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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
---------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993 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 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
229 WEST 43D STREET, NEW YORK, N. Y. 10036
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 556-1234
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
Class A Common Stock of $.10 par value American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Not Applicable
(TITLE OF CLASS)
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. ....
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
The aggregate market value of Class A Common Stock held by non-affiliates
as of February 28, 1994, was approximately $2.14 billion. As of such date,
non-affiliates held 55,597 shares of Class B Common Stock. There is no active
market for such stock.
The number of outstanding shares of each class of the registrant's common
stock as of February 28, 1994, was as follows: 106,461,863 shares of Class A
Common Stock and 431,681 shares of Class B Common Stock.
DOCUMENT INCORPORATED BY REFERENCE PART
Proxy Statement for the 1994 Annual Meeting of Stockholders . ....... III
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INDEX TO THE NEW YORK TIMES COMPANY
1993 FORM 10-K
------------------------
PART I
ITEM NO. PAGE
1. Business......................................................................... 1
Introduction................................................................. 1
Summary of Segment Information............................................ 1
Newspapers................................................................... 2
The New York Times........................................................ 2
Circulation............................................................ 2
Advertising............................................................ 3
Production............................................................. 3
The Boston Globe.......................................................... 4
Circulation............................................................ 4
Advertising............................................................ 5
Production............................................................. 5
Regional Newspapers....................................................... 5
International Herald Tribune S.A.......................................... 6
Magazines.................................................................... 6
Women's Magazines......................................................... 6
Sports/Leisure Magazines.................................................. 7
Broadcasting/Information Services............................................ 7
Broadcasting.............................................................. 7
Information Services...................................................... 8
Forest Products Companies.................................................... 8
Competition.................................................................. 9
Employees.................................................................... 10
2. Properties....................................................................... 10
3. Legal Proceedings................................................................ 11
4. Submission of Matters to a Vote of Security Holders.............................. 11
Executive Officers of the Registrant................................................ 11
PART II
5. Market for the Registrant's Common Equity and Related Stockholder Matters........ 13
6. Selected Financial Data.......................................................... 13
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 13
8. Financial Statements and Supplementary Data...................................... 13
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.......................................................................... 13
PART III
10. Directors and Executive Officers of the Registrant.............................. 13
11. Executive Compensation.......................................................... 13
12. Security Ownership of Certain Beneficial Owners and Management.................. 13
13. Certain Relationships and Related Transactions.................................. 13
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................. 14
PART I
ITEM 1. BUSINESS.
INTRODUCTION
The New York Times Company (the "Company") was incorporated on August 26,
1896, under the laws of the State of New York. The Company is engaged in
diversified activities in the communications field. The Company also has
substantial equity interests in two Canadian newsprint companies and a Maine
supercalendered paper manufacturing partnership.
On October 1, 1993, a wholly owned subsidiary of the Company was merged
with Affiliated Publications, Inc. ("API"), the parent company of The Boston
Globe, which became a wholly owned subsidiary of the Company. (See Note 2 of
Notes to Consolidated Financial Statements and "Newspapers--The Boston Globe".)
The Company currently classifies its businesses into the following
segments:
Newspapers: The New York Times ("The Times"); The Boston Globe, a
daily newspaper, and the Boston Sunday Globe (both editions, "The Globe");
23 other daily and five non-daily newspapers in Alabama, California,
Florida, Kentucky, Louisiana, Maine, Mississippi, North Carolina, South
Carolina and Tennessee ("Regional Newspapers"); a newspaper wholesaler in
the New York City metropolitan area; and a one-half interest in the
International Herald Tribune.
Magazines: Family Circle, McCall's, American HomeStyle, Child,
Fitness, Custom Builder, Golf Digest, Golf World (U.S.), Golf World (U.K.),
Golf Shop Operations, Golf World Industry News (U.K.), Golf Weekly (U.K.),
Tennis, Tennis Buyer's Guide, Cruising World, Sailing World, Sailing
Business, Snow Country and Ski Business.
Broadcasting/Information Services: television stations WREG-TV in
Memphis, Tennessee, WNEP-TV in Wilkes-Barre/Scranton, Pennsylvania, WHNT-TV
in Huntsville, Alabama, WQAD-TV in Moline, Illinois, and KFSM-TV in Fort
Smith, Arkansas; radio stations WQXR (FM) and WQEW (AM) in New York City;
news, photo and graphics services and news and features syndication;
TimesFax; The New York Times Index; and licensing of electronic data bases
and microform, CD-ROM products and the trademarks and copyrights of The
Times.
SUMMARY OF SEGMENT INFORMATION
In 1993 the Company's consolidated revenues increased to $2,019,654,000
from $1,773,535,000 in 1992, due principally to the October 1, 1993 acquisition
of The Globe, the June 1992 acquisition of two wholesale newspaper distribution
businesses and higher advertising and circulation revenues. The Company's net
income in 1993 was $6,123,000, or $.07 per share, compared with a net loss of
$44,709,000, or $.57 per share, in 1992. The 1993 net income includes pre-tax
charges aggregating $35,400,000, or $.23 per share, to cover severance and
related costs resulting from anticipated white-collar and composing room staff
reductions at The Times and an after-tax noncash charge of $47,000,000, or $.56
per share, to write down the Company's investment in its Forest Products Group
to reflect current operating conditions and economic factors in the industry.
The 1992 loss includes an after-tax charge of $33,437,000, or $.43 per share,
related to the net cumulative effect of adopting three accounting changes in
1992 and a pre-tax loss of $53,768,000, or $.47 per share, due to the closing of
The Gwinnett (Georgia) Daily News, the sale of its residual assets and its 1992
operations. A summary of segment information for the three years ended December
31, 1993, is set forth on pages F-2 and F-3 of this Form 10-K. Also see
"Management's Discussion and Analysis" on pages F-4 through F-7 of this Form
10-K.
As part of the API merger, the Company acquired a one-third interest in BPI
Communications, L.P. ("BPI"), a publisher of speciality magazines including
Billboard and Hollywood Reporter. In February 1994 BPI was sold and the Company
received approximately $53,000,000 for its interest. The Company expects to
receive additional payments of approximately $2,000,000 later in the year. (See
Note 2 of Notes to Consolidated Financial Statements.)
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 the Company's business segments.
NEWSPAPERS
The Newspaper Group had revenues of $1,537,934,000 in 1993, compared with
$1,306,952,000 in 1992, and an operating profit of $114,332,000 in 1993,
compared with $81,173,000 in 1992. Exclusive of the special items discussed in
more detail in "Management's Discussion and Analysis" on pages F-4 and F-5 of
this Form 10-K, operating profit of the Newspaper Group increased to
$150,832,000 in 1993 from $129,073,000 in 1992. Improvements in operating profit
were mainly due to inclusion of the results of The Globe since the October 1,
1993 acquisition date, higher advertising and circulation revenues, cost
controls throughout the Group and cost savings related to The Times's Edison
facility. Advertising weakness at the Company's two California regional
newspapers and higher depreciation and newsprint prices partially offset the
higher results.
THE NEW YORK TIMES
CIRCULATION
The Times, a standard-size weekday and Sunday newspaper which commenced
publication in 1851, is circulated in each of the 50 states and the District of
Columbia and worldwide. Approximately 64% of the weekday (Monday through Friday)
circulation is sold in the 31 counties that make up the greater New York City
area which includes New York City, Westchester and parts of upstate New York,
Connecticut and New Jersey; 36% is sold elsewhere. On Sundays approximately 63%
of the circulation is sold in the greater New York City area and 37% elsewhere.
According to reports of the Audit Bureau of Circulations ("ABC"), an independent
agency that audits the circulation of most U.S. newspapers and magazines on an
annual basis, for the semi-annual period ended September 30, 1993, of all
seven-day United States newspapers, The Times's daily and Sunday circulations
were the largest.
The Times's average weekday and Sunday circulations for the five 12-month
periods ended September 30, 1993, as audited by ABC (except as indicated), are
shown in the table below.
Weekday Sunday
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(Thousands of copies)
1989............................................................. 1,091.9 1,644.1
1990............................................................. 1,128.3 1,695.9
1991............................................................. 1,160.0 1,730.0
1992............................................................. 1,175.9 1,757.0
1993 (unaudited)................................................. 1,185.0 1,785.0
During the year ended December 31, 1993, the average weekday circulation of
The Times increased by approximately 1,700 copies to 1,179,000 copies and the
average Sunday circulation of The Times increased by approximately 17,100 copies
to 1,781,200 copies. Approximately 52% of the weekday circulation and 42% of the
larger Sunday circulation were sold through home and office delivery; the
remainder were sold primarily on newsstands.
The suggested newsstand price of The Times within the New York City
metropolitan area is $.50 on weekdays and $2.00 on Sunday. The suggested
newsstand price in the New England-Middle Atlantic states outside the New York
City metropolitan area is $.75 on weekdays and $2.00 on Sundays. The suggested
newsstand price of the National Edition, distributed throughout the rest of the
country, is $.75 on weekdays and $3.50 on Sundays, except that, effective
January 10, 1994, the suggested
2
newsstand price of the National Edition in 11 southwest and southeast states and
the Caribbean is $1.00 on weekdays.
ADVERTISING
The Times published 77,787,000 lines of advertising in 1993, compared with
77,012,000 lines in 1992. Both figures include part-run linage, which totaled
21,728,000 lines in 1993, compared with 20,574,000 lines in 1992.
Total linage in The Times for the five years ended December 31, 1993, as
measured by Leading National Advertisers Incorporated ("LNA"), an independent
agency that measures advertising volume, is shown in the table below. The
"National" heading in the table below includes such categories as automotive,
financial and general advertising.
Retail National Classified
---------------------- ---------------------- ---------------------- Total
Weekday Sunday Weekday Sunday Weekday Sunday
----------- --------- ----------- --------- ----------- --------- ---------
(Thousands of lines)
1989 21,365 29,267 13,527 15,581 9,612 18,681 108,033
1990 19,542 25,983 11,823 13,920 7,434 14,341 93,043
1991 17,344 22,318 10,173 12,134 5,661 10,988 78,618
1992 18,082 21,528 9,696 12,811 4,721 10,174 77,012
1993 18,377 23,172 9,494 12,463 4,030 10,251 77,787
The table includes linage for The New York Times Magazine, which published 2,857
pages of advertising in 1993, compared with 2,742 pages in 1992.
Advertising rates for The Times increased an average of 5% in January 1993
and in January 1994.
PRODUCTION
Except for The New York Times Magazine, the Television section, the
National Edition and certain supplements, The Times is currently produced at its
New York City production facility and a newly-operational production and
distribution facility in Edison, New Jersey.
The Times is fully photocomposed, and all news is processed through
electronic editing terminals and photocomposition equipment that produce text at
a rate of up to 3,000 lines per minute. Page images are reproduced on
lightweight printing plates through the use of negatives that are produced by
laser beams scanning paste-ups. The page images are transmitted by direct wire
to the platemaking room in the Manhattan facility and by a combination of
microwave and satellite transmission from the composing room in the Manhattan
facility to the platemaking room in Edison and each of the eight National
Edition printing sites around the country.
The new Edison facility, which recently replaced an older production
facility in Carlstadt, New Jersey, prints all the advance sections of the Sunday
newspaper (except The New York Times Magazine and the Television section) and
approximately one-third of the weekday New York edition. The Edison facility
houses six 10-unit Goss Colorliner presses as well as modern, automated
packaging and distribution equipment. No decision has been made as to the
disposition of the Carlstadt plant, which was closed in February 1993. During
1993 The Times began printing some of its advance Sunday sections at Edison in
color; it expects to add at least two color sections in 1994.
The National Edition of The Times is distributed from eight printing sites:
in the Midwest from printing sites in Chicago, Illinois, and Warren, Ohio; in
the West from printing sites in Torrance and Walnut Creek, California, and
Tacoma, Washington; in the Southwest from a printing site in Austin, Texas; and
in the Southeast from printing sites in Atlanta, Georgia, and Ft. Lauderdale,
Florida. Satellite transmission of page images to the National Edition printing
sites permits early-morning delivery to homes and newsstands in many major
markets.
3
In June 1992 the Company acquired two wholesale newspaper distribution
businesses that distribute The Times and other newspapers and periodicals in New
York City and central and northern New Jersey. (See Note 2 of Notes to
Consolidated Financial Statements.) These wholesalers operate under the name of
City & Suburban Delivery Systems. Approximately 46% of The Times's daily
circulation and 40% of its Sunday circulation in the New York City metropolitan
area are delivered to retail outlets and home delivery depots through these
wholesale operations.
The Times has an agreement with R.R. Donnelley & Sons Company to print The
New York Times Magazine through December 1999 and an agreement with KTB
Associates, Inc. to print the Television section through February 1998.
In 1993 The Times used approximately 301,000 metric tons of newsprint,
which was purchased primarily under long-term contracts from both related and
unrelated suppliers (see "Forest Products Companies"). The New York Times
Magazine used approximately 21,000 metric tons of supercalendered paper, an
intermediate grade of magazine quality paper, in 1993. This supercalendered
paper was purchased under long-term contracts from both related (see "Forest
Products Companies") and unrelated suppliers. The Times and The New York Times
Magazine are not dependent on any one supplier.
THE BOSTON GLOBE
The Company acquired The Globe on October 1, 1993, pursuant to a merger of
a wholly owned subsidiary of the Company into API. The Globe is owned and
published by an API subsidiary, Globe Newspaper Company (as used herein, "The
Globe" may also be used to refer to Globe Newspaper Company).
CIRCULATION
The Globe is distributed throughout New England, though its circulation is
concentrated in the Boston metropolitan area. According to ABC reports, as of
September 30, 1993, the daily circulation of The Globe was the 12th largest of
any daily newspaper, and circulation of the Sunday edition was the 9th largest
of any Sunday newspaper published in the United States; and its daily and Sunday
circulation was the largest of all newspapers published in either Boston or New
England.
During the year ended December 26, 1993, the average weekday circulation of
The Globe decreased by approximately 3,300 copies to 504,600 copies and the
average Sunday circulation increased by approximately 2,700 copies to 814,500
copies. Approximately 68% of The Globe's total daily circulation and 54% of The
Globe's total Sunday circulation were sold through home or office delivery; the
remainder were sold primarily on newsstands.
Within the 30-mile-radius of Boston, the newsstand price of the daily
edition of The Globe during 1993 was $.35. The newsstand price for copies sold
more than 30 miles from Boston was $.50. The newsstand price of the Sunday
edition of The Globe was $1.50. The seven-day home delivery price for the
newspaper was $4.00.
The following table shows the average weekday and Sunday paid circulation
of The Globe for the editions and the periods indicated.
PERIOD WEEKDAY SUNDAY
- ---------------------------------------------------------------------- --------- ---------
52 Weeks ended March 28, 1993*........................................ 506,996 811,743
26 Weeks ended September 26, 1993**................................... 507,647 814,036
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* Per audit report of ABC.
** As submitted by The Globe to ABC.
4
ADVERTISING
The Globe's total advertising volume by category of advertising for the
year ended December 31, 1993 for all editions, as measured by The Globe, is set
forth below:
Run of Press inches, Daily & Sunday
Retail............................................................................... 816,911
National............................................................................. 510,973
Classified........................................................................... 1,158,163
Zone advertising inches................................................................ 252,408
Preprint distribution in pieces........................................................ 637,670,000
Advertising rates in each category of advertising were adjusted in 1993.
The latest increase in retail advertising rates occurred on January 1, 1994.
Increases in national and classified advertising rates occurred effective July
1, 1993 and August 1, 1993, respectively. These increases ranged from 2.1% to
4.5%.
PRODUCTION
All editions of The Globe are printed and prepared for delivery at its main
Boston plant or its Billerica, Massachusetts, satellite plant. Both of the
plants use Goss Metroliner offset presses. The Boston plant has a comprehensive
computerized information system utilizing terminals for entering news and
advertising copy into its phototext setting equipment. The data for printing The
Globe at the Billerica plant are delivered by dedicated telephone lines.
In June 1992, The Globe purchased a 126,000 square foot building in
Westwood, Massachusetts, which became operational as a Sunday pre-print storage,
inserting and packaging plant in the fall of 1993.
Virtually all of The Globe's home-delivered circulation is delivered
through The Globe's distribution subsidiary, Community Newsdealers Inc.
In 1993, The Globe used approximately 128,000 metric tons of newsprint. The
major portion was purchased under long-term contracts with unrelated suppliers;
The Globe is not dependent on any one supplier.
REGIONAL NEWSPAPERS
The Company currently owns 23 daily and five non-daily smaller-city
newspapers.
Daily Newspapers Non-Daily Newspapers
---------------- --------------------
Sarasota Herald-Tribune The Courier (Houma, La.) York County Coast Star
(Fla.) Daily Commercial (Kennebunk, Me.)
The Press Democrat (Santa (Leesburg, Fla.) The News-Sun (Sebring/
Rosa, Cal.) Times-News Avon Park, Fla.)
The Ledger (Lakeland, Fla.) (Hendersonville, N.C.) Marco Island Eagle
The Gainesville Sun (Fla.) Daily World (Opelousas, La.) (Fla.)
Santa Barbara The Dispatch (Lexington, N.C.) News-Leader
News-Press (Cal.) Lenoir News-Topic (N.C.) (Fernandina Beach, Fla.)
Spartanburg Daily Comet (Thibodaux, La.) The Banner-Independent
Herald-Journal (S.C.) Palatka Daily News (Fla.) (Booneville, Miss.)
Wilmington Morning Star The Messenger
(N.C.) (Madisonville, Ky.)
Ocala Star-Banner (Fla.) The Daily Corinthian
Times Daily (Corinth, Miss.)
(Florence, Ala.) Lake City Reporter (Fla.)
The Tuscaloosa News (Ala.) State Gazette (Dyersburg,
The Gadsden Times (Ala.) Tenn.)
5
The regional daily newspapers achieved circulation gains for the year ended
December 31, 1993, as weekday circulation increased 4,500 copies to 851,000
copies and Sunday circulation increased 9,200 copies to 853,700 copies; the
circulation of the non-dailies decreased 500 copies to 72,700 copies.
Advertising volume, stated on the basis of six columns per page, was 35,163,700
inches in 1993, compared with 33,854,000 inches in 1992. The circulation gains
and the advertising volume exclude the 1992 circulation and advertising volume
of The Gwinnett (Georgia) Daily News, which the Company closed in September
1992. The circulation and advertising volume include the two weekly Georgia
newspapers sold at year-end, The Forsyth County News (Cumming) and The Winder
News (Winder). (See Note 2 of Notes to Consolidated Financial Statements.)
All of the Regional Newspapers are produced by photocomposition and offset
printing. In 1993 the Regional Newspapers used approximately 99,000 metric tons
of newsprint, which was purchased under long-term contracts from both related
(see "Forest Products Companies") and unrelated suppliers. The Regional
Newspapers are not dependent on any one supplier.
INTERNATIONAL HERALD TRIBUNE S.A.
The Company owns a one-half interest in the International Herald Tribune
S.A., which publishes the International Herald Tribune. The newspaper is edited
in Paris and printed simultaneously in Paris, London, Zurich, Hong Kong,
Singapore, The Hague, Marseille, Tokyo, Rome, Frankfurt and New York. The other
one-half interest is owned by The Washington Post Company.
MAGAZINES
The Company's Magazine Group had revenues of $394,463,000 in 1993, compared
with $386,120,000 in 1992, and operating profit of $12,330,000 in 1993, compared
with $9,929,000 in 1992. Exclusive of the amortization costs associated with the
acquisitions of McCall's and Golf World (U.S.), which were structured to
maximize cash flow, the Group's operating profit was $25,400,000 in 1993, which
is equal to 1992. Continuing softness in advertising in the consumer packaged
goods category in the women's magazines field continues to affect the Group
adversely.
All of the Company's magazines are printed under long-term contracts with
unrelated printers. In 1993 the magazines used approximately 78,000 metric tons
of coated paper, all of which was purchased from unrelated suppliers under
long-term contracts.
WOMEN'S MAGAZINES
As of December 31, 1993, NYT Women's Magazines published the magazines
listed in the chart below:
PERCENTAGE
INCREASE
(DECREASE) IN
AVERAGE
PUBLICATION SUBJECT/ AVERAGE CIRCULATION ADVERTISING
MAGAZINE CYCLE AUDIENCE RATEBASE CIRCULATION(1) OVER 1992 PAGES(4)
- -------------------------- ----------------- ------------------ ---------- ----------- --------------- -----------
Family Circle............. 17 issues per Women's Service 5,000,000 5,092,000 (1.3) 1,570
year
McCall's.................. Monthly Women's Service 4,600,000 4,604,000 (1.6) 1,138
American HomeStyle(2)..... 8 issues per year Home decorating 700,000(2) 712,000 7.4 469
Child(3).................. 10 issues per Parents of 650,000(3) 612,000 13.3 872
year children under 12
Fitness................... 6 issues per year Health and fitness 500,000(5) 408,000 40.9 237
Custom Builder............ 7 issues per year Trade publication Not 28,000 4.7 357
for the shelter Applicable
field
PERCENTAGE
INCREASE
(DECREASE) IN
ADVERTISING
MAGAZINE PAGES OVER 1992
- -------------------------- ---------------
Family Circle............. (8.9)
McCall's.................. (5.2)
American HomeStyle(2)..... 3.3
Child(3).................. 5.1
Fitness................... 91.3
Custom Builder............ 42.2
- ---------------
(1) As reported by the publisher to ABC or the Business Publications
Association ("BPA").
(2) Formerly called Decorating Remodeling. Six ancillary publications were
published in 1993: Home Plans (four times a year), Kitchen Plans (two
times a year), Build It, Build It Ultra, Weekend Decorator, Weekend
Remodeler. The Ratebase for American HomeStyle increased from 675,000
to 700,000 in January 1994.
(3) Four ancillary publications were published in 1993: Organized Parent,
Organized Pregnancy, Having a Baby, Child's Guide to Baby Products. The
Ratebase for Child increased from 600,000 to 650,000 in January 1994.
(4) As reported by the publisher to Publisher's Information Bureau ("PIB");
or, in the case of Custom Builder, as calculated by the publisher using
the same methodology as for PIB.
(5) The Ratebase increased from 400,000 to 500,000 in January 1994.
In 1993, NYT Women's Magazines also published 14 Special Interest
Publications on such topics as Christmas, food and shelter.
6
SPORTS/LEISURE MAGAZINES
As of December 31, 1993, NYT Sports/Leisure Magazines published the
magazines listed in the chart below:
PERCENTAGE PERCENTAGE
INCREASE INCREASE
(DECREASE) IN (DECREASE) IN
AVERAGE ADVERTISING
PUBLICATION AVERAGE CIRCULATION ADVERTISING PAGES
MAGAZINE CYCLE SUBJECT/AUDIENCE RATEBASE CIRCULATION(1) OVER 1992 PAGES(2) OVER 1992
- ----------------------- ----------------- ------------------- --------- ----------- ------------- ----------- -------------
Golf Digest............ Monthly Golf 1,450,000 1,459,000 2.8 1,344 0.9
Tennis................. Monthly Tennis 800,000 804,000 5.8 795 3.5
Snow Country........... 8 issues per year Skiing market 460,000 428,000 14.9 669 24.6
Recreational
Cruising World......... Monthly sailors 143,000 148,000 0.9 1,169 10.3
44 issues per
Golf World (U.S.)...... year Golf 135,000 141,000 2.0 1,622 (1.9)
Golf World (U.K.)...... Monthly Golf 94,500 95,000 3.0 1,180 5.9
Sailing World.......... Monthly Racing sailors 61,000 64,000 1.5 555 13.0
10 issues per
Golf Shop Operations... year Golf trade 16,500 17,000 1.3 1,469 (2.1)
Ski Business........... 6 issues per year Ski trade 11,500 12,000 (8.1) 302 62.4
Tennis Buyer's Guide... 6 issues per year Tennis trade 10,100 10,000 (0.9) 326 (9.9)
Sailing Business....... 6 issues per year Sailing trade 8,500 8,000(3) 17.7 93 3.3
Golf Weekly (U.K.)..... Weekly Golf 8,250 8,000 (21.6) 651 8.7
Golf World Industry
News (U.K.)............ Monthly Golf trade 5,000 5,000 0 231 20.3
- ---------------
(1) As reported by the publisher to ABC or BPA.
(2) As reported by the publisher to PIB; or, in the case of trade publications,
as calculated by the publisher using the same methodology as for PIB.
(3) As provided by publisher.
BROADCASTING/INFORMATION SERVICES
Broadcasting/Information Services had revenues of $87,257,000 in 1993, up
from $80,463,000 in 1992, and an operating profit of $19,403,000 in 1993,
compared with $14,766,000 in 1992. Higher local advertising revenues at the
Company's television stations accounted for the improved results.
BROADCASTING
The Company's television and radio stations are operated under licenses
from the Federal Communications Commission ("FCC") and are subject to FCC
regulations. Each television station's license is for a five-year term. The
licenses for WREG-TV (Memphis, Tenn.), WHNT-TV (Huntsville, Ala.), WQAD-TV
(Moline, Ill.) and KFSM-TV (Fort Smith, Ark.) will expire in 1997. The license
of WNEP-TV (Wilkes-Barre/Scranton, Pa.) will expire on August 1, 1994. The
Company expects this license to be renewed.
All of the television stations have three principal sources of revenue:
local advertising sold to advertisers in the immediate geographic areas of the
stations, national spot advertising and compensation paid by the networks for
carrying commercial network programs. WREG-TV, WHNT-TV and KFSM-TV are
affiliated with the CBS Television Network and WNEP-TV and WQAD-TV are
affiliated with the ABC Television Network.
WREG-TV, WQAD-TV and KFSM-TV are in the VHF band; WNEP-TV and WHNT-TV are
in the UHF band, as are all other stations in their markets. According to A. C.
Nielsen Company, Memphis is the 42nd largest television market in the United
States, Wilkes-Barre/Scranton is the 47th largest market, Huntsville is the 87th
largest market, Moline is part of the Quad Cities market, the 88th largest, and
Fort Smith is the 118th largest market.
The Company's two radio stations serve the New York metropolitan area. WQXR
(FM) is currently the only commercial classical music station serving this
market. WQEW (AM) is the only station that offers a format of American popular
standards for the market. Applications for renewal of the FCC licenses for both
stations for the seven-year terms starting June 1, 1991, are pending. Although
the National Hispanic Media Coalition has filed an opposition to the radio
stations' license renewals, the Company expects its licenses to be renewed.
7
INFORMATION SERVICES
The New York Times Syndication Sales Corporation ("Syndication Sales")
operates The New York Times News Service, Special Features and the licensing and
reprint permission operations of The Times. The News Service transmits articles,
graphics and photographs from The Times to approximately 650 newspapers and
magazines in the United States and in 53 countries worldwide. Special Features
markets other supplemental news services and feature material, graphics and
photographs from The Times and other leading news sources to newspapers and
magazines around the world.
In 1993 the Company continued to expand its distribution of TimesFax, a
six- to eight-page synopsis of The Times delivered to customers' facsimile
machines or personal computers in markets where The Times is not easily
available. In addition to distribution by satellite to cruise ships and U.S.
Navy vessels, TimesFax is distributed to hotels, governments and corporations in
over 50 countries and territories. In 1993 the Company launched its first
industry specific fax product: The Monday Media edition, a six-page synopsis of
media-related news, is produced weekly and distributed to media and advertising
executives.
Through its Index department and Times On-Line Services, Inc., the Company
creates The New York Times Index and computer-retrievable data bases. The
Company licenses Mead Data Central, Inc. to store, market and distribute its
on-line computer data bases and University Microfilms, Inc. to produce and sell
The New York Times Index and The Times on microform and CD-ROM. The Company has
entered into license agreements which will make material from The Times
available online on the day of publication through Dow Jones Business
Information Services and America Online beginning in the first half of 1994.
FOREST PRODUCTS COMPANIES
The Company has equity interests in two Canadian newsprint companies,
Donohue Malbaie Inc. ("Malbaie"), and Gaspesia Pulp and Paper Company Ltd.
("Gaspesia"), and in a partnership operating a supercalendered paper mill in
Maine, Madison Paper Industries ("Madison") (collectively, the "Forest Products
Companies"). None of these companies' debt is guaranteed by the Company.
Exclusive of the $47,000,000 noncash charge to write down the Company's
investment in the Forest Products Group (see "Summary of Segment Information"),
the Company's equity in operations (an after-tax amount) of these businesses in
1993 was a loss of $4,852,000 compared with a loss of $8,718,000 in 1992.
Softness due to oversupply is continuing. The improved year over year results
are due principally to lower newsprint discounts and a favorable Canadian
exchange rate.
The Company has a 49% equity interest in Malbaie. The other 51% is owned by
Donohue, Inc. ("Donohue"), a publicly traded Canadian company whose voting
shares are controlled by Quebecor, a Canadian publishing company. Malbaie
purchases pulp from Donohue and manufactures newsprint from this raw material on
the paper machine it owns within the Donohue paper mill at Clermont, Quebec.
Malbaie is wholly dependent upon Donohue for its pulp. The production capacity
for 1993 of Malbaie was 196,000 metric tons. In 1993 Malbaie produced 192,000
metric tons of newsprint, 82,000 tons of which were sold to the Company with the
balance sold to Donohue for resale.
The Company has a 49% equity interest in Gaspesia. The other 51% is owned
by Abitibi-Price Inc. ("Abitibi"), a publicly traded Canadian company. Gaspesia
produces newsprint at Chandler, Quebec, on the southern coast of the Gaspe
Peninsula. Gaspesia has cutting rights on approximately 2,500 square miles of
forest under a license from the Province of Quebec. It also purchases wood from
local jobbers and farmers. The production capacity for 1993 of Gaspesia was
256,000 metric tons. Under the terms of the Company's agreement with Abitibi,
all of Gaspesia's production is purchased by Abitibi for resale to the Company
and other customers. The Company has a long-term newsprint purchase agreement
with Abitibi, pursuant to which it purchased 133,000 tons of newsprint from
Abitibi in 1993. The Company includes all of this newsprint as affiliated
tonnage when calculating how much newsprint the Company purchases from
affiliated companies.
8
Madison is a partnership between Northern SC Paper Corporation ("Northern")
and a subsidiary of Myllykoski Oy, a Finnish papermaking company. The Company
owns 80% of Northern, and Myllykoski Oy, through a subsidiary, owns the
remaining 20%. Madison produces supercalendered paper at its facility in
Madison, Maine. Madison purchases all its wood from local suppliers, mostly
under long-term contracts. Madison's production capacity for 1993 was 170,000
metric tons, 10,050 tons of which were sold to the Company. In 1994 Madison's
five largest customers, one of which is the Company, are expected to purchase
approximately 68% of Madison's budgeted production.
The Forest Products Companies are subject to comprehensive environmental
protection laws, regulations and orders of provincial, federal, state and local
authorities of Canada or the United States (the "Environmental Laws"). The
Environmental Laws impose effluent and emission limitations and require the
Forest Products Companies to obtain, and operate in compliance with the
conditions of, permits and other governmental authorizations ("Governmental
Authorizations"). The Forest Products Companies follow policies and operate
monitoring programs to ensure compliance with applicable Environmental Laws and
Governmental Authorizations and to minimize exposure to environmental
liabilities. Various regulatory authorities periodically review the status of
the operations of the Forest Products Companies. Based on the foregoing, the
Company believes that the Forest Products Companies are in substantial
compliance with such Environmental Laws and Governmental Authorizations.
COMPETITION
The Times competes with newspapers of general circulation in New York City
and its suburbs. The Times also competes in varying degrees with national
publications such as The Wall Street Journal and USA Today and with television,
radio and other media. Based on a specially prepared LNA report and The Times's
own internal analysis, The Times believes that it ranks first in advertising
revenue in the general weekday and Sunday newspaper field in the New York City
metropolitan area. The Regional Newspapers and the International Herald Tribune
compete with a variety of other advertising media in their respective markets.
The Globe competes with other newspapers distributed in Boston and its
neighboring suburbs. However, the only major daily metropolitan newspaper in
direct competition with The Globe is The Boston Herald (daily and Sunday), whose
publisher and sole stockholder (through Herald Media, Inc.) is Patrick J.
Purcell. The Globe also competes with other communications media, such as direct
mail, magazines, radio, television (including cable television), and
nationally-distributed newspapers. Based on information supplied by major daily
newspapers published in New England and assembled by the New England Newspaper
Association, Inc., for the 12-month period ending December 31, 1993, The Globe
ranked first in advertising inches among all newspapers published in Boston and
New England.
All the magazines published by the Company compete directly with comparable
publications as well as with general interest magazines and other media, such as
newspapers and broadcasting.
All of the Company's television stations compete directly with other
television stations in their respective markets and with other video services
such as cable network programming carried on local cable systems. WQXR (FM)
competes in New York City with WNYC (a non-commercial station) for the classical
music audience, and it and WQEW (AM) compete with many adult-audience commercial
radio stations and other media in New York City and surrounding suburbs.
Syndication Sales's operations compete with several other syndicated
features and supplemental news services.
The Forest Products Companies are in a highly-competitive industry.
9
EMPLOYEES
As of December 31, 1993, the Company had approximately 13,000 full-time
employees.
Approximately 4,290 full-time employees of The Times and City & Suburban
Delivery Systems, which operates its newspaper wholesaler business, are
represented by 14 unions. The Times has collective bargaining agreements
effective through March 30, 2000, with all of its six production unions and with
seven of its eight non-production unions. The production agreements enabled The
Times to begin full operation of its Edison production and distribution facility
in February 1993. The Times is in the process of negotiating the remaining
agreement with the Newspaper Guild of New York; this agreement expired on March
30, 1993; The Times cannot predict the timing or the outcome of the
negotiations. Three other entities owned by the Company (The Press Democrat,
WQXR and WQEW) also have collective bargaining agreements covering certain of
their employees.
Approximately 2,103 full-time employees of The Globe and Wilson Tisdale
Company, its subsidiary which owns the truck fleet used in delivery of The
Globe, are represented by 12 unions. As of December 31, 1993, labor agreements
with four of its 11 mechanical unions were in effect with expiration dates
ranging from December 31, 1995, to December 31, 1998. Labor agreements with six
of the other mechanical unions expired on December 31, 1992, and one expired on
December 31, 1993; negotiations are proceeding with respect to these new
agreements, all of which The Globe expects to be completed during 1994. A new
agreement with The Boston Globe Employees' Association covering the period from
January 1, 1991, through December 31, 1994, was recently approved by the union
membership. On March 10, 1994, the membership of that union voted to affiliate
with The Newspaper Guild.
ITEM 2. PROPERTIES.
The Times: The Company owns its headquarters at 229 West 43d Street, New
York, New York. The building has 15 stories and approximately 714,000 square
feet of floor space and serves as a publishing facility for The Times.
The other publishing facility is located in Edison, New Jersey. This
1,300,000 square foot facility is occupied pursuant to a long-term lease with
renewal and purchase options. The Edison production and distribution facility
began producing newspapers in September 1992, and produces all of the advance
Sunday sections of The Times (except The New York Times Magazine and the
Television section) and approximately one-third of the weekday and Sunday New
York edition. (See Notes 3 and 13 of Notes to Consolidated Financial
Statements.)
The Edison facility is the first step in a plan to modernize the production
facilities of The Times, giving the Company the ability to add color, increase
paging and sections and improve quality. To complete this upgrade in capability
and capacity, the Company plans to replace the production facility housed in the
basement at its 43d Street facility.
On December 17, 1993, the Company executed a lease agreement and related
agreements with the City of New York under which the Company will lease a
31-acre site for this replacement facility in Queens, New York. The agreements
include a package of tax benefits and energy cost reductions valued at
approximately $29 million. The Company has ten years in which to begin
construction, and the lease will run for 25 years from the start of
construction. The Company has the option to purchase the property at any time
prior to the end of the lease. Construction of the facility is subject to
approval of the Company's Board of Directors. (See Note 3 of Notes to
Consolidated Financial Statements.)
The Globe owns its printing plants in Boston and Billerica, Massachusetts,
as well as its new Sunday pre-print storage, inserting and packaging plant in
Westwood, Massachusetts. The Globe and its subsidiaries own or lease office and
other facilities that are suitable and adequate for their current activities.
The Regional Newspapers own their printing facilities. The Company's
regional newspapers, magazines, broadcast stations and information businesses
own or lease office facilities that are suitable and adequate for their current
activities.
10
ITEM 3. LEGAL PROCEEDINGS.
There are various legal actions that have arisen in the ordinary course of
business and are now pending against the Company. Such actions are usually for
amounts greatly in excess of the payments, if any, that may be required to be
made. It is the opinion of management after reviewing such actions with legal
counsel to the Company that the ultimate liability which might result from such
actions will not have a material adverse effect on the consolidated financial
position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Employed
By
Registrant Position(s) As Of
Name Age Since March 21, 1994(1)
- ------------------------------------ ----------- ---------- -----------------------------------------------------------
CORPORATE OFFICERS
Arthur Ochs Sulzberger.............. 68 1951 Chairman (since 1973); Chief Executive Officer; Director;
Publisher of The New York Times ("The Times") (1963 to
1992)
Lance R. Primis..................... 47 1969 President and Chief Operating Officer (since 1992);
President and General Manager of The Times (1988 to 1992)
Katharine P. Darrow................. 50 1970 Senior Vice President (since 1993), Broadcasting, Corporate
Development and Human Resources; Vice President,
Broadcasting/Information Services and Corporate
Development (1989 to 1993); Vice President, Information
Services (1988 to 1989); General Counsel (1981 to 1989)
David L. Gorham..................... 61 1974 Senior Vice President and Chief Financial Officer (since
1980); Treasurer (1988 to 1992)
Michael E. Ryan..................... 55 1956 Senior Vice President (since 1980), Law, Forest Products
and Special Projects
Frank R. Gatti...................... 47 1974 Vice President (since 1988); Corporate Controller
Leslie A. Mardenborough............. 45 1981 Vice President, Human Resources (since 1990); Director,
Corporate Personnel (1987 to 1990)
Gordon Medenica..................... 42 1982 Vice President, Operations and Planning (since 1993); Vice
President, Corporate Planning (1990 to 1993); Director,
Planning (1986 to 1990)
Thomas H. Nied...................... 51 1977 Vice President, Taxation (since 1990); Tax Director (1977
to 1990)
Elise J. Ross....................... 50 1973 Vice President and Chief Information Officer (since 1992);
Senior Vice President of Systems and Technology of The
Times (1992); Senior Vice President of Systems of The
Times (1988 to 1992)
Solomon B. Watson IV................ 49 1974 Vice President (since 1990); General Counsel (since 1989);
Secretary (1979 to 1989)
11
Employed
By
Registrant Position(s) As Of
Name Age Since March 21, 1994(1)
- ------------------------------------ ----------- ---------- -----------------------------------------------------------
Laura J. Corwin..................... 49 1980 Secretary (since 1989) and Corporate Counsel (since January
1993); Assistant Secretary (1983 to 1989)
Richard G. Thomas................... 45 1977 Treasurer (since 1992); Assistant Treasurer (1983 to 1992)
OPERATING UNIT EXECUTIVES
James W. FitzGerald................. 55 1968 President, Sports/Leisure Division of the Company's
Magazine Group (since 1985)
Stephen Golden...................... 47 1974 Vice President, Forest Products, Health, Safety and
Environmental Affairs (since 1992); President and General
Manager of the Company's Forest Products Group (since
January 1994); Vice President, Forest Products (1990 to
1992); Director, Forest Products Group (1987 to 1990)
C. Frank Roberts.................... 50 1970 Vice President, Broadcasting (since 1986)
Arthur O. Sulzberger, Jr............ 42 1978 Publisher of The Times (since 1992); Deputy Publisher of
The Times (1988 to 1992)
William O. Taylor................... 61 1993 Publisher of The Boston Globe (since 1978) and Chairman and
Chief Executive Officer of Globe Newspaper Company (since
1982)
James C. Weeks...................... 51 1971 President, Regional Newspaper Group of the Company (since
1993); Senior Vice President, Operations, Regional
Newspaper Group (1988 to 1993)
- ---------------
(1) During the past five years, all of the executive officers listed above have
held positions which were the same or substantially similar to those they
currently hold except as indicated above.
12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this item appears at page F-26 of this Form
10-K.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item appears at page F-28 of this Form
10-K.
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this item appears at pages F-4 to F-7 of this
Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item appears at pages F-2, F-3 and F-8 to
F-27 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
In addition to the information set forth under the caption "Executive
Officers of the Registrant" in Part I of this Form 10-K, the information
required by this item is incorporated by reference to pages 6 to 14 of the
Company's Proxy Statement for the 1994 Annual Meeting of Stockholders.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference to pages
14 to 20 (but only up to and not including the paragraph entitled "Performance
Presentation") of the Company's Proxy Statement for the 1994 Annual Meeting of
Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is incorporated by reference to pages
1 to 8 of the Company's Proxy Statement for the 1994 Annual Meeting of
Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated by reference to pages
14 to 15 and pages 17 to 20 (but only up to and not including the paragraph
entitled "Performance Presentation") of the Company's Proxy Statement for the
1994 Annual Meeting of Stockholders.
13
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(A) DOCUMENTS FILED AS PART OF THIS REPORT
(1) FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
(a) The consolidated financial statements of the Company are filed
as part of this Form 10-K and are set forth on pages F-2, F-3 and F-8 to
F-25. The report of Deloitte & Touche, Independent Public Accountants,
dated February 10, 1994, is set forth on page F-26 of this Form 10-K.
(b) The following additional consolidated financial information is
filed as part of this Form 10-K and should be read in conjunction with
the consolidated financial statements set forth on pages F-2, F-3 and
F-8 to F-25. Schedules not included with this additional consolidated
financial information have been omitted either because they are not
applicable or because the required information is shown in the
consolidated financial statements at the aforementioned pages.
Page
----
Consent of Independent Public Accountants......................................... 18
Consolidated Schedules for the Three Years Ended December 31, 1993:
V--Property, Plant and Equipment............................................. S-1
VI--Accumulated Depreciation of Property, Plant and Equipment................ S-2
VIII--Valuation and Qualifying Accounts...................................... S-3
IX--Short-term Borrowings.................................................... S-4
X--Supplementary Income Statement Information................................ S-5
Separate financial statements and supplemental schedules of
associated companies accounted for by the equity method are omitted in
accordance with the provisions of Rule 3-09 of Regulation S-X.
(2) EXHIBITS
(2.1) Agreement and Plan of Merger dated as of June 11, 1993, as
amended by the First Amendment dated as of August 12, 1993, by and among
the Company, Sphere, Inc. and Affiliated Publications, Inc. (filed as
Exhibit 2 to the Form S-4 Registration Statement, Registration No.
33-50043, on August 23, 1993, and included as Annex I to the Joint Proxy
Statement/Prospectus included in such Registration Statement (schedules
omitted--the Company agrees to furnish a copy of any schedule to the
Commission upon request), and incorporated by reference herein).
(2.2) Stockholders Agreement dated as of June 11, 1993 by and
between the Company and the other parties signatory thereto (filed as
Exhibit 2.1 to the Form S-4 Registration Statement, Registration No.
33-50043, on August 23, 1993, and included as Annex II to the Joint
Proxy Statement/Prospectus included in such Registration Statement, and
incorporated by reference herein).
(3.1) Certificate of Incorporation as amended by the Class A and
Class B stockholders and as restated on September 29, 1993.
(3.2) By-laws as amended through February 17, 1994.
(4) The Company agrees to furnish to the Commission upon request a
copy of any instrument with respect to long-term debt of the Company and
any subsidiary for which consolidated or unconsolidated financial
statements are required to be filed, and for which the
14
amount of securities authorized thereunder does not exceed 10% of the
total assets of the Company and its subsidiaries on a consolidated
basis.
(9.1) Globe Voting Trust Agreement, dated as of October 1, 1993.
(9.2) Jordan Voting Trust Agreement, dated as of January 29, 1987,
as amended through May 15, 1987 (filed as Exhibit 9.2 to API's Form 10-K
for fiscal year ended December 31, 1989, and incorporated by reference
herein).
(10.1) The Company's Executive Incentive Compensation Plan as
amended through December 20, 1990 (filed as an Exhibit to the Company's
Form 10-K dated March 1, 1991, and incorporated by reference herein).
(10.2) The Company's 1991 Executive Stock Incentive Plan, as
amended through April 13, 1993.
(10.3) The Company's 1991 Executive Cash Bonus Plan, adopted on
April 16, 1991 (filed as an Exhibit to the Company's Proxy Statement
dated March 1, 1991, and incorporated by reference herein).
(10.4) The Company's Non-Employee Directors' Stock Option Plan,
adopted on April 16, 1991 (filed as an Exhibit to the Company's Proxy
Statement dated March 1, 1991, and incorporated by reference herein).
(10.5) The Company's Supplemental Executive Retirement Plan as
amended through May 5, 1989 (filed as an Exhibit to the Company's Form
10-K dated March 29, 1990, and incorporated by reference herein).
(10.6) Lease (short form) between the Company and Z Edison Limited
Partnership dated April 8, 1987 (filed as an Exhibit to the Company's
Form 10-K dated March 27, 1988, and incorporated by reference herein).
(10.8) Agreement of Lease, dated as of December 15, 1993, between
The City of New York, Landlord, and the Company, Tenant (as successor to
New York City Economic Development Corporation (the "EDC"), pursuant to
an Assignment and Assumption of Lease With Consent, made as of December
15, 1993, between the EDC, as Assignor, to the Company, as Assignee).
(10.9) Funding Agreement #1, dated as of December 15, 1993, between
the EDC and the Company.
(10.10) Funding Agreement #2, dated as of December 15, 1993,
between the EDC and the Company.
(10.11) Funding Agreement #3, dated as of December 15, 1993,
between the EDC and the Company.
(10.12) Funding Agreement #4, dated as of December 15, 1993,
between the EDC and the Company.
(10.13) New York City Public Utility Service Power Service
Agreement, made as of May 3, 1993, between The City of New York, acting
by and through its Public Utility Service, and The New York Times
Newspaper Division of the Company.
(10.14) Employment Agreement, dated May 19, 1993, between API,
Globe Newspaper Company and William O. Taylor.
(10.15) API's 1989 Stock Option Plan (filed as Annex F-1 to API's
Proxy Statement-Joint Prospectus, dated as of April 28, 1989, contained
in API's Registration Statement on
15
Form S-4 (Registration Statement No. 33-28373) declared effective April
28, 1989, and incorporated by reference herein).
(10.16) API's Supplemental Executive Retirement Plan, as amended
effective September 15, 1993.
(10.17) API's 1990 Stock Option Plan (Restated 1991) (filed as
Exhibit 1 to API's Quarterly Report on Form 10-Q for the Quarter ended
June 30, 1991 (Commission File No. 1-10251), and incorporated by
reference herein).
(10.18) Form of Substituted Stock Option Option Agreement/Incentive
86 among API, its predecessor company and certain employees (filed as
Exhibit 10.27 to Post-Effective Amendment No. 1 filed August 11, 1989,
to API's Registration Statement on Form S-4 (Registration Statement No.
33-28373) declared effective April 28, 1989, and incorporated by
reference herein).
(10.19) Form of Substituted Stock Option Option Agreement/Incentive
87 among API, its predecessor company and certain employees (filed as
Exhibit 10.29 to Post-Effective Amendment No. 1 filed August 11, 1989,
to API's Registration Statement on Form S-4 (Registration Statement No.
33-28373) declared effective April 28, 1989, and incorporated by
reference herein).
(10.20) Form of Substituted Stock Option Option Agreement/Incentive
88 among API, its predecessor company and certain employees (filed as
Exhibit 10.31 to Post-Effective Amendment No. 1 filed August 11, 1989,
to API's Registration Statement on Form S-4 (Registration Statement No.
33-28373) declared effective April 28, 1989, and incorporated by
reference herein).
(21) Subsidiaries of the Company.
(B) REPORTS ON FORM 8-K
During the quarter ended December 31, 1993, no reports on Form 8-K
were filed.
16
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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.
Date: March 21, 1994
(Registrant)
THE NEW YORK TIMES COMPANY
By: LAURA J. CORWIN
.................................
Laura J. Corwin, Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- --------------------------------------------------- -------------------------------------- --------------------
ARTHUR OCHS SULZBERGER Chairman (Chief March 21, 1994
(Arthur Ochs Sulzberger) Executive Officer),
Director
JOHN F. AKERS Director March 21, 1994
(John F. Akers)
FRANK R. GATTI Vice President, March 21, 1994
(Frank R. Gatti) Corporate Controller
(Principal Accounting
Officer)
RICHARD L. GELB Director March 21, 1994
(Richard L. Gelb)
LOUIS V. GERSTNER, JR. Director March 21, 1994
(Louis V. Gerstner, Jr.)
DAVID L. GORHAM Senior Vice President and Chief March 21, 1994
(David L. Gorham) Financial Officer (Principal
Financial Officer)
MARIAN S. HEISKELL Director March 21, 1994
(Marian S. Heiskell)
A. LEON HIGGINBOTHAM, JR. Director March 21, 1994
(A. Leon Higginbotham, Jr.)
RUTH S. HOLMBERG Director March 21, 1994
(Ruth S. Holmberg)
ROBERT A. LAWRENCE Director March 21, 1994
(Robert A. Lawrence)
WALTER E. MATTSON Director March 21, 1994
(Walter E. Mattson)
GEORGE B. MUNROE Director March 21, 1994
(George B. Munroe)
CHARLES H. PRICE II Director March 21, 1994
(Charles H. Price II)
LANCE R. PRIMIS President (Chief Operating Officer) March 21, 1994
(Lance R. Primis)
GEORGE L. SHINN Director March 21, 1994
(George L. Shinn)
DONALD M. STEWART Director March 21, 1994
(Donald M. Stewart)
JUDITH P. SULZBERGER Director March 21, 1994
(Judith P. Sulzberger)
WILLIAM O. TAYLOR Director March 21, 1994
(William O. Taylor)
CYRUS R. VANCE Director March 21, 1994
(Cyrus R. Vance)
17
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
THE NEW YORK TIMES COMPANY:
We consent to the incorporation by reference in Registration Statements No.
2-91826, 33-31538, 33-43210, 33-43211, 33-50461, 33-50465, 33-50457, 33-50467
and 33-50459 on Forms S-8 of our report dated February 10, 1994, appearing in
this Annual Report on Form 10-K of The New York Times Company (the "Company")
for the year ended December 31, 1993.
We also consent to the Company extending the reference to us under the
heading "Experts" in Registration Statement No. 33-31538 to comprehend our
report, dated February 10, 1994, on the consolidated balance sheets of the
Company as of December 31, 1993 and 1992, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1993 included in the aforementioned
Form 10-K.
DELOITTE & TOUCHE
New York, New York
March 21, 1994
18
THE NEW YORK TIMES COMPANY
1993 Consolidated Financial Statements
- ----------------------------------------------------------------------
Contents Page
- ----------------------------------------------------------------------
Financial Highlights F-1
Segment Information F-2
Management's Discussion and Analysis F-4
Consolidated Statements of Operations F-8
Consolidated Balance Sheets F-9
Consolidated Statements of Cash Flows F-11
Consolidated Statements of Stockholders' Equity F-13
Notes to Consolidated Financial Statements F-14
Independent Auditors' Report F-26
Management's Responsibilities Report F-26
Market Information F-26
Quarterly Information F-27
Ten-Year Supplemental Financial Data F-28
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------
Dollars in thousands except per share data Year Ended December 31
1993 1992 1991 1990 1989
- --------------------------------------------------------------------------------------------------------------------
REVENUES AND INCOME
Revenues $2,019,654 $1,773,535 $1,703,101 $1,776,761 $1,768,893
Operating profit 126,581 88,408 93,639 129,779 169,044
Income from continuing operations before income
taxes and equity in operations of forest
products group 101,206 8,525 63,053 110,190 148,364
Income (Loss) from continuing operations before
equity in operations of forest products group 57,975 (2,554) 41,293 60,871 84,097
Equity in operations of forest products group (51,852) (8,718) 5,700 3,965 (15,922)
Income (Loss) from continuing operations before
net cumulative effect of accounting changes 6,123 (11,272) 46,993 64,836 68,175
Income from discontinued operations, net of taxes - - - - 198,448
Net cumulative effect of accounting changes - (33,437) - - -
Net income (loss) 6,123 (44,709) 46,993 64,836 266,623
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Property, plant and equipment - net 1,112,024 902,755 966,593 1,013,430 972,474
Total assets 3,215,204 1,994,974 2,127,981 2,149,623 2,187,520
Long-term debt and capital lease obligations 460,063 206,911 213,487 319,449 337,417
Common stockholders' equity 1,598,883 999,630 1,073,442 1,055,785 1,064,446
- --------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Continuing operations before net cumulative
effect of accounting changes .07 (.14) .61 .85 .87
Discontinued operations - - - - 2.52
Net cumulative effect of accounting changes - (.43) - - -
Net income (loss) .07 (.57) .61 .85 3.39
Dividends .56 .56 .56 .54 .50
Common stockholders' equity (end of year) 14.96 12.54 13.70 13.68 13.63
- --------------------------------------------------------------------------------------------------------------------
KEY RATIOS (See notes below)
Operating profit to revenues 6% 5% 5% 7% 10%
Income from continuing operations before equity in
operations of forest products group to revenues 3% 2% 2% 3% 5%
Return on average stockholders' equity - 2% 4% 6% 27%
Return on average total assets - 1% 2% 3% 13%
Long-term debt and capital lease obligations to
total capitalization 22% 17% 17% 23% 24%
Current assets to current liabilities .89 1.08 .89 .81 .86
- --------------------------------------------------------------------------------------------------------------------
EMPLOYEES 13,000 10,100 10,100 10,400 10,600
- --------------------------------------------------------------------------------------------------------------------
Amounts for 1993 have been affected by the October 1, 1993 acquisition of The Boston Globe (see Note 2).
In September 1992 the Company closed The Gwinnett (Ga.) Daily News and sold the
residual assets. The closing and related sale resulted in a pre-tax loss of
$53.8 million ($37.1 million after taxes or $.47 per share). This transaction
is not reflected in the 1992 income amounts used in the applicable key ratio
calculations presented above.
Net cumulative effect of accounting changes reflects the 1992 adoption of the
change in methods of accounting for income taxes, postretirement benefits other
than pensions and postemployment benefits. The net cumulative effect is not
reflected in the 1992 income amounts used in the applicable key ratio
calculations presented above.
For 1993, return on average stockholders' equity and return on average total
assets are less than 1 percent due to several factors which lowered net income
for the year. See Management's Discussion and Analysis on page F-4.
F-1
SEGMENT INFORMATION
- ------------------------------------------------------------------------------
The Company has classified its business into the following segments and equity
interests:
NEWSPAPERS: The New York Times, The Boston Globe, 28 regional newspapers, a
wholesale newspaper distribution business in the New York City metropolitan
area and a one-half interest in the International Herald Tribune S.A.
MAGAZINES: Numerous publications and related activities in the women's
publishing and sports/leisure fields.
BROADCASTING/INFORMATION SERVICES: Five network-affiliated television stations,
two radio stations, a news service, a features syndicate, TimesFax and licensing
operations of The New York Times databases and microfilm.
FOREST PRODUCTS: Equity interests in two newsprint companies and a partnership
in a supercalendered paper mill that together supply the major portion of the
Newspaper Group's annual paper requirements.
- -------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1993 1992 1991
- -------------------------------------------------------------------------------
REVENUES
Newspapers $1,537,934 $1,306,952 $1,274,435
Magazines 394,463 386,120 352,686
Broadcasting/Information services 87,257 80,463 75,980
- -------------------------------------------------------------------------------
Total $2,019,654 $1,773,535 $1,703,101
- -------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 114,332 $ 81,173 $ 93,578
Magazines 12,330 9,929 (492)
Broadcasting/Information services 19,403 14,766 13,957
Unallocated corporate expenses (19,484) (17,460) (13,404)
- -------------------------------------------------------------------------------
Total 126,581 88,408 93,639
Interest expense, net of interest income 25,375 26,115 30,586
Loss on disposition of Gwinnett Daily News - 53,768 -
- -------------------------------------------------------------------------------
Income before income taxes and equity
in operations of forest products group 101,206 8,525 63,053
Income taxes 43,231 11,079 21,760
- -------------------------------------------------------------------------------
Income (Loss) before equity in
operations of forest products group 57,975 (2,554) 41,293
Equity in operations of forest products
group (51,852) (8,718) 5,700
- -------------------------------------------------------------------------------
INCOME (LOSS) BEFORE NET CUMULATIVE
EFFECT OF ACCOUNTING CHANGES $ 6,123 $ (11,272) $ 46,993
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-2
SEGMENT INFORMATION
- -------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1993 1992 1991
- -------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Newspapers $ 98,957 $ 74,495 $ 77,090
Magazines 18,616 20,628 26,683
Broadcasting/Information services 10,731 12,424 12,621
Corporate 528 385 446
- -------------------------------------------------------------------------------
Total $ 128,832 $ 107,932 $ 116,840
- -------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Newspapers $ 71,746 $ 42,675 $ 21,867
Magazines 3,059 1,888 1,467
Broadcasting/Information services 3,323 1,863 2,697
Corporate 1,491 903 169
- -------------------------------------------------------------------------------
Total $ 79,619 $ 47,329 $ 26,200
- -------------------------------------------------------------------------------
IDENTIFIABLE ASSETS AT DECEMBER 31
Newspapers $2,676,779 $1,321,667 $1,444,462
Magazines 247,723 255,777 272,323
Broadcasting/Information services 113,675 117,679 122,436
Corporate 101,007 160,459 125,760
Investment in forest products group 76,020 139,392 163,000
- -------------------------------------------------------------------------------
Total $3,215,204 $1,994,974 $2,127,981
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
Newspaper Group amounts for 1993 have been affected by the October 1, 1993
acquisition of The Boston Globe (see Note 2).
Newspaper Group operating profit for 1993, 1992 and 1991 includes charges of
$35.4 million, $28.0 million and $20.0 million, respectively, for costs related
to staff reductions at The New York Times newspaper.
Equity in operations of Forest Products Group and investment in Forest Products
Group for 1993 reflect an after-tax noncash charge of $47.0 million to write
down the Company's investment in this Group to reflect current operating
conditions and economic factors in the industry.
Newspaper Group operating results for 1992 were negatively affected by $21.4
million for labor disruptions and training and start-up costs related to the new
production and distribution facility located in Edison, New Jersey ("Edison")
for The New York Times newspaper.
F-3
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -------------------------------------------------------------------------------
Per share amounts in the following Management's Discussion and Analysis are
computed on an after-tax basis.
Results of Operations: 1993 Compared with 1992
In 1993, the Company reported net income of $6.1 million, or $.07 per share
compared with a net loss of $44.7 million, or $.57 per share, in 1992.
Earnings for 1993 were affected by the following factors:
- $47.0 million after-tax charge ($.56 per share) against equity in
operations of the Forest Products Group to write down the
Company's investment in the Group to reflect current operating
conditions and economic factors in the industry.
- $30.0 million pre-tax charge ($.20 per share) to cover severance
and related costs resulting from anticipated white-collar staff
reductions at The New York Times newspaper ("The Times").
- $5.4 million pre-tax charge ($.03 per share) to cover severance
and related costs resulting from voluntary early retirements from
the composing room of The Times.
- $2.6 million pre-tax gain ($.02 per share) on the sale of assets.
- $5.6 million tax expense ($.07 per share) due to the enactment of
the Omnibus Budget Reconciliation Act of 1993 ("Tax Act") which
increased the Federal corporate income tax rate from 34 percent
to 35 percent retroactively to January 1, 1993, affected the
deductibility of certain costs and caused the Company to
remeasure its year-end 1992 deferred tax balances to reflect the
higher tax rate.
- $3.7 million pre-tax ($.02 per share) in unfavorable advertising
and circulation rate adjustments due to a snowstorm in March that
disrupted delivery of The Times.
Earnings for 1992 were affected by the following factors:
- $33.4 million after-tax charge ($.43 per share) for the adoption
as of January 1, 1992, of three mandated non-cash accounting
changes related to income taxes, postretirement benefits and
postemployment benefits.
- $3.1 million pre-tax gain ($.02 per share) on the sales of
assets.
- $28.0 million pre-tax charge ($.20 per share) to cover severance
and related costs for production unions at The Times.
- $53.8 million pre-tax loss ($.47 per share) due to the closing of
The Gwinnett (Ga.) Daily News, the sale of its residual assets
and its 1992 operations.
- $10.4 million pre-tax ($.07 per share) for training and start-up
costs related to The Times's new production and distribution
facility located in Edison, N.J. ("Edison").
- $11.0 million pre-tax ($.08 per share) due to labor disruptions
arising from a dispute between independent distributors of The
Times and its Drivers' Union.
Exclusive of the factors described above for the 1993 and 1992 periods,
earnings would have been $.93 per share in 1993 compared with $.66 per share in
1992.
Consolidated revenues for 1993 increased to $2.02 billion from $1.77 billion
in 1992, due principally to the October 1, 1993 acquisition of The Boston Globe
("The Globe"), the June 1992 acquisition of two wholesale newspaper distribution
businesses and higher advertising and circulation revenues. Costs and expenses
after excluding special items increased to $1.86 billion from $1.64 billion in
1992. The increase was due principally to the October 1993 Globe acquisition,
the June 1992 wholesale distribution business acquisition and higher newsprint,
depreciation, and payroll and benefit costs.
Operating profit after excluding the special factors rose to $163.1 million
from $134.7 million in 1992 due principally to higher advertising and
circulation revenues in the Newspaper Group, which included the operations of
The Globe subsequent to October 1, 1993 and a strong performance by the
Company's television stations which was partially offset by higher newsprint
prices and increased depreciation.
Interest expense, net of interest income, declined to $25.4 million in 1993
from $26.1 million in 1992. Lower levels of borrowings through the first half
of 1993 were partially offset by increased borrowings in connection with the
Company's stock repurchase program (see Note 13) and the utilization of cash
balances in connection with the October 1, 1993 acquisition of The Globe.
The Company's effective income tax rate for 1993 was 42.7 percent compared
with 44.5 percent in 1992, exclusive of the effect of the Gwinnett transaction.
The lower rate is due principally to the recognition of capital loss
carryforwards and state operating loss carryforwards, which were partially
offset by the negative impact of the Tax Act.
A discussion of the operating results of the Company's segments and equity
interests follows:
Exclusive of the special pre-tax items ($36.5 million in 1993 and $47.9
million in 1992), operating profit of the Newspaper Group was $150.8 million
compared with $129.1 million in 1992 on revenues of $1.54 billion and $1.31
billion respectively. Improvements in revenues were due to higher advertising
and circulation rates, principally at The Times, the June 1992 acquisition of
two wholesale newspaper distribution businesses and the October 1, 1993
acquisition of The Globe. The higher operating profit results principally
from the inclusion of the results of The Globe since the October 1, 1993
acquisition date, higher advertising and circulation revenues, cost controls
throughout the Group and cost savings related to Edison, which were partially
offset by advertising weakness at the Company's two California regional
newspapers, increased depreciation and start-up and redesign costs related to
certain sections of The Times.
F-4
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- -------------------------------------------------------------------------------
Advertising linage at The Times increased 1.0 percent over 1992 to 77.8
million lines. Retail advertising rose 4.9 percent over 1992 while national and
classified advertising declined 2.4 percent and 4.1 percent respectively.
Circulation of The Times for the year ended December 31, 1993 was 1,179,000
copies weekdays, approximately equal to the 1992 period. Sunday circulation of
1,781,200 copies reached a record high, up 17,100 copies over the prior year.
At The Globe, full-run advertising volume for the year 1993 increased 4.0
percent over 1992 to 2.5 million inches. Retail and classified advertising
increased 9.9 percent and 2.6 percent, respectively, over 1992, but national
advertising declined 1.6 percent. Circulation of The Globe for the year ended
December 31, 1993 was 504,600 copies weekdays, down 3,300 copies, and 814,500
copies Sundays, up 2,700 copies.
At the 30 regional newspapers that were in the Group for the entire 1993 and
1992 periods (two weekly newspapers were sold at the end of 1993), advertising
volume increased 3.9 percent to 35.2 million inches. The 1993 amount includes a
significantly higher volume of advertising inserts. Circulation for the daily
regional newspapers for the year ended December 31, 1993 was 851,000 copies
weekdays, up 4,500 copies, and 853,700 copies Sundays, up 9,200 copies.
Circulation for the non-dailies was 72,700 copies, down 500 copies.
The Magazine Group's operating profit was $12.3 million in 1993 compared with
$9.9 million in 1992 on revenues of $394.5 million and $386.1 million
respectively. Exclusive of the amortization costs associated with the
acquisitions of McCall's and Golf World (U.S.), the Group's operating profit was
$25.4 million in both years. Results for 1993 were adversely affected by an
August 1993 lawsuit settlement of $1.5 million. In addition, continuing
softness in the consumer packaged goods category in the women's magazines field
continues to affect the Group adversely.
Advertising pages as reported to Publications Information Bureau ("PIB") for
Golf Digest increased 1 percent from 1992 to 1,344 pages; for Tennis increased 4
percent from 1992 to 795 pages; for Family Circle decreased 9 percent from 1992
to 1,570 pages, and for McCall's decreased 5 percent from 1992 to 1,138 pages.
The Broadcasting/Information Services Group operating profit was $19.4 million
compared with $14.8 million in 1992 on revenues of $87.3 million and $80.5
million respectively. Higher local advertising revenues at the Company's
television stations accounted for the improved results.
Exclusive of the $47.0 million noncash charge to write down the Company's
investment in its Forest Products Group, equity in operations (an after-tax
amount) of the Group was a loss of $4.9 million compared with a loss of $8.7
million in 1992. The 1993 results have been adversely affected by $0.6 million
resulting from the impact of the Tax Act. Lower newsprint discounts and a
favorable Canadian exchange rate accounted for the improved results. Higher
newsprint discounts which were effective October 1, 1993 negatively affected the
Group during the fourth quarter and into 1994.
The Forest Products Group write-down resulted principally from the softening
of paper prices due to continuing oversupply, as well as high costs and
projected environmental expenditures at one mill.
All of the Company's paper mills were affected by pricing difficulties in
1993. Newsprint prices showed some strengthening during the second and third
quarters but they resumed their decline in October and were at their lowest
point at year-end. This trend continued into the first quarter of 1994 as
prices fell further in January. A modest March 1, 1994, newsprint price
increase has been announced throughout the industry. However, other recently
announced increases have not become effective because of oversupply, and it is
uncertain whether this increase will be realized. In addition to pricing
difficulties, one of the Company's two newsprint mills has been unable to fully
overcome high cost disadvantages. This mill also requires a capital expenditure
(estimated to be $25.0 million) to comply with environmental regulations which
become effective in 1995. This expenditure, if it is made, will not lower the
mill's costs.
In measuring the write-down, the Company projected the future cash flows of
the mills, including the required capital expenditure, and determined that the
value of those cash flows was less than the carrying value of its investment in
the Forest Products Group. Due in part to this write-down, the Company
currently expects to report an improvement in 1994 equity operations since it
will not be recording operating losses for one of its mills.
- -------------------------------------------------------------------------------
Results of Operations: 1992 Compared with 1991
In 1992, the Company reported a net loss of $44.7 million, or $.57 per share,
compared with net income of $47.0 million, or $.61 per share, in 1991. The 1992
year was adversely affected by $33.4 million, or $.43 per share, resulting from
the net cumulative effect of adopting three mandated noncash accounting changes
related to postretirement and postemployment benefits (see Note 11) and income
taxes (see Note 7) as of January 1, 1992.
Exclusive of the net cumulative effect of the accounting changes, the net loss
for 1992 was $11.3 million or $.14 per share. Earnings for 1992 and 1991 have
also been affected by the following factors:
- $3.1 million pre-tax gains ($.02 per share) in 1992 on the sale
of assets.
- $28.0 million pre-tax charge ($.20 per share) in 1992 to cover
severance and related costs resulting from labor agreements for
various production unions at The Times.
- $53.8 million pre-tax loss ($.47 per share) in 1992 due to the
closing of The Gwinnett (Ga.) Daily News, the sale of its
residual assets and its 1992 operations.
F-5
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- ------------------------------------------------------------------------------
- $10.4 million pre-tax ($.07 per share) in 1992 for training and
start-up costs related to commencement of operations at Edison.
- $11.0 million pre-tax ($.08 per share) in 1992 due to labor
disruptions arising from a dispute between inde-pendent
distributors of The Times and its Drivers' Union.
- $7.8 million pre-tax ($.05 per share) in 1992 for the annual
charge related to postretirement benefits.
- $20.0 million pre-tax charge ($.15 per share) in 1991 to cover
severance and related costs resulting from a voluntary early
retirement program for 160 employees, mainly Newspaper Guild at
The Times.
- $10.0 million ($.13 per share) in 1991 for the reversal of a
provision for income taxes which related to a settlement with the
Internal Revenue Service for tax years 1980 through 1984.
Exclusive of these factors, 1992 earnings would have been $.71 per share
compared with $.63 per share for 1991.
Excluding the factors mentioned above, the principal reason for the increase
in net income is higher advertising and circulation revenues in the Newspaper
and Magazine Groups and lower newsprint costs due to increased price discounting
offset, in part, by the adverse effect such discounting had on equity in
earnings of the Forest Products Group.
Consolidated revenues increased to $1.77 billion from $1.70 billion in 1991.
The increase was due principally to higher advertising rates, higher
circulation revenues in the Newspaper and Magazine Groups and the June 1992
acquisition of two wholesale newspaper distribution businesses, which distribute
The Times and other publications in New York City and parts of New Jersey.
Excluding the special factors, costs and expenses increased to $1.63 billion
in 1992 from $1.59 billion in 1991 due principally to higher payroll and benefit
costs and operating expenses of two wholesale distribution businesses acquired
in June 1992 offset, in part, by lower newsprint prices.
Interest expense, net of interest income, declined to $26.1 million compared
with $30.6 million in 1991 due to lower levels of borrowings.
The nondeductibility of a portion of the loss on the closedown and sale of The
Gwinnett (Ga.) Daily News significantly increased the Company's tax rate.
Exclusive of the Gwinnett transaction and the 1991 favorable IRS settlement, the
effective income tax rate in 1992 declined to 44.5 percent compared with 50.4
percent in 1991. The lower rate is due principally to a decrease in the
relationship of amortization expense for intangible assets to 1992's pre-tax
income, which was significantly higher than that of 1991.
A discussion of the operating results of the Company's segments and equity
interests follows:
Exclusive of the special pre-tax items ($47.9 million in 1992 and $20.0
million in 1991), operating profit of the Newspaper Group increased to $129.1
million in 1992 from $113.6 million in 1991 on revenues of $1.31 billion and
$1.27 billion respectively.
Improvements in revenues and operating profit were due to higher advertising
and circulation rates and increased circulation. Lower newsprint costs also
favorably affected the Group. The June 1992 acquisition of wholesale newspaper
distribution businesses also increased the Group's revenues.
Advertising linage at The Times declined 2.0 percent to 77.0 million lines
compared with 1991. Retail advertising was flat compared with 1991 and national
advertising rose 0.9 percent. However, classified advertising declined 10.5
percent from last year. Circulation of The Times for the year ended December
31, 1992, reached record highs. Circulation was 1,181,500 copies weekdays and
1,763,800 copies Sundays, up 21,600 copies and 29,800 copies, respectively, over
the prior year.
Depreciation of the building portion of Edison amounted to $14.0 million per
year beginning in 1990. Depreciation of the facility's equipment has begun and
will increase as each element is placed in service. Production commenced in
September 1992 and depreciation of related equipment began in the fourth
quarter.
Full operation of the facility began during the first quarter of 1993. The
Company estimates that depreciation of the building and equipment will total
$33.0 million in 1993 increasing to $35.0 million in 1994 when the facility is
operational for a full year.
At the 30 regional newspapers that were in the Group for the entire 1992 and
1991 periods, advertising volume increased 2.5 percent to 33.8 million inches.
The 1992 amount includes a significantly higher volume of advertising inserts.
Circulation for the daily regional newspapers for the year ended December 31,
1992, was 844,500 copies Sundays, up 13,800 copies, and 846,500 copies weekdays,
up 10,400 copies. Circulation for the non-dailies was 73,200 copies, up 3,100
copies.
The Magazine Group's operating profit was $9.9 million in 1992 compared with a
loss of $0.5 million in 1991 on revenues of $386.1 million and $352.7 million
respectively. Exclusive of the amortization costs associated with the
acquisitions of McCall's and Golf World (U.S.), which were structured to
maximize cash flow, the Group's operating profit was $25.4 million in 1992
compared with $21.2 million in 1991. The better 1992 results were primarily due
to increased advertising pages at most of the Group's magazines and lower
magazine paper prices. Most of the Group's magazines increased their market
share compared with 1991.
Advertising pages as reported to PIB for Golf Digest increased 10 percent from
1991 to 1,332 pages; for Tennis increased 4 percent from 1991 to 768 pages; for
Family Circle increased 12 percent from 1991 to 1,723 pages, and for McCall's
increased 11 percent from 1991 to 1,201 pages.
Broadcasting/Information Services Group operating profit was $14.8 million in
1992 compared with $14.0 million in 1991 on revenues of $80.5 million and $76.0
million respectively. The higher operating profit was due to higher local
advertising revenues at the Company's television stations offset, in part, by
costs related to a format change for the AM radio station WQEW, formerly WQXR-
AM.
Equity in operations of the Forest Products Group (an after-tax amount) was a
loss of $8.7 million compared with income of $5.7 million in 1991. Higher paper
discounts due to oversupply continue to have a negative impact.
F-6
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONCLUDED)
- -------------------------------------------------------------------------------
Liquidity and Capital Resources
Net cash provided by operating activities of $175.3 million was used primarily
to modernize facilities and equipment, to pay dividends to stockholders, to
repurchase shares of the Company's Class A Common Stock and, in part, to
purchase The Globe. The ratio of current assets to current liabilities was 0.89
at December 31, 1993 compared with 1.08 at December 31, 1992, and long-term debt
and capital lease obligations as a percentage of total capitalization was 22
percent at December 31, 1993 compared with 17 percent at December 31,1992. The
increase was due principally to the impact of the Company's stock repurchase
program discussed below, which was partially offset by the acquisition of The
Globe on October 1, 1993.
In October 1993, the Company announced authorized expenditures of up to $150.0
million for repurchases of its Class A Common Stock. 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. To date the Company has
repurchased approximately 30,000 shares of its Class A Common Stock at an
average price of $24.78 per share under this program.
Under a previously announced program that expired at the close of The Globe
transaction, the Company expended approximately $254.0 million. Under this
program, the Company repurchased approximately 10,231,000 shares of its Class A
Common Stock at an average price of $24.87 per share.
In December 1993 the Company and the City of New York executed a lease
agreement and related agreements, under which the Company will lease 31 acres of
City-owned land in Queens, New York, on which The Times plans to build a state-
of-the-art printing and distribution facility. The Company estimates that the
cost of the new facility will be approximately $280.0 million with construction
to begin in the summer of 1994 and completion expected in 1997. Construction of
the facility is subject to approval of the Company's Board of Directors.
The Company currently estimates that, exclusive of the Queens facility,
capital expenditures for 1994 will range from $90.0 million to $110.0 million.
In connection with the 1991 divestiture of a jointly-owned affiliate, Spruce
Falls Power and Paper Company Limited, the Company committed to lend up to $26.5
million (C$30.0 million) to the new owners of the mill. Such loans will take
place over a five-year period ending December 1996. To date the Company has
loaned approximately U.S. $20.5 million under the commitment.
In October 1993 the Company issued notes totaling $200.0 million to an
insurance company with interest payable semi-annually. $100.0 million of five-
year notes were issued at a rate of 5.50 percent, and the remaining $100.0
million were issued as six and one-half year notes at a rate of 5.77 percent.
In connection with the previously announced charges totaling $35.4 million for
white-collar and production union staff reductions (see Note 4), the Company
currently anticipates that the staff reductions and related expenditures will
occur during 1994 and that the cost of this program will be recovered through
reduced costs over a two-year period. The charges cover approximately 300
employees with an average annual wage and benefit cost of $110,000 per employee.
The Company does not anticipate that its ongoing business operations will be
affected by this reduction of staff and expects to fund this charge through
internally generated funds.
In January 1994 a definitive agreement was reached regarding the sale of a
partnership (BPI Communications, L.P.) in which the Company has a one-third
interest. In February 1994, the Company received approximately $53.0 million,
which will primarily be utilized to repay notes payable, which totaled $62.3
million at December 31, 1993.
In addition to cash provided from operating activities, the Company has
several established sources for future liquidity purposes, including several
revolving credit and term loan agreements. At December 31, 1993, $150.0 million
was available for borrowing by the Company under these agreements. The Company
anticipates that during 1994 cash for operating, investing and financing
activities will continue to come from a combination of internally generated
funds and external financing.
F-7
CONSOLIDATED STATEMENTS OF OPERATIONS
- -------------------------------------------------------------------------------
Dollars and shares in thousands except Year Ended December 31
per share data 1993 1992 1991
- -------------------------------------------------------------------------------
REVENUES
Advertising $1,399,042 $1,254,764 $1,254,365
Circulation 473,971 419,454 390,600
Other 146,641 99,317 58,136
- -------------------------------------------------------------------------------
Total 2,019,654 1,773,535 1,703,101
- -------------------------------------------------------------------------------
COSTS AND EXPENSES
Production costs:
Raw materials 280,531 250,575 288,618
Wages and benefits 437,528 388,403 361,660
Other 418,554 365,651 341,105
- -------------------------------------------------------------------------------
Total 1,136,613 1,004,629 991,383
Selling, general and administrative
expenses 756,460 680,498 618,079
- -------------------------------------------------------------------------------
Total 1,893,073 1,685,127 1,609,462
- -------------------------------------------------------------------------------
OPERATING PROFIT 126,581 88,408 93,639
Interest expense, net of interest income 25,375 26,115 30,586
Loss on disposition of Gwinnett Daily News - 53,768 -
- -------------------------------------------------------------------------------
Income before income taxes and equity
in operations of forest products group 101,206 8,525 63,053
Income taxes 43,231 11,079 21,760
- -------------------------------------------------------------------------------
Income (Loss) before equity in operations
of forest products group 57,975 (2,554) 41,293
Equity in operations of forest products
group (51,852) (8,718) 5,700
- -------------------------------------------------------------------------------
Income (Loss) before net cumulative
effect of accounting changes 6,123 (11,272) 46,993
Net cumulative effect of accounting
changes - (33,437) -
- -------------------------------------------------------------------------------
NET INCOME (LOSS) $ 6,123 $ (44,709) $ 46,993
- -------------------------------------------------------------------------------
Average number of common shares
outstanding 84,459 78,534 77,299
Per share of common stock
Before net cumulative effect of
accounting changes $ .07 $ (.14) $ .61
Net cumulative effect of accounting
changes - (.43) -
Net income (loss) .07 (.57) .61
Dividends .56 .56 .56
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-8
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------
December 31
1993 1992
- -------------------------------------------------------------------------------
ASSETS Dollars in thousands
- -------------------------------------------------------------------------------
CURRENT ASSETS
Cash and short-term investments (at cost which
approximates market:
1993, $27,744,000; 1992, $91,685,000) $ 42,058 $ 118,503
Accounts receivable (net of allowances: 1993,
$43,507,000; 1992, $33,300,000) 264,218 192,233
Inventories 47,271 51,551
Deferred subscription costs 32,597 32,830
Other current assets 107,009 37,661
- -------------------------------------------------------------------------------
Total current assets 493,153 432,778
- -------------------------------------------------------------------------------
INVESTMENT IN FOREST PRODUCTS GROUP 76,020 139,392
- -------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT (at cost)
Land 65,839 61,961
Buildings, building equipment and improvements 650,186 597,597
Equipment 874,479 751,186
Construction and equipment installations in progress 93,007 47,842
- -------------------------------------------------------------------------------
Total 1,683,511 1,458,586
Less accumulated depreciation 571,487 555,831
- -------------------------------------------------------------------------------
Total property, plant and equipment - net 1,112,024 902,755
- -------------------------------------------------------------------------------
INTANGIBLE ASSETS ACQUIRED
Costs in excess of net assets acquired 1,383,582 554,014
Other intangible assets acquired 227,377 63,200
- -------------------------------------------------------------------------------
Total 1,610,959 617,214
Less accumulated amortization 190,006 160,991
- -------------------------------------------------------------------------------
Total intangible assets acquired - net 1,420,953 456,223
- -------------------------------------------------------------------------------
MISCELLANEOUS ASSETS 113,054 63,826
- -------------------------------------------------------------------------------
Total $3,215,204 $1,994,974
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-9
- -------------------------------------------------------------------------------
December 31
1993 1992
- -------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY Dollars in thousands
- -------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 115,402 $ 139,115
Notes payable 62,340 -
Payrolls 71,256 47,820
Accrued expenses 171,515 90,063
Unexpired subscriptions 130,627 119,508
Short-term debt 2,590 2,643
- -------------------------------------------------------------------------------
Total current liabilities 553,730 399,149
- -------------------------------------------------------------------------------
OTHER LIABILITIES
Long-term debt 413,581 158,131
Capital lease obligations 46,482 48,780
Deferred income taxes 196,875 187,701
Other 403,869 199,799
- -------------------------------------------------------------------------------
Total other liabilities 1,060,807 594,411
- -------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
5 1/2% Cumulative prior preference stock of $100 par
value - authorized 110,000 shares; outstanding:
1993 and 1992, 17,837 shares 1,784 1,784
Serial preferred stock of $1 par value - authorized
200,000 shares - none issued - -
Common stock of $.10 par value
Class A - authorized 200,000,000 shares; issued:
1993, 107,678,024 shares; 1992, 88,047,623 shares
(including treasury shares: 1993, 1,251,573; 1992,
8,773,419) 10,768 8,805
Class B, convertible - authorized 600,000 shares;
issued: 1993, 571,624 shares; 1992, 571,804
(including treasury shares: 1993 and 1992,
139,943) 57 57
Additional capital 599,758 164,928
Earnings reinvested in the business 1,022,958 1,065,347
Common stock held in treasury, at cost (34,658) (239,507)
- -------------------------------------------------------------------------------
Total stockholders' equity 1,600,667 1,001,414
- -------------------------------------------------------------------------------
Total $3,215,204 $1,994,974
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-10
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------
CASH PROVIDED (USED):
OPERATING ACTIVITIES
Income (loss) before net cumulative effect of accounting changes $ 6,123 $ (11,272) $ 46,993
Adjustments to reconcile income (loss) before net cumulative effect of
accounting changes to net cash provided by operating activities
Depreciation 89,274 69,880 72,441
Amortization 39,558 38,052 44,399
Equity in operations of forest products group - net 52,311 943 (6,406)
Cash distributions and dividends from forest products group - 6,775 775
Loss on closing and disposition of Gwinnett Daily News - 53,768 -
Deferred income taxes (37,901) (18,216) 8,729
(Increase) Decrease in receivables - net (21,636) 430 (2,375)
Decrease (Increase) in inventories 10,799 (10,707) 5,471
Decrease (Increase) in deferred subscription costs and other current assets 4,749 1,078 (13,963)
(Decrease) Increase in accounts payable (41,429) 15,216 9,120
Increase (Decrease) in payrolls and accrued expenses 46,758 (12,474) 9,377
Increase in unexpired subscriptions 11,196 4,342 6,666
Other - net 15,491 290 4,944
- --------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 175,293 138,105 186,171
- --------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Businesses acquired, net of cash acquired (134,384) (23,091) -
Proceeds on sale of residual assets of Gwinnett Daily News - 68,000 -
Additions to property, plant and equipment (75,738) (47,068) (39,708)
Purchases of marketable securities (65,077) - -
Proceeds from sales of marketable securities 65,077 - -
Decrease in investment in forest products group - - 46,234
Loans to former affiliate (15,000) - (5,000)
Other investing proceeds 944 4,985 1,495
Other investing payments (1,986) (8,629) (16,354)
- --------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (226,164) (5,803) (13,333)
- --------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Short-term borrowing - net 62,340 - (11,971)
Long-term obligations and notes payable
Increase 200,000 - 76,963
Reduction (5,510) (63,847) (167,477)
Capital shares
Issuance 19,894 19,785 15,121
Repurchase (255,222) - (9)
Dividends paid to stockholders (47,076) (54,935) (32,580)
- --------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (25,574) (98,997) (119,953)
- --------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in Cash and short-term investments (76,445) 33,305 52,885
Cash and short-term investments at the beginning of the year 118,503 85,198 32,313
- --------------------------------------------------------------------------------------------------------------------
Cash and short-term investments at the end of the year $ 42,058 $ 118,503 $ 85,198
- --------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements and supplemental disclosures to consolidated statements of cash flows.
F-11
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1993 1992 1991
- -------------------------------------------------------------------------------
NONCASH INVESTING AND FINANCING
TRANSACTIONS
Capital lease assets and obligations
incurred $ 338 $ 668 $ 311
========== ========== ==========
Businesses acquired
Fair value of assets acquired $1,237,029 $ 34,462
Liabilities assumed (209,000) (11,371)
Liabilities incurred, net of
payments (18,744) -
Common stock issued (874,901) -
--------- ----------
Net cash paid $ 134,384 $ 23,091
========= ==========
Valuation reserve (investment in
forest products group) $ (26,927)
==========
CASH FLOW INFORMATION
Cash payments during the year for
Interest (net of amount capitalized) $ 26,861 $ 28,486 $ 31,367
========= ======== =========
Income taxes $ 55,327 $ 36,776 $ 25,620
========= ======== =========
- -------------------------------------------------------------------------------
F-12
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------
Dollars in thousands
except per share data Capital Stock Common
5 1/2% Class A Class B Earnings Stock
Preference Common Common Reinvested Held in
Additional in the Treasury
Capital Business at cost
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, JANUARY 1, 1991 $1,798 $ 8,755 $58 $178,826 $1,157,045 $(288,899)
- ------------------------------------------------------------------------------------------------------------------------
Net income 46,993
- ------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (98)
Dividends, common - $.56 per share (43,306)
- ------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 26,544 Class A
shares from treasury 348 370
Employee stock purchase plan - 1,041,858
Class A shares 1 (2,062) 16,978
Stock options - 95,125 Class A shares 13 963 (891)
Stock conversions - 8,572 shares 1 (1)
- ------------------------------------------------------------------------------------------------------------------------
Purchase of company stock -
143 preference shares (14) 5
- ------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (1,657)
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1991 1,784 8,770 57 178,080 1,158,977 (272,442)
- ------------------------------------------------------------------------------------------------------------------------
Net loss (44,709)
- ------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (98)
Dividends, common - $.56 per share (43,987)
- ------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 19,576 Class A
shares from treasury (491) 524
Employee stock purchase plan - 1,069,743
Class A shares 1 (16,432) 34,311
Stock options - 252,435 Class A shares 34 3,771 (1,900)
Stock conversions - 600 shares - -
- ------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (4,836)
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1992 1,784 8,805 57 164,928 1,065,347 (239,507)
- ------------------------------------------------------------------------------------------------------------------------
Net income 6,123
- ------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (98)
Dividends, common - $.56 per share (47,003)
- ------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
The Globe acquisition - 36,397,313
Class A shares 1,940 432,624 440,337
Retirement units, etc. 10,877 Class A
shares from treasury 123 339
Employee stock purchase plan - 819,166
Class A shares (2,612) 20,329
Stock options - 185,611 Class A shares 23 4,695 (934)
Stock conversions - 180 shares - -
- ------------------------------------------------------------------------------------------------------------------------
Purchase of company stock - 10,260,900
Class A shares (255,222)
- ------------------------------------------------------------------------------------------------------------------------
Foreign currency translation (1,411)
- ------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1993 $1,784 $10,768 $57 $599,758 $1,022,958 $ (34,658)
- ------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation. The consolidated financial statements include the
accounts of The New York Times Company and all subsidiaries (the "Company")
after elimination of intercompany items.
Inventories. Inventories are stated at the lower of cost or current market
value. Inventory cost generally is based on the last-in, first-out ("LIFO")
method for newsprint and magazine paper and the first-in, first-out ("FIFO")
method for other inventories.
Investments. Investments in which the Company has at least a 20 percent but not
more than 50 percent interest are accounted for under the equity method.
Property, Plant and Equipment. Property, plant and equipment is stated at cost,
and depreciation is computed by the straight-line method over estimated service
lives. The Company capitalizes interest costs as part of the cost of
constructing major facilities and equipment.
Intangible Assets Acquired. Costs in excess of net assets acquired consist of
excess costs of businesses acquired over values assigned to their net tangible
assets and other intangible assets. The excess costs which arose from
acquisitions after October 31, 1970 are being amortized by the straight-line
method principally over 40 years. The remaining portion of such excess, which
arose from acquisitions before November 1, 1970 (approximately $13,000,000), is
not being amortized since in the opinion of management there has been no
diminution in value. Other intangible assets acquired consist principally of
advertiser and subscriber relationships which are being amortized over the
remaining lives, ranging from 5 to 40 years.
Subscription Revenues and Costs. Proceeds from subscriptions and related costs,
principally agency commissions, are deferred at the time of sale and are
included in the Consolidated Statements of Operations on a pro rata basis over
the terms of the subscriptions.
Foreign Currency Translation. The assets and liabilities of foreign companies
are translated at the year-end exchange rates. Results of operations are
translated at the average rates of exchange in effect during the year. The
resultant translation adjustment is included as a component of stockholders'
equity.
Earnings Per Share. Earnings per share is computed after preference dividends
and is based on the weighted average number of shares of Class A and Class B
Common Stock outstanding during each year. The effect of shares issuable under
the Company's Incentive Plans (see Note 12), including stock options, is not
material and therefore excluded from the computation.
Cash and Short-Term Investments. For purposes of the Consolidated Statements of
Cash Flows, the Company considers all highly liquid debt instruments purchased
with maturities of three months or less to be cash equivalents. The Company has
overdraft positions at certain banks caused by outstanding checks. These
overdrafts have been reclassified to accounts payable.
- -------------------------------------------------------------------------------
2. ACQUISITIONS/DIVESTITURES
On October 1, 1993, pursuant to an Agreement and Plan of Merger dated June 11,
1993, as amended as of August 12, 1993 (the "Merger Agreement"), a wholly-owned
subsidiary of the Company was merged with Affiliated Publications, Inc., the
parent company of The Boston Globe ("The Globe"), which became a wholly-owned
subsidiary of the Company.
The transaction was accounted for as a purchase and, accordingly, the results
of The Globe's operations have been included in the Company's consolidated
financial statements beginning October 1, 1993, the date the transaction closed.
The acquisition had a net cost of approximately $1,028,000,000. Under the
Merger Agreement the Company exchanged cash of approximately $160,000,000 for 15
percent of The Globe's common stock with the remainder of the consideration paid
by the exchange of approximately 36,400,000 shares of the Company's Class A
Common Stock valued at $24.03 per share. The purchase resulted in increases in
costs in excess of net assets acquired of approximately $830,000,000 (which will
be amortized by the straight-line method over 40 years); other intangible assets
acquired of $161,000,000 (which consist principally of advertiser and subscriber
relationships which are being amortized by the straight-line method over an
average period of 33 years); and property, plant and equipment of $246,000,000.
Net liabilities assumed as a result of the transaction totaled approximately
$209,000,000.
The following pro forma supplemental financial information is presented as if
the enterprises had combined at the beginning of the respective periods. It is
not necessarily indicative of the combined results that would have occurred had
the merger taken place as of the beginning of the periods provided, nor
necessarily indicative of results that may be achieved in the future:
(Dollars in thousands Year Ended December 31,
except per share data) 1993 1992
- ----------------------------------------------------------------------------
Revenues $ 2,335,985 $2,187,490
Income (loss)
before net cumulative
effect of accounting changes 1,380 (14,237)
Net income (loss) 1,380 (61,783)
Income (loss)
per share before net
cumulative effect of
accounting changes .01 (.13)
Net income (loss) per share .01 (.54)
F-14
Pro forma depreciation and amortization expense for the year ended December 31,
1993 and 1992 was approximately $166,816,000 and $158,363,000 respectively.
On December 31, 1993 the Company sold two weekly newspapers and recognized a
pre-tax gain of $2,600,000, or $.02 per share, on the transaction.
In January 1994, a definitive agreement was announced regarding the sale of
BPI Communications, L.P. ("BPI"), a partnership in which the Company acquired a
one-third interest through its October 1993 merger with The Globe. The Company
received approximately $53,000,000 when the transaction was completed in
February 1994 with additional payments of approximately $2,000,000 expected
later in the year. For financial reporting purposes, no gain or loss will be
recognized on the transaction. The Company's investment in BPI of $55,000,000
has been included in other current assets on the accompanying Consolidated
Balance Sheet at December 31, 1993.
In September 1992 the Company closed The Gwinnett (Ga.) Daily News and sold
the residual assets. The closing, related sale and its 1992 operations resulted
in a pre-tax loss of approximately $53,768,000 ($37,113,000 after taxes or $.47
per share). The newspaper had not earned a profit since its acquisition in
1987, but its annual operating losses were not material.
In June 1992 the Company acquired two wholesale newspaper distribution
businesses that distribute The Times and other newspapers and periodicals in
New York City and central and northern New Jersey. The acquisition was
accounted for as a purchase; accordingly, the operating results have been
included in the consolidated financial statements from the date of the
acquisition. The cost of the acquisition was approximately $34,500,000, of
which $23,091,000 was paid in cash with the remainder representing net
liabilities assumed. The purchase resulted in an increase in intangible
assets acquired of $34,462,000.
In April 1991 the Company increased its interest in the International Herald
Tribune S.A. to 50 percent.
- -------------------------------------------------------------------------------
3. CAPITAL INVESTMENT PROJECTS
Depreciation of the building portion of the Company's Edison facility, amounting
to approximately $14,000,000 per year, began in 1990 when the facility was
substantially completed. Due to the resolution of various labor issues,
commencement of production at the facility was delayed until late in 1992.
Depreciation of the equipment began during the fourth quarter and was phased in
as each element was placed in service with full operation of the facility
beginning in the first quarter of 1993. Depreciation of the building and
equipment totaled $33,000,000 in 1993 and will increase to $35,000,000 in 1994
when the facility is operational for a full year.
In February 1993 the Company announced that The Times closed its printing
plant in Carlstadt, New Jersey, and transferred production and distribution to
the new Edison facility. The carrying value of the facility (approximately
$24,000,000) has been included in miscellaneous assets at December 31, 1993
pending the Company's determination of the future of the facility. The closing
of the plant and decision related to its future is not expected to result in a
writedown.
In December 1993 the Company and the City of New York executed a lease
agreement and related agreements, under which the Company will lease 31 acres of
City-owned land in Queens, New York, on which The Times plans to build a state-
of-the-art printing and distribution facility. Such agreement will not commence
until certain provisions relating to site preparation have been met and,
accordingly, the transaction has not yet been recorded on the Company's
financial statements. The Company estimates that the cost of the new facility
will be approximately $280,000,000 with construction to begin in the summer of
1994 and completion expected in 1997. The new facility will replace presses and
distribution facilities now located at The Times's facility in Manhattan. The
lease will continue for 25 years after the start of construction with an option
ultimately to purchase the property. Under the terms of the agreement, The
Times would receive various tax and energy cost reductions. Construction of the
facility is subject to approval of the Company's Board of Directors.
- -------------------------------------------------------------------------------
4. VOLUNTARY STAFF REDUCTIONS AND PRODUCTION UNION NEGOTIATIONS
The Company announced two fourth quarter 1993 pre-tax charges totaling
$35,400,000 or $.23 per share for severance and related costs resulting from
anticipated white-collar staff reductions (approximately $30,000,000) and
voluntary early retirements from the composing room (approximately $5,400,000)
at The Times.
In 1993 the Company completed the negotiations of long-term labor agreements
with all of its production unions, which extend to the year 2000. These
agreements include wages, payments to the unions' benefit and pension funds, job
security and financial incentives. The agreements extend to all of The Times's
production and distribution facilities and to any new facilities which the
Company might utilize (see Note 3).
In connection with these agreements, the Company recorded two pre-tax charges,
$28,000,000, or $.20 per share, in 1992 and $30,000,000, or $.22 per share, in
1989) for voluntary production union staff reductions at The Times related to
the opening of Edison (see Note 3), the further automation of newspaper
production in the composing room and the announced closing of Carlstadt.
In 1991 the Company recorded a $20,000,000 before-tax charge ($.15 per share)
for severance and related costs resulting from a voluntary termination benefits
program for approximately 160 employees at The Times, most of whom were members
of The Newspaper Guild of New York.
At December 31, 1993 and 1992, approximately $40,000,000 and $29,000,000,
respectively, are included in accrued expenses in the accompanying Consolidated
Balance Sheets, which represents the unpaid balance of the pre-tax charges.
F-15
- -------------------------------------------------------------------------------
5. INVESTMENT IN FOREST PRODUCTS GROUP
The Company has equity interests in two Canadian newsprint companies and a paper
manufacturing company operating as a partnership. The equity interests in the
newsprint companies are: Donohue Malbaie Inc. - 49 percent; and Gaspesia Pulp
and Paper Company Ltd. - 49 percent.
In 1993 the Company recorded an after-tax noncash charge of $47.0 million
($.56 per share) against equity in operations to write down the Company's
investment in the Forest Products Group to reflect current operating conditions
and economic factors in the industry.
In December 1991 the Company and Kimberly-Clark Corporation announced the
completion of the divestiture of their jointly-owned affiliate, Spruce Falls
Power and Paper Company, Limited ("Spruce Falls"). Spruce Falls is a producer
of newsprint in which the Company held a 49.5 percent equity interest.
In connection with the divestiture, the Company committed to lend up to
$26,500,000 (C$30,000,000) to the new owners of the mill. Such loans will take
place over a five-year period ending December 1996. At December 31, 1993 and
1992 the Company had loaned Spruce Falls approximately $20,515,000 and
$5,515,000, respectively, under the loan commitment. Interest on the
outstanding balance is payable quarterly at annual rates ranging from 4 to 10
percent. Commencing in December 1997, the borrowings outstanding at the end of
the commitment (December 1996) are payable annually over a 5 year period in 20
percent increments.
The Company and Myllykoski Oy, a Finnish paper manufacturing company, are
partners through subsidiary companies in Madison Paper Industries ("Madison").
Loans and contributions to Madison by an 80 percent-owned subsidiary of the
Company totaled $1,279,000, $1,337,000 and $1,806,000, respectively, in 1993,
1992 and 1991. The partners' interests in the net assets of Madison at any time
will depend on their capital accounts, as defined, at such time. Through the 80
percent-owned subsidiary, the Company's share of Madison's profits and losses is
40 percent.
At December 31, 1993, the Company recorded a distribution receivable from
Donohue Malbaie Inc. of $8,224,000. Such amount is included in other current
assets in the Company's consolidated balance sheet at such date. No other
distributions were received from the Canadian newsprint companies in 1993, 1992
or 1991. The Company's share of undistributed earnings of these companies
aggregated approximately $3,975,000 and $24,551,000 at December 31, 1993 and
1992, respectively.
Loans and contributions to the Canadian newsprint companies by the Company
totaled $171,000 in 1991. No loans and contributions were made in 1993 or 1992.
- -------------------------------------------------------------------------------
Condensed Combined Balance Sheets
of Forest Products Group
Dollars in thousands
- -------------------------------------------------------------------------------
December 31 1993 1992
- -------------------------------------------------------------------------------
Current assets $ 87,984 $ 76,317
Less current liabilities 75,073 65,026
- -------------------------------------------------------------------------------
Working capital 12,911 11,291
Fixed assets, net, etc. 345,413 372,554
Long-term debt (71,528) (77,025)
Deferred income taxes, etc. (102,752) (86,755)
- -------------------------------------------------------------------------------
Net assets $184,044 $220,065
- -------------------------------------------------------------------------------
At December 31, 1993 long-term debt of the Forest Products Group (exclusive of
$10,275,000 due within one year) matures as follows: 1995, $10,335,000; 1996,
$46,085,000; and 1997, $15,108,000. The maturities of a substantial portion of
the debt may be accelerated if cash flow, as defined, exceed certain levels.
None of the Forest Products Group's debt is guaranteed by the Company.
- -------------------------------------------------------------------------------
Condensed Combined Statements of Operations
of Forest Products Group
Dollars in thousands
- -------------------------------------------------------------------------------
Year Ended December 31 1993 1992 1991
- -------------------------------------------------------------------------------
Net sales and other income $254,324 $266,451 $287,924
Costs and expenses 269,845 297,117 276,062
- -------------------------------------------------------------------------------
Income (Loss) before taxes (15,521) (30,666) 11,862
Income tax benefit (2,700) (11,680) (544)
- -------------------------------------------------------------------------------
Net income (loss) $(12,821) $(18,986) $ 12,406
- -------------------------------------------------------------------------------
The condensed combined financial information of the Forest Products Group
excludes the income tax effects related to Madison. Such tax effects (see Note
7) have been included in the Company's consolidated financial statements.
The accumulated translation adjustment (included in earnings reinvested in the
business) decreased stockholders' equity by $2,628,000 and $1,217,000 at
December 31, 1993 and 1992 respectively. Upon the disposition of Spruce Falls
in 1991, stockholders' equity was reduced by $3,506,000 to reflect the
accumulated translation adjustment for such company.
Adjustments from translating certain balance sheet accounts, principally of
the Canadian newsprint companies, for each of the three years in the period
ended December 31, 1993, are set forth in the Consolidated Statements of
Stockholders' Equity.
During 1993, 1992 and 1991, the Company's Newspaper Group purchased newsprint
and supercalendered paper from the Forest Products Group at competitive prices.
Such purchases aggregated approximately $102,000,000, $112,000,000, and
$127,000,000 respectively.
F-16
- --------------------------------------------------------------------------------
6. INVENTORIES
Inventories as shown in the accompanying Consolidated Balance Sheets are
composed of the following:
- ---------------------------------------
Dollars in thousands
- ---------------------------------------
December 31 1993 1992
- ---------------------------------------
Newsprint and
magazine paper $38,691 $44,570
Work-in-process, etc. 8,580 6,981
- ---------------------------------------
Total $47,271 $51,551
- ---------------------------------------
Utilization of the LIFO method reduced inventories as calculated on the FIFO
method by approximately $2,263,000 and $1,765,000 at December 31, 1993 and 1992
respectively.
- --------------------------------------------------------------------------------
7. INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes ("SFAS 109") as of January 1, 1992 which changed its
method of accounting for income taxes from the deferred method (Accounting
Principles Board Opinion No. 11 - "APB 11") to an asset and liability approach.
The cumulative effect of this change in accounting method on net income was a
credit of $13,414,000 ($.17 per share) and was reflected as of January 1, 1992.
Income taxes for 1991 are measured under APB 11.
SFAS 109 requires recognition of deferred tax liabilities and assets for the
estimated future tax consequences attributable to temporary differences. Such
temporary differences exist when the tax basis differs from the financial
reporting amount of assets or liabilities. All tax liabilities and tax assets
are measured using current tax law and applicable rates. A valuation allowance
is recorded to reduce deferred tax assets to amounts which, in management's
judgment, are most likely to be realized.
SFAS 109 further requires adjustment of tax balances to reflect enacted
changes in tax law or rates in the period of enactment. Accordingly, 1993
results include increased tax expense resulting from the enactment of the Tax
Act in August. The Tax Act increased the statutory corporate income tax rate
one percent (to 35 percent) retroactive to January 1, 1993, and made other
changes concerning the deductibility of certain costs in determining taxable
income.
Income tax expense as shown in the Consolidated Statements of Operations is
composed of the following:
- -----------------------------------------------------
Dollars in thousands 1993 1992 1991
- -----------------------------------------------------
Current tax expense
Federal $60,178 $8,970 $21,666
State, local,
foreign 17,612 1,413 695
- -----------------------------------------------------
77,790 10,383 22,361
- -----------------------------------------------------
Deferred tax expense
Federal (26,982) (1,157) (2,335)
State, local,
foreign (8,919) 1,302 4,941
- -----------------------------------------------------
(35,901) 145 2,606
- -----------------------------------------------------
Income tax expense
including the
tax effects of
equity in
operations 41,889 10,528 24,967
Less income tax
(benefit) expense
related to equity
in operations (1,342) (551) 3,207
- -----------------------------------------------------
Income tax expense $43,231 $11,079 $21,760
- -----------------------------------------------------
Tax expense in 1993 was reduced by approximately $7,000,000 and $2,485,000,
respectively, relating to a decrease in valuation allowance and recognition of
federal tax benefits of capital loss carryforwards. Of the decrease in
valuation allowance, $4,390,000 was associated with federal tax benefits of
capital loss carryforwards; with the remainder attributable to state and local
tax benefits of net operating loss carryforwards. Adjustment of the Company's
deferred tax balances for the one percent rate increase provided in the Tax Act
added $4,359,000 to deferred tax expense, inclusive of $600,000 of expense
reported in equity in operations of the forest products group. In accordance
with the provisions of SFAS 109, approximately $1,600,000 of additional
reduction in valuation allowance, which was established against acquired
deferred tax assets, was recorded as a reduction of goodwill. No such amounts
affected 1992 tax expense.
In connection with the Gwinnett transaction in 1992 (see Note 2), the Company
had a net tax benefit of $16,655,000 on a pre-tax loss of $53,768,000. The
difference of $1,626,000 between the tax benefit and such benefit calculated at
the federal statutory rate is mainly attributable to an unrecognized capital
loss (which increased tax expense by $3,405,000), net of the impact of
previously amortized intangibles (which decreased tax expense by $1,779,000).
In 1991 the Company reversed a provision for income tax contingencies of
$10,000,000 related to a settlement with the Internal Revenue Service for tax
years 1980 through 1984.
The components of deferred income tax expense for 1991, which totaled
$2,606,000, are as follows: depreciation $13,288,000; tax certificate
$(10,409,000); tax settlement $(10,000,000); subscription expenses $7,969,000;
and other net deferred tax expense of $1,758,000.
Income tax benefits credited directly to stockholders' equity totaled
$3,595,000, $3,735,000 and $707,000 during 1993, 1992 and 1991 respectively.
Foreign taxes included in income tax expense in each of the years presented
were not significant.
F - 17
The reasons for the variance between the effective tax rate on income before
income taxes and equity in operations of the Forest Products Group and the
federal statutory rate (exclusive in 1992 of the loss on the disposition of
Gwinnett) are as follows:
Year Ended December 31 1993 1992 1991
- ------------------------------------------------------------------------------
% of % of % of
Dollars in thousands Amount Pretax Amount Pretax Amount Pretax
- ------------------------------------------------------------------------------
Tax at federal
statutory rate $35,422 35.0% $21,180 34.0% $21,438 34.0%
Increase (decrease)
resulting from
State and local taxes
- - net 6,883 6.8 2,294 3.7 3,507 5.6
Capital loss
carryforwards (6,875) (6.8) - - - -
Amortization of
intangible
assets acquired 5,602 5.5 4,033 6.5 6,970 11.1
Change in enacted tax
rate 3,759 3.7 - - - -
Tax settlement - - - - (10,000) (15.9)
Other - net (1,560) (1.5) 227 0.3 (155) (0.3)
- ------------------------------------------------------------------------------
Subtotal 43,231 42.7% 27,734 44.5% 21,760 34.5%
- ------------------------------------------------------------------------------
Gwinnett disposition - (16,655) -
- ------------------------------------------------------------------------------
Income tax expense $43,231 $11,079 $21,760
- ------------------------------------------------------------------------------
Federal income taxes currently refundable totaled $2,992,000 and $4,842,000 at
December 31, 1993 and 1992, respectively, and are included in other current
assets on the Consolidated Balance Sheets. The components of the net deferred
tax liabilities recognized on the respective Consolidated Balance Sheets, are
as follows:
- -----------------------------------------
Dollars in thousands
December 31 1993 1992
- -----------------------------------------
Deferred Tax Assets
Intangible assets
acquired $23,568 $ 23,504
Accrued state and
local taxes 19,890 18,522
Postretirement and
postemployment 78,655 40,177
benefits
Other accrued
employee benefits 110,218 25,370
and compensation
Allowance for
doubtful 23,557 24,077
accounts
AMT credit - 4,033
carryforward
Tax loss 23,595 26,741
carryforwards
Other 20,151 6,521
- -----------------------------------------
Total deferred tax 299,634 168,945
assets
Valuation allowance (25,064) (19,851)
- -----------------------------------------
Net deferred tax $274,570 $149,094
assets
- -----------------------------------------
- -----------------------------------------
Dollars in thousands
December 31 1993 1992
- -----------------------------------------
Deferred Tax
Liabilities
Property, plant and
equipment $131,189 $ 127,691
Tax certificate 137,343 145,631
Nontaxable 145,298 -
acquisition
Deferred
subscription 21,743 21,361
expenses
Safe harbor tax 20,376 24,433
lease
Other 18,446 20,703
- -----------------------------------------
Total deferred tax 474,395 339,819
liabilities
- -----------------------------------------
Net deferred tax (274,570) (149,094)
assets
- -----------------------------------------
Net deferred tax 199,825 190,725
liability
- -----------------------------------------
Less amounts
included in:
Other current (4,812) -
assets
Accrued expenses 7,762 3,024
- -----------------------------------------
Deferred income $196,875 $187,701
taxes
- -----------------------------------------
At December 31, 1993, there were no federal net operating loss carryforwards.
Benefits from state and local loss carryforwards are attributable mainly to tax
operating losses. Such loss carryforwards expire in accordance with provisions
of applicable tax law and have remaining lives ranging from 1 to 15 years. At
December 31, 1993 the tax benefits relating to these carryforwards expire as
follows: 1996, $4,829,000; 1997, $7,984,000; 1998, $3,017,000; 1999 through
2003, $6,540,000 and 2004 through 2008, $1,225,000.
In connection with the sale in 1989 of its cable television system, the
Federal Communications Commission granted the Company a tax certificate. This
certificate enabled the Company to defer income taxes on the gain on the
transaction and pay such taxes over a number of years. Under the provisions
of the Internal Revenue Code, this is accomplished through a reduction in the
tax bases of various assets. As a result, $10,820,000, $10,388,000 and
$10,409,000 of income taxes that were so deferred became currently payable in
1993, 1992 and 1991 respectively. Additional income taxes that were deferred
will become currently payable over the remaining lives of those assets with
reduced tax bases.
Federal income tax returns for all years through 1989 have been examined by
the Internal Revenue Service. Tentative agreements have been reached for all
years through 1989.
F - 18
Examinations of the tax returns for the years 1990 through 1992 have not
commenced. Management is of the opinion that any assessments resulting from
these examinations will not have a material effect on the consolidated
financial statements.
Equity in operations of the Forest Products Group (see Note 5) includes the
income tax effects of the Company's interest in Madison and its equity in the
operations of the Canadian newsprint companies. Of such amounts, tax benefits
of $585,000 in 1993, $1,219,000 in 1992 and $120,000 in 1991 are applicable to
the Canadian newsprint companies. Deferred taxes attributable to the Company's
interest in Madison were $1,562,000, $265,000, and $(561,000), respectively,
for 1993, 1992 and 1991. These deferred taxes relate principally to
differences between financial reporting and tax depreciation. The Company's
consolidated federal income tax returns include the income tax effects of its
interest in Madison.
- --------------------------------------------------------------------------------
8. DEBT
Long-term debt consisted of the following:
- -----------------------------------------
Dollars in thousands
December 31 1993 1992
- -----------------------------------------
Notes due 1998-2000
(a) $200,000 $ -
Notes due 1995 net of
unamortized discount:
1993, $2,444; 1992,
$4,169 (b) 159,856 158,131
Notes due 1995 net of
unamortized premium of
$3,725 in 1993(c) 53,725 -
Other notes, due in
1993 at a weighted
average interest
rate of 7.80%
in 1992 - 22
- -----------------------------------------
Total 413,581 158,153
Less current portion - 22
- -----------------------------------------
Total long-term
portion $413,581 $158,131
- -----------------------------------------
(a) In October 1993 the Company issued senior notes totaling $200,000,000 to
an insurance company with interest payable semi-annually. Five-year notes
totaling $100,000,000 were issued at a rate of 5.50 percent, and the remaining
$100,000,000 were issued as six and one-half year notes at a rate of 5.77
percent.
(b) In connection with the 1985 acquisition of certain newspapers, the Company
issued 10-year notes with an aggregate stated value of $162,300,000 which have
been discounted at an interest rate of 11.85 percent for financial reporting
purposes. Interest on certain of the notes is payable semi-annually. The
original difference of $12,600,000 between the stated value of the notes and the
amount that results from discounting the notes at 11.85 percent is being
amortized as interest expense over the term of the notes. Based on the
borrowing rates currently available to the Company for bank loans with similar
terms and average maturities, the fair value of these notes is $179,000,000.
(c) In connection with the 1993 acquisition of The Globe (see Note 2), the
Company assumed $50,000,000 of 9.34 percent fixed-rate notes maturing July 1995
which have been valued for financial reporting purposes using a discount rate of
4.25 percent. Interest on the notes is payable semi-annually. The excess of
the fair value of the notes at the acquisition date over the stated value of
such notes was $4,303,000, which is being amortized as a reduction of interest
expense over the remaining term of the notes.
The Company has an interest rate swap agreement (the "Agreement") with a major
financial institution to manage interest costs. The Agreement matures in 1995
and effectively converts the 9.34 percent interest rate to a variable rate which
is semi-annually indexed to the six-month LIBOR rate. Based on quoted market
prices, the Agreement was valued at $1,800,000 at the acquisition date and is
being amortized as interest expense over its term. Such amount has been
included in miscellaneous assets in the accompanying balance sheet at December
31, 1993. During the 1993 fourth quarter and on December 31, 1993, the
Company's effective interest rate on these unsecured notes was 6.42 percent.
As of December 31, 1993, the recorded amounts for these unsecured notes and
the Agreement approximate fair value.
- ------------------------------------------------------------------------------
In May 1992 the Company entered into an $80,000,000 revolving credit and term
loan agreement with a group of banks, which replaced the previous $100,000,000
revolving credit and term loan agreement which would have terminated in July
1992. The new agreement, as amended, terminates in May 1995. At such time,
then outstanding borrowings would be payable semi-annually aggregating 5
percent, 20 percent, 45 percent and 30 percent annually from 1995 to 1998. At
the Company's discretion, this facility may be converted into term loans at any
time. The Company also has a $40,000,000 revolving credit
agreement with the same group of banks that expires May 1994, at which time, any
outstanding borrowings would be payable.
The agreements permit borrowings which bear interest, at the Company's option,
(i) for domestic borrowings: based on the certificates of deposit rate, the
Federal Funds rate, a prime rate or a quoted rate; or (ii) for Eurodollar
borrowings: based on the London interbank rate. Borrowings under these
agreements may be prepaid without penalty. In October 1992 the Company entered
into a new $20,000,000 revolving credit and term loan agreement with a bank and
its affiliate, which replaced a previous $30,000,000 revolving credit agreement
with the same bank. The new agreement, as amended, terminates in May 1995. At
such time, then outstanding borrowings would be payable semi-annually
aggregating 5 percent, 20 percent, 45 percent and 30 percent annually from 1995
to 1998. At the Company's discretion, this facility may be converted into term
loans at any time. The Company also has entered into a $10,000,000 revolving
credit agreement with the same bank and its affiliate that expires May 1994, at
which time, any outstanding borrowings would be payable.
The agreements permit borrowings which bear interest, at the Company's option,
(i) for domestic borrowings: based on the certificates of deposit rate, a prime
rate or a quoted rate; or (ii) for
F - 19
Eurodollar borrowings based on the London interbank rate. Borrowings under
these agreements may be prepaid without penalty.
No borrowings under any of the above agreements were outstanding during 1993.
Both agreements provide for an annual commitment fee of 1/8th of 1 percent on
the unused commitment. Certain of the agreements also include provisions which
require, among other matters, specified levels of stockholders' equity. At
December 31, 1993 approximately $1,148,000,000 of stockholders' equity was
unrestricted.
Short-term debt is comprised of current maturities of long-term debt and
capital lease obligations. Outstanding notes payable at December 31, 1993
consists of $62,340,000 of short-term bank borrowings at an average interest
rate of 3.71 percent. There were no outstanding notes payable at December 31,
1992.
Interest expense, net of interest income, as shown in the accompanying
Consolidated Statements of Operations consisted
of the following:
- -------------------------------------------------------
Dollars in thousands
Year Ended
December 31 1993 1992 1991
- -------------------------------------------------------
Interest expense $29,549 $30,075 $32,401
Interest income (4,174) (3,960) (1,815)
- -------------------------------------------------------
Net $25,375 $26,115 $30,586
- -------------------------------------------------------
In connection with various construction projects, interest of approximately
$1,351,000 and $705,000 was capitalized as property, plant and equipment for
1993 and 1992 respectively. There was no interest capitalized in 1991.
- --------------------------------------------------------------------------------
9. LEASE COMMITMENTS
In December 1993, the Company and The City of New York executed a long-term
lease agreement and related agreements, under which the Company will lease land
to build a state-of-the-art printing and distribution facility for The Times
(see Note 3).
Operating Leases:
Such lease commitments are primarily for office space and equipment. Certain
office space leases provide for adjustments relating to changes in real estate
taxes and other operating expenses.
Rental expense amounted to $24,744,000 in 1993, $23,689,000 in 1992 and
$24,159,000 in 1991. The approximate minimum rental commitments under
noncancelable leases (exclusive of minimum sublease rentals of $301,000) at
December 31, 1993 were as follows: 1994, $16,917,000; 1995, $11,977,000; 1996,
$9,647,000; 1997, $8,566,000; 1998, $7,416,000 and $36,427,000 thereafter.
Capital Leases:
In connection with its Capital Investment Projects (see Note 3), the Company
entered into a long-term lease for a building and site in Edison, New Jersey.
The lease provides the Company with certain early cancellation rights, as well
as renewal and purchase options. For financial reporting purposes, the lease
has been classified as a capital lease; accordingly, an asset of approximately
$57,000,000 (included in buildings, building equipment and improvements at
December 31, 1993 and 1992) has been recorded.
The following is a schedule of future minimum lease payments under all
capitalized leases together with the present value of the net minimum lease
payments as of December 31, 1993:
Dollars in thousands
- --------------------------------------
Year Ended December 31 Amount
- --------------------------------------
1994 $ 7,221
1995 6,871
1996 6,623
1997 6,411
1998 6,400
Later years 52,800
- --------------------------------------
Total minimum lease
payments 86,326
Less: amount representing
interest 37,254
- --------------------------------------
Present value of net
minimum lease payments
including current
maturities of $2,590 $49,072
- --------------------------------------
F - 20
- --------------------------------------------------------------------------------
10. PENSION PLANS
The Company sponsors several pension plans and makes contributions to several
others in connection with collective bargaining agreements, including a joint
Company-union plan and a number of joint industry-union plans. These plans
cover substantially all employees.
The Company-sponsored pension plans provide participating employees with
retirement benefits in accordance with benefit provision formulas which are
based on years of service and final average or career pay, and where applicable,
employee contributions. Funding is based on an evaluation and review of the
assets, liabilities and requirements of each plan. Retirement benefits are also
provided under supplemental unfunded pension plans. Amounts for 1993 have
increased due to the October 1, 1993 acquisition of The Globe.
Net periodic pension cost was $16,461,000 in 1993, $15,082,000 in 1992, and
$14,467,000 in 1991. The components
of net periodic pension cost are:
- ----------------------------------------------------------------
Dollars in thousands
Year Ended December 31 1993 1992 1991
- ----------------------------------------------------------------
Service cost $14,075 $11,879 $11,210
Interest cost 26,675 24,167 22,451
Actual return on
plan assets (38,907) (25,365) (37,430)
Curtailment gain - (885) -
Net amortization
and deferral 14,618 5,286 18,236
- ----------------------------------------------------------------
Net periodic
pension cost $16,461 $15,082 $14,467
- ----------------------------------------------------------------
Assumptions used in the actuarial computations were:
- ----------------------------------------------------------------
Year Ended December 31 1993 1992 1991
- ----------------------------------------------------------------
Discount rate 7.0% 8.0% 8.25%
Rate of increase in
compensation levels 5.5% 5.5% 5.5%
Expected long-term
rate of return
on assets 8.75% 8.75% 8.75%
- ----------------------------------------------------------------
In connection with collective bargaining agreements, the Company contributes to
several other pension plans including a joint Company-union plan and a number of
joint industry-union plans. Contributions are determined as a function of hours
worked or period earnings. Pension cost for these plans was $17,970,000 in
1993, $15,700,000 in 1992, and $15,052,000 in 1991.
The funded status of the Company's plans which were valued at September 30, 1993
and 1992 is as follows:
Plans Plans
Whose Whose
Assets Accumulated
Exceed Benefits
December 31, 1993 Accumulated Exceed
Dollars in thousands Benefits Assets
- ----------------------------------------------------
Actuarial present
value of
benefit obligation:
Vested benefit
obligation $187,972 $219,554
- ----------------------------------------------------
Accumulated benefit
obligation $193,951 $227,102
- ----------------------------------------------------
Projected benefit
obligation $251,679 $282,179
Plan assets at fair
value 234,366 142,015
- ----------------------------------------------------
Projected benefit
obligation in
excess of plan
assets 17,313 140,164
Unrecognized net
losses (24,972) (20,043)
Unrecognized prior
service cost 7,746 (9,633)
Unrecognized
transition obligation (2,690) (2,724)
Fourth-quarter
contribution, net (2,675) (3,220)
Adjustment required
to recognize
additional minimum
liability - 10,087
- ----------------------------------------------------
Recorded pension
(asset) liability $ (5,278) $114,631
- ----------------------------------------------------
Plans Plans
Whose Whose
Assets Accumulated
Exceed Benefits
December 31, 1992 Accumulated Exceed
Dollars in thousands Benefits Assets
- ----------------------------------------------------
Actuarial present
value of
benefit obligation:
Vested benefit
obligation $230,705 $21,039
- ----------------------------------------------------
Accumulated benefit
obligation $235,994 $21,153
- ----------------------------------------------------
Projected benefit
obligation $296,312 $30,722
Plan assets at fair
value 284,469 -
- ----------------------------------------------------
Projected benefit
obligation
in excess of plan
assets 11,843 30,722
Unrecognized net
gains (losses) 6,181 (6,393)
Unrecognized prior
service cost (1,202) (1,005)
Unrecognized net
asset (transition
obligation) 1,873 (6,339)
Fourth-quarter
contribution, net (3,172) (265)
Adjustment required
to recognize
additional minimum
liability - 4,167
- ----------------------------------------------------
Recorded pension
liability $ 15,523 $20,887
- ----------------------------------------------------
Plan assets, which were valued as of September 30, 1993 and 1992, consist of
money market investments, investments in marketable fixed income and equity
securities, an investment in a diversified real estate equity fund and
investments in group annuity insurance contracts.
The additional liability relating to the unfunded status of these plans is
included in other liabilities on the Consolidated Balance Sheets as of December
31, 1993 and 1992 and miscellaneous assets includes a related intangible asset
of equal amount.
F - 21
- --------------------------------------------------------------------------------
11. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND POSTEMPLOYMENT
BENEFITS
The Company provides health and life insurance benefits to retired employees
(and their eligible dependents) who are not covered by any collective bargaining
agreements if the employee meets specified age and service requirements.
The Company adopted the provisions of SFAS No. 106 - Employers' Accounting for
Postretirement Benefits Other Than Pensions ("SFAS 106"), changing to the
accrual method of accounting for these benefits effective January 1, 1992.
Prior to 1992, postretirement benefit expenses were recognized on a pay-as-you-
go basis and were not material.
As permitted by SFAS 106, the Company elected to recognize in 1992 the
accumulated postretirement benefit obligation related to prior service costs.
The Company recorded this obligation of $64,856,000 ($37,411,000 after taxes or
$.48 per share) as the cumulative effect of an accounting change at January 1,
1992.
Net periodic postretirement cost was $10,809,000 and $7,776,000 in 1993 and
1992 respectively. The components of this cost are as follows:
- --------------------------------------------
Dollars in thousands 1993 1992
- --------------------------------------------
Service cost for benefits
earned during the period $3,955 $3,299
Interest cost on
accumulated postretirement
benefit obligation 6,854 5,239
Curtailment gain - (762)
- --------------------------------------------
Net periodic
postretirement
benefit cost $10,809 $7,776
- -------------------------------------------
The Company's policy is to fund the
above-mentioned payments as claims
and premiums are paid.
The following table sets forth the
amounts included in "Accrued
Expenses" and "Other Liabilities" in
the Consolidated Balance Sheets at
December 31, 1993 and 1992 based on
valuation dates of September 30 in
each year. The 1993 amounts have
increased principally due to the
October 1, 1993 acquisition of The
Globe.
- --------------------------------------------
Dollars in thousands
- --------------------------------------------
December 31 1993 1992
- --------------------------------------------
Accumulated postretirement
benefit obligation
Retirees $53,677 $28,054
Fully eligible active 28,450 18,943
plan participants
Other active plan
participants 51,522 25,645
- --------------------------------------------
Total 133,649 72,642
Unrecognized net gains
(losses) 3,093 (2,198)
Fourth-quarter expense
net of benefit
payment 621 -
- --------------------------------------------
Total accrued
postretirement
benefit liability 137,363 70,444
Current portion included
in accrued expenses 4,040 2,591
- --------------------------------------------
Long-term accrued
postretirement
benefit liability $133,323 $67,853
- --------------------------------------------
For 1993 the accumulated postretirement benefit obligation was determined
using a discount rate of 7.0 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of between 13 percent
and 11 percent in the first year grading down to 5 percent in the year 2008.
Increasing the assumed health care cost trend rates by one percentage point in
each year and holding all other assumptions constant would increase the
accumulated postretirement benefit obligation as of December 31, 1993 by
$18,857,000 and increase the net periodic postretirement benefit cost for 1993
by $2,300,000.
For 1992 the accumulated postretirement benefit obligation was determined
using a discount rate of 8.0 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of approximately 15.0
percent for pre-age-65 benefits, decreasing to 6.25 percent in the year 2014 and
thereafter and a rate of 14.75 percent for post-age-65 benefits decreasing to
6.0 percent in the year 2014 and thereafter.
In connection with collective bargaining agreements, the Company contributes
to several welfare plans including a joint Company-union plan and a number of
joint industry-union plans. Contributions are determined as a function of hours
worked or period earnings. Portions of these contributions, which cannot be
disaggregated, related to postretirement benefits for plan participants. Total
contributions to these welfare funds were approximately $18,000,000 and
$16,800,000 in 1993 and 1992 respectively.
The Company also adopted SFAS No. 112 - Employers' Accounting for
Postemployment Benefits ("SFAS 112") as of the beginning of 1992. SFAS 112
requires that certain benefits provided to former or inactive employees, after
employment but before retirement, such as workers' compensation, disability
benefits and health care continuation coverage be accrued if attributable to
employees' service already rendered. The cumulative effect on net income of
this change in accounting method resulted in a one-time charge of $16,365,000
($9,440,000 after taxes or $.12 per share) and has been reflected as of
January 1, 1992.
F - 22
- --------------------------------------------------------------------------------
12. EXECUTIVE AND NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
Under the Company's 1991 Executive Stock Incentive Plan and 1991 Executive Cash
Bonus Plan (together the "1991 Executive Plans"), the Board of Directors may
authorize incentive compensation awards and grant stock options to key employees
of the Company. Awards may be granted in cash, restricted and unrestricted
shares of the Company's Class A Common Stock, Retirement Units or such other
forms as the Board of Directors deems appropriate. Under the 1991 Executive
Plans, stock options of up to 10,000,000 shares of Class A Common Stock may be
granted and stock awards of up to 1,000,000 shares of Class A Common Stock may
be made. In adopting the 1991 Executive Plans, shares previously available for
issuance of retirement units and stock options under prior plans are no longer
available for future awards.
Retirement Units are payable in Class A Common Stock over a period of 10 years
following retirement.
Stock options currently outstanding were granted under the Company's 1974 and
1984 Stock Option Plans and the 1991 Executive Plans. The Plans provide for
granting of both incentive and non-qualified stock options principally at an
option price per share of 100 percent of the fair market value of the Class A
Common Stock on the date of grant. These options have terms of five or ten
years, and become exercisable in annual periods ranging from one year to four
years from the date of grant. Payment upon exercise of an option may be made in
cash, with previously-acquired shares, with shares (valued at fair market value)
which would be otherwise issued on the exercise of the option or any combination
thereof.
Under the Company's Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"), non-qualified options with ten-year terms are granted annually to each
non-employee director of the Company. Each annual grant allows the director to
purchase from the Company up to 1,000 shares of Class A Common Stock at the fair
market value of such shares at the date of grant. Options for an aggregate of
250,000 shares of Class A Common Stock may be granted under the Directors' Plan.
Outstanding stocks options granted to key employees of The Globe to purchase
its Series A and/or Series B Common Stock prior to the merger have been
converted to stock options to purchase the Company's Class A Common Stock. The
former Globe stock options were converted at a ratio of 0.6 shares of Class A
Common for each share of Globe stock as determined by the merger agreement. All
of these stock options became exercisable effective with the merger on October
1, 1993.
Changes in stock options for each of the three years in the period ended
December 31, 1993 were as follows:
- --------------------------------------------------------------
Dollars in thousands Option Price
except per share data Shares Per Share($) Total
- --------------------------------------------------------------
Options outstanding
January 1, 1991 3,296,385 4.77 to 38.87 76,344
Granted 1,269,064 20.00 to 20.81 25,391
Exercised (134,984) 4.77 to 18.40 (1,121)
Terminations (94,957) 20.56 to 38.87 (2,515)
- --------------------------------------------------------------
Options outstanding
December 31, 1991 4,335,508 5.76 to 38.87 98,099
Granted 1,103,410 25.93 to 28.88 28,473
Exercised (466,320) 5.76 to 26.75 (7,900)
Terminations (91,982) 20.56 to 36.43 (2,737)
- --------------------------------------------------------------
Options outstanding
December 31, 1992 4,880,616 13.96 to 38.87 115,935
Granted 1,909,080 26.50 to 30.68 50,641
Globe stock
option conversion 958,654 6.89 to 22.50 14,381
Exercised (346,334) 6.89 to 26.75 (6,333)
Terminations (41,175) 20.00 to 36.43 (1,116)
- --------------------------------------------------------------
Options outstanding
December 31, 1993 7,360,841 6.89 to 38.87 $173,508
- --------------------------------------------------------------
Options which became
exercisable during
1991 1,086,077 20.56 $22,332
1992 728,859 20.00 to 20.81 14,588
1993 1,803,174 6.89 to 28.88 35,098
- --------------------------------------------------------------
Options exercisable
at December 31,
1991 3,066,444 5.76 to 38.87 $72,708
1992 3,237,964 13.96 to 38.87 76,678
1993 4,673,663 6.89 to 38.87 104,789
- --------------------------------------------------------------
F-23
- --------------------------------------------------------------------------------
13. CAPITAL STOCK
The 5 1/2 percent cumulative prior preference stock, which is redeemable at the
option of the Company on 30-day's notice at par plus accrued dividends, is
entitled to an annual dividend of $5.50 payable quarterly.
The serial preferred stock is subordinate to the 5 1/2 percent cumulative
prior preference stock. The Board of Directors is authorized to set the
distinguishing characteristics of each series prior to issuance, including the
granting of limited or full voting rights; however, the consideration received
must be at least $100 per share. No shares of serial preferred stock have been
issued.
The Class A and Class B Common Stock are entitled to equal participation in
the event of liquidation and in dividend declarations. The Class B Common Stock
is convertible at the holders' option on a share-for-share basis into Class A
shares. As provided for in the certificate of incorporation, the Class A Common
Stock has limited voting rights, including the right to elect 30 percent of the
Board of Directors, and the Class A and Class B Common Stock have the right to
vote together on reservations of Company stock for stock options, on the
ratification of the selection of independent certified public accountants and,
in certain circumstances, on acquisitions of the stock or assets of other
companies. Otherwise, except as provided by the laws of the State of New York,
all voting power is vested solely and exclusively in the holders of the Class B
Common Stock.
At a special meeting of shareholders in September 1993, an amendment of the
Company's Restated Certificate of Incorporation was approved to increase the
total number of authorized shares of Class A Common Stock to 200,000,000 shares,
thereby increasing the Company's overall total number of authorized shares of
capital stock of The New York Times Company to 200,910,000 shares.
Under a stock repurchase program which commenced in June 1993 and expired at
the close of The Globe transaction on October 1, 1993, the Company repurchased
approximately 10,231,000 shares of its Class A Common Stock at an average price
of $24.87 per share.
In a new program announced in October 1993, the Company's Board of Directors
authorized additional expenditures of up to $150,000,000 for repurchases of its
Class A Common Stock. Under the new Board authorization, purchases may be made
from time to time either in the open market or through private transactions.
The number of shares that may be purchased in market transactions may be limited
as a result of The Globe transaction. Purchases may be suspended from time to
time or discontinued. Under this program, to date, the Company has repurchased
approximately 30,000 shares of its Class A Common Stock at an average price of
$24.78 per share. Had stock repurchases, under both programs, occurred as of
January 1, 1993, earnings per share for the year 1993 would have been $.08.
Under the 1994 Offering of the Employee Stock Purchase Plan, eligible
employees may purchase Class A Common Stock through payroll deductions during
1994 at the lower of $20.03 per share (85 percent of the average market price on
November 1, 1993) or 85 percent of the average market price on December 29,
1994.
Shares of Class A Common Stock reserved for issuance at December 31, 1993 and
1992 were as follows:
- --------------------------------------------------
December 31 1993 1992
- --------------------------------------------------
Retirement Units
Outstanding 216,806 229,574
Stock Awards
Available 993,359 -
Stock Options
Outstanding 7,360,841 4,880,616
Available 5,988,480 7,651,526
Employee Stock
Purchase Plan
Available 993,919 1,813,085
Voluntary Conversion of
Class B Common Stock
Available 571,624 571,804
- --------------------------------------------------
Total 16,125,029 15,146,605
- --------------------------------------------------
F - 24
- --------------------------------------------------------------------------------
14. ACCOUNTING CHANGES
During 1992, the Company adopted three noncash accounting changes mandated by
the Financial Accounting Standards Board: SFAS No. 106-Employers' Accounting
for Postretirement Benefits Other Than Pensions (see Note 11), SFAS 109-
Accounting for Income Taxes (see Note 7) and SFAS 112-Employers' Accounting for
Postemployment Benefits (see Note 11). All accounting changes have been adopted
prospectively and, accordingly, earnings for 1991 have not been restated.
The cumulative effect of adopting these accounting changes is as follows:
- ----------------------------------------------
After-tax effects Earnings
(Dollars in thousands) per share
- ----------------------------------------------
Postretirement Benefits $(37,411) $(.48)
Income Taxes 13,414 .17
Postemployment Benefits (9,440) (.12)
-------- -----
Net charge $(33,437) $(.43)
======== =====
- ----------------------------------------------
- --------------------------------------------------------------------------------
15. SEGMENTS
The Company's segment and related information is included on pages 2 and 3 of
this Appendix. The information for the years 1993, 1992 and 1991 appearing
therein is presented on a basis consistent with, and is an integral part of, the
consolidated financial statements. Revenues from individual customers, revenues
between business segments and revenues, operating profit and identifiable assets
of foreign operations are not significant.
- --------------------------------------------------------------------------------
16. CONTINGENT LIABILITIES
There are various libel and other legal actions that have arisen in the ordinary
course of business and are now pending against the Company. Such actions are
usually for amounts greatly in excess of the payments, if any, that may be
required to be made. It is the opinion of management after reviewing such
actions with legal counsel to the Company that the ultimate liability which
might result from such actions would not have a material adverse effect on the
consolidated financial statements.
- --------------------------------------------------------------------------------
17. RECLASSIFICATIONS
For comparability, certain 1991 and 1992 amounts have been reclassified to
conform with the 1993 presentation.
F - 25
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
AND STOCKHOLDERS OF
THE NEW YORK TIMES COMPANY:
We have audited the accompanying consolidated balance sheets of The New York
Times Company as of December 31, 1993 and 1992 and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended December 31, 1993. Our audits also include
the financial schedules listed in the Index at Item 14(a). These consolidated
financial statements and financial statement schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and financial statement schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of The New York Times Company as of
December 31, 1993 and 1992 and the results of their operations and their cash
flows for each of the three years in the period ended December 31, 1993 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.
As discussed in notes 7, 11 and 14, the Company changed its methods of
accounting for income taxes, postretirement benefits other than pensions and
postemployment benefits effective January 1, 1992 to conform with Statements of
Financial Accounting Standards 109, 106 and 112.
-Deloitte & Touche-
New York, New York
February 10, 1994
MANAGEMENT'S RESPONSIBILITIES
REPORT
The Company's consolidated financial statements were prepared by management who
is responsible for their integrity and objectivity. The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles and, as such, include amounts based on management's best estimates
and judgments.
Management is further responsible for maintaining a system of internal
accounting control, designed to provide reasonable assurance that the Company's
assets are adequately safeguarded and that the accounting records reflect
transactions executed in accordance with management's authorization. The system
of internal control is continually reviewed for its effectiveness and is
augmented by written policies and procedures, the careful selection and training
of qualified personnel and a program of internal audit.
The consolidated financial statements were audited by Deloitte & Touche,
independent auditors. Their audit was conducted in accordance with generally
accepted auditing standards and their report is shown on this page.
The Audit Committee of the Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, internal
auditors and management to discuss specific accounting, financial reporting and
internal control matters. Both the independent auditors and the internal
auditors have full and free access to the Audit Committee. Each year the Audit
Committee selects, subject to ratification by stockholders, the firm which is to
perform audit and other related work for the Company.
MARKET INFORMATION
The Class A Common Stock is listed on the American Stock Exchange. The Class B
convertible Common Stock and the 5 1/2 percent cumulative prior preference stock
are unlisted and are not actively traded. Dividends on the preference stock
were paid at the quarterly rate of $1.375 per share during each of the two
years.
The approximate number of security holders of record as of January 31, 1994
was as follows: Class A Common Stock: 17,245; Class B Common Stock: 43; 5 1/2
percent cumulative prior preference stock: 65.
The market price range of Class A Common Stock in 1993 and 1992 is as follows:
- ------------------------------------------
Quarter Ended 1993 1992
- ------------------------------------------
High Low High Low
March 31 $31.25 $26.37 $32.12 $22.62
June 30 31.25 23.00 32.00 26.00
September 30 26.12 22.62 29.75 25.00
December 31 28.75 22.37 28.37 23.62
Year 31.25 22.37 32.12 22.62
- ------------------------------------------
F - 26
QUARTERLY INFORMATION (Unaudited)
- ----------------------------------------------------------------------------------------------------------------
Dollars and shares in millions First Second Third Fourth
except per share data Quarter Quarter Quarter Quarter Year
1993 1992 1993 1992 1993 1992 1993 1992 1993 1992
- ----------------------------------------------------------------------------------------------------------------
Revenues $ 454.5 $ 435.9 $ 483.6 $443.2 $ 445.6 $ 426.2 $ 636.0 $468.2 $2,019.7 $1,773.5
- ----------------------------------------------------------------------------------------------------------------
Costs and Expenses
Production costs:
Raw materials 63.7 67.6 67.5 62.1 64.2 63.6 85.1 57.3 280.5 250.6
Wages and benefits 101.2 91.4 100.1 92.7 99.8 100.5 136.4 103.8 437.5 388.4
Other 94.5 84.5 98.6 84.5 102.9 88.7 122.6 107.9 418.6 365.6
- ----------------------------------------------------------------------------------------------------------------
Total 259.4 243.5 266.2 239.3 266.9 252.8 344.1 269.0 1,136.6 1,004.6
Selling, general and
administrative
expenses 164.0 157.6 168.4 167.2 166.5 162.0 257.6 193.7 756.5 680.5
- ----------------------------------------------------------------------------------------------------------------
Total 423.4 401.1 434.6 406.5 433.4 414.8 601.7 462.7 1,893.1 1,685.1
- ----------------------------------------------------------------------------------------------------------------
Operating profit 31.1 34.8 49.0 36.7 12.2 11.4 34.3 5.5 126.6 88.4
Interest expense, net 5.2 7.0 5.2 6.7 6.6 6.4 8.4 6.0 25.4 26.1
Loss on disposition
of
Gwinnett Daily News - 1.6 - 1.1 - 51.1 - - - 53.8
Income taxes 12.9 11.2 20.9 12.4 6.5 (13.2) 2.9 0.7 43.2 11.1
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) before
equity in operations of
forest products group 13.0 15.0 22.9 16.5 (0.9) (32.9) 23.0 (1.2) 58.0 (2.6)
Equity in operations of
forest products group (2.1) (1.6) (0.5) (2.5) (2.1) (2.1) (47.2) (2.5) (51.9) (8.7)
- ----------------------------------------------------------------------------------------------------------------
Income (Loss) before
net cumulative effect
of accounting changes 10.9 13.4 22.4 14.0 (3.0) (35.0) (24.2) (3.7) 6.1 (11.3)
Net cumulative effect
of accounting changes - (33.4) - - - - - - - (33.4)
- ----------------------------------------------------------------------------------------------------------------
Net income (loss) $ 10.9 $(20.0) $ 22.4 $14.0 $ (3.0) $(35.0) $(24.2) $(3.7) $ 6.1 $(44.7)
- ----------------------------------------------------------------------------------------------------------------
Average number of
common
shares outstanding 79.9 78.4 79.7 78.5 72.4 78.6 106.0 78.6 84.5 78.5
Per share of common
stock
Before net cumulative
effect of
accounting changes $ .14 $ .17 $ .28 $.18 $ (.04) $(.44) $ (.23) $(.05) $ .07 $ (.14)
Net cumulative effect
of accounting changes - (.43) - - - - - - - (.43)
Net income (loss) .14 (.26) .28 .18 (.04) (.44) (.23) (.05) .07 (.57)
Dividends .14 .14 .14 .14 .14 .14 .14 .14 .56 .56
- ----------------------------------------------------------------------------------------------------------------
The 1993 quarters do not equal the 1993 year-end amount for earnings per share
due to the weighted average number of shares outstanding used in the
computations for the respective periods. Per share amounts for the respective
quarters and years have been computed using the average number of common shares
outstanding as presented in the table above. The significant differences in the
number of shares in the 1993 periods are due principally to the issuance of
approximately 36.4 million shares due to the October 1993 Globe acquisition
offset, in part, by stock repurchases of approximately 10.3 million shares
during the third and fourth quarter.
The Company's largest source of revenues is advertising, which influences the
pattern of the Company's quarterly consolidated revenues and is seasonal in
nature. Traditionally, second-quarter and fourth-quarter advertising volume is
higher than that in the first quarter. Advertising volume tends to be lower in
the third quarter primarily because of the summer slow-down in many areas of
economic activity. Quarterly trends are also affected by the overall economy
and economic conditions that may exist in specific markets served by each of the
Company's business segments.
First-quarter 1993 was negatively affected by $3.7 million pre-tax ($.02 per
share) due to a March snowstorm.
Third-quarter 1993 includes $5.6 million ($.07 per share) of additional
income tax expense due to the enactment of the Tax Act.
Fourth-quarter 1993 includes a $2.6 million pre-tax gain ($.02 per share) on
the sale of assets.
Fourth-quarter 1993 includes $35.4 million of pre-tax charges ($.19 per share)
for white-collar and production union staff reductions at The Times.
Fourth-quarter 1993 includes an after-tax noncash charge to equity in
operations of $47.0 million ($.44 per share) to write-down the Company's
investment in its Forest Products Group to reflect current operating conditions
and economic factors in the industry.
First-quarter 1992 includes $3.1 million pre-tax gain ($.02 per share) on the
sales of assets.
Second-quarter 1992 was negatively affected by $11.0 million pre-tax ($.08 per
share) due to labor disruptions at The Times.
Third and fourth-quarter 1992 include pre-tax $2.8 million ($.02 per share)
and $7.6 million ($.05 per share), respectively, for training and start-up costs
for commencement of operations at Edison.
Fourth-quarter 1992 includes a $28.0 million pre-tax charge ($.20 per share)
for voluntary union staff reductions at The Times.
F - 27
TEN-YEAR SUPPLEMENTAL FINANCIAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Dollars and shares in millions Year Ended December 31
except per share data 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
- --------------------------------------------------------------------------------------------------------------------------------
Revenues and Income
Revenues $2,020 $1,774 $1,703 $1,777 $1,769 $1,700 $1,642 $1,524 $1,358 $1,199
- --------------------------------------------------------------------------------------------------------------------------------
Operating Profit 127 88 94 130 169 251 284 266 210 176
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing operations before
equity in forest products group 58 (2) 41 61 84 132 138 110 93 86
Equity in operations of forest products group (52) (9) 6 4 (16) 29 18 20 21 13
- --------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing operations 6 (11) 47 65 68 161 156 130 114 99
Discontinued operations - - - - 199 7 4 2 2 1
Net cumulative effect of accounting changes - (34) - - - - - - - -
- --------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 6 (45) 47 65 267 168 160 132 116 100
- --------------------------------------------------------------------------------------------------------------------------------
Balance Sheet
Total assets 3,215 1,995 2,128 2,150 2,188 1,915 1,712 1,405 1,296 869
Long-term debt and capital lease obligations 460 207 213 319 337 378 391 217 274 75
Common stockholders' equity 1,599 1,000 1,073 1,056 1,064 873 823 705 586 485
- --------------------------------------------------------------------------------------------------------------------------------
Per share of Common Stock
Continuing operations .07 (.14) .61 .85 .87 2.00 1.91 1.60 1.43 1.25
Discontinued operations - - - - 2.52 .08 .05 .03 .02 .01
Net cumulative effect of accounting changes - (.43) - - - - - - - -
Net income (loss) .07 (.57) .61 .85 3.39 2.08 1.96 1.63 1.45 1.26
Dividends .56 .56 .56 .54 .50 .46 .40 .33 .29 .25
Common stockholders' equity (end of year) 14.96 12.54 13.70 13.68 13.63 11.02 10.04 8.59 7.24 6.09
- --------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding (end of year)
Class A and Class B Common 106.9 79.7 78.4 77.2 78.1 79.2 82.0 82.0 80.9 79.7
- --------------------------------------------------------------------------------------------------------------------------------
Market Price (end of year) 26.25 26.37 23.62 20.62 26.37 26.87 31.00 35.50 24.50 19.19
- --------------------------------------------------------------------------------------------------------------------------------
1993 - Results include pre-tax $3.7 million ($.02 per share) due to a March
snowstorm.
Results include $5.6 million ($.07 per share) of additional tax expense due to
the enactment of the Tax Act.
Results include a $2.6 million pre-tax gain ($.02 per share) on the sale of
assets.
Results include $35.4 million of pre-tax charges ($.23 per share) for staff
reductions at The Times.
Results include an after-tax noncash charge of $47.0 million ($.56 per share)
against equity in operations to write down the Company's investment in its
Forest Products Group to reflect current operating conditions and economic
factors in the industry.
1992 - Results included a $53.8 million pre-tax loss ($.47 per share) on the
closing of The Gwinnett (Ga.) Daily News.
Results included a $3.1 million pre-tax gain ($.02 per share) from the sales
of assets.
Results included a $28.0 million pre-tax charge ($.20 per share) for voluntary
union staff reductions at The Times.
Results included $21.4 million pre-tax ($.15 per share) for labor disruptions
and training and start-up costs at Edison.
1991 - Results included a $20.0 million pre-tax charge ($.15 per share) for
voluntary union staff reductions at The Times.
Results include the reversal of a provision for income taxes of $10.0 million
($.13 per share) for a favorable tax settlement.
1989 - Results included an after-tax gain of $193.3 million ($2.46 per share)
from the sale of the Company's cable television operations. The gain and
results of operations through the 1989 sale date are included as discontinued
operations.
Results included a $30.0 million pre-tax charge ($.22 per share) for voluntary
union staff reductions at The Times.
Results included an after-tax charge of $27.2 million ($.35 per share) for a
valuation reserve against the Company's investment in the Forest Products Group.
1986 - Results included an interest charge of $8.5 million ($.05 per share)
which relates to a court decision arising from the Company's 1981 acquisition of
two cable television systems.
1985 - Results included a $2.8 million gain ($.03 per share) from the sale
of property. The Company acquired five newspapers and two television stations
for $389.6 million.
F-28
SCHEDULE V
THE NEW YORK TIMES COMPANY
PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
- --------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- --------------------------------------------------------------------------------------------------------
Balance at Other Balance at
beginning changes-- end
Classification of period Additions Retirements add (deduct) of period
- --------------------------------------------------------------------------------------------------------
Dollars in thousands
YEAR ENDED DECEMBER 31, 1993
Land........................ $ 61,961 $ 275 $ 15 $ 3,618(2,3) $ 65,839
Buildings, building
equipment and
improvements.............. 597,597 9,587 147 43,149(2,3) 650,186(5)
Equipment................... 751,186 28,610 9,497 104,180(2,3) 874,479
Construction and equipment
installations in
progress.................. 47,842 41,147(1) -- 4,018(2) 93,007
------------- ------------ ----------- ------------ -------------
Total............. $ 1,458,586 $ 79,619 $ 9,659 $ 154,965(2,3) $1,683,511
------------- ------------ ----------- ------------ -------------
------------- ------------ ----------- ------------ -------------
YEAR ENDED DECEMBER 31, 1992
Land........................ $ 66,022 $ 551 $ 894 $ (3,718)(4) $ 61,961
Buildings, building
equipment and
improvements.............. 605,416 9,849 856 (16,812)(4) 597,597(5)
Equipment................... 770,651 16,917 14,319 (22,063)(4) 751,186
Construction and equipment
installations in
progress.................. 27,830 20,012(1) -- -- 47,842
------------- ------------ ----------- ------------ -------------
Total............. $ 1,469,919 $ 47,329 $ 16,069 $ (42,593)(4) $ 1,458,586
------------- ------------ ----------- ------------ -------------
------------- ------------ ----------- ------------ -------------
YEAR ENDED DECEMBER 31, 1991
Land........................ $ 60,131 $ 5,908 $ 17 $ -- $ 66,022
Buildings, building
equipment and
improvements.............. 602,402 3,182 168 -- 605,416(5)
Equipment................... 762,250 15,248 6,847 -- 770,651
Construction and equipment
installations in
progress.................. 25,968 1,862(1) -- -- 27,830
------------- ------------ ----------- ------------ -------------
Total............. $ 1,450,751 $ 26,200 $ 7,032 $ -- $ 1,469,919
------------- ------------ ----------- ------------ -------------
------------- ------------ ----------- ------------ -------------
- ---------------
(1) Net change for the period.
(2) Includes property, plant and equipment acquired through the October 1, 1993
acquisition of The Boston Globe.
(3) Includes reclassification of closed production facility (totaling $89
million) to miscellaneous assets pending decision related to future use of
such facility.
(4) Sale of residual assets of The Gwinnett (Ga.) Daily News.
(5) Includes $57 million capitalized lease of building and site for a production
and distribution facility in Edison, New Jersey for The New York Times.
S-1
SCHEDULE VI
THE NEW YORK TIMES COMPANY
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
- -----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- -----------------------------------------------------------------------------------------------------------
Balance at Other Balance at
beginning changes-- end
Description of period Additions(1) Retirements add (deduct) of period
- -----------------------------------------------------------------------------------------------------------
Dollars in thousands
YEAR ENDED DECEMBER 31, 1993
Buildings, building equipment and
improvements...................... $ 209,247 $ 31,386 $ 101 $ (21,616)(2) $ 218,916
Equipment........................... 346,584 57,888 8,445 (43,456)(2) 352,571
----------- ----------- ----------- ------------ -----------
Total..................... $ 555,831 $ 89,274 $ 8,546 $ (65,072)(2) $ 571,487
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
YEAR ENDED DECEMBER 31, 1992
Buildings, building equipment and
improvements...................... $ 178,869 $ 31,834 $ 378 $ (1,078)(3) $ 209,247
Equipment........................... 324,457 38,046 10,771 (5,148)(3) 346,584
----------- ----------- ----------- ------------ -----------
Total..................... $ 503,326 $ 69,880 $ 11,149 $ (6,226)(3) $ 555,831
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
YEAR ENDED DECEMBER 31, 1991
Buildings, building equipment and
improvements...................... $ 147,723 $ 31,187 $ 41 $ -- $ 178,869
Equipment........................... 289,598 41,254 6,395 -- 324,457
----------- ----------- ----------- ------------ -----------
Total..................... $ 437,321 $ 72,441 $ 6,436 $ -- $ 503,326
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
- ---------------
(1) Depreciation of property, plant and equipment is provided at annual rates
based on estimated service lives. The rates are applied by the straight-line
method using ranges of estimated service lives as follows: 15 to 50 years
for buildings; 5 to 30 years for building equipment and improvements and 2
to 20 years for equipment.
(2) Reclassification of closed production facility to miscellaneous assets
pending decision related to future use of such facility.
(3) Sale of residual assets of The Gwinnett (Ga.) Daily News.
S-2
SCHEDULE VIII
THE NEW YORK TIMES COMPANY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
- ----------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ----------------------------------------------------------------------------------------------------------
Additions Deductions
charged for
to costs purposes
and for
Balance at expenses which Balance
beginning or accounts at end
Description of period revenues were set up of period
- ----------------------------------------------------------------------------------------------------------
Dollars in thousands
YEAR ENDED DECEMBER 31, 1993
Deducted from assets to which they apply
Uncollectible accounts...................... $ 12,809 $ 18,495 $ 14,196 $ 17,108
Returns and allowances, etc................. 20,491 71,657 65,749 26,399
----------- ----------- ----------- -----------
Total.................................. $ 33,300 $ 90,152 $ 79,945 $ 43,507
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
YEAR ENDED DECEMBER 31, 1992
Deducted from assets to which they apply
Uncollectible accounts...................... $ 13,020 $ 14,848 $ 15,059 $ 12,809
Returns and allowances, etc................. 17,621 61,154 58,284 20,491
----------- ----------- ----------- -----------
Total.................................. $ 30,641 $ 76,002 $ 73,343 $ 33,300
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
YEAR ENDED DECEMBER 31, 1991
Deducted from assets to which they apply
Uncollectible accounts...................... $ 11,837 $ 20,334 $ 19,151 $ 13,020
Returns and allowances, etc................. 17,968 42,957 43,304 17,621
Investment in forest products group
valuation allowance......................... 26,927 -- 26,927 --
----------- ----------- ----------- -----------
Total.................................. $ 56,732 $ 63,291 $ 89,382 $ 30,641
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
S-3
SCHEDULE IX
THE NEW YORK TIMES COMPANY
SHORT-TERM BORROWINGS
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
- -------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E Column F
- -------------------------------------------------------------------------------------------------------------------
Maximum Average Weighted
amount amount average
Weighted outstanding outstanding interest rate
Category of aggregate Balance at average during the during the during the
short-term borrowings end of period interest rate period period(1) period(2)
- -------------------------------------------------------------------------------------------------------------------
Dollars in thousands
YEAR ENDED DECEMBER 31, 1993
Borrowings from banks and commercial
paper................................ $ 62,340 3.7% $ 281,050 $ 75,924 3.5%
------------- ------ ----------- ----------- ------
------------- ------ ----------- ----------- ------
YEAR ENDED DECEMBER 31, 1992
Borrowings from banks and commercial
paper................................ $ -- -- % $ 45,000 $ 2,331 4.0%
------------- ------ ----------- ----------- ------
------------- ------ ----------- ----------- ------
YEAR ENDED DECEMBER 31, 1991
Borrowings from banks and commercial
paper................................ $ -- -- % $ 66,000 $ 18,941 6.6%
------------- ------ ----------- ----------- ------
------------- ------ ----------- ----------- ------
- ---------------
(1) Calculated by dividing the aggregate amount borrowed during the year by the
number of days in a year.
(2) Calculated by dividing the total short-term interest expense by the average
short-term borrowings outstanding during the period.
S-4
SCHEDULE X
THE NEW YORK TIMES COMPANY
SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE THREE YEARS ENDED DECEMBER 31, 1993
- --------------------------------------------------------------------------------------------------------------------------
Column A Column B
- --------------------------------------------------------------------------------------------------------------------------
Charged to costs
Item(1) and expenses
- --------------------------------------------------------------------------------------------------------------------------
Dollars in
thousands
YEAR ENDED DECEMBER 31, 1993
Advertising costs (promotion, media, etc.).............................. $ 112,153
-------------------
-------------------
YEAR ENDED DECEMBER 31, 1992
Advertising costs (promotion, media, etc.).............................. $ 98,144
-------------------
-------------------
YEAR ENDED DECEMBER 31, 1991
Advertising costs (promotion, media, etc.).............................. $ 95,463
-------------------
-------------------
-----------------------
(1) Amounts for other items required by this schedule are omitted as
they are presented in the consolidated financial statements or are
less than 1% of consolidated revenues.
S-5
EXHIBIT INDEX
Exhibit
No. Description
- ------ ---------------------------------------------------------------
3.1 -Certificate of Incorporation as amended by the Class A and
Class B stockholders and as restated on September 29, 1993.
3.2 -By-laws as amended through February 17, 1994.
9.1 -Globe Voting Trust Agreement, dated as of October 1, 1993.
10.2 -The Company's 1991 Executive Stock Incentive Plan, as
amended through April 13, 1993.
10.8 -Agreement of Lease, dated as of December 15, 1993, between
The City of New York, Landlord, and the Company, Tenant (as successor
to New York City Economic Development Corporation (the "EDC"),
pursuant to an Assignment and Assumption of Lease With Consent, made
as of December 15, 1993, between the EDC, as Assignor, to the
Company, as Assignee).
10.9 -Funding Agreement #1, dated as of December 15, 1993, between
the EDC and the Company.
10.10 -Funding Agreement #2, dated as of December 15, 1993,
between the EDC and the Company.
10.11 -Funding Agreement #3, dated as of December 15, 1993,
between the EDC and the Company.
10.12 -Funding Agreement #4, dated as of December 15, 1993,
between the EDC and the Company.
10.13 -New York City Public Utility Service Power Service
Agreement, made as of May 3, 1993, between The City of New York,
acting by and through its Public Utility Service, and The New York
Times Newspaper Division of the Company.
10.14 -Employment Agreement, dated May 19, 1993, between API,
Globe Newspaper Company and William O. Taylor.
10.16 -API's Supplemental Executive Retirement Plan, as amended
effective September 15, 1993.
21 -Subsidiaries of the Company.