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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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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, 1995 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
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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 26, 1996, was approximately $2.04 billion. As of such date,
non-affiliates held 52,272 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 26, 1996, was as follows: 97,225,562 shares of Class A
Common Stock and 428,916 shares of Class B Common Stock.
DOCUMENT INCORPORATED BY REFERENCE PART
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Proxy Statement for the 1996 Annual Meeting of Stockholders ............ III
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INDEX TO THE NEW YORK TIMES COMPANY
1995 FORM 10-K
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PART I
ITEM NO. PAGE
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1. Business......................................................... 1
Introduction.................................................. 1
Summary of Segment Information.............................. 1
Newspapers.................................................... 1
The New York Times.......................................... 2
Circulation............................................... 2
Advertising............................................... 2
Production and Distribution............................... 3
The Boston Globe............................................ 4
Circulation............................................... 4
Advertising............................................... 4
Production................................................ 5
Regional Newspapers......................................... 5
International Herald Tribune................................ 6
Information Services........................................ 6
New Ventures................................................ 6
Magazines..................................................... 7
New Ventures................................................ 7
Broadcasting.................................................. 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 a Canadian newsprint company and a Maine
supercalendered paper manufacturing partnership.
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"); 18
other daily and three non-daily newspapers in Alabama, California, Florida,
Louisiana, North Carolina and South Carolina ("Regional Newspapers");
newspaper distributors in the New York City and Boston metropolitan areas; a
one-half interest in the International Herald Tribune; 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.
Magazines: Golf Digest, Golf World, Golf Shop Operations, Tennis, Tennis
Buyer's Guide, Cruising World, Sailing World, Snow Country and Snow Country
Business.
Broadcasting: television stations WTKR-TV in Norfolk, Virginia; 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; and NYT Video Productions.
SUMMARY OF SEGMENT INFORMATION
In 1995 the Company's consolidated revenues increased to $2,409,403,000 from
$2,357,563,000 in 1994 due principally to strong revenues at the Company's
newspaper and broadcast properties. The Company's net income in 1995 was
$135,860,000, or $1.40 per share, compared with $213,349,000, or $2.05 per
share, in 1994. Exclusive of special factors set forth on page F-3 on this Form
10-K, annual earnings from ongoing operations would have been $1.41 per share in
1995, compared with $1.06 per share in 1994. A summary of segment information
for the three years ended December 31, 1995, 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-8 of this Form 10-K.
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. National and local economic conditions influence the level of
retail, national and classified advertising revenue generated in the markets
served by the Company's business segments. Circulation revenue is affected by
competition from other forms of media available in the Company's respective
markets.
NEWSPAPERS
The Newspaper Group had revenues of $2,161,356,000 in 1995, compared with
$2,006,184,000 in 1994, and an operating profit of $208,465,000 in 1995,
compared with $207,489,000 in 1994. (These amounts include certain special items
for 1995 which are discussed in more detail in "Management's Discussion and
Analysis" on page F-4 of this Form 10-K.) Improvements in operating profit
occurred despite a significant increase in newsprint prices, as increased
advertising and circulation rates and cost controls enabled the Newspaper Group
to overcome a $76.2 million increase for the year in newsprint costs (net of
conservation programs).
The Newspaper Group segment consists of two categories: Newspapers
(consisting of The New York Times, The Boston Globe, 21 Regional Newspapers,
newspaper distributors, a 50 percent interest in the International Herald
Tribune and Information Services) and New Ventures (consisting of projects
developed in electronic media by The Times and The Globe, as well as various new
media investments such as NYT Video News International, Inc. and The Popcorn
Channel, L.P.). The Newspapers category had revenues of $2,160,399,000 in 1995
and an operating profit of $221,566,000 in 1995, while the New Ventures category
had revenues of $957,000 and an operating loss of $13,101,000.
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, the District of
Columbia and worldwide. Approximately 62% 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; 38% is sold elsewhere. On Sundays, approximately 60%
of the circulation is sold in the greater New York City area and 40% 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, 1995, of all seven-
day United States newspapers, The Times's weekday and Sunday circulations were
the largest.
The Times's average weekday and Sunday circulations for the five 12-month
periods ended September 30, 1995, as audited by ABC (except as indicated), are
shown in the table below:
Weekday Sunday
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(Thousands of copies)
1995 (unaudited).................................... 1,124.5 1,720.5
1994................................................ 1,148.8 1,742.2
1993................................................ 1,183.1 1,783.9
1992................................................ 1,166.9 1,753.9
1991................................................ 1,153.6 1,728.3
During the year ended December 31, 1995, the average weekday circulation of
The Times decreased by approximately 22,100 copies to 1,120,700 copies and the
average Sunday circulation of The Times decreased by approximately 31,300 copies
to 1,712,600 copies. Approximately 55% of the weekday circulation and 47% of the
larger Sunday circulation were sold through home and office delivery; the
remainder was sold primarily on newsstands.
The weekly rate charged to subscribers for home-delivered copies of The
Times in the New York City metropolitan area is $6.70. The suggested newsstand
price of The Times within the New York City metropolitan area is $.60 on
weekdays and $2.50 on Sundays. The suggested newsstand price in the New
England-Middle Atlantic states outside the New York City metropolitan area is
$1.00 on weekdays and $2.50 on Sundays. The suggested newsstand price of the
National Edition, distributed throughout the rest of the country, is $1.00 on
weekdays and $4.00 on Sundays.
Advertising
The Times published 3,831,200 inches of advertising in 1995, compared with
3,733,600 inches in 1994. Both figures include part-run volume, which totaled
1,061,200 inches in 1995, compared with 925,600 inches in 1994.
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Total volume in The Times for the three years ended December 31, 1995, as
measured by The Times, is shown in the table below. The "National" heading in
the table below includes such categories as entertainment, financial, magazine
and general advertising.
Full Run
---------------------------------- Preprint
Retail National Classified Zoned Total* Copies
Inches Inches Inches Inches Inches Distributed
------ -------- ---------- ------- ------- -----------
(Inches and Preprints in Thousands)
1995 667.3 1,181.6 921.1 1,061.2 3,831.2 306,505
1994 693.3 1,166.6 948.1 925.6 3,733.6 294,985
1993 701.2 1,142.5 910.6 854.6 3,608.9 294,906
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* All totals exclude preprint inches.
The table includes volume for The New York Times Magazine, which published 2,809
pages of advertising in 1995, compared with 2,781 pages in 1994.
Advertising rates for The Times increased an average of 5% in January 1995,
4% in May 1995 and 9.5% in January 1996.
Production And Distribution
The Times is processed through electronic editing terminals and sent
electronically to high-resolution image setters. The Times initiated a
pagination program in the first quarter of 1994, which enables editors to
electronically design a newspaper page, including news text, graphics and ads,
thereby avoiding all or part of the manual paste-up of the various elements on a
page. By the end of 1995, seven sections of the Sunday newspaper and over 50% of
the weekday newspaper were paginated. The Times's goal is to paginate the entire
newspaper by the end of 1996.
Generally, The Times is printed at its New York City production facility and
at its production and distribution facility in Edison, New Jersey.
The Edison facility 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. The Times prints four of its advance
Sunday sections at Edison in color.
The Times has agreements with two commercial printing companies to print The
New York Times Magazine and its Television section.
The National Edition of The Times is distributed from eight printing sites
with which it has contract printing agreements: 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.
The Company owns a wholesale newspaper distribution business that
distributes The Times and other newspapers and periodicals in New York City and
central and northern New Jersey. This wholesaler operates under the name of City
& Suburban Delivery Systems. Approximately 49% of The Times's single-copy daily
circulation and 38% of its single-copy Sunday circulation in the New York City
metropolitan area are delivered to retail outlets through this wholesale
operation.
In 1995 The Times used approximately 276,000 metric tons of newsprint,
compared to 295,200 metric tons in 1994. This newsprint was purchased primarily
under long-term contracts from both related (see "Forest Products Companies")
and unrelated suppliers. In 1995 The New York Times Magazine used approximately
20,000 metric tons of supercalendered paper, an intermediate grade of magazine
quality paper, compared to 21,000 metric tons in 1994. This supercalendered
paper was
3
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 Affiliated Publications, Inc.
("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, although its circulation is
concentrated in the Boston metropolitan area. According to ABC reports, as of
September 24, 1995, the weekday circulation of The Globe was the 13th largest of
any weekday newspaper, and circulation of the Sunday edition was the ninth
largest of any Sunday newspaper published in the United States; and its weekday
and Sunday circulation was the largest of all newspapers published in either
Boston or New England.
The following table shows the average weekday and Sunday paid circulation of
The Globe for the editions and the periods indicated, as audited by ABC.
Period Weekday Sunday
------ --------- -------
26 Weeks ended September 24, 1995....................... 498,853 793,672
52 Weeks ended March 26, 1995........................... 503,651 798,508
During the year ended December 31, 1995, the average weekday circulation of
The Globe was down 6,800 copies below 1994 to 497,700 copies and the average
Sunday circulation decreased by 15,500 copies below 1994 to 789,300 copies.
Approximately 70% of The Globe's total weekday circulation and 57% of The
Globe's total Sunday circulation were sold through home or office delivery; the
remainder was sold primarily on newsstands. Virtually all of The Globe's
home-delivered circulation is delivered through The Globe's distribution
subsidiary, Community Newsdealers, Inc.
The weekly rate charged to subscribers for home-delivered copies of The
Globe is $4.50 within the 30-mile radius of Boston and $5.00 outside of the
30-mile radius. The suggested newsstand price of The Globe within the 30-mile
radius is $.50 on weekdays and $1.75 on Sundays. The suggested newsstand price
outside the 30-mile radius is $.50 on weekdays and $2.00 on Sundays.
Advertising
The Globe's total advertising volume by category of advertising for the two
years ended December 31, 1995, for all editions, as measured by The Globe, is
set forth below:
Full Run
---------------------------------- Preprint
Retail National Classified Zoned Total* Copies
Inches Inches Inches Inches Inches Distributed
------ -------- ---------- ------ ------- -----------
(Inches and Preprints in Thousands)
1995 812.9 573.9 1,252.4 307.7 2,946.9 730,944
1994 830.7 562.4 1,217.5 273.6 2,884.2 702,757
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* All totals exclude preprint inches.
Advertising rates in each category of advertising, except for classified
real estate, were adjusted in 1995. The latest increase in retail advertising
rates occurred on September 1, 1995. Increases in classified and national
advertising rates occurred effective April 1, 1995, and July 1, 1995,
respectively. These rate increases ranged from 5% to 8%.
4
Production
The Globe's pagination project, which started in 1989, continued according
to plan as full-page output increased in 1995 to approximately 900 pages per
week, or almost 70% of The Globe's pages produced weekly. The Globe plans to
paginate most of the remaining portions of the newspaper by mid-1996.
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 Globe also owns a Sunday
pre-print storage, inserting and packaging plant in Westwood, Massachusetts.
In 1995 The Globe used approximately 136,000 metric tons of newsprint, which
is approximately the same amount it used in 1994. The major portion was
purchased under long-term contracts with related (see "Forest Product
Companies") and unrelated suppliers. The Globe is not dependent on any one
supplier.
REGIONAL NEWSPAPERS
The Company currently owns 18 daily and three non-daily smaller-city
newspapers.
Daily Newspapers Non-Daily Newspapers
Sarasota Herald-Tribune Times Daily The News-Sun (Sebring/
(Fla.) (Florence, Ala.) Avon Park, Fla.)
The Press Democrat (Santa The Tuscaloosa News (Ala.) Marco Island Eagle
Rosa, Cal.) The Gadsden Times (Ala.) (Fla.)
The Ledger (Lakeland, Fla.) The Courier (Houma, La.) News-Leader
The Gainesville Sun (Fla.) Times-News (Fernandina Beach, Fla.)
Santa Barbara (Hendersonville, N.C.)
News-Press (Cal.) Daily World (Opelousas, La.)
Spartanburg The Dispatch (Lexington, N.C.)
Herald-Journal (S.C.) Daily Comet (Thibodaux, La.)
Wilmington Morning Star Palatka Daily News (Fla.)
(N.C.) Lake City Reporter (Fla.)
Star-Banner (Ocala, Fla.)
The regional daily newspapers' weekday circulation for the year ended
December 31, 1995, decreased 18,000 copies to 753,700 copies, and Sunday
circulation decreased 13,000 copies to 803,900 copies; the circulation of the
non-dailies decreased 600 copies to 36,000 copies. Advertising volume, stated on
the basis of six columns per page, was 15,525,000 inches in 1995, compared with
15,359,700 inches in 1994. These figures exclude the circulation numbers and
advertising volume of five daily newspapers, The Daily Corinthian (Corinth,
Mississippi), State Gazette (Dyersburg, Tennessee), Daily Commercial (Leesburg,
Florida), Lenoir News-Topic (Lenoir, North Carolina) and The Messenger
(Madisonville, Kentucky), as well as two weekly newspapers, The
Banner-Independent (Booneville, Mississippi) and York County Coast Star
(Kennebunk, Maine), which were sold in 1995. (See Note 2 of Notes to
Consolidated Financial Statements.) Preprints distributed in 1995 were
913,922,000, compared with 904,434,000 in 1994 (in each case, not including
preprints distributed by the seven Regional Newspapers sold in 1995).
All of the Regional Newspapers are produced by photocomposition and offset
printing. In 1995 the Regional Newspapers used approximately 94,000 metric tons
of newsprint (not including 2,000 metric tons of newsprint used by the seven
Regional Newspapers sold in 1995), 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
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
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Frankfurt, Hong Kong, London, Marseille, New York, Paris, Rome, Singapore, The
Hague, Tokyo and Zurich. The other one-half interest is owned by The Washington
Post Company.
INFORMATION SERVICES
The New York Times Syndication Sales Corporation ("Syndication Sales")
operates The New York Times News Service, The New York Times Syndicate 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 more than 50 countries
worldwide. The New York Times Syndicate 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 1995, Syndication
Sales introduced two sites on the World Wide Web with news about computers and
health.
NYT Business Information Services, through the group's Index department and
Times On-Line Services, Inc., produces The New York Times Index, a print
publication. The Company licenses LEXIS/NEXIS, Dow Jones Business Information
Services, UMI, Knight-Ridder Information, Inc., and DataTimes to store, market
and distribute its on-line computer data bases. The Company also licenses UMI to
produce and sell The New York Times Index and The Times on microform and CD-ROM.
In 1995 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, and
created an Internet edition of TimesFax. 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
1995 the Company launched a specialized fax product for the legal profession.
NYT Custom Publishing designs, writes, edits, produces, sells and markets
magazines for clients under contract, including IBM, USAir Group, Inc. and Four
Seasons Hotels Limited.
Information Services also develops and markets new services, including
CD-ROM disks, database marketing and multimedia education services.
NEW VENTURES
In 1994, the Company created and introduced @times, an on-line service which
carries information from The Times on America Online and is one of its most
frequently accessed services. In the fall of 1995, a new subsidiary of The
Globe, Boston Globe Electronic Publishing, Inc., launched its Internet site
located at "boston.com." Its goal is to become the principal information
provider for Internet users interested in New England. By the end of 1995, the
site had begun generating some revenue. The New York Times's website, The New
York Times(sm) on the Web, is located at "nytimes.com." and went on-line in
January 1996. According to Netscape, the Internet software company, The New York
Times on the Web had one of the most successful launches to date of any of its
customers. Additionally, several Regional Newspapers have created on-line
services tailored to their local market interests and needs.
In April 1995 the Company acquired a majority interest in Video News
International ("VNI"), a worldwide video newsgathering operation specializing in
low-cost, high-quality footage for sale globally to major television and cable
networks. VNI offers its customers a variety of products and services, including
global news coverage and production, spot news, long-form programming and
videojournalism training.
The Company owns 40% of Popcorn Channel, L.P., through the Company's
wholly-owned subsidiary NYT Broadcast Holdings, Inc. The Popcorn Channel, a new
basic cable network which launched in November 1995, provides viewers with
localized movie theater listings along with previews of the top motion pictures
in current release.
In September 1995, the Company also invested in OVATION, a visual and
performing arts cable television network which is scheduled to launch in 1996.
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MAGAZINES
The Company's Magazine Group had revenues of $162,941,000 in 1995, compared
with $280,061,000 in 1994, and operating profit of $28,741,000 in 1995, compared
with $19,204,000 in 1994. The decrease in revenues is primarily due to the
revenues attributable to the Women's Magazines Division and certain U.K. golf
publications, which were sold in the third quarter of 1994.
The Magazine Group segment consists of two categories: Magazines (including
those publications set forth in the table below) and New Ventures (including
computerized systems for golf tee time reservations, on-line magazine services
and related activities in the sports/leisure field). The Magazines category had
revenues of $152,819,000 in 1995 and an operating profit of $19,971,000 in 1995,
while the New Ventures category had revenues of $122,000 and an operating loss
of $1,230,000 in 1995. The Magazine Group's revenues for 1995 also include $10
million relating to the non-competition agreement entered into in connection
with the sale of the Women's Magazines Division (described below).
On July 26, 1994, the Company sold its Women's Magazines Division to
Gruner+Jahr Printing and Publishing Co. On August 12, 1994, the Company sold
Golf World (U.K.), Golf Illustrated Weekly and Golf Industry News to EMAP plc.
The net after-tax proceeds to the Company from these sales, inclusive of a
four-year $40,000,000 non-competition agreement entered into in connection with
the Women's Magazines sale, were approximately $160,000,000. (See Note 2 of
Notes to Consolidated Financial Statements.)
All of the Company's magazines are printed under long-term contracts with
unrelated printers. In 1995 the magazines used approximately 16,100 metric tons
of coated paper, all of which was purchased from unrelated suppliers under
long-term contracts. The Magazine Group is not dependent on any one supplier.
As of December 31, 1995, the Company published the magazines listed in the
chart below:
PERCENTAGE
INCREASE
(DECREASE) IN
AVERAGE
PUBLICATION AVERAGE CIRCULATION ADVERTISING
MAGAZINE CYCLE SUBJECT/AUDIENCE RATE BASE CIRCULATION(1) OVER 1994 PAGES(2)
- ------------------- ------------------- --------------------- --------- -------------- ------------- -----------
Golf Digest........ Monthly Golf 1,500,000 1,507,900 2.8 1,304
Tennis............. Monthly Tennis 800,000 804,800 0.2 717
Snow Country....... 8 issues per year Skiing/mountain 475,000 479,500 1.8 814
lifestyle
Cruising World..... Monthly Recreational sailors 146,000 150,900 2.0 1,365
Golf World......... 46 issues per year Golf 145,000 146,300 2.3 1,682
Sailing World...... Monthly Racing sailors 65,000 68,500 (2.1) 583
Golf Shop
Operations....... 10 issues per year Golf trade 22,600(3) 17,100 0.6 1,383
Snow Country
Business......... 6 issues per year Ski trade 20,371(3) 15,800 12.9 271
Tennis Buyer's
Guide............ 6 issues per year Tennis trade 12,975(3) 10,800 (1.8) 216
PERCENTAGE
INCREASE
(DECREASE) IN
ADVERTISING
PAGES
MAGAZINE OVER 1994
- ------------------- -------------
<
Golf Digest........ (1.3)
Tennis............. (12.9)
Snow Country....... (0.5)
Cruising World..... 3.4
Golf World......... (5.5)
Sailing World...... 0.7
Golf Shop
Operations....... (4.6)
Snow Country
Business......... (21.0)
Tennis Buyer's
Guide............ (17.9)
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1 As reported by the publisher to ABC or the Business Publications Association.
2 As reported by the publisher to Publisher's Information Bureau ("PIB"); or, in
the case of trade publications, as calculated by the publisher using the same
methodology as for PIB.
3 For these trade publications, the average print order is disclosed as the
applicable measure for advertisers.
NEW VENTURES
In October 1995, the Company acquired the business of PAR Business Systems,
Inc., which provides computerized systems for golf tee time reservations and
automated pro shop business systems for the golf industry. The new business is
being operated by Golf Digest Information Systems, Inc., an indirect subsidiary
of the Company. The Magazine Group has entered into a contract to purchase 450
acres of property in Palm Beach Gardens, Florida, and intends to build and
operate a daily fee 36-hole golf course and teaching facility, which will become
the home of the Golf Digest Golf School. The Magazine Group also offers various
golf and travel information and excerpts from its publications on the World Wide
Web and the Microsoft Network.
7
BROADCASTING
The Broadcasting Group had revenues of $85,106,000 in 1995, up from
$71,318,000 in 1994, and an operating profit of $18,943,000 in 1995, compared
with $13,626,000 in 1994. The Company acquired WTKR-TV, the CBS affiliate which
serves the Norfolk-Portsmouth-Newport News television market in Virginia, in
June 1995. (See Note 2 of Notes to Consolidated Financial Statements.) Higher
local advertising revenues and network compensation at the Company's television
stations, as well as the acquisition of WTKR, accounted for the improved
results.
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
license for WTKR-TV will expire in October 1996. 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 for WNEP-TV
(Wilkes-Barre/Scranton, Pa.) will expire in 1999.
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. WTKR-TV, 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.
WTKR-TV, 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, Norfolk is the 40th largest television
market in the United States, Memphis is the 42nd largest, Wilkes-Barre/Scranton
is the 49th largest, Huntsville is the 86th largest, Moline is part of the Quad
Cities market, the 88th largest, and Fort Smith is the 118th largest market.
The Broadcasting Group produces high quality commercial video and television
programming through NYT Video Productions.
The Company's two radio stations serve the New York City metropolitan area.
WQXR (FM) is currently the only commercial classical music station serving this
market. WQEW (AM) is the only station covering the total New York City region
that offers a format of American popular standards for the market. The licenses
of WQEW(AM) and WQXR(FM) were renewed during 1994 and will expire on February 1,
1998.
FOREST PRODUCTS COMPANIES
The primary raw material used by the Company is newsprint. In 1995, the
Company consumed approximately 508,000 metric tons of newsprint purchased from
various suppliers, including those in which it holds an equity interest. The
Company believes it has an adequate supply of newsprint available through
contracts at market prices from its various suppliers.
The Company has equity interests in a Canadian newsprint company, Donohue
Malbaie Inc. ("Malbaie"), and in a partnership operating a supercalendered paper
mill in Maine, Madison Paper Industries ("Madison") (collectively, the "Forest
Products Companies"). Neither of these companies' debt is guaranteed by the
Company. The Company's equity in operations (an after-tax amount) of these
businesses in 1995 was a profit of $14,051,000, up from $3,264,000 in 1994. The
improved year over year results are due principally to higher selling prices.
Newsprint prices as of December 31, 1995, were significantly higher than 1994
year-end prices. During 1995, notwithstanding the decline in domestic
consumption, the newsprint market remained tight due to the lack of capacity
growth and strong overseas demand.
8
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. In 1995 Malbaie produced
192,000 metric tons of newsprint, 88,000 tons of which were sold to the Company,
with the balance sold to Donohue for resale.
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%. Through Northern, the Company's share of Madison's profits and
losses is 40%. Madison produces supercalendered paper at its facility in
Madison, Maine. Madison purchases all its wood from local suppliers, mostly
under long-term contracts. In 1995 Madison produced 180,000 metric tons, 10,000
tons of which were sold to the Company. In 1996 Madison's five largest customers
(of which the smallest is the Company) are expected to purchase approximately
39% 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 magazines,
television, radio and other media. Based on a specially prepared report by
Competitive Media Reporting, Inc., an independent agency that measures
advertising revenue, and The Times's internal analysis, The Times believes that
it ranks first by a substantial margin 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, including The Boston Herald (daily and Sunday). The Globe
also competes with other communications media, such as direct mail, magazines,
radio, television (including cable television), and weekly, suburban 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, 1995, 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 for listeners with WNYC (FM) (a non-commercial station) for
9
the classical music audience, and it and WQEW (AM) compete for listeners and
revenues 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.
EMPLOYEES
As of December 31, 1995, the Company had approximately 12,300 full-time
equivalent employees.
Approximately 3,600 full-time equivalent employees of The Times and City &
Suburban Delivery Systems, which operates its wholesaler business, are
represented by 16 unions. The Times has collective bargaining agreements
effective through March 30, 2000, with all of its six production unions and with
six of its non-production unions. The Times's contracts with the International
Brotherhood of Electricians (covering approximately 30 non-production employees)
and the International Union of Operating Engineers (covering approximately 20
non-production employees) will expire in the first half of 1996. Negotiations
regarding new contracts with both of these unions will be initiated in the first
quarter of 1996. In early 1996, both The Times and City & Suburban Delivery
Systems will initiate negotiations with 13 unions representing their respective
production and non-production employees (approximately 3,500) regarding a wage
package covering the period beginning March 31, 1996, and ending March 30, 2000.
In the event the parties are unable to reach agreement, the matter will be
submitted to binding arbitration.
API and its subsidiaries, including The Globe, employ approximately 3,100
full-time equivalent employees. Of these, approximately 2,100 are represented by
12 unions. As of December 31, 1995, labor agreements with three of its 11
mechanical unions expired. Negotiations have commenced and The Globe expects
them to be successfully completed in 1996. Seven other mechanical unions have
contracts which continue to be in effect with expiration dates ranging from
December 31, 1996, to December 31, 2001. As of December 31, 1995, three of those
contracts are subject to renegotiation of wage provisions only. Negotiations
continue with one mechanical union whose contract expired on December 31, 1992.
The Globe expects to conclude this negotiation successfully in 1996 as well.
After its agreement with The Boston Globe Employees Association ("BGEA"), an
affiliate of The Newspaper Guild, expired on December 31, 1994, The Globe
reached an impasse in its negotiations with the BGEA in July 1995. Thereafter,
The Globe implemented the terms of its final offer to the BGEA, although
negotiations are continuing.
Three other entities owned by the Company (The Press Democrat, WQXR and
WQEW) also have collective bargaining agreements covering certain of their
employees.
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. During
late 1995, a renovation of The Times's newsroom commenced. The renovation is
expected to be complete by 1999 and to cost approximately $30,000,000. The
renovation is timed to give The Times the space and electrical infrastructure to
fully paginate the newspaper by the end of 1996.
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 1992, and produces all of the advance Sunday
sections of The Times (except The New York Times Magazine and the Television
section) and
10
approximately one-third of the weekday and Sunday New York edition. (See Notes 8
and 14 of Notes to Consolidated Financial Statements.)
The Edison facility replaced an older production facility in Carlstadt, New
Jersey. The Company completed removal of equipment from the facility and has
commenced marketing of the Carlstadt facility for lease or sale.
The Edison facility is the first step in a plan to modernize the production
facilities of The Times. To complete its modernization plan, the Company expects
to replace the production facility housed in the basement at its 43d Street
facility in 1997. The Company is constructing a 515,000 square foot printing and
distribution plant in College Point, Queens, to be operational in the second
half of 1997. The Company is leasing a 31-acre site in College Point and has the
option to purchase the property at any time prior to the end of the lease in
2019. Together with the Edison plant, the College Point facility will provide a
number of benefits, including later deadlines, increased color in the daily
paper, increased flexibility in paging and sectioning the paper and daily
advertising inserts. (See Notes 8 and 14 of Notes to Consolidated Financial
Statements.)
The Globe owns its printing plants in Boston (652,000 square feet) and
Billerica (290,000 square feet), Massachusetts, as well as its Sunday pre-print
storage, inserting and packaging plant in Westwood, Massachusetts (115,000
square feet). 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. A new 180,000 square foot color printing facility is under
construction at The Ledger in Lakeland, Florida, for an expected cost of
approximately $70,000,000 and completion is expected by the end of 1996.
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 11, 1996(1)
- ---- --- ---------- -----------------
CORPORATE OFFICERS
Arthur Ochs Sulzberger....... 70 1951 Chairman (since 1973); Chief Executive Officer;
Director; Publisher of The New York Times
("The Times") (1963 to 1992)
Lance R. Primis.............. 49 1969 President and Chief Operating Officer (since
1992); President and General Manager of The
Times (1988 to 1992)
11
Employed
By
Registrant Position(s) As Of
Name Age Since March 11, 1996(1)
- ----------------------------- --- ---------- -----------------------------------------------
Diane P. Baker............... 41 1995 Senior Vice President and Chief Financial
Officer (since 1995); Group Senior Vice
President--Chief Financial Officer of R.H.
Macy & Co., Inc. ("Macy's") (1993 to 1995);
Senior Vice President--Finance and Chief
Financial Officer of Macy's (1990 to 1993)
Katharine P. Darrow.......... 52 1970 Senior Vice President (since 1993),
Broadcasting, Corporate Development and Human
Resources; Vice President (1988 to 1993),
Broadcasting/Information Services and
Corporate Development
Michael Golden............... 46 1984 Vice President, Operations Development (since
1996); Executive Vice President and Publisher
of Tennis (1994 to 1995); Executive Vice
President and General Manager of Women's
Magazines (1991 to 1994); Publisher of McCall's
(1990-1991)
David L. Gorham.............. 63 1974 Senior Vice President (since 1980) and Deputy
Chief Operating Officer (since 1995); Chief
Financial Officer (1980 to 1995); Treasurer
(1988 to 1992)
Leslie A. Mardenborough...... 46 1981 Vice President, Human Resources (since 1990)
Thomas H. Nied............... 53 1977 Vice President, Taxation (since 1990)
Stuart Stoller............... 40 1996 Vice President and Corporate Controller (since
1996); Controller of Coopers and Lybrand
L.L.P. (1995); Senior Vice President--Control
and Accounting of Macy's (1993 to 1995); Group
Vice President--Control and Accounting of
Macy's (1991 to 1993); Vice President--Corporate
Accounting of Macy's (1989 to 1991)
Solomon B. Watson IV......... 51 1974 Vice President (since 1990); General Counsel
(since 1989)
Laura J. Corwin.............. 50 1980 Secretary (since 1989) and Corporate Counsel
(since 1993)
Richard G. Thomas............ 47 1977 Treasurer (since 1992); Assistant Treasurer
(1983 to 1992)
OPERATING UNIT EXECUTIVES
James W. FitzGerald.......... 57 1968 President, The New York Times Company Magazine
Group, Inc. (since 1985)
Stephen Golden............... 49 1974 Vice President, Forest Products, Health, Safety
and Environmental Affairs (since 1992);
President and General Manager of the
Company's Forest Products Group (since 1994);
Vice President, Forest Products (1990 to
1992)
C. Frank Roberts............. 52 1970 Vice President, Broadcasting (since 1986)
Arthur O. Sulzberger, Jr..... 44 1978 Publisher of The Times (since 1992); Deputy
Publisher of The Times (1988 to 1992)
William O. Taylor............ 63 1993 Publisher of The Boston Globe (since 1978) and
Chairman and Chief Executive Officer of Globe
Newspaper Company (since 1982)
James C. Weeks............... 53 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-27 of this Form
10-K.
ITEM 6. Selected Financial Data.
The information required by this item appears at page F-1 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-8 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, pages F-9
to F-26 and page F-28 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 the paragraph immediately
following footnote 10 on page 6, pages 8 to 13 and the top of page 14, but only
up to and not including the section entitled "Certain Information about the
Board of Directors," of the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders.
ITEM 11. Executive Compensation.
The information required by this item is incorporated by reference to pages
13 to 19 and the section on page 23 entitled "Compensation Committee Interlocks
and Insider Participation" of the Company's Proxy Statement for the 1996 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, but only up to and not including the section entitled "Proposal Number
1- Election of Directors," of the Company's Proxy Statement for the 1996 Annual
Meeting of Stockholders.
ITEM 13. Certain Relationships and Related Transactions.
The information required by this item is incorporated by reference to page
13 and pages 16 to 19 of the Company's Proxy Statement for the 1996 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-9 to
F-26. The report of Deloitte & Touche LLP, Independent Public
Accountants, dated February 7, 1996, is set forth on page F-27 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-9
to F-26. 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
----
Independent Auditors' Consent............................... Exhibit 23
Consolidated Schedules for the Three Years Ended December
31, 1995:
II--Valuation and Qualifying Accounts.................. S-1
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 (filed as an
Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated
by reference herein).
(3.2) By-laws as amended through February 16, 1995 (filed as an
Exhibit to the Company's Form 10-Q dated May 11, 1995, and incorporated
by reference herein).
(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 amount of
securities authorized thereunder does not exceed 10% of the total assets
of the Company and its subsidiaries on a consolidated basis.
14
(9.1) Globe Voting Trust Agreement, dated as of October 1, 1993, as
amended effective October 1, 1995.
(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 18, 1995.
(10.3) The Company's 1991 Executive Cash Bonus Plan, as amended
through April 18, 1995.
(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 and restated through January 1, 1993.
(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).
(10.7) 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) (filed
as an Exhibit to the Company's Form 10-K dated March 21, 1994, and
incorporated by reference herein).
(10.8) Funding Agreement #1, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.9) Funding Agreement #2, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.10) Funding Agreement #3, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.11) Funding Agreement #4, dated as of December 15, 1993, between
the EDC and the Company (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.12) 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 (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.13) Employment Agreement, dated May 19, 1993, between API, Globe
Newspaper Company and William O. Taylor (filed as an Exhibit to the
Company's Form 10-K dated March 21, 1994, and incorporated by reference
herein).
(10.14) 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 Form S-4 (Registration Statement No.
33-28373) declared effective April 28, 1989, and incorporated by
reference herein).
15
(10.15) API's Supplemental Executive Retirement Plan, as amended
effective September 15, 1993 (filed as an Exhibit to the Company's Form
10-K dated March 21, 1994, and incorporated by reference herein).
(10.16) 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).
(10.17) Form of Substituted Stock 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).
(10.18) Form of Substituted Stock 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).
(10.19) Form of Substituted Stock 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).
(10.20) The Company's Deferred Executive Compensation Plan, adopted
on May 19, 1994.
(21) Subsidiaries of the Company.
(23) Consent of Deloitte & Touche LLP.
(27) Financial Data Schedule.
(B) REPORTS ON FORM 8-K
On December 26, 1995, the Company filed a report on Form 8-K dated
December 26, 1995, relating to the change in its fiscal year end from December
31 to the last Sunday in December, beginning with the fiscal year ending
December 29, 1996.
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 11, 1996
(Registrant)
THE NEW YORK TIMES COMPANY
By: /s/ 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 11, 1996
Executive Officer),
Director
JOHN F. AKERS Director March 11, 1996
DIANE P. BAKER Senior Vice President and March 11, 1996
Chief Financial Officer
(Principal Financial Officer)
RICHARD L. GELB Director March 11, 1996
LOUIS V. GERSTNER, JR. Director March 11, 1996
MARIAN S. HEISKELL Director March 11, 1996
A. LEON HIGGINBOTHAM, JR. Director March 11, 1996
RUTH S. HOLMBERG Director March 11, 1996
ROBERT A. LAWRENCE Director March 11, 1996
GEORGE B. MUNROE Director March 11, 1996
CHARLES H. PRICE II Director March 11, 1996
LANCE R. PRIMIS President (Chief Operating March 11, 1996
Officer)
GEORGE L. SHINN Director March 11, 1996
DONALD M. STEWART Director March 11, 1996
STUART STOLLER Vice President, March 11, 1996
Corporate Controller
(Principal Accounting
Officer)
JUDITH P. SULZBERGER Director March 11, 1996
WILLIAM O. TAYLOR Director March 11, 1996
CYRUS R. VANCE Director March 11, 1996
17
Appendix
1995 Financial Report
THE NEW YORK TIMES COMPANY
1995 Consolidated Financial Statements
- -------------------------------------------------------------------------------
Contents Page
- -------------------------------------------------------------------------------
Financial Highlights F-1
Segment Information F-2
Management's Discussion and Analysis F-4
Consolidated Statements of Income F-9
Consolidated Balance Sheets F-10
Consolidated Statements of Cash Flows F-12
Consolidated Statements of Stockholders' Equity F-14
Notes to Consolidated Financial Statements F-15
Independent Auditors' Report F-27
Management's Responsibilities Report F-27
Market Information F-27
Quarterly Information F-28
Ten-Year Supplemental Financial Data F-29
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------------------------------------------------------------
Dollars in thousands except per share data Year Ended December 31
1995 1994 1993 1992 1991
--------------------------------------------------------------------------------------------------------------------------------
REVENUES AND INCOME
Revenues $ 2,409,403 $ 2,357,563 $ 2,019,654 $ 1,773,535 $ 1,703,101
Operating profit 228,580 211,242 126,581 88,408 93,639
Income before income taxes and equity in operations
of forest products group 214,641 383,953 101,206 8,525 63,053
Income (Loss) before equity
in operations of forest products group 121,809 210,085 57,975 (2,554) 41,293
Equity in operations of forest products group 14,051 3,264 (51,852) (8,718) 5,700
Income (Loss) before net cumulative effect
of accounting changes 135,860 213,349 6,123 (11,272) 46,993
Net cumulative effect of accounting changes -- -- -- (33,437) --
Net income (loss) 135,860 213,349 6,123 (44,709) 46,993
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Property, plant and equipment - net 1,276,066 1,158,751 1,112,024 902,755 966,593
Total assets 3,376,730 3,137,631 3,215,204 1,994,974 2,127,981
Long-term debt and capital lease obligations 637,873 523,196 460,063 206,911 213,487
Common stockholders' equity 1,610,349 1,543,539 1,598,883 999,630 1,073,442
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Income (Loss) before net cumulative
effect of accounting changes 1.40 2.05 .07 (.14) .61
Net cumulative effect of accounting changes -- -- -- (.43) --
Net income (loss) 1.40 2.05 .07 (.57) .61
Dividends .56 .56 .56 .56 .56
Common stockholders' equity (end of year) 16.50 15.71 14.96 12.54 13.70
- ------------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS (See notes below)
Operating profit to revenues 9% 9% 6% 5% 5%
Income before equity in operations
of forest products group to revenues 5% 5% 3% 2% 2%
Return on average stockholders' equity 8% 7% -- 2% 4%
Return on average total assets 4% 3% -- 1% 2%
Long-term debt and capital lease obligations
to total capitalization 28% 25% 22% 17% 17%
Current assets to current liabilities .89 .91 .89 1.08 .89
- ------------------------------------------------------------------------------------------------------------------------------------
EMPLOYEES 12,300 12,800 13,000 10,100 10,100
- ------------------------------------------------------------------------------------------------------------------------------------
In 1995, the Company sold small regional newspapers (see Note 2). The sales
resulted in a pre-tax gain of approximately $11.3 million ($5.0 million after
taxes or $.05 per share). These transactions are not reflected in the 1995
income amounts used in the applicable key ratio calculations presented above.
In 1994, the Company sold its Women's Magazines Division and U.K. golf
publications, and divested a minority interest in a Canadian paper mill
("Gaspesia") (see Note 2). As a result of these transactions, the Company
recorded a net pre-tax gain of approximately $200.9 million ($103.3 million
after taxes or $.99 per share). These transactions are not reflected in the 1994
income amounts used in the applicable key ratio calculations presented above.
Amounts for 1995 through 1993 include The Boston Globe since its acquisition on
October 1, 1993 (see Note 2).
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-6).
In 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). 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 and the Gwinnett transaction
are not reflected in the 1992 income amounts used in the applicable key ratio
calculations presented above.
F-1
SEGMENT INFORMATION
- --------------------------------------------------------------------------------
The Company has classified its business into the following segments and equity
interests:
NEWSPAPERS: The New York Times ("The Times"), The Boston Globe ("The Globe"), 21
regional newspapers, newspaper distributors, a one-half interest in the
International Herald Tribune S.A., a news service, a features syndicate,
TimesFax, licensing operations of The New York Times databases/microfilm and New
Ventures. New Ventures include projects developed in electronic media by The
Times and The Globe as well as various new media investments.
MAGAZINES: Numerous publications and New Ventures such as computerized systems
for golf tee time reservations and on-line magazine services, and related
activities in the sports/leisure field.
BROADCASTING: Six network-affiliated television stations and two radio stations.
FOREST PRODUCTS: Equity interests in a newsprint company and a partnership in a
supercalendered paper mill that together supply a portion of the Newspaper
Group's annual paper requirements.
- -----------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- -----------------------------------------------------------------------------------------
REVENUES
Newspapers $ 2,161,356 $ 2,006,184 $ 1,563,281
Magazines 162,941 280,061 394,463
Broadcasting 85,106 71,318 61,910
- -----------------------------------------------------------------------------------------
Total $ 2,409,403 $ 2,357,563 $ 2,019,654
- -----------------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 208,465 $ 207,489 $ 125,597
Magazines 28,741 19,204 12,330
Broadcasting 18,943 13,626 8,138
Unallocated corporate expenses (27,569) (29,077) (19,484)
- -----------------------------------------------------------------------------------------
Total 228,580 211,242 126,581
Interest expense, net of interest income 25,230 28,162 25,375
Net gain on dispositions 11,291 200,873 --
- -----------------------------------------------------------------------------------------
Income before income taxes and equity
in operations of forest products group 214,641 383,953 101,206
Income taxes 92,832 173,868 43,231
- -----------------------------------------------------------------------------------------
Income before equity in
operations of forest products group 121,809 210,085 57,975
Equity in operations of forest products group 14,051 3,264 (51,852)
- -----------------------------------------------------------------------------------------
NET INCOME $ 135,860 $ 213,349 $ 6,123
- -----------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-2
SEGMENT INFORMATION
- -------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- -------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Newspapers $ 133,264 $ 135,767 $ 98,963
Magazines (7,000) 3,426 18,616
Broadcasting 11,519 10,113 10,725
Corporate 1,151 784 528
- -------------------------------------------------------------------------------
Total $ 138,934 $ 150,090 $ 128,832
- -------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Newspapers $ 196,096 $ 188,222 $ 71,780
Magazines 736 906 3,059
Broadcasting 4,093 3,013 3,289
Corporate 11,130 794 1,491
- -------------------------------------------------------------------------------
Total $ 212,055 $ 192,935 $ 79,619
- -------------------------------------------------------------------------------
IDENTIFIABLE ASSETS AT DECEMBER 31
Newspapers $ 2,832,297 $ 2,732,953 $ 2,685,611
Magazines 99,525 91,797 247,723
Broadcasting 174,363 100,874 104,843
Corporate 168,576 126,574 101,007
Investment in forest products group 101,969 85,433 76,020
- -------------------------------------------------------------------------------
Total $ 3,376,730 $ 3,137,631 $ 3,215,204
- -------------------------------------------------------------------------------
See notes to consolidated financial statements.
Newspaper Group operating profit for 1995 and 1993 includes charges of $8.5
million and $35.4 million, respectively, for costs related to staff reductions.
Unallocated corporate expenses for 1995 includes a charge of $1.6 million for
similar staff reductions.
Magazine Group amounts for 1994 have been affected by the dispositions of the
Women's Magazines Division and the U.K. golf publications (see Note 2). The 1995
and 1994 amortization amounts include $10.0 million and $4.2 million,
respectively, of the income relating to a $40.0 million non-compete agreement,
associated with the disposition of the Women's Magazines Division, which is
being recognized straight-line over four years.
Newspaper Group amounts for 1995 and 1994 have been affected by the inclusion of
The Globe's operations for the entire year, while the 1993 amounts only include
its operations from the October 1, 1993 acquisition date (see Note 2).
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 Gaspesia.
F-3
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -------------------------------------------------------------------------------
Advertising and circulation revenues accounted for approximately 69 percent and
23 percent of the Company's revenues in 1995. National and local economic
conditions influence the level of retail, national and classified advertising
generated in the markets served by the Company's business segments. Circulation
revenue is affected by competition from other forms of media available in the
Company's respective markets.
The cost of raw materials for the Company and the entire publishing industry
was adversely affected by the significant increases in newsprint and magazine
paper prices throughout 1995. The unfavorable impact of these increases is
expected to continue during 1996. However, it its unclear whether paper prices
will continue to rise in 1996.
Per share amounts in the following Management's Discussion and Analysis are
computed on an after-tax basis.
RESULTS OF OPERATIONS: 1995 Compared with 1994
In 1995, the Company reported net income of $135.9 million, or $1.40 per share,
compared with net income of $213.3 million, or $2.05 per share, in 1994.
Exclusive of special factors as described below, annual earnings from
ongoing operations would have been $1.41 per share in 1995, compared with $1.06
per share in 1994, an increase of 33 percent. The improvement in ongoing
operations in 1995's annual earnings was primarily due to higher revenues from
the Company's newspaper and broadcast properties and higher earnings from its
Forest Products Group.
Consolidated revenues for 1995 increased to $2.41 billion from $2.36 billion
in 1994. Excluding the revenues attributable to the operations divested during
1995 and 1994, annual revenues on a comparable basis were up 8 percent over
1994. The growth in revenues for the year was driven by strong revenues at the
newspaper and broadcast properties.
The Company's costs and expenses, excluding special factors, increased to
$2.17 billion from $2.15 billion in 1994. Excluding the costs and expenses
associated with the 1995 and 1994 divestitures, costs increased approximately 9
percent. The increase was primarily due to higher newsprint and magazine paper
prices and higher wages and benefits costs throughout the Company.
The Company's earnings for the year before interest, income taxes,
depreciation and amortization ("EBITDA"), excluding the net gains from the 1995
and 1994 divestitures, rose to $367.5 million from $361.3 million in the
comparable 1994 period.
Earnings for 1995 were affected by the following special factors:
- $10.1 million pre-tax charge ($.06 per share) for severance and
related costs resulting from work force reductions ("buyouts").
- $11.3 million pre-tax gain ($.05 per share) on the sales of small
regional newspapers.
Earnings for 1994 were affected by the following special factor:
- $200.9 million net pre-tax gain ($.99 per share) relating to the
divestitures of the Women's Magazines Division, U.K. golf publications
and a minority interest in Gaspesia Pulp & Paper Company Ltd.
("Gaspesia"), a Canadian newsprint mill.
Annual per share amounts were affected by the repurchase of the Company's
Class A Common Stock throughout 1994 and 1995. During 1995, $46.3 million was
expended to repurchase approximately 2.1 million shares. In 1994, approximately
$235.2 million was expended to repurchase 10.0 million shares.
Interest expense, net of interest income, declined to $25.2 million from
$28.2 million in 1994. The 1995 decline was due to higher levels of capitalized
interest in connection with new construction and a lower rate of interest on the
Company's outstanding debt, offset by higher debt balances.
Exclusive of taxes related to the 1995 and the 1994 divestitures, the annual
effective income tax rate for 1995 was 42.5 percent compared with 41.7 percent
in 1994. The 1995 tax rate includes the effects of a 1995 favorable state tax
ruling. The 1994 rate includes the utilization of capital loss carryforwards.
The following discussion provides additional information with respect to the
Company's traditional operations and new ventures.
- --------------------------------------------------------------------------------
NEWSPAPER GROUP: The table below shows the Newspaper Group's revenues, EBITDA
and operating profit split between newspapers/related businesses and new
ventures. The Newspapers category consists of: The New York Times ("The Times"),
The Boston Globe ("The Globe"), 21 Regional Newspapers, newspaper distributors,
a 50 percent interest in the International Herald Tribune, and Information
Services (previously included in the Broadcasting Group) which includes a news
service, a features syndicate, TimesFax and licensing operations of The New York
Times databases and microfilm. The New Ventures category consists of new
projects developed in electronic media by The Times and The Globe as well as
various new media investments such as Video News International and The Popcorn
Channel.
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------
REVENUES
Newspapers $2,160,399 $2,006,184
New Ventures 957 -
- ------------------------------------------------------------------
Total Revenues $2,161,356 $2,006,184
- ------------------------------------------------------------------
EBITDA
Newspapers $ 354,415 $ 343,256
New Ventures (12,686) -
- ------------------------------------------------------------------
Total EBITDA $ 341,729 $ 343,256
- ------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 221,566 $ 207,489
New Ventures (13,101) -
- ------------------------------------------------------------------
Total Operating Profit $ 208,465 $ 207,489
- ------------------------------------------------------------------
F-4
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
Excluding buyouts associated with the Group, operating profit in 1995 was
$217.0 million compared with $207.5 million in 1994. Revenues increased to $2.16
billion in 1995 from $2.01 billion in the prior year. Operating profit improved
despite a significant increase in newsprint prices over 1994. Increased
advertising and circulation rates and cost controls enabled the Group to
overcome a $76.2 million increase for the year in newsprint costs (net of
conservation programs).
Revenues increased approximately 8 percent for the year. The increase was
attributable to higher advertising rates and volume, higher circulation revenues
and database royalties. The Times experienced a 15 percent gain in circulation
revenues while The Globe recorded an 11 percent increase for the year. At the 21
Regional Newspapers, circulation revenue grew 7 percent for the year.
Average circulation on a comparable basis for the year was as follows:
Weekday Sunday
- ------------------------------------------------------------------
(Copies in thousands) 1995 % Change 1995 % Change
- ------------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,120.7 -1.9 1,712.6 -1.8
The Boston Globe 497.7 -1.3 789.3 -1.9
Regional Newspapers 753.7 -2.3 803.9 -1.6
- ------------------------------------------------------------------
The average circulation decline is partly attributable to the increase in
newsstand and home delivery prices and a decrease in distribution to selected
outlying areas.
Advertising volume on a comparable basis for the year was as follows:
- ------------------------------------------------------------------
(Inches in thousands) 1995 % Change
- ------------------------------------------------------------------
ADVERTISING VOLUME (EXCLUDING PREPRINTS)
The New York Times 3,831.2 +2.6
The Boston Globe 2,946.9 +2.2
Regional Newspapers 15,525.1 +1.1
- ------------------------------------------------------------------
Advertising volume at The Times increased 2.6 percent over 1994. Zoned and
national advertising categories increased 14.6 percent and 1.3 percent,
respectively, while retail and classified advertising experienced decreases of
3.8 percent and 2.8 percent, respectively.
At The Globe, advertising volume for the year increased 2.2 percent over
1994. Advertising increased in all categories except retail, which declined 2.1
percent. Advertising volume for the 21 Regional Newspapers increased 1.1 percent
over 1994. Classified advertising increased 8.0 percent, while the retail
category decreased 2.1 percent.
MAGAZINE GROUP: The Magazine Group is comprised of a number of publications, New
Ventures such as computerized systems for golf tee time reservations and on-line
magazine services, and related activities in the sports/leisure field. The
revenues for the Group include a $40.0 million non-compete agreement, associated
with the divestiture of the Women's Magazine Division, which is being recognized
straight-line over four years.
- ------------------------------------------------------------------
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------
REVENUES
Sports/Leisure Magazines $152,819 $144,777
New Ventures 122 -
Non-Compete 10,000 4,167
1994 Divested Magazines - 131,117
- ------------------------------------------------------------------
Total Revenues $162,941 $280,061
- ------------------------------------------------------------------
EBITDA
Sports/Leisure Magazines $ 22,876 $ 21,611
New Ventures (1,135) -
1994 Divested Magazines - 1,019
- ------------------------------------------------------------------
Total EBITDA $ 21,741 $ 22,630
- ------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Sports/Leisure Magazines $ 19,971 $ 19,439
New Ventures (1,230) -
Non-Compete 10,000 4,167
1994 Divested Magazines - (4,402)
- ------------------------------------------------------------------
Total Operating Profit $ 28,741 $ 19,204
- ------------------------------------------------------------------
Operating profit for the Group was $28.7 million in 1995, compared with
$19.2 million in 1994, on revenues of $162.9 million and $280.1 million,
respectively. The decrease in revenues for the year was primarily due to the
revenues attributable to the Women's Magazines Division and the U.K. golf
publications, which were sold in the third quarter of 1994.
Excluding the operations of the 1994 divested magazines and the non-compete
income, revenues for 1995 increased approximately 6 percent due to higher
advertising revenues at Golf Digest and Golf World USA offset, in part, by
sluggish advertising at Tennis magazine. Operating profit for the Sports/Leisure
Magazines increased slightly due to improved revenues offset by higher paper
prices and subscription costs.
Advertising pages as reported to Publisher's Information Bureau ("PIB") for
Golf Digest decreased 1.3 percent to 1,304 pages and for Tennis decreased 12.9
percent to 717 pages.
THE BROADCASTING GROUP: The Broadcasting Group consists of six network-
affiliated television stations and two radio stations.
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------
Revenues $85,106 $71,318
- ------------------------------------------------------------------
EBITDA $30,462 $23,739
- ------------------------------------------------------------------
Operating Profit $18,943 $13,626
- ------------------------------------------------------------------
The Broadcasting Group's operating profit increased 39 percent over 1994.
The Group's operating profit was $18.9 million in 1995, compared with $13.6
million in 1994, on revenues of $85.1 million and $71.3 million, respectively.
Increased results for the year were due to higher local advertising revenues,
higher network compensation and the added operations of WTKR-TV, Norfolk, Va.,
which was acquired in June 1995.
FOREST PRODUCTS GROUP: Equity in operations of the Forest Products Group
(an after-tax amount) was $14.1 million in 1995 compared with $3.3 million in
1994. The 1995 improvement resulted principally from higher paper sales prices.
F-5
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
RESULTS OF OPERATIONS: 1994 COMPARED WITH 1993
In 1994, the Company reported net income of $213.3 million, or $2.05 per share,
compared with $6.1 million, or $.07 per share, in 1993.
Exclusive of the special factors described below, annual earnings would have
been $1.06 per share in 1994 compared with $.91 per share in 1993. Operating
profit for 1994, after excluding the special factors, rose to $211.2 million
from $163.1 million in 1993. The improvement in ongoing operations in 1994's
annual earnings was due to higher revenues at The Times, Regional Newspapers and
Broadcasting and the inclusion of The Globe's operations for the entire year
compared with one quarter in 1993.
Revenues for 1994 increased to $2.36 billion from $2.02 billion in 1993. The
1994 annual revenues included The Globe for an entire year, but the Women's
Magazines and U.K. golf publications only through the first six months. Annual
revenues for 1993 included an entire year of revenues from the magazines sold in
1994, but only the fourth-quarter revenues from The Globe. On a comparable
basis, excluding revenues attributable to The Globe and the magazines sold, 1994
annual revenues increased by approximately 6 percent over 1993. The growth in
1994 revenues was due to higher revenues in the Newspaper and Broadcasting
Groups.
The Company's costs and expenses after excluding special factors increased
to $2.15 billion from $1.86 billion in 1993. The increase was due to the
inclusion of The Globe's operations and acquisition amortization expense for the
entire year, as well as higher wages and benefits costs throughout the Company
offset, in part, by the reduction in expenses associated with the magazines
sold.
Earnings for 1994 were affected by the following special factor:
- $200.9 million net pre-tax gain ($.99 per share) relating to the
divestitures of the Women's Magazines Division, U.K. golf publications
and a minority interest in Gaspesia.
Earnings for 1993 were affected by the following special 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 Gaspesia.
- $35.4 million pre-tax charges ($.23 per share) for severance and
related costs resulting from staff reductions at The Times.
- $4.4 million unfavorable tax adjustment ($.05 per share) due to a
federal corporate income tax rate increase which required the
remeasurement of deferred tax balances.
- $3.7 million pre-tax costs ($.02 per share) due to a severe snowstorm
that disrupted delivery of The Times.
- $2.6 million pre-tax gain ($.02 per share) on the sale of assets.
Excluding the net gain from the dispositions, EBITDA rose significantly to
$361.3 million in 1994 from $255.4 million in 1993. The increase was due to
improved operating results and the inclusion of The Globe's operations for an
entire year in 1994.
Interest expense, net of interest income, rose to $28.2 million in 1994 from
$25.4 million in 1993. The increase was a result of higher borrowings in
connection with stock repurchases and the October 1993 acquisition of The Globe.
Exclusive of the taxes related to the 1994 magazine sales and the
disposition of Gaspesia, the Company's effective income tax rate for 1994 was
41.7 percent compared with 42.7 percent in 1993. The rates in both years reflect
the utilization of capital tax loss carryforwards.
A discussion of the Company's financial performance follows:
NEWSPAPER GROUP:
(Dollars in thousands) 1994 1993
- ------------------------------------------------------------------
Revenues $2,006,184 $1,563,281
- ------------------------------------------------------------------
EBITDA $ 343,256 $ 224,560
- ------------------------------------------------------------------
Operating Profit $ 207,489 $ 125,597
- ------------------------------------------------------------------
Operating profit of the Newspaper Group, adjusted for special factors, in
1994 was $207.5 million compared with $162.1 million in 1993. Revenues increased
to $2.01 billion in 1994 from $1.56 billion in the prior year. The improvements
in 1994 revenues and operating profit were due to a combination of higher
advertising and circulation rates, increased advertising volume, and the
inclusion of the operations of The Globe for an entire year. The Group was
affected by higher newsprint prices in the fourth quarter of 1994, as a result
of increased demand for newsprint in the market. These prices increased in 1995.
Average circulation for 1994 throughout the Newspaper Group was adversely
affected by newsstand and home delivery price increases. Average circulation on
a comparable basis for the year was as follows:
Weekday Sunday
- ------------------------------------------------------------------
(Copies in thousands) 1994 % Change 1994 % Change
- ------------------------------------------------------------------
AVERAGE CIRCULATION
The New York Times 1,142.8 -3.1 1,743.9 -2.1
The Boston Globe 504.5 - 804.8 -1.2
Regional Newspapers 843.5 -0.9 851.4 -0.3
Advertising volume on a comparable basis for the year was as follows:
- ------------------------------------------------------------------
(Inches in thousands) 1994 % Change
- ------------------------------------------------------------------
ADVERTISING VOLUME (EXCLUDING PREPRINTS)
The New York Times 3,733.6 +3.5
The Boston Globe 2,884.2 +5.3
Regional Newspapers 17,086.8 +4.3
- ------------------------------------------------------------------
Advertising volume at The Times increased 3.5 percent. National, classified
and zoned advertising categories experienced increases of 2.1 percent, 4.1
percent and 8.3 percent, respectively. However, retail advertising decreased by
1.1 percent.
At The Globe, advertising volume for the year 1994 increased 5.3 percent
over 1993. Advertising increased in all categories, especially classified which
was up 8.6 percent over 1993.
F-6
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
- --------------------------------------------------------------------------------
At the 28 regional newspapers that were in the Group for the entire 1994 and
1993 periods (two weekly newspapers were sold at the end of 1993), advertising
volume increased 4.3 percent. Advertising increased in all categories over 1993.
MAGAZINE GROUP:
(Dollars in thousands) 1994 1993
- ------------------------------------------------------------------
REVENUES
Sports/Leisure Magazines $144,777 $146,306
Non-Compete 4,167 -
1994 Divested Magazines 131,117 $248,157
- ------------------------------------------------------------------
Total Revenues $280,061 $394,463
- ------------------------------------------------------------------
EBITDA
Sports/Leisure Magazines $ 21,611 $ 26,364
1994 Divested Magazines 1,019 4,582
- ------------------------------------------------------------------
Total EBITDA $ 22,630 $ 30,946
- ------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Sports/Leisure Magazines $ 19,439 $ 22,780
Non-Compete 4,167 -
1994 Divested Magazines (4,402) (10,450)
- ------------------------------------------------------------------
Total Operating Profit $ 19,204 $ 12,330
- ------------------------------------------------------------------
Operating profit for the Magazine Group was $19.2 million in 1994, compared
with $12.3 million in 1993, on revenues of $280.1 million and $394.5 million,
respectively. The decrease in revenues for the year was primarily due to the
lack of revenues attributable to the Women's Magazines Division and the U.K.
golf publications, which were sold in the third quarter of 1994.
In connection with the sale of the Women's Magazines Division, the Company
entered into a four-year non-compete agreement for which it received $40.0
million. This amount is being recognized as income, on a straight-line basis,
over a four- year period commencing with the closing of the sale on July 26,
1994. The 1994 revenues for the Group included $4.2 million relating to this
agreement.
Excluding the 1993 and 1994 operations of the Women's Magazines Division,
the U.K. golf publications and the non-compete income arising from the Women's
sale in 1994, both the revenues and the operating profit of the Sports/Leisure
Magazines for 1994 were down from the comparable period in 1993. This was due
primarily to softness in advertising at Golf Digest and Tennis magazines and
higher subscription promotion costs.
Advertising pages as reported to Publisher's Information Bureau for Golf
Digest decreased 2 percent from 1993 to 1,321 pages and for Tennis increased 4
percent from 1993 to 823 pages.
BROADCASTING GROUP:
(Dollars in thousands) 1994 1993
- ------------------------------------------------------------------
Revenues $71,318 $61,910
- ------------------------------------------------------------------
EBITDA $23,739 $18,863
- ------------------------------------------------------------------
Operating Profit $13,626 $ 8,138
- ------------------------------------------------------------------
The Broadcasting Group's operating profit was $13.6 million in 1994,
compared with $8.1 million in 1993 on revenues of $71.3 million and $61.9
million, respectively. Higher national and local advertising revenues at the
television stations accounted for the improved operating results.
FOREST PRODUCTS GROUP: Equity in operations of the Forest Products Group (an
after-tax amount) was $3.3 million in 1994, compared with a loss of $4.9 million
in 1993, when adjusted for the Gaspesia write-down. The 1994 improvements
resulted from the Company no longer needing to record its share of operating
losses for Gaspesia as a result of the 1993 write-down. In addition, higher
sales prices improved the Group's operating results during the second half of
the year and this favorable trend continued into 1995.
- --------------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities in 1995 of $295.2 million and the
incremental proceeds from the debt offering (see below) were used primarily to
modernize facilities and equipment, to fund acquisitions, to pay dividends to
stockholders and to repurchase shares of the Company's Class A Common Stock. The
ratio of current assets to current liabilities was .89 at December 31, 1995,
compared with .91 at December 31, 1994, and long-term debt and capital lease
obligations as a percentage of total capitalization was 28 percent at December
31, 1995, compared with 25 percent at December 31, 1994.
FINANCING: In March 1995, the Company completed a public offering of $400.0
million of unsecured notes and debentures. The offering consisted of ten-year
notes aggregating $250.0 million maturing March 15, 2005 at an annual rate of
7.625% (the "Notes") and 30-year debentures aggregating $150.0 million maturing
March 15, 2025 at an annual rate of 8.25% (the "Debentures"), (collectively
referred to herein as the "Offering").
The Debentures are callable after ten years. Interest is payable semi-annually
on March 15 and September 15 on both the Notes and the Debentures.
The net proceeds from the Offering were used to repay the principal balance
of the $162.3 million 11.85% Notes due March 31, 1995, $50.0 million of 9.34%
Notes due July 15, 1995 and indebtedness outstanding under the Company's
commercial paper program. The remaining net proceeds were used for general
corporate purposes. Accordingly, at December 31, 1994, the 11.85% Notes due
March 31, 1995, the 9.34% Notes due July 15, 1995 and the amounts outstanding
under the Company's commercial paper facility were classified as long-term debt
as they were expected to be refinanced on a long-term basis under the Offering.
The Company has established a $200.0 million commercial paper program,
which is supported by the Company's revolving credit and term loan agreements.
Borrowings are in the form of
F-7
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONCLUDED)
- -------------------------------------------------------------------------------
unsecured notes sold at a discount with maturities ranging up to 270 days.
There were no borrowings outstanding under the commercial paper program at
December 31, 1995.
In addition to the commercial paper program, the Company has several
established sources for future liquidity purposes, including several revolving
credit and term loan agreements. At December 31, 1995, $170.0 million was
available for borrowing by the Company under these agreements.
In connection with the divestiture of a jointly-owned affiliate, Spruce
Falls Power and Paper Company Limited, the Company has fulfilled its commitment
to lend $26.5 million in 1994 to the new owners of the mill. Under the terms of
the loan, the five-year repayment period is not scheduled to commence until
December 1997. The Company expects the former affiliate to fulfill its
contractual obligation as stipulated in the loan agreement.
At December 31, 1995, approximately $17.5 million remains from charges
associated with staff reductions. The remaining cash outflows associated with
these charges are expected to occur over the next three years as a result of the
timing of certain union pension and welfare fund contributions. The Company does
not anticipate that its ongoing business operations will be affected by this
reduction of staff and expects to fund these charges through
internally-generated funds.
STOCK REPURCHASE PROGRAM: During the first quarter of 1995, the Company spent
the remainder of the $100.0 million authorized pursuant to a stock repurchase
program announced in October 1994. In February 1995, the Board of Directors
authorized expenditures of up to an additional $50.0 million. 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.
In 1995, $46.3 million was expended under the two programs to repurchase
approximately 2.1 million shares. To date, approximately $18.0 million remains
from the 1995 authorization.
CAPITAL EXPENDITURES: In July 1994, the Company's Board of Directors approved
the construction of a new production and distribution facility in College Point,
New York, for the production of The Times. The Company estimates that the cost
of the new facility will be approximately $315.0 million, exclusive of
capitalized interest currently projected to be $35.0 million. Construction began
in August 1994 and completion is expected in the middle of 1997. While the new
facility will replace The Times's Manhattan production and distribution
facility, business and news operations will remain at the Manhattan building. No
write-down is anticipated as a result of the discontinuance of production at the
Manhattan facility.
The Company currently estimates that, inclusive of the College Point
facility, capital expenditures for 1996 will range from $275.0 million to $325.0
million.
The Company believes that cash generated from its operations and the
availability of funds from external sources should be adequate to cover planned
capital expenditures, dividend payments to stockholders and other cash
requirements.
NEW ACCOUNTING PRONOUNCEMENTS: In March 1995, the Financial Accounting Standards
Board ("FASB"), issued Statement of Financial Accounting Standards ("SFAS") No.
121, Accounting for Impairment of Long-Lived Assets ("SFAS 121"). SFAS 121 will
require a review for impairment of long-lived assets and certain identifiable
intangible assets to be held and used, whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. This statement is effective for the Company's 1996 financial
statements. The Company does not believe operating results will be materially
affected upon the adoption of SFAS 121.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). This statement is effective for the Company's 1996
financial statements. SFAS 123 encourages companies to account for stock
compensation awards based on their fair value at the date they are granted. The
resulting compensation cost would be shown as an expense on the income
statement. Companies choosing not to apply the new accounting method are
permitted to continue following current accounting requirements, however, they
will be required to disclose in the notes to the financial statements the effect
on net income and earnings per share had the new accounting method been applied.
The Company anticipates that it will continue to apply current accounting
requirements upon adoption of this standard.
F-8
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------------
Dollars and shares in thousands except per share data
Year Ended December 31
1995 1994 1993
- ---------------------------------------------------------------------------------------
REVENUES
Advertising $ 1,672,598 $ 1,656,999 $ 1,399,042
Circulation 551,985 545,854 473,971
Other 184,820 154,710 146,641
- ---------------------------------------------------------------------------------------
Total 2,409,403 2,357,563 2,019,654
- ---------------------------------------------------------------------------------------
COSTS AND EXPENSES
Production costs
Raw materials 368,152 304,360 280,531
Wages and benefits 537,159 529,701 437,528
Other 399,107 428,663 418,554
- ---------------------------------------------------------------------------------------
Total 1,304,418 1,262,724 1,136,613
Selling, general and
administrative expenses 876,405 883,597 756,460
- ---------------------------------------------------------------------------------------
Total 2,180,823 2,146,321 1,893,073
- ---------------------------------------------------------------------------------------
OPERATING PROFIT 228,580 211,242 126,581
Interest expense, net of interest income 25,230 28,162 25,375
Net gain on dispositions 11,291 200,873 --
- ---------------------------------------------------------------------------------------
Income before income taxes and equity
in operations of forest products group 214,641 383,953 101,206
Income taxes 92,832 173,868 43,231
- ---------------------------------------------------------------------------------------
Income before equity in operations
of forest products group 121,809 210,085 57,975
Equity in operations of forest products group 14,051 3,264 (51,852)
- ---------------------------------------------------------------------------------------
NET INCOME $ 135,860 $ 213,349 $ 6,123
- ---------------------------------------------------------------------------------------
Average number of common shares outstanding 96,854 104,070 84,459
- ---------------------------------------------------------------------------------------
Per share of common stock
Net income $ 1.40 $ 2.05 $ .07
Dividends .56 .56 .56
- ---------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-9
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
December 31
1995 1994
- --------------------------------------------------------------------------------
ASSETS Dollars in thousands
- --------------------------------------------------------------------------------
CURRENT ASSETS
Cash and short-term investments
(at cost which approximates market:
1995, $56,891,000; 1994, $14,255,000) $ 91,442 $ 41,419
Accounts receivable (net of allowances:
1995, $25,865,000; 1994, $28,157,000) 277,974 247,750
Inventories 42,844 30,545
Deferred subscription costs 10,333 10,659
Other current assets 40,042 81,401
- --------------------------------------------------------------------------------
Total current assets 462,635 411,774
- --------------------------------------------------------------------------------
INVESTMENT IN FOREST PRODUCTS GROUP 101,969 85,433
- --------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT (at cost)
Land 65,188 62,945
Buildings, building equipment and improvements 649,131 629,152
Equipment 956,890 908,630
Construction and equipment installations in progress 345,721 218,041
- --------------------------------------------------------------------------------
Total 2,016,930 1,818,768
Less accumulated depreciation 740,864 660,017
- --------------------------------------------------------------------------------
Total property, plant and equipment - net 1,276,066 1,158,751
- --------------------------------------------------------------------------------
INTANGIBLE ASSETS ACQUIRED
Costs in excess of net assets acquired 1,383,687 1,391,250
Other intangible assets acquired 218,646 160,747
- --------------------------------------------------------------------------------
Total 1,602,333 1,551,997
Less accumulated amortization 207,489 172,531
- --------------------------------------------------------------------------------
Total intangible assets acquired - net 1,394,844 1,379,466
- --------------------------------------------------------------------------------
MISCELLANEOUS ASSETS 141,216 102,207
- --------------------------------------------------------------------------------
Total $3,376,730 $3,137,631
- --------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-10
- ----------------------------------------------------------------------------------------------------------------------
December 31
1995 1994
- -----------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY Dollars in thousands
- -----------------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 156,722 $ 121,504
Accrued payroll 74,560 67,012
Accrued expenses 200,576 182,338
Unexpired subscriptions 81,919 77,697
Current portion of capital lease obligations 3,139 2,681
- -----------------------------------------------------------------------------------------------------------------------
Total current liabilities 516,916 451,232
- -----------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES
Long-term debt 589,193 473,530
Capital lease obligations 48,680 49,666
Deferred income taxes 168,715 176,588
Other 441,124 441,323
- -----------------------------------------------------------------------------------------------------------------------
Total other liabilities 1,247,712 1,141,107
- -----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
5 1/2 percent cumulative prior preference stock of $100 par value - authorized
110,000 shares; outstanding: 1995 and 1994, 17,530 shares 1,753 1,753
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: 1995, 108,950,897 shares;
1994, 108,052,347 shares (including treasury shares: 1995, 11,775,295; 1994, 10,242,381) 10,895 10,805
Class B, convertible - authorized 600,000 shares; issued: 1995, 568,919 shares;
1994, 570,121 (including treasury shares: 1995 and 1994, 139,943) 57 57
Additional capital 618,570 597,860
Earnings reinvested in the business 1,262,022 1,179,715
Common stock held in treasury, at cost (281,195) (244,898)
- -----------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,612,102 1,545,292
- -----------------------------------------------------------------------------------------------------------------------
Total $ 3,376,730 $ 3,137,631
- -----------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-11
CONSOLIDATED STATEMENTS OF CASH FLOWS
- ----------------------------------------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
CASH PROVIDED (USED):
OPERATING ACTIVITIES
Net income $ 135,860 $ 213,349 $ 6,123
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation 102,271 104,624 89,274
Amortization - net 36,663 45,466 39,558
Equity in operations of forest products group - net (20,064) (3,240) 52,311
Cash distributions and dividends from forest products group 4,330 8,224 --
Net gain on dispositions (11,291) (200,873) --
Proceeds from non-compete agreement -- 40,000 --
Deferred income taxes (9,225) (33,732) (37,901)
Increase in receivables - net (32,762) (18,573) (21,636)
(Increase) Decrease in inventories (12,723) (4,035) 10,799
Decrease (Increase) in deferred subscription costs and other current assets 51,939 (17,820) 4,749
Increase (Decrease) in accounts payable 28,200 17,481 (41,429)
Increase (Decrease) in accrued payroll and accrued expenses 45,275 (6,359) 64,823
Increase in unexpired subscriptions 4,832 18,027 11,196
Other - net (28,140) 19,046 15,491
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 295,165 181,585 193,358
- ----------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net proceeds from sale of BPI Communications, L.P. -- 55,367 --
Net proceeds from dispositions 27,536 243,776 --
Businesses acquired, net of cash acquired (71,214) -- (134,384)
Additions to property, plant and equipment (200,688) (186,203) (75,738)
Purchases of marketable securities (39,370) (88,358) (65,077)
Proceeds from sales of marketable securities 39,370 88,358 65,077
Other investing proceeds 8,610 7,725 944
Other investing payments (17,873) (8,505) (16,986)
- ----------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (253,629) 112,160 (226,164)
- ----------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Short-term borrowing - net -- (1,935) 62,340
Long-term obligations
Increase 400,000 -- 200,000
Reduction (278,244) (5,113) (5,510)
Capital shares
Issuance 1,908 2,577 1,829
Repurchase (49,987) (232,815) (255,222)
Dividends paid to stockholders (54,291) (58,287) (47,076)
Other financing (payments) proceeds (10,899) 1,189 --
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 8,487 (294,384) (43,639)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in Cash and short-term investments 50,023 (639) (76,445)
Cash and short-term investments at the beginning of the year 41,419 42,058 118,503
- ----------------------------------------------------------------------------------------------------------------------
Cash and short-term investments at the end of the year $ 91,442 $ 41,419 $ 42,058
- ----------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements and supplemental disclosures to
consolidated statements of cash flows.
F-12
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31
1995 1994 1993
- ------------------------------------------------------------------------------------------
NONCASH INVESTING AND FINANCING TRANSACTIONS
Capital lease assets and obligations incurred $ 2,495 $ 5,990 $ 338
========== =========== ===========
Businesses acquired
Fair value of assets acquired 72,610 1,257,029
Liabilities assumed (1,396) (229,000)
Liabilities incurred, net of payments -- (18,744)
Common stock issued -- (874,901)
---------- -----------
Net cash paid $ 71,214 $ 134,384
========== ===========
Issuance of common shares $ 20,569 $ 21,723 $ 18,188
========== =========== ===========
CASH FLOW INFORMATION
Cash payments during the year for
Interest (net of amount capitalized) $ 29,277 $ 36,320 $ 26,861
========== =========== ===========
Income taxes $ 86,851 $ 220,973 $ 55,327
========== =========== ===========
----------------------------------------------------------------------------------------
For 1994, the increase in income taxes paid (and corresponding decrease in net
cash provided by operating activities) is in large part due to an increase in
estimated income tax payments of approximately $113,500,000 related to the net
gain on dispositions in 1994. Under Statement of Financial Accounting Standards
No. 95, "Statement of Cash Flows," all income tax payments are included in
determining net cash flow from operating activities, but the net cash proceeds
received from the dispositions are reported as an investing cash inflow.
F-13
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, 1993 $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)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 213,349
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (97)
Dividends, common - $.56 per share (58,190)
- ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 10,889 Class A shares
from treasury (128) 271
Employee stock purchase plan - 1,191,323
Class A shares 2 (7,237) 29,119
Stock options - 223,700 Class A shares 35 6,928 (3,385)
Stock conversions - 1,503 shares - -
- ----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock:
10,043,900 Class A shares (236,245)
307 5 1/2 percent preference shares (31) 10
Proceeds from the sale of put options 1,189
Equity put option obligations (2,660)
- ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 1,695
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1994 1,753 10,805 57 597,860 1,179,715 (244,898)
- ----------------------------------------------------------------------------------------------------------------------------------
Net income 135,860
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends, preference - $5.50 per share (96)
Dividends, common - $.56 per share (54,195)
- ----------------------------------------------------------------------------------------------------------------------------------
Issuance of shares:
Retirement units, etc. - 21,421 Class A shares
from treasury (308) 533
Employee stock purchase plan - 1,100,348
Class A shares 1 (4,852) 26,023
Stock options - 297,569 Class A shares 89 22,925 (16,317)
Stock conversions - 1,202 shares
- ----------------------------------------------------------------------------------------------------------------------------------
Purchase of company stock: 2,054,904 Class A shares (46,536)
Proceeds from the sale of put options 285
Fulfilled equity put option obligations 2,660
- ----------------------------------------------------------------------------------------------------------------------------------
Foreign currency translation 738
- ----------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1995 $1,753 $10,895 $57 $618,570 $1,262,022 $(281,195)
- ----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
F-14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. The New York Times Company and all subsidiaries (the
"Company"), is engaged in diversified activities in the communications field.
The Company's principal businesses are newspapers, magazines and broadcasting.
The Company also has equity interests in a Canadian newsprint company and a
supercalendered paper manufacturing partnership. The Company's major source of
revenue is advertising from its newspaper business. The newspapers operate in
the Northeast, Southeast and California markets.
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of the Company after elimination of intercompany items.
FISCAL YEAR. The Company changed its fiscal
year-end to the last Sunday in December, beginning with the fiscal year ending
December 29, 1996.
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 Company evaluates periodically whether
there has been a permanent impairment in any of its intangible assets, inclusive
of goodwill. The major factors which are considered in such valuation include
the cash flow and any contemplated long-term strategies which might affect the
viability of such business. 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. The general policy of 5 to 40 years relates to all
intangible assets with the life of 5 years used for various software licenses
and lives of 40 years used for mastheads on various acquired properties.
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 Income 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 11), including stock options, is not
material and therefore is 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 as a result of outstanding checks, which
have been reclassified to accounts payable.
DERIVATIVES. The Company had interest rate swap agreements with major
financial institutions that were used to manage exposure to fluctuations in
interest rates. The Company was exposed to credit losses in the event of
nonperformance by the counterparties to its interest rate swap agreements.
As of December 31, 1995, the Company did not have any derivative financial
instruments.
USE OF ESTIMATES. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements. Actual results could differ from these estimates.
NEW ACCOUNTING PRONOUNCEMENTS. In March 1995, the Financial Accounting
Standards Board ("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for Impairment of Long-Lived Assets ("SFAS
121"). SFAS 121 will require a review for impairment of long-lived assets
and certain identifiable intangible assets to be held and used, whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. This statement is effective for the Company's
1996 financial statements. The Company does not believe operating results
will be materially affected upon the adoption of SFAS 121.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation ("SFAS 123"). This statement is effective for the Company's 1996
financial statements. SFAS 123 encourages companies to account for stock
compensation awards based on their fair value at the date they are granted. The
resulting compensation cost would be shown as an expense on the income
statement. Companies choosing not to apply the new accounting method are
permitted to continue following current accounting requirements, however, they
will be required to disclose in the notes to the financial statements the effect
on net income and earnings per share had the new accounting method been applied.
The Company anticipates that it will continue to apply current accounting
requirements upon adoption of this standard.
F-15
- --------------------------------------------------------------------------------
2. ACQUISITIONS/DIVESTITURES
In June 1995, the Company acquired WTKR-TV in Norfolk, Virginia. The acquisition
was accounted for as a purchase. The aggregate net cost of the acquisition was
$71,214,000 which was paid in cash. The purchase resulted in increases in other
intangible assets of approximately $57,705,000 (which consist of a network
affiliation agreement, FCC licenses and other intangible assets); property,
plant and equipment of $13,841,000, and other assets of $1,064,000. Net
liabilities assumed as a result of the transaction totaled approximately
$1,396,000. This acquisition will not have a material impact on the future
operations of the Company.
In the third quarter of 1995, the Company completed the sales of six small
regional newspapers: The Daily Commercial (Leesburg, FL); The Daily Corinthian
(Corinth, MS), The Messenger (Madisonville, KY), The Lenoir News-Topic (Lenoir,
NC), The State Gazette (Dyersburg, TN) and The Banner-Independent (Booneville,
MS). The sales resulted in a net pre-tax gain of approximately $11,300,000
($5,000,000 after taxes, or $.05 per share). In May 1995, the Company sold The
York County Coast Star (Kennebunk, ME). The sale did not have a material effect
on the Company's consolidated financial statements. These dispositions will not
have a material impact on the future operations of the Company.
In December 1994, the Company divested its minority interest in Gaspesia
Pulp & Paper Company Ltd. ("Gaspesia"), a Canadian newsprint mill. The Company's
49 percent interest was transferred to Abitibi-Price, Inc., the majority owner.
In connection with the transfer, a pre-tax charge of approximately $3,100,000
($.02 per share) was recorded. In 1993, the Company wrote down its investment in
Gaspesia by $47,000,000 ($.56 per share) to reflect its net realizable value.
In July and August 1994, the Company completed the sales of its Women's
Magazines Division and U.K. golf publications, respectively. These transactions
resulted in a pre-tax gain of approximately $204,000,000 ($1.01 per share). In
connection with the sale of the Women's Magazines Division, the Company entered
into a four-year non-compete agreement, for which it received $40,000,000. This
amount is being recognized as operating income, on a straight-line basis, over a
four-year period commencing with the closing of the sale on July 26, 1994.
The divestitures of the Women's Magazines Division, U.K. golf publications
and the minority interest in Gaspesia resulted in a net pre-tax gain of $200.9
million ($103.3 million after taxes or $.99 per share).
On October 1, 1993, pursuant to an Agreement and Plan of Merger dated June
11, 1993, as amended as of August 12, 1993 (the "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
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 $850,000,000 (which is
being 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 $229,000,000.
Pro forma operating results for the year ended December 31, 1993, had The
Globe transaction occurred at the beginning of that period are as follows:
revenues of $2,335,985,000; net income of $1,178,000; and net income per share
of $.01.
Pro forma operating results for the year ended December 31, 1994, had the
magazines sales occurred as of January 1, 1994 were as follows: revenues of
$2,231,942,000; net income of $115,518,000; and net income per share of $1.11.
Pro forma operating results for the year ended December 31, 1993, had the
magazine sales and The Globe transaction occurred at the beginning of that
period were as follows: revenues of $2,097,828,000; net income of $14,009,000;
and net income per share of $.13.
The above pro forma results are not necessarily indicative of the combined
results that would have occurred had the sales and the merger taken place as of
the beginning of the periods provided, nor necessarily indicative of results
that may be achieved in the future. The gain on the sales is not included in the
above pro forma operating results.
In February 1994, the sale of BPI Communications, L.P., a partnership in
which the Company acquired a one-third interest through the 1993 acquisition of
The Globe, was completed. The Company received approximately $55,000,000 in 1994
from the sale. For financial reporting purposes, no gain or loss was recognized
on the sale.
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 connection with the divestiture of a newsprint mill in 1991, the Company
made a loan commitment of up to $26,500,000 to the new owners of the mill. At
December 31, 1994, the commitment was fully funded. 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 December 1996 are
payable annually over a five-year period in 20 percent increments. The Company
expects the obligation to be satisfied as stipulated in the loan commitment.
F-16
- --------------------------------------------------------------------------------
3. INVESTMENT IN FOREST PRODUCTS GROUP
The Company has equity interests in a Canadian newsprint company, Donohue
Malbaie, Inc. ("Malbaie"), and in a partnership operating a supercalendered
paper mill in Maine, Madison Paper Industries ("Madison"). The equity interest
in Malbaie represents a 49 percent ownership interest.
The Company and Myllykoski Oy, a Finnish paper manufacturing company, are
partners through subsidiary companies in Madison. The partners' interests in the
net assets of Madison at any time will depend on their capital accounts, as
defined, at such time. Through an 80 percent-owned subsidiary, the Company's
share of Madison's profits and losses is 40 percent.
In December 1994, the Company divested its minority interest in Gaspesia,
which was written down to its net realizable value in 1993 (see Note 2).
Loans to Madison by the 80 percent-owned subsidiary of the Company totaled
$1,882,000, $1,523,000, and $1,279,000 in 1995, 1994 and 1993, respectively. No
contributions were made to Madison in 1995, 1994 or 1993.
The Company received distributions from Malbaie of $4,330,000 and $8,224,000
in 1995 and 1994, respectively. No distributions were received from Malbaie in
1993. The Company's share of undistributed earnings of Malbaie aggregated
approximately $9,200,000 and $4,882,000 at December 31, 1995 and 1994,
respectively.
No loans or contributions were made to Malbaie in 1995, 1994 or 1993.
Condensed combined balance sheets of the Forest Products Group are as
follows:
- ------------------------------------------------------------------
Condensed Combined Balance Sheets
of Forest Products Group
Dollars in thousands
- ------------------------------------------------------------------
December 31 1995 1994
- ------------------------------------------------------------------
Current assets $ 94,934 $ 66,280
Less current liabilities 88,129 33,027
- ------------------------------------------------------------------
Working capital 6,805 33,253
Fixed assets, net 234,240 236,961
Long-term debt (771) (62,355)
Deferred income taxes and other (106,667) (103,756)
- ------------------------------------------------------------------
Net assets $ 133,607 $ 104,103
- ------------------------------------------------------------------
The current portion of debt of the Forest Products Group of $46,678,000 is
included in current liabilities. At December 31, 1995, long-term debt of the
Forest Products Group matures as follows: 1997, $526,000; 1998, $152,000; and
1999, $93,000. The Forest Products Group's debt is not guaranteed by the
Company.
Condensed combined statements of operations of the Forest Products Group,
which exclude the operations of Gaspesia subsequent to the write-down at
December 31, 1993, are as follows:
- -------------------------------------------------------------------
Condensed Combined Statements of Operations
of Forest Products Group
Dollars in thousands
- -------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
- -------------------------------------------------------------------
Net sales and other income $ 268,377 $ 189,805 $ 254,324
Costs and expenses 216,342 180,860 269,845
- -------------------------------------------------------------------
Income (Loss) before taxes 52,035 8,945 (15,521)
Income tax expense (benefit) 7,969 1,136 (2,700)
- -------------------------------------------------------------------
Net income (loss) $ 44,066 $ 7,809 $ (12,821)
- -------------------------------------------------------------------
The condensed combined financial information of the Forest Products Group
excludes the income tax effects attributable to Madison. Such tax effects (see
Note 6) have been included in the Company's consolidated financial statements.
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, 1995, are set forth in the Consolidated Statements of
Stockholders' Equity.
The cumulative translation adjustment (included in earnings reinvested in
the business) decreased stockholders' equity by $195,000 and $933,000 at
December 31, 1995 and 1994, respectively. Upon the disposition of Gaspesia in
1994, stockholders' equity was increased by $3,000,000, net of tax, to reflect
the cumulative translation adjustment related to Gaspesia.
During 1995, 1994 and 1993, the Company's Newspaper Group purchased
newsprint and supercalendered paper from the Forest Products Group (including
Gaspesia through the disposal date) at competitive prices. Such purchases
aggregated approximately $59,000,000, $107,000,000 and $102,000,000,
respectively.
- -------------------------------------------------------------------------------
4. INVENTORIES
Inventories as shown in the accompanying Consolidated Balance Sheets are
composed of the following:
- -----------------------------------------------------------------
Dollars in thousands
- -----------------------------------------------------------------
December 31 1995 1994
- -----------------------------------------------------------------
Newsprint and magazine paper $36,965 $24,783
Work-in-process, etc. 5,879 5,762
- -----------------------------------------------------------------
Total $42,844 $30,545
- -----------------------------------------------------------------
Utilization of the LIFO method reduced inventories as calculated on the FIFO
method by approximately $11,731,000 and $2,694,000 at December 31, 1995 and
1994, respectively.
F-17
- --------------------------------------------------------------------------------
5. VOLUNTARY STAFF REDUCTIONS AND UNION NEGOTIATIONS
In 1995 the Company recorded pre-tax charges of approximately $10,100,000,
or $.06 per share, for work force reductions at The Times, The Globe and
corporate headquarters. In 1993 the Company recorded pre-tax charges of
$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.
At December 31, 1995 and 1994, approximately $17,472,000 and $22,563,000,
respectively, are included in accrued expenses in the accompanying Consolidated
Balance Sheets, which represents the unpaid balance of the pre-tax charges. The
Company has committed the remaining funds. The remaining cash flows associated
with these charges are expected to be paid over the next three years due to the
timing of certain union pension and welfare fund contributions.
- --------------------------------------------------------------------------------
6. INCOME TAXES
Income tax expense for each of the years presented is determined in accordance
with Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes ("SFAS 109").
Income tax expense as shown in the Consolidated Statements of Operations is
composed of the following:
- -------------------------------------------------------------------
Dollars in thousands 1995 1994 1993
- -------------------------------------------------------------------
Current tax expense
Federal $105,999 $159,779 $60,178
State, local, foreign 1,970 49,651 17,612
- -------------------------------------------------------------------
107,969 209,430 77,790
- -------------------------------------------------------------------
Deferred tax expense
Federal (22,483) (20,955) (26,982)
State, local, foreign 12,493 (13,088) (8,919)
- -------------------------------------------------------------------
(9,990) (34,043) (35,901)
- -------------------------------------------------------------------
Income tax expense from
continuing operations 97,979 175,387 41,889
Less income tax expense (benefit)
related to equity in operations 5,147 1,519 (1,342)
- -------------------------------------------------------------------
Income tax expense $ 92,832 $173,868 $43,231
- -------------------------------------------------------------------
Tax expense in 1995 was reduced by $10,986,000 as a result of a favorable
state tax ruling and federal, state and local tax refunds. A further reduction
of $4,339,000 ($6,676,000 before federal tax effect) in 1995 tax expense relates
to a reduction in the valuation allowance attributable to state and local
capital and net operating loss tax benefits. The remaining decrease in the
valuation reserve is due principally to the expiration of net operating loss tax
benefits and does not affect income tax expense.
Tax expense in 1994 was reduced by approximately $10,000,000 and $3,000,000,
respectively, relating to a decrease in valuation allowance and recognition of
federal capital loss tax benefits. The decrease in valuation allowance is
associated with federal capital loss tax benefits. An increase in valuation
allowance associated with state and local capital loss carryforward tax benefits
added approximately $688,000 (net of federal tax benefit) to 1994 tax expense.
Tax expense in 1993 was reduced by $6,317,000. The reduction was due to a
decrease in the valuation allowance of $4,390,000 related to federal capital
loss carryforwards, and benefits associated with state and local operating loss
carryforwards net of federal tax effect. Adjustment of the Company's deferred
tax balances for the one percent rate increase provided in the Tax Reform Act
of 1993 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 in 1993.
No such amounts affected 1995 or 1994 tax expense.
Income tax benefits credited directly to stockholders' equity totaled
$837,000, $2,434,000 and $3,595,000 during 1995, 1994 and 1993, respectively.
Foreign taxes included in income tax expense in 1994 of $4,979,000 were
principally attributable to the disposition of the Company's U.K. golf
publications. Foreign taxes included in income tax expense in 1995 and 1993
were not significant.
Equity in operations of the Forest Products Group (see Note 3) 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 expense of
$850,000 in 1995, and tax benefits of $117,000 in 1994 and $585,000 in 1993 are
applicable to the Canadian newsprint companies. Deferred taxes attributable to
the Company's interest in Madison were an expense of $273,000 in 1995, a benefit
of $(39,000) in 1994, and expense of $1,562,000 in 1993. These deferred taxes
result principally from differences between depreciation used for financial
reporting and that used for tax reporting. The Company's consolidated federal
income tax returns include the income tax effects of its interest in Madison.
F-18
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 of the net gain on dispositions in 1995 and
1994) are as follows:
- ---------------------------------------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
% of % of % of
Dollars in thousands Amount Pretax Amount Pretax Amount Pretax
- ---------------------------------------------------------------------------------------------------
Tax at federal statutory rate $71,173 35.0% $ 64,078 35.0% $35,422 35.0%
Increase (decrease) resulting from
State and local taxes - net 8,090 4.0 5,177 2.8 6,883 6.8
Capital loss tax benefits - - (10,000) (5.4) (6,875) (6.8)
Amortization of nondeductible
intangible assets acquired 11,061 5.4 11,139 6.1 5,602 5.5
Change in enacted tax rate - - - - 3,759 3.7
Other - net (3,826) (1.9) 5,920 3.2 (1,560) (1.5)
- ---------------------------------------------------------------------------------------------------
Subtotal 86,498 42.5% 76,314 41.7% 43,231 42.7%
- ---------------------------------------------------------------------------------------------------
Dispositions 6,334 97,554 -
- ---------------------------------------------------------------------------------------------------
Income tax expense $92,832 $173,868 $43,231
- ---------------------------------------------------------------------------------------------------
Federal income taxes payable (refundable) totaled $8,725,000 and $(28,109,000)
as of December 31, 1995 and 1994, respectively. Current income taxes payable are
included in accrued expenses while refundable amounts are included in other
current assets. The components of the net deferred tax liabilities recognized on
the respective Consolidated Balance Sheets are as follows:
- -----------------------------------------------------------------
Dollars in thousands
December 31 1995 1994
- -----------------------------------------------------------------
Deferred Tax Assets
Intangible assets acquired $ 5,941 $ 10,425
Accrued state and local taxes 17,033 14,996
Postretirement and
postemployment benefits 86,822 81,707
Other accrued employee benefits
and compensation 93,777 89,569
Allowance for doubtful
accounts 13,411 13,113
Tax loss carryforwards 8,571 20,260
Deferred Income 29,811 35,040
Other 10,550 4,578
- -----------------------------------------------------------------
Total deferred tax assets 265,916 269,688
Valuation allowance (10,724) (19,774)
- -----------------------------------------------------------------
Net deferred tax assets $255,192 $249,914
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Dollars in thousands
December 31 1995 1994
- -----------------------------------------------------------------
Deferred Tax Liabilities
Property, plant and equipment $134,613 $121,617
Tax certificate 113,238 125,664
Nontaxable acquisition 123,880 125,782
Deferred subscription
expenses 8,013 8,627
Safe harbor tax lease 18,975 19,717
Unremitted earnings 1,238 833
Investment in Forest Products
Group 13,382 13,324
Other 1,084 2,641
- -----------------------------------------------------------------
Total deferred tax liabilities 414,423 418,205
- -----------------------------------------------------------------
Net deferred tax assets (255,192) (249,914)
- -----------------------------------------------------------------
Net deferred tax liability 159,231 168,291
- -----------------------------------------------------------------
Less amounts included in:
Other current assets (10,559) (9,296)
Accrued expenses 1,075 999
- -----------------------------------------------------------------
Deferred income taxes $168,715 $176,588
- -----------------------------------------------------------------
At December 31, 1995, tax loss carryforwards include only state and local
tax loss benefits. The benefits are primarily attributable to tax operating
losses. Such loss carryforwards expire in accordance with provisions of
applicable tax laws and have remaining lives ranging from 1 to 13 years. The
remaining $8,571,000 of operating loss carryforwards will expire in years
through 2008.
In 1989, the Federal Communications Commission granted the Company a tax
certificate in connection with the sale of its cable television system. This
certificate permitted 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 which results in lower tax depreciation and
amortization deductions in subsequent years. As a result, $10,994,000,
$10,508,000, and $10,820,000 of income taxes that were deferred became currently
payable in 1995, 1994 and 1993, respectively.
Federal income tax returns for all years through 1989 have been examined by the
Internal Revenue Service and the respective tax years have been closed by
statute. Examinations of the tax returns for the years 1990 through 1992 are in
process. Management is of the opinion that any assessments resulting from these
examinations will not have a material effect on the consolidated financial
statements.
F-19
- --------------------------------------------------------------------------------
7. DEBT
Long-Term Debt consists of the following:
- ------------------------------------------------------------------
Dollars in thousands
- ------------------------------------------------------------------
December 31 1995 1994
- ------------------------------------------------------------------
5.50% to 5.77% Senior Notes due $200,000 $200,000
1998-2000 (a)
7.625% Notes due 2005, net of unamortized 244,041 -
debt issuance costs of $5,959 in 1995;
effective interest rate 7.996% (b)
8.25% Debentures due 2025 (due 2005 at 145,152 -
option of Company), net of unamortized
debt issuance costs of $4,848 in 1995;
effective interest rate 8.553% (b)
11.85% Notes, discounted, due 1995 net of - 161,789
unamortized discount of $511 in 1994 (c)
9.34% Notes due 1995, including - 51,336
unamortized premium of $1,336 in 1994;
effective interest rate 4.25% (c)
Commercial Paper (d) - 60,405
- ------------------------------------------------------------------
Total Notes, Debentures and Other 589,193 473,530
- ------------------------------------------------------------------
Less: Current Portion - -
- ------------------------------------------------------------------
Total Long-Term Debt $589,193 $473,530
- ------------------------------------------------------------------
(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 an annual rate of 5.50 percent, and the
remaining $100,000,000 were issued as six and one-half year notes at an annual
rate of 5.77 percent.
(b) In March 1995, the Company completed a public offering of $400,000,000
of unsecured notes and debentures. The offering consisted of ten-year notes
aggregating $250,000,000 maturing March 15, 2005 at an annual rate of 7.625%
(the "Notes") and 30-year debentures aggregating $150,000,000 maturing March 15,
2025 at an annual rate of 8.25% (the "Debentures"), (collectively referred to
herein as the "Offering"). The Debentures are callable after ten years. Interest
is payable semi-annually on March 15 and September 15 on both the Notes and
Debentures.
The net proceeds from the Offering were used to repay the principal balance
of the $162,300,000 11.85% Notes due March 31, 1995, $50,000,000 of 9.34% Notes
due July 15, 1995 and indebtedness outstanding under the Company's commercial
paper program. The remaining net proceeds were used for general corporate
purposes. Accordingly, at December 31, 1994, the 11.85% Notes due March 31,
1995, the 9.34% Notes due July 15, 1995 and the amounts outstanding under the
Company's commercial paper program were classified as long-term debt as they
were refinanced on a long-term basis under the Offering.
(c) 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 were discounted at an annual interest rate of 11.85 percent for financial
reporting purposes. Interest on certain of the notes was payable semi-annually.
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 had been valued for financial reporting purposes using a discount rate of
4.25 percent. Interest on the notes was payable semi-annually.
(d) In December 1994, the Company established a $200,000,000 commercial
paper program. Borrowings are in the form of unsecured notes sold at a discount
with maturities ranging up to 270 days. There were no borrowings outstanding
under the commercial paper program at December 31, 1995. The $60,700,000 in
aggregate face value of such notes outstanding at December 31, 1994 were issued
at a weighted average annual interest rate of 6.06 percent. The outstanding
commercial paper is supported by the Company's revolving credit and term loan
agreements.
Based on borrowing rates currently available for debt with similar terms and
average maturities, the fair value of long-term debt, excluding the current
portion, was $647,900,000 and $455,100,000 at December 31, 1995 and 1994,
respectively.
- --------------------------------------------------------------------------------
The Company has a $93,300,000 revolving credit and term loan agreement with
a group of banks, which, as amended, terminates in October 1998. At such time,
the outstanding borrowings would be payable semi-annually in equal installments
over one year. At the Company's discretion, this facility may be converted into
term loans at any time. The agreement provides for an annual commitment fee of
0.11 percent on the unused commitment.
The Company also has a $46,700,000 revolving credit agreement with the same
group of banks, which expires in October 1996. The agreement provides for an
annual commitment fee of 0.06 percent on the unused commitment.
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 LIBOR rate. Borrowings under these agreements may be
prepaid without penalty.
The Company has a $20,000,000 revolving credit and term loan agreement with
a bank and its affiliate, which as amended, terminates in December 1999. At such
time, the outstanding borrowings would be payable semi-annually in equal
installments over one year. At the Company's discretion, this facility may be
converted into term loans at any time. The agreement provides for an annual
commitment fee of 0.09 percent on the unused commitment. The Company also has
entered into a $10,000,000 revolving credit agreement with the same bank and its
affiliate that expires November 1996, at which time, any outstanding borrowings
would be payable. The agreement provides for an annual commitment fee of 0.06
percent on the unused commitment.
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 Eurodollar borrowings: based on the
LIBOR rate. Borrowings
F-20
under these agreements may be prepaid without penalty.
No borrowings under any of the above agreements were outstanding during
1995 and 1994.
Certain of the agreements also include provisions which require, among other
matters, specified levels of stockholders' equity. At December 31, 1995,
approximately $862,000,000 of stockholders' equity was unrestricted.
Short-term debt is comprised of the current portion of capital lease
obligations. There were no outstanding notes payable at December 31, 1995 and
1994.
The aggregate amount of maturities of long-term debt over the next five
years are as follows: 1996, none; 1997, none; 1998, $100,000,000; 1999, none;
2000, $100,000,000; and $400,000,000 thereafter.
Interest expense, net of capitalized interest and interest income, as shown
in the accompanying Consolidated Statements of Income consists of the following:
- -----------------------------------------------------------------
Dollars in thousands
- -----------------------------------------------------------------
December 31, 1995 1994 1993
- -----------------------------------------------------------------
Interest expense $ 48,751 $39,823 $30,900
Capitalized interest (15,177) (4,943) (1,351)
Interest income (8,344) (6,718) (4,174)
- -----------------------------------------------------------------
Net $ 25,230 $28,162 $25,375
- -----------------------------------------------------------------
- --------------------------------------------------------------------------------
8. LEASE COMMITMENTS
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 $27,699,000 in 1995, $26,559,000 in 1994, and
$24,744,000 in 1993. The approximate minimum rental commitments under
noncancelable leases (exclusive of minimum sublease rentals of $152,000) at
December 31, 1995 were as follows: 1996, $17,454,000; 1997, $14,390,000; 1998,
$12,334,000; 1999, $9,919,000; 2000, $6,798,000 and $24,529,000 thereafter.
CAPITAL LEASES:
In 1993, the Company and the City of New York executed a long-term lease
agreement and related agreements, under which the Company is leasing 31 acres of
City-owned land in College Point, New York, on which The Times is building a
state-of-the-art printing and distribution facility. Conditions stipulated under
the lease were met in 1994 and, accordingly, a capital lease of $5,000,000 was
recorded at such time. The lease will continue for 25 years after the start of
construction with an option to ultimately purchase the property. Under the terms
of the agreement, The Times would receive various tax and energy cost
reductions.
The Company also has 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, 1995 and 1994) 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, 1995:
- --------------------------------------------------------------------
Dollars in thousands
- --------------------------------------------------------------------
Year Ended December 31 Amount
- --------------------------------------------------------------------
1996 $ 7,433
1997 7,337
1998 7,386
1999 7,288
2000 7,140
Later years 57,108
- --------------------------------------------------------------------
Total minimum lease payments 93,692
Less: amount representing interest 41,873
- --------------------------------------------------------------------
Present value of net minimum
lease payments including current
maturities of $3,139 $51,819
- --------------------------------------------------------------------
F-21
- --------------------------------------------------------------------------------
9. 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 contribu-tions. 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.
Net periodic pension cost was $25,688,000 in 1995, $32,730,000 in 1994 and
$16,461,000 in 1993. The components of net periodic pension cost are:
-------------------------------------------------------------------
Dollars in thousands
-------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
-------------------------------------------------------------------
Service cost $ 16,413 $ 19,194 $ 14,075
Interest cost 41,859 38,933 26,675
Actual (return) loss on plan assets (74,904) 2,942 (38,907)
Curtailment loss - 1,887 -
Net amortization and
deferral 42,320 (30,226) 14,618
-------------------------------------------------------------------
Net periodic pension cost $ 25,688 $ 32,730 $ 16,461
-------------------------------------------------------------------
Due to the sale of the Women's Magazines Division, the Company recognized a
curtailment loss in 1994 (see Note 2). Accordingly, net periodic pension cost
relating to certain plans was remeasured at July 1994, using an increased
discount rate of 8.0 percent.
Assumptions used in the actuarial computations were:
- -------------------------------------------------------------------
Year Ended December 31 1995 1994 1993
- -------------------------------------------------------------------
Discount rate 7.25% 8.25% 7.00%
Rate of increase in
compensation levels 5.50% 5.50% 5.50%
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 $20,679,000 in 1995,
$19,535,000 in 1994 and $17,970,000 in 1993.
The funded status of the Company's plans which were valued at September 30, 1995
and 1994 is as follows:
- -------------------------------------------------------------------
Plans Whose Plans Whose
Assets Exceed Accumulated
December 31, 1995 Accumulated Benefits
Dollars in thousands Benefits Exceed Assets
- -------------------------------------------------------------------
Actuarial present value of benefit
obligation:
Vested benefit obligation $234,139 $256,239
- -------------------------------------------------------------------
Accumulated benefit obligation $239,507 $264,219
- -------------------------------------------------------------------
Projected benefit obligation $297,317 $331,039
Plan assets at fair value 269,633 178,539
- -------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 27,684 152,500
Unrecognized net (losses) gains (28,150) (23,770)
Unrecognized prior service cost 6,131 (9,945)
Unrecognized transition obligation (1,645) (1,274)
Fourth-quarter contribution, net (1,365) (8,986)
Adjustment required to recognize
additional minimum liability - 2,384
- -------------------------------------------------------------------
Recorded pension liability $ 2,655 $110,909
- -------------------------------------------------------------------
- -------------------------------------------------------------------
Plans Whose Plans Whose
Assets Exceed Accumulated
December 31, 1994 Accumulated Benefits
Dollars in thousands Benefits Exceed Assets
- -------------------------------------------------------------------
Actuarial present value of benefit obligation:
Vested benefit obligation $187,656 $207,104
- -------------------------------------------------------------------
Accumulated benefit obligation $193,129 $212,519
- -------------------------------------------------------------------
Projected benefit obligation $238,574 $263,044
Plan assets at fair value 231,236 144,200
- -------------------------------------------------------------------
Projected benefit obligation
in excess of plan assets 7,338 118,844
Unrecognized net (losses) gains (12,337) 11,269
Unrecognized prior service cost 6,567 (10,814)
Unrecognized transition obligation (2,038) (1,517)
Fourth-quarter contribution, net (2,483) (7,891)
- -------------------------------------------------------------------
Recorded pension (asset) liability $ (2,953) $109,891
- -------------------------------------------------------------------
Plan assets, which were valued as of September 30, 1995 and 1994, 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 minimum liability relating to the unfunded status of these
plans is included in other liabilities on the Consolidated Balance Sheets as of
December 31, 1995 and miscellaneous assets includes a related intangible asset
of an equal amount. No such liability was required as of December 31, 1994.
F-22
- --------------------------------------------------------------------------------
10. 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.
In accordance with SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, the Company accrues the costs of such benefits
during the employee's active years of service.
Net periodic postretirement cost was $7,842,000 in 1995, $12,419,000 in 1994
and $10,809,000 in 1993, respectively. The decrease in 1995 cost was a result of
a plan amendment which was adopted to reduce benefits for participants retiring
after January 1, 1995. The effect on the accumulated postretirement benefit
obligation is a reduction of $16,736,000. This amount is being amortized over a
period of approximately nine years beginning in 1995. The components of this
cost are as follows:
- ----------------------------------------------------------------
Dollars in thousands 1995 1994 1993
- ----------------------------------------------------------------
Service cost for benefits
earned during the period $ 2,820 $ 4,629 $ 3,955
Interest cost on accumulated
postretirement obligation 8,142 9,376 6,854
Net amortization and deferral (3,120) (102) -
Curtailment gain (See Note 2) - (1,484) -
- ----------------------------------------------------------------
Net periodic postretirement cost $ 7,842 $12,419 $10,809
- ----------------------------------------------------------------
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 on the Consolidated Balance Sheets at December 31, 1995 and
1994, based on valuation dates of September 30 in each year.
- ----------------------------------------------------------------
Dollars in thousands
- ----------------------------------------------------------------
December 31 1995 1994
- ----------------------------------------------------------------
Accumulated postretirement
benefit obligation
Retirees $ 55,954 $ 49,595
Fully eligible active plan 19,870 26,894
participants
Other active plan participants 44,965 45,017
- ----------------------------------------------------------------
Total 120,789 121,506
Unrecognized net gains 16,536 26,287
Unrecognized prior service cost 13,597 -
Fourth-quarter benefit
payments (544) (1,035)
- ----------------------------------------------------------------
Total accrued postretirement
benefit liability 150,378 146,758
Current portion included in
accrued expenses 4,400 4,400
- ----------------------------------------------------------------
Long-term accrued postretirement
benefit liability $145,978 $142,358
- ----------------------------------------------------------------
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, 1995 by
$16,706,000 and increase the net periodic postretirement benefit cost for 1995
by $1,785,000.
For 1995, the accumulated postretirement benefit obligation was determined
using a discount rate of 7.25 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of between 11.0 percent
and 9.25 percent in the first year, grading down to 5.0 percent in the year
2008.
For 1994, the accumulated postretirement benefit obligation was determined
using a discount rate of 8.25 percent, an estimated increase in compensation
levels of 5.5 percent and a health care cost trend rate of between 12.0 percent
and 10.0 percent in the first year grading down to 5.0 percent in the year 2008.
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 $26,034,000, $25,460,000
and $18,000,000 in 1995, 1994 and 1993, respectively.
In accordance with SFAS No. 112, Employers' Accounting for Postemployment
Benefits, the Company accrues the cost of certain benefits provided to former
or inactive employees, after employment but before retirement, such as workers'
compensation, disability benefits and health care continuation coverage during
the employees' active years of service.
F-23
- --------------------------------------------------------------------------------
11. 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 1984
Stock Option Plan 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 stock 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 as of the acquisition date.
Changes in stock options for each of the three years in the period ended
December 31, 1995 were as follows:
----------------------------------------------------------------
Dollars in thousands Option Price
except per share data Shares Per Share ($) Total
----------------------------------------------------------------
Options outstanding
January 1, 1993 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
Granted 2,426,376 22.56 to 26.18 54,807
Exercised (378,392) 6.89 to 26.75 (6,634)
Terminations (127,037) 11.45 to 36.43 (3,174)
----------------------------------------------------------------
Options outstanding
December 31, 1994 9,281,788 6.89 to 38.87 218,507
Granted 2,047,438 23.18 to 29.75 60,826
Exercised (909,622) 6.89 to 26.75 (18,741)
Terminations (412,379) 11.45 to 36.43 (11,009)
----------------------------------------------------------------
Options outstanding
December 31, 1995 10,007,225 10.31 to 38.87 $249,583
----------------------------------------------------------------
Options which became
exercisable during
1993 1,803,174 6.89 to 28.88 $35,098
1994 761,221 20.00 to 30.68 19,021
1995 1,285,288 20.00 to 26.50 30,667
----------------------------------------------------------------
Options exercisable
at December 31,
1993 4,673,663 6.89 to 38.87 $104,789
1994 4,953,313 6.89 to 38.87 114,260
1995 5,272,657 10.31 to 38.87 124,603
----------------------------------------------------------------
F-24
- --------------------------------------------------------------------------------
12. 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 five of the
fifteen directors of the Board, and the Class A and Class B Common Stock have
the right to vote together on reservations of Company stock for stock options
and other stock-related plans, 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 the April 1994 annual meeting of the Company's Class A and B Common
Stockholders, an amendment to the Employee Stock Purchase Plan was approved to
reserve an additional 6,000,000 shares of Class A Common Stock for sale under
the Plan.
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.
The Company spent $150,000,000 authorized under its previous stock
repurchase program announced in October 1993. In October 1994, the Company
announced authorized expenditures of up to $100,000,000 for repurchases of its
Class A Common Stock. Under the two programs, the Company has repurchased
approximately 10,074,000 shares of its Class A Common Stock at an average
effective price of $23.42 per share. Had the stock repurchases, under both
programs, occurred as of January 1, 1994, earnings per share for the year 1994
would have been $2.12, an increase of $.07 per share.
During the first quarter of 1995, the remainder of the October 1994
$100,000,000 authorization was spent to repurchase approximately 639,000 shares
of Class A Common Stock at an average price of $22.08. In February 1995 the
Company's Board of Directors authorized additional expenditures of up to
$50,000,000. As of February 26, 1996, the Company repurchased approximately
1,415,000 shares of its Class A Common Stock at an average price of $22.84 per
share under this program. Under the program, purchases may be made from time to
time either in the open market or through private transactions. The number of
shares that may be purchased in market transactions may be limited as a result
of The Globe transaction. Purchases may be suspended from time to time or
discontinued. The remaining amount of this authorization is approximately
$18,000,000. Had the 1995 stock repurchases occurred as of January 1, 1995,
earnings per share for the year 1995 would have been $1.41, an increase of $.01
per share.
In addition to the Company's stock repurchase program, in 1994 the Company
began to sell equity put options in a series of private placements that entitle
the holder, upon exercise, to sell shares of Class A Common Stock to the Company
at a specified price. In 1995 and 1994, put options for 300,000 and 1,210,000
shares were issued for $285,000 and $1,189,000 in premiums, respectively, which
have been accounted for as a part of additional capital. As of December 31, 1995
all put options issued in 1995 have expired. Put options for 120,000 shares that
were outstanding at December 31, 1994 have been exercised or expired and the
amount of $2,660,000 that was recorded in other liabilities has been reclassed
to additional capital as of December 31, 1995. Premiums received in 1995 from
put options reduced the average price of shares repurchased during 1995 to
$22.51 per share from $22.65 per share; premiums received in 1994 reduced the
average price of shares repurchased during 1994 to $23.42 per share from $23.53
per share.
Under the 1996 Offering of the Employee Stock Purchase Plan, eligible
employees may purchase Class A Common Stock through payroll deductions during
1996 at the lower of $23.85 per share (85 percent of the average market price on
November 1, 1995) or 85 percent of the average market price on December 30,
1996. Shares of Class A Common Stock reserved for issuance at December 31, 1995
and 1994 were as follows:
-----------------------------------------------------------------
December 31 1995 1994
-----------------------------------------------------------------
Retirement Units Outstanding 197,000 221,021
Stock Awards Available 965,686 973,844
Stock Options
Outstanding 10,007,225 9,281,788
Available 1,888,961 3,646,047
Employee Stock
Purchase Plan
Available 4,702,248 5,802,596
Voluntary Conversion of
Class B Common Stock
Available 568,919 570,121
-----------------------------------------------------------------
Total 18,330,039 20,495,417
-----------------------------------------------------------------
F-25
- --------------------------------------------------------------------------------
13. SEGMENTS
The Company's segment and related information is included on pages 2 and 3 of
this Appendix. The information for the years 1995, 1994 and 1993 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.
- --------------------------------------------------------------------------------
14. COMMITMENTS AND CONTINGENT LIABILITIES
In July 1994, the Company's Board of Directors approved the construction of the
new facility in College Point which will allow for later news deadlines and
provide color and inserting capability for The Times's daily newspaper. The cost
of the new facility, excluding capitalized interest currently projected to be
$35,000,000, is estimated to be $315,000,000. As of December 31, 1995, the
Company has spent approximately $176,600,000 excluding capitalized interest.
The Company is presently engaged in additional projects to modernize and
improve other production facilities. As of December 31, 1995, the Company has
committed $123,200,000 and spent approximately $50,000,000 for these additional
projects.
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 the Company may be
required to make. 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.
- --------------------------------------------------------------------------------
15. RECLASSIFICATIONS
For comparability, certain 1993 and 1994 amounts have been reclassified to
conform with the 1995 presentation.
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, 1995 and 1994, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the three
years in the period ended December 31, 1995. Our audits also include the
financial schedule listed in the Index at Item 14(a). These consolidated
financial statements and financial statement schedule are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements and financial statement schedule 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, such consolidated financial statements present fairly, in
all material respects, the financial position of The New York Times Company as
of December 31, 1995 and 1994, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 1995 in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.
/S/Deloitte & Touche LLP
- ------------------------
Deloitte & Touche LLP
New York, New York
February 7, 1996
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 LLP,
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, 1996
was as follows: Class A Common Stock: 16,111; Class B Common Stock: 41; 5 1/2
percent cumulative prior preference stock: 61.
The market price range of Class A Common Stock in 1995 and 1994 is as follows:
-------------------------------------------------------------------
Quarter Ended 1995 1994
------------------------------------------------------------------
High Low High Low
March 31 $23.50 $20.12 $29.50 $25.75
June 30 24.50 21.62 27.62 23.00
September 30 29.25 22.62 25.00 21.62
December 31 30.87 27.12 24.62 21.25
Year 30.87 20.12 29.50 21.25
------------------------------------------------------------------
F-27
QUARTERLY INFORMATION (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Dollars and shares in millions First Quarter Second Quarter Third Quarter Fourth Quarter Year
except per share data 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
Revenues $ 571.2 $ 589.5 $ 610.4 $ 635.5 $ 572.7 $ 527.2 $ 655.1 $ 605.4 $ 2,409.4 $ 2,357.6
- -----------------------------------------------------------------------------------------------------------------------------------
Costs and Expenses
Production costs:
Raw materials 80.0 78.4 85.7 80.4 90.5 66.0 111.9 79.6 368.1 304.4
Wages and benefits 131.4 132.1 133.6 133.7 135.1 129.8 137.1 134.1 537.2 529.7
Other 96.2 112.9 97.6 117.6 97.2 96.2 108.1 102.0 399.1 428.7
- -----------------------------------------------------------------------------------------------------------------------------------
Total 307.6 323.4 316.9 331.7 322.8 292.0 357.1 315.7 1,304.4 1,262.8
Selling, general and
administrative expenses 206.0 223.0 211.9 230.4 209.7 201.9 248.8 228.3 876.4 883.6
- -----------------------------------------------------------------------------------------------------------------------------------
Total 513.6 546.4 528.8 562.1 532.5 493.9 605.9 544.0 2,180.8 2,146.4
- -----------------------------------------------------------------------------------------------------------------------------------
Operating profit 57.6 43.1 81.6 73.4 40.2 33.3 49.2 61.4 228.6 211.2
Interest expense, net 7.3 8.7 6.7 8.0 5.6 6.2 5.6 5.3 25.2 28.2
Net gain (loss) on dispositions - - - - 11.3 204.0 - (3.1) 11.3 200.9
Income taxes 24.5 16.7 34.2 31.4 18.0 112.0 16.1 13.8 92.8 173.9
- -----------------------------------------------------------------------------------------------------------------------------------
Income before
equity in operations of
forest products group 25.8 17.7 40.7 34.0 27.9 119.1 27.5 39.2 121.9 210.0
Equity in operations of
forest products group 1.6 - 2.6 0.3 4.3 1.5 5.5 1.5 14.0 3.3
- -----------------------------------------------------------------------------------------------------------------------------------
Net income $ 27.4 $ 17.7 $ 43.3 $ 34.3 $ 32.2 $ 120.6 $ 33.0 $ 40.7 $ 135.9 $ 213.3
- -----------------------------------------------------------------------------------------------------------------------------------
Average number of common
shares outstanding 97.8 106.9 96.8 106.3 96.3 104.3 96.5 98.8 96.9 104.1
Per share of common stock
Net income $ .28 $ .17 $ .45 $ .32 $ .33 $ 1.16 $ .34 $ .41 $ 1.40 $ 2.05
Dividends .14 .14 .14 .14 .14 .14 .14 .14 .56 .56
- -----------------------------------------------------------------------------------------------------------------------------------
The 1994 quarters do not equal the respective year-end amounts 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.
Annual and quarterly per share amounts are affected by the timing of share
issuances and repurchases. During 1994, approximately $235.2 million was
expended to repurchase 10.0 million shares.
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.
The cost of raw materials for the Company and the entire publishing industry
has been adversely affected by the significant increases in newsprint and
magazine paper prices throughout 1995. The unfavorable impact of these increases
is expected to continue during 1996. 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.
Third-quarter 1995 includes a $11.3 million pre-tax gain ($.05 per share)
from the sales of small regional newspapers.
Fourth-quarter 1995 includes a $10.1 million pre-tax charge ($.06 per
share) for severance and related costs for work force reductions.
Third-quarter 1994 includes a $204.0 million pre-tax gain ($.99 per share)
from the sales of the Women's Magazines Division and U.K. golf publications.
Fourth-quarter 1994 includes a $3.1 million loss ($.02 per share) on the
disposition of Gaspesia.
F-28
TEN-YEAR SUPPLEMENTAL FINANCIAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Dollars and shares in millions Year Ended December 31
except per share data 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues and Income
Revenues $2,409 $2,358 $2,020 $1,774 $1,703 $1,777 $1,769 $1,700 $1,642 $1,524
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Profit 229 211 127 88 94 130 169 251 284 266
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing
operations before equity
in forest products group 122 210 58 (2) 41 61 84 132 138 110
Equity in operations of
forest products group 14 3 (52) (9) 6 4 (16) 29 18 20
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing
operations 136 213 6 (11) 47 65 68 161 156 130
Discontinued operations - - - - - - 199 7 4 2
Net cumulative effect of
accounting changes - - - (34) - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) 136 213 6 (45) 47 65 267 168 160 132
- ------------------------------------------------------------------------------------------------------------------------------------
Balance Sheet
Total assets 3,377 3,138 3,215 1,995 2,128 2,150 2,188 1,915 1,712 1,405
Long-term debt
and capital lease obligations 638 523 460 207 213 319 337 378 391 217
Common stockholders' equity 1,610 1,544 1,599 1,000 1,073 1,056 1,064 873 823 705
- ------------------------------------------------------------------------------------------------------------------------------------
Per share of Common Stock
Continuing operations 1.40 2.05 .07 (.14) .61 .85 .87 2.00 1.91 1.60
Discontinued operations - - - - - - 2.52 .08 .05 .03
Net cumulative effect of
accounting changes - - - (.43) - - - - - -
Net income (loss) 1.40 2.05 .07 (.57) .61 .85 3.39 2.08 1.96 1.63
Dividends .56 .56 .56 .56 .56 .54 .50 .46 .40 .33
Common stockholders'
equity (end of year) 16.50 15.71 14.96 12.54 13.70 13.68 13.63 11.02 10.04 8.59
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding (end of year)
Class A and Class B Common 97.6 98.2 106.9 79.7 78.4 77.2 78.1 79.2 82.0 82.0
- ------------------------------------------------------------------------------------------------------------------------------------
Market Price (end of year) 29.62 22.12 26.25 26.37 23.62 20.62 26.37 26.87 31.00 35.50
- ------------------------------------------------------------------------------------------------------------------------------------
1995 - Results included: a net pre-tax gain of $11.3 million ($.05 per share)
from the sales of small regional newspapers; $10.1 million pre-tax charge ($.06
per share) for work force reductions.
1994 - Results included: a net pre-tax gain of $200.9 million ($.99 per share)
from the sales of the Women's Magazines Division and U.K. golf publications
and the disposition of Gaspesia.
1993 - Results included: a pre-tax $3.7 million ($.02 per share) rate
adjustments due to a severe snowstorm; $4.4 million ($.05 per share) of
additional tax expense for remeasurement of deferred tax balances due to the
enactment of the Tax Act; $1.2 million ($.02 per share) of additional tax
expense due to the Tax Act which increased the federal corporate income tax
rate; a $2.6 million pre-tax gain ($.02 per share) on the sale of assets; $35.4
million of pre-tax charges ($.23 per share) for staff reductions at The Times;
an after-tax noncash charge of $47.0 million ($.56 per share) against equity in
operations to write down the Company's investment in Gaspesia to its net
realizable value.
1992 - Results included: $53.8 million pre-tax loss ($.47 per share) on the
closing of The Gwinnett (Ga.) Daily News; a $3.1 million pre-tax gain ($.02 per
share) from the sales of assets; a $28.0 million pre-tax charge ($.20 per share)
for voluntary union staff reductions at The Times; $21.4 million pre-tax ($.15
per share) for labor disruptions and training and start-up costs at Edison. 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.
1991 - Results included: a $20.0 million pre-tax charge ($.15 per share) for
voluntary union staff reductions at The Times; 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, of which the gain
and results of operations through the 1989 sale date are included as
discontinued operations; a $30.0 million pre-tax charge ($.22 per share) for
voluntary union staff reductions at The Times; 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.
F-29
SCHEDULE II
THE NEW YORK TIMES COMPANY
VALUATION AND QUALIFYING ACCOUNTS
For the Three Years Ended December 31, 1995
- ------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ------------------------------------------------------------------------------------------------------------------------
Deduc-
tions
Additions for
charged purposes
to costs for
Balance and which
at expenses accounts Balance
beginning or were set at end
Description of period revenues up of period
- -------------------------------------------------------------------------------------------------------------------------
Dollars in thousands
YEAR ENDED DECEMBER 31, 1995
Deducted from assets to which they apply
Uncollectible accounts . . . . . . . $22,268 $20,749 $24,075 $18,942
Returns and allowances, etc. . . . . 5,889 9,892 8,858 6,923
------- ------- ------- -------
Total . . . . . . . . . . . . . . . $28,157 $30,641 $32,933 $25,865
======= ======= ======= =======
YEAR ENDED DECEMBER 31, 1994
Deducted from assets to which they apply
Uncollectible accounts . . . . . . . $17,108 $23,134 $17,974 $22,268
Returns and allowances, etc. . . . . 26,399 44,562 65,072 5,889
------- ------- ------- -------
Total . . . . . . . . . . . . . . . $43,507 $67,696 $83,046 $28,157
======= ======= ======= =======
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
======= ======= ======= =======
S-1
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- -------- -----------
(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 (filed as an Exhibit to
the Company's Form 10-K dated March 21, 1994, and incorporated by reference
herein).
(3.2) By-laws as amended through February 16, 1995 (filed as an Exhibit to the
Company's Form 10-Q dated May 11, 1995, and incorporated by reference
herein).
(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 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, as amended
effective October 1, 1995.
(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
18, 1995.
(10.3) The Company's 1991 Executive Cash Bonus Plan, as amended through April 18,
1995.
(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 and restated
through January 1, 1993.
(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).
(10.7) 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) (filed as an Exhibit to the
Company's Form 10-K dated March 21, 1994, and incorporated by reference
herein).
(10.8) Funding Agreement #1, dated as of December 15, 1993, between the EDC and the
Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994,
and incorporated by reference herein).
(10.9) Funding Agreement #2, dated as of December 15, 1993, between the EDC and the
Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994,
and incorporated by reference herein).
EXHIBIT
NO. DESCRIPTION
- -------- -----------
(10.10) Funding Agreement #3, dated as of December 15, 1993, between the EDC and the
Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994,
and incorporated by reference herein).
(10.11) Funding Agreement #4, dated as of December 15, 1993, between the EDC and the
Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994,
and incorporated by reference herein).
(10.12) 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
(filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and
incorporated by reference herein).
(10.13) Employment Agreement, dated May 19, 1993, between API, Globe Newspaper
Company and William O. Taylor (filed as an Exhibit to the Company's Form 10-K
dated March 21, 1994, and incorporated by reference herein).
(10.14) 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 Form S-4 (Registration Statement No. 33-28373)
declared effective April 28, 1989, and incorporated by reference herein).
(10.15) API's Supplemental Executive Retirement Plan, as amended effective September
15, 1993 (filed as an Exhibit to the Company's Form 10-K dated March 21,
1994, and incorporated by reference herein).
(10.16) 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).
(10.17) Form of Substituted Stock 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).
(10.18) Form of Substituted Stock 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).
(10.19) Form of Substituted Stock 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).
(10.20) The Company's Deferred Executive Compensation Plan, adopted on May 19, 1994.
(21) Subsidiaries of the Company.
(23) Consent of Deloitte & Touche LLP.
(27) Financial Data Schedule.