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

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.

For quarterly period ended June 27, 2004

Commission file number 1-5837

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

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o.

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ý    No o.

        Number of shares of each class of the registrant's common stock outstanding as of July 30, 2004 (exclusive of treasury shares):

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars and shares in thousands, except per share data)

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

See Notes to Condensed Consolidated Financial Statements.

4

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

SUPPLEMENTAL DATA

Acquisition

        On January 1, 2003, the Company purchased the remaining 50% interest in the International Herald Tribune that it did not previously own for approximately $65 million.

Other

        For the first six months of 2003, capital expenditures are net of a reimbursement of remediation costs at one of the Company's major printing facilities, a portion of which costs had been previously capitalized.

        The Company's and its development partner's interests in the Company's new headquarters are approximately 58% and 42% (see Note 12). Due to the Company's majority interest, 100% of the financial position and results of operations of the building partnership are consolidated with those of the Company. Capital expenditures attributable to the Company's development partner's interest in the Company's new headquarters are included in Investing Activities—Other investing payments and were approximately $19 million for the first six months of 2004 and approximately $46 million for the first six months of 2003. Cash received from the development partner for capital expenditures is included in Financing Activities—Other financing (payments)/proceeds—net and was approximately $18 million for the first six months of 2004 and approximately $36 million for the first six months of 2003.

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     General

        In the opinion of The New York Times Company's (the "Company") management, the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of June 27, 2004, and December 28, 2003, and the results of operations and cash flows of the Company for the periods ended June 27, 2004, and June 29, 2003. All adjustments necessary for a fair presentation have been included and are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company's Condensed Consolidated Financial Statements and related Notes should be read in conjunction with the Consolidated Financial Statements and related Notes included in the Company's Annual Report on Form 10-K for the year ended December 28, 2003. Due to the seasonal nature of the Company's business, operating results for the interim periods are not necessarily indicative of a full year's operations. Certain reclassifications have been made to the 2003 Condensed Consolidated Financial Statements to conform with classifications used as of and for the period ended June 27, 2004. The fiscal periods included herein comprise 13 weeks for the three-month periods and 26 weeks for the six-month periods.

        As of June 27, 2004, the Company's significant accounting policies and estimates, which are detailed in the Company's Annual Report on Form 10-K for the year ended December 28, 2003, have not changed from December 28, 2003.

2.     Recent Accounting Pronouncements

        In January 2004 the Financial Accounting Standards Board ("FASB") issued FASB Staff Position No. 106-1 ("FSP 106-1"), Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which permitted a sponsor of a postretirement health care plan that provides a prescription drug benefit to make a one-time election to defer accounting for the effects of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Act"). In May 2004 the FASB issued FSP No.106-2 ("FSP 106-2"), which superseded FSP 106-1. FSP 106-2 provides authoritative guidance on the accounting for the Act and specifies the disclosure requirements for employers who have adopted FSP 106-2. FSP 106-2 is effective for the interim or annual period beginning after June 15, 2004. See Note 7 for the effect of the adoption of FSP 106-2 on the Company's Condensed Consolidated Financial Statements.

3.     Stock Option and Employee Stock Purchase Plans

        The Company applies the intrinsic value method under Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees, and related interpretations to account for its stock option plans and employee stock purchase plan ("ESPP") (together, "Stock-Based Plans"). Accordingly, the Company would only record compensation expense if it granted stock options with an exercise price that is less than the fair market value of the underlying stock at the date of grant. The Company does not record compensation expense for rights to purchase shares under its ESPP because it satisfies certain conditions under APB 25.

        The following table details the effect on net income and earnings per share had compensation expense for awards issued and vested under the Stock-Based Plans been recorded based on the fair

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value method under Statement of Financial Accounting Standards ("FAS") No. 123, as amended, Accounting for Stock-Based Compensation.

        In June 2004 the Company accelerated the vesting of certain employee stock options where the exercise price of the stock options was above the Company's stock price. Due to the acceleration of the vesting of these stock options, additional compensation expense of approximately $32 million (net of income taxes) was included in stock-based compensation expense in the table above for the second quarter and first six months of 2004.

4.     Goodwill and Other Intangible Assets

        Goodwill is the excess of cost over the fair market value of tangible net assets acquired. Goodwill is not amortized but tested for impairment annually or if certain circumstances indicate a possible impairment may exist in accordance with FAS No. 142, Goodwill and Other Intangible Assets.

        Other intangible assets acquired consist primarily of mastheads and licenses on various acquired properties, customer lists, as well as other assets. Other intangible assets acquired (mastheads and licenses) that have indefinite lives are not amortized but tested for impairment annually or if certain circumstances indicate a possible impairment may exist. Certain other intangible assets acquired (customer lists and other assets) are amortized over their estimated useful lives.

        The changes in the carrying amount of Goodwill in 2004 are as follows:

        The foreign currency translation line item above reflects changes in Goodwill resulting from fluctuating exchange rates related to the consolidation of the International Herald Tribune.

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        Other intangible assets acquired as of June 27, 2004, and December 28, 2003, were as follows:

        As of June 27, 2004, the remaining weighted-average amortization period is eight years for customer lists and five years for other intangible assets acquired included in the table above.

        Amortization expense related to other intangible assets acquired, which is subject to amortization, was $8.7 million for the first six months of 2004 and is expected to be $17.3 million for the full year 2004. Estimated annual amortization expense for the next five years related to these intangible assets is expected to be as follows:

5.     Debt Obligations

        The Company's total debt, including commercial paper and capital lease obligations, was $869.5 million as of June 27, 2004.

        The Company's $600.0 million commercial paper program is supported by the revolving credit agreements described below. Commercial paper issued by the Company is unsecured and can have maturities of up to 270 days. The Company had $144.0 million in commercial paper outstanding as of June 27, 2004, with an annual weighted average interest rate of 1.1% and an average of 3 days to maturity from original issuance.

        The primary purpose of the Company's revolving credit agreements is to support the Company's commercial paper program. The Company has a total of $670.0 million available to borrow under its revolving credit agreements. In May 2004 the Company terminated its one-year $330.0 million revolving credit agreement and entered into a $400.0 million five-year revolving credit agreement that extends to May 2009. The Company's multi-year $270.0 million credit agreement remains unchanged, maturing in June 2006. There were no amounts outstanding under the revolving credit agreements as of June 27, 2004.

        The revolving credit agreements permit borrowings that bear interest at specified margins based on the Company's credit rating, over various floating rates selected by the Company.

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        The revolving credit agreements contain a covenant that requires specified levels of stockholders' equity. The amount of stockholders' equity in excess of the required levels was $425.8 million as of June 27, 2004.

        The Company's 10-year notes, aggregating $250.0 million and bearing interest at an annual rate of 7.625%, mature on March 15, 2005. As a result, the Company reclassified these notes from "Long-term debt" to "Current portion of long-term debt and capital lease obligations" in the Company's Condensed Consolidated Balance Sheets in the first quarter of 2004.

        "Interest expense, net" in the Company's Condensed Consolidated Statements of Income was as follows:

6.     Common Stock

        During the first half of 2004, the Company repurchased 2.6 million shares of its Class A Common Stock at a cost of $117.3 million. The average price of these repurchases was $45.38 per share. From June 28, 2004, through July 30, 2004, the Company repurchased 1.5 million shares at a cost of $62.5 million.

        On April 13, 2004, the Company's Board of Directors (the "Board") declared a $.01 per share increase in the quarterly dividend on the Company's Class A and Class B Common Stock from $.145 per share to $.155 per share effective with the June 2004 dividend.

        On June 17, 2004, the Board declared a dividend of $.155 per share on the Company's Class A and B Common Stock. The dividend is payable on September 17, 2004, to shareholders of record on September 1, 2004. The estimated dividend payable of approximately $23 million is included in "Accounts payable" in the Company's Condensed Consolidated Balance Sheet as of June 27, 2004.

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7.     Pension and Postretirement Benefits

Pension

        The components of net periodic pension cost of all Company-sponsored pension plans were as follows:

        The Company did not make any contributions to its pension plans in the first half of 2004 and it will determine the level of contributions to be made this year during the fourth quarter of 2004. The Company does not pre-fund its non-qualified pension plans, but rather pays for benefits as required from ongoing cash flows.

Postretirement Benefits

        The components of net periodic postretirement cost were as follows:

        Postretirement costs decreased in the second quarter and first half of 2004 compared to the second quarter and first half of 2003 primarily due to the plan amendments and the Medicare reform discussed in Note 2 and below.

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        On January 1, 2004, amendments to the Company's postretirement plan became effective. These amendments included changes to the age and service eligibility requirements and an increase in deductibles, co-payments, and out-of-pocket maximum payments related to the medical prescription drug plans. The amendments resulted in a reduction of the Company's Accumulated Postretirement Benefit Obligation ("APBO") of $44.2 million that was treated as a negative prior service cost, which is being amortized starting in 2004. Additionally, the Company began recognizing the effects of FSP 106-2 (see Note 2).

        The estimated effect of the Act resulted in a decrease in the Company's APBO of $32.7 million. The decrease in the APBO was treated as a gain, which is being amortized starting in 2004. The table below details the reduction in net periodic postretirement cost by component in the second quarter and first half of 2004 as a result of the Act.

8.     Other Income

        "Other income" in the Company's Condensed Consolidated Statements of Income includes the following items:

(a)

Related to a credit for advertising issued by the Company, which was not used within the allotted time by the advertiser.

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9.     Earnings Per Share

        Basic and diluted earnings per share have been computed as follows:

        The difference between basic and diluted shares is primarily due to the assumed exercise of stock options included in the diluted earnings per share computation.

        Stock options with exercise prices that exceeded the fair market value of the Company's common stock had an antidilutive effect and, therefore, were excluded from the computation of diluted earnings per share. Approximately 8 million stock options with exercise prices ranging from $46.34 to $48.54 were excluded from the computation in the second quarter of 2004 and approximately 5 million stock options with exercise prices ranging from $46.40 to $48.54 were excluded from the computation in the first six months of 2004. Approximately 5 million stock options with exercise prices ranging from $46.40 to $47.25 were excluded from the computation in the second quarter and first six months of 2003.

10.   Comprehensive Income

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

        Comprehensive income was as follows:

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        The "Accumulated other comprehensive loss, net of income taxes" in the Company's Condensed Consolidated Balance Sheets was net of a deferred income tax benefit of $68.5 million as of June 27, 2004, and $68.6 million as of December 28, 2003.

11.   Segment Statements of Income

        The Company's reportable segments consist of its Newspaper Group, Broadcast Group and New York Times Digital ("NYTD"), its digital and business information group. These segments are evaluated regularly by key management in assessing performance and allocating resources.

(a)

Intersegment eliminations primarily represent license fees between NYTD and other segments.



(b)

For the first six months of 2003, Newspaper Group operating profit includes a $9.5 million net benefit related to the reimbursement of printing plant remediation expenses and a charge associated with the closing of a job fair business.

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

12.   Contingent Liabilities

New Headquarters Building

        The Company is in the process of developing a 1.54 million square foot condominium office building (the "Building") in New York City that will serve as its new headquarters. In December 2001, a wholly-owned subsidiary of the Company ("NYT"), and FC Lion LLC (a partnership between an affiliate of the Forest City Ratner Companies and an affiliate of ING Real Estate, "FC") became the

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sole members of The New York Times Building LLC (the "Building Partnership"), a partnership established for the purpose of constructing the Building.

        The Building Partnership is a New York limited liability company and a separate and distinct legal entity from the Company. NYT's and FC's percentage interests in the Building Partnership are approximately 58% and 42%. Due to the Company's majority interest, 100% of the financial position and results of operations of the Building Partnership are consolidated with those of the Company, and FC's minority interest in the Building Partnership is included in "Minority Interest" in the Company's Condensed Consolidated Balance Sheets as of June 27, 2004 and December 28, 2003 and in "Minority interest in net income of subsidiaries" in the Condensed Consolidated Statements of Income for the periods ended June 27, 2004 and June 29, 2003.

        In December 2001, the Building Partnership entered into a land acquisition and development agreement ("LADA") for the Building site with a New York State agency, which subsequently acquired title to the site through a condemnation proceeding. Pursuant to the LADA, the Building Partnership was required to fund all costs of acquiring the Building site, including the purchase price of approximately $86 million, and certain additional amounts ("excess site acquisition costs") to be paid in connection with the condemnation proceeding. NYT and FC were required to post letters of credit for these acquisition costs. As of June 27, 2004, approximately $19 million remained undrawn on a letter of credit posted by the Company on behalf of NYT and approximately $14 million remained undrawn on a letter of credit posted by Forest City Enterprises, Inc. ("FCE") on behalf of FC.

        On September 24, 2003, the Building Partnership obtained vacant possession of the Building site, and the New York State agency leased the site to the Building Partnership under a 99-year lease (the "Ground Lease"). Under the terms of the Ground Lease, no fixed rent is payable, but the Building Partnership is required to make payments in lieu of real estate taxes ("PILOT"), pay percentage (profit) rent with respect to retail portions of the Building, and make certain other payments over the term of the Ground Lease. The Building Partnership receives credits for its excess site acquisition costs against 85% of the PILOT payments. The Ground Lease gives the Building Partnership or its designee the option to purchase the Building site after 29 years for nominal consideration.

        The Ground Lease requires the Building Partnership to commence construction of the Building no later than September 24, 2004 and to complete construction within 36 months following construction commencement, subject to certain extensions. The Company and FCE have guaranteed the Building Partnership's obligation to complete construction of the Building in accordance with the Ground Lease.

        Pursuant to the Operating Agreement of the Building Partnership, dated December 12, 2001, and amended June 25, 2004 (the "Operating Agreement"), the funds for construction of the Building are to be provided through a construction loan and capital contributions of NYT and FC. On June 25, 2004, the Building Partnership closed a construction loan with GMAC Commercial Mortgage Corporation (the "construction lender"), which will provide a loan of up to $320 million (the "construction loan"), secured by the Building, for construction of the Building's core and shell as well as other development costs. NYT has elected not to borrow any portion of its share of the total costs of the Building through this construction loan and, instead, has made and will make capital contributions to the Building Partnership for its share of Building costs. The Company will fund such contributions from internally generated cash, including the sale proceeds of its existing headquarters, and external financing sources. FC's share of the total costs of the Building will be funded through capital contributions and the construction loan.

        Under the terms of the Operating Agreement and the construction loan, NYT is required to fund all of its construction equity related to construction of the core and shell as well as other devolopment costs prior to the funding of the construction loan. As of June 27, 2004, NYT's remaining construction equity requirement related to the construction of the core and shell as well as other development costs was approximately $218 million. This requirement has been guaranteed by the Company and is backed

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by a standby letter of credit of $206 million, the amount of which will decline on a monthly basis as capital contributions are made. Because NYT is funding its construction equity first, a portion of those funds will be used to fund FC's share of Building costs (the "FC funded share") prior to commencement of funding of the construction loan. The FC funded share will bear interest at the construction loan rate and will be repaid to NYT out of construction loan draws. FC's interest in the Building Partnership has been pledged to NYT to secure repayment of the FC funded share.

        The construction loan, made through a building loan agreement and a project loan agreement, bears interest at an initial annual rate of LIBOR plus 265 basis points and will mature on July 1, 2008, subject to the Building Partnership's right to extend the maturity date for two six-month periods upon the satisfaction of certain terms and conditions. FCE has provided the construction lender with a guaranty of completion with respect to the Building conditioned upon the availability of the construction loan and NYT construction capital contributions. In addition, the Company has provided the construction lender with a guaranty of NYT's obligation to complete the interior construction of the NYT portions of the Building.

        Upon substantial completion of the Building's core and shell, the Building will be converted to a leasehold condominium, and the Building Partnership will be dissolved. At such time, ownership of the leasehold condominium units will transfer from the Building Partnership to NYT and FC.

        Under the terms of the Operating Agreement and the construction loan, the lien of the construction loan will be released from the NYT condominium units upon substantial completion of the Building's core and shell but will remain upon the FC condominium units until the construction loan is repaid in full. If FC is unable to obtain other financing to repay the construction loan upon substantial completion of the Building's core and shell, the Company is required to make a loan (the "extension loan") to FC of approximately $119.5 million to pay a portion of the construction loan balance. The extension loan will have a maturity date of five years following substantial completion of the core and shell of the Building, bear interest at 1% per annum in excess of the construction loan rate, and be secured by a second mortgage lien on the FC condominium units.

        In January 2004, the Building Partnership entered into a construction management agreement with AMEC Construction Management, Inc., a construction manager, for the construction of the core and shell of the Building at a guaranteed maximum price of approximately $353 million.

        Capital expenditures in connection with the Building, including both core and shell and interior construction costs, are detailed in the table below.

Capital Expenditures

(a)

Approximately $39 million was incurred as of June 27, 2004 (approximately $19 million incurred by NYT and approximately $20 million incurred by FC).



(b)

This amount is net of estimated sale proceeds from the Company's existing headquarters.



(c)

Includes estimated capitalized interest and salaries in the range of $50 to $60 million.

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        Capital expenditures attributable to NYT's interest in the Building are included in "Property, plant and equipment" and capital expenditures attributable to FC's interest in the Building are included in "Miscellaneous assets" in the Company's Condensed Consolidated Balance Sheets as of June 27, 2004 and December 28, 2003.

Third-Party Guarantees

        The Company has outstanding guarantees on behalf of a third party that provides circulation customer service, telemarketing and home-delivery services for The New York Times ("The Times") and The Boston Globe (the "circulation servicer"), and on behalf of three third parties that provide printing and distribution services for The Times's National Edition (the "National Edition printers"). In accordance with accounting principles generally accepted in the United States of America, the contingent obligations related to these guarantees are not reflected in the Company's Condensed Consolidated Balance Sheets as of June 27, 2004, and December 28, 2003.

        The Company has guaranteed the payments under the circulation servicer's credit facility and any miscellaneous costs related to any default thereunder (the "credit facility guarantee"). The total amount of the credit facility guarantee was $20 million as of June 27, 2004. The amount outstanding under the credit facility, which expires in April 2005 and is renewable, was approximately $18 million as of June 27, 2004. The credit facility guarantee was made by the Company to allow the circulation servicer to obtain more favorable financing terms. The circulation servicer has agreed to reimburse the Company for any amounts the Company pays under the credit facility guarantee and has granted the Company a security interest in all of its assets to secure repayment of any amounts the Company pays under the credit facility guarantee.

        In addition, the Company has guaranteed the payments of four property leases of the circulation servicer and any miscellaneous costs related to any default thereunder (the "property lease guarantees"). The total amount of the property lease guarantees was approximately $5 million as of June 27, 2004. The property leases expire at various dates through May 2009. The property lease guarantees were made by the Company to allow the circulation servicer to obtain space to conduct business.

        The Company would have to perform the obligations of the circulation servicer under the credit facility and property lease guarantees if the circulation servicer defaulted under the terms of its credit facility or lease agreements.

        The Company has guaranteed a portion of the payments of equipment leases of two of the National Edition printers and any miscellaneous costs related to any default thereunder (the "equipment lease guarantees"). The total amount of the equipment lease guarantees was approximately $9 million as of June 27, 2004. The Company was released from one equipment lease guarantee ($5 million) subsequent to the second quarter of 2004, because the remaining amount due under the equipment lease was paid. The remaining equipment lease expires in March 2011 but is cancelable in March 2006. The Company made the equipment lease guarantees to allow the National Edition printers to obtain a lower cost of borrowing.

        The Company has also guaranteed certain debt of one of the three National Edition printers and any miscellaneous costs related to any default thereunder (the "debt guarantee"). The total amount of the debt guarantee was approximately $7 million as of June 27, 2004. The debt guarantee, which expires in May 2012, was made by the Company to allow the National Edition printer to obtain a lower cost of borrowing.

        The Company has obtained a secured guarantee from a related party of the National Edition printer to repay the Company for any amounts that it would pay under the debt guarantee. In addition,

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the Company has a security interest in the equipment that was purchased by the National Edition printer with the funds it received from its debt issuance, as well as other equipment and real property.

        The Company would have to perform the obligations of the National Edition printers under the equipment and debt guarantees if the National Edition printers defaulted under the terms of their equipment leases or debt agreements.

Other

        The Company also has letters of credit of approximately $34 million, which are required by insurance companies, to provide support for the Company's workers' compensation liability. The workers' compensation liability is included in the Company's Condensed Consolidated Balance Sheet as of June 27, 2004.

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

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

EXECUTIVE OVERVIEW

Our Business

        The core purpose of The New York Times Company (the "Company") is to enhance society by creating, collecting and distributing high-quality news, information and entertainment. In order to fulfill its mission, the Company must create value for all of the constituents it serves, including its customers, employees and stockholders and the communities in which it operates. The Company creates value by executing its long-term strategy, which is to operate leading news and advertising media in the national/global market and in each of the local markets it serves. In addition, the Company enhances value by controlling costs and implementing process improvement initiatives. The Company continues to execute its strategy to grow geographically and across platforms.

        The Company's long-term strategy is pursued with a portfolio of properties that serves its customers in print, in broadcast and online. For the first six months of 2004, the Newspaper Group contributed 92% of the Company's total revenues, the Broadcast Group accounted for 5% and New York Times Digital ("NYTD"), the Company's digital and business information group, accounted for 3%. Advertising revenues cause the Company's quarterly consolidated results to vary by season. Second-quarter and fourth-quarter advertising volume is traditionally higher than first-quarter and third-quarter volume since economic activity tends to be lower during the winter and summer. The business model of each of the Company's segments is summarized below.

        Newspaper Group (consisting of The New York Times Newspaper Group, which includes The New York Times ("The Times") and the International Herald Tribune (the "IHT"), the New England Newspaper Group, which includes The Boston Globe (the "Globe") and the Worcester Telegram & Gazette, and the Regional Newspaper Group, consisting of 15 other newspapers). The Newspaper Group derives the majority of its revenues by offering advertisers a means to promote their brands, products and services to the buying public. For the first six months of 2004, approximately 64% of the Newspaper Group's revenues was from advertising. The Newspaper Group also derives revenues by offering the public a source of timely news and editorial materials, as well as information on products sold by advertisers. For the first six months of 2004, approximately 29% of the Newspaper Group's revenues was from circulation. Other revenues, which makes up the remainder of revenues, primarily consists of revenues from wholesale delivery operations, news services and direct marketing. The Newspaper Group's main operating expenses are employee-related costs, which include compensation and benefits, and raw materials, primarily newsprint.

        Broadcast Group (consisting of eight network-affiliated television stations and two radio stations). The Broadcast Group derives almost all of its revenues (95% for the first six months of 2004) from the sale of commercial time to advertisers. The Broadcast Group's main operating expenses are employee-related costs and programming costs.

        NYTD (consisting of NYTimes.com, Boston.com and Digital Archive Distribution ("DAD"), which licenses archive databases of The Times and the Globe to electronic information providers). NYTD derives most of its revenues from the sale of advertisements. For the first six months of 2004, advertising revenues accounted for 77% of NYTD's total revenues. Display advertisements accounted for approximately 59% of NYTD's advertising revenues and classified ads, such as help-wanted, real estate and automotive listings, accounted for approximately 41%. NYTD benefits from the exclusive online distribution rights for the classified listings of The Times and the Globe. Access to NYTD's Web sites is offered without subscription fees. Non-advertising revenues for the first six months of 2004, which accounted for 23% of revenues, were primarily from DAD. NYTD's main operating expenses are employee-related costs and royalties paid to The Times and the Globe for content.

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        The Company's long-term strategy is also pursued through its 50% interest in the Discovery Times Channel, a digital cable television channel, and its interest of approximately 17% in New England Sports Ventures, which owns the Boston Red Sox, Fenway Park and 80% of the New England Sports Network, a regional cable sports network. The Company also has investments in a Canadian newsprint company, Donohue Malbaie Inc., and a partnership, Madison Paper Industries, operating a supercalendared paper mill in Maine.

2004 Highlights

•

Advertising revenues grew approximately 4% in the second quarter and first six months of 2004 over the prior-year periods. Advertising revenues improved at each of the Company's business segments in the second quarter of 2004. However, the pace of advertising revenue growth slowed throughout the second quarter. In July, advertising revenue growth was similar to that of June. Based on the rate of advertising revenue growth that the Company has experienced during the first half of the year, the Company adjusted the full-year advertising revenue growth guidance down from the mid-single digits to the low- to mid-single digits.



•

Circulation revenues in the second quarter and first half of 2004 were at approximately the same levels as they were in the prior-year periods. The New York Times Newspaper Group had copy growth in the second quarter, but circulation revenues decreased approximately 2% as a result of more copies being sold to schools, universities and hotels, where the rate paid is less than that on newsstands or for home delivery. Circulation revenues for the New England Newspaper Group grew approximately 6% in the second quarter and first six months of 2004 compared with the comparable prior-year periods, primarily as a result of price increases.



•

Total costs and expenses rose approximately 3% in the second quarter and 4% in the first six months of 2004. Excluding a reimbursement of printing plant remediation expenses and a charge associated with the closing of a small job fair business in the first six months of 2003 (see below), total costs and expenses increased approximately 3% in the first half of 2004. The increase in costs and expenses in the second quarter and first six months of 2004 was mainly because of higher newsprint expense and an increase in compensation, outside printing and distribution costs. The Company has responded to the advertising revenue growth trend discussed above by implementing cost control measures. Therefore, given the Company's expense performance to date and its outlook for the remainder of 2004, the Company adjusted the full-year expense growth rate down from the mid-single digits to the low- to mid-single digits.



•

Earnings per share ("EPS"), on a diluted basis, in the second quarter of 2004 increased approximately 6% to $.50 per share from $.47 per share in the second quarter of 2003.



•

In the first six months of 2004, EPS decreased approximately 4% to $.88 per share from $.92 per share in the first six months of 2003. EPS in the first six months of 2004 would have increased approximately 4% compared with the same period last year had the first half of 2003 not included a net benefit of $.07 per share ($17.8 million pre-tax, $10.7 million after tax) from the following three items:

        Included in Costs and Expenses (a net benefit of $9.5 million):

•

Reimbursement of printing plant remediation expenses



•

Charge for closing of a job fair business

        Included in Other Income (a benefit of $8.3 million):

•

Forfeiture of an advertising credit

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•

The Company continued to be a strong cash generator during the first half of 2004, resulting in an increase of approximately 10% in net cash provided by operating activities over the first half of 2003. The Company utilized its liquidity position to invest in capital projects to improve its operations, to repay commercial paper borrowings, to repurchase shares of its Class A Common Stock and to pay dividends to its stockholders.

Trends and Uncertainties

        The Company's Annual Report on Form 10-K for the year ended December 28, 2003, details the Company's trends and uncertainties. As of June 27, 2004, there have been no material changes in the Company's trends and uncertainties from December 28, 2003.

2004 Guidance

        The key financial measures discussed in the table below are in accordance with accounting principles generally accepted in the United States of America ("GAAP").

        A summary of guidance on key financial measures for 2004, on a GAAP basis, is shown below.

(a)

Includes costs of $65 to $75 million related to the Company's interest in a new headquarters, which is lower, due to delays, than our earlier guidance of $110 to $120 million. However, total capital expenditure guidance for the year remains unchanged as the Company has moved up the timing of certain projects. The Company expects to occupy its new headquarters in 2007.

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RESULTS OF OPERATIONS

Overview

        The following table presents the Company's consolidated financial results for the second quarter and first half of 2004 and 2003.