Document
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 25, 2016
 
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
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
620 Eighth Avenue, New York, N.Y.
 
10018
(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:
Title of each class
 
Name of each exchange on which registered
Class A Common Stock of $.10 par value
 
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: Not Applicable
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No þ
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 þ No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes þ 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. þ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer          
þ  
Accelerated filer
¨
 
Non-accelerated filer        
¨
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨     No þ
The aggregate worldwide market value of Class A Common Stock held by non-affiliates, based on the closing price on June 24, 2016, the last business day of the registrant’s most recently completed second quarter, as reported on the New York Stock Exchange, was approximately $1.8 billion. As of such date, non-affiliates held 69,667 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 15, 2017 (exclusive of treasury shares), was as follows: 160,384,114 shares of Class A Common Stock and 812,757 shares of Class B Common Stock.
Documents incorporated by reference
Portions of the Proxy Statement relating to the registrant’s 2017 Annual Meeting of Stockholders, to be held on April 19, 2017, are incorporated by reference into Part III of this report.



INDEX TO THE NEW YORK TIMES COMPANY 2016 ANNUAL REPORT ON FORM 10-K
 
 
ITEM NO.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Circulation and Audience
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





PART I
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, including the sections titled “Item 1A — Risk Factors” and “Item 7 —Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements that relate to future events or our future financial performance. We may also make written and oral forward-looking statements in our Securities and Exchange Commission (“SEC”) filings and otherwise. We have tried, where possible, to identify such statements by using words such as “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “could,” “project,” “plan” and similar expressions in connection with any discussion of future operating or financial performance. Any forward-looking statements are and will be based upon our then-current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
By their nature, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in any such statements. You should bear this in mind as you consider forward-looking statements. Factors that we think could, individually or in the aggregate, cause our actual results to differ materially from expected and historical results include those described in “Item 1A — Risk Factors” below, as well as other risks and factors identified from time to time in our SEC filings.
ITEM 1. BUSINESS
OVERVIEW
The New York Times Company (the “Company”) was incorporated on August 26, 1896, under the laws of the State of New York. The Company and its consolidated subsidiaries are referred to collectively in this Annual Report on Form 10-K as “we,” “our” and “us.”
We are a global media organization focused on creating, collecting and distributing high-quality news and information. Our continued commitment to premium content and journalistic excellence makes The New York Times brand a trusted source of news and information for readers and viewers across various platforms. Recognized widely for the quality of our reporting and content, our publications have been awarded many industry and peer accolades, including 119 Pulitzer Prizes and citations, more than any other news organization.
The Company includes newspapers, print and digital products and investments. We have one reportable segment with businesses that include:
our newspaper, The New York Times (“The Times”);
our websites, including NYTimes.com;
our mobile applications, including The Times’s core news applications, as well as interest-specific applications such as NYT Cooking, Crossword and others; and
related businesses, such as The Times news services division, product review and recommendation websites The Wirecutter and The Sweethome, digital archive distribution, NYT Live (our live events business) and other products and services under The Times brand.
We generate revenues principally from circulation and advertising. Circulation revenue is derived from the sale of subscriptions to our print, web and mobile products and single-copy sales of our print newspaper. Advertising revenue is derived from the sale of our advertising products and services on our print, web and mobile platforms. Revenue information for the Company appears under “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
During 2016, the Company continued to focus on investing in original, quality journalism across its print and digital platforms. Among other things, we launched groundbreaking digital journalism projects and created compelling special inserts in our print newspaper. In addition, we continued to create innovative digital advertising solutions across our platforms and continued to expand our branded content studio.


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We also made a number of acquisitions during the year. In March 2016 and August 2016, we acquired digital marketing agencies, HelloSociety and Fake Love, respectively, for a total of $15.4 million. And in October 2016, we acquired product review and recommendation websites The Wirecutter and The Sweethome for $25.0 million. See Note 4 of the Notes to the Consolidated Financial Statements for additional information regarding these acquisitions.
The Company sold the New England Media Group in 2013 and the Regional Media Group and the About Group in 2012.  The results of operations for these businesses have been presented as discontinued operations for all periods presented. See Note 13 of the Notes to the Consolidated Financial Statements for additional information regarding these discontinued operations.
PRODUCTS
The Company’s principal business consists of distributing content generated by our newsroom through our print, web and mobile platforms. In addition, we distribute selected content on third-party platforms. The Times’s print edition, a daily (Mon. - Sat.) and Sunday newspaper in the United States, commenced publication in 1851. The NYTimes.com website was launched in 1996. The Times also has an international edition that is tailored and edited for global audiences. First published in 2013 and previously called the International New York Times, the international edition succeeded the International Herald Tribune, a leading daily newspaper that commenced publishing in Paris in 1887.
Our print newspapers are sold in the United States and around the world through individual home-delivery subscriptions, bulk subscriptions (primarily by schools and hotels) and single-copy sales. All print home-delivery subscribers are entitled to receive unlimited digital access.
Since 2011, we have charged consumers for content provided on our core news websites and mobile applications. Digital subscriptions can be purchased individually or through group corporate or group education subscriptions. Our metered model offers users free access to a set number of articles per month and then charges users for access to content beyond that limit. In addition, certain subscriptions include access to Times Insider, a suite of exclusive online content and features.
In addition to our core news websites and mobile applications, the Company has a number of websites and mobile applications that are tailored to a variety of interests, including NYT Cooking and our Crossword product.
CIRCULATION AND AUDIENCE
Our content reaches a broad audience through our print, web and mobile platforms. As of December 25, 2016, we had approximately 2.9 million paid subscriptions in 195 countries to our print and digital products, and in early 2017, we surpassed three million paid subscriptions to our products.
In the United States, The Times had the largest daily and Sunday circulation of all seven-day newspapers for the three-month period ended September 30, 2016, according to data collected by the Alliance for Audited Media (“AAM”), an independent agency that audits circulation of most U.S. newspapers and magazines.
For the fiscal year ended December 25, 2016, The Times’s average print circulation (which includes paid and qualified circulation of the newspaper in print) was approximately 571,500 for weekday (Monday to Friday) and 1,085,700 for Sunday. (Under AAM’s reporting guidance, qualified circulation represents copies available for individual consumers that are either non-paid or paid by someone other than the individual, such as copies delivered to schools and colleges and copies purchased by businesses for free distribution.)
Internationally, average circulation for the international edition of our newspaper (which includes paid circulation of the newspaper in print and electronic replica editions) for the fiscal years ended December 25, 2016, and December 27, 2015, was approximately 197,000 (estimated) and 215,000, respectively. These figures follow the guidance of Office de Justification de la Diffusion, an agency based in Paris and a member of the International Federation of Audit Bureaux of Circulations that audits the circulation of most newspapers and magazines in France. The final 2016 figure will not be available until April 2017.
Paid digital-only subscriptions totaled approximately 1,853,000 as of December 25, 2016, an increase of approximately 46% compared with December 27, 2015. This amount includes paid subscriptions to our Crossword product, which totaled approximately 245,000 as of December 25, 2016. This amount also includes estimated group corporate and group education subscriptions (which collectively represent approximately 7% of total paid digital subscriptions to our news products). The number of paid group subscriptions is derived using the value of the


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relevant contract and a discounted basic subscription rate. The actual number of users who have access to our products through group subscriptions is substantially higher.
According to comScore Media Metrix, an online audience measurement service, in 2016, NYTimes.com had a monthly average of approximately 85 million unique visitors in the United States on either desktop/laptop computers or mobile devices. Globally, including the United States, NYTimes.com had a 2016 monthly average of approximately 122 million unique visitors on either desktop/laptop computers or mobile devices, according to internal data estimates. 
ADVERTISING
We have a comprehensive portfolio of advertising products and services that we provide across print, web and mobile platforms. Our advertising revenue is divided into three main categories:
Display Advertising
Display advertising is principally from advertisers promoting products, services or brands, such as financial institutions, movie studios, department stores, American and international fashion and technology. In print, column-inch ads are priced according to established rates, with premiums for color and positioning. The Times had the largest market share in 2016 in print advertising revenue among a national newspaper set that consists of USA Today, The Wall Street Journal and The Times, according to MediaRadar, an independent agency that measures advertising sales volume and estimates advertising revenue.
On our web and mobile platforms, display advertising comprises banners, video, rich media and other interactive ads. Display advertising also includes branded content on The Times’s platforms. Branded content is longer form marketing content that is distinct from The Times’s editorial content. In 2016, display advertising (print and digital) represented approximately 89% of advertising revenues.
Classified Advertising
Classified advertising includes line ads sold in the major categories of real estate, help wanted, automotive and other. In print, classified advertisers pay on a per-line basis. On our web and mobile platforms, classified advertisers pay on either a per-listing basis for bundled listing packages, or as an add-on to their print ad. In 2016, classified advertising (print and digital) represented approximately 5% of advertising revenues.
Other Advertising
Other advertising primarily includes creative services fees associated with our branded content studio and digital marketing agencies; revenues from preprinted advertising, also known as free-standing inserts; revenues generated from branded bags in which our newspapers are delivered; and advertising revenues from our news services business. In 2016, other advertising (print and digital) represented approximately 6% of our advertising revenues.
Our business is affected in part by seasonal patterns in advertising, with generally higher advertising volume in the fourth quarter due to holiday advertising.
COMPETITION
Our print, web and mobile products compete for advertising and consumers with other media in their respective markets, including paid and free newspapers, broadcast, satellite and cable television, broadcast and satellite radio, magazines, other forms of media and direct marketing. Competition for advertising is generally based upon audience levels and demographics, advertising rates, service, targeting capabilities and advertising results, while competition for consumer revenue and readership is generally based upon platform, format, content, quality, service, timeliness and price.
The Times competes for advertising and circulation primarily with national newspapers such as The Wall Street Journal and USA Today; newspapers of general circulation in New York City and its suburbs; other daily and weekly newspapers and television stations and networks in markets in which The Times is circulated; and some national news and lifestyle magazines. The international edition of our newspaper competes with international sources of English-language news, including The Wall Street Journal’s European and Asian Editions, the Financial Times, Time, Bloomberg Business Week and The Economist.


THE NEW YORK TIMES COMPANY – P. 3


As our industry continues to experience a shift from print to digital media, our products face competition for audience and advertising from a wide variety of digital media, including news and other information websites and mobile applications, news aggregation sites, sites that cover niche content, social media platforms, and other forms of media. In addition, we also compete for advertising on digital advertising networks and exchanges and real-time bidding and other programmatic buying channels.
Our websites and mobile applications most directly compete for traffic and readership with other news and information websites and mobile applications. NYTimes.com faces competition from sources such as WSJ.com, washingtonpost.com, Google News, Yahoo! News, huffingtonpost.com, MSNBC.com and CNN.com. Internationally, our websites and mobile applications compete against international online sources of English-language news, including bbc.co.uk, guardian.co.uk, ft.com, WSJ.com, economist.com, huffingtonpost.com and reuters.com.
OTHER BUSINESSES
We derive revenue from other businesses, which primarily include:
The Times news services division, which transmits articles, graphics and photographs from The Times and other publications to approximately 2,000 newspapers, magazines and websites in over 100 countries and territories worldwide. It also comprises a number of other businesses that primarily include our online retail store, product licensing, news digests, book development and rights and permissions;
The Company’s NYT Live business, which is a platform for our live journalism and convenes thought leaders from business, academia and government at conferences and events to discuss topics ranging from education to sustainability to the luxury business;
The Wirecutter and The Sweethome, product review and recommendation websites acquired in October 2016 that serve as a guide to technology gear, home products and other consumer goods. These websites generate affiliate referral revenue (revenue generated by offering direct links to merchants in exchange for a portion of the sale price), which we record as other revenues; and
Digital archive distribution, which licenses electronic archive databases to resellers of that information in the business, professional and library markets.
JOINT VENTURE INVESTMENTS
We have noncontrolling ownership interests in three entities:
49% interest in Donahue Malbaie Inc., a Canadian newsprint company (“Malbaie”);   
40% interest in Madison Paper Industries, a partnership that previously operated a paper mill (“Madison”); and
30% interest in Women in the World, LLC, a live-event conference business.
Ownership of Malbaie is shared with the Resolute FP Canada Inc. (“Resolute Canada”), which owns the other 51%. Resolute Canada is a subsidiary of Resolute Forest Products Inc., a Delaware corporation (“Resolute”), which is a large global manufacturer of paper, market pulp and wood products. Malbaie manufactures newsprint on the paper machine it owns within Resolute’s paper mill in Clermont, Quebec, and is wholly dependent upon Resolute for its pulp, which it purchases from this paper mill. In 2016, Malbaie produced approximately 226,000 metric tons of newsprint, of which approximately 12% was sold to us.
The Company and UPM-Kymmene Corporation, a Finnish paper manufacturing company (“UPM”), are partners through subsidiary companies in Madison. The Company’s percentage ownership is through an 80%-owned consolidated subsidiary. UPM owns 60% of Madison, including a 10% interest through a 20% noncontrolling interest in the consolidated subsidiary of the Company. The Madison paper mill closed during 2016 and the joint venture is currently being liquidated.
These investments are accounted for under the equity method and reported in “Investments in joint ventures” in our Consolidated Balance Sheets as of December 25, 2016. For additional information on these investments, see “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 5 of the Notes to the Consolidated Financial Statements.


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PRINT PRODUCTION AND DISTRIBUTION
The Times is currently printed at our production and distribution facility in College Point, N.Y., as well as under contract at 27 remote print sites across the United States. The Times is delivered to newsstands and retail outlets in the New York metropolitan area through a combination of third-party wholesalers and our own drivers. In other markets in the United States and Canada, The Times is delivered through agreements with other newspapers and third-party delivery agents.
The international edition of The Times is printed under contract at 38 sites throughout the world and is sold in 131 countries and territories. It is distributed through agreements with other newspapers and third-party delivery agents.
RAW MATERIALS
The primary raw materials we use are newsprint and coated paper, which we purchase from a number of North American and European producers. A significant portion of our newsprint is purchased from Resolute.
In 2016 and 2015, we used the following types and quantities of paper:
(In metric tons)
 
2016

 
2015

Newsprint
 
97,800

 
104,200

Coated and Supercalendered Paper
 
19,500

 
20,400

EMPLOYEES AND LABOR RELATIONS
We had 3,710 full-time equivalent employees as of December 25, 2016.
As of December 25, 2016, nearly half of our full-time equivalent employees were represented by unions. The following is a list of collective bargaining agreements covering various categories of the Company’s employees and their corresponding expiration dates. As indicated below, two collective bargaining agreements have expired and negotiations for new contracts are ongoing. We cannot predict the timing or the outcome of these negotiations.
Employee Category
Expiration Date
NewsGuild of New York
March 30, 2016
Typographers
March 30, 2016
Machinists
March 30, 2018
Mailers
March 30, 2019
Drivers
March 30, 2020
Paperhandlers
March 30, 2021
Pressmen
March 30, 2021
Stereotypers
March 30, 2021
As of December 25, 2016, approximately 75 of our full-time equivalent employees were located in France, and the terms and conditions of employment of those employees are established by a combination of French national labor law, industry-wide collective agreements and Company-specific agreements.
AVAILABLE INFORMATION
Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports, and the Proxy Statement for our Annual Meeting of Stockholders are made available, free of charge, on our website at http://www.nytco.com, as soon as reasonably practicable after such reports have been filed with or furnished to the SEC.


THE NEW YORK TIMES COMPANY – P. 5


ITEM 1A. RISK FACTORS
You should carefully consider the risk factors described below, as well as the other information included in this Annual Report on Form 10-K. Our business, financial condition or results of operations could be materially adversely affected by any or all of these risks, or by other risks or uncertainties not presently known or currently deemed immaterial, that may adversely affect us in the future.
We face significant competition in all aspects of our business.
We operate in a highly competitive environment. We compete for advertising and consumer revenue with both traditional publishers and new content providers. Competition among companies offering online content is intense, and new competitors can quickly emerge. Some of our current and potential competitors may have greater resources than we do, which may allow them to compete more effectively than us.  
Our ability to compete effectively depends on many factors both within and beyond our control, including among others:
our ability to continue to deliver high-quality journalism and content that is interesting and relevant to our audience;
the popularity, usefulness, ease of use, performance and reliability of our digital products compared with those of our competitors;
the engagement of our current readers with our print and digital products, and our ability to reach new readers;
our ability to develop, maintain and monetize products;
the pricing of our products;
our marketing and selling efforts, including our ability to provide marketers with a compelling return on their investments;
our ability to attract, retain, and motivate talented employees, including journalists and product and technology specialists;
our ability to manage and grow our operations in a cost-effective manner; and
our reputation and brand strength relative to those of our competitors.
Our success depends on our ability to respond and adapt to changes in technology and consumer behavior.
Technology in the media industry continues to evolve rapidly. Advances in technology have led to an increased number of methods for the delivery and consumption of news and other content. These developments are also driving changes in the preferences and expectations of consumers as they seek more control over how they consume content.
Changes in technology and consumer behavior pose a number of challenges that could adversely affect our revenues and competitive position. For example, among others:
we may be unable to develop products for mobile devices or other digital platforms that consumers find engaging, that work with a variety of operating systems and networks and that achieve a high level of market acceptance;
there may be changes in user sentiment about the quality or usefulness of our existing products or concerns related to privacy, security or other factors;
news aggregation websites and customized news feeds may reduce our traffic levels by creating a disincentive for users to visit our websites or use our digital products;
consumers’ increased reliance on mobile devices for the consumption of news and other content may contribute to a decline in engagement with our products;
failure to successfully manage changes in search engine optimization and social media traffic to increase our digital presence and visibility may reduce our traffic levels;


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we may be unable to maintain or update our technology infrastructure in a way that meets market and consumer demands; and
the distribution of our content on delivery platforms of third parties may lead to limitations on monetization of our products, the loss of control over distribution of our content and loss of a direct relationship with our audience.
Responding to these changes may require significant investment. We may be limited in our ability to invest funds and resources in digital products, services or opportunities, and we may incur expense in building, maintaining and evolving our technology infrastructure.
Unless we are able to use new and existing technologies to distinguish our products and services from those of our competitors and develop in a timely manner compelling new products and services that engage users across platforms, our business, financial condition and prospects may be adversely affected.
Our advertising revenues are affected by numerous factors, including economic conditions, market dynamics, audience fragmentation and evolving digital advertising trends.
We derive substantial revenues from the sale of advertising in our products. Advertising spending is sensitive to overall economic conditions, and our advertising revenues could be adversely affected if advertisers respond to weak and uneven economic conditions by reducing their budgets or shifting spending patterns or priorities, or if they are forced to consolidate or cease operations.
In determining whether to buy advertising, our advertisers consider the demand for our products, demographics of our reader base, advertising rates, results observed by advertisers, and alternative advertising options.
Although print advertising revenue continues to represent a majority of our total advertising revenue (64% of our total advertising revenues in 2016), the increased popularity of digital media among consumers, particularly as a source for news and other content, has driven a corresponding shift in demand from print advertising to digital advertising. However, our digital advertising revenue may not replace in full print advertising revenue lost as a result of the shift.
The increasing number of digital media options available, including through social networking platforms and news aggregation websites, has expanded consumer choice significantly, resulting in audience fragmentation. Competition from new content providers and platforms, some of which charge lower rates than we do or have greater audience reach and targeting capabilities, and the significant increase in inventory of digital advertising space, have affected and will likely continue to affect our ability to attract and retain advertisers and to maintain or increase our advertising rates.
The digital advertising market itself continues to undergo significant change. Digital advertising networks and exchanges, real-time bidding and other programmatic buying channels that allow advertisers to buy audiences at scale are playing a more significant role in the advertising marketplace and may cause further downward pricing pressure. New delivery platforms may also lead to loss of distribution and pricing control and loss of a direct relationship with consumers. In addition, changes in the standards for the delivery of digital advertising, such as the industry-wide standard on viewability, could also negatively affect our digital advertising revenues.
Technologies have been developed, and will likely continue to be developed, that enable consumers to circumvent digital advertising on websites and mobile devices. Advertisements blocked by these technologies are treated as not delivered and any revenue we would otherwise receive from the advertiser for that advertisement is lost. Increased adoption of these technologies could adversely affect our advertising revenues, particularly if we are unable to develop effective solutions to mitigate their impact.
As the digital advertising market continues to evolve, our ability to compete successfully for advertising budgets will depend on, among other things, our ability to engage and grow digital audiences and prove the value of our advertising and the effectiveness of our platforms to advertisers.


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We may experience further downward pressure on our advertising revenue margins.
The character of our digital advertising business continues to change, as demand for newer forms of advertising, such as branded content and video advertising, increases. The margin on revenues from some of these newer advertising forms tends to be lower than the margin on revenues we generate from our print advertising and traditional digital display advertising. Consequently, we may experience further downward pressure on our advertising revenue margins as a greater percentage of advertising revenues comes from these newer forms.
The inability of the Company to retain and grow our subscriber base could adversely affect our results of operations and business.
Revenue from subscriptions to our print and digital products makes up a majority of our total revenue. Subscription revenue is sensitive to discretionary spending available to subscribers in the markets we serve, as well as economic conditions. To the extent poor economic conditions lead consumers to reduce spending on discretionary activities, our ability to retain current and obtain new subscribers could be hindered, thereby reducing our subscription revenue. In addition, the growth rate of new subscriptions to our news products that are driven by significant news events, such as an election, may not be sustainable.
Print subscriptions have declined over the last several years, primarily due to increased competition from digital media formats (which are often free to users), higher subscription rates and a growing preference among certain consumers to receive all or a portion of their news from sources other than a print newspaper. If we are unable to offset continued revenue declines resulting from falling print subscriptions with revenue from home-delivery price increases, our print circulation revenue will be adversely affected.
Subscriptions to content provided on our digital platforms generate substantial revenue for us. Our future growth depends upon our ability to retain and grow our digital subscription base and audience. To do so will require us to evolve our subscription model, address changing consumer demands and developments in technology and improve our digital product offering while continuing to deliver high-quality journalism and content that is interesting and relevant to readers. There is no assurance that we will be able to successfully maintain and increase our digital subscriber base or that we will be able to do so without taking steps such as reducing pricing or incurring subscription acquisition costs that would affect our margin or profitability.
Failure to execute cost-control measures successfully could adversely affect our profitability.
Over the last several years, we have taken steps to reduce operating costs across the Company, and we plan to continue our cost-management efforts. Some of these cost management efforts require significant up-front investment. If we do not achieve expected savings from these efforts, our total operating costs would be greater than anticipated. In addition, if we do not manage cost-management efforts properly, such efforts may affect the quality of our products and therefore our ability to generate future revenues. And to the extent our cost-management efforts result in reductions in staff and employee compensation and benefits, this could adversely affect our ability to attract and retain key employees.
Significant portions of our expenses are fixed costs that neither increase nor decrease proportionately with revenues. In addition, our ability to make short-term adjustments to manage our costs or to make changes to our business strategy may be limited by certain of our collective bargaining agreements. If we are not able to implement further cost-control efforts or reduce our fixed costs sufficiently in response to a decline in our revenues, our results of operations will be adversely affected.
The underfunded status of our pension plans may adversely affect our operations, financial condition and liquidity.
We sponsor several single-employer defined benefit pension plans. Although we have frozen participation and benefits under all but two of these qualified pension plans, our results of operations will be affected by the amount of income or expense we record for, and the contributions we are required to make to, these plans.
We are required to make contributions to our plans to comply with minimum funding requirements imposed by laws governing those plans. As of December 25, 2016, our qualified defined benefit pension plans were underfunded by approximately $222 million. Our obligation to make additional contributions to our plans, and the timing of any such contributions, depends on a number of factors, many of which are beyond our control. These include: legislative changes; assumptions about mortality; and economic conditions, including a low interest rate environment or sustained volatility and disruption in the stock and bond markets, which impact discount rates and returns on plan assets.


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As a result of these required contributions, we may have less cash available for working capital and other corporate uses, which may have an adverse impact on our results of operations, financial condition and liquidity.
Our participation in multiemployer pension plans may subject us to liabilities that could materially adversely affect our results of operations, financial condition and cash flows.
We participate in, and make periodic contributions to, various multiemployer pension plans that cover many of our current and former production and delivery union employees. Our required contributions to these plans could increase because of a shrinking contribution base as a result of the insolvency or withdrawal of other companies that currently contribute to these plans, the inability or failure of withdrawing companies to pay their withdrawal liability, low interest rates, lower than expected returns on pension fund assets or other funding deficiencies. Our withdrawal liability for any multiemployer pension plan will depend on the nature and timing of any triggering event and the extent of that plan’s funding of vested benefits.
If a multiemployer pension plan in which we participate has significant underfunded liabilities, such underfunding will increase the size of our potential withdrawal liability. In addition, under federal pension law, special funding rules apply to multiemployer pension plans that are classified as “endangered,” “critical” or “critical and declining.” If plans in which we participate are in critical status, benefit reductions may apply and/or we could be required to make additional contributions.
We have recorded significant withdrawal liabilities with respect to multiemployer pension plans in which we formerly participated (primarily in connection with the sales of the New England and the Regional Media Groups) and may record additional liabilities in the future. In addition, we have recorded withdrawal liabilities for actual and estimated partial withdrawals from several plans in which we continue to participate. Until demand letters from some of the multiemployer plans’ trustees are received, the exact amount of the withdrawal liability will not be fully known and, as such, a difference from the recorded estimate could have an adverse effect on our results of operations, financial condition and cash flows. Several of the multiemployer plans in which we participate are specific to the newspaper industry, which continues to undergo significant pressure. A withdrawal by a significant percentage of participants may result in a mass withdrawal declaration by the trustees of one or more of these plans, which would require us to record additional withdrawal liabilities.  
If, in the future, we elect to withdraw from these plans or if we trigger a partial withdrawal due to declines in contribution base units or a partial cessation of our obligation to contribute, additional liabilities would need to be recorded that could have an adverse effect on our business, results of operations, financial condition or cash flows.
Acquisitions, divestitures, investments and other transactions could adversely affect our costs, revenues, profitability and financial position.
In order to position our business to take advantage of growth opportunities, we engage in discussions, evaluate opportunities and enter into agreements for possible acquisitions, divestitures, investments and other transactions. We may also consider the acquisition of, or investment in, specific properties, businesses or technologies that fall outside our traditional lines of business and diversify our portfolio, including those that may operate in new and developing industries, if we deem such properties sufficiently attractive. In 2016, for example, we acquired HelloSociety and Fake Love, two digital marketing agencies, as well as product review and recommendation websites The Wirecutter and The Sweethome.
Acquisitions involve significant risks, including:
difficulties in integrating acquired operations (including cultural challenges associated with integrating employees from the acquired company into our organization);
diversion of management attention from other business concerns or resources;
use of resources that are needed in other parts of our business;
possible dilution of our brand or harm to our reputation;
the potential loss of key employees;
risks associated with integrating financial reporting and internal control systems; and
other unanticipated problems and liabilities.


THE NEW YORK TIMES COMPANY – P. 9


Competition for certain types of acquisitions, particularly digital properties, is significant. Even if successfully negotiated, closed and integrated, certain acquisitions or investments may prove not to advance our business strategy and may fall short of expected return on investment targets, which would adversely affect our business, results of operations and financial condition.
We have made investments in companies, and we may make similar investments in the future. Investments in these businesses subject us to the operating and financial risks of these businesses and to the risk that we do not have sole control over the operations of these businesses. Our investments are generally illiquid and the absence of a market may inhibit our ability to dispose of them. In addition, if the book value of an investment were to exceed its fair value, we would be required to recognize an impairment charge related to the investment.
Security breaches and other network and information systems disruptions could affect our ability to conduct our business effectively.
Our online systems store and process confidential subscriber, employee and other sensitive personal data, and therefore maintaining our network security is of critical importance. We use third-party technology and systems for a variety of operations, including encryption and authentication technology, employee email, domain name registration, content delivery to customers, back-office support and other functions. Our systems, and those of third parties upon which our business relies, may be vulnerable to interruption or damage that can result from natural disasters, fires, power outages, acts of terrorism or other similar events, or from deliberate attacks such as computer hacking, computer viruses, worms or other destructive or disruptive software, process breakdowns, denial of service attacks, malicious social engineering or other malicious activities, or any combination of the foregoing.
We have implemented controls and taken other preventative measures designed to strengthen our systems against attacks, including measures designed to reduce the impact of a security breach at our third-party vendors. Although the costs of the controls and other measures we have taken to date have not had a material effect on our financial condition, results of operations or liquidity, there can be no assurance as to the costs of additional controls and measures that we may conclude are necessary in the future.
There can also be no assurance that the actions, measures and controls we have implemented will be effective against future attacks or be sufficient to prevent a future security breach or other disruption to our network or information systems, or those of our third-party providers. Such an event could result in a disruption of our services or improper disclosure of personal data or confidential information, which could harm our reputation, require us to expend resources to remedy such a security breach or defend against further attacks, divert management’s attention and resources or subject us to liability under laws that protect personal data, resulting in increased operating costs or loss of revenue.
Our international operations expose us to economic and other risks inherent in foreign operations.
We have news bureaus and other offices around the world, and our print, web and mobile products are generally available globally. We are focused on further expanding the international scope of our business, and face the inherent risks associated with doing business abroad, including:
effectively managing and staffing foreign operations, including complying with local laws and regulations in each different jurisdiction;
ensuring the safety and security of our journalists and other employees working in foreign locations;
navigating local customs and practices;
government policies and regulations that restrict the digital flow of information, which could block access to, or the functionality of, our products;
protecting and enforcing our intellectual property rights under varying legal regimes;
complying with international laws and regulations, including those governing consumer privacy and the collection, use, retention, sharing and security of consumer data;
economic uncertainty, volatility in local markets and political or social instability;
restrictions on foreign ownership, foreign investment or repatriation of funds;
higher-than-anticipated costs of entry; and


P. 10 – THE NEW YORK TIMES COMPANY


currency exchange rate fluctuations.
Adverse developments in any of these areas could have an adverse impact on our business, financial condition and results of operations. We may, for example, incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. In addition, we have limited experience in developing and marketing our digital products in international regions and could be at a disadvantage compared with local and multinational competitors.
A significant number of our employees are unionized, and our business and results of operations could be adversely affected if labor agreements were to further restrict our ability to maximize the efficiency of our operations.
Approximately half of our full-time equivalent work force is unionized. As a result, we are required to negotiate the wages, salaries, benefits, staffing levels and other terms with many of our employees collectively. Our results could be adversely affected if future labor negotiations or contracts were to further restrict our ability to maximize the efficiency of our operations. If we are unable to negotiate labor contracts on reasonable terms, or if we were to experience labor unrest or other business interruptions in connection with labor negotiations or otherwise, our ability to produce and deliver our products could be impaired. In addition, our ability to make adjustments to control compensation and benefits costs, change our strategy or otherwise adapt to changing business needs may be limited by the terms and duration of our collective bargaining agreements.
Our brand and reputation are key assets of the Company, and negative perceptions or publicity could adversely affect our business, financial condition and results of operations.
The New York Times brand is a key asset of the Company, and we believe that it has contributed significantly to the success of our business. We also believe that our continued success depends on our ability to preserve, grow and leverage the value of our brand. We believe that we have a powerful and trusted brand with an excellent reputation for high-quality journalism and content, but our brand could be damaged by incidents that erode consumer trust. For example, to the extent consumers perceive the quality of our content to be less reliable, our ability to attract readers and advertisers may be hindered. In addition, we may introduce new products or services that users do not like and which may negatively affect our brand. We also may fail to provide adequate customer service, which could erode confidence in our brand. Our reputation could also be damaged by failures of third-party vendors we rely on in many contexts. Maintaining and enhancing our brand may require us to make significant investments, which may not be successful. To the extent our brand and reputation are damaged by these or other incidents, our revenues and profitability could be adversely affected.
Our business may suffer if we cannot protect our intellectual property.
Our business depends on our intellectual property, including our valuable brands, content, services and internally developed technology. We believe our proprietary trademarks and other intellectual property rights are important to our continued success and our competitive position. Unauthorized parties may attempt to copy or otherwise unlawfully obtain and use our content, services, technology and other intellectual property, and we cannot be certain that the steps we have taken to protect our proprietary rights will prevent any misappropriation or confusion among consumers and merchants, or unauthorized use of these rights.
Advancements in technology have made the unauthorized duplication and wide dissemination of content easier, making the enforcement of intellectual property rights more challenging. In addition, as our business and the risk of misappropriation of our intellectual property rights have become more global in scope, we may not be able to protect our proprietary rights in a cost-effective manner in a multitude of jurisdictions with varying laws.
If we are unable to procure, protect and enforce our intellectual property rights, including maintaining and monetizing our intellectual property rights to our content, we may not realize the full value of these assets, and our business and profitability may suffer. In addition, if we must litigate in the United States or elsewhere to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of others, such litigation may be costly and divert the attention of our management. In addition, if we must take actions, including litigation, in the United States or elsewhere to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of others, such actions may be costly and divert the attention of our management.


THE NEW YORK TIMES COMPANY – P. 11


Legislative and regulatory developments, including with respect to privacy, could adversely affect our business.
Our business is subject to government regulation in the jurisdictions in which we operate, and our websites, which are available worldwide, may be subject to laws regulating the Internet even in jurisdictions where we do not do business. Among others, we are subject to laws and regulations with respect to online privacy and the collection and use of consumer data. Various federal and state laws and regulations, as well as the laws of foreign jurisdictions in which we operate, govern the collection, use, retention, sharing and security of the data we receive from and about our readers. Failure to protect confidential customer data or to provide customers with adequate notice of our privacy policies could subject us to liabilities imposed by these jurisdictions.
Existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations, and various federal and state legislative and regulatory bodies, as well as foreign legislative and regulatory bodies, may expand current or enact new laws regarding privacy and data security-related matters. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.
In addition, any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related requirements could result in claims against us by governmental entities or others and/or increased costs to change our practices. They could also result in negative publicity and a loss of confidence in us by our readers and advertisers. All of these potential consequences could adversely affect our business and results of operations.
We have been, and may be in the future, subject to claims of intellectual property infringement that could adversely affect our business.
We periodically receive claims from third parties alleging infringement, misappropriation or other violations of their intellectual property rights. These third parties often include patent holding companies seeking to monetize patents they have purchased or otherwise obtained through asserting claims of infringement or misuse. Even if we believe that these claims of intellectual property infringement are without merit, defending against the claims can be time-consuming, be expensive to litigate or settle, and cause diversion of management attention.
These intellectual property infringement claims, if successful, may require us to enter into royalty or licensing agreements on unfavorable terms, use more costly alternative technology or otherwise incur substantial monetary liability. Additionally, these claims may require us to significantly alter certain of our operations. The occurrence of any of these events as a result of these claims could result in substantially increased costs or otherwise adversely affect our business.
A significant increase in the price of newsprint, or significant disruptions in our newsprint supply chain, would have an adverse effect on our operating results.
The cost of raw materials, of which newsprint is the major component, represented approximately 5% of our total operating costs in 2016. The price of newsprint has historically been volatile and, while the price has decreased over the last several years, the price increased in 2016 due to declining newsprint supply as a result of paper mill closures and conversions to other grades of paper. The price of newsprint could further increase as a result of various factors, including a reduction in the number of suppliers due to restructurings, bankruptcies and consolidations and other factors that adversely impact supplier profitability, including increases in operating expenses caused by raw material and energy costs, and currency volatility.
In addition, we rely on our suppliers for deliveries of newsprint. The availability of our newsprint supply may be affected by various factors, including labor unrest, transportation issues and other disruptions that may affect deliveries of newsprint.
If newsprint prices increase significantly or we experience significant disruptions in the availability of our newsprint supply in the future, our operating results will be adversely affected.
We may not have access to the capital markets on terms that are acceptable to us or may otherwise be limited in our financing options.
From time to time the Company may need or desire to access the long-term and short-term capital markets to obtain financing. The Company’s access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including, but not limited to: (1) the Company’s financial performance, (2) the Company’s credit ratings or absence of a credit rating, (3) liquidity of the overall capital markets and (4) the


P. 12 – THE NEW YORK TIMES COMPANY


state of the economy. There can be no assurance that the Company will continue to have access to the capital markets on terms acceptable to it.
In addition, macroeconomic conditions, such as continued or increased volatility or disruption in the credit markets, could adversely affect our ability to obtain financing to support operations or to fund acquisitions or other capital-intensive initiatives.
Our Class B Common Stock is principally held by descendants of Adolph S. Ochs, through a family trust, and this control could create conflicts of interest or inhibit potential changes of control.
We have two classes of stock: Class A Common Stock and Class B Common Stock. Holders of Class A Common Stock are entitled to elect 30% of the Board of Directors and to vote, with holders of Class B Common Stock, on the reservation of shares for equity grants, certain material acquisitions and the ratification of the selection of our auditors. Holders of Class B Common Stock are entitled to elect the remainder of the Board of Directors and to vote on all other matters. Our Class B Common Stock is principally held by descendants of Adolph S. Ochs, who purchased The Times in 1896. A family trust holds approximately 90% of the Class B Common Stock. As a result, the trust has the ability to elect 70% of the Board of Directors and to direct the outcome of any matter that does not require a vote of the Class A Common Stock. Under the terms of the trust agreement, the trustees are directed to retain the Class B Common Stock held in trust and to vote such stock against any merger, sale of assets or other transaction pursuant to which control of The Times passes from the trustees, unless they determine that the primary objective of the trust can be achieved better by the implementation of such transaction. Because this concentrated control could discourage others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial to our businesses, the market price of our Class A Common Stock could be adversely affected.
Adverse results from litigation or governmental investigations can impact our business practices and operating results.
From time to time, we are party to litigation and regulatory, environmental and other proceedings with governmental authorities and administrative agencies. See Note 18 of the Notes to the Consolidated Financial Statements regarding certain matters. Adverse outcomes in lawsuits or investigations could result in significant monetary damages or injunctive relief that could adversely affect our results of operations or financial condition as well as our ability to conduct our business as it is presently being conducted. In addition, regardless of merit or outcome, such proceedings can have an adverse impact on the Company as a result of legal costs, diversion of management and other personnel, and other factors.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.


THE NEW YORK TIMES COMPANY – P. 13


ITEM 2. PROPERTIES
Our principal executive offices are located in our New York headquarters building in the Times Square area. The building was completed in 2007 and consists of approximately 1.54 million gross square feet, of which approximately 828,000 gross square feet of space have been allocated to us. We owned a leasehold condominium interest representing approximately 58% of the New York headquarters building until March 2009, when we entered into an agreement to sell and simultaneously lease back 21 floors, or approximately 750,000 rentable square feet, currently occupied by us (the “Condo Interest”). The sale price for the Condo Interest was $225.0 million. The lease term is 15 years, and we have three renewal options that could extend the term for an additional 20 years. We have an option exercisable in 2019 to repurchase the Condo Interest for $250.0 million, and we currently expect that we will exercise this option.We continue to own a leasehold condominium interest in seven floors in our New York headquarters building, totaling approximately 216,000 rentable square feet that were not included in the sale-leaseback transaction, all of which are currently leased to third parties.
In December 2016, we announced a plan to consolidate the Company’s operations in our headquarters building from the 17 floors we currently occupy to nine by the end of 2017. We plan to lease the remaining eight floors to third parties. This will require the temporary relocation of a number of employees to office space elsewhere in New York while we reconfigure the space. We believe this plan will further enhance the value of our headquarters building.
In addition, we have a printing and distribution facility with 570,000 gross square feet located in College Point, N.Y., on a 31-acre site owned by the City of New York for which we have a ground lease. We have an option to purchase the property at any time before the lease ends in 2019 for $6.9 million. As of December 25, 2016, we also owned other properties with an aggregate of approximately 3,000 gross square feet and leased other properties with an aggregate of approximately 209,200 rentable square feet in various locations.
ITEM 3. LEGAL PROCEEDINGS
We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made. See Note 18 of the Notes to the Consolidated Financial Statements for a description of certain matters, which is incorporated herein by reference. Although the Company cannot predict the outcome of these matters, it is possible that an unfavorable outcome in one or more matters could be material to the Company’s consolidated results of operations or cash flows for an individual reporting period. However, based on currently available information, management does not believe that the ultimate resolution of these matters, individually or in the aggregate, is likely to have a material effect on the Company’s financial position.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.



P. 14 – THE NEW YORK TIMES COMPANY


EXECUTIVE OFFICERS OF THE REGISTRANT
Name
 
Age
 
Employed By
Registrant Since
 

Recent Position(s) Held as of February 21, 2017
Arthur Sulzberger, Jr.
 
65
 
1978
 
Chairman (since 1997) and Publisher of The Times (since 1992); Chief Executive Officer (2011 to 2012)
Mark Thompson
 
59
 
2012
 
President and Chief Executive Officer (since 2012); Director-General, British Broadcasting Corporation (“BBC”) (2004 to 2012); Chief Executive, Channel 4 Television Corporation (2002 to 2004); and various positions of increasing responsibility at the BBC (1979 to 2001)
James M. Follo
 
57
 
2007
 
Executive Vice President (since 2013) and Chief Financial Officer (since 2007); Senior Vice President (2007 to 2013); Chief Financial and Administrative Officer, Martha Stewart Living Omnimedia, Inc. (2001 to 2006)
R. Anthony Benten
 
53
 
1989
 
Senior Vice President, Treasurer (since December 2016) and Corporate Controller (since 2007); Senior Vice President, Finance (2008 to 2016); Vice President (2003 to 2008); Treasurer (2001 to 2007)
Diane Brayton
 
48
 
2004
 
Executive Vice President, General Counsel (since January 2017) and Corporate Secretary (since 2011); Deputy General Counsel (2016); Assistant Secretary (2009 to 2011) and Assistant General Counsel (2009 to 2016); Senior Counsel (2007 to 2009); Counsel (2004 to 2007)
Meredith Kopit Levien
 
45
 
2013
 
Executive Vice President and Chief Revenue Officer (since 2015); Executive Vice President, Advertising (2013 to 2015); Chief Revenue Officer, Forbes Media LLC (2011 to 2013); Senior Vice President and Group Publisher, Forbes Magazine Group (2010 to 2011); Vice President and Publisher, ForbesLife and ForbesWoman.com (2008 to 2010); and various positions of increasing responsibility at Atlantic Media Company (2001 to 2008)


THE NEW YORK TIMES COMPANY – P. 15


PART II
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED  STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
The Class A Common Stock is listed on the New York Stock Exchange. The Class B Common Stock is unlisted and is not actively traded.
The number of security holders of record as of February 15, 2017, was as follows: Class A Common Stock: 6,092; Class B Common Stock: 24.
We have paid quarterly dividends of $0.04 per share on the Class A and Class B Common Stock since late 2013. We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividend program may be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant. In addition, our Board of Directors will consider restrictions in any existing indebtedness. See also “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Third-Party Financing.”
The following table sets forth, for the periods indicated, the high and low closing sales prices for the Class A Common Stock as reported on the New York Stock Exchange.
 
 
2016
 
2015
Quarters
 
High

 
Low

 
High

 
Low

First Quarter
 
$
13.74

 
$
12.25

 
$
14.45

 
$
12.02

Second Quarter
 
13.12

 
11.80

 
14.46

 
12.81

Third Quarter
 
13.17

 
11.54

 
13.75

 
11.62

Fourth Quarter
 
14.10

 
10.80

 
14.25

 
11.56

ISSUER PURCHASES OF EQUITY SECURITIES(1) 
Period
 
Total number of
shares of Class A
Common Stock
purchased
(a)
 
Average
price paid
per share of
Class A
Common Stock
(b)
 
Total number of
shares of Class A
Common Stock
purchased
as part of
publicly
announced plans
or programs
(c)
 
Maximum 
number (or
approximate
dollar value)
of shares of
Class A
Common
Stock that may
yet be
purchased
under the plans
or programs
(d)
September 26, 2016 - October 30, 2016
 

 
$

 

 
$
16,236,612

October 31, 2016 - November 27, 2016
 

 
$

 

 
$
16,236,612

November 28, 2016 - December 25, 2016
 

 
$

 

 
$
16,236,612

Total for the fourth quarter of 2016
 

 
$

 

 
$
16,236,612

(1)
On January 13, 2015, the Board of Directors approved an authorization of $101.1 million to repurchase shares of the Company’s Class A Common Stock. As of December 25, 2016, repurchases under this authorization totaled $84.9 million (excluding commissions), and $16.2 million remained under this authorization. All purchases were made pursuant to our publicly announced share repurchase program. Our Board of Directors has authorized us to purchase shares from time to time, subject to market conditions and other factors. There is no expiration date with respect to this authorization.


P. 16 – THE NEW YORK TIMES COMPANY


PERFORMANCE PRESENTATION
The following graph shows the annual cumulative total stockholder return for the five fiscal years ended December 25, 2016, on an assumed investment of $100 on December 25, 2011, in the Company, the Standard & Poor’s S&P 400 MidCap Stock Index and the Standard & Poor’s S&P 1500 Publishing and Printing Index. Stockholder return is measured by dividing (a) the sum of (i) the cumulative amount of dividends declared for the measurement period, assuming reinvestment of dividends, and (ii) the difference between the issuer’s share price at the end and the beginning of the measurement period, by (b) the share price at the beginning of the measurement period. As a result, stockholder return includes both dividends and stock appreciation.
Stock Performance Comparison Between the S&P 400 Midcap Index, S&P 1500 Publishing & Printing Index and The New York Times Company’s Class A Common Stock
performancechart2016.jpg


THE NEW YORK TIMES COMPANY – P. 17


ITEM 6. SELECTED FINANCIAL DATA
The Selected Financial Data should be read in conjunction with “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and the related Notes in Item 8. The results of operations for the New England Media Group, which was sold in 2013, as well as for the Regional Media Group and the About Group, which were sold in 2012, have been presented as discontinued operations for all periods presented (see Note 13 of the Notes to the Consolidated Financial Statements). The pages following the table show certain items included in Selected Financial Data. All per share amounts on those pages are on a diluted basis. Fiscal year 2012 comprised 53 weeks and all other fiscal years presented in the table below comprised 52 weeks.
 
 
As of and for the Years Ended
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
December 29,
2013

 
December 30,
2012

 
 
(52 Weeks)

 
(52 Weeks)

 
(52 Weeks)

 
(52 Weeks)

 
(53 Weeks)

Statement of Operations Data
 
 
 
 
 
 
Revenues
 
$
1,555,342

 
$
1,579,215

 
$
1,588,528

 
$
1,577,230

 
$
1,595,341

Operating costs
 
1,410,910

 
1,393,246

 
1,484,505

 
1,411,744

 
1,441,410

Restructuring charge
 
14,804

 

 

 

 

Multiemployer pension plan withdrawal expense
 
6,730

 
9,055

 

 
6,171

 

Pension settlement expense
 
21,294

 
40,329

 
9,525

 
3,228

 
47,657

Early termination charge and other expenses
 

 

 
2,550

 

 
2,620

Operating profit
 
101,604

 
136,585

 
91,948

 
156,087

 
103,654

Gain on sale of investments, net of impairments
 

 

 

 

 
214,775

(Loss)/gain from joint ventures
 
(36,273
)
 
(783
)
 
(8,368
)
 
(3,215
)
 
2,936

Interest expense, net
 
34,805

 
39,050

 
53,730

 
58,073

 
62,808

Income from continuing operations before income taxes
 
30,526

 
96,752

 
29,850

 
94,799

 
258,557

Income from continuing operations, net of income taxes
 
26,105

 
62,842

 
33,391

 
56,907

 
163,940

(Loss)/income from discontinued operations, net of income taxes
 
(2,273
)
 

 
(1,086
)
 
7,949

 
(27,927
)
Net income attributable to The New York Times Company common stockholders
 
29,068

 
63,246

 
33,307

 
65,105

 
135,847

Balance Sheet Data
 
 
 
 
 
 
 
 
Cash, cash equivalents and marketable securities
 
$
737,526

 
$
904,551

 
$
981,170

 
$
1,023,780

 
$
959,754

Property, plant and equipment, net
 
596,743

 
632,439

 
665,758

 
713,356

 
773,469

Total assets
 
2,185,395

 
2,417,690

 
2,566,474

 
2,572,552

 
2,807,470

Total debt and capital lease obligations
 
246,978

 
431,228

 
650,120

 
684,163

 
696,875

Total New York Times Company stockholders’ equity
 
847,815

 
826,751

 
726,328

 
842,910

 
662,325




P. 18 – THE NEW YORK TIMES COMPANY


 
 
As of and for the Years Ended
(In thousands, except ratios, per share
and employee data)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
December 29,
2013

 
December 30,
2012

 
(52 Weeks)

 
(52 Weeks)

 
(52 Weeks)

 
(52 Weeks)

 
(53 Weeks)

Per Share of Common Stock
 
 
 
 
 
 
 
 
 
Basic earnings/(loss) per share attributable to The New York Times Company common stockholders:
Income from continuing operations
 
$
0.19

 
$
0.38

 
$
0.23

 
$
0.38

 
$
1.11

(Loss)/income from discontinued operations, net of income taxes
 
(0.01
)
 

 
(0.01
)
 
0.05

 
(0.19
)
Net income
 
$
0.18

 
$
0.38

 
$
0.22

 
$
0.43

 
$
0.92

Diluted earnings/(loss) per share attributable to The New York Times Company common stockholders: 
Income from continuing operations
 
$
0.19

 
$
0.38

 
$
0.21

 
$
0.36

 
$
1.07

(Loss)/income from discontinued operations, net of income taxes
 
(0.01
)
 

 
(0.01
)
 
0.05

 
(0.18
)
Net income
 
$
0.18

 
$
0.38

 
$
0.20

 
$
0.41

 
$
0.89

Dividends declared per share
 
$
0.16

 
$
0.16

 
$
0.16

 
$
0.08

 
$

New York Times Company stockholders’ equity per share
 
$
5.21

 
$
4.97

 
$
4.50

 
$
5.34

 
$
4.34

Average basic shares outstanding
 
161,128

 
164,390

 
150,673

 
149,755

 
148,147

Average diluted shares outstanding
 
162,817

 
166,423

 
161,323

 
157,774

 
152,693

Key Ratios
 
 
 
 
 
 
 
 
 
 
Operating profit to revenues
 
7
%
 
9
%
 
6
%
 
10
%
 
6
%
Return on average common stockholders’ equity
 
3
%
 
8
%
 
4
%
 
9
%
 
23
%
Return on average total assets
 
1
%
 
3
%
 
1
%
 
2
%
 
5
%
Total debt and capital lease obligations to total capitalization
 
23
%
 
34
%
 
47
%
 
45
%
 
51
%
Current assets to current liabilities
 
2.00

 
1.53

 
1.91

 
3.36

 
3.30

Ratio of earnings to fixed charges
 
2.37

 
2.90

 
1.67

 
2.58

 
4.94

Full-Time Equivalent Employees
 
3,710

 
3,560

 
3,588

 
3,529

 
5,363

The items below are included in the Selected Financial Data.
2016
The items below had a net unfavorable effect on our results from continuing operations of $65.4 million, or $.40 per share:
a $37.5 million pre-tax loss ($22.8 million after tax and net of noncontrolling interest, or $.14 per share) from joint ventures related to the announced closure of the paper mill operated by Madison Paper Industries, in which the Company has an investment through a subsidiary.
a $21.3 million pre-tax pension settlement charge ($12.8 million after tax, or $.08 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees.
an $18.8 million pre-tax charge ($11.3 million after tax, or $.07 per share) for severance costs.
$15.9 million of pre-tax expenses ($9.5 million after tax, or $.06 per share) for non-operating retirement costs.
a $14.8 million pre-tax charge ($8.8 million after tax, or $.05 per share) in connection with the streamlining of the Company’s international print operations (primarily consisting of severance costs).


THE NEW YORK TIMES COMPANY – P. 19


a $6.7 million pre-tax charge ($4.0 million after tax or $.02 per share) for a partial withdrawal obligation under a multiemployer pension plan following an unfavorable arbitration decision.
a $3.8 million income tax benefit ($.02 per share) primarily due to a reduction in the Company’s reserve for uncertain tax positions.
2015
The items below had a net unfavorable effect on our results from continuing operations of $54.1 million, or $.32 per share:
a $40.3 million pre-tax pension settlement charge ($24.0 million after tax, or $.14 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees.
$34.4 million of pre-tax expenses ($20.5 million after tax, or $.12 per share) for non-operating retirement costs.
a $9.1 million pre-tax charge ($5.4 million after tax, or $.03 per share) for partial withdrawal obligations under multiemployer pension plans.
a $7.0 million pre-tax charge ($4.2 million after tax, or $.03 per share) for severance costs.
2014
The items below had a net unfavorable effect on our results from continuing operations of $35.1 million, or $.22 per share:
$36.7 million of pre-tax expenses ($21.7 million after tax, or $.13 per share) for non-operating retirement costs.
a $36.1 million pre-tax charge ($21.4 million after tax, or $.13 per share) for severance costs.
a $21.1 million income tax benefit ($.13 per share) primarily due to reductions in the Company’s reserve for uncertain tax positions.
a $9.5 million pre-tax pension settlement charge ($5.7 million after tax, or $.04 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees.
a $9.2 million pre-tax charge ($5.9 million after tax or $.04 per share) for an impairment related to the Company’s investment in a joint venture.
a $2.6 million pre-tax charge ($1.5 million after tax, or $.01 per share) for the early termination of a distribution agreement.
2013
The items below had a net unfavorable effect on our results from continuing operations of $25.2 million, or $.16 per share:
$20.8 million of pre-tax expenses ($12.3 million after tax, or $.08 per share) for non-operating retirement costs.
a $12.4 million pre-tax charge ($7.3 million after tax, or $.05 per share) for severance costs.
a $6.2 million pre-tax charge ($3.7 million after tax, or $.02 per share) for a partial withdrawal obligation under multiemployer pension plans.
a $3.2 million pre-tax pension settlement charge ($1.9 million after tax, or $.01 per share) in connection with lump-sum payments under an immediate pension benefit offer to certain former employees.
2012 (53-week fiscal year)
The items below had a net favorable effect on our results from continuing operations of $69.2 million, or $.45 per share:
a $220.3 million pre-tax gain ($134.7 million after tax, or $.87 per share) on the sales of our remaining ownership interest in Indeed.com and our remaining units in Fenway Sports Group.
a $47.7 million pre-tax pension settlement charge ($27.7 million after tax, or $.18 per share) in connection with lump-sum payments made under an immediate pension benefit offer to certain former employees.
$44.5 million of pre-tax expenses ($25.9 million after tax, or $.17 per share) for non-operating retirement costs.


P. 20 – THE NEW YORK TIMES COMPANY


a $12.3 million pre-tax charge ($7.2 million after tax, or $.04 per share) for severance costs.
a $5.5 million pre-tax, non-cash charge ($3.2 million after tax, or $.02 per share) for the impairment of certain investments, primarily related to our investment in Ongo Inc.
a $2.6 million pre-tax charge ($1.5 million after tax, or $.01 per share) in connection with a legal settlement.



THE NEW YORK TIMES COMPANY – P. 21


ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated financial condition as of December 25, 2016, and results of operations for the three years ended December 25, 2016. This item should be read in conjunction with our Consolidated Financial Statements and the related Notes included in this Annual Report.
EXECUTIVE OVERVIEW
We are a global media organization that includes newspapers, print and digital products and investments. We have one reportable segment with businesses that include our newspapers, websites, mobile applications and related businesses.
We generate revenues principally from circulation and advertising. Other revenues primarily consist of revenues from news services/syndication, digital archives, rental income, our NYT Live business, e-commerce and affiliate referrals. Our main operating costs are employee-related costs.
In the accompanying analysis of financial information, we present certain information derived from consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-operating retirement costs and certain identified special items, as applicable. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures, and should be read in conjunction with financial information presented on a GAAP basis. For further information and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see “—Results of Operations—Non-GAAP Financial Measures.”
2016 Financial Highlights
In 2016, diluted earnings per share from continuing operations were $0.19, compared with $0.38 for 2015. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below (or “adjusted diluted earnings per share,” a non-GAAP measure) were $0.57 for 2016, compared with $0.71 for 2015.
Operating profit in 2016 was $101.6 million, compared with $136.6 million for 2015. The decline was driven by lower print advertising revenue and higher costs. Operating profit before depreciation, amortization, severance, non-operating retirement costs and special items discussed below (or “adjusted operating profit,” a non-GAAP measure) was $240.9 million for 2016, compared with $289.0 million for 2015.
Total revenues decreased slightly in 2016 to $1.56 billion, compared with $1.58 billion in 2015. This was driven by declines in advertising revenues, partially offset by growth in circulation and other revenues.
Compared with 2015, circulation revenues increased 3.4% in 2016, as digital subscription growth and a print home-delivery price increase at The Times more than offset a decline in the number of print copies sold. Circulation revenues from our digital-only subscription packages increased 17% in 2016 compared with 2015.
Paid digital-only subscriptions totaled approximately 1,853,000 as of December 25, 2016, a 46% increase compared with year-end 2015. We saw a significant increase in the number of paid digital-only subscriptions to our news products following the 2016 presidential election. Given that this increase occurred late in 2016, the revenue generated from these subscriptions is expected to be reflected more fully in 2017.
Advertising revenues remained under pressure during 2016. Total advertising revenues decreased 9.1% in 2016 compared with 2015, reflecting a 15.8% decrease in print advertising revenues that was primarily driven by a decline in display advertising. This was partially offset by a 5.9% increase in digital advertising revenues that was primarily driven by increased revenue from our mobile platform, our programmatic buying channels and branded content distribution.
Compared with 2015, other revenues increased 6.0% in 2016, largely due to affiliate referral revenue associated with product review and recommendation websites, The Wirecutter and The Sweethome, which the Company acquired in October 2016, as well as from our NYT Live business.


P. 22 – THE NEW YORK TIMES COMPANY


Operating costs in 2016 increased 1.3% to $1.41 billion, compared with $1.39 billion in 2015. The increase was primarily due to higher advertising, technology, marketing and newsroom costs, partially offset by lower print production and distribution costs. Operating costs before depreciation, amortization, severance and non-operating retirement costs discussed below (or “adjusted operating costs,” a non-GAAP measure) increased 1.9% to $1.31 billion in 2016, compared with $1.29 billion in 2015.
Non-operating retirement costs decreased to $15.9 million in 2016 from $34.4 million in 2015, driven primarily by a change in the methodology of calculating the discount rate applied to retirement costs.
Business Environment
We believe that a number of factors and industry trends have had, and will continue to have, an adverse effect on our business and prospects. These include the following:
Competition in our industry
We operate in a highly competitive environment. Our print and digital products compete for advertising and circulation revenue with both traditional and new content providers. Competition among companies offering online content is intense, and new competitors can quickly emerge. Some of our current and potential competitors may have greater resources than we do, which may allow them to compete more effectively than us.  
Our ability to compete effectively depends on, among other things, our ability to continue delivering high-quality journalism and content that is interesting and relevant to our audience; the popularity, ease of use and performance of our products compared to those of our competitors; the engagement of our current readers with our print and digital products, and our ability to reach new readers; our ability to develop, maintain and monetize our products; our ability to attract, retain and motivate talented employees, including journalists and product and technology specialists; and our ability to manage and grow our business in a cost-effective manner.
Continuing shift to digital from print
Circulation revenue is a significant source of revenue for us and an increasingly important driver as the overall composition of our revenues has shifted in response to transformations in our industry. The largest portion of our circulation revenue is currently from our print newspaper, where we have experienced declining print circulation volume in recent years. This is due to, among other factors, increased competition from digital media formats (which are often free to users), higher print subscription and single-copy rates and a growing preference among some consumers to receive their news from sources other than a print newspaper.
Advances in technology have led to an increased number of methods for the delivery and consumption of news and other content. These developments are also driving changes in the preferences and expectations of consumers as they seek more control over how they consume content. Our ability to retain and continue to build on our digital subscription base depends on, among other things, our ability to evolve our subscription model, address changing consumer demands and developments in technology and improve our digital product offering while continuing to deliver high-quality journalism and content that is interesting and relevant to readers.
Advertising market dynamics
We derive substantial revenue from the sale of advertising in our print and digital products. In determining whether to buy advertising, our advertisers consider the demand for our products, demographics of our reader base, advertising rates, results observed by advertisers, and alternative advertising options.
During 2016, the Company, along with others in the industry, continued to experience significant pressure on print advertising revenue. Although print advertising revenue continues to represent a majority of our total advertising revenue, the increased popularity of digital media among consumers, particularly as a source for news and other content, has driven a corresponding shift in demand from print advertising to digital advertising. However, our digital advertising revenue may not replace in full print advertising revenue lost as a result of the shift.
The digital advertising market continues to undergo significant changes. The increasing number of digital media options available, including through social networking platforms and news aggregation websites, has resulted in audience fragmentation and increased competition for advertising. Competition from new content providers and platforms, some of which charge lower rates than we do or have greater audience reach and targeting capabilities, and the significant increase in inventory of digital advertising space, have affected and will likely continue to affect our ability to attract and retain advertisers and to maintain or increase our advertising rates. In addition, digital


THE NEW YORK TIMES COMPANY – P. 23


advertising networks and exchanges, real-time bidding and other programmatic buying channels that allow advertisers to buy audiences at scale are playing a more significant role in the advertising marketplace and may cause further downward pricing pressure.
The character of our digital advertising business also continues to change, as demand for newer forms of advertising, such as branded content and video advertising, increases. The margin on revenues from some of these newer advertising forms tends to be lower than the margin on revenues we generate from our print advertising and traditional digital display advertising. Consequently, we may experience further downward pressure on our advertising revenue margins as a greater percentage of advertising revenues comes from these newer forms.
In addition, technologies have been and will continue to be developed that enable consumers to block digital advertising on websites and mobile devices. Advertisements blocked by these technologies are treated as not delivered and any revenue we would otherwise receive from the advertiser for that advertisement is lost.
As the digital advertising market continues to evolve, our ability to compete successfully for advertising budgets will depend on, among other things, our ability to engage and grow our audience and prove the value of our advertising and the effectiveness of our platforms to advertisers.
Economic conditions
Global, national and local economic conditions affect various aspects of our business. The level of advertising sales in any period may be affected by advertisers’ decisions to increase or decrease their advertising expenditures in response to anticipated consumer demand and general economic conditions. Changes in spending patterns and priorities, including shifts in marketing strategies and budget cuts of key advertisers, in response to economic conditions, have depressed and may continue to depress our advertising revenues.
In addition, subscription revenue is sensitive to discretionary spending available to subscribers in the markets we serve, and to the extent poor economic conditions lead consumers to reduce spending on discretionary activities, our ability to retain current and obtain new subscribers could be hindered.
Fixed costs
A significant portion of our costs are fixed, and therefore we are limited in our ability to reduce these costs in the short term. Employee-related costs and raw materials together accounted for approximately 50% of our total operating costs in 2016. Changes in employee-related costs and the price and availability of newsprint can materially affect our operating results.
For a discussion of these and other factors that could affect our business, results of operations and financial condition, see “Item 1A — Risk Factors.”
Our Strategy
We are operating during a period of transformation for our industry and amidst uncertain economic conditions. We anticipate that the challenges we currently face will continue, and we believe that the following elements are key to our efforts to address them.
Strengthening The New York Times brand through innovation
Our priority is to maintain The Times’s commitment to premium content and journalistic excellence, while at the same time positioning our organization for growth.
In 2016, we continued to invest in our digital platforms and products. Among other things, we focused on innovating the way we tell stories, through new forms of visual and multimedia journalism, including podcasts, interactive journalism (through Facebook Live and other initiatives) and virtual reality journalism. We also invested in our international opportunities and in April 2016 announced our commitment to invest more than $50 million in the digital potential of The Times internationally.
While we continue to focus on digital innovation, we remain committed to the continued success of our print products, which we expect will continue to be a significant source of revenue for us. During 2016, for example, we created compelling special inserts in our print newspaper on the presidential election and other events.
As we look ahead for opportunities to further innovate our products, we remain committed to creating quality content and a quality user experience, regardless of the distribution model or platform.


P. 24 – THE NEW YORK TIMES COMPANY


Expanding and deepening our relationship with readers
We are a “subscription-first” organization and continue to focus on deepening the engagement of our current readers and expanding our reach to new readers around the world. In 2016, we saw significant growth in digital-only subscriptions to our news products, and earlier this year the number of total paid subscriptions to our print and digital products surpassed three million. We believe this growth underscores the willingness of our readers to pay for high-quality journalism, and we will continue to look for ways to strengthen the relationship we have with our subscribers. We will also continue to focus on developing new audiences, including by expanding our global reach and working to engage younger readers.
During the year, we continued efforts to make The Times an indispensable part of our readers’ lives. Among others, The Times introduced or enhanced products and features that span a broad range of topics and interests, including NYT Cooking, a dynamic recipe box designed to make cooking easier; Watching, our guide to what to watch on television; and Well, our healthy living guide. In October 2016, the Company also purchased The Wirecutter and The Sweethome, product review and recommendation websites that align with The Times’s commitment to service journalism.
We also continued our efforts to engage readers around the world. Among other things, we launched The New York Times en Español, a mobile-optimized website covering news and issues of interest to a Spanish-speaking audience, and extended our popular Daily Briefings to Europe and Asia. In addition, we will continue to experiment with reaching new readers on third-party platforms, while remaining committed to building engagement with readers on our own platforms.
Creating compelling digital advertising solutions
We are focused on continuing to grow our digital advertising revenue by developing innovative and compelling advertising offerings that integrate with and add value to the user experience. We believe we have a powerful and trusted brand that, because of the quality of our journalism, attracts educated, affluent and influential audiences, and we continue to focus on leveraging our brand in developing and refining these offerings.
During 2016, the digital advertising market continued to shift away from traditional desktop display advertising and towards newer advertising forms, such as branded content and other creative services, as well as programmatic, video and mobile advertising. We have quickly adapted to this market shift, introducing innovative digital advertising solutions for our mobile and other platforms, and providing advertisers new ways of reaching our audience, such as our virtual reality application. We have also continued to expand our branded content studio, which has become a fast-growing part of our advertising business since we launched it in early 2014.
Transforming our business to deliver on our goals
We are focused on becoming a more effective and efficient organization and have taken and continue to take a number of steps to achieve this. Among other things, we streamlined our international print operations in 2016 and are reviewing initiatives aimed at improving newsroom efficiency. In December 2016, we also announced plans to redesign our headquarters building, consolidating our operations within a smaller number of floors and leasing the remaining floors to third parties. We expect the changes will generate significant rental income and result in a more collaborative workspace.
Looking ahead, we will continue to focus on managing our cost structure to ensure that we are operating our businesses efficiently, while maintaining our commitment to investing in high-quality content and the achievement of strategic goals.
Strengthening our liquidity
We have continued to strengthen our liquidity position and remain focused on further de-leveraging and de-risking our balance sheet. In December 2016, we repaid, at maturity, the remaining principal amount of our senior notes. As of December 25, 2016, the Company had cash and cash equivalents and marketable securities of approximately $738 million (excluding restricted cash of approximately $25 million, the majority of which is set aside to collateralize certain workers’ compensation obligations). This exceeded our total debt and capital lease obligations by approximately $491 million. We believe our cash balance and cash provided by operations, in combination with other sources of cash, will be sufficient to meet our financing needs over the next 12 months.


THE NEW YORK TIMES COMPANY – P. 25


In March 2009, we entered into an agreement to sell and simultaneously lease back a portion of our leasehold condominium interest in our Company’s headquarters building located at 620 Eighth Avenue in New York City (the “Condo Interest”). The sale price for the Condo Interest was $225.0 million less transaction costs, for net proceeds of approximately $211 million. We have an option, exercisable in 2019, to repurchase the Condo Interest for $250.0 million, and we currently expect to exercise this option. We believe that exercising this option will provide us greater flexibility with respect to our headquarters building.
Managing our retirement-related costs
We remain focused on managing the underfunded status of our pension plans and adjusting the size of our pension obligations relative to the size of our Company. Our qualified pension plans were underfunded (meaning the present value of future benefits obligations exceeded the fair value of plan assets) as of December 25, 2016, by approximately $222 million, compared with approximately $273 million as of December 27, 2015. We made contributions of approximately $8 million to certain qualified pension plans in 2016, compared with approximately $7 million in 2015. We expect contributions in 2017 to total approximately $9 million to satisfy minimum funding requirements.
We have taken steps over the last few years to address our pension obligations, including freezing accruals under most of our qualified defined benefit pension plans, which cover both our non-union employees and those covered by certain collective bargaining agreements. We have also made immediate pension benefits offers in the form of lump-sum payments to certain former employees and will continue to look for ways to reduce the size of our pension obligations.
While we have made significant progress in our liability-driven investment strategy to reduce the funding volatility of our qualified pension plans, the size of our pension plan obligations relative to the size of our current operations will continue to have a significant impact on our reported financial results. We expect to continue to experience volatility in our retirement-related costs, including pension, multiemployer pension and retiree medical costs.


P. 26 – THE NEW YORK TIMES COMPANY


RESULTS OF OPERATIONS
Overview
Fiscal years 2016, 2015, and 2014 each comprise 52 weeks. The following table presents our consolidated financial results:
 
 
Years Ended
 
% Change
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Revenues
 
 
 
 
 
 
 
 
 
 
Circulation
 
$
880,543

 
$
851,790

 
$
840,213

 
3.4

 
1.4

Advertising
 
580,732

 
638,709

 
662,315

 
(9.1
)
 
(3.6
)
Other
 
94,067

 
88,716

 
86,000

 
6.0

 
3.2

Total revenues
 
1,555,342

 
1,579,215

 
1,588,528

 
(1.5
)
 
(0.6
)
Operating costs
 
 
 
 
 
 
 
 
 
 
Production costs:
 
 
 
 
 
 
 
 
 
 
Wages and benefits
 
363,051

 
354,516

 
357,573

 
2.4

 
(0.9
)
Raw materials
 
72,325

 
77,176

 
88,958

 
(6.3
)
 
(13.2
)
Other
 
192,728

 
186,120

 
197,464

 
3.6

 
(5.7
)
Total production costs
 
628,104

 
617,812

 
643,995

 
1.7

 
(4.1
)
Selling, general and administrative costs
 
721,083

 
713,837

 
761,055

 
1.0

 
(6.2
)
Depreciation and amortization
 
61,723

 
61,597

 
79,455

 
0.2

 
(22.5
)
Total operating costs
 
1,410,910

 
1,393,246

 
1,484,505

 
1.3

 
(6.1
)
Restructuring charge
 
14,804

 

 

 
100.0

 
*

Multiemployer pension plan withdrawal expense
 
6,730

 
9,055

 

 
(25.7
)
 
*

Pension settlement charge
 
21,294

 
40,329

 
9,525

 
(47.2
)
 
*

Early termination charge
 

 

 
2,550

 
*

 
(100.0
)
Operating profit
 
101,604

 
136,585

 
91,948

 
(25.6
)
 
48.5

Loss from joint ventures
 
(36,273
)
 
(783
)
 
(8,368
)
 
*

 
(90.6
)
Interest expense, net
 
34,805

 
39,050

 
53,730

 
(10.9
)
 
(27.3
)
Income from continuing operations before income taxes
 
30,526

 
96,752

 
29,850

 
(68.4
)
 
*

Income tax expense/(benefit)
 
4,421

 
33,910

 
(3,541
)
 
(87.0
)
 
*

Income from continuing operations
 
26,105

 
62,842

 
33,391

 
(58.5
)
 
88.2

Loss from discontinued operations, net of income taxes
 
(2,273
)
 

 
(1,086
)
 
100.0

 
(100.0
)
Net income
 
23,832

 
62,842

 
32,305

 
(62.1
)
 
94.5

Net loss attributable to the noncontrolling interest
 
5,236

 
404

 
1,002

 
*

 
(59.7
)
Net income attributable to The New York Times Company common stockholders
 
$
29,068

 
$
63,246

 
$
33,307

 
(54.0
)
 
89.9

* Represents an increase or decrease in excess of 100%.


THE NEW YORK TIMES COMPANY – P. 27


Revenues
Circulation, advertising and other revenues were as follows:
 
 
Years Ended
 
% Change
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Circulation
 
$
880,543

 
$
851,790

 
$
840,213

 
3.4

 
1.4

Advertising
 
580,732

 
638,709

 
662,315

 
(9.1
)
 
(3.6
)
Other
 
94,067

 
88,716

 
86,000

 
6.0

 
3.2

Total
 
$
1,555,342

 
$
1,579,215

 
$
1,588,528

 
(1.5
)
 
(0.6
)
Circulation Revenues
Circulation revenues consist of revenues from our print and digital products, including our digital-only subscription packages, e-readers and replica editions. These revenues are based on the number of copies of the printed newspaper sold (through home-delivery subscriptions and single-copy and bulk sales) and digital-only subscriptions and the rates charged to the respective customers. All print home-delivery subscribers receive unlimited digital access.
In the first quarter of 2016, the Company reclassified the subscription revenue from its Crossword product, including prior period information, into circulation revenues from other revenues. The following tables summarize digital-only subscription revenues reflecting this reclassification:
 
 
Years Ended
 
% Change
(In thousands)
 
December 25, 2016

 
December 27, 2015

 
December 28, 2014

 
2016 vs. 2015
 
2015 vs. 2014
Digital-only subscription revenues:
 
 
 
 
 
 
 

 

   Digital-only news product subscription revenues
 
$
223,459

 
$
192,657

 
$
169,297

 
16.0
 
13.8
   Digital Crossword product subscription revenues
 
9,369

 
6,286

 
3,391

 
49.0
 
85.4
Total
 
$
232,828

 
$
198,943

 
$
172,688

 
17.0
 
15.2
Consistent with this reclassification, the Company also adjusted the number of digital-only subscriptions to include Crossword product subscriptions. The following tables summarize digital-only subscriptions:
 
 
Years Ended
 
% Change
(In thousands)
 
December 25, 2016

 
December 27, 2015

 
December 28, 2014

 
2016 vs. 2015
 
2015 vs. 2014
Digital-only subscriptions:
 
 
 
 
 
 
 
 
 
 
   Digital-only news product subscriptions
 
1,608

 
1,094

 
910

 
47.0
 
20.2
   Digital Crossword product subscriptions
 
245

 
176

 
141

 
39.2
 
24.8
Total
 
1,853

 
1,270

 
1,051

 
45.9
 
20.8
2016 Compared with 2015
Circulation revenues increased in 2016 compared with 2015 primarily due to growth in our digital-only subscription base and the January 2016 print home-delivery price increase for The Times, partially offset by a reduction in the number of print copies sold. Digital-only subscription revenues were $232.8 million in 2016 compared with $198.9 million in 2015, an increase of 17.0%.


P. 28 – THE NEW YORK TIMES COMPANY


2015 Compared with 2014
Circulation revenues increased in 2015 compared with 2014 primarily due to growth in our digital-only subscription base and the January 2015 print home-delivery price increase for The Times, partially offset by a reduction in the number of print copies sold. Digital-only subscription revenues were $198.9 million in 2015 compared with $172.7 million in 2014, an increase of 15.2%.
Advertising Revenues
Advertising revenues are derived from the sale of our advertising products and services on our print, web and mobile platforms. These revenues are primarily determined by the volume, rate and mix of advertisements. Display advertising revenue is principally from advertisers promoting products, services or brands in print in the form of column-inch ads, and on our web and mobile platforms in the form of banners, video, rich media and other interactive ads. Display advertising also includes branded content on The Times’s platforms. Classified advertising revenue includes line-ads sold in the major categories of real estate, help wanted, automotive and other. Other advertising revenue primarily includes creative services fees associated with, among other things, our branded content studio; revenue from preprinted advertising, also known as free-standing inserts; and revenue generated from branded bags in which our newspapers are delivered.
Advertising revenues (print and digital) by category were as follows:
 
 
Years Ended
 
% Change
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Display
 
$
517,197

 
$
579,153

 
$
606,838

 
(10.7
)
 
(4.6
)
Classified
 
29,902

 
34,544

 
36,689

 
(13.4
)
 
(5.8
)
Other
 
33,633

 
25,012

 
18,788

 
34.5

 
33.1

Total
 
$
580,732

 
$
638,709

 
$
662,315

 
(9.1
)
 
(3.6
)
Below is a percentage breakdown of 2016, 2015 and 2014 advertising revenues (print and digital):
 
 
Display
 
Classified
 
Other
 
Total
2016
 
89
%
 
5
%
 
6
%
 
100
%
2015
 
91
%
 
5
%
 
4
%
 
100
%
2014
 
91
%
 
6
%
 
3
%
 
100
%
2016 Compared with 2015
In 2016, total advertising revenues decreased primarily due to lower print advertising revenues. Print advertising revenues, which represented 64% of total advertising revenues in 2016, declined 15.8% to $372.0 million in 2016 compared with $441.6 million in 2015, mainly due to a decline in display advertising, primarily in the luxury goods, entertainment retail and technology categories.
Digital advertising revenues, which represented 36% of total advertising revenues in 2016, increased 5.9% to $208.8 million in 2016 compared with $197.1 million in 2015 due to an increase in revenue from our mobile platform, our programmatic buying channels and branded content distribution. Revenues from HelloSociety and Fake Love, digital marketing agencies acquired in 2016, also contributed favorably to this increase. This increase was partially offset by a decline in traditional desktop display advertising.
Classified advertising revenues decreased 13.4% in 2016 compared with 2015 due to a decrease in the real estate, help wanted and other categories.
Other advertising revenues increased 34.5% in 2016 compared with 2015 due to an increase in creative services fees related to branded content campaign launches during 2016.


THE NEW YORK TIMES COMPANY – P. 29


2015 Compared with 2014
In 2015, total advertising revenues decreased primarily due to lower print advertising revenues. Print advertising revenues, which represented 69% of total advertising revenues in 2015, declined 8.0% to $441.6 million in 2015 compared with $480.1 million in 2014, mainly due to a decline in display advertising, primarily in the financial services, entertainment and corporate categories. The decline was partially offset by an increase in the luxury goods, real estate and technology categories.
Digital advertising revenues, which represented 31% of total advertising revenues in 2015, increased 8.2% to $197.1 million in 2015 compared with $182.2 million in 2014 due to an increase in display advertising. Display advertising benefited strongly from increased revenue from branded content as well as increased revenue from our mobile and video platforms and our programmatic buying channels. These increases were partially offset by a decline in traditional desktop display advertising.
Classified advertising revenues decreased 5.8% in 2015 compared with 2014 due to a decrease in the real estate and help wanted categories.
Other advertising revenues increased 33.1% in 2015 compared with 2014 due to an increase in creative services fees.
Other Revenues
Other revenues primarily consist of revenues from news services/syndication, digital archives, rental income, our NYT Live business, e-commerce and affiliate referrals. Rental income consists of revenue from the lease of floors in our New York headquarters, which totaled $17.1 million, $16.9 million and $14.7 million in 2016, 2015 and 2014, respectively.
2016 Compared with 2015
Other revenues increased 6.0% in 2016 compared with 2015 largely due to affiliate referral revenue associated with our acquisition in October 2016 of the product review and recommendation websites The Wirecutter and The Sweethome, as well as from our NYT Live business.
2015 Compared with 2014
Other revenues increased 3.2% in 2015 compared with 2014 due to higher revenues from digital archives and rental income.


P. 30 – THE NEW YORK TIMES COMPANY


Operating Costs
Operating costs were as follows:
 
 
Years Ended
 
% Change
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Production costs:
 
 
 
 
 
 
 
 
 
 
Wages and benefits
 
$
363,051

 
$
354,516

 
$
357,573

 
2.4

 
(0.9
)
Raw materials
 
72,325

 
77,176

 
88,958

 
(6.3
)
 
(13.2
)
Other
 
192,728

 
186,120

 
197,464

 
3.6

 
(5.7
)
Total production costs
 
628,104

 
617,812

 
643,995

 
1.7

 
(4.1
)
Selling, general and administrative costs
 
721,083

 
713,837

 
761,055

 
1.0

 
(6.2
)
Depreciation and amortization
 
61,723

 
61,597

 
79,455

 
0.2

 
(22.5
)
Total operating costs
 
$
1,410,910

 
$
1,393,246

 
$
1,484,505

 
1.3

 
(6.1
)
The components of operating costs as a percentage of total operating costs were as follows:
 
 
Years Ended
 
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

Components of operating costs as a percentage of total operating costs
 
 
 
 
 
 
Wages and benefits
 
45
%
 
44
%
 
44
%
Raw materials
 
5
%
 
6
%
 
6
%
Other operating costs
 
46
%
 
46
%
 
45
%
Depreciation and amortization
 
4
%
 
4
%
 
5
%
Total
 
100
%
 
100
%
 
100
%
The components of operating costs as a percentage of total revenues were as follows:
 
 
Years Ended
 
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

Components of operating costs as a percentage of total revenues
 
 
 
 
 
 
Wages and benefits
 
41
%
 
39
%
 
41
%
Raw materials
 
5
%
 
5
%
 
5
%
Other operating costs
 
41
%
 
40
%
 
42
%
Depreciation and amortization
 
4
%
 
4
%
 
5
%
Total
 
91
%
 
88
%
 
93
%


THE NEW YORK TIMES COMPANY – P. 31


Production Costs
Production costs include items such as labor costs, raw materials and machinery and equipment expenses related to news-gathering and production activity, as well as costs related to producing branded content.
2016 Compared with 2015
Production costs increased in 2016 compared with 2015 primarily due to higher wages and benefits (approximately $9 million) and other expenses (approximately $7 million), which consisted mainly of outside services (approximately $9 million) and travel and entertainment (approximately $2 million), offset by lower outside printing expenses (approximately $5 million). Newsprint expense declined 6.6% in 2016 compared with 2015, with 6.1% from lower consumption and 0.5% from lower pricing.
2015 Compared with 2014
Production costs decreased in 2015 compared with 2014 primarily due to lower raw materials expense(approximately $12 million), which consisted mainly of newsprint and outside printing expenses (approximately $8 million). Newsprint expense declined 20.3% in 2015 compared with 2014, with 7.4% from lower consumption and 12.9% from lower pricing.
Selling, General and Administrative Costs
Selling, general and administrative costs include costs associated with the selling, marketing and distribution of products as well as administrative expenses.
2016 Compared with 2015
Selling, general and administrative costs increased in 2016 compared with 2015 primarily due to an increase in severance costs (approximately $12 million), compensation costs (approximately $11 million) and promotion costs (approximately $8 million), partially offset by a decrease in non-operating retirement costs (approximately $19 million) and distribution costs (approximately $6 million). Compensation costs increased primarily as a result of increased hiring to support growth initiatives and business acquisitions. Distribution costs decreased primarily as a result of fewer print copies produced and lower transportation costs.
2015 Compared with 2014
Selling, general and administrative costs decreased in 2015 compared with 2014 primarily due to a decrease in severance costs (approximately $29 million) and lower distribution costs (approximately $17 million), partially offset by an increase in compensation expense (approximately $6 million). Severance costs decreased as a result of workforce reductions in 2014 that did not repeat in 2015. Lower distribution costs were mainly due to increased use of lower cost vendors, transportation efficiencies and fewer print copies delivered. Compensation expense increased primarily as a result of increased hiring to support growth initiatives.
Depreciation and Amortization
2016 Compared with 2015
Depreciation and amortization costs were flat in 2016 compared with 2015.
2015 Compared with 2014
Depreciation and amortization costs decreased in 2015 compared with 2014 primarily due to the discontinued use of certain software products.
Other Items
See Note 7 of the Notes to the Consolidated Financial Statements for more information regarding other items.


P. 32 – THE NEW YORK TIMES COMPANY


NON-OPERATING ITEMS
Investments in Joint Ventures
See Note 5 of the Notes to the Consolidated Financial Statements for information regarding our joint venture investments.
Interest Expense, Net
See Note 6 of the Notes to the Consolidated Financial Statements for information regarding interest expense.
Income Taxes
See Note 12 of the Notes to the Consolidated Financial Statements for information regarding income taxes.
Discontinued Operations
See Note 13 of the Notes to the Consolidated Financial Statements for information regarding discontinued operations.
Non-GAAP Financial Measures
We have included in this report certain supplemental financial information derived from consolidated financial information but not presented in our financial statements prepared in accordance with GAAP. Specifically, we have referred to the following non-GAAP financial measures in this report:
diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and the impact of special items (or adjusted diluted earnings per share from continuing operations);
operating profit before depreciation, amortization, severance, non-operating retirement costs and special items (or adjusted operating profit); and
operating costs before depreciation, amortization, severance and non-operating retirement costs (or adjusted operating costs).
The special items in 2016 consisted of:
a $37.5 million pre-tax loss ($22.8 million after tax and net of noncontrolling interest, or $.14 per share) from joint ventures related to the announced closure of the paper mill operated by Madison Paper Industries, in which the Company has an investment through a subsidiary;
a $21.3 million pre-tax pension settlement charge ($12.8 million after tax, or $.08 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees;
a $14.8 million pre-tax charge ($8.8 million after tax, or $.05 per share) in connection with the streamlining of the Company’s international print operations (primarily consisting of severance costs);
a $6.7 million pre-tax charge ($4.0 million after tax, or $.02 per share) for a partial withdrawal obligation under a multiemployer pension plan following an unfavorable arbitration decision; and
a $3.8 million income tax benefit ($.02 per share) primarily due to a reduction in the Company’s reserve for uncertain tax positions.
The special items in 2015 consisted of:
a $40.3 million pre-tax pension settlement charge ($24.0 million after tax, or $.14 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees; and
a $9.1 million pre-tax charge ($5.4 million after tax, or $.03 per share) for partial withdrawal obligations under multiemployer pension plans.


THE NEW YORK TIMES COMPANY – P. 33


The special items in 2014 consisted of:
a $21.1 million income tax benefit ($.13 per share) primarily due to reductions in the Company’s reserve for uncertain tax positions;
a $9.5 million pre-tax pension settlement charge ($5.7 million after tax, or $.04 per share) in connection with lump-sum payments made under an immediate pension benefits offer to certain former employees;
a $9.2 million pre-tax charge ($5.9 million after tax, or $.04 per share) for an impairment related to the Company’s investment in a joint venture; and
a $2.6 million pre-tax charge ($1.5 million after tax, or $.01 per share) for the early termination of a distribution agreement.
We have included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of our operations. We believe that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share from continuing operations, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.
Adjusted diluted earnings per share provides useful information in evaluating our period-to-period performance because it eliminates items that we do not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit is useful in evaluating the ongoing performance of our businesses as it excludes the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance and non-operating retirement costs. Adjusted operating costs, which exclude these items, provide investors with helpful supplemental information on our underlying operating costs that is used by management in its financial and operational decision-making.
Management considers special items, which may include impairment charges, pension settlement charges and other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.
Non-operating retirement costs include:
interest cost, expected return on plan assets and amortization of actuarial gain and loss components of pension expense;
interest cost and amortization of actuarial gain and loss components of retiree medical expense; and
all expenses associated with multiemployer pension plan withdrawal obligations not otherwise included as special items.
These non-operating retirement costs are primarily tied to financial market performance and changes in market interest rates and investment performance. Non-operating retirement costs do not include service costs and amortization of prior service costs for pension and retiree medical benefits, which we believe reflect the ongoing operating costs of providing pension and retiree medical benefits to our employees. We consider non-operating retirement costs to be outside the performance of our ongoing core business operations and believe that presenting operating results excluding non-operating retirement costs, in addition to our GAAP operating results, provides increased transparency and a better understanding of the underlying trends in our operating business performance.


P. 34 – THE NEW YORK TIMES COMPANY


Reconciliations of non-GAAP financial measures from, respectively, diluted earnings per share from continuing operations, operating profit and operating costs, the most directly comparable GAAP items, as well as details on the components of non-operating retirement costs, are set out in the tables below.
Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations)
 
 
Years Ended
% Change
 
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Diluted earnings per share from continuing operations
 
$
0.19

 
$
0.38

 
$
0.21

 
-50.0
%
 
81.0
%
Add:
 
 
 
 
 
 
 


 


Severance
 
0.12

 
0.04

 
0.22

 
*

 
-81.8
%
Non-operating retirement costs
 
0.10

 
0.21

 
0.23

 
-52.4
%
 
-8.7
%
Special items:
 
 
 
 
 
 
 


 


Loss in joint ventures, net of tax and noncontrolling interest
 
0.18

 

 

 
*

 
*

Pension settlement charges
 
0.13

 
0.24

 
0.06

 
-45.8
 %
 
*

Restructuring charge
 
0.09

 

 

 
*

 
*

Multiemployer pension plan withdrawal expense
 
0.04

 
0.05

 

 
-20.0
%
 
*

Reduction in reserve for uncertain tax positions
 
(0.02
)
 

 
(0.13
)
 
*

 
-100.0
 %
Early termination charge
 

 

 
0.02

 
*

 
-100.0
 %
Impairment charge
 

 

 
0.06

 
*

 
-100.0
 %
Income tax expense of special items
 
(0.26
)
 
(0.22
)
 
(0.24
)
 
18.2
 %
 
-8.3
 %
Adjusted diluted earnings per share from continuing operations (1)
 
$
0.57

 
$
0.71

 
$
0.43

 
-19.7
 %
 
65.1
 %
(1) Amounts may not add due to rounding.
* Represents an increase or decrease in excess of 100%.


THE NEW YORK TIMES COMPANY – P. 35


Reconciliation of operating profit before depreciation & amortization, severance, non-operating retirement costs and special items (or adjusted operating profit)
 
 
Years Ended
 
% Change
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Operating profit
 
$
101,604

 
$
136,585

 
$
91,948

 
(25.6
)%
 
48.5
 %
Add:
 
 
 
 
 
 
 


 


Depreciation & amortization
 
61,723

 
61,597

 
79,455

 
0.2
%
 
(22.5
%)
Severance
 
18,829

 
7,035

 
36,082

 
*

 
(80.5
%)
Non-operating retirement costs
 
15,880

 
34,383

 
36,697

 
(53.8
)%
 
(6.3
)%
Special items:
 
 
 
 
 
 
 


 


Restructuring charge
 
14,804

 

 

 
*

 
*

Multiemployer pension plan withdrawal expense
 
6,730

 
9,055

 

 
(25.7
)%
 
*

Pension settlement charges
 
21,294

 
40,329

 
9,525

 
(47.2
)%
 
*

Early termination charge
 

 

 
2,550

 
*

 
(100.0
)%
Adjusted operating profit
 
$
240,864

 
$
288,984

 
$
256,257


(16.7
)%
 
12.8
 %
Reconciliation of operating costs before depreciation & amortization, severance and non-operating retirement costs (or adjusted operating costs)
 
 
Years Ended
 
% Change
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Operating costs
 
$
1,410,910

 
$
1,393,246

 
$
1,484,505

 
1.3
 %
 
(6.1
)%
Less:
 
 
 
 
 
 
 


 


Depreciation & amortization
 
61,723

 
61,597

 
79,455

 
0.2
%
 
(22.5
%)
Severance
 
18,829

 
7,035

 
36,082

 
*

 
(80.5
%)
Non-operating retirement costs
 
15,880

 
34,383

 
36,697

 
(53.8
)%
 
(6.3
)%
Adjusted operating costs
 
$
1,314,478

 
$
1,290,231

 
$
1,332,271

 
1.9
 %
 
(3.2
)%
* Represents an increase or decrease in excess of 100%.


P. 36 – THE NEW YORK TIMES COMPANY


Components of non-operating retirement costs (1)
 
 
Years Ended
% Change
(In thousands)
 
December 25,
2016

 
December 27,
2015

 
December 28,
2014

 
2016 vs. 2015

 
2015 vs. 2014

Pension:
 
 
 
 
 
 
 
 
 
 
Interest cost
 
$
74,465

 
$
84,596

 
$
94,897

 
(12.0
)%
 
(10.9
)%
Expected return on plan assets
 
(111,159
)
 
(115,261
)
 
(113,839
)
 
(3.6
%)
 
1.2
%
Amortization and other costs
 
32,489

 
41,523

 
31,338

 
(21.8
)%
 
32.5
 %
Non-operating pension costs
 
(4,205
)
 
10,858

 
12,396

 
*

 
(12.4
%)
Other postretirement benefits:
 
 
 
 
 
 
 


 


Interest cost
 
1,980

 
2,794

 
3,722

 
(29.1
%)
 
(24.9
%)
Amortization and other costs
 
4,104

 
5,197

 
7,299

 
(21.0
)%
 
(28.8
)%
Non-operating other postretirement benefits costs
 
6,084

 
7,991

 
11,021

 
(23.9
%)
 
(27.5
%)
Expenses associated with multiemployer pension plan withdrawal obligations
 
14,001

 
15,534

 
13,280

 
(9.9
)%
 
17.0
 %
Total non-operating retirement costs
 
$
15,880

 
$
34,383

 
$
36,697

 
(53.8
)%
 
(6.3
)%
(1) Components of non-operating retirement costs do not include special items.
* Represents an increase or decrease in excess of 100%.



THE NEW YORK TIMES COMPANY – P. 37


LIQUIDITY AND CAPITAL RESOURCES
Overview
The following table presents information about our financial position.
Financial Position Summary
 
 
 
 
 
 
% Change

(In thousands, except ratios)
 
December 25,
2016

 
December 27,
2015

 
2016 vs. 2015

Cash and cash equivalents
 
$
100,692

 
$
105,776

 
(4.8
)
Marketable securities
 
636,834

 
798,775