NYT 10-Q Quarter ended March 28, 2010

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 28, 2010

Commission file number 1-5837

THE NEW YORK TIMES COMPANY

(Exact name of registrant as specified in its charter)

620 EIGHTH AVENUE, NEW YORK, NEW YORK

(Address of principal executive offices)

10018

(Zip Code)

Registrant’s telephone number, including area code 212-556-1234

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 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer		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

Number of shares of each class of the registrant’s common stock outstanding as of April 29, 2010 (exclusive of treasury shares):

THE NEW YORK TIMES COMPANY

(Unaudited)

(In thousands, except per share data)

See Notes to Condensed Consolidated Financial Statements.

2

THE NEW YORK TIMES COMPANY

(In thousands)

See Notes to Condensed Consolidated Financial Statements.

3

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

See Notes to Condensed Consolidated Financial Statements.

4

THE NEW YORK TIMES COMPANY

(Unaudited)

(In thousands)

See Notes to Condensed Consolidated Financial Statements.

5

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In the opinion of The New York Times Company’s (the “Company”) management, the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of March 28, 2010, and December 27, 2009, and the results of operations and cash flows of the Company for the periods ended March 28, 2010, and March 29, 2009. All adjustments necessary for a fair presentation have been included and are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. For comparability, certain prior year amounts have been reclassified to conform with the current period presentation. The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted from these interim financial statements. These financial statements, therefore, should be read in conjunction with the Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 27, 2009. Due to the seasonal nature of the Company’s business, operating results for the interim periods are not necessarily indicative of a full year’s operations. The fiscal periods included herein comprise 13 weeks for the first-quarter periods.

As of March 28, 2010, the Company’s significant accounting policies, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 27, 2009 have not changed materially.

Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board issued new guidance which amended previous guidance related to the accounting for revenue arrangements with multiple deliverables. The guidance specifically addressed how consideration should be allocated to the separate units of accounting. The guidance is effective for fiscal years beginning on or after June 15, 2010, and will apply to the Company’s 2011 fiscal year. The guidance can be applied prospectively to new or materially modified arrangements after the effective date or retrospectively for all periods presented, and early application is permitted. The Company is currently evaluating the impact of adopting this guidance on its financial statements.

6

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Goodwill is the excess of cost over the fair value of tangible and other intangible net assets acquired. Goodwill is not amortized but tested for impairment annually or in an interim period if certain circumstances indicate a possible impairment may exist.

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

The changes in the carrying amount of goodwill were as follows:

Other intangible assets acquired were as follows:

As of March 28, 2010, the remaining weighted-average amortization period was seven years for content, six years for customer lists and three years for other amortizable intangible assets acquired included in the table above.

Amortization expense related to other intangible assets acquired that are subject to amortization was $2.0 million in the first quarter of 2010 and is expected to be $8.1 million for the fiscal year 2010.

7

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Amortization expense for the next five years related to these intangible assets is expected to be as follows:

The Company’s investments in joint ventures consisted of equity ownership interests in the following entities as of March 28, 2010:

“Income from joint ventures” in the Condensed Consolidated Statements of Operations in the first quarter of 2010 included a pre-tax gain of $12.7 million from the sale of an asset at one of the paper mills in which the Company has an investment. The Company’s share of the pre-tax gain, after eliminating the noncontrolling interest portion, is $10.2 million.

The following table presents summarized information for the Company’s unconsolidated joint ventures. Summarized unaudited condensed combined income statements of the Company’s unconsolidated joint ventures were as follows:

8

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company’s current indebtedness includes a private financing arrangement with Inmobiliaria Carso, S.A. de C.V. and Banco Inbursa S.A., Institución de Banca Múltiple, Grupo Financiero Inbursa; a sale lease-back of a portion of the Company’s New York headquarters; publicly-issued senior notes; and a revolving credit facility. The Company’s total debt consists of the following:

Based on borrowing rates currently available for debt with similar terms and average maturities, the fair value of the Company’s debt was approximately $911 million as of March 28, 2010.

The Company’s $400.0 million revolving credit agreement expiring in June 2011 is used for general corporate purposes and provides a facility for the issuance of letters of credit. As of March 28, 2010, excluding letters of credit of approximately $62 million, there were no outstanding borrowings under the Company’s revolving credit facility.

The revolving credit agreement contains a covenant that requires a specified level of stockholders’ equity, which as defined by the agreement does not include accumulated other comprehensive loss and excludes the impact of one-time non-cash charges. The required level of stockholders’ equity (as defined) is the sum of $950.0 million plus an amount equal to 25% of net income for each fiscal year ending after December 28, 2003, when net income exists. As of March 28, 2010, the amount of stockholders’ equity (as defined) in excess of the required levels was approximately $685 million, which excludes the impact of non-cash impairment charges incurred in 2006, 2007 and 2008 that together aggregated approximately $878 million.

In addition, as of March 28, 2010, the Company was in compliance with all of its covenants under its other third-party financing arrangements.

“Interest expense, net” in the Company’s Condensed Consolidated Statements of Operations was as follows:

9

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Loan Issuance

As of March 28, 2010, the Company had a remaining loan receivable of approximately $11 million under a $13 million one-year 13% secured term loan made to a third party (the “Circulation Service Provider”) that provides home-delivery services for The New York Times (“The Times”) and The Boston Globe (the “Globe”) and circulation customer services for The Times. The Circulation Service Provider has granted a security interest in all of its assets to secure the payment of the loan due in April 2010. See Note 13 for additional information regarding the loan.

Severance Costs

The Company recognized severance costs of $0.2 million in the first quarter of 2010 and $25.0 million in the first quarter of 2009. These costs were primarily recognized at the News Media Group related to various initiatives and are primarily recorded in “Selling, general and administrative costs” in the Company’s Condensed Consolidated Statements of Operations. As of March 28, 2010, the Company had a severance liability of approximately $17 million included in “Accrued expenses and other” in the Company’s Condensed Consolidated Balance Sheet.

Pension

The Company sponsors several pension plans, participates in The New York Times Newspaper Guild pension plan, a joint Company and Guild-sponsored plan, and makes contributions to several multiemployer plans in connection with collective bargaining agreements. The Company-sponsored plans include qualified (funded) plans as well as non-qualified (unfunded) plans. These plans provide participating employees with retirement benefits in accordance with benefit formulas detailed in each plan. The Company’s non-qualified plans provide enhanced retirement benefits to select members of management.

Certain Company-sponsored qualified and non-qualified pension plans covering union and non-union employees no longer accrue future benefits because the plans are frozen. The benefits earned by participants prior to the pension plans being frozen were not affected.

10

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The components of net periodic pension cost of all Company-sponsored plans and The New York Times Newspaper Guild pension plan were as follows:

While the Company does not have any mandatory contributions to its sponsored qualified plans in 2010 due to existing funding credits, the Company made a discretionary contribution of $78.0 million, early in the second quarter of 2010, to one of its Company-sponsored qualified pension plans, reducing the underfunded status. The Company may make additional discretionary contributions to its Company-sponsored qualified pension plans in 2010 depending on cash flows, pension asset performance, interest rates and other factors.

Based on the Company’s contractual obligations, it expects to make contributions in 2010 of approximately $22 to $28 million (of which approximately $5 million was made in the first quarter of 2010) to The New York Times Newspaper Guild pension plan.

Postretirement Benefits

The Company provides health benefits to retired employees (and their eligible dependents) who are not covered by any collective bargaining agreements, if the employees meet specified age and service requirements. The Company no longer provides post-age 65 retiree medical benefits for employees who retire on or after March 1, 2009. The Company also contributes to a postretirement plan under the provisions of a collective bargaining agreement. The Company accrues the costs of postretirement benefits during the employees’ active years of service and its policy is to pay its portion of insurance premiums and claims from Company assets.

11

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Patient Protection and Affordable Care Act, which became law on March 23, 2010, and the Health Care and Education Reconciliation Act of 2010, which became law on March 30, 2010, eliminated the tax deductibility of retiree health care costs, beginning January 1, 2013, to the extent of federal subsidies received by plan sponsors that provide retiree prescription drug benefits equivalent to Medicare Part D. Because the future anticipated retiree health care liabilities and related subsidies are already reflected in the Company’s financial statements, this legislation required the Company to reduce the related deferred tax asset recognized in its financial statements. As a result, the Company recorded a one-time income tax charge of $10.9 million in the first quarter of 2010 to reflect the impact of the legislation. In addition, the Company is currently evaluating the impact of the legislation on all of its benefit plans and will record the impact, if any, upon completion of its assessment.

The components of net periodic postretirement benefit income were as follows:

The Company’s effective income tax rate was 65.6% in the first quarter of 2010. The tax rate for the quarter was impacted by a $10.9 million one-time tax charge (see Note 6). Excluding the charge, the Company’s effective income tax rate was 39.3% in the first quarter of 2010.

In the first quarter of 2009, the Company recognized a pre-tax loss of $75.4 million but only an income tax benefit of $1.2 million. The tax provision was unfavorably affected by significant losses at the New England Media Group, for which only a minimum state tax benefit was recognized due to a Massachusetts law change, and various nondeductible losses. These items were partially offset by a $12 million adjustment to reduce the Company’s reserve for uncertain tax positions.

12

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Basic and diluted earnings/(loss) per share have been computed as follows:

The difference between basic and diluted shares is that diluted shares include the dilutive effect of the assumed exercise of outstanding securities. The Company’s stock options and warrants, issued in connection with the Company’s 14.053% senior notes due in 2015, have the most significant impact on diluted shares.

In the first quarter of 2009, securities that could potentially be dilutive were not included in diluted shares because the loss from continuing operations made them anti-dilutive. Therefore, the amount of basic and diluted shares was the same.

The number of stock options that were excluded from the computation of diluted earnings per share because their exercise price exceeded the market value of the Company’s common stock (in the first quarter of 2010) or because they were anti-dilutive due to a loss from continuing operations (in the first quarter of 2009) was approximately 25 million for the first quarter of 2010 with exercise prices ranging from $10.53 to $48.54 and approximately 30 million for the first quarter of 2009 with exercise prices ranging from $3.63 to $48.54.

The number of warrants that were excluded from the computation of diluted earnings per share because they were anti-dilutive due to a loss from continuing operations was approximately 15.9 million for the first quarter of 2009. All of these warrants were issued in the first quarter of 2009 and have an exercise price of $6.3572.

13

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The results of operations for WQXR-FM, a New York City classical radio station, which was sold in October 2009, are presented as discontinued operations. The Company received proceeds related to the sale of approximately $45 million and recorded a pre-tax gain of approximately $35 million (approximately $19 million after tax) in the fourth quarter of 2009.

The results of operations for WQXR-FM presented as discontinued operations are summarized below.

Comprehensive income/(loss) was as follows:

The “Accumulated other comprehensive loss, net of income taxes” in the Company’s Condensed Consolidated Balance Sheets was net of a deferred income tax benefit of approximately $242 million as of March 28, 2010 and December 27, 2009.

14

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

The Company’s reportable segments consist of the News Media Group and the About Group. These segments are evaluated regularly by key management in assessing performance and allocating resources.

Below is a description of the Company’s reportable segments:

News Media Group (consisting of The New York Times Media Group, which includes The Times, the International Herald Tribune, NYTimes.com and related businesses; the New England Media Group, which includes the Globe, Boston.com, the Worcester Telegram & Gazette, Telegram.com and related businesses; and the Regional Media Group, which includes 14 daily newspapers, other print publications and related businesses); and

About Group (consisting of the Web sites: About.com, ConsumerSearch.com, UCompareHealthCare.com and Caloriecount.com; and related businesses).

The Company’s Statements of Operations by reportable segment and Corporate were as follows:

15

THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(Unaudited)

Third-Party Guarantees

As of March 28, 2010, the Company had outstanding guarantees on behalf of the Circulation Service Provider and on behalf of a third party that provides printing and distribution services for The Times’s National Edition. The guarantees were for payments under property leases and debt and costs related to any default. The total amount of the guarantees was approximately $3 million as of March 28, 2010. In accordance with GAAP, the contingent obligations related to these guarantees are not reflected in the Company’s Condensed Consolidated Balance Sheets as of March 28, 2010 and December 27, 2009.

Other

The Company also had letters of credit of approximately $62 million as of March 28, 2010, primarily for obligations under the Company’s workers’ compensation program, sale-leaseback financing and its New York headquarters. The workers’ compensation liability (approximately $40 million) is included in the Company’s Condensed Consolidated Balance Sheet as of March 28, 2010.

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

Early in the second quarter of 2010, the Company sold 50 of its 750 units in the NESV. The Company expects to record an approximate $9 million pre-tax gain in the second quarter of 2010 from the sale. Following the sale, the Company’s ownership interest in NESV is 16.57%. The Company intends to continue to explore the sale of its remaining interest in NESV, in whole or in parts.

In April 2010, the Circulation Service Provider repaid the Company $1.0 million of a one-year 13% secured term loan, reducing the amount outstanding to $10 million (see Note 5). Also in April 2010, the Company amended the loan agreement with the Circulation Service Provider, reducing the amount of the loan to $10 million and extending the maturity date for one year until April 2011.

16

We are a diversified media company that currently includes newspapers, Internet businesses, investments in paper mills and other investments. Our segments and divisions are:

News Media Group (consisting of The New York Times Media Group, which includes The New York Times (“The Times”), the International Herald Tribune, NYTimes.com and related businesses; the New England Media Group, which includes The Boston Globe (the “Globe”), Boston.com, the Worcester Telegram & Gazette, Telegram.com and related businesses; and the Regional Media Group, which includes 14 daily newspapers, other print publications and related businesses). The News Media Group generates revenues principally from print and online advertising and through circulation. Other revenues, which make up the remainder of revenues, primarily consist of revenues from news services/syndication, commercial printing, rental income, digital archives and direct mail advertising services. The News Media Group’s main operating costs are employee-related costs and raw materials, primarily newsprint.

About Group (consisting of the Web sites: About.com, ConsumerSearch.com, UCompareHealthCare.com and Caloriecount.com; and related businesses). The About Group generates revenues through cost-per-click advertising (sponsored links for which the About Group is paid when a user clicks on the ad), display advertising and e-commerce (including sales lead generation). Almost all of its revenues (95% in the first quarter of 2010) are derived from the sale of cost-per-click and display advertising. Cost-per-click advertising accounted for 62% of the About Group’s total advertising revenues in the first quarter of 2010. The About Group’s main operating costs are employee-related costs and content and hosting costs.

Joint Ventures Our investments accounted for under the equity method are as follows:

17

Like many companies across America and in our industry, we remain in a challenging business environment, resulting in lingering uncertainty about the economic outlook. As the first quarter of 2010 progressed, we saw an acceleration in the rate of advertiser spending across our newspapers, Web sites and other platforms, reflecting a potential firming of economic conditions, and we experienced positive trending in both print and digital advertising revenues relative to the fourth quarter of 2009. The increase in digital advertising revenues, which rose 18.3%, significantly offset a 12.3% decrease in print advertising revenues and held our total advertising revenue decline to 6.1% in the first quarter of 2010 compared with the same period in 2009. The newspaper industry remains affected by the secular shift to digital media choices. We have seen the positive impact of transitioning into an increasingly multiplatform company, as online advertising revenues have become a much more significant part of our revenue mix and made up approximately 26% of our advertising revenue in the first quarter of 2010, up from about 20% in the same period in 2009.

Visibility remains limited for advertising. In the early part of the second quarter of 2010, revenue trends for print advertising are expected to improve from the levels of the first quarter of 2010, while digital advertising is expected to trend similarly to the first quarter, with increases in the high teens. As the advertising marketplace, particularly in print, changes we continue to explore other approaches to generate revenues from our online content (including charging consumers for such content) and to evaluate our circulation pricing models. In the first quarter of 2010, our circulation revenues increased 3.5% compared with the first quarter of 2009. In addition, our continued progress in pursuing our long-term strategy to restructure our cost base and reposition our businesses also contributed to the growth in our operating profit in the first quarter of 2010. In the first quarter of 2010, our operating costs declined 18.0% compared with the first quarter of 2009, with reductions in nearly all major expense categories as a result of cost-savings initiatives. See the “Results of Operations” section for a further discussion of our first quarter 2010 performance.

Our liquidity position improved during the first quarter of 2010 as a result of strong cash flow from operations, which provided us with increased financial flexibility. We continue to improve our liquidity, reducing our debt and capital lease obligations, net of cash and cash equivalents by approximately one third to $671 million from the balance at the beginning of 2009. The majority of our debt matures in 2015 or later.

RECENT DEVELOPMENTS

Health Care Legislation

The Patient Protection and Affordable Care Act, which became law on March 23, 2010, and the Health Care and Education Reconciliation Act of 2010, which became law on March 30, 2010, eliminated the tax deductibility of retiree health care costs, beginning January 1, 2013, to the extent of federal subsidies received by plan sponsors that provide retiree prescription drug benefits equivalent to Medicare Part D. Because the future anticipated retiree health care liabilities and related subsidies are already reflected in our financial statements, this legislation required us to reduce the related deferred tax asset recognized in our financial statements. As a result, we recorded a one-time income tax charge of $10.9 million in the first quarter of 2010 to reflect the impact of the legislation. In addition, we are currently evaluating the impact of the legislation on all of our benefit plans and will record the impact, if any, upon completion of our assessment.

18

Gain on Sale of Asset

In the first quarter of 2010, one of the paper mills in which we have an investment sold an asset resulting in a pre-tax gain of $12.7 million included within “Income from joint ventures” in the Condensed Consolidated Statements of Operations. Our share of the pre-tax gain, after eliminating the noncontrolling interest portion, is $10.2 million.

Sale of a Portion of Interest in NESV

Early in the second quarter of 2010, we sold 50 of our 750 units in the NESV. We expect to record an approximate $9 million pre-tax gain in the second quarter of 2010 from the sale. Following the sale, our ownership interest in NESV is 16.57%. We intend to continue to explore the sale of our remaining interest in NESV, in whole or in parts.

Pension Contributions

Early in the second quarter of 2010, we made a discretionary contribution of $78.0 million to one of our Company-sponsored qualified pension plans, reducing the underfunded status. We may make additional discretionary contributions to our Company-sponsored qualified pension plans in 2010 depending on cash flows, pension asset performance, interest rates and other factors.

We also expect to make contributions in 2010 of approximately $22 to $28 million (of which approximately $5 million was made in the first quarter of 2010) to The New York Times Newspaper Guild pension plan based on our contractual obligations.

Amended Loan Issuance

In April 2010, a third party that provides home-delivery services for The Times and the Globe and circulation customer services for The Times (the “Circulation Service Provider”) repaid us $1.0 million of a one-year 13% secured term loan, reducing the amount outstanding to $10 million. Also in April 2010, we amended the loan agreement with the Circulation Service Provider, reducing the amount of the loan to $10 million and extending the maturity date for one year until April 2011.

19

2010 EXPECTATIONS

While we will remain diligent in managing our operating expenses, we expect that through the remainder of 2010 year-over-year cost savings will moderate, in part because we will be cycling past several major expense-reduction initiatives implemented in mid-2009, we reinstated many of the salary rollbacks implemented in the second quarter of 2009, and newsprint prices are currently rising. We expect to manage our operating cost base such that we will adjust expense levels to offset any revenue declines through the remainder of 2010.

Given recent announcements of additional price increases by suppliers, we expect newsprint price comparisons to be slightly favorable in the second quarter and unfavorable in the third and fourth quarters of 2010.

In addition, we expect the following on a pre-tax basis in 2010:

20

RESULTS OF OPERATIONS

The following table presents our consolidated financial results.