-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CvCUqxjcNozLig0EOEuZbDtWywubAzx9rm6b/666Ru5JcqCzcSPDqIbHbdARoUjG 05cfKNrVTA5DYY6/emu/0A== 0000950112-96-000742.txt : 19960312 0000950112-96-000742.hdr.sgml : 19960312 ACCESSION NUMBER: 0000950112-96-000742 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960311 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW YORK TIMES CO CENTRAL INDEX KEY: 0000071691 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 131102020 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05837 FILM NUMBER: 96533310 BUSINESS ADDRESS: STREET 1: 229 W 43RD ST CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2125561234 MAIL ADDRESS: STREET 1: 229 W 43RD STREET CITY: NEW YORK STATE: NY ZIP: 10036 10-K 1 THE NEW YORK TIMES COMPANY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ------------ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 Commission file number 1-5837 The New York Times Company (Exact name of registrant as specified in its charter) New York 13-1102020 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 229 West 43d Street, New York, N. Y. 10036 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212) 556-1234 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ------------------------ Class A Common Stock of $.10 par value American Stock Exchange Securities registered pursuant to Section 12(g) Of The Act: Not Applicable (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes. [X] No. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ( ) The aggregate market value of Class A Common Stock held by non-affiliates as of February 26, 1996, was approximately $2.04 billion. As of such date, non-affiliates held 52,272 shares of Class B Common Stock. There is no active market for such stock. The number of outstanding shares of each class of the registrant's common stock as of February 26, 1996, was as follows: 97,225,562 shares of Class A Common Stock and 428,916 shares of Class B Common Stock. DOCUMENT INCORPORATED BY REFERENCE PART ---------------------------------- ---- Proxy Statement for the 1996 Annual Meeting of Stockholders ............ III - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INDEX TO THE NEW YORK TIMES COMPANY 1995 FORM 10-K ------------------- PART I ITEM NO. PAGE - ------- ---- 1. Business......................................................... 1 Introduction.................................................. 1 Summary of Segment Information.............................. 1 Newspapers.................................................... 1 The New York Times.......................................... 2 Circulation............................................... 2 Advertising............................................... 2 Production and Distribution............................... 3 The Boston Globe............................................ 4 Circulation............................................... 4 Advertising............................................... 4 Production................................................ 5 Regional Newspapers......................................... 5 International Herald Tribune................................ 6 Information Services........................................ 6 New Ventures................................................ 6 Magazines..................................................... 7 New Ventures................................................ 7 Broadcasting.................................................. 8 Forest Products Companies..................................... 8 Competition................................................... 9 Employees..................................................... 10 2. Properties....................................................... 10 3. Legal Proceedings................................................ 11 4. Submission of Matters to a Vote of Security Holders.............. 11 Executive Officers of the Registrant.......................... 11 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters........................................................ 13 6. Selected Financial Data.......................................... 13 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 13 8. Financial Statements and Supplementary Data...................... 13 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........................................... 13 PART III 10. Directors and Executive Officers of the Registrant.............. 13 11. Executive Compensation.......................................... 13 12. Security Ownership of Certain Beneficial Owners and Management.. 13 13. Certain Relationships and Related Transactions.................. 13 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................................................... 14 PART I ITEM 1. BUSINESS. INTRODUCTION The New York Times Company (the "Company") was incorporated on August 26, 1896, under the laws of the State of New York. The Company is engaged in diversified activities in the communications field. The Company also has substantial equity interests in a Canadian newsprint company and a Maine supercalendered paper manufacturing partnership. The Company currently classifies its businesses into the following segments: Newspapers: The New York Times ("The Times"); The Boston Globe, a daily newspaper, and the Boston Sunday Globe (both editions, "The Globe"); 18 other daily and three non-daily newspapers in Alabama, California, Florida, Louisiana, North Carolina and South Carolina ("Regional Newspapers"); newspaper distributors in the New York City and Boston metropolitan areas; a one-half interest in the International Herald Tribune; news, photo and graphics services and news and features syndication; TimesFax; The New York Times Index; and licensing of electronic data bases and microform, CD-ROM products and the trademarks and copyrights of The Times. Magazines: Golf Digest, Golf World, Golf Shop Operations, Tennis, Tennis Buyer's Guide, Cruising World, Sailing World, Snow Country and Snow Country Business. Broadcasting: television stations WTKR-TV in Norfolk, Virginia; WREG-TV in Memphis, Tennessee; WNEP-TV in Wilkes-Barre/Scranton, Pennsylvania; WHNT-TV in Huntsville, Alabama; WQAD-TV in Moline, Illinois; and KFSM-TV in Fort Smith, Arkansas; radio stations WQXR (FM) and WQEW (AM) in New York City; and NYT Video Productions. SUMMARY OF SEGMENT INFORMATION In 1995 the Company's consolidated revenues increased to $2,409,403,000 from $2,357,563,000 in 1994 due principally to strong revenues at the Company's newspaper and broadcast properties. The Company's net income in 1995 was $135,860,000, or $1.40 per share, compared with $213,349,000, or $2.05 per share, in 1994. Exclusive of special factors set forth on page F-3 on this Form 10-K, annual earnings from ongoing operations would have been $1.41 per share in 1995, compared with $1.06 per share in 1994. A summary of segment information for the three years ended December 31, 1995, is set forth on pages F-2 and F-3 of this Form 10-K. Also see "Management's Discussion and Analysis" on pages F-4 through F-8 of this Form 10-K. The Company's largest source of revenues is advertising, which influences the pattern of the Company's quarterly consolidated revenues and is seasonal in nature. Traditionally, second-quarter and fourth-quarter advertising volume is higher than that in the first quarter. Advertising volume tends to be lower in the third quarter primarily because of the summer slow-down in many areas of economic activity. National and local economic conditions influence the level of retail, national and classified advertising revenue generated in the markets served by the Company's business segments. Circulation revenue is affected by competition from other forms of media available in the Company's respective markets. NEWSPAPERS The Newspaper Group had revenues of $2,161,356,000 in 1995, compared with $2,006,184,000 in 1994, and an operating profit of $208,465,000 in 1995, compared with $207,489,000 in 1994. (These amounts include certain special items for 1995 which are discussed in more detail in "Management's Discussion and Analysis" on page F-4 of this Form 10-K.) Improvements in operating profit occurred despite a significant increase in newsprint prices, as increased advertising and circulation rates and cost controls enabled the Newspaper Group to overcome a $76.2 million increase for the year in newsprint costs (net of conservation programs). The Newspaper Group segment consists of two categories: Newspapers (consisting of The New York Times, The Boston Globe, 21 Regional Newspapers, newspaper distributors, a 50 percent interest in the International Herald Tribune and Information Services) and New Ventures (consisting of projects developed in electronic media by The Times and The Globe, as well as various new media investments such as NYT Video News International, Inc. and The Popcorn Channel, L.P.). The Newspapers category had revenues of $2,160,399,000 in 1995 and an operating profit of $221,566,000 in 1995, while the New Ventures category had revenues of $957,000 and an operating loss of $13,101,000. THE NEW YORK TIMES Circulation The Times, a standard-size weekday and Sunday newspaper which commenced publication in 1851, is circulated in each of the 50 states, the District of Columbia and worldwide. Approximately 62% of the weekday (Monday through Friday) circulation is sold in the 31 counties that make up the greater New York City area, which includes New York City, Westchester and parts of upstate New York, Connecticut and New Jersey; 38% is sold elsewhere. On Sundays, approximately 60% of the circulation is sold in the greater New York City area and 40% elsewhere. According to reports of the Audit Bureau of Circulations ("ABC"), an independent agency that audits the circulation of most U.S. newspapers and magazines on an annual basis, for the semi-annual period ended September 30, 1995, of all seven- day United States newspapers, The Times's weekday and Sunday circulations were the largest. The Times's average weekday and Sunday circulations for the five 12-month periods ended September 30, 1995, as audited by ABC (except as indicated), are shown in the table below: Weekday Sunday ------- ------ (Thousands of copies) 1995 (unaudited).................................... 1,124.5 1,720.5 1994................................................ 1,148.8 1,742.2 1993................................................ 1,183.1 1,783.9 1992................................................ 1,166.9 1,753.9 1991................................................ 1,153.6 1,728.3 During the year ended December 31, 1995, the average weekday circulation of The Times decreased by approximately 22,100 copies to 1,120,700 copies and the average Sunday circulation of The Times decreased by approximately 31,300 copies to 1,712,600 copies. Approximately 55% of the weekday circulation and 47% of the larger Sunday circulation were sold through home and office delivery; the remainder was sold primarily on newsstands. The weekly rate charged to subscribers for home-delivered copies of The Times in the New York City metropolitan area is $6.70. The suggested newsstand price of The Times within the New York City metropolitan area is $.60 on weekdays and $2.50 on Sundays. The suggested newsstand price in the New England-Middle Atlantic states outside the New York City metropolitan area is $1.00 on weekdays and $2.50 on Sundays. The suggested newsstand price of the National Edition, distributed throughout the rest of the country, is $1.00 on weekdays and $4.00 on Sundays. Advertising The Times published 3,831,200 inches of advertising in 1995, compared with 3,733,600 inches in 1994. Both figures include part-run volume, which totaled 1,061,200 inches in 1995, compared with 925,600 inches in 1994. 2 Total volume in The Times for the three years ended December 31, 1995, as measured by The Times, is shown in the table below. The "National" heading in the table below includes such categories as entertainment, financial, magazine and general advertising. Full Run ---------------------------------- Preprint Retail National Classified Zoned Total* Copies Inches Inches Inches Inches Inches Distributed ------ -------- ---------- ------- ------- ----------- (Inches and Preprints in Thousands) 1995 667.3 1,181.6 921.1 1,061.2 3,831.2 306,505 1994 693.3 1,166.6 948.1 925.6 3,733.6 294,985 1993 701.2 1,142.5 910.6 854.6 3,608.9 294,906 - ------------ * All totals exclude preprint inches. The table includes volume for The New York Times Magazine, which published 2,809 pages of advertising in 1995, compared with 2,781 pages in 1994. Advertising rates for The Times increased an average of 5% in January 1995, 4% in May 1995 and 9.5% in January 1996. Production And Distribution The Times is processed through electronic editing terminals and sent electronically to high-resolution image setters. The Times initiated a pagination program in the first quarter of 1994, which enables editors to electronically design a newspaper page, including news text, graphics and ads, thereby avoiding all or part of the manual paste-up of the various elements on a page. By the end of 1995, seven sections of the Sunday newspaper and over 50% of the weekday newspaper were paginated. The Times's goal is to paginate the entire newspaper by the end of 1996. Generally, The Times is printed at its New York City production facility and at its production and distribution facility in Edison, New Jersey. The Edison facility prints all the advance sections of the Sunday newspaper (except The New York Times Magazine and the Television section) and approximately one-third of the weekday New York edition. The Edison facility houses six 10-unit Goss Colorliner presses as well as modern, automated packaging and distribution equipment. The Times prints four of its advance Sunday sections at Edison in color. The Times has agreements with two commercial printing companies to print The New York Times Magazine and its Television section. The National Edition of The Times is distributed from eight printing sites with which it has contract printing agreements: in the Midwest from printing sites in Chicago, Illinois, and Warren, Ohio; in the West from printing sites in Torrance and Walnut Creek, California, and Tacoma, Washington; in the Southwest from a printing site in Austin, Texas; and in the Southeast from printing sites in Atlanta, Georgia, and Ft. Lauderdale, Florida. Satellite transmission of page images to the National Edition printing sites permits early-morning delivery to homes and newsstands in many major markets. The Company owns a wholesale newspaper distribution business that distributes The Times and other newspapers and periodicals in New York City and central and northern New Jersey. This wholesaler operates under the name of City & Suburban Delivery Systems. Approximately 49% of The Times's single-copy daily circulation and 38% of its single-copy Sunday circulation in the New York City metropolitan area are delivered to retail outlets through this wholesale operation. In 1995 The Times used approximately 276,000 metric tons of newsprint, compared to 295,200 metric tons in 1994. This newsprint was purchased primarily under long-term contracts from both related (see "Forest Products Companies") and unrelated suppliers. In 1995 The New York Times Magazine used approximately 20,000 metric tons of supercalendered paper, an intermediate grade of magazine quality paper, compared to 21,000 metric tons in 1994. This supercalendered paper was 3 purchased under long-term contracts from both related (see "Forest Products Companies") and unrelated suppliers. The Times and The New York Times Magazine are not dependent on any one supplier. THE BOSTON GLOBE The Company acquired The Globe on October 1, 1993, pursuant to a merger of a wholly owned subsidiary of the Company into Affiliated Publications, Inc. ("API"). The Globe is owned and published by an API subsidiary, Globe Newspaper Company (as used herein, "The Globe" may also be used to refer to Globe Newspaper Company). Circulation The Globe is distributed throughout New England, although its circulation is concentrated in the Boston metropolitan area. According to ABC reports, as of September 24, 1995, the weekday circulation of The Globe was the 13th largest of any weekday newspaper, and circulation of the Sunday edition was the ninth largest of any Sunday newspaper published in the United States; and its weekday and Sunday circulation was the largest of all newspapers published in either Boston or New England. The following table shows the average weekday and Sunday paid circulation of The Globe for the editions and the periods indicated, as audited by ABC. Period Weekday Sunday ------ --------- ------- 26 Weeks ended September 24, 1995....................... 498,853 793,672 52 Weeks ended March 26, 1995........................... 503,651 798,508 During the year ended December 31, 1995, the average weekday circulation of The Globe was down 6,800 copies below 1994 to 497,700 copies and the average Sunday circulation decreased by 15,500 copies below 1994 to 789,300 copies. Approximately 70% of The Globe's total weekday circulation and 57% of The Globe's total Sunday circulation were sold through home or office delivery; the remainder was sold primarily on newsstands. Virtually all of The Globe's home-delivered circulation is delivered through The Globe's distribution subsidiary, Community Newsdealers, Inc. The weekly rate charged to subscribers for home-delivered copies of The Globe is $4.50 within the 30-mile radius of Boston and $5.00 outside of the 30-mile radius. The suggested newsstand price of The Globe within the 30-mile radius is $.50 on weekdays and $1.75 on Sundays. The suggested newsstand price outside the 30-mile radius is $.50 on weekdays and $2.00 on Sundays. Advertising The Globe's total advertising volume by category of advertising for the two years ended December 31, 1995, for all editions, as measured by The Globe, is set forth below: Full Run ---------------------------------- Preprint Retail National Classified Zoned Total* Copies Inches Inches Inches Inches Inches Distributed ------ -------- ---------- ------ ------- ----------- (Inches and Preprints in Thousands) 1995 812.9 573.9 1,252.4 307.7 2,946.9 730,944 1994 830.7 562.4 1,217.5 273.6 2,884.2 702,757 - ------------ * All totals exclude preprint inches. Advertising rates in each category of advertising, except for classified real estate, were adjusted in 1995. The latest increase in retail advertising rates occurred on September 1, 1995. Increases in classified and national advertising rates occurred effective April 1, 1995, and July 1, 1995, respectively. These rate increases ranged from 5% to 8%. 4 Production The Globe's pagination project, which started in 1989, continued according to plan as full-page output increased in 1995 to approximately 900 pages per week, or almost 70% of The Globe's pages produced weekly. The Globe plans to paginate most of the remaining portions of the newspaper by mid-1996. All editions of The Globe are printed and prepared for delivery at its main Boston plant or its Billerica, Massachusetts, satellite plant. Both of the plants use Goss Metroliner offset presses. The Globe also owns a Sunday pre-print storage, inserting and packaging plant in Westwood, Massachusetts. In 1995 The Globe used approximately 136,000 metric tons of newsprint, which is approximately the same amount it used in 1994. The major portion was purchased under long-term contracts with related (see "Forest Product Companies") and unrelated suppliers. The Globe is not dependent on any one supplier. REGIONAL NEWSPAPERS The Company currently owns 18 daily and three non-daily smaller-city newspapers.
Daily Newspapers Non-Daily Newspapers Sarasota Herald-Tribune Times Daily The News-Sun (Sebring/ (Fla.) (Florence, Ala.) Avon Park, Fla.) The Press Democrat (Santa The Tuscaloosa News (Ala.) Marco Island Eagle Rosa, Cal.) The Gadsden Times (Ala.) (Fla.) The Ledger (Lakeland, Fla.) The Courier (Houma, La.) News-Leader The Gainesville Sun (Fla.) Times-News (Fernandina Beach, Fla.) Santa Barbara (Hendersonville, N.C.) News-Press (Cal.) Daily World (Opelousas, La.) Spartanburg The Dispatch (Lexington, N.C.) Herald-Journal (S.C.) Daily Comet (Thibodaux, La.) Wilmington Morning Star Palatka Daily News (Fla.) (N.C.) Lake City Reporter (Fla.) Star-Banner (Ocala, Fla.)
The regional daily newspapers' weekday circulation for the year ended December 31, 1995, decreased 18,000 copies to 753,700 copies, and Sunday circulation decreased 13,000 copies to 803,900 copies; the circulation of the non-dailies decreased 600 copies to 36,000 copies. Advertising volume, stated on the basis of six columns per page, was 15,525,000 inches in 1995, compared with 15,359,700 inches in 1994. These figures exclude the circulation numbers and advertising volume of five daily newspapers, The Daily Corinthian (Corinth, Mississippi), State Gazette (Dyersburg, Tennessee), Daily Commercial (Leesburg, Florida), Lenoir News-Topic (Lenoir, North Carolina) and The Messenger (Madisonville, Kentucky), as well as two weekly newspapers, The Banner-Independent (Booneville, Mississippi) and York County Coast Star (Kennebunk, Maine), which were sold in 1995. (See Note 2 of Notes to Consolidated Financial Statements.) Preprints distributed in 1995 were 913,922,000, compared with 904,434,000 in 1994 (in each case, not including preprints distributed by the seven Regional Newspapers sold in 1995). All of the Regional Newspapers are produced by photocomposition and offset printing. In 1995 the Regional Newspapers used approximately 94,000 metric tons of newsprint (not including 2,000 metric tons of newsprint used by the seven Regional Newspapers sold in 1995), which was purchased under long-term contracts from both related (see "Forest Products Companies") and unrelated suppliers. The Regional Newspapers are not dependent on any one supplier. INTERNATIONAL HERALD TRIBUNE The Company owns a one-half interest in the International Herald Tribune S.A., which publishes the International Herald Tribune. The newspaper is edited in Paris and printed simultaneously in 5 Frankfurt, Hong Kong, London, Marseille, New York, Paris, Rome, Singapore, The Hague, Tokyo and Zurich. The other one-half interest is owned by The Washington Post Company. INFORMATION SERVICES The New York Times Syndication Sales Corporation ("Syndication Sales") operates The New York Times News Service, The New York Times Syndicate and the licensing and reprint permission operations of The Times. The News Service transmits articles, graphics and photographs from The Times to approximately 650 newspapers and magazines in the United States and in more than 50 countries worldwide. The New York Times Syndicate markets other supplemental news services and feature material, graphics and photographs from The Times and other leading news sources to newspapers and magazines around the world. In 1995, Syndication Sales introduced two sites on the World Wide Web with news about computers and health. NYT Business Information Services, through the group's Index department and Times On-Line Services, Inc., produces The New York Times Index, a print publication. The Company licenses LEXIS/NEXIS, Dow Jones Business Information Services, UMI, Knight-Ridder Information, Inc., and DataTimes to store, market and distribute its on-line computer data bases. The Company also licenses UMI to produce and sell The New York Times Index and The Times on microform and CD-ROM. In 1995 the Company continued to expand its distribution of TimesFax, a six- to eight-page synopsis of The Times delivered to customers' facsimile machines or personal computers in markets where The Times is not easily available, and created an Internet edition of TimesFax. In addition to distribution by satellite to cruise ships and U.S. Navy vessels, TimesFax is distributed to hotels, governments and corporations in over 50 countries and territories. In 1995 the Company launched a specialized fax product for the legal profession. NYT Custom Publishing designs, writes, edits, produces, sells and markets magazines for clients under contract, including IBM, USAir Group, Inc. and Four Seasons Hotels Limited. Information Services also develops and markets new services, including CD-ROM disks, database marketing and multimedia education services. NEW VENTURES In 1994, the Company created and introduced @times, an on-line service which carries information from The Times on America Online and is one of its most frequently accessed services. In the fall of 1995, a new subsidiary of The Globe, Boston Globe Electronic Publishing, Inc., launched its Internet site located at "boston.com." Its goal is to become the principal information provider for Internet users interested in New England. By the end of 1995, the site had begun generating some revenue. The New York Times's website, The New York Times(sm) on the Web, is located at "nytimes.com." and went on-line in January 1996. According to Netscape, the Internet software company, The New York Times on the Web had one of the most successful launches to date of any of its customers. Additionally, several Regional Newspapers have created on-line services tailored to their local market interests and needs. In April 1995 the Company acquired a majority interest in Video News International ("VNI"), a worldwide video newsgathering operation specializing in low-cost, high-quality footage for sale globally to major television and cable networks. VNI offers its customers a variety of products and services, including global news coverage and production, spot news, long-form programming and videojournalism training. The Company owns 40% of Popcorn Channel, L.P., through the Company's wholly-owned subsidiary NYT Broadcast Holdings, Inc. The Popcorn Channel, a new basic cable network which launched in November 1995, provides viewers with localized movie theater listings along with previews of the top motion pictures in current release. In September 1995, the Company also invested in OVATION, a visual and performing arts cable television network which is scheduled to launch in 1996. 6 MAGAZINES The Company's Magazine Group had revenues of $162,941,000 in 1995, compared with $280,061,000 in 1994, and operating profit of $28,741,000 in 1995, compared with $19,204,000 in 1994. The decrease in revenues is primarily due to the revenues attributable to the Women's Magazines Division and certain U.K. golf publications, which were sold in the third quarter of 1994. The Magazine Group segment consists of two categories: Magazines (including those publications set forth in the table below) and New Ventures (including computerized systems for golf tee time reservations, on-line magazine services and related activities in the sports/leisure field). The Magazines category had revenues of $152,819,000 in 1995 and an operating profit of $19,971,000 in 1995, while the New Ventures category had revenues of $122,000 and an operating loss of $1,230,000 in 1995. The Magazine Group's revenues for 1995 also include $10 million relating to the non-competition agreement entered into in connection with the sale of the Women's Magazines Division (described below). On July 26, 1994, the Company sold its Women's Magazines Division to Gruner+Jahr Printing and Publishing Co. On August 12, 1994, the Company sold Golf World (U.K.), Golf Illustrated Weekly and Golf Industry News to EMAP plc. The net after-tax proceeds to the Company from these sales, inclusive of a four-year $40,000,000 non-competition agreement entered into in connection with the Women's Magazines sale, were approximately $160,000,000. (See Note 2 of Notes to Consolidated Financial Statements.) All of the Company's magazines are printed under long-term contracts with unrelated printers. In 1995 the magazines used approximately 16,100 metric tons of coated paper, all of which was purchased from unrelated suppliers under long-term contracts. The Magazine Group is not dependent on any one supplier. As of December 31, 1995, the Company published the magazines listed in the chart below:
PERCENTAGE INCREASE (DECREASE) IN AVERAGE PUBLICATION AVERAGE CIRCULATION ADVERTISING MAGAZINE CYCLE SUBJECT/AUDIENCE RATE BASE CIRCULATION(1) OVER 1994 PAGES(2) - ------------------- ------------------- --------------------- --------- -------------- ------------- ----------- Golf Digest........ Monthly Golf 1,500,000 1,507,900 2.8 1,304 Tennis............. Monthly Tennis 800,000 804,800 0.2 717 Snow Country....... 8 issues per year Skiing/mountain 475,000 479,500 1.8 814 lifestyle Cruising World..... Monthly Recreational sailors 146,000 150,900 2.0 1,365 Golf World......... 46 issues per year Golf 145,000 146,300 2.3 1,682 Sailing World...... Monthly Racing sailors 65,000 68,500 (2.1) 583 Golf Shop Operations....... 10 issues per year Golf trade 22,600(3) 17,100 0.6 1,383 Snow Country Business......... 6 issues per year Ski trade 20,371(3) 15,800 12.9 271 Tennis Buyer's Guide............ 6 issues per year Tennis trade 12,975(3) 10,800 (1.8) 216 PERCENTAGE INCREASE (DECREASE) IN ADVERTISING PAGES MAGAZINE OVER 1994 - ------------------- ------------- < Golf Digest........ (1.3) Tennis............. (12.9) Snow Country....... (0.5) Cruising World..... 3.4 Golf World......... (5.5) Sailing World...... 0.7 Golf Shop Operations....... (4.6) Snow Country Business......... (21.0) Tennis Buyer's Guide............ (17.9)
- ------------ 1 As reported by the publisher to ABC or the Business Publications Association. 2 As reported by the publisher to Publisher's Information Bureau ("PIB"); or, in the case of trade publications, as calculated by the publisher using the same methodology as for PIB. 3 For these trade publications, the average print order is disclosed as the applicable measure for advertisers. NEW VENTURES In October 1995, the Company acquired the business of PAR Business Systems, Inc., which provides computerized systems for golf tee time reservations and automated pro shop business systems for the golf industry. The new business is being operated by Golf Digest Information Systems, Inc., an indirect subsidiary of the Company. The Magazine Group has entered into a contract to purchase 450 acres of property in Palm Beach Gardens, Florida, and intends to build and operate a daily fee 36-hole golf course and teaching facility, which will become the home of the Golf Digest Golf School. The Magazine Group also offers various golf and travel information and excerpts from its publications on the World Wide Web and the Microsoft Network. 7 BROADCASTING The Broadcasting Group had revenues of $85,106,000 in 1995, up from $71,318,000 in 1994, and an operating profit of $18,943,000 in 1995, compared with $13,626,000 in 1994. The Company acquired WTKR-TV, the CBS affiliate which serves the Norfolk-Portsmouth-Newport News television market in Virginia, in June 1995. (See Note 2 of Notes to Consolidated Financial Statements.) Higher local advertising revenues and network compensation at the Company's television stations, as well as the acquisition of WTKR, accounted for the improved results. The Company's television and radio stations are operated under licenses from the Federal Communications Commission ("FCC") and are subject to FCC regulations. Each television station's license is for a five-year term. The license for WTKR-TV will expire in October 1996. The licenses for WREG-TV (Memphis, Tenn.), WHNT-TV (Huntsville, Ala.), WQAD-TV (Moline, Ill.) and KFSM-TV (Fort Smith, Ark.) will expire in 1997. The license for WNEP-TV (Wilkes-Barre/Scranton, Pa.) will expire in 1999. All of the television stations have three principal sources of revenue: local advertising sold to advertisers in the immediate geographic areas of the stations, national spot advertising and compensation paid by the networks for carrying commercial network programs. WTKR-TV, WREG-TV, WHNT-TV and KFSM-TV are affiliated with the CBS Television Network, and WNEP-TV and WQAD-TV are affiliated with the ABC Television Network. WTKR-TV, WREG-TV, WQAD-TV and KFSM-TV are in the VHF band; WNEP-TV and WHNT-TV are in the UHF band, as are all other stations in their markets. According to A. C. Nielsen Company, Norfolk is the 40th largest television market in the United States, Memphis is the 42nd largest, Wilkes-Barre/Scranton is the 49th largest, Huntsville is the 86th largest, Moline is part of the Quad Cities market, the 88th largest, and Fort Smith is the 118th largest market. The Broadcasting Group produces high quality commercial video and television programming through NYT Video Productions. The Company's two radio stations serve the New York City metropolitan area. WQXR (FM) is currently the only commercial classical music station serving this market. WQEW (AM) is the only station covering the total New York City region that offers a format of American popular standards for the market. The licenses of WQEW(AM) and WQXR(FM) were renewed during 1994 and will expire on February 1, 1998. FOREST PRODUCTS COMPANIES The primary raw material used by the Company is newsprint. In 1995, the Company consumed approximately 508,000 metric tons of newsprint purchased from various suppliers, including those in which it holds an equity interest. The Company believes it has an adequate supply of newsprint available through contracts at market prices from its various suppliers. The Company has equity interests in a Canadian newsprint company, Donohue Malbaie Inc. ("Malbaie"), and in a partnership operating a supercalendered paper mill in Maine, Madison Paper Industries ("Madison") (collectively, the "Forest Products Companies"). Neither of these companies' debt is guaranteed by the Company. The Company's equity in operations (an after-tax amount) of these businesses in 1995 was a profit of $14,051,000, up from $3,264,000 in 1994. The improved year over year results are due principally to higher selling prices. Newsprint prices as of December 31, 1995, were significantly higher than 1994 year-end prices. During 1995, notwithstanding the decline in domestic consumption, the newsprint market remained tight due to the lack of capacity growth and strong overseas demand. 8 The Company has a 49% equity interest in Malbaie. The other 51% is owned by Donohue, Inc. ("Donohue"), a publicly-traded Canadian company whose voting shares are controlled by Quebecor, a Canadian publishing company. Malbaie purchases pulp from Donohue and manufactures newsprint from this raw material on the paper machine it owns within the Donohue paper mill at Clermont, Quebec. Malbaie is wholly dependent upon Donohue for its pulp. In 1995 Malbaie produced 192,000 metric tons of newsprint, 88,000 tons of which were sold to the Company, with the balance sold to Donohue for resale. Madison is a partnership between Northern SC Paper Corporation ("Northern") and a subsidiary of Myllykoski Oy, a Finnish papermaking company. The Company owns 80% of Northern, and Myllykoski Oy, through a subsidiary, owns the remaining 20%. Through Northern, the Company's share of Madison's profits and losses is 40%. Madison produces supercalendered paper at its facility in Madison, Maine. Madison purchases all its wood from local suppliers, mostly under long-term contracts. In 1995 Madison produced 180,000 metric tons, 10,000 tons of which were sold to the Company. In 1996 Madison's five largest customers (of which the smallest is the Company) are expected to purchase approximately 39% of Madison's budgeted production. The Forest Products Companies are subject to comprehensive environmental protection laws, regulations and orders of provincial, federal, state and local authorities of Canada or the United States (the "Environmental Laws"). The Environmental Laws impose effluent and emission limitations and require the Forest Products Companies to obtain, and operate in compliance with the conditions of, permits and other governmental authorizations ("Governmental Authorizations"). The Forest Products Companies follow policies and operate monitoring programs to ensure compliance with applicable Environmental Laws and Governmental Authorizations and to minimize exposure to environmental liabilities. Various regulatory authorities periodically review the status of the operations of the Forest Products Companies. Based on the foregoing, the Company believes that the Forest Products Companies are in substantial compliance with such Environmental Laws and Governmental Authorizations. COMPETITION The Times competes with newspapers of general circulation in New York City and its suburbs. The Times also competes in varying degrees with national publications such as The Wall Street Journal and USA Today and with magazines, television, radio and other media. Based on a specially prepared report by Competitive Media Reporting, Inc., an independent agency that measures advertising revenue, and The Times's internal analysis, The Times believes that it ranks first by a substantial margin in advertising revenue in the general weekday and Sunday newspaper field in the New York City metropolitan area. The Regional Newspapers and the International Herald Tribune compete with a variety of other advertising media in their respective markets. The Globe competes with other newspapers distributed in Boston and its neighboring suburbs, including The Boston Herald (daily and Sunday). The Globe also competes with other communications media, such as direct mail, magazines, radio, television (including cable television), and weekly, suburban and nationally distributed newspapers. Based on information supplied by major daily newspapers published in New England and assembled by the New England Newspaper Association, Inc., for the 12-month period ending December 31, 1995, The Globe ranked first in advertising inches among all newspapers published in Boston and New England. All the magazines published by the Company compete directly with comparable publications as well as with general interest magazines and other media, such as newspapers and broadcasting. All of the Company's television stations compete directly with other television stations in their respective markets and with other video services, such as cable network programming carried on local cable systems. WQXR (FM) competes for listeners with WNYC (FM) (a non-commercial station) for 9 the classical music audience, and it and WQEW (AM) compete for listeners and revenues with many adult-audience commercial radio stations and other media in New York City and surrounding suburbs. Syndication Sales's operations compete with several other syndicated features and supplemental news services. The Forest Products Companies are in a highly-competitive industry. EMPLOYEES As of December 31, 1995, the Company had approximately 12,300 full-time equivalent employees. Approximately 3,600 full-time equivalent employees of The Times and City & Suburban Delivery Systems, which operates its wholesaler business, are represented by 16 unions. The Times has collective bargaining agreements effective through March 30, 2000, with all of its six production unions and with six of its non-production unions. The Times's contracts with the International Brotherhood of Electricians (covering approximately 30 non-production employees) and the International Union of Operating Engineers (covering approximately 20 non-production employees) will expire in the first half of 1996. Negotiations regarding new contracts with both of these unions will be initiated in the first quarter of 1996. In early 1996, both The Times and City & Suburban Delivery Systems will initiate negotiations with 13 unions representing their respective production and non-production employees (approximately 3,500) regarding a wage package covering the period beginning March 31, 1996, and ending March 30, 2000. In the event the parties are unable to reach agreement, the matter will be submitted to binding arbitration. API and its subsidiaries, including The Globe, employ approximately 3,100 full-time equivalent employees. Of these, approximately 2,100 are represented by 12 unions. As of December 31, 1995, labor agreements with three of its 11 mechanical unions expired. Negotiations have commenced and The Globe expects them to be successfully completed in 1996. Seven other mechanical unions have contracts which continue to be in effect with expiration dates ranging from December 31, 1996, to December 31, 2001. As of December 31, 1995, three of those contracts are subject to renegotiation of wage provisions only. Negotiations continue with one mechanical union whose contract expired on December 31, 1992. The Globe expects to conclude this negotiation successfully in 1996 as well. After its agreement with The Boston Globe Employees Association ("BGEA"), an affiliate of The Newspaper Guild, expired on December 31, 1994, The Globe reached an impasse in its negotiations with the BGEA in July 1995. Thereafter, The Globe implemented the terms of its final offer to the BGEA, although negotiations are continuing. Three other entities owned by the Company (The Press Democrat, WQXR and WQEW) also have collective bargaining agreements covering certain of their employees. ITEM 2. Properties. The Times: The Company owns its headquarters at 229 West 43d Street, New York, New York. The building has 15 stories and approximately 714,000 square feet of floor space and serves as a publishing facility for The Times. During late 1995, a renovation of The Times's newsroom commenced. The renovation is expected to be complete by 1999 and to cost approximately $30,000,000. The renovation is timed to give The Times the space and electrical infrastructure to fully paginate the newspaper by the end of 1996. The other publishing facility is located in Edison, New Jersey. This 1,300,000 square foot facility is occupied pursuant to a long-term lease with renewal and purchase options. The Edison production and distribution facility began producing newspapers in 1992, and produces all of the advance Sunday sections of The Times (except The New York Times Magazine and the Television section) and 10 approximately one-third of the weekday and Sunday New York edition. (See Notes 8 and 14 of Notes to Consolidated Financial Statements.) The Edison facility replaced an older production facility in Carlstadt, New Jersey. The Company completed removal of equipment from the facility and has commenced marketing of the Carlstadt facility for lease or sale. The Edison facility is the first step in a plan to modernize the production facilities of The Times. To complete its modernization plan, the Company expects to replace the production facility housed in the basement at its 43d Street facility in 1997. The Company is constructing a 515,000 square foot printing and distribution plant in College Point, Queens, to be operational in the second half of 1997. The Company is leasing a 31-acre site in College Point and has the option to purchase the property at any time prior to the end of the lease in 2019. Together with the Edison plant, the College Point facility will provide a number of benefits, including later deadlines, increased color in the daily paper, increased flexibility in paging and sectioning the paper and daily advertising inserts. (See Notes 8 and 14 of Notes to Consolidated Financial Statements.) The Globe owns its printing plants in Boston (652,000 square feet) and Billerica (290,000 square feet), Massachusetts, as well as its Sunday pre-print storage, inserting and packaging plant in Westwood, Massachusetts (115,000 square feet). The Globe and its subsidiaries own or lease office and other facilities that are suitable and adequate for their current activities. The Regional Newspapers own their printing facilities. The Company's Regional Newspapers, magazines, broadcast stations and information businesses own or lease office facilities that are suitable and adequate for their current activities. A new 180,000 square foot color printing facility is under construction at The Ledger in Lakeland, Florida, for an expected cost of approximately $70,000,000 and completion is expected by the end of 1996. ITEM 3. Legal Proceedings. There are various legal actions that have arisen in the ordinary course of business and are now pending against the Company. Such actions are usually for amounts greatly in excess of the payments, if any, that may be required to be made. It is the opinion of management after reviewing such actions with legal counsel to the Company that the ultimate liability which might result from such actions will not have a material adverse effect on the consolidated financial position or results of operations of the Company. ITEM 4. Submission Of Matters To A Vote Of Security Holders. Not applicable. Executive Officers Of The Registrant
Employed By Registrant Position(s) As Of Name Age Since March 11, 1996(1) - ---- --- ---------- ----------------- CORPORATE OFFICERS Arthur Ochs Sulzberger....... 70 1951 Chairman (since 1973); Chief Executive Officer; Director; Publisher of The New York Times ("The Times") (1963 to 1992) Lance R. Primis.............. 49 1969 President and Chief Operating Officer (since 1992); President and General Manager of The Times (1988 to 1992)
11
Employed By Registrant Position(s) As Of Name Age Since March 11, 1996(1) - ----------------------------- --- ---------- ----------------------------------------------- Diane P. Baker............... 41 1995 Senior Vice President and Chief Financial Officer (since 1995); Group Senior Vice President--Chief Financial Officer of R.H. Macy & Co., Inc. ("Macy's") (1993 to 1995); Senior Vice President--Finance and Chief Financial Officer of Macy's (1990 to 1993) Katharine P. Darrow.......... 52 1970 Senior Vice President (since 1993), Broadcasting, Corporate Development and Human Resources; Vice President (1988 to 1993), Broadcasting/Information Services and Corporate Development Michael Golden............... 46 1984 Vice President, Operations Development (since 1996); Executive Vice President and Publisher of Tennis (1994 to 1995); Executive Vice President and General Manager of Women's Magazines (1991 to 1994); Publisher of McCall's (1990-1991) David L. Gorham.............. 63 1974 Senior Vice President (since 1980) and Deputy Chief Operating Officer (since 1995); Chief Financial Officer (1980 to 1995); Treasurer (1988 to 1992) Leslie A. Mardenborough...... 46 1981 Vice President, Human Resources (since 1990) Thomas H. Nied............... 53 1977 Vice President, Taxation (since 1990) Stuart Stoller............... 40 1996 Vice President and Corporate Controller (since 1996); Controller of Coopers and Lybrand L.L.P. (1995); Senior Vice President--Control and Accounting of Macy's (1993 to 1995); Group Vice President--Control and Accounting of Macy's (1991 to 1993); Vice President--Corporate Accounting of Macy's (1989 to 1991) Solomon B. Watson IV......... 51 1974 Vice President (since 1990); General Counsel (since 1989) Laura J. Corwin.............. 50 1980 Secretary (since 1989) and Corporate Counsel (since 1993) Richard G. Thomas............ 47 1977 Treasurer (since 1992); Assistant Treasurer (1983 to 1992) OPERATING UNIT EXECUTIVES James W. FitzGerald.......... 57 1968 President, The New York Times Company Magazine Group, Inc. (since 1985) Stephen Golden............... 49 1974 Vice President, Forest Products, Health, Safety and Environmental Affairs (since 1992); President and General Manager of the Company's Forest Products Group (since 1994); Vice President, Forest Products (1990 to 1992) C. Frank Roberts............. 52 1970 Vice President, Broadcasting (since 1986) Arthur O. Sulzberger, Jr..... 44 1978 Publisher of The Times (since 1992); Deputy Publisher of The Times (1988 to 1992) William O. Taylor............ 63 1993 Publisher of The Boston Globe (since 1978) and Chairman and Chief Executive Officer of Globe Newspaper Company (since 1982) James C. Weeks............... 53 1971 President, Regional Newspaper Group of the Company (since 1993); Senior Vice President, Operations, Regional Newspaper Group (1988 to 1993)
- ------------ (1) During the past five years, all of the executive officers listed above have held positions which were the same or substantially similar to those they currently hold except as indicated above. 12 PART II ITEM 5. Market for the Registrant's Common Equity and Related Stockholder Matters. The information required by this item appears at page F-27 of this Form 10-K. ITEM 6. Selected Financial Data. The information required by this item appears at page F-1 of this Form 10-K. ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The information required by this item appears at pages F-4 to F-8 of this Form 10-K. ITEM 8. Financial Statements and Supplementary Data. The information required by this item appears at pages F-2, F-3, pages F-9 to F-26 and page F-28 of this Form 10-K. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable. PART III ITEM 10. Directors and Executive Officers of the Registrant. In addition to the information set forth under the caption "Executive Officers of the Registrant" in Part I of this Form 10-K, the information required by this item is incorporated by reference to the paragraph immediately following footnote 10 on page 6, pages 8 to 13 and the top of page 14, but only up to and not including the section entitled "Certain Information about the Board of Directors," of the Company's Proxy Statement for the 1996 Annual Meeting of Stockholders. ITEM 11. Executive Compensation. The information required by this item is incorporated by reference to pages 13 to 19 and the section on page 23 entitled "Compensation Committee Interlocks and Insider Participation" of the Company's Proxy Statement for the 1996 Annual Meeting of Stockholders. ITEM 12. Security Ownership of Certain Beneficial Owners and Management. The information required by this item is incorporated by reference to pages 1 to 8, but only up to and not including the section entitled "Proposal Number 1- Election of Directors," of the Company's Proxy Statement for the 1996 Annual Meeting of Stockholders. ITEM 13. Certain Relationships and Related Transactions. The information required by this item is incorporated by reference to page 13 and pages 16 to 19 of the Company's Proxy Statement for the 1996 Annual Meeting of Stockholders. 13 PART IV ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (A) Documents Filed As Part Of This Report (1) Financial Statements And Supplemental Schedules (a) The consolidated financial statements of the Company are filed as part of this Form 10-K and are set forth on pages F-2, F-3 and F-9 to F-26. The report of Deloitte & Touche LLP, Independent Public Accountants, dated February 7, 1996, is set forth on page F-27 of this Form 10-K. (b) The following additional consolidated financial information is filed as part of this Form 10-K and should be read in conjunction with the consolidated financial statements set forth on pages F-2, F-3 and F-9 to F-26. Schedules not included with this additional consolidated financial information have been omitted either because they are not applicable or because the required information is shown in the consolidated financial statements at the aforementioned pages. Page ---- Independent Auditors' Consent............................... Exhibit 23 Consolidated Schedules for the Three Years Ended December 31, 1995: II--Valuation and Qualifying Accounts.................. S-1 Separate financial statements and supplemental schedules of associated companies accounted for by the equity method are omitted in accordance with the provisions of Rule 3-09 of Regulation S-X. (2) Exhibits (2.1) Agreement and Plan of Merger dated as of June 11, 1993, as amended by the First Amendment dated as of August 12, 1993, by and among the Company, Sphere, Inc. and Affiliated Publications, Inc. (filed as Exhibit 2 to the Form S-4 Registration Statement, Registration No. 33-50043, on August 23, 1993, and included as Annex I to the Joint Proxy Statement/Prospectus included in such Registration Statement (schedules omitted--the Company agrees to furnish a copy of any schedule to the Commission upon request), and incorporated by reference herein). (2.2) Stockholders Agreement dated as of June 11, 1993, by and between the Company and the other parties signatory thereto (filed as Exhibit 2.1 to the Form S-4 Registration Statement, Registration No. 33-50043, on August 23, 1993, and included as Annex II to the Joint Proxy Statement/Prospectus included in such Registration Statement, and incorporated by reference herein). (3.1) Certificate of Incorporation as amended by the Class A and Class B stockholders and as restated on September 29, 1993 (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (3.2) By-laws as amended through February 16, 1995 (filed as an Exhibit to the Company's Form 10-Q dated May 11, 1995, and incorporated by reference herein). (4) The Company agrees to furnish to the Commission upon request a copy of any instrument with respect to long-term debt of the Company and any subsidiary for which consolidated or unconsolidated financial statements are required to be filed, and for which the amount of securities authorized thereunder does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. 14 (9.1) Globe Voting Trust Agreement, dated as of October 1, 1993, as amended effective October 1, 1995. (10.1) The Company's Executive Incentive Compensation Plan as amended through December 20, 1990 (filed as an Exhibit to the Company's Form 10-K dated March 1, 1991, and incorporated by reference herein). (10.2) The Company's 1991 Executive Stock Incentive Plan, as amended through April 18, 1995. (10.3) The Company's 1991 Executive Cash Bonus Plan, as amended through April 18, 1995. (10.4) The Company's Non-Employee Directors' Stock Option Plan, adopted on April 16, 1991 (filed as an Exhibit to the Company's Proxy Statement dated March 1, 1991, and incorporated by reference herein). (10.5) The Company's Supplemental Executive Retirement Plan, as amended and restated through January 1, 1993. (10.6) Lease (short form) between the Company and Z Edison Limited Partnership dated April 8, 1987 (filed as an Exhibit to the Company's Form 10-K dated March 27, 1988, and incorporated by reference herein). (10.7) Agreement of Lease, dated as of December 15, 1993, between The City of New York, Landlord, and the Company, Tenant (as successor to New York City Economic Development Corporation (the "EDC"), pursuant to an Assignment and Assumption of Lease With Consent, made as of December 15, 1993, between the EDC, as Assignor, to the Company, as Assignee) (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.8) Funding Agreement #1, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.9) Funding Agreement #2, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.10) Funding Agreement #3, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.11) Funding Agreement #4, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.12) New York City Public Utility Service Power Service Agreement, made as of May 3, 1993, between The City of New York, acting by and through its Public Utility Service, and The New York Times Newspaper Division of the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.13) Employment Agreement, dated May 19, 1993, between API, Globe Newspaper Company and William O. Taylor (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.14) API's 1989 Stock Option Plan (filed as Annex F-1 to API's Proxy Statement-Joint Prospectus, dated as of April 28, 1989, contained in API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). 15 (10.15) API's Supplemental Executive Retirement Plan, as amended effective September 15, 1993 (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.16) API's 1990 Stock Option Plan (Restated 1991) (filed as Exhibit 1 to API's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1991 (Commission File No. 1-10251), and incorporated by reference herein). (10.17) Form of Substituted Stock Option Agreement/Incentive 86 among API, its predecessor company and certain employees (filed as Exhibit 10.27 to Post-Effective Amendment No. 1 filed August 11, 1989, to API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). (10.18) Form of Substituted Stock Option Agreement/Incentive 87 among API, its predecessor company and certain employees (filed as Exhibit 10.29 to Post-Effective Amendment No. 1 filed August 11, 1989, to API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). (10.19) Form of Substituted Stock Option Agreement/Incentive 88 among API, its predecessor company and certain employees (filed as Exhibit 10.31 to Post-Effective Amendment No. 1 filed August 11, 1989, to API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). (10.20) The Company's Deferred Executive Compensation Plan, adopted on May 19, 1994. (21) Subsidiaries of the Company. (23) Consent of Deloitte & Touche LLP. (27) Financial Data Schedule. (B) REPORTS ON FORM 8-K On December 26, 1995, the Company filed a report on Form 8-K dated December 26, 1995, relating to the change in its fiscal year end from December 31 to the last Sunday in December, beginning with the fiscal year ending December 29, 1996. 16 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: March 11, 1996 (Registrant) THE NEW YORK TIMES COMPANY By: /s/ LAURA J. CORWIN ................................. Laura J. Corwin, Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. SIGNATURE TITLE DATE --------- ----- ---- ARTHUR OCHS SULZBERGER Chairman (Chief March 11, 1996 Executive Officer), Director JOHN F. AKERS Director March 11, 1996 DIANE P. BAKER Senior Vice President and March 11, 1996 Chief Financial Officer (Principal Financial Officer) RICHARD L. GELB Director March 11, 1996 LOUIS V. GERSTNER, JR. Director March 11, 1996 MARIAN S. HEISKELL Director March 11, 1996 A. LEON HIGGINBOTHAM, JR. Director March 11, 1996 RUTH S. HOLMBERG Director March 11, 1996 ROBERT A. LAWRENCE Director March 11, 1996 GEORGE B. MUNROE Director March 11, 1996 CHARLES H. PRICE II Director March 11, 1996 LANCE R. PRIMIS President (Chief Operating March 11, 1996 Officer) GEORGE L. SHINN Director March 11, 1996 DONALD M. STEWART Director March 11, 1996 STUART STOLLER Vice President, March 11, 1996 Corporate Controller (Principal Accounting Officer) JUDITH P. SULZBERGER Director March 11, 1996 WILLIAM O. TAYLOR Director March 11, 1996 CYRUS R. VANCE Director March 11, 1996 17 Appendix 1995 Financial Report THE NEW YORK TIMES COMPANY 1995 Consolidated Financial Statements - ------------------------------------------------------------------------------- Contents Page - ------------------------------------------------------------------------------- Financial Highlights F-1 Segment Information F-2 Management's Discussion and Analysis F-4 Consolidated Statements of Income F-9 Consolidated Balance Sheets F-10 Consolidated Statements of Cash Flows F-12 Consolidated Statements of Stockholders' Equity F-14 Notes to Consolidated Financial Statements F-15 Independent Auditors' Report F-27 Management's Responsibilities Report F-27 Market Information F-27 Quarterly Information F-28 Ten-Year Supplemental Financial Data F-29 FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------------------------- Dollars in thousands except per share data Year Ended December 31 1995 1994 1993 1992 1991 -------------------------------------------------------------------------------------------------------------------------------- REVENUES AND INCOME Revenues $ 2,409,403 $ 2,357,563 $ 2,019,654 $ 1,773,535 $ 1,703,101 Operating profit 228,580 211,242 126,581 88,408 93,639 Income before income taxes and equity in operations of forest products group 214,641 383,953 101,206 8,525 63,053 Income (Loss) before equity in operations of forest products group 121,809 210,085 57,975 (2,554) 41,293 Equity in operations of forest products group 14,051 3,264 (51,852) (8,718) 5,700 Income (Loss) before net cumulative effect of accounting changes 135,860 213,349 6,123 (11,272) 46,993 Net cumulative effect of accounting changes -- -- -- (33,437) -- Net income (loss) 135,860 213,349 6,123 (44,709) 46,993 - ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL POSITION Property, plant and equipment - net 1,276,066 1,158,751 1,112,024 902,755 966,593 Total assets 3,376,730 3,137,631 3,215,204 1,994,974 2,127,981 Long-term debt and capital lease obligations 637,873 523,196 460,063 206,911 213,487 Common stockholders' equity 1,610,349 1,543,539 1,598,883 999,630 1,073,442 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OF COMMON STOCK Income (Loss) before net cumulative effect of accounting changes 1.40 2.05 .07 (.14) .61 Net cumulative effect of accounting changes -- -- -- (.43) -- Net income (loss) 1.40 2.05 .07 (.57) .61 Dividends .56 .56 .56 .56 .56 Common stockholders' equity (end of year) 16.50 15.71 14.96 12.54 13.70 - ------------------------------------------------------------------------------------------------------------------------------------ KEY RATIOS (See notes below) Operating profit to revenues 9% 9% 6% 5% 5% Income before equity in operations of forest products group to revenues 5% 5% 3% 2% 2% Return on average stockholders' equity 8% 7% -- 2% 4% Return on average total assets 4% 3% -- 1% 2% Long-term debt and capital lease obligations to total capitalization 28% 25% 22% 17% 17% Current assets to current liabilities .89 .91 .89 1.08 .89 - ------------------------------------------------------------------------------------------------------------------------------------ EMPLOYEES 12,300 12,800 13,000 10,100 10,100 - ------------------------------------------------------------------------------------------------------------------------------------
In 1995, the Company sold small regional newspapers (see Note 2). The sales resulted in a pre-tax gain of approximately $11.3 million ($5.0 million after taxes or $.05 per share). These transactions are not reflected in the 1995 income amounts used in the applicable key ratio calculations presented above. In 1994, the Company sold its Women's Magazines Division and U.K. golf publications, and divested a minority interest in a Canadian paper mill ("Gaspesia") (see Note 2). As a result of these transactions, the Company recorded a net pre-tax gain of approximately $200.9 million ($103.3 million after taxes or $.99 per share). These transactions are not reflected in the 1994 income amounts used in the applicable key ratio calculations presented above. Amounts for 1995 through 1993 include The Boston Globe since its acquisition on October 1, 1993 (see Note 2). For 1993, return on average stockholders' equity and return on average total assets are less than 1 percent due to several factors which lowered net income for the year (see Management's Discussion and Analysis on page F-6). In 1992, the Company closed The Gwinnett (Ga.) Daily News and sold the residual assets. The closing and related sale resulted in a pre-tax loss of $53.8 million ($37.1 million after taxes or $.47 per share). Net cumulative effect of accounting changes reflects the 1992 adoption of the change in methods of accounting for income taxes, postretirement benefits other than pensions and postemployment benefits. The net cumulative effect and the Gwinnett transaction are not reflected in the 1992 income amounts used in the applicable key ratio calculations presented above. F-1 SEGMENT INFORMATION - -------------------------------------------------------------------------------- The Company has classified its business into the following segments and equity interests: NEWSPAPERS: The New York Times ("The Times"), The Boston Globe ("The Globe"), 21 regional newspapers, newspaper distributors, a one-half interest in the International Herald Tribune S.A., a news service, a features syndicate, TimesFax, licensing operations of The New York Times databases/microfilm and New Ventures. New Ventures include projects developed in electronic media by The Times and The Globe as well as various new media investments. MAGAZINES: Numerous publications and New Ventures such as computerized systems for golf tee time reservations and on-line magazine services, and related activities in the sports/leisure field. BROADCASTING: Six network-affiliated television stations and two radio stations. FOREST PRODUCTS: Equity interests in a newsprint company and a partnership in a supercalendered paper mill that together supply a portion of the Newspaper Group's annual paper requirements.
- ----------------------------------------------------------------------------------------- Dollars in thousands Year Ended December 31 1995 1994 1993 - ----------------------------------------------------------------------------------------- REVENUES Newspapers $ 2,161,356 $ 2,006,184 $ 1,563,281 Magazines 162,941 280,061 394,463 Broadcasting 85,106 71,318 61,910 - ----------------------------------------------------------------------------------------- Total $ 2,409,403 $ 2,357,563 $ 2,019,654 - ----------------------------------------------------------------------------------------- OPERATING PROFIT (LOSS) Newspapers $ 208,465 $ 207,489 $ 125,597 Magazines 28,741 19,204 12,330 Broadcasting 18,943 13,626 8,138 Unallocated corporate expenses (27,569) (29,077) (19,484) - ----------------------------------------------------------------------------------------- Total 228,580 211,242 126,581 Interest expense, net of interest income 25,230 28,162 25,375 Net gain on dispositions 11,291 200,873 -- - ----------------------------------------------------------------------------------------- Income before income taxes and equity in operations of forest products group 214,641 383,953 101,206 Income taxes 92,832 173,868 43,231 - ----------------------------------------------------------------------------------------- Income before equity in operations of forest products group 121,809 210,085 57,975 Equity in operations of forest products group 14,051 3,264 (51,852) - ----------------------------------------------------------------------------------------- NET INCOME $ 135,860 $ 213,349 $ 6,123 - -----------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-2 SEGMENT INFORMATION - ------------------------------------------------------------------------------- Dollars in thousands Year Ended December 31 1995 1994 1993 - ------------------------------------------------------------------------------- DEPRECIATION AND AMORTIZATION Newspapers $ 133,264 $ 135,767 $ 98,963 Magazines (7,000) 3,426 18,616 Broadcasting 11,519 10,113 10,725 Corporate 1,151 784 528 - ------------------------------------------------------------------------------- Total $ 138,934 $ 150,090 $ 128,832 - ------------------------------------------------------------------------------- CAPITAL EXPENDITURES Newspapers $ 196,096 $ 188,222 $ 71,780 Magazines 736 906 3,059 Broadcasting 4,093 3,013 3,289 Corporate 11,130 794 1,491 - ------------------------------------------------------------------------------- Total $ 212,055 $ 192,935 $ 79,619 - ------------------------------------------------------------------------------- IDENTIFIABLE ASSETS AT DECEMBER 31 Newspapers $ 2,832,297 $ 2,732,953 $ 2,685,611 Magazines 99,525 91,797 247,723 Broadcasting 174,363 100,874 104,843 Corporate 168,576 126,574 101,007 Investment in forest products group 101,969 85,433 76,020 - ------------------------------------------------------------------------------- Total $ 3,376,730 $ 3,137,631 $ 3,215,204 - ------------------------------------------------------------------------------- See notes to consolidated financial statements. Newspaper Group operating profit for 1995 and 1993 includes charges of $8.5 million and $35.4 million, respectively, for costs related to staff reductions. Unallocated corporate expenses for 1995 includes a charge of $1.6 million for similar staff reductions. Magazine Group amounts for 1994 have been affected by the dispositions of the Women's Magazines Division and the U.K. golf publications (see Note 2). The 1995 and 1994 amortization amounts include $10.0 million and $4.2 million, respectively, of the income relating to a $40.0 million non-compete agreement, associated with the disposition of the Women's Magazines Division, which is being recognized straight-line over four years. Newspaper Group amounts for 1995 and 1994 have been affected by the inclusion of The Globe's operations for the entire year, while the 1993 amounts only include its operations from the October 1, 1993 acquisition date (see Note 2). Equity in operations of Forest Products Group and investment in Forest Products Group for 1993 reflect an after-tax noncash charge of $47.0 million to write down the Company's investment in Gaspesia. F-3 MANAGEMENT'S DISCUSSION AND ANALYSIS - ------------------------------------------------------------------------------- Advertising and circulation revenues accounted for approximately 69 percent and 23 percent of the Company's revenues in 1995. National and local economic conditions influence the level of retail, national and classified advertising generated in the markets served by the Company's business segments. Circulation revenue is affected by competition from other forms of media available in the Company's respective markets. The cost of raw materials for the Company and the entire publishing industry was adversely affected by the significant increases in newsprint and magazine paper prices throughout 1995. The unfavorable impact of these increases is expected to continue during 1996. However, it its unclear whether paper prices will continue to rise in 1996. Per share amounts in the following Management's Discussion and Analysis are computed on an after-tax basis. RESULTS OF OPERATIONS: 1995 Compared with 1994 In 1995, the Company reported net income of $135.9 million, or $1.40 per share, compared with net income of $213.3 million, or $2.05 per share, in 1994. Exclusive of special factors as described below, annual earnings from ongoing operations would have been $1.41 per share in 1995, compared with $1.06 per share in 1994, an increase of 33 percent. The improvement in ongoing operations in 1995's annual earnings was primarily due to higher revenues from the Company's newspaper and broadcast properties and higher earnings from its Forest Products Group. Consolidated revenues for 1995 increased to $2.41 billion from $2.36 billion in 1994. Excluding the revenues attributable to the operations divested during 1995 and 1994, annual revenues on a comparable basis were up 8 percent over 1994. The growth in revenues for the year was driven by strong revenues at the newspaper and broadcast properties. The Company's costs and expenses, excluding special factors, increased to $2.17 billion from $2.15 billion in 1994. Excluding the costs and expenses associated with the 1995 and 1994 divestitures, costs increased approximately 9 percent. The increase was primarily due to higher newsprint and magazine paper prices and higher wages and benefits costs throughout the Company. The Company's earnings for the year before interest, income taxes, depreciation and amortization ("EBITDA"), excluding the net gains from the 1995 and 1994 divestitures, rose to $367.5 million from $361.3 million in the comparable 1994 period. Earnings for 1995 were affected by the following special factors: - $10.1 million pre-tax charge ($.06 per share) for severance and related costs resulting from work force reductions ("buyouts"). - $11.3 million pre-tax gain ($.05 per share) on the sales of small regional newspapers. Earnings for 1994 were affected by the following special factor: - $200.9 million net pre-tax gain ($.99 per share) relating to the divestitures of the Women's Magazines Division, U.K. golf publications and a minority interest in Gaspesia Pulp & Paper Company Ltd. ("Gaspesia"), a Canadian newsprint mill. Annual per share amounts were affected by the repurchase of the Company's Class A Common Stock throughout 1994 and 1995. During 1995, $46.3 million was expended to repurchase approximately 2.1 million shares. In 1994, approximately $235.2 million was expended to repurchase 10.0 million shares. Interest expense, net of interest income, declined to $25.2 million from $28.2 million in 1994. The 1995 decline was due to higher levels of capitalized interest in connection with new construction and a lower rate of interest on the Company's outstanding debt, offset by higher debt balances. Exclusive of taxes related to the 1995 and the 1994 divestitures, the annual effective income tax rate for 1995 was 42.5 percent compared with 41.7 percent in 1994. The 1995 tax rate includes the effects of a 1995 favorable state tax ruling. The 1994 rate includes the utilization of capital loss carryforwards. The following discussion provides additional information with respect to the Company's traditional operations and new ventures. - -------------------------------------------------------------------------------- NEWSPAPER GROUP: The table below shows the Newspaper Group's revenues, EBITDA and operating profit split between newspapers/related businesses and new ventures. The Newspapers category consists of: The New York Times ("The Times"), The Boston Globe ("The Globe"), 21 Regional Newspapers, newspaper distributors, a 50 percent interest in the International Herald Tribune, and Information Services (previously included in the Broadcasting Group) which includes a news service, a features syndicate, TimesFax and licensing operations of The New York Times databases and microfilm. The New Ventures category consists of new projects developed in electronic media by The Times and The Globe as well as various new media investments such as Video News International and The Popcorn Channel. (Dollars in thousands) 1995 1994 - ------------------------------------------------------------------ REVENUES Newspapers $2,160,399 $2,006,184 New Ventures 957 - - ------------------------------------------------------------------ Total Revenues $2,161,356 $2,006,184 - ------------------------------------------------------------------ EBITDA Newspapers $ 354,415 $ 343,256 New Ventures (12,686) - - ------------------------------------------------------------------ Total EBITDA $ 341,729 $ 343,256 - ------------------------------------------------------------------ OPERATING PROFIT (LOSS) Newspapers $ 221,566 $ 207,489 New Ventures (13,101) - - ------------------------------------------------------------------ Total Operating Profit $ 208,465 $ 207,489 - ------------------------------------------------------------------ F-4 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) - -------------------------------------------------------------------------------- Excluding buyouts associated with the Group, operating profit in 1995 was $217.0 million compared with $207.5 million in 1994. Revenues increased to $2.16 billion in 1995 from $2.01 billion in the prior year. Operating profit improved despite a significant increase in newsprint prices over 1994. Increased advertising and circulation rates and cost controls enabled the Group to overcome a $76.2 million increase for the year in newsprint costs (net of conservation programs). Revenues increased approximately 8 percent for the year. The increase was attributable to higher advertising rates and volume, higher circulation revenues and database royalties. The Times experienced a 15 percent gain in circulation revenues while The Globe recorded an 11 percent increase for the year. At the 21 Regional Newspapers, circulation revenue grew 7 percent for the year. Average circulation on a comparable basis for the year was as follows: Weekday Sunday - ------------------------------------------------------------------ (Copies in thousands) 1995 % Change 1995 % Change - ------------------------------------------------------------------ AVERAGE CIRCULATION The New York Times 1,120.7 -1.9 1,712.6 -1.8 The Boston Globe 497.7 -1.3 789.3 -1.9 Regional Newspapers 753.7 -2.3 803.9 -1.6 - ------------------------------------------------------------------ The average circulation decline is partly attributable to the increase in newsstand and home delivery prices and a decrease in distribution to selected outlying areas. Advertising volume on a comparable basis for the year was as follows: - ------------------------------------------------------------------ (Inches in thousands) 1995 % Change - ------------------------------------------------------------------ ADVERTISING VOLUME (EXCLUDING PREPRINTS) The New York Times 3,831.2 +2.6 The Boston Globe 2,946.9 +2.2 Regional Newspapers 15,525.1 +1.1 - ------------------------------------------------------------------ Advertising volume at The Times increased 2.6 percent over 1994. Zoned and national advertising categories increased 14.6 percent and 1.3 percent, respectively, while retail and classified advertising experienced decreases of 3.8 percent and 2.8 percent, respectively. At The Globe, advertising volume for the year increased 2.2 percent over 1994. Advertising increased in all categories except retail, which declined 2.1 percent. Advertising volume for the 21 Regional Newspapers increased 1.1 percent over 1994. Classified advertising increased 8.0 percent, while the retail category decreased 2.1 percent. MAGAZINE GROUP: The Magazine Group is comprised of a number of publications, New Ventures such as computerized systems for golf tee time reservations and on-line magazine services, and related activities in the sports/leisure field. The revenues for the Group include a $40.0 million non-compete agreement, associated with the divestiture of the Women's Magazine Division, which is being recognized straight-line over four years. - ------------------------------------------------------------------ (Dollars in thousands) 1995 1994 - ------------------------------------------------------------------ REVENUES Sports/Leisure Magazines $152,819 $144,777 New Ventures 122 - Non-Compete 10,000 4,167 1994 Divested Magazines - 131,117 - ------------------------------------------------------------------ Total Revenues $162,941 $280,061 - ------------------------------------------------------------------ EBITDA Sports/Leisure Magazines $ 22,876 $ 21,611 New Ventures (1,135) - 1994 Divested Magazines - 1,019 - ------------------------------------------------------------------ Total EBITDA $ 21,741 $ 22,630 - ------------------------------------------------------------------ OPERATING PROFIT (LOSS) Sports/Leisure Magazines $ 19,971 $ 19,439 New Ventures (1,230) - Non-Compete 10,000 4,167 1994 Divested Magazines - (4,402) - ------------------------------------------------------------------ Total Operating Profit $ 28,741 $ 19,204 - ------------------------------------------------------------------ Operating profit for the Group was $28.7 million in 1995, compared with $19.2 million in 1994, on revenues of $162.9 million and $280.1 million, respectively. The decrease in revenues for the year was primarily due to the revenues attributable to the Women's Magazines Division and the U.K. golf publications, which were sold in the third quarter of 1994. Excluding the operations of the 1994 divested magazines and the non-compete income, revenues for 1995 increased approximately 6 percent due to higher advertising revenues at Golf Digest and Golf World USA offset, in part, by sluggish advertising at Tennis magazine. Operating profit for the Sports/Leisure Magazines increased slightly due to improved revenues offset by higher paper prices and subscription costs. Advertising pages as reported to Publisher's Information Bureau ("PIB") for Golf Digest decreased 1.3 percent to 1,304 pages and for Tennis decreased 12.9 percent to 717 pages. THE BROADCASTING GROUP: The Broadcasting Group consists of six network- affiliated television stations and two radio stations. (Dollars in thousands) 1995 1994 - ------------------------------------------------------------------ Revenues $85,106 $71,318 - ------------------------------------------------------------------ EBITDA $30,462 $23,739 - ------------------------------------------------------------------ Operating Profit $18,943 $13,626 - ------------------------------------------------------------------ The Broadcasting Group's operating profit increased 39 percent over 1994. The Group's operating profit was $18.9 million in 1995, compared with $13.6 million in 1994, on revenues of $85.1 million and $71.3 million, respectively. Increased results for the year were due to higher local advertising revenues, higher network compensation and the added operations of WTKR-TV, Norfolk, Va., which was acquired in June 1995. FOREST PRODUCTS GROUP: Equity in operations of the Forest Products Group (an after-tax amount) was $14.1 million in 1995 compared with $3.3 million in 1994. The 1995 improvement resulted principally from higher paper sales prices. F-5 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) - -------------------------------------------------------------------------------- RESULTS OF OPERATIONS: 1994 COMPARED WITH 1993 In 1994, the Company reported net income of $213.3 million, or $2.05 per share, compared with $6.1 million, or $.07 per share, in 1993. Exclusive of the special factors described below, annual earnings would have been $1.06 per share in 1994 compared with $.91 per share in 1993. Operating profit for 1994, after excluding the special factors, rose to $211.2 million from $163.1 million in 1993. The improvement in ongoing operations in 1994's annual earnings was due to higher revenues at The Times, Regional Newspapers and Broadcasting and the inclusion of The Globe's operations for the entire year compared with one quarter in 1993. Revenues for 1994 increased to $2.36 billion from $2.02 billion in 1993. The 1994 annual revenues included The Globe for an entire year, but the Women's Magazines and U.K. golf publications only through the first six months. Annual revenues for 1993 included an entire year of revenues from the magazines sold in 1994, but only the fourth-quarter revenues from The Globe. On a comparable basis, excluding revenues attributable to The Globe and the magazines sold, 1994 annual revenues increased by approximately 6 percent over 1993. The growth in 1994 revenues was due to higher revenues in the Newspaper and Broadcasting Groups. The Company's costs and expenses after excluding special factors increased to $2.15 billion from $1.86 billion in 1993. The increase was due to the inclusion of The Globe's operations and acquisition amortization expense for the entire year, as well as higher wages and benefits costs throughout the Company offset, in part, by the reduction in expenses associated with the magazines sold. Earnings for 1994 were affected by the following special factor: - $200.9 million net pre-tax gain ($.99 per share) relating to the divestitures of the Women's Magazines Division, U.K. golf publications and a minority interest in Gaspesia. Earnings for 1993 were affected by the following special factors: - $47.0 million after-tax charge ($.56 per share) against equity in operations of the Forest Products Group to write down the Company's investment in Gaspesia. - $35.4 million pre-tax charges ($.23 per share) for severance and related costs resulting from staff reductions at The Times. - $4.4 million unfavorable tax adjustment ($.05 per share) due to a federal corporate income tax rate increase which required the remeasurement of deferred tax balances. - $3.7 million pre-tax costs ($.02 per share) due to a severe snowstorm that disrupted delivery of The Times. - $2.6 million pre-tax gain ($.02 per share) on the sale of assets. Excluding the net gain from the dispositions, EBITDA rose significantly to $361.3 million in 1994 from $255.4 million in 1993. The increase was due to improved operating results and the inclusion of The Globe's operations for an entire year in 1994. Interest expense, net of interest income, rose to $28.2 million in 1994 from $25.4 million in 1993. The increase was a result of higher borrowings in connection with stock repurchases and the October 1993 acquisition of The Globe. Exclusive of the taxes related to the 1994 magazine sales and the disposition of Gaspesia, the Company's effective income tax rate for 1994 was 41.7 percent compared with 42.7 percent in 1993. The rates in both years reflect the utilization of capital tax loss carryforwards. A discussion of the Company's financial performance follows: NEWSPAPER GROUP: (Dollars in thousands) 1994 1993 - ------------------------------------------------------------------ Revenues $2,006,184 $1,563,281 - ------------------------------------------------------------------ EBITDA $ 343,256 $ 224,560 - ------------------------------------------------------------------ Operating Profit $ 207,489 $ 125,597 - ------------------------------------------------------------------ Operating profit of the Newspaper Group, adjusted for special factors, in 1994 was $207.5 million compared with $162.1 million in 1993. Revenues increased to $2.01 billion in 1994 from $1.56 billion in the prior year. The improvements in 1994 revenues and operating profit were due to a combination of higher advertising and circulation rates, increased advertising volume, and the inclusion of the operations of The Globe for an entire year. The Group was affected by higher newsprint prices in the fourth quarter of 1994, as a result of increased demand for newsprint in the market. These prices increased in 1995. Average circulation for 1994 throughout the Newspaper Group was adversely affected by newsstand and home delivery price increases. Average circulation on a comparable basis for the year was as follows: Weekday Sunday - ------------------------------------------------------------------ (Copies in thousands) 1994 % Change 1994 % Change - ------------------------------------------------------------------ AVERAGE CIRCULATION The New York Times 1,142.8 -3.1 1,743.9 -2.1 The Boston Globe 504.5 - 804.8 -1.2 Regional Newspapers 843.5 -0.9 851.4 -0.3 Advertising volume on a comparable basis for the year was as follows: - ------------------------------------------------------------------ (Inches in thousands) 1994 % Change - ------------------------------------------------------------------ ADVERTISING VOLUME (EXCLUDING PREPRINTS) The New York Times 3,733.6 +3.5 The Boston Globe 2,884.2 +5.3 Regional Newspapers 17,086.8 +4.3 - ------------------------------------------------------------------ Advertising volume at The Times increased 3.5 percent. National, classified and zoned advertising categories experienced increases of 2.1 percent, 4.1 percent and 8.3 percent, respectively. However, retail advertising decreased by 1.1 percent. At The Globe, advertising volume for the year 1994 increased 5.3 percent over 1993. Advertising increased in all categories, especially classified which was up 8.6 percent over 1993. F-6 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED) - -------------------------------------------------------------------------------- At the 28 regional newspapers that were in the Group for the entire 1994 and 1993 periods (two weekly newspapers were sold at the end of 1993), advertising volume increased 4.3 percent. Advertising increased in all categories over 1993. MAGAZINE GROUP: (Dollars in thousands) 1994 1993 - ------------------------------------------------------------------ REVENUES Sports/Leisure Magazines $144,777 $146,306 Non-Compete 4,167 - 1994 Divested Magazines 131,117 $248,157 - ------------------------------------------------------------------ Total Revenues $280,061 $394,463 - ------------------------------------------------------------------ EBITDA Sports/Leisure Magazines $ 21,611 $ 26,364 1994 Divested Magazines 1,019 4,582 - ------------------------------------------------------------------ Total EBITDA $ 22,630 $ 30,946 - ------------------------------------------------------------------ OPERATING PROFIT (LOSS) Sports/Leisure Magazines $ 19,439 $ 22,780 Non-Compete 4,167 - 1994 Divested Magazines (4,402) (10,450) - ------------------------------------------------------------------ Total Operating Profit $ 19,204 $ 12,330 - ------------------------------------------------------------------ Operating profit for the Magazine Group was $19.2 million in 1994, compared with $12.3 million in 1993, on revenues of $280.1 million and $394.5 million, respectively. The decrease in revenues for the year was primarily due to the lack of revenues attributable to the Women's Magazines Division and the U.K. golf publications, which were sold in the third quarter of 1994. In connection with the sale of the Women's Magazines Division, the Company entered into a four-year non-compete agreement for which it received $40.0 million. This amount is being recognized as income, on a straight-line basis, over a four- year period commencing with the closing of the sale on July 26, 1994. The 1994 revenues for the Group included $4.2 million relating to this agreement. Excluding the 1993 and 1994 operations of the Women's Magazines Division, the U.K. golf publications and the non-compete income arising from the Women's sale in 1994, both the revenues and the operating profit of the Sports/Leisure Magazines for 1994 were down from the comparable period in 1993. This was due primarily to softness in advertising at Golf Digest and Tennis magazines and higher subscription promotion costs. Advertising pages as reported to Publisher's Information Bureau for Golf Digest decreased 2 percent from 1993 to 1,321 pages and for Tennis increased 4 percent from 1993 to 823 pages. BROADCASTING GROUP: (Dollars in thousands) 1994 1993 - ------------------------------------------------------------------ Revenues $71,318 $61,910 - ------------------------------------------------------------------ EBITDA $23,739 $18,863 - ------------------------------------------------------------------ Operating Profit $13,626 $ 8,138 - ------------------------------------------------------------------ The Broadcasting Group's operating profit was $13.6 million in 1994, compared with $8.1 million in 1993 on revenues of $71.3 million and $61.9 million, respectively. Higher national and local advertising revenues at the television stations accounted for the improved operating results. FOREST PRODUCTS GROUP: Equity in operations of the Forest Products Group (an after-tax amount) was $3.3 million in 1994, compared with a loss of $4.9 million in 1993, when adjusted for the Gaspesia write-down. The 1994 improvements resulted from the Company no longer needing to record its share of operating losses for Gaspesia as a result of the 1993 write-down. In addition, higher sales prices improved the Group's operating results during the second half of the year and this favorable trend continued into 1995. - -------------------------------------------------------------------------------- LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities in 1995 of $295.2 million and the incremental proceeds from the debt offering (see below) were used primarily to modernize facilities and equipment, to fund acquisitions, to pay dividends to stockholders and to repurchase shares of the Company's Class A Common Stock. The ratio of current assets to current liabilities was .89 at December 31, 1995, compared with .91 at December 31, 1994, and long-term debt and capital lease obligations as a percentage of total capitalization was 28 percent at December 31, 1995, compared with 25 percent at December 31, 1994. FINANCING: In March 1995, the Company completed a public offering of $400.0 million of unsecured notes and debentures. The offering consisted of ten-year notes aggregating $250.0 million maturing March 15, 2005 at an annual rate of 7.625% (the "Notes") and 30-year debentures aggregating $150.0 million maturing March 15, 2025 at an annual rate of 8.25% (the "Debentures"), (collectively referred to herein as the "Offering"). The Debentures are callable after ten years. Interest is payable semi-annually on March 15 and September 15 on both the Notes and the Debentures. The net proceeds from the Offering were used to repay the principal balance of the $162.3 million 11.85% Notes due March 31, 1995, $50.0 million of 9.34% Notes due July 15, 1995 and indebtedness outstanding under the Company's commercial paper program. The remaining net proceeds were used for general corporate purposes. Accordingly, at December 31, 1994, the 11.85% Notes due March 31, 1995, the 9.34% Notes due July 15, 1995 and the amounts outstanding under the Company's commercial paper facility were classified as long-term debt as they were expected to be refinanced on a long-term basis under the Offering. The Company has established a $200.0 million commercial paper program, which is supported by the Company's revolving credit and term loan agreements. Borrowings are in the form of F-7 MANAGEMENT'S DISCUSSION AND ANALYSIS (CONCLUDED) - ------------------------------------------------------------------------------- unsecured notes sold at a discount with maturities ranging up to 270 days. There were no borrowings outstanding under the commercial paper program at December 31, 1995. In addition to the commercial paper program, the Company has several established sources for future liquidity purposes, including several revolving credit and term loan agreements. At December 31, 1995, $170.0 million was available for borrowing by the Company under these agreements. In connection with the divestiture of a jointly-owned affiliate, Spruce Falls Power and Paper Company Limited, the Company has fulfilled its commitment to lend $26.5 million in 1994 to the new owners of the mill. Under the terms of the loan, the five-year repayment period is not scheduled to commence until December 1997. The Company expects the former affiliate to fulfill its contractual obligation as stipulated in the loan agreement. At December 31, 1995, approximately $17.5 million remains from charges associated with staff reductions. The remaining cash outflows associated with these charges are expected to occur over the next three years as a result of the timing of certain union pension and welfare fund contributions. The Company does not anticipate that its ongoing business operations will be affected by this reduction of staff and expects to fund these charges through internally-generated funds. STOCK REPURCHASE PROGRAM: During the first quarter of 1995, the Company spent the remainder of the $100.0 million authorized pursuant to a stock repurchase program announced in October 1994. In February 1995, the Board of Directors authorized expenditures of up to an additional $50.0 million. Under the program, purchases may be made from time to time either in the open market or through private transactions. The number of shares that may be purchased in market transactions may be limited as a result of The Globe transaction. Purchases may be suspended from time to time or discontinued. In 1995, $46.3 million was expended under the two programs to repurchase approximately 2.1 million shares. To date, approximately $18.0 million remains from the 1995 authorization. CAPITAL EXPENDITURES: In July 1994, the Company's Board of Directors approved the construction of a new production and distribution facility in College Point, New York, for the production of The Times. The Company estimates that the cost of the new facility will be approximately $315.0 million, exclusive of capitalized interest currently projected to be $35.0 million. Construction began in August 1994 and completion is expected in the middle of 1997. While the new facility will replace The Times's Manhattan production and distribution facility, business and news operations will remain at the Manhattan building. No write-down is anticipated as a result of the discontinuance of production at the Manhattan facility. The Company currently estimates that, inclusive of the College Point facility, capital expenditures for 1996 will range from $275.0 million to $325.0 million. The Company believes that cash generated from its operations and the availability of funds from external sources should be adequate to cover planned capital expenditures, dividend payments to stockholders and other cash requirements. NEW ACCOUNTING PRONOUNCEMENTS: In March 1995, the Financial Accounting Standards Board ("FASB"), issued Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for Impairment of Long-Lived Assets ("SFAS 121"). SFAS 121 will require a review for impairment of long-lived assets and certain identifiable intangible assets to be held and used, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This statement is effective for the Company's 1996 financial statements. The Company does not believe operating results will be materially affected upon the adoption of SFAS 121. In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). This statement is effective for the Company's 1996 financial statements. SFAS 123 encourages companies to account for stock compensation awards based on their fair value at the date they are granted. The resulting compensation cost would be shown as an expense on the income statement. Companies choosing not to apply the new accounting method are permitted to continue following current accounting requirements, however, they will be required to disclose in the notes to the financial statements the effect on net income and earnings per share had the new accounting method been applied. The Company anticipates that it will continue to apply current accounting requirements upon adoption of this standard. F-8
CONSOLIDATED STATEMENTS OF INCOME - -------------------------------------------------------------------------------------- Dollars and shares in thousands except per share data Year Ended December 31 1995 1994 1993 - --------------------------------------------------------------------------------------- REVENUES Advertising $ 1,672,598 $ 1,656,999 $ 1,399,042 Circulation 551,985 545,854 473,971 Other 184,820 154,710 146,641 - --------------------------------------------------------------------------------------- Total 2,409,403 2,357,563 2,019,654 - --------------------------------------------------------------------------------------- COSTS AND EXPENSES Production costs Raw materials 368,152 304,360 280,531 Wages and benefits 537,159 529,701 437,528 Other 399,107 428,663 418,554 - --------------------------------------------------------------------------------------- Total 1,304,418 1,262,724 1,136,613 Selling, general and administrative expenses 876,405 883,597 756,460 - --------------------------------------------------------------------------------------- Total 2,180,823 2,146,321 1,893,073 - --------------------------------------------------------------------------------------- OPERATING PROFIT 228,580 211,242 126,581 Interest expense, net of interest income 25,230 28,162 25,375 Net gain on dispositions 11,291 200,873 -- - --------------------------------------------------------------------------------------- Income before income taxes and equity in operations of forest products group 214,641 383,953 101,206 Income taxes 92,832 173,868 43,231 - --------------------------------------------------------------------------------------- Income before equity in operations of forest products group 121,809 210,085 57,975 Equity in operations of forest products group 14,051 3,264 (51,852) - --------------------------------------------------------------------------------------- NET INCOME $ 135,860 $ 213,349 $ 6,123 - --------------------------------------------------------------------------------------- Average number of common shares outstanding 96,854 104,070 84,459 - --------------------------------------------------------------------------------------- Per share of common stock Net income $ 1.40 $ 2.05 $ .07 Dividends .56 .56 .56 - ---------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-9 CONSOLIDATED BALANCE SHEETS - -------------------------------------------------------------------------------- December 31 1995 1994 - -------------------------------------------------------------------------------- ASSETS Dollars in thousands - -------------------------------------------------------------------------------- CURRENT ASSETS Cash and short-term investments (at cost which approximates market: 1995, $56,891,000; 1994, $14,255,000) $ 91,442 $ 41,419 Accounts receivable (net of allowances: 1995, $25,865,000; 1994, $28,157,000) 277,974 247,750 Inventories 42,844 30,545 Deferred subscription costs 10,333 10,659 Other current assets 40,042 81,401 - -------------------------------------------------------------------------------- Total current assets 462,635 411,774 - -------------------------------------------------------------------------------- INVESTMENT IN FOREST PRODUCTS GROUP 101,969 85,433 - -------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT (at cost) Land 65,188 62,945 Buildings, building equipment and improvements 649,131 629,152 Equipment 956,890 908,630 Construction and equipment installations in progress 345,721 218,041 - -------------------------------------------------------------------------------- Total 2,016,930 1,818,768 Less accumulated depreciation 740,864 660,017 - -------------------------------------------------------------------------------- Total property, plant and equipment - net 1,276,066 1,158,751 - -------------------------------------------------------------------------------- INTANGIBLE ASSETS ACQUIRED Costs in excess of net assets acquired 1,383,687 1,391,250 Other intangible assets acquired 218,646 160,747 - -------------------------------------------------------------------------------- Total 1,602,333 1,551,997 Less accumulated amortization 207,489 172,531 - -------------------------------------------------------------------------------- Total intangible assets acquired - net 1,394,844 1,379,466 - -------------------------------------------------------------------------------- MISCELLANEOUS ASSETS 141,216 102,207 - -------------------------------------------------------------------------------- Total $3,376,730 $3,137,631 - -------------------------------------------------------------------------------- See notes to consolidated financial statements. F-10
- ---------------------------------------------------------------------------------------------------------------------- December 31 1995 1994 - ----------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Dollars in thousands - ----------------------------------------------------------------------------------------------------------------------- CURRENT LIABILITIES Accounts payable $ 156,722 $ 121,504 Accrued payroll 74,560 67,012 Accrued expenses 200,576 182,338 Unexpired subscriptions 81,919 77,697 Current portion of capital lease obligations 3,139 2,681 - ----------------------------------------------------------------------------------------------------------------------- Total current liabilities 516,916 451,232 - ----------------------------------------------------------------------------------------------------------------------- OTHER LIABILITIES Long-term debt 589,193 473,530 Capital lease obligations 48,680 49,666 Deferred income taxes 168,715 176,588 Other 441,124 441,323 - ----------------------------------------------------------------------------------------------------------------------- Total other liabilities 1,247,712 1,141,107 - ----------------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY 5 1/2 percent cumulative prior preference stock of $100 par value - authorized 110,000 shares; outstanding: 1995 and 1994, 17,530 shares 1,753 1,753 Serial preferred stock of $1 par value - authorized 200,000 shares - none issued -- -- Common stock of $.10 par value Class A - authorized 200,000,000 shares; issued: 1995, 108,950,897 shares; 1994, 108,052,347 shares (including treasury shares: 1995, 11,775,295; 1994, 10,242,381) 10,895 10,805 Class B, convertible - authorized 600,000 shares; issued: 1995, 568,919 shares; 1994, 570,121 (including treasury shares: 1995 and 1994, 139,943) 57 57 Additional capital 618,570 597,860 Earnings reinvested in the business 1,262,022 1,179,715 Common stock held in treasury, at cost (281,195) (244,898) - ----------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 1,612,102 1,545,292 - ----------------------------------------------------------------------------------------------------------------------- Total $ 3,376,730 $ 3,137,631 - -----------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-11 CONSOLIDATED STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------------------------------- Dollars in thousands Year Ended December 31 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------------- CASH PROVIDED (USED): OPERATING ACTIVITIES Net income $ 135,860 $ 213,349 $ 6,123 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 102,271 104,624 89,274 Amortization - net 36,663 45,466 39,558 Equity in operations of forest products group - net (20,064) (3,240) 52,311 Cash distributions and dividends from forest products group 4,330 8,224 -- Net gain on dispositions (11,291) (200,873) -- Proceeds from non-compete agreement -- 40,000 -- Deferred income taxes (9,225) (33,732) (37,901) Increase in receivables - net (32,762) (18,573) (21,636) (Increase) Decrease in inventories (12,723) (4,035) 10,799 Decrease (Increase) in deferred subscription costs and other current assets 51,939 (17,820) 4,749 Increase (Decrease) in accounts payable 28,200 17,481 (41,429) Increase (Decrease) in accrued payroll and accrued expenses 45,275 (6,359) 64,823 Increase in unexpired subscriptions 4,832 18,027 11,196 Other - net (28,140) 19,046 15,491 - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 295,165 181,585 193,358 - ---------------------------------------------------------------------------------------------------------------------- INVESTING ACTIVITIES Net proceeds from sale of BPI Communications, L.P. -- 55,367 -- Net proceeds from dispositions 27,536 243,776 -- Businesses acquired, net of cash acquired (71,214) -- (134,384) Additions to property, plant and equipment (200,688) (186,203) (75,738) Purchases of marketable securities (39,370) (88,358) (65,077) Proceeds from sales of marketable securities 39,370 88,358 65,077 Other investing proceeds 8,610 7,725 944 Other investing payments (17,873) (8,505) (16,986) - ---------------------------------------------------------------------------------------------------------------------- Net cash (used in) provided by investing activities (253,629) 112,160 (226,164) - ---------------------------------------------------------------------------------------------------------------------- FINANCING ACTIVITIES Short-term borrowing - net -- (1,935) 62,340 Long-term obligations Increase 400,000 -- 200,000 Reduction (278,244) (5,113) (5,510) Capital shares Issuance 1,908 2,577 1,829 Repurchase (49,987) (232,815) (255,222) Dividends paid to stockholders (54,291) (58,287) (47,076) Other financing (payments) proceeds (10,899) 1,189 -- - ---------------------------------------------------------------------------------------------------------------------- Net cash provided by (used in) financing activities 8,487 (294,384) (43,639) - ---------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in Cash and short-term investments 50,023 (639) (76,445) Cash and short-term investments at the beginning of the year 41,419 42,058 118,503 - ---------------------------------------------------------------------------------------------------------------------- Cash and short-term investments at the end of the year $ 91,442 $ 41,419 $ 42,058 - ----------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements and supplemental disclosures to consolidated statements of cash flows. F-12 SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS - ------------------------------------------------------------------------------------------
Dollars in thousands Year Ended December 31 1995 1994 1993 - ------------------------------------------------------------------------------------------ NONCASH INVESTING AND FINANCING TRANSACTIONS Capital lease assets and obligations incurred $ 2,495 $ 5,990 $ 338 ========== =========== =========== Businesses acquired Fair value of assets acquired 72,610 1,257,029 Liabilities assumed (1,396) (229,000) Liabilities incurred, net of payments -- (18,744) Common stock issued -- (874,901) ---------- ----------- Net cash paid $ 71,214 $ 134,384 ========== =========== Issuance of common shares $ 20,569 $ 21,723 $ 18,188 ========== =========== =========== CASH FLOW INFORMATION Cash payments during the year for Interest (net of amount capitalized) $ 29,277 $ 36,320 $ 26,861 ========== =========== =========== Income taxes $ 86,851 $ 220,973 $ 55,327 ========== =========== =========== ----------------------------------------------------------------------------------------
For 1994, the increase in income taxes paid (and corresponding decrease in net cash provided by operating activities) is in large part due to an increase in estimated income tax payments of approximately $113,500,000 related to the net gain on dispositions in 1994. Under Statement of Financial Accounting Standards No. 95, "Statement of Cash Flows," all income tax payments are included in determining net cash flow from operating activities, but the net cash proceeds received from the dispositions are reported as an investing cash inflow. F-13 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------- Dollars in thousands except per share data Capital Stock -------------------------------------- Common 5 1/2 % Class A Class B Earnings Stock Preference Common Common Reinvested Held in -------------------------------------- Additional in the Treasury, Capital Business at cost - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE, JANUARY 1, 1993 $1,784 $8,805 $57 $164,928 $1,065,347 $(239,507) - ---------------------------------------------------------------------------------------------------------------------------------- Net income 6,123 - ---------------------------------------------------------------------------------------------------------------------------------- Dividends, preference - $5.50 per share (98) Dividends, common - $.56 per share (47,003) - ---------------------------------------------------------------------------------------------------------------------------------- Issuance of shares: The Globe acquisition - 36,397,313 Class A shares 1,940 432,624 440,337 Retirement units, etc. - 10,877 Class A shares from treasury 123 339 Employee stock purchase plan - 819,166 Class A shares (2,612) 20,329 Stock options - 185,611 Class A shares 23 4,695 (934) Stock conversions - 180 shares - - - ---------------------------------------------------------------------------------------------------------------------------------- Purchase of company stock: 10,260,900 Class A shares (255,222) - ---------------------------------------------------------------------------------------------------------------------------------- Foreign currency translation (1,411) - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1993 1,784 10,768 57 599,758 1,022,958 (34,658) - ---------------------------------------------------------------------------------------------------------------------------------- Net income 213,349 - ---------------------------------------------------------------------------------------------------------------------------------- Dividends, preference - $5.50 per share (97) Dividends, common - $.56 per share (58,190) - ---------------------------------------------------------------------------------------------------------------------------------- Issuance of shares: Retirement units, etc. - 10,889 Class A shares from treasury (128) 271 Employee stock purchase plan - 1,191,323 Class A shares 2 (7,237) 29,119 Stock options - 223,700 Class A shares 35 6,928 (3,385) Stock conversions - 1,503 shares - - - ---------------------------------------------------------------------------------------------------------------------------------- Purchase of company stock: 10,043,900 Class A shares (236,245) 307 5 1/2 percent preference shares (31) 10 Proceeds from the sale of put options 1,189 Equity put option obligations (2,660) - ---------------------------------------------------------------------------------------------------------------------------------- Foreign currency translation 1,695 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1994 1,753 10,805 57 597,860 1,179,715 (244,898) - ---------------------------------------------------------------------------------------------------------------------------------- Net income 135,860 - ---------------------------------------------------------------------------------------------------------------------------------- Dividends, preference - $5.50 per share (96) Dividends, common - $.56 per share (54,195) - ---------------------------------------------------------------------------------------------------------------------------------- Issuance of shares: Retirement units, etc. - 21,421 Class A shares from treasury (308) 533 Employee stock purchase plan - 1,100,348 Class A shares 1 (4,852) 26,023 Stock options - 297,569 Class A shares 89 22,925 (16,317) Stock conversions - 1,202 shares - ---------------------------------------------------------------------------------------------------------------------------------- Purchase of company stock: 2,054,904 Class A shares (46,536) Proceeds from the sale of put options 285 Fulfilled equity put option obligations 2,660 - ---------------------------------------------------------------------------------------------------------------------------------- Foreign currency translation 738 - ---------------------------------------------------------------------------------------------------------------------------------- BALANCE, DECEMBER 31, 1995 $1,753 $10,895 $57 $618,570 $1,262,022 $(281,195) - ----------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements. F-14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF OPERATIONS. The New York Times Company and all subsidiaries (the "Company"), is engaged in diversified activities in the communications field. The Company's principal businesses are newspapers, magazines and broadcasting. The Company also has equity interests in a Canadian newsprint company and a supercalendered paper manufacturing partnership. The Company's major source of revenue is advertising from its newspaper business. The newspapers operate in the Northeast, Southeast and California markets. PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the accounts of the Company after elimination of intercompany items. FISCAL YEAR. The Company changed its fiscal year-end to the last Sunday in December, beginning with the fiscal year ending December 29, 1996. INVENTORIES. Inventories are stated at the lower of cost or current market value. Inventory cost generally is based on the last-in, first-out ("LIFO") method for newsprint and magazine paper and the first-in, first-out ("FIFO") method for other inventories. INVESTMENTS. Investments in which the Company has at least a 20 percent but not more than 50 percent interest are accounted for under the equity method. PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is stated at cost, and depreciation is computed by the straight-line method over estimated service lives. The Company capitalizes interest costs as part of the cost of constructing major facilities and equipment. INTANGIBLE ASSETS ACQUIRED. Costs in excess of net assets acquired consist of excess costs of businesses acquired over values assigned to their net tangible assets and other intangible assets. The Company evaluates periodically whether there has been a permanent impairment in any of its intangible assets, inclusive of goodwill. The major factors which are considered in such valuation include the cash flow and any contemplated long-term strategies which might affect the viability of such business. The excess costs which arose from acquisitions after October 31, 1970 are being amortized by the straight-line method principally over 40 years. The remaining portion of such excess, which arose from acquisitions before November 1, 1970 (approximately $13,000,000), is not being amortized since in the opinion of management there has been no diminution in value. Other intangible assets acquired consist principally of advertiser and subscriber relationships which are being amortized over the remaining lives, ranging from 5 to 40 years. The general policy of 5 to 40 years relates to all intangible assets with the life of 5 years used for various software licenses and lives of 40 years used for mastheads on various acquired properties. SUBSCRIPTION REVENUES AND COSTS. Proceeds from subscriptions and related costs, principally agency commissions, are deferred at the time of sale and are included in the Consolidated Statements of Income on a pro rata basis over the terms of the subscriptions. FOREIGN CURRENCY TRANSLATION. The assets and liabilities of foreign companies are translated at the year-end exchange rates. Results of operations are translated at the average rates of exchange in effect during the year. The resultant translation adjustment is included as a component of stockholders' equity. EARNINGS PER SHARE. Earnings per share is computed after preference dividends and is based on the weighted average number of shares of Class A and Class B Common Stock outstanding during each year. The effect of shares issuable under the Company's Incentive Plans (see Note 11), including stock options, is not material and therefore is excluded from the computation. CASH AND SHORT-TERM INVESTMENTS. For purposes of the Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with maturities of three months or less to be cash equivalents. The Company has overdraft positions at certain banks as a result of outstanding checks, which have been reclassified to accounts payable. DERIVATIVES. The Company had interest rate swap agreements with major financial institutions that were used to manage exposure to fluctuations in interest rates. The Company was exposed to credit losses in the event of nonperformance by the counterparties to its interest rate swap agreements. As of December 31, 1995, the Company did not have any derivative financial instruments. USE OF ESTIMATES. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from these estimates. NEW ACCOUNTING PRONOUNCEMENTS. In March 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121, Accounting for Impairment of Long-Lived Assets ("SFAS 121"). SFAS 121 will require a review for impairment of long-lived assets and certain identifiable intangible assets to be held and used, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. This statement is effective for the Company's 1996 financial statements. The Company does not believe operating results will be materially affected upon the adoption of SFAS 121. In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based Compensation ("SFAS 123"). This statement is effective for the Company's 1996 financial statements. SFAS 123 encourages companies to account for stock compensation awards based on their fair value at the date they are granted. The resulting compensation cost would be shown as an expense on the income statement. Companies choosing not to apply the new accounting method are permitted to continue following current accounting requirements, however, they will be required to disclose in the notes to the financial statements the effect on net income and earnings per share had the new accounting method been applied. The Company anticipates that it will continue to apply current accounting requirements upon adoption of this standard. F-15 - -------------------------------------------------------------------------------- 2. ACQUISITIONS/DIVESTITURES In June 1995, the Company acquired WTKR-TV in Norfolk, Virginia. The acquisition was accounted for as a purchase. The aggregate net cost of the acquisition was $71,214,000 which was paid in cash. The purchase resulted in increases in other intangible assets of approximately $57,705,000 (which consist of a network affiliation agreement, FCC licenses and other intangible assets); property, plant and equipment of $13,841,000, and other assets of $1,064,000. Net liabilities assumed as a result of the transaction totaled approximately $1,396,000. This acquisition will not have a material impact on the future operations of the Company. In the third quarter of 1995, the Company completed the sales of six small regional newspapers: The Daily Commercial (Leesburg, FL); The Daily Corinthian (Corinth, MS), The Messenger (Madisonville, KY), The Lenoir News-Topic (Lenoir, NC), The State Gazette (Dyersburg, TN) and The Banner-Independent (Booneville, MS). The sales resulted in a net pre-tax gain of approximately $11,300,000 ($5,000,000 after taxes, or $.05 per share). In May 1995, the Company sold The York County Coast Star (Kennebunk, ME). The sale did not have a material effect on the Company's consolidated financial statements. These dispositions will not have a material impact on the future operations of the Company. In December 1994, the Company divested its minority interest in Gaspesia Pulp & Paper Company Ltd. ("Gaspesia"), a Canadian newsprint mill. The Company's 49 percent interest was transferred to Abitibi-Price, Inc., the majority owner. In connection with the transfer, a pre-tax charge of approximately $3,100,000 ($.02 per share) was recorded. In 1993, the Company wrote down its investment in Gaspesia by $47,000,000 ($.56 per share) to reflect its net realizable value. In July and August 1994, the Company completed the sales of its Women's Magazines Division and U.K. golf publications, respectively. These transactions resulted in a pre-tax gain of approximately $204,000,000 ($1.01 per share). In connection with the sale of the Women's Magazines Division, the Company entered into a four-year non-compete agreement, for which it received $40,000,000. This amount is being recognized as operating income, on a straight-line basis, over a four-year period commencing with the closing of the sale on July 26, 1994. The divestitures of the Women's Magazines Division, U.K. golf publications and the minority interest in Gaspesia resulted in a net pre-tax gain of $200.9 million ($103.3 million after taxes or $.99 per share). On October 1, 1993, pursuant to an Agreement and Plan of Merger dated June 11, 1993, as amended as of August 12, 1993 (the "Agreement"), a wholly-owned subsidiary of the Company was merged with Affiliated Publications, Inc., the parent company of The Boston Globe ("The Globe"), which became a wholly-owned subsidiary of the Company. The transaction was accounted for as a purchase and, accordingly, The Globe's operations have been included in the Company's consolidated financial statements beginning October 1, 1993, the date the transaction closed. The acquisition had a net cost of approximately $1,028,000,000. Under the Merger Agreement the Company exchanged cash of approximately $160,000,000 for 15 percent of The Globe's common stock with the remainder of the consideration paid by the exchange of approximately 36,400,000 shares of the Company's Class A Common Stock valued at $24.03 per share. The purchase resulted in increases in costs in excess of net assets acquired of approximately $850,000,000 (which is being amortized by the straight-line method over 40 years); other intangible assets acquired of $161,000,000 (which consist principally of advertiser and subscriber relationships which are being amortized by the straight-line method over an average period of 33 years); and property, plant and equipment of $246,000,000. Net liabilities assumed as a result of the transaction totaled approximately $229,000,000. Pro forma operating results for the year ended December 31, 1993, had The Globe transaction occurred at the beginning of that period are as follows: revenues of $2,335,985,000; net income of $1,178,000; and net income per share of $.01. Pro forma operating results for the year ended December 31, 1994, had the magazines sales occurred as of January 1, 1994 were as follows: revenues of $2,231,942,000; net income of $115,518,000; and net income per share of $1.11. Pro forma operating results for the year ended December 31, 1993, had the magazine sales and The Globe transaction occurred at the beginning of that period were as follows: revenues of $2,097,828,000; net income of $14,009,000; and net income per share of $.13. The above pro forma results are not necessarily indicative of the combined results that would have occurred had the sales and the merger taken place as of the beginning of the periods provided, nor necessarily indicative of results that may be achieved in the future. The gain on the sales is not included in the above pro forma operating results. In February 1994, the sale of BPI Communications, L.P., a partnership in which the Company acquired a one-third interest through the 1993 acquisition of The Globe, was completed. The Company received approximately $55,000,000 in 1994 from the sale. For financial reporting purposes, no gain or loss was recognized on the sale. On December 31, 1993, the Company sold two weekly newspapers and recognized a pre-tax gain of $2,600,000, or $.02 per share, on the transaction. In connection with the divestiture of a newsprint mill in 1991, the Company made a loan commitment of up to $26,500,000 to the new owners of the mill. At December 31, 1994, the commitment was fully funded. Interest on the outstanding balance is payable quarterly at annual rates ranging from 4 to 10 percent. Commencing in December 1997, the borrowings outstanding at December 1996 are payable annually over a five-year period in 20 percent increments. The Company expects the obligation to be satisfied as stipulated in the loan commitment. F-16 - -------------------------------------------------------------------------------- 3. INVESTMENT IN FOREST PRODUCTS GROUP The Company has equity interests in a Canadian newsprint company, Donohue Malbaie, Inc. ("Malbaie"), and in a partnership operating a supercalendered paper mill in Maine, Madison Paper Industries ("Madison"). The equity interest in Malbaie represents a 49 percent ownership interest. The Company and Myllykoski Oy, a Finnish paper manufacturing company, are partners through subsidiary companies in Madison. The partners' interests in the net assets of Madison at any time will depend on their capital accounts, as defined, at such time. Through an 80 percent-owned subsidiary, the Company's share of Madison's profits and losses is 40 percent. In December 1994, the Company divested its minority interest in Gaspesia, which was written down to its net realizable value in 1993 (see Note 2). Loans to Madison by the 80 percent-owned subsidiary of the Company totaled $1,882,000, $1,523,000, and $1,279,000 in 1995, 1994 and 1993, respectively. No contributions were made to Madison in 1995, 1994 or 1993. The Company received distributions from Malbaie of $4,330,000 and $8,224,000 in 1995 and 1994, respectively. No distributions were received from Malbaie in 1993. The Company's share of undistributed earnings of Malbaie aggregated approximately $9,200,000 and $4,882,000 at December 31, 1995 and 1994, respectively. No loans or contributions were made to Malbaie in 1995, 1994 or 1993. Condensed combined balance sheets of the Forest Products Group are as follows: - ------------------------------------------------------------------ Condensed Combined Balance Sheets of Forest Products Group Dollars in thousands - ------------------------------------------------------------------ December 31 1995 1994 - ------------------------------------------------------------------ Current assets $ 94,934 $ 66,280 Less current liabilities 88,129 33,027 - ------------------------------------------------------------------ Working capital 6,805 33,253 Fixed assets, net 234,240 236,961 Long-term debt (771) (62,355) Deferred income taxes and other (106,667) (103,756) - ------------------------------------------------------------------ Net assets $ 133,607 $ 104,103 - ------------------------------------------------------------------ The current portion of debt of the Forest Products Group of $46,678,000 is included in current liabilities. At December 31, 1995, long-term debt of the Forest Products Group matures as follows: 1997, $526,000; 1998, $152,000; and 1999, $93,000. The Forest Products Group's debt is not guaranteed by the Company. Condensed combined statements of operations of the Forest Products Group, which exclude the operations of Gaspesia subsequent to the write-down at December 31, 1993, are as follows: - ------------------------------------------------------------------- Condensed Combined Statements of Operations of Forest Products Group Dollars in thousands - ------------------------------------------------------------------- Year Ended December 31 1995 1994 1993 - ------------------------------------------------------------------- Net sales and other income $ 268,377 $ 189,805 $ 254,324 Costs and expenses 216,342 180,860 269,845 - ------------------------------------------------------------------- Income (Loss) before taxes 52,035 8,945 (15,521) Income tax expense (benefit) 7,969 1,136 (2,700) - ------------------------------------------------------------------- Net income (loss) $ 44,066 $ 7,809 $ (12,821) - ------------------------------------------------------------------- The condensed combined financial information of the Forest Products Group excludes the income tax effects attributable to Madison. Such tax effects (see Note 6) have been included in the Company's consolidated financial statements. Adjustments from translating certain balance sheet accounts, principally of the Canadian newsprint companies, for each of the three years in the period ended December 31, 1995, are set forth in the Consolidated Statements of Stockholders' Equity. The cumulative translation adjustment (included in earnings reinvested in the business) decreased stockholders' equity by $195,000 and $933,000 at December 31, 1995 and 1994, respectively. Upon the disposition of Gaspesia in 1994, stockholders' equity was increased by $3,000,000, net of tax, to reflect the cumulative translation adjustment related to Gaspesia. During 1995, 1994 and 1993, the Company's Newspaper Group purchased newsprint and supercalendered paper from the Forest Products Group (including Gaspesia through the disposal date) at competitive prices. Such purchases aggregated approximately $59,000,000, $107,000,000 and $102,000,000, respectively. - ------------------------------------------------------------------------------- 4. INVENTORIES Inventories as shown in the accompanying Consolidated Balance Sheets are composed of the following: - ----------------------------------------------------------------- Dollars in thousands - ----------------------------------------------------------------- December 31 1995 1994 - ----------------------------------------------------------------- Newsprint and magazine paper $36,965 $24,783 Work-in-process, etc. 5,879 5,762 - ----------------------------------------------------------------- Total $42,844 $30,545 - ----------------------------------------------------------------- Utilization of the LIFO method reduced inventories as calculated on the FIFO method by approximately $11,731,000 and $2,694,000 at December 31, 1995 and 1994, respectively. F-17 - -------------------------------------------------------------------------------- 5. VOLUNTARY STAFF REDUCTIONS AND UNION NEGOTIATIONS In 1995 the Company recorded pre-tax charges of approximately $10,100,000, or $.06 per share, for work force reductions at The Times, The Globe and corporate headquarters. In 1993 the Company recorded pre-tax charges of $35,400,000, or $.23 per share, for severance and related costs resulting from anticipated white-collar staff reductions (approximately $30,000,000) and voluntary early retirements from the composing room (approximately $5,400,000) at The Times. At December 31, 1995 and 1994, approximately $17,472,000 and $22,563,000, respectively, are included in accrued expenses in the accompanying Consolidated Balance Sheets, which represents the unpaid balance of the pre-tax charges. The Company has committed the remaining funds. The remaining cash flows associated with these charges are expected to be paid over the next three years due to the timing of certain union pension and welfare fund contributions. - -------------------------------------------------------------------------------- 6. INCOME TAXES Income tax expense for each of the years presented is determined in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes ("SFAS 109"). Income tax expense as shown in the Consolidated Statements of Operations is composed of the following: - ------------------------------------------------------------------- Dollars in thousands 1995 1994 1993 - ------------------------------------------------------------------- Current tax expense Federal $105,999 $159,779 $60,178 State, local, foreign 1,970 49,651 17,612 - ------------------------------------------------------------------- 107,969 209,430 77,790 - ------------------------------------------------------------------- Deferred tax expense Federal (22,483) (20,955) (26,982) State, local, foreign 12,493 (13,088) (8,919) - ------------------------------------------------------------------- (9,990) (34,043) (35,901) - ------------------------------------------------------------------- Income tax expense from continuing operations 97,979 175,387 41,889 Less income tax expense (benefit) related to equity in operations 5,147 1,519 (1,342) - ------------------------------------------------------------------- Income tax expense $ 92,832 $173,868 $43,231 - ------------------------------------------------------------------- Tax expense in 1995 was reduced by $10,986,000 as a result of a favorable state tax ruling and federal, state and local tax refunds. A further reduction of $4,339,000 ($6,676,000 before federal tax effect) in 1995 tax expense relates to a reduction in the valuation allowance attributable to state and local capital and net operating loss tax benefits. The remaining decrease in the valuation reserve is due principally to the expiration of net operating loss tax benefits and does not affect income tax expense. Tax expense in 1994 was reduced by approximately $10,000,000 and $3,000,000, respectively, relating to a decrease in valuation allowance and recognition of federal capital loss tax benefits. The decrease in valuation allowance is associated with federal capital loss tax benefits. An increase in valuation allowance associated with state and local capital loss carryforward tax benefits added approximately $688,000 (net of federal tax benefit) to 1994 tax expense. Tax expense in 1993 was reduced by $6,317,000. The reduction was due to a decrease in the valuation allowance of $4,390,000 related to federal capital loss carryforwards, and benefits associated with state and local operating loss carryforwards net of federal tax effect. Adjustment of the Company's deferred tax balances for the one percent rate increase provided in the Tax Reform Act of 1993 added $4,359,000 to deferred tax expense, inclusive of $600,000 of expense reported in equity in operations of the Forest Products Group. In accordance with the provisions of SFAS 109, approximately $1,600,000 of additional reduction in valuation allowance, which was established against acquired deferred tax assets, was recorded as a reduction of goodwill in 1993. No such amounts affected 1995 or 1994 tax expense. Income tax benefits credited directly to stockholders' equity totaled $837,000, $2,434,000 and $3,595,000 during 1995, 1994 and 1993, respectively. Foreign taxes included in income tax expense in 1994 of $4,979,000 were principally attributable to the disposition of the Company's U.K. golf publications. Foreign taxes included in income tax expense in 1995 and 1993 were not significant. Equity in operations of the Forest Products Group (see Note 3) includes the income tax effects of the Company's interest in Madison and its equity in the operations of the Canadian newsprint companies. Of such amounts, tax expense of $850,000 in 1995, and tax benefits of $117,000 in 1994 and $585,000 in 1993 are applicable to the Canadian newsprint companies. Deferred taxes attributable to the Company's interest in Madison were an expense of $273,000 in 1995, a benefit of $(39,000) in 1994, and expense of $1,562,000 in 1993. These deferred taxes result principally from differences between depreciation used for financial reporting and that used for tax reporting. The Company's consolidated federal income tax returns include the income tax effects of its interest in Madison. F-18 The reasons for the variance between the effective tax rate on income before income taxes and equity in operations of the Forest Products Group and the federal statutory rate (exclusive of the net gain on dispositions in 1995 and 1994) are as follows:
- --------------------------------------------------------------------------------------------------- Year Ended December 31 1995 1994 1993 - --------------------------------------------------------------------------------------------------- % of % of % of Dollars in thousands Amount Pretax Amount Pretax Amount Pretax - --------------------------------------------------------------------------------------------------- Tax at federal statutory rate $71,173 35.0% $ 64,078 35.0% $35,422 35.0% Increase (decrease) resulting from State and local taxes - net 8,090 4.0 5,177 2.8 6,883 6.8 Capital loss tax benefits - - (10,000) (5.4) (6,875) (6.8) Amortization of nondeductible intangible assets acquired 11,061 5.4 11,139 6.1 5,602 5.5 Change in enacted tax rate - - - - 3,759 3.7 Other - net (3,826) (1.9) 5,920 3.2 (1,560) (1.5) - --------------------------------------------------------------------------------------------------- Subtotal 86,498 42.5% 76,314 41.7% 43,231 42.7% - --------------------------------------------------------------------------------------------------- Dispositions 6,334 97,554 - - --------------------------------------------------------------------------------------------------- Income tax expense $92,832 $173,868 $43,231 - ---------------------------------------------------------------------------------------------------
Federal income taxes payable (refundable) totaled $8,725,000 and $(28,109,000) as of December 31, 1995 and 1994, respectively. Current income taxes payable are included in accrued expenses while refundable amounts are included in other current assets. The components of the net deferred tax liabilities recognized on the respective Consolidated Balance Sheets are as follows: - ----------------------------------------------------------------- Dollars in thousands December 31 1995 1994 - ----------------------------------------------------------------- Deferred Tax Assets Intangible assets acquired $ 5,941 $ 10,425 Accrued state and local taxes 17,033 14,996 Postretirement and postemployment benefits 86,822 81,707 Other accrued employee benefits and compensation 93,777 89,569 Allowance for doubtful accounts 13,411 13,113 Tax loss carryforwards 8,571 20,260 Deferred Income 29,811 35,040 Other 10,550 4,578 - ----------------------------------------------------------------- Total deferred tax assets 265,916 269,688 Valuation allowance (10,724) (19,774) - ----------------------------------------------------------------- Net deferred tax assets $255,192 $249,914 - ----------------------------------------------------------------- - ----------------------------------------------------------------- Dollars in thousands December 31 1995 1994 - ----------------------------------------------------------------- Deferred Tax Liabilities Property, plant and equipment $134,613 $121,617 Tax certificate 113,238 125,664 Nontaxable acquisition 123,880 125,782 Deferred subscription expenses 8,013 8,627 Safe harbor tax lease 18,975 19,717 Unremitted earnings 1,238 833 Investment in Forest Products Group 13,382 13,324 Other 1,084 2,641 - ----------------------------------------------------------------- Total deferred tax liabilities 414,423 418,205 - ----------------------------------------------------------------- Net deferred tax assets (255,192) (249,914) - ----------------------------------------------------------------- Net deferred tax liability 159,231 168,291 - ----------------------------------------------------------------- Less amounts included in: Other current assets (10,559) (9,296) Accrued expenses 1,075 999 - ----------------------------------------------------------------- Deferred income taxes $168,715 $176,588 - ----------------------------------------------------------------- At December 31, 1995, tax loss carryforwards include only state and local tax loss benefits. The benefits are primarily attributable to tax operating losses. Such loss carryforwards expire in accordance with provisions of applicable tax laws and have remaining lives ranging from 1 to 13 years. The remaining $8,571,000 of operating loss carryforwards will expire in years through 2008. In 1989, the Federal Communications Commission granted the Company a tax certificate in connection with the sale of its cable television system. This certificate permitted the Company to defer income taxes on the gain on the transaction and pay such taxes over a number of years. Under the provisions of the Internal Revenue Code, this is accomplished through a reduction in the tax bases of various assets which results in lower tax depreciation and amortization deductions in subsequent years. As a result, $10,994,000, $10,508,000, and $10,820,000 of income taxes that were deferred became currently payable in 1995, 1994 and 1993, respectively. Federal income tax returns for all years through 1989 have been examined by the Internal Revenue Service and the respective tax years have been closed by statute. Examinations of the tax returns for the years 1990 through 1992 are in process. Management is of the opinion that any assessments resulting from these examinations will not have a material effect on the consolidated financial statements. F-19 - -------------------------------------------------------------------------------- 7. DEBT Long-Term Debt consists of the following: - ------------------------------------------------------------------ Dollars in thousands - ------------------------------------------------------------------ December 31 1995 1994 - ------------------------------------------------------------------ 5.50% to 5.77% Senior Notes due $200,000 $200,000 1998-2000 (a) 7.625% Notes due 2005, net of unamortized 244,041 - debt issuance costs of $5,959 in 1995; effective interest rate 7.996% (b) 8.25% Debentures due 2025 (due 2005 at 145,152 - option of Company), net of unamortized debt issuance costs of $4,848 in 1995; effective interest rate 8.553% (b) 11.85% Notes, discounted, due 1995 net of - 161,789 unamortized discount of $511 in 1994 (c) 9.34% Notes due 1995, including - 51,336 unamortized premium of $1,336 in 1994; effective interest rate 4.25% (c) Commercial Paper (d) - 60,405 - ------------------------------------------------------------------ Total Notes, Debentures and Other 589,193 473,530 - ------------------------------------------------------------------ Less: Current Portion - - - ------------------------------------------------------------------ Total Long-Term Debt $589,193 $473,530 - ------------------------------------------------------------------ (a) In October 1993, the Company issued senior notes totaling $200,000,000 to an insurance company with interest payable semi-annually. Five-year notes totaling $100,000,000 were issued at an annual rate of 5.50 percent, and the remaining $100,000,000 were issued as six and one-half year notes at an annual rate of 5.77 percent. (b) In March 1995, the Company completed a public offering of $400,000,000 of unsecured notes and debentures. The offering consisted of ten-year notes aggregating $250,000,000 maturing March 15, 2005 at an annual rate of 7.625% (the "Notes") and 30-year debentures aggregating $150,000,000 maturing March 15, 2025 at an annual rate of 8.25% (the "Debentures"), (collectively referred to herein as the "Offering"). The Debentures are callable after ten years. Interest is payable semi-annually on March 15 and September 15 on both the Notes and Debentures. The net proceeds from the Offering were used to repay the principal balance of the $162,300,000 11.85% Notes due March 31, 1995, $50,000,000 of 9.34% Notes due July 15, 1995 and indebtedness outstanding under the Company's commercial paper program. The remaining net proceeds were used for general corporate purposes. Accordingly, at December 31, 1994, the 11.85% Notes due March 31, 1995, the 9.34% Notes due July 15, 1995 and the amounts outstanding under the Company's commercial paper program were classified as long-term debt as they were refinanced on a long-term basis under the Offering. (c) In connection with the 1985 acquisition of certain newspapers, the Company issued 10-year notes with an aggregate stated value of $162,300,000 which were discounted at an annual interest rate of 11.85 percent for financial reporting purposes. Interest on certain of the notes was payable semi-annually. In connection with the 1993 acquisition of The Globe (see Note 2), the Company assumed $50,000,000 of 9.34 percent fixed-rate notes maturing July 1995, which had been valued for financial reporting purposes using a discount rate of 4.25 percent. Interest on the notes was payable semi-annually. (d) In December 1994, the Company established a $200,000,000 commercial paper program. Borrowings are in the form of unsecured notes sold at a discount with maturities ranging up to 270 days. There were no borrowings outstanding under the commercial paper program at December 31, 1995. The $60,700,000 in aggregate face value of such notes outstanding at December 31, 1994 were issued at a weighted average annual interest rate of 6.06 percent. The outstanding commercial paper is supported by the Company's revolving credit and term loan agreements. Based on borrowing rates currently available for debt with similar terms and average maturities, the fair value of long-term debt, excluding the current portion, was $647,900,000 and $455,100,000 at December 31, 1995 and 1994, respectively. - -------------------------------------------------------------------------------- The Company has a $93,300,000 revolving credit and term loan agreement with a group of banks, which, as amended, terminates in October 1998. At such time, the outstanding borrowings would be payable semi-annually in equal installments over one year. At the Company's discretion, this facility may be converted into term loans at any time. The agreement provides for an annual commitment fee of 0.11 percent on the unused commitment. The Company also has a $46,700,000 revolving credit agreement with the same group of banks, which expires in October 1996. The agreement provides for an annual commitment fee of 0.06 percent on the unused commitment. The agreements permit borrowings which bear interest, at the Company's option, (i) for domestic borrowings: based on the certificates of deposit rate, the Federal Funds rate, a prime rate or a quoted rate; or (ii) for Eurodollar borrowings: based on the LIBOR rate. Borrowings under these agreements may be prepaid without penalty. The Company has a $20,000,000 revolving credit and term loan agreement with a bank and its affiliate, which as amended, terminates in December 1999. At such time, the outstanding borrowings would be payable semi-annually in equal installments over one year. At the Company's discretion, this facility may be converted into term loans at any time. The agreement provides for an annual commitment fee of 0.09 percent on the unused commitment. The Company also has entered into a $10,000,000 revolving credit agreement with the same bank and its affiliate that expires November 1996, at which time, any outstanding borrowings would be payable. The agreement provides for an annual commitment fee of 0.06 percent on the unused commitment. The agreements permit borrowings which bear interest, at the Company's option, (i) for domestic borrowings: based on the certificates of deposit rate, a prime rate or a quoted rate; or (ii) for Eurodollar borrowings: based on the LIBOR rate. Borrowings F-20 under these agreements may be prepaid without penalty. No borrowings under any of the above agreements were outstanding during 1995 and 1994. Certain of the agreements also include provisions which require, among other matters, specified levels of stockholders' equity. At December 31, 1995, approximately $862,000,000 of stockholders' equity was unrestricted. Short-term debt is comprised of the current portion of capital lease obligations. There were no outstanding notes payable at December 31, 1995 and 1994. The aggregate amount of maturities of long-term debt over the next five years are as follows: 1996, none; 1997, none; 1998, $100,000,000; 1999, none; 2000, $100,000,000; and $400,000,000 thereafter. Interest expense, net of capitalized interest and interest income, as shown in the accompanying Consolidated Statements of Income consists of the following: - ----------------------------------------------------------------- Dollars in thousands - ----------------------------------------------------------------- December 31, 1995 1994 1993 - ----------------------------------------------------------------- Interest expense $ 48,751 $39,823 $30,900 Capitalized interest (15,177) (4,943) (1,351) Interest income (8,344) (6,718) (4,174) - ----------------------------------------------------------------- Net $ 25,230 $28,162 $25,375 - ----------------------------------------------------------------- - -------------------------------------------------------------------------------- 8. LEASE COMMITMENTS OPERATING LEASES: Such lease commitments are primarily for office space and equipment. Certain office space leases provide for adjustments relating to changes in real estate taxes and other operating expenses. Rental expense amounted to $27,699,000 in 1995, $26,559,000 in 1994, and $24,744,000 in 1993. The approximate minimum rental commitments under noncancelable leases (exclusive of minimum sublease rentals of $152,000) at December 31, 1995 were as follows: 1996, $17,454,000; 1997, $14,390,000; 1998, $12,334,000; 1999, $9,919,000; 2000, $6,798,000 and $24,529,000 thereafter. CAPITAL LEASES: In 1993, the Company and the City of New York executed a long-term lease agreement and related agreements, under which the Company is leasing 31 acres of City-owned land in College Point, New York, on which The Times is building a state-of-the-art printing and distribution facility. Conditions stipulated under the lease were met in 1994 and, accordingly, a capital lease of $5,000,000 was recorded at such time. The lease will continue for 25 years after the start of construction with an option to ultimately purchase the property. Under the terms of the agreement, The Times would receive various tax and energy cost reductions. The Company also has a long-term lease for a building and site in Edison, New Jersey. The lease provides the Company with certain early cancellation rights, as well as renewal and purchase options. For financial reporting purposes, the lease has been classified as a capital lease; accordingly, an asset of approximately $57,000,000 (included in buildings, building equipment and improvements at December 31, 1995 and 1994) has been recorded. The following is a schedule of future minimum lease payments under all capitalized leases together with the present value of the net minimum lease payments as of December 31, 1995: - -------------------------------------------------------------------- Dollars in thousands - -------------------------------------------------------------------- Year Ended December 31 Amount - -------------------------------------------------------------------- 1996 $ 7,433 1997 7,337 1998 7,386 1999 7,288 2000 7,140 Later years 57,108 - -------------------------------------------------------------------- Total minimum lease payments 93,692 Less: amount representing interest 41,873 - -------------------------------------------------------------------- Present value of net minimum lease payments including current maturities of $3,139 $51,819 - -------------------------------------------------------------------- F-21 - -------------------------------------------------------------------------------- 9. PENSION PLANS The Company sponsors several pension plans and makes contributions to several others in connection with collective bargaining agreements, including a joint Company-union plan and a number of joint industry-union plans. These plans cover substantially all employees. The Company-sponsored pension plans provide participating employees with retirement benefits in accordance with benefit provision formulas which are based on years of service and final average or career pay and, where applicable, employee contribu-tions. Funding is based on an evaluation and review of the assets, liabilities and requirements of each plan. Retirement benefits are also provided under supplemental unfunded pension plans. Net periodic pension cost was $25,688,000 in 1995, $32,730,000 in 1994 and $16,461,000 in 1993. The components of net periodic pension cost are: ------------------------------------------------------------------- Dollars in thousands ------------------------------------------------------------------- Year Ended December 31 1995 1994 1993 ------------------------------------------------------------------- Service cost $ 16,413 $ 19,194 $ 14,075 Interest cost 41,859 38,933 26,675 Actual (return) loss on plan assets (74,904) 2,942 (38,907) Curtailment loss - 1,887 - Net amortization and deferral 42,320 (30,226) 14,618 ------------------------------------------------------------------- Net periodic pension cost $ 25,688 $ 32,730 $ 16,461 ------------------------------------------------------------------- Due to the sale of the Women's Magazines Division, the Company recognized a curtailment loss in 1994 (see Note 2). Accordingly, net periodic pension cost relating to certain plans was remeasured at July 1994, using an increased discount rate of 8.0 percent. Assumptions used in the actuarial computations were: - ------------------------------------------------------------------- Year Ended December 31 1995 1994 1993 - ------------------------------------------------------------------- Discount rate 7.25% 8.25% 7.00% Rate of increase in compensation levels 5.50% 5.50% 5.50% Expected long-term rate of return on assets 8.75% 8.75% 8.75% - ------------------------------------------------------------------- In connection with collective bargaining agreements, the Company contributes to several other pension plans including a joint Company-union plan and a number of joint industry-union plans. Contributions are determined as a function of hours worked or period earnings. Pension cost for these plans was $20,679,000 in 1995, $19,535,000 in 1994 and $17,970,000 in 1993. The funded status of the Company's plans which were valued at September 30, 1995 and 1994 is as follows: - ------------------------------------------------------------------- Plans Whose Plans Whose Assets Exceed Accumulated December 31, 1995 Accumulated Benefits Dollars in thousands Benefits Exceed Assets - ------------------------------------------------------------------- Actuarial present value of benefit obligation: Vested benefit obligation $234,139 $256,239 - ------------------------------------------------------------------- Accumulated benefit obligation $239,507 $264,219 - ------------------------------------------------------------------- Projected benefit obligation $297,317 $331,039 Plan assets at fair value 269,633 178,539 - ------------------------------------------------------------------- Projected benefit obligation in excess of plan assets 27,684 152,500 Unrecognized net (losses) gains (28,150) (23,770) Unrecognized prior service cost 6,131 (9,945) Unrecognized transition obligation (1,645) (1,274) Fourth-quarter contribution, net (1,365) (8,986) Adjustment required to recognize additional minimum liability - 2,384 - ------------------------------------------------------------------- Recorded pension liability $ 2,655 $110,909 - ------------------------------------------------------------------- - ------------------------------------------------------------------- Plans Whose Plans Whose Assets Exceed Accumulated December 31, 1994 Accumulated Benefits Dollars in thousands Benefits Exceed Assets - ------------------------------------------------------------------- Actuarial present value of benefit obligation: Vested benefit obligation $187,656 $207,104 - ------------------------------------------------------------------- Accumulated benefit obligation $193,129 $212,519 - ------------------------------------------------------------------- Projected benefit obligation $238,574 $263,044 Plan assets at fair value 231,236 144,200 - ------------------------------------------------------------------- Projected benefit obligation in excess of plan assets 7,338 118,844 Unrecognized net (losses) gains (12,337) 11,269 Unrecognized prior service cost 6,567 (10,814) Unrecognized transition obligation (2,038) (1,517) Fourth-quarter contribution, net (2,483) (7,891) - ------------------------------------------------------------------- Recorded pension (asset) liability $ (2,953) $109,891 - ------------------------------------------------------------------- Plan assets, which were valued as of September 30, 1995 and 1994, consist of money market investments, investments in marketable fixed income and equity securities, an investment in a diversified real estate equity fund and investments in group annuity insurance contracts. The additional minimum liability relating to the unfunded status of these plans is included in other liabilities on the Consolidated Balance Sheets as of December 31, 1995 and miscellaneous assets includes a related intangible asset of an equal amount. No such liability was required as of December 31, 1994. F-22 - -------------------------------------------------------------------------------- 10. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND POSTEMPLOYMENT BENEFITS The Company provides health and life insurance benefits to retired employees (and their eligible dependents) who are not covered by any collective bargaining agreements if the employee meets specified age and service requirements. In accordance with SFAS No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, the Company accrues the costs of such benefits during the employee's active years of service. Net periodic postretirement cost was $7,842,000 in 1995, $12,419,000 in 1994 and $10,809,000 in 1993, respectively. The decrease in 1995 cost was a result of a plan amendment which was adopted to reduce benefits for participants retiring after January 1, 1995. The effect on the accumulated postretirement benefit obligation is a reduction of $16,736,000. This amount is being amortized over a period of approximately nine years beginning in 1995. The components of this cost are as follows: - ---------------------------------------------------------------- Dollars in thousands 1995 1994 1993 - ---------------------------------------------------------------- Service cost for benefits earned during the period $ 2,820 $ 4,629 $ 3,955 Interest cost on accumulated postretirement obligation 8,142 9,376 6,854 Net amortization and deferral (3,120) (102) - Curtailment gain (See Note 2) - (1,484) - - ---------------------------------------------------------------- Net periodic postretirement cost $ 7,842 $12,419 $10,809 - ---------------------------------------------------------------- The Company's policy is to fund the above-mentioned payments as claims and premiums are paid. The following table sets forth the amounts included in Accrued Expenses and Other Liabilities on the Consolidated Balance Sheets at December 31, 1995 and 1994, based on valuation dates of September 30 in each year. - ---------------------------------------------------------------- Dollars in thousands - ---------------------------------------------------------------- December 31 1995 1994 - ---------------------------------------------------------------- Accumulated postretirement benefit obligation Retirees $ 55,954 $ 49,595 Fully eligible active plan 19,870 26,894 participants Other active plan participants 44,965 45,017 - ---------------------------------------------------------------- Total 120,789 121,506 Unrecognized net gains 16,536 26,287 Unrecognized prior service cost 13,597 - Fourth-quarter benefit payments (544) (1,035) - ---------------------------------------------------------------- Total accrued postretirement benefit liability 150,378 146,758 Current portion included in accrued expenses 4,400 4,400 - ---------------------------------------------------------------- Long-term accrued postretirement benefit liability $145,978 $142,358 - ---------------------------------------------------------------- Increasing the assumed health care cost trend rates by one percentage point in each year and holding all other assumptions constant would increase the accumulated postretirement benefit obligation as of December 31, 1995 by $16,706,000 and increase the net periodic postretirement benefit cost for 1995 by $1,785,000. For 1995, the accumulated postretirement benefit obligation was determined using a discount rate of 7.25 percent, an estimated increase in compensation levels of 5.5 percent and a health care cost trend rate of between 11.0 percent and 9.25 percent in the first year, grading down to 5.0 percent in the year 2008. For 1994, the accumulated postretirement benefit obligation was determined using a discount rate of 8.25 percent, an estimated increase in compensation levels of 5.5 percent and a health care cost trend rate of between 12.0 percent and 10.0 percent in the first year grading down to 5.0 percent in the year 2008. In connection with collective bargaining agreements, the Company contributes to several welfare plans including a joint Company-union plan and a number of joint industry-union plans. Contributions are determined as a function of hours worked or period earnings. Portions of these contributions, which cannot be disaggregated, related to postretirement benefits for plan participants. Total contributions to these welfare funds were approximately $26,034,000, $25,460,000 and $18,000,000 in 1995, 1994 and 1993, respectively. In accordance with SFAS No. 112, Employers' Accounting for Postemployment Benefits, the Company accrues the cost of certain benefits provided to former or inactive employees, after employment but before retirement, such as workers' compensation, disability benefits and health care continuation coverage during the employees' active years of service. F-23 - -------------------------------------------------------------------------------- 11. EXECUTIVE AND NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN Under the Company's 1991 Executive Stock Incentive Plan and 1991 Executive Cash Bonus Plan (together the "1991 Executive Plans"), the Board of Directors may authorize incentive compensation awards and grant stock options to key employees of the Company. Awards may be granted in cash, restricted and unrestricted shares of the Company's Class A Common Stock, Retirement Units or such other forms as the Board of Directors deems appropriate. Under the 1991 Executive Plans, stock options of up to 10,000,000 shares of Class A Common Stock may be granted and stock awards of up to 1,000,000 shares of Class A Common Stock may be made. In adopting the 1991 Executive Plans, shares previously available for issuance of retirement units and stock options under prior plans are no longer available for future awards. Retirement Units are payable in Class A Common Stock over a period of 10 years following retirement. Stock options currently outstanding were granted under the Company's 1984 Stock Option Plan and the 1991 Executive Plans. The Plans provide for granting of both incentive and non-qualified stock options principally at an option price per share of 100 percent of the fair market value of the Class A Common Stock on the date of grant. These options have terms of five or ten years, and become exercisable in annual periods ranging from one year to four years from the date of grant. Payment upon exercise of an option may be made in cash, with previously-acquired shares, with shares (valued at fair market value) which would be otherwise issued on the exercise of the option or any combination thereof. Under the Company's Non-Employee Directors' Stock Option Plan (the "Directors' Plan"), non-qualified options with ten-year terms are granted annually to each non-employee director of the Company. Each annual grant allows the director to purchase from the Company up to 1,000 shares of Class A Common Stock at the fair market value of such shares at the date of grant. Options for an aggregate of 250,000 shares of Class A Common Stock may be granted under the Directors' Plan. Outstanding stock options granted to key employees of The Globe to purchase its Series A and/or Series B Common Stock prior to the merger have been converted to stock options to purchase the Company's Class A Common Stock. The former Globe stock options were converted at a ratio of 0.6 shares of Class A Common for each share of Globe stock as determined by the merger agreement. All of these stock options became exercisable as of the acquisition date. Changes in stock options for each of the three years in the period ended December 31, 1995 were as follows: ---------------------------------------------------------------- Dollars in thousands Option Price except per share data Shares Per Share ($) Total ---------------------------------------------------------------- Options outstanding January 1, 1993 4,880,616 13.96 to 38.87 $115,935 Granted 1,909,080 26.50 to 30.68 50,641 Globe stock option conversion 958,654 6.89 to 22.50 14,381 Exercised (346,334) 6.89 to 26.75 (6,333) Terminations (41,175) 20.00 to 36.43 (1,116) ---------------------------------------------------------------- Options outstanding December 31, 1993 7,360,841 6.89 to 38.87 173,508 Granted 2,426,376 22.56 to 26.18 54,807 Exercised (378,392) 6.89 to 26.75 (6,634) Terminations (127,037) 11.45 to 36.43 (3,174) ---------------------------------------------------------------- Options outstanding December 31, 1994 9,281,788 6.89 to 38.87 218,507 Granted 2,047,438 23.18 to 29.75 60,826 Exercised (909,622) 6.89 to 26.75 (18,741) Terminations (412,379) 11.45 to 36.43 (11,009) ---------------------------------------------------------------- Options outstanding December 31, 1995 10,007,225 10.31 to 38.87 $249,583 ---------------------------------------------------------------- Options which became exercisable during 1993 1,803,174 6.89 to 28.88 $35,098 1994 761,221 20.00 to 30.68 19,021 1995 1,285,288 20.00 to 26.50 30,667 ---------------------------------------------------------------- Options exercisable at December 31, 1993 4,673,663 6.89 to 38.87 $104,789 1994 4,953,313 6.89 to 38.87 114,260 1995 5,272,657 10.31 to 38.87 124,603 ---------------------------------------------------------------- F-24 - -------------------------------------------------------------------------------- 12. CAPITAL STOCK The 5 1/2 percent cumulative prior preference stock, which is redeemable at the option of the Company on 30-day's notice at par plus accrued dividends, is entitled to an annual dividend of $5.50 payable quarterly. The serial preferred stock is subordinate to the 5 1/2 percent cumulative prior preference stock. The Board of Directors is authorized to set the distinguishing characteristics of each series prior to issuance, including the granting of limited or full voting rights; however, the consideration received must be at least $100 per share. No shares of serial preferred stock have been issued. The Class A and Class B Common Stock are entitled to equal participation in the event of liquidation and in dividend declarations. The Class B Common Stock is convertible at the holders' option on a share-for-share basis into Class A shares. As provided for in the Certificate of Incorporation, the Class A Common Stock has limited voting rights, including the right to elect five of the fifteen directors of the Board, and the Class A and Class B Common Stock have the right to vote together on reservations of Company stock for stock options and other stock-related plans, on the ratification of the selection of independent certified public accountants and, in certain circumstances, on acquisitions of the stock or assets of other companies. Otherwise, except as provided by the laws of the State of New York, all voting power is vested solely and exclusively in the holders of the Class B Common Stock. At the April 1994 annual meeting of the Company's Class A and B Common Stockholders, an amendment to the Employee Stock Purchase Plan was approved to reserve an additional 6,000,000 shares of Class A Common Stock for sale under the Plan. At a special meeting of shareholders in September 1993, an amendment of the Company's Restated Certificate of Incorporation was approved to increase the total number of authorized shares of Class A Common Stock to 200,000,000 shares, thereby increasing the Company's overall total number of authorized shares of capital stock of The New York Times Company to 200,910,000 shares. Under a stock repurchase program which commenced in June 1993 and expired at the close of The Globe transaction on October 1, 1993, the Company repurchased approximately 10,231,000 shares of its Class A Common Stock at an average price of $24.87 per share. The Company spent $150,000,000 authorized under its previous stock repurchase program announced in October 1993. In October 1994, the Company announced authorized expenditures of up to $100,000,000 for repurchases of its Class A Common Stock. Under the two programs, the Company has repurchased approximately 10,074,000 shares of its Class A Common Stock at an average effective price of $23.42 per share. Had the stock repurchases, under both programs, occurred as of January 1, 1994, earnings per share for the year 1994 would have been $2.12, an increase of $.07 per share. During the first quarter of 1995, the remainder of the October 1994 $100,000,000 authorization was spent to repurchase approximately 639,000 shares of Class A Common Stock at an average price of $22.08. In February 1995 the Company's Board of Directors authorized additional expenditures of up to $50,000,000. As of February 26, 1996, the Company repurchased approximately 1,415,000 shares of its Class A Common Stock at an average price of $22.84 per share under this program. Under the program, purchases may be made from time to time either in the open market or through private transactions. The number of shares that may be purchased in market transactions may be limited as a result of The Globe transaction. Purchases may be suspended from time to time or discontinued. The remaining amount of this authorization is approximately $18,000,000. Had the 1995 stock repurchases occurred as of January 1, 1995, earnings per share for the year 1995 would have been $1.41, an increase of $.01 per share. In addition to the Company's stock repurchase program, in 1994 the Company began to sell equity put options in a series of private placements that entitle the holder, upon exercise, to sell shares of Class A Common Stock to the Company at a specified price. In 1995 and 1994, put options for 300,000 and 1,210,000 shares were issued for $285,000 and $1,189,000 in premiums, respectively, which have been accounted for as a part of additional capital. As of December 31, 1995 all put options issued in 1995 have expired. Put options for 120,000 shares that were outstanding at December 31, 1994 have been exercised or expired and the amount of $2,660,000 that was recorded in other liabilities has been reclassed to additional capital as of December 31, 1995. Premiums received in 1995 from put options reduced the average price of shares repurchased during 1995 to $22.51 per share from $22.65 per share; premiums received in 1994 reduced the average price of shares repurchased during 1994 to $23.42 per share from $23.53 per share. Under the 1996 Offering of the Employee Stock Purchase Plan, eligible employees may purchase Class A Common Stock through payroll deductions during 1996 at the lower of $23.85 per share (85 percent of the average market price on November 1, 1995) or 85 percent of the average market price on December 30, 1996. Shares of Class A Common Stock reserved for issuance at December 31, 1995 and 1994 were as follows: ----------------------------------------------------------------- December 31 1995 1994 ----------------------------------------------------------------- Retirement Units Outstanding 197,000 221,021 Stock Awards Available 965,686 973,844 Stock Options Outstanding 10,007,225 9,281,788 Available 1,888,961 3,646,047 Employee Stock Purchase Plan Available 4,702,248 5,802,596 Voluntary Conversion of Class B Common Stock Available 568,919 570,121 ----------------------------------------------------------------- Total 18,330,039 20,495,417 ----------------------------------------------------------------- F-25 - -------------------------------------------------------------------------------- 13. SEGMENTS The Company's segment and related information is included on pages 2 and 3 of this Appendix. The information for the years 1995, 1994 and 1993 appearing therein is presented on a basis consistent with, and is an integral part of, the consolidated financial statements. Revenues from individual customers, revenues between business segments and revenues, operating profit and identifiable assets of foreign operations are not significant. - -------------------------------------------------------------------------------- 14. COMMITMENTS AND CONTINGENT LIABILITIES In July 1994, the Company's Board of Directors approved the construction of the new facility in College Point which will allow for later news deadlines and provide color and inserting capability for The Times's daily newspaper. The cost of the new facility, excluding capitalized interest currently projected to be $35,000,000, is estimated to be $315,000,000. As of December 31, 1995, the Company has spent approximately $176,600,000 excluding capitalized interest. The Company is presently engaged in additional projects to modernize and improve other production facilities. As of December 31, 1995, the Company has committed $123,200,000 and spent approximately $50,000,000 for these additional projects. There are various legal actions that have arisen in the ordinary course of business and are now pending against the Company. Such actions are usually for amounts greatly in excess of the payments, if any, that the Company may be required to make. It is the opinion of management after reviewing such actions with legal counsel to the Company that the ultimate liability which might result from such actions would not have a material adverse effect on the consolidated financial statements. - -------------------------------------------------------------------------------- 15. RECLASSIFICATIONS For comparability, certain 1993 and 1994 amounts have been reclassified to conform with the 1995 presentation. INDEPENDENT AUDITORS' REPORT BOARD OF DIRECTORS AND STOCKHOLDERS OF THE NEW YORK TIMES COMPANY: We have audited the accompanying consolidated balance sheets of The New York Times Company as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 1995. Our audits also include the financial schedule listed in the Index at Item 14(a). These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of The New York Times Company as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /S/Deloitte & Touche LLP - ------------------------ Deloitte & Touche LLP New York, New York February 7, 1996 MANAGEMENT'S RESPONSIBILITIES REPORT The Company's consolidated financial statements were prepared by management who is responsible for their integrity and objectivity. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and, as such, include amounts based on management's best estimates and judgments. Management is further responsible for maintaining a system of internal accounting control, designed to provide reasonable assurance that the Company's assets are adequately safeguarded and that the accounting records reflect transactions executed in accordance with management's authorization. The system of internal control is continually reviewed for its effectiveness and is augmented by written policies and procedures, the careful selection and training of qualified personnel and a program of internal audit. The consolidated financial statements were audited by Deloitte & Touche LLP, independent auditors. Their audit was conducted in accordance with generally accepted auditing standards and their report is shown on this page. The Audit Committee of the Board of Directors, which is composed solely of independent directors, meets regularly with the independent auditors, internal auditors and management to discuss specific accounting, financial reporting and internal control matters. Both the independent auditors and the internal auditors have full and free access to the Audit Committee. Each year the Audit Committee selects, subject to ratification by stockholders, the firm which is to perform audit and other related work for the Company. - -------------------------------------------------------------------------------- MARKET INFORMATION - -------------------------------------------------------------------------------- The Class A Common Stock is listed on the American Stock Exchange. The Class B convertible Common Stock and the 5 1/2 percent cumulative prior preference stock are unlisted and are not actively traded. Dividends on the preference stock were paid at the quarterly rate of $1.375 per share during each of the two years. The approximate number of security holders of record as of January 31, 1996 was as follows: Class A Common Stock: 16,111; Class B Common Stock: 41; 5 1/2 percent cumulative prior preference stock: 61. The market price range of Class A Common Stock in 1995 and 1994 is as follows: ------------------------------------------------------------------- Quarter Ended 1995 1994 ------------------------------------------------------------------ High Low High Low March 31 $23.50 $20.12 $29.50 $25.75 June 30 24.50 21.62 27.62 23.00 September 30 29.25 22.62 25.00 21.62 December 31 30.87 27.12 24.62 21.25 Year 30.87 20.12 29.50 21.25 ------------------------------------------------------------------ F-27 QUARTERLY INFORMATION (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------------------- Dollars and shares in millions First Quarter Second Quarter Third Quarter Fourth Quarter Year except per share data 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994 - ----------------------------------------------------------------------------------------------------------------------------------- Revenues $ 571.2 $ 589.5 $ 610.4 $ 635.5 $ 572.7 $ 527.2 $ 655.1 $ 605.4 $ 2,409.4 $ 2,357.6 - ----------------------------------------------------------------------------------------------------------------------------------- Costs and Expenses Production costs: Raw materials 80.0 78.4 85.7 80.4 90.5 66.0 111.9 79.6 368.1 304.4 Wages and benefits 131.4 132.1 133.6 133.7 135.1 129.8 137.1 134.1 537.2 529.7 Other 96.2 112.9 97.6 117.6 97.2 96.2 108.1 102.0 399.1 428.7 - ----------------------------------------------------------------------------------------------------------------------------------- Total 307.6 323.4 316.9 331.7 322.8 292.0 357.1 315.7 1,304.4 1,262.8 Selling, general and administrative expenses 206.0 223.0 211.9 230.4 209.7 201.9 248.8 228.3 876.4 883.6 - ----------------------------------------------------------------------------------------------------------------------------------- Total 513.6 546.4 528.8 562.1 532.5 493.9 605.9 544.0 2,180.8 2,146.4 - ----------------------------------------------------------------------------------------------------------------------------------- Operating profit 57.6 43.1 81.6 73.4 40.2 33.3 49.2 61.4 228.6 211.2 Interest expense, net 7.3 8.7 6.7 8.0 5.6 6.2 5.6 5.3 25.2 28.2 Net gain (loss) on dispositions - - - - 11.3 204.0 - (3.1) 11.3 200.9 Income taxes 24.5 16.7 34.2 31.4 18.0 112.0 16.1 13.8 92.8 173.9 - ----------------------------------------------------------------------------------------------------------------------------------- Income before equity in operations of forest products group 25.8 17.7 40.7 34.0 27.9 119.1 27.5 39.2 121.9 210.0 Equity in operations of forest products group 1.6 - 2.6 0.3 4.3 1.5 5.5 1.5 14.0 3.3 - ----------------------------------------------------------------------------------------------------------------------------------- Net income $ 27.4 $ 17.7 $ 43.3 $ 34.3 $ 32.2 $ 120.6 $ 33.0 $ 40.7 $ 135.9 $ 213.3 - ----------------------------------------------------------------------------------------------------------------------------------- Average number of common shares outstanding 97.8 106.9 96.8 106.3 96.3 104.3 96.5 98.8 96.9 104.1 Per share of common stock Net income $ .28 $ .17 $ .45 $ .32 $ .33 $ 1.16 $ .34 $ .41 $ 1.40 $ 2.05 Dividends .14 .14 .14 .14 .14 .14 .14 .14 .56 .56 - -----------------------------------------------------------------------------------------------------------------------------------
The 1994 quarters do not equal the respective year-end amounts for earnings per share due to the weighted average number of shares outstanding used in the computations for the respective periods. Per share amounts for the respective quarters and years have been computed using the average number of common shares outstanding as presented in the table above. Annual and quarterly per share amounts are affected by the timing of share issuances and repurchases. During 1994, approximately $235.2 million was expended to repurchase 10.0 million shares. The Company's largest source of revenues is advertising, which influences the pattern of the Company's quarterly consolidated revenues and is seasonal in nature. Traditionally, second-quarter and fourth-quarter advertising volume is higher than that in the first quarter. Advertising volume tends to be lower in the third quarter primarily because of the summer slow-down in many areas of economic activity. The cost of raw materials for the Company and the entire publishing industry has been adversely affected by the significant increases in newsprint and magazine paper prices throughout 1995. The unfavorable impact of these increases is expected to continue during 1996. Quarterly trends are also affected by the overall economy and economic conditions that may exist in specific markets served by each of the Company's business segments. Third-quarter 1995 includes a $11.3 million pre-tax gain ($.05 per share) from the sales of small regional newspapers. Fourth-quarter 1995 includes a $10.1 million pre-tax charge ($.06 per share) for severance and related costs for work force reductions. Third-quarter 1994 includes a $204.0 million pre-tax gain ($.99 per share) from the sales of the Women's Magazines Division and U.K. golf publications. Fourth-quarter 1994 includes a $3.1 million loss ($.02 per share) on the disposition of Gaspesia. F-28
TEN-YEAR SUPPLEMENTAL FINANCIAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Dollars and shares in millions Year Ended December 31 except per share data 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 - ------------------------------------------------------------------------------------------------------------------------------------ Revenues and Income Revenues $2,409 $2,358 $2,020 $1,774 $1,703 $1,777 $1,769 $1,700 $1,642 $1,524 - ------------------------------------------------------------------------------------------------------------------------------------ Operating Profit 229 211 127 88 94 130 169 251 284 266 - ------------------------------------------------------------------------------------------------------------------------------------ Income (Loss) from continuing operations before equity in forest products group 122 210 58 (2) 41 61 84 132 138 110 Equity in operations of forest products group 14 3 (52) (9) 6 4 (16) 29 18 20 - ------------------------------------------------------------------------------------------------------------------------------------ Income (Loss) from continuing operations 136 213 6 (11) 47 65 68 161 156 130 Discontinued operations - - - - - - 199 7 4 2 Net cumulative effect of accounting changes - - - (34) - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------ Net income (loss) 136 213 6 (45) 47 65 267 168 160 132 - ------------------------------------------------------------------------------------------------------------------------------------ Balance Sheet Total assets 3,377 3,138 3,215 1,995 2,128 2,150 2,188 1,915 1,712 1,405 Long-term debt and capital lease obligations 638 523 460 207 213 319 337 378 391 217 Common stockholders' equity 1,610 1,544 1,599 1,000 1,073 1,056 1,064 873 823 705 - ------------------------------------------------------------------------------------------------------------------------------------ Per share of Common Stock Continuing operations 1.40 2.05 .07 (.14) .61 .85 .87 2.00 1.91 1.60 Discontinued operations - - - - - - 2.52 .08 .05 .03 Net cumulative effect of accounting changes - - - (.43) - - - - - - Net income (loss) 1.40 2.05 .07 (.57) .61 .85 3.39 2.08 1.96 1.63 Dividends .56 .56 .56 .56 .56 .54 .50 .46 .40 .33 Common stockholders' equity (end of year) 16.50 15.71 14.96 12.54 13.70 13.68 13.63 11.02 10.04 8.59 - ------------------------------------------------------------------------------------------------------------------------------------ Shares Outstanding (end of year) Class A and Class B Common 97.6 98.2 106.9 79.7 78.4 77.2 78.1 79.2 82.0 82.0 - ------------------------------------------------------------------------------------------------------------------------------------ Market Price (end of year) 29.62 22.12 26.25 26.37 23.62 20.62 26.37 26.87 31.00 35.50 - ------------------------------------------------------------------------------------------------------------------------------------
1995 - Results included: a net pre-tax gain of $11.3 million ($.05 per share) from the sales of small regional newspapers; $10.1 million pre-tax charge ($.06 per share) for work force reductions. 1994 - Results included: a net pre-tax gain of $200.9 million ($.99 per share) from the sales of the Women's Magazines Division and U.K. golf publications and the disposition of Gaspesia. 1993 - Results included: a pre-tax $3.7 million ($.02 per share) rate adjustments due to a severe snowstorm; $4.4 million ($.05 per share) of additional tax expense for remeasurement of deferred tax balances due to the enactment of the Tax Act; $1.2 million ($.02 per share) of additional tax expense due to the Tax Act which increased the federal corporate income tax rate; a $2.6 million pre-tax gain ($.02 per share) on the sale of assets; $35.4 million of pre-tax charges ($.23 per share) for staff reductions at The Times; an after-tax noncash charge of $47.0 million ($.56 per share) against equity in operations to write down the Company's investment in Gaspesia to its net realizable value. 1992 - Results included: $53.8 million pre-tax loss ($.47 per share) on the closing of The Gwinnett (Ga.) Daily News; a $3.1 million pre-tax gain ($.02 per share) from the sales of assets; a $28.0 million pre-tax charge ($.20 per share) for voluntary union staff reductions at The Times; $21.4 million pre-tax ($.15 per share) for labor disruptions and training and start-up costs at Edison. Net cumulative effect of accounting changes reflects the 1992 adoption of the change in methods of accounting for income taxes, postretirement benefits other than pensions and postemployment benefits. 1991 - Results included: a $20.0 million pre-tax charge ($.15 per share) for voluntary union staff reductions at The Times; the reversal of a provision for income taxes of $10.0 million ($.13 per share) for a favorable tax settlement. 1989 - Results included: an after-tax gain of $193.3 million ($2.46 per share) from the sale of the Company's cable television operations, of which the gain and results of operations through the 1989 sale date are included as discontinued operations; a $30.0 million pre-tax charge ($.22 per share) for voluntary union staff reductions at The Times; an after-tax charge of $27.2 million ($.35 per share) for a valuation reserve against the Company's investment in the Forest Products Group. 1986 - Results included: an interest charge of $8.5 million ($.05 per share) which relates to a court decision arising from the Company's 1981 acquisition of two cable television systems. F-29
SCHEDULE II THE NEW YORK TIMES COMPANY VALUATION AND QUALIFYING ACCOUNTS For the Three Years Ended December 31, 1995 - ------------------------------------------------------------------------------------------------------------------------ Column A Column B Column C Column D Column E - ------------------------------------------------------------------------------------------------------------------------ Deduc- tions Additions for charged purposes to costs for Balance and which at expenses accounts Balance beginning or were set at end Description of period revenues up of period - ------------------------------------------------------------------------------------------------------------------------- Dollars in thousands YEAR ENDED DECEMBER 31, 1995 Deducted from assets to which they apply Uncollectible accounts . . . . . . . $22,268 $20,749 $24,075 $18,942 Returns and allowances, etc. . . . . 5,889 9,892 8,858 6,923 ------- ------- ------- ------- Total . . . . . . . . . . . . . . . $28,157 $30,641 $32,933 $25,865 ======= ======= ======= ======= YEAR ENDED DECEMBER 31, 1994 Deducted from assets to which they apply Uncollectible accounts . . . . . . . $17,108 $23,134 $17,974 $22,268 Returns and allowances, etc. . . . . 26,399 44,562 65,072 5,889 ------- ------- ------- ------- Total . . . . . . . . . . . . . . . $43,507 $67,696 $83,046 $28,157 ======= ======= ======= ======= YEAR ENDED DECEMBER 31, 1993 Deducted from assets to which they apply Uncollectible accounts . . . . . . . $12,809 $18,495 $14,196 $17,108 Returns and allowances, etc. . . . . 20,491 71,657 65,749 26,399 ------- ------- ------- ------- Total . . . . . . . . . . . . . . . $33,300 $90,152 $79,945 $43,507 ======= ======= ======= =======
S-1 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - -------- ----------- (2.1) Agreement and Plan of Merger dated as of June 11, 1993, as amended by the First Amendment dated as of August 12, 1993, by and among the Company, Sphere, Inc. and Affiliated Publications, Inc. (filed as Exhibit 2 to the Form S-4 Registration Statement, Registration No. 33-50043, on August 23, 1993, and included as Annex I to the Joint Proxy Statement/Prospectus included in such Registration Statement (schedules omitted--the Company agrees to furnish a copy of any schedule to the Commission upon request), and incorporated by reference herein). (2.2) Stockholders Agreement dated as of June 11, 1993, by and between the Company and the other parties signatory thereto (filed as Exhibit 2.1 to the Form S-4 Registration Statement, Registration No. 33-50043, on August 23, 1993, and included as Annex II to the Joint Proxy Statement/Prospectus included in such Registration Statement, and incorporated by reference herein). (3.1) Certificate of Incorporation as amended by the Class A and Class B stockholders and as restated on September 29, 1993 (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (3.2) By-laws as amended through February 16, 1995 (filed as an Exhibit to the Company's Form 10-Q dated May 11, 1995, and incorporated by reference herein). (4) The Company agrees to furnish to the Commission upon request a copy of any instrument with respect to long-term debt of the Company and any subsidiary for which consolidated or unconsolidated financial statements are required to be filed, and for which the amount of securities authorized thereunder does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. (9.1) Globe Voting Trust Agreement, dated as of October 1, 1993, as amended effective October 1, 1995. (10.1) The Company's Executive Incentive Compensation Plan as amended through December 20, 1990 (filed as an Exhibit to the Company's Form 10-K dated March 1, 1991, and incorporated by reference herein). (10.2) The Company's 1991 Executive Stock Incentive Plan, as amended through April 18, 1995. (10.3) The Company's 1991 Executive Cash Bonus Plan, as amended through April 18, 1995. (10.4) The Company's Non-Employee Directors' Stock Option Plan, adopted on April 16, 1991 (filed as an Exhibit to the Company's Proxy Statement dated March 1, 1991, and incorporated by reference herein). (10.5) The Company's Supplemental Executive Retirement Plan, as amended and restated through January 1, 1993. (10.6) Lease (short form) between the Company and Z Edison Limited Partnership dated April 8, 1987 (filed as an Exhibit to the Company's Form 10-K dated March 27, 1988, and incorporated by reference herein). (10.7) Agreement of Lease, dated as of December 15, 1993, between The City of New York, Landlord, and the Company, Tenant (as successor to New York City Economic Development Corporation (the "EDC"), pursuant to an Assignment and Assumption of Lease With Consent, made as of December 15, 1993, between the EDC, as Assignor, to the Company, as Assignee) (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.8) Funding Agreement #1, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.9) Funding Agreement #2, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein).
EXHIBIT NO. DESCRIPTION - -------- ----------- (10.10) Funding Agreement #3, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.11) Funding Agreement #4, dated as of December 15, 1993, between the EDC and the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.12) New York City Public Utility Service Power Service Agreement, made as of May 3, 1993, between The City of New York, acting by and through its Public Utility Service, and The New York Times Newspaper Division of the Company (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.13) Employment Agreement, dated May 19, 1993, between API, Globe Newspaper Company and William O. Taylor (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.14) API's 1989 Stock Option Plan (filed as Annex F-1 to API's Proxy Statement-Joint Prospectus, dated as of April 28, 1989, contained in API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). (10.15) API's Supplemental Executive Retirement Plan, as amended effective September 15, 1993 (filed as an Exhibit to the Company's Form 10-K dated March 21, 1994, and incorporated by reference herein). (10.16) API's 1990 Stock Option Plan (Restated 1991) (filed as Exhibit 1 to API's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1991 (Commission File No. 1-10251), and incorporated by reference herein). (10.17) Form of Substituted Stock Option Agreement/Incentive 86 among API, its predecessor company and certain employees (filed as Exhibit 10.27 to Post- Effective Amendment No. 1 filed August 11, 1989, to API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). (10.18) Form of Substituted Stock Option Agreement/Incentive 87 among API, its predecessor company and certain employees (filed as Exhibit 10.29 to Post- Effective Amendment No. 1 filed August 11, 1989, to API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). (10.19) Form of Substituted Stock Option Agreement/Incentive 88 among API, its predecessor company and certain employees (filed as Exhibit 10.31 to Post- Effective Amendment No. 1 filed August 11, 1989, to API's Registration Statement on Form S-4 (Registration Statement No. 33-28373) declared effective April 28, 1989, and incorporated by reference herein). (10.20) The Company's Deferred Executive Compensation Plan, adopted on May 19, 1994. (21) Subsidiaries of the Company. (23) Consent of Deloitte & Touche LLP. (27) Financial Data Schedule.
EX-9.1 2 EXHIBIT 9.1 GLOBE VOTING TRUST VOTING TRUST AGREEMENT dated as of October 1, 1993 by and among the stockholders of The New York Times Company (the "Company") who execute this Agreement (the "Holders") and William O. Taylor, Charles H. Taylor, Benjamin B. Taylor, Alexander B. Hawes, Jr. and Davis Taylor Pillsbury (collectively, with their successors in trust, the "Voting Trustees"), amending, restating and extending the Taylor Voting Trust dated as of October 1, 1954, as heretofore amended. RECITALS 1. This Agreement may from time to time be referred to as the "Globe Voting Trust." 2. All the initial Holders were indirect stockholders of Affiliated Publications, Inc. ("API"), prior to the merger of a subsidiary of the Company into API, by reason of their participation in the Taylor Voting Trust. 3. On October 1, 1993, the Taylor Voting Trust became entitled to receive shares of Class A Common Stock of the Company ("Class A Stock") upon the merger of the subsidiary of the Company into API. 4. The Holders are unanimously of the opinion that, throughout the term of this Agreement, the operation of this Agreement in accordance with its terms (i) would assure the voting of shares of Class A Stock deposited hereunder ("Deposited Stock") as a unit for the election of a Board of Directors of the Company and on other matters as provided herein, (ii) would be conducive to safe and prudent management of the Company, (iii) would support the current emphasis of the Company on maintaining the independence and editorial excellence of its newspaper properties, including The Boston Globe, and a long-term corporate perspective for the benefit of its shareholders, employees, communities, suppliers and readers and (iv) would be in the interests of all the Holders and also in the interests of the beneficial -2- owners of any such additional shares of Class A Stock as may be deposited hereunder. 5. API shares were also held by the Jordan Voting Trust pursuant to a Voting Trust Agreement dated as of January 29, 1987, as amended, established by the trustees of the Jordan Trust created pursuant to the Will of Eben D. Jordan. Such API shares have also been converted into Class A Stock. When the Jordan Voting Trust and the Jordan Trust terminate on January 16, 1996 in accordance with their terms, the beneficiaries of the Jordan Trust who receive shares of Class A Stock upon the liquidation of the Jordan Trust will be offered the opportunity to deposit their holdings of Class A Stock with the Voting Trustees under this Agreement. 6. The terms "Deposited Stock" and "Class A Stock" and words of similar import wherever appearing in this Agreement shall be taken to be synonymous and to mean and include any voting stock of the Company (other than Class B Common Stock of the Company), or of any entity which is a successor of the Company or which may from time to time be issued with respect to or in exchange for any voting stock held by the Voting Trustees hereunder or into which any such voting stock may be changed as a result of any reorganization, merger, recapitalization or similar transaction. The term "Company" wherever appearing in this Agreement shall be taken to mean and include the issuer of any voting stock held hereunder for the time being as "Deposited Stock." 7. "Taylor Descendant" means a descendant by blood or adoption of Charles H. Taylor, first Treasurer of Globe Newspaper Company, a spouse of such descendant or a trustee or trustees holding for the benefit of any such descendant or descendants or for the benefit of a spouse of any such descendant or descendants or a stock corporation all the voting stock of which is owned by the foregoing. 8. "Jordan Descendant" means a descendant by blood or adoption of Eben D. Jordan, a spouse of such descendant or a trustee or trustees holding for the benefit of any such descendant or descendants or for the benefit of a spouse of any such descendant or descendants or a stock corporation all the voting stock of which is owned by any of the foregoing. NOW, THEREFORE, in consideration of the premises and of the agreements herein contained and for other good and valuable consideration, receipt of all of which consideration is hereby acknowledged, the parties hereto amend, restate and extend the Taylor Voting Trust so that it reads in its entirety as follows: 1. Initial Interests in the Voting Trust. The ------------------------------------------- interest of each Holder is set forth in Schedule A and shall -------- - -3- be reflected in transfer records maintained by the Voting Trustees, periodic reports of which will be sent to the Holder. Only if a Holder expressly requests that his interest be represented by a certificate shall the Voting Trustees issue to the Holder a Voting Trust Certificate, registered in the name of that Holder. Certificates issued under the Taylor Voting Trust are no longer valid and should be destroyed. 2. Subsequent Deposits and Interests. The Voting ------------------------------------ Trustees shall accept transfer and delivery to them of additional shares of Class A Stock from any Taylor Descendant and from any Jordan Descendant who shall have executed a copy of this Agreement. The interest of each person who so becomes a Holder shall be reflected in the Voting Trustees' transfer records. Only if such a Holder expressly so requests shall the Voting Trustees issue a Voting Trust Certificate. The Voting Trustees shall prepare a revised Schedule A adding the name and address of each new Holder and -------- - the number of additional shares of Class A Stock so transferred. All such additional shares shall be held by the Voting Trustees hereunder in accordance with and subject to the provisions of this Agreement. 3. Voting. The Voting Trustees shall vote all shares ------ of Deposited Stock as the holders of record of such shares as follows: (a) With respect to any shares of Class A Stock deposited by any stockholder who is a party to the Stockholders Agreement dated June 11, 1993 among the Company and certain of the Stockholders (the "Stockholders Agreement"), as required by Section 3.6 of the Stockholders Agreement for so long as the provisions of such Section 3.6 shall apply. (b) On any question of selling, mortgaging, leasing or otherwise disposing of substantially all the assets or dissolving, merging or consolidating the Company not governed by paragraph (a) of this Section 3, in accordance with the written instructions of the Holder with respect to his or her shares of Deposited Stock. (c) On all other matters, including the election of directors of the Company, as recommended by the Board of Directors of the Company. 4. Disposition of Deposited Stock by Voting Trustees. --------------------------------------------------- The Voting Trustees shall not pledge, mortgage, sell or otherwise dispose of any of the Deposited Stock or any interest therein, provided, however, that if any transaction requires the exchange or conversion of Deposited Stock, the -4- Voting Trustee may surrender the Deposited Stock and receive distribution in respect thereof in accordance with the terms of the transaction and provided, further, that any dissenters' appraisal rights in respect of any such transaction shall be exercised by the Voting Trustees on behalf of any Holder in accordance with the instructions of that Holder at the Holder's expense and provided, further, that the Voting Trustees will exercise no right of dissent with respect to any transaction approved in accordance with Section 3.6 of the Stockholders Agreement. 5. Transfer of Deposited Stock to Other Holders, Other ---------------------------------------------- ----- Taylor Descendants and Other Jordan Descendants. Any Holder ------------------------------------------------ may at any time and from time to time transfer his or her interest in any shares of Deposited Stock to any other Holder, whether by gift or by sale. Any Holder may at any time and from time to time transfer his or her interest in any shares of Deposited Stock to any other Taylor Descendant or Jordan Descendant, whether by gift, by bequest or by sale, and each recipient of an interest shall be conclusively deemed to have assented to all the terms of this Agreement as fully as though the recipient had executed a copy of this Agreement as a Holder. Promptly after receiving advice of any such transfer, the Voting Trustees shall correct Schedule -------- A. - 6. Withdrawal of Deposited Stock for Sale by a ------------------------------------------- Holder. A Holder may withdraw shares of Deposited Stock ------ for the purpose of selling them, subject to the limitations set forth in this Section 6. Notice of withdrawal of more than 10,000 shares in any calendar year by any Holder shall be given by the Voting Trustees to the Company at 229 West 43rd Street, New York, New York 10036, Attention: Secretary. No Holder may withdraw in any calendar year more than 20% of the total number of shares of Deposited Stock deposited by or for him or her from time to time, computed without deducting withdrawals in prior calendar years. In the event that the value of any interest in shares of Deposited Stock is taxed to any person, estate or trust by reason of the death of any person, the 20% limitation shall not apply to the Holder or Holders of such interest, who shall be limited instead, in the aggregate, to the number of shares the sale of which will generate funds in the amount of the taxes and expenses arising by reason of such person's death, whether or not attributable to the value of an interest in Deposited Stock. A Holder may sell any withdrawn shares in one or more broker's transactions or in a private transaction with the Company. -5- 7. Withdrawal of Deposited Stock for Charitable ---------------------------------------------------- Contribution. A Holder may withdraw any number of shares for ------------ contribution to any corporation, trust of community chest, fund or foundation, gifts to which are deductible under Section 170(c)(2) of the Internal Revenue Code of 1986 or any successor provisions thereto. If the contribution shall not have been completed within six months after the withdrawal, the remaining shares shall once again become Deposited Stock. 8. Compensation and Expenses. The Voting Trustees --------------------------- shall serve without compensation. Each Voting Trustee shall be entitled to reimbursement from the assets held by them under this Agreement for such reasonable out-of-pocket expenses as he may incur and as are reasonably incident to the performance of his duties hereunder. 9. Dividends and Other Distributions. From all ------------------------------------- dividends or other cash distributions received from the Company by the Voting Trustees as record holders hereunder of Deposited Stock, the Voting Trustees may deduct such sums as may be required to pay any and all reasonable expenses incurred by the Voting Trustees in the administration of this Voting Trust Agreement. After such deductions, the Voting Trustees shall forthwith pay to the Holders, in proportion to their beneficial interest in the Deposited Stock, the entire balance of the dividends and other cash distributions so received by the Voting Trustees. Dividends and other distributions received by the Voting Trustees in respect of Deposited Stock in the form of voting stock of the Company shall be held by the Voting Trustees as additional Deposited Stock. Any other distributions of securities or property shall be distributed by the Voting Trustees pro rata to the Holders. In case the Company should grant to its stockholders the right to subscribe to any securities, such rights will be granted by the Voting Trustees pro rata to the Holders, provided, however, that if such rights relate to securities which would constitute Deposited Stock, such rights may be exercised through the Voting Trustees only, with funds provided by the respective Holders and the securities so purchased will be retained hereunder as additional Deposited Stock. If the Voting Trustees are required to pay over to any government any withholding tax, they may deduct the amount so required to be paid over from cash distributions received and, if such distributions are insufficient for the purpose, the Holders agree to deliver to the Voting Trustees such amounts as they may require for the purpose. -6- 10. Termination. This Voting Trust Agreement (a) shall ----------- terminate on September 30, 2003, (b) may be terminated on any earlier date as may be fixed in a written notice to the Voting Trustees signed by the Holders of Voting Trust Certificates representing 66-2/3% of the Deposited Stock delivered to the Voting Trustees at least 30 calendar days prior to the termination date so fixed in such notice and (c) may be terminated on any earlier date by unanimous declaration of the Voting Trustees made by written notice addressed to the Holders at least 15 calendar days prior to the date of expiration fixed in such declaration. Upon termination of this Voting Trust Agreement, the Holders who hold certificates shall promptly surrender their certificates to the Voting Trustees for cancellation, and the Voting Trustees shall cause to be delivered to the Holders certificates for the Deposited Stock. 11. Resignation and Replacement. Any Voting Trustee ----------------------------- may resign at any time by delivering to the remaining Voting Trustees and to the Company his written resignation, to take effect at the time of delivery. If any Voting Trustee shall die or resign before any Jordan Descendants shall have become Holders, the then remaining Voting Trustees shall elect a successor Voting Trustee from among Taylor Descendants. When any Jordan Descendant shall have become a Holder, three of the Voting Trustees shall resign. Two of the positions shall be filled by the Holders who are Jordan Descendants, voting as a class (in proportion to their interests in the Globe Voting Trust) for Jordan Descendants; and the remaining position (the "Fifth Trustee") shall be filled by the executive of Globe Newspaper Company, if any, who is a director of the Company or, if none, by vote of the other four Voting Trustees. Thereafter, any vacancy caused by death or resignation of a Voting Trustee who is a Taylor Descendant (but not the Fifth Trustee) shall be filled by the Holders who are Taylor Descendants, voting as a class for a Taylor Descendant, any vacancy caused by the death or resignation of a Voting Trustee who is a Jordan Descendant (but not the Fifth Trustee) shall be filled by the Holders who are Jordan Descendants, voting as a class for a Jordan Descendant, and any vacancy caused by the death or resignation of the Fifth Trustee shall be filled in the same manner as the vacancy filled by election of the original Fifth Trustee. Each and every power granted to a Voting Trustee under this Voting Trust Agreement shall vest in each and every successor Voting Trustee immediately upon his or her appointment and acceptance of said office. Each successor Voting Trustee shall be deemed to have accepted said office upon delivery of a writing to that effect to the remaining Voting Trustees and to the Company. 12. Standards of Conduct. In voting or consenting or -------------------- taking or failing to take any action with respect to the -7- Deposited Stock, the Voting Trustees shall exercise their best judgment with respect to the proper management of the Company and the best interests of the Holders, but it is understood and agreed that no Voting Trustee incurs any liability as Voting Trustee hereunder, except for his own individual malfeasance, and no Voting Trustee shall be responsible for the acts or omissions of any other Voting Trustee hereunder. The Voting Trustees may vote any shares of Deposited Stock held by them in their own interests in each case without any liability to account. The Voting Trustees or any firms of which they may be members or any corporations of which they may be stockholders, directors, officers or counsel may enter into any contract or financial arrangements with, or be pecuniarily interested in any matter or transaction with, the Company as fully as though the Voting Trustees were not Voting Trustees hereunder. 13. Proof of Authority of Voting Trustees. No person -------------------------------------- dealing with the Voting Trustees or their agents shall be bound to make any inquiry concerning the authorization or validity of any act purporting to be done by the Voting Trustees or their agents. Any certificate signed by the Voting Trustees shall be conclusive evidence of the matters contained therein in favor of all persons acting in good faith in reliance thereon. 14. Notices. All notices to Holders shall be given by ------- mail at the address furnished by the Holders to the Voting Trustees. All notices to the Voting Trustees shall be c/o Bingham, Dana & Gould, 150 Federal Street, Boston, Massachusetts 02110, Attention: Director of Fiduciary Services. 15. Amendments. This Agreement may be amended at any ---------- time by a written instrument executed by all of the Voting Trustees then acting and consented to in writing by the Holders of interests in two-thirds or more of the Deposited Stock. 16. Securities Law Representation and Transfer ---------------------------------------------------- Restriction. Each Holder represents and warrants to the ----------- Voting Trustees that the Holder's interest in the Voting Trust is being acquired for the Holder's own account for investment only and not with a view to any resale or distribution thereof, and each Holder agrees that no interest in the Globe Voting Trust may be sold or otherwise disposed of in violation of the Securities Act of 1933, as amended. The Holder understands that the Holder's interest must be held indefinitely unless transfers are made in compliance with applicable law and understands that any certificate that may be issued to evidence the Holder's interest in the Globe Voting Trust will bear the following restrictive legend: -8- "This security has not been registered under the Securities Act of 1933 and may not be sold, assigned or otherwise transferred in the absence of an effective registration statement under that Act or an opinion of counsel satisfactory to the issuer that registration under that Act is not required." 17. Acceptance of Trust. The Voting Trustees hereby -------------------- accept the trust created hereby and agree that they will in good faith in all respects exercise the powers granted to them hereunder or accruing to them by reason of the ownership of Deposited Stock in trust as herein provided. 18. No Action Inconsistent with Stockholders Agreement. --------------------------------------------------- Notwithstanding the express provisions of Sections 5, 6, 7 and 15 of this Agreement, transfer of interests in Deposited Stock and transfer of Deposited Stock will at no time be made by any Holder bound by the Stockholders Agreement in violation of any of the provisions of the Stockholders Agreement. 19. Counterparts. This Agreement may be signed in any ------------ number of counterparts, with Holders signing separate counterparts; and all counterparts taken together shall constitute a single instrument. IN WITNESS WHEREOF, the Voting Trustees and the Holders have caused this Voting Trust Agreement to be executed and delivered on the date first written above. s/ William O. Taylor s/ Alexander B. Hawes, Jr. ----------------------------- ----------------------------- William O. Taylor Alexander B. Hawes, Jr. s/ Charles H. Taylor s/ Davis Taylor Pillsbury ----------------------------- ----------------------------- Charles H. Taylor Davis Taylor Pillsbury s/ Benjamin B. Taylor ----------------------------- Benjamin B. Taylor Charles H. Taylor ----------------------------- Name of Holder s/ Charles H. Taylor ----------------------------- Signature SCHEDULE A NYTCO SHS DEPOSITED TO: ** GLOBE VOTING TRUST ** 12/29/93 # of NYT A Shs to UNIT HOLDER GLOBE VTG TR C H TAYLOR 1993 GLOBE TRUST 199,656 C H TAYLOR GLOBE FAMILY TRUST 248,400 ROSAMOND T DYE REV TRUST 61,531 PAMELA S COTHEY REV TRUST 10,638 CHARLES H TAYLOR 85,560 CHARLES H TAYLOR 88 IRR TRUST 19,440 STEPHEN EMYLIN TAYLOR 10,000 E B TAYLOR STUART 13,230 PAMELA ROGERS WETZELS 127,291 KATRINA WETZELS TRUST 15,921 THOMAS T WETZELS TRUST 15,921 PETER BLACK 1,636 SYLVIA BLACK RIPLEY 20,787 EMILY TAYLOR ANDREWS 460,272 EUNICE T VANDERHOEF TRUST 248,380 ELIZABETH T FESSENDEN TRUST 625,817 LOUISE C RIEMER (MOTHER) 4,708 KARL DAVIS RIEMER 2,760 LOUISE C REIMER (DAUGHTER) 2,760 HENRY F REIMER 2,220 ELIZABETH L RIEMER REECE 2,760 KATHARINE C FEGUSON TRUST 4,708 WILLIAM DAVIS TAYLOR REV TR 289,681 ANNE MACY TAYLOR REV TRUST 26,907 WILLIAM OSGOOD TAYLOR 426 WILLIAM OSGOOD TAYLOR 20,449 WILLIAM OSGOOD TAYLOR 42,970 WILLIAM DAVIS TAYLOR II 499 EDMUND C TAYLOR 180 EDMUND C TAYLOR 630 OLIVIA P HEARFIELD TRUST 387,403 EVANS S PILLSBURY III MAR TRUST 311,318 EVANS S PILLSBURY III RES TR 192,218 TAYLOR PILLSBURY GLOBE TRUST 129,822 ELIZ SCULLY MARCHEWKA 9,570 NYTCO SHS DEPOSITED TO: ** GLOBE VOTING TRUST ** 12/29/93 # of NYT A Shs to UNITHOLDER GLOBE VTG TR MARGARET B TAYLOR FAM TRUST 22,200 BLAKE TAYLOR CHLDRN'S TRUST 184,548 JOHN I TAYLOR REV TRUST 117,734 CARSON TAYLOR 1,338 TIMOTHY B TAYLOR REV TRUST 79,864 DAVID V N TAYLOR REV TRUST 149,662 SHELLEY G HALL-TAYLOR REV TR 30,000 SUSAN D CONNER 1,000 ELIZA TAYLOR 6,676 MATTHEW VAN NESS TAYLOR 6,676 BENJAMIN B TAYLOR REV TRUST 194,312 KATHERINE S TAYLOR REV TRUST 1,338 ABIGAIL TAYLOR 1,781 SAMUEL S TAYLOR 1,781 WILLIAM I TAYLOR 1,781 LITTLE CHILDREN'S TRUST 116,098 ALEXANDER BOYD HAWES TRUST 242,852 ALEXANDER BOYD HAWES 1,330 ELIZABETH SAVAGE WRIGHT 1,526 JOHN WRIGHT 238 MATT. ARMSTRONG HAWES TR 55,384 CHRIS. DeBOUVRY HAWES TRUST 8,533 TOTAL NYTCO SHARES DEPOSITED 4,823,121 --------- --------- EX-10.2 3 EXHIBIT 10.2 THE NEW YORK TIMES COMPANY 1991 EXECUTIVE STOCK INCENTIVE PLAN AS AMENDED 1. NAME AND GENERAL PURPOSE The name of this plan is The New York Times Company 1991 Executive Stock Incentive Plan (hereinafter called the "Plan"). The purpose of the Plan is to enable the Company (as hereinafter defined) to retain and attract executives who enhance its tradition and contribute to its success by their ability, ingenuity and industry, and to enable them to participate in the long-term success and growth of the Company. 2. DEFINITIONS (a) "Awards"--has the meaning specified in Section 12 hereof. (b) "Board"--means the Board of Directors of the Company. (c) "Cash Plan"--means the Company's 1991 Executive Cash Bonus Plan. (d) "Code"--means the Internal Revenue Code of 1986, as amended. (e) "Committee"--means the Committee referred to in Section 3 of the Plan. If at any time no Committee shall be in office then the functions of the Committee specified in the Plan shall be exercised by those members of the Board who are Disinterested Persons. (f) "Common Stock"--means shares of the Class A Common Stock of the Company. (g) "Company"--means The New York Times Company, a corporation organized under the laws of the State of New York (or any successor corporation), and its subsidiaries (as hereinafter defined) and other non-corporate entities in which it owns directly or indirectly 40% or more of the equity interests. A "subsidiary" means any corporation in which the Company possesses directly or indirectly 50% or more of the combined voting power of all classes of stock. (h) "Consolidated Statement of Income"--means the consolidated statement of income (or any comparable statement, however designated) of the Company, audited by the independent certified public accountants of the Company and contained in the Company's annual report to stockholders or proxy statement. (i) "Disability"--means total disability as defined under the Company's long-term disability plan, whether or not the Participant is covered by such plan, as determined by the Committee. (j) "Disinterested Person"--means any Director of the Company who at the time of acting is a "disinterested person" under Rule 16b-3 or any successor rule ("Rule 16b-3") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (k) "Equity in Operations of Forest Products Group"--means the amount designated as Equity in Operations of the Forest Products Group for the applicable year and shown separately in the Consolidated Statement of Income for such year. (l) "Fair Market Value"--means the arithmetic mean of the highest and lowest sales prices of the Common Stock as reported in the Consolidated Transactions of the American Stock Exchange ("AMSE") (or such other national securities exchange on which the Common Stock may be listed at the time of determination, and if the Common Stock is listed on more than one exchange, then on the one located in New York or if the Common Stock is listed only on the National Association of Securities Dealers Automated Quotations System ("NASDAQ"), then on such system) on the date of the grant or other date on which the Common Stock is to be valued hereunder. If no sale shall have been made on the AMSE, such other exchange or the NASDAQ on such date or if the Common Stock is not then listed on any exchange or on the NASDAQ, Fair Market Value shall be determined by the Committee in accordance with Treasury Regulations applicable to incentive stock options. (m) "Participant"--means a key employee of the Company who is selected by the Committee to participate in any one or more parts of the Plan from among persons who in the judgment of the Committee are key employees of the Company. In general, key employees are those employees who have principal responsibility for, or who contribute substantially to, the management efficiency, editorial achievement or financial success of the Company. (n) "Pre-Tax Income"--means income before income taxes and Equity in Operations of Forest Products Group, as shown in the Consolidated Statement of Income for the applicable year, but before the amount of any provision for Awards under the Plan and awards under the Cash Plan for such year. (o) "Retirement"--means retirement as defined by the terms of "The New York Times Companies Pension Plan" which became effective December 31, 1988, or any successor retirement plan, whether or not the Participant is a member of such retirement plan, and, in the case of employees of Affiliated Publications, Inc., or any subsidiary thereof, who are not subject to the reporting requirements of Section 16 of the Exchange Act with respect to Common Stock and who retire under the terms of the Globe Newspaper Company Retirement Plan, which became effective January 1, 1994 (the "Globe Pension Plan") or any successor retirement plan, "Retirement" shall also mean retirement as defined by the terms of the Globe Pension Plan or any successor plan. 3. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Board or the Committee appointed by it and composed of two or more directors all of whom shall be Disinterested Persons. The membership of the Committee shall be constituted so as to comply at all times with the applicable requirements of Rule 16b-3, and with the administration requirements of Section 162(m)(4)(C) of the Code. The Committee shall serve at the pleasure of the Board and shall have such powers as the Board may from time to time confer upon it. 4. OPTIONS AND AWARDS UNDER THE PLAN Options, which include "Non-Qualified Options" and "Incentive Stock Options" or combinations thereof, are rights to purchase Common Stock of the Company. Non-Qualified Options and Incentive Stock Options are subject to the terms, conditions and restrictions provided in Part I of the Plan. Awards under the Plan may include one or more of the following types, either alone or in any combination thereof: (i) "Stock Awards," (ii) "Restricted Stock Awards," (iii) "Retirement Unit Awards," (iv) "Annual Performance Awards," (v) "Performance Awards" or "Other Awards." Stock Awards are granted under Part IIA of the Plan. Restricted Stock Awards are granted under Part IIB of the Plan. Retirement Unit Awards are granted under Part IIC of the Plan. Annual Performance Awards are granted under Part IID of the Plan. Performance Awards or Other Awards are granted under Part IIE of the Plan. Awards are subject to the terms, conditions and restrictions provided in the respective subparts of Part II of the Plan. Annual Performance Awards will be based exclusively on the criteria set forth in Section 27A. PART I STOCK OPTIONS 5. PURPOSE The purpose of the Stock Option portion of the Plan is to provide an added incentive for effective service and high levels of performance to participating key employees of the Company by affording them an opportunity, under the terms of the Plan, to acquire Common Stock and thereby to increase their proprietary interest in the continued progress and success of the Company. 2 6. DETERMINATION OF OPTIONEES; SHARES SUBJECT TO OPTIONS (a) The Committee may grant options to purchase Common Stock ("Options") to key employees of the Company in such amounts as the Committee may determine, subject to the conditions and limitations set forth in the Plan. Options may be granted in combination with Awards made under the Plan, and Options may be granted to any Participant whether or not he or she was eligible for, or received, an Award. (b) The number of shares of Common Stock with respect to which Options may be granted to any key employee during any calendar year shall not exceed 200,000 (subject to adjustment as provided in Sections 28 and 29 hereof). (c) There may be issued under the Plan pursuant to the exercise of Options, an aggregate of not more than 10,000,000 shares of Common Stock, subject to adjustment as provided in Sections 28 and 29 hereof. Shares of Common Stock issued pursuant to Options may be either authorized but unissued shares, treasury shares, reacquired shares, or any combination thereof. Any shares subject to an Option which expires without being exercised shall be available for issuance under new Options. 7. OPTION PRICE The exercise price of Common Stock subject to Options granted pursuant to the Plan shall be the Fair Market Value thereof at the time the Option is granted. If a Participant owns or is deemed to be the owner of, by reason of the attribution rules under Section 425(d) of the Code, more than 10% of the combined voting power of all classes of the stock of the Company or any subsidiary of the Company and an Option granted to such Participant is intended to qualify as an Incentive Stock Option within the meaning of Section 422 of the Code, the option price shall be no less than 110% of the Fair Market Value of the Common Stock on the date the Option is granted. 8. PAYMENT OF OPTION PRICE The purchase price is to be paid in full when the Option is exercised and stock certificates will be delivered only against such payment. Such purchase price may be paid in such form as the Committee may determine. Payment of the option price may be made (i) in cash, (ii) by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the purchase price, (iii) by delivering to the Company shares of Common Stock previously owned, (iv) by electing to have the Company retain Common Stock which would be otherwise issued on exercise of the Option, or (v) any combination of the foregoing forms, all subject to the approval of the Committee and to such rules as the Committee may adopt. In determining the number of shares of Common Stock necessary to be delivered to or retained by the Company, such Common Stock shall be valued at Fair Market Value. 9. TYPES OF STOCK OPTIONS (a) Options granted under the Plan may be two types, an incentive stock option ("Incentive Stock Option") and a non-qualified stock option ("Non-Qualified Option"). It is intended that Incentive Stock Options granted hereunder shall constitute incentive stock options within the meaning of Section 422 of the Code. Anything in the Plan to the contrary notwithstanding, (i) no provision of this Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify either the Plan or any Incentive Stock Option granted under such provisions of the Code, and (ii) no Option designated by the Committee as a Non-Qualified Option shall constitute an Incentive Stock Option. In furtherance of the foregoing and not by way of limitation, no Incentive Stock Option shall be granted to a Participant who is not an employee of The New York Times Company or one of its subsidiaries. 3 (b) If the aggregate Fair Market Value of the Common Stock (determined as of the date of grant) for which any optionee may for the first time exercise Incentive Stock Options in any calendar year under the Plan and any other stock option plan of the Company, considered in the aggregate, exceeds $100,000, such excess Incentive Stock Options will be treated as Non-Qualified Options. 10. TERMS OF STOCK OPTIONS (a) Each Option will be for a term of not more than ten years from the date of grant, except that if a Participant owns or is deemed to be the owner of, by reason of the attribution rules of Section 425(d) of the Code, more than 10% of the combined voting power of all classes of stock of the Company or any subsidiary of the Company and an Incentive Stock Option is granted to such Participant, the term of such Option shall be no more than five years from the date of grant. (b) An Option may not be exercised within one year after the date of grant except in the case of the death of the optionee or upon termination of active employment with the Company by reason of the Disability or Retirement of the optionee during such period (but subject to the provisions of Section 18 hereof with respect to any optionee subject to the reporting requirements of Section 16 of the Exchange Act). Thereafter, an Option shall be exercisable in such installments, if any, as the Committee may specify, and shall be exercisable during the optionee's lifetime only by the optionee (or, if the optionee is disabled, by any guardian or other legal representative appointed to represent him or her) and, except as provided in subsections (c) and (d) below, shall not be exercisable by the optionee unless at the time of exercise such optionee is an employee of the Company. (c) Upon termination of active employment with the Company by reason of Disability or Retirement, an optionee (or, if the optionee is disabled, any guardian or legal representative appointed to represent him or her) may exercise all Options otherwise exercisable by him or her at the time of such termination of employment (subject to the provisions of subsection (e) below) until the expiration thereof. In the event an optionee dies while employed by the Company or after termination of employment by reason of Disability or Retirement, the person who acquired the right to exercise his or her Options by reason of the death of the optionee, as provided in Section 30 hereof, may exercise such Options otherwise exercisable at the time of death (subject to the provisions of subsection (e) below) at any time until the expiration thereof. (d) Upon termination of employment with the Company for any reason other than death, Retirement or Disability, the optionee may exercise all Options otherwise exercisable by him or her at the time of such termination of employment for an additional one year after such termination of employment. In the event such optionee dies within such one-year period, the person who acquired the right to exercise his or her Options by reason of the death of the optionee, as provided in Section 30 hereof, may exercise such Options at any time within the period of the greater of (i) the remainder of the one-year period described in the foregoing sentence, or (ii) three months from the date of the optionee's death. For purposes of this Section 10(d), in the event that any optionee, who is not subject to the reporting requirements of Section 16 of the Exchange Act with respect to Common Stock, is rehired by the Company within one year of such optionee's termination of employment with the Company, such optionee shall be deemed not to have terminated employment for purposes of determining the expiration date of all unexpired non-qualified stock options held by such individual on the date of rehire, with the effect that such options shall continue to be exercisable at any time until the expiration thereof (subject to the terms thereof and the provisions of this Section 10). (e) Notwithstanding any of the foregoing, no Option shall be exercisable in whole or in part after the expiration date provided in the Option. In the event of the death of the optionee while employed by the Company, or the Disability or Retirement of the optionee, the Committee shall have the discretion to provide for the acceleration of the exercisability of Options exercisable over a period of time, or alternatively, to provide for all or any part of such Options to continue to become exercisable in such installments as originally specified by the Committee, or such revised installments as specified by the 4 Committee at the time of termination of employment (but in no event beyond the original expiration date), in either case subject to such conditions as determined by the Committee in its discretion (but in all cases subject to the provisions of Section 18 hereof with respect to any optionee subject to the reporting requirements of Section 16 of the Exchange Act). No Option shall be transferable otherwise than by will or by the laws of descent and distribution. 11. OPTION AGREEMENTS In consideration of any Options granted to a Participant under the Plan, such Participant shall enter into an Option Agreement with the Company providing, in addition to such other terms as the Committee may deem advisable, that the optionee must remain in the employ of the Company for one year before such optionee will be entitled to exercise the Option, except as provided in Section 10 hereof with respect to death, Disability and Retirement, and specifying the installments, if any, in which such Option shall become exercisable. PART II AWARDS 12. FORM OF AWARDS The Award portion of the Plan is designed to provide incentives for key employees of the Company by the making of awards of supplemental compensation ("Awards"). The Committee, subject to the terms and conditions hereof, may make Awards to a Participant in any one, or in any combination, of the following forms: (a) Common Stock as provided in Part IIA of the Plan ("Stock Awards"); (b) Restricted Stock as provided in Part IIB of the Plan ("Restricted Stock Awards"); (c) Retirement Units as provided in Part IIC of the Plan ("Retirement Unit Awards"); (d) Annual Performance Awards as provided in Part IID of the Plan ("Annual Performance Awards"); and (e) Performance Awards ("Performance Awards") or other forms of Awards ("Other Awards"), as provided in Part IIE of the Plan. Awards may be made to a Participant whether or not he or she is receiving an Option grant under Part I of the Plan for the year and whether or not he or she receives an award under the Cash Plan. Awards will be based on a Participant's performance in those areas for which the Participant is directly responsible. Performance for this purpose may be measured by the achievement of specific management goals such as, but not limited to, an increase in earnings or the operating cash flow of the Company, outstanding initiative or achievement in any department of the Company, or any other standards specified by the Committee. Annual Performance Awards will be based exclusively on the criteria set forth in Section 27A. 13. MAXIMUM AMOUNT AVAILABLE FOR THE ACCRUAL OF AWARDS UNDER PART II OF THE PLAN FOR ANY YEAR (a) No accrual for Awards shall be made hereunder (or under the Cash Plan) for any year unless cash dividends of not less than ten cents ($.10) per share (subject to adjustment as provided in Sections 28 and 29 hereof) have been declared on the outstanding Class A and Class B Common Stock of the Company during such year. (b) In the event that the above condition is met for any year during the continuance of this Plan, the maximum aggregate amount that may be accrued for Awards under the Plan and the Cash Plan for such year shall be 4% of the sum of: (1) Pre-Tax Income plus (2) Equity in Operations of Forest Products Group. The Committee, in its sole discretion, may make adjustments in Pre-Tax Income and 5 Equity in Operations of Forest Products Group to take account of extraordinary, unusual or infrequently occurring events and transactions, changes in accounting principles that substantially affect the foregoing, or such other circumstances as the Committee may determine warrant such adjustment. (c) As soon as feasible after the close of each year, the independent certified public accountants of the Company shall report the maximum amount that may be accrued for Awards for such year under the formula described in Section 13(b), subject to the second sentence of such Section. (d) If amounts are accrued in any year under the formula described in this Section 13 and are not awarded in full in such year under the Plan and the Cash Plan, such unawarded amounts may, in the discretion of the Committee, be carried forward and be available for Awards under the Plan and under the Cash Plan in any future year without regard to the provisions of Sections 13(a) or (b) of the Plan applicable to Awards made in such year. (e) Awards under the Plan for any year may not exceed the sum of (i) the amount accrued for such year under Section 13(b) above plus (ii) unawarded accrued amounts carried forward from previous years under Section 13(d) above plus (iii) amounts that may become available for Awards pursuant to the last sentence of Sections 15(c) and 27A hereof, minus (x) the amount of interest or dividend equivalents set aside during such year pursuant to Sections 15(c) and 27A hereof and the amount of dividend equivalents allocated to Retirement Unit Accounts during such year pursuant to Section 24 hereof, and minus (y) the amount of awards made for such year under the Cash Plan (and any interest equivalents allocated during such year pursuant to Section 10(b), 11(f) and 12(b) thereof). For this purpose, the amount of Awards of Common Stock under the Plan shall be based on the Fair Market Value of the Common Stock subject to Awards as of the date of grant of such Awards. (f) Subject to Sections 28 and 29 hereof, the aggregate number of shares of Common Stock for which Stock, Restricted Stock, Retirement Units, Annual Performance Awards, and Performance and Other Awards may be made under the Plan shall not exceed 1,000,000 shares, which shall be treasury shares reserved for issuance of Awards under the Plan. Shares of Common Stock subject to, but not issued under, any deferred Award which has been discontinued by the Committee pursuant to the provisions hereof or any Restricted Stock which is forfeited by any Participant shall again be available for Awards under the Plan. 14. DETERMINATION OF AWARDS AND PARTICIPANTS (a) As promptly as practicable after the end of each year, the Committee may make Awards (other than Annual Performance Awards, which are to be made exclusively as set forth in Section 27A) for such year and determine the amounts to be carried forward for Awards in future years. The Committee may also, in its discretion, make Awards (other than Annual Performance Awards, which are to be made exclusively as set forth in Section 27A) prior to the end of the year based on the amounts available under clauses (ii) and (iii) of Section 13(e) and reasonable estimates of the accrual for the year in question. (b) The Committee shall have absolute discretion to determine the key employees who are to receive Awards (other than Annual Performance Awards, which are to be made exclusively as set forth in Section 27A) under the Plan for any year and to determine the amount of such Awards based on such criteria and factors as the Committee in its sole discretion may determine, such as the Company's operating cash flow and overall financial performance. Recommendations as to the key employees who are to receive Awards (including Annual Performance Awards) under the Plan for any year and as to the amount and form of such Awards shall, however, be made to the Committee by the chief executive officer of the Company. The fact that an employee is selected as eligible for an Award shall not mean, however, that such employee will necessarily receive an Award. (c) A person whose employment terminates during the year or who is granted a leave of absence during the year may, in the discretion of the Committee and under such rules as the Committee may 6 from time to time prescribe, be given an Award with respect to the period of such person's service during such year. 15. METHOD AND TIME OF PAYMENT OF AWARDS (a) Awards shall be paid in full as soon as practicable after the Award is made; provided, however, that the payment of Annual Performance Awards shall be subject to the provisions of Section 27A, and further provided that the payment of any or all Awards may be deferred, divided into annual installments, or made subject to such other conditions as the Committee in its sole discretion may authorize under such rules and regulations as may be adopted from time to time by the Committee. (b) The Committee's rules and regulations may include procedures by which a Participant expresses a preference to the Committee as to the form of Award or method of payment of an Award but the final determination as to the form and the terms and conditions of any Award shall rest solely with the Committee. (c) Awards deferred under the Plan shall become payable to the Participant or, in the event of the Participant's death, as specified in Section 30 hereof, in such manner, at such time or times (which may be either before or after Retirement or other termination of service), and subject to such conditions as the Committee in its sole discretion shall determine. In any year the Committee shall have the discretion to set aside, for payment in such year or any future year, interest on any deferred Award payable partly in cash, and amounts equivalent to dividends on any deferred Award payable wholly or partly in stock; provided, however, that the total amount of such interest and dividend equivalents shall be deducted from the maximum amount available for Awards under Section 13(e) of the Plan. Any forfeited deferred Awards (including any forfeited stock at its Award value) shall be carried forward and be available for Awards in any future year without regard to the provisions of Sections 13(a) or (b) of the Plan. 16. INDIVIDUAL AGREEMENTS (a) The Committee may in its discretion require that each Participant receiving an Award enter into an agreement with the Company which shall contain such terms and conditions as the Committee in its discretion may require. (b) The Committee may cancel any unexpired, unpaid or deferred Award at any time if the Participant is not in compliance with all applicable provisions of the agreement referred to above, if any, and the Plan. 17. STATUS OF PARTICIPANTS No Participant in this Plan shall be deemed to be a stockholder of the Company, or to have any interest in any stock or any specific assets of the Company by reason of the fact that deferred Stock Awards, Retirement Unit Awards, Annual Performance Awards, Performance Awards, Other Awards or dollar credits are to be recorded as being held for such Participant's account to be paid in installments in the future. The interest of all Participants shall derive from and be determined solely by the terms and provisions of the Plan set forth herein. 18. DISPOSITION OF STOCK RECEIVED UNDER AN AWARD; SECTION 16(B) In the case of any Participant subject to the reporting requirements of Section 16 of the Exchange Act, no shares of Common Stock received pursuant to any Award under the Plan or upon the exercise of any "derivative security" (as defined in the rules promulgated under Section 16 of the Exchange Act) received under the Plan may be sold, assigned, pledged or otherwise transferred for the period of time after the date of such Award or receipt of such derivative security as is specified in Rule 16b-3. 7 PART IIA STOCK AWARDS 19. DETERMINATION OF STOCK AWARDS (a) Each year the Committee shall designate those key employees of the Company who shall receive Stock Awards under this part of the Plan. Stock Awards are made in the form of grants of Common Stock, which may be delivered immediately, in installments or on a deferred date, as the Committee, in its discretion, may provide. (b) If the Committee determines that some portion of a Stock Award to a Participant shall be treated as a deferred Stock Award and payable in annual or other periodic installments, then the Participant will be notified in writing when such deferred Stock Awards shall be paid and over what period of time. As soon as feasible after the granting of such a Stock Award, there shall be reserved out of the treasury shares of the Company, a number (which may include a fraction) of shares of Common Stock equal to the number of shares of Common Stock so awarded. In each year at the discretion of the Committee there may also be allocated or credited to each Participant a dollar amount equal to the cash dividends declared and paid by the Company on its Common Stock which the Participant would have received had such Participant been the owner of the number of shares of any Common Stock deferred for future payment. Any amounts provided for pursuant to the preceding sentence shall become payable in such manner, at such time or times, and subject to such conditions (which may include provision for an amount equivalent to interest on such dividend equivalents at rates fixed by the Committee) as the Committee in its sole discretion shall determine; provided, however, that the total value of such dividend equivalents (and any interest thereon) shall be deducted from the amount available for Awards under the provisions of Section 13(e) of the Plan. The Committee in its discretion may make appropriate equitable adjustments to such deferred Stock Award to account for any dividends of property (other than cash) declared and paid by the Company on its Common Stock, or to account for any other event described in Sections 28 and 29 hereof. PART IIB RESTRICTED STOCK AWARDS 20. DETERMINATION OF RESTRICTED STOCK AWARDS Each year the Committee shall designate the key employees of the Company who shall receive Restricted Stock Awards. Shares awarded under this part of the Plan, while subject to the restrictions hereinafter set forth, are referred to as "Restricted Stock." 21. TERMS OF RESTRICTED STOCK AWARDS Any Award of Restricted Stock shall be subject to the following terms and conditions and to any other terms and conditions not inconsistent with the Plan as shall be prescribed by the Committee in its sole discretion and which may be contained in the agreement, if any, referred to in Section 16 above (or in any amendment thereto): (a) Delivery of Restricted Stock. Unless otherwise determined by the Committee, the Company shall transfer treasury shares to each Participant to whom an Award of Restricted Stock has been made equal to the number of shares of Restricted Stock specified in the Award, and hold the certificates representing such shares of Restricted Stock for the Participant for the period of time during which such shares shall remain subject to the restrictions set forth in the Award (the "Restricted Period"). Shares of Restricted Stock may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered by a Participant during the Restricted Period, except as hereinafter provided. Except for the restrictions set forth herein and unless otherwise determined by the Committee, a Participant shall have all the rights of a stockholder with respect to the shares of Restricted Stock comprising his or her Award, including, but not limited to, the right to vote and the right to receive dividends (which if in shares of Common Stock shall be Restricted Stock under the same terms and conditions). 8 (b) Lapse of Restricted Period. The Restricted Period shall commence upon the date of the Award (which unless otherwise specified by the Committee shall be the date the Restricted Stock is transferred to the Participant) and, unless sooner terminated as otherwise provided herein, shall continue for such period of time as specified by the Committee in the Award, which shall in no event be less than one year, and thereafter shall lapse in such installments, if any, as provided by the Committee in the Award. (c) Legend. Each certificate issued in respect of shares of Restricted Stock transferred or issued to a Participant under an Award shall be registered in the name of the Participant and shall bear the following (or a similar) legend: "THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN THE NEW YORK TIMES COMPANY 1991 EXECUTIVE STOCK INCENTIVE PLAN (THE "PLAN") APPLICABLE TO RESTRICTED STOCK AND TO THE RESTRICTED STOCK AGREEMENT DATED (THE "AGREEMENT"), AND MAY NOT BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, HYPOTHECATED, OR OTHERWISE DISPOSED OF OR ENCUMBERED IN ANY MANNER DURING THE RESTRICTED PERIOD SPECIFIED IN SUCH AGREEMENT. COPIES OF SUCH PLAN AND AGREEMENT ARE ON FILE WITH THE SECRETARY OF THE COMPANY." (d) Death or Disability. Unless the Committee shall otherwise determine in the Award (and subject to Section 18 hereof), if a Participant ceases to be employed by the Company by reason of death or Disability, the Restricted Period covering all shares of Restricted Stock transferred or issued to such Participant under the Plan shall immediately lapse. (e) Retirement. Unless the Committee shall otherwise determine in the Award (and subject to the provisions of Section 18 hereof), the Restricted Period covering all shares of Restricted Stock transferred to a Participant under the Plan shall immediately lapse upon such Participant's Retirement, whether early or not. (f) Termination of Employment. Unless the Committee shall otherwise determine in the Award or otherwise determine at or after the date of grant, if a Participant ceases to be employed by the Company other than due to a condition described in Sections 21(d) or (e) above, all shares of Restricted Stock owned by such Participant for which the Restricted Period has not lapsed shall revert back to the Company upon such termination. Authorized leave of absence or absence in military service shall constitute employment for the purposes of this Section 21(f). Whether absence in government service may constitute employment for the purposes of the Plan shall be conclusively determined by the Committee. (g) Waiver of Forfeiture Provisions. The Committee, in its sole and absolute discretion (but subject to the provisions of Section 18 hereof), may waive the forfeiture provisions in respect of all or some of the Restricted Stock awarded to a Participant. (h) Issuance of New Certificates. Upon the lapse of the Restricted Period with respect to any shares of Restricted Stock, such shares shall no longer be subject to the restrictions imposed in the Award and shall no longer be considered Restricted Stock for the purposes of the Award and the Plan, and the Company shall issue new share certificates respecting such shares registered in the name of the Participant without the legend described in Section 21(c) in exchange for those previously issued. 9 PART IIC RETIREMENT UNIT AWARDS 22. DETERMINATION OF RETIREMENT UNIT AWARDS Each year the Committee shall designate those key employees of the Company who shall receive Retirement Unit Awards under the Plan. The Company shall create and maintain appropriate records of account for each Participant which shall be designated as the Participant's Retirement Unit Account. 23. CREDITS TO RETIREMENT UNIT ACCOUNTS The Committee shall allocate to each Participant selected to receive a Retirement Unit Award for that year such dollar amount as the Committee shall determine, taking into account the value of the Participant's services to the Company. Such dollar amount shall thereupon be converted into Retirement Units or fractions of Units and credited to each such Participant's Retirement Unit Account in a number equal to the quotient obtained by dividing such allocated dollar amount by the Fair Market Value of one share of Common Stock as of the date the allocation is made. 24. DIVIDEND CREDITS At the discretion of the Committee there may also be allocated in each year to each Participant a dollar amount equal to the cash dividends declared and paid by the Company on the Common Stock which the Participant would have received had such Participant been the owner of the number of shares of Common Stock equal to the number of the whole Retirement Units (but not fractional Units) credited to the Participant's Retirement Unit Account; provided, however, that the total value of such dividend equivalents shall be deducted from the amount available for Awards under Section 13 of the Plan. The dollar amounts allocated shall be converted into and credited to the Participant's Retirement Unit Accounts as Retirement Units or fractions thereof as set forth in Section 23 above as of the date on which such dividends were paid by the Company. No interest shall be paid on the dollar amount so allocated to the Retirement Unit Account of any Participant. The Committee in its discretion may make appropriate equitable adjustments to such Retirement Unit Accounts to account for any dividends of property (other than cash) declared and paid by the Company on its Common Stock, or to account for any other event described in Sections 28 and 29 hereof. 25. RESERVATION OF STOCK AND ACCOUNTING RECORDS The Company shall keep records of the Participant's Retirement Unit Accounts. At the time of any allocation to a Participant's account under Sections 23 or 24 hereof, there shall be reserved out of treasury shares of the Company a number (which may include a fraction) of shares of Common Stock equal to the number of Units or fraction thereof so allocated. 26. MATURITY AND PAYMENT AFTER MATURITY (a) The Retirement Unit Account of each Participant shall mature upon such Participant's death, Retirement or other termination of employment. (b) After maturity, the Company shall deliver to the Participant (or in the event of the death of the Participant, as specified in Section 30 hereof) in ten approximately equal annual installments, shares of Common Stock equal in the aggregate to the number of Retirement Units credited to the Participant's Retirement Unit Account. Any fraction of a Unit credited to the Participant's account at maturity shall be paid in cash with the first installment, the fractional Unit being converted into cash at the Fair Market Value of the Common Stock on such first payment date. The first such installment shall be paid within 90 days after maturity. However, the Committee in its discretion at or any time after maturity may, with the consent of the Participant (or the beneficiary of a deceased Participant as specified in Section 30 hereof), (i) defer the commencement of such distribution or defer any installment, (ii) deliver full payment of the shares of Common Stock equal to the aggregate number of Retirement Units credited to the Participant's Retirement Unit Account and the dollar amount credited 10 thereto, or (iii) reduce or increase the number of annual installments in which the payments are to be made. (c) So long as Retirement Units remain credited to the Retirement Unit Account of a Participant subsequent to maturity, such account shall be credited with the dollar amount allocated to the account as dividends as provided for in Section 24 hereof. Any dollar amount so credited may be paid in cash with the next succeeding annual installment made under Section 26(b) above, or in such manner, at such time or times, and subject to such conditions as the Committee in its sole discretion shall determine; provided, however, that in the case of any dollar amount credited to an account after maturity in respect of a dividend declared prior to maturity, such dollar amounts shall be converted to Retirement Units as of the date of payment and the remaining installments of Common Stock shall be increased accordingly. PART IID ANNUAL PERFORMANCE AWARDS 27A. DETERMINATION OF ANNUAL PERFORMANCE AWARDS (a) General. Each year the Committee may make Annual Performance Awards under this part of the Plan; provided that no Participant may be eligible to receive an Annual Performance Award hereunder and under the Cash Plan in the same year. (b) Certain Definitions. For the purposes of this Section 27A, the following terms shall have the meanings specified: "Affected Officers" shall mean those executive officers of the Company whose compensation is required to be disclosed in the Company's annual proxy statement relating to the election of directors. "Code Section 162(m)" shall mean Section 162(m) of the Code (or any successor provision), and "Regulations" shall mean the regulations promulgated thereunder, as from time to time in effect. "Eligible Participants" shall have the meaning set forth in subsection (c) below. "Performance Adjustment" means, for any year, a factor ranging from 0% to 200%, based upon the achievement of Performance Goal Targets established by the Committee, that, when multiplied by an Eligible Participant's Target Award, determines the amount of such Eligible Participant's Annual Performance Award for such year. "Performance Goal" means, for any year, the business criteria selected by the Committee to measure the performance during such year of the Company (or of a division, subsidiary or group thereof) from one or more of the following: (i) earnings per share of the Company for the year; (ii) net income of the Company for the year; (iii) return on assets of the Company for the year (net income of the Company for the year divided by average total assets during such year); (iv) return on stockholders' equity of the Company for the year (net income of the Company for the year divided by average stockholders' equity during such year); and (v) operating profit of the Company or of a division, subsidiary or group thereof for the year. 11 "Performance Goal Target" means, for any Performance Goal, the levels of performance during a year under such Performance Goal established by the Committee to determine the Performance Adjustment to an Eligible Participant's Target Award for such year. "Target Award" means, for any year, with respect to an Eligible Participant, the dollar amount set by the Committee that, when multiplied by the applicable Performance Adjustment, determines the dollar amount of such Eligible Participant's Annual Performance Award. (c) Eligibility. Annual Performance Awards are available each year only to Plan Participants who are designated by the Committee, prior to March 31 of such year (or prior to such later date as permitted by Code Section 162(m) and the Regulations), as likely to be Affected Officers for such year, whose annual salary and bonus for such year are expected to exceed $1,000,000 and who are not designated by the Committee as eligible for an annual performance award under the Cash Plan for such year ("Eligible Participants"). (d) Determination of Annual Performance Awards. Prior to March 31 of each year (or prior to such later date as permitted by Code Section 162(m) and the Regulations), the Committee will determine the Eligible Participants for such year, will designate those Eligible Participants who will be entitled to earn an Annual Performance Award for such year under this Plan, and will establish for each such Eligible Participant for such year: (i) a Target Award, (ii) one or more Performance Goals, and (iii) for each such Performance Goal, a Performance Goal Target, the method by which achievement thereof will be measured and a schedule of Performance Adjustment factors corresponding to varying levels of Performance Goal Target achievement. In the event more than one Performance Goal is established for any Eligible Participant, the Committee shall at the same time establish the weighting of each such Performance Goal in determining such Eligible Participant's Annual Performance Award. Notwithstanding anything in this Section 27A to the contrary, the Annual Performance Award payable to any Eligible Participant in any year may not exceed $1.5 million. (e) Payment of Annual Performance Awards. Subject to subsection (f) below, Annual Performance Awards will be paid as soon as practicable after the end of the year to which it relates and after the Committee certifies the extent to which the Performance Goal Target or Targets under the Performance Goal or Goals have been met or exceeded. In the discretion of the Committee, an Annual Performance Award may be paid in cash, shares of Common Stock, shares of Restricted Stock (subject to the provisions of Section 21 hereof), Retirement Units (subject to the provisions of Sections 23-26 hereof) or any combination thereof. For this purpose, shares of Common Stock shall be valued at Fair Market Value, and Restricted Stock and Retirement Units shall be deemed to have a value equal to the Fair Market Value of the underlying Common Stock, in each case as of the date of the Committee's determination to pay such Annual Performance Award in such form or forms. If permitted by the Regulations and Code Section 162(m), the Committee may determine to pay a portion of an Annual Performance Award in December of the year to which it relates. The Committee may not increase the amount of an Annual Performance Award that would otherwise be payable upon achievement of the Performance Target or Targets, but it may reduce any Eligible Participant's Annual Performance Award in its discretion. Subject to Section 14(c) above, no Annual Performance Award will be payable to any Eligible Participant who is not an employee of the Company on the last day of the year to which such Annual Performance Award relates. (f) Deferral of Annual Performance Awards. If the Committee determines that some portion of an Annual Performance Award to an Eligible Participant shall be treated as a deferred Annual Performance Award and be payable in annual or other periodic installments, the Eligible Participant will be notified in writing when such deferred Annual Performance Award shall be paid and over what period of time. A deferred Award in the form of shares of Common Stock shall be subject to the provisions of Section 19 (b) hereof. In the case of a deferred Award in the form of cash, in each year the Committee shall have the discretion to provide for the payment of an amount equivalent to interest, at such rate or rates fixed by the Committee, on such deferred cash Annual Performance Award. Any amounts 12 provided for pursuant to the preceding sentence shall become payable in such a manner, at such time or times, and subject to such conditions as the Committee shall in its sole discretion determine; provided, however, that the total amount of such interest shall be deducted from the maximum amount available for Awards under the formula described in Section 13 of the Plan. (g) Code Section 162(m). It is the intent of the Company that Annual Performance Awards satisfy, and this Section 27A be interpreted in a manner that satisfies, the applicable requirements of Code Section 162(m) and the Regulations so that the Company's tax deduction for Annual Performance Awards to Affected Officers is not disallowed in whole or in part by operation of Code Section 162(m). If any provision of this Plan or of any Annual Performance Award would otherwise frustrate or conflict with such intent, that provision shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any irreconcilable conflict with such intent, such provision shall be deemed void as applicable to Eligible Participants. PART IIE PERFORMANCE OR OTHER AWARDS 27. DETERMINATION OF PERFORMANCE AND OTHER AWARDS (a) Each year the Committee in its sole discretion may authorize other forms of Awards such as, but not limited to, Performance Awards, if the Committee deems it appropriate to do so in order to further the purposes of the Plan. (b) A "Performance Award" shall mean an Award which entitles the Participant to receive Common Stock, Restricted Stock, Retirement Units, Options under Part I of the Plan or other compensation (which may include cash), or any combination thereof, in an amount which depends upon the financial performance of the Company during a stated period of more than one year. Performance for this purpose may be measured by the growth in book value of the Common Stock, an increase in per share earnings of the Company, an increase in operating cash flow, or any other indicators specified by the Committee. The Committee shall also fix the period during which such performance is to be measured, the value of a Performance Award for purposes of providing for the accrual pursuant to Section 13 of the Plan and the form of payment to be made in respect of the Performance Award. PART III GENERAL PROVISIONS 28. STOCK DIVIDEND OR STOCK SPLIT If at any time the Company shall take any action whether by stock dividend, stock split, combination of shares, or otherwise, which results in a proportionate increase or decrease in the number of shares of Common Stock theretofore issued and outstanding, (i) the number of shares of Common Stock then subject to deferred Awards, credited to Retirement Unit Accounts (matured or unmatured) or set aside for Performance or Other Awards, (ii) the number of outstanding Options, the number of shares of Common Stock for which such Options are exercisable and the exercise price thereof, (iii) the number of shares of Common Stock reserved for Awards, (iv) the number of shares of Common Stock reserved for Options, and (v) the maximum number of shares with respect to which Options may be granted to any key employee in any calendar year under Section 6(b), shall be increased or decreased in the same proportion. The Committee shall make an appropriate equitable adjustment to the provisions of Section 13(a) to take account of such increase or decrease in issued and outstanding shares. The Committee in its discretion may make appropriate equitable adjustments respecting deferred Stock Awards, Retirement Units, Annual Performance Awards, Performance or Other Awards and outstanding Options to take account of a dividend by the Company of property other than cash. All such adjustments shall be made by the Committee whose determination shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. 13 29. RECLASSIFICATION OR MERGER If at any time the Company reclassifies or otherwise changes its issued and outstanding Common Stock (other than in par value) or the Company and one or more corporations merge and the Company is the surviving corporation of such merger, then each Stock Award, Retirement Unit (matured or unmatured), Annual Performance Award, Performance or Other Award which at the time of such reclassification or merger is credited as a Stock Award, Retirement Unit, Annual Performance Award, Performance or Other Award shall thereafter be deemed to be the equivalent of (and all Units thereafter credited to a Retirement Unit Account shall be computed with reference to), and outstanding Options shall be exercisable for, the shares of stock or other securities of the Company which pursuant to the terms of such reclassification or merger are issued with respect to each share of Common Stock. The Committee shall also make an appropriate equitable adjustment to the provisions of Sections 6(b) and 13(a) to take account of such event. All such adjustments shall be made by the Committee whose determination shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. 30. NON-ALIENATION OF BENEFITS Except as herein specifically provided, no right or unpaid benefit under this Plan shall be subject to alienation, assignment, pledge or charge and any attempt to alienate, assign, pledge or charge the same shall be void. If any Participant or person entitled to the benefits hereunder should attempt to alienate, assign, pledge or charge any benefit hereunder, then such benefit shall, in the discretion of the Committee, cease. Notwithstanding the foregoing, rights and benefits hereunder shall pass by will or the laws of descent and distribution in the following order: (i) to beneficiaries so designated by the Participant; if none, then (ii) to a legal representative of the Participant; if none, then (iii) to the persons entitled thereto as determined by a court of competent jurisdiction. Awards so passing shall be made at such times and in such manner as if the Participant were living. 31. WITHHOLDING OR DEDUCTION FOR TAXES If at any time specified herein for the making of any payment or delivery of any Common Stock to any Participant or beneficiary, any law or regulation of any governmental authority having jurisdiction in the premises shall require the Company to withhold, or to make any deduction for, any taxes or take any other action in connection with the payment or delivery then to be made, such payment or delivery shall be deferred until such withholding or deduction shall have been provided for by the Participant or beneficiary, or other appropriate action shall have been taken. Subject to the provisions of Rule 16b-3 and the consent of the Committee for persons subject to Section 16 of the Exchange Act, the Participant or beneficiary may satisfy the obligation for such withholding or deduction in whole or in part by electing to deliver shares of Common Stock already owned or to have the Company retain from the distribution shares of Common Stock, in each case having a Fair Market Value equal to the amount to be withheld or deducted. 32. ADMINISTRATION EXPENSES The entire expense of administering this Plan shall be borne by the Company. 33. GENERAL CONDITIONS (a) The Board in its discretion may from time to time amend, suspend or terminate any or all of the provisions of this Plan, provided that no change may be made which would prevent Incentive Stock Options granted under the Plan from being Incentive Stock Options as described therein without the consent of the optionees concerned, and further provided that the Board may not make any amendment which (1) changes the class of persons eligible for Incentive Stock Options, or (2) increases the total number of shares for which Options may be granted under Section 6(b), or (3) materially affects the 14 provisions of Sections 13(a) or (b) of the Plan, or (4) increases the total number of shares authorized under Section 13(f) for which Awards may be granted, without the consent and approval of the holders of a majority of the outstanding shares of Class A and Class B Common Stock of the Company entitled to vote thereon, voting together as one class. The foregoing provisions shall not be construed to prevent the Committee from exercising its discretion, or to limit such discretion, to increase the total number of shares for which Options may be granted under Section 6(b) or the total number of shares authorized under Section 13(f) for which Awards may be granted, as expressly permitted by Sections 28 and 29 hereof, or to adjust the provisions of Sections 13(a) and (b) hereof as expressly permitted by Sections 13(b), 28 and 29 hereof, or otherwise to exercise any discretion to the extent expressly authorized hereunder. (b) Nothing contained in the Plan shall prohibit the Company from establishing incentive compensation arrangements in addition to this Plan and the Cash Plan. Payments made under any such separate arrangements shall not be included in or considered a part of the maximum dollar amount available for Awards under the Plan and Cash Plan, or number of shares available for Awards or Options under the Plan, and shall not be charged against the dollar or share amounts available for Awards under the Plan and Cash Plan or Options under the Plan. In the discretion of the Committee, employees shall be eligible to participate in such other arrangements, as well as the Plan and Cash Plan, in the same year. (c) Nothing in this Plan shall be deemed to limit in any way the right of the Company to terminate a Participant's employment with the Company at any time. (d) The Committee may promulgate rules and regulations relating to the administration and interpretation of, and procedures under, the Plan. Any decision or action taken by the Company, the Board or the Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. (e) No member of the Board or of the Committee shall be liable for any act or action, whether of commission or omission, taken by any other member or by any officer, agent or employee, nor for anything done or omitted to be done by such Director except in circumstances involving actual bad faith. (f) Notwithstanding any other provision of this Plan, the Company shall not be obligated to make any Award, issue any shares of Common Stock, or grant any Option with respect thereto, unless it is advised by counsel of its selection that it may do so without violation of the applicable Federal and State laws pertaining to the issuance of securities, and may require any stock so issued to bear a legend, may give its transfer agent instructions, and may take such other steps, as in its judgment are reasonably required to prevent any such violation. (g) It is the intent of the Company that the Plan comply in all respects with Rule 16b-3, that any ambiguities or inconsistencies in construction of the Plan be interpreted to give effect to such intention and that if any provision of the Plan is found not to be in compliance with Rule 16b-3, such provision shall be deemed null and void to the extent required to permit the Plan to comply with Rule 16b-3. The Board may adopt rules and regulations under, and amend, the Plan in furtherance of the intent of the foregoing. 34. TRANSITION Upon the effectiveness of this Plan, as provided below, and the Cash Plan, such plans replaced the Company's Executive Incentive Compensation Plan ("EICP"), except that the EICP shall continue to govern options and awards of restricted stock outstanding under the EICP. No further awards will be made under the EICP, and all amounts accrued for awards under the EICP and unawarded were carried forward and made available for Awards under the Plan and awards under the Cash Plan. All 15 unmatured and matured but undistributed retirement units and all performance awards respecting current performance cycles awarded under the EICP became Retirement Units and Performance Awards hereunder and any payments or distributions in respect thereof shall be made hereunder; provided, however, that the number of shares of Common Stock available for Awards pursuant to Section 13(f) hereof shall not be reduced by the number of such retirement units previously awarded under the EICP and paid subsequently under the Plan. 35. EFFECTIVE DATES The Plan became effective for periods beginning after January 1, 1991 upon approval by the holders of a majority of the outstanding shares of Class A and Class B Common Stock of the Company entitled to vote thereon at the 1991 Annual Meeting of Stockholders, in person or by proxy, voting together as a single class. No Options may be granted or Awards made under the Plan after December 31, 2000, or such earlier expiration date as may be designated by resolution of the Board. 16 EX-10.3 4 EXHIBIT 10.3 THE NEW YORK TIMES COMPANY 1991 EXECUTIVE CASH BONUS PLAN AS AMENDED 1. NAME AND GENERAL PURPOSE The name of this plan is The New York Times Company 1991 Executive Cash Bonus Plan (hereinafter called the "Plan"). The purpose of the Plan is to enable the Company (as hereinafter defined) to retain and attract executives who enhance its tradition and contribute to its success by their ability, ingenuity and industry, and to enable them to participate in the long-term success and growth of the Company. 2. DEFINITIONS (a) "Awards"--has the meaning specified in Section 4 hereof. (b) "Board"--means the Board of Directors of the Company. (c) "Committee"--means the Committee referred to in Section 3 of the Plan. If at any time no Committee shall be in office then the functions of the Committee specified in the Plan shall be exercised by the non-employee members of the Board. (d) "Company"--means The New York Times Company, a corporation organized under the laws of the State of New York (or any successor corporation), and its subsidiaries (as hereinafter defined) and other non-corporate entities in which it owns directly or indirectly 40% or more of the equity interests. A "subsidiary" means any corporation in which the Company possesses directly or indirectly 50% or more of the combined voting power of all classes of stock. (e) "Consolidated Statement of Income"--means the consolidated statement of income (or any comparable statement, however designated) of the Company, audited by the independent certified public accountants of the Company and contained in the Company's annual report to stockholders or proxy statement. (f) "Equity in Operations of Forest Products Group"--means the amount designated as Equity in Operations of the Forest Products Group for the applicable year and shown separately in the Consolidated Statement of Income for such year. (g) "Participant"--means a key employee of the Company who is selected by the Committee to participate in any part of the Plan from among persons who in the judgment of the Committee are key employees of the Company. In general, key employees are those employees who have principal responsibility for, or who contribute substantially to, the management efficiency, editorial achievement or financial success of the Company. (h) "Pre-Tax Income"--means income before income taxes and Equity in Operations of Forest Products Group, as shown in the Consolidated Statement of Income for the applicable year, but before the amount of any provision for Awards under the Plan and awards under the Stock Plan for such year. (i) "Stock Plan"--means the Company's 1991 Executive Stock Incentive Plan. 3. ADMINISTRATION OF THE PLAN The Plan shall be administered by the Board or the Committee appointed by it and composed of two or more directors who are not employees of the Company. The Committee shall be constituted so as to enable the Plan to comply with the administration requirements of Section 162(m)(4)(C) of the Internal Revenue Code of 1986, as amended. The Committee shall serve at the pleasure of the Board and shall have such powers as the Board may from time to time confer upon it. PART I AWARDS 4. FORM OF AWARDS The Plan is designed to provide incentives for key employees of the Company by the making of awards of supplemental compensation ("Awards"). The Committee, subject to the terms and conditions hereof, may make Awards to a Participant in any one, or in any combination, of the following forms: (a) Cash Awards as provided in Part IA of the Plan ("Cash Awards"); (b) Annual Performance Awards as provided in Part IB of the Plan ("Annual Performance Awards"); and (c) Performance Awards ("Performance Awards") or other forms of Awards as provided in Part IC of the Plan. Awards may be made to a Participant whether or not he or she receives an award or option under the Stock Plan. Cash Awards, Performance Awards and other forms of Awards pursuant to Part IC will be based on a Participant's performance in those areas for which the Participant is directly responsible. Performance for this purpose may be measured by the achievement of specific management goals such as, but not limited to, an increase in earnings or the operating cash flow of the Company, outstanding initiative or achievement in any department of the Company, or any other standards specified by the Committee. Annual Performance Awards will be based exclusively on the criteria set forth in Part IB. No Award under the Plan is payable in common stock or preferred stock of the Company. 5. MAXIMUM AMOUNT AVAILABLE FOR THE ACCRUAL OF AWARDS FOR ANY YEAR (a) No accrual for Awards shall be made hereunder (or under the Stock Plan) for any year unless cash dividends of not less than ten cents ($.10) per share (as adjusted as hereafter provided) have been declared on the outstanding Class A and Class B Common Stock of the Company during such year. If at any time the Company shall take any action, whether by stock dividend, stock split, combination of shares, or otherwise, which results in an increase or decrease in the number of shares of Class A and/or Class B Common Stock theretofore issued and outstanding, or the Company reclassifies or otherwise changes its issued and outstanding Class A and/or Class B Common Stock (other than in par value) or the Company and one or more corporations merge and the Company is the surviving corporation of such merger, then the Committee shall make an equitable adjustment to the provisions of this Section 5(a) to take account of such event. (b) In the event that the above condition is met for any year during the continuance of this Plan, the maximum aggregate amount that may be accrued for Awards under the Plan and the Stock Plan for such year shall be 4% of the sum of: (1) Pre-Tax Income plus (2) Equity in Operations of Forest Products Group. The Committee, in its sole discretion, may make adjustments in Pre-Tax Income and Equity in Operations of Forest Products Group to take account of extraordinary, unusual or infrequently occurring events and transactions, changes in accounting principles that substantially affect the foregoing, or such other circumstances as the Committee may determine warrant such adjustment. (c) As soon as feasible after the close of each year, the independent certified public accountants of the Company shall determine and report the maximum amount that may be accrued for Awards for such year under the formula described in Section 5(b), subject to the second sentence of such Section. (d) If amounts are accrued in any year under the formula described in this Section 5 and are not awarded in full in such year under the Plan and the Stock Plan, such unawarded amounts may, in the discretion of the Committee, be carried forward and be available for Awards under this Plan and under 2 the Stock Plan in any future year without regard to the provisions of Sections 5(a) or (b) of the Plan applicable to Awards made in such year. (e) Awards under the Plan for any year may not exceed the sum of (i) the amount accrued for such year under Section 5(b) above plus (ii) unawarded accrued amounts carried forward from previous years under Section 5(d) above plus (iii) amounts that may become available for Awards pursuant to the last sentence of Section 7(c) hereof, minus (x) the amount of interest equivalents allocated during such year pursuant to Section 10(b) hereof, and minus (y) the amount of awards made for such year under the Stock Plan valued as set forth in Section 13(e) of the Stock Plan (and any interest or dividend equivalents allocated during such year pursuant to Sections 15(c), 24 and 27A thereof). 6. DETERMINATION OF AWARDS AND PARTICIPANTS (a) As promptly as practicable after the end of each year, the Committee may make Awards (other than Annual Performance Awards, which are to be made exclusively as set forth in Part IB) for such year and determine the amounts to be carried forward for Awards in future years. The Committee may also, in its discretion, make Awards (other than Annual Performance Awards, which are to be made exclusively as set forth in Part IB) prior to the end of the year based on amounts available under clauses (ii) and (iii) of Section 5(e) and reasonable estimates of the accrual for the year in question. (b) The Committee shall have absolute discretion to determine the key employees who are to receive Awards (other than Annual Performance Awards, which are to be made exclusively as set forth in Part IB) under the Plan for any year and to determine the amount of such Awards based on such criteria and factors as the Committee in its sole discretion may determine, such as the Company's operating cash flow and overall financial performance. Recommendations as to the key employees who are to receive Awards (including Annual Performance Awards) under the Plan for any year and to the amount and form of such Awards shall, however, be made to the Committee by the chief executive officer of the Company. The fact that an employee is selected as eligible for an Award shall not mean, however, that such employee will necessarily receive an Award. (c) A person whose employment terminates during the year or who is granted a leave of absence during the year may, in the discretion of the Committee and under such rules as the Committee may from time to time prescribe, be given an Award with respect to the period of such person's service during such year. 7. METHOD AND TIME OF PAYMENT OF AWARDS (a) Awards shall be paid in full as soon as practicable after the Award is made; provided, however, that payment of Annual Performance Awards shall be subject to the provisions of Part IB; and provided further, that the payment of any or all Awards may be deferred, divided into annual installments, or made subject to such other conditions as the Committee in its sole discretion may authorize under such rules and regulations as may be adopted from time to time by the Committee. (b) The Committee's rules and regulations may include procedures by which a Participant expresses a preference to the Committee as to the form of Award or method of payment of an Award but the final determination as to the form and the terms and conditions of any Award shall rest solely with the Committee. (c) Awards deferred under the Plan shall become payable to the Participant or, in the event of the Participant's death, as specified in Section 13 hereof, in such manner, at such time or times (which may be either before or after termination of service), and subject to such conditions as the Committee in its sole discretion shall determine. In any year the Committee shall have the discretion to set aside, for payment in such year or any future year, interest on any deferred Award; provided, however, that the total amount of such interest shall be deducted from the maximum amount available for Awards under 3 Section 5 of the Plan. Any forfeited deferred Awards shall be carried forward and be available for Awards in any future year without regard to the provisions of Sections 5(a) or (b) of the Plan. 8. INDIVIDUAL AGREEMENTS (a) The Committee may in its discretion require that each Participant receiving an Award enter into an agreement with the Company which shall contain such terms and conditions as the Committee may in its discretion request. (b) The Committee may cancel any unexpired, unpaid or deferred Award at any time if the Participant is not in compliance with all applicable provisions of the agreement referred to above, if any, and the Plan. 9. STATUS OF PARTICIPANTS No Participant in the Plan shall have any interest in any specific assets of the Company by reason of the fact that deferred Awards are to be recorded as being held for such Participant's account to be paid in installments in the future. The interest of all Participants shall derive from and be determined solely by the terms and provisions of the Plan set forth herein. PART IA CASH AWARDS 10. DETERMINATION OF CASH AWARDS (a) Each year the Committee shall designate those key employees of the Company who shall receive Cash Awards under this part of the Plan. Cash Awards may be paid immediately, in installments or on a deferred date, as the Committee, in its discretion, may provide. (b) If the Committee determines that some portion of a Cash Award to a Participant shall be treated as a deferred Cash Award and be payable in annual or other periodic installments, the Participant will be notified in writing when such deferred Cash Award shall be paid and over what period of time. In each year the Committee shall have discretion to provide for the payment of an amount equivalent to interest, at such rate or rates fixed by the Committee, on any deferred Cash Award. Any amounts provided for pursuant to the preceding sentence shall become payable in such manner, at such time or times, and subject to such conditions as the Committee shall in its sole discretion determine; provided, however, that the total amount of such interest shall be deducted from the maximum amount available for Awards under the formula described in Section 5 of the Plan. PART IB ANNUAL PERFORMANCE AWARDS 11. DETERMINATION OF ANNUAL PERFORMANCE AWARDS (a) General. Each year the Committee may make Annual Performance Awards under this part of the Plan; provided that no Participant may be eligible to receive an Annual Performance Award hereunder and under the Stock Plan in the same year. (b) Certain Definitions. For the purposes of this Part IB, the following terms shall have the meanings specified: 4 "Affected Officers" shall mean those executive officers of the Company whose compensation is required to be disclosed in the Company's annual proxy statement relating to the election of directors. "Code Section 162(m)" shall mean Section 162(m) of the Internal Revenue Code of 1986, as amended (or any successor provision), and "Regulations" shall mean the regulations promulgated thereunder, as from time to time in effect. "Eligible Participants" shall have the meaning set forth in subsection (c) below. "Performance Adjustment" means, for any year, a factor ranging from 0% to 200%, based upon the achievement of Performance Goal Targets established by the Committee, that, when multiplied by an Eligible Participant's Target Award, determines the amount of such Eligible Participant's Annual Performance Award for such year. "Performance Goal" means, for any year, the business criteria selected by the Committee to measure the performance during such year of the Company (or of a division, subsidiary or group thereof) from one or more of the following: (i) earnings per share of the Company for the year; (ii) net income of the Company for the year; (iii) return on assets of the Company for the year (net income of the Company for the year divided by average total assets during such year); (iv) return on stockholders' equity of the Company for the year (net income of the Company for the year divided by average stockholders' equity during such year); and (v) operating profit of the Company or of a division, subsidiary or group thereof for the year. "Performance Goal Target" means, for any Performance Goal, the levels of performance during a year under such Performance Goal established by the Committee to determine the Performance Adjustment to an Eligible Participant's Target Award for such year. "Target Award" means, for any year, with respect to an Eligible Participant, the dollar amount set by the Committee that, when multiplied by the applicable Performance Adjustment, determines such Eligible Participant's Annual Performance Award. (c) Eligibility. Annual Performance Awards are available each year only to Plan Participants who are designated by the Committee, prior to March 31 of such year (or prior to such later date as permitted by Code Section 162(m) and the Regulations), as likely to be Affected Officers for such year, whose annual salary and bonus for such year are expected to exceed $1,000,000 and who are not designated by the Committee as eligible for an Annual Performance Award under the Stock Plan for such year ("Eligible Participants"). (d) Determination of Annual Performance Awards. Prior to March 31 of each year (or prior to such later date as permitted by Code Section 162(m) and the Regulations), the Committee will determine the Eligible Participants for such year, will designate those Eligible Participants who will be entitled to earn an Annual Performance Award for such year under this Plan, and will establish for each such Eligible Participant for such year: (i) a Target Award, (ii) one or more Performance Goals, and (iii) for each such Performance Goal, a Performance Goal Target, the method by which achievement thereof will be measured and a schedule of Performance Adjustment factors corresponding to varying levels of Performance Goal Target achievement. In the event more than one Performance Goal is established for any Eligible Participant, the Committee shall at the same time establish the weighting of each such Performance Goal in determining such Eligible Participant's Annual Performance Award. 5 Notwithstanding anything in this Part IB to the contrary, the Annual Performance Award payable to any Eligible Participant in any year may not exceed $1.5 million. (e) Payment of Annual Performance Awards. Subject to subsection (f) below, Annual Performance Awards will be paid in cash as soon as practicable after the end of the year to which it relates and after the Committee certifies the extent to which the Performance Goal Target or Targets under the Performance Goal or Goals have been met or exceeded. If permitted by the Regulations and Code Section 162(m), the Committee may determine to pay a portion of an Annual Performance Award in December of the year to which it relates. The Committee may not increase the amount of an Annual Performance Award that would otherwise be payable upon achievement of the Performance Target or Targets, but it may reduce any Eligible Participant's Annual Performance Award in its discretion. Subject to Section 6(c) above, no Annual Performance Award will be payable to any Eligible Participant who is not an employee of the Company on the last day of the year to which such Annual Performance Award relates. (f) Deferral of Annual Performance Awards. If the Committee determines that some portion of an Annual Performance Award to an Eligible Participant shall be treated as a deferred Annual Performance Award and be payable in annual or other periodic installments, the Eligible Participant will be notified in writing when such deferred Annual Performance Award shall be paid and over what period of time. In each year the Committee shall have discretion to provide for the payment of an amount equivalent to interest, at such rate or rates fixed by the Committee, on any deferred Annual Performance Award. Any amounts provided for pursuant to the preceding sentence shall become payable in such a manner, at such time or times, and subject to such conditions as the Committee shall in its sole discretion determine; provided, however, that the total amount of such interest shall be deducted from the maximum amount available for Awards under the formula described in Section 5 of the Plan. (g) Code Section 162(m). It is the intent of the Company that Annual Performance Awards satisfy, and this Part IB be interpreted in a manner that satisfies, the applicable requirements of Code Section 162(m) and the Regulations so that the Company's tax deduction for Annual Performance Awards to Affected Officers is not disallowed in whole or in part by operation of Code Section 162(m). If any provision of this Plan or of any Annual Performance Award would otherwise frustrate or conflict with such intent, that provision shall be interpreted and deemed amended so as to avoid such conflict. To the extent of any irreconcilable conflict with such intent, such provision shall be deemed void as applicable to Eligible Participants. PART IC PERFORMANCE AND OTHER AWARDS 12. DETERMINATION OF PERFORMANCE AND OTHER AWARDS (a) Each year the Committee in its sole discretion may authorize other forms of Awards such as, but not limited to, Performance Awards, if the Committee deems it appropriate to do so in order to further the purposes of the Plan. (b) A "Performance Award" shall mean an Award which entitles the Participant to receive cash or other compensation, or any combination thereof, in an amount which depends upon the financial performance of the Company during a stated period of more than one year. Performance for this purpose may be measured by the growth in book value of the common stock of the Company, an increase in per share earnings of the Company, an increase in operating cash flow or any other indicators specified by the Committee. The Committee shall also fix the period during which such performance is to be measured, the value of a Performance Award for purposes of providing for the 6 accrual pursuant to Section 5 of the Plan and the form of payment to be made in respect of the Performance Award. PART II GENERAL PROVISIONS 13. NON-ALIENATION OF BENEFITS Except as herein specifically provided, no right or unpaid benefit under this Plan shall be subject to alienation, assignment, pledge or charge and any attempt to alienate, assign, pledge or charge the same shall be void. If any Participant or person entitled to the benefits hereunder should attempt to alienate, assign, pledge or charge any benefit hereunder, then such benefit shall, in the discretion of the Committee, cease. Notwithstanding the foregoing, rights and benefits hereunder shall pass by will or the laws of descent and distribution in the following order: (i) to beneficiaries so designated by the Participant; if none, then (ii) to a legal representative of the Participant; if none, then (iii) to the persons entitled thereto as determined by a court of competent jurisdiction. Awards so passing shall be made at such times and in such manner as if the Participant were living. 14. WITHHOLDING OR DEDUCTION FOR TAXES If at any time specified herein for the making of any payment to any Participant or beneficiary, any law or regulation of any governmental authority having jurisdiction in the premises shall require the Company to withhold, or to make any deduction for, any taxes or take any other action in connection with the payment then to be made, such payment shall be deferred until such withholding or deduction shall have been provided for by the Participant or beneficiary, or other appropriate action shall have been taken. 15. ADMINISTRATION EXPENSES The entire expense of administering this Plan shall be borne by the Company. 16. GENERAL CONDITIONS (a) The Board in its discretion may from time to time amend, suspend or terminate any or all of the provisions of this Plan, provided that the Board may not make any amendment which materially affects the provisions of Sections 5(a) or (b) of the Plan without the consent and approval of the holders of a majority of the outstanding shares of Class A and Class B Common Stock of the Company entitled to vote thereon, voting together as one class. The foregoing provisions shall not be construed to prevent the Committee from exercising its discretion, or to limit such discretion, to adjust the provisions of Sections 5(a) and (b) hereof as expressly permitted thereby or otherwise to exercise any discretion to the extent expressly authorized hereunder. (b) Nothing contained in the Plan shall prohibit the Company from establishing incentive compensation arrangements in addition to this Plan and the Stock Plan. Payments made under any such separate arrangements shall not be included in or considered a part of the maximum amount available for Awards under the Plan and Stock Plan and shall not be charged against the amount available for Awards under the Plan and Stock Plan for any year. In the discretion of the Committee, employees shall be eligible to participate in such other arrangements, as well as the Plan and Stock Plan, in the same year. (c) Nothing in this Plan shall be deemed to limit in any way the right of the Company to terminate a Participant's employment with the Company at any time. 7 (d) The Committee may promulgate rules and regulations relating to the administration and interpretation of, and procedures under, the Plan. Any decision or action taken by the Company, the Board or the Committee arising out of or in connection with the construction, administration, interpretation and effect of the Plan shall be conclusive and binding upon all Participants and any person claiming under or through any Participant. (e) No member of the Board or of the Committee shall be liable for any act or action, whether of commission or omission, taken by any other member or by any officer, agent or employee, nor for anything done or omitted to be done by such Director except in circumstances involving actual bad faith. 17. TRANSITION Upon the effectiveness of this Plan, and the Stock Plan, such plans replaced the Company's Executive Incentive Compensation Plan ("EICP"), except that the EICP shall continue to govern options and awards of restricted stock outstanding under the EICP. No further awards will be made under the EICP, and all amounts accrued for awards under the EICP and unawarded were carried forward and made available for Awards under the Plan and awards under the Stock Plan. 18. EFFECTIVE DATES The Plan became effective for periods beginning after January 1, 1991 upon the approval by the holders of a majority of the outstanding shares of Class A and Class B Common Stock of the Company entitled to vote thereon at the 1991 Annual Meeting, in person or by proxy, voting together as a single class. No Awards may be granted under the Plan after December 31, 2000, or such earlier expiration date as may be designated by resolution of the Board. 8 EX-10.5 5 EXHIBIT 10.5 THE NEW YORK TIMES COMPANY SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN PURPOSE The Supplemental Executive Retirement Plan is designed to provide a benefit which, when added to the retirement income provided under other Company plans, will ensure the payment of a competitive level of retirement income to key senior executives of The New York Times Company, thereby providing an additional incentive for assuring orderly management succession. Eligibility for participation in the Plan shall be limited to executives designated by the Executive Committee. This Plan shall become effective as of January 1, 1983, and shall be effective as to each Participant on the date he or she is designated as such hereunder. SECTION I - DEFINITIONS 1.1. "Basic Plan" means the qualified non-contributory defined benefit pension plan to which the Company makes or has made contributions on behalf of a designated Participant (including, but not limited to, The New York Times Companies Pension Plan, The Guild-Times Pension Plan, The New York Times Company Retirement Annuity Plan) and any excess benefit plan (within the meaning of Section 3(36) of the Employee Retirement Income Security Act of 1974) pursuant to which the Company makes payments to or on behalf of a designated Participant. 1.2. "Basic Plan Benefit" means the amount of benefit payable to a Participant under any Basic Plan, assuming immediate commencement of payments as of the date of Retirement, with benefits payable in the form of a straight life annuity. 1.3. "Committee" means a committee consisting of the Chairman and the President of The New York Times Company, which has been given authority by the Board of Directors to administer this Plan. 1.4. "Company" means The New York Times Company and its subsidiaries and affiliates. 1.5. "Final Average Earnings" means the average of a Participant's "Earnings" for the highest five consecutive calendar years out of the last ten years (or the total number of calendar years as a Participant in the Basic Plan if less than five) prior to the year of Retirement under Section 2.1. "Earnings" for any calendar year shall include the Participant's base salary, annual cash bonuses and sales commissions paid during such year, and shall exclude any other compensation (such as deferred incentive compensation under the Long-Range Incentive Plan, retirement units, performance awards under the Executive Incentive Award Plan and stock options under the 1974 Incentive Stock Option Plan, the Employee Stock Purchase Plan and any successor plans) and any contributions to or benefits under this Plan or any other pension, profit-sharing, stock bonus or other plan of deferred compensation; except that amounts deferred under a non-qualified deferred compensation plan and/or amounts which the Company contributes to a plan on behalf of the Participant pursuant to a salary reduction agreement which are not includible in the Participant's gross income under Section 125, 402(e)(3), 492(h) or 403(b) of the Code shall be included. 1.6. "Key Executive Position" means a position so designated by the Committee. 1.7. "Participant" means a key senior executive of the Company who has been designated as a Participant by the Committee. An executive shall become a Participant in the Plans as of the date he or she is individually selected by, and specifically named by the Committee for inclusion in the Plan. If a participant is reclassified to a responsibility that is not a Key Executive Position, the Participant's continuing eligibility will be subject to the approval of the Committee. 1.8. "Plan" means the Company's Supplemental Executive Retirement Plan. 1.9. "Retirement" means the termination of a Participant's employment with the Company on one of the retirement dates specified in Section 2.1. 1.10. "Service" means the Participant's service for vesting purposes as defined in the Basic Plan, up to a maximum of 20 years, and shall include any additional service credit in specific situations as may be authorized by the Committee, and approved by the Compensation Committee of the Board. 1.11. "Surviving Spouse" means the Participant's spouse who qualifies for a surviving spouse's benefit under the Basic Plan in the event of a Participant's death before retirement. 1.12. The masculine gender, where appearing in the Plan, will be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates the contrary. SECTION II - ELIGIBILITY FOR BENEFITS 2.1. Each Participant with ten or more years of Service shall be eligible to retire and receive a benefit under this Plan beginning on one of the following dates: (a) "Normal Retirement Date," which is the first day of the month following the month in which the Participant reaches age 65. (b) "Early Retirement Date," which is the first day of any month following (i) the Participant's 60th birthday when an election to retire has been made in accordance with Section 4.1(a), or (ii) if the Committee consents to the Participant's early retirement, the Participant's 55th birthday. (c) "Postponed Retirement Date," which in the case of a Participant who terminates his employment with the Company after his Normal Retirement Date, is the first day of the month next following the month in which the Participant terminates employment with the Company. SECTION III - AMOUNT OF AND FORM OF RETIREMENT BENEFIT AMOUNT OF BENEFIT 3.1. The annual retirement benefit payable at Normal Retirement Date under the Plan shall equal the excess, if any, of (a) 50% of the Final Average Earnings (prorated at 2.5% times Final Average Earnings times years of Service for Service of less than 20 years) over (b) the sum of the Basic Plan Benefits payable as of the Participant's Normal Retirement Date. 3.2. The annual benefit payable at an Early Retirement Date shall equal the benefit determined using the formula in Section 3.1, reduced by 4% for each year (1/3 of 1% for each month) benefits commenced prior to age 60, less the sum of the annual Basic Plan Benefits payable as of the Participant's Early Retirement Date. 3.3. The annual benefit payable at a Postponed Retirement Date shall be equal to the benefit determined in accordance with Section 3.1 based on the Participant's Service and Final Average Earnings as of the Participant's Normal Retirement Date. FORM OF BENEFIT 3.4. Retirement Benefits payable under this Plan shall be payable at the same time and in the same manner as benefits under the Basic Plan (except the Level Income options), unless otherwise determined 2 by the Company. Once in pay status, a Participant may not change the form of benefit payable under the Plan. SECTION IV - PAYMENT OF RETIREMENT BENEFITS 4.1. (a) A Participant with ten or more years of Service who is age 60 or older, may elect to retire under the Plan by giving a minimum of six months' notice to the Committee (unless such notice is waived by the Committee). (b) A Participant with ten or more years of Service who is not eligible for early retirement under Section 4.1(a) may request retirement under this Plan as of the first of any month between the ages of 55 and 60, but such request shall be subject to the approval of the Committee which may approve or deny the request based on the needs of the Company. If the request is denied, the Committee and the Participant will defer such Retirement under this Plan for a mutually agreed upon period of time. This will not preclude the right of the Participant to retire under the Basic Plan, in which case the Participant will not be entitled to any benefit hereunder. 4.2. Benefits payable in accordance with Section III will commence on the Participant's date of Retirement under Section 2.1. Plan payments must begin immediately upon Retirement and may not be deferred. Benefits will continue to be paid on the first day of each succeeding month. The last payment will be on the first day of the month in which the retired Participant dies unless an optional form of benefit was elected in accordance with Section 3.4. SECTION V - DEATH BENEFITS PAYABLE 5.1. (a) If a Participant dies while actively employed by the Company or while receiving Long-Term Disability benefits from the Company and (i) a Surviving Spouse is eligible to receive benefits under the provisions of a Basic Plan and (ii) the Participant had ten or more years of Service and (iii) the Participant's age plus Service equalled or exceeded 65, the Surviving Spouse shall be entitled to receive an annual benefit commencing as of the month following the month in which the Participant's death occurs in an amount equal to 50% of the amount of the Participant's accrued benefit as of his date of death determined in accordance with Section III in which case the sum of the Basic Plan Benefits actually payable as of each respective benefit payment date hereunder shall be substituted for the sum of the Basic Plan Benefits payable as of the Participant's Normal Retirement Date. The reduction described in Section 3.2 for the early payment of benefits does not apply to this benefit. (b) If there is no Surviving Spouse, but there are dependent children under age 23, or if the Surviving Spouse dies while there are dependent children under age 23, the Surviving Spouse's benefits will be shared equally by each such child until he or she reaches the age of 23. 5.2. The Surviving Spouse's benefit will be payable monthly, and will commence on the first day of the month following the month in which the Participant dies. The last payment will be made on the first day of the month in which the Surviving Spouse dies, or, where Section 5.1(b) applies, the date a dependent child reaches age 23 or dies. SECTION VI - FORFEITURE OF BENEFIT Notwithstanding any other provision of this Plan, if at any time during which a Participant is entitled to receive payments under the Plan, the Participant elects to engage in any business or practice or become employed in any position, which the Committee, in its sole discretion, deems to be in competition with the Company or any of its business or interests, or which is deemed by the Committee, in its sole discretion, to be otherwise prejudicial to any of its interests, or such Participant fails to make himself available to the Company for reasonable consultation and other services, the Committee, in its sole discretion, may cause the Participant's entire interest in benefits otherwise payable under the Plan 3 to be forfeited and discontinued, or may cause the Participant's payments of benefits under the Plan to be limited or suspended until such Participant is no longer engaging in the conduct above or for such other period the Committee finds advisable under the circumstances, or may take any other action the Committee, in its sole discretion, deems appropriate. The decision of the Committee shall be final. The omission or failure of the Committee to exercise this right at any time shall not be deemed a waiver of its right to exercise such right in the future. The exercise of discretion will not create a precedent in any future cases. SECTION VII - MISCELLANEOUS 7.1. The Committee may, in its sole discretion, terminate, suspend or amend this Plan at any time or from time to time, in whole or in part. However, no amendment or suspension of the Plan will affect a retired Participant's right or the right of a Surviving Spouse or other beneficiary to continue to receive a benefit in accordance with this Plan as in effect on the date such Participant commenced to receive a benefit under this Plan. 7.2. Nothing contained herein will confer upon any Participant or other employee the right to be retained in the service of the Company nor will it interfere with the right of the Company to discharge or otherwise deal with Participants and other employees without regard to the existence of this Plan. 7.3. This Plan is intended to meet the Employee Retirement Income Security Act's definition of "an unfunded plan for management or other highly compensated individuals" and, as such, the Company will make Plan benefit payments solely on a current disbursement basis out of general assets of the Company. 7.4. To the maximum extent permitted by law, no benefit under this Plan will be assignable or subject in any manner to alienation, sale, transfer, claims of creditors, pledge, attachment or encumbrances of any kind. 7.5. The Committee may adopt rules and regulations to assist it in the administration of the Plan. 7.6. This Plan is established under and will be construed according to the laws of the State of New York. 7.7. CLAIMS. If any Participant, beneficiary or other properly interested party is in disagreement with any determination that has been made under the Plan, a claim may be presented, but only in accordance with the procedures set forth herein. (a) ORIGINAL CLAIM. Any Participant, beneficiary or other properly interested party may, if he/she so desires, file with the Committee a written claim for benefits or a determination under the Plan. Within ninety (90) days after the filing of such a claim, the Committee shall notify the claimant in writing whether the claim is upheld or denied in whole or in part or shall furnish the claimant a written notice describing specific special circumstances requiring a specified amount of additional time (but not more than one hundred eighty (180) days from the date the claim was filed) to reach a decision in the claim. If the claim is denied in whole or in part, the Committee shall state in writing: (i) the reasons for the denial; (ii) the references to the pertinent provisions of this Plan on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the claim review procedure set forth in this section. 4 (b) CLAIM REVIEW PROCEDURE. Within sixty (60) days after receipt of notice that a claim has been denied in whole or in part, the claimant may file with the Committee a written request for a review and may, in conjunction therewith, submit written issues and comments. Within sixty (60) days after the filing of such a request for review, the Committee shall notify the claimant in writing whether, upon review, the claim was upheld or denied in whole or in part or shall furnish the claimant a written notice describing specific special circumstances requiring a specified amount of additional time (but not more than one hundred twenty (120) days from the date the request for review was filed) to reach a decision on the request for review. (c) GENERAL RULES. (i) No inquiry or question shall be deemed to be a claim or a request for a review of a denied claim unless made in accordance with the foregoing claims procedure. The Committee may require that any claim for benefits and any request for a review of a denied claim be filed on forms to be furnished by the Committee upon request. (ii) All decisions on claims and on requests for a review of denied claims shall be made by the Committee. The decisions of the Committee shall be final, binding and conclusive upon all persons. (iii) The decision of the Committee on a claim and on a request for a review of a denied claim shall be served on the claimant in writing. If a decision or notice is not received by a claimant within the time specified, the claim or request for a review of a denied claim shall be deemed to have been denied. (iv) Prior to filing a claim or a request for a review of a denied claim, the claimant or the claimant's representative shall have a reasonable opportunity to review a copy of this Plan and all other pertinent documents in the possession of the Company and the Committee. (v) The individuals serving on the Committee shall, except as prohibited by law, be indemnified and held harmless by the employer from any and all liabilities, costs, and expenses (including legal fees), to the extent not covered by liability insurance arising out of any action taken by any individual of this Committee with respect to this Plan, unless such liability arises from the individual's claim for such individual's own benefit, the proven gross negligence, bad faith, or (if the individual had reasonable cause to believe such conduct was unlawful) the criminal conduct of such individual. This indemnification shall continue as to an individual who has ceased to be a member of the Committee for the employer and shall enure to the benefit of the heirs, executors and administrators of such an individual. 5 EX-10.20 6 EXHIBIT 10.20 THE NEW YORK TIMES COMPANY DEFERRED EXECUTIVE COMPENSATION PLAN ARTICLE I - INTRODUCTION 1.1 PURPOSE OF PLAN. The Employer has adopted the Plan set forth herein to provide a means by which certain employees may elect to defer receipt of designated percentages or amounts of their Compensation. 1.2 STATUS OF PLAN. The Plan is intended to be "a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees" within the meaning of Sections 201(2) and 301(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), and shall be interpreted and administered to the extent possible in a manner consistent with that intent. ARTICLE II - DEFINITIONS Wherever used herein, the following terms have the meanings set forth below, unless a different meaning is clearly required by the context: 2.1 ACCOUNT means, for each Participant, the account established for his or her benefit under Section 5.1. 2.2 CHANGE OF CONTROL means (a) any individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof (a "Person") (or two or more Persons acting in concert), other than any descendent (or any spouse thereof) of Iphigene Ochs Sulzberger (a "Family Member") or a beneficiary or trustee (as the same may change from time to time) of a trust over 50% of the individual beneficiaries of which are Family Members, acquiring the power to elect a majority of the directors of the Company in a transaction or series of transactions not approved in advance by a vote of at least three quarters of the Continuing Directors (as defined below); or (b) individuals who, as of the date hereof, constitute the Board (as of the date hereof the "Continuing Directors") ceasing for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or a nomination for election by the Company's shareholders, was approved in advance by a vote of at least three quarters of the Continuing Directors (other than a nomination of an individual whose initial assumption of office is in connection with an actual or threatened solicitation with respect to the election or removal of the directors of the Company, as such terms are used in Rule 14a-11 of the Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a Continuing Director; or (c) approval by the stockholders of the Company of a reorganization, merger, consolidation, liquidation or dissolution of the Company or of the sale (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company other than a reorganization, merger, consolidation, liquidation, dissolution or sale approved in advance by three quarters of the Continuing Directors. 2.3 CODE means the Internal Revenue Code of 1986, as amended from time to time. Reference to any section or subsection of the Code includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection. 2.4 COMPENSATION means the annual bonus of the Participant and any portion of such Participant's salary that the ERISA Committee of the Board of Directors of the Employer, in its sole discretion, may designate from time to time. The portion of the salary included in Compensation shall be listed in Appendix A. For purposes of the Plan, Compensation shall be determined before giving effect to Elective Deferrals and other salary reduction amounts which are not included in the Participant's gross income under Code Section 125, 401(k), 402(h) or 403(b). 2.5 EFFECTIVE DATE means July 1, 1994. 2.6 ELECTION FORM means the participation election form as approved and prescribed by the Plan Administrator. 2.7 ELECTIVE DEFERRAL means the portion of Compensation which is deferred by a Participant under Article IV. 2.8 ELIGIBLE EMPLOYEE means, on the Effective Date or on any Entry Date thereafter, each employee of the Employer who is a participant in The New York Times Company 1991 Executive Stock Incentive Plan. 2.9 EMPLOYER means The New York Times Company, any successor to all or a major portion of the Employer's assets or business which assumes the obligations of the Employer, and each other entity that is affiliated with the Employer which adopts the Plan with the consent of the Employer. 2.10 ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to any section or subsection of ERISA includes reference to any comparable or succeeding provisions of any legislation which amends, supplements or replaces such section or subsection. 2.11 INSOLVENT means either (i) the Employer is unable to pay its debts as they become due, or (ii) the Employer is subject to a pending proceeding as a debtor under the United States Bankruptcy Code. 2.12 PARTICIPANT means any Eligible Employee who participates in the Plan in accordance with Article 3. 2.13 PLAN means The New York Times Company Deferred Executive Compensation Plan and all amendments thereto. 2.14 PLAN ADMINISTRATOR means the person, persons or entity designated by the Employer under Article VIII to oversee the administration of the Plan and to serve as the agent for "Company" with respect to the Trust as contemplated by the agreement establishing the Trust. If no such person or entity is so serving at any time, the Employer shall be the Plan Administrator. 2.15 PLAN YEAR means the 12-month period beginning on January 1 and ending on December 31 of each year, except for the first plan year which begins on July 1, 1994, and ends on December 31, 1994. 2.16 TOTAL AND PERMANENT DISABILITY means the inability of a Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months, and the permanence and degree of which shall be supported by medical evidence satisfactory to the Plan Administrator. 2 2.17 TRUST means the trust established by the Employer that identifies the Plan as a plan with respect to which assets are to be held by the Trustee. 2.18 TRUSTEE means the trustee or trustees under the Trust. 2.19 VALUATION OPTION means the performance of the investment funds listed in Appendix B of the Plan. ARTICLE III - PARTICIPATION 3.1 COMMENCEMENT OF PARTICIPATION Any Eligible Employee who elects to defer part of his or her Compensation in accordance with Article IV shall become a Participant in the Plan as of the date such deferrals commence in accordance with such Article. 3.2 CONTINUED PARTICIPATION A Participant in the Plan shall continue to be a Participant so long as any amount remains credited to his or her Account. ARTICLE IV - ELECTIVE DEFERRALS 4.1 ELECTIVE DEFERRALS An individual who is an Eligible Employee on the Effective Date may, by completing an Election Form and filing it with the Plan Administrator by the end of the first month following the Effective Date, elect to defer the receipt of a percentage or dollar amount of one or more payments of Compensation for a period of at least three Plan Years and on such terms as the ERISA Management Committee may permit. Thereafter, any Eligible Employee may elect to defer the receipt of a percentage or dollar amount of one or more payments of Compensation for a period of at least three Plan Years and on such terms as the ERISA Management Committee may permit, commencing with Compensation paid in the next succeeding Plan Year, by completing an Election Form during the annual enrollment period for the Plan as determined by the Plan Administrator. No Participant may defer more than 100% of his or her Compensation for a Plan Year. A Participant's Compensation shall be reduced in accordance with the Participant's election hereunder and amounts deferred hereunder shall be paid by the Employer to the Trust as soon as administratively feasible and credited to the Participant's Account as of the date the amounts are received by the Trustee. 4.2 INVESTMENT ELECTION An individual who is an Eligible Employee and elects to defer Compensation under this Plan shall elect to have his or her Account valued based on the Valuation Option represented by the performance of one or more of the investment funds listed in Appendix B of the Plan. Such Appendix B may be amended at any time by an action of the ERISA Management Committee. If a Participant does not elect a Valuation Option for any portion of his or her Account, that portion shall be valued based on the Valuation Option represented by the performance of Fund A. ARTICLE V - ACCOUNTS 5.1 ACCOUNTS The Plan Administrator and/or the Record Keeper shall establish an Account for each Participant reflecting his or her Elective Deferrals made for the Participant's benefit together with any adjustments for income, gain or loss and any payments from the Account. The Trustee will maintain and invest 3 separate asset accounts corresponding to each Participant's Account. The Plan Administrator and/or the Record Keeper shall establish sub-accounts for each Participant that has more than one election in effect under Section 7.1 and such other sub-accounts as are necessary for the proper administration of the Plan. As of the last business day of each calendar quarter, the Plan Administrator shall provide, or cause to be provided, the Participant with a statement of his or her Account reflecting the income, gains and losses (realized and unrealized), amounts of deferrals, fund transfers and distributions of such Account since the prior statement. 5.2 INVESTMENTS The assets of the Trust shall be invested in such investments as the Trustee shall determine. The Trustee may (but is not required to) consider the Employer's or a Participant's investment preferences when investing the assets attributable to a Participant's Account. ARTICLE VI - VESTING A Participant shall be immediately vested in, i.e., shall have a nonforfeitable right to, all Elective Deferrals, and all income and gain attributable thereto, credited to his or her Account. ARTICLE VII - PAYMENTS 7.1 ELECTION AS TO TIME AND FORM OF PAYMENT A Participant shall elect (on the Election Form used to elect to defer Compensation under Article IV) the date at which the Elective Deferrals (including any earnings attributable thereto) will commence to be paid to the Participant. Payments to Participants shall be paid in annual installments over a period of 10 years commencing by March 15 immediately following the end of the deferral period, the amount of each installment to equal the balance of his or her Account immediately prior to the installment divided by the number of installments remaining to be paid. The above notwithstanding, a Participant may elect in writing to receive his or her Elective Deferrals in one lump sum, in annual installments over a period of five years, or in annual installments over a period of fifteen years, so long as such election is made at least 13 months prior to the beginning of the 10-year installment payments. 7.2 CHANGE OF CONTROL As soon as possible following a Change of Control of the Employer, each Participant shall be paid his or her entire Account balance in a single lump sum. 7.3 TERMINATION OF EMPLOYMENT OR DISABILITY Upon termination of a Participant's employment for any reason other than death, the Participant's Account shall be paid to the Participant in the form of payment in effect at the time the disability or termination of employment occurs; provided, however, that the Plan Administrator, in its sole discretion, may pay out a Participant's Account balance in one lump sum. 7.4 DEATH If a Participant dies prior to the complete distribution of his or her Account, the balance of the Account shall be paid as soon as practicable to the Participant's designated beneficiary or beneficiaries, in the form elected by the Participant at the time of his or her death, provided, however, that the 4 ERISA Management Committee and/or the Plan Administrator may, in their sole discretion, pay out the balance of such Participant's Account in one lump sum. Any designation of beneficiary and form of payment to such beneficiary shall be made by the Participant on an Election Form filed with the Plan Administrator and may be changed by the Participant at any time by filing another Election Form containing the revised instructions. If no beneficiary is designated or no designated beneficiary survives the Participant, payment shall be made to the Participant's surviving spouse, or, if none, to his or her issue per stirpes, in a single payment. If no spouse or issue survives the Participant, payment shall be made in a single lump sum to the Participant's estate. 7.5 TAXES All federal, state or local taxes that the Plan Administrator determines are required to be withheld from any payments made pursuant to this Article 7 shall be withheld. ARTICLE VIII - PLAN ADMINISTRATION 8.1 PLAN ADMINISTRATION AND INTERPRETATION The ERISA Management Committee shall oversee the administration of the Plan, shall serve as the agent of "Company" with respect to the trust, and shall appoint a Plan Administrator and/or Record Keeper for the day-to-day operations of the Plan. Such Plan Administrator and/or Record Keeper shall be listed in Appendix C to this Plan. The Committee shall have complete control and authority to determine the rights and benefits under all claims, demands and actions arising out of the provisions of the Plan of any Participant, beneficiary, deceased Participant, or other person having or claiming to have any interest under the Plan. The Committee shall have complete discretion to interpret the Plan and to decide all matters under the Plan. Such interpretation and decision shall be final, conclusive and binding on all Participants and any person claiming under or through any Participant. Any individual(s) serving on the Committee who is a Participant will not vote or act on any matter relating solely to himself or herself. 8.2 COMMITTEE POWERS, DUTIES, PROCEDURES, ETC. The Committee shall have such powers and duties, may adopt such rules and tables, may act in accordance with such procedures, may appoint such agents, may delegate such powers and duties, may receive such reimbursements and compensation, and shall follow such claims and appeal procedures with respect to the Plan as it may establish. 8.3 PLAN ADMINISTRATOR'S DUTIES The Plan Administrator shall be responsible for the day-to-day operations of the Plan. His or her duties shall include, but not be limited to, the following: (a) Keeping track of employees eligible to participate in the Plan and the date each employee becomes eligible to participate. (b) Maintaining, or causing to be maintained by the Record Keeper, Participants' Accounts, including all sub-accounts required for different contribution types and payment elections made by Participants under the Plan and any other relevant information. (c) Transmitting, or causing to be transmitted by the Record Keeper, various communications to the Participant and obtaining information from Participants such as changes in investment selections. (d) Filing reports required by various governmental agencies. 5 When making a determination or calculation, the Plan Administrator and the Record Keeper shall be entitled to rely on information furnished by a Participant, a beneficiary, the Employer or the Trustee. The Plan Administrator shall have the responsibility for complying with any reporting and disclosure requirements of ERISA. 8.4 INFORMATION To enable the Plan Administrator and/or Record Keeper to perform their functions, the Employer shall supply full and timely information to the Plan Administrator and/or Record Keeper on all matters relating to the compensation of Participants, their employment, retirement, death, termination of employment, and such other pertinent facts as the Plan Administrator and/or Record Keeper may require. 8.5 INDEMNIFICATION OF COMMITTEE AND PLAN ADMINISTRATOR The Employer agrees to indemnify and to defend to the fullest extent permitted by law any officer(s) or employee(s) who serve on the Committee or as Plan Administrator (including any such individual who formerly served on the Committee or as Plan Administrator) against all liabilities, damages, costs and expenses (including attorneys' fees and amounts paid in settlement of any claims approved by the Employer) occasioned by any act or omission to act in connection with the Plan, if such act or omission is in good faith. ARTICLE IX - AMENDMENT AND TERMINATION 9.1 AMENDMENTS The Employer shall have the right to amend the Plan from time to time, subject to Section 9.3, by an action of the ERISA Committee of the Board of Directors of the Employer. However, the preceding notwithstanding, the ERISA Management Committee shall have the power to amend at any time the payment provisions under Article VII of the Plan. 9.2 TERMINATION OF PLAN This Plan is strictly a voluntary undertaking on the part of the Employer and shall not be deemed to constitute a contract between the Employer and any Eligible Employee (or any other employee) or a consideration for, or an inducement or condition of employment for, the performance of the services by any Eligible Employee (or other employee). The Employer reserves the right to terminate the Plan at any time, subject to Section 9.3, by an action of the ERISA Committee of the Board of Directors. Upon termination, the Employer may (a) elect to continue to maintain the Trust to pay benefits hereunder as they become due as if the Plan had not terminated or (b) direct the Trustee to pay promptly to Participants (or their beneficiaries) the vested balance of their Accounts. 9.3 EXISTING RIGHTS No amendment or termination of the Plan shall adversely affect the rights of any Participant with respect to amounts that have been credited to his or her Account prior to the date of such amendment or termination. ARTICLE X - MISCELLANEOUS 10.1 NO FUNDING The Plan constitutes a mere promise by the Employer to make payments in accordance with the terms of the Plan and Participants and beneficiaries shall have the status of general unsecured creditors 6 of the Employer. Nothing in the Plan will be construed to give any employee or any other person rights to any specific assets of the Employer or of any other person. In all events, it is the intent of the Employer that the Plan be treated as unfunded for tax purposes and for purposes of Title I of ERISA. 10.2 NON-ASSIGNABILITY None of the benefits, payments, proceeds or claims of any Participant or beneficiary shall be subject to any claim of any creditor of any Participant or beneficiary and, in particular, the same shall not be subject to attachment or garnishment or other legal process by any creditor of such Participant or beneficiary, nor shall any Participant or beneficiary have any right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments or proceeds which he or she may expect to receive, contingently or otherwise, under the Plan. 10.3 LIMITATION OF PARTICIPANTS' RIGHTS Nothing contained in the Plan shall confer upon any person a right to be employed or to continue in the employ of the Employer, or interfere in any way with the right of the Employer to terminate the employment of a Participant in the Plan at any time, with or without cause. 10.4 PARTICIPANTS BOUND Any action with respect to the Plan taken by the Plan Administrator or the Employer or the Trustee or any action authorized by or taken at the direction of the Plan Administrator, the Employer or the Trustee shall be conclusive upon all Participants and beneficiaries entitled to benefits under the Plan. 10.5 RECEIPT AND RELEASE Any payment to any Participant or beneficiary in accordance with the provisions of the Plan shall, to the extent thereof, be in full satisfaction of all claims against the Employer, the Plan Administrator and the Trustee under the Plan, and the Plan Administrator may require such Participant or beneficiary, as a condition precedent to such payment, to execute a receipt and release to such effect. If any Participant or beneficiary is determined by the Plan Administrator to be incompetent by reason of physical or mental disability (including minority) to give a valid receipt and release, the Plan Administrator may cause the payment or payments becoming due to such person to be made to another person for his or her benefit without responsibility on the part of the Plan Administrator, the Employer or the Trustee to follow the application of such funds. 10.6 GOVERNING LAW The Plan shall be construed, administered, and governed in all respects under and by the laws of the State of New York. If any provision shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective. 10.7 HEADINGS AND SUBHEADINGS Headings and subheadings in this Plan are inserted for convenience only and are not to be considered in the construction of the provisions hereof. 7 EX-21 7 EXHIBIT 21 SUBSIDIARIES OF THE COMPANY(1)(2) JURISDICTION OF INCORPORATION OR NAME OF SUBSIDIARY ORGANIZATION ------------------ --------------- Affiliated Publications, Inc.................................. Massachusetts Boston Globe Electronic Publishing, Inc..................... Massachusetts Boston Globe Investments, Inc............................... Massachusetts Zakrewski Ltd. Partnership (99%).......................... Massachusetts Community Newsdealers Inc................................... Massachusetts Globe Newspaper Company..................................... Massachusetts Globe Specialty Products, Inc............................... Massachusetts Retail Sales, Inc........................................... Massachusetts Comet-Press Newspapers, Inc................................... Delaware Crossroads Holding Corporation................................ New Jersey Cruising World Publications, Inc.............................. Delaware Donohue Malbaie Inc. (49%).................................... Canada Fernandina Beach News-Leader, Inc............................. Florida Gainesville Sun Publishing Company............................ Florida Golf World Limited............................................ United Kingdom Hendersonville Newspaper Corporation.......................... North Carolina International Herald Tribune S.A. (50%)....................... France Lake City Reporter, Inc....................................... Florida Lakeland Ledger Publishing Corporation........................ Florida London Bureau Limited......................................... United Kingdom Northern SC Paper Corporation (80%)........................... Delaware Madison Paper Industries (partnership)...................... Maine NYT 1896T, Inc................................................ Delaware NYT Broadcast Holdings, Inc................................... Delaware Popcorn Channel, L.P. (40%)................................. Delaware NYTRNG, Inc................................................... Delaware NYT Shared Service Center, Inc................................ Delaware NYT Video News International, Inc............................. Delaware Ocala Star-Banner Corporation................................. Florida 110 Fifth Avenue Corporation.................................. Iowa Retail Magazines Marketing Company, Inc....................... New York Rome Bureau S.r.l............................................. Italy Sarasota Herald-Tribune Co.................................... Florida Sebring News-Sun, Inc......................................... Florida The Dispatch Publishing Company, Inc.......................... North Carolina The Houma Courier Newspaper Corporation....................... Delaware The New York Times Broadcasting Service, Inc.................. Tennessee Interstate Broadcasting Company, Inc........................ New York The Times Southwest Broadcasting, Inc....................... Arkansas The New York Times Company Magazine Group, Inc................ Delaware Golf Digest Information Systems, Inc........................ Delaware NYT Special Services, Inc................................... Delaware The New York Times Distribution Corporation................... Delaware The New York Times Electronic Media Company................... Delaware The New York Times Sales, Inc................................. Delaware The New York Times Syndication Sales Corporation.............. Delaware The Palatka Daily News, Inc................................... Florida Times Leasing, Inc............................................ Delaware Times On-Line Services, Inc................................... New Jersey TSP Newspapers, Inc........................................... Delaware Times Daily, Inc............................................ Alabama Wilmington Star-News, Inc..................................... New York WNEP-TV, Inc.................................................. Pennsylvania WTKR-TV, Inc.................................................. Delaware - ------------ (1) 100% owned unless otherwise indicated. (2) The names of certain subsidiaries have been omitted because, considered in the aggregate, as a single subsidiary, they would not constitute a significant subsidiary. EX-23 8 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT THE NEW YORK TIMES COMPANY: We consent to the incorporation by reference in Registration Statements No. 2-91826, 33-31538, 33-43210, 33-43211, 33-50461, 33-50465, 33-50457, 33-50467, 33-50459 and 33-56219 on Forms S-8 and in Registration Statement No. 33-57403 on Form S-3 of our report dated February 7, 1996, appearing in this Annual Report on Form 10-K of The New York Times Company (the "Company") for the year ended December 31, 1995. We also consent to the Company extending the reference to us under the heading "Experts" in Registration Statements No. 33-31538, No. 2-91826 and No. 33-57403 to comprehend our report, dated February 7, 1996, on the consolidated balance sheets of the Company as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1995 included in the aforementioned Form 10-K. DELOITTE & TOUCHE LLP New York, New York March 11, 1996 EX-27 9
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR DEC-31-1995 DEC-31-1995 91,442 0 303,839 25,865 42,844 462,635 2,016,930 740,864 3,376,730 516,916 637,873 0 1,753 10,952 1,599,397 3,376,730 0 2,409,403 0 1,304,418 0 0 25,230 214,641 92,832 135,860 0 0 0 135,860 1.40 1.40
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