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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 27, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission file number 1-5837
THE NEW YORK TIMES COMPANY
(Exact name of registrant as specified in its charter)
| | | | | | | | |
| New York | | 13-1102020 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S. Employer
Identification No.) |
620 Eighth Avenue, New York, New York 10018
(Address and zip code of principal executive offices)
Registrant’s telephone number, including area code 212-556-1234
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
| Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Class A Common Stock | | NYT | | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | |
| Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | | |
| Smaller reporting company | ☐ | Emerging growth company | ☐ | | | | |
If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x
Number of shares of each class of the registrant’s common stock outstanding as of April 29, 2022 (exclusive of treasury shares):
| | | | | | | | |
| Class A Common Stock | 166,699,568 | | shares |
| Class B Common Stock | 781,724 | | shares |
THE NEW YORK TIMES COMPANY
INDEX
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
| PART I | | | | Financial Information | | |
| Item | 1 | | Financial Statements | | |
| | | Condensed Consolidated Balance Sheets as of March 27, 2022 (unaudited) and December 26, 2021 | | |
| | | Condensed Consolidated Statements of Operations (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | Condensed Consolidated Statements of Changes In Stockholders’ Equity (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | Condensed Consolidated Statements of Cash Flows (unaudited) for the quarters ended March 27, 2022 and March 28, 2021 | | |
| | | Notes to the Condensed Consolidated Financial Statements | | |
| Item | 2 | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | |
| Item | 3 | | Quantitative and Qualitative Disclosures About Market Risk | | |
| Item | 4 | | Controls and Procedures | | |
| |
| PART II | | | | Other Information | | |
| Item | 1 | | Legal Proceedings | | |
| Item | 1A | | Risk Factors | | |
| Item | 2 | | Unregistered Sales of Equity Securities and Use of Proceeds | | |
| Item | 6 | | Exhibits | | |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
| | | | | | | | | | | | | | |
| | March 27, 2022 | | December 26, 2021 |
| | (Unaudited) | | |
| Assets | | | | |
| Current assets | | | | |
| Cash and cash equivalents | | $ | 169,171 | | | $ | 319,973 | |
| Short-term marketable securities | | 52,788 | | | 341,075 | |
Accounts receivable (net of allowances of $12,234 in 2022 and $12,374 in 2021) | | 197,492 | | | 232,908 | |
| Prepaid expenses | | 41,766 | | | 33,199 | |
Other current assets | | 25,798 | | | 25,553 | |
| Total current assets | | 487,015 | | | 952,708 | |
| Other assets | | | | |
Long-term marketable securities | | 252,815 | | | 413,380 | |
Property, plant and equipment (less accumulated depreciation and amortization of $790,884 in 2022 and $777,637 in 2021) | | 570,803 | | | 574,952 | |
| Goodwill | | 414,200 | | | 166,360 | |
| Intangible assets, net | | 343,351 | | | 14,246 | |
Deferred income taxes | | 110,628 | | | 95,800 | |
Miscellaneous assets | | 350,454 | | | 346,662 | |
| Total assets | | $ | 2,529,266 | | | $ | 2,564,108 | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS-(Continued)
(In thousands, except share and per share data)
| | | | | | | | | | | | | | |
| | March 27, 2022 | | December 26, 2021 |
| | (Unaudited) | | |
| Liabilities and stockholders’ equity | | | | |
| Current liabilities | | | | |
| Accounts payable | | $ | 146,152 | | | $ | 127,073 | |
| Accrued payroll and other related liabilities | | 111,568 | | | 166,464 | |
| Unexpired subscriptions revenue | | 154,360 | | | 119,296 | |
| | | | |
Accrued expenses and other | | 180,933 | | | 146,319 | |
| Total current liabilities | | 593,013 | | | 559,152 | |
| Other liabilities | | | | |
| | | | |
Pension benefits obligation | | 291,035 | | | 295,104 | |
Postretirement benefits obligation | | 35,413 | | | 36,086 | |
Other | | 114,729 | | | 133,041 | |
| Total other liabilities | | 441,177 | | | 464,231 | |
| Stockholders’ equity | | | | |
Common stock of $.10 par value: | | | | |
Class A – authorized: 300,000,000 shares; issued: 2022 – 176,263,169; 2021 – 175,971,801 (including treasury shares: 2022 – 9,563,601; 2021 – 8,870,801) | | 17,626 | | | 17,597 | |
Class B – convertible – authorized and issued shares: 2022 – 781,724; 2021 – 781,724 | | 78 | | | 78 | |
Additional paid-in capital | | 227,815 | | | 230,115 | |
Retained earnings | | 1,834,734 | | | 1,845,343 | |
Common stock held in treasury, at cost | | (200,245) | | | (171,211) | |
Accumulated other comprehensive loss, net of income taxes: | | | | |
Foreign currency translation adjustments | | 2,146 | | | 3,754 | |
Funded status of benefit plans | | (382,014) | | | (385,680) | |
| Net unrealized loss on available-for-sale securities | | (7,069) | | | (1,276) | |
Total accumulated other comprehensive loss, net of income taxes | | (386,937) | | | (383,202) | |
Total New York Times Company stockholders’ equity | | 1,493,071 | | | 1,538,720 | |
Noncontrolling interest | | 2,005 | | | 2,005 | |
| Total stockholders’ equity | | 1,495,076 | | | 1,540,725 | |
| Total liabilities and stockholders’ equity | | $ | 2,529,266 | | | $ | 2,564,108 | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
| | | | | | | | | | | | | | | | | | |
| | | For the Quarters Ended | | |
| | March 27, 2022 | | March 28, 2021 | | | | |
| | (13 weeks) | | |
| Revenues | | | | | | | | |
| Subscription | | $ | 371,979 | | | $ | 329,084 | | | | | |
| Advertising | | 116,270 | | | 97,116 | | | | | |
| Other | | 49,176 | | | 46,845 | | | | | |
Total revenues | | 537,425 | | | 473,045 | | | | | |
| Operating costs | | | | | | | | |
| Cost of revenue (excluding depreciation and amortization) | | 281,365 | | | 250,997 | | | | | |
| Sales and marketing | | 77,588 | | | 60,153 | | | | | |
| Product development | | 47,433 | | | 38,943 | | | | | |
| General and administrative | | 71,357 | | | 56,577 | | | | | |
| Depreciation and amortization | | 18,686 | | | 14,717 | | | | | |
| Total operating costs | | 496,429 | | | 421,387 | | | | | |
| Acquisition-related costs | | 34,712 | | | — | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Operating profit | | 6,284 | | | 51,658 | | | | | |
| Other components of net periodic benefit costs | | 1,522 | | | 2,599 | | | | | |
| | | | | | | | |
| Interest income and other, net | | 1,075 | | | 1,511 | | | | | |
| Income from continuing operations before income taxes | | 5,837 | | | 50,570 | | | | | |
| Income tax expense | | 1,112 | | | 9,461 | | | | | |
| | | | | | | | |
| | | | | | | | |
| Net income | | 4,725 | | | 41,109 | | | | | |
| | | | | | | | |
| Net income attributable to The New York Times Company common stockholders | | $ | 4,725 | | | $ | 41,109 | | | | | |
| Average number of common shares outstanding: | | | | | | | | |
| Basic | | 167,866 | | | 167,647 | | | | | |
| Diluted | | 168,257 | | | 168,165 | | | | | |
| Basic earnings per share attributable to The New York Times Company common stockholders | | $ | 0.03 | | | $ | 0.25 | | | | | |
| Diluted earnings per share attributable to The New York Times Company common stockholders | | $ | 0.03 | | | $ | 0.24 | | | | | |
| Dividends declared per share | | $ | 0.09 | | | $ | 0.07 | | | | | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | | | |
| | | For the Quarters Ended | | |
| | March 27, 2022 | | March 28, 2021 | | | | |
| | (13 weeks) | | |
| Net income | | $ | 4,725 | | | $ | 41,109 | | | | | |
| Other comprehensive (loss)/income, before tax: | | | | | | | | |
| Loss on foreign currency translation adjustments | | (2,209) | | | (2,702) | | | | | |
| Pension and postretirement benefits obligation | | 5,010 | | | 6,406 | | | | | |
| Net unrealized loss on available-for-sale securities | | (7,916) | | | (1,067) | | | | | |
| Other comprehensive (loss)/income, before tax | | (5,115) | | | 2,637 | | | | | |
| Income tax (benefit)/expense | | (1,380) | | | 709 | | | | | |
| Other comprehensive (loss)/income, net of tax | | (3,735) | | | 1,928 | | | | | |
| | | | | | | | |
| | | | | | | | |
| Comprehensive income attributable to The New York Times Company common stockholders | | $ | 990 | | | $ | 43,037 | | | | | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
For the Quarters Ended March 27, 2022 and March 28, 2021
(Unaudited)
(In thousands, except share data)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital Stock -
Class A
and
Class B Common | Additional
Paid-in
Capital | Retained
Earnings | Common
Stock
Held in
Treasury,
at Cost | Accumulated
Other
Comprehensive
Loss, Net of
Income
Taxes | Total
New York
Times
Company
Stockholders’
Equity | Non-
controlling
Interest | Total
Stock-
holders’
Equity |
|
| Balance, December 27, 2020 | $ | 17,609 | | $ | 216,714 | | $ | 1,672,586 | | $ | (171,211) | | $ | (410,181) | | $ | 1,325,517 | | $ | 2,594 | | $ | 1,328,111 | |
| | | | | | | | |
| Net income | — | | — | | 41,109 | | — | | — | | 41,109 | | — | | 41,109 | |
| Dividends | — | | — | | (11,835) | | — | | — | | (11,835) | | — | | (11,835) | |
| Other comprehensive income | — | | — | | — | | — | | 1,928 | | 1,928 | | — | | 1,928 | |
| Issuance of shares: | | | | | | | | |
Stock options – 323,360 Class A shares | 33 | | 2,414 | | — | | — | | — | | 2,447 | | — | | 2,447 | |
Restricted stock units vested – 142,707 Class A shares | 14 | | (4,564) | | — | | — | | — | | (4,550) | | — | | (4,550) | |
Performance-based awards – 142,253 Class A shares | 14 | | (5,947) | | — | | — | | — | | (5,933) | | — | | (5,933) | |
| Stock-based compensation | — | | 4,185 | | — | | — | | — | | 4,185 | | — | | 4,185 | |
| | | | | | | | |
| Balance, March 28, 2021 | $ | 17,670 | | $ | 212,802 | | $ | 1,701,860 | | $ | (171,211) | | $ | (408,253) | | $ | 1,352,868 | | $ | 2,594 | | $ | 1,355,462 | |
| | | | | | | | |
| Balance, December 26, 2021 | $ | 17,675 | | $ | 230,115 | | $ | 1,845,343 | | $ | (171,211) | | $ | (383,202) | | $ | 1,538,720 | | $ | 2,005 | | $ | 1,540,725 | |
| | | | | | | | |
| Net income | — | | — | | 4,725 | | — | | — | | 4,725 | | — | | 4,725 | |
| Dividends | — | | — | | (15,334) | | — | | — | | (15,334) | | — | | (15,334) | |
| Other comprehensive loss | — | | — | | — | | — | | (3,735) | | (3,735) | | — | | (3,735) | |
| Issuance of shares: | | | | | | | | |
Stock options – 400 Class A shares | — | | 3 | | — | | — | | — | | 3 | | — | | 3 | |
Restricted stock units vested – 127,450 Class A shares | 13 | | (3,784) | | — | | — | | — | | (3,771) | | — | | (3,771) | |
Performance-based awards – 163,518 Class A shares | 16 | | (5,573) | | — | | — | | — | | (5,557) | | — | | (5,557) | |
Share Repurchases - 692,800 Class A shares | — | | — | | — | | (29,034) | | — | | (29,034) | | — | | (29,034) | |
| Stock-based compensation | — | | 7,054 | | — | | — | | — | | 7,054 | | — | | 7,054 | |
| | | | | | | | |
| | | | | | | | |
| Balance, March 27, 2022 | $ | 17,704 | | $ | 227,815 | | $ | 1,834,734 | | $ | (200,245) | | $ | (386,937) | | $ | 1,493,071 | | $ | 2,005 | | $ | 1,495,076 | |
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | |
| | For the Three Months Ended |
| | March 27, 2022 | | March 28, 2021 |
| | (13 weeks) |
| Cash flows from operating activities | | | | |
| Net income | | $ | 4,725 | | | $ | 41,109 | |
| Adjustments to reconcile net income to net cash provided by operating activities: | | | | |
| | | | |
| | | | |
| Depreciation and amortization | | 18,685 | | | 14,717 | |
| | | | |
| Amortization of right of use asset | | 5,400 | | | 2,166 | |
| Stock-based compensation expense | | 7,054 | | | 4,185 | |
| | | | |
| | | | |
| | | | |
| Change in long-term retirement benefit obligations | | (4,555) | | | (4,004) | |
| | | | |
| Fair market value adjustment on life insurance products | | 514 | | | 208 | |
| Other – net | | (12,198) | | | (1,277) | |
| Changes in operating assets and liabilities, net of business acquisitions: | | | | |
| Accounts receivable – net | | 40,930 | | | 38,522 | |
| Other assets | | (6,646) | | | (3,768) | |
| Accounts payable, accrued payroll and other liabilities | | (75,571) | | | (68,428) | |
| Unexpired subscriptions | | 7,003 | | | 9,499 | |
| Net cash provided by operating activities | | (14,659) | | | 32,929 | |
| Cash flows from investing activities | | | | |
| Purchases of marketable securities | | (2,492) | | | (177,543) | |
| Maturities of marketable securities | | 442,895 | | | 155,782 | |
| | | | |
| Business acquisitions, net of cash acquired | | (515,299) | | | — | |
| Sales of investments – net | | (958) | | | (70) | |
| Capital expenditures | | (8,580) | | | (6,394) | |
| Other-net | | 425 | | | 2,017 | |
| Net cash used in investing activities | | (84,009) | | | (26,208) | |
| Cash flows from financing activities | | | | |
| Long-term obligations: | | | | |
| | | | |
| Dividends paid | | (11,839) | | | (10,072) | |
| Payment of contingent consideration | | (1,724) | | | — | |
| Capital shares: | | | | |
| Proceeds from stock option exercises | | 3 | | | 2,447 | |
| Repurchases | | (29,034) | | | — | |
| Share-based compensation tax withholding | | (9,328) | | | (10,483) | |
| Net cash used in financing activities | | (51,922) | | | (18,108) | |
| Net decrease in cash, cash equivalents and restricted cash | | (150,590) | | | (11,387) | |
| Effect of exchange rate changes on cash | | (164) | | | (341) | |
| Cash, cash equivalents and restricted cash at the beginning of the period | | 334,306 | | | 301,964 | |
| Cash, cash equivalents and restricted cash at the end of the period | | $ | 183,552 | | | $ | 290,236 | |
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
In the opinion of management of The New York Times Company (the “Company”), the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of March 27, 2022, and December 26, 2021, and the results of operations, changes in stockholders’ equity and cash flows of the Company for the periods ended March 27, 2022, and March 28, 2021. The Company and its consolidated subsidiaries are referred to collectively as “we,” “us” or “our.” All adjustments necessary for a fair presentation have been included and are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted from these interim financial statements. These financial statements, therefore, should be read in conjunction with the Consolidated Financial Statements and related Notes included in our Annual Report on Form 10-K for the year ended December 26, 2021. Due to the seasonal nature of our business, operating results for the interim periods are not necessarily indicative of a full year’s operations. The fiscal periods included herein comprise 13 weeks for the first quarter.
In December 2021, the Board of Directors approved a resolution to change the Company’s fiscal year from a 52/53 week fiscal year ending the last Sunday of December to a calendar year. Accordingly, the Company’s 2022 fiscal year, which commenced December 27, 2021, will be extended from December 25, 2022, to December 31,2022, and subsequent fiscal years will begin on January 1 and end on December 31 of each year.
On February 1, 2022, we acquired The Athletic Media Company (“The Athletic”), a global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in the U.S. and around the world. For the first quarter of 2022, the results of The Athletic have been included in our Condensed Consolidated Financial Statements beginning February 1, 2022. The Athletic is a separate reportable segment of the Company. As a result, beginning in the first quarter of 2022, we have two reportable segments: The New York Times Group and The Athletic. Management, including the Company’s President and Chief Executive Officer (who is the Company’s Chief Operating Decision Maker), uses adjusted operating profit by segment (as defined below) in assessing performance and allocating resources. The Company includes in its presentation revenues and adjusted operating costs (as defined below) to arrive at adjusted operating profit by segment.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements. Actual results could differ from these estimates.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Except as described herein, as of March 27, 2022, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December 26, 2021, have not changed materially.
Recently Adopted Accounting Pronouncements
| | | | | | | | | | | |
| Accounting Standard Update(s) | Topic | Effective Period | Summary |
| 2021-08 | Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers | Fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early adoption is permitted. | Requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 2014-09, Revenue from Contracts with Customers (Topic 606). The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The Company adopted this guidance on December 27, 2021. As a result of The Athletic acquisition, the Company assumed unexpired subscriptions revenue of $28.1 million. |
Recently Issued Accounting Pronouncements
The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. REVENUE
We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter products), and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.
Advertising revenue is principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print in the form of column-inch ads. Advertising revenue is primarily derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges. Advertising revenue is primarily determined by the volume (e.g., impressions), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements. Advertising revenue from The Athletic is primarily podcast revenue and therefore is reflected in this category. Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Other digital advertising includes open-market programmatic advertising and creative services fees. Print advertising includes revenue from column-inch ads and classified advertising as well as preprinted advertising, also known as freestanding inserts.
Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), retail commerce, our student subscription sponsorship program, our live events business and television and film.
Subscription, advertising and other revenues were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | |
| (In thousands) | | March 27, 2022 | | As % of total | | March 28, 2021 | | As % of total | | | | | | | | |
| Subscription | | $ | 371,979 | | | 69.2 | % | | $ | 329,084 | | | 69.6 | % | | | | | | | | |
| Advertising | | 116,270 | | | 21.5 | % | | 97,116 | | | 20.5 | % | | | | | | | | |
Other (1) | | 49,176 | | | 9.3 | % | | 46,845 | | | 9.9 | % | | | | | | | | |
Total | | $ | 537,425 | | | 100.0 | % | | $ | 473,045 | | | 100.0 | % | | | | | | | | |
(1) Other revenues include building rental revenue, which is not under the scope of Revenue from Contracts with Customers (Topic 606). Building rental revenue was approximately $7 million and $6 million for the first quarters of 2022 and 2021, respectively.
The following table summarizes digital and print subscription revenues, which are components of subscription revenues above, for the quarters ended March 27, 2022, and March 28, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | |
| (In thousands) | | March 27, 2022 | | As % of total | | March 28, 2021 | | As % of total | | | | | | | | |
Digital-only subscription revenues (1) | | $ | 226,763 | | | 61.0 | % | | $ | 179,599 | | | 54.6 | % | | | | | | | | |
| Print subscription revenues: | | | | | | | | | | | | | | | | |
Domestic home delivery subscription revenues (2) | | 131,391 | | | 35.3 | % | | 134,395 | | | 40.8 | % | | | | | | | | |
Single-copy, NYT International and Other subscription revenues (3) | | 13,825 | | | 3.7 | % | | 15,090 | | | 4.6 | % | | | | | | | | |
| Subtotal print subscription revenues | | 145,216 | | | 39.0 | % | | 149,485 | | | 45.4 | % | | | | | | | | |
| Total subscription revenues | | $ | 371,979 | | | 100.0 | % | | $ | 329,084 | | | 100.0 | % | | | | | | | | |
(1) Includes revenue from digital-only bundled and standalone subscriptions to the Company’s news product, as well as The Athletic and our Games, Cooking, Audm and Wirecutter products. | | | | |
(2) Domestic home delivery subscriptions include access to digital news, Games, Cooking and Wirecutter products. | | | | |
(3) NYT International is the international edition of our print newspaper. | | | | | | | | | | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes digital and print advertising revenues, which are components of advertising revenues above, for the quarters ended March 27, 2022, and March 28, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | |
| (In thousands) | | March 27, 2022 | | As % of total | | March 28, 2021 | | As % of total | | | | | | | | |
| Advertising revenues: | | | | | | | | | | | | | | | | |
| Digital | | $ | 67,014 | | | 57.6 | % | | $ | 59,496 | | | 61.3 | % | | | | | | | | |
| Print | | 49,256 | | | 42.4 | % | | 37,620 | | | 38.7 | % | | | | | | | | |
| Total advertising | | $ | 116,270 | | | 100.0 | % | | $ | 97,116 | | | 100.0 | % | | | | | | | | |
Performance Obligations
We have remaining performance obligations related to digital archive and other licensing and certain advertising contracts. As of March 27, 2022, the aggregate amount of the transaction price allocated to the remaining performance obligations for contracts with a duration greater than one year was approximately $128 million. The Company will recognize this revenue as performance obligations are satisfied. We expect that approximately $35 million, $25 million and $68 million will be recognized in the remainder of 2022, 2023 and thereafter through 2028, respectively.
Contract Assets
As of March 27, 2022, and December 26, 2021, the Company had $3.6 million and $3.4 million, respectively, in contract assets recorded in the Condensed Consolidated Balance Sheets related to digital archiving licensing revenue. The contract asset is reclassified to Accounts receivable when the customer is invoiced based on the contractual billing schedule.
NOTE 4. MARKETABLE SECURITIES
The Company accounts for its marketable securities as available for sale (“AFS”). The Company recorded $9.7 million and $1.7 million of net unrealized losses in Accumulated other comprehensive income (“AOCI”) as of March 27, 2022, and December 26, 2021, respectively.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS securities as of March 27, 2022, and December 26, 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 27, 2022 |
| (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| | | | | | | | |
| Short-term AFS securities | | | | | | | | |
| U.S. Treasury securities | | $ | 28,481 | | | $ | 4 | | | $ | (217) | | | $ | 28,268 | |
| | | | | | | | |
| Corporate debt securities | | 22,681 | | | 12 | | | (157) | | | 22,536 | |
| | | | | | | | |
| | | | | | | | |
| Municipal securities | | 2,000 | | | — | | | (16) | | | 1,984 | |
| Total short-term AFS securities | | $ | 53,162 | | | $ | 16 | | | $ | (390) | | | $ | 52,788 | |
| Long-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 167,793 | | | $ | — | | | $ | (6,365) | | | $ | 161,428 | |
| U.S. Treasury securities | | 56,576 | | | — | | | (1,892) | | | 54,684 | |
| U.S. governmental agency securities | | 28,804 | | | — | | | (850) | | | 27,954 | |
| Municipal securities | | 8,932 | | | — | | | (183) | | | 8,749 | |
| Total long-term AFS securities | | $ | 262,105 | | | $ | — | | | $ | (9,290) | | | $ | 252,815 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 26, 2021 |
| (In thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value |
| | | | | | | | |
| Short-term AFS securities | | | | | | | | |
| U.S. Treasury securities | | $ | 148,899 | | | $ | 692 | | | $ | (43) | | | $ | 149,548 | |
| Corporate debt securities | | 107,158 | | | 245 | | | (69) | | | 107,334 | |
| Certificates of deposit | | 55,551 | | | — | | | — | | | 55,551 | |
| Commercial paper | | 21,145 | | | — | | | — | | | 21,145 | |
| Municipal securities | | 3,999 | | | — | | | (2) | | | 3,997 | |
| U.S. governmental agency securities | | 3,500 | | | — | | | — | | | 3,500 | |
| Total short-term AFS securities | | $ | 340,252 | | | $ | 937 | | | $ | (114) | | | $ | 341,075 | |
| Long-term AFS securities | | | | | | | | |
| Corporate debt securities | | $ | 242,764 | | | $ | 149 | | | $ | (1,858) | | | $ | 241,055 | |
| U.S. Treasury securities | | 119,695 | | | — | | | (549) | | | 119,146 | |
| U.S. governmental agency securities | | 39,498 | | | — | | | (252) | | | 39,246 | |
| Municipal securities | | 13,994 | | | — | | | (61) | | | 13,933 | |
| Total long-term AFS securities | | $ | 415,951 | | | $ | 149 | | | $ | (2,720) | | | $ | 413,380 | |
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables represent the AFS securities as of March 27, 2022, and December 26, 2021, that were in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | March 27, 2022 |
| | Less than 12 Months | | 12 Months or Greater | | Total |
| (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| | | | | | | | | | | | |
| Short-term AFS securities | | | | | | | | | | | | |
| U.S. Treasury securities | | $ | 24,589 | | | $ | (217) | | | $ | — | | | $ | — | | | $ | 24,589 | | | $ | (217) | |
| Corporate debt securities | | 13,887 | | | (157) | | | — | | | — | | | 13,887 | | | (157) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Municipal securities | | 1,984 | | | (16) | | | — | | | — | | | 1,984 | | | (16) | |
| Total short-term AFS securities | | $ | 40,460 | | | $ | (390) | | | $ | — | | | $ | — | | | $ | 40,460 | | | $ | (390) | |
| Long-term AFS securities | | | | | | | | | | | | |
| Corporate debt securities | | $ | 154,995 | | | $ | (6,253) | | | $ | 6,433 | | | $ | (112) | | | $ | 161,428 | | | $ | (6,365) | |
| U.S. Treasury securities | | 51,923 | | | (1,805) | | | 2,761 | | | (87) | | | 54,684 | | | (1,892) | |
| U.S. governmental agency securities | | 27,954 | | | (850) | | | — | | | — | | | 27,954 | | | (850) | |
| Municipal securities | | 8,749 | | | (183) | | | — | | | — | | | 8,749 | | | (183) | |
| Total long-term AFS securities | | $ | 243,621 | | | $ | (9,091) | | | $ | 9,194 | | | $ | (199) | | | $ | 252,815 | | | $ | (9,290) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | December 26, 2021 |
| | Less than 12 Months | | 12 Months or Greater | | Total |
| (In thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses |
| | | | | | | | | | | | |
| Short-term AFS securities | | | | | | | | | | | | |
| U.S. Treasury securities | | $ | 61,018 | | | $ | (43) | | | $ | — | | | $ | — | | | $ | 61,018 | | | $ | (43) | |
| Corporate debt securities | | 53,148 | | | (69) | | | — | | | — | | | 53,148 | | | (69) | |
| Municipal securities | | 1,998 | | | (2) | | | — | | | — | | | 1,998 | | | (2) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Total short-term AFS securities | | $ | 116,164 | | | $ | (114) | | | $ | — | | | $ | — | | | $ | 116,164 | | | $ | (114) | |
| Long-term AFS securities | | | | | | | | | | | | |
| Corporate debt securities | | $ | 224,022 | | | $ | (1,858) | | | $ | — | | | $ | — | | | $ | 224,022 | | | $ | (1,858) | |
| U.S. Treasury securities | | 119,146 | | | (549) | | | — | | | — | | | 119,146 | | | (549) | |
| U.S. governmental agency securities | | 39,246 | | | (252) | | | — | | | — | | | 39,246 | | | (252) | |
| Municipal securities | | 13,933 | | | (61) | | | — | | | — | | | 13,933 | | | (61) | |
| Total long-term AFS securities | | $ | 396,347 | | | $ | (2,720) | | | $ | — | | | $ | — | | | $ | 396,347 | | | $ | (2,720) | |
We assess AFS securities on a quarterly basis or more often if a potential loss-triggering event occurs.
As of March 27, 2022, and December 26, 2021, we did not intend to sell and it was not likely that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. Unrealized losses related to these investments are primarily due to interest rate fluctuations as opposed to changes in credit quality. Therefore, as of March 27, 2022, and December 26, 2021, we have recognized no losses or allowance for credit losses related to AFS securities.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
As of March 27, 2022, our short-term and long-term marketable securities had remaining maturities of less than one month to 12 months and 13 months to 32 months, respectively. See Note 8 for more information regarding the fair value of our marketable securities.
NOTE 5. BUSINESS COMBINATION
The Athletic Acquisition
The Company accounts for business combinations using the acquisition method of accounting. The purchase price is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. The excess of the purchase price over the estimated fair value of the net assets acquired is recorded as goodwill. The results of businesses acquired in a business combination are included in the Company’s consolidated financial statements from the date of acquisition.
On February 1, 2022, the Company acquired The Athletic in an all-cash transaction. The consideration paid of approximately $550 million was funded from cash on hand and included $523.5 million which we determined to be the purchase price for assets acquired and liabilities assumed, and $26.7 million paid in connection with the acceleration of The Athletic stock options. The stock options acceleration is included in Acquisition-related costs in our Condensed Consolidated Statements of Operations as of March 27, 2022.
The purchase price allocation has been prepared on a preliminary basis. As additional information becomes available, the Company may revise the allocation to certain assets and liabilities, including tax estimates. The Company will finalize the acquisition accounting within the required measurement period of one year.
The following table summarizes the preliminary allocation of the purchase price (at fair value) to the assets acquired and liabilities assumed of The Athletic as of February 1, 2022 (the date of acquisition):
| | | | | | | | | | | | | | |
| (In thousands) | | Preliminary Purchase Price Allocation | | Estimated Useful Life (in years) |
| Total current assets | | $ | 18,495 | | | |
| Property, plant and equipment | | 281 | | | 3- 5 |
Right of use asset (1) | | 2,612 | | | |
Trademark (2) | | 160,000 | | | 20 |
Existing subscriber base (2) | | 135,000 | | | 12 |
Developed technology (2) | | 35,000 | | | 5 |
Content archive (2) | | 2,000 | | | 2 |
| Goodwill | | 249,792 | | | Indefinite |
Total current liabilities (3) | | (41,107) | | | |
Other liabilities — Other | | (3,491) | | | |
Deferred tax liability, net (4) | | (35,116) | | | |
| | | | |
| Total purchase price | | $ | 523,466 | | | |
(1) Included in Miscellaneous assets in our Condensed Consolidated Balance Sheets.
(2) Included in Intangible assets, net in our Condensed Consolidated Balance Sheets.
(3) Includes Unexpired subscriptions revenue of $28.1 million.
(4) Included in Deferred income taxes in our Condensed Consolidated Balance Sheets.
Goodwill is primarily attributable to future subscribers expected to be acquired both organically and through synergies from adding The Athletic to the Company’s products as well as the acquired assembled workforce. Goodwill is not expected to be deductible for tax purposes. The fair value of trademarks is estimated using a relief from royalty valuation method, the fair
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
value of subscriber relationships is estimated using a multi-period excess earnings valuation method, and the fair value of developed technology and content archive is estimated using a replacement cost method.
The following unaudited pro forma summary presents consolidated information of the Company, including The Athletic, as if the business combination had occurred on December 27, 2021, the earliest period presented herein:
| | | | | | | | | | | | | | |
| | For the Quarters Ended |
| (In thousands) | | March 27, 2022 | | March 28, 2021 |
| Revenue | | $ | 544,572 | | | $ | 487,167 | |
| Net income/(loss) | | |