Company Quick10K Filing
Quick10K
New York Times
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$31.87 165 $5,260
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-07-01 Quarter: 2018-07-01
10-Q 2018-04-01 Quarter: 2018-04-01
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-24 Quarter: 2017-09-24
10-Q 2017-06-25 Quarter: 2017-06-25
10-Q 2017-03-26 Quarter: 2017-03-26
10-K 2016-12-25 Annual: 2016-12-25
10-Q 2016-09-25 Quarter: 2016-09-25
10-Q 2016-06-26 Quarter: 2016-06-26
10-Q 2016-03-27 Quarter: 2016-03-27
10-K 2015-12-27 Annual: 2015-12-27
8-K 2019-02-06 Earnings, Exhibits
8-K 2018-11-01 Earnings, Exhibits
8-K 2018-09-21 Officers, Exhibits
8-K 2018-08-08 Earnings, Exhibits
8-K 2018-05-03 Earnings, Exhibits
8-K 2018-04-19 Officers, Exhibits
8-K 2018-02-14 Officers
8-K 2018-02-08 Earnings, Exhibits
8-K 2018-01-30 Off-BS Arrangement
8-K 2018-01-11 Officers, Exhibits
NWS News Corp
MDP Meredith
GCI Gannett
NEWM New Media Investment Group
DJCO Daily Journal
LEE Lee Enterprises
TST Thestreet
AHC A.H. Belo
AXR Amrep
MNI McKlatchy
NYT 2018-09-30
Part I. Financial Information
Item 1. Financial Statements
Note 1. Basis of Presentation
Note 2. Summary of Significant Accounting Policies
Note 3. Revenue
Note 4. Marketable Securities
Note 5. Goodwill and Intangibles
Note 6. Investments
Note 7. Debt Obligations
Note 8. Other
Note 9. Fair Value Measurements
Note 10. Pension and Other Postretirement Benefits
Note 11. Income Taxes
Note 12. Earnings per Share
Note 13. Supplemental Stockholders' Equity Information
Note 14. Segment Information
Note 15. Contingent Liabilities
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
EX-31.1 ex311_09302018.htm
EX-31.2 ex312_09302018.htm
EX-32.1 ex321_09302018.htm
EX-32.2 ex322_09302018.htm

New York Times Earnings 2018-09-30

NYT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 nyt9301810-qdocument.htm FORM 10-Q Document
 
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 September 30, 2018
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
(Address of principal executive offices)
10018
(Zip Code)
Registrant’s telephone number, including area code 212-556-1234
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes 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  x
 
Accelerated filer  o
 
Non-accelerated filer  o 
Smaller reporting company  o
 
Emerging growth company  o
 
 
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. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   o     No  x
Number of shares of each class of the registrant’s common stock outstanding as of October 30, 2018 (exclusive of treasury shares): 
Class A Common Stock
164,146,697

shares
Class B Common Stock
803,408

shares
 




THE NEW YORK TIMES COMPANY
INDEX

 
 
 
 
 
PART I
 
 
 
Financial Information
 
Item
1
 
Financial Statements
 
 
 
 
Condensed Consolidated Balance Sheets as of September 30, 2018 
(unaudited) and December 31, 2017
 
 
 
 
Condensed Consolidated Statements of Operations (unaudited) for the quarters and nine months ended September 30, 2018 and September 24, 2017
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarters and nine months ended September 30, 2018 and September 24, 2017
 
 
 
 
Condensed Consolidated Statements of Changes In Stockholder’s Equity (unaudited) as of September 30, 2018 and September 24, 2017
 
 
 
 
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2018 and September 24, 2017
 
 
 
 
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)
 
 
September 30, 2018


December 31, 2017

 
 
(Unaudited)
 
 
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
206,179

 
$
182,911

Short-term marketable securities
 
348,222

 
308,589

Accounts receivable (net of allowances of $13,370 in 2018 and $14,542 in 2017)
 
157,861

 
184,885

Prepaid expenses
 
26,709

 
22,851

Other current assets
 
43,666

 
50,463

Total current assets
 
782,637

 
749,699

Other assets
 
 
 
 
Long-term marketable securities
 
240,055

 
241,411

Property, plant and equipment (less accumulated depreciation and amortization of $944,455 in 2018 and $945,401 in 2017)
 
645,964

 
640,939

Goodwill
 
141,273

 
143,549

Deferred income taxes
 
146,682

 
153,046

Miscellaneous assets
 
184,777

 
171,136

Total assets
 
$
2,141,388

 
$
2,099,780

 See Notes to Condensed Consolidated Financial Statements.

1



THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS-(Continued)
(In thousands, except share and per share data)
 
 
September 30, 2018

 
December 31, 2017

 
 
(Unaudited)
 
 
Liabilities and stockholders’ equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
113,848

 
$
125,479

Accrued payroll and other related liabilities
 
91,108

 
104,614

Unexpired subscriptions revenue
 
81,869

 
75,054

Accrued expenses and other
 
116,137

 
110,510

Total current liabilities
 
402,962

 
415,657

Other liabilities
 
 
 
 
Long-term debt and capital lease obligations
 
245,932

 
250,209

Pension benefits obligation
 
363,509

 
405,422

Postretirement benefits obligation
 
45,524

 
48,816

Other
 
76,790

 
82,313

Total other liabilities
 
731,755

 
786,760

Stockholders’ equity
 
 
 
 
Common stock of $.10 par value:
 
 
 
 
Class A – authorized: 300,000,000 shares; issued: 2018 – 172,998,668; 2017 – 170,276,449 (including treasury shares: 2018 – 8,870,801; 2017 – 8,870,801)
 
17,300

 
17,028

Class B – convertible – authorized and issued shares: 2018 – 803,408; 2017 – 803,763
 
80

 
80

Additional paid-in capital
 
204,512

 
164,275

Retained earnings
 
1,457,463

 
1,310,136

Common stock held in treasury, at cost
 
(171,211
)
 
(171,211
)
Accumulated other comprehensive loss, net of income taxes:
 
 
 
 
Foreign currency translation adjustments
 
5,745

 
6,328

Funded status of benefit plans
 
(504,851
)
 
(427,819
)
Net unrealized loss on available-for-sale securities
 
(2,450
)
 
(1,538
)
Total accumulated other comprehensive loss, net of income taxes
 
(501,556
)
 
(423,029
)
Total New York Times Company stockholders’ equity
 
1,006,588

 
897,279

Noncontrolling interest
 
83

 
84

Total stockholders’ equity
 
1,006,671

 
897,363

Total liabilities and stockholders’ equity
 
$
2,141,388

 
$
2,099,780

 See Notes to Condensed Consolidated Financial Statements.


2



THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
 
 
For the Quarters Ended
 
For the Nine Months Ended
 
 
September 30, 2018


September 24, 2017

 
September 30, 2018

 
September 24, 2017

 
 
(13 weeks)
 
(39 weeks)
Revenues
 
 
 
 
 
 
 
 
Subscription
 
$
257,796

 
$
246,638

 
$
779,018

 
$
739,050

Advertising
 
121,677

 
113,633

 
366,525

 
375,895

Other
 
37,873

 
25,364

 
100,311

 
76,568

Total revenues
 
417,346

 
385,635

 
1,245,854

 
1,191,513

Operating costs
 
 
 
 
 
 
 
 
Production costs:
 
 
 
 
 
 
 
 
Wages and benefits
 
95,941

 
90,100

 
280,688

 
269,913

Raw materials
 
19,972

 
15,718

 
54,490

 
48,461

Other production costs
 
47,521

 
44,336

 
138,454

 
134,771

Total production costs
 
163,434

 
150,154

 
473,632

 
453,145

Selling, general and administrative costs
 
202,473

 
185,442

 
614,464

 
598,367

Depreciation and amortization
 
14,847

 
15,677

 
43,969

 
46,961

Total operating costs
 
380,754

 
351,273

 
1,132,065

 
1,098,473

Headquarters redesign and consolidation
 

 
2,542

 
3,140

 
6,929

Gain from pension liability adjustment
 
(4,851
)
 

 
(4,851
)
 

Operating profit
 
41,443

 
31,820

 
115,500

 
86,111

Other components of net periodic benefit costs/(income)
 
2,335

 
(1,193
)
 
6,226

 
(3,580
)
(Loss)/Gain from joint ventures
 
(16
)
 
31,557

 
(9
)
 
31,464

Interest expense and other, net
 
4,026

 
4,660

 
13,439

 
15,118

Income from continuing operations before income taxes
 
35,066

 
59,910

 
95,826

 
106,037

Income tax expense
 
10,092

 
23,420

 
25,342

 
40,873

Income from continuing operations
 
24,974

 
36,490

 
70,484

 
65,164

Loss from discontinued operations, net of income taxes
 

 
488

 

 
488

Net income
 
24,974

 
36,002

 
70,484

 
64,676

Net loss/(income) attributable to the noncontrolling interest
 
2

 
(3,673
)
 
1

 
(3,567
)
Net income attributable to The New York Times Company common stockholders
 
$
24,976

 
$
32,329

 
$
70,485

 
$
61,109

Average number of common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
165,064

 
162,173

 
164,742

 
161,798

Diluted
 
166,966

 
164,405

 
166,671

 
164,005

Basic earnings per share attributable to The New York Times Company common stockholders
 


 


 


 


Income from continuing operations
 
$
0.15

 
$
0.20

 
$
0.43

 
$
0.38

Loss from discontinued operations, net of income taxes
 

 

 

 

Net income
 
$
0.15

 
$
0.20

 
$
0.43

 
$
0.38

See Notes to Condensed Consolidated Financial Statements.

3






THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
 
 
For the Quarters Ended
 
For the Nine Months Ended
 
 
September 30, 2018

 
September 24, 2017

 
September 30, 2018

 
September 24, 2017

 
 
(13 weeks)
 
(39 weeks)
Diluted earnings per share attributable to The New York Times Company common stockholders
 
 
 
 
 
 
 
 
Income from continuing operations
 
$
0.15

 
$
0.20

 
$
0.42

 
$
0.37

Loss from discontinued operations, net of income taxes
 

 

 

 

Net income
 
$
0.15

 
$
0.20

 
$
0.42

 
$
0.37

Dividends declared per share
 
$
0.04

 
$
0.08

 
$
0.12

 
$
0.12

 See Notes to Condensed Consolidated Financial Statements.

4



THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In thousands)
 
 
For the Quarters Ended
 
For the Nine Months Ended
 
 
September 30, 2018

 
September 24, 2017

 
September 30, 2018

 
September 24, 2017

 
 
(13 weeks)
 
(39 weeks)
Net income
 
$
24,974

 
$
36,002

 
$
70,484

 
$
64,676

Other comprehensive income, before tax:
 
 
 
 
 
 
 
 
(Loss)/income on foreign currency translation adjustments
 
(567
)
 
6,099

 
(2,923
)
 
11,170

Pension and postretirement benefits obligation
 
8,009

 
6,921

 
24,850

 
20,762

Net unrealized income/(loss) on available-for-sale securities
 
314

 
(1,081
)
 
(784
)
 
(1,081
)
Other comprehensive income, before tax
 
7,756

 
11,939

 
21,143

 
30,851

Income tax expense
 
2,031

 
4,200

 
5,535

 
11,557

Other comprehensive income, net of tax
 
5,725

 
7,739

 
15,608

 
19,294

Comprehensive income
 
30,699

 
43,741

 
86,092

 
83,970

Comprehensive loss/(income) attributable to the noncontrolling interest
 
2

 
(3,673
)
 
1

 
(3,567
)
Comprehensive income attributable to The New York Times Company common stockholders
 
$
30,701

 
$
40,068

 
$
86,093

 
$
80,403

 See Notes to Condensed Consolidated Financial Statements.

5



THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands, except share and per 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 25, 2016
$
17,003

$
149,928

$
1,331,911

$
(171,211
)
$
(479,816
)
$
847,815

$
(3,571
)
$
844,244

 
Net income


61,109



61,109

3,567

64,676

 
Dividends


(19,543
)


(19,543
)

(19,543
)
 
Other comprehensive income




19,294

19,294


19,294

 
Issuance of shares:
 
 
 
 
 
 
 
 
 
Stock options – 615,150 Class A shares
62

4,080




4,142


4,142

 
Restricted stock units vested – 276,527 Class A shares
28

(2,664
)



(2,636
)

(2,636
)
 
Performance-based awards – 115,881 Class A shares
12

(1,360
)



(1,348
)

(1,348
)
 
Stock-based compensation

9,845




9,845


9,845

 
Balance, September 24, 2017
$
17,105

$
159,829

$
1,373,477

$
(171,211
)
$
(460,522
)
$
918,678

$
(4
)
$
918,674

 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2017
$
17,108

$
164,275

$
1,310,136

$
(171,211
)
$
(423,029
)
$
897,279

$
84

$
897,363

 
Impact of adopting new accounting guidance


96,707


(94,135
)
2,572


2,572

 
Net income


70,485



70,485

(1
)
70,484

 
Dividends


(19,865
)


(19,865
)

(19,865
)
 
Other comprehensive income




15,608

15,608


15,608

 
Issuance of shares:
 
 
 
 
 
 
 
 
 
Stock options – 2,219,201 Class A shares
222

40,428




40,650


40,650

 
Restricted stock units vested – 230,822 Class A shares
23

(3,168
)



(3,145
)

(3,145
)
 
Performance-based awards – 271,841 Class A shares
27

(5,930
)



(5,903
)

(5,903
)
 
Stock-based compensation

8,907




8,907


8,907

 
Balance, September 30, 2018
$
17,380

$
204,512

$
1,457,463

$
(171,211
)
$
(501,556
)
$
1,006,588

$
83

$
1,006,671





6



THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 
For the Nine Months Ended
 
 
September 30, 2018

 
September 24, 2017

 
 
(39 weeks)
Cash flows from operating activities
 
 
 
 
Net income
 
$
70,484

 
$
64,676

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
43,969

 
46,961

Stock-based compensation expense
 
9,969

 
10,927

Undistributed (gain)/loss of joint ventures
 
9

 
(31,464
)
Long-term retirement benefit obligations
 
(19,769
)
 
(21,897
)
Other-net
 
351

 
2,748

Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable-net
 
27,024

 
55,032

Other assets
 
6,226

 
(1,761
)
Accounts payable, accrued payroll and other liabilities
 
(28,702
)
 
12,473

Unexpired subscriptions
 
6,815

 
10,200

Net cash provided by operating activities
 
116,376

 
147,895

Cash flows from investing activities
 
 
 
 
Purchases of marketable securities
 
(386,842
)
 
(398,246
)
Maturities of marketable securities
 
346,601

 
454,022

Capital expenditures
 
(61,983
)
 
(47,831
)
Other-net
 
(1,585
)
 
648

Net cash (used in)/provided by investing activities
 
(103,809
)
 
8,593

Cash flows from financing activities
 
 
 
 
Long-term obligations:
 
 
 
 
Repayment of debt and capital lease obligations
 
(414
)
 
(414
)
Dividends paid
 
(19,761
)
 
(19,483
)
Capital shares:
 
 
 
 
Proceeds from stock option exercises
 
40,650

 
4,142

Share-based compensation tax withholding
 
(9,048
)
 
(3,984
)
Net cash provided by/(used in) financing activities
 
11,427

 
(19,739
)
Net increase in cash, cash equivalents and restricted cash
 
23,994

 
136,749

Effect of exchange rate changes on cash
 
(540
)
 
294

Cash, cash equivalents and restricted cash at the beginning of the period
 
200,936

 
125,550

Cash, cash equivalents and restricted cash at the end of the period
 
$
224,390

 
$
262,593


 See Notes to Condensed Consolidated Financial Statements.



7


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 September 30, 2018, and December 31, 2017, and the results of operations, changes in stockholder’s equity and cash flows of the Company for the periods ended September 30, 2018, and September 24, 2017. 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 31, 2017. 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 third quarter.
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 September 30, 2018, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December 31, 2017, have not changed materially.
Recently Adopted Accounting Pronouncements
Accounting Standard Update(s)
Topic
Effective Period
Summary
2018-05
Income Taxes (Topic 740)
Upon issuance
The Financial Accounting Standards Board (“FASB”) issued authoritative guidance that amends Accounting Standards Codification (“ASC”) Topic 740 “Income Taxes” to conform with SEC Staff Accounting Bulletin 118, issued in December 2017, which allowed SEC registrants to record provisional amounts for the year ended December 31, 2017, due to the complexities involved in accounting for the enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”). During the nine months ended September 30, 2018, we did not record any measurement period adjustments to the provisional estimate recorded at December 31, 2017 for the Tax Act. The accounting for the impact of the Tax Act is expected to be completed by the fourth quarter of 2018.
 2018-02
Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
Fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. 
The FASB issued authoritative guidance providing financial statement preparers with an option to reclassify stranded tax effects within accumulated other comprehensive income (“AOCI”) to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate related to the Tax Act is recorded.
The Company elected to adopt this guidance to reclassify the stranded tax effects from AOCI to retained earnings in the first quarter of 2018. Our current accounting policy related to releasing tax effects from AOCI for pension and other postretirement benefits is a plan by plan approach. Accordingly, the Company recorded a $94.1 million cumulative effect adjustment for stranded tax effects, such as pension and other postretirement benefits, to “Retained earnings” on January 1, 2018. See Note 13 for more information.
 
 
 
 

8


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Accounting Standard Update(s)
Topic
Effective Period
Summary
2017-07
Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
Fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. 
The FASB issued authoritative guidance that requires the service cost component of net periodic benefit costs to be presented separately from the other components of net periodic benefit costs. Service cost will be presented with other employee compensation cost within “Operating costs.” The other components of net periodic benefit costs, such as interest cost, amortization of prior service cost and gains or losses, are required to be presented outside of operations. The guidance should be applied retrospectively for the presentation of the service cost component in the income statement and allows a practical expedient for the estimation basis for applying the retrospective presentation requirements.
Since Accounting Standards Update (“ASU”) 2017-07 only requires change to the Condensed Consolidated Statements of Operations classification of the components of net periodic benefit cost, there are no changes to income from continuing operations or net income. As a result of the adoption of the ASU during the first quarter of 2018, the service cost component of net periodic benefit costs continues to be recognized in total operating costs and the other components of net periodic benefit costs have been reclassified to “Other components of net periodic benefit costs/(income)” in the Condensed Consolidated Statements of Operations below “Operating profit” on a retrospective basis. The Company reclassified $0.2 million and $1.0 million of credits from “Production costs” and “Selling and general and administrative costs,” respectively, to “Other components of net periodic benefit costs/(income)” in the third quarter of 2017 and $0.7 million and $2.9 million of credits from “Production costs” and “Selling and general and administrative costs,” respectively, to “Other components of net periodic benefit costs/(income)” in the first nine months of 2017. See Note 10 for the components of net periodic benefit costs/(income) for our pension and other postretirement benefits plans.
2016-18
Statement of Cash Flow: Restricted Cash
Fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted.

The FASB issued authoritative guidance that amends the guidance in ASC 230 on the classification and presentation of restricted cash in the statement of cash flows. The key requirements of the ASU are: (1) all entities should include in their cash and cash-equivalent balances in the statements of cash flows those amounts that are deemed to be restricted cash or restricted cash equivalents, (2) a reconciliation between the statement of financial position and the statement of cash flows must be disclosed when the statement of financial position includes more than one line item for cash, cash equivalents and restricted cash, (3) changes in restricted cash that result from transfers between cash, cash equivalents and restricted cash should not be presented as cash flow activities in the statement of cash flows and (4) an entity with a material balance of amounts generally described as restricted cash must disclose information about the nature of the restrictions.
As a result of the adoption of ASU 2016-18 in the first quarter of 2018, the Company included the restricted cash balance with the cash and cash equivalents balances in the Condensed Consolidated Statements of Cash Flows on a retrospective basis. The reclassification did not have a material impact to the Condensed Consolidated Statement of Cash Flows for the first nine months of 2017. The Company has added a reconciliation from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statement of Cash Flows. See Note 8 for more information.
 
 
 
 

9


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Accounting Standard Update(s)
Topic
Effective Period
Summary
2016-01
2018-03
Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities
Fiscal years beginning after December 15, 2017, and interim periods within those fiscal years.
The FASB issued authoritative guidance that addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including requirements to measure most equity investments at fair value with changes in fair value recognized in net income, to perform a qualitative assessment of equity investments without readily determinable fair values, and to separately present financial assets and liabilities by measurement category and by type of financial asset on the balance sheet or the accompanying notes to the financial statements.
We adopted ASU 2016-01 in the first quarter of 2018 and elected the measurement alternative, defined as cost, less impairments, adjusted by observable price changes, given our equity instruments are without readily determinable fair values. This guidance did not impact our available-for-sale (“AFS”) securities because we only hold debt securities. We also early adopted ASU 2018-03 in the first quarter of 2018. The adoptions of ASU 2016-01 and ASU 2018-03 did not have a material effect on our Condensed Consolidated Financial Statements. See Note 6 for more information.
2014-09
2016-08
2016-10
2016-12

Revenue from Contracts with Customers (Topic 606)
Fiscal years beginning after December 31, 2017
The FASB issued authoritative guidance that prescribes a single comprehensive model for entities to use in the accounting of revenue arising from contracts with customers. The new guidance supersedes virtually all existing revenue guidance under GAAP. There are two transition options available to entities: the full retrospective approach or the modified retrospective approach.
On January 1, 2018, the Company adopted Topic 606. The Company has elected the modified retrospective approach, which allows for the new revenue standard to be applied to all existing contracts as of the effective date and a cumulative catch-up adjustment to be recorded to “Retained earnings.” The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration to which the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when a performance obligation is satisfied.
The most significant change to the Company’s accounting practices related to accounting for certain licensing arrangements in the other revenue category for which archival and updated content is included. Under the former revenue guidance, licensing revenue was generally recognized over the term of the contract based on the annual minimum guarantee amount specified in the contractual agreement with the licensee. Based on the guidance of Topic 606, the Company has determined that the archival content and updated content included in these licensing arrangements represent two separate performance obligations. As such, a portion of the total contract consideration related to the archival content was recognized at the commencement of the contract when control of the archival content is transferred. The remaining contractual consideration will be recognized proportionately over the term of the contract when updated content is transferred to the licensee, in line with when the control of the new content is transferred.
The net impact of these changes accelerated the revenue of contracts not completed as of January 1, 2018. In connection with the adoption of the standard the Company recorded a net increase to opening retained earnings of $2.6 million ($3.5 million before tax) and a contract asset of $3.5 million, with $1.3 million categorized as a current asset and $2.2 million categorized as a long term asset as of January 1, 2018. The impact to “Other revenues” as a result of applying Topic 606 will be a decrease of $1.3 million for the twelve months ended December 30, 2018.
Our subscription and advertising revenues were not changed by the new guidance. See Note 3 for more information on our revenues and the application of Topic 606.


10


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Recently Issued and Not Yet Adopted Accounting Pronouncements
Accounting Standard Update(s)
Topic
Effective Period
Summary
2018-15
Intangibles—Goodwill and Other—Internal-Use Software
Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted.
The FASB issued authoritative guidance that clarifies the accounting for implementation costs in cloud computing arrangements. The standard provides that implementation costs be evaluated for capitalization using the same criteria as that used for internal-use software development costs, with amortization expense being recorded in the same income statement expense line as the hosted service costs and over the expected term of the hosting arrangement. We are currently in the process of evaluating the impact of this guidance on our consolidated financial statements.
2018-14
Compensation—Retirement Benefits—Defined Benefit Plans—General
Fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted.
The FASB issued authoritative guidance that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. The guidance removes disclosures, clarifies the specific requirements of disclosures and adds disclosure requirements identified as relevant. We are currently in the process of evaluating the impact of this guidance on our consolidated financial statements.
2018-13
Fair Value Measurement (Topic 820) Disclosure Framework
Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted.
The FASB issued authoritative guidance that modifies the disclosure requirements on fair value measurements. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. We are currently in the process of evaluating the impact of this guidance on our consolidated financial statements.
2016-13
Financial Instruments—Credit Losses
Fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.
The FASB issued authoritative guidance that amends guidance on reporting credit losses for assets, including trade receivables, available-for-sale marketable securities and any other financial assets not excluded from the scope that have the contractual right to receive cash. For trade receivables, ASU 2016-13 eliminates the probable initial recognition threshold in current generally accepted accounting standards, and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the gross trade receivables balance to present the net amount expected to be collected. For available-for-sale marketable securities, credit losses should be measured in a manner similar to current generally accepted accounting standards; however, ASU 2016-13 will require that credit losses be presented as an allowance rather than as a write-down.
 
 
 
 

11


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Accounting Standard Update(s)
Topic
Effective Period
Summary
2016-02
2018-10
2018-11
Leases
Fiscal years beginning after December 30, 2018. Early adoption is permitted.
The FASB issued authoritative guidance that provides guidance on accounting for leases and disclosure of key information about leasing arrangements. The guidance requires lessees to recognize the following for all operating and finance leases at the commencement date: (1) a lease liability, which is the obligation to make lease payments arising from a lease, measured on a discounted basis, and (2) a right-of-use asset representing the lessee’s right to use, or control the use of, the underlying asset for the lease term. A lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities for short-term leases with a term of 12 months or less. The guidance does not fundamentally change lessor accounting; however, some changes have been made to align that guidance with the lessee guidance and other areas within GAAP.
The Company expects to adopt this guidance in the first quarter of 2019 utilizing the alternative transition method. Upon adoption, the Company expects to elect the transition package of practical expedients permitted within the new standard, which, among other things, allows the carryforward of the historical lease classification and allows the Company to recognize a cumulative effect adjustment to the opening balance of retained earnings. The Company continues to evaluate which other, if any, practical expedients will be elected.
The adoption of the standards will require us to add right-of-use assets and lease liabilities onto our balance sheet. Based on our lease portfolio at December 31, 2017, the right-of-use asset and lease liability would have been in the range of $40 million to $45 million on our Consolidated Balance Sheets based on the remaining lease payments, with no material impact to our Consolidated Statement of Operations or liquidity. However, the ultimate impact of adopting ASU 2016-02 will depend on the Company’s lease portfolio as of the adoption date.

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.

NOTE 3. REVENUE
We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our print and digital products (which include our news product, as well as our Crossword and Cooking 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 revenues are derived from the sale of our advertising products and services on our print and digital platforms. These revenues are primarily determined by the volume, rate and mix of advertisements.
Other revenues primarily consist of revenues from commercial printing, building rental income, news services/syndication, affiliate referrals (revenue generated by offering direct links to merchants in exchange for a portion of the sale price), digital archive licensing, NYT Live (our live events business) and retail commerce.
Revenue is recognized when a performance obligation is satisfied by transferring a promised good or service to a customer. A good or service is considered transferred when the customer obtains control, which is when the customer has the ability to direct the use of and/or obtain substantially all of the benefits of an asset.
Proceeds from subscription revenues are deferred at the time of sale and are recognized on a pro rata basis over the terms of the subscriptions. Payment is typically due upfront and the revenue is recognized ratably over the subscription period. The deferred proceeds are recorded within “Unexpired subscription revenue” in the Condensed Consolidated Balance Sheet. Single-copy revenue is recognized based on date of publication, net of provisions for related returns. Payment for single-copy sales is typically due upon complete satisfaction of our performance obligations. The Company does not have significant financing components or significant payment terms as we only offer industry standard payment terms to our customers.

12


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

When our subscriptions are sold through third parties, we are a principal in the transaction and, therefore, revenues and related costs to third parties for these sales are reported on a gross basis. We are considered a principal if we control a promised good or service before transferring that good or service to the customer. The Company considers several factors to determine if it controls the good and therefore is the principal. These factors include: (1) if we have primary responsibility for fulfilling the promise, (2) if we have inventory risk before the goods or services are transferred to the customer or after the transfer of control to the customer and (3) if we have discretion in establishing price for the specified good or service.
Advertising revenues are recognized when advertisements are published in newspapers or placed on digital platforms or, with respect to certain digital advertising, each time a user clicks on certain advertisements, net of provisions for estimated rebates and rate adjustments.
We recognize a rebate obligation as a reduction of revenues based on the amount of estimated rebates that will be earned related to the underlying revenue transactions during the period. Measurement of the rebate obligation is estimated based on the historical experience of the number of customers that ultimately earn and use the rebate. We recognize a reserve for rate adjustments as a reduction of revenues based on the amount of estimated post-billing adjustments that will be claimed. Measurement of the rate adjustment reserve is estimated based on historical experience of credits actually issued.
Payment for advertising is due upon complete satisfaction of our performance obligations. The Company has a formal credit checking policy, procedures and controls in place that evaluate collectability prior to ad publication. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts do not include a significant financing component.
Subscription, advertising and other revenues were as follows:
 
 
For the Quarters Ended
 
For the Nine Months Ended
(In thousands)
 
September 30, 2018

 
September 24, 2017

 
September 30, 2018

 
September 24, 2017

Subscription
 
$
257,796

 
$
246,638

 
$
779,018

 
$
739,050

Advertising
 
121,677

 
113,633

 
366,525

 
375,895

Other (1)
 
37,873

 
25,364

 
100,311

 
76,568

Total
 
$
417,346

 
$
385,635

 
$
1,245,854

 
$
1,191,513

(1) Other revenue includes approximately $7 million and $5 million of building rental income for the third quarters of 2018 and 2017, respectively, and approximately $17 million and $13 million for the first nine months of 2018 and 2017, respectively, which is not under the scope of Topic 606.
The following table summarizes digital-only subscription revenues, which are a component of subscription revenues above, for the third quarters and first nine months of 2018 and 2017:
 
 
For the Quarters Ended
 
For the Nine Months Ended
(In thousands)
 
September 30, 2018

 
September 24, 2017

 
September 30, 2018

 
September 24, 2017

Digital-only subscription revenues:
 
 
 
 
 
 
 
 
News product subscription revenues(1)
 
$
95,568

 
$
82,073

 
$
279,693

 
$
234,234

Other product subscription revenues(2)
 
5,639

 
3,610

 
15,669

 
9,810

Total digital-only subscription revenues
 
$
101,207

 
$
85,683

 
$
295,362

 
$
244,044

(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Crossword and Cooking products are also included in this category.
(2) Includes revenues from standalone subscriptions to the Company’s Crossword and Cooking products.

13


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Advertising revenues (print and digital) by category were as follows:
 
 
For the Quarters Ended
 
 
September 30, 2018
 
September 24, 2017
(In thousands)
 
Print
 
Digital
 
Total
 
Print
 
Digital
 
Total
Display
 
$
57,245

 
$
43,730

 
$
100,975

 
$
56,710

 
$
41,547

 
$
98,257

Classified and Other
 
6,676

 
14,026

 
20,702

 
7,679

 
7,697

 
15,376

Total advertising
 
$
63,921

 
$
57,756

 
$
121,677

 
$
64,389

 
$
49,244

 
$
113,633

 
 
For the Nine Months Ended
 
 
September 30, 2018
 
September 24, 2017
(In thousands)
 
Print
 
Digital
 
Total
 
Print
 
Digital
 
Total
Display
 
$
188,853

 
$
123,870

 
$
312,723

 
$
196,836

 
$
129,008

 
$
325,844

Classified and Other
 
22,182

 
31,620

 
53,802

 
24,966

 
25,085

 
50,051

Total advertising
 
$
211,035

 
$
155,490

 
$
366,525

 
$
221,802

 
$
154,093

 
$
375,895

Performance Obligations
Our contracts with customers may include multiple performance obligations. For such arrangements, we allocate revenue to each performance obligation based on its relative standalone selling price.
In the case of our licensing contracts, the transaction price was allocated among the performance obligations, (i) the archival content and (ii) the updated content, based on the Company’s estimate of the standalone selling price of each of the performance obligations, as they are currently not sold separately.
As of September 30, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $25 million. The Company will recognize this revenue as control of the performance obligation is transferred to the customer. We expect that approximately $5 million, $10 million and $10 million will be recognized in the remainder of 2018, 2019 and 2020, respectively.
Contract Assets
We record revenue from performance obligations when performance obligations are satisfied. For our licensing revenue, we record revenue related to the portion of performance obligation (i) satisfied at the commencement of the contract when the customer obtains control of the archival content or (ii) when the updated content is transferred. We receive payments from customers based upon contractual billing schedules. As the transfer of control represents a right to the contract consideration, we record a contract asset in “Other current assets” for short-term contract assets and “Miscellaneous assets” for long-term contract assets on the Consolidated Balance Sheet for any amounts not yet invoiced to the customer. As of September 30, 2018, the Company had $2.6 million in contract assets recorded in the Condensed Consolidated Balance Sheet. The contract asset is reclassified to “Accounts receivable” when the customer is invoiced based on the contractual billing schedule. The increase in the contract assets balance for the nine months ended September 30, 2018, is primarily driven by the cumulative catch-up adjustment recorded by the Company on January 1, 2018, of $3.5 million as a result of adoption of Topic 606, offset by $0.9 million of consideration that was reclassified to “Accounts receivable” when invoiced based on the contractual billing schedules for the period ended September 30, 2018.
Significant Judgments
Our contracts with customers sometimes include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. We use an observable price to determine the standalone selling price for separate performance obligations if available or, when not available, an estimate that maximizes the use of observable inputs and faithfully depicts the selling price of the promised goods or services if we sold those goods or services separately to a similar customer in similar circumstances.
Practical Expedients and Exemptions
We expense the cost to obtain or fulfill a contract as incurred because the amortization period of the asset that the entity otherwise would have recognized is one year or less. We also apply the practical expedient for the significant financing component when the difference between the payment and the transfer of the products and services is a year or less.

14


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 4. MARKETABLE SECURITIES
The Company accounts for its marketable securities as AFS. The Company recorded $3.3 million and $2.5 million of net unrealized loss in AOCI as of September 30, 2018, and December 31, 2017, respectively.
The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS debt securities as of September 30, 2018, and December 31, 2017:
 
 
September 30, 2018
(In thousands)
 
Amortized Cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair Value
Short-term AFS securities
 
 
 
 
 
 
 
 
Corporate debt securities
 
$
138,983

 
$
2

 
$
(350
)
 
$
138,635

U.S. Treasury securities
 
113,016

 

 
(232
)
 
112,784

U.S. governmental agency securities
 
77,872

 

 
(717
)
 
77,155

Commercial paper
 
11,800

 

 

 
11,800

Certificates of deposit
 
7,848

 

 

 
7,848

Total short-term AFS securities
 
$
349,519

 
$
2

 
$
(1,299
)
 
$
348,222

Long-term AFS securities
 
 
 
 
 
 
 

Corporate debt securities
 
$
139,179

 
$
14

 
$
(959
)
 
$
138,234

U.S. governmental agency securities
 
48,347

 

 
(458
)
 
47,889

U.S. Treasury securities
 
54,560

 

 
(628
)
 
53,932

Total long-term AFS securities
 
$
242,086

 
$
14

 
$
(2,045
)
 
$
240,055

 
 
December 31, 2017
(In thousands)
 
Amortized Cost
 
Gross unrealized gains
 
Gross unrealized losses
 
Fair Value
Short-term AFS securities
 
 
 
 
 
 
 
 
Corporate debt securities
 
$
150,334

 
$

 
$
(227
)
 
$
150,107

U.S. Treasury securities
 
70,985

 

 
(34
)
 
70,951

U.S. governmental agency securities
 
45,819

 

 
(179
)
 
45,640

Commercial paper
 
32,591

 

 

 
32,591

Certificates of deposit
 
9,300

 

 

 
9,300

Total short-term AFS securities
 
$
309,029

 
$

 
$
(440
)
 
$
308,589

Long-term AFS securities
 
 
 
 
 
 
 
 
U.S. governmental agency securities
 
$
97,798

 
$

 
$
(1,019
)
 
96,779

Corporate debt securities
 
92,687

 

 
(683
)
 
92,004

U.S. Treasury securities
 
53,031

 

 
(403
)
 
52,628

Total long-term AFS securities
 
$
243,516

 
$

 
$
(2,105
)
 
$
241,411


15


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following tables represent the AFS securities as of September 30, 2018 and December 31, 2017, that were in an unrealized loss position, aggregated by investment category and the length of time that individual securities have been in a continuous loss position:
 
 
September 30, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
 
$
82,866

 
$
(123
)
 
$
41,587

 
$
(227
)
 
$
124,453

 
$
(350
)
U.S. Treasury securities
 
92,021

 
(56
)
 
20,763

 
(176
)
 
112,784

 
(232
)
U.S. governmental agency securities
 
3,484

 
(3
)
 
73,670

 
(714
)
 
77,154

 
(717
)
Total short-term AFS securities
 
$
178,371

 
$
(182
)
 
$
136,020

 
$
(1,117
)
 
$
314,391

 
$
(1,299
)
Long-term AFS securities
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
 
$
94,522

 
$
(459
)
 
$
28,379

 
$
(500
)
 
$
122,901

 
$
(959
)
U.S. Treasury securities
 
35,178

 
(305
)
 
18,754

 
(323
)
 
53,932

 
(628
)
U.S. governmental agency securities
 
37,688

 
(318
)
 
10,202

 
(140
)
 
47,890

 
(458
)
Total long-term AFS securities
 
$
167,388

 
$
(1,082
)
 
$
57,335

 
$
(963
)
 
$
224,723

 
$
(2,045
)
 
 
December 31, 2017
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
 
$
140,111

 
$
(199
)
 
$
9,996

 
$
(28
)
 
$
150,107

 
$
(227
)
U.S. Treasury securities
 
70,951

 
(34
)
 

 

 
70,951

 
(34
)
U.S. governmental agency securities
 
19,770

 
(50
)
 
25,870

 
(129
)
 
45,640

 
(179
)
Total short-term AFS securities
 
$
230,832

 
$
(283
)
 
$
35,866

 
$
(157
)
 
$
266,698

 
$
(440
)
Long-term AFS securities
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
 
$
81,118

 
$
(579
)
 
$
10,886

 
$
(104
)
 
$
92,004

 
$
(683
)
U.S. Treasury securities
 
23,998

 
(125
)
 
72,781

 
(894
)
 
96,779

 
(1,019
)
U.S. governmental agency securities
 
52,628

 
(403
)
 

 

 
52,628

 
(403
)
Total long-term AFS securities
 
$
157,744

 
$
(1,107
)
 
$
83,667

 
$
(998
)
 
$
241,411

 
$
(2,105
)
We conduct an other-than-temporary impairment (“OTTI”) analysis on a quarterly basis or more often if a potential loss-triggering event occurs. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period and whether we intend to sell. We also consider whether (i) it is more likely than not that we will be required to sell the debt securities before recovery of their amortized cost basis and (ii) the amortized cost basis cannot be recovered as a result of credit losses.
As of September 30, 2018, 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 September 30, 2018, we have recognized no OTTI loss.

16


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

As of September 30, 2018, our short-term and long-term marketable securities had remaining maturities of less than 1 month to 12 months and 13 months to 35 months, respectively. See Note 9 for more information regarding the fair value of our marketable securities.
NOTE 5. GOODWILL AND INTANGIBLES
The changes in the carrying amount of goodwill as of September 30, 2018, and since December 31, 2017, were as follows:
(In thousands)
 
Total Company
Balance as of December 31, 2017
 
$
143,549

Foreign currency translation
 
(2,276
)
Balance as of September 30, 2018
 
$
141,273


The foreign currency translation line item reflects changes in goodwill resulting from fluctuating exchange rates related to the consolidation of certain international subsidiaries.
The aggregate carrying amount of intangible assets of $6.7 million is included in “Miscellaneous assets” in our Condensed Consolidated Balance Sheets as of September 30, 2018.
NOTE 6. INVESTMENTS
Equity Method Investments
As of September 30, 2018, our investments in joint ventures of $1.7 million consisted of a 40% equity ownership interest in Madison Paper Industries (“Madison”), a partnership that previously operated a supercalendered paper mill in Maine. The Company and UPM-Kymmene Corporation (“UPM”), a Finnish paper manufacturing company, are partners through subsidiary companies in Madison. The Company’s 40% ownership of Madison is through an 80%-owned consolidated subsidiary that owns 50% of Madison. UPM owns 60% of Madison, including a 10% interest through a 20% noncontrolling interest in the consolidated subsidiary of the Company.
In 2016, the paper mill closed and we recognized a $41.4 million loss related to the closure. As a result of the mill closure, we wrote our investment down to zero.  In the fourth quarter of 2016, Madison sold certain assets at the mill site and we recognized a $3.9 million gain related to the sale. In 2017, we recognized a $20.8 million gain, primarily related to the sale of the remaining assets (which primarily consisted of hydro power assets), partially offset by the loss related to Madison’s settlement of certain pension obligations. The partnership is currently in the process of liquidation.
The investment is accounted for under the equity method, and is recorded in “Miscellaneous assets” in our Condensed Consolidated Balance Sheets. Our proportionate share of the operating results of our investment is recorded in “(Loss)/Gain from joint ventures” in our Condensed Consolidated Statements of Operations.
The following table presents summarized income statement information for Madison, which follows a calendar year:
 
 
For the Quarters Ended
 
For the Nine Months Ended
(In thousands)
 
September 30, 2018

 
September 30, 2017

 
September 30, 2018

 
September 30, 2017

Revenues
 
$

 
$

 
$

 
$

Expenses:
 
 
 
 
 
 
 
 
Cost of sales
 

 
(105
)
 

 
(1,277
)
General and administrative (expense)/income and other
 
(65
)
 
60,216

 
(99
)
 
59,662

Total (expense)/income
 
(65
)
 
60,111

 
(99
)
 
58,385

Operating (loss)/income
 
(65
)
 
60,111

 
(99
)
 
58,385

Other income/(expense)
 
33

 
(1
)
 
81

 
(7
)
Net (loss)/income
 
$
(32
)
 
$
60,110

 
$
(18
)
 
$
58,378

We received no distributions from Madison during the third quarters and first nine months of 2018 and 2017, respectively.

17


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Non-Marketable Equity Securities
Our non-marketable equity securities are investments in privately held companies/funds without readily determinable market values. Prior to January 1, 2018 and the adoption of ASU 2016-01, we accounted for our non-marketable equity securities at cost less impairment. Subsequent to the adoption of ASU 2016-01 as of January 1, 2018, we elected the measurement alternative, defined as cost, less impairments, adjusted by observable price changes given our non-marketable equity securities are without readily determinable fair values. We estimate the fair value based on valuation methods using the observable transaction price at the transaction date. Realized gains and losses on non-marketable securities sold or impaired are recognized in “Interest expense and other, net.”
Non-marketable equity securities are classified within Level 3 in the fair value hierarchy. See Note 9 for the definition of Level 3. As of September 30, 2018 and December 31, 2017, non-marketable equity securities included in “Miscellaneous assets’’ in our Condensed Consolidated Balance Sheets had a carrying value of $14.6 million and $13.6 million, respectively. We did not have any material fair value adjustments in the third quarter and first nine months of 2018.
NOTE 7. DEBT OBLIGATIONS
Our indebtedness consisted of the repurchase option related to a sale-leaseback of a portion of our New York headquarters. Our total debt and capital lease obligations consisted of the following:
(In thousands)
 
September 30, 2018

 
December 31, 2017

Option to repurchase ownership interest in headquarters building in 2019:
 
 
 
 
Principal amount
 
$
250,000

 
$
250,000

Less unamortized discount based on imputed interest rate of 13.0%
 
4,068

 
6,596

Net option to repurchase ownership interest in headquarters building in 2019
 
245,932

 
243,404

Capital lease obligations
 
6,825

 
6,805

Total debt and capital lease obligations
 
252,757

 
250,209

Less current portion
 
6,825

 

Total long term debt and capital lease obligations
 
$
245,932

 
$
250,209

The current portion of capital lease obligations of $6.8 million as of September 30, 2018, is included in “Accrued expenses and other” as shown in the accompanying Condensed Consolidated Balance Sheets. See Note 9 for more information regarding the fair value of our long-term debt.
“Interest expense and other, net,” as shown in the accompanying Condensed Consolidated Statements of Operations was as follows:
 
 
For the Quarters Ended
 
For the Nine Months Ended
(In thousands)
 
September 30, 2018

 
September 24, 2017

 
September 30, 2018

 
September 24, 2017

Interest expense
 
$
7,061

 
$
6,956

 
$
21,078

 
$
20,775

Amortization of debt costs and discount on debt
 
839

 
801

 
2,528

 
2,379

Capitalized interest
 
(38
)
 
(345
)
 
(412
)
 
(852
)
Interest income and other, net
 
(3,836
)
 
(2,752
)
 
(9,755
)
 
(7,184
)
Total interest expense and other, net
 
$
4,026

 
$
4,660

 
$
13,439

 
$
15,118

Notice of Intent to Exercise Repurchase Option Under Lease Agreement
On January 30, 2018, the Company provided notice to an affiliate of W.P. Carey & Co. LLC of the Company’s intention to exercise its option under the Lease Agreement, dated March 6, 2009, by and between the parties (the “Lease”) to repurchase a portion of the Company’s leasehold condominium interest in the Company’s headquarters building located at 620 Eighth Avenue, New York, New York (the “Condo Interest”).
The Lease was part of a transaction in 2009 under which the Company sold and simultaneously leased back approximately 750,000 rentable square feet, comprising the Condo Interest. The sale price for the Condo Interest was

18


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

approximately $225 million. Under the Lease, the Company has an option exercisable in the second half of 2019 to repurchase the Condo Interest for approximately $250 million.
The Company has accounted for the transaction as a financing transaction, and has continued to depreciate the Condo Interest and account for the rental payments as interest expense. The difference between the purchase option price and the net sale proceeds from the transaction is being amortized over the 10-year period of 2009-2019 through interest expense.
NOTE 8. OTHER
Advertising Expenses
Advertising expenses incurred to promote our brand and products (which we also refer to as marketing expenses) were $40.4 million and $26.6 million in the third quarters of 2018 and 2017, respectively, and $107.6 million and $86.0 million in the first nine months of 2018 and 2017, respectively.
Capitalized Computer Software Costs
Amortization of capitalized computer software costs included in “Depreciation and amortization” in our Condensed Consolidated Statements of Operations were $4.1 million and $4.0 million in the third quarters of 2018 and 2017, respectively, and $11.4 million and $9.7 million in the first nine months of 2018 and 2017, respectively.
Headquarters Redesign and Consolidation
In December 2016, we announced plans to redesign our headquarters building, consolidate our space within a smaller number of floors and lease the additional floors to third parties. We incurred $2.5 million of total expenses related to these measures in the third quarter of 2017, and $3.1 million and $6.9 million in the first nine months of 2018 and 2017, respectively. We capitalized approximately $3 million and $26 million in the third quarters of 2018 and 2017, respectively, and $14 million and $37 million in the first nine months of 2018 and 2017, respectively, related to these measures. We expect the capital expenditures and spending in connection with this project to be completed in the fourth quarter of 2018.
Restricted Cash
A reconciliation of cash, cash equivalents and restricted cash as of September 30, 2018 and December 31, 2017 from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows is as follows:
(In thousands)
 
September 30, 2018

 
December 31, 2017

 
 
 
 
 
Reconciliation of cash, cash equivalents and restricted cash
 
 
 
 
Cash and cash equivalents
 
$
206,179

 
$
182,911

Restricted cash included within other current assets
 
651

 
375

Restricted cash included within miscellaneous assets
 
17,560

 
17,650

Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows
 
$
224,390

 
$
200,936

Substantially all of the amount included in restricted cash is set aside to collateralize workers’ compensation obligations.
Severance Costs
We recognized severance costs of $0.3 million and $2.1 million in the third quarters of 2018 and 2017, respectively, and $4.9 million and $23.0 million in the first nine months of 2018 and 2017, respectively, related to workforce reductions. The costs in 2017 were related to a workforce reduction primarily affecting our newsroom in connection with measures to streamline our editing process and allow for further investments in the newsroom. These costs are recorded in “Selling, general and administrative costs” in our Condensed Consolidated Statements of Operations.
We had a severance liability of $8.3 million and $18.8 million included in “Accrued expenses and other” in our Condensed Consolidated Balance Sheets as of September 30, 2018, and December 31, 2017, respectively. We anticipate most of the payments will be made within the next twelve months.

19


THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 9. FAIR VALUE MEASUREMENTS
Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability. The fair value hierarchy consists of three levels:
Level 1–quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;
Level 2–inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level 3–unobservable inputs for the asset or liability.
Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis
The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2018, and December 31, 2017:
(In thousands)
 
September 30, 2018
 
December 31, 2017
 
Total
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-term AFS securities (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt securities
 
$
138,635

 
$

 
$
138,635

 
$

 
$
150,107

 
$

 
$
150,107

 
$

U.S. Treasury securities
 
112,784

 

 
112,784

 

 
70,951

 

 
70,951

 

U.S. governmental agency securities
 
77,155

 

 
77,155

 

 
45,640

 

 
45,640

 

Commercial paper
 
11,800

 

 
11,800

 

 
32,591

 

 
32,591

 

Certificates of deposit
 
7,848

 

 
7,848

 

 
9,300

 

 
9,300

 

Total short-term AFS securities
 
$
348,222

 
$

 
$
348,222

 
$

 
$
308,589

 
$

 
$
308,589

 
$

Long-term AFS securities (1)
 

 

 

 

 

 

 

 

Corporate debt securities
 
$
138,234

 
$

 
$
138,234

 
$

 
$
92,004

 
$

 
$
92,004

 
$

U.S. Treasury securities
 
53,932

 

 
53,932

 

 
52,628

 

 
52,628

 

U.S. governmental agency securities
 
47,889

 

 
47,889

 

 
96,779

 

 
96,779

 

Total long-term AFS securities
 
$
240,055

 
$

 
$
240,055

 
$

 
$
241,411

 
$

 
$
241,411

 
$

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deferred compensation (2)
 
$