10-Q
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 27, 2015
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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
| | | | | | |
Large accelerated filer x | | Accelerated filer o | | Non-accelerated filer o | | Smaller reporting company 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 27, 2015 (exclusive of treasury shares):
|
| | | | | |
Class A Common Stock | | | 161,074,241 |
| shares |
Class B Common Stock | | | 816,635 |
| shares |
THE NEW YORK TIMES COMPANY
INDEX
|
| | | | | | |
| | ITEM NO. | | |
PART I | | | | Financial Information | | |
Item | 1 | | Financial Statements | | |
| | | Condensed Consolidated Balance Sheets as of September 27, 2015 (unaudited) and December 28, 2014 | | |
| | | Condensed Consolidated Statements of Operations (unaudited) for the quarter and nine months ended September 27, 2015 and September 28, 2014 | | |
| | | Condensed Consolidated Statements of Comprehensive Income (unaudited) for the quarter and nine months ended September 27, 2015 and September 28, 2014 | | |
| | | Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 27, 2015 and September 28, 2014 | | |
| | | 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 27, 2015 |
|
| December 28, 2014 |
|
| (Unaudited) | | |
Assets | | | |
Current assets | | | |
Cash and cash equivalents | $ | 144,606 |
| | $ | 176,607 |
|
Short-term marketable securities | 499,486 |
| | 636,743 |
|
Accounts receivable (net of allowances of $11,624 in 2015 and $12,860 in 2014) | 157,570 |
| | 212,690 |
|
Deferred income taxes | 63,640 |
| | 63,640 |
|
Prepaid expenses | 22,017 |
| | 25,635 |
|
Other current assets | 26,764 |
| | 32,780 |
|
Total current assets | 914,083 |
| | 1,148,095 |
|
Other assets | | | |
Long-term marketable securities | 228,586 |
| | 167,820 |
|
Investments in joint ventures | 22,870 |
| | 22,069 |
|
Property, plant and equipment (less accumulated depreciation and amortization of $872,351 in 2015 and $853,363 in 2014) | 638,836 |
| | 665,758 |
|
Goodwill | 110,469 |
| | 116,422 |
|
Deferred income taxes | 238,596 |
| | 252,587 |
|
Miscellaneous assets | 186,474 |
| | 193,723 |
|
Total assets | $ | 2,339,914 |
| | $ | 2,566,474 |
|
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) |
| | | | | | | | |
| | September 27, 2015 |
| | December 28, 2014 |
|
| | (Unaudited) | | |
Liabilities and stockholders’ equity | | | | |
Current liabilities | | | | |
Accounts payable | | $ | 83,457 |
| | $ | 94,401 |
|
Accrued payroll and other related liabilities | | 75,501 |
| | 91,755 |
|
Unexpired subscriptions | | 60,222 |
| | 58,736 |
|
Current portion of long-term debt and capital lease obligations | | — |
| | 223,662 |
|
Accrued expenses and other | | 104,608 |
| | 131,954 |
|
Total current liabilities | | 323,788 |
| | 600,508 |
|
Other liabilities | | | | |
Long-term debt and capital lease obligations | | 430,007 |
| | 426,458 |
|
Pension benefits obligation | | 604,812 |
| | 631,756 |
|
Postretirement benefits obligation | | 67,485 |
| | 71,628 |
|
Other | | 95,302 |
| | 107,775 |
|
Total other liabilities | | 1,197,606 |
| | 1,237,617 |
|
Stockholders’ equity | | | | |
Common stock of $.10 par value: | | | | |
Class A – authorized: 300,000,000 shares; issued: 2015 – 168,110,083; 2014 – 151,701,136 (including treasury shares: 2015 – 5,817,535; 2014 – 2,180,442) | | 16,811 |
| | 15,170 |
|
Class B – convertible – authorized and issued shares: 2015 – 816,635; 2014 – 816,635 (including treasury shares: 2015 – none; 2014 – none) | | 82 |
| | 82 |
|
Additional paid-in capital | | 146,112 |
| | 39,217 |
|
Retained earnings | | 1,283,533 |
| | 1,291,907 |
|
Common stock held in treasury, at cost | | (132,187 | ) | | (86,253 | ) |
Accumulated other comprehensive loss, net of income taxes: | | | | |
Foreign currency translation adjustments | | 1,143 |
| | 5,705 |
|
Funded status of benefit plans | | (498,656 | ) | | (539,500 | ) |
Total accumulated other comprehensive loss, net of income taxes | | (497,513 | ) | | (533,795 | ) |
Total New York Times Company stockholders’ equity | | 816,838 |
| | 726,328 |
|
Noncontrolling interest | | 1,682 |
| | 2,021 |
|
Total stockholders’ equity | | 818,520 |
| | 728,349 |
|
Total liabilities and stockholders’ equity | | $ | 2,339,914 |
| | $ | 2,566,474 |
|
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 | | For the Nine Months Ended |
| September 27, 2015 |
| | September 28, 2014 |
| | September 27, 2015 |
|
| September 28, 2014 |
|
| (13 weeks) | | (39 weeks) |
Revenues | | | | | | | |
Circulation | $ | 209,075 |
| | $ | 206,729 |
| | $ | 632,203 |
| | $ | 626,267 |
|
Advertising | 135,356 |
| | 138,222 |
| | 433,863 |
| | 454,683 |
|
Other | 22,973 |
| | 19,767 |
| | 68,463 |
| | 62,895 |
|
Total revenues | 367,404 |
| | 364,718 |
| | 1,134,529 |
| | 1,143,845 |
|
Operating costs | | | | | | | |
Production costs: | | | | | | | |
Raw materials | 18,400 |
| | 20,875 |
| | 57,025 |
| | 64,513 |
|
Wages and benefits | 88,999 |
| | 90,777 |
| | 268,667 |
| | 267,418 |
|
Other | 44,632 |
| | 49,525 |
| | 135,748 |
| | 146,173 |
|
Total production costs | 152,031 |
| | 161,177 |
| | 461,440 |
| | 478,104 |
|
Selling, general and administrative costs | 178,071 |
| | 193,198 |
| | 533,120 |
| | 565,506 |
|
Depreciation and amortization | 15,369 |
| | 19,375 |
| | 46,023 |
| | 58,636 |
|
Total operating costs | 345,471 |
| | 373,750 |
| | 1,040,583 |
| | 1,102,246 |
|
Pension settlement charges | — |
| | — |
| | 40,329 |
| | 9,525 |
|
Multiemployer pension plan withdrawal expense | — |
| | — |
| | 4,697 |
| | — |
|
Early termination charge | — |
| | — |
| | — |
| | 2,550 |
|
Operating profit/(loss) | 21,933 |
| | (9,032 | ) | | 48,920 |
| | 29,524 |
|
Income/(loss) from joint ventures | 170 |
| | 1,599 |
| | (758 | ) | | (523 | ) |
Interest expense, net | 9,127 |
| | 15,254 |
| | 31,095 |
| | 41,760 |
|
Income/(loss) from continuing operations before income taxes | 12,976 |
| | (22,687 | ) | | 17,067 |
| | (12,759 | ) |
Income tax expense/(benefit) | 3,611 |
| | (10,247 | ) | | 5,904 |
| | (12,226 | ) |
Income/(loss) from continuing operations | 9,365 |
| | (12,440 | ) | | 11,163 |
| | (533 | ) |
Loss from discontinued operations, net of income taxes | — |
| | — |
| | — |
| | (994 | ) |
Net income/(loss) | 9,365 |
| | (12,440 | ) | | 11,163 |
| | (1,527 | ) |
Net loss/(income) attributable to the noncontrolling interest | 50 |
| | (59 | ) | | 390 |
| | (41 | ) |
Net income/(loss) attributable to The New York Times Company common stockholders | $ | 9,415 |
| | $ | (12,499 | ) | | $ | 11,553 |
| | $ | (1,568 | ) |
Amounts attributable to The New York Times Company common stockholders: | | | | | | | |
Income/(loss) from continuing operations | $ | 9,415 |
| | $ | (12,499 | ) | | $ | 11,553 |
| | $ | (574 | ) |
Loss from discontinued operations, net of income taxes | — |
| | — |
| | — |
| | (994 | ) |
Net income/(loss) | $ | 9,415 |
| | $ | (12,499 | ) | | $ | 11,553 |
| | $ | (1,568 | ) |
Average number of common shares outstanding: | | | | | | | |
Basic | 165,052 |
| | 150,822 |
| | 165,130 |
| | 150,728 |
|
Diluted | 166,981 |
| | 150,822 |
| | 167,574 |
| | 150,728 |
|
Basic earnings/(loss) per share attributable to The New York Times Company common stockholders: | | | | | | | |
Income/(loss) from continuing operations | $ | 0.06 |
| | $ | (0.08 | ) | | $ | 0.07 |
| | $ | 0.00 |
|
Loss from discontinued operations, net of income taxes | — |
| | — |
| | — |
| | (0.01 | ) |
Net income/(loss) | $ | 0.06 |
| | $ | (0.08 | ) | | $ | 0.07 |
| | $ | (0.01 | ) |
Diluted earnings/(loss) per share attributable to The New York Times Company common stockholders: | | | | | | | |
Income/(loss) from continuing operations | $ | 0.06 |
| | $ | (0.08 | ) | | $ | 0.07 |
| | $ | 0.00 |
|
Loss from discontinued operations, net of income taxes | — |
| | — |
| | — |
| | (0.01 | ) |
Net income/(loss) | $ | 0.06 |
| | $ | (0.08 | ) | | $ | 0.07 |
| | $ | (0.01 | ) |
Dividends declared per share | $ | 0.04 |
| | $ | 0.04 |
| | $ | 0.12 |
| | $ | 0.12 |
|
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 | | For the Nine Months Ended |
| September 27, 2015 |
| | September 28, 2014 |
| | September 27, 2015 |
| | September 28, 2014 |
|
| (13 weeks) | | (39 weeks) |
Net income/(loss) | $ | 9,365 |
| | $ | (12,440 | ) | | $ | 11,163 |
| | $ | (1,527 | ) |
Other comprehensive income, before tax: | | | | | | | |
Loss on foreign currency translation adjustments | (482 | ) | | (6,581 | ) | | (7,102 | ) | | (7,163 | ) |
Pension and postretirement benefits obligation | 9,166 |
| | 29,877 |
| | 67,646 |
| | 43,471 |
|
Other comprehensive income, before tax | 8,684 |
| | 23,296 |
| | 60,544 |
| | 36,308 |
|
Income tax expense | 3,635 |
| | 9,410 |
| | 24,211 |
| | 14,551 |
|
Other comprehensive income, net of tax | 5,049 |
| | 13,886 |
| | 36,333 |
| | 21,757 |
|
Comprehensive income | 14,414 |
| | 1,446 |
| | 47,496 |
| | 20,230 |
|
Comprehensive loss/(income) attributable to the noncontrolling interest | 50 |
| | (59 | ) | | 339 |
| | (41 | ) |
Comprehensive income attributable to The New York Times Company common stockholders | $ | 14,464 |
| | $ | 1,387 |
| | $ | 47,835 |
| | $ | 20,189 |
|
See Notes to Condensed Consolidated Financial Statements.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
|
| | | | | | | |
| For the Nine Months Ended |
| September 27, 2015 |
| | September 28, 2014 |
|
| (39 weeks) |
Cash flows from operating activities | | | |
Net income/(loss) | $ | 11,163 |
| | $ | (1,527 | ) |
Adjustments to reconcile net income to net cash provided by operating activities: | | | |
Gain on insurance settlement | — |
| | (1,421 | ) |
Pension settlement charges | 40,329 |
| | 9,525 |
|
Multiemployer pension plan withdrawal expense | 4,697 |
| | — |
|
Early termination charge | — |
| | 2,550 |
|
Depreciation and amortization | 46,023 |
| | 58,636 |
|
Stock-based compensation expense | 7,588 |
| | 6,120 |
|
Undistributed loss of joint ventures | 758 |
| | 523 |
|
Long-term retirement benefit obligations | (7,767 | ) | | (42,255 | ) |
Uncertain tax positions | 147 |
| | 11,211 |
|
Other-net | 14,303 |
| | 9,947 |
|
Changes in operating assets and liabilities: | | | |
Accounts receivable-net | 55,120 |
| | 42,191 |
|
Other current assets | 10,742 |
| | (6,268 | ) |
Accounts payable, accrued payroll and other liabilities | (76,555 | ) | | (53,871 | ) |
Unexpired subscriptions | 1,486 |
| | 882 |
|
Net cash provided by operating activities | 108,034 |
| | 36,243 |
|
Cash flows from investing activities | | | |
Purchases of marketable securities | (555,040 | ) | | (398,124 | ) |
Maturities of marketable securities | 626,697 |
| | 382,376 |
|
Repayment of borrowings against cash surrender value of corporate-owned life insurance | — |
| | (26,005 | ) |
Purchase of investments – net of proceeds | (3,592 | ) | | (1,005 | ) |
Capital expenditures | (21,150 | ) | | (25,819 | ) |
Proceeds from insurance settlement | — |
| | 1,200 |
|
Change in restricted cash | (1,190 | ) | | (1,100 | ) |
Other-net | (343 | ) | | (238 | ) |
Net cash provided by/(used in) investing activities | 45,382 |
| | (68,715 | ) |
Cash flows from financing activities | | | |
Long-term obligations: | | | |
Repayment of debt and capital lease obligations | (223,653 | ) | | (18,860 | ) |
Dividends paid | (20,053 | ) | | (18,166 | ) |
Capital shares: | | | |
Stock issuances | 102,803 |
| | 1,120 |
|
Repurchases | (43,561 | ) | | — |
|
Net cash used in financing activities | (184,464 | ) | | (35,906 | ) |
Net decrease in cash and cash equivalents | (31,048 | ) | | (68,378 | ) |
Effect of exchange rate changes on cash | (953 | ) | | 224 |
|
Cash and cash equivalents at the beginning of the period | 176,607 |
| | 482,745 |
|
Cash and cash equivalents at the end of the period | $ | 144,606 |
| | $ | 414,591 |
|
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 The New York Times Company’s (the “Company”) management, the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of September 27, 2015 and December 28, 2014, and the results of operations and cash flows of the Company for the periods ended September 27, 2015 and September 28, 2014. 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 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 28, 2014. 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 periods and 39 weeks for the full nine-month periods.
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“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.
For comparability, certain prior-year amounts have been reclassified to conform with the current period presentation. See Management’s Discussion and Analysis of Results of Operations for additional information regarding reclassified amounts.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
As of September 27, 2015, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December 28, 2014, have not changed.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”). ASUs not specifically identified in our disclosures are either not applicable to the Company or will not have a material effect on our financial condition or results of operations.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, “Revenue from Contracts with Customers,” which prescribes a single comprehensive model for entities to use in the accounting of revenue arising from contracts with customers. The new guidance will supersede virtually all existing revenue guidance under GAAP and International Financial Reporting Standards. There are two transition options available to entities: the full retrospective approach or the modified retrospective approach. Under the full retrospective approach, the Company would restate prior periods in compliance with Accounting Standards Codification 250, “Accounting Changes and Error Corrections”. Alternatively, the Company may elect the modified retrospective approach, which allows for the new revenue standard to be applied to existing contracts as of the effective date and record a cumulative catch-up adjustment to retained earnings effective for fiscal years beginning after December 31, 2017, subject to finalization. Early application is permitted. We are currently in the process of evaluating the impact of the new revenue guidance.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. MARKETABLE SECURITIES
Our marketable debt securities consisted of the following:
|
| | | | | | | | |
(In thousands) | | September 27, 2015 |
| | December 28, 2014 |
|
Short-term marketable securities | | | | |
Marketable debt securities | | | | |
U.S Treasury securities | | $ | 170,815 |
| | $ | 238,488 |
|
Corporate debt securities | | 184,579 |
| | 208,346 |
|
U.S. agency securities | | 56,274 |
| | 32,009 |
|
Municipal securities | | 3,242 |
| | 13,622 |
|
Certificates of deposit | | 63,583 |
| | 109,293 |
|
Commercial paper | | 20,993 |
| | 34,985 |
|
Total short-term marketable securities | | $ | 499,486 |
| | $ | 636,743 |
|
Long-term marketable securities | | | | |
Marketable debt securities | | | | |
Corporate debt securities | | $ | 96,454 |
| | $ | 71,191 |
|
U.S. agency securities | | 132,132 |
| | 95,204 |
|
Municipal securities | | — |
| | 1,425 |
|
Total long-term marketable securities | | $ | 228,586 |
| | $ | 167,820 |
|
As of September 27, 2015, our short-term and long-term marketable securities had remaining maturities of less than 1 month to 12 months and 13 months to 36 months, respectively. See Note 8 for additional information regarding the fair value of our marketable securities.
NOTE 4. GOODWILL
The changes in the carrying amount of goodwill as of September 27, 2015 and December 28, 2014 were as follows:
|
| | | | |
(In thousands) | | Total Company |
Balance as of December 28, 2014 | | $ | 116,422 |
|
Foreign currency translation | | (5,953 | ) |
Balance as of September 27, 2015 | | $ | 110,469 |
|
The foreign currency translation line item reflects changes in goodwill resulting from fluctuating exchange rates related to the consolidation of certain international subsidiaries.
NOTE 5. INVESTMENTS
Equity Method Investments
As of September 27, 2015, our investments in joint ventures consisted of equity ownership interests in the following entities:
|
| | | | | |
Company | | | | Approximate % Ownership |
Donohue Malbaie Inc. | | | | 49 | % |
Madison Paper Industries | | | | 40 | % |
Women in the World Media, LLC | | | | 30 | % |
We have investments in Donohue Malbaie Inc. (“Malbaie”), a Canadian newsprint company, Madison Paper Industries (“Madison”), a partnership operating a supercalendered paper mill in Maine (together, the “Paper Mills”), and Women in the World Media, LLC, a live-event conference business.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
We received no distributions from our equity method investments during the nine-month periods ended September 27, 2015 and September 28, 2014.
We purchase newsprint and have purchased supercalendered paper from the Paper Mills at competitive prices. Such purchases totaled $8.8 million and $15.2 million for the nine-month periods ended September 27, 2015 and September 28, 2014, respectively. Effective February 2015, we no longer purchase supercalendered paper.
NOTE 6. DEBT OBLIGATIONS
Our current indebtedness includes senior notes and 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, except percentages) | | Coupon Rate |
| | September 27, 2015 |
| | December 28, 2014 |
|
Current portion of long-term debt and capital lease obligations: | | | | | | |
Senior notes due in March 2015 | | 5.0 | % | | $ | — |
| | $ | 223,662 |
|
Long-term debt and capital lease obligations: | | | | | | |
Senior notes due in December 2016 | | 6.625 | % | | 188,178 |
| | 187,604 |
|
Option to repurchase ownership interest in headquarters building in 2019 | | | | 235,077 |
| | 232,118 |
|
Long-term capital lease obligations | | | | 6,752 |
| | 6,736 |
|
Total long-term debt and capital lease obligations | | | | 430,007 |
| | 426,458 |
|
Total debt and capital lease obligations | | | | $ | 430,007 |
| | $ | 650,120 |
|
See Note 8 for information regarding the fair value of our long-term debt.
In March 2015, we repaid, at maturity, the remaining $223.7 million principal amount of our 5.0% senior notes.
“Interest expense, 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 27, 2015 |
| | September 28, 2014 |
| | September 27, 2015 |
| | September 28, 2014 |
|
Cash interest expense | | $ | 9,919 |
| | $ | 12,795 |
| | $ | 32,008 |
| | $ | 38,999 |
|
Premium on debt repurchases | | — |
| | 2,188 |
| | — |
| | 2,188 |
|
Amortization of debt issuance costs and discount on debt | | 1,180 |
| | 1,314 |
| | 3,540 |
| | 3,632 |
|
Capitalized interest | | (85 | ) | | (47 | ) | | (242 | ) | | (129 | ) |
Interest income | | (1,887 | ) | | (996 | ) | | (4,211 | ) | | (2,930 | ) |
Total interest expense, net | | $ | 9,127 |
| | $ | 15,254 |
| | $ | 31,095 |
| | $ | 41,760 |
|
NOTE 7. OTHER
Severance Costs
We recognized severance costs of $1.0 million in the third quarter of 2015 and $4.3 million in the first nine months of 2015. We recognized severance costs of $21.4 million in the third quarter of 2014 and $26.7 million in the first nine months of 2014, the majority of which related to workforce reductions that the Company announced on October 1, 2014. These costs are recorded in “Selling, general and administrative costs” in our Condensed Consolidated Statements of Operations.
We had a severance liability of $14.9 million and $34.6 million included in “Accrued expenses and other” in our Condensed Consolidated Balance Sheets as of September 27, 2015 and December 28, 2014, respectively.
Pension Settlement Charges
During the first quarter of 2015, we recorded a pension settlement charge of $40.3 million in connection with a lump-sum payment offer made to certain former employees who participated in certain qualified pension plans. These lump-sum payments were made with cash from the qualified pension plans, not with Company cash.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
During the second quarter of 2014, we recorded a pension settlement charge of $9.5 million in connection with a lump-sum payment offer made to certain former employees who participated in certain non-qualified pension plans.
See Note 9 for additional information regarding the pension settlement charges.
Multiemployer Pension Plan Withdrawal Expense
During the first quarter of 2015, we recorded a $4.7 million charge for a partial withdrawal obligation under a multiemployer pension plan.
Early Termination Charge
In the first quarter of 2014, we recorded a $2.6 million charge for the early termination of a distribution agreement.
Advertising Expenses
Advertising expenses incurred to promote our consumer and marketing services were $20.6 million in the third quarter of 2015 and $63.1 million in the first nine months of 2015 compared to $20.1 million in the third quarter of 2014 and $67.7 million in the first nine months of 2014.
Capitalized Computer Software Costs
Amortization of capitalized computer software costs included in “Depreciation and amortization” in our Condensed Consolidated Statements of Operations were $2.9 million in the third quarter of 2015 and $8.9 million in the first nine months of 2015 compared to $6.9 million in the third quarter of 2014 and $21.2 million in the first nine months of 2014.
NOTE 8. 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 liabilities measured at fair value on a recurring basis as of September 27, 2015 and December 28, 2014:
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(In thousands) | | September 27, 2015 | | December 28, 2014 |
| Total | | Level 1 | | Level 2 | | Level 3 | | Total | | Level 1 | | Level 2 | | Level 3 |
Deferred compensation | | $ | 34,330 |
| | $ | 34,330 |
| | $ | — |
| | $ | — |
| | $ | 45,136 |
| | $ | 45,136 |
| | $ | — |
| | $ | — |
|
The deferred compensation liability, included in “Other liabilities—Other” in our Condensed Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), which enables certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. The DEC has been frozen effective December 31, 2015.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Assets Measured and Recorded at Fair Value on a Non-Recurring Basis
Certain non-financial assets, such as goodwill, other intangible assets, property, plant and equipment and certain investments, that were part of operations that have been classified as discontinued operations are only recorded at fair value if an impairment charge is recognized. The following table presents non-financial assets that were measured and recorded at fair value on a non-recurring basis and the total impairment losses recorded on those assets as of December 28, 2014.
|
| | | | | | | | | | | | | | | | | | | | |
(In thousands) | | Net Carrying Value as of | | Fair Value Measured and Recorded Using | | Impairment Losses as of |
| December 28, 2014 | | Level 1 | | Level 2 | | Level 3 | | December 28, 2014 |
Investments in joint ventures | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 9,216 |
|
The impairment of assets in 2014 reflects the impairment of our investment in Madison. During the fourth quarter of 2014, we estimated the fair value using unobservable inputs (Level 3). We recorded a $9.2 million non-cash charge in the fourth quarter of 2014. Our proportionate share of the loss was $4.7 million after tax and adjusted for the allocation of the loss to the non-controlling interest.
Financial Instruments Disclosed, But Not Reported, at Fair Value
Our marketable securities, which include U.S. Treasury securities, corporate debt securities, U.S. government agency securities, municipal securities, certificates of deposit and commercial paper, are recorded at amortized cost (see Note 3). As of September 27, 2015 and December 28, 2014, the amortized cost approximated fair value because of the short-term maturity and highly liquid nature of these investments. We classified these investments as Level 2 since the fair value estimates are based on market observable inputs for investments with similar terms and maturities.
The carrying value of our long-term debt was $423 million as of September 27, 2015 and $420 million as of December 28, 2014. The fair value of our long-term debt was $520 million as of September 27, 2015 and $527 million as of December 28, 2014. We estimate the fair value of our debt utilizing market quotations for debt that have quoted prices in active markets. Since our debt does not trade on a daily basis in an active market, the fair value estimates are based on market observable inputs based on borrowing rates currently available for debt with similar terms and average maturities (Level 2).
NOTE 9. PENSION AND OTHER POSTRETIREMENT BENEFITS
Pension
Single-Employer Plans
We sponsor several single-employer defined benefit pension plans, the majority of which have been frozen. We also participate in two single-employer defined benefit plans, which are established pursuant to collective bargaining and cover Company employees who are members of The Newspaper Guild of New York. The plans are sponsored by a Board of Trustees consisting of representatives of The Newspaper Guild of New York and the Company. The Newspaper Guild of New York-The New York Times Pension Fund (the “Guild Plan”) is a frozen plan. The Guild-Times Adjustable Pension Plan is a new defined benefit plan that replaced the Guild Plan.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The components of net periodic pension cost were as follows: |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended |
| | September 27, 2015 | | September 28, 2014 |
(In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans |
Service cost | | $ | 2,989 |
| | $ | — |
| | $ | 2,989 |
| | $ | 2,386 |
| | $ | — |
| | $ | 2,386 |
|
Interest cost | | 18,514 |
| | 2,502 |
| | 21,016 |
| | 21,112 |
| | 2,382 |
| | 23,494 |
|
Expected return on plan assets | | (28,832 | ) | | — |
| | (28,832 | ) | | (28,460 | ) | | — |
| | (28,460 | ) |
Amortization of actuarial loss | | 9,478 |
| | 1,271 |
| | 10,749 |
| | 6,655 |
| | 990 |
| | 7,645 |
|
Amortization of prior service credit | | (487 | ) | | — |
| | (487 | ) | | (486 | ) | | — |
| | (486 | ) |
Net periodic pension cost | | $ | 1,662 |
| | $ | 3,773 |
| | $ | 5,435 |
| | $ | 1,207 |
| | $ | 3,372 |
| | $ | 4,579 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
| | For the Nine Months Ended |
| | September 27, 2015 | | September 28, 2014 |
(In thousands) | | Qualified Plans | | Non- Qualified Plans | | All Plans | | Qualified Plans | | Non- Qualified Plans | | All Plans |
Service cost | | $ | 8,964 |
| | $ | — |
| | $ | 8,964 |
| | $ | 7,158 |
| | $ | — |
| | $ | 7,158 |
|
Interest cost | | 55,966 |
| | 7,506 |
| | 63,472 |
| | 63,336 |
| | 7,968 |
| | 71,304 |
|
Expected return on plan assets | | (86,439 | ) | | — |
| | (86,439 | ) | | (85,380 | ) | | — |
| | (85,380 | ) |
Amortization of actuarial loss | | 28,354 |
| | 3,811 |
| | 32,165 |
| | 19,964 |
| | 3,077 |
| | 23,041 |
|
Amortization of prior service credit | | (1,459 | ) | | — |
| | (1,459 | ) | | (1,456 | ) | | — |
| | (1,456 | ) |
Effect of settlement | | 40,329 |
| | — |
| | 40,329 |
| | — |
| | 9,525 |
| | 9,525 |
|
Net periodic pension cost | | $ | 45,715 |
| | $ | 11,317 |
| | $ | 57,032 |
| | $ | 3,622 |
| | $ | 20,570 |
| | $ | 24,192 |
|
During the first nine months of 2015 and 2014, we made pension contributions of $5.3 million and $12.5 million, respectively, to certain qualified pension plans. We expect to make total contributions of $7.7 million in 2015 to satisfy funding requirements.
As part of our strategy to reduce the pension obligations and the resulting volatility of our overall financial condition, we have offered lump-sum payments to certain former employees participating in both our qualified and non-qualified pension plans.
In the first quarter of 2015, we recorded a pension settlement charge of $40.3 million in connection with a lump-sum payment offer made to certain former employees who participated in certain qualified pension plans. These lump-sum payments totaled $98.3 million and were made with cash from the qualified pension plans, not with Company cash. The effect of this lump-sum payment offer was to reduce our pension obligations by $142.8 million.
In the second quarter of 2014, we recorded a pension settlement charge of $9.5 million in connection with a lump-sum payment offer made to certain former employees who participated in certain non-qualified pension plans. These lump-sum payments totaled $24.0 million and were paid out of Company cash. The effect of this lump-sum payment offer was to reduce our pension obligations by $32.0 million.
Multiemployer Plans
During the first quarter of 2015, we recorded a $4.7 million charge related to a partial withdrawal obligation under a multiemployer pension plan.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Other Postretirement Benefits
The components of net periodic postretirement benefit expense were as follows:
|
| | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 27, 2015 |
| | September 28, 2014 |
| | September 27, 2015 |
| | September 28, 2014 |
|
Service cost | | $ | 148 |
| | $ | 145 |
| | $ | 442 |
| | $ | 439 |
|
Interest cost | | 688 |
| | 930 |
| | 2,065 |
| | 2,950 |
|
Amortization of actuarial loss | | 1,303 |
| | 1,237 |
| | 3,909 |
| | 3,605 |
|
Amortization of prior service credit | | (2,399 | ) | | (1,800 | ) | | (7,349 | ) | | (5,000 | ) |
Net periodic postretirement benefit (credit) expense | | $ | (260 | ) | | $ | 512 |
| | $ | (933 | ) | | $ | 1,994 |
|
NOTE 10. INCOME TAXES
The Company had income tax expense of $3.6 million and $5.9 million in the third quarter and first nine months of 2015, respectively, and an effective tax rate of 27.8% and 34.6% in the third quarter and first nine months of 2015, respectively. The effective income tax rate for the third quarter of 2015 was lower than the statutory tax rate principally due to the tax deduction for domestic production activities. The Company had an income tax benefit of $10.2 million and $12.2 million in the third quarter and first nine months of 2014, respectively. The tax benefits in the third quarter and first nine months of 2014 were primarily due to pre-tax losses from continuing operations and a reduction in our reserve for uncertain tax positions, respectively.
NOTE 11. EARNINGS/(LOSS) PER SHARE
We compute earnings/(loss) per share using a two-class method, an earnings allocation method used when a company’s capital structure includes either two or more classes of common stock or common stock and participating securities. This method determines earnings/(loss) per share based on dividends declared on common stock and participating securities (i.e., distributed earnings), as well as participation rights of participating securities in any undistributed earnings.
Earnings/(loss) per share is computed using both basic shares and diluted shares. The difference between basic and diluted shares is that diluted shares include the dilutive effect of the assumed exercise of outstanding securities. Our stock options, stock-settled long-term performance awards and restricted stock units could have the most significant impact on diluted shares. The increase in our basic shares is due to the exercise of warrants in January 2015, partially offset by repurchases of the Company’s Class A Common Stock.
Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the market value of our Class A Common Stock, because their inclusion would result in an anti-dilutive effect on per share amounts.
The number of stock options excluded from the computation of diluted earnings per share because they were anti-dilutive was approximately 5 million in the third quarter and first nine months of 2015 and approximately 6 million in the third quarter and first nine months of 2014.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 12. SUPPLEMENTAL STOCKHOLDERS’ EQUITY INFORMATION
Stockholders’ equity is summarized as follows:
|
| | | | | | | | | | | | |
(In thousands) | | Total New York Times Company Stockholders’ Equity | | Noncontrolling Interest | | Total Stockholders’ Equity |
Balance as of December 28, 2014 | | $ | 726,328 |
| | $ | 2,021 |
| | $ | 728,349 |
|
Net income/(loss) | | 11,553 |
| | (390 | ) | | 11,163 |
|
Other comprehensive income, net of tax | | 36,282 |
| | 51 |
| | 36,333 |
|
Effect of issuance of shares | | 100,624 |
| | — |
| | 100,624 |
|
Share repurchases | | (45,953 | ) | | — |
| | (45,953 | ) |
Dividends declared | | (19,926 | ) | | — |
| | (19,926 | ) |
Stock-based compensation | | 7,930 |
| | — |
| | 7,930 |
|
Balance as of September 27, 2015 | | $ | 816,838 |
| | $ | 1,682 |
| | $ | 818,520 |
|
|
| | | | | | | | | | | | |
(In thousands) | | Total New York Times Company Stockholders’ Equity | | Noncontrolling Interest | | Total Stockholders’ Equity |
Balance as of December 29, 2013 | | $ | 842,910 |
| | $ | 3,624 |
| | $ | 846,534 |
|
Net (loss)/income | | (1,568 | ) | | 41 |
| | (1,527 | ) |
Other comprehensive income, net of tax | | 21,757 |
| | — |
| | 21,757 |
|
Effect of issuance of shares | | (841 | ) | | — |
| | (841 | ) |
Dividends declared | | (18,179 | ) | | — |
| | (18,179 | ) |
Stock-based compensation | | 7,163 |
| | — |
| | 7,163 |
|
Balance as of September 28, 2014 | | $ | 851,242 |
| | $ | 3,665 |
| | $ | 854,907 |
|
In January 2009, pursuant to a securities purchase agreement, we issued warrants to affiliates of Carlos Slim Helú, then the beneficial owner of approximately 8% of our Class A Common Stock (excluding the warrants), to purchase 15.9 million shares of our Class A Common Stock at a price of $6.3572 per share. On January 14, 2015, the warrant holders exercised these warrants in full and the Company received cash proceeds of $101.1 million from this exercise.
On January 13, 2015, the Board of Directors terminated an existing authorization to repurchase shares of the Company’s Class A Common Stock and approved a new repurchase authorization of $101.1 million, equal to the cash proceeds received by the Company from the exercise of warrants. As of September 27, 2015, the Company had repurchased 3,637,639 Class A shares under this authorization for a cost of $45.9 million (excluding commissions). Our Board of Directors has authorized us to purchase shares from time to time as market conditions permit. There is no expiration date with respect to this authorization.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table summarizes the changes in AOCI by component as of September 27, 2015:
|
| | | | | | | | | | | | |
(In thousands) | | Foreign Currency Translation Adjustments | | Funded Status of Benefit Plans | | Total Accumulated Other Comprehensive Loss |
Balance as of December 28, 2014 | | $ | 5,705 |
| | $ | (539,500 | ) | | $ | (533,795 | ) |
Other comprehensive loss before reclassifications, before tax(1) | | (7,102 | ) | | — |
| | (7,102 | ) |
Amounts reclassified from accumulated other comprehensive income, before tax(1) | | — |
| | 67,595 |
| | 67,595 |
|
Income tax (benefit)/expense(1) | | (2,540 | ) | | 26,751 |
| | 24,211 |
|
Net current-period other comprehensive (loss)/income, net of tax | | (4,562 | ) | | 40,844 |
| | 36,282 |
|
Balance as of September 27, 2015 | | $ | 1,143 |
| | $ | (498,656 | ) | | $ | (497,513 | ) |
| |
(1) | All amounts are shown net of noncontrolling interest. |
The following table summarizes the reclassifications from AOCI for the periods ended September 27, 2015:
|
| | | | | | |
(In thousands) | | For the Nine Months Ended September 27, 2015 | | |
Detail about accumulated other comprehensive loss components | | Amounts reclassified from accumulated other comprehensive loss | | Affect line item in the statement where net income is presented |
Funded status of benefit plans: | | | | |
Amortization of prior service credit(1) | | $ | (8,808 | ) | | Selling, general & administrative costs |
Amortization of actuarial loss(1) | | 36,074 |
| | Selling, general & administrative costs |
Pension settlement charge | | 40,329 |
| | Pension settlement charges |
Total reclassification, before tax(2) | | 67,595 |
| | |
Income tax expense | | 26,751 |
| | Income tax (benefit)/expense |
Total reclassification, net of tax | | $ | 40,844 |
| | |
| |
(1) | These accumulated other comprehensive income components are included in the computation of net periodic benefit cost for pension and other retirement benefits. See Note 9 for additional information. |
| |
(2) | There were no reclassifications relating to noncontrolling interest for the quarter ended September 27, 2015. |
NOTE 13. SEGMENT INFORMATION
We have one reportable segment that includes The New York Times, International New York Times, NYTimes.com, international.nytimes.com and related businesses. Therefore, all required segment information can be found in the Condensed Consolidated Financial Statements.
Our operating segment generated revenues principally from circulation and advertising. Other revenues consist primarily of revenues from news services/syndication, digital archives, rental income, NYT Live business (which includes conferences and live events), e-commerce and the Crossword product.
THE NEW YORK TIMES COMPANY
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 14. CONTINGENT LIABILITIES
Restricted Cash
We were required to maintain $29.0 million of restricted cash as of September 27, 2015 and $30.2 million as of December 28, 2014, primarily related to certain collateral requirements for obligations under our workers’ compensation programs.
Newspaper and Mail Deliverers–Publishers’ Pension Fund
In September 2013, the Newspaper and Mail Deliverers-Publishers’ Pension Fund (the “Fund”) assessed a partial withdrawal liability to the Company in the amount of $26 million for the plan years ending May 31, 2012 and 2013, an amount that was increased to approximately $34 million in December 2014, when the Fund issued a revised partial withdrawal liability assessment for the plan year ending May 31, 2013. The Fund claims that when City & Suburban Delivery Systems, Inc., a retail and newsstand distribution subsidiary of the Company and the largest contributor to the Fund, ceased operations in 2009, it triggered a decline of more than 70% in contribution base units in each of these two plan years. The Company disagrees with both the Fund’s determination that a partial withdrawal occurred and the methodology by which it calculated the withdrawal liability, and the matter is currently being arbitrated. We do not believe that a loss is probable on this matter and have not recorded a loss contingency for the period ended September 27, 2015. However, as required by the Employee Retirement Income Security Act of 1974, we have been making the quarterly payments to the Fund set forth in the demand letters. As of September 27, 2015, we made total payments of $9.8 million since the receipt of the initial demand letter, including $5.3 million in 2015.
Other
We are involved in various legal actions incidental to our business that are now pending against us. These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made. It is the opinion of management after reviewing these actions with our legal counsel that the ultimate liability that might result from these actions would not have a material adverse effect on our Condensed Consolidated Financial Statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
EXECUTIVE OVERVIEW
We are a global media organization that includes newspapers, digital businesses and investments in joint ventures. We currently have one reportable segment comprising businesses that include The New York Times (“The Times”), International New York Times (“INYT”), NYTimes.com, international.nytimes.com and related businesses.
We generate revenues principally from circulation and advertising. Other revenues primarily consist of revenues from news services/syndication, digital archives, rental income, NYT Live business (which includes conferences and live events), e-commerce and the Crossword product.
Our main operating costs are employee-related costs and raw materials, primarily newsprint.
In the accompanying analysis of financial information, we present certain information derived from consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-operating retirement costs and certain identified special items, as applicable. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures, and should be read in conjunction with financial information presented on a GAAP basis. For further information and reconciliations of these non-GAAP measures to the most directly comparable GAAP items, respectively, diluted (loss)/earnings per share, operating profit and operating costs, see “Results of Operations—Non-GAAP Financial Measures.”
Financial Highlights
For the third quarter of 2015, diluted earnings per share from continuing operations were $0.06, compared with a loss of $0.08 for the third quarter of 2014. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below (or “adjusted diluted earnings per share,” a non-GAAP measure) were $0.09 and $0.03 for the third quarters of 2015 and 2014, respectively.
The Company had an operating profit of $21.9 million in the third quarter of 2015, compared with an operating loss of $9.0 million for the third quarter of 2014. Operating profit before depreciation, amortization, severance, non-operating retirement costs and special items discussed below (or “adjusted operating profit,” a non-GAAP measure) was $47.6 million and $40.0 million for the third quarters of 2015 and 2014, respectively.
Total revenues increased slightly to $367.4 million in the third quarter of 2015 from $364.7 million in the third quarter of 2014.
Compared with the third quarter of 2014, circulation revenues increased 1.1% in the third quarter of 2015, as digital subscription growth and a print home-delivery price increase for The Times more than offset a decline in the number of print copies sold. Circulation revenues from our digital-only subscription packages, e-readers and replica editions increased 13.8% in the third quarter of 2015 compared with the same period in 2014.
Paid subscribers to digital-only subscription packages totaled approximately 1,041,000 as of September 27, 2015, a net increase of approximately 51,000 compared to the end of the second quarter of 2015.
Total advertising revenues decreased 2.1% in the third quarter of 2015 compared with the same period in 2014, reflecting a 0.9% decrease in print advertising revenues and a 5.0% decrease in digital advertising revenues. The decrease in print advertising revenues resulted from declines from INYT, partially offset by increased revenue from The Times. The decrease in digital advertising revenues primarily reflected a decrease in non-repeating advertising campaigns compared to the third quarter of 2014 and a decline in traditional website display advertising in favor of our mobile and video platforms and Paid Posts. Our recent transition to the new industry-wide standard on viewability also had some impact.
Compared with the third quarter of 2014, other revenues increased 16.2% during the third quarter of 2015, driven primarily by increased revenues from the Company’s NYT Live business, Crossword product and rental income.
Operating costs decreased 7.6% to $345.5 million in the third quarter of 2015, compared with $373.8 million in the third quarter of 2014. The decrease was primarily due to declines in severance, depreciation and amortization, efficiencies in print distribution, and declines in raw materials costs and external printing expenses. Operating costs before depreciation, amortization, severance and non-operating retirement costs discussed below (or “adjusted operating costs,” a non-GAAP measure) decreased 1.5% to $319.8 million during the third quarter of 2015, compared with $324.7 million in the third quarter of 2014.
Non-operating retirement costs increased to $9.4 million during the third quarter of 2015 compared to $8.3 million in the third quarter of 2014 primarily due to higher multiemployer pension plan withdrawal obligations.
Outlook
We remain in a challenging business environment, reflecting an increasingly competitive and fragmented landscape, and visibility remains limited.
For the fourth quarter of 2015, we expect circulation revenues to increase at a rate similar to that of the third quarter of 2015, driven by the benefit from our digital subscription initiatives, partially offset by lower expected print circulation revenue. We expect to add approximately 40,000-45,000 net digital subscribers in the fourth quarter of 2015.
We expect advertising trends to remain challenging and subject to significant month-to-month volatility. In the fourth quarter of 2015, we expect advertising revenues to decrease in the mid-single digits compared with the fourth quarter of 2014. We expect digital advertising revenue to increase in the mid-single digits compared with the fourth quarter of 2014.
Similar to other publishers, we have been optimizing our website to meet an industry-wide standard on viewability, a measurement standard intended to ensure that advertisers only pay for impressions that have actually been viewed by users. As we continue transitioning to this standard, our fourth quarter 2015 advertising revenues may be affected. In the long term, however, we expect that this transition will benefit digital advertising growth as it aligns with our strength in user engagement.
In addition, we are continuing to monitor the development of technology used to block the display of digital advertising and are exploring options to mitigate the impact it may have on our business should adoption rates increase.
We expect other revenues to grow in the mid-single digits in the fourth quarter of 2015 compared with the fourth quarter of 2014.
We expect operating costs to decrease in the low- to mid-single digits in the fourth quarter of 2015 compared with the fourth quarter of 2014.
We expect non-operating retirement costs in the fourth quarter of 2015 to be approximately $8 million compared with $11.2 million in the fourth quarter of 2014 due to lower other postretirement benefits costs.
We also expect the following on a pre-tax basis in 2015:
| |
• | Results from joint ventures: breakeven, |
| |
• | Depreciation and amortization: $60 million to $65 million, |
| |
• | Interest expense, net: $40 million to $45 million, and |
| |
• | Capital expenditures: approximately $35 million. |
RESULTS OF OPERATIONS
The following table presents our consolidated financial results:
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | For the Nine Months Ended | | |
(In thousands) | | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
| | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
|
Revenues | | | | | | | | | | | | |
Circulation | | $ | 209,075 |
| | $ | 206,729 |
| | 1.1 | % | | $ | 632,203 |
| | $ | 626,267 |
| | 0.9 | % |
Advertising | | 135,356 |
| | 138,222 |
| | (2.1 | )% | | 433,863 |
| | 454,683 |
| | (4.6 | )% |
Other | | 22,973 |
| | 19,767 |
| | 16.2 | % | | 68,463 |
| | 62,895 |
| | 8.9 | % |
Total revenues | | 367,404 |
| | 364,718 |
| | 0.7 | % | | 1,134,529 |
| | 1,143,845 |
| | (0.8 | )% |
Operating costs | | | | | | | | | | | | |
Production costs: | | | | | | | | | | | | |
Raw materials | | 18,400 |
| | 20,875 |
| | (11.9 | )% | | 57,025 |
| | 64,513 |
| | (11.6 | )% |
Wages and benefits | | 88,999 |
| | 90,777 |
| | (2.0 | )% | | 268,667 |
| | 267,418 |
| | 0.5 | % |
Other | | 44,632 |
| | 49,525 |
| | (9.9 | )% | | 135,748 |
| | 146,173 |
| | (7.1 | )% |
Total production costs | | 152,031 |
| | 161,177 |
| | (5.7 | )% | | 461,440 |
| | 478,104 |
| | (3.5 | )% |
Selling, general and administrative costs | | 178,071 |
| | 193,198 |
| | (7.8 | )% | | 533,120 |
| | 565,506 |
| | (5.7 | )% |
Depreciation and amortization | | 15,369 |
| | 19,375 |
| | (20.7 | )% | | 46,023 |
| | 58,636 |
| | (21.5 | )% |
Total operating costs | | 345,471 |
| | 373,750 |
| | (7.6 | )% | | 1,040,583 |
| | 1,102,246 |
| | (5.6 | )% |
Pension settlement charges | | — |
| | — |
| | * |
| | 40,329 |
| | 9,525 |
| | * |
|
Multiemployer pension plan withdrawal expense | | — |
| | — |
| | * |
| | 4,697 |
| | — |
| | * |
|
Early termination charge | | — |
| | — |
| | * |
| | — |
| | 2,550 |
| | * |
|
Operating profit/(loss) | | 21,933 |
| | (9,032 | ) | | * |
| | 48,920 |
| | 29,524 |
| | 65.7 | % |
Income/(loss) from joint ventures | | 170 |
| | 1,599 |
| | (89.4 | )% | | (758 | ) | | (523 | ) | | 44.9 | % |
Interest expense, net | | 9,127 |
| | 15,254 |
| | (40.2 | )% | | 31,095 |
| | 41,760 |
| | (25.5 | )% |
Income/(loss) from continuing operations before income taxes | | 12,976 |
| | (22,687 | ) | | * |
| | 17,067 |
| | (12,759 | ) | | * |
|
Income tax expense/(benefit) | | 3,611 |
| | (10,247 | ) | | * |
| | 5,904 |
| | (12,226 | ) | | * |
|
Income/(loss) from continuing operations | | 9,365 |
| | (12,440 | ) | | * |
| | 11,163 |
| | (533 | ) | | * |
|
Loss from discontinued operations, net of income taxes | | — |
| | — |
| | * |
| | — |
| | (994 | ) | | * |
|
Net income/(loss) | | 9,365 |
| | (12,440 | ) | | * |
| | 11,163 |
| | (1,527 | ) | | * |
|
Net loss/(income) attributable to the noncontrolling interest | | 50 |
| | (59 | ) | | * |
| | 390 |
| | (41 | ) | | * |
|
Net income/(loss) attributable to The New York Times Company common stockholders | | $ | 9,415 |
| | $ | (12,499 | ) | | * |
| | $ | 11,553 |
| | $ | (1,568 | ) | | * |
|
* Represents a change equal to or in excess of 100% or not meaningful.
Revenues
Circulation Revenues
Circulation revenues are based on the number of copies of the printed newspaper (through home-delivery subscriptions and single-copy and bulk sales) and digital subscriptions sold and the rates charged to the respective customers. Total circulation revenues consist of revenues from our print and digital products, including our digital-only subscription packages, e-readers and replica editions.
Circulation revenues increased 1.1% in the third quarter and 0.9% in the first nine months of 2015 compared with the same prior-year periods primarily due to growth in our digital subscription base and the increase in print home-delivery prices at The Times, offset by a reduction in the number of print copies sold. Revenues from our digital-only subscription packages, e-readers and replica editions were $48.6 million in the third quarter of 2015 and $142.2 million in the first nine months of 2015, an increase of 13.8% and 14.0% from the third quarter and first nine months of 2014, respectively.
Advertising Revenues
In the fourth quarter of 2014, the Company reclassified advertising revenues, including prior period information, into three categories: Display, Classified and Other. Display advertising revenue is principally from advertisers promoting products, services or brands, such as financial institutions, movie studios, department stores, American and international fashion and technology in The Times and INYT. In print, display advertising consists of column-inch ads sold. In digital, display advertising consists of banners, video, rich media and other interactive ads on our website and across other digital platforms. Display advertising also includes Paid Posts, a native advertising product that allows advertisers to present longer form marketing content that is distinct from The Times’s editorial content.
Classified advertising revenue includes line-ads sold in the major categories of real estate, help wanted, automotive and other. Other advertising revenue primarily includes creative services fees associated with our branded content studio; revenue from preprinted advertising, also known as free-standing inserts; revenue generated from branded bags in which our newspapers are delivered; and advertising revenues from our News Services business.
Advertising revenues (print and digital) by category were as follows: |
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | For the Nine Months Ended | | |
(In thousands) | | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
| | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
|
Display | | $ | 121,933 |
| | $ | 125,591 |
| | (2.9 | )% | | $ | 393,871 |
| | $ | 414,703 |
| | (5.0 | )% |
Classified | | 8,435 |
| | 9,110 |
| | (7.4 | )% | | 26,055 |
| | 28,177 |
| | (7.5 | )% |
Other | | 4,988 |
| | 3,521 |
| | 41.7 | % | | 13,937 |
| | 11,803 |
| | 18.1 | % |
Total | | $ | 135,356 |
| | $ | 138,222 |
| | (2.1 | )% | | $ | 433,863 |
| | $ | 454,683 |
| | (4.6 | )% |
Below is a percentage breakdown of advertising revenues (print and digital) for the first nine months of 2015 and 2014:
|
| | | | | | | | | | | | |
| | Display | | Classified | | Other | | Total |
2015 | | 91 | % | | 6 | % | | 3 | % | | 100 | % |
2014 | | 91 | % | | 6 | % | | 3 | % | | 100 | % |
Print advertising revenues, which represented 73.0% and 70.7% of total advertising revenues for the third quarter and first nine months of 2015, respectively, declined 0.9% in the third quarter of 2015 and 8.6% in the first nine months of 2015 compared with the same prior-year periods. The decrease in print advertising revenues in the third quarter of 2015 resulted from declines from INYT, partially offset by increased revenue from The Times. The decrease in the first nine months of 2015 was primarily due to lower print advertising revenues across most advertising categories.
Digital advertising revenues, which represented 27.0% and 29.3% of total advertising revenues for the third quarter and first nine months of 2015, respectively, decreased 5.0% in the third quarter of 2015 and increased 6.9% in the first nine months of 2015, compared with the same prior-year periods. The decrease in digital advertising revenues in the third quarter of 2015 primarily reflected a decrease in non-repeating advertising campaigns compared with the third quarter of 2014, particularly in the international fashion, technology, corporate, telecommunications and media categories. The decrease also reflected a decline in traditional website display advertising in favor of our mobile and video platforms and Paid Posts, as well as some impact from our transition to the new viewability standard. The increase in the first nine months of 2015 was primarily due to an overall increase
in display advertising from our mobile and video platforms, partially offset by a decrease in traditional website display advertising on our homepage.
Other Revenues
Other revenues increased 16.2% in the third quarter of 2015 and 8.9% in the first nine months of 2015, compared with the same prior-year periods, primarily due to revenues from our NYT Live business, Crossword product and rental income.
Operating Costs
Operating costs were as follows:
|
| | | | | | | | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | | | For the Nine Months Ended | | |
(In thousands) | | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
| | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
|
Production costs: | | | | | | | | | | | | |
Raw materials | | $ | 18,400 |
| | $ | 20,875 |
| | (11.9 | )% | | $ | 57,025 |
| | $ | 64,513 |
| | (11.6 | )% |
Wages and benefits | | 88,999 |
| | 90,777 |
| | (2.0 | )% | | 268,667 |
| | 267,418 |
| | 0.5 | % |
Other | | 44,632 |
| | 49,525 |
| | (9.9 | )% | | 135,748 |
| | 146,173 |
| | (7.1 | )% |
Total production costs | | 152,031 |
| | 161,177 |
| | (5.7 | )% | | 461,440 |
| | 478,104 |
| | (3.5 | )% |
Selling, general and administrative costs | | 178,071 |
| | 193,198 |
| | (7.8 | )% | | 533,120 |
| | 565,506 |
| | (5.7 | )% |
Depreciation and amortization | | 15,369 |
| | 19,375 |
| | (20.7 | )% | | 46,023 |
| | 58,636 |
| | (21.5 | )% |
Total operating costs | | $ | 345,471 |
| | $ | 373,750 |
| | (7.6 | )% | | $ | 1,040,583 |
| | $ | 1,102,246 |
| | (5.6 | )% |
Production Costs
Production costs decreased in the third quarter of 2015 compared with the third quarter of 2014 due to a decrease in other expenses (approximately $5 million), raw materials expense (approximately $2 million) and wages and benefits expenses (approximately $2 million). Other expenses decreased primarily as a result of lower outside printing costs. Raw materials expense decreased as a result of a 21.4% decline in newsprint expense in the third quarter of 2015 compared with the third quarter of 2014, with 6.5% from lower consumption and 14.9% from lower pricing. The decline was partially offset by a 31.5% increase in magazine paper expense in the third quarter of 2015 compared with the third quarter of 2014, with 29.9% from higher consumption, driven by an increased number of issues of T Magazine in the third quarter of 2015 compared with the third quarter of 2014, and 1.6% from higher pricing. Wages and benefits expenses decreased as a result of reduced headcount in several departments.
Production costs decreased in the first nine months of 2015 compared with the first nine months of 2014 primarily due to a decrease in other expenses (approximately $10 million) and raw materials expense (approximately $7 million). Lower other expenses decreased primarily as a result of lower outside printing costs. Raw materials expense decreased as a result of a 19.1% decline in newsprint expense in the first nine months of 2015 compared with the first nine months of 2014, with 8.1% from lower consumption and 11.0% from lower pricing. The decline was partially offset by a 23.8% increase in magazine paper expense in the first nine months of 2015 compared with the first nine months of 2014, with 24.8% from higher consumption offset by 1.0% from lower pricing. Higher consumption in the first nine months of 2015 resulted primarily from increased paging in both the Sunday and T Magazines and an increased number of T Magazines issued in the first nine months of 2015, compared with the first nine months of 2014.
Selling, General and Administrative Costs
Selling, general and administrative costs decreased in the third quarter of 2015 compared with the third quarter of 2014 primarily due to a decrease in severance costs (approximately $21 million), partially offset by higher compensation expenses (approximately $7 million). During the third quarter of 2014 the Company recognized $21.4 million in severance costs. Compensation expenses increased in the third quarter of 2015 compared with the third quarter of 2014 as a result of an increase in hiring in departments directly aligned with our growth initiatives.
Selling, general and administrative costs decreased in the first nine months of 2015 compared with the first nine months of 2014 primarily due to a decrease in severance costs (approximately $22 million), distribution costs (approximately $15 million), promotion costs (approximately $6 million) and benefits costs (approximately $5 million), partially offset by an increase in compensation (approximately $8 million) and professional and other expenses (approximately $7 million). Severance costs decreased as a result of workforce reductions in 2014 that did not repeat in 2015. Lower distribution costs were mainly due to increased utilization of lower cost vendors, transportation efficiency and fewer print copies produced. The decrease in promotion costs was primarily due to promotions in 2014 for new product launches that did not repeat in 2015. The decrease in benefits costs was primarily due to lower medical claims in the first nine months of 2015 compared with the same period in 2014, while compensation expense increased primarily as a result of increased hiring to support our growth initiatives. Professional and other expenses increased as a result of growth initiatives as well as legal fees.
Depreciation and Amortization
Depreciation and amortization decreased in the third quarter and first nine months of 2015 compared with the same prior-year periods primarily due to $4.0 million and $12.3 million of depreciation expense recognized in the third quarter and first nine months of 2014, respectively, as a result of the Company’s discontinued use of certain software products.
Other Items
See Note 7 of the Notes to the Condensed Consolidated Financial Statements for more information regarding other items.
NON-OPERATING ITEMS
Joint Ventures
Income from joint ventures was $0.2 million in the third quarter of 2015 compared with income of $1.6 million in the third quarter of 2014 due to lower results from our paper products investments.
Interest Expense, Net
Interest expense, net, was as follows: |
| | | | | | | | | | | | | | | | |
| | For the Quarters Ended | | For the Nine Months Ended |
(In thousands) | | September 27, 2015 |
| | September 28, 2014 |
| | September 27, 2015 |
| | September 28, 2014 |
|
Cash interest expense | | $ | 9,919 |
| | $ | 12,795 |
| | $ | 32,008 |
| | $ | 38,999 |
|
Premium on debt repurchases | | — |
| | 2,188 |
| | — |
| | 2,188 |
|
Amortization of debt issuance costs and discount on debt | | 1,180 |
| | 1,314 |
| | 3,540 |
| | 3,632 |
|
Capitalized interest | | (85 | ) | | (47 | ) | | (242 | ) | | (129 | ) |
Interest income | | (1,887 | ) | | (996 | ) | | (4,211 | ) | | (2,930 | ) |
Total interest expense, net | | $ | 9,127 |
| | $ | 15,254 |
| | $ | 31,095 |
| | $ | 41,760 |
|
Interest expense, net decreased in the third quarter of 2015 compared with the third quarter of 2014 mainly due to a lower level of debt outstanding as a result of the repayment, at maturity, of the principal amount of the Company’s 5.0% senior notes (the “5.0% Notes”) made in the first quarter of 2015 and debt repurchases made in 2014.
Income Taxes
The Company had income tax expense of $3.6 million and $5.9 million in the third quarter and first nine months of 2015, respectively, and an effective tax rate of 27.8% and 34.6% in the third quarter and first nine months of 2015, respectively. The effective income tax rate for the third quarter of 2015 was lower than the statutory tax rate principally due to the tax deduction for domestic production activities. The Company had an income tax benefit of $10.2 million and $12.2 million in the third quarter and first nine months of 2014, respectively. The tax benefits in the third quarter and first nine months of 2014 were primarily due to pre-tax losses from continuing operations and a reduction in our reserve for uncertain tax positions, respectively.
Non-GAAP Financial Measures
We have included in this report certain supplemental financial information derived from consolidated financial information but not presented in our financial statements prepared in accordance with GAAP. Specifically, we have referred to the following non-GAAP financial measures in this report:
| |
• | diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and the impact of special items (or adjusted diluted earnings per share from continuing operations); |
| |
• | operating profit before depreciation, amortization, severance, non-operating retirement costs and special items (or adjusted operating profit); and |
| |
• | operating costs before depreciation, amortization, severance and non-operating retirement costs (or adjusted operating costs). |
The special items in 2015 consisted of a $40.3 million pension settlement charge in connection with a lump-sum payment offer made to certain former employees who participated in certain qualified pension plans and a $4.7 million charge for a partial withdrawal obligation under a multiemployer pension plan, each in the first quarter.
The special items in 2014 consisted of a $9.5 million pension settlement charge in connection with a lump-sum payment offer made to certain former employees who participated in certain non-qualified pension plans and a reduction in the reserve for uncertain tax positions of $9.5 million, each in the second quarter, and a $2.6 million charge in the first quarter for the early termination of a distribution agreement.
We have included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of our operations. We believe that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share from continuing operations, operating profit/(loss) and operating costs. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.
Adjusted diluted earnings per share provides useful information in evaluating our period-to-period performance because it eliminates items that we do not consider to be indicative of earnings from ongoing operating activities. Adjusted operating profit is useful in evaluating the ongoing performance of our businesses as it excludes the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance and non-operating retirement costs. Adjusted operating costs, which exclude these items, provide investors with helpful supplemental information on our underlying operating costs that is used by management in its financial and operational decision-making.
Non-operating retirement costs include:
| |
• | interest cost, expected return on plan assets and amortization of actuarial gain and loss components of pension expense; |
| |
• | interest cost and amortization of actuarial gain and loss components of retiree medical expense; and |
| |
• | all expenses associated with multiemployer pension plan withdrawal obligations, not otherwise included as special items. |
These non-operating retirement costs are primarily tied to financial market performance and changes in market interest rates and investment performance. Non-operating retirement costs do not include service costs and amortization of prior service costs for pension and retiree medical benefits, which we believe reflect the ongoing service-related costs of providing pension and retiree medical benefits to our employees. We consider non-operating retirement costs to be outside the performance of our ongoing core business operations and believe that presenting operating results excluding non-operating retirement costs, in addition to our GAAP operating results, will provide increased transparency and a better understanding of the underlying trends in our operating business performance.
Reconciliations of non-GAAP financial measures from, respectively, diluted earnings per share from continuing operations, operating profit and operating costs, the most directly comparable GAAP items, as well as details on the components of non-operating retirement costs, are set out in the tables below.
|
| | | | | | | | | | | | | | | | | | | | |
Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted earnings per share from continuing operations) |
| | | | | | | |
| For the Quarters Ended | | | | For the Nine Months Ended | | |
| September 27, 2015 |
| | September 28, 2014 |
| | % Change | | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
|
Diluted earnings/(loss) per share from continuing operations | $ | 0.06 |
| | $ | (0.08 | ) | | * | | $ | 0.07 |
| | $ | 0.00 |
| | * |
|
Add: | | | | | | | | | | | |
Severance | 0.00 |
| | 0.08 |
| | * | | 0.02 |
| | 0.11 |
| | (81.8 | )% |
Non-operating retirement costs | 0.03 |
| | 0.03 |
| | * | | 0.10 |
| | 0.10 |
| | * |
|
Special items: | | | | | | | | | | | |
Pension settlement charges | — |
| | — |
| | * | | 0.14 |
| | 0.04 |
| | * |
|
Multiemployer pension plan withdrawal expense | — |
| | — |
| | * | | 0.02 |
| | — |
| | * |
|
Early termination charge | — |
| | — |
| | * | | — |
| | 0.01 |
| | * |
|
Reduction in uncertain tax positions | — |
| | — |
| | * | | — |
| | (0.06 | ) | | * |
|
Adjusted diluted earnings per share from continuing operations(1) | $ | 0.09 |
| | $ | 0.03 |
| | * | | $ | 0.34 |
| | $ | 0.20 |
| | 70.0 | % |
| | | | | | | | | | | |
(1) Amounts may not add due to rounding. | | | | | | | | |
| | |
* Represents a change equal to or in excess of 100% or not meaningful. | | |
|
| | | | | | | | | | | | | | | | | | | | | |
Reconciliation of operating profit before depreciation & amortization, severance, non-operating retirement costs and special items (or adjusted operating profit) |
| | | | | | | |
| For the Quarters Ended | | | | For the Nine Months Ended | | |
| September 27, 2015 |
| | September 28, 2014 |
| | % Change |
| | September 27, 2015 |
| | September 28, 2014 |
| | % Change |
|
Operating profit/(loss) | $ | 21,933 |
| | $ | (9,032 | ) | | * |
| | $ | 48,920 |
| | $ | 29,524 |
| | 65.7 | % |
Add: | | | | | | | | | | | |
Depreciation & amortization | 15,369 |
| | 19,375 |
| | (20.7 | )% | | 46,023 |
| | 58,636 |
| | (21.5 | )% |
Severance | 959 |
| | 21,365 |
| | (95.5 | )% | | 4,350 |
| | 26,662 |
| | (83.7 | )% |
Non-operating retirement costs | 9,380 |
| | 8,327 |
| | |