The FINANCIAL -- The New York Times Company announced on March 10 2009 fourth-quarter and full-year results.

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Operating profit excluding depreciation, amortization, severance and the special items discussed below grew 10.9 percent to $157.6 million in the fourth quarter of 2009 compared with $142.1 million in the fourth quarter of 2008. On a GAAP basis, the Company had an operating profit of $136.0 million compared with $63.0 million in the fourth quarter of 2008.

"Operating costs excluding depreciation, amortization and severance declined 16.3 percent in the fourth quarter of 2009 versus the fourth quarter of 2008. On a GAAP basis, the Company's operating costs declined 15.5 percent in the fourth quarter of 2009 versus the fourth quarter of 2008. For the year operating costs declined by approximately $475 million as a result of reductions in nearly all major expense categories," New York Times Company reported.

Diluted earnings per share from continuing operations excluding severance and special items were $.44 per share in the fourth quarter of 2009 compared with $.36 per share in the same period of 2008. On a GAAP basis, the Company had diluted earnings per share from continuing operations of $.48 per share in the fourth quarter of 2009 compared with $.19 per share in the fourth quarter of 2008.

The Company has reduced its debt by over $290 million to $769 million from its balance at the end of 2008 of $1.059 billion. As of the end of the quarter, excluding $67 million in letters of credit, there were no outstanding borrowings under the Company's $400 million revolving credit facility.

 

Total revenues were down 11.5 percent in the quarter, a significant improvement from the third quarter decline of 16.9 percent.

 

"We were pleased to see advertisers increase their rate of spending across our newspapers, Web sites and other platforms as advertising trends improved during the fourth quarter," said Janet Robinson, president and CEO. "Our results also reflect our ability to restructure our cost base, introduce new products and innovations, leverage our brand strength and extend our reach to new audiences.

 

"In the fourth quarter total advertising revenues declined approximately 15 percent compared with the fourth quarter of 2008, as a 20 percent decrease in print advertising was offset in part by growth in digital advertising, which rose nearly 11 percent. While the advertising market remains challenging, the rate of decline across the major advertising categories - national, retail and classified - lessened as the quarter progressed.

 

"Circulation revenues increased 2 percent as we were able to command higher subscription and newsstand prices at The New York Times and The Boston Globe. This growth demonstrates the strong demand and loyalty for our high quality news and information in print, even as the content marketplace becomes increasingly digital.

 

"Once again we were encouraged by the strong performance at the About Group, whose fourth-quarter operating profit rose 80 percent to $18 million. The Group's advertising revenues grew 23 percent on healthy gains in both cost-per-click and display advertising.

 

"We continued to capitalize on our ability to aggressively manage our expenses, as evidenced in an approximately 16 percent decline in operating costs. And we remain focused on securing strong performance on costs as we continue to reposition our Company for the evolving media marketplace.

 

"Looking ahead, visibility remains limited for advertising. In the first quarter of 2010, we expect the rate of decline for print advertising to continue to improve modestly from the fourth quarter of 2009, while digital advertising is expected to perform in line with the fourth-quarter level.

 

"Lastly, we havebeguntaking steps to enhance our digital strategy by planning to introduce apaid model for NYTimes.com in 2011, to create an additional revenue stream while preservingour robust advertising business. We continue to embrace innovative new platforms and devices that provide rich experiences for our content."

 

Discontinued Operations

 

In October 2009, the Company completed the sale of WQXR-FM, its New York City classical radio station, for gross proceeds of approximately $45 million. The Company recorded a pre-tax gain on the sale of $34.9 million ($19.5 million after tax, or $.13 per share). The results for WQXR-FM, which had previously been included in The New York Times Media Group, are now classified as discontinued operations for all periods presented. The Company has made reclassifications in all periods presented to reflect this change.

 

Comparisons

 

All quarterly and annual comparisons exclude the results of WQXR-FM. The operations of City & Suburban (C & S), the Company's retail and newsstand distribution subsidiary, which closed in early January 2009, are included for the entire fourth quarter of 2008. The effect of the C&S closure on the Company's 2009 fourth-quarter results compared with the fourth quarter of 2008 was a decrease in other revenues of approximately $20 million, circulation revenues of approximately $1 million and operating costs of approximately $31 million.

 

The fourth-quarter 2009 results from continuing operations included the following special items:

A $56.7 million ($32.4 million after tax or $.22 per share) pension curtailment gain resulting from the freezing of benefits under various Company-sponsored qualified and non-qualified pension plans.

An $18.3 million ($10.5 million after tax or $.07 per share) charge for a loss on leases ($14.8 million) and a fee ($3.5 million) for the early termination of a third-party printing contract. The lease charge includes an $8.3 million loss on a lease for office space at The New York Times Media Group as well as an adjustment of $6.5 million to the estimated loss on leases recorded in the first quarter associated with the C & S closing.

A $4.2 million ($2.6 million after tax or $.01 per share) charge for a write-down of assets due to the reduced scope of a systems project.

 

The fourth-quarter 2008 results from continuing operations included the following special item:

A non-cash charge of $19.2 million ($10.7 million after tax, or $.07 per share) for the write-down of an intangible asset at the International Herald Tribune, whose results are included in The New York Times Media Group.

 

In addition to these special items, the Company had severance costs of $24.6 million ($14.3 million after tax or $.10 per share) in the fourth quarter of 2009 compared with $24.1 million ($13.7 million after tax or $.10 per share) in the fourth quarter of 2008.

 

Unless otherwise noted all comparisons are for the fourth quarter of 2009 to the fourth quarter of 2008. This release includes non-GAAP financial measures, and the exhibits include a discussion of management's use of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures.

 

Fourth-Quarter Results from Continuing Operations

 

Revenues

 

Total revenues decreased 11.5 percent to $681.2 million from $769.5 million primarily due to lower print advertising. Advertising revenues decreased 14.7 percent; circulation revenues rose 2.4 percent; and other revenues decreased 37.0 percent, mainly because of the closure of C & S. Excluding the operations of C & S, total revenues decreased 9.0 percent, circulation revenues increased 3.0 percent and other revenues decreased 11.7 percent.

 

Operating Costs

 

Operating costs decreased 15.5 percent to $580.7 million from $687.4 million. Depreciation and amortization decreased to $31.3 million from $35.9 million in the fourth quarter of 2008.

 

Excluding depreciation, amortization and severance, operating costs were down 16.3 percent to $524.9 million from $627.4 million as reductions occurred in nearly all major expense categories as a result of cost-saving initiatives, including the closure of C & S. In addition, newsprint expense declined 48.2 percent, with 34.5 percent from lower pricing and 13.7 percent from lower consumption.

 

Fourth-Quarter Business Segment Results

 

News Media Group

 

Total News Media Group revenues decreased 12.8 percent to $644.8 million from $739.7 million mainly as a result of lower print advertising and the closure of C & S. Excluding C & S, total revenues decreased 10.2 percent.

 

Advertising revenues decreased 17.1 percent mainly due to weakness in print advertising across the News Media Group. Print advertising declines of 20.0 percent were offset in part by a 4.1 percent growth in online advertising.

 

Circulation revenues increased 2.4 percent, mainly because of higher subscription and newsstand prices at The New York Times and The Boston Globe, offset in part by volume declines across the News Media Group and the closure of C & S. Excluding C & S, circulation revenues increased 3.0 percent.

 

Other revenues decreased 38.0 percent due in large part to the closure of C & S. Excluding C & S, other revenues decreased 12.2 percent mainly because of lower revenues from commercial printing.

 

News Media Group operating costs decreased 17.3 percent to $542.3 million from $655.7 million. Excluding depreciation, amortization and severance, operating costs decreased 18.6 percent to $489.2 million from $601.2 million as reductions occurred in nearly all major expense categories as a result of cost-saving initiatives, including the closure of C & S. In addition, newsprint expense declined 48.2 percent, with 34.5 percent from lower pricing and 13.7 percent from lower consumption.

 

Operating profit for the News Media Group was $81.4 million compared with $64.8 million. Excluding depreciation, amortization, severance and special items, operating profit rose 13.3 percent to $156.9 million from $138.5 million, primarily due to lower operating costs. The closure of C & S favorably affected the fourth-quarter 2009 operating profit by approximately $10 million.

 

 

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