NEW YORK--(BUSINESS WIRE)--
The New York Times Company (NYSE:NYT) announced today adjusted diluted
earnings per share from continuing operations (defined below) of $.11 in
the first quarter of 2015 compared with $.07 in the first quarter of
2014. There was a first-quarter 2015 diluted loss per share from
continuing operations of $.09 compared with diluted earnings per share
of $.02 in the same period of 2014.
Adjusted operating profit (defined below) grew to $59.2 million in the
first quarter of 2015 from $56.6 million in the first quarter of 2014,
as broad cost reductions more than offset a decline in revenues. There
was an operating loss of $11.1 million in the first quarter of 2015
compared with an operating profit of $22.1 million in the same period of
2014, driven by special pension charges in this year’s first quarter.
“We got off to a solid start in early 2015, as our Company maintained
its digital momentum,” said
Mark Thompson
, president and chief executive
officer. “We increased our digital subscriber count by 47,000 in the
first quarter, more than in any quarter over the past two years,
bringing us to a total of 957,000 paid digital subscribers. The strong
digital consumer growth in the first quarter was largely attributable to
improved retention and higher traffic to the website, partially as a
result of our recent audience development efforts.
“We also saw digital advertising revenue continue to expand at the
double-digit pace that began in the second half of last year, ending up
11 percent in the first quarter, driven by growth across mobile, Paid
Posts and video.
“Adjusted operating profit also grew in the quarter, as broad cost
reductions more than offset an overall revenue decline driven by print
advertising. While we will continue to make digital investments to fuel
our Company’s growth, cost management will remain a key focus in 2015.
“In recent weeks, I have made two significant appointments intended to
simplify the structure of our executive team and drive results. Kinsey
Wilson, who joined the company in February as editor for strategy and
innovation, adds responsibility for product development and technology
across the company as executive vice president, product and technology.
Kinsey has both deep roots in journalism and a keen understanding of the
challenges and opportunities surrounding product monetization. And
Meredith Kopit Levien
, who has already transformed our advertising
group, is adding responsibility for our consumer business and becomes
chief revenue officer. Unifying advertising and marketing under
Meredith’s leadership will allow us to more effectively accelerate the
progress of both groups.”
Comparisons
Unless otherwise noted, all comparisons are for
the first quarter of 2015 to the first quarter of 2014. Discontinued
operations in 2014 include the results of New England Media Group
(NEMG), which was sold in 2013.
This release presents certain non-GAAP financial measures, including
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); 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 exhibits include a
discussion of management’s reasons for the presentation of these
non-GAAP financial measures and reconciliations to the most comparable
GAAP financial measures, as well as an explanation of non-operating
retirement costs.
First-quarter 2015 results included the following special items:
-
A $40.3 million ($24.0 million after tax or $.15 per share) pension
settlement charge in connection with a lump-sum payment offer to
certain former employees. These lump-sum payments were made with cash
from The New York Times Companies Pension Plan, not with Company cash.
-
A $4.7 million ($2.8 million after tax or $.02 per share) charge for a
partial withdrawal obligation under a multiemployer pension plan.
First-quarter 2014 results included the following special item:
-
A $2.6 million ($1.5 million after tax or $.01 per share) charge for
the early termination of a distribution agreement, resulting in
distribution cost savings for the Company.
The Company had severance costs of $1.5 million ($0.9 million after tax
or $.01 per share) and $3.1 million ($1.8 million after tax or $.01 per
share) in the first quarters of 2015 and 2014, respectively.
Results from Continuing Operations
Revenues
Total revenues for the first quarter of 2015
decreased 1.6 percent to $384.2 million from $390.4 million. Circulation
and other revenues increased 0.8 percent and 6.5 percent, respectively,
while advertising revenues declined 5.8 percent.
Circulation revenues rose as revenues from the Company’s digital
subscription initiatives and January’s increase in home-delivery prices
for The New York Times more than offset a decline in print copies sold.
Circulation revenue from the Company’s digital-only subscription
products was $46.1 million in the first quarter, an increase of 14.4
percent from the first quarter of 2014.
Paid subscribers to the Company’s digital-only subscription products
totaled approximately 957,000 as of the end of the first quarter of
2015, an increase of 20 percent compared to the end of the first quarter
of 2014.
First-quarter print advertising revenue decreased 11.1 percent while
digital advertising revenue increased 10.7 percent. Digital advertising
revenue was $42.3 million, or 28.2 percent of total Company advertising
revenues, compared with $38.2 million, or 24.0 percent, in the 2014
first quarter.
Other revenues rose 6.5 percent in the first quarter primarily due to an
increase in revenues from the Company’s conference business as well as
from rental income.
Operating Costs
Operating costs decreased 4.2 percent to
$350.3 million from $365.8 million in the first quarter. Costs decreased
mainly as a result of print distribution efficiencies as well as
declines in depreciation and amortization, raw materials and outside
printing expenses. Adjusted operating costs decreased 2.6 percent to
$325.0 million.
Non-operating retirement costs were flat at $8.9 million in the first
quarter. The exhibits in this release include the detail of those
expenses.
Raw materials costs decreased to $20.3 million from $22.0 million in the
first quarter due to paper price and volume declines.
Other Data
Interest Expense, net
Interest expense, net decreased to
$12.2 million from $13.3 million due to a lower level of debt
outstanding as a result of the repayment of the principal amount of the
Company’s 5.0 percent senior notes made late in the first quarter of
2015 and debt repurchases made in 2014.
Income Taxes
The Company had an income tax benefit of $9.4
million in the first quarter of 2015 and income tax expense of $3.8
million in the first quarter of 2014. The income tax benefit in 2015 is
due to the $23.8 million loss from continuing operations before taxes
that resulted from the two pension charges.
Liquidity
As of March 29, 2015, the Company had cash and
marketable securities of $847.8 million (excluding restricted cash of
$30.6 million primarily to collateralize certain workers’ compensation
obligations). Total debt and capital lease obligations were $427.7
million. During the first quarter of 2015, the Company repaid, at
maturity, the remaining $223.7 million principal amount of its 5.0
percent senior notes.
At the beginning of the first quarter of 2015, entities affiliated with
Carlos Slim Helú exercised warrants to acquire 15.9 million shares of
the Company’s Class A common stock, and as a result the Company received
cash proceeds of $101.1 million.
Capital Expenditures
Capital expenditures totaled
approximately $5 million in the first quarter of 2015.
Outlook
Total circulation revenues in the second quarter of
2015 are expected to increase at a rate similar to that of the first
quarter of 2015.
Total advertising revenues in the second quarter of 2015 are expected to
decrease in the mid-single digits compared with the second quarter of
2014.
Operating costs and adjusted operating costs are each expected to
decrease in the low-single digits in the second quarter of 2015 compared
with the second quarter of 2014.
The Company expects 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: $35 million to $45 million.
Conference Call Information
The Company’s first-quarter 2015
earnings conference call will be held on Thursday, April 30 at 11:00
a.m. E.T. To access the call, dial 877-201-0168 (in the U.S.) or
647-788-4901 (international callers). The passcode is 16267398. Online
listeners can link to the live webcast at investors.nytco.com.
An archive of the webcast will be available beginning about two hours
after the call at investors.nytco.com.
The archive will be available for approximately three months. An audio
replay will be available at 855-859-2056 (in the U.S.) and 404-537-3406
(international callers) beginning approximately two hours after the call
until 11:59 p.m. E.T. on Thursday, May 7. The passcode is 16267398.
Except for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that
involve risks and uncertainties, and actual results could differ
materially from those predicted by such forward-looking statements.
These risks and uncertainties include changes in the business and
competitive environment in which the Company operates, the impact of
national and local conditions and developments in technology, each of
which could affect the Company’s circulation and advertising revenues,
the growth of its digital businesses and the implementation of its
strategic initiatives. The Company’s actual results could also be
impacted by the other risks detailed from time to time in its publicly
filed documents, including its Annual Report on Form 10-K for the year
ended December 28, 2014. The Company undertakes no obligation to
publicly update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
The New York Times Company is a global media organization dedicated to
enhancing society by creating, collecting and distributing high-quality
news and information. The Company includes The New York Times,
International New York Times, NYTimes.com,
international.nytimes.com and
related properties. It is known globally for excellence in its
journalism, and innovation in its print and digital storytelling and its
business model. Follow news about the company at @NYTimesComm or
investor news at @NYT_IR.
Exhibits:
|
|
|
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Condensed Consolidated Statements of Operations
|
|
|
|
|
|
Footnotes
|
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|
|
|
|
Reconciliation of Non-GAAP Information
|
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|
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This press release can be downloaded from www.nytco.com.
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THE NEW YORK TIMES COMPANY
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Dollars and shares in thousands, except per share data)
|
|
|
|
|
First Quarter
|
|
|
2015
|
|
2014
|
|
% Change
|
Revenues
|
|
|
|
|
|
|
|
Circulation
|
|
$
|
211,470
|
|
|
$
|
209,723
|
|
|
0.8%
|
Advertising(a)
|
|
149,908
|
|
|
159,212
|
|
|
-5.8%
|
Other(b)
|
|
22,861
|
|
|
21,473
|
|
|
6.5%
|
Total revenues
|
|
384,239
|
|
|
390,408
|
|
|
-1.6%
|
Operating costs
|
|
|
|
|
|
|
|
Production costs
|
|
151,986
|
|
|
158,983
|
|
|
-4.4%
|
Selling, general and administrative costs
|
|
183,447
|
|
|
186,724
|
|
|
-1.8%
|
Depreciation and amortization
|
|
14,844
|
|
|
20,092
|
|
|
-26.1%
|
Total operating costs
|
|
350,277
|
|
|
365,799
|
|
|
-4.2%
|
Pension settlement charge (c)
|
|
40,329
|
|
|
—
|
|
|
*
|
Multiemployer pension plan withdrawal expense(d)
|
|
4,697
|
|
|
—
|
|
|
*
|
Early termination charge (e)
|
|
—
|
|
|
2,550
|
|
|
*
|
Operating (loss)/profit
|
|
(11,064
|
)
|
|
22,059
|
|
|
*
|
Loss from joint ventures
|
|
(572
|
)
|
|
(2,147
|
)
|
|
-73.4%
|
Interest expense, net
|
|
12,192
|
|
|
13,301
|
|
|
-8.3%
|
(Loss)/income from continuing operations before income taxes
|
|
(23,828
|
)
|
|
6,611
|
|
|
*
|
Income tax (benefit)/expense
|
|
(9,407
|
)
|
|
3,764
|
|
|
*
|
(Loss)/income from continuing operations
|
|
(14,421
|
)
|
|
2,847
|
|
|
*
|
Loss from discontinued operations, net of income taxes(f)
|
|
—
|
|
|
(994
|
)
|
|
*
|
Net (loss)/income
|
|
(14,421
|
)
|
|
1,853
|
|
|
*
|
Net loss/(income) attributable to the noncontrolling interest
|
|
159
|
|
|
(110
|
)
|
|
*
|
Net (loss)/income attributable to The New York Times Company
common stockholders
|
|
$
|
(14,262
|
)
|
|
$
|
1,743
|
|
|
*
|
|
|
|
|
|
|
|
|
Amounts attributable to The New York Times Company common
stockholders:
|
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
|
$
|
(14,262
|
)
|
|
$
|
2,737
|
|
|
*
|
Loss from discontinued operations, net of income taxes
|
|
—
|
|
|
(994
|
)
|
|
*
|
Net (loss)/income
|
|
$
|
(14,262
|
)
|
|
$
|
1,743
|
|
|
*
|
|
|
|
|
|
|
|
|
Average number of common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
163,988
|
|
|
150,612
|
|
|
8.9%
|
Diluted
|
|
163,988
|
|
|
161,920
|
|
|
1.3%
|
|
|
|
|
|
|
|
|
Basic (loss)/earnings per share attributable to The New York
Times Company common stockholders:
|
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
|
$
|
(0.09
|
)
|
|
$
|
0.02
|
|
|
*
|
Loss from discontinued operations, net of income taxes
|
|
—
|
|
|
(0.01
|
)
|
|
*
|
Net (loss)/income
|
|
$
|
(0.09
|
)
|
|
$
|
0.01
|
|
|
*
|
|
|
|
|
|
|
|
|
Diluted (loss)/earnings per share attributable to The New York
Times Company common stockholders:
|
|
|
|
|
|
|
|
(Loss)/income from continuing operations
|
|
$
|
(0.09
|
)
|
|
$
|
0.02
|
|
|
*
|
Loss from discontinued operations, net of income taxes
|
|
—
|
|
|
(0.01
|
)
|
|
*
|
Net (loss)/income
|
|
$
|
(0.09
|
)
|
|
$
|
0.01
|
|
|
*
|
Dividends declared per share
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
|
*
|
|
|
|
|
|
|
|
|
* Represents an increase or decrease in excess of 100% or not
meaningful.
|
See footnotes pages for additional information.
|
|
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THE NEW YORK TIMES COMPANY
|
FOOTNOTES
|
(Dollars in thousands)
|
|
(a)
|
|
The following table summarizes the first quarter of 2015 advertising
revenues by category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
vs. 2014
|
|
|
Display
|
|
|
|
|
|
|
|
|
|
|
|
$
|
136,433
|
|
|
-7.0%
|
|
|
Classified
|
|
|
|
|
|
|
|
|
|
|
|
9,324
|
|
|
1.9%
|
|
|
Other advertising
|
|
|
|
|
|
|
|
|
|
|
|
4,151
|
|
|
21.9%
|
|
|
Total advertising
|
|
|
|
|
|
|
|
|
|
|
|
$
|
149,908
|
|
|
-5.8%
|
|
|
In the fourth quarter of 2014, the Company reclassified
advertising revenues, including prior period information, into
three categories: Display, Classified and Other. “Display”
combines the prior “Retail” and “National” categories and includes
advertising in our newspapers, online on our websites and across
our digital products principally by advertisers promoting products
or brands. “Classified” includes line ads sold in the Classified
section of our newspapers and websites. “Other advertising”
includes, among others, creative services fees associated with our
branded content studio and revenue from pre-printed advertising,
also known as free-standing inserts.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
|
Other revenues consist primarily of revenues from news
services/syndication, digital archives, rental income,
conferences/events and e-commerce.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
In the first quarter of 2015, the Company recorded a $40.3 million
pension settlement charge in connection with a lump-sum payment
offer to certain former employees.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d)
|
|
In the first quarter of 2015, the Company recorded a $4.7 million
charge for a partial withdrawal obligation under a multiemployer
pension plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e)
|
|
In the first quarter of 2014, the Company recorded a $2.6 million
charge for the early termination of a distribution agreement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(f)
|
|
The results of operations for NEMG, which was sold in 2013, are
reported as discontinued operations in 2014.
|
|
The following table summarizes the 2015 and 2014 results of
operations presented as discontinued operations for NEMG:
|
|
|
First Quarter
|
|
|
2015
|
|
2014
|
Loss on sale, net of income taxes:
|
|
|
|
|
Loss on sale
|
|
$
|
|
|
|
—
|
|
|
$
|
(1,559
|
)
|
Income tax benefit
|
|
—
|
|
|
(565
|
)
|
Loss on sale, net of income taxes
|
|
—
|
|
|
(994
|
)
|
Loss from discontinued operations, net of income taxes
|
|
$
|
|
|
|
—
|
|
|
$
|
(994
|
)
|
|
THE NEW YORK TIMES COMPANY
RECONCILIATION OF NON-GAAP
INFORMATION
(Dollars in thousands, except per share data)
In this release, the Company has referred to non-GAAP financial
information with respect to 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); 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 Company has included these non-GAAP financial
measures because management reviews them on a regular basis and uses
them to evaluate and manage the performance of the Company’s operations.
Management believes 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 the Company’s period-to-period performance because it
eliminates items that the Company does not consider to be indicative of
earnings from ongoing operating activities. Adjusted operating profit is
useful in evaluating the ongoing performance of the Company’s business
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. Total operating costs
excluding these items provide investors with helpful supplemental
information on the Company’s 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 gains and loss components of
pension expense; interest cost and amortization of actuarial gains and
loss components of retiree medical expense; and all expenses associated
with multiemployer pension plan withdrawal obligations. 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 management believes reflect the ongoing service-related
costs of providing pension and retiree medical benefits to its
employees. Management considers non-operating retirement costs to be
outside the performance of the business and believes that presenting
operating results excluding non-operating retirement costs, in addition
to the Company’s GAAP operating results, provides increased transparency
and a better understanding of the underlying trends in the Company’s
operating business performance.
Reconciliations of these 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)
|
|
First Quarter
|
|
|
2015
|
|
2014
|
|
% Change
|
Diluted (loss)/earnings per share from continuing operations
|
|
$
|
(0.09
|
)
|
|
$
|
0.02
|
|
|
*
|
Add:
|
|
|
|
|
|
|
Severance
|
|
0.01
|
|
|
0.01
|
|
|
*
|
Non-operating retirement costs
|
|
0.03
|
|
|
0.03
|
|
|
*
|
Special items:
|
|
|
|
|
|
|
Pension settlement charge
|
|
0.15
|
|
|
—
|
|
|
*
|
Multiemployer pension plan withdrawal expense
|
|
0.02
|
|
|
—
|
|
|
*
|
Early termination charge
|
|
—
|
|
|
0.01
|
|
|
*
|
Adjusted diluted earnings per share from continuing operations(1)
|
|
$
|
0.11
|
|
|
$
|
0.07
|
|
|
57.1%
|
|
|
|
|
|
|
|
(1) Amounts may not add due to rounding.
|
|
|
|
|
|
|
|
* Represents a decrease in excess of 100% or not meaningful.
|
|
THE NEW YORK TIMES COMPANY
|
RECONCILIATION OF NON-GAAP INFORMATION (continued)
|
(Dollars in thousands)
|
|
|
Reconciliation of operating profit before
depreciation & amortization, severance, non-operating retirement
costs and special items (or adjusted operating profit)
|
|
|
|
|
First Quarter
|
|
|
2015
|
|
2014
|
|
% Change
|
Operating (loss)/profit
|
|
$
|
(11,064
|
)
|
|
$
|
22,059
|
|
|
*
|
Add:
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
14,844
|
|
|
|
20,092
|
|
|
-26.1%
|
Severance
|
|
|
1,517
|
|
|
|
3,054
|
|
|
-50.3%
|
Non-operating retirement costs
|
|
|
8,875
|
|
|
|
8,877
|
|
|
*
|
Special items:
|
|
|
|
|
|
|
Pension settlement charge
|
|
|
40,329
|
|
|
|
—
|
|
|
*
|
Multiemployer pension plan withdrawal expense
|
|
|
4,697
|
|
|
|
—
|
|
|
*
|
Early termination charge
|
|
|
—
|
|
|
|
2,550
|
|
|
*
|
Adjusted operating profit
|
|
$
|
59,198
|
|
|
$
|
56,632
|
|
|
4.5%
|
|
|
|
|
Reconciliation of operating costs before
depreciation & amortization, severance and non-operating
retirement costs (or adjusted operating costs)
|
|
|
|
|
First Quarter
|
|
|
2015
|
|
2014
|
|
% Change
|
Operating costs
|
|
$
|
350,277
|
|
|
$
|
365,799
|
|
|
-4.2%
|
Less:
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
14,844
|
|
|
|
20,092
|
|
|
-26.1%
|
Severance
|
|
|
1,517
|
|
|
|
3,054
|
|
|
-50.3%
|
Non-operating retirement costs
|
|
|
8,875
|
|
|
|
8,877
|
|
|
*
|
Adjusted operating costs
|
|
$
|
325,041
|
|
|
$
|
333,776
|
|
|
-2.6%
|
|
|
|
|
Components of non-operating retirement
costs(1)
|
|
|
|
|
First Quarter
|
|
|
2015
|
|
2014
|
|
% Change
|
Pension:
|
|
|
|
|
|
|
|
Interest cost
|
|
$
|
21,440
|
|
|
$
|
23,987
|
|
|
-10.6%
|
Expected return on plan assets
|
|
|
(28,775
|
)
|
|
|
(28,460
|
)
|
|
1.1%
|
Amortization and other costs
|
|
|
10,667
|
|
|
|
7,652
|
|
|
39.4%
|
Non-operating pension costs
|
|
|
3,332
|
|
|
|
3,179
|
|
|
4.8%
|
Other postretirement benefits:
|
|
|
|
|
|
|
|
Interest cost
|
|
|
688
|
|
|
|
1,010
|
|
|
-31.9%
|
Amortization and other costs
|
|
|
1,303
|
|
|
|
1,184
|
|
|
10.1%
|
Non-operating other postretirement benefits costs
|
|
|
1,991
|
|
|
|
2,194
|
|
|
-9.3%
|
Expenses associated with multiemployer pension plan withdrawal
obligations
|
|
|
3,552
|
|
|
|
3,504
|
|
|
1.4%
|
Total non-operating retirement costs
|
|
$
|
8,875
|
|
|
$
|
8,877
|
|
|
*
|
|
|
(1)Components of non-operating retirement
costs do not include special items.
|
|
|
|
* Represents a decrease in excess of 100% or not meaningful.
|
|
Source: The New York Times Company