"Our fourth-quarter earnings were higher than we anticipated mainly because of stronger than expected advertising in December," said Leonard P. Forman, senior vice president and chief financial officer. "Newspaper Group advertising revenues, excluding the International Herald Tribune, rose 4.2 percent in December, a very strong showing, particularly given that they increased 16.7 percent in December '02. Our digital business again demonstrated outstanding growth, with fourth-quarter revenues up 27.2 percent and earnings more than doubling. And despite higher benefits costs, investments in our properties and increased newsprint prices, expense growth remained restrained, rising just 2.5 percent in the quarter, excluding the International Herald Tribune.
“Minority interest in net (income)/loss of subsidiaries”
"Our earnings guidance for 2004 remains unchanged. In 2004, earnings comparisons are expected to be the most challenging in the first quarter versus the same period in 2003 when we benefited from a one-time reimbursement of printing facility remediation costs and when ad revenue growth was strongest. While advertising this year is off to a somewhat slow start, we are well positioned to take advantage of a rebounding advertising market, thanks to our clearly defined and proven national expansion strategy and companion local strategy, along with our demonstrated financial discipline."
In both 2003 and 2002, fourth-quarter earnings per share and net income noted above include pre-tax income of $1.3 million ($0.8 million after tax, or less than $.01 per share) related to a non-compete agreement.
Full-Year EPS and Net Income
For the year, diluted earnings per share were $1.98, up from $1.94 in 2002 and net income was $302.7 million, up from $299.7 million in 2002.
Full-year diluted earnings per share and net income noted above include the following items:
2003
In 2003 the three items below resulted in a net pre-tax gain of $8.7 million ($5.2 million after tax, or $.03 per share):
-- a pre-tax gain of $8.3 million ($5.0 million after tax, or $.03 per share) from the expiration of an unused advertising credit,
-- pre-tax income of $5.0 million ($3.0 million after tax, or $.02 per share) related to a non-compete agreement and
-- a pre-tax charge of $4.6 million ($2.8 million after tax, or $.02 per share) associated with the closing of a small job fair business.
2002
In 2002 the two items below resulted in a net pre-tax charge of $7.6 million ($4.7 million after tax, or $.03 per share):
-- pre-tax income of $5.0 million ($3.0 million after tax, or $.02 per share) related to a non-compete agreement and
-- a pre-tax charge of $12.6 million ($7.7 million after tax, or $.05 per share) related to work force reductions.
International Herald Tribune
In January 2003 the Company purchased the remaining 50 percent interest in the International Herald Tribune (IHT) that it did not previously own. Since January of 2003, results for the IHT have been included in the Newspaper Group. Before that time, the Company's partial ownership interest was reflected in the joint venture line of its income statement. To provide useful comparisons, the results of the IHT are excluded from some of the revenue and expense numbers as noted below.
Revenues
Total revenues for the Company rose 5.0 percent to $882.3 million in the fourth quarter from $840.2 million in the 2002 fourth quarter. Advertising revenues (68 percent of total revenues) grew 3.2 percent and circulation revenues (25 percent of total revenues) rose 7.3 percent in the fourth quarter compared with the same period in 2002. Excluding the IHT, total revenues increased 2.5 percent, advertising revenues rose 1.2 percent and circulation revenues grew 2.8 percent compared with the fourth quarter of 2002.
Costs and Expenses
Total costs and expenses in the fourth quarter increased 6.2 percent to $687.8 million from $648.0 million in the 2002 fourth quarter. Excluding the IHT, total costs and expenses in the fourth quarter rose 2.5 percent compared with the fourth quarter of 2002, mainly because of higher benefits expenses and increased costs associated with the Company's investments in the national expansion of The New York Times, as well as an increase in newsprint expense.
Newsprint expense increased 7.4 percent in the fourth quarter compared with the 2002 fourth quarter. Excluding the IHT, newsprint expense rose 5.3 percent, resulting from an increase in the Company's average cost per ton of newsprint of 6.0 percent, partially offset by a decrease in consumption of 0.7 percent.
Operating Profit
Operating profit in the fourth quarter increased 1.2 percent to $194.5 million from $192.2 million in the fourth quarter of 2002. Higher revenues in the fourth quarter were partially offset by an increase in costs and expenses.
EBITDA
EBITDA (earnings before interest, taxes, depreciation and amortization) in the fourth quarter rose 2.1 percent to $230.9 million from $226.2 million in the 2002 fourth quarter. The increase was primarily because of higher revenues as well as more favorable results from joint ventures in the fourth quarter compared with the prior-year fourth quarter, partially offset by an increase in costs and expenses.
The Company believes that EBITDA, a non-GAAP financial measure, is a useful metric for evaluating its financial performance because of its focus on the Company's results from operations before depreciation and amortization. EBITDA is a common alternative measure of performance used by investors, financial analysts and rating agencies. These groups use EBITDA, along with other measures, to estimate the value of a company and evaluate a company's ability to meet its debt service requirements. A reconciliation of EBITDA to net income, as well as additional information concerning EBITDA, is included in the exhibits to this release.
Newspaper Group
Total Newspaper Group revenues grew 5.7 percent in the fourth quarter to $820.6 million from $776.5 million in the prior-year fourth quarter. Advertising revenues increased 4.0 percent and circulation revenues increased 7.3 percent in the fourth quarter compared with the same period in 2002. Excluding the IHT, total revenues rose 3.0 percent, advertising revenues increased 1.8 percent and circulation revenues grew 2.8 percent in the fourth quarter compared with the fourth quarter of 2002. Advertising revenues increased primarily as a result of higher advertising rates and circulation revenues grew primarily as a result of increased volume at The New York Times and higher prices at The Boston Globe.
Operating profit for the Newspaper Group increased 2.6 percent to $189.8 million in the fourth quarter from $184.9 million in the 2002 fourth quarter. Higher revenues were partially offset by higher benefits expenses and increased costs associated with the Company's investments in the national expansion of The New York Times, as well as an increase in newsprint expense.
Broadcast Group
Broadcast Group revenues declined 15.2 percent in the fourth quarter to $40.4 million from $47.6 million in the same period in 2002. Operating profit decreased 30.9 percent in the fourth quarter to $13.1 million from $18.9 million in the 2002 fourth quarter, primarily due to lower advertising revenues related to decreased political advertising ($3.2 million in the fourth quarter of 2003 compared with a record $13.2 million in the same quarter last year).
New York Times Digital
Revenues for New York Times Digital grew 27.2 percent in the fourth quarter to $25.0 million from $19.7 million in the 2002 fourth quarter, and operating profit more than doubled to a record $7.2 million from $3.3 million, primarily due to higher advertising revenues resulting from increased volume.
Joint Ventures
Net loss from joint ventures was $2.8 million in the fourth quarter compared with $5.8 million in the 2002 fourth quarter. Beginning in January 2003, the operating results of the IHT were no longer included in net loss from joint ventures.
Income Taxes
In 2003 the Company's effective income tax rate (net of minority interest) for the fourth quarter was 39.5 percent compared with 39.0 percent for the fourth quarter of 2002.
Interest Expense-net, Shares, Cash and Total Debt
Interest expense-net in the fourth quarter decreased to $10.3 million from $11.5 million in the fourth quarter of 2002, primarily due to lower interest rates on debt outstanding and higher levels of capitalized interest in the fourth quarter compared with the 2002 fourth quarter.
In the fourth quarter, the Company repurchased 0.4 million shares at a cost of $19.8 million. Approximately $94.9 million remains from the Company's current share repurchase authorization at the end of the fourth quarter. Class A and Class B common shares outstanding at the end of the quarter totaled 149.9 million shares.
At the end of the fourth quarter, the Company's cash and cash equivalents were $39.4 million and total debt was $955.3 million.
Pension Contributions
The Company made a total of $110.5 million in tax-deductible contributions to its qualified pension plans in 2003. Of the total contributions, $10.5 million was made in September and $100.0 million was made in the fourth quarter.
2004 Guidance
Below is 2004 guidance based on GAAP. There have been no changes in guidance for 2004 since the Company issued it on December 9, 2003.
To provide more comprehensive guidance and reflect the growth of all of the Company's lines of business, the 2004 advertising revenues guidance is for total Company advertising revenues. This includes the Newspaper Group (of which the IHT is a part), the Digital Division and the Broadcast Group. The 2004 growth rates for total Company advertising revenues and for expenses are each expected to be in the mid-single digits but the growth rate for total Company advertising revenues is expected to be higher than that of expenses.
Item 2004 Guidance
----------------------------------------------------------------------
Total Company Advertising Revenues Growth rate expected to be in
the mid-single digits
----------------------------------------------------------------------
Newspaper Group Circulation Revenues Growth rate expected to be in
the low-single digits
----------------------------------------------------------------------
Newsprint Cost Per Ton Growth rate expected to be in
the low teens
----------------------------------------------------------------------
Total Company Expenses Growth rate expected to be in
the mid-single digits
----------------------------------------------------------------------
Depreciation & Amortization $145 to $150 million
----------------------------------------------------------------------
Capital Expenditures (a) $220 to $250 million
----------------------------------------------------------------------
Net loss from Joint Ventures Breakeven to a loss of $5 million
----------------------------------------------------------------------
Interest Expense $47 to $52 million
----------------------------------------------------------------------
Tax Rate 39.5%
----------------------------------------------------------------------
Diluted Earnings Per Share Growth rate expected to be in
the low- to mid-single
digits over 2003 EPS
of $1.98
----------------------------------------------------------------------
(a) Includes costs of $110 to $120 million related to the Company's interest in a new headquarters in New York City, which the Company expects to occupy in 2007.
Conference Call Information
The Company's fourth-quarter earnings conference call will be held on Tuesday, January 27, at 11:30 a.m. E.T. The live webcast will be accessible through the Investors section of the Company's Web site, www.nytco.com, and other Web services including CCBN's Individual Investor Center and CCBN's StreetEvents for institutional investors.
To access the call, dial 800-289-0436 (in the U.S.) and 913-981-5507 (international callers) at least 10 minutes prior to the scheduled start of the call. In addition, a replay of the call will be available online at www.nytco.com. A replay of the call will also be available at 888-203-1112 (in the U.S.) and 719-457-0820 (international callers) beginning approximately two hours after the call until 5 p.m. E.T. on Thursday, January 29. The access code is 273929.
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. These risks and uncertainties include national and local conditions, as well as competition, that could influence the levels (rate and volume) of retail, national and classified advertising and circulation generated by the Company's various markets and material increases in newsprint prices. They also include other risks detailed from time to time in the Company's publicly-filed documents, including the Company's Annual Report on Form 10-K for the period ended December 29, 2002. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.
The New York Times Company (NYSE: NYT), a leading media company with 2003 revenues of $3.2 billion, includes The New York Times, The International Herald Tribune, The Boston Globe, 16 other newspapers, eight network-affiliated television stations, two New York City radio stations and more than 40 Web sites, including NYTimes.com and Boston.com. For the third consecutive year, the Company was ranked No. 1 in the publishing industry in Fortune's 2002 list of America's Most Admired Companies. The Company's core purpose is to enhance society by creating, collecting and distributing high-quality news, information and entertainment.
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Statements of Income are prepared in accordance with accounting
principles generally accepted in the United States of America (GAAP).
(Dollars and shares in thousands, except per share data)
-----------------------
Fourth Quarter
-----------------------
2003 2002
----------- -----------
Revenues
Advertising $ 596,711 $ 578,221
Circulation 223,011 207,789
Other (a) 62,560 54,188
----------- -----------
Total 882,282 840,198
Costs and expenses 687,821 647,962
----------- -----------
Operating profit 194,461 192,236
Net loss from joint ventures 2,835 5,778
Interest expense - net 10,333 11,533
Other income (b) 1,250 1,250
----------- -----------
Income before income taxes and
minority interest 182,543 176,175
Income taxes 72,431 68,730
Minority interest in net (income)/loss
of subsidiaries (c) 748 57
----------- -----------
Net Income $ 110,860 $ 107,502
=========== ===========
Average Number of Common Shares:
Basic 149,262 151,691
Diluted 151,775 154,732
Basic Earnings Per Share $ 0.74 $ 0.71
=========== ===========
Diluted Earnings Per Share $ 0.73 $ 0.69
=========== ===========
Dividends Per Share $ 0.145 $ 0.135
=========== ===========
-----------------------
Twelve Months
-----------------------
2003 2002
----------- -----------
Revenues
Advertising $2,120,814 $2,048,815
Circulation 885,767 825,208
Other (a) 220,619 204,984
----------- -----------
Total 3,227,200 3,079,007
Costs and expenses 2,687,650 2,534,139
----------- -----------
Operating profit 539,550 544,868
Net loss from joint ventures 8,223 12,330
Interest expense - net 44,757 45,435
Other income (b) 13,277 5,000
----------- -----------
Income before income taxes and
minority interest 499,847 492,103
Income taxes 197,762 191,955
Minority interest in net (income)/loss
of subsidiaries (c) 570 (401)
----------- -----------
Net Income $ 302,655 $ 299,747
=========== ===========
Average Number of Common Shares:
Basic 150,285 151,563
Diluted 152,840 154,805
Basic Earnings Per Share $ 2.01 $ 1.98
=========== ===========
Diluted Earnings Per Share $ 1.98 $ 1.94
=========== ===========
Dividends Per Share $ 0.570 $ 0.530
=========== ===========
THE NEW YORK TIMES COMPANY
SEGMENT AND STATISTICAL INFORMATION
Revenues, Operating Profit (Loss) and Depreciation & Amortization
are prepared in accordance with GAAP.
(Dollars and copies in thousands)
--------------------------------------
Fourth Quarter 2003
--------------------------------------
Operating Depreciation
Revenues Profit & Amortization
(Loss)
----------- --------------- ------------------
Newspapers $ 820,557 $ 189,802 $ 30,906
Broadcast 40,360 13,058 2,421
New York Times Digital 24,990 7,235 1,171
Intersegment
eliminations (d) (3,625) - -
Unallocated Corporate
expenses - (15,634) 2,824
----------- ------------- ------------
Total $ 882,282 $ 194,461 $ 37,322
=========== ============= ============
--------------------------------------
Twelve Months Ended December 28, 2003
---------------------------------------
Operating Depreciation
Revenues Profit & Amortization
(Loss)
----------- --------------- ------------------
Newspapers $3,007,544 $ 530,579 $ 121,981
Broadcast 145,337 35,761 9,269
New York Times Digital 88,046 20,431 5,289
Intersegment
eliminations (d) (13,727) - -
Unallocated Corporate
expenses - (47,221) 11,208
----------- ------------- ------------
Total $3,227,200 $ 539,550 $ 147,747
=========== ============= ============
--------------------------------------
Fourth Quarter 2002
--------------------------------------
Operating Depreciation
Revenues Profit & Amortization
(Loss)
----------- --------------- ------------------
Newspapers $ 776,473 $ 184,932 $ 32,190
Broadcast 47,620 18,902 2,150
New York Times Digital 19,652 3,315 1,554
Intersegment
eliminations (d) (3,547) - -
Unallocated Corporate
expenses - (14,913) 2,491
----------- ------------- ------------
Total $ 840,198 $ 192,236 $ 38,385
=========== ============= ============
--------------------------------------
Twelve Months Ended December 29, 2002
--------------------------------------
Operating Depreciation
Revenues Profit & Amortization
(Loss)
----------- --------------- ------------------
Newspapers $2,864,135 $ 531,605 $ 127,870
Broadcast 155,799 48,962 8,168
New York Times Digital 71,795 8,258 7,349
Intersegment
eliminations (d) (12,722) - -
Unallocated Corporate
expenses - (43,957) 9,960
----------- ------------- ------------
Total $3,079,007 $ 544,868 $ 153,347
=========== ============= ============
----------------------------------------------
Fourth Quarter 2003
----------------------------------------------
Weekday/ % Sunday %
Daily Change Change
vs. vs.
2002 2002
----------------------------------------------
Average Net Paid
Circulation (e)
The New York Times 1,165.7 2.6% 1,704.1 1.8%
The International
Herald Tribune 221.8 N/A N/A N/A
New England Newspaper
Group 550.6 -2.6% 810.0 0.9%
Regional Newspapers 621.5 0.6% 675.2 -0.3%
----------------------------------------------
Twelve Months Ended December 28, 2003
----------------------------------------------
Weekday/ % Sunday %
Daily Change Change
vs. vs.
2002 2002
----------------------------------------------
Average Net Paid
Circulation (e)
The New York Times 1,132.0 0.1% 1,682.1 -
The International
Herald Tribune 222.7 N/A N/A N/A
New England Newspaper
Group 549.0 -3.6% 816.2 -0.7%
Regional Newspapers 613.5 -0.1% 669.7 -1.0%
THE NEW YORK TIMES COMPANY
NEWSPAPER GROUP REVENUES BY DIVISION
Revenues are prepared in accordance with GAAP.
(Dollars in thousands)
--------------------
2003
--------------------
%
Change
Fourth vs.
Quarter 2002
--------------------
The New York Times
Advertising $315,988 1.5%
Circulation 145,924 2.2%
Other 42,130 13.6%
-----------
Subtotal $504,042 2.6%
-----------
International Herald Tribune
Advertising $ 11,381 N/A
Circulation 9,465 N/A
Other 188 N/A
-----------
Subtotal $ 21,034 N/A
-----------
Total New York Times Newspaper Group
Advertising $327,369 5.1%
Circulation 155,389 8.8%
Other 42,318 14.1%
-----------
Total $525,076 6.9%
-----------
New England Newspaper Group
Advertising $123,258 2.0%
Circulation 45,578 6.6%
Other 10,437 21.9%
-----------
Total $179,273 4.2%
-----------
Regional Newspapers
Advertising $ 89,670 2.9%
Circulation 22,044 -0.7%
Other 4,494 21.2%
-----------
Total $116,208 2.8%
-----------
Total Newspaper Group Excluding
International Herald Tribune
Advertising $528,916 1.8%
Circulation 213,546 2.8%
Other 57,061 15.6%
-----------
Total $799,523 3.0%
===========
Total Newspaper Group
Advertising $540,297 4.0%
Circulation 223,011 7.3%
Other (a) 57,249 16.0%
-----------
Total $820,557 5.7%
===========
--------------------
2003
--------------------
%
Change
Twelve vs.
Months 2002
--------------------
The New York Times
Advertising $1,105,097 1.7%
Circulation 584,266 3.6%
Other 146,429 4.8%
-----------
Subtotal $1,835,792 2.5%
-----------
International Herald Tribune
Advertising $ 35,473 N/A
Circulation 38,795 N/A
Other 1,336 N/A
-----------
Subtotal $ 75,604 N/A
-----------
Total New York Times Newspaper Group
Advertising $1,140,570 5.0%
Circulation 623,061 10.4%
Other 147,765 5.8%
-----------
Total $1,911,396 6.7%
-----------
New England Newspaper Group
Advertising $ 448,443 1.6%
Circulation 174,634 0.8%
Other 35,372 15.8%
-----------
Total $ 658,449 2.1%
-----------
Regional Newspapers
Advertising $ 333,769 2.2%
Circulation 88,072 0.2%
Other 15,858 12.0%
-----------
Total $ 437,699 2.1%
-----------
Total Newspaper Group Excluding
International Herald Tribune
Advertising $1,887,309 1.8%
Circulation 846,972 2.6%
Other 197,659 7.2%
-----------
Total $2,931,940 2.4%
===========
Total Newspaper Group
Advertising $1,922,782 3.7%
Circulation 885,767 7.3%
Other (a) 198,995 7.9%
-----------
Total $3,007,544 5.0%
===========
THE NEW YORK TIMES COMPANY
FOOTNOTES
(a) Other revenue consists primarily of revenue from wholesale
delivery operations, news services and direct marketing.
(b) "Other income" in the Company's Condensed Condsolidated
Statements of Income include the following items:
Fourth Quarter Twelve Months
---------------------------- ----------------------------
(In thousands) (In thousands)
---------------------------- ----------------------------
2003 2002 2003 2002
---------------------------- ----------------------------
Non-compete
agreement $ 1,250 $ 1,250 $ 5,000 $ 5,000
Advertising
credit (1) - - 8,277 -
---------- ---------- ---------- ----------
Other
income $ 1,250 $ 1,250 $ 13,277 $ 5,000
========== ========== ========== ==========
(1) Related to a credit for advertising issued by the Company, which
was not used within the allotted time by the advertiser.
(c) "Minority interest in net (income)/loss of subsidiaries" includes
minority holders (FC Lion LLC and Myllykoski Corporation) income
or loss, net of income taxes, of subsidiaries that are
consolidated with the Company but less than 100% owned. FC Lion
LLC is a minority holder in a subsidiary formed for the purpose
of constructing the Company's new headquarters and Myllykoski
Corporation is a minority holder of a subsidiary that has an
investment (along with the Company) in a paper mill. All prior
periods presented have been reclassed to conform with this
presentation.
(d) Intersegment eliminations primarily include license fees between
NYTD and other segments.
(e) Average net paid circulation for The New York Times, the New
England Newspaper Group and the Regional Newspapers is provided
following the guidelines of the Audit Bureau of Circulations, an
independent agency that audits the circulation of most U.S.
newspapers and magazines. Average net paid circulation for the
International Herald Tribune is provided following the guidelines
of Diffusion Controle, an independent Paris-based agency that
audits the circulation of most of France's newspapers
and magazines.
Reconciliation of EBITDA to Net Income
EBITDA, which is reconciled to net income below, is defined as
earnings before interest, taxes, depreciation and amortization.
For comparability, EBITDA in the prior year has been restated to
conform with the 2003 presentation. The EBITDA presented may not
be comparable to similarly titled measures reported by other
companies. The Company believes that EBITDA, while providing
useful information, should not be considered in isolation or as an
alternative to other financial measures determined under GAAP.
Fourth Quarter Twelve Months
---------------------------- ----------------------------
(In thousands) (In thousands)
---------------------------- ----------------------------
2003 2002 2003 2002
---------------------------- ----------------------------
EBITDA $ 230,894 $ 226,150 $ 692,760 $ 690,169
Depreciation
and
amortization (37,322) (38,385) (147,747) (153,347)
Interest
expense -
net (10,333) (11,533) (44,757) (45,435)
Income
taxes (*) (72,379) (68,730) (197,601) (191,640)
----------- ----------- ----------- -----------
Net income $ 110,860 $ 107,502 $ 302,655 $ 299,747
=========== =========== =========== ===========
(*) Includes taxes of minority holders netted within "Minority
interest in net (income)/loss of subsidiaries" in the Condensed
Consolidated Statements of Income.
This press release can be downloaded from www.nytco.com
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