The New York Times Company (NYT) filed Quarterly Report for the period ended 2009-09-27.
New York Times Company is a diversified media company including newspapers television and radio stations magazines electronic information and publishing Internet businesses and forest products investments. The Company currently classifies its businesses into the following segments: Newspapers Broadcasting Magazines and Forest Product Investments and Other Joing Ventures. The New York Times Company has a market cap of $1.15 billion; its shares were traded at around $7.98 with a P/E ratio of 42 and P/S ratio of 0.4.
Highlight of Business Operations:
Amendments to two union agreements ratified in the second quarter of 2009 included the elimination of certain non-qualified retirement benefits, which resulted in a nominal curtailment. In connection with the curtailment, we remeasured the projected benefit obligation, resulting in a decrease in the pension liability of approximately $5 million and an increase in comprehensive income (before taxes) of approximately $5 million. In the third quarter of 2009, the Boston Newspaper Guild of the Globe ratified amendments to its collective bargaining agreement. These amendments included freezing benefits under a Company-sponsored qualified defined benefit pension plan, which resulted in a curtailment and a remeasurement of the pension plan. Therefore, we recognized in the third quarter of 2009 a curtailment loss of $2.5 million, a decrease in the pension liability of approximately $22 million and an increase in comprehensive income (before taxes) of approximately $25 million.
On October 8, 2009, we completed the sale of WQXR-FM, our New York City radio station to subsidiaries of Univision Radio Inc. and WNYC Radio for a total of approximately $45 million. Univision Radio paid us $33.5 million to exchange the FCC 105.9 FM broadcast license and transmitting equipment for our license, equipment and stronger signal at 96.3 FM. At the same time, WNYC Radio purchased the FCC license for 105.9 FM, all related transmitting equipment and WQXR’s call letters and Web site from us for $11.5 million. Univision Radio is retaining the WCAA-FM call letters. We used the proceeds from the sale to pay outstanding debt. We expect to record an after-tax gain on the sale of approximately $23 million.
In April 2009, we made a one-year secured term loan of approximately $13 million to a third party that provides home-delivery services for The Times and the Globe and circulation customer services for The Times. We had previously guaranteed the payments under the circulation service provider’s credit facility for approximately $20 million to enable it to obtain more favorable financing terms (see Note 10 of the Notes to the Condensed Consolidated Financial Statements). However, the credit facility, which expired in April 2009, and our guarantee were replaced by our loan. The circulation service provider has agreed to pay us interest at an annual rate of 13% and has granted a security interest in all of its assets to secure the payment of the loan. In September 2009, the circulation service provider repaid $1 million, and therefore the amount outstanding as of September 27, 2009 is approximately $12 million.
As of September 27, 2009, total costs recorded to close City & Suburban were approximately $59 million, of which approximately $26 million was recorded in the first nine months of 2009 and approximately $33 million was recorded in 2008 (principally consisting of $29 million in severance costs). In the first nine months of 2009, the costs included a $16.4 million estimated loss, recorded in the first quarter, for the present value of remaining rental payments under leases, for property previously occupied by City & Suburban, in excess of estimated rental income under potential subleases and a $6.6 million estimated charge, recorded in the second quarter for the present value of estimated future payments under a pension withdrawal liability related to a multi-employer pension plan. While the majority of costs to close City & Suburban have been recognized as of September 27, 2009, the loss on abandoned leases may be adjusted as we enter into subleases or other transactions to utilize or exit the vacant properties, and the estimated pension charge may be adjusted when we receive a final assessment regarding the actual pension withdrawal liability to be paid (see Note 5 of the Notes to the Condensed Consolidated Financial Statements).
In the second quarter of 2009, we completed the consolidation of the Globe’s printing facility in Billerica, Mass., into our Boston, Mass., facility. As of September 27, 2009, total costs recorded to close the Billerica facility were approximately $29 million, of which approximately $25 million was recorded in the first nine months of 2009 (approximately $13 million in severance, approximately $6 million in accelerated depreciation and approximately $6 million in moving costs) and approximately $4 million was recorded in 2008 (for accelerated depreciation). The majority of the costs to close the Billerica facility have been recognized as of September 27, 2009.
We recognized severance costs of $3.8 million in the third quarter of 2009 and $30.5 million in the first nine months of 2009. In the third quarter and first nine months of 2008, we recognized severance costs of $18.1 million and $56.9 million, respectively. These costs were primarily recognized at the News Media Group related to various initiatives and are primarily recorded in “Selling, general and administrative costs” in our Condensed Consolidated Statements of Operations.
NYT is in the portfolios of Irving Kahn of Kahn Brothers & Company Inc., Brian Rogers of T Rowe Price Equity Income Fund.
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