The New York Times Company Reports 2013 Second-Quarter Results
The New York Times Company Reports 2013 Second-Quarter Results
NEW YORK--(BUSINESS WIRE)-- The New York Times Company (NYS: NYT) announced today second-quarter 2013 diluted earnings per share from continuing operations of $.13 compared with $.25 in the same period of 2012. Excluding severance and the 2012 special item discussed below, diluted earnings per share from continuing operations were $.14 in the second quarter of 2013 compared with $.11 in the second quarter of 2012.
The Company had operating profit of $53.4 million in the second quarter of 2013 compared with $44.1 million in the same period of 2012. Excluding depreciation, amortization and severance, operating profit rose 13 percent to $77.8 million from $68.8 million in the second quarter of 2012.
"Our improved results in the second quarter were an organization-wide effort - with contributions from more favorable revenue trends and strong cost performance," said Mark Thompson, president and chief executive officer. "The increase in operating profit reflects the ongoing evolution of our digital subscription initiatives on the circulation side, the moderation of revenue declines on the advertising side and the continued focus on managing costs.
"Circulation revenues rose 5 percent led by digital subscription initiatives. Paid digital subscriptions across the Company totaled approximately 738,000 at quarter-end, an increase of nearly 40 percent year-over-year from the end of the second quarter of 2012. And while advertising revenues decreased approximately 6 percent, we saw a sequential improvement from the first-quarter trends.
"We are making good progress and are on track with our strategic growth initiatives. In particular, we are well under way in the ramp-up for the fall re-brand of the International Herald Tribune as the International New York Times and with the development work related to our new paid products. I am also very pleased to welcome Meredith Kopit Levien, our new executive vice president of advertising, who joined the Company earlier this week."
Comparisons
Unless otherwise noted, all comparisons are for the second quarter of 2013 to the second quarter of 2012. The results of the Regional Media Group, which was sold in the first quarter of 2012, and the results of the About Group, which was sold in the fourth quarter of 2012, are reported within discontinued operations in 2012.
This release includes non-GAAP financial measures, a discussion of management's reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures.
There were no special items in the second quarter of 2013.
The second-quarter 2012 results included the following special item:
A $37.8 million ($22.0 million after tax or $.15 per share) gain on the sale of the Company's remaining 210 units in Fenway Sports Group.
In addition to these special items, the Company had severance costs of $2.7 million ($1.6 million after tax or $.01 per share) and $1.8 million ($1.1 million after tax or $.01 per share) in the second quarters of 2013 and 2012, respectively.
Second-Quarter Results from Continuing Operations
Revenues
Total revenues decreased 0.9 percent to $485.4 million from $489.8 million. Circulation revenues increased 5.1 percent, while advertising and other revenues decreased 5.8 percent and 9.7 percent, respectively.
Circulation revenues rose as digital subscription initiatives and the increase in print circulation prices at The New York Times and The Boston Globe earlier this year offset a decline in print copies sold. In the second quarter of 2013, revenues from the Company's digital-only subscription packages, e-readers and replica editions were $38.3 million, up 44.1 percent from the second quarter of 2012, and in the first half of 2013 totaled $75.1 million, up 51.7 percent from the same period in 2012.
Paid subscribers to The Times and the International Herald Tribune digital-only subscription packages, e-readers and replica editions totaled about 699,000 as of the end of the second quarter of 2013, an increase of more than 35 percent year-over-year since the end of the second quarter of 2012. Paid digital subscribers to BostonGlobe.com and The Boston Globe's e-readers and replica editions totaled about 39,000 as of the end of the second quarter of 2013, an increase of nearly 70 percent year-over-year from the end of the second quarter of 2012.
Print and digital advertising revenues decreased 6.8 percent and 2.7 percent, respectively, largely due to ongoing secular trends and an increasingly complex and fragmented digital advertising marketplace. In the second quarter of 2013, digital advertising revenues were $51.2 million compared with $52.6 million in the 2012 second quarter. Digital advertising revenues as a percentage of total Company advertising revenues were 24.7 percent in the second quarter of 2013 compared with 23.9 percent in the second quarter of 2012.
Operating Costs
Operating costs decreased 3.1 percent to $431.9 million from $445.7 million. Excluding depreciation, amortization and severance, operating costs decreased 3.2 percent to $407.6 million from $421.0 million mainly due to lower compensation and benefits costs and raw materials expense.
Other Data
Joint Ventures
Loss from joint ventures was $0.5 million compared with income of $1.1 million largely due to lower results for the paper mills in which the Company has investments.
Interest Expense, net
Interest expense, net decreased to $14.6 million from $15.5 million mainly due to the Company's payment at maturity on September 26, 2012 of all $75 million aggregate principal amount of the Company's 4.610 percent senior notes.
Income Taxes
The Company had income tax expense of $18.2 million (effective tax rate of 47.4 percent) in the second quarter of 2013 and an income tax expense of $21.5 million (effective tax rate of 47.8 percent) in the first six months of 2013.
The Company had income tax expense of $29.4 million (effective tax rate of 43.6 percent) in the second quarter of 2012 and income tax expense of $31.2 million (effective tax rate of 39.8 percent) in the first six months of 2012.
Liquidity
As of June 30, 2013, the Company had cash and marketable securities of approximately $918 million (excluding restricted cash of approximately $22 million that is subject to certain collateral requirements). Total debt and capital lease obligations were approximately $694 million. During the second quarter of 2013, the Company repurchased approximately $5 million principal amount of its 6.625 percent senior notes due 2016.
Capital Expenditures
Capital expenditures totaled approximately $1.8 million in the second quarter of 2013 and approximately $5.5 million in the first six months of 2013.
Prior Period Adjustments
During the second quarter of 2013, the Company determined that due to an error in the actuarial valuation of accrued benefits for certain participants in The New York Times Companies Pension Plan, the Company's pension benefit obligation was overstated by approximately $50.4 million as of December 30, 2012. The Company concluded that the impact of the error was not material individually or in the aggregate to any of the prior reporting periods from an income statement and balance sheet perspective.
This release contains 2012 second-quarter and six-month financial information presented on an adjusted basis to correct the error and the Company will make adjustments for future filings that include financial statements for the periods affected. Financial information for the first quarter of 2013 has also been adjusted. The adjustments resulted in a reduction in pension expense and pension liability in each of the periods presented.
As reported, in the first quarter of 2013, operating costs, operating profit and diluted EPS were $443.1 million, $22.9 million and $.02, respectively. As adjusted, first-quarter 2013 operating costs, operating profit and diluted EPS were $442.3 million, $23.7 million and $.02, respectively.
The quarterly impact of the adjustments on 2012 is summarized below:
(Dollars in thousands, except per share data)
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Full Year | |||||||||||||||
2012 Operating Costs As Reported | $ | 462,812 | $ | 446,599 | $ | 440,519 | $ | 480,461 | $ | 1,830,391 | |||||||||
2012 Operating Costs As Adjusted | 461,948 | 445,734 | 439,656 | 479,599 | 1,826,937 | ||||||||||||||
2012 Settlement Charge As Reported | 48,729 | 48,729 | |||||||||||||||||
2012 Settlement Charge As Adjusted | 47,657 | 47,657 | |||||||||||||||||
2012 Operating Profit As Reported | 12,620 | 43,203 | 8,509 | 44,008 | 108,340 | ||||||||||||||
2012 Operating Profit As Adjusted | 13,484 | 44,068 | 9,372 | 45,942 | 112,866 | ||||||||||||||
2012 Diluted EPS As Reported | 0.28 | (0.59 | ) | 0.02 | 1.14 | 0.87 | |||||||||||||
2012 Diluted EPS As Adjusted | 0.28 | (0.58 | ) | 0.02 | 1.15 | 0.89 | |||||||||||||
Outlook
Total circulation revenues are projected to increase in the low- to mid-single digits in the third quarter of 2013 compared with the same period in 2012.
Total advertising revenue trends in the third quarter of 2013 are expected to experience similar month-to-month volatility to the first half of 2013.
Total operating costs in the third quarter of 2013 are expected to be in line with the same period in 2012.
In addition, the Company expects the following on a pre-tax basis in 2013:
Results from joint ventures: loss of $3 to $6 million,
Depreciation and amortization: $90 to $95 million,
Interest expense, net: $55 to $60 million, and
Capital expenditures: approximately $35 million.
Conference Call Information
The Company's second-quarter earnings conference call will be held on Thursday, August 1, at 11:00 a.m. E.T. To access the call, dial 888-686-9683 (in the U.S.) and 913-312-1520 (international callers). Participants should dial into the conference call approximately 10 minutes before the start time. Online listeners can link to the live webcast at www.nytco.com/investors.
An archive of the webcast will be available beginning two hours after the call at www.nytco.com/investors. The archive will be available for approximately three months. An audio replay will 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 Friday, August 2. The access code is 5503280.
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 circulation and advertising generated by the Company's various markets and the development of the Company's digital businesses. 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 year ended December 30, 2012. 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, a leading global, multimedia news and information company with 2012 revenues of $2.0 billion, includes The New York Times, the International Herald Tribune, The Boston Globe, NYTimes.com, BostonGlobe.com, Boston.com and related properties. The Company's core purpose is to enhance society by creating, collecting and distributing high-quality news and information.
Exhibits: | Condensed Consolidated Statements of Operations | ||
Revenues by Operating Segment | |||
Advertising Revenues by Category | |||
Footnotes | |||
Reconciliation of Non-GAAP Information | |||
THE NEW YORK TIMES COMPANY | |||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||
(Dollars and shares in thousands, except per share data) | |||||||||||||||||||||
Second Quarter | Six Months | ||||||||||||||||||||
2013 | 2012 | % Change | 2013 | 2012 | % Change | ||||||||||||||||
Revenues | |||||||||||||||||||||
Circulation | $ | 245,132 | $ | 233,291 | 5.1% | $ | 486,921 | $ | 460,285 | 5.8% | |||||||||||
Advertising | 207,454 | 220,228 | -5.8% | 398,621 | 435,462 | -8.5% | |||||||||||||||
Other(a) | 32,777 | 36,283 | -9.7% | 65,754 | 69,487 | -5.4% | |||||||||||||||
Total revenues | 485,363 | 489,802 | -0.9% | 951,296 | 965,234 | -1.4% | |||||||||||||||
Operating costs | |||||||||||||||||||||
Production costs | 192,396 | 202,578 | -5.0% | 388,662 | 405,285 | -4.1% | |||||||||||||||
Selling, general and administrative costs | 217,928 | 220,236 | -1.0% | 442,131 | 449,360 | -1.6% | |||||||||||||||
Depreciation and amortization(b) | 21,608 | 22,920 | -5.7% | 43,408 | 53,036 | -18.2% | |||||||||||||||
Total operating costs | 431,932 | 445,734 | -3.1% | 874,201 | 907,681 | -3.7% | |||||||||||||||
Operating profit | 53,431 | 44,068 | 21.2% | 77,095 | 57,553 | 34.0% | |||||||||||||||
Gain on sale of investment(c) | — | 37,797 | N/A | — | 55,645 | N/A | |||||||||||||||
Write-down of investments(d) | — | — | N/A | — | 4,900 | N/A | |||||||||||||||
(Loss)/income from joint ventures | (459 | ) | 1,079 | * | (3,399 | ) | 1,050 | * | |||||||||||||
Interest expense, net | 14,646 | 15,464 | -5.3% | 28,720 | 30,916 | -7.1% | |||||||||||||||
Income from continuing operations before income taxes | 38,326 | 67,480 | -43.2% | 44,976 | 78,432 | -42.7% | |||||||||||||||
Income tax expense | 18,189 | 29,440 | -38.2% | 21,516 | 31,233 | -31.1% | |||||||||||||||
Income from continuing operations | 20,137 | 38,040 | -47.1% | 23,460 | 47,199 | -50.3% | |||||||||||||||
Loss from discontinued operations, net of income taxes(e) | — | (125,689 | ) | N/A | — | (92,298 | ) | N/A | |||||||||||||
Net income/(loss) | 20,137 | (87,649 | ) | * | 23,460 | (45,099 | ) | * | |||||||||||||
Net (income)/loss attributable to the noncontrolling interest | (6 | ) | 27 | * | 243 | 80 | * | ||||||||||||||
Net income/(loss) attributable to The New York Times | $ | 20,131 | $ | (87,622 | ) | * | $ | 23,703 | $ | (45,019 | ) | * | |||||||||
Amounts attributable to The New York Times | |||||||||||||||||||||
Income from continuing operations | $ | 20,131 | $ | 38,067 | -47.1% | $ | 23,703 | $ | 47,279 | -49.9% | |||||||||||
Loss from discontinued operations, net of income taxes | — | (125,689 | ) | N/A | — | (92,298 | ) | N/A | |||||||||||||
Net income/(loss) | $ | 20,131 | $ | (87,622 | ) | * | $ | 23,703 | $ | (45,019 | ) | * | |||||||||
Average number of common shares outstanding: | |||||||||||||||||||||
Basic | 148,797 | 148,005 | 0.5% | 148,754 | 147,936 | 0.6% | |||||||||||||||
Diluted | 156,511 | 149,799 | 4.5% | 156,101 | 150,669 | 3.6% | |||||||||||||||
Basic earnings/(loss) per share attributable to The New | |||||||||||||||||||||
Income from continuing operations | $ | 0.14 | $ | 0.26 | -46.2% | $ | 0.16 | $ | 0.32 | -50.0% | |||||||||||
Loss from discontinued operations, net of income taxes | — | (0.85 | ) | N/A | — | (0.62 | ) | N/A | |||||||||||||
Net income/(loss) | $ | 0.14 | $ | (0.59 | ) | * | $ | 0.16 | $ | (0.30 | ) | * | |||||||||
Diluted earnings/(loss) per share attributable to The | |||||||||||||||||||||
Income from continuing operations | $ | 0.13 | $ | 0.25 | -48.0% | $ | 0.15 | $ | 0.31 | -51.6% | |||||||||||
Loss from discontinued operations, net of income taxes | — | (0.83 | ) | N/A | — | (0.61 | ) | N/A | |||||||||||||
Net income/(loss) | $ | 0.13 | $ | (0.58 | ) | * | $ | 0.15 | $ | (0.30 | ) | * | |||||||||
* Represents an increase or decrease in excess of 100%. | |||||||||||||||||||||
See footnotes page for additional information. | |||||||||||||||||||||
THE NEW YORK TIMES CO | ||||||||||||||||
