And earnings actually climbed! Still plenty of restructuring needed (revenue is still declining rapidly, especially print ads), but company is now fine for a couple of years.
NEW YORK (AP) — The New York Times Co. says its fourth-quarter earnings climbed more than threefold, helped by cost cutting, an improving ad market and a one-time gain from lower pension costs.
Shares rose 68 cents, or 5.8 per cent, to $12.35 in premarket trading.
The publisher of The New York Times, The Boston Globe, the International Herald Tribune and 15 other daily newspapers had its smallest ad revenue decline in a year. It dropped 14.7 per cent in the fourth quarter from the same period of 2008, compared with a 26.9 per cent year-over-year decline during the third quarter.
That, along with layoffs and other cost-cutting steps, helped the Times Co. earn $90.9 million, or 61 cents per share. In the same quarter a year ago, it earned $27.6 million, or 19 cents per share.
Overall revenue fell 11.5 per cent to $681 million.
NEW YORK–(BUSINESS WIRE)–The New York Times Company announced today 2009 fourth-quarter and full-year results.
- Operating profit excluding depreciation, amortization, severance and the special items discussed below grew 10.9 per cent 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 per cent in the fourth quarter of 2009 versus the fourth quarter of 2008. On a GAAP basis, the Company’s operating costs declined 15.5 per cent 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.
- 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 per cent in the quarter, a significant improvement from the third quarter decline of 16.9 per cent.
“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 per cent compared with the fourth quarter of 2008, as a 20 per cent decrease in print advertising was offset in part by growth in digital advertising, which rose nearly 11 per cent. 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 per cent 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 per cent to $18 million. The Group’s advertising revenues grew 23 per cent on healthy gains in both cost-per-click and display advertising.
“We continued to capitalise on our ability to aggressively manage our expenses, as evidenced in an approximately 16 per cent 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 have begun taking steps to enhance our digital strategy by planning to introduce a paid model for NYTimes.com in 2011, to create an additional revenue stream while preserving our robust advertising business. We continue to embrace innovative new platforms and devices that provide rich experiences for our content.”
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.
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
Total revenues decreased 11.5 per cent to $681.2 million from $769.5 million primarily due to lower print advertising. Advertising revenues decreased 14.7 per cent; circulation revenues rose 2.4 per cent; and other revenues decreased 37.0 per cent, mainly because of the closure of C & S. Excluding the operations of C & S, total revenues decreased 9.0 per cent, circulation revenues increased 3.0 per cent and other revenues decreased 11.7 per cent.
Operating costs decreased 15.5 per cent 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 per cent 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 per cent, with 34.5 per cent from lower pricing and 13.7 per cent from lower consumption.
Fourth-Quarter Business Segment Results
News Media Group
Total News Media Group revenues decreased 12.8 per cent 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 per cent.
Advertising revenues decreased 17.1 per cent mainly due to weakness in print advertising across the News Media Group. Print advertising declines of 20.0 per cent were offset in part by a 4.1 per cent growth in online advertising.
Circulation revenues increased 2.4 per cent, 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 per cent.
Other revenues decreased 38.0 per cent due in large part to the closure of C & S. Excluding C & S, other revenues decreased 12.2 per cent mainly because of lower revenues from commercial printing.
News Media Group operating costs decreased 17.3 per cent to $542.3 million from $655.7 million. Excluding depreciation, amortization and severance, operating costs decreased 18.6 per cent 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 per cent, with 34.5 per cent from lower pricing and 13.7 per cent 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 per cent to $156.9 million from $138.5 million, primarily due to lower operating costs. The closure of C & S favourably affected the fourth-quarter 2009 operating profit by approximately $10 million.
About Group revenues increased 21.8 per cent to $36.3 million from $29.8 million due to higher cost-per-click and display advertising.
About Group operating costs decreased 7.6 per cent to $18.3 million from $19.8 million. Excluding depreciation and amortization, operating costs decreased 6.2 per cent to $15.6 million from $16.6 million mainly because of lower marketing expenses and professional fees, offset in part by higher compensation costs.
Operating profit rose 80.3 per cent to $18.0 million from $10.0 million. Excluding depreciation and amortization, operating profit increased 57.2 per cent to $20.7 million from $13.2 million, due to higher revenues and lower operating costs.
Corporate costs were $20.1 million compared with $11.8 million in the fourth quarter of 2008 mainly due to higher performance-related compensation costs.
The pension curtailment gain of $56.7 million was recognised at Corporate. Therefore, Corporate had an operating profit of $36.6 million for the fourth quarter of 2009 and $2.0 million for the full year.
Other Financial Data
Internet businesses include NYTimes.com, About.com, Boston.com and other Company Web sites. In the fourth quarter, total Internet revenues increased 10.3 per cent to $102.0 million from $92.5 million, and Internet advertising revenues increased 10.6 per cent to $90.6 million from $81.9 million. Internet advertising revenues at the News Media Group increased 4.1 per cent to $56.1 million from $53.8 million mainly due to growth in display advertising. In total, Internet businesses accounted for 15.0 per cent of the Company’s revenues for the fourth quarter of 2009 versus 12.0 per cent for the fourth quarter of 2008.
For 2009, the Company’s Internet revenues decreased 4.1 per cent to $337.4 million from $351.6 million for 2008, and Internet advertising revenues decreased 4.6 per cent to $294.5 million for 2009 from $308.7 million for 2008. Internet advertising revenues at the News Media Group decreased 10.9 per cent to $179.3 million for 2009 from $201.2 million for 2008. In total, Internet businesses accounted for 13.8 per cent of the Company’s revenues for 2009 versus 12.0 per cent for 2008.
Net income from joint ventures was $0.3 million for the fourth quarter of 2009 compared with $1.8 million for the fourth quarter of 2008. Results at the paper mills in which the Company has investments were negatively affected in the fourth quarter of 2009 by lower paper selling prices. For 2009, net income from joint ventures was $20.7 million compared with $17.1 million for 2008.
Interest expense-net increased to $20.9 million from $12.3 million, as a result of higher interest rates on the Company’s debt offset in part by lower average debt outstanding.
The Company’s effective income tax rate was 38.2 per cent in the fourth quarter and 58.4 per cent for the full year of 2009. The higher tax rate for the year was driven by the impact of certain items, including the reduction of deferred tax asset balances resulting from lower income tax rates on near break-even results.
In 2008, the Company’s effective tax rate was 47.5 per cent for the fourth quarter and 8.3 per cent for the full year. The 2008 fourth-quarter and full year effective income tax rates were unfavorably affected by non-deductible losses on investments in corporate-owned life insurance policies. For the full year, the effective income tax rate was also unfavorably affected by a non-deductible goodwill impairment charge.
Cash and Total Debt
At the end of the quarter, cash and cash equivalents were approximately $37 million.
The following table details the maturities and carrying values of the Company’s debt as of the end of the fourth quarter of 2009.
4.61% medium-term notes
$ 75,000 2015
5.0% notes and 14.053% notes
Option to repurchase ownership interest in headquarters building
250,000 Total $ 825,000 Unamortized amounts (62,535 ) Carrying value as of December 27, 2009 $ 762,465 In addition, the Company had approximately $7 million of capital lease obligations outstanding as of the end of the fourth quarter.
Capital expenditures totaled approximately $8 million in the fourth quarter and approximately $45 million for the full year.
The Company’s pension assets benefited from strong performance in 2009.
For accounting purposes on a GAAP basis, based on preliminary results, the underfunded status of the Company’s qualified pension plans improved by approximately $120 million from year-end 2008.
For funding purposes on an ERISA basis, the Company previously disclosed a January 1, 2009 underfunded status for its qualified pension plans of approximately $300 million. This funding gap reflected the use of temporary valuation relief allowed by the U.S. Treasury Department.
As of January 1, 2009, without the valuation relief, the Company’s underfunded status would have been approximately $535 million. Based on preliminary results, the Company estimates a January 1, 2010 underfunded status of $420 million.
The Company does not have mandatory contributions to its sponsored qualified plans in 2010 due to existing funding credits. However, the Company may choose to make discretionary contributions in 2010 to address a portion of this funding gap. At this time, the Company expects to make contributions in the range of $60 to $80 million to its sponsored qualified plans but may adjust this range based on cash flows, pension asset performance, interest rates and other factors. The Company also expects to make contractual contributions of approximately $22 to $28 million in connection with The New York Times Newspaper Guild pension plan.
For 2010, approximate expectations are as follows:
- Depreciation and amortization to be $125 to $130 million,
- Capital expenditures to be $40 to $50 million, and
- Interest expense to be $85 to $90 million.
In 2010, the Company expects to see the full-year benefit of several actions it took in 2009, including the consolidation of the plants and amendments to various labour agreements at The Boston Globe, and freezing of various Company-sponsored qualified and non-qualified pension plans, supplemental executive retirement plan and various other non-qualified defined benefit plans.
Conference Call Information
The Company’s fourth-quarter and full-year 2009 earnings conference call will be held on Wednesday, February 10, at 11:00 a.m. E.T. To access the call, dial 877-780-3381 (in the U.S.) and 719-325-2336 (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, and a transcript of the call will also be posted. The archive and transcript 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, February 12. The access code is 5240447.
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