Newspaper & Mailroom

The New York Times Company Reports 2008 Second-Quarter Results

Wednesday 23. July 2008 - The New York Times Company announced today second-quarter earnings per share (EPS) from continuing operations of $.15 compared with $.15 in the second quarter last year.

In the second quarter of 2007, special items (detailed below) reduced EPS by $.14 per share. Excluding the effect of these items, EPS from continuing operations was $.29 in the second quarter last year. There were no special items in the second quarter of 2008.
Second-quarter 2008 operating profit decreased to $40.3 million from $43.3 million in the second quarter of 2007. Excluding depreciation and amortization and special items, operating profit declined to $72.9 million in the second quarter of 2008 from $118.5 million in the second quarter last year.
“During the quarter, we saw the continued effect on our businesses of the U.S. economic slowdown and secular forces playing out across the media industry,” said Janet L. Robinson, president and CEO. “Print advertising continued to soften during the quarter, particularly in the classified areas. At the same time, circulation revenues rose 2.5 percent to a second-quarter record of $224 million. Continuing our digital transition, online revenues increased about 13 percent as a result of strong display advertising, which benefited from the new digital ad formats we introduced.
“Our operating costs decreased 2.1 percent as we continued our drive to lower costs. Excluding depreciation and amortization and buyouts, operating costs declined 3.6 percent. Given the economic downturn, we are accelerating our cost reduction efforts. We are now on track to exceed our previous plan to lower our 2007 cash cost base by $130 million in 2008, and a total of $230 million by the end of 2009, excluding the effects of inflation, buyout costs and one-time costs.
“To date in July, we have seen the effects of the deepening economic slowdown, particularly in categories sensitive to the price of oil – airlines, hotels and autos, and we expect that will continue for some time. Despite the cyclical and secular issues facing the industry and our company, we believe our strategy will provide value to our shareholders over the longer term. In this challenging time, we remain strongly focused on introducing new products in print and online, building our research and development capability, driving down costs and rebalancing our portfolio of businesses.”
Comparisons
There were no special items in the second quarter of 2008.
In the second quarter of 2007, results from continuing operations included the following special items:
— A pre-tax net loss of $68.2 million from the sale of assets, principally the Edison, N.J., printing facility ($41.3 million after tax or $.29 per share) and
— A pre-tax gain of $39.6 million from the sale of WQEW-AM ($21.2 million after tax or $.15 per share).
The net effect of these special items reduced second-quarter 2007 net income from continuing operations by $20.1 million or $.14 per share.
In addition, the following items should be noted when comparing the second quarter of 2008 versus the second quarter of 2007:
— Depreciation and amortization declined 30.0 percent to $32.6 million from $46.6 million, mainly because there was no accelerated depreciation expense in the second quarter of 2008 related to the Edison, N.J., printing facility, which was closed in March of 2008. In the second quarter of 2007, accelerated depreciation expense for assets at the Edison, N.J., printing facility totaled $13.1 million.
— Buyout costs were $27.6 million ($15.7 million after tax or $.11 per share) compared with $5.0 million ($2.8 million after tax or $.02 per share) in the second quarter last year.
— In the second quarter of 2007, there was a pre-tax gain of $191.2 million from the sale of the Broadcast Media Group ($94.3 million after tax or $.66 per share), which is classified as discontinued operations.
All comparisons are for the second quarter of 2008 to the second quarter of 2007 and exclude the results of the Broadcast Media Group.
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.
Second-Quarter Results
Revenues
Total revenues decreased 6.0 percent to $741.9 million from $788.9 million. Advertising revenues decreased 10.6 percent; circulation revenues rose 2.5 percent; and other revenues increased 2.5 percent. Revenues decreased mainly due to lower print advertising.
Operating Costs
Operating costs decreased 2.1 percent to $701.7 million from $717.0 million. Excluding depreciation and amortization and buyouts, operating costs were down 3.6 percent to $641.4 million from $665.4 million mainly as a result of lower compensation costs and newsprint expense.
Compensation costs declined primarily due to lower incentive compensation and a reduced workforce in the second quarter of 2008 compared with the same period last year.
Newsprint expense decreased 10.1 percent, with 16.8 percent from lower consumption, offset in part by 6.7 percent in higher prices.
Second-Quarter Business Segment Results
News Media Group
Total News Media Group revenues decreased 6.7 percent to $713.3 million from $764.2 million.
Advertising revenues decreased 11.8 percent due to weakness in print advertising across the News Media Group, partially offset by higher online advertising revenues.
Circulation revenues rose 2.5 percent, mainly because of higher prices at The New York Times offset in part by volume declines across the News Media Group.
Other revenues increased 1.4 percent primarily because of revenues from rental income and commercial printing, partially offset by the elimination of subscription revenues for TimesSelect, an online product offering that was discontinued in September 2007.
Total News Media Group operating costs decreased 2.9 percent to $668.8 million from $689.0 million. Excluding depreciation and amortization and buyouts, operating costs decreased 4.4 percent to $614.1 million from $642.6 million, mainly as a result of the items noted in the operating costs section above.
Operating profit for the News Media Group decreased 4.7 percent to $44.5 million from $46.7 million. Excluding depreciation and amortization and the special items identified above, operating profit for the News Media Group decreased 38.3 percent to $72.0 million from $116.7 million, because of lower print advertising revenues.