NEW YORK TIMES CO

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

CONDENSED CONSOLIDATED BALANCE SHEETS-(Continued)

(In thousands, except share and per share data)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(1) First quarter 2023 was recast to conform to the current presentation of total operating costs.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(In thousands)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Quarters Ended March 31, 2024 and March 31, 2023

(In thousands, except share data)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

NOTE 1. BASIS OF PRESENTATION

In the opinion of management of The New York Times Company (the “Company”), the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of March 31, 2024, and December 31, 2023, and the results of operations, changes in stockholders’ equity and cash flows of the Company for the periods ended March 31, 2024, and March 31, 2023. The Company and its consolidated subsidiaries are referred to collectively as “we,” “us” or “our.” All adjustments necessary for a fair presentation have been included and are of a normal and recurring nature. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements were prepared in accordance with the requirements of the United States Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted from these interim financial statements. These financial statements, therefore, should be read in conjunction with the Consolidated Financial Statements and related Notes included in our Annual Report on Form 10-K for the year ended December 31, 2023. Due to the seasonal nature of our business, operating results for the interim periods are not necessarily indicative of a full year’s operations. The first quarter of 2024 includes an additional day compared with the first quarter of 2023 as a result of 2024 being a leap year.

The Company hastwo reportable segments: The New York Times Group (“NYTG”) and The Athletic.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our Condensed Consolidated Financial Statements. Actual results could differ from these estimates.

Reclassification

Beginning with the third quarter of 2023, we have updated our presentation of total operating costs to include operating items that are outside the ordinary course of our operations (“special items”). These items have been previously presented separate from operating costs and included in operating profit. We recast operating costs for the prior periods in order to present comparable financial results. There was no change to consolidated operating profit, net income or cash flows as a result of this change.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

As of March 31, 2024, our significant accounting policies, which are detailed in our Annual Report on Form 10-K for the year ended December 31, 2023, have not changed.

Recently Issued Accounting Pronouncements

The Company considers the applicability and impact of all recently issued accounting pronouncements. Recent accounting pronouncements not specifically identified in our disclosures are either not applicable to the Company or are not expected to have a material effect on our financial condition or results of operations.

NOTE 3. REVENUE

We generate revenues principally from subscriptions and advertising.

Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as The Athletic and our Cooking, Games and Wirecutter products), and single-copy and bulk sales of our print products. Subscription revenues are based on both the number of digital-only subscriptions and copies of the printed newspaper sold, and the rates charged to the respective customers.

Advertising revenue is generated principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video, and in print in the form of column-inch ads. Advertising revenue is generated primarily from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through open-market programmatic auctions run by third-party ad exchanges. Advertising revenue is primarily determined by the volume (e.g., impressions), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements (including direct-sold programmatic advertising). Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Other digital advertising includes open-market programmatic advertising and creative services fees. Print advertising includes revenue from column-inch ads and classified advertising as well as preprinted advertising, also known as freestanding inserts. NYTG has revenue from all categories discussed above. The Athletic has revenue from direct-sold display advertising (including direct-sold programmatic advertising), podcast, email and video advertisements and open-market programmatic advertising. There is no print advertising revenue generated from The Athletic.

Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the New York headquarters building located at 620 Eighth Avenue, New York, New York (the “Company Headquarters”), retail commerce, our live events business, our student subscription sponsorship program and books, television and film.

Subscription, advertising and other revenues were as follows:

(1) Other revenues include building rental revenue, which is not under the scope of Revenue from Contracts with Customers (Topic 606). Building rental revenue was $6.7 million and $7.3 million for the first quarters of 2024 and 2023, respectively.

The following table summarizes digital and print subscription revenues, which are components of subscription revenues above, for the quarters ended March 31, 2024, and March 31, 2023:

The following table summarizes digital and print advertising revenues, which are components of advertising revenues above, for the quarters ended March 31, 2024, and March 31, 2023:

Performance Obligations

We have remaining performance obligations related to digital archive and other licensing and certain advertising contracts. As of March 31, 2024, the aggregate amount of the transaction price allocated to the remaining performance obligations for contracts with a duration greater than one year was approximately $183 million. The Company will recognize this revenue as performance obligations are satisfied. We expect that approximately $76 million, $76 million and $31 million will be recognized in the remainder of 2024, 2025 and thereafter through 2028, respectively.

Unexpired Subscriptions

Payments for subscriptions are typically due upfront and the revenue is recognized ratably over the subscription period. The proceeds are recorded within Unexpired subscriptions revenue in the Condensed Consolidated Balance Sheet. Total unexpired subscriptions as of December 31, 2023, were $172.8 million, of which approximately $110 million was recognized as revenues during the three months ended March 31, 2024.

Contract Assets

As of March 31, 2024, and December 31, 2023, the Company had $3.3 million and $3.5 million, respectively, in contract assets recorded in the Condensed Consolidated Balance Sheets related to digital archiving licensing revenue. The contract asset is reclassified to Accounts receivable when the customer is invoiced based on the contractual billing schedule.

NOTE 4. MARKETABLE SECURITIES

The Company accounts for its marketable securities as available for sale (“AFS”). Pre-tax net unrealized losses in Accumulated other comprehensive income (“AOCI”) were $1.4 million and $0.7 million as of March 31, 2024, and December 31, 2023, respectively.

The following tables present the amortized cost, gross unrealized gains and losses, and fair market value of our AFS securities as of March 31, 2024, and December 31, 2023:

The following tables represent the AFS securities as of March 31, 2024, and December 31, 2023, that were in an unrealized loss position for which an allowance for credit losses has not been recorded, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:

We assess AFS securities on a quarterly basis or more often if a potential loss-triggering event occurs.

As of March 31, 2024, and December 31, 2023, we did not intend to sell and it was not likely that we would be required to sell these investments before recovery of their amortized cost basis, which may be at maturity. Unrealized losses related to these investments are primarily due to interest rate fluctuations as opposed to changes in credit quality. Therefore, as of March 31, 2024, and December 31, 2023, we have recognizedno losses or allowance for credit losses related to AFS securities.

As of March 31, 2024, our short-term and long-term marketable securities had remaining maturities of less thanone month to 12 months and 13 months to 26 months, respectively. See Note 8 for more information regarding the fair value of our marketable securities.

NOTE 5. GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill as of March 31, 2024, and since December 31, 2022, were as follows:

The foreign currency translation line item reflects changes in goodwill resulting from fluctuating exchange rates related to the consolidation of certain international subsidiaries.

As of March 31, 2024 and December 31, 2023, the gross book value and accumulated amortization of the intangible assets with definite lives were as follows:

Amortization expense for intangible assets included in Depreciation and amortization in our Condensed Consolidated Statements of Operations was $7.1 million and $7.3 million for the first quarters of 2024 and 2023, respectively. The estimated aggregate amortization expense for the remainder of 2024 and each of the following fiscal years ending December 31 is presented below:

The aggregate carrying amount of intangible assets of $278.4 million, which includes an indefinite-lived intangible of $2.5 million, is included in Intangible assets, net in our Condensed Consolidated Balance Sheet as of March 31, 2024.

NOTE 6. INVESTMENTS

Non-Marketable Equity Securities

Our non-marketable equity securities are investments in privately held companies/funds without readily determinable market values. Gains and losses on non-marketable securities revalued, sold or impaired are recognized in Interest income and other, netin our Condensed Consolidated Statements of Operations.

As of March 31, 2024, and December 31, 2023, non-marketable equity securities included in Miscellaneous assets in our Condensed Consolidated Balance Sheets had a carrying value of $29.7 million.

NOTE 7. OTHER

Capitalized Computer Software Costs

Amortization of capitalized computer software costs included in Depreciation and amortization in our Condensed Consolidated Statements of Operations was $2.0 million and $1.7 million for the first quarters of 2024 and 2023, respectively.

Interest income and other, net

Interest income and other, net, as shown in the accompanying Condensed Consolidated Statements of Operations, was as follows:

Restricted Cash

A reconciliation of cash, cash equivalents and restricted cash as of March 31, 2024, and March 31, 2023, from the Condensed Consolidated Balance Sheets to the Condensed Consolidated Statements of Cash Flows is as follows:

Substantially all of the amount included in restricted cash is set aside to collateralize workers’ compensation obligations.

Revolving Credit Facility

On July 27, 2022, the Company entered into an amendment and restatement of its previous credit facility that, among other changes, increased the committed amount to $350.0 million and extended the maturity date to July 27, 2027 (as amended and restated, the “Credit Facility”). Certain of the Company’s domestic subsidiaries have guaranteed the Company’s obligations under the Credit Facility. Borrowings under the Credit Facility bear interest at specified rates based on our utilization and consolidated leverage ratio. The Credit Facility contains various customary affirmative and negative covenants. In addition, the Company is obligated to pay a quarterly unused commitment fee at an annual rate of 0.20%.

As of March 31, 2024, and December 31, 2023, there wereno borrowings and approximately $0.6 million in outstanding letters of credit, with the remaining committed amount available. As of March 31, 2024, the Company was in compliance with the financial covenants contained in the Credit Facility.

Severance Costs

We recognized $4.4 million and $3.8 million in severance costs for the first quarters of 2024 and 2023, respectively. These costs are recorded in General and administrative costs in our Condensed Consolidated Statements of Operations.

We had a severance liability of $7.5 million and $4.4 million included in Accrued expenses and other in our Condensed Consolidated Balance Sheets as of March 31, 2024, and December 31, 2023, respectively.

Generative AI Litigation Costs

In the first quarter of 2024, the Company recorded $1.0 million of pre-tax litigation-related costs in connection with a lawsuit against Microsoft Corporation (“Microsoft”) and Open AI Inc. and various of its corporate affiliates (collectively, “OpenAI”), alleging unlawful and unauthorized copying and use of the Company’s journalism and other content in connection with their development of generative artificial intelligence products (“Generative AI Litigation Costs”). See Note 14 for additional information.

NOTE 8. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received upon the sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The transaction would be in the principal or most advantageous market for the asset or liability, based on assumptions that a market participant would use in pricing the asset or liability. The fair value hierarchy consists of three levels:

Level 1–quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date;

Level 2–inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3–unobservable inputs for the asset or liability.

Assets/Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024, and December 31, 2023:

(1) We classified these investments as Level 2 since the fair value is based on market observable inputs for investments with similar terms and maturities.

(2) The deferred compensation liability, included in Other liabilities—other in our Condensed Consolidated Balance Sheets, consists of deferrals under The New York Times Company Deferred Executive Compensation Plan (the “DEC”), a frozen plan that enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. Participation in the DEC was frozen effective December 31, 2015.

(3)The Company invests the assets associated with the deferred compensation liability in life insurance products. Our investments in life insurance products are included in Miscellaneous assets in our Condensed Consolidated Balance Sheets, and were $53.8 million as of March 31, 2024, and $52.3 million as of December 31, 2023. The fair value of these assets is measured using the net asset value per share (or its equivalent) and has not been classified in the fair value hierarchy.

(4) The remaining contingent consideration balances (as discussed below) are included in Accrued expenses and other, for the current portion of the liability, and Other non-current liabilities, for the long-term portion of the liability, in our Condensed Consolidated Balance Sheets.

Level 3 Liabilities

The contingent consideration liability is related to the 2020 acquisition of substantially all the assets and certain liabilities of Serial Productions, LLC and represents contingent payments based on the achievement of certain operational targets, as defined in the acquisition agreement, over thefive years following the acquisition. The Company estimated the fair value using a probability-weighted discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to be made regarding probabilities assigned to operational targets and the discount rate. As the fair value is based on significant unobservable inputs, this is a Level 3 liability.

The following table presents changes in the contingent consideration balances for the quarters ended March 31, 2024, and March 31, 2023:

NOTE 9. PENSION AND OTHER POSTRETIREMENT BENEFITS

Pension

Single-Employer Plans

We maintain The New York Times Companies Pension Plan, a frozen single-employer defined benefit pension plan. The Company also jointly sponsors a defined benefit plan with The NewsGuild of New York known as the Guild-Times Adjustable Pension Plan (the “APP”) that continues to accrue active benefits.

We also have a foreign-based pension plan for certain employees (the “foreign plan”). The information for the foreign plan is combined with the information for U.S. non-qualified plans. The benefit obligation of the foreign plan is immaterial to our total benefit obligation.

The components of net periodic pension (income)/cost were as follows:

During the first quarters of 2024 and 2023, we made pension contributions of $3.4 million and $2.0 million, respectively, to the APP. We expect to make contractual contributions in 2024 of approximately $12 million, which more than satisfy minimum funding requirements.

Other Postretirement Benefits

The components of net periodic postretirement benefit cost were as follows:

NOTE 10. INCOME TAXES

The Company had income tax expense of $15.2 million and $9.4 million in the first quarters of 2024 and 2023, respectively. The Company’s effective tax rates were 27.4% and 29.7% for the first quarters of 2024 and 2023, respectively. The increase in income tax expense was primarily due to higher pre-tax income in the first quarter of 2024. The decrease in the effective tax rate was primarily due to non-deductible items having a lower impact on the rate due to higher pre-tax income in the first quarter of 2024.

The Organization for Economic Co-operation and Development enacted model rules for a new global minimum tax framework, also known as Pillar Two, and certain governments globally have enacted these rules effective January 1, 2024. We are monitoring this development and evaluating its potential impact on our tax rate and eligibility to qualify for the safe harbor provisions and currently do not expect a material impact from the Pillar Two income tax rules.

NOTE 11. EARNINGS PER SHARE

Earnings per share is computed using both basic shares and diluted shares. The difference between basic and diluted shares is that diluted shares include the dilutive effect of the assumed exercise of outstanding securities. Our stock-settled long-term performance awards and restricted stock units could have a significant impact on diluted shares. The difference between basic and diluted shares was approximately 1.0 million and 0.4 million in the first quarters of 2024 and 2023, respectively, and resulted primarily from the dilutive effect of our stock-based awards.

Securities that could potentially be dilutive are excluded from the computation of diluted earnings per share when a loss from continuing operations exists or when the exercise price exceeds the market value of our Class A Common Stock because their inclusion would result in an anti-dilutive effect on per share amounts.

There wereno restricted stock units excluded from the computation of diluted earnings per share in the first quarter of 2024. There were approximately 1.1 million restricted stock units excluded from the computation of diluted earnings per share in the first quarter of 2023, because they were anti-dilutive. There wereno anti-dilutive stock-settled long-term performance awards excluded from the computation of diluted earnings per share in the first quarters of 2024 and 2023.

NOTE 12. SUPPLEMENTAL STOCKHOLDERS’ EQUITY INFORMATION

Share Repurchases

In February 2022, the Board of Directors approved a $150.0 million Class A share repurchase program that replaced the previous program, which was approved in 2015. In February 2023, in addition to the remaining 2022 authorization, the Board of Directors approved a $250.0 million Class A share repurchase program. The authorizations provide that shares of Class A Common Stock may be purchased from time to time as market conditions warrant, through open-market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares to offset the impact of dilution from our equity compensation program and to return capital to our stockholders. There is no expiration date with respect to these authorizations.

As of March 31, 2024, repurchases under these authorizations totaled approximately $182.0 million (excluding commissions and excise taxes), fully utilizing the 2022 authorization and leaving approximately $218.0 million remaining under the 2023 authorization. During the three months ended March 31, 2024, repurchases under these authorizations totaled approximately $32.4 million.

Accumulated Other Comprehensive Income

The following table summarizes the changes in AOCI by component as of March 31, 2024:

The following table summarizes the reclassifications from AOCI for the three months ended March 31, 2024:

Stock-based Compensation Expense

Total stock-based compensation expense included in the Condensed Consolidated Statements of Operations is as follows:

NOTE 13. SEGMENT INFORMATION

The Company identifies a business as an operating segment if: (i) it engages in business activities from which it may earn revenues and incur expenses; (ii) its operating results are regularly reviewed by the Company’s President and Chief Executive Officer (who is the Company’s CODM) to make decisions about resources to be allocated to the segment and assess its performance; and (iii) it has available discrete financial information.

The Company hastwo reportable segments: NYTG and The Athletic. These segments are evaluated regularly by the Company’s CODM in assessing performance and allocating resources. Management uses adjusted operating profit (loss) by segment in assessing performance and allocating resources. Adjusted operating profit is defined as operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items. Adjusted operating profit for NYTG and The Athletic is presented below, along with a reconciliation to consolidated income before taxes. Asset information by segment is not a measure of performance used by the Company’s CODM. Accordingly, we have not disclosed asset information by segment.

Subscription revenues from and expenses associated with our digital subscription package (or “bundle”) are allocated to NYTG and The Athletic.

Prior to April 1, 2023, we allocated bundle revenues first to our digital news product based on its standalone list price and then the remaining bundle revenues were allocated to the other products in the bundle, including The Athletic, based on their relative standalone list prices. Starting April 1, 2023, we allocate 10% of bundle revenues to The Athletic based on management’s view of The Athletic’s relative value to the bundle, which is derived based on analysis of various metrics, and allocate the remaining bundle revenues to NYTG.

Prior to April 1, 2023, we allocated to NYTG and The Athletic direct variable expenses associated with the bundle, which include credit card fees, third party fees and sales taxes, based on a historical actual percentage of these costs to bundle revenues. Starting April 1, 2023, we allocate 10% of product development, marketing and subscriber servicing expenses (including the direct variable expenses referenced above) associated with the bundle to The Athletic, and the remaining costs are allocated to NYTG, in each case, in line with the revenues allocations.

For comparison purposes, the Company has recast segment results for the first quarter of 2023 to reflect the updated allocation methodology.

The following tables present segment information:

NOTE 14. CONTINGENCIES

Legal Proceedings

We are involved in various legal actions incidental to our business that are now pending against us. These actions generally assert damages claims that are greatly in excess of the amount, if any, that we would be liable to pay if we lost or settled the cases. We record a liability for legal claims when a loss is probable and the amount can be reasonably estimated. Although the Company cannot predict the outcome of these matters, no amount of loss in excess of recorded amounts as of March 31, 2024, is believed to be reasonably possible.

On December 27, 2023, we filed a lawsuit against Microsoft and OpenAI in the United States District Court for the Southern District of New York, alleging copyright infringement, unfair competition, trademark dilution and violations of the Digital Millennium Copyright Act, related to their unlawful and unauthorized copying and use of our journalism and other content. We are seeking monetary relief, injunctive relief preventing Microsoft and OpenAI from continuing their unlawful, unfair and infringing conduct and other relief. We intend to vigorously pursue all of our legal remedies in this litigation, but there is no guarantee that we will be successful in our efforts.