UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 1, 2007

Commission file number  1-5837

THE NEW YORK TIMES COMPANY

(Exact name of registrant as specified in its charter)

 

229 WEST 43RD STREET, NEW YORK, NEW YORK

(Address of principal executive offices)

10036

(Zip Code)

Registrant’s telephone number, including area code 212-556-1234

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o  No  x.

Number of shares of each class of the registrant’s common stock outstanding as of May 4, 2007 (exclusive of treasury shares):

Class A Common Stock	143,081,387	shares
Class B Common Stock	832,572	shares

 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
THE NEW YORK TIMES COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)

		For the Quarters Ended
		April 1, 2007			March 26, 2006
		(13 weeks)
Revenues
Advertising		$	504,915		$	522,685
Circulation		222,454			220,281
Other		58,651			56,231
Total revenues		786,020			799,197
Operating Costs
Production costs
Raw materials		74,896			81,937
Wages and benefits		165,560			166,381
Other		104,569			108,428
Total production costs		345,025			356,746
Selling, general and administrative costs		342,061			346,510
Depreciation and amortization		44,437			35,476
Total operating costs		731,523			738,732
Operating profit		54,497			60,465
Net (loss)/income from joint ventures		(2,153		)	1,967
Interest expense, net		11,328			12,524
Income from continuing operations before income taxes and minority interest		41,016			49,908
Income taxes		20,899			19,475
Minority interest in net loss of subsidiaries		9			93
Income from continuing operations		20,126			30,526
Discontinued operations, net of income taxes — Broadcast Media Group		3,776			1,886
Net income		$	23,902		$	32,412
Average number of common shares outstanding
Basic		143,905			145,165
Diluted		144,077			145,361
Basic earnings per share:
Income from continuing operations		$	.14		$	.21
Discontinued operations, net of income taxes		.03			.01
Net income		$	.17		$	.22
Diluted earnings per share:
Income from continuing operations		$	.14		$	.21
Discontinued operations, net of income taxes		.03			.01
Net income		$	.17		$	.22
Dividends per share		$	.175		$	.165

 

See Notes to Condensed Consolidated Financial Statements.

 

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

		April 1, 2007			December 31, 2006
ASSETS		(Unaudited)
Current Assets
Cash and cash equivalents		$	54,030		$	72,360
Accounts receivable-net		368,156			402,639
Inventories
Newsprint and magazine paper		26,147			32,594
Work-in-process and other		4,683			4,102
Total inventories		30,830			36,696
Deferred income taxes		92,563			73,729
Assets held for sale		357,761			357,028
Other current assets		108,630			242,591
Total current assets		1,011,970			1,185,043
Other Assets
Investments in joint ventures		142,278			145,125
Property, plant and equipment (less accumulated depreciation and amortization of       $1,334,002 in 2007 and $1,297,546 in 2006)		1,447,613			1,375,365
Intangible assets acquired
Goodwill		653,763			650,920
Other intangible assets acquired (less accumulated amortization of $221,272 in 2007 and $217,972 in 2006)		130,375			133,448
Deferred income taxes		162,584			125,681
Miscellaneous assets		251,024			240,346
TOTAL ASSETS		$	3,799,607		$	3,855,928

 

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

		April 1, 2007			December 31, 2006
LIABILITIES AND STOCKHOLDERS’ EQUITY		(Unaudited)
Current Liabilities
Commercial paper outstanding		$	492,550		$	422,025
Accounts payable		217,576			242,528
Accrued payroll and other related liabilities		96,844			121,240
Accrued expenses		177,531			200,030
Unexpired subscriptions		86,370			83,298
Current portion of long-term debt and capital lease obligations		104,558			104,168
Construction loan		—			124,705
Total current liabilities		1,175,429			1,297,994
Other Liabilities
Long-term debt		720,956			720,790
Capital lease obligations		73,572			74,240
Pension benefits obligation		387,651			384,277
Postretirement benefits obligation		258,450			256,740
Other		379,351			296,078
Total other liabilities		1,819,980			1,732,125
Minority Interest		5,958			5,967
Stockholders’ Equity
Common stock of $.10 par value:
Class A — authorized 300,000,000 shares; issued: 2007 — 148,038,220; 2006 — 148,026,952 (including treasury shares: 2007 — 4,968,590; 2006 — 5,000,000)		14,804			14,804
Class B — convertible — authorized and issued shares: 2007 — 832,572; 2006 — 832,592		82			82
Additional paid-in capital		3,958			—
Retained earnings		1,085,236			1,111,006
Common stock held in treasury, at cost		(158,162		)	(158,886		)
Accumulated other comprehensive loss, net of income taxes		(147,678		)	(147,164		)
Total stockholders’ equity		798,240			819,842
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	3,799,607		$	3,855,928

 

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)

		For the Quarters Ended
		April 1, 2007			March 26, 2006
		(13 weeks)
OPERATING ACTIVITIES
Net cash provided by operating activities		$	34,899		$	76,425
INVESTING ACTIVITIES
Capital expenditures		(112,664		)	(65,168		)
Acquisition		(1,784		)	—
Other investing (payments)/proceeds–net		(7,226		)	1,810
Net cash used in investing activities		(121,674		)	(63,358		)
FINANCING ACTIVITIES
Commercial paper borrowings–net		70,525			10,956
Long-term obligations:
Reductions		(372		)	(405		)
Capital shares:
Issuances		254			2,501
Repurchases		(745		)	(7,092		)
Excess tax benefits from stock-based awards		30			472
Dividends paid to stockholders		(25,315		)	(24,047		)
Other financing proceeds/(payments)–net		23,979			(267		)
Net cash provided by/(used in) financing activities		68,356			(17,882		)
Decrease in cash and cash equivalents		(18,419		)	(4,815		)
Effect of exchange rate changes on cash and cash equivalents		89			72
Cash and cash equivalents at the beginning of the year		72,360			44,927
Cash and cash equivalents at the end of the quarter		$	54,030		$	40,184

 

SUPPLEMENTAL DATA

 

Acquisition

·                     In March 2007, the Company acquired UCompareHealthCare.com for $2.3 million, The Company paid approximately $1.8 million in the first quarter of 2007 and withheld the remaining $0.5 million for a one-year indemnification period.

 

Other

·                     Financing activities – Other financing proceeds in the first quarter of 2007 include cash received from the Company’s development partner for repayment of the Company’s loan receivable.

 

Non-Cash

·                     As of December 31, 2006, approximately $125 million was outstanding under the Company’s development partner’s construction loan.  In January 2007, the Company was released as a co-borrower, and therefore the receivable and the construction loan were reversed and are not included in the Company’s Condensed Consolidated Balance Sheet as of April 1, 2007.  See Note 12 for additional information related to the Company’s new headquarters.

 

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1.                         GENERAL AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

In the opinion of The New York Times Company’s (the “Company”) management, the Condensed Consolidated Financial Statements present fairly the financial position of the Company as of April 1, 2007, and December 31, 2006, and the results of operations and cash flows of the Company for the periods ended April 1, 2007 and March 26, 2006.  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 Company’s Condensed Consolidated Financial Statements and related Notes should be read in conjunction with the Consolidated Financial Statements and related Notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006.  Due to the seasonal nature of the Company’s business, operating results for the interim periods are not necessarily indicative of a full year’s operations.

As of April 1, 2007, the Company’s significant accounting policies, which are detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, have not changed materially, except for the adoption of Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB statement No.109 (“FIN 48”) (see Note 5).

Certain reclassifications have been made to the prior periods to conform to classifications used as of and for the period ended April 1, 2007, such as presenting depreciation and amortization separately from production and selling, general and administrative costs.  The fiscal periods included herein comprise 13 weeks for the first quarter periods.

Recent Accounting Pronouncements

In February 2007, FASB issued Statement of Financial Accounting Standards (“FAS”) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115 (“FAS 159”).  FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value.  FAS 159 is effective for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact of adopting FAS 159 on its financial statements.

In September 2006, FASB issued FAS No. 157, Fair Value Measurements (“FAS 157”).  FAS 157 establishes a common definition for fair value under accounting principles generally accepted in the United States of America (“GAAP”), establishes a framework for measuring fair value and expands disclosure requirements about such fair value measurements.  FAS 157 is effective for fiscal years beginning after November 15, 2007.  The Company is currently evaluating the impact of adopting FAS 157 on its financial statements.

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In September 2006, FASB ratified the Emerging Issues Task Force (“EITF”) conclusion under EITF No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements (“EITF 06-4”).  Diversity in practice exists in accounting for the deferred compensation and postretirement aspects of endorsement split-dollar life insurance arrangements.  EITF 06-4 was issued to clarify the accounting and requires employers to recognize a liability for future benefits in accordance with FAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions (if, in substance, a postretirement benefit plan exists), or Accounting Principles Board Opinion No. 12, Omnibus Opinion—1967 (if the arrangement is, in substance, an individual deferred compensation contract) based on the substantive agreement with the employee.

EITF 06-4 is effective for fiscal years beginning after December 15, 2007, with earlier application permitted.  The effects of adopting EITF 06-4 can be recorded either as (i) a change in accounting principle through a cumulative-effect adjustment to retained earnings or to other components of equity as of the beginning of the year of adoption, or (ii) a change in accounting principle through retrospective application to all prior periods.  The Company is currently evaluating the impact of adopting EITF 06-4 on its financial statements.

NOTE 2.                         DISCONTINUED OPERATIONS

In January 2007, the Company entered into an agreement to sell its Broadcast Media Group, which consists of nine network-affiliated television stations, their related Web sites and digital operating center, for $575 million (see Note 13).  This decision was a result of the Company’s ongoing analysis of its business portfolio and will allow the Company to place an even greater emphasis on developing and integrating its print and growing digital resources.

In accordance with the provisions of FAS No. 144, Accounting for Costs Associated with Exit or Disposal Activities, the Broadcast Media Group’s results of operations are presented as discontinued operations, and certain assets and liabilities are classified as held for sale for all periods presented.  The results of operations presented as discontinued operations and the assets and liabilities classified as held for sale are summarized below.

		For the Quarters Ended
(In thousands)		April 1, 2007			March 26, 2006
Revenues		$	32,904		$	31,954
Total operating costs		26,403			28,757
Pre-tax income		6,501			3,197
Income taxes		2,725			1,311
Discontinued operations, net of income taxes		$	3,776		$	1,886

 

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(In thousands)		April 1, 2007			December 31, 2006
Property, plant & equipment, net		$	65,057		$	64,309
Goodwill		41,658			41,658
Other intangible assets, net		234,105			234,105
Other assets		16,941			16,956
Assets held for sale		357,761			357,028
Program rights liability(a)		13,138			14,931
Net assets held for sale		$	344,623		$	342,097

(a)           Included in “Accounts payable” in the Condensed Consolidated Balance Sheets.

NOTE 3.                         GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill is the excess of cost over the fair market value of tangible and other intangible assets acquired.  Goodwill is not amortized but tested for impairment annually or if certain circumstances indicate a possible impairment may exist, in accordance with FAS No. 142, Goodwill and Other Intangible Assets.

Other intangible assets acquired consist primarily of mastheads on various acquired properties, customer lists, as well as other assets.  Other intangible assets acquired that have indefinite lives (mastheads) are not amortized but tested for impairment annually or if certain circumstances indicate a possible impairment may exist.  Certain other intangible assets acquired (customer lists and other assets) are amortized over their estimated useful lives.

The Company performs its annual impairment testing in the fourth quarter of its fiscal year.

The changes in the carrying amount of goodwill were as follows:

(In thousands)		News Media Group			About.com			Total
Balance as of December 31, 2006		$	306,564		$	344,356		$	650,920
Goodwill acquired during year		—			2,284			2,284
Foreign currency translation		559			—			559
Balance as of April 1, 2007		$	307,123		$	346,640		$	653,763

 

The Company acquired UCompareHealthCare.com (“UCHC”), a site that provides consumers with access to quality ratings and related health information, on March 27, 2007, for $2.3 million.  The Company paid approximately $1.8 million in the first quarter of 2007 and withheld the remaining $0.5 million for a one-year indemnification period.  The Condensed Consolidated Financial Statements include the operating results of this acquisition subsequent to the date of acquisition.  UCHC is now part of About.com.

Based on a preliminary valuation of UCHC, the Company has allocated the excess of the purchase price over the carrying value of the net assets acquired of $2.3 million to goodwill.  The net assets acquired were nominal.  The goodwill for this acquisition is tax-deductible.  The preliminary purchase price allocation for the UCHC acquisition is subject to adjustment when additional information concerning asset and liability valuations is obtained.  The final asset and liability fair values may differ from those included in the Company’s Condensed Consolidated Balance Sheet as of April 1, 2007; however, the changes are not expected to have a material effect on the Company’s Condensed Consolidated Financial Statements.

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Other intangible assets acquired were as follows:

		April 1, 2007									December 31, 2006
(In thousands)		Gross Carrying Amount			Accumulated Amortization			Net			Gross Carrying Amount			Accumulated Amortization			Net
Amortized other intangible assets:
Customer lists		$	220,942		$	(197,150	)	$	23,792		$	220,935		$	(196,268	)	$	24,667
Other		63,802			(24,122		)	39,680			63,777			(21,704		)	42,073
Total		284,744			(221,272		)	63,472			284,712			(217,972		)	66,740
Unamortized other intangible assets:
Newspaper mastheads		66,903			—			66,903			66,708			—			66,708
Total other intangible assets acquired		$	351,647		$	(221,272	)	$	130,375		$	351,420		$	(217,972	)	$	133,448

 

As of April 1, 2007, the remaining weighted-average amortization period is eight years for customer lists and seven years for other amortizable intangible assets acquired included in the table above.

Amortization expense related to other intangible assets acquired that are subject to amortization was approximately $3 million in the first quarter of 2007, and is expected to be approximately $13 million for the fiscal year 2007.  Estimated annual amortization expense for the next five years related to these intangible assets is expected to be as follows:

 

NOTE 4.                         DEBT OBLIGATIONS

The Company’s total debt, including commercial paper and capital lease obligations, was $1.4 billion as of April 1, 2007.  Until January 2007, the Company was a co-borrower under a $320 million non-recourse construction loan in connection with the construction of its new headquarters.  The Company did not draw down on the construction loan, which is being used by its development partner.  However, as a co-borrower, the Company was required to record the amount outstanding of the construction loan on its financial statements.  The Company also recorded a receivable, due from its development partner, for the same amount outstanding under the construction loan.  As of December 31, 2006, approximately $125 million was outstanding under the construction loan and recorded as a receivable included in “Other current assets” in the Condensed Consolidated Balance Sheet.  In January 2007, with the Company’s release as a co-borrower, the receivable and the construction loan were reversed and are not included in the Company’s Condensed Consolidated Balance Sheet as of April 1, 2007.  See Note 12 for additional information related to the Company’s new headquarters.

The Company’s $725.0 million commercial paper program is supported by the revolving credit agreements described below.  Commercial paper issued by the Company is unsecured and can have maturities of up to 270 days.  The Company had $492.6 million in commercial paper outstanding as of April 1, 2007, with an annual weighted-average interest rate of 5.4% and an average of 17 days to maturity from original issuance.

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The primary purpose of the Company’s $800.0 million revolving credit agreements is to support its commercial paper program.  In addition, these revolving credit agreements provide a facility for the issuance of letters of credit.  Of the total $800.0 million available under the two revolving credit agreements ($400.0 million credit agreement maturing in May 2009 and $400.0 million credit agreement maturing in June 2011), the Company has issued letters of credit of approximately $24 million.  The remaining balance of approximately $776 million supports the Company’s commercial paper program.  There were no borrowings outstanding under the revolving credit agreements as of April 1, 2007 and December 31, 2006.

Any borrowings under the revolving credit agreements bear interest at specified margins based on the Company’s credit rating, over various floating rates selected by the Company.

The revolving credit agreements each contain a covenant that requires a specified level of stockholders’ equity (as defined in the agreements).  As of April 1, 2007, the amount of stockholders’ equity in excess of the required levels was approximately $597 million.

“Interest expense, net” in the Company’s Condensed Consolidated Statements of Income was as follows:

 

NOTE 5.                         INCOME TAXES

The Company’s effective income tax rate increased to 51% in the first quarter of 2007 compared with 39% in the first quarter of 2006.  The increase was primarily due to a net tax adjustment in the first quarter of 2007 that resulted in additional tax expense of $4.5 million, or an 11% increase in the effective income tax rate.  The tax adjustment was primarily due to the application of a change in New York state law (effective January 1, 2007) that required a revaluation of the existing deferred tax balances.  Excluding this tax adjustment, the effective income tax rate in the first quarter of 2007 was consistent with the rate in the first quarter of 2006.

On January 1, 2007, the Company adopted FIN 48.  The adoption of FIN 48 resulted in a cumulative effect adjustment of approximately $24 million recorded as a reduction to the beginning balance of retained earnings.  After the adoption of FIN 48, the total amount of unrecognized tax benefits on January 1, 2007, was approximately $108 million.  Of this amount, the total amount of unrecognized tax benefits that would, if recognized, affect the effective income tax rate was approximately $57 million.

The Company also recognizes accrued interest expense and penalties related to unrecognized tax benefits as additional tax expense, which is consistent with prior periods.  After the adoption of FIN 48, the total amount of accrued interest and penalties on January 1, 2007, is approximately $25 million.

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With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years prior to 2000.  Management believes that its accrual for tax liabilities is adequate for all open audit years.  This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events.

It is reasonably possible that U.S. federal, state and local, and non-U.S. tax examinations will be settled during the next twelve months.  If any of these tax audit settlements do occur within the next twelve months, the Company would make any necessary adjustments to the accrual for uncertain tax benefits.  Until formal resolutions are reached between the Company and the tax authorities, the determination of a possible audit settlement range with respect to the impact on uncertain tax benefits is not practicable.  On the basis of present information, it is the opinion of the Company’s management that any assessments resulting from the current audits will not have a material adverse effect on the Company’s consolidated financial statements.

NOTE 6.                         COMMON STOCK

During the first quarter of 2007, the Company repurchased 29,300 shares of its Class A Common Stock under its stock repurchase program at a cost of approximately $0.7 million.  The average price of these repurchases was $24.42 per share.

On March 22, 2007, the Company’s Board of Directors authorized a $.23 per share dividend on the Company’s Class A and Class B Common Stock, effective with the June 2007 dividend, representing a 31% increase from the prior quarterly dividend of $.175 per share.

NOTE 7.                         PENSION AND POSTRETIREMENT BENEFITS

Pension

The Company sponsors several pension plans (qualified funded plans and non-qualified unfunded plans) and makes contributions to several others, in connection with collective bargaining agreements, that are considered multi-employer pension plans.  These plans cover substantially all employees.

The components of net periodic pension cost of all Company-sponsored pension plans were as follows:

 

Although the Company does not have any quarterly funding requirements in 2007 (under the Employee Retirement Income Security Act of 1974, as amended, and Internal Revenue Code requirements), the Company will make contractual funding contributions of approximately $13 million (approximately $3 million was made in the

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first quarter) in connection with The New York Times Newspaper Guild pension plan.  The Company may elect to make additional contributions to its other pension plans.  The amount of these contributions, if any, would be based on the results of the January 1, 2007, valuation, market performance and interest rates in 2007 as well as other factors.

Postretirement Benefits

The Company provides health and life insurance benefits to retired employees (and their eligible dependents) who are not covered by any collective bargaining agreements if the employees meet specified age and service requirements.  In addition, the Company contributes to a postretirement plan under the provisions of a collective bargaining agreement.

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

 

NOTE 8.                         OTHER

Staff Reductions

The Company recognized staff reduction charges of $7.8 million in the first quarter of 2007 and $9.4 million in the first quarter of 2006.  Most of the charges in 2007 and 2006 were recognized at the News Media Group.  These charges are recorded in “Selling, general and administrative costs” in the Company’s Condensed Consolidated Statements of Income.  As of April 1, 2007, the Company had a staff reduction liability of approximately $13.3 million included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheet.

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NOTE 9.                         EARNINGS PER SHARE

Basic and diluted earnings per share have been computed as follows:

 

The difference between basic and diluted shares is primarily due to the assumed exercise of stock options included in the diluted earnings per share computation.

Stock options with exercise prices that exceeded the average fair market value of the Company’s Common Stock had an antidilutive effect and, therefore, were excluded from the computation of diluted earnings per share.  Approximately 32 million stock options with exercise prices ranging from $23.83 to $48.54 were excluded from the computation in the first quarter of 2007 and approximately 31 million stock options with exercise prices ranging from $27.45 to $48.54 were excluded from the computation in the first quarter of 2006.

NOTE 10.                  COMPREHENSIVE INCOME

Comprehensive income was as follows:

 

The “Accumulated other comprehensive loss, net of income taxes” in the Company’s Condensed Consolidated Balance Sheets was net of a deferred income tax benefit of approximately $148 million as of April 1, 2007 and approximately $152 million as of December 31, 2006.

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NOTE 11.                  SEGMENT STATEMENTS OF INCOME

The Company’s reportable segments consist of the News Media Group and About.com.  These segments are evaluated regularly by key management in assessing performance and allocating resources.

Below is a description of the Company’s reportable segments:

News Media Group (consisting of The New York Times Media Group, which includes The New York Times (“The Times”), NYTimes.com, the International Herald Tribune and a New York City radio station; the New England Media Group, which includes The Boston Globe (the “Globe”), Boston.com and the Worcester Telegram & Gazette; and the Regional Media Group, which includes 14 daily newspapers and their related digital operations); and

About.com (an online consumer information provider).  The Company acquired UCHC in the first quarter of 2007 (see Note 3).  The Condensed Consolidated Financial Statements include the operating results of this acquisition subsequent to the date of acquisition.  UCHC is now part of About.com.

The Broadcast Media Group is now classified as a discontinued operation and is no longer included as a reportable segment (see Note 2).

 

NOTE 12.                  CONTINGENT LIABILITIES

New Headquarters Building

The Company is in the process of constructing a new headquarters building in New York City (the “Building”) which the Company expects to occupy in the second quarter of 2007.  In December 2001, a wholly owned subsidiary of the Company (“NYT”) and FC Lion LLC (a partnership between an affiliate of the Forest City Ratner Companies and an affiliate of ING Real Estate) became the sole members of The New York Times Building LLC (the “Building Partnership”), a partnership established for the purpose of constructing the Building.

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In August 2006, the Building was converted to a leasehold condominium, and NYT and FC Lion LLC each acquired ownership of its respective leasehold condominium units.  Also in August 2006, Forest City Ratner Companies purchased the ownership interest in FC Lion LLC of the ING Real Estate affiliate.  In turn, FC Lion LLC assigned its ownership interest in the Building Partnership and the FC Lion LLC condominium units to FC Eighth Ave., LLC.

In connection with the construction of the Building, the Building Partnership obtained a construction loan, secured by the Building.  In January 2007, the construction loan was amended to release NYT as a co-borrower and release NYT’s condominium units from the related lien.  The Company was also released from its obligation to make an extension loan.  The Company no longer includes the construction loan in its financial statements (see Note 4).

The Company’s actual and anticipated capital expenditures in connection with the Building, net of proceeds from the sale of its existing headquarters, including core and shell and interior construction costs, are detailed in the table below.

Capital Expenditures
(In millions)		NYT
2001-2006		$	434
2007		$	170-$190
Total		$	604-$624
Less: net sale proceeds(a)		$	106
Total, net of sale proceeds(b)		$	498-$518

(a)       Represents cash proceeds from the sale of the Company’s existing headquarters, net of income taxes and transaction costs.

(b)       Includes estimated capitalized interest and salaries in the range of $40 to $50 million.

See the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, for additional information regarding the Building.  In addition, during the first quarter of 2007, the Company leased five floors in its portion of the Building under a 15-year non-cancelable agreement.

Third-Party Guarantees

The Company has outstanding guarantees on behalf of a third party that provides circulation customer service, telemarketing and home-delivery services for The Times and the Globe (the “circulation servicer”), and on behalf of two third parties that provide printing and distribution services for The Times’s National Edition (the “National Edition printers”).  In accordance with GAAP, the contingent obligations related to these guarantees are not reflected in the Company’s Condensed Consolidated Balance Sheets as of April 1, 2007 and December 31, 2006.

The Company has guaranteed the payments under the circulation servicer’s credit facility and any miscellaneous costs related to any default thereunder (the “credit facility guarantee”).  As of April 1, 2007, the total amount of the credit facility guarantee was approximately $20 million and the amount outstanding under the credit facility was approximately $16 million.  On April 30, 2007, the credit facility was extended for another year and the amount available was reduced to $17.5 million.  The credit facility guarantee was made by the Company to

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allow the circulation servicer to obtain more favorable financing terms.  The circulation servicer has agreed to reimburse the Company for any amounts the Company pays under the credit facility guarantee and has granted the Company a security interest in all of its assets to secure repayment of any amounts the Company pays under the credit facility guarantee.

In addition, the Company has guaranteed the payments of two property leases of the circulation servicer and any miscellaneous costs related to any default thereunder (the “property lease guarantees”).  The total amount of the property lease guarantees was approximately $2 million as of April 1, 2007.  One property lease expires in June 2008 and the other property lease expires in May 2009.  The property lease guarantees were made by the Company to allow the circulation servicer to obtain space to conduct business.

The Company would have to perform the obligations of the circulation servicer under the credit facility and property lease guarantees if the circulation servicer defaulted under the terms of its credit facility or lease agreements.

The Company has guaranteed a portion of the payments of an equipment lease of a National Edition printer and any miscellaneous costs related to any default thereunder (the “equipment lease guarantee”).  The total amount of the equipment lease guarantee was approximately $2 million as of April 1, 2007.  The equipment lease expires in March 2011.  The Company made the equipment lease guarantee to allow the National Edition printer to obtain lower cost of lease financing.

The Company has also guaranteed certain debt of one of the two National Edition printers and any miscellaneous costs related to any default thereunder (the “debt guarantee”).  The total amount of the debt guarantee was approximately $6 million as of April 1, 2007.  The debt guarantee, which expires in May 2012, was made by the Company to allow the National Edition printer to obtain a lower cost of borrowing.

The Company has obtained a secured guarantee from a related party of the National Edition printer to repay the Company for any amounts that it would pay under the debt guarantee.  In addition, the Company has a security interest in the equipment that was purchased by the National Edition printer with the funds it received from its debt issuance, as well as other equipment and real property.

The Company would have to perform the obligations of the National Edition printers under the equipment lease and debt guarantees if the National Edition printers defaulted under the terms of their equipment leases or debt agreements.

Other

The Company also has letters of credit of approximately $24 million, which are required by insurance companies, to provide support for the Company’s workers’ compensation liability.  The workers’ compensation liability is included in the Company’s Condensed Consolidated Balance Sheet as of April 1, 2007.

There are various legal actions that have arisen in the ordinary course of business and are now pending against the Company.  These actions are generally for amounts greatly in excess of the payments, if any, that may be required to be made.  It is the opinion of management after reviewing these actions with legal counsel to the Company that the ultimate liability that might result from these actions would not have a material adverse effect on the Company’s Condensed Consolidated Financial Statements.

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NOTE 13.                  SUBSEQUENT EVENTS

Broadcast Media Group Sale

On May 7, 2007, the Company sold the Broadcast Media Group, consisting of nine network-affiliated television stations, their related Web sites and the digital operating center, for approximately $575 million.  The Company expects to recognize a pre-tax gain of approximately $190 to $195 million in the second quarter of 2007.

Acquisition of ConsumerSearch.com

On May 4, 2007, the Company purchased ConsumerSearch.com, an online publisher that analyzes reviews of thousands of products from multiple online and offline sources, for approximately $33 million.  ConsumerSearch.com will be included within the operating results of About.com.

WQEW Sale

On April 26, 2007, the Company sold WQEW-AM to Radio Disney, LLC (which provided substantially all of WQEW programming through a licensing agreement) for $40 million.  The Company expects to recognize a pre-tax gain of approximately $40 million in the second quarter of 2007 because the net book value of WQEW’s net assets being sold is nominal.

Plant Consolidation

The Company is in the process of consolidating the printing operations of a facility it leases in Edison, New Jersey, into its newest facility in College Point, Queens.  The plant consolidation is part of the Company’s cost-saving initiatives and is expected to be completed in the second quarter of 2008.  As part of the consolidation, the Company originally planned to sublease the Edison facility through 2018, the end of its current lease term.  However, after an evaluation of this and other options, the Company decided it was more economical to purchase the Edison facility and sell it, with two adjacent properties it already owned, to a third party.  The Edison lease, which was entered into in 1987, committed the Company to rent increases resulting in above-market rent that could only be partially offset through a sublease arrangement.  It also required the Company to restore the facility to its original prior state at the end of the term.  In addition, the Company concluded that in order to attract potential sublessees, it would need to convert the manufacturing facility to a warehouse, resulting in occupancy delays and significant cost.  The Company believes that the purchase and sale arrangement, which allowed it to liquidate its real estate obligations and holdings in a single transaction, is more financially attractive and also eliminates the market, credit and property risks arising from a sublease arrangement.

On April 30, 2007, the Company purchased the Edison facility from the landlord for $140 million, the value of the property plus a premium to be released from its leasehold obligations.  The Company simultaneously sold the Edison facility and the adjacent properties, including a warehouse used for distribution

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operations for $92 million to KIF Property Trust.  The transactions are expected to result in a net pre-tax loss of approximately $68 million in the second quarter of 2007.

At the same time, the Company terminated its existing capital lease agreement for the Edison facility and entered into a new lease for the facility with KIF Property Trust (through December 31, 2008, with a right to terminate beginning June 1, 2008), during which it will complete the consolidation and remove equipment, and also leased a portion of the adjacent warehouse (for five years, with a five-year extension option) for a local distribution center.  Both leases are operating leases at market rates.

In addition to the loss mentioned above, the Company estimates costs to close the Edison facility as follows:

·                  $77 to $81 million for accelerated depreciation expense, of which approximately $32 million has been recognized.  The remainder will be recognized through the end of the first quarter of 2008 ($11 to $13 million per quarter).  This expense is for the acceleration of depreciation expense of assets that the Company continues to own at the Edison facility, mainly printing presses.

·                  $12 to $16 million for staff reduction costs.  As part of the consolidation, the Company expects a workforce reduction of approximately 250 full-time equivalent employees.  The Company plans to facilitate the reductions through a variety of severance and buyout packages.  The exact cost and the timing of the recognition and expenditures will depend on the final composition and seniority of the affected employees as well as the timing of the implementation of the staff reductions.

·                  $5 to $6 million in other costs, mainly restoration costs, under the new Edison lease.

Capital expenditures for the plant consolidation are estimated to be approximately $135 million, most of which will be made in 2007.  The Company expects to save $30 million annually due to lower operating costs and to avoid the need for approximately $50 million in capital investment at the Edison facility over the next ten years.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We are a leading media and news organization serving our audiences through print, online and mobile technology.  Our segments and divisions are:

News Media Group (consisting of The New York Times Media Group, which includes The New York Times (“The Times”), NYTimes.com, the International Herald Tribune and a New York City radio station; the New England Media Group, which includes The Boston Globe (the “Globe”), Boston.com and the Worcester Telegram & Gazette; and the Regional Media Group, which includes 14 daily newspapers and their related digital operations).  The News Media Group generates revenues principally from print, online and radio advertising and through circulation.  Other revenues, which make up the remainder of revenues, primarily consist of revenues from wholesale delivery operations, news services/syndication, digital archives, TimesSelect, Baseline StudioSystems (“Baseline”) and commercial printing.  The News Media Group’s main operating costs are employee-related costs and raw materials, primarily newsprint.

About.com (an online consumer information provider).  About.com generates revenues from display advertising relevant to its adjacent content, cost-per-click advertising (sponsored links for which About.com is paid when a user clicks on the ad) and e-commerce (including sales lead generation).  Almost all of its revenues (95% in the first quarter of 2007) are derived from the sale of advertisements (display and cost-per-click advertising).  Cost-per-click advertising accounts for 49% of About.com’s total advertising revenues.  About.com’s main operating costs are employee-related costs and content and hosting costs.

Joint Ventures.  Our investments accounted for under the equity method are as follows:

·                  a 49% interest in Metro Boston LLC, which publishes a free daily newspaper catering to professionals and students in the Greater Boston area,

·                  a 49% interest in a Canadian newsprint company, Donohue Malbaie Inc.,

·                  a 40% interest in a partnership, Madison Paper Industries, operating a supercalendered paper mill in Maine, and

·                  an approximately 17% interest in New England Sports Ventures, which owns the Boston Red Sox, Fenway Park and adjacent real estate, approximately 80% of the New England Sports Network, a regional cable sports network, and 50% of Roush Fenway Racing, a leading NASCAR team.

RECENT DEVELOPMENTS

Broadcast Media Group Sale

On May 7, 2007, we sold the Broadcast Media Group, consisting of nine network-affiliated television stations, their related Web sites and the digital operating center, for approximately $575 million.  We expect to

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recognize a pre-tax gain of approximately $190 to $195 million in the second quarter of 2007.  We used the cash proceeds of the sale to repay our commercial paper outstanding.

Acquisition of ConsumerSearch.com

On May 4, 2007, we purchased ConsumerSearch.com, an online publisher that analyzes reviews of thousands of products from multiple online and offline sources, for approximately $33 million.  ConsumerSearch.com will be included within the operating results of About.com.

WQEW Sale

On April 26, 2007, we sold WQEW-AM (“WQEW”) to Radio Disney, LLC (which provided substantially all of WQEW programming through a licensing agreement) for $40 million.  We expect to recognize a pre-tax gain of approximately $40 million in the second quarter of 2007 because the net book value of WQEW’s net assets being sold is nominal.

Plant Consolidation 

We are in the process of consolidating the printing operations of a facility we lease in Edison, New Jersey, into our newest facility in College Point, Queens.  The plant consolidation is part of our cost-saving initiatives and is expected to be completed in the second quarter of 2008.  As part of the consolidation, we originally planned to sublease the Edison facility through 2018, the end of our current lease term.  However, after an evaluation of this and other options, we decided it was more economical to purchase the Edison facility and sell it, with two adjacent properties we already owned, to a third party.  The Edison lease, which was entered into in 1987, committed us to rent increases resulting in above-market rent that could only be partially offset through a sublease arrangement.  It also required us to restore the facility to its original prior state at the end of the term.  In addition, we concluded that in order to attract potential sublessees, we would need to convert the manufacturing facility to a warehouse, resulting in occupancy delays and significant cost.  We believe that the purchase and sale arrangement, which allowed us to liquidate our real estate obligations and holdings in a single transaction, is more financially attractive and also eliminates the market, credit and property risks arising from a sublease arrangement.

On April 30, 2007, we purchased the Edison facility from the landlord for $140 million, the value of the property plus a premium to be released from our leasehold obligations.  We simultaneously sold the Edison facility and the adjacent properties, including a warehouse used for distribution operations, for $92 million to KIF Property Trust.  The transactions are expected to result in a net pre-tax loss of approximately $68 million in the second quarter of 2007.

At the same time, we terminated our existing capital lease agreement for the Edison facility and entered into a new lease for the facility with KIF Property Trust (through December 31, 2008, with a right to terminate beginning June 1, 2008), during which we will complete the consolidation and remove equipment, and also

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leased a portion of the adjacent warehouse (for five years, with a five-year extension option) for a local distribution center.  Both leases are operating leases at market rates.

In addition to the loss mentioned above, we estimate costs to close the Edison facility as follows:

·                  $77 to $81 million for accelerated depreciation expense, of which approximately $32 million has been recognized.  The remainder will be recognized through the end of the first quarter of 2008 ($11 to $13 million per quarter).  This expense is for the acceleration of depreciation expense of assets that we continue to own at the Edison facility, mainly printing presses.

·                  $12 to $16 million for staff reduction costs.  As part of the consolidation, we expect a workforce reduction of approximately 250 full-time equivalent employees.  We plan to facilitate the reductions through a variety of severance and buyout packages.  The exact cost and the timing of the recognition and expenditures will depend on the final composition and seniority of the affected employees as well as the timing of the implementation of the staff reductions.

·                  $5 to $6 million in other costs, mainly restoration costs, under the new Edison lease.

Capital expenditures for the plant consolidation are estimated to be approximately $135 million, most of which will be made in 2007.  We expect to save $30 million annually due to lower operating costs and to avoid the need for approximately $50 million in capital investment at the Edison facility over the next ten years.

Acquisition of UCompareHealthCare.com

We acquired UCompareHealthCare.com (“UCHC”), a site that provides consumers with access to quality ratings and related health information, on March 27, 2007, for $2.3 million.  Our Condensed Consolidated Financial Statements include the operating results of this acquisition subsequent to the date of acquisition.  UCHC is now part of About.com (see Note 3 of the Notes to the Condensed Consolidated Financial Statements).

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UPDATED 2007 EXPECTATIONS

The key financial measures for 2007 are discussed in the table below.

 

Item		2007 Expectation
Newsprint cost per ton		Decline expected to be about 8%
Depreciation & amortization		$185 to $195 million (a)
Net income from joint ventures		$5 to $10 million
Interest expense		$44 to $48 million
Tax rate		41% (b)
Capital expenditures		$340 to $370 million (c)
Cost savings and productivity gains		$65 to $75 million (d)

(a)          Includes $45 to $48 million of accelerated depreciation expense associated with the plant consolidation project, mainly presses.   Total depreciation and amortization includes approximately $16 to $19 million for the new building, primarily in the second half of 2007.

(b)          Represents the tax rate excluding discrete items such as a first-quarter tax adjustment and asset dispositions.

(c)           Includes $170 to $190 million for our new headquarters and $75 million for the plant consolidation.

(d)          Excludes certain one-time costs, mainly staff reduction costs.

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RESULTS OF OPERATIONS

The following table presents our consolidated financial results.

*                    Represents an increase or decrease in excess of 100%.

(a)          Includes accelerated depreciation expense of $11.6 million for assets at our Edison, N.J., printing plant, which is in the process of being closed.

(b)          Includes staff reduction costs of $7.8 million in the first quarter of 2007 and $9.4 million in the first quarter of 2006.

(c)           Includes an unfavorable tax adjustment of $4.5 million, primarily from a change in New York state tax law that was effective January 1, 2007.

Revenues

Revenues by reportable segment and for the Company as a whole were as follows:

 

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News Media Group

Advertising, circulation and other revenues by operating segment of the News Media Group and for the Group as a whole were as follows:

 

Advertising Revenues

Advertising revenue is primarily determined by the volume, rate and mix of advertisements.  Total News Media Group advertising revenues decreased in the first quarter of 2007 compared with the first quarter of 2006 due to lower print volume, which was partially offset by higher online advertising revenues.  Print advertising revenues declined 6.1%, while online advertising revenues increased 20.3%.

During the last few years, our results have been adversely affected by a weak print advertising environment.  Print advertising volume for the News Media Group was as follows:

 

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Advertising revenues (print and online) by category for the News Media Group were as follows:

 

The New York Times Media Group

Advertising revenues were slightly lower in the first quarter of 2007 primarily due to lower print volume partially offset by higher rates.  Online advertising increased 18.1%, and print advertising declined 5.2%, across the classified, retail and national advertising categories.

In the first quarter of 2007, national advertising, which represented 65% of the Group’s advertising revenues, declined slightly compared to the first quarter of 2006.  This was principally the result of reduced spending in the telecommunications, national automotive, media and studio entertainment categories, partially  offset by growth in a number of national ad categories, including international fashion, American fashion, home furnishing manufacturers and alcoholic beverages.  Classified advertising, which represented 20% of the Group’s advertising revenues, decreased compared with the prior year due to declines in the real estate, automotive and help-wanted advertising categories.  Retail advertising, which represented 13% of the Group’s advertising revenues, decreased compared with the prior-year first quarter mainly because of softness in department store, mass market and fashion/jewelry store advertising, partially offset by gains in fine arts advertising.

New England Media Group

Advertising revenues were lower in the first quarter of 2007 primarily due to lower print revenues.  Print advertising declines in the classified and retail advertising categories were partially offset by growth in national advertising and in online national, retail and classified categories.

In the first quarter of 2007, classified advertising, which represented 39% of the Group’s advertising revenues, decreased due to weakness in real estate, automotive and help-wanted.  National advertising, which represented 29% of the Group’s advertising revenues, increased mainly because of growth in telecommunications, travel, network television/cable and club/concert advertising.  Retail advertising, which represented 27% of the Group’s advertising revenues declined, primarily due to a decrease in department store advertising as a result of the consolidation of two large retailers.

Regional Media Group

In the first quarter of 2007 compared with the first quarter of 2006, advertising revenues decreased primarily due to weakness in print classified and retail advertising, which was partially offset by growth in online advertising.

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In the first quarter of 2007, retail advertising, which represented 49% of the Group’s advertising revenues, decreased due to declines in home furnishings, telecommunications and retail banking advertising, offset by growth in medical/dental, media, service and hospital advertising.  Classified advertising, which represented 42% of the Group’s advertising revenues, decreased due to weakness in help-wanted, automotive and real estate advertising.

Circulation Revenues

Circulation revenue is based on the number of copies sold and the subscription rate charged to customers.  Circulation revenues in the first quarter of 2007 increased slightly compared with the first quarter of 2006 mainly because of higher prices for The New York Times, partially offset by fewer copies sold.  In the fourth quarter of 2006, The New York Times raised the newsstand price of the Northeast edition of the Sunday Times and increased home-delivery prices.  At the New England Media Group and Regional Media Group, circulation revenues declined primarily due to lower volume.

Other Revenues

Other revenues increased in the first quarter of 2007 compared with prior-year period, primarily due to revenues from Baseline, wholesale delivery operations and growth in subscriptions to TimesSelect, a fee-based product that charges non-print subscribers for access to our columnists and archives.  Baseline, which was acquired in August 2006, is a leading online database and research service for information on the film and television industries.

About.com

About.com revenues increased to $22.5 million in the first quarter of 2007 from $18.2 million in the first quarter of 2006, due to higher display and cost-per-click advertising and e-commerce revenues.

Operating Costs

Operating costs were as follows:

 

Production Costs

Total production costs decreased 3.3% ($11.7 million) in the first quarter of 2007 compared with the same period last year mainly due to lower raw materials, primarily newsprint ($7.0 million) and outside printing

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($3.0 million).  Newsprint expense declined 8.5% in the first quarter compared with the same period last year from lower consumption and lower prices.  Outside printing decreased as a result of cost saving initiatives and lower volume of copies printed by third parties.  Compensation costs declined primarily due to staff reductions.

Selling, General and Administrative Costs

Total selling, general and administrative costs decreased 1.3% ($4.4 million) in the first quarter of 2007 primarily because of lower promotion costs ($5.3 million) due to the timing of promotion campaigns and elimination of certain programs compared to the prior year and lower compensation costs ($5.2 million) due to reduced headcount, which were partially offset by higher professional fees ($4.0 million) associated with cost savings efforts and the outsourcing of certain technology functions.

Depreciation and Amortization

Total depreciation and amortization, by reportable segment, Corporate and for the Company as a whole, was as follows:

 

In the first quarter of 2007, depreciation and amortization increased primarily because we recognized $11.6 million in accelerated depreciation expense for assets at the Edison, N.J., printing plant, which we are in the process of closing.  This increase was partially offset by lower amortization expense in the first quarter of 2007 compared to the first quarter of 2006 because of the write-down of certain intangible assets of the New England Media Group in 2006.

The following table sets forth consolidated operating costs by reportable segment, Corporate and the Company as a whole.

 

News Media Group

In the first quarter of 2007, total operating costs decreased 1.8% ($12.9 million) primarily due to lower compensation ($13.7 million), raw materials, primarily newsprint ($7.0 million), and promotions costs ($5.5 million), which were partially offset by higher depreciation expense ($11.6 million) from the accelerated depreciation of assets at the Edison, N.J., printing plant.

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About.com

Total operating costs for About.com increased 26.2% ($3.0 million) in the first quarter of 2007 primarily due to higher compensation costs ($1.8 million) from headcount increases, professional fees ($0.3 million) and incremental costs related to higher revenues.

Corporate

Total operating costs for Corporate increased 25.4% ($2.7 million) in the first quarter of 2007 primarily due to higher compensation costs ($1.7 million) and professional fees associated with cost savings efforts ($1.1 million).

Operating Profit

Consolidated operating profit, by reportable segment, Corporate and for the Company as a whole, were as follows:

 

The reasons underlying the period-to-period changes in each segment’s and Corporate’s operating profit (loss) are discussed above under “Revenues” and “Operating Costs.”

Non-Operating Items

Joint Ventures

Net loss from joint ventures totaled $2.2 million in the first quarter of 2007 compared with net income of $2.0 million in the first quarter of 2006.  Earnings from the Discovery Times Channel are no longer included due to the sale of our interest in 2006, and performance at the paper mills declined.

Interest Expense, Net

“Interest expense, net” in our Condensed Consolidated Statements of Income was as follows:

 

Interest expense, net decreased in the first quarter of 2007 mainly because of higher capitalized interest associated with our new headquarters due to continued spending for construction.  This increase in capitalized interest was partially offset by higher interest expense due to increased short-term rates and lower interest income from our development partner.  Interest income was related to funds we advanced to our development partner for the construction of our new headquarters.

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Income Taxes

The effective income tax rate increased to 51% in the first quarter of 2007 compared with 39% in the first quarter of 2006.  The increase was primarily due to a net tax adjustment in the first quarter of 2007 that resulted in additional tax expense of $4.5 million, or an 11% increase in the effective income tax rate.  The tax adjustment was primarily due to the application of a change in New York state law (effective January 1, 2007) that required a revaluation of the existing deferred tax balances.  Excluding this tax adjustment, the effective income tax rate in the first quarter of 2007 was consistent with the rate in the first quarter of 2006.

Discontinued Operations

 

On May 7, 2007, we sold the Broadcast Media Group, consisting of nine network-affiliated television stations, their related Web sites and the digital operating center, for approximately $575 million.  We expect to recognize a pre-tax gain of approximately $190 to $195 million in the second quarter of 2007.  We used the cash proceeds of the sale to repay our commercial paper outstanding.

LIQUIDITY AND CAPITAL RESOURCES

We expect our cash balance, cash provided from operations and available third-party financing, described below, to be sufficient to meet our normal operating commitments and debt service requirements, to fund planned capital expenditures, to pay dividends to our stockholders, to repurchase shares of our Class A Common Stock and to make contributions to our pension plans.  In addition, we have used the proceeds from the sales of the Broadcast Media Group and WQEW to reduce our debt, which will increase our borrowing capacity in the future for potential acquisitions, investments or capital projects, and to pay dividends to our shareholders.

We expect dividends to increase to approximately $125 million in 2007 from approximately $100 million in 2006.  On March 22, 2007, our Board of Directors authorized a $.23 per share dividend on our Class A and Class B Common Stock, effective with the June 2007 dividend, representing a 31% increase from the prior quarterly dividend of $.175 per share.

We repurchase Class A Common Stock under our stock repurchase program from time to time either in the open market or through private transactions, and these repurchases may be suspended from time to time or discontinued.  During the first quarter of 2007, we repurchased 29,300 shares of Class A Common Stock at a cost of approximately $0.7 million.  The average price of these repurchases was $24.42 per share.  As of April 1, 2007, approximately $93 million remained from our current share repurchase authorization.

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