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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001005477-02-000811.txt : 20020414
<SEC-HEADER>0001005477-02-000811.hdr.sgml : 20020414
ACCESSION NUMBER: 0001005477-02-000811
CONFORMED SUBMISSION TYPE: 10-K405
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20011230
FILED AS OF DATE: 20020222
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: NEW YORK TIMES CO
CENTRAL INDEX KEY: 0000071691
STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711]
IRS NUMBER: 131102020
STATE OF INCORPORATION: NY
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K405
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-05837
FILM NUMBER: 02556341
BUSINESS ADDRESS:
STREET 1: 229 W 43RD ST
CITY: NEW YORK
STATE: NY
ZIP: 10036
BUSINESS PHONE: 2125561234
MAIL ADDRESS:
STREET 1: 229 W 43RD STREET
CITY: NEW YORK
STATE: NY
ZIP: 10036
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>d02-35767.txt
<DESCRIPTION>FORM 10-K
<TEXT>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
----------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 30, 2001 COMMISSION FILE NUMBER 1-5837
THE NEW YORK TIMES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 13-1102020
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
229 WEST 43RD STREET, NEW YORK, N.Y. 10036
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (212) 556-1234
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- -------------------------------------- ------------------------
Class A Common Stock of $.10 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NOT APPLICABLE
(TITLE OF CLASS)
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 and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
The aggregate market value of Class A Common Stock held by non-affiliates as of
February 15, 2002, was approximately $5.50 billion. As of such date,
non-affiliates held 89,554 shares of Class B Common Stock. There is no active
market for such stock.
The number of outstanding shares of each class of the registrant's common stock
as of February 15, 2002, was as follows: 149,939,710 shares of Class A Common
Stock and 847,020 shares of Class B Common Stock.
DOCUMENT INCORPORATED BY REFERENCE PART
---------------------------------- ----
Proxy Statement for the 2002 Annual Meeting of Stockholders..... III
================================================================================
<Page>
INDEX TO THE NEW YORK TIMES COMPANY
2001 FORM 10-K
-----------------
PART I
ITEM NO. PAGE
- ------- ----
1. Business............................................................. 1
Introduction....................................................... 1
Newspapers......................................................... 1
The New York Times............................................... 1
Circulation.................................................... 1
Advertising.................................................... 2
Production and Distribution.................................... 2
Related Businesses............................................. 3
New England Newspaper Group...................................... 3
Circulation: The Globe......................................... 4
Circulation: Worcester......................................... 4
Advertising.................................................... 5
Production and Distribution.................................... 5
Regional Newspapers.............................................. 5
Broadcasting....................................................... 6
New York Times Digital............................................. 7
Forest Products Investments and Other Joint Ventures............... 7
Forest Products Investments...................................... 7
Other Joint Ventures............................................. 8
Raw Materials...................................................... 8
Competition ....................................................... 9
Employees.......................................................... 9
Labor Relations.................................................. 10
2. Properties........................................................... 11
3. Legal Proceedings.................................................... 11
4. Submission of Matters to a Vote of Security Holders.................. 12
Executive Officers of the Registrant............................... 12
PART II
5. Market for the Registrant's Common Equity and Related Stockholder
Matters............................................................ 13
6. Selected Financial Data.............................................. 13
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 13
7A. Quantitative and Qualitative Disclosure About Market Risk............ 13
8. Financial Statements and Supplementary Data.......................... 13
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure........................................... 13
PART III
10. Directors and Executive Officers of the Registrant................... 13
11. Executive Compensation............................................... 14
12. Security Ownership of Certain Beneficial Owners and Management....... 14
13. Certain Relationships and Related Transactions....................... 14
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K...... 14
<Page>
1
PART I
ITEM 1. BUSINESS.
INTRODUCTION
The New York Times Company (the "Company") was incorporated on August 26, 1896,
under the laws of the State of New York. The Company is a diversified media
company including newspapers, television and radio stations, electronic
information and publishing, Internet businesses, and forest products
investments. Financial information about industry segments is incorporated by
reference to Note 16 to the Consolidated Financial Statements on pages F-32 to
F-34 of this report.
The Company currently classifies its businesses into the following segments:
o Newspapers: The New York Times ("The Times"); the New England Newspaper
Group, consisting of The Boston Globe, a daily newspaper, the Boston
Sunday Globe (both editions, "the Globe") and the Worcester Telegram &
Gazette, in Worcester, Mass. (the "Telegram & Gazette"); 15 other
newspapers in Alabama, California, Florida, Louisiana, North Carolina and
South Carolina ("Regional Newspapers"); newspaper distributors in the New
York City and Boston metropolitan areas; news, photo and graphics services
and news and features syndication; TimesDigest; and licensing of the
trademarks and copyrights of The Times and the Globe.
o Broadcasting: television stations WREG-TV in Memphis, Tenn.; WTKR-TV in
Norfolk, Va.; KFOR-TV in Oklahoma City, Okla.; WNEP-TV in Scranton, Pa.;
WHO-TV in Des Moines, Iowa; WHNT-TV in Huntsville, Ala.; WQAD-TV in
Moline, Ill.; and KFSM-TV in Fort Smith, Ark.; and radio stations WQXR(FM)
and WQEW(AM) in New York City.
o New York Times Digital: the Company's digital business division, including
NYTimes.com (www.nytimes.com), Boston.com (www.boston.com), and the
licensing of electronic databases through its Digital Archive Division.
Additionally, the Company owns minority equity interests in a Canadian
newsprint company and a supercalendered paper manufacturing partnership in
Maine, and a one-half interest in the International Herald Tribune.
In January 2002 Major League Baseball approved the sale of the Boston Red Sox
baseball club (including Fenway Park and approximately 80% of New England Sports
Network, a regional cable sports network) to New England Sport Ventures, LLC
("NESV"), in which the Company is an investor. The closing of the Red Sox sale
is expected to be completed in the first quarter of 2002, and the Company's
$75.0 million investment will represent an interest of approximately 15% in
NESV.
On April 2, 2001, the Company sold its golf properties, which included Golf
Digest, Golf Digest Woman, Golf World and Golf World Business, which previously
represented the Magazine Group segment of the Company (the "Magazine Group") and
GolfDigest.com, to Advance Publications, Inc., for approximately $435.0 million.
NEWSPAPERS
The Newspaper Group segment consists of The Times, the New England Newspaper
Group, 15 Regional Newspapers, newspaper distributors, and certain related
businesses.
THE NEW YORK TIMES
CIRCULATION
The Times is a standard-size daily (Monday through Saturday) and Sunday
newspaper, which commenced publication in 1851. The Times is circulated in each
of the 50 states, the District of Columbia and worldwide. Approximately 58% of
the weekday (Monday through Friday) circulation is sold in the 31 counties that
make up the greater New York City area, which includes New York City,
Westchester and parts of upstate New York, Connecticut, New Jersey and
Pennsylvania; 42% is
<Page>
2
sold elsewhere. On Sundays, approximately 53% of the circulation is sold in the
greater New York City area and 47% elsewhere. According to reports filed with
the Audit Bureau of Circulations ("ABC"), an independent agency that audits the
circulation of most U.S. newspapers and magazines, for the six-month period
ended September 30, 2001, The Times has the largest daily and Sunday circulation
of all seven-day newspapers in the United States.
The Times's average weekday and Sunday circulations for the two 12-month periods
ended September 30, 2001, and September 30, 2000, as audited by ABC (except as
indicated), are shown in the table below:
<Table>
<Caption>
WEEKDAY (MON. - FRI.) SUNDAY
--------------------- ------
(Thousands of copies)
<S> <C> <C>
2001 (unaudited).......................... 1,130.0 1,681.1
2000...................................... 1,122.4 1,686.7
</Table>
Approximately 63% of the weekday circulation and 61% of the larger Sunday
circulation were sold through home delivery in 2001. During the year ended
December 30, 2001, the average weekday circulation of The Times increased
approximately 14,700 copies above 2000 to approximately 1,143,700 copies and the
average Sunday circulation increased by approximately 600 copies above 2000 to
approximately 1,695,900 copies. An increase in home-delivery rates was effective
February 4, 2002.
ADVERTISING
Total advertising volume in The Times for the two years ended December 30, 2001,
and December 31, 2000, as measured by The Times, is shown in the table below.
The "National" heading in the table below includes such categories as
entertainment, financial and general advertising.
<Table>
<Caption>
FULL RUN
---------------------------------- PREPRINT
RETAIL NATIONAL CLASSIFIED ZONED TOTAL(1) COPIES
INCHES INCHES INCHES INCHES INCHES DISTRIBUTED
------ -------- ---------- ------ ------ -----------
(Inches and Preprints in Thousands)
<S> <C> <C> <C> <C> <C> <C>
2001 ......... 475.0 1,370.2 781.2 939.5 3,565.9 489,660
2000 ......... 574.0 1,691.6 964.6 1,033.4 4,263.6 459,311
</Table>
The table includes volume for The New York Times Magazine, which published 3,329
pages of advertising in 2001, compared with 3,760 pages in 2000.
Advertising rates for The Times increased an average of 7% in January 2001, and
6% in January 2002.
Based on recent data provided by Competitive Media Reporting, Inc., an
independent agency that measures advertising sales volume and estimates
advertising revenue, and The Times's internal analysis, The Times believes that
it ranks first by a substantial margin in advertising revenue in the general
weekday and Sunday newspaper field in the New York City metropolitan area.
PRODUCTION AND DISTRIBUTION
Generally, The Times is printed at its production and distribution facilities in
Edison, N.J., and Flushing, N.Y., as well as the regional print sites described
below.
The Edison and Flushing facilities print all sections of the weekday and Sunday
newspapers (except The New York Times Magazine and the Sunday Television
section) for distribution in the New York City metropolitan area. Both
facilities have the capacity to print in color and have modern, automated
presses, packaging and distribution equipment.
- ----------
(1) All totals exclude preprint inches.
<Page>
3
The Times has agreements with two commercial printing companies to print its
Sunday Television section and The New York Times Magazine.
The editions of The Times distributed outside of the New York City area are
printed under contract at the following sites:
<Table>
<Caption>
REGION(1) PRINT SITES
----------------------------------------------------------------------
<S> <C>
Midwest Chicago, Ill.; Canton, Ohio; Ann Arbor, Mich.;
Columbia, Mo.(2); Dayton, Ohio; Minneapolis, Minn.
----------------------------------------------------------------------
Northeast Billerica, Mass.(3); Springfield, Va.
----------------------------------------------------------------------
Southeast Atlanta, Ga.; Ft. Lauderdale, Fla.; Lakeland, Fla.(4);
Gastonia, N.C.
----------------------------------------------------------------------
Southwest Austin, Tex.; Phoenix, Ariz.
----------------------------------------------------------------------
West Torrance and Concord, Calif.; Kent, Wash.; Denver, Colo.
----------------------------------------------------------------------
</Table>
The Times currently has agreements with various newspapers and other delivery
agents located in the United States and Canada to deliver The Times in their
respective markets and, in some cases, to expand current markets. The agreements
include various arrangements for delivery on Sundays and daily to homes and
newsstands.
A subsidiary of the Company, City & Suburban Delivery Systems, Inc. ("City &
Suburban"), operates a wholesale newspaper distribution business that
distributes The Times and other newspapers and periodicals in New York City,
Long Island (N.Y.), the counties of Westchester (N.Y.) and Fairfield (Conn.) and
New Jersey. Approximately 94% of The Times's single-copy daily circulation and
92% of its single-copy Sunday circulation in the New York City metropolitan area
are delivered by City & Suburban or The Times. Approximately 96% of The Times's
daily home-delivered circulation and 95% of its Sunday home-delivered
circulation in the New York City metropolitan area are delivered to depots by
City & Suburban or The Times.
RELATED BUSINESSES
<Table>
<Caption>
NAME DESCRIPTION OF BUSINESS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
New York Times Index Produces and licenses The New York Times Index, a print publication
- -----------------------------------------------------------------------------------------------------------------------
THE NEW YORK TIMES NEWS SERVICES DIVISION:
- -----------------------------------------------------------------------------------------------------------------------
The New York Times News Service Transmits articles, graphics and photographs from The Times, the Globe
and other publications to approximately 650 newspapers and magazines in
the United States and in more than 50 countries worldwide
- -----------------------------------------------------------------------------------------------------------------------
The New York Times Syndicate Markets other supplemental news services and feature material, graphics
and photographs from The Times and other leading news sources to
newspapers and magazines around the world
- -----------------------------------------------------------------------------------------------------------------------
NYT Television Using New York Times branded and other content, creates television
programming for a variety of broadcast, cable and public television
networks
- -----------------------------------------------------------------------------------------------------------------------
</Table>
NEW ENGLAND NEWSPAPER GROUP
The Boston Globe is owned and published by the Company's subsidiary, Globe
Newspaper Company, Inc. (the "Globe" may also be used to refer to Globe
Newspaper Company, Inc.).
The Globe and the Telegram & Gazette constitute the Company's New England
Newspaper Group.
- ----------
(1) Most advance sections of the Sunday newspaper distributed in these areas
are printed in Edison, N.J., Flushing, N.Y., Concord, Calif. and Dayton,
Ohio.
(2) Commencing in 2002.
(3) At the Globe.
(4) At the Company's Regional Newspaper, The Ledger.
<Page>
4
CIRCULATION: THE GLOBE
The Globe is a daily (Monday through Saturday) and Sunday newspaper, which
commenced publication in 1872, and was acquired by the Company in 1993. The
Globe is distributed throughout New England, although its circulation is
concentrated in the Boston metropolitan area. According to ABC reports, as of
September 30, 2001, the weekday (Monday through Friday) circulation of the Globe
was the 17th largest of any weekday newspaper; circulation of the Sunday edition
was the 11th largest of any Sunday newspaper published in the United States; and
its daily and Sunday circulation was the largest of all newspapers published in
either Boston or New England.
The Globe's average weekday and Sunday paid circulation for the two 12-month
periods ended April 1, 2001, and March 26, 2000, as audited by ABC, are shown
below:
<Table>
<Caption>
WEEKDAY (MON-FRI) SUNDAY
----------------- ------
(Thousands of copies)
<S> <C> <C>
2001............................ 465.8 716.5
2000............................ 469.9 726.8
</Table>
During the year ended December 30, 2001, the average weekday circulation of the
Globe increased approximately 2,100 copies over 2000 to approximately 472,500
copies and the average Sunday circulation decreased by approximately 16,800
copies below 2000 to approximately 704,000 copies.
Approximately 75.6% of the Globe's weekday circulation and 67.4% of its larger
Sunday circulation are sold through home delivery; the remainder are sold
primarily on newsstands.
CIRCULATION: WORCESTER
The Telegram & Gazette is a daily (Monday through Saturday) newspaper, which
began publishing in 1866. Its Sunday companion, the Sunday Telegram, began in
1884. These newspapers and several Company-owned non-daily newspapers, some
published under the name of Coulter Press, circulate throughout Worcester County
and northeastern Connecticut. The daily Telegram & Gazette is the 97th largest
newspaper in the United States.
The Telegram & Gazette's average weekday and Sunday paid circulations, for the
two six-month periods ended September 30, 2001 and September 30, 2000, as
reported to ABC in the Newspaper Publisher's Statement, are shown below:
<Table>
<Caption>
DAILY (MON-SAT) SUNDAY
--------------- ------
(Thousands of copies)
<S> <C> <C>
2001................................... 104.6 124.7
2000................................... 103.6 127.5
</Table>
From December 31, 2000 to December 30, 2001, the average daily circulation of
the Telegram & Gazette increased approximately 500 copies, and the average
Sunday circulation decreased approximately 2,900 copies. Approximately 70% of
its daily and Sunday circulation is distributed by home delivery; the remainder
are sold in stores or newsstands.
<Page>
5
ADVERTISING
The New England Newspaper Group's advertising volumes by category of advertising
for the two years ended December 30, 2001, for all editions are set forth below:
<Table>
<Caption>
FULL RUN
-------------------------------- PREPRINT
RETAIL NATIONAL CLASSIFIED ZONED TOTAL(1) COPIES
INCHES INCHES INCHES INCHES INCHES DISTRIBUTED
------ -------- ---------- ------ -------- -----------
(Inches and Preprints in Thousands)
<S> <C> <C> <C> <C> <C> <C>
2001 .......... 865.0 762.5 1,641.6 880.6 4,149.7 957,555
2000(2) ....... 966.8 879.8 1,908.5 795.9 4,551.0 1,032,437
</Table>
Both the Globe and the Telegram & Gazette increased advertising rates in each
category of advertising in 2001. The Telegram & Gazette increased all rates,
except for classified advertising, effective as of January 1, 2001. Classified
advertising rates were increased effective as of February 1, 2001. Additionally,
the Globe's latest increase in certain retail and preprint advertising rates
occurred on September 1, 2001. These rate increases ranged from 2% to 5%.
National rates increased January 1, 2002 between 4% to 6%.
Based on information supplied by major daily newspapers published in New England
and assembled by the New England Newspaper Association, Inc. for the 12-month
period ending December 30, 2001, the Globe ranked first and the Telegram &
Gazette ranked sixth in advertising inches among all newspapers published in
Boston and New England.
PRODUCTION AND DISTRIBUTION
All editions of the Globe are printed and prepared for delivery at its main
Boston plant or its Billerica, Mass., satellite plant. All editions of the
Telegram & Gazette are printed and prepared for delivery at Worcester's plant in
Millbury, Mass.
Virtually all of the Globe's home-delivered circulation was delivered in 2001
through the Globe's distribution subsidiary, Community Newsdealers LLC ("CNI").
Effective December 31, 2001, the Globe outsourced substantially all of its
requirements for home-delivery services. The Telegraph & Gazette delivers
approximately 9,535 daily and approximately 13,989 Sunday Globes in its
home-delivery area. Direct single-copy distribution by the Globe, its subsidiary
Retail Sales, Inc. and the Telegraph & Gazette accounted for 61.4% and 56.6% of
the average weekday and Sunday single-copy distribution of the Globe in 2001.
REGIONAL NEWSPAPERS
The Company currently owns 14 daily newspapers, of which 12 publish on Sunday,
and one weekly newspaper.
<Table>
<Caption>
DAILY SUNDAY DAILY SUNDAY
DAILY NEWSPAPERS CIRCULATION CIRCULATION DAILY NEWSPAPERS CIRCULATION CIRCULATION
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The Gadsden Times (Ala.) 24,900 26,100 The Ledger (Lakeland, Fla.) 70,500 86,100
The Tuscaloosa News (Ala.) 37,600 38,700 The Courier (Houma, La.) 17,700 20,100
TimesDaily (Florence, Ala.) 31,900 34,500 Daily Comet (Thibodaux, La.) 11,600 N/A
The Press Democrat (Santa Rosa, Calif.) 89,500 97,400 The Dispatch (Lexington, N.C.) 12,600 N/A
Sarasota Herald-Tribune (Fla.) 106,900 134,400 Times-News (Hendersonville, N.C.) 19,800 20,100
Star-Banner (Ocala, Fla.) 49,300 52,600 Wilmington Morning Star (N.C.) 53,700 61,400
The Gainesville Sun (Fla.) 49,500 56,000 Herald-Journal (Spartanburg, S.C.) 52,600 61,100
</Table>
On August 31, 2001, the Company acquired a weekly newspaper, the Petaluma
Argus-Courier, in Petaluma, Calif. The average weekly circulation of the
Petaluma Argus-Courier for the four-month period ended December 30, 2001, was
8,017.
- ----------
(1) All totals exclude preprint inches.
(2) Includes the Telegram & Gazette for the period from the date of its
acquisition by the Company, January 7, 2000, through December 31, 2000.
<Page>
6
In September and October 2000, the Company sold seven Regional Newspapers and
nine telephone directory operations ("divested Regionals"). The advertising and
circulation information presented below does not include amounts relating to the
divested Regionals.
The Regional Newspapers' circulation for the years ended December 30, 2001, and
December 31, 2000, is shown in the table below:
<Table>
<Caption>
DAILY SUNDAY(1)
----- ---------
(Thousands of copies)
<S> <C> <C>
2001.......................... 628.1 688.5
2000.......................... 643.3 705.9
</Table>
Advertising volume, stated on the basis of six columns per page, was 13,216,000
inches in 2001, compared with 13,790,300 inches in 2000. Preprints distributed
in 2001 were 1,056,784,000, compared with 1,081,986,000 in 2000.
Advertising rates increased 1% to 3% in January 2002 in certain categories.
BROADCASTING
The Company's television and radio stations are operated under licenses from the
Federal Communications Commission ("FCC") and are subject to FCC regulations.
Radio and television license renewals are now normally granted for terms of
eight years.
<Table>
<Caption>
STATION LICENSE EXPIRATION DATE
-------------------------------------------------------
<S> <C>
WTKR-TV (Norfolk, Va.) October 1, 2004
-------------------------------------------------------
WHNT-TV (Huntsville, Ala.) April 1, 2005
KFSM-TV (Ft. Smith, Ark.) June 1, 2005
WREG-TV (Memphis, Tenn.) August 1, 2005
WQAD-TV (Moline, Ill.) December 1, 2005
-------------------------------------------------------
WHO-TV (Des Moines, Iowa) February 1, 2006
KFOR-TV (Oklahoma City, Okla.) June 1, 2006
-------------------------------------------------------
WNEP-TV (Scranton, Penn.) August 1, 2007
-------------------------------------------------------
WQXR(FM) (New York, N.Y.) June 1, 2006
WQEW(AM) (New York, N.Y.) June 1, 2006
-------------------------------------------------------
</Table>
The Company anticipates that its future applications for renewal of its station
licenses will result in the licenses being renewed for eight-year periods.
All of the television stations have three principal sources of revenue: local
advertising (sold to advertisers in the immediate geographic areas of the
stations), national spot advertising (sold to national clients by individual
stations rather than networks), and compensation paid by the networks for
carrying commercial network programs. Network compensation has declined at all
stations over the past several years. This industry trend is expected to result
in the eventual elimination of network compensation at all of the Company's
television stations.
- ----------
(1) Includes 12 daily newspapers.
<Page>
7
<Table>
<Caption>
MARKET'S NETWORK
STATION NIELSEN RANKING(1) AFFILIATION BAND
--------------------------------------------------------------
<S> <C> <C> <C>
WREG-TV 41 CBS VHF
--------------------------------------------------------------
WTKR-TV 42 CBS VHF
--------------------------------------------------------------
KFOR-TV 45 NBC VHF
--------------------------------------------------------------
WNEP-TV 52 ABC UHF(2)
--------------------------------------------------------------
WHO-TV 70 NBC VHF
--------------------------------------------------------------
WHNT-TV 83 CBS UHF(2)
--------------------------------------------------------------
WQAD-TV 92 ABC VHF
--------------------------------------------------------------
KFSM-TV 107 CBS VHF
--------------------------------------------------------------
</Table>
The Company's two radio stations serve the New York City metropolitan area.
WQXR(FM) is currently the only commercial classical music station serving this
market, which is the nation's largest radio audience. In December 1998, the
Company entered into a Time Brokerage Agreement with ABC, Inc., under which ABC,
Inc. is providing substantially all of the programming for WQEW(AM) for an
eight-year period. Under a separate option agreement, ABC, Inc. has acquired the
right to purchase WQEW(AM) at the end of the eight-year period.
NEW YORK TIMES DIGITAL
New York Times Digital operates the Company's digital businesses, which include
the following:
<Table>
<S> <C>
- ------------------------------------------------------------------------------------------
NYTimes.com Exclusive Internet access to the complete
contents of The Times, plus enhanced features
and regularly updated breaking news
- ------------------------------------------------------------------------------------------
Boston.com Information concerning Boston and New England
and featuring exclusive Internet access to the
complete contents of the Globe
- ------------------------------------------------------------------------------------------
Digital Archive Distribution Licenses archive databases of The Times and the
Globe to electronic information providers
- ------------------------------------------------------------------------------------------
</Table>
In April 2001, the Company sold GolfDigest.com, which was included in the sale
of the Company's golf properties.
FOREST PRODUCTS INVESTMENTS AND OTHER JOINT VENTURES
The Company has ownership interests in one newsprint mill and one
supercalendered (glossy paper used in magazines) paper mill (the "Forest
Products Investments") and the International Herald Tribune.
FOREST PRODUCTS INVESTMENTS
The Company has a 49% equity interest in a Canadian newsprint company, Donohue
Malbaie Inc. ("Malbaie"). The other 51% is owned by Abitibi-Consolidated
("Abitibi"), a global manufacturer of paper. Malbaie purchases pulp from Abitibi
and manufactures newsprint from this raw material on the paper machine it owns
within the Abitibi paper mill at Clermont, Quebec. Malbaie is wholly dependent
upon Abitibi for its pulp. In 2001 Malbaie produced 222,000 metric tons of
newsprint, 93,000 tons of which were sold to the Company, with the balance sold
to Abitibi for resale.
The Company has an equity interest in a partnership operating a supercalendered
paper mill in Maine, Madison Paper Industries ("Madison"). The Company's
interest in Madison is 40%. Madison produces supercalendered paper at its
facility
- ----------
(1) According to Nielsen Media Research, a research company that measures
audiences for television stations.
(2) All other stations in this market are also in the UHF band.
<Page>
8
in Madison, Me. Madison purchases all of its wood from local suppliers, mostly
under long-term contracts. In 2001 Madison produced 151,000 metric tons, 11,000
tons of which were sold to the Company.
The debt of Malbaie and Madison is not guaranteed by the Company.
Malbaie and Madison are subject to comprehensive environmental protection laws,
regulations and orders of provincial, federal, state and local authorities of
Canada or the United States (the "Environmental Laws"). The Environmental Laws
impose effluent and emission limitations and require Malbaie and Madison to
obtain, and operate in compliance with the conditions of, permits and other
governmental authorizations ("Governmental Authorizations"). Malbaie and Madison
follow policies and operate monitoring programs to ensure compliance with
applicable Environmental Laws and Governmental Authorizations and to minimize
exposure to environmental liabilities. Various regulatory authorities
periodically review the status of the operations of Malbaie and Madison. Based
on the foregoing, the Company believes that Malbaie and Madison are in
substantial compliance with such Environmental Laws and Governmental
Authorizations.
OTHER JOINT VENTURES
The Company and The Washington Post Company each own a one-half interest in the
International Herald Tribune S.A.S., which publishes the International Herald
Tribune. The newspaper is edited in Paris and printed in Athens, Bangkok,
Beirut, Bologna, Frankfurt, Hong Kong, Jakarta, Kuala Lumpur, Linkoping
(Sweden), London, Madrid, Manila, Marseille, New York, Osaka, Paris, Seoul,
Singapore, Taipei, Tel Aviv, The Hague, Tokyo, Toulouse and Zurich.
The Company's anticipated investment in approximately 15% of NESV, which will
own the Red Sox, Fenway Park and approximately 80% of New England Sport Network,
will be categorized under "Other Joint Ventures" in 2002 and thereafter.
RAW MATERIALS
The primary raw materials used by the Company are newsprint and supercalendered
and coated paper. Neither the Company nor any of its businesses is dependent on
any one supplier of paper.
In 2001 and 2000 the Company used the following types and quantities of paper
(all amounts in metric tons):
<Table>
<Caption>
COATED,
SUPERCALENDERED
PUBLICATION NEWSPRINT AND OTHER PAPER
----------------------------------------------------------------------------
2001 2000 2001 2000
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Times(1) 308,000 347,000 25,000 27,000
----------------------------------------------------------------------------
New England
Newspaper Group(1) 130,000 150,000 4,400 4,300
----------------------------------------------------------------------------
Regional Newspapers(2) 86,000 102,000 -- --
----------------------------------------------------------------------------
Magazine Group(3) -- -- 2,500 10,400
----------------------------------------------------------------------------
TOTAL 524,000 599,000 31,900 41,700
----------------------------------------------------------------------------
</Table>
The paper used by The Times, The New York Times Magazine, the New England
Newspaper Group, the Regional Newspapers and the magazines published by the
Magazine Group(3) was purchased under contracts with unrelated suppliers and
related suppliers in which the Company holds equity interests (see "Forest
Products Investments"). Web widths were reduced at nine of the 15 Regional
Newspapers in 2001, resulting in a total of 13 out of the 18 Company newspapers
that have reduced web widths thus far.
- ----------
(1) The Times and the Globe use coated, supercalendered or other paper for The
New York Times Magazine and the Globe's Sunday Magazine.
(2) The Regional Newspapers' 2000 consumption includes 7,000 tons for the
divested Regionals.
(3) The Magazine Group was sold by the Company on April 2, 2001.
<Page>
9
COMPETITION
The Times competes with newspapers of general circulation in New York City and
its suburbs, as well as with national publications such as The Wall Street
Journal and USA Today. The Times also competes with magazines, television,
radio, direct mail, the Yellow Pages, the Internet and other media.
The Globe competes with other daily, weekly and national newspapers distributed
in Boston, its neighboring suburbs and the greater New England region,
including, among others, The Boston Herald (daily and Sunday). The Globe also
competes with other communications media, such as direct mail, magazines, radio,
the Internet and television. The Telegram & Gazette competes with other daily
and weekly newspapers distributed in Worcester, Mass., and adjacent counties,
including in northeastern Connecticut, as well as with radio, television and
direct mail.
The Regional Newspapers and the International Herald Tribune compete with a
variety of other advertising media in their respective markets.
All of the Company's television stations compete directly with other television
stations in their respective markets and with other video services, such as
cable network programming carried on local cable systems, satellite-to-home
systems, and with the Internet. WQXR(FM) competes for listeners primarily with
two all-news commercial radio stations and with WNYC(FM), a non-commercial
station, which features both news and classical music. It competes for revenues
with many adult-audience commercial radio stations and other media in New York
City and surrounding suburbs.
The New York Times News Service and The New York Times Syndicate operations
compete with several other syndicated features and supplemental news services.
New York Times Digital competes with other advertising-supported news and
information Web sites, such as MSNBC.com and CNN.com, and classified portals,
such as Monster.com (help-wanted advertising).
EMPLOYEES
As of December 30, 2001, the Company had approximately 12,050 full-time
equivalent employees.
<Table>
<S> <C>
The Times 4,550
New England Newspaper Group 3,050(1)
Regional Newspapers 2,950
Broadcast Group 900
New York Times Digital 230
Corporate/Shared Service Center 370
------
Total Company 12,050(1)
======
</Table>
In April 2001, the Company announced a company-wide work force reduction
program. The Company's work force declined approximately nine percent from the
year-end 2000 level of 13,750 full-time equivalent employees, which excludes the
employees of the Magazine Group.
- ----------
(1) Excludes 450 employees no longer employed by CNI due to the Globe's
outsourcing of substantially all of its home-delivery requirements.
<Page>
10
LABOR RELATIONS
Approximately 3,400 full-time equivalent employees of The Times and City &
Suburban are represented by 15 unions for collective bargaining purposes.
Approximately 30 employees of New York Times Digital are represented by the
Newspaper Guild of New York and approximately 130 post-production employees of
NYT Television are represented by the International Alliance of Theatrical Stage
Employees ("IATSE").
The Times has collective bargaining agreements in effect through at least March
30, 2003, with all of its unions except the International Brotherhood of
Electricians, which has a contract expiring March 30, 2002, which covers
approximately five full-time maintenance employees.
City & Suburban's collective bargaining agreement with its drivers' union,
representing approximately 500 full-time equivalent employees, expires in 2008;
its four agreements with its truck maintenance unions, representing
approximately 20 full-time equivalent employees, expire in 2003; its agreements
with its two building maintenance unions, representing approximately eight
full-time equivalent employees, expire in 2003; and its agreement with its
support staff union, representing approximately 15 full-time equivalent
employees, expired in April 2001. City & Suburban reached a tentative agreement
for a successor collective bargaining agreement with its support staff union in
December 2001.
The Times's agreement with its printing pressmens' union (which covers
approximately 425 production employees) provides that wages for the 2000-2005
period are to be negotiated by the parties. If the negotiations do not result in
an agreement, the issue of wages for this period is to be submitted to binding
arbitration for resolution.
NYT Television is in the process of negotiating its first contract with IATSE,
which was certified as the bargaining agent for NYT Television's post-production
employees in December 2001.
Approximately 2,300 full- and part-time employees of the Globe are represented
by 10 unions with 12 labor agreements. Effective December 31, 2000, the contract
with the Boston Newspaper Guild, an affiliate of The Newspaper Guild
representing non-production employees, expired and negotiations for a new
contract are ongoing.
In 2001 the Globe concluded negotiations for three-year contracts (dating back
to January 1, 1999) with two production department bargaining units. Those two
agreements, along with three other production and delivery department contracts,
expired December 31, 2001. Negotiations with all those unions have begun and are
ongoing. The Globe expects to conclude all open negotiations in 2002.
Arbitration to resolve the terms of one open machinist union agreement (dating
back to January 1999 through December 2001) is also scheduled. In addition, two
other production unions have four-year contracts, extending through December 31,
2002; two unions have six-year contracts, which extend through December 31,
2003; and one has a ten-year contract, which extends through December 31, 2006.
Approximately one-third of the 600 full-time equivalent employees of the
Telegram & Gazette are represented by three production unions. Contracts with
these unions expire August 31, 2002, November 30, 2002 and October 8, 2003,
respectively. The Providence Newspaper Guild was certified as the bargaining
agent for the Telegram & Gazette newsroom employees in 1993 and for the Telegram
& Gazette circulation employees in 2000. Negotiations are ongoing.
The Company cannot predict the timing or the outcome of the various negotiations
described above.
Three other entities owned by the Company (The Press Democrat, WQXR(FM) and the
Petaluma Argus-Courier) also have unions representing their employees.
<Page>
11
ITEM 2. PROPERTIES.
The general character, location, terms of occupancy and approximate size of the
Company's principal plants and other materially important properties at December
30, 2001, are listed below.
<Table>
<Caption>
APPROXIMATE AREA IN APPROXIMATE AREA IN
GENERAL CHARACTER OF PROPERTY SQUARE FEET (OWNED) SQUARE FEET (LEASED)
---------------------------------------------------------------------------------------------
<S> <C> <C>
NEWSPAPER PUBLISHING
---------------------------------------------------------------------------------------------
Printing plants, business and editorial offices,
garages and warehouse space located in:
---------------------------------------------------------------------------------------------
New York, N.Y. 714,000 145,600
---------------------------------------------------------------------------------------------
Flushing, N.Y. -- 515,000(1)
---------------------------------------------------------------------------------------------
Edison, N.J. -- 1,300,000(2)
---------------------------------------------------------------------------------------------
Boston, Mass. 652,000 --
---------------------------------------------------------------------------------------------
Billerica, Mass. 290,000 --
---------------------------------------------------------------------------------------------
Other locations 1,696,600 435,600(3)
---------------------------------------------------------------------------------------------
DIGITAL PUBLISHING -- 103,000
---------------------------------------------------------------------------------------------
BROADCASTING
---------------------------------------------------------------------------------------------
Business offices, studios and transmitters
at various locations 325,350 29,200
---------------------------------------------------------------------------------------------
TOTAL 3,677,950 2,528,400
---------------------------------------------------------------------------------------------
</Table>
The Company will be building a new headquarters, which will be located in
Manhattan, New York in the Times Square area. The building will contain
approximately 1.54 million gross square feet of space, of which 825,000 gross
square feet will be occupied by the Company. On December 13, 2001, the Company
announced the execution of a 99-year ground lease for the building site by the
Company and the Forest City Ratner Companies Inc. (its development partner) with
a New York State agency. The lease gives the Company the option to purchase the
site after 29 years. The Company is targeting occupancy for the fourth quarter
of 2005.
ITEM 3. LEGAL PROCEEDINGS.
There are various legal actions that have arisen in the ordinary course of
business and are now pending against the Company. Such actions are usually 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 such actions with legal
counsel to the Company that the ultimate liability which might result from such
actions will not have a material adverse effect on the consolidated financial
statements.
- ----------
(1) The Company is leasing a 31-acre site in Flushing, N.Y., where its
printing and distribution plant is located, and has the option to purchase
the property at any time prior to the end of the lease in 2019.
(2) The Edison production and distribution facility is occupied pursuant to a
long-term lease with renewal and purchase options.
(3) Excludes 218,000 square feet in leased space no longer leased by CNI due
to the Globe's outsourcing of substantially all of its home-delivery
requirements.
<Page>
12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
<Table>
<Caption>
EMPLOYED BY POSITION(S) AS OF
NAME AGE REGISTRANT SINCE FEBRUARY 22, 2002
- ------------------------ --- ---------------- ---------------------------------------------------
<S> <C> <C> <C>
CORPORATE OFFICERS
Arthur Sulzberger, Jr. 50 1978 Chairman (since 1997) and Publisher of The
Times (since 1992)
Russell T. Lewis 54 1966(1) President (since 1996) and Chief Executive
Officer (since 1997); Chief Operating Officer
(1996 to 1997); President and General Manager
of The Times (1993 to 1996)
Michael Golden 52 1984 Vice Chairman and Senior Vice President (since
1997); Vice President, Operations Development
(1996 to 1997)
Cynthia H. Augustine 44 1986(2) Senior Vice President, Human Resources (since
1998) and Broadcasting (since 2000);
President, The New York Times Company
Broadcast Group (since 2000); Partner in
Sabin, Bermant and Gould LLP (1994 to 1998)
Leonard P. Forman 56 1974(3) Senior Vice President and Chief Financial
Officer (since 2002); Senior Vice President
(since 2001); President and Chief Executive
Officer, The New York Times Company Magazine
Group, Inc. (1998 to 2001); Senior Vice
President, Corporate Development, New Ventures
and Electronic Businesses (1996-1998)
Solomon B. Watson IV 57 1974 Senior Vice President (since 1996); Vice
President (1990 to 1996); General Counsel
(since 1989); and Secretary (since 2000)
James C. Lessersohn 46 1987 Vice President, Finance and Corporate
Development (since 2001); Vice President and
Treasurer (1999 to 2001); Vice President,
Corporate Planning (1997 to 1999); Managing
Director, Corporate Planning (1994 to 1997)
Stuart Stoller 46 1996 Vice President and Corporate Controller (since
1996)
Michael G. Williams 45 1998 Vice President, Chief Information Officer
(since 2000); Vice President, Chief
Information Officer, The Times (since 1998);
Vice President, Information Technology and
Chief Technology Officer, The Seagram Spirits
and Wine Group (1992 to 1998)
R. Anthony Benten 38 1989 Treasurer (since 2001); Assistant Treasurer
(1997-2001); Director of Treasury (1997).
</Table>
- ----------
(1) Mr. Lewis left the Company in 1973 and returned in 1977.
(2) Ms. Augustine left the Company in 1993 and returned in 1998.
(3) Mr. Forman left the Company in 1986 and returned in 1996.
<Page>
13
<Table>
<Caption>
EMPLOYED BY POSITION(S) AS OF
NAME AGE REGISTRANT SINCE FEBRUARY 22, 2002
- ------------------------ --- ---------------- ---------------------------------------------------
<S> <C> <C> <C>
OPERATING UNIT EXECUTIVES
Richard H. Gilman 51 1983 Publisher of The Globe (since 1999); Senior
Vice President, Operations (1993 to 1998) and
Circulation (1998 to 1999) of The Times
Lynn O. Matthews 57 1973 President and Chief Operating Officer,
Regional Newspaper Group (since 2000);
Publisher, Sarasota Herald-Tribune (1991 to
2000)
Martin A. Nisenholtz 46 1995 Chief Executive Officer, New York Times
Digital (since 1999); President, The New York
Times Electronic Media Company (1995 to 1999)
Janet L. Robinson 51 1983 Senior Vice President, Newspaper Operations
(since 2001), and President and General
Manager of The Times (since 1996); Senior Vice
President, Advertising of The Times (1995-1996)
</Table>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this item appears at page F-38 of this Form 10-K.
ITEM 6. SELECTED FINANCIAL DATA.
The information required by this item appears at pages F-1 to F-2 of this Form
10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required by this item appears at pages F-3 to F-12 of this Form
10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The information required by this item appears at page F-12 of this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required by this item appears at pages F-13 to F-35 and pages
F-37 to F-38 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
In addition to the information set forth under the caption "Executive Officers
of the Registrant" in Part I of this Form 10-K, the information required by this
item is incorporated by reference to the sections entitled "Section 16(a)
Beneficial Ownership Reporting Compliance," "Proposal Number 1 - Election of
Directors," and "Interest of Directors in Certain Transactions of the Company,"
but only up to and not including the section entitled "Board of Directors," of
the Company's Proxy Statement for the 2002 Annual Meeting of Stockholders.
<Page>
14
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this item is incorporated by reference to the
sections entitled "Directors' Compensation," "Directors' and Officers' Liability
Insurance" and "Compensation of Executive Officers," but only up to and not
including the section entitled "Performance Presentation," of the Company's
Proxy Statement for the 2002 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this item is incorporated by reference to the
sections entitled "Voting On Matters Before The Annual Meeting," "Principal
Holders of Common Stock," "Security Ownership of Management and Directors,"
"Section 16(a) Beneficial Ownership Reporting Compliance," and "The 1997 Trust,"
of the Company's Proxy Statement for the 2002 Annual Meeting of Stockholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this item is incorporated by reference to the
sections entitled "Interest of Directors in Certain Transactions of the
Company," "Compensation of Executive Officers," but only up to and not including
the section entitled "Performance Presentation," of the Company's Proxy
Statement for the 2002 Annual Meeting of Stockholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A) DOCUMENTS FILED AS PART OF THIS REPORT
(1) FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
(a) The Consolidated Financial Statements of the Company are filed as part of
this Form 10-K and are set forth on pages F-13 to F-35. The report of
Deloitte & Touche LLP, Independent Auditors, dated January 28, 2002
(February 21, 2002 as to Note 18), is set forth on page F-36 of this Form
10-K.
(b) The following additional consolidated financial information is filed as
part of this Form 10-K and should be read in conjunction with the
Consolidated Financial Statements set forth on pages F-13 to F-35.
Schedules not included with this additional consolidated financial
information have been omitted either because they are not applicable or
because the required information is shown in the Consolidated Financial
Statements at the aforementioned pages.
<Table>
<Caption>
PAGE
----
<S> <C>
Ratio of Earnings to Fixed Charges................................... Exhibit 12
Independent Auditors' Consent........................................ Exhibit 23
Consolidated Schedules for the Three Years Ended December 30, 2001:
II--Valuation and Qualifying Accounts............................ S-1
</Table>
Separate financial statements and supplemental schedules of associated companies
accounted for by the equity method are omitted in accordance with the provisions
of Rule 3-09 of Regulation S-X.
<Page>
15
(2) EXHIBITS
(3.1) Certificate of Incorporation as amended and restated to reflect
amendments effective June 19, 1998 (filed as an Exhibit to the
Company's Form 10-Q dated August 11, 1998, and incorporated by
reference herein).
(3.2) By-laws as amended through December 20, 2001.
(4) The Company agrees to furnish to the Commission upon request a copy of
any instrument with respect to long-term debt of the Company and any
subsidiary for which consolidated or unconsolidated financial
statements are required to be filed, and for which the amount of
securities authorized thereunder does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated basis.
(10.1) The Company's 1991 Executive Stock Incentive Plan, as amended through
September 20, 2001 (filed as an Exhibit to the Company's Form 10-Q
dated November 8, 2001, and incorporated by reference herein).
(10.2) The Company's 1991 Executive Cash Bonus Plan, as amended through May
23, 2000 (filed as an Exhibit to the Company's Form 10-Q dated November
8, 2000, and incorporated by reference herein).
(10.3) The Company's Non-Employee Directors' Stock Option Plan, as amended
through September 21, 2000 (filed as an Exhibit to the Company's Form
10-Q dated November 8, 2000, and incorporated by reference herein).
(10.4) The Company's Supplemental Executive Retirement Plan, as amended and
restated through January 1, 1993 (filed as an Exhibit to the Company's
Form 10-K dated March 11, 1996, and incorporated by reference herein).
(10.5) Amendment No. 1, dated May 1, 1997, to the Company's Supplemental
Executive Retirement Plan (filed as an Exhibit to the Company's Form
10-Q dated March 30, 1997, and incorporated by reference herein).
(10.6) Lease (short form) between the Company and Z Edison Limited
Partnership, dated April 8, 1987 (filed as an Exhibit to the Company's
Form 10-K dated March 27, 1988, and incorporated by reference herein).
(10.6.1) Amendment to Lease between the Company and Z Edison Limited
Partnership, dated May 14, 1997 (filed as an Exhibit to the Company's
Form 10-Q dated November 10, 1998, and incorporated by reference
herein).
(10.6.2) Second Amendment to Lease between the Company and Z Edison Limited
Partnership, dated June 30, 1998 (filed as an Exhibit to the Company's
Form 10-Q dated November 10, 1998, and incorporated by reference
herein).
(10.7) Agreement of Lease, dated as of December 15, 1993, between The City of
New York, Landlord, and the Company, Tenant (as successor to New York
City Economic Development Corporation (the "EDC"), pursuant to an
Assignment and Assumption of Lease With Consent, made as of December
15, 1993, between the EDC, as Assignor, to the Company, as Assignee)
(filed as an Exhibit to the Company's Form 10-K dated March 21, 1994,
and incorporated by reference herein).
(10.8) Funding Agreement #1, dated as of December 15, 1993, between the EDC
and the Company (filed as an Exhibit to the Company's Form 10-K dated
March 21, 1994, and incorporated by reference herein).
(10.9) Funding Agreement #2, dated as of December 15, 1993, between the EDC
and the Company (filed as an Exhibit to the Company's Form 10-K dated
March 21, 1994, and incorporated by reference herein).
(10.10) Funding Agreement #3, dated as of December 15, 1993, between the EDC
and the Company (filed as an Exhibit to the Company's Form 10-K dated
March 21, 1994, and incorporated by reference herein).
(10.11) Funding Agreement #4, dated as of December 15, 1993, between the EDC
and the Company (filed as an Exhibit to the Company's Form 10-K dated
March 21, 1994, and incorporated by reference herein).
<Page>
16
(10.12) New York City Public Utility Service Power Service Agreement, made as
of May 3, 1993, between The City of New York, acting by and through its
Public Utility Service, and The New York Times Newspaper Division of
the Company (filed as an Exhibit to the Company's Form 10-K dated March
21, 1994, and incorporated by reference herein).
(10.13) Employment Agreement, dated May 19, 1993, between API, Globe Newspaper
Company and William O. Taylor (filed as an Exhibit to the Company's
Form 10-K dated March 21, 1994, and incorporated by reference herein).
(10.14) Globe Newspaper Company, Inc. Supplemental Executive Retirement Plan,
as amended effective December 16, 1998 (filed as an Exhibit to the
Company's Form 10-K dated February 26, 1999, and incorporated by
reference herein).
(10.15) API's 1990 Stock Option Plan (Restated 1991) (filed as Exhibit 1 to
API's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1991
(Commission File No. 1-10251), and incorporated by reference herein).
(10.16) The Company's Deferred Executive Compensation Plan, as amended
effective January 1, 2001 (filed as an Exhibit to the Company's Form
10-K dated February 1, 2001, and incorporated by reference herein).
(10.17) The Company's Non-Employee Directors Deferral Plan (filed as an Exhibit
to the Company's Form 10-Q dated November 12, 1997, and incorporated by
reference herein).
(10.18) Distribution Agreement, dated as of September 24, 1998, by and among
the Company, Morgan Stanley & Co., Incorporated, Chase Securities Inc.
and Salomon Smith Barney Inc. (filed as an Exhibit to the Company's
Form 8-K dated September 24, 1998, and incorporated by reference
herein).
(10.19) Exchange Rate Agency Agreement, dated as of September 24, 1998, by and
between the Company and Morgan Stanley Dean Witter (filed as an Exhibit
to the Company's Form 8-K dated September 24, 1998, and incorporated by
reference herein).
(10.20) Calculation Agent Agreement, dated as of September 24, 1998, by and
between the Company and The Chase Manhattan Bank (filed as an Exhibit
to the Company's Form 8-K dated September 24, 1998, and incorporated by
reference herein).
(10.21) Employment Agreement, dated as of September 1, 1999, between the
Company and Martin Nisenholtz (filed as an Exhibit to the Company's
Form 10-K dated March 14, 2000, and incorporated by reference herein).
(10.22) Agreement of Lease, dated December 12, 2001, between the 42nd St.
Development Project, Inc., as Landlord, and The New York Times Building
LLC, as Tenant.
(12) Ratio of Earnings to Fixed Charges.
(21) Subsidiaries of the Company.
(23) Consent of Deloitte & Touche LLP.
(B) REPORTS ON FORM 8-K
The Company did not file any reports on Form 8-K during the last quarter of the
fiscal year ended December 30, 2001.
<Page>
17
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
Date: February 22, 2002
(Registrant)
THE NEW YORK TIMES COMPANY
By: /s/ SOLOMON B. WATSON, IV
............................................
Solomon B. Watson IV, Senior Vice President,
General Counsel and Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<Table>
<Caption>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
ARTHUR OCHS SULZBERGER Chairman Emeritus, Director February 22, 2002
ARTHUR SULZBERGER, JR. Chairman, Director (Principal February 22, 2002
Executive Officer)
RUSSELL T. LEWIS Chief Executive Officer, February 22, 2002
President and Director
MICHAEL GOLDEN Vice Chairman, Senior Vice February 22, 2002
President and Director
JOHN F. AKERS Director February 22, 2002
BRENDA C. BARNES Director February 22, 2002
RAUL E. CESAN Director February 22, 2002
JACQUELINE H. DRYFOOS Director February 22, 2002
WILLIAM E. KENNARD Director February 22, 2002
ROBERT A. LAWRENCE Director February 22, 2002
DAVID E. LIDDLE Director February 22, 2002
ELLEN R. MARRAM Director February 22, 2002
LEONARD P. FORMAN Senior Vice President and February 22, 2002
Chief Financial Officer
(Principal Financial Officer)
CHARLES H. PRICE II Director February 22, 2002
HENRY B. SCHACHT Director February 22, 2002
DONALD M. STEWART Director February 22, 2002
STUART STOLLER Vice President, Corporate February 22, 2002
Controller (Principal Accounting
Officer)
</Table>
<Page>
THE NEW YORK TIMES COMPANY
2001 FINANCIAL REPORT
- --------------------------------------------------------------------------------
CONTENTS PAGE
- --------------------------------------------------------------------------------
Selected Financial Data................................................... F-1
Management's Discussion and Analysis of Financial Condition and
Results of Operations................................................... F-3
Consolidated Statements of Income......................................... F-13
Consolidated Balance Sheets............................................... F-14
Consolidated Statements of Cash Flows..................................... F-16
Consolidated Statements of Stockholders' Equity........................... F-18
Notes to the Consolidated Financial Statements............................ F-19
Independent Auditors' Report.............................................. F-36
Management's Responsibilities Report...................................... F-36
Quarterly Information (unaudited)......................................... F-37
Market Information........................................................ F-38
Ten-Year Supplemental Financial Data...................................... F-39
<Page>
F-1
SELECTED FINANCIAL DATA
<Table>
<Caption>
YEARS ENDED
------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26, DECEMBER 27, DECEMBER 28,
(IN THOUSANDS, EXCEPT PER SHARE AND EMPLOYEE DATA) 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES AND INCOME
Revenues $3,015,958 $3,374,017 $3,046,190 $2,841,491 $2,727,009
Operating profit 374,403 616,579 552,630 493,137 426,770
Income from continuing operations before income taxes 339,854 653,744 519,812 475,437 398,645
Income from continuing operations 202,222 386,240 299,433 269,573 240,800
Discontinued operations, net of income taxes - Magazine
Group 242,450 11,296 10,744 17,057 21,501
Extraordinary item, net of income taxes - debt
extinguishment -- -- -- (7,716) --
Net income 444,672 397,536 310,177 278,914 262,301
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL POSITION
Property, plant and equipment - net $1,166,863 $1,207,160 $1,218,396 $1,326,196 $1,366,931
Total assets 3,438,684 3,606,679 3,495,802 3,465,109 3,623,183
Long-term debt and capital lease obligations 598,703 636,866 598,327 597,818 535,428
Common stockholders' equity 1,149,653 1,281,163 1,448,658 1,531,470 1,729,297
- ------------------------------------------------------------------------------------------------------------------------------------
PER SHARE OF COMMON STOCK
Basic earnings per share
Income from continuing operations $ 1.29 $ 2.30 $ 1.71 $ 1.43 $ 1.25
Discontinued operations, net of income taxes -
Magazine Group 1.54 .07 .06 .09 .11
Extraordinary item, net of income taxes - debt
extinguishments -- -- -- (.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.83 $ 2.37 $ 1.77 $ 1.48 $ 1.36
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share
Income from continuing operations $ 1.26 $ 2.25 $ 1.67 $ 1.40 $ 1.22
Discontinued operations, net of income taxes -
Magazine Group 1.52 .07 .06 .09 .11
Extraordinary item, net of income taxes - debt
extinguishment -- -- -- (.04) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.78 $ 2.32 $ 1.73 $ 1.45 $ 1.33
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends per share $ .49 $ .45 $ .41 $ .37 $ .32
Common stockholders' equity per share $ 7.18 $ 7.47 $ 8.08 $ 7.94 $ 8.77
- ------------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS
Operating profit to revenues 12% 18% 18% 17% 16%
Return on average common stockholders' equity 37% 29% 21% 17% 16%
Return on average total assets 13% 11% 9% 8% 7%
Long-term debt and capital lease obligations
to total capitalization 34% 33% 29% 28% 24%
Current assets to current liabilities .65 .70 .91 .82 .92
- ------------------------------------------------------------------------------------------------------------------------------------
FULL-TIME EQUIVALENT EMPLOYEES 12,050 14,000 13,400 13,200 13,100
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
o The Selected Financial Data should be read in conjunction with the
Consolidated Financial Statements included in this Form 10-K.
o See page F-2 for special items included in Selected Financial Data. All
earnings per share amounts for special items on page F-2 are on a diluted
basis.
o For comparability, certain prior year amounts have been reclassified to
conform with the 2001 presentation, primarily the presentation of Golf
Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine
Group") as discontinued operations.
o Fiscal year 2000 comprises 53 weeks and fiscal years 2001, 1999, 1998, and
1997 each comprise 52 weeks.
<Page>
F-2
Income used in computing the key operating ratios on page F-1 include the
following special items:
2001
The net effect of these items increased net income by $190.4 million and
earnings per share by $1.19.
o The Company recorded a $412.0 million pre-tax gain ($1.51 per share)
resulting from the sale of its golf properties, which included Golf
Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine
Group") and GolfDigest.com (see Note 2 of the Notes to the Consolidated
Financial Statements).
o The Company recorded a $90.4 million pre-tax charge ($.34 per share) for
work force reduction expenses, which included voluntary work force
reductions ("Buyouts") and layoffs (see Notes 6 and 16 of the Notes to the
Consolidated Financial Statements).
o The Company recorded $5.0 million in income on a pre-tax basis ($.02 per
share) related to a $25.0 million non-compete agreement (the "non-compete
agreement") entered into in connection with the sale of the Santa Barbara
News-Press in 2000. The total amount of the non-compete agreement is
recognized as income on a straight-line basis over the life of the
agreement (see Note 2 of the Notes to the Consolidated Financial
Statements).
2000
The net effect of these items increased net income by $37.6 million and earnings
per share by $.22.
o The Company recorded an $85.3 million pre-tax net gain ($.36 per share).
This resulted from a gain of $132.1 million in connection with the sale of
seven newspapers and nine telephone directory operations as well as the
amortization of income related to the non-compete agreement, partially
offset by a disposition loss and write-downs for certain of the Company's
equity investments in online ventures in the aggregate amount of $46.8
million (see Note 2 of the Notes to the Consolidated Financial
Statements).
o The Company recorded a $22.7 million pre-tax noncash charge ($.12 per
share) for a write-down of intangible assets related to the acquisition of
Abuzz Technologies, Inc. This charge is included in amortization expense
(see Note 2 of the Notes to the Consolidated Financial Statements).
o The Company recorded a $5.3 million pre-tax charge ($.02 per share) for
Buyouts across the Company (see Notes 6 and 16 of the Notes to the
Consolidated Financial Statements).
1999
This item reduced net income by $8.9 million and earnings per share by $.05.
o The Company recorded a $15.5 million pre-tax charge principally for
Buyouts at The Boston Globe (see Notes 6 and 16 of the Notes to the
Consolidated Financial Statements).
1998
The net effect of these items reduced net income by $0.4 million and earnings
per share by $.01.
o The Company recorded a $4.6 million pre-tax gain ($.01 per share) from the
sale of equipment.
o The Company recorded a $7.7 million after-tax extraordinary item ($.04 per
share) in connection with its repurchase of $78.1 million of its $150.0
million, 8.25% notes due in 2025.
o The Company recorded an $8.0 million pre-tax gain ($.02 per share) from
the satisfaction of a post-closing requirement related to the sale of
assets of its tennis, sailing and ski magazines in 1997.
o The Company recorded $5.8 million in pre-tax income ($.02 per share)
related to a non-compete agreement entered into as part of the divestiture
of the Company's Women's Magazine Division in 1994.
o The Company recorded a $5.4 million pre-tax charge ($.02 per share) for
Buyouts.
1997
The net effect of these items increased net income by $18.8 million and earnings
per share by $.10.
o The Company recorded an $18.0 million benefit from a tax settlement ($.09
per share) resulting from the completion of its federal income tax audits
for periods through 1992.
o The Company recorded aggregate pre-tax gains totaling $10.4 million ($.03
per share) from the sale of assets of its tennis, sailing and ski
magazines and certain small properties, net of costs associated with the
exit of a golf tee-time reservation operation.
o The Company recorded a $10.1 million pre-tax noncash charge ($.03 per
share) relating to the adoption of Emerging Issues Task Force Issue No.
97-13, Accounting for Costs Incurred in Connection with a Consulting
Contract or an Internal Project That Combines Business Process
Reengineering and Information Technology Transformation.
o The Company recorded $10.0 million in pre-tax income ($.03 per share)
related to a non-compete agreement entered into as part of the divestiture
of the Company's Women's Magazine Division in 1994.
o The Company recorded an $8.5 million pre-tax charge ($.02 per share) for
Buyouts.
<Page>
F-3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
In 2001 newspapers contributed 93% of the Company's $3.0 billion in revenues,
while broadcasting accounted for 5% and New York Times Digital ("NYTD"), the
Company's digital division, accounted for the remainder.
Advertising revenues were 68% and circulation revenues were 25% of the Company's
total revenues in 2001, and newspaper distribution operations and NYTD database
royalties principally made up the balance.
Newsprint is the major component of the Company's cost of raw materials. Average
newsprint market prices in 2001 increased from 2000 and are expected to be lower
in 2002 than in 2001.
Below are charts of the Company's consolidated costs and expenses for the three
years ended December 30, 2001.
COMPONENTS OF CONSOLIDATED COSTS AND EXPENSES
[The following table was depicted as a bar chart in the printed material.]
<Table>
<Caption>
2001 2000 1999
---- ---- ----
<S> <C> <C> <C>
Wages and Benefits 43% 42% 43%
Raw Materials 12% 13% 12%
Other Operating Costs 37% 37% 37%
Depreciation & Amortization 8% 8% 8%
Total 100% 100% 100%
</Table>
CONSOLIDATED COSTS AND EXPENSES AS A PERCENTAGE OF REVENUES
[The following table was depicted as a bar chart in the printed material.]
<Table>
<Caption>
2001 2000 1999
---- ---- ----
<S> <C> <C> <C>
Wages and Benefits 38% 34% 35%
Raw Materials 11% 10% 10%
Other Operating Costs 33% 31% 31%
Depreciation & Amortization 6% 7% 6%
Total 88% 82% 82%
</Table>
The 2001 increase in wages and benefits as a percentage of revenues compared
with 2000 and 1999 is primarily due to lower total revenue resulting from a
decline in advertising revenue as well as larger work force reduction expenses,
which included voluntary work force reductions ("Buyouts") and layoffs, incurred
in 2001.
RESULTS OF OPERATIONS
CONSOLIDATED RESULTS
The Company's consolidated financial results for 2001, 2000 and 1999 were as
follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
(IN MILLIONS, EXCEPT PER -------------
SHARE DATA) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $3,016.0 $3,374.0 $3,046.2 (10.6) 10.8
- --------------------------------------------------------------------------------
Operating profit $ 374.4 $ 616.6 $ 552.6 (39.3) 11.6
- --------------------------------------------------------------------------------
Income before
special items $ 254.3 $ 359.9 $ 319.1 (29.4) 12.8
Special items 190.4 37.6 (8.9) * *
- --------------------------------------------------------------------------------
Net income $ 444.7 $ 397.5 $ 310.2 11.9 28.2
- --------------------------------------------------------------------------------
Diluted earnings per
share before
special items $ 1.59 $ 2.10 $ 1.78 (24.3) 18.0
Special items 1.19 .22 (.05) * *
- --------------------------------------------------------------------------------
Diluted earnings
per share $ 2.78 $ 2.32 $ 1.73 19.8 34.1
- --------------------------------------------------------------------------------
</Table>
FOR AN EXPLANATION OF SPECIAL ITEMS, SEE "SPECIAL ITEMS" ON PAGE F-5.
ALL REFERENCES TO EARNINGS PER SHARE IN THIS MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ARE TO DILUTED
EARNINGS PER SHARE.
FISCAL YEARS 2001 AND 1999 EACH COMPRISES 52 WEEKS AND FISCAL YEAR 2000
COMPRISES 53 WEEKS. THE IMPACT OF THE 53RD WEEK (THE "ADDITIONAL WEEK") IN THE
COMPANY'S 2000 FISCAL YEAR WAS REVENUES OF $40.2 MILLION, OPERATING PROFIT OF
$7.1 MILLION, NET INCOME OF $3.3 MILLION AND EARNINGS PER SHARE OF $.02.
*REPRESENTS PERCENTAGES GREATER THAN OR EQUAL TO 100%.
Revenues were $3.0 billion in 2001, down 10.6% from $3.4 billion in 2000.
Excluding revenues from disposed properties including seven newspapers and nine
telephone directory operations ("divested Regionals") and the additional week,
total revenues for the Company decreased 8.4% and advertising revenues decreased
13.7% in 2001 compared with 2000.
Operating profit for 2001 decreased 39.3% to $374.4 million from $616.6 million
in 2000. Operating profit for 2001, excluding special items, declined 27.8% to
$464.8 million from $643.7 million in 2000.
Operating results in 2001 decreased compared with 2000, primarily due to lower
advertising revenue in most categories resulting from a decline in the U.S.
economy. The decrease in advertising revenue was partly offset by a decrease in
total costs as well as an increase in circulation revenue in 2001 due to price
increases at The New York Times ("The Times") and The Boston Globe (the
"Globe").
Net income for 2001 increased 11.9% to $444.7 million from $397.5 million in
2000. Net income for 2001, excluding special items, declined 29.4% to $254.3
million from $359.9 million in 2000.
Revenues were $3.4 billion in 2000, up 10.8% from $3.0 billion in 1999.
Excluding revenues from the divested Regionals, the Worcester Telegram & Gazette
(the "T&G"), which was acquired on January 7, 2000, and the additional week,
total revenues for
<Page>
F-4
the Company grew 7.4% in 2000 and advertising revenues grew 8.5% over 1999. On a
comparable basis, total revenues in 2000 improved mostly as a result of higher
advertising rates and increased advertising volume.
Operating profit for 2000 increased 11.6% to $616.6 million from $552.6 million
in 1999. Operating profit for 2000, excluding special items, rose 13.3% to
$643.7 million from $568.1 million in 1999.
The increase in operating results in 2000 compared with 1999 was mainly due to
strong advertising revenue growth, partially offset by higher newsprint expense.
Net income for 2000 increased 28.2% to $397.5 million from $310.2 million in
1999. Net income for 2000, excluding special items, rose 12.8% to $359.9 million
from $319.1 million in 1999.
EBITDA
The Company's consolidated EBITDA (earnings before interest, taxes, depreciation
and amortization) for 2001, 2000 and 1999 was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
---------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EBITDA $ 990.1 $964.3 $786.6 2.7 22.6
Special items (321.6) (79.2) 15.5 * *
- --------------------------------------------------------------------------------
EBITDA excluding
special items $ 668.5 $885.1 $802.1 (24.5) 10.3
- --------------------------------------------------------------------------------
</Table>
EBITDA is presented because it is a widely accepted indicator of funds available
to service debt, although it is not a measure of liquidity or of financial
performance under accounting principles generally accepted in the United States
of America ("GAAP"). The EBITDA presented may not be comparable to similarly
titled measures reported by other companies. The Company believes that EBITDA,
while providing useful information, should not be considered in isolation or as
an alternative to net income or cash flows as determined under GAAP.
OPERATING EXPENSES
Consolidated operating expenses were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
-------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Production costs
Raw materials $ 321.2 $ 350.4 $ 309.6 (8.3) 13.2
Wages and benefits 594.2 622.6 584.4 (4.6) 6.5
Other 447.5 460.9 437.8 (2.9) 5.3
- --------------------------------------------------------------------------------
Total production
costs 1,362.9 1,433.9 1,331.8 (5.0) 7.7
- --------------------------------------------------------------------------------
Selling, general and
administrative
expenses 1,278.7 1,323.5 1,161.8 (3.4) 13.9
- --------------------------------------------------------------------------------
Total $2,641.6 $2,757.4 $2,493.6 (4.2) 10.6
- --------------------------------------------------------------------------------
</Table>
Production costs for 2001 decreased 5.0% compared with 2000. The decrease was
primarily due to lower newsprint expense resulting from a decrease in
consumption, partially offset by an increase in cost, as well as lower wages and
benefits.
In 2001 the Company's newsprint expense decreased 6.2% compared with 2000,
excluding the divested Regionals. This resulted from an increase in the average
cost per ton of newsprint of 5.3%, which was more than offset by a decrease in
consumption of 11.5%. The decrease in consumption in 2001 was due to lower
advertising volume and web-width reductions, which decrease the size of a
printed sheet, at nine of the Company's newspapers as compared with two
newspapers in 2000.
Selling, general and administrative ("SGA") expenses decreased 6.8% to $1.2
billion in 2001 from $1.3 billion in 2000, excluding special items and the
divested Regionals. The lower level of SGA expenses is principally due to lower
compensation and promotion costs.
Production costs for 2000 increased 7.7% to $1.4 billion from $1.3 billion in
1999. The increase was in part related to higher newsprint expense associated
with increases in cost and consumption, and the acquisition of the T&G.
Production costs for 2000, excluding the divested Regionals, the T&G and NYTD,
increased 4.9% principally due to higher newsprint expense.
In 2000 the Company's newsprint expense increased 12.2%, 5.7% of which resulted
from an increase in the average cost per ton of newsprint and 6.5% of which
resulted from an increase in consumption due to increased advertising compared
with 1999.
SGA expenses for 2000 increased 13.1% to $1.3 billion from $1.1 billion in 1999,
excluding special items. SGA expenses increased 6.0% in 2000, excluding the
divested Regionals, the T&G and NYTD. The higher level of SGA expenses is partly
attributable to the national expansion of The Times.
OTHER ITEMS
JOINT VENTURES
Income from joint ventures (see Note 4 of the Notes to the Consolidated
Financial Statements) decreased to $7.7 million in 2001 from $15.9 million in
2000 and $17.9 million in 1999.
The decrease in joint venture income in 2001 compared with 2000 was primarily
due to the shutdown of Madison Paper Industries' ("Madison") paper machine for
an equipment modernization program, offset in part by higher newsprint selling
prices at Donohue Malbaie, Inc. ("Malbaie").
The reduction in joint venture income in 2000 compared with 1999 was due to
higher raw material expenses at Madison, partially offset by higher paper
selling prices at Madison and Malbaie.
INTEREST EXPENSE, NET
Interest expense, net decreased to $47.2 million in 2001 from $64.1 million in
2000. The decrease was principally due to lower levels of debt outstanding and
reduced interest rates on floating rate borrowings. In 2000 interest expense,
net
<Page>
F-5
increased to $64.1 million from $50.7 million in 1999. The increase was
principally due to increased borrowing levels to fund the purchase of the T&G
and the Company's share repurchase program.
Interest expense, net, included interest income of $4.2 million in 2001, $4.5
million in 2000 and $1.8 million in 1999 and $0.5 million in capitalized
interest in 2001. There was no capitalized interest in 2000 and 1999.
TAXES
The Company's annual effective income tax rates were 40.5% in 2001, 41.6% in
2000 and 42.4% in 1999, exclusive of special items. The decline in the effective
income tax rates was primarily attributable to lower state and local income
taxes.
DISCONTINUED OPERATIONS
On April 2, 2001, the Company sold its golf properties, which included Golf
Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine Group")
and GolfDigest.com for approximately $435.0 million. The Company recorded a gain
from the sale of approximately $412.0 million ($241.3 million after-tax), or
$1.51 per share in 2001.
The results of operations of the Magazine Group are reported as discontinued
operations for all periods presented. Diluted earnings per share from
discontinued operations of the Magazine Group were $1.52 in 2001, $.07 in 2000
and $.06 in 1999. Revenues and operating profit for the Magazine Group were as
follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% Change
---------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $26.5 $115.4 $110.6 (77.0) 4.4
- --------------------------------------------------------------------------------
Operating Profit $ 2.0 $ 19.3 $ 18.7 (89.6) 3.7
- --------------------------------------------------------------------------------
</Table>
Assets and liabilities for the Magazine Group were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(IN MILLIONS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ -- $31.0
- --------------------------------------------------------------------------------
Total assets $ -- $56.0
- --------------------------------------------------------------------------------
Current liabilities $ -- $34.8
- --------------------------------------------------------------------------------
Total liabilities $ -- $44.2
- --------------------------------------------------------------------------------
Net assets of discontinued
operations $ -- $11.8
- --------------------------------------------------------------------------------
</Table>
EARNINGS PER SHARE
Diluted earnings per share in 2001 were $1.59, down 24.3% from $2.10 in 2000,
excluding special items. The decrease in 2001 compared with 2000 was mainly
related to lower advertising revenue resulting from a decline in the U.S.
economy.
Excluding special items, diluted earnings per share were $2.10 in 2000, up 18.0%
from $1.78 in 1999. The increase was mostly due to higher advertising revenues
in the Newspaper Group.
Diluted earnings per share as reported in the Company's Consolidated Statements
of Income were $2.78 in 2001, $2.32 in 2000 and $1.73 in 1999. The effect of
Company share repurchases on diluted earnings per share was an increase to
earnings per share of $.12 in 2001, $.09 in 2000 and $.07 in 1999 (see Note 15
of the Notes to the Consolidated Financial Statements).
The average diluted Class A and Class B common shares outstanding were 160.1
million in 2001, 171.6 million in 2000 and 179.2 million in 1999.
The Company expects that its first-quarter diluted earnings per share, excluding
special items, will be $.34 to $.37. The Company anticipates a second-half
recovery in the economy which is expected to result in 2002 earnings per share
growth in the mid-single-digit to low-double-digit range. If there is no
recovery in 2002, the Company believes modest earnings per share growth is still
possible.
SPECIAL ITEMS
Over the past three years, the Company's results have been affected by the
following special items:
2001
The net effect of these items increased net income by $190.4 million and
earnings per share by $1.19.
o A $412.0 million pre-tax gain ($1.51 per share) resulting from the sale of
the Magazine Group and GolfDigest.com (see Note 2 of the Notes to the
Consolidated Financial Statements).
o A $90.4 million pre-tax charge ($.34 per share) for work force reduction
expenses (see Notes 6 and 16 of the Notes to the Consolidated Financial
Statements).
o $5.0 million in income on a pre-tax basis ($.02 per share) related to a
$25.0 million non-compete agreement (the "non-compete agreement") entered
into in connection with the sale of the Santa Barbara News-Press in 2000.
The total amount of the non-compete agreement is recognized as income on a
straight-line basis over the life of the agreement (see Note 2 of the
Notes to the Consolidated Financial Statements).
2000
The net effect of these items increased net income by $37.6 million and earnings
per share by $.22.
o An $85.3 million pre-tax net gain ($.36 per share). This resulted from a
gain of $132.1 million in connection with the sale of the divested
Regionals as well as the amortization of income from the non-compete
agreement, partially offset by a disposition loss and write-downs for
certain of the Company's equity investments in online ventures in the
aggregate amount of $46.8 million (see Note 2 of the Notes to the
Consolidated Financial Statements).
o A $22.7 million pre-tax noncash charge ($.12 per share) for a write-down
of intangible assets related to the acquisition of Abuzz Technologies,
Inc. ("Abuzz"). This charge is included in amortization expense (see Note
2 of the Notes to the Consolidated Financial Statements).
<Page>
F-6
o A $5.3 million pre-tax charge ($.02 per share) for Buyouts across the
Company (see Notes 6 and 16 of the Notes to the Consolidated Financial
Statements).
1999
This item reduced net income by $8.9 million and earnings per share by $.05.
o A $15.5 million pre-tax charge principally for Buyouts at the Globe (see
Notes 6 and 16 of the Notes to the Consolidated Financial Statements).
OPERATING SEGMENT INFORMATION
REVENUES, EBITDA AND OPERATING PROFIT
Consolidated revenues, EBITDA and operating profit by business segment were as
follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
-----------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
Newspapers $2,826.1 $3,160.2 $2,857.4 (10.6) 10.6
Broadcast 140.9 160.3 150.1 (12.1) 6.8
New York Times
Digital 60.3 66.6 43.7 (9.4) 52.4
Intersegment
eliminations(A) (11.3) (13.1) (5.0) 13.0 *
- --------------------------------------------------------------------------------
Total revenues $3,016.0 $3,374.0 $3,046.2 (10.6) 10.8
- --------------------------------------------------------------------------------
EBITDA
Newspapers $ 550.3 $ 842.6 $ 732.8 (34.7) 15.0
Broadcast 51.3 65.6 63.2 (21.8) 3.7
New York Times
Digital 0.1 (36.7) (9.5) * *
Unallocated corporate
expenses (33.9) (28.6) (38.2) (18.5) 25.1
Income from joint
ventures 8.0 16.3 18.3 (50.8) (10.9)
Gain on disposition
of assets and
other-net -- 84.5 -- * *
Discontinued
operations 414.3 20.6 20.0 * 2.9
- --------------------------------------------------------------------------------
Total EBITDA $ 990.1 $ 964.3 $ 786.6 2.7 22.6
- --------------------------------------------------------------------------------
Operating Profit (Loss)
Newspapers $ 389.0 $ 677.6 $ 568.6 (42.6) 19.2
Broadcast 35.2 48.8 45.8 (27.9) 6.5
New York Times
Digital (7.3) (70.0) (14.1) 89.5 *
Unallocated corporate
expenses (42.5) (39.8) (47.7) (6.5) 16.5
- --------------------------------------------------------------------------------
Total operating profit $ 374.4 $ 616.6 $ 552.6 (39.3) 11.6
- --------------------------------------------------------------------------------
</Table>
(A) Intersegment eliminations primarily include license fees between New York
Times Digital and other segments.
NEWSPAPER GROUP
The Newspaper Group includes The Times, the New England Newspaper Group, which
includes the Globe and the T&G, 15 other newspapers ("Regional Newspapers"),
newspaper distributors, a news service, a features syndicate, TimesDigest and
licensing of the trademarks and copyrights of The Times and the Globe.
The Company acquired certain assets and liabilities of the T&G on January 7,
2000, and the related results of operations are included as of that date.
Beginning in 2001, for financial reporting purposes, the Globe and the T&G were
combined and presented as the New England Newspaper Group.
<Table>
<Caption>
- -----------------------------------------------------------------------------------
% CHANGE
-----------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $2,826.1 $3,160.2 $2,857.4 (10.6) 10.6
- -----------------------------------------------------------------------------------
EBITDA $ 550.3 $ 842.6 $ 732.8 (34.7) 15.0
- -----------------------------------------------------------------------------------
Operating Profit $ 389.0 $ 677.6 $ 568.6 (42.6) 19.2
- -----------------------------------------------------------------------------------
</Table>
Revenues declined to $2.8 billion in 2001, down 10.6% from $3.2 billion in 2000.
Excluding revenues from the divested Regionals and the additional week, total
Newspaper Group revenues decreased 8.2% compared with 2000. The decrease was due
to lower advertising revenue across the entire group principally attributable to
a slowing U.S. economy. The decrease in advertising revenue was partially offset
by higher circulation revenue at The Times and the Globe due to price increases
at both newspapers.
The Newspaper Group's operating profit for 2001 declined 42.6% to $389.0
million, compared with $677.6 million in 2000. Excluding special items, 2001
operating profit declined 30.0% to $475.5 million, compared with $679.7 million
in 2000. The decrease in 2001 was mainly related to lower advertising revenue,
partly offset by a decrease in total costs as well as an increase in circulation
revenue in 2001.
Revenues grew to $3.2 billion in 2000, up 10.6% from $2.9 billion in 1999.
Excluding revenues from the divested Regionals, the T&G and the additional week,
total Newspaper Group revenues in 2000 grew 7.0% over 1999. Performance was
strongest at The Times and the Globe, where advertising revenues climbed 11.2%
and 6.8%. The Times benefited from higher advertising rates, while both
newspapers benefited from increased volume.
The Newspaper Group's operating profit for 2000 rose 19.2% to $677.6 million,
compared with $568.6 million in 1999. Excluding special items, 2000 operating
profit rose 16.4% to $679.7 million, compared with $584.0 million in 1999. The
improvement primarily resulted from strong revenue growth despite higher
newsprint costs. Excluding the T&G and the divested Regionals, operating profit
increased 17.1% in 2000.
<Page>
F-7
Advertising, circulation and other revenue, by line of business of the Newspaper
Group, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
-----------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The New York Times
Advertising $1,098.5 $1,306.2 $1,175.2 (15.9) 11.2
Circulation 508.2 476.6 452.6 6.6 5.3
Other 151.7 144.6 129.3 4.9 11.8
- --------------------------------------------------------------------------------
Total $1,758.4 $1,927.4 $1,757.1 (8.8) 9.7
- --------------------------------------------------------------------------------
New England Newspaper
Group (A)
Advertising $ 451.3 $ 552.3 $ 462.4 (18.3) 19.4
Circulation 162.1 159.4 133.7 1.7 19.2
Other 27.5 35.2 22.5 (21.9) 56.2
- --------------------------------------------------------------------------------
Total $ 640.9 $ 746.9 $ 618.6 (14.2) 20.7
- --------------------------------------------------------------------------------
Regional Newspapers
Advertising $ 323.8 $ 368.6 $ 363.4 (12.1) 1.4
Circulation 89.4 101.2 103.0 (11.7) (1.8)
Other 13.6 16.1 15.3 (15.9) 5.6
- --------------------------------------------------------------------------------
Total $ 426.8 $ 485.9 $ 481.7 (12.2) 0.9
- --------------------------------------------------------------------------------
Total Newspaper Group
Advertising $1,873.6 $2,227.1 $2,001.0 (15.9) 11.3
Circulation 759.7 737.2 689.3 3.1 6.9
Other 192.8 195.9 167.1 (1.6) 17.2
- --------------------------------------------------------------------------------
Total $2,826.1 $3,160.2 $2,857.4 (10.6) 10.6
- --------------------------------------------------------------------------------
</Table>
(A) The T&G was acquired on January 7, 2000, and the results of operations
were included as of that date. Advertising, circulation, other and total
revenue for the T&G in 2000 were $58.4 million, $23.5 million, $0.7
million and $82.6 million.
The percentage change excluding the divested Regionals was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
--------------------
01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C>
Regional Newspapers
Advertising (4.0) 4.9
Circulation (3.1) 1.1
Other (4.5) 7.4
- --------------------------------------------------------------------------------
Total (3.8) 4.2
- --------------------------------------------------------------------------------
Total Newspaper Group
Advertising (14.7) 12.1
Circulation 4.3 7.5
Other (0.6) 17.5
- --------------------------------------------------------------------------------
Total (9.4) 11.3
- --------------------------------------------------------------------------------
</Table>
The decrease in advertising revenue and volume in 2001 compared with 2000 was
principally attributable to a slowing U.S. economy. The Company increased
circulation prices at The Times and the Globe in 2001. These circulation price
increases resulted in approximately $31.0 million in circulation revenue in
2001. Effective February 4, 2002, prices for home-delivery subscriptions for The
Times increased, which is expected to improve profits by $24.0 to $26.0 million
in 2002. Additionally, the Company continues to expect 2002 circulation revenue
growth to be in the range of 4% to 6%.
Advertising volume for The Times, the New England Newspaper Group and the
Regional Newspapers was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(INCHES IN
THOUSANDS, % CHANGE
PREPRINTS IN ---------------
THOUSANDS OF COPIES) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
The New York Times
Retail 475.0 574.0 567.3 (17.2) 1.2
National 1,370.2 1,691.6 1,582.1 (19.0) 6.9
Classified 781.2 964.6 984.2 (19.0) (2.0)
Zoned 939.5 1,033.4 1,015.7 (9.1) 1.8
- --------------------------------------------------------------------------------
Total 3,565.9 4,263.6 4,149.3 (16.4) 2.8
- --------------------------------------------------------------------------------
Preprints 489,660 459,311 427,857 6.6 7.4
- --------------------------------------------------------------------------------
New England Newspaper
Group(A)
Retail 865.0 966.8 667.5 (10.5) 44.8
National 762.5 879.8 753.1 (13.3) 16.8
Classified 1,641.6 1,908.5 1,354.4 (14.0) 40.9
Zoned 880.6 795.9 256.2 10.6 *
- --------------------------------------------------------------------------------
Total 4,149.7 4,551.0 3,031.2 (8.8) 50.1
- --------------------------------------------------------------------------------
Preprints 957,555 1,032,437 801,842 (7.3) 28.8
- --------------------------------------------------------------------------------
Regional Newspapers
Retail 5,721.3 7,099.8 7,575.4 (19.4) (6.3)
National 223.4 290.8 285.0 (23.2) 2.0
Classified 6,909.1 8,046.7 8,068.4 (14.1) (0.3)
Legal 362.2 511.4 456.4 (29.2) 12.1
- --------------------------------------------------------------------------------
Total 13,216.0 15,948.7 16,385.2 (17.1) (2.7)
- --------------------------------------------------------------------------------
Preprints 1,056,784 1,149,955 1,115,303 (8.1) 3.1
- --------------------------------------------------------------------------------
</Table>
(A) Advertising volume for the T&G in 2000 was 320,100 inches for retail,
82,200 inches for national, 536,700 inches for classified, 493,900 inches
for zoned and 1,432,900 inches for total. Preprints for the T&G in 2000
were 201,135,000 copies.
The percentage change in advertising volume, excluding the divested Regionals,
was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
---------------------
01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C>
Regional Newspapers
Retail (4.6) (1.0)
National (4.6) 5.7
Classified (3.5) 2.7
Legal (10.0) 18.1
- --------------------------------------------------------------------------------
Total (4.2) 1.5
- --------------------------------------------------------------------------------
Preprints (2.3) 6.0
- --------------------------------------------------------------------------------
</Table>
<Page>
F-8
Average circulation for The Times, the New England Newspaper Group and the
Regional Newspapers was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
WEEKDAY/DAILY SUNDAY
------------------ ------------------
(COPIES IN THOUSANDS) 2001 % CHANGE 2001 % CHANGE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The New York Times 1,143.7 1.3 1,695.9 --
New England Newspaper
Group(A) 577.1 0.5 828.8 (2.3)
Regional Newspapers(B) 628.1 (10.1) 688.5 (8.3)
- --------------------------------------------------------------------------------
<Caption>
- --------------------------------------------------------------------------------
WEEKDAY/DAILY SUNDAY
------------------ ------------------
(COPIES IN THOUSANDS) 2000 % CHANGE 2000 % CHANGE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The New York Times 1,129.0 1.7 1,695.3 1.6
New England Newspaper
Group(A) 574.5 22.0 848.6 16.2
Regional Newspapers(B) 698.7 (4.9) 750.7 (3.9)
- --------------------------------------------------------------------------------
</Table>
(A) Average circulation in 2000 for the T&G was 104,100 weekday/daily copies
and 127,700 Sunday copies.
(B) Excluding the divested Regionals, average circulation for the Regional
Newspapers decreased 2.4% for weekday/daily copies and 2.5% for Sunday
copies in 2001 compared with 2000. On the same basis, average circulation
for the Regional Newspapers decreased 1.9% for weekday/daily copies and
1.8% for Sunday copies in 2000 compared with 1999.
The Times continues to improve retail availability in major markets across the
nation and to improve the quality and levels of its home-delivery circulation
base. All of the Company's newspapers are continuing to make improvements in
product delivery and customer service to attract new readers and retain existing
ones. Additionally, after the September 11 terrorist attacks, many of the
Company's newspapers experienced strong demand.
BROADCAST GROUP
The Broadcast Group is comprised of eight network-affiliated television stations
and two radio stations.
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
---------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $140.9 $160.3 $150.1 (12.1) 6.8
- --------------------------------------------------------------------------------
EBITDA $ 51.3 $ 65.6 $ 63.2 (21.8) 3.7
- --------------------------------------------------------------------------------
Operating Profit $ 35.2 $ 48.8 $ 45.8 (27.9) 6.5
- --------------------------------------------------------------------------------
</Table>
In 2001 revenues at the Broadcast Group declined 12.1% to $140.9 million from
$160.3 million in 2000 and operating profit declined 27.9% to $35.2 million from
$48.8 million in 2000. Revenues and operating profit in 2001 decreased as a
result of lower levels of advertising revenue due to a slowing U.S. economy. In
2000 the Broadcast Group benefited from advertising revenue associated with the
presidential elections and the Olympics as well as a stronger economy.
In 2000 the Broadcast Group revenues increased 6.8% to $160.3 million from
$150.1 million in 1999. Operating profit in 2000 increased 6.5% to $48.8 million
from $45.8 million in 1999. Revenues and operating profit increased in 2000
principally as a result of higher advertising revenue associated with the
presidential elections and the Olympics.
NEW YORK TIMES DIGITAL
NYTD consists of NYTimes.com, Boston.com and Digital Archive Distribution
("DAD"), which licenses archive databases of The Times and the Globe to
electronic information providers. In 2001, the Company sold GolfDigest.com,
which was included in the sale of the Company's golf properties.
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
--------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $60.3 $ 66.6 $ 43.7 (9.4) 52.4
- --------------------------------------------------------------------------------
EBITDA $ 0.1 $(36.7) $ (9.5) * *
- --------------------------------------------------------------------------------
Operating Profit $(7.3) $(70.0) $(14.1) 89.5 *
- --------------------------------------------------------------------------------
</Table>
NYTD revenues for 2001 were $60.3 million, down from $66.6 million in 2000.
Revenues declined mainly due to lower online display advertising, particularly
in the dot-com, telecommunication, finance and technology sectors, partially
offset by an increase in classified advertising revenue. The increase in
classified advertising revenue resulted from an increase in the real estate and
auto categories, partially offset by a decline in the help-wanted category.
Advertising revenue accounted for approximately 62% and other revenue, which is
primarily DAD, accounted for the remainder of NYTD's total revenues for 2001.
Operating losses in 2001 decreased to $7.3 million from $70.0 million in 2000.
The lower operating losses were mainly from cost reduction efforts including
decreased staffing and promotion costs. Additionally, operating losses in 2000
included a $22.7 million write-down of intangible assets related to the
acquisition of Abuzz.
NYTD revenues for 2000 were $66.6 million, up from $43.7 million in 1999. The
increase was primarily from new revenue streams.
Operating losses in 2000 increased to $70.0 million from $14.1 million in 1999.
Operating losses in 2000 included a $22.7 million write-down of intangible
assets related to the acquisition of Abuzz. Higher operating losses were mainly
due to increased staffing, promotion and advertising costs.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $471.2 million in 2001 compared
with $589.9 million in 2000 and $601.1 million in 1999. The 2001 decrease
compared with 2000 was primarily due to lower earnings resulting from lower
advertising revenues. The 2000 decrease compared with 1999 was principally due
to reductions in working capital, partially offset by higher earnings. Operating
cash flow was primarily used for share repurchases, capital expenditures,
dividend payments to stockholders and debt reduction.
Net cash provided by investing activities was $337.4 million in 2001 compared
with net cash used of $195.0 million in 2000 and $82.9 million in 1999. In 2001
net cash provided by investing activities was primarily due to proceeds from the
sale of the Magazine Group and GolfDigest.com. Net cash used in 2000 was
primarily due to cash paid for the acquisition
<Page>
F-9
of the T&G. The 2000 increase compared with 1999 was primarily due to the
acquisition of the T&G for $296.3 million in cash and the Company's minority
interest investments in online ventures, partially offset by the proceeds of the
sales of the divested Regionals.
Net cash used in financing activities was $825.7 million in 2001 compared with
$389.7 million in 2000 and $490.4 million in 1999. The increase in 2001 was
primarily due to the repayment of commercial paper in 2001 compared with
commercial paper borrowings in 2000. The proceeds from the sale of the Magazine
Group and GolfDigest.com were used to reduce debt. Additionally, income taxes on
the gain on the sale were paid on January 15, 2002 (see Note 9 of the Notes to
the Consolidated Financial Statements). Although the Company spent $156.9
million more in share repurchases in 2000 compared with 1999, the increase in
commercial paper borrowings in 2000 caused a decrease in cash used by $100.7
million.
Cash generated from the Company's operations and the funds available from
external sources are expected to be adequate to cover all cash requirements,
including working capital needs, stock repurchases, planned capital expenditures
and acquisitions, and dividend payments to stockholders. The Company's
operations are subject to certain risks outlined under Factors That Could Affect
Operating Results on pages F-11 and F-12.
The ratio of current assets to current liabilities decreased to 65.0% as of
December 30, 2001, from 69.5% as of December 31, 2000. The decline in 2001 is
primarily due to lower current assets primarily resulting from a decrease in
accounts receivable and other current assets as compared with 2000. Long-term
debt and capital lease obligations, as a percentage of total capitalization,
were 34.2% as of December 30, 2001, and 33.2% as of December 31, 2000. This
increase was principally from a reduction in stockholders' equity mainly
resulting from stock repurchases.
Contractual cash obligations as of December 30, 2001, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DUE IN
------------------------------------------------
(IN MILLIONS) 2002 2003-2004 2005-2006 LATER YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Long-term debt $ -- $ 49.5 $250.0 $220.4
Capital leases 8.6 15.2 13.9 119.2
Operating leases 15.2 21.3 16.1 32.6
------------------------------------------------
$ 23.8 $ 86.0 $280.0 $372.2
- --------------------------------------------------------------------------------
</Table>
Commercial commitments as of December 30, 2001, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
COMMITMENTS IN
------------------------------------------------
(IN MILLIONS) 2002 2003-2004 2005-2006 LATER YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Letters of credit $ 61.6 $ -- $ -- $ --
Guarantees 43.0 23.5 12.5 8.7
------------------------------------------------
$104.6 $ 23.5 $ 12.5 $ 8.7
- --------------------------------------------------------------------------------
</Table>
Included in the commercial commitments table above are a letter of credit
related to the Company's proposed new headquarters, a guarantee of a credit
facility and leases of a third-party service provider and a guarantee of leases
of three third-party printing and distribution facilities for The New York Times
national edition.
A guarantee of the Company's development partner's obligations related to the
Company's proposed new headquarters in the amount of $45.3 million is not
included in the commercial commitments table. This exposure is mitigated by a
letter of credit posted by the development partner for the same amount (see Note
17 of the Notes to the Consolidated Financial Statements). Also not included in
the commercial commitments table are letters of credit in the amount of $27.7
million, required by insurance companies, to provide support for the Company's
workers' compensation liability that is included in the Company's Consolidated
Balance Sheet as of December 30, 2001.
The Company believes that all third-party transactions recorded in the
Consolidated Financial Statements have been negotiated on an arm's-length basis.
Additionally, the Company has no material energy contracts.
FINANCING
In June 2001 total available funds under the Company's revolving credit
agreements were voluntarily decreased to $540.0 million from $600.0 million. The
Company's one-year revolving credit agreement was renewed and decreased to
$270.0 million from $300.0 million and will now mature in June 2002. The
Company's multi-year revolving credit agreement was renewed and decreased to
$270.0 million from $300.0 million and will now mature in June 2006. The
Company's revolving credit agreements require, among other provisions, specified
levels (amended in June 2001) of stockholders' equity. The amount of
stockholders' equity over required levels was $349.7 million as of December 30,
2001, compared with $262.7 million as of December 31, 2000. The increase in the
level of unrestricted stockholders' equity was primarily due to an amendment to
the agreement.
The revolving credit agreements permit borrowings, which bear interest at the
Company's option (i) for domestic borrowings: based on a certificates of deposit
rate, a Federal Funds rate, a base rate or a quoted rate; or (ii) for Eurodollar
borrowings: based on the LIBOR rate, plus various margins based on the Company's
credit rating.
In June 2001 the Company voluntarily decreased its ability to issue commercial
paper to $540.0 million from $600.0 million. The commercial paper facility is
supported by the Company's revolving credit agreements. Borrowings are in the
form of unsecured notes sold at a discount with maturities ranging up to 270
days.
The Company had $158.3 million in commercial paper outstanding as of December
30, 2001, with an annual weighted average interest rate of 2.0% and an average
of 11 days to maturity from original issuance.
The Company had $291.3 million in commercial paper outstanding as of December
31, 2000, with an annual weighted average interest rate of 6.6% and an average
of 52 days to maturity from original issuance.
On September 28, 2001, the Company repaid $40.0 million in 7.0% subordinated
convertible notes that were issued in March 2000 to three venture capital firms.
These notes, which were to mature in March 2003, allowed the venture capital
firms to call the notes beginning January 1, 2002, if the Company did not
<Page>
F-10
issue a certain new class of stock by this date. The Company agreed to repay the
notes prior to the call and maturity dates and subsequently borrowed lower-rate
commercial paper.
In 2001 the Company entered into interest rate swap agreements, designated as
fair-value hedges as defined under Statement of Financial Accounting Standards
("SFAS") No. 133 (see Note 8 of the Notes to the Consolidated Financial
Statements), with notional amounts totaling $100.0 million with variable
interest rates, which are reset quarterly based on three-month LIBOR. These
agreements were entered into to exchange the fixed interest rate on a portion of
the Company's 10-year $250.0 million 7.625% notes that mature on March 15, 2005,
for a variable interest rate. The fair value of the swap agreements was $2.8
million as of December 30, 2001. This resulted in the recording of an interest
rate swap asset and an increase in the value of the ten-year notes of $2.8
million along with an off-setting gain and loss in earnings which was included
in interest expense, net, in the Company's Consolidated Statement of Income. The
difference between fixed and variable interest rates to be paid or received is
accrued as interest rates change, and recognized as an adjustment to interest
expense.
The Company's total debt, including commercial paper and capital lease
obligations, was $759.5 million as of December 30, 2001, and $930.7 million as
of December 31, 2000. The decrease is primarily attributable to the lower levels
of commercial paper outstanding, due to proceeds from the sale of the Magazine
Group and GolfDigest.com and the deferral of income taxes payable related to
gain on the sale (see Note 9 of the Notes to the Consolidated Financial
Statements).
Total unused borrowing capacity under all financing arrangements amounted to
$483.7 million as of December 30, 2001, and $292.0 million as of January 28,
2002. On January 15, 2002, the Company paid the income taxes on the gain on the
sale of the Magazine Group and GolfDigest.com (see Note 9 of the Notes to the
Consolidated Financial Statements). Total debt, including commercial paper and
capital lease obligations, as of January 28, 2002, amounted to $951.2 million.
The increase of $191.7 million in total debt from December 30, 2001, is
primarily due to additional commercial paper outstanding.
CAPITAL EXPENDITURES
The Company estimates that capital expenditures for 2002 will be in a range from
$190.0 million to $210.0 million, compared with $90.4 million in 2001, $85.3
million in 2000 and $73.4 million in 1999. The 2002 estimate includes
approximately $46.0 million of land acquisition costs and $32.0 million of
pre-development costs related to the Company's proposed new headquarters in New
York City. (These estimates exclude the Company's development partner's interest
in costs associated with the proposed new headquarters. See Note 17 of the Notes
to the Consolidated Financial Statements for additional information). In
addition, the 2002 expenditures will include costs related to improving customer
service and increasing efficiency in support of the Company's national expansion
efforts, as well as adding capability to transmit digital high definition
broadcast signals, completing the construction of a new printing facility in
Tuscaloosa, Ala., and upgrading the Company's disaster recovery infrastructure.
DEPRECIATION AND AMORTIZATION
The Company expects that depreciation and amortization expense will be between
$160.0 million to $170.0 million for 2002, compared with $194.0 million in 2001,
$228.0 million in 2000 and $197.5 million in 1999. In 2000 amortization expense
included a $22.7 million write-down of intangible assets. The Company's
amortization expense in 2002 will be reduced with the adoption of SFAS No. 142
(see Recent Accounting Pronouncements below). If SFAS No. 142 had been in effect
in 2001, 2000 and 1999, depreciation and amortization expense would have been
$151.2 million, $180.8 million and $158.2 million, respectively. The reduction
in depreciation and amortization expense is prior to the review of any goodwill
and other intangible asset impairment.
SIGNIFICANT ACCOUNTING POLICIES
The Company's management is required to make estimates and assumptions in order
to prepare financial statements in conformity with GAAP. While actual results
could differ from these estimates and assumptions, the Company does not believe
that such differences would have a material effect on its results of operations
or financial position. The Company's significant accounting policies are
included in Note 1 of the Notes to the Consolidated Financial Statements. The
most significant accounting policies or estimates that underlie the preparation
of the Consolidated Financial Statements are the revenue recognition and
depreciation policies, in addition to the judgments used to review long-lived
assets, including goodwill and other intangible assets, for impairment.
Additionally, the Company's depreciation policy reflects judgments on the
estimated useful life of assets.
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2001 the Financial Accounting Standards Board ("FASB") issued SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets. This
statement supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. This statement also
supersedes the accounting and reporting provisions of Accounting Principles
Board ("APB") Opinion 30, Reporting the Results of Operations-Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions, relating to the disposal of a
segment of a business. SFAS No. 121 did not address the accounting for a segment
of a business accounted for as a discontinued operation under APB Opinion 30 and
therefore two accounting models existed for long-lived assets to be disposed of.
SFAS No. 144 established one accounting model for long-lived assets to be held
and used, long-lived assets (including those accounted for as a discontinued
operation) to be disposed of by sale and long-lived assets to be disposed of
other than by sale, and resolved certain implementation issues related to SFAS
No. 121. The Company adopted SFAS No. 144 on December 31, 2001, and it did not
have a material effect on its results of operations or financial position.
In July 2001 the FASB issued SFAS No. 141, Business Combinations and SFAS No.
142, Goodwill and Other Intangible
<Page>
F-11
Assets. SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations initiated after June 30, 2001, and prohibits the use
of the pooling-of-interest method. The Company adopted SFAS No. 141 in the third
quarter of 2001. The adoption of SFAS No. 141 had no material effect on the
Company's results of operations or financial position. SFAS No. 142, upon
adoption, ceases the amortization of goodwill and certain other intangibles and
requires, among other things, an impairment approach on the carrying value of
goodwill and other intangibles. An initial goodwill and other intangibles
impairment test must be completed in the year of adoption with at least an
annual impairment test thereafter. The Company adopted SFAS No. 142 on December
31, 2001, the first day of its 2002 fiscal year. The pro forma effect of the
adoption of SFAS No. 142, prior to the review of any goodwill and other
intangible asset impairment, had the pronouncement been adopted at the beginning
of each of the fiscal years 2001, 2000 and 1999, would have been a reduction in
depreciation and amortization of $42.8 million, $47.2 million and $39.3 million,
respectively.
Effective January 1, 2001, the Company adopted SFAS No. 133, as amended,
Accounting for Derivative Instruments and Hedging Activities, and it did not
have a material effect on its results of operations or financial position. SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. All derivatives, whether designated as
hedging activities or not, are required to be recorded on the balance sheet at
fair value. If the derivative is designated as a fair-value hedge, the changes
in the fair value of the derivative and the hedged item will be recognized in
earnings. If the derivative is designated as a cash-flow hedge, changes in the
fair value of the derivative will be recorded in other comprehensive income and
will be recognized in the statement of income when the hedged item affects
earnings. For derivatives that do not qualify as a hedge, changes in the fair
value will be recognized in earnings. SFAS No. 133 defines new requirements for
the designation of hedging relationships as well as ongoing effectiveness
assessments in order to use hedge accounting. See Note 8 of the Notes to the
Consolidated Financial Statements for a description of the Company's derivative
instruments.
FACTORS THAT COULD AFFECT OPERATING RESULTS
This Form 10-K contains forward-looking statements. Additional written and oral
forward-looking statements may be made by the Company from time to time in
Securities and Exchange Commission (SEC) filings and otherwise. The Company
cautions readers that results predicted by forward-looking statements,
including, without limitation, those relating to the Company's:
o future business prospects
o revenues
o operating expenses
o working capital
o liquidity
o capital needs
o interest costs and
o income
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those indicated in the forward-looking statements. The
risks and uncertainties include those listed below as well as other risks and
factors identified from time to time in the Company's filings with the SEC.
ADVERTISING REVENUES
Advertising is the Company's most significant source of revenue. Competition
from other forms of media available in the Company's various markets, including
but not limited to other newspapers, broadcast, magazines, direct marketing, the
Yellow Pages and the Internet, affects the Company's ability to attract and
retain advertisers and to increase advertising rates. Advertising could be
negatively affected by an economic downturn in any of the Company's markets.
Advertising revenues cause the Company's quarterly consolidated results to vary
by season. Second-quarter and fourth-quarter advertising revenue is generally
higher than first- and third-quarter volume since economic activity tends to be
lower after the holidays and in the summer. This trend was masked in 2001, as
advertising revenue declined during the first three quarters of 2001, due to a
significant cyclical decline. National and local economic conditions,
particularly in the New York City and Boston metropolitan regions, affect the
levels of the Company's retail, national and most particularly, classified
advertising revenue. Structural changes in the retail environment may also
depress the level of advertising revenue.
CIRCULATION REVENUES
Circulation is another significant source of revenue for the Company.
Circulation revenue and the Company's ability to achieve price increases for its
print products are affected by competition from other publications and other
forms of media available in the Company's various markets. Declining consumer
spending on discretionary items like newspapers and magazines, decreasing
amounts of free time and the declining frequency of regular newspaper buying
among young people could also negatively affect circulation.
PAPER PRICES
Newsprint is the Company's most important raw material and represents a
significant portion of the Company's operating expenses. The Company's operating
results could be adversely affected to the extent that such historically
volatile raw material prices increase significantly.
LABOR RELATIONS
Advances in technology and other factors have allowed the Company to lower costs
by reducing the size of its work force. There is no assurance that the Company
will continue to be able to reduce costs in this way. A significant portion of
the Company's employees are unionized and the Company's results could be
adversely affected if labor negotiations were to restrict its ability to
maximize the efficiency of its operations. In addition, if the Company
experienced labor unrest, its ability to produce and deliver its largest
products could be impaired.
<Page>
F-12
NEW PRODUCTS IN NEW MARKETS
There are substantial uncertainties associated with the Company's efforts to
develop new products and services for evolving markets. The success of these
ventures will be determined by the Company's efforts, and in some cases by those
of its partners, fellow investors and licensees. Initial timetables for the
introduction and development of new products or services may not be achieved and
price/profitability targets may not prove feasible. External factors, such as
the development of competitive alternatives and market response, may cause new
markets to move in unanticipated directions.
The Company may also consider the acquisition of specific properties or
businesses that fall outside its traditional lines of business if it deems such
properties sufficiently attractive.
The Company's Internet businesses have a limited operating history, are
dependent on advertising revenue and the continued growth and acceptance of the
Internet and subject to all risks of Internet businesses, such as evolving
regulation and technology, changes in consumer preferences and intense
competition.
PRODUCT PORTFOLIO; ACQUISITIONS
From time to time, the Company evaluates the various components of its portfolio
of products and may, as a result, buy or sell different properties. Such
acquisitions or divestitures may affect the Company's costs, revenues,
profitability and financial position.
Acquisitions involve risks, including difficulties in integrating acquired
operations, diversions of management resources, debt incurred in financing such
acquisitions and unanticipated problems and liabilities.
GOVERNMENT REGULATIONS
The Company's broadcast stations are subject to continuing technological and
regulatory developments that may affect their future profitability. The advent
of digital television broadcasting is one such development. The Federal
Communications Commission ("FCC") adopted rules in 1997 under which all
television stations are required to change to a new system of digital
broadcasting by May 2002. The direct hardware cost of this change will be
significant and the new digital stations are unlikely to produce significant
additional revenue until consumers have purchased a substantial number of
digital television receivers or until other sources of revenue to be derived
from the digital spectrum have been developed. Additionally, the new digital
transmission systems to be used by television stations, cable systems and direct
broadcast satellites could greatly increase the number of electronic video
services with which the Company's stations compete.
MEDIA CONSOLIDATION AND CONVERGENCE
Changes in the regulatory and technological environment are bringing about
consolidation of media companies and convergence among various forms of media.
The Company might then face competition with larger and more diversified
entities for circulation and advertising revenues. Such consolidation could also
affect the Company's opportunities to make acquisitions.
----------------------------
The foregoing list of factors should not be construed as exhaustive or as any
admission regarding the adequacy of disclosure made by the Company.
The Company disclaims any intention or obligation to update or revise
forward-looking statements, whether as a result of new information, future
events or otherwise.
----------------------------
MARKET RISK
The Company's market risk is principally associated with the following:
o Interest rate fluctuations related to its debt obligations which are
managed by balancing the mix of variable- versus fixed-rate borrowings.
Based on the variable-rate debt included in the Company's debt portfolio,
including interest rate swap agreements, a 25 basis point increase in
interest rates would have resulted in an additional $0.6 million (pre-tax)
in interest expense in 2001.
o Newsprint is a commodity subject to supply and demand market conditions.
The Company has equity investments in two paper mills, which provide a
partial hedge against price volatility. Newsprint expense represented 12%
of the Company's total costs and expenses in 2001. Based on the number of
newsprint tons consumed in 2001, a $10 increase in newsprint prices would
have resulted in an additional $5.2 million (pre-tax) in newsprint expense
in 2001.
o Unionized employees represent a significant portion of the Company's work
force and the Company's results could be adversely affected if labor
negotiations were to restrict its ability to maximize the efficiency of
its operations. In addition, if the Company experienced labor unrest, its
ability to produce and deliver its largest products could be impaired.
See Factors That Could Affect Operating Results above and Notes 4, 7, 8
and 17 of the Notes to the Consolidated Financial Statements as well.
<Page>
F-13
CONSOLIDATED STATEMENTS OF INCOME
<Table>
<Caption>
YEARS ENDED
--------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Advertising $2,042,211 $2,422,643 $2,170,473
Circulation 759,674 737,168 689,281
Other 214,073 214,206 186,436
- ----------------------------------------------------------------------------------------------------
Total 3,015,958 3,374,017 3,046,190
- ----------------------------------------------------------------------------------------------------
COSTS AND EXPENSES
Production costs
Raw materials 321,204 350,355 309,620
Wages and benefits 594,197 622,637 584,368
Other 447,463 460,895 437,836
- ----------------------------------------------------------------------------------------------------
Total 1,362,864 1,433,887 1,331,824
Selling, general and administrative expenses 1,278,691 1,323,551 1,161,736
- ----------------------------------------------------------------------------------------------------
Total 2,641,555 2,757,438 2,493,560
- ----------------------------------------------------------------------------------------------------
OPERATING PROFIT 374,403 616,579 552,630
Income from joint ventures 7,650 15,914 17,900
Interest expense, net 47,199 64,098 50,718
Gain on dispositions of assets and other - net 5,000 85,349 --
- ----------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 339,854 653,744 519,812
Income taxes 137,632 267,504 220,379
- ----------------------------------------------------------------------------------------------------
Income from continuing operations 202,222 386,240 299,433
- ----------------------------------------------------------------------------------------------------
Income from operations of discontinued Magazine Group,
net of income taxes 1,192 11,296 10,744
Gain on disposal of Magazine Group, net of income taxes 241,258 -- --
- ----------------------------------------------------------------------------------------------------
Discontinued operations, net of income taxes 242,450 11,296 10,744
- ----------------------------------------------------------------------------------------------------
NET INCOME $ 444,672 $ 397,536 $ 310,177
- ----------------------------------------------------------------------------------------------------
Average number of common shares outstanding
Basic 157,082 167,987 175,587
Diluted 160,081 171,597 179,244
- ----------------------------------------------------------------------------------------------------
Basic earnings per share
Income from continuing operations $ 1.29 $ 2.30 $ 1.71
Discontinued operations, net of income taxes 1.54 .07 .06
- ----------------------------------------------------------------------------------------------------
Net income $ 2.83 $ 2.37 $ 1.77
- ----------------------------------------------------------------------------------------------------
Diluted earnings per share
Income from continuing operations $ 1.26 $ 2.25 $ 1.67
Discontinued operations, net of income taxes 1.52 .07 .06
- ----------------------------------------------------------------------------------------------------
Net income $ 2.78 $ 2.32 $ 1.73
- ----------------------------------------------------------------------------------------------------
Dividends per share $ .49 $ .45 $ .41
- ----------------------------------------------------------------------------------------------------
</Table>
See Notes to the Consolidated Financial Statements.
<Page>
F-14
CONSOLIDATED BALANCE SHEETS
<Table>
<Caption>
DECEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2001 2000
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- ----------------------------------------------------------------------------------------------------
CURRENT ASSETS
Cash and cash equivalents $ 51,952 $ 69,043
Accounts receivable (net of allowances: 2001 - $42,597; 2000 - $44,169) 318,529 341,863
Inventories 31,639 35,064
Deferred income taxes 78,737 62,939
Other current assets 79,033 101,079
- ----------------------------------------------------------------------------------------------------
Total current assets 559,890 609,988
- ----------------------------------------------------------------------------------------------------
INVESTMENT IN JOINT VENTURES 86,811 107,320
- ----------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Land 71,428 72,228
Buildings, building equipment and improvements 779,552 814,658
Equipment 1,399,765 1,364,256
Construction and equipment installations in progress 65,532 37,132
- ----------------------------------------------------------------------------------------------------
Total - at cost 2,316,277 2,288,274
Less accumulated depreciation and amortization 1,149,414 1,081,114
- ----------------------------------------------------------------------------------------------------
Property, plant and equipment - net 1,166,863 1,207,160
- ----------------------------------------------------------------------------------------------------
INTANGIBLE ASSETS ACQUIRED
Costs in excess of net assets acquired (less accumulated amortization
of $332,308 in 2001 and $302,571 in 2000) 1,017,766 1,060,796
Other intangible assets acquired (less accumulated amortization
of $136,848 in 2001 and $110,172 in 2000) 392,473 419,302
- ----------------------------------------------------------------------------------------------------
Total 1,410,239 1,480,098
- ----------------------------------------------------------------------------------------------------
MISCELLANEOUS ASSETS 214,881 202,113
- ----------------------------------------------------------------------------------------------------
Total $3,438,684 $3,606,679
- ----------------------------------------------------------------------------------------------------
</Table>
See Notes to the Consolidated Financial Statements.
<Page>
F-15
<Table>
<Caption>
DECEMBER 30, DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE DATA) 2001 2000
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
Commercial paper outstanding $ 158,300 $ 291,251
Accounts payable 170,950 174,552
Accrued payroll and other related liabilities 81,299 126,983
Accrued expenses 160,867 190,748
Accrued income taxes 225,220 9,852
Unexpired subscriptions 61,706 81,385
Current portion of long-term debt and capital lease obligations 2,534 2,599
- -------------------------------------------------------------------------------------------------------------
Total current liabilities 860,876 877,370
- -------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES
Long-term debt 517,094 553,415
Capital lease obligations 81,609 83,451
Deferred income taxes 64,748 106,247
Other 764,704 705,033
- -------------------------------------------------------------------------------------------------------------
Total other liabilities 1,428,155 1,448,146
- -------------------------------------------------------------------------------------------------------------
Total liabilities 2,289,031 2,325,516
- -------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Serial preferred stock of $1 par value - authorized 200,000 shares - none issued -- --
Common stock of $.10 par value:
Class A - authorized 300,000,000 shares; issued: 2001 - 155,609,044;
2000 - 166,526,108 (including treasury shares: 2001 - 5,000,000;
2000 - 5,000,000) 15,561 16,653
Class B - convertible - authorized 847,020 shares; issued: 2001 - 847,020;
2000 - 847,158 (including treasury shares: 2001 - none and 2000 - none) 85 85
Retained earnings 1,354,173 1,467,103
Common stock held in treasury, at cost (208,392) (198,858)
Deferred compensation on issuance of restricted Class A common stock (2,951) (1,127)
Accumulated other comprehensive loss, net of income taxes:
Unrealized loss on marketable securities (105) --
Foreign currency translation adjustments (3,281) (2,693)
Unrealized derivative losses on cash-flow hedges (3,189) --
Minimum pension liability (2,248) --
- -------------------------------------------------------------------------------------------------------------
Total accumulated other comprehensive loss, net of income taxes (8,823) (2,693)
- -------------------------------------------------------------------------------------------------------------
Total stockholders' equity 1,149,653 1,281,163
- -------------------------------------------------------------------------------------------------------------
Total $ 3,438,684 $ 3,606,679
- -------------------------------------------------------------------------------------------------------------
</Table>
See Notes to the Consolidated Financial Statements.
<Page>
F-16
CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
YEARS ENDED
---------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
(IN THOUSANDS) 2001 2000 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 444,672 $ 397,536 $ 310,177
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 128,556 129,079 134,721
Amortization 65,452 98,894 62,772
Excess distributed earnings (undistributed earnings) of affiliates 7,209 3,461 (4,839)
Net gain on dispositions (412,029) (85,349) --
Deferred income taxes (52,940) (28,166) (44,632)
Long-term retirement benefit obligations 28,693 39,950 38,452
Other - net 20,716 850 13,108
Changes in operating assets and liabilities, net of
acquisitions/dispositions:
Accounts receivable - net 5,196 28,330 (38,743)
Inventories 323 (4,576) 3,122
Other current assets 6,992 (41,326) 43,121
Accounts payable (5,179) (18,717) 29,263
Accrued payroll and accrued expenses 14,169 62,025 53,583
Accrued income taxes 215,368 9,937 --
Unexpired subscriptions 4,040 (2,071) 990
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 471,238 589,857 601,095
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Businesses Acquired (2,636) (296,278) (5,100)
Net proceeds from dispositions 436,672 191,171 11,434
Additions to property, plant and equipment (90,367) (85,300) (73,407)
Other investing proceeds 11,835 13,865 8,704
Other investing payments (18,130) (18,418) (24,489)
- ------------------------------------------------------------------------------------------------------------------------
Net cash provided by/(used in) investing activities 337,374 (194,960) (82,858)
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Commercial paper (repayments) borrowings - net (132,951) 291,251 (124,100)
Redemption of subsidiary stock (25,000) -- --
Long-term obligations:
Increase -- 40,000 103,861
Reduction (42,899) (102,487) (2,358)
Capital shares:
Issuance 57,349 37,503 27,961
Repurchase (623,723) (580,584) (423,715)
Dividends paid to stockholders (77,018) (75,398) (72,016)
Other financing proceeds 18,539 -- --
- ------------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (825,703) (389,715) (490,367)
- ------------------------------------------------------------------------------------------------------------------------
Net (decrease)/increase in cash and cash equivalents (17,091) 5,182 27,870
Cash and cash equivalents at the beginning of the year 69,043 63,861 35,991
- ------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $ 51,952 $ 69,043 $ 63,861
- ------------------------------------------------------------------------------------------------------------------------
</Table>
See Notes to the Consolidated Financial Statements and Supplemental Disclosures
to Consolidated Statements of Cash Flows.
<Page>
F-17
SUPPLEMENTAL DISCLOSURES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
<Table>
<Caption>
CASH FLOW INFORMATION YEARS ENDED
----------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
(IN THOUSANDS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash payments during the year for
- --------------------------------------------------------------------------------
Interest $38,358 $ 61,575 $ 50,050
- --------------------------------------------------------------------------------
Income taxes, net of refunds $95,948 $253,989 $210,951
- --------------------------------------------------------------------------------
</Table>
NONCASH INVESTING AND FINANCING TRANSACTIONS
o In 1999 the Company entered into an irrevocable $12.0 million advertising
credit agreement for future advertising by TheStreet.com. The $12.0
million advertising credit was part of the purchase price of a minority
interest in TheStreet.com (see Note 5 of the Notes to the Consolidated
Financial Statements). Investment and deferred revenue accounts were
increased by $12.0 million accordingly. A total of $3.6 million of
advertising credits was utilized as of December 30, 2001.
BUSINESSES ACQUIRED
o In August 2001 the Company acquired certain assets and assumed certain
liabilities of a weekly newspaper, the Petaluma Argus-Courier, for
approximately $2.6 million (see Note 2 of the Notes to the Consolidated
Financial Statements).
o In January 2000 the Company acquired certain assets ($313.8 million) and
assumed certain liabilities ($17.5 million) of a newspaper, the Worcester
Telegram & Gazette, for $296.3 million in cash (see Note 2 of the Notes to
the Consolidated Financial Statements).
o The Company acquired Abuzz Technologies, Inc. in July 1999, for $5.1
million in cash and $25.0 million in the stock of a subsidiary of the
Company (see Note 2 of the Notes to the Consolidated Financial
Statements).
OTHER
o Capital expenditures attributable to our development partner's interest in
the Company's proposed new headquarters (see Note 17 of the Notes to the
Consolidated Financial Statements) are included in Other investing
payments and Other financing proceeds in the Company's Consolidated
Statements of Cash Flows.
<Page>
F-18
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<Table>
<Caption>
DEFERRED
COMPENSATION
COMMONON ON ISSUANCE
CAPITAL STOCK STOCK OF
---------------- ADDITIONAL HELD IN RESTRICTED
CLASS A CLASS B PAID-IN RETAINED TREASURY, CLASS A
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) COMMON COMMON CAPITAL EARNINGS AT COST COMMON STOCK
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 28, 1998 $ 18,576 $85 $ -- $1,677,469 $(162,051) $ --
- ----------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net income 310,177
Foreign currency translation
adjustments (net of tax of $55)
Change in unrealized gains on
marketable securities (net of
tax of $4,708)
- ----------------------------------------------------------------------------------------------------------------------
Comprehensive income
Dividends, common - $.41 per share (72,016)
Issuance of shares:
Retirement units - 16,407 Class A shares (615) 532
Employee stock purchase plan -
1,523,292 Class A shares 1 (15,261) 49,101
Stock options - 2,529,597 Class A shares 361 87,134 (37,152)
Stock conversions - 2,362 Class B shares
Repurchase of stock - 11,864,000 Class A shares (410,853)
Treasury stock retirement - 11,407,000 shares (1,141) (71,258) (314,887) 387,286
- ----------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 26, 1999 17,797 85 -- 1,600,743 (173,137) --
- ----------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net income 397,536
Foreign currency translation
adjustments (net of tax benefit of $92)
Change in unrealized loss on marketable
securities (net of tax benefit
of $9,858)
Reclassification adjustment for loss
included in net income (net of tax
benefit of $5,150)
- ----------------------------------------------------------------------------------------------------------------------
Comprehensive income
Dividends, common - $.45 per share (75,398)
Issuance of shares:
Retirement units - 34,468 Class A shares (1,193) 1,191
Employee stock purchase plan -
1,137,820 Class A shares 1 (3,977) 39,090
Restricted shares - 28,000 Class A shares 157 970 (1,127)
Stock options - 1,952,544 Class A shares 195 61,370 137
Stock conversions - 82 Class B shares
Repurchase of stock - 14,598,000 Class A
shares (580,584)
Treasury stock retirement - 13,402,791 shares (1,340) (56,357) (455,778) 513,475
- ----------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000 16,653 85 -- 1,467,103 (198,858) (1,127)
- ----------------------------------------------------------------------------------------------------------------------
Comprehensive income:
Net income 444,672
Foreign currency translation
adjustments (net of tax benefit
of $494)
Change in unrealized loss on marketable
securities (net of tax benefit of $88)
Unrealized derivative losses on
cash-flow hedges (net of tax benefit
of $2,244)
Minimum pension liability (net of tax
benefit of $1,530)
- ----------------------------------------------------------------------------------------------------------------------
Comprehensive income
Dividends, common - $.49 per share (77,018)
Issuance of shares:
Retirement units - 16,172 Class A shares (494) 644
Employee stock purchase plan -
999,371 Class A shares 3 (4,647) 38,429
Restricted shares - 50,000 Class A shares 164 1,989 (2,153)
Stock options - 2,982,459 Class A shares 298 96,127
Stock conversions - 138 Class B shares
Compensation expense recognized on
issuance of Restricted Class A shares 329
Repurchase of stock - 14,965,204 Class A shares (623,723)
Treasury stock retirement - 13,932,773 shares (1,393) (91,150) (480,584) 573,127
- ----------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 30, 2001 $ 15,561 $85 $ -- $1,354,173 $(208,392) $(2,951)
- ----------------------------------------------------------------------------------------------------------------------
<Caption>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME (LOSS),
NET OF
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) INCOME TAX TOTAL
- ---------------------------------------------------------------------------
<S> <C> <C>
BALANCE, DECEMBER 28, 1998 $ (2,609) $1,531,470
- ---------------------------------------------------------------------------
Comprehensive income:
Net income 310,177
Foreign currency translation
adjustments (net of tax of $55) 26 26
Change in unrealized gains on
marketable securities (net of
tax of $4,708) 5,753 5,753
- ---------------------------------------------------------------------------
Comprehensive income 315,956
Dividends, common - $.41 per share (72,016)
Issuance of shares:
Retirement units - 16,407 Class A shares (83)
Employee stock purchase plan -
1,523,292 Class A shares 33,841
Stock options - 2,529,597 Class A shares 50,343
Stock conversions - 2,362 Class B shares
Repurchase of stock - 11,864,000 Class A shares (410,853)
Treasury stock retirement - 11,407,000 shares --
- ---------------------------------------------------------------------------
BALANCE, DECEMBER 26, 1999 3,170 1,448,658
- ---------------------------------------------------------------------------
Comprehensive income:
Net income 397,536
Foreign currency translation
adjustments (net of tax of $92) (110) (110)
Change in unrealized loss on marketable
securities (net of tax benefit
of $9,858) (11,732) (11,732)
Reclassification adjustment for loss
included in net income (net of tax
benefit of $5,150) 5,979 5,979
- ---------------------------------------------------------------------------
Comprehensive income 391,673
Dividends, common - $.45 per share (75,398)
Issuance of shares:
Retirement units - 34,468 Class A shares (2)
Employee stock purchase plan -
1,137,820 Class A shares 35,114
Restricted shares - 28,000 Class A shares --
Stock options - 1,952,544 Class A shares 61,702
Stock conversions - 82 Class B shares
Repurchase of stock - 14,598,000 Class A
shares (580,584)
Treasury stock retirement - 13,402,791 shares --
- ---------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000 (2,693) 1,281,163
- ---------------------------------------------------------------------------
Comprehensive income:
Net income 444,672
Foreign currency translation
adjustments (net of tax benefit
of $494) (588) (588)
Change in unrealized loss on marketable
securities (net of tax benefit of $88) (105) (105)
Unrealized derivative losses on
cash-flow hedges (net of tax benefit
of $2,244) (3,189) (3,189)
Minimum pension liability (net of tax
benefit of $1,530) (2,248) (2,248)
- ---------------------------------------------------------------------------
Comprehensive income 438,542
Dividends, common - $.49 per share (77,018)
Issuance of shares:
Retirement units - 16,172 Class A shares 150
Employee stock purchase plan -
999,371 Class A shares 33,785
Restricted shares - 50,000 Class A shares --
Stock options - 2,982,459 Class A shares 96,425
Stock conversions - 138 Class B shares
Compensation expense recognized on
issuance of Restricted Class A shares 329
Repurchase of stock - 14,965,204 Class A shares (623,723)
Treasury stock retirement - 13,932,773 shares --
- ---------------------------------------------------------------------------
BALANCE, DECEMBER 30, 2001 $ (8,823) $1,149,653
- ---------------------------------------------------------------------------
</Table>
See Notes to the Consolidated Financial Statements
<Page>
F-19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The New York Times Company (the "Company") is engaged in diversified activities
in media. The Company's principal businesses are newspapers, television and
radio stations, and Internet properties. The Company also has equity interests
in a Canadian newsprint mill and a "supercalendered" (glossy paper commonly used
in magazines) paper mill. The Company's major source of revenue is advertising
from its newspaper business. The newspapers generally operate in the Northeast,
Southeast and California markets.
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Company after
elimination of intercompany items.
FISCAL YEAR
The Company's fiscal year-end is the last Sunday in December. Fiscal years 2001
and 1999 each comprises 52 weeks and fiscal year 2000 comprises 53 weeks.
INVENTORIES
Inventories are stated at the lower of cost or current market value. Inventory
cost is generally based on the last-in, first-out ("LIFO") method for newsprint
and magazine paper and the first-in, first-out ("FIFO") method for other
inventories.
INVESTMENTS
Investments in which the Company has at least a 20%, but not more than a 50%,
interest are accounted for under the equity method. Investment interests below
20% are accounted for under the cost method.
MARKETABLE SECURITIES
The Company determines the appropriate classification of marketable securities
at the time of purchase and re-evaluates such designation at each balance sheet
date. Marketable securities have been classified as available-for-sale, except
those securities included in mutual funds in connection with the Company's
deferred executive compensation plan (see Note 5), and are carried at fair
value. Unrealized holding gains and losses on available-for-sale securities are
reported as a separate component of the Consolidated Statements of Stockholders'
Equity and in the Consolidated Balance Sheets, in the caption "Accumulated other
comprehensive income/(loss), net of income taxes."
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed by
the straight-line method over the shorter of estimated asset service lives or
lease terms as follows: buildings, building equipment and improvements -- 10 to
40 years; equipment -- 3 to 30 years. The Company capitalizes interest costs as
part of the cost of constructing major facilities and equipment.
INTANGIBLE ASSETS ACQUIRED
Cost in excess of net assets acquired is primarily the excess of cost over the
fair market value of tangible net assets acquired.
The excess costs that arose from acquisitions after October 31, 1970, are being
amortized by the straight-line method mainly over 40 years. The remaining
portion ($8.2 million), which arose from acquisitions before November 1, 1970,
is not being amortized since management believes there has been no decrease in
value. Other intangible assets acquired consist primarily of advertiser and
subscriber relationships, mastheads and licenses on various acquired properties,
as well as software. These intangible assets are being amortized over their
estimated useful lives, ranging from 10 to 40 years for customer relationships,
mastheads and licenses, and 3 to 10 years for software.
See the Recent Accounting Pronouncements of this section for information
regarding new accounting rules for goodwill and other intangible assets
effective for the 2002 fiscal year.
IMPAIRMENT OF LONG-LIVED ASSETS
Each quarter the Company evaluates whether there has been an impairment that is
other than temporary in any of its long-lived assets. An impairment in value is
considered to have occurred when the undiscounted future operating cash flows
associated with long-lived assets are not sufficient to recover the carrying
value of the long-lived assets. If it is determined that an impairment in value
has occurred, the carrying value will be written down to the present value of
the future operating cash flows to be generated by the long-lived assets in
accordance with the Statement of Financial Accounting Standards ("SFAS") No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets To Be Disposed Of (see Note 2).
REVENUE RECOGNITION
o Advertising revenue is recognized when advertisements are published,
broadcast or when placed on the Company's Web sites, net of provisions for
estimated rebates, credit and rate adjustments and discounts.
o Circulation revenue includes single copy and home-delivery subscription
revenue. Single copy revenue is recognized based on date of publication,
net of provisions for related returns. Proceeds from home-delivery
subscriptions and related costs, principally agency commissions, are
deferred at the time of sale and are recognized in earnings on a pro rata
basis over the terms of the subscriptions.
o Other revenue is recognized when the related service or product has been
delivered.
<Page>
F-20
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of foreign companies are translated at year-end
exchange rates. Results of operations are translated at average rates of
exchange in effect during the year. The resulting translation adjustment is
included as a separate component of the Consolidated Statements of Stockholders'
Equity and in the Stockholders' Equity section of the Consolidated Balance
Sheets, in the caption "Accumulated other comprehensive income/(loss), net of
income taxes."
EARNINGS PER SHARE
The Company calculates earnings per share in accordance with SFAS No. 128,
Earnings Per Share (see Note 13). Basic earnings per share is calculated by
dividing net earnings available to common shares by average common shares
outstanding. Diluted earnings per share is calculated similarly, except that it
includes the dilutive effect of the assumed exercise of securities, including
the effect of shares issuable under the Company's incentive plans (see Note 14).
All references to earnings per share are on a diluted basis.
CASH AND CASH EQUIVALENTS
The Company considers all highly-liquid debt instruments with original
maturities of three months or less to be cash equivalents.
INVESTMENT TAX CREDITS
The Company uses the deferral method of accounting for investment tax credits.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements. Actual results could differ from these estimates.
RECLASSIFICATIONS
For comparability, certain 2000 and 1999 amounts have been reclassified to
conform with the 2001 presentation, primarily the presentation of the Magazine
Group as discontinued operations.
RECENT ACCOUNTING PRONOUNCEMENTS
In August 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. This
statement supersedes SFAS No. 121. This statement also supersedes the accounting
and reporting provisions of Accounting Principles Board ("APB") Opinion 30,
Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions, relating to the disposal of a segment of a business.
SFAS No. 121 did not address the accounting for a segment of a business
accounted for as a discontinued operation under APB Opinion 30 and therefore two
accounting models existed for long-lived assets to be disposed of. SFAS No. 144
established one accounting model for long-lived assets to be held and used,
long-lived assets (including those accounted for as a discontinued operation) to
be disposed of by sale and long-lived assets to be disposed of other than by
sale, and resolved certain implementation issues related to SFAS No. 121. The
Company adopted SFAS No. 144 on December 31, 2001, and it did not have a
material effect on its results of operations or financial position.
In July 2001, the FASB issued SFAS No. 141, Business Combinations and SFAS No.
142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001, and prohibits the use of the pooling-of-interest method.
The Company adopted SFAS No. 141 in the third quarter of 2001. The adoption of
SFAS No. 141 had no material effect on the Company's results of operations or
financial position. SFAS No. 142, upon adoption, ceases the amortization of
goodwill and certain other intangibles and requires, among other things, an
impairment approach on the carrying value of goodwill and other intangibles. An
initial goodwill and other intangibles impairment test must be completed in the
year of adoption with at least an annual impairment test thereafter. The Company
adopted SFAS No. 142 on December 31, 2001, the first day of its 2002 fiscal
year. The pro forma effect of the adoption of SFAS No. 142, prior to the review
of any goodwill and other intangible asset impairment, had the pronouncement
been adopted at the beginning of each of the fiscal years 2001, 2000 and 1999,
would have been a reduction in depreciation and amortization of $42.8 million,
$47.2 million and $39.3 million, respectively.
Effective January 1, 2001, the Company adopted SFAS No. 133, as amended,
Accounting for Derivative Instruments and Hedging Activities, and it did not
have a material effect on its results of operations or financial position. SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. All derivatives, whether designated as
hedging activities or not, are required to be recorded on the balance sheet at
fair value. If the derivative is designated as a fair-value hedge, the changes
in the fair value of the derivative and the hedged item will be recognized in
earnings. If the derivative is designated as a cash-flow hedge, changes in the
fair value of the derivative will be recorded in other comprehensive income and
will be recognized in the statement of income when the hedged item affects
earnings. For derivatives that do not qualify as a hedge, changes in the fair
value will be recognized in earnings. SFAS No. 133 defines new requirements for
the designation of hedging relationships as well as ongoing effectiveness
assessments in order to use hedge accounting. See Note 8 for a description of
the Company's derivative instruments.
<Page>
F-21
- --------------------------------------------------------------------------------
2. ACQUISITIONS/DISPOSITIONS
ACQUISITIONS
On August 31, 2001, the Company acquired certain assets and assumed certain
liabilities of a weekly newspaper, the Petaluma Argus-Courier, in Petaluma,
Calif., for approximately $2.6 million. The majority of the purchase price was
allocated to goodwill. The transaction was accounted for as a purchase in
accordance with SFAS No. 141. This acquisition does not have a material impact
on the Company's results of operations or financial position for periods
presented herein. If this acquisition had occurred in the beginning of 2001,
2000 or 1999, it would not have had a material impact on the results of
operations for the periods presented herein.
On January 7, 2000, the Company acquired certain assets and assumed certain
liabilities of a newspaper, the Worcester Telegram & Gazette ("T&G"), in
Worcester, Mass., for $296.3 million in cash. The cost of this acquisition was
principally funded through the Company's commercial paper program. This
transaction was accounted for as a purchase and, accordingly, the T&G has been
included in the Company's Consolidated Financial Statements as of January 7,
2000. Based on a final valuation, the purchase price was allocated to the fair
values of goodwill ($162.8 million), other intangibles ($100.5 million
principally advertising and subscriber relationships) and to other assets
acquired net of liabilities assumed. The amount allocated to goodwill is
amortized over a 40-year period and the amount allocated to other intangibles is
amortized over an average of 19 years. If this acquisition had occurred in the
beginning of 2000 or 1999, it would not have had a material impact on the
results of operations for the periods presented herein.
On July 22, 1999, a subsidiary of the Company acquired Abuzz Technologies, Inc.
("Abuzz"). The purchase price of Abuzz amounted to $30.1 million and resulted in
an increase to goodwill of $23.8 million and other intangible assets of $7.7
million, all of which was to be amortized over five years. In 2000, the Company
recorded a write-down of intangible assets related to the acquisition of Abuzz
amounting to $22.7 million. This write-down was related to an impairment
determined in accordance with SFAS No. 121 due to the uncertainty of expected
cash flows.
The purchase price for Abuzz included $5.1 million in cash and $25.0 million in
the stock of a subsidiary of the Company. Since the Company did not issue a
certain new class of stock to the public by December 31, 2000, the former
stockholders of Abuzz and certain optionees of the subsidiary of the Company
required the subsidiary to redeem their shares for $25.0 million in cash, which
was paid in the first quarter of 2001. The operating results of Abuzz are not
material to the Company's Consolidated Financial Statements.
DISPOSITIONS
On April 2, 2001, the Company sold its golf properties, which included Golf
Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine Group")
and GolfDigest.com for approximately $435.0 million. The Company recorded a
pre-tax gain from the sale of approximately $412.0 million ($241.3 million
after-tax), or $1.51 per share in 2001.
The results of operations of the Magazine Group are reported as discontinued
operations for all periods presented. Revenues and operating profit for the
Magazine Group were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN MILLIONS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $26.5 $115.4 $ 110.6
- --------------------------------------------------------------------------------
Operating Profit $ 2.0 $ 19.3 $ 18.7
- --------------------------------------------------------------------------------
</Table>
Assets and liabilities for the Magazine Group were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(IN MILLIONS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ -- $31.0
- --------------------------------------------------------------------------------
Total assets $ -- $56.0
- --------------------------------------------------------------------------------
Current liabilities $ -- $34.8
- --------------------------------------------------------------------------------
Total liabilities $ -- $44.2
- --------------------------------------------------------------------------------
Net assets of discontinued operations $ -- $11.8
- --------------------------------------------------------------------------------
</Table>
In 2000, the Company sold seven newspapers and nine telephone directory
operations ("divested Regionals"). In connection with the sale of one of these
newspapers (the Santa Barbara News-Press) the Company entered into a five-year
$25.0 million non-compete agreement (the "non-compete agreement"), which amount
will be recognized as income on a straight-line basis over the life of the
agreement. The sale of the divested Regionals as well as the amortization of
income from the non-compete agreement resulted in a pre-tax gain of $132.1
million in 2000. The seven newspapers sold were:
o Santa Barbara News-Press in Santa Barbara, Calif.
o Daily World in Opelousas, La.
o Daily News in Palatka, Fla.
o Lake City Reporter in Lake City, Fla.
o News-Sun in Sebring/Avon Park, Fla.
o News-Leader in Fernandina Beach, Fla.
o Marco Island Eagle in Marco Island, Fla.
Additionally, the Company had a disposition loss as well as write-downs for
certain of its equity investments in online ventures in the aggregate amounts of
$46.8 million.
The gain from the sale of the divested Regionals as well as the amortization of
income from the non-compete agreement was partially offset by the disposition
loss and write-downs for certain of the Company's equity investments in online
ventures resulting in a net pre-tax gain of $85.3 million ($.36 per share).
The operations of the divested Regionals and the investments in online ventures
were not material to the Company's Consolidated Financial Statements.
<Page>
F-22
- --------------------------------------------------------------------------------
3. INVENTORIES
Inventories as shown in the accompanying Consolidated Balance Sheets were as
follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Newsprint and magazine paper $28,442 $30,639
- --------------------------------------------------------------------------------
Work-in-process and other inventory 3,197 4,425
- --------------------------------------------------------------------------------
Total $31,639 $35,064
- --------------------------------------------------------------------------------
</Table>
Inventories are stated at the lower of cost or current market value. Cost was
determined utilizing the LIFO method for 91% of inventory in 2001 and 89% of
inventory in 2000. The replacement cost of inventory was approximately $33.8
million as of December 30, 2001, and $41.3 million as of December 31, 2000.
- --------------------------------------------------------------------------------
4. INVESTMENT IN JOINT VENTURES
Investment in Joint Ventures consists of equity ownership interests in Forest
Products Investments ("FPI") and the International Herald Tribune S.A.S.
("IHT"). The results of the IHT are not material to the Company's Consolidated
Financial Statements.
FPI consist of the Company's investment in a Canadian newsprint company, Donohue
Malbaie Inc. ("Malbaie"), and a partnership operating a supercalendered paper
mill in Maine, Madison Paper Industries ("Madison") (together with Malbaie, the
"Paper Mills"). The equity interest in Malbaie represents a 49% ownership
interest.
The Company and Myllykoski Oy, a Finnish paper manufacturing company, are
partners through subsidiary companies in Madison. The partners' interests in the
net assets of Madison at any time will depend on their capital accounts, as
defined, at such time. Through an 80%-owned subsidiary, the Company's share of
Madison's profits and losses is 40%.
The Company received distributions from Madison of $.6 million in 2001, $6.2
million in 2000 and $7.2 million in 1999. Loan repayments by Madison to the
Company were $11.2 million in 2001, $12.1 million in 2000 and $7.0 million in
1999. All Company loans were repaid as of December 30, 2001. No additional loans
or contributions were made by the Company to Madison in 2001, 2000 or 1999.
The Company received distributions from Malbaie of $14.3 million in 2001, $13.2
million in 2000 and $5.9 million in 1999. No loans or contributions were made by
the Company to Malbaie in 2001, 2000 or 1999.
The current portion of debt of the Paper Mills included in current liabilities
in the table below was $12.0 million as of December 30, 2001 and none at
December 31, 2000. The debt of the Paper Mills is not guaranteed by the Company.
Condensed combined balance sheets of the Paper Mills were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
CONDENSED COMBINED BALANCE SHEETS OF PAPER MILLS
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 59,337 $ 55,520
Less current liabilities 40,424 45,422
- --------------------------------------------------------------------------------
Working capital 18,913 10,098
Fixed assets, net 207,686 208,336
Long-term debt (52,000) (26,000)
Deferred income taxes and other (11,358) (14,685)
- --------------------------------------------------------------------------------
Net assets $ 163,241 $ 177,749
- --------------------------------------------------------------------------------
</Table>
During 2001, 2000, and 1999, the Company's Newspaper Group purchased newsprint
and supercalendered paper from the Paper Mills at competitive prices. Such
purchases aggregated approximately $58.9 million for 2001, $62.7 million for
2000 and $35.0 million for 1999.
Condensed combined income statements of the Paper Mills were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
CONDENSED COMBINED INCOME STATEMENTS OF PAPER MILLS
- --------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales and other income $233,102 $258,308 $237,519
Costs and expenses 203,404 212,369 192,941
- --------------------------------------------------------------------------------
Income before taxes 29,698 45,939 44,578
Income tax expense 9,422 8,395 5,525
- --------------------------------------------------------------------------------
Net income $ 20,276 $ 37,544 $ 39,053
- --------------------------------------------------------------------------------
</Table>
The condensed combined financial information of the Paper Mills excludes the
income tax effects attributable to Madison, since it is a partnership. Such tax
effects have been included in the Company's Consolidated Financial Statements.
During 2001, Madison entered into two interest rate agreements (the
"agreements") with a bank to hedge the impact of changes in interest rates on
outstanding balances of its line-of-credit/term loan agreement. One agreement
caps the interest to be paid at 10.75% while the other sets an interest rate
floor at 6.20% through July 1, 2002. The notional principal amounts of these
agreements totaled $47.0 million as of December 30, 2001. The agreements expire
July 1, 2005. The agreements were designated as cash flow hedging instruments by
Madison. In 2001 Madison
<Page>
F-23
recorded an unrealized loss of $2.7 million, related to the change in market
value of the interest rate agreements. The change in market value resulted in
the Company reducing its investment in Madison by its percentage share of the
unrealized loss along with recording the unrealized loss in "Accumulated other
comprehensive income/(loss), net of income taxes" in the Company's Consolidated
Balance Sheet as of December 30, 2001, and the Consolidated Statement of
Stockholders' Equity for the year then ended.
- --------------------------------------------------------------------------------
5. MARKETABLE SECURITIES
In 1999 the Company acquired a total of 1.6 million shares or approximately 6%
in TheStreet.com for $15.6 million, of which $3.6 million was in cash and $12.0
million represents an irrevocable credit for future advertising to be used by
TheStreet.com through February 2003. These marketable securities are classified
as available-for-sale as defined under SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. In 2001 the Company sold
substantially all of its investment in TheStreet.com. The proceeds of the sale
approximated carrying value. The securities are reported at fair market value,
and are included in the caption "Miscellaneous Assets" in the Company's
Consolidated Balance Sheets. These securities are not material to the Company's
results of operations or financial position. There were no realized gains or
losses on available-for-sale securities in 2001 or 1999. In 2000, the Company
recorded a $6.0 million loss (net of income taxes) on its original $15.6 million
investment in TheStreet.com due to an impairment in value that was other than
temporary.
Certain eligible executives of the Company have elected to defer a portion of
their compensation on a pre-tax basis under a deferred executive compensation
plan sponsored by the Company (see Note 12). Part of the deferred compensation
of the executives is invested in mutual funds. The securities in the mutual
funds are classified as trading securities as defined under SFAS No. 115.
- --------------------------------------------------------------------------------
6. WORK FORCE REDUCTION CHARGES
In 2001 the Company recorded pre-tax charges of $90.4 million related to work
force reduction expenses, which included voluntary work force reductions
("Buyouts") and layoffs. These charges are included in "Selling, general and
administrative expenses" in the Company's Consolidated Statements of Income and
reduced earnings per share by $.34 in 2001. In 2000 and 1999, the Company
recorded pre-tax charges related to Buyouts of $5.3 million and $15.5 million.
These charges reduced earnings per share by $.02 in 2000 and $.05 in 1999.
Accruals for these work force reduction expenses are primarily included in
"Accrued expenses" on the Company's Consolidated Balance Sheets and amounted to
$20.6 million as of December 30, 2001, and $13.6 million as of December 31,
2000. Most of the accruals outstanding as of December 30, 2001, will be paid
within one year.
- --------------------------------------------------------------------------------
7. DEBT
Long-term debt consists of the following:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
7.625% Notes due 2005, net of
unamortized debt costs of $2,574
in 2001, and $3,254 in 2000,
effective interest rate 7.996%(A) $250,265 $246,746
8.25% Debentures due 2025 (due 2005
at option of Company), net of
unamortized debt costs of $2,167
in 2001 and $2,198 in 2000,
effective interest rate 8.553%(A) 69,733 69,702
5.0%-7.125% Medium-Term Notes due
2003 and 2009, net of
unamortized debt costs of $904
in 2001 and $1,033 in 2000(B) 197,096 196,967
7.0% Subordinated Convertible Notes
due March 21, 2003(C) -- 40,000
- --------------------------------------------------------------------------------
Total notes and debentures 517,094 553,415
- --------------------------------------------------------------------------------
Less current portion -- --
- --------------------------------------------------------------------------------
Total long-term debt $517,094 $553,415
- --------------------------------------------------------------------------------
</Table>
(A) In March 1995 the Company completed a public offering of $400.0 million of
unsecured notes and debentures. The offering consisted of 10-year notes
aggregating $250.0 million maturing March 15, 2005, at an annual rate of
7.625% and 30-year debentures aggregating $150.0 million maturing March
15, 2025, at an annual rate of 8.25%. The debentures are callable after
ten years. Interest is payable semi-annually on March 15 and September 15
on both the notes and the debentures. In 2001 the Company entered into
interest rate swap agreements to exchange the fixed interest rate on a
portion of the ten-year notes for a variable interest rate. The value of
the Company's ten-year notes was increased by $2.8 million to reflect an
increase in the fair value as of December 30, 2001 (see Note 8).
In 1998 the Company made a tender offer for any and all of its $150.0
million of outstanding publicly-held 8.25% debentures due March 15, 2025.
The debenture holders tendered $78.1 million of the outstanding
debentures. The Company financed the purchase of the debentures with
available cash and through its existing commercial paper facility. By
replacing higher rate long-term borrowings with lower-rate short-term
alternatives, the Company reduced interest expense and generated a
positive return on a net present value basis. Total cash paid in
connection with the tender offer was $89.3 million.
(B) On August 21, 1998, the Company filed a $300.0 million shelf registration
on Form S-3 with the SEC for unsecured debt securities that may be issued
by the Company from time to time. The registration statement became
effective August 28, 1998. On September 24, 1998, the Company filed a
prospectus supplement to allow the issuance of up to $300.0 million in
medium-term notes. As of December 30, 2001, the Company had issued a total
of $198.0 million, excluding unamortized debt costs under the medium-term
note program. The notes have maturity dates ranging from October 8, 2003,
through November 15, 2009, and pay interest semi-annually with rates
ranging from 5.0% to 7.125%.
<Page>
F-24
(C) On September 28, 2001, the Company repaid $40.0 million in 7.0%
subordinated convertible notes that were issued in March 2000 to three
venture capital firms. These notes, which were to mature in March 2003,
allowed the venture capital firms to call the notes beginning January 1,
2002, if the Company did not issue a certain new class of stock by this
date. The Company agreed to repay the notes prior to the call and maturity
dates and subsequently borrowed lower-rate commercial paper.
----------------------------
Based on borrowing rates currently available for debt with similar terms and
average maturities, the fair value of long-term debt was $543.8 million as of
December 30, 2001, and $582.8 million as of December 31, 2000.
In June 2001 total available funds under the Company's revolving credit
agreements were voluntarily decreased to $540.0 million from $600.0 million. The
Company's one-year agreement was renewed and decreased to $270.0 million from
$300.0 million and will now mature in June 2002. The Company's multi-year
agreement was renewed and decreased to $270.0 million from $300.0 million and
will now mature in June 2006.
The revolving credit agreements permit borrowings, which bear interest at the
Company's option (i) for domestic borrowings: based on a certificates of deposit
rate, a Federal Funds rate, a base rate or a quoted rate; or (ii) for Eurodollar
borrowings: based on the LIBOR rate, plus various margins based on the Company's
credit rating. The revolving credit agreements include provisions that require,
among other matters, specified levels (amended in 2001) of stockholders' equity.
The amount of stockholders' equity in excess of the required levels was $349.7
million as of December 30, 2001.
In June 2001 the Company voluntarily decreased its ability to issue commercial
paper to $540.0 million from $600.0 million. The commercial paper facility is
supported by the Company's revolving credit agreements. Borrowings are in the
form of unsecured notes sold at a discount with maturities ranging up to 270
days.
As of December 30, 2001, the Company had $158.3 million in commercial paper
outstanding with an annual weighted average interest rate of 2.0% and an average
of 11 days to maturity from original issuance.
As of December 31, 2000, the Company had $291.3 million in commercial paper
outstanding with an annual weighted average interest rate of 6.6% and an average
of 52 days to maturity from original issuance.
Total debt as of December 30, 2001, including commercial paper and capital lease
obligations (see Note 17), amounted to $759.5 million. Total unused borrowing
capacity under all financing arrangements amounted to $483.7 million as of
December 30, 2001.
The aggregate face amount of maturities of long-term debt over the next five
years are as follows: 2002, none; 2003, $49.5 million; 2004, none; 2005, $250.0
million; 2006, none, and $220.4 million, thereafter.
Interest expense, net as shown in the accompanying Statements of Income was as
follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense $ 51,864 $ 68,567 $ 52,503
Capitalized interest (459) -- --
Interest income (4,206) (4,469) (1,785)
- --------------------------------------------------------------------------------
Interest expense, net $ 47,199 $ 64,098 $ 50,718
- --------------------------------------------------------------------------------
</Table>
- --------------------------------------------------------------------------------
8. DERIVATIVE INSTRUMENTS
In 2001 the Company entered into interest rate swap agreements, designated as
fair-value hedges as defined under SFAS No. 133, with notional amounts totaling
$100.0 million with variable interest rates which are reset quarterly based on
three-month LIBOR. These agreements were entered into to exchange the fixed
interest rate on a portion of the Company's ten-year $250.0 million 7.625% notes
that mature on March 15, 2005, for a variable interest rate. The fair value of
the interest rate swap agreements as of December 30, 2001, was $2.8 million.
This resulted in the recording of an interest rate swap asset and an increase in
the value of the ten-year notes of $2.8 million along with an off-setting gain
and loss in earnings which was included in interest expense, net, in the
Company's Consolidated Statement of Income. The difference between fixed and
variable interest rates to be paid or received is accrued as interest rates
change, and recognized as an adjustment to interest expense.
The Company entered into a newsprint swap agreement ("newsprint swap") with
Enron Corp. ("Enron") in 1998, which was terminated by the Company for default
in January 2002 ("termination date"). From the date of adoption of SFAS No. 133,
the newsprint swap was designated as a cash flow hedge and the changes in the
fair value of the newsprint swap have been recorded in "Accumulated other
comprehensive income/(loss), net of income taxes" in the Company's Consolidated
Balance Sheets and Consolidated Statements of Stockholders' Equity. Because
Enron filed for bankruptcy in December 2001, the Company could not be assured of
settlement from Enron throughout the life of the contract. Therefore, hedge
accounting under SFAS No. 133 was no longer permitted as of the date of Enron's
bankruptcy. The changes in fair value of the newsprint swap from the date of
bankruptcy to the termination date of the contract will be recognized in
earnings. The amount recognized in earnings in 2001 was immaterial.
<Page>
F-25
- --------------------------------------------------------------------------------
9. INCOME TAXES
Income tax expense for each of the years presented is determined in accordance
with SFAS No. 109, Accounting for Income Taxes. Reconciliations between the
effective tax rate on income before income taxes and the federal statutory rate
are presented below.
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000 1999
- -------------------------------------------------------------------------------------------------------------------
% OF % OF % OF
AMOUNT PRETAX AMOUNT PRETAX AMOUNT PRETAX
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax at federal statutory rate $ 117,199 35.0% $ 206,886 35.0% $ 181,934 35.0%
Increase (decrease)
State and local taxes - net 11,663 3.5 29,910 5.1 31,189 6.0
Amortization of nondeductible intangible
assets acquired 9,273 2.8 10,581 1.8 9,876 1.9
Other - net (2,528) (0.8) (1,784) (0.3) (2,620) (0.5)
- -------------------------------------------------------------------------------------------------------------------
Subtotal 135,607 40.5% 245,593 41.6% 220,379 42.4%
- -------------------------------------------------------------------------------------------------------------------
Tax effect of net gain on dispositions,
write-downs and other 2,025 21,911 --
- -------------------------------------------------------------------------------------------------------------------
Income tax expense $ 137,632 $ 267,504 $ 220,379
- -------------------------------------------------------------------------------------------------------------------
</Table>
The components of income tax expense as shown in the Consolidated Statements of
Income were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Current tax expense
Federal $ 137,419 $ 248,838 $ 188,045
State, local, foreign 47,038 48,774 76,032
- --------------------------------------------------------------------------------
Total current tax expense 184,457 297,612 264,077
- --------------------------------------------------------------------------------
Deferred tax benefit
Federal (18,218) (28,193) (15,405)
State, local, foreign (28,607) (1,915) (28,293)
- --------------------------------------------------------------------------------
Total deferred tax benefit (46,825) (30,108) (43,698)
- --------------------------------------------------------------------------------
Income tax expense $ 137,632 $ 267,504 $ 220,379
- --------------------------------------------------------------------------------
</Table>
Income tax benefits related to the exercise of stock options reduced current
taxes payable and increased additional paid-in capital by $30.6 million in 2001,
$22.9 million in 2000 and $35.5 million in 1999.
State tax operating loss carryforwards totaled $11.1 million as of December 30,
2001. Such loss carryforwards expire in accordance with provisions of applicable
tax laws and have remaining lives ranging from one to 20 years. Certain loss
carryforwards are likely to expire unused. Accordingly, the Company has
valuation allowances amounting to $2.7 million ($1.7 million net of federal
benefit) as of December 30, 2001.
Tax expense in 2001, 2000 and 1999 was reduced by $0.2 million, $1.4 million and
$0.4 million ($0.3 million, $2.1 million and $0.7 million before federal income
tax effect) due to a reduction in the valuation allowance attributable to state
net operating loss tax benefits.
The Company generated $16.0 million in investment tax credits in the state of
New York in connection with the construction of its Flushing, NY facility in
1997. The Company has fully utilized the investment tax credit for state income
tax purposes. For financial statement purposes, the Company has selected the
deferral method of accounting for investment tax credits, and will amortize the
tax benefit over the average useful life of the assets which ranges from 10 to
20 years.
The Company reduced goodwill by $3.1 million in 2000 as a result of
pre-acquisition tax refunds.
"Accrued income taxes" in the Company's Consolidated Balance Sheet as of
December 30, 2001, increased as compared with the prior year primarily due to
income taxes payable in connection with the gain on the sale of the Magazine
Group and GolfDigest.com. The Internal Revenue Service granted all companies in
the five boroughs of New York City an extension in connection with the terrorist
attacks, on income taxes payable after September 11, 2001, until January 15,
2002. The Company paid the income taxes related to the gain on January 15, 2002.
In 2001 the Internal Revenue Service completed its examination of federal income
tax returns for 1996 and 1997. The examination did not have a material effect on
the Company's Consolidated Financial Statements.
The Internal Revenue Service audits for the years 1998 through 2000 are
currently in process and are not expected to have a material effect on the
Company's Consolidated Financial Statements.
<Page>
F-26
The components of the net deferred tax liabilities recognized on the respective
Consolidated Balance Sheets were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Deferred Tax Assets
Retirement, postemployment and
deferred compensation plans $ 251,151 $ 226,544
Accruals for other employee
benefits, compensation,
insurance and other 87,089 74,713
Accounts receivable allowances 11,993 13,493
Other 42,730 43,699
- --------------------------------------------------------------------------------
Total deferred tax assets 392,963 358,449
Valuation allowance (1,737) (1,922)
- --------------------------------------------------------------------------------
Net deferred tax assets 391,226 356,527
- --------------------------------------------------------------------------------
Deferred Tax Liabilities
Property, plant and equipment 237,512 253,881
Intangible assets 107,853 106,598
Investments in joint ventures 4,932 15,616
Other 26,940 23,740
- --------------------------------------------------------------------------------
Total deferred tax liabilities 377,237 399,835
- --------------------------------------------------------------------------------
Net deferred tax (asset)/liability (13,989) 43,308
- --------------------------------------------------------------------------------
Amounts included in
Total current assets 78,737 62,939
- --------------------------------------------------------------------------------
Deferred income tax liability $ 64,748 $ 106,247
- --------------------------------------------------------------------------------
</Table>
As of December 30, 2001, and December 31, 2000, "Accumulated other comprehensive
income/(loss), net of income taxes" in the Company's Consolidated Balance Sheets
and for the years then ended in the Consolidated Statements of Stockholders'
Equity was net of a deferred income tax asset of $6.6 million, and $2.3 million,
respectively.
- --------------------------------------------------------------------------------
10. PENSION PLANS
The Company sponsors several pension plans and makes contributions to several
others in connection with collective bargaining agreements, including a joint
Company-union plan and a number of joint industry-union plans. These plans cover
substantially all employees.
The Company-sponsored pension plans provide participating employees with
retirement benefits in accordance with benefit provision formulas, which are
based on years of service and final average or career pay and, where applicable,
employee contributions. Retirement benefits are also provided under supplemental
unfunded pension plans.
In accordance with SFAS No. 132, Employer's Disclosures about Pensions and Other
Postretirement Benefits, the components of net periodic pension cost for all
Company-sponsored pension plans were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 25,093 $ 24,058 $ 25,248
Interest cost 66,863 61,609 54,781
Expected return on plan assets (65,795) (62,153) (48,190)
Recognized actuarial (gain)/loss (2,068) (4,053) 1,655
Amortization of prior service cost 777 873 576
Amortization of transition (asset)/obligation (2) 243 609
Effect of curtailment (4,057) -- --
Effect of special termination benefits 15,808 -- --
- --------------------------------------------------------------------------------
Net periodic pension cost $ 36,619 $ 20,577 $ 34,679
- --------------------------------------------------------------------------------
</Table>
In 2000, subsequent to the prior year valuation measurement date, the Company
sold various newspapers (see Note 2). In addition, in 2001 the Company sold the
Magazine Group and GolfDigest.com (see Note 2), as well as reduced its work
force in connection with its work force reduction program (see Note 6). These
events resulted in a curtailment because it reduced the future working lifetime
of impacted employees.
The special termination benefits were related to the Company's work force
reduction program in 2001.
<Page>
F-27
Assumptions used in the actuarial computations were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.25% 7.75% 7.75%
Rate of increase in compensation levels 5.00% 5.00% 5.00%
Expected long-term rate of return on assets 9.00% 9.00% 9.00%
- --------------------------------------------------------------------------------
</Table>
In connection with collective bargaining agreements, the Company contributes to
several other pension plans, including a joint Company-union plan and a number
of joint industry-union plans. Contributions are determined as a function of
hours worked or period earnings. Pension cost for these plans was $29.5 million
in 2001, $28.7 million in 2000, and $29.6 million in 1999.
In 2001 the Company changed the valuation measurement date from September 30 to
December 30. This change in accounting principle was made to have the valuation
completed as of the date of the Company's year end. The change in the valuation
measurement date did not have a material effect on the Company's results of
operations or financial position.
The changes in benefit obligation and plan assets as of December 30, 2001, and
September 30, 2000, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Change in benefit obligation
Benefit obligation at prior
measurement date $ 851,834 $ 755,385
Service cost 25,093 24,058
Interest cost 66,863 61,609
Plan participants' contributions 118 145
Amendments -- 311
Actuarial loss 56,762 15,038
Acquisitions -- 34,179
Curtailments 5,090 --
Benefits paid (49,497) (38,891)
Effect of change in the measurement date 13,307 N/A
- --------------------------------------------------------------------------------
Benefit obligation at current
measurement date 969,570 851,834
- --------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets at prior
measurement date 748,633 647,144
Actual (loss)/return on plan assets (34,300) 95,950
Employer contribution 10,950 7,125
Plan participants' contributions 118 145
Acquisitions -- 37,160
Benefits paid (49,497) (38,891)
Effect of change in the measurement date (34,814) N/A
- --------------------------------------------------------------------------------
Fair value of plan assets at current
measurement date 641,090 748,633
- --------------------------------------------------------------------------------
Funded status (328,480) (103,201)
Unrecognized actuarial loss/(gain) 73,065 (130,136)
Unrecognized transition obligation -- 59
Unrecognized prior service cost 8,568 9,431
Contribution paid after measurement date -- 1,834
- --------------------------------------------------------------------------------
Net amount recognized $(246,847) $(222,013)
- --------------------------------------------------------------------------------
Amounts recognized in the Consolidated
Balance Sheets consist of:
- --------------------------------------------------------------------------------
Accrued benefit cost $(252,974) $(222,013)
Intangible asset 2,348 --
Accumulated other comprehensive
income/(loss) 3,779 --
- --------------------------------------------------------------------------------
Net amount recognized $ 246,847 $ 222,013
- --------------------------------------------------------------------------------
</Table>
The financial statement effects of the Company's Supplemental Employee
Retirement Plans were included in the tables above. The primary portion of the
Company's net obligation under these plans is included in "Other Liabilities --
Other" in the Company's Consolidated Balance Sheets (see Note 12).
The amount of cost recognized for employer-sponsored defined contribution
benefit plans for the year ended December 30, 2001, was $13.8 million, $13.2
million for the year ended December 31, 2000, and $11.9 million for the year
ended December 26, 1999.
<Page>
F-28
- --------------------------------------------------------------------------------
11. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS AND POSTEMPLOYMENT 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 accordance with SFAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions, the Company accrues the costs of such benefits
during the employees' active years of service.
Net periodic postretirement cost was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Components of net periodic benefit cost
Service cost $ 5,030 $ 4,790 $ 4,363
Interest cost 10,622 10,578 8,499
Recognized actuarial gain (1,226) (1,292) (1,167)
Amortization of prior service cost (3,182) (3,182) (2,231)
- --------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 11,244 $ 10,894 $ 9,464
- --------------------------------------------------------------------------------
</Table>
The Company's policy is to pay claims and premiums under the above-mentioned
plans from Company assets.
The accumulated postretirement benefit obligation assumptions were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 7.25% 7.75% 7.75%
Estimated increase in compensation level 5.00% 5.00% 5.00%
Health care cost trend rate range 9.50%-4.25% 7.25%-5.00% 7.75%-5.00%
- --------------------------------------------------------------------------------
</Table>
A one-percentage point change in assumed health care cost trend rates would have
the following effects in 2001:
<Table>
<Caption>
- --------------------------------------------------------------------------------
ONE-PERCENTAGE ONE-PERCENTAGE
(IN THOUSANDS) POINT INCREASE POINT DECREASE
- --------------------------------------------------------------------------------
<S> <C> <C>
Effect on total service
and interest cost
for 2001 $ 2,316 $(1,868)
Effect on accumulated
postretirement
benefit obligation
as of December 30,
2001 $24,657 $(20,261)
- --------------------------------------------------------------------------------
</Table>
In 2001 the Company changed the valuation measurement date from September 30 to
December 30. This change in accounting principle was made to have the valuation
completed as of the date of the Company's year end. The change in the valuation
measurement date did not have a material effect on the Company's results of
operations or financial position.
The accrued postretirement benefit liability and the change in benefit
obligation as of December 30, 2001, and September 30, 2000, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Change in benefit obligation
Benefit obligation at prior measurement
date $ 140,487 $ 115,627
Service cost 5,030 4,790
Interest cost 10,622 10,578
Plan participants' contributions 959 1,848
Actuarial loss 39,264 22,235
Amendments -- (14,001)
Acquisitions -- 7,007
Benefits paid (7,253) (7,597)
Effect of change in the measurement date 2,065 N/A
- --------------------------------------------------------------------------------
Benefit obligation at current
measurement date 191,174 140,487
- --------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets at prior
measurement date -- --
Employer contribution 7,253 7,597
Benefits paid (7,253) (7,597)
- --------------------------------------------------------------------------------
Fair value of plan assets at current
measurement date -- --
- --------------------------------------------------------------------------------
Funded status (191,174) (140,487)
Unrecognized actuarial loss/(gain) 24,728 (21,156)
Unrecognized prior service cost (23,596) (26,778)
Contribution paid after measurement date -- 2,044
- --------------------------------------------------------------------------------
Net amount recognized $(190,042) $(186,377)
- --------------------------------------------------------------------------------
</Table>
In connection with collective bargaining agreements, the Company contributes to
several welfare plans, including a joint Company-union plan and a number of
joint industry-union plans. Contributions are determined as a function of hours
worked or period earnings. Portions of these contributions, which cannot be
disaggregated, related to postretirement benefits for plan participants. Total
contributions to these welfare plans were $28.2 million in 2001, $25.7 million
in 2000, and $25.5 million in 1999. The primary portion of the Company's net
obligation under these plans is included in "Other Liabilities -- Other" on the
Company's Consolidated Balance Sheets (see Note 12).
In accordance with SFAS No. 112, Employers' Accounting for Postemployment
Benefits, the Company accrues the cost of certain benefits provided to former or
inactive employees after employment but before retirement (such as workers'
compensation, disability benefits and health care continuation coverage) during
the employees' active years of service. The accrued cost of these benefits is
included in "Other Liabilities -- Other" in the Company's Consolidated Balance
Sheets and amounted to $15.9 million as of December 30, 2001, and $14.4 million
as of December 31, 2000.
<Page>
F-29
- --------------------------------------------------------------------------------
12. OTHER LIABILITIES
The components of the "Other Liabilities -- Other" balance in the Company's
Consolidated Balance Sheets were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Pension plan obligation
(see Note 10) $ 252,974 $222,013
Obligation for postretirement
benefits other than pensions
and postemployment benefits
(see Note 11) 190,042 186,377
Deferred compensation 101,537 95,783
Other 226,568 203,255
- --------------------------------------------------------------------------------
$ 771,121 $707,428
- --------------------------------------------------------------------------------
Less amount included in current
liabilities (6,417) (2,395)
- --------------------------------------------------------------------------------
Total $ 764,704 $705,033
- --------------------------------------------------------------------------------
</Table>
Certain eligible executives of the Company have elected to defer a portion of
their compensation on a pre-tax basis under a deferred executive compensation
plan sponsored by the Company. The deferrals are initially for a period of up to
four years but may be extended by participants, after which time taxable
distributions must begin. Employees' contributions earn income based on the
performance of investment funds they select.
The deferred compensation obligation is recorded at fair market value in "Other
Liabilities -- Other" in the Company's Consolidated Balance Sheets, and amounted
to $101.5 million as of December 30, 2001, and $95.8 million as of December 31,
2000. The Company invests the majority of employee contributions in life
insurance products designed to closely mirror the performance of the investment
funds that the participants select. The remainder of employee contributions are
invested in mutual funds. The Company's corresponding investments are recorded
at fair market value and are included in "Miscellaneous Assets" in the Company's
Consolidated Balance Sheets, and amounted to $100.0 million as of December 30,
2001, and $96.3 million as of December 31, 2000.
- --------------------------------------------------------------------------------
13. EARNINGS PER SHARE
Basic and diluted earnings per share for the years ended December 30, 2001,
December 31, 2000 and December 26, 1999, were as follows:
<Table>
<Caption>
- ----------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2001 2000 1999
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic earnings per share computation
Numerator
Income from continuing operations $202,222 $386,240 $299,433
Discontinued operations, net of income taxes 242,450 11,296 10,744
-------- -------- --------
Net income $444,672 $397,536 $310,177
======== ======== ========
Denominator
Average number of common shares outstanding 157,082 167,987 175,587
- ----------------------------------------------------------------------------------------
Income from continuing operations $ 1.29 $ 2.30 $ 1.71
Discontinued operations, net of income taxes 1.54 .07 .06
- ----------------------------------------------------------------------------------------
Net income $ 2.83 $ 2.37 $ 1.77
- ----------------------------------------------------------------------------------------
Diluted earnings per share computation
Numerator
Income from continuing operations $202,222 $386,240 $299,433
Discontinued operations, net of income taxes 242,450 11,296 10,744
-------- -------- --------
Net income $444,672 $397,536 $310,177
======== ======== ========
Denominator
Average number of common shares outstanding 157,082 167,987 175,587
Incremental shares for assumed exercise of securities 2,999 3,610 3,657
- ----------------------------------------------------------------------------------------
Total shares 160,081 171,597 179,244
- ----------------------------------------------------------------------------------------
Income from continuing operations $ 1.26 $ 2.25 $ 1.67
Discontinued operations, net of income taxes 1.52 .07 .06
- ----------------------------------------------------------------------------------------
Net income $ 2.78 $ 2.32 $ 1.73
- ----------------------------------------------------------------------------------------
</Table>
<Page>
F-30
- --------------------------------------------------------------------------------
14. EXECUTIVE AND NON-EMPLOYEE DIRECTORS' INCENTIVE PLANS
Under the Company's 1991 Executive Stock Incentive Plan and the 1991 Executive
Cash Bonus Plan (together, the "1991 Executive Plans"), the Board of Directors
may authorize incentive compensation awards and grant stock options to key
employees of the Company. Awards may be granted in cash, restricted and
unrestricted shares of the Company's Class A Common Stock, retirement units
(stock equivalents) or such other forms as the Board of Directors deems
appropriate. Under the 1991 Executive Plans, stock options of up to 60 million
shares of Class A Common Stock may be granted and stock awards of up to two
million shares of Class A Common Stock may be made. In adopting the 1991
Executive Plans, shares previously available for issuance of retirement units
and stock options under prior plans are no longer available for future awards.
Retirement units are payable in Class A Common Stock generally over a period of
10 years following retirement.
The Plans provide for granting of both incentive and non-qualified stock options
principally at an option price per share of 100% of the fair market value of the
Class A Common Stock on the date of grant. These options generally have a term
of 10 years and become exercisable in annual periods ranging from one year to
four years from the date of grant. Payment upon exercise of an option may be
made in cash, or with previously-acquired shares.
Under the Company's Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"), non-qualified options with 10-year terms are granted annually to each
non-employee director of the Company. Under the grant, a director may purchase
4,000 shares of Class A Common Stock from the Company at the fair market value
of such shares at the date of grant. Options for an aggregate of 0.5 million
shares of Class A Common Stock may be granted under the Directors' Plan.
Changes in the Company's stock options for the three-year period ended December
30, 2001, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------
2001 2000 1999
------------------- -------------------- --------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
NUMBER OF EXERCISE NUMBER OF EXERCISE NUMBER OF EXERCISE
(SHARES IN THOUSANDS) OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding, beginning of year 25,002 $33 21,703 $30 20,317 $23
Granted 5,455 43 5,897 40 5,271 47
Exercised (2,985) 21 (1,966) 18 (3,574) 15
Forfeited (1,082) 41 (632) 35 (311) 26
- --------------------------------------------------------------------------------------------------------------
Options outstanding, end of year 26,390 $36 25,002 $33 21,703 $30
- --------------------------------------------------------------------------------------------------------------
Options exercisable, end of year 14,317 $31 12,857 $26 10,343 $22
- --------------------------------------------------------------------------------------------------------------
</Table>
The Company's stock options outstanding at December 30, 2001, were as follows:
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------
(IN THOUSANDS) OPTIONS OUTSTANDING OPTIONS EXERCISABLE
-------------------------------------------------- --------------------------------
WEIGHTED AVERAGE
NUMBER REMAINING WEIGHTED REMAINING NUMBER WEIGHTED AVERAGE
EXERCISE PRICE RANGES OF OPTIONS CONTRACTUAL LIFE EXERCISE PRICE OF OPTIONS EXERCISE PRICE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 5-10 29 1 year $ 9 29 $ 9
$10-15 2,605 3 years 13 2,605 13
$15-20 1,622 5 years 19 1,622 19
$20-35 6,539 7 years 33 5,740 33
$35-50 15,595 9 years 43 4,321 45
- -------------------------------------------------------------------------------------------------------------
26,390 $36 14,317 $31
- -------------------------------------------------------------------------------------------------------------
</Table>
<Page>
F-31
As part of an initiative to simplify the corporate structure and administration
of the Company, in December 2001, the Company merged out of existence a
subsidiary (the "Subsidiary") that had its own stock option plan. Following the
merger, all outstanding Subsidiary stock options could no longer be exercised.
To provide equitable treatment for the holders of the options under the
Subsidiary stock option plan, the Company decided to pay the holders fair
consideration for their options. The holders of most of the Subsidiary stock
options will receive either cash or stock options exercisable for the Company's
Class A Common Stock ("Company stock options"). No payment will be made to the
holders of a smaller portion of the Subsidiary stock options, whose options had
no value at the time of the merger or who were members of the Company's Board of
Directors or certain senior executives of the Company. The Company recognized
$1.1 million of compensation expense in 2001, of which $0.8 million was related
to the merger and the remaining amount related to the Subsidiary stock options.
The Company recognized $1.9 million in 2000 and $2.0 million in 1999 of
compensation expense related to the Subsidiary stock options. The Subsidiary
stock options that will be deemed exchanged for the Company stock options could
result in compensation expense being recognized from the date of the deemed
exchange until the stock options are exercised, forfeited or expire unexercised.
Compensation expense will be recognized, in each reporting period, in an amount
equal to the excess, if any, of (i) the market price of the Company's Class A
Common Stock at the end of each reporting period over (ii) the Company stock
option's exercise price, multiplied by the number of Company stock options then
outstanding.
The Company applies APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations to accounting for its stock option and
employee stock purchase plans ("Employee Stock-Based Plans") (see Note 15).
The weighted average fair values for stock option grants were $13.69 in 2001,
$13.94 in 2000 and $15.84 in 1999. The weighted average values for the Company's
Employee Stock Purchase Plan ("ESPP") rights were $9.21 in 2001, $9.46 in 2000
and $8.62 in 1999. The weighted average values were estimated at the date of
grant using the Black Scholes Option Valuation model and the assumptions
presented in the table below.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------
STOCK OPTIONS ESPP RIGHTS
------------------------ -----------------------------
2001 2000 1999 2001 2000 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Risk-free interest rate 4.46% 5.00% 6.20% 5.6% 5.16% 4.15%
Expected life 5 years 5 years 5 years 1.1 years 1.1 years 1.1 years
Expected volatility 31.51% 34.09% 28.08% 31.51% 34.09% 28.08%
Expected dividend yield 1.14% 1.12% 0.87% 1.45% 1.33% 1.89%
- ---------------------------------------------------------------------------------------------------
</Table>
Had compensation cost for the Employee Stock-Based Plans been determined over
the vesting period based on the fair value at the grant date for awards under
those plans, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below.
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------------------
2001 2000 1999
------------------------- ------------------------- -------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) AS REPORTED PRO FORMA AS REPORTED PRO FORMA AS REPORTED PRO FORMA
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Income $444,672 $397,479 $397,536 $353,323 $310,177 $279,807
Basic earnings per share $ 2.83 $ 2.53 $ 2.37 $ 2.10 $ 1.77 $ 1.59
Diluted earnings per share $ 2.78 $ 2.48 $ 2.32 $ 2.06 $ 1.73 $ 1.56
- -------------------------------------------------------------------------------------------------------------------------
</Table>
15. CAPITAL STOCK
The Company's Class A and Class B Common Stock are entitled to equal
participation in the event of liquidation and in dividend declarations. The
Class B Common Stock is convertible at the holders' option on a share-for-share
basis into Class A shares. As provided for in the Company's Certificate of
Incorporation, the Class A Common Stock has limited voting rights, including the
right to elect 30% of the directors of the Board, and the Class A and Class B
Common Stock have the right to vote together on reservation of Company shares
for stock options and other stock-related plans, on the ratification of the
selection of independent certified public accountants and, in certain
circumstances, on acquisitions of the stock or assets of other companies.
Otherwise, except as provided by the laws of the State of New York, all voting
power is vested solely and exclusively in the holders of the Class B Common
Stock.
The Company paid $623.7 million in 2001 and $580.6 million in 2000 to repurchase
shares of Class A Common Stock. The Company repurchased 15.0 million shares in
2001 at an average cost of $41.68 per share and 14.6 million shares in 2000 at
an average cost of $39.77 per share.
On April 17, 2001, the Board of Directors authorized additional repurchase
expenditures under the Company's stock repurchase program for up to $300.0
million. During the period from December 31, 2001, through January 28, 2002, the
Company paid $24.6 million to repurchase 0.6 million shares of Class A Common
Stock at an average price of $43.70 per share. As of January 28, 2002, the
remaining amount of the repurchase authorization from the Company's Board of
Directors is $107.1 million. Under the authorization, purchases may be made from
time to time either in the open market or through private transactions.
Purchases may be suspended from time to time or
<Page>
F-32
discontinued. The effect of repurchases on diluted earnings per share was an
increase to earnings per share of $.12 in 2001, $.09 in 2000 and $.07 in 1999.
The Company retired 13.9 million and 13.4 million shares from treasury in 2001
and 2000, respectively. The 2001 retirement resulted in a reduction of $573.1
million in treasury stock, $1.4 million in Class A Common Stock, $91.1 million
in Additional Paid-In Capital and $480.6 million in Retained Earnings. The 2000
retirement resulted in a reduction of $513.5 million in treasury stock, $1.3
million in Class A Common Stock, $56.4 million in Additional Paid-In Capital and
$455.8 million in Retained Earnings.
Under the 2002 Offering of the ESPP, eligible employees may purchase Class A
Common Stock through payroll deductions during the 2002 plan year at the lower
of $32.71 per share (85% of the average market price on October 1, 2001) or 85%
of the average market price on November 29, 2002. Between 43% to 46% of eligible
employees have participated in the ESPP in the last three years. Under the ESPP,
the Company issued 1.0 million shares in 2001, 1.1 million shares in 2000 and
1.5 million shares in 1999.
In December 2001 the Company awarded 50,000 shares of restricted common stock to
a certain executive. These shares vest at the end of a 5-year period.
In December 2000 the Company awarded 28,000 shares of restricted common stock to
certain executives. These shares vest 50% in December 2003 and 50% in December
2004.
The Company will expense the value of the shares awarded from both grants over
the vesting period.
Shares of Class A Common Stock reserved for issuance were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
DECEMBER 30, DECEMBER 31,
(SHARES IN THOUSANDS) 2001 2000
- --------------------------------------------------------------------------------
<S> <C> <C>
Stock Options
Outstanding 26,390 25,002
Available 16,657 21,031
- --------------------------------------------------------------------------------
Employee Stock Purchase Plan
Available 10,785 1,785
- --------------------------------------------------------------------------------
Voluntary Conversion of
Class B Common Stock
Available 847 847
- --------------------------------------------------------------------------------
Retirement Units and Other Awards
Outstanding 147 163
Available 1,855 1,905
- --------------------------------------------------------------------------------
Total
Outstanding 26,537 25,165
Available 30,144 25,568
- --------------------------------------------------------------------------------
</Table>
The Board of Directors is authorized to set the distinguishing characteristics
of each series of preferred stock prior to issuance, including the granting of
limited or full voting rights; however, the consideration received must be at
least $100 per share. No shares of serial preferred stock have been issued.
- --------------------------------------------------------------------------------
16. SEGMENT INFORMATION
Operating segments represent components of the Company's business that are
evaluated regularly by key management in assessing performance and resource
allocation. The Company has determined that its reportable segments consist of
its Newspaper, Broadcast, and its digital division, NYTD. For the years
presented herein, the Newspaper Group is comprised of the following operating
segments, each of which has its own management: The New York Times, The New
England Newspapers, which includes The Boston Globe (the "Globe") and the T&G,
and 15 other newspapers ("Regional Newspapers"). The economic characteristics,
products, services, production process, customer type and distribution methods
for the operating segments of the Newspaper Group are substantially similar and
have therefore been aggregated as a reportable segment.
Broadcast and NYTD are managed separately and have different economic
characteristics from those of the Newspaper Group, and are therefore shown as
separate reportable segments.
Prior to April 2001, the Magazine Group was reported as a separate reportable
segment, but it has since been sold and its results of operations are classified
as discontinued operations for all periods presented.
Revenues from individual customers, and revenues, operating profit and
identifiable assets of foreign operations are not significant. For the years
presented herein, the following are the Company's reportable operating segments:
NEWSPAPER GROUP
The New York Times, the New England Newspaper Group, which includes the Globe
and the T&G, Regional Newspapers, newspaper distributors, a news service, a
features syndicate, TimesDigest and licensing of the trademarks and copyrights
of The Times and the Globe.
In 2001, for financial reporting purposes, the Globe and the T&G were combined
and presented as the New England Newspaper Group.
BROADCAST GROUP
Eight network-affiliated television stations and two radio stations.
NEW YORK TIMES DIGITAL
NYTD consists of NYTimes.com, Boston.com and Digital Archive Distribution, which
licenses archive databases of The Times and the Globe to electronic information
providers. In 2001 the Company sold GolfDigest.com, which was included in the
sale of the Company's golf properties.
<Page>
F-33
The Company's Statements of Income on a segment basis were as follows:
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------
YEARS ENDED
-------------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
(IN THOUSANDS) 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Newspapers $ 2,826,116 $ 3,160,247 $ 2,857,380
Broadcast 140,914 160,297 150,130
New York Times Digital 60,337 66,590 43,680
Intersegment eliminations(A) (11,409) (13,117) (5,000)
- ----------------------------------------------------------------------------------------------------------------
Total $ 3,015,958 $ 3,374,017 $ 3,046,190
- ----------------------------------------------------------------------------------------------------------------
OPERATING PROFIT (LOSS)
Newspapers $ 388,974 $ 677,643 $ 568,600
Broadcast 35,195 48,818 45,833
New York Times Digital (7,318) (70,007) (14,063)
Unallocated corporate expenses (42,448) (39,875) (47,740)
- ----------------------------------------------------------------------------------------------------------------
Total 374,403 616,579 552,630
- ----------------------------------------------------------------------------------------------------------------
Income from joint ventures 7,650 15,914 17,900
Interest expense, net 47,199 64,098 50,718
Gain on dispositions of assets and other - net 5,000 85,349 --
- ----------------------------------------------------------------------------------------------------------------
Income from continuing operations before income taxes 339,854 653,744 519,812
Income taxes 137,632 267,504 220,379
- ----------------------------------------------------------------------------------------------------------------
Income from continuing operations 202,222 386,240 299,433
- ----------------------------------------------------------------------------------------------------------------
Income from operations of discontinued Magazine Group,
net of income taxes 1,192 11,296 10,744
Gain on disposal of Magazine Group, net of income taxes 241,258 -- --
- ----------------------------------------------------------------------------------------------------------------
Discontinued operations, net of income taxes 242,450 11,296 10,744
- ----------------------------------------------------------------------------------------------------------------
NET INCOME $ 444,672 $ 397,536 $ 310,177
- ----------------------------------------------------------------------------------------------------------------
</Table>
(A) Intersegment eliminations primarily include license fees between NYTD and
other segments.
Newspaper Group operating profit includes work force reduction expenses of $86.5
million for 2001. Operating profit includes charges related to Buyouts of $2.1
million for 2000 and $15.4 million for 1999.
The Broadcast Group operating profit includes work force reduction expenses of
$0.2 million for 2001. Operating profit includes charges related to Buyouts of
$0.9 million for 2000 and $0.1 million for 1999.
NYTD operating loss includes work force reduction expenses of $0.7 million in
2001. Operating loss includes charges related to Buyouts of $0.4 million in
2000. Additionally, the 2000 operating loss includes a $22.7 million pre-tax
noncash charge for a write-down of intangible assets related to the acquisition
of Abuzz.
Unallocated corporate expense include work force reduction expenses of $3.0
million in 2001, and charges related to Buyouts of $1.0 million in 2000.
Advertising, circulation and other revenue, by major product of the Newspaper
Group, were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
--------------
(IN MILLIONS) 2001 2000 1999 01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
THE NEW YORK TIMES
Advertising $1,098.5 $1,306.2 $1,175.2 (15.9) 11.2
Circulation 508.2 476.6 452.6 6.6 5.3
Other 151.7 144.6 129.3 4.9 11.8
- --------------------------------------------------------------------------------
Total $1,758.4 $1,927.4 $1,757.1 (8.8) 9.7
- --------------------------------------------------------------------------------
NEW ENGLAND NEWSPAPER
GROUP(A)
Advertising $ 451.3 $ 552.3 $ 462.4 (18.3) 19.4
Circulation 162.1 159.4 133.7 1.7 19.2
Other 27.5 35.2 22.5 (21.9) 56.2
- --------------------------------------------------------------------------------
Total $ 640.9 $ 746.9 $ 618.6 (14.2) 20.7
- --------------------------------------------------------------------------------
REGIONAL NEWSPAPERS
Advertising $ 323.8 $ 368.6 $ 363.4 (12.1) 1.4
Circulation 89.4 101.2 103.0 (11.7) (1.8)
Other 13.6 16.1 15.3 (15.9) 5.6
- --------------------------------------------------------------------------------
Total $ 426.8 $ 485.9 $ 481.7 (12.2) 0.9
- --------------------------------------------------------------------------------
TOTAL NEWSPAPER GROUP
Advertising $1,873.6 $2,227.1 $2,001.0 (15.9) 11.3
Circulation 759.7 737.2 689.3 3.1 6.9
Other 192.8 195.9 167.1 (1.6) 17.2
- --------------------------------------------------------------------------------
Total $2,826.1 $3,160.2 $2,857.4 (10.6) 10.6
- --------------------------------------------------------------------------------
</Table>
(A) The T&G was acquired on January 7, 2000, and the results of operations
were included as of such date. Advertising, circulation, other and total
revenue for the T&G in 2000 were $58.4 million, $23.5 million, $0.7
million and $82.6 million.
<Page>
F-34
The percentage change excluding the divested Regionals was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
% CHANGE
------------------
01-00 00-99
- --------------------------------------------------------------------------------
<S> <C> <C>
Regional Newspapers
Advertising (4.0) 4.9
Circulation (3.1) 1.1
Other (4.5) 7.4
- --------------------------------------------------------------------------------
Total (3.8) 4.2
- --------------------------------------------------------------------------------
Total Newspaper Group
Advertising (14.7) 12.1
Circulation 4.3 7.5
Other (0.6) 17.5
- --------------------------------------------------------------------------------
Total (9.4) 11.3
- --------------------------------------------------------------------------------
</Table>
The Company's segment depreciation and amortization, capital expenditures and
identifiable assets reconciled to consolidated amounts were as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
YEARS ENDED
---------------------------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 26,
(IN THOUSANDS) 2001 2000 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
DEPRECIATION AND AMORTIZATION
Newspapers $ 161,298 $ 164,977 $ 164,195
Broadcast 16,071 16,732 17,368
New York Times Digital(A) 7,373 33,314 4,586
Corporate 8,613 11,333 9,620
Investment in joint ventures 352 352 352
- --------------------------------------------------------------------------------
Total $ 193,707 $ 226,708 $ 196,121
- --------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Newspapers $ 67,695 $ 50,882 $ 40,160
Broadcast 11,130 9,001 10,475
New York Times Digital 6,032 20,136 9,726
Corporate 5,398 5,152 12,581
- --------------------------------------------------------------------------------
Total $ 90,255 $ 85,171 $ 72,942
- --------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Newspapers $2,652,835 $2,754,716 $2,564,674
Broadcast 364,709 368,112 377,221
Magazines -- 55,964 60,362
New York Times Digital 31,745 38,378 50,538
Corporate 302,584 282,189 321,067
Investment in joint ventures 86,811 107,320 121,940
- --------------------------------------------------------------------------------
Total $3,438,684 $3,606,679 $3,495,802
- --------------------------------------------------------------------------------
</Table>
(A) In 2000, the Company recorded a write-down of intangible assets related to
the acquisition of Abuzz amounting to $22.7 million, which was included in
amortization expense.
- --------------------------------------------------------------------------------
17. COMMITMENTS AND CONTINGENT LIABILITIES
NEW HEADQUARTERS BUILDING
The Company is in the process of developing a condominium office building (the
"Building") in New York City that will serve as its new headquarters. 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, "FC") became the sole members of The New York
Times Building LLC (the "Building Partnership"), a partnership established for
the purpose of constructing the Building. The Building will contain
approximately 1.54 million square feet of space, of which approximately 825,000
square feet will be occupied by the Company.
The Building Partnership is a New York limited liability company and a separate
and distinct legal entity from the Company. NYT's and FC's percentage interest
in the Building Partnership are approximately 58% and 42%, respectively, at
December 30, 2001. For financial reporting purposes, the Building Partnership's
assets, liabilities and earnings are
<Page>
F-35
consolidated with those of the Company, and FC's minority interest in the
Building Partnership is included in "Other Liabilities -- Other" in the
Company's Consolidated Balance Sheet as of December 30, 2001. Capital
expenditures attributable to NYT's interest in the Building are included in
"Construction and equipment installation in progress" and capital expenditures
attributable to FC's interest in the Building are included in "Miscellaneous
Assets" in the Company's Consolidated Balance Sheet as of December 30, 2001.
There was no impact on the Company's Consolidated Statement of Income for the
year ended December 30, 2001.
The Company's Board of Directors has approved $87.3 million of NYT's share of
the new building cost to date. At December 30, 2001, NYT had incurred capital
expenditures of approximately $22.6 million, excluding capitalized interest.
In December 2001 the Building Partnership entered into a land acquisition and
development agreement ("LADA") for the Building site with a New York State
agency, which will acquire the site through a condemnation proceeding. Pursuant
to the LADA, the Building Partnership is required to fund all of the costs of
acquiring the Building site, and the Company has guaranteed payment of 100% of
these acquisition costs. In addition, the Building Partnership has posted
letters of credit totaling approximately $106.9 million with respect to such
acquisition costs. The Company posted a letter of credit in the amount of $61.6
million as NYT's share of such costs, which expires on December 10, 2002, but
has renewal provisions. At December 30, 2001, the entire letter of credit was
available. FC posted a letter of credit in the amount of $45.3 million as its
share of these costs. The transaction price for the Building site is $85.6
million. To the extent that actual costs to acquire the Building site exceed
$85.6 million, the Building Partnership is entitled to a credit against payments
due under the ground lease described below.
Upon acquisition of the Building site, the New York State agency will lease the
site to the Building Partnership under a 99-year lease (the "ground lease").
Under the terms of the ground lease, no fixed rent is payable, but the Building
Partnership is required to make payments in lieu of real estate taxes (PILOT),
percentage (profit) rent with respect to retail portions of the Building and
certain other payments over the term of the ground lease. The ground lease gives
the Building Partnership the option to purchase the Building site after 29 years
for nominal consideration.
The Building Partnership will be funded by capital contributions by NYT, FC and
third-party loans. The Building Partnership has not entered into any loan
agreements to date. Upon substantial completion of the construction of the core
and shell, the Building will be converted to a leasehold condominium and the
Building Partnership will be dissolved. At such time, ownership of the leasehold
will transfer from the Building Partnership to NYT and FC, with ownership
interests of 58% and 42% respectively (subject to certain options on the part of
NYT to increase its ownership interest in the Building).
OPERATING LEASES
Such lease commitments are primarily for office space and equipment. Certain
office space leases provide for rent adjustments relating to changes in real
estate taxes and other operating expenses.
Rental expense amounted to $38.1 million in 2001, $37.4 million in 2000 and
$32.8 million in 1999. The approximate minimum rental commitments under
noncancelable leases at December 30, 2001, were as follows: 2002, $15.2 million;
2003, $11.7 million; 2004, $9.6 million; 2005, $8.6 million; 2006, $7.5 million
and $32.6 million thereafter.
CAPITAL LEASES
Future minimum lease payments for all capital leases, and the present value of
the minimum lease payments at December 30, 2001, are as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
(IN THOUSANDS) AMOUNT
- --------------------------------------------------------------------------------
<S> <C>
2002 $ 8,591
2003 7,812
2004 7,374
2005 6,977
2006 6,952
Later years 119,235
- --------------------------------------------------------------------------------
Total minimum lease payments $ 156,941
Less imputed interest (72,798)
- --------------------------------------------------------------------------------
Present value of net minimum lease
payments including current maturities $ 84,143
- --------------------------------------------------------------------------------
</Table>
OTHER
The Company has various other guarantees which include a guarantee of a credit
facility and leases of a third-party service provider and a guarantee of leases
of three third-party printing and distribution facilities for The New York Times
national edition. These guarantees total approximately $43.0 million as of
December 30, 2001.
The Company also has letters of credit in the amount of $27.7 million, required
by insurance companies, to provide support for the Company's workers'
compensation liability that is included in the Company's Consolidated Balance
Sheet as of December 30, 2001.
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
Consolidated Financial Statements.
- --------------------------------------------------------------------------------
18. SUBSEQUENT EVENTS
In January 2002 Major League Baseball approved the sale of the Boston Red Sox
baseball club (including Fenway Park and approximately 80% of New England Sports
Network, a regional cable sports network) to New England Sports Ventures, LLC
("NESV"), in which the Company is an investor. The closing of the Red Sox sale
is expected to be completed in the first quarter of 2002, and the Company's
$75.0 million investment will represent an interest of approximately 15% in
NESV.
On February 21, 2002, the Board of Directors authorized additional repurchase
expenditures under the Company's stock repurchase program for up to $300.0
million.
<Page>
F-36
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
AND STOCKHOLDERS OF
THE NEW YORK TIMES COMPANY
We have audited the accompanying consolidated balance sheets of The New York
Times Company (the "Company") as of December 30, 2001 and December 31, 2000, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended December 30, 2001. Our
audits also included the financial statement schedules listed in the Index at
Item 14(b). These financial statements and financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedules based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of The New York Times Company as of
December 30, 2001 and December 31, 2000, and the results of their operations and
their cash flows for each of the three years in the period ended December 30,
2001, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, such financial statement schedules,
when considered in relation to the basic consolidated financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
/s/ Deloitte & Touche LLP
New York, New York
January 28, 2002
(February 21, 2002 as to Note 18)
MANAGEMENT'S RESPONSIBILITIES REPORT
The Company's consolidated financial statements were prepared by management, who
is responsible for their integrity and objectivity. The consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America and, as such, include amounts based on
management's best estimates and judgments.
Management is further responsible for maintaining a system of internal
accounting control, designed to provide reasonable assurance that the Company's
assets are adequately safeguarded and that the accounting records reflect
transactions executed in accordance with management's authorization. The system
of internal control is continually reviewed for its effectiveness and is
augmented by written policies and procedures, the careful selection and training
of qualified personnel and a program of internal audit.
The consolidated financial statements were audited by Deloitte & Touche LLP,
independent auditors. Their audit was conducted in accordance with auditing
standards generally accepted in the United States of America and their report is
shown on this page.
The Audit Committee of the Board of Directors, which is composed solely of
independent directors, meets regularly with the independent auditors, internal
auditors and management to discuss specific accounting, financial reporting and
internal control matters. Both the independent auditors and the internal
auditors have full and free access to the Audit Committee. Each year the Audit
Committee selects, subject to ratification by stockholders, the firm which is to
perform audit and other related work for the Company.
/s/ Russell T. Lewis
Russell T. Lewis
President and Chief Executive Officer
The New York Times Company
/s/ Leonard P. Forman
Leonard P. Forman
Senior Vice President and Chief Financial Officer
The New York Times Company
<Page>
F-37
QUARTERLY INFORMATION (UNAUDITED)
<Table>
<Caption>
FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER YEAR
-------------------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA) 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $778.2 $821.7 $760.3 $857.5 $696.9 $767.7 $780.6 $927.1 $3,016.0 $3,374.0
Costs and expenses
Production costs
Raw materials 85.1 82.5 83.9 84.1 71.6 81.0 80.6 102.8 321.2 350.4
Wages and benefits 153.1 155.3 148.5 156.7 145.4 146.3 147.2 164.3 594.2 622.6
Other 111.0 109.1 109.7 111.4 110.8 112.2 116.0 128.2 447.5 460.9
- --------------------------------------------------------------------------------------------------------------------------------
Total production costs 349.2 346.9 342.1 352.2 327.8 339.5 343.8 395.3 1,362.9 1,433.9
Selling, general and
administrative expenses 314.5 324.5 370.0 329.0 287.8 315.5 306.4 354.5 1,278.7 1,323.5
- --------------------------------------------------------------------------------------------------------------------------------
Operating profit 114.5 150.3 48.2 176.3 81.3 112.7 130.4 177.3 374.4 616.6
Income from joint ventures 0.9 3.7 0.8 3.6 2.4 3.9 3.6 4.7 7.7 15.9
Interest expense, net 14.7 15.3 10.4 15.2 11.3 17.5 10.8 16.1 47.2 64.1
Gain on dispositions of assets and
other - net 1.2 -- 1.2 -- 1.3 22.1 1.3 63.2 5.0 85.3
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations
before income taxes 101.9 138.7 39.8 164.7 73.7 121.2 124.5 229.1 339.9 653.7
Income taxes 41.8 58.3 15.6 68.6 29.9 48.3 50.4 92.3 137.7 267.5
- --------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations 60.1 80.4 24.2 96.1 43.8 72.9 74.1 136.8 202.2 386.2
- --------------------------------------------------------------------------------------------------------------------------------
Income from operations of
discontinued Magazine Group 1.2 2.6 -- 5.6 -- 2.1 -- 1.0 1.2 11.3
Gain on disposal of Magazine Group -- -- 241.3 -- -- -- -- -- 241.3 --
- --------------------------------------------------------------------------------------------------------------------------------
Discontinued operations, net of
income taxes 1.2 2.6 241.3 5.6 -- 2.1 -- 1.0 242.5 11.3
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ 61.3 $ 83.0 $265.5 $101.7 $ 43.8 $ 75.0 $ 74.1 $137.8 $ 444.7 $ 397.5
- --------------------------------------------------------------------------------------------------------------------------------
Average number of common
shares outstanding
Basic 161.9 173.0 158.8 169.5 155.9 166.6 151.8 162.9 157.1 168.0
Diluted 165.1 177.2 161.7 173.0 158.9 169.9 154.6 165.7 160.1 171.6
- --------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share
Income from continuing operations $ .37 $ .47 $ .15 $ .57 $ .28 $ .44 $ .49 $ .84 $ 1.29 $ 2.30
Discontinued operations, net of
income taxes .01 .01 1.52 .03 -- .01 -- .01 1.54 .07
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ .38 $ .48 $ 1.67 $ .60 $ .28 $ .45 $ .49 $ .85 $ 2.83 $ 2.37
- --------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share
Income from continuing operations $ .36 $ .46 $ .15 $ .56 $ .28 $ .43 $ .48 $ .82 $ 1.26 $ 2.25
Discontinued operations, net of
income taxes .01 .01 1.49 .03 -- .01 -- .01 1.52 .07
- --------------------------------------------------------------------------------------------------------------------------------
Net income $ .37 $ .47 $ 1.64 $ .59 $ .28 $ .44 $ .48 $ .83 $ 2.78 $ 2.32
- --------------------------------------------------------------------------------------------------------------------------------
Dividends per share $ .115 $ .105 $ .125 $ .115 $ .125 $ .115 $ .125 $ .115 $ .49 $ .45
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
o All earnings per share amounts for special items below are on a diluted
basis.
o For comparability, certain prior year amounts have been reclassified to
conform with 2001 presentation, primarily the presentation of the Magazine
Group as discontinued operations.
<Page>
F-38
The 2001 and 2000 quarters do not equal the respective year-end amounts for
earnings per share due to the weighted average number of shares outstanding used
in the computations for the respective periods. Per share amounts for the
respective quarters and years have been computed using the average number of
common shares outstanding as presented in the table on the preceding page.
The Company's largest source of revenue is advertising, which influences the
pattern of the Company's quarterly consolidated revenues and is seasonal in
nature. Second-quarter and fourth-quarter advertising revenue is generally
higher than that which occurs in the first and third quarters. Advertising
revenue tends to be lower in these quarters primarily because economic activity
is lower in the post holiday season and summer periods. This trend was masked in
2001, as advertising revenue declined during the first three quarters of 2001,
due to a significant cyclical decline. Quarterly trends are also affected by the
overall economy and economic conditions that may exist in specific markets
served by each of the Company's business segments as well as the occurrence of
certain international, national and local events.
Special items for 2001 and 2000 by quarter were as follows:
o First-quarter 2001 results included $1.3 million in pre-tax income in
connection with a five-year $25.0 million non-compete agreement related to
the sale of the Santa Barbara News-Press in 2000 (the "non-compete
agreement"). The income is recognized on a straight-line basis over the
life of the agreement.
o Second-quarter 2001 results included a $412.0 million pre-tax gain ($1.49
per share) resulting from the sale of its golf properties, which included
Golf Digest, Golf Digest Woman, Golf World, Golf World Business ("Magazine
Group") and GolfDigest.com. In the same period, there was a $79.1 million
pre-tax charge ($.29 per share) for work force reduction expenses, which
included voluntary work force reduction expenses ("Buyouts") and layoffs.
Additionally, there was $1.3 million in pre-tax income related to the
non-compete agreement.
o Third-quarter 2001 results included a $5.4 million pre-tax charge ($.02
per share) for work force reduction expenses and $1.3 million in pre-tax
income related to the non-compete agreement.
o Third-quarter 2000 results included a $22.2 million pre-tax gain ($.08 per
share) principally resulting from the sale of four Regional Newspapers and
nine telephone directory operations, partially offset by a loss on the
disposition of the Company's investment in an online venture. In the same
period, there was a $3.8 million pre-tax charge ($.01 per share) for
Buyouts.
o Fourth-quarter 2001 results included an $5.9 million pre-tax charge ($.02
per share) for work force reduction expenses and $1.3 million in pre-tax
income related to the non-compete agreement.
o Fourth-quarter 2000 results included a $63.2 million pre-tax gain ($.28
per share) principally resulting from the sale of three Regional
Newspapers, partially offset by a disposition loss as well as write-downs
for certain of the Company's investments in online ventures. In the same
period, there was a $22.7 million pre-tax charge ($.12 per share) for a
write-down of intangible assets related to the acquisition of Abuzz and a
$1.5 million pre-tax charge ($.01 per share) for Buyouts.
- --------------------------------------------------------------------------------
MARKET INFORMATION
The Class A Common Stock is listed on the New York Stock Exchange. The Class B
Common Stock is unlisted and is not actively traded.
The number of security holders of record as of January 28, 2002 was as follows:
Class A Common Stock: 10,373; Class B Common Stock: 35.
The market price range of Class A Common Stock was as follows:
<Table>
<Caption>
- --------------------------------------------------------------------------------
QUARTER ENDED 2001 2000
- --------------------------------------------------------------------------------
HIGH LOW HIGH LOW
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
March $45.50 $38.50 $49.94 $38.63
June 43.76 37.93 45.19 35.75
September 47.60 37.42 42.75 35.88
December 46.70 38.36 44.63 32.63
Year 47.60 37.42 49.94 32.63
- --------------------------------------------------------------------------------
</Table>
<Page>
F-39
TEN-YEAR SUPPLEMENTAL FINANCIAL DATA
<Table>
<Caption>
YEARS ENDED DECEMBER
(IN MILLIONS, EXCEPT PER SHARE DATA) 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues and Income
Revenues $3,016 $3,374 $3,046 $2,841 $2,727 $2,492 $2,289 $2,116 $1,663 $1,424
- ------------------------------------------------------------------------------------------------------------------------------------
Operating Profit 374 617 553 493 427 149 204 191 114 78
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from Joint Ventures 8 16 18 21 14 18 15 5 (53) (9)
- ------------------------------------------------------------------------------------------------------------------------------------
Income (Loss) from continuing operations $ 203 $ 387 $ 299 $ 270 $ 241 $ 67 $ 119 $ 97 $ (1) $ (17)
Discontinued operations, net of income
taxes 242 11 11 17 21 18 17 116 7 6
Extraordinary item, net of income taxes -- -- -- (8) -- -- -- -- -- --
Net cumulative effect of accounting
change, net of income taxes -- -- -- -- -- -- -- -- -- (34)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 445 $ 398 $ 310 $ 279 $ 262 $ 85 $ 136 $ 213 $ 6 $ (45)
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Position
Total assets $3,439 $3,607 $3,496 $3,465 $3,623 $3,540 $3,390 $3,138 $3,215 $1,995
Long-term debt
and capital lease obligations 599 637 598 598 535 637 638 523 460 207
Common stockholders' equity 1,150 1,281 1,449 1,531 1,729 1,624 1,610 1,544 1,599 1,000
- ------------------------------------------------------------------------------------------------------------------------------------
Basic earnings per share
Income (Loss) from continuing operations $ 1.29 $ 2.30 $ 1.71 $ 1.43 $ 1.25 $ .34 $ .61 $ .46 $ -- $ (.11)
Discontinued operations, net of income
taxes 1.54 .07 .06 .09 .11 .09 .09 .56 .04 .04
Extraordinary item, net of income taxes -- -- -- (.04) -- -- -- -- -- --
Net cumulative effect of accounting
change, net of income taxes -- -- -- -- -- -- -- -- -- (.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.83 $ 2.37 $ 1.77 $ 1.48 $ 1.36 $ .43 $ .70 $ 1.02 $ .04 $ (.29)
- ------------------------------------------------------------------------------------------------------------------------------------
Diluted earnings per share
Income (Loss) from continuing operations $ 1.26 $ 2.25 $ 1.67 $ 1.40 $ 1.22 $ .34 $ .61 $ .46 $ -- $ (.10)
Discontinued operations, net of income
taxes 1.52 .07 .06 .09 .11 .09 .09 .56 .04 .04
Extraordinary item, net of income taxes -- -- -- (.04) -- -- -- -- -- --
Net cumulative effect of accounting
change, net of income taxes -- -- -- -- -- -- -- -- -- (.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $ 2.78 $ 2.32 $ 1.73 $ 1.45 $ 1.33 $ .43 $ .70 $ 1.02 $ .04 $ (.28)
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends per share $ .49 $ .45 $ .41 $ .37 $ .32 $ .29 $ .28 $ .28 $ .28 $ .28
Common stockholders' equity per share $ 7.18 $ 7.47 $ 8.08 $ 7.94 $ 8.77 $ 8.25 $ 8.27 $ 7.39 $ 9.42 $ 6.33
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding
Class A and Class B Common 151 162 174 182 193 195 195 196 214 159
- ------------------------------------------------------------------------------------------------------------------------------------
Market Price (end of year) $43.86 $40.06 $46.88 $35.31 $32.03 $19.25 $14.81 $11.06 $13.13 $13.19
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
o All earnings per share amounts for special items below are on a diluted
basis.
o For comparability, certain prior year amounts have been reclassified to
conform with 2001 presentation, primarily the presentation of the Magazine
Group as discontinued operations.
<Page>
F-40
Special items by year were as follows:
2001
The net effect of these items increased net income by $190.4 million and
earnings per share by $1.19.
o $412.0 million pre-tax gain ($1.51 per share) resulting from the sale of
its golf properties, which included Golf Digest, Golf Digest Woman, Golf
World, Golf World Business ("Magazine Group") and Golf Digest.com (see
Note 2 of the Notes to the Consolidated Financial Statements)
o $90.4 million pre-tax charge ($.34 per share) for work force reduction
charges, which included voluntary work force reductions ("Buyouts") and
layoffs (see Notes 6 and 16 of the Notes to the Consolidated Financial
Statements)
o $5.0 million in income on a pre-tax basis ($.02 per share) related to a
$25.0 million non-compete agreement (the "non-compete agreement") entered
into in connection with the sale of the Santa Barbara News-Press in 2000.
The total amount of the non-compete agreement is recognized as income on a
straight-line basis over the life of the agreement (see Note 2 of the
Notes to the Consolidated Financial Statements)
2000
The net effect of these items increased net income by $37.6 million and earnings
per share by $.22.
o $85.3 million pre-tax net gain ($.36 per share). This resulted from a gain
of $132.1 million in connection with the sale of seven newspapers and nine
telephone directory operations as well as the amortization of income
related to the non-compete agreement, partially offset by a disposition
loss and write-downs for certain of the Company's equity investments in
online ventures in the aggregate amount of $46.8 million (see Note 2 of
the Notes to the Consolidated Financial Statements)
o $22.7 million pre-tax noncash charge ($.12 per share) for a write-down of
intangible assets related to the acquisition of Abuzz Technologies, Inc.
This charge is included in amortization expense (see Note 2 of the Notes
to the Consolidated Financial Statements)
o $5.3 million pre-tax charge ($.02 per share) for Buyouts across the
Company (see Notes 6 and 16 of the Notes to the Consolidated Financial
Statements)
1999
This item reduced net income by $8.9 million and earnings per share by $.05.
o $15.5 million pre-tax charge principally for Buyouts at The Boston Globe
(see Notes 6 and 16 of the Notes to the Consolidated Financial Statements)
1998
The net effect of these items reduced net income by $0.4 million and earnings
per share by $.01.
o $4.6 million pre-tax gain ($.01 per share) from the sale of equipment
o $7.7 million after-tax extraordinary charge ($.04 per share) in connection
with the Company's repurchase of $78.1 million of its $150.0 million,
8.25% notes due in 2025
o $8.0 million pre-tax gain ($.02 per share) from the satisfaction of a
post-closing requirement related to the 1997 sale of assets of the
Company's tennis, sailing and ski magazines
o $5.8 million in pre-tax income ($.02 per share) related to a non-compete
agreement entered into as part of the divestiture of the Company's Women's
Magazine Division in 1994
o $5.4 million pre-tax charge ($.02 per share) for Buyouts
1997
The net effect of these items increased net income by $18.8 million and
increased earnings per share by $.10.
o $18.0 million ($.09 per share) benefit from a tax settlement
o $10.4 million pre-tax gain ($.03 per share) resulting from the sale of
assets of the Company's tennis, sailing and ski magazines and certain
small properties, net of costs associated with the exit of a golf tee-time
reservation operation
o $10.1 million pre-tax noncash accounting charge ($.03 per share) related
to Emerging Issues Task Force Issue No. 97-13
o $10.0 million in pre-tax income ($.03 per share) related to a non-compete
agreement entered into as part of the divestiture of the Company's Women's
Magazine Division in 1994
o $8.5 million pre-tax charge ($.02 per share) for Buyouts
1996
The net effect of these items reduced net income by $95.8 million and earnings
per share by $.48.
o $126.8 million pre-tax noncash accounting charge ($.48 per share) related
to Statement of Financial Accounting Standards No. 121
o $32.9 million pre-tax gain ($.09 per share) from the sale of a building
and the realization of a gain contingency from the disposition of a paper
mill in a prior year
o $10.0 million in pre-tax income ($.03 per share) related to a non-compete
agreement entered into as part of the divestiture of the Company's Women's
Magazine Division in 1994
o $44.1 million pre-tax charge ($.12 per share) for Buyouts
1995
The net effect of these items increased net income by $5.0 million and earnings
per share by $.03.
o $11.3 million pre-tax gain ($.03 per share) from the sales of several
small Regional Newspapers
o $10.0 million in pre-tax income ($.03 per share) related to a non-compete
agreement entered into as part of the divestiture of the Company's Women's
Magazine Division in 1994
o $10.1 million pre-tax charge ($.03 per share) for Buyouts
<Page>
F-41
1994
The net effect of these items increased net income by $105.7 million and
earnings per share by $.50.
o $200.9 million pre-tax gain ($.49 per share) from the sales of the Women's
Magazines Division and the U.K. golf publications, and the disposition of
a minority interest in a newsprint mill
o $4.2 million in pre-tax income ($.01 per share) related to a non-compete
agreement entered into as part of the divestiture of the Company's Women's
Magazine Division in 1994
1993
The net effect of these items reduced net income by $73.5 million and earnings
per share by $.43.
o $3.7 million pre-tax charge ($.01 per share) for rate adjustments due to a
severe snowstorm
o $4.4 million ($.02 per share) of additional tax expense for remeasurement
of deferred tax balances due to the enactment of the Revenue
Reconciliation Act of 1993
o $1.2 million ($.01 per share) of additional tax expense due to the Revenue
Reconciliation Act of 1993 which increased the federal corporate income
tax rate
o $2.6 million pre-tax gain ($.01 per share) from the sale of assets
o $35.4 million of pre-tax charges ($.12 per share) for Buyouts
o $47.0 million pre-tax noncash charge ($.28 per share) to write down a
joint venture investment
1992
The net effect of these items reduced net income by $96.8 million and earnings
per share by $.63.
o $53.8 million pre-tax loss ($.24 per share) on the closing of The Gwinnett
Daily News (GA)
o $3.1 million pre-tax gain ($.01 per share) from the sale of assets
o $28.0 million pre-tax charge ($.10 per share) for Buyouts
o $21.4 million pre-tax charge ($.08 per share) for labor disruptions,
training and start-up costs at one of the Company's printing and
distribution facilities in Edison, NJ
o $34.0 million after-tax net cumulative effect of accounting changes ($.22
per share) includes the change in methods of accounting for income taxes,
postretirement benefits other than pensions and postemployment benefits
<Page>
S-1
THE NEW YORK TIMES COMPANY
VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 30, 2001
<Table>
<Caption>
(IN THOUSANDS)
- -----------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -----------------------------------------------------------------------------------------------------
ADDITIONS DEDUCTIONS
CHARGED TO FOR PURPOSES
BALANCE AT COSTS AND FOR WHICH
BEGINNING OF EXPENSES OR ACCOUNTS WERE BALANCE AT
DESCRIPTION PERIOD REVENUES SETUP END OF PERIOD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year Ended December 30, 2001
Deducted from assets to which they apply
Uncollectible accounts $38,875 $56,046 $57,472 $37,449
Returns and allowances, etc 5,294 7,770 7,916 5,148
- -----------------------------------------------------------------------------------------------------
Total $44,169 $63,816 $65,388 $42,597
- -----------------------------------------------------------------------------------------------------
Year Ended December 31, 2000
Deducted from assets to which they apply
Uncollectible accounts $33,596 $68,020 $62,741 $38,875
Returns and allowances, etc 6,153 11,189 12,048 5,294
- -----------------------------------------------------------------------------------------------------
Total $39,749 $79,209 $74,789 $44,169
- -----------------------------------------------------------------------------------------------------
Year Ended December 26, 1999
Deducted from assets to which they apply
Uncollectible accounts $28,146 $64,055 $58,605 $33,596
Returns and allowances, etc 6,218 6,754 6,819 6,153
- -----------------------------------------------------------------------------------------------------
Total $34,364 $70,809 $65,424 $39,749
- -----------------------------------------------------------------------------------------------------
</Table>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<FILENAME>ex3-2.txt
<DESCRIPTION>BY-LAWS
<TEXT>
Exhibit 3.2
The New York Times Company
BY-LAWS
As Amended by the
Board of Directors
October 21, 1968, February 26, 1969, March 24, 1971, March 29, 1972, March 28,
1973, May 30, 1973, November 28, 1973, March 27, 1974, March 31, 1976, April 26,
1977, January 30, 1978, October 25, 1978, April 3, 1979, July 23, 1979, March
20, 1980, May 15, 1980, March 19, 1981, March 18, 1982, February 17, 1983, April
28, 1983, February 16, 1984, July 18, 1985, February 20, 1986, April 30, 1986,
October 16, 1986, February 19, 1987, February 18, 1988, March 16, 1989, February
15, 1990, February 21, 1991, February 20, 1992, February 18, 1993, October 21,
1993, December 16, 1993, February 17, 1994, February 16, 1995, March 20, 1997,
October 16, 1997, February 19, 1998, May 21, 1998, April 27, 2000, and December
18, 2001.
As Ratified by the
Class B Stockholders
April 22, 1969
and the Class A and Class B Stockholders
(Article XI only)
April 19, 1988
<Page>
BY-LAWS
OF
THE NEW YORK TIMES COMPANY
As Amended by the
Board of Directors
October 21, 1968
February 26, 1969 As Ratified by the
March 24, 1971 Class B Stockholders
March 29, 1972 April 22, 1969
March 28, 1973 and the Class A and
May 30, 1973 Class B Stockholders
November 28, 1973 (Article XI only)
March 27, 1974 April 19, 1988
March 31, 1976
April 26, 1977
January 30, 1978
October 25, 1978
April 3, 1979
July 23, 1979
March 20, 1980
May 15, 1980
March 19, 1981
March 18, 1982
February 17, 1983
April 28, 1983
February 16, 1984
July 18, 1985
February 20, 1986
April 30, 1986
October 16, 1986
February 19, 1987
February 18, 1988
March 16, 1989
February 15, 1990
February 21, 1991
February 20, 1992
February 18, 1993
October 21, 1993
December 16, 1993
February 17, 1994
February 16, 1995
March 20, 1997
October 16, 1997
February 19, 1998
May 21, 1998
April 27, 2000
December 18, 2001
<Page>
INDEX
<Table>
<Caption>
Page
----
<S> <C> <C>
ARTICLE I. STOCKHOLDERS...................................................... 1
1. Annual Meeting................................................. 1
2. Special Meetings............................................... 1
3. Notice of Meetings............................................. 1
4. Quorum......................................................... 1
5. Voting......................................................... 1
ARTICLE II. CLOSING TRANSFER BOOKS; SETTING RECORD DATE....................... 2
1. Qualification of Voters........................................ 2
2. Determination of Stockholders of Record for Other Purposes..... 2
ARTICLE III. BOARD OF DIRECTORS................................................ 2
1. Number, Classification, Election and Qualifications............ 2
2. Vacancies...................................................... 2
3. Regular Meetings............................................... 2
4. Special Meetings............................................... 3
5. Quorum......................................................... 3
6. Committees..................................................... 3
7. Salaries....................................................... 3
8. Resignation.................................................... 4
9. Telephonic Meetings............................................ 4
ARTICLE IV. OFFICERS.......................................................... 4
1. Appointment.................................................... 4
2. Term of Office................................................. 4
3. The Chairman of the Board...................................... 4
4. The Vice Chairman of the Board................................. 4
5. The President.................................................. 4
6. Vice Presidents................................................ 5
7. The Secretary.................................................. 5
8. The Treasurer.................................................. 5
9. Duties of Officers may be Delegated............................ 5
ARTICLE V. STOCK CERTIFICATES................................................ 5
1. Issuance of Stock Certificates................................. 5
2. Lost Stock Certificates........................................ 5
3. Transfers of Stock............................................. 5
4. Regulations.................................................... 6
ARTICLE VI. SEAL.............................................................. 6
ARTICLE VII. CHECKS............................................................ 6
ARTICLE VIII. BOOKS OF ACCOUNT AND STOCK BOOK................................... 6
ARTICLE IX. FISCAL YEAR....................................................... 6
ARTICLE X. VOTING SECURITIES................................................. 6
ARTICLE XI. INDEMNIFICATION................................................... 7
1. Directors and Officers......................................... 7
2. Non-Exclusivity................................................ 7
3. Continuity of Rights........................................... 7
ARTICLE XII. INTEREST OF DIRECTORS AND OFFICERS IN CONTRACTS WITH THE COMPANY.. 7
ARTICLE XIII. NOTICES........................................................... 8
ARTICLE XIV. AMENDMENT......................................................... 8
</Table>
- -----------
<Page>
THE NEW YORK TIMES COMPANY
BY-LAWS
ARTICLE I
STOCKHOLDERS
1. ANNUAL MEETING. The Annual Meeting of Stockholders for the election of
directors and for the transaction of such other business as may properly come
before the meeting shall be held on such date, at such time and place either
within or without the State of New York as may be specified by the Board of
Directors.
2. SPECIAL MEETINGS. Special meetings of the stockholders, to be held at
such place either within or without the State of New York and for the purpose or
purposes as may be specified in the notices of such meetings, may be called by
the Chairman of the Board or the President and shall be called by the President
or the Secretary at the request of a majority of the Board of Directors or of
stockholders owning 25 per cent or more of the shares or stock of the Company
issued and outstanding and entitled to vote on any action proposed by such
stockholders for such meetings. Such request shall be in writing and shall state
the purpose or purposes of the proposed meeting.
3. NOTICE OF MEETINGS. Notice shall be given to the stockholders of the
time and place of every meeting of stockholders. Notices of special meetings
shall also specify the purpose or purposes for which the meeting has been called
and indicate that the notice is being issued at the direction of the person or
persons calling the meeting. Notice of any meeting may be written or electronic,
and shall be given not fewer than 10, nor more than 60, days before the date of
the meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be directed to a stockholder at his, her or its
address as it appears on the stock book, unless the stockholder shall have filed
with the Secretary a written request that notices intended for the stockholder
be mailed to some other address, in which case it will be mailed to the address
designated in such request. If transmitted electronically, such notice shall be
directed to the stockholder's electronic mail address as supplied by the
stockholder to the Secretary or as otherwise directed pursuant to the
stockholder's authorization or instructions. If, at any meeting, action is
proposed to be taken which would, if taken, entitle stockholders fulfilling the
requirements of Section 623 of the New York Business Corporation Law to receive
payment for their shares, the notice of such meeting shall include a statement
of that purpose and to that effect and shall be accompanied by a copy of such
Section 623 or an outline of its material terms.
4. QUORUM. The holders of record of a majority of the shares of stock
issued and outstanding and entitled to vote thereat, present in person or by
proxy, shall be requisite and shall constitute a quorum at each meeting of
stockholders for the transaction of business, except as otherwise provided by
law, by the Certificate of Incorporation or by these By-laws; provided that,
when any specified action is required to be voted upon by a class of stock
voting as a class, the holders of a majority of the shares of such class shall
be requisite and shall constitute a quorum for the transaction of such specified
action. If, however, there shall be no quorum, the officer of the Company
presiding as chairman of the meeting shall have the power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present, when any business may be transacted which might have
been transacted at the meeting as first convened had there been a quorum.
5. VOTING. Each stockholder entitled to vote on any action proposed at a
meeting of stockholders shall be entitled to one vote in person or by proxy for
each share of voting stock held of record by him. Execution of a proxy may be
accomplished by the stockholder or the stockholder's authorized officer,
director, employee or agent. Proxies may be executed by facsimile signature or
transmitted by telegram, cablegram or other means of electronic transmission
authorized by the stockholder to the person who will be the holder of the proxy
or to a proxy solicitation firm, proxy support service organization or like
agent duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram, cablegram or other
means of electronic transmission must either set forth or be submitted with
information from which it can be reasonably determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder. No
proxy shall be valid after the expiration of eleven months from the date of its
execution, unless the person executing it shall have specified therein its
duration.
The vote for directors shall be by ballot, and the election of each
director shall be decided by a plurality vote. Except as otherwise
provided by law, by the Certificate of Incorporation, by other certificate
filed pursuant to law or by these By-laws, votes on any other matters
coming before any meeting of stockholders shall be decided by the vote of
the holders of a majority of the shares represented at such meeting, in
person or by proxy, and entitled to vote on the specific matter. Except as
required by law, by the Certificate of Incorporation, by other certificate
filed pursuant to law or by these By-laws, the chairman presiding at any
meeting of stockholders may rule on questions of order or procedure coming
before the meeting or submit such questions to the vote of the meeting,
which vote may at his direction be by
9
<Page>
ballot. The chairman shall submit any such questions to the vote of the
meeting at the request of any stockholder entitled to vote present in
person or by proxy at the meeting, which vote shall be by ballot.
ARTICLE II
CLOSING TRANSFER BOOKS; SETTING RECORD DATE
1. QUALIFICATION OF VOTERS. The Board of Directors may fix a date, which
shall not be more than sixty days, nor fewer than 10 days prior to the date of
any meeting of the stockholders or prior to the last day on which the consent or
dissent of stockholders may be effectively expressed for any purpose without a
meeting, as the record date for the determination of stockholders entitled to
notice of and to vote at such a meeting or whose consent or dissent is required
or may be expressed for any purpose, as the case may be, shall be determined,
and all persons who were holders of record of voting stock on the date so fixed
and no others shall be entitled to notice of and to vote at such meeting or to
express their consent or dissent, as the case may be.
2. DETERMINATION OF STOCKHOLDERS OF RECORD FOR OTHER PURPOSES.The Board of
Directors may fix a date, which shall not be more than sixty days, nor fewer
than 10 days preceding the date fixed for the payment of any dividend or for the
making of any distribution or for the delivery of evidences of rights or
evidences of interests arising out of any change, conversion or exchange of
capital stock, as the record date for the determination of the stockholders
entitled to receive any such dividend, distribution, rights or interests, and in
such case only stockholders of record on the date so fixed shall be entitled to
receive such dividend, distribution, rights or interests.
ARTICLE III
BOARD OF DIRECTORS
1. NUMBER, CLASSIFICATION, ELECTION AND QUALIFICATIONS.The affairs of the
Company shall be managed by a Board of Directors consisting of not fewer than
three nor more than eighteen members. The number of directors shall be
determined from time to time by resolution of a majority of the entire Board of
Directors then in office, provided that no decrease in the number of directors
shall shorten the term of any incumbent director. For the purpose of election of
directors only, and not for any other purpose, the directors shall be divided
into two classes, the holders of Class A Common Stock are entitled to elect 30%
of the Board of Directors proposed to be elected at any meeting of stockholders
held for that purpose (or the nearest larger whole number if such percentage is
not a whole number), to be designated the Class A directors, and the holders of
Class B Common Stock are entitled to elect the balance of the Board of Directors
proposed to be elected at any such meeting, to be designated the Class B
directors. The directors shall, except as provided in Section 2 of this Article
III, be elected by the classes of shares entitled to elect them, by ballot at
each annual meeting of stockholders, and shall hold office until the next annual
meeting of stockholders and until their successors shall be elected and
qualified. All directors must be at least eighteen years of age and at least one
shall be a citizen of the United States and a resident of New York State.
2. VACANCIES. Any vacancy in the Board of Directors, whether caused by
resignation, death, increase in the number of directors, disqualification or
otherwise, may be filled by a majority of the directors in office after the
vacancy has occurred, although less than a quorum. A director so elected shall
hold office for the unexpired term in respect of which such vacancy occurred.
3. REGULAR MEETINGS. A regular meeting of the Board shall be held in each
year immediately following the Annual Meeting of Stockholders or if such meeting
be adjourned, the final adjournment thereof at the same place as such meeting of
stockholders. No notice of such meeting shall be necessary to the newly elected
directors in order to legally constitute the meeting. Other regular meetings of
the Board may be held at such time and place, either within or without the State
of New York, as shall from time to time be determined by a resolution of the
Board. Any business may be transacted at any regular meeting at which a quorum
is present. The time and place of any such regular meeting may be changed (i) at
the preceding regular meeting; or (ii) subsequent to the adjournment of the
preceding regular meeting by consent in writing signed by a majority of the
whole Board; provided, however, that in either case notice of such change be
given to each director personally or by telegram, facsimile transmission or
comparable means two days or by mail five days prior to the date originally
designated for such regular meeting.
4. SPECIAL MEETINGS. A special meeting of the Board of Directors may be
held at the time fixed by resolution of the Board or upon call of the Chairman
of the Board, the President or any two directors and may be held at any place
within or
10
<Page>
without the State of New York. Except as otherwise provided by law, by the
Certificate of Incorporation, by other certificate filed pursuant to law or by
these By-laws, notice of the time and place of any special meeting of the Board
shall be given by the Secretary or other person designated by him to perform
this duty by giving the same personally or by telegram, facsimile transmission
or comparable means to each director at his address as the same shall appear on
the books of the Company at least two days previous to such meeting or by
mailing a copy of such notice, postage prepaid, to each director at such address
at least five days previous to such meeting; provided, however, that no notice
need be given to any director if waived by him either before or after the
meeting or if he shall be present at such meeting, and any meeting of the Board
may be held at any time without notice if all the directors then in office shall
be present thereat.
Any such notice shall also state the items of business which are expected
to come before the meeting, and the items of business transacted at any
special meeting of the Board shall be limited to those stated in such
notice, unless all the directors are present at the meeting, or all those
absent consent in writing either before or after the meeting, to the
transaction of an item or items of business not stated in such notice.
5. QUORUM. At all meetings of the Board, the presence of at least
one-third of the directors in office shall be necessary and sufficient to
constitute a quorum for the transaction of business, and, except as otherwise
required by law, by the Certificate of Incorporation, by other certificate filed
pursuant to law or by these By-laws, the affirmative vote of a majority of the
directors present at any meeting at which a quorum is present shall be necessary
for the adoption of any business or resolution which may come before the
meeting; provided, however, that in the absence of a quorum a majority of the
directors present or any director solely present may adjourn any meeting from
time to time until a quorum is present. No notice of any adjournment to a later
hour on the date originally designated for the holding of a meeting need be
given, but immediate notice by telegram, facsimile transmission or comparable
means shall be given by the Secretary or other person designated by him to
perform this duty to all directors of any adjournment to any subsequent date,
and such notice shall be deemed sufficient, though less than the notice required
by Section 3 if such meeting be an adjourned regular meeting of the Board, or by
Section 4 if such meeting be an adjourned special meeting of the Board.
6. COMMITTEES. The Board of Directors may by resolution or resolutions
passed by a majority of the whole Board designate one or more committees, each
committee to consist of three or more of the directors, which, to the extent
provided in said resolution or resolutions, shall have and may exercise powers
of the Board of Directors in the management of the business and affairs of the
Company and may have power to authorize the seal of the Company to be affixed to
all papers which may require it. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the Board of Directors. All committees so appointed shall keep regular minutes
of the business transacted at their meetings.
7. SALARIES. Directors, as such, shall not receive any stated salary for
their services, provided that, by resolution of the Board, the Board of
Directors shall have authority to fix the compensation of directors and provide
for the reimbursement of expenses of attending meetings; provided further that
nothing herein contained shall be construed to preclude any director from
serving the Company in any other capacity and receiving compensation therefor.
Members of committees may be allowed such compensation as may be fixed from time
to time by the Board for attending committee meetings and reimbursement of
expenses of attendance.
8. RESIGNATION. Any director may, at any time, resign, such resignation to
take effect upon receipt of written notice thereof by the President or the
Secretary, unless otherwise stated in the resignation.
9. TELEPHONIC MEETINGS. One or more directors may participate in a meeting
of the Board of Directors, or a committee designated pursuant to Section 6 of
this Article III, by a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear and speak to
each other. Participation in a meeting pursuant to this provision shall
constitute actual attendance at such meeting.
ARTICLE IV
OFFICERS
1. APPOINTMENT. The Board of Directors may appoint from their number a
Chairman of the Board and a Vice Chairman of the Board. The Board of Directors
shall appoint a President, a Secretary and a Treasurer and may also appoint one
or more Vice Presidents, none of whom need be members of the Board, and may from
time to time appoint such other officers as they may deem proper. The Chairman,
President or Vice Chairman may appoint one or more Vice Presidents, the
Secretary, the Treasurer, or any Assistant Secretary or Assistant Treasurer. Any
two of the aforesaid offices, except those of President and Vice
11
<Page>
President, or President and Secretary, may be filled by the same person. The
compensation of all officers of the Company shall be fixed by the Board.
2. TERM OF OFFICE. The officers of the Company shall hold office at the
pleasure of the Board of Directors. Any officer may be removed from office at
any time for or without cause by the affirmative vote of a majority of the whole
Board of Directors. Any officer may resign his office at any time, such
resignation to take effect upon receipt of written notice thereof by the
Company, unless otherwise stated in the resignation. If the office of any
officer becomes vacant for any reason, the vacancy may be filled by the Board or
in the case of any Vice President, the Secretary or the Treasurer, or any
Assistant Secretary or Assistant Treasurer, the vacancy may be filled by any two
of the Chairman, President or Vice Chairman.
3. THE CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at
all meetings of the Board of Directors and all meetings of the stockholders. He
shall have final authority, subject to the control of the Board of Directors,
over the general policy and business of the Company, and shall have such other
powers and duties as may from time to time be prescribed by the Board of
Directors.
4. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the Board shall
have such powers and duties as may from time to time be prescribed by the Board
of Directors or by the Chairman of the Board. In the absence or inability to act
of the Chairman of the Board, the Vice Chairman of the Board shall preside at
all meetings of the Board of Directors and all meetings of the stockholders.
5. THE PRESIDENT. The President shall be the chief executive officer of
the Company and as such shall have the general control and management of the
business and affairs of the Company subject, however, to the control of the
Chairman of the Board. The President shall have the power, subject to the
control of the Chairman of the Board, to appoint or discharge and to prescribe
the duties and to fix the compensation of such agents and employees of the
Company as he may deem necessary. He shall have, as does the Chairman of the
Board, the authority to make and sign bonds, mortgages and other contracts and
agreements in the name and on behalf of the Company, except when the Board of
Directors by resolution instructs the same to be done by some other officer or
agent. He shall see that all orders and resolutions of the Board of Directors
are carried into effect and shall perform all other duties necessary to his
office or properly required of him by the Board of Directors subject, however,
to the right of the directors to delegate any specific powers, except such as
may by statute be exclusively conferred upon the President, to any other officer
or officers of the Company. In the absence or inability to act of the Chairman
of the Board, the President shall have the duties prescribed for the Chairman of
the Board subject, however, to Section 4 of this Article IV.
6. VICE PRESIDENTS. Each Vice President shall have such powers and perform
such duties as may be assigned to him from time to time by the Chairman of the
Board or the President.
7. THE SECRETARY. The Secretary shall attend all sessions of the Board and
all meetings of the stockholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose, and shall perform like duties
for committees when required. He shall give, or cause to be given, notice of all
meetings of the stockholders and meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or the
President. He shall keep in safe custody the seal of the Company and shall see
that it is affixed to all documents, the execution of which, on behalf of the
Company, under its seal, is necessary or proper, and when so affixed may attest
the same.
8. THE TREASURER. The Treasurer shall, if required by the Board of
Directors, give a bond for the faithful discharge of his duties in such amount
and with such surety or sureties as the Board of Directors may determine; the
cost of any such bond, and any expenses incurred in connection therewith, shall
be borne by the Company. He shall have the custody of the corporate funds and
securities, except as otherwise provided by the Board, and shall cause to be
kept full and accurate accounts of receipts and disbursements in books belonging
to the Company and shall deposit all moneys and other valuable effects in the
name and to the credit of the Company in such depositories as may be designated
by the Board of Directors. He shall disburse the funds of the Company as may be
ordered by the Board, taking proper vouchers for such disbursements, and shall
render to the President and the directors, at the regular meetings of the Board,
or whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the Company.
9. DUTIES OF OFFICERS MAY BE DELEGATED. In the case of the absence of any
officer, or for any other reason that the Board may deem sufficient, the
President or the Board may delegate for the time being the powers or duties of
such officer to any other officer or to any director.
ARTICLE V
STOCK CERTIFICATES
12
<Page>
1. ISSUANCE OF STOCK CERTIFICATES. The Capital Stock of the Company shall
be represented by certificates signed by the Chairman or the President or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer and sealed with the seal of the Company. Such seal may be a
facsimile, engraved or printed and where any such certificate is signed by a
transfer agent registered by a registrar other than the Company or an employee
of the Company or the shares represented by such certificate are listed on a
national security exchange, the signatures of any officers appearing thereon may
be facsimiles, engraved or printed.
2. LOST STOCK CERTIFICATES. The Board of Directors may by resolution
adopt, from time to time, such regulations concerning the issue of any new or
duplicate certificates for lost, stolen or destroyed stock certificates of the
Company as shall not be inconsistent with the provisions of the laws of the
State of New York as presently in effect or as they may hereafter be amended.
3. TRANSFERS OF STOCK. Transfers of stock shall be made only on the stock
transfer books of the Company, and, except in the case of any such certificate
which has been lost, stolen or destroyed, in which case the resolutions of the
Board then in effect respecting lost, stolen or destroyed stock certificates
shall be complied with, such transfer shall only be made upon surrender to the
Company of a certificate for shares for cancellation duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon the issue of a new certificate to the person entitled thereto,
the Company shall cancel the old certificate and record the transaction upon its
books.
4. REGULATIONS. Except to the extent that the exercise of such power shall
be prohibited or circumscribed by these By-laws, by the Certificate of
Incorporation, or other certificate filed pursuant to law, or by statute, the
Board of Directors shall have power to make such rules and regulations
concerning the issuance, registration, transfer and cancellation of stock
certificates as it shall deem appropriate.
ARTICLE VI
SEAL
The seal of the Company shall be circular in form, shall bear the legend:
"The New York Times Company--1851 Inc. 1896" and shall contain in the
center the Roman letter T.
ARTICLE VII
CHECKS
All checks or demands for money and notes of the Company shall be signed
by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
ARTICLE VIII
BOOKS OF ACCOUNT AND STOCK BOOK
The Company shall keep at its principal office correct books of account of
all its business and transactions. A book to be known as the stock book,
containing the names alphabetically arranged, of all persons who are
stockholders of the Company, showing their addresses, the number and class
of shares of stock held by them respectively and the times when they
respectively became the owners thereof shall be kept at the principal
office of the Company or its transfer agent.
ARTICLE IX
FISCAL YEAR
The fiscal year of the Company shall be the calendar year unless otherwise
provided by the Board of Directors.
ARTICLE X
VOTING SECURITIES
13
<Page>
Unless otherwise ordered by the Board of Directors, the Chairman, the
President or the Vice Chairman, or, in the event of their absence or
inability to act, the Vice Presidents, in order of seniority or priority
established by the Board or by the President, unless and until the Board
shall otherwise direct, shall have full power and authority on behalf of
the Company to attend and to act and to vote, or to execute in the name
and on behalf of the Company a proxy authorizing an agent or
attorney-in-fact for the Company to attend and to act and to vote at any
meetings of security holders of corporations in which the Company may hold
securities, and at such meetings he or his duly authorized agent or
attorney-in-fact shall possess and may exercise any and all rights and
powers incident to the ownership of such securities, and which as the
owner thereof the Company might have possessed and exercised, if present.
The Board of Directors by resolution from time to time may confer like
powers upon any other person or persons.
ARTICLE XI
INDEMNIFICATION
1. DIRECTORS AND OFFICERS. The Company shall, to the fullest extent
permitted by applicable law as the same exists or may hereafter be in effect,
indemnify any person who is or was made or threatened to be made a party to or
is involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an action by
or in the right of the Company to procure a judgment in its favor and an action
by or in the right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit plan or any
other entity, which any director or officer of the Company is serving, has
served or has agreed to serve in any capacity at the request of the Company, by
reason of the fact that such person or such person's testator or intestate is or
was or has agreed to become a director or officer of the Company, or is or was
serving or has agreed to serve such other corporation, partnership, joint
venture, trust, employee benefit plan or other entity in any capacity, against
judgments, fines, amounts paid or to be paid in settlement, taxes or penalties,
and costs, charges and expenses, including attorneys' fees, incurred in
connection with such action or proceeding or any appeal therein; provided,
however, that no indemnification shall be provided to any such person if a
judgment or other final adjudication adverse to the director or officer
establishes that (i) his or her acts were committed in bad faith or were the
result of active and deliberate dishonesty and, in either case, were material to
the cause of action so adjudicated or (ii) he or she personally gained in fact a
financial profit or other advantage to which he or she was not legally entitled.
2. NON-EXCLUSIVITY. Nothing contained in this Article XI shall limit the
right to indemnification and advancement of expenses to which any person would
be entitled by law in the absence of this Article, or shall be deemed exclusive
of any other rights to which such person seeking indemnification or advancement
of expenses may have or hereafter may be entitled under law, any provision of
the Certificate of Incorporation, or By-laws, any agreement approved by the
Board of Directors, or a resolution of stockholders or directors; and the
adoption of any such resolution or entering into of any such agreement approved
by the Board of Directors is hereby authorized.
3. CONTINUITY OF RIGHTS. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article XI shall (i) apply with
respect to acts or omissions occurring prior to the adoption of this Article XI
to the fullest extent permitted by law and (ii) survive the full or partial
repeal or restrictive amendment hereof with respect to events occurring prior
thereto.
ARTICLE XII
INTEREST OF DIRECTORS AND OFFICERS IN CONTRACTS WITH THE COMPANY
A director or officer of the Company shall not be disqualified by his office
from dealing or contracting with the Company either as a vendor, purchaser or
otherwise, nor shall any transaction or contract of the Company be void or
voidable by reason of the fact that any director or officer or any firm of which
any director or officer is a member or any corporation or other entity of which
any director or officer is a shareholder, officer or director or has a
substantial interest, is in any way interested in such transaction or contract,
provided that such transaction or contract is or shall be authorized, ratified
or approved either (1) by a vote of a majority of a quorum of the Board of
Directors, without counting in such majority any director so interested or
member of a firm so interested, or a shareholder, officer or director or holder
of substantial interest of a corporation so interested, or, if the disinterested
directors are less than a majority of the directors present at such meeting, by
unanimous vote of the disinterested directors and, in each case, the common or
interested directors may be counted in determining the presence of a quorum at
such meeting, or (2) by the written consent, or by the vote at any stockholders'
meeting of the holders of record of a majority of all the outstanding shares of
stock of the Company entitled to vote on such transaction or contract; nor shall
any director or officer be liable to account to the Company for any profits
realized by or from or through any such transaction or contract of the Company
authorized, ratified or approved as aforesaid by reason of the fact that he, or
any firm of which he is a member or any corporation
14
<Page>
of which he is a shareholder, officer or director, was interested in such
transaction or contract. Nothing herein contained shall create liability in the
events above described or prevent the authorization, ratification or approval of
such transactions or contracts in any other manner permitted by law.
ARTICLE XIII
NOTICES
Whenever, under the provisions of these By-laws, notice is required to be given
to any director, officer, or stockholder, it shall not be construed to mean
personal notice, but unless otherwise expressly stated in these By-laws, such
notice may be given in writing by depositing the same, with postage pre-paid, in
a post office or official depositary under the exclusive care and custody of the
United States Postal Service, addressed to such stockholder, officer or
director, at such address as appears on the books of the Company, and such
notice shall be deemed to have been given at the time when the same was thus
mailed.
ARTICLE XIV
AMENDMENT
These By-laws may be amended, altered, changed, added to or repealed by a
majority vote of all the Class B Common Stock issued and outstanding and
entitled to vote at any annual or special meeting of the stockholders, provided
that such amendments are not inconsistent with any provisions of the Company's
Certificate of Incorporation.
The Board of Directors, at any regular or at any special meeting, by a majority
vote of the whole Board, may amend, alter, change, add to or repeal these
By-laws, provided that such amendments are not inconsistent with any provisions
of the Company's Certificate of Incorporation, and provided further that if any
By-law regulating an impending election of directors is adopted or amended or
repealed by the Board, there shall be set forth in the notice of the next
stockholders meeting for the election of directors the By-laws so adopted or
amended or repealed, together with a concise statement of the changes made.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.22
<SEQUENCE>4
<FILENAME>ex10-22.txt
<DESCRIPTION>AGREEMENT OF LEASE
<TEXT>
Exhibit 10.22
AGREEMENT OF LEASE
BY AND BETWEEN
42ND ST. DEVELOPMENT PROJECT, INC.,
LANDLORD,
AND
THE NEW YORK TIMES BUILDING LLC,
TENANT
DATED AS OF: DECEMBER 12, 2001
<Page>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS; CONSTRUCTION OF TERMS
Section 1.1 Definitions .................................................. 2
Section 1.2 Rules of Construction ........................................ 33
Section 1.3 Captions/Table of Contents ................................... 34
ARTICLE II
LEASE OF PROPERTY; TERM OF LEASE
Section 2.1 Demise of Property; Term ..................................... 35
Section 2.2 Condition of Property ........................................ 37
Section 2.3 Waiver of Right to Rescind ................................... 37
ARTICLE III
CHARGES AND FEES
Section 3.1 PILOT ........................................................ 38
Section 3.2 Retail Space Percentage Rent ................................. 41
Section 3.3 Sales Tax Savings; PILOST .................................... 43
Section 3.4 Exemption from Mortgage Recording Tax; PILOMRT ............... 45
Section 3.5 Theater Surcharge ............................................ 46
Section 3.6 Administrative Fee ........................................... 47
Section 3.7 Prorations; Overdue Amounts .................................. 47
Section 3.8 No Joint Venture ............................................. 48
Section 3.9 All Charges Treated as Rent .................................. 48
Section 3.10 Payments ..................................................... 48
Section 3.11 Net Lease .................................................... 48
Section 3.12 No Offset .................................................... 48
Section 3.13 Books and Records ............................................ 49
Section 3.14 Illegality ................................................... 50
Section 3.15 Administrative Code Section 11-208.1 ......................... 51
Section 3.16 Survival ..................................................... 51
Section 3.17 Existing Violations .......................................... 51
Section 3.18 End of NYTC Benefits ......................................... 51
ARTICLE IV
IMPOSITIONS
Section 4.1 Impositions .................................................. 52
Section 4.2 Payment ...................................................... 52
Section 4.3 Right to Contest ............................................. 52
<Page>
ARTICLE V
PURCHASE OPTION
Section 5.1 Purchase Option ............................................... 55
Section 5.2 Casualty to, or Condemnation of, the Property ................. 57
Section 5.3 Termination of Right to Purchase .............................. 57
Section 5.4 Survival of Certain Obligations ............................... 57
ARTICLE VI
CONSTRUCTION OF THE PROJECT
Section 6.1 Construction of the Project .................................. 58
Section 6.2 Plans and Specifications ..................................... 63
Section 6.3 Performance of Construction Work ............................. 66
Section 6.4 Use of Plans and Specifications .............................. 70
Section 6.5 Conditions Precedent to Commencement of Demolition, Asbestos
Removal and Lead Abatement ................................... 71
Section 6.6 Construction of Tenant's Subway Improvements ................. 72
Section 6.7 Final Completion; Permanent Certificate of Occupancy ......... 72
Section 6.8 Construction Agreements ...................................... 73
Section 6.9 Construction Sign ............................................ 73
Section 6.10 Project Area ................................................. 73
Section 6.11 Title to Materials ........................................... 74
Section 6.12 Nonadverse Structural Effect ................................. 74
Section 6.13 Arbitration .................................................. 74
ARTICLE VII
USE AND MAINTENANCE OF THE PROPERTY
Section 7.1 Permitted Use ................................................ 75
Section 7.2 Restrictions on Use .......................................... 75
Section 7.3 Interim and Long-Term Maintenance Obligations ................ 75
Section 7.4 Compliance with Legal Requirements ........................... 78
Section 7.5 No Waste ..................................................... 79
Section 7.6 Right of Entry ............................................... 79
Section 7.7 Utilities; Services; No Landlord Responsibility .............. 79
Section 7.8 Environmental ................................................ 80
Section 7.9 Equitable Relief ............................................. 80
Section 7.10 Windows ...................................................... 80
Section 7.11 Adverse Possession ........................................... 81
Section 7.12 Pre-Possession Obligations ................................... 81
ARTICLE VIII
REPAIRS
Section 8.1 Repairs ....................................................... 82
ii
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ARTICLE IX
ALTERATIONS
Section 9.1 Requirements for Alterations ................................. 83
Section 9.2 Major Alterations ............................................ 83
Section 9.3 Reimbursement of Expenses of Review .......................... 84
Section 9.4 Disputes ..................................................... 85
ARTICLE X
INSURANCE
Section 10.1 Insurance .................................................... 86
Section 10.2 Requirements for Policies .................................... 88
Section 10.3 Waiver of Subrogation ........................................ 88
Section 10.4 Delivery of Policies ......................................... 89
Section 10.5 Separate Insurance ........................................... 89
Section 10.6 Cooperation; Adjustment ...................................... 89
Section 10.7 Approval by Landlord ......................................... 90
Section 10.8 Depositary ................................................... 90
Section 10.9 Security for Commercial Property Insurance Premium ........... 90
ARTICLE XI
DAMAGE AND DESTRUCTION
Section 11.1 Damage and Destruction ....................................... 92
Section 11.2 Restoration Funds ............................................ 94
Section 11.3 Conditions Precedent to Disbursement ......................... 95
Section 11.4 Section 227 of Real Property Law ............................. 96
Section 11.5 Additional Requirements for Restoration ...................... 96
Section 11.6 Effect of Casualty on this Lease ............................. 96
ARTICLE XII
CONDEMNATION
Section 12.1 Condemnation ................................................. 97
Section 12.2 Date of Taking ............................................... 97
Section 12.3 Minor Taking; Condemnation Restoration ....................... 97
Section 12.4 Additional Restoration Requirements .......................... 99
Section 12.5 Temporary Taking ............................................. 99
Section 12.6 Right to Compensation ........................................ 99
Section 12.7 Settlement; Compromise ....................................... 99
ARTICLE XIII
ASSIGNMENT, SUBLETTING AND TRANSFER
Section 13.1 Transfers Generally .......................................... 100
Section 13.2 Subleasing ................................................... 102
Section 13.3 Assignments .................................................. 106
iii
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Section 13.4 Collect Charges from Assignee, Subtenant .................... 106
Section 13.5 No Relief ................................................... 107
Section 13.6 Consent ..................................................... 107
Section 13.7 Costs and Expenses .......................................... 107
Section 13.8 Prohibited Persons .......................................... 107
Section 13.9 Constitutive Documents ...................................... 108
Section 13.10 Permitted Disposition ....................................... 108
ARTICLE XIV DEFAULT PROVISIONS
Section 14.1 Conditions of Limitation ..................................... 111
Section 14.2 Events of Default ............................................ 112
Section 14.3 Rights of Landlord ........................................... 114
Section 14.4 Waiver of Right of Redemption ................................ 115
Section 14.5 No Waiver .................................................... 115
Section 14.6 Remedies Under Bankruptcy and Insolvency Codes ............... 115
ARTICLE XV
LANDLORD'S RIGHT TO PERFORM
Section 15.1 Right to Perform ............................................. 117
Section 15.2 Additional Remedies .......................................... 117
Section 15.3 Strict Performance ........................................... 118
Section 15.4 Right to Enjoin Defaults or Threatened Defaults .............. 118
ARTICLE XVI
ARBITRATION
Section 16.1 Generally .................................................... 119
Section 16.2 Standard Arbitration ......................................... 119
Section 16.3 Expedited Arbitration ........................................ 120
ARTICLE XVII
INDEMNITY; LIMITATION ON LIABILITY
Section 17.1 Indemnification by Tenant .................................... 123
Section 17.2 Indemnification Generally .................................... 124
Section 17.3 Recourse Only to Landlord's Estate in the Property ........... 124
Section 17.4 Recourse Only to Tenant's Estate in the Property ............. 125
Section 17.5 Survival ..................................................... 125
ARTICLE XVIII
QUIET ENJOYMENT; TRANSFER OF LANDLORD'S INTEREST
Section 18.1 Quiet Enjoyment ............................................. 126
Section 18.2 Transfer of Landlord's Interest ............................. 126
iv
<Page>
ARTICLE XIX
WAIVER OF JURY TRIAL; COUNTERCLAIMS
Section 19.1 Waiver of Jury Trial ......................................... 127
Section 19.2 No Counterclaims ............................................. 127
Section 19.3 Survival ..................................................... 127
ARTICLE XX
NOTICES
Section 20.1 Notices ...................................................... 128
ARTICLE XXI
ESTOPPEL CERTIFICATE
Section 21.1 Certificate of Tenant ........................................ 131
Section 21.2 Certificate of Landlord ...................................... 131
Section 21.3 Construction Certificate ..................................... 131
ARTICLE XXII
SEVERABILITY
Section 22.1 Severability ................................................. 132
ARTICLE XXIII
END OF TERM; TITLE TO IMPROVEMENTS
Section 23.1 Surrender .................................................... 133
Section 23.2 Re-Entry ..................................................... 134
Section 23.3 Removal of Property .......................................... 134
Section 23.4 Title to Improvements ........................................ 134
ARTICLE XXIV
COVENANTS BINDING
Section 24.1 Covenants Binding ............................................ 135
ARTICLE XXV
ENTIRE AGREEMENT; NO WAIVER
Section 25.1 Entire Agreement ............................................. 136
Section 25.2 No Waiver .................................................... 136
ARTICLE XXVI
NO MERGER
Section 26.1 No Merger .................................................... 137
v
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ARTICLE XXVII
ENCUMBRANCES
Section 27.1 Encumbrances ................................................. 138
ARTICLE XXVIII
CONSENTS; APPROVALS
Section 28.1 Reasonable Standard .......................................... 139
Section 28.2 No Damages ................................................... 139
Section 28.3 Deemed Consent ............................................... 139
ARTICLE XXIX
NON-DISCRIMINATION AND AFFIRMATIVE ACTION
Section 29.1 Incorporation by Reference ................................... 141
ARTICLE XXX
REPRESENTATIONS, WARRANTIES AND COVENANTS, AND OTHER AGREEMENTS
Section 30.1 Representations and Warranties ............................... 142
Section 30.2 Possession ................................................... 143
Section 30.3 Covenants of Tenant .......................................... 143
Section 30.4 Public Amenity ............................................... 143
Section 30.5 Other Agreements ............................................. 146
ARTICLE XXXI
PERMITTED FINANCING
Section 31.1 Recognized Mortgage ......................................... 148
Section 31.2 Right and Time to Cure ...................................... 148
Section 31.3 Notice to Landlord .......................................... 149
Section 31.4 Acceptance of Performance ................................... 149
Section 31.5 Other Defaults .............................................. 149
Section 31.6 Execution of New Lease ...................................... 150
Section 31.7 Recognition of Most Senior Recognized Mortgagee ............. 154
Section 31.8 No Rights of Other Mortgagees ............................... 154
Section 31.9 Miscellaneous Mortgage Provisions ........................... 154
Section 31.10 Delegation by Tenant ........................................ 155
Section 31.11 Survival .................................................... 155
ARTICLE XXXII
CONDOMINIUM CONVERSION
Section 32.1 Condominium Conversion ....................................... 156
Section 32.2 Condominium Documents ........................................ 157
vi
<Page>
ARTICLE XXXIII
MISCELLANEOUS
Section 33.1 Recording and Transfer Tax ................................... 159
Section 33.2 Brokers ...................................................... 159
Section 33.3 Media Announcements .......................................... 159
Section 33.4 Relationship of Landlord and Tenant .......................... 160
Section 33.5 Person Acting on Behalf of a Party Hereunder ................. 160
Section 33.6 Third Party Beneficiary ...................................... 160
Section 33.7 Proprietary Capacity Only .................................... 160
ARTICLE XXXIV
COMMON ELEMENTS LEASEABLE SPACE
Section 34.1 Generally .................................................... 161
Section 34.2 Defined Terms ................................................ 161
vii
<Page>
Schedules
SCHEDULE 1 PILOT SCHEDULE
EXHIBITS
EXHIBIT A THE PROJECT DOCUMENTS
EXHIBIT B APPROVED CERTIFIED PUBLIC ACCOUNTING FIRMS
EXHIBIT C FORM OF COLLATERAL ASSIGNMENT
EXHIBIT D FORM OF CONDOMINIUM DECLARATION
EXHIBIT E-1 DESIGN, CONSTRUCTION AND MAINTENANCE REQUIREMENTS
FOR CONSTRUCTION OF BRIDGES AND FENCING
EXHIBIT E-2 HISTORIC PRESERVATION PROTECTION PLAN FOR
CONSTRUCTION ADJACENT TO HISTORIC STRUCTURES
EXHIBIT E-3 STREETSCAPE IMPROVEMENT DESIGN PROGRAM
EXHIBIT E-4 DISPLAY AND SIGNAGE REQUIREMENTS
EXHIBIT E-5 USE AND OPERATING PROGRAM
EXHIBIT E-6 ARCHITECTURAL REQUIREMENTS
EXHIBIT E-7 SITE SAFETY PROGRAM
EXHIBIT F FORM OF CONSTRUCTION GUARANTY
EXHIBIT G THE LAND
EXHIBIT H PERMITTED ENCUMBRANCES
EXHIBIT I-1 SCHEMATIC DESIGN PLANS
EXHIBIT I-2 TABLE OF AREAS
EXHIBIT I-3 FORM OF DECEMBER LETTER
EXHIBIT J FORM OF ARCHITECT'S CERTIFICATE
EXHIBIT K OUTLINE OF METHODOLOGY FOR DETERMINING PILOT
EXHIBIT L FORM OF NOTICE OF UNREIMBURSED ESAC
EXHIBIT M APPROVED CONTRACTORS AND CONSTRUCTION MANAGERS
EXHIBIT N APPROVED MAJOR CONTRACTORS
EXHIBIT 0 FORM OF "NON ADVERSE STRUCTURAL EFFECT" STATEMENT OF
ENGINEER OR ARCHITECT
EXHIBIT P FORM OF NONDISTURBANCE AGREEMENT
EXHIBIT Q NYTC FORM SUBLEASE
EXHIBIT R FORM OF NOTICE OF DEFAULT
EXHIBIT S FORM OF SECOND NOTICE OF DEFAULT
EXHIBIT T NON-DISCRIMINATION AND AFFIRMATIVE ACTION
EXHIBIT U STRUCTURE OF TENANT
EXHIBIT V LIST OF NFP USERS
EXHIBIT W FORM OF LEASE ASSIGNMENT
EXHIBIT X FORM CONDOMINIUM ASSOCIATION ASSUMPTION AGREEMENT
EXHIBIT Y AMENDED AND RESTATED AGREEMENT OF LEASE TO BE
ENTERED INTO UPON CONDOMINIUMIZATION
EXHIBIT Z FORM OF MEMORANDUM OF LEASE
viii
<Page>
This AGREEMENT OF LEASE (this "LEASE"), is made as of the 12th day
of December, 2001, by and between 42ND ST. DEVELOPMENT PROJECT, INC. ("42DP"), a
subsidiary of New York State Urban Development Corporation d/b/a Empire State
Development Corporation ("ESDC"), a corporate governmental agency of the State
of New York constituting a political subdivision and public benefit corporation,
having an office at 633 Third Avenue, 33rd floor, New York, New York 10017, as
Landlord, and THE NEW YORK TIMES BUILDING LLC ("TENANT"), a New York limited
liability company, having an office at c/o The New York Times Company, 229 West
43rd Street, New York, New York 10036.
W I T N E S S E T H:
WHEREAS, ESDC and the City have developed, and are in the process of
implementing, a rehabilitation and renewal plan for an area of midtown Manhattan
surrounding West 42nd Street between Broadway and Eighth Avenue, known as the
42nd Street Development Project (the "42ND STREET PROJECT");
WHEREAS, in furtherance of the 42nd Street Project, ESDC has agreed
to commence proceedings to obtain fee title to the Property pursuant to the
Condemnation;
WHEREAS, promptly after ESDC obtains fee title to the Property, ESDC
will convey (a) to 42DP an estate on limitation in the Property, and (b) to the
City a reversionary estate in the Property;
WHEREAS, Landlord and Tenant acknowledge that the goals of the 42nd
Street Project include (i) development of the 42nd Street Project area's
commercial and retail potential, fostering a lively, healthy street ambience and
supporting the City's policy of fostering an environment that encourages the
expansion of the midtown Manhattan office area, (ii) expansion of the 42nd
Street Project area's economic contribution to New York City as a whole, both
through increased revenues to the City and expanded private investment and
employment opportunities, and (iii) restoration of the 42nd Street Project
area's role as a positive influence on the adjacent communities;
WHEREAS, Landlord and Tenant further acknowledge that it is their
intent that the Property be developed and operated in accordance with this Lease
to further the goals of the 42nd Street Project;
WHEREAS, ESDC, Landlord, Tenant, NYTC Member, the FC Members, NYTC,
NYCEDC and the City are, as applicable, contemporaneously herewith entering
into, or have agreed to enter into, the documents listed on EXHIBIT A attached
hereto (the "PROJECT DOCUMENTS");
WHEREAS, Landlord and Tenant wish to provide for the development,
construction, operation and maintenance of the Project; and
WHEREAS, Tenant wishes to hire and to take from Landlord, and
Landlord wishes to lease and to demise to Tenant, the Property.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of whkh are hereby
acknowledged, the parties hereto hereby covenant and agree as follows:
<Page>
ARTICLE I
DEFINITIONS; CONSTRUCTION OF TERMS
SECTION 1.1 DEFINITIONS. (a) The terms defined in this SECTION 1.1
shall, for all purposes of this Lease and all agreements supplemental hereto,
have the meanings herein specified, unless specifically stated otherwise:
(i) "$2,OOO,OOO+ ALTERATION" has the meaning set forth in
SECTION 9.2(a) hereof.
(ii) "42DP" has the meaning set forth in the preamble to this
Lease.
(iii) "AAA" has the meaning set forth in SECTION 16.2(a)
hereof.
(iv) "ACCEPTABLE GUARANTOR" means a Person having (A) a net
worth, on the date of the depositing of such security, of at least $50,000,000,
as Adjusted for Inflation from the date hereof and (B) a debt rating of at least
"A" from Standard and Poors or the equivalent rating from another nationally
recognized rating agency.
(v) "ACCOUNTING PRINCIPLES" means, from time to time, the then
generally accepted accounting practices, consistently applied on a "cash basis".
(vi) "ADJUSTED DIMS" has the meaning set forth in SECTION
1.1(a)(xxxix) hereof, the definition of Project.
(vii) "ADJUSTED FOR INFLATION" means, with respect to any sum,
that there shall be added to such sum (as the same may have been previously
adjusted) beginning on the date hereof unless otherwise specified, on an annual
or such other basis as may be specified in this Lease (such annual or other
period, the "SPECIFIED INTERVAL"), an amount equal to the product of (A) such
sum (as the same may have been previously adjusted) and (B) a fraction (1) the
numerator of which is the difference between [a] the Consumer Price Index for
the calendar month immediately preceding the calendar month in which the
Specified Interval for which such calculation is being made ended and [b] the
Consumer Price Index for the calendar month immediately preceding the calendar
month in which the immediately preceding Specified Interval ended (or, if such
date would be prior to the date hereof, the calendar month in which the date
hereof occurs) (the "MEASURING MONTH"), and (2) the denominator of which is the
Consumer Price Index for the Measuring Month; PROVIDED, HOWEVER, (i) if for any
Specified Interval the difference between the index numbers in clauses [a] and
[b] above is less than zero (0), such numerator shall be deemed to be zero (0)
for purposes of calculating the applicable adjustment, and (ii) the applicable
adjustment for the Specified Interval immediately following a Specified Interval
in which the preceding clause (i) shall have been applicable shall be determined
by replacing clause [b] above in its entirety with the following: "[b] the
Consumer Price Index for the calendar month immediately preceding the calendar
month in which the Last Positive Specified Interval (as hereinafter defined)
ended. The "LAST POSITIVE SPECIFIED INTERVAL" shall mean the last Specified
Interval prior to the date of the applicable determination hereunder for which
the difference between the index numbers determined in accordance with clause
[a] above and this clause [b], prior to being altered due to the triggering of
this proviso, was more than zero (0)".
2
<Page>
(viii) "ADJUSTED GROSS REVENUES" means all (A) revenues,
receipts and income of whatever kind and nature of Tenant or any Related Entity,
as determined in accordance with Accounting Principles, in any Lease Year,
generated from the ownership, operation, leasing, use or occupancy of the Retail
Space including (1) license fees or other amounts received from any subtenant of
such Retail Space or its affiliate for the right to maintain signage on the
facade of the New Building (but not from the granting of such signage rights to
any third party), (2) rentals, fees or other payments from Subtenants (subject
to clause (9) below), including any common area maintenance and operating
expense, but specifically excluding payments received in reimbursement of
utility, PILOT, Theater Surcharge or BID payments made by Tenant, or any Related
Entity, (3) the proceeds of insurance received by Tenant with respect to
business interruption or rent insurance (but not liability or casualty insurance
received by Tenant), (4) security and other deposits which secure other
revenues, receipts or income qualifying as Adjusted Gross Revenues when and to
the extent Tenant, after the final resolution of any Subtenant dispute over
whether Tenant has the right to retain such security and other deposits, either
has the right to retain the same or Tenant has no obligation to refund the same
(and excluding security and other deposits to the extent applied by Tenant to
reimburse Tenant for reasonable costs incurred in remedying a non-monetary
default by the provider of such security or deposit), (5) interest or other
investment income earned from time to time by Tenant on deposits or other
revenues, receipts or income qualifying as Adjusted Gross Revenues. (6) amounts
recovered in any legal action or proceeding or settlement thereof which
reimburses Tenant for a loss of revenues, receipts or income qualifying as
Adjusted Gross Revenues (and excluding any such amounts to the extent
reimbursing Tenant for reasonable costs incurred in remedying a non-monetary
default by the defendant in such action), (7) construction fees from the
performance by Tenant or any Related Entity of construction or construction
management services for Subtenants, but only to the extent such fees exceed
customary amounts (and excluding such fees to the extent they do not exceed such
customary amounts), (8) leasing or brokerage commissions paid to Tenant or any
Related Entity in connection with the entering into of a Sublease or the renewal
thereof or the expansion of the Demised Space thereunder, but only to the extent
Tenant or such Related Entity is not the procuring broker, or if Tenant or such
Related Entity is the procuring broker, only to the extent such commissions
exceed customary amounts (and excluding such commissions to the extent they do
not exceed such customary amounts), and (9) with respect to any Related Entity
that is a Subtenant in possession and actual use of its Demised Space, the
greater of [a] the rentals, fees or other payments made to Tenant by such
Subtenant, including any common area maintenance and operating expense, but
specifically excluding payments received in reimbursement of utility, PILOT,
Theater Surcharge or BID payments made by Tenant and [b] the fair market rental
value of such Demised Space (and with respect to a Related Entity that is a
Subtenant not in possession and actual use of its Demised Space, all revenues,
receipts and income of whatever kind and nature of such Related Entity generated
from the Project, as provided above, shall be included in Adjusted Gross
Revenues) less (B) refunds made upon transactions included within the revenues
described in clause (A) above. "Adjusted Gross Revenues" shall not include any
management fee in a customary amount paid by Tenant to any Related Entity to
manage the Property.
(ix) "ADMINISTRATIVE FEE" has the meaning set forth in SECTION
3.6 hereof.
(x) "ALLOCATED SQUARE FEET" has the meaning set forth in
SECTION 1.1(a)(cccxxi) hereof, the definition of Total Taxable Square Feet
Certificate.
(xi) "ALTERATION" means every alteration, installation,
improvement, addition, removal, demolition or other physical change in or about
the Property (or applicable portion
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thereof) after the completion of Tenant's Construction Work; PROVIDED, HOWEVER,
that no Interior Construction Work shall constitute an Alteration.
(xii) "ALTERATIONS CERTIFICATION" has the meaning set forth in
SECTION 9.2(d) hereof.
(xiii) "ALTERNATIVE PILOT NOTICE" has the meaning set forth in
SECTION 3.1(a)(i)(C) hereof.
(xiv) "ALTERNATIVE PILOT SCHEDULE" has the meaning set forth
in SECTION 3.1(a)(i)(C) hereof.
(xv) "APPLICABLE JUDGMENTS" means all judgments, court orders
and injunctions applicable to or affecting the Project, this Lease or the
Property now or hereafter existing.
(xvi) "APPOINTMENT DATE" has the meaning set forth in SECTION
16.2(a) hereof or SECTION 16.3(a) hereof, as applicable.
(xvii) "APPROVED SCHEMATIC DESIGN PLANS" means those Schematic
Design Plans approved in accordance with SECTION 6.2(a)(ii) hereof.
(xviii) "ARBITRATION NOTICE" has the meaning set forth in
SECTION 16.2(a) hereof.
(xix) "ARBITRATOR" has the meaning set forth in SECTION
16.2(a) hereof.
(xx) "ARCHITECT" means the Design Architect and any other
registered architect or architectural firm selected by Tenant and/or any
Subtenant and, if required pursuant to the terms of this Lease, approved by
Landlord in accordance with this Lease.
(xxi) "ARCHITECT'S CERTIFICATION" means a certification,
executed by an Architect or an Engineer, made to Landlord.
(xxii) "Argent" has the meaning set forth in SECTION 33.2(a)
hereof.
(xxiii) "ASSESSED VALUE" means the then-current full assessed
value of the Existing Improvement in question, as assessed by the New York City
Department of Finance.
(xxiv) "ASSIGNMENT" means the sale, exchange, assignment or
other disposition, whether by operation of law or otherwise, of all or any
portion of Tenant's interest in this Lease or the leasehold estate created
hereby.
(xxv) "AUDITORIUM" has the meaning set forth in SECTION
30.4(b)(i) hereof.
(xxvi) "BID" means a Business Improvement District or any
successor in function.
(xxvii) "BROKERS" has the meaning set forth in SECTION 33.2
hereof.
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(xxviii) "BUDGETED LOBBY SUBLEASE SPACE CONSTRUCTION COSTS"
has the meaning set forth is SECTION 34.2(a) hereof.
(xxix) "BUDGETED PA RETAIL CONSTRUCTION COSTS" means the
total, actual cost to construct the PA Retail Space as reasonably approved by
Tenant's construction lender (so long as such construction lender is a Lending
Institution) or as reasonably approved by Landlord (if, in respect of the PA
Retail Space, Tenant has no construction lender which is a Lending Institution),
as indicated on a final construction budget approved, as the case may be, by
such construction lender or by Landlord (the construction budget for the PA
Retail Space having been prepared separately from the overall construction
budget for the New Building, and having been provided to Landlord as a Verified
Statement), including the Transaction Price and all other hard and soft costs
(other than land acquisition costs above the Transaction Price), in each case,
reasonably allocable, on a square foot basis, to the PA Retail Space.
(xxx) "BUDGETED RETAIL CONSTRUCTION COSTS" means the total,
actual cost to construct the Retail Space as reasonably approved by Tenant's
construction lender (so long as such construction lender is a Lending
Institution) or as reasonably approved by Landlord (if, in respect of any
particular Retail Space, Tenant has no construction lender which is a Lending
Institution), as indicated on a final construction budget approved, as the case
may be, by such construction lender or by Landlord (the construction budget for
the Retail Space having been prepared separately from the overall construction
budget for the New Building, and having been provided to Landlord as a Verified
Statement), including the Transaction Price and all other hard and soft costs
(other than land acquisition costs above the Transaction Price), in each case,
reasonably allocable, on a square foot basis, to such Retail Space.
(xxxi) "BUDGETED ROOF TOP GARDEN CONSTRUCTION COSTS" has the
meaning set forth in SECTION 34.2(b) hereof.
(xxxii) "BUSINESS DAY" means any day which is not a Saturday,
a Sunday or a day observed as a holiday by the City or the State of New York or
the federal government of the United States of America.
(xxxiii) "CASH DEPOSIT" has the meaning set forth in SECTION
10.9(a) hereof.
(xxxiv) "CASUALTY" has the meaning set forth in SECTION
11.1(a) hereof.
(xxxv) "CERTIFIED PUBLIC ACCOUNTANT" means (A) any of the
firms set forth on EXHIBIT B attached hereto, or (B) any other reputable and
disinterested certified public accounting firm with more than seventy-five (75)
Principals.
(xxxvi) "CHARGES" means all of the amounts payable by Tenant
pursuant to this Lease, including, but not limited to, PILOT, Percentage Rent,
Theater Surcharge, additional charges, and any other sums, costs, expenses, or
deposits which Tenant is obligated, pursuant to any of the provisions of this
Lease, to pay to and/or deposit with Landlord.
(xxxvii) "CITY" means The City of New York, a municipal
corporation.
(xxxviii) "CLAIMS" means all liabilities (statutory or
otherwise), obligations, claims, demands, damages, penalties, causes of action,
costs, expenses (including attorneys' fees and
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expenses), losses and injuries in any manner relating to or arising with respect
to the subject matter of any indemnity granted herein, including any enforcement
of any such indemnity by the indemnified party; provided, however, "Claims"
shall not include any of the foregoing to the extent arising directly from
disputes between Landlord and Tenant under this Lease except to the extent that
any such dispute between Landlord and Tenant arises from enforcement of any such
indemnity by the indemnified party.
(xxxix) "COLLATERAL ASSIGNMENT" means that certain Collateral
Assignment in the form attached hereto as EXHIBIT C.
(xl) "COLLECTION AGENT" means the Person designated in
accordance with the Project Agreement to collect rents and other amounts payable
hereunder, and such Person's successors and assigns.
(xli) "COMMENCE CONSTRUCTION" or "COMMENCEMENT OF
CONSTRUCTION" means commencement of the Tenant's Construction Work, including
any excavation or pile driving, but not including test borings, test-pilings,
surveys, the Demolition Work and similar pre-construction activities.
(xlii) "COMMENCEMENT DATE" means the date hereof.
(xliii) "COMMERCIALLY AVAILABLE" means, with respect to the
procurement of insurance coverage, that such insurance coverage is then being
offered by at least three (3) nationally-recognized insurance providers or by a
governmental entity on commercially reasonable terms, which insurance coverage
is generally being procured by developers of high-rise office buildings in
midtown Manhattan.
(xliv) "COMMON ELEMENTS LEASEABLE SPACE" has the meaning set
forth in SECTION 34.1(c) hereof.
(xlv) "COMPTROLLER" has the meaning set forth in SECTION
3.13(a) hereof.
(xlvi) "CONDEMNATION" means the "Proceeding" as such term is
defined in the Site 8 South LADA.
(xlvii) "CONDEMNATION RESTORATION" has the meaning set forth
in SECTION 12.3(a) hereof.
(xlviii) "CONDOMINIUM ACT" means Article 9-B of the Real
Property Law of the State of New York or any statute enacted in lieu thereof.
(xlix) "CONDOMINIUM ASSOCIATION" means the condominium
association established pursuant to the Condominium Documents.
(l) "CONDOMINIUM ASSOCIATION ASSUMPTION AGREEMENT" has the
meaning set forth in SECTION 32.1(a)(iii) hereof.
(li) "CONDOMINIUM BY-LAWS" means the by-laws annexed to the
Condominium Declaration, together with all amendments, modifications and
supplements thereto.
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(lii) "CONDOMINIUM DECLARATION" means the instrument by which
Tenant's leasehold estate in the Property is subjected to the Condominium Act,
in the form attached hereto as EXHIBIT D, together with all amendments,
modifications and supplements thereto.
(liii) "CONDOMINIUM DOCUMENTS" means the Condominium
Declaration, the Condominium By-Laws and any other documents executed or
recorded in connection with subjecting the Property to the Condominium Act.
(liv) "CONDOMINIUM UNIT" means a condominium unit in the
Property, as described in the Condominium Documents.
(lv) "CONSTITUTIVE DOCUMENTS" means Tenant's organizational
documents, including (A) the operating agreement of Tenant, (B) the articles of
organization of Tenant and (C) any modifications to the foregoing.
(lvi) "CONSTRUCTION COMMENCEMENT DATE" means, the earlier to
occur of (A) the Fixed Construction Commencement Date, as the same may be
extended by Unavoidable Delays and (B) the first date upon which any Ternant's
Construction Work actually commences.
(lvii) "CONSTRUCTION GUARANTIES" means, collectively, the
guaranties to be delivered in accordance with SECTION 6.3(b)(iv) hereof.
(lviii) "CONSTRUCTION WORK" means any construction work at the
Property, including without limitation Tenant's Construction Work, the
Demolition Work and any Alteration.
(lix) "CONSUMER PRICE INDEX" means the Consumer Price Index
for All Urban Consumers published by the Bureau of Labor Statistics of the
United States Department of Labor, New York - Northern New Jersey - Long Island,
NY-NJ-CT area, All Items (1982-1984 = 100), or any successor index thereto,
appropriately adjusted. If the Consumer Price Index ceases to be published, and
there is no successor thereto, such other index as Landlord and Tenant agree
upon, each acting reasonably, as appropriately adjusted, shall be substituted
for the Consumer Price Index. If the Consumer Price Index ceases to use
1982-1984 = 100 as the basis of calculation, the Consumer Price Index shall be
adjusted accordingly.
(lx) "CONTINUATION NOTICE" has the meaning set forth in
SECTION 31.6 (i)(ii) hereof.
(lxi) "CONTROL" has the meaning indicated in the definition of
Control Affiliate.
(lxii) "CONTROL AFFILIATE" means any Person (A) controlling,
controlled by or under common control with another Person, and for the purposes
hereof no Person shall be deemed to control any other Person unless more than
fifty percent (50%) of such controlled Person is owned beneficially by the
controlling person or entity and (B) which retains the power and authority to
make Major Decisions on behalf of the controlled Person.
(lxiii) "CONVICTION" has the meaning set forth in SECTION
13.1O(d)(2) hereof.
(lxiv) "CORE AND SHELL" means, in respect of the New Building,
collectively but without duplication: (A) (1) the exterior and interior
structure of, and common systems and
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equipment servicing, the New Building, including without limitation, the roof
(other than any Roof Top Garden Improvements and the Roof Top Garden Space),
interior weight-bearing walls, support beams, foundation, columns, lateral
supports, exterior walls including, without limitation, exterior permanent
storefronts (but not to the extent prevented by hoists due to ongoing
Construction Work), exterior doors and exterior windows, (2) concrete slabs and
related structural assemblies that constitute the superstructure of the New
Building, (3) the core corridor walls on each floor of the New Building, (4)
base building systems servicing the building common areas and the tenant
premises (and the air shafts, elevator shafts, electrical and other utility
closets, equipment rooms, fire doors and fire stairways housing necessary to
accommodate, affecting or servicing such base building services) including
without limitation [a] the sprinkler system, including the main sprinkler loop
on each floor and all vertical risers, [b] the elevator (including service)
facilities, including the elevator cabs and all shafts, cables and other
mechanical equipment relating thereto, [c] the heating, ventilation and air
conditioning system (including boilers and circulation pumps but excluding any
portions of such systems which may be installed in connection with Interior
Construction Work performed by NYTC Member with respect to the NYTC Component or
by or for any Subtenant with respect to the FC Component), [d] all vertical
pipes, mains and risers of plumbing and sanitary systems, [e] the electrical
system, including, without limitation, any and all switch gears, risers,
feeders, transformers, main distribution panels, wiring and meters relating
thereto up through the point of connection to the electrical closet of any floor
of the New Building, and [f] the life safety, fire alarm and security systems
required by Legal Requirements in respect of core and shell construction,
including the fire command station, the emergency generator, panel and system,
any wiring, cables, risers, ductwork or distribution apparatus necessary to
distribute such service within the New Building, (5) all of the common areas
located within or outside of the New Building, common entrances, lobbies,
corridors and doors of common areas, loading areas, fire stairways and the
interior walls, ceilings, floors of the common areas of the New Building, and
(6) the exterior site improvements including adjoining sidewalks; and (B) any
other initial Improvements governed by any element of the DUO other than any
signage on the New Building required by the DUO (it being acknowledged that the
DUO may govern certain interior spaces).
(lxv) "CORE AND SHELL PUNCHLIST" has the meaning set forth in
SECTION 6.3(b)(iv) hereof.
(lxvi) "COURT" has the meaning set forth in SECTION 16.2(a)
hereof.
(lxvii) "CPLR" has the meaning set forth in SECTION 16.2(bXi)
hereof.
(lxviii) "CUSTOMARY" or "CUSTOMARY" when used in respect of
fees, commissions or other payments for services performed or materials
furnished, means the amount customarily and reasonably paid in arm's length
transactions to an unaffiliated third party for the performance of the
applicable service or the provision of the applicable material in multi-tenant
office developments situated in Manhattan.
(lxix) "DA WORK PRODUCT" has the meaning set forth in SECTION
6.4 hereof.
(lxx) "DATE OF TAKING" has the meaning set forth in SECTION
12.2 hereof.
(lxxi) "DECEMBER LETTER" has the meaning set forth in SECTION
6.2(a)(ii) hereof.
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(lxxii) "DEFAULT" means (A) the failure of any party hereto to
perform or complete any Obligations as required hereunder and in accordance
herewith after receipt of any applicable First Default Notice (but without
regard to any cure period in respect thereof), and (B) any other matter
expressly identified as a Default hereunder.
(lxxiii) "DELIVERY DATE" means the date that Landlord delivers
Possession to Tenant.
(lxxiv) "DEMISED SPACE" means the portion of the New Building
in which a Subtenant has an interest pursuant to a Sublease, including, without
limitation, any portion of the Roof Top Garden Space or the Lobby Sublease
Space.
(lxxv) "DEMOLITION ENGINEER" has the meaning set forth in
SECTION 6.5(b)(iii) hereof.
(lxxvi) "DEMOLITION WORK" has the meaning set forth in SECTION
6.5(a) hereof.
(lxxvii) "DEPOSITARY" means any entity, agreeing for the
benefit of Landlord and Tenant, to perform the obligations of depositary
hereunder on substantially the terms of the Depositary Agreement, which (A) (1)
is a Recognized Mortgagee or a Control Affiliate of a Recognized Mortgagee
(PROVIDED that such Recognized Mortgagee or such Control Affiliate is designated
as the Depositary by Tenant and such Recognized Mortgage and would qualify as a
Lending Institution, but is other than a savings bank or savings and loan
association), (2) if not a Recognized Mortgagee or such Control Affiliate, is a
commercial bank or trust company qualifying as a Lending Institution designated
by the Recognized Mortgagee most senior in lien, or (3) if not the Recognized
Mortgagee or such Control Affiliate or designated by the Recognized Mortgagee
pursuant to clause (2) above, is a commercial bank or trust company qualifying
as a Lending Institution, as designated by Tenant with the reasonable
concurrence of Landlord, (B) has an office in the City of New York, and (C) has
a net worth of not less than One Hundred Million Dollars ($100,000,000) and net
assets of not less than Two Hundred Fifty Million Dollars ($250,000,000) (as
such sums shall be Adjusted for Inflation on an annual basis from the
Commencement Date) throughout the period during which it acts as the Depositary.
If, at any time, no Lending Institution has been designated to so act, then
Landlord shall designate as the Depositary an unaffiliated third party
reasonably acceptable to Tenant that is ordinarily engaged in the business of
acting as a depositary. Tenant's disapproval of an unaffiliated third party so
designated by Landlord shall not be reasonable unless it is based solely on the
prior direct experience of Tenant or any Related Entity of Tenant with such
party.
(lxxviii) "DEPOSITARY AGREEMENT" means the agreement, in form
reasonably acceptable to Landlord and Tenant (and reasonably approved by each
Recognized Mortgagee, if any, at the time of the execution and delivery
thereof), pursuant to which the Depositary agrees to perform its obligations
hereunder.
(lxxix) "DESIGN ARCHITECT" means Renzo Piano Building Workshop
or, in the event that Renzo Piano Building Workshop is no longer the Design
Architect, any other Replacement Design Architect approved in accordance with
this Lease, in either case alone or in affiliation with another Architect acting
as the Production Architect.
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(lxxx) "DESIGN DEVELOPMENT PLANS" means proposed design
development plans that have been submitted to and approved by Landlord in
accordance with SECTION 6.2(b) hereof, with such modifications as shall be
consented to by Landlord in accordance herewith. The proposed design development
plans submitted to Landlord shall (A) conform to the applicable Approved
Schematic Design Plans, if any, submitted to Landlord, (B) comply with the
applicable requirements of DUO and (C) consist of drawings more particularly
described in EXHIBIT E-6 attached hereto, and at a minimum consist of (1) floor
plans of all floors and building sections indicating spaces, structure, the
location of proposed entrances and lobbies, doors, and windows, (2) rendered
exterior elevations, in color, including elevations that show the relationship
of the New Building to its surroundings, (3) exterior elevations noted with
materials and floor heights, (4) elevations and sections with sufficient detail
to adequately convey the aesthetics of the building's exterior, including each
typical molding and cornice profile, reveal, and window details, (5) storefront,
public areas and building entrance details, (6) material samples and light
fixture samples for all exterior facades, (7) color boards illustrating the
building's actual color palette, (8) diagrammatic elevational rendering
illustrating the exterior lighting scheme, (9) rendering of the building as it
would be seen looking south from the northwest corner of 4lst Street and 8th
Avenue and any other rendering Landlord may request to assist in the review of
the design, (10) table of areas by use by floor, (11) a scale model at 1"=50'
showing the entire building, and (12) scale models at 1/4"=1' of the facade to
illustrate the varying curtain wall treatment of each of the tower and the base
of the building (which scale models shall depict in accurate scale the varying
mullion patterns and designs, including the screening rods).
(lxxxi) "Determination" has the meaning set forth in SECTION
16.2(b)(iii) hereof.
(lxxxii) "DEVELOPMENT TEAM" means, collectively, the Design
Architect and any other Architect, general contractor and/or construction
manager, hired in respect of the Demolition Work and the Tenant's Construction
Work.
(lxxxiii) "DISCOUNT RATE" means a discount rate equal to the
then current rate of United States Treasury bills or notes, as applicable,
maturing ten (10) years after the Delivery Date or the next maturity date for
such bills or notes occurring after such date.
(lxxxiv) "DISCRETIONARY INSIDE MECHANICAL SPACE" means up to
60,000 Square Feet (or, in the event of the occurrence of the Third Non-Delivery
Event, if applicable, the Adjusted DIMS), within the New Building, to be built,
at Tenant's discretion, and used only for building mechanical purposes.
(lxxxv) "DUO" means the Design, Use and Operating Requirements
which are attached to this Lease as follows:
(A) Design, Construction and Maintenance Requirements
for construction of Bridges and Fencing attached hereto as EXHIBIT E-1;
(B) Historic Preservation Protection Plan for
Construction Adjacent to Historic Structures attached hereto as EXHIBIT E-2;
(C) Streetscape Improvement Design Program attached
hereto as EXHIBIT E-3;
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(D) Display and Signage Program attached hereto as
EXHIBIT E-4;
(E) Use and Operating Requirements attached hereto as
EXHIBIT E-5;
(F) Architectural Requirements attached hereto as
EXHIBIT E-6;
(G) Site Safety Program attached hereto as EXHIBIT E-7.
(lxxxvi) "DUO/STRUCTURAL ALTERATION" has the meaning set forth
in SECTION 9.2(a) hereof.
(lxxxvii) "DUO ALTERATION" has the meaning set forth in
SECTION 9.2(a) hereof.
(lxxxviii) "DUPLICATE TS PAYMENT" has the meaning set forth in
SECTION 3.3(e) hereof.
(lxxxix) "EDPL" means the Eminent Domain Procedure Law of the
State of New York, as amended from time to time.
(xc) "EIN" means an employer identification number or taxpayer
identification number issued by the Internal Revenue Service.
(xci) "ENGINEER" means any licensed structural engineer or
engineering firm selected by Tenant and/or any Subtenant and, if required
pursuant to the terms of this Lease, approved by Landlord in accordance with
this Lease.
(xcii) "ENVIRONMENTAL ACTIVITY" means any use, storage,
installation, existence, release, threatened release, discharge, generation,
abatement, removal, disposal, handling or transportation from, under, into or on
the Property (or any portion thereof) of any Hazardous Materials.
(xciii) "EQUIPMENT" means all fixtures and personal property
incorporated in or attached to and used or usable in the operation of the
Project owned or leased by Tenant.
(xciv) "EQUITY INTEREST DISPOSITION" means any Transfer in a
Person or in any direct or indirect constituent entity of such Person, where
such Transfer directly or indirectly produces any change in the direct or
indirect beneficial ownership of an interest in, or Control of, such Person. The
term "Equity Interest Disposition" shall also include any (A) transaction or
series of transactions (including, without limitation, the issuance of
additional equity interests in such Person) or (B) direct or indirect revision
of the beneficial ownership structure or control of such Person or any direct or
indirect constituent entity of such Person, which, in either case, produces any
change in the direct or indirect beneficial ownership of an interest in, or
Control of, such Person.
(xcv) "EQUITY INVESTOR" means any member of an FC Member
(other than FC) approved by Landlord in Landlord's sole discretion, it being
agreed that INGREDUS Site 8 South LLC is so approved.
(xcvi) "ESDC" has the meaning set forth in the recitals of
this Lease.
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(xcvii) "ESTIMATED TENANT SALES TAX STATEMENT" has the meaning
set forth in SECTION 3.3(c) hereof.
(xcviii) "EVENT" has the meaning set forth in SECTION
30.4(b)(ii) hereof.
(xcix) "EVENT OF DEFAULT" has the meaning set forth in SECTION
14.2 hereof
(c) "EXCESS CONSIDERATION" has the meaning set forth in
SECTION 13.1(i)(iii) hereof.
(ci) "EXCESS DAYS" has the meaning set forth in SECTION
6.1(c)(iii) hereof.
(cii) "EXCESS SITE ACQUISITION COSTS" means the amount by
which the total SAC amount, including interest thereon pursuant to Section
3.04(c) of the Site 8 South LADA, exceeds the Transaction Price.
(ciii) "EXCLUDED TAXES" has the meaning set forth in SECTION
1.1(a)(cxlii) hereof, the definition of Impositions.
(civ) "EXEMPTED MORTGAGE" means (A) the Mortgage granted by
Tenant in connection with the initial construction financing of the Project (the
"INITIAL CONSTRUCTION MORTGAGE"), (B) to the extent such financing is closed
simultaneously with the Initial Construction Mortgage, the mortgage granted by
Tenant in connection with Tenant's initial permanent financing of the Project
(the "INITIAL PERMANENT MORTGAGE") and (C) the recording of any assignment(s) of
the Initial Construction Mortgage and the Initial Permanent Mortgage, and any
other documents securing payment of such financing recorded concurrently or in
connection therewith, but only to the extent of the outstanding principal
indebtedness secured by such mortgages at such time.
(cv) "EXISTING IMPROVEMENTS" has the meaning set forth in
Section 1.1(a)(cxliii) hereof, the definition of Improvements.
(cvi) "EXISTING VIOLATIONS" means any condition on the
Property, existing on or before the Delivery Date, which gives rise to a
violation of record of Legal Requirements, issued by a Governmental Authority
with applicable jurisdiction prior to or within twelve (12) months after the
Delivery Date.
(cvii) "EXPIRATION DATE" has the meaning set forth in SECTION
2.1(b) hereof.
(cviii) "FC" means FC 41St Street Associates, LLC.
(cix) "FC COMPONENT" means the portion of the Property leased
pursuant to the FC Severance Subleases (including, without limitation, the FC
Members' undivided interests in the common areas of the Property).
(cx) "FC FACILITY PERCENTAGE" means a percentage equal to the
difference between one hundred percent (100%) and the NYTC Facility Percentage.
(cxi) "FC MEMBER" means each tenant executing a FC Severance
Sublease and its permitted successors and assigns.
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(cxii) "FC OFFICE SEVERANCE SUBLEASE" means that certain FC
Office Severance Sublease, dated as of the date hereof, between Tenant and an FC
Member, and any other sublease entered into pursuant to SECTION 13.12 thereof.
(cxiii) "FC RETAIL SEVERANCE SUBLEASE" means that certain FC
Retail Severance Sublease, dated as of the date hereof, between Tenant and an FC
Member.
(cxiv) "FC SEVERANCE SUBLEASES" means the FC Office Severance
Sublease and the FC Retail Severance Sublease.
(cxv) "FCE" means Forest City Enterprises, Inc., an Ohio
corporation.
(cxvi) "FCE CONSTRUCTION GUARANTY" means a Construction
Guaranty by FCE in favor of 42DP in the form attached hereto as EXHIBIT F.
(cxvii) "FINAL MRT NOTIFICATION" has the meaning set forth in
SECTION 3.4(c) hereof.
(cxviii) "FINAL TAX NOTIFICATION" has the meaning set forth in
SECTION 3.3(e) hereof.
(cxix) "FINAL PLANS AND SPECIFICATIONS" means proposed final
plans and specifications that have been submitted to and approved by Landlord in
accordance with SECTION 6.2(c) hereof or SECTION 9.2(a) hereof, as applicable,
with such modifications after such consent as shall be consented to by Landlord
in accordance herewith. The proposed final plans and specifications submitted to
Landlord shall (A) conform to the applicable Design Development Plans, if any,
submitted to Landlord, (B) comply with the applicable requirements of DUO, (C)
consist, of plans and specifications more particularly described in EXHIBIT E-6
attached hereto, and at a minimum consist of (1) floor plans of all floors or
representative floor plans and building sections indicating spaces, structure,
the location of proposed entrances and lobbies, doors, and windows, (2) rendered
exterior elevations, in color, (3) exterior elevations noted with material and
floor heights, (4) sufficient details, elevations and sections required to
adequately convey the aesthetics of the building's exterior including each
typical molding and cornice profiles, reveals, and window details, (5)
storefront, public areas and building entrance details, (6) table of areas by
use by floor (the table of areas shall be submitted by an Architect and such
Architect shall certify that the area of the New Building has been measured in
strict accordance with the definition of Square Foot; the certification by such
Architect shall include an explanation of all assumptions made in the
calculation the table of areas), (7) any other information required as part of
the Design Development Plans that was not available at the time of the Design
Development Plans submission, and (8) a visual mock-up of the proposed curtain
walls and (D) contain a schedule of retail signage allocations with respect to
the NYTC Component and the FC Component.
(cxx) "FIRST DEFAULT NOTICE" has the meaning set forth in
SECTION 14.2 hereof.
(cxxi) "FIRST EXTENSION PERIOD" has the meaning set forth in
SECTION 6.1(c)(i) hereof.
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(cxxii) "FIRST LEASE YEAR" has the meaning set forth in
SECTION 1.1(a)(clxviii) hereof, the definition of Lease Year.
(cxxiii) "FIRST NON-DELIVERY EVENT" has the meaning set forth
in SECTION 1.1(a)(clxxxix) hereof, the definition of Non-Delivery Event.
(cxxiv) "FIRST PA EXTENSION" has the meaning set forth in
SECTION 30.4(d)(i)(B)(2) hereof.
(cxxv) "FIRST PILOT YEAR" has the meaning set forth in SECTION
1.1(a)(ccxxxii) hereof, the definition of PILOT Year.
(cxxvi) "FIXED CONSTRUCTION COMMENCEMENT DATE" means the date
that is twelve (12) months after the Delivery Date, as such date may be adjusted
pursuant to SECTIONS 6.1(b), 6.1(c) and 6.5(b)(ii)(C) hereof.
(cxxvii) "FIXED SUBSTANTIAL COMPLETION DATE" means the date
that is thirty-six (36) months after the Construction Commencement Date, as such
date may be extended pursuant SECTIONS 6.1(b), 6.1(c) and 6.6(c) hereof.
(cxxviii) "FIXED CONSTRUCTION PERIOD" has the meaning set
forth in SECTION 6.1(c)(i) hereof.
(cxxix) "FOURTH NON-DELIVERY EVENT" has the meaning set forth
in SECTION 1.1(a)(clxxxix) hereof, the definition of Non-Delivery Event.
(cxxx) "FULL INSURABLE VALUE" means actual replacement cost of
the Improvements (exclusive of the cost of excavation, foundations and
footings).
(cxxxi) "FULL TAXES" means the real property taxes that would
be assessed and levied against the Property, the owner thereof and the interest
of Tenant therein, if the Property or the owner thereof were not exempt from
such taxes, pursuant to (A) the provisions of Chapter 58 of the Administrative
Code of The City of New York and Title 11, Chapter 2, of the Administrative Code
of the City of New York, as the same may be amended from time to time, or (B)
any statute or ordinance in lieu thereof or in addition thereto to the extent
the charges imposed thereby are of a type customarily considered as real
property taxes.
(cxxxii) "GALLERY" has the meaning set forth in SECTION
30.4(b)(iii) hereof.
(cxxxiii) "GOVERNMENTAL AUTHORITY" or "GOVERNMENTAL
AUTHORITIES" means the United States of America, the State of New York, the City
and any agency, department, commission, board, bureau, instrumentality or
political subdivision of any of the foregoing, now existing or hereafter
created, having jurisdiction over the Property or any portion thereof or any
street, road, avenue or sidewalk comprising a part of, or in front of, the
Property, or any vault in or under the Property.
(cxxxiv) "GUARANTIES" means, collectively, the LADA Guaranty,
the Insurance Guaranty and each Construction Guaranty (upon their execution and
delivery in accordance with SECTION 6.3(b)(iv) hereof, as applicable).
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(cxxxv) "GUARANTORS" means, collectively, all guarantors under
the Guaranties.
(cxxxvi) "HAZARDOUS MATERIALS" means (A) any "hazardous
substance" as defined in SECTION 101(14) of the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C ss. 9601(14), as amended, (B)
any "hazardous waste" as defined in SECTION 27 1301(1) of the New York
Environmental Conservation Law, (C) petroleum or petroleum products, crude oil
or any by products thereof, natural gas or synthetic gas used for fuel, (D) any
asbestos, asbestos containing material or polychlorinated biphenyl and (E) any
additional substances or materials which are classified or considered to be
hazardous or toxic under the laws of the State of New York, the United States of
America or under any other Legal Requirements.
(cxxxvii) "HEARING" has the meaning set forth in SECTION
13.10(a) hereof.
(cxxxviii) "HEARING OFFICERS" has the meaning set forth in
SECTION 13.10(a) hereof.
(cxxxix) "IDA" means the New York City Industrial Development
Agency, a public benefit corporation of the State of New York.
(cxl) "IDA INDUCEMENT DATE" means the date the IDA board of
directors adopts an inducement resolution with respect to NYTC.
(cxli) "IDA PROJECT AGREEMENT" means that certain Project
Agreement, dated as of December 1, 2001, between the IDA and NYTC.
(cxlii) "IMPOSITIONS" means all taxes, fees, assessments and
charges that are levied by a Governmental Authority, BID or similar entity
against the Property or the interest of Tenant therein to the extent that same
may give rise to a lien against the Property, including special assessments,
personal property and general intangibles taxes, gross receipts, sales, use and
occupancy, water and sewer charges, rates and rents to the extent charged
separately from Full Taxes, charges for the establishment and operation of any
BID in which the Property is located, charges for public utilities assessed by a
Governmental Authority, BID or similar entity, excises, levies, vault and other
license, rent and permit fees and other municipal and governmental impositions
and charges, general and special, ordinary and extraordinary, foreseen and
unforeseen, of any kind and nature whatsoever, which are during the term of this
Lease assessed, levied, charged or imposed upon or become payable out of or
become a lien on (A) the Property, or any part thereof, the appurtenances
thereto or the sidewalks, streets or vaults adjacent thereto, (B) any personal
property owned by Tenant and located on the Property, or any part thereof, (C)
any rent and income received by or for the account of Tenant from any Subtenants
or other users or occupants of the Property, or any part thereof, (D) any
franchises, easements or similar rights demised hereunder, licenses and permits
as may be appurtenant to the use of the Property or any documents to which
Tenant is a party, creating or transferring an interest or estate in the
Property, or (E) any occupancy, use or possession of the Property, or any part
thereof, the appurtenances thereto or the sidewalks, streets, alleys or vaults
adjacent thereto; "Impositions" shall not include any amounts included in Full
Taxes, any PILOT, PILOMRT, Theater Surcharge, PILOST, municipal, state or
federal income taxes assessed against Landlord or Tenant, any capital levy,
estate, gift, succession, inheritance or transfer taxes, or any corporate
franchise taxes or unincorporated business taxes imposed upon any owner of the
Land, or any part thereof ("EXCLUDED TAXES"); PROVIDED, HOWEVER, that if at any
time during the
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term of this Lease the present method of taxation or assessment shall be so
changed that any Excluded Taxes shall either be added to, or substituted in
whole or in part for, Impositions, then any such Excluded Tax shall, to the
extent that it is so added or substituted, be deemed to be included within
Impositions.
(cxliii) "IMPROVEMENTS" means (A) the buildings and other
improvements and appurtenances of every kind and description located on the Land
as of the Delivery Date, any equipment situated or incorporated therein or
attached thereto, and all alterations and replacements thereof and additions
thereto, made or installed prior to the Commencement of Construction of the New
Building (the "EXISTING IMPROVEMENTS") and (B) any buildings and structures, and
any building machinery, equipment and fixtures (including Equipment) affixed to
and forming a part of the buildings and structures, which may be erected or
located wholly or partially on the Land during the term of this Lease by or on
behalf of Tenant or any Subtenant, but excluding any personal property owned or
leased by Tenant or any Subtenant.
(cxliv) "INCOME TAX CODE" means the United States Internal
Revenue Code of 1986, as amended from time to time.
(cxlv) "INDEMNIFIED PARTIES" has the meaning set forth in
SECTION 17.2(a) hereof.
(cxlvi) "INDICTED PARTY" has the meaning set forth in SECTION
13.10(a) hereof.
(cxlvii) "IN EFFECT" when used with respect to a Sublease
means a Sublease, the term of which has commenced and under which rent has
become payable (or if not yet payable, will become payable upon expiration of a
rent abatement period provided for in such Sublease) regardless of whether the
space leased thereby is occupied by the Subtenant.
(cxlviii) "INITIAL CONSTRUCTION MORTGAGE" has the meaning set
forth in SECTION 1.1(a)(civ) hereof, the definition of Exempted Mortgage.
(cxlix) "INITIAL PERMANENT MORTGAGE" has the meaning set forth
in SECTION 1.1(a)(civ) hereof, the definition of Exempted Mortgage.
(cl) "INITIAL RESTORATION ESTIMATE" has the meaning set forth
in SECTION 11.1(d) hereof.
(cli) "INITIAL TAKING ESTIMATE" has the meaning set forth in
SECTION 12.3(c) hereof.
(clii) "ING CONSTRUCTION GUARANTY" means a Construction
Guaranty, by ING Vastgoed B B.V. in favor of 42DP in the form attached hereto as
EXHIBIT F.
(cliii) "INSURANCE GUARANTY" has the meaning set forth in
SECTION 10.9(a) hereof.
(cliv) "INSURANCE REQUIREMENTS" means all of the terms and
conditions of all insurance policies covering, related to or applicable to the
Project, all requirements of the issuers of such policies and all rules,
regulations, orders and other requirements or standards issued or
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promulgated by the National or Regional Board of Fire Underwriters, the National
or Regional Fire Protective Association or any other national or regional body
in lieu of the foregoing exercising similar functions whose requirements or
standards must be complied with in order to obtain any governmental approval or
insurance policy required hereunder, and applicable to or affecting the Project
or the use and occupancy thereof.
(clv) "INTEREST RATE" means a rate equal to the lesser of (A)
three (3) percentage points over the Prime Rate or (B) the maximum rate
permitted by applicable law.
(clvi) "INTERIOR CONSTRUCTION WORK" means Construction Work
which (A) relates solely to interior spaces in the New Building, and (B) is not
governed by any element of the DUO (it being understood that the DUO may govern
certain interior spaces) and does not affect a Structural Component (other than
by having a Nonadverse Structural Effect).
(clvii) "ISSUING BANK" means any commercial bank reasonably
acceptable to Landlord.
(clviii) "LADA GUARANTY" means that certain Site 8 South LADA
Guaranty, dated as of the date hereof, by NYTC, in favor of 42DP and ESDC.
(clix) "LAND" means the parcels of land described in EXHIBIT G
attached hereto, together with all right, title and interest, if any, of
Landlord in and to any easements, licenses, privileges, rights and appurtenances
related thereto.
(clx) "LANDLORD" means 42DP, its successors and assigns.
(clxi) "LANDLORD'S OBLIGATIONS" has the meaning set forth in
SECTION 1.1(a)(cciii) hereof, the definition of Obligations.
(clxii) "LANDLORD'S TSF STATEMENT" has the meaning set forth
in SECTION 3.1(a)(i)(B)(3) hereof.
(clxiii) "LAST POSITIVE SPECIFIED INTERVAL" has the meaning
set forth in SECTION 1.1(a)(vii) hereof, the definition of Adjusted for
Inflation.
(clxiv) "LAWS AND REGULATIONS" means all federal, state,
county, municipal and other governmental statutes, laws, rules, orders, permits,
licenses, regulations and ordinances applicable to or affecting the Project,
this Lease, the Property or the use or occupancy thereof, or the owner thereof
as owner of the Property, whether now or hereafter enacted or in force, ordinary
or extraordinary, foreseen or unforeseen.
(clxv) "LEASE" has the meaning set forth in the preamble to
this Lease.
(clxvi) "LEASE ASSIGNMENT" has the meaning set forth in
SECTION 32.1(a)(ii) hereof.
(clxvii) "LEASE ASSIGNMENT DATE" has the meaning set forth in
SECTION 32.1(a)(iii) hereof
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(clxviii) "LEASE YEAR" means (A) in the event that the
Commencement Date does not occur on January 1, the period from the Commencement
Date through the second December 31 thereafter (such period, the "FIRST LEASE
YEAR"), and (B) each twelve (12) calendar month period commencing on the first
January 1 following the First Lease Year and on each anniversary thereof, and in
the case of the calendar year in which the term of this Lease shall expire, so
much of such calendar year as shall fall within the term of this Lease.
(clxix) "LEASE-UP COSTS" has the meaning set forth in EXHIBIT
K attached hereto.
(clxx) "LEGAL REQUIREMENTS" means all Laws and Regulations and
all Applicable Judgments.
(clxxi) "LENDING INSTITUTION" means (A) a savings bank,
savings and loan association, commercial bank or trust company (whether acting
individually or in a fiduciary capacity) or a Control Affiliate of the
foregoing, (B) an insurance company, (C) a real estate investment trust, a
trustee or issuer of collateralized mortgage obligations, a loan conduit, or
other similar investment entity which is listed on the New York, American Stock
Exchange or other regional exchange (or their respective successors), (D) a
federal, state, municipal or secular employee's welfare, benefit, pension or
retirement fund, a religious, educational or eleemosynary institution, any
governmental agency or entity insured by a governmental agency, a credit union,
trust or endowment, (E) any combination of the foregoing entities or (F) any
other Person approved by Landlord, such approval not to be unreasonably
withheld; provided that each of the above entities shall qualify as a Lending
Institution within the provisions of this definition only if it (1) shall have a
business office in Manhattan and be subject to the jurisdiction of the courts of
the State of New York, (2) shall be subject to the supervision of the
Comptroller of the Currency of the United States, the federal Securities and
Exchange Commission, the Insurance Department or the Banking Department or the
Comptroller of the State of New York, the Board of Regents of the University of
the State of New York, or the Comptroller of the City or any federal, state or
municipal agency or public benefit corporation or public authority advancing or
assuring mortgage loans or making payments which, in any manner, assist in the
financing, development, operation and maintenance of improvements, (3) shall
have a net worth of not less than One Hundred Million Dollars ($100,000,000) and
net assets of not less than Two Hundred Fifty Million Dollars ($250,000,000) (as
such amounts shall be Adjusted for Inflation on an annual basis from the
Commencement Date) at the time of the initial determination of its status as a
Lending Institution, (4) is not a Related Entity of Tenant, and (5) is not a
Prohibited Person. From and after Substantial Completion, "Lending Institution"
shall also include any Person that satisfies the conditions of clauses (1)
through (5) above notwithstanding that such Person does not constitute any of
the entities set forth in clauses (A) through (E) above.
(clxxii) "LETTER OF CREDIT" means a clean, irrevocable and
unconditional letter of credit, in form and content reasonably satisfactory to
Landlord, issued by and drawn upon any Issuing Bank.
(clxxiii) "LOBBY SUBLEASE SPACE" has the meaning set forth in
SECTION 34.1(c) hereof.
(clxxiv) "LOBBY SUBLEASE SPACE ADJUSTED GROSS REVENUES" has
the meaning set forth in SECTION 34.2(c) hereof.
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(clxxv) "MAJOR ALTERATION" has the meaning set forth in
SECTION 9.2(a) hereof.
(clxxvi) "MAJOR CONTRACTOR" has the meaning set forth in
SECTION 6.1(e)(iii) hereof.
(clxxvii) "MAJOR DECISIONS" means decisions with respect to
(A) the initial debt financing of the Project, (B) the refinancing of any debt
for the Project, (C) the development capital budget for the Project and any
increases therein, and (D) selection of the Project construction manager and/or
general contractor.
(clxxviii) "MANAGER" means the manager of any portion of the
Project under a management agreement.
(clxxix) "MINOR DEFAULT" means any non-monetary Default of
Tenant with respect to SECTIONS 33(c), 3.3(d), 3.3(e), 3.13(d), 3.15, 4.2(b),
4.3(a), 6.l(e)(iii) (as such Section relates to Tenant's failure to timely
submit a list of Major Contractors for approval or obtain approval by Landlord
of Major Contractors prior to Commencement of Construction of Tenant's
Construction Work), 73(a) (as such Section relates to Tenant's failure to comply
with the interim maintenance obligations set forth in SECTION 7.3(a) hereof, but
such Default shall be a Minor Default only if: (A) such Default would be either
cured or rendered moot by performance of Tenant's Construction Work and once
cured shall no longer be a Default in any case; and (B) the continued existence
of such Default is not creating a hazard to life, health and safety), 7.3(b) (as
such Section relates to Tenant's failure to comply with the maintenance
obligations set forth in SECTION 73(b) hereof during the performance of
Demolition Work, but such Default shall only be a Minor Default if: (A) such
Default would be either cured or rendered moot by performance of Tenant's
Construction Work and once cured shall no longer be a Default in any case and
(B) the continued existence of such Default is not creating a hazard to life,
health or safety) and 7.10 hereof and ARTICLE VIII hereof (as such Section
relates to Tenant's failure to comply with the maintenance obligations set forth
in ARTICLE XIII hereof during the performance of Demolition Work, but such
Default shall be a Minor Default only if: (A) such Default would be either cured
or rendered moot by performance of Tenant's Construction Work and once cured
shall no longer be a Default in any case and (B) the continued existence of such
Default is not creating a hazard to life, health or safety).
(clxxx) "MODIFICATION" has the meaning set forth in SECTION
13.9.
(clxxxi) "MORTGAGE" means any mortgage that constitutes a lien
on Tenant's interest in this Lease and the leasehold estate created hereby.
(clxxxii) "MORTGAGE RECORDING TAX" means any mortgage
recording tax under Article 11 of the New York State Tax Law, or any successor
statute thereto, as the same may now or hereafter be amended, and any New York
City mortgage recording tax.
(clxxxiii) "MORTGAGE RECORDING TAX SAVINGS" means any savings,
as provided in SECTION 3.4 hereof, realized by Tenant on account of Mortgage
Recording Tax.
(clxxxiv) "NEW BUILDING" has the meaning set forth in SECTION
1.1(a)(ccxl) hereof the definition of Project.
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(clxxxv) "NFP EVENT" has the meaning set forth in SECTION
30.4(b) hereof.
(clxxxvi) "NFP EVENT SHORTFALL" has the meaning set forth in
SECTION 30.4(b) hereof.
(clxxxvii) "NFP USER" has the meaning set forth in SECTION
30.4(b) hereof.
(clxxxviii) "NO-ACTION LETTER" means a "no-action letter"
issued by the New York State Department of Law to the effect that it will not
take any enforcement action because the formation of a condominium occurs
without filing or registration pursuant to Section 352-e and Section 359-e of
the General Business Law of the State of New York.
(clxxxix) "NON-DELIVERY EVENT" means any of the following: (A)
if the Delivery Date has not occurred by the twenty-four (24) month anniversary
of the date of this Agreement, then on the day following such day, the "FIRST
NON-DELIVERY EVENT" shall have occurred; (B) if the Delivery Date has not
occurred by the twenty-eight (28) month anniversary of the date of this
Agreement, then on the day following such day, the "SECOND NON-DELIVERY EVENT"
shall have occurred; (C) if the Delivery Date has not occurred by the thirty-two
(32) month anniversary of the date of this Agreement, then on the day following
such day, the "THIRD NON-DELIVERY EVENT" shall have occurred; and (D) if the
Delivery Date has not occurred by thirty-six (36) month anniversary of the date
of this Agreement, then on the day following such day, the "FOURTH NON-DELIVERY
EVENT" shall have occurred.
(cxc) "NON-VESTING DEADLINE" has the meaning set forth in
SECTION 2.1(b)(iii) hereof.
(cxci) "NON-VESTING TERMINATION NOTICE" has the meaning set
forth in SECTION 2.1(b)(iii) hereof.
(cxcii) "NONADVERSE STRUCTURAL EFFECT" means any effect of
Construction Work on any Structural Component that, taken together with the
totality of the remedial measures to be taken in respect of such Construction
Work, will not have more than an insignificant adverse effect on such Structural
Component at the completion of the Construction Work.
(cxciii) "NONDISTURBANCE AGREEMENT" has the meaning set forth
in SECTION 13.2(b) hereof.
(cxciv) "NON-RENEWAL NOTICE" has the meaning set forth in
SECTION 10.9(b) hereof.
(cxcv) "NYCEDC" means the New York City Economic Development
Corporation or any successor in function.
(cxcvi) "NYTC" means The New York Times Company.
(cxcvii) "NYTC COMPONENT" means that portion of the Property
that is leased pursuant to the NYTC Severance Sublease (including, without
limitation, the undivided interest of NYTC Member in the common areas of the
Property).
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(cxcviii) "NYTC CONSTRUCTION GUARANTY" means a Construction
Guaranty by NYTC in favor of 42DP in the form attached hereto as EXHIBIT F.
(cxcix) "NYTC FACILITY PERCENTAGE" shall mean the percentage
determined by dividing 900,000 by the number of Taxable Square Feet.
(cc) "NYTC FORM SUBLEASE" has the meaning set forth in SECTION
13.2(b)(ii)(A) hereof.
(cci) "NYTC MEMBER" means the tenant executing the NYTC
Severance Sublease and its permitted successors and assigns.
(ccii) "NYTC SEVERANCE SUBLEASE" means that certain NYTC
Severance Sublease, dated as of the date hereof, between Tenant and NYTC Member.
(cciii) "OBLIGATIONS", and words of like import, means
covenants to pay Charges and other sums payable hereunder and perform acts or
fulfill obligations hereunder, as applicable, and all of the other covenants,
agreements, terms, conditions, limitations, exceptions and reservations
contained in this Lease and the schedules and exhibits attached hereto. The
terms "TENANT'S OBLIGATIONS" and "LANDLORD'S OBLIGATIONS", and words of like
import, mean the Obligations of this Lease which are imposed upon and are to be
performed, observed or complied with by Tenant or by Landlord, as the case may
be.
(cciv) "OCCUPIED SQUARE FOOT" means (A) in respect of the NYTC
Component, each Rentable Square Foot within the NYTC Component, (B) in respect
of the FC Component, (1) as to any portion thereof with respect to which a
Sublease exists, each Rentable Square Foot (or its equivalent) of such portion
of the FC Component, as set forth in an applicable Sublease, and (2) as to any
portion thereof with respect to which no Sublease exists, each Rentable Square
Foot of such portion of the FC Component, as reasonably determined by Landlord,
(C) in respect of the Roof Top Garden Space, each Rentable Square Foot within
the Roof Top Garden Space and (D) in respect of the Lobby Sublease Space, each
Rentable Square Foot within the Lobby Sublease Space.
(ccv) "OFFICE PILOT" means (a) the rate set forth under
"Office PILOT" on SCHEDULE 1 attached hereto multiplied by (b) the number of
Taxable Square Feet exclusive of any Taxable Square Feet with respect to which
Retail PILOT is being paid.
(ccvi) "OFFICE SPACE" means all Taxable Square Feet other than
that which is attributable to the Retail Space.
(ccvii) "ONGOING PREDELIVERY COSTS" has the meaning set forth
in the Site 8 South LADA.
(ccviii) "OPERATIVE AGREEMENTS" means (A) all Condominium
Documents, (B) the applicable building management agreement, and (C) any
agreement or agreements for construction management, general contracting or
similar services in respect of Tenant's Construction Work.
(ccix) "ORGANIZED CRIME FIGURE" means any Person (A) who has
been convicted in a criminal proceeding for a felony or any crime involving
moral turpitude or that is an
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organized crime figure or is reputed to have substantial business or other
affiliations with an organized crime figure, or (B) who, directly or indirectly
controls, is controlled by, or is under common control with, a Person who has
been convicted in a criminal proceeding for a felony or any crime involving
moral turpitude or that is an organized crime figure or is reputed to have
substantial business or other affiliations with an organized crime figure. The
determination as to whether any Person is an organized crime figure or is
reputed to have substantial business or other affiliations with an organized
crime figure shall be within the sole discretion of Landlord, which discretion
shall be exercised in good faith; PROVIDED, HOWEVER, that such Person shall not
be deemed a Prohibited Person if the City, having actual knowledge that such
Person meets the criteria set forth in clauses (A) or (B) above of this
definition, entered into a contract and is then doing business with such Person.
(ccx) "OVERDUE PAYMENT" has the meaning set forth in SECTION
3.7(c) hereof.
(ccxi) "PA EFFECTIVE DATE" has the meaning set forth in
SECTION 30.4(b) hereof.
(ccxii) "PA NFP OPERATING COSTS" has the meaning set forth in
SECTION 30.4(b) hereof.
(ccxiii) "PA OBLIGATION TERM" has the meaning set forth in
SECTION 30.4(b) hereof.
(ccxiv) "PA OBLIGATION TERMINATION DATE" has the meaning set
forth in SECTION 30.4(b) hereof.
(ccxv) "PA OPENING DATE" has the meaning set forth in SECTION
30.4(b) hereof.
(ccxvi) "PA PILOT REDUCTION" has the meaning set forth in
SECTION 30.4(e)(i) hereof.
(ccxvii) "PA RETAIL ADJUSTED GROSS REVENUES" means all (A)
revenues, receipts and income of whatever kind and nature of Tenant or any
Related Entity, as determined in accordance with Accounting Principles, in any
Lease Year, generated from the ownership, operation, leasing, use or occupancy
of any PA Retail Space (but only if the PA Retail Space equals or exceeds 5,000
Square Feet) including (1) license fees or other amounts received from any
subtenant of such PA Retail Space or its affiliate for the right to maintain
signage on the facade of the New Building (but not from the granting of such
signage rights to any third party), (2) rentals, fees or other payments from
Subtenants (subject to clause (9) below), including any common area maintenance
and operating expense, but specifically excluding payments received in
reimbursement of utility, PILOT, Theater Surcharge or BID payments made by
Tenant, or any Related Entity, (3) the proceeds of insurance received by Tenant
with respect to business interruption or rent insurance (but not liability or
casualty insurance received by Tenant), (4) security and other deposits which
secure other revenues, receipts or income qualifying as PA Retail Adjusted Gross
Revenues when and to the extent Tenant, after the final resolution of any
Subtenant dispute over whether Tenant has the right to retain such security and
other deposits, either has the right to retain the same or Tenant has no
obligation to refund the same (and excluding security and other deposits to the
extent applied by
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Tenant to reimburse Tenant for reasonable costs incurred in remedying a
non-monetary default by the provider of such security or deposit), (5) interest
or other investment income earned from time to time by Tenant on deposits or
other revenues, receipts or income qualifying as PA Retail Adjusted Gross
Revenues, (6) amounts recovered in any legal action or proceeding or settlement
thereof which reimburses Tenant for a loss of revenues, receipts or income
qualifying as PA Retail Adjusted Gross Revenues (and excluding any such amounts
to the extent reimbursing Tenant for reasonable costs incurred in remedying a
non-monetary default by the defendant in such action), (7) construction fees
from the performance by Tenant or any Related Entity of construction or
construction management services for Subtenants, but only to the extent such
fees exceed customary amounts (and excluding such fees to the extent they do not
exceed such customary amounts), (8) leasing or brokerage commissions paid to
Tenant or any Related Entity in connection with the entering into of a Sublease
or the renewal thereof or the expansion of the Demised Space thereunder, but
only to the extent Tenant or such Related Entity is not the procuring broker, or
if Tenant or such Related Entity is the procuring broker, only to the extent
such commissions exceed customary amounts (and excluding such commissions to the
extent they do not exceed such customary amounts), and (9) with respect to any
Related Entity that is a Subtenant in possession and actual use of its Demised
Space, the greater of [a] the rentals, fees or other payments made to Tenant by
such Subtenant, including any common area maintenance and operating expense, but
specifically excluding payments received in reimbursement of utility, PILOT,
Theater Surcharge or BID payments made by Tenant and [b] the fair market rental
value of such Demised Space (and with respect to a Related Entity that is a
Subtenant not in possession and actual use of its Demised Space, all revenues,
receipts and income of whatever kind and nature of such Related Entity generated
from the Project, as provided above, shall be included in PA Retail Adjusted
Gross Revenues) less (B) refunds made upon transactions included within the
revenues described in clause (A) above. "PA Retail Adjusted Gross Revenues"
shall not include any management fee in a customary amount paid by Tenant to any
Related Entity to manage the Property.
(ccxviii) "PA RETAIL SPACE" means any portion of the Property
to be used for retail purposes or any purposes ancillary thereto which is
located within, and ancillary to, the Public Amenity (it being understood and
agreed that, for purposes only of computing Percentage Rent, if the PA Retail
Space is less than 5,000 Square Feet, then the area of all of the PA Retail
Space shall not be considered "PA Retail Space" for such purposes, and if the PA
Retail Space equals or exceeds 5,000 Square Feet, the area of all of the PA
Retail Space shall be considered "PA Retail Space" for such purposes).
Notwithstanding anything to the contrary herein, the Gallery and the Auditorium
shall not constitute PA Retail Space so long as any concessions or other retail
operations conducted therein are incidental or ancillary to, and are associated
with, the occurrence of Events in the Public Amenity.
(ccxix) "PA YEAR" has the meaning set forth in SECTION 30.4(b)
hereof.
(ccxx) "PERCENTAGE RENT" means the amounts payable by Tenant
pursuant to SECTIONS 3.2 and 34.3(c) hereof.
(ccxxi) "PERCENTAGE RENT REPORT" has the meaning set forth in
SECTION 3.2(c) hereof.
(ccxxii) "PERMITTED DEVELOPER" means a legal entity composed
only of (A) NYTC or its wholly-owned, single-purpose Control Affiliates, and/or
(B) FC or its single-purpose Control Affiliates, and/or (C) Equity Investor or
its wholly-owned, single-purpose Control Affiliates.
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(ccxxiii) "PERMITTED DISPOSITION" has the meaning set forth in
SECTION 13.10(d) hereof.
(ccxxiv) "PERMITTED ENCUMBRANCES" means (A) the matters
described in EXHIBIT H attached hereto and (B) any other encumbrance on the
Property expressly agreed to in writing by all parties hereto and any violation
that will, by its nature, be cured or otherwise rendered inconsequential due to
the demolition of the Existing Improvements.
(ccxxv) "PERMITTED TRANSFEREE" means a Person who (A) either
(1) directly and/or together with its Control Affiliates, owns and/or manages,
and has not less than five (5) years' experience in the ownership and/or
management of, at least five million (5,000,000) square feet of office space or
(2) retains a qualified manager having the qualifications set forth in clause
(A)(1), above, (B) is of sufficient financial condition to perform the
obligations to be assumed by such proposed assignee (Landlord having been
furnished with evidence reasonably satisfactory to Landlord of such financial
condition) and (C) is not a Prohibited Person.
(ccxxvi) "PERMITTED USE" has the meaning set forth in SECTION
7.1(a) hereof.
(ccxxvii) "PERSON" means (A) an individual, corporation,
limited liability company, partnership, joint venture, estate, trust,
unincorporated association or other entity, (B) any federal, state, county or
municipal government (or any bureau, department, agency or instrumentality
thereof), and (C) any fiduciary acting in such capacity on behalf of any of the
foregoing.
(ccxxviii) "PILOMRT" means the payments in lieu of Mortgage
Recording Tax payable by Tenant to Landlord pursuant to SECTION 3.4(b) hereof.
(ccxxix) "PILOST" means payments in lieu of sales and
compensating use taxes payable by Tenant to Landlord pursuant to SECTION 3.3
hereof.
(ccxxx) "PILOST AMOUNT" has the meaning set forth in SECTION
3.3(b) hereof.
(ccxxxi) "PILOT" means the payments in lieu of real estate
taxes payable by Tenant to Landlord pursuant to SECTION 3.1 hereof.
(ccxxxii) "PILOT YEAR" means (A) in the event that the
Delivery Date does not occur on January 1, the period from the Delivery Date
through the second December 31 thereafter (such period, the "First PILOT Year"),
and (B) each twelve (12) calendar month period commencing on the first January 1
following the First PILOT Year and on each anniversary thereof.
(ccxxxiii) "POSSESSION" means good and indefeasible leasehold
title to, and actual vacant occupancy and possession of, all of the Property,
free and clear of all leases, licenses, tenancies, occupancies, liens or other
similar encumbrances, and any claims to or rights of others attaching to the
Property, except Permitted Encumbrances.
(ccxxxiv) "PRIME RATE" means the fluctuating annual interest
rate announced publicly by Citibank, N.A., or any successor, at its headquarters
in New York City, as its base commercial lending rate, as the same may change
from time to time.
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(ccxxxv) "PRINCIPAL" means, with respect to any Person, (A)
any director or the president, any vice president, the treasurer, or the
secretary thereof if such Person is a corporation, (B) any general partner of a
partnership or managing member of a limited liability company, or (C) any
shareholder, limited partner, member or other Person having a direct or indirect
economic interest in such Person, whether beneficially or of record, in excess
of ten percent (10%) of all of the issued and outstanding shares, partnership
interests, limited liability company interests or other ownership interests of
such Person. In calculating the percentage interest of any shareholder, partner,
member or other beneficially interested Person referred to in the prior
sentence, the interest in the equity of any affiliate of such shareholder,
partner, member or beneficially interested Person shall be attributed to such
shareholder, partner, member or beneficially interested Person.
(ccxxxvi) "PRO RATA COST" has the meaning set forth in SECTION
30.4(b)(xiii) hereof.
(ccxxxvii) "PROCEEDING" has the meaning set forth in the Site
8 South LADA.
(ccxxxviii) "PRODUCTION ARCHITECT" means any Architect
proposed by Tenant and approved (or deemed approved) by Landlord pursuant to
SECTION 6.1(d)(ii) hereof as the production architect working in affiliation
with the Design Architect.
(ccxxxix) "PROHIBITED PERSON" means (A) any Person (1) that is
in default after notice and beyond any applicable cure period, of such Person's
obligations under any material written agreement with the City, the State or any
of their instrumentalities, or (2) that directly controls, is controlled by, or
is under common control with a Person that is in default after notice and beyond
any applicable cure period, of such Person's obligations under any material
written agreement with the City, the State or any of their instrumentalities,
unless, in each instance, such default or breach either (x) has been waived in
writing by the City, the State or any of their instrumentalities as the case may
be or (y) is being disputed in a court of law, administrative proceeding,
arbitration or other forum or (z) is cured within thirty (30) days after a
determination and notice to Tenant from Landlord that such Person is a
Prohibited Person as a result of such default; (B) any Person that is an
Organized Crime Figure; (C) any government, or any Person that is directly or
indirectly controlled (rather than only regulated) by a government, that is
finally determined to be in violation of (including, but not limited to, any
participant in an international boycott in violation of) the Export
Administration Act of 1979, as amended, or any successor statute, or the
regulations issued pursuant thereto, or any government that is, or any Person
that, directly or indirectly, is controlled (rather than only regulated) by a
government that is subject to the regulations or controls thereof; (D) any
government, or any Person that, directly or indirectly, is controlled (rather
than only regulated) by a government, the effects or the activities of which are
regulated or controlled pursuant to regulations of the United States Treasury
Department or executive orders of the President of the United States of America
issued pursuant to the Trading with the Enemy Act of 1917, as amended; (E) any
Person that is in default in the payment to the City of any real estate taxes,
sewer rents or water charges totaling more than $10,000, unless such default is
then being contested in good faith in accordance with applicable Legal
Requirements or unless such default is cured within thirty (30) days after a
determination and notice to Tenant from Landlord that such Person is a
Prohibited Person as a result of such default; or (F) any Person (1) that has
solely owned, at any time during the 3-year period immediately preceding a
determination of whether such Person is a Prohibited Person, any property which,
while in the ownership of such Person, was acquired by the City by in rem tax
foreclosure, other than a property in which the City has released or is in the
process of releasing its
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interest pursuant to the Administrative Code of the City, or (2) that, directly
or indirectly controls, is controlled by, or is under common control with a
person that has owned, at any time in the 3-year period immediately preceding a
determination of whether such Person is a Prohibited Person, any property which,
while in the ownership of such person, was acquired by the City by in rem tax
foreclosure, other than a property in which the City has released or is in the
process of releasing its interest to such person pursuant to the Administrative
Code of the City.
(ccxl) "PROJECT" means the design, construction and operation,
in accordance with the DUO and the other terms of this Lease, on the Land, of
improvements to include, without limitation: (A) an up to approximately 780 foot
tall office building (the "NEW BUILDING") to be occupied, in whole or in part,
by NYTC, having a floor area of (1) up to 1,380,000 square feet (it being
acknowledged and agreed that no subway entrance located on the property shall be
deemed to be included in such 1,380,000 Square Feet) plus (2) the Discretionary
Inside Mechanical Space plus (3) the Roof Top Mechanical Space, which New
Building will contain, inter alia, (i) Retail Space at least on the ground
floor, (ii) the Public Amenity, and (iii) signage in accordance with the DUO,
and may, at Tenant's election, contain the Roof Top Garden Space and the Roof
Top Garden Improvements; and (B) Tenant's Subway Improvements; PROVIDED,
HOWEVER, that if the Third Non-Delivery Event shall have occurred, then upon the
receipt of written notice from Tenant to Landlord of its election to modify the
floor area of the New Building, the aforesaid 1,380,000 Square Feet and all
references to the 1,380,000 Square Foot floor area in this Lease shall be
deemed, for all purposes of this Lease, to be a reference to such lesser floor
area indicated by Tenant in such notice (such area to be not less than a number
of Square Feet equal to the sum of (a) 1,020,000 and (b) the product of (I)
60,000 and (II) a fraction, the numerator of which is such lesser floor area and
the denominator of which is 1,380,000 (such product, the "ADJUSTED DIMS")).
(ccxli) "PROJECT AGREEMENT" means that certain Site 8 South
Project Agreement, dated as of the date hereof, by and among ESDC, 42DP, the
City, Tenant, FC Member and NYTC Member, and any amendments thereto.
(ccxlii) "PROJECT COMPONENT" means each of the FC Component,
the NYTC Component, the Roof Top Garden Space and the Lobby Sublease Space, if
any.
(ccxliii) "PROJECT DOCUMENTS" means (A) all those documents
listed on EXHIBIT A attached hereto, and (B) from and after their execution and
delivery, the Construction Guaranties.
(ccxliv) "PROJECT PARTICIPANTS" means (A) Tenant and Control
Affiliates of Tenant, (B) the Condominium Association, if any, of the New
Building, (C) any Manager, and (D) the construction manager and/or general
contractor (or other entities serving such purpose) for all aspects of Tenant's
Construction Work.
(ccxlv) "PROPERTY" means the Land and the Improvements.
(ccxlvi) "PUBLIC AMENITY" has the meaning set forth in SECTION
30.4(a) hereof.
(ccxlvii) "PUBLIC AMENITY SPACE" has the meaning set forth in
SECTION 30.4(b)(xiv) hereof.
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(ccxlviii) "PUBLIC CONDEMNATION COSTS" has the meaning set
forth in SECTION 2.1(b)(iii) hereof.
(ccxlix) "PUBLIC PARTIES" means 42DP, ESDC, the City and
NYCEDC.
(ccl) "PUBLIC PARTY EXPENSES" has the meaning set forth in the
Site 8 South LADA.
(ccli) "PURCHASE OPTION" has the meaning set forth in SECTION
5.1(a) hereof.
(cclii) "PURCHASE OPTION CLOSING DATE" has the meaning set
forth in SECTION 5.1(a) hereof.
(ccliii) "PURCHASE OPTION NOTICE" has the meaning set forth in
SECTION 5.1(a) hereof.
(ccliv) "PURCHASE PRICE" means Ten Dollars ($10).
(cclv) "QUALIFIED CERTIFYING PARTY" means with respect to any
Person that is a partnership or limited liability company, a member or general
partner thereof, or in the case of a Person or general partner that is a
corporation, the President, Vice President, Chief Financial Officer or Treasurer
of such Person or general partner.
(cclvi) "REAL ESTATE TAX METHODOLOGY CHANGES" has the meaning
set forth in SECTION 3.1(a)(i)(C) hereof.
(cclvii) "RECOGNITION AGREEMENT (PUBLIC PARTIES)" means that
certain Recognition Agreement (Public Parties), dated as of the date hereof, by
and among INGREDUS Site 8 SOUTH LLC, ING Vastgoed B B.V., FC 41st Street
Associates, LLC, FC Lion LLC, Tenant, Forest City Ratner Companies, ESDC and
42DP.
(cclviii) "RECOGNIZED MORTGAGE" means a Mortgage (A) that is
held by a Lending Institution, (B) that complies with the provisions of this
Lease, and (C) a copy of which has been delivered to Landlord, together with a
certification of a Qualified Certifying Party of Tenant confirming that the copy
is a true and complete copy of such Mortgage and giving the name and address of
the mortgagee thereunder.
(cclix) "RECOGNIZED MORTGAGEE" means the holder of a
Recognized Mortgage.
(cclx) "RELATED ENTITY" means, as to any Person, any other
Person that controls, is controlled by, or is under common control with, such
Person; for the purposes of this definition, "control" (and its correlative
meanings, "controlled by" and "under common control with"), means (A) direct or
indirect ownership of more than fifty percent (50%) of the outstanding voting
capital stock of a corporation or more than fifty percent (50%) of the
beneficial interests of any other entity or (B) the possession, directly or
indirectly, of the power to direct or cause the direction of the business
decisions of such corporation or other entity.
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(cclxi) "RENTABLE SQUARE FEET" or "RENTABLE SQUARE FOOT" means
rentable square footage of the Improvements, as determined in accordance with
the Standard Method for Measuring Floor Area in Office Buildings ANSI
Z65.1-1996), as promulgated by the Building Owners and Managers Association
(BOMA) International or any successor entity.
(cclxii) "REPLACEMENT DESIGN ARCHITECT" has the meaning set
forth in SECTION 6.1(d)(i) hereof
(cclxiii) "REPLACEMENT DESIGN ARCHITECT APPROVAL CRITERIA" has
the meaning set forth in SECTION 6.1(d)(i) hereof.
(cclxiv) "RESTORATION" has the meaning set forth in SECTION
11.1(a) hereof.
(cclxv) "RESTORATION FUNDS" has the meaning set forth in
SECTION 11.2(a) hereof.
(cclxvi) "RESTORE" has the meaning set forth in SECTION
11.1(a) hereof.
(cclxvii) "RETAIL PILOT" means (A) the rate set forth under
"Retail PILOT" in SCHEDULE 1 attached hereto multiplied by (B) the sum of (1)
the number of gross square feet of above-grade Retail Space, (2) the number of
gross square feet of below-grade Revenue Producing Retail Space for which a
Taxable Square Feet Delivery Date has occurred, (3) 10,000 Square Feet,
representing the Roof Top Garden Space and (4) if and for so long as the Lobby
Sublease Space is used for retail purposes, the number of gross square feet of
the Lobby Sublease Space (collectively "TAXABLE RETAIL SQUARE FEET").
(cclxviii) "RETAIL SPACE" means any portion of the Property to
be used for retail purposes or any purposes ancillary thereto (other than the PA
Retail Space).
(cclxix) "REVENUE-PRODUCING RETAIL SPACE" means that portion
of the Retail Space leased or otherwise demised to a Subtenant, which space is
being used for the selling of goods, merchandise or services.
(cclxx) "ROOFTOP GARDEN ADJUSTED GROSS REVENUES" has the
meaning set forth in SECTION 34.2(d) hereof.
(cclxxi) "ROOF TOP GARDEN IMPROVEMENTS" means an open air
garden on the 53rd floor of the New Building (as shown on the Schematic Design
Plans set forth on EXHIBIT I-2 attached hereto) approximately in the
configuration as shown on Schematic Design Plan drawing number A1053 listed on
Exhibit I-1 attached hereto.
(cclxxii) "ROOFTOP GARDEN SPACE" has the meaning set forth in
SECTION 34.1(b) hereof.
(cclxxiii) "ROOF TOP MECHANICAL SPACE" means all the
mechanical space located on and above the 52nd floor of the New Building (as
shown in the Schematic Design Plans set forth on EXHIBIT I-2 attached hereto)
(it being understood that the space on and above such 52nd floor of the New
Building shall only be used for (A) housing of mechanical equipment, (B) siting
of the Roof Top Garden Space and (C) the development of the Roof Top Garden
Improvements.
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(cclxxiv) "SALES TAX SAVINGS" means the Sales Tax savings
realized by tenant, pursuant to SECTION 3.3 hereof.
(cclxxv) "SALES TAX SAVINGS REPORT" has the meaning set forth
in SECTION 3.3(d) hereof.
(cclxxvi) "SALES TAXES" means the New York City and New York
State sales and/or compensating use taxes imposed pursuant to Sections 1105,
1107, 1109 and 1110 of the New York State Tax Law, as each of the same may be
amended from time to time (including any successor provisions to such statutory
sections).
(cclxxvii) "SCHEDULED EXPIRATION DATE" means the date set
forth in SECTION 2.1(b) hereof as the originally scheduled Expiration Date.
(cclxxviii) "SCHEDULED PILOT CONVERSION DATE" means the
twenty-ninth (29th) anniversary of the first December 31 after the Delivery
Date.
(cclxxix) "SCHEMATIC DESIGN PLANS" means those certain
schematic design plans relating to Tenant's Construction Work listed on Exhibit
I-1 attached hereto (a copy of which Schematic Design Plans has been provided to
Landlord) and the table of areas set forth on EXHIBIT I-2 attached hereto.
(cclxxx) "SECOND EXTENSION PERIOD" has the meaning set forth
in SECTION 6.1(c)(ii) hereof.
(cclxxxi) "SECOND NON-DELIVERY EVENT" has the meaning set
forth in SECTION 1.1(a)(clxxxix) hereof, the definition of Non-Delivery Event.
(cclxxxii) "SECOND PA EXTENSION" has the meaning set forth in
SECTION 30.4(d)(i)(B)(2) hereof.
(cclxxxiii) "SECTION 2.1 LETTER OF CREDIT" has the meaning set
forth in SECTION 2.1(b)(iii) hereof.
(cclxxxiv) "SECTION 6.1(b)(ii) EXTENSION PERIOD" has the
meaning set forth in SECTION 6.1(b)(ii) hereof.
(cclxxxv) "SECURITY DEPOSIT" has the meaning set forth in
SECTION 10.9(a) hereof.
(cclxxxvi) "SEVERANCE SUBLEASES" means the NYTC Severance
Sublease and the FC Severance Subleases.
(cclxxxvii) "SEVERANCE TENANT" means the lessee under a
Severance Sublease.
(cclxxxviii) "SITE 8 SOUTH LADA" means that certain Site 8
South Land Acquisition and Development Agreement, dated as of the date hereof,
entered into by 42DP, NYCEDC and Tenant, together with the LADA Guaranty.
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(cclxxxix) "SITE 8 SOUTH SUBWAY AGREEMENT" means that certain
Agreement, dated as of the date hereof, among Landlord, The New York City
Transit Authority, Tenant and The City of New York.
(ccxc) "SITE ACQUISITION COSTS" has the meaning set forth in
the Site 8 South LADA.
(ccxci) "SQUARE FEET" or "Square Foot" means square footage
computed with reference to the gross square footage of the New Building, above
grade, measured from the outside of the exterior walls for each floor and
including, without limitation, mechanical space (other than the Roof Top
Mechanical Space), floor cutouts for ducts, interior partition walls and loading
areas. Because the New Building will include a double curtain wall (i.e., an
interior glass curtain wall and an exterior screen curtain wall), "exterior
walls" for purposes of this definition means the inner glass curtain wall of the
New Building, as long as and to the extent that there is no usable floor area
between the two components of the curtain wall.
(ccxcii) "STABILIZED LEASE YEAR" has the meaning set forth in
SECTION 143(g) hereof
(ccxciii) "STRUCTURAL ALTERATION" has the meaning set forth in
SECTION 9.2(a) hereof.
(ccxciv) "STRUCTURAL COMPONENT" means, in respect of the New
Building, (A) the roof, (B) exterior walls and (C) any load-bearing member,
including load-bearing columns and slabs.
(ccxcv) "SUBLEASE" means any sublease, sub-sublease, license,
concession, occupancy or other agreement, other than the NYTC Severance Sublease
and the FC Severance Subleases, pursuant to which a Subtenant occupies or
otherwise uses all or any portion of the Property.
(ccxcvi) "SUBMISSION DATE" has the meaning set forth in
SECTION 16.2(b)(iv) hereof.
(ccxcvii) "SUBSTANTIAL CASUALTY" means a Casualty that would
require a Restoration the cost of which is greater than eighty percent (80%) of
the replacement cost of the New Building.
(ccxcviii) "SUBSTANTIAL COMPLETION" or "SUBSTANTIALLY
COMPLETE(D)" means that (A) the Core and Shell has been completed in substantial
conformity with the Final Plans and Specifications therefor and the Design
Architect has delivered to Landlord a certification of such completion in
accordance with SECTION 6.3(c)(i) hereof, subject to completion of "punch list"
items, and (B) subject to SECTION 6.6(c) hereof, the New York City Department of
Buildings or any successor agency of comparable function has issued, pursuant to
Section 1804 of the New York City Charter, or any successor statute of similar
import, either temporary or permanent certificates of occupancy for the Core and
Shell.
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(ccxcix) "SUBSTANTIAL COMPLETION DATE" means the earlier to
occur of (A) the Fixed Substantial Completion Date, as the same may be extended
by Unavoidable Delays, and (B) the date upon which actual Substantial Completion
is achieved.
(ccc) "SUBSTANTIALLY ALL OF" has the meaning set forth in
SECTION 12.1(a) hereof.
(ccci) "SUBTENANT" means any space tenant, subtenant,
operator, licensee, franchisee, concessionaire or other occupant of the Property
(or any portion thereof), other than the Severance Tenants.
(cccii) "TAKING" means, other than in respect of the
Condemnation, a taking, or voluntary conveyance, of title to, or any interest
in, the Property, or any part thereof, or of the right to use all or any part
thereof pursuant to, as a result of, in lieu of or in anticipation of the
exercise of the right of condemnation, expropriation or eminent domain, and upon
such a Taking, the Property, or such part thereof, shall be deemed to have been
"taken".
(ccciii) "TAXABLE RETAIL SQUARE FEET" has the meaning set
forth in SECTION 1.1(a)(cclxvii) hereof, the definition of Retail PILOT.
(ccciv) "TAXABLE SQUARE FEET" means, as determined pursuant to
SECTION 3.1(a)(i)(B) hereof, the sum of (A) 1,370,000 Square Feet (as adjusted,
if necessary after the occurrence of the Third Non-Delivery Event, in accordance
with SECTION 1.1(a)(clxxxix) hereof), (B) the number of Square Feet of
Discretionary Inside Mechanical Space actually constructed by Tenant, (C) the
number of below-grade Taxable Retail Square Feet and (D) the number of Square
Feet comprising the Roof Top Garden Space; "Taxable Square Feet" explicitly
excludes the Roof Top Mechanical Space.
(cccv) "TAXABLE SQUARE FEET DELIVERY DATE" means, with respect
to any Sublease of Retail Space, the earlier to occur of (A) the date the
applicable sublease premises is delivered to such Subtenant for the build out of
such premises and (B) the date that rent commences pursuant to such Sublease
(excluding any payment of first month's rent made upon execution of such
Sublease until applied in accordance with such Sublease).
(cccvi) "TENANT" has the meaning set forth in the preamble to
this Lease.
(cccvii) "TENANT'S CONSTRUCTION WORK" means the construction
of the Core and Shell.
(cccviii) "TENANT'S OBLIGATIONS" has the meaning set forth in
SECTION 1.1(a)(cciii) hereof, the definition of Obligations.
(cccix) "TENANT'S SUBLET NOTICE" has the meaning set forth in
SECTION 13.2(b)(vii) hereof.
(cccx) "TENANT'S SUBWAY IMPROVEMENTS" has the meaning set
forth in SECTION 6.6 hereof.
(cccxi) "TENANT'S TRANSFER BASIS" has the meaning set forth in
SECTION 13.1(i)(iii) hereof.
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(cccxii) "TENANT'S TSF CERTIFICATION" has the meaning set
forth in SECTION 3.1(a)(i)(B)(2) hereof.
(cccxiii) "TERMINATION NOTICE" has the meaning set forth in
SECTION 14.2 hereof.
(cccxiv) "THEATER MANAGEMENT ENTITY" means The New 42nd
Street, Inc. or any other not-for-profit organization which promotes, operates
and/or oversees one or more historic theaters within the 42nd Street Project.
(cccxv) "THEATER SURCHARGE" has the meaning set forth in
SECTION 3.5(a) hereof.
(cccxvi) "THEATER SURCHARGE COMMENCEMENT DATE" has the meaning
set forth in SECTION 3.5(b) hereof.
(cccxvii) "THEATER SURCHARGE REPORT" has the meaning set forth
in SECTION 3.5(d) hereof.
(cccxviii) "THIRD NON-DELIVERY EVENT" has the meaning set
forth in SECTION 1.1(a)(clxxxix) hereof, the definition of Non-Delivery Event.
(cccxix) "TRANSACTION PRICE" means $85,560,000.
(cccxx) "TOTAL SAC AMOUNT" means the total of all Site
Acquisition Costs.
(cccxxi) "TOTAL TAXABLE SQUARE FEET CERTIFICATE" means a
certification, delivered by Tenant, setting forth as of the Lease Assignment
Date (A) the Total Taxable Square Feet (as defined in the Severance Sublease) of
the Improvements, and (B) the Taxable Square Feet (as defined in each Severance
Sublease) comprising the Demised Premises under each Severance Sublease, which
shall be comprised of (1) the number of Taxable Square Feet, above-grade,
situated within the applicable Demised Premises, (2) an amount equal to the
product of (a) the number of Square Feet comprising the Common Elements (as
defined in each Severance Sublease) and (b) a percentage equal to the Common
Interest (as defined in the Condominium Declaration) attributed to the
condominium unit comprising the applicable Demised Premises (such product, the
"ALLOCATED SQUARE FEET"), (3) any then-identified below-grade Taxable Retail
Square Feet, and (4) the Square Feet comprising the Roof Top Garden Space.
(cccxxii) "TRANSFER" has the meaning set forth in SECTION
13.1(a) hereof.
(cccxxiii) "UNAVOIDABLE DELAY(S)" means actual delays (after
taking into account all reasonable measures that are taken or should reasonably
have been taken by Tenant to mitigate the effect of the following) caused by (A)
acts of God, war, sabotage, hostilities, invasion, insurrection, riot, mob
violence, malicious mischief, embargo, enemy action, civil commotion,
earthquake, flood, fire or other casualty, government restriction, strikes,
labor troubles, unknown physical conditions which differ materially from those
ordinarily found to exist and generally recognized as inherent in the
construction of office building in Manhattan and inability to procure labor,
equipment, materials or supplies (exclusive of delays inherent in the ordering
of long-lead items) which are not attributable to the improper acts or omissions
of Tenant or its affiliates, (B) any litigation (not instituted, financed or
supported by any of Tenant, NYTC, FC, an Equity Investor or
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any of their Related Entities) which results in an injunction prohibiting or
otherwise delaying the Commencement of Construction of Tenant's Construction
Work or the continuation of such Construction Work, and (C) any other matter
beyond the reasonable control of Tenant and not normally associated with a
project of the nature described herein. Inability (1) to pay a sum of money or
(2) to obtain or to timely obtain (a) any permits or certificates from
applicable governmental authorities or (b) financing from a lender, shall not
constitute Unavoidable Delay. The period of delay caused by any occurrence of
Unavoidable Delay shall not be deemed to commence any earlier than ten (10) days
before the date Landlord receives notification from Tenant of such occurrence;
PROVIDED, HOWEVER, that no such notification shall be valid unless Tenant shall
substantiate the basis for any claim of Unavoidable Delay made therein to the
reasonable satisfaction of the Public Parties within twenty (20) days
thereafter. Tenant shall advise Landlord in such notice as to the measures taken
or proposed to be taken by Tenant to mitigate the delay caused by such
occurrence of Unavoidable Delay and thereafter to keep Landlord reasonably
informed as to the status of such measures, and notify Landlord as to the
termination of the occurrence of Unavoidable Delay within ten (10) days
thereafter; PROVIDED, HOWEVER, Tenant's failure to provide any such notice of
termination shall not prejudice Tenant's rights to claim Unavoidable Delay.
(cccxxiv) "VACANT EXISTING IMPROVEMENTS" has the meaning set
forth in SECTION 6.5(c) hereof.
(cccxxv) "VENUE" has the meaning set forth in SECTION
30.4(b)(xv) hereof.
(cccxxvi) "VERIFIED STATEMENT" means a statement in reasonable
detail and in a reasonable form, as prescribed by Landlord, prepared in a
consistent manner and certified as being true, correct and complete by a
Qualified Certifying Party or the Certified Public Accountants, unless such
statement pertains to an annual (or longer) period, in which case it shall be so
certified by both a Qualified Certifying Party and the Certified Public
Accountants.
(cccxxvii) "VESTING DATE" means the date ESDC acquires title
to, and (subject to occupants in possession) the right to legal possession of,
all of the parcels and improvements within the Property.
(cccxxviii) "ZONING RESOLUTION" means the Zoning Resolution of
The City of New York or any successor statute, as the same may be amended or
otherwise modified.
SECTION 1.2 RULES OF CONSTRUCTION. The following rules of
construction shall be applicable for all purposes of this Lease and all
agreements supplemental hereto, unless the context otherwise requires:
(a) The terms "HEREBY", "HEREOF", "HERETO", "HEREIN", "HEREUNDER"
and any similar terms shall refer to this Lease, and "HEREAFTER" shall mean
after, and "HERETOFORE" shall mean before, the date of this Lease.
(b) Words of the masculine, feminine or neuter gender shall mean and
include the correlative words of the other genders and words importing the
singular number shall mean and include the plural number and vice versa.
(c) The terms "INCLUDE", "INCLUDING" and similar terms shall be
construed as if followed by the phrase "without being limited to".
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(d) This Lease shall be governed by, and construed in accordance
with, the law of the State of New York applicable to agreements to be performed
wholly within such State.
(e) Whenever a party hereto "shall" perform (or cause to be
performed) any Obligations hereunder, such performance shall be at such party's
sole cost and expense unless otherwise expressly provided.
SECTION 1.3 CAPTIONS/TABLE OF CONTENTS. THE captions under the
article and section numbers and the table of contents of this Lease are for
convenience and reference only and in no way define, limit or describe the scope
or intent of this Lease nor in any way affect this Lease.
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ARTICLE II
LEASE OF PROPERTY; TERM OF LEASE
SECTION 2.1 DEMISE OF PROPERTY; TERM.
(a) DEMISE AND LEASE. (i) During the term described in SECTION
2.1(b) hereof, Landlord hereby demises and leases to Tenant, and Tenant hereby
hires and takes from Landlord, pursuant to the provisions of this Lease, the
Property subject only to Permitted Encumbrances; PROVIDED, HOWEVER, that the
demise hereunder does not include, and shall not effectuate or constitute any
transfer or assignment to Tenant of, Landlord's privity of estate with, or
Landlord's obligations with respect to the removal of, Persons occupying the
Property on the Vesting Date.
(ii) During the term of this Lease, Landlord shall not create
or consent to any encumbrance or the putting of any lien on the Property (other
than an encumbrance or lien resulting from the prosecution by Landlord of any
remedy for the enforcement of any provision of this Lease) without Tenant's
prior written consent.
(b) TERM. (i) The leasehold estate granted in SECTION 2.1(a) hereof
is for a term of ninety-nine (99) years, commencing on the Commencement Date,
and ending upon the earlier of the date immediately preceding the ninety-ninth
(99th) anniversary of the Commencement Date or the date on which this Lease
shall sooner terminate as hereunder provided (the "EXPIRATION DATE"), upon and
subject to the covenants, agreements, terms, provisions and limitations herein
set forth, all of which covenants, agreements, terms, provisions and limitations
Landlord and Tenant covenant and agree to perform and observe.
(ii) Notwithstanding SECTION 2.1(b)(i) hereof, if the Fourth
Non-Delivery Event shall have occurred, then Tenant may cancel and terminate
this Lease by giving written notice thereof to Landlord on or prior to the
ninetieth (9Oth) day subsequent to the date of the occurrence of the Fourth
Non-Delivery Event and within the thirty (30) day period following each
subsequent anniversary of the Fourth Non-Delivery Date (but, in no event, after
the occurrence of the Delivery Date), in which event this Lease shall terminate
on such date and the estate demised under this Lease shall be extinguished and
neither Landlord nor Tenant shall have any obligations or liabilities to each
other whatsoever under this Lease (it being acknowledged and agreed that such
termination shall not limit, qualify, or otherwise affect any of the obligations
of the parties to the Site 8 South LADA thereunder).
(iii) Notwithstanding SECTION 2.1(b)(i) hereof, if the Vesting
Date has not occurred on or before the date (the "NON-VESTING DEADLINE") which
is the earlier to occur of (A) the eighth (8th) anniversary of the date hereof
and (B) the first date upon which NYTC fails to achieve a positive long term
return on its investment in the Project, then Tenant shall have the right, in
Tenant's sole discretion, within thirty (30) days after the Non-Vesting Deadline
(and, thereafter, so long as the Vesting Date has not then occurred and NYTC
continues to fail to achieve such positive return, within thirty (30) days after
each anniversary of the Non-Vesting Deadline), to send a notice (the
"NON-VESTING TERMINATION NOTICE") to Landlord electing to terminate this Lease
effective as of a date designated in such Non-Vesting Termination Notice, being
not less than five (5) nor more than thirty (30) Business Days after the date of
Landlord's receipt of such Non-Vesting Termination Notice; PROVIDED, HOWEVER,
that Tenant's exercise of the right to terminate set forth in this sentence
shall be void and of no effect if: [a] after the submission by ESDC of all
appropriate documentation with the Court for the dismissal of the Petition (as
defined in the LADA) (which ESDC covenants to
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submit and thereafter diligently prosecute) and notwithstanding such diligent
prosecution by ESDC of such dismissal, the Court has failed to expressly grant a
final, non-appealable dismissal of the Petition; [b] on or prior to the date of
such termination, Tenant has not paid all Public Condemnation Costs then
expended by the State Parties (unless Tenant has caused a Control Affiliate
acceptable to Landlord in its reasonable discretion to fully indemnify, pursuant
to an indemnification agreement acceptable to Landlord in its reasonable
discretion, Landlord for (or has provided to Landlord a Letter of Credit (a
"SECTION 2.1 LETTER OF CREDIT") sufficient in form and substance, in Landlord's
reasonable discretion, to secure the payment of) all such Public Condemnation
Costs); [c] Tenant is in Default under any Project Document and such Default
will not, by its nature, be cured or otherwise rendered inconsequential by
reason of the termination of this Lease by Tenant (unless Tenant has caused a
Control Affiliate acceptable to Landlord in its reasonable discretion to fully
indemnify, pursuant to an indemnification agreement acceptable to Landlord in
its reasonable discretion, Landlord for (or has provided to Landlord a SECTION
2.1 Letter of Credit sufficient in form and substance, in Landlord's reasonable
discretion, to secure the payment of) any claims, costs and expenses imposed
upon or incurred by or arising against Landlord with respect to such Default);
or [d] the Vesting Date has not occurred as a result, directly or indirectly, of
any action or inaction on the part of Tenant or any affiliate of Tenant. Upon
the later of the date designated in the Non-Vesting Termination Notice and the
formal dismissal or the Proceeding by the Court, this Lease shall terminate and
Tenant, NYTC, FCE and their Related Entities shall have no further obligations
hereunder or under the other Project Documents (except for (1) the obligations
set forth in SECTIONS 6.4, 6.5(c), 17.5, 19.3, and 33.2(e) hereof that survive
termination, and (2) the obligation to reimburse the Public Parties for (A)
costs theretofore and thereafter expended, and liabilities theretofore incurred
or thereafter imposed upon the Public Parties in respect of this Lease and the
other Project Documents pursuant to agreements entered into prior to the date of
termination of this Lease (it being agreed that Landlord shall take all efforts
(other than incurring any costs or liabilities in respect thereof) to minimize
Tenant's liability due to this clause (2)(A) and (B) all costs and liabilities
incurred by the Public Parties in connection with, and as a consequence of, such
termination including, without limitation, any costs which arise, directly or
indirectly, pursuant to Section 702 of the EDPL (including, without limitation,
attorney and appraisal fees) (the costs and liabilities described in clauses
(2)(A) and (2)(B) of this SECTION 2.1(b)(iii), "PUBLIC CONDEMNATION COSTS")).
Promptly after (x) the full and complete reimbursement of all Public
Condemnation Costs by Tenant to the Public Parties, as applicable and (y) all
remaining obligations of Tenant under this Lease being fully discharged,
Landlord shall, return any and all Letters of Credit delivered to Landlord by
Tenant, NYTC, FCE or their Related Entities in connection with the Project and
acknowledge in writing to Tenant that all guaranties delivered to Landlord in
connection with the Project Documents are of no further force or effect;
PROVIDED, HOWEVER, that if Tenant shall provide to Landlord a SECTION 2.1 Letter
of Credit which, in Landlord's reasonable discretion, is sufficient in amount to
secure the Public Parties against any claims, costs and expenses that may be
imposed upon or incurred by or asserted against the Public Parties in connection
with, and as a consequence of, the termination set forth in this SECTION
2.1(b)(iii), including, without limitation, all Public Condemnation Costs, then
Landlord shall accept such SECTION 2.1 Letter of Credit and promptly after the
receipt of the aforesaid SECTION 2.1 Letter of Credit shall return to Tenant all
other Letters of Credit then held by Landlord in connection with this Lease.
Tenant hereby agrees to indemnify Landlord and the other Public Parties for, and
to hold Landlord and the other Public Parties harmless from and against, any and
all claims, costs and expenses that may be imposed upon or incurred by or
asserted against Landlord or any of the other Public Parties in connection with,
and as a consequence of such termination, including, without limitation, all
Public Condemnation Costs.
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(c) POSSESSION OF PREMISES. Landlord and Tenant acknowledge that, as
of the Vesting Date, all of the parcels comprising the Land within the Property
will be demised to Tenant under this Lease but that, in obtaining Possession of
any parcel or in managing the Existing Improvements as to which Possession has
not been obtained, Landlord will be acting solely in its capacity as fee owner
of such parcels comprising the Land (and not as an agent for Tenant). No
landlord/tenant relationship or privity of estate or, by virtue of this Lease,
any contractual relationship shall exist between Tenant and any occupants of any
such parcels.
SECTION 2.2 CONDITION OF PROPERTY. Tenant is fully familiar with the
Property, the condition thereof and the Permitted Encumbrances, and Tenant
accepts and agrees to lease the same in their "AS IS" condition on the date
hereof and without any representation or warranty, express or implied, in fact
or by law, by Landlord, NYCEDC, ESDC or the City, except as expressly provided
in this Lease, and without recourse to Landlord, NYCEDC, ESDC or the City as to
the title thereto, the nature, condition or usability thereof or the use or uses
to which the Property or any part thereof may be put, except as expressly
provided in this Lease.
SECTION 2.3 WAIVER OF RIGHT TO RESCIND. Tenant waives any right to
rescind this Lease under Section 223-a of the New York State Real Property Law
or under any present or future statute of similar import then in force and
further expressly waives the right to recover any damages which may result from
Landlord's failure to deliver possession of the Property. Tenant agrees that
this SECTION 2.3 is intended to constitute "an express provision to the
contrary" within the meaning of said Section 223-a.
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ARTICLE III
CHARGES AND FEES
SECTION 3.1 PILOT.
(a) DETERMINATION OF PILOT. Tenant covenants and agrees to pay to
Landlord, commencing as of the Delivery Date and continuing during the term of
this Lease, payments in lieu of real estate taxes ("PILOT") determined as
follows:
(i) PRIOR TO SCHEDULED PILOT CONVERSION DATE.
(A) From the Delivery Date through the day before the
Scheduled PILOT Conversion Date, Tenant shall pay to Landlord an amount, per
annum, equal to the lesser of (1) subject to SECTION 3.1(a)(i)(C) hereof, Full
Taxes and (2) [a] the sum of Office PILOT and Retail PILOT for the applicable
PILOT Year minus [b] (i) any Theater Surcharge payable in respect of such
applicable PILOT Year, and (ii) any applicable PA PILOT Reduction. Landlord's
calculation of PILOT shall be binding, absent computational error.
(B) The number of Taxable Square Feet shall be
determined as follows:
(1) Within ten (10) Business Days after Landlord's
approval of the Final Plans and Specifications, Tenant shall cause an Architect
to submit to Landlord and Tenant an Architect's Certification, prepared by an
Architect approved by Landlord, which sets forth the number of Square Feet of
Discretionary Inside Mechanical Space represented by the Final Plans and
Specifications (it being agreed that such Architect's Certification shall be
deemed approved by Landlord unless disputed within ten (10) Business Days of
receipt thereof by Landlord). The form of the Architect's Certificate described
in this SECTION 3.1(a)(i)(B)(1) is set forth on EXHIBIT J attached hereto. The
Architect's Certification described in this SECTION 3.1(a)(i)(B)(1) shall assume
all space set forth on the Final Plans and Specifications is actually built. The
parties hereto agree that the initial number of Taxable Square Feet shall be
equal to the sum of: [a] the Discretionary Inside Mechanical Space (as
determined pursuant to this SECTION 3.1(a)(i)(B)(1)); and [b] 1,380,000.
(2) Upon the occurrence of each of the following
events [a] the Substantial Completion Date, and [b] the completion of any
Construction Work which would potentially cause a change in the number of
Taxable Square Feet, Tenant shall: [I] cause an Architect, approved (or deemed
approved) by Landlord pursuant to SECTION 6.1(d)(ii) hereof to submit an
Architect's Certification to Landlord and Tenant (it being agreed that such
Architect's Certification shall be deemed approved by Landlord unless disputed
within ten (10) Business Days of receipt thereof by Landlord) confirming that
the number of Square Feet earlier certified to pursuant to the Architect's