NYT » Topics » Recent Events

This excerpt taken from the NYT 10-Q filed May 5, 2005.

Recent Events


        On March 18, 2005, the Company acquired 100% of the outstanding common stock of About, Inc., a leading online consumer information provider. The purchase price was approximately $410 million and was funded through a combination of short-term and long-term debt. For the first quarter of 2005, the results of About.com have been included in the Company's Condensed Consolidated Financial Statements beginning March 19, 2005. The acquisition provides the Company with strategic benefits, including diversifying the Company's advertising base and extending its reach among Internet users. About.com is a separate reportable segment of the Company.


        On February 1, 2005, the Company acquired the North Bay Business Journal ("North Bay"), a weekly publication targeting business leaders in California's Sonoma, Napa and Marin counties, for approximately $3 million. For the first quarter of 2005, the results of North Bay have been included in the Company's Condensed Consolidated Financial Statements since the acquisition date. North Bay is included in the results of the News Media Group under the Regional Media Group.

        See Notes 2, 4 and 12 of the Notes to the Company's Condensed Consolidated Financial Statements for additional information regarding these acquisitions.

        On March 10, 2005, the Company invested $16.5 million to acquire a 49% interest in Metro Boston LLC ("Metro Boston"), which publishes a free daily newspaper catering to young professionals in the Greater Boston area. The investment in Metro Boston is being accounted for under the equity method, and therefore the investment and results of operations are included in "Investments in joint ventures" and "Net loss from joint ventures" in the Company's Condensed Consolidated Balance Sheet and Statement of Income.

        If any of the acquisitions and investment discussed above had occurred in the beginning of 2004, they would not have had a material impact on the Company's consolidated results of operations for the periods ended March 27, 2005, or March 28, 2004.

Sale of Assets

        In the first quarter of 2005, the Company recognized a $122.9 million gain from the sale of assets. The Company completed the sale of its current headquarters in New York City for $175.0 million and entered into a lease for the building with the purchaser/lessor through 2007, when it expects to occupy its new headquarters (see Note 13 of the Notes to the Company's Condensed Consolidated Financial Statements). This transaction has been accounted for as a sale-leaseback in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The sale resulted in a total pre-tax gain of $143.9 million, of which $114.5 million ($62.8 million after tax or $.43 per diluted share) was recognized in the first quarter of 2005. The remainder of the gain is being deferred and amortized over the lease term in accordance with GAAP. The lease requires the payment of rent over the lease term by the Company to the purchaser/lessor and will result in rent expense that will be offset by the amount of the gain being deferred and amortized. In addition, the Company sold property in Sarasota, Fla., which resulted in a pre-tax gain in the first quarter of 2005 of approximately $8.4 million ($5.0 million after tax or $.03 per diluted share).

Adoption of FAS 123-R

        In December 2004 the Financial Accounting Standards Board issued Financial Accounting Standards ("FAS") No. 123 (revised 2004), Share-Based Payment ("FAS 123-R"). FAS 123-R is a revision of FAS No. 123, as amended, Accounting for Stock-Based Compensation ("FAS 123") and supersedes Accounting Principles Board Opinion ("APB") No. 25, Accounting for Stock Issued to Employees. FAS 123-R eliminates the alternative to use the intrinsic value method of accounting that was provided in FAS 123, which generally resulted in no compensation expense recorded in the financial statements related to the issuance of equity awards to employees. FAS 123-R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. FAS 123-R establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all companies to apply a fair-value-based measurement method in accounting for generally all share-based payment transactions with employees.

        On December 27, 2004 (the first day of its 2005 fiscal year), the Company adopted FAS 123-R. While the provisions of FAS 123-R are not effective until the first annual reporting period that begins after June 15, 2005, the Company elected to adopt FAS 123-R before the required effective date. The Company adopted FAS 123-R using a modified prospective application, as permitted under FAS 123-R.


Accordingly, prior period amounts have not been restated. Under this application, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption.

        Prior to the adoption of FAS 123-R, the Company applied APB 25 to account for its stock-based awards. Under APB 25, the Company generally only recorded stock-based compensation expense related to restricted stock which amounted to $0.8 million ($0.5 million after tax) in the first quarter of 2004. Under the provisions of APB 25, the Company was not required to recognize compensation expense for the cost of stock options or shares issued under the Company's Employee Stock Purchase Plan ("ESPP"). Beginning with its 2005 fiscal year, with the adoption of FAS 123-R, the Company recorded stock-based compensation expense for the cost of stock options, restricted stock and shares issued under the ESPP. Stock-based compensation expense in the first quarter of 2005 was $6.3 million ($4.6 million after tax or $.03 per basic and diluted share).

        See Note 3 of the Notes of the Company's Condensed Consolidated Financial Statements for additional information regarding the adoption of FAS 123-R.

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