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Press release from Business Wire

The New York Times Company Reports 2012 Fourth-Quarter and Full-Year Results

Thursday, February 07, 2013

The New York Times Company Reports 2012 Fourth-Quarter and Full-Year Results08:30 EST Thursday, February 07, 2013 NEW YORK (Business Wire) -- The New York Times Company (NYSE: NYT) announced today fourth-quarter 2012 diluted earnings per share from continuing operations increased to $.76 from $.34 in the same period of 2011, largely due to the special items discussed below. Excluding severance and special items, diluted earnings per share from continuing operations decreased to $.32 in the fourth quarter of 2012 from $.39 in the fourth quarter of 2011. The decrease was due principally to a higher effective tax rate applicable in the fourth quarter of 2012 after the exclusion of severance and special items. The Company had operating profit of $44.0 million in the fourth quarter of 2012 compared with $90.8 million in the same period of 2011. Excluding depreciation, amortization, severance and the special items discussed below, operating profit was $124.5 million in the fourth quarter of 2012 compared with $126.8 million in the fourth quarter of 2011. “2012 showed both the opportunities and challenges we face as a company,” said Mark Thompson, president and chief executive officer. “We saw continued strong growth in digital subscriptions as well as increased revenue from our large print circulation base. Indeed, for the first time in our history, annual circulation revenues surpassed those from advertising. Our pay model continued to prove itself, with approximately 668,000 paid digital subscriptions across the Company at quarter end, up 13 percent from the end of the third quarter. “The demonstrated willingness of users here and around the world to pay for the high quality journalism for which The New York Times and the Company's other titles are renowned will be a key building block in the strategy for growth, which we are currently developing and which I will have much more to say about later in the year. “By contrast, the advertising environment remained challenging in the fourth quarter, with advertising revenue trends similar to third-quarter levels. “We continued to improve our liquidity position in the fourth quarter. In addition to steady cash flow from operations, our balance sheet was further strengthened by the sales of the About Group and our ownership interest in Indeed.com, as we sharpened our focus on our core brands. All in, we ended 2012 with approximately $955 million in cash and short-term investments, even after making pension contributions and debt payments totaling about $188 million during the fourth quarter. At year end, our total cash position exceeded total debt and capital lease obligations by approximately $258 million.” Comparisons Unless otherwise noted, all comparisons are for the fourth quarter of 2012 to the fourth quarter of 2011. The results of the Regional Media Group, which was sold in the first quarter of 2012, and the results of the About Group, which was sold in the fourth quarter of 2012, are reported within discontinued operations for all periods presented. Because of the Company's fiscal calendar, the 2012 fourth quarter and year included an additional week (14 weeks and 53 weeks) compared with the 2011 fourth quarter and year (13 weeks and 52 weeks). A reconciliation of revenues, excluding the estimated effect of the additional week, to revenues including the additional week, is included in the exhibits to this release. This release includes other non-GAAP financial measures, a discussion of management's reasons for the presentation of these non-GAAP financial measures and reconciliations to the most comparable GAAP financial measures. The fourth-quarter 2012 results included the following special items: A $164.6 million ($102.4 million after tax or $.66 per share) gain on the sale of the Company's ownership interest in Indeed.com, a search engine for jobs. A $48.7 million ($28.3 million after tax or $.18 per share) non-cash settlement charge in connection with the Company's immediate pension benefit offer to certain former employees. A $2.6 million ($1.5 million after tax or $.01 per share) charge in connection with a legal settlement. The fourth-quarter 2011 results included the following special item: A $4.5 million ($2.6 million after tax or $.02 per share) charge for a retirement and consulting agreement in connection with the retirement of the Company's former chief executive officer at the end of 2011. In addition, the Company had severance costs of $7.9 million ($4.4 million after tax or $.03 per share) and $7.9 million ($4.7 million after tax or $.03 per share) in the fourth quarters of 2012 and 2011, respectively. Sale of About Group – Discontinued Operations On September 24, 2012, the first day of the fiscal fourth quarter, the Company completed the sale of the About Group for $300 million in cash, plus a net working capital adjustment of approximately $17 million. As a result of the sale, the Company recorded a gain of $96.7 million ($61.9 million after tax) in the fourth quarter of 2012. The net after-tax proceeds from the sale were approximately $291 million. Fourth-Quarter Results from Continuing OperationsRevenues Total revenues increased 5.2 percent to $575.8 million from $547.4 million. Advertising revenues decreased 3.1 percent, while circulation and other revenues increased 16.1 percent and 4.8 percent, respectively. Excluding the additional week, estimated total revenues decreased 0.7 percent, with advertising revenues down 8.3 percent and circulation and other revenues up 8.6 percent and 2.1 percent, respectively. Print advertising revenues decreased 5.6 percent and digital advertising revenues rose 5.1 percent. Excluding the additional week, estimated print and digital advertising revenues decreased 10.2 percent and 1.7 percent, respectively, largely due to the uneven economic environment, ongoing secular trends and an increasingly complex and fragmented digital advertising marketplace. Circulation revenues rose mainly as growth in digital subscriptions and the increase in print circulation prices in the first half of 2012 at The New York Times and The Boston Globe offset a decline in print copies sold. Operating Costs Operating costs increased 6.3 percent to $480.5 million from $452.1 million. Excluding depreciation, amortization and severance, operating costs increased 7.3 percent to $451.3 million from $420.6 million. In addition to the effect of the additional week, costs rose mainly due to higher promotion costs, benefits expense and various other costs, offset in part by lower compensation costs, including stock-based compensation, and raw materials expense. Other DataDigital Digital businesses principally include NYTimes.com, BostonGlobe.com and Boston.com. In the fourth quarter of 2012, digital advertising revenues increased 5.1 percent to $69.0 million from $65.7 million. For the full year of 2012, digital advertising revenues increased 0.2 percent to $214.8 million from $214.5 million in 2011. Excluding the additional week, estimated digital advertising revenues decreased 1.7 percent in the fourth quarter and 1.9 percent for the full year of 2012. Digital advertising revenues as a percentage of total Company advertising revenues were 24.7 percent in the fourth quarter of 2012 compared with 22.7 percent in the fourth quarter of 2011. For the full year, digital advertising revenues as a percentage of total Company advertising revenues were 23.9 percent in 2012 compared with 22.5 percent in 2011. Paid subscribers to The New York Times and the International Herald Tribune digital subscription packages, e-readers and replica editions totaled approximately 640,000 as of the end of the fourth quarter of 2012, an increase of approximately 13 percent since the end of the third quarter of 2012. Paid digital subscribers to BostonGlobe.com and The Boston Globe's e-readers and replica editions totaled approximately 28,000 as of the end of the fourth quarter of 2012, up approximately 8 percent since the end of the third quarter of 2012. Joint Ventures Income from joint ventures decreased to $0.9 million from $4.1 million largely because of the divestiture of the Company's ownership interest in Fenway Sports Group in the first half of 2012, coupled with lower results for the paper mills in which the Company has an investment. Interest Expense, net Interest expense, net increased to $16.4 million from $15.5 million mainly due to charges related to the termination of the Company's revolving credit facility and the repurchase of $5.9 million principal amount of the Company's 5.0 percent senior notes due March 15, 2015, offset by lower interest expense due to the Company's payment at maturity on September 26, 2012 of all $75 million aggregate principal amount of the Company's 4.610 percent senior notes. Income Taxes The Company had income tax expense of $75.8 million (effective tax rate of 39.2 percent) in the fourth quarter and $103.5 million (effective tax rate of 39.3 percent) for the full year of 2012. The Company's effective tax rate in the fourth quarter of 2012 was favorably affected by a lower income tax rate on the sale of the Company's ownership interest in Indeed.com. The Company had income tax expense of $28.4 million (effective tax rate of 35.8 percent) in the fourth quarter and $31.9 million (effective tax rate of 38.4 percent) for the full year of 2011. Excluding severance and special items, the Company's effective tax rate was 43.9 percent in the fourth quarter of 2012 compared with 36.5 percent in the fourth quarter of 2011. The 36.5 percent tax rate in the 2011 fourth quarter was favorably affected by the reversal of reserves for uncertain tax positions due to the lapse of applicable statutes of limitations. Liquidity The following table details the original maturities and carrying values of the Company's debt and capital lease obligations as of December 30, 2012. (in thousands)   December 30, 2012 2015           5.0% senior notes   $ 244,100 2016 6.625% senior notes 225,000 2019           Option to repurchase ownership interest in headquarters building   250,000   Total   $ 719,100 Less: Unamortized amounts   (29,045 ) Carrying value of debt $ 690,055 Capital lease obligations   7,023   Total debt and capital lease obligations   $ 697,078     At the end of 2012, cash and short-term investments were approximately $955 million (excluding restricted cash of approximately $24 million that is subject to certain collateral requirements). As a result, the Company's cash and short-term investments exceeded total debt and capital lease obligations by approximately $258 million. The Company believes this provides a useful measure of its liquidity and overall debt position. In the fourth quarter of 2012, the Company's cash and short-term investments improved by more than $340 million from the third quarter of 2012, in large part due to proceeds from the sales of the About Group and the Company's ownership interest in Indeed.com. During the fourth quarter, the Company also repaid in full the $75 million 4.610 percent senior notes that matured on September 26, 2012, repurchased $5.9 million principal amount of the 5.0 percent senior notes due March 15, 2015, and terminated its $125 million asset-backed revolving credit facility. In early October 2012, Indeed.com, in which the Company had an ownership interest, was sold. The pre-tax proceeds from the sale of the Company's interest were approximately $167 million and the net after-tax proceeds were approximately $104 million. Capital Expenditures Capital expenditures totaled approximately $6 million in the fourth quarter and approximately $26 million in 2012. Pension Obligations As part of the Company's ongoing strategy to reduce its pension obligations and the resulting volatility of the Company's overall financial condition, in September 2012, it offered certain former employees who participate in The New York Times Companies Pension Plan the option to receive a one-time lump sum payment equal to the present value of the participant's pension benefit or to commence an immediate monthly annuity. As a result, the Company recorded a non-cash settlement charge of $48.7 million in connection with the lump sum payments made in the fourth quarter of 2012, which totaled approximately $112 million. These lump sum distributions were made with existing assets of The New York Times Companies Pension Plan and not with Company cash. For accounting purposes on a GAAP basis, based on preliminary results, the underfunded status of the Company's qualified pension plans as of December 30, 2012, was approximately $396 million.While the funded status of the Company's qualified pension plans was negatively affected by the decline in interest rates, that decline was more than offset by contributions, the lump-sum offer and solid returns in pension asset performance. The Company made contributions of approximately $107 million in the fourth quarter and approximately $144 million for the full year of 2012 to certain qualified pension plans. The majority of these contributions were discretionary. In January 2013, the Company made a contribution of approximately $57 million to The New York Times Newspaper Guild pension plan, of which $20 million was necessary to satisfy minimum funding requirements in 2013. For the full year 2013, the Company expects mandatory contributions to other qualified pension plans to raise total contributions to approximately $71 million. The Company will continue to evaluate whether to make additional discretionary contributions in 2013 to its qualified pension plans based on cash flows, pension asset performance, interest rates and other factors. Outlook Total advertising revenue trends in the first quarter of 2013 are expected to be similar to the level experienced in the fourth quarter of 2012 on a 13-week basis. Total circulation revenues are projected to increase in the mid-single digits in the first quarter of 2013 because the Company expects to benefit from its digital subscription initiatives as well as from the print circulation price increase at The New York Times implemented in the first quarter of 2013. The Company expects first-quarter operating costs to decrease in the low- to mid-single digits largely because it is cycling against approximately $7 million in accelerated depreciation in the first quarter of 2012. Operating costs, excluding depreciation, amortization and severance, are expected to decrease in the low-single digits compared with the same period last year. In addition, the Company expects the following on a pre-tax basis in 2013: Results from joint ventures: loss of $1 to $5 million, Depreciation and amortization: $90 to $95 million, Interest expense, net: $55 to $60 million, and Capital expenditures: $40 to $50 million. Conference Call Information The Company's fourth-quarter 2012 earnings conference call will be held on Thursday, February 7, at 11:00 a.m. E.T. To access the call, dial 888-233-8011 (in the U.S.) and 913-312-1450 (international callers). Participants should dial into the conference call approximately 10 minutes before the start time. Online listeners can link to the live webcast at www.nytco.com/investors. An archive of the webcast will be available beginning two hours after the call at www.nytco.com/investors. The archive will be available for approximately three months. An audio replay will be available at 888-203-1112 (in the U.S.) and 719-457-0820 (international callers) beginning approximately two hours after the call until 5 p.m. E.T. on Friday, February 8. The access code is 4856442. Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those predicted by such forward-looking statements. These risks and uncertainties include national and local conditions, as well as competition, that could influence the levels (rate and volume) of national, retail and classified advertising and circulation generated by our various markets, material increases in newsprint prices and the development of our digital businesses. They also include other risks detailed from time to time in the Company's publicly filed documents, including the Company's Annual Report on Form 10-K for the year ended December 25, 2011. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The New York Times Company, a leading global, multimedia news and information company with 2012 revenues of $2.0 billion, includes The New York Times, the International Herald Tribune, The Boston Globe, NYTimes.com, BostonGlobe.com, Boston.com and related properties. The Company's core purpose is to enhance society by creating, collecting and distributing high-quality news and information. This press release can be downloaded from www.nytco.com     Exhibits: Condensed Consolidated Statements of Operations Revenues by Operating Segment Advertising Revenues by Category Footnotes Reconciliation of Non-GAAP Information     THE NEW YORK TIMES COMPANYCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Dollars and shares in thousands, except per share data)           Fourth Quarter   Full Year2012   2011   % Change2012   2011   % Change (14 weeks) (13 weeks) (53 weeks) (52 weeks) Revenues Advertising $ 279,975 $ 289,039 -3.1% $ 898,078 $ 954,531 -5.9% Circulation 257,816 222,065 16.1% 952,968 862,982 10.4% Other(a) 38,027   36,291   4.8% 139,034   135,117   2.9% Total revenues 575,818 547,395 5.2% 1,990,080 1,952,630 1.9% Operating costs Production costs 224,110 206,920 8.3% 832,228 810,569 2.7% Selling, general and administrative costs 235,114 221,501 6.1% 901,405 886,232 1.7% Depreciation and amortization(b) 21,237   23,660   -10.2% 96,758   94,224   2.7% Total operating costs 480,461 452,081 6.3% 1,830,391 1,791,025 2.2% Pension settlement expense(c) 48,729 — N/A 48,729 — N/A Other expense(d) 2,620 4,500 -41.8% 2,620 4,500 -41.8% Write-down of assets(e) — — N/A — 9,225 N/A Pension withdrawal expense(f) —   —   N/A —   4,228   N/A Operating profit 44,008 90,814 -51.5% 108,340 143,652 -24.6% Gain on sale of investments(g) 164,630 — N/A 220,275 71,171 * Write-down of investments(h) — — N/A 5,500 — N/A Income from joint ventures 927 4,054 -77.1% 3,004 28 * Premium on debt redemption(i) — — N/A — 46,381 N/A Interest expense, net 16,402   15,461   6.1% 62,815   85,243   -26.3% Income from continuing operations before income taxes 193,163 79,407 * 263,304 83,227 * Income tax expense 75,775   28,423   * 103,482   31,932   * Income from continuing operations 117,388 50,984 * 159,822 51,295 * Income/(loss) from discontinued operations, netof income taxes(j) 59,789   7,921   * (26,483 ) (91,519 ) -71.1% Net income/(loss) 177,177 58,905 * 133,339 (40,224 ) * Net (income)/loss attributable to the noncontrolling interest (267 ) 40   * (166 ) 555   * Net income/(loss) attributable to The New YorkTimes Company common stockholders $ 176,910   $ 58,945   * $ 133,173   $ (39,669 ) *   Amounts attributable to The New York TimesCompany common stockholders: Income from continuing operations $ 117,121 $ 51,024 * $ 159,656 $ 51,850 * Income/(loss) from discontinued operations, net of income taxes 59,789   7,921   * (26,483 ) (91,519 ) -71.1% Net income/(loss) $ 176,910   $ 58,945   * $ 133,173   $ (39,669 ) *   Average number of common shares outstanding: Basic 148,461 147,451 0.7% 148,147 147,190 0.7% Diluted 154,685 149,887 3.2% 152,693 152,007 0.5%   Basic earnings/(loss) per share attributable toThe New York Times Company common stockholders: Income from continuing operations $ 0.79 $ 0.35 * $ 1.08 $ 0.35 * Income/(loss) from discontinued operations, net of income taxes 0.40   0.05   * (0.18 ) (0.62 ) -71.0% Net income/(loss) $ 1.19   $ 0.40   * $ 0.90   $ (0.27 ) *   Diluted earnings/(loss) per share attributable toThe New York Times Company common stockholders: Income from continuing operations $ 0.76 $ 0.34 * $ 1.04 $ 0.34 * Income/(loss) from discontinued operations, net of income taxes 0.38   0.05   * (0.17 ) (0.60 ) -71.7% Net income/(loss) $ 1.14   $ 0.39   * $ 0.87   $ (0.26 ) *   * Represents an increase or decrease in excess of 100%.   See footnotes page for additional information.     THE NEW YORK TIMES COMPANYREVENUES BY OPERATING SEGMENT AND ADVERTISING REVENUES BY CATEGORY(Dollars in thousands)                               2012     % Change         % ChangeFourth Quartervs. 2011Full Yearvs. 2011 (14 weeks) (53 weeks) The New York Times Media Group Advertising $ 226,461 -3.5% $ 711,829 -5.9% Circulation 216,123 18.1% 795,037 12.7% Other 25,531   1.1% 88,475   -5.1% Total $ 468,115   5.7% $ 1,595,341   2.6%   New England Media Group Advertising $ 53,514 -1.6% $ 186,249 -6.1% Circulation 41,693 6.8% 157,931 0.1% Other 12,496   13.3% 50,559   20.8% Total $ 107,703   3.1% $ 394,739   -0.8%   Total Company Advertising $ 279,975 -3.1% $ 898,078 -5.9% Circulation 257,816 16.1% 952,968 10.4% Other(a) 38,027   4.8% 139,034   2.9% Total $ 575,818   5.2% $ 1,990,080   1.9%                           See footnotes page for additional information.             2012% Change% ChangeFourth Quartervs. 2011Full Yearvs. 2011 (14 weeks) (53 weeks) National $ 190,663 -3.4% $ 601,630 -5.9% Retail 52,602 -2.9% 153,217 -3.8% Classified: Help-Wanted 6,343 -4.0% 26,781 -2.5% Real Estate 9,567 -10.9% 39,057 -16.2% Automotive 5,958 9.4% 23,057 -2.5% Other 7,469   -1.3% 28,780   -6.5% Total Classified 29,337 -3.4% 117,675 -8.4% Other 7,373   2.0% 25,556   -5.8% Total Company $ 279,975   -3.1% $ 898,078   -5.9%     THE NEW YORK TIMES COMPANYFOOTNOTES(Dollars in thousands)   (a) Other revenues consist primarily of revenues from news services/syndication, commercial printing and distribution, rental income, digital archives and direct mail advertising services.   (b) Includes $6.7 million of accelerated depreciation expense in the first quarter of 2012 for certain assets at the Worcester Telegram & Gazette's facility in Millbury, Mass., associated with the consolidation of most of its printing into The Boston Globe's facility in Boston, Mass., in the second quarter of 2012.   (c) In the fourth quarter of 2012, the Company recorded a $48.7 million non-cash settlement charge in connection with the Company's immediate pension benefit offer to certain former employees.   (d) In the fourth quarter of 2012, the Company recorded a $2.6 million charge in connection with a legal settlement. In the fourth quarter of 2011, the Company recorded a $4.5 million charge for a retirement and consulting agreement in connection with the retirement of the Company's former chief executive officer at the end of 2011.   (e) In the second quarter of 2011, the Company recorded a $9.2 million non-cash charge for the write-down of certain assets held for sale.   (f) In the second quarter of 2011, the Company recorded a $4.2 million charge for a pension withdrawal obligation under a multiemployer pension plan at The Boston Globe.   (g) In the fourth quarter of 2012, the Company recorded a $164.6 million gain on the sale of its ownership interest in Indeed.com, a search engine for jobs. In the second quarter of 2012, the Company recorded a $37.8 million gain on the sale of its remaining 210 units in Fenway Sports Group. In the first quarter of 2012, the Company recorded a $17.8 million gain on the sale of 100 of its units in Fenway Sports Group.   In the third quarter of 2011, the Company recorded a $65.3 million gain on the sale of 390 of its units in Fenway Sports Group. In the first quarter of 2011, the Company recorded a $5.9 million gain on the sale of a portion of the Company's ownership interest in Indeed.com.   (h) In the first and third quarters of 2012, the Company recorded a $4.9 million and $0.6 million non-cash charge, respectively, for the write-down of certain investments.   (i) In the third quarter of 2011, the Company recorded a $46.4 million charge in connection with the prepayment of its $250 million 14.053% notes.   (j) On September 24, 2012, the Company completed the sale of the About Group, consisting of About.com, ConsumerSearch.com, CalorieCount.com and related businesses. The results of the About Group have been classified as discontinued operations for all periods presented.   On January 6, 2012, the Company completed the sale of its Regional Media Group, consisting of 16 regional newspapers, other print publications and related businesses. The results of the Regional Media Group have been classified as discontinued operations for all periods presented.   The following tables summarize the results of operations presented as discontinued operations for both the About Group and the Regional Media Group:       Fourth Quarter2012       2011       Regional             Regional       AboutMediaAboutMediaGroupGroupTotalGroupGroupTotal Revenues $ — $ — $ — $ 26,116 $ 69,449 $ 95,565 Total operating costs — — — 17,809 58,789 76,598 Write-down of assets —   —   —   3,116   —   3,116 Pre-tax income — — — 5,191 10,660 15,851 Income tax expense —   —   —   1,994   5,936   7,930 Income from discontinued operations, net of income taxes — — — 3,197 4,724 7,921 Gain/(loss) on sale, net of income taxes: Gain/(loss) on sale 96,675 (724 ) 95,951 — — — Income tax expense 34,785   1,377   36,162   —   —   — Gain/(loss) on sale, net of income taxes 61,890   (2,101 ) 59,789   —   —   — Income/(loss) from discontinued operations, net of income taxes $ 61,890   $ (2,101 ) $ 59,789   $ 3,197   $ 4,724   $ 7,921     THE NEW YORK TIMES COMPANYFOOTNOTES (continued)(Dollars in thousands)                                   Full Year20122011RegionalRegionalAboutMediaAboutMediaGroupGroupTotalGroupGroupTotal Revenues $ 74,970 $ 6,115 $ 81,085 $ 110,826 $ 259,945 $ 370,771 Total operating costs 51,140 8,017 59,157 67,475 235,032 302,507 Write-down of assets 194,732   —   194,732   3,116   152,093   155,209   Pre-tax (loss)/income (170,902 ) (1,902 ) (172,804 ) 40,235 (127,180 ) (86,945 ) Income tax (benefit)/expense (60,065 ) (736 ) (60,801 ) 15,453   (10,879 ) 4,574   (Loss)/income from discontinued operations, net of income taxes (110,837 ) (1,166 ) (112,003 ) 24,782 (116,301 ) (91,519 ) Gain/(loss) on sale, net of income taxes: Gain/(loss) on sale 96,675 (5,441 ) 91,234 — — — Income tax expense/(benefit) 34,785   (29,071 ) * 5,714   —   —   —   Gain on sale, net of income taxes 61,890   23,630   85,520   —   —   —   (Loss)/income from discontinued operations, net of income taxes $ (48,947 ) $ 22,464   $ (26,483 ) $ 24,782   $ (116,301 ) $ (91,519 ) *Tax benefit is primarily due to a tax deduction for goodwill, which was previously non-deductible, triggered upon the sale of the Regional Media Group.     THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP INFORMATION     In this release, the Company has included non-GAAP financial information with respect to diluted earnings per share from continuing operations excluding severance and special items; operating profit before depreciation, amortization, severance and special items (if any); operating costs before depreciation, amortization, severance and raw materials; revenues excluding the estimated effect of the additional week in the 2012 fiscal calendar; and the effective tax rate on income from continuing operations excluding severance and special items. The Company has included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of the Company's operations. In addition, because the Company's 2012 fiscal fourth quarter and year included an additional week (14 weeks and 53 weeks) compared with the 2011 fiscal fourth quarter and year (13 weeks and 52 weeks), the Company has disclosed revenues excluding the estimated effect of the additional week in 2012. Management believes that, for the reasons outlined below, these non-GAAP financial measures provide useful information to investors as a supplement to reported diluted earnings/(loss) per share from continuing operations, operating profit/(loss), operating costs, revenues and the effective tax rate. However, these measures should be evaluated only in conjunction with the comparable GAAP financial measures and should not be viewed as alternative or superior measures of GAAP results.   Diluted earnings/(loss) per share from continuing operations excluding severance and special items provide useful information in evaluating the Company's period-to-period performance because it eliminates items that the Company does not consider to be indicative of earnings from ongoing operating activities. Operating profit/(loss) before depreciation, amortization, severance and special items (if any) is useful in evaluating the Company's ongoing performance of its businesses as it excludes the significant non-cash impact of depreciation and amortization as well as items not indicative of ongoing operating activities. Total operating costs include depreciation, amortization, severance and raw materials. Total operating costs excluding these items provide investors with helpful supplemental information on the Company's underlying operating costs that is used by management in its financial and operational decision-making. The effective tax rate on income from continuing operations excluding severance and special items provides investors with helpful supplemental information in evaluating the Company's period-to-period diluted earnings per share excluding severance and special items, by highlighting the relative impact of the tax rates on this measure in 2012 and 2011.   Reconciliations of these non-GAAP financial measures from, respectively, diluted earnings/(loss) per share from continuing operations, operating profit, operating costs, revenues and the effective tax rate on income from continuing operations, the most directly comparable GAAP items, are set out in the tables below. Reconciliation of diluted earnings per share from continuing operations excluding severance and special items                         Fourth QuarterFull Year2012       2011       % Change20122011% Change Diluted earnings per share from continuing operations $     0.76 $     0.34 * $     1.04 $   0.34 * Add: Severance 0.03 0.03 0.07 0.04 Special items: Accelerated depreciation — — 0.02 — Pension settlement expense 0.18 — 0.18 — Other expense 0.01 0.02 0.01 0.02 Write-down of assets — — — 0.04 Pension withdrawal expense — — — 0.02 Gain on sale of investments (0.66 ) — (0.87 ) (0.27 ) Write-down of investments — — 0.02 — Premium on debt redemption —   —     —   0.18     Diluted earnings per share from continuing operations excluding severance and special items $     0.32   $     0.39   -17.9% $     0.47   $   0.37   27.0%   * Represents an increase in excess of 100%.     THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP INFORMATION (continued)(Dollars in thousands)                         Reconciliation of operating profit before depreciation & amortization, severance and special items   Fourth QuarterFull Year20122011% Change20122011% Change (14 weeks) (13 weeks) (53 weeks) (52 weeks) Operating profit $ 44,008 $ 90,814 -51.5% $ 108,340 $ 143,652 -24.6 % Add: Depreciation & amortization 21,237 23,660 96,758 94,224 Severance 7,923 7,853 18,051 12,852 Special items: Pension settlement expense 48,729 — 48,729 — Other expense 2,620 4,500 2,620 4,500 Write-down of assets — — — 9,225 Pension withdrawal expense —   —     —   4,228       Operating profit before depreciation & amortization, severance and special items $ 124,517   $ 126,827   -1.8% $ 274,498   $ 268,681   2.2 %     Reconciliation of operating costs before depreciation & amortization, severance and raw materials   Fourth QuarterFull Year   20122011% Change20122011% Change   (14 weeks) (13 weeks) (53 weeks) (52 weeks) Operating costs $ 480,461 $ 452,081 6.3% $ 1,830,391 $ 1,791,025 2.2 % Less: Depreciation & amortization 21,237 23,660 96,758 94,224 Severance 7,923   7,853     18,051   12,852       Operating costs before depreciation & amortization and severance 451,301 420,568 7.3% 1,715,582 1,683,949 1.9 % Less: Raw materials 37,975   37,525     136,526   138,622       Operating costs before depreciation & amortization, severance and raw materials $ 413,326   $ 383,043   7.9% $ 1,579,056   $ 1,545,327   2.2 %     THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP INFORMATION (continued)(Dollars in thousands)                   Reconciliation of revenues excluding the estimated effect of the additional week       Fourth Quarter2012       Additional2012As ReportedWeekAdjusted2011% ChangeTotal Company (14 weeks) (13 weeks) (13 weeks) Advertising: Print $ 210,949 $ (10,422 ) $ 200,527 $ 223,352 -10.2% Digital 69,026   (4,435 ) 64,591   65,687   -1.7% Total advertising 279,975 (14,857 ) 265,118 289,039 -8.3% Circulation 257,816 (16,704 ) 241,112 222,065 8.6% Other 38,027   (964 ) 37,063   36,291   2.1% Total revenues $ 575,818   $ (32,525 ) $ 543,293   $ 547,395   -0.7%   The New York Times Media Group Advertising $ 226,461 $ (11,613 ) $ 214,848 $ 234,660 -8.4% Circulation 216,123 (13,903 ) 202,220 183,032 10.5% Other 25,531   (326 ) 25,205   25,260   -0.2% Total revenues $ 468,115   $ (25,842 ) $ 442,273   $ 442,952   -0.2%   New England Media Group Advertising $ 53,514 $ (3,244 ) $ 50,270 $ 54,379 -7.6% Circulation 41,693 (2,801 ) 38,892 39,033 -0.4% Other 12,496   (638 ) 11,858   11,031   7.5% Total revenues $ 107,703   $ (6,683 ) $ 101,020   $ 104,443   -3.3%   Full Year2012Additional2012As ReportedWeekAdjusted2011% ChangeTotal Company (53 weeks) (52 weeks) (52 weeks) Advertising: Print $ 683,306 $ (10,422 ) $ 672,884 $ 740,081 -9.1% Digital 214,772   (4,435 ) 210,337   214,450   -1.9% Total advertising 898,078 (14,857 ) 883,221 954,531 -7.5% Circulation 952,968 (16,704 ) 936,264 862,982 8.5% Other 139,034   (964 ) 138,070   135,117   2.2% Total revenues $ 1,990,080   $ (32,525 ) $ 1,957,555   $ 1,952,630   0.3%   The New York Times Media Group Advertising $ 711,829 $ (11,613 ) $ 700,216 $ 756,148 -7.4% Circulation 795,037 (13,903 ) 781,134 705,163 10.8% Other 88,475   (326 ) 88,149   93,263   -5.5% Total revenues $ 1,595,341   $ (25,842 ) $ 1,569,499   $ 1,554,574   1.0%   New England Media Group Advertising $ 186,249 $ (3,244 ) $ 183,005 $ 198,383 -7.8% Circulation 157,931 (2,801 ) 155,130 157,819 -1.7% Other 50,559   (638 ) 49,921   41,854   19.3% Total revenues $ 394,739   $ (6,683 ) $ 388,056   $ 398,056   -2.5%     THE NEW YORK TIMES COMPANYRECONCILIATION OF NON-GAAP INFORMATION (continued)(Dollars in thousands)       Reconciliation of effective tax rate on income from continuing operations excluding severance and special items         2012   2011Pre-     After   EffectivePre-AfterEffectiveTaxTaxTaxTax RateTaxTaxTaxTax Rate Income from continuing operations $   193,163 $   75,775 $   117,388 39.2 % $   79,407 $   28,423 $   50,984 35.8 % Add: Severance 7,923 3,525 4,398 7,853 3,184 4,669 Special items: Pension settlement expense 48,729 20,413 28,316 — — — Other expense 2,620 1,098 1,522 4,500 1,883 2,617 Gain on sale of investment (164,630 ) (62,230 ) (102,400 )   —   —   —       Income from continuing operations excluding severance and special items $   87,805   $   38,581   $   49,224   43.9 % $   91,760   $   33,490   $   58,270   36.5 %   The New York Times CompanyFor Media:Abbe Serphos, 212-556-4425serphos@nytimes.comorFor Investors:Paula Schwartz, 212-556-5224paula.schwartz@nytimes.comorAndrea Passalacqua, 212-556-7354andrea.passalacqua@nytimes.com