NEW YORK TIMES CO (NYT) FY 2021 MD&A

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated financial condition as of December 26, 2021, and results of operations for the three years ended December 26, 2021. Please read this item together with our Consolidated Financial Statements and the related Notes included in this Annual Report. Given the impact of the Covid-19 pandemic on our business in 2020, we believe that certain comparisons of our operating results in 2021 to 2019 provide useful context for our 2021 results. We have included supplemental disclosures and discussion comparing the operating results in 2021 to the 2019 results. We have omitted discussion of 2019 results where it would be redundant to the discussion previously included in Part II, Item 7, of our 2020 Annual Report on Form 10-K, filed with the SEC on February 25, 2021, which is incorporated herein by reference.

Significant components of the management’s discussion and analysis of results of operations and financial condition section include:

EXECUTIVE OVERVIEW

We are a global media organization that includes our digital and print products and related businesses. On February 1, 2022, subsequent to our fiscal year end, we completed the acquisition of The Athletic for an all-cash purchase price of $550 million, subject to customary closing adjustments. The purchase price was financed from cash on hand. See Note 19 of the Notes to the Consolidated Financial Statements for additional information related to this acquisition.

We generate revenues principally from subscriptions and advertising. Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as our Games, Cooking, Audm and Wirecutter products) and single-copy and bulk sales of our print products. Advertising revenue is derived from the sale of our advertising products and services. Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company Headquarters, retail commerce, television and film, our student subscription sponsorship program and our live events business.

Our main operating costs are employee-related costs.

In the accompanying analysis of financial information, we present certain information derived from our consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-

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operating retirement costs and certain identified special items, as applicable. These non-GAAP financial measures should not be considered in isolation from or as a substitute for the related GAAP measures and should be read in conjunction with financial information presented on a GAAP basis. For further information and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures, see “— Results of Operations — Non-GAAP Financial Measures.”

We believe that a number of factors and industry trends have presented, and will continue to, present risks and challenges to our business. For a detailed discussion of certain factors that could affect our business, results of operations and financial condition, see “Item 1A — Risk Factors.”

2021 Financial Highlights

•In 2021, diluted earnings per share from continuing operations were $1.31, compared with $0.60 for 2020. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below (or “adjusted diluted earnings per share from continuing operations,” a non-GAAP measure) were $1.28 for 2021, compared with $0.97 for 2020.

•Operating profit increased 52.1% to $268.0 million in 2021 from $176.3 million in 2020. Operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items discussed below (or “adjusted operating profit,” a non-GAAP measure) increased 33.8% to $335.4 million in 2021 from $250.6 million in 2020.

•Total revenues increased 16.3% to $2.07 billion in 2021 from $1.78 billion in 2020.

•Total subscription revenues increased 13.9% to $1.36 billion in 2021 from $1.20 billion in 2020. Paid digital-only subscriptions totaled approximately 8,005,000 at the end of 2021, a net increase of 1,273,000 compared with the end of 2020. Of the 1,273,000 total net additions, 735,000 came from the Company’s digital news product, while 538,000 came from the Company’s Cooking, Games, Audm and Wirecutter (to which a subscription option was launched during the third quarter of 2021) products (“other digital-only products”). Subscribers totaled approximately 7.6 million.

•Total advertising revenues increased 26.8% to $497.5 million in 2021 from $392.4 million in 2020, due to an increase of 35.0% in digital advertising revenues and an increase of 15.3% in print advertising revenues.

•Operating costs increased 12.2% to $1.80 billion in 2021 from $1.61 billion in 2020. Operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or “adjusted operating costs,” a non-GAAP measure) increased 13.5% to $1.74 billion in 2021 from $1.53 billion in 2020.

Impact of Covid-19 Pandemic

The global Covid-19 pandemic continues to have widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets and business practices. The pandemic, efforts to contain it and the resulting disruptions have impacted our business in various ways, and there is substantial uncertainty as to the nature and degree of the continued effects of the pandemic over time.

For example, during 2020, we experienced significant growth in the number of subscriptions to our digital news and other products, which we believe was attributable in part to an increase in traffic given the news environment and as a result of the pandemic. The rate of digital subscription growth moderated in 2021, although it was our second-best year for net subscription additions, and we do not expect the 2020 growth rate to be indicative of results for future periods. In addition, revenues from the single-copy and bulk sales of our print newspaper (which include our international edition and collectively represent less than 5% of our total subscription revenues) were adversely affected as a result of continued increased levels of remote working and reductions in travel.

The worldwide economic slowdown caused by the pandemic led to a significant decline in our advertising revenues in 2020 as advertisers reduced their spending. While we experienced significantly increased demand for advertising in 2021, particularly with respect to digital advertising as the broader advertising market recovered, there is no assurance that this recovery will be sustained, and developments related to the pandemic such as global supply chain disruptions and labor shortages, among others, could adversely impact our advertising revenues in the future if our advertisers were to reduce their advertising spend as a result. In addition, the pandemic and attempts to contain

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it have resulted in the postponement and cancellation of live events, and while this impact moderated in 2021, this continues to adversely affect our revenues from live events and related services.

In 2020 our expenses in certain areas decreased as a result of the pandemic: the costs to promote our subscription business, which we refer to as media expenses, decreased as we reduced marketing spend in response to a heightened news cycle; print production and distribution costs decreased due to lower demand for print newspaper copies; variable advertising costs were lower; and travel and entertainment costs decreased as a result of the Covid-19 pandemic. In 2021, while print production and distribution costs continued to be lower due to lower demand for print newspaper copies, media expenses were higher than both 2020 and 2019, as further described below, and variable advertising costs and travel and entertainment costs increased when compared with 2020, although they remained below 2019 levels. We have invested and expect to continue to invest in our Company Headquarters and other offices as well as technological improvements as we transition to hybrid work with employees working both from the office and remotely.

At this time, the full impact that the Covid-19 pandemic will have on our business, operations and financial results is uncertain. The extent to which the pandemic will continue to impact us will depend on numerous evolving factors and future developments, including the extent of variants and resurgences; the effect of ongoing vaccination and mitigation efforts; the impact of the pandemic on economic conditions and the companies with which we do business, including our advertisers; governmental, business and other actions; the status of travel restrictions; and changes in consumer behavior in response to the pandemic, among many other factors. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are appropriate. Please see “Item 1A — Risk Factors” for more information.

Our Strategy

We are in the middle of a decades-long global shift in consumption from traditional media — such as print newspapers — to digital, as well as what we believe to be an overall growth in consumer demand for quality news and information. We have designed our strategy to take advantage of both the challenges and opportunities presented by this period of transformation in our industry.

In early 2019, we set a goal of reaching 10 million subscriptions by 2025. We ended 2021 with approximately 7.6 million paid subscribers with approximately 8.8 million subscriptions, and with the acquisition of The Athletic in February 2022, we met this target three years early. Even without The Athletic, we believe we would have reached 10 million subscriptions far sooner than we originally anticipated.

Our latest audience research suggests that there are at least 135 million adults worldwide who are willing to pay for one or more subscriptions to English-language news, sports coverage, puzzles, recipes, expert shopping advice or podcasting. Our current aim is to reach 15 million total subscribers by year-end 2027, up from approximately 7.6 million at the end of 2021. Since many people purchase subscriptions to multiple New York Times products, this new goal shifts the emphasis from counting total subscriptions to focusing on the growth and value of individual subscribers.

We believe that focusing on the following priorities will enable us to become an essential subscription for our addressable market, put us on track to achieve our 15 million subscriber goal and drive long-term, profitable growth for the Company and our shareholders.

Producing the best journalism

We believe that The Times’s original, independent and high-quality reporting, storytelling and journalistic excellence across topics and formats set us apart from others and is at the heart of what makes our journalism worth paying for. We expect to extend our news lead by focusing on four major areas — providing expert beat reporting on a broad array of important subjects, covering breaking news, producing signature journalism projects and excelling at ideas-based commentary and criticism.

The impact of our journalism and its breadth were evident as The Times continued to break stories, produce investigative reports and help our audience understand a wide range of topics, including the Covid-19 pandemic and its many reverberations, the intersection of race and culture in America, and the varied effects of climate change. Our ground-breaking coverage continues to be recognized, including in the 132 Pulitzer Prizes The Times has received — more than any other news organization.

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While general interest news is and will remain our primary value proposition, we are building leadership positions in a handful of areas that occupy a prominent place in global culture alongside general interest news — including sports fandom, puzzle gaming, cooking guidance and expert shopping guidance.

In 2022, we plan to continue making significant investments in our journalism and remain committed to providing a multimedia report of deep breadth, authority, creativity and excellence, produced with a focus on independence and integrity.

Growing engagement with our products

We will continue to focus on reaching a large non-paying audience while also creating a subscription experience so good at building valuable daily news and information habits that it draws people into lifelong relationships worth paying for. A central part of this approach will be offering a single, high-value New York Times subscription — or bundle — of interconnected products to our digital subscribers. To attract the widest audience, we offer subscriptions to each of our products on a standalone basis. But we believe that by focusing on the bundle, we are providing the most value to our customers, and in-turn, the best opportunity to monetize the full scale of our platform.

Within news, we have invested in bringing readers back to our site and exposing them to more of our offerings. For example, the innovation in our live briefings has kept users aware of the latest developments across important storylines; our growing suite of email newsletters now reaches the inboxes of more than 15 million global users and plays an increasingly central role in engaging potential subscribers; and our newsletters and news website and mobile app help surface the best recipes, games and product recommendations.

We plan to invest more in content and product development across news and in Games and Cooking; to continue exploring new opportunities for Wirecutter as a subscription product; to develop new audio programming and experiment in audio product; to test the concept of an app for children; and to help The Athletic reach more sports fans and grow its subscriber base. We see all of these products as a way for The Times to mean even more in people’s lives, and also to make a relationship with our brand more valuable.

Effectively monetizing our products

We ended 2021 with approximately 7.6 million paid subscribers with approximately 8.8 million subscriptions to our news and other products. Our approximately 1.273 million digital subscription net additions in 2021 were our second-highest annual total and 23% higher than 2019. We also reached significant milestones with our non-news subscription products, Games and Cooking, when each crossed one million subscriptions just before year end, the result of strong audience demand and product innovations like the addition of the Spelling Bee word puzzle to our Games product. We also gained efficiencies by applying learnings from our core news product, including customer journey enhancements and promotional pricing, and expanded subscriptions to our other non-news products, by launching paid subscriptions to Wirecutter in the third quarter of 2021.

In addition to digital subscription revenue, high-margin digital advertising revenue remains an important part of our business. We believe our journalism attracts valuable audiences and that we provide a safe and trusted platform for advertisers’ brands. In a recovering market, we continued to innovate advertising offerings that integrate well with the user experience, including solutions that use proprietary first-party data — rather than third-party data — to generate predictive insights and help inform our clients’ advertising strategies while leveraging our audiences in privacy-forward ways, as well as our audio advertising offerings. We expect each will continue to play critical roles in the growth of our digital advertising business.

Looking ahead, we plan to continue to invest in our journalism and digital product experience, with an increasing emphasis on growing total unique subscribers through a single New York Times bundle of interconnected products. At the same time, we believe we can apply disciplined cost-management to fund continued investment in our business and support long-term profitable growth. Given that our investments in our journalism and digital product experience have yielded strong organic subscriber growth, we expect that we’ll be able to improve the overall efficiency of our marketing spend for our core products. We also believe we can continue to maximize the efficiency and profitability of our print products and services, which remain a significant part of our business.

Making technology and data a bigger propellant of our growth

Achieving our ambition will require products and technology that match the quality of our journalism. Over the past five years, we have invested substantially in our digital product experience as well as in the back-end

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technology and underlying capabilities that allow users to seamlessly move among various devices and products. In 2022, we plan to continue investing in these areas, with a focus on strengthening our data management infrastructure, creating platforms that power our multi-product subscription bundle, and advancing machine learning applications across our business. Over time, we believe we will see further benefits from these investments as they help us better engage, habituate, convert and retain more subscribers.

Fostering a culture that enables our mission and people to thrive

We believe our ability to attract, develop and maximize the contributions of world-class talent, and to create the conditions for our people to do their best work, is vital to the continued success of our mission and business and central to our long-term strategy. As we continue to transform the Company, we are focused on building a more diverse, equitable and inclusive workplace; developing and promoting our talent; providing equitable and competitive compensation and benefits; and supporting the health, safety and well-being of our employees.

Effectively managing our liquidity and our non-operating costs

Throughout 2021 we continued to strengthen our liquidity position and further de-leverage and de-risk our balance sheet. As of December 26, 2021, the Company had cash, cash equivalents and marketable securities of approximately $1.1 billion and was debt-free. On February 1, 2022, we used approximately $550 million of this cash to fund the acquisition of The Athletic (see Note 19 of the Notes to the Consolidated Financial Statements for additional information related to this acquisition).

We have paid quarterly dividends on the Class A and Class B Common Stock since late 2013. In February 2022, the Board of Directors approved a quarterly dividend of $0.09 per share, an increase of $0.02 per share from the previous quarter. We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividend program will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.

In February 2022, the Board of Directors approved a $150.0 million Class A stock repurchase program that replaced the previous program, which was approved in 2015. The new authorization provides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization.

In addition, we remain focused on managing our pension plan obligations. We have taken steps over the last several years to reduce the size and volatility of our pension obligations, including freezing accruals under all but one of our qualified defined benefit pension plans, making immediate pension benefits offers in the form of lump-sum payments to certain former employees and transferring certain future benefit obligations and administrative costs to insurers. During 2020, we entered into an agreement to transfer certain future benefit obligations and administrative costs to an insurer, which allowed us to reduce our overall qualified pension plan obligations by approximately $236 million. See Note 9 of the Notes to the Consolidated Financial Statements for additional information on these actions.

As of December 26, 2021, our qualified pension plans had plan assets that were approximately $74 million above the present value of future benefits obligations, compared with a surplus of approximately $36 million as of December 27, 2020. We made contributions of approximately $9 million and $10 million to certain qualified pension plans in 2021 and 2020, respectively. We expect to make contributions in 2022 to satisfy minimum funding requirements of approximately $10 million. We will continue to look for ways to reduce the size and volatility of our pension obligations.

While we have made significant progress in our liability-driven investment strategy to reduce the funding volatility of our qualified pension plans, the size of our pension plan obligations relative to the size of our current operations will continue to have an impact on our reported financial results. We expect to continue to experience volatility in our retirement-related costs, particularly due to the impact of changing discount rates and mortality assumptions on our unfunded, non-qualified pension plans and retiree medical costs. We may also incur additional withdrawal obligations due to the poor funded status of several of the multiemployer plans in which we participate.

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RESULTS OF OPERATIONS

Overview

Fiscal years 2021, 2020 and 2019 each comprised 52 weeks. The following table presents our consolidated financial results:

* Represents a change equal to or in excess of 100% or one that is not meaningful.

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Revenues

Subscription, advertising and other revenues were as follows:

Subscription Revenues

Subscription revenues consist of revenues from subscriptions to our digital and print products (which include our news product, as well as our other digital-only products), and single-copy and bulk sales of our print products (which represent less than 5% of these revenues). Subscription revenues are based on both the number of copies of the printed newspaper sold and digital-only subscriptions, and the rates charged to the respective customers.

The following table summarizes digital and print subscription revenues for the years ended December 26, 2021, December 27, 2020 and December 29, 2019:

(1) Includes revenues from subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games, Cooking and Wirecutter products are also included in this category.

(2) Includes revenues from standalone subscriptions to the Company’s other digital-only products. During the third quarter of 2021, the Company launched a Wirecutter subscription option.

(3) Includes access to digital news, Games, Cooking and Wirecutter products.

(4) NYT International is the international edition of our print newspaper.

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The following table summarizes digital and print subscriptions as of December 26, 2021, and December 27, 2020:

(1) Includes subscriptions to the Company’s news product. News product subscription packages that include access to the Company’s Games, Cooking and Wirecutter products are also included in this category.

(2) The number of paid digital-only subscriptions includes estimated group corporate and group education subscriptions (which collectively represent approximately 5% of total paid digital subscriptions to our news products in 2021). We calculate this estimate using the value of the relevant contract and a discounted subscription rate. The actual number of users who have access to our products through group subscriptions is substantially higher. In the fourth quarter of 2021, we updated the discounted subscription rate used in order to bring it in line with our current digital subscription pricing model. For comparison purposes, we recast news product subscriptions in prior periods using the updated methodology, and this resulted in approximately 42,000 additional group corporate and group education subscriptions in the fourth quarter of 2020. There is no impact to subscription revenue as a result of this change.

(3) Includes standalone subscriptions to the Company’s other digital-only products.

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We believe that the significant growth over the last several years in subscriptions to The Times’s products demonstrates the success of our “subscription-first” strategy and the willingness of our readers to pay for high-quality journalism. The following charts illustrate the acceleration in net digital-only subscription additions and corresponding subscription revenues, as well as the relative stability of our print domestic home delivery subscription products since the launch of the digital pay model in 2011.

(1) Amounts may not add due to rounding.

(2) Includes access to some of the Company’s digital products.

(3) Print Other includes single-copy, NYT International and other subscription revenues.

Note: Revenues for 2012 and 2017 include the impact of an additional week.

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2021 Compared with 2020

Subscription revenues increased 13.9% in 2021 compared with 2020. The increase was primarily due to an increase in digital subscription revenue driven by year-over-year growth of 18.9% in the number of subscriptions to the Company’s digital-only products, as well as digital subscriptions graduating to higher prices from introductory promotional pricing. The increase in digital-only subscription revenue was partially offset by a decrease in print subscription revenue attributable to lower single-copy and bulk sales, primarily as a result of increased levels of remote working and reductions in travel due to the Covid-19 pandemic as well as ongoing secular trends. Print domestic home delivery revenues were flat as decreases in the number of subscriptions were offset by price increases.

Paid digital-only subscriptions totaled approximately 8,005,000 at the end of 2021, a net increase of 1,273,000 subscriptions compared with the end of 2020. The year-over-year growth in our digital subscriptions is attributable in part to initiatives we have undertaken to drive subscriptions, including adjustments to our access model.

Digital-only news product subscriptions totaled approximately 5,867,000 at the end of 2021, a net increase of 735,000 subscriptions compared with the end of 2020. Other digital-only product subscriptions totaled approximately 2,138,000 at the end of 2021, a net increase of 538,000 subscriptions compared with the end of 2020.

Print domestic home delivery subscriptions totaled approximately 784,000 at the end of 2021, a net decrease of 49,000 subscriptions compared with the end of 2020. The year-over-year decrease is a result of secular declines.

2021 Compared with 2019

Subscription revenues increased 25.7% in 2021 compared with 2019. The increase was primarily due to growth in the number of subscriptions to the Company’s digital-only products. These increases were partially offset by a 36.8% and 53.7% decrease in print subscription revenue from single-copy and bulk sales and international edition of our newspaper, respectively, as a result of increased levels of remote working and reductions in travel due to the Covid-19 pandemic as well as secular trends.

Advertising Revenues

Advertising revenue is principally from advertisers (such as technology, financial and luxury goods companies) promoting products, services or brands on digital platforms in the form of display ads, audio and video ads, and in print, in the form of column-inch ads.

Advertising revenue is primarily derived from offerings sold directly to marketers by our advertising sales teams. A smaller proportion of our total advertising revenues is generated through programmatic auctions run by third-party ad exchanges.

Advertising revenues are primarily determined by the volume (e.g., impressions or column inches), rate and mix of advertisements. Digital advertising includes our core digital advertising business and other digital advertising. Our core digital advertising business includes direct-sold website, mobile application, podcast, email and video advertisements. Direct-sold display advertising, a component of core digital advertising, includes offerings on websites and mobile applications sold directly to marketers by our advertising sales teams. Our digital advertising offerings include solutions that use proprietary first-party data — rather than third-party data — to generate predictive insights and help inform our clients’ advertising strategies while leveraging our audiences in privacy-forward ways. Other digital advertising includes advertising revenues generated by open-market programmatic advertising, creative services fees associated with branded content, advertisements appearing on our Wirecutter product and classified advertising. Print advertising includes revenue from column-inch ads and classified advertising, as well as preprinted advertising, also known as freestanding inserts.

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The following table summarizes digital and print advertising revenues for the years ended December 26, 2021, December 27, 2020 and December 29, 2019:

2021 Compared with 2020

Digital advertising revenues, which represented 62.0% of total advertising revenues in 2021, increased $80.0 million, or 35.0%, to $308.6 million, compared with $228.6 million in 2020. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts, as well as the impact of the comparison to weak digital advertising revenues in 2020 caused by reduced advertiser spending during the earlier stages of the Covid-19 pandemic. Core digital advertising revenue increased $77.4 million due to growth in direct-sold display advertising revenue and podcast advertising revenues. Direct-sold display impressions increased 27%, while the average rate grew 18%. Other digital advertising revenue increased $2.6 million, primarily due to a 30% increase in creative services fees, partially offset by a 8.4% decrease in open-market programmatic advertising revenue. Programmatic impressions decreased by 44%, offsetting the average rate increase of 59%.

Print advertising revenues, which represented 38.0% of total advertising revenues in 2021, increased $25.1 million, or 15.3%, to $188.9 million in 2021 compared with $163.8 million in 2020. The increase was primarily in the luxury and media categories, and was partially offset by declines in the financial services category, as well as secular trends.

2021 Compared with 2019

Digital advertising revenues increased $48.2 million, or 18.5%, to $308.6 million in 2021 compared with $260.5 million in 2019. The increase was primarily driven by higher direct-sold advertising, including traditional display and podcasts. Core digital advertising revenue increased $71.7 million due to growth in direct-sold display advertising revenue and podcast advertising revenues. Direct-sold display impressions increased 8%, while the average rate grew 23%. Other digital advertising revenue decreased $23.5 million, primarily due to the closure of our HelloSociety and Fake Love digital marketing agencies.

Print advertising revenues declined $81.3 million, or 30.1%, to $188.9 million in 2021 compared with $270.2 million in 2019. The decline reflected reduced spending on print advertising by businesses negatively impacted by the Covid-19 pandemic as well as continued secular trends.

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Other Revenues

Other revenues primarily consist of revenues from licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company Headquarters, retail commerce, television and film, our student subscription sponsorship program and our live events business. Digital other revenues, which consist primarily of Wirecutter affiliate referral revenue, digital licensing revenue, and television and film revenue, totaled $111.4 million, $101.0 million and $79.8 million in 2021, 2020 and 2019, respectively. Building rental revenue consists of revenue from the leasing of floors in our Company Headquarters, which totaled $22.9 million, $28.5 million and $30.6 million in 2021, 2020 and 2019, respectively.

2021 Compared with 2020

Other revenues increased 9.9% in 2021 compared with 2020, primarily as a result of higher Wirecutter affiliate referral revenues mainly due to Wirecutter’s presence on our core news website (NYTimes.com) homepage resulting in increased views, higher licensing revenue as well as higher commercial printing revenue resulting from our beginning to print several News Corporation publications in our College Point, N.Y., printing and distribution facility in mid-2021, partially offset by volume declines from other publications. These increases were partially offset by lower television series revenues as a result of fewer episodes in 2021 compared to 2020.

2021 Compared with 2019

Other revenues increased 8.9% in 2021 compared with 2019, primarily as a result of higher Wirecutter affiliate referral revenues mainly due to Wirecutter’s presence on our core news website (NYTimes.com) homepage resulting in increased views and licensing revenue primarily related to Facebook News, to which the Company licenses select content for access by its users, partially offset by lower revenues from our television series as a result of fewer episodes in 2021 compared to 2019 and live events, which were impacted by the Covid-19 pandemic.

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Operating Costs

Operating costs were as follows:

The components of operating costs as a percentage of total operating costs were as follows:

The components of operating costs as a percentage of total revenues were as follows:

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Cost of Revenue (excluding depreciation and amortization)

Cost of revenue includes all costs related to content creation, subscriber and advertiser servicing, and print production and distribution as well as infrastructure costs related to delivering digital content, which include all cloud and cloud-related costs as well as compensation for employees that enhance and maintain that infrastructure.

2021 Compared with 2020

Cost of revenue increased in 2021 by $80.3 million, or 8.4%, compared with 2020, largely due to higher journalism costs of $58.3 million, higher subscriber servicing costs of $15.6 million, higher advertising servicing costs of $9.5 million, and higher digital content delivery costs of $4.5 million, partially offset by a $7.6 million decrease in print production and distribution costs. The increase in journalism costs was largely driven by growth in the number of employees who work in the newsroom and on our Games, Cooking and audio products, a higher incentive compensation accrual and costs in connection with the production of audio content. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Advertising servicing costs increased as a result of costs to produce higher creative services revenues. Digital content delivery costs increased due to higher cloud storage costs and a higher incentive compensation accrual. The decrease in print production and distribution costs was largely due to lower distribution costs and outside printing costs.

2021 Compared with 2019

Cost of revenue increased in 2021 by $51.4 million, or 5.2%, compared with 2019, largely due to higher journalism costs of $83.0 million, higher subscriber servicing costs of $27.4 million, and higher digital content delivery costs of $20.7 million. The increases were partially offset by lower print production and distribution costs of $61.0 million and lower advertising servicing costs of $18.7 million. The increase in journalism costs was largely driven by growth in the number of employees who work in the newsroom and on our Games, Cooking and audio products, and a higher incentive compensation accrual. The increase in subscriber servicing costs was primarily due to higher credit card processing fees and third-party commissions due to increased subscriptions. Digital content delivery costs increased due to higher cloud storage costs and growth in the number of employees. The decrease in print production and distribution costs was largely due to lower newsprint consumption and pricing, as well as lower distribution costs, primarily due to copy declines, and outside printing costs. Advertising servicing costs decreased primarily as a result of the closure of our HelloSociety and Fake Love digital marketing agencies as well as fewer live events.

Sales and Marketing

Sales and marketing includes costs related to the Company’s marketing efforts as well as advertising sales costs.

2021 Compared with 2020

Sales and marketing costs increased in 2021 by $66.0 million, or 28.8%, compared with 2020, primarily due to higher media expenses.

Media expenses, a component of sales and marketing costs that represents the cost to promote our subscription business, increased to $187.3 million in 2021 from $129.6 million in 2020. The increase is primarily from subscription-related media expenses as we were able to profitably scale media spend as a result of strong demand for news and success in converting readers to subscribers, as well as higher brand marketing expenses. The Company had reduced its marketing expense in 2020 during the earlier stages of the Covid-19 pandemic.

2021 Compared with 2019

Sales and marketing costs increased in 2021 by $22.3 million, or 8.2%, compared with 2019, primarily a result of higher media expenses and the growth in the number of marketing employees, partially offset by the closure of our HelloSociety and Fake Love digital marketing agencies, as well as lower travel costs due to the ongoing pandemic.

Media expenses increased to $187.3 million in 2021 from $156.9 million in 2019. The increase is primarily from subscription-related media expenses as we were able to profitably scale media spend as a result of strong demand for news and success in converting readers to subscribers, as well as higher brand marketing expenses.

Product Development

Product development includes costs associated with the Company’s investment into developing and enhancing new and existing product technology, including engineering, product development and data insights.

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2021 Compared with 2020

Product development costs increased in 2021 by $27.5 million, or 20.6%, compared with 2020, largely due to growth in the number of digital product development employees in connection with digital subscription strategic initiatives as well as a higher incentive compensation accrual.

2021 Compared with 2019

Product development costs increased in 2021 by $54.5 million, or 51.2%, compared with 2019, largely due to growth in the number of digital product development employees to support our digital subscription strategic initiatives as well as a higher incentive compensation accrual.

General and Administrative Costs

General and administrative costs include general management, corporate enterprise technology, building operations, unallocated overhead costs, severance and multiemployer pension plan withdrawal costs.

2021 Compared with 2020

General and administrative costs increased in 2021 by $26.6 million, or 11.9%, compared with 2020, primarily as a result of higher incentive compensation accrual, growth in the number of employees and higher consulting costs.

2021 Compared with 2019

General and administrative costs increased in 2021 by $43.3 million, or 21.0%, compared with 2019, primarily due to higher incentive compensation accrual, growth in the number of employees, mainly in the enterprise technology and human resources departments in support of employee growth in other areas, and higher consulting costs.

Depreciation and Amortization

2021 Compared with 2020

Depreciation and amortization costs decreased $4.6 million, or 7.5%, in 2021 compared with 2020, primarily due to lower depreciation of software assets.

2021 Compared with 2019

Depreciation and amortization costs decreased $3.2 million, or 5.2%, in 2021 compared with 2019 due to lower depreciation of software assets, partially offset by equipment and building projects that were placed in service.

Other Items

See Note 7 of the Notes to the Consolidated Financial Statements for more information regarding other items.

NON-OPERATING ITEMS

Investments in Joint Ventures

See Note 6 of the Notes to the Consolidated Financial Statements for information regarding our joint venture investments.

Interest Income/(Expense) and Other, Net

See Note 7 of the Notes to the Consolidated Financial Statements for information regarding interest expense and other.

Income Taxes

See Note 12 of the Notes to the Consolidated Financial Statements for information regarding income taxes.

Other Components of Net Periodic Benefit Costs

See Notes 9 and 10 of the Notes to the Consolidated Financial Statements for information regarding other components of net periodic benefit costs.

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Non-GAAP Financial Measures

We have included in this report certain supplemental financial information derived from consolidated financial information but not presented in our financial statements prepared in accordance with GAAP. Specifically, we have referred to the following non-GAAP financial measures in this report:

•diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and the impact of special items (or adjusted diluted earnings per share from continuing operations);

•operating profit before depreciation, amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit, and as a percentage of revenues, adjusted operating profit margin); and

•operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs).

The special items in 2021 consisted of:

•a $27.2 million gain ($19.8 million after tax or $0.12 per share) related to a non-marketable equity investment transaction. The gain consists of a $15.2 million realized gain due to the partial sale of the investment and an $11.9 million unrealized gain due to the mark to market of the remaining investment, and is included in Interest income and other, net in our Condensed Consolidated Statements of Operations; and

•a $3.8 million charge ($2.8 million or $0.02 per share after tax) resulting from the termination of a tenant’s lease in the Company Headquarters.

The special items in 2020 consisted of:

•a $10.1 million gain ($7.4 million after tax or $0.04 per share) related to a non-marketable equity investment transaction. The gain consists of $2.5 million realized gain due to the partial sale of the investment and a $7.6 million unrealized gain due to the mark to market of the remaining investment, and is included in Interest income/(expense) and other, net in our Consolidated Statements of Operations;

•A $5 million gain ($3.1 million or $0.02 per share after tax and net of noncontrolling interest) reflecting our proportionate share of a distribution from the pending liquidation of Madison Paper Industries (“Madison”), in which the Company has an investment through a subsidiary; and

•$80.6 million in pension settlement charges ($59.1 million after tax or $0.35 per share) in connection with the transfer of certain pension benefit obligations to an insurer.

The special items in 2019 consisted of:

•a $4.0 million charge ($3.0 million after tax or $0.02 per share) related to restructuring charges, including impairment and severance charges related to the closure of our digital marketing agency, HelloSociety, LLC; and

•a $2.0 million gain ($1.5 million after tax or $0.01 per share) from a multiemployer pension plan liability adjustment.

We have included these non-GAAP financial measures because management reviews them on a regular basis and uses them to evaluate and manage the performance of our operations. We believe 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) and operating costs. 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.

Adjusted diluted earnings per share from continuing operations provides 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. Adjusted operating profit (and adjusted operating profit margin) is useful in evaluating the ongoing performance of the Company’s business 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 multiemployer pension plan withdrawal costs.

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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.

Management considers special items, which may include impairment charges, pension settlement charges and other items that arise from time to time, to be outside the ordinary course of our operations. Management believes that excluding these items provides a better understanding of the underlying trends in the Company’s operating performance and allows more accurate comparisons of the Company’s operating results to historical performance. In addition, management excludes severance costs, which may fluctuate significantly from quarter to quarter, because it believes these costs do not necessarily reflect expected future operating costs and do not contribute to a meaningful comparison of the Company’s operating results to historical performance.

Included in our non-GAAP financial measures are non-operating retirement costs which are primarily tied to financial market performance and changes in market interest rates and investment performance. Management considers non-operating retirement costs to be outside the performance of the business and believes that presenting adjusted diluted earnings per share from continuing operations excluding non-operating retirement costs and presenting adjusted operating results excluding multiemployer pension plan withdrawal costs, in addition to the Company’s GAAP diluted earnings per share from continuing operations and GAAP operating results, provide increased transparency and a better understanding of the underlying trends in the Company’s operating business performance.

Reconciliations of non-GAAP financial measures from, respectively, diluted earnings per share from continuing operations, operating profit and operating costs, the most directly comparable GAAP items, as well as details on the components of non-operating retirement costs, are set out in the tables below.

* Represents a change equal to or in excess of 100% or one that is not meaningful.

(1) Amounts may not add due to rounding.

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* Represents a change equal to or in excess of 100% or one that is not meaningful.

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LIQUIDITY AND CAPITAL RESOURCES

Overview

The following table presents information about our financial position:

Financial Position Summary

(1) Approximately $550.0 million of cash and marketable securities were used in February 2022 to fund the purchase price of The Athletic (refer to commentary below).

Our primary sources of cash from operations were revenues from subscription and advertising sales. Subscription and advertising revenues provided about 66% and 24%, respectively, of total revenues in 2021. The remaining cash inflows were primarily from other revenue sources such as licensing, Wirecutter affiliate referrals, commercial printing, the leasing of floors in the Company Headquarters, retail commerce, television and film, our student subscription sponsorship program and our live events business.

Our primary uses of cash were for employee compensation and benefits and other operating expenses. We believe our cash and cash equivalents, marketable securities balance and cash provided by operations, in combination with other sources of cash, will be sufficient to meet our financing needs over the next 12 months and beyond.

We have continued to strengthen our liquidity position and our debt profile. As of December 26, 2021, we had cash and cash equivalents and marketable securities of $1.07 billion, and approximately $250 million in available borrowings and no amounts outstanding under the Credit Facility. Our cash and cash equivalents and marketable securities balances increased in 2021, primarily due to cash proceeds from operating activities and proceeds from the sale of non-marketable equity securities, partially offset by cash used for dividend payments, capital expenditures, and taxes paid on behalf of employees resulting from share-based compensation tax withholding. Approximately $550.0 million of cash and marketable securities were used in February 2022 to fund the purchase price of The Athletic (see Note 19 of the Notes to the Consolidated Financial Statements for additional information related to this acquisition).

We have paid quarterly dividends on the Class A and Class B Common Stock since late 2013. In February 2022, the Board of Directors approved a quarterly dividend of $0.09 per share, an increase of $0.02 per share from the previous quarter (see Note 19 of the Notes to the Consolidated Financial Statements for additional information). We currently expect to continue to pay comparable cash dividends in the future, although changes in our dividend program will be considered by our Board of Directors in light of our earnings, capital requirements, financial condition and other factors considered relevant.

During 2021, we made contributions of $9.2 million to certain qualified pension plans funded by cash on hand. As of December 26, 2021, our qualified pension plans had plan assets that were $74.3 million above the present value of future benefits obligations, an improvement of $38.1 million from the surplus of $36.2 million as of December 27, 2020. We expect contributions made to satisfy minimum funding requirements to total approximately $10 million in 2022. In October 2020, we entered into an agreement with an insurance company to transfer the future benefit obligations and annuity administration for certain retirees (or their beneficiaries) in The New York Times Companies Pension Plan (the ”Pension Plan”). This transfer of plan assets and obligations reduced the Company’s qualified pension plan obligations by $236.3 million.

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In February 2022, the Board of Directors approved a $150.0 million Class A stock repurchase program that replaced the previous program, which was approved in 2015. The new authorization provides that Class A shares may be purchased from time to time as market conditions warrant, through open market purchases, privately negotiated transactions or other means, including Rule 10b5-1 trading plans. We expect to repurchase shares primarily to offset the impact of dilution from our equity compensation program, but subject to market conditions and other factors, we may also make opportunistic repurchases to reduce share count. There is no expiration date with respect to this authorization. As of February 22, 2022, we repurchased 550,000 shares for approximately $23 million under the new authorization.

Capital Resources

Sources and Uses of Cash

Cash flows provided by/(used in) by category were as follows:

Operating Activities

Cash from operating activities is generated by cash receipts from subscriptions, advertising sales and other revenue. Operating cash outflows include payments for employee compensation, retirement and other benefits, raw materials, marketing expenses, interest and income taxes.

Net cash provided by operating activities decreased in 2021 compared with 2020 due to lower cash collections from accounts receivable and lower cash payments received from prepaid subscriptions, partially offset by higher net income adjusted for non-cash items and lower cash payments made to settle accounts payable, accrued payroll and other liabilities.

Investing Activities

Cash from investing activities generally includes proceeds from marketable securities that have matured and the sale of assets, investments or a business. Cash used in investing activities generally includes purchases of marketable securities, payments for capital projects, acquisitions of new businesses and investments.

Net cash used in investing activities in 2021 was primarily related to $170.0 million in net purchases of marketable securities and $34.6 million in capital expenditures payments, partially offset by $20.1 million in cash proceeds related to the sale of a non-marketable equity investment.

Financing Activities

Cash from financing activities generally includes borrowings under third-party financing arrangements, the issuance of long-term debt and funds from stock option exercises. Cash used in financing activities generally includes the repayment of amounts outstanding under third-party financing arrangements, the payment of dividends, the payment of long-term debt and capital lease obligations, and stock-based compensation tax withholding.

Net cash used in financing activities in 2021 was primarily related to dividend payments of $45.3 million and share-based compensation tax withholding payments of $11.2 million.

See “— Third-Party Financing” below and our Consolidated Statements of Cash Flows for additional information on our sources and uses of cash.

Restricted Cash

We were required to maintain $14.3 million of restricted cash as of December 26, 2021, and $15.9 million as of December 27, 2020, substantially all of which is set aside to collateralize workers’ compensation obligations.

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Capital Expenditures

Capital expenditures totaled approximately $35 million and $30 million in 2021 and 2020, respectively. The increase in capital expenditures was primarily driven by improvements at our Company Headquarters and newsroom bureaus, partially offset by lower expenditures related to improvements at our College Point, N.Y, printing and distribution facility. The improvements in our Company Headquarters are intended to address growth in the number of employees and to enhance technologies that support our transition to hybrid work with employees working both from the office and remotely. The cash payments related to the capital expenditures totaled approximately $35 million and $34 million in 2021 and 2020, respectively, due to the timing of the payments. In 2022, we expect capital expenditures of approximately $50 million, which will be funded from cash on hand. The capital expenditures will be primarily driven by improvements in our Company Headquarters, investments in technology to support our strategic initiatives and expenditures related to our College Point, N.Y., printing and distribution facility.

Acquisition of The Athletic Media Company

On February 1, 2022, we completed the acquisition of The Athletic Media Company, a global digital subscription-based sports media business that provides national and local coverage of more than 200 clubs and teams in the U.S. and around the world, for an all-cash purchase price of $550 million, subject to customary closing adjustments (see Note 19 of the Notes to the Consolidated Financial Statements for additional information related to this acquisition). The purchase price was funded from cash on hand.

Third-Party Financing

As of December 26, 2021, there were no outstanding borrowings under the Credit Facility and the Company was in compliance with the financial covenants contained in the Credit Facility. See Note 7 for information regarding the Credit Facility.

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Contractual Obligations

The information provided is based on management’s best estimate and assumptions of our contractual obligations as of December 26, 2021. Actual payments in future periods may vary from those reflected in the table.

(1)See Note 17 of the Notes to the Consolidated Financial Statements for additional information related to our operating leases.

(2)The Company's general funding policy with respect to qualified pension plans is to contribute amounts at least sufficient to satisfy the minimum amount required by applicable law and regulations and Guild contracts. Contributions for our qualified pension plans and future benefit payments for our unfunded pension and other postretirement benefit payments have been estimated over a 10-year period; therefore, the amounts included in the “Later Years” column only include payments for the period of 2027-2031. For our funded qualified pension plans, estimating funding depends on several variables, including the performance of the plans' investments, assumptions for discount rates, expected long-term rates of return on assets, rates of compensation increases (applicable only for the Guild-Times Adjustable Pension Plan that has not been frozen) and other factors. Thus, our actual contributions could vary substantially from these estimates. While benefit payments under these plans are expected to continue beyond 2031, we have included in this table only those benefit payments estimated over the next 10 years. Benefit plans in the table above also include estimated payments for multiemployer pension plan withdrawal liabilities. See Notes 9 and 10 of the Notes to the Consolidated Financial Statements for additional information related to our pension and other postretirement benefits plans.

Other Liabilities — Other in our Consolidated Balance Sheets include liabilities related to (1) deferred compensation, primarily related to our deferred executive compensation plan (the “DEC”) and (2) various other liabilities, including our contingent tax liability for uncertain tax positions and contingent consideration. These liabilities are not included in the table above primarily because the timing of the future payments is not determinable. See Note 11 of the Notes to the Consolidated Financial Statements for additional information.

The DEC previously enabled certain eligible executives to elect to defer a portion of their compensation on a pre-tax basis. The deferred amounts are invested at the executives’ option in various mutual funds. The fair value of deferred compensation is based on the mutual fund investments elected by the executives and on quoted prices in active markets for identical assets. The fair value of deferred compensation was $21.1 million as of December 26, 2021. The DEC was frozen effective December 31, 2015, and no new contributions may be made into the plan. See Note 11 of the Notes to the Consolidated Financial Statements for additional information on Other Liabilities — Other.

Our liability for uncertain tax positions was approximately $7 million, including approximately $1 million of accrued interest as of December 26, 2021. Until formal resolutions are reached between us and the taxing authorities, determining the timing and amount of possible audit settlements relating to uncertain tax positions is not practicable. Therefore, we do not include this obligation in the table of contractual obligations. See Note 12 of the Notes to the Consolidated Financial Statements for additional information regarding income taxes.

The contingent consideration represents contingent payments in connection with the acquisition of substantially all the assets and certain liabilities of Serial Productions, LLC. The Company estimated the fair value of the contingent consideration liability using a probability-weighted discounted cash flow model. The estimate of the fair value of contingent consideration requires subjective assumptions to be made regarding probabilities assigned to operational targets and the discount rate. The contingent consideration balance of $7.5 million as of December 26, 2021, is included in Accrued expenses and other, for the current portion of the liability, and Other non-current liabilities, for the long-term portion of the liability, in our Consolidated Balance Sheets. See Note 8 for more information.

We have a contract through the end of 2022 with Resolute FP US Inc., a subsidiary of Resolute Forest Products Inc., a major paper supplier, to purchase newsprint. The contract requires us to purchase annually the lesser of a fixed number of tons or a percentage of our total newsprint requirement at market rate in an arm’s length transaction. Since the quantities of newsprint purchased annually under this contract are based on our total newsprint requirement, the amount of the related payments for these purchases is excluded from the table above.

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CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements are prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements for the periods presented.

We continually evaluate the policies and estimates we use to prepare our Consolidated Financial Statements. In general, management’s estimates are based on historical experience, information from third-party professionals and various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results may differ from those estimates made by management.

Our critical accounting estimates include our accounting for goodwill and intangibles, retirement benefits and revenue recognition. Specific risks related to our critical accounting estimates are discussed below. For a description of our related accounting policies, refer to Note 2 of the Notes to the Consolidated Financial Statements.

Goodwill and Intangibles

We evaluate whether there has been an impairment of goodwill or intangible assets not amortized on an annual basis or in an interim period if certain circumstances indicate that a possible impairment may exist.

The impairment analysis is considered critical because of the significance of goodwill and intangibles to our Consolidated Balance Sheets.

We test goodwill for impairment at a reporting unit level. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.

If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we compare the fair value of a reporting unit with its carrying amount, including goodwill. Fair value is calculated by a combination of a discounted cash flow model and a market approach model.

We test intangible assets that are not amortized (i.e., trade names) for impairment at the asset level. We first perform a qualitative assessment to determine whether it is more likely than not that the fair value of the asset is less than its carrying value. If we determine that it is more likely than not that the intangible asset is impaired, we perform a quantitative assessment by comparing the fair value of the asset with its carrying amount. If the fair value, which is based on future cash flows, exceeds the carrying value, the asset is not considered impaired. If the carrying amount exceeds the fair value, an impairment loss would be recognized in an amount equal to the excess of the carrying amount of the asset over the fair value of the asset. We recognized a de minimis impairment in 2020 and 2019 related to the closure of HelloSociety and Fake Love digital marketing agencies.

Intangible assets that are amortized (i.e., customer lists, non-competes, etc.) are tested for impairment at the asset level associated with the lowest level of cash flows. An impairment exists if the carrying value of the asset (1) is not recoverable (the carrying value of the asset is greater than the sum of undiscounted cash flows) and (2) is greater than its fair value.

The discounted cash flow analysis requires us to make various judgments, estimates and assumptions, many of which are interdependent, about future revenues, operating margins, growth rates, capital expenditures, working capital, discount rates and royalty rates. The starting point for the assumptions used in our discounted cash flow analysis is the annual long-range financial forecast. The annual planning process that we undertake to prepare the long-range financial forecast takes into consideration a multitude of factors, including historical growth rates and operating performance, related industry trends, macroeconomic conditions, and marketplace data, among others. Assumptions are also made for perpetual growth rates for periods beyond the long-range financial forecast period.

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Our estimates of fair value are sensitive to changes in all of these variables, certain of which relate to broader macroeconomic conditions outside our control.

The market approach analysis includes applying a multiple, based on comparable market transactions, to certain operating metrics of a reporting unit.

The significant estimates and assumptions used by management in assessing the recoverability of goodwill and intangibles are estimated future cash flows, discount rates, growth rates, as well as other factors. Any changes in these estimates or assumptions could result in an impairment charge. The estimates, based on reasonable and supportable assumptions and projections, require management’s subjective judgment. Depending on the assumptions and estimates used, the estimated results of the impairment tests can vary within a range of outcomes.

For the 2021 annual impairment testing, based on our qualitative assessment, we concluded that goodwill and intangible assets are not impaired.

Retirement Benefits

Our single-employer pension and other postretirement benefit costs and obligations are accounted for using actuarial valuations. We recognize the funded status of these plans – measured as the difference between plan assets, if funded, and the benefit obligation – on the balance sheet and recognize changes in the funded status that arise during the period but are not recognized as components of net periodic pension cost, within other comprehensive income/(loss), net of tax. The assets related to our funded pension plans are measured at fair value.

We also recognize the present value of liabilities associated with the withdrawal from multiemployer pension plans.

We consider accounting for retirement plans critical to our operations because management is required to make significant subjective judgments about a number of actuarial assumptions, which include discount rates, long-term return on plan assets and mortality rates. These assumptions may have an effect on the amount and timing of future contributions. Depending on the assumptions and estimates used, the impact from our pension and other postretirement benefits could vary within a range of outcomes and could have a material effect on our Consolidated Financial Statements.

See “— Pensions and Other Postretirement Benefits” below for more information on our retirement benefits.

Revenue Recognition

Our contracts with customers sometimes include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. We use an observable price to determine the standalone selling price for separate performance obligations if available or, when not available, an estimate that maximizes the use of observable inputs and faithfully depicts the selling price of the promised goods or services if we sold those goods or services separately to a similar customer in similar circumstances.

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PENSIONS AND OTHER POSTRETIREMENT BENEFITS

We maintain the Pension Plan, a frozen single-employer defined benefit pension plan. The Company and The NewsGuild of New York (the “Guild”) jointly sponsor the Guild-Times Adjustable Pension Plan (the “APP”), which continues to accrue active benefits. Our pension liability also includes our multiemployer pension plan withdrawal obligations. Our liability for postretirement obligations includes our liability to provide health benefits to eligible retired employees.

The table below includes the liability for all of these plans.

Pension Benefits

Our Company-sponsored defined benefit pension plans include qualified plans (funded) as well as non-qualified plans (unfunded). These plans provide participating employees with retirement benefits in accordance with benefit formulas detailed in each plan. All of our non-qualified plans, which provide enhanced retirement benefits to select employees, are frozen, except for a foreign-based pension plan discussed below.

Our joint Company and Guild-sponsored plan is a qualified plan and is included in the table below.

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

The funded status of our qualified and non-qualified pension plans as of December 26, 2021, is as follows:

We made contributions of approximately $9 million to the APP in 2021. We expect contributions made to satisfy minimum funding requirements to total approximately $10 million in 2022.

Pension expense is calculated using a number of actuarial assumptions, including an expected long-term rate of return on assets (for qualified plans) and a discount rate. Our methodology in selecting these actuarial assumptions is discussed below.

In determining the expected long-term rate of return on assets, we evaluated input from our investment consultants, actuaries and investment management firms, including our review of asset class return expectations, as well as long-term historical asset class returns. Projected returns by such consultants and economists are based on broad equity and bond indices. Our objective is to select an average rate of earnings expected on existing plan assets and expected contributions to the plan (less plan expenses to be incurred) during the year. The expected long-term rate of return determined on this basis was 3.75% at the beginning of 2021. Our plan assets had an average rate of return of approximately 1.91% in 2021 and an average annual return of approximately 13.65% over the three-year period 2019-2021. We regularly review our actual asset allocation and periodically rebalance our investments to meet our investment strategy.

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The market-related value of plan assets is multiplied by the expected long-term rate of return on assets to compute the expected return on plan assets, a component of net periodic pension cost. The market-related value of plan assets is a calculated value that recognizes changes in fair value over three years.

Based on the composition of our assets at the end of the year, we estimated our 2022 expected long-term rate of return to be 3.75%. If we had decreased our expected long-term rate of return on our plan assets by 50 basis points in 2021, pension expense would have increased by approximately $7 million for our qualified pension plans. Our funding requirements would not have been materially affected.

We determined our discount rate using a Ryan ALM, Inc. Curve (the “Ryan Curve”). The Ryan Curve provides the bonds included in the curve and allows adjustments for certain outliers (i.e., bonds on “watch”). We believe the Ryan Curve allows us to calculate an appropriate discount rate.

To determine our discount rate, we project a cash flow based on annual accrued benefits. For active participants, the benefits under the respective pension plans are projected to the date of termination. The projected plan cash flow is discounted to the measurement date, which is the last day of our fiscal year, using the annual spot rates provided in the Ryan Curve. A single discount rate is then computed so that the present value of the benefit cash flow equals the present value computed using the Ryan Curve rates.

The weighted-average discount rate determined on this basis was 2.94% for our qualified plans and 2.81% for our non-qualified plans as of December 26, 2021.

If we had decreased the expected discount rate by 50 basis points for our qualified plans and our non-qualified plans in 2021, pension expense would have decreased by approximately $0.3 million and our pension obligation would have increased by approximately $108 million as of December 26, 2021.

We will continue to evaluate all of our actuarial assumptions, generally on an annual basis, and will adjust as necessary. Actual pension expense will depend on future investment performance, changes in future discount rates, the level of contributions we make and various other factors.

We also recognize the present value of pension liabilities associated with the withdrawal from multiemployer pension plans. Our multiemployer pension plan withdrawal liability was approximately $70 million as of December 26, 2021. This liability represents the present value of the obligations related to complete and partial withdrawals that have already occurred as well as an estimate of future partial withdrawals that we considered probable and reasonably estimable. For those plans that have yet to provide us with a demand letter, the actual liability will not be known until they complete a final assessment of the withdrawal liability and issue a demand to us. Therefore, the estimate of our multiemployer pension plan liability will be adjusted as more information becomes available that allows us to refine our estimates.

See Note 9 of the Notes to the Consolidated Financial Statements for additional information regarding our pension plans.

Other Postretirement Benefits

We provide health benefits to certain primarily grandfathered retired employee groups (and their eligible dependents) who meet the definition of an eligible participant and certain age and service requirements, as outlined in the plan document. There is a de minimis liability for retiree health benefits for active employees. While we offer pre-age 65 retiree medical coverage to employees who meet certain retiree medical eligibility requirements, we do not provide post-age 65 retiree medical benefits for employees who retired on or after March 1, 2009. We accrue the costs of postretirement benefits during the employees’ active years of service and our policy is to pay our portion of insurance premiums and claims from general corporate assets.

See Note 10 of the Notes to the Consolidated Financial Statements for additional information regarding our other postretirement benefits.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 2 of the Notes to the Consolidated Financial Statements for information regarding recent accounting pronouncements.

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