THE NEW YORK TIMES COMPANY EXECUTIVE OVERVIEW We are a global media organization that includes digital and print products and related businesses. We have one reportable segment with businesses that include our core news product and other interest-specific products, and related content and services. We generate revenues principally from subscriptions and advertising. In addition, we generate other revenues primarily consisting of revenues from licensing, Wirecutter affiliate referrals, the leasing of floors in ourNew York headquarters building located at620 Eighth Avenue ,New York, New York (the "Company Headquarters"), commercial printing, 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 consolidated financial information but not presented in our financial statements prepared in accordance with generally accepted accounting principles inthe United States of America ("GAAP"). We are presenting in this report supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non-operating retirement costs or multiemployer pension plan withdrawal 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 "Non-Operating Items-Non-GAAP Financial Measurements." Financial Highlights •Diluted earnings per share from continuing operations were$0.32 and$0.14 for the second quarters of 2021 and 2020, respectively. Diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items discussed below (or "adjusted diluted earnings per share," a non-GAAP measure) were$0.36 and$0.18 for the second quarters of 2021 and 2020, respectively. •The Company had an operating profit of$73.3 million in the second quarter of 2021, compared with$28.8 million in the second quarter of 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 to$92.9 million in the second quarter of 2021 from$52.1 million in the second quarter of 2020. •Total revenues increased 23.5% to$498.5 million in the second quarter of 2021 from$403.8 million in the second quarter of 2020. •Subscription revenues increased 15.7% in the second quarter of 2021 compared with the same prior-year period. Paid digital-only subscriptions totaled approximately 7,133,000 at the end of the second quarter of 2021, a net increase of 142,000 subscriptions compared with the end of the first quarter of 2021. Of the 142,000 total net additions, 77,000 came from the Company's digital news product, while 65,000 came from the Company's Cooking, Games and Audm products. We expect total net subscription additions in 2021 to be in the range of the number of total net subscription additions in 2019, though it remains difficult to predict with precision. •Total advertising revenues increased 66.4% in the second quarter of 2021 compared with the same prior-year period, due to an increase of 79.6% in digital advertising revenues and an increase of 48.0% in print advertising revenues. •Operating costs increased 12.4% to$421.4 million in the second quarter of 2021 from$374.9 million compared with the second quarter of 2020. Operating costs before depreciation, amortization, severance and multiemployer pension plan withdrawal costs (or "adjusted operating costs," a non-GAAP measure) increased 15.4% in the second quarter of 2021 to$405.6 million from$351.6 million in the second quarter of 2020. Impact of Covid-19 Pandemic 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 tables comparing the operating results in 2021 to 2020 and to 2019 (see "Supplemental Financial Information"), as well as discussion comparing the second quarter and first six months in 2021 to 2020 and 2019. The Covid-19 pandemic impacted our business in various ways, including impacts on both our operating revenues and operating expenses. Beginning in the first quarter of 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 20 -------------------------------------------------------------------------------- environment and as a result of the pandemic. More recently, we have seen these pandemic-related trends subside and we expect total net subscription additions in 2021 to be in the range of the number of total net subscription additions in 2019, though it remains difficult to predict with precision. 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 widespread business closures, increased remote working and reductions in travel. The worldwide economic slowdown caused by the pandemic also led to a significant decline in our advertising revenues in 2020 as advertisers reduced their spending. More recently, we experienced increasing demand for advertising with the recovery of the broader market. Our live events business was and continues to be adversely affected by the impacts of the Covid-19 pandemic. In 2020 we incurred less media expense as we decreased marketing spend due to a heightened news cycle, lower print production and distribution costs due to less demand for print copies of the newspaper, lower costs related to our advertising business as a result of lower variable expenses in connection with lower advertising revenues and lower travel and entertainment costs as a result of the Covid-19 pandemic. More recently we have begun increasing some of our spending in these areas. We also incurred some additional expenses in response to the pandemic, including certain enhanced employee benefits; however these expenses have not yet been significant. We expect to incur additional costs as we prepare for our employees to return to our headquarters building and other offices, and may incur significant additional costs as circumstances evolve, including in connection with potential operational changes. 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 scope and duration of the pandemic (including the extent of a resurgence); the effect of ongoing vaccination and mitigation efforts; the impact of the pandemic on economic conditions and the companies with which we do business; 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" in our Annual Report on Form 10-K for the year endedDecember 27, 2020 , for more information. 21 -------------------------------------------------------------------------------- RESULTS OF OPERATIONS The following table presents our consolidated financial results: For the Quarters Ended For the Six Months Ended (In thousands) June 27, 2021 June 28, 2020 % Change June 27, 2021 June 28, 2020 % Change Revenues Subscription$ 339,217 $ 293,189 15.7 %$ 668,301 $ 578,623 15.5 % Advertising 112,774 67,760 66.4 % 209,890 173,897 20.7 % Other 46,506 42,801 8.7 % 93,351 94,866 (1.6) % Total revenues 498,497 403,750 23.5 % 971,542 847,386 14.7 % Operating costs Cost of revenue (excluding depreciation and amortization) 251,358 229,913 9.3 % 502,355 473,397 6.1 % Sales and marketing 53,555 39,605 35.2 % 113,708 113,389 0.3 % Product development 39,699 30,983 28.1 % 78,642 61,985 26.9 % General and administrative 62,283 58,812 5.9 % 118,860 111,673 6.4 % Depreciation and amortization 14,486 15,631 (7.3) % 29,203 30,816 (5.2) % Total operating costs 421,381 374,944 12.4 % 842,768 791,260 6.5 %
Lease termination charge 3,831 - * 3,831 - * Operating profit 73,285 28,806 * 124,943 56,126 * Other components of net periodic benefit costs 2,598 2,149 20.9 % 5,197 4,463 16.4 % Interest income and other, net 1,873 2,786 (32.8) % 3,384 16,640 (79.7) % Income from continuing operations before income taxes 72,560 29,443 * 123,130 68,303 80.3 % Income tax expense 18,243 5,781 * 27,704 11,787 * Net income 54,317 23,662 * 95,426 56,516 68.8 % Net income attributable toThe New York Times Company common stockholders$ 54,317 $ 23,662 *$ 95,426 $ 56,516 68.8 %
* Represents a change equal to or in excess of 100% or not meaningful.
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SUPPLEMENTAL FINANCIAL INFORMATION
Second Quarter
2021 vs 2020 % 2021 vs 2019 %
2021 2020 Change 2019 Change
Revenues
Digital $ 190,145 $ 145,984 30.3 % $ 112,635 68.8 %
Print 149,072 147,205 1.3 % 157,821 (5.5) %
Subscription revenues 339,217 293,189 15.7 % 270,456 25.4 %
Digital 70,995 39,531 79.6 % 58,026 22.4 %
Print 41,779 28,229 48.0 % 62,735 (33.4) %
Advertising revenues 112,774 67,760 66.4 % 120,761 (6.6) %
Other revenues 46,506 42,801 8.7 % 45,041 3.3 %
Total revenues 498,497 403,750 23.5 % 436,258 14.3 %
Operating costs
Cost of revenue (excluding
depreciation and amortization) 251,358 229,913 9.3 % 244,939 2.6 %
Sales and marketing 53,555 39,605 35.2 % 62,280 (14.0) %
Product development 39,699 30,983 28.1 % 25,526 55.5 %
General and administrative 62,283 58,812 5.9 % 50,400 23.6 %
Depreciation and amortization 14,486 15,631 (7.3) % 15,180 (4.6) %
Total operating costs 421,381 374,944 12.4 % 398,325 5.8 %
Lease termination charge 3,831 - * - *
Operating profit $ 73,285 $ 28,806 * $ 37,933 93.2 %
* Represents a change equal to or in excess of 100% or not meaningful.
Six Months
2021 vs 2020 % 2021 vs 2019 %
2021 2020 Change 2019 Change
Revenues
Digital $ 369,745 $ 275,994 34.0 % $ 222,494 66.2 %
Print 298,556 302,629 (1.3) % 318,772 (6.3) %
Subscription revenues 668,301 578,623 15.5 % 541,266 23.5 %
Digital 130,491 90,689 43.9 % 113,569 14.9 %
Print 79,399 83,208 (4.6) % 132,280 (40.0) %
Advertising revenues 209,890 173,897 20.7 % 245,849 (14.6) %
Other revenues 93,351 94,866 (1.6) % 88,205 5.8 %
Total revenues 971,542 847,386 14.7 % 875,320 11.0 %
Operating costs
Cost of revenue (excluding
depreciation and amortization) 502,355 473,397 6.1 % 484,125 3.8 %
Sales and marketing 113,708 113,389 0.3 % 137,094 (17.1) %
Product development 78,642 61,985 26.9 % 49,433 59.1 %
General and administrative 118,860 111,673 6.4 % 102,039 16.5 %
Depreciation and amortization 29,203 30,816 (5.2) % 30,098 (3.0) %
Total operating costs 842,768 791,260 6.5 % 802,789 5.0 %
Lease termination charge 3,831 - * - *
Operating profit $ 124,943 $ 56,126 * $ 72,531 72.3 %
* Represents a change equal to or in excess of 100% or not meaningful.
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Revenues
Subscription Revenues
Subscription revenues consist of revenues from subscriptions to our digital and
print products (which include our news product, as well as our Games, Cooking
and Audm 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.
2021 Compared with 2020
Subscription revenues increased 15.7% in the second quarter and increased 15.5%
in the first six months of 2021 compared with the same prior-year periods. The
increase in the second quarter and first six months was primarily due to
year-over-year growth of 25.8% in the number of subscriptions to the Company's
digital-only products as well as subscriptions graduating to higher prices from
introductory promotional pricing. Subscription revenues also benefited from an
increase in revenue from our domestic home delivery print subscription products
during both periods, primarily due to an increase in home delivery prices.
However, for the first six months of 2021 compared with the same prior-year
period, the increase attributable to higher home delivery subscription prices
was more than offset by a decrease in revenue from single-copy and bulk sales as
a result of business closures, increased levels of remote working and reductions
in travel due to the Covid-19 pandemic as well as ongoing secular trends.
Paid digital-only subscriptions totaled approximately 7,133,000 at the end of
the second quarter of 2021, a net increase of 142,000 subscriptions compared
with the end of the first quarter of 2021 and a net increase of 1,463,000
compared with the end of the second quarter of 2020. We experienced significant
growth in the number of subscriptions to our digital-only products in 2020, and
we do not expect the 2020 growth rate to be sustainable or indicative of results
for future periods. Net subscription additions for our digital-only products
were modest in the second quarter of 2021, especially in comparison to the
significant growth in the number of subscriptions we saw in the second quarter
of 2020 at the beginning of the Covid-19 pandemic. In the second quarter, which
is traditionally our slowest quarter of the year for net digital subscription
additions, we saw improvement in net additions each month during the quarter
since a low in March. We expect total net subscription additions in 2021 to be
in the range of the number of total net subscription additions in 2019, although
it remains difficult to predict with precision.
Digital-only news product subscriptions totaled approximately 5,334,000 at the
end of the second quarter of 2021, a 77,000 net increase compared with the end
of the first quarter of 2021 and a 944,000 increase compared with the end of the
second quarter of 2020. Other product subscriptions (which include our Games,
Cooking and Audm products) totaled approximately 1,799,000 at the end of the
second quarter of 2021, an increase of 65,000 subscriptions compared with the
end of the first quarter of 2021 and an increase of 519,000 subscriptions
compared with the end of the second quarter of 2020.
Print domestic home delivery subscriptions totaled approximately 803,000 at the
end of the second quarter of 2021, a net decrease of 22,000 compared with the
end of the first quarter of 2021 and a net decrease of 37,000 compared with the
end of the second quarter of 2020.
2021 Compared with 2019
Subscription revenues increased 25.4% in the second quarter and increased 23.5%
in the first six months of 2021 compared with the same prior-year periods in
2019. The increase in the second quarter and first six months of 2021 was
primarily due to year-over-year growth of 88.7% in the number of subscriptions
to the Company's digital-only products. These increases were partially offset by
a decrease in print subscription revenue from single-copy and bulk sales as a
result of business closures, increased levels of remote working and reductions
in travel due to the Covid-19 pandemic as well as secular trends. Single-copy
and bulk sales decreased 38.9% and 38.8% in the second quarter and the first six
months, respectively.
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The following table summarizes digital and print subscription revenues for the second quarters and first six months of 2021 and 2020:
For the Quarters Ended For the Six Months Ended
(In thousands) June 27, 2021 June 28, 2020 % Change June 27, 2021 June 28, 2020 % Change
Digital-only subscription
revenues:
News product subscription
revenues(1) $ 170,893 $ 132,922 28.6 % $ 332,181 $ 251,880 31.9 %
Other product
subscription revenues(2) 19,252 13,062 47.4 % 37,564 24,114 55.8 %
Subtotal digital-only
subscription revenues 190,145 145,984 30.3 % 369,745 275,994 34.0 %
Print subscription
revenues:
Domestic home delivery
subscription revenues(3) 134,755 132,971 1.3 % 269,150 266,708 0.9 %
Single-copy, NYT
International and other
subscription revenues(4) 14,317 14,234 0.6 % 29,406 35,921 (18.1) %
Subtotal print
subscription revenues 149,072 147,205 1.3 % 298,556 302,629 (1.3) %
Total subscription
revenues $ 339,217 $ 293,189 15.7 % $ 668,301 $ 578,623 15.5 %
(1) Includes revenues from subscriptions to the Company's news product. News product subscription packages that include access to the Company's Games and Cooking products
are also included in this category.
(2) Includes revenues from standalone subscriptions to the Company's Games, Cooking and Audm products.
(3) Includes free access to some of the Company's digital products.
(4) NYT International is the international edition of our print newspaper.
The following table summarizes digital and print subscriptions as of the end of the second quarters of 2021 and 2020:
Quarters Ended
(In thousands) June 27, 2021 June 28, 2020 % Change
Digital-only subscriptions:
News product subscriptions(1) 5,334 4,390 21.5 %
Other product subscriptions(2) 1,799 1,280 40.5 %
Subtotal digital-only subscriptions 7,133 5,670 25.8 %
Print subscriptions 803 840 (4.4) %
Total subscriptions 7,936 6,510 21.9 %(1) Includes subscriptions to the Company's news product. News product subscription packages that include access to the Company's Games and Cooking products are also included in this category. (2) Includes standalone subscriptions to the Company's Games, Cooking and Audm products.
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We believe that the significant growth over the last several years in
subscriptions to our 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 growth 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.
[[Image Removed: nyt-20210627_g1.jpg]]
[[Image Removed: nyt-20210627_g2.jpg]]
(1) Amounts may not add due to rounding.
(2) Print domestic home delivery subscriptions include free access to some of
our 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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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, 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 revenue is primarily
determined by the volume (e.g., impressions), 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. Other digital advertising includes
open-market programmatic advertising and creative services fees. Print
advertising includes revenue from column-inch ads and classified advertising,
including line-ads as well as preprinted advertising, also known as freestanding
inserts.
The following table summarizes digital and print advertising revenues for the
second quarters and first six months of 2021 and 2020:
For the Quarters Ended For the Six Months Ended
(In thousands) June 27, 2021 June 28, 2020 % Change June 27, 2021 June 28, 2020 % Change
Advertising revenues:
Digital $ 70,995 $ 39,531 79.6 % $ 130,491 $ 90,689 43.9 %
Print 41,779 28,229 48.0 % 79,399 83,208 (4.6) %
Total advertising $ 112,774 $ 67,760 66.4 % $ 209,890 $ 173,897 20.7 %
2021 Compared with 2020
Digital advertising revenues, which represented 63.0% of total advertising
revenues in the second quarter of 2021, increased $31.5 million , or 79.6%, to
$71.0 million compared with $39.5 million in the same prior-year period. 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 the prior year period caused by reduced
advertiser spending during the start of the Covid-19 pandemic. Core digital
advertising revenue increased $27.6 million due to growth in direct-sold display
advertising and podcast advertising revenues. Direct-sold display impressions
increased 77%, while the average rate grew 24%. Other digital advertising
revenue increased $3.9 million , primarily due to a 78% increase in creative
services fees, as well as a 12.3% increase in open-market programmatic
advertising revenue. Programmatic impressions decreased by 47%, while the
average rate increased 107%.
Digital advertising revenues, which represented 62.2% of total advertising
revenues in the first six months of 2021, increased $39.8 million , or 43.9%, to
$130.5 million compared with $90.7 million in the same prior-year period. 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 the prior year period caused by reduced
advertiser spending during the start of the Covid-19 pandemic. Core digital
advertising revenue increased $37.1 million due to growth in direct-sold display
advertising revenue and podcast advertising revenues. Direct-sold display
impressions increased 16%, while the average rate grew 31%. Other digital
advertising revenue increased $2.7 million , primarily due to a 31% increase in
creative services fees. Open-market programmatic advertising revenue was flat to
prior year as programmatic impressions decreased by 39% offsetting the average
rate increase of 63%.
Print advertising revenues, which represented 37.0% of total advertising
revenues in the second quarter of 2021, increased $13.6 million , or 48.0%, to
$41.8 million compared with $28.2 million in the same prior-year period. Print
advertising revenues, which represented 37.8% of total advertising revenues in
the first six months of 2021, declined $3.8 million , or 4.6%, to $79.4 million
compared with $83.2 million in the same prior-year period. The increase in the
second quarter of 2021 was primarily in the luxury, media and technology
categories, largely due to the impact of the comparison to weak print
advertising revenues in the second quarter of 2020 caused by reduced advertiser
spending by businesses negatively impacted by the start of the Covid-19
pandemic. The increase in the second quarter of 2021 was partially offset by
secular trends. The decline in the first six months of 2021 reflected reduced
spending in the first quarter of 2021 on print advertising by businesses
negatively impacted by the Covid-19 pandemic and secular trends, partially
offset by higher print advertising revenues in the second quarter of 2021 due to
the impact of the comparison to weak print advertising revenues in the second
quarter of 2020. Decreases, primarily in the entertainment, travel and real
estate categories were partially offset by an increase in the media category. We
expect reduced advertising spending by these businesses, along with secular
trends, to continue to adversely affect our print advertising revenues. Some of
our print advertising revenues may not return to pre-pandemic levels once
economic conditions improve.
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2021 Compared with 2019
Digital advertising revenues for the second quarter of 2021 increased $13.0
million , or 22.4%, to $71.0 million compared with $58.0 million in the second
quarter of 2019. The increase was primarily driven by higher direct-sold
advertising, including traditional display and podcasts. Core digital
advertising revenue increased $18.5 million due to growth in podcast advertising
revenues and direct-sold display advertising revenues. Direct-sold display
impressions increased 13%, while the average rate grew 24%. Other digital
advertising revenue decreased $5.5 million , primarily due to the closure of our
HelloSociety and Fake Love digital marketing agencies, partially offset by a
4.0% increase in open-market programmatic advertising revenue. Programmatic
impressions decreased by 24%, while the average rate increased 31%.
Digital advertising revenues for the first six months of 2021 increased $16.9
million , or 14.9%, to $130.5 million compared with $113.6 million in the first
six months of 2019. The increase was primarily driven by higher direct-sold
advertising, including traditional display and podcasts. Core digital
advertising revenue increased $26.5 million due to growth in podcast advertising
revenues and direct-sold display advertising revenue. Direct-sold display
impressions decreased 4%, while the average rate grew 25%. Other digital
advertising revenue decreased $9.6 million , primarily due to the closure of our
HelloSociety and Fake Love digital marketing agencies, partially offset by a
7.2% increase in open-market programmatic advertising revenue. Programmatic
impressions decreased by 3%, while the average rate increased 10%.
Print advertising revenues for the second quarter of 2021 declined $20.9
million , or 33.4%, to $41.8 million compared with $62.7 million in the same
period of 2019. Print advertising revenues for the first six months of 2021
declined $52.9 million , or 40.0%, to $79.4 million compared with $132.3 million
in the same period of 2019. The declines in both periods reflected reduced
spending on print advertising by businesses negatively impacted by the Covid-19
pandemic as well as continued secular trends.
Other Revenues
Other revenues primarily consist of revenues from licensing, Wirecutter
affiliate referrals, the leasing of floors in the Company Headquarters,
commercial printing, retail commerce, television and film, our student
subscription sponsorship program and our live events business.
2021 Compared with 2020
Other revenues increased 8.7% in the second quarter of 2021 and decreased 1.6%
in the first six months of 2021, compared with the same prior-year periods. The
increase in the second quarter of 2021 was primarily a result of higher
Wirecutter affiliate referral revenues. The decrease in the first six months of
2021 was primarily a result of fewer television episodes as well as lower
building rental revenue, live events revenue and commercial printing revenue,
partially offset by higher Wirecutter affiliate referral revenues.
Building rental revenue from the leasing of floors in the Company Headquarters
totaled $6.6 million and $7.3 million in the second quarters of 2021 and 2020,
respectively, and $12.8 million and $15.2 million in the first six months of
2021 and 2020, respectively.
2021 Compared with 2019
Other revenues increased 3.3% in the second quarter of 2021 and increased 5.8%
in the first six months, compared with the same periods in 2019. The increase in
the second quarter of 2021 was primarily a result of higher Wirecutter affiliate
referral revenues and licensing revenue related to Facebook News , partially
offset by fewer television episodes and lower live events and commercial
printing revenue. The increase in the first six months of 2021 was primarily a
result of higher Wirecutter affiliate referral revenues and licensing revenue
related to Facebook News , partially offset by lower live events revenue, lower
commercial printing revenue and fewer television episodes.
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Operating Costs
Operating costs were as follows:
For the Quarters Ended For the Six Months Ended
(In thousands) June 27, 2021 June 28, 2020 % Change June 27, 2021 June 28, 2020 % Change
Operating costs:
Cost of revenue (excluding
depreciation and amortization) $ 251,358 $ 229,913 9.3 % $ 502,355 $ 473,397 6.1 %
Sales and marketing 53,555 39,605 35.2 % 113,708 113,389 0.3 %
Product development 39,699 30,983 28.1 % 78,642 61,985 26.9 %
General and administrative 62,283 58,812 5.9 % 118,860 111,673 6.4 %
Depreciation and amortization 14,486 15,631 (7.3) % 29,203 30,816 (5.2) %
Total operating costs $ 421,381 $ 374,944 12.4 % $ 842,768 $ 791,260 6.5 %
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 our platforms.
2021 Compared with 2020
Cost of revenue increased in the second quarter of 2021 by $21.4 million , or
9.3%, compared with the second quarter of 2020, largely due to higher journalism
costs of $17.9 million , higher subscriber servicing costs of $2.9 million , and
higher advertising servicing costs of $2.8 million . The increases were partially
offset by lower print production and distribution costs of $2.5 million . The
increase in journalism costs was largely driven by growth in the number of
employees in the newsroom, Games, Cooking and audio, costs in connection with
the production of audio content 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.
Advertising servicing costs increased primarily due to higher incentive
compensation and higher outside services costs. The decrease in print production
and distribution costs was largely due to lower outside printing and
distribution costs.
Cost of revenue increased in the first six months of 2021 by $29.0 million , or
6.1%, compared with the first six months of 2020, largely due to higher
journalism costs of $27.1 million , higher subscriber servicing costs of $7.6
million , and higher digital content delivery costs of $4.2 million . The
increases were partially offset by lower print production and distribution costs
of $11.7 million . The increase in journalism costs was largely driven by growth
in the number of employees in the newsroom, Games, Cooking and audio, costs in
connection with the production of audio content and a higher incentive
compensation accrual. This cost growth was partially offset by lower content
creation costs as a result of fewer television episodes. 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 a higher incentive compensation accrual and
higher cloud storage costs. The decrease in print production and distribution
costs was largely due to lower newsprint consumption and pricing, as well as
lower outside printing and distribution costs.
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2021 Compared with 2019
Cost of revenue increased in the second quarter of 2021 by $6.4 million , or
2.6%, compared with the second quarter of 2019, largely due to higher journalism
costs of $19.8 million , higher subscriber servicing costs of $5.7 million , and
higher digital content delivery costs of $5.3 million . The increases were
partially offset by lower print production and distribution costs of $20.0
million and lower advertising servicing costs of $4.4 million . The increase in
journalism costs was largely driven by growth in the number of employees in the
newsroom, Games, Cooking and audio, costs in connection with the production of
audio content 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 an increase in the number of employees and
higher cloud-related costs. The decrease in print production and distribution
costs was largely due to lower distribution costs, lower newsprint consumption
and pricing, and lower 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 lower volume of creative services
campaigns and live events.
Cost of revenue increased in the first six months of 2021 by $18.2 million , or
3.8%, compared with the first six months of 2019, largely due to higher
journalism costs of $42.8 million , higher subscriber servicing costs of $11.8
million , and higher digital content delivery costs of $11.5 million . The
increases were partially offset by lower print production and distribution costs
of $40.0 million and lower advertising costs of $7.8 million . The increase in
journalism costs was largely driven by growth in the number of employees in the
newsroom, Games, Cooking and audio, costs in connection with the production of
audio content 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 growth in the number of employees and higher
cloud storage costs. The decrease in print production and distribution costs was
largely due to fewer print copies produced and lower newsprint pricing, as well
as lower distribution costs 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 in the second quarter of 2021 increased by $14.0
million , or 35.2%, compared with the second quarter of 2020, primarily due to
higher subscription-related media spending, which the Company had reduced during
the start of the Covid-19 pandemic.
Sales and marketing costs in the first six months of 2021 remained relatively
flat compared with the first six months of 2020. The increase in marketing costs
resulting from higher subscription-related media expenses was partially offset
by lower advertising sales costs.
Media expenses, a component of sales and marketing costs that represents the
cost to promote our subscription business, increased to $29.0 million in the
second quarter of 2021 from $16.5 million in the second quarter of 2020 and
increased to $64.9 million in the first six months of 2021 from $61.9 million in
the first six months of 2020 as the Company increased its marketing spend.
2021 Compared with 2019
Sales and marketing costs in the second quarter of 2021 decreased by $8.7
million , or 14.0%, compared with the second quarter of 2019, primarily as a
result of the closure of our HelloSociety and Fake Love digital marketing
agencies and lower media expenses.
Sales and marketing costs in the first six months of 2021 decreased by $23.4
million , or 17.1%, compared with the first six months of 2019. The decrease in
sales and marketing costs are primarily a result of the factors identified
above.
Media expenses decreased to $29.0 million in the second quarter of 2021 from
$33.9 million in the second quarter of 2019 and decreased to $64.9 million in
the first six months of 2021 from $78.7 million in the first six months of 2019
as the Company reduced its marketing spend during the Covid-19 pandemic.
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 in the second quarter of 2021 increased by $8.7
million , or 28.1%, compared with the second quarter of 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.
Product development costs in the first six months of 2021 increased by $16.7
million , or 26.9%, compared with the first six months of 2020, largely due to
the factors identified above.
2021 Compared with 2019
Product development costs in the second quarter of 2021 increased by $14.2
million , or 55.5%, compared with the second quarter of 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.
Product development costs in the first six months of 2021 increased by $29.2
million , or 59.1%, compared with the first six months of 2019, largely due to
the factors identified above.
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 in the second quarter of 2021 increased by $3.5
million , or 5.9%, compared with the second quarter of 2020, primarily due to
growth in the number of employees, higher outside services and a higher
incentive compensation accrual, partially offset by severance expense in the
second quarter of 2020 compared with no expense in the second quarter of 2021.
General and administrative costs in the first six months of 2021 increased by
$7.2 million , or 6.4%, compared with the first six months of 2020, primarily due
to a higher incentive compensation accrual, higher outside services and growth
in the number of employees, partially offset by a severance charge in the second
quarter of 2020, a favorable fair market value adjustment in 2021, and lower
building operations and maintenance costs in 2021.
2021 Compared with 2019
General and administrative costs in the second quarter of 2021 increased by
$11.9 million , or 23.6%, compared with the second quarter of 2019, primarily due
to growth in the number of employees, mainly in the enterprise technology and
human resources departments in support of employee growth in other areas, higher
outside services and a higher incentive compensation accrual.
General and administrative costs in the first six months of 2021 increased by
$16.8 million , or 16.5%, compared with the first six months of 2019, largely due
to the factors identified above, partially offset by a favorable fair market
value adjustment.
Depreciation and Amortization
2021 Compared with 2020
Depreciation and amortization costs in the second quarter and first six months
of 2021 decreased $1.1 million , or 7.3%, and $1.6 million , or 5.2%,
respectively, compared with the same prior-year period. The decrease in both
periods is due to lower depreciation of software assets.
2021 Compared with 2019
Depreciation and amortization costs in the second quarter and first six months
of 2021 compared with the same periods in 2019 were flat.
See Note 7 of the Notes to the Condensed Consolidated Financial Statements for
additional information regarding other items.
NON-OPERATING ITEMS
Other Components of Net Periodic Benefit Costs
See Note 9 of the Notes to the Condensed Consolidated Financial Statements for
information regarding other components of net periodic benefit costs.
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Interest Income and other, net
See Note 7 of the Notes to the Condensed Consolidated Financial Statements for
information regarding interest income/(expense) and other, net.
Income Taxes
See Note 10 of the Notes to the Condensed Consolidated Financial Statements for
information regarding income taxes.
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
•operating costs before depreciation, amortization, severance and multiemployer
pension plan withdrawal costs (or adjusted operating costs).
The special item in 2021 consisted of:
•a $3.8 million charge ($2.8 million or $0.02 per share after tax) in the second
quarter resulting from the termination of a tenant's lease in our headquarters
building.
The special item in 2020 consisted of:
•a $10.1 million gain ($7.4 million after tax or $0.04 per share) in the first
quarter related to a non-marketable equity investment transaction. The gain is
comprised 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 and other, net in our
Condensed Consolidated Statements of Operations.
There were no special items in 2019.
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 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 is useful in evaluating the ongoing
performance of the Company's 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 multiemployer pension plan withdrawal costs. 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
32
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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 these non-GAAP financial measures to the most directly
comparable GAAP measures are set out in the tables below.
Reconciliation of diluted earnings per share from continuing operations excluding severance, non-operating retirement costs and special items (or adjusted diluted
earnings per share from continuing operations)
For the Quarters Ended For the Six Months Ended
June 27, 2021 June 28, 2020 % Change June 27, 2021 June 28, 2020 % Change
Diluted earnings per share
from continuing operations $ 0.32 $ 0.14 * $ 0.57 $ 0.34 67.6 %
Add:
Severance - 0.04 * - 0.04 *
Non-operating retirement
costs:
Multiemployer pension plan
withdrawal costs 0.01 0.01 - 0.02 0.02 -
Other components of net periodic benefit costs 0.02 0.01 * 0.03 0.03
-
Special items:
Gain from non-marketable equity security - - * - (0.06) * Lease termination charge 0.02 - * 0.02 - * Income tax expense of adjustments (0.01) (0.02) (50.0) % (0.02) (0.01) * Adjusted diluted earnings per share from continuing operations(1)$ 0.36 $ 0.18 *$ 0.62 $ 0.35 77.1 % (1)Amounts may not add due to rounding. * Represents a change equal to or in excess of 100% or not meaningful.
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)
For the Quarters Ended
2021 vs 2020 % 2021 vs 2019 %
2021 2020 Change 2019 Change
Operating profit $ 73,285 $ 28,806 * $ 37,933 93.2 %
Add:
Depreciation and amortization 14,486 15,631 (7.3) % 15,180 (4.6) %
Severance - 6,305 * 672 *
Multiemployer pension plan
withdrawal costs 1,301 1,400 (7.1) % 1,801 (27.8) %
Special items:
Lease termination charge 3,831 - * - *
Adjusted operating profit $ 92,903 $ 52,142 78.2 % $ 55,586 67.1 %
* Represents a change equal to or in excess of 100% or not meaningful.
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Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)
For the Quarters Ended
2021 vs 2020 % 2021 vs 2019 %
2021 2020 Change 2019 Change
Operating costs $ 421,381 $ 374,944 12.4 % $ 398,325 5.8 %
Less:
Depreciation & amortization 14,486 15,631 (7.3) % 15,180 (4.6) %
Severance - 6,305 * 672 *
Multiemployer pension plan
withdrawal costs 1,301 1,400 (7.1) % 1,801 (27.8) %
Adjusted operating costs $ 405,594 $ 351,608 15.4 % $ 380,672 6.5 %
* Represents a change equal to or in excess of 100% or not meaningful.
Reconciliation of operating profit before depreciation and amortization, severance, multiemployer pension plan withdrawal costs and special items (or adjusted operating profit)
For the Six Months Ended
2021 vs 2020 % 2021 vs 2019 %
2021 2020 Change 2019 Change
Operating profit $ 124,943 $ 56,126 * $ 72,531 72.3 %
Add:
Depreciation and amortization 29,203 30,816 (5.2) % 30,098 (3.0) %
Severance 406 6,675 (93.9) % 2,075 (80.4) %
Multiemployer pension plan
withdrawal costs 2,627 2,823 (6.9) % 3,250 (19.2) %
Special items:
Lease termination charge 3,831 - * - *
Adjusted operating profit $ 161,010 $ 96,440 67.0 % $ 107,954 49.1 %
* Represents a change equal to or in excess of 100% or not meaningful.
Reconciliation of operating costs before depreciation and amortization, severance and multiemployer pension plan withdrawal costs (or adjusted operating costs)
For the Six Months Ended
2021 vs 2020 % 2021 vs 2019 %
2021 2020 Change 2019 Change
Operating costs $ 842,768 $ 791,260 6.5 % $ 802,789 5.0 %
Less:
Depreciation & amortization 29,203 30,816 (5.2) % 30,098 (3.0) % Severance 406 6,675 (93.9) % 2,075 (80.4) % Multiemployer pension plan withdrawal costs 2,627 2,823 (6.9) % 3,250 (19.2) % Adjusted operating costs$ 810,532 $ 750,946 7.9 %$ 767,366 5.6 %
* Represents a change equal to or in excess of 100% or not meaningful.
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LIQUIDITY AND CAPITAL RESOURCES
We believe our cash balance and cash provided by operations, in combination with
other sources of cash, will be sufficient to meet our financing needs over the
next twelve months. Although there is uncertainty related to the anticipated
continued effect of the Covid-19 pandemic on our business (as referenced above
and in "Item 1A - Risk Factors" in our Annual Report on Form 10-K for the year
ended December 27, 2020 ), given the strength of our balance sheet and based on
the information currently available to us, we do not expect the impact of the
pandemic to have a material impact on our liquidity position. As of June 27,
2021 , we had cash, cash equivalents and short- and long-term marketable
securities of $946.6 million . Our cash and marketable securities balances
between the end of 2020 and June 27, 2021 , increased, primarily due to cash
proceeds from operating activities, partially offset by dividend payments,
capital expenditures and share-based compensation tax withholding.
We have paid quarterly dividends on the Class A and Class B Common Stock each
quarter since late 2013. In February 2021 , the Board of Directors approved an
increase in the quarterly dividend to $0.07 per share, which was paid in April
2021 . On June 30, 2021 , the Board of Directors declared a quarterly dividend of
$0.07 per share on the Class A and Class B Common Stock, which was paid in July
2021 . We currently expect to continue to pay comparable cash dividends in the
future, although changes in our dividends will be considered by our Board of
Directors in light of our earnings, capital requirements, financial condition
and other factors considered relevant.
Capital Resources
Sources and Uses of Cash
Cash flows provided by/(used in) by category were as follows:
For the Six Months Ended
(In thousands) June 27, 2021 June 28, 2020 % Change
Operating activities $ 110,434 $ 118,590 (6.9) %
Investing activities $ (46,332) $ (72,938) (36.5) %
Financing activities $ (30,285) $ (28,192) 7.4 %
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, pension and other benefits, raw materials, marketing expenses and income taxes. Net cash provided by operating activities decreased in the first six months of 2021 compared with the same prior-year period primarily due to lower cash collections from accounts receivable, an increase in other assets 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 and acquisitions of new businesses and investments. Net cash used in investing activities in the first six months of 2021 was primarily related to$33.9 million in net purchases of marketable securities and$14.7 million in capital expenditures payments. 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 finance lease obligations and share-based compensation tax withholding. Net cash used in financing activities in the first six months of 2021 was primarily related to dividend payments of$21.8 million and share-based compensation tax withholding payments of$10.9 million . 35 -------------------------------------------------------------------------------- Restricted Cash We were required to maintain$14.6 million of restricted cash as ofJune 27, 2021 , and$15.9 million as ofDecember 27, 2020 , substantially all of which is set aside to collateralize workers' compensation obligations. Capital Expenditures Capital expenditures totaled approximately$15 million and$17 million in the first six months of 2021 and 2020, respectively. The decrease in capital expenditures was primarily driven by lower expenditures related to improvements at ourCollege Point, N.Y. , printing and distribution facility and lower investments in technology, partially offset by improvements at our newsroom bureaus and Company Headquarters. The cash payments related to capital expenditures totaled approximately$15 million and$22 million in the first six months of 2021 and 2020, respectively. Third-Party Financing InSeptember 2019 , we entered into a$250 million five-year unsecured credit facility (the "Credit Facility"). Certain of our domestic subsidiaries have guaranteed our obligations under the Credit Facility. As ofJune 27, 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. CRITICAL ACCOUNTING POLICIES Our critical accounting policies are detailed in our Annual Report on Form 10-K for the year endedDecember 27, 2020 . Other than as described in Note 2 of the Notes to the Condensed Consolidated Financial Statements, as ofJune 27, 2021 , our critical accounting policies have not changed fromDecember 27, 2020 . CONTRACTUAL OBLIGATIONS & OFF-BALANCE SHEET ARRANGEMENTS Our contractual obligations and off-balance sheet arrangements are detailed in our Annual Report on Form 10-K for the year endedDecember 27, 2020 . As ofJune 27, 2021 , our contractual obligations and off-balance sheet arrangements have not changed materially fromDecember 27, 2020 . FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, including the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations," contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Terms such as "aim," "anticipate," "believe," "confidence," "contemplate," "continue," "conviction," "could," "drive," "estimate," "expect," "forecast," "future," "goal," "guidance," "intend," "likely," "may," "might," "objective," "opportunity," "optimistic," "outlook," "plan," "position," "potential," "predict," "project," "seek," "should," "strategy," "target," "will," "would" or similar statements or variations of such words and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms. Forward-looking statements are based upon our current expectations, estimates and assumptions and involve risks and uncertainties that change over time; actual results could differ materially from those predicted by such forward-looking statements. These risks and uncertainties include, but are not limited to: the impact of the Covid-19 pandemic; significant competition in all aspects of our business; our ability to improve and scale our technical infrastructure and respond and adapt to changes in technology and consumer behavior; our ability to continue to retain and grow our subscriber base; numerous factors that affect our advertising revenues, including economic conditions, market dynamics, audience fragmentation, evolving digital advertising trends and the evolution of our strategy; damage to our brand or reputation; economic, geopolitical and other risks associated with the international scope of our business and foreign operations; our ability to attract and maintain a highly skilled and diverse workforce; adverse results from litigation or governmental investigations; the risks and challenges associated with investments we make in new and existing products and services; risks associated with acquisitions, divestitures, investments and other transactions; the effects of the fixed cost nature of significant portions of our expenses; the effects of the size and volatility of our pension plan obligations; liabilities that may result from our participation in multiemployer pension plans; the impact of labor negotiations and agreements; increases in the price of newsprint or significant disruptions in our newsprint supply chain or newspaper printing and distribution channels; security breaches and other network and information systems disruptions; our ability to comply with laws and regulations, including with respect to privacy, data protection and consumer marketing practices; payment processing risk; defects, delays or interruptions in the cloud-based hosting services we utilize; our ability to protect our intellectual property; claims of intellectual property infringement that we have been, and may be in the future, be subject to; the effects of restrictions on our operations as a result of the terms of our credit facility; our future access to capital markets and other financing options; and the concentration of control of our company due to our dual-class capital structure. More information regarding these risks and uncertainties and other important factors that could cause actual results to differ materially from those in the forward-looking statements is set forth in "Item 1A - Risk Factors" in our Annual Report 36 -------------------------------------------------------------------------------- on Form 10-K for the year endedDecember 27, 2020 , and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Form 10-Q. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. 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. Item 3. Quantitative and Qualitative Disclosures About Market Risk Our Annual Report on Form 10-K for the year endedDecember 27, 2020 , details our disclosures about market risk. As ofJune 27, 2021 , there were no material changes in our market risks fromDecember 27, 2020 . 37
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