FORM 10-Q

UNITED STATES
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549

QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_|.

Number of shares of each class of the registrant’s common stock outstanding as of August 2, 2002 (exclusive of treasury shares):

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars and shares in thousands, except per share data)

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(Dollars in thousands)

SUPPLEMENTAL CASH FLOW INFORMATION

See Notes to Condensed Consolidated Financial Statements.

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THE NEW YORK TIMES COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.  General

     The accompanying Notes to the Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 30, 2001, for The New York Times Company (the “Company”) filed with the Securities and Exchange Commission (the “SEC”). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations, as of and for the interim periods ended, have been included. Due to the seasonal nature of the Company’s business, results for the interim periods are not necessarily indicative of a full year’s operations. The fiscal periods included herein comprise 13 weeks for the three-month periods and 26 weeks for the six-month periods.

     As of June 30, 2002, the Company’s significant accounting policies and estimates, which are detailed in the Company’s Annual Report on Form 10-K, have not changed from December 30, 2001, except for the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets.

2.  Stock Option and Employee Stock Purchase Plans

     The Company applies Accounting Principles Board Opinion (“APB”) No. 25, Accounting for Stock Issued to Employees, and related interpretations to account for stock options granted under its 1991 Executive Stock Incentive Plan and shares issued under its employee stock purchase plan (“ESPP”). APB 25 does not require compensation expense to be recorded if certain conditions are met. The Company satisfies the conditions for non-recognition of compensation expense under APB 25, and therefore no compensation expense for stock options granted or shares issued under the ESPP is reflected in the Company’s Condensed Consolidated Financial Statements.

     Had compensation expense been recorded over the vesting period based on the fair value at the grant date of stock options and the shares issued under the ESPP, the Company’s net income and diluted earnings per share would have been reduced by $12.4 million and $.08 per share in the second quarter of 2002, and $24.8 million and $.16 per share for the first six months of 2002. The Company’s net income and diluted earnings per share would have been reduced by $11.8 million and $.07 per share in the second quarter of 2001, and $23.6 million and $.14 per share for the first six months of 2001.

3.  Goodwill and Other Intangible Assets - Adoption of SFAS 142

     At the beginning of the Company’s 2002 fiscal year, the Company adopted SFAS 142. SFAS 142 eliminated the amortization of goodwill and certain other intangibles and requires an impairment test of their carrying value. An initial impairment test of goodwill and certain other intangibles must be completed in the year of adoption with at least an annual impairment test thereafter. The Company completed the initial impairment tests in the first quarter of 2002, which did not result in an impairment of goodwill or certain other intangibles. The provisions of SFAS 142 are effective for periods after adoption and retroactive application is not permitted. Therefore, the historical results of periods prior to 2002 in the Company’s Condensed Consolidated Statements of Income do not reflect the effect of SFAS 142 and, accordingly, the second quarter of 2001 includes amortization expense of $10.6 million in “Selling, general and administrative (‘SGA’) expenses” and $0.1 million in “Net (loss)/income from joint ventures” ($9.2 million after tax or $.06 per share, collectively). The first six months of 2001 include amortization expense of $21.2 million in SGA expenses and $0.2 million in “Net (loss)/income from joint ventures” ($18.5 million after tax or $.11 per share, collectively).

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     The following information represents pro forma net income and earnings per share assuming the adoption of SFAS 142 at the beginning of the Company’s 2001 fiscal year:

     Included in “Other intangible assets acquired” in the Company’s Condensed Consolidated Balance Sheets are other intangible assets, that are subject to amortization as well as those that are no longer subject to amortization in accordance with the adoption of SFAS 142.

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     Other intangible assets as of June 30, 2002, and December 30, 2001, were as follows:

     Amortization expense for the first six months of 2002 was $8.6 million and is expected to be $17.2 million for the full-year 2002. Estimated annual amortization expense for the next five years related to other intangible assets subject to amortization is expected to be as follows:

4.   Investments/Dispositions

     Investments:

     In April 2002, the Company and Discovery Communications, Inc. formed a joint venture in Discovery Civilization, a digital cable television channel (“DC”). The Company invested approximately $100 million for a 50% interest in DC.

     In February 2002, New England Sports Ventures, LLC (“NESV”), in which the Company is an investor, purchased the Boston Red Sox baseball club (including Fenway Park and approximately 80% of New England Sports Network, a regional cable sports network). The Company invested approximately $75 million for an interest of approximately 15% in NESV.

     The Company’s investments in DC and NESV are accounted for under the equity method, and are recorded in “Investments in joint ventures” in the Company’s Condensed Consolidated Balance Sheet. The Company’s proportionate shares of the operating results of DC and NESV are recorded in “Net (loss)/income from joint ventures” in the Company’s Condensed Consolidated Statement of Income and in “Investment in joint ventures” in the Company’s Condensed Consolidated Balance Sheet. The final allocations of the purchase prices of DC and NESV among the fair value of the assets acquired, net of the liabilities assumed, is in the process of being completed. The Company’s results from DC and NESV could be affected by these final allocations.

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     Magazine Sale - Discontinued Operations:

     On April 2, 2001, the Company sold Golf Digest, Golf Digest Woman, Golf World, Golf World Business (“Magazine Group”) and GolfDigest.com, for $435.0 million. In the second quarter and first six months of 2001, the Company recorded a gain from the sale of $412.0 million ($241.3 million after tax), or $1.49 per share in the second quarter and $1.47 per share for the first six months of 2001.

     The results of operations of the Magazine Group in 2001 are reported as discontinued operations. In 2001, revenues, operating profit and EBITDA (earnings before interest, taxes, depreciation and amortization) for the Magazine Group were $26.5 million, $2.0 million and $2.3 million, respectively.

5.  Income Taxes

     “Accrued income taxes” in the Company’s Condensed Consolidated Balance Sheets decreased as of June 30, 2002, from December 30, 2001, because income taxes payable, which were primarily related to the gain on the sale of the Magazine Group and GolfDigest.com, were paid on January 15, 2002. The Internal Revenue Service granted all companies in the five boroughs of New York City an extension on income taxes payable after September 11, 2001, until January 15, 2002.

     The Company’s effective income tax rate in the second quarter of 2002 was 39.0% compared with 33.8% in the 2001 second quarter, assuming the adoption of SFAS 142 in 2001. On the same basis, the effective income tax rate for the first six months of 2002 was 39.0% compared with 37.0% for the first six months of 2001. The Company expects its effective tax rate in 2002 will be 39.0% compared with 37.5% in 2001, assuming SFAS 142 was adopted in the prior year.

6.   Staff Reductions

     The Company recorded work force reduction expenses of $3.0 million and $12.6 million in the second quarter and first six months of 2002. Total work force reduction expenses of $79.1 million were recorded in the second quarter and first six months of 2001. These charges are included in SGA expenses in the Company’s Condensed Consolidated Statements of Income. Accruals for these work force reduction expenses are primarily included in “Accrued expenses” in the Company’s Condensed Consolidated Balance Sheets and amounted to $7.1 million as of June 30, 2002, and $20.6 million as of December 30, 2001. Most of the accruals outstanding as of June 30, 2002, will be paid within one year.

7.   Debt Obligations

     In June 2002, the Company increased the amount available to borrow under its revolving credit agreements to $600.0 million from $540.0 million to provide additional credit flexibility over the next year. The Company’s one-year credit agreement was renewed and increased to $330.0 million from $270.0 million and will now mature in June 2003. The Company’s multi-year credit agreement remained at $270.0 million and will mature in June 2006. These revolving credit agreements require, among other provisions, specified levels of stockholders’ equity. Under these agreements, $455.3 million of stockholders’ equity was unrestricted as of June 30, 2002, and $349.7 million was unrestricted as of December 30, 2001.

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     The Company had $210.9 million in commercial paper outstanding as of June 30, 2002, and $158.3 million as of December 30, 2001. These commercial paper obligations are supported by the revolving credit agreements, which had no amounts outstanding as of June 30, 2002, or December 30, 2001. The amount available under the commercial paper facility was $389.1 million as of June 30, 2002.

     In June and April 2002, the Company issued $52.0 million and $50.0 million in notes under its medium-term note program, respectively. The medium-term notes issued in June 2002 pay interest semi-annually at 4.625% and mature on June 25, 2007, and the medium-term notes issued in April 2002 pay interest semi-annually at 5.35% and mature on April 16, 2007. The total issuance of $102.0 million in 2002 was the remaining amount available under the Company’s 1998 shelf registration.

     The Company’s total debt, including commercial paper and capital leases, was $914.6 million as of June 30, 2002, and $759.5 million as of December 30, 2001. The increase in total debt was due to the issuance of medium-term notes and commercial paper, primarily due to the payment of income taxes on January 15, 2002 (see Note 5), and the financing of the Company’s investments in DC and NESV.

     On July 26, 2002, the Company filed a $300.0 million shelf Registration Statement on Form S-3 with the SEC for unsecured debt securities that may be issued by the Company from time to time. This registration statement became effective on August 6, 2002.

8.  Common Stock

     On February 21, 2002, the Board of Directors authorized an additional $300.0 million of repurchase expenditures under the Company’s stock repurchase program. During the first six months of 2002, the Company repurchased 1.0 million shares of Class A Common Stock at a cost of $43.0 million. The average price of these repurchases was $43.20 per share. From July 1, 2002, through August 2, 2002, the Company has repurchased 1.1 million shares at a cost of $46.0 million. As of August 2, 2002, the remaining amount of the aggregate repurchase authorizations from the Company’s Board of Directors was $342.8 million.

     On April 16, 2002, the Board of Directors authorized a $.01 per share increase in the quarterly dividend on the Company’s Class A and Class B Common Stock from $.125 per share to $.135 per share, effective with the June 2002 dividend.

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9.   Comprehensive Income

     Comprehensive income for the Company includes foreign currency translation adjustments, unrealized gains/(losses) on available-for-sale securities, unrealized gains/(losses) on cash-flow hedges, as well as net income reported in the Company’s Condensed Consolidated Statements of Income.

     Comprehensive income for 2002 and 2001 was as follows:

     The “Accumulated other comprehensive loss” in the Company’s Condensed Consolidated Balance Sheets was net of a deferred income tax asset of $5.6 million as of June 30, 2002, and $6.5 million as of December 30, 2001.

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10.   Segment Statements of Income

     The Company’s reportable segments consist of its Newspaper, Broadcast and digital business division, New York Times Digital. These segments are evaluated regularly by key management in assessing performance and allocating resources. The results of operations of the Magazine Group, which was sold in April 2001, are classified as discontinued operations for all periods presented.

     See Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q for more information on the Company’s reportable segments.

     (A) Intersegment eliminations primarily include license fees between New York Times Digital and other segments.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

     Advertising revenues accounted for approximately 66% and circulation revenues accounted for 27% of the Company’s total revenues for the first six months of 2002. For the first half of 2002, the Company experienced a decline in its advertising revenue compared with the first half of 2001, primarily as a result of lower advertising volume. Circulation revenue increased for the first six months of 2002 compared with the first six months of 2001, primarily due to higher subscription prices at The New York Times (“The Times”) and The Boston Globe (the “Globe”). For 2002, the Company now expects circulation revenue growth in the range of 6% to 8%, up from its earlier guidance of 5% to 7%.

     For the first half of 2002, total costs decreased compared with the first half of 2001, excluding special items and the effect of SFAS 142 (see below). This resulted from a decrease in newsprint expense, which was partially offset by an increase in bonus accruals linked to improved performance and higher benefits costs. For 2002, the Company expects an increase in total costs of 1% to 2%, excluding work force reduction expenses and the effect of SFAS 142 (see below). Newsprint is the major component of the Company’s cost of raw materials. Newsprint market prices, on average, were lower for the first half of 2002 than for the first half of 2001 and are expected to be below 2001 levels for the remainder of the year.

     The Company currently expects that third-quarter diluted earnings per share will be within a range of $.34 to $.38 and that the full-year 2002 diluted earnings per share will be within a range of $1.90 to $2.00, excluding special items. The Company’s performance for the second half of 2002 depends on the strength of the advertising recovery. While the Company has reported sequential improvement in the rate of year-over-year advertising revenue declines, there is no certainty that this will continue.

     At the beginning of the Company’s 2002 fiscal year, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets. SFAS 142 eliminated the amortization of goodwill and certain other intangibles and requires an impairment test of their carrying value. An initial impairment test of goodwill and certain other intangibles must be completed in the year of adoption with at least an annual impairment test thereafter. The Company completed the initial impairment tests in the first quarter of 2002, which did not result in an impairment of goodwill or certain other intangibles. The provisions of SFAS 142 are effective for periods after adoption and retroactive application is not permitted. Therefore, the historical results of periods prior to 2002 in the Company’s Condensed Consolidated Statements of Income do not reflect the effect of SFAS 142 and, accordingly, the second quarter of 2001 includes amortization expense of $10.6 million in “Selling, general and administrative (‘SGA’) expenses” and $0.1 million in “Net (loss)/income from joint ventures” ($9.2 million after tax or $.06 per share, collectively). The first six months of 2001 include amortization expense of $21.2 million in SGA expenses and $0.2 million in “Net (loss)/income from joint ventures” ($18.5 million after tax or $.11 per share, collectively).

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     Management believes a more meaningful comparison of the results of operations for 2002 and 2001 is achieved by using the 2001 results of operations adjusted as if SFAS 142 had been adopted retroactively. Therefore, the historical results for 2001 included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have been adjusted as if SFAS 142 had been adopted retroactively.

Seasonality

     Advertising revenues cause the Company’s quarterly consolidated results to vary by season. Second-quarter and fourth-quarter advertising volume is traditionally higher than first- and third-quarter volume since economic activity tends to be lower after the holidays and in the summer. National and local economic conditions, particularly in the New York City and Boston metropolitan regions, also affect the levels of the Company’s retail, national and most particularly, classified advertising revenue.

Investments

     In April 2002, the Company and Discovery Communications, Inc. formed a joint venture in Discovery Civilization, a digital cable television channel (“DC”). The Company invested approximately $100 million for a 50% interest in DC.

     In February 2002, New England Sports Ventures, LLC (“NESV”), in which the Company is an investor, purchased the Boston Red Sox baseball club (including Fenway Park and approximately 80% of New England Sports Network, a regional cable sports network). The Company invested approximately $75 million for an interest of approximately 15% in NESV.

     The Company’s investments in DC and NESV are accounted for under the equity method, and are recorded in “Investments in joint ventures” in the Company’s Condensed Consolidated Balance Sheet. The Company’s proportionate shares of the operating results of DC and NESV are recorded in “Net (loss)/income from joint ventures” in the Company’s Condensed Consolidated Statement of Income and in “Investment in joint ventures” in the Company’s Condensed Consolidated Balance Sheet. The final allocations of the purchase prices of DC and NESV among the fair value of the assets acquired, net of the liabilities assumed, is in the process of being completed. The Company’s results from DC and NESV could be affected by these final allocations.

Discontinued Operations

     On April 2, 2001, the Company sold Golf Digest, Golf Digest Woman, Golf World, Golf World Business (“Magazine Group”) and GolfDigest.com, for $435.0 million. In the second quarter and first six months of 2001, the Company recorded a gain from the sale of $412.0 million ($241.3 million after tax), or $1.49 per share in the second quarter and $1.47 per share for the first six months of 2001.

     The results of operations of the Magazine Group in 2001 are reported as discontinued operations. In 2001, revenues, operating profit and EBITDA (earnings before interest, taxes, depreciation and amortization) for the Magazine Group were $26.5 million, $2.0 million and $2.3 million, respectively.

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Special Items

     Total special items amounted to $1.7 million ($1.0 million after tax or $.01 per share) in the second quarter of 2002 and $10.1 million ($6.2 million after tax or $.04 per share) for the first six months of 2002.

     Special items in the second quarter and first six months of 2002 included the following:

     Total special items amounted to $334.2 million ($194.9 million after tax or $1.20 per share) in the second quarter of 2001 and $335.4 million ($195.7 million after tax or $1.19 per share) for the first six months of 2001.

     Special items in the second quarter and first six months of 2001 included the following:

Operating Results

     The Company’s consolidated financial results for the quarter and six months ended June 30, 2002, compared with the adjusted quarter and six months ended July 1, 2001, were as follows:

     * Represents percentages greater than or equal to 100%.

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     Total revenues for the Company increased 1.6% to $772.2 million in the second quarter of 2002 from $760.3 million in the second quarter of 2001. Circulation revenue increased 12.7% and advertising revenue decreased 1.4% in the second quarter of 2002 compared with the second quarter of 2001. For the first half of 2002, total revenues for the Company decreased 1.9% to $1,509.3 million from $1,538.4 million for the first half of 2001. Circulation revenue increased 10.8% and advertising revenue decreased 5.9% for the first half of 2002 compared with the first half of 2001. Circulation revenue increased primarily due to higher subscription prices at The Times and the Globe and advertising revenue decreased primarily as a result of lower advertising volume.

     Operating profit in the second quarter of 2002 increased 4.9% to $144.7 million from an adjusted $137.9 million in the second quarter of 2001, excluding special items. On the same basis, operating profit for the first half of 2002 decreased 3.9% to $252.8 million from an adjusted $263.0 million for the first half of 2001. Including special items, operating profit in the second quarter of 2002 increased to $141.7 million from an adjusted $58.8 million in the corresponding period of 2001. On the same basis, operating profit for the first six months of 2002 increased 30.7% to $240.3 million from an adjusted $183.9 million for the first six months of 2001.

     The increase in operating profit in the second quarter of 2002, excluding special items, was due to an increase in circulation revenue, partially offset by a decrease in advertising revenue and a slight increase in total costs. On the same basis, operating profit for the first six months of 2002 decreased primarily from lower advertising revenue, partially offset by an increase in circulation revenue and a decrease in total costs.

     The 2002 second-quarter net income of $79.8 million equaled the adjusted amount of $79.8 million in the second quarter of 2001, excluding special items. On the same basis, net income for the first half of 2002 decreased 6.8% to $139.4 million from an adjusted $149.5 million for the first half of 2001. Including special items, net income in the second quarter of 2002 decreased 71.3% to $78.8 million from an adjusted $274.7 million in the second quarter of 2001. On the same basis, net income for the first six months of 2002 decreased 61.4% to $133.2 million from an adjusted $345.2 million for the first six months of 2001.

EBITDA

     EBITDA in the second quarter of 2002 increased 2.9% to $180.3 million from $175.2 million in the second quarter of 2001, excluding special items. On the same basis, EBITDA for the first half of 2002 decreased 4.5% to $327.1 million from $342.6 million for the first half of 2001. Including special items, EBITDA in the second quarter of 2002 decreased 65.1% to $177.3 million from $508.2 million in the second quarter of 2001. On the same basis, EBITDA for the first six months of 2002 decreased 53.4% to $314.5 million from $675.6 million for the first six months of 2001.

     EBITDA is presented since it is a widely accepted indicator of funds available to service debt, although it is not a measure of liquidity or of financial performance under accounting principles generally accepted in the United States of America (“GAAP”). The EBITDA presented may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDA, while providing useful information, should not be considered in isolation or as an alternative to net income or cash flows as determined under GAAP.

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Consolidated Costs and Expenses

     Consolidated costs and expenses in the second quarter and first half of 2002 and an adjusted second quarter and first half of 2001 were as follows:

     Total production costs decreased 5.1% in the second quarter and 5.4% for the first six months of 2002, primarily due to lower newsprint expense, partially offset by an increase in benefits costs. In the second quarter of 2002, the Company’s newsprint expense decreased 25.1% compared with the 2001 second quarter. This resulted from a decrease in the Company’s average cost per ton of newsprint of 27.5%, partially offset by an increase in consumption of 2.4%. For the first six months of 2002 compared with the first six months of 2001, the Company’s newsprint expense decreased 22.5% due to a decrease in the Company’s average cost per ton of newsprint of 22.4% as well as a decrease in consumption of 0.1%.

     SGA expenses increased 8.0% and 3.1% in the second quarter and first six months of 2002 compared with the corresponding adjusted periods in 2001, excluding special items. These increases resulted primarily from higher bonus accruals linked to improved performance as well as an increase in benefits costs. The increase for the first six months of 2002 was partially offset by lower promotion costs. Including special items, SGA expenses decreased 14.9% and 7.3% in the second quarter and first half of 2002 compared with the corresponding adjusted periods in 2001.

Other

     The Company recorded a loss from joint ventures of $2.3 million in the second quarter of 2002 and $2.2 million for the first six months of 2002 compared with income from joint ventures of $0.8 million and $1.7 million in the same periods last year. This was primarily due to the impact of the Company’s recent investments in DC and NESV. For 2002, the Company expects results from joint ventures to be a loss of approximately $5 million due to the impact of these recent investments, lower operating results at the International Herald Tribune and lower paper prices at the mills in which the Company has an equity investment. The final allocations of the purchase prices of DC and NESV among the fair value of the assets acquired, net of the liabilities assumed, is in the process of being completed. The Company’s results from DC and NESV could be affected by these final allocations.

     Interest expense-net increased to $11.6 million in the 2002 second quarter and decreased to $22.2 million for the first six months of 2002 compared with $10.4 million and $25.2 million in the comparable 2001 periods. The increase in the second quarter of 2002 was mainly due to higher levels of debt outstanding while the decrease for the first six months of 2002 was primarily due to lower interest rates on floating-rate borrowings. For 2002, the Company expects interest expense to be in the range of $48.0 to $53.0 million as a result of additional debt incurred to finance recent investments.

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     The effective income tax rate in the second quarter of 2002 was 39.0% compared with an adjusted 33.8% in the 2001 second quarter. For the first six months of 2002, the effective income tax rate was 39.0% compared with an adjusted 37.0% for the first six months of 2001. The Company expects its effective tax rate in 2002 will be 39.0% compared with an adjusted 37.5% in 2001.

     Consolidated revenues, EBITDA, depreciation and amortization and operating profit from continuing operations, in the second quarter and first six months of 2002 and the adjusted second quarter and first six months of 2001, by business segment were as follows:

     * Represents percentages greater than or equal to 100%.

     (A) Intersegment eliminations primarily include license fees between New York Times Digital and other segments.

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Newspaper Group: The Newspaper Group consists of The Times, the New England Newspaper Group, which includes the Globe and the Worcester Telegram & Gazette (the “T&G”), 15 other newspapers (“Regional Newspapers”), a newspaper distributor, news services, and licensing of the trademarks and copyrights of The Times and the Globe.

     Total Newspaper Group revenues in the second quarter of 2002 increased 1.4% to $718.9 million from $709.1 million in the 2001 second quarter. Advertising revenue decreased 2.1% to $464.5 million in the second quarter of 2002 from $474.3 million in the prior-year quarter, and circulation revenue increased 12.7% to $211.9 million in the second quarter of 2002 from $187.9 million in the second quarter of 2001. For the first six months of 2002, total Newspaper Group revenues decreased 2.3% to $1,410.3 million from $1,443.4 million for the first six months of 2001. Advertising revenue decreased 6.8% to $913.2 million for the first six months of 2002 from $979.7 million for the first six months of 2001, and circulation revenues increased 10.8% to $413.2 million for the first half of 2002 from $373.0 million for the first half of 2001. Advertising revenue decreased primarily as a result of lower advertising volume and circulation revenue increased primarily due to higher subscription prices at The Times and the Globe.

     Operating profit for the Newspaper Group increased 6.9% to $139.7 million in the second quarter of 2002 from an adjusted $130.7 million in the 2001 second quarter, excluding special items. On the same basis, for the first half of 2002, operating profit decreased 5.2% to $252.1 million from an adjusted $266.0 million for the first half of 2001. Including special items, operating profit increased to $136.8 million in the second quarter of 2002 from an adjusted $55.5 million in the second quarter of 2001. On the same basis, for the first half of 2002, operating profit increased 25.6% to $239.6 million from an adjusted $190.8 million for the first half of 2001.

     The increase in operating profit in the second quarter of 2002, excluding special items, was primarily due to an increase in circulation revenue, partially offset by a decrease in advertising revenue. A decrease in newsprint expense in the second quarter of 2002 was offset by an increase in other costs and expenses. For the first six months of 2002, operating profit decreased, excluding special items, primarily due to a decrease in advertising revenue as well as an increase in bonus accruals linked to improved performance and increased benefits costs, partially offset by an increase in circulation revenue and a decrease in newsprint expense.

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Advertising, circulation and other revenue, by major line of business of the Newspaper Group, were as follows: