ITEMGLYPH<160>7.GLYPH<160>MANAGEMENTGLYPH<146>SGLYPH<160>DISCUSSIONGLYPH<160>ANDGLYPH<160>ANALYSISGLYPH<160>OFGLYPH<160>FINANCIALGLYPH<160>CONDITIONGLYPH<160>AND RESULTSGLYPH<160>OFGLYPH<160>OPERATIONS EXECUTIVE OVERVIEW 2014 Financial Highlights P. 22 – THE NEW YORK TIMES COMPANY The following discussion and analysis provides information that management believes is relevant to an  assessment and understanding of our consolidated financial condition as of December 28, 2014, and results of  operations for the three years ended December 28, 2014. This item should be read in conjunction with our  Consolidated Financial Statements and the related Notes included in this Annual Report. We are a global media organization that includes newspapers, digital businesses and investments in paper  mills. We currently have one reportable segment comprising businesses that include The Times, INYT, NYTimes.com,  international.nytimes.com and related businesses.  We generate revenues principally from circulation and advertising. Other revenues primarily consist of  revenues from news services/syndication, digital archives, office rental income, e-commerce and conferences/events.  Our main operating costs are employee-related costs and raw materials, primarily newsprint.  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 in the United States of America (“GAAP”). We are presenting in this report  supplemental non-GAAP financial performance measures that exclude depreciation, amortization, severance, non- operating retirement costs and certain identified special items, as applicable. These non-GAAP financial measures  should not be considered in isolation from or as a substitute for the related GAAP measures, and should be read in  conjunction with financial information presented on a GAAP basis. For further information and reconciliations of  these non-GAAP measures to the most directly comparable GAAP items, respectively, diluted (loss)/earnings per  share, operating profit and operating costs, see “Results of Operations — Non-GAAP Financial Measures.” In 2014, diluted earnings per share from continuing operations were $0.21, compared with $0.36 for 2013.  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 $0.43 for 2014,  compared with $0.52 for 2013. Operating profit in 2014 was $91.9 million, compared with $156.1 million for 2013. The decline was primarily  driven by investment spending related to the Company’s strategic initiatives and severance expense. Operating profit  before depreciation, amortization, severance, non-operating retirement costs and special items discussed below (or  “adjusted operating profit,” a non-GAAP measure) for 2014 was $256.3 million, compared with $277.1 million for  2013.  Total revenues increased slightly in 2014 to $1.59 billion, compared with $1.58 billion in 2013. This was driven  by growth in circulation and other revenues, partially offset by declines in advertising revenues. Compared with 2013,  circulation revenues increased 1.5% in 2014, as digital subscription growth and a print home-delivery price increase at  The Times offset a decline in the number of print copies sold. Circulation revenues from our digital-only subscription  packages increased 13.5% in 2014, compared with 2013. Paid subscribers to digital-only subscription packages totaled  approximately 910,000 as of December 28, 2014, a nearly 20% increase compared with year-end 2013. Advertising revenues remained under pressure during 2014 due to continuing secular trends. Total advertising  revenues decreased 0.7% in 2014 compared with 2013, reflecting a 4.7% decrease in print advertising revenues and an  11.9% increase in digital advertising revenues.  Compared with 2013, other revenues increased 3.6% in 2014, driven by our e-commerce business and digital  archives. Operating costs in 2014 increased 5.2% to $1.48 billion, compared with $1.41 billion in 2013. The increase was  primarily due to investment spending related to the Company’s strategic initiatives as well as severance expense  associated with workforce reductions, partially offset by efficiencies in print distribution. Operating costs before  depreciation, amortization, severance and non-operating retirement costs discussed below (or “adjusted operating  costs,” a non-GAAP measure) increased 2.5% to $1.33 billion in 2014, compared with $1.30 billion in 2013. 