New York Times Co. Cendant Corp. Ziff-Davis Inc. Snyder Communications Inc.

(S-3, 1/28/00) (PRES14A, 12/28/99) (S-3, 10/22/99) (424B3, 10/7/99)

Over the past several years, all companies have been forced to develop, or at least consider, a business strategy that tries to exploit the exponential growth of the Internet. Online businesses generally are not yet profitable, with start-up and operating expenses far outdistancing revenues. However, the stock value of many Internet businesses is currently based more on perceived potential than on actual results. Consequently, market valuations of online stocks are generally very high at the moment.

That fact has driven many companies to create a class of tracking shares that reflects solely the performance of the company's Internet business. The shares enable investors to participate in the company's online segment apart from the rest of its business. It also allows the company to obtain a separate valuation for its volatile Internet operations without impacting the shares that reflect the value of the company's traditional business.

New York Times Co. recently registered the initial public offering of a new class of shares that represent Times Co. Digital ("TCD"), the company's Internet business division. TCD provides news, information and a community through a network of branded Web sites. TCD has been in operation since 1995 when it generated $101,000 in revenue. For the nine months ended September 30, 1999, TCD's revenue was $15.33 million.

As with many online businesses, TCD expects to incur net losses for the foreseeable future. Its growth will require the company to increase its marketing and promotional spending. TCD expects to generate most of its revenue from advertising. Investors that purchase TCD shares will be able to trade them on the New York Stock Exchange. TCD shares will be designated Class C common shares, while New York Times Co.'s traditional business will be represented by its Class A and B shares.

In February, Cendant Corp. asked its shareholders to vote on a proposal to create a new series of common shares, the CompleteHome.com shares. The new shares will track the performance of Cendant's Internet real estate services portal which was expected to be operational in January. Cendant's existing shares will be reclassified as CD shares and will reflect the value of all of Cendant's businesses other than the CompleteHome.com group.

Cendant currently plans to issue the new shares under a 1999 stock option plan to CompleteHome group employees and Cendant employees. In connection with a recent acquisition of Metro-Rent, Inc., the company issued non-voting redeemable common shares of CompleteHome.com in a private placement. Those shares are mandatorily redeemable for the new tracking shares upon completion of the IPO of the CompleteHome.com shares.

Ziff-Davis Inc. is an integrated media and marketing company focused on Internet-related technology, with platforms in publishing trade shows and conferences, online content, television and education. The company has issued two classes of shares, one of which tracks the performance of ZDNet, the company's Internet business unit.

Ziff-Davis notes that the dual class structure may make it difficult for someone interested in acquiring one or both of the company's business units. In particular, a person interested in acquiring ZDNet would first have to obtain control of the voting shares of Ziff-Davis. The company also notes that even though ZDNet shares are intended to reflect the performance of the Internet business, shareholders ultimately are still shareholders of Ziff-Davis and are subject to all of the risks associated with such an investment.

In October, Snyder Communications Inc. proposed a recapitalization in which its created Circle.com shares to reflect separately the performance of its Internet professional services business. Circle.com creates Internet-based customer relationship management systems for its Fortune 1000 clients. Until May 1999, the operations of Circle.com were contained within the Brann Worldwide and Arnold Worldwide divisions of Snyder.

In the recapitalization, Snyder reserved a portion of the new shares to be issued to current shareholders in order to encourage the company's managers to continue to promote and use Circle.com's services for shared clients and in joint business initiatives. In addition, Snyder agreed to issue an additional 4.3 million Circle.com shares following the recapitalization as consideration for Circle.com acquisitions, including its purchase of Interactive Bureau LLC.