-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JKYffiY++5E934ENwKv9+qQA68ZC1UHtaY+MVP28KgST24qMIN0c3NZPPSW5KZF5 pvplADkCbLVwDp71cGDy7w== 0000029924-04-000086.txt : 20040413 0000029924-04-000086.hdr.sgml : 20040413 20040413133044 ACCESSION NUMBER: 0000029924-04-000086 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040331 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20040413 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOW JONES & CO INC CENTRAL INDEX KEY: 0000029924 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 135034940 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07564 FILM NUMBER: 04730185 BUSINESS ADDRESS: STREET 1: 200 LIBERTY ST CITY: NEW YORK STATE: NY ZIP: 10281 BUSINESS PHONE: 2124162000 MAIL ADDRESS: STREET 1: 200 LIBERTY ST CITY: NEW YORK STATE: NY ZIP: 10281 8-K 1 form8kapr132004e.txt DOW JONES FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 13, 2004 DOW JONES & COMPANY, INC. (Exact name of registrant as specified in its charter) Delaware 1-7564 13-5034940 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification No.) 200 Liberty Street, New York, New York 10281 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 416-2000 PAGE 2 Item 7. Financial Statements and Exhibits. The following exhibit is furnished pursuant to Item 12. 99.1 Earnings press release issued April 13, 2004. Item 12. Results of Operations and Financial Condition On April 13, 2004, Dow Jones & Company issued a press release announcing the Company's results of operations for the first quarter ended March 31, 2004. A copy of this press release is furnished with this report as Exhibit 99.1. In accordance with General Instruction B.6 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, is being furnished under Item 12 and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to the liability of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of the general incorporation language of such filing, except as shall be expressly set forth by specific reference in such filing. PAGE 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. DOW JONES & COMPANY, INC. Dated: April 13, 2004 By: /s/ Robert Perrine ------------------------ Robert Perrine Chief Accounting Officer and Controller PAGE 4 EXHIBIT INDEX Exhibit No. Description - ---------- ----------- 99.1 Earnings press release issued April 13, 2004. EX-99 3 exhibit99q12004e.txt EXHIBIT 99 EARNINGS RELEASE EXHIBIT 99.1 Investor Contact: Dow Jones & Company Mark Donohue 200 Liberty Street Director, Investor Relations New York, NY 10281 (609) 520-5660 Media Contact: Brigitte Trafford Vice President, Communications (212) 416-3213 DOW JONES REPORTS IMPROVED REVENUE AND PROFIT FOR FIRST QUARTER 2004 Provides 2nd Quarter Outlook NEW YORK (April 13, 2004)---Dow Jones & Company (NYSE: DJ) today reported that it earned 22 cents per diluted share during the first quarter 2004, compared with 82 cents per diluted share in the first quarter of 2003. Excluding the special items explained herein, the Company earned 22 cents per diluted share during the first quarter 2004, up 83% over the 12 cents per diluted share earned in the first quarter of 2003. Revenue rose 12.1% in the first quarter of 2004 to $401.6 million, led by a 6.3% increase in U.S. Wall Street Journal linage compared with the first quarter of 2003, as well as increases at Electronic Publishing and Ottaway Community Newspapers. Operating income was $33.8 million, up 92.0% compared to $17.6 million in 2003. Excluding special items, operating income was up 76% from the same period last year with operating margins of 7.7% in 2004 compared to 4.9% in 2003. Special Items: In the first quarter 2004, the Company recorded special items netting to zero cents per share as a special gain of two cents per share related to reduction of a lease obligation reserve was offset by a loss of two cents per share for accretion of discount on a contract-guarantee obligation. In the first quarter 2003, special items netted to a gain of 70 cents per share and included a non-cash gain from the reversal of a 1998 reserve for loss contingencies net of a charge for accretion of discount on a contract-guarantee obligation. "We are pleased with the progress we made in the quarter. First, the quality of our products continues to be recognized - most recently evidenced by the Journal winning two Pulitzer prizes," said Peter R. Kann, chairman and chief executive officer of Dow Jones & Company. "Financially, the combination of a moderately improved advertising environment, the successful execution of our strategic plan, 'Business Now,' and major operational improvements, have enabled us to post healthy gains in revenue and profit - not only in total but also in each business segment - during the first quarter." Mr. Kann continued: "While we are encouraged by this progress, and the fact that this marks the third quarter in a row of improved linage at the Journal, ad levels and therefore revenue and profit remain well below normal levels. As such, we remain committed to controlling everything we can to maximize our current performance and future potential." Dow Jones also said that it expects earnings per share before special items in the second quarter of 2004 to be in the mid-30 cents per share range, compared with 27 cents per share in the second quarter of 2003. This assumes second-quarter 2004 linage at the U.S. Wall Street Journal will be up in the mid-single digit percentage range over the second quarter of 2003. Based on currently anticipated special items in the second quarter of 2004, the Company expects reported earnings per share to be in the mid-30 cents per share range, compared with 38 cents per share in the second quarter of 2003. Please refer to the attached table for a reconciliation of the Company's second quarter earnings before and after special items. Segment Results Print Publishing revenue increased $23.2 million, or 10.8%, in the first quarter 2004 over the same period a year ago. Operating income rose $9.3 million to $4.6 million and operating margin was 1.9% in the first quarter 2004, an improvement from the prior years operating loss. U.S. Wall Street Journal advertising linage increased 6.3% (up 25.2% in March, with two extra issues) while linage at the international editions of the Journal increased 11.1% (up 38.6% in March, with two extra issues in both the European and Asian editions). Barron's ad pages increased 22.0% in the quarter (up 51.0% in March). Electronic Publishing revenue in the first quarter 2004 increased 9.1% and operating income rose 10.0% from the same period a year ago. Operating margin of 21.4% was up slightly over last year. Improved performance at Indexes/Ventures, Consumer Electronic Publishing and Newswires, including the acquisition of Alternative Investor Group--which closed on March 19, 2004--drove these improved results. Terminal counts at Newswires were down 4.6%, but down only 1.4% on a sequential basis. Paid subscribers to The Wall Street Journal Online grew to 695,000 as of March 31, 2004, up 3.0% from March 31, 2003 and up 0.9% on a sequential basis. Ottaway Community Newspapers' revenue in the first quarter 2004 increased 20.2% from the same period a year ago with operating income up 34.9%. Operating margin of 21.9% was well up over last year's 19.5%. Excluding the May 2003 acquisition of The Record of Stockton, same property revenue was up 5.9% and operating income was up 19.2%. Same-property advertising linage increased 4.3% in the first quarter (linage was up 3.8% in March with one fewer Sunday). The Company ended the first quarter with $258 million in debt, compared with $153 million at the end of the fourth quarter of 2003. The increase is primarily due to the $85 million acquisition of Alternative Investor Group in March 2004. As previously announced, the Company will host an earnings conference call at 10 a.m. ET today. The call can be accessed via a live Web cast through the Investor Relations section of the Company's Web site, www.dowjones.com, or through a listen-only, dial-in conference line, by dialing 877-407-3140. A replay of the conference call and the full text of the prepared remarks will be available on the Company's Web site in the Investor Relations section shortly after the call concludes. Dow Jones & Company (NYSE: DJ; dowjones.com) publishes The Wall Street Journal and its international and online editions, Barron's and the Far Eastern Economic Review, Dow Jones Newswires, Dow Jones Indexes and the Ottaway group of community newspapers. Dow Jones is co-owner with Reuters Group of Factiva, with Hearst of SmartMoney and with NBC of CNBC television operations in Asia and Europe. Dow Jones also provides news content to CNBC and radio stations in the U.S. Information Relating To Forward-Looking Statements: This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those anticipated, including the cyclical nature of the Company's business and the strong negative impact of economic downturns on the Company's core advertising market--business-to-business advertising--and on advertising revenues in general; the severe weaknesses in the current technology and financial advertising markets; the extent of any recovery in the economy; the risk that the Company will not benefit from any recovery in the economy; the Company's ability to continue to limit and manage expense growth without harming its growth prospects; the uncertainties relating to the Company's guarantee to Cantor Fitzgerald Securities and Market Data Corporation; the intense competition the Company's existing products and services face; the risk that the Company's initiatives to attract more consumer advertising, and other diversified advertising, to The Wall Street Journal will not succeed; with respect to Newswires, the negative impact of consolidations and layoffs in the financial services industry on sales; and such other risk factors as may be included from time to time in the Company's reports filed with the Securities and Exchange Commission. This press release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have attached to this press release a reconciliation of those measures to the most directly comparable GAAP measures. This reconciliation is also available on the Investor Relations page of our web site at www.dowjones.com. Dow Jones & Company Earnings Summary 6 (Unaudited)
(in thousands, except per share amounts) Quarters Ended March 31 2004 2003 ---- ---- Reported results: Revenues $401,621 $358,230 Operating income 33,759 17,579 Net income 17,816 66,932 Effective tax rate* 41.2% 8.8% Diluted EPS $.22 $.82 Excluding items described in Note 2: Operating income $ 30,998 $ 17,579 Net income 18,139 9,721 Effective tax rate* 38.6% 40.0% Diluted EPS $.22 $.12 EPS percentage change 83.3% 50.0% *The effective income tax rate is net of minority interests.
See notes to financial information on page 11. Reconciliation of Second Quarter Earnings Outlook
Quarters Ended June 30, 2004 Guidance 2003 Actual -------------- ----------- Reported earnings per share mid-30 cents $.38 per share range** Adjusted to remove: Contract guarantee (.02) (.03) Gain from business interruption insurance claim .14 Gain on disposal of interest in vwd investment .02 ----- ---- EPS before special items mid-30 cents $.27 per share range **Based on special items currently anticipated.
Dow Jones & Company Condensed Consolidated Statements of Income 7 (Unaudited)
(in thousands, except per share amounts) Quarters Ended March 31 2004 2003 ---- ---- Revenues: Advertising $226,699 $190,508 Information services 75,827 71,856 Circulation and other 99,095 95,866 -------- -------- Total revenues 401,621 358,230 Expenses: News, production and technology 122,557 115,295 Selling, administrative and general 145,235 129,022 Newsprint 27,631 23,071 Print delivery costs 47,845 45,906 Depreciation and amortization 27,355 27,357 Restructuring charges and September 11 related items (2,761) -------- -------- Operating expenses 367,862 340,651 -------- -------- Operating income 33,759 17,579 Other income (deductions): Investment income 91 74 Interest expense (648) (453) Equity in losses of associated companies (740) (1,849) Gain on resolution of Telerate sale loss contingencies 59,821 Contract guarantee (1,985) (2,610) Other, net (766) 439 -------- -------- Income before income taxes and minority interests 29,711 73,001 Income taxes 12,481 6,481 -------- -------- Income before minority interests 17,230 66,520 Minority interests 586 412 -------- -------- Net income $ 17,816 $ 66,932 ======== ======== Net income per share: - Basic $.22 $.82 - Diluted .22 .82 Weighted-average shares outstanding: - Basic 81,758 81,791 - Diluted 82,212 82,028
See notes to financial information on page 11. Dow Jones & Company Segment Information 8 (Unaudited)
(dollars in thousands) Quarters Ended March 31 2004 2003 ---- ---- Revenues: Print publishing $237,575 $214,424 Electronic publishing 86,369 79,187 Community newspapers: Comparable operations* 68,413 64,619 Newly-acquired operations 9,264 -------- -------- Consolidated revenues 401,621 358,230 Percentage change in revenues excluding divested/newly-acquired operations 9.1% (4.9)% Operating income: Print publishing 4,624 (4,685) Electronic publishing 18,513 16,831 Community newspapers: Comparable operations* 14,995 12,581 Newly-acquired operations 1,977 Corporate (9,111) (7,148) -------- -------- Segment operating income 30,998 17,579 Restructuring charges and September 11 related items 2,761 -------- -------- Consolidated operating income $ 33,759 $ 17,579 ======== ======== Operating margin: Print publishing 1.9% (2.2)% Electronic publishing 21.4 21.3 Community newspapers: Comparable operations* 21.9 19.5 Newly-acquired operations 21.3 Consolidated operating margin 8.4 4.9 Depreciation and amortization (D&A): Print publishing $ 17,676 $ 17,680 Electronic publishing 6,660 6,790 Community newspapers: Comparable operations* 2,484 2,758 Newly-acquired operations 495 Corporate 40 129 -------- -------- Consolidated D&A $ 27,355 $ 27,357 ======== ======== * Comparable operations exclude the results of Ottaway properties divested or acquired in the past 12 months.
See notes to financial information on page 11. Dow Jones & Company Supplemental Segment Revenue Information 9 (Unaudited)
(in thousands) Quarters Ended March 31 2004 2003 ---- ---- Print Publishing: U.S. Publications: Advertising $151,182 $129,857 Circulation and other 65,953 66,390 International Publications: Advertising 11,920 9,993 Circulation and other 8,520 8,184 -------- -------- Total 237,575 214,424 Electronic Publishing: Dow Jones Newswires: Domestic 44,403 43,365 International 10,797 10,611 -------- -------- Total Newswires 55,200 53,976 Consumer Electronic Publishing* 18,169 15,371 Dow Jones Indexes/Ventures 13,000 9,840 -------- -------- Total 86,369 79,187 Community Newspapers: Advertising Comparable operations 49,091 45,691 Newly-acquired operations 7,777 -------- -------- Total advertising 56,868 45,691 Circulation and other Comparable operations 19,322 18,928 Newly-acquired operations 1,487 -------- -------- Total circulation and other 20,809 18,928 Total 77,677 64,619 -------- -------- Total segment revenues $401,621 $358,230 ======== ======== * Includes WSJ.com, related vertical sites, licensing/business development and radio/audio.
See notes to financial information on page 11. Dow Jones & Company Statistical Information 10 (Unaudited)
Quarters Ended March 31 2004 2003 ---- ---- Advertising Volume Year-Over-Year Percentage Change: The Wall Street Journal General (7.5)% 2.5% Technology (0.2) (28.5) Financial 47.1 (37.5) Classified 7.9 15.3 Total 6.3 (11.0) The Asian Wall Street Journal 8.3 5.6 The Wall Street Journal Europe 13.5 22.1 Barron's 22.0 (17.3) Ottaway Newspapers* Daily 2.4 (0.5) Non-daily 13.2 3.1 Total 4.3 0.1 Wall Street Journal advertising as a percentage of total Journal linage: General 37.6% 43.2% Technology 15.9 16.9 Financial 22.6 16.3 Classified 23.9 23.6 Other statistics: March 31 March 31 2004 2003 Dow Jones Newswires terminals 289,000 303,000 WSJ.com subscribers 695,000 675,000 WSJ.com unique visitors/business day 141,000 129,000 Average monthly unique visitors to the Journal Network 6,017,000 5,975,000 Average monthly page views to the Journal Network 73,097,000 67,339,000 * Percentage excludes divested/newly-acquired operations.
Dow Jones & Company Notes to Financial Information 11 1. The Company's calculation of net income, operating income and earnings per share excluding special items may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what type of events warrant adjustment. Net income, operating income and earnings per share excluding special items are not measures of performance under generally accepted accounting principles and should not be construed as substitutes for consolidated net income, operating income and earnings per share as a measure of performance. However, management uses these measures in comparing the Company's historical performance and believes that they provide meaningful and comparable information to investors to assist in their analysis of the Company's performance relative to prior periods and its competitors. 2. The following table reconciles reported results to income adjusted for special items for the quarters ended March 31, 2004 and 2003.
Quarters Ended March 31 (in millions, except 2004 2003 per share amounts) Operating Net EPS Operating Net EPS --------- --- --- --------- --- --- Reported $33.8 $17.8 $ .22 $17.6 $66.9 $.82 Adjusted to remove: Included in operating income: Reversal of lease obligation reserve - WFC (a) 2.8 1.7 .02 Included in non-operating income: Contract guarantee (b) (2.0) (.02) (2.6) (.03) Gain on resolution of Telerate sale loss contingencies (c) 59.8 .73 ----- ----- ---- ---- ----- ---- Adjusted $31.0 $18.1 $.22 $17.6 $ 9.7 $.12 ===== ===== ==== ===== ===== ====
(a) Reversal of lease obligation reserve - World Financial Center (WFC): In the fourth quarter 2001, the Company recorded a charge of $32.2 million as a result of its decision to permanently re-deploy certain personnel and abandon four of seven floors that were leased at its World Financial Center headquarters. This charge primarily reflected the Company's rent obligation through 2005 on this vacated space. In the first quarter 2004, the Company renewed its lease at the World Financial Center including extending the term of one of the floors that was previously abandoned. The Company plans to re-occupy this floor with personnel from another New York location, whose lease term was expiring. As a result, the Company reversed $2.8 million ($1.7 million, net of taxes, or $.02 per diluted share) of the remaining lease obligation reserve of the previously abandoned floor at WFC. (b) Contract guarantee: Under the terms of the Company's 1998 sale of Telerate to Bridge Information Systems (Bridge), Dow Jones retained its guarantee of payments under certain circumstances of certain minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). The annual minimum payments average approximately $50 million per year through October 2006 under certain conditions. Bridge agreed to indemnify Dow Jones for any liability Dow Jones incurred under the contract guarantee with respect to periods subsequent to Bridge's purchase of Telerate. In 2000, based in part on uncertainty with Bridge's solvency as well as other factors, the Company established a reserve of $255 million representing the net present value of the total minimum payments of about $300 million from 2001 through October 2006, using a discount rate of 6%. Bridge filed for bankruptcy in February 2001 but made payments for this data for the Dow Jones & Company Notes to Financial Information 12 post-petition periods through October 2001, when Telerate ceased operations, went out of business, sold certain assets and rejected its contracts with Cantor and MDC. The Company is now in litigation with Cantor and MDC with respect to their claims for amounts due under the contract guarantee. The Company has various substantial defenses to these claims and the litigation is proceeding. The first quarter of 2004 and 2003 included charges related to the accretion of the discount on the reserve balance of $2.0 million ($.02 per diluted share) and $2.6 million ($.03 per diluted share), respectively. (c) Gain on resolution of Telerate sale loss contingencies: In the first quarter of 2003, the Company recorded a gain of $59.8 million ($.73 per diluted share) on the resolution of certain loss contingencies resulting from the sale of its former Telerate subsidiary to Bridge. The reserve for loss contingencies was established as part of the loss on sale of Telerate in 1998 and related to various claims that arose out of the Stock Purchase Agreement, including a purchase price adjustment related to working capital, an indemnification undertaking and other actual and potential claims and counter-claims between the Company and Bridge. In February 2001, Bridge declared bankruptcy. In March 2003, these matters were resolved by the bankruptcy court, and the Company's contingent liabilities were thereby extinguished. 3. On March 19, 2004, the Company completed its acquisition of Alternative Investor from Wicks Business Information for $85 million plus net working capital. The $85 million purchase price could be increased by $5 million, payable in 2008, based on the performance of the acquired business. The acquisition was funded by the issuance of debt under the Company's commercial paper program. Alternative Investor is a provider of newsletters, databases and industry conferences for the venture-capital and private-equity markets, and will be combined into the Company's Dow Jones Newswires business. 4. The Company's business and financial news and information operations are reported in two segments: print publishing and electronic publishing. The results of the Company's Ottaway Newspapers subsidiary, which publishes 15 daily newspapers and more than 30 weeklies and shoppers in nine states in the U.S., are reported in the community newspaper segment. Print publishing includes the global operations of The Wall Street Journal and its international editions, as well as Barron's and U.S. television operations (results of the Company's international television ventures are included in equity in earnings (losses) of associated companies). Electronic publishing includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures. 5. Restructuring charges and September 11 related items are not included in segment expenses, as management evaluates segment results exclusive of these items. For information purposes, the reversal of the lease obligation reserve allocable to each segment for the three months ended March 31, 2004 were as follows:
(in thousands) Quarters Ended March 31 2004 ---- Print Publishing $2,631 Electronic Publishing 125 Corporate 5 ------ Reversal of lease obligation reserve $2,761 ======
Dow Jones & Company Notes to Financial Information 13 6. Summarized financial information for 50% held equity-basis investments in associated companies were as follows (amounts are at 100% levels):
(in thousands) Quarters Ended March 31 2004 2003 ---- ---- Factiva Revenues $63,534 $62,153 Operating income 4,260 2,284 Depreciation and amortization 3,102 3,202 SmartMoney Revenues $12,170 $12,093 Operating (loss) income (498) 88 Depreciation and amortization 211 440 CNBC International (*) Revenues $ 8,857 $ 8,301 Operating loss (8,566) (7,631) Depreciation and amortization 956 998 (*) Includes the results of CNBC Europe and CNBC Asia.
-----END PRIVACY-ENHANCED MESSAGE-----