UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[x] | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the fiscal year ended December 31, 2005 |
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[ ] | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from ___________ to ____________ |
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Commission File Number 1-7564 | |
A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
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| DOW JONES 401(k) SAVINGS PLAN |
B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
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| DOW JONES & COMPANY, INC. |
| 200 LIBERTY STREET, NEW YORK, NEW YORK 10281 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Committee appointed by the Board of Directors of Dow Jones & Company, Inc., as administrator of the Plan, has duly caused this annual report to be signed by the undersigned thereunto duly authorized.
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| DOW JONES 401(k) SAVINGS PLAN |
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Date: | June 28, 2006 | By: | /s/ Thomas W. McGuirl |
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| Thomas W. McGuirl |
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| Chairman , ERISA Plan Committee |
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| Dow Jones & Company, Inc. |
Dow Jones
401(k) Savings Plan
December 31, 2005 and 2004
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INDEX | Page |
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Report of Independent Registered Public Accounting Firm | 1 |
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Financial Statements*: |
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Statements of Net Assets Available for Plan Benefits | 2 |
Statement of Changes in Net Assets Available for Plan Benefits | 3 |
Notes to Financial Statements | 4 |
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EXHIBIT | Exhibit Number |
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Consent of Independent Registered Public Accounting Firm | 23 |
* | Other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 (“ERISA”) have been omitted because they are not applicable. |
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
Dow Jones 401(k) Savings Plan
In our opinion, the accompanying statements of net assets available for plan benefits and the related statement of changes in net assets available for plan benefits present fairly, in all material respects, the net assets available for plan benefits of Dow Jones 401(k) Savings Plan (the “Plan”) as of December 31, 2005 and 2004, and the changes in net assets available for plan benefits for the year ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audi t to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
New York, New York
June 27, 2006
1
Dow Jones
401(k) Savings Plan
Statements of Net Assets Available for Plan Benefits
December 31, 2005 and 2004
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| 2004 |
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Assets |
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Investment in the Master Trust | $ | 919,079,722 | $ | 888,692,216 |
Participant loans |
| 13,166,300 |
| 13,342,134 |
Total investments |
| 932,246,022 |
| 902,034,350 |
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Receivables |
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Employer's contribution |
| 522,598 |
| 506,606 |
Participants' contributions |
| 660,017 |
| 601,014 |
Total receivables |
| 1,182,615 |
| 1,107,620 |
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Net assets available for benefits | $ | 933,428,637 | $ | 903,141,970 |
The accompanying notes are an integral part of these financial statements.
2
Dow Jones
401(k) Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
December 31, 2005
Investment income |
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Investment gain from the Master Trust | $ | 60,073,697 |
Interest income from participant loans |
| 736,311 |
Total investment income, net |
| 60,810,008 |
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Additions to net assets attributed to |
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Contributions to the Plan |
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By the employer |
| 17,000,412 |
By participants |
| 22,277,241 |
Total contributions |
| 39,277,653 |
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Rollovers |
| 2,538,796 |
Total additions |
| 102,626,457 |
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Deductions from net assets attributed to |
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Benefits paid to participants |
| (71,248,775) |
Loan defaults |
| (1,059,300) |
Administrative expenses |
| (31,715) |
Total deductions |
| (72,339,790) |
Net increase |
| 30,286,667 |
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Net assets available for plan benefits |
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Beginning of the year |
| 903,141,970 |
End of the year | $ | 933,428,637 |
The accompanying notes are an integral part of these financial statements.
3
Dow Jones
401(k) Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
1.
Description of Plan
The following description provides only general information of the Dow Jones 401(k) Savings Plan (the “Plan”). Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan, and covers eligible employees of Dow Jones & Company Inc. and certain of its subsidiaries and affiliates (“Dow Jones” or the “Company”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Eligible employees are enrolled in the Plan on January 1st or July 1st after completing six months of service.
Contributions
The Plan provides eligible employees with (1) a fixed company contribution equal to 3% of covered compensation up to $210,000 (the compensation limit set by the IRS), (2) the opportunity to make employee pre-tax savings contributions of up to 10% and effective July 1, 2002, 40% of covered compensation (subject to IRS limitations), and (3) a 100% company match on those employee contributions up to the first 2% of covered compensation (subject to IRS limitations).
Investment Options
All contributions are participant directed. The Plan provides for a number of investment options. During 2005, the Plan offered 26 mutual funds in addition to the Dow Jones Stock Fund and the Dow Jones Investment Contract Fund.
Vesting
Participants are fully vested in the amount credited to their accounts at all times.
Loan Fund
Plan participants who are active employees can borrow from their individual Plan accounts excluding their voluntary after-tax contributions amount. The minimum amount a participant can borrow is $1,000 and the maximum is the lesser of $50,000 (reduced by the highest outstanding loan balance during the previous 12 months) or 50% of the total value of the participant’s Plan accounts, including voluntary after-tax contributions account, but reduced by any prior outstanding loan balances on the date of the loan.
The participant’s note held by the Loan Fund is pledged as collateral for the loan. Loan terms range from one to five years or up to ten years for the purchase of a principal residence. Loans bear interest at rates comparable to lending institution rates. The interest rate on loans granted during 2005 ranged from 6.5% to 8.5%. The interest rate on loans granted during 2004 ranged from 5.0% to 6.5%. Interest rates on participant loans are determined by the Program Committee of the Dow Jones Retirement Program based on the prevailing prime rate.
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Dow Jones
401(k) Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
Payment of Benefits
The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account. Upon termination of employment due to death, retirement or other reasons, a participant or his or her beneficiary is entitled to receive the value of the funds allocated to the participant’s account, in one of the following forms of payment: single distribution, partial payment distributions, quarterly or annual installments, or through annuity contract with an insurance company.
A participant may also elect the date on which any distribution shall commence, provided such date shall be no later than December 31 of the year the participant attains age 70-1/2. A participant electing quarterly or annual installments also may elect periodic partial single payment distributions. Inactive participants do not participate in subsequent allocations of employer contributions.
Loan Defaults
Loan defaults are recorded as taxable participant distributions at the time of cancellation.
Administrative Expenses
Trustee fees of the Plan are paid by the Plan. All other administrative fees are paid by the Company.
Master Trust
The assets of the Plan are maintained, for investment purposes only, on a commingled basis with the assets of the Dow Jones Money Purchase Retirement Plan in the Dow Jones Profit Sharing Retirement Plan Trust (the “Master Trust”). The plans do not own specific Master Trust assets but rather maintain beneficial interests in such assets. A portion of the Master Trust investment assets and the Master Trust investment activity are allocable to each plan based upon each Plan’s net assets in relation to the total Master Trust net assets. Allocations are performed on a daily basis. Participant loans and related interest income represent specific loans of participants under the respective Plan.
2.
Summary of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting, except for benefit payments, which are recorded when paid.
Investment Valuation and Income Recognition
The investments are held by the Plan’s trustee, Fidelity Management Trust Company (“Fidelity”). The following policy applies to these investments and any related income earned.
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Dow Jones
401(k) Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
The investment funds are valued at the net asset value as reported by the fund managers. Fair values of the underlying investments are based upon the latest published market quotations, where available. The common shares of the Company are valued at their fair value on December 31, 2005 and 2004, as determined by their quoted market prices. Fair values of investments not having an established market are determined by the fund managers by reference to quoted market values and other financial data pertaining to investments of a similar nature, quality, and yield as determined by the fund managers. Investments in benefit – responsive contracts with financial institutions are valued at contract value.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.
The Plan presents, within investment income/loss in the statement of changes in net assets available for plan benefits, the net appreciation (depreciation) in the fair value of its investments and interest and dividends. Net appreciation (depreciation) in the fair value of investments consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments. Interest and dividends consists of interest earned on the investment contract fund and dividends earned on the various investments.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of net assets available for benefits and changes there in. Actual results could differ from those estimates.
3.
Related Party Transactions
Certain Plan investments are shares of mutual funds managed by Fidelity Management & Research Co., an affiliate of Fidelity. Fidelity is the trustee as defined by the Plan and, therefore, investments in these mutual funds qualify as party-in-interest transactions. Trustee fees paid by the Plan amounted to $31,715 for the year ended December 31, 2005.
4.
Concentrations of Credit Risk
Financial instruments which potentially subject the Plan to concentrations of credit risk consist principally of investment contracts with financial institutions. These investment contracts typically are uncollateralized contractual obligations under which the issuer agrees to pay a specific rate of interest for a fixed period of time and to repay principal at maturity. The investment contract fund seeks to place its contracts with high-credit quality institutions, limiting the amount of credit exposure to any one financial institution.
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Dow Jones
401(k) Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
5.
Risk and Uncertainties
The Plan provides for various investment options in investment securities. Investment securities, in general, are exposed to various risks, such as interest rate risk, credit risk and overall market volatility. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the value of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.
6.
Contracts with Insurance Company and Banks
The Master Trust contains a fund invested in Guaranteed Investment Contracts (“GICS”) with various banks and an insurance company, which are managed by Fidelity Management Trust Company. The contracts are included in the financial statements at contract value because they are fully benefit - responsive, which represents contributions made under the contracts, plus earnings, less withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
There were no contract value reserves established for credit risk of the contract issuers or otherwise as of December 31, 2005 and 2004. The fair value of the Master Trust’s investment in contracts was $292,561,384 and $305,915,929 as of December 31, 2005 and 2004, respectively. The average yield was approximately 4.55% and 4.89% for 2005 and 2004, respectively. The crediting interest rate was approximately 4.33% and 4.60% as of December 31, 2005 and 2004, respectively. The crediting interest rate is based on a formula agreed upon with the issuers. Such rates are reviewed on a quarterly basis for resetting.
7.
Plan Termination
Although the Plan sponsor has not expressed any intent to terminate the Plan, it has the right to do so at any time, subject to the provisions of ERISA.
8.
Federal Income Taxes
The Internal Revenue Service (“IRS”) has issued a determination letter dated July 16, 2002, indicating that the Plan qualifies under Section 401(a) of the Internal Revenue Code (“IRC”) and, therefore, the Plan is not subject to tax under Section 501(a) of the IRC. The Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan’s sponsor believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC and that the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan’s financial statements.
9.
Interest in Master Trust
The Plan had approximately an 87.9% and a 90.0% interest in the net assets of the Master Trust at December 31, 2005 and 2004, respectively.
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Dow Jones
401(k) Savings Plan
Notes to Financial Statements
December 31, 2005 and 2004
The net assets of the Master Trust were as follows:
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Investments at fair value |
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Cash |
| $ | 3,509,311 |
| $ | 3,572,896 |
Mutual Funds |
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| 662,130,569 |
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| 600,461,438 |
Company Common Stock |
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| 2,674,237 |
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| 2,858,864 |
Money Market Funds |
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| 84,432,975 |
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| 82,312,247 |
Participant loans |
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| 13,448,173 |
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| 13,533,876 |
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Guaranteed investment contracts carried at contract value |
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Guaranteed investment contracts |
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| 294,518,059 |
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| 299,696,366 |
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| $ | 1,060,713,324 |
| $ | 1,002,435,687 |
The net investment income of the Master Trust for the year ended December 31, 2005 was as follows:
Investment results |
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Investment income |
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Interest and dividends | $ | 36,919,544 | |
Interest income from participant loans |
| 750,937 | |
Net appreciation in mutual funds |
| 32,629,061 | |
Net depreciation in company common stock |
| (410,091 | ) |
Net investment income | $ | 69,889,451 |
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