UNITED STATES
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): December 5, 2006
DOW JONES & COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE | 1-7564 | 13-5034940 |
(State or other jurisdiction of | (Commission File Number) | (IRS Employer 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
n/a |
(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
As previously reported, on October 27, 2006, Dow Jones & Company, Inc. ("Dow Jones") entered into an Agreement of Purchase and Sale, dated as of October 27, 2006 (the "Agreement"), among The Santa Cruz Sentinel, Inc., The Traverse City Record-Eagle, Inc., Ottaway Newspapers of Pennsylvania, L.P., Ottaway Newspapers, Inc., The Mail Tribune, Inc. (collectively, the "Sellers"), and Community Newspaper Group, LLC (the "Buyer") and Community Newspaper Holdings, Inc.
On December 5, 2006, the parties closed on the purchase and sale of the non-real estate assets of the six community newspapers covered by the Agreement. In accordance with the Agreement, the Sellers received $281.5 million of the purchase price in cash (including an estimated working capital adjustment), and will receive an additional $6.4 million of the purchase price upon transfer of real property, subject to satisfaction of environmental conditions, in later periods. The six Dow Jones papers sold to the Buyer are: the News-Times of Danbury, Conn.; The Daily Star of Oneonta, N.Y.; the Press-Republican of Plattsburgh, N.Y.; the Santa Cruz Sentinel (Santa Cruz, Calif.).; The Daily Item of Sunbury, Pa.; and the Traverse City Record-Eagle (Traverse City, Mich.). Dow Jones issued a press release on December 5, 2006 announcing the closing of the sale, and a copy of the press release is furnished with this report as Exhibit 99.2. &nb sp;
In accordance with General Instruction B.2 of Form 8-K, the information in Exhibit 99.2 is being furnished and shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "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.
The foregoing description of the sale and the Agreement is qualified in its entirety by reference to the Agreement. The Agreement was attached as Exhibit 99.1 to the Current Report on Form 8-K dated October 30, 2006 and is incorporated herein by reference.
Neither Buyer nor any of its affiliates have any material relationships with the Sellers or their directors, officers (or any associates of such directors or officers) or affiliates.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(b)
Pro Forma Financial Information
Dow Jones & Company, Inc. unaudited pro forma condensed consolidated financial information:
(1) | Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2006. |
(2) | Unaudited Pro Forma Condensed Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003. |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On December 5, 2006, the parties closed on the purchase and sale of the non-real estate assets of the six community newspapers covered by the Agreement. In accordance with the Agreement, the Sellers received $281.5 million of the purchase price in cash (including an estimated working capital adjustment), and will receive an additional $6.4 million of the purchase price upon transfer of real property, subject to satisfaction of environmental conditions, in later periods. The six Dow Jones papers sold to the Buyer are: the News-Times of Danbury, Conn.; The Daily Star of Oneonta, N.Y.; the Press-Republican of Plattsburgh, N.Y.; the Santa Cruz Sentinel (Santa Cruz, Calif.).; The Daily Item of Sunbury, Pa.; and the Traverse City Record-Eagle (Traverse City, Mich.).
The following unaudited pro forma condensedconsolidated balance sheet at September 30, 2006 and the unaudited pro forma condensed consolidated statements of income for the years ended December 31, 2005, 2004 and 2003, and the accompanying notes thereto, have been prepared to illustrate the effects of the sale, as discontinued operations, on the historical financial position and results of operations of Dow Jones. However, the unaudited pro forma condensed consolidated financial statements and related notes do not give effect to any utilization of cash proceeds from the sale. Since the sale properties met the criteria for discontinued operations as of September 30, 2006, the statements of income for the nine months ended September 30, 2006 and 2005 included in our Form 10-Q for the period ended September 30, 2006 reflected the sale properties as discontinued operations. Accordingly, we ha ve not presented the September 30, 2006 and 2005 statements of income herein.
The unaudited pro forma condensed consolidated statements of income present the historical condensed consolidated statements of income of Dow Jones as if the sale occurred on January 1, 2003. The unaudited pro forma condensed balance sheet presents the historical condensed consolidated balance sheet of Dow Jones as if the sale occurred on September 30, 2006. The assumptions and adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated financial statements and related notes are presented for informational purposes only. The pro forma data is not necessarily indicative of what our financial position or results of operations actually would have been had we completed the sale at the respective dates indicated and do not reflect the impact of any proposed utilization of cash proceeds. In addition, the unaudited pro forma condensed consolidated financial statements do not purport to project the future financial position or operating results of Dow Jones. In the opinion of management, all necessary adjustments to the unaudited pro forma financial information have been made. The unaudited pro forma condensed consolidated balance sheet includes the real property which will be transferred to the buyer in later periods, subject to satisfaction of environmental conditions.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the accompanying notes and the respective historical financial information from which it was derived, which includes the Dow Jones 2005 Annual Report on Form 10-K and the unaudited Dow Jones Quarterly Report on Form 10-Q as of and for the nine months ended September 30, 2006.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||
Dow Jones & Company, Inc. | |||||||||
Year Ended December 31, 2005 | |||||||||
(in thousands, except per share amounts) | |||||||||
Historical | Discontinued Operations (a) | Pro Forma | |||||||
Revenues: | |||||||||
Advertising | $ | 961,288 | $ | (70,948) | $ | 890,340 | |||
Information services | 411,804 | - | 411,804 | ||||||
Circulation and other | 396,598 | (25,795) | 370,803 | ||||||
Total revenues | 1,769,690 | (96,743) | 1,672,947 | ||||||
Expenses: | |||||||||
News, production and technology | 560,988 | (26,242) | 534,746 | ||||||
Selling, administrative and general | 649,250 | (30,872) | 618,378 | ||||||
Newsprint | 126,449 | (8,194) | 118,255 | ||||||
Print delivery costs | 192,027 | (3,754) | 188,273 | ||||||
Depreciation and amortization | 108,301 | (2,462) | 105,839 | ||||||
Restructuring and other items, net | 11,367 | - | 11,367 | ||||||
Total operating expenses | 1,648,382 | (71,524) | 1,576,858 | ||||||
Operating income | 121,308 | (25,219) | 96,089 | ||||||
Other income (expense): | |||||||||
Investment income | 2,127 | 2,127 | |||||||
Interest expense | (19,255 | ) | (19,255 | ) | |||||
Equity in earnings of associated companies | 14,090 | 14,090 | |||||||
Write-down of equity investments | (35,865 | ) | (35,865 | ) | |||||
Gain on disposition of investments | 22,862 | 22,862 | |||||||
Contract guarantee | (4,090 | ) | (4,090 | ) | |||||
Other, net | 2,434 | 169 | 2,603 | ||||||
Income before income taxes | 103,611 | (25,050) | 78,561 | ||||||
Income taxes | 43,216 | (10,250) | 32,966 | ||||||
Income from continuing operations | $ | 60,395 | $ | (14,800) | $ | 45,595 | |||
Income from continuing operations per share: | |||||||||
Basic | $ | .73 | $ | .55 | |||||
Diluted | $ | .73 | $ | .55 | |||||
Weighted-average shares outstanding: | |||||||||
Basic | 82,751 | 82,751 | |||||||
Diluted | 83,189 | 83,189 | |||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements. |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||
Dow Jones & Company, Inc. | |||||||||
Year Ended December 31, 2004 | |||||||||
(in thousands, except per share amounts) | |||||||||
Historical | Discontinued Operations (a) | Pro Forma | |||||||
Revenues: | |||||||||
Advertising | $ | 946,325 | $ | (71,133) | $ | 875,192 | |||
Information services | 328,708 | 328,708 | |||||||
Circulation and other | 396,425 | (26,018) | 370,407 | ||||||
Total revenues | 1,671,458 | (97,151) | 1,574,307 | ||||||
Expenses: | |||||||||
News, production and technology | 513,808 | (25,544) | 488,264 | ||||||
Selling, administrative and general | 584,714 | (30,124) | 554,590 | ||||||
Newsprint | 115,067 | (7,641) | 107,426 | ||||||
Print delivery costs | 186,856 | (3,945) | 182,911 | ||||||
Depreciation and amortization | 104,907 | (2,676) | 102,231 | ||||||
Restructuring and other items, net | 3,932 | - | 3,932 | ||||||
Total operating expenses | 1,509,284 | (69,930) | 1,439,354 | ||||||
Operating income | 162,174 | (27,221) | 134,953 | ||||||
Other income (expense): | |||||||||
Investment income | 520 | 520 | |||||||
Interest expense | (3,740 | ) | (3,740 | ) | |||||
Equity in earnings of associated companies | 2,375 | 2,375 | |||||||
Gain on disposition of investments | 3,260 | 3,260 | |||||||
Contract guarantee | (6,933 | ) | (6,933 | ) | |||||
Other, net | (1,571 | ) | (2) | (1,573 | ) | ||||
Income before income taxes and minority interests | 156,085 | (27,223) | 128,862 | ||||||
Income taxes | 58,578 | (11,011) | 47,567 | ||||||
Income before minority interests | 97,507 | (16,212) | 81,295 | ||||||
Minority interests in losses of subsidiaries | 2,041 |
| 2,041 | ||||||
Income from continuing operations | $ | 99,548 | $ | (16,212) | $ | 83,336 | |||
Income from continuing operations per share: | |||||||||
Basic | $ | 1.22 | $ | 1.02 | |||||
Diluted | $ | 1.21 | $ | 1.01 | |||||
Weighted-average shares outstanding: | |||||||||
Basic | 81,878 | 81,878 | |||||||
Diluted | 82,285 | 82,285 | |||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements. |
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||||||
Dow Jones & Company, Inc. | |||||||||
Year Ended December 31, 2003 | |||||||||
(in thousands, except per share amounts) | |||||||||
Historical | Discontinued Operations (a) | Pro Forma | |||||||
Revenues: | |||||||||
Advertising | $ | 871,817 | $ | (66,805) | $ | 805,012 | |||
Information services | 286,863 | 286,863 | |||||||
Circulation and other | 389,805 | (26,359) | 363,446 | ||||||
Total revenues | 1,548,485 | (93,164) | 1,455,321 | ||||||
Expenses: | |||||||||
News, production and technology | 483,709 | (24,637) | 459,072 | ||||||
Selling, administrative and general | 540,529 | (27,218) | 513,311 | ||||||
Newsprint | 105,066 | (6,950) | 98,116 | ||||||
Print delivery costs | 188,662 | (4,182) | 184,480 | ||||||
Depreciation and amortization | 106,014 | (3,019) | 102,995 | ||||||
Restructuring and other items, net | (18,408) |
| (18,408) | ||||||
Total operating expenses | 1,405,572 | (66,006) | 1,339,566 | ||||||
Operating income | 142,913 | (27,158) | 115,755 | ||||||
Other income (expense): | |||||||||
Investment income | 7,771 | 7,771 | |||||||
Interest expense | (2,830 | ) | (2,830 | ) | |||||
Equity in earnings of associated companies | 2,869 | 2,869 | |||||||
Gain on disposition of investments | 18,699 | 18,699 | |||||||
Gain on resolution of Telerate sale loss contingencies | 59,821 | 59,821 | |||||||
Contract guarantee | (9,523 | ) | (9,523 | ) | |||||
Other, net | 1,138 | 5 | 1,143 | ||||||
Income before income taxes and minority interests | 220,858 | (27,153) | 193,705 | ||||||
Income taxes | 51,704 | (10,787) | 40,917 | ||||||
Income before minority interests | 169,154 | (16,366) | 152,788 | ||||||
Minority interests in losses of subsidiaries | 1,445 |
| 1,445 | ||||||
Income from continuing operations | $ | 170,599 | $ | (16,366) | $ | 154,233 | |||
Income from continuing operations per share: | |||||||||
Basic | $ | 2.09 | $ | 1.89 | |||||
Diluted | $ | 2.08 | $ | 1.88 | |||||
Weighted-average shares outstanding: | |||||||||
Basic | 81,593 | 81,593 | |||||||
Diluted | 81,950 | 81,950 | |||||||
The accompanying notes are an integral part of the unaudited pro forma condensed consolidated financial statements. |
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Dow Jones & Company, Inc.
NOTE 1: BASIS OF PRO FORMA PRESENTATION
On December 5, 2006, the parties closed on the purchase and sale of the non-real estate assets of the six community newspapers covered by the Agreement. In accordance with the Agreement, the Sellers received $281.5 million of the purchase price in cash (including an estimated working capital adjustment), and will receive an additional $6.4 million of the purchase price upon transfer of real property, subject to satisfaction of environmental conditions, in later periods. The six Dow Jones papers sold to the Buyer are: the News-Times of Danbury, Conn.; The Daily Star of Oneonta, N.Y.; the Press-Republican of Plattsburgh, N.Y.; the Santa Cruz Sentinel (Santa Cruz, Calif.).; The Daily Item of Sunbury, Pa.; and the Traverse City Record-Eagle (Traverse City, Mich.).
NOTE 2: PRO FORMA ADJUSTMENTS
The historical condensed consolidated financial statements have been adjusted to give effect to pro forma events that are (1) directly attributable to the sale; (2) factually supportable; and (3) as they relate to the statements of income, expected to have a continuing impact on the consolidated results. The following pro forma adjustments are included:
(h) | To record the estimated gain on disposition (in millions): | ||||
Cash received | $ | 281.5 | |||
Less net assets sold | 49.7 | ||||
Less estimated deal and separation costs | 6.1 | ||||
Less estimated defined benefit plan changes | 2.2 | ||||
Gain before income taxes | 223.5 | ||||
Income taxes* | 93.4 | ||||
Net gain | $ | 130.1 | |||
* Approximately $89.4 million of these income taxes will not be paid as the capital gain from this sale was largely offset by existing capital loss carryforwards. |
NOTE 3: PRO FORMA CONDENSED CONSOLIDATED INCOME FROM CONTINUING OPERATIONS PER SHARE
Unaudited pro forma condensed consolidated income from continuing operations per basic share was computed using Dow Jones' weighted average shares outstanding during the respective periods. Unaudited pro forma condensed consolidated income from continuing operations per diluted share was computed using the treasury stock method based on Dow Jones' weighted average shares outstanding during the respective periods.
(d) Exhibits
Exhibit No. | Description |
99.1 | Agreement of Purchase and Sale, dated as of October 27, 2006, among The Santa Cruz Sentinel, Inc., The Traverse City Record-Eagle, Inc., Ottaway Newspapers of Pennsylvania, L.P., Ottaway Newspapers, Inc., The Mail Tribune, Inc., and Community Newspaper Group, LLC and Community Newspaper Holdings, Inc. is hereby incorporated by reference to Exhibit 99.1 to its Form 8-K filed on October 30, 2006. |
99.2 | Press Release dated December 5, 2006. |
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: | December 8, 2006 | By: | /s/ Robert Perrine | |
Robert Perrine | ||||
Chief Accounting Officer and Controller |
EXHIBIT INDEX
Exhibit No. | Description |
99.1 | Agreement of Purchase and Sale, dated as of October 27, 2006, among The Santa Cruz Sentinel, Inc., The Traverse City Record-Eagle, Inc., Ottaway Newspapers of Pennsylvania, L.P., Ottaway Newspapers, Inc., The Mail Tribune, Inc., and Community Newspaper Group, LLC and Community Newspaper Holdings, Inc. is hereby incorporated by reference to Exhibit 99.1 to its Form 8-K filed on October 30, 2006. |
99.2 | Press Release dated December 5, 2006. |