UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
Commission file number 1-7564
DOW JONES & COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-5034940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 LIBERTY STREET, NEW YORK, NEW YORK 10281
(Address of principal executive offices) (Zip Code)
(212) 416-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of each of the issuer's classes of common
stock on June 30, 2001: 64,665,835 shares of Common Stock and 20,918,081 shares
of Class B Common Stock.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Dow Jones & Company, Inc.
=========================================================================================
Quarters Ended Six Months Ended
(in thousands, except June 30 June 30
per share amounts) 2001 2000 2001 2000
- -----------------------------------------------------------------------------------------
Revenues:
Advertising $300,903 $408,994 $577,092 $ 777,613
Information services 72,601 69,004 145,778 136,078
Circulation and other 110,622 115,159 221,124 230,218
- -----------------------------------------------------------------------------------------
Total revenues 484,126 593,157 943,994 1,143,909
- -----------------------------------------------------------------------------------------
Expenses:
News, operations and development 133,612 135,639 271,748 267,034
Selling, administrative and general 156,870 175,635 327,015 342,055
Newsprint 44,094 47,054 87,208 88,765
Print delivery costs 50,023 49,208 99,342 98,050
Depreciation and amortization 26,601 27,716 55,214 54,591
Restructuring charge 17,167 32,052
- -----------------------------------------------------------------------------------------
Operating expenses 428,367 435,252 872,579 850,495
- -----------------------------------------------------------------------------------------
Operating income 55,759 157,905 71,415 293,414
Other income (deductions):
Investment income 499 2,499 1,053 5,302
Interest expense (70) (557) (139) (904)
Equity in earnings (losses) of
associated companies 720 (485) (10,057) (9,515)
Gain on disposition of
businesses and investments 6,423 20,192
Contract guarantee, net 8,129 10,285
Other, net 538 (1,044) 833 (396)
- -----------------------------------------------------------------------------------------
Income before income taxes and
minority interests 65,575 164,741 73,390 308,093
Income taxes 23,544 63,870 26,715 119,869
- -----------------------------------------------------------------------------------------
Income before minority interests 42,031 100,871 46,675 188,224
Minority interests 1,213 (308) 2,748 1,009
- -----------------------------------------------------------------------------------------
Net income $ 43,244 $100,563 $ 49,423 $ 189,233
=========================================================================================
Net income per share:
- Basic $.50 $1.15 $.57 $2.14
- Diluted .50 1.13 .57 2.12
Weighted-average shares outstanding:
- Basic 86,147 87,603 86,458 88,395
- Diluted 86,741 88,624 87,078 89,402
Cash dividends declared per share $.50 $.50 $.75 $.75
- -----------------------------------------------------------------------------------------
Comprehensive income $ 41,206 $ 87,768 $ 42,044 $ 210,118
=========================================================================================
<FN>
See notes to condensed consolidated financial statements.
-2-
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
Dow Jones & Company, Inc.
=============================================================================
Six Months Ended June 30
(in thousands) 2001 2000
- -----------------------------------------------------------------------------
Operating Activities:
Net income $ 49,423 $189,233
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 55,214 54,591
Gain on disposition of businesses
and investments (20,192)
Changes in assets and liabilities 19,652 22,475
Other, net 4,601 7,896
- -----------------------------------------------------------------------------
Net cash provided by operating activities 128,890 254,003
- -----------------------------------------------------------------------------
Investing Activities:
Additions to plant and property (72,071) (96,119)
Businesses and investments acquired,
net of cash received (28,977) (37,610)
Disposition of businesses and investments 1,176 28,760
Other, net 4,365 2,658
- -----------------------------------------------------------------------------
Net cash used in investing activities (95,507) (102,311)
- -----------------------------------------------------------------------------
Financing Activities:
Cash dividends (43,297) (44,460)
Increase in long-term debt 49,056
Repurchase of treasury stock, net of
put premiums (71,854) (186,651)
Proceeds from sales under stock
compensation plans 10,132 22,233
Contributions from minority partner 3,930
- -----------------------------------------------------------------------------
Net cash used in financing activities (52,033) (208,878)
- -----------------------------------------------------------------------------
Decrease in cash and cash equivalents (18,650) (57,186)
Cash and cash equivalents at beginning of year 49,347 86,388
- -----------------------------------------------------------------------------
Cash and cash equivalents at June 30 $ 30,697 $ 29,202
=============================================================================
<FN>
See notes to condensed consolidated financial statements.
-3-
CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited)
Dow Jones & Company, Inc.
=========================================================================
June 30 December 31
(in thousands) 2001 2000
- -------------------------------------------------------------------------
Assets:
Cash and cash equivalents $ 30,697 $ 49,347
Accounts receivable-trade, net 211,738 236,284
Newsprint inventory 13,012 13,109
Deferred income taxes 7,727 7,749
Other current assets 47,852 61,754
- -------------------------------------------------------------------------
Total current assets 311,026 368,243
- -------------------------------------------------------------------------
Investments in associated companies,
at equity 70,658 65,871
Other investments 7,879 11,219
Plant and property, at cost 1,684,115 1,625,479
Less, accumulated depreciation 911,511 864,616
- -------------------------------------------------------------------------
772,604 760,863
Goodwill, less accumulated amortization 78,736 73,840
Deferred income taxes 77,292 71,316
Other assets 8,662 10,704
- -------------------------------------------------------------------------
Total assets $1,326,857 $1,362,056
=========================================================================
Liabilities:
Accounts payable and accrued liabilities $ 358,862 $ 346,289
Income taxes 41,708 27,658
Unearned revenue 207,727 213,277
- -------------------------------------------------------------------------
Total current liabilities 608,297 587,224
Long-term debt 199,921 150,865
Other noncurrent liabilities 449,505 456,606
- -------------------------------------------------------------------------
Total liabilities 1,257,723 1,194,695
- -------------------------------------------------------------------------
Minority Interests in Subsidiaries 9,819 8,593
Stockholders' Equity:
Common stock 102,181 102,181
Additional paid-in capital 130,128 137,481
Retained earnings 587,162 602,432
Accumulated other comprehensive loss (11,934) (4,555)
- -------------------------------------------------------------------------
807,537 837,539
Less, treasury stock, at cost 748,222 678,771
- -------------------------------------------------------------------------
Total stockholders' equity 59,315 158,768
- -------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,326,857 $1,362,056
=========================================================================
<FN>
See notes to condensed consolidated financial statements.
-4-
NOTES TO FINANCIAL STATEMENTS
Dow Jones & Company, Inc.
1. The accompanying unaudited condensed consolidated financial statements
reflect all adjustments considered necessary by management to present fairly
the company's consolidated financial position as of June 30, 2001, and
December 31, 2000, and the consolidated results of operations for the three
and six-month periods ended June 30, 2001 and 2000 and the consolidated cash
flows for the six-month periods then ended. The results of operations for the
respective interim periods are not necessarily indicative of the results to be
expected for the full year.
2. Second quarter 2001 operating expenses included restructuring charges of
$14.7 million ($8.9 million after tax, or $.10 per diluted share) for employee
severance related to a general workforce reduction. Through June 2001, the
company has reduced its full-time workforce by 429 employees, or 5%, including
a reduction of approximately 160 employees in the second quarter. The bulk of
second quarter severance charge will be paid during the third quarter of 2001.
In addition to the workforce reduction in the second quarter, the company
posted an asset write-down of $2.4 million ($1.5 million after tax, or $.02
per diluted share) related to WSJ.com for assets which were made obsolete or
were redundant and abandoned as a result of the restructuring plan.
3. The second quarter of 2001 included a net gain of $8.1 million, or $.09
per diluted share, related to a reserve for a contract guarantee. The first
quarter of 2001 included a net gain of $2.2 million, or $.02 per diluted
share, related to this matter. In 2000, the company established a reserve for
payments that the company may have to make on behalf of Bridge Information
Systems in connection with Dow Jones' guarantee of certain minimum annual
payments for data acquired by Dow Jones' former Telerate subsidiary from
Cantor Fitzgerald Securities and Market Data Corporation. Dow Jones sold
Telerate to Bridge Information Systems in 1998. Bridge is currently in
bankruptcy, but made payments for the post-petition periods in the first and
second quarters. The resulting reversal of the reserve for these payments was
partly offset by the amortization of the present value discount on the
contract reserve.
4. The first quarter of 2001 included a restructuring charge of $12.7 million
($7.8 million after tax, or $.09 per diluted share) for employee severance
related to a general workforce reduction in all segments. Most of the first
quarter severance charge was paid in the second quarter of 2001. In addition,
the company posted a restructuring charge of $2.2 million ($1.3 million after
tax, or $.01 per diluted share) for asset write-downs associated with the
company's online businesses which were made obsolete or were redundant and
abandoned as a result of the restructuring plan. These charges were included
in first quarter operating expenses. Also in the first quarter, the company
recorded a charge of $2.4 million ($1.6 million after tax, or $.02 per diluted
share) to Equity in losses of associated companies for costs related to the
shut-down of Work.com, a joint venture with Excite@Home.
5. The second quarter of 2000 included a net gain of $4.8 million, or $.05
per diluted share, from the sale of its minority interest in SportsTicker
Enterprises L.P.
6. The second quarter of 2000 included a reversal of a 1998 restructuring
charge of $3.2 million ($2.1 million after tax, or $.02 per diluted share)
relating to a favorable disposition of a satellite contract for CNBC Europe.
The benefit was recorded in Equity in earnings (losses) of associated
companies.
7. The first quarter of 2000 included a net gain of $9.5 million, or $.10 per
diluted share, from the sale of the company's subsidiary, Dow Jones Financial
Publishing Corp.
8. Various libel actions and other legal proceedings that have arisen in the
ordinary course of business are pending against the company and its
subsidiaries. In the opinion of management, the ultimate outcome to the
-5-
company and its subsidiaries as a result of legal proceedings is adequately
covered by insurance or, if not covered, would not have a material effect on
the company's financial statements taken as a whole.
9. Comprehensive income was computed as follows:
=============================================================================
Quarters Ended Six Months Ended
June 30 June 30
(in thousands) 2001 2000 2001 2000
- -----------------------------------------------------------------------------
Net income $43,244 $100,563 $49,423 $189,233
Foreign currency
translation adjustments (1,612) (552) (4,390) (2,006)
Adjustments for realized gain
included in net income (246) (1,743)
Unrealized (loss) gain on
investments (180) (12,243) (1,246) 22,891
- -----------------------------------------------------------------------------
Comprehensive income $41,206 $ 87,768 $42,044 $210,118
=============================================================================
10. Diluted earnings per share have been computed as follows:
=============================================================================
Quarters Ended Six Months Ended
(in thousands, except June 30 June 30
per share amounts) 2001 2000 2001 2000
- -----------------------------------------------------------------------------
Weighted-average shares
outstanding - basic 86,147 87,603 86,458 88,395
Stock options 409 876 449 856
Other, principally
contingent stock rights 185 145 171 151
- -----------------------------------------------------------------------------
Weighted-average shares
outstanding - diluted 86,741 88,624 87,078 89,402
Diluted earnings per share $.50 $1.13 $.57 $2.12
=============================================================================
11. The following table compares revenues, income before income taxes and
minority interests and EBITDA by business segment for the quarters and six
months ended June 30, 2001 and 2000. EBITDA is computed by the company as
operating income excluding depreciation, amortization and restructuring
charges. EBITDA is a measure used by the company's management in determining
a business unit's performance. EBITDA is not a measure of performance under
generally accepted accounting principles and should not be construed as a
substitute for consolidated net income as a measure of performance, nor as a
substitute for cash flow as a measure of liquidity. EBITDA is not a measure
of funds available for management's use. EBITDA is a component of a covenant
of the company's credit agreement that limits the company's ability to incur
certain additional future indebtedness. Management believes that EBITDA is a
standard measure of operating performance that is commonly used by investors
and analysts to analyze and compare other communication companies. EBITDA may
be calculated differently by other companies and investors should not view the
company's calculation of EBITDA as an alternative to GAAP measures such as
operating income, net income and cash flows provided by or used in operating,
investing and financing activities.
-6-
SEGMENT INFORMATION
=============================================================================
Quarters Ended Six Months Ended
June 30 June 30
(in thousands) 2001 2000 2001 2000
- -----------------------------------------------------------------------------
Revenues:
Print publishing $312,846 $420,861 $611,419 $ 811,878
Electronic publishing 80,262 79,806 161,660 158,889
Community newspapers 91,018 92,490 170,915 173,142
-------- -------- -------- ----------
Consolidated revenues $484,126 $593,157 $943,994 $1,143,909
- -----------------------------------------------------------------------------
Income before income taxes
and minority interests:
Print publishing $ 34,949 $132,576 $ 46,803 $ 251,298
Electronic publishing 7,098 12,314 9,982 22,178
Community newspapers 25,339 26,628 39,537 44,474
Corporate (11,627) (13,613) (24,907) (24,536)
-------- -------- -------- ----------
Consolidated operating income $ 55,759 $157,905 $ 71,415 $ 293,414
Equity in earnings (losses)
of associated companies 720 (485) (10,057) (9,515)
Gain on disposition of
businesses and investments 6,423 20,192
Contract guarantee, net 8,129 10,285
Other income, net 967 898 1,747 4,002
-------- -------- -------- ----------
Income before income taxes
and minority interests $ 65,575 $164,741 $ 73,390 $ 308,093
- -----------------------------------------------------------------------------
EBITDA:
Print publishing $ 60,856 $150,298 $ 98,837 $ 285,709
Electronic publishing 18,807 17,935 33,246 33,539
Community newspapers 29,483 30,910 48,165 53,086
Corporate (9,619) (13,522) (21,567) (24,329)
-------- -------- -------- ----------
Consolidated EBITDA $ 99,527 $185,621 $158,681 $ 348,005
EBITDA Margin:
Print publishing 19.5% 35.7% 16.2% 35.2%
Electronic publishing 23.4 22.5 20.6 21.1
Community newspapers 32.4 33.4 28.2 30.7
All segments 20.6 31.3 16.8 30.4
=============================================================================
Restructuring charges were included in operating income in 2001 as follows:
(in thousands) 2nd Quarter Six Months
----------- ----------
Print publishing $ 8,312 $16,879
Electronic publishing 7,135 12,084
Community newspapers 321
Corporate 1,720 2,768
------- -------
$17,167 $32,052
Excluding restructuring charges, segment operating income was as follows:
(in thousands) Quarters Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
Print publishing $43,261 $132,576 $ 63,682 $251,298
Electronic publishing 14,233 12,314 22,066 22,178
Community newspapers 25,339 26,628 39,858 44,474
Corporate (9,907) (13,613) (22,139) (24,536)
------- -------- -------- --------
Consolidated operating income $72,926 $157,905 $103,467 $293,414
-7-
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
FOR THE SECOND QUARTERS AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
In the second quarter of 2001, the company reported net income of $43.2
million, or $.50 per diluted share, compared with earnings last year of
$100.6 million, or $1.13 per diluted share. (All references to "per share"
amounts in this discussion are on a per diluted share basis.) Special
charges in the second quarter 2001 amounted to $2.3 million, net of taxes.
This consisted of an after-tax charge of $10.4 million related to severance
and asset write-downs, partially offset by a gain from a reversal of a
contract guarantee of $8.1 million. The second quarter of 2000 included
special gains totaling $6.9 million from the sale of an investment and a
gain from a favorable disposition of a contract. Excluding these special
items, net income was $45.5 million, or $.52 per share, compared with net
income of $93.7 million, or $1.06 per share, in the second quarter of 2000.
The year-over-year decline was primarily due to a sharp drop-off in profits
at the print publishing segment.
Results in the first half of 2001 reflect continued economic softness, which
in particular has affected the company's advertising-supported businesses.
Additionally, the first half of 2000 presented a tough comparison due to the
company's extraordinary advertising volume growth in the period from
financial, technology and dot.com businesses.
In light of these economic conditions, the company is taking steps to better
align its costs with its revenues. The company initiated a general
workforce reduction in the second quarter in addition to the reductions
begun in the first quarter. Through June 2001, the company has reduced its
full-time workforce by 429 employees, or 5%, including a reduction of
approximately 160 employees in the second quarter. Restructuring charges
related to these workforce reductions amounted to $27.4 million ($16.7
million after tax) on a year-to-date basis, of which $14.7 million ($8.9
million after tax) was recorded in the second quarter. These reductions
were across all business segments. In addition to the workforce reduction,
the company posted year-to-date charges of $7.1 million ($4.4 million after
tax) related to asset write-downs associated with online businesses that
were made obsolete, or were redundant and abandoned, including the
shuttering of Work.com in the first quarter. This included a second quarter
charge of $2.4 million ($1.5 million after tax). The annualized cost
savings associated with the workforce reduction is expected to be $37.7
million, including expected savings of $17 million from the second quarter
staff reductions. In addition to cost savings from these staff reductions,
the company has also significantly reduced costs in other, non-staff, areas
as well. Most of the severance charge for the first quarter was paid in the
second quarter of 2001, and the bulk of second quarter severance charge will
be paid during the third quarter of 2001.
The second quarter of 2001 results also included a net gain of $8.1 million,
or $.09 per share, related to a reserve of a contract guarantee. In the
first quarter, the company recorded a net gain of $2.2 million, or $.02 per
share, related to this matter. In 2000, the company established a reserve
for the present value of payments that the company may have to make on
behalf of Bridge Information Systems, in connection with Dow Jones'
guarantee of certain minimum annual payments for data acquired by Dow Jones'
former Telerate subsidiary from Cantor Fitzgerald Securities and Market Data
Corporation. Dow Jones sold Telerate to Bridge Information Systems in 1998.
Bridge is currently in bankruptcy, but made payments for the post-petition
periods in the first and second quarters. The resulting reversal of the
reserve for these payments was partly offset by the amortization of the
present value discount on the remaining contract reserve.
-8-
The following table reconciles the company's reported results to income
excluding special items. The term "special items," as used within the
remainder of management's discussion and analysis, refers to those items
within the table.
(in millions, except Special Items
per share amounts) -------------
Quarters Ended June 30 Six Months Ended June 30
2001 2000 2001 2000
-------------------- ---------------------- --------------------- -----------------------
Operating Net EPS Operating Net EPS Operating Net EPS Operating Net EPS
--------- --- --- --------- --- --- --------- --- --- --------- --- ---
REPORTED INCOME $ 55.8 $43.2 $ .50 $157.9 $100.6 $1.13 $ 71.4 $ 49.4 $ .57 $293.4 $189.2 $2.12
Adjusted to remove
Restructuring
Employee
severance (14.7) (8.9) (.10) (27.4) (16.7) (.19)
Asset Write-down (2.4) (1.5) (.02) (4.7) (2.8) (.03)
Included in non-
operating income
Reverse of
contract guarantee 8.1 .09 10.3 .11
Work.com shutdown (1.6) (.02)
Gains on sales:
DJ Financial
Publishing 9.5 .10
SportsTicker 4.8 .05 4.8 .05
Reverse Int'l TV
restructuring 2.1 .02 2.1 .02
INCOME EXCLUDING
SPECIAL ITEMS $ 72.9 $45.5 $ .52* $157.9 $ 93.7 $1.06 $103.5 $ 60.2 $ .69* $293.4 $172.9* $1.93*
<FN>
*The total of the individual items does not add due to rounding.
Operating income in the second quarter of 2001 of $55.8 million dropped
$102.1 million, or 65%, from 2000's $157.9 million. The operating margin
was 11.5%, down from 2000's 26.6%. Excluding the restructuring charge in
this year's second quarter, operating income of $72.9 million (operating
margin of 15.1%) decreased $85 million, or 54%. The second quarter EBITDA
margin (defined as operating income excluding depreciation, amortization and
restructuring charges) was 20.6% in 2001 versus 31.3% in 2000. Revenues
were down $109 million, or 18%, due to a company-wide decline in advertising
revenue. Operating expenses, excluding restructuring charges of $17.2
million, were down $24.1 million, or 5.5%, reflecting a decline in
promotional spending, volume-related expenses and other cost-cutting
efforts.
For the six months ended June 30, net income was $49.4 million in 2001, or
$.57 per share, versus $189.2 million in 2000, or $2.12 per share.
Excluding special items in the first six months of both years, net income
was $60.2 million, or $.69 per share in 2001, compared with net income of
$172.9 million, or $1.93 per share, in 2000.
Operating income in the first six months of 2001 was $71.4 million, down
$222 million, or 76%, from $293.4 million in 2000. The operating margin was
7.6% in 2001 versus 25.7% in 2000. Excluding 2001 restructuring charges,
operating income was $103.5 million (operating margin of 11%), a decline of
$189.9 million, or 65%. Revenues fell $199.9 million, or 18%, to $944
million in the first half of 2001. A decline in advertising revenue, driven
by a 34.8% linage decrease at The Wall Street Journal, was slightly
mitigated by improved Newswires revenue. Operating expenses increased $22.1
million, or 2.6%, to $872.6 million from $850.5 million in 2000. Excluding
restructuring charges in 2001, the operating expenses were down $10 million,
or 1.2%. Lower promotional spending, volume-related expenses and other cost
cutting efforts were partially mitigated by higher staffing costs in the
first quarter.
-9-
SEGMENT DATA
The company's business and financial news are reported in two segments:
print publishing and electronic publishing. The results of the company's
Ottaway Newspapers subsidiary, which publishes 19 daily newspapers and 17
weekly newspapers in 12 states in the U.S., are reported in the community
newspapers segment.
Print publishing includes the operations of The Wall Street Journal and its
international editions, Barron's and other periodicals, as well as U.S.
television operations. Results of the company's international television
ventures are included in Equity in earnings (losses) of associated
companies. Print publishing accounted for approximately 65% of 2001's first
half revenues, of which approximately 11% were earned by international
publications.
Electronic publishing includes the operations of Dow Jones Newswires,
WSJ.com, Dow Jones Indexes and other.
PRINT PUBLISHING
===========================================================================
Quarters Ended Six Months Ended
June 30 June 30
(in thousands) 2001 2000 2001 2000
- ---------------------------------------------------------------------------
U.S. Publications:
Advertising $206,986 $304,765 $402,567 $586,688
Circulation and other 70,886 75,458 143,757 153,587
International Publications:
Advertising 22,984 28,619 42,617 48,932
Circulation and other 11,990 12,019 22,478 22,671
- ---------------------------------------------------------------------------
Total revenue 312,846 420,861 611,419 811,878
Operating expenses 277,897 288,285 564,616 560,580
- ---------------------------------------------------------------------------
Operating income $ 34,949 $132,576 $ 46,803 $251,298
Operating margin 11.2% 31.5% 7.7% 31.0%
- ---------------------------------------------------------------------------
EBITDA* $ 60,856 $150,298 $ 98,837 $285,709
EBITDA margin 19.5% 35.7% 16.2% 35.2%
===========================================================================
<FN>
* See footnote 11 to financial statements.
Print publishing operating income in the second quarter dropped $97.6
million, or 74%. Excluding restructuring charges of $8.3 million, second
quarter 2001 operating income of $43.3 million (operating margin of 13.8%)
declined $89.3 million, or 67%, from a year ago. EBITDA was $60.9 million
in the second quarter of 2001, versus $150.3 million in the like period a
year ago.
Revenues fell $108 million, or 26%, from the comparable quarter in 2000,
after rising $93.7 million, or 29%, in 2000 from 1999. The steep drop in
revenue was largely due to a decline in advertising volume at The Wall
Street Journal. U.S. revenue decreased $102.4 million, or 27%, as Wall
Street Journal linage declined 37.4%, following a gain of 29.8% last year.
Barron's advertising pages were down 33.5% in the second quarter of 2001.
Advertising revenue for international publications fell 20%, as Wall Street
Journal Europe linage was down 28.9% and Asian Wall Street Journal linage
-10-
was off 16.1%. However, U.S. television revenue was up 11.6% from last
year.
From the second half of 1999 through the first half of 2000, the company
experienced extraordinary linage growth when advertising by financial,
technology and dot-com businesses thrived. As the economy has slowed down
in 2001, the company has faced historically high comparisons with last
year's like period. General linage for The Wall Street Journal, which made
up 61% of total linage, was down 40.5% in the second quarter of 2001, after
rising 39% a year earlier. The technology component of general advertising
dropped 57.9%, driven by an 85% curtailment of business to business e-
commerce advertising and a 48.7% decline in software advertising. These
declines were somewhat offset by improvement in PCs and hardware
advertising. General linage, excluding technology, was down 27.8%, largely
due to decline in communications, insurance and publishing and media
advertising. Financial advertising linage, which comprised 24% of total
Journal linage, fell 38.6% in the second quarter of 2001, reflecting a
nearly 60% decline in broker and investment banking linage, coupled with a
41% reduction in tombstone/initial public offerings (IPOs) linage.
Classified and other advertising, which comprised the remaining 15% of
linage, decreased 18.2%, as employment and real estate advertising softened.
Circulation revenue for U.S. print publications was down $5 million, or
7.5%, from the second quarter of 2000. Although paid orders were up
overall, there was an increase in lower-revenue disclaimer copies (i.e.
copies provided to hotels and other outlets for distribution to their
customers) and a decrease in single copy sales. The U.S. Wall Street
Journal's six-month ABC paid circulation as of June 30, 2001 averaged
1,842,000, up from 1,820,000 for the six-month period ended March 31, 2001
and 1,781,000 for June 30, 2000. The company's Statement of Total
Circulation (STC) provides circulation data, including complimentary and
third party amenity copies, which periodically is reviewed by independent
accountants, as well as information on the quality and character of the
publication's paid circulation, subscription terms and price. The STC is
issued semi-annually, covering the six-month periods ending March and
September. Its March 2001 circulation for The Wall Street Journal was
1,944,000, compared with 1,883,000 for September 30, 2000 and 1,925,000 for
March 31, 2000. The company increased The Wall Street Journal single copy
price from $.75 to $1.00, effective April 2, 2001. Barron's average paid
circulation was 294,000 versus last year's 314,000.
International publications circulation revenue in the second quarter of 2001
declined 7.6% from the like 2000 period. Average combined circulation
during the second quarter for the international editions of The Wall Street
Journal rose 10.1% to 186,000 from 169,000 a year ago. However, the
circulation gains from international editions of the Journal were more than
offset by a stronger U.S. dollar in 2001, a 5% volume decline at the Far
Eastern Economic Review and an increase in lower rate copies.
Print publishing expenses in the quarter were down $10.4 million, or 3.6%.
Excluding restructuring charges, expenses were down $18.7 million, or 6.5%,
from a year earlier, resulting from lower volume-related costs (newsprint
and sales incentives) and a reduction in direct mail promotional spending as
a part of the company's cost cutting efforts. Newsprint expense in the
second quarter of 2001 was down 8.9% on a 22% decline in newsprint
consumption somewhat offset by 17% increase in prices. At June 30, 2001,
the number of full-time employees in the print publishing segment was down
1.8% from the comparable period in 2000.
Operating income for the first half of 2001 declined $204.5 million, or 81%,
($187.6 million, or 75%, excluding restructuring) from 2000's first half,
-11-
mainly reflecting the soft advertising environment. Operating margin,
excluding restructuring, was 10.4%.
For the first six months of 2001, revenue in the U.S. publications declined
$194 million, or 26%, driven by a Wall Street Journal linage drop of 34.8%.
General, financial and classified and other linage fell 38.2%, 35.8% and
15.1%, respectively. International print revenues were down $6.5 million,
or 9.1%. Advertising linage at The Wall Street Journal Europe was down
20.7%, while The Asian Wall Street Journal linage fell 11.2%.
Operating expenses in the first half of 2001 increased $4 million, or 0.7%.
Excluding restructuring charges, expenses decreased $12.8 million, or 2.3%,
mainly due to lower volume-related costs and advertising promotional
expenses.
ELECTRONIC PUBLISHING
===========================================================================
Quarters Ended Six Months Ended
June 30 June 30
(in thousands) 2001 2000 2001 2000
- ---------------------------------------------------------------------------
Dow Jones Newswires:
North America $48,885 $47,127 $ 97,997 $ 93,453
International 10,536 9,822 21,016 19,468
- ---------------------------------------------------------------------------
Total Newswires 59,421 56,949 119,013 112,921
WSJ.com 9,316 12,149 18,441 23,653
Dow Jones Indexes 3,862 3,359 7,633 6,740
Other 7,663 7,349 16,573 15,575
- ---------------------------------------------------------------------------
Total revenue 80,262 79,806 161,660 158,889
Operating expenses 73,164 67,492 151,678 136,711
- ---------------------------------------------------------------------------
Operating income $ 7,098 $12,314 $ 9,982 $ 22,178
Operating margin 8.8% 15.4% 6.2% 14.0%
- ---------------------------------------------------------------------------
EBITDA* 18,807 $17,935 $ 33,246 $ 33,539
EBITDA margin 23.4% 22.5% 20.6% 21.1%
===========================================================================
<FN>
* See footnote 11 to financial statements.
Electronic publishing's second quarter operating income fell $5.2 million,
or 42%, from 2000. Excluding restructuring charges of $7.1 million,
operating income rose $1.9 million, or 16%. The operating margin, excluding
restructuring charges, was 17.7%. Revenues increased $.5 million, or 0.6%,
while operating expenses, excluding restructuring, decreased $1.5 million,
or 2.2%. Reduced promotional spending as well as lower technology related
expenses and depreciation more than offset higher expenses related to the
Newswires business expansion overseas. EBITDA improved $.9 million, or
4.9%.
Dow Jones Newswires revenue increased $2.5 million, or 4.3%, in the quarter.
International revenue grew 7.3%, while revenue from North America advanced
3.7%. Revenue from non-traditional distribution channels, such as online
brokerages and other e-commerce sites as well as wholesale arrangements,
both domestic and internationally, continued to grow, while revenue from
larger customers, in particular from the securities industry, has softened
due to the economic slowdown and consolidation. As of June 30, 2001, there
were 333,000 newswires terminals compared with 319,000 terminals a year ago,
an improvement of 4.4%. Bridge Information Systems was current with all of
its post-petition obligations to Newswires in the second quarter of 2001.
-12-
WSJ.com revenue declined $2.8 million, or 23%, from last year's second
quarter. Advertising revenue dropped 41%, due to a weak advertising market
across all customer categories. At June 30, 2001, the number of subscribers
to WSJ.com reached 591,000 versus 461,000 a year ago, a gain of 28%. The
mix of advertising versus subscription revenue was 43% to 57%, respectively,
compared with 55% to 44% in last year's second quarter.
Dow Jones Indexes second quarter revenue was $3.9 million, up 15% from the
like 2000 period. The increase was driven by license fees for funds based
on Global Titans, exchange traded funds, STOXX and customer indexes.
Electronic publishing's operating income for the first half of 2001 declined
$12.2 million, or 55%. Excluding restructuring charges, operating income of
$22.1 million was almost flat with 2000. The operating margin, excluding
restructuring, was 13.6%. Revenue advanced $2.8 million, or 1.7%, with
gains at Newswires partly tempered by lower WSJ.com advertising revenue.
The operating expenses, excluding restructuring charges of $12.1 million,
were up $2.9 million, or 2.1%, reflecting expansion efforts overseas and
higher royalty expenses somewhat offset by lower promotional spending.
COMMUNITY NEWSPAPERS
===========================================================================
Quarters Ended Six Months Ended
June 30 June 30
(in thousands) 2001 2000 2001 2000
- ---------------------------------------------------------------------------
Advertising $65,588 $67,369 $121,272 $124,366
Circulation and other 25,430 25,121 49,643 48,776
- ---------------------------------------------------------------------------
Total revenue 91,018 92,490 170,915 173,142
Operating expenses 65,679 65,862 131,378 128,668
- ---------------------------------------------------------------------------
Operating income $25,339 $26,628 $ 39,537 $ 44,474
Operating margin 27.8% 28.8% 23.1% 25.7%
- ---------------------------------------------------------------------------
EBITDA* $29,483 $30,910 $ 48,165 $ 53,086
EBITDA margin 32.4% 33.4% 28.2% 30.7%
===========================================================================
<FN>
* See footnote 11 to financial statements.
Community newspapers operating income declined $1.3 million, or 4.8%, from
the second quarter of 2000. EBITDA was down $1.4 million, or 4.6%.
Revenue in the quarter decreased $1.5 million, or 1.6%. Advertising revenue
declined $1.8 million, or 2.6%, on a 2% decline in linage. Advertising
linage for the daily papers was down 3.1%, but linage for the non-dailies
was up 4.6% in the second quarter of 2001 from a year earlier. Circulation
and other revenues were up 1.2%, due to an increase in commercial printing
revenue. Second quarter average circulation for the 19 dailies was 538,000
in 2001, versus 549,000 in 2000. Expenses in this quarter were at the same
level as 2000. Lower production costs and sales commissions offset higher
newsprint prices as well as increased promotional and marketing costs.
Newsprint expense was up 5%, as a 6% usage decline was more than offset by
price increases. Employee compensation expense, which is a major cost
component of the segment, was up 1.9% from 2000's second quarter.
In May 2001, the company completed a purchase acquisition of the York County
Coast Star and The York Weekly in Maine and combined these operations with
Seacoast Newspapers, Inc. in Portsmouth, New Hampshire.
-13-
For the first six months in 2001, operating income was down $4.9 million, or
11.1%. Excluding restructuring charges, the operating margin was 23.3%.
EBITDA declined $4.9 million, or 9.3%. Advertising revenue fell $3.1
million, or 2.5%, as overall linage was down 2.4%. Operating expenses were
up $2.7 million, or 2.1%, largely due to higher newsprint prices.
OTHER INCOME/DEDUCTIONS
Net investment income in the second quarter was $.4 million in 2001 compared
with $1.9 million in 2000, a decline of $1.5 million, or 78%. Year-to-date
net investment income in 2001 was $.9 million, versus $4.4 million in 2000.
Investment income in the first half of 2000 included accrued dividends from
Bridge (about $1.5 million per quarter) which ceased in the third quarter of
2000. Long-term debt outstanding at June 30, 2001 was $200 million, an
increase of $50 million from a year ago.
The company's second-quarter share of equity in earnings from associated
companies was $.7 million, an improvement of $1.2 million from losses of $.5
million in the like 2000 period. The second quarter of 2000's equity
results included a reversal of a 1998 restructuring charge of $3.2 million
relating to the favorable disposition of a satellite lease in Europe.
Excluding this benefit, equity results improved $4.4 million from 2000's
equity losses of $3.6 million, driven by elimination of Work.com losses in
this quarter, reduced losses from international television joint ventures,
as well as higher earnings at Factiva and the company's newsprint mill
affiliate.
The first six months of 2001 equity in losses from associated companies of
$10.1 million was $.6 million worse than last year's losses of $9.5 million.
The company incurred a first quarter 2001 shutdown cost of $2.4 million for
Work.com. Excluding special items in both years, equity losses were
favorable by $5 million, or 40%. Improved results from Factiva,
international television joint ventures, SmartMoney and the newsprint mill
affiliate were partly offset by higher losses from the company's European
publishing investments and Work.com.
The second quarter of 2001 included a net gain of $8.1 million, or $.09 per
share, related to a reserve for the contract guarantee. The first quarter
of 2001 included a net gain of $2.2 million, or $.02 per diluted share,
related to this matter. In 2000, the company established a reserve for
payments that the company may have to make on behalf of Bridge Information
Systems in connection with Dow Jones' guarantee of certain minimum payments
for data acquired by Dow Jones' former Telerate subsidiary from Cantor
Fitzgerald Securities and Market Data Corporation. Dow Jones sold Telerate
to Bridge Information Systems in 1998. Bridge is currently in bankruptcy,
but made payments for the post-petition periods in the first and second
quarters.
The second quarter of 2000 included a net gain of $4.8 million, or $.05 per
diluted share, from the sale of its minority interest in SportsTicker
Enterprises L.P. In the first quarter of 2000, the company sold its
subsidiary, Dow Jones Financial Publishing Corp. for a pretax gain of $13.8
million.
TELEVISION
Television includes income from U.S. television operations reported in the
print publishing segment and losses from international television reported
in equity results. The total pretax earnings in the second quarter of $9
million were down slightly from last year's earnings of $9.4 million.
-14-
Excluding the special item in 2000, pretax earnings improved $2.8 million,
or 46%, reflecting improved results in the overseas joint ventures and U.S.
television revenues. For the first half, total pretax earnings were $10.5
million in 2001, compared with $9.7 million ($6.6 million excluding the
special item) in 2000. Since 1998, television results have benefited from
the company's worldwide alliance with CNBC, particularly enhancing U.S.
television revenues.
INCOME TAXES
The following table presents the effective income tax rates.
===========================================================================
Quarters Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
- ---------------------------------------------------------------------------
Effective income tax rate
(net of minority interests) 35.3% 38.8% 35.1% 38.8%
- ---------------------------------------------------------------------------
Effective income tax rate
(net of minority interests),
excluding special items 40.0% 39.5% 40.0% 39.5%
===========================================================================
The effective tax rate was lower than the rate excluding special items due
to the non-taxable reversal of the reserve for the contract guarantee in
2001. As of June 30, 2001, the company had available approximately $486
million of capital loss carryforward (a deferred tax asset of $185 million).
The company may utilize the bulk of carryforward through 2003. In addition,
the company has recorded an unrecognized capital loss carryforward of $402
million (a deferred tax asset of $153 million) that will be available for
use for five years from the year it is recognized for tax purposes. Both
loss carryforwards are fully reserved.
FINANCIAL POSITION
Cash provided by operations in the first half of 2001 of $128.9 million
declined $125.1 million, or 49%, from 2000's like period, primarily due to
lower earnings.
During the first six months of 2001, the company repurchased 1.6 million
shares of its common stock for an aggregate price of $87.3 million, with an
average price per share of $55.73. As of June 30, 2001, approximately $495
million remained under board authorization for share repurchases after
reserving for the possible exercise of outstanding puts. The company has
outstanding puts covering up to 1 million shares which, if exercised, will
require the company to repurchase up to $53.8 million of its common stock at
strike prices (net of put premiums received) ranging from $50.70 to $55.78
per share through April 2002. The company has the option of net share
settlement on these contracts.
In addition to the repurchase of the company's stock, the company made
capital expenditures of $72.1 million in the first half of 2001 (including
$15.2 million for The Wall Street Journal color print expansion project and
$13.4 million for the WSJ.com redesign), paid dividends of $43.3 million and
funded $29 million for various investments.
-15-
The company has guaranteed payment under certain circumstances of certain
minimum payments for data acquired by Telerate (now wholly-owned by Bridge
Information Systems, Inc.) from Cantor Fitzgerald Securities and Market Data
Corporation (MDC) under contracts entered into during the period when
Telerate was a subsidiary of the company. The minimum payments average
approximately $50 million per year through October 2006. In 2000, the
company established a reserve in the amount of $255 million representing the
present value of the total estimated minimum payments over the remainder of
the contract term using a discount rate of approximately 6%.
In the first quarter of 2001, Bridge paid, as an administrative expense in
bankruptcy, the portion of the quarterly payment owed to MDC for the period
subsequent to Bridge's February 15, 2001 Chapter 11 bankruptcy filing. In
April 2001, Dow Jones paid $5.8 million to MDC covering the period January 1
to February 14, 2001 preceding Bridge's Chapter 11 bankruptcy filing.
Bridge made payments to MDC for the second quarter. After conducting an
auction, the bankruptcy court approved the sale of a substantial portion of
Bridge's assets, but excluding the Telerate business, to Reuters. The
Bridge bankruptcy continues and the Telerate business remains available for
sale.
As noted in Item 3 of this Form 10-Q, MDC has amended its complaint to seek
a declaratory judgment that the remainder of the minimum payments through
October 2006 will be payable by the company under the guarantee. The
company has asked the court to dismiss the claim on the grounds that it is
premature to consider it because the company expects to have various
defenses with respect to the remaining payments.
As of June 30, 2001, the company had borrowings of $200 million through the
issuance of commercial paper, which is classified as long-term, as it is the
company's intent to refinance such obligations on a long-term basis. In
June 2001, the company renewed its revolving credit agreements with a
consortium of banks. Under these agreements, the company can borrow up to
$430 million, of which $290 million through June 24, 2002 and $140 million
through June 24, 2006. The terms are essentially the same as the prior
agreement.
ACCOUNTING PRONOUNCEMENTS
In June 2001, Statement of Financial Accounting Standards No. 141 (SFAS 141)
"Business Combination" was issued. This Statement requires that all
business combinations be accounted for by a single method -- the purchase
method. This Statement also requires disclosure of the primary reasons for
a business combination and the allocation of the purchase price paid to the
assets acquired and liabilities assumed by major balance sheet caption.
When the amounts of goodwill and intangible assets acquired are significant
in relation to the purchase price paid, disclosure of other information
about those assets is required, such as the amount of goodwill by reportable
segment and the amount of the purchase price assigned to each major
intangible asset class. The effective date for the provisions of this
Statement is all business combinations initiated after June 30, 2001.
In addition, the FASB issued Statement of Financial Accounting Standards No.
142 (SFAS 142) "Goodwill and Other Intangible Assets." According to this
Statement, goodwill shall not be amortized but be tested for impairment at
least annually or between annual tests if an event occurs or circumstances
change indicating that goodwill of a reporting unit might be impaired. The
aggregate amount of goodwill impairment losses shall be presented as a
separate line item in the operating section of the income statement. This
Statement applies fiscal years beginning after December 15, 2001. The
company is in the process of evaluating the standards and determining their
effect on financial results upon implementation.
-16-
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis and other sections of this Quarterly
Report include forward-looking statements that reflect the company's current
expectations or beliefs concerning future results and events. In addition,
the company may from time to time make additional forward-looking
statements, either orally or in writing. The company cautions readers that
the company's targets and objectives, and the results expected or
anticipated by forward-looking statements, including, without limitation,
statements relating to the company's future business prospects, revenues,
income, working capital, liquidity, capital needs and interest costs and
similar items, are subject to certain risks and uncertainties which could
cause actual results and events to differ materially from those anticipated
in the forward-looking statements. Factors that might cause such a
difference include, but are not limited to:
- global business, economic and stock market conditions, and the negative
impact of economic downturns on sales of the company's products and
services;
- economic conditions that are influencing the rate and volume of
advertising linage, in particular IPO, dot-com and technology
advertising, and the resulting impact on the company's advertising
revenues;
- the company's ability to reduce costs without harming long term growth
prospects;
- business conditions (growth or consolidation) in the financial services
industry, and the tendency of consolidation to negatively impact the
market for the company's products and services and advertising;
- the difficult comparisons the company will face in 2001 in light of the
high level of advertising sales revenue achieved at The Wall Street
Journal in 2000;
- - the extent to which the company is called upon to perform under the
guarantee to Cantor Fitzgerald Securities and Market Data Corporation,
and the other uncertainties relating to liability under this guarantee
described above in Management's Discussion and Analysis;
- the intense competition the company's products and services face in the
markets for financial news and information and advertising revenues from
newspapers, specialized magazines, free and paid Internet publications
and services, financial television programming and other new media;
- the company's ability to manage expense growth;
- with respect to Newswires, the extent and impact of delays and
difficulties that would be encountered in a migration process if Bridge
and/or Telerate were unable to serve their customers;
- with respect to Newswires, the rate of addition of new subscribers,
particularly, outside the U.S., and the cancellations of Telerate and
Bridge terminals;
- increased competition in the market for electronic business information
and research services and Factiva's ability to increase its market share
and revenues in the face of competition from local providers with more
local content and from other international providers;
- WSJ.com's ability to increase its revenues in light of its paid
subscription model;
-17-
- the company's ability to leverage its brands and develop new and
enhanced "vertical" Internet sites and to generate advertising and other
revenues from these sites;
- rapid technological changes and frequent new product introductions
prevalent in electronic publishing;
- the company's ability to expand production and service capacity for
electronic publishing products on a timely basis to support growth of
operations and user traffic;
- the amount of user traffic on the company's Internet sites and the
pricing of advertising on Internet sites generally;
- potential increased regulation of on-line businesses;
- the company's ability to increase its circulation and advertising
revenues from its international print publications, given competition
from local publications and from other international publications;
- the company's ability to achieve and maintain a diversified advertising
base for its print publications;
- any delays that could occur in expanding the company's newspaper page
and color printing capacity, which could result in insufficient capacity
to carry advertisements;
- adverse developments relating to the company's commitments,
contingencies and equity investments;
- risks associated with the development of television channels in
competitive foreign markets, including the ability to produce or obtain
desired programming, to sell advertising time at desired rates, to
achieve sufficient distribution and to attract audiences;
- risks associated with the ability to sell advertising time at desired
rates in the U.S. television market;
- cost of newsprint;
- the extent to which the company is able to maintain favorable
arrangements with respect to the licensing of its content;
- any damage to or technical failure of the company's computer
infrastructure systems or software that causes interruptions of
operations;
- the company's ability to attract and retain qualified personnel;
- the company's ability to negotiate collective bargaining agreements with
its labor unions without work interruptions;
- adverse verdicts in legal proceedings, including libel actions;
- risks associated with foreign operations, including currency and
political risks;
- and such other risk factors as may have been or may be included from
time to time in the company's reports filed with the Securities and
Exchange Commission.
-18-
PART II. OTHER INFORMATION
ITEM 3. Legal Proceedings
On February 20, 2001, Market Data Corp. (MDC) commenced a lawsuit against
Dow Jones in the Supreme Court of the State of New York, seeking to compel
the company to pay $11.7 million, plus interest, attorneys fees and costs,
that MDC claimed was owed under the guarantee issued to MDC and Cantor
Fitzgerald Securities Corp., together with unspecified consequential damages
that MDC claimed result from Dow Jones' failure to pay on the guarantee.
The guarantee relates to certain annual minimum payments owed by Telerate
for data acquired by Telerate from Cantor Fitzgerald and MDC under contracts
entered into when Telerate was a subsidiary of Dow Jones, and is described
above in Management's Discussion and Analysis.
In the first quarter of 2001, Bridge paid, as an administrative expense in
bankruptcy, the portion of the quarterly payment owed to MDC for the period
subsequent to Bridge's February 15, 2001 Chapter 11 bankruptcy filing. In
April 2001, Dow Jones paid $5.8 million to MDC covering the period January 1
to February 14, 2001 preceding Bridge's Chapter 11 bankruptcy filing. On
May 15, 2001, Bridge paid, as an administrative expense in bankruptcy, the
entire quarterly payment owed to MDC on that date.
MDC has amended its complaint to drop its claim for consequential damages
and to drop its claim for a declaratory judgment that the remainder of the
annual minimum payments through October 2006 will be payable under the
guarantee. The only remaining claims in the complaint seek the payment of
interest on the payment made in the first quarter of 2001 and for attorneys
fees and costs in this litigation. The company has asserted various
defenses with respect to these remaining claims.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Not applicable
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits filed:
Exhibit
Number Document
- ------- --------
* 10.1 364-Day Credit Agreement, dated as of June 25, 2001
* 10.2 5-Year Credit Agreement, dated as of June 25, 2001
* Securities and Exchange Commission and New York Stock Exchange copies
only.
(b) Reports on Form 8-K:
Form 8-K, dated April 12, 2001
Form 8-K/A, dated June 19, 2001 (to amend Form 8-K dated
June 18, 2001)
-19-
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 thereunto duly authorized.
DOW JONES & COMPANY, INC.
-------------------------
(Registrant)
Dated: August 13, 2001 By: /s/ Christopher W. Vieth
------------------------
Christopher W. Vieth
Vice President, Finance
and Corporate Controller
-20-