Investor Contacts: Dow Jones & Company
Mark Donohue 200 Liberty Street
Director, Investor Relations New York, NY 10281
(609) 520-5660
Richard Zannino
Executive Vice President, COO
(212) 416-4205
Media Contact:
Brigitte Trafford
Vice President, Communications
(212) 416-3213
DOW JONES & COMPANY ANNOUNCES
FIRST QUARTER 2003 RESULTS
Provides 2nd Quarter Outlook
NEW YORK, N.Y. (April 10, 2003)-- Dow Jones & Company (NYSE: DJ) announced
today that it earned 82 cents per diluted share during the first quarter
ended March 31, 2003, compared to $1.53 per diluted share in the first
quarter of 2002. Excluding the special items detailed below, the Company
earned 12 cents per diluted share, an increase of 50.0% compared to the 8
cents per diluted share earned in the first quarter 2002.
First quarter 2003 special items netted to a gain of 70 cents. This
included a non-cash gain of 73 cents per diluted share from the reversal of
a 1998 reserve for loss contingencies related to the sale of Telerate to
Bridge Information Systems that were settled in Bridge's bankruptcy
proceedings, and a charge of 3 cents per diluted share for accretion of
discount for contract guarantee obligations. Special items in the first
quarter of 2002 netted to a gain of $1.45 per diluted share. This included
a gain of $1.49 per diluted share from the sale of four Ottaway Newspaper
properties and a charge of 4 cents per diluted share to accrete discount for
contract guarantee obligations. Please refer to the attached financial
exhibits and notes for more details on the Company's results and special
items.
Revenue of $358.2 million declined 8.8% in the first quarter of 2003,
with U.S. Wall Street Journal linage declining 11.0% in the quarter compared
to the first quarter 2002. Operating expenses were $340.7 million, down
10.5% from the first quarter of 2002 and operating income was $17.6 million,
up 42.8% from last year. Operating income as a percent of revenues was
4.9%, compared to 3.1% last year.
Dow Jones also said that, assuming war effects persist through much of
the second quarter, it expects earnings per share before special items in
the quarter to be in the mid-teens cents per share range, compared to 25
cents per share in the second quarter 2002. This assumes that second
quarter 2003 linage at the U.S. Wall Street Journal declines in the mid-
teens percentage range compared to the second quarter 2002. Based on
currently anticipated special items that may occur in the second quarter
2003, the Company expects reported earnings per share to be in the mid-20
cents per share range, compared with 64 cents per share in the second
quarter 2002. Please refer to the attached table for a reconciliation of
the Company's second quarter 2003 earnings estimates.
Peter R. Kann, chairman and CEO of Dow Jones & Company, said: "We
continue to be hampered by the persistently difficult business and
advertising environment, especially in our core financial and technology
advertising segments, further exacerbated by the war in Iraq. At the same
time, however, we continue to invest in our products, improve our operating
performance and control our spending, laying the groundwork for much better
results - and stronger shareholder returns - as business recovers."
Rich Zannino, executive vice president and chief operating officer of
Dow Jones added: "While we can't control the business environment, business
confidence or geopolitical events and their impact on advertising, we are
aggressively controlling all we can. One result is improved bottom lines at
each of our business segments in the first quarter. Other results include
increased color and consumer advertising at the Journal, increased ad volume
at our international Journal editions, the launch of Dow Jones NewsPlus,
price increases for a number of our products, improved financial performance
at the Online Journal and our equity investments, tight control of spending,
and improved organizational effectiveness. We continue to successfully
execute these and the other initiatives outlined in Business Now, our
strategic plan, enabling us to take full advantage of an improving
environment, when it arrives."
Segment Results
Print publishing results were depressed by the continued difficult
global advertising environment, especially in our core financial and
technology segments. Revenues declined 9.2% in the first quarter to $214.4
million. Advertising linage at The Wall Street Journal (U.S.) fell 11.0%
(down 20.0% per issue in March) while per issue linage at the international
editions of the Journal were up 11.9% (up 6.0% in March). Barron's ad pages
were down 23.7% per issue in the quarter (down 30.6% in March). The print
publishing segment had an operating loss of $4.7 million in the first
quarter, an improvement of 46.6% from the prior year period.
Electronic publishing continued to post strong results. Revenues in
the first quarter were $79.2 million, up 1.8% from the prior year period.
Operating income was $16.8 million, up 10.5% from last year, and operating
margins improved to 21.3% this year from 19.6% last year, driven by improved
performance at Indexes/Ventures and Consumer Electronic Publishing. Paid
subscribers to The Wall Street Journal Online, the largest paid subscription
news site on the web, reached 675,000 as of March 31, 2003, up 5.5% over
March 31, 2002.
Ottaway community newspapers continued its steady performance (results
discussed here exclude operations divested and acquired during the last 12
months). Revenue increased 2.7% in the first quarter to $63.6 million.
Advertising linage increased 0.1% in the first quarter (linage was down 5.2%
in March). Ottaway operating income was up 1.6% to $12.5 million in
the first quarter with an operating margin of 19.6% compared to 19.8%
last year.
During the first quarter, the Company repurchased 556,000 shares
of its common stock at an aggregate cost of $19.8 million. The
Company ended the first quarter 2003 with $119.9 million in debt,
compared to $92.9 million at the end of 2002.
As previously announced, the Company will host an earnings
conference call at 10:00 a.m. Eastern standard time today. The call
can be accessed via a live webcast through the Investor Relations
section of the Company's Web site, www.dowjones.com, or listen-only
dial-in conference lines, by dialing 706-643-1846. A replay of the
conference call and the full text of the prepared remarks will be
available on the Company's Web site in the Investor Relations section
shortly after the call concludes.
Dow Jones & Company (NYSE: DJ; dowjones.com) publishes The Wall
Street Journal and its international and online editions, Barron's and
the Far Eastern Economic Review, Dow Jones Newswires, Dow Jones
Indexes and the Ottaway group of community newspapers. Dow Jones is
co-owner with Reuters Group of Factiva, with Hearst of SmartMoney and
with NBC of CNBC television operations in Asia and Europe. Dow Jones
also provides news content to CNBC and radio stations in the U.S.
Information Relating To Forward-Looking Statements:
This press release contains forward-looking statements that involve
risks and uncertainties that could cause actual results to differ
materially from those anticipated, including the cyclical nature of
the company's business and the strong negative impact of economic
downturns, including the continuing effect of the war in Iraq, on
advertising revenues; the severe weaknesses in the current technology
and financial advertising markets; the extent of any recovery in the
economy; the risk that the company will not benefit from any recovery
in the economy; and such other risk factors as may be included from
time to time in the company's reports filed with the Securities and
Exchange Commission.
Dow Jones & Company
Earnings Summary 5
(Unaudited)
(in thousands, except
per share amounts) Quarters Ended March 31
2003 2002
-------- --------
Reported results:
Revenues $358,230 $392,891
Operating income 17,579 12,306
Net income 66,932 129,825
Effective tax rate* 8.8% 19.7%
Diluted EPS $.82 $1.53
Excluding items described in Note 2:
Net income $9,721 $6,884
Effective tax rate* 40.0% 40.0%
Diluted EPS $.12 $.08
EPS percentage change 50.0% (52.9)%
<FN>
*The effective income tax rate is net of minority interests.
See notes to financial information on page 10.
Reconciliation of Second Quarter Earnings Outlook
Quarters Ended June 30,
2003 Guidance 2002 Actual
--------------- -----------
Reported earnings per share mid-20 cents $.64
per share range**
Adjusted to remove:
Gain on sale of ONI property .45
Potential gain on exchange of WSJ Europe
and Handelsblatt interests .14
Restructuring charge related to a workforce reduction (.07)
Special gains at equity method investments .05
Contract guarantee (.03) (.04)
------------ -----------
EPS before special items mid-teens cents $.25
per share range
<FN>
**Based on special items currently anticipated.
Dow Jones & Company
Condensed Consolidated Statements of Income 6
(Unaudited)
(in thousands, except
per share amounts) Quarters Ended March 31
2003 2002
-------- --------
Revenues:
Advertising $190,508 $219,868
Information services 71,856 71,631
Circulation and other 95,866 101,392
-------- --------
Total revenues 358,230 392,891
Expenses:
News, operations and development 115,295 127,032
Selling, administrative and general 129,022 152,126
Newsprint 23,071 26,778
Print delivery costs 45,906 47,252
Depreciation and amortization 27,357 27,397
-------- --------
Operating expenses 340,651 380,585
-------- --------
Operating income 17,579 12,306
Other income (deductions):
Investment income 74 90
Interest expense (453) (1,589)
Equity in losses of
associated companies (1,849) (2,450)
Gain on reversal of Telerate sale
loss contingency 59,821
Gain on sale of businesses 153,407
Contract guarantee (2,610) (3,178)
Other, net 439 755
-------- --------
Income before income taxes and
minority interests 73,001 159,341
Income taxes 6,481 31,878
-------- --------
Income before minority interests 66,520 127,463
Minority interests 412 2,362
-------- --------
Net income $ 66,932 $129,825
======== ========
Net income per share:
- Basic $.82 $1.54
- Diluted $.82 1.53
Weighted-average shares outstanding:
- Basic 81,791 84,319
- Diluted 82,028 84,849
<FN>
See notes to financial information on page 10.
Dow Jones & Company
Segment Information 7
(Unaudited)
(dollars in thousands) Quarters Ended March 31
2003 2002
-------- --------
Revenues:
Print publishing $214,424 $236,048
Electronic publishing 79,187 77,800
Community newspapers:
Comparable operations 63,635 61,977
Divested/acquired operations 984 17,066
-------- --------
Consolidated revenues 358,230 392,891
Percentage change in revenues
excluding divested/acquired operations (4.9)% (14.9)%
Operating income:
Print publishing (4,685) (8,777)
Electronic publishing 16,831 15,227
Community newspapers:
Comparable operations 12,483 12,285
Divested/acquired operations 98 3,778
Corporate (7,148) (10,207)
-------- --------
Consolidated operating income $ 17,579 $ 12,306
======== ========
Operating margin:
Print publishing (2.2)% (3.7)%
Electronic publishing 21.3 19.6
Community newspapers:
Comparable operations 19.6 19.8
Divested/acquired operations 10.0 22.1
Consolidated operating margin 4.9 3.1
Depreciation and amortization (D&A):
Print publishing $ 17,680 $ 17,016
Electronic publishing 6,790 6,735
Community newspapers:
Comparable operations 2,704 2,813
Divested/acquired operations 54 593
Corporate 129 240
-------- --------
Consolidated D&A $ 27,357 $ 27,397
======== ========
<FN>
See notes to financial information on page 10.
Dow Jones & Company
Supplemental Segment Revenue Information 8
(Unaudited)
(in thousands) Quarters Ended March 31
2003 2002
-------- --------
Print Publishing:
U.S. Publications:
Advertising $129,857 $148,166
Circulation and other 66,390 67,092
International Publications:
Advertising 9,993 11,711
Circulation and other 8,184 9,079
-------- --------
Total 214,424 236,048
Electronic Publishing:
Dow Jones Newswires:
Domestic 43,365 45,809
International 10,611 11,975
-------- --------
Total Newswires 53,976 57,784
Consumer Electronic Publishing(*) 15,371 12,792
Dow Jones Indexes/Ventures 9,840 7,224
-------- --------
Total 79,187 77,800
Community Newspapers:
Advertising
Comparable operations 44,931 43,343
Divested/acquired operations 760 12,016
-------- --------
Total advertising 45,691 55,359
Circulation and other
Comparable operations 18,704 18,634
Divested/acquired operations 224 5,050
-------- --------
Total circulation and other 18,928 23,684
Total 64,619 79,043
-------- --------
Total segment revenues $358,230 $392,891
======== ========
<FN>
(*) Includes WSJ.com, related vertical sites, licensing/business development
and radio/audio.
See notes to financial information on page 10
Dow Jones & Company
Statistical Information 9
(Unaudited)
Quarters Ended March 31
2003 2002
---- ----
<C.
Advertising Volume
Year-Over-Year Percentage Change:
The Wall Street Journal
General 2.5% (14.0)%
Technology (28.5) (39.8)
Financial (37.5) (33.3)
Classified 15.3 (17.1)
Total (11.0) (26.2)
The Asian Wall Street Journal 5.6 (44.5)
The Wall Street Journal Europe 22.1 (42.8)
Barron's (17.3) (23.8)
Ottaway Newspapers (*)
Daily (0.5) (2.6)
Non-daily 3.1 1.3
Total 0.1 (2.0)
Wall Street Journal advertising as a
percentage of total Journal linage:
General 43.2% 37.5%
Technology 16.9 21.0
Financial 16.3 23.3
Classified 23.6 18.2
Other statistics: March 31 March 31
2003 2002
-------- --------
Dow Jones Newswires terminals 303,000 348,000
WSJ.com subscribers 675,000 640,000
WSJ.com unique visitors/business day 129,000 112,000
Average monthly unique visitors to the Journal Network (**) 5,454,000 N/A
Average monthly page views to the Journal Network (**) 71,295,000 N/A
<FN>
(*) Percentage excludes divested/acquired operations
(**) In conjunction with the relaunch of WSJ.com, page views and unique visitors statistics
are calculated under a new methodology, prior year figures are not available on a comparable
basis. Journal Network consists of WSJ.com and related vertical sites.
Dow Jones & Company
Notes to Financial Information 10
1. The company's calculation of net income and earnings per share excluding
certain items may not be comparable to similarly titled measures reported by
other companies, since companies and investors may differ as to what type of
events warrant adjustment. Net income and earnings per share excluding
certain items are not measures of performance under generally accepted
accounting principles and should not be construed as substitutes for
consolidated net income and earnings per share as a measure of performance.
However, management uses these measures in comparing the company's historical
performance and believes that they provide meaningful and comparable
information to investors to assist in their analysis of the company's
performance relative to prior periods and its competitors.
2. The following table reconciles reported results to income adjusted for
certain items for the quarters ended March 31, 2003 and 2002.
Quarters Ended March 31
(in millions, except 2003 2002
per share amounts) Pre-Tax Net EPS Pre-Tax Net EPS
------- ----- ----- ------- ----- -----
Reported $73.0 $66.9 $ .82 $159.3 $129.8 $1.53
Adjusted to remove:
Included in non-operating income:
Contract guarantee (a) (2.6) (2.6) (.03) (3.2) (3.2) (.04)
Gain on reversal of Telerate sale
loss contingency (b) 59.8 59.8 .73
Sale of ONI properties (c) 153.4 126.1 1.49
------- ----- ----- ------- ------ -----
Adjusted $15.8 $ 9.7 $ .12 $ 9.1 $ 6.9 $ .08
======= ===== ===== ======= ====== =====
(a) Contract Guarantee:
Under the terms of the company's 1998 sale of Telerate to Bridge Information
Systems (Bridge), Dow Jones retained its guarantee of payments under certain
circumstances of certain minimum payments for data acquired by Telerate from
Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). The
annual minimum payments average approximately $50 million per year through
October 2006 under certain conditions. Bridge agreed to indemnify Dow Jones
for any liability Dow Jones incurred under the contract guarantee with respect
to periods subsequent to Bridge's purchase of Telerate. In 2000, based in
part on uncertainty with Bridge's solvency as well as other factors, the
company established a reserve of $255 million representing the net present
value of the total minimum payments of about $300 million from 2001 through
October 2006, using a discount rate of 6%. Bridge filed for bankruptcy in
February 2001 but made payments for this data for the post-petition periods
through October 2001, when Telerate ceased operations, went out of business,
sold certain assets and rejected its contracts with Cantor and MDC. The
company is now in litigation with Cantor and MDC with respect to their claims
for amounts due under the contract guarantee. The company has various
substantial defenses to these claims and the litigation is proceeding.
The first quarter of 2003 and 2002 included charges related to the accretion
of the discount on the reserve balance of $2.6 million ($.03 per diluted
share) and $3.2 million ($.04 per diluted share), respectively.
Dow Jones & Company
Notes to Financial Information 11
(b) Gain on reversal of Telerate sale loss contingency:
In May 1998, the company established a reserve for loss contingencies related
to the sale of its Telerate subsidiary to Bridge. In March 2003, based on a
settlement in Bridge bankruptcy proceedings, the company recorded a
reversal of its reserve of $59.8 million ($.73 per diluted share).
(c) Gains on sale of ONI properties:
The first quarter of 2002 included a gain of $153.4 million ($126.1 million
after taxes, or $1.49 per diluted share) resulting from the sale of four of
the company's Ottaway newspapers to Community Newspapers Holdings, Inc.
3. The company's business and financial news and information operations are
reported in two segments: print publishing and electronic publishing. The
results of the company's Ottaway Newspapers subsidiary, which publishes 14
daily newspapers and over 30 weeklies and shoppers in 9 states in the U.S.,
are reported in the community newspaper 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
losses of associated companies). Electronic publishing includes the
operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow
Jones Indexes/Ventures.
4. Summarized financial information for 50% held equity-basis investments in
associated companies were as follows (amounts are at 100% levels):
(in thousands) Quarters Ended March 31
2003 2002
---- ----
Factiva
Revenues $62,153 $63,426
Operating income 2,284 4,651
Depreciation and amortization 3,202 3,848
SmartMoney
Revenues $12,093 $10,973
Operating income (loss) 88 (2,448)
Depreciation and amortization 440 508
CNBC International (*)
Revenues $ 8,301 $ 7,207
Operating loss (7,631) (8,727)
Depreciation and amortization 998 1,054
<FN>
(*) Includes the results of CNBC Europe and CNBC Asia.