Exhibit 99.1
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 REPORTS TAX REFUND AND INCREASES
THIRD QUARTER 2003 REPORTED EARNINGS
NEW YORK, N.Y. (November 14, 2003)-- Dow Jones & Company (NYSE: DJ)
announced today that it has recorded a special net tax benefit of $19.5
million, or 24 cents per diluted share, in the third quarter of 2003.
Subsequent to the Company's October 14 reported results, the Company was
notified of the Congressional Joint Committee on Taxation's approval of $24
million of refund claims and $6.7 million of related interest income
associated with the Company's audited tax returns for the years 1995 through
1998. The Company also recorded provisions of $9.5 million in the third
quarter for loss contingencies relating to recent developments in certain
other tax matters. Under generally accepted accounting principles, all of
these items are required to be reported in the third quarter of 2003. The
net effect of these items was an increase in net income of $19.5 million, or
24 cents per diluted share.
For the third quarter ended September 30, 2003, reported earnings were
35 cents per diluted share, compared with 3 cents per diluted share in the
third quarter of 2002. Excluding special items and this special tax
benefit, earnings per diluted share are unchanged from the Company's
original report: the Company earned 14 cents per diluted share during the
third quarter 2003, an increase of 133% from the 6 cents per diluted share
earned in the third quarter 2002.
In addition to the special tax benefit noted above, a special charge
of 3 cents per share was recorded in the third quarter of both 2002 and
2003, as previously reported, for accretion of the discount for contract
guarantee obligations. Please refer to the attached for more details on the
Company's results.
For additional information, please refer to the attached financial
exhibits and notes and the Company's third quarter 2003 Form 10-Q, filed
today with the SEC.
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.
Non-GAAP Financial Measures
This press release includes certain non-GAAP financial measures as defined
under SEC rules. As required by SEC rules, we have attached to this press
release a reconciliation of those measures to the most directly comparable
GAAP measures. This reconciliation is also available on the Investor
Relations page of our web site at www.dowjones.com.
Dow Jones & Company
Earnings Summary 3
(Unaudited)
<HEADING>
(in thousands, except
per share amounts) Quarters Ended September 30 Nine Months Ended September 30
2003 2002 2003 2002
---- ---- ---- ----
Reported results:
Revenues $375,946 $352,409 $1,127,762 $1,162,324
Operating income 16,816 7,964 87,619 44,227
Net income 28,577 2,446 126,347 186,271
Effective tax rate* (25.3)% 59.3% 15.3% 21.7%
Diluted EPS $.35 $.03 $1.54 $2.21
Excluding items described in Note 2:
Operating income $ 16,816 $ 7,964 $ 69,211 $ 55,325
Net income 11,382 5,347 43,320 33,633
Effective tax rate* 38.2% 40.0% 39.5% 40.0%
Diluted EPS $.14 $.06 $.53 $.40
EPS percentage change 133.3% (70.0)% 32.5% (55.6)%
<FN>
*The effective income tax rate is net of minority interests.
See notes to financial information on page 8.
Dow Jones & Company
Condensed Consolidated Statements of Income 4
(Unaudited)
<HEADING>
(in thousands, except
per share amounts) Quarters Ended September 30 Nine Months Ended September 30
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Advertising $208,897 $185,308 $ 622,733 $ 650,177
Information services 71,278 69,132 214,194 211,488
Circulation and other 95,771 97,969 290,835 300,659
-------- -------- ---------- ----------
Total revenues 375,946 352,409 1,127,762 1,162,324
-------- -------- ---------- ----------
Expenses:
News, operations and development 122,487 121,695 357,862 373,385
Selling, administrative and general 137,143 122,752 400,938 428,630
Newsprint 26,438 24,283 76,971 77,699
Print delivery costs 46,904 47,572 141,529 142,715
Depreciation and amortization 26,158 28,143 81,251 84,570
Restructuring charges and
September 11 related items, net (18,408) 11,098
-------- -------- ---------- ----------
Operating expenses 359,130 344,445 1,040,143 1,118,097
-------- -------- ---------- ----------
Operating income 16,816 7,964 87,619 44,227
Other income (deductions):
Investment income 7,258 106 7,511 302
Interest expense (664) (493) (1,862) (2,574)
Equity in (losses) earnings of
associated companies (16) (674) 306 (17)
Gain on resolution of Telerate sale
loss contingencies 59,821
Gain on sale of businesses 197,925
Contract guarantee (2,306) (2,901) (7,375) (9,120)
Other, net 1,258 (303) 1,909 147
-------- -------- ---------- ----------
Income before income taxes and
minority interests 22,346 3,699 147,929 230,890
Income taxes (5,779) 3,565 22,841 51,758
-------- -------- ---------- ----------
Income before minority interests 28,125 134 125,088 179,132
Minority interests 452 2,312 1,259 7,139
-------- -------- ---------- ----------
Net income $ 28,577 $ 2,446 $ 126,347 $ 186,271
======== ======== ========== ==========
Net income per share:
- Basic $.35 $.03 $1.55 $2.22
- Diluted .35 .03 1.54 2.21
Weighted-average shares outstanding:
- Basic 81,507 83,450 81,568 83,933
- Diluted 81,865 83,768 81,864 84,379
See notes to financial information on page 8.
Dow Jones & Company
Segment Information 5
(Unaudited)
<HEADING>
(dollars in thousands) Quarters Ended September 30 Nine Months Ended September 30
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Print publishing $213,586 $205,342 $ 662,295 $ 702,647
Electronic publishing 79,352 75,173 238,551 231,586
Community newspapers:
Comparable operations 72,526 71,894 208,302 205,917
Divested/newly-acquired operations 10,482 18,614 22,174
-------- -------- ---------- ----------
Consolidated revenues $375,946 $352,409 $1,127,762 $1,162,324
======== ======== ========== ==========
Percentage change in revenues excluding
divested/newly-acquired operations 3.7% (7.0)% (2.7)% (11.3)%
Operating income:
Print publishing $(11,491) $(18,005) $ (10,598) $ (21,615)
Electronic publishing 17,098 13,580 50,012 43,971
Community newspapers:
Comparable operations 19,364 20,554 51,747 54,590
Divested/newly-acquired operations 2,402 4,100 5,255
Corporate (10,557) (8,165) (26,050) (26,876)
-------- -------- ---------- ----------
Segment operating income 16,816 7,964 69,211 55,325
Restructuring charges and
September 11 related items, net 18,408 (11,098)
-------- -------- ---------- ----------
Consolidated operating income $ 16,816 $ 7,964 $ 87,619 $ 44,227
======== ======== ========== ==========
Operating margin:
Print publishing (5.4)% (8.8)% (1.6)% (3.1)%
Electronic publishing 21.5 18.1 21.0 19.0
Community newspapers:
Comparable operations 26.7 28.6 24.8 26.5
Divested/newly-acquired operations 22.9 22.0 23.7
Segment operating margin 4.5 2.3 6.1 4.8
Depreciation and amortization (D&A):
Print publishing $ 16,312 $ 18,818 $ 51,700 $ 55,058
Electronic publishing 6,543 6,363 20,121 19,794
Community newspapers:
Comparable operations 2,502 2,722 7,843 8,318
Divested/newly-acquired operations 630 1,156 681
Corporate 171 240 431 719
-------- -------- ---------- ----------
Consolidated D&A $ 26,158 $ 28,143 $ 81,251 $ 84,570
======== ======== ========== ==========
See notes to financial information on page 8.
Dow Jones & Company
Supplemental Segment Revenue Information 6
(Unaudited)
<HEADING>
(in thousands) Quarters Ended September 30 Nine Months Ended September 30
2003 2002 2003 2002
---- ---- ---- ----
Print Publishing:
U.S. Publications:
Advertising $129,790 $119,322 $ 406,745 $ 435,040
Circulation and other 63,562 67,505 197,274 203,194
International Publications:
Advertising 12,138 10,020 33,272 37,467
Circulation and other 8,096 8,495 25,004 26,946
-------- -------- ---------- ----------
Total 213,586 205,342 662,295 702,647
Electronic Publishing:
Dow Jones Newswires:
Domestic 42,739 43,676 127,971 134,323
International 10,920 10,635 32,171 33,670
-------- -------- ---------- ----------
Total Newswires 53,659 54,311 160,142 167,993
Consumer Electronic Publishing(*) 16,254 13,179 49,207 40,375
Dow Jones Indexes/Ventures 9,439 7,683 29,202 23,218
-------- -------- ---------- ----------
Total 79,352 75,173 238,551 231,586
Community Newspapers:
Advertising
Comparable operations 51,869 51,352 149,247 146,844
Divested/newly-acquired operations 8,879 15,692 15,707
-------- -------- ---------- ----------
Total advertising 60,748 51,352 164,939 162,551
Circulation and other
Comparable operations 20,657 20,542 59,055 59,073
Divested/newly-acquired operations 1,603 2,922 6,467
-------- -------- ---------- ----------
Total circulation and other 22,260 20,542 61,977 65,540
Total 83,008 71,894 226,916 228,091
-------- -------- ---------- ----------
Total segment revenues $375,946 $352,409 $1,127,762 $1,162,324
======== ======== ========== ==========
<FN>
(*) Includes WSJ.com, related vertical sites, licensing/business development and radio/audio.
See notes to financial information on page 8.
Dow Jones & Company
Statistical Information 7
(Unaudited)
<HEADING>
Quarters Ended September 30 Nine Months Ended September 30
2003 2002 2003 2002
---- ---- ---- ----
Advertising Volume
Year-Over-Year Percentage Change:
The Wall Street Journal
General 12.5% (13.6)% (1.8)% (11.7)%
Technology 12.0 (10.5) (7.8) (30.6)
Financial (12.8) (17.8) (23.0) (31.5)
Classified 10.5 (4.1) 12.3 (9.7)
Total 7.1 (12.0) (4.7) (20.5)
The Asian Wall Street Journal 29.0 (2.9) 8.7 (32.6)
The Wall Street Journal Europe 23.6 (10.0) 16.2 (31.4)
Barron's (8.9) 3.3 (16.7) (13.0)
Ottaway Newspapers (*)
Daily (2.5) (2.6) (2.0) (3.0)
Non-daily 2.4 (6.6) 1.8 (3.6)
Total (1.7) (3.3) (1.4) (3.1)
Wall Street Journal advertising as a
percentage of total Journal linage:
General 40.7% 38.7% 41.0% 39.8%
Technology 21.1 20.2 19.8 20.5
Financial 15.7 19.3 16.5 20.4
Classified 22.5 21.8 22.7 19.3
Other statistics: September 30 September 30
2003 2002
------------ ------------
Dow Jones Newswires terminals 289,000 324,000
WSJ.com subscribers 686,000 664,000
WSJ.com unique visitors/business day 123,371 121,036
Average monthly unique visitors to the Journal Network 5,401,000 5,035,000
Average monthly page views to the Journal Network 64,586,000 60,320,000
<FN>
(*) Percentage excludes divested/newly-acquired operations.
Dow Jones & Company
Notes to Financial Information 8
1. The company's calculation of net income, operating income and earnings
per share before special items may not be comparable to similarly titled
measures reported by other companies, since companies and investors may
differ as to what type of events warrant adjustment. Net income, operating
income and earnings per share before special items are not measures of
performance under generally accepted accounting principles and should not be
construed as substitutes for consolidated net income, operating income and
earnings per share as a measure of performance. However, management uses
these measures in comparing the company's historical performance and
believes that they provide meaningful and comparable information to
investors to assist in their analysis of the company's performance relative
to prior periods and its competitors.
2. The following table reconciles reported results to income adjusted for
special items for the third quarter and the nine months ended September 30,
2003 and 2002.
<HEADING>
Quarters Ended September 30
(in millions, except 2003 2002
per share amounts) Operating Net EPS Operating Net EPS
------------------------ ------------------------
Reported income $16.8 $28.6 $.35 $ 8.0 $ 2.4 $ .03
Adjusted to remove:
Included in non-operating income:
Contract guarantee (a) (2.3) (.03) (2.9) (.03)
Special income tax matters (b) 19.5 .24
----- ----- ---- ----- ------ -----
Adjusted $16.8 $11.4 $.14 $ 8.0 $ 5.3 $ .06
===== ===== ==== ===== ====== =====
Nine Months Ended September 30
(in millions, except 2003 2002
per share amounts) Operating Net EPS Operating Net EPS
------------------------ ------------------------
Reported $87.6 $126.3 $1.54 $44.2 $186.3 $2.21
Adjusted to remove:
Included in operating income:
Restructuring charges (c) (11.1) (6.3) (.07)
Gain from business interruption
insurance claim (c) 18.4 11.1 .14
Included in non-operating income:
Contract guarantee (a) (7.4) (.09) (9.1) (.11)
Gain on resolution of Telerate sale
loss contingencies (d) 59.8 .73
Special income tax matters (b) 19.5 .24
Sale of ONI properties (e) 164.1 1.94
CNBC International gain (f) 3.9 .05
----- ------ ----- ----- ------ -----
Adjusted $69.2 $ 43.3 $ .53* $55.3 $ 33.6* $ .40
===== ====== ===== ===== ====== =====
<FN>
* The sum of the individual amounts does not equal the total due to rounding.
Dow Jones & Company
Notes to Financial Information 9
(a) Contract guarantee:
Under the terms of the company's 1998 sale of Telerate to 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 estimated payments from 2001 through October 2006, using a discount
rate of 6%.
Earnings in 2003 and 2002 have included charges related to the accretion of
the discount on the reserve balance. These charges totaled $2.3 million and
$2.9 million in the third quarters of 2003 and 2002, respectively. For the
first nine months of 2003 and 2002, charges related to the accretion of
discount totaled $7.4 million and $9.1 million, respectively.
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 trial court rendered a decision in January
2003 denying the parties' respective motions to grant their own claims and to
dismiss the competing claims. The company, Cantor and MDC have all filed
appeals from the trial court's order. While these appeals are pending, the
discovery phase is proceeding.
While it is not possible to predict with certainty the ultimate outcome of
this litigation, the company believes the likelihood of a loss exceeding the
amount reserved is remote; however, it is possible that such loss could be
less than the amount reserved.
(b) Special income tax matters:
In the third quarter of 2003, the Internal Revenue Service ("IRS") completed
its audit of the company's tax returns for the 1995 through 1998 tax periods,
which had been amended for additional tax refunds. In October 2003, the
company received notification that the Congressional Joint Committee on
Taxation had approved these claims for tax refunds of approximately $24
million. The company expects to receive these refunds plus interest of
approximately $6.7 million in the fourth quarter of 2003. Pursuant to the
settlement of these claims, in the third quarter of 2003, the company
released $25 million of tax provisions no longer needed for loss
contingencies and recorded interest income of $6.7 million ($4.0 million, net
of taxes). The company also recorded a provision of $9.5 million in the
third quarter for loss contingencies relating to recent developments in
certain other tax matters. The net effect of these items was an increase in
net income of $19.5 million, or $.24 per share.
(c) Restructuring charges and September 11 related items, net:
In the second quarter of 2003, the company recorded a gain of $18.4 million
($11.1 million after taxes, or $.14 per diluted share) reflecting the
settlement of its business interruption insurance claim for loss of operating
income suffered as a result of the terrorist attacks on the World Trade
Center on September 11, 2001.
Dow Jones & Company
Notes to Financial Information 10
The second quarter of 2002 included restructuring charges of $11.1 million
($6.3 million after taxes, or $.07 per diluted share) largely reflecting
employee severance related to a workforce reduction.
(d) Gain on resolution of Telerate sale loss contingencies:
In the first quarter of 2003, the company recorded a gain of $59.8 million
($.73 per diluted share) on the resolution of certain loss contingencies
resulting from the sale of its former Telerate subsidiary to Bridge
Information Systems, Inc. (Bridge). The reserve for loss contingencies was
established as part of the loss on sale of Telerate in 1998 and related to
various claims that arose out of the Stock Purchase Agreement, including a
purchase price adjustment related to working capital, an indemnification
undertaking and other actual and potential claims and counter-claims between
the company and Bridge. In February 2001, Bridge declared bankruptcy. In
March 2003, these matters were resolved by the bankruptcy court, and the
company's contingent liabilities were thereby extinguished.
(e) Gains on sale of ONI properties:
The second quarter of 2002 included a gain of $44.5 million ($38 million
after taxes, or $.45 per diluted share) from the sale of Ottaway's Essex
County newspaper properties to Eagle-Tribune Publishing Company. 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.
(f) Gains in equity in losses of associated companies:
The second quarter of 2002 included gains at CNBC Asia of $3.9 million ($.05
per diluted share) which consisted of a $2.5 million gain from the favorable
settlement of a contractual obligation and a $1.4 million gain from the sale
of an investment by CNBC Asia.
3. On May 5, 2003, the company's Ottaway Newspaper subsidiary acquired The
Record of Stockton, California from Omaha World-Herald Company for $144
million in cash, plus net working capital. The Record has daily paid
circulation of 59,271 and Sunday circulation of 72,698. The Record Group
reported 2002 revenues of $37 million and operating profits of $9.6 million.
4. Restructuring charges and September 11 related items, net are not included
in segment expenses, as management evaluates segment results exclusive of
these items. For information purposes, restructuring charges and September
11 related items, net allocable to each segment for the nine months ended
September 30, 2003 and 2002 were as follows:
<HEADING>
(in thousands) Nine Months Ended September 30
2003 2002
-------------------------------
Print Publishing $(17,422) $ 8,310
Electronic Publishing (951) 2,443
Corporate (35) 345
-------- -------
Total (gain)/charges from restructuring
and September 11 related items, net $(18,408) $11,098
======== =======
Dow Jones & Company
Notes to Financial Information 11
5. The company's business and financial news and information operations are
reported in two segments: print publishing and electronic publishing. The
results of the company's Ottaway Newspapers subsidiary, which publishes 15
daily newspapers and over 30 weeklies and shoppers in 9 states in the U.S.,
are reported in the community newspaper segment. Print publishing includes
the global operations of The Wall Street Journal and its international
editions, as well as Barron's and U.S. television operations (results of the
company's international television ventures are included in equity in
earnings of associated companies). Electronic publishing includes the
operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow
Jones Indexes/Ventures.
6. Summarized financial information for 50% held equity-basis investments in
associated companies were as follows (amounts are at 100% levels):
<HEADING>
(in thousands) Quarters Ended September 30 Nine Months Ended September 30
2003 2002 2003 2002
--- ---- ---- ----
Factiva
Revenues $59,162 $62,327 $183,119 $187,473
Operating income 3,045 6,590 7,937 14,027
Depreciation and amortization 2,942 2,314 9,357 9,530
SmartMoney
Revenues $12,056 $11,016 $ 36,400 $ 34,088
Operating loss (1,227) (2,070) (2,255) (6,859)
Depreciation and amortization 208 408 1,103 1,362
CNBC International (*)
Revenues $ 9,432 $ 9,760 $ 27,584 $ 27,503
Operating loss (4,698) (6,772) (17,624) (20,360)
Depreciation and amortization 931 1,085 2,897 3,210
<FN>
(*) Includes the results of CNBC Europe and CNBC Asia.