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 IMPROVED
RESULTS FOR FOURTH QUARTER 2003
Provides 1st Quarter 2004 Outlook
NEW YORK (January 27, 2004)?Dow Jones & Company (NYSE: DJ) reported today
that it earned 54 cents per diluted share during the fourth quarter ended
Dec. 31, 2003, compared with 18 cents per diluted share in the fourth
quarter of 2002. Excluding the special items explained herein, the Company
earned 43 cents per diluted share during the fourth quarter 2003, an
increase of 26.5% from the 34 cents per diluted share earned in the fourth
quarter of 2002.
Special items netted to a gain of 11 cents per share in the fourth
quarter of 2003 as the Company recorded a gain on the previously announced
disposal of an equity interest in Handelsblatt in exchange for an increase
in the Company's ownership in The Wall Street Journal Europe, partially
offset by a loss for accretion of discount on a contract-guarantee
obligation. Fourth quarter 2002 special charges netted to a loss of 16
cents per share and included restructuring charges for work force
reductions, an insurance gain on property damaged on Sept. 11, 2001, a lease
write-off and accretion of discount on a contract-guarantee obligation.
Revenue rose 6.0% in the fourth quarter of 2003 to $420.7 million,
primarily due to an 8.1% increase in U.S. Wall Street Journal linage
compared with the fourth quarter of 2002. Operating expenses were $365.4
million, down slightly from the fourth quarter of 2002, and operating income
was $55.3 million compared to 2002's $30.9 million. Excluding special
items, operating expenses were up 3.4% in the fourth quarter of 2003, while
operating income was up 26.9% from the same period last year with operating
margins up to 13.1% in 2003 compared to 11.0% in 2002.
For the full year 2003, earnings were $2.08 per share, compared to
$2.40 per share in 2002. Excluding the special items contained herein,
earnings in 2003 increased 29.7% to 96 cents per share versus 74 cents per
share in 2002. Special items in 2003 netted to a gain of $1.12 per share
compared to a gain of $1.66 cents per share in 2002. For the full year,
revenue fell less than 1% to $1.5 billion. Operating expenses were $1.4
billion, down 5.3% from 2002, and operating income was $142.9 million
compared to 2002's $75.1 million. Excluding restructuring charges and
September 11 related items, operating expenses were down 2.5% from 2002, and
operating income was up 25.9% from the same period last year. Please refer
to the attached financial exhibits and notes for more details on the
Company's results.
Commenting on the quarter's results, Peter R. Kann, chairman and CEO of
Dow Jones & Company, said: "We're encouraged by improved results in the
quarter and early returns we're seeing on nearly all our `Business Now'
strategic initiatives. We're also somewhat pleased with the improving
advertising trend we saw at the Journal in the second half of 2003.
However, advertising volumes still are well below normal, and business
confidence and spending commitments remain somewhat volatile. We'll
continue to focus on controlling spending, improving quality, enhancing our
products and executing `Business Now' to maximize our results in any
advertising environment."
Dow Jones also said that it expects earnings per share before special
items in the first quarter of 2004 to be in the mid to upper teens cents per
share range, compared with 12 cents per share in the first quarter of 2003.
This assumes first-quarter 2004 linage at the U.S. Wall Street Journal will
be up in the mid to upper single digit percentage range versus the first
quarter of 2003 (including an extra issue in 2004). Based on currently
anticipated special items in the first quarter of 2004, the Company expects
reported earnings per share to be in the low to mid teens cents per share
range, compared with 82 cents per share in the first quarter of 2003.
Please refer to the attached table for a reconciliation of the Company's
first quarter earnings before and after special items.
Segment Results
Print publishing revenue increased 2.8% in the fourth quarter to $253.2
million, and operating income rose 37.8% to $18.7 million from the same
period a year ago. U.S. Wall Street Journal advertising linage increased
8.1% (up 19.0% in December, with one extra issue) while linage at the
international editions of the Journal decreased 9.0% (down 9.4% in December,
with one extra issue in both the European and Asian editions). Barron's ad
pages fell 14.0% in the quarter (down 6.8% in December).
Electronic publishing revenue in the fourth quarter was $83.5 million,
up 7.2% from the same period a year ago. Operating income was $17.9
million, up 5.7% from last year. Improved performance at Consumer
Electronic Publishing and Indexes/Ventures drove these improved results.
Operating margin of 21.4% was essentially flat with the same period a year
ago. Paid subscribers to The Wall Street Journal Online grew to 689,000 as
of Dec. 31, 2003, up 1.5% from Dec. 31, 2002.
Ottaway community newspapers' revenue in the fourth quarter was $84.1
million, up 15.6% from the same period a year ago (revenue was up 1.7%
excluding the May 2003 acquisition of The Record of Stockton). Same-
property advertising linage decreased 2.2% in the fourth quarter (linage was
down 3.5% in December with one fewer Sunday). Ottaway total operating
income was up 29.6% to $25.1 million in the fourth quarter with an operating
margin of 29.9% compared with 26.7% last year.
The Company ended the fourth quarter with $153.1 million in commercial
paper, compared with $92.9 million at the end of the fourth quarter of 2002.
As previously announced, the Company will host an earnings conference
call at 10 a.m. EST today. The call can be accessed via a live Web cast
through the Investor Relations section of the Company's Web site,
www.dowjones.com, or through a listen-only, dial-in conference line, by
dialing 201-689-8320. 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 on the company's core
advertising market--business-to-business advertising--and on advertising
revenues in general; 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;
the company's ability to continue to limit and manage expense growth without
harming its growth prospects; the uncertainties relating to the company's
guarantee to Cantor Fitzgerald Securities and Market Data Corporation; the
intense competition the company's existing products and services face; the
risk that the company's initiatives to attract more consumer advertising,
and other diversified advertising, to The Wall Street Journal will not
succeed; with respect to Newswires, the negative impact of consolidations
and layoffs in the financial services industry on sales; 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. 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 5
(Unaudited)
(in thousands, except per share amount)
Quarters Ended December 31 Twelve Months Ended December 31
2003 2002 2003 2002
---- ---- ---- ----
Reported results:
Revenues $420,723 $396,849 $1,548,485 $1,559,173
Operating income 55,294 30,856 142,913 75,083
Net income 44,252 15,235 170,599 201,506
Effective tax rate* 39.5% 44.0% 23.3% 24.0%
Diluted EPS $.54 $.18 $2.08 $2.40
Excluding items described in Note 2:
Operating income $ 55,294 $ 43,568 $ 124,505 $ 98,893
Net income 35,030 28,234 78,350 61,867
Effective tax rate* 38.1% 40.0% 38.9% 40.0%
Diluted EPS $.43 $.34 $.96 $.74
EPS percentage change 26.5% - 29.7% (40.3)%
<FN>
*The effective income tax rate is net of minority interests.
See notes to financial information on page 10.
Reconciliation of First Quarter 2004 Earnings Outlook
Quarters Ended March 31
2004 Guidance 2003 Actual
------------- -----------
Reported earnings per share low to mid teens $0.82
cents per share range**
Adjusted to remove:
Contract guarantee (.02) (.03)
Gain on reversal of Telerate
sale loss contingency .73
------ -----
EPS before special items mid to upper teens $0.12
cents 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 December 31 Twelve Months Ended December 31
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Advertising $249,084 $227,504 $ 871,817 $ 877,681
Information services 72,669 69,732 286,863 281,220
Circulation and other 98,970 99,613 389,805 400,272
-------- -------- ---------- ----------
Total revenues 420,723 396,849 1,548,485 1,559,173
-------- -------- ---------- ----------
Expenses:
News, operations and
development 125,847 122,095 483,709 495,480
Selling, administrative
and general 139,591 131,317 540,529 559,947
Newsprint 28,095 25,835 105,066 103,534
Print delivery costs 47,133 48,866 188,662 191,581
Depreciation and amortization 24,763 25,168 106,014 109,738
Restructuring charges and
September 11 related items,
net 12,712 (18,408) 23,810
-------- -------- ---------- ----------
Operating expenses 365,429 365,993 1,405,572 1,484,090
-------- -------- ---------- ----------
Operating income 55,294 30,856 142,913 75,083
Other income (deductions):
Investment income 260 98 7,771 400
Interest expense (968) (509) (2,830) (3,083)
Equity in earnings (losses)
of associated companies 2,563 (471) 2,869 (488)
Gain on resolution of Telerate
sale loss contingencies 59,821
Gain on sale of businesses 197,925
Gain on non-monetary exchange 18,699 18,699
Contract guarantee (2,148) (2,758) (9,523) (11,878)
Other, net (771) (576) 1,138 (429)
-------- -------- ---------- ----------
Income before income taxes
and minority interests 72,929 26,640 220,858 257,530
Income taxes 28,863 11,983 51,704 63,741
Income before minority
interests 44,066 14,657 169,154 193,789
Minority interests 186 578 1,445 7,717
-------- -------- ---------- ----------
Net income $ 44,252 $ 15,235 $ 170,599 $ 201,506
======== ======== ========== ==========
Net income per share:
- Basic $.54 $.19 $2.09 $2.41
- Diluted .54 .18 2.08 2.40
Weighted-average shares outstanding:
- Basic 81,664 82,224 81,593 83,510
- Diluted 82,201 82,519 81,950 83,917
<FN>
See notes to financial information on page 10.
Dow Jones & Company
Segment Information 7
(Unaudited)
(dollars in thousands) Quarters Ended December 31 Twelve Months Ended December 31
2003 2002 2003 2002
Revenues: ---- ---- ---- ----
Print publishing $253,173 $246,223 $ 915,468 $ 948,870
Electronic publishing 83,481 77,905 322,032 309,491
Community newspapers:
Comparable operations 73,934 72,721 282,236 278,638
Divested/newly-acquired
operations 10,135 28,749 22,174
-------- -------- ---------- ----------
Consolidated revenues $420,723 $396,849 $1,548,485 $1,559,173
======== ======== ========== ==========
Percentage change in revenue
excluding divested/newly-
acquired operations 3.5% (4.1)% (1.1)% (9.6)%
Operating income:
Print publishing $ 18,677 $ 13,557 $ 8,079 $ (8,058)
Electronic publishing 17,859 16,892 67,871 60,863
Community newspapers:
Comparable operations 22,207 19,410 73,954 74,000
Divested/newly-acquired
operations 2,939 7,039 5,255
Corporate (6,388) (6,291) (32,438) (33,167)
-------- -------- ---------- ----------
Segment operating income 55,294 43,568 124,505 98,893
Restructuring charges and
September 11 related items,
net (12,712) 18,408 (23,810)
-------- -------- ---------- ----------
Consolidated operating income $ 55,294 $ 30,856 $ 142,913 $ 75,083
======== ======== ========== ==========
Operating margin:
Print publishing 7.4% 5.5% .9% (.8)%
Electronic publishing 21.4 21.7 21.1 19.7
Community newspapers:
Comparable operations 30.0 26.7 26.2 26.6
Divested/newly-acquired
operations 29.0 24.5 23.7
Segment operating margin 13.1% 11.0% 8.0% 6.3%
Depreciation and amortization (D&A):
Print publishing $ 15,354 $ 16,510 $ 67,054 $ 71,568
Electronic publishing 6,142 5,580 26,263 25,374
Community newspapers:
Comparable operations 2,532 2,751 10,375 11,069
Divested/newly-acquired
operations 519 1,675 681
Corporate 216 327 647 1,046
-------- -------- ---------- ----------
Consolidated D&A $ 24,763 $ 25,168 $ 106,014 $ 109,738
======== ======== ========== ==========
<FN>
See notes to financial information on page 10.
Dow Jones & Company
Supplemental Segment Revenue Information 8
(Unaudited)
<CAPTIONS>
(in thousands) Quarters Ended December 31 Twelve Months Ended December 31
2003 2002 2003 2002
---- ---- ---- ----
Print Publishing:
U.S. Publications:
Advertising $163,606 $150,811 $ 570,351 $ 585,851
Circulation and other 66,026 68,906 263,300 272,100
International Publications:
Advertising 14,402 17,365 47,674 54,832
Circulation and other 9,139 9,141 34,143 36,087
-------- -------- ---------- ----------
Total 253,173 246,223 915,468 948,870
Electronic Publishing:
Dow Jones Newswires:
Domestic 42,296 43,383 170,267 177,706
International 10,632 10,849 42,803 44,519
-------- -------- ---------- ----------
Total Newswires 52,928 54,232 213,070 222,225
Consumer Electronic Publishing(*) 19,509 15,318 68,716 55,693
Dow Jones Indexes/Ventures 11,044 8,355 40,246 31,573
-------- -------- ---------- ----------
Total 83,481 77,905 322,032 309,491
Community Newspapers:
Advertising
Comparable operations 53,889 53,075 203,136 199,919
Divested/newly-acquired
operations 8,633 24,325 15,707
-------- -------- ---------- ----------
Total advertising 62,522 53,075 227,461 215,626
Circulation and other
Comparable operations 20,045 19,646 79,100 78,719
Divested/newly-acquired
operations 1,502 4,424 6,467
-------- -------- ---------- ----------
Total circulation and other 21,547 19,646 83,524 85,186
Total 84,069 72,721 310,985 300,812
-------- -------- ---------- ----------
Total segment revenues $420,723 $396,849 $1,548,485 $1,559,173
======== ======== ========== ==========
<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 December 31 Twelve Months Ended December 31
2003 2002 2003 2002
---- ---- ---- ----
Advertising Volume
Year-Over-Year Percentage Change:
The Wall Street Journal
General 2.2% 3.2% (0.6)% (7.9)%
Technology 13.8 (29.9) (2.7) (30.4)
Financial 7.0 (15.6) (15.8) (28.2)
Classified 19.9 4.6 14.1 (6.8)
Total 8.1 (8.2) (1.3) (17.6)
The Asian Wall Street Journal (12.6) 4.4 2.0 (24.0)
The Wall Street Journal Europe (5.3) 6.4 9.3 (22.6)
Barron's (14.0) (2.3) (16.0) (10.4)
Ottaway Newspapers (*)
Daily (3.9) 2.1 (2.5) (1.7)
Non-daily 5.6 .8 2.9 (2.5)
Total (2.2) 1.9 (1.6) (1.8)
Wall Street Journal advertising as a
percentage of total Journal linage:
General 44.3% 46.8% 41.9% 41.7%
Technology 19.0 18.1 19.6 19.8
Financial 18.2 18.4 17.0 19.9
Classified 18.5 16.7 21.5 18.6
Other statistics: December 31 December 31
2003 2002
----------- -----------
Dow Jones Newswires terminals 293,000 308,000
WSJ.com subscribers 689,000 679,000
WSJ.com unique visitors/business day 125,329 121,071
Average monthly unique visitors to the Journal Network 5,834,000 5,280,000
Average monthly page views to the Journal Network 63,893,000 59,757,000
<FN>
(*) Percentage excludes divested/newly-acquired operations.
Dow Jones & Company
Notes to Financial Information 10
1. The company's calculation of net income, operating income and earnings
per share excluding 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 excluding 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 fourth quarter and the twelve months ended December
31, 2003 and 2002.
Quarters Ended December 31
(in millions, except 2003 2002
per share amounts) Operating Net EPS Operating Net EPS
--------- --- --- --------- --- ---
Reported income $55.3 $44.3 $.54 $30.9 $15.2 $.18
Adjusted to remove:
Included in operating income:
Restructuring charges (a) (15.8) (9.5) (.11)
Insurance gain on WFC damaged
assets (a) 3.1 1.8 .02
Included in non-operating income:
Contract guarantee (b) (2.1) (.03) (2.8) (.03)
Gain on non-monetary exchange
of interests in WSJ Europe
and Handelsblatt (c) 11.4 .14
Equity Method investments:
Restructuring/workforce
reductions by Factiva
and CNBC International (d) (1.6) (.03)
Lease termination charge at
SmartMoney (d) (0.9) (.01)
----- ----- ---- ----- ----- ----
Adjusted $55.3 $35.0 $.43 $43.6 $28.2 $.34
===== ===== === ===== ==== ====
Dow Jones & Company
Notes to Financial Information 11
Twelve Months Ended December 31
(in millions, except 2003 2002
per share amounts) Operating Net EPS Operating Net EPS
--------- --- --- -------- ---- ---
Reported $142.9 $170.6 $2.08 $75.1 $201.5 $2.40
Adjusted to remove:
Included in operating income:
Restructuring charges (a) (26.9) (15.8) (.18)
Insurance gain on WFC damaged
assets (a) 3.1 1.8 .02
Gain from business
interruption insurance claim (a) 18.4 11.1 .14
Included in non-operating income:
Contract guarantee (b) (9.5) (.12) (11.9) (.14)
Gain on non-monetary exchange
of interests in WSJ Europe
and Handelsblatt (c) 11.4 .14
Gain on resolution of Telerate
sale loss contingencies (e) 59.8 .73
Sale of ONI properties (f) 164.1 1.94
Equity method investments:
Restructuring/workforce
reductions by Factiva and
CNBC International (d) (1.6) (.03)
Lease termination charge at
SmartMoney (d) (0.9) (.01)
CNBC International gain (d) 3.9 .05
Special income tax matters (g) 19.5 .24
------ ----- ----- ----- ------ ------
Adjusted $124.5 $78.4* $ .96* $98.9 $ 61.9 $ .74*
====== ===== ===== ===== ====== ======
<FN>
* The sum of the individual amounts does not equal the total due to rounding.
(a) Restructuring charges and September 11 related items, net:
Restructuring
The fourth quarter of 2002 included restructuring charges of $15.8 million
($9.5 million after taxes and minority interests, or $.11 per diluted share)
reflecting employee severance related to a workforce reduction of about 280
full time employees, or roughly 4% of full-time employees. On a full year
basis, including a workforce reduction in the second quarter of 2002,
restructuring charges totaled $26.9 million ($15.8 million after taxes and
minority interests, or $.18 per diluted shares) largely reflecting employee
severance related to a workforce reduction of about 445 full-time employees,
or roughly 6%, of full-time employees.
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.
The fourth quarter of 2002 included a gain of $3.1 million ($1.8 million
after taxes, or $.02 per diluted share), reflecting the recovery of
insurance proceeds in excess of the carrying value of World Financial Center
assets that were destroyed as a result of the September 11 terrorist
attacks.
Dow Jones & Company
Notes to Financial Information 12
(b) Contract guarantee:
Under the terms of the company's 1998 sale of Telerate to Bridge Information
Systems, Inc. (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 $2.1 million and
$2.8 million in the fourth quarters of 2003 and 2002, respectively. For the
twelve months of 2003 and 2002, charges related to the accretion of discount
totaled $9.5 million and $11.9 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 all
filed appeals from the trial court's order, but these appeals are in the
process of being withdrawn. 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.
(c) Gain on non-monetary exchange of interests in WSJ Europe and
Handelsblatt:
In December 2003, the company and the von Holtzbrinck Group exchanged equity
shareholdings so as to increase the company's interest in the Wall Street
Journal to 90% from 51% and reduce the company's ownership of the von
Holtzbrinck Group's business daily, Handelsblatt, to 10% from 22%, with news
and advertising relationships continuing. The company recorded a gain of
$18.7 million ($11.4 million after taxes, or $.14 per diluted share), on the
disposal of the 12% interest in Handelsblatt.
(d) Gains in equity in losses of associated companies:
In the fourth quarter of 2002, equity in losses of associated companies
included restructuring/workforce reduction charges of $2.7 million at
Factiva and CNBC International, combined ($.03 per diluted share), and an
office lease termination charge of $1.5 million at SmartMoney ($.01 per
diluted share).
Equity in losses of associated companies for the full year of 2002 included
the fourth quarter charges above of $4.2 million ($.04 per diluted share),
and gains at CNBC Asia of $3.9 million ($.05 per diluted share). These gains
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.
Dow Jones & Company
Notes to Financial Information 13
(e) 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. 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.
(f) 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.
(g) 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 received 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 about $6.7 million (about $4.0
million, net of taxes). The company also recorded a provision of about $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.
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. Based on September 2003
circulation figures, The Record has daily paid circulation of 59,271 and
Sunday circulation of 72,698. Prior to the acquisition, 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 twelve
months ended December 31, 2003 and 2002 were as follows:
(in thousands) Quarters Ended December 31 Twelve Months Ended December 31
2003 2002 2003 2002
---- ---- ---- ----
Print Publishing $ 8,484 $(17,422) $ 16,794
Electronic Publishing 4,078 (951) 6,521
Corporate 150 (35) 495
------ -------- --------
Total (gain)/charges from
restructuring and September 11
related items, net $12,712 $(18,408) $23,810
======= ======== =======
Dow Jones & Company
Notes to Financial Information 14
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 more than 30 weeklies and shoppers in nine 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):
(in thousands) Quarters Ended December 31 Twelve Months Ended December 31
2003 2002 2003 2002
---- ---- ---- ----
Factiva
Revenues $61,834 $61,413 $244,953 $248,886
Operating income 5,328 331 13,265 14,358
Depreciation and amortization 3,092 3,294 12,449 12,824
SmartMoney
Revenues $13,291 $14,515 $ 49,691 $ 48,603
Operating income (loss) 1,049 (2,741) (1,206) (9,600)
Depreciation and amortization 216 411 1,319 1,773
CNBC International (*)
Revenues $12,937 $11,383 $ 40,521 $ 38,886
Operating loss (2,616) (5,776) (20,240) (26,136)
Depreciation and amortization 986 1,106 3,883 4,316
<FN>
(*) Includes the results of CNBC Europe and CNBC Asia.