EXHIBIT 99.1
Investor Contact: Dow Jones & Company
Mark Donohue 200 Liberty Street
Director, Investor Relations New York, NY 10281
(609) 520-5660
Media Contact:
Brigitte Trafford
Vice President, Communications
(212) 416-3213
DOW JONES REPORTS IMPROVED
REVENUE AND PROFIT FOR FIRST QUARTER 2004
Provides 2nd Quarter Outlook
NEW YORK (April 13, 2004)---Dow Jones & Company (NYSE: DJ) today reported
that it earned 22 cents per diluted share during the first quarter 2004,
compared with 82 cents per diluted share in the first quarter of 2003.
Excluding the special items explained herein, the Company earned 22 cents
per diluted share during the first quarter 2004, up 83% over the 12 cents
per diluted share earned in the first quarter of 2003.
Revenue rose 12.1% in the first quarter of 2004 to $401.6 million, led by a
6.3% increase in U.S. Wall Street Journal linage compared with the first
quarter of 2003, as well as increases at Electronic Publishing and Ottaway
Community Newspapers. Operating income was $33.8 million, up 92.0% compared
to $17.6 million in 2003. Excluding special items, operating income was up
76% from the same period last year with operating margins of 7.7% in 2004
compared to 4.9% in 2003.
Special Items: In the first quarter 2004, the Company recorded special items
netting to zero cents per share as a special gain of two cents per share
related to reduction of a lease obligation reserve was offset by a loss of
two cents per share for accretion of discount on a contract-guarantee
obligation. In the first quarter 2003, special items netted to a gain of 70
cents per share and included a non-cash gain from the reversal of a 1998
reserve for loss contingencies net of a charge for accretion of discount on
a contract-guarantee obligation.
"We are pleased with the progress we made in the quarter. First, the
quality of our products continues to be recognized - most recently evidenced
by the Journal winning two Pulitzer prizes," said Peter R. Kann, chairman
and chief executive officer of Dow Jones & Company. "Financially, the
combination of a moderately improved advertising environment, the successful
execution of our strategic plan, 'Business Now,' and major operational
improvements, have enabled us to post healthy gains in revenue and profit -
not only in total but also in each business segment - during the first
quarter."
Mr. Kann continued: "While we are encouraged by this progress, and the fact
that this marks the third quarter in a row of improved linage at the
Journal, ad levels and therefore revenue and profit remain well below normal
levels. As such, we remain committed to controlling everything we can to
maximize our current performance and future potential."
Dow Jones also said that it expects earnings per share before special items
in the second quarter of 2004 to be in the mid-30 cents per share range,
compared with 27 cents per share in the second quarter of 2003. This
assumes second-quarter 2004 linage at the U.S. Wall Street Journal will be
up in the mid-single digit percentage range over the second quarter of 2003.
Based on currently anticipated special items in the second quarter of 2004,
the Company expects reported earnings per share to be in the mid-30 cents
per share range, compared with 38 cents per share in the second quarter of
2003. Please refer to the attached table for a reconciliation of the
Company's second quarter earnings before and after special items.
Segment Results
Print Publishing revenue increased $23.2 million, or 10.8%, in the first
quarter 2004 over the same period a year ago. Operating income rose $9.3
million to $4.6 million and operating margin was 1.9% in the first quarter
2004, an improvement from the prior years operating loss. U.S. Wall Street
Journal advertising linage increased 6.3% (up 25.2% in March, with two extra
issues) while linage at the international editions of the Journal increased
11.1% (up 38.6% in March, with two extra issues in both the European and
Asian editions). Barron's ad pages increased 22.0% in the quarter (up 51.0%
in March).
Electronic Publishing revenue in the first quarter 2004 increased 9.1% and
operating income rose 10.0% from the same period a year ago. Operating
margin of 21.4% was up slightly over last year. Improved performance at
Indexes/Ventures, Consumer Electronic Publishing and Newswires, including
the acquisition of Alternative Investor Group--which closed on March 19,
2004--drove these improved results. Terminal counts at Newswires were down
4.6%, but down only 1.4% on a sequential basis. Paid subscribers to The
Wall Street Journal Online grew to 695,000 as of March 31, 2004, up 3.0%
from March 31, 2003 and up 0.9% on a sequential basis.
Ottaway Community Newspapers' revenue in the first quarter 2004 increased
20.2% from the same period a year ago with operating income up 34.9%.
Operating margin of 21.9% was well up over last year's 19.5%. Excluding the
May 2003 acquisition of The Record of Stockton, same property revenue was up
5.9% and operating income was up 19.2%. Same-property advertising linage
increased 4.3% in the first quarter (linage was up 3.8% in March with one
fewer Sunday).
The Company ended the first quarter with $258 million in debt, compared with
$153 million at the end of the fourth quarter of 2003. The increase is
primarily due to the $85 million acquisition of Alternative Investor Group
in March 2004.
As previously announced, the Company will host an earnings conference call
at 10 a.m. ET 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 877-407-3140.
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 6
(Unaudited)
(in thousands, except
per share amounts) Quarters Ended March 31
2004 2003
---- ----
Reported results:
Revenues $401,621 $358,230
Operating income 33,759 17,579
Net income 17,816 66,932
Effective tax rate* 41.2% 8.8%
Diluted EPS $.22 $.82
Excluding items described in Note 2:
Operating income $ 30,998 $ 17,579
Net income 18,139 9,721
Effective tax rate* 38.6% 40.0%
Diluted EPS $.22 $.12
EPS percentage change 83.3% 50.0%
<FN>
*The effective income tax rate is net of minority interests.
See notes to financial information on page 11.
Reconciliation of Second Quarter Earnings Outlook
Quarters Ended June 30,
2004 Guidance 2003 Actual
-------------- -----------
Reported earnings per share mid-30 cents $.38
per share range**
Adjusted to remove:
Contract guarantee (.02) (.03)
Gain from business interruption
insurance claim .14
Gain on disposal of interest in vwd investment .02
----- ----
EPS before special items mid-30 cents $.27
per share range
<FN>
**Based on special items currently anticipated.
Dow Jones & Company
Condensed Consolidated Statements of Income 7
(Unaudited)
(in thousands, except
per share amounts) Quarters Ended March 31
2004 2003
---- ----
Revenues:
Advertising $226,699 $190,508
Information services 75,827 71,856
Circulation and other 99,095 95,866
-------- --------
Total revenues 401,621 358,230
Expenses:
News, production and technology 122,557 115,295
Selling, administrative and general 145,235 129,022
Newsprint 27,631 23,071
Print delivery costs 47,845 45,906
Depreciation and amortization 27,355 27,357
Restructuring charges and September 11
related items (2,761)
-------- --------
Operating expenses 367,862 340,651
-------- --------
Operating income 33,759 17,579
Other income (deductions):
Investment income 91 74
Interest expense (648) (453)
Equity in losses of associated companies (740) (1,849)
Gain on resolution of Telerate sale loss
contingencies 59,821
Contract guarantee (1,985) (2,610)
Other, net (766) 439
-------- --------
Income before income taxes
and minority interests 29,711 73,001
Income taxes 12,481 6,481
-------- --------
Income before minority interests 17,230 66,520
Minority interests 586 412
-------- --------
Net income $ 17,816 $ 66,932
======== ========
Net income per share:
- Basic $.22 $.82
- Diluted .22 .82
Weighted-average shares outstanding:
- Basic 81,758 81,791
- Diluted 82,212 82,028
See notes to financial information on page 11.
Dow Jones & Company
Segment Information 8
(Unaudited)
(dollars in thousands) Quarters Ended March 31
2004 2003
---- ----
Revenues:
Print publishing $237,575 $214,424
Electronic publishing 86,369 79,187
Community newspapers:
Comparable operations* 68,413 64,619
Newly-acquired operations 9,264
-------- --------
Consolidated revenues 401,621 358,230
Percentage change in revenues
excluding divested/newly-acquired operations 9.1% (4.9)%
Operating income:
Print publishing 4,624 (4,685)
Electronic publishing 18,513 16,831
Community newspapers:
Comparable operations* 14,995 12,581
Newly-acquired operations 1,977
Corporate (9,111) (7,148)
-------- --------
Segment operating income 30,998 17,579
Restructuring charges and
September 11 related items 2,761
-------- --------
Consolidated operating income $ 33,759 $ 17,579
======== ========
Operating margin:
Print publishing 1.9% (2.2)%
Electronic publishing 21.4 21.3
Community newspapers:
Comparable operations* 21.9 19.5
Newly-acquired operations 21.3
Consolidated operating margin 8.4 4.9
Depreciation and amortization (D&A):
Print publishing $ 17,676 $ 17,680
Electronic publishing 6,660 6,790
Community newspapers:
Comparable operations* 2,484 2,758
Newly-acquired operations 495
Corporate 40 129
-------- --------
Consolidated D&A $ 27,355 $ 27,357
======== ========
<FN>
* Comparable operations exclude the results of Ottaway properties divested or
acquired in the past 12 months.
See notes to financial information on page 11.
Dow Jones & Company
Supplemental Segment Revenue Information 9
(Unaudited)
(in thousands) Quarters Ended March 31
2004 2003
---- ----
Print Publishing:
U.S. Publications:
Advertising $151,182 $129,857
Circulation and other 65,953 66,390
International Publications:
Advertising 11,920 9,993
Circulation and other 8,520 8,184
-------- --------
Total 237,575 214,424
Electronic Publishing:
Dow Jones Newswires:
Domestic 44,403 43,365
International 10,797 10,611
-------- --------
Total Newswires 55,200 53,976
Consumer Electronic Publishing* 18,169 15,371
Dow Jones Indexes/Ventures 13,000 9,840
-------- --------
Total 86,369 79,187
Community Newspapers:
Advertising
Comparable operations 49,091 45,691
Newly-acquired operations 7,777
-------- --------
Total advertising 56,868 45,691
Circulation and other
Comparable operations 19,322 18,928
Newly-acquired operations 1,487
-------- --------
Total circulation and other 20,809 18,928
Total 77,677 64,619
-------- --------
Total segment revenues $401,621 $358,230
======== ========
<FN>
* Includes WSJ.com, related vertical sites, licensing/business development and
radio/audio.
See notes to financial information on page 11.
Dow Jones & Company
Statistical Information 10
(Unaudited)
Quarters Ended March 31
2004 2003
---- ----
Advertising Volume
Year-Over-Year Percentage Change:
The Wall Street Journal
General (7.5)% 2.5%
Technology (0.2) (28.5)
Financial 47.1 (37.5)
Classified 7.9 15.3
Total 6.3 (11.0)
The Asian Wall Street Journal 8.3 5.6
The Wall Street Journal Europe 13.5 22.1
Barron's 22.0 (17.3)
Ottaway Newspapers*
Daily 2.4 (0.5)
Non-daily 13.2 3.1
Total 4.3 0.1
Wall Street Journal advertising as a
percentage of total Journal linage:
General 37.6% 43.2%
Technology 15.9 16.9
Financial 22.6 16.3
Classified 23.9 23.6
Other statistics: March 31 March 31
2004 2003
Dow Jones Newswires terminals 289,000 303,000
WSJ.com subscribers 695,000 675,000
WSJ.com unique visitors/business day 141,000 129,000
Average monthly unique visitors to the Journal
Network 6,017,000 5,975,000
Average monthly page views to the Journal
Network 73,097,000 67,339,000
<FN>
* Percentage excludes divested/newly-acquired operations.
Dow Jones & Company
Notes to Financial Information 11
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 quarters ended March 31, 2004 and 2003.
Quarters Ended March 31
(in millions, except 2004 2003
per share amounts) Operating Net EPS Operating Net EPS
--------- --- --- --------- --- ---
Reported $33.8 $17.8 $ .22 $17.6 $66.9 $.82
Adjusted to remove:
Included in operating income:
Reversal of lease obligation
reserve - WFC (a) 2.8 1.7 .02
Included in non-operating income:
Contract guarantee (b) (2.0) (.02) (2.6) (.03)
Gain on resolution of
Telerate sale loss
contingencies (c) 59.8 .73
----- ----- ---- ---- ----- ----
Adjusted $31.0 $18.1 $.22 $17.6 $ 9.7 $.12
===== ===== ==== ===== ===== ====
(a) Reversal of lease obligation reserve - World Financial Center (WFC):
In the fourth quarter 2001, the Company recorded a charge of $32.2 million
as a result of its decision to permanently re-deploy certain personnel and
abandon four of seven floors that were leased at its World Financial Center
headquarters. This charge primarily reflected the Company's rent obligation
through 2005 on this vacated space.
In the first quarter 2004, the Company renewed its lease at the World
Financial Center including extending the term of one of the floors that was
previously abandoned. The Company plans to re-occupy this floor with
personnel from another New York location, whose lease term was expiring. As
a result, the Company reversed $2.8 million ($1.7 million, net of taxes, or
$.02 per diluted share) of the remaining lease obligation reserve of the
previously abandoned floor at WFC.
(b) 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
Dow Jones & Company
Notes to Financial Information 12
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 2004 and 2003 included charges related to the accretion
of the discount on the reserve balance of $2.0 million ($.02 per diluted
share) and $2.6 million ($.03 per diluted share), respectively.
(c) 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.
3. On March 19, 2004, the Company completed its acquisition of Alternative
Investor from Wicks Business Information for $85 million plus net working
capital. The $85 million purchase price could be increased by $5 million,
payable in 2008, based on the performance of the acquired business. The
acquisition was funded by the issuance of debt under the Company's
commercial paper program.
Alternative Investor is a provider of newsletters, databases and industry
conferences for the venture-capital and private-equity markets, and will be
combined into the Company's Dow Jones Newswires business.
4. 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 (losses) of associated companies). Electronic publishing
includes the operations of Dow Jones Newswires, Consumer Electronic
Publishing and Dow Jones Indexes/Ventures.
5. Restructuring charges and September 11 related items are not included in
segment expenses, as management evaluates segment results exclusive of these
items. For information purposes, the reversal of the lease obligation
reserve allocable to each segment for the three months ended March 31, 2004
were as follows:
(in thousands) Quarters Ended March 31
2004
----
Print Publishing $2,631
Electronic Publishing 125
Corporate 5
------
Reversal of lease obligation reserve $2,761
======
Dow Jones & Company
Notes to Financial Information 13
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 March 31
2004 2003
---- ----
Factiva
Revenues $63,534 $62,153
Operating income 4,260 2,284
Depreciation and amortization 3,102 3,202
SmartMoney
Revenues $12,170 $12,093
Operating (loss) income (498) 88
Depreciation and amortization 211 440
CNBC International (*)
Revenues $ 8,857 $ 8,301
Operating loss (8,566) (7,631)
Depreciation and amortization 956 998
<FN>
(*) Includes the results of CNBC Europe and CNBC Asia.