Exhibit 99
Contact: Richard Tofel
(212) 416-2951
Valerie Gerard
(212) 416-2687
DOW JONES & COMPANY ANNOUNCES
SECOND QUARTER RESULTS,
REVISES FINANCIAL REPORTING SEGMENTS,
ADDS SUPPLEMENTAL DISCLOSURES
NEW YORK, N.Y. (July 9, 1998)-- Dow Jones & Company announced today that it
earned $54.7 million, or 56 cents per diluted share, during the second quarter
ended June 30, 1998 excluding losses at its former Telerate subsidiary and a
loss on the sale of Telerate ("pro forma"). These earnings were up 10.6% from
comparable pro forma earnings of $49.5 million, or 51 cents per share, in the
second quarter of 1997.
Actual results for the second quarter of 1998 reflect earnings of $46.3
million, or 47 cents per share, including the operating loss at Telerate, but
before the previously-announced loss on the sale of that unit of $98 million.
Including the loss on sale, Dow Jones recorded a net loss of $51.7 million, or
54 cents per share, during the quarter. Dow Jones earned $34.9 million, or
36 cents per share, in the second quarter of 1997.
For the six months ended June 30, 1998, pro forma earnings were up 27% at
$104.3 million, or $1.07 per share, compared with $82.3 million, or 85 cents per
share, in the year-earlier period. These figures include gains on asset sales
of 11 cents per share in 1998 and four cents per share in 1997.
Page 2
Including Telerate, actual results for the six month period reflect a loss
of $17 million, or 18 cents per share in 1998, compared with earnings of $60.3
million, or 63 cents per share, during the like period of 1997.
Pro forma revenue rose 6.8% in the second quarter to $486.7 million, while
revenue including Telerate fell 6.2% to $601.1 million. Pro forma consolidated
operating income was up 3.6% to $98.1 million. Including Telerate, consolidated
operating income rose 10% to $85.9 million. The pro forma EBITDA margin for the
quarter was 24.8%.
Dow Jones chairman and chief executive officer Peter R. Kann said, "Our
second quarter results reflect continuing strength in Wall Street Journal
advertising and significant revenue and operating income growth for our
electronic publishing operations. The turnaround at Dow Jones is well
underway."
The results announced today also reflect new financial reporting segments,
and new supplemental revenue and EBITDA disclosures. Dow Jones will henceforth
be reporting the results of its business and financial news and information
operations in two segments, Print Publishing (including The Wall Street Journal
and its international editions, Barron's and other periodicals, and U.S.
television operations) and Electronic Publishing (Dow Jones Newswires, Dow Jones
Indexes, and Dow Jones Interactive Publishing). Under the previous segments,
Dow Jones Interactive Publishing was included in "Business Publishing" and
Telerate was included in "Financial Information Services." The Ottaway
community newspapers will continue to be reported as a separate segment.
Page 3
Dow Jones will also, beginning with the results announced today, disclose
on a quarterly basis supplemental revenue information for the following: U.S.
and international print advertising; U.S. and international print circulation
and other revenue; Dow Jones Newswires and Dow Jones Indexes; and Dow Jones
Interactive Publishing. EBITDA results will also be reported for each segment on
a quarterly basis, rather than only annually as in the past.
Dow Jones senior vice president and chief financial officer Jerry Bailey
said, "The new segments and new revenue disclosures unveiled today, along with
the pro forma information for Dow Jones ex-Telerate, will make our results much
more transparent, and should make Dow Jones easier for investors to value."
The new print publishing segment posted a second quarter revenue increase
of 6.7% to $307.9 million, reflecting a 9.7% increase in U.S. print advertising
revenue. Advertising linage at The Wall Street Journal rose 6.5% in the
quarter. Operating income in the print publishing segment was $69.7 million, a
decrease of 5.4%. The EBITDA margin for the segment was 26.7%, down from 29.4%
in the second quarter of 1997, in significant part reflecting Asian advertising
softness and higher newsprint prices.
Second quarter revenue in the new electronic publishing segment rose 14.3%
to $97.5 million. Operating income in the segment rose 14.1% to $18.4 million.
The EBITDA margin was 24.7%.
Revenue in the community newspaper segment rose 5.7% in the second quarter
to $81.4 million. Advertising linage at Ottaway's 19 daily and 17 weekly
newspapers rose 4.7%. Operating income in the segment rose 4.7% to $16.1
million. The EBITDA margin was 25.1%.
Page 4
Pretax losses at Dow Jones' television operations (including income from
U.S. television reported in the print publishing segment and losses from
international television reported in equity results) were $5 million in the
second quarter, compared with $12.2 million in the year-earlier period. For the
six months ended June 30, 1998, pre-tax television losses were $15 million,
compared with $31.1 million in the first half of 1997.
Dow Jones & Company (NYSE: DJ) publishes The Wall Street Journal and its
international and Interactive editions, Barron's and SmartMoney magazines and
other periodicals, Dow Jones Newswires, Dow Jones Indexes, Dow Jones Interactive
and the Ottaway group of community newspapers. Dow Jones is co-owner of the
CNBC television operations in Asia and Europe, and also provides news content to
CNBC in the U.S.
Page 5
Dow Jones & Company
Earnings Summary
Second Second First First
(in thousands, except Quarter Quarter Half Half
per share amounts) 1998 1997 1998 1997
--------------- --------------- ----------------- ---------------
Consolidated:
Revenues $ 601,142 $ 640,744 $ 1,222,623 $ 1,246,707
Operating Income 85,864 78,027 141,342 140,189
Net (loss) income (51,697) 34,906 (16,999) 60,305
Diluted EPS (0.54) 0.36 (0.18) 0.63
Diluted EPS, excluding loss on
sale of Telerate 0.47 0.36 0.83 0.63
Pro forma:
(Consolidated less Telerate results
from operations and loss on sale)
Revenues 486,739 455,808 936,721 876,544
Operating Income 98,075 94,675 174,569 162,968
Net income 54,746 49,482 104,348 82,258
Diluted EPS 0.56 0.51 1.07 0.85
Pro forma, excluding gains
from other asset sales: (1)
Net income 54,746 49,482 94,202 78,740
Diluted EPS 0.56 0.51 0.96 0.82
See notes to financial information on page 11.
Page 6
UNAUDITED PRO FORMA INCOME STATEMENT
BY QUARTER
Second First Fourth Third Second
(in thousands, except Quarter Quarter Quarter Quarter Quarter
per share amounts) 1998 1998 1997 1997 1997
------------- ------------- ------------- ------------- -------------
Revenues:
Advertising $ 277,043 $ 244,666 $ 291,586 $ 235,180 $ 256,626
Information services 95,379 95,884 90,579 101,952 84,226
Circulation and other 114,317 109,432 118,253 114,235 114,956
Total revenues 486,739 449,982 500,418 451,367 455,808
Expenses:
News, operations and development 129,589 122,652 140,812 126,877 122,862
Selling, administrative and general 163,873 160,287 157,609 153,378 150,974
Newsprint 43,028 39,855 44,333 36,485 38,041
Second class postage and carrier delivery 29,639 28,268 30,683 27,690 28,426
Depreciation and amortization 22,535 22,426 31,218 21,471 20,830
Restructuring (2) 21,761
Operating expenses 388,664 373,488 426,416 365,901 361,133
Operating income 98,075 76,494 74,002 85,466 94,675
Other income (deductions):
Investment income 1,795 301 223 143 224
Interest expense (1,351) (2,246) (3,919) (4,424) (4,342)
Equity in losses of associated companies (2) (3,618) (5,887) (26,970) (4,544) (4,794)
Gain on disposition of businesses
and investments (3) 15,390 46,416
Other, net (469) (449) (1,938) 298 (600)
Income before income taxes 94,432 83,603 87,814 76,939 85,163
Income taxes 39,686 34,001 28,489 31,160 35,681
Net income $ 54,746 $ 49,602 $ 59,325 $ 45,779 $ 49,482
Net income per share:
- Basic $ 0.57 $ 0.51 $ 0.61 $ 0.48 $ 0.52
- Diluted 0.56 0.50 0.61 0.47 0.51
Average shares outstanding:
- Basic 96,476 96,878 96,465 96,124 95,821
- Diluted 97,677 98,248 97,756 97,060 96,585
First Fourth Third Second First
(in thousands, except Quarter Quarter Quarter Quarter Quarter
per share amounts) 1997 1996 1996 1996 1996
------------- ------------- ------------- ------------- -------------
Revenues:
Advertising $ 228,472 $ 262,287 $ 202,900 $ 238,315 $ 193,479
Information services 80,750 81,354 77,355 74,585 75,894
Circulation and other 111,514 116,718 115,149 114,123 112,996
Total revenues 420,736 460,359 395,404 427,023 382,369
Expenses:
News, operations and development 122,181 131,172 122,853 121,070 117,229
Selling, administrative and general 148,129 152,322 146,563 148,759 138,305
Newsprint 33,619 37,408 36,573 45,881 44,904
Second class postage and carrier delivery 27,643 29,541 26,746 27,343 26,626
Depreciation and amortization 20,871 20,414 19,950 19,912 19,871
Restructuring (2)
Operating expenses 352,443 370,857 352,685 362,965 346,935
Operating income 68,293 89,502 42,719 64,058 35,434
Other income (deductions):
Investment income 122 363 169 176 -
Interest expense (4,260) (5,445) (4,525) (3,069) (3,150)
Equity in losses of associated companies (2) (12,693) (6,858) (3,310) 3,094 1,666
Gain on disposition of businesses
and investments (3) 6,179 14,315
Other, net 517 1,026 1,774 1,973 1,909
Income before income taxes 58,158 78,588 51,142 66,232 35,859
Income taxes 25,382 32,296 20,827 27,764 16,421
Net income $ 32,776 $ 46,292 $ 30,315 $ 38,468 $ 19,438
Net income per share:
- Basic $ 0.34 $ 0.48 $ 0.31 $ 0.40 $ 0.20
- Diluted 0.34 0.48 0.31 0.39 0.20
Average shares outstanding:
- Basic 95,570 95,808 96,725 97,118 97,435
- Diluted 96,267 96,234 97,448 97,863 98,195
See notes to financial information on page 11.
Page 7
Dow Jones & Company
Segment information
By Quarter
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
(in thousands) 1998 1998 1997 1997 1997
--------------- --------------- --------------- -------------- --------------
Revenues:
- --------
Print Publishing (4) $ 307,885 $ 281,504 $ 322,797 $ 267,170 $288,651
Electronic Publishing (5) 97,464 97,581 92,642 103,182 85,258
Community Newspapers 81,390 70,897 79,306 76,275 76,995
--------------- --------------- ---------------- -------------- --------------
Segment Revenues 486,739 449,982 494,745 446,627 450,904
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations (6) - - 5,673 4,740 4,904
--------------- --------------- ---------------- -------------- --------------
Total Pro Forma Revenues 486,739 449,982 500,418 451,367 455,808
Telerate 114,403 171,499 189,067 184,959 184,936
--------------- --------------- ---------------- -------------- --------------
Consolidated Revenues $ 601,142 $ 621,481 $ 689,485 $ 636,326 $640,744
Operating Income (Loss):
- -----------------------
Print Publishing $ 69,749 $ 53,223 $ 69,017 $ 48,888 $ 73,700
Electronic Publishing 18,377 21,281 (2,285) 33,012 16,107
Community Newspapers 16,067 8,155 14,117 12,743 15,351
Corporate operating expenses (6,118) (6,165) (3,439) (4,997) (5,627)
--------------- --------------- ---------------- -------------- --------------
Segment Profit 98,075 76,494 77,410 89,646 99,531
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations - - (3,408) (4,180) (4,856)
--------------- --------------- ---------------- -------------- --------------
Pro Forma operating income 98,075 76,494 74,002 85,466 94,675
Telerate (12,211) (21,016) (1,017,159) (24,472) (16,648)
--------------- --------------- ---------------- -------------- --------------
Consolidated Operating income (loss) $ 85,864 $ 55,478 $ (943,157) $ 60,994 $ 78,027
EBITDA: (7)
- -----------
Print Publishing $ 82,255 $ 65,802 $ 92,730 $ 59,790 $ 84,753
Electronic Publishing 24,034 26,832 21,870 38,706 21,244
Community Newspapers 20,439 12,451 18,499 16,951 19,329
Corporate operating expenses (6,118) (6,165) (3,439) (4,997) (5,627)
--------------- --------------- ---------------- -------------- --------------
Segment EBITDA 120,610 98,920 129,660 110,450 119,699
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations - - (2,679) (3,513) (4,194)
--------------- --------------- ---------------- -------------- --------------
Pro Forma EBITDA 120,610 98,920 126,981 106,937 115,505
Telerate 9,500 11,171 124 16,154 23,229
--------------- --------------- ---------------- -------------- --------------
Consolidated EBITDA $ 130,110 $ 110,091 $ 127,105 $ 123,091 $138,734
EBITDA Margin:
- -------------
Print Publishing 26.7% 23.4% 28.7% 22.4% 29.4%
Electronic Publishing (8) 24.7% 27.5% 23.6% 37.5% 24.9%
Community Newspapers 25.1% 17.6% 23.3% 22.2% 25.1%
All Segments 24.8% 22.0% 26.2% 24.7% 26.5%
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
(in thousands) 1997 1996 1996 1996 1996
-------------- --------------- -------------- ------------- ------------
Revenues:
- --------
Print Publishing (4) $ 264,777 $ 295,501 $ 238,504 $ 272,864 $ 237,392
Electronic Publishing (5) 82,150 82,756 78,517 75,103 76,185
Community Newspapers 68,035 76,427 72,691 73,858 64,535
-------------- --------------- -------------- ------------- ------------
Segment Revenues 414,962 454,684 389,712 421,825 378,112
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations (6) 5,774 5,675 5,692 5,198 4,257
-------------- --------------- -------------- ------------- ------------
Total Pro Forma Revenues 420,736 460,359 395,404 427,023 382,369
Telerate 185,227 210,891 199,467 203,614 202,465
-------------- --------------- -------------- ------------- ------------
Consolidated Revenues $ 605,963 $ 671,250 $ 594,871 $ 630,637 $ 584,834
Operating Income (Loss):
- -----------------------
Print Publishing $ 55,586 $ 71,563 $ 30,090 $ 53,553 $ 28,691
Electronic Publishing 14,255 16,948 15,503 12,797 17,652
Community Newspapers 8,373 15,655 11,390 12,924 3,797
Corporate operating expenses (4,126) (5,494) (5,927) (5,341) (5,290)
-------------- --------------- -------------- ------------- ------------
Segment Profit 74,088 98,672 51,056 73,933 44,850
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations (5,795) (9,170) (8,337) (9,875) (9,416)
-------------- --------------- -------------- ------------- ------------
Pro Forma operating income 68,293 89,502 42,719 64,058 35,434
Telerate (6,131) 24,162 19,553 28,034 33,518
-------------- --------------- -------------- ------------- ------------
Consolidated Operating income (loss) $ 62,162 $ 113,664 $ 62,272 $ 92,092 $ 68,952
EBITDA: (7)
- -----------
Print Publishing $ 66,564 $ 82,431 $ 40,084 $ 63,955 $ 38,858
Electronic Publishing 19,465 20,896 20,419 17,397 22,455
Community Newspapers 12,359 19,678 15,342 16,875 7,750
Corporate operating expenses (4,126) (5,494) (5,927) (5,341) (5,290)
-------------- --------------- -------------- ------------- ------------
Segment EBITDA 94,262 117,511 69,918 92,886 63,773
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations (5,098) (7,594) (7,251) (8,915) (8,468)
-------------- --------------- -------------- ------------- ------------
Pro Forma EBITDA 89,164 109,917 62,667 83,971 55,305
Telerate 31,929 59,161 54,300 62,061 67,354
-------------- --------------- -------------- ------------- ------------
Consolidated EBITDA $ 121,093 $ 169,078 $ 116,967 $ 146,032 $ 122,659
EBITDA Margin:
- -------------
Print Publishing 25.1% 27.9% 16.8% 23.4% 16.4%
Electronic Publishing (8) 23.7% 25.3% 26.0% 23.2% 29.5%
Community Newspapers 18.2% 25.7% 21.1% 22.8% 12.0%
All Segments 22.7% 25.8% 17.9% 22.0% 16.9%
See notes to financial information on page 11.
Page 8
Dow Jones & Company
Supplemental Segment Revenue Information
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
1998 1998 1997 1997 1997
(in thousands) --------------- -------------- -------------- -------------- -------------
Print Publishing (4)
U.S. Publications
- -----------------
Advertising $ 198,692 $ 181,040 $ 209,107 $ 163,138 $181,205
Circulation and Other 80,506 76,155 80,901 75,930 77,458
International Publications
- --------------------------
Advertising 17,804 13,270 22,517 16,841 18,442
Circulation and Other 10,883 11,039 10,272 11,261 11,546
--------------- -------------- -------------- -------------- -------------
Total 307,885 281,504 322,797 267,170 288,651
Electronic Publishing (5)
Dow Jones Newswires/Indexes 54,519 54,444 51,128 63,015 47,482
Interactive Publishing 42,945 43,137 41,514 40,167 37,776
--------------- -------------- -------------- -------------- -------------
Total 97,464 97,581 92,642 103,182 85,258
Community Newspapers
Advertising 58,476 48,687 56,704 53,313 55,008
Circulation and Other 22,914 22,210 22,602 22,962 21,987
--------------- -------------- -------------- -------------- -------------
81,390 70,897 79,306 76,275 76,995
Total $ 486,739 $ 449,982 $ 494,745 $ 446,627 $450,904
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
1997 1996 1996 1996 1996
(in thousands) -------------- ------------- -------------- ------------- -------------
Print Publishing (4)
U.S. Publications
- -----------------
Advertising $ 166,228 $183,234 $ 134,955 $166,903 $ 136,256
Circulation and Other 73,846 78,321 76,246 76,161 77,147
International Publications
- --------------------------
Advertising 13,177 21,776 15,249 17,301 12,527
Circulation and Other 11,526 12,170 12,054 12,499 11,462
-------------- ------------- -------------- ------------- -------------
Total 264,777 295,501 238,504 272,864 237,392
Electronic Publishing (5)
Dow Jones Newswires/Indexes 42,249 41,108 40,206 39,561 38,797
Interactive Publishing 39,901 41,648 38,311 35,542 37,388
-------------- ------------- -------------- ------------- -------------
Total 82,150 82,756 78,517 75,103 76,185
Community Newspapers
Advertising 46,668 54,575 50,341 52,425 43,750
Circulation and Other 21,367 21,852 22,350 21,433 20,785
-------------- ------------- -------------- ------------- -------------
68,035 76,427 72,691 73,858 64,535
Total $ 414,962 $454,684 $ 389,712 $421,825 $ 378,112
See notes to financial information on page 11.
Page 9
Dow Jones & Company
Segment information
First Half First Half Year Year
(in thousands) 1998 1997 1997 1996
---------------- ---------------- --------------- ----------------
Revenues:
Print Publishing (4) $ 589,389 $ 553,428 $ 1,143,395 $ 1,044,261
Electronic Publishing (5) 195,045 167,408 363,232 312,561
Community Newspapers 152,287 145,030 300,611 287,511
---------------- ---------------- --------------- ----------------
Segment Revenues 936,721 865,866 1,807,238 1,644,333
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations (6) - 10,678 21,091 20,822
---------------- ---------------- --------------- ----------------
Total Pro Forma Revenues 936,721 876,544 1,828,329 1,665,155
Telerate 285,902 370,163 744,189 816,437
---------------- ---------------- --------------- ----------------
Consolidated Revenues $ 1,222,623 $ 1,246,707 $ 2,572,518 $ 2,481,592
First Half First Half Year Year
Operating Income (Loss): 1998 1997 1997 1996
---------------- ---------------- --------------- ----------------
Print Publishing $ 122,972 $ 129,286 $ 247,191 $ 183,897
Electronic Publishing 39,658 30,362 61,089 62,900
Community Newspapers 24,222 23,724 50,584 43,766
Corporate operating expenses (12,283) (9,753) (18,189) (22,052)
---------------- ---------------- --------------- ----------------
Segment Profit 174,569 173,619 340,675 268,511
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations - (10,651) (18,239) (36,798)
---------------- ---------------- --------------- ----------------
Pro Forma operating income 174,569 162,968 322,436 231,713
Telerate (33,227) (22,779) (1,064,410) 105,267
---------------- ---------------- --------------- ----------------
Consolidated Operating income (loss) $ 141,342 $ 140,189 $ (741,974) $ 336,980
First Half First Half Year Year
EBITDA: (7) 1998 1997 1997 1996
---------------- ---------------- --------------- ----------------
Print Publishing $ 148,057 $ 151,317 $ 303,837 $ 225,328
Electronic Publishing 50,866 40,709 101,285 81,167
Community Newspapers 32,890 31,688 67,138 59,645
Corporate operating expenses (12,283) (9,753) (18,189) (22,052)
---------------- ---------------- --------------- ----------------
Segment EBITDA 219,530 213,961 454,071 344,088
Divested/Joint Ventured Operations:
- ----------------------------------
Print and Television Operations (9,292) (15,484) (32,228)
---------------- ---------------- --------------- ----------------
Pro Forma EBITDA 219,530 204,669 438,587 311,860
Telerate 20,671 55,158 71,436 242,876
---------------- ---------------- --------------- ----------------
Consolidated EBITDA $ 240,201 $ 259,827 $ 510,023 $ 554,736
First Half First Half Year Year
EBITDA Margin: 1998 1997 1997 1996
---------------- ---------------- --------------- ----------------
Print Publishing 25.1% 27.3% 26.6% 21.6%
Electronic Publishing (8) 26.1% 24.3% 27.9% 26.0%
Community Newspapers 21.6% 21.8% 22.3% 20.7%
All Segments 23.4% 24.7% 25.1% 20.9%
See notes to financial information on page 11.
Page 10
Dow Jones & Company
Supplemental Segment Revenue Information
First Half First Half Year Year
(in thousands) 1998 1997 1997 1996
--------------- ---------------- --------------- ----------------
Print Publishing (4)
U.S. Publications
- -----------------
Advertising $ 379,732 $ 347,433 $ 719,679 $ 621,348
Circulation and Other 156,661 151,304 308,134 307,875
International Publications
- --------------------------
Advertising 31,074 31,619 70,977 66,853
Circulation and Other 21,922 23,072 44,605 48,185
--------------- ---------------- --------------- ----------------
Total 589,389 553,428 1,143,395 1,044,261
Electronic Publishing (5)
Dow Jones Newswires/Indexes 108,963 89,731 203,874 159,672
Interactive Publishing 86,082 77,677 159,358 152,889
--------------- ---------------- --------------- ----------------
Total 195,045 167,408 363,232 312,561
Community Newspapers
Advertising 107,163 101,676 211,693 201,091
Circulation and Other 45,124 43,354 88,918 86,420
--------------- ---------------- --------------- ----------------
Total 152,287 145,030 300,611 287,511
Total $ 936,721 $ 865,866 $ 1,807,238 $ 1,644,333
See notes to financial information on page 11.
Page 11
Dow Jones & Company
Notes to Financial Information on Pages 5-10
(1) Other asset sales in the first half of 1998 included the sale of the
company's interest in WBIS+ TV and Mediatex Communications Corp., publisher
of Texas Monthly magazine. Asset sales in 1997's first half included the
sale of the company's American Demographics subsidiary, a publisher of
information products serving the marketing industry.
(2) Fourth quarter 1997 operating expenses include charges for restructuring
IDD Enterprises ($17.1 million) and U.S. TV operations ($4.7 million).
Equity losses in associated companies in 1997's fourth quarter include
restructuring charges of $29.7 million related to International television
operations.
(3) Includes pretax gains on the sale of the company's interest in WBIS+ and
Mediatex Communications Corp. (1998 first quarter), Bear Island Paper
Company and related timberlands (1997 fourth quarter), American
Demographics, Inc. (1997 first quarter) and Press-Enterprise Company (1996
third quarter).
(4) Print Publishing includes the results of The Wall Street Journal and its
international editions in Europe and Asia, Barron's and other U.S. and
international periodicals. Also included in the segment are U.S. television
operations. Within the Print Publishing segment, "U.S." revenue figures
refer to all revenues, from whatever geographic source, for publications
headquartered in the United States, while "International" revenue figures
refer to all revenues, from whatever geographic source, for publications
headquartered outside the United States.
(5) Electronic Publishing includes the results of Dow Jones Newswires, Dow
Jones Interactive Publishing and Dow Jones Indexes.
(6) Divested/Joint Ventured Print and Television Operations includes the
results of European Business News, a television operation which merged with
CNBC Europe 12/97; Dow Jones Investor Network, a multimedia product which
was discontinued 1/97; American Demographics, Inc., (sold 3/97); and IDD
Enterprises' print publishing unit (sold 11/97).
(7) EBITDA is computed as operating income excluding depreciation and
amortization and restructuring costs.
(8) Electronic Publishing revenue in 1997 included $31 million in one-time fees
for licensing the Dow Jones Averages, approximately two-thirds of which
occurred in the third quarter. Excluding these fees, Electronic
Publishing's EBITDA margin for 1997 and the 1997 third quarter would have
been 21.2% and 22.5%, respectively.
Page 12
UNAUDITED PRO FORMA INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(in thousands, except Consolidated Less: Pro Forma Pro Forma
per share amounts) Dow Jones & Co. Telerate Adjustments (5)
Revenues:
Information services $ 477,165 $ 289,027 $ 3,125 (1) $ 191,263
Advertising 521,709 521,709
Circulation and other 223,749 223,749
Total revenues 1,222,623 289,027 3,125 936,721
Expenses:
News, operations and development 404,083 160,557 8,715 (2) 252,241
Selling, administrative and general 437,549 119,802 6,413 (3) 324,160
Newsprint 82,883 82,883
Second class postage and carrier delivery 57,907 57,907
Depreciation and amortization 98,859 53,898 44,961
Operating expenses 1,081,281 334,257 15,128 762,152
Operating income 141,342 (45,230) (12,003) 174,569
Other income (deductions):
Investment income 3,032 936 2,096
Interest expense (4,520) (923) (3,597)
Equity in losses of associated companies (9,505) (9,505)
(Loss) gain on disposition of businesses
and investments (120,997) (136,387) 15,390
Other, net (3,272) (2,354) (918)
Income (loss) before income taxes 6,080 (183,958) (12,003) 178,035
Income tax (benefit) 23,079 (55,457) (4,849) (4) 73,687
Net (loss) income $ (16,999) $ (128,501) $ (7,154) $ 104,348
Net income per share:
- Basic $ (0.18) $ 1.08
- Diluted (0.18) 1.07
Average shares outstanding:
- Basic 96,610 96,610
- Diluted 96,610 97,920
See notes to unaudited pro forma income statements on page 15.
Page 13
UNAUDITED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1997
(in thousands, except Dow Jones & Co. Less: Pro Forma Pro Forma
per share amounts) (as reported) Telerate Adjustments (5)
Revenues:
Information services $ 1,101,696 $ 751,689 $ 7,500 (1) $ 357,507
Advertising 1,011,864 1,011,864
Circulation and other 458,958 458,958
Total revenues 2,572,518 751,689 7,500 1,828,329
Expenses:
News, operations and development 899,868 407,399 20,262 (2) 512,731
Selling, administrative and general 895,707 299,962 14,346 (3) 610,091
Newsprint 152,478 152,478
Second class postage and carrier delivery 114,442 114,442
Depreciation and amortization 250,734 156,344 94,390
Restructuring 1,001,263 979,502 21,761
Operating expenses 3,314,492 1,843,207 34,608 1,505,893
Operating (loss) income (741,974) (1,091,518) (27,108) 322,436
Other income (deductions):
Investment income 3,473 2,761 712
Interest expense (19,367) (2,422) (16,945)
Equity in losses of associated companies (49,311) (310) (49,001)
Gain on disposition of businesses
and investments 52,595 52,595
Other, net (9,300) (8,029) (1,271)
(Loss) income before income taxes (763,884) (1,099,518) (27,108) 308,526
Income tax (benefit) 37,796 (93,868) (10,952) (4) 120,712
(Loss) income before minority interest (801,680) (1,005,650) (16,156) 187,814
Minority interest (452) (452) (452)
Net (loss) income $ (802,132) $ (1,005,650) $ (16,156) $ 187,362
Net (loss) income per share:
- Basic $ (8.36) $ 1.95
- Diluted (8.36) 1.93
Average shares outstanding:
- Basic 95,993 95,993
- Diluted 95,993 96,947
See notes to unaudited pro forma income statements on page 15
Page 14
UNAUDITED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1996
(in thousands, except Dow Jones & Co. Less: Pro Forma Pro Forma
per share amounts) (as reported) Telerate Adjustments (5)
Revenues:
Information services $ 1,125,625 $ 823,937 $ 7,500 (1) $ 309,188
Advertising 896,981 896,981
Circulation and other 458,986 458,986
Total revenues 2,481,592 823,937 7,500 1,665,155
Expenses:
News, operations and development 820,564 344,116 15,872 (2) 492,320
Selling, administrative and general 831,270 256,710 11,393 (3) 585,953
Newsprint 164,766 164,766
Second class postage and carrier delivery 110,256 110,256
Depreciation and amortization 217,756 137,609 80,147
Operating expenses 2,144,612 738,435 27,265 1,433,442
Operating income 336,980 85,502 (19,765) 231,713
Other income (deductions):
Investment income 4,249 3,541 708
Interest expense (18,755) (2,566) (16,189)
Equity in losses of associated companies (5,408) (5,408)
Gain on disposition of businesses
and investments 14,315 14,315
Other, net (121) (366) 245
Income before income taxes 331,260 86,111 (19,765) 225,384
Income tax (benefit) 147,728 42,435 (7,985) (4) 97,308
(Loss) income before minority interest 183,532 43,676 (11,780) 128,076
Minority interest in losses of subsidiaries 6,437 6,437
Net income $ 189,969 $ 43,676 $ (11,780) $ 134,513
Net income per share:
- Basic $ 1.96 $ 1.39
- Diluted 1.95 1.38
Average shares outstanding:
- Basic 96,703 96,703
- Diluted 97,371 97,371
See notes to unaudited pro forma income statements on page 15.
Page 15
Notes to Unaudited Pro Forma Income Statements
(1) Reflects ongoing revenues directly relating to the sale of Telerate.
(2) News and operations costs previously incurred by Telerate which will be
part of Dow Jones' continuing business.
(3) Administrative and general costs previously incurred by Telerate which will
be part of Dow Jones' continuing operations.
(4) Taxes are computed at the company's statutory tax rate.
(5) Pro forma first half 1998 diluted earnings per share, excluding asset
sales, was $0.96 per share. EBITDA, which the company computes as operating
income excluding depreciation and amortization and restructuring charges
(in 1997), was $219.5 million.
Pro forma 1997 diluted earnings per share, excluding asset sales and
restructuring charges, was $1.95 per share. Pro forma 1997 EBITDA was $438.6
million.
Pro forma 1996 diluted earnings per share, excluding asset sales, was $1.29 per
share. Pro forma 1996 EBITDA was $311.9 million.
Page 16
Dow Jones & Company
Advertising Volume
Year-Over-Year Percentage Change
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
1998 1998 1997 1997 1997
------ ------ ------ ------ ------
The Wall Street Journal:
- General 5.4% 10.7% 11.1% 22.6% 15.9%
- Financial 5.5% -5.4% 1.3% 14.9% -6.6%
- Classified and other 12.9% 7.5% 18.0% 8.6% 11.0%
- Total 6.5% 4.8% 8.6% 18.0% 8.3%
The Asian Wall Street Journal -16.4% 5.2% -1.3% 10.5% 10.3%
The Wall Street Journal Europe 8.7% 16.3% 20.5% 4.3% 6.9%
Barron's 12.1% 13.1% 6.8% 19.0% -5.0%
Ottaway Newspapers:
- Daily 0.6% -1.4%
- Non-daily 31.7% 25.5%
- Total 4.7% 1.9% -1.2% 2.1% 0.2%
First Fourth Third Second First
Quarter Quarter Quarter Quarter Quarter
1997 1996 1996 1996 1996
------ ------ ------ ------ -------
The Wall Street Journal:
- General 23.9% 20.2% 14.3% 7.5% -17.1%
- Financial 20.5% 30.7% 26.8% 47.3% 29.9%
- Classified and other 17.0% -0.4% 5.8% 5.0% -1.9%
- Total 21.7% 21.7% 17.0% 18.2% -2.0%
The Asian Wall Street Journal 4.6% 7.3% 14.9% 12.4% -5.8%
The Wall Street Journal Europe 8.9% -18.5% 14.2% 12.5% -14.3%
Barron's 9.1% 47.0% 33.0% 25.9% 19.8%
Ottaway Newspapers:
- Daily
- Non-daily
- Total 2.2% 0.5% -2.3% -3.2% 0.5%