Dow Jones & Company Announces Third Quarter Earnings.NEW YORK--(BUSINESS WIRE)--Oct. 8, 1998--Dow Jones & Company announced today that it earned $35.4 million, or 37 cents per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, before a special charge during the third quarter ended September September: see month. 30, 1998. Net income was $25.9 million, or 27 cents per diluted share, after the charge of ten cents Ten Cents has several meanings:
Third quarter 1998 earnings compare with 1997 third quarter earnings of $45.8 million, or 47 cents per diluted share, excluding losses at Dow Jones' former Telerate subsidiary ("pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma "); these pro forma 1997 earnings included an 11 cent per share enhancement for one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. fees for licensing derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. on the Dow Jones Averages Dow Jones Averages A trademark used for three indexes of the relative price of selected industrial, transportation, and utility stocks based on a formula developed and periodically revised by Dow Jones & Company, Inc. .Excluding both these one-time fees and the Ottaway charge, third quarter earnings were up 0.8% from 1997 pro forma results. For the nine months ended September 30, 1998, pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. were $130.2 million, or $1.34 per diluted share, compared with $128 million, or $1.32 per diluted share, in 1997. The 1998 figure includes not only the Ottaway charge, but also gains on asset sales of 11 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. ; the 1997 figure includes not only the 11 cents per share in one-time licensing fees, but also gains on asset sales of four cents per share. Revenues in the third quarter were down 1.7% at $443.6 million compared with pro forma 1997 results. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $44.6 million, down 47.9% from the pro forma figure for 1997. Excluding the Ottaway charge and the one-time licensing fees, operating income was down 9.8%. Dow Jones Dow Jones the best known of several U.S. indexes of movements in price on Wall Street. [Am. Hist.: Payton, 202] See : Finance chairman and chief executive officer Peter R. Kann said, "While, as we previously announced, Wall Street Journal advertising revenues softened soft·en v. soft·ened, soft·en·ing, soft·ens v.tr. 1. To make soft or softer. 2. To undermine or reduce the strength, morale, or resistance of. 3. in the third quarter, they did so against very tough comparisons. Indeed, September was the fifth-highest advertising revenue month in the Journal's history. Elsewhere, we're we're Contraction of we are. we're we are very pleased with the early results in our drive to boost profit margins at our Ottaway community newspapers. We made investors a commitment on Ottaway margins earlier this year, and we're already well along toward making good on that commitment." Dow Jones' print publishing segment posted a third quarter revenue decline of 1.3% to $263.6 million. As previously announced, advertising linage lin·age also line·age n. 1. The number of lines of printed or written material. 2. Payment for written work at a specified amount per line. linage Noun 1. at The Wall Street Journal fell 6.8% in the quarter. Operating income in the print publishing segment was $31.4 million, a decrease of 35.7%, reflecting the linage decline, higher personnel expenses, newsprint newsprint low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been prices and the effects of the economic difficulties in Asia, somewhat offset by television programming and advertising revenues from CNBC CNBC Center for the Neural Basis of Cognition (artificial intelligence) CNBC Consumer News and Business Channel CNBC Congress of National Black Churches, Inc. in the U.S. Dow Jones expects the increases in personnel expenses to be somewhat ameliorated in 1999 by a voluntary separation incentive program the Company announced last week. The EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become margin for the print publishing segment was 16.6%, down from 22.4% in 1997. Third quarter revenue in the Company's electronic publishing An umbrella term for non-paper publishing, which includes publishing online or on media such as CDs and DVDs. segment fell 4.2% to $98.8 million, because of the inclusion of one-time licensing fees at Dow Jones Indexes in 1997's third quarter. Operating income in the segment declined 46.3% to $17.7 million; excluding the one-time licensing fees, operating income was up 17.7%. The EBITDA margin was 24%. Revenue in the community newspapers segment rose 6.5% to $81.2 million in the third quarter. Advertising linage at Ottaway's 19 daily and 17 weekly newspapers rose 3.8%. Excluding the restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , operating income in the segment climbed 35.8% to $17.3 million. The EBITDA margin was 26.7%, up from 22.2%. Pretax losses pretax loss A loss reported before tax benefits are considered. at Dow Jones' television operations (including income from U.S. television programming reported in the print publishing segment and losses from international television reported in equity results) were $2.8 million in the third quarter, compared with a $9.3 million loss in the year-earlier period. During the third quarter the Company repurchased 258,000 shares of its common stock at an aggregate price of $12.4 million, bringing to 4.3 million the number of shares repurchased this year. To enhance its ongoing share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program, during the second quarter the Company issued puts covering an aggregate of one million shares of its common stock. During the third quarter, one-third of such puts expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. and were replaced. Presently outstanding puts could obligate obligate /ob·li·gate/ (ob´li-gat) pertaining to or characterized by the ability to survive only in a particular environment or to assume only a particular role, as an obligate anaerobe. the Company to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to $44.6 million of its common stock (net of cumulative put premiums received) over the next eight months. Dow Jones & Company (NYSE NYSE See: New York Stock Exchange : DJ) publishes The Wall Street Journal and its international and Interactive editions, Barron's and SmartMoney SmartMoney The Wall Street Journal Magazine of Personal Business was launched in 1992 by Hearst Corporation and Dow Jones & Company. Its first editor was Norman Pearlstine. It is published monthly and its current circulation is 824,327. magazines and other periodicals, Dow Jones Newswires Dow Jones Newswires is the real-time financial news organization owned by Dow Jones. Founded in 1882, its primary competitors are Bloomberg L.P. and Reuters. The company reports more than 420,000 subscribers -- including brokers, traders, analysts and fund managers -- as of July , 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 Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , and also provides news content to CNBC in the U.S. -0-
Page 5
Dow Jones & Company
Earnings Summary
Quarters Ended Nine Months Ended
September 30 September 30
(in thousands, except 1998 1997 1998 1997
per share amounts) ---- ---- ---- ----
Consolidated:
Revenues $443,625 $636,326 $1,666,248 $1,883,033
Operating income 44,550 60,994 185,892 201,183
Net income 25,859 26,878 8,860 87,183
Diluted EPS 0.27 0.28 0.09 0.90
Diluted EPS,
excluding
loss on sale
of Telerate 0.27 0.28 1.10 0.90
Pro forma:
(Consolidated less Telerate
results from operations and
loss on sale)
Revenues $443,625 $451,367 $1,380,346 $1,327,911
Operating income 44,550 85,466 219,119 248,434
Net income 25,859 45,779 130,207 128,037
Diluted EPS 0.27 0.47 1.34 1.32
Pro forma, excluding certain
one-time items: (1)
Net income $35,418 $35,130 $129,620 $112,152
Diluted EPS 0.37 0.36 1.33 1.16
See notes to financial information on page 10.
Page 6
Dow Jones & Company
Unaudited Pro Forma Condensed Consolidated
Statements of Income
Quarters Ended Nine Months Ended
(in thousands except September 30 September 30
per share amounts) 1998 1997 1998 1997
---- ---- ---- ----
Revenues:
Advertising $231,457 $235,180 $ 753,166 $ 720,278
Information services 96,935 101,952 288,198 266,928
Circulation and other 115,233 114,235 338,982 340,705
Total revenues 443,625 451,367 1,380,346 1,327,911
Expenses:
News, operations
and development 131,448 126,877 383,689 371,920
Selling, administrative
and general 161,588 153,378 485,748 452,481
Newsprint 38,510 36,485 121,393 108,145
Second class postage
and carrier delivery 28,612 27,690 86,519 83,759
Depreciation and
amortization 22,577 21,471 67,538 63,172
Restructuring (1) 16,340 16,340
Operating expenses 399,075 365,901 1,161,227 1,079,477
Operating income 44,550 85,466 219,119 248,434
Other income (deductions):
Investment income 4,535 143 6,631 489
Interest expense (909) (4,424) (4,506) (13,026)
Equity in losses of
associated companies (4,123) (4,544) (13,628) (22,031)
Gain on disposition of
businesses and
investments (1) 15,390 6,179
Other, net (263) 298 (1,181) 215
Income before
income taxes 43,790 76,939 221,825 220,260
Income taxes 17,931 31,160 91,618 92,223
Net income $ 25,859 $ 45,779 $130,207 $ 128,037
Net income per share:
- Basic $0.28 $0.48 $1.36 $1.34
- Diluted 0.27 0.47 1.34 1.32
Weighted-average shares
outstanding:
- Basic 93,928 96,124 95,825 95,836
- Diluted 95,113 97,060 97,125 96,821
See notes to financial information on page 10.
Page 7
Dow Jones & Company
Segment information
Quarters Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
(in thousands) ---- ---- ---- ----
Revenues:
Print publishing(2) $263,604 $267,170 $ 852,993 $ 820,598
Electronic
publishing(3)(7) 98,808 103,182 293,853 270,590
Community newspapers 81,213 76,275 233,500 221,305
------- ------- --------- ---------
Segment revenues 443,625 446,627 1,380,346 1,312,493
Divested/Joint Ventured
operations:
Print and television
operations (4) 4,740 15,418
------- ------- --------- ---------
Pro forma revenues 443,625 451,367 1,380,346 1,327,911
Telerate 184,959 285,902 555,122
------- ------- --------- ---------
Consolidated
revenues $443,625 $636,326 $1,666,248 $1,883,033
Operating income:
Print publishing $ 31,435 $ 48,888 $ 154,407 $ 178,174
Electronic publishing 17,731 33,012 57,389 63,374
Community newspapers(5) 968 12,743 25,190 36,467
Corporate operating
expenses (5,584) (4,997) (17,867) (14,750)
------- ------- --------- ---------
Segment operating
income 44,550 89,646 219,119 263,265
Divested/Joint Ventured
operations:
Print and television
operations (4,180) (14,831)
------- ------- --------- ---------
Pro forma operating
income 44,550 85,466 219,119 248,434
Telerate (24,472) (33,227) (47,251)
------- ------- --------- ---------
Consolidated
operating income $ 44,550 $ 60,994 $ 185,892 $ 201,183
EBITDA: (6)
Print publishing $ 43,661 $ 59,790 $ 191,718 $ 211,107
Electronic publishing 23,685 38,706 74,551 79,415
Community newspapers 21,705 16,951 54,595 48,639
Corporate operating
expenses (5,584) (4,997) (17,867) (14,750)
------- ------- --------- ---------
Segment EBITDA 83,467 110,450 302,997 324,411
Divested/Joint Ventured
operations:
Print and television
operations (3,513) (12,805)
------- ------- --------- ---------
Pro forma EBITDA 83,467 106,937 302,997 311,606
Telerate 16,154 20,671 71,312
------- ------- --------- ---------
Consolidated EBITDA $ 83,467 $123,091 $ 323,668 $ 382,918
EBITDA Margin:
Print publishing 16.6% 22.4% 22.5% 25.7%
Electronic publishing (7) 24.0% 37.5% 25.4% 29.3%
Community newspapers 26.7% 22.2% 23.4% 22.0%
All segments 18.8% 24.7% 22.0% 24.7%
See notes to financial information on page 10.
Page 8
Dow Jones & Company
Supplemental Segment Revenue Information
Quarters ended Nine Months Ended
September 30 September 30
(in thousands) 1998 1997 1998 1997
Print Publishing: (2) ---- ---- ---- ----
U.S. Publications:
Advertising $156,617 $163,138 $ 536,349 $ 510,571
Circulation and other 79,350 75,930 236,011 227,234
International
Publications:
Advertising 15,585 16,841 46,659 48,460
Circulation and other 12,052 11,261 33,974 34,333
-------- -------- ---------- ----------
Total 263,604 267,170 852,993 820,598
Electronic Publishing: (3)
Dow Jones
Newswires/Indexes 55,704 63,015 164,667 152,746
Interactive
Publishing 43,104 40,167 129,186 117,844
-------- -------- ---------- ----------
Total 98,808 103,182 293,853 270,590
Community Newspapers:
Advertising 57,400 53,313 164,563 154,989
Circulation and other 23,813 22,962 68,937 66,316
-------- -------- ---------- ----------
Total 81,213 76,275 233,500 221,305
Total segment
revenues $443,625 $446,627 $1,380,346 $1,312,493
See notes to financial information on page 10.
Page 9
Dow Jones & Company
Statistical Information
Quarters ended Nine Months Ended
Advertising Volume September 30 September 30
Year-Over-Year
Percentage Change: 1998 1997 1998 1997
---- ---- ---- ----
The Wall Street Journal
- General (10.0)% 22.6% 2.1% 20.3%
- Financial (8.4) 14.9 (2.8) 8.7
- Classified and other 8.4 8.6 9.7 12.0
- Total (6.8) 18.0 1.7 15.4
The Asian Wall Street
Journal (18.7) 10.5 (11.7) 8.9
The Wall Street Journal
Europe 14.0 4.3 12.5 6.7
Barron's (11.0) 19.0 4.8 6.7
Ottaway Newspapers
- Daily (0.5) (0.4)
- Non-daily 30.1 29.7
- Total 3.8 2.1 3.6 1.4
Wall Street Journal
advertising as a
percentage of total
Journal linage:
- General 53.8% 55.7% 56.1% 55.9%
- Financial 29.2 29.7 28.6 29.9
- Classified and other 17.0 14.6 15.3 14.2
Other Statistics: September 30 September 30
1998 1997
---- ----
Dow Jones Newswires terminals 287,000 247,000
Wall Street Journal Interactive
Edition subscribers 256,000 144,000
Dow Jones Indexes - Assets under
management $15 billion N/A
Page 10
Dow Jones & Company
Notes to Financial Information
1. The third quarter of 1998 included a restructuring charge of
$16.3 million ($9.6 million after tax) relating to a staff
reduction plan at the company's Ottaway Newspapers subsidiary.
The first quarter of 1998 included a pretax gain of $15.4 million
($10.1 million after tax) from the sales of the company's
interest in WBIS+ TV and Mediatex Communications Corp., publisher
of Texas Monthly magazine.
The first quarter of 1997 included a pretax gain of $6.2 million
($3.5 million after tax) from the sale of the company's American
Demographics subsidiary, a publisher of information products
serving the marketing industry. Earnings for the third quarter of
1997 were enhanced 11 cents per share from one-time index
licensing fees.
2. 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. 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.
3. Electronic Publishing includes the results of Dow Jones
Newswires, Dow Jones Interactive Publishing and Dow Jones
Indexes.
4. Divested/Joint Ventured print and television operations include
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).
5. Community newspapers 1998 results include a $16.3 million
restructuring charge related to a staff reduction plan.
6. EBITDA is computed as operating income excluding depreciation and
amortization and restructuring costs.
7. Electronic publishing revenue in the first nine months of 1997
included $25 million in one-time fees for licensing the Dow Jones
Averages, approximately 80% of which occurred in the third
quarter. Excluding these fees, Electronic Publishing's EBITDA
margin for the first nine months of 1997 and the third quarter of
1997 were 23.9% and 25.0%, respectively.
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