Dow Jones Reports Improved Revenue And Profit For Second Quarter 2004; Provides 3rd Quarter Outlook.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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 & Company (NYSE NYSE See: New York Stock Exchange : DJ) today reported that it earned 41 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 during the second quarter of 2004, compared with 38 cents per diluted share in the second quarter of 2003. Excluding the special items explained herein, the Company earned 41 cents per diluted share during the second quarter of 2004, up 52% over the 27 cents per diluted share earned in the second quarter of 2003. Revenue rose 11.2% in the second quarter of 2004 to $437.8 million compared to second quarter of 2003 and 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 up 5.8% over last year to $56.3 million. Excluding special items, operating income increased 61.7% and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were 12.9% in 2004, up from 8.8% in 2003. Results were driven by improved revenue, profit and margin in nearly all of the company's major businesses. Special Items: In the second quarter of 2004, the Company recorded special items which net to zero 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. as a special gain of two cents per share related to the disposition of an investment was offset by a loss of two cents per share for accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes. The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the of discount on a contract-guarantee obligation. In the second quarter of 2003, special items netted to a gain of 11 cents per share and included a gain from the settlement of a business-interruption insurance claim with respect to loss of operating income suffered as a result of the terrorist attacks on the World Trade Center on Sept. 11, 2001, net of a charge for accretion of discount on a contract-guarantee obligation. "We're we're Contraction of we are. we're we are encouraged once again by improvements in revenue and profit in each of our business segments during the quarter," said Peter R. Kann, chairman and chief executive officer of Dow Jones & Company. "Our continued focus on product quality, effective sales efforts, sensible investments, operating efficiencies and cost controls is paying off as evidenced by year over year earnings growth in each quarter since the beginning of 2003." Mr. Kann continued: "Nonetheless, we still see inconsistent trends in monthly Wall Street Journal advertising and ad levels, and results remain well below what we consider normal levels. We'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall continue to control all we can to maximize financial results in any advertising environment." Dow Jones also said that it expects earnings per share before special items in the third quarter of 2004, to be about 20 cents per share, compared with 14 cents per share in the third quarter of 2003. This assumes third-quarter 2004 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 U.S. Wall Street Journal will be up in the low single digit A single character in a numbering system. In decimal, digits are 0 through 9. In binary, digits are 0 and 1. digit - An employee of Digital Equipment Corporation. See also VAX, VMS, PDP-10, TOPS-10, DEChead, double DECkers, field circus. percentage range over the third quarter of 2003. The third quarter, including the summer months, is historically the Company's lightest quarter for advertising at The Wall Street Journal. Based on currently anticipated special items in the third quarter of 2004, the Company expects reported earnings per share to be in the upper-teens cents per share range, compared with 35 cents per share in the third quarter of 2003. Please refer to the attached table for a reconciliation of the Company's third quarter earnings before and after special items. Segment Results Print Publishing revenue increased $19.5 million, or 8.3%, in the second quarter of 2004 over the same period a year ago. Operating income rose 210% to $17.3 million and operating margin was 6.8% in the second quarter of 2004--an improvement from the prior year's operating margin of 2.4%. U.S. Wall Street Journal advertising linage increased 3.3% (up 1.1% in June June: see month. , with one extra issue) while linage at the international editions of the Journal increased 6.9% (flat in the month of June, with two extra issues in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. edition and one extra issue in the Asian edition). Barron's advertising pages increased 21.1% in the quarter (down 25.4% in June with one less issue). Electronic Publishing An umbrella term for non-paper publishing, which includes publishing online or on media such as CDs and DVDs. revenue in the second quarter of 2004 increased 20.2% and operating income rose 42.7% from the same period a year ago, driven by the acquisitions of Alternative Investor Group in March 2004 and vwd, a German business wire, in April 2004, together with improved performance in all business segments. Operating margin of 23.8% was up over the previous year's 20.1%. Terminal counts at Newswires were down 2.0% to last year, but up 0.7% on a sequential basis. Paid subscribers to The Wall Street Journal Online grew to 684,000 as of June 30, 2004, up 1.9% from the prior year period. Ottaway Community Newspapers' revenue in the second quarter of 2004 increased 10.8% from the same period a year ago to $87.8 million with operating income up 17.0% to $25.2 million. Operating margin of 28.7% was up over last year's 27.1%. Excluding the May 2003 acquisition of The Record of Stockton, same property revenue was up 6.4% and operating income was up 13.1%. Same-property advertising linage increased 5.5% in the second quarter (linage was up 4.7% in June even with one fewer Sunday Sunday: see Sabbath; week. ). The Company ended the second quarter with $215 million in debt, compared with $258 million at the end of the first quarter of 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 Investor relations The process by which the corporation communicates with its investors. 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 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 and the Ottaway group of community newspapers. Dow Jones is co-owner with Reuters Reuters British cooperative news agency. Founded in 1851 by Paul Julius Reuter, it was initially concerned with commercial news but began to serve a growing newspaper clientele after the London Morning Advertiser subscribed in 1858. Group of Factiva, with Hearst of SmartMoney and with NBC Universal NBC Universal is a media and entertainment company formed in May 2004 by the combination of General Electric's NBC with Vivendi Universal Entertainment (part of the French Media Group, Vivendi SA). GE owns 80% of NBC Universal with the remaining 20% owned by Vivendi SA. of CNBC CNBC Center for the Neural Basis of Cognition (artificial intelligence) CNBC Consumer News and Business Channel CNBC Congress of National Black Churches, Inc. television operations in Asia and Europe. Dow Jones also provides news content to CNBC and radio stations in the U.S. Information Relating To relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : 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 cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the Company's business and the strong, negative impact of economic downturns on advertising revenues, particularly in the Company's core advertising market--B2B advertising; the risk that inconsistent trends across major advertising categories, such as technology and finance, will continue; the risk that advertising levels will not return to the pre-boom, pre-bust levels that the Company considers normal levels; the Company's ability to limit and manage expense growth, especially in light of its prior cost cutting and its planned growth initiatives; the uncertainties relating to the Company's guarantee to Cantor Fitzgerald Cantor Fitzgerald L.P. is a global financial services firm specializing in bond trading, as well as investment banking, asset management, market data and brokerage services. 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 diversified (di·verˑ·s advertising, to The Wall Street Journal will not succeed; with respect to Newswires, the negative impact of consolidations and layoffs in the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. 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 and posted in the Investor Relations section of the Company's web site (www.dowjones.com). 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 GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). measures. This reconciliation is also available on the Investor Relations page of our web site (www.dowjones.com)
Dow Jones & Company
Earnings Summary
(Unaudited)
(in thousands, except
per share amounts) Quarters Ended June 30 Six Months Ended June 30
2004 2003 2004 2003
Reported results:
Revenues $437,790 $393,586 $839,411 $751,816
Operating income 56,290 53,224 90,049 70,803
Net income 34,041 30,838 51,857 97,770
Effective tax rate* 42.3% 41.8% 42.0% 22.6%
Diluted EPS $.41 $.38 $.63 $1.19
Excluding items described in Note 2:
Operating income $ 56,290 $ 34,816 $ 87,288 $ 52,395
Net income 34,019 22,217 52,158 31,938
Effective tax rate* 40.9% 40.0% 40.1% 40.0%
Diluted EPS $.41 $.27 $.63 $.39
EPS percentage change 51.9% 8.0% 61.5% 18.2%
he effective income tax rate is net of minority interests. See notes to financial information on page 10. Reconciliation of Third Quarter Earnings Outlook Quarters Ended September 30, 2004 Guidance2003 Actual Reported earnings per shareupper-teens cents$.35 per share range** Adjusted to remove: Contract guarantee(.02)(.03) Special income tax matters____________.24 EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. before special itemsabout $0.20$.14 cents per share **Based on special items currently anticipated. Condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. Consolidated Statements of Income (Unaudited) (in thousands, except per share amounts)Quarters Ended June 30Six Months Ended June 30 2004200320042003 Revenues: Advertising$255,836$223,328$482,535$413,836 Information services See Information Systems. 81,51871,060157,345142,916 Circulation and other100,43699,198199,531195,064 Total revenues437,790393,586839,411751,816 Expenses: News, production and technology130,052120,080252,609235,375 Selling, administrative and general148,779134,773294,014263,795 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 28,94727,46256,57850,533 Print delivery costs47,02448,71994,86994,625 Depreciation and amortization26,69827,73654,05355,093 Restructuring charges 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. and September 11 related items, net(18,408)(2,761)(18,408) Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 381,500340,362749,362681,013 Operating income56,29053,22490,04970,803 Other income (deductions): Investment income165179256253 Interest expense(800)(745)(1,448)(1,198) Equity in earnings of associated companies associated company associate n → Partnerfirma f associated company n → società collegata 2,1392,1711,399322 Gain on disposition of investment3,2603,260 Gain on resolution of Telerate sale loss contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. 59,821 Contract guarantee(1,819)(2,459)(3,804)(5,069) Other, net(499)212(1,265)651 Income before income taxes and minority interests58,73652,58288,447125,583 Income taxes25,00422,13937,48528,620 Income before minority interests33,73230,44350,96296,963 Minority interests309395895807 Net income$34,041$30,838$51,857$97,770 Net income per share: - Basic$.42$.38$.63$1.20 - Diluted.41.38.631.19 Weighted-average shares outstanding: - Basic81,79981,38281,77981,595 - Diluted82,21181,67482,21181,860 See notes to financial information on page 10. Dow Jones & Company Segment Information (Unaudited) (dollars in thousands)Quarters EndedSix Months Ended June 30June 30 2004200320042003 Revenues: Print publishing$253,761$234,285$491,336$448,709 Electronic publishing96,21480,012182,583159,199 Community newspapers: Comparable operations81,11876,256149,531140,875 Newly-acquired operations6,6973,03315,9613,033 Consolidated revenues$437,790$393,586$839,411$751,816 Percentage change in revenues excluding newly-acquired operations7.6%(6.2)%8.3%(5.6)% Operating income: Print publishing$17,289$5,578$21,913$893 Electronic publishing22,94716,08341,46032,914 Community newspapers: Comparable operations23,34020,64338,33533,224 Newly-acquired operations1,8218573,798857 Corporate(9,107)(8,345)(18,218)(15,493) Segment operating income56,29034,81687,28852,395 Restructuring charges and September 11 related items, net18,4082,76118,408 Consolidated operating income$56,290$53,224$90,049$70,803 Operating margin: Print publishing6.8%2.4%4.5%0.2% Electronic publishing23.820.122.720.7 Community newspapers: Comparable operations28.827.125.623.6 Newly-acquired operations27.228.323.828.3 Segment operating margin 12.98.810.47.0 Depreciation and amortization (D&A): Print publishing$16,866$17,708$34,542$35,388 Electronic publishing6,9506,78813,61013,578 Community newspapers: Comparable operations2,5483,0345,0325,792 Newly-acquired operations2917578675 Corporate4313183260 Consolidated D&A$26,698$27,736$54,053$55,093 See notes to financial information on page 10. Dow Jones & Company Supplemental Segment Revenue Information (Unaudited) (in thousands)Quarters Ended June 30Six Months Ended June 30 2004200320042003 Print Publishing: U.S. Publications: Advertising$165,535$147,098$316,717$276,955 Circulation and other66,10467,322132,057133,712 International Publications: Advertising13,99611,14125,91621,134 Circulation and other 8,1268,72416,64616,908 Total253,761234,285491,336448,709 Electronic Publishing: Dow Jones Newswires: Domestic48,94541,86793,34885,232 International14,61610,64025,41321,251 Total Newswires(*)63,56152,507118,761106,483 Consumer Electronic Publishing(**)19,89317,58238,06232,953 Dow Jones Indexes/ Ventures12,7609,92325,76019,763 Total96,21480,012182,583159,199 Community Newspapers: Advertising Comparable operations60,57755,884109,668101,575 Newly-acquired operations5,7402,61613,5172,616 Total advertising66,31758,500123,185104,191 Circulation and other Comparable operations20,54120,37239,86339,300 Newly-acquired operations9574172,444417 Total circulation and other21,49820,78942,30739,717 Total87,81579,289165,492143,908 Total segment revenues$437,790$393,586$839,411$751,816 (*) The increase in Dow Jones Newswires revenue in the second quarter of 2004 was largely due to acquisitions. (**) Includes WSJ WSJ Wall Street Journal WSJ Wisconsin State Journal (Madison, WI) WSJ Web Services Journal WSJ Winston-Salem Journal (North Carolina) WSJ Wagle Street Journal (Kathmandu, Nepal blog) .com, related vertical sites, licensing/business development and radio/audio. See notes to financial information on page 10. Dow Jones & Company Statistical Information (Unaudited) Quarters EndedSix Months Ended June 30June 30 2004200320042003 Advertising Volume Year-Over-Year Percentage Change: The Wall Street Journal General15.2%(15.4)%3.9%(7.4)% Technology(27.9)(3.2)(16.3)(15.7) Financial5.3(14.5)24.5(26.9) Classified10.511.19.213.1 Total3.3(7.9)4.7(9.4) The Asian Wall Street Journal5.0(4.9)6.3(0.3) The Wall Street Journal Europe8.64.910.912.6 Barron's21.1(22.9)21.5(20.4) Ottaway Newspapers (*) Daily3.8(2.9)3.2(1.8) Non-daily13.20.313.21.5 Total5.5(2.4)4.9(1.3) Wall Street Journal advertising as a percentage of total Journal linage: General44.0%39.4%40.9%41.2% Technology14.821.215.319.2 Financial17.617.320.016.8 Classified23.622.123.822.8 Other statistics:June 30June 30 20042003 Dow Jones Newswires terminals291,000297,000 WSJ.com subscribers684,000671,000 WSJ.com unique visitors/business day143,000127,000 Average monthly unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. to the Journal Network (**)4,172,000n/a Average monthly page views to the Journal Network (**)66,438,000n/a (*) Percentage excludes divested/newly-acquired operations. (**) Beginning in the second quarter of 2004, page views and unique visitors statistics for the Journal Network have been calculated using a new measurement technology. Prior year figures are not available on a comparable basis. The Journal Network consists of WSJ.com and related vertical sites. Dow Jones & Company Notes to Financial Information *T 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 The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting 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 second quarter and the six months ended June 30, 2004 and 2003.
Quarters Ended June 30
(in millions, except 2004 2003
per share amounts) Operating Net EPS Operating Net EPS
Reported income $56.3 $34.0 $.41 $53.2 $30.8 $.38
Adjusted to remove:
Included in operating income:
Gain from business interruption
insurance claim (a) 18.4 11.1 .14
Included in non-operating income:
Contract guarantee (b) (1.8) (.02) (2.5) (.03)
Gain on disposition of
investment (c) 1.8 .02
Adjusted $56.3 $34.0 $.41 $34.8 $22.2 $.27
Six Months Ended June 30
(in millions, except 2004 2003
per share amounts) Operating Net EPS Operating Net EPS
Reported $90.0 $51.9 $.63 $70.8 $97.8 $1.19
Adjusted to remove:
Included in operating income:
Reversal of lease obligation
reserve - WFC (a) 2.8 1.7 .02
Gain from business interruption
insurance claim (a) 18.4 11.1 .14
Included in non-operating income:
Contract guarantee (b) (3.8) (.04) (5.1) (.06)
Gain on disposition of
investment (c) 1.8 .02
Gain on resolution of Telerate sale
loss contingencies (d) 59.8 .73
Adjusted $87.3* $52.2 $.63 $52.4 $31.9* $ .39*
* The sum of the individual amounts does not equal the total due to
rounding.
(a) Restructuring charges and September 11 related items, net: Reversal of lease obligation reserve - World Financial Center (WFC WFC Wi-Fi Connection (Nintendo gaming service) WFC Wide-Field Camera WFC World Financial Center (New York) WFC Workforce Center WFC World Federation of Chiropractic WFC World Food Council ): 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 decided to extend the term of its lease for one of the floors that was previously abandoned. The Company will re-occupy this floor with personnel from another New York location, whose lease term was expiring 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. . 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. Gain from business interruption insurance Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril claim 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. (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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or of certain minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC (1) (Mobile Daughter Card) See riser card. (2) See Meta Data Coalition. ). The annual minimum payments average approximately $50 million per year through October 2006 under certain conditions. Bridge agreed to indemnify To compensate for loss or damage; to provide security for financial reimbursement to an individual in case of a specified loss incurred by the person. Insurance companies indemnify their policyholders against damage caused by such things as fire, theft, and flooding, which 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 The ability of an individual to pay his or her debts as they mature in the normal and ordinary course of business, or the financial condition of owning property of sufficient value to discharge all of one's debts. solvency n. 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 bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most 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 An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called 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. Earnings in 2004 and 2003 have included charges related to the accretion of the discount on the reserve balance. These charges totaled $1.8 million and $2.5 million in the second quarters of 2004 and 2003, respectively. For the first six months of 2004 and 2003, charges related to the accretion of discount totaled $3.8 million and $5.1 million, respectively. (c) Gain on disposition of investment: On April 2, 2004, simultaneous with the Company's acquisition of the remaining interest in the news operations of Vereinigte Wirtschaftsdienste GmbH ("VWD"), VWD sold its non-news assets to a third party, resulting in cash proceeds to Dow Jones of $6.7 million. Dow Jones was a minority shareholder in VWD. As a result of this sale, the Company recorded an after-tax gain of $1.8 million, or $.02 cents per diluted share, in the second quarter of 2004. (d) Gain on resolution of Telerate sale loss contingencies: In the first quarter of 2003, the Company recorded a gain of $59.8 million ($.73 per diluted share) on the resolution of certain loss contingencies resulting from the sale of its former Telerate subsidiary to Bridge Information Systems (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 Indemnification Used in insurance policy agreements as to compensation for damage or loss. In the context of corporate governance, Director Indemnification uses the bylaws and/or charter to indemnify officers and directors from certain legal expenses and judgements resulting from 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 bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. , and the Company's contingent liabilities Contingent Liability 1. The possibility of an obligation to pay certain sums dependent on future events. 2. Defined obligations by a company that must be met, but the probability of payment is minimal. Notes: 1. were thereby extinguished ex·tin·guish tr.v. ex·tin·guished, ex·tin·guish·ing, ex·tin·guish·es 1. To put out (a fire, for example); quench. 2. To put an end to (hopes, for example); destroy. See Synonyms at abolish. 3. . 3. The Company made the following acquisitions during the first half of 2004 and 2003. Acquisition of Remaining Interest in VWD news operations in 2004 On April 2, 2004, the Company acquired the remaining interest in the news operations of Vereinigte Wirtschaftsdienste GmbH ("VWD"), a German newswires business, for $12.1 million. The acquired business consists of financial newswires and business newsletters, which have been combined into the Company's Dow Jones Newswires business, under the brand name Dow (Direct OverWrite) See magneto-optic disk. Jones-VWD News. Dow Jones was a minority shareholder in VWD. Acquisition of Alternative Investor in 2004 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 has been combined into the Company's Dow Jones Newswires business. Acquisition of The Record of Stockton, California Stockton is a city in California and the seat of San Joaquin County (the 5th largest agricultural county in the United States). According to 2007 estimates by the California Department of Finance, Stockton has a population of 289,789 (689,689 MSA) and is the 13th largest city in in 2003 On May 5, 2003, the Company's Ottaway Newspaper subsidiary acquired The Record of Stockton, California from Omaha World-Herald The Omaha World-Herald, based in Omaha, Nebraska, is the primary daily newspaper of Nebraska as well as portions of southwest Iowa. It is the largest employee-owned newspaper company in the United States. History The newspaper was founded in 1885 by Gilbert M. Company for $144 million in cash, plus net working capital. The Record has daily paid circulation of 59,271 and Sunday circulation of 72,698. 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, the reversal of the lease obligation reserve in 2004 and the gain from insurance claim in 2003 allocable al·lo·ca·ble adj. Capable of being allocated. Adj. 1. allocable - capable of being distributed allocatable, apportionable distributive - serving to distribute or allot or disperse to each segment for the quarters and six months ended June 30, 2004 and 2003 were as follows:
(in thousands) Quarters Ended June 30 Six Months Ended June 30
2004 2003 2004 2003
Print Publishing $17,422 $2,631 $17,422
Electronic Publishing 951 125 951
Community newspapers
Corporate 35 5 35
Total income - $18,408 $2,761 $18,408
5. The Company's business and financial news and information operations Actions taken to affect adversary information and information systems while defending one's own information and information systems. Also called IO. See also defensive information operations; information; offensive information operations; operation. 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 Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. 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 is as follows (amounts are at
100% levels):
(in thousands) Quarters Ended June 30 Six Months Ended June 30
2004 2003 2004 2003
Factiva
Revenues $66,637 $61,804 $130,171 $123,957
Operating income 8,709 2,608 12,969 4,892
Depreciation and
amortization 3,340 3,213 6,442 6,415
SmartMoney
Revenues $12,904 $12,251 $25,074 $ 24,344
Operating loss (88) (1,116) (586) (1,028)
Depreciation and
amortization 211 455 422 895
CNBC International (*)
Revenues $11,629 $ 9,851 $20,486 $ 18,152
Operating loss (6,429) (5,295) (14,995) (12,926)
Depreciation and
amortization 785 968 1,741 1,966
(*) Includes the results of CNBC Europe and CNBC Asia.
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