Dow Jones Reports Improved Revenue and Profit for Third Quarter 2003; Provides 4th Quarter Outlook.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 14, 2003 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) reported today that it earned 11 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 third quarter ended September September: see month. 30, 2003, compared with 3 cents per diluted share in the third quarter of 2002. Excluding the special items explained herein, the Company earned 14 cents per diluted share during the third quarter 2003, an increase of 133% from the 6 cents per diluted share earned in the third quarter 2002. A special charge of 3 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. was recorded in the third quarter of both 2002 and 2003 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 the discount for contract guarantee obligations. Please refer to the attached financial exhibits and notes for more details on the Company's results. Revenue increased 6.7% in the third quarter of 2003 to $375.9 million, led by a 7.1% increase in U.S. Wall Street Journal 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. , compared with the third quarter of 2002. Third quarter linage at the Journal was driven by a 29.4% increase in September. 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. were $359.1 million, up 4.3% from the third quarter of 2002, 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 $16.8 million (4.5% of revenue), up 111% over last year's $8.0 million (2.3% of revenue). Commenting on the quarter's results, Peter R. Kann, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Dow Jones & Company, said: "We are very pleased with the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. in Wall Street Journal ad linage in September. Together with continued tight cost control and many operational improvements successfully executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. as part of our strategic plan, Business Now, drove our much-improved financial performance in the third quarter. While we're we're Contraction of we are. we're we are not ready to call an end to this severe B2B (Business to Business) Refers to one business communicating with or selling to another. See B2B e-commerce, B2C and B2G. B2B - business to business ad recession, we are cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op that the worst is now behind us. In any event, we will continue to do all we can to further improve the quality of our products and to maximize In a graphical environment, to enlarge a window to the full size of the screen. See Win Maximize windows. our revenue growth, operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and profitability in any environment." Dow Jones also said that it expects earnings per share before special items in the fourth quarter 2003 to be around the 40 cents per share range, compared to 34 cents per share in the fourth quarter 2002. This assumes that fourth quarter 2003 linage at the U.S. Wall Street Journal will be up in the low to mid 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 versus the fourth quarter 2002. Based on currently anticipated special items that may occur in the fourth quarter 2003, the Company expects reported earnings per share to be around the 50 cents per share range, compared with 18 cents per share in the fourth quarter 2002. Please refer to the attached table for a reconciliation of the Company's fourth quarter earnings. Segment Results Print publishing revenues increased 4.0% in the third quarter to $213.6 million. Advertising linage at The Wall Street Journal (U.S.) increased 7.1% (up 29.4% in September, with one extra issue) while linage at the international editions of the Journal increased 26.3% (up 44.1% in September, with one extra issue in both the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. and Asian editions). Barron's ad pages were down 8.9% in the quarter with one less issue (up 4.1% in September). The print publishing segment had an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $11.5 million in the third quarter, seasonally its weakest quarter, an improvement of 36.2% compared to a loss of $18.0 million last year. Electronic publishing An umbrella term for non-paper publishing, which includes publishing online or on media such as CDs and DVDs. revenues in the third quarter were $79.4 million, up 5.6% from the prior year period. Operating income was $17.1 million, up 25.9% from last year, while operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: improved to 21.5% this year from 18.1% last year, driven by improved performance at Consumer Electronic Publishing and Indexes/Ventures. Paid subscribers to The Wall Street Journal Online, the largest paid subscription news site on the web, grew to 686,000 as of September 30, 2003, up 3.3% over September 30, 2002. Ottaway community newspapers' revenue in the third quarter was $83.0 million, up 15.5% over the prior year period (revenues would have been flat excluding the May 2003 acquisition of The Record of Stockton Stockton, city (1990 pop. 210,943), seat of San Joaquin co., central Calif., on the San Joaquin River; inc. 1850. One of the fastest-growing U.S. cities during the late 20th cent., Stockton is an inland seaport located at the head of the San Joaquin delta. ). Same property advertising linage decreased 1.7% in the third quarter (linage was down 6.1% in September with one less Sunday Sunday: see Sabbath; week. ). Ottaway total operating income was up 5.9% to $21.8 million in the third quarter with an operating margin of 26.2% compared to 28.6% last year, primarily because of increased 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 and pension costs. The Company ended the third quarter with $193.6 million in debt, compared with $210.3 million at the end of the second quarter 2003. As previously announced, the Company will host an earnings conference call at 10:00 a.m. Eastern standard time today. The call can be accessed via a live webcast 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 201-689-8320. A replay of the conference call and the full text of the prepared remarks will be available on the Company's Web site in the Investor Relations section shortly after the call concludes. Dow Jones & Company (NYSE: DJ; dowjones.com) publishes The Wall Street Journal and its international and online editions, Barron's and the Far Eastern Economic Review, Dow Jones Newswires Dow Jones 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 Factiva is a division of Dow Jones & Company. The unit provides business and research information and services for the business and education communities. Factiva products provide access to more than 10,000 sources (such as newspapers, journals, magazines, news and radio , with Hearst of 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. and with NBC NBC in full National Broadcasting Co. Major U.S. commercial broadcasting company. It was formed in 1926 by RCA Corp., General Electric Co. (GE), and Westinghouse and was the first U.S. company to operate a broadcast network. 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 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). . 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 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 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. This presentation 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 at www.dowjones.com.
Dow Jones & Company
Earnings Summary 5
(Unaudited)
(in thousands, except
per share amounts) Quarters Ended Nine Months Ended
September 30 September 30
------------------- -----------------------
2003 2002 2003 2002
---- ---- ---- ----
Reported results:
Revenues $375,946 $352,409 $1,127,762 $1,162,324
Operating income 16,816 7,964 87,619 44,227
Net income 9,076 2,446 106,846 186,271
Effective tax rate* 43.6% 59.3% 25.0% 21.7%
Diluted EPS $.11 $.03 $1.31 $2.21
Excluding items described in Note 2:
Operating income $ 16,816 $ 7,964 $ 69,211 $ 55,325
Net income 11,382 5,347 43,320 33,633
Effective tax rate* 38.2% 40.0% 39.5% 40.0%
Diluted EPS $.14 $.06 $.53 $.40
EPS percentage change 133.3% (70.0)% 32.5% (55.6)%
* The effective income tax rate is net of minority interests.
See notes to financial information on page 10.
Reconciliation of Fourth Quarter Earnings Outlook
Quarters Ended December 31
2003 Guidance 2002 Actual
------------- -----------
Reported earnings per share around $.50 .18
per share range**
Adjusted to remove:
Potential gain on exchange of WSJ Europe
and Handelsblatt interests .14
Restructuring charges (.11)
Insurance gain on WFC damaged assets .02
Restructuring charges included in equity
investment results (.04)
Contract guarantee (.03) (.03)
------------ ----------
EPS before special items around $.40 $.34
per share range
**Based on special items currently anticipated.
Dow Jones & Company
Condensed Consolidated Statements of Income 6
(Unaudited)
(in thousands, except
per share amounts) Quarters Ended Nine Months Ended
September 30 September 30
-------------------- --------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Advertising $208,897 $185,308 $622,733 $650,177
Information services 71,278 69,132 214,194 211,488
Circulation and other 95,771 97,969 290,835 300,659
-------- -------- --------- ---------
Total revenues 375,946 352,409 1,127,762 1,162,324
-------- -------- --------- ---------
Expenses:
News, operations and
development 122,487 121,695 357,862 373,385
Selling, administrative
and general 137,143 122,752 400,938 428,630
Newsprint 26,438 24,283 76,971 77,699
Print delivery costs 46,904 47,572 141,529 142,715
Depreciation and
amortization 26,158 28,143 81,251 84,570
Restructuring charges
and September 11
related items, net (18,408) 11,098
-------- -------- --------- ---------
Operating expenses 359,130 344,445 1,040,143 1,118,097
-------- -------- --------- ---------
Operating income 16,816 7,964 87,619 44,227
Other income (deductions):
Investment income 558 106 811 302
Interest expense (664) (493) (1,862) (2,574)
Equity in (losses)
earnings of associated
companies (16) (674) 306 (17)
Gain on resolution of
Telerate sale loss
contingencies 59,821
Gain on sale of businesses 197,925
Contract guarantee (2,306) (2,901) (7,375) (9,120)
Other, net 1,258 (303) 1,909 147
-------- -------- --------- ---------
Income before
income taxes and
minority interests 15,646 3,699 141,229 230,890
Income taxes 7,022 3,565 35,642 51,758
-------- -------- --------- ---------
Income before minority
interests 8,624 134 105,587 179,132
Minority interests 452 2,312 1,259 7,139
Net income $ 9,076 $ 2,446 $ 106,846 $ 186,271
======== ======== ========= =========
Net income per share:
- Basic $ .11 $ .03 $ 1.31 $ 2.22
- Diluted .11 .03 1.31 2.21
Weighted-average
shares outstanding:
- Basic 81,507 83,450 81,568 83,933
- Diluted 81,865 83,768 81,864 84,379
See notes to financial information on page 10.
Dow Jones & Company
Segment Information 7
(Unaudited)
(dollars in thousands)
Quarters Ended Nine Months Ended
September 30 September 30
------------------ -----------------------
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Print publishing $213,586 $205,342 $ 662,295 $ 702,647
Electronic publishing 79,352 75,173 238,551 231,586
Community newspapers:
Comparable operations 72,526 71,894 208,302 205,917
Divested/newly-acquired
operations 10,482 18,614 22,174
--------- --------- ----------- -----------
Consolidated revenues $375,946 $352,409 $1,127,762 $1,162,324
========= ========= =========== ===========
Percentage change in
revenues excluding
divested/newly-acquired
operations 3.7% (7.0)% (2.7)% (11.3)%
Operating income:
Print publishing $(11,491) $(18,005) $ (10,598) $ (21,615)
Electronic publishing 17,098 13,580 50,012 43,971
Community newspapers:
Comparable operations 19,364 20,554 51,747 54,590
Divested/newly-acquired
operations 2,402 4,100 5,255
Corporate (10,557) (8,165) (26,050) (26,876)
--------- --------- ----------- -----------
Segment operating income 16,816 7,964 69,211 55,325
Restructuring charges and
September 11 related
items, net 18,408 (11,098)
--------- --------- ----------- -----------
Consolidated operating
income $ 16,816 $ 7,964 $ 87,619 $ 44,227
========= ========= =========== ===========
Operating margin:
Print publishing (5.4)% (8.8)% (1.6)% (3.1)%
Electronic publishing 21.5 18.1 21.0 19.0
Community newspapers:
Comparable operations 26.7 28.6 24.8 26.5
Divested/newly-acquired
operations 22.9 22.0 23.7
Segment operating margin 4.5 2.3 6.1 4.8
Depreciation and
amortization (D&A):
Print publishing $ 16,312 $ 18,818 $ 51,700 $ 55,058
Electronic publishing 6,543 6,363 20,121 19,794
Community newspapers:
Comparable operations 2,502 2,722 7,843 8,318
Divested/newly-acquired
operations 630 1,156 681
Corporate 171 240 431 719
--------- --------- ----------- -----------
Consolidated D&A $ 26,158 $ 28,143 $ 81,251 $ 84,570
========= ========= =========== ===========
See notes to financial information on page 10.
Dow Jones & Company 8
Supplemental Segment Revenue Information
(Unaudited)
(in thousands) Quarters Ended Nine Months Ended
September 30 September 30
----------------- ------------------
2003 2002 2003 2002
---- ---- ---- ----
Print Publishing:
U.S. Publications:
Advertising $129,790 $119,322 $ 406,745 $ 435,040
Circulation and
other 63,562 67,505 197,274 203,194
International
Publications:
Advertising 12,138 10,020 33,272 37,467
Circulation and other 8,096 8,495 25,004 26,946
------- -------- ---------- ----------
Total 213,586 205,342 662,295 702,647
Electronic Publishing:
Dow Jones Newswires:
Domestic 42,739 43,676 127,971 134,323
International 10,920 10,635 32,171 33,670
------- -------- ---------- ----------
Total Newswires 53,659 54,311 160,142 167,993
Consumer Electronic
Publishing(a) 16,254 13,179 49,207 40,375
Dow Jones
Indexes/Ventures 9,439 7,683 29,202 23,218
------- -------- ---------- ----------
Total 79,352 75,173 238,551 231,586
Community Newspapers:
Advertising
Comparable operations 51,869 51,352 149,247 146,844
Divested/newly-
acquired operations 8,879 15,692 15,707
------- -------- ---------- ----------
Total advertising 60,748 51,352 164,939 162,551
Circulation and other
Comparable operations 20,657 20,542 59,055 59,073
Divested/newly-
acquired operations 1,603 2,922 6,467
------- -------- ---------- ----------
Total circulation
and other 22,260 20,542 61,977 65,540
Total 83,008 71,894 226,916 228,091
------- -------- ---------- ----------
Total segment
revenues $375,946 $352,409 $1,127,762 $1,162,324
======== ======== ========== ==========
(*) Includes WSJ.com, related vertical sites, licensing/business
development and radio/audio.
See notes to financial information on page 10.
Dow Jones & Company 9
Statistical Information
(Unaudited)
Quarters Nine Months
Ended Ended
September 30 September 30
------------ --------------
2003 2002 2003 2002
---- ---- ---- ----
Advertising Volume
Year-Over-Year Percentage Change:
The Wall Street Journal
General 12.5% (13.6)% (1.8)% (11.7)%
Technology 12.0 (10.5) (7.8) (30.6)
Financial (12.8) (17.8) (23.0) (31.5)
Classified 10.5 (4.1) 12.3 (9.7)
Total 7.1 (12.0) (4.7) (20.5)
The Asian Wall Street Journal 29.0 (2.9) 8.7 (32.6)
The Wall Street Journal Europe 23.6 (10.0) 16.2 (31.4)
Barron's (8.9) 3.3 (16.7) (13.0)
Ottaway Newspapers (a)
Daily (2.5) (2.6) (2.0) (3.0)
Non-daily 2.4 (6.6) 1.8 (3.6)
Total (1.7) (3.3) (1.4) (3.1)
Wall Street Journal advertising as a
percentage of total Journal linage:
General 40.7% 38.7% 41.0% 39.8%
Technology 21.1 20.2 19.8 20.5
Financial 15.7 19.3 16.5 20.4
Classified 22.5 21.8 22.7 19.3
Other statistics: September 30 September 30
2003 2002
---- ----
Dow Jones Newswires terminals 289,000 324,000
WSJ.com subscribers 686,000 664,000
WSJ.com unique visitors/business day 123,371 121,036
Average monthly unique visitors to the
Journal Network 5,401,000 5,035,000
Average monthly page views to the
Journal Network 64,586,000 60,320,000
(a) Percentage excludes divested/newly-acquired operations.
Dow Jones & Company 10
Notes to Financial Information
1. The company's calculation of net income, operating income and
earnings per share before 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 before 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 third quarter and the nine months ended
September 30, 2003 and 2002.
Quarters Ended September 30
(in millions, except 2003 2002
per share amounts) Operating Net EPS Operating Net EPS
---------------------- -----------------------
Reported income $16.8 $ 9.1 $ .11 $8.0 $ 2.4 $ .03
Adjusted to remove:
Included in non-operating
income:
Contract guarantee(a) (2.3) (.03) (2.9) (.03)
----- ----- ----- ---- ------ -----
Adjusted $16.8 $11.4 $ .14 $8.0 $ 5.3 $ .06
===== ===== ===== ==== ======= =====
Nine Months Ended September 30
(in millions, except 2003 2002
per share amounts) Operating Net EPS Operating Net EPS
---------------------- -----------------------
Reported $87.6 $106.8 $1.31 $ 44.2 $186.3 $2.21
Adjusted to remove:
Included in operating
income:
Restructuring
charges(b) (11.1) (6.3) (.07)
Gain from business
interruption insurance
claim (b) 18.4 11.1 .14
Included in non-operating
income:
Contract guarantee (a) (7.4) (.09) (9.1) (.11)
Gain on resolution of
Telerate sale loss
contingencies(c) 59.8 .73
Sale of ONI
properties (d) 164.1 1.94
CNBC International
gain (e) 3.9 .05
---- ---- ----- ------ ------- ------
Adjusted $69.2 $43.3 $ .53 $ 55.3 $ 33.6* $ .40
(a) The sum of the individual amounts does not equal the total due to
rounding.
Dow Jones & Company 11
Notes to Financial Information
(a) Contract guarantee:
Under the terms of the company's 1998 sale of Telerate to Bridge,
Dow Jones retained its guarantee of payments under certain
circumstances of certain minimum payments for data acquired by
Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data
Corporation (MDC). The annual minimum payments average approximately
$50 million per year through October 2006 under certain conditions.
Bridge agreed to indemnify Dow Jones for any liability Dow Jones
incurred under the contract guarantee with respect to periods
subsequent to Bridge's purchase of Telerate. In 2000, based in part on
uncertainty with Bridge's solvency as well as other factors, the
company established a reserve of $255 million representing the net
present value of the total estimated payments from 2001 through
October 2006, using a discount rate of 6%.
Earnings in 2003 and 2002 have included charges related to the
accretion of the discount on the reserve balance. These charges
totaled $2.3 million and $2.9 million in the third quarters of 2003
and 2002, respectively. For the first nine months of 2003 and 2002,
charges related to the accretion of discount totaled $7.4 million and
$9.1 million, respectively.
Bridge filed for bankruptcy in February 2001 but made payments for
this data for the post-petition periods through October 2001, when
Telerate ceased operations, went out of business, sold certain assets
and rejected its contracts with Cantor and MDC. The company is now in
litigation with Cantor and MDC with respect to their claims for
amounts due under the contract guarantee. The company has various
substantial defenses to these claims and the litigation is proceeding.
The trial court rendered a decision in January 2003 denying the
parties' respective motions to grant their own claims and to dismiss
the competing claims. The company, Cantor and MDC have all filed
appeals from the trial court's order. While these appeals are pending,
the discovery phase is proceeding.
While it is not possible to predict with certainty the ultimate
outcome of this litigation, the company believes the likelihood of a
loss exceeding the amount reserved is remote; however, it is possible
that such loss could be less than the amount reserved.
(b) Restructuring charges and September 11 related items, net:
In the second quarter of 2003, the company recorded a gain of
$18.4 million ($11.1 million after taxes, or $.14 per diluted share)
reflecting the settlement of its business interruption insurance claim
for loss of operating income suffered as a result of the terrorist
attacks on the World Trade Center on September 11, 2001.
The second quarter of 2002 included restructuring charges of $11.1
million ($6.3 million after taxes, or $.07 per diluted share) largely
reflecting employee severance related to a workforce reduction.
(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 Information Systems, Inc. (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.
Dow Jones & Company 12
Notes to Financial Information
(d) Gains on sale of ONI properties:
The second quarter of 2002 included a gain of $44.5 million ($38
million after taxes, or $.45 per diluted share) from the sale of
Ottaway's Essex County newspaper properties to Eagle-Tribune
Publishing Company. The first quarter of 2002 included a gain of
$153.4 million ($126.1 million after taxes, or $1.49 per diluted
share) resulting from the sale of four of the company's Ottaway
newspapers to Community Newspapers Holdings, Inc.
(e) Gains in equity in losses of associated companies:
The second quarter of 2002 included gains at CNBC Asia of $3.9
million ($.05 per diluted share) which consisted of a $2.5 million
gain from the favorable settlement of a contractual obligation and a
$1.4 million gain from the sale of an investment by CNBC Asia.
3. On May 5, 2003, the company's Ottaway Newspaper subsidiary
acquired The Record of Stockton, California from Omaha World-Herald
Company for $144 million in cash, plus net working capital. The Record
has daily paid circulation of 59,271 and Sunday circulation of 72,698.
The Record Group reported 2002 revenues of $37 million and operating
profits of $9.6 million.
4. Restructuring charges and September 11 related items, net are
not included in segment expenses, as management evaluates segment
results exclusive of these items. For information purposes,
restructuring charges and September 11 related items, net allocable to
each segment for the nine months ended September 30, 2003 and 2002
were as follows:
(in thousands) Nine Months Ended
September 30
-----------------
2003 2002
---- ----
Print Publishing $(17,422) $ 8,310
Electronic Publishing (951) 2,443
Corporate (35) 345
-------- -------
Total (gain)/charges from restructuring
and September 11 related items, net $(18,408) $11,098
======== =======
5. The company's business and financial news and information
operations are reported in two segments: print publishing and
electronic publishing. The results of the company's Ottaway Newspapers
subsidiary, which publishes 15 daily newspapers and over 30 weeklies
and shoppers in 9 states in the U.S., are reported in the community
newspaper segment. Print publishing includes the global operations of
The Wall Street Journal and its international editions, as well as
Barron's and U.S. television operations (results of the company's
international television ventures are included in equity in earnings
of associated companies). Electronic publishing includes the
operations of Dow Jones Newswires, Consumer Electronic Publishing and
Dow Jones Indexes/Ventures.
Dow Jones & Company 13
Notes to Financial Information
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 Nine Months Ended
September 30 September 30
--------------- -------------------
2003 2002 2003 2002
---- ---- ---- ----
Factiva
Revenues $59,162 $62,327 $183,119 $187,473
Operating income 3,045 6,590 7,937 14,027
Depreciation and amortization 2,942 2,314 9,357 9,530
SmartMoney
Revenues $12,056 $11,016 $ 36,400 $ 34,088
Operating loss (1,227) (2,070) (2,255) (6,859)
Depreciation and amortization 208 408 1,103 1,362
CNBC International (a)
Revenues $ 9,432 $ 9,760 $ 27,584 $ 27,503
Operating loss (4,698) (6,772) (17,624) (20,360)
Depreciation and amortization 931 1,085 2,897 3,210
(a) Includes the results of CNBC Europe and CNBC Asia.
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