UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 1-7564
DOW JONES & COMPANY, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE |
13-5034940 | |
| (State or other jurisdiction of |
(I.R.S. Employer | |
| incorporation or organization) |
Identification No.) |
| 200 LIBERTY STREET, NEW YORK, NEW YORK |
10281 | |
| (Address of principal executive offices) |
(Zip Code) |
(212) 416-2000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares outstanding of each of the issuer’s classes of common stock on March 31, 2003: 60,603,844 shares of Common Stock and 20,770,483 shares of Class B Common Stock.
DOW JONES & COMPANY, INC.
| PAGE | ||||
| PART I. Financial Information |
||||
| Item 1. |
Financial Statements (unaudited) |
|||
| Consolidated Statements of Income—For the three months ended March 31, 2003 and 2002 |
3 | |||
| Consolidated Statement of Cash Flows—For the three months ended March 31, 2003 and 2002 |
4 | |||
| Consolidated Balance Sheets—March 31, 2003 and December 31, 2002 |
5 | |||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 | ||
| Item 3. |
20 | |||
| Item 4. |
20 | |||
| PART II. Other Information |
||||
| Item 1. |
21 | |||
| Item 4. |
22 | |||
| Item 6. |
22 | |||
2
I. FINANCIAL INFORMATION
Item 1: Financial Statements
CONSOLIDATED STATEMENTS OF INCOME
Dow Jones and Company, Inc.
For the three months ended March 31, 2003 and 2002
(unaudited)
| Three Months Ended March 31 |
||||||||
| 2003 |
2002 |
|||||||
| (in thousands, except per share amounts) |
||||||||
| Revenues: |
||||||||
| Advertising |
$ |
190,508 |
|
$ |
219,868 |
| ||
| Information services |
|
71,856 |
|
|
71,631 |
| ||
| Circulation and other |
|
95,866 |
|
|
101,392 |
| ||
| Total revenues |
|
358,230 |
|
|
392,891 |
| ||
| Expenses: |
||||||||
| News, operations and development |
|
115,295 |
|
|
127,032 |
| ||
| Selling, administrative and general |
|
129,022 |
|
|
152,126 |
| ||
| Newsprint |
|
23,071 |
|
|
26,778 |
| ||
| Print delivery costs |
|
45,906 |
|
|
47,252 |
| ||
| Depreciation and amortization |
|
27,357 |
|
|
27,397 |
| ||
| Operating expenses |
|
340,651 |
|
|
380,585 |
| ||
| Operating income |
|
17,579 |
|
|
12,306 |
| ||
| Other income (deductions): |
||||||||
| Investment income |
|
74 |
|
|
90 |
| ||
| Interest expense |
|
(453 |
) |
|
(1,589 |
) | ||
| Equity in losses of associated companies |
|
(1,849 |
) |
|
(2,450 |
) | ||
| Gain on resolution of Telerate sale loss contingencies |
|
59,821 |
|
|||||
| Gain on sale of businesses |
|
153,407 |
| |||||
| Contract guarantee |
|
(2,610 |
) |
|
(3,178 |
) | ||
| Other, net |
|
439 |
|
|
755 |
| ||
| Income before income taxes and minority interests |
|
73,001 |
|
|
159,341 |
| ||
| Income taxes |
|
6,481 |
|
|
31,878 |
| ||
| Income before minority interests |
|
66,520 |
|
|
127,463 |
| ||
| Minority interests in losses of subsidiaries |
|
412 |
|
|
2,362 |
| ||
| Net income |
$ |
66,932 |
|
$ |
129,825 |
| ||
| Per Share: |
||||||||
| Net income per share: |
||||||||
| —Basic |
$ |
.82 |
|
$ |
1.54 |
| ||
| —Diluted |
|
.82 |
|
|
1.53 |
| ||
| Cash dividends |
|
.25 |
|
|
.25 |
| ||
| Weighted-average shares outstanding: |
||||||||
| —Basic |
|
81,791 |
|
|
84,319 |
| ||
| —Diluted |
|
82,028 |
|
|
84,849 |
| ||
| Comprehensive income |
$ |
66,817 |
|
$ |
131,463 |
| ||
The accompanying notes are an integral part of the financial statements.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dow Jones & Company, Inc.
For the three months ended March 31, 2003 and 2002
(unaudited)
| Three Months Ended March 31 |
||||||||
| 2003 |
2002 |
|||||||
| (in thousands) |
||||||||
| Operating Activities: |
||||||||
| Net income |
$ |
66,932 |
|
$ |
129,825 |
| ||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
||||||||
| Depreciation |
|
27,061 |
|
|
27,142 |
| ||
| Amortization of intangibles |
|
296 |
|
|
255 |
| ||
| Equity in losses of associated companies, net of distributions |
|
1,849 |
|
|
2,450 |
| ||
| Minority interests in losses of subsidiaries |
|
(412 |
) |
|
(2,362 |
) | ||
| Gain on resolution of Telerate sale loss contingencies |
|
(59,821 |
) |
|||||
| Gain on sale of businesses |
|
(153,407 |
) | |||||
| Contract guarantee |
|
2,610 |
|
|
3,178 |
| ||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
|
15,131 |
|
|
3,793 |
| ||
| Other assets |
|
(3,122 |
) |
|
1,998 |
| ||
| Accounts payable and accrued liabilities |
|
(45,895 |
) |
|
(40,585 |
) | ||
| Income taxes |
|
716 |
|
|
(26,701 |
) | ||
| Deferred taxes |
|
(1,161 |
) |
|
20,856 |
| ||
| Unearned revenue |
|
4,049 |
|
|
4,414 |
| ||
| Other noncurrent liabilities |
|
1,786 |
|
|
8,688 |
| ||
| Other, net |
|
(907 |
) |
|
(557 |
) | ||
| Net cash provided by (used in) operating activities |
|
9,112 |
|
|
(21,013 |
) | ||
| Investing Activities: |
||||||||
| Additions to property, plant and equipment |
|
(14,341 |
) |
|
(18,855 |
) | ||
| Funding of equity-method investments, net |
|
(6,888 |
) |
|
(5,751 |
) | ||
| Proceeds from insurance |
|
1,271 |
|
|||||
| Disposition of businesses and investments |
|
177,913 |
| |||||
| Other, net |
|
2,219 |
|
|
(1,515 |
) | ||
| Net cash (used in) provided by investing activities |
|
(17,739 |
) |
|
151,792 |
| ||
| Financing Activities: |
||||||||
| Cash dividends |
|
(20,472 |
) |
|
(21,088 |
) | ||
| Increase in long-term debt |
|
26,982 |
|
|||||
| Reduction of long-term debt |
|
(81,059 |
) | |||||
| Purchases of treasury stock |
|
(18,698 |
) |
|
(33,340 |
) | ||
| Proceeds from sales under stock compensation plans |
|
30 |
|
|
7,199 |
| ||
| Contribution from minority partner |
|
7,428 |
|
|
5,737 |
| ||
| Net cash used in financing activities |
|
(4,730 |
) |
|
(122,551 |
) | ||
| (Decrease) increase in cash and cash equivalents |
|
(13,357 |
) |
|
8,228 |
| ||
| Cash and cash equivalents at beginning of year |
|
39,346 |
|
|
21,026 |
| ||
| Cash and cash equivalents at March 31 |
$ |
25,989 |
|
$ |
29,254 |
| ||
The accompanying notes are an integral part of the financial statements.
4
Dow Jones & Company, Inc.
(unaudited)
| March 31 2003 |
December 31 2002 |
|||||||
| (dollars in thousands) |
||||||||
| Assets: |
||||||||
| Cash and cash equivalents |
$ |
25,989 |
|
$ |
39,346 |
| ||
| Accounts receivable—trade, net |
|
131,160 |
|
|
146,305 |
| ||
| Accounts receivable—other |
|
25,472 |
|
|
23,779 |
| ||
| Newsprint inventory |
|
9,023 |
|
|
9,698 |
| ||
| Prepaid expenses |
|
17,326 |
|
|
||||