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 June 30, 2004
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 incorporation or organization) |
(I.R.S. Employer 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 June 30, 2004: 61,231,190 shares of Common Stock and 20,636,680 shares of Class B Common Stock.
2
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Dow Jones and Company, Inc.
For the quarters and six months ended June 30, 2004 and 2003
(unaudited)
| Quarters Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||
| (in thousands, except per share amounts)
|
2004 |
2003 |
2004 |
2003 |
||||||||||||
| Revenues: |
||||||||||||||||
| Advertising |
$ | 255,836 | $ | 223,328 | $ | 482,535 | $ | 413,836 | ||||||||
| Information services |
81,518 | 71,060 | 157,345 | 142,916 | ||||||||||||
| Circulation and other |
100,436 | 99,198 | 199,531 | 195,064 | ||||||||||||
| Total revenues |
437,790 | 393,586 | 839,411 | 751,816 | ||||||||||||
| Expenses: |
||||||||||||||||
| News, production and technology |
130,052 | 120,080 | 252,609 | 235,375 | ||||||||||||
| Selling, administrative and general |
148,779 | 134,773 | 294,014 | 263,795 | ||||||||||||
| Newsprint |
28,947 | 27,462 | 56,578 | 50,533 | ||||||||||||
| Print delivery costs |
47,024 | 48,719 | 94,869 | 94,625 | ||||||||||||
| Depreciation and amortization |
26,698 | 27,736 | 54,053 | 55,093 | ||||||||||||
| Restructuring charges and September 11 related items, net |
(18,408 | ) | (2,761 | ) | (18,408 | ) | ||||||||||
| Operating expenses |
381,500 | 340,362 | 749,362 | 681,013 | ||||||||||||
| Operating income |
56,290 | 53,224 | 90,049 | 70,803 | ||||||||||||
| Other income (deductions): |
||||||||||||||||
| Investment income |
165 | 179 | 256 | 253 | ||||||||||||
| Interest expense |
(800 | ) | (745 | ) | (1,448 | ) | (1,198 | ) | ||||||||
| Equity in earnings of associated companies |
2,139 | 2,171 | 1,399 | 322 | ||||||||||||
| Gain on disposition of investment |
3,260 | 3,260 | ||||||||||||||
| Gain on resolution of Telerate sale loss contingencies |
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 interests |
58,736 | 52,582 | 88,447 | 125,583 | ||||||||||||
| Income taxes |
25,004 | 22,139 | 37,485 | 28,620 | ||||||||||||
| Income before minority interests |
33,732 | 30,443 | 50,962 | 96,963 | ||||||||||||
| Minority interests in losses of subsidiaries |
309 | 395 | 895 | 807 | ||||||||||||
| Net income |
$ | 34,041 | $ | 30,838 | $ | 51,857 | $ | 97,770 | ||||||||
| Per Share: |
||||||||||||||||
| Net income per share: |
||||||||||||||||
| - Basic |
$ | .42 | $ | .38 | $ | .63 | $ | 1.20 | ||||||||
| - Diluted |
.41 | .38 | .63 | 1.19 | ||||||||||||
| Cash dividends declared |
.50 | .50 | .75 | .75 | ||||||||||||
| Weighted-average shares outstanding: |
||||||||||||||||
| - Basic |
81,799 | 81,382 | 81,779 | 81,595 | ||||||||||||
| - Diluted |
82,211 | 81,674 | 82,211 | 81,860 | ||||||||||||
| Comprehensive income |
$ | 32,930 | $ | 34,382 | $ | 51,283 | $ | 101,199 | ||||||||
The accompanying notes are an integral part of the financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Dow Jones & Company, Inc.
For the six months ended June 30, 2004 and 2003
(unaudited)
| Six Months Ended June 30 |
||||||||
| (in thousands)
|
2004 |
2003 |
||||||
| Operating Activities: |
||||||||
| Net income |
$ | 51,857 | $ | 97,770 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
52,015 | 54,325 | ||||||
| Amortization of intangibles |
2,038 | 768 | ||||||
| Equity in earnings of associated companies, net of distributions |
5,175 | 4,972 | ||||||
| Minority interests in losses of subsidiaries |
(895 | ) | (807 | ) | ||||
| Gain on resolution of Telerate sale loss contingencies |
(59,821 | ) | ||||||
| Gain on sale of investment |
(3,260 | ) | ||||||
| Contract guarantee |
3,804 | 5,069 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable - trade |
(13,662 | ) | 18,871 | |||||
| Other assets |
(8,660 | ) | 3,730 | |||||
| Accounts payable and accrued liabilities |
(13,978 | ) | (40,012 | ) | ||||
| Income taxes |
17,356 | 22,739 | ||||||
| Deferred taxes |
(1,964 | ) | (2,608 | ) | ||||
| Unearned revenue |
3,033 | (902 | ) | |||||
| Deferred compensation and other noncurrent liabilities |
5,842 | 7,508 | ||||||
| Other, net |
2,022 | (937 | ) | |||||
| Net cash provided by operating activities |
100,723 | 110,665 | ||||||
| Investing Activities: |
||||||||
| Additions to property, plant and equipment |
(31,165 | ) | (26,231 | ) | ||||
| Funding of equity investees |
(16,279 | ) | (9,995 | ) | ||||
| Advances from (repayment to) equity investees |
9,173 | (3,439 | ) | |||||
| Disposition of investment |
6,514 | |||||||
| Proceeds from property damage insurance claim |
1,271 | |||||||
| Businesses acquired, net of cash received |
(91,632 | ) | (145,768 | ) | ||||
| Other, net |
2,382 | 2,821 | ||||||
| Net cash used in investing activities |
(121,007 | ) | (181,341 | ) | ||||
| Financing Activities: |
||||||||
| Cash dividends |
(40,870 | ) | (40,808 | ) | ||||
| Borrowings under long-term debt |
105,313 | 117,317 | ||||||
| Repayments of long-term debt |
(43,692 | ) | ||||||
| Purchases of treasury stock |
(21,135 | ) | ||||||
| Reduction of book overdraft |
(4,547 | ) | ||||||
| Proceeds from sales under stock compensation plans |
5,661 | 2,551 | ||||||
| Contribution from minority partner |
6,114 | |||||||
| Net cash provided by financing activities |
21,865 | 64,039 | ||||||
| Increase (decrease) in cash and cash equivalents |
1,581 | (6,637 | ) | |||||
| Cash and cash equivalents at beginning of year |
23,514 | 39,346 | ||||||
| Cash and cash equivalents at June 30 |
$ | 25,095 | $ | 32,709 | ||||
The accompanying notes are an integral part of the financial statements.
4
Dow Jones & Company, Inc.
(unaudited)
| (dollars in thousands)
|
June 30 2004 |
December 31 2003 | ||||
| Assets: |
||||||
| Current Assets: |
||||||
| Cash and cash equivalents |
$ | 25,095 | $ | 23,514 | ||
| Accounts receivable – trade, net |
172,708 | 157,750 | ||||
| Accounts receivable – other |
19,011 | 17,522 | ||||
| Newsprint inventory |
13,325 | 12,315 | ||||
| Prepaid expenses |
19,927 | 20,055 | ||||
| Deferred income taxes |
14,718 | 14,723 | ||||
| Total current assets |
264,784 | 245,879 | ||||
| Investments in associated companies, at equity |
83,271 | 89,230 | ||||
| Other investments |
14,255 | 14,558 | ||||
| Plant, property and equipment, at cost |
1,754,322 | 1,731,874 | ||||
| Less, accumulated depreciation |
1,089,871 | 1,042,590 | ||||
| Plant, property and equipment, net |
664,451 | 689,284 | ||||
| Goodwill |
239,731 | 153,320 | ||||
| Other intangible assets |
88,461 | 70,124 | ||||
| Deferred income taxes |
14,537 | 17,394 | ||||
| Other assets |
30,914 | |||||