<PAGE>
Rule 424(b)(2)
Registration No. 1-1764
Prospectus Supplement (to Prospectus dated November 22, 1989)
$150,000,000
DOW JONES & COMPANY, INC.
5.75% NOTES DUE DECEMBER 1, 2000
Interest on the Notes is payable semi-annually on June 1 and December 1 of
each year, beginning June 1, 1996. The Notes may not be redeemed prior to
maturity.
The Notes will be denominated in principal amounts of $1,000 or multiples
thereof and will be represented by one or more Global Notes registered in the
name of a nominee of The Depository Trust Company ("DTC"), as Depositary.
Interests in the Global Notes will be shown on, and transfers thereof will be
effected only through, records maintained by DTC and its participants.
Settlement for the Notes will be made in immediately available funds. The
Notes will trade in DTC's Same-Day Funds Settlement System until maturity, and
secondary market trading activity for the Notes will therefore settle in
immediately available funds. All payments of principal and interest will be
made by the Company in immediately available funds. See "Description of Notes
- -- Same Day Settlement and Payment".
---------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------
<S> <C> <C> <C>
PER NOTE 99.823% .426% 99.397%
- --------------------------------------------------------------------------
TOTAL $149,734,500 $639,000 $149,095,500
</TABLE>
(1) Plus accrued interest, if any, from December 6, 1995.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company estimated at $75,000.
---------------------------------------------------------
The Notes are offered by the Underwriter, subject to prior sale, when, as and
if issued to and accepted by the Underwriter. The Underwriter reserves the
right to withdraw, cancel or modify such offers and to reject orders in whole
or in part. It is expected that delivery of the Notes will be made in book-
entry form through the facilities of DTC on or about December 6, 1995, against
payment therefor in immediately available funds.
CHEMICAL SECURITIES INC.
The date of this Prospectus Supplement is December 1, 1995.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE
MONTHS
ENDED
SEPTEMBER
30, YEARS ENDED DECEMBER 31,
--------- ------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........... 6.7 8.0 8.3 6.8 5.1 3.4 3.2
</TABLE>
For purposes of computing the ratio of earnings to fixed charges (a)
"earnings" have been calculated by adding to net income (i) taxes based on
income, (ii) interest on debt, (iii) the portion of lease rentals estimated by
management to be representative of the interest factor, (iv) minority interest
in net income of subsidiary, and (v) distribution of earnings from associated
companies, and deducting from net income equity in earnings of associated
companies; and (b) "fixed charges" include interest on debt and the portion of
lease rentals estimated by management to be representative of the interest
factor.
USE OF PROCEEDS
The net proceeds from the sale of the Notes will be used to refund a portion
of the Company's commercial paper borrowings. As of December 1, 1995, the
Company had approximately $243 million aggregate principal amount of commercial
paper outstanding with maturities ranging from one to twelve weeks and interest
rates ranging from 5.75% to 5.85%. The proceeds of such commercial paper
borrowings were used by the Company for general corporate purposes.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered hereby
(referred to in the accompanying Prospectus as the "Offered Debt Securities")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Notes set forth in the Prospectus,
to which description reference is hereby made.
GENERAL
The Notes offered hereby constitute a series of Notes under the Indenture
referred to in the Prospectus, as supplemented by a Second Supplemental
Indenture, dated as of December 1, 1995, between the Company and First Trust of
New York, National Association, as successor Trustee under the Indenture. Such
series is limited to $150,000,000 aggregate principal amount. The Notes are to
mature on December 1, 2000. Notes are issuable in denominations of $1,000 and
in any integral multiples thereof.
Each Note will bear interest from December 6, 1995 at the rate of 5.75% per
annum, payable on June 1 and December 1 of each year, commencing June 1, 1996.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest will be payable generally to the person in whose name the Note
is registered at the close of business on the May 15 or November 15 next
preceding the June 1 or December 1 interest payment date. Principal of and
interest on the Notes will be payable, and the Notes will be transferable and
exchangeable, at an office or agency of the Company maintained in New York
City, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the person entitled thereto as it
appears on the Security Register. The Notes will be general unsecured
obligations of the Company. The Notes may not be redeemed prior to maturity.
S-2
<PAGE>
BOOK-ENTRY SYSTEM
The Notes will be issued in the form of one or more fully registered global
notes (collectively, the "Global Notes"), which will be deposited with, or on
behalf of, the Depository Trust Company, New York, New York (the "Depositary")
and registered in the name of the Depositary's nominee. Except as set forth
below, the Global Notes may be transferred, in whole and not in part, only to
the Depositary or another nominee of the Depositary.
The Depositary has advised the Company and the Underwriter as follows: the
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary was created to hold securities
of institutions that have accounts with the Depositary or its nominee
("participants") and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic book-
entry changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Underwriter), banks,
trust companies, clearing corporations and certain other organizations, some of
whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. The Depositary
agrees with and represents to its participants that it will administer its
book-entry system in accordance with its rules and bylaws and requirements of
law.
Upon the issuance of the Global Notes, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the Notes represented by such Global Notes to the accounts of participants.
The accounts to be credited shall be designated by the Underwriter. Ownership
of beneficial interests in the Global Notes will be limited to participants or
persons that may hold interests through participants. Ownership of interests in
the Global Notes will be shown on, and the transfer of those ownership
interests will be effected only through, records maintained by the Depositary
(with respect to participants' interests) and such participants (with respect
to the owners of beneficial interests in the Global Notes through such
participants). The laws of some jurisdictions may require that certain
purchasers of securities take physical delivery of such securities in
definitive form. Such limits and laws may impair the ability to transfer
beneficial interests in the Global Notes.
So long as the Depositary, or its nominee, is the registered holder and owner
of the Global Notes, the Depositary or such nominee, as the case may be, will
be considered the sole owner and holder of the related Notes for all purposes
of such Notes and for all purposes under the Indenture. Except as set forth
below, owners of beneficial interests in the Global Notes will be entitled to
have the Notes represented by such Global Notes registered in their names, will
not receive or be entitled to receive physical delivery of certificated Notes
in definitive form and will not be considered to be the owners or holders of
any Notes under the Indenture or the Global Notes. Accordingly, each person
owning a beneficial interest in the Global Notes must rely on the procedures of
the Depositary and, if such person is not a participant, on the procedures of
the participant through which such person owns its interest, to exercise any
rights of a holder of Notes under the Indenture or the Global Notes. The
Company understands that under existing industry practice, in the event the
Company requests any action of holders of Notes or an owner of a beneficial
interest in the Global Notes desires to take any action that the Depositary, as
the holder of the Global Notes, is entitled to take, the Depositary would
authorize the participants to take such action, and that the participants would
authorize beneficial owners owning through such participants to take such
action or would otherwise act upon the instructions of beneficial owners owning
through them.
S-3
<PAGE>
Payment of principal of (and premium, if any) and interest on Notes
represented by the Global Notes registered in the name of or held by the
Depositary or its nominee will be made to the Depositary or its nominee, as the
case may be, as the registered owner and holder of the Global Notes.
The Company expects that the Depositary, upon receipt of any payment of
principal or interest in respect of the Global Notes, will credit immediately
participants' accounts with payment in amounts proportionate in their
respective beneficial interests in the principal amount of the Global Notes as
shown on the records of the Depositary. The Company also expects that payments
by participants to owners of beneficial interests in the Global Notes held
through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts
of customers in bearer form or registered in "street name", and will be the
responsibility of such participants. None of the Company, the Trustee or any
agent of the Company or the Trustee will have any responsibility or liability
for any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in the Global Notes for any Notes or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests or for any other aspect of the relationship between the
Depositary and its participants or the relationship between such participants
and the owners of beneficial interests in the Global Notes owning through such
participants.
Unless and until they are exchanged in whole or in part for certificated
Notes in definitive form, the Global Notes may not be transferred except as a
whole by the Depositary to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary.
The Notes represented by the Global Notes are exchangeable for certificated
Notes in definitive registered form of like tenor as such Notes in
denominations of $1,000 and in any greater amount that is an integral multiple
thereof if (i) the Depositary notifies the Company that it is unwilling or
unable to continue as Depositary for the Global Notes or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, (ii) the Company in its discretion at any
time determines not to have all of the Notes represented by the Global Notes
and notifies the Trustee thereof or (iii) an Event of Default with respect to
the Notes represented by such Global Notes has occurred and is continuing. Any
Notes that are exchangeable pursuant to the preceding sentence are exchangeable
for certificated Notes issuable in authorized denominations and registered in
such names as the Depositary shall direct. Subject to the foregoing, the Global
Notes are not exchangeable, except for a Global Note or Global Notes of the
same aggregate denominations to be registered in the name of the Depositary or
its nominee.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement by the purchasers of the Notes will be made in immediately
available funds. All payments by the Company to the Depositary of principal and
interest will be made in immediately available funds.
The Notes will trade in the Depositary's Same-Day Funds Settlement System
until maturity, and therefore the Depositary will require secondary trading
activity in the Notes to be settled in immediately available funds. Secondary
trading in long-term notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Notes.
S-4
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Pricing Agreement and
the Underwriting Agreement incorporated by reference therein (together, the
"Underwriting Agreement"), the Company has agreed to sell to Chemical
Securities Inc. (the "Underwriter"), and the Underwriter has agreed to purchase
the principal amount of the Notes set forth opposite its name below. In the
Underwriting Agreement, the Underwriter has agreed, subject to the terms and
conditions set forth therein, to purchase all the Notes offered hereby if any
of the Notes are purchased.
<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
----------- ------------
<S> <C>
Chemical Securities Inc. .................................... $150,000,000
------------
Total.................................................... $150,000,000
============
</TABLE>
The Underwriter has advised the Company that it proposes initially to offer
the Notes to the public at the public offering price set forth on the cover
page of this Prospectus Supplement, and to certain dealers at such price less a
concession not in excess of .35% of the principal amount of the Notes. The
Underwriter may allow, and such dealers may reallow, a discount not in excess
of .25% of the principal amount of the Notes. After the initial public
offering, the public offering price, concession and discount may be changed.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriter that the Underwriter intends to
make a market in the Notes but is not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the Notes.
Settlement for the Notes will be made in immediately available funds and all
secondary trading in the Notes will settle in immediately available funds. See
"Description of the Notes--Same-Day Settlement and Payment".
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
Chemical Securities Inc. is an affiliate of Chemical Bank, which is a lender
to the Company and certain of its affiliates. Chemical Bank and its affiliates
participate on a regular basis in various financing and banking transactions
for the Company. Richard D. Wood, a director of the Company, is also a director
of Chemical Bank and Chemical Banking Corporation.
VALIDITY OF THE NOTES
The validity of the Notes will be passed upon for the Company by David E.
Moran, Esq., Vice President/Law and Deputy General Counsel of the Company, and
for the Underwriter by Sullivan & Cromwell, 125 Broad Street, New York, New
York 10004.
S-5
<PAGE>
DOW JONES & COMPANY, INC.
DEBT SECURITIES
----------------
Dow Jones & Company, Inc. (the "Company") may offer and sell from time to
time debt securities consisting of debentures, notes and/or other unsecured
evidences of indebtedness (the "Debt Securities") in one or more series at an
aggregate initial offering price not to exceed $350,000,000 (or its equivalent
at the time of offering in a non-U.S. dollar currency or a composite currency
or currencies). As used herein, the term Debt Securities shall include
securities denominated, or whose principal is payable, in United States
dollars, or, at the option of the Company, in any other currency or in a
composite currency or currencies or in amounts determined by reference to an
index. The Debt Securities may be offered in separate series in amounts, at
prices and on terms to be determined at the time of offering. The terms of the
Debt Securities, including, where applicable, the specific designation,
aggregate principal amount, denominations, maturity, interest rate or rates
(which may be fixed or variable) and time of payment of interest, if any, terms
for any redemption at the option of the Company or the holder, terms for any
sinking fund payments, any listing on a securities exchange, the initial public
offering price or prices and certain other terms of the offering and sale of
the Debt Securities in respect of which this Prospectus is being delivered will
be set forth in an accompanying Prospectus Supplement (the "Prospectus
Supplement").
The Company may sell Debt Securities to or through underwriters, dealers or
agents or directly to other purchasers. See "Plan of Distribution." Such
underwriters, dealers or agents may include Goldman, Sachs & Co. or another
firm acting alone, or may be a group of underwriters, dealers or agents
represented by Goldman, Sachs & Co. or by one or more firms including Goldman,
Sachs & Co. The names of any underwriters, dealers or agents, the principal
amounts to be purchased by any underwriters or dealers acting for their own
accounts and the compensation of such underwriters, dealers or agents will be
set forth in the applicable Prospectus Supplement.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
GOLDMAN, SACHS & CO.
----------------
The date of this Prospectus is November 22, 1989.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at its Regional Offices located at Room 3190, 230 South
Dearborn Street, Chicago, Illinois 60604 and 75 Park Place, 14th Floor, New
York, New York 10007. Copies of such material can be obtained, at prescribed
rates, by writing to the Commission, Public Reference Section, at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material can also be inspected at
the offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005, on which the Company's common stock is listed.
The Company has filed with the Commission two registration statements on Form
S-3 relating to the Debt Securities (such registration statements, together
with all amendments and exhibits, referred to collectively herein as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"). This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the Company's
Annual Report on Form 10-K for the year ended December 31, 1988, the Company's
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1989, June 30,
1989 and September 30, 1989 and the Company's Current Report on Form 8-K dated
January 5, 1989, each filed with the Commission (File No. 1-7564) under the
Exchange Act.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Debt Securities shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing such documents.
The Company will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the request of such person, a copy of any or all
of the foregoing documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to the attention of Peter G. Skinner, Esq., Corporate General Counsel, Dow
Jones & Company, Inc., 200 Liberty Street, New York, New York 10281 (telephone
number 212-416-2000).
2
<PAGE>
THE COMPANY
The Company is engaged primarily in the business of collecting and
distributing, in the print, electronic and broadcast media, business and
financial news and information, and in publishing general interest community
newspapers.
In the print media, the Company publishes national and international
newspapers and periodicals, including The Wall Street Journal, The Asian Wall
Street Journal, The Asian Wall Street Journal Weekly, The Wall Street
Journal/Europe, Barron's National Business and Financial Weekly, American
Demographics, Far Eastern Economic Review and National Business Employment
Weekly. In the electronic media, the Company operates and distributes various
international and domestic news services, including the Dow Jones News
Service(R) newswire (commonly known as the "Broadtape"), Dow Jones
News/Retrieval(R), an online computer database service, and DowPhone(R), an
automated telephone information service. In the broadcast media, the Company
produces syndicated and customized business television and radio programming.
Community newspapers published by Ottaway Newspapers, Inc., a wholly owned
subsidiary of the Company, include 23 general interest dailies in Arizona,
California, Connecticut, Kentucky, Massachusetts, Michigan, Minnesota,
Missouri, New York, North Carolina, Oregon and Pennsylvania.
The Company owns approximately 66.8% of the outstanding common stock of
Telerate, Inc. ("Telerate"), a provider of computerized financial information
and services. The Company's nominees constitute a majority of Telerate's Board
of Directors. On September 26, 1989, the Company, through a wholly owned
subsidiary, commenced a tender offer to purchase for cash any and all
outstanding shares of common stock of Telerate not owned by the Company at a
price of $18 per share. On November 3, 1989, the Company (and its wholly owned
subsidiary) and Telerate entered into an Agreement and Plan of Merger that
provides, among other things, for an increase in the price per share to be paid
pursuant to the offer to $21 per share and, subject to the waiver or
satisfaction of certain conditions, the merger of such wholly owned subsidiary
with and into Telerate. See "Recent Developments."
In addition to the foregoing, the Company has interests in an international
newswire, a community newspaper, foreign publications, newsprint mills and
magazines.
The Company's principal executive offices are located at 200 Liberty Street,
New York, New York 10281 (telephone number 212-416-2000).
USE OF PROCEEDS
The net proceeds from the sale of the Debt Securities will be used for
general corporate purposes, including, without limitation, to refinance a
portion of commercial paper borrowings made by the Company to fund all or a
portion of the purchase by the Company (or any of its subsidiaries) of the
common stock of Telerate. See "Recent Developments."
3
<PAGE>
SELECTED FINANCIAL INFORMATION
Set forth below is selected consolidated financial information of the
Company. The selected consolidated financial information for each year in the
five-year period ended December 31, 1988 has been derived from the Company's
financial statements which have been audited by Coopers & Lybrand, independent
accountants. This information is qualified in its entirety by and should be
read in conjunction with the consolidated financial statements and notes
thereto which are incorporated by reference in this Prospectus. See
"Incorporation of Certain Documents by Reference." Information for the nine-
month periods ended September 30, 1989 and 1988 is unaudited, but reflects all
adjustments (consisting only of normal recurring accruals) considered
necessary by management of the Company for a fair presentation thereof.
Results for the nine-month period ended September 30, 1989 are not necessarily
indicative of results for the entire year.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- --------------------------------------------------------
1989 1988 1988 1987 1986 1985 1984
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES:
Advertising.......................... $ 503,329 $ 505,264 $ 685,931 $ 703,780 $ 678,247 $ 632,277 $589,607
Circulation.......................... 213,626 217,089 287,217 283,916 264,350 245,216 234,631
Information services and other....... 531,630 467,758 629,962 326,747 192,270 163,425 141,382
---------- ---------- ---------- ---------- ---------- ---------- --------
Total revenues..................... 1,248,585 1,190,111 1,603,110 1,314,443 1,134,867 1,040,918 965,620
---------- ---------- ---------- ---------- ---------- ---------- --------
EXPENSES:
News, production and delivery........ 354,286 327,245 445,510 351,828 287,656 272,870 254,089
Selling, administrative and general.. 356,764 323,531 437,087 356,247 312,778 276,210 247,124
Newsprint............................ 101,018 104,084 139,432 134,301 119,277 114,300 112,117
Second class postage and alternate
delivery............................ 66,556 65,852 89,095 86,322 85,394 81,434 77,631
Depreciation and amortization........ 116,519 104,983 140,209 89,646 66,132 53,408 44,472
---------- ---------- ---------- ---------- ---------- ---------- --------
Operating expenses................. 995,143 925,695 1,251,333 1,018,344 871,237 798,222 735,433
---------- ---------- ---------- ---------- ---------- ---------- --------
Operating income................... 253,442 264,416 351,777 296,099 263,630 242,696 230,187
OTHER INCOME (DEDUCTIONS):
Investment income.................... 20,983 6,478 8,984 5,203 5,240 8,212 9,794
Interest expense..................... (12,981) (21,374) (28,597) (16,514) (8,592) (11,593) (2,532)
Equity in earnings (losses) of
associated companies................ (17,303) 5,979 5,276 35,687 21,368 14,404 8,082
Gain on disposition of investments... 269,182 106,495 106,495 42,208 49,426
Other, net........................... (764) 4,927 5,210 1,810 251 4,741 357
---------- ---------- ---------- ---------- ---------- ---------- --------
Income before income taxes and
minority interest.................... 512,559 366,921 449,145 364,493 331,323 258,460 245,888
Income taxes.......................... 214,612 150,540 182,080 151,194 147,961 119,852 116,748
---------- ---------- ---------- ---------- ---------- ---------- --------
Income before minority interest....... 297,947 216,381 267,065 213,299 183,362 138,608 129,140
Minority interest..................... 20,779 31,266 38,887 10,281
---------- ---------- ---------- ---------- ---------- ---------- --------
NET INCOME............................ $ 277,168 $ 185,115 $ 228,178 $ 203,018 $ 183,362 $ 138,608 $129,140
========== ========== ========== ========== ========== ========== ========
Net income per share.................. $2.75 $1.92 $2.35 $2.10 $1.89 $1.43 $1.34
Ratio of earnings to fixed charges (1) 18.2 11.1 10.3 11.8 14.3 10.9 18.8
OTHER DATA:
Capital expenditures.................. $ 130,357 $ 125,010 $ 183,501 $ 107,760 $ 70,236 $ 154,589 $142,792
Total assets.......................... 2,256,758 1,926,085 2,111,781 1,942,630 1,235,630 1,176,697 803,539
Long-term debt........................ 182,538 310,529 290,120 444,163 59,602 248,104 21,020
Stockholders' equity.................. 1,382,265 985,303 1,160,575 847,494 727,977 600,200 505,601
Cash dividends........................ 54,398 49,130 66,270 61,860 53,585 50,228 46,232
</TABLE>
- --------
(1) The ratio of earnings to fixed charges has been computed as follows:
(a) "earnings" have been calculated by adding to net income (i) taxes based on
income, (ii) interest on debt, (iii) the portion of lease rentals estimated by
management to be representative of the interest factor, (iv) minority interest
in net income of subsidiary, and (v) distribution of earnings from associated
companies, and deducting from net income equity in earnings of associated
companies; and (b) "fixed charges" include interest on debt and the portion of
lease rentals estimated by management to be representative of the interest
factor.
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
----------------- ----------------------------------------------------
1989 1988 1988 1987 1986 1985 1984
---- ---- ---- ---- ---- ---- ----
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............. $ 277,168 $ 185,115 $ 228,178 $ 203,018 $183,362 $ 138,608 $ 129,140
Adjustments to
reconcile net income
to net cash provided
by operating
activities:
Depreciation........... 96,778 88,224 117,314 82,806 64,784 52,079 43,323
Amortization of excess
of cost over net
assets of business
acquired.............. 19,741 16,759 22,895 6,840 1,348 1,329 1,149
Gain on disposition of
investments........... (269,182) (106,495) (106,495) (42,208) (49,426)
Gain on disposition of
plant and property.... (1,209) (4,894) (4,171) (1,558) (1,248) (6,882) (1,937)
Equity in losses
(earnings) of
associated companies,
net of distributions.. 21,366 2,733 8,350 (9,842) (7,538) (3,586) (4,225)
Minority interest in
earnings, net of
dividends paid........ 13,266 21,134 26,374 6,954
Changes in assets and
liabilities:
Accounts receivable--
trade................. (34,982) (5,776) 1,313 (7,257) (12,898) (11,179) (10,219)
Unexpired
subscriptions......... 18,930 (16,562) (9,489) (7,642) 25,238 15,666 4,981
Inventories............ 3,036 (4,413) (4,404) (7,042) 12,583 (4,129) (4,855)
Other current assets... (8,475) (9,959) (14,429) (1,862) (1,774) 1,101 (4,316)
Accounts payable and
accrued liabilities... 1,846 (9,518) 15,736 23,913 (2,505) 14,846 9,576
Federal and state
income taxes.......... (1,412) (4,666) 24,679 (16,743) 20,522 756 (14,986)
Deferred taxes......... (6,015) 364 1,393 21,538 15,861 22,439 8,603
Other, principally
provision for
noncurrent 3,385 1,797 1,678 6,121 6,587 5,348 3,802
liabilities........... --------- --------- --------- --------- -------- --------- ---------
Net cash provided by 134,241 153,843 308,922 257,036 254,896 226,396 160,036
operating activities... --------- --------- --------- --------- -------- --------- ---------
INVESTING ACTIVITIES:
Additions to plant and
property.............. (130,357) (125,010) (183,501) (107,760) (70,236) (154,589) (142,792)
Disposition of plant
and property.......... 9,959 18,815 17,664 5,654 2,776 10,129 4,557
Business acquired, net
of cash received...... (13,508) (4,971) (34,704) (439,242) (4,275) (3,258)
Business sold, net of
cash given............ 124,520 124,520
Other investments...... (29,276) (11,932) (20,467) (21,798) (992) (294,914) (2,110)
Disposition of
investments........... 298,563 6,527 6,527 161,027 1,428
Other, net............. (1,054) (456) (1,841) 2,510 98 (602) (3,867)
--------- --------- --------- --------- -------- --------- ---------
Net cash provided by
(used in) investing 134,327 7,493 (91,802) (560,636) 88,398 (439,976) (146,042)
activities............. --------- --------- --------- --------- -------- --------- ---------
FINANCING ACTIVITIES:
Cash dividends......... (54,398) (49,130) (66,270) (61,860) (53,585) (50,228) (46,232)
Increase in long-term
debt.................. 10,000 15,356 15,356 388,830 271,000
Reduction of long-term
debt.................. (117,658) (148,990) (169,399) (72,057) (188,502) (48,809) (3,290)
Proceeds from sale
under stock purchase
plans................. 6,695 4,164 4,555 9,596 8,587 5,748 6,115
Purchase of treasury
stock................. (8,558) (2,354) (2,367) (32,343) (10,526)
Stock issued by
consolidated 1,942 528 1,006 1,981
subsidiary............ --------- --------- --------- --------- -------- --------- ---------
Net cash provided by
(used in) financing (161,977) (180,426) (217,119) 234,147 (244,026) 177,711 (43,407)
activities............. --------- --------- --------- --------- -------- --------- ---------
EFFECT OF EXCHANGE RATE (142) (1,955) (2,130) (258) (339)
CHANGES ON CASH........ --------- --------- --------- --------- -------- --------- ---------
Increase (decrease) in
cash and cash
equivalents............ 106,449 (21,045) (2,129) (69,711) 98,929 (35,869) (29,413)
Cash and cash
equivalents at 60,791 62,920 62,920 132,631 33,702 69,571 98,984
beginning of year...... --------- --------- --------- --------- -------- --------- ---------
Cash and cash
equivalents at end of $ 167,240 $ 41,875 $ 60,791 $ 62,920 $132,631 $ 33,702 $ 69,571
period................. ========= ========= ========= ========= ======== ========= =========
SUPPLEMENTARY CASH FLOW
DATA:
Interest payments....... $ 9,871 $ 19,019 $ 30,711 $ 12,954 $ 10,462 $ 12,262 $ 2,385
Income tax payments..... 222,041 154,839 156,152 146,749 111,551 96,657 123,131
Liabilities assumed in
connection with
acquisitions........... 3,238 2,177 3,358 181,641 613 9,120
Liabilities assumed by
purchaser in connection
with the sale of a
subsidiary............. 18,205
Value of shares issued
to acquire Telerate,
Inc. common stock...... 148,635
</TABLE>
- --------
Note: Certain amounts have been reclassified for comparative purposes.
5
<PAGE>
RECENT DEVELOPMENTS
On September 20, 1989, the Company announced its intention to commence, and
on September 26, 1989, Dow Jones Acquisition Sub, Inc., a wholly owned
subsidiary of the Company (the "DJ Sub"), commenced, an offer to purchase for
cash any and all outstanding shares of common stock of Telerate (the "Shares")
not owned by the Company at $18 per Share (the "Tender Offer"). On November 3,
1989, the Company, the DJ Sub and Telerate entered into an Agreement and Plan
of Merger (the "Merger Agreement") pursuant to which (i) the price to be paid
under the Tender Offer was increased to $21 per Share, (ii) conditions to the
Tender Offer were modified, and (iii) as soon as practicable after the later
of January 2, 1990 or the satisfaction or waiver of certain conditions
specified in the Merger Agreement, the DJ Sub will be merged with and into
Telerate (the "Merger"). The Tender Offer is currently scheduled to expire on
November 22, 1989, unless extended. In the Merger, each then outstanding Share
(other than Shares owned by the Company or the DJ Sub or any other wholly
owned subsidiary of the Company, Shares held in Telerate's treasury and Shares
held by stockholders who have perfected their dissenters' rights under
Delaware law) will be converted into the right to receive in cash $21 per
Share or any higher price per Share paid pursuant to the Tender Offer.
According to Telerate, as of November 3, 1989, there were outstanding
31,651,649 Shares (other than Shares owned by the Company or the DJ Sub or any
other wholly owned subsidiary of the Company), and employee stock options to
purchase 829,208 Shares. All terms and conditions relating to the Tender Offer
and the Merger are set forth in the Offer to Purchase dated September 26,
1989, the Supplements to the Offer to Purchase dated October 27, 1989 and
November 8, 1989 and the related Letter of Transmittal and the Merger
Agreement, all filed by the Company with the Commission under the Exchange
Act.
Since the Company announced its intention to commence the Tender Offer, nine
putative class actions (the "Actions") have been filed by several alleged
Telerate stockholders in Delaware and New York state courts against various
parties, including the DJ Sub, the Company, Telerate and certain present and
former directors and officers thereof. The Actions allege that, among other
things, the Company and its co-defendants breached their fiduciary duties by
offering an inadequate price for the Shares and by failing to encourage other
possible purchasers or offers for Telerate. The Actions seek, among other
things, to enjoin the consummation of the Tender Offer and, if the Tender
Offer is consummated, rescission of the DJ Sub's acquisition of the Shares not
owned by the Company under the Tender Offer, as well as damages and attorneys'
fees in unspecified amounts. The Actions remain pending.
The total amount of funds required by the DJ Sub and the Company to purchase
all the outstanding Shares on a fully-diluted basis (other than Shares owned
by the Company) pursuant to the Tender Offer and the Merger and to pay related
fees and expenses is estimated to be approximately $676 million. The DJ Sub
plans to obtain all the funds needed for the Tender Offer and the Merger from
capital contributions or advances made by the Company. The Company currently
intends to obtain the funds necessary to make such capital contributions or
advances from its cash and cash equivalents (totalling $165 million as of
November 3, 1989), the issuance of commercial paper, and the proceeds of an
offering or offerings of Debt Securities hereunder.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at September 30, 1989.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1989
------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C>
LONG-TERM DEBT
Floating rate demand industrial development revenue bonds,
6.3% at September 30, 1989 maturing 2012 and 2022........ $ 14,500
Notes payable, 9 1/4% due November 1, 1992................ 99,538
Notes payable, 7.75% due 1991 through 2001................ 58,500
Bank debt, 9.21% and 9.59%................................ 10,000
----------
Total long-term debt.................................... 182,538
STOCKHOLDERS' EQUITY........................................ 1,382,265
----------
TOTAL CAPITALIZATION.................................. $1,564,803
==========
</TABLE>
6
<PAGE>
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED)
The following pro forma condensed consolidated financial information
illustrates how the Company's financial statements might have been affected if
the Company had owned 100% of Telerate at the beginning of the periods, and as
of the date, presented below.
The pro forma income statement data are presented for the nine months ended
September 30, 1989 and for the year ended December 31, 1988. The pro forma
balance sheet data are presented as of September 30, 1989. The information does
not purport to be indicative of the results that actually would have occurred
had the Company owned 100% of Telerate as of the date and for the periods
presented or that may occur in the future.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1989 YEAR ENDED DECEMBER 31, 1988
---------------------------------- ----------------------------------
PRO FORMA PRO FORMA PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS COMBINED HISTORICAL ADJUSTMENTS COMBINED
---------- ----------- --------- ---------- ----------- ---------
(IN THOUSANDS EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Advertising............ $ 503,329 $ 503,329 $ 685,931 $ 685,931
Circulation............ 213,626 213,626 287,217 287,217
Information services 531,630 531,630 629,962 629,962
and other............. ---------- ---------- ---------- ----------
Total revenues....... 1,248,585 1,248,585 1,603,110 1,603,110
---------- ---------- ---------- ----------
EXPENSES:
News, production and
delivery.............. 354,286 354,286 445,510 445,510
Selling, administrative
and general........... 356,764 356,764 437,087 437,087
Newsprint.............. 101,018 101,018 139,432 139,432
Second class postage
and alternate
delivery.............. 66,556 66,556 89,095 89,095
Depreciation and 116,519 $ 10,218 126,737 140,209 $ 16,512 156,721
amortization.......... ---------- -------- ---------- ---------- -------- ----------
Operating expenses... 995,143 10,218 1,005,361 1,251,333 16,512 1,267,845
---------- -------- ---------- ---------- -------- ----------
Operating income..... 253,442 (10,218) 243,224 351,777 (16,512) 335,265
OTHER INCOME
(DEDUCTIONS):
Investment income...... 20,983 (10,125) 10,858 8,984 (8,984)
Interest expense....... (12,981) (35,510) (48,491) (28,597) (54,009) (82,606)
Equity in earnings
(losses) of associated
companies............. (17,303) (17,303) 5,276 5,276
Gain on disposition of
investments........... 269,182 269,182 106,495 106,495
Other, net............. (764) (764) 5,210 5,210
---------- -------- ---------- ---------- -------- ----------
Income before income
taxes and minority
interest............... 512,559 (55,853) 456,706 449,145 (79,505) 369,640
Income taxes............ 214,612 (21,611) 193,001 182,080 (29,544) 152,536
---------- -------- ---------- ---------- -------- ----------
Income before minority
interest............... 297,947 (34,242) 263,705 267,065 (49,961) 217,104
Minority interest....... 20,779 (20,779) 38,887 (38,887)
---------- -------- ---------- ---------- -------- ----------
NET INCOME.............. $ 277,168 $(13,463) $ 263,705 $ 228,178 $(11,074) $ 217,104
========== ======== ========== ========== ======== ==========
Net income per share.... $2.75 $2.62 $2.35 $2.15
===== ===== ===== =====
Average shares 100,731 100,731 97,081 3,697 100,778
outstanding............ ======= ======= ====== ===== =======
Ratio of earnings to
fixed charges ......... 18.2 8.2 10.3 4.7
</TABLE>
7
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1989
---------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS COMBINED
---------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents................... $ 167,240 $(150,000) $ 17,240
Accounts receivable--trade, net............. 172,358 172,358
Inventories................................. 17,990 17,990
Other current assets........................ 55,281 55,281
---------- --------- ----------
Total current assets...................... 412,869 (150,000) 262,869
---------- --------- ----------
Investments in associated companies, at
equity..................................... 83,852 83,852
Other investments........................... 80,869 80,869
Plant and property, at cost................. 1,339,536 1,339,536
Less, Allowance for depreciation........... 632,400 632,400
---------- ----------
707,136 707,136
Excess of cost over net assets of
businesses acquired, less amortization..... 958,871 544,944 1,503,815
Other assets................................ 13,161 13,161
---------- --------- ----------
Total assets.............................. $2,256,758 $ 394,944 $2,651,702
========== ========= ==========
LIABILITIES:
Accounts payable and accrued liabilities.... $ 170,135 $ 170,135
Federal and state income taxes.............. 63,319 63,319
Unexpired subscriptions..................... 178,802 178,802
---------- ----------
Total current liabilities................. 412,256 412,256
Long-term debt.............................. 182,538 $ 526,075 708,613
Other noncurrent liabilities................ 148,568 148,568
---------- --------- ----------
Total liabilities......................... 743,362 526,075 1,269,437
---------- --------- ----------
MINORITY INTEREST IN SUBSIDIARY.............. 131,131 (131,131)
---------- ---------
STOCKHOLDERS' EQUITY:
Common stocks............................... 102,181 102,181
Additional paid-in capital.................. 149,514 149,514
Retained earnings........................... 1,163,759 1,163,759
---------- ----------
1,415,454 1,415,454
Less, Treasury stock, at cost............... 33,189 33,189
---------- ----------
Total stockholders' equity................ 1,382,265 1,382,265
---------- --------- ----------
Total liabilities and stockholders' $2,256,758 $ 394,944 $2,651,702
equity................................... ========== ========= ==========
</TABLE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(1) The unaudited pro forma condensed consolidated income statements have
been adjusted for amortization of excess of cost over net assets, minority
interest in Telerate's earnings, interest income on investments, interest
expense on the borrowing and related income taxes.
(2) The unaudited pro forma condensed consolidated balance sheet has been
adjusted to reflect, as of September 30, 1989, (i) the elimination of the
Company's minority interest in Telerate, and (ii) the incurrence of
indebtedness of approximately $526 million and the use of $150 million of the
Company's cash and cash equivalents to fund the Company's acquisition of all
Shares not owned by the Company for $21 per Share under the Tender Offer and
the Merger.
8
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the series of Debt Securities offered by an accompanying
Prospectus Supplement (the "Offered Debt Securities"), and the extent to which
the following general provisions apply thereto, will be described therein.
The Debt Securities will be issued under an Indenture, dated as of October 1,
1985, as supplemented by the First Supplemental Indenture, to be dated as of
November 15, 1989 (as so supplemented, the "Indenture"), between the Company
and Morgan Guaranty Trust Company of New York, as Trustee (the "Trustee"), a
form of which Indenture is filed as an exhibit to the Registration Statement.
The following summaries of certain provisions of the Indenture do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all the provisions of the Indenture, including the definitions
therein. Certain terms defined in the Indenture are capitalized herein.
Wherever capitalized terms are used and not otherwise defined herein, it is
intended that such terms shall have the meanings assigned to them in the
Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of the Debt
Securities or of any particular series of Offered Debt Securities which may be
issued thereunder and provides that Debt Securities may be issued from time to
time in series. The Debt Securities will be unsecured obligations of the
Company and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company.
Reference is made to the Prospectus Supplement relating to the Offered Debt
Securities for the following terms or additional provisions thereof, where
applicable: (1) the title of the Offered Debt Securities; (2) any limit on the
aggregate principal amount of the Offered Debt Securities; (3) the price
(expressed as a percentage of the aggregate principal amount thereof) at which
the Offered Debt Securities will be issued; (4) the date or dates on which the
Offered Debt Securities will mature; (5) the rate or rates (which may be fixed
or variable) at which the Offered Debt Securities will bear interest, if any;
(6) the date or dates from which any such interest will accrue, the date on
which payment of such interest will commence, the Interest Payment Dates, the
Regular Record Dates for such Interest Payment Dates, and the Person to whom
any such interest will be payable, if other than the Person in whose name the
Offered Debt Security (or one or more Predecessor Securities) is registered at
the close of business on the Regular Record Date for such interest payment; (7)
the place or places where the principal of (and premium, if any) and interest
on the Offered Debt Securities will be payable; (8) the dates on which and the
price or prices at which the Offered Debt Securities will, pursuant to any
mandatory sinking fund provisions, or may, pursuant to any optional sinking
fund provisions, be redeemed by the Company, and the other detailed terms and
provisions of such sinking funds; (9) the date, if any, after which, and the
price or prices at which, the Offered Debt Securities may, pursuant to any
optional redemption provisions, be redeemed at the option of the Company or of
the Holder thereof and the other detailed terms and provisions of such optional
redemptions; (10) the currency or currencies, including composite currencies,
in which payment of the principal of (and premium, if any) and interest on the
Offered Debt Securities will be payable if other than U.S. dollars; (11) any
index used to determine the amount of payments of principal of (and premium, if
any) or interest on the Offered Debt Securities; (12) the portion of the
principal amount of the Offered Debt Securities, if other than the principal
amount thereof, payable upon acceleration of maturity thereof; (13) the right
of the Company to defease the Offered Debt Securities for certain restrictive
covenants and certain Events of Default under the Indenture; and (14) any other
terms of the Offered Debt Securities. (Section 301)
9
<PAGE>
Unless otherwise provided in the Prospectus Supplement relating to the
Offered Debt Securities, (1) principal of (and premium, if any) and interest on
the Debt Securities will be payable, and the Debt Securities will be
exchangeable and transfers thereof will be registrable, at the Corporate Trust
Office of the Trustee, except that, at the option of the Company, interest may
be paid by mailing a check to the address of the Person entitled thereto as it
appears in the Security Register; (2) payment of any interest due on any Debt
Security will be made to the Person in whose name such Debt Security is
registered at the close of business on the Regular Record Date for such
interest; and (3) the Debt Securities will be issued only in registered form
without coupons and in denominations of $1,000 and integral multiples thereof.
No service charge will be made for any transfer or exchange of the Debt
Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. (Sections
301, 302, 305, 307 and 1002)
Debt Securities may be issued as Original Issue Discount Debt Securities to
be sold at a substantial discount from their principal amount. Special federal
income tax, accounting and other considerations applicable thereto will be
described in the Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any Debt Security which provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof. (Section 101)
The applicable Prospectus Supplement will describe the federal income tax
consequences of the ownership of any Offered Debt Securities denominated in
other than U.S. dollars.
LIMITATIONS ON LIENS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, incur, issue, assume, guarantee or suffer to exist
any indebtedness for borrowed money secured by a mortgage, pledge or other lien
("Mortgage") on any of its or their Tangible Property, or on any shares of
stock or indebtedness of a Restricted Subsidiary, without providing that the
Debt Securities (other than Debt Securities of a series not entitled to the
benefits of this provision) shall be secured equally and ratably with (or prior
to) such secured indebtedness, unless after giving effect thereto, the
aggregate amount of all such secured indebtedness (other than indebtedness
secured by excepted Mortgages referred to in the following sentence) plus all
Attributable Debt of the Company and its Restricted Subsidiaries in respect of
Sale and Leaseback Transactions, but excluding any Sale and Leaseback
Transaction the proceeds of which are applied to the retirement of secured
indebtedness of the Company (other than indebtedness secured by excepted
Mortgages referred to in the following sentence), would not exceed 10% of
Consolidated Net Tangible Assets. The foregoing restriction does not apply to
(1) Mortgages existing on the date of the Indenture; (2) Mortgages on property
of, or on any shares of stock or indebtedness of, any corporation existing at
the time such corporation becomes a Restricted Subsidiary; (3) Mortgages on
property of any corporation existing at the time such corporation is merged
into or consolidated with, or at the time of any sale, lease or other
disposition of all or substantially all its assets to, the Company or a
Restricted Subsidiary; (4) Mortgages on property existing at the time of
acquisition thereof and purchase money Mortgages relating thereto (including
construction cost financing); (5) Mortgages on particular property to secure
all or part of the cost of repairing, altering, constructing, improving or
developing such property as is, in the opinion of the Company's Board of
Directors, substantially unimproved; (6) Mortgages in favor of governmental
bodies to secure progress, advance or other payments pursuant to any contract
or provision of any statute; and (7) Mortgages in favor of the Company or any
Restricted Subsidiary, and will not apply to any extension, renewal or
replacement of any Mortgage referred to in the foregoing clauses (1) through
(6). (Section 1007)
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, enter into any arrangement with any bank, insurance
company or other lender or investor providing for
10
<PAGE>
the leasing by the Company or such Restricted Subsidiary for a period in excess
of three years of any real property located within the United States which has
been owned by the Company or such Restricted Subsidiary for more than six
months and which has been or is to be sold or transferred by the Company or
such Restricted Subsidiary to such lender or investor unless either (1) the
Company or such Restricted Subsidiary could mortgage such property under the
restrictions described under "Limitation on Liens" in an amount equal to the
Attributable Debt with respect to such Sale and Leaseback Transaction without
equally and ratably securing the Debt Securities (other than Debt Securities of
a series not entitled to the benefits of that provision) or (2) the Company,
within six months after such sale or transfer, applies to the retirement of
secured indebtedness of the Company (other than indebtedness secured by
excepted Mortgages referred to in the last sentence of "Limitation on Liens"
above) an amount equal to the greater of (i) the net proceeds of the sale of
the real property so leased back or (ii) the fair market value of the real
property so leased back. (Section 1008)
CERTAIN DEFINITIONS
As used in the Indenture:
"Subsidiary" means any corporation of which the Company or one or more of its
Subsidiaries owns more than 50% of the outstanding stock ordinarily having
voting power for the election of directors. "Restricted Subsidiary" means any
Subsidiary other than (1) a Subsidiary substantially all the physical
properties of which are located, or substantially all the operations of which
are conducted, outside the United States or (2) a Subsidiary the principal
business of which consists of (i) investing in, developing or otherwise dealing
in or with, real estate or providing services directly related thereto, (ii)
financing, including without limitation lending on the security of, purchasing
or discounting (with or without recourse), receivables, leases, obligations or
other claims arising from or in connection with the purchase or sale of
products or services or (iii) leasing property. "Attributable Debt" means the
total net amount of rent (discounted at a rate per annum equal to the
prevailing market interest rate, at the time the lease was entered into, on
United States Treasury obligations having a maturity substantially the same as
the average term of such lease, plus 3%) required to be paid during the
remaining term of such lease. "Consolidated Net Tangible Assets" means the
aggregate amount of assets (less applicable reserves and other properly
deductible items) of the Company and its Restricted Subsidiaries after
deducting therefrom (1) all current liabilities and (2) all goodwill, trade
names, trademarks, patents, unamortized debt discount and expense and other
like intangibles, all as set forth on the most recent balance sheet of the
Company and its Subsidiaries and computed in accordance with generally accepted
accounting principles. "Tangible Property" means all land, buildings, machinery
and equipment, and leasehold interests and improvements in respect of the
foregoing, which would be reflected on a consolidated balance sheet of the
Company and its Restricted Subsidiaries prepared in accordance with generally
accepted accounting principles, excluding all such tangible property located
outside the United States. (Section 101)
WAIVER
The Holders of at least 66 2/3% in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture. (Section 1011)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
that series waive any past default under the Indenture with respect to that
series, except a default in the payment of the principal of (or premium, if
any) or interest on any Debt Security of that series or in respect of a
covenant or provision of the Indenture which cannot be modified or amended
without the consent of the Holder of each Outstanding Debt Security of that
series affected. (Section 513)
11
<PAGE>
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any series is defined
in the Indenture as: (1) default for 30 days in payment of any interest on any
Debt Security of that series; (2) default in payment of principal of (or
premium, if any, on) any Debt Security of that series at Maturity; (3) failure
to deposit any sinking fund payment when due in respect of that series; (4)
failure by the Company for 60 days after due notice in performance of any other
of the covenants or warranties in the Indenture (other than a covenant or
warranty included in the Indenture solely for the benefit of a series of Debt
Securities other than that series); (5) default under any indebtedness for
money borrowed (including a default with respect to Debt Securities other than
that series) with a principal amount then outstanding in excess of $5,000,000
or under any mortgage, indenture or instrument under which any such
indebtedness is issued or secured (including the Indenture) which default
results in the acceleration of maturity of such indebtedness, unless such
indebtedness or acceleration shall have been discharged or annulled within 10
days after due notice by the Trustee or by Holders of at least 10% in principal
amount of the Outstanding Debt Securities of that series; (6) certain events of
bankruptcy, insolvency or reorganization of the Company; and (7) any other
Event of Default provided with respect to Debt Securities of that series.
(Section 501)
The Indenture provides that, if any Event of Default with respect to Debt
Securities of any series at the time Outstanding occurs and is continuing,
either the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Debt Securities of that series may declare the principal amount
(or, if any of the Debt Securities of that series are Original Issue Discount
Debt Securities, such portion of the principal amount of such Debt Securities
as may be specified in the terms thereof) of all Debt Securities of that series
to be due and payable immediately, but upon certain conditions such declaration
may be annulled and past defaults (except, unless theretofore cured, a default
in payment of principal of (or premium, if any) or interest on the Debt
Securities of that series and certain other specified defaults) may be waived
by the Holders of a majority in principal amount of the Outstanding Debt
Securities of that series on behalf of the Holders of all Debt Securities of
that series. (Sections 502 and 513)
Reference is made to the Prospectus Supplement relating to each series of
Offered Debt Securities that consists in whole or in part of Original Issue
Discount Debt Securities for the particular provisions relating to acceleration
of the Maturity of a portion of the principal amount of such Original Issue
Discount Debt Securities upon the occurrence of an Event of Default and the
continuation thereof.
The Indenture provides that the Trustee will, within 90 days after the
occurrence of a default with respect to Debt Securities of any series at the
time Outstanding, give to the Holders of the Outstanding Debt Securities of
that series notice of such default known to it if uncured or not waived,
provided that, except in the case of default in the payment of principal of (or
premium, if any) or interest on any Debt Security of that series, or in the
deposit of any sinking fund payment which is provided, the Trustee will be
protected in withholding such notice if the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders of the
Outstanding Debt Securities of such series; and, provided further, that in the
case of any default of the character specified in clause (4) under "Events of
Default," such notice shall not be given until at least 30 days after the
occurrence thereof. The term "default" with respect to any series of
Outstanding Debt Securities for the purpose only of this provision means any
event which is, or after notice or lapse of time or both would become, an Event
of Default. (Section 602)
The Indenture contains a provision entitling the Trustee, subject to the duty
of the Trustee during default to act with the required standard of care, to be
indemnified by the Holders of any series of Outstanding Debt Securities before
proceeding to exercise any right or power under the Indenture at the request of
the Holders of such series of Debt Securities. (Section 603) Subject to such
provisions
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for indemnification of the Trustee, the Indenture provides that the Holders of
a majority in principal amount of Outstanding Debt Securities of any series may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Debt Securities of such series, provided that the
Trustee may decline to act if such direction is contrary to law or the
Indenture. (Section 512)
No Holder of any Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture or for any remedy thereunder,
unless: (1) such Holder shall have previously given to the Trustee written
notice of a continuing Event of Default with respect to Debt Securities of that
series, (2) the Holders of at least 25% in principal amount of the Outstanding
Debt Securities of that series shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
(3) the Trustee shall have failed to institute such proceeding within 60 days
and (4) the Trustee shall not have received from the Holders of a majority in
principal amount of the Outstanding Debt Securities of that series a direction
inconsistent with such request during such 60-day period. (Section 507)
However, the Holder of any Debt Security will have an absolute right to receive
payment of the principal of (and premium, if any) and any interest on such Debt
Security on or after the due dates expressed in such Debt Security and to
institute suit for the enforcement of any such payment. (Section 508)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate of no default as to certain provisions of the
Indenture, or specifying any default that exists. (Section 1010)
DEFEASANCE
The Prospectus Supplement will state if any defeasance provision will apply
to the Offered Debt Securities.
DEFEASANCE AND DISCHARGE. The Indenture provides that, if applicable, the
Company will be discharged from any and all obligations in respect of the Debt
Securities of any series (except for certain obligations to register the
transfer or exchange of Debt Securities of such series, to replace stolen, lost
or mutilated Debt Securities of such series, to maintain paying agencies and to
hold monies for payment in trust) upon the deposit with the Trustee, in trust,
of money or U.S. Government Obligations which through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay (1) the principal of (and premium, if any)
and each instalment of interest on the Debt Securities of such series on the
Stated Maturity of such payments and (2) instalments of any sinking fund
payments applicable to the Debt Securities of such series, in accordance with
the terms of the Indenture and the Debt Securities of such series. Such a trust
may only be established if, among other things, the Company has delivered to
the Trustee an Opinion of Counsel (who may be an employee of or counsel for the
Company) to the effect that (1) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling to the effect that
Holders of the Debt Securities of such series will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to federal income tax on the same amount and
in the same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred and (2) the Debt Securities,
if then listed on the New York Stock Exchange, would not be delisted as a
result of such defeasance. (Section 403)
DEFEASANCE OF CERTAIN COVENANTS AND CERTAIN EVENTS OF DEFAULT. The Indenture
provides that, if applicable, the Company may omit to comply with certain
restrictive covenants in Sections 1005 (Maintenance of Properties), 1006
(Payment of Taxes and Other Claims), 1007 (Limitation on Liens) and 1008
(Limitation on Sale and Leaseback Transactions), and neither Section 501(4)
(described in
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clause (4) under "Events of Default") with respect to Sections 1005 through
1008 nor Section 501(5) (described in clause (5) under "Events of Default")
shall be deemed to be an Event of Default under the Indenture and the Debt
Securities of any series, upon the deposit with the Trustee, in trust, of money
or U.S. Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will provide money
in an amount sufficient to pay (1) the principal of (and premium, if any) and
each instalment of interest on the Debt Securities of such series on the Stated
Maturity of such payments and (2) instalments of any sinking fund payments
applicable to the Debt Securities of such series, in accordance with the terms
of the Indenture and the Debt Securities of such series. The obligations of the
Company under the Indenture and the Debt Securities of such series other than
the covenants referred to above and the Events of Default other than the Events
of Default referred to above shall remain in full force and effect. Such a
trust may only be established if, among other things, the Company has delivered
to the Trustee an Opinion of Counsel (who may be an employee of or counsel for
the Company) to the effect that (1) the Holders of the Debt Securities of such
series will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit and defeasance of certain covenants and Events of
Default and will be subject to federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such deposit
and defeasance had not occurred and (2) the Debt Securities of such series, if
then listed on the New York Stock Exchange, would not be delisted as a result
of such defeasance. (Section 1009)
DEFEASANCE AND CERTAIN OTHER EVENTS OF DEFAULT. In the event the Company
exercises its option not to comply with certain covenants of the Indenture with
respect to the Debt Securities of any series as described above and the Debt
Securities of such series are declared due and payable because of the
occurrence of any Event of Default other than an Event of Default described in
clause (4) or (5) under "Events of Default," the amount of money and U.S.
Government Obligations on deposit with the Trustee will be sufficient to pay
amounts due on the Debt Securities of such series at the time of their stated
maturity but may not be sufficient to pay amounts due on the Debt Securities of
such series at the time of the acceleration resulting from such Event of
Default. However, the Company shall remain liable for such payments.
MODIFICATION AND WAIVER OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than 66 2/3% in principal amount of
Outstanding Debt Securities of each series affected thereby, to execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the Indenture or modifying the rights of the Holders of
Outstanding Debt Securities of such series, except that no such supplemental
indenture may, without the consent of the Holder of each Outstanding Debt
Security affected thereby, (1) change the Stated Maturity of the principal of,
or any instalment of principal of or interest on, any Debt Security, (2) reduce
the principal amount of (or premium, if any) or any interest on any Debt
Security or reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon acceleration, (3) change the place
or currency of payment of principal of (or premium, if any) or interest on any
Debt Security, (4) impair the right to institute suit for the enforcement of
any payment on or with respect to any Debt Security on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), (5) reduce the aforesaid percentage in principal amount of Outstanding
Debt Securities of any series, the consent of the Holders of which is required
for any such supplemental indenture or for waiver of compliance with certain
provisions of the Indenture or certain defaults thereunder or (6) effect
certain other changes. (Section 902)
The Holders of at least 66 2/3% in principal amount of the Outstanding Debt
Securities of any series may on behalf of the Holders of all Debt Securities of
such series waive, insofar as such series is
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concerned, compliance by the Company with certain restrictive provisions of the
Indenture. (Section 1011) The Holders of a majority in principal amount of the
Outstanding Debt Securities of any series may on behalf of the Holders of all
Debt Securities of such series waive any past default under the Indenture with
respect to such series, except a default in the payment of the principal of (or
premium, if any) or any interest on any Debt Security of such series or in
respect of a provision or covenant which under the Indenture cannot be modified
or amended without the consent of the Holder of each Outstanding Debt Security
of such series affected thereby. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Indenture contains a provision permitting the Company, without the
consent of the Holders of any of the Outstanding Debt Securities, to
consolidate with or merge into any other corporation or transfer or lease its
assets substantially as an entirety to any Person or to acquire or lease the
assets of any Person substantially as an entirety or to permit any corporation
to merge into the Company, provided that (1) the successor is a corporation
organized under the laws of any domestic jurisdiction; (2) the successor
corporation, if other than the Company, assumes the Company's obligations on
the Debt Securities and under the Indenture; (3) after giving effect to the
transaction, no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have occurred and be
continuing; and (4) certain other conditions are met. (Section 801)
REGARDING THE TRUSTEE
Morgan Guaranty Trust Company of New York is the Trustee under the Indenture.
The Company maintains normal banking relationships with the Trustee in the
ordinary course of business. The Trustee acts as Trustee under a Trust
Indenture dated as of April 1, 1982 relating to the Floating Rate Demand
Industrial Development Revenue Bonds due 2012 issued by the City of West Des
Moines, Iowa, in respect of which the Company has entered into a loan agreement
with the City of West Des Moines, and under a Trust Indenture dated as of July
1, 1982 relating to the Floating Rate Demand Industrial Development Revenue
Bonds due 2022 issued by the Development Authority of La Grange, Georgia, in
respect of which the Company has entered into a loan agreement with the
Development Authority.
PLAN OF DISTRIBUTION
The Company may sell Debt Securities to or through underwriters, dealers or
agents or directly to other purchasers. Such underwriters, dealers or agents
may include Goldman, Sachs & Co. or another firm acting alone, or may be a
group of underwriters, dealers or agents represented by Goldman, Sachs & Co. or
by one or more firms including Goldman, Sachs & Co.
The distribution of Debt Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Underwriters may sell Debt
Securities to or through dealers.
In connection with the sale of Debt Securities, underwriters may receive
compensation from the Company or from purchasers of Debt Securities for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them from the Company and any profit on
the resale of Debt Securities by them may be deemed to be underwriting
discounts and commissions under the Act. Any such underwriter or agent will be
identified, and any such compensation to be received from the Company will be
described in, the Prospectus Supplement.
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Under agreements that may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Debt Securities may
be entitled to indemnification by the Company against certain liabilities,
including liabilities under the Act.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or other persons acting as the Company's agents to solicit offers
by certain institutions to purchase Offered Debt Securities from the Company
pursuant to contracts providing for payment and delivery on a future date.
Institutions with which such contracts may be made include commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others, but in all cases such
institutions must be approved by the Company. The obligations of any purchaser
under any such contract will be subject to the condition that the purchase of
the Offered Debt Securities shall not at the time of delivery be prohibited
under the laws of the jurisdiction to which such purchaser is subject. The
underwriters and such other agents will not have any responsibility in respect
of the validity or performance of such contracts.
VALIDITY OF DEBT SECURITIES
Unless otherwise indicated in an accompanying Prospectus Supplement relating
to Offered Debt Securities, the validity of the Debt Securities will be passed
upon for the Company by Peter G. Skinner, Esq., Vice President, Corporate
General Counsel and Secretary of the Company, and for the underwriters or
agents by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004.
EXPERTS
The consolidated financial statements and related financial statement
schedules included or incorporated by reference in the Company's Annual Report
on Form 10-K for the year ended December 31, 1988 have been audited by Coopers
& Lybrand, independent accountants, whose reports thereon are incorporated
herein by reference. Such financial statements and schedules have been so
incorporated in reliance upon the report of Coopers & Lybrand given upon their
authority as experts in auditing and accounting.
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NO DEALER, SALESPERSON, OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS PROSPECTUS SUP-
PLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITA-
TION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDIC-
TION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDIC-
TION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR
ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AF-
FAIRS OF THE COMPANY SINCE SUCH DATE.
- -------------------------------------------------------------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Ratio of Earnings to Fixed Charges S-2
Use of Proceeds S-2
Description of Notes S-2
Underwriting S-5
Validity of the Notes S-5
PROSPECTUS
Available Information 2
Incorporation of Certain Documents by Reference 2
The Company 3
Use of Proceeds 3
Selected Financial Information 4
Recent Developments 6
Capitalization 6
Pro Forma Financial Information 7
Description of Debt Securities 9
Plan of Distribution 15
Validity of Debt Securities 16
Experts 16
</TABLE>
Prospectus Supplement
DOW JONES & COMPANY, INC.
$150,000,000
5.75% NOTES DUE DECEMBER 1, 2000
CHEMICAL SECURITIES INC.
Dated December 1, 1995
