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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
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)
Registrant's telephone number, including area code: (212) 416-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock $1.00 par value
(Title of class)
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 a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. ( )
Aggregate market value of common stock held by non-affiliates of the
registrant at January 31, 1996 was approximately $1,891,000,000.
The number of shares outstanding of each of the registrant's classes of
common stock on January 31, 1996: 75,525,247 shares of Common Stock and
21,910,588 shares of Class B Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement for 1996 Annual Meeting of Stockholders
dated March 22, 1996: Part III.
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PART I.
ITEM 1. Business.
Dow Jones & Company, Inc. (the company) is a global provider of
business news and information. Its operations are divided into three
industry segments: financial information services, business publishing and
general interest community newspapers. Financial information about industry
segments and geographic areas is incorporated by reference to Note 16 to
the Financial Statements on pages 43 and 44 of this report.
The company currently has approximately 11,200 full-time employees.
The company's principal executive offices are located at 200 Liberty Street,
New York, New York, 10281.
Financial Information Services
- ------------------------------
The financial information services segment of Dow Jones reflects the
operations of Dow Jones Telerate and the company's financial news services,
such as Dow Jones News Service, Dow Jones Capital Markets Report, AP-Dow
Jones News Service, Federal Filings and the Dow Jones Asian Equities Report.
This segment primarily serves the global financial services industry.
Dow Jones Telerate is one of the largest suppliers of real-time market
information and related services to financial professionals in over 80
countries around the world. Over two-thirds of Dow Jones Telerate's
revenues are generated by its foreign operations. Dow Jones Telerate
Holdings, Inc., formerly Telerate, Inc., which became a wholly owned
subsidiary of Dow Jones in 1990, started in 1969 as a provider of commercial
paper quotations. The breadth and depth of Dow Jones Telerate are reflected
in the mix of services presently offered. The foundation of the service
rests on providing prices of U.S. Government securities, foreign exchange,
international government bonds, global equities, energy, mortgage-backed
securities and a variety of money market instruments. In addition, Dow
Jones Telerate provides global news coverage of the world's financial
markets and an array of services from outside information providers, ranging
from informed commentary on U.S. Federal Reserve actions to analysis of the
commodities markets.
Dow Jones Telerate also provides products and software to help users
analyze its live market data. Its Trading Room Systems (TRS) provide
advanced decision-support tools. Designed to serve the needs of large
trading rooms, TRS have networking capabilities which enable customers to
link trading rooms worldwide. Running on powerful desktop workstations
using software compatible with Microsoft Windows, TRS consolidate several
information, transaction and analytic services into a single platform at a
trader's desk.
The Telerate Workstation, introduced in early 1995, provides the
entire breadth of Dow Jones Telerate's real-time and historical market data
and decision-support products on a single, Windows-based platform. The
Telerate Workstation can be delivered as a stand-alone product or
incorporated into a customized Telerate Trading Room System.
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The Telerate Digital Page Feed (TDPF) fills the needs of customers who
prefer to receive any or all of Dow Jones Telerate's thousands of pages of
data in the form of an electronic feed that can be incorporated into their
own information systems. TDPF offers these customers a highly reliable,
timely and selective information feed combined with the flexibility required
by their custom distribution systems.
Matrix employs the power of a personal computer to allow customers to
build customized, full-color, market-specific pages using Dow Jones Telerate
data. Matrix has modules to analyze the fixed income and foreign exchange
markets and sophisticated analytical tools, including a spreadsheet from
Lotus Development Corporation that uses live Telerate data and contains
built-in formulas customized to help traders analyze financial markets.
The Treasury 500 service, which is part of Telerate's basic information
package, offers the widest coverage available of U.S. Government securities
and provides value-added analytics in addition to the price information
distributed through Dow Jones Telerate's long-standing exclusive agreement
with Cantor Fitzgerald Securities Corp. One of Treasury 500's most
important features is that it provides live bids and offers from an
identified source that customers can actually trade on. It also has live
two-sided market displays of best-bid and best-offer prices.
Dow Jones Telerate is the exclusive distributor of real-time foreign
exchange and money market prices from M. W. Marshall & Company and Exco
International, two of the world's foremost foreign exchange brokers.
TeleTrac is a DOS-based technical analysis product favored by dealers
in the foreign exchange and fixed income markets. An enhanced version of
Teletrac, TeleTrac Tradestation, was introduced in January 1996. Teletrac
Tradestation is Windows-based technical analysis software designed to run on
the Telerate Workstation. It offers advanced charting and analytical power
combined with access to all Dow Jones Telerate news, commentary and price
information.
The company and Aegon USA Inc. formed a partnership in 1994 to develop
and market the first comprehensive on-line commercial real estate
information service. This new service, known as Teleres, will be available
over the Telerate Workstation and includes performance data on realty stocks
and real estate investment trusts as well as breaking news on relevant real
estate events. The service is expected to be launched in the first half of
1996.
Dow Jones Telerate's Emerging Markets Report provides information on
the emerging capital markets of developing countries, with particular
emphasis on Latin America, by combining Dow Jones Telerate's live market
prices with news from Dow Jones and the Associated Press, plus market
commentary from Thomson Financial Services.
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Other Dow Jones Telerate products and services currently in the
marketplace include: the Telerate Access Service, a personal-computer
software package that provides a link to Telerate's core information base
through public telephone networks and includes access to Dow Jones News/
Retrieval; hand-held quotation devices that deliver current prices, rates
and other data; Telerate Charting, a Windows-based analytical tool available
in Europe; and data for mortgage markets.
Dow Jones News Service is the nation's pre-eminent supplier of business
and financial news to subscribers at brokerage firms, banks, investment
companies and other businesses. Capital Markets Report, which is
incorporated into Dow Jones Telerate's basic information package, is the
company's newswire that covers fixed income and financial futures markets
around the world.
AP-Dow Jones, a news service joint venture with the Associated Press,
provides international economic, business and financial news to subscribers
in 65 countries. In addition to two broad international newswires, AP-Dow
Jones offers specialized wires dedicated to the coverage of European
equities, banking and the markets in foreign exchange. AP-Dow Jones also
produces the World Equities Report newswire which serves domestic
institutions investing in international markets. In 1995 AP-Dow Jones
expanded its global staff by opening news bureaus in Budapest, Dublin,
Hanoi, Istanbul, Santiago, Shanghai and Warsaw.
The Dow Jones Asian Equities Report, launched in 1994, covers 15 Asian-
Pacific stock markets and news of the companies traded on them.
Headquartered in Singapore, the service draws on the staffs of AP-Dow Jones,
The Asian Wall Street Journal and Far Eastern Economic Review, as well as
its own editors and reporters.
Washington-based Federal Filings publishes newswires, newsletters and
investment research based on its coverage of federal regulatory agencies,
Capitol Hill and bankruptcy courts nationwide. Federal Filings' products
include Federal Filings Business News, a real-time newswire covering SEC
filings; Daily Bankruptcy Review, a compendium of large bankruptcy filings
throughout the U.S.; and 13F Advance, which analyzes the equity portfolio
changes of prominent money managers. Federal Filings also offers Edgar
Direct, which provides real-time access to the full text of SEC filings.
Business Publishing
- -------------------
The business publishing segment contains the operations of the
company's print publications, which include The Wall Street Journal as well
as its international editions in Europe and Asia; Business Information
Services, the electronic publishing arm of the company; and the company's
television and multimedia operations.
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Dow Jones' flagship publication, the domestic Wall Street Journal, is
the country's largest daily newspaper with average circulation for 1995 of
1,796,000. The Wall Street Journal is edited in New York City at the
company's executive offices. The Journal's four regional editions are
printed at 17 plants located across the United States. The Wall Street
Journal offers advertisers the opportunity to focus their messages on
readers served by sixteen localized editions and, as of the fourth quarter
of 1995, the option of advertising in full color.
Texas Journal, Southeast Journal and Florida Journal editions provide
Journal-quality reporting on regional business trends and issues. They
appear as a four-page weekly section included in copies of The Wall Street
Journal distributed in their respective markets each Wednesday. The Journal
also provides weekend-oriented coverage every Friday, including Your Money
Matters Weekend Report (an expanded personal-finance column), a sports page,
a travel page and a residential real estate page.
Production of the paper employs satellite transmission of page images
to the outlying plants and other technologies designed to speed the delivery
of editorial material to the presses and to reduce the steps taken in the
printing process. The Wall Street Journal is delivered in two ways: by
second-class postal service and through the company's National Delivery
Service, Inc. subsidiary. In 1995 National Delivery Service on average
delivered slightly over one million of the Journal's subscription copies
each publishing day. The system provides delivery earlier and more reliably
than the Postal Service. Approximately 226,000 copies of the Journal are
sold each business day at newsstands.
Barron's, The Dow Jones Business and Financial Weekly, is a magazine
that specializes in reporting and commentary on financial markets. The
magazine, which had average circulation of 281,200 in 1995, uses the same
facilities employed in the production of The Wall Street Journal. Barron's
is edited in New York City and is delivered by second-class postal service
and through National Delivery Service. About 122,000 copies are sold at
newsstands weekly.
The Wall Street Journal Europe is headquartered in Brussels and printed
in Brussels, the Netherlands, Switzerland and England. It is available on
the day of publication in continental Europe and the United Kingdom. The
newspaper had average circulation in 1995 of 61,800. The Central European
Economic Review is distributed as an insert in The Wall Street Journal
Europe and also sold separately by subscription. Formerly a quarterly,
the magazine, which covers political and business developments in the former
Soviet bloc, became a monthly publication in 1995. Convergence, which is a
quarterly magazine that reports on multimedia industries in Europe, was
introduced in 1995 as an insert in The Wall Street Journal Europe.
The Asian Wall Street Journal is headquartered and printed in Hong Kong
and is transmitted by satellite to additional printing sites in Singapore,
Japan and Bangkok. The Asian Wall Street Journal had average circulation of
50,300 in 1995.
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Both the Journal Europe and the Asian Journal draw on the resources of
The Wall Street Journal's worldwide news staff. The Asian Journal provides
the foundation for the company's Asian Wall Street Journal Weekly, which is
published in New York for North American readers with interests in Asia.
The company began expanding its readership of Wall Street Journal news
content by introducing The Wall Street Journal Americas in 1994. At the end
of 1995, this daily, Spanish-language business news section was included in
nine major Latin American newspapers with a combined weekday circulation in
excess of 1.2 million. In 1995 the company further broadened its worldwide
delivery of Wall Street Journal news content via component pages of national
newspapers in South Africa, Canada and China.
Other business publications include Far Eastern Economic Review, Asia's
leading English-language newsweekly; the National Business Employment
Weekly, which contains career-related news features, job-related ads from
the Journal's regional editions and self-generated advertising; The Wall
Street Journal Classroom Edition, which is published nine times during the
school year and is used in more than 3,500 schools nationwide; American
Demographics magazine, which contains feature stories analyzing statistics
from the United States Census Bureau and private data collectors; and
Marketing Tools magazine, a publication introduced in 1994 which features
articles about marketing tactics and techniques.
In early 1995 the company purchased Charter Financial Publishing Corp.
of Shrewsbury, New Jersey. Charter is publisher of Investment Advisor,
Realty Stock Review and Fee Advisor.
SmartMoney, The Wall Street Journal Magazine of Personal Business, is
published jointly with Hearst Corp. SmartMoney increased its advertising
rate base to 600,000 copies effective with its January 1996 issue.
Dow Jones Business Information Services is recognized as one of the
nation's leading publishers of electronic business and financial news and
information to financial professionals, private investors, corporate
executives and managers, as well as to information specialists in corporate
libraries. The Business Information Services (BIS) group serves its
customers' needs by delivering its information products and services in a
wide range of electronic media, including personal computers, facsimile
machines and radio. This group's products include Dow Jones News/Retrieval,
DowVision, two radio networks as well as two products released in 1995,
Personal Journal and Money & Investing Update, the first phase of The Wall
Street Journal Interactive Edition. BIS also includes the operations of IDD
Enterprises, L.P.
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Dow Jones News/Retrieval, an on-line business and financial information
service, greatly expanded its electronic text library with the addition of
over 1,000 publications in 1995. In early 1995, on-line availability on the
day of publication of the Financial Times, along with two years of back
editions, was added. Also in 1995, Dow Jones News/Retrieval opened an
"electronic gateway" to Nikkei Telecom Japan News & Retrieval, offering
access to news and information about Japan and the Pacific Rim. Beginning
January 1, 1996, Dow Jones News/Retrieval subscribers could access the full
text of the most recent 90 days of the New York Times. Dow Jones News/
Retrieval's text library by year-end 1995 contained approximately 3,000
publications, representing over 47 million articles. In addition to
expanding its electronic text library in 1995, Dow Jones News/Retrieval
provided its subscribers with improved graphical user interface software for
Windows and Macintosh.
Business Information Services has an alliance, which was formed in
1994, with West Publishing in which West's WESTLAW is the exclusive
computer-assisted legal research service to offer integrated access to Dow
Jones News/Retrieval.
DowVision is the only electronic information service that delivers the
text of The Wall Street Journal, the New York Times, the Financial Times and
the Los Angeles Times together with the premier Dow Jones newswires and the
press-release services directly to corporate desktops. DowVision's
extensive profiling enables users in the corporate marketplace to customize
information delivery to meet their needs.
Because of declining demand for telephone-based business news services,
Business Information Services discontinued DowPhone and the Voice
Information Network audio service for newspapers in early 1995. However,
the BIS group retained a presence in the telephone-based business news
market with JournalPhone and the Dow Jones Market Report and continued to
expand the distribution of text-based news and information on paging and
wireless electronic mail services.
Dow Jones' radio products include two radio networks -- The Wall Street
Journal Report on AM stations and The Dow Jones Report on FM stations.
Together these programs are carried on 150 stations and reach 82% of the
country.
The Business Information Services group in early 1995 introduced
Personal Journal, the first electronic version of The Wall Street Journal.
The publication is designed to deliver customized business and market news,
stock quotes, world and national news, weather and sports 24 hours a day
directly to subscribers' personal computers.
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Money & Investing Update, the first phase of The Wall Street Journal
Interactive Edition, was introduced in July 1995 on the Internet's World
Wide Web. The full Wall Street Journal Interactive Edition, which is
expected to be available in the first half of 1996, will offer continuously
updated news and information, background information on companies, stock
quotes, audio and video content from the company's television and multimedia
group as well as access to Dow Jones News/Retrieval. This interactive
edition, in addition to being supported by subscribers, will be supported by
advertising, featuring electronic links to advertisers' World Wide Web
sites.
In February 1995, the company acquired a majority interest in IDD
Enterprises L.P., a financial publishing, database, software and consulting
company. IDD publishes Investment Dealers' Digest and 14 other magazines,
newsletters and directories. Its software and electronic information
products are available to investment banks and financial institutions
through a variety of services, including Dow Jones Telerate and Dow Jones
News/Retrieval.
Also included in this business segment is the company's television
group, which formed European Business News (EBN) in 1994. EBN, which began
broadcasting in February 1995, provides 24-hours-a-day coverage of European
business, financial and consumer news throughout Europe. EBN is a limited
partnership, 70% owned by Dow Jones and 30% owned by Flextech PLC, of
London, an affiliate of Tele-Communications Inc. The television group also
produces "The Wall Street Journal Report," a half-hour, weekly program in
the U.S. covering business, consumer and investment topics.
Dow Jones Investor Network is a video business-news service delivered
to customers' computer terminals that includes exclusive interviews with
business leaders and coverage of major corporate announcements and events.
In February 1996, the company introduced DJIN/On-Demand, which provides
subsribers on-line access to prior broadcasts of the Dow Jones Investor
Network.
In January 1995, ESPN Inc. acquired an 80% interest in SportsTicker,
the real-time sports news and information unit of Dow Jones. Dow Jones
retained a 20% interest in the service.
Community Newspapers
- --------------------
Community newspapers published at year-end 1995 by Ottaway Newspapers,
Inc., a wholly owned subsidiary, include 19 general interest dailies in
Arizona, California, Connecticut, Kentucky, Massachusetts, Michigan,
Minnesota, Missouri, New York, Oregon and Pennsylvania. Average circulation
of the dailies during 1995 was approximately 575,600; Sunday circulation for
13 newspapers was approximately 529,300. The principal administrative
office of Ottaway Newspapers is in Campbell Hall, New York. The primary
delivery method for the newspapers is private delivery.
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Ottaway Newspapers purchased the Salem (Mass.) Evening News in March
1995 and in August 1995 combined the operations of this newspaper with the
operations of the Peabody Times and the Beverly Times, all in Essex County,
Massachusetts, creating the leading newspaper on Boston's North Shore.
Other
- -----
In 1995 the company and ITT Corporation formed a 50/50 partnership to
purchase WNYC-TV from New York City. The purchase, which is subject to
approval by the Federal Communications Commission, is expected to be
finalized in the first half of 1996. The television station is expected to
be relaunched in the latter part of 1996 as WBIS+ and will provide a mix of
business and sports programming. Dow Jones is a 49% owner of Asia Business
News (Singapore) Pte. Ltd., a business and financial news television company
broadcasting in Asia. The company also owns a minority interest in Hubbard
Broadcasting Inc.'s U.S. Satellite Broadcasting venture which directly
broadcasts television programming to viewers in the U.S. via 18-inch dish
antennas linked to special home receivers.
Dow Jones also has other investments in Handelsblatt-Dow Jones GmbH, a
joint venture with the von Holtzbrinck Group, publisher of Germany's leading
business daily, Handelsblatt; Press-Enterprise Co., a daily newspaper in
Riverside, Calif.; Mediatex Communications Corp., publisher of Texas Monthly
magazine; Nation Publishing Group, a Bangkok, Thailand, publisher of
English and Thai-language magazines and newspapers; AmericaEconomia, a
Spanish-language business magazine in South America; VWD-Vereinigte
Wirtschaftsdienste GmbH, a German news agency specializing in business and
economic news and information; Minex Corporation, a minority-owner of EBS, a
provider of a foreign exchange trading service; HB-Dow Jones S.A., a part-
owner of a publishing company in the Czech Republic; and newsprint mills in
the United States and Canada.
Raw Materials
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The primary raw material used by the company is newsprint. In 1995,
approximately 224,000 metric tons were consumed. Newsprint was purchased
principally from 14 suppliers. F.F. Soucy, Inc. & Partners, L.P., Riviere
du Loup, Quebec, Canada, and Bear Island Paper Company, Richmond, Virginia,
furnished 16.5% and 19.8%, respectively, of total newsprint requirements.
The company is a limited partner in both ventures and has signed long-term
contracts with both for a substantial portion of its annual newsprint
requirements. For many years the available sources of newsprint have been
adequate to supply the company's needs.
Research and Development
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Research and development expenses were $66,710,000 in 1995, $52,522,000
in 1994 and $40,705,000 in 1993.
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Competition
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The company believes that Reuters Holdings PLC ("Reuters"), a company
headquartered in London whose shares are publicly traded in the United
States and the UK, is its most significant competitor currently providing,
on a worldwide basis, financial information display services closely
comparable to those furnished by Dow Jones Telerate, although other
companies, primarily Automated Data Processing Corporation, Knight-
Ridder, Inc., Bloomberg L.P., Telesphere Corporation, ILX Systems, Inc.,
Bridge Information Services, Inc. and Quick Corporation of Japan are also in
the business of providing financial information displayed on video screens
to customers. The company believes that Reuters has more subscribers and
video screens than the company on a worldwide basis. The company believes
that Dow Jones Telerate is the largest provider of fixed income and foreign
exchange data in the United States.
Many business enterprises, including banks, brokerage houses and other
financial firms, operate electronic data systems which are able to move
financial and business news rapidly from one location to another, competing
with the company's other electronic information services products. This
competition will become more intense as telecommunications systems are
improved and new techniques of data transmission are developed. In
addition, some of the company's electronic information products compete
directly with various on-line services of the Internet.
The business publications of the company remain highly competitive. In
its various news publishing activities, Dow Jones competes with a wide
spectrum of other information media. All metropolitan general interest
newspapers and many small city or suburban papers carry business and
financial pages or sections, including securities quotations. In addition,
specialized magazines in the economics field, as well as general news
magazines, publish substantial amounts of business material. Nearly all
these publications seek to sell advertising space and much of this effort is
directly or indirectly competitive with Dow Jones' publications. The
company's business publications also compete with television and radio for
advertisers.
The company's emerging worldwide television operations are in highly
competitive markets. The company believes its major direct competitor in
Europe and Asia is CNBC, which also provides full-length business
programming. International satellite networks which specialize in general
news also provide business programming. In addition, individual television
stations and networks in each country produce business news programming that
targets local viewers. Upon entering the U.S. market for business news
programming via its investment in WBIS+, the company views CNBC, which is
well established, and CNNfn, which was recently launched, as its chief
competitors.
All of the community newspapers operating under Ottaway Newspapers,
Inc. compete with metropolitan general interest newspapers, and most compete
with other newspapers available in their respective sales areas.
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ITEM 2. Properties.
Dow Jones operates 17 plants with an aggregate of approximately one
million square feet for the printing of its domestic publications. Printing
plants are located in Palo Alto and Riverside, California; Denver, Colorado;
Orlando, Florida; LaGrange, Georgia; Naperville and Highland, Illinois; Des
Moines, Iowa; White Oak, Maryland; Chicopee Falls, Massachusetts; South
Brunswick, New Jersey; Charlotte, North Carolina; Bowling Green, Ohio;
Sharon, Pennsylvania; Dallas and Beaumont, Texas; and Federal Way,
Washington. All plants include office space. All are owned in fee except
the Palo Alto, California, plant, which is located on 8.5 acres under a
lease to Dow Jones for 50 years, expiring in 2015.
Other facilities owned in fee with a total of approximately 870,000
square feet house news, sales, administrative, research, computer and
operations staff. These facilities are located in Chicopee Falls,
Massachusetts, and South Brunswick, New Jersey.
Dow Jones occupies two major leased facilities in New York City:
editorial and executive staff occupy 360,000 square feet, while advertising
sales staff occupy 89,000 square feet at a separate location. The company
also leases other business and editorial offices in numerous separate
locations around the world, including 50,000 square feet in two locations in
Hong Kong.
Dow Jones Telerate leases approximately 25,000 square feet in New York
City, 330,000 in Jersey City, New Jersey, 126,000 at five locations in
London, England, 70,000 at three locations in Toronto, Ontario, 44,000 at
two locations in Singapore and 37,000 at two locations in Hong Kong. In
addition, Dow Jones Telerate leases space around the world for its
operations.
Ottaway Newspapers operates in 28 locations, including a 24,000 square
foot administrative headquarters in Campbell Hall, New York. These
facilities are located in Sun City, Arizona; Santa Cruz, California;
Danbury, Connecticut; Ashland, Kentucky; Beverly, Hyannis, New Bedford,
Gloucester, Nantucket, Peabody, Salem, Fall River and Newburyport,
Massachusetts; Traverse City, Michigan; Mankato, Minnesota; Joplin,
Missouri; Exeter and Hampton, New Hampshire; Middletown, Oneonta,
Plattsburgh and Port Jervis, New York; Medford, Oregon; and Grove City,
Sharon, Stroudsburg and Sunbury, Pennsylvania. Local printing facilities,
which include office space, total approximately 1,172,000 square feet. All
facilities are owned in fee except the office space in Salem, which is
leased.
The company believes that its current facilities are suitable and
adequate, well maintained and in good condition. Older facilities have been
modernized and expanded to meet present and anticipated needs. It is
estimated that between 65% and 75% of the capacity of the company's existing
production facilities is being utilized.
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PAGE 12
ITEM 3. Legal Proceedings.
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
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PAGE 13
Executive Officers of the Registrant
- ------------------------------------
Each executive officer is elected annually to serve at the pleasure of
the Board of Directors.
All executive officers named below have been employed by the company
for more than five years.
Peter R. Kann, age 53, Chairman of the Board since July 1991, Chief
Executive Officer since January 1991 and Publisher of The Wall Street
Journal since January 1989, served as President from July 1989 to July 1991
and Chief Operating Officer from July 1989 to December 1990, Executive Vice
President from 1985 to 1989 and Associate Publisher of The Wall Street
Journal from 1979 to 1988.
Kenneth L. Burenga, age 51, President of the company and President of
The Wall Street Journal since July 1991 and Chief Operating Officer since
January 1991, served as Executive Vice President from January 1991 to July
1991 and Senior Vice President from 1986 thru 1990, and General Manager from
January 1989 thru December 1990, as Chief Financial and Administrative
Officer from 1986 to 1988 and Vice President/Circulation of The Wall Street
Journal from 1980 to 1986.
James H. Ottaway Jr., age 58, Senior Vice President since 1986,
President of Magazines since February 1988, Chairman of Ottaway Newspapers,
Inc. since 1979, served as President of the International Group from
February 1988 to January 1995, as Vice President/Community Newspapers from
1980 to 1985 and as President of Ottaway Newspapers, Inc. from 1970 to 1985
and its Chief Executive from 1976 to January 1989.
Peter G. Skinner, age 51, Senior Vice President since November 1989,
General Counsel and Secretary since 1985 and President, Television since
January 1995, served as Vice President from 1985 to November 1989.
Carl M. Valenti, age 57, President and Publisher of Dow Jones Telerate
since May 1990, Senior Vice President of the company since July 1989, served
as Vice President of the company and President/Information Services Group
from 1987 to 1990 and as Vice President/Information Services Group from 1980
to 1987.
Kevin J. Roche, age 61, Vice President/Finance since 1986 and Chief
Financial Officer since January 1989, served as Comptroller from 1977 to
1987.
Thomas G. Hetzel, age 40, Comptroller since October 1993, served as
Associate Comptroller from 1992 to 1993 and Assistant Comptroller from 1988
to 1992.
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PART II.
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The company's common stock is listed on the New York Stock Exchange.
The class B common stock is not traded. The approximate number of
stockholders of record as of January 31, 1996, was 12,600 for common stock
and 5,000 for class B common stock. The company paid $.92 per share in
dividends in 1995 and $.84 per share in 1994. The dividend payout ratio was
47.0% in 1995 and 46.8% in 1994.
<TABLE>
<CAPTION>
============================================================================
Market Price 1995 Market Price 1994
----------------- -----------------
Quarters Dividends Dividends
Ended High Low Paid 1995 High Low Paid 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31 $38 1/2 $30 5/8 $.23 $41 7/8 $35 1/2 $.21
June 30 37 7/8 33 1/2 .23 40 3/8 31 .21
September 30 37 7/8 34 1/2 .23 32 1/4 28 3/8 .21
December 31 40 1/8 34 1/8 .23 31 7/8 28 1/8 .21
============================================================================
</TABLE>
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PAGE 15
ITEM 6. Selected Financial Data.
See Management's Discussion and Analysis of Financial Condition and
Results of Operations for a discussion of factors that affect the
comparability of the information reflected in this table.
<TABLE>
<CAPTION>
The following table shows selected financial data for the most recent five
years:
============================================================================
(in thousands except
per share amounts) 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues $2,283,761 $2,090,977 $1,931,816 $1,817,870 $1,725,079
Income before
cumulative effect
of accounting
changes $189,572 $181,180 $147,547 $118,391 $72,189
Net income $189,572 $178,173 $147,547 $107,586 $72,189
- ----------------------------------------------------------------------------
Per Share Amounts:
Income before
cumulative effect
of accounting
changes $1.96 $1.83 $1.48 $1.17 $.71
Net income $1.96 $1.80 $1.48 $1.06 $.71
Dividends $ .92 $ .84 $ .80 $ .76 $.76
- ----------------------------------------------------------------------------
Average shares
outstanding 96,907 99,002 99,773 101,150 101,011
Total assets $2,598,700 $2,445,766 $2,349,539 $2,372,035 $2,470,584
Long-term debt,
incl. current
portion $259,253 $300,870 $266,391 $340,036 $453,308
- ----------------------------------------------------------------------------
Operating income
as a percent of
revenues 13.3% 17.1% 16.4% 15.4% 14.0%
Net income as a
percent of
revenues 8.3% 8.5% 7.6% 5.9% 4.2%
Net income as a
percent of stock-
holders' equity 11.8% 12.0% 9.9% 7.4% 5.0%
============================================================================
</TABLE>
<PAGE>
PAGE 16
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net income in 1995 of $189.6 million, or $1.96 per share, increased
$11.4 million, or 6.4%, from 1994's earnings of $178.2 million, or $1.80 per
share, marking the fourth consecutive year of income growth. Per-share
earnings increased at the greater rate of 8.9% as average shares outstanding
in 1995 declined due to share repurchases in the latter part of 1994. The
earnings gain in 1995 was largely the result of lower income tax expense,
improved earnings from the company's newsprint mill affiliates, and a gain
on the sale of 80% of the company's interest in SportsTicker, a sports
information service. Also, earnings in 1994 included a $3 million after-tax
charge for a change in accounting. Return on stockholders' equity was 11.8%
in 1995, just under 1994's 12%.
Operating income declined $54.3 million, or 15.1%, in 1995, the first
decline since 1990. The operating margin slipped to 13.3% from the 17.1%
achieved in 1994. Although 1995 revenues grew $192.8 million, or 9.2%,
expenses rose $247 million, or 14.3%, from 1994. Expenses were affected by
significantly higher newsprint prices, expansion of worldwide television
operations, continued spending on the development and enhancement of
electronic information products and an $8.4 million loss on an operating
lease.
The company's foreign operations continue to accelerate in growth and
importance -- contributing 30% of consolidated revenue in 1995, up from 29%
in 1994 and 24% in 1990.
In 1994 net income increased $30.7 million, or 20.8%, to $178.2 million
from 1993's earnings of $147.5 million, or $1.48 per share. The improvement
reflected strong growth in operating income which was up $41.9 million, or
13.2%. Additionally, earnings in 1993 included after-tax write-downs of
various investments totaling $5.4 million. The operating margin of 17.1%
rose from 1993's 16.4%. Revenues increased $159.2 million, or 8.2%, in
1994, and expenses were up $117.3 million, or 7.3%. Return on stockholders'
equity increased to 12% in 1994 from 9.9% in 1993, the first double-digit
return since 1989.
Earnings in 1993 grew $40 million, or 37.1%, from 1992. Excluding
nonrecurring items, net income increased $21.1 million, or 16.7%. Operating
income grew $35.8 million, or 12.7%, in 1993.
SEGMENT DATA
A summary of the results of operations for each of the company's
principal business segments as well as financial data by geographic area is
displayed in Note 16 to the financial statements.
<PAGE>
PAGE 17
The company realigned its business operations in 1995 into the
following three segments: financial information services, business
publishing and community newspapers. Financial information services
includes Dow Jones Telerate and Dow Jones' financial news services, such as
Dow Jones News Service, the AP-Dow Jones newswires and Federal Filings.
This segment primarily serves the worldwide financial services industry --
including traders and brokers -- with real-time business and financial news,
quotes, trading systems and analytical tools. Financial information
services comprised about 42% of the company's revenue in 1995.
Business publishing contains the company's print publications, Business
Information Services group and the Television and Multimedia group.
Business publishing, which serves the business consumer marketplace,
accounted for roughly 46% of the company's revenue in 1995.
The community newspapers segment consists of the company's Ottaway
Newspapers, Inc. subsidiary, which publishes 19 daily newspapers in
communities throughout the United States. The community newspapers segment
contributed about 12% of the company's 1995 revenue.
FINANCIAL INFORMATION SERVICES
Operating income for the financial information services segment of
$197 million in 1995 increased $13.9 million, or 7.6%, from the
$183.1 million earned in 1994. This segment in 1995 contributed 42% of
consolidated revenues, the same as in 1994, but up from 40% in 1993.
Revenues at this segment grew $84 million, or 9.6%, in 1995, and expenses
increased $70.1 million, or 10.1%. The operating margin declined moderately
to 20.5% in 1995 from 20.9% in 1994, but was up from the 1993 margin of
18.1%. Excluding the effect of foreign exchange fluctuations in 1995,
financial information services revenue, operating expenses and operating
income would have been up 6.7%, 7.8% and 2.7%, respectively.
Dow Jones Telerate, which encompasses about 85% of financial
information services segment revenue, reported a revenue increase of 10.2%.
The foreign components of this group posted revenue growth of 14% and
provided over two-thirds of Dow Jones Telerate's revenue. Revenue from
domestic operations increased only 3.2%, in part reflecting the
consolidations taking place in the financial services and banking
industries. The introduction of the Telerate Workstation in January 1995,
growth in digital feeds, an increase in the number of Telerate Trading Room
Systems and favorable foreign exchange rates contributed to higher worldwide
revenues.
The increase in this segment's expenses was caused chiefly by increases
in the cost of acquiring third-party content (royalties), product
development and costs of expanded news coverage. These expenditures support
the company's strategy of improving content as well as distribution.
Additionally, sales costs rose mainly due to the marketing of the Telerate
Workstation.
<PAGE>
PAGE 18
In 1994 financial information services segment operating income jumped
$42.1 million, or 30%, with Dow Jones Telerate up 41% and Financial News
Services up 10.9%. Revenue for the segment was up $98.5 million, or 12.6%,
from the prior year, and expenses increased $56.4 million, or 8.8%. Revenue
from foreign components of these groups rose 14.2% in 1994, while U.S.
revenue increased 10.5%. Operating income in 1993 increased 4.5% from 1992.
Financial information services benefited in 1994 from increased sales
of Dow Jones Telerate's Matrix, digital feed and Telerate Trading Room
Systems products and foreign exchange currency fluctuation. Expenses were
up 8.8% in 1994, primarily due to higher royalties for expanded third-party
content and investments in product development and network upgrades.
Excluding foreign exchange, operating income grew 26.5% in 1994 on an 11.5%
revenue gain and an 8.2% increase in expenses.
The number of full-time employees in the financial information services
segment at December 31, 1995 was up 10.3% from a year earlier, as Dow Jones
Telerate continued the expansion of its worldwide development and sales
efforts.
BUSINESS PUBLISHING
Operating income in 1995 declined $61.9 million, or 39.3%, to
$95.5 million from the $157.4 million earned in the prior year. This
followed a decrease in operating income of $2.7 million, or 1.6%, from the
$160.1 million achieved in 1993. Operating income in 1993 rose
$29.3 million, or 22.4%, from 1992.
The sharp decline in 1995 mainly resulted from the steep rise in the
cost of newsprint, the start-up of the company's television operation in
Europe, European Business News, in February 1995 and the loss on an
operating lease. Excluding the effect of newsprint prices, which rose
roughly 44% on average in 1995, the company's emerging television operations
and the loss on an operating lease, business publishing operating income
would have risen $5.8 million, or 3.3%, in 1995. The business publishing
segment's contribution to consolidated operating income declined to 31% in
1995 from 44% in 1994 and 51% in 1993. As business publishing's operating
income contribution fell, financial information services' contribution rose
from 45% in 1993 to 65% in 1995.
Business publishing 1995 revenues, which for the first time exceeded
$1 billion, increased $88.1 million, or 9.2%. However, expenses of
$954 million were $150 million, or 18.7%, higher than 1994 largely due to
newsprint expense and television operations. In 1994 revenues grew
$53.1 million, or 5.8%, as expenses climbed $55.7 million, or 7.4%. The
higher expense growth included start-up costs for European Business News.
<PAGE>
PAGE 19
Print publications, the largest component of this segment, had a
revenue increase of 5.6% in 1995. Wall Street Journal advertising linage
increased 2.2%, or 2.6% on a per-issue basis, with one less publishing day
in 1995, after declining 1.2% in 1994. Linage rose 3.3% in 1993. Increases
in 1995 of 5.1% in general advertising linage, which comprised 58% of total
advertising, and 2.7% in classified and other were partially offset by a
3.1% decline in financial advertising. General advertising increased 3.1%
in 1994, following a 0.9% decline in 1993. Financial advertising, which is
more volatile, fell 9.9% in 1994 after increasing 13.4% in 1993.
Advertising linage for the international editions of the Journal -- The
Wall Street Journal Europe and The Asian Wall Street Journal -- rose 7.8%
and 5.9%, respectively, in 1995. The company's other international
publication -- Far Eastern Economic Review -- posted a 15.3% increase in
advertising pages. Barron's 1995 national advertising pages fell 17.5%,
following gains of 2.4% and 6.9% in 1994 and 1993.
Average circulation for the domestic Wall Street Journal was 1,796,000
in 1995, down from 1,809,000 in 1994 and 1,840,000 in 1993. The
international editions of The Wall Street Journal continue to expand with
Europe and Asia, combined, posting average 1995 circulation of 112,200, up
6.7% from a year earlier and up 10.3% from 1993. Circulation at the Far
Eastern Economic Review also continued to grow, up 2.4% from 1994.
Expenses for print publications jumped 12.2% in 1995, with almost half
of the rise due to significant newsprint price increases. Newsprint expense
was up 46% from 1994. Also contributing to the expense rise was a 12.5%
increase in second class postal rates and an $8.4 million loss on an
operating lease for office space in New York City. In 1994 print
publications expenses were up 4.5%, chiefly due to higher selling and
operating costs.
At the Business Information Services group, which contains the Dow
Jones News/Retrieval service and other on-line products, revenues jumped 39%
in 1995, chiefly due to volume gains and the inclusion of IDD Enterprises,
L.P. (IDD), a majority-owned subsidiary acquired in early 1995. Expenses
were 49% higher than 1994 because of the inclusion of IDD, royalties to
information providers and product development costs. The growth in
expenses, which in part was due to development and introduction costs for
the group's new line of products, including Personal Journal and the first
stage of The Wall Street Journal Interactive Edition, caused a drop in 1995
operating income for the group.
Also within the business publishing segment are the company's global
television and multimedia initiatives, including European Business News.
Expenses for television operations increased $24.2 million in 1995, mainly
due to European Business News which was launched on February 27, 1995. The
company's television initiatives, including operating losses less the
minority partner's share of losses in European Business News, and equity
losses from Asia Business News, posted a pretax loss of $38 million in 1995,
compared with the loss of $19 million in 1994.
The number of full-time employees for the business publishing segment
at the end of 1995 was up 14.6% from a year earlier, due to staffing for
European Business News, expansion of Business Information Services' product
line and acquisitions.
<PAGE>
PAGE 20
COMMUNITY NEWSPAPERS
The community newspapers segment reported a $3.2 million, or 8.8%,
decline in operating income to $33 million in 1995. Although revenues
advanced $20.7 million, or 8.2%, to $272.9 million, expenses climbed
$23.9 million, or 11.1%. Acquisition of the Salem Evening News contributed
to the higher revenue and expense levels. As with print publications,
newsprint price hikes had a severe impact in 1995, accounting for roughly
half of the $23.9 million rise in expenses. Excluding the effect of
newsprint price increases, costs were up 6%. Advertising revenue in 1995
grew $14.0 million, or 7.9%, due to rate increases and a 1.2% linage gain
from 1994. Circulation revenue rose $5.7 million, or 8.1%. Average daily
circulation for 1995 was 575,600, down slightly from 580,200 in 1994,
including Salem Evening News for both years.
In 1994 operating income of $36.2 million for community newspapers
increased $3.6 million, or 11.1%, from 1993, on revenue growth of
$7.6 million, or 3.1%. Advertising linage improved 0.2% in 1994 and
circulation was flat. Expenses were up $4 million, or 1.9%. Operating
income in 1993 rose $0.9 million, or 2.9%.
In 1995 Ottaway Newspapers combined the operations of Peabody Times and
the Beverly Times with the Salem Evening News, all located in Essex County,
Massachusetts, creating the leading newspaper on Boston's North Shore.
STAFFING COSTS
At December 31, 1995, the company employed 11,232 full-time employees,
up 9.4% from 10,265 at the end of 1994. There were 10,006 employees at
year-end 1993. Salaries and wages were 30% of total operating expenses in
1995 compared with 31% in both 1994 and 1993. Salaries and wages increased
12.3% in 1995, following increases of 5.8% and 6.4% in 1994 and 1993,
respectively. The greater number of employees and the increase in salaries
and wages in 1995 was largely attributable to acquired businesses, expanding
television activities and higher staff levels in product development.
OTHER INCOME/DEDUCTIONS
Equity in earnings of associated companies was $14.2 million in 1995, a
positive swing of $19.6 million from a loss of $5.4 million in 1994. Equity
results were break-even in 1993. Both F.F. Soucy Inc. and Partners and Bear
Island Paper Company reported strong earnings in 1995. The company's share
of profits from these newsprint mill affiliates reached $26.1 million in
1995, compared with $1.9 million in 1994 and $2.2 million in 1993. The
significant improvement in earnings from the newsprint mills mitigated
roughly half of the effect that higher newsprint prices had on the company's
operating income.
Also in 1995, the company recognized losses from two start-up joint
ventures: Asia Business News, the company's television operation in Asia,
which started broadcasting in late 1993; and DJA Partners (Teleres), which
is developing a comprehensive commercial real estate on-line service to be
launched in the first half of 1996. SmartMoney, a monthly personal business
news magazine, and HB-Dow Jones S.A., a Belgian holding company with an
investment in a Czech Republic publishing company, contributed to the
increase in equity earnings in 1995.
<PAGE>
PAGE 21
The downturn in equity results in 1994 from 1993 was caused by start-up
costs of Asia Business News and losses from the company's investment in BIZ
magazine, which ceased publication with its January 1995 issue.
Other income in 1995 of $17.6 million included a pretax gain of
$13.4 million from the sale of an 80% interest in SportsTicker. In 1994
other, net was a loss of $2.9 million due to foreign exchange losses of
$3.8 million. A deduction of $12.8 million in 1993 included the write-downs
of minor investments totaling $8.2 million ($5.4 million after taxes) and
foreign exchange losses of $5.8 million.
Interest expense of $18.3 million increased $1.5 million, or 8.8%, with
the average debt level rising in 1995 to $275.6 million from $251.1 million
in 1994. Interest rates fell modestly in 1995. The higher average debt
level was in part due to significant stock repurchases in the latter part of
1994. Interest expense declined 25% in 1994 to $16.9 million due to a drop
in both rates and the average debt level.
INCOME TAXES
Income tax expense decreased $17.7 million, or 11.3%, in 1995, partly
due to a 4.5% drop in pretax earnings. Additionally, the effective income
tax rate declined to 43.3% in 1995, following a drop to 46.6% in 1994 from
48.5% in 1993. The drop in the 1995 effective rate resulted from changes in
state tax laws and favorable settlements of certain state and local tax
issues. Also, in 1995 the company benefited from additional tax credits due
to increased research and development spending and from an Internal Revenue
Service regulation that broadened the definition of research and development
expenditures. The lower 1994 effective rate, relative to 1993, was
partially caused by the lesser impact of stable nondeductible goodwill
amortization on higher 1994 pretax earnings.
INVESTMENTS
During 1995 the company invested a total of $74.2 million mainly for
the following business acquisitions: The Salem Evening News, a
Massachusetts daily that expands the community newspapers segment's
franchise along Boston's North Shore; Charter Financial Publishing Corp., a
magazine publisher serving financial professionals; a majority ownership in
IDD Enterprises, L.P., a diversified publishing, database, software and
consulting company; and additional funding for its joint ventures -- Asia
Business News and DJA Partners.
Also in 1995 the company and ITT Corporation entered into a 50/50
partnership to acquire WNYC-TV from New York City for $207 million in cash.
The purchase, subject to approval by the Federal Communications Commission,
is expected to be finalized in the first half of 1996. The partners plan to
provide a mix of business and sports programming. The company's share of
this investment is expected to be funded through commercial paper
borrowings.
<PAGE>
PAGE 22
Investments totaled $45.7 million in 1994. These investments included
a minority interest in United States Satellite Broadcasting Company, Inc.
(USSB), a company providing digital television broadcast via satellite to
customers' 18-inch satellite dishes, and VWD-Vereinigte Wirtschaftsdienste
GmbH, a German news agency. The company also made additional investments in
Asia Business News, Minex Corp. and Bear Island Paper Company.
FINANCIAL POSITION
Cash provided by operations of $369.6 million in 1995 declined
$31.5 million from 1994's $401.1 million but was $33.9 million more than the
$335.7 million generated in 1993. In 1995 the decline was chiefly
attributable to the $54.3 million drop in operating income. During 1995 the
company principally used cash from operations to pay dividends of
$89.1 million, invest $74.2 million in new businesses and make capital
expenditures of $218.8 million. The year-end cash balance increased
$2.8 million to $13.7 million from the 1994 year-end balance of
$10.9 million.
Long-term debt, including current maturities, at December 31, 1995 was
$259.3 million, down $41.6 million from the year-earlier level of
$300.9 million. The debt-to-equity ratio at December 31, 1995 dropped to
16.2%, compared with 20.3% at the end of 1994, the lowest ratio since year-
end 1986. In 1995 the company issued 5-year notes of $150 million at an
annual interest rate of 5.75% and redeemed a portion of its commercial paper
debt. The working capital ratio, excluding unearned revenue, was 1.1 to 1
in 1995, up from 1 to 1 in both 1994 and 1993.
In 1996 the company expects cash provided by operations to be
sufficient to meet its normal recurring operating commitments, fund capital
expenditures of approximately $200 million and pay dividends of about
$93 million. Capital spending in 1996 will again include the enhancement of
the company's electronic information services' distribution systems and
networks as well as a news-dissemination network for the business publishing
group. Although the company did not repurchase any of its common stock in
1995, the company has authorization from its Board of Directors to acquire
approximately 1.6 million shares of its common stock.
In January 1996 the company raised the quarterly dividend per share
4.3% to 24 cents from 23 cents in 1995, making 1996 the fourth consecutive
year in which the dividend has been raised.
OUTLOOK
The company expects earnings and operating income to grow moderately in
1996, as continued investments are made in information and news content,
television, advanced technology to best utilize different means of
information delivery, such as the Internet, and development of new products
and services at Business Information Services and Dow Jones Telerate. The
company's earnings growth, in part, will be dependent on favorable economic
conditions both in the United States and overseas, particularly in Europe
and Japan. Additionally, the company expects that products introduced in
1995 and to be introduced in 1996 -- Telerate Workstation, four-color
capability in the domestic print publications, European Business News, The
Wall Street Journal Interactive Edition -- will provide incremental revenue
in 1996.
<PAGE>
PAGE 23
Financial information services segment revenue in 1996 is expected to
increase at a rate similar to the annual rates of growth over the past
several years. The 1996 revenue growth is again expected to be driven by
overseas operations. Revenue growth in U.S. operations will be constricted
until sluggish market conditions in the financial services and banking
industries improve. Dow Jones Telerate's digital feeds, Telerate Trading
Room Systems and the Telerate Workstation are expected to provide most of
the revenue increase.
Financial information services segment expenses in 1996 are expected
to rise in line with the increase posted in 1995 as continued investments
are made in new products, existing services are enhanced, and the breadth
and depth of information content is strengthened.
The business publishing segment includes the company's domestic and
international Wall Street Journal editions, Barron's magazine, the Business
Information Services group, and Dow Jones' television initiatives. Business
publishing revenue growth in 1996 is expected from advertising rate
increases and from volume gains overseas and at Business Information
Services. Advertising rates at The Wall Street Journal and Barron's on
average were raised about 5% on January 1, 1996. The overseas editions have
raised rates by an average of 8%. Improvement in domestic Journal
advertising linage is largely dependent upon the continuing strength of the
U.S. economy and specifically, on the activity in the financial markets.
Business publishing expenses in 1996 will be affected by newsprint prices
which are proposed to be raised again in 1996, although not to the extent of
the sharp price hikes in 1995. On average, newsprint expense is expected to
be up about 20% in 1996, largely due to the full-year effect of price
increases effective in 1995. However, as in 1995, the impact on
consolidated net income should be cushioned by additional equity earnings
from the newsprint mill affiliates.
Business Information Services group operating income is expected to
improve in 1996 as this group benefits from enhanced content and new product
offerings, such as Personal Journal and The Wall Street Journal Interactive
Edition. Revenue growth from new services will be partially offset by
continued investment in product development at this group.
The community newspapers segment in 1996 sees revenue gains similar to
those posted in recent years. The bulk of the revenue increase will result
from higher rates. Expenses will be adversely affected by higher newsprint
prices; however, with other expenses under control, the company anticipates
increased operating earnings in 1996 for this segment.
Union contracts including wage scales for about 20% of the company's
full-time employees will be renegotiated in 1996. Historically, the company
and its major union have agreed to new contracts without work interruptions.
<PAGE>
PAGE 24
<TABLE>
<CAPTION>
ITEM 8. Financial Statements and Supplementary Data
CONSOLIDATED STATEMENTS OF INCOME
Dow Jones & Company, Inc.
For the years ended December 31, 1995, 1994 and 1993
==============================================================================
(in thousands except per share amounts) 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Information services $1,092,002 $ 976,800 $ 861,979
Advertising 771,779 724,990 699,009
Circulation and other 419,980 389,187 370,828
- ------------------------------------------------------------------------------
Total revenues 2,283,761 2,090,977 1,931,816
- ------------------------------------------------------------------------------
EXPENSES:
News, operations and development 748,945 642,184 580,636
Selling, administrative and general 764,161 681,244 642,772
Newsprint 157,047 107,178 106,357
Second class postage and
carrier delivery 103,497 96,751 96,926
Depreciation and amortization 206,070 205,303 188,665
- ------------------------------------------------------------------------------
Operating expenses 1,979,720 1,732,660 1,615,356
- ------------------------------------------------------------------------------
Operating income 304,041 358,317 316,460
OTHER INCOME (DEDUCTIONS):
Investment income 5,379 4,884 5,060
Interest expense (18,345) (16,858) (22,555)
Equity in earnings (losses) of
associated companies (Note 4) 14,193 (5,434) 72
Other, net (Note 3) 17,632 (2,884) (12,797)
- ------------------------------------------------------------------------------
Income before income taxes and
minority interests (Note 8) 322,900 338,025 286,240
Income taxes (Note 8) 139,878 157,632 138,693
- ------------------------------------------------------------------------------
Income before minority interests 183,022 180,393 147,547
Minority interests in losses of subsidiaries 6,550 787
- ------------------------------------------------------------------------------
Income before cumulative effect of
accounting change 189,572 181,180 147,547
Cumulative effect of accounting change
(Note 11) (3,007)
- ------------------------------------------------------------------------------
NET INCOME $ 189,572 $ 178,173 $ 147,547
==============================================================================
PER SHARE (Note 13):
Income before cumulative effect of
accounting change $1.96 $1.83 $1.48
Cumulative effect of accounting change (.03)
Net income 1.96 1.80 1.48
Cash dividends .92 .84 .80
==============================================================================
Weighted average shares outstanding 96,907 99,002 99,773
==============================================================================
The accompanying notes are an integral part of the financial statements
</TABLE>
<PAGE>
PAGE 25
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
Dow Jones & Company, Inc.
December 31, 1995 and 1994
===============================================================================
(dollars in thousands) 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 13,667 $ 10,888
Accounts receivable -- trade, net of
allowance for doubtful accounts of
$13,402 in 1995 and $14,870 in 1994 272,601 229,687
Inventories (Note 5) 12,752 10,454
Deferred income taxes (Note 8) 18,989 18,604
Prepaid expenses 24,142 18,861
Other current assets 29,104 21,636
-------------------------------------------------------------------------------
Total current assets 371,255 310,130
-------------------------------------------------------------------------------
Investments in Associated Companies, at equity (Note 4) 122,587 90,231
Other Investments (Notes 6 & 17) 71,777 72,835
Plant and Property, at cost:
Land 26,206 22,675
Buildings and improvements 348,396 325,291
Equipment 1,625,831 1,436,857
Construction in progress 49,133 73,946
-------------------------------------------------------------------------------
2,049,566 1,858,769
Less, Accumulated depreciation 1,359,585 1,216,680
-------------------------------------------------------------------------------
689,981 642,089
Excess of Cost over Net Assets of Businesses
Acquired, less accumulated amortization of
$325,306 in 1995 and $283,712 in 1994 1,308,623 1,304,953
Deferred Income Taxes (Note 8) 11,786 10,675
Other Assets 22,691 14,853
-------------------------------------------------------------------------------
Total assets $2,598,700 $2,445,766
===============================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PAGE 26
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
Dow Jones & Company, Inc.
December 31, 1995 and 1994
===============================================================================
(dollars in thousands) 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES:
Current Liabilities:
Accounts payable -- trade $ 104,597 $ 89,006
Accrued wages, salaries and commissions 61,121 56,331
Profit sharing and other retirement plan
contributions payable (Note 10) 37,483 35,029
Other payables 70,911 57,040
Income taxes (Note 8) 67,940 68,694
Unearned revenue 234,168 219,880
Current maturities of long-term debt (Note 6) 5,318 5,318
-------------------------------------------------------------------------------
Total current liabilities 581,538 531,298
Long-Term Debt (Notes 6 & 17) 253,935 295,552
Deferred Compensation, principally postretirement
benefit obligation (Note 11) 149,522 133,334
Other Liabilities 11,954 3,971
-------------------------------------------------------------------------------
Total liabilities 996,949 964,155
-------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common Stock, par value $1 per share; authorized
135,000,000 shares; issued 80,266,177 shares
in 1995 and 80,161,777 shares in 1994 80,266 80,162
Class B Common Stock, convertible, par value $1
per share; authorized 25,000,000 shares; issued
21,914,844 shares in 1995 and 22,019,244 shares
in 1994 21,915 22,019
-------------------------------------------------------------------------------
102,181 102,181
Additional Paid-in Capital 134,898 134,017
Retained Earnings 1,504,787 1,404,346
Cumulative Translation Adjustment (5,586) (6,219)
-------------------------------------------------------------------------------
1,736,280 1,634,325
Less, Treasury Stock at cost, 4,932,141 shares in
1995 and 5,556,839 shares in 1994 134,529 152,714
-------------------------------------------------------------------------------
Total stockholders' equity 1,601,751 1,481,611
-------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,598,700 $2,445,766
===============================================================================
</TABLE>
<PAGE>
PAGE 27
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dow Jones & Company, Inc.
For the years ended December 31, 1995, 1994 and 1993
======================================================================================
(in thousands) 1995 1994 1993
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $189,572 $178,173 $147,547
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 163,051 164,383 147,495
Amortization of excess of cost over net
assets of businesses acquired 43,019 40,920 41,170
Gain on sale of businesses and investments (13,557) (3,097) (868)
Gain on disposition of plant and property (1,827) (1,965) (529)
Write-down of investments 3,582 8,171
Loss on operating lease 8,412
Minority interests in losses of subsidiaries (6,550) (787)
Cumulative effect of accounting change 3,007
Equity in (earnings) losses of associated
companies, net of distributions (4,039) 6,762 4,690
Changes in assets and liabilities:
Accounts receivable - trade (36,423) (35,604) (29,679)
Unearned revenue 7,863 14,376 13,451
Inventories (2,180) 147 (969)
Other current assets (8,563) 2,064 (3,211)
Accounts payable and accrued liabilities 16,168 22,220 1,252
Income taxes 952 12,948 1,429
Deferred taxes (1,377) (16,867) (5,724)
Deferred compensation 15,271 9,387 8,716
Other, net (230) 1,443 2,768
--------------------------------------------------------------------------------------
Net cash provided by operating activities 369,562 401,092 335,709
--------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Additions to plant and property (218,765) (222,434) (159,943)
Disposition of plant and property 13,451 18,608 7,542
Businesses and investments acquired, net of
cash received (74,186) (45,752) (24,915)
Businesses and investments sold, net of cash given 22,066 5,218 4,694
Return of capital by investees 770 2,527 1,859
Proceeds from guaranteed investment contract 5,318 5,318 5,318
Loans to investees (8,827) (5,207) (185)
--------------------------------------------------------------------------------------
Net cash used in investing activities (260,173) (241,722) (165,630)
--------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Cash dividends (89,131) (83,360) (79,833)
Increase in long-term debt 172,285 231,679 47,278
Reduction of long-term debt (214,544) (197,318) (121,188)
Proceeds from sales under stock purchase plans 17,430 17,001 22,553
Purchase of treasury stock (118,219) (48,312)
Contributions from minority partner 9,142
--------------------------------------------------------------------------------------
Net cash used in financing activities (104,818) (150,217) (179,502)
--------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PAGE 28
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,792) (3,917) (1,341)
--------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,779 5,236 (10,764)
Cash and cash equivalents at beginning of year 10,888 5,652 16,416
--------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 13,667 $ 10,888 $ 5,652
======================================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PAGE 29
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Dow Jones & Company, Inc.
For the years ended December 31, 1995, 1994 and 1993
=====================================================================================================================
Class B Additional Cumulative Treasury Stock
(in thousands Common Common Paid-in Retained Translation -------------------
except shares) Stock Stock Capital Earnings Adjustment Shares Amount Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $79,860 $22,321 $135,151 $1,241,819 $(2,824)(1,577,752) $(29,760) $1,446,567
Net income - 1993 147,547 147,547
Dividends, $.80 per share (79,833) (79,833)
Translation adjustment (2,065) (2,065)
Conversion of class B common
stock into common stock 143 (143)
Sales under stock purchase
plans (42) 849,179 24,079 24,037
Purchase of treasury stock (1,668,000) (48,312) (48,312)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 80,003 22,178 135,109 1,309,533 (4,889)(2,396,573) (53,993) 1,487,941
Net income - 1994 178,173 178,173
Dividends, $.84 per share (83,360) (83,360)
Translation adjustment (1,330) (1,330)
Conversion of class B common
stock into common stock 159 (159)
Capital changes of investee 157 157
Sales under stock purchase
plans (1,249) 621,734 19,498 18,249
Purchase of treasury stock (3,782,000) (118,219) (118,219)
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 80,162 22,019 134,017 1,404,346 (6,219)(5,556,839) (152,714) 1,481,611
Net income - 1995 189,572 189,572
Dividends, $.92 per share (89,131) (89,131)
Translation adjustment 633 633
Conversion of class B common
stock into common stock 104 (104)
Capital changes of investee (242) (242)
Sales under stock purchase
plans (Note 9) 1,123 624,698 18,185 19,308
- ---------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 $80,266 $21,915 $134,898 $1,504,787 $(5,586)(4,932,141) $(134,529) $1,601,751
=====================================================================================================================
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
PAGE 30
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE CONSOLIDATED FINANCIAL STATEMENTS include the accounts of the company
and its majority-owned subsidiaries. The equity method of accounting is
used for companies and other investments in which the company's common stock
ownership or partnership equity is at least 20% and not more than 50% (see
Note 4). All significant intercompany transactions are eliminated in
consolidation and all earnings or losses of subsidiaries which are
attributable to minority owners are removed from consolidated earnings.
UNEARNED REVENUE is recorded as earned, pro rata on a monthly basis, over
the life of subscriptions. Costs in connection with the procurement of
subscriptions are charged to expense as incurred.
DEPRECIATION is computed using straight-line or declining-balance methods
over the estimated useful lives of the respective assets or terms of the
related leases. Upon retirement or sale, the cost of disposed assets and
the related accumulated depreciation are deducted from the respective
accounts and the resulting gain or loss is included in income.
MAINTENANCE AND REPAIRS are charged to expense as incurred. Major renewals,
betterments and additions are capitalized.
RESEARCH AND DEVELOPMENT expenditures are charged to expense as incurred.
Research and development expenses were $66,710,000 in 1995, $52,522,000 in
1994 and $40,705,000 in 1993.
CASH EQUIVALENTS are highly liquid investments with a maturity of three
months or less when purchased.
INVENTORIES are stated at the lower of cost or market. The cost of
newsprint, which is the principal component of inventories, is computed by
the last-in, first-out (LIFO) method. Remaining inventories include
equipment purchased for resale to customers, which is based on specific
identification, and other inventories, primarily spare parts to service
maintenance contracts which are stated at average cost (see Note 5).
DEFERRED INCOME TAXES are provided for temporary differences in bases
between financial statement and income tax assets and liabilities. Deferred
income taxes are recalculated annually at tax rates then in effect
(see Note 8).
THE EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED (GOODWILL) is
amortized using the straight-line method over various periods, principally
forty years. The company evaluates annually whether there has been a
permanent impairment in the value of goodwill. Any impairment would be
recognized when the sum of expected undiscounted cash flows derived from the
acquired business is less than its carrying value. If such an impairment
occurred, the amount of the impairment would be based on the fair value of
the acquired business as determined by the market value of comparable
companies or the present value of expected cash flows.
<PAGE>
PAGE 31
FOREIGN CURRENCY TRANSLATION of the assets and liabilities of subsidiaries
whose functional currency is not the U.S. dollar is determined at the
appropriate year-end exchange rates, while results of operations are
translated at the average rates of exchange in effect throughout the year.
The resultant translation adjustment is recorded directly to Stockholders'
Equity. Gains and losses arising from translation of financial statements
for foreign subsidiaries where the U.S. dollar is the functional currency as
well as from all foreign currency transactions are included in income.
FORWARD EXCHANGE CONTRACTS are entered into to hedge contractual revenue
streams from foreign currency exchange rate fluctuations. As such, these
nonspeculative forward exchange contracts are not recorded on the company's
balance sheets. Also, unrealized gains and losses on these forward exchange
contracts are deferred and recognized upon settlement of the related
transactions. Accordingly, cash flows resulting from forward exchange
contract settlements are classified as cash provided by operations as are
the corresponding cash flows from the revenue streams being hedged (see Note
17).
AN ACCOUNTING CHANGE was adopted, effective January 1, 1994, in response to
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits." The cumulative effect of this change in
accounting was a charge against 1994 earnings of $3,007,000 (see Note 11).
NOTE 2. BUSINESS COMBINATIONS
The company purchased the following businesses in the first quarter of 1995:
Salem News Publishing Co., which publishes the Salem (Mass.) Evening News;
Charter Financial Publishing Corp., publisher of Investment Advisor and Fee
Advisor magazines and the Realty Stock Review newsletter; and a majority
interest in IDD Enterprises, L.P., a diversified publishing, database,
software and consulting company. In aggregate, the cost of these
acquisitions, which were accounted for by the purchase method, was
$44,679,000.
NOTE 3. OTHER, NET
Other, net includes gains/losses from asset sales and foreign currency
exchange rate fluctuations, write-downs of investments and other
miscellaneous non-operating income and expenses.
In the first quarter of 1995, the company recognized a gain of $13.4 million
($5.8 million after taxes) from the sale of 80% of its interest in
SportsTicker, a real-time sports news and information company.
Foreign exchange losses totaled $358,000 in 1995, $3,812,000 in 1994 and
$5,808,000 in 1993.
In 1993's fourth quarter, the company recorded a charge of $8.2 million
($5.4 million after taxes) to write down certain of its investments.
<PAGE>
PAGE 32
NOTE 4. INVESTMENTS IN ASSOCIATED COMPANIES, AT EQUITY
<TABLE>
<CAPTION>
The operating results of the principal associated companies accounted for by
the equity method have been included in the accompanying consolidated
financial statements on the following bases:
============================================================================
% of ownership
- ----------------------------------------------------------------------------
<S> <C>
Bear Island Paper Company, L.P. (Bear Island Paper) 35
Bear Island Timberlands Company, L.P. 35
F.F. Soucy, Inc. & Partners, L.P. (Soucy) 40
Asia Business News (Singapore) Pte. Ltd. (1) 49
DJA Partners (2) 50
============================================================================
NOTES:
(1) The company increased its ownership of Asia Business News (Singapore)
Pte. Ltd. (ABN) in 1995. At the end of September 1995, the company owned
49% of ABN, up from 44% in July and 30% at January 1, 1995. ABN is a
business and financial news television company broadcasting in Asia.
(2) DJA Partners is a joint venture between the company and Aegon USA to
develop and market the first comprehensive on-line commercial real estate
information service.
</TABLE>
The company, as a limited partner in the newsprint mill affiliates, Bear
Island Paper and Soucy, has signed long-term contracts with both covering a
substantial portion of its annual newsprint requirements. Operating expenses
of the company include the cost of newsprint supplied by Bear Island Paper
and Soucy of $55,375,000 in 1995, $41,828,000 in 1994 and $39,558,000 in
1993.
NOTE 5. INVENTORIES
<TABLE>
<CAPTION>
Inventories as of December 31 were composed of the following:
============================================================================
(in thousands) 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Newsprint inventory $ 9,776 $ 7,832
Equipment for resale 1,346 1,157
Other 1,630 1,465
- ----------------------------------------------------------------------------
Total inventories $12,752 $10,454
============================================================================
</TABLE>
Newsprint inventory was determined by the last-in, first-out (LIFO) method.
If newsprint inventory had been valued by the average cost method, it would
have been approximately $12,567,000 and $6,449,000 higher in 1995 and 1994,
respectively.
<PAGE>
PAGE 33
NOTE 6. LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt at December 31 was as follows:
============================================================================
(in thousands) 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
Commercial paper, 5.45% to 5.80% at December 31, 1995 $ 77,606 $263,643
Notes payable, 5.75%, due December 1, 2000 149,738
Note payable, Associated Press, 7.75% 31,909 37,227
- ----------------------------------------------------------------------------
259,253 300,870
Less: current portion 5,318 5,318
- ----------------------------------------------------------------------------
Total long-term debt $253,935 $295,552
============================================================================
</TABLE>
Payments on long-term debt are due as follows: $5,318,000 in each year from
1996 through 1998, $82,925,000 in 1999, $155,056,000 in 2000 and $5,318,000
in 2001. Interest payments were $16,679,000 in 1995, $21,989,000 in 1994
and $22,459,000 in 1993.
The company can borrow up to $400 million through November 16, 1999, under a
revolving credit agreement with several banks. Borrowings may be made
either in Eurodollars with interest that approximates the applicable
Eurodollar rate or in U.S. dollars with interest that approximates the
bank's prime rate, its C/D rate or the federal funds rate. An annual fee of
0.08% is payable on the commitment which the company may terminate or reduce
at any time. Prepayment of borrowings may be made without penalty.
Although there were no borrowings under the agreement as of December 31,
1995, the company intends to maintain the commitment at least through
December 31, 1996. Accordingly, commercial paper was classified as long-
term.
The credit agreement contains various restrictive covenants principally
relating to net worth, liabilities and cash flows. At December 31, 1995,
consolidated net worth exceeded the minimum by $852 million and total
consolidated liabilities were $1.8 billion less than the maximum. The
company's cash flow, as defined in the agreement, in 1995 far exceeded that
required.
In December 1995, the company sold $150 million of 5.75% notes due December
1, 2000. The notes are general unsecured obligations of the company and may
not be redeemed prior to maturity.
In 1994 notes of $192 million matured. This debt was refinanced by the
issuance of commercial paper, which is supported by the company's revolving
credit agreement.
The note payable to the Associated Press is owed by the company in equal
annual principal payments of $5,318,000 which commenced in 1991. The
company purchased a Guaranteed Investment Contract from an insurance company
which is included in Other Investments. The contract provides for payments
to the company of interest and principal that match the payments owed the
Associated Press.
<PAGE>
PAGE 34
NOTE 7. CAPITAL STOCK
Common stock and class B common stock have the same dividend and liquidation
rights. Class B common stock has ten votes per share, free convertibility
into common stock on a one-for-one basis and can be transferred in class B
form only to members of the stockholder's family and certain others
affiliated with the stockholder.
NOTE 8. INCOME TAXES
<TABLE>
<CAPTION>
The components of income before income taxes, minority interests and the
cumulative effect of accounting change were as follows:
============================================================================
(in thousands) 1995 1994 1993
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic $151,697 $202,046 $168,455
Foreign 171,203 135,979 117,785
- ----------------------------------------------------------------------------
$322,900 $338,025 $286,240
============================================================================
</TABLE>
The following is a reconciliation of income tax expense to the amount
derived by multiplying income before income taxes, minority interests and
the cumulative effect of accounting change by the statutory federal income
tax rate of 35%.
<TABLE>
<CAPTION>
============================================================================
% of % of % of
Income Income Income
Before Before Before
(in thousands) 1995 Taxes 1994 Taxes 1993 Taxes
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income before taxes
multiplied by statutory
federal income tax rate $113,015 35.0 $118,309 35.0 $100,184 35.0
State and foreign taxes
net of federal income
tax benefit 14,852 4.6 20,110 5.9 21,893 7.6
Amortization of excess of
cost over net assets of
businesses acquired 14,434 4.5 14,322 4.2 14,338 5.0
Research and development
credits (6,113) (1.9) (1,731) (0.5) (1,369) (0.5)
Other, net 3,690 1.1 6,622 2.0 3,647 1.4
- ----------------------------------------------------------------------------
$139,878 43.3 $157,632 46.6 $138,693 48.5
============================================================================
</TABLE>
<PAGE>
PAGE 35
<TABLE>
<CAPTION>
Income tax expense was as follows:
============================================================================
(in thousands) Federal State Foreign Total
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995:
Currently payable $101,756 $19,126 $26,902 $147,784
Deferred (3,040) (3,845) (1,021) (7,906)
- ----------------------------------------------------------------------------
Total $ 98,716 $15,281 $25,881 $139,878
============================================================================
1994:
Currently payable $124,330 $26,223 $16,441 $166,994
Deferred (7,408) 1,911 (3,865) (9,362)
- ----------------------------------------------------------------------------
Total $116,922 $28,134 $12,576 $157,632
============================================================================
1993:
Currently payable $102,588 $24,632 $15,075 $142,295
Deferred (9,357) 6,376 (621) (3,602)
- ----------------------------------------------------------------------------
Total $ 93,231 $31,008 $14,454 $138,693
============================================================================
</TABLE>
<TABLE>
<CAPTION>
The company's combined current and noncurrent deferred taxes at December 31,
1995 and 1994 consisted of the following deferred tax assets and liabilities:
============================================================================
Deferred Tax Deferred Tax
Assets Liabilities
(in thousands) 1995 1994 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation $63,019 $54,595
Employee benefit plans, including
deferred compensation $ 73,895 $65,375 4,896 4,223
Sales and product allowances 3,180 3,384
Foreign tax credits 13,123 8,304
Write-down of investments 602 5,615
All other 9,399 6,771 1,509 1,352
- ----------------------------------------------------------------------------
Total deferred taxes $100,199 $89,449 $69,424 $60,170
============================================================================
</TABLE>
The company has not established a deferred tax asset with respect to certain
foreign operating loss carryforwards which are not expected to be realized.
Income tax payments were $140,303,000 in 1995, $161,551,000 in 1994 and
$142,988,000 in 1993.
<PAGE>
PAGE 36
NOTE 9. STOCK PURCHASE, STOCK OPTION AND EXECUTIVE INCENTIVE PLANS
STOCK PURCHASE PLAN: Under the terms of the Dow Jones 1990 Employee Stock
Purchase Plan, eligible employees may purchase shares of the company's
common stock based on compensation through payroll deductions or lump-sum
payment. The purchase price for payroll deductions is the lower of 85% of
the fair market value of the stock on the first or last day of the purchase
period. Lump-sum purchases are made during the offering period at the lower
of 85% of the fair market value of the stock on the first day of the
purchase period or the payment date.
<TABLE>
<CAPTION>
The activity in the plan was as follows:
===========================================================================
Shares Subscribed
--------------------------
Price 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, January 1 145,410 143,524
Shares subscribed 231,341 232,238
Purchases $26.56 to $31.24 (224,663) (220,315)
Terminated or canceled (10,233) (10,037)
- ---------------------------------------------------------------------------
Balance, December 31 141,855 145,410
===========================================================================
</TABLE>
At December 31, 1995, there were 571,041 shares available for future
offerings.
STOCK OPTION PLAN: Under the Dow Jones 1991 Stock Option Plan, options for
shares of common stock may be granted to key employees at not less than the
fair market value of the common stock on the date of grant. Options granted
in 1995 become exercisable in 1996 and all other options granted were
exercisable at December 31, 1995. Options expire ten years from the date of
grant.
EXECUTIVE INCENTIVE PLAN: The Dow Jones 1992 Long Term Incentive Plan
provides for the grant to key executives of stock options and contingent
stock rights (collectively, "plan awards"). The plan is administered by the
compensation committee of the Board of Directors, the members of which may
not participate in the plan.
Options for shares of common stock may be granted at not less than the fair
market value of the common stock on the date of grant. In 1992 and
thereafter, options were granted at 125% of the fair market value of common
stock on the day of grant. An optionee may purchase shares upon exercise of
an option or may surrender exercisable options in return for an amount equal
to any excess of the market value over the option price on the day the
option is surrendered. Payment to the optionee for such stock appreciation
rights may be made in common stock, cash or a combination of both. Options
granted prior to 1991 became exercisable four years after they were granted.
Fifty percent of the options granted in 1991 and thereafter become
exercisable in the year following the year of grant; the remaining fifty
percent of the options granted become exercisable in the second year
following the year of grant. Options expire ten years from the date of
grant.
<PAGE>
PAGE 37
Contingent stock rights entitle the participant to receive future payments
in the form of common stock, cash or a combination of both. The
compensation ultimately received will depend on the extent to which specific
performance criteria are achieved during the four-year performance period,
the participant's individual performance and other factors, as determined by
the compensation committee. With respect to the 1992 and 1993 grants,
compensation received could be less than or equal to that specified in the
right, but not greater than 125% of that amount. With respect to the 1994
and 1995 grants, compensation received could be less than or equal to that
specified in the right, but cannot exceed the right.
<PAGE>
PAGE 38
<TABLE>
<CAPTION>
The activity in the stock option and executive incentive plans was as follows:
=============================================================================
Stock Option Executive Incentive
Plan Plan
------------ ----------------------
Shares Shares Contingent
Option Under Under Stock
Prices Option Option Rights
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1992 3,356,908 784,625 197,400
Granted $35.13 and $43.91 518,600 99,300 88,200
Exercised $22.17 to $32.88 (608,220) (51,878)
Terminated/canceled (136,059) (8,611) (4,400)
Surrendered upon exercise
of stock appreciation
rights at $30.00 to $35.88 (13,117) (11,923)
- -----------------------------------------------------------------------------
Balance, December 31, 1993 3,118,112 811,513 281,200
Granted $30.00 and $37.50 648,100 98,200 135,900
Exercised $26.00 to $32.88 (390,058) (14,072)
Terminated/canceled (91,680) (2,321)
Surrendered upon exercise
of stock appreciation
rights at $39.38 to $40.88 (4,980) (7,359)
- -----------------------------------------------------------------------------
Balance, December 31, 1994 3,279,494 885,961 417,100
Granted $36.25 and $45.31 548,300 103,500 124,100
Exercised $26.00 to $35.13 (397,728) (12,256) (8,789)
Terminated/canceled (65,574) (1,146) (9,511)
Surrendered upon exercise
of stock appreciation
rights at $33.13 to $36.63 (4,460) (9,924)
- -----------------------------------------------------------------------------
Balance, December 31, 1995 3,360,032 966,135 522,900
=============================================================================
Year granted:
1986 $32.42 67,227 29,550
1987 $54.25 82,090 23,783
1988 $32.00 125,655 43,555
1989 $32.50 183,000 81,637
1990 $28.13 196,620 134,610
1991 $26.00 285,470 148,800
1992 $32.88 and $41.09 470,270 89,700 81,300
1992 $28.38 and $35.47 397,550 113,500 100,800
1993 $35.13 and $43.91 451,300 99,300 84,600
1994 $30.00 and $37.50 552,550 98,200 132,100
1995 $36.25 and $45.31 548,300 103,500 124,100
- -----------------------------------------------------------------------------
3,360,032 966,135 522,900
=============================================================================
Available for future
grants, December 31, 1995 2,069,000 464,111
=============================================================================
</TABLE>
<PAGE>
PAGE 39
Compensation expense was $6,218,000 in 1995, $943,000 in 1994 and $2,826,000
in 1993, with respect to both the stock option and executive incentive
plans. The increase in 1995 was chiefly the result of the rise in the
market price of Dow Jones common stock from $31 per share at December 31,
1994 to $39.88 per share at December 31, 1995.
In the fourth quarter of 1995, Statement of Financial Accounting Standards
No. 123 (SFAS 123), "Accounting for Stock-Based Compensation," was issued.
The statement provides the company the option between adopting a fair-value
based method of accounting for stock-based compensation or just disclosing
the effect on earnings and earnings per share as if the fair-value based
method had been applied. The company is planning to adopt the disclosure-
only option. Adoption of SFAS 123 is required in 1996.
NOTE 10. PROFIT SHARING AND PENSION PLANS
The company and certain subsidiaries have profit sharing retirement plans
for a majority of employees who meet specified length of service
requirements. The annual cost of the plans, which are funded currently, is
based upon a percentage of compensation or consolidated net income, as
defined, but is limited to the amount deductible for income tax purposes.
Substantially all employees of subsidiaries who are not covered by the above
plans are covered by noncontributory defined benefit pension plans. These
plans are not material in respect to charges to operations.
Total profit sharing and pension plan expenses amounted to $50,358,000,
$46,768,000 and $44,805,000 in 1995, 1994 and 1993, respectively.
NOTE 11. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS, AND POSTEMPLOYMENT
BENEFITS
For a majority of its employees, the company sponsors a defined benefit
postretirement medical plan which provides lifetime health care benefits to
retirees, who meet specified length of service and age requirements, and
their eligible dependents. The plan is unfunded. The company sponsors no
additional postretirement benefit plans other than its profit sharing and
pension plans (see Note 10).
<PAGE>
PAGE 40
<TABLE>
<CAPTION>
The following sets forth the plan's status reconciled with amounts reported
in the company's consolidated balance sheet at December 31.
===========================================================================
(in thousands) 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees $ 25,321 $20,665
Fully eligible active plan participants 15,238 14,558
Other active plan participants 61,811 53,957
- ---------------------------------------------------------------------------
Total APBO as of December 31 102,370 89,180
Unrecognized net gain 543 1,864
- ---------------------------------------------------------------------------
Accrued postretirement benefit liability at
December 31 $102,913 $91,044
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
Pretax postretirement benefit expense included the following components:
===========================================================================
(in thousands) 1995 1994 1993
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 5,417 $ 5,482 $ 4,850
Interest cost 7,318 5,944 6,168
- ---------------------------------------------------------------------------
Net periodic postretirement benefit cost $12,735 $11,426 $11,018
===========================================================================
</TABLE>
An 11.5% annual rate of increase in the per capita costs of covered health
care benefits was assumed for 1996, gradually decreasing to 5% by the year
2008 and remaining at that rate thereafter. Increasing the assumed health
care cost trend rates by one percentage point in each year would increase
the accumulated postretirement benefit obligation as of December 31, 1995,
by $16.8 million and increase the aggregate of the service cost and interest
cost components of net periodic postretirement benefit cost for 1995 by $2.6
million. A discount rate of 7% was used to determine the accumulated
postretirement benefit obligation as of December 31, 1995.
At December 31, 1994, the company's accumulated postretirement benefit
obligation was calculated using a discount rate of 8.25% and a health care
cost trend rate of 13% for 1995 decreasing to 6% by the year 2008.
Effective January 1, 1994, the company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." Accordingly, the company recorded an after-tax charge of
$3,007,000, or three cents per share, as the cumulative effect of accounting
change as of the date of adoption. This change in accounting had no
material effect on operating expenses.
<PAGE>
PAGE 41
NOTE 12. COMMITMENTS AND CONTINGENCIES
Commitments for capital expenditures amounted to $33,626,000 at December 31,
1995.
<TABLE>
<CAPTION>
Noncancelable leases require minimum rental payments through 2011 totaling
$518,354,000. Payments required for the years 1996 through 2000 are as
follows:
============================================================================
(in thousands) 1996 1997 1998 1999 2000
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$79,038 $72,789 $64,143 $52,916 $48,622
============================================================================
</TABLE>
These leases are principally for office space and equipment and contain
renewal and escalation clauses. Total rental expense amounted to
$107,753,000 in 1995, $90,286,000 in 1994 and $83,853,000 in 1993.
Rental expense in 1995 included a charge of $8.4 million, discounted at 6%,
for the recognition of a loss on an operating lease, net of expected
sublease rental income. The loss stemmed from vacating office space in
which the company is obligated to rent until July 2001. The estimated loss
was mitigated by expected sublease rentals estimated at $7 million.
The company has the obligation to furnish financial support in the form of
capital contributions, loans and loan guarantees up to a total of $10.9
million for certain of its investees. At December 31, 1995, loan guarantees
of $10,816,000 with remaining terms of up to seven and one-half years were
in effect. The company views it as unlikely that its investees will fail to
meet the terms of their obligations.
The company is obligated to purchase the 44.3% interest in IDD Enterprises,
L.P. (IDD) that it does not already own upon the exercise of put options by
IDD's minority partners. These options are exercisable in installments
through the year 2001. The company's purchase obligation is approximately
$15.5 million, but can vary based on certain performance criteria.
In August 1995, the company announced it entered into a 50/50 partnership
with ITT Corporation and that the partnership had agreed to acquire WNYC-TV
from the city of New York for $207 million in cash. The purchase, which is
contingent on approval by the Federal Communications Commission, is expected
to be finalized in the first half of 1996.
Various libel actions, environmental and other legal proceedings that have
arisen in the ordinary course of business are pending against the company
and its subsidiaries. In the opinion of management, the ultimate outcome to
the company and its subsidiaries as a result of legal proceedings is
adequately covered by insurance, or if not covered, would not have a
material effect on the financial position of the company.
<PAGE>
PAGE 42
NOTE 13. PER SHARE AMOUNTS
Net income per share has been computed on the basis of the weighted average
number of shares outstanding (96,907,000 shares in 1995, 99,002,000 shares
in 1994 and 99,773,000 shares in 1993). The assumed exercise of outstanding
options under the stock purchase, stock option and executive incentive plans
at the December 31, 1995 market price or at the average market price for
1995 would not have a material dilutive effect on earnings per share.
NOTE 14. RECLASSIFICATIONS
Certain amounts for prior years have been reclassified for comparative
purposes.
NOTE 15. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)
The summary of unaudited 1995 and 1994 quarterly financial data shown on
pages 48 and 49 of this report is incorporated herein by reference.
<PAGE>
PAGE 43
NOTE 16. BUSINESS SEGMENTS
<TABLE>
<CAPTION>
The company's operations by business segment and geographic area were as follows:
Financial Data by Business Segment
================================================================================================
Financial
Information Business Community
(in thousands) Services Publishing Newspapers Corporate Consolidated
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues
1995 $ 961,398 $1,049,462 $272,901 $2,283,761
1994 877,392 961,417 252,168 2,090,977
1993 778,881 908,344 244,591 1,931,816
Operating income
1995 197,015 95,509 32,987 $(21,470) 304,041
1994 183,135 157,429 36,166 (18,413) 358,317
1993 140,994 160,066 32,563 (17,163) 316,460
Identifiable assets (1)
1995 1,598,041 587,032 229,515 184,112 2,598,700
1994 1,608,538 482,633 198,985 155,610 2,445,766
1993 1,611,920 401,739 199,248 136,632 2,349,539
Depreciation and
amortization expense
1995 141,226 50,434 14,410 206,070
1994 148,065 43,002 14,236 205,303
1993 133,593 42,090 12,982 188,665
Capital expenditures
1995 113,296 89,054 16,415 218,765
1994 110,443 100,512 11,479 222,434
1993 101,230 45,990 12,723 159,943
Investments in associated
companies, at equity (2)
1995 80,891
1994 57,366
1993 46,686
Equity in earnings (losses)
of associated companies (2)
1995 19,494
1994 (2,702)
1993 1,784
=================================================================================================
NOTES:
(1) Corporate assets include cash and cash equivalents, investments in associated companies,
other investments and related deferred income taxes.
(2) Business publishing -- F.F. Soucy, Inc. & Partners, L.P. and Bear Island Paper Company,
L.P., operators of newsprint mills located in Quebec, Canada and Richmond, Virginia,
respectively, Bear Island Timberlands Co., L.P. and Asia Business News (Singapore) Pte.
Ltd., a business and financial news television company broadcasting in Asia.
</TABLE>
<PAGE>
PAGE 44
<TABLE>
<CAPTION>
Financial Data by Geographic Area
==============================================================================================
Europe
United Middle East Asia/ Other
(in thousands) States Africa Pacific Foreign Corporate Consolidated
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues
1995 $1,589,181 $383,266 $261,823 $ 49,491 $2,283,761
1994 1,489,014 329,699 225,143 47,121 2,090,977
1993 1,404,492 294,415 192,220 40,689 1,931,816
Operating income
1995 171,641 54,371 96,214 3,285 $(21,470) 304,041
1994 234,479 61,031 78,547 2,673 (18,413) 358,317
1993 207,435 53,343 70,471 2,374 (17,163) 316,460
Identifiable assets
1995 1,570,852 468,882 256,547 118,307 184,112 2,598,700
1994 1,453,132 453,409 258,536 125,079 155,610 2,445,766
1993 1,379,222 459,768 251,851 122,066 136,632 2,349,539
==============================================================================================
</TABLE>
<PAGE>
PAGE 45
NOTE 17. FINANCIAL INSTRUMENTS
Forward Exchange Contracts
The company enters into nonspeculative forward exchange contracts to
insulate contractual revenue streams from foreign currency exchange rate
fluctuations (see Note 1). Risk arises from movements in foreign currency
exchange rates and from the possible inability of counterparties to meet the
terms of their commitments, which the company views as unlikely. At
December 31, 1995, the company had foreign currency forward exchange
contracts settling on various dates through January 1997 to sell 6.4 billion
Japanese yen.
At December 31, 1995, the fair value of these forward exchange contracts,
which are not recorded on the company's consolidated balance sheets, was
$62,854,000 against a contracted value of $75,465,000, yielding a deferred
gain of $12,611,000. The fair value as of December 31, 1994 of forward
exchange contracts then in effect was $66,367,000 against a contracted value
of $67,827,000, representing a deferred gain of $1,460,000.
Fair Value of Financial Instruments
The following information presents the fair value of the company's financial
instruments which are not carried as such on the company's balance sheets.
The fair value of these financial instruments as of December 31, 1995 and
1994, was determined primarily by reference to dealer markets.
<TABLE>
<CAPTION>
============================================================================
(in thousands) Fair Value Carrying Value
- ----------------------------------------------------------------------------
<S> <C> <C>
1995
Other Investments $ 71,135 $ 71,777
Long-Term Debt 256,530 253,935
- ----------------------------------------------------------------------------
1994
Other Investments $ 71,842 $ 72,835
Long-Term Debt 294,886 295,552
============================================================================
Note: Additionally on February 1, 1996, United States Satellite
Broadcasting Company, Inc. (USSB), a provider of direct satellite television
programming, placed an initial public offering of common stock for $27 per
share. The company has a 5% interest in USSB which would be valued at
$119.1 million based on this offering price compared with the carrying value
of $25 million at December 31, 1995.
</TABLE>
Concentrations of Credit Risk
Financial instruments which potentially could subject the company to
concentrations of credit risk consist largely of trade accounts receivables.
The company sells print and electronic information products worldwide to a
wide variety of customers in the financial, business and private investor
marketplaces. The concentration of credit risk with respect to trade
receivables is slight due to the large number and geographic dispersion of
customers which comprise the company's customer base.
<PAGE>
PAGE 46
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Dow Jones & Company, Inc.:
We have audited the accompanying consolidated balance sheets of Dow Jones &
Company, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and the
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Dow Jones &
Company, Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in Note 11 to the consolidated financial statements, the
company changed its method of accounting for postemployment benefits
effective January 1, 1994.
COOPERS & LYBRAND L.L.P.
New York, New York
January 23, 1996
<PAGE>
PAGE 47
STATEMENT OF MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS
To the Stockholders of Dow Jones & Company, Inc.:
Management has prepared and is responsible for the consolidated financial
statements and related information in the Annual Report. The financial
statements, which include amounts based on judgment, have been prepared in
conformity with generally accepted accounting principles consistently
applied.
Management has developed, and in 1995 continued to strengthen, a system of
internal accounting and other controls for the company and its wholly owned
subsidiaries. Management believes these controls provide reasonable
assurance that assets are safeguarded from loss or unauthorized use and that
the company's financial records are a reliable basis for preparing the
financial statements. Underlying the concept of reasonable assurance is the
premise that the cost of control should not exceed the benefit derived. The
company's system of internal controls is supported by written policies, a
program of internal audits, including a periodic independent review of the
Internal Audit Department, and by a program of selecting and training
qualified staff.
Coopers & Lybrand L.L.P., independent accountants, have audited the
company's consolidated financial statements, as described in their report.
The report expresses an independent opinion of the fairness of presentation
of the financial statements and, in so doing, provides an independent
objective assessment of the manner in which management meets its
responsibility for fairness and accuracy in financial reporting.
The Board of Directors, through its audit committee consisting solely of
outside directors, is responsible for reviewing and monitoring the company's
financial reporting and accounting practices. The audit committee meets
regularly with management, internal auditors and independent accountants -
both separately and together. The internal auditors and the independent
accountants have free access to the audit committee to review the results of
their audits, the adequacy of internal accounting controls and the quality
of financial reporting.
<PAGE>
PAGE 48
<TABLE>
<CAPTION>
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Dow Jones & Company, Inc.
For the fourth quarters ended December 31, 1995 and 1994
============================================================================
(in thousands except per share amounts) 1995 1994
- ----------------------------------------------------------------------------
<S> <C> <C>
REVENUES:
Information services $282,704 $260,557
Advertising 219,392 206,145
Circulation and other 109,994 99,886
- ----------------------------------------------------------------------------
Total revenues 612,090 566,588
- ----------------------------------------------------------------------------
EXPENSES:
News, operations and development 201,437 180,449
Selling, administrative and general 198,321 171,731
Newsprint 46,522 31,063
Second class postage and carrier delivery 27,363 25,207
Depreciation and amortization 47,977 54,445
- ----------------------------------------------------------------------------
Operating expenses 521,620 462,895
- ----------------------------------------------------------------------------
Operating income 90,470 103,693
OTHER INCOME (DEDUCTIONS):
Investment income 1,558 1,391
Interest expense (4,365) (4,595)
Equity in earnings of associated companies 4,637 1,733
Other, net 2,450 (126)
- ----------------------------------------------------------------------------
Income before income taxes and minority interests 94,750 102,096
Income taxes 36,686 44,498
- ----------------------------------------------------------------------------
Income before minority interests 58,064 57,598
Minority interests in losses of subsidiaries 1,917 634
- ----------------------------------------------------------------------------
NET INCOME $ 59,981 $ 58,232
============================================================================
PER SHARE:
Net income $.62 $.60
- ----------------------------------------------------------------------------
Cash dividends $.23 $.21
============================================================================
Weighted average shares outstanding 97,136 97,221
============================================================================
Note: The fourth quarter of 1995 included research and development tax
credits of approximately $4.6 million.
</TABLE>
<PAGE>
PAGE 49
<TABLE>
<CAPTION>
SUMMARY OF QUARTERLY FINANCIAL DATA
(UNAUDITED)
Dow Jones & Company, Inc.
===========================================================================
Quarters Ended
(in thousands except --------------------------------------
per share amounts) March 31 June 30 Sept. 30 Dec. 31 Year
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Revenues $545,358 $577,043 $549,270 $612,090 $2,283,761
Operating income 74,356 83,825 55,390 90,470 304,041
Net income 46,431 49,318 33,842 59,981 189,572
Net income per share .48 .51 .35 .62 1.96
- ---------------------------------------------------------------------------
1994
Revenues $499,212 $524,153 $501,024 $566,588 $2,090,977
Operating income 88,750 96,273 69,601 103,693 358,317
Net income 40,175 46,020 33,746 58,232 178,173
Net income per share .40 .46 .34 .60 1.80
===========================================================================
</TABLE>
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits," was adopted effective January 1, 1994.
Excluding the net effect of this change, net income was $43,182,000, or
$.43 per share, in the first quarter of 1994 and $181,180,000, or $1.83 per
share, for the year (see Note 1).
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III.
ITEM 10. Directors and Executive Officers of the Registrant.
The information required by this item with respect to directors of
the company is incorporated by reference to the tables, including the
footnotes thereto, appearing on pages 8 to 10 of the 1996 Proxy Statement
and to the material in footnote 5 on page 6 of the 1996 Proxy Statement.
The information required by this item with respect to compliance with
Section 16(a) of the Securities Exchange Act of 1934 is incorporated by
reference to the material on page 20 of the 1996 Proxy Statement under the
caption "Compliance with Section 16(a) of The Exchange Act." For the
information required by this item relating to executive officers, see Part
I, page 13 of this 1995 Form 10-K.
<PAGE>
PAGE 50
ITEM 11. Executive Compensation.
The information required by this item is incorporated by reference to
the tables, including the footnotes thereto, appearing under the caption
"Executive Compensation" on pages 12 to 15 of the 1996 Proxy Statement and
to the material appearing on pages 10 and 11 of the 1996 Proxy Statement in
the two paragraphs immediately following footnote 7 on page 10.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is incorporated by reference to
the tables, including the footnotes thereto, appearing on pages 1 to 6 of
the 1996 Proxy Statement under the captions "Security Ownership of Certain
Beneficial Owners" and "Security Ownership of Directors and Management."
ITEM 13. Certain Relationships and Related Transactions.
The information required by this item is incorporated by reference to
footnotes 2, 4 and 6 on page 10 of the 1996 Proxy Statement.
<PAGE>
PAGE 51
PART IV.
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
14 (a) (1) Financial Statements:
Page
Reference
---------
Included in Part II, Item 8 of this report:
Consolidated statements of income for the years
ended December 31, 1995, 1994 and 1993 24
Consolidated balance sheets, December 31, 1995 and 1994 25-26
Consolidated statements of cash flows for the
years ended December 31, 1995, 1994 and 1993 27-28
Consolidated statements of stockholders' equity for the
years ended December 31, 1995, 1994 and 1993 29
Notes to financial statements 30-45
Report of independent accountants 46
(a) (2) Financial Statement Schedules:
Included in Part IV of this report:
Report and consent of independent accountants 56
II - Valuation and qualifying accounts and reserves 57
Other schedules have been omitted since they are either not required or
not applicable.
<PAGE>
PAGE 52
(a) (3) Exhibits
Exhibit
Number Document
------- --------
3.1 The Restated Certificate of Incorporation of the Company, as
amended, is hereby incorporated by reference to Exhibit 19.1 to
its Form 10-Q for the quarter ended March 31, 1988.
3.2 The Bylaws of the Company is hereby incorporated by reference to
Exhibit 19.2 to its Form 10-Q for the quarter ended September 30,
1987.
4.1 Form of promissory note for commercial paper is hereby
incorporated by reference to Exhibit 4.1 to its Form 10-Q for the
quarter ended September 30, 1985.
10.1 Deferred Compensation Contracts between the Company and various
officers and directors are hereby incorporated by reference to
Exhibit 20 to its Form 10-K for the year ended December 31, 1980.
10.2 Dow Jones 1981 Stock Option Plan, as amended, is hereby
incorporated by reference to Exhibit 20.2 to its Form 10-Q for the
quarter ended June 30, 1981.
10.3 Dow Jones 1983 Executive Incentive Plan, as amended, is hereby
incorporated by reference to Exhibit 10.3 to its Form 10-K for the
year ended December 31, 1983.
10.4 Lease, as amended, between the Company and Olympia and York
Battery Park Company, of space in The World Financial Center, New
York City, is hereby incorporated by reference to Exhibit 10.9 to
its Form 10-K for the year ended December 31, 1983.
10.5 Dow Jones 1988 Executive Incentive Plan, as amended, is hereby
incorporated by reference to Exhibit 19 to its Form 10-Q for the
quarter ended June 30, 1988.
10.6 Lease, as amended, between the Company and Waterfront Associates,
of space at Harborside Plaza Two, Jersey City, N.J. is hereby
incorporated by reference to Exhibit 10.15 to its Form 10-K for
the year ended December 31, 1989.
10.7 Dow Jones 1991 Stock Option Plan, as amended, is hereby
incorporated by reference to Exhibit 19.2 to its Form 10-Q for the
quarter ended September 30, 1991.
<PAGE>
PAGE 53
Exhibit
Number Document
------- --------
10.8 Dow Jones 1992 Long Term Incentive Plan is hereby incorporated by
reference to Exhibit 10 to its Form 10-Q for the quarter ended
March 31, 1992.
10.9 Dow Jones Credit Agreement dated November 16, 1994 between the
Company and Chemical Bank is hereby incorporated by reference to
Exhibit 10.9 to its Form 10-K for the year ended December 31,
1994.
11 Computation of Earnings Per Share.
21 List of Subsidiaries.
23 Consent of Coopers & Lybrand, independent accountants, is
contained on page 56 of this report.
* 27 Financial Data Schedule
* Securities and Exchange Commission and New York Stock Exchange copies
only.
(b) Reports on Form 8-K
Form 8-K dated December 5, 1995
<PAGE>
PAGE 54
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DOW JONES & COMPANY, INC.
By Thomas G. Hetzel
-------------------------
Comptroller
(Chief Accounting Officer)
Dated: March 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Peter R. Kann
- -------------------------- Chairman of the Board March 25, 1996
Chief Executive Officer
Kenneth L. Burenga
- -------------------------- President March 25, 1996
Chief Operating Officer
Kevin J. Roche
- -------------------------- Vice President/Finance March 25, 1996
Chief Financial Officer
Carl M. Valenti
- -------------------------- Director March 25, 1996
James H. Ottaway Jr.
- -------------------------- Director March 25, 1996
<PAGE>
PAGE 55
Signature Title Date
- --------- ----- ----
Richard D. Wood
- --------------------------- Director March 25, 1996
Irvine O. Hockaday Jr.
- --------------------------- Director March 25, 1996
Carlos Salinas de Gortari
- --------------------------- Director March 25, 1996
William C. Cox Jr.
- --------------------------- Director March 25, 1996
Rand V. Araskog
- --------------------------- Director March 25, 1996
James Q. Riordan
- --------------------------- Director March 25, 1996
Warren H. Phillips
- --------------------------- Director March 25, 1996
<PAGE>
PAGE 56
INDEPENDENT ACCOUNTANTS' REPORT ON FINANCIAL STATEMENT SCHEDULES
-----------------------
To the Board of Directors and Stockholders
of Dow Jones & Company, Inc.:
Our report on the consolidated financial statements of Dow Jones & Company,
Inc. and its Subsidiaries is included on page 46 of this 1995 Form 10-K. In
connection with our audits of such financial statements, we have also
audited the related financial statement schedules listed in the index on
page 51 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
New York, New York
January 23, 1996
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------------------
We consent to the incorporation by reference in the Registration Statements
on Form S-8 (File Nos. 2-72684, 2-95540, 33-35211, 33-45962, 33-45963, 33-
49311 and 33-55079) of Dow Jones & Company, Inc. of our report dated January
23, 1996 appearing on page 46 of this 1995 Form 10-K. We also consent to
the incorporation by reference of our report on the financial statement
schedules, which appears above.
COOPERS & LYBRAND L.L.P.
New York, New York
March 25, 1996
<PAGE>
PAGE 57
<TABLE>
<CAPTION>
Schedule II
DOW JONES & COMPANY, INC.
and its Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1995, 1994 and 1993
(in thousands)
Additions
------------------------
Balance at Charged to Charged Balance
Beginning Cost and to Other at End
Description of Period Expenses Accounts(A) Deductions(B) of Period
----------- --------- --------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Reserves deducted from assets -
allowance for doubtful accounts $14,870 $ 6,176 $3,572 $11,216 $13,402
======= ======= ====== ======= =======
Year ended December 31, 1994:
Reserves deducted from assets -
allowance for doubtful accounts $14,548 $ 7,169 $2,002 $ 8,849 $14,870
======= ======= ====== ======= =======
Year ended December 31, 1993:
Reserves deducted from assets -
allowance for doubtful accounts $16,443 $ 5,582 $1,520 $ 8,997 $14,548
======= ======= ====== ======= =======
Notes:
(A) Recoveries of accounts previously written off and reductions of revenue.
(B) Accounts written off as uncollectible.
</TABLE>
<PAGE>
PAGE 1
<TABLE>
<CAPTION>
Exhibit 11
DOW JONES & COMPANY, INC.
and its Subsidiaries
COMPUTATION OF EARNINGS PER SHARE
(in thousands except per share data)
1995 1994 1993
PRIMARY -------- -------- --------
- -------
<S> <C> <C> <C>
Average shares outstanding used in the computation of
reported earnings per share 96,907 99,002 99,773
Common stock equivalents (assuming the use of the proceeds from
their exercise or issuance to acquire treasury stock at the
average market value of stock during the year)--shares
granted under employee stock option and stock purchase plans 768 660 510
-------- -------- --------
Average shares and common stock equivalents outstanding--primary 97,675 99,662 100,283
======== ======== ========
Net income $189,572 $178,173 $147,547
======== ======== ========
Net income per share--primary $1.94 $1.79 $1.47
===== ===== =====
FULLY DILUTED
- -------------
Average shares outstanding used in the computation of
reported earnings per share 96,907 99,002 99,773
Common stock equivalents (assuming the use of the proceeds from
their exercise or issuance to acquire treasury stock at the
higher of average market value of stock during the year or
year-end market price)--shares granted under employee stock
option and stock purchase plans 1,068 660 862
-------- -------- --------
Average shares and common stock equivalents outstanding--fully diluted 97,975 99,662 100,635
======== ======== ========
Net income $189,572 $178,173 $147,547
======== ======== ========
Net income per share--fully diluted $1.93 $1.79 $1.47
===== ===== =====
</TABLE>
<PAGE>
PAGE 1
<TABLE>
<CAPTION>
Exhibit 21
SUBSIDIARIES OF THE COMPANY
Jurisdiction of
Incorporation or
Name of Subsidiary Organization
- ------------------ ----------------
<S> <C>
American Demographics, Inc. New York
Dow Jones AER Company, Inc. Delaware
Economic Research Company, Inc. Delaware
Dow Jones Canada, Inc. Canada
Dow Jones Financial Publishing Corp. Delaware
Dow Jones Information Services International (HK) Ltd. Hong Kong
Dow Jones International Marketing Services (U.K.), Ltd. United Kingdom
Dow Jones International Marketing Services GmbH Germany
Dow Jones Newsprint Company, Inc. Delaware
Dow Jones Printing Company (Asia), Inc. Delaware
Dow Jones Publishing Company (Asia), Inc. (90% owned) Delaware
Dow Jones Broadcasting (Asia), Inc. Delaware
Dow Jones Broadcasting (Europe), Inc. Delaware
Dow Jones Broadcasting (USA), Inc. Delaware
Dow Jones Publishing Company (Europe), Inc. Delaware
Dow Jones Real Estate Development Corporation Delaware
Dow Jones Southern Holding Company, Inc. Delaware
Dow Jones Virginia Company, Inc. Delaware
Dow Jones Ventures I, Inc. Delaware
Dow Jones Ventures II, Inc. Delaware
Dow Jones Ventures III, Inc. Delaware
Federal Filings, Incorporated Delaware
Nanbei Ltd (50% owned) Turks and Caicos
National Delivery Service, Inc. Delaware
Ottaway Newspapers, Inc. Delaware
News-Sun, Inc. Arizona
The Inquirer & Mirror, Inc. Massachusetts
Portuguese-American Publications, Inc. Massachusetts
Review Publishing Company Limited Hong Kong
The China Phone Book Co. Ltd. Hong Kong
Dow Jones Telerate Holdings, Inc. Delaware
Dow Jones Telerate Canada Inc. Ontario
Dow Jones Telerate Systems, Inc. California
Telerate Research & Development Pte Ltd Singapore
Dow Jones Telerate, Inc. New York
Dow Jones Telerate Sports, Inc. Delaware
CompuTrac, Inc. Louisiana
Dow Jones Telerate Software, Inc. Delaware
Dow Jones Telerate Puerto Rico, Inc. Delaware
Telerate Financial Services Co. Delaware
Telerate International Inc. Delaware
Telerate International Limited United Kingdom
</TABLE>
<PAGE>
PAGE 2
<TABLE>
<CAPTION>
Jurisdiction of
Incorporation or
Name of Subsidiary Organization
- ------------------ ----------------
<S> <C>
Dow Jones Telerate International Company
(100% owned Partnership) Delaware
Dow Jones Telerate (Panama) Inc. Panama
Servicios Informativos Telerate Systems (Chile)
Limitada Chile
Dow Jones Telerate (Asia-Pacific) Singapore
Pte Ltd Singapore
Dow Jones Telerate (Australia) Pty Limited Australia
Telerate (Bahamas) Limited Bahamas
Dow Jones Telerate Belgium SA Belgium
Dow Jones Telerate Danmark A/S Denmark
Dow Jones Telerate Limited United Kingdom
Dow Jones Telerate Finland OY Finland
Dow Jones Telerate France SA France
Dow Jones Telerate Ireland Limited Ireland
Dow Jones Telerate Netherlands BV Netherlands
Dow Jones Telerate Espana S.A. Spain
Dow Jones Telerate Sweden AB Sweden
Dow Jones Telerate (Thailand) Limited Thailand
Dow Jones Telerate Technical Services Limited United Kingdom
Telefin SA Greece
Dow Jones Telerate (Switzerland) AG Switzerland
Dow Jones Telerate Argentina Limitada S.A. Argentina
Dow Jones Telerate (Singapore) Pte Ltd Singapore
Dow Jones Telerate de Venezuela, C.A. Venezuela
Dow Jones Telerate (Hong Kong) Limited Hong Kong
Dow Jones Telerate (Asia Pacific) Limited Hong Kong
Dow Jones Telerate Financial Information Delaware
Services, Inc.
Telerate Finansal Sistemler A.S. Turkey
Dow Jones Telerate Informacao Financeira, Lda. Portugal
Dow Jones Telerate Ges.m.b.H. Austria
Dow Jones Telerate Luxembourg SARL Luxembourg
Dow Jones Telerate (New Zealand) Ltd. New Zealand
Advance Pacific Limited Cook Islands
Telerate Uruguay S.A. Uruguay
Dow Jones Telerate GmbH Germany
Dow Jones Telerate Norway AS Norway
Dow Jones Telerate Cyprus Limited Cyprus
Dow Jones Telerate (South Africa) (Pty) Limited South Africa
Dow Jones Telerate Italia s.r.l. Italy
Dow Jones Telerate (Malaysia) SDN BHD Malaysia
All of the above subsidiaries are included in the consolidated financial
statements.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM FINANCIAL STATEMENTS IN FORM 10-K FOR DOW JONES & COMPANY, INC.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000029924
<NAME> DOW JONES & COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 13,667
<SECURITIES> 0
<RECEIVABLES> 286,003
<ALLOWANCES> 13,402
<INVENTORY> 12,752
<CURRENT-ASSETS> 371,255
<PP&E> 2,049,566
<DEPRECIATION> 1,359,585
<TOTAL-ASSETS> 2,598,700
<CURRENT-LIABILITIES> 581,538
<BONDS> 253,935
<COMMON> 102,181
0
0
<OTHER-SE> 1,499,570
<TOTAL-LIABILITY-AND-EQUITY> 2,598,700
<SALES> 2,283,761
<TOTAL-REVENUES> 2,283,761
<CGS> 1,215,559
<TOTAL-COSTS> 1,215,559
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,345
<INCOME-PRETAX> 322,900
<INCOME-TAX> 139,878
<INCOME-CONTINUING> 189,572
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 189,572
<EPS-PRIMARY> 1.96
<EPS-DILUTED> 0
</TABLE>
