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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 1-7564
DOW JONES & COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-5034940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 LIBERTY STREET, NEW YORK, NEW YORK 10281
(Address of principal executive offices) (Zip Code)
(212) 416-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of each of the issuer's classes of
common stock on June 30, 1997: 74,346,756 shares of Common Stock and
21,607,145 shares of Class B Common Stock.
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
Dow Jones & Company, Inc.
Quarters Ended Six Months Ended
June 30 June 30
==========================================================================================
(in thousands except
per share amounts) 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Information services $269,162 $278,199 $ 535,139 $ 556,558
Advertising 256,626 238,315 485,098 431,794
Circulation and other 114,956 114,123 226,470 227,119
- ------------------------------------------------------------------------------------------
Total revenues 640,744 630,637 1,246,707 1,215,471
- ------------------------------------------------------------------------------------------
EXPENSES:
News, operations and development 213,942 202,712 424,605 397,434
Selling, administrative and general 221,601 208,669 434,546 404,592
Newsprint 38,041 45,881 71,660 90,785
Second class postage and carrier delivery 28,426 27,343 56,069 53,969
Depreciation and amortization 60,707 53,940 119,638 107,647
- ------------------------------------------------------------------------------------------
Operating expenses 562,717 538,545 1,106,518 1,054,427
- ------------------------------------------------------------------------------------------
Operating income 78,027 92,092 140,189 161,044
OTHER INCOME (DEDUCTIONS):
Investment income 954 1,012 1,760 2,099
Interest expense (5,151) (3,733) (9,952) (7,477)
Equity in (losses) earnings
of associated companies (4,794) 3,094 (17,487) 4,760
Other, net (1,698) (1,413) 4,332 (1,160)
- ------------------------------------------------------------------------------------------
Income before income taxes and
minority interests 67,338 91,052 118,842 159,266
Income taxes 32,264 40,847 58,273 73,193
- ------------------------------------------------------------------------------------------
Income before minority interests 35,074 50,205 60,569 86,073
Minority interests in
(earnings) losses of subsidiaries (168) 1,820 (264) 3,577
- ------------------------------------------------------------------------------------------
NET INCOME $ 34,906 $ 52,025 $ 60,305 $ 89,650
==========================================================================================
PER SHARE:
Net income $.36 $.54 $.63 $.92
Cash dividends declared .48 .48 .72 .72
==========================================================================================
Weighted-average shares outstanding 95,821 97,118 95,688 97,238
==========================================================================================
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Dow Jones & Company, Inc.
Six Months Ended June 30
===========================================================================
(in thousands) 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 60,305 $ 89,650
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 119,638 107,647
Changes in assets and liabilities 22,068 (20,109)
Other, net 16,001 1,721
- ---------------------------------------------------------------------------
Net cash provided by operating activities 218,012 178,909
- ---------------------------------------------------------------------------
INVESTING ACTIVITIES:
Additions to plant and property (144,818) (101,576)
Businesses and investments acquired,
net of cash received (39,263) (27,857)
Other, net 21,970 6,599
- ---------------------------------------------------------------------------
Net cash used in investing activities (162,111) (122,834)
- ---------------------------------------------------------------------------
FINANCING ACTIVITIES:
Cash dividends (45,914) (46,771)
Increase in long-term debt 32,310 44,707
Reduction of long-term debt (32,900) (46,843)
Purchase of treasury stock (26,699)
Other, net 16,101 18,280
- ---------------------------------------------------------------------------
Net cash used in financing activities (30,403) (57,326)
- ---------------------------------------------------------------------------
Effect of exchange rate changes on cash (322) (238)
- ---------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 25,176 (1,489)
Cash and cash equivalents at beginning of year 6,769 13,667
- ---------------------------------------------------------------------------
Cash and cash equivalents at June 30 $ 31,945 $ 12,178
===========================================================================
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED
BALANCE SHEETS
Dow Jones & Company, Inc.
June 30 December 31
===========================================================================
(in thousands) 1997 1996
- ---------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 31,945 $ 6,769
Accounts receivable--trade, net 294,620 313,205
Inventories 7,642 10,840
Other current assets 76,659 72,871
- ---------------------------------------------------------------------------
Total current assets 410,866 403,685
- ---------------------------------------------------------------------------
Investments in associated companies,
at equity 190,599 215,478
Other investments 98,348 99,587
Plant and property, at cost 2,321,225 2,219,490
Less, accumulated depreciation 1,545,985 1,480,090
- ---------------------------------------------------------------------------
775,240 739,400
Excess of cost over net assets of
businesses acquired, less amortization 1,273,021 1,272,489
Other assets 34,188 28,992
- ---------------------------------------------------------------------------
Total assets $2,782,262 $2,759,631
===========================================================================
LIABILITIES:
Accounts payable and accrued liabilities $ 292,241 $ 291,780
Income taxes 63,901 63,868
Unearned revenue 250,256 240,239
Current maturities of long-term debt 5,318 5,318
- ---------------------------------------------------------------------------
Total current liabilities 611,716 601,205
Long-term debt 331,735 332,300
Other noncurrent liabilities 192,634 182,133
- ---------------------------------------------------------------------------
Total liabilities 1,136,085 1,115,638
- ---------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common stocks 102,181 102,181
Additional paid-in capital 135,033 134,434
Retained earnings 1,593,149 1,601,787
Unrealized gain on investments 6,595 12,353
Cumulative translation adjustment (6,991) (5,896)
- ---------------------------------------------------------------------------
1,829,967 1,844,859
Less, treasury stock, at cost 183,790 200,866
- ---------------------------------------------------------------------------
Total stockholders' equity 1,646,177 1,643,993
- ---------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,782,262 $2,759,631
===========================================================================
See notes to condensed consolidated financial statements.
</TABLE>
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NOTES TO FINANCIAL STATEMENTS
Dow Jones & Company, Inc.
1. The accompanying unaudited condensed consolidated financial statements
reflect all adjustments considered necessary by management to present fairly
the company's consolidated financial position as of June 30, 1997, and
December 31, 1996, and the consolidated results of operations for the three-
month and six-month periods ended June 30, 1997 and 1996, and the
consolidated cash flows for the six-month periods then ended. All
adjustments reflected in the accompanying unaudited condensed consolidated
financial statements are of a normal recurring nature. The results of
operations for the respective interim periods are not necessarily indicative
of the results to be expected for the full year.
2. The first quarter of 1997 included a gain of four cents a share from the
sale of the company's American Demographics subsidiary, a publisher of
information products serving the marketing industry.
3. On June 17, 1997, the company purchased Indepth Data Inc., a provider of
comprehensive historical and real-time information on fixed-income
instruments.
4. In February 1997, Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings Per Share" was issued and is effective for financial
statements issued after December 15, 1997. SFAS 128 modifies the standards
for computing and presenting earnings per share ("EPS"). The statement
requires the dual presentation of a basic EPS, which is consistent with the
company's current EPS calculation, and a diluted EPS on the face of the
income statement. The company does not expect the adoption of SFAS 128 to
have a material effect on EPS.
5. Supplementary cash flow data:
<TABLE>
<CAPTION>
Six Months Ended June 30
===========================================================================
(in thousands) 1997 1996
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<S> <C> <C>
Interest payments $ 9,622 $ 6,953
Income tax payments 60,964 70,724
===========================================================================
</TABLE>
6. Certain of the 1996 amounts have been reclassified for comparative
purposes.
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ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Net income for the second quarter of 1997 was $34.9 million, or $.36
per share, a fall-off of 32.9% from the $52 million, or $.54 per share,
earned in 1996's second quarter. A considerable downturn in financial
information services profits, as well as a decline in equity results from
newsprint mill affiliates and television partnerships, more than offset
strong operating income advancements at the business publishing and
community newspapers segments.
In early 1997, the company launched a plan to revitalize its Dow Jones
Markets business unit, which is the major component of the financial
information services segment, with a $650 million investment program over a
three to four year period. This revitalization program, coupled with
worsening results from Dow Jones Markets, are expected to have a significant
adverse effect on consolidated earnings in 1997 and 1998.
For the first six months of 1997, net income of $60.3 million, or $.63
per share, was down $29.4 million, or 32.7%, from net income of $89.7
million, or $.92 per share, in 1996. Earnings in 1997 included a gain of
four cents per share from the first quarter sale of the company's American
Demographics subsidiary, a publisher of information products serving the
marketing industry. Excluding this nonrecurring item, net income fell
36.7%.
In the second quarter of 1997, operating income declined 15.3%, to $78
million from $92.1 million in the like 1996 period. The operating margin
dipped to 12.2% from 14.6% a year ago. Revenues grew $10.1 million, or
1.6%, to $640.7 million. Higher advertising revenue, principally from The
Wall Street Journal, and initial revenue for licensing Dow Jones equity
indexes were partially offset by a decline in Dow Jones Markets revenues.
Second-quarter 1997 operating expenses of $562.7 million increased
$24.2 million, or 4.5%, as expenses attributable to the Dow Jones Markets
revitalization program and increased content costs from information
providers were tempered by a drop in newsprint prices. Newsprint expense
was down $7.8 million, or 17.1%, reflecting a 19% decline in the average
price per ton from the second quarter of 1996. Over the second half of this
year, the rate of decline in newsprint expense, relative to 1996, will
likely narrow due to a modest increase in prices in 1997 and significantly
lower newsprint prices in the second half of 1996.
Operating income of $140.2 million for the first half of 1997 declined
12.9% from the $161 million earned in the first half of 1996. A fall-off in
financial information services results outweighed substantial operating
income gains from the business publishing and community newspapers segments.
Revenues of $1.25 billion grew $31.2 million, or 2.6%, while operating
expenses increased $52.1 million, or 4.9%. The company employed 12,317
full-time employees at June 30, 1997, up 5.6% from 11,661 a year earlier, as
a result of increased staffing at Dow Jones Markets, The Wall Street Journal
and Dow Jones Interactive Publishing.
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SEGMENT DATA
The company's operations are divided into the following three segments:
business publishing, financial information services and community
newspapers. Business publishing contains the company's Print Publications,
as well as the Dow Jones Interactive Publishing (formerly Business
Information Services) and Television groups. Business publishing serves the
corporate business consumer and private investor marketplaces by providing
news and information in a wide variety of print and electronic media.
Business publishing accounted for just over half of the company's revenues
in the first six months of 1997.
Financial information services includes Dow Jones Markets (formerly Dow
Jones Telerate); Dow Jones' financial newswires, such as the Dow Jones News
Service, the AP-Dow Jones newswires and Federal Filings; and the Dow Jones
Global Indexes group. This segment serves primarily 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 37% of the company's revenues in the
first half of 1997.
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
accounted for 12% of the company's first-half 1997 revenues.
The following table compares revenues and operating income by business
segment for the quarters and six months ended June 30, 1997 and 1996:
<TABLE>
<CAPTION>
Quarters Ended June 30
============================================================================
% Increase
(in thousands) 1997 1996 (Decrease)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Business publishing $330,626 $312,553 5.8
Financial information services 233,123 244,226 (4.5)
Community newspapers 76,995 73,858 4.2
- ----------------------------------------------------------------------------
Operating Income:
Business publishing $ 68,134 $ 44,234 54.0
Financial information services 169 40,275 (99.6)
Community newspapers 15,351 12,924 18.8
============================================================================
Six Months Ended June 30
============================================================================
Revenues:
Business publishing $639,845 $591,100 8.2
Financial information services 461,832 485,978 (5.0)
Community newspapers 145,030 138,393 4.8
- ----------------------------------------------------------------------------
Operating Income:
Business publishing $119,344 $ 68,568 74.1
Financial information services 6,874 86,386 (92.0)
Community newspapers 23,724 16,721 41.9
============================================================================
</TABLE>
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BUSINESS PUBLISHING
Second-quarter operating income of $68.1 million grew $23.9 million, or
54%, from the comparable 1996 quarter. The rise was attributable to an
advertising volume gain at The Wall Street Journal and a drop-off in
newsprint prices. The operating margin jumped to 20.6% from 14.2% in 1996.
Revenues of $330.6 million grew $18.1 million, or 5.8%, while operating
expenses fell $5.8 million, or 2.2%.
In the second quarter, Print Publications, which includes the results
of The Wall Street Journal and its international editions in Europe and
Asia, Barron's as well as other periodicals, achieved a revenue increase of
5.4%. Advertising revenue from Print Publications advanced 8.4%, largely
the result of an 8.3% advertising linage gain at The Wall Street Journal.
General advertising linage, which comprised about 60% of total Journal
linage, grew 15.9%. Financial advertising linage, which composed about 27%
of Journal linage, declined 6.6%. (Financial advertising in 1996's second
quarter increased 47% over the like 1995 period.) Classified and other
Journal linage was up 11%. Barron's national advertising pages fell 5%.
Advertising revenue for international print publications, which include the
Asian and European Journals and the Far Eastern Economic Review, grew 6.4%.
Expenses for Print Publications fell 3.4%, as the group benefited from lower
newsprint prices.
Dow Jones Interactive Publishing revenues advanced 7.1% in the quarter,
mainly due to increased advertising and subscription revenues for The Wall
Street Journal Interactive Edition. The Interactive Journal, which was
limited to paying subscribers in the latter part of 1996, had over 110,000
subscribers as of June 30, 1997. Expenses for the group rose 13.8%,
reflecting higher content costs from third parties and increased expenses
from Interactive Journal operations. Television operating losses within the
business publishing segment fell $4.5 million, the result of discontinuing
the Dow Jones Investor Network in January 1997 and improved operating
results from European Business News.
Business publishing six-month operating income of $119.3 million gained
$50.8 million, or 74.1%, from the comparable 1996 period, largely driven by
gains from Print Publications. Business publishing revenues of $639.8
million added $48.7 million, or 8.2%, from the first half of 1996, while
expenses dipped $2.1 million, or 0.4%.
Print Publications revenues grew 8.8% in the first half of 1997.
Advertising revenue climbed 13.9%, with Wall Street Journal linage up 14.2%
and Barron's national advertising pages increasing 1.5%. Advertising
revenue for the international publications grew 5.9%. Circulation revenue
for Print Publications was relatively flat versus the first half of 1996.
Average circulation for The Wall Street Journal declined about 0.9%, to
1,803,000. Average combined circulation for the Asian and European Journals
rose roughly 3%, to 120,000. Barron's average circulation slipped about
1.5%, to 298,000. Print Publications expenses decreased 1.5%, as lower
newsprint costs more than offset higher costs related to advertising volume.
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For the first six months of 1997, total pretax losses due to worldwide
television ventures, including operating losses from European Business News,
and equity losses from ventures in Asia and the U.S., were $31 million
compared with losses of $21.8 million in the first half of 1996. The first
half of 1997 was negatively affected by start-up losses of WBIS+, the
company's half-owned New York television station which the company and its
partner ITT Corp. have agreed to sell to Paxson Communications Corp.
The number of full-time employees in the business publishing segment
increased 2.2% from June 30, 1996 due to the expansion of The Wall Street
Journal and Dow Jones Interactive Publishing staffs.
FINANCIAL INFORMATION SERVICES
Financial information services segment second-quarter operating income
declined $40.1 million, or 99.6%, to roughly break-even. Excluding the $5.2
million adverse effect of fluctuations in foreign currency exchange rates,
operating income would have decreased $34.9 million, or 86.8%, from 1996's
second quarter. Earnings for the quarter were negatively affected by a
significant downturn in Dow Jones Markets results. In particular, Dow Jones
Markets revenues fell 9.2% in the second quarter, in part the result of
intensifying competitive pressures over recent years.
To address such competitive pressures, in early 1997 the company
launched a revitalization program for Dow Jones Markets that intends to
expand and improve Dow Jones Markets news, real-time prices, historical
data, analytical products and third-party services to make it a more
competitive vendor in the fixed income, equities, foreign exchange and
commodities markets as well as the areas of transactional services and risk
management. Additionally, the company is developing a distribution
infrastructure for Dow Jones Markets based on standard Internet protocols
which is expected to be more flexible than its current page-based system.
Financial information services revenues for the quarter slipped $11.1
million, or 4.5%, to $233.1 million. Excluding fluctuations in foreign
currency exchange, revenues dipped 1.2%. A Dow Jones Markets revenue
decline of 9.2%, or 5.2% excluding foreign exchange, more than offset a 7.7%
revenue gain from the company's newswires and initial revenue for licensing
Dow Jones equity indexes. Domestic revenues for the segment were up 4.5%,
due to revenue gains from financial newswires and Dow Jones Global Indexes.
Foreign revenues fell 10.1%, or 4.6% excluding foreign exchange.
Second-quarter 1997 segment operating expenses of $232.9 million
climbed $29 million, or 14.2%. Excluding the effect of foreign currency
exchange fluctuations, operating expenses rose 15.7%. The rise was
primarily due to expenses for the revitalization program, principally
related to research and development.
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For the first six months of 1997, financial information services
operating income of $6.9 million dropped $79.5 million, or 92%, from the
first half of 1996. Revenues decreased $24.1 million, or 5%, while expenses
rose $55.4 million, or 13.9%. Excluding the effect of foreign currency
exchange fluctuations in 1997, operating income would have declined $69.5
million, or 80.4%, with revenues down 1.8% and operating expenses increasing
15.2%. Dow Jones Markets revenues fell 8.6% in the first half and are
expected to be down in that range for the full year.
At June 30, 1997, the number of full-time employees in this segment was
up roughly 13.3% from a year earlier, largely due to expanded staffs for the
revitalization program and the acquisition of Indepth Data Inc., a provider
of comprehensive historical and real-time information on fixed-income
instruments.
COMMUNITY NEWSPAPERS
The community newspapers segment's second-quarter 1997 operating income
of $15.4 million increased $2.4 million, or 18.8%, compared with the like
1996 quarter. Community newspapers revenues of $77 million grew $3.1
million, or 4.2%. Advertising revenue was up 4.9% due to rate increases.
Advertising linage edged up 0.2%. Circulation revenue gained 2.6% from the
year-ago quarter. Operating expenses of $61.6 million rose $0.7 million, or
1.2%.
Community newspapers operating income for the first half of 1997 grew
$7 million, or 41.9%, to $23.7 million. Revenues were up $6.6 million, or
4.8%, while operating expenses were flat. Community newspapers 1997 results
benefited from a decline in newsprint prices, as newsprint expense was down
close to 20% in both the second quarter and in the first six months of 1997,
relative to their comparable 1996 periods.
OTHER INCOME / DEDUCTIONS
Interest expense in 1997's second quarter increased $1.4 million, or
38%, from the second quarter of 1996. For the first half of 1997, interest
expense was up $2.5 million, or 33.1%, primarily reflecting a higher average
debt level in 1997.
In the second quarter of 1997, the company's share of losses from
associated companies was $4.8 million, which was a negative swing of $7.9
million from earnings of $3.1 million a year ago. For the first six months
of 1997, the company's share of losses from associated companies totaled
$17.5 million, a downturn of $22.3 million from earnings of $4.8 million a
year earlier. The negative swing in equity results in 1997 was largely due
to a fall-off in newsprint mill partnership earnings and additional losses
from television ventures, primarily the company's New York television
station, WBIS+.
Other income for the first half of 1997 was up $5.5 million from the
comparable period last year. The first quarter of 1997 included a pretax
gain of $6.2 million from the sale of the company's American Demographics
subsidiary.
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INCOME TAXES
The effective income tax rate for the second quarter of 1997 increased
to 47.9% from 44.9% in the second quarter a year ago. For the first six
months of 1997, the effective income tax rate was 49% compared with 46% in
the comparable 1996 period. The higher effective tax rates in 1997 were
chiefly the result of the greater impact of nondeductible goodwill
amortization on substantially lower pretax earnings.
FINANCIAL POSITION
In the first six months of 1997, funds provided by operations of $218
million advanced $39.1 million from the $178.9 million generated in the
first half of 1996. The rise in cash from operations was largely the result
of increased collections of accounts receivables. During 1997's first
half, the company paid cash dividends of $45.9 million and funded capital
expenditures of $144.8 million. The company also made investments totaling
$39.3 million, consisting of the purchase of Indepth Data Inc. and
investments in various equity ventures.
On May 12, 1997, the company and ITT Corp. entered into an agreement to
sell WBIS+'s broadcast license and equipment to Paxson Communications Corp.
("Paxson") for $257.5 million. At least $250 million of the consideration
will be paid in cash, while, at Paxson's discretion, $7.5 million may be
paid in the form of Paxson common stock or cash. The sale, which is subject
to obtaining necessary regulatory approvals, is anticipated to be finalized
by the end of 1997. Since June 30, 1997, Paxson has been providing interim
programming as part of a time brokerage agreement. The company expects to
recognize a modest gain when the sale is consummated.
ACCOUNTING PRONOUNCEMENTS
In 1997 in addition to issuing Statement of Financial Accounting
Standards No. 128, "Earnings Per Share," which is described in Note 4 to the
financial statements on page 5 of this Form 10-Q, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 130
("SFAS 130") "Reporting Comprehensive Income," and No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information."
SFAS 130 establishes standards for the reporting and display of
comprehensive income as part of a full set of financial statements. For the
company, comprehensive income would include net income plus any changes
during the period in certain items that are recorded directly to
stockholders' equity, specifically unrealized gains/losses on investments
and foreign currency translation adjustments. SFAS 130 is effective for
fiscal years beginning after December 15, 1997.
SFAS 131 modifies the standards for reporting operating segments of the
company and information to be disclosed. At this time, the company does not
expect the adoption of SFAS 131 will significantly change the company's
segment reporting. The statement is effective for periods beginning after
December 15, 1997.
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PAGE 12
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis and other sections of this Form
10-Q include forward-looking statements that reflect the company's current
expectations concerning future results and events. The words "expects,"
"intends," "plans," "believes," "anticipates," "likely," "will," and similar
expressions identify forward-looking statements. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results and events to differ materially from those anticipated in the
forward-looking statements. Some important factors that might cause such a
difference include, but are not limited to, the company's ability to achieve
and implement the planned enhancements of Dow Jones Markets' products and
services on a timely and cost-effective basis and customer acceptance of
those products and services; rapid technological changes and frequent new
product introductions prevalent in the financial information services and
electronic publishing industries; product obsolescence due to advances in
technology and shifts in market demand; competition from increased
availability of financial information, including through the Internet, and
resulting price pressures; business conditions (growth or consolidation) in
the financial services and banking industries; economic and stock market
conditions, particularly in the U.S., Europe and Japan, and their impact on
advertising sales and sales of the company's products and services; cost of
newsprint; adverse verdicts in legal proceedings, including libel actions;
adverse decisions by federal regulators, including failure to approve the
sale of WBIS+'s broadcast license or the index-related products developed by
licensees of the company's equity indexes; risks associated with the
development of television channels in competitive foreign markets, including
the company's ability to produce or obtain desired programming, to sell
advertising time at desired rates, to achieve sufficient distribution and to
attract audiences; risks associated with foreign operations, including
currency and political risks; and such other risk factors as may have been
or may be included from time to time in the company's reports filed with the
Securities and Exchange Commission.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
MMAR GROUP, INC. V. DOW JONES & COMPANY, INC. AND LAURA JERESKI is a
libel case brought by a defunct bond brokerage firm against the company and
one of its reporters in October 1994 in the United States District Court for
the Southern District of Texas. The plaintiff alleged that it had gone out
of business as a result of an October 1993 article in The Wall Street
Journal that sought to describe MMAR's business and its dealings with the
Louisiana State Employees Retirement System. On March 20, 1997, a federal
district court jury in Houston, Texas returned a verdict against the company
and Ms. Jereski for $22.7 million in compensatory damages, $200 million in
punitive damages against the company and $20,000 in punitive damages against
Ms. Jereski. On May 23, the District Judge issued a judgment on the verdict
accepting the jury's award of $22.7 million in compensatory damages against
the company and Ms. Jereski and the $20,000 punitive damages award against
Ms. Jereski, but rejecting the jury's award of punitive damages against the
company in its entirety. The amount of the judgment, $22.72 million, plus
pre- and post-judgment interest on that amount, is well below the company's
libel insurance coverage of $45 million. The company filed a motion on June
7, 1997 with the trial court renewing its request for judgment in favor of
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PAGE 13
the company as a matter of law, for a new trial, or for remittitur of the
compensatory damages award to less than $2 million. If any portion of the
verdict remains subsequent to the court's ruling on these motions, Dow Jones
and Ms. Jereski anticipate that they will pursue their right to appeal to
the United States Court of Appeals for the Fifth Circuit.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits filed:
Financial Data Schedule (Exhibit 27)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for which
this report is filed.
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PAGE 14
SIGNATURE
---------
Pursuant to the requirements 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.
-------------------------
(Registrant)
Date: August 11, 1997 By Thomas G. Hetzel
----------------------
Comptroller
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS IN FORM 10-Q FOR DOW JONES & COMPANY, INC. FOR THE
PERIOD ENDED JUNE 30, 1997, 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 31,945
<SECURITIES> 0
<RECEIVABLES> 313,762
<ALLOWANCES> 19,142
<INVENTORY> 7,642
<CURRENT-ASSETS> 410,866
<PP&E> 2,321,225
<DEPRECIATION> 1,545,985
<TOTAL-ASSETS> 2,782,262
<CURRENT-LIABILITIES> 611,716
<BONDS> 331,735
0
0
<COMMON> 102,181
<OTHER-SE> 1,543,996
<TOTAL-LIABILITY-AND-EQUITY> 2,782,262
<SALES> 1,246,707
<TOTAL-REVENUES> 1,246,707
<CGS> 671,972
<TOTAL-COSTS> 671,972
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,952
<INCOME-PRETAX> 118,842
<INCOME-TAX> 58,273
<INCOME-CONTINUING> 60,305
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60,305
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
</TABLE>
