<PAGE>
PAGE 1
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 September 30, 2000
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 September 30, 2000: 66,461,741 shares of Common Stock and 21,048,825
shares of Class B Common Stock.
<PAGE>
PAGE 2
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Dow Jones & Company, Inc.
<CAPTION>
=========================================================================================
Quarters Ended Nine Months Ended
(in thousands, except September 30 September 30
per share amounts) 2000 1999 2000 1999
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Advertising $319,307 $290,831 $1,096,920 $ 850,360
Information services 71,257 65,937 207,335 249,826
Circulation and other 109,726 113,027 339,944 342,262
-----------------------------------------------------------------------------------------
Total revenues 500,290 469,795 1,644,199 1,442,448
-----------------------------------------------------------------------------------------
Expenses:
News, operations and development 137,306 129,328 404,340 412,028
Selling, administrative and general 159,817 153,081 501,872 451,157
Newsprint 44,828 34,704 133,593 108,744
Print delivery costs 47,135 44,433 145,185 132,029
Depreciation and amortization 27,937 24,106 82,528 73,966
Restructuring charge 2,755
-----------------------------------------------------------------------------------------
Operating expenses 417,023 385,652 1,267,518 1,180,679
-----------------------------------------------------------------------------------------
Operating income 83,267 84,143 376,681 261,769
Other income (deductions):
Investment income 844 2,480 6,146 7,251
Interest expense (918) (904) (3,741)
Equity in losses of associated
companies (4,653) (8,171) (14,168) (18,797)
Gain on disposition of
businesses and investments 57,607 20,192 68,225
Write-down of investment (82,295) (82,295)
Other, net (544) (384) (940)
-----------------------------------------------------------------------------------------
(Loss) income before income taxes and
minority interests (3,381) 134,757 304,712 314,707
Income taxes 31,601 31,957 151,470 103,113
-----------------------------------------------------------------------------------------
(Loss) income before minority interests (34,982) 102,800 153,242 211,594
Minority interests 1,086 1 2,095 (59)
-----------------------------------------------------------------------------------------
Net (loss) income $(33,896) $102,801 $ 155,337 $ 211,535
=========================================================================================
Net income per share:
- Basic $(.39) $1.14 $1.76 $2.33
- Diluted (.39) 1.13 1.74 2.32
Weighted-average shares outstanding:
- Basic 87,476 90,040 88,099 90,711
- Diluted 87,476 90,689 89,063 91,333
Cash dividends declared per share $.75 $.72
-----------------------------------------------------------------------------------------
Comprehensive (loss) income $(38,642) $ 42,498 $ 171,476 $ 171,427
=========================================================================================
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
Dow Jones & Company, Inc.
<CAPTION>
=============================================================================
Nine Months Ended September 30
(in thousands) 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C>
Operating Activities:
Net income $155,337 $211,535
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 82,528 73,966
Gain on disposition of businesses
and investments (20,192) (68,225)
Write-down of investment 82,295
Changes in assets and liabilities 22,300 (66,780)
Other, net 12,071 19,580
-----------------------------------------------------------------------------
Net cash provided by operating activities 334,339 170,076
-----------------------------------------------------------------------------
Investing Activities:
Additions to plant and property (141,385) (144,159)
Businesses and investments acquired,
net of cash received (49,209) (39,518)
Disposition of businesses and investments 28,760 92,698
Other, net 3,645 2,084
-----------------------------------------------------------------------------
Net cash used in investing activities (158,189) (88,895)
-----------------------------------------------------------------------------
Financing Activities:
Cash dividends (66,334) (65,662)
Repurchase of treasury stock, net of
put premiums (186,651) (141,529)
Proceeds from sales under stock
compensation plans 33,725 18,524
-----------------------------------------------------------------------------
Net cash used in financing activities (219,260) (188,667)
-----------------------------------------------------------------------------
Decrease in cash and cash equivalents (43,110) (107,486)
Cash and cash equivalents at beginning of year 86,388 142,877
-----------------------------------------------------------------------------
Cash and cash equivalents at September 30 $ 43,278 $ 35,391
=============================================================================
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
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<TABLE>
CONDENSED CONSOLIDATED
BALANCE SHEETS
Dow Jones & Company, Inc.
<CAPTION>
=============================================================================
September 30 December 31
2000 1999
(in thousands) (Unaudited)
-----------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and cash equivalents $ 43,278 $ 86,388
Accounts receivable-trade, net 248,987 314,289
Newsprint inventory 16,154 9,407
Deferred income taxes 9,722 9,885
Other current assets 42,714 36,020
-----------------------------------------------------------------------------
Total current assets 360,855 455,989
-----------------------------------------------------------------------------
Investments in associated companies,
at equity 77,261 50,959
Other investments 119,835 174,727
Plant and property, at cost 1,579,527 1,443,351
Less, accumulated depreciation 841,641 766,939
-----------------------------------------------------------------------------
737,886 676,412
Goodwill, less accumulated amortization 75,096 83,099
Deferred income taxes 77,955 73,552
Other assets 15,389 15,821
-----------------------------------------------------------------------------
Total assets $1,464,277 $1,530,559
=============================================================================
Liabilities:
Accounts payable and accrued liabilities $ 306,312 $ 309,964
Income taxes 19,292 40,315
Unearned revenue 214,069 228,251
-----------------------------------------------------------------------------
Total current liabilities 539,673 578,530
Long-term debt 149,990 149,945
Other noncurrent liabilities 263,383 248,594
-----------------------------------------------------------------------------
Total liabilities 953,046 977,069
-----------------------------------------------------------------------------
Stockholders' Equity:
Common stock 102,181 102,181
Additional paid-in capital 137,411 137,487
Retained earnings 898,520 809,517
Accumulated other comprehensive income (loss) 13,941 (2,198)
-----------------------------------------------------------------------------
1,152,053 1,046,987
Less, treasury stock, at cost 640,822 493,497
-----------------------------------------------------------------------------
Total stockholders' equity 511,231 553,490
-----------------------------------------------------------------------------
Total liabilities and stockholders' equity $1,464,277 $1,530,559
=============================================================================
<FN>
See notes to condensed consolidated financial statements.
</TABLE>
<PAGE>
PAGE 5
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 September 30, 2000 and
December 31, 1999, and the consolidated results of operations for the three
and nine-month periods ended September 30, 2000 and 1999 and the consolidated
cash flows for the nine-month period then ended. In management's opinion,
all adjustments necessary for a fair presentation are reflected in the
interim periods presented. The results of operations for the respective
interim periods are not necessarily indicative of the results to be expected
for the full year.
2. Dow Jones holds $150 million aggregate par value of 5 year, redeemable,
convertible, 4% preferred stock of Bridge Information Systems, Inc. and has
accrued dividends of $12.6 million. Dow Jones accounts for this investment
under the cost method; therefore, changes in the value of the investment are
not recognized unless there is an impairment in value of the investment that
is deemed to be "other than temporary". It is the company's policy to
continually monitor investments for indications of impairment.
Bridge's continued operating shortfalls from plan and need for additional
financing, combined with the pricing of its third quarter issuance of
convertible notes, clearly demonstrate, in the judgment of Dow Jones
management, that there has been a decline in value of the company's preferred
stock holdings. In addition, Bridge has notified its lenders that as of
September 30, 2000 it was not in compliance with certain financial covenants
under its outstanding credit agreement. Bridge has indicated to the company
that it intends to seek waivers or other appropriate relief from such
lenders.
The lack of updated long-term forward projections (which is due to third
quarter management changes and the time required to reassess various aspects
of forward strategy) leaves Dow Jones management with insufficient objective
evidence to demonstrate that such decline is temporary. The lack of such
projections also means that it is not presently practicable to conduct a
discounted cash flow valuation analysis. Accordingly, management's view is
that the best means to quantify the decline in value is the third quarter
convertible debt transaction that Bridge had with its controlling
shareholder. Similar securities were offered to new investors, but no sales
were consummated. Using this transaction as a benchmark, the company has
taken a charge to earnings in the current period of $82.3 million on this
investment (there is no tax benefit as the loss is a capital loss), or $.94
per diluted share. Accrual of dividends was discontinued effective with the
third quarter of 2000. This results in a revised carrying value for this
investment of $80.3 million.
Bridge's principal shareholder is managing the company and recruiting a new
CEO. Bridge has launched several initiatives focused on improving
operations; increasing revenues and raising additional capital; however there
is no assurance that these efforts will be successful. The company will
continue to closely monitor the status of Bridge.
<PAGE>
PAGE 6
The company also holds a direct interest in SAVVIS, which was acquired
through the investment in Bridge. The SAVVIS stock carrying value of $16
million at September 30, 2000 includes an unrealized gain of $15.1 million
(which is reflected in shareholders equity but will not be recognized in
operating results until realized).
Dow Jones has guaranteed payment under certain circumstances of certain
annual minimum payments for data acquired by Telerate (now wholly-owned by
Bridge Information Systems, Inc.) from Cantor Fitzgerald Securities and
Market Data Corporation (MDC), under contracts entered into during the period
when Telerate was a subsidiary of the company. The annual minimum payments
average approximately $50 million per year through October 2006. Bridge has
agreed to indemnify Dow Jones if the company is required to make any payments
under the guarantee. The write-down of the investment in Bridge is related
to Dow Jones' assessment of the current value of the Series E preferred
shares. Bridge is presently meeting its payment obligations to Cantor
Fitzgerald and MDC. Bridge is also focused on improving operations;
increasing revenues and raising additional capital, which are expected to
further strengthen its cash flow position. Thus, Dow Jones management
believes that while it is not possible to predict with certainty, it is not
probable that Dow Jones will be required to perform under this guarantee.
3. The second quarter of 2000 included a net gain of $4.8 million, or $.05
per share, from the sale of the company's minority interest in SportsTicker
Enterprises L.P., a leading supplier of real-time sports news and
information.
4. The second quarter of 2000 included a reversal of a 1998 equity investee
restructuring charge of $3.2 million ($2.1 million after tax, or $.02 per
share) relating to the favorable disposition of a satellite lease in Europe.
The benefit was recorded in Equity in Losses of Associated Companies.
5. The first quarter of 2000 included a net gain of $9.5 million, or $.10
per diluted share, from the sale of the company's subsidiary, Dow Jones
Financial Publishing Corp., which published Investment Advisor, Asset
Management, Property and Realty Stock Review.
6. On July 1, 1999, the company formed a 50-50 joint venture, Dow Jones
Reuters Business Interactive LLC (Factiva), with Reuters Group Plc, into
which Dow Jones contributed a significant portion of its interactive business
unit. The company's share of the joint venture's results is included in
Equity in Losses of Associated Companies.
7. The third quarter of 1999 included a net gain of $57.3 million, or $.63
per share, from the sale of the company's interest in United States
Satellite Broadcasting, Inc.
<PAGE>
PAGE 7
8. The second quarter of 1999 included a restructuring charge of $2.8
million ($1.6 million after tax, or $.02 per share) for employee severance
associated with the conversion to electronic pagination of The Wall Street
Journal.
9. The first quarter of 1999 included a net gain of $10.6 million, or $.12
per diluted share, from the sale of a portion of the company's minority
interest in OptiMark Technologies, Inc.
10. On January 1, 2000, the company exchanged a 49% interest in The Wall
Street Journal Europe for a 22% interest in Handelsblatt, Germany's leading
business newspaper. In addition, Dow Jones contributed its indirect holdings
in the Czech business publisher Economia and the German financial news agency
VWD. Dow Jones' interest in Economia declined to 12% and in VWD to 17%.
Minority interests largely represent von Holtzbrinck group's 49% share of
losses in the contributed businesses.
11. In the first nine months of 2000, the company repurchased 3 million
shares of its common stock at an aggregate price of $190.5 million. As of
September 30, 2000, puts were outstanding covering 1.3 million shares at
strike prices (net of put premiums received) ranging from $59.91 to $60.66
per share, with exercise dates through June 28, 2001. The company has the
option of net share settlement on these contracts. In September 2000, the
company's board of directors authorized the repurchase of up to $500 million
of the company's own stock. This is in addition to the $92.8 million (after
reserving for the exercise of outstanding puts) that remained as of the end
of September 2000 under a prior authorization from the company's board.
12. Certain prior year amounts have been reclassified to conform to current
year presentation.
<TABLE>
13. Comprehensive income was computed as follows:
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
September 30 September 30
(in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net (loss) income $(33,896) $102,801 $155,337 $211,535
Adjustments for realized
gain included in net income (57,607) (38,840)
Foreign currency
translation adjustments (168) 832 (2,174) (245)
Unrealized (loss) gain on
investments (4,578) (3,528) 18,313 (1,023)
-----------------------------------------------------------------------------
Comprehensive (loss) income $(38,642) $ 42,498 $171,476 $171,427
=============================================================================
</TABLE>
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PAGE 8
<TABLE>
14. Diluted earnings per share have been computed as follows:
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
(in thousands, except September 30 September 30
per share amounts) 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted-average shares
outstanding - basic 87,476 90,040 88,099 90,711
Stock options 509 550 488
Other, principally
contingent stock rights 140 414 134
-----------------------------------------------------------------------------
Weighted-average shares
outstanding - diluted 87,476 90,689 89,063 91,333
Diluted (loss) earnings per share $(.39) $1.13 $1.74 $2.32
=============================================================================
</TABLE>
Options and contingent stock rights outstanding at September 30, 2000 have
been excluded from the diluted loss per share in the third quarter ended
September 30, 2000 because to include such securities would be antidilutive.
Including the dilution from outstanding options and contingent stock rights
would have resulted in weighted-average diluted shares outstanding of
88,354,000 for the third quarter of 2000.
15. Various libel actions 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 company's financial statements taken as a whole.
16. The following table compares revenues, income before income taxes and
minority interests and EBITDA by business segment for the quarters and nine
months ended September 30, 2000 and 1999. EBITDA is computed by the company
as operating income excluding depreciation, amortization and restructuring
charges. EBITDA is a measure used by the company's management in determining
a business unit's performance. EBITDA is not a measure of performance under
generally accepted accounting principles and should not be construed as a
substitute for consolidated net income as a measure of performance, nor as a
substitute for cash flow as a measure of liquidity. EBITDA is a component of
a covenant of the company's credit agreement that limits the company's
ability to incur certain additional future indebtedness. EDITA is not a
measure of funds available for management's use. Management believes that
EBITDA is a standard measure of operating performance that is commonly used
by investors and analysts to analyze and compare other communications
companies. EBITDA may be calculated differently by other companies and
investors should not view the company's calculation of EBITDA as an
alternative to GAAP measures such as operating income, net income and cash
flows provided by or used in operating, investing and financing activities.
<PAGE>
PAGE 9
<TABLE>
SEGMENT INFORMATION
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
September 30 September 30
(in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Print publishing $327,624 $310,027 $1,139,502 $ 927,827
Electronic publishing 82,245 75,071 241,134 271,394
Community newspapers 90,421 84,697 263,563 243,227
-------- -------- ---------- ----------
Consolidated revenues $500,290 $469,795 $1,644,199 $1,442,448
-----------------------------------------------------------------------------
Income before income taxes
and minority interests:
Print publishing $ 54,785 $ 61,304 $ 306,083 $ 193,623
Electronic publishing 11,055 8,013 33,233 31,681
Community newspapers 24,202 22,855 68,676 60,451
Corporate (6,775) (8,029) (31,311) (23,986)
-------- -------- ---------- ----------
Consolidated operating
income 83,267 84,143 376,681 261,769
Equity in losses of
associated companies (4,653) (8,171) (14,168) (18,797)
Gain on disposition of
businesses and investments 57,607 20,192 68,225
Write-down of investment (82,295) (82,295)
Other income, net 300 1,178 4,302 3,510
-------- -------- ---------- ----------
(Loss) income before income
taxes and minority interests $ (3,381) $134,757 $ 304,712 $ 314,707
-----------------------------------------------------------------------------
EBITDA:
Print publishing * $ 72,743 $ 75,153 $ 358,452 $ 238,577
Electronic publishing 16,622 13,851 50,161 50,287
Community newspapers 28,512 27,274 81,598 73,612
Corporate (6,673) (8,029) (31,002) (23,986)
-------- -------- ---------- ----------
Consolidated EBITDA * $111,204 $108,249 $ 459,209 $ 338,490
EBITDA Margin:
Print publishing * 22.2% 24.2% 31.5% 25.7%
Electronic publishing 20.2% 18.5% 20.8% 18.5%
Community newspapers 31.5% 32.2% 31.0% 30.3%
All segments * 22.2% 23.0% 27.9% 23.5%
=============================================================================
<FN>
* Excludes a restructuring charge of $2.8 million in the second quarter of
1999.
</TABLE>
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ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results
of Operations.
FOR THE THIRD QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
In the third quarter of 2000, the company incurred a net loss of $33.9
million, or $.39 per share, compared with a profit of $102.8 million, or
$1.13 per diluted share, a year ago. (All references to "per share" amounts
in this discussion are on a per diluted share basis.) The third quarter loss
included a charge of $82.3 million, or $.94 per share, from the impairment of
the company's non-core investment in Bridge Information Systems, Inc. (See
"Write-Down of Investment" on pages 18 and 19 of this Form 10-Q.) Earnings
in the third quarter of 1999 included an after-tax gain of $57.3 million, or
$.63 per share, from the sale of the company's full interest in United States
Satellite Broadcasting, Inc. (USSB), a provider of direct satellite
television programming. Excluding these special items in both years,
earnings in the third quarter of 2000 increased to $48.4 million, or $.55 per
share, from $45.5 million, or $.50 per share, earned in the like 1999 period.
The growth in earnings per share largely was due to growth in earnings at the
electronic publishing business ($.02 per share), improved equity investee
results ($.02 per share) as well as lower average shares outstanding, a
reduced tax rate and improvement in community newspaper results ($.04 per
share in the aggregate). These increases were partially offset by reduced
earnings in print publishing ($.04 per share).
Operating income in the quarter was down slightly to $83.3 million from $84.1
million a year ago. EBITDA margin was 22.2% in the third quarter of 2000
compared with 23.0% a year ago. EBITDA is defined as operating income
excluding depreciation, amortization and restructuring charges (see footnote
16 to financial statements in this Form 10-Q).
Third quarter revenues increased 6.5% to $500.3 million from $469.8 million
in 1999 with growth in all segments. Third quarter expenses of $417 million
grew 8.1% from 1999's like period, in part reflecting higher newsprint costs
and promotional spending. Newsprint expense rose 29% in the third quarter
with a 22% increase in the average price per ton of newsprint and a 5.6%
increase in the usage. There were approximately 8,500 full-time employees at
September 30, 2000, up 5.3% from a year earlier.
Net income for the nine months ended September 30, 2000 was $155.3 million,
or $1.74 per share, compared with $211.5 million, or $2.32 per share, earned
in the comparable 1999 period. In addition to the third quarter special
item, the company recorded an after-tax gain of $9.5 million, or $.10 per
share, from the sale of its subsidiary, Dow Jones Financial Publishing Corp.
in 2000's first quarter and an after-tax gain of $4.8 million, or $.05 per
share, from the sale of the company's minority interest in SportsTicker
Enterprises L.P. in 2000's second quarter. Also included in 2000's second
quarter was a $3.2 million reversal of a 1998 equity investee restructuring
charge ($2.1 million after tax, or $.02 per share) relating to the favorable
disposition of a satellite lease in Europe. The benefit was recorded in
Equity in Losses of Associated Companies. In addition to the third quarter
1999 gain on the sale of USSB, last year's earnings included a net gain of
$10.6 million, or $.12 per share, from the sale of a portion of the company's
<PAGE>
PAGE 11
minority interest in OptiMark Technologies, Inc. in the first quarter and a
restructuring charge of $2.8 million ($1.6 million after tax, or $.02 per
share) in the second quarter for employee severance as part of the company's
conversion to electronic pagination of The Wall Street Journal. Excluding
the write-down of investment, gains from sale of investments and
restructuring items from the first nine months in both years, the company
earned $221.3 million, or $2.48 per share, in 2000 compared with $145.2
million, or $1.59 per share, a year ago, an increase of 56% on an earnings
per share basis. The rise in earnings largely reflected significant growth
at the print publishing segment. Also contributing to the improvement in
earnings were stock repurchases which lowered average shares outstanding,
improved results at community newspapers and a reduced tax rate.
Operating income in the first nine months improved 44% from a year ago (42%
excluding the 1999 restructuring charge), as revenues advanced 14%,
reflecting strong advertising gains at The Wall Street Journal and its
international editions. Expenses in 2000 grew 7.4% (7.6% excluding the 1999
restructuring charge) from 1999. EBITDA for the nine months was $459.2
million in 2000, up 36% from $338.5 million in last year's like period; the
EBITDA margin increased to 27.9% from 23.5%, respectively.
On July 1, 1999, the company formed a 50-50 joint venture, Dow Jones Reuters
Business Interactive LLC (Factiva), into which the company contributed a
significant portion of its Dow Jones Interactive business. The company's
share of Factiva's results is reported in Equity in Losses of Associated
Companies. Prior to July 1, 1999, results of the interactive business
contributed to Factiva were included in the company's information services
revenues, expenses and operating income.
If the company's one-half share of Factiva results were consolidated on a
proportional basis, third quarter revenues of $529.4 million would have
increased 6.7% from last year, expenses of $442.8 million would have risen 7%
and operating income of $86.7 million would have been 5.3% better. The
EBITDA margin would have been 22.0% in the third quarter compared with 21.6%
a year earlier. For the nine-month periods, revenues would have been $1.7
billion, up 17.8% from 1999, expenses of $1.3 billion would have increased
11.6% (11.9% excluding the 1999 restructuring charge) and operating income of
$380.5 would have jumped 46% (45% excluding the 1999 restructuring charge).
SEGMENT DATA
The company's business and financial news and information operations are
reported in two segments: print publishing and electronic publishing. The
results of the company's Ottaway Newspapers subsidiary, which publishes 19
daily newspapers and 15 weekly newspapers in 11 states in the U.S., are
reported in the community newspapers segment.
Print publishing includes the operations of The Wall Street Journal and its
international editions, Barron's and other periodicals, as well as U.S.
television operations. (Results of the company's international television
ventures are included in Equity in Losses of Associated Companies). Print
publishing accounted for approximately 69% of first nine-month revenues.
Approximately 9% of print publishing revenues are earned by international
publications. Revenues, particularly advertising, for the print publications
<PAGE>
PAGE 12
are historically seasonal with the fourth quarter typically being the
strongest in terms of total volume followed by the second, the first and
the third quarters.
Electronic publishing includes the operations of Dow Jones Newswires, Dow
Jones Indexes, WSJ.com, dowjones.com (up to April 1, 2000 when it was
contributed to Work.com) and other. Prior year's results included Dow Jones
Interactive, a significant portion of which was contributed to Factiva on
July 1, 1999.
PRINT PUBLISHING
<TABLE>
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
September 30 September 30
(in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Publications:
Advertising $222,685 $207,309 $ 809,373 $611,027
Circulation and other 70,569 76,736 224,156 234,569
International Publications:
Advertising 23,300 15,596 72,232 49,424
Circulation and other 11,070 10,386 33,741 32,807
-----------------------------------------------------------------------------
Total revenue 327,624 310,027 1,139,502 927,827
Operating expenses 272,839 248,723 833,419 734,204
-----------------------------------------------------------------------------
Operating income $ 54,785 $ 61,304 $ 306,083 $193,623
-----------------------------------------------------------------------------
EBITDA * $ 72,743 $ 75,153 $ 358,452 $238,577
EBITDA margin 22.2% 24.2% 31.5% 25.7%
=============================================================================
<FN>
* See footnote 16 to financial statements.
</TABLE>
Print publishing operating income decreased 10.6% in the third quarter from
the comparable 1999 period, reflecting higher newsprint expenses, production
and marketing costs. EBITDA was down 3.2% from last year's third quarter.
Third quarter print publishing revenue increased $17.6 million, or 5.7%, from
last year, despite a tough comparison with last year's record revenue.
Driving the increase was growth in advertising revenue in U.S. print
publishing of 7.4% and U.S. television, which more than doubled from 1999's
third quarter. The Wall Street Journal advertising linage in the third
quarter increased 4.5% from last year (linage in the third quarter of 1999
increased 27.4% from 1998). There was one less publishing day in 2000. On a
per issue basis, linage rose 6.1%. International publications revenue grew
32% with linage gains of 6.6% (9.9% on a per issue basis) at The Wall Street
Journal Europe and 26.7% (28.7% on a per issue basis) at The Asian Wall
Street Journal. The Far Eastern Economic Review also continued to have
significant advertising page growth in the third quarter with an increase of
60.4%. In the third quarter, circulation and other revenue fell $5.5
million, or 6.3%.
<PAGE>
PAGE 13
General linage for The Wall Street Journal, which made up 62% of total
linage, rose 10.4% in the third quarter. Technology, the largest advertising
category within general, rose 81% and represented 47% of total general
advertising, or 29% of total linage. General linage (excluding technology)
declined 18%, in part due to lower telecommunications, travel and energy
category advertising. Financial advertising linage, which comprised 24% of
total Journal linage declined 13% in 2000's third quarter, reflecting reduced
investing and trading and weakness in security offerings (tombstone linage).
Classified and other advertising, which comprised the remaining 14% of
linage, increased 15.8%, reflecting growth in real estate advertising, both
commercial and residential.
Circulation revenue for U.S. print publications declined $6 million, or 8.8%,
from the third quarter of 1999. Recent circulation growth at The Wall Street
Journal has been chiefly in lower rate hotel/airline copies. Minimal
circulation revenue is generated from hotel/airline copies but they are of
value to advertisers and some are tied to advertising sales in the Journal.
The Statement of Total Circulation (STC) provides circulation data which is
periodically reviewed by independent accountants, and also information on the
quality and character of the publication's paid circulation, including
complimentary and third party amenity copies, subscription terms and price.
The STC is issued semi-annually covering the six-month periods ending March
and September. For the six months ended September 30, 2000 Wall Street
Journal average circulation under the STC was 1,883,000 compared with
1,855,000 in the like 1999 period. Barron's average paid third quarter
circulation of 293,000 was up from last year's 290,000.
Third quarter circulation revenue for international publications was up 1.6%
from the like 1999 quarter, with gains from increased circulation largely
offset by a stronger U.S. dollar in Europe in 2000. Average combined
circulation for the international editions of The Wall Street Journal at
September 30, 2000 was 171,000, up 19.6% from 143,000 a year ago.
Print publishing expenses in the quarter rose $24.1 million, or 9.7%, from a
year earlier. The increase mainly was due to higher newsprint prices,
production costs (reflecting larger papers) and promotional spending (a
portion of which was linked to the Journal's branding campaign). Newsprint
expense was up 29%, driven by a 23% increase in price and a 5.1% increase in
usage in the third quarter 2000 compared with a year ago. The average
newsprint price per ton consumed in the quarter was $586 versus $477 a year
ago. At September 30, 2000, the number of full-time employees in the print
publishing segment was up 7.9% from a year earlier, primarily due to expanded
news coverage worldwide.
Print publishing operating income for the first nine months of 2000 increased
58%, or 56% excluding the 1999 restructuring charge. The increase primarily
was due to strength in advertising revenue, particularly during the first six
months of 2000. Revenues for the first nine months rose $211.7 million, or
23%, largely on a 25.2% linage gain at The Wall Street Journal.
International print revenues grew 29%, also driven by strong advertising
growth. First nine-month year-over-year advertising linage at The Wall
Street Journal Europe increased 23.9% and at The Asian Wall Street Journal
grew 31.5%.
Wall Street Journal general advertising linage for the first nine months grew
32.5%, resulting from an increase of 136% from the technology component.
<PAGE>
PAGE 14
Financial linage was up 14.5% chiefly from higher investing and trading.
Classified and other linage increased 15.2%, largely from strong real estate
advertising, partly through the Weekend Journal section.
Operating expenses (excluding the 1999 restructuring charge) rose $102
million, or 13.9%, in the first nine months of 2000. The growth in expenses
was principally volume related (higher production and newsprint costs, sales
incentives and delivery costs) in addition to increased promotional spending
and higher newsprint prices. Newsprint expense increased 24% for the nine-
month period as usage was up 16.3% and the average newsprint price per ton
used rose 6.9% from the like 1999 period.
ELECTRONIC PUBLISHING
<TABLE>
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
September 30 September 30
(in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $82,245 $75,071 $241,134 $271,394
Expenses 71,190 67,058 207,901 239,713
-----------------------------------------------------------------------------
Operating income $11,055 $ 8,013 $ 33,233 $ 31,681
-----------------------------------------------------------------------------
EBITDA * $16,622 $13,851 $ 50,161 $ 50,287
EBITDA margin 20.2% 18.5% 20.8% 18.5%
=============================================================================
<FN>
* See footnote 16 to financial statements.
</TABLE>
Operating income in the third quarter of 2000 for electronic publishing
jumped $3 million, or 38%, from 1999's third quarter. Revenues improved $7.2
million, or 9.6%, while operating expenses grew $4.1 million, or 6.2%. The
expense growth largely was due to the promotion of the company's interactive
products, including Internet development costs and expansion of the Newswires
business. This increase was partially mitigated by the impact of the sale of
the company's subsidiary (IDD Enterprises in December 1999) and the April 1,
2000 contribution of dowjones.com, a division of the company, to a joint
venture, Work.com. Excluding IDD Enterprises and work.com from third-quarter
2000, operating income declined 10.1%, revenues were up 16.2% and expenses
increased 22%. On the same basis, EBITDA dropped 6.9% as the margin declined
to 20.2% from 25.2% in last year's quarter.
For the first nine months, operating income was up $1.6 million, or 4.9%,
despite a decline in revenues of $30.3 million, or 11.1%. These comparisons
are distorted by the impact of the company contributing the bulk of the Dow
Jones Interactive business to the Factiva joint venture, effective July 1,
1999. Factiva's results are recorded in Equity in Losses of Associated
Companies.
<PAGE>
PAGE 15
The information included in the table below and related discussion which
follows includes Dow Jones' 50% share of Factiva's results on a pro forma
basis as if the venture were formed on January 1, 1999.
<TABLE>
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
September 30 September 30
(in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dow Jones Newswires:
North America $ 48,745 $ 43,245 $142,198 $125,905
International 10,174 8,973 29,642 28,294
-----------------------------------------------------------------------------
Total Newswires 58,919 52,218 171,840 154,199
Factiva 30,461 27,916 89,583 83,007
WSJ.com 12,657 7,517 36,310 20,124
Dow Jones Indexes 3,571 3,289 10,311 9,593
Other 5,792 10,544 18,946 30,884
-----------------------------------------------------------------------------
Total revenue 111,400 101,484 326,990 297,807
Operating expenses 96,921 95,272 289,911 267,927
-----------------------------------------------------------------------------
Operating income $ 14,479 $ 6,212 $ 37,079 $ 29,880
-----------------------------------------------------------------------------
EBITDA * $ 21,688 $ 12,983 $ 58,409 $ 49,419
EBITDA margin 19.5% 12.8% 17.9% 16.6%
=============================================================================
<FN>
* See footnote 16 to financial statements.
</TABLE>
Electronic publishing's third quarter 2000 operating income more than doubled
to $14.5 million from $6.2 million in 1999's third quarter. EBITDA increased
$8.7 million, or 67%. Revenue advanced $9.9 million, or 9.8%.
Dow Jones Newswires revenue in the third quarter of 2000 increased $6.7
million, or 12.8%, from a year ago, with gains of 12.7% and 13.4% in North
America and international, respectively. The gain in North America was
partly driven by new revenue from on-line trading sites of institutional
customers. International growth reflects new distribution channels with
Reuters and Bloomberg as well as third-party wholesale agreements in Asia.
At September 30, 2000, there were 339,000 newswire terminals compared with
312,000 a year ago.
The Factiva revenue represents the company's 50% share as if Factiva had
existed from the beginning of 1999. The difference between the company's pro
forma half of Factiva revenue and the company's wholly-owned Dow Jones
Interactive revenues for the first half of 1999 is reflected in "other", and
in part accounts for the decline in the "other" category. The company's
share of Factiva revenue increased $2.5 million, or 9.1%, in 2000's third
quarter.
WSJ.com revenue in the quarter jumped $5.1 million, or 68%, from last year's
third quarter, reflecting an 85% increase in advertising revenue and a 50%
increase in subscription revenue. The mix of advertising versus subscription
revenue for the quarter was 57% to 43%, respectively. The number of
subscribers at September 30, 2000 reached 500,000, up 52% from the year-ago
total of 330,000, and up 8.5% from the 461,000 subscribers at June 30, 2000,
in part reflecting new educational subscriptions related to the fall
semester. In the third quarter of 2000, the average number of unique
<PAGE>
PAGE 16
visitors who accessed at least one page of WSJ.com subscriber-only content
over the course of a 24-hour business day was 90,000, slightly below the
second quarter average of 93,000.
Effective April 1, 2000, Dow Jones and Excite At Home Corp., an Internet-
access and content provider, formed a new company, Work.com. In late August
2000, it launched its business portal website at www.work.com targeted to
small and midsize business Internet users. The results for Work.com, as of
the effective date, are included in Equity in Losses of Associated Companies.
Operating income for electronic publishing (including 50% of Factiva's
results in 2000) rose $7.2 million, or 24%, in the first nine months of 2000.
Improved revenue, lower expenses at Factiva and a favorable comparison as IDD
Enterprises costs were included in 1999 (IDD Enterprises was sold in December
1999) more than offset increased promotional and development spending.
Revenue for the first nine months grew $29.2 million, or 9.8%, from a year
ago.
Dow Jones Newswires nine-month revenue increased $17.6 million, or 11.4%,
reflecting particular strength in North America with a 12.9% increase
followed by a 4.8% increase in international. Factiva's revenue increased
$6.6 million, or 7.9%. WSJ.com's revenue jumped $16.2 million, or 80%, as
advertising revenue doubled and subscription revenue grew 59%. Dow Jones
Indexes revenue was up 7.5%. Other electronic publishing revenue declined
$11.9 million, or 39%, mainly due to the sale of IDD Enterprises.
COMMUNITY NEWSPAPERS
<TABLE>
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
September 30 September 30
(in thousands) 2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advertising $64,541 $60,425 $188,907 $173,034
Circulation and other 25,880 24,272 74,656 70,193
-----------------------------------------------------------------------------
Total revenue 90,421 84,697 263,563 243,227
Operating expenses 66,219 61,842 194,887 182,776
-----------------------------------------------------------------------------
Operating income $24,202 $22,855 $ 68,676 $ 60,451
-----------------------------------------------------------------------------
EBITDA * $28,512 $27,274 $ 81,598 $ 73,612
EBITDA margin 31.5% 32.2% 31.0% 30.3%
=============================================================================
<FN>
* See footnote 16 to financial statements.
</TABLE>
Operating income at community newspapers in the third quarter of 2000 was up
$1.3 million, or 5.9%, from 1999's like quarter; EBITDA increased 4.5%.
Revenue for the third quarter rose $5.7 million, or 6.8%. Advertising
revenue increased $4.1 million, or 6.8%, from last year's quarter.
Advertising linage for the daily papers increased 2.2% from the year ago
quarter, largely from a 5.6% increase in classified advertising. Linage for
the daily papers was up 2.9% but for the non-daily papers was down 1.8%.
Circulation and other revenues were $1.6 million, or 6.6%, higher than the
third quarter of 1999, reflecting higher subscription rates. Average
<PAGE>
PAGE 17
circulation for the 19 dailies was 551,000, down 2% from the third quarter
of 1999. Expenses for the third quarter grew $4.4 million, or 7.1%,
reflecting higher newsprint expense, promotional spending and print
delivery costs. Newsprint expense rose 30% with a 21% increase in price
and a 7.2% increase in usage. Employee compensation expense, which is
a major cost component of community newspapers, was up 4.1% from 1999's
third quarter.
For the nine months ended September 30, 2000, operating income improved $8.2
million, or 13.6%, from last year's comparable period. EBITDA grew $8
million, or 10.8%. The gain in operating income reflected a $20.3 million,
or 8.4%, increase in revenues as expenses grew $12.1 million, or 6.6%. The
revenue growth chiefly resulted from a $15.9 million, or 9.2%, increase in
advertising revenue. Community newspapers overall advertising linage rose
4.6% in the nine-month period, with linage at the daily papers up 5.3%
(classified linage was up 8.5%).
OTHER INCOME/DEDUCTIONS
Net investment income in the third quarter was $.8 million in 2000, down from
$1.6 million in 1999. The company did not accrue the quarterly dividend on
the preferred stock of Bridge Information Systems, Inc. This was partially
offset by higher capitalized interest related to the color print expansion
project. Year-to-date net investment income in 2000 was $5.2 million versus
$3.5 million in 1999. Long-term debt was $150 million at September 30, 2000,
the same as a year ago.
The company's share of losses from equity investments was $4.7 million in the
third quarter of 2000 compared with losses of $8.2 million a year ago. The
improvement in equity losses largely reflected the company's 50% share of
Factiva profits (formed on July 1, 1999), higher earnings at the company's
newsprint mill affiliate and reduced losses at the international television
joint ventures. Partly offsetting these gains were increased losses at
SmartMoney (in part from new product development costs)and the inclusion of
Work.com losses. Prior to April 1, 2000, Dow Jones' costs for this business
portal were included in consolidated operating expenses.
For the first nine months of 2000, equity in losses of associated companies
was $14.2 million, an improvement of $4.6 million from losses of $18.8
million a year ago. A reversal of a 1998 equity investee restructuring
charge of $3.2 million relating to the favorable disposition of a satellite
lease in Europe was included in the second quarter of 2000. Excluding the
reversal of a restructuring charge, equity losses were $17.3 million.
Included in the third quarter of 1999 was a net gain of $57.3 million, or
$.63 per share, from the sale of the company's interest in United States
Satellite Broadcasting, Inc.
The second quarter of 2000 included a net gain of $4.8 million, or $.05 per
share, from the sale of the company's minority interest in SportsTicker
Enterprises L.P., a leading supplier of real-time sports news and
information.
In the first quarter of 2000, the company reported a net gain of $9.5
million, or $.10 per diluted share, from the sale of the company's
subsidiary, Dow Jones Financial Publishing Corp., which published
<PAGE>
PAGE 18
Investment Advisor, Asset Management, Property and Realty Stock Review.
In 1999's first quarter, earnings included a net gain of $10.6 million,
or $.12 per diluted share, from the sale of a portion of the company's
minority interest in OptiMark Technologies, Inc.
WRITE-DOWN OF INVESTMENT
Dow Jones holds $150 million aggregate par value of 5 year, redeemable,
convertible, 4% preferred stock of Bridge Information Systems, Inc. and has
accrued dividends of $12.6 million. Dow Jones accounts for this investment
under the cost method; therefore, changes in the value of the investment are
not recognized unless there is an impairment in value of the investment that
is deemed to be "other than temporary". It is the company's policy to
continually monitor investments for indications of impairment.
Bridge's continued operating shortfalls from plan and need for additional
financing, combined with the pricing of its third quarter issuance of
convertible notes, clearly demonstrate, in the judgment of Dow Jones
management, that there has been a decline in value of the company's preferred
stock holdings. In addition, Bridge has notified its lenders that as of
September 30, 2000 it was not in compliance with certain financial covenants
under its outstanding credit agreement. Bridge has indicated to the company
that it intends to seek waivers or other appropriate relief from such
lenders.
The lack of updated long-term forward projections (which is due to third
quarter management changes and the time required to reassess various aspects
of forward strategy) leaves Dow Jones management with insufficient objective
evidence to demonstrate that such decline is temporary. The lack of such
projections also means that it is not presently practicable to conduct a
discounted cash flow valuation analysis. Accordingly, management's view is
that the best means to quantify the decline in value is the third quarter
convertible debt transaction that Bridge had with its controlling
shareholder. Similar securities were offered to new investors, but no sales
were consummated. Using this transaction as a benchmark, the company has
taken a charge to earnings in the current period of $82.3 million on this
investment (there is no tax benefit as the loss is a capital loss), or $.94
per share. Accrual of dividends was discontinued effective with the third
quarter of 2000 (which adversely impacted third quarter earnings per share by
$.01). This results in a revised carrying value for this investment of $80.3
million.
Bridge's principal shareholder is managing the company and recruiting a new
CEO. Bridge has launched several initiatives focused on improving
operations; increasing revenues and raising additional capital; however there
is no assurance that these efforts will be successful. The company will
continue to closely monitor the status of Bridge.
The company also holds a direct interest in SAVVIS, which was acquired
through the investment in Bridge. The SAVVIS stock carrying value of $16
million at September 30, 2000 includes an unrealized gain of $15.1 million
(which is reflected in shareholders equity but will not be recognized in
operating results until realized).
Dow Jones has guaranteed payment under certain circumstances of certain
annual minimum payments for data acquired by Telerate (now wholly-owned by
Bridge Information Systems, Inc.) from Cantor Fitzgerald Securities and
Market Data Corporation (MDC), under contracts entered into during the
<PAGE>
PAGE 19
period when Telerate was a subsidiary of the company. The annual minimum
payments average approximately $50 million per year through October 2006.
Bridge has agreed to indemnify Dow Jones if the company is required to
make any payments under the guarantee. The write-down of the investment
in Bridge is related to Dow Jones' assessment of the current value of the
Series E preferred shares. Bridge is presently meeting its payment
obligations to Cantor Fitzgerald and MDC. Bridge is also focused on
improving operations; increasing revenues and raising additional capital,
which are expected to further strengthen its cash flow position. Thus,
Dow Jones management believes that while it is not possible to predict
with certainty, it is not probable that Dow Jones will be required to
perform under this guarantee.
TELEVISION
Television includes income from U.S. television operations reported in the
print publishing segment and losses from international television reported in
equity results. Total pretax earnings were $5.7 million in 2000's third
quarter versus losses of $300,000 a year ago. For the first nine months of
2000, pretax earnings were $12.2 million (excluding the reversal of a
restructuring charge) compared with losses of $4.9 million in last year's
like period.
INCOME TAXES
The non-deductibility of the Bridge write-down and the utilization of capital
loss carryforwards on gains from the sale of investments distorted the
effective income tax rates. The following table presents the effective
income tax rates to show the impact of these items.
<TABLE>
<CAPTION>
=============================================================================
Quarters Ended Nine Months Ended
September 30 September 30
2000 1999 2000 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Effective income tax rate
(net of minority interests) - 23.7% 49.4% 32.8%
-----------------------------------------------------------------------------
Effective income tax rate
(net of minority interests)
excluding the investment
write-down and the gains from
the sale of investments 39.5% 41.1% 39.5% 41.7%
=============================================================================
</TABLE>
At September 30, 2000 the company had available approximately $488 million of
capital loss carryforward (a deferred tax asset of $184 million), which was
fully reserved through a valuation allowance. The company may utilize the
carryforward through 2003.
<PAGE>
PAGE 20
FINANCIAL POSITION
During the first nine months of 2000, the company repurchased 3 million
shares of its common stock at an aggregate price of $190.5 million. As of
September 30, 2000, puts were outstanding covering 1.3 million shares at
strike prices (net of put premiums received) ranging from $59.91 to $60.66
per share, with exercise dates through June 28, 2001. The company has the
option of net share settlement on these contracts. In September 2000, the
company's board of directors authorized the repurchase of up to $500 million
of the company's common stock. This is in addition to the $92.8 million (net
of outstanding puts) that remained as of the end of September 2000 under a
prior authorization from the company's board. Since initial approval in
1998, the company has repurchased 12.3 million shares.
Cash provided by operations in the first nine months was up $164.3 million,
or 97%, from the like 1999 period due to enhanced earnings and faster
collections of accounts receivable. Trade accounts receivable provided $66
million of cash in 2000 first nine months.
In addition to the repurchase of the company's stock in 2000, the company
funded capital expenditures of $141.4 million (including $48.7 million for
the print expansion project), paid dividends of $66.3 million, and invested
$49.2 million in various affiliated companies. Sales of investments and
businesses provided $28.8 million of cash.
At September 30, 2000, the company had outstanding long-term notes of $150
million, which are due December 1, 2000 and are not redeemable prior to
maturity. Upon maturity, the outstanding debt will be repaid through
borrowings from either the issuance of commercial paper or the company's
revolving credit facility, or through issuance of long-term debt. As such,
these notes are classified as long term.
INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis and other sections of this Quarterly
Report include forward-looking statements that reflect the company's current
expectations or beliefs concerning future results and events. In addition,
the company may from time to time make additional forward-looking statements,
either orally or in writing. The company cautions readers that the company's
targets and objectives, and the results expected or anticipated by forward-
looking statements, including, without limitation, statements relating to the
company's future business prospects, revenues, income, working capital,
liquidity, capital needs and interest costs and similar items, are subject to
certain risks and uncertainties which could cause actual results and events
to differ materially from those anticipated in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, global economic, business and stock market conditions, and the
strong tendency of economic downturns to negatively impact advertising sales,
in particular, and sales of the company's products and services; the intense
competition faced by the company's products and services in the markets for
financial news and information, and related advertising revenues, from
newspapers, specialized business and financial magazines, technology
publications, Internet-based publications and services (including both free
and paid competitive Internet services that feature or include business and
financial news and information), financial television programming and other
new media that may develop; the extent to which the company is able to
<PAGE>
PAGE 21
increase its circulation and advertising revenues from its international
print publications, in the face of competition from local publications and
from other international publications; the extent to which the company is
able to achieve its revenues and earnings targets for distribution of its
newswires services, taking into account in particular the rate of addition of
new subscribers outside the U.S. and cancellations of Telerate-related
terminals; the extent to which the company is able to achieve and maintain a
diversified advertising base for its print publications; the extent to which
there are declines in the level of technology advertising; increased
competition in the global market for electronic business information and
research services and Factiva's ability to increase its market share and
revenues on a global basis in the face of competition from local providers
with more local content and from other international providers; WSJ.com's
ability to increase its subscriber base in light of its paid subscription
model; the extent to which the company is able to leverage its brands and
develop new and enhanced "vertical" internet sites and to generate
advertising and other revenues for those sites; rapid technological changes
and frequent new product introductions prevalent in electronic publishing;
any delays that could occur in expanding the company's newspaper page and
color printing capacity, which could result in insufficient capacity to carry
advertisements; the company's ability to expand production and service
capacity for electronic publishing products on a timely basis to support
growth of operations and user traffic; business conditions (growth or
consolidation) in the financial services industry, and the tendency of
consolidation to negatively impact the market for the company's products
and services and advertising; with respect to the company's Internet services
that rely partly or entirely on advertising revenues, the amount of user
traffic on those services and the pricing of advertising on Internet sites
generally; risks associated with the development of television channels in
competitive foreign markets, including the 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 the
ability to sell advertising time at desired rates in the U.S. television
market; the extent to which the company is able to maintain favorable
arrangements with respect to the licensing of its content; potential
increased regulation of on-line businesses; any damage to or technical
failure of the company's computer infrastructure systems or software that
causes interruptions of operations; cost of newsprint; the difficult
comparisons that the company will face in coming years in light of
the high level of advertising sales revenue achieved at The Wall Street
Journal in the past two years; the extent to which the company is able to
limit expenses through process redesign or other measures; the company's
ability to attract and retain qualified personnel in the tight labor market
that exists; the company's ability to negotiate collective bargaining
agreements with its labor unions without work interruptions; adverse verdicts
in legal proceedings, including libel actions; adverse developments relating
to commitments and contingencies and/or investments held by the company;
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.
<PAGE>
PAGE 22
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits filed:
Exhibit
Number Document
------- --------
* 27 Financial Data Schedule
* Securities and Exchange Commission and New York Stock Exchange copies
only.
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the period for which this
report is filed.
<PAGE>
PAGE 23
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: November 3, 2000 By: /s/ Raymond Baumkirchner
-------------------------
Raymond Baumkirchner
Vice President of Finance
