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PAGE 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission file number 1-7564
DOW JONES & COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-5034940
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 LIBERTY STREET, NEW YORK, NEW YORK 10281
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 416-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Class B Common Stock $1.00 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ( )
Aggregate market value of common stock held by non-affiliates of the
registrant at January 31, 1995 was approximately $1,689,000,000.
The number of shares outstanding of each of the registrant's classes of
common stock on January 31, 1995: 74,626,047 shares of Common Stock and
22,015,032 shares of Class B Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement for 1995 Annual Meeting of Stockholders dated
March 20, 1995: Part III.
PAGE 2
PART I.
ITEM 1. Business.
Dow Jones & Company, Inc. (the company) is a global provider of business
news and information. Its operations are divided into three industry
segments: information services, business publications and general interest
community newspapers. Financial information about industry segments and
geographic areas are incorporated by reference to Note 15 to the Financial
Statements on pages 44 and 45 of this report.
The company currently has approximately 10,300 full-time employees. The
company's principal executive offices are located at 200 Liberty Street, New
York, New York.
Information Services
- --------------------
The information services segment of Dow Jones reflects the operations of
the company's Dow Jones/Telerate group and the Business Information Services
group. The Dow Jones/Telerate group primarily serves the financial services
industry world-wide and includes Dow Jones Telerate, Dow Jones News Service,
Professional Investor Report, AP-Dow Jones News Service, Federal Filings and
the Dow Jones Asian Equities Report. The Business Information Services group
serves corporate, business and individual investor needs by delivering its
information products and services on a wide range of electronic media,
including desktop and portable personal computers, pagers, facsimile machines
and radio. This group's products include Dow Jones News/Retrieval, DowVision
and two radio networks.
Dow Jones Telerate is one of the largest suppliers of real-time market
information and related services to financial professionals with offices or
distributors in more than 85 countries. About 60% of Dow Jones Telerate's
revenues are generated by its foreign operations. Dow Jones Telerate
Holdings, Inc., formerly Telerate, Inc., which became a wholly-owned
subsidiary of Dow Jones in 1990, started in 1969 as a provider of commercial
paper quotations. The breadth and depth of Dow Jones Telerate are reflected
in the mix of services presently offered. The foundation of the service rests
on providing prices of U.S. Government securities, foreign exchange,
international government bonds, global equities, energy, mortgage-backed
securities and a variety of money market instruments. In addition, Dow Jones
Telerate provides global news coverage of the world's financial markets and an
array of services from outside information providers, ranging from informed
commentary on Federal Reserve actions to analysis of the commodities markets.
Dow Jones Telerate also provides products and software to help users
analyze its live market data. Its Trading Room Systems (TRS) provide advanced
decision-support tools. Designed to serve the needs of large trading rooms,
TRS have networking capabilities which enable customers to link trading rooms
world-wide. Running on powerful desktop workstations using software
compatible with Microsoft's Windows, TRS consolidates several information,
transaction and analytic services into a single platform at a trader's desk.
PAGE 3
In 1994 a single-user and multiuser version of this workstation concept
was developed. The Telerate Workstation, introduced in early 1995, provides
the full range of Dow Jones Telerate's real-time and historical market data,
decision-support products and transaction services, as well as the Dow Jones
Investor Network, a video business-news service. The Telerate Workstation has
been customized to meet the specific needs of professionals in the fixed-
income, foreign exchange, equity and energy markets.
Digital Page Feed (DPF) fills the needs of customers who prefer to
receive any or all of Dow Jones Telerate's thousands of pages of data in the
form of an electronic feed that can be incorporated into their own information
systems. DPF offers these customers highly reliable, timely and selective
information feeds combined with the flexibility required by their custom
distribution systems.
Matrix employs the power of a personal computer to allow customers to
build customized, full-color, market-specific pages using Dow Jones Telerate
data. Matrix has modules to analyze the fixed income and foreign exchange
markets and sophisticated analytical tools, including a spreadsheet from Lotus
Development Corporation that uses live Telerate data and contains built-in
formulas customized to help traders analyze financial markets.
The Treasury 500 product offers the widest coverage available of U.S.
Government securities and provides value-added analytics in addition to the
price information distributed through Dow Jones Telerate's long-standing
exclusive agreement with Cantor Fitzgerald Securities Corp. One of Treasury
500's most important features is that it provides live bids and offers from an
identified source that customers can actually trade on. It also has live two-
sided market displays of best-bid and best-offer prices. In 1994 Liberty
Brokerage Investment Corp. started supplying Treasury securities prices,
further strengthening Dow Jones Telerate's position as the leading provider of
real-time U.S. Treasury prices.
Dow Jones Telerate is the exclusive distributor of real-time foreign
exchange and money market prices from M. W. Marshall & Company and Exco
International, two of the world's foremost foreign exchange brokers.
TeleTrac is a technical analysis product favored by dealers in the
foreign exchange and fixed income markets. It is a leading technical analysis
tool in Europe and Asia. Telerate Charting, a Windows-based analytical tool,
is also available in Europe.
Dow Jones holds an equity stake in the Japanese consortium Minex Corp.
and Dow Jones Telerate serves as exclusive world-wide sales and distribution
agent outside of Japan for Minex's foreign exchange trading service.
PAGE 4
Telerate Equities Service (TES) product line offers quotes and news on
thousands of securities traded on stock, futures and options exchanges around
the world. TES, when combined with Dow Jones Telerate's fixed income and
foreign exchange information, gives customers comprehensive coverage of the
world's major markets and reflects the markets' growing interaction. TES
combines in one service all Dow Jones Telerate data, including information on
equities, foreign exchange and U.S. Government issues.
Dow Jones Telerate Emerging Markets Report, introduced in 1993, nearly
doubled its staff in 1994. This service provides information on the emerging
capital markets of developing countries, with particular emphasis on Latin
America, by combining Dow Jones Telerate's live market prices with news from
Dow Jones and the Associated Press, plus market commentary from Thomson
Financial Services.
Other Dow Jones Telerate products and services currently in the
marketplace include: the Telerate Access Service, a personal-computer
software package that provides a link to Telerate's core information base
through public telephone networks and includes access to Dow Jones News/
Retrieval; hand-held quotation devices that deliver current prices, rates and
other data; and data for mortgage markets.
Dow Jones News Service is the nation's preeminent supplier of business
and financial news to subscribers at brokerage firms, banks, investment
companies and other businesses. Professional Investor Report (PIR), a
companion to the News Service, focuses on daily trading activity and news of
interest to traders, arbitragers, hedge fund operators and other equity market
professionals. Capital Markets Report, which is incorporated into Dow Jones
Telerate's basic information package, is the company's newswire that covers
fixed income and financial futures markets around the world.
AP-Dow Jones, a news service joint venture with Associated Press,
provides international economic, business and financial news to subscribers in
56 countries. In addition to two broad international newswires, AP-Dow Jones
offers specialized wires dedicated to the coverage of European equities,
banking and the markets in foreign exchange and petroleum. AP-Dow Jones also
produces the European Corporate Report, a news service focusing on European
companies and stock markets, and the World Equities Report newswire which
serves domestic institutions investing in international markets. In 1994 AP-
Dow Jones increased the speed of its distribution network and enhanced its
global staff by opening news bureaus in Beijing, Lisbon, New Delhi, Oslo,
Prague and Vienna.
PAGE 5
Washington-based Federal Filings publishes newswires, newsletters and
investment research based on its coverage of federal regulatory agencies,
Capitol Hill and bankruptcy courts nationwide. Federal Filings' products
include Federal Filings Business News, a real-time newswire covering SEC
filings; Daily Bankruptcy Review, a compendium of large bankruptcy filings
throughout the U.S.; and 13F Advance, which analyzes the equity portfolio
changes of prominent money managers. In 1994 Federal Filings introduced Edgar
Direct which provides real-time access to the full text of SEC filings.
In 1994 the company launched the Dow Jones Asian Equities Report, which
covers 12 Asian-Pacific stock markets and news of the companies traded on
them. Headquartered in Singapore, the service draws on the staffs of AP-Dow
Jones, The Asian Wall Street Journal and Far Eastern Economic Review, as well
as its own editors and reporters.
Dow Jones News/Retrieval is recognized as one of the nation's leading
suppliers of electronic business and financial news and information to
financial professionals, private investors, corporate executives and managers,
as well as to information specialists in corporate libraries. Business
Information Services in 1994 formed an alliance with West Publishing in which
West's product Westlaw became the exclusive computer-assisted legal research
service to offer integrated access to Dow Jones News/Retrieval. Also, in 1994
the news content on the day of publication, with availability for 24 hours,
of the New York Times was added to News/Retrieval. In early 1995, on-line
availability on day of publication of the Financial Times, along with two
years of back editions, was made available. In 1995 an "electronic gateway"
was opened to Nikkei Telecom Japan News & Retrieval, offering access to news
and information about Japan and the Pacific Rim. In 1994 News/Retrieval
introduced an enhanced Dow Jones Text Library that gives added flexibility and
precision in searching the vast databases which contain more than 1,800
publications and 35 million articles.
The Business Information Services group in early 1995 introduced
Personal Journal, an electronic publication designed to deliver customized
business and market news, stock quotes, world and national news, weather and
sports 24 hours a day directly to personal computers. The Wall Street Journal
Interactive Edition, currently under development, builds on Personal Journal.
It will be a true "interactive newspaper," combining the editorial qualities
of the Journal with the immediacy and depth of the electronic medium.
DowVision, a comprehensive service that delivers all the Dow Jones
newswires, three press release services and the complete text of The Wall
Street Journal directly to desktops through corporate computer systems,
enables users in the corporate and financial marketplaces to tailor
information to their own needs.
In 1994 Business Informations Services broadened its access to consumer
markets by signing agreements to provide Dow Jones news to CompuServe, owned
by H&R Block Inc., and eWorld, Apple Computer Inc.'s new on-line service. The
company and Aegon USA Inc. formed a partnership in 1994 which plans to gather
and distribute commercial real estate data, information and analytics through
on-line services.
PAGE 6
Because of declining demand for telephone-based business news services,
Business Information Services discontinued DowPhone and the Voice Information
Network audio service for newspapers in early 1995. At the same time, it
continued to expand the distribution of text-based news and information on
paging and wireless electronic mail services.
Dow Jones' radio products include two radio networks -- "The Wall Street
Journal Report" on AM stations and "The Dow Jones Report" on FM stations.
Together these programs are carried on 150 stations and reach 80% of the
country.
In January 1995, ESPN Inc. acquired an 80% interest in SportsTicker, the
real-time sports news and information unit of Dow Jones. Dow Jones retains a
20% interest in the service and plans to develop opportunities with ESPN to
provide business-of-sports TV programming.
In March 1995, the company acquired majority ownership in IDD
Enterprises L.P., a financial publishing, database, software and consulting
company. IDD publishes Investment Dealers' Digest and 16 other magazines,
newsletters and directories. Its software and electronic information products
are available to investment banks and financial institutions through a variety
of services, including Dow Jones Telerate and Dow Jones/News Retrieval.
Business Publications
- ---------------------
Dow Jones' best-known publication, The Wall Street Journal, is the
country's largest daily newspaper with average circulation for 1994 of
1,808,700. The Wall Street Journal is edited in New York City at the
company's executive offices. The Journal's four regional editions are printed
at seventeen plants located across the United States. Advertisers can also
focus their messages on readers served by sixteen localized editions. In
October 1994, Southeast Journal and Florida Journal were introduced. Together
with Texas Journal, introduced in 1993, these editions provide Journal-quality
reporting on regional business trends and issues. They appear as a four-page
weekly section included in copies of The Wall Street Journal distributed in
their respective Southern markets each Wednesday. The Journal now provides
weekend-oriented coverage every Friday, including Your Money Matters Weekend
Report (an expanded personal-finance column), a sports page and a travel page.
Production of the paper employs satellite transmission of page images to
the outlying plants and other technologies designed to speed the delivery of
editorial material to the presses and to reduce the steps taken in the
printing process. The Wall Street Journal is delivered in two ways: by second
class postal service and through the company's own National Delivery Service,
Inc., a subsidiary. At the end of 1994, National Delivery Service delivered
nearly one million of the Journal's subscription copies. The system provides
delivery earlier and more reliably than the postal service. Approximately
226,000 copies of the Journal are sold each business day on newsstands.
PAGE 7
Barron's, The Dow Jones Business and Financial Weekly, a magazine
specializing in reporting and commentary on financial markets, was redesigned
in 1994. The new look includes a new cover, a more readable typeface and a
new pullout section, Market Week, providing readers with an easy-to-use
statistical reference guide. The magazine, which had average circulation of
278,300 in 1994, uses the same facilities employed in the production of The
Wall Street Journal. Barron's is edited in New York City and is delivered by
second class postal service and through National Delivery Service. About
126,600 copies are sold on newsstands weekly.
The Wall Street Journal Europe is headquartered in Brussels and printed
in Brussels, the Netherlands, Switzerland and England. It is available on
day-of-publication in continental Europe and the United Kingdom. The
newspaper, which began publication in 1983, had average circulation in 1994 of
59,100. The Central European Economic Review is distributed as an insert in
the Wall Street Journal Europe and also sold separately by subscription.
Formerly a quarterly, the magazine, which covers political and business
developments in the former Soviet bloc, became a monthly publication in 1995.
The Asian Wall Street Journal began publication in 1976. It is headquartered
and printed in Hong Kong and is transmitted by satellite to additional
printing sites in Singapore, Japan and Bangkok. The Asian Wall Street Journal
had average circulation of 46,500 in 1994. The Journal Europe and the Asian
Journal draw on the resources of The Wall Street Journal's world-wide news
staff. The Asian Journal provides the foundation for the company's Asian Wall
Street Journal Weekly, which is published in New York for North American
readers with interests in Asia.
The Wall Street Journal Americas was launched in 1994. The daily,
Spanish-language business news section is included in eight major Latin
American newspapers with a combined weekday circulation of 1.2 million.
Other business publications include Far Eastern Economic Review, Asia's
leading English-language newsweekly; the National Business Employment Weekly,
which contains career-related news features, job-related ads from the
Journal's regional editions and self-generated advertising; The Wall Street
Journal Classroom Edition, which is published nine times during the school
year and is used in more than 900 schools nationwide; and American
Demographics magazine, which contains feature stories analyzing statistics
from the United States Census Bureau and private data collectors.
SmartMoney, The Wall Street Journal Magazine of Personal Business, is
published jointly with Hearst Corp. SmartMoney, introduced in 1992, was named
Magazine of the Year for 1993 by Advertising Age magazine. SmartMoney
increased its advertising rate base to 550,000 copies in 1994. BIZ, the
monthly magazine introduced in 1994 by Dow Jones and American City Business
Journals, Inc., ceased publication with its January 1995 issue.
PAGE 8
In early 1995 the company purchased Charter Financial Publishing Corp.
of Shrewsbury, New Jersey. Charter is publisher of Investment Advisor, Realty
Stock Review and the newly launched Fee Advisor.
Also included in this business segment is The Wall Street Journal's
television group which developed European Business News (EBN) in 1994. EBN,
which began broadcasting in February 1995, provides 19-hours-a-day coverage
of European business, financial and consumer news throughout Europe. EBN is a
joint venture, 70% owned by Dow Jones and 30% owned by Flextech PLC, of
London, an affiliate of Tele-Communications Inc. The television group also
produces "The Wall Street Journal Report" a half-hour, weekly program in the
U.S. covering business, consumer and investment topics.
Dow Jones Investor Network is a video business-news service delivered to
customers' computer terminals, that includes exclusive interviews with
business leaders and coverage of major corporate announcements and events.
Community Newspapers
- --------------------
Community newspapers published at year-end 1994 by Ottaway Newspapers,
Inc., a wholly-owned subsidiary, include 20 general-interest dailies in
Arizona, California, Connecticut, Kentucky, Massachusetts, Michigan,
Minnesota, Missouri, New York, Oregon and Pennsylvania. Average circulation
of the dailies during 1994 was approximately 551,500; Sunday circulation for
13 newspapers was approximately 527,500. The principal administrative office
of Ottaway Newspapers is in Campbell Hall, New York. The primary delivery
method for the newspapers is private delivery.
Ottaway Newspapers purchased the Salem (Massachusetts) Evening News in
March 1995. The Evening News publishes 30,000 copies Monday through Saturday
afternoons in Essex County, where Ottaway has four other dailies with a total
circulation of 37,000.
PAGE 9
Other
- -----
Dow Jones also has investments in Handelsblatt-Dow Jones GmbH, a joint
venture with the von Holtzbrinck Group, publisher of Germany's leading
business daily, Handelsblatt; Press-Enterprise Co., a daily newspaper in
Riverside, Calif.; Groupe Expansion S.A., a French business publishing
company; Mediatex Communications Corp., publisher of Texas Monthly magazine;
Nation Publishing Group, a Bangkok, Thailand publisher of English and Thai-
language magazines and newspapers; AmericaEconomia, a Spanish-language
business magazine in South America; VWD-Vereinigte Wirtschaftsdienste GmbH, a
German news agency specializing in business and economic news and information;
Asia Business News, a business and financial television news channel
broadcasting in Asia; and newsprint mills in the United States and Canada.
The company also owns a minority interest in Hubbard Broadcasting Inc.'s U.S.
Satellite Broadcasting venture which directly broadcasts television
programming to viewers in the U.S. via 18-inch dish antennas linked to special
home receivers.
Raw Materials
- -------------
The primary raw material used by the company is newsprint. In 1994,
approximately 221,000 metric tons were consumed. Newsprint was purchased from
sixteen suppliers. F.F. Soucy, Inc. & Partners and Company, Limited, Riviere
du Loup, Quebec, Canada, and Bear Island Paper Company, Richmond, Virginia,
furnished 18% and 20.6%, respectively, of total newsprint requirements. The
company is a limited partner in both ventures and has signed long-term
contracts with both for a substantial portion of its annual newsprint
requirements. For many years the available sources of newsprint have been
adequate to supply the company's needs.
10
Competition
- -----------
The company believes that Reuters Holdings PLC ("Reuters"), a company
headquartered in London whose shares are publicly traded in the United States
and the UK, is its most significant competitor currently providing, on a
world-wide basis, financial information display services closely comparable to
those furnished by Dow Jones Telerate, although other companies, primarily
Automated Data Processing Corporation, Knight-Ridder, Inc., Bloomberg L.P.,
Telekurs A.G., ILX Systems, Inc. and Quick Corporation of Japan are also in
the business of providing financial information displayed on video screens to
customers. The company believes that Reuters has more subscribers and video
screens than the company on a world-wide basis. The company believes that Dow
Jones Telerate is the largest provider of fixed income and foreign exchange
data in the United States.
Many business enterprises, including banks, brokerage houses and other
financial firms, operate electronic data systems which are able to move
financial and business news rapidly from one location to another, competing
with the company's other information services products. This competition will
become more intense as telecommunications systems are improved and new
techniques of data transmission are developed.
The business publications of the company remain highly competitive. In
its various news publishing activities, Dow Jones competes with a wide
spectrum of other information media. All metropolitan general newspapers and
many small city or suburban papers carry business and financial pages or
sections, including securities quotations. In addition, specialized magazines
in the economics field, as well as general news magazines, publish substantial
amounts of business material. Nearly all these publications seek to sell
advertising space and much of this effort is directly or indirectly
competitive with Dow Jones' publications. The company also competes with
television and radio for advertisers.
All of the community newspapers operating under Ottaway Newspapers, Inc.
compete with metropolitan general newspapers and most compete with other
newspapers available in their respective sales areas.
Research and Development
- ------------------------
Research and development expenses were $52,522,000 in 1994, $40,705,000
in 1993 and $32,320,000 in 1992.
PAGE 11
ITEM 2. Properties.
Dow Jones operates seventeen plants with an aggregate of approximately 1
million square feet for the printing of its domestic publications. Printing
plants are located in Palo Alto and Riverside, California; Denver, Colorado;
Orlando, Florida; LaGrange, Georgia; Naperville and Highland, Illinois; Des
Moines, Iowa; White Oak, Maryland; Chicopee Falls, Massachusetts; South
Brunswick, New Jersey; Charlotte, North Carolina; Bowling Green, Ohio; Sharon,
Pennsylvania; Dallas and Beaumont, Texas; and Federal Way, Washington. All
plants include office space. All are owned in fee except the Palo Alto,
California plant, which is located on 8.5 acres under a lease to Dow Jones for
50 years, expiring in 2015.
Other facilities owned in fee with a total of approximately 870,000
square feet house news, sales, administrative, research, computer and
operations staff. These facilities are located in Chicopee Falls,
Massachusetts and South Brunswick, New Jersey.
Dow Jones occupies two major leased facilities in New York City:
editorial and executive staff occupy 350,000 square feet, while advertising
sales staff occupy 106,000 square feet at a separate location. The company
also leases other business and editorial offices in numerous separate
locations around the world, including 50,000 square feet in two locations in
Hong Kong.
Dow Jones Telerate leases approximately 23,000 square feet in New York
City, 325,000 in Jersey City, New Jersey, 115,000 at three locations in
London, England, 70,000 at three locations in Toronto, Ontario and 30,000 at
two locations in Hong Kong. In addition, Dow Jones Telerate leases space
around the world for its operations.
Ottaway Newspapers operates in 26 locations, including a 24,000 square
foot administrative headquarters in Campbell Hall, New York. These facilities
are located in Sun City, Arizona; Santa Cruz, California; Danbury,
Connecticut; Ashland, Kentucky; Beverly, Hyannis, New Bedford, Gloucester,
Nantucket, Peabody, Fall River and Newburyport, Massachusetts; Traverse City,
Michigan; Mankato, Minnesota; Joplin, Missouri; Exeter and Hampton, New
Hampshire; Middletown, Oneonta, Plattsburgh and Port Jervis, New York;
Medford, Oregon; and Grove City, Sharon, Stroudsburg and Sunbury,
Pennsylvania. Local printing facilities, which include office space, total
approximately 1,087,000 square feet. All facilities are owned in fee.
The company believes that its current facilities are suitable and
adequate, well maintained and in good condition. Older facilities have been
modernized and expanded to meet present and anticipated needs. It is
estimated that between 65% and 75% of the capacity of the company's existing
production facilities is being utilized.
PAGE 12
ITEM 3. Legal Proceedings.
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PAGE 13
Executive Officers of the Registrant
- ------------------------------------
Each executive officer is elected annually to serve at the pleasure of
the Board of Directors.
All executive officers named below have been employed by the company
for more than five years.
Peter R. Kann, age 52, Chairman of the Board since July 1991, Chief
Executive Officer since January 1991 and Publisher of The Wall Street
Journal since January 1989, served as President from July 1989 to July 1991
and Chief Operating Officer from July 1989 to December 1990, Executive Vice
President from 1985 to 1989 and Associate Publisher of The Wall Street
Journal from 1979 to 1988.
Kenneth L. Burenga, age 50, President of the company and President of
The Wall Street Journal since July 1991 and Chief Operating Officer since
January 1991, served as Executive Vice President from January 1991 to July
1991 and Senior Vice President from 1986 thru 1990, and General Manager from
January 1989 thru December 1990, as Chief Financial and Administrative
Officer from 1986 to 1988 and Vice President/Circulation of The Wall Street
Journal from 1980 to 1986.
James H. Ottaway Jr., age 57, Senior Vice President since 1986,
President of Magazines since February 1988, President of Affiliated
Companies Group since 1986, and Chairman of Ottaway Newspapers, Inc. since
1979, served as President of the International Group from February 1988 to
January 1995, as Vice President/Community Newspapers from 1980 to 1985 and
as President of Ottaway Newspapers, Inc. from 1970 to 1985 and its Chief
Executive from 1976 to January 1989.
Peter G. Skinner, age 50, Senior Vice President since November 1989,
General Counsel and Secretary since 1985 and President, Television since
January 1995, served as Vice President from 1985 to November 1989.
Carl M. Valenti, age 56, Senior Vice President and President and
Publisher of Dow Jones Telerate since May 1990, served as Vice President of
the company and President/Information Services Group from 1987 to 1990 and
as Vice President/Information Services Group from 1980 to 1987.
Kevin J. Roche, age 60, Vice President/Finance since 1986 and Chief
Financial Officer since January 1989, served as Comptroller from 1977 to
March 1987.
Thomas G. Hetzel, age 39, Comptroller since October 1993, served as
Associate Comptroller from 1992 to 1993 and Assistant Comptroller from 1988
to 1992.
PAGE 14
PART II.
ITEM 5. Market for the Registrant's Common Equity and Related
Stockholder Matters.
The company's common stock is listed on the New York Stock Exchange.
The class B common stock is not traded. The approximate number of
stockholders of record as of January 31, 1995, was 10,700 for common stock
and 4,500 for class B common stock. The company paid $.84 per share in
dividends in 1994 and $.80 per share in 1993, which represented an earnings
payout of 46.8% in 1994 and 54.1% in 1993.
============================================================================
Market Price 1994 Market Price 1993
Quarters ----------------- Dividends ----------------- Dividends
Ended High Low Paid 1994 High Low Paid 1993
- ----------------------------------------------------------------------------
March 31 $41 7/8 $35 1/2 $.21 $33 3/4 $27 1/8 $.20
June 30 40 3/8 31 .21 32 3/4 26 3/4 .20
September 30 32 1/4 28 3/8 .21 33 3/8 27 3/4 .20
December 31 31 7/8 28 1/8 .21 39 32 1/2 .20
============================================================================
PAGE 15
ITEM 6. Selected Financial Data.
See Management's Discussion and Analysis of Financial Condition and
Results of Operations for a discussion of factors that affect the
comparability of the information reflected in this table.
The following table shows selected financial data for the most recent
five years:
============================================================================
(in thousands except
per share amounts) 1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------
Revenues $2,090,977 $1,931,816 $1,817,870 $1,725,079 $1,720,084
Income before
cumulative effect
of accounting
changes $181,180 $147,547 $118,391 $72,189 $106,923
Net income $178,173 $147,547 $107,586 $72,189 $106,923
- ----------------------------------------------------------------------------
Per Share Amounts:
Income before
cumulative effect
of accounting
changes $1.83 $1.48 $1.17 $.71 $1.06
Net income $1.80 $1.48 $1.06 $.71 $1.06
Dividends $ .84 $ .80 $ .76 $.76 $ .76
- ----------------------------------------------------------------------------
Average shares
outstanding 99,002 99,773 101,150 101,011 100,826
Total assets $2,445,766 $2,349,539 $2,372,035 $2,470,584 $2,591,377
Long-term debt,
excl. current
portion $295,552 $261,073 $334,718 $447,990 $607,805
- ----------------------------------------------------------------------------
Operating income
as a percent of
revenues 17.1% 16.4% 15.4% 14.0% 13.3%
Net income as a
percent of
revenues 8.5% 7.6% 5.9% 4.2% 6.2%
Net income as a
percent of stock-
holders' equity 12.0% 9.9% 7.4% 5.0% 7.4%
============================================================================
PAGE 16
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net income in 1994 of $178.2 million, or $1.80 per share, increased
$30.6 million, or 20.8%, from 1993 net income of $147.5 million, or $1.48
per share. Growth in 1994 earnings was largely driven by robust gains in
both revenues and operating income at the information services segment.
Earnings in 1994 included the cumulative effect of the adoption of
Statement of Financial Accounting Standards (SFAS) No. 112, "Employers'
Accounting for Postemployment Benefits," which reduced net income by $3
million, or three cents per share. Excluding the cumulative effect of this
accounting change, net income of $181.2 million would have been $33.6
million, or 22.8%, better than 1993 earnings, continuing the sharp upward
trend in earnings begun in 1992.
Earnings in 1993 were up $40 million, or 37.1%, from 1992 net income of
$107.6 million, or $1.06 per share. Net income in 1992 included the
cumulative effect of the adoption of SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," which reduced net income
$32.4 million, or $.32 per share, and SFAS No. 109, "Accounting for Income
Taxes," which increased earnings $21.6 million, or $.21 per share. Also
included in 1992 net income were after-tax charges totaling $8 million, or
eight cents per share, for the write-down of certain investments. Excluding
these nonrecurring items, net income in 1993 would have increased $21.1
million, or 16.7%, from 1992 earnings.
Net income in 1992, excluding nonrecurring items, increased $22.4
million, or 21.5%, from 1991.
A summary of the results of operations for each of the company's
principal business segments as well as financial data by geographic area is
displayed in Note 15 to the financial statements.
OPERATING INCOME
In 1994 operating income increased $41.9 million, or 13.2%, reaching a
record $358.3 million. Operating income of $316.5 million in 1993 was up
$35.8 million, or 12.7%, from 1992's operating income of $280.7 million. In
1992 operating income increased $40 million, or 16.6%. The operating margin
grew to 17.1% in 1994 from 16.4% in 1993 and 15.4% in 1992.
Foreign operations, primarily at Dow Jones Telerate, provided $142.3
million, or roughly 40%, of 1994 operating income. Income from foreign
operations was up 12.7% from $126.2 million in 1993. Domestic operating
income in 1994 increased 13% to $234.5 million. In 1993 operating income
from foreign operations grew 21%, while domestic operating income was up
7.4%.
PAGE 17
Operating income at the information services segment, which includes
both the Dow Jones/Telerate and Business Information Services groups, grew
$41.5 million, or 26.4%, to $199 million in 1994. Information services
operating income comprised 55.5% of consolidated operating income, up from
49.7% in 1993. Revenues advanced $114.8 million, or 13.3%, while operating
expenses increased $73.3 million, or 10.4%. Operating income in 1994
benefited from fluctuations in foreign currency exchange rates, chiefly in
the Asia/Pacific region. Excluding this benefit, 1994 operating income would
have still increased 23.4%.
Dow Jones/Telerate operating income grew 30% in 1994; however,
operating income at the Business Information Services group was down 3.6%.
The operating margin for the information services segment reached 20.4% in
1994, up from 18.3% in 1993 and 18.6% in 1992. Expenses in 1994 continued
to include substantial investments in technical improvements, product
development and enhanced information.
In 1993 operating income for this segment grew $6.7 million, or 4.5%,
as revenues advanced $52.6 million, or 6.5%, and operating expenses
increased $45.9 million, or 7%. Operating income at this segment rose 2.1%
in 1992.
The business publications segment includes The Wall Street Journal and
its overseas editions, Barron's, other domestic and foreign publications and
global initiatives into television. This segment's operating income in 1994
decreased $2 million, or 1.4%, to $141.6 million and accounted for 39.5% of
the company's 1994 operating profit versus 45.4% in 1993.
The company's global television initiatives include European Business
News (EBN), which is 70% owned by Dow Jones and 30% owned by an affiliate of
Tele-Communications Inc. EBN launched a European business news channel in
the first quarter of 1995. Excluding television operations, business
publications operating income would have increased $6.8 million, or 4.5%, in
1994.
Business publications revenues were up $36.8 million, or 4.5%, in 1994.
Operating expenses rose $38.8 million, or 5.7%. Operating income for the
segment in 1993 increased $28.6 million, or 24.8%, to $143.7 million, after
climbing $33.6 million, or 41.3%, to $115.1 million in 1992. The operating
margin for the business publications segment was 16.4% in 1994, 17.4% in
1993 and 14.9% in 1992.
Community newspapers segment operating income for 1994 of $36.2 million
grew $3.6 million, or 11.1%. This segment contains the Ottaway Newspapers
group of 20 daily newspapers. The operating income gain was primarily due
to higher advertising revenue and continuing cost controls. Operating
income was up $0.9 million, or 2.9%, in 1993 and $4.7 million, or 17.6%, in
1992. The operating margin for the community newspapers segment improved to
14.3% in 1994 compared with 13.3% in 1993 and 13.5% in 1992.
PAGE 18
REVENUES
In 1994 revenues advanced $159.2 million, or 8.2%, reaching a record
$2.1 billion. Revenues from domestic operations increased 6% to $1.5
billion in 1994, accounting for about 70% of total revenues. Revenues from
foreign components grew 14.2% to $602 million in 1994. Total revenues
increased $113.9 million, or 6.3%, to $1.9 billion in 1993.
Advertising revenue in 1994 grew $26 million, or 3.7%, to $725 million.
In 1993 advertising revenue was up $44.4 million, or 6.8%, from 1992.
Circulation revenue in 1994 improved $16.3 million, or 4.7%, growing to
$364.2 million. In 1993 circulation revenue increased $14.3 million, or
4.3%, to $347.8 million.
Information services 1994 revenue, which composed about 47% of the
company's revenue, climbed $114.8 million, or 13.3%, to $976.8 million.
Excluding a net benefit from fluctuations in foreign currency exchange
rates, information services revenue would have increased $106.2 million, or
12.3%. In 1993 information services revenue grew $52.6 million, or 6.5%, to
$862 million from $809.4 million in 1992.
Dow Jones/Telerate, which primarily serves professionals in the
financial services industry and includes Dow Jones Telerate and the
company's proprietary newswires, produced 90% of information services
revenue in 1994. Dow Jones/Telerate revenues of $877.4 million grew $98.5
million, or 12.6%. About four-fifths of this increase resulted from world-
wide volume gains attributable to growth in both the number of terminals and
enhanced and expanded services. Dow Jones/Telerate's three regions:
Americas; Europe, Middle East, Africa; and Asia/Pacific; all posted double
digit revenue growth. Americas revenue climbed 12.1%, revenue from Europe,
Middle East, Africa increased 12%, while Asia/Pacific revenue was up 15.1%.
In 1993 Americas revenue was up 5.7%, revenues from Europe, Middle East,
Africa rose 6.5% and Asia/Pacific revenue increased 5%.
The remaining 10% of information services revenue was earned by
Business Information Services, which serves corporate, individual business
consumer and private investor needs through Dow Jones News/Retrieval and
related services. Business Information Services revenue was up 19.6% in
1994 after increasing 13.1% in 1993. Volume gains at Dow Jones News/
Retrieval were the primary reason for revenue growth in 1994 and 1993.
Business publications 1994 revenues of $862 million advanced 4.5% from
1993 revenues of $825.2 million. Revenues in 1993 were up 6.7% from 1992
revenues of $773.8 million. Advertising revenue increased 3.7% in 1994,
with the Journal, its overseas editions and Barron's all posting gains.
Advertising linage in 1994 at The Wall Street Journal, the largest component
of business publications, declined 1.2% after rising 3.3% in 1993.
PAGE 19
The decrease in linage at the Journal was the result of a 9.9% drop in
financial advertising in 1994, following an increase of 13.4% in 1993.
Financial linage is volatile and fluctuates with the level of new debt and
equity offerings, which in 1994 were constrained by the upswing in interest
rates. This category comprised 31.7% of total Journal advertising linage in
1994, compared with 34.8% in 1993, 31.2% in 1992 and 39% at its peak in
1987. General linage was up 3.1% in 1994, following declines of 0.9% in
1993 and 1.2% in 1992. Journal advertising rates were raised an average of
4% in 1994, 5% in 1993 and 4.5% in 1992.
Barron's national advertising pages increased 2.4% in 1994 and 6.9% in
1993, after being flat in 1992. Advertising revenue from overseas
publications, including The Asian Wall Street Journal, The Wall Street
Journal Europe and Far Eastern Economic Review, gained 23.3% in 1994.
Overseas advertising revenue advanced 7.7% in 1993.
Circulation revenue at business publications grew 5.4% in 1994. Wall
Street Journal revenue in 1994 benefited from a mid-1993 increase of 7.2% to
$149 in the Journal's annual subscription price. Effective January 1, 1995,
the price of an annual subscription was increased 10% to $164, while an
annual Barron's subscription was raised 4.7% to $135 from $129. The
newsstand price of the Journal remained at 75 cents in 1994, and it is not
scheduled to change in 1995. Barron's newsstand price was raised 20% to
$3.00 from $2.50 in June 1994. Including the Journal's European and Asian
editions, world-wide average circulation decreased to 1,914,400 in 1994,
compared with 1,941,600 in 1993 and 1,920,300 in 1992. Barron's average
circulation for 1994 was up 4.9% to 278,300, following a 5.3% gain in 1993.
Revenues at Ottaway Newspapers, Inc., Dow Jones' community newspapers
subsidiary, increased $7.6 million, or 3.1%, in 1994. Revenues were up 4.2%
in 1993 and 3.4% in 1992. Ottaway's advertising revenue in 1994 grew $6.3
million, or 3.7%, chiefly as a result of rate increases and sales gains in
preprinted inserts. Advertising revenue rose 4.1% in 1993 and 2.1% in 1992.
Advertising linage edged up 0.2% in 1994 and 0.6% in 1993; linage declined
3.9% in 1992. Circulation revenue improved $1.3 million, or 1.8%, in 1994,
after increases of 3.8% and 6.2% in 1993 and 1992, respectively. Average
circulation for Ottaway's 20 daily newspapers was essentially flat at about
551,000 from 1991-1994.
PAGE 20
OPERATING EXPENSES
Operating expenses in 1994 grew $117.3 million, or 7.3%, to $1.7
billion, primarily due to increases in spending on technical development and
product enhancements, fees to outside information providers (royalties),
salaries and depreciation. In 1993 operating expenses increased $78.2
million, or 5.1%, in part due to increases in royalties, newsprint costs and
depreciation. Operating expenses in 1992 increased $52.8 million, or 3.6%,
with higher information services costs moderated by lower newsprint expense.
In 1994 the company spent $52.5 million on research and development
compared with $40.7 million and $32.3 million in 1993 and 1992,
respectively. In addition to research and development costs, significant
enhancements made to existing products resulted in a $22.7 million increase
in 1994 expenses.
Information services expenses were up $73.3 million, or 10.4%, to
$777.9 million in 1994, mainly due to continuing investments in technical
development, network upgrades and product and information enhancements.
Excluding the effect of foreign currency rate fluctuations, operating
expenses increased $69.4 million, or 9.8%. At December 31, 1994, the number
of full-time employees for information services was up 6.4% from year-end
1993.
Business publications expenses increased $38.8 million, or 5.7%, to
$720.4 million in 1994. The increase was chiefly due to higher selling and
operations costs for print publications and expansion of television
operations. In 1994 television and multimedia initiatives increased segment
expenses $9.1 million. Excluding television-related expenses, business
publications expenses increased $29.7 million, or 4.4%. Newsprint expense
was up slightly as consumption and the average cost of newsprint remained
stable relative to 1993. However, newsprint prices are expected to increase
sharply, possibly in excess of 40%, in 1995 as both the list prices of
newsprint increase and currently available discounts decline.
Business publications operating expenses for 1993 of $681.6 million
increased $22.9 million, or 3.5%, partially due to higher newsprint expense
reflecting increased consumption and a higher average price. In 1992
operating expenses of $658.7 million were essentially flat with the prior
year.
Community newspapers expenses were up $4 million, or 1.9%, in 1994.
Higher selling costs and depreciation were moderated by slightly lower
volume-related costs for printing, distribution and newsprint. Operating
expenses increased 4.4% in 1993 and 1.4% in 1992.
In 1994 purchases of newsprint containing recycled fiber reached 70% of
total purchases, up from 54% in 1993 and 39% in 1992. The company expects
purchases of newsprint containing recycled material to remain high in 1995.
PAGE 21
Salaries and wages were 31% of total operating expenses in 1994 and
1993 and 30% in 1992. Salaries and wages increased 5.8% in 1994, following
increases of 6.4% in 1993 and 8.4% in 1992. At December 31, 1994, Dow Jones
employed 10,265 full-time employees, up 2.6% from 10,006 at year-end 1993.
OTHER INCOME / DEDUCTIONS
Interest expense of $16.9 million decreased $5.7 million, or 25.3%,
from 1993 due to a lower average debt level. Long-term debt outstanding
averaged $251.1 million during 1994 compared with $339.9 million in 1993 and
$385.4 million in 1992.
Equity in losses of associated companies for 1994 was $5.4 million
compared with break-even results in 1993. The company's share of earnings
from its newsprint affiliates of $1.9 million was 16.7% worse than earnings
of $2.2 million in 1993. Equity earnings from newsprint mill affiliates in
1993 improved $6.9 million from losses of $4.7 million in 1992. Results
from the newsprint mills should improve in 1995 as price increases and lower
discounts for newsprint yield higher revenues.
Equity losses in 1994 included the first full year of operations for
Asia Business News (ABN), a business and financial news television channel
broadcasting in Asia. ABN, for which Dow Jones provides news and
programming, is part of the company's global business television
initiative. Also contained in equity results for 1994 were losses for BIZ,
a monthly controlled-circulation magazine, which ceased publication with its
January 1995 issue.
The fourth quarters of 1993 and 1992 included write-downs of
investments totaling $8.2 million ($5.4 million after taxes) and $13.4
million ($8 million after taxes), respectively.
INCOME TAXES
The effective income tax rate was 46.5% in 1994 versus 48.5% in 1993
and 49.5% in 1992. The lower 1994 rate was chiefly caused by the lesser
impact of stable nondeductible goodwill amortization on higher 1994 pretax
earnings and an easing of state income taxes. Excluding goodwill
amortization, the effective income tax rate would have been 41.5% in 1994,
42.4% in 1993 and 42.1% in 1992.
In 1992 SFAS No. 109, "Accounting for Income Taxes," was adopted. The
cumulative effect of the accounting change was a benefit of $21.6 million,
or $.21 per share, to 1992 earnings.
PAGE 22
INVESTMENTS
During 1994, businesses and investments acquired totaled $47.3 million.
These investments included acquiring minority stakes in United States
Satellite Broadcasting Company, Inc. (USSB), a digital satellite television
company, and VWD-Vereinigte Wirtschaftsdienste GmbH, a German news agency.
The company also increased the amount of its investments in Asia Business
News, Minex Corp., a Tokyo-based consortium offering foreign exchange
transaction services, and a newsprint mill affiliate.
In January 1995, Charter Financial Publishing Corp., of Shrewsbury, New
Jersey, was acquired. Charter Financial publishes Investment Advisor, a
controlled-circulation monthly magazine for financial advisors and Realty
Stock Review, a monthly paid-circulation newsletter on real estate.
FINANCIAL POSITION
Cash provided by operations in 1994 was $401.1 million, up $65.4
million, or 19.5%, from $335.7 million in 1993 and up 31.2% from $305.6
million in 1992. The gain in earnings and a change in working capital were
chiefly responsible for the increase. In 1994, primarily using cash
generated through operations, the company paid dividends of $83.4 million,
funded $222.4 million in capital expenditures, made investments of $47.3
million and purchased 3,782,000 shares of its common stock for $118.2
million. The year-end cash balance increased to $10.9 million in 1994 from
$5.7 million at year-end 1993.
At December 31, 1994, long-term debt, excluding current maturities, was
$295.6 million, an increase of $34.5 million, or 13.2%, from $261.1 million
at year-end 1993. The debt-to-equity ratio at December 31, 1994, was 19.9%,
compared with 17.5% at 1993's year end. Long-term debt peaked at $719
million on December 31, 1989, when the debt-to-equity ratio was 51.2%.
Commercial paper was used to retire long-term notes of $192 million which
matured in 1994.
The company expects cash provided by operations in 1995 to be
sufficient to meet its normal recurring operating commitments, fund capital
expenditures of roughly $200 million and pay dividends of about $90 million.
Capital spending in 1995 will include press equipment, which will enable Dow
Jones' domestic print publications to offer advertisers limited four-color
capability, as well as continued investments in the technical infrastructure
of print and electronic services. Depending on business opportunities and
market conditions, cash from operations may be used for strategic
acquisitions, retirement of long-term debt or treasury share purchases. At
December 31, 1994, the company had authorization to acquire an additional
1.6 million shares of its common stock.
PAGE 23
The working capital ratio, excluding unearned revenue, was 1 to 1 as of
year-end 1994 and 1993. Return on equity rose to 12% in 1994 from 9.9% in
1993 and 7.4% in 1992. On January 18, 1995, Dow Jones announced that it
would raise its quarterly dividend to 23 cents per share from 21 cents per
share, an increase of 9.5%.
In January 1995, the company sold an 80% interest in SportsTicker, a
real-time sports news and information unit, to Entertainment Sports
Programming Network, Inc. (ESPN), a subsidiary of Capital Cities/ABC. Dow
Jones retains a 20% interest in the service and plans to collaborate with
ESPN to produce business-of-sports TV programming.
OUTLOOK
Consolidated earnings are expected to improve in 1995. However, the
growth in 1995 will be tempered in comparison to the high growth rates
posted in recent years. The company plans a substantial increase in
spending to develop new products and enhance existing products. Initiatives
in 1995 include expansion of world-wide television activities, four-color
printing capability for domestic publications and continued development of
advanced platforms for the storage and retrieval of text, user-friendly
front-end software for customer terminals and an interactive edition of The
Wall Street Journal.
Information services revenues in 1995 are expected to increase at a
rate consistent with the annual rates of growth achieved over the past
several years. It is expected that a significant portion of the growth will
come from Dow Jones Telerate's overseas operations. Dow Jones Telerate's
sales of digital feeds and trading room systems should continue to fuel
revenue growth.
Information services 1995 expenses will also likely increase at a rate
similar to those seen in recent years as this segment continues to invest in
expanded information, network enhancements and product improvements. Dow
Jones Telerate will move forward in integrating all of its information into
its more flexible Telerate Workstation, which was introduced in January
1995.
In 1995 business publications revenues are expected to show
improvement, primarily from rate increases. National advertising rates at
The Wall Street Journal were raised almost four percent for 1995.
Improvement in domestic Journal advertising linage is largely dependent on
the continuing strength of the overall U.S. economy and, specifically, on
the activity in financial markets. Advertising rates at the Journal's
overseas editions were raised an average of about seven percent for 1995.
Circulation revenues in 1995 for both The Wall Street Journal and Barron's
will begin to reflect the effect of subscription rate increases which went
into effect January 1, 1995.
PAGE 24
Business publications expenses in 1995 will be affected by price
increases in newsprint and second class postage. On average, newsprint
prices are expected to increase about 40% in 1995 as list prices increase
and discounts given by suppliers decrease. Also, second class postage rates
were increased 12.5% effective January 1, 1995. These increases are likely
to cause business publications operating income to fall in 1995. However,
the effect of newsprint price increases on consolidated net income is
expected to be mitigated by improvements in earnings at the company's
newsprint mill affiliates. Even with the price increase, newsprint expense
is expected to comprise only about 7% of the company's total operating
expenses in 1995.
Operating income at business publications will also be held down in
1995 as the expansion of world-wide television initiatives is pursued.
European Business News launched its 19-hour a day channel in 1995's first
quarter.
Following revenue increases at the community newspapers segment of 3.1%
in 1994 and 4.2% in 1993, revenues are expected to grow at a higher level in
1995 as the segment benefits from an improved domestic economy and the
acquisition of the Salem (Massachusetts) Evening News. However, community
newspapers expenses will also be affected by increased newsprint prices.
PAGE 25
ITEM 8. Financial Statements and Supplementary Data
CONSOLIDATED STATEMENTS OF INCOME
Dow Jones & Company, Inc.
For the years ended December 31, 1994, 1993 and 1992
==============================================================================
(in thousands except per share amounts) 1994 1993 1992
- ------------------------------------------------------------------------------
REVENUES:
Information services $ 976,800 $ 861,979 $ 809,387
Advertising 724,990 699,009 654,598
Circulation and other 389,187 370,828 353,885
- ------------------------------------------------------------------------------
Total revenues 2,090,977 1,931,816 1,817,870
- ------------------------------------------------------------------------------
EXPENSES:
News, operations and development 642,184 580,636 534,984
Selling, administrative and general 681,244 642,772 634,766
Newsprint 107,178 106,357 93,299
Second class postage and
carrier delivery 96,751 96,926 94,818
Depreciation and amortization 205,303 188,665 179,312
- ------------------------------------------------------------------------------
Operating expenses 1,732,660 1,615,356 1,537,179
- ------------------------------------------------------------------------------
Operating income 358,317 316,460 280,691
OTHER INCOME (DEDUCTIONS):
Investment income 4,884 5,060 6,829
Interest expense (16,858) (22,555) (30,355)
Equity in (losses) earnings of
associated companies (Note 3) (5,434) 72 (4,190)
Other, net (Note 2) (2,097) (12,797) (18,638)
- ------------------------------------------------------------------------------
Income before income taxes (Note 7) 338,812 286,240 234,337
Income taxes (Note 7) 157,632 138,693 115,946
- ------------------------------------------------------------------------------
Income before cumulative effect of
accounting changes 181,180 147,547 118,391
Cumulative effect of accounting changes
(Notes 7 & 10) (3,007) (10,805)
- ------------------------------------------------------------------------------
NET INCOME $ 178,173 $ 147,547 $ 107,586
==============================================================================
PER SHARE (Note 12):
Income before cumulative effect of
accounting changes $1.83 $1.48 $1.17
Cumulative effect of accounting changes (.03) (.11)
Net income 1.80 1.48 1.06
Cash dividends .84 .80 .76
==============================================================================
Weighted average shares outstanding 99,002 99,773 101,150
==============================================================================
The accompanying notes are an integral part of the financial statements.
PAGE 26
CONSOLIDATED BALANCE SHEETS
Dow Jones & Company, Inc.
December 31, 1994 and 1993
===============================================================================
(dollars in thousands) 1994 1993
- -------------------------------------------------------------------------------
ASSETS:
Current Assets:
Cash and cash equivalents $ 10,888 $ 5,652
Accounts receivable -- trade, net of
allowance for doubtful accounts of
$14,870 in 1994 and $14,548 in 1993 229,687 192,855
Newsprint inventory (Note 4) 7,832 7,576
Deferred income taxes (Note 7) 18,604 15,784
Prepaid expenses 21,483 22,966
Other current assets 21,636 23,628
- -------------------------------------------------------------------------------
Total current assets 310,130 268,461
- -------------------------------------------------------------------------------
Investments in Associated Companies, at equity (Note 3) 90,231 70,653
Other Investments (Notes 2, 5 & 16) 72,835 55,009
Plant and Property, at cost:
Land 22,675 22,942
Buildings and improvements 341,309 322,899
Equipment 1,420,839 1,302,757
Construction in progress 73,946 27,155
- -------------------------------------------------------------------------------
1,858,769 1,675,753
Less, Allowance for depreciation 1,216,680 1,081,286
- -------------------------------------------------------------------------------
642,089 594,467
Excess of Cost over Net Assets of Businesses
Acquired, less accumulated amortization of
$283,712 in 1994 and $243,424 in 1993 1,304,953 1,347,757
Deferred Income Taxes (Note 7) 10,675
Other Assets 14,853 13,192
- -------------------------------------------------------------------------------
Total assets $2,445,766 $2,349,539
===============================================================================
The accompanying notes are an integral part of the financial statements.
PAGE 27
CONSOLIDATED BALANCE SHEETS
Dow Jones & Company, Inc.
December 31, 1994 and 1993
===============================================================================
(dollars in thousands) 1994 1993
- -------------------------------------------------------------------------------
LIABILITIES:
Current Liabilities:
Accounts payable -- trade $ 89,006 $ 69,032
Accrued wages, salaries and commissions 56,331 46,883
Profit sharing and other retirement plan
contributions payable (Note 9) 35,029 35,122
Other payables 57,040 53,524
Income taxes (Note 7) 68,694 56,739
Unearned revenue 219,880 204,220
Current maturities of long-term debt (Note 5) 5,318 5,318
- -------------------------------------------------------------------------------
Total current liabilities 531,298 470,838
Long-Term Debt (Notes 5 & 16) 295,552 261,073
Deferred Compensation, principally postretirement
benefit obligation (Note 10) 133,334 118,985
Deferred Income Taxes (Note 7) 5,327
Other Liabilities 3,971 5,375
- -------------------------------------------------------------------------------
Total liabilities 964,155 861,598
- -------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY:
Common Stock, par value $1 per share; authorized
135,000,000 shares; issued 80,161,777 shares
in 1994 and 80,002,971 shares in 1993 80,162 80,003
Class B Common Stock, convertible, par value $1
per share; authorized 25,000,000 shares; issued
22,019,244 shares in 1994 and 22,178,050 shares
in 1993 22,019 22,178
- -------------------------------------------------------------------------------
102,181 102,181
Additional Paid-in Capital 134,017 135,109
Retained Earnings 1,404,346 1,309,533
Cumulative Translation Adjustment (6,219) (4,889)
- -------------------------------------------------------------------------------
1,634,325 1,541,934
Less, Treasury Stock at cost, 5,556,839 shares in
1994 and 2,396,573 shares in 1993 152,714 53,993
- -------------------------------------------------------------------------------
Total stockholders' equity 1,481,611 1,487,941
- -------------------------------------------------------------------------------
Total liabilities and stockholders' equity $2,445,766 $2,349,539
===============================================================================
PAGE 28
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dow Jones & Company, Inc.
For the years ended December 31, 1994, 1993 and 1992
======================================================================================
(in thousands) 1994 1993 1992
--------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $178,173 $147,547 $107,586
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 164,383 147,495 138,372
Amortization of excess of cost over net
assets of businesses acquired 40,920 41,170 40,940
(Gain) on sale of businesses and investments (3,097) (868) (1,121)
(Gain) loss on disposition of plant and property (1,965) (529) 2,011
Write-down of investments 3,582 8,171 13,422
Cumulative effect of accounting changes 3,007 10,805
Equity in losses (earnings) of associated
companies, net of distributions 6,762 4,690 4,423
Changes in assets and liabilities:
Accounts receivable - trade (35,604) (29,679) 371
Unearned revenue 14,376 13,451 1,554
Newsprint inventory (256) (346) 302
Other current assets 2,467 (3,834) (3,552)
Accounts payable and accrued liabilities 22,220 1,252 (2,330)
Income taxes 12,948 1,429 (2,514)
Deferred taxes (16,867) (5,724) (16,720)
Deferred compensation 9,387 8,716 10,285
Other, net 656 2,768 1,771
--------------------------------------------------------------------------------------
Net cash provided by operating activities 401,092 335,709 305,605
--------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Additions to plant and property (222,434) (159,943) (125,626)
Disposition of plant and property 18,608 7,542 11,567
Businesses and investments acquired, net of
cash received (47,327) (24,915) (10,608)
Businesses and investments sold, net of cash given 5,218 4,694 3,083
Return of capital by investees 2,527 1,859
Proceeds from guaranteed investment contract 5,318 5,318 5,318
Investees' (loans) repayments (3,632) (185) 100
--------------------------------------------------------------------------------------
Net cash used in investing activities (241,722) (165,630) (116,166)
--------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Cash dividends (83,360) (79,833) (76,912)
Increase in long-term debt 231,679 47,278 86,055
Reduction of long-term debt (197,318) (121,188) (199,746)
Proceeds from sale under stock purchase plans 17,001 22,553 10,815
Purchase of treasury stock (118,219) (48,312) (28,429)
--------------------------------------------------------------------------------------
Net cash used in financing activities (150,217) (179,502) (208,217)
--------------------------------------------------------------------------------------
PAGE 29
EFFECT OF EXCHANGE RATE CHANGES ON CASH (3,917) (1,341) (828)
--------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,236 (10,764) (19,606)
Cash and cash equivalents at beginning of year 5,652 16,416 36,022
--------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 10,888 $ 5,652 $ 16,416
======================================================================================
The accompanying notes are an integral part of the financial statements.
PAGE 30
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Dow Jones & Company, Inc.
For the years ended December 31, 1994, 1993 and 1992
======================================================================================================================
Class B Additional Cumulative Treasury Stock
(in thousands Common Common Paid-in Retained Translation ------------------
except shares) Stock Stock Capital Earnings Adjustment Shares Amount Total
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1991 $79,586 $22,595 $142,908 $1,211,145 $ 2,293 (1,063,193) $ (20,626) $1,437,901
Net income - 1992 107,586 107,586
Dividends, $.76 per share (76,912) (76,912)
Translation adjustment (5,117) (5,117)
Conversion of class B common
stock into common stock 274 (274)
Capital changes of investee (26) (26)
Sales under stock purchase
plans (7,731) 444,383 19,295 11,564
Purchase of treasury stock (958,942) (28,429) (28,429)
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1992 79,860 22,321 135,151 1,241,819 (2,824)(1,577,752) (29,760) 1,446,567
Net income - 1993 147,547 147,547
Dividends, $.80 per share (79,833) (79,833)
Translation adjustment (2,065) (2,065)
Conversion of class B common
stock into common stock 143 (143)
Sales under stock purchase
plans (42) 849,179 24,079 24,037
Purchase of treasury stock (1,668,000) (48,312) (48,312)
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 80,003 22,178 135,109 1,309,533 (4,889)(2,396,573) (53,993) 1,487,941
Net income - 1994 178,173 178,173
Dividends, $.84 per share (83,360) (83,360)
Translation adjustment (1,330) (1,330)
Conversion of class B common
stock into common stock 159 (159)
Capital changes of investee 157 157
Sales under stock purchase
plans (Note 8) (1,249) 621,734 19,498 18,249
Purchase of treasury stock (3,782,000) (118,219) (118,219)
- ----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 $80,162 $22,019 $134,017 $1,404,346 $(6,219)(5,556,839) $(152,714) $1,481,611
======================================================================================================================
The accompanying notes are an integral part of the financial statements.
PAGE 31
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE CONSOLIDATED FINANCIAL STATEMENTS include the accounts of the company
and its majority-owned subsidiaries. The equity method of accounting is
used for companies and other investments in which the company's common stock
ownership and partnership equity is at least 20% and not more than 50% (see
Note 3). All significant intercompany transactions are eliminated in
consolidation.
UNEARNED REVENUE is recorded as earned, pro rata on a monthly basis, over
the life of subscriptions. Costs in connection with the procurement of
subscriptions are charged to expense as incurred.
DEPRECIATION is computed using straight-line or declining-balance methods
over the estimated useful lives of the respective assets or terms of the
related leases. Upon retirement or sale, the cost of disposed assets and
the related accumulated depreciation are deducted from the respective
accounts and the resulting gain or loss is included in income.
MAINTENANCE AND REPAIRS are charged to expense as incurred. Major renewals,
betterments and additions are capitalized.
RESEARCH AND DEVELOPMENT expenditures are charged to expense as incurred.
Research and development expenses were $52,522,000 in 1994, $40,705,000 in
1993 and $32,320,000 in 1992.
CASH EQUIVALENTS are highly liquid investments with a maturity of three
months or less when purchased.
NEWSPRINT INVENTORY is stated at the lower of last-in, first-out (LIFO) cost
or market (see Note 4).
DEFERRED INCOME TAXES are provided for temporary differences in bases
between financial statement and income tax assets and liabilities. In 1992,
the company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Accordingly, deferred tax assets and
liabilities are recalculated annually at tax rates then in effect (see Note
7).
THE EXCESS OF COST OVER NET ASSETS OF BUSINESSES ACQUIRED (GOODWILL) is
amortized using the straight-line method over various periods, principally
forty years. The company evaluates annually whether there has been a
permanent impairment in the value of goodwill. Factors considered in the
evaluation include expected future cash flows from operations of businesses
acquired and the market value of comparable companies.
PAGE 32
FOREIGN CURRENCY TRANSLATION of the assets and liabilities of subsidiaries
whose functional currency is not the U.S. dollar is determined at the
appropriate year-end exchange rates, while results of operations are
translated at the average rates of exchange in effect throughout the year.
The resultant translation adjustment is recorded directly to Stockholders'
Equity. Gains and losses arising from translation of financial statements
for foreign subsidiaries where the U.S. dollar is the functional currency as
well as from all foreign currency transactions are included in income.
FORWARD EXCHANGE CONTRACTS are entered into to hedge contracted revenue
streams from foreign currency exchange rate fluctuations. As such, these
nonspeculative forward exchange contracts are not recorded on the company's
balance sheets. Also, unrealized gains and losses on these forward exchange
contracts are deferred and recognized upon settlement of the related
transactions. Accordingly, cash flows resulting from forward exchange
contract settlements are classified as cash provided by operations as are
the corresponding cash flows from the revenue streams being hedged (see Note
16).
ACCOUNTING CHANGES were adopted in response to recently issued accounting
standards. Effective January 1, 1994, the company adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." The cumulative effect of this change in
accounting was a charge against earnings of $3,007,000 (see Note 10).
Effective January 1, 1992, the company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions." A charge against earnings of $32,370,000 was
recorded (see Note 10). As of the same date, the company also adopted
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," by recording a benefit to earnings of $21,565,000 (see Note 7).
NOTE 2. OTHER, NET
Other, net includes gains/losses from foreign currency exchange rate
fluctuations, write-downs of investments and other miscellaneous non-
operating income and expenses.
Foreign exchange losses totaled $3,812,000 in 1994, $5,808,000 in 1993 and
$2,247,000 in 1992.
In 1993's fourth quarter, the company recorded a charge of $8.2 million
($5.4 million after taxes) to write down certain of its investments.
In the fourth quarter of 1992 a charge of $13.4 million ($8 million after
taxes) was recorded to write down certain of the company's investments. The
investments written down included the company's minority position in Groupe
Expansion, S.A., a French publisher of business magazines, as well as Groupe
Expansion-related companies, and the Chapel Hill News, a community newspaper
held by the company's Ottaway Newspapers, Inc. subsidiary.
PAGE 33
NOTE 3. INVESTMENTS IN ASSOCIATED COMPANIES, AT EQUITY
The operating results of the principal associated companies accounted for by
the equity method have been included in the accompanying consolidated
financial statements on the following bases: Bear Island Paper Company,
L.P. (Bear Island Paper), 35% owned; Bear Island Timberlands Company, L.P.,
35% owned; and F.F. Soucy, Inc. & Partners and Company, Limited (Soucy), 40%
owned.
The company, as a limited partner in Bear Island Paper and Soucy, has signed
long-term contracts with both covering a substantial portion of its annual
newsprint requirements. Operating expenses of the company include the cost
of newsprint supplied by Bear Island Paper and Soucy of $41,828,000 in 1994
$39,558,000 in 1993, and $42,918,000 in 1992.
NOTE 4. NEWSPRINT INVENTORY
Newsprint inventory was determined by the last-in, first-out (LIFO) method.
If inventory had been valued by the average cost method, it would have been
approximately $6,449,000 and $4,976,000 higher in 1994 and 1993,
respectively.
NOTE 5. LONG-TERM DEBT
Long-term debt at December 31 was as follows:
============================================================================
(in thousands) 1994 1993
- ----------------------------------------------------------------------------
Commercial paper, 5.90% to 6.23% at December 31, 1994 $263,643 $ 31,964
Notes payable, 7.7% and 8.4%, due February 1 and
December 1, 1994 191,882
Note payable, Associated Press, 7.75% 37,227 42,545
- ----------------------------------------------------------------------------
300,870 266,391
Less: current portion 5,318 5,318
- ----------------------------------------------------------------------------
Total long-term debt $295,552 $261,073
============================================================================
Payments on long-term debt are due as follows: $5,318,000 in each year from
1995 through 1998, $268,962,000 in 1999 and $10,636,000 thereafter.
Interest payments were $21,989,000 in 1994, $22,459,000 in 1993 and
$31,825,000 in 1992.
PAGE 34
The company can borrow up to $400 million through November 16, 1999, under a
revolving credit agreement with several banks. Borrowings may be made
either in Eurodollars with interest that approximates the applicable
Eurodollar rate or in U.S. dollars with interest that approximates the
bank's prime rate, its C/D rate or the federal funds rate. A fee of 0.08%
is payable on the commitment which the company may terminate or reduce at
any time. Prepayment of borrowings may be made without penalty. Although
there were no borrowings under the agreement as of December 31, 1994, the
company intends to maintain the commitment at least through December 31,
1995. Accordingly, commercial paper was classified as long-term.
The revolving credit agreement contains various restrictive covenants
principally relating to net worth, liabilities and cash flows. At December
31, 1994, consolidated net worth exceeded the minimum by $731 million and
total consolidated liabilities were $1.6 billion less than the maximum. The
company's cash flow, as defined in the agreement, in 1994 far exceeded that
required.
In 1994 notes of $192 million matured. This debt was refinanced by the
issuance of commercial paper, which is supported by the company's revolving
credit agreement.
The note payable to the Associated Press is owed by the company in equal
annual principal payments of $5,318,000 which commenced in 1991. The
company purchased a Guaranteed Investment Contract from an insurance company
which is supported by an irrevocable stand-by letter of credit. The
contract, which is included in Other Investments, provides for payments to
the company of interest and principal that match the payments owed the
Associated Press.
NOTE 6. CAPITAL STOCK
Common stock and class B common stock have the same dividend and liquidation
rights. Class B common stock has ten votes per share, free convertibility
into common stock on a one-for-one basis and can be transferred in class B
form only to members of the stockholder's family and certain others
affiliated with the stockholder.
PAGE 35
NOTE 7. INCOME TAXES
Effective January 1, 1992, the company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under
Statement No. 109, deferred taxes are determined upon the cumulative
differences in bases between financial statement and income tax assets and
liabilities. The measurement of deferred taxes resulting from these
differences is based on currently enacted tax rates.
It was principally the recalculation of deferred taxes at the lower 34%
federal income tax rate enacted in the Tax Reform Act of 1986 that resulted
in the 1992 earnings benefit of $21.6 million, or $.21 per share, which has
been included in the cumulative effect of accounting changes. During 1993
the Omnibus Budget Reconciliation Act was enacted, which increased the
federal corporate income tax rate to 35%. The impact of remeasuring
deferred tax assets and liabilities at this higher rate was immaterial to
1993 income tax expense.
The company's combined current and noncurrent deferred taxes at December 31,
1994 and 1993, consisted of the following deferred tax assets and
liabilities:
============================================================================
Deferred Tax Deferred Tax
Assets Liabilities
(in thousands) 1994 1993 1994 1993
- ----------------------------------------------------------------------------
Depreciation $54,595 $65,727
Employee benefit plans, including
deferred compensation $65,375 $58,505 4,223 3,542
Sales and product allowances 3,384 3,119
Unremitted foreign earnings 8,304 7,765
Write-down of investments 5,615 5,615
All other 6,771 6,200 1,352 1,478
- ----------------------------------------------------------------------------
Total deferred taxes $89,449 $81,204 $60,170 $70,747
============================================================================
The company has not established a deferred tax asset with respect to certain
foreign operating loss carryforwards which are not expected to be realized.
The components of income before income taxes and accounting changes were as
follows:
============================================================================
(in thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
Domestic $187,889 $154,298 $123,809
Foreign 150,923 131,942 110,528
- ----------------------------------------------------------------------------
$338,812 $286,240 $234,337
============================================================================
PAGE 36
The following is a reconciliation of income tax expense to the amount
derived by multiplying income before income taxes and the cumulative effect
of accounting changes by the statutory federal income tax rate of 35% in
1994 and 1993 and 34% in 1992.
============================================================================
% of % of % of
Income Income Income
Before Before Before
(in thousands) 1994 Taxes 1993 Taxes 1992 Taxes
- ----------------------------------------------------------------------------
Income before taxes
multiplied by statutory
federal income tax rate $118,584 35.0 $100,184 35.0 $ 79,675 34.0
State and foreign taxes
net of federal income
tax benefit 20,064 5.9 21,893 7.6 19,482 8.3
Amortization of excess of
cost over net assets of
businesses acquired 14,322 4.2 14,338 5.0 13,920 5.9
Other, net 4,662 1.4 2,278 0.9 2,869 1.3
- ----------------------------------------------------------------------------
$157,632 46.5 $138,693 48.5 $115,946 49.5
============================================================================
Income tax expense was as follows:
============================================================================
(in thousands) Federal State Foreign Total
- ----------------------------------------------------------------------------
1994:
Currently payable $124,330 $26,223 $16,441 $166,994
Deferred (7,408) 1,911 (3,865) (9,362)
- ----------------------------------------------------------------------------
Total $116,922 $28,134 $12,576 $157,632
============================================================================
1993:
Currently payable $102,588 $24,632 $15,075 $142,295
Deferred (9,357) 6,376 (621) (3,602)
- ----------------------------------------------------------------------------
Total $ 93,231 $31,008 $14,454 $138,693
============================================================================
1992:
Currently payable $ 98,792 $27,280 $ 8,810 $134,882
Deferred (16,848) (2,383) 295 (18,936)
- ----------------------------------------------------------------------------
Total $ 81,944 $24,897 $ 9,105 $115,946
============================================================================
Income tax payments were $161,551,000 in 1994, $142,988,000 in 1993 and
$135,180,000 in 1992.
PAGE 37
NOTE 8. STOCK PURCHASE, STOCK OPTION AND EXECUTIVE INCENTIVE PLANS
STOCK PURCHASE PLAN: Under the terms of the Dow Jones 1990 Employee Stock
Purchase Plan, eligible employees may purchase shares of the company's
common stock based on compensation through payroll deductions or lump-sum
payment. The purchase price for payroll deductions is the lower of 85% of
the fair market value of the stock on the first or last day of the purchase
period. Lump-sum purchases are made during the offering period at the lower
of 85% of the fair market value of the stock on the first day of the
purchase period or the payment date.
The activity in the plan was as follows:
===========================================================================
Shares Subscribed
--------------------------
Price 1994 1993
- ---------------------------------------------------------------------------
Balance, January 1 143,524 140,091
Shares subscribed 232,238 213,782
Purchases $23.70 to $26.56 (220,315) (200,711)
Terminated or canceled (10,037) (9,638)
- ---------------------------------------------------------------------------
Balance, December 31 145,410 143,524
===========================================================================
At December 31, 1994, there were 792,149 shares available for future
offerings.
STOCK OPTION PLAN: Under the Dow Jones 1991 Stock Option Plan, options for
shares of common stock may be granted to key employees at not less than the
fair market value of the common stock on the date of grant. Options expire
ten years from the date of grant.
EXECUTIVE INCENTIVE PLANS: The executive incentive plans provide for the
grant to key executives of stock options, performance awards, which were
suspended in 1992, and contingent stock rights. The incentive plans are
administered by the compensation committee of the Board of Directors, the
members of which may not participate in the plans.
The Dow Jones 1992 Long Term Incentive Plan provides for the grant to key
executives of stock options and contingent stock rights (collectively, "plan
awards"). Options for shares of common stock may be granted at not less
than the fair market value of the common stock on the date of grant. An
optionee may purchase shares upon exercise of an option or may surrender
exercisable options in return for an amount equal to any excess of the
market value over the option price on the day the option is surrendered.
Payment to the optionee for such stock appreciation rights may be made in
common stock, cash or a combination of both. Options expire ten years after
date of grant.
PAGE 38
Contingent stock rights entitle the participant to receive future payments
in the form of common stock. The number of shares of common stock
ultimately received will depend upon the extent to which specified
performance criteria are achieved over the performance period, the
participant's individual performance and other factors, all as determined by
the compensation committee. Accordingly, the number of shares received
could be less than or equal to the number specified in the right, but not
greater than 125% of that amount.
PAGE 39
The activity in the stock option and executive incentive plans was as follows:
=============================================================================
Stock Option Executive Incentive
Plan Plans
------------ ----------------------
Shares Shares Contingent
Option Under Under Stock
Prices Option Option Rights
- -----------------------------------------------------------------------------
Balance, December 31, 1991 2,207,462 660,417
Granted $32.88 and $41.09 693,150 98,000 94,200
Granted $28.38 and $35.47 751,200 116,000 109,100
Exercised $15.42 to $32.42 (226,924) (27,864)
Terminated/canceled (66,465) (39,058) (5,900)
Surrendered upon exercise
of stock appreciation
rights at $31.00 to $33.38 (1,515) (22,870)
- -----------------------------------------------------------------------------
Balance, December 31, 1992 3,356,908 784,625 197,400
Granted $35.13 and $43.91 518,600 99,300 88,200
Exercised $22.17 to $32.88 (608,220) (51,878)
Terminated/canceled (136,059) (8,611) (4,400)
Surrendered upon exercise
of stock appreciation
rights at $30.00 to $35.88 (13,117) (11,923)
- -----------------------------------------------------------------------------
Balance, December 31, 1993 3,118,112 811,513 281,200
Granted $30.00 and $37.50 648,100 98,200 135,900
Exercised $26.00 to $ 32.88 (390,058) (14,072)
Terminated/canceled (91,680) (2,321)
Surrendered upon exercise
of stock appreciation
rights at $39.38 to $40.88 (4,980) (7,359)
- -----------------------------------------------------------------------------
Balance, December 31, 1994 3,279,494 885,961 417,100
=============================================================================
Year granted:
1985 $28.83 and $31.75 53,429 16,588
1986 $32.42 98,315 30,645
1987 $54.25 82,420 23,783
1988 $32.00 140,790 44,102
1989 $32.50 197,835 81,637
1990 $28.13 226,660 134,906
1991 $26.00 334,405 153,600
1992 $32.88 and $41.09 519,140 89,700 86,300
1992 $28.38 and $35.47 497,600 113,500 106,700
1993 $35.13 and $43.91 488,400 99,300 88,200
1994 $30.00 and $37.50 640,500 98,200 135,900
- -----------------------------------------------------------------------------
3,279,494 885,961 417,100
=============================================================================
Available for future
grants, December 31, 1994 2,558,000 682,200
=============================================================================
PAGE 40
Under the stock option plan, options granted in 1994 become exercisable in
1995 and all other options granted were exercisable at December 31, 1994.
Under the executive incentive plans, options granted prior to 1991 become
exercisable and performance awards and contingent stock rights become payable
four years after they are granted. Fifty percent of the options granted in
1991 and thereafter become exercisable in the year following the year of
grant; the balance of the options granted become exercisable in the second
year following the year of grant.
Compensation expense was $943,000 in 1994, $2,826,000 in 1993 and $1,850,000
in 1992, with respect to both the stock option and executive incentive plans.
NOTE 9. PROFIT SHARING AND PENSION PLANS
The company and certain subsidiaries have profit sharing retirement plans for
a majority of employees who meet specified length of service requirements.
The annual cost of the plans, which are funded currently, is based upon a
percentage of consolidated net income, as defined, or compensation but is
limited to the amount deductible for income tax purposes.
Substantially all employees of subsidiaries who are not covered by the above
plans are covered by noncontributory defined benefit pension plans. These
plans are not material in respect to charges to operations.
Total profit sharing and pension plan expenses amounted to $46,768,000,
$44,805,000 and $42,157,000 in 1994, 1993 and 1992, respectively.
PAGE 41
NOTE 10. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS, AND POSTEMPLOYMENT
BENEFITS
For a majority of its employees, the company sponsors a defined benefit
postretirement medical plan which provides lifetime health care benefits to
retirees, who meet specified length of service and age requirements, and their
eligible dependents. The plan is unfunded. The company sponsors no
additional postretirement benefit plans other than its profit sharing and
pension plans (see Note 9).
As of January 1, 1992, the provisions of Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," were adopted. As a result, after-tax earnings for 1992 were
lowered $32.4 million, or $.32 per share, which was included in the cumulative
effect of accounting changes (see Note 1).
The following sets forth the plan's status reconciled with amounts reported
in the company's consolidated balance sheets at December 31.
===========================================================================
(in thousands) 1994 1993
- ---------------------------------------------------------------------------
Accumulated postretirement benefit obligation (APBO):
Retirees $20,665 $16,977
Fully eligible active plan participants 14,558 13,788
Other active plan participants 53,957 52,573
- ---------------------------------------------------------------------------
Total APBO as of December 31 89,180 83,338
Unrecognized net gain (loss) 1,864 (2,052)
- ---------------------------------------------------------------------------
Accrued postretirement benefit liability at
December 31 $91,044 $81,286
===========================================================================
Pretax postretirement benefit expense included the following components:
===========================================================================
(in thousands) 1994 1993 1992
- ---------------------------------------------------------------------------
Service cost $ 5,482 $ 4,850 $4,345
Interest cost 5,944 6,168 5,320
- ---------------------------------------------------------------------------
Net periodic postretirement benefit cost $11,426 $11,018 $9,665
===========================================================================
A 13% annual rate of increase in the per capita costs of covered health care
benefits was assumed for 1995, gradually decreasing to 6% by the year 2008
and remaining at that rate thereafter. Increasing the assumed health care
cost trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1994, by
$15.8 million and increase the aggregate of the service cost and interest
cost components of net periodic postretirement benefit cost for 1994 by $2.5
million. A discount rate of 8.25% was used to determine the accumulated
postretirement benefit obligation as of December 31, 1994.
PAGE 42
At December 31, 1993, the company's accumulated postretirement benefit
obligation was calculated using a discount rate of 7% and a health care cost
trend rate of 12.5% for 1994 decreasing to 5.5% by the year 2008.
Effective January 1, 1994, the company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits." Accordingly, the company recorded an after-tax charge of
$3,007,000, or three cents per share, as the cumulative effect of accounting
change as of the date of adoption. This change in accounting had no
material effect on 1994 operating expenses.
NOTE 11. COMMITMENTS
Commitments for capital expenditures amounted to $33,974,000 at December 31,
1994.
Noncancelable leases require minimum rental payments through 2011 totaling
$490,441,000. Payments required for the years 1995 through 1999 are as
follows:
============================================================================
(in thousands) 1995 1996 1997 1998 1999
- ----------------------------------------------------------------------------
$68,606 $65,433 $60,209 $52,330 $46,096
============================================================================
These leases are principally for office space and equipment and contain
renewal and escalation clauses. Total rental expense amounted to
$90,286,000 in 1994, $83,853,000 in 1993 and $82,382,000 in 1992.
At December 31, 1994, the company had foreign currency forward exchange
contracts settling on various dates through January 1996 to sell 6.5 billion
Japanese yen (against $67,827,000). Risk arises from movements in foreign
currency exchange rates and from the possible inability of counterparties to
meet the terms of their commitments, which the company views as unlikely.
The company has the obligation to furnish financial support in the form of
capital contributions, loans and loan guarantees up to a total of $18.6
million for certain of its investees. At December 31, 1994, loan guarantees
of $11,008,000 with remaining terms of up to eight and one-half years were
in effect. The company views it as unlikely that its investees will fail to
meet the terms of their obligations.
PAGE 43
NOTE 12. PER SHARE AMOUNTS
Net income per share has been computed on the basis of the weighted average
number of shares outstanding (99,002,000 shares in 1994, 99,773,000 shares
in 1993 and 101,150,000 shares in 1992). The assumed exercise of
outstanding options under the stock purchase, stock option and executive
incentive plans does not have a material dilutive effect on earnings per
share.
NOTE 13. RECLASSIFICATIONS
Certain amounts for prior years have been reclassified for comparative
purposes.
NOTE 14. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)
The summary of unaudited 1994 and 1993 quarterly financial data shown on
pages 49 and 50 of this report is incorporated herein by reference.
PAGE 44
NOTE 15. BUSINESS SEGMENTS
The company's operations by business segment and geographic area were as follows:
Financial Data by Business Segment
================================================================================================
Information Business Community
(in thousands) Services Publications Newspapers Corporate Consolidated
- ------------------------------------------------------------------------------------------------
Revenues
1994 $ 976,800 $862,009 $252,168 $2,090,977
1993 861,979 825,246 244,591 1,931,816
1992 809,387 773,753 234,730 1,817,870
Operating income
1994 198,950 141,614 36,166 $(18,413) 358,317
1993 157,406 143,654 32,563 (17,163) 316,460
1992 150,678 115,066 31,653 (16,706) 280,691
Identifiable assets (1)
1994 1,645,380 445,791 198,985 155,610 2,445,766
1993 1,652,394 361,265 199,248 136,632 2,349,539
1992 1,682,972 342,891 198,427 147,745 2,372,035
Depreciation and
amortization expense
1994 152,579 38,488 14,236 205,303
1993 138,639 37,044 12,982 188,665
1992 127,535 38,948 12,829 179,312
Capital expenditures
1994 121,973 88,982 11,479 222,434
1993 115,659 31,561 12,723 159,943
1992 99,258 14,532 11,836 125,626
Investments in associated
companies, at equity (2)
1994 53,758
1993 43,224
1992 41,250
Equity in earnings (losses)
of associated companies (2)
1994 1,875
1993 2,252
1992 (4,680)
=================================================================================================
NOTES:
(1) Corporate assets include cash and cash equivalents, investments in associated companies,
other investments and related deferred income taxes.
(2) Business publications -- F.F. Soucy, Inc. & Partners and Company, Limited and Bear Island
Paper Company, L.P., operators of newsprint mills located in Quebec, Canada and Richmond,
Virginia, respectively, and Bear Island Timberlands Co., L.P.
PAGE 45
Financial Data by Geographic Area
==============================================================================================
Europe
United Middle East Asia/ Other
(in thousands) States Africa Pacific Foreign Corporate Consolidated
- ----------------------------------------------------------------------------------------------
Revenues
1994 $1,489,014 $329,699 $225,143 $ 47,121 $2,090,977
1993 1,404,492 294,415 192,220 40,689 1,931,816
1992 1,321,190 278,835 178,398 39,447 1,817,870
Operating income
1994 234,479 61,031 78,547 2,673 $(18,413) 358,317
1993 207,435 53,343 70,471 2,374 (17,163) 316,460
1992 193,086 41,262 63,310 (261) (16,706) 280,691
Identifiable assets
1994 1,453,132 453,409 258,536 125,079 155,610 2,445,766
1993 1,379,222 459,768 251,851 122,066 136,632 2,349,539
1992 1,365,394 477,412 252,772 128,712 147,745 2,372,035
==============================================================================================
PAGE 46
NOTE 16. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following information presents the fair value of the company's financial
instruments which are not carried as such on the company's balance sheets.
The fair value of these financial instruments as of December 31, 1994 and
1993, was determined primarily by reference to dealer markets.
============================================================================
(in thousands) Fair Value Carrying Value
- ----------------------------------------------------------------------------
1994
Other Investments $ 71,842 $ 72,835
Long-Term Debt 294,886 295,552
- ----------------------------------------------------------------------------
1993
Other Investments $ 65,657 $ 55,009
Long-Term Debt 268,650 261,073
============================================================================
Nonspeculative forward exchange contracts, which hedge contracted revenue
streams from foreign currency exchange rate fluctuations, are not recorded
on the company's consolidated balance sheets (see Note 1). The fair value
of forward exchange contracts at December 31, 1994, was $66,367,000 against
a contracted value of $67,827,000, yielding a deferred gain of $1,460,000.
The fair value as of December 31, 1993, of forward exchange contracts then
in effect was $59,030,000 against a contracted value of $59,501,000,
representing a deferred gain of $471,000.
PAGE 47
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Dow Jones & Company, Inc.:
We have audited the accompanying consolidated balance sheets of Dow Jones &
Company, Inc. and Subsidiaries as of December 31, 1994 and 1993, and the
related consolidated statements of income, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1994.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and the
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Dow Jones &
Company, Inc. and Subsidiaries as of December 31, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.
As discussed in Notes 7 and 10 to the consolidated financial statements, the
company changed its method of accounting for income taxes and postretirement
benefits other than pensions effective January 1, 1992, and postemployment
benefits effective January 1, 1994.
COOPERS & LYBRAND L.L.P.
New York, New York
January 24, 1995
PAGE 48
STATEMENT OF MANAGEMENT RESPONSIBILITY FOR FINANCIAL STATEMENTS
To the Stockholders of Dow Jones & Company, Inc.:
Management has prepared and is responsible for the consolidated financial
statements and related information in the Annual Report. The financial
statements, which include amounts based on judgment, have been prepared in
conformity with generally accepted accounting principles consistently
applied.
Management has developed, and in 1994 continued to strengthen, a system of
internal accounting and other controls for the company and its wholly owned
subsidiaries. Management believes these controls provide reasonable
assurance that assets are safeguarded from loss or unauthorized use and that
the company's financial records are a reliable basis for preparing the
financial statements. Underlying the concept of reasonable assurance is the
premise that the cost of control should not exceed the benefit derived. The
company's system of internal controls is supported by written policies, a
program of internal audits, including a periodic independent review of the
Internal Audit Department, and by a program of selecting and training
qualified staff.
Coopers & Lybrand L.L.P., independent accountants, have audited the
company's consolidated financial statements, as described in their report.
The report expresses an independent opinion of the fairness of presentation
of the financial statements and, in so doing, provides an independent
objective assessment of the manner in which management meets its
responsibility for fairness and accuracy in financial reporting.
The Board of Directors, through its audit committee consisting solely of
outside directors, is responsible for reviewing and monitoring the company's
financial reporting and accounting practices. The audit committee meets
regularly with management, internal auditors and independent accountants -
both separately and together. The internal auditors and the independent
accountants have free access to the audit committee to review the results of
their audits, the adequacy of internal accounting controls and the quality
of financial reporting.
PAGE 49
QUARTERLY CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Dow Jones & Company, Inc.
For the fourth quarters ended December 31, 1994 and 1993
============================================================================
(in thousands except per share amounts) 1994 1993
- ----------------------------------------------------------------------------
REVENUES:
Information services $260,557 $223,459
Advertising 206,145 192,581
Circulation and other 99,886 96,614
- ----------------------------------------------------------------------------
Total revenues 566,588 512,654
- ----------------------------------------------------------------------------
EXPENSES:
News, operations and development 180,449 158,861
Selling, administrative and general 171,731 155,898
Newsprint 31,063 26,767
Second class postage and carrier delivery 25,207 25,581
Depreciation and amortization 54,445 43,984
- ----------------------------------------------------------------------------
Operating expenses 462,895 411,091
- ----------------------------------------------------------------------------
Operating income 103,693 101,563
OTHER INCOME (DEDUCTIONS):
Investment income 1,391 1,319
Interest expense (4,595) (5,213)
Equity in income (losses) of associated companies 1,733 (1,147)
Other, net (Note 2) 508 (8,178)
- ----------------------------------------------------------------------------
Income before income taxes 102,730 88,344
Income taxes 44,498 41,200
- ----------------------------------------------------------------------------
NET INCOME $ 58,232 $ 47,144
============================================================================
PER SHARE:
Net income $.60 $.47
- ----------------------------------------------------------------------------
Cash dividends $.21 $.20
============================================================================
Weighted average shares outstanding 97,221 99,571
============================================================================
PAGE 50
SUMMARY OF QUARTERLY FINANCIAL DATA
(UNAUDITED)
Dow Jones & Company, Inc.
===========================================================================
Quarters Ended
(in thousands except --------------------------------------
per share amounts) March 31 June 30 Sept. 30 Dec. 31 Year
- ---------------------------------------------------------------------------
1994
Revenues $499,212 $524,153 $501,024 $566,588 $2,090,977
Operating income 88,750 96,273 69,601 103,693 358,317
Net income 40,175 46,020 33,746 58,232 178,173
Net income per share .40 .46 .34 .60 1.80
- ---------------------------------------------------------------------------
1993
Revenues $463,435 $487,043 $468,684 $512,654 $1,931,816
Operating income 65,350 81,624 67,923 101,563 316,460
Net income 30,946 39,807 29,650 47,144 147,547
Net income per share .31 .40 .30 .47 1.48
===========================================================================
Statement of Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits," was adopted effective January 1, 1994.
Excluding the net effect of this change, net income was $43,182,000, or
$.43 per share, in the first quarter of 1994 and $181,180,000, or $1.83 per
share, for the year (see Note 1).
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
PART III.
ITEM 10. Directors and Executive Officers of the Registrant.
The information required by this item with respect to directors of
the company is incorporated by reference to the tables, including the
footnotes thereto, appearing on pages 8 to 10 of the 1995 Proxy Statement
and to the material in footnote 5 on page 5 of the 1995 Proxy Statement.
The information required by this item with respect to compliance with
Section 16(a) of the Securities Exchange Act of 1934 is incorporated by
reference to the material on pages 21 to 22 of the 1995 Proxy Statement
under the caption "Compliance with Section 16(a) of the Exchange Act." For
the information required by this item relating to executive officers, see
Part I, page 13.
PAGE 51
ITEM 11. Executive Compensation.
The information required by this item is incorporated by reference to
the tables, including the footnotes thereto, appearing under the caption
"Executive Compensation" on pages 11 to 13 of the 1995 Proxy Statement and
to the material appearing on page 10 of the 1995 Proxy Statement in the two
paragraphs immediately following footnote 5 on page 10.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is incorporated by reference to
the tables, including the footnotes thereto, appearing on pages 2 to 6 of
the 1995 Proxy Statement under the captions "Security Ownership of Certain
Beneficial Owners" and "Security Ownership of Directors and Management."
ITEM 13. Certain Relationships and Related Transactions.
The information required by this item is incorporated by reference to
footnote 2 on page 9 of the 1995 Proxy Statement and to footnotes 4 and 5
on page 10 of the 1995 Proxy Statement.
PAGE 52
PART IV.
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
14 (a) (1) Financial Statements:
Page
Reference
---------
Included in Part II, Item 8 of this report:
Consolidated statements of income for the years
ended December 31, 1994, 1993 and 1992 25
Consolidated balance sheets, December 31, 1994 and 1993 26-27
Consolidated statements of cash flows for the
years ended December 31, 1994, 1993 and 1992 28-29
Consolidated statements of stockholders' equity for the
years ended December 31, 1994, 1993 and 1992 30
Notes to financial statements 31-46
Report of independent accountants 47
(a) (2) Financial Statement Schedules:
Included in Part IV of this report:
Report and consent of independent accountants 57
II - Valuation and qualifying accounts and reserves 58
Other schedules have been omitted since they are either not required or
not applicable.
PAGE 53
(a) (3) Exhibits
Exhibit
Number Document
------- --------
3.1 The Restated Certificate of Incorporation of the Company, as
amended, is hereby incorporated by reference to Exhibit 19.1 to
its Form 10-Q for the quarter ended March 31, 1988.
3.2 The Bylaws of the Company is hereby incorporated by reference to
Exhibit 19.2 to its Form 10-Q for the quarter ended September 30,
1987.
4.1 Form of promissory note for commercial paper is hereby
incorporated by reference to Exhibit 4.1 to its Form 10-Q for the
quarter ended September 30, 1985.
10.1 Deferred Compensation Contracts between the Company and various
officers and directors are hereby incorporated by reference to
Exhibit 20 to its Form 10-K for the year ended December 31, 1980.
10.2 Dow Jones 1981 Stock Option Plan, as amended, is hereby
incorporated by reference to Exhibit 20.2 to its Form 10-Q for the
quarter ended June 30, 1981.
10.3 Dow Jones 1983 Executive Incentive Plan, as amended, is hereby
incorporated by reference to Exhibit 10.3 to its Form 10-K for the
year ended December 31, 1983.
10.4 Lease, as amended, between the Company and Olympia and York
Battery Park Company, of space in The World Financial Center, New
York City, is hereby incorporated by reference to Exhibit 10.9 to
its Form 10-K for the year ended December 31, 1983.
10.5 Dow Jones 1988 Executive Incentive Plan, as amended, is hereby
incorporated by reference to Exhibit 19 to its Form 10-Q for the
quarter ended June 30, 1988.
10.6 Lease, as amended, between the Company and Waterfront Associates,
of space at Harborside Plaza Two, Jersey City, N.J. is hereby
incorporated by reference to Exhibit 10.15 to its Form 10-K for
the year ended December 31, 1989.
10.7 Dow Jones 1991 Stock Option Plan, as amended, is hereby
incorporated by reference to Exhibit 19.2 to its Form 10-Q for the
quarter ended September 30, 1991.
PAGE 54
Exhibit
Number Document
------- --------
10.8 Dow Jones 1992 Long Term Incentive Plan is hereby incorporated by
reference to Exhibit 10 to its Form 10-Q for the quarter ended
March 31, 1992.
* 10.9 Dow Jones Credit Agreement dated November 16, 1994 between the
Company and Chemical Bank.
11 Computation of Earnings Per Share.
21 List of Subsidiaries.
23 Consent of Coopers & Lybrand, independent accountants, is
contained on page 57 of this report.
* 27 Financial Data Schedule
* Securities and Exchange Commission and New York Stock Exchange copies
only.
(b) No reports on Form 8-K were filed during the last quarter of the
1994 fiscal year.
PAGE 55
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DOW JONES & COMPANY, INC.
By Thomas G. Hetzel
-------------------------
Comptroller
(Chief Accounting Officer)
Dated: March 22, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Peter R. Kann
- -------------------------- Chairman of the Board March 22, 1995
Chief Executive Officer
Kenneth L. Burenga
- -------------------------- President March 22, 1995
Chief Operating Officer
Kevin J. Roche
- -------------------------- Vice President/Finance March 22, 1995
Chief Financial Officer
Carl M. Valenti
- -------------------------- Director March 22, 1995
James H. Ottaway Jr.
- -------------------------- Director March 22, 1995
Rene C. McPherson
- -------------------------- Director March 22, 1995
PAGE 56
Signature Title Date
- --------- ----- ----
Martha S. Robes
- --------------------------- Director March 22, 1995
James Q. Riordan
- --------------------------- Director March 22, 1995
Bettina Bancroft
- --------------------------- Director March 22, 1995
Irvine O. Hockaday Jr.
- --------------------------- Director March 22, 1995
Richard D. Wood
- --------------------------- Director March 22, 1995
William C. Cox Jr.
- --------------------------- Director March 22, 1995
Vernon E. Jordan Jr.
- --------------------------- Director March 22, 1995
Warren H. Phillips
- --------------------------- Director March 22, 1995
Rand V. Araskog
- --------------------------- Director March 22, 1995
Carlos Salinas de Gortari
- --------------------------- Director March 22, 1995
PAGE 57
INDEPENDENT ACCOUNTANTS' REPORT ON FINANCIAL STATEMENT SCHEDULES
-----------------------
To the Board of Directors and Stockholders
of Dow Jones & Company, Inc.:
Our report on the consolidated financial statements of Dow Jones & Company,
Inc. and its Subsidiaries is included on page 47 of this 1994 Form 10-K. In
connection with our audits of such financial statements, we have also
audited the related financial statement schedules listed in the index on
page 52 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
New York, New York
January 24, 1995
CONSENT OF INDEPENDENT ACCOUNTANTS
-----------------------
We consent to the incorporation by reference in the Registration Statements
on Form S-3 (File Nos. 33-575 and 33-32110) and Form S-8 (File Nos.
2-72684, 2-95540, 33-35211, 33-45962, 33-45963, 33-49311 and 33-55079) of
Dow Jones & Company, Inc. of our report dated January 24, 1995 appearing on
page 47 of this 1994 Form 10-K. We also consent to the incorporation by
reference of our report on the financial statement schedules, which appears
above.
COOPERS & LYBRAND L.L.P.
New York, New York
March 22, 1995
PAGE 58
Schedule II
DOW JONES & COMPANY, INC.
and its Subsidiaries
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 1994, 1993 and 1992
(in thousands)
Additions
------------------------
Balance at Charged to Charged Balance
Beginning Cost and to Other at End
Description of Period Expenses Accounts(A) Deductions(B) of Period
----------- --------- --------- ---------- ------------ ---------
Year ended December 31, 1994:
Reserves deducted from assets -
allowance for doubtful accounts $14,548 $ 7,169 $2,002 $ 8,849 $14,870
======= ======= ====== ======= =======
Year ended December 31, 1993:
Reserves deducted from assets -
allowance for doubtful accounts $16,443 $ 5,582 $1,520 $ 8,997 $14,548
======= ======= ====== ======= =======
Year ended December 31, 1992:
Reserves deducted from assets -
allowance for doubtful accounts $18,881 $11,112 $2,830 $16,380 $16,443
======= ======= ====== ======= =======
Notes:
(A) Recoveries of accounts previously written off and reductions of revenue.
(B) Accounts written off as uncollectible.