Dow Jones Reports Fourth Quarter and Full Year 2004 Results; Provides

    Business Editors

    NEW YORK--(BUSINESS WIRE)--Jan. 27, 2005--Dow Jones & Company (NYSE: DJ) today reported that it earned 43 cents per diluted share during the fourth quarter of 2004, compared with 54 cents per diluted share in the fourth quarter of 2003. Excluding the special items explained herein, the Company earned 43 cents per diluted share during the fourth quarter of 2004 and 43 cents per diluted share in the fourth quarter of 2003.
    Revenue of $437.2 million in the fourth quarter of 2004 was up 3.9% over the fourth quarter of 2003 while operating income declined 6.5% to $51.7 million. Operating income excluding special items increased 5.6% and was 13.4% of revenue in the fourth quarter of 2004.
    Special Items: In the fourth quarter of 2004, the Company recorded special items netting to zero as a special gain of seven cents per share related to a tax benefit was offset by a loss of five cents per share for a restructuring charge and a two cent per share loss for accretion of discount on a contract-guarantee obligation. In the fourth quarter of 2003, special items netted to a gain of 11 cents per share and included a gain of 14 cents per share on the exchange of an equity interest for The Wall Street Journal Europe, partially offset by a charge of 3 cents per share for accretion of discount on a contract-guarantee obligation.
    For the full year 2004, earnings were $1.21 per share, compared to $2.08 per share in 2003. Excluding the special items contained herein, earnings in 2004 of $1.21 per share were up 26.0% over 96 cents per share in 2003. Operating income was $162.2 million compared to 2003's $142.9 million. Excluding special items, operating income was up 33.4% from the same period last year and operating margins improved to 9.9% from 8.0% last year. Please refer to the attached financial exhibits and notes for more details on the Company's results.
    Commenting on fourth quarter results, Peter R. Kann, chairman and chief executive officer of Dow Jones, said: "We're pleased to have increased revenue, profit and margins in the quarter and the year in light of the continuing difficult B2B print advertising environment. In 2004, we set the stage for future growth as we controlled costs, improved the quality of our products and invested in our future. Last week's acquisition of MarketWatch and our planned September 2005 launch of the Weekend Edition of the Journal are the two most recent examples. These major initiatives are pillars of our new three-year strategic plan. Both will fuel profitable growth while also diversifying our reliance on B2B print advertising."
    Dow Jones said it estimates first quarter 2005 earnings per share before special items to be in the range of 12 to 15 cents per share before dilution from Weekend Edition and MarketWatch, compared to the 22 cents per share earned in the first quarter of 2004. After dilution from Weekend Edition and MarketWatch, the Company expects first quarter 2005 earnings per share in the range of 7 to 10 cents per share. This assumes first quarter 2005 linage at the U.S. Wall Street Journal will be down in the upper single digit percentage range compared to the first quarter of 2004. Based on currently anticipated special items in the first quarter of 2005, the Company expects reported earnings per share to be in the 5 to 8 cents per share range, compared with 22 cents per share in the first quarter of 2004. Please refer to the attached table for a reconciliation of the Company's first quarter earnings before and after special items.

    Segment Results

    Print Publishing revenue of $247.9 million in the fourth quarter of 2004 declined 2.1% versus the same period a year ago. Advertising linage at the U.S. Wall Street Journal decreased 5.1% (down 9.9% in December with one additional issue) while linage at the international editions of the Journal decreased 8.6% (down 12.6% in December). Barron's advertising pages increased 10.7% in the quarter (down 22.1% in December with one less issue). Operating income increased 40.1% to $26.2 million from the same period last year primarily due to tight cost control. Operating margin of 10.6% was up over the previous year's 7.4%.
    Electronic Publishing revenue of $101 million in the fourth quarter of 2004 increased 20.9% from the same period a year ago, driven by the acquisitions of Alternative Investor Group and vwd, together with increased revenue in all electronic publishing business units. Operating income of $15.9 million in the fourth quarter of 2004 fell 11.1% from the same period last year mainly due to reduced profits at Newswires, which more than offset strong profit growth at both Consumer Electronic Publishing and Indexes. Operating margin of 15.7% in the fourth quarter of 2004 was down from the previous year's 21.4%. Terminal counts at Newswires were up 1.7% compared to last year. Paid subscribers to The Wall Street Journal Online grew to 712,000 as of December 31, 2004, up 3.3% from the prior year period.
    Ottaway Community Newspapers' revenue of $88.3 million in the fourth quarter of 2004 increased 5.0% from the same period a year ago. Operating income of $23.5 million was down 6.6% and operating margin was 26.6% versus 29.9% last year due to higher newsprint prices and investments in a new internet initiative and content management system. Advertising linage increased 2.4% in the fourth quarter (linage was up 6.6% in December).
    The Company ended the fourth quarter with $146 million in debt, compared with $197 million at the end of the third quarter of 2004 and $153 million at the end of the fourth quarter of 2003. In January 2005, the Company incurred an additional $440 million in debt relating to its acquisition of MarketWatch.
    As previously announced, the Company will host an earnings conference call at 10 a.m. EST today. The call can be accessed via a live Web cast through the Investor Relations section of the Company's Web site, www.dowjones.com, or through a listen-only, dial-in conference line, by dialing 877-407-3140. A replay of the conference call and the full text of the prepared remarks will be available on the Company's Web site in the Investor Relations section shortly after the call concludes.
    Dow Jones & Company (NYSE: DJ; dowjones.com) publishes The Wall Street Journal and its international and online editions, Barron's and the Far Eastern Economic Review, Dow Jones Newswires, Dow Jones Indexes, MarketWatch and the Ottaway group of community newspapers. Dow Jones is co-owner with Reuters Group of Factiva, with Hearst of SmartMoney and with NBC Universal of CNBC television operations in Asia and Europe. Dow Jones also provides news content to CNBC and radio stations in the U.S.

    Information Relating To Forward-Looking Statements:

    This press release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those anticipated: including the cyclical nature of the Company's business and the strong, negative impact of economic downturns on advertising revenues, particularly in the Company's core advertising market-B2B advertising; the risk that inconsistent trends across major advertising categories, such as technology and finance, will continue; the risk that advertising levels will not return to the pre-boom, pre-bust levels; the Company's ability to limit and manage expense growth, especially in light of its prior cost cutting and its planned growth initiatives; intense competition for ad revenues and readers the Company's products and services face; the Company's ability to expand and diversify the Journal's market segment focus beyond financial and technology; the Company's ability to successfully integrate the MarketWatch business into its existing business units, and to achieve production and operational efficiencies and synergies in doing so; with respect to Newswires and other subscription-based products and services, the negative impact of business consolidations and layoffs in the financial services industry on sales; the uncertainties relating to the Company's guarantee to Cantor Fitzgerald Securities and Market Data Corporation; and such other risk factors as may be included from time to time in the Company's reports filed with the Securities and Exchange Commission and posted in the Investor Relations section of the Company's web site (www.dowjones.com). This press release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, we have attached to this press release a reconciliation of those measures to the most directly comparable GAAP measures. This reconciliation is also available on the Investor Relations page of our web site (www.dowjones.com).

Dow Jones & Company Earnings Summary 6 (Unaudited)

(in thousands, except per share amounts) Quarters Ended Twelve Months Ended December 31 December 31 -------------- ------------------- 2004 2003 2004 2003 ---- ---- ---- ----

Reported results: Revenues $437,155 $420,723 $1,671,458 $1,548,485

Operating income 51,697 55,294 162,174 142,913

Net income 35,624 44,252 99,548 170,599

Effective tax rate* 28.0% 39.5% 37.0% 23.3%

Diluted EPS $ .43 $ .54 $ 1.21 $ 2.08

Excluding items described in Note 3: Operating income $58,390 $55,294 $166,106 $124,505

Net income 35,476 35,030 99,871 78,350

Effective tax rate* 38.5% 38.1% 39.7% 38.9%

Diluted EPS $ .43 $ .43 $ 1.21 $ .96

EPS percentage change - 26.5% 26.0% 29.7%

* The effective income tax rate is net of minority interests.

See notes to financial information on page 11.

Reconciliation of First Quarter Earnings Outlook

Quarters Ended March 31, 2005 Guidance 2004 Actual ------------------------------

5 to 8 cents Reported earnings per share per share $.22 Adjusted to remove: Contract guarantee (.02) (.02) Reversal of lease obligation reserve - WFC ____________ .02 ---- EPS before special items 7 to 10 cents per share $.22 =====

** Based on special items currently anticipated.

Condensed Consolidated Statements of Income 7 (Unaudited)

(in thousands, except per share amounts) Quarters Ended Twelve Months Ended December 31 December 31 ------------------------------------ 2004 2003 2004 2003 ---- ---- ---- ----

Revenues: Advertising $251,642 $249,084 $946,325 $871,817 Information services 86,457 72,669 328,708 286,863 Circulation and other 99,056 98,970 396,425 389,805 -------------------------------------- Total revenues 437,155 420,723 1,671,458 1,548,485 --------------------------------------

Expenses: News, production and technology 127,143 125,847 513,808 483,709 Selling, administrative and general 150,688 139,591 584,714 540,529 Newsprint 30,107 28,095 115,067 105,066 Print delivery costs 45,571 47,133 186,856 188,662 Depreciation and amortization 25,256 24,763 104,907 106,014 Restructuring charges and September 11 related items, net 6,693 _______ 3,932 (18,408) --------- -------------------- Operating expenses 385,458 365,429 1,509,284 1,405,572 --------------------------------------

Operating income 51,697 55,294 162,174 142,913

Other income (deductions): Investment income 188 260 520 7,771 Interest expense (1,328) (968) (3,740) (2,830) Equity in earnings of associated companies 989 2,563 2,375 2,869 Gain on disposition/exchange of investments 18,699 3,260 18,699 Gain on resolution of Telerate sale loss contingencies 59,821 Contract guarantee (1,478) (2,148) (6,933) (9,523) Other, net (1,065) (771) (1,571) 1,138 --------------------------------------

Income before income taxes and minority interests 49,003 72,929 156,085 220,858 Income taxes 13,884 28,863 58,578 51,704 --------------------------------------

Income before minority interests 35,119 44,066 97,507 169,154 Minority interests 505 186 2,041 1,445 --------------------------------------

Net income $ 35,624 $ 44,252 $ 99,548 $ 170,599 ======================================

Net income per share: - Basic $.43 $.54 $1.22 $2.09 - Diluted .43 .54 1.21 2.08 Weighted-average shares outstanding: - Basic 82,014 81,664 81,878 81,593 - Diluted 82,397 82,201 82,285 81,950

See notes to financial information on page 11.

Dow Jones & Company Segment Information 8 (Unaudited)

(dollars in thousands) Quarters Ended Twelve Months Ended December 31 December 31 -------------------------------------- 2004 2003 2004 2003 ---- ---- ---- ----

Revenues: Print publishing $247,893 $253,173 $948,833 $915,468 Electronic publishing 100,954 83,481 381,181 322,032 Community newspapers:* Comparable operations 88,308 84,069 325,483 307,952 Newly-acquired operations _______ _______ 15,961 3,033

Consolidated revenues $437,155 $420,723 $1,671,458 $1,548,485 ========================================

Percentage change in revenues excluding newly-acquired operations 1.5% 3.5% 4.9% (1.1)%

Operating income (loss): Print publishing $26,161 $18,677 $31,485 $8,079 Electronic publishing 15,882 17,859 79,034 67,871 Community newspapers:* Comparable operations 23,491 25,146 85,317 80,224 Newly-acquired operations 3,798 769 Corporate (7,144) (6,388) (33,528) (32,438) ----------------------------------------

Segment operating income 58,390 55,294 166,106 124,505 Restructuring charges and September 11 related items, net (6,693) _______ (3,932) 18,408 --------- ---------- --------

Consolidated operating income $51,697 $55,294 $162,174 $142,913 ========================================

Operating margin: Print publishing 10.6% 7.4% 3.3% 0.9% Electronic publishing 15.7 21.4 20.7 21.1 Community newspapers:* Comparable operations 26.6 29.9 26.2 26.1 Newly-acquired operations 23.8 25.4

Segment operating margin 13.4% 13.1% 9.9% 8.0%

Depreciation and amortization (D&A): Print publishing $15,397 $15,354 $65,335 $67,054 Electronic publishing 6,828 6,142 27,732 26,263 Community newspapers:* Comparable operations 2,990 3,051 10,889 11,887 Newly-acquired operations 786 163 Corporate 41 216 165 647 ----------------------------------------

Consolidated D&A $25,256 $24,763 $104,907 $106,014 ======================================== * Amounts in 2003 have been reclassified between comparable operations and newly-acquired operations to conform with comparable operations in 2004.

See notes to financial information on page 11.

Dow Jones & Company Supplemental Segment Revenue Information 9 (Unaudited)

(in thousands) Quarters Ended Twelve Months Ended December 31 December 31 ----------------------------------------- 2004 2003 2004 2003 ---- ---- ---- ----

Print Publishing: U.S. Publications: Advertising $161,719 $163,606 $606,649 $570,351 Circulation and other 65,568 66,026 260,375 263,300

International Publications: Advertising 12,555 14,402 48,630 47,674 Circulation and other 8,051 9,139 33,179 34,143 ----------------------------------------

Total 247,893 253,173 948,833 915,468

Electronic Publishing: Dow Jones Newswires: Domestic 49,006 42,296 192,375 170,267 International 14,770 10,632 55,698 42,803 ---------------------------------------- Total Newswires (1) 63,776 52,928 248,073 213,070 Consumer Electronic Publishing (2) 22,390 19,509 79,710 68,716 Dow Jones Indexes/Ventures 14,788 11,044 53,398 40,246 ----------------------------------------

Total 100,954 83,481 381,181 322,032

Community Newspapers: (3) Advertising Comparable operations 66,998 62,522 242,249 224,845 Newly-acquired operations _______ _______ 13,517 2,616 ---------------------- Total advertising 66,998 62,522 255,766 227,461

Circulation and other Comparable operations 21,310 21,547 83,234 83,107 Newly-acquired operations _______ _______ 2,444 417 ---------------------- Total circulation and other 21,310 21,547 85,678 83,524

Total 88,308 84,069 341,444 310,985 ----------------------------------------

Total segment revenues $437,155 $420,723 $1,671,458 $1,548,485 ========================================

(1) The increase in Dow Jones Newswires revenue in the fourth quarter and twelve months of 2004 was largely due to acquisitions.

(2) Includes WSJ.com, related vertical sites, licensing/business development and radio/audio.

(3) Amounts in 2003 have been reclassified between comparable operations and newly-acquired operations to conform with comparable operations in 2004.

See notes to financial information on page 11.

Dow Jones & Company Statistical Information 10 (Unaudited)

Quarters Ended Twelve Months December 31 Ended December 31 ------------------------------------ Advertising Volume Year-Over-Year Percentage Change: 2004 2003 2004 2003 ---- ---- ---- ----

The Wall Street Journal General 0.9% 2.2% 2.5% (0.6)% Technology (26.8) 13.8 (24.1) (2.7) Financial (8.7) 7.0 7.0 (15.8) Classified 6.4 19.9 8.9 14.1 Total (5.1) 8.1 (0.5) (1.3)

The Asian Wall Street Journal (2.7) (12.6) (3.3) 2.0 The Wall Street Journal Europe (14.1) (5.3) (3.5) 9.3 Barron's 10.7 (14.0) 11.7 (16.0)

Ottaway Newspapers (*) Daily 2.7 (3.9) 2.9 (2.5) Non-daily 1.3 5.6 10.1 2.9 Total 2.4 (2.2) 4.2 (1.6)

Wall Street Journal advertising as a percentage of total Journal linage: General 47.1% 44.3% 43.3% 41.9% Technology 14.6 19.0 14.9 19.6 Financial 17.6 18.2 18.3 17.0 Classified 20.7 18.5 23.5 21.5

December 31 December 31 Other statistics: 2004 2003 ---- ----

Dow Jones Newswires terminals 298,000 293,000 WSJ.com subscribers 712,000 689,000 WSJ.com unique visitors/business day 153,000 125,000 Average monthly unique visitors to the Journal Network (**) 6,074,000 n/a Average monthly page views to the Journal Network (**) 83,904,000 n/a

(*) Percentages exclude divested/newly-acquired operations.

(**) Beginning in the second quarter of 2004, page views and unique visitors statistics for the Journal Network have been calculated using a new measurement technology. Prior year figures are not available on a comparable basis. The Journal Network consists of WSJ.com and related vertical sites.

Dow Jones & Company Notes to Financial Information 11

    1. The Company's calculation of net income, operating income and earnings per share excluding special items may not be comparable to similarly titled measures reported by other companies, since companies and investors may differ as to what type of events warrant adjustment. Net income, operating income and earnings per share excluding special items are not measures of performance under generally accepted accounting principles and should not be construed as substitutes for consolidated net income, operating income and earnings per share as a measure of performance. However, management uses these measures in comparing the Company's historical performance and believes that they provide meaningful and comparable information to investors to assist in their analysis of the Company's performance relative to prior periods and its competitors.
    2. The Company made the following acquisitions during 2004 and 2003.

    Acquisition of Remaining Interest in VWD news operations in 2004

    On April 2, 2004, the Company acquired the remaining interest in the news operations of Vereinigte Wirtschaftsdienste GmbH ("VWD"), a German newswires business, for $12.1 million. The acquired business consists of financial newswires and business newsletters, which have been combined into the Company's Dow Jones Newswires business, under the brand name Dow Jones-VWD News. Dow Jones was a minority shareholder in VWD.

    Acquisition of Alternative Investor in 2004

    On March 19, 2004, the Company completed its acquisition of Alternative Investor from Wicks Business Information for $85 million plus net working capital. The $85 million purchase price could be increased by $5 million, payable in 2008, based on the performance of the acquired business. The acquisition was funded by the issuance of debt under the Company's commercial paper program.
    Alternative Investor is a provider of newsletters, databases and industry conferences for the venture-capital and private-equity markets, and has been combined into the Company's Dow Jones Newswires business.

    Acquisition of The Record of Stockton, California in 2003

    On May 5, 2003, the Company's Ottaway Newspaper subsidiary acquired The Record of Stockton, California from Omaha World-Herald Company for $144 million in cash, plus net working capital.

Dow Jones & Company Notes to Financial Information 12

3. The following table reconciles reported results to income adjusted for special items for the fourth quarter and the twelve months ended December 31, 2004 and 2003.

Quarters Ended December 31 -------------------------- (in millions, except per share 2004 2003 amounts) Operating Net EPS Operating Net EPS --------- ---- --- --------- ---- ---

Reported income $51.7 $35.6 $.43 $55.3 $44.3 $.54

Adjusted to remove: Included in operating income: Restructuring charges (a) (6.7) (4.0) (.05) Included in non-operating income: Contract guarantee (b) (1.5) (.02) (2.1)(.03) Gain on non-monetary exchange of interests in WSJ Europe and Handelsblatt (c) 11.4 .14 Certain income tax matters (d) ____ 5.7 .07 ____ ____ ___ ------- ----- Adjusted $58.4 $35.5* $.43 $55.3 $35.0 $.43 ======================================

Twelve Months Ended December 31 ----------------------------------- (in millions, except per share 2004 2003 amounts) Operating Net EPS Operating Net EPS --------- ---- --- --------- ---- ---

Reported $162.2 $99.5 $1.21 $142.9 $170.6 $2.08

Adjusted to remove: Included in operating income: Restructuring charges(a) (6.7) (4.0) (.05) Reversal of lease obligation reserve - WFC (a) 2.8 1.7 .02 Gain from business interruption insurance claim (a) 18.4 11.1 .14 Included in non- operating income: Contract guarantee (b) (6.9) (.08) (9.5) (.12) Gain on non-monetary exchange of interests in WSJ Europe and Handelsblatt (c) 11.4 .14 Gain on resolution of Telerate sale loss contingencies (e) 59.8 .73 Gain on disposition of investment (f) 1.8 .02 Certain income tax matters (d) _____ 7.2 .09 _____ 19.5 .24 ---------------------------------------- Adjusted $166.1 $99.9* $1.21 $124.5 $78.4* $.96* ========================================= * The sum of the individual amounts does not equal the total due to rounding.

Dow Jones & Company Notes to Financial Information 13

    (a) Restructuring charges and September 11 related items, net:

    2004

    Restructuring

    In the fourth quarter of 2004, the Company recorded a restructuring charge of $6.7 million ($4.0 million after taxes, or $.05 per diluted share) primarily reflecting employee severance related to a workforce reduction of about 100 employees. This charge principally related to the Company's decision to restructure the Far Eastern Economic Review as a monthly periodical beginning in December 2004, with the balance related to headcount reductions in circulation and international operations.

    Reversal of lease obligation reserve - World Financial Center (WFC):

    In the fourth quarter 2001, the Company recorded a charge of $32.2 million as a result of its decision to permanently re-deploy certain personnel and abandon four of seven floors that were leased at its World Financial Center headquarters. This charge primarily reflected the Company's rent obligation through 2005 on this vacated space.

    In the first quarter 2004, the Company decided to extend the term of its lease for one of the floors that was previously abandoned and re-occupy this floor with personnel from another New York location, whose lease term was expiring. As a result, the Company reversed $2.8 million ($1.7 million, after taxes, or $.02 per diluted share) of the remaining lease obligation reserve of the previously abandoned floor at WFC.

    2003

    Gain from business interruption insurance claim

    In the second quarter of 2003, the Company recorded a gain of $18.4 million ($11.1 million after taxes, or $.14 per diluted share) reflecting the settlement of its business interruption insurance claim for loss of operating income suffered as a result of the terrorist attacks on the World Trade Center on September 11, 2001

    (b) Contract guarantee:

    Under the terms of the Company's 1998 sale of Telerate to Bridge Information Systems (Bridge), Dow Jones retained its guarantee of payments under certain circumstances of certain minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). The annual minimum payments average approximately $50 million per year through October 2006 under certain conditions. Bridge agreed to indemnify Dow Jones for any liability Dow Jones incurred under the contract guarantee with respect to periods subsequent to Bridge's purchase of Telerate. In 2000, based in part on uncertainty with Bridge's solvency as well as other factors, the Company established a reserve of $255 million representing the net present value of the total minimum payments of about $300 million from 2001 through October 2006, using a discount rate of 6%. Bridge filed for bankruptcy in February 2001, but made payments for this data for the post-petition periods through October 2001, when Telerate ceased operations, went out of business, sold certain assets and rejected its contracts with Cantor and MDC. The Company is now in litigation with Cantor and MDC with respect to their claims for amounts due under the contract guarantee. The Company has various substantial defenses to these claims and the litigation is proceeding. In January 2003, the trial court denied motions by each of the parties that their own claims for relief be granted and the competing claims be dismissed. Appeals from those decisions are not being pursued. Discovery has concluded. Dispositive motions are scheduled to be filed and argument heard by the trial court in the first quarter of 2005, and the trial is currently scheduled to begin in June 2005.
    Earnings in 2004 and 2003 included charges related to the accretion of the discount on the reserve balance. These charges totaled $1.5 million and $2.1 million in the fourth quarters of 2004 and 2003, respectively. For the fiscal years ended 2004 and 2003, charges related to the accretion of discount totaled $6.9 million and $9.5 million, respectively.

Dow Jones & Company Notes to Financial Information 14

    (c) Gain on non-monetary exchange of interests in WSJ Europe and Handelsblatt:

    In December 2003, the Company and the von Holtzbrinck Group exchanged equity shareholdings so as to increase the Company's ownership of The Wall Street Journal Europe to 90% from 51% and reduce the Company's ownership of the von Holtzbrinck Group's business daily, Handelsblatt, to 10% from 22%, with news and advertising relationships continuing. The transaction was accounted for at fair value in accordance with EITF 01-2, Interpretations of APB 29, as a disposition of 12% of Handelsblatt in exchange for the acquisition of an additional 39% interest in The Wall Street Journal Europe. The Company recorded a gain of $18.7 million ($11.4 million after taxes, or $.14 per diluted share), on the disposal of the 12% interest in Handelsblatt, as the risks of ownership were relinquished at the time of sale.

    (d) Certain income tax matters:

    2004 Income tax matters

    Income tax expense included a special tax benefit of $5.7 million, or $.07 per share, in the fourth quarter 2004 and $1.5 million, or $.02 per diluted share, in the third quarter 2004, as a result of favorable resolutions of federal tax matters.

    2003 Income tax matters

    In the third quarter of 2003, the Internal Revenue Service ("IRS") completed its audit of the Company's tax returns for the 1995 through 1998 tax periods, which had been amended for additional tax refunds. In October 2003, the Company received notification that the Congressional Joint Committee on Taxation had approved these claims for tax refunds of approximately $24 million. The Company received these refunds plus interest of approximately $6.7 million in the fourth quarter of 2003. Pursuant to the settlement of these claims, in the third quarter of 2003, the Company released $25 million of tax provisions no longer needed for loss contingencies and recorded interest income of $6.7 million ($4.0 million, after taxes). The Company also recorded a provision of $9.5 million in the third quarter for loss contingencies relating to recent developments in certain other tax matters. The net effect of these items was an increase in net income of $19.5 million, or $.24 per diluted share.

    (e) Gain on resolution of Telerate sale loss contingencies:

    In the first quarter of 2003, the Company recorded a gain of $59.8 million ($.73 per diluted share) on the resolution of certain loss contingencies resulting from the sale of its former Telerate subsidiary to Bridge Information Systems (Bridge). The reserve for loss contingencies was established as part of the loss on sale of Telerate in 1998 and related to various claims that arose out of the Stock Purchase Agreement, including a purchase price adjustment related to working capital, an indemnification undertaking and other actual and potential claims and counter-claims between the Company and Bridge. In February 2001, Bridge declared bankruptcy. In March 2003, these matters were resolved by the bankruptcy court, and the Company's contingent liabilities were thereby extinguished.

    (f) Gain on disposition of investment:

    On April 2, 2004, simultaneous with the Company's acquisition of the remaining interest in the news operations of Vereinigte Wirtschaftsdienste GmbH ("VWD"), VWD sold its non-news assets to a third party, resulting in cash proceeds to Dow Jones of $6.7 million. Dow Jones was a minority shareholder in VWD.
    As a result of this sale, the Company recorded an after-tax gain of $1.8 million, or $.02 per diluted share, in the second quarter of 2004.

Dow Jones & Company Notes to Financial Information 15

4. Restructuring charges and September 11 related items are not included in segment expenses, as management evaluates segment results exclusive of these items. For information purposes, the aforementioned net items allocable to each segment for the fourth quarter and twelve months ended December 31, 2004 and 2003 were as follows:

(in thousands) Quarters Ended Twelve Months Ended December 31 December 31 ------------------------------------------ 2004 2003 2004 2003 ---- ---- ---- ----

Print Publishing $(6,192) - $(3,561) $17,422 Electronic Publishing (405) - (280) 951 Community Newspapers - Corporate (96) - (91) 35 ---------------------------------------------

Total (charge) income $(6,693) - $(3,932) $18,408 =============================================

5. The Company's business and financial news and information operations are reported in two segments: print publishing and electronic publishing. The results of the Company's Ottaway Newspapers subsidiary, which publishes 15 daily newspapers and more than 30 weeklies and shoppers in nine states in the U.S., are reported in the community newspaper segment. Print publishing includes the global operations of The Wall Street Journal and its international editions, as well as Barron's and U.S. television operations (results of the Company's international television ventures are included in equity in (losses) earnings of associated companies). Electronic publishing includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures.

6. Summarized financial information for 50% held equity-basis investments in associated companies were as follows (amounts are at 100% levels):

(in thousands) Quarters Ended Twelve Months Ended December 31 December 31 --------------------------------------- 2004 2003 2004 2003 ---- ---- ---- ----

Factiva Revenues $67,295 $61,834 $263,036 $244,953 Operating income 3,557 5,328 17,544 13,265 Depreciation and amortization 2,309 3,092 11,393 12,449

SmartMoney Revenues $15,654 $13,291 $53,004 $49,691 Operating income (loss) 888 1,049 101 (1,206) Depreciation and amortization 132 216 668 1,319

CNBC International * Revenues $13,312 $12,937 $42,885 $40,521 Operating loss (4,960) (2,616) (28,245) (20,240) Depreciation and amortization 701 986 3,186 3,883

* Includes the results of CNBC Europe and CNBC Asia.

Dow Jones & Company Notes to Financial Information 16

    7. On January 24, 2005, the Company announced the completion of its acquisition of MarketWatch, Inc. ("MarketWatch") for a purchase price of approximately $528 million. This represents a purchase price of $18 per fully diluted common share and was financed by $440 million of commercial paper borrowings, with the balance funded in cash by the Company, including cash received from MarketWatch. The commercial paper borrowings, which are expected to be refinanced in part with the proceeds of a bond offering to occur during the first quarter of 2005, are supported by a $260 million 60-day revolving credit facility dated January 20, 2005 and $440 million of mutli-year revolving credit facilities.

    MarketWatch is a leading provider of business news, financial information and analytical tools and operates two award-winning Web sites: MarketWatch.com and BigCharts.com. These free, advertising-supported sites serve approximately 8 million unique visitors per month with timely market news and information. MarketWatch also operates the MarketWatch Information Services group, which is a leading licensor of market news, data, investment analysis tools and other online applications to financial services firms, media companies, and corporations.

    The Company believes that the MarketWatch acquisition will complement The Wall Street Journal Online network, which provides premium business news to about 3 million unique visitors per month. By combining the traffic of the Wall Street Journal network of sites and MarketWatch, the Web sites are expected to have more than 9 million unduplicated unique visitors per month.

    The Company intends to integrate MarketWatch into the Consumer Electronic Publishing business.

--30--JTP/ny*

CONTACT: Dow Jones & Company Investor Contact: Mark Donohue Director, Investor Relations 609-520-5660 or Media Contact: Amy Wolfcale Vice President, Corporate Communications 212-416-3213

KEYWORD: NEW YORK NEW JERSEY INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS PUBLISHING BANKING INTERNET E-COMMERCE EARNINGS CONFERENCE CALLS SOURCE: Dow Jones & Company

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