JOURNAL REGISTER CO - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 29, 2002

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-12955

JOURNAL REGISTER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 22-3498615

(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

50 WEST STATE STREET
TRENTON, NEW JERSEY 08608-1298
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)

Registrant's telephone number, including area code: (609) 396-2200

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

Name of Each Exchange
Title of Each Class On Which Registered
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Common Stock, par value $0.01 per share New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None

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. [X] Yes [ ] No

Indicate by 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 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 [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). [X] Yes [ ] No

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 18, 2003, was approximately $567,166,902.

As of March 18, 2003, 41,157,534 shares of the registrant's Common Stock,
par value $0.01 per share, were outstanding (excluding treasury shares).

DOCUMENTS INCORPORATED BY REFERENCE. The information called for by Part III
is incorporated by reference to the definitive Proxy Statement for the Company's
2003 Annual Meeting of Stockholders, which will be filed on or before April 28,
2003.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

STATEMENTS IN THIS ANNUAL REPORT ON FORM 10-K THAT ARE NOT PURELY
HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF
THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF
1934, INCLUDING STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, HOPES,
INTENTIONS OR STRATEGIES REGARDING THE FUTURE. FORWARD-LOOKING STATEMENTS
INCLUDE STATEMENTS REGARDING THE PLANS AND OBJECTIVES OF THE COMPANY FOR FUTURE
OPERATIONS AND TRENDS AFFECTING THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF
OPERATIONS. IN ADDITION, THE WORDS "ANTICIPATES," "PROJECTS," "PLANS,"
"INTENDS," "ESTIMATES," "EXPECTS," "MAY," "BELIEVES" AND SIMILAR WORDS ARE
INTENDED TO IDENTIFY THESE FORWARD-LOOKING STATEMENTS. ALL FORWARD-LOOKING
STATEMENTS IN THIS REPORT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY (AS
HEREINAFTER DEFINED) AS OF THE DATE THIS REPORT IS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY SUCH
FORWARD-LOOKING STATEMENTS, EXCEPT AS REQUIRED BY LAW. ALL FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS AS A RESULT
OF CERTAIN FACTORS INCLUDING, BUT NOT LIMITED TO, THE UNAVAILABILITY OR A
MATERIAL INCREASE IN THE PRICE OF NEWSPRINT, THE SUCCESS OF THE COMPANY'S
ACQUISITION STRATEGY, DISPOSITIONS, THE ABILITY OF THE COMPANY TO ACHIEVE COST
REDUCTIONS AND INTEGRATE ACQUISITIONS, COMPETITIVE PRESSURES, GENERAL OR
REGIONAL ECONOMIC CONDITIONS, ADVERTISING TRENDS AND MATERIAL INCREASES IN
INTEREST RATES, AMONG OTHER THINGS. THESE AND OTHER FACTORS ARE DISCUSSED IN
MORE DETAIL BELOW UNDER "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CERTAIN FACTORS WHICH MAY AFFECT
THE COMPANY'S FUTURE PERFORMANCE." SUCH FACTORS SHOULD NOT BE CONSTRUED AS
EXHAUSTIVE. THE COMPANY UNDERTAKES NO OBLIGATION TO RELEASE PUBLICLY THE RESULTS
OF ANY FUTURE REVISIONS IT MAY MAKE TO FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.

PART I

ITEM 1. BUSINESS.

GENERAL

Journal Register Company (the "Company") is a leading U.S. newspaper
publisher with total paid daily circulation of approximately 550,000 and total
non-daily distribution of approximately 3.7 million, as of December 29, 2002.
The Company currently owns and operates 23 daily newspapers and 233 non-daily
publications strategically clustered in six geographic areas: Greater
Philadelphia, Connecticut, Greater Cleveland, Central New England, and the
Capital-Saratoga and Mid-Hudson regions of New York. The Company's newspapers
are characterized by an intense focus on the coverage of local news and local
sports and offer compelling graphic design in colorful, reader-friendly
packages. The Company also operates 147 Web sites, which represent each of the
Company's publications.

The Company's objective is to continue its growth in revenues, EBITDA
and net income. The principal elements of the Company's strategy are to: (i)
expand advertising revenues and readership; (ii) grow by acquisition; (iii)
capture synergies from geographic clustering; and (iv) implement consistent
operating policies and standards.

The Company has been a leader in executing its clustering strategy. The
Company believes that its clustering strategy creates significant synergies and
cost savings within each cluster, including cross-selling of advertising,
centralized news gathering and consolidation of printing, production and back
office activities. The Company also believes that its clustering strategy
enables it to improve print quality and distribution, introduce new products and
services in a cost-effective manner and increase readership. In addition,
clustering allows the Company to offer its advertisers expanded reach both
geographically and demographically.

From September 1993 through December 2002, the Company successfully
completed (i) 25 strategic acquisitions, acquiring 14 daily newspapers, 192
non-daily publications and four commercial printing companies; and (ii) two
dispositions.

In 2002, the Company completed three strategic acquisitions. On March
18, 2002, the Company completed the acquisition of the assets of News Gleaner
Publications, Inc. and Big Impressions Web Printing, Inc., which are based in
Northeast Philadelphia, Pennsylvania. This acquisition included eight weekly
newspapers, with total circulation of approximately 121,000, serving Northeast
Philadelphia, seven monthly publications, with total circulation of
approximately 59,000, serving Montgomery County, Pennsylvania, and a commercial
printing operation. On March 22, 2002, the Company completed the acquisition of
the assets of the Essex, Connecticut-

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based Hull Publishing, Inc. This acquisition included one weekly newspaper with
total circulation of 5,000 and two annual magazines with total distribution of
approximately 20,000. On October 14, 2002, the Company completed the acquisition
of seven weekly newspapers serving Delaware County, Pennsylvania, with total
circulation of approximately 24,000.

In 2001, the Company completed five strategic acquisitions. On January
31, 2001, the Company completed the acquisition of the Pennsylvania and New
Jersey newspaper operations from Chesapeake Publishing Corporation's
Mid-Atlantic Division. This acquisition included 13 publications with non-daily
distribution of approximately 90,000. On June 7, 2001, the Company completed the
acquisition of the operations of Montgomery Newspaper Group's community
newspapers and magazines, which are based in Fort Washington, Pennsylvania, from
Metroweek Corporation. Total distribution of the 24 non-daily publications
acquired from Metroweek Corporation is approximately 285,000. On August 1, 2001,
the Company completed the acquisition of the assets of Roe Jan Independent
Publishing, Inc., which is based in Hillsdale, New York. Total distribution of
the two non-daily publications included in this purchase is approximately
21,000. On September 14, 2001, the Company completed the acquisition of the
assets of The Reporter, a 19,000-circulation daily newspaper based in Lansdale,
Pennsylvania. On October 25, 2001, the Company completed the acquisition of The
Litchfield County Times, a weekly newspaper based in New Milford, Connecticut,
with circulation of approximately 12,000. The acquisition also included three
lifestyle magazines serving Litchfield and Fairfield counties in Connecticut and
Westchester County, New York, with total monthly distribution of approximately
90,000.

In order to achieve a strategic repositioning in six geographic
clusters and a reduction in the Company's leverage, the Company sold its
operations in the greater St. Louis area in 2000 and two daily newspapers and a
commercial printing operation in the southern part of central Ohio in early
2001. The proceeds from these sales were used to reduce the Company's
outstanding debt, repurchase Company stock and for strategic acquisitions.

In December 2001, the Company commenced operations at its newly
constructed production facility, Journal Register Offset, located in Exton,
Pennsylvania. The plant currently produces five of the Company's seven daily
newspapers and 32 of the Company's 113 non-daily publications in the Greater
Philadelphia cluster. The new facility generated approximately $1.1 million of
cash expense savings in fiscal year 2002, and the Company expects to achieve
additional savings and to continue to produce excellent product quality at the
Exton facility.

The majority of the Company's daily newspapers have been published for
more than 100 years and are established franchises with strong identities in the
communities they serve. For example, the New Haven Register, the Company's
largest newspaper based on daily circulation, has roots in the New Haven,
Connecticut area dating back to 1755. In many cases, the Company's daily
newspapers are the only general circulation daily newspapers published in their
respective communities. The Company's non-daily publications serve well-defined
suburban circulation areas.

The Company manages its newspapers to best serve the needs of its local
readers and advertisers. The editorial content of its newspapers is tailored to
the specific interests of each community served and includes coverage of local
youth, high school, college and professional sports, as well as local business,
politics, entertainment and culture. The Company maintains high product quality
standards, and uses extensive process color and compelling graphic design to
more fully engage existing readers and to attract new readers. The Company's
newspapers typically are produced using advanced prepress pagination technology,
and are printed on efficient, high-speed presses.

The Company's revenues are derived from advertising (72.9 percent of
2002 revenues), paid circulation (22.3 percent of 2002 revenues), including
single copy sales and subscription sales, and commercial printing and other
activities (4.8 percent of fiscal year 2002 revenues). The Company's advertiser
base is predominantly local. The Company's newspapers seek to produce desirable
results for local advertisers by targeting readers based on certain geographic
and demographic characteristics. The Company seeks to increase readership, and
thereby generate traffic for its advertisers, by focusing on high product
quality, local content as well as creative and interactive promotions. The
Company promotes single copy sales of its newspapers because it believes that
such sales have higher readership than subscription sales, and that single copy
readers tend to be more active consumers of goods and services, as indicated by
a Newspaper Association of America ("NAA") study. Single copy sales also tend to
generate higher profit margins than subscription sales, as single copy sales
generally have higher per unit prices and lower distribution costs. Subscription
sales, which provide readers with the convenience of home delivery, are an
important component of the Company's circulation base. The Company also
publishes numerous special sections and niche and special interest publications.
Such publications tend to increase readership within

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targeted demographic groups and geographic areas. The Company's management
believes that as a result of these strategies, its newspapers represent an
attractive and cost-effective medium for its readers and advertisers.

The Company's advertising revenues in 2002 were derived primarily from
a broad group of local retailers (approximately 55.2 percent) and classified
advertisers (approximately 39.6 percent). No single advertiser accounted for
more than 1 percent of the Company's total fiscal year 2002 revenues. The
Company's management believes that its advertising revenues tend to be
relatively stable because its newspapers rely on a broad base of local retail
and local classified advertising, rather than more volatile national and major
account advertising.

Substantially all of the Company's operations relate to newspaper
publishing. In addition to its daily newspapers and non-daily publications, the
Company owns four commercial printing operations that complement and enhance its
publishing operations.

OVERVIEW OF OPERATIONS

The Company's operations are clustered in six geographic areas:

GREATER PHILADELPHIA. The suburban Philadelphia area is one of the
fastest growing and most affluent areas in Pennsylvania. Since 1990, the
population of the areas covered by the Company's Greater Philadelphia Cluster
has increased approximately eight percent, and average household income has
increased approximately 62 percent.

The Company owns seven daily newspapers and 113 non-daily publications
serving areas surrounding Philadelphia. These publications include: in
Pennsylvania, the Delaware County Daily and Sunday Times (Primos); the Daily
Local News (West Chester); The Mercury (Pottstown); The Times Herald
(Norristown); The Reporter (Lansdale); The Phoenix (Phoenixville); Montgomery
Newspapers, a group of 24 non-daily publications; News Gleaner Publications,
which includes eight weekly publications serving Northeast Philadelphia and
seven monthly publications serving Montgomery County, Pennsylvania; the
InterCounty Newspaper Group, a group of 18 weekly newspapers serving suburban
Philadelphia and central and southern New Jersey; Chesapeake Publishing, a group
of 15 non-daily publications; Town Talk Newspapers (Media); Acme Newspapers, a
group of non-daily newspapers, including the Main Line Times, serving
Philadelphia's affluent Main Line; the News of Delaware County, one of the
largest audited community newspapers in the United States; and the Penny Pincher
Shoppers (Pottstown). Also, in New Jersey, the Company owns The Trentonian
(Trenton, NJ), a daily newspaper operation. The Company also owns three
commercial printing companies in Pennsylvania, two of which print more than 30
of the Company's non-daily publications in addition to printing for other
non-affiliated customers, and one of which is a premium quality sheet-fed
printing operation.

The seven Greater Philadelphia Cluster daily newspapers have aggregate
daily and aggregate Sunday circulation of approximately 189,000 and 167,000,
respectively. The Company's aggregate non-daily distribution in the Company's
Greater Philadelphia Cluster is approximately 1.2 million.

In 2002, the Company launched the Lansdale edition of The Sunday Times
Herald, adding circulation of approximately 15,000 on Sunday in Montgomery
County. This edition provides advertisers with a local Sunday newspaper to reach
the desirable Lansdale market. The Company also added to its Greater
Philadelphia Cluster with the completion of two strategic acquisitions in 2002,
acquiring the News Gleaner publications and the County Press publications.

In 2001, the Company commenced operations at its newly constructed
production facility, Journal Register Offset, located in Exton, Pennsylvania.
The plant produces five of the Company's seven daily newspapers and 32 of the
Company's 113 non-daily publications in the Company's Greater Philadelphia
Cluster. The new facility generated approximately $1.1 million of cash expense
savings in fiscal year 2002 and the Company expects to achieve additional cost
savings and to continue to produce excellent product quality at the Exton
facility. The Company also completed three strategic acquisitions in its Greater
Philadelphia Cluster in 2001, acquiring the Chesapeake Publishing publications,
the Montgomery Newspapers publications, and The Reporter (Lansdale).

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The following table sets forth information regarding the Company's
publications in Greater Philadelphia:

(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.

(2) Circulation averages according to the most recently released Audit Bureau
of Circulations ("ABC") Audit Report. The Times Herald Sunday circulation
is from the ABC Publisher Statement for September 30, 2002 in order to
include the new Sunday Lansdale edition.

(3) Non-daily distribution includes both paid and free distribution. Non-daily
distribution reflects average distribution for December 2002, with the
following exceptions: Suburban Publications, which includes three
publications, two of which, Suburban Advertiser and King of Prussia
Courier, reflect the Certified Audit of Circulations ("CAC") Publisher's
Statements for the 12 months ended March 2002, and The Suburban & Wayne
Times which reflects the ABC audit for the 24-month period ended September
30, 2001; Acme Newspapers, which includes four publications, three of which
(News of Delaware County, Germantown Courier and Mt. Airy Times Express)
reflect the CAC Newspaper Audit Report for the 12 months ended March 31,
2002, and Main Line Times, which reflects the ABC Newspaper Audit Report
for the 24 months ended September 30, 2001; the News Gleaner Publications,
which includes eight weekly publications, reflects the CAC Audit for the 12
months ended June 30, 2002; and Montgomery Newspapers, which includes 16
weekly newspapers, reflects the CAC Audit for the 12 months ended September
30, 2002.

(4) Represents the year the Company started the publication.

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The majority of the Company's Pennsylvania publications are located
within a 30-mile radius of Philadelphia. The Company's newspapers serve
geographic areas with highly desirable demographics. The Delaware County Daily
and Sunday Times serves an area that has a population of 597,300 and had
population growth of approximately two percent from 1980 to 2002. The Delaware
County Daily and Sunday Times market area has average household income of
$75,500, which is 18 percent above the national average. The Daily Local News
serves an area which has a population of 431,400 and had population growth of
approximately 46 percent from 1980 to 2002. The Daily Local News serves an area
that has average household income of $91,600, which is 43 percent above the
national average. The Mercury, located approximately 40 miles west of
Philadelphia, serves an area that has a population of 470,600 and had population
growth of approximately 27 percent from 1980 to 2002. The area The Mercury
serves has average household income of $72,000, which is 13 percent above the
national average. The Times Herald serves an area that has a population of
184,000 and had population growth of approximately 15 percent from 1980 to 2002.
The Times Herald's market area has average household income of $79,200, which is
24 percent above the national average. The Phoenix serves an area that has a
population of 128,100 and had population growth of approximately 40 percent from
1980 to 2002. The Phoenix's market area has average household income of $90,700,
which is 42 percent above the national average. The Reporter serves an area that
has a population of 381,700 and had population growth of approximately 21
percent from 1990 to 2002. The Reporter's market area has an average household
income of $82,600, which is 29 percent above the national average. The Company's
weekly newspaper group, Suburban Publications, which is located on the Main Line
in suburban Philadelphia, serves an area that has a population of 340,300 and
had population growth of approximately 25 percent from 1980 to 2002. The market
area served by Suburban Publications has average household income of $119,500,
which is 87 percent above the national average. The Main Line Times, the
flagship of the Company's Acme Newspapers group, serves an area that has a
population of 399,900 and had population growth of approximately three percent
from 1980 to 2002. The Main Line Times' market area, which is also on the Main
Line, has average household income of $115,000, which is 80 percent above the
national average. The majority of the Company's Pennsylvania properties are
located within 20 miles of the area's largest retail complex, the King of
Prussia Plaza and Court, which is the largest mall in the United States based on
retail square footage.

The Trentonian is published in Trenton, the capital of New Jersey,
which is located 35 miles north of Philadelphia and 65 miles south of New York
City. The Trentonian serves an area that has a population of 293,200 and had
population growth of approximately 10 percent from 1980 to 2002. This area has
average household income of $76,900, which is 20 percent above the national
average.

As a result of the synergies in the Company's Greater Philadelphia
Cluster, the Company has been able to cross-sell advertising into multiple
publications. The nature of the cluster also allows for the implementation of
significant cost savings programs. For example, in December 2001, the Company
commenced operations at its new production facility, Journal Register Offset,
located in Exton, Pennsylvania. This plant produces five of the Company's seven
dailies - the Daily Local News, The Mercury, The Times Herald, The Reporter and
The Phoenix - and thirty-two of the Company's 113 non-daily publications in the
Company's Greater Philadelphia Cluster. The new facility generated approximately
$1.1 million of cash expense savings in 2002 and the Company expects to achieve
additional savings and to continue to produce excellent product quality at the
Exton facility. In addition, the Company's publications in its Greater
Philadelphia Cluster share several news gathering resources.

CONNECTICUT. In Connecticut, the Company owns the New Haven Register, a
small metropolitan daily newspaper with daily circulation of nearly 100,000 and
Sunday circulation of over 100,000, four suburban daily newspapers, 73 suburban
non-daily publications and one commercial printing company. The suburban daily
newspapers in the Connecticut Cluster are The Herald (New Britain), The Bristol
Press, The Register Citizen (Torrington) and The Middletown Press. The five
daily newspapers have aggregate daily and Sunday circulation of approximately
149,000 and 143,000, respectively. The 73 non-daily publications have aggregate
distribution of approximately 1.7 million. Included in the non-daily
publications is Connecticut Magazine, the state's premier lifestyle magazine
that was acquired in September 1999. Combined, the Company's Connecticut daily
newspapers and non-daily publications serve a statewide audience with
concentrations in western Connecticut (Litchfield and Fairfield counties) to
Hartford and its suburban areas, to the greater New Haven area, as well as the
Connecticut shoreline from New Haven northeast to New London.

In 2002, the Company added to its Connecticut Cluster with the
acquisition of a weekly newspaper, Main Street News, based in Essex,
Connecticut, with approximately 5,000 distribution, and two annual magazines
with total distribution of approximately 20,000.

In 2001, the Company acquired The Litchfield County Times, a weekly
newspaper based in New Milford, Connecticut, with circulation of approximately
12,000. This acquisition also included three lifestyle magazines

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serving Litchfield and Fairfield counties in Connecticut and Westchester County,
New York, with total monthly distribution of approximately 90,000. These
publications cover Litchfield and Fairfield counties in Connecticut and
Westchester County, New York.

The following table sets forth information regarding the Company's
publications in Connecticut:

(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.

(2) Circulation averages are according to the most recently released ABC Audit
Report.

(3) Non-daily distribution is solely free distribution and reflects average
distribution for December 2002.

(4) Represents the year the Company started the publication.

The News-Herald and The Morning Journal serve areas located directly
east and west of Cleveland, respectively. The News-Herald, which is one of
Ohio's largest suburban newspapers, serves communities located in Lake and
Geauga counties, two of Ohio's five most affluent counties. Lake and Geauga
counties have populations of 228,100 and 92,200, respectively, and had
population growth of approximately eight percent and 33 percent, respectively,
from 1980 to 2002. Lake and Geauga counties have average household incomes of
$65,900 and $85,200, respectively. The Morning Journal serves an area that has a
population of 150,700 with population growth of approximately three percent from
1980 to 2002. Average household income is $59,700 in the area served by The
Morning Journal. The Company's management believes that The News-Herald and The
Morning Journal compete effectively with Cleveland's major metropolitan
newspaper due to the focus on coverage of local news and local sports. The
Greater Cleveland Cluster benefits from a variety of synergies, including
advertising cross-sell arrangements and certain news gathering resources.

CENTRAL NEW ENGLAND. The Company owns five daily and 23 non-daily
publications in the central New England area. The Company's publications in this
cluster include The Herald News (Fall River, MA), the Taunton Daily Gazette
(Taunton, MA), The Call (Woonsocket, RI), The Times (Pawtucket, RI), the Kent
County Daily Times (West Warwick, RI), and two groups of weekly newspapers
serving southern Rhode Island, including South County. The five daily newspapers
have aggregate daily circulation of approximately 70,000 and aggregate Sunday
circulation of approximately 57,000. The non-daily publications in this cluster
have total distribution of approximately 276,000.

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The following table sets forth information regarding the Company's
publications in Central New England:

(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.

(2) Circulation averages according to the most recently released ABC Audit
Report.

(3) Non-daily distribution reflects average distribution for December 2002,
with the exception of The Coventry Courier, The East Greenwich Pendulum,
The Narragansett Times, The Standard Times, and The Chariho Times (all
Southern Rhode Island Newspapers), which reflect the CAC Audit Report for
the 12 month period ended June 30, 2002.

(4) Represents the year the Company started the publication.

The Herald News and the Taunton Daily Gazette are situated 14 miles
apart. Each is less than 40 miles south of Boston, Massachusetts and 25 miles
east of Providence, Rhode Island. The region's second largest shopping mall,
located in Taunton, contains one million square feet of retail space and
approximately 150 stores. The Herald News serves an area that has a population
of 166,900 and had population growth of approximately three percent from 1980 to
2002. The Herald News' market area has average household income of $54,700. The
Taunton Daily Gazette serves an area that has a population of 138,200 and had
population growth of approximately 33 percent from 1980 to 2002. The Taunton
Daily Gazette's market area has average household income of $64,100. The Call
serves an area that has a population of 188,600 and had population growth of
approximately 16 percent from 1980 to 2002. The Call's market area has average
household income of $71,000, which is 11 percent above the national average. The
Times serves an area that has a population of 198,400 and had population growth
of approximately 13 percent from 1980 to 2002. The Times' market area has
average household income of $62,800. Southern Rhode Island Newspapers serve an
area that has a population of 165,000 and had population growth of approximately
35 percent from 1980 to 2002. The Southern Rhode Island Newspaper market area
has average household income of $71,300, which is 12 percent above the national
average.

No local television stations exist in the communities served by the
Company's Central New England newspapers. Furthermore, the Company believes that
its Central New England properties benefit from the fragmentation of local radio
markets. As a result, the Company believes that each of its newspapers is a
significant media outlet in its respective community, thereby making these
newspapers attractive vehicles for area advertisers. The Central New England
newspapers benefit from advertising cross-selling, as well as significant
production and editorial synergies. For example, The Times, The Call and the
Kent County Daily Times are printed at the same facility, as are the Taunton
Daily Gazette and The Herald News. Southern Rhode Island Newspapers are printed
at the Company's New Haven Register facility.

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CAPITAL-SARATOGA REGION OF NEW YORK. The Company owns three daily and
five non-daily publications in the Capital-Saratoga Region of New York. The
Company's publications in this cluster include The Record (Troy), The Saratogian
(Saratoga Springs), The Oneida Daily Dispatch and the weekly Community News,
serving Clifton Park. The daily newspapers have aggregate daily circulation of
approximately 40,000 and aggregate Sunday circulation of approximately 36,000.
The non-daily publications in this cluster have total distribution of
approximately 98,000.

The following table sets forth information regarding the Company's
publications in the Capital-Saratoga Region of New York:

(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.

(2) Circulation averages according to the most recently released ABC Audit
Report.

(3) Non-daily distribution includes both paid and free distribution and is
based on the average distribution for December 2002.

(4) Represents the year the Company started the publication.

The Daily Freeman and Taconic Press serve markets in the Mid-Hudson
region of New York. The Daily Freeman serves an area that has a population of
279,500 and had population growth of approximately 11 percent from 1980 to 2002.
The Daily Freeman's market area has average household income of $50,700. The
Taconic Press newspaper group based in Dutchess County serves an area that has a
population of 97,000 and had population growth of approximately ten percent from
1980 to 2002. The Taconic Press publications serve markets with average
household income of $73,300, which is 15 percent above the national average. The
Putnam County Courier serves an area that has a population of 98,000 and had
population growth of approximately 33 percent from 1980 to 2002. The Putnam
County Courier's market area has average household income of $82,200, which is
29 percent above the national average. On August 1, 2001, the Company added two
non-daily publications to the cluster with the acquisition of the assets of Roe
Jan Independent Publishing, Inc., which is based in Hillsdale, New York.

One independent television station (which serves a regional, rather
than a local audience) exists in the communities that the Mid-Hudson Region
publications serve. The Company's management believes that its Mid-Hudson Region
properties benefit from the fragmentation of local radio markets. Consequently,
each of these newspapers is a significant media outlet in its respective
community, thereby making these newspapers attractive vehicles for area
advertisers. The Mid-Hudson Region newspapers benefit from significant
cross-selling of advertising, as well as production and editorial synergies.
Certain publications in this cluster also benefit from advertising cross-selling
with The Register Citizen (Torrington, CT) and certain of the Housatonic
Publications (New Milford, CT), which serve Litchfield County, Connecticut.

ONLINE OPERATIONS

Since 1995, the Company has been developing Web sites, which attract
readers and advertisers. Journal Register Company operates 147 Web sites, which
represent each of its publications, as well as portal sites for each of its six
geographic clusters. The Company's online objective is to have its Web sites
complement its print publications by providing certain content from these
publications, as well as unique content and interactive features. The Company's
Web sites also provide an online marketplace for its advertisers.

A number of the Web sites can be accessed individually, through the
Company's "cluster" portal sites, which combine publications within a specific
geographic area, or through the Company's home page at www.journalregister.com.
The remaining Company newspapers, along with Connecticut Magazine, have
individual Web sites. All Web sites can be accessed through the corporate Web
site (www.journalregister.com). The following is a list of the Company's
cluster/portal Web sites:

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Cluster/Portal site (number
Geographic cluster of individual Web sites)
------------------ -----------------------------

Connecticut........................... www.ctcentral.com (43)

Greater Philadelphia.................. www.allaroundphilly.com (70)

Greater Cleveland..................... www.allaroundcleveland.com (5)

Capital-Saratoga Region of New York... www.capitalcentral.com (5)

Central New England................... www.ricentral.com (12)

Mid-Hudson Region of New York......... www.midhudsoncentral.com (11)

The primary source of online revenue is classified advertising. For the
year ended December 29, 2002, the Company's Web sites generated approximately $4
million of revenue as compared to approximately $3.5 million for the year ended
December 30, 2001.

ADVERTISING

Substantially all of the Company's advertising revenues are derived
from a diverse group of local retailers and classified advertisers. The
Company's management believes that its advertising revenues tend to be
relatively stable because its newspapers rely on a broad base of local retail
and local classified advertising, rather than more volatile national and major
account advertising. Local advertising is typically more stable than national
advertising because a community's need for local services provides a stable base
of local businesses and because local advertisers generally have fewer effective
advertising vehicles from which to choose.

Advertising revenues accounted for approximately 72.9 percent of the
Company's total revenues for fiscal year 2002. The Company's advertising rate
structures vary among its publications and are a function of various factors,
including advertising effectiveness, local market conditions and competition, as
well as circulation, readership, demographics and type of advertising (whether
classified or display). In fiscal year 2002, local and regional display
advertising accounted for the largest share of the Company's advertising
revenues (55.2 percent), followed by classified advertising (39.6 percent) and
national advertising (5.2 percent). The Company's advertising revenues are not
reliant upon any one company or industry, but rather are supported by a variety
of companies and industries, including realtors, car dealerships, grocery stores
and other local businesses. No single advertiser accounted for more than 1
percent of the Company's total fiscal year 2002 revenues.

The Company's corporate management works with its local newspaper
management to approve advertising rates and to establish goals for each year
during a detailed annual budget process. As a result, local management is given
little latitude for discounting from the approved rates. Corporate management
also works with local advertising staff to develop marketing kits and
presentations utilizing the results of third-party research studies. A portion
of the compensation for the Company's publishers is based upon increasing
advertising revenues. The Company stresses the timely collection of receivables.
Compensation of the Company's sales personnel depends in part upon performance
relative to goals and timely collection of advertising receivables.
Additionally, corporate management facilitates the sharing of advertising
resources and information across the Company's publications. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Certain Factors Which May Affect the Company's Future Performance - Dependence
on Local Economies."

CIRCULATION

The Company's circulation revenues are derived from home delivery sales
of publications to subscribers and single copy sales made through retailers and
vending racks. Circulation accounted for approximately 22.3 percent of the
Company's total revenues in fiscal year 2002. Approximately 64 percent of fiscal
year 2002 circulation revenues were derived from subscription sales and
approximately 36 percent from single copy sales. Single copy rates range from
$.35 to $.50 per daily copy and $.75 to $1.75 per Sunday copy. The Company
promotes single copy sales of its newspapers because it believes that such sales
have higher readership than subscription sales, and that single copy readers
tend to be more active consumers of goods and services, as indicated

13

in a Newspaper Association of America readership study. Single copy sales also
tend to generate a higher profit margin than subscription sales, as single copy
sales generally have higher per unit prices and lower distribution costs. As of
December 29, 2002, the Company had total daily paid circulation of 550,000, paid
Sunday circulation of 526,000 and non-daily distribution of approximately 3.7
million, most of which is distributed free of charge.

The Company's corporate management works with its local newspaper
management to establish subscription and single copy rates. In addition, the
Company tracks rates of newspaper returns and customer service calls through
formal reports which are reviewed weekly in an effort to optimize the number of
newspapers available for sale and to improve delivery and customer service. The
Company also implements creative and interactive programs and promotions to
increase readership through both subscription and single copy sales. The most
recent Fall 2002 Scarborough Research studies, which measured 19 of the
Company's 23 daily newspapers and several of its non-daily publications,
reported a gain in overall readership of approximately three percent as compared
to the results from Scarborough Research's Spring 2002 studies for the papers
measured. In recent years, circulation has generally declined throughout the
newspaper industry and the Company's newspapers have generally experienced this
trend. The Company seeks to maximize the overall operating performance rather
than maximizing circulation of its individual newspapers.

OTHER OPERATIONS

As of December 29, 2002, the Company owned and operated four commercial
printing facilities: Imprint Print in North Haven, Connecticut; Nittany Valley
Offset in State College, Pennsylvania; InterPrint in Bristol, Pennsylvania; and
Big Impressions Web Printing in Northeast Philadelphia, Pennsylvania. With the
exception of Nittany Valley Offset, which is a premium quality sheet-fed
operation, these facilities also print certain of the Company's publications.
Commercial printing operations and other revenues accounted for approximately
4.8 percent of the Company's total revenues in fiscal year 2002.

EMPLOYEES

As of December 29, 2002, the Company employed approximately 4,800
full-time and part-time employees, or 4,100 full-time equivalents ("FTEs").
Approximately 20 percent of the Company's employees are employed under
collective bargaining agreements.

RAW MATERIALS

The basic raw material for newspapers is newsprint. In fiscal year
2002, the Company consumed approximately 49,000 metric tons of newsprint,
excluding paper consumed in its commercial printing operations. The average
price per metric ton of newsprint based on East Coast transactions prices in
2002, 2001 and 2000 was $465, $585 and $565, respectively, as reported by the
trade publication, Pulp and Paper Weekly. The Company purchases the majority of
its newsprint through its central purchasing group, Journal Register Supply. The
Company has no long-term contracts to purchase newsprint. Generally, Journal
Register Supply purchases most of its newsprint requirements from one or two
suppliers, although in the future the Company may purchase newsprint from other
suppliers. Historically, the percentage of newsprint from each supplier has
varied. The Company's management believes that concentrating its newsprint
purchases in this way provides a more secure newsprint supply and lower unit
prices. The Company's management also believes that it purchases newsprint at
price levels lower than those that are available to individually owned small
metropolitan and suburban newspapers, and consistent with price levels generally
available to the largest newsprint purchasers. The available sources of
newsprint have been, and the Company believes will continue to be, adequate to
supply the Company's needs. The inability of the Company to obtain an adequate
supply of newsprint in the future could have a material adverse effect on the
financial condition and results of operations of the Company. Historically, the
price of newsprint has been cyclical and volatile. The Company's average price
per ton of newsprint for the full fiscal year decreased approximately 22 percent
in 2002, increased approximately nine percent in 2001 and increased
approximately six percent in 2000, each as compared to the preceding year. The
Company believes that if any price decrease or increase is sustained in the
industry, the Company will also be impacted by such change. The Company seeks to
manage the effects of increases in prices of newsprint through a combination of,
among other things, technology improvements, including web-width reductions,
inventory management and advertising and circulation price increases. The
Company also has reduced fringe circulation in response to increased newsprint
prices, as it is the Company's experience that such circulation does not provide
adequate response for advertisers. In fiscal year 2002, the Company's newsprint
cost (excluding paper consumed in the Company's commercial printing operations)
was approximately 5.5 percent of the Company's newspaper revenues.

14

COMPETITION

While many of the Company's metropolitan and suburban daily newspapers
are the only daily newspapers of general circulation published in their
respective communities, they compete within their own geographic areas with
other daily and weekly newspapers of general circulation published in adjacent
or nearby cities and towns. Competition for advertising and paid circulation
comes from local, regional and national newspapers, shoppers, television, radio,
direct mail, online services and other forms of communication and advertising
media. Competition for advertising revenue is largely based upon advertiser
results, readership, advertising rates, demographics and circulation levels,
while competition for circulation and readership is based largely upon the
content of the newspaper, its price and the effectiveness of its distribution.
The Company's non-daily publications, including shoppers and real estate guides,
compete primarily with direct mail advertising, shared mail packages and other
private advertising delivery services. The Company's management believes that,
because of the relative competitive position of its suburban and community
non-daily publications in the communities that they serve, such publications
generally have been able to compete effectively with other forms of media
advertising. Commercial printing, a highly competitive business, is largely
driven by price and quality. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Certain Factors Which May Affect
the Company's Future Performance - Newspaper Industry Competition."

SEASONALITY

Newspaper companies tend to follow a distinct and recurring seasonal
pattern. The first quarter of the year (January-March) tends to be the weakest
quarter because advertising volume is then at its lowest level. Correspondingly,
the fourth quarter (October-December) tends to be the strongest quarter as it
includes heavy holiday season advertising.

ENVIRONMENTAL MATTERS

As is the case with other newspaper and similar publishing companies,
the Company is subject to a wide range of federal, state and local environmental
laws and regulations pertaining to air and water quality, storage tanks and the
management and disposal of wastes at its facilities. To the best of the
Company's knowledge, its operations are in material compliance with applicable
environmental laws and regulations as currently interpreted. Management believes
that continued compliance with these laws and regulations will not have a
material adverse effect on the Company's financial condition or results of
operations.

REGULATION

Paid or requestor circulation newspapers with "periodical" mailing
privileges are required to obtain a "periodical" permit from, and file an annual
Statement of Ownership, Mailing and Circulation with the United States Postal
Service. There is no significant regulation with respect to acquisition of
newspapers other than filings under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.

AVAILABLE INFORMATION

The Company makes available all of its filings with the U.S. Securities
and Exchange Commission, along with any amendments thereto, free of charge on
its Web site at www.journalregister.com as soon as reasonably practicable after
the reports and amendments are electronically filed with the SEC. The contents
of the Web site are not incorporated into this filing.

15

ITEM 2. PROPERTIES.

As of December 29, 2002, the Company operated 139 facilities used in
the course of producing and publishing its daily and non-daily publications.
Approximately 96 of these facilities are leased for terms ranging from one to
five years. These leased facilities range in size from approximately 160 to
70,000 square feet. Except as otherwise noted, the facilities are utilized for
office space. The location and approximate size of the principal physical
properties (greater than 1,500 square feet) used by the Company at December 29,
2002, as well as the expiration date of the leases relating to such properties
that the Company leases are set forth below:

(1) Corporate headquarters
(2) Production facility
(3) Warehouse

Management believes that all of its properties are in good condition,
are generally well maintained and are adequate for their current operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."

16

ITEM 3. LEGAL PROCEEDINGS.

The Company is involved in a number of litigation matters that have
arisen in the ordinary course of business. The Company believes that the outcome
of these legal proceedings will not have a material adverse effect on the
Company's financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.

17

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information as of January 2,
2003 with respect to each person who is an executive officer of the Company as
of such date:

Officer Position
- ------- --------
Robert M. Jelenic............ Chairman, President and Chief Executive Officer
Jean B. Clifton.............. Executive Vice President, Chief Financial
Officer and Secretary
Thomas E. Rice............... Senior Vice President, Operations
Allen J. Mailman............. Senior Vice President, Technology
Marc S. Goldfarb............. Vice President and General Counsel

ROBERT M. JELENIC is Chairman, President and Chief Executive Officer of
the Company. He has been President and Chief Executive Officer since the
inception of the Company, and has been a director of the Company and its
predecessors for more than the past ten years. A Chartered Accountant, Mr.
Jelenic began his business career with Arthur Andersen in Toronto, Canada. Mr.
Jelenic has 27 years of senior management experience in the newspaper industry,
including 12 years with the Toronto Sun Publishing Corp. Mr. Jelenic graduated
Honors Bachelor of Commerce from Laurentian University, Sudbury, Ontario. Mr.
Jelenic is a member of the Technology Committee of the Newspaper Association of
America ("NAA"). Mr. Jelenic is 52 years old.

JEAN B. CLIFTON is Executive Vice President, Chief Financial Officer
and Secretary of the Company, positions she has held since the Company's
inception. Ms. Clifton has also been a director of the Company and its
predecessors for more than the past ten years. Ms. Clifton, a Certified Public
Accountant, began her business career at Arthur Young & Co. (a predecessor to
Ernst & Young LLP). Ms. Clifton has 17 years of senior management experience in
the newspaper industry. Ms. Clifton is a member of the Board of Directors of the
NAA, as well as a member of the Board of Directors of the Fresh Air Fund, and
the Board of Directors of the Lower Bucks Chapter of the American Red Cross. Ms.
Clifton received a Bachelor of Business Administration in 1983 from the
University of Michigan. Ms. Clifton is 41 years old.

THOMAS E. RICE is Senior Vice President of Operations of the Company, a
position he has held since November 2000. From the inception of the Company to
November 2000, Mr. Rice was located in St. Louis, Missouri, where he was
President and Chief Executive Officer of Suburban Newspapers of Greater St.
Louis and The Telegraph in Alton, Illinois, which the Company sold in 2000. Mr.
Rice began his career with Lee Enterprises in 1963 and has held senior
management positions with Tribune Company, The Times Mirror Company, MediaNews
Group and the Chicago Sun Times. Mr. Rice has 40 years of experience in the
newspaper industry. Mr. Rice is a member of the Newsprint Committee of the NAA.
Mr. Rice attended the University of Nebraska and Roosevelt University in
Chicago. Mr. Rice is 58 years old.

ALLEN J. MAILMAN is Senior Vice President of Technology of the Company,
a position he has held since February 1999. From March 1994 to February 1999, he
was Vice President of Technology of the Company. From the Company's inception in
1990 to March 1994, Mr. Mailman was Corporate Director of Information Services
of the Company. Mr. Mailman has 28 years of management experience in the
newspaper industry, including 14 years with Advance Publications, Inc. Mr.
Mailman received a Bachelor of Arts degree in Economics and Mathematics from the
University of Oklahoma. Mr. Mailman is 55 years old.

MARC S. GOLDFARB is Vice President and General Counsel of the Company,
positions he has held since January 2003. From July 1998 to January 2003, he
served as Managing Director and General Counsel of The Vertical Group, an
international private equity firm. Prior to that, Mr. Goldfarb was a Partner at
Bacher, Tally, Polevoy & Misher LLP. Mr. Goldfarb has 15 years of diverse legal,
financial and strategic experience. Mr. Goldfarb earned his Juris Doctor from
the University of Pennsylvania and his Bachelor of Science from Cornell
University. Mr. Goldfarb is 39 years old.

18

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The Company's common stock, par value $0.01 per share (the "Common
Stock"), commenced trading on the New York Stock Exchange on May 8, 1997 under
the symbol "JRC." The following table reflects the high and low sale prices for
the Common Stock, based on the daily composite listing of stock transactions for
the New York Stock Exchange, for the periods indicated:

YEAR QUARTER LOW HIGH
- ----------------- -------------------- --------------- ------------------
2001 First $15.75 $17.63
Second $15.13 $18.25
Third $15.69 $18.25
Fourth $15.00 $21.13
- ----------------- -------------------- --------------- ------------------

2002 First $19.30 $21.55
Second $19.85 $21.86
Third $16.14 $19.99
Fourth $17.00 $19.47

On March 18, 2003, there were approximately 75 stockholders of record
of the Common Stock. The Company believes that it has approximately 4,200
beneficial owners.

The Company has not paid dividends on its Common Stock and does not
currently anticipate paying dividends. The Company currently intends to retain
future cash flow to increase shareholder value by acquiring additional
newspapers, reducing debt, repurchasing the Company's stock and reinvesting in
the Company's operations. In addition, the Company's Credit Agreement (as
hereinafter defined) places limitations on the Company's ability to pay
dividends or make any other distributions on the Common Stock. See Note 4 of
"Notes to Consolidated Financial Statements." Any future determination as to the
payment of dividends will be subject to such prohibitions and limitations, will
be at the discretion of the Company's Board of Directors and will depend on the
Company's results of operations, financial condition, capital requirements and
other factors deemed relevant by the Board of Directors.

Journal Register Company conducts its operations through direct and
indirect subsidiaries. The Company's available cash will depend upon the cash
flow of its subsidiaries and the ability of such subsidiaries to make funds
available to the Company in the form of loans, dividends or otherwise. The
subsidiaries are separate and distinct legal entities and have no legal
obligation, contingent or otherwise, except as required by the Credit Agreement,
to make funds available to the Company, whether in the form of loans, dividends
or otherwise. The Credit Agreement is secured by substantially all of the assets
of the Company and the common stock and assets of the Company's subsidiaries. In
addition, the Company's subsidiaries may, subject to limitations contained in
the Credit Agreement, become parties to financing arrangements that may contain
limitations on the ability of such subsidiaries to pay dividends or to make
loans or advances to the Company. In the event of any insolvency, bankruptcy or
similar proceedings of a subsidiary, creditors of such subsidiary would
generally be entitled to priority over the Company with respect to financial
assets of the affected subsidiary.

19

ITEM 6. SELECTED FINANCIAL DATA.

The following selected financial data (except number of publications)
has been derived from the audited financial statements of the Company and should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements
and notes thereto included elsewhere in this report:

20

ITEM 6. SELECTED FINANCIAL DATA. (CONTINUED)

(1) In 1999, the Company changed its fiscal year from a calendar year to a
52/53 week fiscal year ending on the nearest Sunday to the end of the
calendar year. As a result of this change, the Company's fiscal year ended
December 26, 1999 consisted of 360 days. The Company's fiscal year ended
December 31, 2000 consisted of 53 weeks.

(2) The 1998 extraordinary item represents a charge of $4.5 million (net of
tax) related to the early extinguishment of debt in connection with the
Company's prior credit agreement.

(3) The 1998 data excludes the effects of special charges ($3.8 million,
before tax benefit, $3.2 million of which was recorded in selling, general
and administrative, and approximately $630,000 in other expenses) related
to the cancellation of the Company's convertible debt offering, the
integration of the acquired assets of the Goodson Newspaper Group, and an
increase to certain receivable reserves and the extraordinary item ($4.5
million, net of tax) discussed in Note (2) above.

(4) EBITDA is defined by the Company as operating income plus depreciation,
amortization and other non-cash, special or non-recurring charges. Free
cash flow is defined as EBITDA minus capital expenditures, interest and
cash taxes. The Company's cash taxes prior to 2001 were reduced
substantially as a result of the utilization of net operating loss
carry-forwards. Tangible net income is defined as net income, excluding
after tax gains on sales of newspaper properties, reversals of certain tax
accruals and equity interest, plus after-tax amortization. EBITDA, free
cash flow and tangible net income are not intended to represent cash flow
from operations and should not be considered as alternatives to operating
or net income computed in accordance with accounting principles generally
accepted in the United States ("GAAP") as indicators of the Company's
operating performance, as alternatives to cash from operating activities
(as determined in accordance with GAAP) or as measures of liquidity.

The Company believes that EBITDA, free cash flow and tangible net income
are standard measures commonly reported and widely used by analysts,
investors and other interested parties in the media industry. Accordingly,
this information has been disclosed herein to permit a more complete
comparative analysis of the Company's operating performance relative to
other companies in the industry. However, not all companies calculate
EBITDA, free cash flow and tangible net income using the same methods;
therefore, the EBITDA, free cash flow and tangible net income figures set
forth above may not be comparable to EBITDA, free cash flow and tangible
net income reported by other companies. Certain covenants contained in the
Company's Credit Agreement are based upon EBITDA. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Free cash flow and tangible net income per share are calculated using the
weighted-average shares outstanding on a fully diluted basis.

(5) Capital expenditures, excluding capitalized interest, associated with the
Company's new Philadelphia printing facility (Journal Register Offset)
were $22.8 million, $10.8 million and $1.8 million in fiscal years 2001,
2000 and 1999, respectively. Capitalized interest associated with Journal
Register Offset was $1.3 million in fiscal year 2001 and $601,000 in
fiscal year 2000. Journal Register Offset began operating in December
2001.

21

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion and analysis should be read in conjunction
with the historical consolidated financial statements and notes thereto and the
other financial information appearing elsewhere in this Report.

GENERAL

The Company's principal business is publishing newspapers in the United
States, where its publications are primarily daily and non-daily newspapers and
similar publications. The Company's revenues are derived primarily from
advertising, paid circulation and commercial printing.

As of December 29, 2002, the Company owned and operated 23 daily
newspapers and 233 non-daily publications strategically clustered in six
geographic areas: Greater Philadelphia; Connecticut; Greater Cleveland; Central
New England; and the Capital-Saratoga and Mid-Hudson, New York regions. As of
December 29, 2002, the Company had total paid daily circulation of approximately
550,000, total paid Sunday circulation of approximately 526,000 and total
non-daily distribution of approximately 3.7 million.

The Company's objective is to continue its growth in revenues, EBITDA
and net income. The principal elements of the Company's strategy are to: (i)
expand advertising revenues and readership; (ii) grow by acquisition; (iii)
capture synergies from geographic clustering; and (iv) implement consistent
operating policies and standards.

The Company has been a leader in executing its clustering strategy. The
Company believes that its clustering strategy creates significant synergies and
cost savings within each cluster, including cross-selling of advertising,
centralized news gathering and consolidation of printing and production and back
office activities. The Company also believes that its clustering strategy
enables it to improve print quality and distribution, introduce new products and
services in a cost-effective manner and increase readership. In addition,
clustering allows the Company to offer its advertisers expanded reach both
geographically and demographically.

From 1993 through 2002, the Company successfully completed 25 strategic
acquisitions, acquiring 14 daily newspapers, 192 non-daily publications and four
commercial printing companies. Three of the four commercial printing facilities
owned by the Company print a number of the Company's non-daily publications; the
fourth is a premium quality sheet-fed printing company.

On March 18, 2002, the Company completed the acquisition of the assets
of News Gleaner Publications, Inc. and Big Impressions Web Printing, Inc., based
in Northeast Philadelphia, Pennsylvania. This acquisition includes eight weekly
newspapers, with total circulation of 121,000, serving Northeast Philadelphia,
seven monthly publications, with total circulation of 59,000, serving Montgomery
County, Pennsylvania, and a commercial printing operation. On March 22, 2002,
the Company completed the acquisition of the assets of the Essex,
Connecticut-based Hull Publishing, Inc. This acquisition includes a weekly
newspaper with total circulation of 5,000 and two annual magazines with total
distribution of approximately 20,000. On October 14, 2002, the Company completed
the acquisition of County Press Publications, which includes seven weekly
newspapers serving Delaware County, Pennsylvania, with total circulation of
24,000.

On January 31, 2001, the Company completed the acquisition of the
Pennsylvania and New Jersey newspaper operations from Chesapeake Publishing
Corporation, which included 13 publications with non-daily distribution of
approximately 90,000. On June 7, 2001, the Company completed the acquisition of
Montgomery Newspaper Group's community newspaper and magazine operations, which
are based in Fort Washington, Pennsylvania, from Metroweek Corporation. Total
distribution of these 24 non-daily publications is approximately 285,000. On
August 1, 2001, the Company completed the acquisition of the assets of Roe Jan
Independent Publishing, Inc., which is based in Hillsdale, New York. Total
distribution of the two non-daily publications included in this purchase is
approximately 21,000. On September 14, 2001, the Company completed the
acquisition of The Reporter, a 19,000-circulation daily newspaper based in
Lansdale, Pennsylvania. On October 25, 2001, the Company completed the
acquisition of The Litchfield County Times, a weekly newspaper based in New
Milford, Connecticut, with circulation of approximately 12,000. The acquisition
also included three lifestyle magazines serving Litchfield and Fairfield
counties in Connecticut and Westchester County, New York, with total monthly
distribution of approximately 90,000.

The Company sold its operations in the Greater St. Louis area in two
transactions in August and October of 2000. The Company also sold two daily
newspapers and a commercial printing operation in the southern part of

22

central Ohio on January 31, 2001. These dispositions resulted in a strategic
repositioning of the Company's operations in six geographic clusters.

The Company's management believes that its newspapers are effective in
addressing the needs of local readers and advertisers. The Company's management
believes that because its newspapers rely on a broad base of local retail and
local classified advertising, rather than more volatile national and major
account advertising, its advertising revenues tend to be relatively stable.

As part of the Company's strategy, the Company focuses on increasing
advertising and circulation revenues and expanding readership at its existing
and newly acquired properties. The Company has also developed certain operating
policies and standards that it believes have resulted in significant
improvements in the cash flow and profitability of its existing and acquired
newspapers, including: (i) focusing on local content; (ii) maintaining and
improving product quality; (iii) enhancing distribution; and (iv) promoting
community involvement.

In addition, the Company is committed to expanding its business through
its Internet initiatives. The Company's online objective is to make its Web
sites, all of which are accessible through www.journalregister.com, the
indispensable source of useful and reliable community news, sports and
information in their markets by making the Web sites the local information
portal for their markets. As of December 29, 2002, the Company operated 147 Web
sites, which represent each of the Company's publications.

In 1999, the Company elected to change its fiscal year from a calendar
year end to a fiscal year ending on the nearest Sunday to the end of the
calendar year. Accordingly, the Company's recent fiscal years ended on December
29, 2002, December 30, 2001, and December 31, 2000.

FISCAL YEAR ENDED DECEMBER 29, 2002 COMPARED TO FISCAL YEAR ENDED DECEMBER 30,
2001

FOR COMPARISON PURPOSES, WHERE NOTED, THE COMPANY'S FISCAL YEAR 2002 AND 2001
RESULTS ARE PRESENTED ON A SAME-STORE BASIS, WHICH EXCLUDES THE RESULTS OF THE
OHIO NEWSPAPERS SOLD IN 2001 AND THE COMPANY'S ACQUISITIONS COMPLETED IN 2002
AND 2001.

Summary. Net income for the year ended December 29, 2002 ("fiscal year
2002") was $49.2 million, or $1.16 per diluted share, versus $78.1 million, or
$1.83 per diluted share, for the year ended December 30, 2001 ("fiscal year
2001"). Excluding the gain on the sale of the Company's two Ohio properties in
fiscal year 2001, the reversal of certain tax accruals in fiscal years 2002 and
2001, and the elimination of goodwill amortization as if SFAS No. 142 had been
adopted on January 1, 2001, earnings for fiscal year 2002 were $1.14 per diluted
share as compared to $1.03 per diluted share for fiscal year 2001.

Revenues. Reported revenues were $407.8 million for fiscal year 2002 as
compared to $394.4 million for fiscal year 2001. The increase was mainly due to
acquisitions. On a same-store basis, total newspaper revenues for fiscal year
2002 decreased one percent to $354.2 million from $357.6 million in fiscal year
2001. Advertising revenues, on a same-store basis, for fiscal year 2002
decreased by 1.6 percent to $268.2 million from $272.7 million in fiscal year
2001. Circulation revenues, on a same-store basis, increased by 1.2 percent in
fiscal year 2002 to $86.0 million from $84.9 million in fiscal year 2001. Online
revenues, which are included in advertising revenues, increased approximately
12.8 percent to $4.0 million in fiscal year 2002 as compared to fiscal year
2001.

Salaries and employee benefits. Salaries and employee benefit expenses
were 36.9 percent of the Company's total revenues for fiscal year 2002, compared
to 35.6 percent for fiscal year 2001. Salaries and employee benefits increased
$10.1 million, or 7.2 percent, in fiscal year 2002 to $150.6 million, primarily
due to acquisitions. Same-store salaries and employee benefits increased $1.8
million, or 1.4 percent, primarily due to increased pension and medical benefit
costs.

Newsprint, ink and printing charges. For fiscal year 2002, newsprint,
ink and printing charges were 7.6 percent of the Company's revenues, as compared
to 9.6 percent for fiscal year 2001. Newsprint, ink and printing charges
decreased $6.9 million, or 18.4 percent, for fiscal year 2002 as compared to the
prior year due principally to a decrease in newsprint prices of approximately 22
percent, partially offset by an increase in newsprint consumption related
primarily to the Company's acquisitions. On a same-store basis, newsprint, ink
and printing charges decreased approximately $9.3 million, or 26.0 percent,
primarily due to a decrease in newsprint expense which resulted from the
decrease in newsprint prices and a decrease in newsprint consumption on a
same-store basis of approximately one percent.

23

Selling, general and administrative. Selling, general and
administrative expenses were 13.3 percent and 12.1 percent of the Company's
revenues for fiscal years 2002 and 2001, respectively. Selling, general, and
administrative expenses increased $6.4 million, or 13.3 percent, for fiscal year
2002 as compared to the prior year, primarily due to acquisitions. On a
same-store basis, selling, general and administrative expenses for fiscal year
2002 increased $1.7 million, or 3.7 percent, principally as a result of
increased general insurance costs.

Depreciation and amortization. Depreciation and amortization expenses
were 3.7 percent and 6.7 percent of the Company's revenues for fiscal years 2002
and 2001, respectively. Depreciation and amortization expenses decreased $11.4
million, or 43.3 percent, to $14.9 million for fiscal year 2002 as compared to
fiscal year 2001. This decrease was primarily due to the implementation of SFAS
No. 142, which was implemented in the beginning of fiscal year 2002 and
eliminated the amortization of goodwill and indefinite-lived intangible assets,
resulting in a reduction in amortization expense of approximately $12 million
for fiscal year 2002, partially offset by increased depreciation related to
capital expenditures, particularly the Company's new production facility in its
Greater Philadelphia Cluster.

Other expenses. Other expenses increased to $56.9 million in fiscal
year 2002 from $53.5 million in fiscal year 2001, primarily as a result of
acquisitions. On a same-store basis, other expenses increased approximately
$428,000, or 0.8 percent, to $51.1 million.

Operating income. Operating income increased $11.8 million, or 13.3
percent, for fiscal year 2002 to $100.3 million as compared to $88.5 million in
fiscal year 2001 primarily due to the reduction in amortization expense
resulting from the implementation of SFAS No. 142 and an increase in EBITDA, the
components of which are described above.

Net interest expense and other. Net interest expense and other
decreased $6.8 million, or 22.3 percent, from $30.5 million in fiscal year 2001
to $23.7 million in fiscal year 2002. This decrease was due to lower interest
expense, which resulted from lower interest rates and a reduction in the
Company's weighted average debt outstanding during fiscal year 2002 as compared
to fiscal year 2001.

Provision for income taxes. The Company's effective tax rate was 37.3
percent for fiscal year 2002 as compared to 38.9 percent for fiscal year 2001,
excluding the reversals of certain tax accruals in each year which were
determined to no longer be required and excluding the effect of the gain on sale
of newspaper properties in fiscal year 2001. The decrease in the effective tax
rate for fiscal year 2002 as compared to fiscal year 2001 is principally a
result of the adoption of SFAS No. 142 at the beginning of fiscal year 2002.

Other information. EBITDA for fiscal year 2002 was $115.3 million as
compared to $114.9 million for fiscal year 2001. Free cash flow was $61.6
million, or $1.46 per diluted share, for fiscal year 2002 as compared to $57.1
million, or $1.34 per diluted share, for fiscal year 2001. Tangible net income
for fiscal year 2002 was $49.2 million, or $1.16 per share, as compared to $46.6
million, or $1.09 per share, for fiscal year 2001. During fiscal year 2002, the
Company made a $10.9 million cash contribution ($6.9 million after tax) to its
defined benefit pension plans.

FISCAL YEAR ENDED DECEMBER 30, 2001 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,
2000

FOR COMPARISON PURPOSES, WHERE NOTED, THE COMPANY'S RESULTS FOR FISCAL YEARS
2001 AND 2000 ARE PRESENTED ON A SAME-STORE BASIS, WHICH EXCLUDES THE RESULTS OF
THE GREATER ST. LOUIS CLUSTER NEWSPAPERS SOLD IN 2000, THE OHIO NEWSPAPERS SOLD
IN FISCAL YEAR 2001, AND THE COMPANY'S ACQUISITIONS COMPLETED IN FISCAL YEAR
2001. ALSO, WHERE NOTED, THE COMPANY'S RESULTS ARE PRESENTED ON A COMPARABLE DAY
BASIS, WHICH REFLECTS AN ADJUSTMENT TO ELIMINATE THE ESTIMATED IMPACT OF THE
ADDITIONAL WEEK INCLUDED IN THE COMPANY'S FISCAL YEAR 2000 RESULTS. IN 2000, THE
COMPANY HAD A 53-WEEK FISCAL YEAR AS COMPARED TO A 52-WEEK FISCAL YEAR IN 2001.

Summary. Net income for fiscal year 2001 was $78.1 million, or $1.83
per diluted share, versus $169.4 million, or $3.72 per diluted share, for the
year ended December 31, 2000 ("fiscal year 2000"). Excluding special items,
earnings per diluted share were $0.80 and $1.07 for fiscal years 2001 and 2000,
respectively.

The special items reported in the 2001 and 2000 results include a $32.2
million pre-tax ($42.1 million after-tax) gain on the sale of the Company's Ohio
operations in 2001, a $180.7 million pre-tax ($113.0 million after-tax) gain on
the sale of the Company's St. Louis cluster operations in 2000 and reversals of
certain tax accruals in both years.

24

Revenues. Reported revenues were $394.4 million for fiscal year 2001 as
compared to $464.0 million for fiscal year 2000. The decline was mainly due to
the sale of the Company's St. Louis cluster and Ohio operations, a 52-week
fiscal year in 2001 versus a 53-week fiscal year in 2000, and lower advertising
revenues resulting from a decline in the U.S. economy.

Same-store revenues. Same-store revenues decreased by 6.7 percent to
$375.5 million. On a same-store, comparable day basis, revenues decreased
approximately 4.9 percent. On a same-store, comparable day basis, advertising
revenues decreased 6.0 percent, circulation revenues decreased 1.4 percent and
commercial print revenues decreased 4.3 percent. Online revenues included in
advertising revenues increased approximately 15.5 percent to $3.5 million on a
same-store, comparable day basis.

Salaries and employee benefits. Salaries and employee benefit expenses
were 35.6 percent of the Company's revenues for fiscal year 2001, compared to
33.4 percent for fiscal year 2000. Salaries and employee benefits decreased
$14.6 million, or 9.4 percent, in 2001 to $140.5 million. Same-store salaries
and employee benefits decreased $6.1 million, or 4.5 percent, primarily due to a
reduction in headcount, lower cost of retiree benefits, and one less week in
fiscal year 2001.

Newsprint, ink and printing charges. For fiscal year 2001, newsprint,
ink and printing charges were 9.6 percent of the Company's revenues, as compared
to 10.0 percent for fiscal year 2000. Newsprint, ink and printing charges
decreased $8.8 million, or 18.9 percent, for fiscal year 2001 as compared to the
prior year due to the dispositions of certain newspaper properties. On a
same-store, comparable day basis, newsprint, ink and printing charges increased
approximately $1.2 million, or 3.6 percent, primarily due to an increase of
approximately 9.2 percent in newsprint prices, offset partially by a decrease in
newsprint consumption of approximately 7.0 percent.

Selling, general and administrative. Selling, general and
administrative expenses were 12.1 percent and 10.1 percent of the Company's
revenues for fiscal years 2001 and 2000, respectively. On a same-store basis,
selling, general and administrative expenses for fiscal year 2001 increased $4.2
million from $40.7 million to $44.9 million, due primarily to increased
promotional activity associated with the Company's focus on increasing revenues.

Depreciation and amortization. Depreciation and amortization expenses
were 6.7 percent and 6.0 percent of the Company's revenues for fiscal years 2001
and 2000, respectively. Depreciation and amortization expenses decreased $1.3
million, or 4.7 percent, to $26.3 million for fiscal year 2001 primarily due to
the dispositions of certain newspaper properties. On a same-store basis,
depreciation and amortization expense was flat for fiscal year 2001 as compared
to fiscal year 2000.

Other expenses. Other expenses were $53.5 million for fiscal year 2001
as compared to $58.4 million for fiscal year 2000. On a same-store basis, other
expenses increased approximately $700,000, or 1.4 percent, to $50.7 million due
in part to increases in promotional expenses.

Operating income. Operating income decreased $40.7 million, or 31.5
percent, for fiscal year 2001 to $88.5 million as compared to $129.3 million in
fiscal year 2000. Same-store operating income decreased $26.2 million, or 23.1
percent, to $87.1 million.

Net interest and other expenses. Net interest and other expense
decreased $17.5 million for fiscal year 2001 as compared to fiscal year 2000,
principally due to a reduction in average net debt outstanding and lower
weighted average interest rates during fiscal year 2001 as compared to fiscal
year 2000. The reduction in average net debt is due primarily to the sales of
the St. Louis cluster and Ohio properties and strong free cash flow generated
from operations, partially offset by funds used for share repurchases,
acquisitions and the Philadelphia plant in 2001.

Gains on the sales of newspaper properties. On August 10, 2000, the
Company completed its sale of substantially all of the assets of the Suburban
Newspapers of Greater St. Louis and all of the issued and outstanding capital
stock of The Ladue News, Inc. (collectively, "St. Louis") and reported a pre-tax
gain of $141.1 million ($88.4 million after-tax) on the sale. On October 24,
2000, the Company sold substantially all the assets of its Alton, Illinois
newspaper, The Telegraph ("Alton") and reported a pre-tax gain of $39.6 million
on the sale ($24.6 million after-tax). On January 31, 2001, the Company
completed the sale of the assets of The Times Reporter, Dover/New Philadelphia,
Ohio (including Midwest Offset, one of the Company's commercial printing
companies co-located with The Times Reporter), and The Independent, Massillon,
Ohio and reported a pre-tax gain of $32.2 million ($42.1 million gain
after-tax).

25

Provision for income taxes. The provision for income taxes was $10.8
million for fiscal year 2001 as compared to $91.0 million for fiscal year 2000.
Included in the tax provision for fiscal year 2001 is a $9.9 million tax benefit
on the gain on sale of the Company's Dover/New Philadelphia and Massillon
properties, which was recorded due to the realization of previously unrecognized
book/tax differences and a $1.8 million reversal of certain accruals which were
determined to no longer be required. Included in the provision for fiscal year
2000 is $67.7 million of income taxes provided for the sale of the St. Louis
cluster partially offset by a $8.0 million reversal of certain accruals which
were determined to be no longer required. Excluding these special items in each
year, the Company's effective tax rate for fiscal years 2001 and 2000 were 38.9
percent and 38.4 percent, respectively.

Equity interest. The loss on equity interest of $1.3 million recorded
for fiscal year 2001 represents the Company's pro rata share (7.56 percent) of
the net loss for the period of AdOne, LLC, a provider of classified advertising
on the Internet, and compares to a loss on equity interest of $1.6 million in
the prior year.

Other information. Tangible net income for fiscal year 2001 was $46.6
million, or $1.09 per share, as compared to $61.0 million, or $1.34 per share,
for fiscal year 2000.

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations have historically generated strong positive
cash flow. The Company believes that cash flows from operations, future
borrowings and its ability to issue common stock will be sufficient to fund its
operating needs, capital expenditure requirements and long-term debt obligations
and will provide it with the flexibility to finance its acquisition strategy and
share repurchase program. See Note 4 of "Notes to Consolidated Financial
Statements."

Cash flows from operating activities. Net cash provided from operating
activities was $59.0 million for fiscal year 2002 as compared to $77.7 million
in the prior year. Current assets were $65.4 million and current liabilities,
excluding $32.9 million of current maturities of long-term debt, were $52.1
million as of December 29, 2002. The Company manages its working capital through
the utili