JOURNAL REGISTER CO, 10-K, 2000-03-24

JOURNAL REGISTER CO
10-K, 2000-03-24
NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING

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

-----------------

FORM 10-K

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

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

For the fiscal year ended ______________________

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

For the transition period from January 1, 1999 to December 26, 1999

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 IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)

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:
Common Stock, par value $0.01 per share

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 [ ].

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 17, 2000 was approximately $144,311,985.

As of March 17, 2000, 45,367,428 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
2000 Annual Meeting of Stockholders, which will be filed on or before April 24,
2000.

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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: THE PLANS AND OBJECTIVES OF THE COMPANY FOR FUTURE OPERATIONS AND
TRENDS AFFECTING THE COMPANY'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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. FACTORS THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, (I) A DECLINE IN
GENERAL ECONOMIC CONDITIONS, (II) THE UNAVAILABILITY OR MATERIAL INCREASE IN THE
PRICE OF NEWSPRINT, (III) AN ADVERSE JUDGMENT IN PENDING OR FUTURE LITIGATION
AND (IV) INCREASED COMPETITIVE PRESSURE FROM CURRENT COMPETITORS AND FUTURE
MARKET ENTRANTS. SEE "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS -- CERTAIN FACTORS WHICH MAY AFFECT THE
COMPANY'S FUTURE PERFORMANCE." 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 (together with all of its subsidiaries and
their respective predecessors (the "Company") is a leading U.S. newspaper
publisher, with total paid daily circulation of 636,939 and total non-daily
distribution of approximately 4.6 million. As of December 26, 1999, the Company
owned and operated 25 daily newspapers and 200 non-daily publications
strategically clustered in seven geographic areas: Connecticut; Philadelphia and
its surrounding areas; Ohio; the greater St. Louis area; central New England;
and the Capital-Saratoga and Mid-Hudson, New York regions. The Company's
newspapers are characterized by an intense focus on coverage of local news and
local sports and offer compelling graphic design in colorful, reader-friendly
packages.

From 1993 through 1999, the Company successfully completed 17 strategic
acquisitions, acquiring 13 daily newspapers, 126 non-daily publications and
three commercial printing companies. The Company has generally increased the
revenues and significantly increased the cash flow and profitability of its
acquired newspapers. For the fiscal year ended December 26, 1999, the Company
generated revenues of $469.6 million, EBITDA (as hereinafter defined) of $160.7
million and net income of $47.7 million. In 1998, the Company's EBITDA was
$146.7 million (excluding special charges and an extraordinary item recorded in
the third quarter of 1998). From 1993 through 1999, the Company recorded
compound annual growth in revenues and EBITDA (excluding special charges in 1997
and 1998 and the extraordinary item in 1998), of approximately 9.5% and 11.1%,
respectively. The Company has achieved this growth through a combination of
expanding revenues in existing geographic areas, strategic acquisitions and
implementing cost controls and ongoing expense reduction efforts at existing and
acquired newspapers.

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 and include the St. Louis, Missouri SUBURBAN JOURNALS
(the "JOURNALS"), the largest group of weekly newspapers in the United States
based on total distribution.

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, using extensive process color and compelling graphic design to

1
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attract new readers and to more fully engage existing 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 (approximately
74.3% of 1999 revenues), paid circulation, including single copy sales and
subscription sales (20.6% of 1999 revenues), and commercial printing and other
(5.1% of 1999 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
and 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 profits
than subscription sales, as single copy sales generally have higher per unit
prices and lower associated 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 targeted demographic groups and geographic
areas. The Company 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 1999 were derived primarily from
a broad group of local retailers (approximately 56%) and classified advertisers
(approximately 42%). No advertiser accounted for more than 2% of the Company's
1999 advertising revenues. The Company 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.

Substantially all of the Company's operations relate to newspaper
publishing. In addition to its daily newspapers and non-daily publications, the
Company owns other businesses that complement and enhance its publishing
operations, consisting of four commercial printing operations as well as a
company which develops application software for the newspaper industry.

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OVERVIEW OF OPERATIONS

The Company's operations are currently clustered in seven geographic
areas:

CONNECTICUT. In Connecticut, the Company owns the NEW HAVEN REGISTER, a
daily newspaper with daily circulation of more than 100,000, and Sunday
circulation of approximately 108,000, four suburban daily newspapers, 60
non-daily publications and one commercial printing company. The suburban daily
newspapers in this 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 155,000
and 157,000, respectively. The 60 suburban and community non-daily publications
have aggregate distribution of approximately 862,000. Included in the non-daily
publications is Connecticut Magazine, the state's premier magazine, acquired in
September, 1999. Combined, the Company's Connecticut daily newspapers and
non-daily publications serve a state-wide audience with concentrations in
western Connecticut (Litchfield and Fairfield counties) through Hartford and its
suburban areas to the greater New Haven area; and the Connecticut shoreline from
New Haven northeast to New London.

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

Year Year Daily Sunday Non-Daily
Publication Originated(1) Acquired Location Circulation(2) Circulation(2) Distribution(3)
----------- ------------- -------- -------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>

NEW HAVEN REGISTER.............. 1755 1989 New Haven 100,030 107,886
THE HERALD...................... 1881 1995 New Britain 19,095 38,857(4)
THE BRISTOL PRESS............... 1871 1994 Bristol 14,505 (4)
THE REGISTER CITIZEN............ 1889 1993 Torrington 11,352 10,649
THE MIDDLETOWN PRESS............ 1884 1995 Middletown 10,034 (4)
Imprint Newspapers
11 publications.............. 1880 1995 Bristol 98,766
Shore Line Newspapers
11 publications.............. 1877 1995 Guilford 129,739
Elm City Newspapers
9 publications.............. 1931 1995 Milford 90,342
Minuteman Newspapers
2 publications.............. 1993 1998 Westport 36,707
Housatonic Publications
9 publications.............. 1825 1998 New Milford 53,570
CONNECTICUT'S COUNTY KIDS
2 publications.............. 1989 1996 Westport 45,000
FOOTHILLS TRADER
3 publications.............. 1965 1995 Torrington 50,000
CONNECTICUT MAGAZINE............ 1938 1999 Trumbull 88,639
Gamer Publications
3 publications.............. 1981 1995 Bristol 57,500
EAST HARTFORD GAZETTE........... 1885 1995 East Hartford 19,500
THOMASTON EXPRESS............... 1874 1994 Thomaston 1,485
TMC (7 publications)............ 191,020
-------------- -------------- -------
TOTALS.......................... 155,016 157,392 862,268
============== ============== =======

</TABLE>

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

(2) Circulation averages for the six months ended September 30, 1999, according
to ABC Fas-Fax Report.

(3) Non-daily distribution includes both paid and free distribution. Paid
distribution for Housatonic Valley and Minuteman Newspapers reflects
Certified Audit of Circulations ("CAC") audit results for the 12 month
period ended June 30, 1999. All other non-daily distribution reflects
average distribution for December 1999.

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(4) In August 1996, the Company commenced publication of a Sunday newspaper,
THE HERALD PRESS, serving readers of THE HERALD, THE BRISTOL PRESS and THE
MIDDLETOWN PRESS.

The NEW HAVEN REGISTER is the Company's largest newspaper based on
daily circulation and is the second largest daily circulation newspaper in
Connecticut. The NEW HAVEN REGISTER serves a primary circulation area comprised
of the majority of New Haven County and portions of Fairfield, Middlesex and New
London Counties. This area (including portions of Fairfield County which are
served by related non-daily publications) has a population of 749,137 and had
population growth of approximately 8% from 1980 to 1999. This area has average
household income of $72,021, which is 28% above the national average of $56,184,
and a retail environment comprised of approximately 6,600 stores. This area is
home to a number of large and well-established institutions, including Yale
University and Yale-New Haven Hospital. As a result of its proximity to the
large media markets of New York City, Boston and Hartford, New Haven has only
one locally licensed television station (which serves a state-wide, rather than
a local, audience) and a fragmented radio market. Consequently, the Company
believes that the NEW HAVEN REGISTER is a powerful local news and advertising
franchise for the greater New Haven area.

THE HERALD, THE BRISTOL PRESS and THE MIDDLETOWN PRESS serve contiguous
areas between New Haven and Hartford. THE BRISTOL PRESS serves an area which has
a population of 322,794 and had population growth of approximately 4% from 1980
to 1999. This area has average household income of $75,186, which is 34% above
the national average. THE MIDDLETOWN PRESS serves an area which has a population
of 98,990 and had population growth of approximately 16% from 1980 to 1999. This
area has average household income of $65,197, which is 16% above the national
average. THE HERALD serves an area which has a population of 102,575, which is
essentially unchanged since 1980. This area has average household income of
$52,925. THE REGISTER CITIZEN serves an area which has a population of 245,166
and had population growth of approximately 12% from 1980 to 1999. This area has
average household income of $73,639, which is 31% above the national average.

The Connecticut publications benefit from considerable cross-selling of
advertising as well as from news-gathering and production synergies. The NEW
HAVEN REGISTER gathers state-wide news for all of the Company's Connecticut
newspapers; the newspapers cross-sell advertising through a one-order, one-bill
system; THE HERALD and THE MIDDLETOWN PRESS are printed at one facility, as are
THE REGISTER CITIZEN and THE BRISTOL PRESS. Moreover, in August 1996, in order
to take advantage of the contiguous nature of the geographic areas served by THE
HERALD, THE BRISTOL PRESS and THE MIDDLETOWN PRESS, the Company started a Sunday
newspaper, THE HERALD PRESS, serving readers of these three dailies with three
zoned editions and having Sunday circulation of approximately 38,857 as of
September 30, 1999.

PHILADELPHIA AND SURROUNDING AREAS. The Company owns six daily
newspapers and 51 non-daily publications serving areas surrounding Philadelphia,
Pennsylvania. These publications include, in Pennsylvania, the DAILY LOCAL NEWS
(West Chester), THE TIMES HERALD (Norristown), THE PHOENIX (Phoenixville), a
group of non-daily newspapers serving Philadelphia's affluent Main Line and a
group of 17 weekly newspapers, the InterCounty Newspaper Group, serving suburban
Philadelphia and central and southern New Jersey; and also in New Jersey, THE
TRENTONIAN (Trenton). The Company also owns two commercial printing companies,
acquired with the InterCounty Newspapers in December 1997, one of which prints
the 17 weekly newspapers and one of which is a premium quality sheet-fed
printing operation. The daily newspapers, acquired in the July 1998 Goodson
Acquisition (as hereinafter defined) include, both in Pennsylvania, The Delaware
County DAILY TIMES and THE MERCURY, Pottstown. The Goodson Acquisition non-daily
publications include, also in Pennsylvania, Acme Newspapers (Ardmore), including
THE MAIN LINE TIMES, serving the affluent Main Line, and NEWS OF DELAWARE
COUNTY, one of the largest audited community newspapers in the United States;
Town Talk Newspapers (Media); and Penny Pincher Shoppers (Pottstown). The six
daily newspapers have aggregate daily and Sunday circulation of approximately
187,000 and 166,000, respectively. This non-daily distribution totals
approximately 692,000.

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The following table sets forth information regarding the Company's
publications in Philadelphia and surrounding areas:

<TABLE>
<CAPTION>
Year Year Daily Sunday Non-Daily
Publication Originated(1) Acquired Location Circulation(2) Circulation(2) Distribution(3)
----------- ------------- -------- -------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>

DAILY TIMES (4)........... 1876 1998 Delaware County, PA 50,373 47,530
DAILY LOCAL NEWS.......... 1872 1986 West Chester, PA 33,127 31,316
THE MERCURY (4)........... 1930 1998 Pottstown, PA 26,099 26,851
THE TIMES HERALD.......... 1799 1993 Norristown, PA 20,752 17,787
THE PHOENIX............... 1888 1986 Phoenixville, PA 3,768
THE TRENTONIAN............ 1945 1985 Trenton, NJ 53,177 42,513
Suburban Publications
4 publications......... 1885 1986 Wayne, PA 42,631
InterCounty Newspaper
Group
17 publications....... 1869 1997 Bristol, PA 109,950
Acme Newspapers
4 publications (4)..... 1930 1998 Ardmore, PA 82,917
Penny Pincher Shoppers
6 publications (4)..... 1988 1998 Pottstown, PA 65,000
Town Talk Newspapers
7 publications (4)..... 1964 1998 Media, PA 87,500
MERCER'S PARENT & CHILD
GUIDE.................. 1999 1999(5) Trenton, NJ 60,000
THE WEEKLY SAVER.......... 1996 1996(5) Trenton, NJ 30,000
TRI-COUNTY RECORD......... 1975 1986 Morgantown, PA 21,363
THE HOMES MAGAZINE........ 1988 1988(5) West Chester, PA 18,545
THE VILLAGE NEWS.......... 1980 1986 Downingtown, PA 18,135
THE TIMES RECORD.......... 1980 1986 Kennett Square, PA 9,000
BLUE BELL JOURNAL......... 1999 1999(5) Blue Bell, PA 7,300
TMC (6 publications)...... 139,966
------------ ------------ -----------
TOTALS.................... 187,296 165,997 692,307
=========== ============ ============
</TABLE>

(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.
(2) Circulation averages for the six months ended September 30, 1999, according
to ABC Fas-Fax Report.
(3) Non-daily distribution includes both paid and free distribution. Non-daily
distribution reflects average distribution for December 1999, with the
following exceptions: Suburban Publications, which includes two
publications ( SUBURBAN ADVERTISER and KING OF PRUSSIA COURIER) which
reflect the CAC audit for the six months ended June 30, 1999 and THE
SUBURBAN & WAYNE TIMES which reflects the ABC audit results for the 24
month period ended September 30, 1999; Acme Newspapers, which includes
three publications (NEWS OF DELAWARE COUNTY, GERMANTOWN COURIER and MT.
AIRY TIMES EXPRESS) which reflect the CAC audit for the six months ended
September 30, 1999 and MAIN LINE TIMES which reflects the ABC Audit for the
24 month period ended September 30, 1999.
(4) Part of the Goodson Acquisition, completed July 15, 1998.
(5) Year established by the Company.

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
TIMES serves an area which has a population of 586,647, which has remained
substantially unchanged since 1980. This area has average household income of
$71,405, which is 27% above the national average. The DAILY LOCAL NEWS serves an
area which has a population of 404,637 and had population growth of
approximately 37% from 1980 to 1999. This area has average household income of
$87,691, which is 56% above the national average. THE MERCURY (Pottstown),
located approximately 40 miles west of Philadelphia, serves an area which has a
population of 436,692 and had population growth of approximately 18% from 1980
to 1999. This area has average household income of $69,850, which is 24% above

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the national average. THE TIMES HERALD serves an area which has a population of
170,604 and had population growth of approximately 7% from 1980 to 1999. This
area has average household income of $73,619, which is 31% above the national
average. THE PHOENIX serves an area which has a population of 118,749 and had
population growth of approximately 29% from 1980 to 1999. This area has average
household income of $88,152, which is 57% above the national average. The
Company's weekly newspaper group, Suburban Publications, in suburban
Philadelphia serves an area which has a population of 324,680 and had population
growth of approximately 20% from 1980 to 1999. This area has average household
income of $108,309, which is 93% above the national average. MAIN LINE TIMES,
the flagship of the Acme Newspapers group, serves an area which has a population
of 391,936 and had population growth of approximately 1% from 1980 to 1999. This
area has average household income of $104,400, which is 86% 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 on the East Coast of the United States in
terms of total square footage.

THE TRENTONIAN is published in Trenton, the capital of New Jersey,
located 40 miles north of Philadelphia and 75 miles south of New York City. THE
TRENTONIAN serves an area which has a population of 285,905 and had population
growth of approximately 7% from 1980 to 1999. This area has average household
income of $70,670, which is 26% above the national average.

The Company's Philadelphia cluster cross-sells advertising. The nature
of the cluster has allowed for the implementation of significant cost saving
programs. For example, THE TIMES HERALD and several non-daily suburban
publications share printing facilities, as do the DAILY LOCAL NEWS and THE
PHOENIX. Acme Newspapers, part of the Goodson Acquisition, are printed at the
DAILY LOCAL NEWS plant and at the Company's commercial printing company in
Bristol, Pennsylvania. THE TRENTONIAN'S television guide is also printed at the
Bristol plant. All of these publications share certain news-gathering resources.
The Company believes that the continued integration of the Goodson Acquisition
newspapers into this cluster will result in considerable additional
cross-selling of advertising, as well as additional cost saving programs. The
Company further believes that the integration of the Goodson Acquisition
newspapers into this cluster allows the Company to compete more effectively in
the areas it serves. The Company believes that the construction of a centralized
printing facility in the Philadelphia area, scheduled to begin in late 1999,
will result in considerable additional cost savings.

OHIO. The Company owns four daily newspapers and a commercial printing
operation in Ohio. The daily newspapers are THE NEWS-HERALD (Lake County), THE
MORNING JOURNAL (Lorain), THE TIMES REPORTER (Dover-New Philadelphia) and,
acquired as part of the Goodson Acquisition, THE INDEPENDENT (Massillon). The
Company has aggregate daily and Sunday circulation of approximately 126,000 and
141,000, respectively. Non-daily distribution in the Ohio cluster is
approximately 125,000.

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

THE NEWS-HERALD......... 1878 1987 Lake County 50,823 61,505
THE MORNING JOURNAL .... 1921 1987 Lorain 35,850 39,476
Dover-New
THE TIMES REPORTER...... 1903 1987 Philadelphia 24,118 25,451
THE INDEPENDENT (4)..... 1871 1998 Massillon 15,034 15,001
COUNTY KIDS Lake County &
2 publications....... 1997 1997(5) Lorain 38,500
TMC (4 publications).... 86,780
--------- --------- -------
TOTALS.................. 125,825 141,433 125,280
========= ========= =======
</TABLE>
(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.
(2) Circulation averages for the six months ended September 30, 1999, according
to ABC Fas-Fax Report.
6

<PAGE>

(3) Non-daily distribution is solely free distribution and reflects average
distribution for December 1999.
(4) Part of the Goodson Acquisition, completed July 15, 1998.
(5) Established by the Company in 1997.

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 222,583 and 83,231, respectively, and had
population growth of approximately 6% and 20%, respectively, from 1980 to 1999.
Lake and Geauga Counties have average household incomes of $58,122 and $75,437,
respectively. THE MORNING JOURNAL serves an area which has a population of
148,191 and had population growth of approximately 1% from 1980 to 1999. This
area has average household income of $53,218. THE TIMES REPORTER and THE
INDEPENDENT serve contiguous markets primarily in Tuscarawas and western Stark
counties. THE TIMES REPORTER serves the rural communities of Dover and New
Philadelphia, which are located approximately 80 miles south of Cleveland. THE
TIMES REPORTER serves an area which has a population of 109,514 and had
population growth of approximately 7% from 1980 to 1999. This area has average
household income of $43,027. THE INDEPENDENT (Massillon) serves western Stark
County, at the southern edge of the Northeast Ohio industrial area, which is
located approximately 60 miles south of Cleveland and 20 miles north of
Dover-New Philadelphia. THE INDEPENDENT serves an area which has a population of
240,594 and had population growth of approximately 4% from 1980 to 1999. This
area has average household income of approximately $52,675. The Company believes
that each of its Ohio newspapers benefits from a fragmented local media
environment. The Company further 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 Company's Ohio cluster
benefits from a variety of synergistic opportunities, including the
cross-selling of advertising and editorial coverage. In addition, THE TIMES
REPORTER and THE Independent benefit from commercial printing synergies, as both
operations include commercial printing.

GREATER ST. LOUIS AREA. The Company owns the SUBURBAN JOURNALS (the
"Journals"), the largest group of suburban and community non-daily newspapers in
the United States (in terms of total distribution); one daily newspaper; the
LADUE NEWS, a weekly newspaper acquired in December 1997; and six other
non-daily publications in the greater St. Louis area. The JOURNALS are a group
of 42 newspapers which are distributed one to three times each week in the St.
Louis suburban areas, including communities in Illinois, with total weekly
distribution of approximately 1.7 million. The Company's daily newspaper in this
cluster, THE TELEGRAPH (Alton, IL), has daily and Sunday circulation of
approximately 28,000 and 30,000, respectively.

The following table sets forth information regarding the Company's publications
in the greater St. Louis area:

Suburban Newspapers of
Greater St. Louis (79
editions of 42 JOURNALS) 1922 1984 St. Louis, MO 1,695,580
THE TELEGRAPH............. 1836 1985 Alton, IL 27,885 29,886
LADUE NEWS
4 publications......... 1981 1997 Ladue, MO 149,500
COUNTY KIDS
3 publications.......... 1996 1996(4) St. Louis, MO 90,000
TMC (1 publication)....... 15,000
------------ ------------- --------------
TOTALS.................... 27,885 29,886 1,950,080
============ ============= ==============

</TABLE>

<PAGE>

(4) Established by the Company in 1996.

The JOURNALS have total distribution of approximately 1.1 million
mid-week and approximately 634,000 on Sunday, for total weekly distribution of
approximately 1.7 million. The JOURNALS reach approximately 90% of the homes in
the greater suburban St. Louis area. The JOURNALS serve an area which has a
population of approximately 2.4 million and had population growth of
approximately 5% from 1980 to 1999. This area has average household income of
$57,750. According to EDITOR & PUBLISHER MARKET GUIDE, St. Louis is the 17th
largest metropolitan area in the United States. The JOURNALS have received
national recognition and have been studied by domestic and foreign publishers as
a model of successful neighborhood newspapers. Due to St. Louis'
characterization as a city of neighborhoods (92 municipalities comprise St.
Louis County alone), the Company believes the JOURNALS offer local retailers a
cost-effective way to reach targeted demographic groups, which enables the
JOURNALS to compete effectively with the major metropolitan daily and other
weekly newspapers in the area. The Company believes that the area's largest
radio station competes primarily for major accounts rather than small
advertisers and, thus, is not a significant direct competitor. The Company
believes that the JOURNALS' targeted, highly localized approach places the
JOURNALS in a strong competitive position. LADUE NEWS serves the affluent
suburbs west of St. Louis, an area with average household income of $108,019,
92% above the national average. This area has a population of approximately
158,478 and had population growth of approximately 18% from 1980 to 1999. THE
TELEGRAPH serves a community located in southeast Illinois, within the greater
St. Louis area and which is connected to St. Louis by the Clark Bridge. THE
TELEGRAPH serves an area which has a population of 119,184 and had a decline in
population of approximately 2% since 1980. This area has average household
income of $45,529.

Suburban and community non-daily newspapers, such as the JOURNALS, have
several advantages over national and major metropolitan daily newspapers,
including an intrinsically lower cost structure, the ability to publish only on,
what are for dailies, the most profitable days (i.e. one midweek day and one
weekend day) and the ability to avoid expensive wire services and syndicated
feature material. Moreover, suburban and community non-daily newspapers provide
an alternative outlet for local merchants and advertisers to advertise in their
own local areas at costs lower than those of national and major metropolitan
newspapers. Thus, the JOURNALS have a broader advertiser base and do not rely on
major accounts for advertising revenue to the same degree as national and major
metropolitan daily newspapers.

CENTRAL NEW ENGLAND. The Company owns five daily and 18 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), acquired August 13, 1999 and a group of
weekly newspapers serving the South County, Rhode Island area. The five daily
newspapers have aggregate daily circulation of approximately 76,000 and
aggregate Sunday circulation of approximately 58,000. The non-daily publications
in this cluster have total distribution of approximately 246,000.

<PAGE>

The following table sets forth information regarding the Company's
publications in central New England.
<TABLE>
<CAPTION>

THE HERALD NEWS........... 1872 1985 Fall River, MA 26,210 27,820
TAUNTON DAILY GAZETTE..... 1848 1996 Taunton, MA 14,142 13,426
THE CALL.................. 1892 1984 Woonsocket, RI 16,199 16,314
THE TIMES................. 1885 1984 Pawtucket, RI 15,021
KENT COUNTY DAILY TIMES 1892 1999 West Warwick, RI 4,839
Southern Rhode Island
Newspapers
8 publications......... 1854 1995 Wakefield, RI 54,502
Hometown Newspapers
4 publications......... 1969 1999 West Warwick, RI 45,500
COUNTY KIDS............... 1999 1999(4) Fall River, MA, 29,850
Pawtucket &
NEIGHBORS................. 1999 1999(4) Woonsocket, RI 20,000
TMC (4 publications)...... 95,800
-------------- ------------ --------
TOTALS.................... 76,411 57,560 245,652
============= ============ ========
</TABLE>
- ------------------
(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.
(2) Circulation averages for the six months ended September 30, 1999, according
to ABC Fas-Fax Report.
(3) Non-daily distribution includes both paid and free distribution. Paid and
free non-daily distribution for Southern Rhode Island Newspapers (except
THE WESTERLY SHOPPER, THE WEEK IN SOUTH COUNTY AND RHODE ISLAND FAMILY)
reflects the CAC Audit report for the six months ended June 30, 1999. The
other non-daily distribution figures reflect average distribution for
December 1999.
(4) Established by the Company in 1999.

THE HERALD NEWS and the TAUNTON DAILY GAZETTE are situated 14 miles
apart. Each is approximately 50 miles south of Boston, Massachusetts and 20
miles east of Providence, Rhode Island. The region's largest shopping mall,
located in Taunton, contains one million square feet of retail space and
approximately 150 stores. THE HERALD NEWS serves an area which has a population
of 162,021, which has remained substantially unchanged from 1980. This area has
average household income of $44,248. The TAUNTON DAILY GAZETTE serves an area
which has a population of 129,134 and had population growth of approximately 24%
from 1980 to 1999. This area has average household income of $55,113. THE CALL
serves an area which has a population of 182,663 and had population growth of
approximately 12% from 1980 to 1999. This area has average household income of
$58,265. THE TIMES serves an area which has a population of 182,837 and had
population growth of approximately 4% from 1980 to 1999. This area has average
household income of $50,015. Southern Rhode Island Newspapers serve an area
which has a population of 154,960 and had population growth of approximately 27%
from 1980 to 1999. This area has average household income of $63,936, which is
14% above the national average. No local television stations exist in the
communities which the central New England newspapers serve. Further, the Company
believes that its central New England properties benefit from fragmented 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; moreover, the Company's
Massachusetts and Rhode Island newspapers benefit from significant production
and editorial synergies. For example, THE TIMES and THE CALL are printed at the
same facility, as are the TAUNTON DAILY GAZETTE and THE HERALD News.
Additionally, THE TIMES, THE CALL and the group of paid suburban and community
non-daily newspapers serving southern Rhode Island all share certain news
gathering resources.

CAPITAL-SARATOGA REGION OF NEW YORK. The Company owns three daily and
four 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 weekly COMMUNITY NEWS, serving Clifton Park, and THE
ONEIDA DAILY DISPATCH, acquired as part of the 1998 Goodson Acquisition. The

<PAGE>

daily newspapers have aggregate daily circulation of approximately 42,000 and
aggregate Sunday circulation of approximately 39,000. The non-daily publications
in this cluster have total distribution of approximately 82,000.

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

THE RECORD................ 1896 1987 Troy 23,668 25,560
Saratoga
THE SARATOGIAN............ 1855 1998 Springs 11,147 13,008
COMMUNITY NEWS............ 1969 1998 Clifton Park 28,134
THE ONEIDA DAILY
DISPATCH (4).............. 1850 1998 Oneida 7,581
Oneida-Chittenango
Pennysavers(4)............ 1957 1998 Oneida 24,000
TMC (2 publication)....... 30,360
------ -------- ------
TOTALS.................... 42,396 38,568 82,494
======= ======== ======
</TABLE>
- -----------------
(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.
(2) Circulation averages for the six months ended September 30, 1999, according
to ABC Fas-Fax Report.
(3) Non-daily distribution is free and reflects average distribution for
December 1999.
(4) Part of the Goodson Acquisition, completed July 15, 1998.

THE RECORD and THE SARATOGIAN are situated approximately 26 miles
apart. THE RECORD serves an area which has a population of 173,159, which has
remained substantially unchanged since 1980. This area has average household
income of $46,355. THE SARATOGIAN serves an area which has a population of
208,307 and had population growth of approximately 24% from 1980 to 1999. This
area has average household income of $55,193. THE ONEIDA DAILY DISPATCH serves
an area which has a population of 75,397 and had population growth of
approximately 5% from 1980 to 1999. This area has average household income of
$47,728. No local television stations exist in the communities which the
Capital-Saratoga Region newspapers serve. Further, the Company believes that its
Capital-Saratoga Region properties benefit from fragmented 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 RECORD, THE SARATOGIAN and the
COMMUNITY NEWS benefit from significant cross-selling of advertising. These
newspapers also benefit from significant production synergies. Directly
following the March 9, 1998 acquisition of THE SARATOGIAN and the COMMUNITY
NEWS, the newspapers began printing at THE RECORD plant in Troy, taking
advantage of that plant's excess capacity and achieving significant cost
efficiencies. The three newspapers also share certain news-gathering functions,
and the Company believes that additional synergies may be available between
them.

MID-HUDSON REGION OF NEW YORK. The Company owns one daily newspaper and
11 non-daily publications in the Mid-Hudson Region of New York. The daily
newspaper in this cluster is THE DAILY FREEMAN in Kingston. The Company's
non-daily publications in this cluster are Taconic Press, a group of 10
non-daily newspapers in Dutchess County, New York, acquired September 21, 1998,
and THE PUTNAM COUNTY COURIER, serving Putnam County, New York, which the
Company acquired as part of its January 1998 acquisition of HVM, LLC. The
Mid-Hudson Region cluster has aggregate daily circulation of approximately
22,000, aggregate Sunday circulation of approximately 29,000 and total non-daily
distribution of approximately 603,000.

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

<PAGE>
<TABLE>
<CAPTION>
Year Year Daily Sunday Non-Daily
Publication Originated(1) Acquired Location Circulation(2) Circulation(2) Distribution(3)
----------- ------------- -------- -------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>

DAILY FREEMAN (4)......... 1871 1998 Kingston 22,110 29,127
Taconic Press
11 publications........... 1846 1998 Millbrook 603,187
-------- -------- --------
TOTALS.................. 22,110 29,127 603,187
======== ======== ========
</TABLE>
- ---------------
(1) For merged newspapers and newspaper groups, the year given reflects the
date of origination for the earliest publication.
(2) Circulation averages for the six months ended September 30, 1999, according
to ABC Fas-Fax Report.
(3) Non-daily distribution includes both paid and free distribution. Paid
distribution for the Putnam County Courier, part of the Taconic Press
publications, reflects the CAC Audit report for the twelve months ended
June 30, 1999. All other distribution reflects average distribution for
December 1999.
(4) Part of the Goodson Acquisition, completed July 15, 1998.

THE DAILY FREEMAN, Taconic Press and THE PUTNAM COUNTY COURIER serve
markets in the Mid-Hudson Region of New York. THE DAILY FREEMAN serves an area
which has a population of 265,862 and had population growth of approximately 6%
from 1980 to 1999. This area has average household income of $47,837. Taconic
Press newspapers serve an area which has a population of 95,401 and had
population growth of approximately 8% from 1980 to 1999. This area has average
household income of $61,827. THE PUTNAM COUNTY COURIER serves an area which has
a population of 89,937 and had population growth of approximately 22% from 1980
to 1999. This area has average household income of $83,108. One independent
television station (which serves a regional, rather than a local, audience)
exists in the communities which the Mid-Hudson Region newspapers serve. Further,
the Company believes that its Mid-Hudson Region properties benefit from
fragmented local radio markets. As a result, the Company believes that each of
these newspapers is a significant media outlet in its respective community,
thereby making these newspapers attractive vehicles for area advertisers. The
Company believes that the Mid-Hudson Region newspapers benefit from significant
cross-selling of advertising, production synergies and certain news-gathering
resources. Certain publications in this cluster also benefit from advertising
cross-selling with THE REGISTER CITIZEN (Torrington, CT) and Housatonic
Publications (New Milford, CT), which serve Litchfield County, Connecticut.

ADVERTISING

Substantially all the Company's advertising revenues are derived from a
diverse group of local retailers and classified advertisers. The Company
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.
Local advertising is 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 74.3% of the
Company's total revenues for 1999. The Company's advertising rate structures
vary among its publications and are a function of various factors, including
results achieved for advertisers, local market conditions and competition, as
well as circulation, readership, demographics and type of advertising (whether
classified or display). In 1999, local and regional advertising accounted for
the largest share of the Company's advertising revenues (55.6%), followed by
classified advertising (39.3%), legal advertising (2.4%) and national
advertising (2.7%). 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 advertiser accounted for more than 2% of the Company's total 1999
advertising 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. Local management is given
little latitude for discounting from the approved rates. Corporate management
also works with local advertising staff to develop marketing kits, presentations
and third-party research studies. A portion of the compensation for the

11
<PAGE>

Company's publishers is based upon increasing advertising revenues. The Company
stresses the timely collection of receivables, and sales compensation 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

Substantially all of 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 20.6% of the Company's total revenues in 1999. Approximately 66.2%
of 1999 circulation revenues were derived from subscription sales and
approximately 33.8% from single copy sales. Single copy sales rates currently
range from $.25 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 by
an NAA study. Single copy sales also tend to generate a higher profit than
subscription sales, as single copy sales generally have higher per unit prices
and lower associated distribution costs. In 1999, the Company had total paid
daily circulation of 636,939, paid Sunday circulation of 619,963 and non-daily
distribution of approximately 4.6 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.
Circulation has generally declined throughout the newspaper industry in recent
years, and the Company's newspapers have generally experienced this trend, even
as overall operating performance of its newspapers has improved. The Company
seeks to maximize the overall operating performance rather than maximizing
circulation of its individual newspapers.

ONLINE OPERATIONS

The Company publishes 27 Web sites which represent their various
newspapers and magazines. A number of the Web sites are "cluster" sites
combining publications within a specific geographic area. The largest cluster
site is www.CTCentral.com, which represents the NEW HAVEN REGISTER, THE BRISTOL
PRESS, THE HERALD (New Britain), THE REGISTER CITIZEN (Torrington) and THE
MIDDLETOWN PRESS. In addition to these five dailies, the site also includes
news, information and ads from 24 weekly publications situated throughout
Connecticut.

Cluster sites also exist in St. Louis, www.yourjournal.com,
representing the Suburban Newspapers of Greater St. Louis group; Philadelphia,
www.allaroundphilly.com, representing the Delaware County Daily and Sunday
Times, the DAILY LOCAL NEWS (Westchester), THE MERCURY (Pottstown), THE TIMES
HERALD (Norristown), THE PHOENIX (Phoenixville), THE TRENTONIAN (Trenton, NJ)
and the weekly publications; the Capital region of New York,
www.CapitalCentral.com, representing THE RECORD (Troy) and THE SARATOGIAN; and
in Rhode Island, www.RICentral.com, representing Southern Rhode Island
Newspapers and the KENT COUNTY DAILY TIMES.

The remaining Company newspapers, along with Connecticut Magazine, have
individual Web sites.

The primary source of online revenue is from classified advertising.
For the year ended December 26, 1999, the 27 web sites generated approximately
$3.2 million as compared to approximately $1.8 million for the year ended
December 31, 1998.

The Company is in the process of re-launching its sites which will
offer viewers significantly more content, improved functionality and increased
interactive opportunities.

<PAGE>

OTHER OPERATIONS

The Company owns and operates four commercial printing facilities:
Imprint Printing in North Haven, Connecticut; Midwest Offset in New
Philadelphia, Ohio; Nittany Valley Offset in State College, Pennsylvania; and
InterPrint in Bristol, Pennsylvania. These operations also print certain of the
Company's publications. The commercial printing operations accounted for
approximately 5.1% of the Company's 1999 revenues. The Company also owns
Integrated Newspaper Systems, Inc., a company which develops application
software for the newspaper industry.

EMPLOYEES

The Company employs approximately 5,500 employees.

RAW MATERIALS

The basic raw material for newspapers is newsprint. The Company's
newsprint consumption (excluding paper consumed in the Company's commercial
printing operations) totaled approximately $36.5 million in 1999, which was
approximately 8.2% of the Company's newspaper revenues. In 1999, the Company
consumed approximately 82,000 metric tons of newsprint, including paper consumed
in its commercial printing operations. The Company has no long-term contracts to
purchase newsprint. Generally, the Company has in the past and currently
purchases all of its newsprint from two suppliers, although in the future the
Company may purchase newsprint from other suppliers. The Company believes that
concentrating its newsprint purchases in this way provides a more secure
newsprint supply and lower per unit newsprint prices. The Company also believes
that it purchases newsprint at price levels lower than those which are available
to individually owned small metropolitan and suburban daily newspapers and
suburban and community non-daily publications 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 reflected a decrease of
approximately 18% in 1997 and an increase of approximately 8% in 1998 and a
decrease of approximately 13% in 1999, in each case compared to the previous
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. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Certain Factors Which May Affect the Company's Future Performance
- -- Price and Availability of Newsprint."

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.

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 expenditures and paid
circulation comes from local, regional and national newspapers, shoppers,
television, radio, direct mail, on-line services and other forms of
communication and advertising media. Since 1995, the Company has been developing
web sites for each of its publications which attract readers and advertisers.
The Company has published an on-line version of the NEW HAVEN REGISTER since
1995. The Company has an on-line editorial presence and a full on-line
classified advertising service for each of its daily newspapers and weekly
newspaper groups. Competition for newspaper advertising expenditures is largely
based upon advertiser results, readership, advertising rates, demographics and
circulation levels, while competition for circulation and readership is based

<PAGE>

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, primarily compete with direct mail advertising, shared mail
packages and other private advertising delivery services. The Company believes
that, because of the relative competitive position of its suburban and community
non-daily publications in the communities which 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."

ENVIRONMENTAL MATTERS

As is the case with other newspaper and similar publication 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. The Company
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. The Company is in the process of monitoring groundwater
contamination which has been detected at one of its facilities. The Company
believes that the remediation of any such groundwater contamination, if
required, will not have a material adverse effect on its financial condition or
results of operations. In May 1998, one of the Company's subsidiaries, acquired
as part of the Goodson Acquisition, received a notice of potential liability in
connection with a landfill superfund site. The Company is fully indemnified for
all costs and liabilities arising out of this issue by the seller as part of the
Goodson Acquisition purchase agreement. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Certain Factors
Which May Affect the Company's Future Performance -- Environmental Matters."

REGULATION

Paid circulation newspapers which are delivered by second-class mail
are required to obtain permits from, and file an annual statement of ownership
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, if certain
threshold requirements under such Act are satisfied.

<PAGE>
ITEM 2. PROPERTIES.

The Company owns and operates 118 facilities used in the course of
producing and publishing its daily and non-daily publications. Approximately 80
of the Company's facilities are leased for terms ranging from one to six years.
These leased facilities range in size from approximately 160 to 70,000 square
feet. The location and approximate size of the principal physical properties
used by the Company at December 26, 1999, as well as the expiration date of the
leases relating to such properties which the Company leases are set forth below:

<TABLE>
<CAPTION>
Approximate Area in Square Feet
--------------------------------------------
Location Owned Square Feet Leased Square Feet Lease Expiration Date
-------- ----------------- ------------------ ---------------------
<S> <C> <C> <C>

New Haven, CT......................... 205,000(1)(3)
New Britain, CT....................... 33,977(1)(3)
Bristol, CT........................... 40,000(1)(3)
Torrington, CT........................ 36,120(1)(3)
Middletown, CT........................ 30,000(1)(3)
North Haven, CT....................... 24,000(3) 10,000(3) 12/31/05
Guilford, CT.......................... 18,400(1) 2,500(1) 5/31/01
Colchester, CT........................ 1,900(1) 12/31/02
Trumbull, CT.......................... 6,187(1) 1/9/04
Westport, CT.......................... 1,620(1) 12/31/02
Milford, CT........................... 11,745(1)
New Milford, CT....................... 6,840(1) 8/15/03
Old Saybrook, CT...................... 1,950(1) 3/31/00
Willoughby, OH........................ 80,400(1)(3)
Lorain, OH............................ 68,770(1)(3)
New Philadelphia, OH.................. 85,567(1)(3)
Moorestown, NJ........................ 2,000(1) 3/31/02
Trenton, NJ........................... 54,642(1)(3) 18,889(2) 11/30/00
Turnersville, NJ...................... 11,032(1)
West Chester, PA...................... 34,000(1)(3)
Norristown, PA........................ 40,000(1)(3)
Newtown, PA...........................
Philadelphia, PA...................... 2,700(1) 3/31/03
Ridley, PA............................ 8,000(1) 1,500(1)
Phoenixville, PA...................... 10,696(1)(3) 9/30/02
Wayne, PA............................. 11,980(1)(3)
State College, PA..................... 23,365(1)(3) 2,800(4) 8/31/00
Bristol, PA........................... 70,000(1)(3) 12/31/04
Fall River, MA........................ 57,571(1)(3)
Taunton, MA........................... 21,100(1)(3)
Pawling, NY........................... 2,000(1) 9/30/00
Troy, NY.............................. 50,000(1)(3)
Saratoga, NY.......................... 11,000(1)
Carmel, NY............................ 2,000(1) 9/30/00
Woonsocket, RI........................ 49,338(1)(3)
Pawtucket, RI......................... 41,096(1)(3)
Wakefield, RI......................... 11,750(1)(3)
St. Louis, MO......................... 69,415(1)(3) 22,043(1) 12/31/00
Warrenton, MO......................... 1,900(1) 8/31/03
Festus, MO............................ 6,783(1) 12/31/00
Hazelwood, MO......................... 5,000(1) 2/05/05
St. Charles, MO....................... 4,298(1) 6/30/04
Collinsville, IL...................... 14,587(1)
Granite City, IL...................... 17,550(1)
Belleville, IL........................ 8,400(1)

</TABLE>

<PAGE>

2. PROPERTIES. (CONTINUED)

Approximate Area in Square Feet
--------------------------------------------
Location Owned Square Feet Leased Square Feet Lease Expiration Date
-------- ----------------- ------------------ ---------------------
<S> <C> <C> <C>

Alton, IL............................. 39,000(1)(3) 16,000(4) 1/31/01
Oneida, NY............................ 24,000(1)(3)
Kingston, NY.......................... 25,800(1)(3)
Ardmore, PA........................... 25,250(1)(3)
Media, PA............................. 4,500(1) 4/30/04
Primos, PA............................ 85,000(1)(3)
Pottstown, PA......................... 48,000(1)(3) 7,031(3) 9/30/00
Massillon, OH......................... 25,000(1)(3)
Millbrook, NY........................ 5,000(1)

</TABLE>

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

The Company 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."

ITEM 3. LEGAL PROCEEDINGS.

The Company is involved in a number of litigation matters which 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. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Certain Factors Which May Affect the Company's Future Performance -
Environmental Matters."

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

None.

16
<PAGE>

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information as of March 17, 2000
with respect to each person who is an executive officer of the Company:

NAME POSITION
<S> <C>

Robert M. Jelenic....................................... Chairman, President and Chief Executive Officer
Jean B. Clifton......................................... Executive Vice President, Chief Financial Officer
and Secretary
Allen J. Mailman........................................ Senior Vice President, Technology
William J. Higginson.................................... Vice President, Production

</TABLE>

ROBERT M. JELENIC is the 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 six years. A Chartered Accountant, Mr.
Jelenic began his business career with Arthur Andersen in Toronto, Canada. Mr.
Jelenic has 24 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 director of the NAA and Chairman of the NAA's Technology Committee.
Mr. Jelenic is 49 years old.

JEAN B. CLIFTON is Executive Vice President, Chief Financial Officer and
Secretary of the Company, positions she has held since the inception of the
Company, and has been a director of the Company and its predecessors for more
than the past six years. Prior to joining the Company, Ms. Clifton, a Certified
Public Accountant, had been employed by Arthur Young & Co. (a predecessor to
Ernst & Young LLP). She has 14 years of senior management experience in the
newspaper industry. Ms. Clifton is a graduate of the University of Michigan
School of Business Administration. Ms. Clifton is a member of the Postal Affairs
Committee and the Employee Benefits Committee of the NAA. Ms. Clifton is 39
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. He has 25 years of management experience in the newspaper
industry, including 14 years with Newhouse Publications. Mr. Mailman received a
Bachelor of Arts degree in Economics and Mathematics from the University of
Oklahoma. Mr. Mailman is 53 years old.

WILLIAM J. HIGGINSON is Vice President of Production of the Company, a
position he has held since July 1995. From January 1994 to July 1995, he was
Corporate Production Director of the Company and, from 1991 to January 1994, was
Production Director of the NEW HAVEN REGISTER. Mr. Higginson has 27 years of
experience in the newspaper industry. Mr. Higginson is 44 years old.

<PAGE>

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:

HIGH LOW
---- ---
(Per Share)
Year ended December 26, 1999
----------------------------

Fourth Quarter $15 3/4 $11 13/16
Third Quarter 21 7/8 13 7/16
Second Quarter 23 11 3/8
First Quarter 15 7/8 11 11/16

Year ended December 31, 1998
----------------------------

Fourth Quarter $16 3/16 $12 1/8
Third Quarter 18 7/8 13 3/4
Second Quarter 23 7/8 16 5/16
First Quarter 21 18

On March 17, 2000, there were approximately 50 stockholders of record
of the Common Stock. The Company believes that it has approximately 1,272
beneficial owners.

The Company has not paid dividends on the Common Stock and does not
currently anticipate paying dividends on the Common Stock in the foreseeable
future. The Company currently intends to retain future earnings for reinvestment
in the Company. In addition, the 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 5 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.

The Company is a holding company which 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 obligation,
contingent or otherwise, 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 which 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 assets of the affected subsidiary.

18
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

The following selected combined data (except number of newspapers and
per share amounts) for the combined balance sheet of the Company as of December
31, 1995, the consolidated balance sheet of the Company as of December 26, 1999
and the consolidated balance sheets of the Company as of December 31, 1998, 1997
and 1996 and the related consolidated statements of income and cash flows for
each of the five years in the period ended December 26, 1999 have been derived
from the audited financial statements of the Company. The selected financial
data 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.

Year ended Year Ended December 31,
December 26, -------------------------------------------------
1999(1) 1998 1997 1996 1995
----------- ---- ---- ---- ----
(In thousands, except number of newspapers and per share amounts)
Statement of Income Data:
<S> <C> <C> <C> <C> <C>

Revenues:
Advertising................................ $348,995 $312,908 $266,914 $256,971 $249,534
Circulation................................ 96,783 89,388 80,211 79,776 73,797
---------- ---------- --------- ----------- --------
Newspaper revenues.............................. 445,778 402,296 347,125 336,747 323,331
Commercial printing and other................... 23,787 24,484 12,282 14,373 15,626
---------- ---------- --------- ----------- --------
469,565 426,780 359,407 351,120 338,957
Operating expenses:
Salaries and employee benefits............. 157,110 139,216 114,302 111,626 110,651
Newsprint, ink and printing charges........ 48,432 53,594 40,452 50,110 48,243
Selling, general and administrative........ 45,318 39,047 30,450 30,993 28,678
Depreciation and amortization.............. 28,798 23,844 20,480 20,525 19,178
Other...................................... 57,975 52,012 40,783 38,976 38,743
Special charge(2).......................... -- -- 31,899 -- --
-------- --------- --------- --------- -------
337,633 307,713 278,366 252,230 245,493
-------- --------- --------- --------- -------
Operating income................................ 131,932 119,067 81,041 98,890 93,464
Net interest and other expense.................. (52,347) (45,321) (42,288) (56,472) (64,028)
---------- --------- --------- ---------- --------
Income before provision for income taxes,
equity interest and extraordinary item .... 79,585 73,746 38,753 42,418 29,436

Provision for income taxes...................... 31,694 28,112 15,784 14,309 2,653
---------- --------- --------- ---------- --------
Income before extraordinary item
and equity interest ...................... 47,891 45,634 22,969 28,109 26,783
Equity interest................................. (226) -- -- -- --
---------- --------- -------- ---------- --------
Income before extraordinary item................ 47,665 45,634 22,969 28,109 26,783
Extraordinary item (3).......................... -- (4,495) -- -- --
Net income ..................................... $ 47,665 $ 41,139 $ 22,969 $ 28,109 $26,783
========== ========= ========= ========== ==========
Income before extraordinary item per common share $ 1.02 $ .94 $ .51 $ -- $ --
Net income per common share, basic and diluted.. $ 1.02 $ .85 $ .51 $ -- $ --
Proforma net income per common share(4)......... $ -- $ -- $ -- $ .74 $ --

OTHER DATA:
EBITDA(5)(6).................................... $160,730 $146,706 $133,420 $ 119,415 $112,642
EBITDA Margin(6)................................ 34.2% 34.4% 37.1% 34.0% 33.2%
Net income as adjusted, per common share(5)..... $ -- $ .99 $ -- $ -- $ --
Tangible net income, as adjusted(5)(6) $ 58,887 $ 55,537 $ 46,042 $ 31,905 $ 30,931
Tangible net income, as adjusted, per common share(5)(6) $ 1.26 $ 1.14 $ 1.02 $ -- $ --

Capital expenditures............................ $ 17,438 $ 12,914 $ 9,727 $ 7,675 $ 4,859
Net cash provided by operating activities....... 89,952 78,905 66,030 60,065 26,778
Net cash used in investing activities........... 32,084 352,774 19,447 25,700 50,557
Net cash (used in) provided by financing
activities................................. (63,320) 274,228 (46,946) (34,441) 24,384
Number of daily newspapers, end of period....... 25 24 18 18 17
Number of non-daily publications, end of
period..................................... 200 185 141 118 114

</TABLE>
19

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA. (CONTINUED)

<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total current assets............................ $ 88,397 $ 81,878 $ 77,833 $ 66,035 $ 73,456
Property, plant and equipment, net.............. 104,976 99,978 92,620 91,713 99,036
Total assets.................................... 687,180 671,869 327,931 305,985 306,434
Total current liabilities, less current maturities of
long-term debt............................. 53,380 50,124 39,034 37,720 44,582
Total debt, including current maturities........ 731,467 765,000 490,774 654,825 689,256
Stockholders'/members' deficit(7)............... $(207,383) $(225,313) $(266,242) $(423,658) $(451,767)

</TABLE>

(1) In 1999, the Company changed its fiscal year from a calendar year to a
fiscal year ending on the Sunday closest to December 31st. Accordingly,
the Company's 1999 fiscal year results are reported for the period
January 1, 1999 through December 26, 1999.

(2) The 1997 special charge of $31.9 million (before benefit for income
taxes of $13.0 million) was incurred in connection with the Company's
initial public offering and was comprised of $28.4 million for a
management bonus and $3.5 million for the discontinuance of a
management incentive plan. The management bonus was comprised of 1.1
million shares of Common Stock and a cash portion to satisfy the
recipients' tax obligations arising from the management bonus.

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

(4) Proforma net income per common share for 1996 was calculated reflecting
the 37,962,500 shares which were issued and outstanding prior to the
Company's initial public offering, but subsequent to December 31, 1996.

(5) The 1998 other 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, integration of the Goodson Acquisition, and an increase to
certain receivable reserves and an extraordinary item ($4.5 million,
net of tax) as discussed in Note (3) above. The 1997 other data
excludes the effect of the special charge of $31.9 million (before
benefit for income taxes of $13.0 million) comprised of $28.4 million
for a management bonus and $3.5 million for the discontinuance of a
management incentive plan. See Note 5 of "Notes to Consolidated
Financial Statements."

(6) EBITDA is defined by the Company as operating income (loss) plus
depreciation, amortization and other non-cash, special or non-recurring
charges. Tangible net income is defined as net income, excluding equity
interest, plus after-tax amortization. EBITDA 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 generally accepted accounting principles ("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 is a
standard measure 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 and tangible net income using the same
methods; therefore, the EBITDA and tangible net income figures set
forth above may not be comparable to EBITDA 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." Tangible net income per share is calculated using the
weighted-average shares outstanding on a diluted basis.

(7) During 1994, the Company was converted into a limited liability company
and in March 1997 the Company was converted into a C Corporation. In
connection with such conversion, the Company's preferred stock and
dividends in arrears thereon were redeemed for approximately $61.6
million.

20
<PAGE>

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

As of December 26, 1999, the Company owned and operated 25 daily
newspapers and 200 non-daily publications strategically clustered in seven
geographic areas: Connecticut; Philadelphia and its surrounding areas; Ohio; the
greater St. Louis area; central New England; and the Capital-Saratoga and
Mid-Hudson, New York regions. As of December 26, 1999, the Company had total
paid daily circulation of 636,939, total paid Sunday circulation of 619,963 and
total non-daily distribution of approximately 4.6 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. From 1993 through 1999, the Company
successfully completed 17 strategic acquisitions, acquiring 13 daily newspapers,
126 non-daily publications and three commercial printing companies, two of which
print a number of the non-daily publications. The third is a premium quality
sheet-fed printing company.

The Company believes that its newspapers are generally effective in
addressing the needs of local readers and advertisers. The Company 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 which 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 1999, the Company changed from a calendar year to the industry
standard fiscal year ending on the Sunday closest to December 31st. Accordingly,
the Company's 1999 results are reported for the period January 1, 1999 through
December 26, 1999.

YEAR ENDED DECEMBER 26, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

REPORTING PERIOD. As stated above, in 1999 the Company changed its
fiscal year and consequently ended the year on December 26, 1999. Therefore,
unless specified otherwise, all comparisons to the 1998 reporting period are
affected by the loss of days in the 1999 year-end period.

REVENUES. In 1999, revenues increased $42.8 million, or 10.0%, to
$469.6 million, due to acquisitions. Newspaper revenues increased $43.5 million,
or 10.8%, to $445.8 million in 1999, principally due to increased advertising
revenue as a result of acquisitions. Circulation revenues increased
approximately $7.4 million, or 8.3%, to $96.8 million in 1999. Commercial
printing and other represented 5.1% of the Company's revenues in 1999, as
compared to 5.7% in 1998. On-line revenue, included in advertising revenue,
increased 75% from the prior-year period to $3.2 million. Revenue, including the
five-day period ended December 31, 1999, increased approximately $47.4 million,
or 11.1%, from the prior-year.

SALARIES AND EMPLOYEE BENEFITS. Salaries and employee benefit expenses
were 33.5% of the Company's revenues in 1999 and 32.6% in 1998. Salaries and
employee benefits increased $17.9 million, or 12.9%, in 1999 to $157.1 million,
primarily due to acquisitions and increased pension expense.

<PAGE>

NEWSPRINT, INK AND PRINTING CHARGES. In 1999, newsprint, ink and
printing charges were 10.3% of the Company's revenues, as compared to 12.6% in
1998. Newsprint, ink and printing charges decreased $5.2 million, or 9.6%, in
1999 as compared to 1998. During 1999, the average newsprint price per ton
declined approximately 13% from the prior period. The decrease in newsprint
expense attributable to reductions in price have been offset in part by volume
increases related to the Company's acquisitions.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses were 9.7% and 9.1% of the Company's revenues for 1999
and 1998, respectively. Selling, general and administrative expenses for 1999
increased $6.3 million, or 16.1%, to $45.3 million. During the third quarter of
1998, the Company recorded special charges of $3.2 million (see Note 5 to
Selected Financial Data). Excluding the special charges, selling, general and
administrative expenses for 1999 increased $9.5 million, or 26.3%, from the
prior year, primarily due to acquisitions and promotion costs associated with
the Company's revenue generating activities.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
were 6.1% of the Company's revenues in 1999 as compared to 5.6% in 1998.
Depreciation and amortization expenses increased $5.0 million, or 20.8%, to
$28.8 million in 1999, primarily due to increased amortization resulting from
the Company's acquisitions.

OTHER EXPENSES. Other expenses accounted for 12.3% of the Company's
revenues in 1999 as compared to 12.2% in 1998. Other expenses increased $6.0
million, or 11.5%, to $58.0 million in 1999, primarily due to acquisitions and
increased promotion expenses. During the third quarter of 1998, the Company
reported $630,000 in special charges (see Note 5 to Selected Financial Data).
Excluding the $630,000 in special charges, other expenses for 1999 increased
$6.6 million, or 12.8%, from the prior-year period.

OPERATING INCOME. Operating income increased $12.9 million in 1999 to
$131.9 million from $119.1 million in 1998, which included special charges of
$3.8 million as noted above. Excluding the effect of the special charges in
1998, operating income increased $9.1 million, or 7.4%, due to growth in the
Company's advertising revenue, continued newsprint cost savings and the effect
of acquisitions.

INTEREST EXPENSE. Interest expense increased $6.8 million, or 15.0%,
from 1998 to 1999 as a result of increased borrowing in connection with the
Company's acquisitions, including the Goodson Acquisition completed in the third
quarter of 1998, offset in part by 1999 debt repayments and a decrease in
average borrowing rates.

PROVISION FOR INCOME TAXES. The Company reported effective tax rates of
39.8% and 38.1% for the years ended December 26, 1999 and December 31, 1998,
respectively. The increase in the effective tax rate is primarily a result of
the Company's acquisitions, particularly the Goodson Acquisition completed in
the third quarter of 1998.

EXTRAORDINARY ITEM. The Company recorded an extraordinary item related
to the write-off of deferred financing charges in connection with the Company's
prior credit agreement in the amount of $4.5 million ( net of $2.8 million
income tax benefit) in the third quarter of 1998.

EQUITY INTEREST. During 1999, the Company purchased a 7.14% interest in
AdOne, LLC ("AdOne"), a provider of classified advertising on the Internet. The
loss recorded in 1999 represents the Company's prorata share of AdOne's net loss
since the date of the Company's investment.

NET INCOME. Net income was $47.7 million, or $1.02 per share, basic and
diluted, for 1999, as compared to $41.1 million, or $.85 per share, basic and
diluted, for 1998, which reflects $6.8 million (net of $4.3 million of income
tax benefit) of special charges and an extraordinary item.

OTHER INFORMATION. EBITDA increased $14.0 million, or 9.6%, to $160.7
million from $146.7 million in 1998. Tangible net income in 1999 was $58.9
million, or $1.26 per share, as compared to $55.5 million or $1.14 per share in
1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

REVENUES. In 1998, revenues increased $67.4 million, or 18.8%, to
$426.8 million, due to acquisitions. Newspaper revenues increased $55.2 million,
or 15.9%, to $402.3 million in 1998, principally due to increased advertising
revenue as a result of acquisitions. Circulation revenues increased
approximately $9.2 million, or 11.4%, to $89.4 million in 1998. Commercial
printing and other represented 5.7% of the Company's revenues in 1998, as

<PAGE>

compared to 3.4% in 1997 due to the commercial printing operations acquired as
part of the InterCounty acquisition in December of 1997.

SALARIES AND EMPLOYEE BENEFITS. Salaries and employee benefit expenses
were 32.6% of the Company's revenues in 1998 and 31.8% in 1997. Salaries and
employee benefits increased $24.9 million, or 21.8%, in 1998 to $139.2 million,
due to acquisitions.

NEWSPRINT, INK AND PRINTING CHARGES. In 1998, newsprint, ink and
printing charges were 12.6% of the Company's revenues, as compared to 11.3% in
1997. Newsprint, ink and printing charges increased $13.1 million, or 32.5%, in
1998 as compared to 1997, primarily as a result of volume increases due to the
Company's acquisitions and an approximately 8.0% increase in the price per ton
of newsprint in 1998 as compared with 1997.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses were 9.1% and 8.5% of the Company's revenues for 1998
and 1997, respectively. Selling, general and administrative expenses for 1998
increased $8.6 million, or 28.2%, to $39.0 million, due to the Company's
acquisitions and the special charges incurred during the third quarter of 1998
of $3.2 million (see Note 5 to Selected Financial Data). Excluding the special
charges, selling, general and administrative expenses for 1998 increased $5.4
million from the prior-year primarily due to acquisitions and represented 8.4%
of the Company's revenues for 1998.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization expenses
were 5.6% of the Company's revenues in 1998 as compared to 5.7% in 1997.
Depreciation and amortization expenses increased $3.4 million, or 16.4%, to
$23.8 million in 1998, primarily due to increased amortization resulting from
the Company's acquisitions. This increase was partially offset by a decrease in
depreciation expense related to certain assets that became fully depreciated
during 1998 and in the third and fourth quarters of 1997.

OTHER EXPENSES. Other expenses accounted for 12.2% of the Company's
revenues in 1998 as compared to 11.3% in 1997. Other expenses increased $11.2
million, or 27.5%, to $52.0 million in 1998, primarily due to acquisitions,
increased circulation promotion expenses, increased postage expense related to
the Company's preprint advertising sales and $630,000 in special charges
incurred in the third quarter of 1998 (see Note 5 to Selected Financial Data).
Excluding the $630,000 in special charges, other expenses for 1998 increased
$10.6 million and represented 12.0% of the Company's revenues for 1998.

OPERATING INCOME. Operating income increased $38.0 million in 1998 to
$119.1 million, including special charges of $3.8 million, from $81.0 million in
1997, which included a special charge of $31.9 million related to the Company's
Initial Public Offering ("IPO") in May 1997.

INTEREST EXPENSE. Interest expense increased $3.2 million, or 7.5%,
from 1997 to 1998 as a result of increased borrowing in connection with the
Company's acquisitions including the Goodson Acquisition, offset in part by a
decrease in average borrowing rates.

PROVISION FOR INCOME TAXES. The Company reported effective tax rates of
38.1% and 40.7% for the years ended December 31, 1998 and 1997, respectively.
The reduction in the effective tax rate is a result of the Company's corporate
restructuring implemented January 1, 1998 offset in part by an increase in the
rate as a result of the Goodson Acquisition.

EXTRAORDINARY ITEM. The Company recorded an extraordinary item related
to the write-off of deferred financing charges in connection with the Company's
prior credit agreement in the amount of $4.5 million (net of $2.8 million income
tax benefit) in the third quarter of 1998.

NET INCOME. Net income was $41.1 million, or $.85 per share, basic and
diluted, for 1998, which reflects $6.8 million (net of $4.3 million of income
tax benefit) of special charges and an extraordinary item, as compared to $23.0
million, or $.51 per share, basic and diluted, for 1997, which included a
special charge of $18.9 million (net of $13.0 million of income tax benefit)
related to the IPO.

OTHER INFORMATION. EBITDA as adjusted for the special charges noted
above in both years, increased $13.3 million, or 10.0%, to $146.7 million from
$133.4 million in 1997. Net income in 1998 excluding the special charges and
extraordinary item was $48.0 million or $.99 per share.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations have historically generated strong positive
cash flow. The Company believes cash flows from operations will be sufficient to
fund its operations, capital expenditures and long-term debt obligations. The
Company also believes that cash flows from operations and future borrowings and
its ability to issue common stock as consideration for future acquisitions, will
provide it with the flexibility to fund its acquisition strategy while
continuing to meet its operating needs, capital expenditures and long-term debt
obligations.

CASH FLOWS FROM OPERATIONS. Net cash provided by operating activities
increased $11.0 million to $90.0 million in 1999. Net cash provided by operating
activities in 1999 primarily resulted from net income before non-cash expenses
(i.e., depreciation and amortization), of $76.5 million.

CASH FLOWS FROM INVESTING ACTIVITIES. Net cash used in investing
activities decreased $320.7 million to $32.1 million in 1999. The 1998 investing
activity reflects the Company's purchase of the Goodson Newspaper group for
approximately $300.0 million. In 1999, the Company's capital expenditures
increased by $4.5 million, due primarily to the 1998 acquisitions and system
conversions related to Year 2000. During 1999, the Company began the initial
planning phases for its new Philadelphia printing facility. As of December 26,
1999, approximately $1.8 million of expenditures were made in connection with
the facility. The total cost of the project is currently estimated to be $35.0
million and is expected to be completed in 2001. The Company expects to fund
this construction project with cash flows from operations and borrowings. The
Company has a capital expenditure program (excluding future acquisitions) of
approximately $17.0 million in place for 2000, which includes spending on
technology, including prepress and business systems, computer hardware and
software, other machinery and equipment, plants and property, vehicles and other
assets. The 2000 budget also includes funds of approximately $25.0 million for
costs associated with the Philadelphia plant. The Company believes its capital
expenditure program is sufficient to maintain its current level and quality of
operations. The Company reviews its capital expenditure program periodically and
modifies it as required to meet current needs.

CASH FLOWS FROM FINANCING ACTIVITIES. Net cash used in financing
activities was $63.3 million in 1999 as compared to net cash provided by
financing activities of $274.2 million in 1998. The 1998 activity reflects net
proceeds of approximately $808.0 million from the issuance of senior secured
debt in connection with the Company's new credit facility, $533.8 million which
was used to repay outstanding debt. The 1999 activity reflects the use of funds
of approximately $29.9 million in connection with the Company's stock repurchase
program and approximately $33.5 million for the repayment of senior debt.

On July 15, 1998, the Company entered into a new credit agreement (the
"Credit Agreement") with the banks and other financial institutions, signatories
thereto and The Chase Manhattan Bank, as administrative agent for the lenders
thereunder. The Credit Agreement provides for $500.0 million in term loans and a
$400.0 million revolving credit facility. The proceeds from the Credit Agreement
were used to repay amounts outstanding under the prior senior facilities and to
fund the Goodson Acquisition. The term loans mature on March 31, 2006 and
September 30, 2006, and the revolving credit facility matures on March 31, 2006.

The Credit Agreement also provides for an uncommitted multiple draw
term loan facility (the "Incremental Facility") in the amount of up to $500.0
million as permitted by the administrative agent to be repaid under conditions
as defined in the Credit Agreement.

The amounts outstanding under the Credit Agreement bear interest at (i) 1
3/4% to 1/2% above LIBOR (as defined in the Credit Agreement) or (ii) 1/2% to 0%
above the higher of (a) the Prime Rate (as defined in the Credit Agreement) or
(b) 1/2% above the Federal Funds Rate (as defined in the Credit Agreement). The
interest rate spreads ("the applicable margins") are dependent upon the ratio of
debt to trailing four quarters Cash Flow (as defined in the Credit Agreement)
and reduce as such ratio declines.

The Company generally manages its exposure to interest rate
fluctuations for its variable rate debt by entering into interest rate
protection agreements. The Company was required under the prior credit agreement
and is required under the Credit Agreement to maintain interest rate protection
agreements for a certain percentage of its outstanding debt, based upon the
Total Leverage Ratio (as defined in the Credit Agreement).

Interest rate protection agreements (IRPAs) relating to the Company's
borrowings at December 26, 1999 included SWAP agreements with a notional
principal amount of $619.0 million. At December 31, 1998, the Company's
borrowings included a SWAP agreement with a notional principal amount of $300.0

<PAGE>

million which matured on January 29, 1999. On January 29, 1999, the Company's
new SWAP agreements became effective, for an aggregate notional principal amount
of $400.0 million which reduce by $75.0 million per year beginning on January
31, 2000 and expire on October 29, 2002. The agreements exchange a floating
LIBOR rate plus an applicable margin for a fixed LIBOR rate plus an applicable
margin. In 1999, the Company entered into additional three month SWAP agreements
in an aggregate notional amount of $219.0 million which mature by March 15,
2000. As of December 26, 1999, if the SWAPs were marked to market, they would
result in a net gain of approximately $6.1 million. The fair value as of
December 26, 1999 of the IRPAs were obtained from the Company's bank. The fixed
LIBOR rate of the SWAP agreements range from 5.85% to 6.04%. For the year ended
December 26, 1999, the Company's weighted average effective interest rate on its
outstanding debt balance was approximately 6.75%. This takes into account the
interest rate protection agreements in effect during that period.

As of December 26, 1999, the Company had outstanding indebtedness under
the Credit Agreement, due and payable in installments through 2006, of $731.5
million, of which $231.5 million was outstanding under the revolving credit
facility. There was $168.5 million of unused and available funds under the
revolving credit facility at December 26, 1999.

YEAR 2000

During the fourth quarter of 1999, the Company completed the final
phases of its remediation, testing and contingency planning in order to ensure
the Company's Year 2000 readiness. As a result of the Company's planning and
implementation efforts, the Company experienced no significant interruptions in
operations during the transition period from 1999 to 2000. The Company is not
aware of any material problems resulting from Year 2000 issues, either with its
products, internal systems or the products and services of third parties. The
Company will continue to monitor all general purpose and production hardware and
software as well as those of its suppliers and vendors for any potential Year
2000 issues that may surface.

In accordance with GAAP, the Company's direct Year 2000 costs,
including modifying computer software or converting to new programs, were
expensed as incurred. Additionally, a majority of the hardware costs for
replacement systems were capitalized as ordinarily accounted for in the normal
course of business. These system replacements represented upgrades consistent
with the Company's goal to maintain and improve operational efficiencies. The
Company capitalized approximately $6.1 million related to new hardware and
software in connection with its Year 2000 compliance plan as of December 26,
1999.

INFLATION

The Company's results of operations and financial condition have not
been significantly affected by inflation. Subject to normal competitive
conditions, the Company generally has been able to pass along rising costs
through increased advertising and circulation rates.

RECENT EVENTS

On November 9, 1999, the Company's Board of Directors approved a
change, effective December 27, 1999, in the Company's fiscal year from a
calendar year to an industry standard 52/53 week fiscal year ending on the
Sunday nearest to December 31st.

During 1999, the Company's Board of Directors authorized the use of up
to $50.0 million per year for the repurchase of Common Stock. As of December 26,
1999, the Company had repurchased 2,369,200 shares. As of March 17, 2000, the
Company had repurchased an additional 707,200 shares on the open market. Shares
under the program are to be repurchased at management's discretion, either in
the open market or in privately negotiated transactions.

The decision to repurchase stock depends on price, market conditions
and other factors. The Company indicated that there is no minimum number of
shares to be purchased under the program.

Purchases under the program will be financed with the Company's free
cash flow or borrowings under the Company's Credit Agreement.

On February 28, 2000, the Company announced its intent to sell the Ohio and St.
Louis area newspapers. The Ohio properties include four daily newspapers with a
total daily circulation of approximately 126,000. The Missouri and Illinois

<PAGE>

properties include the Suburban Newspapers of Greater St. Louis, representing
non-daily distribution of approximately 1.7 million and a daily newspaper in
Alton, Illinois, with daily circulation of approximately 28,000 and Sunday
circulation of approximately 30,000. For the year ended December 26, 1999, the
Ohio and St. Louis area newspapers generated approximately $135 million in
revenue.

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Management's Discussion and Analysis of Financial Condition and Results
of Operations and other sections of this Form 10-K include forward-looking
statements, which may be identified by use of terms such as "believes,"
"anticipates," "plans," "will," "likely," "continues," "intends" or "expects."
These forward-looking statements relate to the plans and objectives of the
Company for future operations. In light of the risks and uncertainties inherent
in all future projections, the inclusion of forward-looking statements herein
should not be regarded as a representation by the Company or any other person
that the objectives or plans of the Company will be achieved. Many factors could
cause the Company's actual results to differ materially from those in the
forward-looking statements, including, among other things, the factors discussed
below under "Certain Factors Which May Affect the Company's Future Performance."
The following 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.

NEW ACCOUNTING PRONOUNCEMENT

In June of 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), was
issued by the Financial Accounting Standards Board ("FASB"). Subsequently, in
June 1999, the FASB issued SFAS No. 137, an amendment to SFAS 133, deferring the
effective date of SFAS 133 to years beginning after June 15, 2000. SFAS 133 will
require the Company to recognize all derivatives on the balance sheet at fair
market value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair values of the derivatives will either be offset
against the change in fair value of the hedged assets or liabilities through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value will be immediately recognized in earnings. The Company has not yet
determined what effect, if any, SFAS 133 will have on the earnings and financial
position of the Company.

CERTAIN FACTORS WHICH MAY AFFECT THE COMPANY'S FUTURE PERFORMANCE

NEWSPAPER INDUSTRY COMPETITION

The Company's business is concentrated in newspapers and other
publications located primarily in small metropolitan and suburban areas in the
United States. Revenues in the newspaper industry primarily consist of
advertising and paid circulation. Competition for advertising expenditures and
paid circulation comes from local, regional and national newspapers, shopping
guides, television, radio, direct mail, on-line services and other forms of
communication and advertising media. Competition for newspaper advertising
expenditures is based largely 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. Many of the Company's competitors are
larger and have greater financial resources than the Company.

DEPENDENCE ON LOCAL ECONOMIES

The Company's advertising revenues and, to a lesser extent, circulation
revenues are dependent on a variety of factors specific to the communities which
the Company's newspapers serve. These factors include, among others, the size
and demographic characteristics of the local population, local economic
conditions in general, and the related retail segments in particular, and local
weather conditions.

INDEBTEDNESS

The Company has a substantial amount of indebtedness. As of December
26, 1999, the consolidated indebtedness of the Company was approximately $731.5
million, which represents a multiple of 4.6 times the Company's twelve months
trailing EBITDA of approximately $160.7 million. The 1999 EBITDA is impacted by

<PAGE>

the loss of five days resulting from the Company's decision to adopt a 52/53
week fiscal year and to end 1999 on December 26, 1999. As of December 26, 1999,
the Company had a net stockholders' deficit of approximately $207.4 million and
a total capitalization of $524.1 million, and, thus, the percentage of the
Company's indebtedness to total capitalization was 139.6%. The Company may incur
additional indebtedness to fund operations, capital expenditures or future
acquisitions.

The Company believes that cash provided by operating activities will be
sufficient to fund its operations and to meet payment requirements under its
Term Loans and the Revolver under the Credit Agreement. However, a decline in
cash provided by operating activities, which could result from factors beyond
the Company's control, such as unfavorable economic conditions, an overall
decline in advertising expenditures or increased competition, could impair the
Company's ability to service its debt. The Credit Agreement requires the
maintenance of certain financial ratios and imposes certain operating and
financial restrictions on the Company which restrict, among other things, the
Company's ability to declare dividends, redeem stock, incur indebtedness, create
liens, sell assets, consummate mergers and make capital expenditures,
investments and acquisitions.

ENVIRONMENTAL MATTERS

The Company's operations are subject to federal, state and local
environmental laws and regulations pertaining to air and water quality, storage
tanks and the management and disposal of waste 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. The
Company cannot predict with any certainty whether future events, such as changes
in existing laws and regulations or the discovery of conditions not currently
known to the Company, may give rise to additional costs which could be material.
Furthermore, actions by federal, state and local governments concerning
environmental matters could result in laws or regulations that could have a
material adverse effect on the financial condition or results of operations of
the Company. The Company is not aware of any pending legislation by federal,
state or local governments relating to environmental matters which, if enacted,
would reasonably be expected to have a material adverse effect on the financial
condition or results of operations of the Company. The Company is in the process
of monitoring groundwater contamination which has been detected at one of its
facilities. The Company believes the remediation of any such groundwater
contamination, if required, will not have a material adverse effect on its
financial condition or results of operations. In May 1998, one of the Company's
subsidiaries, acquired as part of the Goodson Acquisition, received a Notice of
Potential Liability in connection with a landfill superfund site. The Company is
fully indemnified for all costs and liabilities arising out of this issue by the
seller as part of the Goodson Acquisition purchase agreement.

ACQUISITION STRATEGY

The Company has grown through, and anticipates that it will continue to
grow through, acquisitions of daily and non-daily newspapers and similar
publications. Acquisitions may expose the Company to particular risks,
including, without limitation, diversion of management's attention, assumption
of liabilities and amortization of goodwill and other acquired intangible
assets, some or all of which could have a material adverse effect on the
financial condition or results of operations of the Company. Depending on the
value and nature of the consideration paid by the Company for acquisitions, such
acquisitions may have a dilutive impact on the Company's earnings per share. In
making acquisitions, the Company competes for acquisition targets with other
companies, many of which are larger and have greater financial resources than
the Company. There can be no assurance that the Company will continue to be
successful in identifying acquisition opportunities, assessing the value,
strengths and weaknesses of such opportunities, evaluating the costs of new
growth opportunities at existing operations or managing the publications it owns
and improving their operating efficiency. Historically, the Company has financed
acquisitions through cash on hand and borrowings, which borrowings have
increased the Company's indebtedness. The Company anticipates that it will
finance future acquisitions through cash on hand, borrowings and issuances of
capital stock. The Credit Agreement limits acquisitions to certain permitted
investments and newspapers in the United States, and requires that acquisitions
be financed through certain permitted sources. In addition, the financial
covenants contained in the Credit Agreement may limit the Company's ability to
make acquisitions.

PRICE AND AVAILABILITY OF NEWSPRINT

<PAGE>

metric ton of newsprint based on East Coast transaction prices in 1999, 1998 and
1997 was $510, $596 and $555, respectively, as reported by the trade publication
PULP AND PAPER WEEKLY. The Company has no long-term contracts to purchase
newsprint. Generally, the Company purchases all of its newsprint from two
suppliers. Historically, the percentage of the Company's newsprint supplied by
each of such suppliers has varied. The Company believes that it would not be
materially adversely effected if it were no longer able to purchase its
newsprint supply from its two current suppliers and that, in such event, other
newsprint suppliers would be readily available to the Company. In the future,
the Company may purchase newsprint from other suppliers. 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 or 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 consumed decreased
approximately 13% in 1999, increased approximately 8% in 1998 and decreased
approximately 18% in 1997, in each case compared to the previous year. The
Company believes that if any price increase or decrease is sustained in the
industry, the Company will also be impacted by such increase or decrease. The
Company is unable to predict whether, or to what extent, any increase or
decrease will be sustained. Significant increases in newsprint costs could have
a material adverse effect on the financial condition or results of operations of
the Company. 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to market risk arising from changes in interest
rates associated with its long-term debt obligations. The Company's long-term
debt is at variable interest rates based on certain interest rate spreads
applied to LIBOR, the Prime Rate or Federal Funds Rate as defined in the Credit
Agreement. To manage its exposure to fluctuations in interest rates, the
Company, as required by its Credit Agreement, enters into certain interest rate
protection agreements, which allows the Company to exchange variable rate
interest for fixed rate, maturing at specific intervals. The difference to be
paid or received as interest rates change is accrued and recognized as an
adjustment of interest expense related to the debt. The related amount payable
to or receivable from counterparties is included in accrued interest. The
Company's use of these agreements is limited to hedging activities and not for
trading or speculative activity.

At December 26, 1999, the Company had in effect SWAP agreements for a
notional amount of $619 million. The fair market value of the SWAP at December
26, 1999, had the SWAP been marked to market, would have resulted in a gain of
approximately $6.1 million. SWAP agreements in an aggregate notional amount of
$400 million which became effective January 29, 1999, reduce by $75 million per
year beginning on January 31, 2000 and expire on October 29, 2002. In 1999, the
Company entered into additional three month SWAP agreements in an aggregate
notional amount of $219 million which mature by March 15, 2000. Assuming a 10%
increase or reduction in interest rates for the year ended December 26, 1999,
the effect on the Company's pre-tax earnings and cash flows would be
approximately $2.4 million.

28
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

Page
----
FINANCIAL STATEMENTS:

Report of Independent Auditors......................................... 30
Consolidated Balance Sheets............................................ 31
Consolidated Statements of Income...................................... 32
Consolidated Statements of Stockholders'/Members' Deficit.............. 33
Consolidated Statements of Cash Flows.................................. 34
Notes to Consolidated Financial Statements............................. 35

FINANCIAL STATEMENT SCHEDULE:

Schedule II, Valuation and Qualifying Accounts.......................... S-1

All other schedules are omitted because they are not applicable or the
requested information is shown in the consolidated financial statements or
related notes.

<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors
Journal Register Company

We have audited the accompanying consolidated balance sheets of Journal
Register Company as of December 26, 1999 and December 31, 1998, and the related
consolidated statements of income, stockholders'/members' deficit, and cash
flows for each of the three years in the period ended December 26, 1999. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Journal Register Company, as of December 26, 1999 and December 31, 1998 and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 26, 1999, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.

ERNST & YOUNG LLP

February 3, 2000
MetroPark, New Jersey

<PAGE>

JOURNAL REGISTER COMPANY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

December 26, December 31,
1999 1998
------------- --------------
ASSETS

Current assets:
Cash and cash equivalents $ 3,090 $ 8,542
Accounts receivable, less allowance for
doubtful accounts of $6,293 in 1999
and $4,632 in 1998 65,597 58,244
Inventories 9,899 8,440
Deferred income taxes 2,721 2,522
Other current assets 7,090 4,130
---------- -----------
Total current assets 88,397 81,878
Property, plant and equipment:
Land 9,018 8,810
Buildings and improvements 66,187 65,127
Machinery and equipment 171,631 156,223
----------- -----------
246,836 230,160
Less accumulated depreciation (141,860) (130,182)
----------- ------------
Property, plant and equipment, net 104,976 99,978
Intangible and other assets, net of
accumulated amortization of $42,751
in 1999 and $28,297 in 1998 493,807 490,013
----------- ------------
Total assets $687,180 $ 671,869
=========== ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current maturities of long-term debt $ 19,500 $ --
Accounts payable 14,617 12,107
Income taxes payable 438 829
Accrued interest 6,886 6,374
Deferred subscription revenue 8,896 8,290
Accrued salaries and vacation 5,647 5,231
Other accrued expenses and current liabilities 16,896 17,293
---------- ------------
Total current liabilities 72,880 50,124

Senior debt, less current maturities 711,967 765,000
Deferred income taxes 20,291 14,029
Accrued retiree benefits and other liabilities 15,920 17,078
Income taxes payable 73,505 50,951

Commitments and contingencies

Stockholders' deficit:

Common stock, $.01 par value per share,
300,000,000 shares authorized, 48,437,581
issued at December 26, 1999 and
December 31, 1998 484 484
Additional paid-in capital 358,244 358,236
Accumulated deficit (536,156) (583,821)
---------- -----------
(177,428) (225,101)

Less treasury stock, 2,362,953 shares, at cost (29,795) --

Accumulated other comprehensive loss, net of tax (160) (212)
---------- ------------
Net stockholders' deficit (207,383) (225,313)
----------- ------------
Total liabilities and stockholders' deficit $687,180 $671,869
=========== ============

SEE ACCOMPANYING NOTES.

<PAGE>

JOURNAL REGISTER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Year Ended
December 26, Year Ended December 31,
1999 1998 1997
-------------- ---------------- --------------
<S> <C> <C> <C>

Revenues:
Advertising $ 348,995 $ 312,908 $ 266,914
Circulation 96,783 89,388 80,211
-------------- ---------------- ----------------
Newspaper revenues 445,778 402,296 347,125
Commercial printing and other 23,787 24,484 12,282
-------------- ---------------- ----------------
469,565 426,780 359,407

Operating expenses:
Salaries and employee benefits 157,110 139,216 114,302
Newsprint, ink and printing charges 48,432 53,594 40,452
Selling, general and administrative 45,318 39,047 30,450
Depreciation and amortization 28,798 23,844 20,480
Other 57,975 52,012 40,783
Special charge -- -- 31,899
-------------- ---------------- ----------------
337,633 307,713 278,366
-------------- ---------------- ----------------
Operating income 131,932 119,067 81,041

Other income (expense):
Interest expense (52,265) (45,465) (42,282)
Other (82) 144 (6)
-------------- ---------------- ----------------
Income before provision for income taxes,
equity interest and extraordinary item 79,585 73,746 38,753
Provision for income taxes 31,694 28,112 15,784
-------------- ---------------- --------------
Income before equity interest and extraordinary item 47,891 45,634 22,969
Equity interest (226) -- --
-------------- ---------------- --------------
Income before extraordinary item 47,665 45,634 22,969
Extraordinary item, net of tax of $2,755 -- 4,495 --
-------------- ---------------- --------------
Net income $ 47,665 $ 41,139 $ 22,969
============== ================ ==============

Net Income per common share (basic and diluted):

Income before extraordinary item $ 1.02 $ .94 $ .51
Net income $ 1.02 $ .85 $ .51

</TABLE>

SEE ACCOMPANYING NOTES.

<PAGE>

JOURNAL REGISTER COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'/MEMBERS' DEFICIT
(DOLLARS IN THOUSANDS)

Total
Additional Other Stockholders'/
Common Membership Paid-in Comprehensive Accumulated Treasury Members'
Stock Interest Capital Income Deficit Stock Deficit
---------- ------------ ----------- -------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>

Balance at January 1, 1997 $ -- $ 2,104 $ 222,167 $ -- $ (647,929) $ -- $ (423,658)

Net income 22,969 22,969

Conversion of membership
interest 379 (2,104) 1,725 --

Issuance of common stock 105 134,342 134,447
-------------------------------------------------------------------------------------------
Balance at December 31, 1997 484 -- 358,234 -- (624,960) -- (266,242)

Net income 41,139 41,139

Minimum pension liability
adjustment, net of tax
benefit of $153 (212) (212)
---------------
Comprehensive income 40,927
---------------
Exercise of stock options
for common stock 2 2
---------------------------------------------------------------------------------------------
Balance at December 31, 1998 484 -- 358,236 (212) (583,821) -- (225,313)

Net income 47,665 47,665

Minimum pension liability
adjustment, net of tax of $37 52 52
---------------
Comprehensive income 47,717
---------------
Purchase of 2,369,200 shares
for treasury (29,874) (29,874)

Exercise of stock options 8 79 87
for common stock
---------------------------------------------------------------------------------------------
Balance at December 26, 1999 $ 484 $ -- $ 358,244 $ (160) $ (536,156) $ (29,795) $ (207,383)
=============================================================================================

</TABLE>
SEE ACCOMPANYING NOTES.

<PAGE>

JOURNAL REGISTER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

Year Ended
December 26 Year Ended December 31,
1999 1998 1997
-------------- ---------------- --------------
<S> <C> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 47,665 $ 41,139 $ 22,969
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for losses on accounts receivable 4,257 4,464 3,291
Depreciation and amortization 28,798 23,844 20,480
Net loss (gain) on disposal of property, plant and equipment and other assets 135 (1,074) (464)
Loss on equity investment 266 -- --
Extraordinary loss on extinguishment of deferred debt costs -- 7,250 --
Non-cash portion of special charge -- -- 15,400
Increase in deferred taxes 5,993 7,928 4,779
Increase in accounts receivable (10,726) (5,885) (4,546)
(Increase) decrease in inventories (1,446) 2,412 (2,431)
Increase in accounts payable and deferred subscription revenue 2,442 1,301 2,311
Increase in income taxes payable 22,163 15,570 8,526
Increase (decrease) in accrued interest 512 1,307 (2,431)
(Decrease) increase in accrued retiree benefits and other liabilities (1,193) (6,877) 1,964
Decrease (increase) in other assets, net of increase (decrease) in
other current Liabilities (8,914) (12,474) (3,818)
-------------- ------------- -----------
Net cash provided by operating activities 89,952 78,905 66,030

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (17,438) (12,914) (9,727)
Net proceeds from sale of property, plant and equipment and other assets 22 1,487 1,186
Purchase of businesses and equity investment (14,668) (341,347) (10,906)
-------------- --------------- -----------
Net cash used in investing activities (32,084) (352,774) (19,447)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt:
Senior facilities -- 808,000 4,000
Accretion on subordinated notes -- -- 1,205
Repayments of:
Senior debt (33,533) (533,774) (136,674)
Subordinated notes -- -- (34,524)
Exercise of stock options for common stock 87 2 --
Purchase of treasury shares (29,874) -- --
Net proceeds from issuance of common stock -- -- 119,047
-------------- -------------- -----------
Net cash (used in) provided by financing activities (63,320) 274,228 (46,946)
-------------- -------------- -----------
(Decrease) increase in cash and cash equivalents (5,452) 359 (363)
Cash and cash equivalents, beginning of year 8,542 8,183 8,546
-------------- ------------- -----------
Cash and cash equivalents, end of year $ 3,090 $ 8,542 $ 8,183
============== ============= ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 51,753 $44,158 $ 44,713
Income taxes 3,574 1,719 2,479

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Issuance of additional subordinated notes $ -- $ -- $ 1,205
Issuance of note payable in connection with an acquisition -- -- 2,884
Comprehensive loss - minimum pension liability, net of tax (52) 212 --

</TABLE>

SEE ACCOMPANYING NOTES.

34
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 26, 1999

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying consolidated financial statements include Journal
Register Company (the "Company") and all of its wholly-owned subsidiaries. The
Company was incorporated on March 11, 1997 and became a publicly traded company
in May of 1997.

In March of 1997, certain entities (namely, JRC, LLC, JRNI and INSI)
were combined and JRC, LLC was converted into a C corporation, Journal Register
Company. Substantially all of the membership interests and equity securities of
these entities were owned by affiliates of E.M. Warburg, Pincus & Co., LLC
(collectively, "Warburg, Pincus"). Since the companies were under common
control, this transaction was accounted for on a basis similar to a pooling of
interests. The accompanying financial statements include the accounts and
operations of JRC (or its predecessor JRC, LLC), JRNI and INSI for all periods
presented.

Journal Register Company (through its consolidated subsidiaries)
primarily publishes daily and non-daily newspapers serving markets in
Connecticut, Philadelphia and its surrounding areas, Ohio, the greater St. Louis
area, central New England and the Capital-Saratoga and Mid-Hudson, New York
regions; and has commercial printing operations in Connecticut, Ohio and
Pennsylvania.

On November 9, 1999, the Company elected to change from a calendar year
end to a fiscal year ending on the Sunday closest to December 31st. Accordingly,
the Company's 1999 fiscal year ended on December 26, 1999.

The Company has authorized 1,000,000 shares of Preferred Stock, none of
which were issued or outstanding as of December 26, 1999.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the
Company and all of its wholly-owned subsidiaries. All significant intercompany
activity has been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Such estimates would include the allowance for doubtful
accounts and valuation allowance for deferred taxes. Actual results could differ
from those estimates.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For purposes of the accompanying consolidated statements of cash flows,
the Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The carrying value of
cash equivalents approximates fair value due to the short-term maturity of these
instruments.

INVENTORIES

Inventories, consisting of newsprint, ink and supplies, are stated at
the lower of cost (primarily first-in, first-out method) or market.

35
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Maintenance and
repairs are charged to expense as incurred; costs of major additions and
betterments are capitalized.

Depreciation is provided for financial reporting purposes primarily by
the straight-line method over the following estimated useful lives:

Buildings and improvements 5 to 30 years
Machinery and equipment 3 to 30 years

INTANGIBLE ASSETS AND OTHER ASSETS

Intangible assets recorded in connection with the acquisition of
newspapers generally consist of the values assigned to subscriber lists and the
excess of cost over the value of identifiable net assets of the companies
acquired. These assets are carried at the lower of amortized cost or the amount
expected to be recovered by projected future operations after considering
attributable general and administration expense and interest on debt allocated
to the various newspapers. If, in the opinion of management, an impairment in
value occurs, any necessary write-downs will be charged to expense.

The balance of intangible assets at December 26, 1999 and December 31,
1998 was comprised principally of subscriber lists and excess cost over the
value of identifiable net assets of companies acquired. These assets are being
amortized over a period of 4 to 40 years and are amortized by the straight-line
method.

In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 121 "Accounting for the Impairment of Long Lived Assets and for Long-Lived
Assets to be Disposed Of ", the Company reviews the recoverability of
intangibles and other long-lived assets whenever events and circumstances
indicate that the carrying amount may not be recoverable. The carrying amount of
the long-lived assets is reduced by the difference between the carrying amount
and estimated fair value.

Other assets consist principally of capitalized costs associated with
the term loans and the revolver (as defined in Note 4, Long-Term Debt) that are
being amortized over the terms of such loans.

INCOME TAXES

The Company uses the liability method of accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities
and are measured using the currently enacted tax rates and laws that will be in
effect when the differences are expected to reverse.

DEFERRED SUBSCRIPTION REVENUE

Deferred subscription revenue arises from subscription payments made in
advance of newspaper delivery. Revenue is recognized in the period in which it
is earned.

36
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INTEREST-RATE PROTECTION AGREEMENTS

The Company enters into Interest-Rate Protection Agreements ("IRPAs")
to modify the interest characteristics of its outstanding debt. Each IRPA is
designated for all or a portion of the principal balance and term of a specific
debt obligation. Certain of these agreements involve the exchange of amounts
based on a fixed interest rate for amounts based on variable interest rates over
the life of the agreement without an exchange of the notional amount upon which
the payments are based. The differential to be paid or received as interest
rates change is accrued and recognized as an adjustment of interest expense
related to the debt. The related amount payable to or receivable from
counterparties is included in accrued interest. The fair values of IRPAs are not
recognized in the financial statements. Gains and losses on terminations of
IRPAs would be deferred as an adjustment to the carrying amount of the
outstanding debt and amortized as an adjustment to interest expense related to
the debt over the remaining term of the original contract life of the IRPAs. In
the event of the early extinguishment of a designated debt obligation, any
realized or unrealized gain or loss from the IRPA would be recognized in income
coincident with the extinguishment. Any IRPAs that were not designated with
outstanding debt or notional amounts (or durations) of IRPAs in excess of the
principal amounts (or maturities) of the underlying debt would be recorded as an
asset or liability at fair value, with changes in fair value recorded in other
income (expense).

STOCK OPTION PLAN

The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations in accounting for its employee stock options. Under APB 25, when
the exercise price of the Company's employee stock options equals the market
price of the underlying stock on the date of grant, no compensation expense is
recognized.

EARNINGS PER SHARE

The Company, in accordance with Financial Accounting Standards Board
("FASB") SFAS No. 128, "Earnings Per Share", discloses earnings per share on a
basic and diluted basis. Diluted earnings per share include any dilutive effects
of options, warrants and convertible securities.

CONCENTRATION OF RISK

Certain employees of the Company's newspapers are employed under
collective bargaining agreements.

SEGMENTS REPORTING

In 1998, the Company adopted the FASB's SFAS No. 131, "Disclosure About
Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS 131
superceded SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise". The adoption of SFAS 131 did not affect the results of operations
or financial position and did not affect the disclosure of segment information.

The Company is a newspaper company. The Company publishes 25 daily and
200 non-daily newspapers in the U.S. It maintains operations and local
management in the markets that it serves. Revenue is earned from the sale of
advertising, circulation and related activities. Newspapers are distributed
through local distribution channels consisting of contract carriers and single
copy outlets.

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company conducts business in one operating segment. The Company
determined its operating segment based on individual operations that the chief
operating decision maker reviews for purposes of assessing performance and
making operational decisions. These individual operations have been aggregated
into one segment because the Company believes it helps the users understand the
Company's performance. The combined operations have similar economic
characteristics and each operation has similar products, services, customers,
production processes and distribution systems.

EFFECT OF NEW PRONOUNCEMENT

In June of 1998, SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"), was issued by the FASB. Subsequently, in
June 1999, the FASB issued SFAS No. 137, an amendment to SFAS 133, deferring the
effective date of SFAS 133 to years beginning after June 15, 2000. SFAS 133 will
require the Company to recognize all derivatives on the balance sheet at fair
market value. Derivatives that are not hedges must be adjusted to fair value
through income. If the derivative is a hedge, depending on the nature of the
hedge, changes in the fair values of the derivatives will either be offset
against the change in fair value of the hedged assets or liabilities through
earnings or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value will be immediately recognized in earnings. The Company has not yet
determined what the effect, if any, of SFAS 133 will have on the earnings and
financial position of the Company.

RECLASSIFICATIONS

Certain reclassifications were made to the 1998 and 1997 financial
statements to conform to the 1999 presentation.

3. INTANGIBLE AND OTHER ASSETS

Intangible and other assets as of December 26 and December 31,
respectively, net of accumulated amortization, are summarized as follows:

(in thousands)
1999 1998
---- ----
Excess of cost over the value of identifiable net
assets and subscriber lists $473,904 $473,245
Prepaid pension cost 9,230 8,434
Other 10,673 8,334
---------- ----------
$493,807 $490,013
========== ==========

Included in other assets is the Company's investment in AdOne, LLC
("AdOne"). On August 20, 1999, the Company acquired a 7.14% interest in AdOne,
LLC, a provider of classified advertising on the Internet. The Company applied
the equity method of accounting for this transaction. In addition, the company
holds a $1.2 million promissory note from AdOne. The note bears interest at 9.4%
per annum and is payable in five equal installments commencing December 31,
2005.

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

4. LONG-TERM DEBT

The Company's long-term debt as of December 26 and December 31,
respectively, was comprised of the following:

(in thousands)
1999 1998
----- ------

Senior Secured Term Loans $500,000 $500,000
Senior Secured Revolving Credit Facility 231,467 265,000
---------- ---------
731,467 765,000
Less current portion (19,500) --
----------- ---------
$711,967 $765,000
=========== =========

On July 15, 1998, the Company entered into a new credit agreement
with a group of lenders led by The Chase Manhattan Bank, as administrative agent
(the "Credit Agreement"). The Credit Agreement provides a 7 3/4-year term loan
facility ("Term Loan A") in the aggregate amount of $250.0 million, an 8
1/4-year term loan facility ("Term Loan B") in the aggregate amount of $250.0
million and a 7 3/4-year revolving credit facility in the aggregate amount of
$400.0 million (the "Revolving Credit Facility"). Proceeds under these loan
facilities were used to repay existing debt and to fund the Goodson Acquisition.
The Company had $168.5 million and $135.0 million unused and available under the
Revolving Credit Facility at December 26, 1999 and December 31, 1998,
respectively.

The Term Loan A Facility matures on March 31, 2006 and is repayable
in quarterly installments commencing on June 30, 2000. The Term Loan B Facility
matures on September 30, 2006 and is repayable in quarterly installments
commencing on June 30, 2000.

The aggregate annual maturities of long-term debt payable under the
term loans are as follows:

(in thousands)

2000................................. $ 19,500
2001................................. 22,625
2002................................. 35,375
2003................................. 41,625
2004................................. 47,875
Thereafter........................... 333,000

The Revolving Credit Facility is available on a revolving basis until
March 31, 2006. Availability will be reduced by consecutive quarterly
reductions, commencing on June 30, 2002 and ending on March 31, 2006, in an
aggregate amount for each twelve month period commencing on the date set forth
below equal to the amount set forth opposite such date (with reductions during
each such period being equal in amount):

PRINCIPAL AMOUNT
(in thousands)

June 30, 2002 $ 55,000
June 30, 2003 65,000
June 30, 2004 100,000
June 30, 2005 180,000

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

4. LONG-TERM DEBT (CONTINUED)

The senior secured term loans and senior secured revolving credit
facility are secured by substantially all of the assets of the Company and the
common stock and assets of the Company's subsidiaries. The senior secured term
loans and senior secured revolving credit facility require compliance with
certain covenants, which require, among other things, maintenance of certain
financial ratios, and restricts the Company's ability to declare dividends,
redeem stock, incur additional indebtedness, create liens, sell assets,
consummate mergers and make capital expenditures, investments and acquisitions.

The amounts outstanding under the credit facilities bear interest at
(i) 1 3/4% to 1/2% above LIBOR or (ii) 1/2% to 0% above the higher of (a) the
Prime Rate or (b) 1/2% above the Federal Funds Rate. The interest rate spreads
are dependent upon the ratio of debt to trailing four quarters Cash Flow (as
defined in the Credit Agreement) and reduce as such ratio declines.

An annual commitment fee is incurred on the average daily unused
portion of the Revolving Credit Facility, payable quarterly in arrears, at a
percentage which varies from 0.375% to 0.250% based on the quarterly calculation
of the Total Leverage Ratio (as defined in the Credit Agreement). At December
26, 1999, the Company's commitment fee was 0.375%.

The Credit Agreement also requires the Company, in order to manage
interest rate risk, to maintain IRPA's for a certain percentage of the
outstanding debt, based upon the Total Leverage Ratio. In accordance with this
requirement, the Company participates in certain IRPA's whereby the Company has
assumed a fixed rate of interest and a counterparty has assumed the variable
rate (the "SWAP"). Pursuant to the SWAP agreement, the Company agrees to
exchange with certain banks at specific dates the difference between the fixed
rate in the SWAP agreement and the LIBOR floating rate applied to the notional
principal amount. Prior to and during 1997, the Company, in connection with the
prior credit agreement, also entered into interest rate collar agreements which
expired on various dates between April 30, 1998 and June 30, 1998. The interest
rate collar agreements had an aggregate notional principal amount of $286.0
million with ceiling interest rates ranging from 7.29% through 7.41% and floor
interest rates of 5.48%.

IRPA's relating to the Company's borrowings at December 26, 1999
included SWAP agreements with a notional principal amount of $619.0 million. At
December 31, 1998, the Company's borrowings included a SWAP agreement with a
notional principal amount of $300.0 million which matured on January 29, 1999.
On January 29, 1999, the Company's new SWAP agreements became effective, for an
aggregate notional principal amount of $400.0 million which reduce by $75.0
million per year, beginning on January 31, 2000 and expire on October 29, 2002.

In 1999, the Company entered into additional three month SWAP
agreements in an aggregate notional amount of $219 million which mature by March
15, 2000. As of December 26, 1999, if the SWAPs were marked to market, they
would result in a net gain of approximately $6.1 million. The fair value as of
December 26, 1999 of the IRPAs were obtained from the Company's bank. The fixed
LIBOR rate of the SWAP agreements range from 5.85% to 6.04%.

The estimated fair value of the Term Loans and Revolving Credit
Facility approximates their carrying value since the interest rates are
variable.

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

5. INITIAL PUBLIC OFFERING AND SPECIAL CHARGE

In May 1997, the Company completed an initial public offering of
9,375,000 shares (the "Offering") of its common stock, par value $0.01 per share
(the "Common Stock"), at a price of $14 per share. The Common Stock began
trading on the New York Stock Exchange under the symbol "JRC" on May 8, 1997.
The net proceeds to the Company from the Offering were approximately $119.0
million, which the Company used to repay a portion of the amounts outstanding
under the term loan and to retire all of the outstanding principal amount of and
accrued and unpaid interest on the Company's subordinated notes.

On June 6, 1997, pursuant to an agreement with the underwriters of the
Offering (the "Underwriting Agreement"), the underwriters exercised their option
to purchase 1,406,250 additional shares of Common Stock at a price of $14 per
share. In accordance with the Underwriting Agreement, these shares were
purchased directly from Warburg, Pincus and were purchased solely for the
purpose of covering over-allotments made in connection with the Offering.

In connection with the Offering, in the second quarter of 1997 the
Company incurred a special charge of $31.9 million (before benefit for income
taxes of $13.0 million) comprised of $28.4 million for a management bonus and
$3.5 million for the discontinuance of a management incentive plan. The
management bonus was comprised of 1,100,000 shares of Common Stock and a cash
portion to satisfy the recipients' tax obligations arising from the management
bonus.

6. STOCK INCENTIVE PLAN

Prior to the completion of the Offering (see Note 5, Initial Public
Offering and Special Charge), the Company's Board of Directors (the "Board")
adopted and the stockholders approved the Company's 1997 Stock Incentive Plan
(the "1997 Plan"). Subject to adjustment as provided in the 1997 Plan, the 1997
Plan authorizes the granting of up to 4,843,750 shares of the Common Stock
through: (i) incentive stock options and non-qualified stock options (in each
case, with or without stock appreciation rights), to acquire Common Stock; (ii)
awards of restricted shares of Common Stock; and (iii) performance units, to
such directors, officers and other employees of, and consultants to, the Company
and its subsidiaries and affiliates as may be designated by the Compensation
Committee of the Board or such other committee of the Board as the Board may
designate.

Incentive stock options are granted at no less than fair market value
of the Common Stock on the date of grant. The option price per share of Common
Stock for all other stock options are established by the Compensation Committee.
Stock options are exercisable at cumulative intervals of 20% commencing on the
first anniversary after issuance, continuing through the fifth anniversary, at
which time 100% may be exercised. These options expire ten years after issuance.

Proforma information regarding net income and earnings per share is
required by FASB SFAS No. 123, "Accounting for Stock-Based Compensation", and
has been determined as if the Company had accounted for its employee stock
options under the fair value method of that statement. The fair value for these
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions for 1999 and 1998:
risk-free interest rate of 6.51% and 5.49%, respectively; dividend yield of 0%
for both years; volatility factor of the expected market price of the Common
Stock of .41 and .38, respectively; and a weighted-average expected life of the
option of seven years for both 1999 and 1998.

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

6. STOCK INCENTIVE PLAN (CONTINUED)

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For purposes of proforma disclosures, the estimated fair value of the
options is amortized to expense over the vesting period for such options. The
Company's proforma information, had compensation costs for the Company's stock
option plans been determined in accordance with FASB SFAS No. 123, for the year
ended December 26, 1999 and years ended December 31, 1998 and 1997,
respectively, are as follows:

<TABLE>
<CAPTION>
(in thousands)
1999 1998 1997
---- ----- ----
<S> <C> <C> <C>

Net income attributable to common stockholder:
As reported $ 47,665 $ 41,139 $ 22,969
Proforma 44,619 39,135 22,259
Net income per share
As reported
Basic $ 1.02 $ .85 $ .51
Diluted 1.02 .85 .51
Proforma
Basic .95 .81 .50
Diluted .95 .80 .49

</TABLE>

A summary of the Company's stock option activity and related
information for the year ended December 26, 1999 and years ended December 31,
1998 and 1997, respectively, are as follows:

1999 1998 1997
----------------------------------------------------------------------------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Options Price Options Price Options Price
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>

Outstanding-beginning of year 2,587,167 $19.27 1,825,189 $17.50 -- --
Granted 932,925 $14.72 925,700 $22.45 1,959,992 $17.50
Exercised 6,247 $14.00 5,174 $14.00 -- --
Forfeited 230,839 $19.14 158,548 $17.59 134,803 $17.52
--------- --------- ----------
Outstanding-end of year 3,283,006 $18.00 2,587,167 $19.27 1,825,189 $17.50
========= ========= =========
Exercisable at end of year 786,616 $18.55 332,973 $17.51 -- --
Weighted-average fair value of
options granted during the
year $7.95 $11.13 $5.42

</TABLE>

42
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

6. STOCK INCENTIVE PLAN (CONTINUED)

Exercise prices for options outstanding as of December 26, 1999 ranged
from $14.00 to $22.50 per share. The weighted-average remaining contractual life
of those options is 8.2 years.

7. EXTRAORDINARY ITEM

In July 1998, in connection with the Credit Agreement, the Company
expensed approximately $7.3 million of deferred financing costs associated with
the extinguishment of the Company's prior credit facility, resulting in an
extraordinary charge of $4.5 million, net of tax (See Note 4, Long-Term Debt).

8. EARNINGS PER COMMON SHARE

The following table sets forth the computation of weighted-average
shares outstanding for calculating basic and diluted earnings per share for the
years ended December 26, 1999 and December 31, 1998 and 1997, respectively.

1999 1998 1997
---- ---- ----
<S> <C> <C> <C>

Weighted-average shares for basic earnings per share 46,820,485 48,437,521 44,792,774
Effect of diluted securities:
employee stock options 53,125 188,935 190,747
----------- ---------- ----------
Adjusted weighted-average shares for diluted
earnings per share 46,873,610 48,626,456 44,983,521
=========== ========== ===========

</TABLE>

Options to purchase 1.6 million, 1.7 million and 951,670 shares of
Common Stock at a range of $17.63 to $22.50, $18.00 to $22.50 and $17.63 to
$21.00, were outstanding during 1999, 1998 and 1997, respectively, but were not
included in the computation of the diluted EPS because the options' exercise
price was greater than the average market price of the common shares.

9. PENSION AND POST RETIREMENT PLANS

The Company and its subsidiaries have separate defined benefit pension
plans, certain of which are successors to prior plans. The benefits are based on
years of service and primarily on the employees' career average pay. The
Company's funding policy is to contribute annually an amount that can be
deducted for federal income tax purposes under a different actuarial cost method
and different assumptions from those used for financial reporting. Assets of the
plans consist principally of short-term investments, equity securities and
corporate and U.S. Government obligations.

The Company uses September 30, to measure pension plan assets and
liabilities.

43
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

9. PENSION AND POST RETIREMENT PLANS (CONTINUED)

The following table sets forth the plans' funded status and the amount
recognized in the Company's consolidated balance sheet:

(in thousands)
Pension Benefits Post-Retirement Benefits
------------------------ --------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>

Change in benefit obligation
Benefit obligation at beginning of year $ 74,278 $ 57,697 $ 7,291 $ 6,850
Service cost 1,847 1,588 15 15
Interest cost 5,203 4,516 493 500
Actuarial (gain)/loss (5,100) 3,377 (210) 197
Benefits paid (4,351) (4,201) (429) (487)
Business combinations -- 11,301 -- 216
--------- ------- ---------- ---------
Benefit obligation at end of year $ 71,877 $ 74,278 $ 7,160 $ 7,291
Change in plan assets
Fair value of trust assets at beginning of year $ 83,956 $ 78,365 $ -- $ --
Actual return on plan assets 8,858 (2,099) -- --
Employer contributions 116 114 429 487
Benefits paid (4,351) (4,201) (429) (487)
Business combinations -- 11,777 -- --
---------- --------- ----------- ---------

Fair value of trust assets at end of year $ 88,579 $ 83,956 $ -- $ --
Reconciliation of funded status
Funded status $ 16,702 $ 9,678 $ (7,160) $ (7,291)
Unrecognized net
Transition (asset)/obligation 135 240 -- --
Prior service cost (2,712) (3,073) (530) (622)
(Gain)/loss (4,443) 2,151 (580) (367)
Contributions after measurement date 55 34 -- --
--------- --------- ----------- -----------
Net amount recognized $ 9,737 $ 9,030 $ (8,270) $ (8,280)
Amounts recognized in statement of financial
position

Prepaid benefit cost $ 10,104 $ 9,466 $ -- $ --
(Accrued) benefit cost (874) (1,032) (8,270) (8,280)
Adjustment required to recognize minimum
liability 231 231 N/A N/A
Accumulated other comprehensive loss 276 365 N/A N/A
---------- ---------- --------- -----------
Net amount recognized $ 9,737 $ 9,030 $ (8,270) $ (8,280)
Separate disclosures for pension plans with
accumulated benefit obligation in excess of
plan assets
Projected benefit obligation at end of year $ 2,085 $ 3,811 N/A N/A
Accumulated benefit obligation at end of year $ 2,022 $ 3,578 N/A N/A
Fair value of assets at end of year $ 1,728 $ 3,019 N/A N/A

</TABLE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

9. PENSION AND POST RETIREMENT PLANS (CONTINUED)

<TABLE>
<CAPTION>
(in thousands)
Pension Benefits Post-retirement Benefits
------------------------ -----------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>

Components of net periodic benefit cost
Service cost $ 1,847 $ 1,588 $ 15 $ 15
Interest cost 5,203 4,516 493 500
Expected return on plan assets (7,376) (7,273) -- --
Amortization of net

Transition obligation 105 101 -- --
Prior service cost (361) (367) (92) (82)
(Gain)/loss 60 (297) (18) (17)
Adjustment (48) -- -- --
-------- --------- ---------- ---------
Net periodic benefit (income) cost $ (570) $(1,732) $ 398 $ 416

Actuarial assumptions

Discount rate 7.75% 7.00% 7.75% 7.00%
Expected long-term return on plan assets 9.00% 9.00% N/A N/A
Rate of compensation increase 3.00% 3.00% 3.00% 3.00%
Rate of increase in health benefit costs
Immediate rate 7.00% 8.00%
Ultimate rate 6.50% 6.50%
Year ultimate rate reached 2000 2000

Effects of a change in the assumed rate of health
benefit costs
Effect of a 1% increase on
Total of service cost and interest cost $33 $33
Post-Retirement benefit obligation $394 $390
Effect of a 1% decrease on
Total of service cost and interest cost $(27) $(31)
Post-Retirement benefit obligation $(347) $(350)

</TABLE>

The Company also has defined contribution plans covering certain
employees. Company contributions to these plans are based on a percentage of
participants' salaries and amounted to approximately $706,000, $377,000 and
$325,000 in 1999, 1998 and 1997, respectively.

The Company contributes to various multi-employer union administered
pension plans. Contributions to these plans amounted to approximately $160,000,
$110,000 and $68,000 in 1999, 1998 and 1997, respectively.

45
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

10. INCOME TAXES

The provision for income taxes on income before extraordinary item is
as follows:

(in thousands)
1999 1998 1997
---------------- ---------------- -----------------
<S> <C> <C> <C>

Current tax expense:
Federal $ 23,592 $ 16,492 $ 8,035
State 2,145 3,389 2,970
---------------- ---------------- -----------------
Total current 25,737 19,881 11,005
Deferred tax expense (benefit):
Federal 5,244 10,157 5,027
State 713 (1,926) (248)
---------------- ---------------- -----------------
Total deferred 5,957 8,231 4,779
---------------- ---------------- -----------------
Total provision for taxes $ 31,694 $ 28,112 $ 15,784
================ ================ =================

</TABLE>

The reconciliation of income tax computed at the U.S. federal statutory
tax rate to income tax expense is as follows:

(in thousands)
1999 1998 1997
---------------- ---------------- ----------------
<S> <C> <C> <C>

Tax at U.S. statutory rates $ 27,855 $ 25,811 $ 13,564
State taxes, net of federal effect 1,858 951 1,769
Non deductible goodwill amortization 1,976 -- --
Other 5 1,350 451
---------------- ---------------- ----------------
$ 31,694 $28,112 $ 15,784
================ ================ ================

</TABLE>

State net operating loss carryforwards were utilized as follows: $12.4
million in 1999, $13.5 million in 1998 and $700,000 in 1997.

At December 26, 1999, certain subsidiaries had net operating loss
carryforwards available ranging from approximately $21,000 to $62.2 million in
various state and local jurisdictions. Substantial portions of the related
deferred tax assets are offset by valuation allowances. The carryforwards at
December 26, 1999 expire in various years through 2014.

46
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

10. INCOME TAXES (CONTINUED)

Deferred income taxes reflect the net effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of December 26 and December
31, respectively, are as follows:

(in thousands)
1999 1998
------------------------------------------
<S> <C> <C>

Deferred tax liabilities:
Property, plant and equipment $ 12,518 $ 13,966
Intangibles 11,321 4,891
Retiree benefits 259 -
----------- -------------
Total deferred tax liabilities 24,098 18,857
Deferred tax assets:
Retiree benefits -- 54
Net operating loss carryforwards 3,878 3,251
Other 5,020 5,127
---------- ---------
Total deferred tax assets 8,898 8,432
Valuation allowance 2,370 1,082
---------- ---------
Net deferred tax assets 6,528 7,350
---------- ---------
Net deferred tax liabilities $ 17,570 $ 11,507
========= ========

</TABLE>

As part of the acquisitions in 1999 and the acquisition of the Goodson
properties in 1998, the Company recorded net deferred tax liabilities of
approximately $69,000 and $2.0 million, respectively.

The Company's valuation allowances for deferred tax assets increased by
approximately $1.3 million in 1999 and decreased by approximately $700,000 in
1998.

The Company's federal income tax returns, which consisted, prior to the
Offering, of three separate consolidated groups and two individual entities,
have not been examined by the Internal Revenue Service. Effective with the
Offering that occurred in May 1997, the Company files its federal income tax
return as one consolidated group.

11. COMMITMENTS AND CONTINGENCIES

The Company leases office space and equipment under noncancellable
operating leases. These leases contain several renewal options for periods up to
five years. The Company's future minimum lease payments under operating leases
at December 26, 1999 are as follows:

(in thousands)

2000.............................................. $2,508
2001.............................................. $1,379
2002.............................................. $ 958
2003.............................................. $ 796
2004............................................... $ 556
Thereafter........................................ $ 52

Total rent expense was $3.3 million, $3.1 million and $2.0 million for
the years ended December 26, 1999, December 31, 1998 and 1997, respectively.

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

11. COMMITMENTS AND CONTINGENCIES (CONTINUED)

In 1999, the Company began the planning phases for the construction of
a new Philadelphia printing facility. In conjunction with the Philadelphia
plant, the Company entered into an agreement for the construction of a new
printing press. The cost of the press is approximately $15.0 million with an
estimated in service date in 2001.

The Company is involved in certain litigation matters which have arisen
in the ordinary course of business. In the opinion of management, the outcome of
these legal proceedings should not have a material adverse impact on the
Company's financial position or results of operations.

12. ACQUISITIONS

On June 7, 1999, the Company acquired certain assets and liabilities of
THE FARMINGTON VALLEY POST in Avon, Connecticut, a suburban monthly newspaper.
On July 13, 1999, the Company acquired certain assets and liabilities of TOWN
TALK SOUTHERN, TOWN TALK EASTERN and the DELAWARE COUNTY JOURNAL in Ridley,
Pennsylvania. On August 13, 1999, the Company acquired the stock of Hometown
News, Inc., in West Warwick, Rhode Island, comprising a daily, weekly and three
non-daily publications. On September 1, 1999, the Company acquired certain
assets and liabilities of CONNECTICUT MAGAZINE, in Trumbull, Connecticut, a
monthly publication. The Company applied the purchase method of accounting for
these transactions. Accordingly, the total acquisition cost, on a preliminary
basis, was allocated to the tangible assets and liabilities based on their
relative estimated fair value on the effective dates of the acquisition of
approximately $2.1 million and $800,000, respectively. In connection with these
acquisitions, intangible assets of approximately $14.1 million were recorded for
the excess of the purchase price over the value of identifiable net assets and
are being amortized according to the Company's policy. The results of the
acquired companies have been included in the consolidated financial statements
since the acquisition date.

On January 2, 1998, the Company acquired for approximately $3.8 million
certain assets and liabilities of HVM, L.L.C. in New Milford, Connecticut, which
publishes a group of newspapers, shoppers and monthly magazines. The Company
applied the purchase method of accounting for this transaction.

On March 9, 1998, the Company acquired THE SARATOGIAN, a daily
newspaper in Saratoga Springs, New York and the COMMUNITY NEWS, a weekly
newspaper serving Clifton Park, New York. The Company applied the purchase
method of accounting for this transaction.

On July 15, 1998, the Company completed its acquisition of the
Pennsylvania, New York and Ohio newspaper businesses of The Goodson Newspaper
Group (including Mark Goodson Enterprises, Ltd.) for approximately $300 million
in cash (the "Goodson Acquisition"). The Company applied the purchase method of
accounting for this transaction. Accordingly, the total acquisition cost, was
allocated to the tangible assets and liabilities acquired based upon their
estimated fair market value on the effective date of the acquisition of
approximately $17.1 million and $7.9 million, respectively. Intangible assets of
approximately $300 million were recorded for the subscriber lists and excess of
the purchase price over the value of identifiable net assets and are being
amortized in accordance with the Company's policy.

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

The following table presents the unaudited proforma results of
operations of the Company as though the Goodson Acquisition occurred on January
1, 1997.

(in thousands)
1998 1997
---- ----

Net Revenues $464,330 $428,416
Income before extraordinary item 40,413 12,024
Net Income 35,918 12,024
Net income per share (basic and diluted):

Income before extraordinary item $ .83 $ .27
Net income $ .74 $ .27

The proforma results are not necessarily indicative of what actually
would have occurred if the acquisition had been in effect for the entire periods
presented and are not intended to be a projection of future results.

On September 21, 1998, the Company completed its acquisition of Taconic
Media, Dutchess County, NY. The Company applied the purchase method of
accounting for this transaction. Accordingly, the total acquisition cost, was
allocated to the assets and liabilities based on the relative estimated fair
values on the effective date of the acquisition.

Intangible assets of $344.0 million related to the aforementioned 1998
acquisitions were recorded and are being amortized according to the Company's
policy. The results of the acquired companies have been included in the
consolidated financial statements since the acquisition date.

On December 22, 1997, the Company acquired for approximately $12.8
million certain assets and liabilities of the InterCounty Newspaper Group. The
InterCounty Newspaper Group includes 17 weekly newspapers in suburban
Philadelphia and central and southern New Jersey with total weekly distribution
of approximately 100,000. The Company applied the purchase method of accounting
for this transaction. Accordingly, the total acquisition cost was allocated to
the tangible assets and liabilities, respectively, of InterCounty Newspaper
Group based on their relative estimated fair values on the effective date of the
acquisition of approximately $6.2 million and $1.8 million, respectively.

On December 12, 1997, the Company acquired certain assets and
liabilities of the LADUE NEWS in Ladue, MO, a 44 times-per-year newspaper
serving suburban St. Louis. The Company applied the purchase method of
accounting for this transaction. Accordingly, the total acquisition cost was
allocated to the assets and liabilities, respectively, of the LADUE NEWS based
on their relative estimated fair values on the effective date of the
acquisition.

Intangible assets of $14.1 million related to the aforementioned 1997
acquisitions were recorded for the excess of the purchase price over the value
of identifiable net assets and are being amortized according to the Company's
policy.

<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

13. MEMBERSHIP INTERESTS

On March 11, 1997, membership interests in JRC, LLC and the capital
stock of INSI Holdings, Inc. were converted to 37,962,500 shares of Common Stock
(see Note 1, Organization and Basis of Presentation).

Membership Interests
Par ------------------------------------ Membership Paid-in
Value Authorized Issued Outstanding Interest Capital
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Journal Register Company, LLC:
Class A Membership Interest $ 1.00 1,000,000 1,000,000 1,000,000 $1,000,000
Class B Membership Interest $ 1.00 1,000,000 1,000,000 1,000,000 1,000,000
Additional paid-in capital -- $216,982,319
---------- -------------
2,000,000 216,982,319
INS Holdings, Inc.:
Common stock voting $ .10 2,000 2,000 2,000 200
Common stock non-voting $ .10 1,000,000 1,000,000 1,000,000 100,000
Preferred Stock, Class A $ 1.00 4,000 4,000 4,000 4,000
Additional paid-in-capital -- 5,185,016
------------ --------------
104,200 5,185,016
------------ --------------
$2,104,200 $222,167,335
============ ==============

</TABLE>

14. SUBSEQUENT EVENTS (UNAUDITED)

On February 28, 2000, the Company announced its intent to sell its Ohio
and St. Louis area newspapers. The Ohio properties include four daily newspapers
with a total daily circulation of approximately 126,000. The Missouri and
Illinois properties include the Suburban Newspapers of Greater St. Louis,
representing non-daily distribution of approximately 1.7 million and a daily
newspaper in Alton, Illinois, with daily circulation of approximately 28,000 and
Sunday circulation of approximately 30,000. For the year ended December 26,
1999, the Ohio and St. Louis area newspapers generated approximately $135
million in revenue.

Since December 26, 1999 and as of March 17, 2000, the Company, in
accordance with its stock repurchase program, has repurchased an additional
707,200 shares of its Common Stock on the open market at a total cost of
approximately $9.9 million. Shares under the program are to be repurchased at
management's discretion, either in the open market or in privately negotiated
transactions.

The decision to repurchase stock depends on price, market conditions
and other factors. There is no minimum number of shares to be purchased under
the program. Purchases under the program will be financed with the Company's
free cash flow or borrowings under the Company's revolving credit facility.

50
<PAGE>

JOURNAL REGISTER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 26, 1999

15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a summary of the quarterly results of operations for
years ended December 26, 1999 and December 31, 1998:

March June September December(2)
------------- ---------------- ---------------- -----------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>

1999
- ----
Revenues $ 109,902 $121,166 $119,545 $118,952
Operating income $ 26,749 $ 35,982 $ 32,509 $ 36,692
Net income $ 7,940 $ 13,852 $ 11,515 $ 14,358

Net income per common share:
(basic and diluted) $ 0.17 $ 0.30 $ 0.25 $ 0.31

1998
- ----
Revenues $ 89,661 $101,881 $114,046 $121,192
Operating income $ 22,302 $ 31,739 $ 27,807 $ 37,219
Net income $ 8,563 $ 14,606 $ 3,615 $ 14,355

Net income per common share:
(basic and diluted)
Income before extraordinary item (1) $ 0.18 $ 0.30 $ .17 $ .30
Net income $ 0.18 $ 0.30 $ .07 $ .30

</TABLE>

(1) Extraordinary item recorded in the third quarter of 1998 was related to the
extinguishment of debt.
(2) December 1999 quarterly results reflect operations for the period September
1, 1999 through December 26, 1999

<PAGE>

JOURNAL REGISTER COMPANY
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

Balance At Charges to Balance At
Beginning of Costs and End of
Description Period Adjustments(1) Expenses Deductions(2) Period
----------- ------------ -------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>

YEAR ENDED DECEMBER 31, 1999
Allowance for doubtful accounts $4,632 $ 141 $ 4,257 $ 2,737 $ 6,293
Valuation allowance for deferred tax assets $1,082 -- $ 1,288 -- $ 2,370

YEAR ENDED DECEMBER 31, 1998
Allowance for doubtful accounts $4,055 $ 1,092 $ 4,464 $ 4,979 $ 4,632
Valuation allowance for deferred tax assets $1,792 -- -- $ 710 $ 1,082

YEAR ENDED DECEMBER 31, 1997
Allowance for doubtful accounts $4,173 $ 847 $ 3,291 $ 4,256 $ 4,055
Valuation allowance for deferred tax assets $2,350 -- -- $ 558 $ 1,792

</TABLE>

- ----------------------------

(1) Allowance for doubtful accounts additions related to 1999, 1998 and 1997
acquisitions.

(2) Write-off of uncollectable accounts to the allowance for doubtful accounts
and reduction of the valuation allowance for deferred tax assets.

S-1
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Information with respect to executive officers of the Company is
presented in Item 4 of this Report under the caption "Executive Officers of the
Registrant."

The information appearing under the captions "Proposal 1 - Election of
Directors", "Certain Transactions" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the Company's Proxy Statement for its 2000 Annual
Meeting of Stockholders (the "2000 Proxy Statement") is incorporated herein by
reference.

ITEM 11. EXECUTIVE COMPENSATION.

Information appearing under the caption "Executive Compensation" in the
2000 Proxy Statement is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

Information appearing under the caption "Security Ownership of
Beneficial Owners and Management" in the 2000 Proxy Statement is incorporated
herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Information appearing under the caption "Certain Transactions" in the
2000 Proxy Statement is incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) 1. Financial Statements.
--------------------

The financial statements are included in Part II, Item 8 of this Report.

2. Financial Statement Schedules and Supplementary Information
Required to be Submitted.
-----------------------------------------------------------

Schedule of Valuation and Qualifying Accounts on Schedule II, included
in Part II, Item 8 of the report.

All other schedules have been omitted because they are inapplicable or
the required information is shown in the consolidated financial
statements or related notes.

(b) Reports On Form 8-K.
-------------------

A report on Form 8-K was filed by the Company on October 27, 1999,
pursuant to Item 8 thereof, reporting the Company's decision to change the
Company's fiscal year end from a calendar year period to a 5-week, 4-week,
4-week reporting period.

A report on Form 8-K was filed by the Company on November 24, 1999,
pursuant to Item 8 thereof, and in connection with the Company's October 27,
1999 Form 8-K filing, whereby the Company approved a change in the Company's
fiscal year end from December 31, 1999 to December 26, 1999.

<PAGE>

The following is a list of all Exhibits filed as part of this Report:

Exhibit No. Description
----------- -----------

*2.1 Master Agreement, dated as of May 17, 1998, by and
among each of the persons listed on Annex A and Annex
B thereto, Richard G. Schneidman, as Designated
Stockholder, and the Company (filed as Exhibit 99.2 to
the Company's Current Report on Form 8-K/A, dated June
30, 1998).
*3(i) Amended and Restated Certificate of Incorporation
(filed as Exhibit 3(i) to Journal Register Company's
Form 10-Q/A Amendment No. 1 for the fiscal quarter
ended June 30, 1997 (the "June 1997 Form 10-Q")).
*3(ii) Amended and Restated By-laws (filed as Exhibit 3(ii)
to the September 1999 Form 10-Q).
*4.1 Company Common Stock Certificate (filed as Exhibit 4.1
to Journal Register Company's Registration Statement
on Form S-1, Registration No. 333-23425 (the "Form
S-1")).
*10.1 1997 Stock Incentive Plan (filed as Exhibit 10.2 to
the June 1997 Form 10-Q).+
*10.2 Management Bonus Plan (filed as Exhibit 10.3 to the
June 1997 Form 10-Q).+
*10.3 Supplemental 401(k) Plan (filed as Exhibit 10.4 to the
Form S-1).+
*10.4 Voting Agreement by and among Journal Register
Company, Warburg, Pincus Capital Company, L.P.,
Warburg, Pincus Capital Partners, L.P. and Warburg,
Pincus Investors, L.P. (filed as Exhibit 10.5 to the
June 1997 Form 10-Q).
*10.5 Registration Rights Agreement by and among Journal
Register Company, Warburg, Pincus Capital Company,
L.P., Warburg, Pincus Capital Partners, L.P. and
Warburg, Pincus Investors, L.P. (filed as Exhibit 10.6
to the June 1997 Form 10-Q).
*10.6 Credit Agreement among Journal Register Company, each
of the banks and other financial institutions that is
a signatory thereto or which, pursuant to Section 2.01
(c) or Section (b) thereto, becomes a "Lender"
thereunder and the Chase Manhattan Bank, as
administrative agent for the lenders (filed as Exhibit
10.7 to the September 30, 1998 Form 10-Q).

**21.1 Subsidiaries of Journal Register Company.
**23.1 Consent of Ernst & Young LLP.
**24 Power of Attorney (appears on signature page).
**27.1 Financial Data Schedule.

+ Management contract or compensatory plan or arrangement.
* Incorporated by reference.
** Filed herewith.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Trenton, State of New Jersey, on the 24th day of March, 2000.

JOURNAL REGISTER COMPANY

By: /S/ ROBERT M.JELENIC
---------------------------------------
Chairman, President and Chief Executive
Officer

KNOWN BY ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints both Robert M. Jelenic and Jean B.
Clifton his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Annual Report on
Form 10-K, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or their or his substitutes
or substitute, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 24th day of March, 2000.

Signature Title(s)
--------- --------

/S/ ROBERT M. JELENIC Chairman, President, Chief Executive Officer and
- ----------------------- Director (Principal Executive Officer)
Robert M. Jelenic

/S/ JEAN B. CLIFTON Executive Vice President, Chief Financial Officer
- ----------------------- (Principal Financial and Accounting Officer),
Jean B. Clifton Secretary and Director

/S/ JOHN L. VOGELSTEIN Director
- -----------------------
John L. Vogelstein

/S/ DOUGLAS M. KARP Director
- -----------------------
Douglas M. Karp

/S/ GARY D. NUSBAUM Director
- -----------------------
Gary D. Nusbaum

/S/ JOHN R. PURCELL Director
- -----------------------
John R. Purcell

/S/ JOSEPH A. LAWRENCE Director
- -----------------------
Joseph A. Lawrence

<PAGE>

Exhibit Index

Exhibit No. Description
----------- ------------

*3(i) Amended and Restated Certificate of Incorporation
(filed as Exhibit 3(i) to Journal Register Company's
Form 10-Q/A Amendment No. 1 for the fiscal quarter
ended June 30, 1997 (the "June 1997 Form 10-Q")).
*3(ii) Amended and Restated By-laws (filed as Exhibit 3(ii)
to the September 1999 Form 10-Q).
*4.1 Company Common Stock Certificate (filed as Exhibit 4.1
to Journal Register Company's Registration Statement
on Form S-1, Registration No. 333-23425
(the "Form S-1")).
*10.1 1997 Stock Incentive Plan (filed as Exhibit 10.2 to
the June 1997 Form 10-Q).+
*10.2 Management Bonus Plan (filed as Exhibit 10.3 to the
June 1997 Form 10-Q).+
*10.3 Supplemental 401(k) Plan (filed as Exhibit 10.4 to the
Form S-1).+
*10.4 Voting Agreement by and among Journal Register
Company, Warburg, Pincus Capital Company, L.P.,
Warburg, Pincus Capital Partners, L.P. and Warburg,
Pincus Investors, L.P. (filed as Exhibit 10.5 to the
June 1997 Form 10-Q).
*10.5 Registration Rights Agreement by and among Journal
Register Company, Warburg, Pincus Capital Company,
L.P., Warburg, Pincus Capital Partners, L.P. and
Warburg, Pincus Investors, L.P. (filed as Exhibit
10.6 to the June 1997 Form 10-Q).
*10.6 Credit Agreement among Journal Register Company, each
of the banks and other financial institutions that is
a signatory thereto or which, pursuant to Section 2.01
(c) or Section (b) thereto, becomes a "Lender"
thereunder and the Chase Manhattan Bank, as
administrative agent for the lenders (filed as Exhibit
10.7 to the September 30, 1998 Form 10-Q).

**21.1 Subsidiaries of Journal Register Company.
**23.1 Consent of Ernst & Young LLP.
**24 Power of Attorney (appears on signature page).
**27.1 Financial Data Schedule.

+ Management contract or compensatory plan or arrangement.
* Incorporated by reference.
** Filed herewith.

<PAGE>

EXHIBIT 21.1

LIST OF SUBSIDIARIES OF JOURNAL REGISTER COMPANY

The following is a list of the corporations that are subsidiaries of Journal
Register Company, a Delaware corporation. If indented, the corporation listed is
a wholly-owned subsidiary of the corporation under which it is listed.

State of
Name of Corporation Incorporation
- ------------------- -------------

Journal News, Inc. Delaware

Journal Register East, Inc.(1) Delaware

Northeast Publishing Company, Inc.(2) Delaware

Central Acquisition, LLC Delaware

Mark I Communications Delaware

The Goodson Holding Company(3) Delaware

OMMA Acquisition, LLC(4) Delaware

New Haven Register, LLC(5) Delaware

Suburban Newspapers of Greater St. Louis, LLC(6) Delaware

The Saratogian, LLC(7) Delaware

- ----------------------------

(1) Doing business as The Herald, The Herald Press, The Bristol Press, The
Register Citizen, Shore Line Times, Pictorial Gazette,The Dolphin, Branford
Review, Clinton Recorder, Regional Standard, Regional Express, Pennysaver,
Shoreliner Shopper East, Shoreliner Shopper West, Milford Reporter, Milford
Sunday, Hamden Chronicle, The Stratford Bard, The Post, The Orange Bulletin, The
Advertiser, West Haven News, West Hartford News, Weathersfield Post, Newington
Town Crier, Windsor Journal, Valley News, Bloomfield Journal, Windsor Locks
Journal, East Hartford Gazette, Thomaston Express, Connecticut's County Kids,
Tradewinds, Rhode Island Homes, Hartford Homes, Springfield Homes, Foothills
Trader, Daily Local News, The Phoenix, The Suburban & Wayne Times, The Suburban
Advertiser, The King of Prussia Courier, The Village News, The Times Record, The
Record, The Narragansett Times, The Standard Times, The East Greenwich Pendulum,
The Chariho Times, The Coventry Courier, The Westerly Shopper, The Telegraph,
Press Plus, Herald Extra, Township Voice, Suburban Extra, Riverbend Express,
Wallingford Voice, The Homefinder, Homes Magazine, West Chester Voice, Register
Citizen Express, Rhode Island Family, The Week in South County and The
Farmington Valley Post.

<PAGE>

(2) Doing business as The News-Herald, The Morning Journal, The Times
Reporter, The Herald News, The Call, The Times, Closer Look, Chatter, Cover
Story (The Herald News), Neighbors, County Kids, Taste and The Times Cover
Story.

(3) Doing business as The Mercury, Penny Pincher Shoppers, Delaware County
Daily & Sunday Times, Times Extra, US Express and Marketplace.

(4) Doing business as the Daily Freeman, the Independent, The Oneida Daily
Dispatch, The Oneida Pennysaver, The Chittenango Pennysaver, Quality Time,
Central Delaware County Edition, Western Delaware County Edition,
Aston/Brookhaven/Chichester Edition, Chester County Edition, Main Line Times,
News of Delaware County, Germantown Courier, Mt. Airy Times Express.

(5) Doing business as the New Haven Register, Valley Express, Shoreline
Express and Hamden Express.

(6) Doing business as the Belleville Journal, Granite City Journal,
Collinsville Journal, Monroe County Clarion Journal, Cahokia/Dupo Journal,
O'Fallon Journal, IL Classified Plus, East St. Louis Journal, Edwardsville
Journal, Fairview Heights, County Journal, Granite City Press Record, Enterprise
Journal, Collinsville Herald, St. Peters Journal, North County Journal West,
Southwest County Journal, North County Journal East, St. Charles Journal, Press
Journal, News Democrat Journal, Jefferson County Journal, South County Journal,
Oakville/Mehlville Journal, South Side Journal, West County Journal, County Star
Journal East, MO Classified Plus, Southwest City Journal, Webster/Kirkwood
Journal, Meramec Journal, Citizen Journal, North Side Journal, Chesterfield
Journal, Wentzville Journal, South County Kids, St. Charles Kids, West County
Kids, County Star Journal West, Mid County Journal, South City Journal,
Warrenton Journal, Tri County Journal and Central West End Journal.

(7) Doing business as The Saratoginan, the Saratoga Extra and Community News.

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-27555) pertaining to the 1997 Stock Incentive Plan of Journal
Register Company of our report dated February 3, 2000, with respect to the
consolidated financial statements and schedule of Journal Register Company
included in the Annual Report (Form 10-K) of Journal Register Company for the
year ended December 26, 1999.

/s/ Ernst & Young LLP

MetroPark, New Jersey
March 23, 2000

<ARTICLE>5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET OF JOURNAL REGISTER COMPANY AT DECEMBER 26, 1999 AND
THE CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 26, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-26-1999
<CASH> 3,090
<SECURITIES> 0
<RECEIVABLES> 71,890
<ALLOWANCES> 6,293
<INVENTORY> 9,899
<CURRENT-ASSETS> 88,397
<PP&E> 246,836
<DEPRECIATION> 141,860
<TOTAL-ASSETS> 687,180
<CURRENT-LIABILITIES> 72,880
<BONDS> 731,467
0
0
<COMMON> 484
<OTHER-SE> (207,867)
<TOTAL-LIABILITY-AND-EQUITY> 687,180
<SALES> 0
<TOTAL-REVENUES> 469,565
<CGS> 0
<TOTAL-COSTS> 263,517
<OTHER-EXPENSES> 28,798
<LOSS-PROVISION> 4,257
<INTEREST-EXPENSE> 52,265
<INCOME-PRETAX> 79,585
<INCOME-TAX> 31,694
<INCOME-CONTINUING> 47,665
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,665
<EPS-BASIC> 1.02
<EPS-DILUTED> 1.02

</TABLE>