##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



---



FORM 10-Q



|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2003



OR



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



For the transition period
from            to



Commission file number 1-7564



---



DOW JONES
& COMPANY, INC.

(Exact name of registrant as specified in its charter)



|DELAWARE                        |  | 13-5034940         
|------------------------------- |  | -------------------
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)



|200 LIBERTY STREET, NEW YORK, NEW YORK   |  | 10281     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip Code)



(212)
416-2000

(Registrants telephone number, including area code)



---



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.    Yes    x    No ̈



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



The number of shares outstanding of each of the issuers
classes of common stock on March 31, 2003: 60,603,844 shares of Common Stock and 20,770,483 shares of Class B Common Stock.



---



---

##### Table of Contents



DOW JONES
& COMPANY, INC.



INDEX



|                              |  |                                                                                         |  | PAGE
|----------------------------- |  | --------------------------------------------------------------------------------------- |  | ----
|PART I. Financial Information |  |                                                                                        
|                             
|Item 1.                       |  | Financial Statements (unaudited)                                                        |  |     
|                             
|                              |  | Consolidated Statements of IncomeFor the three months ended March 31, 2003 and 2002    |  | 3   
|                             
|                              |  | Consolidated Statement of Cash FlowsFor the three months ended March 31, 2003 and 2002 |  | 4   
|                             
|                              |  | Consolidated Balance SheetsMarch 31, 2003 and December 31, 2002                        |  | 5   
|                             
|                              |  | Notes to Financial Statements                                                           |  | 6   
|                             
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations   |  | 11  
|                             
|Item 3.                       |  | Quantitative and Qualitative Disclosure About Market Risk                               |  | 20  
|                             
|Item 4.                       |  | Controls and Procedures                                                                 |  | 20  
|                             
|PART II. Other Information    |  |                                                                                        
|                             
|Item 1.                       |  | Legal Proceedings                                                                       |  | 21  
|                             
|Item 4.                       |  | Submissions of Matters to a Vote of Security Holders                                    |  | 22  
|                             
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                        |  | 22  



2



---

##### Table of Contents

I. FINANCIAL INFORMATION



Item 1: Financial Statements



CONSOLIDATED STATEMENTS OF INCOME

Dow Jones and Company, Inc.

For the three months ended March 31, 2003 and 2002

(unaudited)



|                                                       |  | Three Months Ended March 31              |        
|------------------------------------------------------ |  | ---------------------------------------- | -------
|                                                       |  | 2003                                     |        
|                                                       |  | (in thousands, except per share amounts) |        
|Revenues:                                              |  |                                          |        
|Advertising                                            |  | $                                        | 190,508
|Information services                                   |  |                                          | 71,856 
|Circulation and other                                  |  |                                          | 95,866 
|                                                       |  |                                          |        
|Total revenues                                         |  |                                          | 358,230
|                                                      
|Expenses:                                              |  |                                          |        
|News, operations and development                       |  |                                          | 115,295
|Selling, administrative and general                    |  |                                          | 129,022
|Newsprint                                              |  |                                          | 23,071 
|Print delivery costs                                   |  |                                          | 45,906 
|Depreciation and amortization                          |  |                                          | 27,357 
|                                                       |  |                                          |        
|Operating expenses                                     |  |                                          | 340,651
|                                                       |  |                                          |        
|Operating income                                       |  |                                          | 17,579 
|                                                      
|Other income (deductions):                             |  |                                          |        
|Investment income                                      |  |                                          | 74     
|Interest expense                                       |  |                                          | (453   
|Equity in losses of associated companies               |  |                                          | (1,849 
|Gain on resolution of Telerate sale loss contingencies |  |                                          | 59,821 
|Gain on sale of businesses                             |  |                                          |        
|Contract guarantee                                     |  |                                          | (2,610 
|Other, net                                             |  |                                          | 439    
|                                                       |  |                                          |        
|Income before income taxes and minority interests      |  |                                          | 73,001 
|Income taxes                                           |  |                                          | 6,481  
|                                                       |  |                                          |        
|Income before minority interests                       |  |                                          | 66,520 
|Minority interests in losses of subsidiaries           |  |                                          | 412    
|                                                       |  |                                          |        
|                                                      
|Net income                                             |  | $                                        | 66,932 
|                                                       |  |                                          |        
|                                                      
|Per Share:                                             |  |                                          |        
|Net income per share:                                  |  |                                          |        
|Basic                                                 |  | $                                        | .82    
|Diluted                                               |  |                                          | .82    
|Cash dividends                                         |  |                                          | .25    
|                                                      
|Weighted-average shares outstanding:                   |  |                                          |        
|Basic                                                 |  |                                          | 81,791 
|Diluted                                               |  |                                          | 82,028 
|                                                      
|Comprehensive income                                   |  | $                                        | 66,817 
|                                                       |  |                                          |        



The accompanying notes
are an integral part of the financial statements.



3



---

##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS

Dow Jones & Company, Inc.

For the three months ended March 31, 2003 and 2002

(unaudited)



|                                                                                            |  | Three Months Ended March 31 |        
|------------------------------------------------------------------------------------------- |  | --------------------------- | -------
|                                                                                            |  | 2003                        |        
|                                                                                            |  | (in thousands)              |        
|Operating Activities:                                                                       |  |                             |        
|Net income                                                                                  |  | $                           | 66,932 
|Adjustments to reconcile net income to net cash provided by (used in) operating
activities: |  |                             |        
|Depreciation                                                                                |  |                             | 27,061 
|Amortization of intangibles                                                                 |  |                             | 296    
|Equity in losses of associated companies, net of distributions                              |  |                             | 1,849  
|Minority interests in losses of subsidiaries                                                |  |                             | (412   
|Gain on resolution of Telerate sale loss contingencies                                      |  |                             | (59,821
|Gain on sale of businesses                                                                  |  |                             |        
|Contract guarantee                                                                          |  |                             | 2,610  
|Changes in assets and liabilities:                                                          |  |                             |        
|Accounts receivable                                                                         |  |                             | 15,131 
|Other assets                                                                                |  |                             | (3,122 
|Accounts payable and accrued liabilities                                                    |  |                             | (45,895
|Income taxes                                                                                |  |                             | 716    
|Deferred taxes                                                                              |  |                             | (1,161 
|Unearned revenue                                                                            |  |                             | 4,049  
|Other noncurrent liabilities                                                                |  |                             | 1,786  
|Other, net                                                                                  |  |                             | (907   
|                                                                                            |  |                             |        
|Net cash provided by (used in) operating activities                                         |  |                             | 9,112  
|                                                                                           
|Investing Activities:                                                                       |  |                             |        
|Additions to property, plant and equipment                                                  |  |                             | (14,341
|Funding of equity-method investments, net                                                   |  |                             | (6,888 
|Proceeds from insurance                                                                     |  |                             | 1,271  
|Disposition of businesses and investments                                                   |  |                             |        
|Other, net                                                                                  |  |                             | 2,219  
|                                                                                            |  |                             |        
|Net cash (used in) provided by investing activities                                         |  |                             | (17,739
|                                                                                           
|Financing Activities:                                                                       |  |                             |        
|Cash dividends                                                                              |  |                             | (20,472
|Increase in long-term debt                                                                  |  |                             | 26,982 
|Reduction of long-term debt                                                                 |  |                             |        
|Purchases of treasury stock                                                                 |  |                             | (18,698
|Proceeds from sales under stock compensation plans                                          |  |                             | 30     
|Contribution from minority partner                                                          |  |                             | 7,428  
|                                                                                            |  |                             |        
|Net cash used in financing activities                                                       |  |                             | (4,730 
|                                                                                           
|(Decrease) increase in cash and cash equivalents                                            |  |                             | (13,357
|Cash and cash equivalents at beginning of year                                              |  |                             | 39,346 
|                                                                                            |  |                             |        
|Cash and cash equivalents at March 31                                                       |  | $                           | 25,989 
|                                                                                            |  |                             |        



The accompanying notes
are an integral part of the financial statements.



4



---

##### Table of Contents



CONSOLIDATED BALANCE SHEETS

Dow Jones & Company, Inc.

(unaudited)



|                                                                     |  | March 31 2003          |           |   | December 31 2002 |  
|-------------------------------------------------------------------- |  | ---------------------- | --------- | - | ---------------- | -
|                                                                     |  | (dollars in thousands) |          
|Assets:                                                              |  |                        |           |   |                  |  
|Cash and cash equivalents                                            |  | $                      | 25,989    |   |                  | $
|Accounts receivabletrade, net                                       |  |                        | 131,160   |   |                  |  
|Accounts receivableother                                            |  |                        | 25,472    |   |                  |  
|Newsprint inventory                                                  |  |                        | 9,023     |   |                  |  
|Prepaid expenses                                                     |  |                        | 17,326    |   |                  |  
|Deferred income taxes                                                |  |                        | 14,752    |   |                  |  
|                                                                     |  |                        |           |   |                  |  
|Total current assets                                                 |  |                        | 223,722   |   |                  |  
|                                                                    
|Investments in associated companies, at equity                       |  |                        | 87,171    |   |                  |  
|Plant, property and equipment, at cost                               |  |                        | 1,700,579 |   |                  |  
|Less, Accumulated depreciation                                       |  |                        | 995,307   |   |                  |  
|                                                                     |  |                        |           |   |                  |  
|Plant, property and equipment, net                                   |  |                        | 705,272   |   |                  |  
|Goodwill and other intangible assets                                 |  |                        | 62,865    |   |                  |  
|Deferred income taxes                                                |  |                        | 72,776    |   |                  |  
|Other assets                                                         |  |                        | 18,535    |   |                  |  
|                                                                     |  |                        |           |   |                  |  
|Total assets                                                         |  | $                      | 1,170,341 |   |                  | $
|                                                                     |  |                        |           |   |                  |  
|                                                                    
|Liabilities:                                                         |  |                        |           |   |                  |  
|Accounts payable and accrued liabilities                             |  | $                      | 173,133   |   |                  | $
|Contract guarantee obligation                                        |  |                        | 124,804   |   |                  |  
|Income taxes                                                         |  |                        | 41,564    |   |                  |  
|Unearned revenue                                                     |  |                        | 194,488   |   |                  |  
|                                                                     |  |                        |           |   |                  |  
|Total current liabilities                                            |  |                        | 533,989   |   |                  |  
|                                                                    
|Long-term debt                                                       |  |                        | 119,919   |   |                  |  
|Deferred compensation, principally postretirement benefit obligation |  |                        | 298,945   |   |                  |  
|Contract guarantee obligation                                        |  |                        | 122,009   |   |                  |  
|Other noncurrent liabilities                                         |  |                        | 30,199    |   |                  |  
|                                                                     |  |                        |           |   |                  |  
|Total liabilities                                                    |  |                        | 1,105,061 |   |                  |  
|                                                                    
|Minority interests in subsidiaries                                   |  |                        | 7,577     |   |                  |  
|                                                                    
|Stockholders equity:                                                |  |                        |           |   |                  |  
|Common stock                                                         |  |                        | 102,181   |   |                  |  
|Additional paid-in capital                                           |  |                        | 120,684   |   |                  |  
|Retained earnings                                                    |  |                        | 779,180   |   |                  |  
|Accumulated other comprehensive income                               |  |                        | (6,204    | ) |                  |  
|                                                                     |  |                        |           |   |                  |  
|                                                                     |  |                        | 995,841   |   |                  |  
|Less, treasury stock, at cost                                        |  |                        | 938,138   |   |                  |  
|                                                                     |  |                        |           |   |                  |  
|Total stockholders equity                                           |  |                        | 57,703    |   |                  |  
|                                                                     |  |                        |           |   |                  |  
|Total liabilities and stockholders equity                           |  | $                      | 1,170,341 |   |                  | $
|                                                                     |  |                        |           |   |                  |  

The accompanying notes are an integral part of the financial statements.



5



---

##### Table of Contents



NOTES TO FINANCIAL STATEMENTS

Dow Jones & Company, Inc.

(unaudited)



1. Basis of Presentation



The accompanying unaudited condensed consolidated financial statements reflect all adjustments considered necessary by management to present fairly the
companys consolidated financial position as of March 31, 2003, and the consolidated results of operations and consolidated cash flows for the three month periods ended March 31, 2003 and 2002. In managements opinion, all adjustments
necessary for a fair presentation in accordance with generally accepted accounting principles are reflected in the financial statements presented.



The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the
companys annual report on Form 10-K for the year ended December 31, 2002 filed with the Securities and Exchange Commission. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the
full year.



2. Gain on Resolution of Telerate Sale Loss
Contingencies



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



3. Contract Guarantee



Under the terms of the companys 1998 sale of Telerate to Bridge, Dow
Jones retained its guarantee of payments under certain circumstances of certain minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). The annual minimum payments average
approximately $50 million per year through October 2006 under certain conditions. Bridge agreed to indemnify Dow Jones for any liability Dow Jones incurred under the contract guarantee with respect to periods subsequent to Bridges purchase of
Telerate. In 2000, based in part on uncertainty with Bridges solvency as well as other factors, the company established a reserve of $255 million representing the net present value of the total estimated payments from 2001 through October
2006, using a discount rate of 6%. The first quarters of 2003 and 2002 included charges related to the accretion of the discount on the reserve balance of $2.6 million ($.03 per diluted share) and $3.2 million ($.04 per diluted share), respectively.



Bridge filed for bankruptcy in February 2001 but made payments
for this data for the post-petition periods through October 2001, when Telerate ceased operations, went out of business, sold certain assets and rejected its contracts with Cantor and MDC. The company is now in litigation with Cantor and MDC with
respect to their claims for amounts due under the contract guarantee. The company has various substantial defenses to these claims and the litigation is proceeding. The trial court rendered a decision in January 2003 denying the parties
respective motions to grant their own claims and to dismiss the competing claims. The company, Cantor and MDC have all filed appeals from the trial courts order. While these appeals are pending, the discovery phase is proceeding.



While it is not possible to predict with certainty the ultimate outcome of
this litigation, the company believes the likelihood of a loss exceeding the amount reserved is remote; however, it is possible that such loss could be less than the amount reserved.



6



---

##### Table of Contents

4. Other Guarantees and Contingencies



In addition to the litigation that is separately disclosed in Note 3 of this Form 10-Q, there are various libel actions and
other legal proceedings that have arisen in the ordinary course of business that are pending against the company and its subsidiaries. In the opinion of management, based on advice of legal counsel, the ultimate outcome to the company and its
subsidiaries as a result of these other legal proceedings will not have a material effect on the companys financial statements. In addition, the company has insurance coverage for many of these matters.



The companys bylaws provide for indemnification of officers and
directors prosecuted in a criminal action or sued in a civil action or proceeding to the full extent permitted by the Delaware General Corporation Law. The maximum potential amount of future payments the company could be required to make under these
indemnification provisions is unlimited; however, the company maintains directors and officers liability and corporation reimbursement insurance for the benefit of the company and its directors and officers. The policy provides coverage
for certain amounts paid as indemnification pursuant to the provisions of Delaware law and the companys bylaws. As a result of its insurance coverage, the company believes that the estimated fair value of these indemnification provisions is
minimal.



The company enters into indemnification agreements in
its ordinary course of business, typically with companies from which it is acquiring or to which it is selling businesses, partners in joint ventures, licensees and licensors, and service providers and contractors. Under these agreements the company
generally indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, as a result of the companys activities or its breach of the agreement in question or in connection
with any intellectual property infringement claim by any third party with respect to its products. These indemnification obligations generally survive termination of the underlying agreement, either for some set number of years or perpetually. In
some cases, the maximum potential amount of future payments the company could be required to make under these indemnification obligations is unlimited. The company believes that the estimated fair value of these indemnity obligations is minimal and
the company has no liabilities recorded for these obligations as of March 31, 2003. The company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.



The company has guaranteed payment for office space occupied by certain of its
joint ventures. The companys partners in these joint ventures have either directly guaranteed their share of any payments required under these guarantees or agreed to indemnify the company for 50% of any payments the company may be required to
make under these guarantees. Dow Jones share of this obligation under these guarantees totals $7.9 million through 2010.



5. Dispositions



In the first quarter of 2002, the company recognized a gain of $153.4 million ($126.1 million after taxes, or $1.49 per diluted share) resulting from the
sale at the end of March 2002 of four of the companys Ottaway newspapers to Community Newspapers Holdings, Inc.



6. Restructuring Reserves



The following table displays the activity and balances of the restructuring reserve account as of March 31, 2003:



|                   |  | December 31, 2002 Reserve |        | Net Cash Payments |   | March 31, 2003 Reserve
|------------------ |  | ------------------------- | ------ | ----------------- | - | ----------------------
|                   |  | (in thousands)           
|Employee severance |  | $                         | 17,116 |                   | $ | 8,634                 
|Other exit costs   |  |                           | 264    |                   |   | 41                    



As of March 31, 2003,
roughly 95% of the approximate 445 employees involved in the 2002 restructurings were terminated with the remainder expected to be terminated by mid-year 2003.



7



---

##### Table of Contents



7. Dilution and Stock
Compensation Plans



Basic and diluted earnings per share
have been computed as follows:



|                                                |  | March 31 2003 (2)                        |        | March 31 2002 (3)
|----------------------------------------------- |  | ---------------------------------------- | ------ | -----------------
|                                                |  | (in thousands, except per share amounts)
|Net income                                      |  | $                                        | 66,932 |                  
|                                                |  |                                          |        |                  
|Weighted-average shares outstandingbasic       |  |                                          | 81,791 |                  
|Effect of dilutive securities:                  |  |                                          |        |                  
|Stock options                                   |  |                                          | 56     |                  
|Other, principally contingent stock rights      |  |                                          | 181    |                  
|                                                |  |                                          |        |                  
|Weighted-average shares outstandingdiluted (1) |  |                                          | 82,028 |                  
|                                                |  |                                          |        |                  
|Basic earnings per share                        |  | $                                        | .82    |                  
|Diluted earnings per share                      |  |                                          | .82    |                  



(1) The diluted average
shares outstanding have been determined using the treasury stock method, which assumes the proceeds from the exercise of outstanding options were used to repurchase shares at the average market value of the stock during the quarter.



(2) Options to purchase 8,577,000 shares in 2003 at an average price of $53.97
have been excluded from the diluted earnings per share calculation because the options exercise prices were greater than the average market price during the quarter and to include such securities would be antidilutive.



(3) Options to purchase 5,600,000 shares in 2002 at an average price of $58.54
have been excluded from the diluted per share calculation because to include such securities would be antidilutive.



Fair Value Based Method

The company
accounts for its stock-based compensation in accordance with Accounting Principles Board Opinion No. 25 (APB 25), Accounting for Stock Issued to Employees, and its related interpretations. Had the companys stock-based compensation
been determined by the fair-value based method of SFAS 123, Accounting for Stock-Based Compensation, the companys net income and earnings per share would have been as follows:



|                                                                                                                     |  | For the Three Months Ended               |       
|-------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ------
|                                                                                                                     |  | 2003                                     |       
|                                                                                                                     |  | (in thousands, except per share amounts) |       
|Net income, as reported                                                                                              |  | $                                        | 66,932
|Add: Stock-based compensation expense included in reported net income, net of
taxes                                  |  |                                          | 915   
|Deduct: Total stock-based compensation expense determined under fair-value based method
for all awards, net of taxes |  |                                          | (3,984
|                                                                                                                     |  |                                          |       
|Adjusted net income                                                                                                  |  | $                                        | 63,863
|                                                                                                                     |  |                                          |       
|Basic earnings per share:                                                                                            |  |                                          |       
|As reported                                                                                                          |  | $                                        | .82   
|Adjusted                                                                                                             |  |                                          | .78   
|Diluted earnings per share:                                                                                          |  |                                          |       
|As reported                                                                                                          |  | $                                        | .82   
|Adjusted                                                                                                             |  |                                          | .78   



8



---

##### Table of Contents



The following table provides
the estimated fair value under the Black-Scholes option-pricing model of each option granted in the first quarter of 2003 and 2002, and the significant weighted-average assumptions used in their determination.



|              |  | Fair Value |       | Risk-Free Interest         Rate |     |   | Dividend Yield |     |   | Expected Life |           | Volatility |     
|------------- |  | ---------- | ----- | ------------------------------- | --- | - | -------------- | --- | - | ------------- | --------- | ---------- | ----
|Stock Options |  |            |       |                                 |     |   |                |     |   |               |           |            |     
|2003          |  | $          | 13.13 |                                 | 3.0 | % |                | 2.2 | % |               | 5.0 years |            | 28.0
|2002          |  | $          | 13.55 |                                 | 4.4 | % |                | 2.3 | % |               | 5.0 years |            | 25.7
|              |  |            |       |                                 |     |   |                |     |   |               |           |            |     





8. Comprehensive Income



Comprehensive income was computed as follows:



|                                  |  | For the Three Months Ended |       
|--------------------------------- |  | -------------------------- | ------
|                                  |  | 2003                       |       
|                                  |  | (in thousands)             |       
|Net income                        |  | $                          | 66,932
|Add: change in                    |  |                            |       
|Cumulative translation adjustment |  |                            | (292  
|Unrealized gain (loss) on hedging |  |                            | (21   
|Unrealized gain on investments    |  |                            | 198   
|                                  |  |                            |       
|Comprehensive income              |  | $                          | 66,817
|                                  |  |                            |       



9. Pending
Transactions/Subsequent Events



In November 2002, the
company and the von Holtzbrinck Group entered into a memorandum of understanding pursuant to which they agreed to exchange equity shareholdings so as to reduce the von Holtzbrinck Groups ownership of The Wall Street Journal Europe to 10% from
49% and the companys ownership of the von Holtzbrinck Groups business daily, Handelsblatt, to 10% from 22%, with news and advertising relationships continuing. The agreement also provides each party the unilateral option to unwind the
strategic alliance entirely. Assuming the transaction is consummated, the company expects to record an after-tax gain of $11 million, or $.14 per share, on the exchange of its 12% interest in Handelsblatt for 39% of The Wall Street Journal Europe.
Although the transaction has not been finalized, the company is funding Wall Street Journal Europe losses at the ninety-percent level as of January 1, 2003.



On April 16, 2003, the companys Ottaway Newspaper subsidiary entered into a definitive agreement to acquire The Record of Stockton, California from
Omaha World-Herald Company for $144 million in cash, plus net working capital. The purchase was consummated on May 5, 2003. The Record has daily paid circulation of 59,271 and Sunday circulation of 72,698. The Record Group had combined 2002 revenues
of $37 million and operating profits of $9.6 million. The purchase was primarily funded by the issuance of debt under the companys commercial paper program. The company has temporarily suspended its share repurchase program to utilize excess
cash flow to reduce this debt.



In April 2003, the company and
its insurance providers reached agreement on its recovery for business interruption losses resulting from the terrorist attacks on the World Trade Center on September 11, 2001. The company expects to receive proceeds and record pretax income of
approximately $18 million from its business interruption insurance claim in the second quarter of 2003.



9



---

##### Table of Contents



10. Business Segments



The company has determined the following three reportable
segments based on the manner in which it manages its business: print publishing, electronic publishing and general-interest community newspapers. In addition, the company reports certain administrative activities under the corporate segment.



Print publishing includes the operations of The Wall Street
Journal and its international editions, Barrons and other business periodicals, as well as U.S. television operations. Electronic publishing includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones
Indexes/Ventures. Consumer Electronic Publishing includes the results of WSJ.com and its related vertical sites as well as the companys licensing/business development and radio/audio businesses. Revenues in the electronic publishing segment
are mainly subscription based. Ottaway Newspapers, the community newspapers segment, publishes 15 daily newspapers, 12 Sunday papers and more than 30 weeklies and shoppers in communities throughout the U.S.



|                                                       |  | Three Months Ended March 31 |        
|------------------------------------------------------ |  | --------------------------- | -------
|                                                       |  | 2003                        |        
|                                                       |  | (in thousands)              |        
|Revenues:                                              |  |                             |        
|Print publishing                                       |  | $                           | 214,424
|Electronic publishing                                  |  |                             | 79,187 
|Community newspapers:                                  |  |                             |        
|Comparable operations                                  |  |                             | 63,635 
|Divested/newly-acquired operations                     |  |                             | 984    
|                                                       |  |                             |        
|Consolidated revenues                                  |  | $                           | 358,230
|                                                       |  |                             |        
|                                                      
|Income before income taxes and minority interests:     |  |                             |        
|Print publishing                                       |  | $                           | (4,685 
|Electronic publishing                                  |  |                             | 16,831 
|Community newspapers:                                  |  |                             |        
|Comparable operations                                  |  |                             | 12,483 
|Divested/newly-acquired operations                     |  |                             | 98     
|Corporate                                              |  |                             | (7,148 
|                                                       |  |                             |        
|Consolidated operating income                          |  |                             | 17,579 
|                                                      
|Equity in losses of associated companies               |  |                             | (1,849 
|Gain on resolution of Telerate sale loss contingencies |  |                             | 59,821 
|Gain on sale of businesses                             |  |                             |        
|Contract guarantee                                     |  |                             | (2,610 
|Other income, net                                      |  |                             | 60     
|                                                       |  |                             |        
|Income before income taxes and minority interests      |  | $                           | 73,001 
|                                                       |  |                             |        
|                                                      
|Depreciation and amortization (D&A):                   |  |                             |        
|Print publishing                                       |  | $                           | 17,680 
|Electronic publishing                                  |  |                             | 6,790  
|Community newspapers:                                  |  |                             |        
|Continuing operations                                  |  |                             | 2,704  
|Divested/acquired operations                           |  |                             | 54     
|Corporate                                              |  |                             | 129    
|                                                       |  |                             |        
|Consolidated D&A                                       |  | $                           | 27,357 
|                                                       |  |                             |        



10



---

##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations



Revenues in the first quarter of 2003 were affected by the difficult advertising and business environment, particularly in the latter half of the quarter
as advertisers delayed placing ads on the expectation, and then the reality, of war with Iraq. Despite the war, operating profits rose 43%. The companys aggressive cost containment efforts, improved color advertising at The Wall Street
Journal, and strong revenue growth at Consumer Electronic Publishing and some other electronic businesses more than offset sharp declines in business-to-business advertising revenue and a reduction of profits as a result of the divestitures of
Ottaway properties last year.



During the quarter, the company
continued to focus on its Business Now strategic plan. Dow Jones Newswires launched Dow Jones NewsPlus, the first of the Newswire of the Future products. This service is aimed at the broker community and is a major enhancement for Dow
Jones Newswires subscribers to the North American equity wire. This added functionality has allowed Dow Jones Newswires to introduce an overall price increase in 2003. Also, as a continuation of the companys strategy to reinvest in additional,
more strategic, community newspapers, in April 2003, the company entered into an agreement to purchase The Record in Stockton, California. The purchase was consummated on May 5, 2003. The Record is the leading daily newspaper serving the city of
Stockton and surrounding San Joaquin County in Northern Californias Central Valley, one of the fastest growing markets in California. The Record Group had combined 2002 revenues of $37 million and operating profits of $9.6 million. The
transaction is expected to be accretive to earnings per share.



Results of Operations



Net income for the
first quarter of 2003 was $66.9 million, or $.82 per diluted share, compared with first quarter 2002 earnings of $129.8 million, or $1.53 per diluted share (all per share amounts included herein are based on reported net income and use
diluted shares). Net income in each quarter included certain items affecting comparisons which netted to a gain of $.70 per share in the first quarter 2003 and a gain of $1.45 per share in the first quarter of 2002. The items affecting comparisons
are detailed further on page 16.



Revenues for the first quarter
of 2003 fell $34.7 million, or 8.8%, to $358.2 million, largely as a result of a decline in company-wide advertising revenue and a decline in revenues related to divested community newspaper properties. Excluding Ottaway divested and newly-acquired
properties, or on a same store basis, total revenue was down $18.6 million, or 4.9%. Same store advertising revenue declined $18.1 million, or 8.7%, on lower advertising volume principally at the domestic Journal. Information services
revenue was up modestly as strong growth in revenue at Consumer Electronic Publishing and other electronic businesses was partially offset by a decline in Dow Jones Newswires revenues. Circulation and other revenue, on a same-store basis, decreased
$.7 million, or .7% on a slight decline in circulation and commercial printing revenue.



Operating expenses in 2003 were reduced $39.9 million, or 10%, to $340.7 million, reflecting cost saving initiatives (about $22 million), lower newsprint costs ($3 million), lower costs as a result of the Ottaway
divestitures, net of newly acquired properties ($12 million), and a decrease in year-over-year Todays Journal costs ($3 million). Newsprint expense, on a same-store basis, was down 10%, as a result of a 10.7% decrease in consumption offset by
a slight increase in prices. Employee compensation expense was down about 10% (down about 6.9% on a same-store basis). At the end of March 2003, the number of full-time employees was about 6,800, down 9.4% from March 31, 2002.



Operating income for the first quarter of 2003 was $17.6 million (4.9% of
revenues), up $5.3 million, or 43%, from $12.3 million (3.1% of revenues) in the like period a year ago, as operating income and margins improved across the print and electronic publishing segments.



11



---

##### Table of Contents



Segment Data



The companys business and financial news and
information operations are reported in two segments: print publishing and electronic publishing. The results of the companys Ottaway Newspapers subsidiary, which publishes 15 daily newspapers, 12 Sunday papers and more than 30 weeklies and
shoppers in 9 states in the U.S., are reported in the community newspaper segment. In addition, the company reports certain administrative activities under the corporate segment. Print publishing accounted for approximately 60% of first quarter 2003
revenues, with electronic publishing accounting for 22% and community newspapers accounting for 18%.





Print Publishing



Print publishing includes the operations of The Wall Street Journal and its international editions, Barrons and other periodicals, as well as U.S.
television operations (results of the companys international television ventures are included in equity in losses of associated companies).



|                                       |  | Three Months Ended March 31 |        
|-------------------------------------- |  | --------------------------- | -------
|                                       |  | 2003                        |        
|                                       |  | (in thousands)              |        
|Revenues                               |  |                             |        
|U.S. Publications:                     |  |                             |        
|Advertising                            |  | $                           | 129,857
|Circulation and other                  |  |                             | 66,390 
|                                      
|International Publications:            |  |                             |        
|Advertising                            |  |                             | 9,993  
|Circulation and other                  |  |                             | 8,184  
|                                       |  |                             |        
|Total revenues                         |  |                             | 214,424
|                                      
|Expenses                               |  |                             | 219,109
|                                       |  |                             |        
|Operating loss                         |  | $                           | (4,685 
|                                       |  |                             |        
|Operating margin                       |  |                             | (2.2   
|                                      
|Included in expenses:                  |  |                             |        
|Depreciation and amortization          |  | $                           | 17,680 
|                                      
|Statistical information:               |  |                             |        
|Advertising volume increase/(decrease) |  |                             |        
|                                      
|The Wall Street Journal                |  |                             |        
|General                                |  |                             | 2.5    
|Technology                             |  |                             | (28.5  
|Financial                              |  |                             | (37.5  
|Classified                             |  |                             | 15.3   
|Total                                  |  |                             | (11.0  
|                                      
|The Asian Wall Street Journal          |  |                             | 5.6    
|The Wall Street Journal Europe         |  |                             | 22.1   
|Barrons                               |  |                             | (17.3  



12



---

##### Table of Contents



Revenues

First quarter 2003 revenue fell $21.6 million, or 9.2%, driven by advertising softness at The Wall Street Journal, where ad linage
dropped 11%. Advertising linage declines accelerated during the quarter as the effects of the Iraq war intensified. Journal linage declined 1.2% in January, 9.4% in February and 20% in March. Revenues were down 8.8% in the U.S. and were down 12.6%
overseas despite advertising linage increases at The Asian Wall Street Journal and The Wall Street Journal Europe. The declines in international advertising revenue largely reflect discounts related to a global ad sales program launched in the
summer of 2002. U.S. television advertising license revenue from CNBC was down 5.6%.



Overall Journal advertising linage was down 11%, as improvements in general, consumer and classified advertising were more than offset by a sharp decline in the companys core financial and technology categories.
General advertising, which represented 43% of total linage, improved 2.5%, with increases in professional services, autos and other consumer advertising somewhat offset by a decline in travel advertising and other general business advertising.
Technology advertising, which represented 17% of the total Journal linage, fell 28.5% as declines in business-to-business e-commerce, hardware, personal computer and telecommunications advertising were offset slightly by an increase in software
advertising. Financial advertising, which accounted for 16% of total Journal linage for the quarter, fell 37.5%, reflecting the continued weakness in the financial markets, as evidenced by significant declines in tombstones and investment advisory.
Classified advertising linage, which represented 24% of total Journal linage, increased 15.3% reflecting improvements in real estate and other classified advertising. Color advertising, which is billed at a premium, increased 14%.



First quarter 2003 circulation and other revenue for the U.S. print
publications decreased $.7 million, or 1%, in the first quarter of 2003, as a result of slight declines in circulation volume at both The Wall Street Journal and Barrons. Average circulation for the first three months of 2003 for The Wall
Street Journal was 1,812,000 compared with circulation of 1,836,000 in the first quarter of 2002. Barrons average circulation was 287,000 in the quarter, down from 298,000 in the first quarter 2002. The Journals subscription price
increase, which was announced in 2002s fourth quarter, became effective in February 2003 for renewing subscribers.



International print circulation and other revenues fell $.9 million, or 9.9%, as a result of lower conference revenue coupled with a decrease in
circulation at the Far Eastern Economic Review. Combined average circulation for the international Journals was 160,000 in the first quarter compared with 174,000 in the first quarter of 2002.



Expenses

Print publishing expenses were reduced $25.7 million, or 11%, from first quarter 2002 levels, as a result of lower employee salary and benefits expense,
reduced marketing expenses for Todays Journal, and a decrease in newsprint expenses. Newsprint expense was down 11.7% as a result of a 12.4% decrease in consumption somewhat offset by a .9% increase in newsprint prices. The number of employees
in the print publishing segment was down 9.3% from March 31, 2002.



Operating losses

Print publishing operating losses were reduced 47% in the quarter, to a loss of $4.7 million,
as the companys strict cost containment initiatives more than offset advertising revenue declines.





Electronic Publishing



Electronic publishing includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Consumer Electronic
Publishing includes the results of WSJ.com and its related vertical sites as well as the companys licensing/business development and radio/audio businesses. Revenues in the electronic publishing segment are mainly subscription-based.
Electronic publishing represented about 22% of total 2003 revenues.



13



---

##### Table of Contents



|                               |  | Three Months Ended March 31 |        
|------------------------------ |  | --------------------------- | -------
|                               |  | 2003                        |        
|                               |  | (in thousands)              |        
|Revenues                       |  |                             |        
|Dow Jones Newswires:           |  |                             |        
|North America                  |  | $                           | 43,365 
|International                  |  |                             | 10,611 
|                               |  |                             |        
|                              
|Total Newswires                |  |                             | 53,976 
|Consumer Electronic Publishing |  |                             | 15,371 
|Dow Jones Indexes/Ventures     |  |                             | 9,840  
|                               |  |                             |        
|Total revenues                 |  |                             | 79,187 
|                              
|Expenses                       |  |                             | 62,356 
|                               |  |                             |        
|Operating income               |  | $                           | 16,831 
|                               |  |                             |        
|Operating margin               |  |                             | 21.3   
|                              
|Included in expenses:          |  |                             |        
|Depreciation and amortization  |  | $                           | 6,790  
|                              
|Statistical information:       |  |                             |        
|Dow Jones Newswires terminals  |  |                             | 303,000
|WSJ.com subscribers            |  |                             | 675,000



Revenues

Electronic publishing revenues increased $1.4 million, or 1.8%, as strong increases in Consumer Electronic Publishing and Dow Jones
Indexes/Ventures more than offset a decrease in Newswires revenue. Dow Jones Newswires revenue fell $3.8 million, or 6.6%, from the first quarter of 2002, primarily reflecting a decrease in retail revenue due to contraction in the securities
industry. English-language terminals carrying Dow Jones Newswires at March 31, 2003 were 303,000 compared with 348,000 at March 31, 2002. North American terminals decreased by 46,000, while International terminals increased by 1,000.



Consumer Electronic Publishing revenue increased $2.6 million, or 20%,
compared to the same period last year. The strong growth in revenue was driven by an increase of WSJ.com subscriber revenue largely due to a price increase implemented in July 2002 coupled with a rise in the number of subscribers. At the end of
March 2003, the number of WSJ.com subscribers increased 5.5% from a year earlier. Dow Jones Indexes/Ventures revenues, which include Dow Jones Indexes and reprints/permissions businesses, increased $2.6 million, or 36%.



Expenses

Electronic publishing expenses were down slightly, to $62.4 million. The decline in expenses reflected lower employee salary and benefits costs and other
cost saving initiatives offset by an increase in facilities expense. The number of employees in the electronic publishing segment was down 8.1% from a year ago.



Operating income

Electronic publishings operating income of $16.8 million (21.3% of revenues) was $1.6 million, or 11%, better than first quarter 2002 operating income of $15.2 million (19.6% of revenues). The improvement in both margins and
profitability were largely driven by increases in revenues at Consumer Electronic Publishing and Dow Jones Indexes/Ventures and cost containment efforts.



14



---

##### Table of Contents



Community Newspapers



Community newspapers includes the operations of Ottaway
Newspapers, which publishes 15 daily newspapers and over 30 weekly newspaper and shoppers in 9 states in the U.S. Community newspapers comprised about 18% of first quarter 2003 revenues.



|                                        |  | Three Months Ended March 31 |       
|--------------------------------------- |  | --------------------------- | ------
|                                        |  | 2003                        |       
|                                        |  | (in thousands)              |       
|Revenues                                |  |                             |       
|Advertising                             |  |                             |       
|Comparable operations                   |  | $                           | 44,931
|Divested/newly-acquired operations      |  |                             | 760   
|                                        |  |                             |       
|Total advertising                       |  |                             | 45,691
|                                       
|Circulation and other                   |  |                             |       
|Comparable operations                   |  |                             | 18,704
|Divested/newly-acquired operations      |  |                             | 224   
|                                        |  |                             |       
|Total circulation and other             |  |                             | 18,928
|                                       
|Total revenues                          |  |                             | 64,619
|                                       
|Expenses                                |  |                             |       
|Comparable operations                   |  |                             | 51,152
|Divested/newly-acquired operations      |  |                             | 886   
|                                        |  |                             |       
|Total segment expenses                  |  |                             | 52,038
|                                       
|Operating income                        |  |                             |       
|Comparable operations                   |  |                             | 12,483
|Divested/newly-acquired operations      |  |                             | 98    
|                                        |  |                             |       
|Total operating income                  |  | $                           | 12,581
|                                        |  |                             |       
|                                       
|Operating margin                        |  |                             |       
|Comparable operations                   |  |                             | 19.6  
|Divested/newly-acquired operations      |  |                             | 10.0  
|                                       
|Included in expenses:                   |  |                             |       
|Depreciation and amortization           |  |                             |       
|Comparable operations                   |  | $                           | 2,704 
|Divested/newly-acquired operations      |  |                             | 54    
|                                       
|Statistical information:                |  |                             |       
|Advertising volume increase/(decrease)* |  |                             |       
|Dailies                                 |  |                             | (0.5  
|Non-Dailies                             |  |                             | 3.1   
|Overall                                 |  |                             | 0.1   



* Percentage excludes
divested/newly-acquired operations.



15



---

##### Table of Contents



Revenues

Community newspapers revenue was down $14.4 million, or 18%, from the first quarter of 2002 reflecting revenue lost as a result of
divesting properties in 2002. Excluding divested and newly-acquired operations, or on a same store basis, revenue increased $1.7 million, or 2.7%. Same store advertising revenue increased $1.6 million, or 3.7%, on higher preprint
revenues coupled with increases in both advertising rates and volume. Same store circulation and other revenue was relatively flat on average daily circulation of about 375,000 in both 2003 and 2002.



Expenses

Community newspapers expenses decreased $10.9 million, or 17.4%, reflecting the divestiture of the properties in 2002. On a same store basis, operating
expenses increased $1.5 million, or 2.9%, primarily as a result of higher employee benefit costs somewhat offset by a decrease in newsprint expense. Newsprint expense, on a same store basis, decreased 2.1% as a result of a 2.4% reduction in
consumption offset by a slight increase in newsprint prices. The number of employees in the community newspapers segment was down 8.6%, or 2.1% on a same store basis.



Operating income

Operating income was $12.6 million (19.5% of revenues), compared with income last year of $16.1 million (20.3% of revenues). On a same store basis, operating income of $12.5 million (19.6% of revenues) increased $.2 million, or 1.6%,
from $12.3 million (19.8% of revenues) a year earlier.



Certain Items Affecting Comparisons



The
following table summarizes certain items affecting comparisons for the first quarters ended March 31, 2003 and 2002:



|                                                           |         | First Quarter 2003                      |      |     | First Quarter 2002 |  
|---------------------------------------------------------- | ------- | --------------------------------------- | ---- | --- | ------------------ | -
|                                                           | Pre-Tax |                                         |      | Net |                    |  
|                                                           |         | (in millions, except per share amounts) |     
|Contract guarantee (a)                                     |         | $                                       | (2.6 | )   |                    | $
|Gain on resolution of Telerate sale loss contingencies (b) |         |                                         | 59.8 |     |                    |  
|Sale of ONI properties (c)                                 |         |                                         |      |     |                    |  
|                                                           |         |                                         |      |     |                    |  
|Total                                                      |         | $                                       | 57.2 |     |                    | $
|                                                           |         |                                         |      |     |                    |  



(a) Contract
Guarantee:

Under the terms of the companys 1998 sale of Telerate to Bridge, Dow Jones retained its guarantee of payments under
certain circumstances of certain minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC). The annual minimum payments average approximately $50 million per year through October 2006
under certain conditions. Bridge agreed to indemnify Dow Jones for any liability Dow Jones incurred under the contract guarantee with respect to periods subsequent to Bridges purchase of Telerate. In 2000, based in part on uncertainty with
Bridges solvency as well as other factors, the company established a reserve of $255 million representing the net present value of the total estimated payments from 2001 through October 2006, using a discount rate of 6%. The first quarters of
2003 and 2002 included charges related to the accretion of the discount on the reserve balance of $2.6 million ($.03 per diluted share) and $3.2 million ($.04 per diluted share), respectively.



Bridge filed for bankruptcy in February 2001 but made payments for this data
for the post-petition periods through October 2001, when Telerate ceased operations, went out of business, sold certain assets and rejected its contracts with Cantor and MDC. The company is now in litigation with Cantor and MDC with respect to their
claims for amounts due under the contract guarantee. The company has various substantial defenses to these claims and the litigation is proceeding. The trial court rendered a decision in January 2003 denying the parties respective motions to
grant their own claims and to dismiss the competing claims. The company, Cantor and MDC have all filed appeals from the trial courts order. While these appeals are pending, the discovery phase is proceeding.



16



---

##### Table of Contents



While it is not possible to
predict with certainty the ultimate outcome of this litigation, the company believes the likelihood of a loss exceeding the amount reserved is remote; however, it is possible that such loss could be less than the amount reserved.





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

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





(c) Gains on sale of ONI properties:

The first quarter of 2002 included a gain of
$153.4 million ($126.1 million after taxes, or $1.49 per diluted share) resulting from the sale at the end of March 2002 of four of the companys Ottaway newspapers to Community Newspapers Holdings, Inc.





Equity in Losses of Associated Companies



The companys share of equity in losses from equity investments was $1.8 million, an improvement of $.6 million, or 25%, compared with losses of $2.4 million in the first three months of 2002. The improved results were the
result of reduced losses at SmartMoney and CNBC International partially offset by a decline in earnings at Factiva and F.F. Soucy, the companys newsprint affiliate.





Other Income/Deductions



Interest expense, net of investment income for the first three months of 2003
was $.4 million compared with $1.5 million for the first quarter of 2002. The improvement largely reflected a lower average debt level and lower interest rates.





Income Taxes



The effective income tax rate for the first quarter of 2003 was 8.8% compared
with 19.7% in the first quarter of 2002. The effective income tax rate in the first quarter of 2003 and 2002 was affected by certain capital loss/gain transactions that occurred during the periods. Excluding the items identified in the table on page
16, the effective tax rate, net of minority interests, was 40% in the first quarters of 2003 and 2002.



In the first quarter of 2003, as a result of changes to Internal Revenue Service (IRS) guidelines in 2002, the company amended its 1998 U.S. Corporate income tax return to include an additional capital
loss of $605 million on its sale of Telerate. Factoring in the amended capital loss, as of March 31, 2003, the company had available approximately $1.3 billion of capital loss carryforward (a deferred tax asset of $504 million, which was fully
reserved). About $1.06 billion of this loss carryforward is recognized for tax purposes, with about $899 million expiring at the end of 2003 and $157 million expiring in 2006. The remaining $267 million of capital loss carryforward, which primarily
relates to the Cantor contract guarantee obligation, will be recognized for tax purposes only to the extent, if any, that the company is required to make payment. If the company is required to make such payment, the resulting loss carryforward will
be available for use five years from the year it is recognized.



17



---

##### Table of Contents



Liquidity and Capital
Resources



Cash provided by operations for the first three
months of 2003 was $9.1 million, which was an improvement of $30.1 million from net cash used in operations of $21 million in the first quarter of 2002. The improvement was primarily the result of lower income tax payments as well as the timing of
the collections of receivables. The companys federal income taxes that were normally due on September 15 and December 15, 2001, were deferred to January 15, 2002, as the Internal Revenue Service offered relief of these payments for taxpayers
that were affected by the September 11 terrorist attacks on the World Trade Center.



Net cash used in investing activities was $17.7 million in the first quarter of 2003 primarily reflecting capital expenditures of $14.3 million and the funding of equity investees. Cash used in investing activities included
the receipt of $1.3 million that was due on the companys property damage claim for damage sustained at its World Financial Center offices as a result of the September 11 attacks. (See Pending Transactions/Subsequent Events below
for information on the companys business interruption claim as a result of the terrorist attacks on September 11). In the first quarter of 2002, net cash provided by investing activities totaled $151.8 million, which included proceeds of
$177.9 million from the sale of the four Ottaway properties offset by capital expenditures of $18.9 million and the funding of equity investees.



Net cash used in financing activities for the first quarter of 2003 was $4.7 million. Cash outlays included the payment of $20.5 million in dividends to
shareholders and the repurchase of shares of treasury stock for $18.7 million. Sources of cash from financing activities in the quarter included an increase in debt of $27 million and the receipt of funding of $7.4 million from a minority
shareholder of a subsidiary. Net cash used in financing activities in the first quarter 2002 was $122.6 million, as the company used the proceeds from the sale of the four Ottaway properties at the end of March 2002 to purchase shares of treasury
stock for $33.3 million and reduce its debt by $81.1 million. Also in the 2002 first quarter, the company paid $21.1 million in dividends and received $5.7 million from a minority shareholder in a subsidiary.



As previously disclosed, in 2000 the company established a reserve for the
present value of the total estimated payments through October 2006 in connection with Dow Jones guarantee of certain minimum payments for data acquired by Dow Jones former Telerate subsidiary from Cantor Fitzgerald Securities and Market
Data Corporation (MDC). Bridge Information Systems, Inc., which purchased Telerate in 1998, is currently in bankruptcy but made payments for this data for the post-petition periods through October 2001, when Telerate ceased operations, went out of
business, sold certain assets and rejected its contracts with Cantor and MDC. The company is now in litigation with Cantor and MDC with respect to their claims for amounts allegedly due under the contract guarantee. The company has various
substantial defenses to these claims and the litigation is proceeding.



As of March 31, 2003, the balance of the reserve for the contract guarantee was $246.8 million. The company has classified $124.8 million of this reserve as current based on the original due dates of the contract. Due to the stage of
the lawsuit at March 31, 2003, it is not possible to determine whether the court will find that any obligation under the guarantee may be dismissed or reduced. Accordingly, the company believes the balance of the reserve continues to be appropriate.





Pending Transactions/Subsequent Events



In November 2002, the company and the von Holtzbrinck Group entered into a memorandum of understanding pursuant to which they agreed to exchange equity shareholdings so as to reduce the von Holtzbrinck Groups ownership of The
Wall Street Journal Europe to 10% from 49% and the companys ownership of the von Holtzbrinck Groups business daily, Handelsblatt, to 10% from 22%, with news and advertising relationships continuing. The agreement also provides each party
the unilateral option to unwind the strategic alliance entirely. Assuming the transaction is consummated, the company expects to record an after-tax gain of $11 million, or $.14 per share, on the exchange of its 12% interest in Handelsblatt for 39%
of The Wall Street Journal Europe. Although the transaction has not been finalized, the company is funding Wall Street Journal Europe losses at the ninety-percent level as of January 1, 2003.



18



---

##### Table of Contents



On April 16, 2003, the
companys Ottaway Newspaper subsidiary entered into a definitive agreement to acquire The Record of Stockton, California from Omaha World-Herald Company for $144 million in cash, plus net working capital. The purchase was consummated on May 5,
2003. The Record has daily paid circulation of 59,271 and Sunday circulation of 72,698. The Record Group had combined 2002 revenues of $37 million and operating profits of $9.6 million. The purchase was primarily funded by the issuance of debt under
the companys commercial paper program. The company has temporarily suspended its share repurchase program to utilize excess cashflow to reduce this debt.



In April 2003, the company and its insurance providers reached agreement on its recovery of business interruption losses resulting from the terrorist
attacks on the World Trade Center on September 11, 2001. The company expects to receive proceeds and record pretax income of approximately $18 million from its business interruption insurance claim in the second quarter of 2003.





Information Relating To Forward-Looking Statements



This document contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. Such risks and uncertainties include, but are not limited
to: the cyclical nature of the companys business and the strong negative impact of economic downturns on advertising revenues; the negative impact on the companys core advertising marketbusiness-to-business advertisingcaused
by weak corporate profits, concern over possible double-dip recession, corporate scandals that have resulted in damage to business, investor and public confidence; and fears over the situation with Iraq; the risk that the current weak advertising
market, particularly in the financial and technology segments, will not improve or will very slowly or only to a limited extent; the risk that the company will not benefit from or will only benefit to a limited extent from any improvement in the
advertising market in the face of competition from other national business magazines, television, trade publications and other publications and services; the companys ability to limit and manage expense growth, especially in light of its prior
cost-cutting and its new planned growth initiatives, without harming its growth prospects; the extent to which the company is required to perform under the guarantee to Cantor Fitzgerald Securities and Market Data Corporation, and other
uncertainties relating to liability under this guarantee; the intense competition the companys existing products and services face in the markets for financial news and information and advertising revenues from newspapers, specialized
magazines, free and paid Internet publications and services, news services, financial television programming and other new media, and the impact this will have on the companys initiatives to expand its existing market presence as well as to
extend its consumer reach; the companys ability to expand and diversify its market segment focus beyond financial and technology and the challenge it will face in attempting to become a leading presence in new market segments, such as health
care, automotive, telecom, and high-end consumer goods, where competing publications and services, such as specialty and trade magazines, have already established themselves; the competition the company will face in introducing new products and
services in the business-to-business market from already existing newsletters, trade publications, research reports and services; with respect to Newswires, the challenges the company will face in launching its Newswire of the Future
initiative, in the face of competing resources for in-depth news analysis; with respect to Newswires and other subscription-based products and services, the negative impact of business consolidations and layoffs in the financial services industry on
sales of the companys products and services; with respect to Newswires, the challenges the company faces in striving to increase its international revenues given the competition from and subscribers desire for, local language news
services; with respect to Newswires, risks concerning the financial viability of the Moneyline Telerate business, with which Newswires has entered into a bundling arrangement that is important to Newswires international revenues; with respect
to Newswires, competition from other independent news service providers and the risk that distributors of Newswires products may elect to distribute only their own news services; the companys ability to find strategic and financially
attractive core-business acquisition opportunities; the companys ability to leverage its brands to develop new business opportunities and to generate advertising and other revenues from these products; the companys ability to achieve
strategic alliances and to improve the growth and profitability of existing strategic alliances; with respect to the companys community newspapers business, its ability to maintain or grow margins and to strengthen its portfolio of newspaper
properties, particularly given the difficulty of finding quality newspaper properties to acquire; the degree to which the companys new Personal Journal is able to generate new advertising revenues from diversified markets, such as health care,
automotive and consumer goods; the extent to which the new enhancements to The Wall Street Journal will attract a broader base of readers, subscribers, and advertisers; in light of the weak advertising market and competition, the companys
ability to attract diverse advertisers to place color advertising; the companys ability to increase its circulation and advertising revenues from its international



19



---

##### Table of Contents

print publications and to further penetrate overseas markets through print and television products, given the competition from local language
publications and television networks and other international publications and television ventures; the ability of WSJ.com to continue to increase revenues through building subscriber and advertiser numbers and to limit expenses; the amount of user
traffic on the companys Internet sites and the pricing of advertising on Internet sites generally; with respect to sales of and advertising in the companys products in Asia, risks from the impact of the SARS outbreak on those economies;
potential increased regulation of online businesses; adverse developments relating to the companys commitments, contingencies and equity investments; the companys ability to negotiate collective bargaining agreements with its labor
unions without work interruptions; cost of newsprint; and such other risk factors as may have been or may be included from time to time in the companys reports filed with the Securities and Exchange Commission.





Item 3: Quantitative And Qualitative Disclosures about Market Risk



In December 2002, the company entered into forward foreign currency exchange contracts to exchange $24.5 million for 15.8 million British pounds and to exchange $25.3 million for 25.2 million euro.
These contracts, which expire ratably over 2003, are designated as cash flow hedges of anticipated operating expenses that are denominated in these foreign currencies. Revenues of the company are largely collected in U.S. dollars. The company has
not entered into any new forward foreign exchange contracts since December 2002.



These contracts are entered into to protect against the risk that such expenses will be adversely affected by changes in exchange rates. Such losses could be significant if a major devaluation were to occur. By using these derivative
instruments the company is exposed to the adverse effect that a change in currency has on the value of a financial instrument. The company manages this market risk by establishing and monitoring limits as to the degree of risk that may be
undertaken. The companys derivative activities are monitored by its treasury and finance functions. Realized gains or losses on foreign currency forward contracts are recognized currently through income and generally offset the transaction
losses or gains on the foreign currency cash flows which they are intended to hedge.



The companys commercial paper outstanding of $119.9 million at March 31, 2003 is also subject to market risk as the debt reaches maturity and is reissued at prevailing interest rates. At March 31, 2003, interest rates
outstanding ranged from 1.20% to 1.23%, with a weighted-average of 1.21%. The bulk of this debt matures in early May.





Item 4: Controls & Procedures



Evaluation of Controls and Procedures



Within 90
days prior to the filing of this report, under the supervision and with the participation of the companys management, including the companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO), an evaluation of the
effectiveness of the companys disclosure controls and procedures was performed. Based on this evaluation, the CEO and CFO have concluded that the companys disclosure controls and procedures are effective to ensure that material
information is recorded, processed, summarized and reported by management of the company on a timely basis in order to comply with the companys disclosure obligations under the Securities Exchange Act of 1934 and the SEC rules thereunder.



Changes in internal controls



There were no significant changes in the companys internal controls or
in other factors that could significantly affect these controls subsequent to the date of the evaluation.



20



---

##### Table of Contents



PART II. OTHER INFORMATION



Item 1: Legal Proceedings



On February
20, 2001, Market Data Corp. (MDC) commenced a lawsuit against Dow Jones in the Supreme Court of the State of New York, seeking to compel the company to pay $11.7 million, plus interest, attorneys fees and costs, that MDC claimed was owed under
the guarantee issued to MDC and Cantor Fitzgerald Securities (together with its affiliates, Cantor), together with unspecified consequential damages that MDC claimed result from Dow Jones failure to pay on the guarantee. The guarantee relates
to certain annual minimum payments owed by Telerate for data acquired by Telerate from Cantor Fitzgerald and MDC under contracts entered into when Telerate was a subsidiary of Dow Jones, and is described in Managements Discussion
and Analysis.



In April 2001, Dow Jones paid $5.8 million to MDC
covering the period January 1 to February 14, 2001 preceding Bridge Information Systems Chapter 11 bankruptcy filing. Bridge made the payments for the post-petition periods through the third quarter of 2001. After certain amendments were made
to the complaint, the remaining claims in this lawsuit sought the payment of interest on the payment made in the first quarter of 2001 and for attorneys fees and costs in this litigation. The parties settled these claims and this lawsuit was
then withdrawn.



In October 2001, the bankruptcy court granted
Bridges motion to reject Telerates contracts with Cantor and MDC. Telerate has indicated that it has ceased operations, is no longer receiving government securities data from Cantor and MDC and will not make further payments to Cantor
and MDC. Cantor and MDC advised the company that they would demand payment from Dow Jones of an amount they alleged was due on November 15, 2001 under the contract guarantee as well as future amounts due through October 2006. The company has various
substantial defenses to these claims.



On November 13, 2001, the
company instituted a lawsuit in the Supreme Court of the State of New York seeking a declaratory judgment with respect to the contract guarantee and the claims of Cantor and MDC. In this lawsuit the company has asked the court to find that the
company does not and will not owe any payment under the contract guarantee through October 2006. In the alternative, the company has asked the court to find that if any amount is owed, it must be reduced by amounts that Cantor and MDC receive or
should have received from other distribution of the data. MDC has asserted counterclaims demanding payment of $10,197,416 (allegedly the balance owed by Telerate on November 15, 2001), interest, attorneys fees, specific performance of the
guarantee, and a declaratory judgment as to the validity and interpretation of the guarantee through October 2006.



Cantor also commenced a separate lawsuit in the Supreme Court of the State of New York (since consolidated with the companys case) seeking payment
of $10 million (allegedly the balance of the November 2001 minimum payment), payment of $250 million in breach of contract damages, specific performance of the guarantee, a declaration that the guarantee remains in full force and effect, payment of
approximately $16 million allegedly owed by Telerate and guaranteed by the company in the guarantee for the distribution of certain other data, attorneys fees, interest, and other relief.



Arguments were heard in August 2002 on the parties respective motions to
grant their own claims and to dismiss the competing claims. The Court rendered a decision in January 2003 denying these motions in all material respects. The company, Cantor, and MDC have all filed appeals from the trial courts order. While
those appeals are pending, the discovery phase is proceeding.



21



---

##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.



At the Annual Meeting of Stockholders on April 16, 2003, there were represented in person or by proxy 55,691,583 shares of Common Stock (carrying one vote per share) and 19,507,899 shares of Class B Common Stock (carrying
ten votes per share). At the Annual Meeting:



1)
the holders of the Common Stock, voting separately as a class, elected as directors:



|              |  | For        |  | Votes Withheld
|------------- |  | ---------- |  | --------------
|Harvey Golub  |  | 53,454,440 |  | 2,237,143     
|David K.P. Li |  | 41,082,566 |  | 14,609,017    



2) the
holders of the Common Stock and the Class B Common Stock, voting together, elected as directors:



|                      |  | For         |  | Votes Withheld
|--------------------- |  | ----------- |  | --------------
|Roy A. Hammer         |  | 248,924,035 |  | 1,846,538     
|Frank N. Newman       |  | 246,708,509 |  | 4,062,064     
|James H. Ottaway, Jr. |  | 249,085,009 |  | 1,685,564     



3) the
holders of the Common Stock and the Class B Common Stock, voting together, approved the appointment of PricewaterhouseCoopers LLP, independent certified public accountants, as auditors for 2003 by a vote of 247,468,678 votes in favor; 2,840,332
votes against and 461,563 abstentions.



4) the
holders of the Common Stock and the Class B Common Stock, voting together, approved the amendment to the companys restated Certificate of Incorporation to eliminate the classification of the Board of Directors by a vote of 249,607,947 votes in
favor; 687,448 votes against and 475,178 abstentions.



5) the holders of the Common Stock and the Class B Common Stock, voting together, rejected the stockholder proposal to require that the positions of Chairman and CEO be held by different persons by a vote of 12,067,807 votes in
favor; 232,462,047 votes against; 1,856,302 abstentions; and 4,384,417 broker non-votes.



6) the holders of the Common Stock and the Class B Common Stock, voting together, rejected the stockholder proposal to require that the company make disclosures about its charitable donations in its
annual proxy statement by a vote of 6,362,284 votes in favor; 239,107,357 votes against; 916,516 abstentions; and 4,384,416 broker non-votes.



In addition, the following directors continued in office after the meeting: Peter R. Kann, Christopher Bancroft, Leslie Hill, Irvine O.
Hockaday, Jr., Dieter von Holtzbrinck, Vernon E. Jordan, Jr., M. Peter McPherson, Elizabeth Steele and William C. Steere, Jr.





Item 6. Exhibits and Reports on Form 8-K



|Exhibit Number |  | Document                                                                            
|-------------- |  | ------------------------------------------------------------------------------------
|              
|10.1           |  | The Restated Certificate of Incorporation of the company, as amended April 21,
2003.
|              
|10.2           |  | The By-laws of the company restated as of April 21, 2003.                           
|              
|99             |  | Certifications by the Chief Executive Officer and Chief Financial
Officer.          



Reports on Form
8-KNo reports were filed on Form 8-K in the first quarter of 2003.



22



---

##### Table of Contents



SIGNATURE



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                   |  |  |  | DOW JONES & COMPANY, INC.
|------------------ |  |  |  | -------------------------
|                   |  |  |  | (Registrant)             
|                  
|Dated: May 9, 2003 |  |  |  | By:                      
|                   |  |  |  |                          



23



---

##### Table of Contents



CERTIFICATIONS





I, Peter R. Kann, certify that:



1. I have
reviewed this quarterly report on Form 10-Q of Dow Jones & Company, Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:



a) designed such disclosure controls and
procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



b) evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and



c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;



5. The registrants other certifying
officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and



b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls; and



6. The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



Date: May 9, 2003





/S/    PETER R.
KANN

---

Peter R. Kann

Chief Executive Officer



24



---

##### Table of Contents



CERTIFICATIONS





I, Christopher W. Vieth, certify that:



1. I have
reviewed this quarterly report on Form 10-Q of Dow Jones & Company, Inc.;



2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this quarterly report;



3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;



4. The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and we have:



a) designed such disclosure controls and
procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;



b) evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and



c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;



5. The registrants other certifying
officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent function):



a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record, process, summarize and report financial data and have identified for the registrants auditors any material weaknesses in internal controls; and



b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls; and



6. The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



Date: May 9, 2003





/S/    CHRISTOPHER W.
VIETH

---

Christopher W. Vieth

Chief Financial Officer



25