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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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



For the fiscal year ended December 31, 2004



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



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DOW JONES & COMPANY, INC.

(Exact name of registrant as specified in its charter)



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



200 LIBERTY STREET,
NEW YORK, NEW YORK 10281

(Address of principal executive offices)(Zip Code)



Registrants telephone number, including area code: (212) 416-2000



Securities registered pursuant to Section 12(b) of the
Act:



|                             |  |                                          
|---------------------------- |  | -----------------------------------------
|Title of each class          |  | Name of each exchange on which registered
|Common Stock $1.00 par value |  | New York Stock Exchange                  



Securities
registered pursuant to Section 12(g) of the Act:

Class B Common Stock $1.00 par value

(Title of class)



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



Indicate by a check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K. ̈



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



Aggregate market value of common stock held by non-affiliates of the registrant at January 31, 2005 was approximately $1,993,000,000.



The number of shares outstanding of each of the registrants classes of
common stock on January 31, 2005: 61,493,160 shares of Common Stock and 20,590,564 shares of Class B Common Stock.



DOCUMENTS INCORPORATED BY REFERENCE



Part III incorporates information from certain portions of the registrants definitive Proxy Statement for the 2005 annual meeting of stockholders to be filed with the Securities and Exchange Commission within
120 days after the close of the fiscal year.



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##### Table of Contents

DOW JONES & COMPANY, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

INDEX



|                                     |  |                                                                                                                  |  |     
|------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------- |  | ----
|                                     |  |                                                                                                                  |  | PAGE
|PART I                               |  |                                                                                                                  |  |     
|                                     |  |                                                                                                                 
|ITEM 1.                              |  | Business                                                                                                         |  | 3   
|                                     |  |                                                                                                                 
|ITEM 2.                              |  | Properties                                                                                                       |  | 8   
|                                     |  |                                                                                                                 
|ITEM 3.                              |  | Legal Proceedings                                                                                                |  | 9   
|                                     |  |                                                                                                                 
|ITEM 4.                              |  | Submission of Matters to a Vote of Security Holders                                                              |  | 9   
|                                     | 
|Executive Officers of the Registrant |  | 9                                                                                                               
|                                     |  |                                                                                                                 
|PART II                              |  |                                                                                                                  |  |     
|                                     |  |                                                                                                                 
|ITEM 5.                              |  | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 10  
|                                     |  |                                                                                                                 
|ITEM 6.                              |  | Selected Financial Data                                                                                          |  | 11  
|                                     |  |                                                                                                                 
|ITEM 7.                              |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                            |  | 12  
|                                     |  |                                                                                                                 
|ITEM 8.                              |  | Financial Statements and Supplementary Data                                                                      |  | 38  
|                                     |  |                                                                                                                 
|ITEM 9.                              |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                             |  | 72  
|                                     |  |                                                                                                                 
|ITEM 9A.                             |  | Controls and Procedures                                                                                          |  | 72  
|                                     |  |                                                                                                                 
|ITEM 9B.                             |  | Other Information                                                                                                |  | 72  
|                                     |  |                                                                                                                 
|PART III                             |  |                                                                                                                  |  |     
|                                     |  |                                                                                                                 
|ITEM 10.                             |  | Directors and Executive Officers of the Registrant                                                               |  | 72  
|                                     |  |                                                                                                                 
|ITEM 11.                             |  | Executive Compensation                                                                                           |  | 73  
|                                     |  |                                                                                                                 
|ITEM 12.                             |  | Security Ownership of Certain Beneficial Owners and Management                                                   |  | 73  
|                                     |  |                                                                                                                 
|ITEM 13.                             |  | Certain Relationships and Related Transactions                                                                   |  | 73  
|                                     |  |                                                                                                                 
|ITEM 14.                             |  | Principal Accounting Fees and Services                                                                           |  | 73  
|                                     |  |                                                                                                                 
|PART IV                              |  |                                                                                                                  |  |     
|                                     |  |                                                                                                                 
|ITEM 15.                             |  | Exhibits, Financial Statement Schedules                                                                          |  | 74  
|                                     | 
|Signatures                           |  | 77                                                                                                              



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PART I



ITEM 1. BUSINESS.



We are a provider of global
business and financial news and information through newspapers, newswires, magazines, the Internet, indexes, television and radio. In addition to The Wall Street Journal and our international and online editions, we publish
Barrons, Dow Jones Newswires and Dow Jones Indexes. We also provide news and information of general interest to local communities through our Ottaway group of community newspapers throughout the U.S. We are co-owner with Reuters Group
of Factiva, with Hearst of SmartMoney and with NBC Universal of the CNBC television operations throughout Asia and Europe. We also provide news content to CNBC and radio stations in the U.S.



We have determined the following three reportable segments based on the manner in which we
manage our business: print publishing, electronic publishing and general-interest community newspapers. Over the three years ended December 2004, approximately 60% of our revenues have been derived from the print publishing segment, with the
remaining 40% divided almost equally between our general-interest community newspapers and our electronic publishing segments. In addition, the Company reports certain administrative activities under the corporate segment. Financial information
about operating segments and geographic areas is incorporated by reference to Note 13 to the financial statements of this report.



The Companys principal executive offices are located at 200 Liberty Street, New York, New York, 10281.



The Company makes available all of its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to such reports free of charge through its Internet Web site at www.dowjones.com. These reports are also available on the Securities and Exchange Commissions Internet Web site at www.sec.gov.





EMPLOYEES



At December 31, 2004, the Company employed 7,143 full-time employees
compared with 6,975 full-time employees at December 31, 2003 and 6,816 at December 31, 2002. The increase in full-time employees in 2004 was largely the result of acquisitions.





PRINT PUBLISHING



Print publishing, which is largely comprised of the global print editions of The Wall
Street Journal, publishes business and financial news and information in the U.S., Europe, Asia and Latin America and on CNBC television. The Journal utilizes a global management structure with shared news flows and workforce and a global
advertising customer base and pricing. Through a licensing agreement with NBC Universal, the Journal provides branding, news content and on-air expertise to CNBC as a further extension of The Wall Street Journal brand and the content it
produces. Print publishing also includes our Barrons weekly magazine.



Our overall performance in print publishing is largely dependent on the operating performance of the global Wall Street Journal (including its extended U.S. television brand and content) which in turn is largely dependent on B2B
advertising revenue, particularly from the financial and technology sectors.



U.S. Publications



The Wall Street Journal, our
flagship publication, is one of the countrys largest daily newspapers with average print circulation of 1,810,000 in 2004. The Journals three major national editions are printed at 17 printing plants located throughout the U.S. The
Journal also sells regional advertising in 18 regional editions.



The Wall
Street Journal has an overall daily print capacity of 96 pages, including 24 pages of color. In addition to its business coverage, the Journal also covers the business of life with its Personal Journal section which launched in 2002
and runs every Tuesday, Wednesday and Thursday, and Weekend Journal section, which debuted in 1998 and runs every Friday and includes pages devoted to travel, wine, sports, shopping, residential real estate and the arts. The Journal also publishes
special reports at various times of the year on topics such as technology, personal finance and executive compensation, e-commerce and health and medicine as well as demographically targeted sections devoted to subjects of retirement and small
business.





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In September 2004, we announced the September 2005 launch of the Weekend Edition of The Wall Street
Journal, which is a key element of our 2005 to 2007 strategic plan. We expect the launch of the Weekend Edition will build off the success of our Weekend and Personal Journal sections in attracting more consumer-oriented advertisers and
reducing our reliance over time on B2B financial and technology advertising. The Weekend Edition will be delivered to readers at home on the weekend, enabling advertisers to reach readers in the right place at the right time, which is highly
conducive to influencing their consumer spending decisions.



The Journal
reaches additional readers through The Wall Street Journal Sunday, which focuses on personal finance and careers and is published once a week in the business sections of local newspapers with combined circulation of about 10.7 million in more
than 80 community newspapers.



The Journal production process employs
electronic pagination and satellite transmission of page images to outlying printing plants to enable early delivery of fresher content to the majority of our readers.



The Wall Street Journal is delivered principally in three ways. Each business day, approximately 124,000 copies of The Wall Street
Journal are sold at newsstands. Most home and office subscription deliveries are handled through our National Delivery Service, Inc. subsidiary which in 2004 provided early morning delivery to about 1.3 million, or 83%, of The Wall Street
Journals subscribers each publishing day. The balance of The Wall Street Journals home and office deliveries is made by second class postal service.



Barrons, the Dow Jones Business and Financial Weekly, is a weekly magazine with average circulation in 2004 of 299,000 that
caters to financial professionals, individual investors and others interested in financial markets. Barrons is printed in twelve of The Wall Street Journals 17 printing plants. It is delivered by second-class postal service
and through National Delivery Service with about 60,000 newsstand copies sold each week.



The Wall Street Journal Classroom Edition is published nine times during the school year and is read by an estimated 750,000 students every month during the academic year in more than 5,300 middle-school and
high-school classrooms throughout the U.S. Individuals, organizations and corporations sponsor more than one-third of all subscriptions and schools sponsor the remainder. The Wall Street Journal Campus Edition is included in college
newspapers throughout the U.S. and includes the weeks top business news and feature stories.



International Publications



The Wall Street Journal Europe, which had an average circulation in 2004 of 87,000, is headquartered in Brussels, Belgium and printed in Belgium, Germany, Switzerland, Italy, Spain, the United Kingdom and Israel. It is available on
the day of publication in continental Europe, the United Kingdom, and parts of the Middle East and North Africa. Starting in 2003, the content of the international editions of The Wall Street Journal added news and opinion articles from
The Washington Post.



The Asian Wall Street
Journal, which had an average circulation of 80,000 in 2004, is headquartered in Hong Kong and printed in Hong Kong, Singapore, Japan, Thailand, Malaysia, Taiwan, the Philippines, Korea and Indonesia. It has the largest advertising market share
of any pan-regional business newspaper in Asia.



We also publish The Wall
Street Journal Special Editions, which are a collection of Journal pages in local languages distributed as part of 36 newspapers in 34 countries. The Wall Street Journal Americas, serving Central and South America, is the centerpiece of
the Special Editions published in Spanish and Portuguese in 18 leading Latin America newspapers.



In the fourth quarter of 2004, we announced that theFar Eastern Economic Review, a Hong Kong based newsweekly magazine, would change its format to a monthly periodical of issues and ideas largely written by
Asian opinion leaders from the fields of politics, business and academics. The first issue of the Far Eastern Economic Review in its new format was published in December 2004. This repositioning resulted in a workforce reduction of
approximately 80 employees and reduced costs by approximately $3 million.



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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, its related vertical sites, our consumer electronic licensing and radio businesses and since its acquisition in January 2005, MarketWatch, which includes internet, licensing, radio and newswires operations.
Revenues in the electronic publishing segment are mainly subscription based and comprised about 20% of our revenues over the three years ended in 2004.



Dow Jones Newswires



Dow Jones Newswires is the premier provider of real-time, comprehensive business news and information for financial professionals around the world. Its news is displayed
on approximately 298,000 English-language terminals worldwide providing users with real-time information on equity, fixed income, foreign exchange, commodities and energy markets. Dow Jones Newswires has a dedicated staff of more than 900
journalists in addition to drawing on the global resources of The Wall Street Journal and the Associated Press (AP). Newswires also distributes selected portions of its content to the retail customers of on-line brokers.



Dow Jones News Service is North Americas leading source of business and
financial news on U.S. and Canadian companies and markets for brokerage firms, banks, investment companies and other businesses. Capital Markets Report covers global debt and money markets. Corporate Filings Alert provides real-time news covering
SEC filings, bankruptcy courts and government agencies.



The Dow Jones Economic
Report and the Dow Jones Financial Wire, which are produced outside the United States, provide international economic, business and financial news to subscribers in 71 countries. In addition to these two broad international newswires, Newswires
publishes specialized wires dedicated to the coverage of European and Asian equities, banking and foreign exchange markets as well as the World Equities Report, which serves U.S. institutions investing in international markets.



Dow Jones Newswires also publishes on its own or with local partners, in Chinese, Japanese,
Spanish, French, Portuguese, Dutch, Italian, German and Russian. In April 2004, we acquired the remaining interest in the news operations of Vereinigte Wirtschaftsdienste GmbH (vwd), a German local-language news service, for $12.1
million. Previously, we were a minority shareholder in vwd.



On March 19, 2004,
we acquired Alternative Investor Group for $85 million, a company serving the private equity and venture capital markets with newsletters, conferences and databases. Alternative Investor was integrated with Dow Jones Newswires, its newsletters
division and Technologic Partners business, which we acquired in late 2003, to form Dow Jones Financial Information Services.



In 2004, Dow Jones Newswires won many accolades including Technology Journalist of the Year, Excellence in Wire Service Reporting and a Codie Award from the Software and
Information Industry Association. Also, for the second year in a row, Dow Jones Newswires was named Inside Market Datas News Provider of the Year.



Consumer Electronic Publishing



The Wall Street Journal Online (WSJ.com), introduced in 1996, is a paid online subscription site that offers continuously updated coverage of
business news both in the U.S. and abroad. WSJ.com content comprises the global resources of The Wall Street Journaland Dow Jones Newswires as well as its own dedicated journalists. In addition to continuously updated exclusive
real-time news and scoops, subscribers have access to the full text of each days global editions of the Journal, more than 30,000 in-depth company background reports, an archive of Journal and Dow Jones news articles, and personalized news and
stock portfolios. WSJ.com had 712,000 subscribers at the end of 2004 and was the largest paid subscription news site on the Internet.



On January 21, 2005, we completed the acquisition of MarketWatch for a purchase price of approximately $538 million, including transaction costs. MarketWatch is a leading
provider of business news, financial information and analytical tools and operates two award-winning Web sites: MarketWatch.com and BigCharts.com. These free, advertising-supported Web sites serve approximately seven million unique
visitors per month with timely market news and information. MarketWatch also operates the MarketWatch Information Services group, which is a leading licensor of market news, data, investment analysis tools and other online applications to financial
services firms, media companies, and corporations.





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We believe that the MarketWatch acquisition will complement The Wall Street Journal Online network, which provides
premium business news to about three million unique visitors per month. By combining the traffic of The Wall Street Journal network of Web sites and MarketWatch, our Web sites are expected to have close to nine million unduplicated
unique visitors per month. We also expect that the licensing businesses of MarketWatch will provide additional assets, such as online charting and other tools, which will extend the reach of our business-to-business licensing operations.



Other consumer sites in The Wall Street Journal Network include
OpinionJournal.com, which provides commentary on global issues from The Wall Street Journal editorial page; CareerJournal.com, which gives career guidance and job-search services for executives; StartupJournal.com, the
premier Web site for entrepreneurs seeking guidance on starting or buying a business or franchise; CollegeJournal.com, which provides guidance and job-search services for future business leaders; and RealEstateJournal.com, a
comprehensive guide to commercial and residential property.



Consumer
Electronic Publishing also includes our radio/audio business and our consumer electronic licensing division, which offers electronic rights to use Dow Jones content. The Wall Street Journal Radio Network produces and distributes
late-breaking business reports during the week to 229 radio stations across the country, covering 92% of the population.



Dow Jones Indexes/Ventures



In 1997, we began licensing the Dow Jones Industrial Averages as well as other indexes as the basis for trading options, futures, unit trusts, annuities, exchange traded
funds, mutual funds, derivatives and specialized structured products. Dow Jones Indexes also maintains a variety of specialty indexes, such as the Dow Jones-AIG Commodity Index, the Dow Jones Select Dividend Index and the Dow Jones
Islamic Market Indexes. Dow Jones Indexes now offers more than 4,000 indexes. During 2004, Dow Jones Indexes launched a new family of hedge fund indexes and also partnered with Wilshire Associates to provide the Dow Jones Wilshire index
family, which features the Dow Jones Wilshire 5000 and is expanding to include a complete global family of country, region, sector, cap-range and style indexes.



Dow Jones Ventures includes our reprints/permissions. The reprints/permissions business sells print or electronic reprints of The Wall
Street Journal and Barrons stories.





COMMUNITY NEWSPAPERS



Community newspapers consists of our wholly-owned Ottaway Newspapers, Inc. subsidiary. Revenues in this segment are largely dependent on local consumer-based advertising revenue and comprised about 20% of our revenues
over the past three years.



Our Ottaway community newspapers segment serves
relatively small, self-contained communities, outside the heavy competitive pressures of large metropolitan papers and other media. In 2002, we divested five low-growth papers, non-strategically located papers, which provided after-tax proceeds of
$235 million and utilized $190 million of capital loss carryforwards. In 2003, we acquired the faster growing, more strategically located The Record of Stockton, California.



Ottaway publications now include 15 general-interest dailies, published in nine states: California, Connecticut, Maine, Massachusetts,
Michigan, New Hampshire, New York, Oregon and Pennsylvania. Average 2004 circulation of the dailies was approximately 436,000; Sunday circulation for our newspapers was approximately 483,000. Ottaway also publishes more than 30 weekly newspapers and
shoppers. The primary delivery method for the newspapers is by carrier delivery.





STRATEGIC ALLIANCES (Included in Equity in Earnings (Losses) of Associated Companies)



Dow Jones Reuters Business Interactive LLC (Factiva) is a 50/50 joint venture launched in
mid-1999 with Reuters Group Plc. Factiva is the number one provider of global news and business information to corporate end users and holds the number two position, based on revenue, in the archival business news and information marketplace.
Factivas business information sources include exclusive third party access to Dow Jones and Reuters Newswires and The Wall Street Journal, plus nearly 9,000 sources from around the world. These sources provide current news, historical
articles, local-language articles, market research and investment analyst reports, and stock quotes.



CNBC Europe and CNBC Asia Pacific are 50/50 joint ventures between Dow Jones and NBC Universal (NBC). In early 1998, NBC and Dow Jones re-launched their business information channels in Europe and Asia Pacific as
CNBC, a service of NBC and Dow Jones. These overseas networks reach more than 120 million households on a full-time basis.



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SmartMoney is a 50/50 joint venture with Hearst Corp. SmartMoney magazine, The Wall Street Journal
Magazine of Personal Business, featuring sections on personal investing, spending and saving money, has circulation of more than 800,000 copies. SmartMoney also includes SmartMoney.com and SmartMoney Custom Solutions, a custom
publishing business.



Vedomosti, a joint venture owned equally by Dow
Jones, Pearson PLC and Independent Media, was introduced in 1999. Vedomosti, considered the only independent business newspaper in Russia, is published Monday through Friday. Circulation reached 66,000 in 2004, with original content created
by 80 local reporters and editors and content from The Wall Street Journal and The Financial Times translated into Russian.



STOXX, Ltd. is a joint venture owned equally by Dow Jones and the leading exchanges of Germany (Deutsche Borse) and Switzerland (Swiss Exchange).



In January 2004, Dow Jones and Bennett Coleman & Company Ltd., publisher of the Times
of India and the Economic Times, entered into an agreement on a new joint venture to publish The Wall Street Journal for India. Subject to Indian government approval, Dow Jones will own 26% (maximum foreign ownership permitted in
India) and Bennett Coleman would own the remaining 74% and launch The Wall Street Journal for India in 2005, using the Journals global content.



In December 2003, we and the von Holtzbrinck Group exchanged equity shareholdings so as to increase our interest in The Wall Street Journal Europe to 90% from 51%
and reduce our ownership of the von Holtzbrinck Groups business daily, Handelsblatt, to 10% from 22%, with news and advertising relationships continuing. The Company and the von Holtzbrinck Group are in negotiations to further exchange,
in 2005, our cross shareholdings so as to return the Company to full ownership of The Wall Street Journal Europe and of its 41% interest in HB-Dow Jones S.A. and to eliminate the Companys 10% ownership of Handelsblatt.



Other equity investments include HB-Dow Jones S.A., a part-owner of Economia,
a publishing company in the Czech Republic; CareerCast, Inc., a leading supplier of data services to employers and online career sites; and F.F. Soucy Inc. & Partners, L.P., a newsprint mill in Canada.





RAW MATERIALS



The primary raw material used by the Company is newsprint. In 2004,
approximately 219,000 metric tons were consumed. Newsprint was purchased principally from eight suppliers. The Company is a limited partner in F.F. Soucy, Inc. & Partners, L.P., Riviere du Loup, Quebec, Canada. F.F. Soucy furnished 18% of total
newsprint requirements in 2004. The Company has signed long-term contracts with certain newsprint suppliers, including F.F. Soucy, for a substantial portion of its annual newsprint requirements. For many years the available sources of newsprint have
been adequate to supply the Companys needs.





RESEARCH AND DEVELOPMENT



Research and development expenses, which primarily relate to software development for various operations of the Company, were $32 million in 2004, $29.7 million in 2003
and $31.2 million in 2002.





COMPETITION



Dow Jones print publishing
businesses compete with a wide range of information providers in many different channels of distribution. All metropolitan general interest newspapers and many small city or suburban papers carry business and financial content as do many
Internet-based services as well as television and radio. In addition, specialized magazines in the business and financial field, as well as general news magazines publish substantial amounts of business-related material. The Journal also competes
for advertising with non-business publications offering audiences of similar demographic quality, such as technology and lifestyle magazines. Nearly all of these services seek audiences and seek to sell advertising, making them competitive with Dow
Jones publications and services.



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The Companys newswires compete with other global financial newswires including Reuters Group PLC, Bloomberg L.P.
and other organizations that publish financial news. The Companys newswires maintain a stronger market position in North America than internationally.



Consumer Electronic Publishing competes with other Web sites that offer continuously updated coverage of business news as well as licensing of electronic content. Unlike
WSJ.com, competitors do not, for the most part, utilize a full online paid subscription model, and most remain free sites. Competitors include FT.com, New York Times Digital, TheStreet.com, Bloomberg, Forbes.com,
Yahoo!Finance, CNET, AOL/CNNfn and MSNMoney/CNBC.



Dow Jones
index-licensing business competes with various organizations that develop and license indexes, including Standard & Poors, The Financial Times, and Morgan Stanley/Capital International.



Ottaway Newspapers competes with the metropolitan general-interest newspapers, and other
community newspapers as well as radio and television stations in their respective local markets.



Factiva competes with various business information service providers, including Dialog Corp., a division of The Thomson Corporation; and Lexis-Nexis, a division of Reed Elsevier Plc. Factiva also competes with various
online, Web-based information services.



The Companys international
television ventures compete with various international satellite networks that not only specialize in general news but also provide business programming. Also, individual television stations, networks and cable channels in each country broadcast
programming that competes for advertising and the attention of viewers in their respective markets.





ITEM 2. PROPERTIES.



Dow Jones operates 17 plants
with an aggregate of approximately one million square feet for the printing of its domestic publications. Printing plants are located in Palo Alto and Riverside, California; Denver, Colorado; Orlando, Florida; LaGrange, Georgia; Naperville and
Highland, Illinois; Des Moines, Iowa; White Oak, Maryland; Chicopee, Massachusetts; South Brunswick, New Jersey; Charlotte, North Carolina; Bowling Green, Ohio; Sharon, Pennsylvania; Dallas and Beaumont, Texas; and Federal Way, Washington. All
plants include office space. All are owned in fee except the Palo Alto, California, plant, which is located on 8.5 acres under a lease to Dow Jones for 50 years, expiring in 2015.



Other facilities, owned in fee with a total of approximately one million square feet, house news, sales, administrative, technology and
operational staff. These facilities are located in South Brunswick, New Jersey and Chicopee Falls, Massachusetts. The Company has leased about 200,000 square feet of its office space in South Brunswick to other companies.



Dow Jones occupies two major leased facilities in New York City, including leasing about
315,000 square feet downtown at the World Financial Center, which primarily houses editorial and executive staff, and 98,000 square feet at a separate midtown location for advertising sales staff. The Company also leases other business and editorial
offices in numerous locations around the world, including 92,000 square feet in Jersey City, New Jersey, 42,000 square feet in three locations in London and 58,000 square feet in three locations in Hong Kong.



Ottaway Newspapers operates in 21 locations, including a 24,000 square foot administrative
headquarters in Campbell Hall, New York. These facilities are located in Santa Cruz and Stockton, California; Danbury, Connecticut; Kennebunk and York, Maine; Hyannis, New Bedford and Nantucket, Massachusetts; Traverse City, Michigan; Stratham and
Portsmouth, New Hampshire; Middletown, Oneonta, and Plattsburgh, New York; Medford and Ashland, Oregon; and Stroudsburg, Danville and Sunbury, Pennsylvania. Local printing facilities, which include office space in certain locations, total
approximately 900,000 square feet. All of these facilities are owned in fee, with the exception of the Maine facilities, which are leased.



The Company believes that its current facilities are suitable and adequate, well maintained and in good condition. Older facilities have been modernized and expanded to
meet present and anticipated needs.



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ITEM 3. LEGAL PROCEEDINGS.



On November 13, 2001,
the Company instituted a lawsuit in the Supreme Court of the State of New York against Market Data Corp. (MDC) and Cantor Fitzgerald Securities (together with its affiliates, Cantor) seeking a declaratory judgment with respect to the Companys
obligations, if any, under a guarantee issued to MDC and Cantor. The guarantee relates to certain annual minimum payments owed by Telerate under certain conditions 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 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 after Telerate stopped receiving the government
securities data from Cantor and MDC. MDC has asserted counterclaims demanding payment of $10.2 million (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.



The trial court in January 2003 denied motions by each of the parties that their own claims for relief be granted and that competing claims be dismissed. Appeals from
those decisions were not pursued, and discovery has concluded. Dispositive motions are being briefed, with argument before the court scheduled for the first quarter of 2005. The trial is currently scheduled to begin in June 2005.





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



Not applicable.





Executive Officers of the Registrant



Each
executive officer is elected annually to serve at the pleasure of the Board of Directors.



Mr. Zannino, Mr. Vieth and Mr. Stern have each been employed by the Company for fewer than five years.



Peter R. Kann, age 62, Chairman of the Board since July 1991, Chief Executive Officer since January 1991, served as Publisher of The Wall Street Journal from
January 1989 to July 2002, President from July 1989 to July 1991 and Chief Operating Officer from July 1989 to December 1990, Executive Vice President from 1985 to 1989 and Associate Publisher of The Wall Street Journal from 1979 to 1988. Mr.
Kann, who is the spouse of Ms. House, joined the Company in 1964.



Richard F.
Zannino, age 46, Chief Operating Officer since July 2002, Executive Vice President since joining the Company in February 2001 and served as Chief Financial Officer from February 2001 until July 2002. Before joining Dow Jones, Mr. Zannino was
Executive Vice President of Liz Claiborne, Inc., having joined in 1998 as Senior Vice President, Finance & Administration and Chief Financial Officer. Previously, Mr. Zannino had worked briefly as Chief Financial Officer of General Signal
Corporation, prior to that companys sale and before that for five years at Saks Fifth Avenue, ultimately as Executive Vice President and Chief Financial Officer.



9



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##### Table of Contents

Executive Officers of the Registrant (continued)



Joseph A. Stern, age 55, appointed General Counsel, Vice President and Secretary beginning
in February 2005, to replace Peter G. Skinner who retired as Executive Vice President, General Counsel and Secretary as of December 31, 2004. Before joining Dow Jones, Mr. Stern was a partner at Fried, Frank, Harris, Shriver & Jacobson LLP, the
Companys primary outside corporate law firm and has advised the Company on a variety of legal issues. Mr. Stern joined Fried Frank in 1979 and became a partner there in 1984.



L. Gordon Crovitz, age 46, Senior Vice President and President, Electronic Publishing and Senior Vice President/Electronic Publishing since
October 1998, Vice President/Planning and Development from November 1997 to October 1998. Managing Director for Telerates Asia/Pacific operation from September 1996 to November 1997. Editor and Publisher of Review Publishing Company from July
1993 to September 1996. Mr. Crovitz joined the Company in 1981.



Christopher
W. Vieth, age 40, Vice President and Chief Financial Officer since July 2002 and Vice President, Finance from March 2001 to July 2002 and Corporate Controller after joining the Company in July 2000 up until July 2002. Prior to joining Dow Jones, Mr.
Vieth had been Vice President and Corporate Controller of Barnes and Noble, Inc. since May 1999. He joined Barnes and Noble in December 1995 as Director of Finance. From 1987 through 1995, Mr. Vieth worked at Amerada Hess Corporation.



Karen House, age 56, Senior Vice President and Publisher of all print editions of The
Wall Street Journal since July 2002 and President of Dow Jones International Group from January 1995 to July 2002, Vice President of the International Group from March 1989 to January 1995. Ms. House, who is the spouse of Mr. Kann, joined
the Company in 1974.



Paul Steiger, age 61, Managing Editor of The Wall
Street Journal since June 1991 and Vice President of The Wall Street Journal since May 1992, Deputy Managing Editor from April 1985 to June 1991 and Assistant Managing Editor from 1983 to April 1985. Mr. Steiger joined the Company in
1966.





PART II.



ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.



The Companys common stock is listed on the New York Stock Exchange. The class B common stock is not traded. The approximate number of stockholders of record as
of January 31, 2005 was 10,673 for common stock and 3,670 for class B common stock. The Company paid $1.00 per share in dividends in 2004 and in 2003.



|         |  |                   |       |                     |   |                   |      |                    |     |  |   |       |  |   |       |  |   |    
|-------- |  | ----------------- | ----- | ------------------- | - | ----------------- | ---- | ------------------ | --- |  | - | ----- |  | - | ----- |  | - | ---
|         |  | Market Price 2004 |       | Dividends Paid 2004 |   | Market Price 2003 |      | DividendsPaid 2003
|Quarters |  | High              |       | Low                 |   |                   | High |                    | Low | 
|First    |  | $                 | 52.74 |                     | $ | 45.10             |      | $                  | .25 |  | $ | 46.12 |  | $ | 33.25 |  | $ | .25
|Second   |  |                   | 49.68 |                     |   | 44.27             |      |                    | .25 |  |   | 48.10 |  |   | 35.06 |  |   | .25
|Third    |  |                   | 45.20 |                     |   | 39.50             |      |                    | .25 |  |   | 49.30 |  |   | 37.70 |  |   | .25
|Fourth   |  |                   | 45.24 |                     |   | 40.44             |      |                    | .25 |  |   | 53.62 |  |   | 46.45 |  |   | .25



Issuer Purchases of Equity
Securities



In 1998, the Companys board of directors authorized the
repurchase of $800 million of the Companys common stock and in September 2000 authorized the repurchase of an additional $500 million of the Companys common stock. As of December 31, 2004, approximately $326.4 million remained under
board authorization for share repurchases. The Company did not repurchase any shares of its common stock in 2004.





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##### Table of Contents

ITEM 6. SELECTED FINANCIAL DATA.



See
Managements Discussion and Analysis of Financial Condition and Results of Operations for a discussion of factors that affect the comparability of the information reflected in this table. The following table shows selected financial data for
the most recent five years:



|                                                       |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|------------------------------------------------------ |  | ------------------------------ | --------- | -- | ------- | - | --------- | ------- |  | - | --------- | -- |  | ------- | --------- | -- |  | - | --------- | -
|                                                       |  | Fiscal Year Ended December 31, |          
|(dollars in thousands, except per share amounts)       |  | 2004(1)                        |           |    | 2003(1) |   |           | 2002(1) |  |   | 2001(2)   |    |  | 2000(3) |          
|Income Statement Data:                                 |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Revenues                                               |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Advertising                                            |  | $                              | 946,325   |    |         | $ | 871,817   |         |  | $ | 877,681   |    |  | $       | 1,052,322 |    |  | $ | 1,467,244 |  
|Information services                                   |  |                                | 328,708   |    |         |   | 286,863   |         |  |   | 281,220   |    |  |         | 289,321   |    |  |   | 281,366   |  
|Circulation and other                                  |  |                                | 396,425   |    |         |   | 389,805   |         |  |   | 400,272   |    |  |         | 431,440   |    |  |   | 454,008   |  
|                                                       |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Total revenues                                         |  |                                | 1,671,458 |    |         |   | 1,548,485 |         |  |   | 1,559,173 |    |  |         | 1,773,083 |    |  |   | 2,202,618 |  
|Operating expenses                                     |  |                                | 1,509,284 |    |         |   | 1,405,572 |         |  |   | 1,484,090 |    |  |         | 1,662,884 |    |  |   | 1,704,392 |  
|                                                       |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Operating income                                       |  |                                | 162,174   |    |         |   | 142,913   |         |  |   | 75,083    |    |  |         | 110,199   |    |  |   | 498,226   |  
|Other income (deductions)                              |  |                                | (4,048    | )  |         |   | 79,390    |         |  |   | 190,164   |    |  |         | (1,185    | )  |  |   | (420,231  | )
|Income taxes                                           |  |                                | 58,578    |    |         |   | 51,704    |         |  |   | 63,741    |    |  |         | 10,794    |    |  |   | 196,957   |  
|                                                       |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Net income (loss)                                      |  | $                              | 99,548    |    |         | $ | 170,599   |         |  | $ | 201,506   |    |  | $       | 98,220    |    |  | $ | (118,962  | )
|                                                       |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Earnings (loss) per share:                             |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Basic                                                  |  | $                              | 1.22      |    |         | $ | 2.09      |         |  | $ | 2.41      |    |  | $       | 1.15      |    |  | $ | (1.35     | )
|Diluted                                                |  |                                | 1.21      |    |         |   | 2.08      |         |  |   | 2.40      |    |  |         | 1.14      |    |  |   | (1.35     | )
|                                                       |  |                                |           |    |        
|Balance Sheet Data (at period end):                    |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Cash and cash equivalents                              |  | $                              | 17,237    |    |         | $ | 23,514    |         |  | $ | 39,346    |    |  | $       | 21,026    |    |  | $ | 49,347    |  
|Total assets                                           |  |                                | 1,380,203 |    |         |   | 1,304,154 |         |  |   | 1,207,659 |    |  |         | 1,298,340 |    |  |   | 1,362,056 |  
|Long-term debt                                         |  |                                | 135,845   |    |         |   | 153,110   |         |  |   | 92,937    |    |  |         | 173,958   |    |  |   | 150,865   |  
|Stockholders equity                                   |  |                                | 150,543   |    |         |   | 129,661   |         |  |   | 30,571    |    |  |         | 41,777    |    |  |   | 158,768   |  
|                                                       |  |                                |           |    |        
|Other Cash Flow and Operating Data:                    |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Net cash provided by operating activities              |  | $                              | 251,909   |    |         | $ | 220,312   |         |  | $ | 146,302   |    |  | $       | 340,797   |    |  | $ | 447,469   |  
|Dividends per share                                    |  |                                | 1.00      |    |         |   | 1.00      |         |  |   | 1.00      |    |  |         | 1.00      |    |  |   | 1.00      |  
|Advertising volume (year-over-year percentage change): |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|The Wall Street Journal                                |  |                                | (0.5      | )% |         |   | (1.3      | )%      |  |   | (17.6     | )% |  |         | (37.6     | )% |  |   | 14.1      | %
|The Asian Wall Street Journal                          |  |                                | (3.3      | )  |         |   | 2.0       |         |  |   | (24.0     | )  |  |         | (29.0     | )  |  |   | 25.2      |  
|The Wall Street Journal Europe                         |  |                                | (3.5      | )  |         |   | 9.3       |         |  |   | (22.6     | )  |  |         | (28.9     | )  |  |   | 14.9      |  
|Barrons                                               |  |                                | 11.7      |    |         |   | (16.0     | )       |  |   | (10.4     | )  |  |         | (33.4     | )  |  |   | 12.9      |  
|Community newspapers                                   |  |                                | 4.2       |    |         |   | (1.6      | )       |  |   | (1.8      | )  |  |         | (2.5      | )  |  |   | 3.6       |  
|Electronic publishing (at period end):                 |  |                                |           |    |         |   |           |         |  |   |           |    |  |         |           |    |  |   |           |  
|Dow Jones Newswires terminals                          |  |                                | 298,000   |    |         |   | 293,000   |         |  |   | 308,000   |    |  |         | 330,000   |    |  |   | 346,000   |  
|WSJ.com subscribers                                    |  |                                | 712,000   |    |         |   | 689,000   |         |  |   | 679,000   |    |  |         | 626,000   |    |  |   | 535,000   |  



|(1) | Refer to page 24 for further information regarding items affecting comparisons of these figures.
|--- | ------------------------------------------------------------------------------------------------



|(2) | In 2001, certain items affecting comparisons include the following: (a) included within operating income were restructuring charges related to work-force reductions and related
asset write-downs and certain losses related to the September 11 terrorist attack on the World Trade Center totaling $43.9 million; (b) included within non-operating deductions were a net gain of $17.1 million from a contract guarantee, reflecting
the net reversal of certain losses, and a charge of $8.8 million related to the impairment in the value of certain investments; (c) and included within income taxes was a net tax savings of $30 million from the adjustment of an income tax valuation
allowance as a result of the expected utilization of capital loss carryforwards.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Non-operating deductions in 2000 included investment write-downs totaling $178.5 million and a loss reserve of $255.3 million on a contract guarantee related to the sale of the
Companys former Telerate subsidiary. These losses were partially offset by net gains on sales of businesses and investments totaling $18.1 million.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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





Overview



Dow Jones & Company is a provider of global business and financial news and information through newspapers, newswires, magazines, the
Internet, indexes, television and radio. In addition, the Company owns general-interest community newspapers throughout the U.S. Over the three years ended in December 2004, approximately 60% of the Companys revenues were derived from the
print publishing segment, which is largely comprised of the global editions of The Wall Street Journal. The Companys overall financial results are largely dependent on the operating performance of The Wall Street Journal, which,
to a significant extent, is dependent upon business-to-business (B2B) advertising placed in its publications, particularly from the financial and technology sectors. The remaining 40% of total revenues are split almost equally between our
general-interest community newspapers segment and our electronic publishing segment, which includes newswires, WSJ Online, indexes and other electronic operations.



We began to see a modest recovery in the global B2B advertising environment beginning in the third quarter 2003 which carried into the first
two quarters of 2004. This advertising recovery stalled in the last half of 2004 and remains choppy in part due to continued weakness in B2B technology advertising and volatile financial advertising. For the full year 2004, advertising linage at
The Wall Street Journal declined 0.5%, which resulted in a 6% increase in ad revenue at print publishing as the lower volume was more than offset by higher advertising rates. We posted gains in revenue, operating profits and margins in 2004
driven by improvements at all of our business segments. In addition, we are continuing to control costs, improve the quality of our products, sharpen our execution and invest in initiatives to fuel our future growth. These future growth initiatives
include our planned launch in September 2005 of the Weekend Edition of the Journal and our January 2005 acquisition of MarketWatch, both of which we believe will help reduce our reliance over time on B2B financial and technology advertising.



In September 2004, we announced the September 2005 launch of the Weekend
Edition of the Journal, which will be a key element of our 2005 to 2007 strategic plan. We expect the launch of the Weekend Edition will build off the success of our Weekend Journal and Personal Journal sections in growing and diversifying our
advertising customer base by attracting more consumer-oriented advertisers as revenue from the Weekend Edition is expected to mainly come from consumer advertising. We have a uniquely influential and affluent audience that not only makes large B2B
spending decisions but also spends heavily on personal consumption items. The Weekend Edition will enable advertisers to reach these readers in the right place at the right time  at home on the weekend  which is highly conducive to
influencing their consumer spending decisions. While it is expected that this initiative will be dilutive to earnings by about 15 cents per share in 2005 and more than that in 2006 based on its first full year of operation, we believe that the
Weekend Edition will be a major driver of long-term growth in revenue and earnings.



On January 21, 2005, we completed the acquisition of MarketWatch, Inc. (MarketWatch) for a purchase price of approximately $538 million, including direct transaction costs. MarketWatch is a leading provider of business news,
financial information and analytical tools and operates two award-winning Web sites: MarketWatch.com and BigCharts.com. These free, advertising-supported sites serve approximately seven million unique visitors per month with timely
market news and information. MarketWatch also operates the MarketWatch Information Services group, which is a leading licensor of market news, data, investment analysis tools and other online applications to financial services firms, media
companies, and corporations. The Company intends to integrate MarketWatch into the Consumer Electronic Publishing business. The Company believes that the MarketWatch merger will complement The Wall Street Journal Online network, which
provides premium business news to about three million unique visitors per month. By combining the traffic of The Wall Street Journal network of sites and MarketWatch, the Web sites are expected to have close to nine million unduplicated
unique visitors per month. We expect this acquisition will be dilutive to earnings by five cents per share in 2005, reflecting higher interest and amortization costs and then accretive in our first full year of ownership in 2006, when our
integration benefits are expected to take full effect.



2004 marked the final
year of Business Now, our three year strategic plan, which was launched in 2002 and aimed at accelerating growth and modestly reducing cyclicality by improving operational execution and enhancing existing products and creating new ones to reach new
customers, markets and channels. The cornerstone of Business Now was Todays Journal, a package of content, organization and design changes to The Wall Street Journal that also included a new Personal Journal section. Launched in April
2002, Todays Journal also increased total page capacity by 20% and tripled color page capacity to 24 pages a day. Todays Journal has produced strong positive reader and advertiser response. The expanded color advertising capacity, which
sells at a 27% premium to black and white advertising, drove a 20% increase in color advertising pages in 2004, to approximately eight pages per day. Since the launch of this new color capacity in January 2002, color advertising pages more than
doubled. We also successfully used Todays Journal to increase our consumer advertising to help reduce our reliance on B2B advertising. Advertising revenue in our targeted consumer categories of auto, travel, health care and luxury goods was up
14% in 2004 and 35% since 2001.



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##### Table of Contents

The Companys electronic publishing segment implemented a number of Business Now initiatives to improve its
products, profits and margins as well as reduce overall Company reliance on B2B advertising. On March 19, 2004, the Company acquired Alternative Investor Group for $85 million. Alternative Investor has been integrated with our newsletters operations
and the recently acquired Technologic Partners business. This newly formed business provides newsletters, databases and conferences primarily to the venture capital and private-equity markets. On April 2, 2004, the Company acquired VWD, a German
newswires business, for a net price of $5.4 million, expanding on Dow Jones Newswires local language newswire businesses. Both of these businesses will be operated as part of Dow Jones Newswires within our electronic publishing segment. In
electronic publishing we have also driven significant organic growth in revenue and earnings at our Consumer Electronic Publishing and Dow Jones Indexes businesses.



Our Ottaway community newspapers segment serves relatively small, self-contained communities, outside the heavy competitive pressures of
large metropolitan papers and other media. Ottaways strong and stable cash flow over the years has helped us weather a particularly harsh B2B ad environment in our print publishing segment. As part of our Business Now three-year plan to
enhance our Ottaway property portfolio, we divested five low-growth papers in 2002, which provided after-tax proceeds of $235 million and utilized $190 million of capital loss carryforwards. The second phase of this plan was to acquire more
strategic and financially attractive properties, which included the acquisitions in 2003 of The Record of Stockton, California and smaller papers in late 2002.



Finally, we continue to improve the quality and breadth of our products and services. In 2004, we have won a number of awards including two
Pulitzer prizes and a number of Loeb awards for the Journal. For the second year in a row, Dow Jones Newswires was named Inside Market Datas News Provider of the Year and won its first ever Codie Award and the Online Journal won two
Codie Awards.





Consolidated Results of Operations





2004 Compared to 2003 - Consolidated



|                                         |  |      |           |   |      |   |                       |  |       |  
|---------------------------------------- |  | ---- | --------- | - | ---- | - | --------------------- |  | ----- | -
|(in thousands, except per share amounts) |  | 2004 |           |   | 2003 |   | % Increase/(Decrease) | 
|Revenues                                 |  |      |           |   |      |   |                       |  |       |  
|Advertising                              |  | $    | 946,325   |   |      | $ | 871,817               |  | 8.5   |  
|Information services                     |  |      | 328,708   |   |      |   | 286,863               |  | 14.6  |  
|Circulation and other                    |  |      | 396,425   |   |      |   | 389,805               |  | 1.7   |  
|                                         |  |      |           |   |      |   |                       |  |       |  
|Total revenues                           |  |      | 1,671,458 |   |      |   | 1,548,485             |  | 7.9   |  
|                                         |  |      |          
|Operating expenses                       |  |      | 1,509,284 |   |      |   | 1,405,572             |  | 7.4   |  
|                                         |  |      |           |   |      |   |                       |  |       |  
|Operating income                         |  |      | 162,174   |   |      |   | 142,913               |  | 13.5  |  
|                                         |  |      |          
|Non-operating (loss) income*             |  |      | (4,048    | ) |      |   | 79,390                |  |      |  
|                                         |  |      |          
|Income taxes                             |  |      | 58,578    |   |      |   | 51,704                |  | 13.3  |  
|                                         |  |      |           |   |      |   |                       |  |       |  
|Net income                               |  | $    | 99,548    |   |      | $ | 170,599               |  | (41.6 | )
|                                         |  |      |           |   |      |   |                       |  |       |  
|Earnings per share:                      |  |      |           |   |      |   |                       |  |       |  
|Basic                                    |  | $    | 1.22      |   |      | $ | 2.09                  |  | (41.6 | )
|Diluted                                  |  |      | 1.21      |   |      |   | 2.08                  |  | (41.8 | )



|* | Net of minority interests
|- | -------------------------



Net Income



Net income in 2004
was $99.5 million, or $1.21 per diluted share, compared with 2003 earnings of $170.6 million, or $2.08 per share (all per share amounts included herein are based on reported net income and use diluted weighted-average shares
outstanding). Earnings per share in 2004 included certain items affecting comparisons but taken together had no effect on earnings per share in 2004, while 2003 included certain items affecting comparisons that netted to a gain of $1.12 per share.
These items are detailed further beginning on page 24.





13



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##### Table of Contents

Revenues



Revenues in 2004 increased $123 million, or 7.9%, to $1.7 billion. On a same property basis, meaning excluding properties divested or acquired in the past 12
months, total revenue was up 4.9%. Advertising revenue was up 8.5% and, on a same property basis, increased 7.1%, primarily reflecting strong gains in advertising rates at the U.S. Journal and volume and rate gains at our community newspapers.
Information services revenues were up 15% and, on a same property basis, increased 5.2%, reflecting strong organic growth at Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Circulation and other revenue were up 1.7% and, on a same
property basis, decreased slightly.



Operating Expenses



Operating expenses in 2004 increased $103.7 million, or 7.4%, to $1.5
billion. Just over one percentage point of the increase was due to the fact that 2003 expenses were reduced by an $18.4 million gain on the settlement of a business interruption insurance claim, while the remaining increase reflected incremental
costs from newly acquired properties (about three percentage points), and the balance due to increases in employee compensation, newsprint usage and prices, and unfavorable changes in foreign currency exchange. Newsprint expense, on a same property
basis, increased 8.5% as a result of a 6.5% increase in newsprint prices and a 1.9% increase in consumption. The number of full-time employees at December 31, 2004 was 7,143, up 2.4% from December 31, 2003, primarily reflecting additional employees
from acquisitions.



Operating Income



Operating income in 2004 was $162.2 million (9.7% of revenues), up $19.3 million, or 13.5%,
from 2003 operating income of $142.9 million (9.2% of revenues). The increase in operating income reflected 33% growth in operating income at our business segments, partially offset by the insurance gain in 2003, which did not recur in 2004.



Non-operating (Loss)/Income



Non-operating losses totaled $4 million in 2004 compared with non-operating income of $79.4
million in 2003. Non-operating income in 2003 included a gain of $59.8 million related to the resolution of a loss contingency related to the sale of our former Telerate subsidiary, $6.7 million of interest income related to an IRS tax refund and a
gain of $18.7 million from a non-monetary exchange of interests in Wall Street Journal Europe and Handelsblatt, net of a $9.5 million charge related to the accretion of discount on a contract guarantee, while 2004 included a $6.9
million charge related to the accretion of discount on the contract guarantee, net of a $3.3 million gain on the disposition of an investment. Please see page 24 for additional information on these items.





2003 Compared
to 2002 - Consolidated



|                                         |  |      |           |      |   |                       |  |       |  
|---------------------------------------- |  | ---- | --------- | ---- | - | --------------------- |  | ----- | -
|(in thousands, except per share amounts) |  | 2003 |           | 2002 |   | % Increase/(Decrease) | 
|Revenues                                 |  |      |           |      |   |                       |  |       |  
|Advertising                              |  | $    | 871,817   |      | $ | 877,681               |  | (0.7  | )
|Information services                     |  |      | 286,863   |      |   | 281,220               |  | 2.0   |  
|Circulation and other                    |  |      | 389,805   |      |   | 400,272               |  | (2.6  | )
|                                         |  |      |           |      |   |                       |  |       |  
|Total revenues                           |  |      | 1,548,485 |      |   | 1,559,173             |  | (0.7  | )
|                                         |  |      |          
|Operating expenses                       |  |      | 1,405,572 |      |   | 1,484,090             |  | (5.3  | )
|                                         |  |      |           |      |   |                       |  |       |  
|Operating income                         |  |      | 142,913   |      |   | 75,083                |  | 90.3  |  
|                                         |  |      |          
|Non-operating income*                    |  |      | 79,390    |      |   | 190,164               |  | (58.3 | )
|                                         |  |      |          
|Income taxes                             |  |      | 51,704    |      |   | 63,741                |  | (18.9 | )
|                                         |  |      |           |      |   |                       |  |       |  
|Net income                               |  | $    | 170,599   |      | $ | 201,506               |  | (15.3 | )
|                                         |  |      |           |      |   |                       |  |       |  
|Earnings per share:                      |  |      |           |      |   |                       |  |       |  
|Basic                                    |  | $    | 2.09      |      | $ | 2.41                  |  | (13.3 | )
|Diluted                                  |  |      | 2.08      |      |   | 2.40                  |  | (13.3 | )



|* | Net of minority interests
|- | -------------------------



14



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##### Table of Contents

Net Income



Net income in 2003 was $170.6 million, or $2.08 per share, compared with 2002 net income of $201.5 million, or $2.40 per share. Earnings per share included certain items
affecting comparisons, which netted to a gain of $1.12 per share in 2003 and a gain of $1.66 per share in 2002. These items are detailed further beginning on page 24.



Revenues



Revenues in 2003 declined $10.7 million, or 0.7%, to $1.55 billion primarily as a result of a decline in print publishing revenues. On a same-property basis, meaning
excluding properties divested or acquired in the past 12 months, total revenue was down 1.1%, with advertising revenue down 1.7%. Information services revenue increased $5.6 million, or 2%, as growth at both Consumer Electronic Publishing and Dow
Jones Indexes/Ventures was somewhat offset by declines in Newswires revenue. Circulation and other revenue was down 2.6%. On a same-property basis, circulation and other revenue declined 2.1% reflecting lower circulation revenue.



Operating Expenses



Operating expenses in 2003 were down $78.5 million, or 5.3%, to $1.41 billion. The reduction
in expenses reflected cost-saving initiatives ($24 million); a favorable comparison ($42 million) as 2003 operating expenses included a gain on the settlement of a business interruption insurance claim, while 2002 included restructuring charges; and
lower Todays Journal costs, predominantly launch marketing spent in 2002 ($18 million). These reductions in costs were slightly offset by a net increase in expenses as a result of acquired/divested community newspapers ($5 million). On a
same-property basis, newsprint expense increased a modest 0.7%, as a result of a 9.9% increase in newsprint prices and a decline in consumption of 8.4%. The number of full-time employees at December 31, 2003, was 6,975, up 2.3% from 2002, primarily
reflecting the additional employees from the acquisition of The Record of Stockton, California in 2003.



Operating Income



Operating
income in 2003 was $142.9 million (9.2% of revenues), up $67.8 million, or 90%, from $75.1 million (4.8% of revenues) in 2002. Contributing to the improvement were the gain on the settlement of the business interruption insurance claim, a favorable
comparison to the restructuring charge in 2002, and improved results at all of the Companys business segments.



Non-operating (Loss)/Income



Non-operating income totaled $79.4 million in 2003 compared with non-operating income of $190.2 million in 2002. Non-operating income in 2003 included a gain of $59.8
million related to the resolution of a loss contingency related to the sale of our former Telerate subsidiary, $6.7 million of interest income related to an IRS tax refund and a gain of $18.7 million from a non-monetary exchange of interests in
Wall Street Journal Europe and Handelsblatt, net of a $9.5 million charge related to the accretion of discount on a contract guarantee, while non-operating income in 2002 included $197.9 million gain from the sale of businesses, net of
a $11.9 million charge related to the accretion of discount on a contract guarantee. Please see page 24 for additional information on these items.



Segment Data



A summary of results of operations for each of the Companys principal business segments as well as additional financial data is displayed in Note 13 to the financial statements. Segment data excludes
restructuring charges and certain September 11-related items as management evaluates segment results exclusive of these items. Please refer to page 24 for further explanation of these items.



The Company reports the results of its operations in three segments: print publishing,
electronic publishing and community newspapers. In addition, the Company reports certain administrative activities under the corporate segment.



15



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##### Table of Contents

Print Publishing



Print publishing, which is largely comprised of the global editions of The Wall Street Journal, publishes business and financial content world-wide. This content
is published primarily in the U.S., Europe, Asia and Latin America editions of The Wall Street Journal and on U.S. television through a licensing arrangement with CNBC. The Company manages the global Journal operations as one segment as their
products comprise the global Journal brand, and there are significant interrelationships within the editions including global management, shared news flows and workforce and a global advertising customer base, sales force and pricing. U.S.
television, which represents a licensing agreement with NBC Universal to provide branding, news content and on-air expertise to CNBC, is a further extension of the Journal brand and content. U.S. television contributes a significantly higher
operating margin than the publications within the segment since it largely represents incremental revenue for the global Journal content and branding. The Company also includes the operations of Barrons within print publishing instead
of reporting them separately because of their relative immateriality to the Companys results on a consolidated basis and because Barrons shares services with and its operations are similar to the global Journal.





2004 Compared
to 2003  Print Publishing



|                                       |  |      |         |   |      |   |         |                       |  |      |  
|-------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | --------------------- |  | ---- | -
|(dollars in thousands)                 |  | 2004 |         |   | 2003 |   |         | % Increase/(Decrease) | 
|Revenues                               |  |      |         |   |      |   |         |                       |  |      |  
|U.S. Publications:                     |  |      |         |   |      |   |         |                       |  |      |  
|Advertising                            |  | $    | 606,649 |   |      | $ | 570,351 |                       |  | 6.4  |  
|Circulation and other                  |  |      | 260,375 |   |      |   | 263,300 |                       |  | (1.1 | )
|                                       |  |      |         |   |      |   |         |                       |  |      |  
|Total for U.S. publications            |  |      | 867,024 |   |      |   | 833,651 |                       |  | 4.0  |  
|                                       |  |      |        
|International Publications:            |  |      |         |   |      |   |         |                       |  |      |  
|Advertising                            |  |      | 48,630  |   |      |   | 47,674  |                       |  | 2.0  |  
|Circulation and other                  |  |      | 33,179  |   |      |   | 34,143  |                       |  | (2.8 | )
|                                       |  |      |         |   |      |   |         |                       |  |      |  
|Total for International publications   |  |      | 81,809  |   |      |   | 81,817  |                       |  |      |  
|                                       |  |      |        
|Total Print Publishing revenues        |  |      | 948,833 |   |      |   | 915,468 |                       |  | 3.6  |  
|Expenses                               |  |      | 917,348 |   |      |   | 907,389 |                       |  | 1.1  |  
|                                       |  |      |         |   |      |   |         |                       |  |      |  
|Operating income                       |  | $    | 31,485  |   |      | $ | 8,079   |                       |  |     |  
|                                       |  |      |         |   |      |   |         |                       |  |      |  
|Operating margin                       |  |      | 3.3     | % |      |   | 0.9     | %                     |  |      |  
|                                       |  |      |        
|Included in expenses:                  |  |      |         |   |      |   |         |                       |  |      |  
|Depreciation and amortization          |  | $    | 65,335  |   |      | $ | 67,054  |                       |  | (2.6 | )
|                                       |  |      |        
|Statistical information:               |  |      |         |   |      |   |         |                       |  |      |  
|Advertising volume increase/(decrease) |  |      |         |   |      |   |         |                       |  |      |  
|                                       |  |      |        
|                                       |  | 2004 |         |   | 2003 |   |         |                       | 
|The Wall Street Journal                |  |      |         |   |      |   |         |                       |  |      |  
|General                                |  |      | 2.5     | % |      |   | (0.6    | )%                    |  |      |  
|Technology                             |  |      | (24.1   | ) |      |   | (2.7    | )                     |  |      |  
|Financial                              |  |      | 7.0     |   |      |   | (15.8   | )                     |  |      |  
|Classified                             |  |      | 8.9     |   |      |   | 14.1    |                       |  |      |  
|Total                                  |  |      | (0.5    | ) |      |   | (1.3    | )                     |  |      |  
|                                       |  |      |        
|The Asian Wall Street Journal          |  |      | (3.3    | ) |      |   | 2.0     |                       |  |      |  
|The Wall Street Journal Europe         |  |      | (3.5    | ) |      |   | 9.3     |                       |  |      |  
|Barrons                               |  |      | 11.7    |   |      |   | (16.0   | )                     |  |      |  





16



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##### Table of Contents

Revenues



Print publishing revenues for 2004 increased $33.4 million, or 3.6%, to $948.8 million, reflecting advertising revenue gains at the U.S. publications.



U.S. print publication revenue increased $33.4 million, or 4%, to $867 million. U.S. print
publication advertising revenue increased $36.3 million, or 6.4%, to $606.6 million, despite a 0.5% decrease in advertising linage at The Wall Street Journal as a result of higher ad yield (or revenue per page). General advertising, which
represented about 43% of total U.S. Wall Street Journal linage, increased 2.5%, which combined with higher rates yielded an increase in ad revenue of 11% in 2004. The increase in general ad volume was driven by a 4% increase in consumer
advertising linage and a 13% increase in consumer ad revenue, with gains in luxury and pharmaceuticals advertising, partially offset by a decline in auto advertising. Financial advertising, which accounted for 18% of total Journal linage, increased
7% with ad revenue up 15% in 2004. Financial ad volume improved as a result of strong gains in wholesale advertising coupled with increases in retail mutual funds advertising partially offset by weakness in banks and savings and loan advertising.
Technology advertising, which represented 15% of total U.S. Journal linage, fell 24.1% while ad revenue fell 18% as ad rates improved despite softness in nearly all technology categories. Classified and other advertising linage, which represented
about 24% of total U.S. Journal linage, increased 8.9% while ad revenue increased about 12%, driven by strong increases in real estate advertising coupled with increases in classified advertising. Color advertising pages increased 20%, and color
premium revenue was up 34%.



Circulation and other revenue for U.S. print
publications decreased $2.9 million, or 1.1%, to $260.4 million in part due to lower contractual printing for third parties and slightly lower circulation revenue reflecting somewhat more discounted rates. Average circulation for 2004 for The
Wall Street Journal was 1,810,000 compared with circulation of 1,792,000 in 2003. Barrons average circulation was 299,000 in 2004 compared with 297,000 in 2003.



Revenues at our international publications were flat, as revenue increases at the international editions of the Journal were offset by
revenue declines at the Far Eastern Economic Review (FEER), largely due to repositioning of their operations in the fourth quarter of 2004 from a weekly magazine to a monthly publication. International print publication advertising revenues
increased $1 million, or 2%, to $48.6 million, as gains in advertising rates were partially offset by a decrease in advertising volume at The Asian Wall Street Journal and The Wall Street Journal Europe and the lower revenue from FEER.
International print circulation and other revenues decreased $1 million, or 2.8%, to $33.2 million, in part due to lower conferences revenue and circulation revenue at FEER. Combined average circulation for the International Journals was 167,000 in
2004 compared with 168,000 in 2003.



Expenses



Print publishing expenses in 2004 were held to a $10 million, or 1.1%, increase to $917.3
million, as modest growth in employee compensation and higher newsprint costs were mitigated by lower costs related to the repositioning of FEER operations and lower depreciation expense. Newsprint expense was up 8% as a result of a 6% increase in
newsprint prices coupled with a 1.9% increase in consumption.



Operating
Income



Print publishing operating income in 2004 was $31.5 million
(3.3% of revenues) an improvement of $23.4 million compared with operating income of $8.1 million (0.9% of revenues) in 2003 as increased profits at the U.S. Journal and U.S television were partially offset by higher losses overseas, in part due to
unfavorable foreign currency translation costs.



17



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##### Table of Contents

2003 Compared to 2002  Print Publishing



|                                       |  |      |         |    |      |   |         |                       |  |       |  
|-------------------------------------- |  | ---- | ------- | -- | ---- | - | ------- | --------------------- |  | ----- | -
|(dollars in thousands)                 |  | 2003 |         |    | 2002 |   |         | % Increase/(Decrease) | 
|Revenues                               |  |      |         |    |      |   |         |                       |  |       |  
|U.S. Publications:                     |  |      |         |    |      |   |         |                       |  |       |  
|Advertising                            |  | $    | 570,351 |    |      | $ | 585,851 |                       |  | (2.6  | )
|Circulation and other                  |  |      | 263,300 |    |      |   | 272,100 |                       |  | (3.2  | )
|                                       |  |      |         |    |      |   |         |                       |  |       |  
|Total for U.S. publications            |  |      | 833,651 |    |      |   | 857,951 |                       |  | (2.8  | )
|                                       |  |      |        
|International Publications:            |  |      |         |    |      |   |         |                       |  |       |  
|Advertising                            |  |      | 47,674  |    |      |   | 54,832  |                       |  | (13.1 | )
|Circulation and other                  |  |      | 34,143  |    |      |   | 36,087  |                       |  | (5.4  | )
|                                       |  |      |         |    |      |   |         |                       |  |       |  
|Total for International publications   |  |      | 81,817  |    |      |   | 90,919  |                       |  | (10.0 | )
|                                       |  |      |        
|Total Print Publishing revenues        |  |      | 915,468 |    |      |   | 948,870 |                       |  | (3.5  | )
|Expenses                               |  |      | 907,389 |    |      |   | 956,928 |                       |  | (5.2  | )
|                                       |  |      |         |    |      |   |         |                       |  |       |  
|Operating income (loss)                |  | $    | 8,079   |    |      | $ | (8,058  | )                     |  |      |  
|                                       |  |      |         |    |      |   |         |                       |  |       |  
|Operating margin                       |  |      | 0.9     | %  |      |   | (0.8    | )%                    |  |       |  
|                                       |  |      |        
|Included in expenses:                  |  |      |         |    |      |   |         |                       |  |       |  
|Depreciation and amortization          |  | $    | 67,054  |    |      | $ | 71,568  |                       |  | (6.3  | )
|                                       |  |      |        
|Statistical information:               |  |      |         |    |      |   |         |                       |  |       |  
|Advertising volume increase/(decrease) |  |      |         |    |      |   |         |                       |  |       |  
|                                       |  |      |        
|                                       |  | 2003 |         |    | 2002 |   |         |                       | 
|The Wall Street Journal                |  |      |         |    |      |   |         |                       |  |       |  
|General                                |  |      | (0.6    | )% |      |   | (7.9    | )%                    |  |       |  
|Technology                             |  |      | (2.7    | )  |      |   | (30.4   | )                     |  |       |  
|Financial                              |  |      | (15.8   | )  |      |   | (28.2   | )                     |  |       |  
|Classified                             |  |      | 14.1    |    |      |   | (6.8    | )                     |  |       |  
|Total                                  |  |      | (1.3    | )  |      |   | (17.6   | )                     |  |       |  
|                                       |  |      |        
|The Asian Wall Street Journal          |  |      | 2.0     |    |      |   | (24.0   | )                     |  |       |  
|The Wall Street Journal Europe         |  |      | 9.3     |    |      |   | (22.6   | )                     |  |       |  
|Barrons                               |  |      | (16.0   | )  |      |   | (10.4   | )                     |  |       |  



Revenues



In 2003, print publishing revenue fell 3.5%, or $33.4 million, to $915.5 million. U.S. print
publication revenue fell $24.3 million, or 2.8%, to $833.7 million, largely reflecting a decline in advertising volume and lower circulation revenue at The Wall Street Journal and at Barrons. U.S. advertising revenue declined
2.6%, to $570.4 million, on lower advertising volume at the U.S. Journal and Barrons. While advertising volume at the U.S. Journal was down 1.3% for the year, advertising volume began to strengthen in the second half of 2003 (up 7.7% in
total) and in the fourth quarter of 2003 the U.S. Journals advertising linage increased across all of its major ad categories for the first time since the second quarter of 2000.



General advertising linage, which represented 42% of 2003 total U.S. Wall Street Journal linage, was down 0.6% in 2003, largely
reflecting declines in public utility advertising offset by increases in passenger travel, pharmaceuticals and insurance advertising. Technology advertising, which represented 20% of total 2003 Journal linage, fell 2.7% in 2003, despite gains of 13%
in the latter half of the year. The year-over-year decrease in technology advertising was the result of declines in personal computer advertising, B2B e-commerce advertising and hardware advertising, partially offset by improvements in software and
communications advertising. Financial advertising, which represented 17% of total 2003 Journal linage, fell 15.8% in 2003, primarily resulting from declines in investment advisory and tombstone advertising somewhat offset by an increase in broker
advertising. Despite the decline for the full year, financial advertising began to show positive results as fourth quarter ad linage increased 7%. Classified advertising, which represented the remaining 21% of linage, increased 14.1% in 2003, due to
improvements in real estate advertising and other classified advertising. Color advertising, which is billed at a premium, was up 28% over 2002.



18



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##### Table of Contents

Circulation and other revenue for U.S. publications decreased $8.8 million, or 3.2%, to $263.3 million in 2003. Average
circulation for The Wall Street Journal was 1,792,000 in 2003 compared with 1,817,000 in 2002. Barrons average annual circulation was 297,000 in 2003 compared with 295,000 in 2002. The decline in volume along with a decrease in
revenue-producing subscriptions and a higher number of discounted subscriptions more than offset incremental revenue from the fourth quarter 2002 Wall Street Journal price increase.



International print publication revenues declined $9.1 million, or 10%, to $81.8 million,
primarily as a result of a decline in advertising revenue. Despite increases in advertising linage of 2% at The Asian Wall Street Journal and 9.3% at The Wall Street Journal Europe, revenues decreased as a result of discounts related
to the global ad sales program launched in the summer of 2002. Circulation and other revenue for international publications declined $1.9 million, or 5.4%, to $34.1 million in 2003. Average combined circulation for the international editions of
The Wall Street Journal was 168,000 in 2003 compared with 179,000 in 2002.



Expenses



Print publishing 2003 expenses declined $49.5
million, or 5.2%, to $907.4 million, reflecting lower expenses resulting from the Companys cost containment program and reduced Todays Journal costs as 2002 included expenses related to its launch. Newsprint expense for 2003 was nearly
flat compared with 2002, as a 10.1% increase in prices was offset by 9.5% lower newsprint consumption.



Operating Income (Loss)



Print
publishing operating income was $8.1 million (0.9% of revenues) compared to an operating loss in 2002 of $8.1 million, as profits at the U.S. Journal and at U.S. television were partially offset by significant losses at the international editions.
The improvement in operating performance reflected improved results at the U.S. Journal partially offset by increased losses at the international editions and reduced profitability at U.S. television.





Electronic
Publishing



Electronic publishing, which electronically distributes
business and financial news and information includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures, all of which are expected to have similar long-term economic characteristics. 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 and represented about 20% of the Companys revenues over the three years ended in 2004.





2004 Compared to 2003  Electronic Publishing



|                                     |  |      |         |   |      |   |         |                       |  |     
|------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | --------------------- |  | ----
|(dollars in thousands)               |  | 2004 |         |   | 2003 |   |         | % Increase/(Decrease)
|Revenues                             |  |      |         |   |      |   |         |                       |  |     
|Dow Jones Newswires:                 |  |      |         |   |      |   |         |                       |  |     
|North America                        |  | $    | 192,375 |   |      | $ | 170,267 |                       |  | 13.0
|International                        |  |      | 55,698  |   |      |   | 42,803  |                       |  | 30.1
|                                     |  |      |         |   |      |   |         |                       |  |     
|Total Newswires revenues             |  |      | 248,073 |   |      |   | 213,070 |                       |  | 16.4
|                                     |  |      |        
|Consumer Electronic Publishing       |  |      | 79,710  |   |      |   | 68,716  |                       |  | 16.0
|Dow Jones Indexes/Ventures           |  |      | 53,398  |   |      |   | 40,246  |                       |  | 32.7
|                                     |  |      |         |   |      |   |         |                       |  |     
|Total Electronic Publishing revenues |  |      | 381,181 |   |      |   | 322,032 |                       |  | 18.4
|                                     |  |      |        
|Expenses                             |  |      | 302,147 |   |      |   | 254,161 |                       |  | 18.9
|                                     |  |      |         |   |      |   |         |                       |  |     
|Operating income                     |  | $    | 79,034  |   |      | $ | 67,871  |                       |  | 16.4
|                                     |  |      |         |   |      |   |         |                       |  |     
|Operating margin                     |  |      | 20.7    | % |      |   | 21.1    | %                     |  |     
|                                     |  |      |        
|Included in expenses:                |  |      |         |   |      |   |         |                       |  |     
|Depreciation and amortization        |  | $    | 27,732  |   |      | $ | 26,263  |                       |  | 5.6 
|                                     |  |      |        
|Statistical:                         |  |      |         |   |      |   |         |                       |  |     
|Dow Jones Newswires terminals        |  |      | 298,000 |   |      |   | 293,000 |                       |  | 1.7 
|WSJ.com subscribers                  |  |      | 712,000 |   |      |   | 689,000 |                       |  | 3.3 



19



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##### Table of Contents

Revenues



Electronic publishing revenues in 2004 increased $59.1 million, or 18%, to $381.2 million, primarily as a result of business acquisitions at Dow Jones Newswires and
revenue gains at Dow Jones Indexes/Ventures and Consumer Electronic Publishing.



Dow Jones Newswires revenue increased $35 million, or 16%, to $248.1 million, due to recent acquisitions. Excluding recent acquisitions, Dow Jones Newswires revenues were relatively flat. English-language terminals carrying Dow Jones
Newswires at December 31, 2004, were 298,000 compared with 293,000 at December 31, 2003. North American terminals increased by 1,000 and International terminals increased by 4,000.



Consumer Electronic Publishing revenue increased $11 million, or 16%, to $79.7 million on a 26% increase in advertising revenue coupled with
increases in licensing revenue and WSJ.com subscriber revenue. At the end of December 2004, the number of WSJ.com subscribers reached a record 712,000, an increase of 3.3% from a year earlier. Dow Jones Indexes/Ventures revenues, which
include Dow Jones Indexes and reprints/permissions businesses, increased $13.2 million, or 33%, to $53.4 million, driven by increases in Indexes revenue (40%) and in reprints and permissions revenue (19%).



Expenses



Electronic publishing expenses were up $48 million, or 19%, to $302.1 million, primarily as a result of incremental expenses from recent
acquisitions (comprising nearly two thirds of the increase) as well as an increase in employee compensation.



Operating Income



Electronic
publishings operating income was $79 million (20.7% of revenues), an improvement of $11.2 million, or 16%, over 2003 operating income of $67.9 million (21.1% of revenues). The improvement was driven by increased profits at Consumer Electronic
Publishing, Dow Jones Indexes/Ventures and from recent acquisitions.





2003 Compared to 2002  Electronic Publishing



|                                     |  |      |         |   |      |   |         |                       |  |      |  
|------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | --------------------- |  | ---- | -
|(dollars in thousands)               |  | 2003 |         |   | 2002 |   |         | % Increase/(Decrease) | 
|Revenues                             |  |      |         |   |      |   |         |                       |  |      |  
|Dow Jones Newswires:                 |  |      |         |   |      |   |         |                       |  |      |  
|North America                        |  | $    | 170,267 |   |      | $ | 177,706 |                       |  | (4.2 | )
|International                        |  |      | 42,803  |   |      |   | 44,519  |                       |  | (3.9 | )
|                                     |  |      |         |   |      |   |         |                       |  |      |  
|Total Newswires revenues             |  |      | 213,070 |   |      |   | 222,225 |                       |  | (4.1 | )
|                                     |  |      |        
|Consumer Electronic Publishing       |  |      | 68,716  |   |      |   | 55,693  |                       |  | 23.4 |  
|Dow Jones Indexes/Ventures           |  |      | 40,246  |   |      |   | 31,573  |                       |  | 27.5 |  
|                                     |  |      |         |   |      |   |         |                       |  |      |  
|Total Electronic Publishing revenues |  |      | 322,032 |   |      |   | 309,491 |                       |  | 4.1  |  
|                                     |  |      |        
|Expenses                             |  |      | 254,161 |   |      |   | 248,628 |                       |  | 2.2  |  
|                                     |  |      |         |   |      |   |         |                       |  |      |  
|Operating income                     |  | $    | 67,871  |   |      | $ | 60,863  |                       |  | 11.5 |  
|                                     |  |      |         |   |      |   |         |                       |  |      |  
|Operating margin                     |  |      | 21.1    | % |      |   | 19.7    | %                     |  |      |  
|                                     |  |      |        
|Included in expenses:                |  |      |         |   |      |   |         |                       |  |      |  
|Depreciation and amortization        |  | $    | 26,263  |   |      | $ | 25,374  |                       |  | 3.5  |  
|                                     |  |      |        
|Statistical:                         |  |      |         |   |      |   |         |                       |  |      |  
|Dow Jones Newswires terminals        |  |      | 293,000 |   |      |   | 308,000 |                       |  | (4.9 | )
|WSJ.com subscribers                  |  |      | 689,000 |   |      |   | 679,000 |                       |  | 1.5  |  



20



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##### Table of Contents

Revenues



Electronic publishing revenue in 2003 improved $12.5 million, or 4.1%, to $322 million, as strong revenue growth at Consumer Electronic Publishing and Dow Jones
Indexes/Ventures were somewhat offset by revenue declines at Dow Jones Newswires.



Dow Jones Newswires revenue decreased $9.2 million, or 4.1%, to $213.1 million. North American revenue declined $7.4 million, or 4.2%, and international revenues declined $1.7 million, or 3.9%, primarily as a result of a decline in retail
revenue reflecting contraction in the securities industry. English-language terminals carrying Dow Jones Newswires at the end of 2003 were 293,000 compared with 308,000 in 2002, with North American terminals declining 25,000, while international
terminals increased 10,000 year over year.



Consumer Electronic Publishing
revenue increased $13 million, or 23%, to $68.7 million as a result of a 29% increase in subscriber revenue driven by a subscription price increase in mid-2002, and increases in advertising (23%) and licensing revenue (9.1%). Total WSJ.com
subscribers at the end of 2003 reached 689,000, up 1.5% from 2002. Dow Jones Indexes/Ventures revenue increased $8.7 million, or 27%, to $40.2 million as a result of increases in both Dow Jones Indexes and reprints and permission revenues.



Expenses



Electronic publishing expenses in 2003 were up $5.5 million, or 2.2%, to $254.2 million, as
a result of higher marketing costs, facilities expenses and employee incentives partially offset by continued cost control efforts.



Operating Income



Electronic publishing operating income in 2003 of $67.9 million (21.1% of revenues) was $7 million, or 12%, better than 2002 operating income of $60.9 million (19.7% of revenues), as reduced losses at Consumer
Electronic Publishing and increased profits at Dow Jones Indexes/Ventures more than offset a decline in profits at Dow Jones Newswires.





Community Newspapers



Community newspapers includes the operations of Ottaway Newspapers, which publishes 15 daily newspapers and over 30 weekly newspapers and
shoppers in nine states in the U.S. Community newspapers comprised roughly 20% of the Companys revenues over the three years ended in 2004.



During 2002, the Company sold five low-growth community newspaper properties, completing the divestiture phase of its strategy to enhance the Ottaway Newspaper portfolio.
The Company reinvested a portion of these proceeds with the purchase of The Ashland Tidings and The Medford Nickel, two small publications in southern Oregon, in October 2002 and in May 2003, the purchase of The Record of Stockton,
California, enhancing the Companys community newspaper portfolio.



21



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##### Table of Contents

2004 Compared to 2003  Community Newspapers



|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|----------------------------------------------------- |  | ---- | ------- | - | ----- | - | ------- | --------------------- |  | ---- | -
|(dollars in thousands)                                |  | 2004 |         |   | 2003* |   |         | % Increase/(Decrease) | 
|Revenues                                              |  |      |         |   |       |   |         |                       |  |      |  
|Advertising                                           |  |      |         |   |       |   |         |                       |  |      |  
|Comparable operations                                 |  | $    | 242,249 |   |       | $ | 224,845 |                       |  | 7.7  |  
|Divested/newly-acquired operations                    |  |      | 13,517  |   |       |   | 2,616   |                       |  |     |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Total advertising revenues                            |  |      | 255,766 |   |       |   | 227,461 |                       |  | 12.4 |  
|                                                      |  |      |        
|Circulation and other                                 |  |      |         |   |       |   |         |                       |  |      |  
|Comparable operations                                 |  |      | 83,234  |   |       |   | 83,107  |                       |  | 0.2  |  
|Divested/newly-acquired operations                    |  |      | 2,444   |   |       |   | 417     |                       |  |     |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Total circulation and other revenues                  |  |      | 85,678  |   |       |   | 83,524  |                       |  | 2.6  |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Total Community Newspapers revenues                   |  |      | 341,444 |   |       |   | 310,985 |                       |  | 9.8  |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Expenses                                              |  |      |         |   |       |   |         |                       |  |      |  
|Comparable operations                                 |  |      | 240,166 |   |       |   | 227,728 |                       |  | 5.5  |  
|Divested/newly-acquired operations                    |  |      | 12,163  |   |       |   | 2,264   |                       |  |     |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Total Community Newspapers expenses                   |  |      | 252,329 |   |       |   | 229,992 |                       |  | 9.7  |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Operating income                                      |  |      |         |   |       |   |         |                       |  |      |  
|Comparable operations                                 |  |      | 85,317  |   |       |   | 80,224  |                       |  | 6.3  |  
|Divested/newly-acquired operations                    |  |      | 3,798   |   |       |   | 769     |                       |  |     |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Total Community Newspapers operating income           |  | $    | 89,115  |   |       | $ | 80,993  |                       |  | 10.0 |  
|                                                      |  |      |         |   |       |   |         |                       |  |      |  
|Operating margin                                      |  |      |         |   |       |   |         |                       |  |      |  
|Comparable operations                                 |  |      | 26.2    | % |       |   | 26.1    | %                     |  |      |  
|Divested/newly-acquired operations                    |  |      | 23.8    | % |       |   | 25.4    | %                     |  |      |  
|                                                      |  |      |        
|Included in expenses:                                 |  |      |         |   |       |   |         |                       |  |      |  
|Depreciation and amortization                         |  |      |         |   |       |   |         |                       |  |      |  
|Comparable operations                                 |  | $    | 10,889  |   |       | $ | 11,887  |                       |  | (8.4 | )
|Divested/newly-acquired operations                    |  |      | 786     |   |       |   | 163     |                       |  |     |  
|                                                      |  |      |        
|Statistical information                               |  |      |         |   |       |   |         |                       |  |      |  
|Advertising volume year-over-year percentage change** |  |      |         |   |       |   |         |                       |  |      |  
|Dailies                                               |  |      | 2.9     | % |       |   | (2.5    | )%                    |  |      |  
|Non-Dailies                                           |  |      | 10.1    |   |       |   | 2.9     |                       |  |      |  
|Overall                                               |  |      | 4.2     |   |       |   | (1.6    | )                     |  |      |  



|* | Amounts in 2003 have been reclassified between comparable and divested/newly-acquired operations to conform with comparable operations in 2004.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------

|** | Percentage excludes Ottaway properties divested or acquired in the past 12 months.
|-- | ----------------------------------------------------------------------------------



|Revenues | 
|-------- | 



Community newspapers 2004 revenue was up $30.5 million, or 9.8%, to $341.4 million reflecting in part newly-acquired properties. On a same property basis, revenue increased $17.5 million, or 5.7%. Same property advertising revenue increased
$17.4 million, or 7.7%, to $242.2 million, primarily reflecting an increase in advertising linage, as well as average advertising rates and preprint revenue. Same property circulation and other revenue increased slightly, to $83.2 million.



Expenses



Community newspaper expenses in 2004 increased $22.3 million, or 9.7%, to $252.3 million,
partially reflecting newly-acquired properties. On a same property basis, expenses increased $12.4 million, or 5.5%, as a result of increases in compensation expense, newsprint and outside service costs. Newsprint expense, on a same property basis,
increased 10.2% as a result of an 8.2% increase in newsprint prices coupled with an increase in consumption of 1.8%.



22



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##### Table of Contents

Operating Income



Community newspapers operating income in 2004 was $89.1 million (26.1% of revenues) compared with 2003 operating income of $81 million (26.0% of revenues). On a same
property basis, 2004 operating income of $85.3 million (26.2% of revenues) increased 6.3% from $80.2 million (26.1% of revenues) in 2003.





2003 Compared to 2002  Community Newspapers



|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|---------------------------------------------------- |  | ---- | ------- | -- | ---- | - | ------- | --------------------- |  | ----- | -
|(dollars in thousands)                               |  | 2003 |         |    | 2002 |   |         | % Increase/(Decrease) | 
|Revenues                                             |  |      |         |    |      |   |         |                       |  |       |  
|Advertising                                          |  |      |         |    |      |   |         |                       |  |       |  
|Comparable operations                                |  | $    | 203,136 |    |      | $ | 199,919 |                       |  | 1.6   |  
|Divested/newly-acquired operations                   |  |      | 24,325  |    |      |   | 15,707  |                       |  | 54.9  |  
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|Total advertising revenues                           |  |      | 227,461 |    |      |   | 215,626 |                       |  | 5.5   |  
|                                                     |  |      |        
|Circulation and other                                |  |      |         |    |      |   |         |                       |  |       |  
|Comparable operations                                |  |      | 79,100  |    |      |   | 78,719  |                       |  | 0.5   |  
|Divested/newly-acquired operations                   |  |      | 4,424   |    |      |   | 6,467   |                       |  | (31.6 | )
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|Total circulation and other revenues                 |  |      | 83,524  |    |      |   | 85,186  |                       |  | (2.0  | )
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|Total Community Newspapers revenues                  |  |      | 310,985 |    |      |   | 300,812 |                       |  | 3.4   |  
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|Expenses                                             |  |      |         |    |      |   |         |                       |  |       |  
|Comparable operations                                |  |      | 208,282 |    |      |   | 204,638 |                       |  | 1.8   |  
|Divested/newly-acquired operations                   |  |      | 21,710  |    |      |   | 16,919  |                       |  | 28.3  |  
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|Total Community Newspapers expenses                  |  |      | 229,992 |    |      |   | 221,557 |                       |  | 3.8   |  
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|Operating income                                     |  |      |         |    |      |   |         |                       |  |       |  
|Comparable operations                                |  |      | 73,954  |    |      |   | 74,000  |                       |  | (0.1  | )
|Divested/newly-acquired operations                   |  |      | 7,039   |    |      |   | 5,255   |                       |  | 33.9  |  
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|Total Community Newspapers operating income          |  | $    | 80,993  |    |      | $ | 79,255  |                       |  | 2.2   |  
|                                                     |  |      |         |    |      |   |         |                       |  |       |  
|                                                     |  |      |        
|Operating margin                                     |  |      |         |    |      |   |         |                       |  |       |  
|Comparable operations                                |  |      | 26.2    | %  |      |   | 26.6    | %                     |  |       |  
|Divested/newly-acquired operations                   |  |      | 24.5    | %  |      |   | 23.7    | %                     |  |       |  
|                                                     |  |      |        
|Included in expenses:                                |  |      |         |    |      |   |         |                       |  |       |  
|Depreciation and amortization                        |  |      |         |    |      |   |         |                       |  |       |  
|Comparable operations                                |  | $    | 10,375  |    |      | $ | 11,069  |                       |  | (6.3  | )
|Divested/newly-acquired operations                   |  |      | 1,675   |    |      |   | 681     |                       |  |      |  
|                                                     |  |      |        
|Statistical information                              |  |      |         |    |      |   |         |                       |  |       |  
|Advertising volume year-over-year percentage change* |  |      |         |    |      |   |         |                       |  |       |  
|Dailies                                              |  |      | (2.5    | )% |      |   | (1.7    | )%                    |  |       |  
|Non-Dailies                                          |  |      | 2.9     |    |      |   | (2.5    | )                     |  |       |  
|Overall                                              |  |      | (1.6    | )  |      |   | (1.8    | )                     |  |       |  



|* | Percentage excludes Ottaway properties divested or acquired in the past 12 months.
|- | ----------------------------------------------------------------------------------



Revenues



Community newspapers revenue in 2003 increased 3.4%, to $311 million, principally reflecting incremental revenue from newly-acquired newspapers. On a same-property basis,
revenue increased 1.3%. Same-property advertising revenue increased 1.6% as an overall linage decrease was more than offset by rate increases and increases in preprint and other advertising revenue. Circulation and other revenue decreased 2%,
reflecting a net reduction from divested/newly-acquired operations. Circulation and other revenue on a same-property basis increased less than 1%. Average daily circulation was about 379,000 in 2003 compared to 384,000 in 2002.



23



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##### Table of Contents

Expenses



Community newspapers 2003 expenses increased 3.8%, to $230 million, reflecting in part newly-acquired properties. Expenses on a same-property basis were up 1.8% as a
result of higher employee salary and benefit costs as well as an increase in newsprint costs. Newsprint expense on a same-property basis was up 4.9% as a result of a 9.1% increase in prices partially offset by a 3.9% decrease in newsprint
consumption. The number of full-time employees in this segment was up 13% from December 31, 2002, reflecting the acquisition of The Record of Stockton, California.



Operating Income



Operating income in 2003 was $81 million (26% of revenues), up 2.2% from 2002 operating income of $79.3 million (26.3% of revenues). On a same-property basis, operating
income of $74 million (26.2% of revenues) was flat with 2002 operating income of $74 million (26.6% of revenues).





Certain Items Affecting Comparisons



The following table summarizes certain items affecting comparisons by year.



|                                                                              |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|----------------------------------------------------------------------------- |  | --------- | ---- | - | ---- | - | ---- | ---- |  | - | --------- | - | --- | - | ---- | --- | - | ---- | --------- |  | - | ---- | - |  | --- | ----- | - |  | - | ----- | - |  | - | ---- | -
|                                                                              |  | 2004      |      |   | 2003 |   |      | 2002 | 
|(in millions, except per share amounts)                                       |  | Operating |      |   | Net  |   |      | EPS  |  |   | Operating |   | Net |   |      | EPS |   |      | Operating |  |   | Net  |   |  | EPS |      
|Included in operating income: (a)                                             |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|Restructuring charges                                                         |  | $         | (6.7 | ) |      | $ | (4.0 | )    |  | $ | (.05      | ) |     |   |      |     |   |      |           |  |   |      |   |  | $   | (26.9 | ) |  | $ | (15.8 | ) |  | $ | (.18 | )
|World Financial Center/September 11-related:                                  |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|Reversal of lease obligation reserve - WFC                                    |  |           | 2.8  |   |      |   | 1.7  |      |  |   | .02       |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|Insurance claim                                                               |  |           |      |   |      |   |      |      |  |   |           |   |     | $ | 18.4 |     | $ | 11.1 |           |  | $ | .14  |   |  |     | 3.1   |   |  |   | 1.8   |   |  |   | .02  |  
|                                                                              |  |           |      |   |      |   |      |      | 
|Included in non-operating income:                                             |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|Equity method investments: (b)                                                |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|CNBC International gains                                                      |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   | 3.9   |   |  |   | .05  |  
|Restructuring/workforce reductions at Factiva and CNBC International          |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   | (1.6  | ) |  |   | (.03 | )
|Lease termination charge at SmartMoney                                        |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   | (0.9  | ) |  |   | (.01 | )
|                                                                              |  |           |      |   |      |   |      |      | 
|Gain on disposition of investment (c)                                         |  |           |      |   |      |   | 1.8  |      |  |   | .02       |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|Gain on resolution of Telerate sale loss contingencies (d)                    |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   | 59.8 |           |  |   | .73  |   |  |     |       |   |  |   |       |   |  |   |      |  
|Sale of five Ottaway properties (e)                                           |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   | 164.1 |   |  |   | 1.94 |  
|Contract guarantee (f)                                                        |  |           |      |   |      |   | (6.9 | )    |  |   | (.08      | ) |     |   |      |     |   | (9.5 | )         |  |   | (.12 | ) |  |     |       |   |  |   | (11.9 | ) |  |   | (.14 | )
|Gain on non-monetary exchange of interests in WSJ Europe and Handelsblatt (g) |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   | 11.4 |           |  |   | .14  |   |  |     |       |   |  |   |       |   |  |   |      |  
|                                                                              |  |           |      |   |      |   |      |      | 
|Certain income tax matters (h)                                                |  |           |      |   |      |   | 7.2  |      |  |   | .09       |   |     |   |      |     |   | 19.5 |           |  |   | .24  |   |  |     |       |   |  |   |       |   |  |   |      |  
|                                                                              |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  
|Total                                                                         |  | $         | (3.9 | ) |      | $ | (0.3 | )*   |  | $ |          |   |     | $ | 18.4 |     | $ | 92.2 | *         |  | $ | 1.12 | * |  | $   | (23.8 | ) |  | $ | 139.6 |   |  | $ | 1.66 | *
|                                                                              |  |           |      |   |      |   |      |      |  |   |           |   |     |   |      |     |   |      |           |  |   |      |   |  |     |       |   |  |   |       |   |  |   |      |  



|* | The sum of the individual amounts does not equal the total due to rounding.
|- | ---------------------------------------------------------------------------



24



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##### Table of Contents

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



Restructuring charges

In the fourth quarter of 2004, the Company recorded a restructuring charge of $6.7 million ($4.0 million after taxes, or $.05 per diluted share) primarily reflecting employee severance related to a workforce reduction
of about 100 employees. This charge principally related to the Companys decision to reposition the Far Eastern Economic Review from a weekly magazine to a monthly publication beginning in December 2004, with the balance related to headcount
reductions in circulation and international operations. Annualized cost savings associated with this workforce reduction are expected be about $6 million.



In 2002, the Company initiated two workforce reductions resulting in total restructuring charges of $26.9 million largely reflecting employee severance related to
workforce reductions of about 445 full-time employees, or roughly 6%, of the Companys full-time workforce. These workforce reductions occurred in all business segments with the exception of community newspapers.



See Note 3 to the financial statements for additional information on restructuring efforts.



World Financial Center/September 11-related

On September 11, 2001, the Companys headquarters at the World Financial Center sustained damage from debris and dust as a result of the terrorist attacks on the
World Trade Center. Approximately 60% of the floor space, including furniture and related equipment, had been determined a total loss. In 2001, the Company had written off the $15 million carrying value in assets that were destroyed and recorded a
receivable from insurance, which was included in other noncurrent assets on the balance sheet.



Reversal of lease obligation reserve  World Financial Center (WFC)



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



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



Insurance Claim



The Company has insurance policies that cover property damage, extra expenses and business
interruption related to the September 11 disaster. In the fourth quarter of 2002, the Company recorded a gain of $3.1 million ($1.8 million after taxes), reflecting the recovery of insurance proceeds in excess of the carrying value of World
Financial Center assets that were destroyed as a result of the September 11 terrorist attacks. Proceeds from the property damage insurance claim, net of WFC clean-up costs paid by the Company, totaled $16.9 million in 2002. The final settlement of
the Companys property damage claim of $1.3 million was received in 2003.



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



(b)
Gains/charges in equity in earnings (losses) of associated companies

In 2002, equity in losses of associated companies included a net charge of
$0.3 million consisting of charges in the fourth quarter totaling $4.2 million, offset by second quarter 2002 gains at CNBC Asia of $3.9 million. The second quarter 2002 gains at CNBC Asia included a $2.5 million gain from the favorable settlement
of a contractual obligation and a $1.4 million gain from the sale of an investment by CNBC Asia. The fourth quarter of 2002 included restructuring/workforce reduction charges of $2.7 million ($1.6 million after taxes) at Factiva and CNBC
International, combined, and an office lease termination charge of $1.5 million ($0.9 million after taxes) at SmartMoney.



(c) Gain on disposition of investment

On April 2, 2004,
simultaneous with the Companys acquisition of the remaining interest in the news operations of Vereinigte Wirtschaftsdienste GmbH (vwd), vwd sold its non-news assets to a third party, resulting in cash proceeds to the Company of
$6.7 million. The Company was a minority shareholder in vwd.



As a result of
this sale, the Company recorded an after-tax gain of $1.8 million, or $.02 per diluted share, in the second quarter of 2004.



25



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##### Table of Contents

(d) 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. The reserve for loss contingencies was established as part of the loss on the 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.



(e) Gains on sale of Ottaway properties

The second quarter of
2002 included a gain of $44.5 million ($38 million after taxes, or $.45 per diluted share) from the sale of a community newspaper to Eagle-Tribune Publishing Company. 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 of four of the Companys Ottaway newspapers to Community Newspapers Holdings, Inc.



The Company utilized approximately $190 million of its capital loss carryforward on these sales.



(f) Contract guarantee

In 1998,
the Company completed the sale of its former subsidiary, Telerate, to Bridge Information Systems, Inc. (Bridge). Under the terms of the sale, Dow Jones retained its guarantee of payments under certain circumstances of certain annual minimum payments
for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC) under contracts entered into during the period when Telerate was a subsidiary of Dow Jones (contract guarantee). 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. However, Bridge filed for bankruptcy protection on February 15, 2001, after unsuccessful attempts to reorganize its operations and arrange for additional financing.



Dow Jones believes that Cantor and MDC have the obligation to cover, mitigate or otherwise reduce and/or avoid any losses or damages under
these circumstances, including by securing the best possible commercial terms for the supply of the subject data to a third party or parties. Cantor and MDC deny that they have this obligation. Dow Jones believes that any and all amounts which are
received by Cantor and/or MDC in respect of such data would reduce any liability that Dow Jones might have under the contract guarantee. As of December 31, 2000, there was a high degree of uncertainty, however, as to what value the data might have
in the marketplace; whether an agreement would be reached by Cantor and/or MDC to supply the data to a third party or parties, the financial position of such party or parties; the timing of any such agreement, and various related factors. Therefore,
it was not possible for Dow Jones to determine with any certainty that any such offsets would in fact be realized, or at what time or in what amounts. Consequently, in December 2000, the Company established a reserve in the amount of $255 million
representing the present value of the total estimated annual minimum payments of about $300 million over the remainder of the contract (through October 2006 and using a discount rate of approximately 6%).



Earnings in 2004, 2003 and 2002 included accretion charges of $6.9 million, $9.5 million and
$11.9 million, respectively, which has increased the reserve balance as of December 31, 2004, to $260.7 million. The Company has classified $219.3 million of this reserve as current based on the original due dates of the contract.



On November 13, 2001, the Company instituted a lawsuit in the Supreme Court of the State of
New York against MDC and Cantor seeking a declaratory judgment with respect to the Companys obligations, if any, under the guarantee. 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 $10.2 million (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.



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##### Table of Contents

The trial court in January 2003 denied motions by each of the parties that their own claims for relief be granted and the
competing claims be dismissed. Appeals from those decisions were not pursued and discovery has concluded. Dispositive motions are being briefed, with argument before the court scheduled for the first quarter of 2005. The trial is currently scheduled
to begin in June 2005.



Due to the stage of the lawsuit at December 31, 2004,
it is not possible to determine whether the court will find that any obligation the Company had under the guarantee may be dismissed or reduced. Accordingly, the Company believes the balance of the reserve continues to be appropriate. 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.



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



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



The Company and the von Holtzbrinck Group are in negotiations to further exchange in 2005 our cross shareholdings so as to return the Company to full ownership of The Wall Street Journal Europe and of its 41% interest in HB-Dow Jones
S.A. and eliminate the Companys 10% ownership of Handelsblatt.



(h) Certain income tax matters



2004 Income tax
matters



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



2003 Income tax matters



In the third quarter of 2003, the Internal Revenue Service (IRS) completed its audit of the Companys tax returns for the 1995 through 1998 tax periods,
which had been amended for additional tax refunds. In October 2003, the Company received notification that the Congressional Joint Committee on Taxation had approved these claims for tax refunds of approximately $24 million. The Company received
these refunds plus interest of approximately $6.7 million in the fourth quarter of 2003. Pursuant to the settlement of these claims, in the third quarter of 2003, the Company recorded an adjustment of $25 million to its tax reserve balance as a
result of the resolution of certain tax matters and recorded interest income of $6.7 million ($4.0 million, net of taxes). The Company also recorded a provision of $9.5 million in the third quarter for loss contingencies relating to recent
developments in certain other tax matters. The net effect of these items was an increase in net income of $19.5 million, or $.24 per share.



Non-operating (Losses)/Income



Other Income/Deductions



Interest expense, net of investment income in 2004 was $3.2 million compared to investment income, net of interest expense of $4.9 million in 2003 and net interest expense in 2002 of $2.7 million. The negative swing
in 2004 was primarily related to the inclusion in 2003 of interest received on an IRS tax refund of approximately $6.7 million.



Equity in Earnings (Losses) of Associated Companies



The Companys share of equity in earnings of associated companies in 2004 was $2.4 million compared with earnings of $2.9 million in 2003. The lower earnings
primarily resulted from increased losses at CNBC International which was somewhat offset by improved results at Factiva, SmartMoney and Vedomosti.



The Companys share of equity in earnings of associated companies in 2003 was $2.9 million compared with losses of $0.5 million in 2002. Improved results at
SmartMoney, STOXX and F.F. Soucy were somewhat offset by a decline in earnings at Factiva and an increase in losses at CNBC International.



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##### Table of Contents

Income Taxes



The following table presents the effective income tax rates, net of minority interests:



|                                                                        |  |      |   |  |      |   |  |      |  
|----------------------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                                                        |  | 2004 |   |  | 2003 |   |  | 2002 |  
|Effective income tax rate                                               |  | 37.0 | % |  | 23.3 | % |  | 24.0 | %
|Effective income tax rate excluding items identified in the table below |  | 39.8 | % |  | 39.0 | % |  | 39.7 | %



The effective income tax rate over
these years was affected by a number of capital loss/gain transactions and certain income tax matters, which are detailed below.



|                                                       |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |             |      |              |  |   |                   |  |   |       |   |  |      |  
|------------------------------------------------------ |  | ----------- | ---- | - | ------------ | - | ----- | ----------------- |  | ---- | ----------- |  | - | ------------ | - |  | ----------------- | ----- | - | ----------- | ---- | ------------ |  | - | ----------------- |  | - | ----- | - |  | ---- | -
|                                                       |  | 2004        |      |   | 2003         |   |       | 2002              | 
|(dollars in millions)                                  |  | IncomeTaxes |      |   | PretaxIncome |   |       | EffectiveTax Rate |  |      | IncomeTaxes |  |   | PretaxIncome |   |  | EffectiveTax Rate |       |   | IncomeTaxes |      | PreTaxIncome |  |   | EffectiveTax Rate | 
|Reported                                               |  | $           | 58.6 |   |              | $ | 158.1 |                   |  | 37.0 | %           |  | $ | 51.7         |   |  | $                 | 222.3 |   |             | 23.3 | %            |  | $ | 63.7              |  | $ | 265.2 |   |  | 24.0 | %
|(net of minority interests)                            |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |             |      |              |  |   |                   |  |   |       |   |  |      |  
|                                                       |  |             |      |   |              |   |       |                   | 
|Adjusted to remove:                                    |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |             |      |              |  |   |                   |  |   |       |   |  |      |  
|Cantor guarantee                                       |  |             |      |   |              |   | (6.9  | )                 |  |      |             |  |   |              |   |  |                   | (9.5  | ) |             |      |              |  |   |                   |  |   | (11.9 | ) |  |      |  
|Gain on resolution of Telerate sale loss contingencies |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   | 59.8  |   |             |      |              |  |   |                   |  |   |       |   |  |      |  
|Sale of ONI properties                                 |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |             |      |              |  |   | 33.8              |  |   | 197.9 |   |  |      |  
|CNBC International capital gains                       |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |             |      |              |  |   |                   |  |   | 3.9   |   |  |      |  
|Certain income tax matters                             |  |             | (7.2 | ) |              |   |       |                   |  |      |             |  |   | (12.8        | ) |  |                   | 6.7   |   |             |      |              |  |   |                   |  |   |       |   |  |      |  
|                                                       |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |             |      |              |  |   |                   |  |   |       |   |  |      |  
|Adjusted                                               |  | $           | 65.8 |   |              | $ | 165.0 |                   |  | 39.8 | %           |  | $ | 64.5         |   |  | $                 | 165.3 |   |             | 39.0 | %            |  | $ | 29.9              |  | $ | 75.3  |   |  | 39.7 | %
|                                                       |  |             |      |   |              |   |       |                   |  |      |             |  |   |              |   |  |                   |       |   |             |      |              |  |   |                   |  |   |       |   |  |      |  



Capital Loss Carryforward



As of December 31, 2004, the Company had a capital loss carryforward
remaining of about $435 million (a deferred tax asset of about $165 million with a full valuation allowance). About $148 million of this loss carryforward is recognized for tax purposes and expires in 2006. The remaining $287 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 any such payment, the
resulting loss carryforward will be available for use five years from the year it is recognized.



The Company could not conclude that it was more likely than not it would realize any net tax savings from capital loss carryforward prior to their expiration and believes the full valuation allowance reserve was
appropriate at December 31, 2004.



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Liquidity and Capital Resources





Cash Flow Summary



|                                                    |  |      |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|(in millions)                                       |  | 2004 |        |   | 2003 |   |        | 2002 | 
|Net cash provided by operating activities           |  | $    | 251.9  |   |      | $ | 220.3  |      |  | $ | 146.3  |  
|Net cash (used in) provided by investing activities |  |      | (174.4 | ) |      |   | (216.0 | )    |  |   | 158.5  |  
|Net cash used in financing activities               |  |      | (82.2  | ) |      |   | (19.8  | )    |  |   | (285.7 | )
|Effect of currency exchange rate changes on cash    |  |      | (1.5   | ) |      |   | (0.4   | )    |  |   | (0.7   | )
|                                                    |  |      |        |   |      |   |        |      |  |   |        |  
|(Decrease) increase in cash and cash equivalents *  |  |      | (6.3   | ) |      |   | (15.8  | )    |  |   | 18.3   |  
|Cash and cash equivalents at beginning of the year  |  |      | 23.5   |   |      |   | 39.3   |      |  |   | 21.0   |  
|                                                    |  |      |        |   |      |   |        |      |  |   |        |  
|Cash and cash equivalents at December 31            |  | $    | 17.2   |   |      | $ | 23.5   |      |  | $ | 39.3   |  
|                                                    |  |      |        |   |      |   |        |      |  |   |        |  



|* | The sum of the individual amounts does not equal the total due to rounding.
|- | ---------------------------------------------------------------------------



Cash provided by operating activities in 2004 was $251.9 million, which was up $31.6 million, or 14%, from net cash provided by operations in 2003, primarily reflecting
higher operating income and increases in cash as a result of changes in working capital reflecting higher subscriptions received and lower payments related to employee benefits offset by higher income taxes paid in 2004 relative to 2003. Cash
provided by operations was $220.3 million in 2003, up $74 million, or 51%, from cash provided by operations of $146.3 million in 2002. The improvement was primarily the result of higher operating income coupled with lower income taxes paid,
partially offset by increased funding of $27.4 million in defined benefit pension plans.



Net cash used in investing activities was $174.4 million in 2004, mainly reflecting the business acquisitions totaling $98 million (mainly Alternative Investor for $85 million) and capital expenditures of $76 million.
Net cash used in investing activities was $216 million in 2003, compared with net cash provided by investing activities of $158.5 million in 2002. Net cash used in investing activities in 2003 primarily reflected the $146 million acquisition of
The Record of Stockton, California, capital expenditures of $55.9 million and the funding of equity investees. Net cash provided by investing activities in 2002 included pretax proceeds from the sales of the five Ottaway properties of $244
million and proceeds from an insurance claim of $16.9 million, net of clean-up costs, related to its World Financial Center property damage claim. Capital expenditures totaled $77.7 million in 2002.



Net cash used in financing activities in 2004 was $82 million, including the payment of $82
million in dividends to shareholders, and a net decrease in debt of $7 million partially offset by proceeds from sales under stock compensation plans of $11 million. Net cash used in financing activities was $20 million in 2003 compared with $286
million in 2002. Cash outlays in 2003 included the payment of $82 million in dividends to shareholders and the repurchase of shares of treasury stock of $21 million. Sources of cash from financing activities in 2003 included a net increase in debt
of $65 million, proceeds from sales under stock compensation plans of $12 million, as well as the receipt of $7 million from a minority shareholder to fund a subsidiary, net of distributions. Cash outlays in 2002 include $143 million to repurchase
3.2 million of the Companys shares, the payment of $84 million in dividends to shareholders and the net reduction in debt of $81 million.



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 (Cantor) 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.



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##### Table of Contents

As of December 31, 2004, the balance of the reserve for the contract guarantee was $260.7 million. The Company has
classified $219.3 million of this reserve as current based on the original due dates of the contract. Due to the stage of the lawsuit at December 31, 2004, 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.



Subsequent Event



On January 21, 2005, the Company completed its acquisition of MarketWatch, Inc. (MarketWatch) for a purchase price of approximately $538 million, including transaction costs. This represents a purchase
price of $18 per diluted common share and was financed by $439 million of commercial paper borrowings, with the balance funded in cash by the Company, including cash received from MarketWatch. The commercial paper borrowings, which were refinanced
in part with the proceeds of a $225 million 3.875% three-year bond offering that occurred during the first quarter of 2005, are supported by a $260 million 60-day revolving credit facility dated January 20, 2005 and $440 million of multi-year
revolving credit facilities.



In 2005, the Company expects its beginning cash
balance and cash provided by operations to be sufficient to meet its normal recurring operating commitments, fund capital expenditures of about $70 million and pay dividends. After funding capital expenditures and dividends, the Company anticipates
generating about $100 million of excess cash flow from operations, which it expects will be used to reduce its higher debt level as a result of the MarketWatch acquisition. As previously disclosed, a trial date for the Cantor contract guarantee
legal proceeding is set to begin in mid-2005. In the event there is an adverse judgment against the Company it would likely be appealed. If any significant amounts are ultimately considered due, they would likely be financed through issuance of
additional debt.



In addition to the bond offering mentioned above, if
necessary, the Companys liquidity requirements may be funded through the issuance of commercial paper, bank loans or long-term notes under a $300 million shelf registration statement filed with the Securities and Exchange Commission. In
addition to the 60 day credit facility for $260 million that expires on March 20, 2005, the Company can borrow up to $440 million under its multi-year credit facilities, $140 million through June 24, 2006, and $300 million through June 24, 2009. The
Companys borrowing capacity is limited by certain debt covenants, based on cash flow measures. As of year-end 2004, the Companys indebtedness was approximately $559 million less than the maximum borrowing allowed under the debt
covenants.



Total debt outstanding at December 31, 2004, which was in the form
of commercial paper, was $145.8 million, of which $135.8 million was classified as long-term, as it was the Companys intent to refinance this obligation on a long-term basis.



Following the announcement of the MarketWatch acquisition, the credit ratings agencies lowered our senior unsecured credit ratings. They are
as follows:



Credit Ratings



|                  |  |           |  |           
|----------------- |  | --------- |  | ----------
|                  |  | Long Term |  | Short Term
|Standard & Poors |  | A-        |  | A-2       
|Moodys           |  | A2        |  | P-1       
|Fitch             |  | A         |  | F1        





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##### Table of Contents

Contractual Obligations



The following table summarizes our outstanding contractual obligations, excluding the contractual guarantee to Cantor/MDC discussed above, as of December 31, 2004:



|                         |  |                        |     |           |   |           |  |                    |     |       |   |     |  |   |    
|------------------------ |  | ---------------------- | --- | --------- | - | --------- |  | ------------------ | --- | ----- | - | --- |  | - | ---
|                         |  | Payments due by period
|(in millions)            |  | 2005                   |     | 2006-2008 |   | 2009-2011 |  | 2012 andthereafter |     | Total
|Debt (1)                 |  | $                      | 146 |           |   |           |  |                    |     |       |   |     |  | $ | 146
|Lease commitments (2)    |  |                        | 53  |           | $ | 101       |  | $                  | 67  |       | $ | 92  |  |   | 313
|Purchase commitments (3) |  |                        | 98  |           |   | 205       |  |                    | 126 |       |   | 84  |  |   | 513
|                         |  |                        |     |           |   |           |  |                    |     |       |   |     |  |   |    
|Total                    |  | $                      | 297 |           | $ | 306       |  | $                  | 193 |       | $ | 176 |  | $ | 972
|                         |  |                        |     |           |   |           |  |                    |     |       |   |     |  |   |    



|(1) | Debt represents borrowings in the form of commercial paper, $136 million of which is classified as long-term because the Company has the intent and ability to refinance this
obligation on a long-term basis.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Minimum rental commitments under noncancellable leases comprise the majority of the lease obligations presented above. The Company expects to fund these commitments with existing
cash and cash flows from operations.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Purchase commitments primarily represent obligations to purchase newsprint and capital expenditures. The newsprint purchases reflect long-term commitments to purchase certain
minimum amounts of tonnage over time. The Company has discretion as to the timing of such newsprint purchases and the amounts presented are estimated based on 2005 newsprint prices. The Company expects to fund these commitments with existing cash
and cash flows from operations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Additional information regarding
our financial commitments at December 31, 2004 is provided in the Notes to our Financial Statements. See Note 4  Contract Guarantee, Note 7  Debt, Note 11  Pension and Other Postretirement Plans, and Note 12  Commitments and
Contingencies.





Market Risk



In December 2004, the
Company entered into foreign currency exchange forward contracts to exchange US$23.9 million for 12.5 million British pounds and US$18.7 million for 14.0 million euro.



These contracts, which expire ratably over 2005, 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. These contracts are entered into to protect against the risk that operating expenses will be adversely affected by devaluation in the U.S. dollar relative to
these currencies. 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 also enters into foreign currency forward exchange contracts to
limit the cash flow and earnings volatility that results from remeasuring certain foreign currency payables at prevailing exchange rates. The unrealized gains or losses of these forward contracts are recognized in Other, net in the income statement.
The forward contract acts as an economic hedge by increasing in value when the underlying foreign currency payable decreases in value and conversely decreases in value when the underlying foreign currency payable increases. As of December 31, 2004,
the Company had forward currency exchange contracts outstanding to exchange 11 million British pounds for $21.1 million, which are due to expire in the first quarter of 2005.



The Companys commercial paper outstanding of $145.8 million at December 31, 2004, is also subject to market risk as the debt reaches
maturity and is reissued at prevailing interest rates. At December 31, 2004, interest rates outstanding ranged from 1.72% to 2.38%, with a weighted-average of 2.06%. This debt matures in the first quarter of 2005.



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Recent Accounting Pronouncements



In May 2004, the FASB issued FASB Staff Position (FSP) 106-2, Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003 (Medicare Act) which supersedes FSP 106-1 issued in January 2004 with the same title (FSP 106-2). FSP 106-2 provides guidance on the accounting for the Medicare Act and is effective
for the first interim or annual period beginning after June 15, 2004. The Medicare Act became law in December 2003 and introduced both a Medicare prescription drug benefit and a federal subsidy to sponsors of retiree health-care plans that provide a
benefit that is at least actuarially equivalent to the Medicare benefit. The Company determined that its retiree health-care plans provide a benefit that is actuarially equivalent to the Medicare benefit. Accordingly, in the
second quarter of 2004, the Company remeasured its postretirement obligation as of January 1, 2004 factoring in this expected benefit from Medicare as a result of the adoption of FSP 106-2. The remeasurement resulted in a reduction of the
Companys accumulated postretirement benefit obligation by $24 million and reduced its annual 2004 postretirement expense by $3.6 million (a reduction of service cost by $1.2 million, interest cost by $1.5 million and recognized actuarial loss
by $0.9 million). See Note 11 for more information.



In December 2004, the FASB
issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS 123R). This statement eliminates the alternative to apply the intrinsic value measurement provisions of Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees (APB Opinion No. 25), to stock compensation awards issued to employees. Rather, FAS 123R requires companies to measure the cost of employee services received in exchange for an
award of equity instruments based on the grant-date fair value of the award. That cost will be recognized in the consolidated statement of income over the period during which an employee is required to provide services in exchange for the award,
usually the vesting period. There are various methods of adopting 123R and the Company has not yet determined which method it will use. FAS 123R will be effective for the Company beginning July 1, 2005.



In the fourth quarter of 2004, the Company, with approval from its Board of Directors,
announced the acceleration of 2.2 million stock options, representing all unvested options granted and outstanding after 2002. The Companys decision to accelerate the vesting of certain outstanding stock option grants was made as part of a
broad review of long-term incentive compensation in light of changes in market practices and upcoming accounting changes. Other changes to be implemented beyond accelerating the vesting of certain options include reducing overall equity grant
levels, a change in the mix of grants, and applying a three-year cliff vesting schedule to future grants of stock options. All in, the effect of these changes, combined with an expected July stock option expensing implementation date, is
expected to result in a $6 million increase in expense to the Company in 2005.





Critical Accounting Policies



The Companys discussion and analysis of its financial condition and results of operations are based upon the Companys consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Companys management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The Companys accounting policies affect its more significant judgments and estimates used in the preparation of its
financial statements. Actual results could differ from these estimates.



The
following are significant accounting policies of the Company:



Advertising
revenue, net of commissions, is recognized in the period in which the advertisement is displayed. The Companys advertising rate card reflects certain volume-based discounts, which require management to make certain estimates regarding future
advertising volume. These estimated rebates are recorded as a reduction of revenue in the period the advertisement is displayed and are revised as necessary based on actual volume realized. Online-related advertising revenue based on a minimum
number of impressions is recognized as impressions occur.





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##### Table of Contents

Revenue recognition from subscriptions to the Companys print publications and information services is recognized in
income as earned, pro rata on a per-issue basis, over the subscription period. Circulation revenue includes sales to retail outlets/newsstands, which are subject to returns. The Company records these retail sales upon delivery, net of estimated
returns. These estimated returns are based on historical return rates and are revised as necessary based on actual returns experienced. Costs in connection with the procurement of subscriptions are charged to expense as incurred. Revenue from
licensing the Dow Jones Averages includes both upfront one-time fees and ongoing revenue. Both upfront fees and ongoing licensing revenue are recognized in income as earned over the license period.



Accounts receivable includes an allowance for doubtful accounts, which is an estimate of
amounts that may not be collectible. This estimated allowance is based on historical trends, review of aging categories and the specific identification of certain customers that are at risk of not paying. Actual write-offs of bad debt have
historically been insignificant, less than 0.5% of revenues.



Certain costs and
related obligations of the Company are based on actuarial assumptions, including some of its pension plans and the cost of the Companys postretirement medical plan, which provides lifetime health care benefits to retirees who meet specified
length of service and age requirements. These benefit costs are expensed over the employees expected employment period. At December 31, 2004, the Companys postretirement retiree medical benefit obligation was $258.4 million, which is not
funded as it is the Companys policy to fund postretirement medical costs as claims are incurred. In determining the cost of retiree medical costs, some factors that management must consider include the expected increase in health care costs,
discount rates and turnover and mortality rates. The discount rate is based on the yield of long-term corporate bonds at December 31, while other assumptions are updated periodically based on recent actual trends. Increasing the assumed health care
cost trend rates by one percentage point in each year would have increased the accumulated postretirement benefit obligation by $51 million and the cost for 2004 by $5 million. Conversely, a one percentage point decline in assumed health care cost
trend rates would have lowered the benefit obligation at the end of 2004 by $42 million and the cost for 2004 by $4 million. A one quarter of one percentage point decrease in the Companys expected discount rate in 2004 would have increased
retiree medical expense by approximately $1 million.



The majority of the
Companys employees who meet specific length of service requirements are covered by defined contribution retirement plans. Substantially all employees who are not covered by these plans are covered by defined benefit pension plans based on
length of service and age requirements. At December 31, 2004, the Companys accumulated pension benefit obligation was $167.3 million, of which $159.4 million was funded. In determining the cost and obligation of the defined pension benefit
plans, management must consider such factors as the expected return on plan assets, discount rates and expected employee salary increases. While the Company believes its assumptions are appropriate, significant differences in actual experience or
changes in these assumptions would affect the calculation of its projected obligation and cost under the defined benefit pension and postretirement medical plans. The Company evaluates its actuarial assumptions annually. A one quarter of one
percentage point decrease in the expected long-term rate of return on the Companys plan assets in 2004 would have increased pension expense by approximately $0.3 million.



Management must use its judgment in assessing whether the carrying value of certain long-lived assets, cost-method investments, identifiable
intangibles and goodwill is impaired and if any asset is impaired, the extent of any such loss. Certain events or changes in circumstances may indicate that the carrying value may not be recoverable and require an impairment review. Based on that
review, if the carrying value of these assets exceeds fair value and is determined to not be recoverable, an impairment loss representing the amount of excess over its fair value would be recognized in income. Fair value estimates are based on
quoted market values in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including discounted value of estimated future cash flows.



Management also exercises judgment in determining the estimated useful life of long-lived
assets, specifically plant, property and equipment and certain intangible assets with a finite life. The Company depreciates the cost of buildings over 40 years; improvements to the buildings over 10 years; software over 3 to 5 years and machinery
and equipment over 3 to 25 years. The 25-year life is applicable to the Companys press equipment. The cost of leasehold improvements is depreciated over the lesser of the useful lives or the terms of the respective leases. Management bases its
judgment on estimated lives of these assets based on actual experienced length of service of similar assets and expert opinions. The Company also obtains third party appraisals to assist in determining whether an intangible asset has an indefinite
life.



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The Company maintains a stock incentive plan under the Dow Jones 2001 Long-Term Incentive Plan. This plan provides for
the grant of contingent stock rights, stock options, restricted stock, restricted stock units and other stock-based awards. The Company accounts for its stock-based compensation in accordance with Accounting Principles Board Opinion No. 25 (APB 25)
and its related interpretations. Under APB 25, pretax stock-based compensation charged to income principally in relation to the Companys contingent stock rights, restricted stock units and restricted stock awards was $8.7 million in 2004, $7.4
million in 2003 and $2.7 million in 2002. 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 earnings per share for
2004, 2003 and 2002 would have been reduced by roughly $.27 per share, $.19 per share and $.20 per share, respectively. See Notes 1 and 10 for additional details on our stock compensation plans.



Management must exercise judgment in assessing the likely outcome of contingencies including
those relating to tax matters, legal proceedings and other matters that have arisen in the ordinary course of business and those described in Note 4 to the financial statements. Both the timing and amount of the provisions made in the financial
statements and related disclosures represent managements judgment of likelihood, based on information available at the time and on the advice of legal counsel. Provisions made in the financial statements represent managements judgment of
likelihood based on information available at the time. Judicial or governmental bodies largely determine the outcome of these matters. With regard to tax matters, the ultimate resolution of these matters, either by determinations by these bodies or
other means, could be materially different from that assumed by the Company in making its provisions and related disclosures. At the time that these tax contingencies are resolved by tax examination or the expiration of the statute of limitations,
the Company adjusts its tax accounts accordingly.



The Company records a tax
valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Currently, the Company maintains a valuation allowance on deferred tax assets related to its capital loss carryforward. The Company has
considered ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. In the event the Company were to determine that it would be able to realize all or a portion of its net deferred tax assets, an
adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should the Company subsequently determine that it would not be able to realize all or a portion of its net deferred tax asset in the
future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made.





FORWARD-LOOKING STATEMENTS



The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements made by or on behalf of us. This document contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act)
and are intended to come within the safe harbor protection provided by those sections. The forward-looking statements are based upon managements current views and assumptions regarding future events and operating performance, and are
applicable only as of the dates of such statements. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.



By their nature, forward-looking statements involve risk and uncertainties that could cause
actual results to differ materially from anticipated results. Such risks and uncertainties include, but are not limited to:





Risks Relating to Our Business





Advertising revenues



We derive a majority of our
revenue from advertising, primarily in connection with our print publications and our online network of Web sites. Our overall performance is largely dependent on the operating performance of the global Wall Street Journal (including its
extended online and television brand and content), which, to a significant extent, is dependent upon business-to-business (B2B) advertising generated by the distinctive demographic profile of The Wall Street Journals
audience.



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Our advertising revenues are negatively impacted by economic downturns in any of our advertising markets, but
particularly by downturns in our core market, B2B advertising. We have recently experienced depressed levels of advertising in the B2B market, and B2B advertising buyers continue to make spending decisions increasingly closer to publication dates,
generally on a month-to-month basis. Our B2B advertising levels, particularly in technology and finance, which have typically represented approximately 40% of The Wall Street Journals advertising linage, may or may not return to
historical levels. We have experienced decreases in technology advertising, particularly computer software and communications advertising, which we believe may be a result of reduced corporate information technology spending and generally reduced
levels of technology company profits and share prices. We have also experienced decreases in financial advertising, including weakness in retail financial advertising, which we believe may be due to retail financial institutions focusing on reaching
more mass consumer audiences through advertisements in publications that target these audiences, and a decline in tombstone ads, which we believe may be a result of reduced deal activity and changing advertising practices.



Although we have taken initiatives (including the 2002 introduction of our Personal Journal
section of The Wall Street Journal and our new Weekend Edition, which will be a weekend publication of The Wall Street Journal beginning in September 2005) to attract more consumer advertising and other diversified advertising, we may
or may not be able to further penetrate these new consumer advertising segments. In particular, The Wall Street Journals broad national circulation limits our ability to provide certain local advertising to consumers, which advertising
is featured in the regional publications of some of our competitors. Furthermore, our new Weekend Edition may fail to generate anticipated advertising revenues, resulting in greater losses than are currently expected in its first two years of
operation. In addition, the new Weekend Edition may draw advertising away from our other consumer advertising sections, such as the Weekend Journal section of The Wall Street Journal (introduced in 1998) and Personal Journal, for consumer
advertising revenues.



Our community newspapers rely on advertising revenue
from local advertisers. These revenues may be negatively impacted by the condition of the economy in the areas where our community newspapers are circulated and by the advertising habits of large regional advertisers who may change their spending
patterns or go out of business.



Circulation revenues



Circulation revenues from our publications, in particular The Wall Street Journal,
are another significant source of revenue for us. Our circulation revenue may be impacted by competition from other publications and other forms of media. In addition, the nature of The Wall Street Journals circulation base, especially
its distinctive demographics (in particular, its influential and affluent audience that makes significant B2B spending decisions and spends heavily on personal consumption items), is an important factor in generating circulation and advertising
revenues. If we are unable to maintain our core demographic audience, our overall profitability could decline.



Our circulation revenues at The Wall Street Journal and community newspapers may be negatively impacted by the preferences of many younger consumers for news in new media formats and from untraditional sources
rather than from newspapers. If these younger consumers maintain these preferences as they age, this could, in turn, adversely affect the willingness of advertisers to place ads with us and/or the rates they are willing to pay.



Although we seek to cost-effectively maintain our circulation base and its distinctive
demographics (including by implementing content, organization and design changes to The Wall Street Journal), we may not be successful in doing so. In addition, we may incur additional costs to do so and we cannot assure you that we will be
able to recover these costs through increased circulation and advertising revenues.



Subscriptions



Certain of our electronic publishing
businesses, including Dow Jones Newswires, are subscriber-based and are vulnerable to losses in the number of subscribers. For example, Dow Jones Newswires could lose subscriptions, measured by the number of terminals carrying Dow Jones Newswires,
as a result of business consolidations and layoffs in the financial services industry. Similarly, WSJ.com, which currently is the largest paid subscription news site on the Internet, may not be able to continue to increase revenues through
growing the number of subscribers. Unlike WSJ.com, our competitors do not, for the most part, utilize a full online paid subscription model, and most remain free Web sites.



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Seasonality



Our results of operations are subject to seasonal fluctuations, which typically cause revenues in the third quarter (which includes the months of July and August) to be
lower than revenues in the remainder of the year.



Cost structure



We have done much cost-cutting over the last several years, but we
may not be able to continue limiting our expense growth. Factors that may impact our ability to control expense growth in the future include our prior cost cutting, the tightening of the labor market and the resulting risk of loss of key employees,
and our planned growth initiatives, such as the MarketWatch acquisition and the new Weekend Edition. If we are unable to continue to control expense growth in the future, there may be an adverse effect on our overall profitability.



Competition



All of our products and services face intense competition from other newspapers, national business magazines, television, trade
publications, newsletters, research reports and services, free and paid Internet sites, and other new media. We compete for advertising revenues, subscriptions and consumers, which include readers, online users and television viewers. Metropolitan
general interest newspapers and many small city or suburban papers carry business and financial content, as do many Internet-based services as well as television and radio. In addition, specialized magazines in the business and financial field, as
well as general news magazines, publish substantial amounts of business-related material. The Wall Street Journal also competes for advertising with non-business publications offering audiences of high demographic quality, such as technology
and lifestyle magazines. Circulation revenues at our community newspapers may be negatively impacted by local competition, including free publications. Nearly all of these other publications and services seek audiences and seek to sell advertising,
making them competitive with our publications and services.



Our efforts to
expand in Europe have been limited by substantial competition from local language publications, other international publications, and local and international television networks, as well as the limited nature of the foreign language market which we
serve. In Asia, our presence with our Pan-Asia publications may be threatened by developments within the region such that readers may prefer local language or local market publications. As the economies of the various individual Asian nations
develop over time, we may encounter further difficulties in continuing to appeal to a broader Pan-Asian audience.



Our Dow Jones Newswires business and financial news products are distributed through a limited number of vendors, which distribute our news over their platforms into
financial services companies, which receive our content by way of subscriptions with these vendors. Newswires has entered into a bundling arrangement to deliver a selection of our news on all Moneyline Telerate terminals worldwide; this arrangement
is important to Newswires international revenues and may be adversely affected by the impending acquisition by Reuters of the Moneyline Telerate business. Moreover, sales of our Dow Jones Newswire products may continue to be negatively
impacted by technological changes and changes in the brokerage industry, which have resulted in a diminishing reliance on real time news as business and financial news has become increasingly available via Internet-based publications and services.
In addition, as we strive to increase our international revenues from the Dow Jones Newswires business, we may not succeed given the competition from and subscribers desire for, local language news services.



There can be no assurance that we will be able to increase or to maintain the advertising,
readership, circulation or subscriptions market share that we currently enjoy. In addition, changes in the regulatory and technological environment are bringing about a global consolidation of media and telecommunications companies and convergence
among various forms of media. As a result, our operations could face increased competition from larger media entities.



Intellectual property



We rely on a combination of trademarks, trade names, copyrights, and other proprietary rights, as well as contractual arrangements, including licenses, to establish and
protect our intellectual property and brand names. We believe our proprietary trademarks and other intellectual property rights are important to our continued success and our competitive position.



Dow Jones Indexes licenses, sometimes exclusively, our proprietary indexes and trademarks to
exchanges and financial institutions for use as the basis of financial products. For example, Dow Jones has licensed the Dow Jones Industrial Average index and related trademarks to the American Stock Exchange as the basis of the DIAMONDS
exchange-traded fund. Two lawsuits relevant to the index licensing industry are pending in the U.S. District Court for the Southern District of New York. Each of these suits is testing an index providers ability to enforce its intellectual
property rights with respect to certain licensing activities. Although we are not a party to either lawsuit, if the index providers intellectual property rights are successfully challenged, our ability to license our own index-related property
for certain uses may be impaired and our revenues related to such licensing activities could be negatively impacted.



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Acquisitions



From time to time, we seek out strategic and financially attractive core-business acquisition opportunities. Such acquisitions may affect our costs, revenues,
profitability and financial position. Acquisitions, including our recent acquisition of MarketWatch, involve risks and uncertainties, including difficulties in integrating acquired operations, diversions of management resources and loss of key
employees, challenges with respect to operating new businesses, debt incurred in financing such acquisitions (including the related possible reduction in our credit ratings and increase in our cost of borrowing) and unanticipated problems and
liabilities.



New business opportunities and strategic alliances



There are substantial uncertainties associated with our efforts to
leverage our brands to develop new business opportunities and to generate advertising and other revenues from these products. Initial timetables for the introduction and development of new products or services may not be achieved and price and
profitability targets may not prove feasible. For example, we may be unable to successfully control expenses relating to launching our new Weekend Edition and may not achieve the gains from advertising revenues that we hope to achieve. We also face
challenges in our attempts to achieve new strategic alliances and to improve the growth and profitability of existing strategic alliances. For example, we occasionally make non-controlling minority investments in public and private entities. We may
have limited voting rights and, therefore, an inability to influence the direction of such entities. Therefore, the success of these ventures may be dependent upon the efforts of our partners, fellow investors and licensees. In addition, external
factors, such as the development of competitive alternatives and market response, may negatively impact the success of these new opportunities and alliances.



MDC/Cantor Fitzgerald legal proceeding



We are currently party to a legal proceeding with Market Data Corp. (MDC) and Cantor Fitzgerald Securities with respect to our obligations, if any, under a
guarantee issued to MDC and Cantor Fitzgerald Securities. The guarantee relates to certain annual minimum payments owed through October 2006 by Telerate under certain conditions for data acquired by Telerate from Cantor Fitzgerald
Securities and MDC under contracts entered into by Telerate when Telerate was a subsidiary of ours. We have established a reserve to cover payments we may need to make if we are required to perform under the guarantee to Cantor Fitzgerald Securities
and MDC. However, if we are required to make payments under this guarantee, whether pursuant to a judgment in the litigation or a settlement agreement, those payments would negatively impact our cash flow.



Labor relations



Approximately 28% of our full-time employees are unionized. As a result, we are required to negotiate the wages, salaries, benefits,
staffing levels and other terms with many of our employees collectively. Our results could be adversely affected if labor negotiations caused work interruptions or if we are unable to negotiate agreements on reasonable terms. In addition, in light
of our efforts to manage expenses, we may face difficulties in attracting and retaining qualified personnel, particularly as the labor market tightens and more opportunities are available elsewhere with higher wages.



Newsprint prices



Newsprint is our single most important raw material and represented approximately 7.5% of our total operating expenses in each of 2003 and
2004. The price of newsprint has historically been volatile. Consolidation in the North American newsprint industry has reduced the number of suppliers. This has led to paper mill closures and conversions to other grades of paper, which, in turn,
have decreased overall newsprint capacity and increased the likelihood of price increases in the future. Our operating results could be adversely affected if newsprint prices increase significantly.



World events



Our results of operations may be affected in various ways by events beyond our control, such as wars, political unrest, natural disasters
and acts of terrorism. The September 11th terrorist attacks in the United States and the war in Iraq each contributed to a downturn in the U.S. domestic economy that, in turn, resulted in a temporary decline in advertising. Similar events may occur
in the future and could have a material adverse effect on our operating results.



Risks relating to MarketWatch



In addition to the
acquisition-related risks described under Acquisitions above, in connection with our acquisition of MarketWatch, we face the risk that the market for online advertising will not grow as rapidly as we expect or that we will ultimately be
unable to capitalize on any such growth. Like our other online products and services, the MarketWatch business is vulnerable to the following risks and uncertainties, among others: competition for readers and advertising revenues; changes in demand
for its products and services, including its licensing business; fluctuations in traffic levels on its Web sites; and potential increased regulation, including with respect to privacy laws.





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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



CONSOLIDATED STATEMENTS OF INCOME

Dow Jones & Company

For the years ended December 31, 2004, 2003 and 2002



|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|(in thousands, except per share amounts)                  |  | 2004 |           |   | 2003 |   |           | 2002 | 
|Revenues:                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|Advertising                                               |  | $    | 946,325   |   |      | $ | 871,817   |      |  | $ | 877,681   |  
|Information services                                      |  |      | 328,708   |   |      |   | 286,863   |      |  |   | 281,220   |  
|Circulation and other                                     |  |      | 396,425   |   |      |   | 389,805   |      |  |   | 400,272   |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Total revenues                                            |  |      | 1,671,458 |   |      |   | 1,548,485 |      |  |   | 1,559,173 |  
|                                                          |  |      |          
|Expenses:                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|News, production and technology                           |  |      | 513,808   |   |      |   | 483,709   |      |  |   | 495,480   |  
|Selling, administrative and general                       |  |      | 584,714   |   |      |   | 540,529   |      |  |   | 559,947   |  
|Newsprint                                                 |  |      | 115,067   |   |      |   | 105,066   |      |  |   | 103,534   |  
|Print delivery costs                                      |  |      | 186,856   |   |      |   | 188,662   |      |  |   | 191,581   |  
|Depreciation and amortization                             |  |      | 104,907   |   |      |   | 106,014   |      |  |   | 109,738   |  
|Restructuring charges and September 11-related items, net |  |      | 3,932     |   |      |   | (18,408   | )    |  |   | 23,810    |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Operating expenses                                        |  |      | 1,509,284 |   |      |   | 1,405,572 |      |  |   | 1,484,090 |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Operating income                                          |  |      | 162,174   |   |      |   | 142,913   |      |  |   | 75,083    |  
|                                                          |  |      |          
|Other income (deductions):                                |  |      |           |   |      |   |           |      |  |   |           |  
|Investment income                                         |  |      | 520       |   |      |   | 7,771     |      |  |   | 400       |  
|Interest expense                                          |  |      | (3,740    | ) |      |   | (2,830    | )    |  |   | (3,083    | )
|Equity in earnings (losses) of associated companies       |  |      | 2,375     |   |      |   | 2,869     |      |  |   | (488      | )
|Gain on disposition of businesses and investments         |  |      | 3,260     |   |      |   | 18,699    |      |  |   | 197,925   |  
|Gain on resolution of Telerate sale loss contingencies    |  |      |           |   |      |   | 59,821    |      |  |   |           |  
|Contract guarantee                                        |  |      | (6,933    | ) |      |   | (9,523    | )    |  |   | (11,878   | )
|Other, net                                                |  |      | (1,571    | ) |      |   | 1,138     |      |  |   | (429      | )
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Income before income taxes and minority interests         |  |      | 156,085   |   |      |   | 220,858   |      |  |   | 257,530   |  
|Income taxes                                              |  |      | 58,578    |   |      |   | 51,704    |      |  |   | 63,741    |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Income before minority interests                          |  |      | 97,507    |   |      |   | 169,154   |      |  |   | 193,789   |  
|Minority interests in losses of subsidiaries              |  |      | 2,041     |   |      |   | 1,445     |      |  |   | 7,717     |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Net income                                                |  | $    | 99,548    |   |      | $ | 170,599   |      |  | $ | 201,506   |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Per share:                                                |  |      |           |   |      |   |           |      |  |   |           |  
|Net income:                                               |  |      |           |   |      |   |           |      |  |   |           |  
|Basic                                                     |  | $    | 1.22      |   |      | $ | 2.09      |      |  | $ | 2.41      |  
|Diluted                                                   |  |      | 1.21      |   |      |   | 2.08      |      |  |   | 2.40      |  
|                                                          |  |      |          
|Cash dividends                                            |  |      | 1.00      |   |      |   | 1.00      |      |  |   | 1.00      |  
|                                                          |  |      |          
|Weighted-average shares outstanding:                      |  |      |           |   |      |   |           |      |  |   |           |  
|Basic                                                     |  |      | 81,878    |   |      |   | 81,593    |      |  |   | 83,510    |  
|Diluted                                                   |  |      | 82,285    |   |      |   | 81,950    |      |  |   | 83,917    |  



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





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CONSOLIDATED BALANCE SHEETS

Dow Jones & Company

December 31, 2004 and 2003



|                                                                                                         |  |      |           |      |   |          
|-------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|(dollars in thousands)                                                                                   |  | 2004 |           | 2003
|Assets:                                                                                                  |  |      |           |      |   |          
|Current Assets:                                                                                          |  |      |           |      |   |          
|Cash and cash equivalents                                                                                |  | $    | 17,237    |      | $ | 23,514   
|Accounts receivable  trade, net of allowance for doubtful accounts of $5,528 in 2004 and $5,229 in 2003 |  |      | 168,497   |      |   | 157,750  
|Accounts receivable  other                                                                              |  |      | 23,282    |      |   | 17,522   
|Newsprint inventory                                                                                      |  |      | 9,402     |      |   | 12,315   
|Prepaid expenses                                                                                         |  |      | 22,471    |      |   | 20,055   
|Deferred income taxes                                                                                    |  |      | 13,025    |      |   | 14,723   
|                                                                                                         |  |      |           |      |   |          
|Total current assets                                                                                     |  |      | 253,914   |      |   | 245,879  
|                                                                                                         |  |     
|Investments in associated companies, at equity                                                           |  |      | 88,911    |      |   | 89,230   
|                                                                                                         |  |     
|Other investments                                                                                        |  |      | 14,302    |      |   | 14,558   
|                                                                                                         |  |     
|Plant, property and equipment, at cost:                                                                  |  |      |           |      |   |          
|Land                                                                                                     |  |      | 22,166    |      |   | 22,173   
|Buildings and improvements                                                                               |  |      | 439,125   |      |   | 431,365  
|Equipment                                                                                                |  |      | 1,227,249 |      |   | 1,243,122
|Construction in progress                                                                                 |  |      | 34,307    |      |   | 35,214   
|                                                                                                         |  |      |           |      |   |          
|                                                                                                         |  |      | 1,722,847 |      |   | 1,731,874
|Less, accumulated depreciation                                                                           |  |      | 1,062,823 |      |   | 1,042,590
|                                                                                                         |  |      |           |      |   |          
|Plant, property and equipment, net                                                                       |  |      | 660,024   |      |   | 689,284  
|                                                                                                         |  |     
|Goodwill                                                                                                 |  |      | 245,558   |      |   | 153,320  
|                                                                                                         |  |     
|Other intangible assets, less accumulated amortization of $8,111 in 2004 and $3,138 in 2003              |  |      | 88,887    |      |   | 70,124   
|                                                                                                         |  |     
|Deferred income taxes                                                                                    |  |      | 13,755    |      |   | 17,394   
|                                                                                                         |  |     
|Other assets                                                                                             |  |      | 14,852    |      |   | 24,365   
|                                                                                                         |  |      |           |      |   |          
|Total assets                                                                                             |  | $    | 1,380,203 |      | $ | 1,304,154
|                                                                                                         |  |      |           |      |   |          





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CONSOLIDATED BALANCE SHEETS

Dow Jones & Company

December 31, 2004 and 2003



|                                                                                                                                                           |  |      |           |   |      |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|(dollars in thousands)                                                                                                                                     |  | 2004 |           |   | 2003 |  
|Liabilities:                                                                                                                                               |  |      |           |   |      |   |           |  
|Current Liabilities:                                                                                                                                       |  |      |           |   |      |   |           |  
|Short-term borrowings                                                                                                                                      |  | $    | 9,998     |   |      |   |           |  
|Accounts payable - trade                                                                                                                                   |  |      | 68,191    |   |      | $ | 65,732    |  
|Accrued wages, salaries and commissions                                                                                                                    |  |      | 75,926    |   |      |   | 63,240    |  
|Retirement plan contributions payable                                                                                                                      |  |      | 24,350    |   |      |   | 24,224    |  
|Other payables                                                                                                                                             |  |      | 59,947    |   |      |   | 71,287    |  
|Contract guarantee obligation                                                                                                                              |  |      | 219,257   |   |      |   | 164,642   |  
|Income taxes                                                                                                                                               |  |      | 43,211    |   |      |   | 32,987    |  
|Unearned revenue                                                                                                                                           |  |      | 215,638   |   |      |   | 191,411   |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total current liabilities                                                                                                                                  |  |      | 716,518   |   |      |   | 613,523   |  
|                                                                                                                                                           |  |     
|Long-term debt                                                                                                                                             |  |      | 135,845   |   |      |   | 153,110   |  
|Deferred compensation, principally postretirement benefit obligation                                                                                       |  |      | 312,925   |   |      |   | 288,364   |  
|Contract guarantee obligation                                                                                                                              |  |      | 41,402    |   |      |   | 89,083    |  
|Other noncurrent liabilities                                                                                                                               |  |      | 19,140    |   |      |   | 23,834    |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total liabilities                                                                                                                                          |  |      | 1,225,830 |   |      |   | 1,167,914 |  
|                                                                                                                                                           |  |     
|Commitments and contingent liabilities (Note 12)                                                                                                           |  |      |           |   |      |   |           |  
|                                                                                                                                                           |  |     
|Minority interests in subsidiaries                                                                                                                         |  |      | 3,830     |   |      |   | 6,579     |  
|                                                                                                                                                           |  |     
|Stockholders Equity:                                                                                                                                      |  |      |           |   |      |   |           |  
|Common stock, par value $1.00 per share; authorized 135,000,000 shares; issued 81,572,497 shares in 2004 and 81,493,687 shares in
2003                     |  |      | 81,572    |   |      |   | 81,494    |  
|Class B common stock, convertible, par value $1.00 per share; authorized 25,000,000 shares; issued 20,608,524 shares in 2004 and 20,687,333
shares in 2003 |  |      | 20,609    |   |      |   | 20,687    |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|                                                                                                                                                           |  |      | 102,181   |   |      |   | 102,181   |  
|Additional paid-in capital                                                                                                                                 |  |      | 124,082   |   |      |   | 122,012   |  
|Retained earnings                                                                                                                                          |  |      | 839,446   |   |      |   | 821,733   |  
|Accumulated other comprehensive income, net of taxes:                                                                                                      |  |      |           |   |      |   |           |  
|Unrealized gain on investments                                                                                                                             |  |      | 4,949     |   |      |   | 5,683     |  
|Unrealized gain on hedging                                                                                                                                 |  |      | 227       |   |      |   | 453       |  
|Foreign currency translation adjustment                                                                                                                    |  |      | 6,826     |   |      |   | 3,817     |  
|Minimum pension liability                                                                                                                                  |  |      | (13,942   | ) |      |   | (223      | )
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|                                                                                                                                                           |  |      | 1,063,769 |   |      |   | 1,055,656 |  
|Less, treasury stock, at cost; 20,136,426 shares in 2004 and 20,472,620 shares in 2003                                                                     |  |      | 913,226   |   |      |   | 925,995   |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total stockholders equity                                                                                                                                 |  |      | 150,543   |   |      |   | 129,661   |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total liabilities and stockholders equity                                                                                                                 |  | $    | 1,380,203 |   |      | $ | 1,304,154 |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  



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



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##### Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

Dow Jones & Company

For the years ended December 31, 2004, 2003 and 2002



|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|(in thousands)                                                                    |  | 2004 |          |   | 2003 |   |          | 2002 | 
|Operating activities:                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net income                                                                        |  | $    | 99,548   |   |      | $ | 170,599  |      |  | $ | 201,506  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |          |   |      |   |          |      |  |   |          |  
|Contract guarantee                                                                |  |      | 6,933    |   |      |   | 9,523    |      |  |   | 11,878   |  
|Depreciation                                                                      |  |      | 99,934   |   |      |   | 104,173  |      |  |   | 108,666  |  
|Amortization of intangibles                                                       |  |      | 4,973    |   |      |   | 1,841    |      |  |   | 1,072    |  
|Gain on disposition of businesses and investments                                 |  |      | (3,260   | ) |      |   | (18,699  | )    |  |   | (197,925 | )
|Gain on resolution of Telerate sale loss contingencies                            |  |      |          |   |      |   | (59,821  | )    |  |   |          |  
|Minority interests in losses of subsidiaries                                      |  |      | (2,041   | ) |      |   | (1,445   | )    |  |   | (7,717   | )
|Equity in (earnings) losses of associated companies, net of distributions         |  |      | 9,219    |   |      |   | 7,233    |      |  |   | 9,761    |  
|Changes in assets and liabilities, net of acquisitions:                           |  |      |          |   |      |   |          |      |  |   |          |  
|Accounts receivable                                                               |  |      | (9,837   | ) |      |   | (7,812   | )    |  |   | 9,065    |  
|Other current assets                                                              |  |      | (4,584   | ) |      |   | (2,157   | )    |  |   | 1,468    |  
|Unearned revenue                                                                  |  |      | 10,811   |   |      |   | (1,234   | )    |  |   | (10,044  | )
|Accounts payable and accrued liabilities                                          |  |      | 14,780   |   |      |   | (6,754   | )    |  |   | (8,273   | )
|Income taxes                                                                      |  |      | 13,281   |   |      |   | (6,560   | )    |  |   | (23,574  | )
|Deferred taxes                                                                    |  |      | 5,442    |   |      |   | 45,524   |      |  |   | 31,396   |  
|Deferred compensation                                                             |  |      | 16,510   |   |      |   | 23,545   |      |  |   | 30,319   |  
|Other noncurrent assets                                                           |  |      | (8,367   | ) |      |   | (25,144  | )    |  |   | (408     | )
|Other noncurrent liabilities                                                      |  |      | (2,797   | ) |      |   | (10,575  | )    |  |   | (9,750   | )
|Other, net                                                                        |  |      | 1,364    |   |      |   | (1,925   | )    |  |   | (1,138   | )
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Net cash provided by operating activities                                         |  |      | 251,909  |   |      |   | 220,312  |      |  |   | 146,302  |  
|                                                                                  |  |      |         
|Investing activities:                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Additions to plant, property and equipment                                        |  |      | (76,003  | ) |      |   | (55,941  | )    |  |   | (77,653  | )
|Disposition of plant, property and equipment                                      |  |      | 2,030    |   |      |   | 3,759    |      |  |   | 355      |  
|Proceeds from property damage insurance claim, net                                |  |      |          |   |      |   | 1,271    |      |  |   | 16,918   |  
|Businesses and investments acquired                                               |  |      | (97,674  | ) |      |   | (149,135 | )    |  |   | (11,815  | )
|Funding of equity investees, net                                                  |  |      | (10,962  | ) |      |   | (18,878  | )    |  |   | (18,972  | )
|Disposition of businesses and investments                                         |  |      | 6,514    |   |      |   |          |      |  |   | 243,592  |  
|Other, net                                                                        |  |      | 1,683    |   |      |   | 2,950    |      |  |   | 6,038    |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Net cash (used in) provided by investing activities                               |  |      | (174,412 | ) |      |   | (215,974 | )    |  |   | 158,463  |  
|                                                                                  |  |      |         
|Financing activities:                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash dividends                                                                    |  |      | (81,835  | ) |      |   | (81,586  | )    |  |   | (83,649  | )
|Increase in long-term debt                                                        |  |      | 105,313  |   |      |   | 117,317  |      |  |   | 58,036   |  
|Reduction of long-term debt                                                       |  |      | (122,578 | ) |      |   | (57,144  | )    |  |   | (139,057 | )
|Short-term borrowing                                                              |  |      | 9,998    |   |      |   |          |      |  |   |          |  
|Book overdraft                                                                    |  |      | (4,547   | ) |      |   | 4,547    |      |  |   |          |  
|Proceeds from sales under stock compensation plans                                |  |      | 11,418   |   |      |   | 11,661   |      |  |   | 16,671   |  
|Purchase of treasury stock, net of put premiums                                   |  |      |          |   |      |   | (21,135  | )    |  |   | (143,477 | )
|Contribution from minority partner, net                                           |  |      |          |   |      |   | 6,582    |      |  |   | 5,737    |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Net cash used in financing activities                                             |  |      | (82,231  | ) |      |   | (19,758  | )    |  |   | (285,739 | )
|                                                                                  |  |      |         
|Effect of currency exchange rate changes on cash                                  |  |      | (1,543   | ) |      |   | (412     | )    |  |   | (706     | )
|                                                                                  |  |      |         
|(Decrease) increase in cash and cash equivalents                                  |  |      | (6,277   | ) |      |   | (15,832  | )    |  |   | 18,320   |  
|Cash and cash equivalents at beginning of year                                    |  |      | 23,514   |   |      |   | 39,346   |      |  |   | 21,026   |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Cash and cash equivalents at end of year                                          |  | $    | 17,237   |   |      | $ | 23,514   |      |  | $ | 39,346   |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  



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



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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Dow Jones & Company

For the years ended December 31, 2004, 2003 and 2002





|                                                               |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  
|-------------------------------------------------------------- |  | ----------- | ------ | ------------------ | - | ------ | ------------------------ |  | ------ | ---------------- | - | ----- | --------------------------------------------- | ------- | - | -------------- | - | ------ | - |  | ----------- | - |  | - | -------- | - |  | - | -------- | -
|(dollars in thousands, except per share amounts)               |  | CommonStock |        | Class BCommonStock |   |        | AdditionalPaid-inCapital |  |        | RetainedEarnings |   |       | Accumulated Other Comprehensive (Loss) income |         |   | Treasury Stock |   |        |   | 
|                                                               |  |             |        |                    |   | Shares |                          |  | Amount |                  |   | Total |                                              
|Balance, December 31, 2001                                     |  | $           | 81,287 |                    | $ | 20,894 |                          |  | $      | 127,846          |   |       | $                                             | 614,863 |   |                | $ | (1,299 | ) |  | (17,549,237 | ) |  | $ | (801,814 | ) |  | $ | 41,777   |  
|                                                               |  |             |        |                    |   |        |                          | 
|Net income  2002                                              |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               | 201,506 |   |                |   |        |   |  |             |   |  |   |          |   |  |   | 201,506  |  
|Unrealized gain on investments                                 |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | 437    |   |  |             |   |  |   |          |   |  |   | 437      |  
|Unrealized gain on hedging                                     |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | 2,059  |   |  |             |   |  |   |          |   |  |   | 2,059    |  
|Translation adjustment                                         |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | 2,693  |   |  |             |   |  |   |          |   |  |   | 2,693    |  
|Minimum pension liability, net of deferred taxes of $6,609     |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | (9,979 | ) |  |             |   |  |   |          |   |  |   | (9,979   | )
|                                                               |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  
|Comprehensive income                                           |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   | 196,716  |  
|                                                               |  |             |        |                    |   |        |                          | 
|Dividends, $1.00 per share                                     |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               | (83,649 | ) |                |   |        |   |  |             |   |  |   |          |   |  |   | (83,649  | )
|Conversion of class B common stock into common stock           |  |             | 118    |                    |   | (118   | )                        |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  
|Sales under stock compensation plans                           |  |             |        |                    |   |        |                          |  |        | (5,738           | ) |       |                                               |         |   |                |   |        |   |  | 534,139     |   |  |   | 26,234   |   |  |   | 20,496   |  
|Purchase of treasury stock                                     |  |             |        |                    |   |        |                          |  |        | (1,463           | ) |       |                                               |         |   |                |   |        |   |  | (3,249,595  | ) |  |   | (143,306 | ) |  |   | (144,769 | )
|                                                               |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  
|Balance, December 31, 2002                                     |  | $           | 81,405 |                    | $ | 20,776 |                          |  | $      | 120,645          |   |       | $                                             | 732,720 |   |                | $ | (6,089 | ) |  | (20,264,693 | ) |  | $ | (918,886 | ) |  | $ | 30,571   |  
|                                                               |  |             |        |                    |   |        |                          | 
|Net income  2003                                              |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               | 170,599 |   |                |   |        |   |  |             |   |  |   |          |   |  |   | 170,599  |  
|Unrealized gain on investments                                 |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | 4,118  |   |  |             |   |  |   |          |   |  |   | 4,118    |  
|Unrealized gain on hedging                                     |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | 453    |   |  |             |   |  |   |          |   |  |   | 453      |  
|Translation adjustment, net of deferred taxes of $2,055        |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | 3,551  |   |  |             |   |  |   |          |   |  |   | 3,551    |  
|Minimum pension liability, net of deferred taxes of $6,471     |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | 9,756  |   |  |             |   |  |   |          |   |  |   | 9,756    |  
|Adjustment for realized gain on hedging included in net income |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   | (2,059 | ) |  |             |   |  |   |          |   |  |   | (2,059   | )
|                                                               |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  
|Comprehensive income                                           |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   | 186,418  |  
|                                                               |  |             |        |                    |   |        |                          | 
|Dividends, $1.00 per share                                     |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               | (81,586 | ) |                |   |        |   |  |             |   |  |   |          |   |  |   | (81,586  | )
|Conversion of class B common stock into common stock           |  |             | 89     |                    |   | (89    | )                        |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  
|Sales under stock compensation plans                           |  |             |        |                    |   |        |                          |  |        | 1,367            |   |       |                                               |         |   |                |   |        |   |  | 347,623     |   |  |   | 12,734   |   |  |   | 14,101   |  
|Purchase of treasury stock                                     |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  | (555,550    | ) |  |   | (19,843  | ) |  |   | (19,843  | )
|                                                               |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  
|Balance, December 31, 2003                                     |  | $           | 81,494 |                    | $ | 20,687 |                          |  | $      | 122,012          |   |       | $                                             | 821,733 |   |                | $ | 9,730  |   |  | (20,472,620 | ) |  | $ | (925,995 | ) |  | $ | 129,661  |  
|                                                               |  |             |        |                    |   |        |                          |  |        |                  |   |       |                                               |         |   |                |   |        |   |  |             |   |  |   |          |   |  |   |          |  



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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Dow Jones & Company

For the years ended
December 31, 2004, 2003 and 2002





|                                                               |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   |         |       |  |             |   |  |   |          |   |  |   |         |  
|-------------------------------------------------------------- |  | ----------- | ------ | ------------------ | - | ------ | ------------------------ |  | ---------------- | ------- |  | ------------------------------------------ | ------- | - | -------------- | - | ------- | ----- |  | ----------- | - |  | - | -------- | - |  | - | ------- | -
|(dollars in thousands, except per share amounts)               |  | CommonStock |        | Class BCommonStock |   |        | AdditionalPaid-inCapital |  | RetainedEarnings |         |  | AccumulatedOtherComprehensive(Loss) income |         |   | Treasury Stock |   |         | Total | 
|                                                               |  |             |        |                    |   | Shares |                          |  | Amount           |         | 
|Balance, December 31, 2003                                     |  | $           | 81,494 |                    | $ | 20,687 |                          |  | $                | 122,012 |  | $                                          | 821,733 |   |                | $ | 9,730   |       |  | (20,472,620 | ) |  | $ | (925,995 | ) |  | $ | 129,661 |  
|                                                               |  |             |        |                    |   |        |                          | 
|Net income  2004                                              |  |             |        |                    |   |        |                          |  |                  |         |  |                                            | 99,548  |   |                |   |         |       |  |             |   |  |   |          |   |  |   | 99,548  |  
|Unrealized gain (loss) on investments                          |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   | (734    | )     |  |             |   |  |   |          |   |  |   | (734    | )
|Unrealized gain on hedging                                     |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   | 227     |       |  |             |   |  |   |          |   |  |   | 227     |  
|Translation adjustment, net of deferred taxes of $1,620        |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   | 3,009   |       |  |             |   |  |   |          |   |  |   | 3,009   |  
|Minimum pension liability, net of deferred taxes of $9,808     |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   | (13,719 | )     |  |             |   |  |   |          |   |  |   | (13,719 | )
|Adjustment for realized gain on hedging included in net income |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   | (453    | )     |  |             |   |  |   |          |   |  |   | (453    | )
|                                                               |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   |         |       |  |             |   |  |   |          |   |  |   |         |  
|Comprehensive income                                           |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   |         |       |  |             |   |  |   |          |   |  |   | 87,878  |  
|                                                               |  |             |        |                    |   |        |                          | 
|Dividends, $1.00 per share                                     |  |             |        |                    |   |        |                          |  |                  |         |  |                                            | (81,835 | ) |                |   |         |       |  |             |   |  |   |          |   |  |   | (81,835 | )
|Conversion of class B common stock into common stock           |  |             | 78     |                    |   | (78    | )                        |  |                  |         |  |                                            |         |   |                |   |         |       |  |             |   |  |   |          |   |  |   |         |  
|Sales under stock compensation plans                           |  |             |        |                    |   |        |                          |  |                  | 2,070   |  |                                            |         |   |                |   |         |       |  | 336,194     |   |  |   | 12,769   |   |  |   | 14,839  |  
|                                                               |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   |         |       |  |             |   |  |   |          |   |  |   |         |  
|Balance, December 31, 2004                                     |  | $           | 81,572 |                    | $ | 20,609 |                          |  | $                | 124,082 |  | $                                          | 839,446 |   |                | $ | (1,940  | )     |  | (20,136,426 | ) |  | $ | (913,226 | ) |  | $ | 150,543 |  
|                                                               |  |             |        |                    |   |        |                          |  |                  |         |  |                                            |         |   |                |   |         |       |  |             |   |  |   |          |   |  |   |         |  



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



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NOTES TO FINANCIAL STATEMENTS





NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





NATURE OF OPERATIONS- Dow Jones & Company is a global provider of business and
financial news and information through newspapers, newswires, newsletters, magazines, the Internet, television and radio stations. In addition, the Company owns certain general-interest community newspapers throughout the U.S. Advertising revenue is
the Companys major revenue source.



THE CONSOLIDATED FINANCIAL
STATEMENTSinclude the accounts of the Company and its majority-owned subsidiaries. All significant intercompany transactions are eliminated in consolidation. The equity method of accounting is used for investments in other companies in which
the Company has significant influence; generally this represents common stock ownership or partnership equity of at least 20% and not more than 50% (see Note 6).



RECLASSIFICATIONS of certain amounts for prior years have been recorded to conform to the current year presentation.



CASH EQUIVALENTS are highly liquid investments with a maturity of three months or less
when purchased.





ACCOUNTS RECEIVABLEare reported net of an allowance for doubtful accounts, which is an estimate of amounts that may not be collectible. The Company extends credit to advertisers, subscribers and certain other
customers based on an evaluation of the financial condition of the customer. Collateral is not generally required from customers. The allowance for doubtful accounts is based on historical trends, review of aging categories and the specific
identification of certain customers that are at risk of not paying. Historically, actual write-offs of bad debt have been insignificant, less than 0.5% of revenues.



NEWSPRINT INVENTORYis stated at the lower of cost or market. The cost of newsprint is computed by the last-in, first-out (LIFO)
method. If newsprint inventory had been valued by the average cost method, it would have been approximately $7.7 million and $6.9 million higher in 2004 and 2003, respectively.



INVESTMENTS in marketable equity securities, all of which are classified as available for sale, are carried at their market value in
Other Investments on the consolidated balance sheets. The unrealized gains or losses from these investments are recorded directly to Stockholders Equity. Any decline in market value below the investments original cost that is determined
to be other-than-temporary as well as any realized gains or losses would be recognized in income (see Note 14).



PLANT, PROPERTYAND EQUIPMENT are recorded at cost and depreciation is computed using straight-line or declining-balance methods over the estimated useful
lives: 10 to 40 years for building and improvements, 3 to 25 years for machinery and equipment and 3 to 5 years for software. The 25-year life is applicable to the Companys press equipment. The cost of leasehold improvements is amortized over
the lesser of the useful lives or the terms of the respective leases. Upon retirement or sale, the cost of disposed assets and the related accumulated depreciation are deducted from the respective accounts and the resulting gain or loss is included
in income. The cost of construction of certain long-term assets includes capitalized interest, which is amortized over the life of the related assets. Interest capitalized in 2004, 2003 and 2002 was insignificant. Maintenance and repairs are charged
to expense as incurred. Major renewals, betterments and additions are capitalized.



GOODWILL AND OTHER INTANGIBLES - As of January 1, 2002, the Company adopted the provisions of SFAS 142, Goodwill and Other Intangible Assets. SFAS 142 requires that an intangible asset that is acquired either individually
or with a group of other assets be initially recognized and measured based on fair value. An intangible with a finite life is amortized over its useful life, while intangibles with an indefinite life, including goodwill, are not amortized.



The Company tests goodwill and other indefinite-lived intangible asset values
at least annually for impairment. The balance of goodwill and other intangibles is assigned to a reporting unit, which is defined as an operating segment or one level below the operating segment. To determine whether an impairment exists, the
carrying value of the reporting unit is compared with its fair value. An impairment loss would be recognized to the extent that the carrying value of the reporting unit exceeded its fair value. Fair value estimates are based on quoted market values
in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including discounted value of estimated future cash flows, market multiples or appraised valuations by
experts.



Other intangible assets include acquired subscription accounts, which
are amortized over 2 to 25 years, acquired advertising accounts are amortized over 3 to 12 years, database intangibles are amortized over 6 years and other amortizable intangibles, including conference sponsorships are amortized over 6 years. Other
intangibles not subject to amortization consist principally of masthead and tradenames (see Note 5).



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DEFERRED INCOME TAXES are provided for temporary differences in bases between financial statement and income tax
assets and liabilities. Deferred income taxes are recalculated annually at tax rates then in effect. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Currently,
the Company maintains a tax valuation allowance on deferred tax assets related to its capital loss carryforward. While the Company has considered ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance,
in the event the Company were to determine that it would be able to realize all or a portion of its net deferred tax assets, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should
the Company subsequently determine that it would not be able to realize all or a portion of its net deferred tax assets in the future, an adjustment to the deferred tax asset would be charged to income in the period such determination was made (see
Note 8).



FOREIGN CURRENCY TRANSLATION of assets and liabilities is
determined at the appropriate year-end exchange rates, while results of operations are translated at the average rates of exchange in effect throughout the year. The resultant translation adjustments for subsidiaries whose functional currency is not
the U.S. dollar are recorded directly to comprehensive income in Stockholders Equity. Gains or losses arising from remeasurement of financial statements for foreign subsidiaries where the U.S. dollar is the functional currency as well as from
all foreign currency transactions are included in income. Foreign exchange included in Other, net in the income statement totaled a loss of $1.3 million in 2004, a gain of $0.1 million in 2003 and a loss of $0.4 million in 2002.



FOREIGN CURRENCY-EXCHANGE CONTRACTS are designated as cash flow hedges of anticipated
operating expenses that are denominated in foreign currencies. Revenues of the Company are largely collected in U.S. dollars. These contracts are entered into to protect against the risk that such expenses will be adversely affected by devaluation
in the U.S. dollar relative to the currencies hedged. 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. Unrealized gains or losses, arising from changes in fair value, are recorded as a component of comprehensive income. Hedge effectiveness for these foreign currency-exchange contracts is assessed, at least quarterly,
by measuring the correlation of the contract to the expected future cash flows (see Note 14).



REVENUE from advertising, which is net of commissions, is recognized in the period in which the advertisement is displayed. The Companys advertising rate card reflects certain volume-based discounts,
which require management to make certain estimates regarding future advertising volume. These estimated rebates are recorded as a reduction of revenue in the period the advertisement is displayed and are revised as necessary based on actual volume
realized. Advertising revenue based on a minimum number of impressions is recognized as impressions occur. Revenue from subscriptions to the Companys print publications and information services is recognized in income as earned,
pro rata on a per-issue basis, over the subscription period. Revenue from licensing the Dow Jones Averages includes both upfront one-time fees and ongoing revenue. Both upfront fees and ongoing licensing revenue are recognized in income as earned
over the license period.



ADVERTISING COSTS, which include circulation
marketing as well as trade advertising, are expensed as incurred. Advertising costs included in selling, administrative and general expenses were $83.1 million in 2004, $73.3 million in 2003 and $80.4 million in 2002.



RESEARCH AND DEVELOPMENT expenditures, which primarily relate to software development
for various operations of the Company, are charged to expense as incurred. Research and development (R&D) expenses were $32 million in 2004, $29.7 million in 2003 and $31.2 million in 2002.



PENSION AND OTHER POSTRETIREMENT PLANS - The Company provides retirement benefits to a
majority of its employees through defined contribution plans based on compensation levels. The Company matches employee contributions up to a determined percentage. The defined contribution plans are funded currently. Some of the Companys
subsidiaries provide a defined benefit plan based on length of service and compensation. The Company also sponsors a defined benefit postretirement medical plan to certain retirees who meet specific length of service and age requirements. It is the
Companys policy to fund postretirement benefits as medical claims are incurred. The estimated cost for both the defined pension benefit and the postretirement medical plans, which is actuarially derived, is recorded over the employees
expected service period (see Note 11). The measurement date used for the majority of plan assets and defined benefit obligations is December 31.



STOCK-BASED COMPENSATION - 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. Under APB 25, pretax stock-based compensation charged to income, principally in relation to the Companys contingent stock rights, restricted stock units and
restricted stock awards, was $8.7 million in 2004, $7.4 million in 2003 and $2.7 million in 2002 (see Note 10).



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In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based
Payment (FAS 123R). This statement eliminates the alternative to apply the intrinsic value measurement provisions of APB 25 to stock compensation awards issued to employees. Rather, FAS 123R requires companies to measure the cost of employee
services received in exchange for an award of equity instruments based on the grant-date fair value of the award. That cost will be recognized in the consolidated statements of income over the period during which an employee is required to provide
services in exchange for the award, usually the vesting period. FAS 123R permits a prospective or two modified versions of retrospective application under which financial statements for prior periods are adjusted on a basis consistent with the pro
forma disclosures required for those periods by the original SFAS No. 123. The Company is required to adopt the provisions of FAS 123R effective July 1, 2005, at which time the Company will begin recognizing an expense for unvested share-based
compensation that has been issued or will be issued after that date. Under the retroactive options, prior periods may be restated either as of the beginning of the year of adoption, January 1, 2005 for the Company, or for all periods presented. The
Company has not yet finalized its decision concerning the transition option it will utilize to adopt FAS 123R.



In the fourth quarter of 2004, the Company, with approval from its Board of Directors, announced the acceleration of 2.2 million stock options, representing all unvested options granted and outstanding starting after
2002. The Companys decision to accelerate the vesting of certain outstanding stock option grants was made as part of a broad review of long-term incentive compensation in light of changes in market practices and upcoming accounting changes.
Other changes to be implemented beyond accelerating the vesting of certain options include reducing overall equity grant levels, a change in the mix of grants, and applying a three-year cliff vesting schedule to future grants of stock
options. Had the Companys stock-based compensation been determined by the fair-value based method of FAS 123, the Companys net income and earnings per share would have been as follows:



|                                                                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|(in thousands, except per share amounts)                                                                             |  | 2004 |         |   | 2003 |   |         | 2002 | 
|                                                                                                                     |  |     
|Net income, as reported                                                                                              |  | $    | 99,548  |   |      | $ | 170,599 |      |  | $ | 201,506 |  
|                                                                                                                     |  |      |        
|Add: Stock-based compensation expense included in reported net income, net of taxes                                  |  |      | 5,272   |   |      |   | 4,471   |      |  |   | 1,640   |  
|                                                                                                                     |  |      |        
|Deduct: Total stock-based compensation expense determined under fair-value based method for all awards, net of taxes |  |      | (27,354 | ) |      |   | (20,229 | )    |  |   | (18,238 | )
|                                                                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Adjusted net income                                                                                                  |  | $    | 77,466  |   |      | $ | 154,841 |      |  | $ | 184,908 |  
|                                                                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Basic earnings per share:                                                                                            |  |      |         |   |      |   |         |      |  |   |         |  
|As reported                                                                                                          |  | $    | 1.22    |   |      | $ | 2.09    |      |  | $ | 2.41    |  
|Adjusted                                                                                                             |  |      | 0.95    | * |      |   | 1.90    |      |  |   | 2.21    |  
|                                                                                                                     |  |      |        
|Diluted earnings per share:                                                                                          |  |      |         |   |      |   |         |      |  |   |         |  
|As reported                                                                                                          |  |      | 1.21    |   |      |   | 2.08    |      |  |   | 2.40    |  
|Adjusted                                                                                                             |  |      | 0.94    | * |      |   | 1.89    |      |  |   | 2.20    |  



|* | Includes about 11 cents per share as a result of the Companys decision to accelerate the vesting of certain options.
|- | ---------------------------------------------------------------------------------------------------------------------



The following table provides the estimated fair value under the Black-Scholes option-pricing
model of each option and stock-purchase plan right granted in years 2002 through 2004, and the significant weighted-average assumptions used in their determination.



|                                 |  |            |       |                       |     |   |               |     |   |              |           |            |      |  
|-------------------------------- |  | ---------- | ----- | --------------------- | --- | - | ------------- | --- | - | ------------ | --------- | ---------- | ---- | -
|                                 |  | Fair Value |       | Risk-FreeInterestRate |     |   | DividendYield |     |   | ExpectedLife |           | Volatility |     
|Stock Purchase Plan Right        |  |            |       |                       |     |   |               |     |   |              |           |            |      |  
|2004                             |  | $          | 8.94  |                       | 1.5 | % |               | 2.2 | % |              | 0.6 years |            | 16.7 | %
|2003                             |  |            | 9.70  |                       | 1.0 |   |               | 2.3 |   |              | 0.6       |            | 29.8 |  
|2002                             |  |            | 10.16 |                       | 1.8 |   |               | 2.3 |   |              | 0.6       |            | 25.7 |  
|                                 |  |            |       |                       |    
|Options under Stock Option Plans |  |            |       |                       |     |   |               |     |   |              |           |            |      |  
|2004                             |  | $          | 13.45 |                       | 3.0 | % |               | 1.7 | % |              | 5.0 years |            | 29.0 | %
|2003                             |  |            | 10.38 |                       | 3.0 |   |               | 2.2 |   |              | 5.0       |            | 28.0 |  
|2002                             |  |            | 13.55 |                       | 4.4 |   |               | 2.3 |   |              | 5.0       |            | 25.7 |  



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##### Table of Contents

USE OF ESTIMATES - The financial statements are prepared in accordance with generally accepted accounting
principles which require certain reported amounts to be based on estimates. Actual results could differ from these estimates.





NOTE 2. ACQUISITIONS/DISPOSITIONS





2004
Acquisitions/Dispositions



Acquisition of remaining interest in
OsterDow Jones



On July 7, 2004, the Company acquired the remaining
two-thirds interest in OsterDow Jones Commodity News for $1.6 million. The new operation, Dow Jones Commodities Service, was combined with the Companys Dow Jones Newswires business. The step acquisition resulted in a purchase price
allocation to goodwill of $1.4 million and tangible assets of $0.2 million.



Acquisition of remaining interest in VWD news operations and disposition of non-news assets of VWD



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



The acquisition was accounted for at fair
value as a step acquisition in accordance with SFAS 141, Business Combinations. The acquisition resulted in a purchase price allocation to goodwill of $9.3 million, other intangibles of $1.7 million and net assets of $0.5 million. The
other intangibles consist primarily of subscription contracts that will be amortized over their estimated useful life of 8 years. Substantially all of the acquired goodwill and intangible assets will be deductible for tax purposes.



On April 2, 2004, simultaneous with the Companys acquisition of the remaining interest
in the news operations of VWD, VWD sold its non-news assets to a third party, resulting in cash proceeds to Dow Jones of $6.7 million. As a result of this sale, the Company recorded an after-tax gain of $1.8 million, or $.02 cents per diluted share,
in the second quarter of 2004. Following the transaction, the Company had no involvement in the continuing operations of the disposed business. The consideration was received at the time of the sale and a gain was recognized pursuant to the guidance
in Staff Accounting Bulletin Topic 5E.



Acquisition of Alternative Investor



On March 19, 2004, the Company acquired Alternative Investor from Wicks
Business Information for $85 million, plus net working capital. The $85 million purchase price could be increased by $5 million, payable in 2008, based on the performance of the acquired business. The acquisition was primarily funded by the issuance
of debt under the Companys commercial paper program.



Alternative
Investor is a provider of newsletters, databases and industry conferences for the venture-capital and private-equity markets, and has been combined into the Companys Dow Jones Newswires business.



The acquisition resulted in a purchase price allocation to goodwill of $78.1 million, other
intangibles of $18.6 million and net liabilities of $11.4 million (principally acquired unearned revenue). Substantially all of the acquired goodwill and intangible assets will be deductible for tax purposes.



Acquired other intangible assets consisted of the following:



|                                          |  |                     |        |                                     |        
|----------------------------------------- |  | ------------------- | ------ | ----------------------------------- | -------
|(in thousands)                            |  | AcquiredIntangibles |        | Weighted- AverageAmortizationPeriod
|Subject to amortization:                  |  |                     |        |                                     |        
|Advertising accounts                      |  | $                   | 500    |                                     | 3 years
|Subscription accounts                     |  |                     | 4,370  |                                     | 4 years
|Conferences sponsor relationships         |  |                     | 1,200  |                                     | 6 years
|Database                                  |  |                     | 5,113  |                                     | 6 years
|Other                                     |  |                     | 700    |                                     | 2 years
|                                          |  |                     |        |                                     |        
|Total intangibles subject to amortization |  |                     | 11,883 |                                     | 5 years
|                                          |  |                    
|Not subject to amortization:              |  |                     |        |                                     |        
|Other, principally trade name             |  |                     | 6,750  |                                     |        
|                                          |  |                     |        |                                     |        
|Total acquired intangibles                |  | $                   | 18,633 |                                     |        
|                                          |  |                     |        |                                     |        



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##### Table of Contents

2003 Acquisitions/Dispositions



Non-monetary Exchange of Equity Holdings



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



The purchase of 39% of The Wall Street Journal Europe resulted in the acquisition of
goodwill of $16.9 million and other intangibles of $6.5 million. The other intangibles consisted of advertising accounts valued at $2.5 million and subscription accounts valued at $0.2 million. These intangibles will be amortized on a straight-line
basis over 8 years. The remaining $3.8 million represented acquired masthead which has an indefinite life.



Acquisition of Technologic Partners



On
September 2, 2003, the Company purchased Technologic Partners, a closely-held publications and events firm for $2.7 million. Technologic Partners, which has eight online newsletters and produces six conference events annually, was combined with the
Newsletters group within Dow Jones Newswires. The purchase resulted in the acquisition of goodwill of $3.4 million and other intangibles of $0.5 million, to be amortized on a straight-line basis over five years.



Based on the performance of the acquired business, and pursuant to the purchase agreement, in
October 2004, the Company made an additional payment of $3.4 million for Technologic Partners.



Acquisition of The Record of Stockton, California



On May 5, 2003, the Companys Ottaway Newspaper subsidiary acquired The Record of Stockton, California from Omaha World-Herald Company for $146 million ($144 million in cash, plus net working capital).



The purchase resulted in the acquisition of tangible net assets of $12
million, goodwill of $76.6 million and other intangibles of $58.2 million. The acquired goodwill and intangible assets will be deductible for tax purposes.



Acquired other intangible assets consisted of the following:



|                                          |  |                     |        |                                     |         
|----------------------------------------- |  | ------------------- | ------ | ----------------------------------- | --------
|(in thousands)                            |  | AcquiredIntangibles |        | Weighted- AverageAmortizationPeriod
|Subject to amortization:                  |  |                     |        |                                     |         
|Advertising accounts                      |  | $                   | 7,200  |                                     | 12 years
|Subscription accounts                     |  |                     | 4,700  |                                     | 14 years
|                                          |  |                     |        |                                     |         
|Total intangibles subject to amortization |  |                     | 11,900 |                                     | 13 years
|                                          |  |                    
|Not subject to amortization:              |  |                     |        |                                     |         
|Other, principally masthead               |  |                     | 46,314 |                                     |         
|                                          |  |                     |        |                                     |         
|Total acquired intangibles                |  | $                   | 58,214 |                                     |         
|                                          |  |                     |        |                                     |         



Had these acquisitions been completed
as of January 1, 2004 or 2003, the impact on the Companys revenues, net income and earnings per share would not have been materially different from those presented.



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. The reserve for loss contingencies was established as part of the loss on the 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.



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##### Table of Contents

2002 Acquisitions/Dispositions



In 2002, the Company acquired minor businesses for an aggregate purchase price of $11.8 million, which consisted principally of purchases of
community newspapers by the Companys Ottaway Newspaper subsidiary. In October 2002, the Company purchased The Ashland Tidings and The Medford Nickel, two small publications in southern Oregon, from Lee Enterprises and in January
2002 the Company purchased the Danville News. The Company also purchased MoneyView Online BV, a Dutch local language newswire, in April 2002. These acquisitions were accounted for by the purchase method and resulted in tangible net assets of
$2.7 million, $7.3 million in goodwill and $1.8 million in other intangibles.



Sale of five Ottaway newspaper properties



On June 7, 2002,
the Company completed the sale of Ottaways Essex County newspaper properties to Eagle-Tribune Publishing Company and recognized a gain of $44.5 million ($38 million after taxes, or $.45 per diluted share). On March 31, 2002, the Company
completed the sale of four of the Ottaway newspapers to Community Newspapers Holdings, Inc. and recognized a gain of $153.4 million ($126.1 million after taxes, or $1.49 per diluted share).



The Company utilized $190 million of its capital loss carryforward on these sales. See Note 8
for a further discussion of capital loss carryforwards.





NOTE 3. RESTRUCTURING CHARGES AND SEPTEMBER 11-RELATED ITEMS, NET



Restructuring charges and September 11-related items, net included in operating expenses were as follows:



|                                                            |  |      |        |   |      |   |         |      |  |   |        |  
|----------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|(in thousands)                                              |  | 2004 |        |   | 2003 |   |         | 2002 | 
|Restructuring:                                              |  |      |        |   |      |   |         |      |  |   |        |  
|Severance                                                   |  | $    | 6,813  |   |      |   |         |      |  | $ | 26,651 |  
|Other exit costs (*)                                        |  |      | (120   | ) |      |   |         |      |  |   | 222    |  
|                                                            |  |      |       
|World Financial Center (WFC)/September 11-related:          |  |      |        |   |      |   |         |      |  |   |        |  
|Reversal of lease obligation reserve  WFC                  |  |      | (2,761 | ) |      |   |         |      |  |   |        |  
|Gain on settlement of business interruption insurance claim |  |      |        |   |      | $ | (18,408 | )    |  |   |        |  
|Gain on insurance claim for property damage                 |  |      |        |   |      |   |         |      |  |   | (3,063 | )
|                                                            |  |      |        |   |      |   |         |      |  |   |        |  
|Total charges (income)                                      |  | $    | 3,932  |   |      | $ | (18,408 | )    |  | $ | 23,810 |  
|                                                            |  |      |        |   |      |   |         |      |  |   |        |  



|(*) | Other exit costs in 2004 includes a gain from the curtailment of the Far Eastern Economic Review defined benefit pension plan, as discussed in Note 11.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



Restructuring



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



Restructuring-related costs have been recorded in accordance with SFAS 112,
Employers Accounting for Postemployment Benefits (FAS 112) or SFAS No. 146, Accounting for the Costs Associated with Exit or Disposal Activities (FAS 146), as appropriate. The estimated employee
severance payments described above were based on predetermined criteria of a written benefit plan and were therefore recorded when the liability was considered probable and reasonably estimable as required by SFAS 112.



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The following table displays the activity and balances of the restructuring reserve account for the year ended December
31, 2004:



|                   |  |                          |       |              |   |                   |  |                          |       |  |   |      
|------------------ |  | ------------------------ | ----- | ------------ | - | ----------------- |  | ------------------------ | ----- |  | - | -----
|(in thousands)     |  | December 31,2003 Reserve |       | CashPayments |   | AdditionalReserve |  | December 31,2004 Reserve
|Employee severance |  | $                        | 3,298 |              | $ | 2,849             |  | $                        | 6,813 |  | $ | 7,262





World Financial Center/September 11-related



On September 11, 2001, the Companys headquarters at the World Financial Center sustained damage from debris and dust as a result of the terrorist attacks on the
World Trade Center. Approximately 60% of the floor space, including furniture and related equipment, had been determined a total loss. In 2001, the Company had written off the $15 million carrying value in assets that were destroyed and recorded a
receivable from insurance, which was included in other noncurrent assets on the balance sheet.



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



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



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



Insurance Claim



The Company has insurance policies that cover property damage, extra expenses and business
interruption related to the September 11 disaster. In the fourth quarter of 2002, the Company recorded a gain of $3.1 million ($1.8 million after taxes), reflecting the recovery of insurance proceeds in excess of the carrying value of World
Financial Center assets that were destroyed as a result of the September 11 terrorist attacks. Proceeds from the property damage insurance claim, net of WFC clean-up costs paid by the Company, totaled $16.9 million in 2002. The final settlement of
the Companys property damage claim of $1.3 million was received in 2003.



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





NOTE 4. CONTRACT GUARANTEE



In 1998, the Company completed the sale of its former subsidiary, Telerate, to Bridge Information Systems, Inc. (Bridge). Under the terms of the sale, the Company
retained its guarantee of payments under certain circumstances of certain annual minimum payments for data acquired by Telerate from Cantor Fitzgerald Securities (Cantor) and Market Data Corporation (MDC) under contracts entered into during the
period when Telerate was a subsidiary of the Company (contract guarantee). The annual minimum payments average approximately $50 million per year through October 2006 under certain conditions. Bridge agreed to indemnify the Company for any liability
the Company incurred under the contract guarantee with respect to periods subsequent to Bridges purchase of Telerate. However, Bridge filed for bankruptcy protection on February 15, 2001, after unsuccessful attempts to reorganize its
operations and arrange for additional financing.



The Company believes that
Cantor and MDC have the obligation to cover, mitigate or otherwise reduce and/or avoid any losses or damages under these circumstances, including by securing the best possible commercial terms for the supply of the subject data to a third party or
parties. Cantor and MDC deny that they have this obligation. The Company believes that any and all amounts which are received by Cantor and/or MDC in respect of such data would reduce any liability that the Company might have under the contract
guarantee. As of December 31, 2000, there was a high degree of uncertainty, however, as to what value the data might have in the marketplace; whether an agreement would be reached by Cantor and/or MDC to supply the data to a third party or parties,
the financial position of such party or parties; the timing of any such agreement, and various related factors. Therefore, it was not possible for the Company to determine with any certainty that any such offsets would in fact be realized, or at
what time or in what amounts. Consequently, in December 2000, the Company established a reserve in the amount of $255 million representing the present value of the total estimated annual minimum payments of about $300 million over the remainder of
the contract (through October 2006 and using a discount rate of approximately 6%).



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##### Table of Contents

Earnings in 2004, 2003 and 2002 included accretion charges of $6.9 million, $9.5 million and $11.9 million, respectively,
which increased the reserve balance as of December 31, 2004 to $260.7 million. The Company has classified $219.3 million of this reserve as current based on the original due dates of the contract.



On November 13, 2001, the Company instituted a lawsuit in the Supreme Court of the State of
New York against MDC and Cantor seeking a declaratory judgment with respect to the Companys obligations, if any, under the guarantee. 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 $10.2 million (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.



The trial court in January 2003 denied motions by each of the parties that their own claims for relief be granted and the competing claims be dismissed. Appeals from those decisions are not being pursued. Discovery
has concluded. Dispositive motions are scheduled to be filed and argument heard by the trial court in the first quarter of 2005, and the trial is currently scheduled to begin in June 2005.



Due to the stage of the lawsuit at December 31, 2004, it is not possible to determine whether
the court will find that any obligation the Company had under the guarantee may be dismissed or reduced. Accordingly, the Company believes the balance of the reserve continues to be appropriate.



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.





NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS



As of January 1, 2002, the Company adopted the provisions of SFAS 142,
Goodwill and Other Intangible Assets. SFAS 142 requires that an intangible asset that is acquired either individually or with a group of other assets be initially recognized and measured based on fair value. An intangible with a finite
life is amortized over its useful life, while an intangible with an indefinite life, including goodwill, is not amortized.



Goodwill balances by reportable segment were as follows:



|                             |  |                 |        |                      |   |                     |  |       |         |  |   |        
|---------------------------- |  | --------------- | ------ | -------------------- | - | ------------------- |  | ----- | ------- |  | - | -------
|(in thousands)               |  | PrintPublishing |        | ElectronicPublishing |   | CommunityNewspapers |  | Total
|Balance at December 31, 2002 |  | $               | 16,471 |                      | $ | 4,473               |  | $     | 35,307  |  | $ | 56,251 
|                             |  |                 |        |                     
|Acquisitions (*)             |  |                 | 16,932 |                      |   | 3,427               |  |       | 76,710  |  |   | 97,069 
|                             |  |                 |        |                      |   |                     |  |       |         |  |   |        
|Balance at December 31, 2003 |  |                 | 33,403 |                      |   | 7,900               |  |       | 112,017 |  |   | 153,320
|                             |  |                 |        |                     
|Acquisitions (*)             |  |                 |        |                      |   | 92,238              |  |       |         |  |   | 92,238 
|                             |  |                 |        |                      |   |                     |  |       |         |  |   |        
|Balance at December 31, 2004 |  | $               | 33,403 |                      | $ | 100,138             |  | $     | 112,017 |  | $ | 245,558
|                             |  |                 |        |                      |   |                     |  |       |         |  |   |        



|(*) | Refer to Note 2 for additional information relating to these acquisitions.
|--- | --------------------------------------------------------------------------



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Other intangible assets were as follows:



|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|--------------------------------- |  | -------------------- | ------ | ----------------------- | - | --------- |  | -------------------- | ------ | ----------------------- | - | --------- |  | - | ----- |  | - | ------
|                                  |  | December 31, 2004    |        | December 31, 2003      
|(in thousands)                    |  | Gross CarryingAmount |        | AccumulatedAmortization |   | NetAmount |  | Gross CarryingAmount |        | AccumulatedAmortization |   | NetAmount
|Amortizable intangible assets:    |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|Subscription accounts             |  | $                    | 15,891 |                         | $ | 4,676     |  | $                    | 11,215 |                         | $ | 10,249    |  | $ | 2,311 |  | $ | 7,938 
|Advertising accounts              |  |                      | 13,448 |                         |   | 2,143     |  |                      | 11,305 |                         |   | 12,948    |  |   | 827   |  |   | 12,121
|Databases                         |  |                      | 5,113  |                         |   | 759       |  |                      | 4,354  |                         |   |           |  |   |       |  |   |       
|Conferences sponsor relationships |  |                      | 1,200  |                         |   | 158       |  |                      | 1,042  |                         |   |           |  |   |       |  |   |       
|Other                             |  |                      | 821    |                         |   | 375       |  |                      | 446    |                         |   |           |  |   |       |  |   |       
|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|Total amortizable                 |  |                      | 36,473 |                         |   | 8,111     |  |                      | 28,362 |                         |   | 23,197    |  |   | 3,138 |  |   | 20,059
|                                  |  |                      |        |                         |   |          
|Unamortizable intangible assets:  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|Masthead and tradenames           |  |                      | 57,285 |                         |   |           |  |                      | 57,285 |                         |   | 50,065    |  |   |       |  |   | 50,065
|Pension (*)                       |  |                      | 3,240  |                         |   |           |  |                      | 3,240  |                         |   |           |  |   |       |  |   |       
|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|Total unamortizable               |  |                      | 60,525 |                         |   |           |  |                      | 60,525 |                         |   | 50,065    |  |   |       |  |   | 50,065
|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       
|Total intangibles                 |  | $                    | 96,998 |                         | $ | 8,111     |  | $                    | 88,887 |                         | $ | 73,262    |  | $ | 3,138 |  | $ | 70,124
|                                  |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |       



|(*) | The pension intangible asset reflects the requirement to record an additional minimum pension liability up to the unfunded accumulated benefit obligation of the Companys
pension plan. Changes in the pension intangible asset represent changes in the additional minimum pension liability and do not impact net income.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Amortization expense, based on intangibles subject to amortization held at December 31, 2004, is expected to be $5.3 million in 2005, $4.7 million in 2006, $3.5
million in 2007, $3.3 million in 2008 and $2.6 million in 2009.





NOTE 6. INVESTMENTS IN ASSOCIATED COMPANIES, AT EQUITY



At December 31, 2004, the principal components of Investments in Associated Companies, at Equity were the following:



|                                                     |  |             |  |                                                                                                                                                         
|---------------------------------------------------- |  | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|Investment                                           |  | Ownership % |  | Description of business                                                                                                                                 
|Business News (Asia) Private                         |  | 50          |  | Business and financial news television company broadcasting as CNBC Asia Pacific, in partnership with NBC Universal                                     
|                                                     |  |            
|Business News (Europe) L.P.                          |  | 50          |  | Business and financial news television company broadcasting as CNBC Europe, in partnership with NBC Universal                                           
|                                                     |  |            
|Dow Jones Reuters Business Interactive LLC (Factiva) |  | 50          |  | Provides electronic delivery of business news and online research, in partnership with Reuters Group Plc.                                               
|                                                     |  |            
|F.F. Soucy, Inc. & Partners, L.P.                    |  | 40          |  | Newsprint mill in Quebec, Canada                                                                                                                        
|                                                     |  |            
|HB-Dow Jones S.A.                                    |  | 42          |  | A part-owner of a publishing company in the Czech Republic                                                                                              
|                                                     |  |            
|SmartMoney                                           |  | 50          |  | Publisher of SmartMoney magazine and SmartMoney.com,serving the private-investor market throughout the U.S. and Canada, in partnership with Hearst Corp.
|                                                     |  |            
|STOXX, Ltd                                           |  | 33          |  | Provides and services the Dow Jones STOXX(sm) indexes, Europes leading regional equity indexes                                                         
|                                                     |  |            
|Vedomosti                                            |  | 33          |  | Publisher of an independent business newspaper in Russia, with Pearson and Independent Media                                                            



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The Company purchases a portion of its newsprint from F.F. Soucy, Inc. & Partners, L.P. Operating expenses of the
Company include the cost of newsprint supplied by F.F. Soucy of $19.5 million in 2004, $19.3 million in 2003 and $18.4 million in 2002.



The Company performs several services on behalf of Factiva, including some billing and collections of receivables and payroll services, in addition to leasing Factiva
office space. The Company also provides content to Factiva for which it receives revenue. At December 31, 2004 and 2003, other receivables included net amounts due from Factiva of $4.2 million and $3.5 million, respectively. Revenues of the Company
included content and licensing fees from Factiva of $13.5 million in 2004, $11.4 million in 2003 and $7.5 million in 2002.



Summarized financial information for the Companys equity-basis investments in associated companies, combined, was as follows (these amounts are in aggregate at 100%
levels). The majority of these investments are partnerships, which require the associated tax benefit or expense to be recorded by the partner.



|                                |  |      |         |      |   |         |  |   |         |  
|------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | ------- | -
|(in thousands)                  |  | 2004 |         | 2003 |   | 2002    | 
|Income statement information:   |  |      |         |      |   |         |  |   |         |  
|Revenues                        |  | $    | 539,505 |      | $ | 540,258 |  | $ | 606,948 |  
|Operating income (loss)         |  |      | 17,770  |      |   | 12,668  |  |   | (9,031  | )
|Net income (loss)               |  |      | 6,658   |      |   | 5,203   |  |   | (2,976  | )
|                                |  |      |        
|Financial position information: |  |      |         |      |   |         |  |   |         |  
|Current assets                  |  | $    | 249,410 |      | $ | 201,313 |  | $ | 190,802 |  
|Noncurrent assets               |  |      | 155,664 |      |   | 172,497 |  |   | 202,562 |  
|Current liabilities             |  |      | 125,119 |      |   | 129,746 |  |   | 156,885 |  
|Noncurrent liabilities          |  |      | 20,182  |      |   | 15,041  |  |   | 22,039  |  
|Equity                          |  |      | 259,773 |      |   | 229,023 |  |   | 214,440 |  





NOTE 7. DEBT



Debt outstanding at December 31 was as follows:



|                                                         |  |      |         |      |   |        
|-------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|(in thousands)                                           |  | 2004 |         | 2003
|Commercial paper, at rates of 1.72% to 2.38%             |  | $    | 145,843 |      | $ | 153,110
|Less: short-term borrowings, at an average rate of 2.20% |  |      | 9,998   |      |   |        
|                                                         |  |      |         |      |   |        
|Total long term debt                                     |  | $    | 135,845 |      | $ | 153,110
|                                                         |  |      |         |      |   |        



Debt outstanding at December 31, 2004
consisted of commercial paper, of which $135.8 million was classified as long-term, as it is the Companys intent to refinance this obligation on a long-term basis. As of December 31, 2004, the Company could borrow up to $440 million, $140
million through June 24, 2006 and $300 million through June 24, 2009, under a revolving credit agreement with a consortium of banks. Borrowings may be made either in Eurodollars with interest that approximates the applicable Eurodollar rate or in
U.S. dollars with interest that approximates the banks prime rate, its certificate of deposit rate or the federal funds rate. An annual fee is payable on the commitment which the Company may terminate or reduce at any time. The annual fee,
which is dependent on the Companys debt rating issued by S&P and Moodys, ranges from .06% to .08%. Prepayment of borrowings may be made without penalty. The Company intends to extend the revolving credit agreements prior to their
expiration.



The revolving credit agreements contain certain restrictive
covenants, including restrictions on consolidated indebtedness and a minimum cash flow requirement. At December 31, 2004, with respect to restrictive covenants then in effect, consolidated indebtedness was within the required ratio and was
approximately $559 million less than the maximum borrowing allowed under the debt covenants. The Companys cash flow, as defined in the agreement, exceeded that required.



Interest payments were $3.8 million in 2004, $2.7 million in 2003 and $3.2 million in 2002.



See Note 16 for changes in the Companys debt structure subsequent to December 31, 2004.



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NOTE 8. INCOME TAXES



The components of consolidated income before income taxes and minority interests were as follows:



|               |  |      |         |   |      |   |         |      |  |   |         |  
|-------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|(in thousands) |  | 2004 |         |   | 2003 |   |         | 2002 | 
|Domestic       |  | $    | 229,128 |   |      | $ | 262,238 |      |  | $ | 306,934 |  
|Foreign        |  |      | (73,043 | ) |      |   | (41,380 | )    |  |   | (49,404 | )
|               |  |      |         |   |      |   |         |      |  |   |         |  
|               |  | $    | 156,085 |   |      | $ | 220,858 |      |  | $ | 257,530 |  
|               |  |      |         |   |      |   |         |      |  |   |         |  



The following is a reconciliation of
income tax expense to the amount derived by multiplying income before income taxes and minority interests by the statutory federal income tax rate of 35%.



|                                                                                                  |  |      |        |   |                       |      |    |      |   |         |                       |  |       |      |  |   |                       |   |  |       |  
|------------------------------------------------------------------------------------------------- |  | ---- | ------ | - | --------------------- | ---- | -- | ---- | - | ------- | --------------------- |  | ----- | ---- |  | - | --------------------- | - |  | ----- | -
|(in thousands)                                                                                    |  | 2004 |        |   | % ofIncomeBeforeTaxes |      |    | 2003 |   |         | % ofIncomeBeforeTaxes |  |       | 2002 |  |   | % ofIncomeBeforeTaxes |  
|Income before income taxes and minority interests multiplied by statutory federal income tax rate |  | $    | 54,629 |   |                       | 35.0 |    |      | $ | 77,300  |                       |  | 35.0  |      |  | $ | 90,136                |   |  | 35.0  |  
|State and foreign taxes, net of federal income tax effect                                         |  |      | 10,254 |   |                       | 6.6  |    |      |   | 15,340  |                       |  | 6.9   |      |  |   | 6,992                 |   |  | 2.7   |  
|Nondeductible capital loss                                                                        |  |      | 2,426  |   |                       | 1.6  |    |      |   | 3,333   |                       |  | 1.5   |      |  |   | 4,875                 |   |  | 1.9   |  
|Utilization of capital loss carryforward                                                          |  |      |        |   |                       |      |    |      |   |         |                       |  |       |      |  |   | (38,482               | ) |  | (14.9 | )
|Certain income tax matters                                                                        |  |      | (7,151 | ) |                       | (4.6 | )  |      |   | (25,055 | )                     |  | (11.3 | )    |  |   |                       |   |  |       |  
|Resolution of Telerate sale loss contingencies                                                    |  |      |        |   |                       |      |    |      |   | (20,937 | )                     |  | (9.5  | )    |  |   |                       |   |  |       |  
|Other, net                                                                                        |  |      | (1,580 | ) |                       | (1.0 | )  |      |   | 1,723   |                       |  | 0.8   |      |  |   | 220                   |   |  | 0.1   |  
|                                                                                                  |  |      |        |   |                       |      |    |      |   |         |                       |  |       |      |  |   |                       |   |  |       |  
|                                                                                                  |  | $    | 58,578 |   |                       | 37.5 | %* |      | $ | 51,704  |                       |  | 23.3  | %*   |  | $ | 63,741                |   |  | 24.8  | %
|                                                                                                  |  |      |        |   |                       |      |    |      |   |         |                       |  |       |      |  |   |                       |   |  |       |  



|* | The sum of the individual amounts does not equal the total due to rounding.
|- | ---------------------------------------------------------------------------



Consolidated income tax expense was as follows:



|                                       |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|-------------------------------------- |  | ------- | ------- | - | ----- | - | ------ | ------- |  | - | ----- | - |  | - | ------- | -
|(in thousands)                         |  | Federal |         |   | State |   |        | Foreign |  |   | Total |  
|2004                                   |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Currently payable                      |  | $       | 21,643  |   |       | $ | 18,543 |         |  | $ | 5,511 |   |  | $ | 45,697  |  
|Deferred                               |  |         | 19,542  |   |       |   | (6,105 | )       |  |   | (556  | ) |  |   | 12,881  |  
|                                       |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Total                                  |  | $       | 41,185  |   |       | $ | 12,438 |         |  | $ | 4,955 |   |  | $ | 58,578  |  
|                                       |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|2003                                   |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Currently payable                      |  | $       | 5,127   |   |       | $ | 17,227 |         |  | $ | 1,329 |   |  | $ | 23,683  |  
|IRS 1995-1998 federal audit tax refund |  |         | (23,978 | ) |       |   |        |         |  |   |       |   |  |   | (23,978 | )
|Deferred                               |  |         | 44,861  |   |       |   | 6,518  |         |  |   | 620   |   |  |   | 51,999  |  
|                                       |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Total                                  |  | $       | 26,010  |   |       | $ | 23,745 |         |  | $ | 1,949 |   |  | $ | 51,704  |  
|                                       |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|2002                                   |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Currently payable                      |  | $       | 29,846  |   |       | $ | 5,516  |         |  | $ | 4,227 |   |  | $ | 39,589  |  
|Deferred                               |  |         | 23,922  |   |       |   | (810   | )       |  |   | 1,040 |   |  |   | 24,152  |  
|                                       |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Total                                  |  | $       | 53,768  |   |       | $ | 4,706  |         |  | $ | 5,267 |   |  | $ | 63,741  |  
|                                       |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  



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The Companys combined current and noncurrent deferred taxes at December 31, 2004 and 2003 consisted of the
following deferred tax assets and liabilities:



|                                                             |  |                     |          |   |                          |   |          |      |  |      |         |  |   |        
|------------------------------------------------------------ |  | ------------------- | -------- | - | ------------------------ | - | -------- | ---- |  | ---- | ------- |  | - | -------
|                                                             |  | Deferred Tax Assets |          |   | Deferred Tax Liabilities
|(in thousands)                                               |  | 2004                |          |   | 2003                     |   |          | 2004 |  | 2003
|Depreciation                                                 |  |                     |          |   |                          |   |          |      |  | $    | 93,085  |  | $ | 87,586 
|Employee benefit plans, including deferred compensation      |  | $                   | 131,826  |   |                          | $ | 113,801  |      |  |      |         |  |   |        
|Foreign tax credits                                          |  |                     | 259      |   |                          |   | 3,409    |      |  |      |         |  |   |        
|Investments                                                  |  |                     |          |   |                          |   |          |      |  |      | 7,740   |  |   | 3,405  
|Intangibles                                                  |  |                     |          |   |                          |   | 2,938    |      |  |      | 3,608   |  |   |        
|Leases                                                       |  |                     | 6,373    |   |                          |   | 10,177   |      |  |      |         |  |   |        
|Capital loss carryforward                                    |  |                     | 55,766   |   |                          |   | 56,618   |      |  |      |         |  |   |        
|Unrecognized capital loss carryforward                       |  |                     | 109,545  |   |                          |   | 110,109  |      |  |      |         |  |   |        
|Income tax valuation allowance for capital loss carryforward |  |                     | (165,311 | ) |                          |   | (166,727 | )    |  |      |         |  |   |        
|All other                                                    |  |                     | 12,843   |   |                          |   | 7,796    |      |  |      | 20,088  |  |   | 15,013 
|                                                             |  |                     |          |   |                          |   |          |      |  |      |         |  |   |        
|Total deferred taxes                                         |  | $                   | 151,301  |   |                          | $ | 138,121  |      |  | $    | 124,521 |  | $ | 106,004
|                                                             |  |                     |          |   |                          |   |          |      |  |      |         |  |   |        



Certain Income Tax Matters



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



In 2003, the Internal Revenue Service (IRS) completed its audit of the Companys tax returns for the 1995 through 1998 tax
periods, which had been amended for additional tax refunds. As a result, the Company received tax refunds totaling $24 million. Pursuant to the settlement of these claims, in the third quarter of 2003, the Company recorded an adjustment of $25
million to reduce its tax reserve balance as a result of the resolution of certain tax matters. The Company also recorded a provision of about $9.5 million in the third quarter of 2003 for loss contingencies relating to recent developments in
certain other tax matters.



Capital Loss Carryforward



As of December 31, 2004, the Company had a capital loss carryforward remaining of about $435
million (a deferred tax asset of about $165 million, with a full valuation allowance). Approximately $148 million of this loss carryforward is recognized for tax purposes and expires in 2006. The remaining $287 million of capital loss carryforward,
which primarily relates to the contract guarantee obligation (see Note 4), 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 any such payment, the
resulting loss carryforward will be available for use five years from the year it is recognized.



While the Company was able to utilize $190 million of capital loss carryforward to offset capital gains on the sale of five Ottaway properties in 2002, there has not been another meaningful strategy that was both
financially attractive and compatible with the Companys criteria for wholly transparent, understandable and conservative financial management. As a result, the Company did not utilize $851 million of a capital loss carryforward, principally
related to the sale of its former Telerate subsidiary, which expired on December 31, 2003.



The Company could not conclude that it was more likely than not that it would realize any net tax savings from capital loss carryforward prior to their expiration and believes the full valuation allowance reserve was
appropriate at December 31, 2004.



Income Taxes Paid/Received



Income tax payments were $39.6 million in 2004, $10 million in 2003 and
$55.9 million in 2002. As mentioned above, the Company received a $24 million refund in 2003 as a result of the completion of the audit of the 1995 to 1998 tax returns. In addition, taxes paid/received in 2002 were affected by the deferral of
certain tax payments. The Companys federal income taxes that were normally due on September 15, and December 15, 2001, which totaled $32 million, 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.



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NOTE 9. CAPITAL STOCK



Common stock and class B common stock have the same dividend and liquidation rights. Class B common stock has ten votes per share, free
convertibility into common stock on a one-for-one basis and can be transferred in class B form only to members of the stockholders family and certain others affiliated with the stockholder.



The Company repurchased 0.6 million shares in early 2003 for $19.8 million at an average cost
of $35.72 per share and 3.2 million shares in 2002 for $143.3 million at an average cost per share of $44.10.



As of December 31, 2004, approximately $326.4 million remained under board authorization for share repurchases.





NOTE 10. DILUTION AND STOCK COMPENSATION PLANS



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



|                                                  |  |         |        |         |   |         |  |   |        
|------------------------------------------------- |  | ------- | ------ | ------- | - | ------- |  | - | -------
|(in thousands, except per share
amounts)          |  | 2004(2) |        | 2003(2) |   | 2002(2)
|Net income                                        |  | $       | 99,548 |         | $ | 170,599 |  | $ | 201,506
|Weighted-average shares outstanding - basic       |  |         | 81,878 |         |   | 81,593  |  |   | 83,510 
|Effect of dilutive securities:                    |  |         |        |         |   |         |  |   |        
|Stock options                                     |  |         | 120    |         |   | 121     |  |   | 219    
|Other, principally contingent stock rights        |  |         | 287    |         |   | 236     |  |   | 188    
|                                                  |  |         |        |         |   |         |  |   |        
|Weighted-average shares outstanding - diluted (1) |  |         | 82,285 |         |   | 81,950  |  |   | 83,917 
|                                                  |  |         |        |         |   |         |  |   |        
|Basic earnings per share                          |  | $       | 1.22   |         | $ | 2.09    |  | $ | 2.41   
|Diluted earnings per share                        |  |         | 1.21   |         |   | 2.08    |  |   | 2.40   



(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 year.



(2) Options to purchase 8,474,000 shares in 2004 at an average price of $54.85, options to
purchase 7,566,000 shares in 2003 at an average price of $55.03 and options to purchase 6,786,000 shares in 2002 at an average price of $56.56 have been excluded from the diluted earnings per share calculation for each respective year because the
options exercise prices were greater than the average market price during the year and to include such securities would be antidilutive.



Dilution Table



The table below shows the effect on the diluted weighted-average shares outstanding using the treasury stock method had the stock price been at higher amounts than its
average for 2004 of $45.32.



(shares in thousands)



|                          |  |                             |  |                                  |  |           
|------------------------- |  | --------------------------- |  | -------------------------------- |  | ----------
|Hypothetical Stock Prices |  | Incremental Dilutive Shares |  | Percentage of Shares Outstanding |  | EPS Impact
|$50                       |  | 527                         |  | 0.6%                             |  | $  0.00   
|60                        |  | 1,077                       |  | 1.3                              |  | (0.01)    
|70                        |  | 1,796                       |  | 2.2                              |  | (0.02)    
|80                        |  | 2,366                       |  | 2.9                              |  | (0.03)    
|90                        |  | 2,809                       |  | 3.4                              |  | (0.03)    



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Stock Compensation Plans



The Dow Jones 2001 Long-Term Incentive Plan (the plan) provides for the grant of contingent stock rights, stock options, restricted stock, restricted stock
units and other stock-based awards (collectively, plan awards). At the 2004 Annual Meeting of Stockholders, an amendment to the plan was approved which increased the number of shares issuable under the plan by 2,000,000 shares to
9,000,000 shares. The Company anticipates that awards under the plan may be made to approximately 750 employees (including employee directors) of the Company and to all non-employee directors of the Company. The Compensation Committee of the Board
of Directors administers the plan. Under the plan, common stock may be granted for plan awards through March 31, 2011. The plan was the successor to the Dow Jones 1997 Long-Term Incentive Plan, which provided benefits to key senior executives, and
the Dow Jones 1998 Stock Option Plan, which primarily provided benefits for middle management. At December 31, 2004, there were 3,283,916 shares available for future grants under the 2001 plan. Shares that remained under 1998 plan have been retired.



Stock options



Options for shares of common stock may be granted under existing plans at not less than the
fair market value of the common stock on the date of grant. In December 2004, under authorization of the Board of Directors, the Company accelerated the vesting of all unvested options granted after 2002. Accordingly, all options outstanding at
December 31, 2004 were exercisable other than a portion of the 2002 grants. Stock options granted subsequent to December 31, 2004 will vest and become exercisable three years from the date of grant pursuant to the new three-year cliff vesting
schedule. Options expire 10 years from the date of grant.



The activity with
respect to options under the Companys stock option plans was as follows:



(shares in thousands)



|                                   |  |        |   |      |                               |       |        |       |   |                               |   |        |  |       |                               |  |   |      
|---------------------------------- |  | ------ | - | ---- | ----------------------------- | ----- | ------ | ----- | - | ----------------------------- | - | ------ |  | ----- | ----------------------------- |  | - | -----
|                                   |  | 2004   |   | 2003 |                               | 2002 
|                                   |  | Shares |   |      | Weighted-AverageExercisePrice |       | Shares |       |   | Weighted-AverageExercisePrice |   | Shares |  |       | Weighted-AverageExercisePrice
|Balance, January 1                 |  | 8,985  |   |      | $                             | 52.57 |        | 7,783 |   |                               | $ | 53.95  |  | 6,176 |                               |  | $ | 52.70
|Granted                            |  | 1,245  |   |      |                               | 52.61 |        | 1,699 |   |                               |   | 44.67  |  | 2,477 |                               |  |   | 54.98
|Exercised (*)                      |  | (219   | ) |      |                               | 35.11 |        | (226  | ) |                               |   | 37.39  |  | (356  | )                             |  |   | 34.82
|Terminated/Canceled                |  | (636   | ) |      |                               | 54.77 |        | (271  | ) |                               |   | 55.26  |  | (514  | )                             |  |   | 57.20
|                                   |  |        |   |      |                               |       |        |       |   |                               |   |        |  |       |                               |  |   |      
|Balance, December 31               |  | 9,375  |   |      | $                             | 52.83 |        | 8,985 |   |                               | $ | 52.57  |  | 7,783 |                               |  | $ | 53.95
|                                   |  |        |   |      |                               |       |        |       |   |                               |   |        |  |       |                               |  |   |      
|Options exercisable at December 31 |  | 8,693  |   |      | $                             | 52.66 |        | 5,231 |   |                               | $ | 53.55  |  | 3,844 |                               |  | $ | 50.58
|                                   |  |        |   |      |                               |       |        |       |   |                               |   |        |  |       |                               |  |   |      



|(*) | Options exercised in 2004, 2003 and 2002 yielded a pretax gain to the option holders of $2 million, $3 million and $5 million, respectively. The five most highly-compensated
executives of the Company exercised 25,000 options yielding them pretax income of $0.2 million in 2004, exercised 27,000 options yielding them pretax income of $0.2 million in 2003 and exercised 48,000 options yielding them pretax income of $0.3
million in 2002.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In 2004, the five most highly-compensated
executives of the Company were Peter R. Kann, Chairman of the Board and Chief Executive Officer; Richard F. Zannino, Executive Vice President and Chief Operating Officer; Peter G. Skinner, Executive Vice President, General Counsel and Secretary;
Karen E. House, Senior Vice President and Publisher of The Wall Street Journal; and L. Gordon Crovitz, Senior Vice President and President, Electronic Publishing.



57



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Options outstanding at the end of 2004 are summarized as follows:



|                                         |  |                     |  |                               |       |                                                  |     |          |   |        |  |                               |  |          |       |  |   |      
|---------------------------------------- |  | ------------------- |  | ----------------------------- | ----- | ------------------------------------------------ | --- | -------- | - | ------ |  | ----------------------------- |  | -------- | ----- |  | - | -----
|(in thousands, except per share amounts) |  | Options Outstanding |  | Options Exercisable          
|Range of Exercise Prices                 |  | Shares              |  | Weighted-AverageExercisePrice |       | Weighted-AverageRemainingContractualLife (years) |     | Value(*) |   | Shares |  | Weighted-AverageExercisePrice |  | Value(*)
|$34.38 to $36.25                         |  | 483                 |  | $                             | 34.84 |                                                  | 1.8 |          | $ | 3,971  |  | 483                           |  | $        | 34.84 |  | $ | 3,971
|$40.64 to $49.85                         |  | 2,463               |  |                               | 46.20 |                                                  | 6.5 |          |   | 4      |  | 2,455                         |  |          | 46.20 |  |   | 4    
|$50.75 to $55.16                         |  | 3,815               |  |                               | 53.72 |                                                  | 7.1 |          |   |        |  | 3,142                         |  |          | 53.41 |  |   |      
|$55.22 to $61.13                         |  | 1,730               |  |                               | 59.55 |                                                  | 6.1 |          |   |        |  | 1,729                         |  |          | 59.55 |  |   |      
|$62.75 to $73.25                         |  | 884                 |  |                               | 64.21 |                                                  | 5.1 |          |   |        |  | 884                           |  |          | 64.21 |  |   |      
|                                         |  |                     |  |                               |       |                                                  |     |          |   |        |  |                               |  |          |       |  |   |      
|Balance, December 31, 2004               |  | 9,375               |  | $                             | 52.83 |                                                  | 6.3 |          | $ | 3,975  |  | 8,693                         |  | $        | 52.66 |  | $ | 3,975
|                                         |  |                     |  |                               |       |                                                  |     |          |   |        |  |                               |  |          |       |  |   |      
|Five most highly-compensated executives  |  | 1,351               |  | $                             | 52.72 |                                                  | 6.5 |          | $ | 619    |  | 1,262                         |  | $        | 52.56 |  | $ | 619  
|All others                               |  | 8,024               |  |                               | 52.85 |                                                  | 6.2 |          |   | 3,356  |  | 7,431                         |  |          | 52.68 |  |   | 3,356
|                                         |  |                     |  |                               |       |                                                  |     |          |   |        |  |                               |  |          |       |  |   |      
|Total                                    |  | 9,375               |  | $                             | 52.83 |                                                  | 6.3 |          | $ | 3,975  |  | 8,693                         |  | $        | 52.66 |  | $ | 3,975
|                                         |  |                     |  |                               |       |                                                  |     |          |   |        |  |                               |  |          |       |  |   |      



|(*) | Represents the excess of the closing price of the Companys common stock on December 31, 2004 ($43.06), over the respective exercise price of the options multiplied by the
number of in-the-money options at December 31, 2004.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Stock
Options Outstanding by Year of Grant



(shares in thousands)



|      |  |                        |           |                               |       |                  |        |                                |             |                      |   |  |       |  |   |       |  |    
|----- |  | ---------------------- | --------- | ----------------------------- | ----- | ---------------- | ------ | ------------------------------ | ----------- | -------------------- | - |  | ----- |  | - | ----- |  | ---
|Year  |  | NumberOf SharesGranted |           | Weighted-AverageExercisePrice |       | Number of Shares |        | Weighted-AverageMarketPrice(*) |             | AdditionalShares(**)
|      |  |                        | Forfeited |                               |       | Exercised        |        |                                | Unexercised |                      |  
|2004  |  | 1,245                  |           | $                             | 52.61 |                  | (49    | )                              |             |                      |   |  | 1,196 |  |   |       |  |    
|2003  |  | 1,699                  |           |                               | 44.67 |                  | (147   | )                              |             | (19                  | ) |  | 1,533 |  | $ | 50.28 |  | 1  
|2002  |  | 2,477                  |           |                               | 54.98 |                  | (423   | )                              |             | (5                   | ) |  | 2,049 |  |   | 51.52 |  | 1  
|2001  |  | 2,225                  |           |                               | 59.45 |                  | (508   | )                              |             |                      |   |  | 1,717 |  |   |       |  |    
|2000  |  | 1,301                  |           |                               | 64.27 |                  | (401   | )                              |             |                      |   |  | 900   |  |   |       |  |    
|1999  |  | 110                    |           |                               | 52.07 |                  | (23    | )                              |             | (20                  | ) |  | 67    |  |   | 65.70 |  | 4  
|1998  |  | 1,285                  |           |                               | 49.19 |                  | (272   | )                              |             | (197                 | ) |  | 816   |  |   | 63.02 |  | 26 
|1997  |  | 1,179                  |           |                               | 50.29 |                  | (420   | )                              |             | (212                 | ) |  | 547   |  |   | 63.48 |  | 26 
|1996  |  | 1,220                  |           |                               | 34.50 |                  | (80    | )                              |             | (778                 | ) |  | 362   |  |   | 54.22 |  | 172
|1995  |  | 678                    |           |                               | 37.70 |                  | (29    | )                              |             | (461                 | ) |  | 188   |  |   | 53.04 |  | 85 
|      |  |                        |           |                               |       |                  |        |                                |             |                      |   |  |       |  |   |       |  |    
|Total |  | 13,419                 |           |                               |       |                  | (2,352 | )                              |             | (1,692               | ) |  | 9,375 |  |   |       |  |    
|      |  |                        |           |                               |       |                  |        |                                |             |                      |   |  |       |  |   |       |  |    



|(*) | Represents the average market price of shares acquired by the option holder on the date of exercise.
|--- | ----------------------------------------------------------------------------------------------------



|(**) | Assumes the Company uses the proceeds from share purchases including related tax deduction to repurchase shares on the open market at the market price.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------



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CEO Stock Options Outstanding by Year of Grant



(in thousands, except per share amounts)



|      |  |                         |                   |                                |                     |  |      |  |        |  |               |  |          |  |   |       |  |   |    
|----- |  | ----------------------- | ----------------- | ------------------------------ | ------------------- |  | ---- |  | ------ |  | ------------- |  | -------- |  | - | ----- |  | - | ---
|Year  |  | NumberOf Shares Granted |                   | Weighted-AverageExercise Price |                     |  |      |  |        |  |               | 
|      |  |                         | Exercised Options |                                | Unexercised Options
|      |  |                         | Shares            |                                | Average Price       |  | Gain |  | Shares |  | Average Price |  | Value(*)
|2004  |  | 88                      |                   | $                              | 52.65               |  |      |  |        |  |               |  | 88       |  | $ | 52.65 |  |   |    
|2003  |  | 92                      |                   |                                | 44.68               |  |      |  |        |  |               |  | 92       |  |   | 44.68 |  |   |    
|2002  |  | 114                     |                   |                                | 55.16               |  |      |  |        |  |               |  | 114      |  |   | 55.16 |  |   |    
|2001  |  | 84                      |                   |                                | 59.50               |  |      |  |        |  |               |  | 84       |  |   | 59.50 |  |   |    
|2000  |  | 60                      |                   |                                | 64.00               |  |      |  |        |  |               |  | 60       |  |   | 64.00 |  |   |    
|1998  |  | 39                      |                   |                                | 49.13               |  |      |  |        |  |               |  | 39       |  |   | 49.13 |  |   |    
|1997  |  | 32                      |                   |                                | 50.75               |  |      |  |        |  |               |  | 32       |  |   | 50.75 |  |   |    
|1996  |  | 40                      |                   |                                | 34.38               |  |      |  |        |  |               |  | 40       |  |   | 34.38 |  | $ | 347
|1995  |  | 15                      |                   |                                | 45.31               |  |      |  |        |  |               |  | 15       |  |   | 45.31 |  |   |    
|      |  |                         |                   |                                |                     |  |      |  |        |  |               |  |          |  |   |       |  |   |    
|Total |  | 564                     |                   | $                              | 52.24               |  |      |  |        |  |               |  | 564      |  | $ | 52.24 |  | $ | 347
|      |  |                         |                   |                                |                     |  |      |  |        |  |               |  |          |  |   |       |  |   |    



|(*) | Represents the difference between the closing price of the Companys common stock on December 31, 2004 ($43.06), and the exercise price of the options. The CEO historically has
not exercised his stock options until their expiration year.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





Contingent stock rights



Contingent stock rights, granted under the Long-Term Incentive Plan, entitle the participant to receive future payments in the form of common stock, cash or a combination of both. The compensation ultimately received
will depend on the extent to which specific performance criteria are achieved during the respective performance period (three years for 2004 grants; four years for prior grants), the participants individual performance and other factors, as
determined by the compensation committee. Compensation received could be less than or equal to that specified in the right, but cannot exceed the right.



The activity with respect to the number of contingent stock rights outstanding was as follows:



|                                                           |  |          |   |  |         |   |  |         |  
|---------------------------------------------------------- |  | -------- | - |  | ------- | - |  | ------- | -
|(in number of stock rights)                                |  | 2004     |   |  | 2003    |   |  | 2002    |  
|Balance, January 1                                         |  | 915,000  |   |  | 750,000 |   |  | 584,000 |  
|Granted  Five most highly-compensated executives          |  | 101,000  |   |  | 111,000 |   |  | 92,000  |  
|Granted  all others                                       |  | 154,000  |   |  | 184,000 |   |  | 183,000 |  
|Final awards  Five most highly-compensated executives (*) |  | (32,000  | ) |  | (11,000 | ) |  | (14,000 | )
|Final awards  all others (*)                              |  | (54,000  | ) |  | (20,000 | ) |  | (36,000 | )
|Terminated/canceled                                        |  | (145,000 | ) |  | (99,000 | ) |  | (59,000 | )
|                                                           |  |          |   |  |         |   |  |         |  
|Balance, December 31                                       |  | 939,000  |   |  | 915,000 |   |  | 750,000 |  
|                                                           |  |          |   |  |         |   |  |         |  



|(*) | The combined market value of the final shares awarded to the five most highly-compensated executives and all others in 2004, 2003 and 2002 was $4.3 million, $1.1 million and $2.8
million, respectively, based on the stock price on the date of award.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Contingent stock rights outstanding:



|                   |  |                                        |  |            |  |        
|------------------ |  | -------------------------------------- |  | ---------- |  | -------
|Performance Period |  | Five most highly-compensatedexecutives |  | All others |  | Total  
|2001-2004          |  | 73,000                                 |  | 124,000    |  | 197,000
|2002-2005          |  | 87,000                                 |  | 153,000    |  | 240,000
|2003-2006          |  | 102,000                                |  | 167,000    |  | 269,000
|2004-2006          |  | 92,000                                 |  | 141,000    |  | 233,000
|                   |  |                                        |  |            |  |        
|Total              |  | 354,000                                |  | 585,000    |  | 939,000
|                   |  |                                        |  |            |  |        



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##### Table of Contents

Restricted stock units and Restricted stock awards



Restricted stock units cliff vest at the end of three years from the date of grant and are payable in the Companys common stock. Any
dividends accrued during this period would be payable at the end of the three year period in cash. In 2004, 101,000 shares of restricted stock units were granted at $52.65 per share, of which 8,000 shares had lapsed at December 31, 2004.



The vesting of restricted stock awards may be conditional upon the completion of a
specified period of employment, upon attainment of specified performance goals, and/or any other such criteria as the Compensation Committee may determine. In 2004, no shares of restricted stock were granted. In 2003, 6,900 shares of restricted
stock were granted at a market value of $0.3 million and in 2002, 26,000 shares of restricted stock were granted at a market value of $1.2 million.



Stock purchase plan



Under the terms of the Dow Jones 1998 Employee Stock Purchase Plan, eligible employees may purchase shares of the Companys common stock based on compensation through payroll deductions or lump-sum payment. The
purchase price for payroll deductions is the lower of 85% of the fair market value of the stock on the first or last day of the purchase period. Lump-sum purchases are made during the offering period at the lower of 85% of the fair market value of
the stock on the first day of the purchase period or the payment date. At December 31, 2004, there were 1,147,000 shares available for future offerings. Under the plan, the Company sold 109,000 shares, 105,000 shares and 104,000 shares to employees
in 2004, 2003 and 2002, respectively.





NOTE 11. PENSION AND OTHER POSTRETIREMENT PLANS



Employee Pension



The Company provides retirement plans for a majority of its employees who meet specific length of service requirements through several plans.



The Companys defined contribution plans cover a majority of its employees. The 401(k) Savings Plans are based on a fixed percentage of
compensation and allow an employer matching opportunity up to a specified percentage. The contribution for each employee is limited to the amount deductible for income tax purposes. The annual cost of the plan is funded currently. The total costs
related to defined contribution plans amounted to $44.3 million in 2004, $43.6 million in 2003 and $45.5 million in 2002.



Substantially all employees who are not covered by the defined contribution plans are covered by defined benefit pension plans. The Companys defined benefit pension
plan benefits are based on years of service and compensation. The total cost of these defined benefit plans was $2.8 million in 2004, $8.0 million in 2003 and $3.0 million in 2002.



Postretirement Benefits other than Pensions



For a majority of its full-time employees, the Company sponsors defined benefit postretirement medical plans which provide lifetime health care benefits to retirees
who meet specified length of service and age requirements, and their eligible dependents. The plans are unfunded.



Medicare Prescription Drug, Improvement and Modernization Act of 2003



In December 2003, new Medicare prescription drug legislation was enacted into law. Beginning in 2006, this law adds a new prescription drug benefit under Medicare and
also provides a federal subsidy to companies that sponsor retiree health care plans that provide a benefit that is at least actuarially equivalent to the Medicare plan. The subsidy amount, which is tax-free, is 28% of each Medicare
eligible retirees drug costs between $250 and $5,000.



In the second
quarter of 2004, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003. The FSP clarified that companies eligible for federal subsidies under the Act should recognize the expected benefit as part of its measurement of its accumulated postretirement obligation. Accordingly in the second
quarter 2004, the Company remeasured its postretirement obligation as of January 1, 2004 factoring in this expected benefit from Medicare. The remeasurement resulted in a reduction of the Companys accumulated postretirement benefit obligation
by $24 million and reduced its expected annual 2004 postretirement expense by $3.6 million (a reduction of service cost by $1.2 million, interest cost by $1.5 million and recognized actuarial loss by $0.9 million).



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##### Table of Contents

Defined Benefit Plans



The Companys defined pension and other postretirement benefit plans, which are measured at December 31, were as follows:



|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|--------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------------------- | - | ------- | ---- |  | - | -------- | - |  | - | -------- | -
|(in thousands)                                                        |  | Pension Benefits |         |   | Other PostretirementBenefits |  
|                                                                      |  | 2004             |         |   | 2003                         |   |         | 2004 |  |   | 2003     |  
|Change in Benefit Obligation                                          |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Projected benefit obligation at January 1                             |  | $                | 169,781 |   |                              | $ | 148,010 |      |  | $ | 239,151  |   |  | $ | 189,643  |  
|Service cost                                                          |  |                  | 5,274   |   |                              |   | 4,707   |      |  |   | 8,240    |   |  |   | 8,028    |  
|Interest cost                                                         |  |                  | 10,301  |   |                              |   | 9,930   |      |  |   | 13,246   |   |  |   | 13,208   |  
|Plan participant contributions                                        |  |                  |         |   |                              |   |         |      |  |   | 1,128    |   |  |   | 989      |  
|Plan amendments                                                       |  |                  |         |   |                              |   | 1,598   |      |  |   | (4,946   | ) |  |   | (23,741  | )
|Effect of curtailment/settlement                                      |  |                  | (4,057  | ) |                              |   |         |      |  |   |          |   |  |   |          |  
|Actuarial loss                                                        |  |                  | 11,435  |   |                              |   | 14,876  |      |  |   | 12,567   |   |  |   | 60,428   |  
|Benefits paid                                                         |  |                  | (11,468 | ) |                              |   | (9,340  | )    |  |   | (11,027  | ) |  |   | (9,404   | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Projected benefit obligation at December 31                           |  | $                | 181,266 |   |                              | $ | 169,781 |      |  | $ | 258,359  |   |  | $ | 239,151  |  
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Change in Plan Assets                                                 |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Fair value of plan assets at January 1                                |  | $                | 159,977 |   |                              | $ | 116,621 |      |  |   |          |   |  |   |          |  
|Actual return on plan assets                                          |  |                  | 12,588  |   |                              |   | 24,026  |      |  |   |          |   |  |   |          |  
|Employer contribution                                                 |  |                  | 1,419   |   |                              |   | 28,670  |      |  | $ | 9,899    |   |  | $ | 8,415    |  
|Plan participant contributions                                        |  |                  |         |   |                              |   |         |      |  |   | 1,128    |   |  |   | 989      |  
|Effect of curtailment/settlement                                      |  |                  | (3,091  | ) |                              |   |         |      |  |   |          |   |  |   |          |  
|Benefits paid                                                         |  |                  | (11,468 | ) |                              |   | (9,340  | )    |  |   | (11,027  | ) |  |   | (9,404   | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Fair value of plan assets at December 31                              |  | $                | 159,425 |   |                              | $ | 159,977 |      |  | $ |         |   |  | $ |         |  
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Components of Accrued Benefit Costs                                   |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Funded status                                                         |  | $                | (21,841 | ) |                              | $ | (9,804  | )    |  | $ | (258,359 | ) |  | $ | (239,151 | )
|Unrecognized actuarial loss                                           |  |                  | 33,228  |   |                              |   | 22,327  |      |  |   | 70,190   |   |  |   | 58,543   |  
|Unrecognized prior service cost                                       |  |                  | 3,240   |   |                              |   | 3,546   |      |  |   | (25,716  | ) |  |   | (22,311  | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Accrued benefit costs                                                 |  | $                | 14,627  |   |                              | $ | 16,069  |      |  | $ | (213,885 | ) |  | $ | (202,919 | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Amounts recognized in the statement of financial position consist of: |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Accrued benefit liability                                             |  | $                | (14,072 | ) |                              | $ | (2,849  | )    |  | $ | (213,885 | ) |  | $ | (202,919 | )
|Prepaid benefit cost                                                  |  |                  | 2,190   |   |                              |   | 18,468  |      |  |   |          |   |  |   |          |  
|Intangible asset                                                      |  |                  | 3,240   |   |                              |   | 88      |      |  |   |          |   |  |   |          |  
|Accumulated other comprehensive income                                |  |                  | 23,269  |   |                              |   | 362     |      |  |   |          |   |  |   |          |  
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Net amount recognized                                                 |  | $                | 14,627  |   |                              | $ | 16,069  |      |  | $ | (213,885 | ) |  | $ | (202,919 | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  



The accumulated benefit obligation for
the defined benefit pension plans was $167.3 million at December 31, 2004 and $160.6 million at December 31, 2003.





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Information for pension plans with an accumulated benefit obligation in excess of plan assets at December 31:



|                               |  |      |      
|------------------------------ |  | ---- | -----
|(in millions)                  |  | 2004
|Projected benefit obligation   |  | $    | 172.9
|Accumulated benefit obligation |  |      | 163.3
|Fair value of plan assets      |  |      | 149.2



In 2003, the projected benefit
obligation of a supplementary benefit plan of a subsidiary of the Company was $2.8 million, which was not funded.



Components of Net Periodic Benefit Costs:





|                                   |  |                  |         |   |                               |   |        |      |  |   |         |   |  |      |        |      |  |   |        |  |   |        |  
|---------------------------------- |  | ---------------- | ------- | - | ----------------------------- | - | ------ | ---- |  | - | ------- | - |  | ---- | ------ | ---- |  | - | ------ |  | - | ------ | -
|                                   |  | Pension Benefits |         |   | Other Postretirement Benefits |  
|(in thousands)                     |  | 2004             |         |   | 2003                          |   |        | 2002 |  |   | 2004    |   |  | 2003 |        | 2002 | 
|Service cost                       |  | $                | 5,274   |   |                               | $ | 4,707  |      |  | $ | 4,109   |   |  | $    | 8,240  |      |  | $ | 8,028  |  | $ | 6,646  |  
|Interest cost                      |  |                  | 10,301  |   |                               |   | 9,930  |      |  |   | 9,759   |   |  |      | 13,246 |      |  |   | 13,208 |  |   | 11,226 |  
|Expected return on plan assets     |  |                  | (13,117 | ) |                               |   | (9,683 | )    |  |   | (11,326 | ) |  |      |        |      |  |   |        |  |   |        |  
|Amortization of prior service cost |  |                  | 724     |   |                               |   | 726    |      |  |   | 1,130   |   |  |      | (1,433 | )    |  |   | 294    |  |   | 264    |  
|Recognized actuarial loss (gain)   |  |                  | 798     |   |                               |   | 1,214  |      |  |   | 40      |   |  |      | 813    |      |  |   |        |  |   | (293   | )
|Special termination benefits       |  |                  |         |   |                               |   | 1,139  |      |  |   | 2,165   |   |  |      |        |      |  |   |        |  |   |        |  
|Plan curtailment                   |  |                  | (1,138  | ) |                               |   |        |      |  |   | (2,878  | ) |  |      |        |      |  |   |        |  |   | 504    |  
|                                   |  |                  |         |   |                               |   |        |      |  |   |         |   |  |      |        |      |  |   |        |  |   |        |  
|Total benefit cost                 |  | $                | 2,842   |   |                               | $ | 8,033  |      |  | $ | 2,999   |   |  | $    | 20,866 |      |  | $ | 21,530 |  | $ | 18,347 |  
|                                   |  |                  |         |   |                               |   |        |      |  |   |         |   |  |      |        |      |  |   |        |  |   |        |  



The plan curtailment in 2004 relates
to the repositioning of the Far Eastern Economic Review to a monthly publication. The plan curtailment and special termination benefits in 2002 relate to the divestiture of five Ottaway properties.



Assumptions



Weighted-average assumptions used to determine benefit obligations at December 31:



|              |  |                  |   |  |                               |   |  |      |   |  |      |  
|------------- |  | ---------------- | - |  | ----------------------------- | - |  | ---- | - |  | ---- | -
|              |  | Pension Benefits |   |  | Other Postretirement Benefits |  
|              |  | 2004             |   |  | 2003                          |   |  | 2004 |   |  | 2003 |  
|Discount Rate |  | 5.88             | % |  | 6.25                          | % |  | 5.88 | % |  | 6.25 | %
|Salary Scale  |  | 3.00             |   |  | 3.00                          |   |  | n/a  |   |  | n/a  |  



Weighted-average assumptions used to
determine net cost at December 31:



|                      |  |                  |   |  |                               |   |  |      |   |  |      |   |  |      |   |  |      |  
|--------------------- |  | ---------------- | - |  | ----------------------------- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | -
|                      |  | Pension Benefits |   |  | Other Postretirement Benefits |  
|                      |  | 2004             |   |  | 2003                          |   |  | 2002 |   |  | 2004 |   |  | 2003 |   |  | 2002 |  
|Discount Rate         |  | 6.25             | % |  | 6.75                          | % |  | 7.25 | % |  | 6.25 | % |  | 6.75 | % |  | 7.25 | %
|Expected Asset Return |  | 8.75             |   |  | 8.75                          |   |  | 9.00 |   |  | n/a  |   |  | n/a  |   |  | n/a  |  
|Salary Scale          |  | 3.00             |   |  | 3.00                          |   |  | 3.00 |   |  | n/a  |   |  | n/a  |   |  | n/a  |  



Basis for determining the expected
asset return



The expected long-term rate of return on assets assumption
for the defined benefit plan was based on gross expected rates of return less anticipated expenses. The gross expected rates of return are the sum of expected real rates of return plus anticipated inflation. Real rates of return were derived for
each asset class based on historical rates of returns. The anticipated inflation rate was then added to these expected real returns to arrive at the expected long-term rate of return on asset assumption. The expected long-term rate is then compared
to actual historic investment performance of the plan assets and evaluated through consultation with investment advisors.



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Health care cost trend rate



A 10% annual rate of increase in the per capita costs of covered health care benefits was assumed for 2005, gradually decreasing to 5% by
the year 2012 and remaining at that rate thereafter. The Companys health care cost trend rate assumed for 2004 was 9% decreasing to 5% by the year 2011.



A one percentage point change in the assumed health care cost trend rates would have had the following effects in 2004:



|                                                                      |  |            |        |            |   |         |  
|--------------------------------------------------------------------- |  | ---------- | ------ | ---------- | - | ------- | -
|(in thousands)                                                        |  | 1%Increase |        | 1%Decrease |  
|Accumulated postretirement benefit obligation as of December 31, 2004 |  | $          | 50,533 |            | $ | (41,789 | )
|Total service and interest cost for 2004                              |  |            | 5,059  |            |   | (4,038  | )





Defined Benefit Pension Plan Assets



The defined benefit pension plans investment objective is to maximize long-term total return through a combination of income and capital appreciation with a prudent
investment practice and assumption of a moderate risk level. The Company provides guidance to the balanced investment manager who has responsibility for asset allocation within the following ranges: equity investments between 25% to 75%, debt
securities between 25% to 75%, and cash equivalents from 0% to 50%. In addition, the investment manager may not allocate more than 35% to a specific industry or more than 5% to an individual company.



Pension plan asset allocation at December 31, 2004 and 2003 and the target allocation for
2005 are as follows:



|                  |  |                       |   |  |                                       |   |  |     |  
|----------------- |  | --------------------- | - |  | ------------------------------------- | - |  | --- | -
|Asset Category    |  | TargetAllocation 2005 |   |  | Percentage of Plan Assets December 31 |  
|                  |  | 2004                  |   |  | 2003                                  |  
|Equity securities |  | 65                    | % |  | 68                                    | % |  | 60  | %
|Debt securities   |  | 35                    |   |  | 32                                    |   |  | 40  |  
|                  |  |                       |   |  |                                       |   |  |     |  
|Total             |  | 100                   | % |  | 100                                   | % |  | 100 | %
|                  |  |                       |   |  |                                       |   |  |     |  



Expected Contributions



The Company does not expect to make contributions to fund the pension
plans in 2005.





Expected Future Benefit Payments



The
Company expects to pay the following benefit payments, which reflect expected future service:



|               |  |                  |        |                                |   |       
|-------------- |  | ---------------- | ------ | ------------------------------ | - | ------
|(in thousands) |  | Pension Benefits |        | Other Post Retirement Benefits
|2005           |  | $                | 9,493  |                                | $ | 10,079
|2006           |  |                  | 9,407  |                                |   | 10,081
|2007           |  |                  | 9,556  |                                |   | 10,642
|2008           |  |                  | 9,853  |                                |   | 10,826
|2009           |  |                  | 10,612 |                                |   | 11,292
|2010-2014      |  |                  | 60,106 |                                |   | 65,846



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NOTE 12. COMMITMENTS AND CONTINGENCIES



Commitments for capital expenditures amounted to $6.2 million at December 31, 2004.



Noncancelable leases require minimum rental payments through 2020 totaling $313 million.
Payments required for the years 2005 through 2009 are as follows:



|               |  |      |        |      |   |        |  |      |        |      |   |        |  |   |       
|-------------- |  | ---- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | ------
|(in thousands) |  | 2005 |        | 2006 |   | 2007   |  | 2008 |        | 2009
|               |  | $    | 52,721 |      | $ | 41,756 |  | $    | 33,670 |      | $ | 25,406 |  | $ | 24,251
|               |  |      |        |      |   |        |  |      |        |      |   |        |  |   |       



These leases are principally for
office space and equipment and contain renewal and escalation clauses. Total rental expense amounted to $60 million in 2004, $61.7 million in 2003 and $58.4 million in 2002.



Other Guarantees and Contingencies



In addition to the litigation that is separately disclosed in Note 4 of this Form 10-K, there are various libel actions, legal proceedings and other matters that have
arisen in the ordinary course of business that represent possible contingencies of 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 legal proceedings and other matters 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 the Companys 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 December 31, 2004. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.



Newsprint is the Companys single most important raw material and represented
approximately 7.5% of total annual operating expenses for each of the past three years. The Company has signed long-term contracts with certain newsprint suppliers for a substantial portion of its annual newsprint requirements and has discretion as
to the timing of such purchases.



The Company has guaranteed payment for office
space occupied by certain of its joint ventures. Partners of the Company 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. The Companys share of this obligation totals $7.3 million through 2010.





NOTE 13. BUSINESS SEGMENTS



The Company reports the results of its operations in three segments: print publishing,
electronic publishing and community newspapers. In addition, the Company reports certain administrative activities under the corporate segment.



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Print publishing, which is largely comprised of the global operations of The Wall Street Journal, produces
business and financial content world-wide. This content is published primarily in the U.S., Europe, Asia and Latin America editions of The Wall Street Journal and on U.S. television through a licensing arrangement with CNBC. The Company
manages the global Journal operations as one segment as their products comprise the global Journal brand, and there are significant interrelationships within the editions including global management, shared news flows and workforce and a global
advertising customer base and pricing. U.S. television, which represents a licensing agreement with NBC Universal to provide branding, news content and on-air expertise to CNBC, is a further extension of the Journal brand and the content it
produces. The Company also includes the operations of Barrons within print publishing instead of reporting such separately because of its relative immateriality to the Companys results on a consolidated basis and because it shares
similarities with the global Journal operations.



Historically, print
publishing accounts for approximately 60% of revenues, with the remaining 40% divided almost equally between electronic publishing and community newspapers segments. The Companys overall performance is largely dependent on the operating
performance of the global Wall Street Journal (including its extended U.S. television brand and content).



Electronic publishing, whose products provide business and financial news and information to customers via electronic dissemination and are expected to have similar
long-term economic characteristics, 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. The community newspapers segment publishes 15 daily newspapers, 12 Sunday papers
and more than 30 weekly newspapers and shoppers in nine states in the U.S.



Management evaluates the performance of its segments exclusive of restructuring charges and September 11-related items. See Note 3 for a further discussion of these items.



The Companys operations by business segment and geographic area were as follows:



Financial Data by Business Segment



|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|(in thousands)                                                |  | 2004 |           |   | 2003 |   |           | 2002 | 
|Revenues (1)                                                  |  |      |           |   |      |   |           |      |  |   |           |  
|Print publishing                                              |  | $    | 948,833   |   |      | $ | 915,468   |      |  | $ | 948,870   |  
|Electronic publishing                                         |  |      | 381,181   |   |      |   | 322,032   |      |  |   | 309,491   |  
|Community newspapers:                                         |  |      |           |   |      |   |           |      |  |   |           |  
|Comparable operations (2)                                     |  |      | 325,483   |   |      |   | 307,952   |      |  |   | 278,638   |  
|Divested/newly-acquired operations                            |  |      | 15,961    |   |      |   | 3,033     |      |  |   | 22,174    |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Total                                                         |  |      | 341,444   |   |      |   | 310,985   |      |  |   | 300,812   |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Consolidated revenues                                         |  | $    | 1,671,458 |   |      | $ | 1,548,485 |      |  | $ | 1,559,173 |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Income Before Income Taxes and Minority Interests (3)         |  |      |           |   |      |   |           |      |  |   |           |  
|Print publishing                                              |  | $    | 31,485    |   |      | $ | 8,079     |      |  | $ | (8,058    | )
|Electronic publishing                                         |  |      | 79,034    |   |      |   | 67,871    |      |  |   | 60,863    |  
|Community newspapers:                                         |  |      |           |   |      |   |           |      |  |   |           |  
|Comparable operations (2)                                     |  |      | 85,317    |   |      |   | 80,224    |      |  |   | 74,000    |  
|Divested/newly-acquired operations                            |  |      | 3,798     |   |      |   | 769       |      |  |   | 5,255     |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Total                                                         |  |      | 89,115    |   |      |   | 80,993    |      |  |   | 79,255    |  
|Corporate                                                     |  |      | (33,528   | ) |      |   | (32,438   | )    |  |   | (33,167   | )
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Segment operating income                                      |  |      | 166,106   |   |      |   | 124,505   |      |  |   | 98,893    |  
|Restructuring charges and September 11-related items, net (3) |  |      | (3,932    | ) |      |   | 18,408    |      |  |   | (23,810   | )
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Consolidated operating income                                 |  |      | 162,174   |   |      |   | 142,913   |      |  |   | 75,083    |  
|                                                              |  |      |          
|Equity in earnings (losses) of associated companies           |  |      | 2,375     |   |      |   | 2,869     |      |  |   | (488      | )
|Gain on disposition of businesses and investments             |  |      | 3,260     |   |      |   | 18,699    |      |  |   | 197,925   |  
|Gain on resolution of Telerate sale loss contingencies        |  |      |           |   |      |   | 59,821    |      |  |   |           |  
|Contract guarantee                                            |  |      | (6,933    | ) |      |   | (9,523    | )    |  |   | (11,878   | )
|Other, net                                                    |  |      | (4,791    | ) |      |   | 6,079     |      |  |   | (3,112    | )
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Income before income taxes and minority interests             |  | $    | 156,085   |   |      | $ | 220,858   |      |  | $ | 257,530   |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  



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|                                                                |  |      |           |      |   |           |  |   |          
|--------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|(in thousands)                                                  |  | 2004 |           | 2003 |   | 2002     
|Depreciation and Amortization Expense                           |  |      |           |      |   |           |  |   |          
|Print publishing                                                |  | $    | 65,335    |      | $ | 67,054    |  | $ | 71,568   
|Electronic publishing                                           |  |      | 27,732    |      |   | 26,263    |  |   | 25,374   
|Community newspapers:                                           |  |      |           |      |   |           |  |   |          
|Comparable operations (2)                                       |  |      | 10,889    |      |   | 11,887    |  |   | 11,069   
|Divested/newly-acquired operations                              |  |      | 786       |      |   | 163       |  |   | 681      
|                                                                |  |      |           |      |   |           |  |   |          
|Total                                                           |  |      | 11,675    |      |   | 12,050    |  |   | 11,750   
|Corporate                                                       |  |      | 165       |      |   | 647       |  |   | 1,046    
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated depreciation and amortization expense              |  | $    | 104,907   |      | $ | 106,014   |  | $ | 109,738  
|                                                                |  |      |           |      |   |           |  |   |          
|Assets at December 31                                           |  |      |           |      |   |           |  |   |          
|Print publishing                                                |  | $    | 673,967   |      | $ | 714,811   |  | $ | 762,071  
|Electronic publishing                                           |  |      | 269,548   |      |   | 156,220   |  |   | 157,789  
|Community newspapers                                            |  |      | 316,238   |      |   | 305,821   |  |   | 159,247  
|                                                                |  |      |           |      |   |           |  |   |          
|Segment assets                                                  |  |      | 1,259,753 |      |   | 1,176,852 |  |   | 1,079,107
|Cash and investments                                            |  |      | 120,450   |      |   | 127,302   |  |   | 128,552  
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated assets                                             |  | $    | 1,380,203 |      | $ | 1,304,154 |  | $ | 1,207,659
|                                                                |  |      |           |      |   |           |  |   |          
|Capital Expenditures                                            |  |      |           |      |   |           |  |   |          
|Print publishing                                                |  | $    | 33,265    |      | $ | 30,409    |  | $ | 55,723   
|Electronic publishing                                           |  |      | 16,270    |      |   | 11,571    |  |   | 16,136   
|Community newspapers                                            |  |      | 26,468    |      |   | 13,961    |  |   | 5,794    
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated capital expenditures                               |  | $    | 76,003    |      | $ | 55,941    |  | $ | 77,653   
|                                                                |  |      |           |      |   |           |  |   |          
|                                                                |  |      |          
|Financial Data by Geographic Area                               |  |      |           |      |   |           |  |   |          
|(in thousands)                                                  |  | 2004 |           | 2003 |   | 2002     
|Revenues                                                        |  |      |           |      |   |           |  |   |          
|United States                                                   |  | $    | 1,527,427 |      | $ | 1,417,854 |  | $ | 1,418,355
|International                                                   |  |      | 144,031   |      |   | 130,631   |  |   | 140,818  
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated revenues                                           |  | $    | 1,671,458 |      | $ | 1,548,485 |  | $ | 1,559,173
|                                                                |  |      |           |      |   |           |  |   |          
|Plant, Property and Equipment, Net of Accumulated Depreciation  |  |      |           |      |   |           |  |   |          
|United States                                                   |  | $    | 647,989   |      | $ | 678,550   |  | $ | 707,360  
|International                                                   |  |      | 12,035    |      |   | 10,734    |  |   | 13,341   
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated plant, property and equipment, net                 |  | $    | 660,024   |      | $ | 689,284   |  | $ | 720,701  
|                                                                |  |      |           |      |   |           |  |   |          
|Goodwill and Intangible Assets, Net of Accumulated Amortization |  |      |           |      |   |           |  |   |          
|United States                                                   |  | $    | 282,021   |      | $ | 181,763   |  | $ | 44,735   
|International                                                   |  |      | 52,424    |      |   | 41,681    |  |   | 18,295   
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated goodwill and intangible assets, net                |  | $    | 334,445   |      | $ | 223,444   |  | $ | 63,030   
|                                                                |  |      |           |      |   |           |  |   |          



Notes:

|(1) | Revenues shown represent revenues from external customers. Transactions between segments are not significant.
|--- | -------------------------------------------------------------------------------------------------------------



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|(2) | Amounts in 2003 have been reclassified between comparable and divested/newly-acquired operations to conform with comparable operations in 2004.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Restructuring charges and September 11-related items, net are not included in segment expenses as management evaluates segment results exclusive of these items. For information
purposes, restructuring and September 11-related items allocable to each segment were as follows:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                       |  |      |        |   |      |   |        |  |   |         |  
|---------------------- |  | ---- | ------ | - | ---- | - | ------ |  | - | ------- | -
|(in thousands)         |  | 2004 |        |   | 2003 |   | 2002   | 
|Print publishing       |  | $    | (3,561 | ) |      | $ | 17,422 |  | $ | (16,794 | )
|Electronic publishing  |  |      | (280   | ) |      |   | 951    |  |   | (6,521  | )
|Corporate              |  |      | (91    | ) |      |   | 35     |  |   | (495    | )
|                       |  |      |        |   |      |   |        |  |   |         |  
|Total (charges) income |  | $    | (3,932 | ) |      | $ | 18,408 |  | $ | (23,810 | )
|                       |  |      |        |   |      |   |        |  |   |         |  





NOTE 14. FINANCIAL INSTRUMENTS



Fair Value of Financial Instruments



Other investments include marketable equity securities, which are carried at their market value. As of December 31, 2004, the market value of these securities was $7.4
million reflecting an unrealized gain of $4.9 million.



The market value of
these securities at December 31, 2003, was $8.2 million reflecting an unrealized gain of $5.7 million. The balance of the other investments is carried at original cost.



The carrying values of the Companys cash and cash equivalents, accounts receivable and accounts payable approximate fair value. At
December 31, 2004 and 2003, the Companys long-term debt consisted of commercial paper, the balance of which approximated its fair value.



Foreign Currency Exchange Forward Contracts



In December 2004 and 2003, the Company entered into foreign currency exchange forward contracts to exchange U.S. dollars for the following foreign currencies:



|                  |  |                 |  |             |      |                 |      |             |   |     
|----------------- |  | --------------- |  | ----------- | ---- | --------------- | ---- | ----------- | - | ----
|                  |  | 2004            |  | 2003       
|(in millions)     |  | ForeignCurrency |  | U.S. Dollar |      | ForeignCurrency |      | U.S. Dollar
|British Pound     |  | 12.5            |  | $           | 23.9 |                 | 14.5 |             | $ | 25.4
|Euro              |  | 14.0            |  |             | 18.7 |                 | 24.4 |             |   | 30.4
|Australian Dollar |  |                 |  |             |      |                 | 1.3  |             |   | 1.0 



These contracts, which expire ratably
over the subsequent year, 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. These contracts are entered into to
protect against the risk that operating expenses will be adversely affected by devaluation in the U.S. dollar relative to these currencies. 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. In the second quarter 2004, the Company closed out the forward contracts that were intended to buy Australian dollars in the last
half of 2004. The resulting loss was insignificant.



Based on the devaluation
in the U.S. dollar relative to these currencies, there were unrealized gains on these contracts of $0.3 million and $0.7 million at December 31, 2004 and December 31, 2003, respectively.



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The Company also enters into foreign currency forward exchange contracts to limit the cash flow and earnings volatility
that results from remeasuring certain foreign currency payables at prevailing exchange rates. The unrealized gains or losses of these forward contracts are recognized in Other, net in the income statement. The forward contract acts as an economic
hedge by increasing in value when the underlying foreign currency payable decreases in value and conversely decreases in value when the underlying foreign currency payable increases. As of December 31, 2004, the Company had forward currency exchange
contracts outstanding to exchange 11 million British Pounds for $21.1 million, which are due to expire in the first quarter of 2005.



Concentrations of Credit Risk



Financial instruments that potentially could subject the Company to concentrations of credit risk consist largely of trade accounts receivable. The Company sells print
and electronic information products world-wide to a wide variety of customers in the financial, business and private investor marketplaces. The concentration of credit risk with respect to trade receivables is slight due to the large number and
geographic dispersion of customers that comprise the Companys customer base.





NOTE 15. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)



The summary of unaudited 2004 and 2003 quarterly financial data was as follows:



|                                                                                  |  |          |         |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   |           |   
|--------------------------------------------------------------------------------- |  | -------- | ------- | - | ------ | - | ------- | ----- |  | - | ------- | - |  | ---- | ------- | - |  | - | --------- | --
|                                                                                  |  | Quarters |        
|(in thousands, except per share amounts)                                          |  | First    |         |   | Second |   |         | Third |  |   | Fourth  |   |  | Year |        
|2004                                                                              |  |          |         |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   |           |   
|Revenues                                                                          |  | $        | 401,621 |   |        | $ | 437,790 |       |  | $ | 394,892 |   |  | $    | 437,155 |   |  | $ | 1,671,458 |   
|Operating income                                                                  |  |          | 33,759  |   |        |   | 56,290  |       |  |   | 20,428  |   |  |      | 51,697  |   |  |   | 162,174   |   
|Net income                                                                        |  |          | 17,816  |   |        |   | 34,041  |       |  |   | 12,067  |   |  |      | 35,624  |   |  |   | 99,548    |   
|Per share                                                                         |  |          |         |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   |           |   
|Basic                                                                             |  | $        | .22     |   |        | $ | .42     |       |  | $ | .15     |   |  | $    | .43     |   |  | $ | 1.22      |   
|Diluted                                                                           |  |          | .22     |   |        |   | .41     |       |  |   | .15     |   |  |      | .43     |   |  |   | 1.21      |   
|                                                                                  |  |          |         |   |       
|2003                                                                              |  |          |         |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   |           |   
|Revenues                                                                          |  | $        | 358,230 |   |        | $ | 393,586 |       |  | $ | 375,946 |   |  | $    | 420,723 |   |  | $ | 1,548,485 |   
|Operating income                                                                  |  |          | 17,579  |   |        |   | 53,224  |       |  |   | 16,816  |   |  |      | 55,294  |   |  |   | 142,913   |   
|Net income (*)                                                                    |  |          | 66,932  |   |        |   | 30,838  |       |  |   | 28,577  |   |  |      | 44,252  |   |  |   | 170,599   |   
|Per share                                                                         |  |          |         |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   |           |   
|Basic                                                                             |  | $        | .82     |   |        | $ | .38     |       |  | $ | .35     |   |  | $    | .54     |   |  | $ | 2.09      |   
|Diluted (**)                                                                      |  |          | 82      |   |        |   | .38     |       |  |   | .35     |   |  |      | .54     |   |  |   | 2.08      |   
|(*)    In 2003, net income included the following items (presented net of taxes): | 
|                                                                                  |  | Quarters |        
|(in millions)                                                                     |  | First    |         |   | Second |   |         | Third |  |   | Fourth  |   |  | Year |        
|Gain on business interruption insurance claim                                     |  |          |         |   |        | $ | 11.1    |       |  |   |         |   |  |      |         |   |  | $ | 11.1      |   
|Gain on reversal of Telerate sale loss contingency                                |  | $        | 59.8    |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   | 59.8      |   
|Contract guarantee                                                                |  |          | (2.6    | ) |        |   | (2.5    | )     |  | $ | (2.3    | ) |  | $    | (2.1    | ) |  |   | (9.5      | ) 
|Gain on exchange of WSJ Europe and Handelsblatt interests                         |  |          |         |   |        |   |         |       |  |   |         |   |  |      | 11.4    |   |  |   | 11.4      |   
|Certain income tax matters                                                        |  |          |         |   |        |   |         |       |  |   | 19.5    |   |  |      |         |   |  |   | 19.5      |   
|                                                                                  |  |          |         |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   |           |   
|                                                                                  |  | $        | 57.2    |   |        | $ | 8.6     |       |  | $ | 17.2    |   |  | $    | 9.3     |   |  | $ | 92.2      | **
|                                                                                  |  |          |         |   |        |   |         |       |  |   |         |   |  |      |         |   |  |   |           |   



|(**) | The sum of the individual amounts does not equal the total due to rounding.
|---- | ---------------------------------------------------------------------------



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NOTE 16. SUBSEQUENT EVENT



On January 21, 2005, the Company completed its acquisition of MarketWatch, Inc. (MarketWatch) for a purchase price of
approximately $538 million, including transaction costs. This represents a purchase price of $18 per diluted common share and was financed by $439 million of commercial paper borrowings, with the balance funded in cash by the Company, including cash
received from MarketWatch. The commercial paper borrowings, which were refinanced in part with the proceeds of a $225 million 3.875% three-year bond offering that occurred during the first quarter of 2005, are supported by a $260 million 60-day
revolving credit facility dated January 20, 2005 and $440 million of multi-year revolving credit facilities.



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



The Company believes that the MarketWatch acquisition will complement The Wall Street
Journal Online network, which provides premium business news to about three million unique visitors per month. By combining the traffic of The Wall Street Journal network of sites and MarketWatch, the Web sites are expected to have close
to nine million unduplicated unique visitors per month. These factors contributed to a purchase price in excess of the fair market value of the net tangible and intangible assets acquired from MarketWatch, and as a result, the Company recorded
goodwill in connection with this transaction.



Under the terms of the merger
agreement, each outstanding common share of MarketWatch was exchanged for $18, representing approximately 28.2 million shares, which amounts to approximately $507.8 million in aggregate cash, and together with approximately $25 million related to
1.2 million stock options to be exchanged and direct transaction costs of approximately $5.1 million, resulted in an aggregate purchase price of approximately $538 million. The value of the stock options was determined using the Black-Scholes option
valuation model.



Under the purchase method of accounting, the total estimated
purchase price is allocated to MarketWatchs net tangible and intangible assets based upon their estimated fair value as of the date of completion of the merger. Based upon the estimated purchase price and the preliminary valuation performed,
the preliminary purchase price allocation, which is subject to change based on Dow Jones final analysis, is as follows (in thousands):



|                              |  |   |         |  
|----------------------------- |  | - | ------- | -
|Tangible assets:              |  |   |         |  
|Current assets                |  | $ | 82,502  |  
|Property, plant and equipment |  |   | 4,357   |  
|Other assets  long term      |  |   | 33,904  |  
|                              |  |   |         |  
|Total tangible assets         |  |   | 120,763 |  
|                              | 
|Intangible assets:            |  |   |         |  
|Customer relationships        |  |   | 16,800  |  
|Developed technology          |  |   | 13,200  |  
|Trade name                    |  |   | 30,000  |  
|Goodwill                      |  |   | 398,026 |  
|                              |  |   |         |  
|Total intangible assets       |  |   | 458,026 |  
|                              | 
|Liabilities assumed:          |  |   |         |  
|Current liabilities           |  |   | (40,140 | )
|Other liabilities  long term |  |   | (810    | )
|                              |  |   |         |  
|Total liabilities assumed     |  |   | (40,950 | )
|                              | 
|Net assets acquired           |  | $ | 537,839 |  
|                              |  |   |         |  



A preliminary estimate of $30 million
has been allocated to amortizable intangible assets consisting of customer-related intangible assets and developed technology with weighted-average useful lives of six and four years, respectively. Further, a preliminary estimate of $30 million has
been allocated to indefinite lived intangible assets, principally trade names, which will not be amortized. A preliminary estimate of $398 million has been allocated to goodwill. Goodwill represents the excess of the purchase price over the fair
value of the net tangible and intangible assets acquired, and is not deductible for tax purposes. The preliminary purchase price allocation for MarketWatch is subject to revision as more detailed analysis is completed and additional information on
the fair values of MarketWatchs assets and liabilities becomes available. Any change in the fair value of the net assets of MarketWatch will change the amount of the purchase price allocable to goodwill.





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MANAGEMENTS RESPONSIBILITY FOR FINANCIAL STATEMENTS



To the Stockholders of Dow Jones & Company, Inc.:



Management has prepared and is responsible for the Companys consolidated financial statements and related information appearing in this report. The financial statements, which include amounts based on estimates and judgments that
Management believes are reasonable, have been prepared in conformity with generally accepted accounting principles consistently applied. Accordingly, Management believes that the consolidated financial statements reasonably present the
Companys financial position and results of operations and that the form and substance of transactions are fairly reflected.



Management has developed and continues to maintain a system of internal accounting and other controls for the Company and its subsidiaries. Management believes these
controls provide reasonable assurance that assets are safeguarded from loss or unauthorized use and that the Companys financial records are a reliable basis for preparing the financial statements. The Companys system of internal controls
is supported by written policies, including a code of conduct, a program of internal audits, and by a program of selecting and training qualified staff. Underlying the concept of reasonable assurance is the premise that the cost of control should
not exceed the benefit derived.



PricewaterhouseCoopers LLP, an independent
registered public accounting firm, audited the consolidated financial statements of the Company and its internal control over financial reporting, as described in their report. Their report expresses an opinion on whether the financial statements
included in the Form 10-K present fairly, in all material respects, the financial condition of the Company and the results of its operations and its cash flows in accordance with accounting principles generally accepted in the United States of
America and opinions on managements assessment of the effectiveness of the Companys internal control over financial reporting as of December 31, 2004 and on the effectiveness of the Companys internal control over financial
reporting as of December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).



The Board of Directors of the Company, through its audit committee consisting solely of
independent directors, is responsible for reviewing and monitoring the Companys financial reporting, accounting practices and the retention of the independent registered public accounting firm. The audit committee meets regularly with
financial management, internal auditors and the independent registered public accounting firm  both separately and together  to review the results of their audits, the adequacy of internal accounting controls and financial reporting
matters.



|                        |  |  |  |                          |  |  |  | 
|----------------------- |  |  |  | ------------------------ |  |  |  | 
|/s/ Peter R. Kann       |  |  |  | /s/ Christopher W. Vieth |  |  |  | 
|                        |  |  |  |                         
|Peter R. Kann           |  |  |  | Christopher W. Vieth     |  |  |  | 
|Chairman of the Board   |  |  |  | Vice President           |  |  |  | 
|Chief Executive Officer |  |  |  | Chief Financial Officer  |  |  |  | 





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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of Dow Jones & Company, Inc.:



We have completed an integrated audit of Dow Jones & Company, Inc.s 2004 consolidated financial statements and of its internal control over financial reporting as of December 31, 2004 and audits of its 2003
and 2002 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.



Consolidated financial statements and financial statement
schedule



In our opinion, the consolidated financial statements listed in
the index appearing under Item 15(a)(1) present fairly, in all material respects, the financial position of Dow Jones & Company, Inc. and its subsidiaries at December 31, 2004 and 2003, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index
appearing under Item 15(a) (2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are
the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



Internal control over financial reporting



Also, in our opinion, managements assessment, included in Managements Report on Internal Control Over Financial Reporting
appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of December 31, 2004 based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2004, based on criteria established in Internal Control - Integrated Framework issued by the COSO. The Companys management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on managements assessment and on the effectiveness of the Companys internal control over financial reporting based on
our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over
financial reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.



A companys internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the companys assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



|                              
|------------------------------
|                              
|/s/ PricewaterhouseCoopers LLP
|PricewaterhouseCoopers LLP    
|New York, New York            
|March 8, 2005                 



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



Not applicable.





ITEM 9A. CONTROLS AND PROCEDURES.



Evaluation
of Disclosure Controls and Procedures



We have established disclosure
controls and procedures to ensure that material information relating to the Company and its consolidated subsidiaries is made known to the officers who certify the Companys financial reports and to other members of senior management and the
Board of Directors.



Based on their evaluation as of December 31, 2004, the
principal executive officer and principal financial officer of the Company have concluded that the Companys disclosure controls and procedures, as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (Exchange Act),
are effective to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and
forms.



Managements Report on
Internal Control Over Financial Reporting



Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive
officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control  Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control  Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2004.
Our managements assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their
report which is included herein.



Changes in Internal Control over Financial
Reporting



There were no changes in the Companys internal control
over financial reporting that occurred during the three month period ended December 31, 2004 that have materially affected, or are reasonable likely to materially affect, the Companys internal control over financial reporting.





ITEM 9B. OTHER INFORMATION.



Not applicable





PART III.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.



The information required by this item with respect to directors of the Company is incorporated by reference to the tables, including the footnotes thereto, titled Nominees for Election at the Annual
Meeting and Incumbent Directors (Class of 2006) in the 2005 Proxy Statement. The information required by this item with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934 is incorporated by reference to
the material under the caption Section 16(a) Beneficial Ownership Reporting Compliance in the 2005 Proxy Statement. For the information required by this item relating to executive officers, see Part I, page 9 of this 2004 Form 10-K. The
information required by this item with respect to family relationships is incorporated by reference to footnotes (1) and (6) under the table titled Nominees for Election at the Annual Meeting in the 2005 Proxy Statement.



The information required by this item with respect to the Audit Committee is incorporated by
reference to the information appearing under the captions Audit CommitteeCommittee Independence, Charter, and Audit Committee Financial Expert and Board of DirectorsDirector Independence in the 2005 Proxy
Statement.



The information required by this item with respect to the
Companys Code of Ethics is incorporated by reference to the information appearing under the caption Code of Conduct in the 2005 Proxy Statement.



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ITEM 11. EXECUTIVE COMPENSATION.



The information
required by this item is incorporated by reference to the material as well as the tables, including the footnotes thereto, appearing under the captions Executive Compensation, Mr. Skinners Retirement Agreement,
Amended and Restated Separation Plan for Senior Management, Executive Death Benefit Agreement, and Compensation Committee Interlocks and Insider Participation in the 2005 Proxy Statement, to the material under the
captions Compensation Committee Report on Executive Compensation and Comparison of Total Stockholder Return and in the first four paragraphs under the caption Board of Directors  Meetings of the Board and
Committees; Director Compensation; Attendance in the 2005 Proxy Statement.





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



The information required by this item is incorporated by reference to the tables, including the footnotes thereto, appearing under the captions Security Ownership of Certain Beneficial Owners and
Security Ownership of Directors and Management in the 2005 Proxy Statement.



The following table provides the Companys equity compensation plan information as of December 31, 2004. Under these plans, the Companys common stock may be issued upon the exercise of options.



|                                                               |  |                                                                      |  |                                                                        |  |                                                                         |    
|-------------------------------------------------------------- |  | -------------------------------------------------------------------- |  | ---------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ---
|Plan Category                                                  |  | Number of Securities to beissued upon exercise ofoutstanding options |  | Weighted average exerciseprice of outstandingoptions compensation plan |  | Number of securitiesremaining available forfuture issuance under equity |    
|Equity compensation plans approved by security holders (a)     |  | 9,435,414                                                            |  | $          52.74                                                       |  | 4,430,977                                                               | (b)
|                                                               |  |                                                                      | 
|Equity compensation plans not approved by security holders (c) |  | 3,305                                                                |  | 35.76                                                                  |  | 401,634                                                                 |    
|                                                               |  |                                                                      |  |                                                                        |  |                                                                         |    
|TOTAL                                                          |  | 9,438,719                                                            |  |                                                                        |  | 4,832,611                                                               |    
|                                                               |  |                                                                      |  |                                                                        |  |                                                                         |    



|(a) | Consists of 2001 Long-Term Incentive Plan and 1998 Employee Stock Purchase Plan. The 1998 Employee Stock Purchase Plan has 60,397 shares outstanding at the price of $38.00.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | Includes 742,088 shares reserved for contingent stock rights and 1,147,061 shares available for the 1998 Employee Stock Purchase Plan.
|--- | --------------------------------------------------------------------------------------------------------------------------------------



|(c) | Dow Jones Reuters Business Interactive, LLC 2000 Employee Stock Purchase Plan.
|--- | ------------------------------------------------------------------------------





ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



The information required by this item is incorporated by reference to footnotes 4 and 10 to the tables titled Nominees for Election at the Annual Meeting and Incumbent Directors (Class of 2006) and the section titled
Certain Relationships and Related Transactions in the 2005 Proxy Statement.





ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.



The information required by this item is incorporated by reference to the tables, including the footnotes thereto, appearing under the captions Audit Committee-Audit Fees, Audit Related Fees, Tax Fees, All Other Fees, Audit Committee
Pre-Approval Process in the 2005 Proxy Statement.



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PART IV.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.



|                                                                                                     |  |               
|---------------------------------------------------------------------------------------------------- |  | --------------
|                                                                                                     |  | Page Reference
|(a)(1) Financial Statements:                                                                         |  |               
|                                                                                                     | 
|Included in Part II, Item 8 of this report:                                                          |  |               
|                                                                                                     | 
|Consolidated statements of income for the years ended December 31, 2004, 2003 and 2002               |  | 38            
|                                                                                                     | 
|Consolidated balance sheets, December 31, 2004 and 2003                                              |  | 39-40         
|                                                                                                     | 
|Consolidated statements of cash flows for the years ended December 31, 2004, 2003 and 2002           |  | 41            
|                                                                                                     | 
|Consolidated statements of stockholders equity for the years ended December 31, 2004, 2003 and 2002 |  | 42-43         
|                                                                                                     | 
|Notes to financial statements                                                                        |  | 44            
|                                                                                                     | 
|Statement of managements responsibility for financial statements                                    |  | 70            
|                                                                                                     | 
|Report of independent registered public accounting firm                                              |  | 71            
|                                                                                                     | 
|(a)(2) Financial Statement Schedule:                                                                 |  |               
|                                                                                                     | 
|Included in Part IV of this report:                                                                  |  |               
|                                                                                                     | 
|Consent of independent registered public accounting firm                                             |  | 79            
|                                                                                                     | 
|Schedule II - Valuation and qualifying accounts and reserve                                          |  | 80            



Other schedules have been omitted
since they are either not required or not applicable.



(a) (3)
Exhibits:



|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.1            |  | The Restated Certificate of Incorporation of the Company, as amended April 21, 2003, is hereby incorporated by                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|               |  | reference to Exhibit 10.1 to its Form 10-Q for the quarter ended March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|               | 
|3.2            |  | The By-laws of the Company restated as of April 21, 2003, is hereby incorporated by reference to Exhibit 10.2 to its Form 10-Q for the quarter ended March 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               | 
|10.1           |  | Lease between the Company and World Financial Center formerly known as Olympia and York Battery Park Company, of space in The World Financial Center, New York City, is hereby incorporated by
reference to Exhibit 10.9 to its Form 10-K for the year ended December 31, 1983 as amended by its First through Eighth Amendments and the Letter agreements relating to such lease, which are hereby incorporated by reference to Exhibit 10.5 to its
Form 10-Q for the quarter ended September 30, 2002, as amended by its Ninth Amendment dated December 17, 2003, which is hereby incorporated by reference to Exhibit 10.1 to its Form 10-K for the year ended December 31, 2003, and as amended by its
Tenth Amendment dated June 8, 2004, and the subordination, Non-Disturbance and Attornment Agreement related thereto, which is hereby incorporated by reference to Exhibit 10.1 its Form 10-Q for the quarter ended June 30, 2004.
|               | 
|10.2           |  | Dow Jones 1991 Stock Option Plan, as amended, is hereby incorporated by reference to Exhibit 19.2 to its Form 10-Q for the quarter ended September 30, 1991.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



74



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.3           |  | Dow Jones 1992 Long Term Incentive Plan is hereby incorporated by reference to Exhibit 10 to its Form 10-Q for the quarter ended March 31, 1992.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 
|10.4           |  | Dow Jones 1997 Long Term Incentive Plan is hereby incorporated by reference to Exhibit 10 to its Form 10-Q for the quarter ended March 31, 1997.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 
|10.5           |  | Dow Jones 1998 Stock Option Plan is hereby incorporated by reference to Exhibit 10.12 to its Form 10-Q for the quarter ended March 31, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|               | 
|10.6           |  | Separation Plan for Senior Management, amended and restated as of September 15, 2004, is hereby incorporated by reference to Exhibit 10.1 to its Form 8-K dated September 20,
2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               | 
|10.7           |  | 5-Year Credit Agreement, dated June 21, 2004, is hereby incorporated by reference to Exhibit 10.3 to its Form 10-Q for the quarter ended June 30, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|               | 
|10.8           |  | 5-Year Credit Agreement, dated June 25, 2001, is hereby incorporated by reference to Exhibit 10.2 to its Form 10-Q for the quarter ended June 30, 2001, as amended by the first amendment
thereto dated as of June 24, 2002, which is hereby incorporated by reference to Exhibit 10.3 to its Form 10-Q for the quarter ended June 30, 2002, as amended by the second amendment thereto dated as of June 23, 2003, which is hereby incorporated by
reference to Exhibit 10.3 to its Form 10-Q for the quarter ended June 30, 2003, and as amended by the third amendment thereto dated as of June 21, 2004, which is hereby incorporated by reference to Exhibit 10.2 to its Form 10-Q for the quarter ended
June 30, 2004.
|               | 
|10.9           |  | Form of Executive Deferred Compensation Agreement is hereby incorporated by reference to Exhibit 10.1 to its Form 10-Q for the quarter ended September 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 
|10.10          |  | Forms of Directors Deferred Compensation Agreements is hereby incorporated by reference to Exhibit 10.2 to its Form 10-Q for the quarter ended September 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|               | 
|10.11          |  | Form of Executive Death Benefit Agreement is hereby incorporated by reference to Exhibit 10.3 to its Form 10-Q for the quarter ended September 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|               | 
|10.12          |  | Dow Jones & Company, Inc. Supplementary Benefit Plan as amended and restated effective January 1, 2000, is hereby incorporated by reference to Exhibit 10.4 to its Form 10-Q for the
quarter ended September 30, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|               | 
|10.13          |  | Agreement of Purchase and Sale, dated February 20, 2002, relating to the sale by Ottaway Newspapers of The Ashland Daily Independent to Newspaper Holdings, Inc. is hereby incorporated by
reference to Exhibit 10.14 to its Form 10-K for the year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                               
|               | 
|10.14          |  | Agreement of Purchase and Sale, dated February 20, 2002, relating to the sale by Ottaway Newspapers of The Joplin Globe to Newspaper Holdings, Inc. is hereby incorporated by reference to
Exhibit 10.15 to its Form 10-K for the year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|               | 
|10.15          |  | Agreement of Purchase and Sale, dated February 20, 2002, relating to the sale by Ottaway Newspapers of The Mankato Free Press to Newspaper Holdings, Inc. is hereby incorporated by reference
to Exhibit 10.16 to its Form 10-K for the year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|               | 
|10.16          |  | Agreement of Purchase and Sale, dated February 20, 2002, relating to the sale by Ottaway Newspapers of The Sharon Herald to Newspaper Holdings, Inc. is hereby incorporated by reference to
Exhibit 10.17 to its Form 10-K for the year ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|               | 
|10.17          |  | Indemnification Agreement, dated February 20, 2002, between Ottaway Newspapers and Newspaper Holdings, Inc. is hereby incorporated by reference to Exhibit 10.14 to its Form 10-K for the year
ended December 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|               | 
|10.18          |  | Dow Jones 2001 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 4 to its Form S-8 on May 17, 2001, as amended by the Amendment to the Dow Jones 2001 Long-Term Incentive
Plan which is hereby incorporated by reference to the Companys 2004 Proxy Statement on Schedule 14A, Appendix C, on March 19, 2004.                                                                                                                                                                                                                                                                                                                                                                                       



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|               |  |                                                                                                                                                                                                                                                                                                   
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Document                                                                                                                                                                                                                                                                                          
|10.19          |  | Form of Dow Jones & Company, Inc. Non-Qualified Stock Option Agreement is hereby incorporated by reference to Exhibit 99.1 to its Form 8-K dated December 23, 2004.                                                                                                                               
|               | 
|10.20          |  | Form of Dow Jones & Company, Inc. Contingent Stock Right Agreement is hereby incorporated by reference to Exhibit 99.2 to its Form 8-K dated December 23, 2004.                                                                                                                                   
|               | 
|10.21          |  | Form of Dow Jones & Company, Inc. Restricted Stock Unit Award Agreement is hereby incorporated by reference to Exhibit 99.3 to its Form 8-K dated December 23, 2004.                                                                                                                              
|               | 
|10.22          |  | Form of Dow Jones & Company, Inc. Restricted Stock Award Agreement is hereby incorporated by reference to Exhibit 99.4 to its Form 8-K dated December 23, 2004.                                                                                                                                   
|               | 
|10.23          |  | Dow Jones Deferred Compensation Plan is hereby incorporated by reference to Exhibit 4 to its Form S-8 on November 22, 2002.                                                                                                                                                                       
|               | 
|10.24          |  | Dow Jones 401(K) Savings Plan, amended and restated as of January 1, 1997 and reflecting revisions through December 15, 2000, and the First and Second Amendments relating to the plan is
hereby incorporated by reference to Exhibit 10.21 to its Form 10-K for the year ended December 31, 2002.
|               | 
|10.25          |  | Dow Jones Money Purchase Plan, effective January 1, 2000, and the First and Second Amendments related to the plan is hereby incorporated by reference to Exhibit 10.22 to its Form 10-K for the
year ended December 31, 2002.                                                                     
|               | 
|10.26          |  | Dow Jones Reuters Business Interactive, LLC 2000 Employee Stock Purchase Plan, dated June 22, 2000, is hereby incorporated by reference to Exhibit 10.23 to its Form 10-K for the year ended
December 31, 2002.                                                                                   
|               | 
|10.27          |  | Agreement between Dow Jones & Company and Peter Skinner, dated July 28, 2004, is hereby incorporated by reference to Exhibit 10.1 to its Form 10-Q for the quarter ended September 30,
2004.                                                                                                      
|               | 
|14             |  | Dow Jones & Company Code of Conduct is hereby incorporated by reference to Exhibit 14 to its Form 10-K for the year ended December 31, 2003.                                                                                                                                                      
|               | 
|* 21           |  | List of Subsidiaries.                                                                                                                                                                                                                                                                             
|               | 
|23             |  | Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm, is contained on page 79 of this report.                                                                                                                                                                  
|               | 
|31.1           |  | Certifications by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          
|               | 
|31.2           |  | Certifications by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          
|               | 
|32.1           |  | Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                              



|* | Securities and Exchange Commission and New York Stock Exchange copies only.
|- | ---------------------------------------------------------------------------



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Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



DOW JONES & COMPANY, INC.



Dated: March 10, 2005



/s/ Robert E. PerrineRobert E. PerrineController andChief Accounting Officer




Pursuant to the requirements of
the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                             |  |                                                  |  |               
|-------------------------------------------- |  | ------------------------------------------------ |  | --------------
|Signature                                    |  | Title                                            |  | Date          
|                                             |  |                                                 
|/s/ Peter R. KannPeter R. Kann               |  | Chairman of the Board Chief Executive Officer    |  | March 10, 2005
|                                             |  |                                                 
|/s/ Richard F. ZanninoRichard F. Zannino     |  | Executive Vice President Chief Operating Officer |  | March 10, 2005
|                                             |  |                                                 
|/s/ Christopher W. ViethChristopher W. Vieth |  | Vice President Chief Financial Officer           |  | March 10, 2005
|                                             |  |                                                 
|/s/ M. Peter McPhersonM. Peter McPherson     |  | Director                                         |  | March 10, 2005
|                                             |  |                                                 
|/s/ Frank N. NewmanFrank N. Newman           |  | Director                                         |  | March 10, 2005
|                                             |  |                                                 
|/s/ Harvey GolubHarvey Golub                 |  | Director                                         |  | March 10, 2005
|                                             |  |                                                 
|/s/ Christopher BancroftChristopher Bancroft |  | Director                                         |  | March 10, 2005



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|                           |  |          |  |               
|-------------------------- |  | -------- |  | --------------
|Signature                  |  | Title    |  | Date          
|                           |  |         
|/s/ Irvine O. Hockaday Jr. |  | Director |  | March 10, 2005
|Irvine O. Hockaday Jr.     |  |          |  |               
|                           |  |         
|/s/ Elizabeth Steele       |  | Director |  | March 10, 2005
|Elizabeth Steele           |  |          |  |               
|                           |  |         
|/s/ Lewis B. Campbell      |  | Director |  | March 10, 2005
|Lewis B. Campbell          |  |          |  |               
|                           |  |         
|/s/ William C. Steere Jr.  |  | Director |  | March 10, 2005
|William C. Steere Jr.      |  |          |  |               
|                           |  |         
|/s/ Roy A. Hammer          |  | Director |  | March 10, 2005
|Roy A. Hammer              |  |          |  |               
|                           |  |         
|/s/ James H. Ottaway Jr.   |  | Director |  | March 10, 2005
|James H. Ottaway Jr.       |  |          |  |               
|                           |  |         
|/s/ David K. P. Li         |  | Director |  | March 10, 2005
|David K. P. Li             |  |          |  |               
|                           |  |         
|/s/ Dieter von Holtzbrinck |  | Director |  | March 10, 2005
|Dieter von Holtzbrinck     |  |          |  |               
|                           |  |         
|/s/ Leslie Hill            |  | Director |  | March 10, 2005
|Leslie Hill                |  |          |  |               
|                           |  |         
|/s/ Vernon E. Jordan Jr.   |  | Director |  | March 10, 2005
|Vernon E. Jordan Jr.       |  |          |  |               



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CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (File No. 333-02071) and Forms S-8 (File Nos. 33-45963, 33-49311, 33-55079, 333-57175, 333-70921, 333-67523, 333-61138, 333-39842, 333-101395,
333-115370 and 333-122650) of Dow Jones & Company, Inc. of our report dated March 8, 2005 relating to the financial statements, financial statement schedule, managements assessment of the effectiveness of internal control over financial
reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.



|                              
|------------------------------
|                              
|/s/ PricewaterhouseCoopers LLP
|PricewaterhouseCoopers LLP    
|New York, New York            
|March 10, 2005                



79



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Schedule II



DOW JONES & COMPANY

and its Subsidiaries



SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS



for the years ended December 31, 2004, 2003 and 2002

(in thousands)



|                                                                |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|--------------------------------------------------------------- |  | ---------------------------- | ------- | -------------------------- | - | --------------------------- |  | ---------- | ----- |  | ------------------------ | ------- | --- |  | - | -------
|                                                                |  | Additions                   
|Description                                                     |  | Balance atBeginningof Period |         | Charged toCost andExpenses |   | Charged to OtherAccounts(1) |  | Deductions |       |  | Balance at End of Period
|Year ended December 31, 2004:                                   |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Reserves deducted from assets - Allowance for doubtful accounts |  | $                            | 5,229   |                            | $ | 3,699                       |  | $          | 989   |  | $                        | 4,389   | (2) |  | $ | 5,528  
|                                                                |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Tax valuation allowance                                         |  | $                            | 166,727 |                            | $ | 2,249                       |  |            |       |  | $                        | 3,665   |     |  | $ | 165,311
|                                                                |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Year ended December 31, 2003:                                   |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Reserves deducted from assets - Allowance for doubtful accounts |  | $                            | 5,220   |                            | $ | 2,916                       |  | $          | 870   |  | $                        | 3,777   | (2) |  | $ | 5,229  
|                                                                |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Tax valuation allowance (3)                                     |  | $                            | 275,659 |                            | $ | 216,915                     |  |            |       |  | $                        | 325,847 |     |  | $ | 166,727
|                                                                |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Year ended December 31, 2002:                                   |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Reserves deducted from assets - Allowance for doubtful accounts |  | $                            | 5,610   |                            | $ | 4,250                       |  | $          | 1,354 |  | $                        | 5,994   | (2) |  | $ | 5,220  
|                                                                |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        
|Tax valuation allowance                                         |  | $                            | 305,897 |                            | $ | 8,113                       |  |            |       |  | $                        | 38,351  |     |  | $ | 275,659
|                                                                |  |                              |         |                            |   |                             |  |            |       |  |                          |         |     |  |   |        

---

Notes:

|(1) | Recoveries of accounts previously written off and reductions of revenue.
|--- | ------------------------------------------------------------------------

|(2) | Accounts written off as uncollectible and credits issued to customers.
|--- | ----------------------------------------------------------------------

|(3) | Includes additional carryforward added in 2003 and an expiring carryforward.
|--- | ----------------------------------------------------------------------------



80