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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, 2003



OR



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



For the transition period from
 to



Commission file number 1-7564



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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



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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, 2004 was approximately $2,515,000,000.



The number
of shares outstanding of each of the registrants classes of common stock on January 31, 2004: 61,092,024 shares of Common Stock and 20,657,807 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 2004 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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DOW JONES & COMPANY, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

INDEX



|         |  |                                                                                                |  |     
|-------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|         |  |                                                                                                |  | PAGE
|PART I   |  |                                                                                                |  |     
|         |  |                                                                                               
|ITEM 1.  |  | Business                                                                                       |  | 3   
|         |  |                                                                                               
|ITEM 2.  |  | Properties                                                                                     |  | 7   
|         |  |                                                                                               
|ITEM 3.  |  | Legal Proceedings                                                                              |  | 8   
|         |  |                                                                                               
|ITEM 4.  |  | Submission of Matters to a Vote of Security Holders                                            |  | 9   
|         |  |                                                                                               
|         |  | Executive Officers of the Registrant                                                           |  |     
|         |  |                                                                                               
|PART II  |  |                                                                                                |  |     
|         |  |                                                                                               
|ITEM 5.  |  | Market for the Registrants Common Equity and Related Stockholder Matters                      |  | 10  
|         |  |                                                                                               
|ITEM 6.  |  | Selected Financial Data                                                                        |  | 10  
|         |  |                                                                                               
|ITEM 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations          |  | 11  
|         |  |                                                                                               
|ITEM 8.  |  | Financial Statements and Supplementary Data                                                    |  | 30  
|         |  |                                                                                               
|ITEM 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure           |  | 63  
|         |  |                                                                                               
|ITEM 9A. |  | Controls and Procedures                                                                        |  | 63  
|         |  |                                                                                               
|PART III |  |                                                                                                |  |     
|         |  |                                                                                               
|ITEM 10. |  | Directors and Executive Officers of the Registrant                                             |  | 63  
|         |  |                                                                                               
|ITEM 11. |  | Executive Compensation                                                                         |  | 63  
|         |  |                                                                                               
|ITEM 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 63  
|         |  |                                                                                               
|ITEM 13. |  | Certain Relationships and Related Transactions                                                 |  | 64  
|         |  |                                                                                               
|ITEM 14. |  | Principal Accounting Fees and Services                                                         |  | 64  
|         |  |                                                                                               
|PART IV  |  |                                                                                                |  |     
|         |  |                                                                                               
|ITEM 15. |  | Exhibits, Financial Statement Schedules, and Reports on Form 8-K                               |  | 65  
|         |  |                                                                                               
|         |  | Signatures                                                                                     |  | 68  



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PART I.



ITEM 1. BUSINESS.



Dow Jones & Company, Inc.
(the Company) is a global provider of business and financial news and information through newspapers, newswires, magazines, the Internet, television and radio stations. In addition, the Company owns certain general-interest community newspapers
throughout the U.S.



The Company has determined the following three reportable
segments based on the manner in which it manages its business: print publishing, electronic publishing and general-interest community newspapers. In addition, the Company reports certain administrative activities under the corporate segment.
Financial information about operating segments and geographic areas is incorporated by reference to Note 14 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, 2003, the Company employed 6,975 full-time employees compared with 6,816 full-time employees at December 31, 2002 and 8,077
at December 31, 2001. The reduction in full-time employees from 2001 was largely the result of workforce reductions in 2002 and 2001.



PRINT PUBLISHING



Print publishing, which is largely comprised of the global operations of The Wall Street Journal, produces business and financial content worldwide. This content is published primarily in the U.S., Europe, Asia and
Latin America editions of The Wall Street Journal and in U.S. television through a licensing arrangement with CNBC. The editions in the print publishing segment utilize a global management structure with shared news flows and workforce and a global
advertising customer base and pricing. U.S. television, which represents a licensing agreement with NBC to provide branding, news content and on-air expertise to CNBC, is a further extension of the Journal brand and the content it produces. Results
of the Companys international television operations are included in equity in earnings (losses) of associated companies.



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). Print publishing revenues and profits are largely dependent on B2B advertising revenue, particularly from the Companys core financial and technology sectors, which have been depressed from their cyclically high levels in 2000.
Advertising volume began to recover in the second half of 2003 but is still below what the Company considers to be normal levels. Revenues of this segment comprise approximately 60% of total Company revenues.



U.S. Publications



The Wall Street Journal, the Companys flagship publication, is one of the
countrys largest daily newspapers with average print circulation of 1,792,000 in 2003. 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. The Journal includes special sections such as The Personal Journal (business of life) section which launched in 2002 and runs every Tuesday, Wednesday and Thursday, and the Weekend
Journal section, which runs each 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, health and medicine as well as demographically targeted sections devoted to subjects of retirement and small business.



The Journal reaches additional readers through Wall Street Journal Sunday, which focuses on personal finance and careers and is published
once a week in the business sections of metropolitan newspapers with combined circulation of about 10.6 million. These branded pages now appear in the Sunday business section of more than 80 community newspapers.



The Journal production process employs electronic pagination and satellite transmission of
page images to outlying plants as well as other technologies designed to speed transmission of news and editorial material to printing plants that enables earlier delivery of fresher content to our readers.



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The Wall Street Journal is delivered principally in three ways. Each business day, approximately 130,000 copies of the
Journal are sold at newsstands. Most home and office subscription deliveries are handled through the Companys National Delivery Service, Inc. subsidiary. In 2003, the National Delivery Service, which provides early morning delivery, on average
delivered about 1.3 million, or 81%, of the Journals subscription copies each publishing day. The balance of the 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 2003 of 297,000 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. About 67,000 newsstand copies are sold each week.



The Wall Street Journal Classroom Edition is published nine times during the school year and is read by an estimated 785,000 students every month during the academic year
in more than 4,900 middle-school and high-school classrooms throughout the U.S. Individuals, organizations and corporations sponsor nearly one-half 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 2003 of 89,000, 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, the Middle East and North Africa. In 2003, the content of the international editions of the Journal was bolstered with
the addition of exclusive news and opinion articles from the Washington Post.



The Asian Wall Street Journal, which had an average circulation of 79,000 in 2003, 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. The Asian Wall Street Journal took home the Excellence in Newspapers award, the Excellence in Newspaper Design award, and the Best Opinion Piece in this years The
Society of Publishers in Asia (SOPA) awards.



The Company also publishes The
Wall Street Journal Special Editions, which are a collection of Journal pages in local languages distributed as part of 34 newspapers in 35 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.



The Far Eastern Economic Review is published weekly in Hong Kong and is Asias leading English-language business magazine, providing authoritative news and analysis on Asian business, economics and politics. Its
circulation in 2003 was about 90,000, which was concentrated in Hong Kong, Malaysia, Singapore and other parts of Southeast Asia, with more than 13,000 copies sold in North America and Europe. In 2003, The Far Eastern Economic Review won in the
Specialized Reporting category at the Society of Publishers in Asia awards.



ELECTRONIC PUBLISHING



Electronic publishing includes the
operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Consumer Electronic Publishing includes the results of WSJ.com and its related vertical sites as well as the Companys licensing/business
development and radio/audio businesses. Revenues in the electronic publishing segment are mainly subscription based and comprise about 20% of the Companys revenues.



Dow Jones Newswires



Dow Jones Newswires is the premier provider of real-time business and financial news offering real-time, comprehensive news and information for financial professionals
around the world. Its news is displayed on approximately 293,000 English-language terminals worldwide, in addition to some foreign language terminals, providing users with real-time information on equities, fixed income, foreign exchange,
commodities and energy. Dow Jones Newswires has a dedicated staff of more than 700 journalists in addition to drawing on the global resources of The Wall Street Journal and the Associated Press (AP). Since 1999, Newswires also distributes selected
content on a real-time basis to 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 is the Companys
newswire covering the global debt and money markets. Corporate Filings Alert provides real-time news covering Securities and Exchange Commission filings, bankruptcy courts and government agencies.



The Dow Jones Economic Report and the Dow Jones Financial Wire, which are produced outside
the United States with contribution from the AP since 1967, provide international economic, business and financial news to subscribers in 58 countries. In addition to these two broad international newswires, the Company and the AP offer specialized
wires dedicated to the coverage of European and Asian equities, banking and foreign exchange markets. Other newswires provided in alliance with the AP include the World Equities Report, which serves U.S. institutions investing in international
markets.



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Dow Jones Newswires also publishes in Chinese, Japanese, Spanish, French, Korean, Portuguese, Dutch, Italian, German and
Russian.



In March 2003, the Company implemented Phase I of its Newswire of the
Future, Dow Jones News Plus, which is a Web-style product that improves the presentation of the newswires, adding clarity, links, stock quotes and convenience to news feeds. The Company also produces newsletters that cover targeted industries and
trading arenas. The largest newsletter, Daily Bankruptcy Review, provides readers with a compendium of large bankruptcy filings throughout the U.S. Other newsletters target niche-investing communities. In 2003, the Company purchased Technologic
Partners, a closely held publications and events firm, which has eight online newsletters and produces six conference events annually. Technologic Partners was combined with the Newsletters group within Dow Jones Newswires.



In 2003, Dow Jones Newswires won many accolades including News Provider of the Year, Highest
Customer Satisfaction and Best Financial News Service.



Consumer
Electronic Publishing



The Wall Street Journal Online (WSJ.com),
introduced in 1996, is a paid subscription site on the Internet that offers continuously updated coverage of business news both in the U.S. and abroad. WSJ.com content is created by its own dedicated journalists in conjunction with the global
resources of The Wall Street Journal and Dow Jones Newswires. The Wall Street Journal Online has undergone a significant redesign which was launched in January 2002, featuring easier to navigate pages, state-of-the-art personalization and a more
reliable and flexible technology platform. This redesign is contributing to increased usage and advertising as well as the roll-out of new online products. In addition to continuously updated news, subscribers have access to more than 30,000
in-depth company background reports, an archive of news articles, and personalized news and stock portfolios. WSJ.com, which won the Best Newspaper Web site Web Award in 2003, had 689,000 subscribers at the end of 2003 and was the largest paid
subscription news site on the Internet.



Other consumer sites in the 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 the
Companys radio/audio business and its consumer electronic licensing/business development 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 more than 210 radio stations across the country, covering 92% of the population.



Dow Jones Indexes/Ventures



In 1997, the Company 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 now offers more than 5,000 indexes.



Dow Jones Ventures include the Companys 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 the Companys wholly-owned Ottaway Newspapers, Inc.
Revenues in this segment are largely dependent on local consumer-based advertising revenue and comprise about 20% of the Companys revenues.



During the second quarter of 2003, the Companys Ottaway Newspapers subsidiary acquired The Record of Stockton California, enhancing the Companys community
newspaper portfolio. The Record has daily paid circulation of 59,985 and Sunday circulation of 70,732, based on 2003 ABC circulation figures. Also, in the fourth quarter of 2002, the Company purchased two small papers in southern Oregon, The Ashland
Tidings and the Medford Nickel. In the first half of 2002, the Company sold five of its low-growth community newspaper properties, which completed the divestiture phase of its long-term strategy of enhancing its community newspaper portfolio.



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 2003 circulation of the dailies excluding properties sold and acquired, was approximately 379,000; Sunday circulation for
11 newspapers, on this same-property basis, was 422,000. Ottaway also publishes more than 30 weekly newspapers and shoppers. The principal administrative office of Ottaway Newspapers is in Campbell Hall, New York. The primary delivery
method for the newspapers is by carrier delivery.



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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 Dow Jones and Reuters Newswires and The Wall Street Journal, plus nearly 9,000 essential sources and another 10,000 business-oriented Web sites 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. 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 services more than 80 million households on a full-time basis and 30 million households on a part-time basis.



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, or The Record, a joint venture held equally by Dow Jones,
Pearson and Independent Media, was introduced in 1999. Vedomosti, considered the only independent business newspaper in Russia, is published Monday through Friday. Circulation reached 55,000 in 2003, with original content created by 69 local
reporters and editors and content from The Wall Street Journal and The Financial Times translated into Russian.



STOXX, Ltd was formed in 1998 by Dow Jones Indexes and the leading exchanges of France (SBF-Bourse de Paris), Germany (Deutsche Borse) and Switzerland (Swiss Exchange).
The futures contract on the Dow Jones Euro 50 has the largest open interest of all futures contracts in Europe and the second largest worldwide. In 2002, the 25% share owned by the French exchange was purchased pro-rata by the three remaining
partners, which now own 33.33% each of STOXX.



In January 2004, Dow Jones and
Bennett Coleman & Company Ltd., publisher of the Times of India and the Economic Times, entered into a Memorandum of Understanding to create a new venture in which Dow Jones would own 26% (maximum foreign ownership permitted in India) and
Bennett Coleman would own the remaining 74%. The Wall Street Journal in India, which is expected to be launched in 2004, will be aimed at global Indian business readers and international business travelers and will use the Journals global
content. The transaction is subject to execution of definitive agreements and regulatory approval.



In December 2003, the Company and the von Holtzbrinck Group exchanged equity shareholdings so as to increase the Companys interest in 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.



Other equity investments include OsterDowJones Commodity News, a commodity newswire in partnership with Oster Communications, Inc.; 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 2003, approximately 213,000 metric tons were consumed. Newsprint was purchased
principally from 10 suppliers. The Company is a limited partner in F.F. Soucy, Inc. & Partners, L.P., Riviere du Loup, Quebec, Canada. F.F. Soucy furnished 19% of total newsprint requirements in 2003. 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 $29.7 million in 2003, $31.2 million in 2002 and $34 million in 2001.



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, MarketWatch,
AOL/CNNfn and MSNMoney/CNBC.



Dow Jones index-licensing business competes
with various organizations that develop and license indexes, including Standard & Poors, 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 1 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 224,000 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 more than
300,000 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, N.J, 62,000 square feet in three locations in London and 72,000 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 $10,197,416 (allegedly the balance owed by Telerate on November 15, 2001), interest, attorneys fees, specific performance of the guarantee, and a
declaratory judgment as to the validity and interpretation of the guarantee through October 2006.



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



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 are not being pursued, and discovery is proceeding.



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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 and Mr. Vieth have been employed by the Company for fewer than five years.



Peter R. Kann, age 61, 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 45,
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.



Peter G. Skinner, age 59, Executive Vice President since October 1998 and General Counsel and Secretary since 1985, Senior Vice President from November 1989 to October
1998, President, Television from January 1995 to December 1997, served as Vice President from 1985 to November 1989. Mr. Skinner joined the Company in 1985.



L. Gordon Crovitz, age 45, 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 39,
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 55, 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 60, 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.



9



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##### Table of Contents

PART II.



ITEM 5. Market for the Registrants Common Equity and Related Stockholder Matters.



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, 2004 was 10,599 for common stock and 3,727 for class B common stock. The Company paid $1.00 per share in dividends in 2003 and in 2002.



|         |  |                   |       |                     |   |                   |      |                     |     |  |   |       |  |   |       |  |   |    
|-------- |  | ----------------- | ----- | ------------------- | - | ----------------- | ---- | ------------------- | --- |  | - | ----- |  | - | ----- |  | - | ---
|         |  | Market Price 2003 |       | Dividends Paid 2003 |   | Market Price 2002 |      | Dividends Paid 2002
|Quarters |  | High              |       | Low                 |   |                   | High |                     | Low | 
|First    |  | $                 | 46.12 |                     | $ | 33.25             |      | $                   | .25 |  | $ | 58.42 |  | $ | 49.95 |  | $ | .25
|Second   |  |                   | 48.10 |                     |   | 35.06             |      |                     | .25 |  |   | 60.20 |  |   | 46.50 |  |   | .25
|Third    |  |                   | 49.30 |                     |   | 37.70             |      |                     | .25 |  |   | 48.80 |  |   | 35.35 |  |   | .25
|Fourth   |  |                   | 53.62 |                     |   | 46.45             |      |                     | .25 |  |   | 44.37 |  |   | 29.50 |  |   | .25



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:



|                                         |  |      |           |      |   |           |  |      |           |  |      |           |   |  |   |          
|---------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | ---- | --------- |  | ---- | --------- | - |  | - | ---------
|(in thousands, except per share amounts) |  | 2003 |           | 2002 |   | 2001      |  | 2000 |           |  | 1999
|Revenues                                 |  | $    | 1,548,485 |      | $ | 1,559,173 |  | $    | 1,773,083 |  | $    | 2,202,618 |   |  | $ | 2,001,835
|Operating income                         |  |      | 142,913   |      |   | 75,083    |  |      | 110,199   |  |      | 498,226   |   |  |   | 389,541  
|Net income (loss)                        |  |      | 170,599   |      |   | 201,506   |  |      | 98,220    |  |      | (118,962  | ) |  |   | 272,429  
|Earnings (loss) per share:               |  |      |           |      |   |           |  |      |           |  |      |           |   |  |   |          
|Basic                                    |  | $    | 2.09      |      | $ | 2.41      |  | $    | 1.15      |  | $    | (1.35     | ) |  | $ | 3.01     
|Diluted                                  |  |      | 2.08      |      |   | 2.40      |  |      | 1.14      |  |      | (1.35     | ) |  |   | 2.99     
|Dividends per share                      |  |      | 1.00      |      |   | 1.00      |  |      | 1.00      |  |      | 1.00      |   |  |   | .96      
|Total assets                             |  | $    | 1,306,453 |      | $ | 1,207,659 |  | $    | 1,298,340 |  | $    | 1,362,056 |   |  | $ | 1,512,713
|Long-term debt                           |  |      | 153,110   |      |   | 92,937    |  |      | 173,958   |  |      | 150,865   |   |  |   | 149,945  



Net income (loss) included certain
items affecting comparisons as follows (presented net of taxes): (1)



|                                                       |  |      |        |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |        |  
|------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | -------- | - |  | - | ------ | -
|(in thousands)                                         |  | 2003 |        |   | 2002 |   |         | 2001 |  |   | 2000    |   |  | 1999 |         
|Restructuring and Sept. 11 related items, net          |  | $    | 11,080 |   |      | $ | (13,922 | )    |  | $ | (43,926 | ) |  |      |          |   |  | $ | (1,643 | )
|Gain on non-monetary exchange                          |  |      | 11,370 |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |        |  
|Gain on resolution of Telerate sale loss contingencies |  |      | 59,821 |   |      |   |         |      |  |   |         |   |  |      |          |   |  |   |        |  
|Gain on disposition of businesses and investments      |  |      |        |   |      |   | 164,128 |      |  |   |         |   |  | $    | 18,161   |   |  |   | 51,660 |  
|Contract guarantee, net                                |  |      | (9,523 | ) |      |   | (11,878 | )    |  |   | 17,136  |   |  |      | (255,308 | ) |  |   |        |  
|Write-down of investments                              |  |      |        |   |      |   |         |      |  |   | (8,827  | ) |  |      | (178,499 | ) |  |   |        |  
|Certain items within equity in losses                  |  |      |        |   |      |   | 1,311   |      |  |   | (3,009  | ) |  |      | 2,052    |   |  |   |        |  
|Certain income tax matters                             |  |      | 19,501 |   |      |   |         |      |  |   | 30,000  |   |  |      |          |   |  |   |        |  

---

|(1) | Refer to page 20 for further information regarding these items affecting comparisons.
|--- | -------------------------------------------------------------------------------------



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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 global provider of business and financial news and information through newspapers, newswires, magazines, the Internet, television and radio stations. In addition, the Company owns certain
general-interest community newspapers throughout the U.S. Approximately 60% of the Companys revenues are contributed from the print publishing segment, which is largely comprised of the global operations of The Wall Street Journal. The
remaining 40% of revenues are split almost equally between our general-interest community newspapers segment and our electronic publishing segment, which includes newswires, WSJ Online and other electronic operations.



The Companys overall financial results are largely dependent on the operating
performance of the global Wall Street Journal, which, to a significant extent, is dependent upon business-to-business (B2B) advertising placed in its publications. Advertising volume fell sharply from its peak in 2000 driven by overall weakness in
the global advertising environment, and particularly in the Companys core financial and technology segments. During this period, the Company responded to this difficult business climate by reducing and controlling expenses, executing its
Business Now long-range plan initiatives and carefully managing working capital and other cash flow items. Since March 2001, the Company has aggressively trimmed its cost base through workforce and other expense reductions that reduced
annual costs by approximately $190 million and headcount by 18%.



Operating
results in 2003 improved from 2002 after two years of successive declines. The increase in 2003 was broad-based with gains across all business segments as cost control efforts more than offset a less than 1% decline in total revenues. Advertising
linage at the U.S. Wall Street Journal began to strengthen in the second half of 2003 from cyclically depressed levels. For the year, Journal advertising linage was down 1.3%, as an increase of 7.7% in the second half of 2003 partially offset a 9.4%
decline in the first half of 2003. While the B2B advertising environment showed improvement in the latter half of 2003, advertising buying decisions from customers continue to be made on very short cycles. As a result, monthly linage comparisons
remain somewhat volatile and overall results remain well below normal levels.



In 2002, the Company began execution of its Business Now plan, aimed at accelerating growth and modestly reducing cyclicality by enhancing existing products and creating new ones to reach new customers, markets and channels. The cornerstone
of the Business Now plan is Todays Journal, a package of content, organization and design changes to the paper that also included a new Personal Journal section. Launched in April 2002, Todays Journal also included increasing page
capacity by 20% and tripling color page capacity to 24 pages a day. Todays Journal has been met by terrific reader response and strong advertiser response as evidenced by a 28% increase in color advertising in 2003. Since its launch in 2002,
color pages are up approximately 70% and consumer advertising is up 5%. The Company has also globally integrated news gathering across Dow Jones, including better collaboration between the Journal and Dow Jones Newswires staffs to capitalize on its
over 1,500 news employees.



The Company is also using the success of
Todays Journal to pursue another Business Now initiative; an aggressive strategy to improve circulation efficiency. The Journals circulation is already vibrant: Dow Jones has higher individually paid circulation than any other newspaper.
As such, its strategy is not aimed at growing circulation, but rather at maintaining it at the highest level of revenue and lowest productive level of spending. So far, this strategy is working reasonably well: The Company has managed to maintain
flat circulation levels while increasing its circulation profitability. Nonetheless, management is disappointed at the fact that print Journal circulation revenue is down about 3% this year, reflecting increased use of discount offers required in
this difficult economic climate and deflationary print subscription price environment.



The Companys electronic publishing segment continued to implement Business Now initiatives to improve its products, profits and margins. Dow Jones Newswires successfully launched Newswire of the Future, a Web-style product which
enables users to gain easier and more useful access to breaking news items and features available every day. In the fourth quarter of 2003, the number of terminals carrying Dow Jones Newswires increased 1% from the third quarter, which was the first
sequential increase in nearly two years, as retrenchments in the securities industry seem to have stabilized. In the second year after the launch of the redesigned Wall Street Journal Online at WSJ.com, revenues are up 28%, reflecting rate increases
and modest growth in subscribers and advertisers. This redesign included improvements in system infrastructure and a simpler, more modern architecture to accommodate long-term growth in scale and new product initiatives.



Another part of the Companys Business Now plan was to enhance our Ottaway community
newspaper property portfolio. Phase one of that strategy was completed in the first half of 2002 by divesting five low-growth community newspaper properties, which generated after-tax cash proceeds of approximately $235 million and utilized $190
million of capital loss carryforwards. The second phase of the plan was to acquire more strategic and financially attractive properties. In May 2003, the Company acquired The Record of Stockton, California (The Stockton, Record), a daily
newspaper with paid circulation of 59,985 and Sunday circulation of 70,732, and in October 2002, the Company purchased two smaller papers in southern Oregon, The Ashland Tidings and The Medford Nickel.



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##### Table of Contents

Consolidated Results of Operations



|                                         |  |      |           |      |   |           |  |   |          
|---------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|(in thousands, except per share amounts) |  | 2003 |           | 2002 |   | 2001     
|Revenues                                 |  |      |           |      |   |           |  |   |          
|Advertising                              |  | $    | 871,817   |      | $ | 877,681   |  | $ | 1,052,322
|Information services                     |  |      | 286,863   |      |   | 281,220   |  |   | 289,321  
|Circulation and other                    |  |      | 389,805   |      |   | 400,272   |  |   | 431,440  
|                                         |  |      |           |      |   |           |  |   |          
|Total revenues                           |  |      | 1,548,485 |      |   | 1,559,173 |  |   | 1,773,083
|Operating expenses                       |  |      | 1,405,572 |      |   | 1,484,090 |  |   | 1,662,884
|                                         |  |      |           |      |   |           |  |   |          
|Operating income                         |  | $    | 142,913   |      | $ | 75,083    |  | $ | 110,199  
|                                         |  |      |           |      |   |           |  |   |          
|Net income                               |  | $    | 170,599   |      | $ | 201,506   |  | $ | 98,220   
|                                         |  |      |           |      |   |           |  |   |          
|Earnings per share:                      |  |      |           |      |   |           |  |   |          
|Basic                                    |  | $    | 2.09      |      | $ | 2.41      |  | $ | 1.15     
|Diluted                                  |  |      | 2.08      |      |   | 2.40      |  |   | 1.14     



2003 Compared to 2002 -
Consolidated



Net Income



Net income in 2003 was $170.6 million, or $2.08 per diluted share, compared with 2002 net
income of $201.5 million, or $2.40 per diluted share (all per share amounts included herein are based on reported net income and diluted weighted-average shares outstanding). 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 20.



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 Ottaway properties divested or acquired
in the past 12 months, total revenue was down 1.1%, with advertising revenue down 1.7%. Information services revenues increased $5.6 million, or 2%, as strong revenue 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 Stockton Record 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.



2002 Compared to 2001 - Consolidated



Net Income



Net income in 2002 was $201.5 million, or $2.40 per diluted share, compared with earnings of $98.2 million, or $1.14 per diluted share, in 2001. Earnings per share included certain items affecting comparisons, which
netted to a gain of $1.66 per share in 2002 and a net charge of $.10 per share in 2001. These items are detailed beginning on page 20.



12



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##### Table of Contents

Revenues



Revenues in 2002 declined 12%, to $1.56 billion, driven largely by a 17% decline in advertising revenue. On a same-property basis, total revenue was down 10% and
advertising revenue decreased 14%. Information services revenue declined $8.1 million, or 2.8%, primarily due to lower domestic Newswires revenue, as a result of contraction in the securities industry; and circulation and other revenues decreased
$31.2 million, or 7.2%. On a same-property basis, circulation and other revenue was down 3.9%, on lower overall circulation revenue and declines in list rental revenue, commercial printing and reprint revenues.



Operating Expenses



Operating expenses in 2002 declined $178.8 million, or 11%, to $1.48 billion, primarily
reflecting cost-saving initiatives ($80 million), a reduction in restructuring charges and September 11 related items ($49.4 million), lower newsprint costs ($42 million), reduced costs as a result of Ottaway divestitures, net of newly-acquired
properties ($37.8 million) offset by launch and ongoing costs of Todays Journal ($32 million). Newsprint expense, on a same-property basis, was down 29.2% as a result of a 22.2% drop in prices and a 9% decline in newsprint consumption.
Employee compensation expense for 2002, excluding restructuring charges and Ottaway divested and newly-acquired newspapers, was down approximately 5% and the number of full-time employees was down 10%. The number of full-time employees at December
31, 2002 was 6,816.



Operating Income



Operating income in 2002 was $75.1 million (4.8% of revenues), down $35.1 million, or 32%,
from $110.2 million (6.2% of revenues) in 2001 as a drop-off in print publishing 2002 operating results was partially offset by increases at electronic publishing and continuing community newspapers segments and a reduction in restructuring charges.



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 14 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 20 for further explanation of these items.



The Company
reports the results of its operations in three segments: print publishing, electronic publishing and community newspapers. The Companys business and financial news and information operations are reported in two segments: print publishing and
electronic publishing. The Company also produces general-interest content for small regional communities throughout the U.S., the results of which are reported in the community newspapers segment. In addition, the Company reports certain
administrative activities under the corporate segment.



Print Publishing



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 to provide branding, news content and on-air expertise to CNBC, is a further extension of the Journal brand and the
content it produces. 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 its relative immateriality to the Companys results on a consolidated basis and because it shares similarities with the global Journal
operations. Print publishing revenues comprised roughly 60% of total Company 2003 revenues.



As discussed earlier, 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). Advertising
volume declined sharply from cyclically strong 2000 levels, driven by overall weakness in the global advertising environment, particularly in the Companys core financial and technology segments. Financial and technology advertising, comprised
about 37% of the U.S. Journals total linage in 2003, 40% in 2002 and 46% in 2001.



13



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##### Table of Contents

|                              |  |      |         |   |      |   |         |      |  |   |           |  
|----------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | --------- | -
|(in thousands)                |  | 2003 |         |   | 2002 |   |         | 2001 | 
|Revenues                      |  |      |         |   |      |   |         |      |  |   |           |  
|U.S. Publications:            |  |      |         |   |      |   |         |      |  |   |           |  
|Advertising                   |  | $    | 570,351 |   |      | $ | 585,851 |      |  | $ | 705,961   |  
|Circulation and other         |  |      | 263,300 |   |      |   | 272,100 |      |  |   | 279,959   |  
|                              |  |      |        
|International Publications:   |  |      |         |   |      |   |         |      |  |   |           |  
|Advertising                   |  |      | 47,674  |   |      |   | 54,832  |      |  |   | 79,080    |  
|Circulation and other         |  |      | 34,143  |   |      |   | 36,087  |      |  |   | 41,934    |  
|                              |  |      |         |   |      |   |         |      |  |   |           |  
|Total revenues                |  |      | 915,468 |   |      |   | 948,870 |      |  |   | 1,106,934 |  
|Expenses*                     |  |      | 907,389 |   |      |   | 956,928 |      |  |   | 1,015,466 |  
|                              |  |      |         |   |      |   |         |      |  |   |           |  
|Operating income (loss) *     |  | $    | 8,079   |   |      | $ | (8,058  | )    |  | $ | 91,468    |  
|                              |  |      |         |   |      |   |         |      |  |   |           |  
|Operating margin              |  |      | 0.9     | % |      |   | (0.8    | )%   |  |   | 8.3       | %
|Included in expenses:         |  |      |         |   |      |   |         |      |  |   |           |  
|Depreciation and amortization |  | $    | 67,054  |   |      | $ | 71,568  |      |  | $ | 65,668    |  

---

|* | Restructuring charges and September 11 related items are not included in segment expenses as management evaluates segment results exclusive of these items.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



Statistical information:



Advertising volume year-over-year percentage change:



|                               |  |       |    |  |       |    |  |       |   
|------------------------------ |  | ----- | -- |  | ----- | -- |  | ----- | --
|                               |  | 2003  |    |  | 2002  |    |  | 2001  |   
|The Wall Street Journal        |  |       |    |  |       |    |  |       |   
|General                        |  | (0.6  | )% |  | (7.9  | )% |  | (27.0 | )%
|Technology                     |  | (2.7  | )  |  | (30.4 | )  |  | (52.6 | ) 
|Financial                      |  | (15.8 | )  |  | (28.2 | )  |  | (42.3 | ) 
|Classified                     |  | 14.1  |    |  | (6.8  | )  |  | (17.8 | ) 
|Total                          |  | (1.3  | )  |  | (17.6 | )  |  | (37.6 | ) 
|                               |  |       |   
|The Asian Wall Street Journal  |  | 2.0   |    |  | (24.0 | )  |  | (29.0 | ) 
|The Wall Street Journal Europe |  | 9.3   |    |  | (22.6 | )  |  | (28.9 | ) 
|Barrons                       |  | (16.0 | )  |  | (10.4 | )  |  | (33.4 | ) 



2003 Compared to 2002  Print
Publishing



Despite the challenging advertising environment, print
publishing operating profits rose $16.1 million, to income of $8.1 million as cost containment efforts and lower costs related to the 2002 launch of Todays Journal more than offset a decline in revenue.



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. television revenue from CNBC decreased 16%. 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.



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.



14



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##### Table of Contents

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 the fourth quarter increased 7% (down 9.1%
in October, up 7.9% in November and up 39% in December). 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.



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. 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. The number of full-time employees in this segment was down 2.8% from December 31, 2002, reflecting a minor workforce reduction in the third quarter of 2003.



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.



2002 Compared to 2001  Print Publishing



2002 was the second year of heavily depressed B2B advertising at the Companys advertising-dependent print publishing businesses, which led to an operating loss for
the segment in 2002.



Revenues



In 2002, print publishing revenues declined $158.1 million, or 14%, to $948.9 million. U.S.
print publication revenue fell $128 million, or 13%, to $858 million, reflecting a decline in advertising revenue as a result of a 17.6% decline in advertising volume at The Wall Street Journal and a 10.4% decline at Barrons. Color
advertising, which is billed at a premium, increased 34% in 2002, driven by the Companys color print expansion and Todays Journal launch. U.S. television advertising license revenue from CNBC decreased 55%. International print
publication revenues declined $30.1 million, or 25%, to $90.9 million, reflecting lower advertising volume and the divestiture in 2002 of a small near break-even publication in South America. Advertising linage at The Asian Wall Street Journal, The
Wall Street Journal Europe and the Far Eastern Economic Review decreased 24%, 22.6% and 30.9%, respectively. Excluding the loss of revenue from the South American publication, international revenues were down 18%.



Wall Street Journal general advertising, which represented 42% of total 2002 Journal linage,
fell 7.9% in 2002. Within the general category, consumer advertising (which represented one quarter of total linage) increased 2.6% in 2002 on increases in auto, travel and other consumer advertising. The increase in consumer advertising was more
than offset, however, by a 20.5% decline in general B2B advertising, including declines in professional services, public utilities and other corporate advertising.



Technology advertising, which represented about 20% of total 2002 Journal linage, fell 30.4% in 2002 on declines in B2B e-commerce,
software, hardware, personal computer and telecommunications advertising. Financial advertising comprised 20% of total Journal advertising in 2002 and declined 28.2% in 2002 reflecting ongoing cyclical weakness in the financial markets. Classified
advertising linage, representing 18% of total Journal linage, declined 6.8% in 2002, primarily due to declines in help-wanted advertising.



Circulation and other revenue for U.S. publications decreased $7.9 million, or 2.8%, to $272.1 million in 2002. Average circulation for The Wall Street Journal was
1,817,000 in 2002, up modestly from 1,798,000. Barrons average annual circulation was 295,000 in 2002 compared with 291,000 in 2001. Despite an increase in average circulation, circulation revenue decreased during the year on an increase in
lower revenue-producing copies. During the fourth quarter of 2002, the Company increased the subscription price of The Wall Street Journal by $14, or 8%.



15



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##### Table of Contents

Circulation and other revenue for international publications declined $5.8 million, or 14%, to $36.1 million in 2002
resulting from an increase in lower revenue-producing copies and a decline in international conference revenues. Average combined circulation for the international editions of The Wall Street Journal was 179,000 in 2002 compared with 185,000 in
2001.



Expenses



Print publishing 2002 expenses declined $58.5 million, or 5.8%, to $956.9 million,
reflecting lower newsprint costs, cost-saving initiatives and the divestiture of the South American publication, offset somewhat by costs related to the launch of Todays Journal. Newsprint expense decreased 30% as a result of a 9.7% decrease
in consumption coupled with a 22.5% decrease in average newsprint prices.



Operating (Loss) Income



Print publishings 2002
segment loss was $8.1 million, which was down almost $100 million from 2001s segment profit of $91.5 million (8.3% of revenues), reflecting a downturn in U.S. Journal and U.S. television profits partially offset by reduced losses at the
international editions.



Electronic Publishing



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. Electronic
publishing represents about 20% of total revenues.



|                               |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|(in thousands)                 |  | 2003 |         |   | 2002 |   |         | 2001 | 
|Revenues                       |  |      |         |   |      |   |         |      |  |   |         |  
|Dow Jones Newswires:           |  |      |         |   |      |   |         |      |  |   |         |  
|North America                  |  | $    | 170,267 |   |      | $ | 177,706 |      |  | $ | 193,134 |  
|International                  |  |      | 42,803  |   |      |   | 44,519  |      |  |   | 41,864  |  
|                               |  |      |         |   |      |   |         |      |  |   |         |  
|Total Newswires                |  |      | 213,070 |   |      |   | 222,225 |      |  |   | 234,998 |  
|Consumer Electronic Publishing |  |      | 68,716  |   |      |   | 55,693  |      |  |   | 53,568  |  
|Dow Jones Indexes/Ventures     |  |      | 40,246  |   |      |   | 31,573  |      |  |   | 29,420  |  
|                               |  |      |         |   |      |   |         |      |  |   |         |  
|Total revenues                 |  |      | 322,032 |   |      |   | 309,491 |      |  |   | 317,986 |  
|Expenses*                      |  |      | 254,161 |   |      |   | 248,628 |      |  |   | 272,269 |  
|                               |  |      |         |   |      |   |         |      |  |   |         |  
|Operating income*              |  | $    | 67,871  |   |      | $ | 60,863  |      |  | $ | 45,717  |  
|                               |  |      |         |   |      |   |         |      |  |   |         |  
|Operating margin               |  |      | 21.1    | % |      |   | 19.7    | %    |  |   | 14.4    | %
|Included in expenses:          |  |      |         |   |      |   |         |      |  |   |         |  
|Depreciation and amortization  |  | $    | 26,263  |   |      | $ | 25,374  |      |  | $ | 22,421  |  
|                               |  |      |        
|Statistical:                   |  |      |         |   |      |   |         |      |  |   |         |  
|Dow Jones Newswires terminals  |  |      | 293,000 |   |      |   | 308,000 |      |  |   | 330,000 |  
|WSJ.com subscribers            |  |      | 689,000 |   |      |   | 679,000 |      |  |   | 626,000 |  

---

|* | Restructuring charges and September 11 related items are not included in segment expenses as management evaluates segment results exclusive of these items.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



2003 Compared to 2002  Electronic Publishing



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.



16



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##### Table of Contents

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. The number of full-time employees in this segment was flat from December 31, 2002.



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.



2002 Compared to 2001  Electronic Publishing



Electronic
publishing significantly improved profitability in 2002 as modestly lower segment revenues were more than offset with cost controls, which led to increased profitability and margins for the segment.



Revenues



Electronic publishing 2002 revenue decreased $8.5 million, or 2.7%, to $309.5 million, as a decline in Newswires revenue was somewhat offset
by increased revenue at Dow Jones Indexes/Ventures and Consumer Electronic Publishing.



Dow Jones Newswires revenue decreased $12.8 million, or 5.4%, to $222.2 million. North American revenue declined $15.4 million, or 8%, primarily the result of a decline in retail revenue caused by retrenchment in the securities industry.
The decline in domestic revenue was partially offset by a 6.3% increase in international newswire revenue as a result of a wholesale agreement to deliver a selection of Dow Jones news on all Moneyline Telerate terminals world-wide. English-language
terminals carrying Dow Jones Newswires at the end of 2002 were 308,000 compared with 330,000 at the end of 2001, with North American terminals declining 45,000 and international terminals increasing 23,000 year over year. International and North
American terminal counts and revenues benefited from the Moneyline Telerate bundling agreement.



Driven largely by the launch of the redesigned Online Journal at WSJ.com in January 2002, Consumer Electronic Publishing revenues increased $2.1 million, or 4%, to $55.7 million. Increases in subscriber (13%) and
advertising revenue (8%) were partially offset by declines in licensing revenue (18%). Total WSJ.com subscribers at the end of 2002 reached 679,000, up 8.5% over year-end 2001, and the number of different users who accessed at least one page of
WSJ.com subscriber-only content over the course of a 24-hour day was 121,000, up 13%, compared with 107,000 in 2001. Dow Jones Indexes/Ventures revenues, which include Dow Jones Indexes and the Companys reprints/permissions business, increased
$2.2 million, or 7.3%, to $31.6 million as a result of higher revenues at Dow Jones Indexes, somewhat offset by a decline in reprints revenue.



Expenses



Electronic publishing 2002 expenses declined $23.6 million, or 8.7%, to $248.6 million, as a result of lower employee costs, decreased royalty expense and cost controls offset by an increase in depreciation expense
related to the investment in the Companys redesigned WSJ.com Web site.



Operating Income



Electronic publishing profits in 2002
of $60.9 million (19.7% of revenues) was $15.1 million, or 33%, better than 2001 operating income of $45.7 million (14.4% of revenues). The improvement in margins and profits was primarily driven by cost control and reduced losses at Consumer
Electronic Publishing and increased profits at Dow Jones Indexes/Ventures.



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 total Company 2003 revenues.



During 2003, the Companys Ottaway Newspapers subsidiary acquired The Stockton Record,
enhancing the Companys community newspaper portfolio. The Record has daily paid circulation of 59,985 and Sunday circulation of 70,732.



17



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##### Table of Contents

During 2002, the Company sold five low-growth community newspaper properties, completing the divestiture phase of its
strategy to enhance the Ottaway Newspaper portfolio. In October 2002, the Company purchased The Ashland Tidings and The Medford Nickel, two small publications in southern Oregon.



|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|------------------------------------------------------ |  | ---- | ------- | -- | ----- | - | ------- | ---- |  | - | ------- | --
|(in thousands)                                         |  | 2003 |         |    | 2002* |   |         | 2001 | 
|Revenues                                               |  |      |         |    |       |   |         |      |  |   |         |   
|Advertising                                            |  |      |         |    |       |   |         |      |  |   |         |   
|Comparable operations                                  |  | $    | 203,136 |    |       | $ | 199,919 |      |  | $ | 194,222 |   
|Divested/newly-acquired operations                     |  |      | 24,325  |    |       |   | 15,707  |      |  |   | 53,145  |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Total advertising                                      |  |      | 227,461 |    |       |   | 215,626 |      |  |   | 247,367 |   
|                                                       |  |      |        
|Circulation and other                                  |  |      |         |    |       |   |         |      |  |   |         |   
|Comparable operations                                  |  |      | 79,100  |    |       |   | 78,719  |      |  |   | 79,109  |   
|Divested/newly-acquired operations                     |  |      | 4,424   |    |       |   | 6,467   |      |  |   | 21,687  |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Total circulation and other                            |  |      | 83,524  |    |       |   | 85,186  |      |  |   | 100,796 |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Total revenues                                         |  |      | 310,985 |    |       |   | 300,812 |      |  |   | 348,163 |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Expenses                                               |  |      |         |    |       |   |         |      |  |   |         |   
|Comparable operations                                  |  |      | 208,282 |    |       |   | 204,638 |      |  |   | 207,294 |   
|Divested/newly-acquired operations                     |  |      | 21,710  |    |       |   | 16,919  |      |  |   | 55,722  |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Total segment expenses**                               |  |      | 229,992 |    |       |   | 221,557 |      |  |   | 263,016 |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Operating income                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Comparable operations                                  |  |      | 73,954  |    |       |   | 74,000  |      |  |   | 66,037  |   
|Divested/newly-acquired operations                     |  |      | 7,039   |    |       |   | 5,255   |      |  |   | 19,110  |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Total operating income**                               |  | $    | 80,993  |    |       | $ | 79,255  |      |  | $ | 85,147  |   
|                                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Operating margin                                       |  |      |         |    |       |   |         |      |  |   |         |   
|Comparable operations                                  |  |      | 26.2    | %  |       |   | 26.6    | %    |  |   | 24.2    | % 
|Divested/newly-acquired operations                     |  |      | 24.5    | %  |       |   | 23.7    | %    |  |   | 25.5    | % 
|                                                       |  |      |        
|Included in expenses:                                  |  |      |         |    |       |   |         |      |  |   |         |   
|Depreciation and amortization                          |  |      |         |    |       |   |         |      |  |   |         |   
|Comparable operations                                  |  | $    | 10,375  |    |       | $ | 11,069  |      |  | $ | 12,699  |   
|Divested/newly-acquired operations                     |  |      | 1,675   |    |       |   | 681     |      |  |   | 3,751   |   
|                                                       |  |      |        
|Statistical information                                |  |      |         |    |       |   |         |      |  |   |         |   
|Advertising volume year-over-year percentage change*** |  |      |         |    |       |   |         |      |  |   |         |   
|Dailies                                                |  |      | (2.5    | )% |       |   | (1.7    | )%   |  |   | (4.0    | )%
|Non-Dailies                                            |  |      | 2.9     |    |       |   | (2.5    | )    |  |   | 6.6     |   
|Overall                                                |  |      | (1.6    | )  |       |   | (1.8    | )    |  |   | (2.5    | ) 

---

|* | Amounts in 2002 have been reclassified between comparable and divested/newly-acquired operations to conform with comparable operations in 2003.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------

|** | Restructuring charges and September 11 related items are not included in segment expenses as management evaluates segment results exclusive of these items.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

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



2003 Compared to 2002  Community Newspapers



Revenues



Community newspapers revenue for 2003 increased 3.4%, to $311 million, primarily reflecting incremental revenue as a result of newly-acquired newspapers and an increase
in advertising revenue. 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



18



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##### Table of Contents

preprint and other advertising revenue. Circulation and other revenue decreased 2%, primarily 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.



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 Stockton Record. On a same-property basis, the number of full-time employees at December
31, 2003, was flat with the year before.



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).



2002 Compared to 2001  Community Newspapers



Revenues



Community newspapers revenue for 2002 declined $47.4 million, or 13.6%, from 2001. On a same-property basis, revenue increased $4.1 million,
or 1.5%. Advertising revenue, on a same-property basis, increased $4.7 million, as higher preprint revenue and rate increases more than offset a modest 1.8% decline in advertising linage. Circulation and other revenues for 2002 declined $15.6
million, or 15.5%. Same-property circulation and other revenue declined slightly as an increase in circulation revenue was more than offset by a decrease in other revenue, primarily from a decline in commercial printing revenue. Average daily
circulation on a same-property basis was 384,000 in 2002 and 2001.



Expenses



Community newspapers expenses in 2002
declined $41.5 million, or 15.8%, from 2001. Same-property operating expenses decreased $3.6 million, or 1.8%, due to lower newsprint expense partially offset by increased employee benefit-related expenses. Newsprint expense fell 25.3%, on a 5.8%
decline in consumption and 20.8% lower prices.



Operating Income



Operating income in 2002 of $79.3 million (26.3% of revenues) declined
$5.9 million, or 6.9%, from 2001 operating income of $85.1 million (24.5% of revenues). Operating income on a same-property basis was $73.8 million (26.6% of revenues) compared with operating income of $66 million (24.2% of revenues) in 2001.



19



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##### Table of Contents

Certain Items Affecting Comparisons



The following table summarizes certain items affecting comparisons by year.



|                                                                              |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  
|----------------------------------------------------------------------------- | --------- | ---- | ---- |  | ---- | ---- | - | ---- | --------- | ---- | - | --- | - | ----- | --- |  | - | --------- | - |  | --- | ---- | - | --- | - | ----- | - |  | - | ----- | - |  | - | ---- | -
|(in millions, except per share amounts)                                       |           | 2003 |      |  | 2002 |      |   | 2001 |          
|                                                                              | Operating |      | Net  |  |      | EPS  |   |      | Operating |      |   | Net |   |       | EPS |  |   | Operating |   |  | Net |      |   | EPS |  
|Included in operating income: (a)                                             |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  
|Restructuring charges                                                         |           |      |      |  |      |      |   |      |           |      |   |     | $ | (26.9 | )   |  | $ | (15.8     | ) |  | $   | (.18 | ) |     | $ | (39.3 | ) |  | $ | (23.5 | ) |  | $ | (.27 | )
|World Financial Center/September 11 related:                                  |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  
|Relocation of personnel out of WFC                                            |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   | (33.9 | ) |  |   | (20.3 | ) |  |   | (.24 | )
|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  |   |     |   |       |   |  |   | 0.7   |   |  |   | .01  |  
|Restructuring/workforce reductions at Factiva and CNBC International          |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   | (1.6      | ) |  |     | (.03 | ) |     |   |       |   |  |   |       |   |  |   |      |  
|Lease termination charge at SmartMoney                                        |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   | (0.9      | ) |  |     | (.01 | ) |     |   |       |   |  |   | (2.2  | ) |  |   | (.02 | )
|Shut-down of Work.com                                                         |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   | (1.6  | ) |  |   | (.02 | )
|Gain on resolution of Telerate sale loss contingencies (c)                    |           |      |      |  |      | 59.8 |   |      |           | .73  |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  
|Sale of five Ottaway properties (d)                                           |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   | 164.1     |   |  |     | 1.94 |   |     |   |       |   |  |   |       |   |  |   |      |  
|Contract guarantee, net (e)                                                   |           |      |      |  |      | (9.5 | ) |      |           | (.12 | ) |     |   |       |     |  |   | (11.9     | ) |  |     | (.14 | ) |     |   |       |   |  |   | 17.1  |   |  |   | .20  |  
|Gain on non-monetary exchange of interests in WSJ Europe and Handelsblatt (f) |           |      |      |  |      | 11.4 |   |      |           | .14  |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  
|                                                                              |           |      |      |  |      |      |   |      |          
|Write-downs of investments: (g)                                               |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  
|Nation Multimedia                                                             |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   | (4.8  | ) |  |   | (.06 | )
|iBEAM                                                                         |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   | (4.0  | ) |  |   | (.05 | )
|Certain income tax matters (h)                                                |           |      |      |  |      | 19.5 |   |      |           | .24  |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   | 30.0  |   |  |   | .35  |  
|                                                                              |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  
|Total                                                                         |           | $    | 18.4 |  | $    | 92.2 | * |      | $         | 1.12 | * |     | $ | (23.8 | )   |  | $ | 139.6     |   |  | $   | 1.66 | * |     | $ | (73.2 | ) |  | $ | (8.6  | ) |  | $ | (.10 | )
|                                                                              |           |      |      |  |      |      |   |      |           |      |   |     |   |       |     |  |   |           |   |  |     |      |   |     |   |       |   |  |   |       |   |  |   |      |  

---

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



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



Restructuring



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. Annualized cost savings associated with the workforce reduction are expected to be
about $39 million.



In 2001, the Company initiated three separate workforce
reductions totaling roughly 550, or 6%, of its full-time employees. Severance and other exit costs related to these workforce reductions, which occurred in every business segment, amounted to $34.9 million. The Company also wrote down assets that
were made obsolete or redundant, and were abandoned totaling $4.4 million. Annualized cost savings associated with the workforce reduction are expected to be about $47 million.



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.





20



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##### Table of Contents

Relocation of personnel out of World Financial Center



The third quarter of 2001 included charges to operating income of $1.7 million ($1 million
after taxes) related to the September 11 World Trade Center terrorist attacks. The charge included temporary relocation-related costs and a charitable donation of $1 million to the September 11 Fund, which were partly offset by savings from World
Financial Center rent abatement.



In addition, the Company announced in October
2001 that it intended to permanently relocate various personnel housed at the World Financial Center to other available office space in the surrounding area, including company-owned facilities in South Brunswick, New Jersey. Dow Jones permanently
vacated four of its existing seven floors (165,000 sq ft of its more than 300,000 sq ft) of leased office space at World Financial Center. The lease for vacated floors is due to expire in 2005.



In the fourth quarter of 2001, as a result of its decision to permanently re-deploy its
personnel from the World Financial Center, Dow Jones recorded a charge of $32.2 million, primarily reflecting its obligation to the landlord on the vacated space. This amount was undiscounted and included a $3.7 million write-down of undamaged
leasehold improvements on the floors the Company was vacating. Reserves related to vacated office space totaled $18 million at December 31, 2003.



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.



(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 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. 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.



In 2001, equity in losses of associated companies included a net charge of $4.8 million ($3.1 million after taxes). The fourth quarter of 2001 included a charge of $3.6
million ($2.2 million after taxes) related to a loss on an office lease that was abandoned by SmartMoney. The third quarter of 2001 included a $1.2 million ($0.7 million after taxes) gain relating to the early extinguishment of debt for CNBC Europe.
In the first quarter of 2001, the Company recorded a charge of $2.4 million ($1.6 million after taxes) for costs related to the shut-down of Work.com, a joint venture with Excite@Home.



(c) 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. 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.



(d) 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.



(e) Contract
Guarantee, net



In 1998, the Company completed the sale of its former
subsidiary, Telerate, to Bridge Information Systems, Inc. (Bridge). The purchase price consisted of $150 million aggregate par value of 5 year, redeemable, convertible, 4% preferred stock of Bridge, which was included in other investments, and cash
of $360 million. Under the terms of the sale, Dow Jones retained its



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guarantee of payments under certain circumstances of certain annual minimum payments for data acquired by Telerate from
Cantor Fitzgerald Securities 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 Fitzgerald 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
Fitzgerald 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 Fitzgerald 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 2001 included income of $31.1 million resulting from Bridge fulfilling its
payment obligation to Cantor during its post-petition bankruptcy phase, which was partially offset by the accretion of discount on the reserve balance of $14 million. In 2001, Dow Jones made one payment of $5.8 million for amounts not paid by Bridge
prior to its bankruptcy. Earnings in 2002 and 2003 included accretion charges of $11.9 million and $9.5 million, respectively, which increased the reserve balance as of December 31, 2003 to $253.7 million. The Company has classified $164.6 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 $10,197,416 (allegedly the balance owed by Telerate on November 15, 2001), interest,
attorneys fees, specific performance of the guarantee, and a declaratory judgment as to the validity and interpretation of the guarantee through October 2006.



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



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, and discovery is proceeding.



Due to the stage of the lawsuit at December 31, 2003, 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.



(f) 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.



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(g) Write-down of Investments



In 2001, the Company realized a loss of $8.8 million from impairment in the value of its investments in Nation Multimedia Group Public Co.
($4.8 million), and iBEAM Broadcasting Corp. ($4 million).



See Note 5 to the
financial statements for additional information on the 2001 write-downs of investments.



(h) Certain Income Tax Matters



In the third quarter of
2003, the Internal Revenue Service (IRS) completed its audit of the Companys tax returns for the 1995 through 1998 tax periods, which had been amended for additional tax refunds. In October 2003, the Company received notification
that the Congressional Joint Committee on Taxation had approved these claims for tax refunds of approximately $24 million. The Company received these refunds plus interest of approximately $6.7 million in the fourth quarter of 2003. Pursuant to the
settlement of these claims, in the third quarter of 2003, the Company released $25 million of tax provisions no longer needed for loss contingencies and recorded interest income of $6.7 million ($4.0 million, 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.



A tax benefit of $30 million was recorded in the fourth quarter of 2001 as the Company
believed that it was more likely than not that it would use a portion of its capital loss carryforward to offset capital gains on the sales of the five Ottaway properties. The valuation allowance against the carryforward was reduced in an amount
equal to the anticipated net tax benefit.



Other Income/Deductions



Investment income, net of interest expense in 2003 was $4.9 million
compared to net interest expense in 2002 of $2.7 million and net investment income of $0.9 million in 2001. The positive swing in 2003 was primarily related to interest received on an IRS tax refund in 2003 of approximately $6.7 million. The
negative swing in 2002 relative to 2001 largely reflected reduced capitalized interest as a result of the completion of the Journal color expansion and the WSJ.com redesign projects.



Equity in Earnings (Losses) of Associated Companies



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.



Equity in losses in 2002 of $0.5 million was an improvement of $16.7 million compared with losses of $17.2 million in 2001. The reduced
losses were the result of improved results at SmartMoney, Factiva and CNBC International as well as a favorable comparison as the first quarter of 2001 included $2.7 million of losses from Work.com operations and shut-down costs of $2.4 million.
Partly offsetting these gains were reduced earnings at F.F. Soucy, the Companys newsprint affiliate, driven by lower newsprint prices.



Income Taxes



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



|                                                                        |  |      |   |  |      |   |  |      |  
|----------------------------------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                                                        |  | 2003 |   |  | 2002 |   |  | 2001 |  
|Effective income tax rate                                               |  | 23.3 | % |  | 24.0 | % |  | 9.9  | %
|Effective income tax rate excluding items identified in the table below |  | 39.0 | % |  | 39.7 | % |  | 40.5 | %



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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.



|                                                       |  |             |       |   |              |   |       |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  
|------------------------------------------------------ |  | ----------- | ----- | - | ------------ | - | ----- | ----------------- |  | ---- | ----------- |  | ------------ | ---- |  | ----------------- | ----- | - | ----------- | ---- | - | ------------ | - | ----- | ----------------- |  | - | ----- | - |  | ---- | -
|                                                       |  | 2003        |       |   | 2002         |   |       | 2001              | 
|(dollars in millions)                                  |  | IncomeTaxes |       |   | PretaxIncome |   |       | EffectiveTax Rate |  |      | IncomeTaxes |  | PretaxIncome |      |  | EffectiveTax Rate |       |   | IncomeTaxes |      |   | PreTaxIncome |   |       | EffectiveTax Rate | 
|Reported                                               |  | $           | 51.7  |   |              | $ | 222.3 |                   |  | 23.3 | %           |  | $            | 63.7 |  | $                 | 265.2 |   |             | 24.0 | % |              | $ | 10.8  |                   |  | $ | 109.0 |   |  | 9.9  | %
|(net of minority interests)                            |  |             |       |   |              |   |       |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  
|                                                       |  |             |       |   |              |   |       |                   | 
|Adjusted to remove:                                    |  |             |       |   |              |   |       |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  
|Cantor guarantee, net                                  |  |             |       |   |              |   | (9.5  | )                 |  |      |             |  |              |      |  |                   | (11.9 | ) |             |      |   |              |   |       |                   |  |   | 17.1  |   |  |      |  
|Gain on resolution of Telerate sale loss contingencies |  |             |       |   |              |   | 59.8  |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  
|Sale of ONI properties                                 |  |             |       |   |              |   |       |                   |  |      |             |  |              | 33.8 |  |                   | 197.9 |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  
|CNBC International capital gains                       |  |             |       |   |              |   |       |                   |  |      |             |  |              |      |  |                   | 3.9   |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  
|Write-down of investments                              |  |             |       |   |              |   |       |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   |       |                   |  |   | (8.8  | ) |  |      |  
|Certain income tax matters                             |  |             | (12.8 | ) |              |   | 6.7   |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   | (30.0 | )                 |  |   |       |   |  |      |  
|                                                       |  |             |       |   |              |   |       |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  
|Adjusted                                               |  | $           | 64.5  |   |              | $ | 165.3 |                   |  | 39.0 | %           |  | $            | 29.9 |  | $                 | 75.3  |   |             | 39.7 | % |              | $ | 40.8  |                   |  | $ | 100.7 |   |  | 40.5 | %
|                                                       |  |             |       |   |              |   |       |                   |  |      |             |  |              |      |  |                   |       |   |             |      |   |              |   |       |                   |  |   |       |   |  |      |  



Capital Loss Carryforward



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.



As of December 31, 2003, the Company had a capital loss carryforward remaining
of about $436 million (a deferred tax asset of about $167 million which is fully reserved). About $156 million of this loss carryforward is recognized for tax purposes and expires in 2006. The remaining $280 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,
2003.



Minority Interests in Losses of Subsidiaries



Minority interests in losses of subsidiaries was $1.4 million in 2003 compared with $7.7
million in 2002 and $9.3 million in 2001, predominantly reflecting the transaction with the von Holtzbrinck Group to reduce their ownership of The Wall Street Journal Europe. Although the transaction was not finalized until December 2003, the
Company began funding Wall Street Journal Europe losses at the 90% level as of January 1, 2003.



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Liquidity and Capital Resources



Cash Flow Summary



|                                                    |  |      |        |   |      |   |        |      |  |   |        |  
|--------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|(in millions)                                       |  | 2003 |        |   | 2002 |   |        | 2001 | 
|Net cash provided by operating activities           |  | $    | 219.9  |   |      | $ | 145.6  |      |  | $ | 341.7  |  
|Net cash (used in) provided by investing activities |  |      | (216.0 | ) |      |   | 158.5  |      |  |   | (172.2 | )
|Net cash (used in) provided by financing activities |  |      | (19.8  | ) |      |   | (285.7 | )    |  |   | (197.9 | )
|                                                    |  |      |        |   |      |   |        |      |  |   |        |  
|(Decrease) increase in cash and cash equivalents    |  |      | (15.8  | ) |      |   | 18.3   |      |  |   | (28.3  | )
|Cash and cash equivalents at beginning of the year  |  |      | 39.3   |   |      |   | 21.0   |      |  |   | 49.3   |  
|                                                    |  |      |        |   |      |   |        |      |  |   |        |  
|Cash and cash equivalents at December 31            |  | $    | 23.5   |   |      | $ | 39.3   |      |  | $ | 21.0   |  
|                                                    |  |      |        |   |      |   |        |      |  |   |        |  



Cash provided by operations was $219.9
million in 2003, up $74.3 million, or 51%, from cash provided by operations of $145.6 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. Income tax payments were $10 million in 2003 compared with $55.9 million in 2002 as taxes paid in 2003 included a $24 million tax refund related to the completion of the audit of the 1995 to 1998 tax
returns. Also, taxes paid in 2002 included $32 million of federal income taxes that was normally payable in 2001 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.



Cash provided by operations in 2002 was $145.6
million, down $196.1 million, or 57%, from 2001s $341.7 million. The decline was due to a drop in operating income adjusted for restructuring charges and September 11 related items not paid in each year, the timing of collections of accounts
receivable and higher income tax payments in 2002.



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 Stockton Record, 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, including $12 million for replacement of assets damaged as a result of the World Trade Center attacks,
which was fully recovered from insurers. Net cash used in investing activities was $172.2 million in 2001 and principally included capital expenditures of $128.8 million, including capital expenditures for The Wall Street Journal color expansion
project ($41 million) and the WSJ.com redesign ($19 million), as well as the funding of equity investees.



Net cash used in financing activities was $19.8 million in 2003 compared with $285.7 million in 2002 and $197.9 million in 2001. Cash outlays in 2003 included the payment of $81.6 million in dividends to shareholders
and the repurchase of shares of treasury stock of $21.1 million. Sources of cash from financing activities in 2003 included a net increase in debt of $64.7 million, proceeds from sales under stock compensation plans of $11.7 million, as well as the
receipt of $6.6 million from a minority shareholder to fund a subsidiary, net of distributions. Cash outlays in 2002 included $143.5 million to repurchase 3.2 million of the Companys shares, the payment of $83.6 million in dividends to
shareholders and the reduction in debt of $81 million. In 2001, the Company paid $154.3 million to repurchase 2.6 million shares and paid $85.8 million in dividends while increasing its debt balance only slightly.



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



As of December 31, 2003, the
balance of the reserve for the contract guarantee was $253.7 million. The Company has classified $164.6 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, 2003, it is
not possible to determine whether the court will find that any obligation under the guarantee may be dismissed or reduced. Accordingly, the Company believes the balance of the reserve continues to be appropriate.



In 2004, 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. If necessary, the Companys liquidity requirements may be funded through the issuance of commercial paper, which is
supported by a $400 million revolving credit agreement with several banks. In June 2003, the Company renewed its revolving credit agreements with several banks. Under these agreements the Company can borrow up to $400 million, $130 million through
June 21, 2004, and $270 million through June 24, 2006. The Company plans to extend the credit agreement prior to its expiration. Borrowings may be in the form of commercial paper, bank loans or long-term notes under a $300 million shelf registration
statement filed with the Securities and Exchange Commission. Commercial



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paper, amounting to $153.1 million at December 31, 2003, is classified as long-term, as it is the Companys intent
to refinance such obligations on a long-term basis. The Companys borrowing capacity is limited by certain debt covenants, based on cash flow measures. As of year-end 2003, the Companys indebtedness was approximately $438 million less
than the maximum borrowing allowed under the debt covenants. In 2003, the Company temporarily suspended its share repurchase program to utilize excess cash flow to reduce its debt.



Subsequent to the announced agreement to acquire Alternative Investor from Wicks Business Information for $85 million, which is described
further below, Standard and Poors (S&P) placed the Companys single-A-plus long term corporate-credit rating on review for a possible downgrade to single-A. S&P affirmed the Companys single A-1 short term corporate-credit
and commercial paper ratings. Because the Companys outstanding debt is in commercial paper, a downgrade in its long-term credit rating is not expected to affect its cost of financing. Moodys Investor Service and Fitch Ratings rate the
Companys senior unsecured debt at double-A3 (Moodys) and single-A-plus (Fitch).



Contractual cash obligations as of December 31, 2003, excluding the contract guarantee to Cantor/MDC discussed above, were as follows:



|                                     |  |        |       |           |   |           |  |            |      |  |   |      
|------------------------------------ |  | ------ | ----- | --------- | - | --------- |  | ---------- | ---- |  | - | -----
|                                     |  | Due in
|(in millions)                        |  | 2004   |       | 2005-2006 |   | 2007-2008 |  | After 2008
|Long-term debt                       |  | $      | 153.1 |           |   |           |  |            |      |  |   |      
|Lease commitments                    |  |        | 57.1  |           | $ | 80.7      |  | $          | 50.7 |  | $ | 128.5
|Other commitments:                   |  |        |       |           |   |           |  |            |      |  |   |      
|Lease guarantees of investees        |  |        | 1.0   |           |   | 2.6       |  |            | 2.7  |  |   | 2.0  
|Commitments for capital expenditures |  |        | 15.0  |           |   |           |  |            |      |  |   |      



Market Risk



In December 2003, the Company entered into foreign currency exchange forward contracts to
exchange US$25.4 million for 14.5 million British pounds, US$30.4 million for 24.4 million euro and US$1 million for 1.3 million Australian dollars. These contracts, which expire ratably over 2004, are designated as cash flow hedges of anticipated
operating expenses that are denominated in these foreign currencies. Revenues of the Company are largely collected in U.S. dollars. The Company has not entered into any new forward foreign exchange contracts since December 2003.



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 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s commercial paper outstanding of $153.1 million at December 31, 2003, is also subject to market risk as the debt reaches maturity and is reissued at prevailing interest rates. At December 31, 2003, interest rates outstanding ranged
from .98% to 1.17%, with a weighted-average of 1.05%. The bulk of this debt matures in the first quarter of 2004.



Labor Negotiations



The Company and its largest union, IAPE, representing about one-quarter of its employees continue to seek agreement on its employment contract, which expired in May 2003. In January 2004, the union voted to reject a
tentative contract agreement that the unions own bargaining committee had reached with the Company in November 2003. The unions new leadership, elected in December 2003, had strongly opposed ratification. The new union leadership has
said it wants to return to the bargaining table and we are hopeful we can reach a mutually agreeable settlement.



Outlook



In 2004, we expect an improving advertising climate and modest revenue growth at each of our operating segments. As we discussed earlier, advertising buying decisions from our customers continue to be made on very
short cycles and revenue recovery at the global Wall Street Journal is largely dependent on a sustained recovery in B2B advertising.



Expenses in 2004 are expected to be up around 5%, with roughly two-thirds of this increase due to an expected 11% increase in newsprint prices, higher costs as a result
of the 2003 acquisitions and higher costs as a result of unfavorable foreign exchange. All other costs will be up roughly 2% over last year as we use cost reductions to help mitigate higher medical, post-retirement and insurance costs as well as
employee salary increases.



Pending Transaction



On February 19, 2004, the Company announced that it had reached an agreement to acquire
Alternative Investor, from Wicks Business Information for $85 million, plus net working capital, as defined. The $85 million purchase price could be increased by $5 million, payable in 2008, based on the performance of the acquired business. The
acquisition is expected to be funded by the issuance of debt under the Companys commercial paper program. The transaction is pending regulatory approval and customary closing conditions, and is expected to close by the end of the first quarter
of 2004.



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Alternative Investor is a provider of newsletters, databases and industry conferences for the venture-capital and
private-equity markets, and upon the closing of the acquisition it will be combined into the Companys Dow Jones Newswires business.



This transaction is expected to be modestly accretive to Dow Jones earnings per share in 2004.



Pending Accounting Pronouncement



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 January 2004,
the Financial Accounting Standards Boards (FASB) issued Staff Position FAS 106-1, which gave companies the option of estimating the effect of the subsidy on their postretirement obligation in their 2003 financial statements or deferring the
recognition of the subsidy until definitive guidance has been issued from the FASB. The Company has elected to defer the accounting for the effects of this new law. Therefore, any measures of the accumulated postretirement benefit obligation or the
net periodic benefit costs in the Companys financial statements or accompanying notes do not reflect the effects of the Act. At this time, specific guidance on accounting for the federal subsidy is pending, but when it is final could require
the Company to change previously reported information.



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.



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 realized. 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, 2003, the Companys postretirement retiree medical benefit obligation was $239 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 $43.7 million and increased the cost for 2003 by $4.6 million. Conversely, a one percentage point decline in
assumed health care cost trend rates would have lowered the benefit obligation at the end of 2003 by $36.7 million and the cost for 2003 by $3.7 million. A one quarter of one percentage point decrease in the Companys expected discount rate in
2003 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, 2003, the Companys



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accumulated pension benefit obligation was $160.6 million, of which $160 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 2003 would have increased pension expense by approximately $0.3 million. A one quarter of one
percentage point decrease in the Companys expected discount rate in 2003 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 uses expert opinions when determining whether an intangible asset has an indefinite life.



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 and restricted stock awards was $7.4 million in
2003, $2.7 million in 2002 and $5.6 million in 2001. 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 2003, 2002 and 2001 would have been reduced by roughly $.19 per share, $.20 per share and $.16 per share, respectively.



Management must exercise judgment in assessing the likely outcome of contingencies including those relating to tax matters and legal proceedings 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. Judicial or governmental bodies largely determine the outcome of these 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.



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.



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Information Relating to Forward-Looking Statements



This document contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially
from those anticipated. Such risks and uncertainties include, but are not limited to: the cyclical nature of the Companys business and the strong negative impact of economic downturns on advertising revenues; the negative impact on the
Companys core advertising market-B2B advertising-caused by weak corporate profits, corporate scandals that have resulted in damage to business, investor and public confidence; the risk that the current weak advertising market, particularly in
the financial and technology segments, will not improve or will improve very slowly or only to a limited extent; the risk that the Company will not benefit from or will only benefit to a limited extent from any improvement in the advertising market
in the face of competition from other national business magazines, television, trade publications and other publications and services; the Companys ability to limit and manage expense growth, especially in light of its prior cost cutting and
its planned growth initiatives, without harming its growth prospects; the intense competition the Companys existing products and services face in the markets for financial news and information and advertising revenues from newspapers,
specialized magazines, free and paid Internet publications and services, news services, financial television programming and other new media; the competition the Companys print publications face from Internet sites for classified advertising;
the Companys ability to expand and diversify the Journals market segment focus beyond financial and technology; the challenge the Companys Personal Journal will face in attempting to become a leading presence in new market
segments, such as health care, automotive, telecom, and high-end consumer goods, where competing publications and services, such as specialty and trade magazines, have already established themselves; the risk that the Companys initiatives to
attract more consumer advertising, and other diversified advertising, to the Journal will not succeed; the competition the Company will face in introducing new products and services in the B2B market from already existing newsletters, trade
publications, research reports and services; the extent to which the recent enhancements to the Journal will attract a broader base of readers, subscribers, and advertisers; in light of the weak advertising market and competition, the Companys
ability to attract diverse advertisers to place color advertising in the Journal; the impact on the future circulation of the Companys print publications that may be caused by the declining frequency of regular newspaper buying by young
people; with respect to Newswires, the challenges the Company will face in promoting its NewsPlus enhancement and in launching the next stages of its Newswire of the Future initiative, in the face of competing resources for in-depth news
analysis; with respect to Newswires and other subscription-based products and services, the negative impact of business consolidations and layoffs in the financial services industry on sales of the Companys products and services; with respect
to Newswires, the challenges the Company faces in striving to increase its international revenues given the competition from and subscribers desire for, local language news services; with respect to Newswires, risks concerning the financial
viability of the Moneyline Telerate business, with which Newswires has entered into a bundling arrangement that is important to Newswires international revenues; with respect to Newswires, competition from other independent news service
providers and the risk that distributors of Newswires products may elect to distribute only their own news services; with respect to the Companys products and services aimed at the venture capital and private equity markets, the
volatility of the venture capital and private equity markets and the extent to which these markets begin to grow, following their contraction in recent years; the Companys ability to successfully integrate its acquisition of Alternative
Investor, which includes distinct newsletters, database and events businesses, into the Companys Newswires business unit, and to achieve production and operational efficiencies in doing so; the competition from other news and information
companies for products aimed at the venture capital or private equity markets; the volatility of the events business which is impacted by growth and contraction in the venture capital and private equity markets and by external factors that impact
willingness to travel, such as war and other geopolitical events; the Companys ability to find strategic and financially attractive core-business acquisition opportunities and to integrate those businesses; the Companys ability to
leverage its brands to develop new business opportunities and to generate advertising and other revenues from these products; the Companys ability to achieve strategic alliances and to improve the growth and profitability of existing strategic
alliances; with respect to the Companys community newspapers business, its ability to maintain or grow margins and to strengthen its portfolio of newspaper properties, particularly given the difficulty of finding quality newspaper properties
to acquire; the Companys ability to increase its circulation and advertising revenues from its international print publications and to further penetrate overseas markets through print and television products, given the competition from local
language publications and television networks and other international publications and television ventures; the ability of WSJ.com to continue to increase revenues through building subscriber and advertiser numbers; the amount of user traffic on the
Companys Internet sites and the pricing of advertising on Internet sites generally; the extent to which the Company is required to perform under the guarantee to Cantor Fitzgerald Securities and Market Data Corporation, and other uncertainties
relating to liability under this guarantee; potential increased regulation of online businesses; adverse developments relating to the Companys commitments, contingencies and equity investments; adverse developments relating to changes in tax
law or rates; risks related to the potential or actual insolvency or bankruptcy of any of the Companys suppliers, service providers or business partners, including providers of software and software maintenance; the Companys ability to
recover from any possible technical, hardware or software failure; the Companys ability to negotiate collective bargaining agreements with its labor unions without work interruptions and on reasonable terms; the Companys ability to
attract and retain qualified personnel if the labor market tightens as a result of an improvement in the economy; cost of newsprint; and such other risk factors as may have been or may be included from time to time in the Companys reports
filed with the Securities and Exchange Commission.



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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



CONSOLIDATED STATEMENTS OF INCOME

Dow Jones & Company

For the years ended December 31, 2003, 2002 and 2001



|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|--------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|(in thousands, except per share amounts)                  |  | 2003 |           |   | 2002 |   |           | 2001 | 
|Revenues:                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|Advertising                                               |  | $    | 871,817   |   |      | $ | 877,681   |      |  | $ | 1,052,322 |  
|Information services                                      |  |      | 286,863   |   |      |   | 281,220   |      |  |   | 289,321   |  
|Circulation and other                                     |  |      | 389,805   |   |      |   | 400,272   |      |  |   | 431,440   |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Total revenues                                            |  |      | 1,548,485 |   |      |   | 1,559,173 |      |  |   | 1,773,083 |  
|                                                          |  |      |          
|Expenses:                                                 |  |      |           |   |      |   |           |      |  |   |           |  
|News, production and technology                           |  |      | 483,709   |   |      |   | 495,480   |      |  |   | 531,584   |  
|Selling, administrative and general                       |  |      | 540,529   |   |      |   | 559,947   |      |  |   | 607,145   |  
|Newsprint                                                 |  |      | 105,066   |   |      |   | 103,534   |      |  |   | 150,791   |  
|Print delivery costs                                      |  |      | 188,662   |   |      |   | 191,581   |      |  |   | 194,432   |  
|Depreciation and amortization                             |  |      | 106,014   |   |      |   | 109,738   |      |  |   | 105,713   |  
|Restructuring charges and September 11 related items, net |  |      | (18,408   | ) |      |   | 23,810    |      |  |   | 73,219    |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Operating expenses                                        |  |      | 1,405,572 |   |      |   | 1,484,090 |      |  |   | 1,662,884 |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Operating income                                          |  |      | 142,913   |   |      |   | 75,083    |      |  |   | 110,199   |  
|                                                          |  |      |          
|Other income (deductions):                                |  |      |           |   |      |   |           |      |  |   |           |  
|Investment income                                         |  |      | 7,771     |   |      |   | 400       |      |  |   | 1,441     |  
|Interest expense                                          |  |      | (2,830    | ) |      |   | (3,083    | )    |  |   | (500      | )
|Equity in earnings (losses) of associated companies       |  |      | 2,869     |   |      |   | (488      | )    |  |   | (17,181   | )
|Gain on sale of businesses                                |  |      |           |   |      |   | 197,925   |      |  |   |           |  
|Gain on non-monetary exchange of equity holdings          |  |      | 18,699    |   |      |   |           |      |  |   |           |  
|Gain on resolution of Telerate sale loss contingencies    |  |      | 59,821    |   |      |   |           |      |  |   |           |  
|Contract guarantee, net                                   |  |      | (9,523    | ) |      |   | (11,878   | )    |  |   | 17,136    |  
|Write-down of investments                                 |  |      |           |   |      |   |           |      |  |   | (8,827    | )
|Other, net                                                |  |      | 1,138     |   |      |   | (429      | )    |  |   | (2,580    | )
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Income before income taxes and minority interests         |  |      | 220,858   |   |      |   | 257,530   |      |  |   | 99,688    |  
|Income taxes                                              |  |      | 51,704    |   |      |   | 63,741    |      |  |   | 10,794    |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Income before minority interests                          |  |      | 169,154   |   |      |   | 193,789   |      |  |   | 88,894    |  
|Minority interests in losses of subsidiaries              |  |      | 1,445     |   |      |   | 7,717     |      |  |   | 9,326     |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Net income                                                |  | $    | 170,599   |   |      | $ | 201,506   |      |  | $ | 98,220    |  
|                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Per share:                                                |  |      |           |   |      |   |           |      |  |   |           |  
|Net income:                                               |  |      |           |   |      |   |           |      |  |   |           |  
|Basic                                                     |  | $    | 2.09      |   |      | $ | 2.41      |      |  | $ | 1.15      |  
|Diluted                                                   |  |      | 2.08      |   |      |   | 2.40      |      |  |   | 1.14      |  
|                                                          |  |      |          
|Cash dividends                                            |  |      | 1.00      |   |      |   | 1.00      |      |  |   | 1.00      |  
|                                                          |  |      |          
|Weighted-average shares outstanding:                      |  |      |           |   |      |   |           |      |  |   |           |  
|Basic                                                     |  |      | 81,593    |   |      |   | 83,510    |      |  |   | 85,691    |  
|Diluted                                                   |  |      | 81,950    |   |      |   | 83,917    |      |  |   | 86,258    |  



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



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CONSOLIDATED BALANCE SHEETS

Dow Jones & Company

December 31, 2003 and 2002



|                                                                                                         |  |      |           |      |   |          
|-------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- | - | ---------
|(dollars in thousands)                                                                                   |  | 2003 |           | 2002
|Assets:                                                                                                  |  |      |           |      |   |          
|Current Assets:                                                                                          |  |      |           |      |   |          
|Cash and cash equivalents                                                                                |  | $    | 23,514    |      | $ | 39,346   
|Accounts receivable  trade, net of allowance for doubtful accounts of $5,229 in 2003 and $5,220 in 2002 |  |      | 157,750   |      |   | 146,305  
|Accounts receivable  other                                                                              |  |      | 17,522    |      |   | 23,779   
|Newsprint inventory                                                                                      |  |      | 12,315    |      |   | 9,698    
|Prepaid expenses                                                                                         |  |      | 20,055    |      |   | 16,704   
|Deferred income taxes                                                                                    |  |      | 14,723    |      |   | 14,772   
|                                                                                                         |  |      |           |      |   |          
|Total current assets                                                                                     |  |      | 245,879   |      |   | 250,604  
|                                                                                                         |  |     
|Investments in associated companies, at equity                                                           |  |      | 89,230    |      |   | 83,619   
|                                                                                                         |  |     
|Other investments                                                                                        |  |      | 14,558    |      |   | 5,587    
|                                                                                                         |  |     
|Plant, property and equipment, at cost:                                                                  |  |      |           |      |   |          
|Land                                                                                                     |  |      | 22,173    |      |   | 21,652   
|Buildings and improvements                                                                               |  |      | 431,365   |      |   | 426,540  
|Equipment                                                                                                |  |      | 1,243,122 |      |   | 1,222,946
|Construction in progress                                                                                 |  |      | 35,214    |      |   | 20,399   
|                                                                                                         |  |      |           |      |   |          
|                                                                                                         |  |      | 1,731,874 |      |   | 1,691,537
|Less, accumulated depreciation                                                                           |  |      | 1,042,590 |      |   | 970,836  
|                                                                                                         |  |      |           |      |   |          
|Plant, property and equipment, net                                                                       |  |      | 689,284   |      |   | 720,701  
|                                                                                                         |  |     
|Goodwill                                                                                                 |  |      | 153,320   |      |   | 56,251   
|                                                                                                         |  |     
|Other intangible assets, less accumulated amortization of $3,138 in 2003 and $1,297 in 2002              |  |      | 70,124    |      |   | 6,779    
|                                                                                                         |  |     
|Deferred income taxes                                                                                    |  |      | 17,394    |      |   | 71,643   
|                                                                                                         |  |     
|Other assets                                                                                             |  |      | 24,365    |      |   | 12,475   
|                                                                                                         |  |      |           |      |   |          
|Total assets                                                                                             |  | $    | 1,304,154 |      | $ | 1,207,659
|                                                                                                         |  |      |           |      |   |          



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CONSOLIDATED BALANCE SHEETS

Dow Jones & Company

December 31, 2003 and 2002



|                                                                                                                                                           |  |      |           |   |      |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|(dollars in thousands)                                                                                                                                     |  | 2003 |           |   | 2002 |  
|Liabilities:                                                                                                                                               |  |      |           |   |      |   |           |  
|Current Liabilities:                                                                                                                                       |  |      |           |   |      |   |           |  
|Accounts payable - trade                                                                                                                                   |  | $    | 65,732    |   |      | $ | 55,285    |  
|Accrued wages, salaries and commissions                                                                                                                    |  |      | 63,240    |   |      |   | 69,967    |  
|Retirement plan contributions payable                                                                                                                      |  |      | 24,224    |   |      |   | 23,850    |  
|Other payables                                                                                                                                             |  |      | 71,287    |   |      |   | 130,373   |  
|Contract guarantee obligation                                                                                                                              |  |      | 164,642   |   |      |   | 111,619   |  
|Income taxes                                                                                                                                               |  |      | 32,987    |   |      |   | 40,816    |  
|Unearned revenue                                                                                                                                           |  |      | 191,411   |   |      |   | 190,569   |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total current liabilities                                                                                                                                  |  |      | 613,523   |   |      |   | 622,479   |  
|                                                                                                                                                           |  |     
|Long-term debt                                                                                                                                             |  |      | 153,110   |   |      |   | 92,937    |  
|Deferred compensation, principally postretirement benefit obligation                                                                                       |  |      | 288,364   |   |      |   | 294,831   |  
|Contract guarantee obligation                                                                                                                              |  |      | 89,083    |   |      |   | 132,584   |  
|Other noncurrent liabilities                                                                                                                               |  |      | 23,834    |   |      |   | 33,696    |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total liabilities                                                                                                                                          |  |      | 1,167,914 |   |      |   | 1,176,527 |  
|                                                                                                                                                           |  |     
|Commitments and contingent liabilities (Note 13)                                                                                                           |  |      |           |   |      |   |           |  
|                                                                                                                                                           |  |     
|Minority interests in subsidiaries                                                                                                                         |  |      | 6,579     |   |      |   | 561       |  
|                                                                                                                                                           |  |     
|Stockholders Equity:                                                                                                                                      |  |      |           |   |      |   |           |  
|Common stock, par value $1.00 per share; authorized 135,000,000 shares; issued 81,493,687 shares in 2003 and 81,404,677 shares in
2002                     |  |      | 81,494    |   |      |   | 81,405    |  
|Class B common stock, convertible, par value $1.00 per share; authorized 25,000,000 shares; issued 20,687,333 shares in 2003 and 20,776,344
shares in 2002 |  |      | 20,687    |   |      |   | 20,776    |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|                                                                                                                                                           |  |      | 102,181   |   |      |   | 102,181   |  
|Additional paid-in capital                                                                                                                                 |  |      | 122,012   |   |      |   | 120,645   |  
|Retained earnings                                                                                                                                          |  |      | 821,733   |   |      |   | 732,720   |  
|Accumulated other comprehensive income, net of taxes:                                                                                                      |  |      |           |   |      |   |           |  
|Unrealized gain on investments                                                                                                                             |  |      | 5,683     |   |      |   | 1,565     |  
|Unrealized gain on hedging                                                                                                                                 |  |      | 453       |   |      |   | 2,059     |  
|Foreign currency translation adjustment                                                                                                                    |  |      | 3,817     |   |      |   | 266       |  
|Minimum pension liability                                                                                                                                  |  |      | (223      | ) |      |   | (9,979    | )
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|                                                                                                                                                           |  |      | 1,055,656 |   |      |   | 949,457   |  
|Less, treasury stock, at cost; 20,472,620 shares in 2003 and 20,264,693 shares in 2002                                                                     |  |      | 925,995   |   |      |   | 918,886   |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total stockholders equity                                                                                                                                 |  |      | 129,661   |   |      |   | 30,571    |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  
|Total liabilities and stockholders equity                                                                                                                 |  | $    | 1,304,154 |   |      | $ | 1,207,659 |  
|                                                                                                                                                           |  |      |           |   |      |   |           |  



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



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CONSOLIDATED STATEMENTS OF CASH FLOWS

Dow Jones & Company

For the years ended December 31, 2003, 2002 and 2001



|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|--------------------------------------------------------------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|(in thousands)                                                                    |  | 2003 |          |   | 2002 |   |          | 2001 | 
|Operating activities:                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Net income                                                                        |  | $    | 170,599  |   |      | $ | 201,506  |      |  | $ | 98,220   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |          |   |      |   |          |      |  |   |          |  
|Contract guarantee, net                                                           |  |      | 9,523    |   |      |   | 11,878   |      |  |   | (17,136  | )
|Depreciation                                                                      |  |      | 104,173  |   |      |   | 108,666  |      |  |   | 102,597  |  
|Amortization of intangibles                                                       |  |      | 1,841    |   |      |   | 1,072    |      |  |   | 3,116    |  
|Gain on sale of businesses                                                        |  |      |          |   |      |   | (197,925 | )    |  |   |          |  
|Gain on resolution of Telerate sale loss contingencies                            |  |      | (59,821  | ) |      |   |          |      |  |   |          |  
|Gain on non-monetary exchange of equity holdings                                  |  |      | (18,699  | ) |      |   |          |      |  |   |          |  
|Write-down of plant, property and equipment                                       |  |      |          |   |      |   |          |      |  |   | 22,936   |  
|Write-down of investments                                                         |  |      |          |   |      |   |          |      |  |   | 8,827    |  
|Minority interests in losses of subsidiaries                                      |  |      | (1,445   | ) |      |   | (7,717   | )    |  |   | (9,326   | )
|Equity in (earnings) losses of associated companies, net of distributions         |  |      | 7,233    |   |      |   | 9,761    |      |  |   | 26,099   |  
|Changes in assets and liabilities:                                                |  |      |          |   |      |   |          |      |  |   |          |  
|Accounts receivable                                                               |  |      | (7,812   | ) |      |   | 9,065    |      |  |   | 74,220   |  
|Other current assets                                                              |  |      | (2,157   | ) |      |   | 1,468    |      |  |   | 22,063   |  
|Unearned revenue                                                                  |  |      | (1,234   | ) |      |   | (10,044  | )    |  |   | (8,737   | )
|Accounts payable and accrued liabilities                                          |  |      | (6,754   | ) |      |   | (8,273   | )    |  |   | (18,584  | )
|Income taxes                                                                      |  |      | (6,560   | ) |      |   | (23,574  | )    |  |   | 42,406   |  
|Deferred taxes                                                                    |  |      | 45,524   |   |      |   | 31,396   |      |  |   | (31,502  | )
|Deferred compensation                                                             |  |      | 23,545   |   |      |   | 30,319   |      |  |   | 23,149   |  
|Other noncurrent assets                                                           |  |      | (25,144  | ) |      |   | (408     | )    |  |   | (13,141  | )
|Other noncurrent liabilities                                                      |  |      | (10,575  | ) |      |   | (9,750   | )    |  |   | 20,457   |  
|Other, net                                                                        |  |      | (2,337   | ) |      |   | (1,844   | )    |  |   | (3,931   | )
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Net cash provided by operating activities                                         |  |      | 219,900  |   |      |   | 145,596  |      |  |   | 341,733  |  
|                                                                                  |  |      |         
|Investing activities:                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Additions to plant, property and equipment                                        |  |      | (55,941  | ) |      |   | (77,653  | )    |  |   | (128,759 | )
|Disposition of plant, property and equipment                                      |  |      | 3,759    |   |      |   | 355      |      |  |   | 2,239    |  
|Proceeds from property damage insurance claim, net                                |  |      | 1,271    |   |      |   | 16,918   |      |  |   |          |  
|Businesses and investments acquired                                               |  |      | (149,135 | ) |      |   | (11,815  | )    |  |   | (11,179  | )
|Funding of equity investees, net                                                  |  |      | (18,878  | ) |      |   | (18,972  | )    |  |   | (41,419  | )
|Disposition of businesses and investments                                         |  |      |          |   |      |   | 243,592  |      |  |   | 1,176    |  
|Other, net                                                                        |  |      | 2,950    |   |      |   | 6,038    |      |  |   | 5,770    |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Net cash (used in) provided by investing activities                               |  |      | (215,974 | ) |      |   | 158,463  |      |  |   | (172,172 | )
|                                                                                  |  |      |         
|Financing activities:                                                             |  |      |          |   |      |   |          |      |  |   |          |  
|Cash dividends                                                                    |  |      | (81,586  | ) |      |   | (83,649  | )    |  |   | (85,789  | )
|Increase in long-term debt                                                        |  |      | 117,317  |   |      |   | 58,036   |      |  |   | 82,556   |  
|Reduction of long-term debt                                                       |  |      | (57,144  | ) |      |   | (139,057 | )    |  |   | (59,463  | )
|Book overdraft                                                                    |  |      | 4,547    |   |      |   |          |      |  |   |          |  
|Proceeds from sales under stock compensation plans                                |  |      | 11,661   |   |      |   | 16,671   |      |  |   | 15,156   |  
|Purchase of treasury stock, net of put premiums                                   |  |      | (21,135  | ) |      |   | (143,477 | )    |  |   | (154,272 | )
|Contribution from minority partner, net                                           |  |      | 6,582    |   |      |   | 5,737    |      |  |   | 3,930    |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Net cash used in financing activities                                             |  |      | (19,758  | ) |      |   | (285,739 | )    |  |   | (197,882 | )
|(Decrease) increase in cash and cash equivalents                                  |  |      | (15,832  | ) |      |   | 18,320   |      |  |   | (28,321  | )
|Cash and cash equivalents at beginning of year                                    |  |      | 39,346   |   |      |   | 21,026   |      |  |   | 49,347   |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  
|Cash and cash equivalents at end of year                                          |  | $    | 23,514   |   |      | $ | 39,346   |      |  | $ | 21,026   |  
|                                                                                  |  |      |          |   |      |   |          |      |  |   |          |  



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



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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Dow Jones & Company

For the years ended December 31, 2003, 2002 and 2001



|                                                           |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |          |  
|---------------------------------------------------------- |  | ------------ | ------ | -------------------- | - | ------ | -------------------------- |  | ------ | ----------------- | - |  | --------------------------------------------- | ------- | - | -------------- | - | ------ | ----- |  | ----------- | - |  | - | -------- | - |  | - | -------- | -
|(in thousands,except per shareamounts)                     |  | Common Stock |        | Class B Common Stock |   |        | Additional Paid-in Capital |  |        | Retained Earnings |   |  | Accumulated Other Comprehensive (Loss) income |         |   | Treasury Stock |   |        | Total | 
|                                                           |  |              |        |                      |   | Shares |                            |  | Amount |                   |  
|Balance, December 31, 2000                                 |  | $            | 81,136 |                      | $ | 21,045 |                            |  | $      | 137,481           |   |  | $                                             | 602,432 |   |                | $ | (4,555 | )     |  | (15,351,872 | ) |  | $ | (678,771 | ) |  | $ | 158,768  |  
|Net income - 2001                                          |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               | 98,220  |   |                |   |        |       |  |             |   |  |   |          |   |  |   | 98,220   |  
|Unrealized loss on investments                             |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   | (118   | )     |  |             |   |  |   |          |   |  |   | (118     | )
|Translation adjustment                                     |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   | (472   | )     |  |             |   |  |   |          |   |  |   | (472     | )
|Adjustment for realized loss included in net income        |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   | 3,846  |       |  |             |   |  |   |          |   |  |   | 3,846    |  
|                                                           |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |          |  
|Comprehensive income                                       |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   | 101,476  |  
|Dividends, $1.00 per share                                 |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               | (85,789 | ) |                |   |        |       |  |             |   |  |   |          |   |  |   | (85,789  | )
|Conversion of class B common                               |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |          |  
|stock into common stock                                    |  |              | 151    |                      |   | (151   | )                          |  |        |                   |   |  |                                               |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |          |  
|Sales under stock compensation plans                       |  |              |        |                      |   |        |                            |  |        | (3,624            | ) |  |                                               |         |   |                |   |        |       |  | 451,640     |   |  |   | 25,218   |   |  |   | 21,594   |  
|Purchase of treasury stock                                 |  |              |        |                      |   |        |                            |  |        | (6,011            | ) |  |                                               |         |   |                |   |        |       |  | (2,649,005  | ) |  |   | (148,261 | ) |  |   | (154,272 | )
|                                                           |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |          |  
|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   |  
|                                                           |  |              |        |                      |   |        |                            |  |        |                   |   |  |                                               |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |          |  



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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Dow Jones & Company

For the years ended
December 31, 2003, 2002 and 2001



|                                                               |  |             |        |                    |   |        |                           |  |                   |         |  |                                             |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |         |  
|-------------------------------------------------------------- |  | ----------- | ------ | ------------------ | - | ------ | ------------------------- |  | ----------------- | ------- |  | ------------------------------------------- | ------- | - | -------------- | - | ------ | ----- |  | ----------- | - |  | - | -------- | - |  | - | ------- | -
|(in thousands,except per shareamounts)                         |  | CommonStock |        | Class BCommonStock |   |        | Additional Paid-inCapital |  | Retained Earnings |         |  | AccumulatedOtherComprehensive (Loss) income |         |   | Treasury Stock |   |        | Total | 
|                                                               |  |             |        |                    |   | Shares |                           |  | Amount            |         | 
|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 |  
|                                                               |  |             |        |                    |   |        |                           |  |                   |         |  |                                             |         |   |                |   |        |       |  |             |   |  |   |          |   |  |   |         |  



The
accompanying notes are an integral part of the 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, 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 7).



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.



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 $6.9 million and $5.4 million higher in 2003 and 2002, 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 15).



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. The Company capitalized interest of $8.9 million in 2001 primarily related to its color expansion project. Interest capitalized in 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 an intangible with an indefinite life, including goodwill, is not amortized. Prior to January 1, 2002,
goodwill was amortized using the straight-line method over various periods, principally 40 years.



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 5 to 25 years and acquired advertising accounts are amortized over 8 to 12 years.
Other intangibles not subject to amortization consist principally of masthead (see Note 6).



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 9).



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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 gain of $0.1 million in 2003, a loss of $0.4 million in 2002 and a loss of $0.9 million in 2001.



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 (see
Note 15). Unrealized gains or losses, arising from changes in fair value, are recorded as a component of comprehensive income.



REVENUE from advertising, which is net of commissions, is recognized in the period in which the advertisement is displayed. 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 $73.3 million in 2003, $80.4 million in 2002 and $95.3 million in 2001.



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 $29.7 million in 2003, $31.2 million in 2002 and $34 million in 2001.



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 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 12). 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 and restricted stock awards, was $7.4 million in 2003, $2.7 million in 2002 and $5.6 million in
2001 (see Note 11).



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Had the Companys stock-based compensation been determined by the fair-value based method of SFAS 123,
Accounting for Stock-Based Compensation, the Companys net income and earnings per share would have been as follows:



|                                                                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|(in thousands, except per share amounts)                                                                             |  | 2003 |         |   | 2002 |   |         | 2001 | 
|Net income, as reported                                                                                              |  | $    | 170,599 |   |      | $ | 201,506 |      |  | $ | 98,220  |  
|Add: Stock-based compensation expense included in reported net income, net of taxes                                  |  |      | 4,471   |   |      |   | 1,640   |      |  |   | 3,360   |  
|Deduct: Total stock-based compensation expense determined under fair-value based method for all awards, net of taxes |  |      | (20,229 | ) |      |   | (18,238 | )    |  |   | (17,084 | )
|                                                                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Adjusted net income                                                                                                  |  | $    | 154,841 |   |      | $ | 184,908 |      |  | $ | 84,496  |  
|                                                                                                                     |  |      |         |   |      |   |         |      |  |   |         |  
|Basic earnings per share:                                                                                            |  |      |         |   |      |   |         |      |  |   |         |  
|As reported                                                                                                          |  | $    | 2.09    |   |      | $ | 2.41    |      |  | $ | 1.15    |  
|Adjusted                                                                                                             |  |      | 1.90    |   |      |   | 2.21    |      |  |   | .99     |  
|Diluted earnings per share:                                                                                          |  |      |         |   |      |   |         |      |  |   |         |  
|As reported                                                                                                          |  |      | 2.08    |   |      |   | 2.40    |      |  |   | 1.14    |  
|Adjusted                                                                                                             |  |      | 1.89    |   |      |   | 2.20    |      |  |   | .98     |  



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 2001 through 2003, and the significant weighted-average assumptions used in their determination.



|                                 |  |            |  |                         |   |  |               |   |  |              |  |            |  
|-------------------------------- |  | ---------- |  | ----------------------- | - |  | ------------- | - |  | ------------ |  | ---------- | -
|                                 |  | Fair Value |  | Risk-Free Interest Rate |   |  | DividendYield |   |  | ExpectedLife |  | Volatility |  
|Stock Purchase Plan Right        |  |            |  |                         |   |  |               |   |  |              |  |            |  
|2003                             |  | 9.70       |  | 1.0                     | % |  | 2.3           | % |  | 0.6 years    |  | 29.8       | %
|2002                             |  | 10.16      |  | 1.8                     |   |  | 2.3           |   |  | 0.6          |  | 25.7       |  
|2001                             |  | 13.17      |  | 3.6                     |   |  | 1.9           |   |  | 0.6          |  | 26.3       |  
|Options under Stock Option Plans |  |            |  |                         |   |  |               |   |  |              |  |            |  
|2003                             |  | 10.38      |  | 3.0                     | % |  | 2.2           | % |  | 5.0 years    |  | 28.0       | %
|2002                             |  | 13.55      |  | 4.4                     |   |  | 2.3           |   |  | 5.0          |  | 25.7       |  
|2001                             |  | 15.66      |  | 5.0                     |   |  | 1.9           |   |  | 5.0          |  | 25.7       |  



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



Non-monetary Exchange of Equity Holdings in 2003



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.



Based on preliminary estimates, 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.



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Acquisition of Technologic Partners in 2003



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.



Acquisition of the Record of Stockton in 2003



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). Prior to the acquisition, The Stockton Record Group
reported 2002 revenues of $37 million and operating profits of $9.6 million. The Record has daily paid circulation of 59,985 and Sunday circulation of 70,732.



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
|Subject to amortization:                                                 |  |                     |       
|Advertising accounts (amortized on a straight-line basis over 12 years)  |  | $                   | 7,200 
|Subscription accounts (amortized on a straight-line basis over 14 years) |  |                     | 4,700 
|                                                                         |  |                     |       
|Total intangibles subject to amortization                                |  |                     | 11,900
|Not subject to amortization:                                             |  |                     |       
|Other, principally masthead                                              |  |                     | 46,314
|                                                                         |  |                     |       
|Total acquired intangibles                                               |  | $                   | 58,214
|                                                                         |  |                     |       



Had these acquisitions been completed
as of January 1, 2003 or 2002, the impact on the Companys results of operations would not have been significantly different from those presented.



Resolution of Telerate Sale Loss Contingencies in 2003



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.



2002 Acquisitions



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 in 2002



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 9 for a further discussion of capital loss carryforward.



2001 Acquisitions



In June 2001, the Company acquired the assets of the York County Coast Star and the York Weekly for $6.7 million and combined these
operations with Seacoast Newspapers, Inc. in Portsmouth, New Hampshire. This acquisition was accounted for by the purchase method and resulted in other intangibles of $1.8 million, tangible net assets of $0.4 million and the balance as goodwill.



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In September 2001, the Company purchased newswire subscriber contracts from Bridge Information Systems for $4.5 million.



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)                                              |  | 2003 |         |   | 2002 |   |        | 2001
|Restructuring:                                              |  |      |         |   |      |   |        |      |  |   |       
|Severance                                                   |  |      |         |   |      | $ | 26,651 |      |  | $ | 33,453
|Write-down of assets                                        |  |      |         |   |      |   |        |      |  |   | 4,399 
|Other exit costs                                            |  |      |         |   |      |   | 222    |      |  |   | 1,377 
|World Financial Center (WFC)/September 11 related:          |  |      |         |   |      |   |        |      |  |   |       
|Gain on settlement of business interruption insurance claim |  | $    | (18,408 | ) |      |   |        |      |  |   |       
|Gain on insurance claim for property damage                 |  |      |         |   |      |   | (3,063 | )    |  |   |       
|Charge to permanently abandon WFC office space              |  |      |         |   |      |   |        |      |  |   | 32,248
|Temporary relocation and other items, net                   |  |      |         |   |      |   |        |      |  |   | 1,742 
|                                                            |  |      |         |   |      |   |        |      |  |   |       
|                                                            |  | $    | (18,408 | ) |      | $ | 23,810 |      |  | $ | 73,219
|                                                            |  |      |         |   |      |   |        |      |  |   |       



Restructuring



During 2002, the Company initiated two separate workforce reductions resulting in total
restructuring charges of $26.9 million ($15.8 million after taxes and minority interests) largely reflecting employee severance related to a workforce reduction of about 445 full-time employees, or roughly 6% of the Companys full-time
workforce.



There were three separate workforce reductions in 2001, in
aggregate affecting roughly 550 full-time employees, or 6% of the Companys full-time workforce. For all of 2001, restructuring charges totaled $39.3 million ($23.5 million after taxes and minority interests) for employee severance and for
asset write-downs associated with online and international businesses that were made obsolete, or redundant and were abandoned as a result of the restructuring plan.



The following table displays the activity and balances of the restructuring reserve account for the year ended December 31, 2003:



|                   |  |                          |        |              |   |                          |  |   |      
|------------------ |  | ------------------------ | ------ | ------------ | - | ------------------------ |  | - | -----
|(in thousands)     |  | December 31,2002 Reserve |        | CashPayments |   | December 31,2003 Reserve
|Employee severance |  | $                        | 17,116 |              | $ | 13,818                   |  | $ | 3,298
|Other exit costs   |  |                          | 264    |              |   | 78                       |  |   | 186  



As of December 31, 2003 workforce
reductions for these restructurings were substantially complete. The remaining reserve relates primarily to continuing payments for employees that were terminated.



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.



Relocation of Personnel out of World Financial Center



The third quarter of 2001 included charges to operating income of $1.7 million ($1 million after taxes) related to the September 11 World Trade Center terrorist attacks. The charge included temporary relocation
related costs and a charitable donation of $1 million to the September 11 Fund, which were partly offset by savings from World Financial Center rent abatement.



In addition, the Company announced in October 2001 that it intended to permanently relocate various personnel housed at the World Financial Center to other available
office space in the surrounding area, including Company-owned facilities in South Brunswick, New Jersey. Dow Jones permanently vacated four of its existing seven floors (165,000 sq ft of its more than 300,000 sq ft) of leased office space at World
Financial Center. The lease for vacated floors is due to expire in 2005.



In
the fourth quarter of 2001, as a result of its decision to permanently re-deploy its personnel from the World Financial Center, Dow Jones recorded a charge of $32.2 million, primarily reflecting its obligation to the landlord on the vacated space.
This amount was undiscounted and included a $3.7 million write-down of undamaged leasehold improvements on the floors the Company was vacating. Reserves relating to vacated office space totaled $18 million at December 31, 2003.



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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). The purchase price consisted of $150 million aggregate par value of 5 year, redeemable, convertible, 4% preferred stock of Bridge, which was included in other investments, and cash of $360 million. 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 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 Fitzgerald 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 Fitzgerald 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 Fitzgerald 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 2001 included income of $31.1 million resulting from Bridge fulfilling its payment obligation to Cantor during its post-petition bankruptcy phase, which was partially offset by the accretion of discount on
the reserve balance of $14 million. Dow Jones made one payment of $5.8 million for amounts not paid by Bridge prior to its bankruptcy. Earnings in 2002 and 2003 included accretion charges of $11.9 million and $9.5 million, respectively, which
increased the reserve balance as of December 31, 2003 to $253.7 million. The Company has classified $164.6 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 $10,197,416 (allegedly the balance owed by Telerate on November 15, 2001), interest, attorneys fees, specific performance of the guarantee, and a declaratory
judgment as to the validity and interpretation of the guarantee through October 2006.



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



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, and
discovery is proceeding.



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##### Table of Contents

Due to the stage of the lawsuit at December 31, 2003, 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. WRITE-DOWNS OF INVESTMENTS



In the third quarter of 2001, the Company realized a loss of $8.8 million, or $.11 per diluted share, from the impairment in the value of the Companys investments
in Nation Multimedia Group Public Co. ($4.8 million, or $.06 per share), and iBEAM Broadcasting Corp. ($4 million, or $.05 per share). These investments are marketable equity securities, which are carried at their market price. Prior to the
realization of losses for these investments in the third quarter of 2001, the Company recorded the unrealized losses associated with these investments directly to other comprehensive income in Stockholders Equity.



Nation Multimedia Group Public Company



The Company holds a less than 10% interest in Nation Multimedia Group Public Company, a
diversified media company based in Thailand, which is publicly traded on the Bangkok Exchange. Prior to and during 2000 there had been volatility in the market price of Nation Multimedia. At December 2000 the Companys investment in Nation
Multimedia was valued at $3.9 million and the Company had recorded $3.4 million of unrealized losses through other comprehensive income. The Companys investment continued to decline in 2001, and in the third quarter, the Company determined the
impairment of the investment was other than temporary. This determination was based on the investments declining market price in 2001, approximately a 37% decline through September 30, 2001, combined with increased economic uncertainty in
Southeast Asia, which was significantly heightened after the September 11 terrorist attacks.



iBEAM Broadcasting Corporation



In
October 2000, the Company received shares of iBEAM Broadcasting Corporation (iBEAM) in exchange for the Companys shares of NextVenue Inc. The Company valued the consideration based on the market value of the shares it received on the date the
purchase of NextVenue was consummated in October 2000. The market value of iBEAM began to deteriorate in the fourth quarter of 2000 and continued to deteriorate throughout 2001. As of December 31, 2000, the Company had recorded $3.3 million of
unrealized losses in other comprehensive income. In March 2001, iBEAMs 10-K public filing included a going concern opinion. In April 2001, iBEAM announced it would restructure its operations and was considering selling the Company. In May
2001, NASDAQ notified iBEAM that it may be delisted because its stock was trading below the $1.00 minimum. iBEAM received an extension and in September, its shareholders approved a one-for-ten reverse stock split, which was expected to raise the
market value. The reverse stock split failed to increase the market value and the stock continued to trade below the minimum trading level, and a delisting was likely. Considering the impact of the September 11 terrorist attacks on the economy, a
near-term rebound was not likely. Therefore, the Company realized a loss of its full $4 million investment in September 2001. Subsequent to the Companys write-down, iBEAM announced it was filing for bankruptcy and selling its assets.



NOTE 6. GOODWILL AND 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 an intangible with an indefinite life, including goodwill, is not amortized.



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##### Table of Contents

Prior to January 1, 2002, goodwill was amortized using the straight-line method over various periods, principally 40
years. The following table reflects net income and basic and diluted earnings per share assuming SFAS 142 had been adopted on January 1, 2001:



|                                                    |  |      |         |      |   |         |  |   |        
|--------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|(in thousands, except per share amounts)            |  | 2003 |         | 2002 |   | 2001   
|Net income, as reported                             |  | $    | 170,599 |      | $ | 201,506 |  | $ | 98,220 
|Add back: goodwill amortization expense, net of tax |  |      |         |      |   |         |  |   | 3,148  
|                                                    |  |      |         |      |   |         |  |   |        
|Adjusted net income                                 |  | $    | 170,599 |      | $ | 201,506 |  | $ | 101,368
|                                                    |  |      |         |      |   |         |  |   |        
|Basic earnings per share:                           |  |      |         |      |   |         |  |   |        
|As reported                                         |  | $    | 2.09    |      | $ | 2.41    |  | $ | 1.15   
|Adjusted                                            |  |      | 2.09    |      |   | 2.41    |  |   | 1.18   
|Diluted earnings per share:                         |  |      |         |      |   |         |  |   |        
|As reported                                         |  |      | 2.08    |      |   | 2.40    |  |   | 1.14   
|Adjusted                                            |  |      | 2.08    |      |   | 2.40    |  |   | 1.18   



Goodwill balances by reportable
segment were as follows:



|                                                               |  |                  |        |                       |   |                      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------- |  | ---------------- | ------ | --------------------- | - | -------------------- |  | - | ------- | - |  | - | ------- | -
|(in thousands)                                                 |  | Print Publishing |        | Electronic Publishing |   | Community Newspapers |  |   | Total   |  
|Goodwill, net of accumulated amortization at December 31, 2001 |  | $                | 16,471 |                       | $ | 2,649                |  | $ | 56,402  |   |  | $ | 75,522  |  
|Acquisitions (1)                                               |  |                  |        |                       |   | 1,824                |  |   | 5,454   |   |  |   | 7,278   |  
|Sale of ONI properties                                         |  |                  |        |                       |   |                      |  |   | (26,549 | ) |  |   | (26,549 | )
|                                                               |  |                  |        |                       |   |                      |  |   |         |   |  |   |         |  
|Goodwill, net of accumulated amortization at December 31, 2002 |  | $                | 16,471 |                       | $ | 4,473                |  | $ | 35,307  |   |  | $ | 56,251  |  
|Acquisitions (1)                                               |  |                  | 16,932 |                       |   | 3,427                |  |   | 76,710  |   |  |   | 97,069  |  
|                                                               |  |                  |        |                       |   |                      |  |   |         |   |  |   |         |  
|Goodwill, net of accumulated amortization at December 31, 2003 |  | $                | 33,403 |                       | $ | 7,900                |  | $ | 112,017 |   |  | $ | 153,320 |  
|                                                               |  |                  |        |                       |   |                      |  |   |         |   |  |   |         |  

---

|(1) | Refer to Note 2 for additional information relating to these acquisitions.
|--- | --------------------------------------------------------------------------



Intangible assets as of December 31 were as follows:



|                                                |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |      
|----------------------------------------------- |  | -------------------- | ------ | ----------------------- | - | --------- |  | -------------------- | ------ | ----------------------- | - | --------- |  | - | ----- |  | - | -----
|                                                |  | December 31, 2003    |        | December 31, 2002      
|(in thousands)                                  |  | Gross CarryingAmount |        | AccumulatedAmortization |   | NetAmount |  | Gross CarryingAmount |        | AccumulatedAmortization |   | NetAmount
|Subscription accounts                           |  | $                    | 10,249 |                         | $ | 2,311     |  | $                    | 7,938  |                         | $ | 4,862     |  | $ | 1,138 |  | $ | 3,724
|Advertising accounts                            |  |                      | 12,948 |                         |   | 827       |  |                      | 12,121 |                         |   | 3,214     |  |   | 159   |  |   | 3,055
|                                                |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |      
|Total                                           |  |                      | 23,197 |                         |   | 3,138     |  |                      | 20,059 |                         |   | 8,076     |  |   | 1,297 |  |   | 6,779
|Unamortizable intangibles, principally masthead |  |                      | 50,065 |                         |   |           |  |                      | 50,065 |                         |   |           |  |   |       |  |   |      
|                                                |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |      
|Total intangibles                               |  | $                    | 73,262 |                         | $ | 3,138     |  | $                    | 70,124 |                         | $ | 8,076     |  | $ | 1,297 |  | $ | 6,779
|                                                |  |                      |        |                         |   |           |  |                      |        |                         |   |           |  |   |       |  |   |      



Amortization expense, based on
intangibles subject to amortization held at December 31, 2003, is expected to be $2.6 million in years 2004 and 2005, $2.3 million in 2006, $1.7 million in 2007 and $1.6 million in 2008.



43



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NOTE 7. INVESTMENTS IN ASSOCIATED COMPANIES, AT EQUITY



At December 31, 2003, 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                                                
|                                                     |  |            
|Business News (Europe) L.P.                          |  | 50          |  | Business and financial news television company broadcasting as CNBC Europe, in partnership with NBC                                                      
|                                                     |  |            
|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.



Dow Jones & 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 $19.3 million in 2003, $18.4 million in 2002 and $21.5 million in 2001.



Dow Jones performs several services on behalf of Factiva, including some billing and
collections of receivables and payroll services, in addition to leasing Factiva office space. Dow Jones also provides content to Factiva for which it receives revenue. At December 31, 2003 and 2002, other receivables included net amounts due from
Factiva and Factiva customers of $3.5 million and $8.4 million, respectively. Revenues of the Company included content fees from Factiva of $11.4 million in 2003, $7.5 million in 2002 and $8.2 million in 2001.



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)                  |  | 2003 |         | 2002 |   |         | 2001 | 
|Income statement information:   |  |      |         |      |   |         |      |  |   |         |  
|Revenues                        |  | $    | 540,258 |      | $ | 606,948 |      |  | $ | 637,809 |  
|Operating income (loss)         |  |      | 12,668  |      |   | (9,031  | )    |  |   | (13,184 | )
|Net income (loss)               |  |      | 5,203   |      |   | (2,976  | )    |  |   | (22,464 | )
|                                |  |      |        
|Financial position information: |  |      |         |      |   |         |      |  |   |         |  
|Current assets                  |  | $    | 201,313 |      | $ | 190,802 |      |  | $ | 212,631 |  
|Noncurrent assets               |  |      | 172,497 |      |   | 202,562 |      |  |   | 193,207 |  
|Current liabilities             |  |      | 129,746 |      |   | 156,885 |      |  |   | 169,348 |  
|Noncurrent liabilities          |  |      | 15,041  |      |   | 22,039  |      |  |   | 72,840  |  
|Equity                          |  |      | 229,023 |      |   | 214,440 |      |  |   | 163,650 |  



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NOTE 8. LONG-TERM DEBT



Long-term debt at December 31 was as follows:



|                                                                 |  |      |         |      |   |       
|---------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------
|(in thousands)                                                   |  | 2003 |         | 2002
|Commercial paper, at rates of .98% to 1.17% at December 31, 2003 |  | $    | 153,110 |      | $ | 92,937
|                                                                 |  |      |         |      |   |       



Commercial paper is classified as
long-term, as it is the Companys intent to refinance such obligations on a long-term basis. The Company can borrow up to $400 million, $130 million through June 21, 2004 and $270 million through June 24, 2006, 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 dependant on the Companys debt rating issued by S&P and Moodys, ranges
from .06% to .10%. Prepayment of borrowings may be made without penalty. The Company intends to extend the revolving credit agreement prior to its expiration.



The revolving credit agreement contains certain restrictive covenants, including restrictions on consolidated indebtedness and a minimum cash flow requirement. At
December 31, 2003, with respect to restrictive covenants then in effect, consolidated indebtedness was within the required ratio and was approximately $438 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 $2.7 million in 2003, $3.2 million in 2002 and $9.5 million in 2001.



NOTE 9. INCOME TAXES



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



|               |  |      |         |   |      |   |         |      |  |   |         |  
|-------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|(in thousands) |  | 2003 |         |   | 2002 |   |         | 2001 | 
|Domestic       |  | $    | 262,238 |   |      | $ | 306,934 |      |  | $ | 168,475 |  
|Foreign        |  |      | (41,380 | ) |      |   | (49,404 | )    |  |   | (68,787 | )
|               |  |      |         |   |      |   |         |      |  |   |         |  
|               |  | $    | 220,858 |   |      | $ | 257,530 |      |  | $ | 99,688  |  
|               |  |      |         |   |      |   |         |      |  |   |         |  



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)                                                                                    |  | 2003 |         |   | % ofIncomeBeforeTaxes |       |   | 2002 |   |         | % ofIncomeBeforeTaxes |  |       | 2001 |  |   | % ofIncomeBeforeTaxes |  
|Income before income taxes and minority interests multiplied by statutory federal income tax rate |  | $    | 77,300  |   |                       | 35.0  |   |      | $ | 90,136  |                       |  | 35.0  |      |  | $ | 34,891                |   |  | 35.0  |  
|State and foreign taxes, net of federal income tax effect                                         |  |      | 15,340  |   |                       | 6.9   |   |      |   | 6,992   |                       |  | 2.7   |      |  |   | 8,036                 |   |  | 8.1   |  
|Nondeductible capital loss                                                                        |  |      | 3,333   |   |                       | 1.5   |   |      |   | 4,875   |                       |  | 1.9   |      |  |   | 3,089                 |   |  | 3.1   |  
|Utilization of capital loss carryforward                                                          |  |      |         |   |                       |       |   |      |   | (38,482 | )                     |  | (14.9 | )    |  |   | (5,997                | ) |  | (6.0  | )
|Research and development credits                                                                  |  |      | (101    | ) |                       | (0.1  | ) |      |   | (684    | )                     |  | (0.3  | )    |  |   | (2,630                | ) |  | (2.6  | )
|Certain income tax matters                                                                        |  |      | (25,055 | ) |                       | (11.3 | ) |      |   |         |                       |  |       |      |  |   | (30,000               | ) |  | (30.1 | )
|Resolution of Telerate sale loss contingencies                                                    |  |      | (20,937 | ) |                       | (9.5  | ) |      |   |         |                       |  |       |      |  |   |                       |   |  |       |  
|                                                                                                  |  |      |         |   |                       |      
|Other, net                                                                                        |  |      | 1,824   |   |                       | 0.8   |   |      |   | 904     |                       |  | 0.4   |      |  |   | 3,405                 |   |  | 3.3   |  
|                                                                                                  |  |      |         |   |                       |       |   |      |   |         |                       |  |       |      |  |   |                       |   |  |       |  
|                                                                                                  |  | $    | 51,704  |   |                       | 23.3  | % |      | $ | 63,741  |                       |  | 24.8  | %    |  | $ | 10,794                |   |  | 10.8  | %
|                                                                                                  |  |      |         |   |                       |       |   |      |   |         |                       |  |       |      |  |   |                       |   |  |       |  



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Consolidated income tax expense was as follows:



|                                                             |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|------------------------------------------------------------ |  | ------- | ------- | - | ----- | - | ------ | ------- |  | - | ----- | - |  | - | ------- | -
|(in thousands)                                               |  | Federal |         |   | State |   |        | Foreign |  |   | Total |  
|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  |  
|                                                             |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|2001                                                         |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Currently payable                                            |  | $       | 29,079  |   |       | $ | 4,953  |         |  | $ | 8,264 |   |  | $ | 42,296  |  
|Deferred                                                     |  |         | 287     |   |       |   | (924   | )       |  |   | (865  | ) |  |   | (1,502  | )
|Income tax valuation allowance for capital loss carryforward |  |         | (30,000 | ) |       |   |        |         |  |   |       |   |  |   | (30,000 | )
|                                                             |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  
|Total                                                        |  | $       | (634    | ) |       | $ | 4,029  |         |  | $ | 7,399 |   |  | $ | 10,794  |  
|                                                             |  |         |         |   |       |   |        |         |  |   |       |   |  |   |         |  



The Companys combined current
and noncurrent deferred taxes at December 31, 2003 and 2002 consisted of the following deferred tax assets and liabilities:



|                                                             |  |                     |          |   |                          |   |          |      |  |      |         |  |   |       
|------------------------------------------------------------ |  | ------------------- | -------- | - | ------------------------ | - | -------- | ---- |  | ---- | ------- |  | - | ------
|                                                             |  | Deferred Tax Assets |          |   | Deferred Tax Liabilities
|(in thousands)                                               |  | 2003                |          |   | 2002                     |   |          | 2003 |  | 2002
|Depreciation                                                 |  |                     |          |   |                          |   |          |      |  | $    | 87,586  |  | $ | 70,932
|Employee benefit plans, including deferred compensation      |  | $                   | 113,801  |   |                          | $ | 127,247  |      |  |      |         |  |   |       
|Foreign tax credits                                          |  |                     | 3,409    |   |                          |   | 8,670    |      |  |      |         |  |   |       
|Investments                                                  |  |                     |          |   |                          |   | 9,555    |      |  |      | 467     |  |   |       
|Leases                                                       |  |                     | 10,177   |   |                          |   | 16,431   |      |  |      |         |  |   |       
|Capital loss carryforward                                    |  |                     | 56,618   |   |                          |   | 175,302  |      |  |      |         |  |   |       
|Unrecognized capital loss carryforward                       |  |                     | 110,109  |   |                          |   | 100,357  |      |  |      |         |  |   |       
|Income tax valuation allowance for capital loss carryforward |  |                     | (166,727 | ) |                          |   | (275,659 | )    |  |      |         |  |   |       
|All other                                                    |  |                     | 7,796    |   |                          |   | 9,263    |      |  |      | 15,013  |  |   | 13,819
|                                                             |  |                     |          |   |                          |   |          |      |  |      |         |  |   |       
|Total deferred taxes                                         |  | $                   | 135,183  |   |                          | $ | 171,166  |      |  | $    | 103,066 |  | $ | 84,751
|                                                             |  |                     |          |   |                          |   |          |      |  |      |         |  |   |       



Certain Income 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 released about $25 million of tax provisions no longer needed for loss contingencies. 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.



A tax benefit of $30 million
was recorded in the fourth quarter of 2001 as the Company believed that it was more likely than not that it would use a portion of its capital loss carryforward to offset capital gains on the sales of the five Ottaway properties. The valuation
allowance against the carryforward was reduced in an amount equal to the anticipated net tax benefit.



Capital Loss Carryforward



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.



46



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##### Table of Contents

As of December 31, 2003, the Company had a capital loss carryforward remaining of about $436 million (a deferred tax
asset of about $167 million which is fully reserved). About $156 million of this loss carryforward is recognized for tax purposes and expires in 2006. The remaining $280 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, 2003.



Income Taxes Paid/Received



Income tax payments were $10 million and $55.9 million in 2003 and 2002, respectively. In
2001, the Company received income tax refunds of $2.7 million. 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
and 2001 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.



NOTE 10. 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 has temporarily suspended its share repurchase program to utilize excess cash flow to reduce its debt. The Company repurchased
0.6 million shares in early 2003 for $19.8 million at an average cost of $35.72 per share, 3.2 million shares in 2002 for $143.3 million at an average cost per share of $44.10 and 2.6 million shares in 2001 for $148.3 million at an average cost of
$55.97. Earnings per share were incrementally enhanced by $0.01 in 2003, $0.04 in 2002 and $0.02 in 2001 as a result of these repurchases.



As of December 31, 2003, approximately $326.4 million remained under board authorization for share repurchases.



NOTE 11. DILUTION AND STOCK COMPENSATION PLANS



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



|                                                |  |         |         |         |   |         |  |   |       
|----------------------------------------------- |  | ------- | ------- | ------- | - | ------- |  | - | ------
|(in thousands, except per share amounts)        |  | 2003(2) |         | 2002(3) |   | 2001(3)
|Net income                                      |  | $       | 170,599 |         | $ | 201,506 |  | $ | 98,220
|Weighted-average shares outstandingbasic       |  |         | 81,593  |         |   | 83,510  |  |   | 85,691
|Effect of dilutive securities:                  |  |         |         |         |   |         |  |   |       
|Stock options                                   |  |         | 121     |         |   | 219     |  |   | 371   
|Other, principally contingent stock rights      |  |         | 236     |         |   | 188     |  |   | 196   
|                                                |  |         |         |         |   |         |  |   |       
|Weighted-average shares outstandingdiluted (1) |  |         | 81,950  |         |   | 83,917  |  |   | 86,258
|                                                |  |         |         |         |   |         |  |   |       
|Basic earnings per share                        |  | $       | 2.09    |         | $ | 2.41    |  | $ | 1.15  
|Diluted earnings per share                      |  |         | 2.08    |         |   | 2.40    |  |   | 1.14  

---

|(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 7,566,000 shares in 2003 at an average price of $55.03 have been excluded from the diluted earnings per share calculation because the options exercise
prices were greater than the average market price during the year and to include such securities would be antidilutive.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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 2003 of $43.59.



(shares in thousands)



|                          |  |                             |  |                                  |   |  |            |       |  
|------------------------- |  | --------------------------- |  | -------------------------------- | - |  | ---------- | ----- | -
|Hypothetical Stock Prices |  | Incremental Dilutive Shares |  | Percentage of Shares Outstanding |   |  | EPS Impact |      
|$50                       |  | 498                         |  | 0.6                              | % |  | $          | 0.00  |  
|60                        |  | 966                         |  | 1.2                              |   |  |            | (0.02 | )
|70                        |  | 1,611                       |  | 2.0                              |   |  |            | (0.03 | )
|80                        |  | 2,125                       |  | 2.6                              |   |  |            | (0.04 | )
|90                        |  | 2,525                       |  | 3.1                              |   |  |            | (0.05 | )

---

|(3) | Options to purchase 6,786,000 shares in 2002 at an average price of $56.56 and 3,193,000 shares in 2001 at an average price of $61.26 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.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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). 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, up to seven million shares of 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, 2003, there were 2,493,773 shares available for future grants under the 2001 plan. Remaining shares 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. The majority of
options granted since 2001 become exercisable in equal annual installments over three years from the date of grant. All other options outstanding at December 31, 2003 that were granted prior to 2001 were exercisable. 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)



|                                   |  |        |   |      |                                 |       |        |       |   |                                |   |        |  |       |                                |  |   |      
|---------------------------------- |  | ------ | - | ---- | ------------------------------- | ----- | ------ | ----- | - | ------------------------------ | - | ------ |  | ----- | ------------------------------ |  | - | -----
|                                   |  | 2003   |   | 2002 |                                 | 2001 
|                                   |  | Shares |   |      | Weighted- AverageExercise Price |       | Shares |       |   | Weighted-AverageExercise Price |   | Shares |  |       | Weighted-AverageExercise Price
|Balance, January 1                 |  | 7,783  |   |      | $                               | 53.95 |        | 6,176 |   |                                | $ | 52.70  |  | 4,587 |                                |  | $ | 48.62
|Granted                            |  | 1,699  |   |      |                                 | 44.67 |        | 2,477 |   |                                |   | 54.98  |  | 2,225 |                                |  |   | 59.45
|Exercised (*)                      |  | (226   | ) |      |                                 | 37.39 |        | (356  | ) |                                |   | 34.82  |  | (338  | )                              |  |   | 35.01
|Terminated/Canceled                |  | (271   | ) |      |                                 | 55.26 |        | (514  | ) |                                |   | 57.20  |  | (298  | )                              |  |   | 60.30
|                                   |  |        |   |      |                                 |       |        |       |   |                                |   |        |  |       |                                |  |   |      
|Balance, December 31               |  | 8,985  |   |      | $                               | 52.57 |        | 7,783 |   |                                | $ | 53.95  |  | 6,176 |                                |  | $ | 52.70
|                                   |  |        |   |      |                                 |       |        |       |   |                                |   |        |  |       |                                |  |   |      
|Options exercisable at December 31 |  | 5,231  |   |      | $                               | 53.55 |        | 3,844 |   |                                | $ | 50.58  |  | 3,337 |                                |  | $ | 45.97
|                                   |  |        |   |      |                                 |       |        |       |   |                                |   |        |  |       |                                |  |   |      

---

|(*) | Options exercised in 2003, 2002 and 2001 yielded a pretax gain to the option holders of $3 million, $5 million and $8 million, respectively. The five most highly-compensated
executives of the Company exercised 27,000 options yielding them pretax income of $0.2 million in 2003, exercised 48,000 options yielding them pretax income of $0.3 million in 2002 and 45,000 options yielding them pretax income of $1.6 million in
2001.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In 2003, 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



48



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##### Table of Contents

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.



Options outstanding at the end of 2003 are summarized as follows:



|                                         |  |                     |  |                                |       |                                           |           |          |   |        |  |                                |  |          |       |  |   |       
|---------------------------------------- |  | ------------------- |  | ------------------------------ | ----- | ----------------------------------------- | --------- | -------- | - | ------ |  | ------------------------------ |  | -------- | ----- |  | - | ------
|(in thousands, except per share amounts) |  | Options Outstanding |  | Options Exercisable           
|Range of Exercise Prices                 |  | Shares              |  | Weighted-AverageExercise Price |       | Weighted-AverageRemainingContractual Life |           | Value(*) |   | Shares |  | Weighted-AverageExercise Price |  | Value(*)
|$30.00 to $37.50                         |  | 668                 |  | $                              | 34.30 |                                           | 2.3 years |          | $ | 10,383 |  | 662                            |  | $        | 34.29 |  | $ | 10,306
|$43.73 to $49.85                         |  | 2,652               |  |                                | 46.21 |                                           | 7.5 years |          |   | 9,656  |  | 976                            |  |          | 48.72 |  |   | 1,102 
|$50.75 to $55.16                         |  | 2,826               |  |                                | 54.22 |                                           | 7.2 years |          |   |        |  | 1,373                          |  |          | 53.25 |  |   |       
|$55.22 to $62.56                         |  | 1,872               |  |                                | 59.55 |                                           | 7.1 years |          |   |        |  | 1,253                          |  |          | 59.53 |  |   |       
|$62.75 to $73.25                         |  | 967                 |  |                                | 64.29 |                                           | 6.1 years |          |   |        |  | 967                            |  |          | 64.29 |  |   |       
|                                         |  |                     |  |                                |       |                                           |           |          |   |        |  |                                |  |          |       |  |   |       
|Balance, December 31, 2003               |  | 8,985               |  | $                              | 52.57 |                                           | 6.8 years |          | $ | 20,039 |  | 5,231                          |  | $        | 53.55 |  | $ | 11,408
|                                         |  |                     |  |                                |       |                                           |           |          |   |        |  |                                |  |          |       |  |   |       
|Five most highly-compensated executives  |  | 1,153               |  | $                              | 52.40 |                                           | 6.8 years |          | $ | 2,843  |  | 631                            |  | $        | 53.34 |  | $ | 1,597 
|All others                               |  | 7,832               |  |                                | 52.60 |                                           | 6.8 years |          |   | 17,196 |  | 4,600                          |  |          | 53.58 |  |   | 9,811 
|                                         |  |                     |  |                                |       |                                           |           |          |   |        |  |                                |  |          |       |  |   |       
|Total                                    |  | 8,985               |  | $                              | 52.57 |                                           | 6.8 years |          | $ | 20,039 |  | 5,231                          |  | $        | 53.55 |  | $ | 11,408
|                                         |  |                     |  |                                |       |                                           |           |          |   |        |  |                                |  |          |       |  |   |       

---

|(*) | Represents the difference between the closing price of the Companys common stock on December 31, 2003 ($49.85), and the exercise price of the options.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



Stock Options Outstanding by Year of Grant



|                      |  |                       |           |                               |       |                  |        |                          |             |                      |   |  |       |  |   |       |  |    
|--------------------- |  | --------------------- | --------- | ----------------------------- | ----- | ---------------- | ------ | ------------------------ | ----------- | -------------------- | - |  | ----- |  | - | ----- |  | ---
|(shares in thousands) |  |                       |           |                               |       |                  |        |                          |             |                      |   |  |       |  |   |      
|Year                  |  | NumberOfSharesGranted |           | Weighted-AverageExercisePrice |       | Number of Shares |        | Weighted-AveragePrice(*) |             | AdditionalShares(**)
|                      |  |                       | Forfeited |                               |       | Exercised        |        |                          | Unexercised |                      |  
|2003                  |  | 1,699                 |           | $                             | 44.67 |                  | (54    | )                        |             |                      |   |  | 1,645 |  |   |       |  |    
|2002                  |  | 2,477                 |           |                               | 54.98 |                  | (232   | )                        |             |                      |   |  | 2,245 |  |   |       |  |    
|2001                  |  | 2,225                 |           |                               | 59.45 |                  | (372   | )                        |             |                      |   |  | 1,853 |  |   |       |  |    
|2000                  |  | 1,301                 |           |                               | 64.27 |                  | (312   | )                        |             |                      |   |  | 989   |  |   |       |  |    
|1999                  |  | 110                   |           |                               | 52.07 |                  | (20    | )                        |             | (20                  | ) |  | 70    |  | $ | 65.70 |  | 4  
|1998                  |  | 1,285                 |           |                               | 49.19 |                  | (228   | )                        |             | (189                 | ) |  | 868   |  |   | 63.46 |  | 26 
|1997                  |  | 1,179                 |           |                               | 50.29 |                  | (394   | )                        |             | (208                 | ) |  | 577   |  |   | 63.70 |  | 25 
|1996                  |  | 1,220                 |           |                               | 34.50 |                  | (80    | )                        |             | (758                 | ) |  | 382   |  |   | 54.36 |  | 167
|1995                  |  | 678                   |           |                               | 37.70 |                  | (26    | )                        |             | (456                 | ) |  | 196   |  |   | 53.10 |  | 84 
|1994                  |  | 739                   |           |                               | 30.99 |                  | (35    | )                        |             | (544                 | ) |  | 160   |  |   | 47.71 |  | 117
|                      |  |                       |           |                               |       |                  |        |                          |             |                      |   |  |       |  |   |       |  |    
|Total                 |  | 12,913                |           |                               |       |                  | (1,753 | )                        |             | (2,175               | ) |  | 8,985 |  |   |       |  |    

---

|(*) | 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.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------



49



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##### Table of Contents

CEO Stock Options Outstanding by Year of Grant



(in thousands, except per share amounts)



|      |  |                       |  |                               |       |                   |  |                     |  |        |  |              |     |        |   |       |  |   |      
|----- |  | --------------------- |  | ----------------------------- | ----- | ----------------- |  | ------------------- |  | ------ |  | ------------ | --- | ------ | - | ----- |  | - | -----
|      |  | NumberOfSharesGranted |  | Weighted-AverageExercisePrice |       | Exercised Options |  | Unexercised Options
|Year  |  |                       |  | Shares                        |       | AveragePrice      |  | Gain                |  | Shares |  | AveragePrice |     | Value*
|2003  |  | 92                    |  | $                             | 44.68 |                   |  |                     |  |        |  |              | 92  |        | $ | 44.68 |  | $ | 475  
|2002  |  | 114                   |  |                               | 55.16 |                   |  |                     |  |        |  |              | 114 |        |   | 55.16 |  |   |      
|2001  |  | 84                    |  |                               | 59.50 |                   |  |                     |  |        |  |              | 84  |        |   | 59.50 |  |   |      
|2000  |  | 60                    |  |                               | 64.00 |                   |  |                     |  |        |  |              | 60  |        |   | 64.00 |  |   |      
|1999  |  |                       |  |                               |       |                   |  |                     |  |        |  |              |     |        |   |       |  |   |      
|1998  |  | 39                    |  |                               | 49.13 |                   |  |                     |  |        |  |              | 39  |        |   | 49.13 |  |   | 29   
|1997  |  | 32                    |  |                               | 50.75 |                   |  |                     |  |        |  |              | 32  |        |   | 50.75 |  |   |      
|1996  |  | 40                    |  |                               | 34.38 |                   |  |                     |  |        |  |              | 40  |        |   | 34.38 |  |   | 619  
|1995  |  | 15                    |  |                               | 45.31 |                   |  |                     |  |        |  |              | 15  |        |   | 45.31 |  |   | 67   
|1994  |  | 15                    |  |                               | 37.50 |                   |  |                     |  |        |  |              | 15  |        |   | 37.50 |  |   | 186  
|      |  |                       |  |                               |       |                   |  |                     |  |        |  |              |     |        |   |       |  |   |      
|Total |  | 491                   |  | $                             | 51.71 |                   |  |                     |  |        |  |              | 491 |        | $ | 51.71 |  | $ | 1,376
|      |  |                       |  |                               |       |                   |  |                     |  |        |  |              |     |        |   |       |  |   |      

---

|(*) | Represents the difference between the closing price of the Companys common stock on December 31, 2003 ($49.85), 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 four-year performance period, 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)                               |  | 2003    |   |  | 2002    |   |  | 2001    |  
|Balance, January 1                                        |  | 750,000 |   |  | 584,000 |   |  | 465,000 |  
|Granted  Five most highly-compensated executives         |  | 111,000 |   |  | 89,000  |   |  | 100,000 |  
|Granted  all others                                      |  | 184,000 |   |  | 186,000 |   |  | 140,000 |  
|Final awards  Five most highly-compensated executives(*) |  | (11,000 | ) |  | (14,000 | ) |  | (22,000 | )
|Final awards  all others (*)                             |  | (20,000 | ) |  | (36,000 | ) |  | (52,000 | )
|Terminated/canceled                                       |  | (99,000 | ) |  | (59,000 | ) |  | (47,000 | )
|                                                          |  |         |   |  |         |   |  |         |  
|Balance, December 31                                      |  | 915,000 |   |  | 750,000 |   |  | 584,000 |  
|                                                          |  |         |   |  |         |   |  |         |  

---

|(*) | The combined market value of the final shares awarded to the five most highly-compensated executives and all others in 2003, 2002 and 2001 was $1.1 million, $2.8 million and $4.6
million, respectively.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Contingent stock rights outstanding:



|                   |  |                                        |  |            |  |        
|------------------ |  | -------------------------------------- |  | ---------- |  | -------
|Performance Period |  | Five most highly-compensatedexecutives |  | All others |  | Total  
|2000-2003          |  | 55,000                                 |  | 82,000     |  | 137,000
|2001-2004          |  | 70,000                                 |  | 150,000    |  | 220,000
|2002-2005          |  | 88,000                                 |  | 175,000    |  | 263,000
|2003-2006          |  | 111,000                                |  | 184,000    |  | 295,000
|                   |  |                                        |  |            |  |        
|Total              |  | 324,000                                |  | 591,000    |  | 915,000
|                   |  |                                        |  |            |  |        



Restricted stock



In 2003, 6,900 shares of restricted stock were granted at a market value of $0.3 million. In
2002, 26,000 shares of restricted stock were granted at a market value of $1.2 million. The 2002 grants of restricted stock were awarded to certain executives who are among the five most highly-compensated executives of the Company. The vesting of
restricted stock may be conditioned 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.



50



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##### Table of Contents

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, 2003, there were 1,253,000 shares available for future offerings. Under the plan, the Company sold 105,000
shares, 104,000 shares and 103,000 shares to employees in 2003, 2002 and 2001, respectively.



NOTE 12. 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 $43.6 million in 2003, $45.5 million in 2002 and $44.2 million in 2001.



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 $8.0 million in 2003, $3.0 million in 2002 and $1.7 million in 2001.



Postretirement Benefits other than Pensions



For a majority of its full-time employees, the Company sponsors a defined benefit postretirement medical plan which provides lifetime health care benefits to retirees who
meet specified length of service and age requirements, and their eligible dependents. The plan is 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 January 2004, the Financial Accounting Standards Boards (FASB)
issued Staff Position FAS 106-1, which gave companies the option of estimating the effect of the subsidy on their postretirement obligation in their 2003 financial statements or defer the accounting until definitive guidance for the subsidy has been
issued from the FASB. The Company has elected to defer the accounting for the effects of this new law. Therefore, any measures of the accumulated postretirement benefit obligation or the net periodic benefit costs in the Companys financial
statements or accompanying notes do not reflect the effects of the Act. At this time, specific guidance on accounting for the federal subsidy is pending, but when it is final could require the Company to change previously reported information.



51



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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 |  
|                                                                      |  | 2003             |         |   | 2002                         |   |         | 2003 |  |   | 2002     |  
|Change in Benefit Obligation                                          |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Projected benefit obligation at January 1                             |  | $                | 148,010 |   |                              | $ | 139,614 |      |  | $ | 189,643  |   |  | $ | 163,577  |  
|Service cost                                                          |  |                  | 4,707   |   |                              |   | 4,109   |      |  |   | 8,028    |   |  |   | 6,646    |  
|Interest cost                                                         |  |                  | 9,930   |   |                              |   | 9,759   |      |  |   | 13,208   |   |  |   | 11,226   |  
|Plan participant contributions                                        |  |                  |         |   |                              |   |         |      |  |   | 989      |   |  |   | 862      |  
|Plan amendments                                                       |  |                  | 1,598   |   |                              |   | 2,259   |      |  |   | (23,741  | ) |  |   |          |  
|Plan curtailment gain                                                 |  |                  |         |   |                              |   | (4,054  | )    |  |   |          |   |  |   | (62      | )
|Actuarial loss                                                        |  |                  | 14,876  |   |                              |   | 7,102   |      |  |   | 60,428   |   |  |   | 14,460   |  
|Benefits paid                                                         |  |                  | (9,340  | ) |                              |   | (10,779 | )    |  |   | (9,404   | ) |  |   | (7,066   | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Projected benefit obligation at December 31                           |  | $                | 169,781 |   |                              | $ | 148,010 |      |  | $ | 239,151  |   |  | $ | 189,643  |  
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Change in Plan Assets                                                 |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Fair value of plan assets at January 1                                |  | $                | 116,621 |   |                              | $ | 137,804 |      |  |   |          |   |  |   |          |  
|Actual return on plan assets                                          |  |                  | 24,026  |   |                              |   | (11,724 | )    |  |   |          |   |  |   |          |  
|Employer contribution                                                 |  |                  | 28,670  |   |                              |   | 1,320   |      |  | $ | 8,415    |   |  | $ | 6,204    |  
|Member contributions                                                  |  |                  |         |   |                              |   |         |      |  |   | 989      |   |  |   | 862      |  
|Benefits paid                                                         |  |                  | (9,340  | ) |                              |   | (10,779 | )    |  |   | (9,404   | ) |  |   | (7,066   | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Fair value of plan assets at December 31                              |  | $                | 159,977 |   |                              | $ | 116,621 |      |  | $ |         |   |  | $ |         |  
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Components of Accrued Benefit Costs                                   |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Funded status                                                         |  | $                | (9,804  | ) |                              | $ | (31,389 | )    |  | $ | (239,151 | ) |  | $ | (189,643 | )
|Unrecognized actuarial loss (gain)                                    |  |                  | 22,327  |   |                              |   | 23,310  |      |  |   | 58,543   |   |  |   | (1,339   | )
|Unrecognized prior service cost                                       |  |                  | 3,546   |   |                              |   | 3,511   |      |  |   | (22,311  | ) |  |   | 1,180    |  
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Accrued benefit costs                                                 |  | $                | 16,069  |   |                              | $ | (4,568  | )    |  | $ | (202,919 | ) |  | $ | (189,802 | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Amounts recognized in the statement of financial position consist of: |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Accrued benefit liability                                             |  | $                | (2,849  | ) |                              | $ | (24,667 | )    |  | $ | (202,919 | ) |  | $ | (189,802 | )
|Prepaid benefit cost                                                  |  |                  | 18,468  |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Intangible asset                                                      |  |                  | 88      |   |                              |   | 3,511   |      |  |   |          |   |  |   |          |  
|Accumulated other comprehensive income                                |  |                  | 362     |   |                              |   | 16,588  |      |  |   |          |   |  |   |          |  
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  
|Net amount recognized                                                 |  | $                | 16,069  |   |                              | $ | (4,568  | )    |  | $ | (202,919 | ) |  | $ | (189,802 | )
|                                                                      |  |                  |         |   |                              |   |         |      |  |   |          |   |  |   |          |  



The accumulated benefit obligation for
the defined benefit pension plans was $160.6 million at December 31, 2003 and $141.7 million at December 31, 2002.



52



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Components of Net Periodic Benefit Costs:



|                                   |  |                  |        |   |                               |   |         |      |  |   |         |   |      |   |        |      |   |        |   |  |   |        |  
|---------------------------------- |  | ---------------- | ------ | - | ----------------------------- | - | ------- | ---- |  | - | ------- | - | ---- | - | ------ | ---- | - | ------ | - |  | - | ------ | -
|                                   |  | Pension Benefits |        |   | Other Postretirement Benefits |  
|                                   |  | 2003             |        |   | 2002                          |   |         | 2001 |  |   | 2003    |   | 2002 |   |        | 2001 |  
|Service cost                       |  | $                | 4,707  |   |                               | $ | 4,109   |      |  | $ | 4,544   |   |      | $ | 8,028  |      | $ | 6,646  |   |  | $ | 6,451  |  
|Interest cost                      |  |                  | 9,930  |   |                               |   | 9,759   |      |  |   | 9,685   |   |      |   | 13,208 |      |   | 11,226 |   |  |   | 10,776 |  
|Expected return on plan assets     |  |                  | (9,683 | ) |                               |   | (11,326 | )    |  |   | (12,819 | ) |      |   |        |      |   |        |   |  |   |        |  
|Amortization of prior service cost |  |                  | 726    |   |                               |   | 1,130   |      |  |   | 1,305   |   |      |   | 294    |      |   | 264    |   |  |   | 361    |  
|Recognized actuarial loss (gain)   |  |                  | 1,214  |   |                               |   | 40      |      |  |   | (1,014  | ) |      |   |        |      |   | (293   | ) |  |   | (600   | )
|Special termination benefits       |  |                  | 1,139  |   |                               |   | 2,165   |      |  |   |         |   |      |   |        |      |   |        |   |  |   |        |  
|Plan curtailment                   |  |                  |        |   |                               |   | (2,878  | )    |  |   |         |   |      |   |        |      |   | 504    |   |  |   |        |  
|                                   |  |                  |        |   |                               |   |         |      |  |   |         |   |      |   |        |      |   |        |   |  |   |        |  
|Total benefit cost                 |  | $                | 8,033  |   |                               | $ | 2,999   |      |  | $ | 1,701   |   |      | $ | 21,530 |      | $ | 18,347 |   |  | $ | 16,988 |  
|                                   |  |                  |        |   |                               |   |         |      |  |   |         |   |      |   |        |      |   |        |   |  |   |        |  



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 PostretirementBenefits |  
|              |  | 2003             |   |  | 2002                         |   |  | 2003 |   |  | 2002 |  
|Discount Rate |  | 6.25             | % |  | 6.75                         | % |  | 6.25 | % |  | 6.75 | %
|Salary Scale  |  | 3.00             |   |  | 3.00                         |   |  | n/a  |   |  | n/a  |  



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



|                      |  |                  |   |  |                              |   |  |      |   |  |      |   |  |      |   |  |      |  
|--------------------- |  | ---------------- | - |  | ---------------------------- | - |  | ---- | - |  | ---- | - |  | ---- | - |  | ---- | -
|                      |  | Pension Benefits |   |  | Other PostretirementBenefits |  
|                      |  | 2003             |   |  | 2002                         |   |  | 2001 |   |  | 2003 |   |  | 2002 |   |  | 2001 |  
|Discount Rate         |  | 6.75             | % |  | 7.25                         | % |  | 7.50 | % |  | 6.75 | % |  | 7.25 | % |  | 7.50 | %
|Expected Asset Return |  | 8.75             |   |  | 9.00                         |   |  | 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.



Health care cost trend rate



A 9% annual rate of increase in the per capita costs of covered health care benefits was assumed for 2004, gradually decreasing to 5% by the year 2011 and remaining at
that rate thereafter. The Companys health care cost trend rate assumed for 2003 was 9% decreasing to 5% by the year 2010.



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A one percentage point change in the assumed health care cost trend rates would have had the following effects in 2003:



|                                                                      |  |            |        |            |   |         |  
|--------------------------------------------------------------------- |  | ---------- | ------ | ---------- | - | ------- | -
|                                                                      |  | 1%Increase |        | 1%Decrease |  
|Accumulated postretirement benefit obligation as of December 31, 2003 |  | $          | 43,746 |            | $ | (36,700 | )
|Total service and interest cost for 2003                              |  |            | 4,558  |            |   | (3,737  | )



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%, 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, 2003 and 2002 and the target allocation for 2004 are as follows:



|                  |  |                       |   |  |                                      |   |  |     |  
|----------------- |  | --------------------- | - |  | ------------------------------------ | - |  | --- | -
|Asset Category    |  | TargetAllocation 2004 |   |  | Percentage of PlanAssets December 31 |  
|                  |  | 2003                  |   |  | 2002                                 |  
|Equity securities |  | 65                    | % |  | 60                                   | % |  | 62  | %
|Debt securities   |  | 35                    |   |  | 40                                   |   |  | 38  |  
|                  |  |                       |   |  |                                      |   |  |     |  
|Total             |  | 100                   | % |  | 100                                  | % |  | 100 | %
|                  |  |                       |   |  |                                      |   |  |     |  



Expected Contributions



The Companys best estimate of expected aggregate contributions to
fund the pension plans in 2004 are expected to be $0.2 million.



NOTE 13.
COMMITMENTS AND CONTINGENCIES



Commitments for capital expenditures
amounted to $15 million at December 31, 2003.



Noncancelable leases require
minimum rental payments through 2020 totaling $317 million. Payments required for the years 2004 through 2008 are as follows:



|               |  |      |        |      |   |        |  |      |        |      |   |        |  |   |       
|-------------- |  | ---- | ------ | ---- | - | ------ |  | ---- | ------ | ---- | - | ------ |  | - | ------
|(in thousands) |  | 2004 |        | 2005 |   | 2006   |  | 2007 |        | 2008
|               |  | $    | 57,080 |      | $ | 43,970 |  | $    | 36,688 |      | $ | 29,577 |  | $ | 21,130
|               |  |      |        |      |   |        |  |      |        |      |   |        |  |   |       



These leases are principally for
office space and equipment and contain renewal and escalation clauses. Total rental expense amounted to $58.1 million in 2003, $58.4 million in 2002 and $67.5 million in 2001.



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 and other legal proceedings that have arisen in
the ordinary course of business that are pending against the Company and its subsidiaries. In the opinion of management, based on advice of legal counsel, the ultimate outcome to the Company and its subsidiaries as a result of these other legal
proceedings will not have a material effect on the Companys financial statements. In addition, the Company has insurance coverage for many of these matters.



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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, 2003. The Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.



The Company has guaranteed payment for office space occupied by certain of its joint
ventures. The Companys partners in these joint ventures have either directly guaranteed their share of any payments required under these guarantees or agreed to indemnify the Company for 50% of any payments the Company may be required to make
under these guarantees. Dow Jones share of this obligation totals $8.3 million through 2010.



NOTE 14. 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.



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 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 them 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.



55



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Print publishing accounted for approximately 60% of 2003 revenues, while the electronic publishing and community
newspapers segments each accounted for about 20%. 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 weeklies 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)                                                |  | 2003 |           |   | 2002 |   |           | 2001 | 
|Revenues (1)                                                  |  |      |           |   |      |   |           |      |  |   |           |  
|Print publishing                                              |  | $    | 915,468   |   |      | $ | 948,870   |      |  | $ | 1,106,934 |  
|Electronic publishing                                         |  |      | 322,032   |   |      |   | 309,491   |      |  |   | 317,986   |  
|Community newspapers:                                         |  |      |           |   |      |   |           |      |  |   |           |  
|Comparable operations (2)                                     |  |      | 282,236   |   |      |   | 278,638   |      |  |   | 273,331   |  
|Divested/newly-acquired operations                            |  |      | 28,749    |   |      |   | 22,174    |      |  |   | 74,832    |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Total                                                         |  |      | 310,985   |   |      |   | 300,812   |      |  |   | 348,163   |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Consolidated revenues                                         |  | $    | 1,548,485 |   |      | $ | 1,559,173 |      |  | $ | 1,773,083 |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Income Before Income Taxes and Minority Interests (3)         |  |      |           |   |      |   |           |      |  |   |           |  
|Print publishing                                              |  | $    | 8,079     |   |      | $ | (8,058    | )    |  | $ | 91,468    |  
|Electronic publishing                                         |  |      | 67,871    |   |      |   | 60,863    |      |  |   | 45,717    |  
|Community newspapers:                                         |  |      |           |   |      |   |           |      |  |   |           |  
|Comparable operations (2)                                     |  |      | 73,954    |   |      |   | 74,000    |      |  |   | 66,037    |  
|Divested/newly-acquired operations                            |  |      | 7,039     |   |      |   | 5,255     |      |  |   | 19,110    |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Total                                                         |  |      | 80,993    |   |      |   | 79,255    |      |  |   | 85,147    |  
|Corporate                                                     |  |      | (32,438   | ) |      |   | (33,167   | )    |  |   | (38,914   | )
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Segment operating income                                      |  |      | 124,505   |   |      |   | 98,893    |      |  |   | 183,418   |  
|Restructuring charges and September 11 related items, net (3) |  |      | 18,408    |   |      |   | (23,810   | )    |  |   | (73,219   | )
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Consolidated operating income                                 |  |      | 142,913   |   |      |   | 75,083    |      |  |   | 110,199   |  
|Equity in earnings (losses) of associated companies           |  |      | 2,869     |   |      |   | (488      | )    |  |   | (17,181   | )
|Gain on sale of businesses                                    |  |      |           |   |      |   | 197,925   |      |  |   |           |  
|Gain on non-monetary exchange of equity holdings              |  |      | 18,699    |   |      |   |           |      |  |   |           |  
|Gain on resolution of Telerate sale loss contingencies        |  |      | 59,821    |   |      |   |           |      |  |   |           |  
|Contract guarantee, net                                       |  |      | (9,523    | ) |      |   | (11,878   | )    |  |   | 17,136    |  
|Write-down of investments                                     |  |      |           |   |      |   |           |      |  |   | (8,827    | )
|Other, net                                                    |  |      | 6,079     |   |      |   | (3,112    | )    |  |   | (1,639    | )
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  
|Income before income taxes and minority interests             |  | $    | 220,858   |   |      | $ | 257,530   |      |  | $ | 99,688    |  
|                                                              |  |      |           |   |      |   |           |      |  |   |           |  



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|                                                                |  |      |           |      |   |           |  |   |          
|--------------------------------------------------------------- |  | ---- | --------- | ---- | - | --------- |  | - | ---------
|(in thousands)                                                  |  | 2003 |           | 2002 |   | 2001     
|Depreciation and Amortization Expense                           |  |      |           |      |   |           |  |   |          
|Print publishing                                                |  | $    | 67,054    |      | $ | 71,568    |  | $ | 65,668   
|Electronic publishing                                           |  |      | 26,263    |      |   | 25,374    |  |   | 22,421   
|Community newspapers:                                           |  |      |           |      |   |           |  |   |          
|Comparable operations (2)                                       |  |      | 10,375    |      |   | 11,069    |  |   | 12,699   
|Divested/newly-acquired operations                              |  |      | 1,675     |      |   | 681       |  |   | 3,751    
|                                                                |  |      |           |      |   |           |  |   |          
|Total                                                           |  |      | 12,050    |      |   | 11,750    |  |   | 16,450   
|Corporate                                                       |  |      | 647       |      |   | 1,046     |  |   | 1,174    
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated depreciation and amortization expense              |  | $    | 106,014   |      | $ | 109,738   |  | $ | 105,713  
|                                                                |  |      |           |      |   |           |  |   |          
|Assets at December 31                                           |  |      |           |      |   |           |  |   |          
|Print publishing                                                |  | $    | 714,811   |      | $ | 762,071   |  | $ | 823,861  
|Electronic publishing                                           |  |      | 156,220   |      |   | 157,789   |  |   | 148,963  
|Community newspapers                                            |  |      | 305,821   |      |   | 159,247   |  |   | 218,805  
|                                                                |  |      |           |      |   |           |  |   |          
|Segment assets                                                  |  |      | 1,176,852 |      |   | 1,079,107 |  |   | 1,191,629
|Cash and investments                                            |  |      | 127,302   |      |   | 128,552   |  |   | 106,711  
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated assets                                             |  | $    | 1,304,154 |      | $ | 1,207,659 |  | $ | 1,298,340
|                                                                |  |      |           |      |   |           |  |   |          
|Capital Expenditures                                            |  |      |           |      |   |           |  |   |          
|Print publishing                                                |  | $    | 30,409    |      | $ | 55,723    |  | $ | 91,628   
|Electronic publishing                                           |  |      | 11,571    |      |   | 16,136    |  |   | 29,139   
|Community newspapers                                            |  |      | 13,961    |      |   | 5,794     |  |   | 7,992    
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated capital expenditures                               |  | $    | 55,941    |      | $ | 77,653    |  | $ | 128,759  
|                                                                |  |      |           |      |   |           |  |   |          
|                                                                |  |      |          
|Financial Data by Geographic Area                               |  |      |           |      |   |           |  |   |          
|                                                                |  |      |          
|(in thousands)                                                  |  | 2003 |           | 2002 |   | 2001     
|Revenues                                                        |  |      |           |      |   |           |  |   |          
|United States                                                   |  | $    | 1,417,854 |      | $ | 1,418,355 |  | $ | 1,604,455
|International                                                   |  |      | 130,631   |      |   | 140,818   |  |   | 168,628  
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated revenues                                           |  | $    | 1,548,485 |      | $ | 1,559,173 |  | $ | 1,773,083
|                                                                |  |      |           |      |   |           |  |   |          
|Plant, Property and Equipment, Net of Accumulated Depreciation  |  |      |           |      |   |           |  |   |          
|United States                                                   |  | $    | 678,550   |      | $ | 707,360   |  | $ | 744,943  
|International                                                   |  |      | 10,734    |      |   | 13,341    |  |   | 16,406   
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated plant, property and equipment, net                 |  | $    | 689,284   |      | $ | 720,701   |  | $ | 761,349  
|                                                                |  |      |           |      |   |           |  |   |          
|Goodwill and Intangible Assets, Net of Accumulated Amortization |  |      |           |      |   |           |  |   |          
|United States                                                   |  | $    | 181,763   |      | $ | 44,735    |  | $ | 65,112   
|International                                                   |  |      | 41,681    |      |   | 18,295    |  |   | 16,471   
|                                                                |  |      |           |      |   |           |  |   |          
|Consolidated goodwill and intangible assets, net                |  | $    | 223,444   |      | $ | 63,030    |  | $ | 81,583   
|                                                                |  |      |           |      |   |           |  |   |          

---

Notes:

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



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|(2) | Amounts in 2002 have been reclassified between comparable and divested/newly-acquired operations to conform with comparable operations in 2003.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(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)                                                  |  | 2003 |        | 2002 |   |         | 2001 | 
|Print publishing                                                |  | $    | 17,422 |      | $ | (16,794 | )    |  | $ | (49,447 | )
|Electronic publishing                                           |  |      | 951    |      |   | (6,521  | )    |  |   | (18,796 | )
|Community newspapers                                            |  |      |        |      |   |         |      |  |   | (321    | )
|Corporate                                                       |  |      | 35     |      |   | (495    | )    |  |   | (4,655  | )
|                                                                |  |      |        |      |   |         |      |  |   |         |  
|Total restructuring charges and September 11 related items, net |  | $    | 18,408 |      | $ | (23,810 | )    |  | $ | (73,219 | )
|                                                                |  |      |        |      |   |         |      |  |   |         |  



NOTE 15. FINANCIAL
INSTRUMENTS



Fair Value of Financial Instruments



Other investments include marketable equity securities, which are carried at their market
value. As of December 31, 2003, the market value of these securities was $8.2 million reflecting a gross unrealized gain of $5.7 million.



The market value of these securities at December 31, 2002, was $4 million reflecting a gross unrealized gain of $1.6 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, 2003 and 2002, 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 2003 and 2002, the Company entered into foreign currency exchange forward
contracts to exchange U.S. dollars for the following foreign currencies:



|                  |  |                 |  |            |      |                 |      |            |   |     
|----------------- |  | --------------- |  | ---------- | ---- | --------------- | ---- | ---------- | - | ----
|                  |  | 2003            |  | 2002      
|(in millions)     |  | ForeignCurrency |  | U.S.Dollar |      | ForeignCurrency |      | U.S.Dollar
|British Pound     |  | 14.5            |  | $          | 25.4 |                 | 15.8 |            | $ | 24.5
|Euro              |  | 24.4            |  |            | 30.4 |                 | 25.2 |            |   | 25.3
|Australian Dollar |  | 1.3             |  |            | 1.0  |                 |      |            |   |     



These contracts, which expire ratably
over 2004, are designated as cash flow hedges of anticipated operating expenses that are denominated in these foreign currencies. Revenues of the Company are largely collected in U.S. dollars. The Company has not entered into any new forward foreign
exchange contracts since December 2003.



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 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.



Based on the devaluation in the U.S. dollar relative to these currencies, there was an unrealized gain on these contracts of $0.7 million at December 31, 2003, and an
unrealized gain of $2.1 million at December 31, 2002.



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.



58



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NOTE 16. SUMMARY OF QUARTERLY FINANCIAL DATA (UNAUDITED)



The summary of unaudited 2003 and 2002 quarterly financial data was as follows:



|                                         |  |          |         |        |   |         |  |        |         |      |   |         |  |   |          
|---------------------------------------- |  | -------- | ------- | ------ | - | ------- |  | ------ | ------- | ---- | - | ------- |  | - | ---------
|                                         |  | Quarters
|(in thousands, except per share amounts) |  | First    |         | Second |   | Third   |  | Fourth |         | Year
|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 (1)                           |  |          | 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     
|                                         |  |          |         |        |  
|2002                                     |  |          |         |        |   |         |  |        |         |      |   |         |  |   |          
|Revenues                                 |  | $        | 392,891 |        | $ | 417,024 |  | $      | 352,409 |      | $ | 396,849 |  | $ | 1,559,173
|Operating income                         |  |          | 12,306  |        |   | 23,957  |  |        | 7,964   |      |   | 30,856  |  |   | 75,083   
|Net income (2)                           |  |          | 129,825 |        |   | 54,000  |  |        | 2,446   |      |   | 15,235  |  |   | 201,506  
|Per share*                               |  |          |         |        |   |         |  |        |         |      |   |         |  |   |          
|Basic                                    |  | $        | 1.54    |        | $ | .64     |  | $      | .03     |      | $ | .19     |  | $ | 2.41     
|Diluted                                  |  |          | 1.53    |        |   | .64     |  |        | .03     |      |   | .18     |  |   | 2.40     

---

|(1) | 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 | *
|                                                          |  |          |      |   |        |   |      |       |  |   |        |   |  |      |      |   |  |   |      |  

---

|(2) | In 2002, net income included the following items (presented net of taxes):
|--- | --------------------------------------------------------------------------



|                                        |  |          |       |   |        |   |      |       |  |   |        |   |  |      |       |   |  |   |       |  
|--------------------------------------- |  | -------- | ----- | - | ------ | - | ---- | ----- |  | - | ------ | - |  | ---- | ----- | - |  | - | ----- | -
|                                        |  | Quarters |      
|(in millions)                           |  | First    |       |   | Second |   |      | Third |  |   | Fourth |   |  | Year |      
|Restructuring charges                   |  |          |       |   |        | $ | (6.3 | )     |  |   |        |   |  | $    | (9.5  | ) |  | $ | (15.8 | )
|Gain on property damage insurance claim |  |          |       |   |        |   |      |       |  |   |        |   |  |      | 1.8   |   |  |   | 1.8   |  
|Gain on sale of ONI properties          |  | $        | 126.1 |   |        |   | 38.0 |       |  |   |        |   |  |      |       |   |  |   | 164.1 |  
|Gains/(charges) at equity investments   |  |          |       |   |        |   | 3.9  |       |  |   |        |   |  |      | (2.5  | ) |  |   | 1.4   |  
|Contract guarantee                      |  |          | (3.2  | ) |        |   | (3.0 | )     |  | $ | (2.9   | ) |  |      | (2.8  | ) |  |   | (11.9 | )
|                                        |  |          |       |   |        |   |      |       |  |   |        |   |  |      |       |   |  |   |       |  
|                                        |  | $        | 122.9 |   |        | $ | 32.6 |       |  | $ | (2.9   | ) |  | $    | (13.0 | ) |  | $ | 139.6 |  
|                                        |  |          |       |   |        |   |      |       |  |   |        |   |  |      |       |   |  |   |       |  

---

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



59



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##### Table of Contents

NOTE 17. PENDING TRANSACTIONS



On February 19, 2004, the Company announced that it had reached an agreement to acquire Alternative Investor, from Wicks Business
Information for $85 million, plus net working capital, as defined. The $85 million purchase price could be increased by $5 million, payable in 2008, based on the performance of the acquired business. The acquisition is expected to be funded by the
issuance of debt under the Companys commercial paper program. The transaction is pending regulatory approval and customary closing conditions, and is expected to close by the end of the first quarter of 2004.



Alternative Investor is a provider of newsletters, databases and industry conferences for the
venture-capital and private-equity markets, and upon the closing of the acquisition it will be combined into the Companys Dow Jones Newswires business.



60



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##### Table of Contents

STATEMENT OF MANAGEMENTS RESPONSIBILITY FOR FINANCIAL STATEMENTS



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



Management has prepared and is responsible for the consolidated financial statements and related information in the Annual Report. The financial statements, which include amounts based on judgment, have been prepared in conformity with
generally accepted accounting principles consistently applied.



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, independent auditors, have audited the consolidated financial statements as described in their report. Their
audit, which was conducted in accordance with auditing standards generally accepted in the United States of America, included consideration of the internal control structure. Their report expresses an independent opinion on the fairness of
presentation of the consolidated financial statements.



The Board of Directors,
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 accountants. The audit committee
meets regularly with management, internal auditors and independent accountants - - both separately and together. The internal auditors and the independent accountants have free access to the audit committee to review the results of their audits, the
adequacy of internal accounting controls and the quality of financial reporting.



|                        |  |  |  |                            
|----------------------- |  |  |  | ---------------------------
|/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    



61



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##### Table of Contents

REPORT OF INDEPENDENT AUDITORS



To the Board
of Directors and Stockholders of

Dow Jones & Company, Inc.:



In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, stockholders equity and cash flows present fairly,
in all material respects, the financial position of Dow Jones & Company, Inc. and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December
31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Companys management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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.



PRICEWATERHOUSECOOPERS LLP



New York, New York

January 27, 2004, except for Note 17, as to which the
date is February 19, 2004



62



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##### Table of Contents

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



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



Changes in internal controls over financial reporting



There were no changes in the Companys internal controls over financial reporting that
occurred during the three month period ended December 31, 2003 that have materially affected, or are reasonable likely to materially affect, the Companys internal control over financial reporting.



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, Incumbent Directors (Class of 2005) and Incumbent Directors (Class of 2006) in the 2004 Proxy Statement and to the material under the caption Certain Relationships and Related Transactions in the
2004 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 2004 Proxy Statement. For the information required by this item relating to executive officers, see Part I, page 9 of this 2003 Form 10-K. The information required by this item with respect to executive officer
family relationships is incorporated by reference to the material under the caption Certain Relationships and Related Transactions in the 2004 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 2004 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 2004 Proxy Statement.



ITEM 11. Executive Compensation



The
information required by this item is incorporated by reference to the tables, including the footnotes thereto, appearing under the captions Executive Compensation, Separation Plan for Senior Management, Executive Death
Benefit Agreement, and Compensation Committee Interlocks and Insider Participation in the 2004 Proxy Statement, and to the material in the first four paragraphs under the caption Board of Directors  Meetings of the
Board and Committees; Director Compensation; Attendance in the 2004 Proxy Statement.



ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters



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 2004 Proxy Statement.



63



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##### Table of Contents

The following table provides the Companys equity compensation plan information as of December 31, 2003. Under these
plans, the Companys common stock may be issued upon the exercise of options.



|                                                               |  |                                                                       |  |                                                                         |       |                                                                          |           |    
|-------------------------------------------------------------- |  | --------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ----- | ------------------------------------------------------------------------ | --------- | ---
|Plan Category                                                  |  | Number of Securities to be issued upon exercise ofoutstanding options |  | Weighted average exercise price of outstandingoptions compensation plan |       | Number of securitiesremaining available for future issuance under equity |          
|Equity compensation plans approved by security holders (a)     |  | 9,053,424                                                             |  | $                                                                       | 52.45 |                                                                          | 3,746,773 | (b)
|                                                               |  |                                                                       | 
|Equity compensation plans not approved by security holders (c) |  | 5,051                                                                 |  |                                                                         | 34.36 |                                                                          | 425,292   |    
|                                                               |  |                                                                       |  |                                                                         |       |                                                                          |           |    
|TOTAL                                                          |  | 9,058,475                                                             |  |                                                                         |       |                                                                          | 4,172,065 |    

---

|(a) | Consists of 2001 Long-Term Incentive Plan and 1998 Employee Stock Purchase Plan. The 1998 Employee Stock Purchase Plan has 67,953 shares outstanding at the price of $36.51.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | Includes 914,771 shares reserved for contingent stock rights and 1,253,000 shares 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 3, 5, 6 and 10 to the tables titled Nominees for Election at the Annual meeting, Incumbent Directors (Class of
2005) and Incumbent Directors (Class of 2006) and the section titled Certain Relationships and Related Transaction in the 2004 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, Pre-Approval
Process in the 2004 Proxy Statement.



64



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##### Table of Contents

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, 2003, 2002 and 2001               |  | 30            
|                                                                                                     | 
|Consolidated balance sheets, December 31, 2003 and 2002                                              |  | 31-32         
|                                                                                                     | 
|Consolidated statements of cash flows for the years ended December 31, 2003, 2002 and 2001           |  | 33            
|                                                                                                     | 
|Consolidated statements of stockholders equity for the years ended December 31, 2003, 2002 and 2001 |  | 34-35         
|                                                                                                     | 
|Notes to financial statements                                                                        |  | 36            
|                                                                                                     | 
|Statement of managements responsibility for financial statements                                    |  | 61            
|                                                                                                     | 
|Report of independent auditors                                                                       |  | 62            
|                                                                                                     | 
|(a)(2) Financial Statement Schedule:                                                                 |  |               
|                                                                                                     | 
|Included in Part IV of this report:                                                                  |  |               
|                                                                                                     | 
|Report of independent auditors and consent of independent accountants                                |  | 70            
|                                                                                                     | 
|Schedule II - Valuation and qualifying accounts and reserve                                          |  | 71            



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



65



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##### Table of Contents

(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 and as amended by its Ninth Amendment dated December 17, 2003 filed herein.
|               | 
|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.                                                                                                                                                                                                                                                                                                                                                                                                                       
|               | 
|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 is hereby incorporated by reference to Exhibit 10.13 to its Form 10-K for the year ended December 31, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|               | 
|10.7           |  | 364-Day Credit Agreement dated June 23, 2003 is hereby incorporated by reference to Exhibit 10.1 to its Form 10-Q for the quarter ended June 30, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                             
|               | 
|10.8           |  | 4-Year Credit Agreement dated June 24, 2002 is hereby incorporated by reference to Exhibit 10.2 to its Form 10-Q for the quarter ended June 30, 2002, as amended by the first amendment thereto
dated as of June 23, 2003, which is hereby incorporated by reference to Exhibit 10.2 to its Form 10-Q for the quarter ended June 30, 2003.                                                                                                                                                                                                                                         
|               | 
|10.9           |  | 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, and 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.                                             
|               | 
|10.10          |  | 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.                                                                                                                                                                                                                                                                                                                                                                                                                   



66



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##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                 
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Document                                                                                                                                                                                                                                                                                        
|              | 
|10.11         |  | 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.                                                                                                                             
|              | 
|10.12         |  | 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.                                                                                                                                        
|              | 
|10.13         |  | 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.                                                                          
|              | 
|10.14         |  | 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.                    
|              | 
|10.15         |  | 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.                                 
|              | 
|10.16         |  | 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.                           
|              | 
|10.17         |  | 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.                                
|              | 
|10.18         |  | 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.                                                                          
|              | 
|10.19         |  | Dow Jones 2001 Long-Term Incentive Plan is hereby incorporated by reference to Exhibit 4 to its Form S-8 on May 17, 2001.                                                                                                                                                                       
|              | 
|10.20         |  | Dow Jones Deferred Compensation Plan is hereby incorporated by reference to Exhibit 4 to its Form S-8 on November 22, 2002.                                                                                                                                                                     
|              | 
|10.21         |  | 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.
|              | 
|10.22         |  | 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.                                                                    
|              | 
|10.23         |  | 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.                                                                                  
|              | 
|14            |  | Dow Jones & Company Code of Conduct                                                                                                                                                                                                                                                             
|              | 
|* 21          |  | List of Subsidiaries                                                                                                                                                                                                                                                                            
|              | 
|23            |  | Consent of PricewaterhouseCoopers LLP, independent accountants, is contained on page 70 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.
|- | ---------------------------------------------------------------------------



(b) Reports on Form 8-K



Form 8-K, dated October 14, 2003, Dow Jones & Company Third Quarter Earnings Release

Form 8-K, dated November 14, 2003, Dow Jones & Company Revised Third Quarter Earnings Release



67



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##### Table of Contents

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 5, 2004



/S/  ROBERT E. PERRINERobert E. PerrineController and Chief 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. KANN          |  | Chairman of the BoardChief Executive Officer    |  | March 5, 2004
|                            |  |                                                 | 
|Peter R. Kann               |  |                                                 | 
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  RICHARD F. ZANNINO     |  | Executive Vice PresidentChief Operating Officer |  | March 5, 2004
|                            |  |                                                 | 
|Richard F. Zannino          |  |                                                 | 
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  CHRISTOPHER W. VIETH   |  | Vice PresidentChief Financial Officer           |  | March 5, 2004
|                            |  |                                                 | 
|Christopher W. Vieth        |  |                                                 | 
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  ELIZABETH STEELE       |  | Director                                        |  | March 5, 2004
|                            |  |                                                 |  |              
|Elizabeth Steele            |  |                                                 |  |              
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  DAVID K. P. LI         |  | Director                                        |  | March 5, 2004
|                            |  |                                                 |  |              
|David K. P. Li              |  |                                                 |  |              
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  WILLIAM C. STEERE JR.  |  | Director                                        |  | March 5, 2004
|                            |  |                                                 |  |              
|William C. Steere Jr.       |  |                                                 |  |              
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  FRANK N. NEWMAN        |  | Director                                        |  | March 5, 2004
|                            |  |                                                 |  |              
|Frank N. Newman             |  |                                                 |  |              
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  DIETER VON HOLTZBRINCK |  | Director                                        |  | March 5, 2004
|                            |  |                                                 |  |              
|Dieter von Holtzbrinck      |  |                                                 |  |              
|                            |  |                                                 |  |              
|                            |  |                                                
|/S/  ROY A. HAMMER          |  | Director                                        |  | March 5, 2004
|                            |  |                                                 |  |              
|Roy A. Hammer               |  |                                                 |  |              



68



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##### Table of Contents

|                            |  |          |  |              
|--------------------------- |  | -------- |  | -------------
|/S/  JAMES H. OTTAWAY JR.   |  | Director |  | March 5, 2004
|                            |  |          |  |              
|James H. Ottaway Jr.        |  |          |  |              
|                            |  |          |  |              
|                            |  |         
|/S/  LESLIE HILL            |  | Director |  | March 5, 2004
|                            |  |          |  |              
|Leslie Hill                 |  |          |  |              
|                            |  |          |  |              
|                            |  |         
|/S/  HARVEY GOLUB           |  | Director |  | March 5, 2004
|                            |  |          |  |              
|Harvey Golub                |  |          |  |              
|                            |  |          |  |              
|                            |  |         
|/S/  IRVINE O. HOCKADAY JR. |  | Director |  | March 5, 2004
|                            |  |          |  |              
|Irvine O. Hockaday Jr.      |  |          |  |              
|                            |  |          |  |              
|                            |  |         
|/S/  LEWIS B. CAMPBELL      |  | Director |  | March 5, 2004
|                            |  |          |  |              
|Lewis B. Campbell           |  |          |  |              
|                            |  |          |  |              
|                            |  |         
|/S/  CHRISTOPHER BANCROFT   |  | Director |  | March 5, 2004
|                            |  |          |  |              
|Christopher Bancroft        |  |          |  |              
|                            |  |          |  |              
|                            |  |         
|/S/  VERNON E. JORDAN JR.   |  | Director |  | March 5, 2004
|                            |  |          |  |              
|Vernon E. Jordan Jr.        |  |          |  |              
|                            |  |          |  |              
|                            |  |         
|/S/  M. PETER MCPHERSON     |  | Director |  | March 5, 2004
|                            |  |          |  |              
|M. Peter McPherson          |  |          |  |              



69



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REPORT OF INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE



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



Our audits of the consolidated financial statements referred to in our report dated January 27, 2004, except for Note 17, as to which the date is February 19, 2004, appearing on the page 62 of this Form 10-K also included an audit of the
financial statement schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements.



PRICEWATERHOUSECOOPERS LLP



New York, New York

January 27, 2004



CONSENT OF INDEPENDENT
ACCOUNTANTS



We hereby consent to the incorporation by reference in the
Registration Statements on Form S-3 (File No. 333-02071) and Form S-8 (File Nos. 2-72684, 33-45962, 33-45963, 33-49311, 33-55079, 333-57175, 333-70921, 333-67523, 333-61138, 333-39842 and 333-101395) of Dow Jones & Company, Inc. of our report
dated January 27, 2004, except for Note 17, as to which the date is February 19, 2004, relating to the financial statements, which appears on page 62 of this Form 10-K. We also consent to the incorporation by reference of our report dated
January 27, 2004 relating to the financial statement schedule, which appears in this 10-K.



PRICEWATERHOUSECOOPERS LLP



New York, New York

March 5, 2004



70



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##### Table of Contents

Schedule II



DOW JONES & COMPANY

and its Subsidiaries



SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS



for the years ended December 31, 2003, 2002 and 2001

(in thousands)



|                                                                |  |                              |         |                           |   |                            |  |            |       |  |                         |         |     |  |   |        
|--------------------------------------------------------------- |  | ---------------------------- | ------- | ------------------------- | - | -------------------------- |  | ---------- | ----- |  | ----------------------- | ------- | --- |  | - | -------
|                                                                |  | Additions                   
|Description                                                     |  | Balance atBeginningof Period |         | Chargedto CostandExpenses |   | Chargedto OtherAccounts(1) |  | Deductions |       |  | Balanceat End of Period
|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
|                                                                |  |                              |         |                           |   |                            |  |            |       |  |                         |         |     |  |   |        
|Year ended December 31, 2001:                                   |  |                              |         |                           |   |                            |  |            |       |  |                         |         |     |  |   |        
|Reserves deducted from assets - Allowance for doubtful accounts |  | $                            | 6,377   |                           | $ | 6,395                      |  | $          | 1,055 |  | $                       | 8,217   | (2) |  | $ | 5,610  
|                                                                |  |                              |         |                           |   |                            |  |            |       |  |                         |         |     |  |   |        
|Tax valuation allowance                                         |  | $                            | 340,707 |                           | $ | 3,614                      |  |            |       |  | $                       | 38,424  |     |  | $ | 305,897
|                                                                |  |                              |         |                           |   |                            |  |            |       |  |                         |         |     |  |   |        

---

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.
|--- | ----------------------------------------------------------------------------



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