<PAGE>


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

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

                                  FORM 10-K

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

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

                        For the fiscal year ended December 31, 1998

            |_|     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 : 1-12955

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

            DELAWARE                                             22-3498615
  (STATE OR OTHER JURISDICTION                               (I.R.S. EMPLOYER 
OF INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

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

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

         SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                   Common Stock, par value $0.01 per share

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

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

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

    The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 23, 1999 was approximately $122,242,340.

    As of March 23 1999, 47,295,781 shares of the registrant's Common Stock, par
value $0.01 per share, were outstanding.

    DOCUMENTS INCORPORATED BY REFERENCE.  The information called for by Part III
is incorporated by reference to the definitive Proxy Statement for the Company's
1999 Annual Meeting of Stockholders,  which will be filed on or before April 30,
1999.

================================================================================

<PAGE>

          CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


      STATEMENTS  IN  THIS  ANNUAL  REPORT  ON FORM  10-K  THAT  ARE NOT  PURELY
HISTORICAL ARE  FORWARD-LOOKING  STATEMENTS WITHIN THE MEANING OF SECTION 27A OF
THE  SECURITIES  ACT OF 1933 AND SECTION 21E OF THE  SECURITIES  EXCHANGE ACT OF
1934,  INCLUDING  STATEMENTS  REGARDING  THE  COMPANY'S   EXPECTATIONS,   HOPES,
INTENTIONS  OR  STRATEGIES  REGARDING  THE  FUTURE.  FORWARD-LOOKING  STATEMENTS
INCLUDE:  THE PLANS AND  OBJECTIVES  OF THE  COMPANY FOR FUTURE  OPERATIONS  AND
TRENDS  AFFECTING THE COMPANY'S  FINANCIAL  CONDITION AND RESULTS OF OPERATIONS.
ALL FORWARD-LOOKING STATEMENTS IN THIS REPORT ARE BASED ON INFORMATION AVAILABLE
TO THE COMPANY (AS HEREINAFTER DEFINED) AS OF THE DATE THIS REPORT IS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION, AND THE COMPANY ASSUMES NO OBLIGATION TO
UPDATE ANY SUCH  FORWARD-LOOKING  STATEMENTS.  FACTORS  THAT COULD CAUSE  ACTUAL
RESULTS  TO  DIFFER   MATERIALLY   FROM  THOSE  EXPRESSED  OR  IMPLIED  BY  SUCH
FORWARD-LOOKING  STATEMENTS  INCLUDE,  BUT ARE NOT  LIMITED TO, (I) A DECLINE IN
GENERAL ECONOMIC CONDITIONS, (II) THE UNAVAILABILITY OR MATERIAL INCREASE IN THE
PRICE OF NEWSPRINT,  (III) AN ADVERSE JUDGMENT IN PENDING OR FUTURE  LITIGATION,
AND (IV)  INCREASED  COMPETITIVE  PRESSURE FROM CURRENT  COMPETITORS  AND FUTURE
MARKET ENTRANTS. SEE "ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION  AND RESULTS OF  OPERATIONS  -- CERTAIN  FACTORS  WHICH MAY AFFECT THE
COMPANY'S FUTURE  PERFORMANCE." THE COMPANY  UNDERTAKES NO OBLIGATION TO RELEASE
PUBLICLY  THE  RESULTS OF ANY FUTURE  REVISIONS  IT MAY MAKE TO  FORWARD-LOOKING
STATEMENTS  TO  REFLECT  EVENTS OR  CIRCUMSTANCES  AFTER  THE DATE  HEREOF OR TO
REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.


                                    PART I

ITEM 1.     BUSINESS.


GENERAL

      Journal Register Company  (together with all of its subsidiaries and their
respective  predecessors (the "Company") is a leading U.S. newspaper  publisher,
with total paid daily circulation of 652,866 and total non-daily distribution of
approximately  3.7  million.  As of December  31,  1998,  the Company  owned and
operated  24  daily  newspapers  and 185  non-daily  publications  strategically
clustered  in  seven  geographic  areas:   Connecticut;   Philadelphia  and  its
surrounding areas;  Ohio; the greater St. Louis area;  central New England;  and
the Capital-Saratoga and Mid-Hudson,  New York regions. The Company's newspapers
are characterized by an intense focus on coverage of local news and local sports
and offer compelling graphic design in colorful, reader-friendly packages.

      From 1993 through 1998,  the Company  successfully  completed 13 strategic
acquisitions,  acquiring 12 daily  newspapers,  117 non-daily  publications  and
three commercial  printing  companies.  The Company has generally  increased the
revenues and  significantly  increased  the cash flow and  profitability  of its
acquired  newspapers.  For the fiscal year ended  December 31, 1998, the Company
generated revenues of $426.8 million,  EBITDA (as hereinafter defined) of $146.7
million  (excluding  special charges and an  extraordinary  item recorded in the
third quarter of 1998),  net income of $41.1  million and net income,  excluding
the special  charges and  extraordinary  item, of $48.0  million.  In 1997,  the
Company's EBITDA was $133.4 million  (excluding the 1997 special  charge).  From
1993 through 1998, the Company  recorded  compound annual growth in revenues and
EBITDA (excluding special charges in 1997 and 1998 and the extraordinary item in
1998), of approximately 9.4% and 11.4%,  respectively.  The Company has achieved
this growth through a combination of expanding  revenues in existing  geographic
areas, strategic acquisitions and implementing cost controls and ongoing expense
reduction efforts at existing and acquired newspapers.

      The majority of the Company's  daily  newspapers  have been  published for
more than 100 years and are established franchises with strong identities in the
communities  they serve.  For example,  the NEW HAVEN  REGISTER,  the  Company's
largest  newspaper  based  on daily  circulation,  has  roots in the New  Haven,
Connecticut  area  dating  back to 1755.  In many  cases,  the  Company's  daily
newspapers are the only general circulation daily newspapers  published in their
respective communities.  The Company's non-daily publications serve well defined
suburban circulation areas and include the St. Louis, Missouri SUBURBAN JOURNALS
(the  "JOURNALS"),  the largest group of weekly  newspapers in the United States
based on total distribution.

                                       1

<PAGE>

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

      The Company's revenues are derived from advertising  (approximately  73.3%
of  1998  revenues),   paid   circulation,   including  single  copy  sales  and
subscription sales (21.0% of 1998 revenues),  and commercial  printing and other
(5.7% of 1998 revenues).  The Company's  advertiser base is predominantly local.
The Company's newspapers seek to produce desirable results for local advertisers
by   targeting   readers   based   on   certain   geographic   and   demographic
characteristics.  The Company seeks to increase readership, and thereby generate
traffic for its advertisers,  by focusing on high product quality, local content
and creative and interactive promotions.  The Company promotes single copy sales
of its  newspapers  because it believes  that such sales have higher  readership
than  subscription  sales,  and that single copy  readers tend to be more active
consumers of goods and  services,  as indicated  by a Newspaper  Association  of
America  ("NAA") study.  Single copy sales also tend to generate  higher profits
than  subscription  sales,  as single copy sales  generally have higher per unit
prices  and lower  associated  distribution  costs.  Subscription  sales,  which
provide  readers  with  the  convenience  of  home  delivery,  are an  important
component of the Company's circulation base. The Company also publishes numerous
special sections and niche and special interest publications.  Such publications
tend to increase  readership within targeted  demographic  groups and geographic
areas. The Company believes that as a result of these strategies, its newspapers
represent  an  attractive  and   cost-effective   medium  for  its  readers  and
advertisers.

      The Company's  advertising  revenues in 1998 were derived primarily from a
broad group of local retailers  (approximately  57%) and classified  advertisers
(approximately  41%). No advertiser  accounted for more than 2% of the Company's
1998 advertising revenues. The Company believes that because its newspapers rely
on a broad base of local  retail and local  classified  advertising  rather than
more volatile national and major account  advertising,  its advertising revenues
tend to be relatively stable.

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

                                       2

<PAGE>

OVERVIEW OF OPERATIONS

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

      CONNECTICUT.  The Company owns the NEW HAVEN  REGISTER,  a daily newspaper
with  circulation  of more than 100,000,  four  suburban  daily  newspapers,  62
non-daily  publications and one commercial printing company.  The suburban daily
newspapers in this cluster are THE HERALD (New Britain),  THE BRISTOL PRESS, THE
REGISTER  CITIZEN   (Torrington)  and  THE  MIDDLETOWN  Press.  The  five  daily
newspapers have aggregate daily and Sunday circulation of approximately  163,000
and 166,000,  respectively. The 62 suburban and community non-daily publications
have aggregate  distribution of approximately  889,000.  Combined, the Company's
Connecticut  daily  newspapers  and  non-daily  publications  serve a state-wide
audience with  concentrations in western  Connecticut  (Litchfield and Fairfield
counties) through Hartford and its suburban areas to the greater New Haven area;
and the Connecticut shoreline from New Haven northeast to New London.

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

<TABLE>
<CAPTION>

                                  YEAR         YEAR                     DAILY          SUNDAY         NON-DAILY
      PUBLICATION             ORIGINATED(1)  ACQUIRED    LOCATION   CIRCULATION(2)  CIRCULATION(2)  DISTRIBUTION(3)

<S>                                <C>         <C>     <C>              <C>             <C>              <C>
NEW HAVEN REGISTER..........       1755        1989    New Haven        100,062         112,318
THE HERALD..................       1881        1995    New Britain       23,198         42,271(4)
THE BRISTOL PRESS...........       1871        1994    Bristol           15,936               (4)
THE REGISTER CITIZEN........       1889        1993    Torrington        12,573         11,554
THE MIDDLETOWN PRESS........       1884        1995    Middletown        10,832               (4)
Imprint Newspapers
   14 publications..........       1880        1995    Bristol                                           121,204
Shore Line Newspapers
   13 publications..........       1877        1995    Guilford                                          120,410
Elm City Newspapers
    8 publications..........       1931        1995    Milford                                            82,063
Minuteman Newspapers
    3 publications..........       1993        1998    Westport                                           73,870
Housatonic Publications
    9 publications..........       1825        1998    New Milford                                        57,183
CONNECTICUT'S COUNTY KIDS...       1989        1996    Westport                                           41,425
Foothills Trader
    3 publications..........       1965        1995    Torrington                                         37,354
EAST HARTFORD GAZETTE.......       1885        1995    East Hartford                                      19,700
THOMASTON EXPRESS...........       1874        1994    Thomaston                                           1,565
TMC (9 publications)........                                                                             333,925
                                                                        -------        -------           -------
TOTALS......................                                            162,601        166,143           888,699
                                                                        =======        =======           =======

</TABLE>

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

(2)  Circulation averages for the six months ended September 30, 1998, according
     to ABC Fas-Fax Report.

(3)  Non-daily  distribution  includes  both  paid and free  distribution.  Paid
     distribution for Housatonic  Valley and Minuteman  Newspapers  reflects the
     1998 Certified  Audit of  Circulations  ("CAC") audit.  All other non-daily
     distribution reflects average distribution for December 1998.

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

                                       3

<PAGE>

      The NEW HAVEN REGISTER is the Company's  largest  newspaper based on daily
circulation   and  is  the  second  largest  daily   circulation   newspaper  in
Connecticut.  The NEW HAVEN REGISTER serves a primary circulation area comprised
of the majority of New Haven  County and  portions of  Middlesex  and New London
Counties.  This area (including portions of Fairfield County which are served by
related  non-daily  publications) has a population of 769,033 and had population
growth of approximately 6% from 1980 to 1997. This area has an average household
income of $68,611,  which is 24% above the  national  average of $55,449,  and a
retail  environment  of more than 6,600  stores.  This area features a number of
large and well-established institutions,  including Yale University and Yale-New
Haven  Hospital.  As a result of its proximity to the large media markets of New
York  City,  Boston  and  Hartford,  New  Haven  has only one  locally  licensed
television  station (which serves a state-wide,  rather than a local,  audience)
and a fragmented radio market.  Consequently,  the Company believes that the NEW
HAVEN  REGISTER  is a powerful  local  news and  advertising  franchise  for the
greater New Haven area.

      THE HERALD,  THE BRISTOL PRESS and THE MIDDLETOWN  PRESS serve  contiguous
areas between New Haven and Hartford. THE BRISTOL PRESS serves an area which has
a population of 319,951 and had population  growth of approximately 5% from 1980
to 1997.  This area has an average  household  income of  $77,156,  which is 39%
above the  national  average.  THE  MIDDLETOWN  PRESS serves an area which has a
population of 99,882 and had population growth of approximately 16% from 1980 to
1997. This area has an average  household income of $65,408,  which is 18% above
the  national  average.  THE  HERALD  serves an area which has a  population  of
104,425,  which is essentially  unchanged  since 1980.  This area has an average
household  income of $55,664.  THE REGISTER  CITIZEN  serves an area which has a
population of 240,515 and had population  growth of approximately  11% from 1980
to 1997.  This area has an average  household  income of  $74,956,  which is 35%
above the national average.

      The Connecticut  publications  benefit from considerable  cross-selling of
advertising as well as from  news-gathering  and production  synergies.  The NEW
HAVEN  REGISTER  gathers  state-wide  news for all of the Company's  Connecticut
newspapers; the newspapers cross-sell advertising through a one-order,  one-bill
system; and THE HERALD and THE MIDDLETOWN PRESS are printed at one facility,  as
are THE REGISTER  CITIZEN and THE BRISTOL  PRESS.  Moreover,  in August 1996, in
order to take advantage of the contiguous  nature of the geographic areas served
by THE HERALD, THE BRISTOL PRESS and THE MIDDLETOWN PRESS, the Company started a
Sunday newspaper,  THE HERALD PRESS, serving readers of these three dailies with
three zoned editions and having Sunday circulation of approximately 42,271 as of
September 30, 1998.

      PHILADELPHIA AND SURROUNDING  AREAS. The Company owns six daily newspapers
and  47  non-daily   publications   serving  areas   surrounding   Philadelphia,
Pennsylvania.  These publications include, in Pennsylvania, the DAILY LOCAL NEWS
(West Chester),  THE TIMES HERALD (Norristown),  THE PHOENIX  (Phoenixville),  a
group of non-daily  newspapers serving  Philadelphia's  affluent Main Line and a
group of 16 weekly newspapers, the InterCounty Newspaper Group, serving suburban
Philadelphia  and central and southern New Jersey;  and also in New Jersey,  THE
TRENTONIAN  (Trenton).  The Company also owns two commercial printing companies,
acquired with the  InterCounty  Newspapers in December 1997, one of which prints
the 16  weekly  newspapers  and one of  which  is a  premium  quality  sheet-fed
printing  operation.  The daily  newspapers,  acquired in the July 1998  Goodson
Acquisition (as hereinafter defined) include, both in Pennsylvania, The Delaware
County DAILY TIMES and THE MERCURY, Pottstown. The Goodson Acquisition non-daily
publications include, also in Pennsylvania, Acme Newspapers (Ardmore), including
THE MAIN LINE  TIMES,  serving  the  affluent  Main Line,  and NEWS OF  DELAWARE
COUNTY,  one of the largest audited  community  newspapers in the United States;
Town Talk Newspapers (Media);  and Penny Pincher Shoppers  (Pottstown).  The six
daily  newspapers have aggregate daily and Sunday  circulation of  approximately
195,000  and  171,000,   respectively.   This  non-daily   distribution   totals
approximately 583,000.

                                       4

<PAGE>

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

<TABLE>
<CAPTION>

                                  YEAR         YEAR                             DAILY          SUNDAY         NON-DAILY
      PUBLICATION             ORIGINATED(1)  ACQUIRED       LOCATION         CIRCULATION(2)  CIRCULATION(2)  DISTRIBUTION(3)

<S>                                <C>         <C>      <C>                       <C>            <C>            <C>
DAILY TIMES (4)............        1876        1998     Delaware County, PA       50,746         48,178
DAILY LOCAL NEWS...........        1872        1986     West Chester, PA          33,420         31,047
THE MERCURY (4)............        1930        1998     Pottstown, PA             26,904         27,815
THE TIMES HERALD...........        1799        1993     Norristown, PA            22,601         19,050
THE PHOENIX................        1888        1986     Phoenixville, PA           4,032
THE TRENTONIAN.............        1945        1985     Trenton, NJ               57,517         45,035
Suburban Publications
  3 publications...........        1885        1986     Wayne, PA                                               32,917
Suburban Philadelphia
  5 publications...........        1885        1986     Suburban Philadelphia                                   64,285
InterCounty Newspaper
    Group             
  16 publications..........        1869        1997     Bristol, PA                                             85,830
Acme Newspapers
  4 publications (4).......        1930        1998     Ardmore, PA                                             84,515
Penny Pincher Shoppers          
  6 publications (4).......        1988        1998     Pottstown, PA                                           64,077
Town Talk Newspapers       
  4 publications (4).......        1964        1998     Media, PA                                               47,500
TMC (9 publications).......                                                                                    203,877
                                                                                 -------       -------         -------
TOTALS............                                                               195,220       171,125         583,001
                                                                                 =======       =======         =======
</TABLE>

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

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

(2)  Circulation averages for the six months ended September 30, 1998, according
     to ABC Fas-Fax Report.

(3)  Non-daily distribution includes both paid and free distribution.  Non-daily
     distribution  reflects  average  distribution  for December 1998,  with the
     following   exceptions:   Suburban   Publications,   which  includes  three
     publications (THE SUBURBAN & WAYNE TIMES,  SUBURBAN  ADVERTISER and KING OF
     PRUSSIA  COURIER)  and  reflects  the CAC  audit  for the 24  months  ended
     September 30, 1997; Acme Newspapers, which includes four publications (MAIN
     LINE TIMES, NEWS OF DELAWARE COUNTY,  GERMANTOWN COURIER and MT. AIRY TIMES
     EXPRESS) and reflects the CAC audit for the 24 months ended  September  30,
     1997.

(4)  Part of the Goodson Acquisition, completed July 15, 1998.

      The majority of the Company's Pennsylvania publications are located within
a 30-mile radius of  Philadelphia.  The Company's  newspapers  serve  geographic
areas with highly desirable demographics. The Delaware County DAILY TIMES serves
an area  which  has a  population  of  604,009  and  had  population  growth  of
approximately 3% from 1980 to 1997. This area has an average household income of
$73,685, which is 33% above the national average. The DAILY LOCAL NEWS serves an
area  which  has  a  population  of  387,524  and  had   population   growth  of
approximately  31% from 1980 to 1997. This area has an average  household income
of $83,894,  which is 51% above the national average.  THE (Pottstown)  MERCURY,
located approximately 40 miles west of Philadelphia,  serves an area which has a
population of 434,287 and had population  growth of approximately  14% from 1980
to 1997.  This area has an average  household  income of  $70,374,  which is 27%
above  the  national  average.  THE  TIMES  HERALD  serves  an area  which has a
population of 167,590 and had population growth of approximately 2% from 1980 to
1997. This area has an average  household income of $80,001,  which is 44% above
the  national  average.  THE PHOENIX  serves an area which has a  population  of
102,854 and had population  growth of approximately  17% from 1980 to 1997. This
area has an average household income of $86,362, which is 56% above the national
                                   
                                        5

<PAGE>
average. The Company's weekly newspaper group in suburban Philadelphia serves an
area  which  has  a  population  of  327,196  and  had   population   growth  of
approximately  21% from 1980 to 1997. This area has an average  household income
of  $102,987,  which is 86% above the  national  average.  MAIN LINE Times,  the
flagship of the Acme Newspapers group,  serves an area which has a population of
398,094 and had population  growth of  approximately  3% from 1980 to 1997. This
area has an  average  household  income  of  $102,005,  which is 84%  above  the
national  average.  The majority of the Company's  Pennsylvania  properties  are
located  within  20 miles of the  area's  largest  retail  complex,  the King of
Prussia  Plaza and  Court,  which is the  largest  mall on the East Coast of the
United States in terms of total square footage.

      THE TRENTONIAN is published in Trenton, the capital of New Jersey, located
40  miles  north of  Philadelphia  and 75 miles  south  of New  York  City.  THE
TRENTONIAN  serves an area which has a population of 294,051 and had  population
growth of approximately 8% from 1980 to 1997. This area has an average household
income of $67,766, which is 22% above the national average.

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

      OHIO.  The Company owns four daily  newspapers  and a commercial  printing
operation in Ohio. The daily newspapers are THE NEWS-HERALD  (Lake County),  THE
MORNING  JOURNAL  (Lorain),  THE TIMES REPORTER  (Dover-New  Philadelphia)  and,
acquired in the Goodson Acquisition,  THE INDEPENDENT  (Massillon).  The Company
has aggregate daily and Sunday circulation of approximately 125,000 and 127,000,
respectively.  Non-daily  distribution  in the  Ohio  cluster  is  approximately
113,000.

      The  following  table  sets  forth  information  regarding  the  Company's
publications in Ohio:
<TABLE>
<CAPTION>
                            YEAR         YEAR                       DAILY           SUNDAY          NON-DAILY
  PUBLICATION           ORIGINATED(1)  ACQUIRED   LOCATION       CIRCULATION(2)  CIRCULATION(2)  DISTRIBUTION(3)

<S>                        <C>           <C>      <C>                <C>             <C>             <C>
THE NEWS-HERALD            1878          1987     Lake County        50,022          61,250
THE MORNING JOURNAL...     1921          1987     Lorain             36,340          40,287
THE TIMES REPORTER....     1903          1987     Dover-New          23,906          25,909
                                                   Philadelphia
THE INDEPENDENT (4)...     1871          1998     Massillon          14,926
COUNTY KIDS...........     1997          1997(5)  Lake County                                         16,000
TMC (4 publications)..                                                                                96,945
                                                                    -------         -------          -------
TOTALS................                                              125,194         127,446          112,945
                                                                    =======         =======          =======
</TABLE>

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

(2)  Circulation averages for the six months ended September 30, 1998, according
     to ABC Fas-Fax Report.

(3)  Non-daily  distribution is solely free  distribution  and reflects  average
     distribution for December 1998.

(4)  Part of the Goodson Acquisition, completed July 15, 1998.

(5)  Established by the Company in 1997.

                                       6

<PAGE>
      THE NEWS-HERALD and THE MORNING JOURNAL serve areas located  directly east
and west of Cleveland,  respectively.  THE  NEWS-HERALD,  which is one of Ohio's
largest  suburban  newspapers,  serves  communities  located  in Lake and Geauga
Counties,  two of Ohio's five most affluent  counties.  Lake and Geauga Counties
have populations of 224,529 and 85,051, respectively,  and had population growth
of  approximately 6% and 14%,  respectively,  from 1980 to 1997. Lake and Geauga
Counties have average  household  incomes of $57,443 and $86,148,  respectively.
THE MORNING  JOURNAL  serves an area which has a  population  of 149,475 and had
population  growth  of  approximately  3% from  1980 to 1997.  This  area has an
average  household  income of $50,296.  THE TIMES  REPORTER and THE  INDEPENDENT
serve contiguous markets primarily in Tuscarawas and western Stark counties. THE
TIMES REPORTER serves the rural communities of Dover and New Philadelphia, which
are located approximately 80 miles south of Cleveland. THE TIMES REPORTER serves
an area  which  has a  population  of  104,567  and  had  population  growth  of
approximately 6% from 1980 to 1997. This area has an average household income of
$38,638.  THE  INDEPENDENT  (Massillon)  serves  western  Stark  County,  at the
southern  edge  of  the  Northeast  Ohio  industrial   area,  which  is  located
approximately  60 miles  south of  Cleveland  and 20  miles  north of  Dover-New
Philadelphia.  THE INDEPENDENT  serves an area which has a population of 239,053
and had population  growth of  approximately 3% from 1980 to 1997. This area has
an average household income of approximately  $50,422. The Company believes that
each of its Ohio newspapers  benefits from a fragmented local media environment.
The Company  further  believes  that THE  NEWS-HERALD  and THE  MORNING  JOURNAL
compete  effectively with Cleveland's  major  metropolitan  newspaper due to the
focus on coverage of local news and local  sports.  The  Company's  Ohio cluster
benefits   from  a  variety  of   synergistic   opportunities,   including   the
cross-selling  of advertising  and editorial  coverage.  In addition,  THE TIMES
REPORTER and THE INDEPENDENT benefit from commercial printing synergies, as both
operations include commercial printing.

      GREATER ST. LOUIS AREA.  The Company owns the JOURNALS,  the largest group
of suburban and community non-daily newspapers in the United States (in terms of
total  distribution);  one daily  newspaper;  the LADUE NEWS, a weekly newspaper
acquired in December 1997; and five other non-daily  publications in the greater
St. Louis area. The JOURNALS are a group of 40 newspapers  which are distributed
two to  three  times  each  week  in the St.  Louis  suburban  areas,  including
communities in Illinois,  with total weekly  distribution of  approximately  1.6
million.  The Company's daily newspaper in this cluster,  THE TELEGRAPH  (Alton,
IL),  has daily and Sunday  circulation  of  approximately  28,000  and  30,000,
respectively.

The following table sets forth information regarding the Company's  publications
in the greater St. Louis area:
<TABLE>
<CAPTION>
                            YEAR         YEAR                       DAILY           SUNDAY          NON-DAILY
  PUBLICATION           ORIGINATED(1)  ACQUIRED   LOCATION       CIRCULATION(2)  CIRCULATION(2)  DISTRIBUTION(3)
<S>                        <C>           <C>      <C>                <C>             <C>             <C>
Suburban Newspapers 
  of Greater St. 
  Louis (73 editions
  of 40 JOURNALS)....      1922          1984     St. Louis, MO                                      1,555,623
THE TELEGRAPH........      1836          1985     Alton, IL          27,950          30,164
LADUE NEWS...........      1981          1997     Ladue, MO                                             40,000
   PERFORMANCE NOTES.      1992          1997     Ladue, MO                                             33,000
   DIRECT DECOR......      1994          1997     Ladue, MO                                              3,000
   GENTLEMEN'S CLUB..      1997          1997     Ladue, MO                                              5,000
COUNTY KIDS.......         1996          1996(4)  St. Louis, MO                                         30,000
TMC (1 publication)..                                                                                   20,000
                                                                     ------          ------          ---------
TOTALS...............                                                27,950          30,164          1,686,623
                                                                     ======          ======          =========
</TABLE>
--------------------------
(1)  For merged  properties  and newspaper  groups,  the year given reflects the
     date of origination for the earliest publication.

(2)  Circulation averages for the six months ended September 30, 1998, according
     to ABC Fas-Fax Report.

(3)  Non-daily   distribution  includes  both  paid  7,335  and  free  1,679,288
     distribution, and reflects December 1998 net distribution.

(4)  Established by the Company in 1996.

                                       7

<PAGE>

      The JOURNALS have total distribution of approximately 930,000 mid-week and
approximately  630,000 on Sunday, for total weekly distribution of approximately
1.6 million.  The JOURNALS reach  approximately  90% of the homes in the greater
St.  Louis  area.  The  JOURNALS  serve  an  area  which  has  a  population  of
approximately  2.4 million and had population  growth of  approximately  5% from
1980 to 1997. This area has an average household income of $60,583. According to
EDITOR & PUBLISHER magazine,  St. Louis is the 17th largest metropolitan area in
the United States. The JOURNALS have received national recognition and have been
studied by domestic and foreign publishers as a model of successful neighborhood
newspapers.  Due to St. Louis'  characterization  as a city of neighborhoods (92
municipalities  comprise  St.  Louis  County  alone),  the Company  believes the
JOURNALS  offer  local  retailers  a   cost-effective   way  to  reach  targeted
demographic  groups,  which enables the JOURNALS to compete effectively with the
major  metropolitan  daily and other weekly  newspapers in the area. The Company
believes  that the area's  largest radio  station  competes  primarily for major
accounts rather than small  advertisers  and, thus, is not a significant  direct
competitor.  The Company believes that the JOURNALS' targeted,  highly localized
approach places the JOURNALS in a strong competitive position. LADUE NEWS serves
the affluent suburbs west of St. Louis, an area with an average household income
of $123,636,  123% above the  national  average.  This area has a population  of
approximately  176,372 and had population  growth of approximately 28% from 1980
to 1997. THE TELEGRAPH serves a community located in southeast Illinois,  within
the  greater St.  Louis area and which is  connected  to St.  Louis by the Clark
Bridge. THE TELEGRAPH serves an area which has a population of 119,256 and had a
decline in population of  approximately  1% since 1980. This area has an average
household income of $44,035.

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

      CENTRAL  NEW  ENGLAND.  The  Company  owns  four  daily  and 10  non-daily
publications in the central New England area. The Company's publications in this
cluster  include THE HERALD NEWS (Fall  River,  MA), the TAUNTON  DAILY  GAZETTE
(Taunton, MA), THE CALL (Woonsocket,  RI), THE TIMES (Pawtucket, RI) and a group
of weekly newspapers serving the Narragansett, Rhode Island area. The four daily
newspapers  have  aggregate  daily  circulation  of  approximately   75,000  and
aggregate Sunday circulation of approximately 60,000. The non-daily publications
in this cluster have total distribution of approximately 132,000.

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

<TABLE>
<CAPTION>

                            YEAR         YEAR                       DAILY           SUNDAY          NON-DAILY
  PUBLICATION           ORIGINATED(1)  ACQUIRED   LOCATION       CIRCULATION(2)  CIRCULATION(2)  DISTRIBUTION(3)

<S>                        <C>           <C>      <C>                <C>             <C>             <C>
THE HERALD NEWS........    1872          1985     Fall River, MA     27,168          29,148
TAUNTON DAILY GAZETTE..    1848          1996     Taunton, MA        14,536          13,703
THE CALL...............    1892          1984     Woonsocket, RI     17,774          17,432
THE TIMES..............    1885          1984     Pawtucket, RI      15,671
Southern Rhode
  Island Newspapers
  6 publications......     1854          1995     Wakefield, RI                                      36,115
TMC (4 publications)...                                                                              95,989
                                                                     ------          ------         -------
TOTALS.................                                              75,149          60,283         132,104
                                                                     ======          ======         =======

</TABLE>

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

(2)  Circulation averages for the six months ended September 30, 1998, according
     to ABC Fas-Fax Report.

(3)  Non-daily  distribution includes both paid and free distribution.  Paid and
     free non-daily  distribution for Southern Rhode Island  Newspapers  (except
     THE  WESTERLY  SHOPPER)  reflects the June 30, 1997 CAC Audit  report.  The
     other  non-daily  distribution  figures reflect  average  distribution  for
     December 1998.


                                       8

<PAGE>

      THE HERALD NEWS and the TAUNTON DAILY GAZETTE are situated 14 miles apart.
Each is approximately 50 miles south of Boston,  Massachusetts and 20 miles east
of Providence,  Rhode Island.  The region's  largest  shopping mall,  located in
Taunton,  contains one million square feet of retail space and approximately 150
stores.  THE HERALD NEWS serves an area which has a population  of 159,776,  and
had a decline in population  of  approximately  1% since 1980.  This area has an
average  household  income of $45,290.  The TAUNTON DAILY GAZETTE serves an area
which has a population of 124,752 and had population growth of approximately 20%
from 1980 to 1997.  This area has an average  household  income of $52,719.  THE
CALL serves an area which has a population of 174,186 and had population  growth
of  approximately  10% from  1980 to 1997.  This area has an  average  household
income of $56,687.  THE TIMES serves an area which has a  population  of 184,356
and had population  growth of  approximately 4% from 1980 to 1997. This area has
an average  household income of $50,069.  Southern Rhode Island Newspapers serve
an area  which  has a  population  of  152,199  and  had  population  growth  of
approximately  24% from 1980 to 1997. This area has an average  household income
of  $69,747,  which is 26%  above  the  national  average.  No local  television
stations  exist in the  communities  which the central  New  England  newspapers
serve.  Further,  the Company  believes that its central New England  properties
benefit from fragmented local radio markets.  As a result,  the Company believes
that each of its  newspapers  is a  significant  media outlet in its  respective
community,   thereby  making  these  newspapers  attractive  vehicles  for  area
advertisers.  The  central  New  England  newspapers  benefit  from  advertising
cross-selling; moreover, the Company's Massachusetts and Rhode Island newspapers
benefit from significant  production and editorial  synergies.  For example, THE
TIMES and THE CALL are printed at the same  facility,  as are the TAUNTON  DAILY
GAZETTE and THE HERALD NEWS. Additionally,  THE TIMES, THE CALL and the group of
paid suburban and community  non-daily  newspapers serving southern Rhode Island
all share certain news gathering resources.

      CAPITAL-SARATOGA REGION OF NEW YORK. The Company owns three daily and four
non-daily publications in the Capital-Saratoga Region of New York. The Company's
publications in this cluster include THE RECORD (Troy), THE SARATOGIAN (Saratoga
Springs), the weekly COMMUNITY NEWS, serving Clifton Park, and, acquired as part
of the Goodson Acquisition, THE ONEIDA DAILY DISPATCH. The daily newspapers have
aggregate  daily  circulation  of  approximately  44,000  and  aggregate  Sunday
circulation of approximately 40,000. The non-daily  publications in this cluster
have total distribution of approximately 63,000.

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

<TABLE>
<CAPTION>

                            YEAR         YEAR                       DAILY           SUNDAY          NON-DAILY
  PUBLICATION           ORIGINATED(1)  ACQUIRED   LOCATION       CIRCULATION(2)  CIRCULATION(2)  DISTRIBUTION(3)

<S>                        <C>           <C>      <C>                <C>             <C>             <C>
THE RECORD...........      1896          1987     Troy               25,002          26,910
THE SARATOGIAN.......      1855          1998     Saratoga Springs   11,582          13,502
COMMUNITY NEWS.......      1969          1998     Clifton Park                                      26,908
THE ONEIDA DAILY
DISPATCH (4).........      1850          1998     Oneida              7,717
ONEIDA-CHITTENANGO
PENNYSAVERS
 2 publications (4)..      1957          1998     Oneida                                            24,515
TMC (1 publication)..                                                                               12,000
                                                                     ------          ------         ------
TOTALS...............                                                44,301          40,412         63,423
                                                                     ======          ======         ======
</TABLE>

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

(2)  irculation averages for the six months ended September 30, 1998,  according
     to ABC Fas-Fax  Report,  with the  exception of THE ONEIDA DAILY  DISPATCH,
     which reflects the December 1997 Publisher's Statement.

(3)  Non-daily  distribution  is free  and  reflects  average  distribution  for
     December 1998.

(4)  Part of the Goodson Acquisition, completed July 15, 1998.


                                       9

<PAGE>
      THE RECORD and THE SARATOGIAN are situated  approximately  26 miles apart.
THE RECORD serves an area which has a population  of 180,117 and had  population
growth of approximately 4% from 1980 to 1997. This area has an average household
income of  $48,777.  THE  SARATOGIAN  serves an area which has a  population  of
201,913 and had population  growth of approximately  23% from 1980 to 1997. This
area has an average  household  income of  $58,760.  THE ONEIDA  DAILY  DISPATCH
serves an area which has a  population  of 74,372 and had  population  growth of
approximately 5% from 1980 to 1997. This area has an average household income of
$47,054.  No local  television  stations  exist  in the  communities  which  the
Capital-Saratoga Region newspapers serve. Further, the Company believes that its
Capital-Saratoga  Region properties benefit from fragmented local radio markets.
As a result,  the Company  believes that each of its newspapers is a significant
media  outlet in its  respective  community,  thereby  making  these  newspapers
attractive  vehicles for area  advertisers.  THE RECORD,  THE SARATOGIAN and the
COMMUNITY NEWS benefit from  significant  cross-selling  of  advertising.  These
newspapers  also  benefit  from  significant   production  synergies.   Directly
following  the March 9, 1998  acquisition  of THE  SARATOGIAN  and the COMMUNITY
NEWS,  the  newspapers  began  printing  at THE  RECORD  plant in  Troy,  taking
advantage  of that  plant's  excess  capacity  and  achieving  significant  cost
efficiencies.  The three newspapers also share certain news-gathering functions,
and the Company  believes that  additional  synergies  may be available  between
them.

      MID-HUDSON REGION OF NEW YORK. The Company owns one daily newspaper and 11
non-daily publications in the Mid-Hudson Region of New York. The daily newspaper
in this  cluster  is THE DAILY  FREEMAN in  Kingston.  The  Company's  non-daily
publications  in  this  cluster  are  Taconic  Press,  a group  of 10  non-daily
newspapers in Dutchess County,  New York,  acquired  September 21, 1998, and THE
PUTNAM  COUNTY  COURIER,  serving  Putnam  County,  New York,  which the Company
acquired as part of its January 1998  acquisition  of HVM,  LLC. The  Mid-Hudson
Region  cluster  has  aggregate  daily  circulation  of  approximately   22,000,
aggregate  Sunday  circulation  of  approximately  30,000  and  total  non-daily
distribution of approximately 198,000.

      The  following  table  sets  forth  information  regarding  the  Company's
publications in the Mid-Hudson Region of New York:
<TABLE>
<CAPTION>
                            YEAR         YEAR                       DAILY           SUNDAY          NON-DAILY
  PUBLICATION           ORIGINATED(1)  ACQUIRED   LOCATION       CIRCULATION(2)  CIRCULATION(2)  DISTRIBUTION(3)
<S>                        <C>           <C>      <C>                <C>             <C>             <C>
DAILY FREEMAN.......       1871          1998     Kingston           22,451          29,888
Taconic Press
10 publications.....       1846          1998     Dutchess County                                    193,476
THE PUTNAM
COUNTY COURIER......       1841          1998     Putnam County                                        4,029
                                                                     ------          ------          -------
TOTALS..............                                                 22,451          29,888          197,505
                                                                     ======          ======          =======
</TABLE>
(1)  For merged  properties  and newspaper  groups,  the year given reflects the
     date of origination for the earliest publication.

(2)  Circulation averages for the six months ended September 30, 1998, according
     to ABC Fas-Fax Report.

(3)  Non-daily   distribution  is  both  paid  and  free  and  reflects  average
     distribution for December 1998.

(4)  Part of the Goodson Acquisition, completed July 15, 1998.

      THE DAILY  FREEMAN,  Taconic  Press and THE PUTNAM  COUNTY  COURIER  serve
markets in the  Mid-Hudson  Region of New York. THE DAILY FREEMAN serves an area
which has a population of 265,747 and had population  growth of approximately 8%
from 1980 to 1997. This area has an average household income of $54,228. Taconic
Press  newspapers  serve  an area  which  has a  population  of  88,322  and had
population  growth  of  approximately  2% from  1980 to 1997.  This  area has an
average  household  income of $69,442.  THE PUTNAM COUNTY COURIER serves an area
which has a population of 92,113 and had population  growth of approximately 19%
from 1980 to 1997.  This area has an average  household  income of $91,234.  One
independent  television  station (which serves a regional,  rather than a local,
audience)  exists in the  communities  which the  Mid-Hudson  Region  newspapers
serve.  Further,  the Company  believes that its  Mid-Hudson  Region  properties
benefit from fragmented local radio markets.  As a result,  the Company believes

                                       10

<PAGE>
that each of these  newspapers is a significant  media outlet in its  respective
community,   thereby  making  these  newspapers  attractive  vehicles  for  area
advertisers.  The Company believes that the Mid-Hudson Region newspapers benefit
from significant  cross-selling of advertising,  and from significant production
synergies.   The  Company   also   believes   that  there  will  be  sharing  of
news-gathering resources as this new cluster is developed.  Certain publications
in this cluster also benefit from  advertising  cross-selling  with THE REGISTER
CITIZEN (Torrington,  CT) and Housatonic  Publications (New Milford,  CT), which
serve Litchfield County, Connecticut.

ADVERTISING

      Substantially  all the Company's  advertising  revenues are derived from a
diverse  group  of local  retailers  and  classified  advertisers.  The  Company
believes  that because its  newspapers  rely on a broad base of local retail and
local  classified  advertising  rather  than more  volatile  national  and major
account  advertising,  its  advertising  revenues tend to be relatively  stable.
Local advertising is more stable than national advertising because a community's
need for local services  provides a stable base of local  businesses and because
local advertisers generally have fewer effective advertising vehicles from which
to  choose.  Advertising  revenues  accounted  for  approximately  73.3%  of the
Company's  total revenues for 1998. The Company's  advertising  rate  structures
vary among its  publications  and are a function of various  factors,  including
results achieved for advertisers,  local market  conditions and competition,  as
well as circulation,  readership,  demographics and type of advertising (whether
classified or display).  In 1998, local and regional  advertising  accounted for
the largest share of the Company's  advertising  revenues  (57.3%),  followed by
classified   advertising   (38.2%),   legal  advertising   (2.4%)  and  national
advertising (2.1%). The Company's  advertising revenues are not reliant upon any
one company or industry,  but rather are supported by a variety of companies and
industries,  including realtors, car dealerships, grocery stores and other local
businesses. No advertiser accounted for more than 2% of the Company's total 1998
advertising  revenues.  The Company's corporate  management works with its local
newspaper  management to approve  advertising  rates and to establish  goals for
each year during a detailed  annual budget  process.  Local  management is given
little latitude for discounting  from the approved rates.  Corporate  management
also works with local advertising staff to develop marketing kits, presentations
and  third-party  research  studies.  A  portion  of the  compensation  for  the
Company's publishers is based upon increasing  advertising revenues. The Company
stresses the timely collection of receivables, and sales compensation depends in
part upon  performance  relative to goals and timely  collection of  advertising
receivables.  Additionally,  corporate  management  facilitates  the  sharing of
advertising  resources and information  across the Company's  publications.  See
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations -- Certain Factors Which May Affect the Company's Future  Performance
-- Dependence on Local Economies."

CIRCULATION

      Substantially all of the Company's  circulation  revenues are derived from
home delivery sales of  publications  to subscribers  and single copy sales made
through  retailers and vending racks.  Circulation  accounted for  approximately
21.0% of the  Company's  total  revenues  in 1998.  Approximately  68.3% of 1998
circulation  revenues  were derived from  subscription  sales and  approximately
31.7% from single copy sales.  Single copy sales rates currently range from $.25
to $.50 per daily copy and $.75 to $1.75 per Sunday copy.  The Company  promotes
single copy sales of its  newspapers  because it  believes  that such sales have
higher readership than  subscription  sales and that single copy readers tend to
be more active  consumers of goods and  services,  as indicated by an NAA study.
Single copy sales also tend to generate a higher profit than subscription sales,
as single copy sales generally have higher per unit prices and lower  associated
distribution  costs.  In 1998,  the Company had total paid daily  circulation of
652,866,  paid Sunday  circulation  of 625,461  and  non-daily  distribution  of
approximately  3.7 million,  most of which is  distributed  free of charge.  The
Company's  corporate  management  works with its local  newspaper  management to
establish  subscription  and single copy rates. In addition,  the Company tracks
rates of newspaper  returns and customer  service calls through  formal  reports
which are  reviewed  weekly in an effort to  optimize  the number of  newspapers
available  for sale and to improve  delivery and customer  service.  The Company
also  implements  creative and  interactive  programs and promotions to increase
readership,  through both  subscription  and single copy sales.  Circulation has
generally  declined  throughout the newspaper  industry in recent years, and the
Company's  newspapers  have generally  experienced  this trend,  even as overall
operating  performance  of its  newspapers  has  improved.  The Company seeks to
maximize the overall operating performance rather than maximizing circulation of
its individual newspapers.

                                       11

<PAGE>

OTHER OPERATIONS

      The Company owns and operates four commercial printing facilities: Imprint
Printing in North Haven, Connecticut;  Midwest Offset in New Philadelphia, Ohio;
Nittany Valley Offset in State College, Pennsylvania; and InterPrint in Bristol,
Pennsylvania. These operations also print certain of the Company's publications.
The  commercial  printing  operations  accounted for  approximately  5.7% of the
Company's 1998 revenues.  The Company also owns  Integrated  Newspaper  Systems,
Inc., a company which develops application software for the newspaper industry.

EMPLOYEES

      The Company employs approximately 5,500 employees.

RAW MATERIALS

      The  basic  raw  material  for  newspapers  is  newsprint.  The  Company's
newsprint  consumption  (excluding  paper  consumed in the Company's  commercial
printing  operations)  totaled  approximately  $39.4 million in 1998,  which was
approximately  9.2% of the Company's  newspaper  revenues.  In 1998, the Company
consumed approximately 79,000 metric tons of newsprint, including paper consumed
in its commercial printing operations. The Company has no long-term contracts to
purchase  newsprint.  Generally,  the  Company  has in the  past  and  currently
purchases all of its newsprint  from two  suppliers,  although in the future the
Company may purchase  newsprint from other suppliers.  The Company believes that
concentrating  its  newsprint  purchases  in this  way  provides  a more  secure
newsprint supply and lower per unit newsprint prices.  The Company also believes
that it purchases newsprint at price levels lower than those which are available
to  individually  owned small  metropolitan  and suburban  daily  newspapers and
suburban and community  non-daily  publications and consistent with price levels
generally available to the largest newsprint  purchasers.  The available sources
of newsprint have been, and the Company  believes will continue to be,  adequate
to supply  the  Company's  needs.  The  inability  of the  Company  to obtain an
adequate supply of newsprint in the future could have a material  adverse effect
on  the   financial   condition  and  results  of  operations  of  the  Company.
Historically,  the  price of  newsprint  has been  cyclical  and  volatile.  The
Company's  average cost of newsprint  reflected an increase of approximately 13%
in  1996,  a  decrease  of  approximately   18%  in  1997  and  an  increase  of
approximately  8% in 1998,  in each case  compared  to the  previous  year.  The
Company  believes  that if any price  decrease or increase is  sustained  in the
industry, the Company will also be impacted by such change. The Company seeks to
manage the effects of increases in prices of newsprint through a combination of,
among other things,  technology  improvements,  including web-width  reductions,
inventory  management and  advertising  and  circulation  price  increases.  The
Company also has reduced fringe  circulation in response to increased  newsprint
prices, as it is the Company's experience that such circulation does not provide
adequate response for advertisers.  See "Management's Discussion and Analysis of
Financial  Condition  and Results of  Operations  -- Certain  Factors  Which May
Affect the Company's Future Performance -- Price and Availability of Newsprint."

SEASONALITY

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

COMPETITION

      While many of the Company's metropolitan and suburban daily newspapers are
the only daily newspapers of general  circulation  published in their respective
communities,  they compete  within their own  geographic  areas with other daily
newspapers  of general  circulation  published in adjacent or nearby  cities and
towns.  Competition for advertising expenditures and paid circulation comes from
local,  regional and national newspapers,  shoppers,  television,  radio, direct
mail,  on-line services and other forms of communication and advertising  media.
Since 1995, the Company has been developing  on-line  publications  based on its
newspapers and attracts  advertising for its on-line  publications.  The Company
has  published  an on-line  version of the NEW HAVEN  REGISTER  since  1995.  In
addition, by December 31, 1998, the Company had established an on-line editorial
presence and a full on-line classified advertising service for each of its daily

                                       12


<PAGE>

newspapers  and the majority of its weekly  newspaper  groups.  Competition  for
newspaper  advertising  expenditures is largely based upon  advertiser  results,
readership,  advertising  rates,  demographics  and  circulation  levels,  while
competition  for circulation and readership is based largely upon the content of
the  newspaper,  its  price  and  the  effectiveness  of its  distribution.  The
Company's  non-daily  publications,  including  shoppers and real estate guides,
primarily compete with direct mail  advertising,  shared mail packages and other
private advertising delivery services. As with daily newspapers, competition for
advertising  expenditures for suburban and community  non-daily  publications is
largely  based  upon  advertiser   results,   readership,   advertising   rates,
demographics and circulation  levels.  The Company believes that, because of the
relative   competitive   position  of  its  suburban  and  community   non-daily
publications in the communities which they serve,  such  publications  generally
have been able to compete  effectively  with other  forms of media  advertising.
Commercial printing, a highly competitive  business,  is largely driven by price
and quality.  See "Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations  -- Certain  Factors  Which May Affect the  Company's
Future Performance -- Newspaper Industry Competition."

ENVIRONMENTAL MATTERS

      As is the case with other newspaper and similar publication companies, the
Company is subject to a wide  range of  federal,  state and local  environmental
laws and regulations pertaining to air and water quality,  storage tanks and the
management  and  disposal  of  wastes  at its  facilities.  To the  best  of the
Company's  knowledge,  its operations are in material compliance with applicable
environmental  laws  and  regulations  as  currently  interpreted.  The  Company
believes that continued compliance with these laws and regulations will not have
a material  adverse  effect on the Company's  financial  condition or results of
operations.   The   Company  is  in  the  process  of   monitoring   groundwater
contamination  which has been  detected  at one of its  facilities.  The Company
believes  that  the  remediation  of  any  such  groundwater  contamination,  if
required,  will not have a material adverse effect on its financial condition or
results of operations. In May 1998, one of the Company's subsidiaries,  acquired
as part of the Goodson Acquisition,  received a notice of potential liability in
connection with a landfill  superfund site. The Company is fully indemnified for
all costs and liabilities arising out of this issue by the seller as part of the
Goodson  Acquisition  purchase  agreement.   See  "Management's  Discussion  and
Analysis of Financial  Condition and Results of  Operations  -- Certain  Factors
Which May Affect the Company's Future Performance -- Environmental Matters."

REGULATION

      Paid circulation  newspapers which are delivered by second-class  mail are
required to obtain permits from,  and file an annual  statement of ownership and
circulation  with,  the United States Postal  Service.  There is no  significant
regulation  with respect to acquisition of newspapers,  other than filings under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, if certain
threshold requirements under such Act are satisfied.

                                       13

<PAGE>

ITEM 2.  PROPERTIES.

      The  Company  owns and  operates  114  facilities  used in the  course  of
producing and publishing its daily and non-daily publications.  Approximately 70
of the Company's  facilities are leased for terms ranging from one to six years.
These leased  facilities range in size from  approximately  250 to 70,000 square
feet. The location and  approximate  size of the principal  physical  properties
used by the Company at December 31, 1998, as well as the expiration  date of the
leases relating to such properties which the Company leases are set forth below:

                                APPROXIMATE AREA IN SQUARE FEET         LEASE
                             -------------------------------------    EXPIRATION
         LOCATION            OWNED SQUARE FEET  LEASED SQUARE FEET       DATE
         --------            -----------------  ------------------  ------------
New Haven, CT.............      205,000(1)(3)
New Britain, CT...........       33,977(1)(3)
Bristol, CT...............       40,000(1)(3)
Torrington, CT............       36,120(1)(3)
Middletown, CT............       30,000(1)(3)
North Haven, CT...........       24,000(3)            10,000(3)         12/31/99
Guilford, CT..............       18,400(1)             1,532(1)          5/31/01
Colchester, CT............                             1,900(1)         12/31/99
Westport, CT..............                             3,200(1)         12/31/99
Milford, CT...............       11,745(1)
New Milford, CT...........                             6,840(1)          8/15/03
Willoughby, OH............       80,400(1)(3)
Lorain, OH................       68,770(1)(3)
New Philadelphia, OH......       85,567(1)(3)
Trenton, NJ...............       54,642(1)(3)         18,889(2)         11/30/00
Turnersville, NJ..........       11,032(1)
West Chester, PA..........       34,000(1)(3)
Norristown, PA............       40,000(1)(3)
Phoenixville, PA..........       10,696(1)(3)
Wayne, PA.................       11,980(1)(3)
State College, PA.........       23,365(1)(3)          2,800(4)          8/31/00
Bristol, PA...............                            70,000(1)(5)      12/31/04
Fall River, MA............       57,571(1)(3)
Taunton, MA...............       21,100(1)(3)
Troy, NY..................       50,000(1)(3)
Saratoga, NY..............       11,000(1)
Woonsocket, RI............       49,338(1)(3)
Pawtucket, RI.............       41,096(1)(3)
Wakefield, RI.............       11,750(1)(3)
St. Louis, MO.............       69,415(1)(3)         22,043(1)         12/31/00
Warrenton, MO.............                             1,900(1)          8/31/03
Festus, MO................                             3,500(1)          4/30/00
Woodson Terrace, MO.......                             5,000(1)         02/09/99
St. Charles, MO...........                             4,298(1)         06/30/99
Collinsville, IL..........       14,587(1)
Granite City, IL..........       17,550(1)
Belleville, IL............        8,400(1)
Alton, IL.................       53,000(1)(3)

                                       14

<PAGE>

ITEM 2.  PROPERTIES. (CONTINUED)


                                APPROXIMATE AREA IN SQUARE FEET         LEASE
                             -------------------------------------    EXPIRATION
         LOCATION            OWNED SQUARE FEET  LEASED SQUARE FEET       DATE
         --------            -----------------  ------------------  ------------
Oneida, NY................       24,000(1)(3)
Kingston, NY..............       25,800(1)(3)
Ardmore, PA...............       25,250(1)(3)
Media, PA.................                            4,500(1)         4/30/04
Primos, PA................       85,000(1)(3)
Pottstown, PA.............       48,000(1)(3)         7,000(3)         8/31/99
Massillon, OH.............       25,000(1)(3)
Millbrook,  NY............        5,000(1)

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



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

                                       15

<PAGE>

ITEM 3.     LEGAL PROCEEDINGS.

      The  Company is  involved  in a number of  litigation  matters  which have
arisen in the ordinary course of business. The Company believes that the outcome
of these  legal  proceedings  will not have a  material  adverse  effect  on the
Company's  financial  condition  or results  of  operations.  See  "Management's
Discussion  and Analysis of Financial  Condition  and Results of  Operations  --
Certain   Factors   Which  May  Affect  the  Company's   Future   Performance  -
Environmental Matters."

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

      None.


EXECUTIVE OFFICERS OF THE REGISTRANT

      The following  table sets forth certain  information  as of March 23, 1999
with respect to each person who is an executive officer of the Company:

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

     ROBERT M. JELENIC is the Chairman, President and Chief Executive Officer of
the  Company.  He has been  President  and  Chief  Executive  Officer  since the
inception  of the  Company,  and has  been a  director  of the  Company  and its
predecessors  for more than the past five  years.  A Chartered  Accountant,  Mr.
Jelenic began his business career with Arthur Andersen in Toronto,  Canada.  Mr.
Jelenic has 23 years of senior management  experience in the newspaper industry,
including 12 years with the Toronto Sun Publishing  Corp. Mr. Jelenic  graduated
Honors Bachelor of Commerce from Laurentian  University,  Sudbury,  Ontario. Mr.
Jelenic is a director of the NAA and Chairman of the NAA's Technology Committee.
Mr. Jelenic is 48 years old.

     JEAN B. CLIFTON is  Executive  Vice  President,  Chief  Financial  Officer,
Treasurer  and  Secretary  of the  Company,  positions  she has held  since  the
inception  of the  Company,  and has  been a  director  of the  Company  and its
predecessors  for more than the past five years.  Prior to joining the  Company,
Ms. Clifton, a Certified Public Accountant,  had been employed by Arthur Young &
Co. (a predecessor to Ernst & Young LLP). She has 13 years of senior  management
experience  in  the  newspaper  industry.  Ms.  Clifton  is a  graduate  of  the
University  of Michigan  School of  Business  Administration.  Ms.  Clifton is a
member of the Postal Affairs  Committee and the Employee  Benefits  Committee of
the NAA. Ms. Clifton is 38 years old.

     ALLEN J. MAILMAN is Senior Vice  President of Technology of the Company,  a
position he has held since  February  1999.  From March 1994 to February 1999 he
was Vice President of Technology of the Company. From the Company's inception in
1990 to March 1994, Mr. Mailman was Corporate  Director of Information  Services
of the  Company.  He has 24  years of  management  experience  in the  newspaper
industry, including 14 years with Newhouse Publications.  Mr. Mailman received a
Bachelor of Arts Degree in Economics  and  Mathematics  from the  University  of
Oklahoma. Mr. Mailman is 52 years old.

     WILLIAM J.  HIGGINSON is Vice  President of  Production  of the Company,  a
position he has held since July 1995.  From  January  1994 to July 1995,  he was
Corporate Production Director of the Company and, from 1991 to January 1994, was
Production  Director of the NEW HAVEN  REGISTER.  Mr.  Higginson has 26 years of
experience in the newspaper industry. Mr. Higginson is 43 years old.

                                       16

<PAGE>

                                   PART II

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

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

                                          HIGH           LOW
                                          ----           ---
                                              (Per Share)
         YEAR ENDED DECEMBER 31, 1998

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

         YEAR ENDED DECEMBER 31, 1997

         Fourth Quarter                 21 1/16        16 1/16
         Third Quarter                  19 11/16       15 5/8
         Second Quarter (commencing   
           May 8)                       20 1/2         14

      On March 23, 1999,  there were  approximately 46 stockholders of record of
the  Common  Stock.  The  Company  believes  that  it  has  approximately  1,900
beneficial owners.

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

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


ITEM 6.     SELECTED FINANCIAL DATA.

      The following  selected combined data (except number of newspapers and per
share amounts) for (i) the combined  balance sheet of the Company as of December
31, 1994 and the  related  combined  statement  of income and cash flows for the
year then ended have been  derived from  unaudited  financial  statements  which
include audited financial statements of the Company's material subsidiaries, and
(ii) the combined  balance  sheet of the Company as of December 31, 1995 and the
consolidated  balance  sheets of the Company as of December 31,  1998,  1997 and


                                       17

<PAGE>

1996 and the related  consolidated  statements of income and cash flows for each
of the four years in the period  ended  December 31, 1998 have been derived from
the audited  financial  statements of the Company.  The selected  financial data
should be read in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition and Results of Operations" and the  Consolidated  Financial
Statements and notes thereto included elsewhere in this Report.


<TABLE>
<CAPTION>

                                                    YEAR ENDED DECEMBER 31,
                                ----------------------------------------------------------------
                                    1998         1995         1994         1997         1996
                                    ----         ----         ----         ----         ----
                               (IN THOUSANDS, EXCEPT NUMBER OF NEWSPAPERS AND PER SHARE AMOUNTS)

<S>                             <C>          <C>          <C>          <C>          <C>      
STATEMENT OF INCOME DATA:
Revenues:
   Advertising................. $ 312,908    $ 266,914    $ 256,971    $ 249,534    $ 224,071
   Circulation.................    89,388       80,211       79,776       73,797       65,204
                                ---------    ---------    ---------    ---------    ---------
Newspaper revenues.............   402,296      347,125      336,747      323,331      289,275
Commercial printing and other..    24,484       12,282       14,373       15,626       10,875
                                ---------    ---------    ---------    ---------    ---------
                                  426,780      359,407      351,120      338,957      300,150
Operating expenses:
   Salaries and employee          
     benefits..................   139,216      114,302      111,626      110,651      105,607
   Newsprint, ink and printing      
     charges...................    53,594       40,452       50,110       48,243       36,481
   Selling, general and             
     administrative............    39,047       30,450       30,993       28,678       25,312
   Depreciation and                 
     amortization..............    23,844       20,480       20,525       19,178       18,605
   Other.......................    52,012       40,783       38,976       38,743       34,187
   Special charge(1)...........        --       31,899           --           --           --
                                ---------    ---------    ---------    ---------    ---------
                                  307,713      278,366      252,230      245,493      220,192
                                ---------    ---------    ---------    ---------    ---------
Operating income...............   119,067       81,041       98,890       93,464       79,958
Net interest and other expense.   (45,321)     (42,288)     (56,472)     (64,028)     (42,049)
                                ---------    ---------    ---------    ---------    ---------

Income before provision for
  income taxes and
   extraordinary items ........    73,746       38,753       42,418       29,436       37,909
Provision for income taxes.....    28,112       15,784       14,309        2,653        4,126
                                ---------    ---------    ---------    ---------    ---------
   Income before extraordinary
     items.....................    45,634       22,969       28,109       26,783       33,783
   Extraordinary items (2).....    (4,495)          --           --           --      (13,100)
                                ---------    ---------    ---------    ---------    ---------
Net income .................... $  41,139    $  22,969    $  28,109    $  26,783    $  20,683
                                =========    =========    =========    =========    =========

Income before extraordinary     
  item per common share         $     .94    $     .51    $      --    $      --    $      --
Net income per common share     $     .85    $     .51    $      --    $      --    $      --
Proforma net income per common
  share(3)..................... $      --    $      --    $     .74    $      --    $      --

OTHER DATA:
EBITDA(4) (5).................. $ 146,706    $ 133,420    $ 119,415    $ 112,642    $  98,563
EBITDA Margin(4)...............      34.4%        37.1%        34.0%        33.2%        32.8%
Net income as adjusted, per  
  common share(4).............. $     .99
Tangible net income, as        
  adjusted(4)(5)............... $  55,537    $  46,042    $  31,905    $  30,931    $  37,325
Tangible net income, as
  adjusted, per common
  share(4)(5).................. $    1.14    $    1.02

Capital expenditures........... $  12,914    $   9,727    $   7,675    $   4,859    $   8,326
Net cash provided by operating
  activities...................    78,905       66,030       60,065       26,778       46,268
Net cash used in investing
  activities...................   352,774       19,447       25,700       50,557       22,614
Net cash provided by (used
in) financing activities.......   274,228      (46,946)     (34,441)      24,384      (33,361)
Number of daily newspapers,
  end of period................        24           18           18           17           16
Number of non-daily
   publications, end of
   period......................       185          141          118          114           68

BALANCE SHEET DATA:
Total current assets........... $  81,878    $  77,833    $  66,035    $  73,456    $  56,959
Property, plant and equipment,
  net..........................    99,978       92,620       91,713       99,036      100,842
Total assets...................   671,869      327,931      305,985      306,434      245,290
Total current liabilities,
  less current maturities of       
   long-term debt..............    50,124       39,034       37,720       44,582       33,734
Total debt, including current     
  maturities...................   765,000      490,774      654,825      689,256      664,298
Stockholders'/members'           (225,313)    (266,242)    (423,658)    (451,767)    (478,548)
  deficit(6)...................

</TABLE>

                                       18

<PAGE>
ITEM 6. SELECTED FINANCIAL DATA (CONTINUED)

-----------------
 (1)  The special  charge of $31.9 million  (before  benefit for income taxes of
      $13.0  million) was comprised of $28.4 million for a management  bonus and
      $3.5 million for the  discontinuance  of a management  incentive plan. The
      management bonus was comprised of 1.1 million shares of Common Stock and a
      cash portion to satisfy the recipients'  tax obligations  arising from the
      management bonus.

(2)   Extraordinary   items   represent   gains  or  losses   related   to  debt
      extinguishment.  In  connection  with  certain  refinancings,  the Company
      recognized a loss of $4.5 million (net of tax) in 1998 and a loss of $13.1
      million in 1994 on extinguishment of debt.

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

(4)   The 1998 other data excludes the effects of special charges ($3.8 million,
      before tax benefit, $3.2 million of which was recorded in Selling, general
      and administrative  and approximately  $630,000 in Other expenses) related
      to  the   cancellation  of  the  Company's   convertible   debt  offering,
      integration  of the  Goodson  Acquisition,  and  an  increase  to  certain
      receivable  reserves and an extraordinary item ($4.5 million,  net of tax)
      for the write-off of deferred  financing charges relating to the Company's
      prior  credit  agreement.  The 1997 other data  excludes the effect of the
      special charge of $31.9 million  (before benefit for income taxes of $13.0
      million)  comprised  of $28.4  million  for a  management  bonus  and $3.5
      million for the discontinuance of a management  incentive plan. See Note 5
      of "Notes to Consolidated Financial Statements."

 (5)  EBITDA  is  defined  by  the  Company  as  operating  income  (loss)  plus
      depreciation,  amortization  and other non-cash,  special or non-recurring
      charges.  Tangible  net income is defined  as net  income  plus  after-tax
      amortization. EBITDA and tangible net income are not intended to represent
      cash flow from  operations and should not be considered as alternatives to
      operating or net income  computed in accordance  with  generally  accepted
      accounting  principles ("GAAP"),  as indicators of the Company's operating
      performance,  as  alternatives  to  cash  from  operating  activities  (as
      determined  in  accordance  with GAAP) or as  measures of  liquidity.  The
      Company believes that EBITDA is a standard  measure commonly  reported and
      widely used by analysts,  investors  and other  interested  parties in the
      media industry. Accordingly, this information has been disclosed herein to
      permit a more complete  comparative  analysis of the  Company's  operating
      performance relative to other companies in the industry.  However, not all
      companies calculate EBITDA and tangible net income using the same methods;
      therefore,  the EBITDA and tangible net income figures set forth above may
      not be  comparable  to EBITDA and  tangible  net income  reported by other
      companies.  Certain covenants  contained in the Company's Credit Agreement
      are based upon  EBITDA.  See  "Management's  Discussion  and  Analysis  of
      Financial  Condition and Results of  Operations."  Tangible net income per
      share is calculated  using the weighted  average  shares  outstanding on a
      diluted basis.

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

                                       19

<PAGE>

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

      THE FOLLOWING  DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION  WITH
THE HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO AND THE OTHER
FINANCIAL INFORMATION APPEARING ELSEWHERE IN THIS REPORT.

GENERAL

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

      As of  December  31,  1998,  the  Company  owned  and  operated  24  daily
newspapers  and 185  non-daily  publications  strategically  clustered  in seven
geographic areas: Connecticut; Philadelphia and its surrounding areas; Ohio; the
greater  St.  Louis area;  central New  England;  and the  Capital-Saratoga  and
Mid-Hudson,  New York  regions.  As of December 31, 1998,  the Company had total
paid daily circulation of 652,866,  total paid Sunday circulation of 625,461 and
total non-daily distribution of approximately 3.7 million.

      The Company's objective is to continue its growth in revenues,  EBITDA and
net income.  The principal elements of the Company's strategy are to: (i) expand
advertising  revenues and readership;  (ii) grow by  acquisition;  (iii) capture
synergies from geographic  clustering;  and (iv) implement  consistent operating
policies  and  standards.  From 1993  through  1998,  the  Company  successfully
completed  13  strategic  acquisitions,   acquiring  12  daily  newspapers,  117
non-daily  publications and three commercial  printing  companies,  two of which
print a number of the  non-daily  publications.  The third is a premium  quality
sheet-fed printing company.

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

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

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

      REVENUES.  In 1998,  revenues increased $67.4 million, or 18.8%, to $426.8
million,  due to acquisitions.  Newspaper revenues  increased $55.2 million,  or
15.9%,  to $402.3  million in 1998,  principally  due to  increased  advertising
revenue   as  a  result  of   acquisitions.   Circulation   revenues   increased
approximately  $9.2  million,  or 11.4%,  to $89.4  million in 1998.  Commercial
printing  and other  represented  5.7% of the  Company's  revenues  in 1998,  as
compared to 3.4% in 1997 due to the commercial  printing  operations acquired as
part of the InterCounty acquisition in December of 1997.

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

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

      SELLING,  GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses  were  9.1%  and 8.5% of the  Company's  revenues  for  1998 and  1997,
respectively.  Selling,  general and administrative  expenses for 1998 increased
$8.6 million, or 28.2%, to $39.0 million, due to the Company's  acquisitions and
the special  charges  incurred  during the third quarter of 1998 of $3.2 million
(see Note 4 to Selected Financial Data). Excluding the special charges, selling,

                                       20

<PAGE>

general and  administrative  expenses for 1998  increased  $5.4 million from the
prior-year  primarily due to acquisitions  and represented 8.4% of the Company's
revenues for 1998.

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

      OTHER  EXPENSES.  Other  expenses  accounted  for  12.2% of the  Company's
revenues in 1998 as compared to 11.3% in 1997.  Other expenses  increased  $11.2
million, or 27.5%, to $52.0  million  in 1998,  primarily  due to  acquisitions,
increased circulation  promotion expenses,  increased postage expense related to
the  Company's  preprint  advertising  sales and  $630,000  in  special  charges
incurred in the third quarter of 1998 (see Note 4 to Selected  Financial  Data).
Excluding the $630,000 in special  charges,  other  expenses for 1998  increased
$10.6 million and represented 12.0% of the Company's revenues for 1998.

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

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

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

      EXTRAORDINARY  ITEM. The Company recorded an extraordinary item related to
the write-off of deferred  financing  charges in  connection  with the Company's
prior credit agreement in the amount of $7.3 million ($4.5 million,  net of $2.8
million income tax benefit) in the third quarter of 1998.

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

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

YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

      REVENUES.  In 1997,  revenues  increased $8.3 million,  or 2.4%, to $359.4
million,  primarily  due  to an  increase  in  advertising  revenues.  Newspaper
revenues  increased  $10.4  million,   or  3.1%,  to  $347.1  million  in  1997,
principally due to increased  classified  advertising  revenues and the December
1996  acquisition  of the TAUNTON  DAILY  GAZETTE (the  "Taunton  acquisition").
Circulation revenues increased approximately $435,000, or 0.5%, to $80.2 million
in  1997.  Commercial  printing  and  other  represented  3.4% of the  Company's
revenues in 1997, as compared to 4.1% in 1996.

      SALARIES AND EMPLOYEE  BENEFITS.  Salaries and employee  benefit  expenses
were  31.8% of the  Company's  revenues  in both  1997 and  1996.  Salaries  and
employee  benefits  increased $2.7 million,  or 2.4%, in 1997 to $114.3 million,
primarily due to the Taunton acquisition.

      NEWSPRINT,  INK AND PRINTING CHARGES. In 1997, newsprint, ink and printing
charges  were 11.3% of the  Company's  revenues,  as  compared to 14.3% in 1996.
Newsprint, ink and printing charges decreased $9.7 million, or 19.3%, in 1997 as

                                       21

<PAGE>

compared  to 1996,  primarily  due to a decrease of  approximately  18.0% in the
average price per ton of newsprint in 1997 as compared with 1996, which accounts
for  approximately  $7.8  million  of  this  decrease,  and a  decrease  in  the
consumption of paper in the Company's commercial printing operations.

      SELLING,  GENERAL AND ADMINISTRATIVE.  Selling, general and administrative
expenses  accounted for 8.5% of the  Company's  revenues in 1997, as compared to
8.8%  in  1996.  Selling,  general  and  administrative  expenses  decreased  by
approximately $543,000, or 1.8%, to $30.5 million in 1997. This decrease was due
primarily  to  higher  expenses  in  1996  related  to the  Company's  Web  site
development.

      DEPRECIATION AND AMORTIZATION.  Depreciation and amortization  expense was
5.7% of the  Company's  revenues in 1997 as  compared  to 5.8% in 1996,  and was
basically flat in 1997 at $20.5 million as compared to 1996.

      OTHER  EXPENSES.  Other  expenses  accounted  for  11.3% of the  Company's
revenues in 1997 as compared to 11.1% in 1996.  Other  expenses  increased  $1.8
million, or 4.6% in 1997,  primarily due to (i) increased  circulation  expenses
and (ii) an increase in postage expense due primarily to an increase in preprint
volume.

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

      OPERATING  INCOME.  Reflecting  the  effect  of the  1997  special  charge
described above,  operating  income decreased $17.8 million,  or 18.0%, to $81.0
million as  compared to 1996  operating  income.  On the same  basis,  operating
income  was  22.5% of  revenues  in 1997 and 28.2% in 1996.  Excluding  the 1997
special charge,  operating income  increased $14.1 million,  or 14.2%, to $112.9
million in 1997.  On the same basis,  as a  percentage  of  revenues,  operating
income increased to 31.4% in 1997 as compared to 28.2% in 1996.

      INTEREST EXPENSE.  Interest expense decreased by $14.1 million,  or 25.0%,
from  1996 to 1997  reflecting  a  decrease  in  average  borrowing  rates and a
decrease of  approximately  $124 million in average debt  outstanding in 1997 as
compared to 1996. The decrease in average  borrowing rates is primarily a result
of a decrease in the applicable margin due to: (i) reduced leverage and (ii) the
revised terms of the Company's Credit Agreement. Interest expense as adjusted to
reflect  the  effects  of the  Company's  initial  public  offering  and  Credit
Agreement  as if they had  occurred  on  January  1, 1997  would have been $36.1
million for 1997. See "-- Liquidity and Capital Resources."

      PROVISION FOR INCOME TAXES.  The Company  reported  effective tax rates of
40.7% and 33.7% for the years ended December 31, 1997 and 1996, respectively. In
1996,  the  effective  tax rate was lower than the  combined  federal  and state
statutory  rates  primarily due to  recognition  of tax benefits  which had been
offset by a valuation allowance in previous years

      NET  INCOME.  Net  income as  reported  on an  historical  basis was $23.0
million,  or $.51 per share,  for the year ended  December 31, 1997.  See "Other
information,"  below,  for  net  income,  as  adjusted  for the  effects  of the
Company's  initial  public  offering  and tax savings  related to the  Company's
January 1, 1998 corporate restructuring.

      OTHER INFORMATION.  EBITDA rose $14.0 million, or 11.7%, to $133.4 million
in 1997,  excluding the 1997 special  charge.  On the same basis,  the Company's
EBITDA Margin reached 37.1% for 1997, as compared to 34.0% for the prior year.

      Net income as adjusted  for the effects of the  Company's  initial  public
offering and the Company's  January 1, 1998 corporate  restructuring  as if they
had  occurred  and been  implemented,  respectively,  as of  January 1, 1997 and
excluding  the 1997  special  charge  described  above,  would  have been  $48.4
million, or $1.00 per share, in 1997.

LIQUIDITY AND CAPITAL RESOURCES

      The Company's operations have historically  generated strong positive cash
flow. The Company believes cash flows from operations will be sufficient to fund
its operations, capital expenditures and long-term debt obligations. The Company

                                       22

<PAGE>

also  believes that cash flows from  operations  and future  borrowings  and its
ability to issue common stock as  consideration  for future  acquisitions,  will
provide  it  with  the  flexibility  to  fund  its  acquisition  strategy  while
continuing to meet its operating needs,  capital expenditures and long-term debt
obligations.

      CASH FLOWS FROM  OPERATIONS.  Net cash  provided by  operating  activities
increased $12.9 million to $78.9 million in 1998. Net cash provided by operating
activities in 1998 primarily  resulted from net income before non-cash  expenses
(i.e., depreciation and amortization), of $65.0 million.

      CASH  FLOWS  FROM  INVESTING  ACTIVITIES.   Net  cash  used  in  investing
activities  increased  $333.3 million to $352.8 million in 1998. The increase in
investing  activities  was  primarily  due to the  Company's  investment  in the
purchase  of  newspaper  properties  of $341.3  million.  In 1998 the  Company's
capital  expenditures  increased by $3.2 million,  and proceeds from the sale of
property,  plant and  equipment  increased by $301,000 as compared to 1997.  The
Company has a capital  expenditure  program  (excluding future  acquisitions) of
approximately  $17.0  million  in place for 1999,  which  includes  spending  on
technology,  including  prepress and  business  systems,  computer  hardware and
software, other machinery and equipment, plants and property, vehicles and other
assets.  The Company believes its capital  expenditure  program is sufficient to
maintain its current level and quality of  operations.  The Company  reviews its
capital  expenditure  program  periodically  and modifies it as required to meet
current needs. It is expected that the 1999 capital  expenditure program will be
funded from  operating  cash flow.  The success of the  Company's  operations in
Philadelphia  and  surrounding  areas has  necessitated  the  construction  of a
centralized  production  facility,  scheduled  to begin in the first  quarter of
2000. Costs for this facility are currently  estimated to be approximately $35.0
million.  The Company expects to fund this construction  project with cash flows
from operations and borrowings.

      CASH FLOWS FROM  FINANCING  ACTIVITIES.  Net cash  provided  by  financing
activities  was $274.2 million in 1998 as compared to net cash used in financing
activities of $46.9 million in 1997. The 1998 activity  reflects net proceeds of
approximately  $808.0  million  from the  issuance  of  senior  secured  debt in
connection with the Company's new credit facility, $533.8 million which was used
to repay outstanding debt.

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

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

      The Company  generally  manages its exposure to interest rate fluctuations
for its variable rate debt by entering into interest rate protection agreements.
The Company was required under the prior credit  agreement and is required under
the Credit  Agreement to maintain  interest  rate  protection  agreements  for a
certain  percentage of its outstanding debt, based upon the Total Leverage Ratio
(as  defined in the  Credit  Agreement).  Interest  rate  protection  agreements
relating  to the  Company's  borrowings  at December  31,  1998  included a SWAP
agreement  with a notional  principal  amount of $300.0 million which matured on
January 29, 1999. As of December 31, 1998, if the SWAP was marked to market,  it
would  result in a net loss of  approximately  $756,000.  In 1998,  the  Company
entered into interest rate  protection  agreements as required which took effect
in January of 1999 when its existing interest rate protection agreement expired,
exchanging floating LIBOR rate plus the applicable margin for a fixed LIBOR rate
of approximately  5.85% plus the applicable margin on $400.0 million of debt, in
the aggregate.  The $400.0 million interest rate protection agreements reduce by
$75.0 million per year and expire in October 2002. If the new SWAP agreements on
December  31,  1998 were  marked to  market,  they  would  have  resulted  in an
aggregate  loss of  approximately  $7.7 million.  If such SWAP  agreements  were
marked to market on March 9, 1999 they would have resulted in an aggregate  loss
of $3.3 million.  For the year ended December 31, 1998,  the Company's  weighted
average   effective   interest  rate  on  its   outstanding   debt  balance  was
approximately  7.2%.  This takes  into  account  the  interest  rate  protection
agreements in effect during that period.

      As of December 31, 1998, the Company had  outstanding  indebtedness  under
the Credit  Agreement,  due and payable in installments  through 2006, of $765.0
million,  of which $265.0  million was  outstanding  under the revolving  credit

                                       23

<PAGE>

facility.  There was  $135.0  million of unused and  available  funds  under the
revolving credit facility at December 31, 1998.

YEAR 2000

      In 1996,  the  Company  began  the  initial  planning  of a  comprehensive
 initiative  to address the Year 2000 issue.  The Company  organized a Year 2000
 oversight team led by the Company's senior  information  technology  officer to
 develop a strategy  of  evaluation,  implementation,  testing  and  contingency
 planning to address the Company's Year 2000  readiness.  The evaluation  phase,
 which began in September  1996,  involved  performing a complete,  company-wide
 inventory to identify all internal, general purpose and production hardware and
 software  systems,  commonly  referred  to  as  information  technology  ("IT")
 systems,  that  required  modification  to  become  Year  2000  compliant.   In
 conjunction with the Company's internal  assessment,  the Company  communicated
 with key third  parties,  namely  suppliers of production  equipment as well as
 financial  institutions  to  determine  their  state  of Year  2000  readiness,
 implementation  of Year 2000 compliant systems and related  contingency  plans.
 The Company has received  responses  from  approximately  70% of such key third
 parties  and is  evaluating  their  impact on the  Company.  The  Company  will
 continue  to  correspond  with  critical   vendors  and  modify  the  Company's
 contingency plans as necessary.

      In  January  of  1997,  the  Company  began  the  implementation  phase of
replacing or  modifying  system  hardware and software as required.  The Company
believes  the  majority  of the  general  business  systems  will be modified or
determined  to be Year 2000  compliant.  The Company is  developing  contingency
plans to address potential non-compliance both internally and externally.

      In accordance with GAAP, the Company's  direct Year 2000 costs,  including
modifying  computer  software or  converting  to new  programs,  are expensed as
incurred. Additionally, a majority of the hardware costs for replacement systems
will  be  capitalized  as  ordinarily  accounted  for in the  normal  course  of
business.  These system  replacements  represent  upgrades  consistent  with the
Company's goal to maintain and improve operational efficiencies. The Company has
capitalized  approximately  $3.0 million related to new hardware and software in
connection  with its Year 2000  compliance  plan as of December  31, 1998 and an
additional $6.0 million is expected to be capitalized in 1999.

     Although the Company  believes it has taken all of the  necessary  steps to
ensure that the Company will be Year 2000 compliant,  there can be no assurances
that  the  Company  will be able to  complete  all of the  modifications  in the
required time frame,  that all third parties will be Year 2000 compliant or that
unforeseen Year 2000 issues will not arise.  The Company expects to complete its
Year 2000 compliance project by September 30, 1999. The Company's  assessment at
this time is that the failure of any of the Company's IT or non-IT  systems,  or
failure by a third party to become Year 2000 compliant would not have a material
adverse  effect  on the  Company,  although  there can be no  assurances  that a
material adverse effect could not result.

 INFLATION

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

RECENT EVENTS

      On  July  15,  1998,  the  Company   completed  its   acquisition  of  the
Pennsylvania,  New York and Ohio newspaper  businesses of The Goodson  Newspaper
Group (including Mark Goodson Enterprises,  Ltd.) for approximately $300 million
in cash (the "Goodson  Acquisition") (See Note 12 of the Company's  accompanying
Consolidated Financial Statements).

      On January  11,  1999 the Company  announced  that its Board of  Directors
authorized a share repurchase program of up to 2 million shares of the Company's
common stock. As of March 11, 1999, the Company has repurchased 1,141,800 shares
on  the  open  market.  Shares  under  the  program  are  to be  repurchased  at
management's  discretion,  either in the open market or in privately  negotiated
transactions.

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

                                       24

<PAGE>

      Purchases  under the program will be financed with the Company's free cash
flow or borrowings under the Company's revolving credit facility.

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

      Management's Discussion and Analysis of Financial Condition and Results of
Operations  and  other  sections  of  this  Form  10-K  include  forward-looking
statements,  which  may be  identified  by  use of  terms  such  as  "believes,"
"anticipates,"  "plans," "will," "likely,"  "continues," "intends" or "expects."
These  forward-looking  statements  relate to the plans  and  objectives  of the
Company for future operations.  In light of the risks and uncertainties inherent
in all future  projections,  the inclusion of forward-looking  statements herein
should not be regarded as a  representation  by the Company or any other  person
that the objectives or plans of the Company will be achieved. Many factors could
cause the  Company's  actual  results  to differ  materially  from  those in the
forward-looking statements, including, among other things, the factors discussed
below under "Certain Factors Which May Affect the Company's Future Performance."
The  following  factors  should not be  construed  as  exhaustive.  The  Company
undertakes no obligation to release publicly the results of any future revisions
it may make to  forward-looking  statements to reflect  events or  circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

NEW ACCOUNTING PRONOUNCEMENT

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

CERTAIN FACTORS WHICH MAY AFFECT THE COMPANY'S FUTURE PERFORMANCE

NEWSPAPER INDUSTRY COMPETITION

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

DEPENDENCE ON LOCAL ECONOMIES

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


INDEBTEDNESS

      The Company has a substantial  amount of indebtedness.  As of December 31,
1998, the  consolidated  indebtedness  of the Company was  approximately  $765.0
million,  which  represents a multiple of 5.2 times the Company's  twelve months
trailing  EBITDA of  approximately  $146.7  million  (excluding the 1998 special
charge). As of December 31, 1998, the Company had a net stockholders' deficit of
approximately $225.3 million and a total capitalization of $539.7 million,  and,

                                       25

<PAGE>

thus, the percentage of the Company's  indebtedness to total  capitalization was
141.7%.  The  Company  may incur  additional  indebtedness  to fund  operations,
capital expenditures or future acquisitions.

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

ENVIRONMENTAL MATTERS

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

ACQUISITION STRATEGY

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

PRICE AND AVAILABILITY OF NEWSPRINT

      The  basic  raw  material  for  newspapers  is  newsprint.  The  Company's
newsprint  consumption  (excluding  paper  consumed in the Company's  commercial
printing  operations)  totaled  approximately  $39.4 million in 1998,  which was
approximately  9.2% of the Company's  newspaper  revenues.  In 1998, the Company
consumed  approximately  79,000 metric tons of newsprint.  The average price per
metric ton of newsprint based on East Coast  transaction  prices in 1998,  1997,
and 1996 was  $596,  $555 and  $645,  respectively,  as  reported  by the  trade
publication  PULP AND PAPER  WEEKLY.  The Company has no long-term  contracts to
purchase newsprint.  Generally,  the Company purchases all of its newsprint from

                                       26

<PAGE>

two suppliers.  Historically, the percentage of the Company's newsprint supplied
by each of such suppliers has varied.  The Company believes that it would not be
materially  adversely  effected  if it  were no  longer  able  to  purchase  its
newsprint supply from its two current  suppliers and that, in such event,  other
newsprint  suppliers would be readily  available to the Company.  In the future,
the Company may purchase  newsprint from other  suppliers.  The inability of the
Company to obtain an adequate  supply of  newsprint  in the future  could have a
material  adverse effect on the financial  condition or results of operations of
the  Company.  Historically,  the  price  of  newsprint  has been  cyclical  and
volatile.   The  Company's   average  cost  of  newsprint   consumed   increased
approximately  8% in 1998,  decreased  approximately  18% in 1997, and increased
approximately  13% in 1996,  in each case  compared to the  previous  year.  The
Company  believes  that if any price  increase or decrease is  sustained  in the
industry,  the Company will also be impacted by such  increase or decrease.  The
Company  is unable to  predict  whether,  or to what  extent,  any  increase  or
decrease will be sustained.  Significant increases in newsprint costs could have
a material adverse effect on the financial condition or results of operations of
the  Company.  The Company has  managed  the effects of  increases  in prices of
newsprint through a combination of, among other things, technology improvements,
including  web-width  reductions,   inventory  management  and  advertising  and
circulation price increases.  The Company also has reduced fringe circulation in
response to increased  newsprint prices, as it is the Company's  experience that
such circulation does not provide adequate response for advertisers.


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

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

     At December  31,  1998,  the Company had in effect a SWAP  agreement  for a
notional  amount of $300 million.  The fair market value of the SWAP at December
31,  1998 had the SWAP been marked to market,  would have  resulted in a loss of
approximately $756,000. In addition,  during 1998, the Company entered into SWAP
agreements  in an  aggregate  notional  amount  of  $400  million  which  became
effective  January 29, 1999. The  agreements  reduce by $75 million per year and
expire on October 29, 2002. At December 31, 1998, had these SWAP agreements been
marked to market, they would have resulted in an aggregate loss of approximately
$7.7 million. However, if such SWAP agreements were marked to market at March 9,
1999,  they would have  resulted  in an  aggregate  loss of  approximately  $3.3
million.  Assuming a ten percent increase or reduction in interest rates for the
year ended December 31, 1998, the effect on the Company's  pre-tax  earnings and
cash flows would be approximately $2.3 million.

                                       27

<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


                        INDEX TO FINANCIAL STATEMENTS


                                                                     PAGE
FINANCIAL STATEMENTS:

Report of Independent Auditors....................................... 29
Consolidated Balance Sheets.......................................... 30
Consolidated Statements of Income.................................... 31
Consolidated Statements of Stockholders'/Members' Deficit............ 32
Consolidated Statements of Cash Flows................................ 33
Notes to Consolidated Financial Statements........................... 34

FINANCIAL STATEMENT SCHEDULE:

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

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

                                       28


<PAGE>

                        REPORT OF INDEPENDENT AUDITORS


The Board of Directors
Journal Register Company


      We have audited the  accompanying  consolidated  balance sheets of Journal
Register Company as of December 31, 1998 and 1997, and the related  consolidated
statements of income, stockholders'/members' deficit, and cash flows for each of
the three years in the period ended  December 31, 1998. Our audits also included
the  financial  statement  schedule  listed  in the Index at Item  14(a).  These
financial  statements  and  schedule  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and schedule based on our audits.

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

      In our opinion,  the consolidated  financial  statements referred to above
present fairly, in all material respects, the consolidated financial position of
Journal Register Company,  as of December 31, 1998 and 1997 and the consolidated
results of its  operations and its cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered  in  relation  to the basic  financial  statements  taken as a whole,
present fairly in all material respects the information set forth therein.

                                                ERNST & YOUNG LLP



February 9, 1999
MetroPark, New Jersey

                                       29

<PAGE>


                           JOURNAL REGISTER COMPANY
                         CONSOLIDATED BALANCE SHEETS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                               December 31,
                                                           ---------------------
                                                             1998        1997
                                                           ---------   ---------
ASSETS
Current assets:
  Cash and cash equivalents                                $  8,542    $  8,183
  Accounts receivable, less allowance for doubtful
    accounts of $4,632 in 1998 and $4,055 in 1997            58,244      48,675
  Inventories                                                 8,440       9,865
  Deferred income taxes                                       2,522       6,444
  Other current assets                                        4,130       4,666
                                                           ---------   ---------
Total current assets                                         81,878      77,833

Property, plant and equipment:
  Land                                                        8,810       7,567
  Buildings and improvements                                 65,127      60,685
  Machinery and equipment                                   156,223     148,605
                                                           ---------   ---------
                                                            230,160     216,857
  Less accumulated depreciation                            (130,182)   (124,237)
                                                           ---------   ---------
Property, plant and equipment, net                           99,978      92,620
Intangible and other assets, net of accumulated
  amortization of $28,297 in 1998 and $23,973 in 1997       490,013     157,478
                                                           ---------   ---------
Total assets                                               $671,869    $327,931
                                                           =========   =========

LIABILITIES AND STOCKHOLDERS' DEFICIT 
Current liabilities:
  Current maturities of long-term debt                     $     --    $ 57,060
  Accounts payable                                           12,107       9,277
  Income taxes payable                                          829         535
  Accrued interest                                            6,374       5,067
  Deferred subscription revenue                               8,290       6,539
  Accrued salaries and vacation                               5,231       3,838
  Other accrued expenses and current liabilities             17,293      13,778
                                                           ---------   ---------
Total current liabilities                                    50,124      96,094

Senior debt, less current maturities                        765,000     433,714
Deferred income taxes                                        14,029       8,049
Accrued retiree benefits and other liabilities               17,078      20,641
Income taxes payable                                         50,951      35,675

Commitments and contingencies

Stockholders' deficit:
  Common stock, $.01 par value per share, 300,000,000
    shares authorized, 48,437,581 and 48,437,500 
    issued and outstanding at December 31, 1998                 
     and 1997, respectively                                     484         484
  Additional paid-in capital                                358,236     358,234
  Accumulated deficit                                      (583,821)   (624,960)
  Accumulated other comprehensive loss, net of 
    tax of $153                                                (212)         --
                                                           ---------   ---------
Net stockholders' deficit                                  (225,313)   (266,242)
                                                           ---------   ---------
Total liabilities and stockholders' deficit                $671,869    $327,931
                                                           =========   =========

                           SEE ACCOMPANYING NOTES.

                                       30

<PAGE>

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


                                            Year Ended December 31,
                                     ------------------------------------
                                       1998         1997        1996
                                     ----------  -----------  ----------
Revenues:
   Advertising                       $312,908      $266,914     $ 256,971
   Circulation                         89,388        80,211        79,776
                                     --------      --------     ---------
Newspaper revenues                    402,296       347,125       336,747
Commercial printing and other          24,484        12,282        14,373
                                     --------      --------     ---------
                                      426,780       359,407       351,120

Operating expenses:
   Salaries and employee benefits     139,216       114,302       111,626
   Newsprint, ink and printing         53,594        40,452        50,110
   Selling, general and                
     administrative                    39,047        30,450        30,993
   Depreciation and amortization       23,844        20,480        20,525
   Other                               52,012        40,783        38,976
   Special charge                          --        31,899            --
                                     --------      --------     ---------
                                      307,713       278,366       252,230
                                     --------      --------     ---------
Operating income                      119,067        81,041        98,890

Other income (expense):
   Interest expense                   (45,465)      (42,282)      (56,410)
   Interest income                         60            46           107
   Other                                   84           (52)         (169)
                                     --------      --------     ---------
Income before provision for income
  taxes and extraordinary item         73,746        38,753        42,418
Provision for income taxes             28,112        15,784        14,309
                                     --------      --------     ---------
Income before extraordinary item       45,634        22,969        28,109
Extraordinary item, net of tax of
  $2,755                                4,495            --            --
                                     --------      --------     ---------
Net income                           $ 41,139      $ 22,969     $  28,109
                                     ========      ========     =========


Net Income per common share (basic 
  and diluted):
   Income before extraordinary item  $    .94      $    .51     $      --
   Net income                        $    .85      $    .51     $      --
   Proforma net income (unaudited)   $     --      $     --     $     .74



                           SEE ACCOMPANYING NOTES.

                                       31

<PAGE>

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

<TABLE>
<CAPTION>

                                                                                                 TOTAL
                                                   ADDITIONAL      OTHER                      STOCKHOLDERS'/
                             COMMON   MEMBERSHIP    PAID-IN     COMPREHENSIVE   ACCUMULATED      MEMBERS'
                             STOCK     INTEREST     CAPITAL     INCOME(LOSS)      DEFICIT        DEFICIT

<S>                          <C>      <C>          <C>            <C>            <C>           <C>       
Balance at January 1, 1996   $   --   $   2,104    $  22,167      $    --        $(676,038)    $(451,767)
Net income                                                                          28,109        28,109
                             ------   ---------    ---------      -------        ---------     ---------
Balance at December 31, 1996     --       2,104      222,167           --         (647,929)     (423,658)

Net income                                                                          22,969        22,969
Conversion of
  membership interest           379      (2,104)       1,725           --               --            --
Issuance of common
  stock                         105          --      134,342           --               --       134,447
                             ------   ---------    ---------      -------        ---------     ---------
Balance at December 31, 1997    484          --      358,234           --         (624,960)     (266,242)

Net income                                                                          41,139        41,139

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


</TABLE>

                           SEE ACCOMPANYING NOTES.

                                       32

<PAGE>

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

<TABLE>
<CAPTION>
                                                     Year Ended December 31,
                                          -------------------------------------------
                                             1998              1997           1996
                                          ----------        ----------     ----------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                       <C>               <C>           <C>      
Net income                                $  41,139         $  22,969     $  28,109
Adjustments to reconcile net income to
  net cash provided by operating
  activities:
    Provision for losses on accounts
      receivable                              4,464             3,291         3,914
    Depreciation and amortization            23,844            20,480        20,525
    Net gain on disposal of property,
      plant and equipment and other 
      assets                                 (1,074)             (464)         (110)
    Extraordinary loss on extinguishment
      of deferred debt costs                  7,250                --            --
    Non-cash portion of special charge           --            15,400            --
    Increase in income taxes payable         15,570             8,526        14,693
    Increase (decrease) in accrued
      interest                                1,307            (2,431)       (2,068)
    Increase (decrease) in deferred
      taxes                                   7,928             4,779        (4,836)
    Increase in accounts receivable          (5,885)           (4,546)       (3,972)
    Decrease (increase) in inventories        2,412            (2,431)       10,476
    Increase (decrease) in accounts
      payable                                 1,427             2,001        (2,664)
    (Decrease) increase  in deferred
      subscription revenue                     (126)              310          (401)
    (Decrease) increase in accrued
      retiree benefits and other
      liabilities                            (6,877)            1,964        (1,227)
    (Increase) decrease in other assets,
      net of increase (decrease) in other   
      current liabilities                   (12,474)           (3,818)       (2,374)
                                          ---------         ---------     ---------
Net cash provided by operating activities    78,905            66,030        60,065

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and
  equipment                                 (12,914)           (9,727)       (7,675)
Net proceeds from sale of property,           
  plant and equipment and other assets        1,487             1,186           237
Purchase of newspaper properties, net of                                   
  cash acquired                            (341,347)          (10,906)      (18,262)
                                          ---------         ---------     ---------
Net cash used in investing activities      (352,774)          (19,447)      (25,700)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt:
    Senior facilities                       808,000             4,000         7,000
    Accretion on subordinated notes              --             1,205         3,029
Repayments of:
    Senior debt                           ( 533,774)         (136,674)      (44,470)
    Subordinated notes                           --           (34,524)           --
Exercise of stock options for common
  stock                                           2                --            --
Net proceeds from issuance of common
  stock                                          --           119,047            --
                                          ---------         ---------     ---------
Net cash provided by (used in) financing    
  activities                                274,228           (46,946)      (34,441)
                                          ---------         ---------     ---------
Increase (decrease) in cash and cash
  equivalents                                   359              (363)          (76)
Cash and cash equivalents, beginning of
  year                                        8,183             8,546         8,622
                                          ---------         ---------     ---------
Cash and cash equivalents, end of year    $   8,542         $   8,183     $   8,546
                                          =========         =========     =========
SUPPLEMENTAL  DISCLOSURES OF CASH FLOW
INFORMATION 
Cash paid during the year for:
          Interest                        $  44,158         $  44,713     $  54,244
          Income taxes                        1,719             2,479         4,452

SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Issuance of additional subordinated
  notes                                   $      --         $   1,205     $   3,029
Issuance of note payable in     
  connection with an acquisition                 --             2,884            --
Comprehensive loss - minimum pension
  liability, net of tax                         212                --            --

</TABLE>

                           SEE ACCOMPANYING NOTES.

                                       33

<PAGE>


                           JOURNAL REGISTER COMPANY
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              DECEMBER 31, 1998


1.    ORGANIZATION AND BASIS OF PRESENTATION

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

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

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

      The Company has authorized  1,000,000 shares of Preferred  Stock,  none of
which were issued or outstanding as of December 31, 1998.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION

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

      USE OF ESTIMATES

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

      CONSOLIDATED STATEMENTS OF CASH FLOWS

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

      INVENTORIES

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

                                       34

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      PROPERTY, PLANT AND EQUIPMENT

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

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

          Buildings and improvements        5 to 30 years
          Machinery and equipment           3 to 20 years

      INTANGIBLE ASSETS AND OTHER ASSETS

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

      The  balance  of  intangible  assets  at  December  31,  1998 and 1997 was
comprised of subscriber lists and excess cost over the value of identifiable net
assets of companies acquired.  These assets are being amortized over a period of
4 to 40 years and are amortized by the straight-line method.

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

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

      INCOME TAXES

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

                                       35

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      DEFERRED SUBSCRIPTION REVENUE

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

      INTEREST-RATE PROTECTION AGREEMENTS

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

      STOCK OPTION PLAN

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

      EARNINGS PER SHARE

      The Company,  in accordance  with  Financial  Accounting  Standards  Board
Statement No. 128, "Earnings Per Share", discloses earnings per share on a basic
and diluted basis.  Basic  earnings per share  excludes any dilutive  effects of
options, warrants and convertible securities. Diluted earnings per share is very
similar to the  previously  required  fully  diluted  earnings  per  share.  The
pronouncement had no impact on the proforma earnings per share amount for 1996.

      CONCENTRATION OF RISK

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

                                       36

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998


2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      SEGMENTS REPORTING

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

      The Company is exclusively a newspaper  company.  The Company publishes 24
daily and 185 non-daily newspapers in the U.S. It maintains operations and local
management  in the  markets  that it serves.  Revenue is earned from the sale of
advertising,  circulation  and related  activities.  Newspapers are  distributed
through local distribution  channels  consisting of contract carriers and single
copy outlets.

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

      EFFECT OF NEW PRONOUNCEMENT

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

      RECLASSIFICATIONS

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

3.    INTANGIBLE AND OTHER ASSETS

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

                                                        (in thousands)
                                                      1998            1997
                                                  -------------   -------------
Excess of cost over the value of identifiable
  net assets and subscriber lists                      $473,245       $138,370
Prepaid pension cost                                      8,434          7,784
Other                                                     8,334         11,324
                                                  --------------  -------------
                                                       $490,013       $157,478
                                                  ==============  =============

                                       37

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998


4.    LONG-TERM DEBT


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

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

Senior Secured Term Loans                           $500,000      $364,890
Senior Secured Revolving Credit Facility             265,000       123,000
Other debt                                                --         2,884
                                               --------------  ------------
                                                     765,000       490,774
Less current portion                                      --       (57,060)
                                               ==============  ============
                                                    $765,000      $433,714
                                               ==============  ============


        On July 15, 1998, the Company entered into a new credit agreement with a
group of lenders led by The Chase Manhattan Bank as  administrative  agent.  The
Credit Agreement provides a 7 3/4-year term loan facility ("Term Loan A") in the
aggregate amount of $250.0 million, an 8 1/4-year term loan facility ("Term Loan
B") in the aggregate amount of $250.0 million and a 7 3/4-year  revolving credit
facility  in the  aggregate  amount of $400.0  million  (the  "Revolving  Credit
Facility").  Proceeds  under these loan  facilities  were used to repay existing
debt and to fund the  Goodson  Acquisition.  In May 1997,  the  Company's  prior
credit facility ("prior credit  facility") was amended to include $398.0 million
in senior  secured  term loans and a $235.0  million  senior  secured  revolving
credit  facility (the "prior  revolver").  The Company had $135.0 million unused
and  available  under the  Revolving  Credit  Facility at December  31, 1998 and
$112.0  million  unused and available  under the prior  revolver at December 31,
1997. During 1998 and in conjunction with the new Credit Agreement,  the Company
borrowed  approximately $808.0 million of which $533.8 million was used to repay
outstanding debt.

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

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

                                              (in thousands)

          1999....................................$     --
          2000......................................19,500
          2001......................................30,688
          2002......................................36,937
          2003......................................43,188
          Thereafter...............................369,687


                                       38

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                               DECEMBER 31, 1998

4.    LONG-TERM DEBT (CONTINUED)

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

                                           PRINCIPAL AMOUNT (IN THOUSANDS)
              June 30, 2002                         $   55,000
              June 30, 2003                             65,000
              June 30, 2004                            100,000
              June 30, 2005                            180,000

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

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

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

      An annual  commitment  fee is incurred on the average daily unused portion
of the Revolving Credit Facility,  payable quarterly in arrears, at a percentage
which varies from 0.375% to 0.250%  based on the  quarterly  calculation  of the
Total Leverage  Ratio.  At December 31, 1998,  the Company's  commitment fee was
0.375%.

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

      Interest rate protection  agreements relating to the Company's  borrowings
at December 31, 1998 included a SWAP agreement with a notional  principal amount
of $300.0 million which matured on January 29, 1999. As of December 31, 1998, if
the SWAP was marked to market,  it would  result in a net loss of  approximately
$756,000.  Upon  expiration  of the  SWAP  agreement  on  January  29,1999,  the
Company's new SWAP agreements,

                                       39

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

4.  LONG-TERM DEBT (CONTINUED)

for an aggregate  notional  principal amount of $400.0 million,  which reduce by
$75.0 million per year, became effective. The new SWAP agreements will expire on
October 29, 2002. At December 31, 1998, if the new SWAP agreements, although not
in  effect,  were  marked to  market,  they  would  have  resulted  in a loss of
approximately $7.7 million.  The fair value as of December 31, 1998 of the IRPAs
were  obtained  from the  Company's  bank.  The  fixed  LIBOR  rate of such SWAP
agreements is approximately 5.85%.

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

      In 1997,  the Company repaid $33.3 million of  subordinated  notes owed to
affiliates of Warburg, Pincus.

5.    INITIAL PUBLIC OFFERING AND SPECIAL CHARGE

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

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

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

6.    STOCK INCENTIVE PLAN

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

      Incentive  stock  options are granted at no less than fair market value of
the  Common  Stock on the date of grant.  The  option  price per share of Common
Stock for all other stock options are established by the Compensation Committee.
Stock options are  exercisable at cumulative  intervals of 20% commencing on the
first anniversary after issuance,  continuing through the fifth anniversary,  at
which time 100% may be exercised. These options expire 10 years after issuance.

                                       40

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

6.     STOCK INCENTIVE PLAN (CONTINUED)

      Proforma  information  regarding  net  income  and  earnings  per share is
required by FASB Statement No. 123,  "Accounting for Stock-Based  Compensation",
and has been  determined as if the Company had accounted for its employee  stock
options under the fair value method of that Statement.  The fair value for these
options was estimated at the date of grant using a Black-Scholes  option pricing
model  with the  following  weighted-average  assumptions  for  1998  and  1997:
risk-free interest rate of 5.49% and 5.76%,  respectively;  dividend yield of 0%
for both years;  volatility  factor of the  expected  market price of the Common
Stock of .38 and .31, respectively;  and a weighted-average expected life of the
option of seven years for both 1998 and 1997.

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

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

                                 (in thousands)

                                                              1998      1997
                                                              ----      ----

            Net income attributable to common stockholder:
               As reported                                  $41,139    $22,969
               Proforma                                      39,135     22,259

            Net income per share
               As reported
                  Basic                                     $   .85    $   .51
                  Diluted                                       .85        .51
               Proforma                             
                  Basic                                         .81        .50
                  Diluted                                       .80        .49

      A summary of the Company's stock option  activity and related  information
for the years ended 1998 and 1997 are as follows:

<TABLE>
<CAPTION>

                                           1998                           1997
                                            WEIGHTED-AVERAGE               WEIGHTED-AVERAGE
                                   OPTIONS   EXERCISE PRICE      OPTIONS     EXERCISE PRICE
  
<S>                               <C>            <C>             <C>             <C>
  Outstanding-beginning of year   1,825,189      $17.50                 --           --
    Granted                         925,700      $22.45          1,959,992       $17.50
    Exercised                         5,174      $14.00                 --           --
    Forfeited                       158,548      $17.59            134,803       $17.52
                                  ---------                      ---------
    Outstanding-end of year       2,587,167      $19.27          1,825,189       $17.50
                                  =========                      =========

    Exercisable at end of year      332,973      $17.51                 --           --
    Weighted-average fair
      value of options granted      
      during the year                $11.13                          $5.42

</TABLE>

                                       41

<PAGE>


                        JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998


6.         STOCK INCENTIVE PLAN (CONTINUED)

      Exercise  prices for options  outstanding  as of December  31, 1998 ranged
from $14.00 to $22.50 per share. The weighted-average remaining contractual life
of those options is 8.7 years.

7.     EXTRAORDINARY ITEM

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

8.    EARNINGS PER COMMON SHARE

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

                                                           1998         1997
                                                        ----------   -----------
Weighted-average shares for basic earnings per share    48,437,521   44,792,774
Effect of diluted securities:
  employee stock options                                   188,935      190,747
                                                        ----------   ----------
Adjusted weighted-average shares for diluted 
  earnings per share                                    48,626,456   44,983,521
                                                        ==========   ==========

      Options  to  purchase  1.7  million  shares of common  stock at a range of
$18.00 to $22.50  were  outstanding  during  1998 but were not  included  in the
computation  of the diluted EPS because the options'  exercise price was greater
than the average market price of the common shares.

      PROFORMA NET INCOME PER COMMON SHARE (UNAUDITED):

      Proforma  net income per common share for 1996 was  calculated  reflecting
the 37,962,500  shares which were issued and outstanding  prior to the Offering,
but subsequent to December 31, 1996.


9.    PENSION AND POST RETIREMENT PLANS

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

      In 1997,  the  Company  changed the date it uses to measure  pension  plan
assets and  liabilities  from  December 31 to September 30, in order to meet the
Company's reporting requirements.

                                       42

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                            DECEMBER 31, 1998

9.    PENSION AND POST RETIREMENT PLANS (CONTINUED)

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

<TABLE>
<CAPTION>
                                                            (in thousands)
                                               PENSION BENEFITS      POST-RETIREMENT BENEFITS
                                               1998         1997          1998        1997
                                            --------      -------       -------     -------
<S>                                         <C>           <C>           <C>         <C>    
Change in benefit obligation
   Benefit obligation at beginning of year  $ 57,697      $55,130       $ 6,850     $ 7,103
   Service cost                                1,588        1,328            15          13
   Interest cost                               4,516        4,115           500         519
   Actuarial (gain)/loss                       3,377          931           197        (277)
   Benefits paid                              (4,201)      (3,807)         (487)       (508)
   Business combinations                      11,301           --           216          --
                                            --------      -------       -------     -------
   Benefit obligation at end of year        $ 74,278      $57,697       $ 7,291     $ 6,850

Change in plan assets
   Fair value of trust assets at
     beginning of year                      $ 78,365      $69,054       $    --     $    --
   Actual return on plan assets               (2,099)      13,034            --          --
   Employer contributions                        114           84           487         508
   Benefits paid                              (4,201)      (3,807)         (487)       (508)
   Business combinations                      11,777           --            --          --
                                            --------      -------       -------     -------
   Fair value of trust assets at
     end of year                            $ 83,956      $78,365       $    --     $    --

Reconciliation of funded status
   Funded status                            $  9,678      $20,668       $(7,291)    $(6,850)
   Unrecognized net
    Transition (asset)/obligation                240          341            --          --
    Prior service cost                        (3,073)      (3,440)         (622)       (704)
    (Gain)/loss                                2,151      (10,895)         (367)       (581)
   Contributions after measurement date           34           28            --          --
                                            --------      -------       -------     -------
   Net amount recognized                    $  9,030      $ 6,702       $(8,280)    $(8,135)

Amounts recognized in statement of
  financial position
   Prepaid benefit cost                     $  9,466      $ 7,128       $    --     $    --
   (Accrued) benefit cost                     (1,032)        (657)       (8,280)     (8,135)
   Adjustment required to
     recognize minimum liability                 231          231           N/A         N/A
   Accumulated other comprehensive               
     loss                                        365           --           N/A         N/A
                                            --------      -------       -------     -------
   Net amount recognized                    $  9,030      $ 6,702       $(8,280)    $(8,135)

Separate disclosures for pension
  plans with accumulated benefit
  obligation in excess of plan
  assets
   Projected benefit obligation at    
     end of year                            $  3,811      $ 1,958           N/A          N/A
   Accumulated benefit obligation
     at end of year                         $  3,578      $ 1,898           N/A          N/A
   Fair value of assets at end of
     year                                   $  3,019      $ 1,788           N/A          N/A

</TABLE>

                                       43

<PAGE>


                               JOURNAL REGISTER COMPANY
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                   DECEMBER 31, 1998

      9.    PENSION AND POST RETIREMENT PLANS (CONTINUED)

<TABLE>
<CAPTION>
                                                            (in thousands)
                                               PENSION BENEFITS      POST-RETIREMENT BENEFITS
                                               1998         1997          1998        1997
                                            --------      -------       -------     -------
<S>                                         <C>           <C>           <C>         <C>    
Components of net periodic benefit cost
   Service cost                             $  1,588      $ 1,328       $    15     $    13
   Interest cost                               4,516        4,115           500         519
   Expected return on plan assets             (7,273)      (6,051)           --          --
   Amortization of net
    Transition obligation                        101          101            --          --
    Prior service cost                          (367)        (367)          (82)        (82)
    (Gain)/loss                                 (297)           1           (17)        (18)
                                            --------      -------       -------     -------
    Net periodic benefit (income) cost      $(1,732)      $  (873)      $   416     $   432

Actuarial assumptions
   Discount rate                               7.00%         7.50%         7.00%       7.50%
   Expected long-term return on         
     plan assets                               9.00%         9.00%           N/A        N/A
   Rate of compensation increase               3.00%         3.00%         3.00%       3.00%
   Rate of increase in health 
     benefit costs
       Immediate rate                                                      8.00%       9.00%
       Ultimate rate                                                       6.50%       6.50%
       Year ultimate rate reached                                          2000        2000

Effects of a change in the assumed
rate of health benefit costs
   Effect of a 1% increase on
    Total of service cost and
      interest cost                                                         $33         $30
    Post-Retirement benefit obligation                                     $390        $353
   Effect of a 1% decrease on
    Total of service cost and
      interest cost                                                        $(31)        N/A
    Post-Retirement benefit obligation                                    $(350)        N/A

</TABLE>

      The  Company  also  has  defined   contribution   plans  covering  certain
employees.   Contributions   to  these  plans  are  based  on  a  percentage  of
participants'  salaries and amounted to approximately  $377,000,  $325,000,  and
$417,000 in 1998, 1997 and 1996, respectively.

      The  Company  contributes  to various  multi-employer  union  administered
pension plans.  Contributions to these plans amounted to approximately $110,000,
$68,000, and $71,000 in 1998, 1997, and 1996, respectively.

                                       44

<PAGE>

                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

10.   INCOME TAXES

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

                                                (in thousands)
                                      1998         1997          1996
                                   -----------  ------------  -----------
Current tax expense:
   Federal                         $   16,492   $    8,035    $     9,812
   State                                3,389        2,970          9,333
                                   -----------  ------------  -----------
Total current                          19,881       11,005         19,145
Deferred tax expense (benefit):
   Federal                             10,157        5,027         (4,322)
   State                               (1,926)        (248)          (514)
                                   -----------  ------------  -----------
Total deferred                          8,231        4,779         (4,836)
                                   ===========  ============  ===========
Total provision for taxes          $   28,112   $   15,784    $    14,309
                                   ===========  ============  ===========


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

                                                  (in thousands)
                                         1998        1997         1996
                                      ----------- ------------ -----------
Tax at U.S. statutory rates              $25,811     $13,564      $14,846
State taxes, net of federal effect           951       1,769        5,732
Reduction in valuation allowance              --          --       (6,632)
Other                                      1,350         451          363
                                      =========== ============ ===========
                                         $28,112     $15,784      $14,309
                                      =========== ============ ===========


      The reduction in the valuation  allowance in 1996 reflects the recognition
of approximately  $4.3 million in deferred tax benefits  expected to be realized
in future years, as well as the reversal of certain temporary differences.

      State net operating  loss  carryforwards  were utilized as follows:  $13.5
million in 1998, $700,000 in 1997 and $300,000 in 1996.

      At  December  31,  1998,  certain  subsidiaries  had  net  operating  loss
carryforwards  available ranging from approximately $100,000 to $25.0 million in
various  state and local  jurisdictions.  Substantial  portions  of the  related
deferred tax assets are offset by valuation  allowances.  The  carryforwards  at
December 31, 1998 expire in various years through 2013.


                                       45

<PAGE>


                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

10.   INCOME TAXES (CONTINUED)

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

                                                      (in thousands)
                                             1998           1997
                                         -----------------------------
Deferred tax liabilities:
   Property, plant and equipment             $13,966       $   14,333
   Intangibles                                 4,891               --
                                             -------       ----------
Total deferred tax liabilities                18,857           14,333
Deferred tax assets:
   Intangibles                                    --            2,042
   Retiree benefits                               54              793
   Net operating loss carryforwards            3,251            1,915
   Deferred interest expense                      --            4,121
   Other                                       5,127            5,649
                                             -------       ----------
Total deferred tax assets                      8,432           14,520
Valuation allowance                            1,082            1,792
                                             -------       ----------
Net deferred tax assets                        7,350           12,728
                                             -------       ----------
Net deferred tax liabilities                 $11,507       $    1,605
                                             =======       ==========

      As part of the acquisition of the Goodson properties, the Company recorded
net deferred tax liabilities of approximately $2.0 million.

      The Company's  valuation  allowances for deferred tax assets  decreased by
approximately $700,000 and $600,000 in 1998 and 1997, respectively.

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

11.   COMMITMENTS AND CONTINGENCIES

      The  Company  leases  office  space  and  equipment  under  noncancellable
operating leases. These leases contain several renewal options for periods up to
five years.  The Company's  future minimum lease payments under operating leases
at December 31, 1998 are as follows:

                                               (in thousands)


      1999..........................................$2,416
      2000..........................................$1,952
      2001..........................................$  902
      2002..........................................$  532
      2003..........................................$  476
      Thereafter....................................$  368

      Total rent expense was $3.1 million, $2.0 million and $1.4 million for the
years ended December 31, 1998, 1997 and 1996, respectively.

                                       46

<PAGE>


                              JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

11.    COMMITMENTS AND CONTINGENCIES (CONTINUED)

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

12.   ACQUISITIONS

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

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

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

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

                                                          (in thousands)

                                                        1998            1997
                                                        ----            ----
      Net Revenues                                 $    464,330     $   428,416
      Income before extraordinary item                   40,413          12,024
      Net Income                                         35,918          12,024

      Net income per share (basic and diluted):
      Income before extraordinary item             $        .83     $       .27
      Net income                                   $        .74     $       .27

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

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

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

      On December 22, 1997, the Company acquired for approximately $12.8 million
certain  assets  and  liabilities  of  the  InterCounty   Newspaper  Group.  The
InterCounty Newspaper Group includes 17 weekly


                                       47

<PAGE>


                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

12.    ACQUISITIONS (CONTINUED)

newspapers  in suburban  Philadelphia  and central and  southern New Jersey with
total weekly  distribution  of  approximately  100,000.  The Company applied the
purchase method of accounting for this transaction.

      Accordingly,  the total  acquisition  cost was  allocated  to the tangible
assets and liabilities,  respectively,  of InterCounty  Newspaper Group based on
their relative estimated fair values on the effective date of the acquisition of
approximately $6.2 million and $1.8 million, respectively.

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

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

      On December 13, 1996, the Company acquired for approximately $18.0 million
certain  assets and  liabilities  of a daily  newspaper,  published  in Taunton,
Massachusetts.  The Company  applied the purchase  method of accounting for this
transaction.  Accordingly,  the  total  acquisition  cost was  allocated  to the
tangible  assets and  liabilities  of the TAUNTON  DAILY  GAZETTE based on their
relative  estimated fair values on the effective date of the acquisition of $1.8
million and $500,000,  respectively.  Intangible  assets of approximately  $17.0
million were recorded for the  subscriber  list and excess of the purchase price
over the value of identifiable  net assets and are being amortized  according to
the Company's policy.

13.   MEMBERSHIP INTERESTS

      Membership interests at December 31, 1996 are summarized as follows:

<TABLE>
<CAPTION>
                                                   Membership Interests                          Additional
                                      Par    ---------------------------------   Membership       Paid-in
                                     Value   Authorized  Issued    Outstanding    Interest        Capital
                                    -------------------------------------------------------------------------
<S>                                 <C>      <C>        <C>        <C>          <C>              <C>        
  Journal Register Company, LLC:  
    Class A Membership Interest     $ 1.00   1,000,000  1,000,000  1,000,000    $ 1,000,000
    Class B Membership Interest     $ 1.00   1,000,000  1,000,000  1,000,000      1,000,000
    Additional paid-in capital                                                           --      $216,982,319
                                                                                -----------    --------------
                                                                                  2,000,000       216,982,319
  INS Holdings, Inc.:
    Common stock voting             $  .10       2,000      2,000      2,000            200
    Common stock non-voting         $  .10   1,000,000  1,000,000  1,000,000        100,000
    Preferred Stock, Class A        $ 1.00       4,000      4,000      4,000          4,000    
    Additional paid-in capital                                                           --         5,185,016
                                                                                               --------------
                                                                                    104,200         5,185,016
                                                                                -----------    --------------
                                                                                $ 2,104,200      $222,167,335
                                                                                ===========    ==============
</TABLE>

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

                                       48

<PAGE>



                           JOURNAL REGISTER COMPANY
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                              DECEMBER 31, 1998

14.   SUBSEQUENT EVENTS (UNAUDITED)

      On January 11,  1999,  the Company  announced  that its Board of Directors
authorized a share repurchase program of up to 2 million shares of the Company's
common stock. As of March 11, 1999, the Company has purchased  1,141,800  shares
on  the  open  market.  Shares  under  the  program  are  to be  repurchased  at
management's  discretion,  either in the open market or in privately  negotiated
transactions.

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

15.   QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

      The  following is a summary of the  quarterly  results of  operations  for
years ended December 31, 1998 and 1997:

<TABLE>
<CAPTION>

                                                Mar. 31       June 30        Sept. 30       Dec. 31
                                              -----------   ------------   ------------  ------------
                                                      (In thousands, except per share data)

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

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


1997
----
Revenues                                        $ 83,040      $ 92,651      $ 89,493      $ 94,223
Operating income (loss)                         $ 22,644      $   (566)     $ 27,438      $ 31,525
Net income (loss)                               $  5,724      $ (7,267)     $ 10,968      $ 13,544

Net income (loss) per common share:
     (basic and diluted)                        $     --      $  (0.16)     $   0.23      $   0.28
Proforma net income per common share(2)         $   0.15            --            --            --
                  

</TABLE>


(1)   Extraordinary  item recorded in the third quarter of 1998  was related  to
      the extinguishment of debt.

(2)   Proforma  net income per  common  share for the first  quarter of 1997 was
      calculated   reflecting  the  37,962,500  shares  which  were  issued  and
      outstanding prior to the Offering.

                                       49

<PAGE>


                           JOURNAL REGISTER COMPANY
               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                               BALANCE AT                        CHARGES TO                        BALANCE AT
                                              BEGINNING OF                       COSTS AND                           END OF
             DESCRIPTION                         PERIOD        ADJUSTMENTS(1)     EXPENSES       DEDUCTIONS(2)       PERIOD
             -----------                      ------------     --------------    -----------     -------------     ---------- 
                                                                       (in thousands)
<S>                                              <C>              <C>              <C>              <C>              <C>   
YEAR ENDED DECEMBER 31, 1998
Allowance for doubtful accounts                  $ 4,055          $1,092           $4,464           $4,979           $4,632
Valuation allowance for deferred tax assets      $ 1,792              --               --           $  710           $1,082

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

YEAR ENDED DECEMBER 31, 1996
Allowance for doubtful accounts                  $ 2,874              --           $3,914           $2,615           $4,173
Valuation allowance for deferred tax assets      $10,034              --               --           $7,684           $2,350


</TABLE>

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

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

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

                                       S-1

<PAGE>

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

      None.

                                   PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

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

      The  information  appearing  under the captions  "Proposal 1 - Election of
Directors",  "Certain  Transactions"  and "Section  16(a)  Beneficial  Ownership
Reporting  Compliance"  in the  Company's  Proxy  Statement  for its 1999 Annual
Meeting of Stockholders (the "1999 Proxy  Statement") is incorporated  herein by
reference.

ITEM 11.  EXECUTIVE COMPENSATION.

      Information  appearing under the caption  "Executive  Compensation" in the
1999 Proxy Statement is incorporated herein by reference.

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

      Information  appearing under the caption "Security Ownership of Beneficial
Owners and  Management" in the 1999 Proxy  Statement is  incorporated  herein by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      Information appearing under the caption "Certain Transactions" in the 1999
Proxy Statement is incorporated herein by reference.

                                   PART IV

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

(A)   1.    FINANCIAL STATEMENTS.

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

      2.    FINANCIAL  STATEMENT  SCHEDULES  AND  SUPPLEMENTARY  INFORMATION
            REQUIRED TO BE SUBMITTED.

      Schedule of  Valuation  and  Qualifying  Accounts  as  attached  hereto on
      Schedule II.

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

(B)   REPORTS ON FORM 8-K.

      No Reports on Form 8-K were filed by the Company during the fourth quarter
      of 1998.

                                       50

<PAGE>


(C)   INDEX TO EXHIBITS.

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

  EXHIBIT NO.                             DESCRIPTION

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

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

                                       51

<PAGE>

                                  SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934,  the  Registrant  has duly  caused  this Report to be signed on its
behalf by the undersigned,  thereunto duly  authorized,  in the City of Trenton,
State of New Jersey, on the 29th day of March, 1999.

                                    JOURNAL REGISTER COMPANY


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


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

      Pursuant to the requirements of the Securities  Exchange Act of 1934, this
Report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities indicated on the 29th day of March, 1999.


               SIGNATURE                               TITLE(S)

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

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

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

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


     /S/ SIDNEY LAPIDUS                 Director
------------------------------- 
         Sidney Lapidus


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


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

                                       52

<PAGE>
                                 EXHIBIT INDEX

  EXHIBIT NO.                             DESCRIPTION

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

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