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                       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, 1997

          |_| 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 IDENTIFICATION NO.)
 OF INCORPORATION OR ORGANIZATION)

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

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
                                      None
           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                     Common Stock, par value $0.01 per share

     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 26, 1998 was approximately $234,951,213.

     As of March 26, 1998,  48,437,500 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
1998 Annual Meeting of Stockholders,  which will be filed on or before April 30,
1998.

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<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 532,472  and total  non-daily
distribution of approximately 2.9 million.  As of December 31, 1997, the Company
owned  and  operated  18  daily   newspapers  and  141  non-daily   publications
strategically   clustered  in  five   geographic   areas:   Connecticut;   Ohio;
Philadelphia and its surrounding  areas; the greater St. Louis area; and central
New England.  The Company's  newspapers are characterized by an intense focus on
coverage  of local  news and  sports  and  offer  compelling  graphic  design in
colorful, reader-friendly packages.

         From 1993 through 1997, the Company successfully completed 9  strategic
acquisitions,  acquiring six daily  newspapers,  73 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, 1997, the Company
generated revenues of $359.4 million,  EBITDA (as hereinafter defined) of $133.4
million  (excluding a 1997 special charge),  net income of $23.0 million and net
income,  as  adjusted,  of $48.4  million.  Net income for the fiscal year ended
December  31, 1997 has been  adjusted  to reflect  the effects of the  Company's
initial public  offering,  a related  special charge and the  implementation  of
tax-saving  strategies.   In  1997,  the  Company's  EBITDA  of  $133.4  million
(excluding  the 1997  special  charge),  as a  percentage  of revenues  ("EBITDA
Margin"),  was  approximately  37%. From 1992 through 1997, the Company recorded
compound  annual  growth in  revenues  and EBITDA  (excluding  the 1997  special
charge), of approximately 6.6% and 12%,  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


                                       1

<PAGE>

newspapers are the only general circulation daily newspapers  published in their
respective communities.  The Company's non-daily publications serve well defined
suburban circulation areas and include the St. Louis, Missouri SUBURBAN JOURNALS
(the  "JOURNALS"),  the largest group of weekly  newspapers in the United States
based on total distribution.

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

         The  Company's  revenues  are derived from  advertising  (approximately
74.3% of 1997  revenues),  paid  circulation,  including  single  copy sales and
subscription sales (22.3% of 1997 revenues),  and commercial  printing and other
(3.4% of 1997 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 1997 were derived primarily from
a  broad  group  of  local  retailers   (approximately   56.4%)  and  classified
advertisers  (approximately  39.1%). No advertiser accounted for more than 2% of
the Company's 1997 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.


OVERVIEW OF OPERATIONS

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

         CONNECTICUT.  The Company owns the NEW HAVEN REGISTER, an approximately
100,273 circulation daily newspaper,  4 suburban daily newspapers,  51 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  162,948 and 171,873,
respectively.   The  51  suburban  and  community  non-daily  publications  have
aggregate  distribution  of  approximately  712,815.   Combined,  the  Company's
Connecticut  daily  newspapers  and  non-daily  publications  serve a state-wide
audience with  concentrations  in the west  (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.

                                       2
<PAGE>
         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>               <C>

NEW HAVEN REGISTER..............        1755          1989     New Haven           100,273          113,269
THE HERALD......................        1881          1995     New Britain          23,197           46,519
THE BRISTOL PRESS...............        1871          1994     Bristol              16,378
THE REGISTER CITIZEN............        1889          1993     Torrington           12,840           12,085
THE MIDDLETOWN PRESS............        1884          1995     Middletown           10,260
Shore Line Newspapers
   13 publications..............        1877          1995     Guilford                                            145,540
Elm City Newspapers
    8 publications..............        1931          1995     Milford                                              50,486
Imprint Newspapers
     15 publications............        1931          1995     Bristol                                             132,224
Foothills Trader
     3 publications.............        1965          1995     Torrington                                           50,300
CONNECTICUT'S COUNTY KIDS               1989          1996     Westport                                             40,000
EAST HARTFORD GAZETTE...........        1885          1995     East Hartford                                        19,763
THOMASTON EXPRESS...............        1874          1994     Thomaston                                             4,537
TMC (9 publications)............                                                                                   269,965
                                                                               ----------       ---------          -------

TOTALS..........................                                                   162,948          171,873        712,815
                                                                                ==========        =========        =======
</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,  1997,
     according to ABC Fas-Fax Report.

(3)  Non-daily  distribution  includes  both paid  (53,174)  and free  (659,701)
     distribution.  Paid and free non-daily  distribution for Shore Line and Elm
     City Newspapers  reflects the monthly average for September 1997. All other
     non-daily distribution reflects average distribution for December 1997.

         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.  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 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 46,519 as of
September 30, 1997.

         OHIO. The Company owns three daily newspapers and a commercial printing
operation in Ohio. The daily newspapers are THE NEWS-HERALD  (Lake County),  THE
MORNING JOURNAL (Lorain) and THE TIMES REPORTER  (Dover-New  Philadelphia).  The
Ohio  newspapers have aggregate  daily and Sunday  circulation of  approximately
112,748 and 131,926, respectively.

                                       3
<PAGE>
         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          50,444          63,226
THE MORNING JOURNAL ..       1921            1987       Lorain               38,532          42,618
THE TIMES REPORTER....       1903            1987       Dover-New            23,772          26,082
                                                        Philadelphia
TMC (3 publications)..                                                                                         63,246
                                                                            -------          -------           ------
TOTALS................                                                      112,748          131,926           63,246
                                                                            =======          =======           ======
</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, 1997, according
    to ABC Fas-Fax Report.

(3) Non-daily  distribution  is solely free  distribution  and reflects  average
    distribution for December 1997.

         THE NEWS-HERALD  and THE MORNING  JOURNAL serve areas located  directly
east and  west of  Cleveland,  respectively.  THE  NEWS-HERALD,  which is one of
Ohio's  largest  suburban  newspapers,  serves  communities  located in Lake and
Geauga Counties, two of Ohio's four most affluent counties. The Company believes
that each of its three 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
their focus on coverage of local news and sports.  The  Company's  Ohio  cluster
benefits   from  a  variety  of   synergistic   opportunities,   including   the
cross-selling of advertising and editorial coverage.

         PHILADELPHIA  AND  SURROUNDING  AREAS.  The  Company  owns  four  daily
newspapers and 29 non-daily publications serving areas surrounding Philadelphia,
Pennsylvania.  These publications include, in Pennsylvania, the DAILY LOCAL NEWS
(West Chester),  THE TIMES HERALD (Norristown),  THE PHOENIX  (Phoenixville),  a
group of non-daily  newspapers serving  Philadelphia's  affluent Main Line and a
group of 17 weekly  newspapers  acquired  in  December  1997,  serving  suburban
Philadelphia  and central and southern New Jersey;  and also in New Jersey,  THE
TRENTONIAN  (Trenton).  The December 1997  acquisition  included two  commercial
printing  companies,  one of which  prints the 17 weekly  newspapers  and one of
which  is a  premium  quality  sheet-fed  printing  operation.  The  four  daily
newspapers have aggregate daily and Sunday circulation of approximately  122,490
and  99,084,   respectively.   This  cluster's  non-daily   distribution  totals
approximately 274,693.

         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 LOCAL NEWS..........       1872          1986     West Chester, PA         33,975           32,263
THE TIMES HERALD..........       1799          1993     Norristown, PA           23,886           20,072
THE PHOENIX...............       1888          1986     Phoenixville, PA          4,333
THE TRENTONIAN............       1945          1985     Trenton, NJ              60,296           46,749
InterCounty Newspaper Group
    17 publications.......       1869          1997     Bristol, PA                                              100,545
Suburban Philadelphia
   8 publications.........       1885          1986     Suburban                                                 101,801
                                                        Philadelphia
TMC (4 publications)......                                                                                        72,347
                                                                                -------          -------         -------
TOTALS....................                                                      122,490           99,084         274,693
                                                                                =======           ======         =======
</TABLE>
_________________________

                                       4
<PAGE>

(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, 1997, according
     to ABC Fas-Fax Report.

(3)  Non-daily  distribution  includes  both paid  (52,691)  and free  (222,002)
     distribution.  Non-daily  distribution  reflects  average  distribution for
     December 1997.

     The Company's Pennsylvania publications are all located within 30 miles  of
Philadelphia. Each of the Company's Pennsylvania daily properties and a majority
of its non-daily  publications 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'S
tabloid format and emphasis on local sports allow it to compete effectively with
the other  local daily  newspaper  in Trenton.  The  Company  believes  that its
newspapers  in this  cluster  compete  effectively  in the areas they serve with
Philadelphia's  major  metropolitan  newspapers  and radio stations due to their
focus on local news and sports. 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. THE TRENTONIAN'S  television guide is printed at the DAILY
LOCAL NEWS  facility.  All of these  publications  share certain  news-gathering
resources.

         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 six 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  28,552
and 30,876, 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>                <C>

Suburban Newspapers of
  Greater St. Louis (73
  editions of 40 JOURNALS)       1922          1984         St. Louis, MO                                         1,585,321
THE TELEGRAPH.............       1836          1985         Alton, IL           28,552          30,876
LADUE NEWS................       1981          1997         Ladue, MO                                                39,500
   PERFORMANCE NOTES......       1992          1997         Ladue, MO                                                19,550
   DIRECT DECOR...........       1994          1997         Ladue, MO                                                 3,000
   GENTLEMEN'S CLUB.......       1997          1997         Ladue, MO                                                 5,000
WEST COUNTY KIDS..........       1996          1996         St. Louis, MO                                            30,000
                                               (4)
TMC (2 publications)......                                                                                           32,000
                                                                                --------         -------          ---------
TOTALS....................                                                      28,552           30,876           1,714,371
                                                                                ========         ========         =========
</TABLE>
-------------------
                                       5
<PAGE>

(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, 1997, according
     to ABC Fas-Fax Report.

(3)  Non-daily   distribution  includes  both  paid  8,390  and  free  1,705,981
     distribution,  and reflects September 1997 net distribution.

(4)  Established by the Company in 1996.

         The JOURNALS have total distribution of approximately  950,000 mid-week
and  approximately   640,000  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 have received national  recognition and
have been studied by domestic and foreign  publishers  as a model of  successful
neighborhood newspapers.  Due to St. Louis' character 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.  THE TELEGRAPH
serves a community located in southeast  Illinois,  within the greater St. Louis
area and which is connected by a bridge to St.  Louis.  LADUE NEWS,  acquired in
December 1997, serves the affluent suburbs west of St. Louis.

         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 Sunday)
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 to
the same degree as national and major  metropolitan  daily  newspapers  on major
accounts for advertising revenue.

         CENTRAL  NEW  ENGLAND.  The  Company  owns five daily and 11  non-daily
publications in the central New England area. The Company's publications in this
cluster  include THE HERALD NEWS (Fall  River,  MA), the TAUNTON  DAILY  GAZETTE
(Taunton, MA), THE CALL (Woonsocket,  RI), THE TIMES (Pawtucket, RI), THE RECORD
(Troy,  NY) and a group of weekly  newspapers  serving the  Narragansett,  Rhode
Island area.  The five daily  newspapers  have  aggregate  daily  circulation of
approximately  105,734 and aggregate Sunday circulation of approximately 78,207.
The  non-daily   publications  in  this  cluster  have  total   distribution  of
approximately 148,867.

         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>                <C>
THE HERALD NEWS...........        1872          1985     Fall River, MA         29,536          31,299
TAUNTON DAILY GAZETTE             1848          1996     Taunton, MA            15,002
THE CALL..................        1892          1984     Woonsocket, RI         19,153          18,263
THE TIMES.................        1885          1984     Pawtucket, RI          16,512
THE RECORD................        1896          1987     Troy, NY               25,531          28,645
Suburban Rhode Island
   Newspapers
    6 non-daily publications      1854          1995     Wakefield, RI                                            38,773
TMC (5 publications)......                                                                                       110,094
                                                                                --------        ------           -------
TOTALS....................                                                      105,734         78,207           148,867
                                                                                ========        ======           =======
</TABLE>

                                       6
<PAGE>

---------------------
(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, 1997, according
     to ABC Fas-Fax Report.

(3)  Non-daily  distribution  includes  both paid  (29,267)  and free  (119,600)
     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 1997.

         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.  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. Moreover, 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.  The Company launched a Sunday edition of the TAUNTON DAILY
GAZETTE, acquired in December 1996, in March 1998.

ADVERTISING

         Substantially all the Company's advertising revenues are derived from a
diverse  group  of local  retailers  and  classified  advertisers.  The  Company
believes  that because its  newspapers  rely on a broad base of local retail and
local  classified  advertising  rather  than more  volatile  national  and major
account  advertising,  its  advertising  revenues tend to be relatively  stable.
Local advertising is more stable than national advertising because a community's
need for local services  provides a stable base of local  businesses and because
local advertisers generally have fewer effective advertising vehicles from which
to  choose.  Advertising  revenues  accounted  for  approximately  74.3%  of the
Company's  total revenues for 1997. 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 1997, local and regional  advertising  accounted for
the largest share of the Company's  advertising  revenues  (56.4%),  followed by
classified   advertising   (39.1%),   national   advertising  (2.3%)  and  legal
advertising (2.2%). 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 1997
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  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."

                                       7
<PAGE>
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  22.3% of the Company's total revenues in 1997.  Approximately 68%
of  1997  circulation   revenues  were  derived  from  subscription   sales  and
approximately  32% 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 1997, the Company had total paid
daily circulation of 532,472,  paid Sunday  circulation of 511,966 and non-daily
distribution of approximately 2.9 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.

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  3.4% of the  Company's  1997  revenues.  The  Company  also  owns
Integrated  Newspaper  Systems,  Inc.,  a  company  which  develops  application
software for the newspaper industry.

EMPLOYEE RELATIONS

         The Company employs approximately 4,500 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  $33.3 million in 1997,  which was
approximately  9.6% of the Company's  newspaper  revenues.  In 1997, the Company
consumed  approximately  61,500  metric  tons of  newsprint.  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 increases of approximately 34%
and 13%,  respectively,  in 1995 and 1996 and a decrease of approximately 18% in
1997,  in each case  compared to the previous  year.  In January  1998,  certain
newsprint  suppliers  announced an April 1998 increase of $50 per metric ton. In
addition,  in February 1998, a major supplier  announced a price increase of $40
per metric  ton as of April 1,  1998.  The  Company  believes  that if any price
increase is sustained in the industry, the Company will also be impacted by such

                                       8
<PAGE>

increase.  The  Company is unable to predict  whether,  or to what  extent,  any
increase will be sustained. 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  small  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  is  seeking  to  attract
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, 1997,
the Company had  established  an on-line  editorial  presence and a full on-line
classified  advertising service for each of its daily newspapers,  the JOURNALS,
Southern  Rhode  Island  Newspapers  in  Wakefield,  Rhode  Island and  Suburban
Publications  in Wayne,  Pennsylvania.  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  developing  a plan to monitor
groundwater contamination which has been detected at one of its facilities.  The
Company believes that the remediation of any such groundwater contamination will
not have a material  adverse  effect on its  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."

                                       9

<PAGE>
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.

ITEM 2.  PROPERTIES.

         The  Company  owns and  operates  91  facilities  used in the course of
producing and publishing its daily and non-daily publications.  Approximately 57
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, 1997, as well as the expiration  date of the
leases relating to such properties which the Company leases are set forth below:

<TABLE>
<CAPTION>

                                                     APPROXIMATE AREA IN SQUARE FEET
                                               --------------------------------------------

                LOCATION                       OWNED SQUARE FEET          LEASED SQUARE FEET        LEASE EXPIRATION DATE
                --------                       -----------------          ------------------        ---------------------
<S>             <C>                            <C>                         <C>                       <C>

New Haven, CT.........................            205,000(1)(3)
New Britain, CT.......................             44,899(1)(3)
Bristol, CT...........................             40,000(1)(4)
Torrington, CT........................             36,120(1)(3)
Middletown,CT.........................             30,000(1)(4)
North Haven, CT.......................             24,000(3)                    10,000(5)                 12/31/99
Guilford, CT..........................             18,400(1)
West Hartford, CT.....................             14,200(1)
Milford, CT...........................             11,745(1)
Willoughby, OH........................            113,400(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)(4)
Wayne, PA.............................             11,980(1)(4)
State College, PA.....................             23,365(1) (3) (4)
Bristol, PA...........................                                          70,000(1) (4) (5)         12/31/04
Fall River, MA........................             57,571(1)(3)
Taunton, MA...........................             21,100(1)(4)
Troy, NY..............................             50,000(1)(4)
Woonsocket, RI........................             49,338(1)(3)
Pawtucket, RI.........................             41,096(1)(4)
Wakefield, RI.........................             11,750(1)(4)
St. Louis, MO.........................             69,415(1)(3)                 22,043(1)                 12/31/00
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.............................             48,000(1)(3)

</TABLE>
------------------------
(1)      Offices
(2)      Corporate headquarters
(3)      Printing plant
(4)      Production facility
(5)      Warehouse

         The Company  believes  that all of its properties are in generally good
condition,  are 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."

                                       10
<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 25, 1998
with respect to each person who is an executive officer of the Company:
<TABLE>
<CAPTION>

      NAME                                                         POSITION
      ----                                                         --------
<S>                                                               <C>

Robert M. Jelenic.......................................    Chairman, President and Chief Executive Officer
Jean B. Clifton.........................................    Executive Vice President, Chief Financial Officer,
                                                            Treasurer and Secretary
Allen J. Mailman........................................    Vice President, Technology
William J. Higginson....................................    Vice President, Production
William J. Rush.........................................    Vice President of the Company and Publisher and Chief
                                                            Executive Officer, NEW HAVEN REGISTER
John Collins............................................    Vice President of Budgets and Planning
Diane B. Pardee.........................................    Vice President of Corporate Communications

</TABLE>

     ROBERT M. JELENIC is the Chairman, President  and Chief  Executive  Officer
of the Company.  He has been  President  and Chief  Executive  Officer since the
inception  of the  Company,  and has  been a  director  of the  Company  and its
predecessors  for more than the past five  years.  A Chartered  Accountant,  Mr.
Jelenic began his business career with Arthur Andersen in Toronto,  Canada.  Mr.
Jelenic has 22 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 47 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 12 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 37 years old.

     ALLEN J.   MAILMAN  is Vice  President  of  Technology  of the  Company,  a
position he has held since March 1994.  From the Company's  inception in 1990 to
March 1994,  Mr. Mailman was Corporate  Director of Information  Services of the
Company.  He has 23 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 51 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 25 years of
experience in the newspaper industry. Mr. Higginson is 42 years old.

                                       11
<PAGE>

     WILLIAM  J. RUSH is Vice  President  of  the  Company,  a  position  he has
held since January 1996,  and Publisher and Chief  Executive  Officer of the NEW
HAVEN  REGISTER,  a position he has held since 1990. Mr. Rush,  with 40 years of
experience  in the  newspaper  industry,  has held,  at various  times,  the top
executive  position at seven  newspapers  in three  states.  Mr. Rush received a
Bachelor of Arts degree from the Ohio State University School of Journalism. Mr.
Rush is 61 years old.

     JOHN  COLLINS is Vice President  of Budgets  and  Planning of the  Company,
a position  he has held since  April  1996.  From June 1995 to April  1996,  Mr.
Collins was Vice  President,  Finance of the Company and,  from December 1991 to
June 1995, was Chief Financial  Officer of the NEW HAVEN  REGISTER.  Mr. Collins
received a Bachelor  of Science  Degree in  Commerce  and  Finance  from  Wilkes
College,  Wilkesbarre,  PA.  Mr.  Collins  has 20  years  of  experience  in the
newspaper  industry,  including  10 years with  Times  Mirror  Corporation.  Mr.
Collins is 45 years old.

     DIANE B. PARDEE is  Vice   President of   Corporate  Communications  of the
Company,  a  position  she has held  since  August  1996.  Prior to her  present
position,  Ms.  Pardee was Director of Corporate  Communications  of the Company
from September 1993 to August 1996,  Director of Public Affairs for the Business
Committee for the Arts, Inc. from April 1992 to June 1993 and prior to that, she
was Editor-in-Chief of UNIQUE HOMES magazine.  Ms. Pardee received a Bachelor of
Arts  degree in English  with  honors  from East  Stroudsburg  University,  East
Stroudsburg, PA. Ms. Pardee is 38 years old.

                                     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:

    1997                                             HIGH            LOW
    ----                                             ----            ---
                                                          (Per Share)
    Fourth Quarter............................       $21            $16-3/16
    Third Quarter........................ ....        19-5/8         16-1/8
    Second  Quarter (commencing May 8)........        19-7/8         14

     On March 26, 1998, there were approximately  55 stockholders of  record  of
the  Common  Stock.  The  Company  believes  that  it  has  approximately  2,400
beneficial owners.

     The Company has  not  paid   dividends   on  the Common  Stock and does not
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.

                                       12
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA.

         The following  selected  combined data (except number of newspapers and
per share  amounts)  for (i) the  combined  balance  sheets of the Company as of
December 31, 1994 and 1993 and the related combined statements of operations and
cash flows for the years 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,
1997 and 1996 and the related  consolidated  statements of  operations  and cash
flows for each of the three  years in the period  ended  December  31, 1997 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,
                                              ---------------------------------------------------------------------------------
                                                    1997            1996               1995              1994            1993
                                              ----------          --------           --------          -------          -------
                                                       (IN THOUSANDS, EXCEPT NUMBER OF NEWSPAPERS AND PER SHARE AMOUNTS)
<S>                                          <C>                <C>                 <C>               <C>               <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
     Advertising...........................  $266,914           $   256,971         $  249,534        $   224,071       $ 201,929
     Circulation...........................    80,211                79,776             73,797             65,204          58,230
                                             --------           -----------         ----------        -----------       ---------
Newspaper revenues.........................   347,125               336,747            323,331            289,275         260,159
Commercial printing and other..............    12,282                14,373             15,626             10,875          11,710
                                             --------           -----------         ----------        -----------       ---------
                                              359,407               351,120            338,957            300,150         271,869
Operating expenses:
     Salaries and employee benefits........   114,302               111,626            110,651            105,607          96,252
     Newsprint, ink and printing charges...    40,452                50,110             48,243             36,481          35,285
     Selling, general and administrative...    30,450                30,993             28,678             25,312          24,017
     Depreciation and amortization.........    20,480                20,525             19,178             18,605          24,097
     Other.................................    40,783                38,976             38,743             34,187          30,757
     Unusual items(1)......................        --                    --                 --                 --         241,969
     Special charge(2).....................    31,899                    --                 --                 --              --
                                             ---------          -----------         ----------        -----------       ---------
                                              278,366               252,230            245,493            220,192         452,377
                                             ---------          -----------         ----------        -----------       ---------
Operating income (loss)....................    81,041                98,890             93,464             79,958        (180,508)
Net interest and other expense.............   (42,288)              (56,472)           (64,028)           (42,049)        (55,295)
                                             ---------          -----------         ----------        -----------       ---------

Income (loss) before provision for income
taxes and extraordinary items .............    38,753                42,418             29,436             37,909        (235,803)
Provision for income taxes.................    15,784                14,309              2,653              4,126           3,067
                                             ---------          -----------         ----------        -----------       ---------

     Income (loss) before extraordinary
       items ..............................    22,969                28,109             26,783             33,783        (238,870)
     Extraordinary items (3) ..............        --                    --                 --            (13,100)          7,698
                                             ---------          -----------         ----------        -----------       ---------

Net income (loss)..........................  $  22,969          $    28,109         $   26,783        $    20,683       $(231,172)
                                             =========          ===========         ==========        ===========       =========
Net income per common share(4).............  $     .51                   --                 --                 --              --
                                             =========          ===========         ==========        ===========       =========
Pro forma net income per common share(4)...         --          $       .74                 --                 --              --
                                             =========          ===========         ==========        ===========       =========
OTHER DATA:
EBITDA(5) (6)..............................   $133,420          $   119,415         $  112,642        $    98,563       $   5,558
EBITDA Margin(5)...........................       37.1%                34.0%              33.2%              32.8%           31.5%

Net income as adjusted, per common share(5)   $   1.00                   --                 --                 --              --
Capital expenditures.......................   $  9,727          $     7,675         $    4,859        $     8,326       $  12,457
Net cash provided by operating activities..     66,030               60,065             26,778             46,268          23,277
Net cash used in investing activities......     19,447               25,700             50,557             22,614          54,995
Net cash (used in) provided by financing
     activities............................    (46,946)             (34,441)            24,384            (33,361)         32,055
Number of daily newspapers, end of period..         18                   18                 17                 16              15
Number of non-daily publications, end of
     period................................        141                  118                114                 68              65
BALANCE SHEET DATA:
Total current assets.......................   $ 77,833           $   66,035          $  73,456        $    56,959       $  57,901
Property, plant and equipment, net.........     92,620               91,713             99,036            100,842         104,958
Total assets...............................    327,931              305,985            306,434            245,290         244,428
Total current liabilities, less current
   maturities of long-term debt............     39,034               37,720             44,582             33,734          31,028
Total debt, including current maturities...    490,774              654,825            689,256            664,298         625,317
Stockholders'/members' deficit(7)..........   (266,242)            (423,658)          (451,767)          (478,548)       (437,634)

</TABLE>
                                       13
<PAGE>
----------------------
(1)      As a  result  of a  restructuring  of the  Company's  debt in 1993  and
         management's   assessment  of  certain  of  the   Company's   newspaper
         properties,  the Company  reduced the carrying  value of its intangible
         assets  related to prior  acquisitions  and reflected this charge as an
         unusual item in the financial statements.

(2)      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.

(3)      Extraordinary   items   represent  gains  or  losses  related  to  debt
         extinguishment.  In connection with certain  refinancings,  the Company
         recognized  a net  gain of $7.7  million  in 1993  and a loss of  $13.1
         million in 1994 on extinguishment of debt.

(4)      Effective  December 31, 1997, the Company  adopted the  requirements of
         Financial  Accounting  Standards Board Statement No. 128, "Earnings Per
         Share."  Statement 128 requires the disclosure of 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 new pronouncement had no dilutive
         effect  on  earnings  per  share in 1997 and no impact on the pro forma
         earnings  per share  amount  for 1996.  Pro forma 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.

(5)      The 1997 other data excludes the effect of the special  charge of $31.9
         million  and  reflects  (i) the  interest  savings  resulting  from the
         initial  public  offering and the Company's  amended bank agreement for
         the  period  prior to May 13,  1997;  (ii) tax  saving  strategies  the
         Company implemented January 1, 1998, as if they had been implemented at
         January 1, 1997;  and (iii) shares  outstanding  of 48,437,500  for the
         year ended December 31, 1997.

(6)      EBITDA is  defined by the  Company  as  operating  income  (loss)  plus
         depreciation,  amortization and other non-cash  charges.  EBITDA is not
         intended  to  represent  cash flow from  operations  and  should not be
         considered  as an  alternative  to operating or net income  computed in
         accordance with generally accepted accounting  principles ("GAAP"),  as
         an indicator of the Company's operating performance,  as an alternative
         to cash from operating  activities  (as  determined in accordance  with
         GAAP) or as a measure 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 using the same methods;  therefore,  the
         EBITDA figures set forth above may not be comparable to EBITDA 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"  and Note 4
         of "Notes to Consolidated Financial Statements."

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

                                       14
<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 principal business is publishing newspapers in the United
States,  where its  publications  are primarily small  metropolitan and suburban
daily newspapers and suburban and community non-daily newspapers.  The Company's
revenues are derived primarily from advertising, paid circulation and commercial
printing.

         As of  December  31,  1997,  the  Company  owned and  operated 18 daily
newspapers  and  141  non-daily  publications  strategically  clustered  in five
geographic areas: Connecticut; Ohio; Philadelphia and its surrounding areas; the
greater St. Louis area;  and central New England.  As of December 31, 1997,  the
Company  had  total  paid  daily  circulation  of  532,472,  total  paid  Sunday
circulation of 511,966 and total  non-daily  distribution of  approximately  2.9
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  1997,  the  Company
successfully completed 9 strategic acquisitions, acquiring six daily newspapers,
73 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  small  metropolitan  and  suburban  daily
newspapers  and  suburban  and  community  non-daily  newspapers  are  generally
effective in addressing the needs of local readers and advertisers  under widely
varying  economic  conditions.  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.

RECENT EVENTS AND TRENDS

         On December 12, 1997, the Company acquired the LADUE NEWS, Ladue, MO, a
44  times-per-year  newspaper  serving the affluent  suburbs west of St.  Louis.
LADUE NEWS has circulation of approximately  40,000,  reaching more than 200,000
residents in the affluent  communities west of St. Louis, and features  coverage
of  society,  fashion,   entertainment,   dining,   distinctive  properties  and
gardening.  Also  included  in the  acquisition  were DIRECT  DECOR,  a biannual
magazine covering home decor, and GENTLEMEN'S CLUB, a recently launched, monthly
men's style  magazine,  both of which are  distributed to readers of LADUE NEWS;
and PERFORMANCE NOTES, a playbill for St. Louis-area,  not-for-profit performing
arts organizations.

         On December 22, 1997,  the Company  completed  its  acquisition  of the
InterCounty  Newspaper  Group from AUS, Inc., Mt.  Laurel,  NJ. The  InterCounty
Newspaper  Group  includes 17 weekly  newspapers  in suburban  Philadelphia  and
central and southern New Jersey with total weekly  distribution of approximately
100,000.  Also included in the acquisition were Nittany Valley Offset, a premium
quality sheet-fed printing company in State College, PA, and InterPrint, Inc., a
commercial  printing  company in  Bristol,  PA,  which  prints  the  InterCounty
newspapers.

                                       15
<PAGE>

         On January 2, 1998, the Company acquired the assets of HVM, L.L.C., New
Milford, CT. Included in the acquisition were eight weekly newspapers, two TMC's
(Total Market  Coverage  vehicles) and three  monthly  magazines,  with combined
distribution of approximately  150,000.  HVM, L.L.C.  includes Housatonic Valley
Publishing,  serving primarily Fairfield and Litchfield Counties, CT, and Putnam
County, NY; and Minuteman Newspapers, serving Westport and Fairfield, CT.

         On March  9,  1998,  the  Company  acquired  THE  SARATOGIAN,  Saratoga
Springs,  NY, and a weekly newspaper,  the COMMUNITY NEWS, serving Clifton Park,
NY, from the Gannett  Foundation.  THE  SARATOGIAN,  founded in 1855, has 11,831
daily and 13,822 Sunday  circulation,  as reported in the September 30, 1997 ABC
Fas-Fax.  COMMUNITY NEWS has weekly  distribution of approximately  26,000.  THE
SARATOGIAN and COMMUNITY NEWS acquisition created the Company's sixth geographic
cluster, in the Capital-Saratoga Region of New York, where the Company also owns
THE RECORD, located in Troy, NY.

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 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  website
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.

                                       16
<PAGE>

         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.  If  the  Company  had
implemented its corporate  restructuring  which was implemented January 1, 1998,
as of January 1, 1997, the Company's effective tax rate for 1997 would have been
approximately 37%.

         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 (1) 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.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

         REVENUES. In 1996, revenues increased $12.1 million, or 3.6%, to $351.1
million  from $339.0  million in 1995,  primarily  as a result of  acquisitions.
Revenues in 1995 reflect the results of operations  since the 1995  acquisitions
of the  New  England  Acquisition  Corp.  (42  non-daily  publications  and  one
commercial  printing company),  THE HERALD and THE MIDDLETOWN PRESS, as compared
to the full 12 months of results for each of these  acquired  companies in 1996.
Newspaper  revenues  for  operations  owned  during  the full 12  months in both
periods were  basically  flat, at $304.2  million in 1995 and $304.0  million in
1996. Advertising revenues increased $7.5 million, or 3.0%, to $257.0 million in
1996 from $249.5  million in 1995. For  newspapers  operated  during the full 12
months in both periods,  advertising revenues declined 1.0% to $231.7 million in
1996 from $234.1 million in 1995. In 1996,  advertising revenues were negatively
impacted by record-breaking snowfalls in the first quarter in the eastern United
States and the soft  retail  environment  in such  areas.  Circulation  revenues
increased $6.0 million,  or 8.1%, to $79.8 million in 1996 from $73.8 million in
1995.  For  newspapers  operated  during  the full 12  months  in both  periods,
circulation revenues increased $2.2 million, or 3.3%, from $70.1 million in 1995
to $72.3 million in 1996, as a result of increased  subscription and single copy

------------
1   EBITDA  is  defined  by  the  Company  as  operating   income   (loss)  plus
    depreciation,  amortization  and  other  non-cash  charges.  EBITDA  is  not
    intended  to  represent  cash  flows  from  operations  and  should  not  be
    considered  as an  alternative  to  operating  or  net  income  computed  in
    accordance   with  GAAP,  as  an  indicator  of  the   Company's   operating
    performance,  as an alternative to cash flows from operating  activities (as
    determined  in  accordance  with  GAAP) or as a measure  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 using the same methods;  therefore,  the EBITDA figures set
    forth above may not be comparable to EBITDA reported by other companies.

                                       17
<PAGE>

rates.  Commercial  printing and other revenues decreased $1.2 million, or 8.0%,
from  $15.6  million  in  1995 to  $14.4  million  in  1996,  reflecting  highly
competitive conditions in the commercial printing industry offset, in part, by a
full year of revenues in 1996  attributable to the commercial  printing business
acquired in 1995. Commercial printing and other revenues represented 4.1% of the
Company's revenues in 1996.

         SALARIES AND EMPLOYEE BENEFIT EXPENSES.  In 1996, salaries and employee
benefit expenses accounted for 31.8% of the Company's  revenues,  as compared to
32.6% in 1995.  Salaries and employee benefit expenses increased $1.0 million to
$111.6 million in 1996 from $110.6 million in 1995, primarily as a result of the
1995  acquisitions,  which added  approximately  450 full-time and 240 part-time
employees.  For  operations  owned  during  the full 12 months in both  periods,
salaries and employee benefit expenses decreased $5.2 million,  or 5.1%, in 1996
as compared to 1995,  due to a reduction  in the number of  employees  resulting
from operating efficiencies.

         NEWSPRINT,  INK AND  PRINTING  CHARGES.  In  1996,  newsprint,  ink and
printing charges accounted for 14.3% of the Company's  revenues,  as compared to
14.2% in 1995.  Newsprint,  ink and printing charges increased $1.9 million,  or
3.9%,  in 1996 to $50.1  million from $48.2  million in 1995, as a result of the
1995  acquisitions.  For  operations  owned  during  the full 12  months in both
periods,  newsprint,  ink and printing  charges were  basically  flat,  at $43.5
million  in 1995 and $43.4  million in 1996,  primarily  due to an  increase  of
approximately  3.0%  in  newsprint  expense  (excluding  paper  consumed  in the
Company's  commercial  printing  operations)  offset by a decrease in commercial
printing expense.  The 3.0% increase in newsprint expense is a result of a 13.0%
increase in the average price of newsprint  offset by a decrease in volume.  The
consumption decrease was primarily related to web-width reductions at a majority
of  the   Company's   newspapers   which  reduced  page  sizes  and  produced  a
corresponding decrease in newsprint consumption of approximately 8%. The Company
also  reduced  fringe  circulation,  as it is the  Company's  belief  that  such
circulation does not provide adequate response for advertisers.

         SELLING,   GENERAL  AND  ADMINISTRATIVE  EXPENSES.  In  1996,  selling,
general,  and  administrative  expenses  accounted  for  8.8%  of the  Company's
revenues,  as compared  to 8.5% in 1995.  Selling,  general  and  administrative
expenses  increased  $2.3 million,  or 8.1%, to $31.0 million in 1996 from $28.7
million in 1995, primarily due to acquisitions.  For operations owned during the
full 12 months in both periods,  selling,  general and  administrative  expenses
increased $413,000, or 1.5%, from $26.7 million to $27.1 million.

         DEPRECIATION  AND  AMORTIZATION  EXPENSE.  In  1996,  depreciation  and
amortization  expense accounted for 5.8% of the Company's revenues,  as compared
to 5.7% in 1995.  Depreciation and amortization  expense increased $1.3 million,
or 7.0%,  to $20.5  million in 1996 from $19.2  million in 1995,  primarily as a
result of acquisitions made during the period.

         OTHER  EXPENSES.  In 1996,  other  expenses  accounted for 11.1% of the
Company's  revenues,  as compared  to 11.4% in 1995.  Other  expenses  increased
$233,000,  or .6%,  to $39.0  million  in 1996 from $38.8  million in 1995.  For
operations  owned  during  the full 12 months in both  periods,  other  expenses
decreased $2.5 million,  or 7.1%, from $35.1 million to $32.6 million  primarily
as a result of cost controls related to the Company's clustering strategy.

         OPERATING  INCOME.  Operating income increased 5.8% to $98.9 million in
1996 from $93.5 million in 1995. As a percentage of revenues,  operating  income
increased  from  27.6%  in  1995 to  28.2%  in 1996  primarily  for the  reasons
discussed above.

         NET INTEREST  EXPENSE.  Net interest expense was $56.3 million in 1996,
an 11.1%  decrease  from $63.3  million in 1995.  The  decrease of $7.0  million
reflected a decrease in average  borrowing  rates and a decrease in average debt
outstanding during 1996 of approximately $18.0 million.

         PROVISION FOR INCOME TAXES. The Company reported effective tax rates of
9.0% in 1995 and 33.7% in 1996,  which were lower than the combined  federal and
state statutory rates. In both years,  this was primarily due to the recognition
of tax  benefits  which had been  offset by a  valuation  allowance  in previous
years. See Note 10 of "Notes to Consolidated  Financial Statements." The Company

                                       18
<PAGE>
expects to report an  effective  tax rate which is higher  than those  effective
rates  previously  reported,  but  lower  than the  combined  federal  and state
statutory  rates as a result of the  various  tax  strategies  which the Company
implemented effective January 1, 1998.

LIQUIDITY AND CAPITAL RESOURCES

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

         CASH FLOWS FROM OPERATIONS.  Net cash provided by operating  activities
increased  by  approximately  $6.0  million to $66.0  million in 1997.  Net cash
provided by operating  activities  in 1997  primarily  resulted  from net income
before non-cash  expenses (i.e.,  depreciation and  amortization,  provision for
losses on accounts  receivable,  non-cash  portion of the 1997  special  charge,
increase in income taxes payable and deferred  income  taxes) of $75.4  million,
offset  by a  decrease  resulting  from  variations  in  other  operating  items
(including accounts  receivables,  income taxes payable and inventories) of $9.4
million.

         CASH  FLOWS  FROM  INVESTING  ACTIVITIES.  Net cash  used in  investing
activities  decreased  $6.3 million to $19.4  million in 1997.  This decrease is
primarily due to a decrease of $7.4 million in the  Company's  investment in the
purchase of newspaper  properties.  In addition,  the Company  increased capital
expenditures by approximately  $2.1 million,  which was offset by an increase of
approximately  $900,000  in  proceeds  from  the  sale of  property,  plant  and
equipment.   The  Company   has  a  capital   expenditure   program   (excluding
acquisitions)  of  approximately  $11.0 million planned for 1998, which includes
spending on  technology,  including  prepress  and  business  systems;  computer
hardware; other machinery and equipment; plants and properties; and 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 1998 capital  expenditure program will be
funded  from  operating  cash flow.  The Company has been able to maintain a low
ratio of capital  expenditures to depreciation and amortization  expenses due to
its: (i) maintenance  program for existing presses and facilities;  (ii) ability
to transfer  redundant  presses,  mechanical  and computer  equipment  and other
capital items among the Company's  locations;  and (iii)  strategy of evaluating
acquisitions  partially  based on the condition of the facilities and production
equipment.  In 1997,  the Company had capital  expenditures  of $9.7 million and
depreciation  and  amortization  of $20.5 million.  The success of the Company's
operations  in   Philadelphia   and   surrounding   areas  may  necessitate  the
construction  of a centralized  production  facility  within the next two years.
Costs for this facility are estimated to be  approximately  $25.0  million.  The
Company expects to fund this construction project with cash flow from operations
and borrowings.

         The Company has  completed an  assessment of the effect of year 2000 on
its computer  systems and production  equipment and has determined  that it will
have to modify or replace portions of its computer  systems.  The Company has an
action plan in place. The Company's  capital  expenditure  program also includes
amounts  necessary  to have all of its systems  Year 2000  compliant  by June 1,
1999.

         CASH  FLOWS  FROM  FINANCING  ACTIVITIES.  Net cash  used in  financing
activities increased $12.5 million from 1996 to 1997. The 1997 activity reflects
net proceeds of  approximately  $119.0  million from the sale of Common Stock in
the Company's initial public offering, which were used to repay a portion of the
amounts  outstanding under the Senior Secured Term Loans (the "Term Loan") and a
Senior Secured  Revolving  Credit Facility (the "Revolver")  (collectively,  the
"Senior  Facilities")  and to retire all of the outstanding  principal amount of
and accrued and unpaid interest on the Company's subordinated notes.

         In May 1997, the Company amended and restated its credit  agreement (as
amended,  the "Credit  Agreement") to amend the terms of the Senior  Facilities.
The Credit  Agreement  provides for,  among other things,  a $398.0 million Term
Loan, a $235.0  million  Revolver and a reduction in the  Applicable  Margin (as
defined in the Credit Agreement).
                                       19
<PAGE>

         The amounts  outstanding  under the Senior  Facilities bear interest at
(i) 1-1/2% to 1/2% above the London Interbank Offered Rate ("LIBOR") or (ii) the
higher of 0% to 1/4%  above  the  higher  of the  Prime  Rate or 1/2%  above the
Federal Funds Rate (collectively the "Base Rate"). The interest rate spreads are
dependent upon the debt to 12 months trailing cash flow ratio (as defined in the
Credit Agreement) and reduce as such ratio declines.  The Term Loan provides for
quarterly  repayment of principal  as  scheduled  in the Credit  Agreement.  The
Revolver has a step-down of  availability  of $40.0  million on each of December
31, 2000, 2001 and 2002. The final $115.0 million of  availability  expires and,
if outstanding, is due on December 31, 2003.

         As of December 31, 1997, the Company had outstanding indebtedness,  due
and payable in installments  through 2003, of approximately  $490.8 million,  of
which  $123.0  million  was  outstanding  under the  Revolver.  There was $112.0
million of unused and available balance under the Revolver at December 31, 1997.

         The Company  manages its  exposure to  interest  rate  fluctuations  by
entering into interest rate protection  agreements.  If the Company's Total Debt
Ratio (as defined in the Credit  Agreement)  is 3.0 or  greater,  the Company is
required  to  have  interest  rate  protection  for a  minimum  of  50%  of  its
outstanding  balance  under the  Senior  Facilities.  The  Company  has in place
interest swap and collar agreements. During 1997, the Company's weighted average
effective interest rate on its outstanding balance was approximately 7.6%, which
takes into account the interest  rate  protection  agreements  in effect at that
time.

         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.

         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.

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.

                                       20
<PAGE>
INDEBTEDNESS

         The Company has a substantial  amount of  indebtedness.  As of December
31, 1997, the consolidated  indebtedness of the Company was approximately $490.8
million,  which  represents a multiple of 3.68 times the Company's twelve months
trailing  EBITDA of  approximately  $133.4  million  (excluding the 1997 special
charge). As of December 31, 1997, the Company had a net stockholders' deficit of
approximately $266.2 million and a total capitalization of $224.5 million,  and,
thus, the percentage of the Company's  indebtedness to total  capitalization was
218.6%.  The  Company  may incur  additional  indebtedness  to fund  operations,
capital expenditures or future acquisitions.

         The Company believes that cash provided by operating activities will be
sufficient to fund its  operations  and to meet payment  requirements  under its
Term 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 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 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.

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.

                                       21
<PAGE>

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  $33.3 million in 1997,  which was
approximately  9.6% of the Company's  newspaper  revenues.  In 1997, the Company
consumed  approximately  61,500 metric tons of newsprint.  The average price per
metric ton of newsprint based on East Coast transaction prices in 1997, 1996 and
1995 was $555, $645 and $668, respectively, as reported by the trade publication
PULP AND PAPER  WEEKLY.  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,   Abitibi  Consolidated  and  Kruger  Inc.
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  reflected  increases  of
approximately  34% and 13%,  respectively,  in 1995 and 1996 and a  decrease  of
approximately  18% in 1997,  in each case  compared  to the  previous  year.  In
January 1998,  certain newsprint  suppliers  announced an April 1998 increase of
$50 per metric ton. In addition,  in February 1998, a major supplier announced a
price  increase of $40 per metric ton effective as of April 1, 1998. The Company
believes that if any price  increase is sustained in the  industry,  the Company
will also be  impacted  by such  increase.  The  Company  is  unable to  predict
whether,  or to  what  extent,  any  increase  will  be  sustained.  Significant
increases  in  newsprint  costs  could  have a  material  adverse  effect on the
financial  condition or results of operations of the Company.  The Company seeks
to manage the effects of increases in prices of newsprint  through a combination
of, among other things, technology improvements, including web-width reductions,
inventory  management and  advertising  and  circulation  price  increases.  The
Company also has reduced fringe  circulation in response to increased  newsprint
prices, as it is the Company's experience that such circulation does not provide
adequate response for advertisers.

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

         Not currently applicable to the Company.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEX TO FINANCIAL STATEMENTS

                                                                     PAGE
                                                                    ------
FINANCIAL STATEMENTS:

Report of Independent Auditors...................................    23
Consolidated Balance Sheets......................................    24
Consolidated Statements of Income................................    25
Consolidated Statements of Stockholders'/Members' Deficit........    26
Consolidated Statements of Cash Flows............................    27
Notes to Consolidated Financial Statements.......................    28

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.

                                       22
<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, 1997 and 1996, 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, 1997. 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, 1997 and 1996 and the consolidated
results of its  operations and its cash flows for each of the three years in the
period ended December 31, 1997, 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 6, 1998
MetroPark, New Jersey

                                       23
<PAGE>

<TABLE>
<CAPTION>

                            JOURNAL REGISTER COMPANY
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                  December 31,
                                                                                      -------------------------------
                                                                                          1997             1996
                                                                                      -------------    --------------
<S>                                                                                       <C>                  <C>

ASSETS
Current assets:
  Cash and cash equivalents                                                           $                $
                                                                                            8,183             8,546

  Accounts receivable, less allowance for doubtful accounts of $4,055 in
    1997 and $4,173 in  1996                                                               48,675            44,064
  Inventories                                                                               9,865             6,204
  Deferred income taxes                                                                     6,444             2,951
  Other current assets                                                                      4,666             4,270
                                                                                      -------------    --------------
Total current assets                                                                       77,833            66,035
Property, plant and equipment:
  Land                                                                                      7,567             7,260
  Buildings and improvements                                                               60,685            59,001
  Machinery and equipment                                                                 148,605           135,937
                                                                                      -------------    --------------
                                                                                          216,857           202,198
  Less accumulated depreciation                                                          (124,237)         (110,485)
                                                                                      -------------    --------------
Property, plant and equipment, net                                                         92,620            91,713
Deferred income taxes                                                                          --               223
Intangible and other assets, net of accumulated amortization of $23,973 in 1997
   and $17,611 in 1996                                                                    157,478           148,014
                                                                                      =============    ==============
Total assets                                                                          $                $
                                                                                          327,931           305,985
                                                                                      =============    ==============
LIABILITIES AND STOCKHOLDERS'/MEMBERS' DEFICIT
Current liabilities:
  Current maturities of long-term debt                                                $    57,060       $    54,174
  Accounts payable                                                                          9,277             7,200
  Income taxes payable                                                                        535             1,196
  Accrued interest                                                                          5,067             7,498
  Deferred subscription revenue                                                             6,539             5,879
  Other accrued expenses and current liabilities                                           17,616            15,946
                                                                                      -------------    --------------
Total current liabilities                                                                  96,094            91,893

Senior debt, less current maturities                                                      433,714           566,390
Subordinated notes and accrued interest due to members                                         --            33,319
Deferred income taxes                                                                       8,049                --
Accrued retiree benefits and other liabilities                                             20,641            11,603
Income taxes payable                                                                       35,675            26,438
Commitments and contingencies
Stockholders'/Members' deficit:
  Common stock, $.01 par value per share, 300,000,000 shares authorized
    and 48,437,500 shares issued and outstanding                                              484                --
  Membership interests                                                                         --             2,104
  Additional paid-in capital                                                              358,234           222,167
  Accumulated deficit                                                                    (624,960)         (647,929)
                                                                                      -------------    --------------
Net stockholders'/members' deficit                                                       (266,242)         (423,658)
                                                                                      -------------    --------------
Total liabilities and stockholders'/members' deficit                                  $                $
                                                                                          327,931           305,985
                                                                                      =============    ==============

                                             SEE ACCOMPANYING NOTES.
</TABLE>
                                       24
<PAGE>

<TABLE>
<CAPTION>



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


                                                                        Year Ended December 31,
                                                     -----------------------------------------------------
                                                         1997               1996              1995
                                                     --------------    ----------------   ----------------
<S>                                                   <C>                 <C>                <C>

Revenues:
   Advertising                                        $   266,914        $   256,971       $   249,534
   Circulation                                             80,211             79,776            73,797
                                                     --------------    ----------------   ----------------
Newspaper revenues                                        347,125            336,747           323,331
Commercial printing and other                              12,282             14,373            15,626
                                                     --------------    ----------------   ----------------
                                                          359,407            351,120           338,957

Operating expenses:
   Salaries and employee benefits                         114,302            111,626            110,651
   Newsprint, ink and printing charges                     40,452             50,110             48,243
   Selling, general and administrative                     30,450             30,993             28,678
   Depreciation and amortization                           20,480             20,525             19,178
   Other                                                   40,783             38,976             38,743
   Special charge                                          31,899                 --                --
                                                     --------------    ----------------   ----------------
                                                          278,366            252,230            245,493
                                                     --------------    ----------------   ----------------
Operating income                                           81,041             98,890             93,464

Other income (expense):
   Interest expense                                       (42,282)           (56,410)          (63,468)
   Interest income                                             46                107               158
   Other                                                      (52)              (169)             (718)
                                                     --------------    ----------------   ----------------
Income before provision for income taxes                   38,753             42,418            29,436
Provision for income taxes                                 15,784             14,309             2,653
                                                     --------------    ----------------   ----------------
Net income                                            $    22,969       $     28,109      $     26,783
                                                     ==============    ================   ================
Net income per common share:
  Basic                                              $        .51                 --                --
  Diluted                                            $        .51                 --                --
  Pro forma (unaudited)                                        --       $        .74                --

</TABLE>

                             SEE ACCOMPANYING NOTES.






                                       25

<PAGE>

<TABLE>
<CAPTION>

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

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

Balance at January 1, 1995                    $  2,104        $ 222,167       $(702,821)            $(478,550)
Net income                                          --           26,783          26,783                26,783
                                              ---------       ----------      ----------            -----------
Balance at December 31, 1995                     2,104          222,167        (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)
                               ===========     ==========      ==========     ===========           =============

</TABLE>

                             SEE ACCOMPANYING NOTES.













                                       26
<PAGE>


<TABLE>
<CAPTION>


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

                                                                                          Year Ended December 31,
                                                                   --------------------------------------------------------------
                                                                       1997                  1996                    1995

                                                                   -------------        -------------       ----------------
<S>                                                                    <C>                       <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                         $22,969                 $ 28,109                $26,783
Adjustments to reconcile net income to net cash
 provided by operating activities:
    Provision for losses on accounts receivable                      3,291                    3,914                  2,872
    Depreciation and amortization                                   20,480                   20,525                 19,178
    Net (gain) loss on disposal of property, plant and
      equipment and other assets                                      (464)                    (110)                   263
    Non-cash portion of special charge                              15,400                       --                     --
     Increase in income taxes payable                                8,526                   14,693                    497
    (Decrease) increase in accrued interest                         (2,431)                  (2,068)                 8,760
    Increase (decrease) in deferred taxes                            4,779                   (4,836)                  (483)
    (Increase) in accounts receivable                               (4,546)                  (3,972)                (6,947)
    (Increase) decrease in inventories                              (2,431)                  10,476                 (7,209)
    Increase (decrease) in accounts payable                          2,001                   (2,664)                (5,320)
    Increase (decrease) in deferred subscription revenue               310                     (401)                   183
    Increase (decrease) in accrued retiree benefits and
      other liabilities                                              1,964                   (1,227)                (1,803)
    (Increase) decrease in other assets, net of increase
      (decrease) in other liabilities                               (3,818)                  (2,374)                (9,997)
                                                                   --------                ---------               -------
Net cash provided by operating activities                           66,030                   60,065                 26,777

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment                          (9,727)                  (7,675)                (4,859)
Net proceeds from sale of property, plant and equipment and
  other assets                                                       1,186                      237                     41
Purchase of newspaper properties, net of cash acquired             (10,906)                 (18,262)               (45,739)
                                                                  ---------                ---------             -----------
Net cash used in investing activities                              (19,447)                 (25,700)               (50,557)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of debt:
    Senior facilities                                                4,000                    7,000                 133,000
    Accretion on subordinated notes                                  1,205                    3,029                   2,746
Repayments of:
    Senior debt                                                   (136,674)                 (44,470)                (29,000)
    Subordinated notes                                             (34,524)                      --                 (82,362)
Net proceeds from issuance of common stock                         119,047                       --                      --
                                                                 ----------                ----------              ---------
Net cash (used in) provided by financing activities                (46,946)                 (34,441)                 24,384
                                                                  ---------                ----------              ----------
(Decrease) increase in cash and cash equivalents                      (363)                     (76)                    604
Cash and cash equivalents, beginning of year                         8,546                    8,622                   8,018
                                                                  ---------                ----------              ----------
Cash and cash equivalents, end of year                            $  8,183                 $  8,546                $  8,622
                                                                  ========                 ==========              ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
    Interest                                                      $  44,713                $ 54,244                $ 51,673
    Income taxes                                                      2,479                   4,452                   1,940

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND
   FINANCING ACTIVITIES
Issuance of additional subordinated notes                         $   1,205                $  3,029                $  2,746
Issuance of  note payable in connection with
   an acquisition                                                     2,884                      --                      --

</TABLE>

                                             SEE ACCOMPANYING NOTES.

                                       27
<PAGE>



                            JOURNAL REGISTER COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1997


1.       ORGANIZATION AND BASIS OF PRESENTATION

         The  accompanying   consolidated  financial  statements include Journal
Register  Company  (the  "Company")  and all of its wholly  owned  subsidiaries,
Journal  Newspapers,  Inc.  ("JNI"),  Journal  Company,  Inc.  ("JCI"),  Journal
Register   Newspapers,   Inc.   ("JRNI")  and  INS  Holdings,   Inc.   ("INSI"),
(collectively,  the "Company").  The Company was  incorporated on March 11, 1997
and became a publicly traded company in May of 1997.

         Effective   December  21,  1994,   JNI  and  JCI   (collectively,   the
"Companies") entered into an exchange agreement with the Company whereby Journal
Register  Company,  LLC,  ("JRC,  LLC") issued 2 million  membership  interests,
representing all of the issued and outstanding  membership interests in JRC, LLC
to  the  stockholders  of JNI  and  JCI in  exchange  for  all  the  issued  and
outstanding  common stock of the  Companies.  Since the combined  Companies were
under common control,  this transaction was accounted for in a manner similar to
a pooling of interests.

         In March of 1997,  certain entities  (namely,  JRC, LLC, JRNI and INSI)
were combined with the 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.

         The Company primarily  publishes small  metropolitan and suburban daily
and suburban and community non-daily  newspapers serving markets in Connecticut,
Ohio,  Philadelphia  and its surrounding  areas,  the greater St. Louis area and
central New England 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, 1997.

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.

                                       28

<PAGE>



                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         INVENTORIES

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

         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, 1997 and 1996 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 the beginning of 1996, the Company  adopted SFAS No. 121 "ACCOUNTING
FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF".  The  adoption  of SFAS No. 121 did not  materially  impact  the  financial
statements.   In  accordance   with  SFAS  No.  121,  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 Loan 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.

                                       29

<PAGE>


                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


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.  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

         Effective  December 31, 1997, the Company  adopted the  requirements of
Financial  Accounting  Standards Board Statement No. 128,  "Earnings Per Share".
Statement  128  requires  the  disclosure  of 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 new
pronouncement had no impact on the pro forma earnings per share amount for 1996.

         CONCENTRATION OF RISK

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


                                       30
<PAGE>
                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

3.       INTANGIBLE AND OTHER ASSETS

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

<TABLE>
<CAPTION>

                                                                               1997                    1996
                                                                        --------------------    -------------------
<S>                                                                            <C>                    <C>

Excess of cost over the value of identifiable net
    assets and subscriber lists                                                $138,370,000           $125,847,000
Prepaid pension cost                                                              7,784,000              7,153,000
Other                                                                            11,324,000             15,014,000
                                                                        --------------------    -------------------
                                                                               $157,478,000           $148,014,000
                                                                        ====================    ===================
</TABLE>

4.       LONG-TERM DEBT

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

<TABLE>
<CAPTION>
                                                                           1997                   1996
                                                                    --------------------   --------------------
<S>                                                                  <C>                        <C>

Senior Secured Term Loans                                                  $364,890,000           $501,530,000
Senior Secured Revolving Credit Facility                                    123,000,000            119,000,000
Subordinated Notes and accrued interest due to members                               --             33,319,000
Other debt                                                                    2,884,000                976,000
                                                                    --------------------   --------------------
                                                                            490,774,000            654,825,000
Less current portion                                                       (57,060,000)           (54,174,000)
                                                                    --------------------   --------------------
                                                                           $433,714,000           $600,651,000
                                                                    ====================   ====================
</TABLE>

         Effective December 21, 1994 (the "Effective Date"), the Company entered
into a definitive  credit  agreement  (as amended,  the "Credit  Agreement")  to
obtain  Senior  Secured  Term  Loans  (the  "Term  Loan")  and a Senior  Secured
Revolving Credit Facility (the "Revolver"). In May 1997, the Company amended and
restated  the Credit  Agreement  to amend  certain  terms of a Term Loan and the
Revolver (collectively,  the "Senior Facilities").  The amended Credit Agreement
provides for the $398.0  million Term Loan and a $235.0  million  Revolver.  The
Company had $112.0  million and $26.0  million  unused and  available  under the
Revolver at December 31, 1997 and 1996,  respectively.  The Term Loan matures in
May 2003 and the Revolver matures on December 31, 2003.

         During 1997, the Company had net borrowings  under the Revolver of $4.0
million. The Company borrowed  approximately $11.0 million under the Revolver to
fund the acquisitions of the InterCounty Newspaper Group and THE LADUE NEWS (see
Note 12,  Acquisitions)  which was offset by $7.0 million of net paydowns of the
Revolver. During 1996, the Company had net borrowings under the Revolver of $7.0
million.  In 1996, the Company  borrowed  approximately  $18.0 million under the
Revolver to fund the  acquisition  of the TAUNTON  DAILY  GAZETTE  (see Note 12,
Acquisitions) which was offset by $11.0 million of net paydowns of the Revolver.

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

         1998...............................          $57,060,000
         1999...............................           65,730,000
         2000...............................           74,650,000
         2001...............................           83,340,000
         2002...............................           78,820,000
         2003...............................            5,290,000

                                       31
<PAGE>


                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

4.       LONG-TERM DEBT (CONTINUED)

         The Revolver has a step-down of  availability  of $40.0 million on each
of December 31, 2000,  2001 and 2002. The final $115.0  million of  availability
expires and, if outstanding, is due on December 31, 2003. The Term Loan provides
for quarterly  repayment of principal as scheduled in the Credit  Agreement.  In
addition, commencing in the year 2000, the Credit Agreement requires a mandatory
prepayment  of the debt equal to 50.0% of Excess  Cash Flows (as  defined in the
Credit 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 Senior  Facilities bear interest at
(i) 1/2% to 1-1/2% above the London Interbank  Offered Rate ("LIBOR") or (ii) 0%
to 1/4% above the higher of the Prime Rate or 1/2% above the Federal  Funds Rate
(collectively,  the "Base Rate").  The interest rate spreads are dependent  upon
the debt to twelve  months  trailing  cash flow ratio (as  defined in the Credit
Agreement)  and  reduce  as such  ratio  declines.  The Term Loan  provides  for
quarterly  repayment of principal  as scheduled in the Credit  Agreement.  As of
December  31, 1997 and 1996,  the  Company  was paying .75% and 2% above  LIBOR,
respectively.  At December 31, 1997 and 1996, the Company had outstanding $472.9
million and $615.5  million of LIBOR loans and $15.0 million and $5.0 million of
Base Rate loans,  respectively.  The average all-in interest rates on the Senior
Facilities  were  approximately  7.6% and 8.4% for the years ended  December 31,
1997 and 1996,  respectively.  The average  all-in  interest  rates  reflect the
effects of the IRPAs.

         An annual commitment fee of 1/4% - 3/8% (depending on the ratio of debt
to twelve  months  trailing  cash flow,  as defined by the Credit  Agreement) is
incurred  on the unused  portion of the  commitment  under the  Revolver.  As of
December 31, 1997, the Company's commitment fee was 1/4%.

         The Credit  Agreement  requires the Company to maintain  interest  rate
protection for at least fifty percent of the outstanding debt in order to manage
interest  rate  risk.  In  accordance   with  this   requirement,   the  Company
participates in various interest rate protection  agreements whereby the Company
has assumed a fixed rate of interest and a counterparty has assumed the variable
rate (the  "SWAP").  The  Company has also  entered  into  interest  rate collar
agreements.  The IRPAs are with major financial  institutions which are expected
to fully perform under the terms of the agreements thereby mitigating the credit
risk from the  transactions.  The  notional  amounts  of such  IRPAs are used to
measure  interest to be paid or received  with  respect to such IRPAs and do not
represent the amount of exposure to credit risk. 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. Under the collar agreements,  the
Company  assumes  the fixed rate  position on an agreed  upon  ceiling  rate and
receives  payment if the LIBOR  exceeds  such  fixed  rate.  Alternatively,  the
Company assumes the LIBOR fixed rate position and makes payments to the banks if
LIBOR is below the fixed floor rate.  No payments are made if the LIBOR  remains
between the fixed ceiling and fixed floor rates.

         Interest  rate   protection   agreements   relating  to  the  Company's
borrowings  include a SWAP  agreement with a notional  principal  amount of $300
million  maturing  on  January  30,  1999,  and  with  a  fixed  LIBOR  rate  of
approximately  6.22%.  The agreements also include interest rate collars with 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%.  The
collars expire on various dates between April 30, 1998 and June 30, 1998. If the
SWAP was marked to market at December 31, 1997, it would result in a net loss of
approximately $1.3 million. If the collars were marked to market at December 31,
1997, they would result in no loss to the Company. The fair value as of December
31, 1997 of the IRPAs was obtained from the Company's bank.


                                       32
<PAGE>


                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

4.       LONG-TERM DEBT (CONTINUED)

         The  estimated  fair value of the Term Loan and  Revolver  approximates
their carrying value since the interest rates are variable.

         As  of  December  31,  1996,   affiliates  of  Warburg,   Pincus  owned
approximately   $33.3  million  of  the  Company's   subordinated   notes.   The
subordinated  notes had an interest  rate of 10% per annum.  These  subordinated
notes were fully paid in 1997.

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.       ADOPTION OF 1997 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.


                                       33
<PAGE>

                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

6.       ADOPTION OF 1997 STOCK INCENTIVE PLAN (CONTINUED)

         Pro forma  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  1997:  risk-free
interest rate of 5.76%;  dividend yield of 0%; volatility factor of the expected
market price of the Common Stock of .31; and a weighted-average expected life of
the option of seven years.

         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 pro forma disclosures,  the estimated fair value of the
options is amortized to expense over the options' vesting period.  The Company's
pro forma information for the year ended December 31, 1997 is as follows:

         Pro forma net income                      $22,259,000
         Pro forma earnings per share:
                  Basic                                   $.50
                  Diluted                                 $.49

         A  summary  of  the  Company's  stock   option  activity  and   related
information for the year ended  December 31, 1997 is as follows:

<TABLE>
<CAPTION>

                                                                             Weighted-Average
                                                        Options              Exercise Price
                                                       --------              ----------------
<S>                                                     <C>                   <C>

       Outstanding-beginning of year                      - -                      - -
       Granted                                         1,959,992                 $17.50
       Exercised                                          - -                      - -
       Forfeited                                         134,803                 $17.52
                                                       ---------
       Outstanding-end of year                         1,825,189                 $17.50
                                                       ==========

       Exercisable at end of year                          - -

       Weighted-average fair value of
         options granted during the year                  $5.42

</TABLE>

         Exercise prices for options  outstanding as of December 31, 1997 ranged
from $14.00 to $21.00 per share. The weighted-average remaining contractual life
of those options is 9.4 years.


                                       34
<PAGE>



                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

7.       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
year ended December 31, 1997.  Income available to common  stockholders for both
basic and diluted  earnings per share is the same as net income presented in the
statement of income for the year ended December 31, 1997.

Weighted-average shares for basic earnings per share        44,792,774
Effect of diluted securities:
   Employee stock options                                      190,747
                                                           ------------
Adjusted weighted-average shares for diluted
   earnings per share                                       44,983,521
                                                           ============

         PRO FORMA NET INCOME PER COMMON SHARE (UNAUDITED):

         Pro  forma  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.

8.       PENSION PLANS

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

         The Company has 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.  The change in  measurement  date had no effect on 1997
pension income.




                                       35
<PAGE>


                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

8.       PENSION PLANS (CONTINUED)

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

                                                           1997                                       1996
                                          ----------------------------------------    --------------------------------------
                                             Overfunded            Underfunded           Overfunded           Underfunded
                                          ------------------    ------------------    -----------------     ----------------
<S>                                        <C>                    <C>                   <C>                     <C>

Actuarial present value of benefit
  obligation:
 Vested benefit obligation                 $ 50,118,000           $ 5,815,000          $ 43,197,000          $ 10,234,000
                                          ==================    ==================    =================     ================
 Accumulated benefit obligation            $ 51,277,000           $ 5,962,000          $ 44,209,000          $ 10,462,000
                                          ==================    ==================    =================     ================

Projected benefit obligation               $  51,649,000            $  6,048,000          $44,489,000          $10,641,000
Fair value of plan assets                     73,546,000               4,818,000           60,027,000            9,027,000
                                          ------------------    ------------------    -----------------     ----------------
Plan assets in excess of (less than)
   projected benefit obligation               21,897,000              (1,230,000)          15,538,000           (1,614,000)
Unrecognized net transition (asset)
   obligation being amortized over 15
   years                                          57,000                 284,000            (275,000)              717,000
Adjustment required to recognize minimum
   liability                                          --                (203,000)                 --              (400,000)
Unrecognized net (gain)                      (10,909,000)                (89,000)          (4,833,000)            (113,000)
Unrecognized prior service cost               (3,261,000)                (76,000)          (3,277,000)            (426,000)
                                         ------------------    ------------------    -----------------      ----------------
Prepaid (accrued) pension cost             $   7,784,000           $  (1,314,000)         $ 7,153,000         $ (1,836,000)
                                          ==================    ==================    =================     ================

         Assumptions  used in determining the funded status of the pension plans are as follows:

                                                                             1997               1996
                                                                       -----------------   ---------------
<S>                                                                       <C>                    <C>
     Discount rate                                                            7.50%             7.75%
     Average rate of increase in compensation levels                           3.0               3.0
     Expected long-term rate of return on assets                               9.0               9.0
     Mortality rates                                                         83GAM             83GAM
                                                                          Unloaded          Unloaded


         Components of net periodic pension income include:

                                                       1997                  1996                 1995
                                                 -----------------     -----------------    -----------------
<S>                                                 <C>                  <C>                   <C>
Service cost                                           $1,328,000            $1,366,000             $955,000
Interest cost                                           4,115,000             3,864,000            3,126,000
Expected return on plan assets                         (6,051,000)           (5,705,000)          (4,631,000)
Net amortization                                         (265,000)             (280,000)            (364,000)
Other                                                          --                    --               93,000
                                                 =================     =================    =================
Net periodic pension expense                          $  (873,000)          $  (755,000)         $  (821,000)
                                                 =================     =================    =================

</TABLE>

         Net amortization  consists of amortization of net assets or obligations
at  transition,  subsequent  plan  amendments  and of  subsequent  net gains and
losses.


                                       36
<PAGE>



                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


8.       PENSION PLANS (CONTINUED)

         The  Company  also has  defined  contribution  pension  plans  covering
certain  employees.  Contributions  to these plans are based on a percentage  of
participants'  salaries and  amounted to  approximately  $325,000,  $417,000 and
$438,000 in 1997, 1996 and 1995, respectively.

         The Company  contributes to various  multi-employer  union administered
pension plans.  Contributions to these plans amounted to approximately  $68,000,
$71,000 and $98,000 in 1997, 1996 and 1995, respectively.

9.       POSTRETIREMENT BENEFITS

         The  Company  has  changed  the date it uses to measure  postretirement
benefit  obligations  from  December  31 to  September  30, in order to meet the
Company's reporting  requirements.  The change in measurement date had no effect
on 1997 postretirement benefit costs.

         The following table sets forth the postretirement medical plans' funded
status as of September 30, 1997 and December 31, 1996:


<TABLE>
<CAPTION>
                                                                       1997               1996
                                                                  ---------------     --------------
<S>                                                                    <C>                <C>

Accumulated postretirement benefit obligation:
  Retirees                                                            $6,517,000         $6,807,000
  Fully eligible active plan participants                                138,000            127,000
  Other active plan participants                                         196,000            169,000
                                                                      ----------         ----------
                                                                       6,851,000          7,103,000
Plan assets at fair value                                                     --                 --
                                                                  ---------------        -----------
Accumulated postretirement benefit obligation in excess
  of plan assets                                                       6,851,000          7,103,000
Unrecognized net gain                                                    591,000            321,000
Unrecognized prior service cost                                          693,000            786,000
                                                                   -------------      -------------
Accrued postretirement benefit obligation                             $8,135,000         $8,210,000
                                                                   =============      =============

         Net  periodic   postretirement  benefit  costs  include  the  following
components:

                                                                          1997            1996           1995
                                                                     ---------------  -------------   -----------
<S>                                                                  <C>                 <C>             <C>

Service cost-benefits earned during the period                        $  13,000      $  11,000         $ 11,000
Interest cost on accumulated postretirement benefit obligation          520,000        525,000           461,000
Other                                                                  (100,000)       (96,000)         (128,000)
                                                                      ----------     ------------      ----------
                                                                      $ 433,000      $ 440,000         $ 344,000
                                                                      =========      =============     ==========
</TABLE>

         Future  benefit  costs were  estimated  assuming  medical  costs  would
increase at a 9.0% annual  rate  during 1997 and  decreasing  1.0% per year to a
6.5% annual  increase in the year 2000 and beyond.  The  discount  rates used to
estimate the accumulated  postretirement obligation were 7.5%, 7.75% and 7.5% at
December 31, 1997, 1996 and 1995,  respectively.  If the assumed trend rate were
to change by 1.0% the accumulated postretirement benefit obligation would change
by  approximately  $354,000 and the net periodic  postretirement  benefit  costs
would change by approximately $30,000.



                                       37
<PAGE>


                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

10.      INCOME TAXES

         The provision for income taxes is as follows:


<TABLE>
<CAPTION>
                                                                      1997                1996               1995
                                                                 ----------------    ----------------   ---------------
<S>                                                                 <C>                 <C>               <C>

Current tax expense:
   Federal                                                       $    8,035,000        $   9,812,000         $   23,000
   State                                                              2,970,000            9,333,000          2,414,000
                                                                 ----------------    ----------------   ---------------
Total current                                                        11,005,000           19,145,000          2,437,000
Deferred tax expense (benefit):
   Federal                                                            5,027,000           (4,322,000)                --
   State                                                               (248,000)            (514,000)           216,000
                                                                 ----------------    ----------------   ---------------
Total deferred                                                        4,779,000           (4,836,000)           216,000
                                                                 ----------------    ----------------   ---------------
Total provision for taxes                                         $  15,784,000       $   14,309,000     $    2,653,000
                                                                 ================    ================   ===============

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

                                                                       1997               1996              1995
                                                                  ----------------   ----------------  ----------------
<S>                                                                  <C>               <C>                 <C>
Tax at U.S. statutory rates                                          $13,564,000        $14,846,000       $10,303,000
State taxes, net of federal effect                                     1,769,000          5,732,000         1,709,000
Reduction in valuation allowance                                              --         (6,632,000)       (9,893,000)
Other                                                                    451,000            363,000           534,000
                                                                  ================   ================  ================
                                                                     $15,784,000        $14,309,000      $  2,653,000
                                                                  ================   ================  ================
</TABLE>

         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.  The reduction in the valuation  allowance in 1995 reflects the use
of approximately  $6.1 million of federal net operating loss  carryforwards,  as
well as the reversal of certain temporary differences.

         State  net  operating  loss  carryforwards  were  utilized  as follows:
$700,000 in 1997,  $300,000 in 1996, and $5.5 million in 1995.

         At December 31,  1997,  certain  subsidiaries  had net  operating  loss
carry-forwards available ranging from approximately $500,000 to $43.9 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, 1997 expire in various years through 2012.

                                       38

<PAGE>

                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

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:

<TABLE>
<CAPTION>
                                                                  1997                    1996
                                                           -------------------      -----------------
<S>                                                        <C>                        <C>
Deferred tax liabilities:
   Property, plant and equipment                              $ 14,333,000             $ 14,986,000
   Other                                                                 --                 394,000
                                                              -------------            ------------
Total deferred tax liabilities                                   14,333,000              15,380,000
Deferred tax assets:
   Intangible assets                                              2,042,000               7,866,000
   Retiree benefits                                                 793,000               1,015,000
   Net operating loss carryforwards                               1,915,000               2,791,000
   Deferred interest expense                                      4,121,000               5,468,000
   Other                                                          5,649,000               3,764,000
                                                            ---------------           -------------
Total deferred tax assets                                        14,520,000              20,904,000
Valuation allowance                                               1,792,000               2,350,000
                                                            ---------------           -------------
Net deferred tax assets                                          12,728,000              18,554,000
                                                            ----------------          -------------
Net deferred tax liabilities (assets)                        $    1,605,000            $ (3,174,000)
                                                            ================          ==============
</TABLE>


         The Company's  valuation  allowances  for deferred tax assets decreased
by approximately  $600,000 and $7.7 million in 1997 and 1996, 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 will file its federal income
tax return as one consolidated group.

11.      COMMITMENTS AND CONTINGENCIES

         The Company  leases  office space and  equipment  under  noncancellable
operating  leases  which expire over the next five years.  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, 1997 are as
follows:

         1998.............................................  $1,445,000
         1999.............................................  $1,364,000
         2000.............................................  $1,112,000
         2001.............................................  $  245,000
         2002.............................................  $       --

         Total rent  expense was $2.0  million,  $1.4  million and $1.4  million
for the years ended  December  31, 1997, 1996 and 1995, respectively.

         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.


                                       39
<PAGE>


                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997

12.      ACQUISITIONS

         On December 22, 1997,  the Company  acquired  for  approximately  $12.8
million certain assets and  liabilities of the InterCounty  Newspaper Group from
AUS,  Inc. The  InterCounty  Newspaper  Group  includes 17 weekly  newspapers in
suburban  Philadelphia  and central and  southern  New Jersey with total  weekly
distribution of approximately  100,000.  The Company applied the purchase method
of accounting for this transaction.  Accordingly, the total acquisition cost was
preliminarily  allocated  to  the  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 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.

         On May 5, 1995, the Company  acquired for  approximately  $31.0 million
certain  assets  and  liabilities  of a group of  newspapers,  which  include 42
publications  and a commercial  printing company located in both Connecticut and
Rhode Island  (collectively,  the "New England Acquisition  Corp."). The Company
applied the purchase method of accounting for this transaction. Accordingly, the
total  acquisition  cost was allocated to the assets and  liabilities of the New
England  Acquisition  Corp.  based on the relative  estimated fair values on the
effective  date of the  acquisition  of  approximately  $5.0  million  and  $2.1
million, respectively.

         On June 21, 1995, the Company acquired the stock of THE HERALD, located
in New Britain,  Connecticut,  for $11.0 million plus the  assumption of certain
noncurrent  liabilities.  THE HERALD publishes a daily newspaper in Connecticut.
The Company applied the purchase method of accounting for this transaction.  The
estimated  fair  values  of  identifiable  net  assets  and  liabilities  on the
effective  date  of  the  acquisition   were  $2.5  million  and  $7.5  million,
respectively.

         On August 31,  1995,  the Company  acquired  for $5.5  million  certain
assets and liabilities of THE MIDDLETOWN  PRESS, a daily newspaper  published in
Middletown,  Connecticut.  The Company applied the purchase method of accounting
for this  transaction.  The  estimated  fair values of  identifiable  assets and
liabilities  on the  effective  date of the  acquisition  were $4.1  million and
$500,000, respectively.

         Intangible assets of $45.9 million related to the  aforementioned  1995
acquisitions  were recorded for the subscriber  lists and excess of the purchase
price  over  the  value of  identifiable  net  assets  and are  being  amortized
according to the Company's policy.

                                       40
<PAGE>


                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


13.      MEMBERSHIP INTERESTS


         Membership  interests at December 31, 1996 and 1995 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 were converted to 37,962,500 shares of Common Stock (see Note 1).

14.      SUBSEQUENT EVENTS (UNAUDITED)

         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.


                                       41
<PAGE>

                            JOURNAL REGISTER COMPANY
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                                DECEMBER 31, 1997


15.      QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

         The following is a summary of the quarterly  results of operations  for
years ended  December 31, 1997 and 1996:

<TABLE>
<CAPTION>

                                           Mar. 31            Jun. 30              Sept. 30             Dec. 31
                                         -------------    -----------------    -----------------    -----------------
<S>                                          <C>                <C>                <C>                 <C>
                                                            (In thousands, except per share data)
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                                       --           $ (0.16)             $  0.23              $  0.28
     Diluted                                     --           $ (0.16)             $  0.23              $  0.28
Pro forma net income per common share(1)   $   0.15                --                   --                   --

1996
----
Revenues                                   $ 82,209           $90,367              $86,630              $91,914
Operating income                           $ 18,690           $25,926              $24,479              $29,795
Net income                                 $  1,953           $ 7,967              $ 6,855              $11,334

Pro forma net income per common share(1)   $   0.05           $  0.21              $  0.18              $  0.30

</TABLE>

(1)     Pro forma net income per common share for 1996 and the first  quarter of
        1997 was calculated  reflecting the 37,962,500  shares which were issued
        and outstanding prior to the Offering.





                                       42
<PAGE>

<TABLE>
<CAPTION>

                            JOURNAL REGISTER COMPANY
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS


                                             BALANCE AT                            CHARGES TO                            BALANCE AT
                                             BEGINNING OF                           COSTS AND                             END OF
        DESCRIPTION                            PERIOD            ADJUSTMENTS(2)      EXPENSES           DEDUCTIONS(1)      PERIOD
        -----------                          ------------        -------------     ----------           ------------    -----------
                                                                               (IN THOUSANDS)
<S>                                           <C>                  <C>             <C>                  <C>                  <C>

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

YEAR ENDED DECEMBER 31, 1995

Allowance for doubtful accounts                   $1,974               --            $2,871            $1,971            $2,874
Valuation  allowance  for deferred tax assets    $18,637           $1,957                --           $10,560           $10,034

</TABLE>


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

(2)  Allowance for doubtful  accounts   additions  related to 1997  acquisitions
     and valuation  allowance related to 1995 acquisitions.


                                       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
Company."

         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 1998 Annual
Meeting of Stockholders (the "1998 Proxy  Statement") is incorporated  herein by
reference.

ITEM 11.  EXECUTIVE COMPENSATION.

         Information appearing under the caption "Executive Compensation" in the
1998 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 1998 Proxy  Statement is incorporated
herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Information  appearing under the caption "Certain  Transactions" in the
1998 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 1997.

(C) INDEX TO EXHIBITS.

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


                                       43
<PAGE>




     EXHIBIT NO.                                                DESCRIPTION

       *3(i)            Amended and Restated Certificate of Incorporation (filed
                        as Exhibit 3(i) to Journal Register  Company's Form 10-Q
                        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             Amended  and  Restated  Credit  Agreement  among Journal
                        Register Company, each of the banks and other  financial
                        institutions  that  is  a  signatory  thereto  or which,
                        pursuant to Section 11.06(b) thereof,  becomes a  "Bank"
                        thereunder  and  The  Chase  Manhattan   Bank  (National
                        Association),  as  agent  for the Banks(filed as Exhibit
                        10.1 to the June 1997 Form 10-Q).
      *10.2             1997 Stock Incentive Plan (filed as Exhibit  10.2 to the
                        June 1997  Form   10-Q).+
      *10.3             Management Bonus Plan (filed as Exhibit 10.3 to the June
                        1997  Form 10-Q).+
      *10.4             Supplemental 401(k) Plan  (filed  as Exhibit 10.4 to the
                        FormS-1).+
      *10.5             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).
      *10.6             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).
     **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.










                                       44

<PAGE>
                                   SIGNATURES

   Pursuant  to the  requirements  of  Section  13 or  15(d)  of the  Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its  behalf  by the  undersigned,  thereunto  duly  authorized,  in the  City of
Trenton, State of New Jersey, on the 24th day of March, 1998.

                                         JOURNAL REGISTER COMPANY


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


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

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities indicated on the 24th day of March, 1998.

<TABLE>
<CAPTION>

                        SIGNATURE                                                   TITLE(S)
                        ---------                                                   --------
<S>                    <C>                                                            <C>

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


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


            /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

</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>



                                  EXHIBIT INDEX
                                 --------------


   EXHIBIT                                                                                       SEQUENTIALLY
   NUMBER                                DESCRIPTION OF DOCUMENT                                 NUMBERED PAGE
----------                               -----------------------                                 --------------
<S>                                         <C>                                                   <C>

*3(i)         Amended  and  Restated  Certificate  of  Incorporation  (filed  as
              Exhibit  3(i) to  Journal  Register  Company's  Form  10-Q 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         Amended and  Restated  Credit  Agreement  among  Journal  Register
              Company,  each of the banks and other financial  institutions that
              is a  signatory  thereto or which,  pursuant  to Section  11.06(b)
              thereof,  becomes a "Bank" thereunder and The Chase Manhattan Bank
              (National  Association),  as agent for the Banks (filed as Exhibit
              10.1 to the June 1997 Form 10-Q).
*10.2         1997 Stock Incentive Plan (filed as Exhibit 10.2 to the June  1997
              Form 10-Q).+
*10.3         Management Bonus Plan (filed as Exhibit 10.3 to the June 1997 Form
              10-Q).+
*10.4         Supplemental  401(k) Plan (filed as Exhibit 10.4 to the Form S-1).
              + *10.5  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).
*10.6         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).
**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.


</TABLE>

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


                                       46