JOURNAL REGISTER CO - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 30, 2003

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from ______ to ______

Commission File Number: 1-12955

JOURNAL REGISTER COMPANY
(Exact Name of Registrant as Specified in its Charter)

DELAWARE 22-3498615
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

50 WEST STATE STREET, TRENTON, NEW JERSEY 08608-1298
(Address of Principal Executive Offices) (Zip Code)

(609) 396-2200
(Registrant's Telephone Number, Including Area Code)

--------------------------------------------------------------
(Former Name, Former Address and Former
Fiscal Year, if Changed Since Last Report)

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

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

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: common stock, $.01 par value
per share 41,130,934 shares outstanding (exclusive of treasury shares) as of May
12, 2003

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JOURNAL REGISTER COMPANY

INDEX TO FORM 10-Q

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
--------------------

JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

See accompanying notes.

1

JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

See accompanying notes.

2

JOURNAL REGISTER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

See accompanying notes.

3

JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 30, 2003
(UNAUDITED)

1. ORGANIZATION AND BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements include
Journal Register Company and all of its wholly owned subsidiaries (the
"Company"). The Company primarily publishes daily and non-daily newspapers
serving markets in Greater Philadelphia, Connecticut, the Greater Cleveland area
of Ohio, Central New England and the Capital-Saratoga and Mid-Hudson regions of
New York. The Company also owns and manages commercial printing operations in
Connecticut and Pennsylvania. In addition, the Company currently operates 147
individual Web sites featuring the Company's daily newspapers and non-daily
publications.

The Company has authorized 1,000,000 shares of Preferred Stock, none of
which were issued or outstanding during the periods for which the financial
statements are presented.

The condensed consolidated interim financial statements included herein
have been prepared by the Company, without audit, in accordance with accounting
principles generally accepted in the United States ("GAAP") and pursuant to the
rules and regulations of the Securities and Exchange Commission. The condensed
consolidated interim financial statements do not include all of the information
and footnote disclosure required by GAAP for complete financial statements. In
the opinion of the Company's management, the accompanying unaudited condensed
consolidated financial statements contain all material adjustments (consisting
only of normal recurring accruals) necessary to present fairly its financial
position as of March 30, 2003 and December 29, 2002 and the results of its
operations and cash flows for the thirteen week periods ended March 30, 2003 and
March 31, 2002. These financial statements should be read in conjunction with
the December 29, 2002 audited Consolidated Financial Statements and Notes
thereto. The interim operating results are not necessarily indicative of the
results to be expected for an entire year.

2. EARNINGS PER COMMON SHARE

The following table sets forth the computation of weighted-average
shares outstanding for calculating both basic and diluted earnings per share:

THIRTEEN WEEKS ENDED
(In thousands) MARCH 30, 2003 MARCH 31, 2002
- --------------------------------------------------------------------------------
Weighted-average shares - basic 41,437 41,525
Effect of dilutive securities:
Employee stock options 227 808
- --------------------------------------------------------------------------------
Weighted-average shares - diluted 41,664 42,333
================================================================================

Options to purchase approximately 2.2 million shares of common stock at
a range of $16.81 to $22.50 per share were outstanding during the thirteen week
period ended March 30, 2003, but were not included in the computation of diluted
earnings per share for such period because the exercise prices were greater than
the average market price of the common shares during such period. Similarly,
options to purchase 1.5 million shares of common stock at a range of $21.00 to
$22.50 were outstanding during the thirteen week period ended March 31, 2002,
but were not included in the computation of the diluted earnings per share for
such period because the exercise prices of those options were greater than the
average market price of the common shares during such period.

4

JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 30, 2003
(UNAUDITED)

3. COMMON STOCK

The Company's Board of Directors has authorized the use of up to $100
million per year for the repurchase of the Company's Common Stock. Shares under
the stock repurchase program are to be purchased at management's discretion,
either in the open market or in privately negotiated transactions. Since January
13, 1999, and as of March 30, 2003, the Company has repurchased approximately
7.5 million shares at a total cost of approximately $109.8 million.

4. STOCK-BASED COMPENSATION COSTS

In December 2002, the Financial Accounting Standards Boards ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure," to provide
alternative methods of transition for a voluntary change to the fair value
method of accounting for stock-based employee compensation. In addition, SFAS
No. 148 amends the disclosure requirements of SFAS No. 123 to require more
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The additional disclosure requirements of SFAS
No. 148 are effective for fiscal years ending after December 15, 2002. The
Company elected to continue to follow the intrinsic value method of accounting
as prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related interpretations in accounting
for its employee stock options. SFAS No. 148 did not require the Company to
change to the fair value based method of accounting for stock-based
compensation.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the vesting period for such options. The
Company's quarterly pro forma information, had compensation costs for the
Company's stock option plans been determined in accordance with SFAS No. 123, is
as follows :

5

JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 30, 2003
(UNAUDITED)

5. ACQUISITIONS

The Company applies the purchase method of accounting for acquisitions.
Acquisitions and dispositions of newspaper properties are subject to the
finalization of customary purchase price adjustments and closing costs.

The Company completed the following three acquisitions in 2002: (i) on
March 18, the Company completed the acquisition of the assets of News Gleaner
Publications, Inc. and Big Impressions Web Printing, Inc., based in Northeast
Philadelphia, Pennsylvania, which includes eight weekly newspapers, with total
circulation of 121,000, serving Northeast Philadelphia, seven monthly
publications, with total circulation of 59,000, serving Montgomery County,
Pennsylvania, and a commercial printing operation; (ii) on March 22, the Company
completed the acquisition of the assets of the Essex, Connecticut-based Hull
Publishing, Inc, which includes a weekly newspaper with total circulation of
5,000 and two annual magazines with total distribution of approximately 20,000;
and (iii) on October 14, the Company completed the acquisition of County Press
Publications, which includes seven weekly newspapers serving Delaware County,
Pennsylvania, with total circulation of 24,000.

6. HEDGING ACTIVITY

In accordance with the requirements of its Credit Agreement dated July
15, 1998, the Company is required to maintain certain Interest Rate Protection
Agreements ("IRPAs") on a portion of its debt, to reduce the potential exposure
of the Company's future cash flows to fluctuations in the variable interest
rates on which the interest on the outstanding debt is calculated. The minimum
requirement varies depending on the Company's Total Leverage Ratio, as defined
in the Credit Agreement. From time to time the Company may enter into additional
IRPAs for nominal amounts on the outstanding debt that will, at a minimum, meet
the requirements of the Credit Agreement. Each IRPA is designated for all or a
portion of the principal balance and term of a specific debt obligation.

Pursuant to the requirements of the Credit Agreement, the Company
entered into certain interest rate hedges ("the Collars") on November 9, 2001.
The Collars establish an interest rate ceiling ("CAP") and an interest rate
floor ("floor").

The CAP on the Company's Collars, which became effective on October 29,
2002, is 6.0 percent and the floor averages approximately 2.66 percent. These
rates are based upon the 90-day LIBOR. In the event 90-day LIBOR exceeds 6.0
percent, the Company will receive cash from the issuers to compensate for the
rate in excess of the 6.0 percent CAP. If the 90-day LIBOR is lower than 2.66
percent, the Company will pay cash to the issuers to compensate for the rate
below the floor. The Collars became effective on October 29, 2002 at a notional
amount of $170 million. The Collars amortize over two years to a notional
aggregate amount of $135 million and terminate on October 29, 2004. On October
10, 2002, the Company entered into additional interest rate collars ("Additional
Collars"). The effective date of the Additional Collars was January 29, 2003.
The Additional Collars are for a notional aggregate amount of $150 million,
which is fixed over the two-year term. Similar to the existing Collars, the
Additional Collars establish a CAP and a floor at no initial cost to the
Company. The CAP on the Additional Collars is 4.0 percent and the floor averages
approximately 1.54 percent. These rates are also based upon the 90-day LIBOR. In
the event that 90-day LIBOR exceeds 4.0 percent, the Company will receive cash
from the issuers to compensate for the rate in excess of the 4.0 percent CAP. If
the 90-day LIBOR is lower than 1.54 percent, the Company will pay cash to the
issuers to compensate for the rate below the floor. From time to time the
Company may enter into additional IRPAs. The Company expects that each IRPA will
be designated for all or a portion of the principal balance and term of a
specific debt obligation.

Under Financial Accounting Standard No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") as amended, the fair market
value of derivatives is reported as an adjustment to Other Comprehensive
Income/Loss ("OCI"). The IRPAs were fully effective in hedging the changes in
cash flows related to the debt obligation during the thirteen weeks ended March
30, 2003 and fiscal year ended December 29, 2002. The total deferred loss
reported in OCI as of March 30, 2003 and December 29, 2002 was approximately
$2.7 million and $3.4 million, respectively (net of $1.4 and $1.8 million of
deferred taxes, respectively).

6

JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 30, 2003
(UNAUDITED)

7. COMPREHENSIVE INCOME

The components of comprehensive income for the thirteen weeks ended
March 30, 2003 and March 31, 2002 are as follows:

(Dollars in thousands)
2003 2002
- --------------------------------------------------------------------------------

Net income $ 9,803 $ 9,232
Reclassification of unrealized gains on fully
effective hedges to net income, net of tax 341 2,173
Net change in fair value of fully effective hedges,
net of tax 365 (960)
- --------------------------------------------------------------------------------
Comprehensive income $10,509 $ 10,445
================================================================================

Accumulated other comprehensive loss, net of tax, as of March 30, 2003
and December 29, 2002 was approximately $22.4 million and $23.1 million,
respectively. These balances primarily consist of net losses from changes in the
fair value of the Company's minimum pension liabilities and IRPAs.

8. INTANGIBLE AND OTHER ASSETS

On July 25, 2001, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 142, Goodwill and Other Intangible Assets. Under SFAS No. 142,
goodwill and indefinite lived intangible assets are no longer amortized, however
they are reviewed annually or more frequently, if required, for impairment.
Separable intangible assets that are not deemed to have an indefinite life will
continue to be amortized over their useful lives. During fiscal 2001, the
Company adopted the amortization provisions of SFAS No. 142 which currently
apply to goodwill and intangible assets acquired after June 30, 2001. With
respect to goodwill and intangible assets acquired prior to July 1, 2001, the
Company adopted SFAS No. 142 at the beginning of fiscal year 2002, which began
December 31, 2001. The Company will perform the required annual impairment tests
as of the first day of the fourth quarter of each fiscal year. Changes in the
carrying amounts of intangible assets are as follows:

7

JOURNAL REGISTER COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 30, 2003
(UNAUDITED)

8. INTANGIBLE AND OTHER ASSETS (CONTINUED)

Identifiable intangible assets include customer and subscriber lists,
non-compete covenants, and debt issuance costs, which have an estimable useful
life and are amortizable on a straight-line basis over their useful lives.
Indefinite-lived intangible assets include Goodwill and Mastheads, which are not
amortizable. Mastheads are included in Other intangible assets on the balance
sheet. For the thirteen weeks ended March 30, 2003 and March 31, 2002,
amortization expense for intangible assets was $347,000 in each period.
Estimated amortization expense for 2003 and each of the four succeeding fiscal
years for identifiable intangible assets and other assets is as follows (dollars
in thousands):

2003 $ 1,384
2004 1,384
2005 1,361
2006 902
2007 131
Thereafter 847

8

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

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

As of March 30, 2003, the Company owned and operated 23 daily
newspapers and 234 non-daily publications strategically clustered in six
geographic areas: Greater Philadelphia; Connecticut; Greater Cleveland; Central
New England; and the Capital-Saratoga and Mid-Hudson regions of New York. As of
March 30, 2003, the Company had total paid daily circulation of approximately
550,000, total paid Sunday circulation of approximately 526,000 and total
non-daily distribution of approximately 3.7 million.

One of the Company's objectives is to grow its 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.

The Company has been a leader in executing its clustering strategy. The
Company believes that its clustering strategy creates significant synergies and
cost savings within each cluster, including cross-selling of advertising,
sharing of certain editorial resources and consolidating certain of the
Company's production and back office activities. The Company also believes that
its clustering strategy enables it to improve print quality and distribution,
introduce new products and services in a cost-effective manner and increase
readership. In addition, clustering allows the Company to offer its advertisers
expanded reach both geographically and demographically.

From September 1993 through March 2003, the Company completed 25
strategic acquisitions, acquiring 14 daily newspapers, 192 non-daily
publications and four commercial printing companies. Three of the four
commercial printing facilities owned by the Company print a number of the
Company's non-daily publications and the fourth is a premium quality sheet-fed
printing company.

The Company completed the following three acquisitions in 2002: (i) on
March 18, the Company completed the acquisition of the assets of News Gleaner
Publications, Inc. and Big Impressions Web Printing, Inc., based in Northeast
Philadelphia, Pennsylvania, which includes eight weekly newspapers, with total
circulation of 121,000, serving Northeast Philadelphia, seven monthly
publications, with total circulation of 59,000, serving Montgomery County,
Pennsylvania, and a commercial printing operation; (ii) on March 22, the Company
completed the acquisition of the assets of the Essex, Connecticut-based Hull
Publishing, Inc, which includes a weekly newspaper with total circulation of
5,000 and two annual magazines with total distribution of approximately 20,000;
and (iii) on October 14, the Company completed the acquisition of County Press
Publications, which includes seven weekly newspapers serving Delaware County,
Pennsylvania, with total circulation of 24,000.

The Company sold certain of its operations in the Greater St. Louis
area in two transactions in August and October of 2000. The Company also sold
two daily newspapers and a commercial printing operation in the southern part of
central Ohio on January 31, 2001. These dispositions resulted in a strategic
repositioning of the Company's operation in six geographic clusters.

The Company's management believes that its newspapers are effective in
addressing the needs of local readers and advertisers. The Company's management
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 more stable
than large metropolitan and national newspapers.

9

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

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.

In addition, the Company is committed to expanding its business through
its Internet initiatives. The Company's online objective is to make its Web
sites, all of which are accessible through www.journalregister.com, the
indispensable source of useful and reliable community news, sports and
information in their markets by making the Web sites the local information
portal for their markets. As of March 30, 2003, the Company operated 147 Web
sites, which represent each of the Company's publications.

RESULTS OF OPERATIONS

THIRTEEN WEEK PERIOD ENDED MARCH 30, 2003 AS COMPARED TO THE THIRTEEN WEEK
PERIOD ENDED MARCH 31, 2002

For comparison purposes, where noted, the Company's financial results are
presented on a same-store basis which excludes the results of the Company's
acquisitions completed in 2002.

Summary. Net income for the thirteen week period ended March 30, 2003
was $9.8 million, or $0.24 per diluted share, versus $9.2 million, or $0.22 per
diluted share, for the thirteen week period ended March 31, 2002.

Revenues. For the thirteen week period ended March 30, 2003, the
Company's revenues were even with the thirteen week period ended March 31, 2002
at approximately $96.6 million. Newspaper revenues for the thirteen weeks ended
March 30, 2003 as compared to the prior year period increased $699,000, or 0.8
percent, to $92.5 million, principally due to an increase in advertising revenue
of $820,000, or 1.2 percent. Circulation revenues for the thirteen week period
ended March 30, 2003 decreased approximately $121,000, or 0.5 percent, as
compared to the prior year period. Commercial printing and other revenues for
the thirteen weeks ended March 30, 2003 decreased approximately $700,000, or
14.4 percent, to $4.2 million as compared to the prior year period and
represented 4.3 percent of the Company's revenues for the thirteen weeks ended
March 30, 2003. Online revenues for the thirteen weeks ended March 30, 2003 were
approximately $1.0 million, an increase of approximately 18.1 percent as
compared to the prior year period.

Same-store newspaper revenues. For the thirteen week period ended March
30, 2003, same-store newspaper revenues decreased $499,000, or 0.5 percent,
compared to the thirteen week period ended March 31, 2002. Same-store
advertising revenues declined $310,000, or 0.4 percent, and same-store
circulation revenues declined $190,000, or 0.8 percent, both compared to the
thirteen week period ended March 31, 2002.

Advertising and circulation revenues were negatively impacted in the
thirteen weeks ended March 30, 2003 by harsh winter weather, geopolitical events
and continued softness in the economy.

Salaries and employee benefits. Salaries and employee benefit expenses
were 40.2 percent of the Company's revenues for the thirteen week period ended
March 30, 2003, as compared to 38.4 percent for the thirteen week period ended
March 31, 2002. Salaries and employee benefits increased $1.7 million, or 4.6
percent, for the thirteen week period ended March 30, 2003 to $38.9 million,
principally due to an increase in employee benefit costs and additional costs
associated with the Company's 2002 acquisitions.

10

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

Newsprint, ink and printing charges. For the thirteen week period ended
March 30, 2003, newsprint, ink and printing charges were 7.3 percent of the
Company's revenues, as compared to 7.8 percent for the thirteen week period
ended March 31, 2002. Newsprint, ink and printing charges for the thirteen week
period ended March 30, 2003 decreased approximately $557,000, or 7.4 percent, as
compared to the thirteen week period ended March 31, 2002. This reduction is
principally due to a reduction in newsprint, ink and printing costs associated
with the Company's commercial printing services and a reduction in the unit cost
of newsprint of approximately 0.5 percent partially offset by additional volume
associated with the Company's 2002 acquisitions.

Selling, general and administrative. Selling, general and
administrative expenses were 13.9 percent and 13.7 percent of the Company's
revenues for the thirteen week periods ended March 30, 2003 and March 31, 2002,
respectively. As compared to the prior year period, selling, general and
administrative expenses for the thirteen week period ended March 30, 2003
increased $147,000, or 1.1 percent, to $13.4 million, principally as a result of
additional costs associated with the Company's 2002 acquisitions.

Depreciation and amortization. Depreciation and amortization expenses
were 4.0 percent of the Company's revenues for the thirteen week period ended
March 30, 2003 as compared to 3.9 percent for the thirteen week period ended
March 31, 2002. Depreciation and amortization expenses for the period ended
March 30, 2003 increased approximately $117,000, or 3.1 percent, to $3.9
million, as a result of increased depreciation expense.

Other expenses. Other expenses were 14.7 percent and 14.3 percent of
the Company's revenues for the thirteen week periods ended March 30, 2003 and
March 31, 2002, respectively. Other expenses increased approximately $347,000,
or 2.5 percent, to $14.2 million for the thirteen week period ended March 30,
2003 principally as a result of additional costs associated with the Company's
2002 acquisitions.

Operating income. Operating income was $19.3 million for the thirteen
week period ended March 30, 2003 as compared to $21.1 million for the thirteen
week period ended March 31, 2002.

Net interest and other expense. Net interest and other expense
decreased approximately $2.5 million, or 38.3 percent, for the thirteen week
period ended March 30, 2003 as compared to the thirteen week period ended March
31, 2002, principally due to lower interest rates on the Company's outstanding
debt in the thirteen weeks ended March 30, 2003 and a decrease in the Company's
weighted-average debt outstanding.

Provision for income taxes. The provision for income taxes increased by
approximately $113,000 for the thirteen week period ended March 30, 2003 as
compared to the thirteen week period ended March 31, 2002, primarily due to an
increase in pretax income, partially offset by a Federal Empowerment Zone tax
credit of approximately $150,000 related to 2002.

Other information. EBITDA (which the Company defines as operating
income plus depreciation and amortization and other non-cash, special or
non-recurring charges) was $23.2 million for the thirteen week period ended
March 30, 2003 as compared to $24.9 million for the thirteen week period ended
March 31, 2002.

11

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations have historically generated strong positive
cash flow. The Company believes that cash flows from operations and the
availability of funds from external sources will be sufficient to fund its
operating needs, capital expenditure requirements and long-term debt obligations
and will provide it with flexibility to finance its acquisition strategy and
share repurchase program.

Cash flows from operations. Net cash provided by operating activities
for the thirteen week period ended March 30, 2003 was $23.3 million as compared
to $17.4 million for the thirteen week period ended March 31, 2002. Current
assets were $60.8 million and current liabilities, excluding $34.1 million of
current maturities of long-term debt, were $52.8 million as of March 30, 2003.
The Company manages its working capital through the utilization of its Revolving
Credit Facility. The outstanding balance on the Revolving Credit Facility is
classified as a long-term liability.

Cash flows from investing activities. Net cash used in investing
activities was $2.2 million for the thirteen week period ended March 30, 2003.
Cash used in investing activities in 2003 was for investments in property, plant
and equipment. Net cash used in investing activities was $7.6 million for the
thirteen week period ended March 31, 2002. In the thirteen week period ended
March 31, 2002, $6.3 million of cash used in investing activities was for
funding the Company's acquisitions of two newspaper properties further described
in Note 4 to the Condensed Consolidated Financial Statements and investments in
property, plant and equipment.

The Company has a capital expenditure program of approximately $15
million in place for 2003, which includes spending on technology, including
prepress and business systems, computer hardware and software, buildings, other
machinery and equipment and vehicles. 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.

Cash flows from financing activities. Net cash used in financing
activities was $21.1 million for the thirteen week period ended March 30, 2003,
reflecting the utilization of free cash flow to repay $14.0 million of senior
debt and to repurchase $7.5 million of the Company's common stock. Net cash used
in financing activities was $9.9 million for the thirteen week period ended
March 31, 2002, of which $10.4 million was used to repay debt.

Debt and derivative activity. The Company entered into a credit
agreement in July 1998 with a group of lenders, led by Chase Manhattan Bank (the
predecessor to J.P. Morgan Chase & Co.) as administrative agent (the "Credit
Agreement"). The Credit Agreement provided for two secured term loan facilities
("Term Loan A" and "Term Loan B" or collectively the "Term Loans") each at a
face amount of $250 million, and a secured revolving credit facility (the
"Revolving Credit Facility") for $400 million. Proceeds under these loan
facilities were used to repay existing debt and to fund the acquisition of the
Pennsylvania, New York, and Ohio newspaper businesses of The Goodson Newspaper
Group (the "Goodson Acquisition") in July 1998. The Credit Agreement also
provides for an uncommitted, multiple draw term loan facility (the "Incremental
Facility") in the amount of up to $500 million, as permitted by the
administrative agent, to be repaid under conditions as defined in the Credit
Agreement. To date, the Company has not drawn down on the Incremental Facility.

The Term Loans mature on March 31, 2006 and September 30, 2006, and the
Revolving Credit Facility matures on March 31, 2006. The Term Loans are
repayable in quarterly installments and the availability of the Revolving Credit
Facility is subject to certain quarterly reductions that commenced in 2002. In
addition, under the terms of the Company's Credit Agreement, net proceeds, as
defined in the Credit Agreement, from the sale of newspaper properties which are
not reinvested within 365 days must be used to prepay debt.

12

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

The amounts outstanding under the Credit Agreement bear interest at (i) 1 3/4
percent to 1/2 percent above LIBOR (as defined in the Credit Agreement) or (ii)
1/2 percent to 0 percent above the higher of (a) the Prime Rate (as defined in
the Credit Agreement) or (b) 1/2 percent above the Federal Funds Rate (as
defined in the Credit Agreement). The interest rate spreads ("the applicable
margins") are dependent upon the ratio of debt to trailing four quarters Cash
Flow (as defined in the Credit Agreement) and are reduced or increased as such
ratio declines or increases, respectively. The estimated fair value of the Term
Loans and Revolving Credit Facility approximates their carrying value.

An annual commitment fee is incurred on the average daily-unused
portion of the Revolving Credit Facility, payable quarterly in arrears, at a
percentage that varies from 0.375 percent to 0.250 percent based on the
quarterly calculation of the Total Leverage Ratio (as defined in the Credit
Agreement).

Pursuant to the requirements of the Credit Agreement, the Company
entered into certain interest rate hedges ("the Collars") on November 9, 2001.
The Collars establish an interest rate ceiling ("CAP") and an interest rate
floor ("floor").

The CAP on the Company's Collars, which became effective on October 29,
2002, is 6.0 percent and the floor averages approximately 2.66 percent. These
rates are based upon the 90-day LIBOR. In the event 90-day LIBOR exceeds 6.0
percent, the Company will receive cash from the issuers to compensate for the
rate in excess of the 6.0 percent CAP. If the 90-day LIBOR is lower than 2.66
percent, the Company will pay cash to the issuers to compensate for the rate
below the floor. The Collars became effective on October 29, 2002 at a notional
amount of $170 million. The Collars amortize over two years to a notional
aggregate amount of $135 million and terminate on October 29, 2004. On October
10, 2002, the Company entered into additional interest rate Collars ("Additional
Collars"). The effective date of the Additional Collars was January 29, 2003.
The Additional Collars are for a notional aggregate amount of $150 million,
which is fixed over its two-year term. Similar to the existing Collars, the
Additional Collars establish a CAP and a floor at no initial cost to the
Company. The CAP on the Additional Collars is 4.0 percent and the floor averages
approximately 1.54 percent. These rates are also based upon the 90-day LIBOR. In
the event that 90-day LIBOR exceeds 4.0 percent, the Company will receive cash
from the issuers to compensate for the rate in excess of the 4.0 percent CAP. If
the 90-day LIBOR is lower than 1.54 percent, the Company will pay cash to the
issuers to compensate for the rate below the floor. From time to time the
Company may enter into additional IRPAs. The Company expects that each IRPA will
be designated for all or a portion of the principal balance and term of a
specific debt obligation.

Under Financial Accounting Standard No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") as amended, the fair market
value of derivatives is reported as an adjustment to Other Comprehensive
Income/Loss ("OCI"). The IRPAs were fully effective in hedging the changes in
cash flows related to the debt obligation during the thirteen weeks ended March
30, 2003 and year ended December 29, 2002. The total deferred loss reported in
OCI as of March 30, 2003 and December 29, 2002 was approximately $2.7 million
and $3.4 million, respectively (net of $1.4 and $1.8 million of deferred taxes,
respectively).

The Company's weighted-average effective interest rate was
approximately 3.3 percent for the thirteen weeks ended March 30, 2003. This
interest rate reflects the effect of a $1.1 million pre-tax charge realized and
reported as a component of interest expense for the period ended March 30, 2003
related to the Company's IRPAs in place during 2003.

Contractual Obligations and Commitments. As of March 30, 2003, the
Company had outstanding indebtedness under the Credit Agreement, due and payable
in installments through 2006, of $469.3 million, of which $142.9 million was
outstanding under the Revolving Credit Facility and $326.4 million was
outstanding under the Term Loans. In addition, the Company had approximately
$105.2 million of unused and available Revolving Credit Facility funds subject
to the terms of the Credit Agreement at March 30, 2003. The total unused balance
on the Revolving Credit Facility was $215.9 million on March 30, 2003. The
remaining aggregate maturities payable under the Term Loans for the following
fiscal years are as follows (dollars in thousands):

13

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

2003 $ 25,302
2004 37,853
2005 86,875
2006 176,417

The Revolving Credit Facility is available until March 31, 2006.
Availability reduces each quarter through March 31, 2006, in an aggregate amount
for each twelve-month period commencing on the dates set forth below, equal to
the amount set forth opposite such date, with reductions during each such period
being equal in amount (dollars in thousands):

June 30, 2002 $ 55,000
June 30, 2003 65,000
June 30, 2004 100,000
June 30, 2005 180,000

The Term Loans and Revolving Credit Facility are secured by
substantially all of the assets of the Company and the common stock and assets
of the Company's subsidiaries. The Term Loans and Revolving Credit Facility
require compliance with certain covenants, which require, among other things,
maintenance of certain financial ratios, which may restrict among other things,
the Company's ability to declare dividends, purchase treasury stock, incur
additional indebtedness, create liens, sell assets, consummate mergers and make
capital expenditures, investments and acquisitions.

The Company leases office space and equipment under noncancellable
operating leases. These leases contain several renewal options for periods up to
five years. The Company's future minimum lease payments under noncancellable
operating leases in effect as of December 30, 2002, are as follows (dollars in
thousands):

2003 $ 2,179
2004 1,699
2005 1,064
2006 366
2007 32
Thereafter 24

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

General

The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's condensed consolidated
interim financial statements, which have been prepared, by the Company, without
audit, in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an on-going basis, the Company evaluates its estimates,
including those related to bad debts, inventories, investments, remaining useful
lives of long-lived assets, income taxes, pensions and other post-retirement
benefits, as well as contingencies and litigation. The Company bases its
estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. The Company believes
the following critical accounting policies affect its more significant judgments
and estimates used in the preparation of its consolidated financial statements.

14

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

Accounts Receivable and Bad Debt

Accounts receivable consist primarily of amounts due to the Company
from normal business activities. Allowances for doubtful accounts are reserves
for the estimated loss from the inability of customers to make required
payments. The Company uses historical experience as well as current market
information in determining the estimate. If the financial condition of the
Company's customers were to deteriorate, resulting in an impairment of their
ability to make payments, additional allowances may be required.

Long-Lived Assets

Identifiable intangible assets, such as customer lists and covenants
not to compete, were amortized using the straight-line method over their
estimated useful lives for the years presented in the Company's consolidated
financial statements. In addition, goodwill associated with the excess purchase
price over the fair value of assets acquired is currently reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Under SFAS No. 142, goodwill
and indefinite-lived intangible assets are no longer amortized but are reviewed
annually, or more frequently if required, for impairment. Separable intangible
assets that are not deemed to have an indefinite life will continue to be
amortized over their useful lives. The Company adopted SFAS No. 142 at the
beginning of fiscal year 2002.

Pension and Post-retirement Benefits

Pension and post-retirement benefit costs and credits are developed
from actuarial valuations. Inherent in these valuations are key assumptions
including discount rates and expected return on plan assets. The Company
considers current market conditions, including changes in interest rates, in
selecting these assumptions.

Changes in the related pension and post-retirement benefit costs or
credits may occur in the future as a result of fluctuations in the Company's
headcount, changes in actuarial assumptions and market performance.

Litigation

The Company is involved in a number of litigation matters that 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.

Revenue Recognition

Revenue is earned from advertising sales, circulation and commercial
printing. Advertising revenues are recognized in the period when advertising is
printed or placed on the Company's Web sites. Circulation revenues are
recognized when purchased newspapers are distributed. Amounts received from
customers in advance of revenue recognition are reported as liabilities in the
Company's financial statements.

15

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES.

The Company believes that the presentation of the Company's EBITDA
enables the Company and its analysts, investors and other interested parties to
evaluate the Company's results from operations in a more meaningful manner.
Accordingly, EBITDA has been disclosed in this Quarterly Report to permit a more
complete comparative analysis of the Company's operating performance relative to
other companies in the industry. EBITDA is also presented to provide an analysis
of operating results using the same measures used by Journal Register Company's
chief operating decision makers to measure the operating results and performance
of the Company and its field operations, as well as to provide information with
respect to the Company's resources available for debt service, taxes, capital
expenditures and working capital requirements.

Journal Register Company calculates EBITDA as operating income plus
depreciation, amortization and other non-cash, special or non-recurring charges.
Journal Register Company's calculation of EBITDA may or may not be consistent
with the calculation of EBITDA by other companies. EBITDA should not be
considered as an alternative to GAAP measures of performance, such as operating
income, net income or cash flow from operations, or as a measure of liquidity.

The table below provides a reconciliation between operating income and
EBITDA for the thirteen week periods ended March 30, 2003 and March 31, 2002.

(Dollars in thousands) 2003 2002
- ---------------------------------------------------------------------------

Operating income $19,348 $21,118

Add: Depreciation and amortization 3,850 3,733
- ---------------------------------------------------------------------------
EBITDA $23,198 $24,851
===========================================================================

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements in this Report 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. In addition, the words
"anticipates," "projects," "plans," "intends," "estimates," "expects," "may,"
"believes" and similar words are intended to identify these forward-looking
statements. All forward-looking statements in this Report are based on
information available to the Company as of the date this Report is filed with
the Securities and Exchange Commission ("SEC"), and the Company assumes no
obligation to update any such forward-looking statements, except as required by
law. All forward-looking statements involve risks and uncertainties. Actual
results may differ materially from those expressed or implied by such
forward-looking statements as a result of certain factors including, but not
limited to, the success of the Company's acquisition strategy, dispositions, the
ability of the Company to achieve cost reductions and integrate acquisitions,
competitive pressures, general or regional economic conditions, advertising
trends, the unavailability or a material increase in the price of newsprint, and
material increases in interest rates, among other things. These and other
factors are discussed in more detail in the Company's other filings with the
SEC, including its Annual Report on Form 10-K for the year ended December 29,
2002. 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.

16

JOURNAL REGISTER COMPANY
MARCH 30, 2003
(UNAUDITED)

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk arising from changes in interest
rates associated with its long-term debt obligations. The Company's long-term
debt is at variable interest rates based on the LIBOR, the Prime Rate or Federal
Funds Rate, plus a certain interest rate spread as defined in the Credit
Agreement. To manage its exposure to fluctuations in interest rates as required
by its Credit Agreement, the Company enters into certain IRPAs on a portion of
its debt, which minimizes the effect of changes in variable interest rates. The
Company's objective with respect to these agreements is for hedging activities
and not for trading or speculative activity.

At March 30, 2003, the Company had in effect no-cost collar agreements
for an aggregate notional amount of $310 million. Assuming a 10 percent increase
or reduction in interest rates the annual impact on the Company's pre-tax
earnings would be approximately $0.6 million.

The Company seeks to manage the effects of increases in the price of
newsprint through a combination of, among other things, technology improvements,
including reductions in page size, 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 4. CONTROLS AND PROCEDURES

Within 90 days prior to the filing date of this report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based upon that evaluation, the
Chief Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in alerting them in a timely
manner to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic
filings with the SEC. No significant changes were made in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of the Company's most recent evaluation.

The Company's disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports that the
Company files or submits under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files under the Exchange
Act is accumulated and communicated to the Company's management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosure.

17

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------

(a) Exhibits

99.1 Certification of Principal Executive Officer Pursuant to
18 U.S.C. Section 1350.

99.2 Certification of Principal Financial Officer Pursuant to
18 U.S.C. Section 1350.

(b) Reports on Form 8-K

The Company filed a Current Report on Form 8-K on April 16,
2003, furnishing pursuant to Item 12 under Item 9 thereof
certain information regarding the text of a press release
issued by the Company, dated April 16, 2003, titled "Journal
Register Company Reports First Quarter Results."

18

SIGNATURE

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

Date: May 13, 2003 JOURNAL REGISTER COMPANY

By: /s/ Jean B. Clifton
------------------------------------------
Jean B. Clifton
Executive Vice President, Chief Financial
Officer and Secretary
(signing on behalf of the registrant
and as principal financial officer)

19

CERTIFICATIONS
--------------

I, Robert M. Jelenic, Chairman, President and Chief Executive Officer of Journal
Register Company (the "Registrant"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Registrant;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the Registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the Registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit
committee of the Registrant's board of directors:
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have
identified for the Registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: May 13, 2003 /s/ Robert M. Jelenic
------------------------------------------------
Robert M. Jelenic
Chairman, President and Chief Executive Officer

20

I, Jean B. Clifton, Executive Vice President, Chief Financial Officer and
Secretary of Journal Register Company (the "Registrant"), certify that:

1. I have reviewed this quarterly report on Form 10-Q of the Registrant;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the Registrant as of, and for, the periods presented in this
quarterly report;
4. The Registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have:
a. designed such disclosure controls and procedures to ensure that material
information relating to the Registrant, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being
prepared;
b. evaluated the effectiveness of the Registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the Registrant's auditors and the audit
committee of the Registrant's board of directors:
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the Registrant's ability to
record, process, summarize and report financial data and have identified
for the Registrant's auditors any material weaknesses in internal
controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: May 13, 2003 /s/ Jean B. Clifton
-------------------------------------------------
Jean B. Clifton
Executive Vice President, Chief Financial Officer
and Secretary

21

EXHIBIT INDEX

99.1 Certification of Principal Executive Officer Pursuant to 18 U.S.C.
Section 1350.

99.2 Certification of Principal Financial Officer Pursuant to 18 U.S.C.
Section 1350.

22