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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2003

OR

For the transition period from              to             

Commission file number 1-7564

DOW JONES & COMPANY, INC.

(Exact name of registrant as specified in its charter)

200 LIBERTY STREET, NEW YORK, NEW YORK 10281

(Address of principal executive offices)(Zip Code)

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

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

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

Class B Common Stock $1.00 par value

(Title of class)

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

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

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

Aggregate market value of common stock held by non-affiliates of the registrant at January 31, 2004 was approximately $2,515,000,000.

The number of shares outstanding of each of the registrant’s classes of common stock on January 31, 2004: 61,092,024 shares of Common Stock and 20,657,807 shares of Class B Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Part III incorporates information from certain portions of the registrant’s definitive Proxy Statement for the 2004 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the close of the fiscal year.

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DOW JONES & COMPANY, INC.

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

INDEX

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PART I.

ITEM 1. BUSINESS.

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

The Company has determined the following three reportable segments based on the manner in which it manages its business: print publishing, electronic publishing and general-interest community newspapers. In addition, the Company reports certain administrative activities under the corporate segment. Financial information about operating segments and geographic areas is incorporated by reference to Note 14 to the Financial Statements of this report.

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

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

EMPLOYEES

At December 31, 2003, the Company employed 6,975 full-time employees compared with 6,816 full-time employees at December 31, 2002 and 8,077 at December 31, 2001. The reduction in full-time employees from 2001 was largely the result of workforce reductions in 2002 and 2001.

PRINT PUBLISHING

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

The Company’s overall performance is largely dependent on the operating performance of the global Wall Street Journal (including its extended U.S. television brand and content). Print publishing revenues and profits are largely dependent on B2B advertising revenue, particularly from the Company’s core financial and technology sectors, which have been depressed from their cyclically high levels in 2000. Advertising volume began to recover in the second half of 2003 but is still below what the Company considers to be normal levels. Revenues of this segment comprise approximately 60% of total Company revenues.

U.S. Publications

The Wall Street Journal, the Company’s flagship publication, is one of the country’s largest daily newspapers with average print circulation of 1,792,000 in 2003. The Journal’s three major national editions are printed at 17 printing plants located throughout the U.S. The Journal also sells regional advertising in 18 regional editions.

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

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

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

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

Barron’s, the Dow Jones Business and Financial Weekly, is a weekly magazine with average circulation in 2003 of 297,000 that caters to financial professionals, individual investors and others interested in financial markets. Barron’s is printed in twelve of The Wall Street Journal’s 17 printing plants. It is delivered by second-class postal service and through National Delivery Service. About 67,000 newsstand copies are sold each week.

The Wall Street Journal Classroom Edition is published nine times during the school year and is read by an estimated 785,000 students every month during the academic year in more than 4,900 middle-school and high-school classrooms throughout the U.S. Individuals, organizations and corporations sponsor nearly one-half of all subscriptions and schools sponsor the remainder. The Wall Street Journal Campus Edition is included in college newspapers throughout the U.S. and includes the week’s top business news and feature stories.

International Publications

The Wall Street Journal Europe, which had an average circulation in 2003 of 89,000, is headquartered in Brussels, Belgium and printed in Belgium, Germany, Switzerland, Italy, Spain, the United Kingdom and Israel. It is available on the day of publication in continental Europe, the United Kingdom, the Middle East and North Africa. In 2003, the content of the international editions of the Journal was bolstered with the addition of exclusive news and opinion articles from the Washington Post.

The Asian Wall Street Journal, which had an average circulation of 79,000 in 2003, is headquartered in Hong Kong and printed in Hong Kong, Singapore, Japan, Thailand, Malaysia, Taiwan, the Philippines, Korea and Indonesia. It has the largest advertising market share of any pan-regional business newspaper in Asia. The Asian Wall Street Journal took home the Excellence in Newspapers award, the Excellence in Newspaper Design award, and the Best Opinion Piece in this year’s The Society of Publishers in Asia (SOPA) awards.

The Company also publishes The Wall Street Journal Special Editions, which are a collection of Journal pages in local languages distributed as part of 34 newspapers in 35 countries. The Wall Street Journal Americas, serving Central and South America, is the centerpiece of the Special Editions published in Spanish and Portuguese in 18 leading Latin America newspapers.

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

ELECTRONIC PUBLISHING

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

Dow Jones Newswires

Dow Jones Newswires is the premier provider of real-time business and financial news offering real-time, comprehensive news and information for financial professionals around the world. Its news is displayed on approximately 293,000 English-language terminals worldwide, in addition to some foreign language terminals, providing users with real-time information on equities, fixed income, foreign exchange, commodities and energy. Dow Jones Newswires has a dedicated staff of more than 700 journalists in addition to drawing on the global resources of The Wall Street Journal and the Associated Press (AP). Since 1999, Newswires also distributes selected content on a real-time basis to retail customers of on-line brokers.

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

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

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

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

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

Consumer Electronic Publishing

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

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

Consumer Electronic Publishing also includes the Company’s radio/audio business and its consumer electronic licensing/business development division, which offers electronic rights to use Dow Jones’ content. The Wall Street Journal Radio Network produces and distributes late-breaking business reports during the week to more than 210 radio stations across the country, covering 92% of the population.

Dow Jones Indexes/Ventures

In 1997, the Company began licensing the Dow Jones Industrial Averages as well as other indexes as the basis for trading options, futures, unit trusts, annuities, exchange traded funds, mutual funds, derivatives and specialized structured products. Dow Jones Indexes now offers more than 5,000 indexes.

Dow Jones Ventures include the Company’s reprints/permissions. The reprints/permissions business sells print or electronic reprints of The Wall Street Journal and Barron’s stories.

COMMUNITY NEWSPAPERS

Community newspapers consists of the Company’s wholly-owned Ottaway Newspapers, Inc. Revenues in this segment are largely dependent on local consumer-based advertising revenue and comprise about 20% of the Company’s revenues.

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

Ottaway publications now include 15 general-interest dailies, published in nine states: California, Connecticut, Maine, Massachusetts, Michigan, New Hampshire, New York, Oregon and Pennsylvania. Average 2003 circulation of the dailies excluding properties sold and acquired, was approximately 379,000; Sunday circulation for 11 newspapers, on this same-property basis, was 422,000. Ottaway also publishes more than 30 weekly newspapers and “shoppers.” The principal administrative office of Ottaway Newspapers is in Campbell Hall, New York. The primary delivery method for the newspapers is by carrier delivery.

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

Dow Jones Reuters Business Interactive LLC (Factiva) is a 50/50 joint venture launched in mid-1999 with Reuters Group Plc. Factiva is the number one provider of global news and business information to corporate end users and holds the number two position, based on revenue, in the archival business news and information marketplace. Factiva’s business information sources include Dow Jones and Reuters Newswires and The Wall Street Journal, plus nearly 9,000 essential sources and another 10,000 business-oriented Web sites from around the world. These sources provide current news, historical articles, local-language articles, market research and investment analyst reports, and stock quotes.

CNBC Europe and CNBC Asia Pacific are 50/50 joint ventures between Dow Jones and NBC. In early 1998, NBC and Dow Jones re-launched their business information channels in Europe and Asia Pacific as CNBC, a service of NBC and Dow Jones. These overseas services more than 80 million households on a full-time basis and 30 million households on a part-time basis.

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

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

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

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

In December 2003, the Company and the von Holtzbrinck Group exchanged equity shareholdings so as to increase the Company’s interest in The Wall Street Journal Europe to 90% from 51% and reduce the Company’s ownership of the von Holtzbrinck Group’s business daily, Handelsblatt, to 10% from 22%, with news and advertising relationships continuing.

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

RAW MATERIALS

The primary raw material used by the Company is newsprint. In 2003, approximately 213,000 metric tons were consumed. Newsprint was purchased principally from 10 suppliers. The Company is a limited partner in F.F. Soucy, Inc. & Partners, L.P., Riviere du Loup, Quebec, Canada. F.F. Soucy furnished 19% of total newsprint requirements in 2003. The Company has signed long-term contracts with certain newsprint suppliers, including F.F. Soucy, for a substantial portion of its annual newsprint requirements. For many years the available sources of newsprint have been adequate to supply the Company’s needs.

RESEARCH AND DEVELOPMENT

Research and development expenses, which primarily relate to software development for various operations of the Company, were $29.7 million in 2003, $31.2 million in 2002 and $34 million in 2001.

COMPETITION

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

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

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

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

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

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

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

ITEM 2. PROPERTIES.

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

Other facilities owned in fee with a total of approximately 1 million square feet house news, sales, administrative, technology and operational staff. These facilities are located in South Brunswick, New Jersey, and Chicopee Falls, Massachusetts. The Company has leased about 224,000 square feet of its office space in South Brunswick to other companies.

Dow Jones occupies two major leased facilities in New York City, including leasing more than 300,000 square feet downtown at the World Financial Center, which primarily houses editorial and executive staff, and 98,000 square feet at a separate midtown location for advertising sales staff. The Company also leases other business and editorial offices in numerous locations around the world, including 92,000 square feet in Jersey City, N.J, 62,000 square feet in three locations in London and 72,000 square feet in three locations in Hong Kong.

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

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

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ITEM 3. LEGAL PROCEEDINGS

On November 13, 2001, the Company instituted a lawsuit in the Supreme Court of the State of New York against Market Data Corp. (MDC) and Cantor Fitzgerald Securities (together with its affiliates, Cantor) seeking a declaratory judgment with respect to the Company’s obligations, if any, under a guarantee issued to MDC and Cantor. The guarantee relates to certain annual “minimum payments” owed by Telerate under certain conditions for data acquired by Telerate from Cantor Fitzgerald and MDC under contracts entered into when Telerate was a subsidiary of Dow Jones, and is described in Management’s Discussion and Analysis.

In this lawsuit the Company has asked the court to find that the Company does not and will not owe any payment under the contract guarantee through October 2006. In the alternative, the Company has asked the court to find that if any amount is owed, it must be reduced by amounts that Cantor and MDC receive or should have received from other distribution of the data after Telerate stopped receiving the government securities data from Cantor and MDC. MDC has asserted counterclaims demanding payment of $10,197,416 (allegedly the balance owed by Telerate on November 15, 2001), interest, attorneys’ fees, specific performance of the guarantee, and a declaratory judgment as to the validity and interpretation of the guarantee through October 2006.

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

The trial court in January 2003 denied motions by each of the parties that their own claims for relief be granted and that competing claims be dismissed. Appeals from those decisions are not being pursued, and discovery is proceeding.

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ITEM 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Executive Officers of the Registrant

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

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

Peter R. Kann, age 61, Chairman of the Board since July 1991, Chief Executive Officer since January 1991, served as Publisher of The Wall Street Journal from January 1989 to July 2002, President from July 1989 to July 1991 and Chief Operating Officer from July 1989 to December 1990, Executive Vice President from 1985 to 1989 and Associate Publisher of The Wall Street Journal from 1979 to 1988. Mr. Kann, who is the spouse of Ms. House, joined the Company in 1964.

Richard F. Zannino, age 45, Chief Operating Officer since July 2002, Executive Vice President since joining the Company in February 2001 and served as Chief Financial Officer from February 2001 until July 2002. Before joining Dow Jones, Mr. Zannino was Executive Vice President of Liz Claiborne, Inc., having joined in 1998 as Senior Vice President, Finance & Administration and Chief Financial Officer. Previously, Mr. Zannino had worked briefly as Chief Financial Officer of General Signal Corporation, prior to that company’s sale and before that for five years at Saks Fifth Avenue, ultimately as Executive Vice President and Chief Financial Officer.

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

L. Gordon Crovitz, age 45, Senior Vice President and President, Electronic Publishing and Senior Vice President/Electronic Publishing since October 1998, Vice President/Planning and Development from November 1997 to October 1998. Managing Director for Telerate’s Asia/Pacific operation from September 1996 to November 1997. Editor and Publisher of Review Publishing Company from July 1993 to September 1996. Mr. Crovitz joined the Company in 1981.

Christopher W. Vieth, age 39, Vice President and Chief Financial Officer since July 2002 and Vice President, Finance from March 2001 to July 2002 and Corporate Controller after joining the Company in July 2000 up until July 2002. Prior to joining Dow Jones, Mr. Vieth had been Vice President and Corporate Controller of Barnes and Noble, Inc. since May 1999. He joined Barnes and Noble in December 1995 as Director of Finance. From 1987 through 1995, Mr. Vieth worked at Amerada Hess Corporation.

Karen House, age 55, Senior Vice President and Publisher of all print editions of The Wall Street Journal since July 2002 and President of Dow Jones’ International Group from January 1995 to July 2002, Vice President of the International Group from March 1989 to January 1995. Ms. House, who is the spouse of Mr. Kann, joined the Company in 1974.

Paul Steiger, age 60, Managing Editor of The Wall Street Journal since June 1991 and Vice President of The Wall Street Journal since May 1992, Deputy Managing Editor from April 1985 to June 1991 and Assistant Managing Editor from 1983 to April 1985. Mr. Steiger joined the Company in 1966.

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PART II.

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

The Company’s common stock is listed on the New York Stock Exchange. The class B common stock is not traded. The approximate number of stockholders of record as of January 31, 2004 was 10,599 for common stock and 3,727 for class B common stock. The Company paid $1.00 per share in dividends in 2003 and in 2002.

ITEM 6. Selected Financial Data.

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

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

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ITEM 7. Management Discussion and Analysis of Financial Condition and Results of Operations

Overview

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

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

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

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

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

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

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

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Consolidated Results of Operations

2003 Compared to 2002 - Consolidated

Net Income

Net income in 2003 was $170.6 million, or $2.08 per diluted share, compared with 2002 net income of $201.5 million, or $2.40 per diluted share (all “per share” amounts included herein are based on reported net income and diluted weighted-average shares outstanding). Earnings per share included certain items affecting comparisons, which netted to a gain of $1.12 per share in 2003 and a gain of $1.66 per share in 2002. These items are detailed further beginning on page 20.

Revenues

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

Operating Expenses

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

Operating Income

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

2002 Compared to 2001 - Consolidated

Net Income

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

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Revenues

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

Operating Expenses

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

Operating Income

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

Segment Data

A summary of results of operations for each of the Company’s principal business segments as well as additional financial data is displayed in Note 14 to the financial statements. Segment data excludes restructuring charges and certain September 11 related items as management evaluates segment results exclusive of these items. Please refer to page 20 for further explanation of these items.

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

Print Publishing

Print publishing, which is largely comprised of the global operations of The Wall Street Journal, produces business and financial content world-wide. This content is published primarily in the U.S., Europe, Asia and Latin America editions of The Wall Street Journal and on U.S. television through a licensing arrangement with CNBC. The Company manages the global Journal operations as one segment as their products comprise the global Journal brand, and there are significant interrelationships within the editions including global management, shared news flows and workforce and a global advertising customer base and pricing. U.S. television, which represents a licensing agreement with NBC to provide branding, news content and on-air expertise to CNBC, is a further extension of the Journal brand and the content it produces. U.S. television contributes a significantly higher operating margin than the publications within the segment since it largely represents incremental revenue for the global Journal content and branding. The Company also includes the operations of Barron’s within print publishing instead of reporting them separately because of its relative immateriality to the Company’s results on a consolidated basis and because it shares similarities with the global Journal operations. Print publishing revenues comprised roughly 60% of total Company 2003 revenues.

As discussed earlier, the Company’s overall performance is largely dependent on the operating performance of the global Wall Street Journal (including its extended U.S. television brand and content). Advertising volume declined sharply from cyclically strong 2000 levels, driven by overall weakness in the global advertising environment, particularly in the Company’s core financial and technology segments. Financial and technology advertising, comprised about 37% of the U.S. Journal’s total linage in 2003, 40% in 2002 and 46% in 2001.

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Statistical information:

Advertising volume year-over-year percentage change:

2003 Compared to 2002 – Print Publishing

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

Revenues

In 2003, print publishing revenue fell 3.5%, or $33.4 million, to $915.5 million. U.S. print publication revenue fell $24.3 million, or 2.8%, to $833.7 million, largely reflecting a decline in advertising volume and lower circulation revenue at The Wall Street Journal and at Barron’s. U.S. television revenue from CNBC decreased 16%. International print publication revenues declined $9.1 million, or 10%, to $81.8 million, primarily as a result of a decline in advertising revenue. Despite increases in advertising linage of 2% at The Asian Wall Street Journal and 9.3% at The Wall Street Journal Europe, revenues decreased as a result of discounts related to the global ad sales program launched in the summer of 2002.

U.S. advertising revenue declined 2.6%, to $570.4 million, on lower advertising volume at the U.S. Journal and Barron’s. While advertising volume at the U.S. Journal was down 1.3% for the year, advertising volume began to strengthen in the second half of 2003 (up 7.7% in total) and in the fourth quarter of 2003 the U.S. Journal’s advertising linage increased across all of its major ad categories for the first time since the second quarter of 2000.

General advertising linage, which represented 42% of 2003 total U.S. Wall Street Journal linage, was down 0.6% in 2003, largely reflecting declines in public utility advertising offset by increases in passenger travel, pharmaceuticals and insurance advertising. Technology advertising, which represented 20% of total 2003 Journal linage, fell 2.7% in 2003, despite gains of 13% in the latter half of the year. The year-over-year decrease in technology advertising was the result of declines in personal computer advertising, B2B e-commerce advertising and hardware advertising, partially offset by improvements in software and communications advertising.

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Financial advertising, which represented 17% of total 2003 Journal linage, fell 15.8% in 2003, primarily resulting from declines in investment advisory and tombstone advertising somewhat offset by an increase in broker advertising. Despite the decline for the full year, financial advertising began to show positive results as the fourth quarter increased 7% (down 9.1% in October, up 7.9% in November and up 39% in December). Classified advertising, which represented the remaining 21% of linage, increased 14.1% in 2003, due to improvements in real estate advertising and other classified advertising. Color advertising, which is billed at a premium, was up 28% over 2002.

Circulation and other revenue for U.S. publications decreased $8.8 million, or 3.2%, to $263.3 million in 2003. Average circulation for The Wall Street Journal was 1,792,000 in 2003 compared with 1,817,000 in 2002. Barron’s average annual circulation was 297,000 in 2003 compared with 295,000 in 2002. The decline in volume along with a decrease in revenue-producing subscriptions and a higher number of discounted subscriptions more than offset incremental revenue from the fourth quarter 2002 Wall Street Journal price increase. Circulation and other revenue for international publications declined $1.9 million, or 5.4%, to $34.1 million in 2003. Average combined circulation for the international editions of The Wall Street Journal was 168,000 in 2003 compared with 179,000 in 2002.

Expenses

Print publishing 2003 expenses declined $49.5 million, or 5.2%, to $907.4 million, reflecting lower expenses resulting from the Company’s cost containment program and reduced Today’s Journal costs as 2002 included expenses related to its launch. Newsprint expense for 2003 was nearly flat compared with 2002, as a 10.1% increase in prices was offset by 9.5% lower newsprint consumption. The number of full-time employees in this segment was down 2.8% from December 31, 2002, reflecting a minor workforce reduction in the third quarter of 2003.

Operating Income (Loss)

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

2002 Compared to 2001 – Print Publishing

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

Revenues

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

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

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

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

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

Expenses

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

Operating (Loss) Income

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

Electronic Publishing

Electronic publishing, whose products provide business and financial news and information to customers via electronic dissemination and are expected to have similar long-term economic characteristics, includes the operations of Dow Jones Newswires, Consumer Electronic Publishing and Dow Jones Indexes/Ventures. Consumer Electronic Publishing includes the results of WSJ.com and its related vertical sites as well as the Company’s licensing/business development and radio/audio businesses. Revenues in the electronic publishing segment are mainly subscription-based. Electronic publishing represents about 20% of total revenues.

2003 Compared to 2002 – Electronic Publishing

Revenues

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

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

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

Expenses

Electronic publishing expenses in 2003 were up $5.5 million, or 2.2%, to $254.2 million, as a result of higher marketing costs, facilities expenses and employee incentives partially offset by continued cost control efforts. The number of full-time employees in this segment was flat from December 31, 2002.

Operating Income

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

2002 Compared to 2001 – Electronic Publishing

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

Revenues

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

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

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

Expenses

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

Operating Income

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

Community Newspapers

Community newspapers includes the operations of Ottaway Newspapers, which publishes 15 daily newspapers and over 30 weekly newspapers and “shoppers” in nine states in the U.S. Community newspapers comprised roughly 20% of total Company 2003 revenues.

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

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

2003 Compared to 2002 – Community Newspapers

Revenues

Community newspapers revenue for 2003 increased 3.4%, to $311 million, primarily reflecting incremental revenue as a result of newly-acquired newspapers and an increase in advertising revenue. On a same-property basis, revenue increased 1.3%. Same-property advertising revenue increased 1.6% as an overall linage decrease was more than offset by rate increases and increases in

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preprint and other advertising revenue. Circulation and other revenue decreased 2%, primarily reflecting a net reduction from divested/newly-acquired operations. Circulation and other revenue on a same-property basis increased less than 1%. Average daily circulation was about 379,000 in 2003 compared to 384,000 in 2002.

Expenses

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

Operating Income

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

2002 Compared to 2001 – Community Newspapers

Revenues

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

Expenses

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

Operating Income

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

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Certain Items Affecting Comparisons

The following table summarizes certain items affecting comparisons by year.

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

Restructuring

In 2002, the Company initiated two workforce reductions resulting in total restructuring charges of $26.9 million largely reflecting employee severance related to workforce reductions of about 445 full-time employees, or roughly 6%, of the Company’s full-time workforce. These workforce reductions occurred in all business segments with the exception of community newspapers. Annualized cost savings associated with the workforce reduction are expected to be about $39 million.

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

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

World Financial Center/September 11 Related

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

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Relocation of personnel out of World Financial Center

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

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

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

Insurance Claim

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

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

(b) Gains/Charges in Equity in Earnings (Losses) of Associated Companies

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

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

(c) Gain on Resolution of Telerate Sale Loss Contingencies

In the first quarter of 2003, the Company recorded a gain of $59.8 million ($.73 per diluted share) on the resolution of certain loss contingencies resulting from the sale of its former Telerate subsidiary to Bridge. The reserve for loss contingencies was established as part of the loss on the sale of Telerate in 1998 and related to various claims that arose out of the Stock Purchase Agreement, including a purchase price adjustment related to working capital, an indemnification undertaking and other actual and potential claims and counter-claims between the Company and Bridge. In February 2001, Bridge declared bankruptcy. In March 2003, these matters were resolved by the bankruptcy court, and the Company’s contingent liabilities were thereby extinguished.

(d) Gains on Sale of Ottaway Properties

The second quarter of 2002 included a gain of $44.5 million ($38 million after taxes, or $.45 per diluted share) from the sale of a community newspaper to Eagle-Tribune Publishing Company. The first quarter of 2002 included a gain of $153.4 million ($126.1 million after taxes, or $1.49 per diluted share) resulting from the sale of four of the Company’s Ottaway newspapers to Community Newspapers Holdings, Inc.

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

(e) Contract Guarantee, net

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

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

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

Earnings in 2001 included income of $31.1 million resulting from Bridge fulfilling its payment obligation to Cantor during its post-petition bankruptcy phase, which was partially offset by the accretion of discount on the reserve balance of $14 million. In 2001, Dow Jones made one payment of $5.8 million for amounts not paid by Bridge prior to its bankruptcy. Earnings in 2002 and 2003 included accretion charges of $11.9 million and $9.5 million, respectively, which increased the reserve balance as of December 31, 2003 to $253.7 million. The Company has classified $164.6 million of this reserve as current based on the original due dates of the contract.

On November 13, 2001, the Company instituted a lawsuit in the Supreme Court of the State of New York against MDC and Cantor seeking a declaratory judgment with respect to the Company’s obligations, if any, under the guarantee. In this lawsuit the Company has asked the court to find that the Company does not and will not owe any payment under the contract guarantee through October 2006. In the alternative, the Company has asked the court to find that if any amount is owed, it must be reduced by amounts that Cantor and MDC receive or should have received from other distribution of the data. MDC has asserted counterclaims demanding payment of $10,197,416 (allegedly the balance owed by Telerate on November 15, 2001), interest, attorneys’ fees, specific performance of the guarantee, and a declaratory judgment as to the validity and interpretation of the guarantee through October 2006.

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

The trial court in January 2003 denied motions by each of the parties that their own claims for relief be granted and the competing claims be dismissed. Appeals from those decisions are not being pursued, and discovery is proceeding.

Due to the stage of the lawsuit at December 31, 2003, it is not possible to determine whether the court will find that any obligation the Company had under the guarantee may be dismissed or reduced. Accordingly, the Company believes the balance of the reserve continues to be appropriate.

While it is not possible to predict with certainty the ultimate outcome of this litigation, the Company believes the likelihood of a loss exceeding the amount reserved is remote; however, it is possible that such loss could be less than the amount reserved.

(f) Gain on Non-monetary Exchange of Interests in WSJ Europe and Handelsblatt

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

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(g) Write-down of Investments

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

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

(h) Certain Income Tax Matters

In the third quarter of 2003, the Internal Revenue Service (“IRS”) completed its audit of the Company’s tax returns for the 1995 through 1998 tax periods, which had been amended for additional tax refunds. In October 2003, the Company received notification that the Congressional Joint Committee on Taxation had approved these claims for tax refunds of approximately $24 million. The Company received these refunds plus interest of approximately $6.7 million in the fourth quarter of 2003. Pursuant to the settlement of these claims, in the third quarter of 2003, the Company released $25 million of tax provisions no longer needed for loss contingencies and recorded interest income of $6.7 million ($4.0 million, net of taxes). The Company also recorded a provision of $9.5 million in the third quarter for loss contingencies relating to recent developments in certain other tax matters. The net effect of these items was an increase in net income of $19.5 million, or $.24 per share.

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

Other Income/Deductions

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

Equity in Earnings (Losses) of Associated Companies

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

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

Income Taxes

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

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