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UNITED STATES SECURITIES AND EXCHANGE COMMISSION  
 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended June 30, 2005
OR 
 Commission File Number 033-75156 MEDIANEWS GROUP, INC.  Delaware
(State or other jurisdiction of
incorporation or organization)
    
    76-0425553
(I.R.S. Employer Identification Number)
 1560 Broadway, Denver, Colorado
(Address of principal executive offices)
    
    80202
(Zip Code)
 Registrants telephone number, including area code: (303) 563-6360 Securities registered pursuant to Section 12(b) of the Act:NONE Securities registered pursuant to Section 12(g) of the Act:NONE Indicate by check mark whether the registrant (1) has filed all reports 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. Item (1) Yes [X] No [   ]; Item (2) Yes [   ]
No [X*] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act). Yes [   ] No [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes [   ] No [X] State the aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was last sold, or the
average bid and asked prices of such common equity, as of the last business day of the registrants
most recently completed second fiscal quarter. Not applicable as there is no active market for our common equity. The number of shares outstanding of the registrants common stock as of September 26, 2005 was
2,298,346. Documents Incorporated by Reference: None *The registrants duty to file reports with the Securities and Exchange Commission has been
suspended in respect of its fiscal year commencing July 1, 2005 pursuant to Section 15(d) of the
Securities Exchange Act of 1934. The registrant is filing this Annual Report on Form 10-K on a
voluntary basis.




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EXPLANATORY NOTE This Annual Report on Form 10-K for the year ended June 30, 2005 includes restated
consolidated information for the fiscal years ended June 30, 2004 through 2001. This restatement
of financial information results from errors that were identified in accounting for deferred income
taxes related to certain of our acquisitions and dispositions that qualified under Internal Revenue
Code Section 1031 as asset exchanges. We incorrectly treated these exchange transactions as
non-taxable transactions, and therefore we did not provide for deferred income tax expense upon
consummation of the sale portion of the transactions. Rather we accounted for the basis
differences on the purchase end of the exchange transactions by recording a deferred tax obligation
to recognize the difference in book and tax basis and a corresponding increase in goodwill. The
correction resulted in an increase/(decrease) of the reported amounts of net income of $(0.9)
million, $(2.5) million, $0.0 million and $0.8 million, respectively, for the fiscal years ended
June 30, 2004, 2003, 2002 and 2001 along with related adjustments to goodwill, deferred income tax
liability and a $23.4 million adjustment to opening retained earnings for fiscal year 2001. See Note 15: Restatement of Previously Issued Financial Statements of the notes to the
consolidated financial statements (as restated) and Restatement of Previously Reported Financial
Statements in Managements Discussion and Analysis of Financial Condition and Results of
Operations contained in the Annual Report on Form 10-K. All previously reported amounts affected
by the restatement that appear in this Annual Report on Form 10-K have been restated. The
restatement had no impact on the reported amounts of net cash flows from operating, investing or
financing activities. We have not amended and do not intend to amend our previously-filed Annual Reports on Form
10-K or Quarterly Reports on Form 10-Q for the periods affected by the restatement that ended prior
to June 30, 2005. For this reason, the consolidated financial
statements, reports of independent registered public accounting firm and
related financial information for the affected periods contained in such reports should no longer
be relied upon. 2




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Table of Contents PagePart IItem 1.
    
    Business
    
    4Item 2.
    
    Properties
    
    11Item 3.
    
    Legal Proceedings
    
    12Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    12Part IIItem 5.
    
    Market for the Registrant's Common Equity and Related Stockholder Matters
    
    13Item 6.
    
    Selected Financial Data
    
    14Item 7.
    
    Management's Discussion and Analysis of Financial Condition and Results of Operations
    
    17Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    33Item 8.
    
    Financial Statements and Supplementary Data
    
    35Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
    
    35Item 9A.
    
    Controls and Procedures
    
    35Item 9B.
    
    Other Information
    
    35Part IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    36Item 11.
    
    Executive Compensation
    
    38Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management
    
    40Item 13.
    
    Certain Relationships and Related Transactions
    
    42Item 14.
    
    Principal Accountant Fees and Services
    
    43Part IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    45Signatures
    
    
    
    82Third Amended & Restated Certificate of IncorporationAmended & Restated BylawsFourth Amendment to Credit AgreementAmendment to the Amended & Restated Shareholders AgreementShareholder AgreementSubsidiariesCertification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to Section 302Certification Pursuant to 18 U.S.C. Section 1350Certification Pursuant to 18 U.S.C. Section 1350
 3




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Item 1: Business General MediaNews Group, Inc. (MediaNews or the Company), a Delaware Corporation, was founded in
March 1985. We are one of the largest privately owned newspaper companies in the United States in
terms of daily paid circulation. We control 41 market dominant daily and approximately 65 non-daily
newspapers in nine states, including suburban markets in close proximity to the San Francisco Bay
area, Los Angeles, New York, Baltimore and Boston. We also own metropolitan daily newspapers in
Denver, Salt Lake City and Detroit that operate under joint operating agency (JOA) agreements.
The newspapers we currently control had combined daily and Sunday paid circulation of approximately
1.8 million and 2.1 million, respectively, as of March 31, 2005 (including the daily circulation of
The Detroit News, which was acquired on August 3, 2005). In addition, we have a 33.8% interest in a
partnership controlled by Gannett, the largest newspaper company in the United States. This
partnership operates six daily newspapers in Texas and New Mexico with a combined daily circulation
of approximately 130,000. We have grown primarily through strategic acquisitions, partnerships and, to a lesser extent,
internal growth. One of our key strategies is geographic clustering. This strategy involves
acquiring newspapers, or partnering with newspapers, in markets contiguous to those in which we
already operate. Clustering has allowed us to realize substantial revenue synergies and cost
efficiencies, resulting in higher operating cash flow growth at those newspapers than they would
have achieved on a stand-alone basis. Our newspapers are generally positioned in markets with limited direct competition for local
newspaper advertising. Start-ups of new daily newspapers in suburban markets with pre-existing
local newspapers are rare. We believe that our newspaper markets, taken as a whole, have above
average population and sales growth potential. Most suburban and small city daily newspapers, such
as a majority of the newspapers we own, have the leading or sole distribution in the markets they
serve. Suburban newspapers address the specific needs of the community by publishing a broad
spectrum of local news as well as advertiser specific editions which television, because of its
broader geographic coverage, is unwilling or unable to provide. Thus, in many communities, the
local newspaper provides a combination of social and economic services in a way that only it can,
making it attractive for both consumers and advertisers. Our suburban newspapers generate the
majority of their revenues from local retail, classified and circulation sales, which we believe
are less affected by national economic trends and therefore tend to provide a more stable base of
operating cash flow. On the other hand, our metropolitan newspapers generate significant revenues
from high margin national and employment advertising, which is strongly influenced by national and
local economic conditions and trends. In conjunction with our daily newspapers, we operate sizeable weekly newspaper groups that
extend our reach and advertising opportunities in and around our daily newspaper markets. Suburban
weekly newspapers allow us to attract a different base of advertisers than our daily newspapers,
such as small local retailers, local classifieds and restaurants, which improves our competitive
positioning, reduces the threat of competition from direct mail and shoppers (free circulars) and
achieves greater household penetration in our newspaper markets. Our largest suburban weekly
newspaper groups operate in conjunction with our San Francisco Bay area newspapers, Los Angeles
Newspapers Group and Connecticut Post. 4




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The following sets forth our daily newspapers: California
    
    MassachusettsDaily News,Los Angeles, CA
    
    The Sun,Lowell, MAPress-Telegram,Long Beach, CA
    
    The Berkshire Eagle,Pittsfield, MAANG Newspapers, San Francisco Bay Area, CA
    
    Sentinel & Enterprise,Fitchburg, MAOakland Tribune,Oakland, CA
    
    North Adams Transcript,North Adams, MATri-Valley Herald,Pleasanton, CAThe Daily Review,Hayward, CA
    
    MichiganThe Argus,Fremont, CA
    
    The Detroit News,Detroit, MI (JOA)Alameda Times-Star,Alameda, CASan Mateo County Times,San Mateo, CA
    
    PennsylvaniaSan Gabriel Valley Newspaper Group, CA
    
    York Daily Record & The York Dispatch,York, PA (JOA)San Gabriel Valley Tribune,West Covina, CA
    
    Lebanon Daily News,Lebanon, PAPasadena Star-News,Pasadena, CA
    
    The Evening Sun,Hanover, PAWhittier Daily News,Whittier, CAThe Sun,San Bernardino, CA
    
    UtahInland Valley Daily Bulletin,Ontario, CA
    
    The Salt Lake Tribune,Salt Lake City, UT (JOA)Marin Independent Journal,Marin CAEnterprise-Record/Oroville Mercury-Register,Chico & Oroville, CA
    
    VermontTimes-Herald,Vallejo, CA
    
    Brattleboro Reformer,Brattleboro, VTTimes-Standard,Eureka, CA
    
    Bennington Banner,Bennington, VTThe Reporter,Vacaville, CADaily Democrat,Woodland, CA
    
    Texas-New Mexico Newspapers PartnershipThe Ukiah Daily Journal,Ukiah, CA
    
    (unconsolidated, 33.8% owned):Redlands Daily Facts,Redlands, CA
    
    El Paso Times,El Paso, TXLake County Record-Bee,Lakeport, CA
    
    Las Cruces Sun-News,Las Cruces, NMRed Bluff Daily News,Red Bluff, CA
    
    The Daily Times,Farmington, NMCarlsbad Current-Argus,Carlsbad, NMColorado
    
    Alamogordo Daily News,Alamogordo, NMThe Denver Post,Denver, CO (JOA)
    
    The Deming Headlight,Deming, NMEastern Colorado Publishing Company, COThe Fort Morgan Times,Fort Morgan, COJournal-Advocate,Sterling, COLamar Daily News,Lamar, COConnecticutConnecticut Post,Bridgeport, CT
 Industry Background Newspaper publishing is the oldest and largest segment of the media industry. Newspapers
address the specific needs of readers and advertisers in the communities they serve by publishing a
broad spectrum of local news as well as special editions that are targeted to specific advertisers
and readers. In most communities, the local newspaper provides the primary voice for local news and
information, including business, sports, government and social as well as political commentary,
making a newspapers content attractive to both readers and advertisers. We believe that the local
newspapers close relationship with its readers and the community is one of the primary reasons why
newspapers remain a dominant medium for local advertising, accounting for approximately 40% of all
local media advertising expenditures in the United States in calendar 2004.(1) We believe that, due to fragmentation of other mediums, newspapers are the last mass market
medium available for advertisers. In addition, newspapers are one of the few forms of mass media
used by readers for both editorial and advertising content. Readers of newspapers also tend to be
more highly educated and have higher incomes than non-newspaper readers,   (1)
    
    Source: Newspaper Association of America 5




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with a recent survey showing approximately 59% of college graduates and 61% of households with
incomes greater than $75,000 read a daily newspaper.(1) Because of the desirable
demographics and market reach of daily newspapers, we believe that they represent the most
cost-effective means for advertisers to reach a broad and affluent spectrum of consumers. With the exception of a few of the largest cities, most cities in the United States do not
have more than one daily newspaper. In addition, start-ups of daily newspapers that compete in a
meaningful way with existing daily newspapers are rare. Significant Transactions Acquisitions In January 2005, we purchased The Park Record,published in Park City, Utah, for approximately
$8.0 million. In June 2005, we purchased the remaining 20% of The Denver Post Corporation which we did not
own for approximately $45.9 million. Effective August 3, 2005, we purchased the editorial assets of The Detroit News,published in
Detroit, Michigan, and a 5% limited partnership interest in the Detroit JOA for approximately $25.0
million. We are responsible for the news and editorial content of The Detroit Newsfor which we
will receive a fixed monthly preferred distribution with possible incremental distributions beginning in
2009 based on profit growth. Under the terms of the Detroit JOA, we are reimbursed for our news
and editorial costs. Debt Refinancings In August 2004, we amended our bank credit facility. The August amendment and refinancing
maintains our $350.0 million revolving credit facility and provides for a $100.0 million term loan
A and a $148.8 million term loan C, both of which were used to refinance the previous term loan
B facility. The amendment and refinancing revised maturities and lowered borrowing margins on
the related borrowings. In September 2005, we again amended our bank credit facility. The
September 2005 amendment and refinancing maintains our $350.0 million revolving credit facility and
the $100.0 million term loan A and provides for a $147.3 million term loan B facility, which
was used to pay off the term loan C facility. The amendment and refinancing slightly revised
maturities and lowered borrowing margins on the related borrowings, which based on June 30, 2005
outstanding debt, would have resulted in $2.3 million in interest savings in fiscal year 2005. See
Note 17: Subsequent Events of the notes to the consolidated financial statements. On July 1, 2004, the first redemption date of our 8 5/8% Senior Subordinated Notes, we used
cash on hand and borrowings under the bank credit facility to redeem all our outstanding $200.0
million 8 5/8% Senior Subordinated Notes. Other Transactions Prior to September 2004, our Alaska TV station participated in a joint sales and shared
services agreement with another Alaska TV station. By the terms of the agreements, we performed
certain production, sales and administrative functions of both stations. We also had an agreement
to purchase the other stations license and operating assets subject to FCC (Federal Communications
Commission) approval. In September 2004, we elected not to extend the joint sales agreement and
purchase agreement, and as a result, the agreements were terminated. Operating Strengths and Strategies Our long-term operating strategy is to increase revenues and operating profit through
geographic clustering, partnerships and internal growth. Our internal growth strategy is built on
our key strengths, which include development of new revenue streams, local news leadership,
circulation growth and prudent cost controls. In addition, we seek to drive revenue growth in our
Internet operations by leveraging our local content across a diverse array of classified
advertising categories, including employment, automotive, real estate and other Internet verticals.   (1)
    
    Source: Newspaper Association of America 6




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Geographic Clusters and Partnerships.One of our key acquisition strategies is to acquire
newspapers in markets contiguous to our own. We refer to this strategy, which we pioneered, as
clustering. Clustering enables us to realize operating efficiencies and economic synergies, such
as the sharing of management, accounting, newsgathering, advertising and production facilities. In
addition, we seek to increase operating cash flows at acquired newspapers by reducing labor costs,
and implementing overall improvements in cost management. Clustering also enables us to maximize
revenues by selling advertising into newspapers owned by us in contiguous markets. We believe that
this strategy allows us to achieve higher operating margins at our clustered newspapers than we
would realize from those newspapers on a stand-alone basis. The California Newspapers Partnership
(CNP), the Denver Newspaper Agency (the Denver JOA or DNA) and the Texas-New Mexico
Newspapers Partnership are all extensions of this strategy. New Revenue Streams.We focus on developing and implementing new revenue initiatives and
exporting these initiatives across all of our newspapers. Launching niche publications is one of
our key initiatives. For example, in Denver, we recently launched BIAS, a youth-oriented free
bi-weekly, and YourHub.com, a zoned weekly, distributed in the newspaper, which is published from
content created on the Internet by people in the community. We also launched, Flipside,an
entertainment publication in York, targeting 18 to 34 year olds in that market.We have other
revenue growth initiatives, such as a monthly contest for the best new revenue initiative,
revenue Think Tanks with our top sales executives, TOMA (Top of Mind Awareness) which introduces
local advertisers to the power of newspaper advertising and SWAT programs which utilize the skills
of our best sales representatives in a sales blitz at a sister newspaper. We have expanded our
product offerings by forming strategic alliances, such as a relationship with a direct mail
provider designed to increase our share of the mid-week preprint and print and delivery business in
four of our markets. In January 2004, our Los Angeles Newspaper Group launched IMPACTO USA, a
weekend home delivered Spanish-language newspaper. IMPACTO USAis home delivered every Saturday to
over 250,000 targeted Hispanic households in Central and East Los Angeles, Long Beach and the San
Fernando Valley under a distribution strategy developed through the Latino Newspaper Network, a
marketing and advertising sales partnership in which we participate. In conjunction with these
programs, we utilize market research, demographic studies, zoning, strong local market penetration
and active community involvement to develop and implement marketing programs that allow our
newspapers to maximize their share of the available advertising dollars in the market. An
expansion of our zoning strategy is YourHub.com, described above, which publishes separate
community editions. YourHub.com has over 40 online zones, along with 15 editorial and 10
advertising zoned editions of YourHub.com which are distributed weekly in both Denver newspapers on
Thursday. Local News Leadership.We believe that we have assembled the largest local newsgathering
resources in our markets, and we are committed to being the leading provider of high quality local
news in those markets. Each newspaper is locally managed and sets its own news coverage and
editorial policy based on the local market. Our focus on in-depth local news coverage sets us apart
from other news sources in our markets, contributing to reader loyalty and increasing franchise
value. With the timeliness and availability of national and world news 24 hours a day on television
and the Internet, we believe that providing in-depth local news coverage is invaluable and is what
sets us apart from other news sources. To foster reader interaction and participation we have also
introduced citizen journalism with YourHub.com in Denver whereby local news content and photos
are submitted directly by readers. In Denver, we have also introduced Podcasts in which The Denver
Poststop headlines, presented in an audio version, can be downloaded from the newspapers Web
site, www.denverpost.com, onto a digital audio device, such as an iPod, and listened to on the go.
Our ongoing involvement in the communities in which we operate not only strengthens our
relationships with these communities but also provides our advertisers a superior vehicle for
promoting their goods and services. Although our focus is primarily on local news, we are committed
to providing quality national and international news coverage when it is of particular interest to
the local community. The majority of our newspapers receive awards annually for excellence in various editorial
categories in their respective regions and circulation size. The Denver Postwon the highest award
for editorial excellence, a Pulitzer Prize, in 2000 for its coverage of the Columbine High School
tragedy. Our newspapers are designed to visually attract readers through attractive layouts and
color enhancements and have also received numerous awards from state press associations as well as
other peer organizations for their editorial content, local news and sports coverage, and
photography. The Society of Professional Journalists awarded its Sigma Delta Chi award for
investigative journalism to the Oakland Tribunefor its four part series, Missing the Target,
which revealed how millions of dollars in federal homeland security money was being misspent by
local and state officials in California. 7




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Circulation Growth.We believe circulation growth is essential to maintaining and growing the
long-term franchise value at our newspapers. Accordingly, we have and will continue to make
significant investments in circulation promotion, telemarketing and other circulation growth campaigns to increase circulation and readership.
Our circulation growth strategies are focused on growing home delivery and single copy sales, the
most desired circulation types for our advertisers. Changes in the telemarketing rules, including
the National Do-Not-Call Registry, are having an impact on our ability to gain subscriptions
through telemarketing; however, we are not prohibited from calling those persons who are not
registered with the registry or those persons who are, but with whom we have had a pre-existing
relationship during the prior 18 months. Other home delivery circulation marketing programs are
being implemented to offset the impact of the reduction in telemarketing orders. We design our
management incentive programs to reward our publishers for circulation growth at their daily
newspapers. While growing circulation volumes is important, we continue to balance this with an
eye on circulation profit by instituting programs that target the replacement of higher churn
short-term circulation orders with lower cost, longer term circulation orders, thereby delivering a
stable subscriber base for our advertising customers and controlling subscriber acquisition costs.
In the past, this strategy has improved circulation profits, but in some cases decreased
circulation volumes in the short-term. Throughout the industry, circulation has been a challenging
area. While the industry as a whole reported for the March 31, 2005 Audit Bureau of Circulations
reporting period a 1.9% and 2.5% decline in daily and Sunday circulation, respectively, we reported
a daily and Sunday decline of 1.2% and 1.3%, after excluding the Denver JOA, where management made
the decision to continue bringing circulation down slowly from abnormally high pre-JOA levels.
Most of our other declines were in the very competitive Los Angeles market. Outside of Los
Angeles, a majority of our newspapers reported gains. We are also making investments in technology
to enhance demographic targeting of potential subscribers, aimed at acquiring and retaining what
our advertisers consider to be high quality subscribers. By the end of the calendar year, we
expect to have implemented this database technology at all our largest newspapers. Cost Controls.We focus on cost control with particular attention on managing staffing
requirements. At newspapers with collective bargaining agreements, management strives to enter
into long-term agreements with small annual increases. In addition, we further control labor costs
through investments in state-of-the-art production equipment that improve production quality and
increase operating efficiency. Our investments, such as a new production and office facility in
Salt Lake, built with our JOA partner, not only cut costs and improve operating cash flows of the
JOA, but also make significant improvements to the reproduction and color quality of the
newspapers. The facility is expected to be operational in the spring of 2006. We are equally
focused on newsprint cost control. Each of our newspapers benefits from the discounted newsprint
pricing we obtain as one of the largest newspaper groups in the United States. We purchase
newsprint from several suppliers under arrangements resulting in what we believe are some of the
most favorable newsprint prices in the industry. Internet.MediaNews Group interactive (MNGi), our Internet subsidiary, drives the
interactive media business of our Company and manages the centralized technology infrastructure
that supports each of our local sites. Our mission is to use the Internet and other electronic
media to enhance and broaden our position as the leading provider of news, information and services
in our local media markets. Our newspapers are growing market share and extending the
profitability of our local media franchises by leveraging our extensive newsgathering resources,
print and online sales infrastructures and partnering with providers of emerging technologies,
including broadband and wireless. We expect to extend the reach of our brands beyond our core and
existing print audience to attract younger and more diverse users. Finally, we are cultivating
relationships with new and existing advertisers by proactively addressing their needs by providing
multimedia packages, among other things. In April 2005, we launched a significant new partnership with Yahoo! Hot Jobs which provides
employers more visibility and distribution for their job postings and provides job seekers the most
comprehensive database of employment listings in each of our local markets. This relationship with
Yahoo! Hot Jobs is another example of partnerships that allow us to offer the best value and
cutting-edge products for both our advertisers and customers. In fiscal year 2006, we plan to
explore additional national distribution opportunities. To expand our direct sales channels, we are evaluating several comprehensive online
self-service products to facilitate customer orders and expect to begin implementation of these in
the first quarter of fiscal year 2006. We have also begun to implement next generation classified
capabilities that we believe will result in more revenue per order, new revenue streams and
significant cost savings. The development of these products will allow us to better compete with
new entrants into online advertising and enhance advertiser satisfaction. In addition, we are
introducing site registration and personalization across each of our sites, giving us the ability
to integrate our online/offline databases to allow for a higher degree of online targeted marketing
including print subscription acquisitions, email marketing and the ability to target advertising
based on the captured demographic and psychographic data. 8




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We have also made strategic Internet investments that we believe expand and enrich our online
content, which are described in more detail below.  
    
    PowerOne Media(www.poweronemedia.com), provides interactive vertical classified
advertising solutions, primarily for the newspaper industry. PowerOne Media solutions
include CarCast, Zwire!, Classified Hosting, Employment (CareerSite), Display Ads, Online
Dating, and Real Estate. We own approximately 16% of PowerOne Media.
    
    SeeitBuyit(www.seeitbuyit.com, legal name, Rate Watch, Inc.), is a marketing and
promotional services company focused on providing the real estate industry a powerful
listing and selling tool designed to provide a one stop shopping marketing solution for our
real estate advertising customers. SeeitBuyit provides realtors with video photography,
online home tours, brochures, direct mail pieces, and other items used by realtors in
selling new and existing homes, primarily in the San Francisco Bay Area; however, we expect
to expand the sites geography to provide listings throughout California and other states in
which we operate. Rate Watch, Inc. is a wholly-owned subsidiary of MediaNews. By being the leading provider of local news and information in our markets, and leveraging the
Internet, electronic media, emerging wireless and broadband technologies, we believe that our
newspapers are well positioned to respond to and benefit from changes in the way advertising, news
and information are delivered to customers now and in the future. Links to our online newspapers
can be found at www.newschoice.com. Superior Management.Our management team has a proven track record of successfully acquiring,
including through partnerships, approximately 70 newspapers that have been successfully integrated
into our operations. All of our senior executives have spent the majority of their careers in the
newspaper industry operating, acquiring and integrating newspapers. Strategic Acquisitions.In the past we have sought to acquire newspapers that are contiguous
to our existing newspapers and that represent compelling values based on expected operating cash
flow growth from clustering synergies, efficiencies or otherwise. We may from time to time
continue to evaluate and pursue strategic or targeted acquisitions and partnerships that meet our
strict acquisition criteria, including our goal of not increasing our leverage ratio over the long
term. Advertising and Circulation Revenues Advertising is the largest component of a newspapers revenues, followed by circulation
revenue. Advertising rates at each newspaper are established based upon market size, circulation,
readership, demographic makeup of the market and the availability of alternative advertising media
in the marketplace. While circulation revenue is not as significant as advertising revenue,
circulation volume trends can impact the decisions of advertisers and advertising rates. Advertising revenue includes Retail(local and national department stores, specialty shops,
preprinted advertising circulars and other local retailers, direct mail and niche publications),
National(national brand advertising accounts), Classifiedadvertising (employment, automotive,
real estate, private party and personals) and Interactive(online components of Retail, National
and Classified Advertising). Other revenue consists primarily of revenue from commercial printing.
The contributions of Retail, National, Classified, Interactive, Circulation and Other revenue to
total revenues for fiscal years 2005, 2004 and 2003 are shown in the table below. Fiscal Years EndedJune 30,(1)2005
    
    2004
    
    2003Retail
    
    
    42
    %
    
    
    42
    %
    
    
    42
    %National
    
    
    6
    
    
    
    6
    
    
    
    6Classified
    
    
    26
    
    
    
    27
    
    
    
    28Interactive
    
    
    4
    
    
    
    3
    
    
    
    1Circulation
    
    
    17
    
    
    
    17
    
    
    
    19Other
    
    
    5
    
    
    
    5
    
    
    
    4100
    %
    
    
    100
    %
    
    
    100
    %
  (1)
    
    Generally accepted accounting principles do not allow us to consolidate the revenues for
our JOA investments we do not control; accordingly, we record our share of the JOAs net
results in one line item, Income from Unconsolidated JOAs. The revenue data for the JOAs we
do not control (Salt Lake City, Denver, and Charleston through May 7, 2004) are excluded from
this summary (see further discussion under Managements Discussion and Analysis of Financial
Condition and Results of Operations  Critical Accounting Policies). 9




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Newsprint Newsprint is one of the largest costs of producing a newspaper, and the price of newsprint is
subject to changes in worldwide supply and demand. We buy newsprint from several suppliers under
arrangements that we believe provide us with some of the most favorable newsprint prices in the
industry. We also own a 6% interest in Ponderay Newsprint Company. During fiscal years 2005, 2004
and 2003, excluding our unconsolidated JOA operations, we consumed approximately 146,000, 150,000
and 154,000 metric tons of newsprint, respectively, and, during the same periods, incurred
newsprint expense of $77.4 million, $72.8 million and $67.3 million, respectively. Newsprint
expense as a percentage of revenue from our newspaper operations (excluding unconsolidated JOAs)
for fiscal years 2005, 2004 and 2003, was 9.9%, 9.8% and 9.2%, respectively. The average price per
metric ton began to increase in the second quarter of fiscal year 2003 and has continued to
increase during fiscal years 2004 and 2005. Our average price per metric ton was $528 during
fiscal year 2005, compared to $485 and $438 during fiscal years 2004 and 2003, respectively. See
Managements Discussion and Analysis of Financial Condition and Results of Operations  Near Term
Outlook  Newsprint Prices for a discussion regarding current newsprint pricing trends. Employee Relations As of June 30, 2005, we employed at our consolidated entities and unconsolidated JOAs
approximately 8,000 full-time and 2,000 part-time employees, of which approximately 3,000 are
unionized (almost 2,000 of the total union employees are in Denver). There has never been a strike
or work stoppage at any of our newspapers during our ownership, and we believe that our relations
with our employees are generally good. Seasonality and Cyclicality Newspaper companies tend to follow a distinct and recurring seasonal pattern, with higher
advertising revenues in months containing significant events or holidays. Accordingly, the fourth
calendar quarter, or our second fiscal quarter, is generally our strongest revenue quarter of the
year. Due to generally poor weather and a lack of holidays, the first calendar quarter, or our
third fiscal quarter, is generally our weakest revenue quarter of the year. Our advertising revenues, as well as those of the newspaper industry in general, are cyclical
and dependent upon general economic conditions. Historically, advertising revenues have increased
in periods of economic growth and declined with general national, regional and local economic
downturns and recessionary economic conditions. Competition Each of our newspapers competes for advertising revenue to varying degrees with magazines,
yellow pages, radio, broadcast television and cable television, as well as with some weekly
publications, direct mail and other advertising media, including electronic media (Internet).
Competition for newspaper advertising is largely based upon circulation, price and the content of
the newspaper. Our suburban and small city daily newspapers are the dominant local news and
information source, with strong brand name recognition and no direct competition from similar daily
newspapers published in their markets. However, as with most suburban small city daily newspapers,
some circulation competition exists from larger daily newspapers, which are usually published in
nearby metropolitan areas. We believe larger metropolitan daily newspapers with circulation in our suburban newspaper
markets generally do not compete in any meaningful way for local advertising revenues, a
newspapers main source of revenues. Our suburban daily newspapers capture the largest share of
local advertising as a result of their in-depth coverage of their suburban market, providing our
readers with local stories and information that major metropolitan newspapers are unable or
unwilling to provide. In addition, we believe advertisers generally regard newspaper advertising
as a more effective method of advertising promotions and pricing as compared to television, which
is generally used to advertise image. Most newspapers are now publishing news and advertising content on the Internet. In addition,
there are many sites on the Internet, which are advertising and/or subscription supported. Many of
these sites target specific types of advertising such as employment, real estate and automotive
classified. Accordingly, we have invested and will continue to invest in our online strategy,
which we believe allows us to capture our share of the locally available advertising dollars being
spent on the Internet now and in the future. 10




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Regulation and Environmental Matters Substantially all of our facilities are subject to federal, state and local laws concerning,
among other things, emissions to the air, water discharges, handling and disposal of waste and
remediation of contaminated sites. Compliance with these laws has not had, nor do we expect it to
have, a material effect upon our capital expenditures, net income or competitive position.
Although we believe we are in material compliance with these requirements, we may not have been and
will not at all times be in complete compliance with all applicable requirements, and there can be
no guarantee we will not incur material costs including fines or damages, resulting from
non-compliance. Environmental laws and regulations and their interpretation have changed rapidly in recent
years and may continue to do so in the future. These may include obligations to investigate and
clean up environmental contamination on or from properties we currently own or formerly owned or
operated, or at off-site locations where we are identified as a responsible party. Certain laws
impose strict and, under certain circumstances, joint and several liability for investigation and
clean-up costs. Environmental Assessment Reports of our properties have identified historic
activities and conditions on certain of these properties, as well as current and historic uses of
properties in surrounding areas, which may require further study or remedial measures. No material
remedial measures are currently anticipated or planned by us with respect to our properties.
However, no assurance can be given that existing Environmental Assessment Reports reveal all
environmental liabilities, that any prior owner of our properties did not create an environmental
condition not known to us, or that an environmental condition does not otherwise exist at any such
property which could result in incurrence of material cost. Because we deliver certain newspapers by second-class mail, we are required to obtain permits
from, and to file an annual statement of ownership with, the United States Postal Service. 
 Item 2: Properties Our corporate headquarters are located in Denver, Colorado. The listing below of our
production and operating facilities are, in most cases, complete newspaper production and office
facilities, but the listing also includes television and radio stations. The principal production
and operating facilities we own are located in: Alaska
    
    Massachusetts
    
    Texas
    
    CaliforniaAnchorage
    
    Pittsfield
    
    Graham
    
    Vacaville
    
    West CovinaNorth Adams
    
    
    
    Paradise
    
    ValenciaColorado
    
    Lowell
    
    Utah
    
    Hayward
    
    Long BeachDenver
    
    Fitchburg
    
    Salt Lake City
    
    Pleasanton
    
    San BernardinoSterling
    
    Devens
    
    Murray
    
    Marin
    
    OntarioFort Morgan
    
    
    
    
    
    Eureka
    
    Woodland HillsLamar
    
    Pennsylvania
    
    Vermont
    
    Chico
    
    RedlandsYork
    
    Brattleboro
    
    VallejoConnecticut
    
    Hanover
    
    Bennington
    
    LakeportBridgeport
    
    Lebanon
    
    
    
    San MateoWoodlandUkiah
 Certain facilities located in Denver, Colorado and Oakland, Pasadena, Hayward and Pleasanton,
California are operated under long-term leases. We believe that all of our properties are generally well maintained, in good condition and
suitable for current operations. Our equipment is adequately insured. 11




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##### Table of Contents



Item 3: Legal Proceedings MediaNews and Salt Lake City Tribune Publishing Company (SLTPC) continue to be involved in
litigation over SLTPCs option to acquire the assets used in connection with the operation and
publication of The Salt Lake Tribune. We are also involved in
other legal proceedings. See Note 11: Commitments and Contingencies of the notes to our consolidated financial statements
for a description of the background of this litigation and other
lawsuits. 
 Item 4: Submission of Matters to a Vote of Security Holders On June 30, 2005, the Companys shareholders approved an amendment and restatement of the
Companys Certificate of Incorporation to authorize 150,000 shares of Class B Common Stock and make
certain other changes. 12




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##### Table of Contents



PART II 
 Item 5: Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities There were no equity securities sold by us during fiscal year 2005. There is no established
public trading market for our common stock. As of September 16, 2005, there were approximately 8 record holders of our Class A Common
Stock. No shares of Class B Common Stock are outstanding. We have not paid a cash dividend on our common stock and we do not currently have plans to pay
cash dividends on our common stock. In addition, our long-term debt agreements contain covenants
which, among other things, limit our ability to pay dividends to our shareholders. 13




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##### Table of Contents



Item 6: Selected Financial Data The following information has been restated to reflect adjustments to previous filings that
are further discussed in Explanatory Note in the forepart of this Form 10-K and in Note 15:
Restatement of Previously Issued Financial statements: of our notes to the consolidated financial
statements. The table below presents selected historical consolidated financial data (as restated). The following data should be read in conjunction with Item 7: Managements Discussion and
Analysis of Financial Condition and Results of Operations and our consolidated financial
statements and notes thereto (as restated) included herein and elsewhere in this Annual Report on
Form 10-K. MediaNews Group, Inc. & SubsidiariesFiscal Years Ended June 30,2005(b)
    
    2004(b)
    
    2003(b)
    
    2002(b)
    
    2001(b)(As restated)
    
    (As restated)
    
    (As restated)
    
    (As restated)(Dollars in thousands)INCOME STATEMENT DATA(a):RevenuesAdvertising
    
    $
    610,060
    
    
    $
    582,689
    
    
    $
    570,163
    
    
    $
    545,715
    
    
    $
    679,610Circulation
    
    
    129,344
    
    
    
    132,505
    
    
    
    137,445
    
    
    
    139,495
    
    
    
    144,292Other
    
    
    39,875
    
    
    
    38,635
    
    
    
    30,990
    
    
    
    25,920
    
    
    
    28,278Total Revenues
    
    
    779,279
    
    
    
    753,829
    
    
    
    738,598
    
    
    
    711,130
    
    
    
    852,180Income (Loss) from Unconsolidated JOAs
    
    
    23,291
    
    
    
    22,207
    
    
    
    25,227
    
    
    
    8,770
    
    
    
    (3,202
    )Cost of Sales
    
    
    242,653
    
    
    
    234,784
    
    
    
    221,888
    
    
    
    220,082
    
    
    
    297,825Selling, General and Administrative
    
    
    382,180
    
    
    
    366,636
    
    
    
    346,763
    
    
    
    324,364
    
    
    
    385,764Depreciation and Amortization
    
    
    40,598
    
    
    
    40,742
    
    
    
    40,553
    
    
    
    47,545
    
    
    
    61,924Interest Expense
    
    
    49,481
    
    
    
    57,036
    
    
    
    64,252
    
    
    
    75,302
    
    
    
    82,241Gain on Sale of Newspaper Properties
    
    
    114
    
    
    
    6,982
    
    
    
    28,797
    
    
    
    
    
    
    
    75,275Minority Interest
    
    
    (29,334
    )
    
    
    (32,237
    )
    
    
    (34,088
    )
    
    
    (32,218
    )
    
    
    (40,927
    )Income Before Income Taxes
    
    
    59,970
    
    
    
    43,703
    
    
    
    69,253
    
    
    
    9,883
    
    
    
    40,960Net Income
    
    
    39,880
    
    
    
    26,737
    
    
    
    38,312
    
    
    
    12,365
    
    
    
    26,048CASH FLOW DATA:Capital Expenditures
    
    $
    51,312
    
    
    $
    36,483
    
    
    $
    20,669
    
    
    $
    11,323
    
    
    $
    19,611Cash Flows from:Operating Activities
    
    
    98,964
    
    
    
    75,155
    
    
    
    102,694
    
    
    
    72,635
    
    
    
    42,001Investing Activities (including Capital Expenditures)
    
    
    (98,689
    )
    
    
    (19,234
    )
    
    
    (45,415
    )
    
    
    (24,008
    )
    
    
    (345,604
    )Financing Activities
    
    
    (60,749
    )
    
    
    5,472
    
    
    
    (55,965
    )
    
    
    (53,747
    )
    
    
    166,120BALANCE SHEET DATA:Total Assets
    
    $
    1,365,772
    
    
    $
    1,369,170
    
    
    $
    1,323,148
    
    
    $
    1,291,886
    
    
    $
    1,355,586Long-Term Debt and Capital Leases
    
    
    877,569
    
    
    
    928,467
    
    
    
    904,554
    
    
    
    957,090
    
    
    
    1,008,473Other Long-Term Liabilities and Obligations
    
    
    47,359
    
    
    
    26,450
    
    
    
    33,947
    
    
    
    30,462
    
    
    
    23,906Putable Common Stock
    
    
    48,556
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Shareholders Equity
    
    
    38,493
    
    
    
    61,006
    
    
    
    34,894
    
    
    
    1,903
    
    
    
    139NON-GAAP FINANCIAL DATA(c):Long-Term Debt and Capital Leases, Net(d)
    
    $
    875,512
    
    
    $
    863,094
    
    
    $
    897,998
    
    
    $
    945,551
    
    
    $
    996,080Adjusted EBITDA
    
    $
    154,446
    
    
    $
    152,409
    
    
    $
    169,947
    
    
    $
    166,684
    
    
    $
    168,591Minority Interest in Adjusted EBITDA
    
    
    (41,152
    )
    
    
    (45,747
    )
    
    
    (49,089
    )
    
    
    (45,946
    )
    
    
    (45,647
    )Combined Adjusted EBITDA of Unconsolidated JOAs
    
    
    38,097
    
    
    
    39,842
    
    
    
    40,371
    
    
    
    36,006
    
    
    
    14,205EBITDA of Texas-New Mexico Newspapers Partnership(e)
    
    
    9,610
    
    
    
    10,108
    
    
    
    3,275
    
    
    
    
    
    
    
    Adjusted EBITDA Available to Company
    
    $
    161,001
    
    
    $
    156,612
    
    
    $
    164,504
    
    
    $
    156,744
    
    
    $
    137,149
   Footnotes on following two pages. 14




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Footnotes from previous page.   (a)
    
    Significant Transactions.The income statement data is impacted by the following significant
transactions. Acquisitions Fiscal Years 2001-2005Year
    
    Date
    
    Publication
    
    Location
    
    Description
    
    Purchase Price2005
    
    01/04/05
    
    The Park Record
    
    Park City, Utah
    
    Three times weekly newspaper
    
$
    8.0 million2004
    
    01/05/04
    
    Grunion Gazetteand
    
    Long Beach, California
    
    Weekly newspapers
    
$
    9.0 millionDowntown GazetteSee other transactions regarding the York JOA restructuring2003
    
    01/31/03
    
    Paradise Post
    
    Paradise, California
    
    Three times weekly newspaper, plus
    
$
    13.0 millioncommercial printing10/01/02
    
    The Reporter
    
    Vacaville, California
    
    Daily morning newspaper
    
$
    30.9 million10/01/02
    
    Original Apartment
    
    Los Angeles, California
    
    Free distribution apartment rental
    
$
    10.0 million,Magazine
    
    
    
    magazine
    

    plus $4.9million inearnouts2002
    
    No significant acquisitions.2001
    
    05/31/01
    
    Ruidoso News
    
    Ruidoso, New Mexico
    
    Bi-weekly newspaper
    
$
    3.8 million03/31/01
    
    Alamogordo Daily News
    
    Alamogordo, New Mexico
    
    Daily evening newspaper
    
$
    9.5 million02/01/01
    
    Lake County Record-Bee
    
    Lakeport, California
    
    Daily morning newspaper
    
$
    7.3 million01/02/01
    
    The Salt Lake Tribune
    
    Salt Lake City, Utah
    
    Daily morning newspaper JOA
    
$
    200.0 million10/31/00
    
    Carlsbad Current-Argus
    
    Carlsbad, New Mexico
    
    Daily morning newspaper
    
$
    7.0 million10/01/00
    
    Connecticut Post
    
    Bridgeport, Connecticut
    
    Daily morning newspaper
    
$
    194.0 million
 Dispositions Fiscal Years 2001-2005Year
    
    Date
    
    Publication
    
    Location
    
    Description
    
    Sales Price2005
    
    No dispositions.2004
    
    No significant dispositions. See other transactions regarding the Charleston JOA restructuring.2003
    
    No dispositions. See other transactions regarding the formation of Texas-New Mexico Newspapers
Partnership.2002
    
    No dispositions.2001
    
    01/31/01
    
    The Lompoc Record
    
    Lompoc, California
    
    Daily evening newspaper
    
$
    8.0 million,pre-tax gainof $4.6 million10/31/00
    
    Daily Nonpareil
    
    Council Bluffs, Iowa
    
    Daily evening newspaper
    
$
    39.0 million,pre-tax gainof $24.6 million,as restated
 Other Transactions Fiscal Years 2001-2005Year
    
    Description2005
    
    In June 2005, we purchased the remaining 20% of The Denver Post Corporation which we did not own for $45.9 million.2004
    
    In May 2004, we restructured our interest in Charleston Newspapers (Charleston JOA). In exchange for $55.0
million (net of certain adjustments) and a limited partnership interest in a newly formed entity, Charleston
Newspapers Holdings, L.P., we contributed our general partnership interest in the Charleston JOA and the masthead
of the Charleston Daily Mailto Charleston Newspapers Holdings, L.P. Our limited partnership interest does not
entitle us to any share of the profits or losses of the limited partnership. We recorded a pre-tax gain of $8.0
million as a result of this transaction.Effective April 30, 2004, we restructured our interest in the York JOA through the exercise of our call option to
acquire the remaining interest in The York Newspaper Company and the masthead of the York Daily Recordfor
approximately $38.3 million.2003
    
    Effective March 3, 2003, we formed the Texas-New Mexico Newspapers Partnership with Gannett. Upon formation, we
recognized in fiscal year 2003 a non-monetary pre-tax gain of $28.8 million, as restated.2002
    
    None.2001
    
    Effective January 23, 2001, we formed the Denver Newspaper Agency (DNA or Denver JOA) with E.W. Scripps
(Scripps), owner of the Rocky Mountain News. Upon formation of DNA, MediaNews and Scripps each contributed to
DNA substantially all of their operating assets used in the publication of The Denver Postand the Rocky Mountain
News. In addition to the assets contributed to DNA, Scripps paid us $60.0 million to obtain its 50% interest in
DNA. We recognized a pre-tax gain of approximately $46.7 million related to this transaction.Effective October 1, 2000, Gannett contributed the Marin Independent Journalto the California Newspapers
Partnership. Effective with the contribution, the partners, MediaNews, Stephens Media Group and Gannett,
interests in the California Newspapers Partnership were adjusted to 54.23%, 26.28% and 19.49%, respectively.
Prior to the contribution, MediaNews held a 58.8% interest in the partnership.
   Footnotes continue on following page. 15




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Footnotes from previous page (continued).   (b)
    
    Prior Year Reclassifications.For comparability certain prior year balances have been
reclassified to conform to current reporting classifications.  (c)
    
    Non-GAAP Financial Data.The Non-GAAP Financial Data presented, including Adjusted EBITDA
and Adjusted EBITDA Available to Company, are not measures of performance recognized under
GAAP. However, we believe that they are indicators and measurements of our leverage capacity
and debt service ability. Adjusted EBITDA and Adjusted EBITDA Available to Company should not
be considered as an alternative to measure profitability, liquidity, or performance, nor
should they be considered an alternative to net income, cash flows generated by operating,
investing or financing activities, or other financial statement data presented in our
consolidated financial statements. Adjusted EBITDA is calculated by deducting cost of sales
and SG&A expense from total revenues. Adjusted EBITDA Available to Company is calculated by:
(i) reducing Adjusted EBITDA by the minorities interest in the Adjusted EBITDA generated from
the California Newspapers Partnership, The Denver Post Corporation (through June 10, 2005),
and The York Newspaper Company (through April 30, 2004), our less than 100% owned subsidiaries
(Minority Interest in Adjusted EBITDA); (ii) increasing Adjusted EBITDA by our combined
proportionate share of the Adjusted EBITDA generated by our unconsolidated JOAs in Denver,
Salt Lake City and through May 7, 2004, Charleston (Combined Adjusted EBITDA of
Unconsolidated JOAs); and (iii) increasing Adjusted EBITDA by our proportionate share of
EBITDA from the Texas-New Mexico Newspapers Partnership (see footnote e). See Managements
Discussion and Analysis of Financial Condition and Results of Operations  Reconciliation of
GAAP and Non-GAAP Financial Information.(d)
    
    Long-Term Debt and Capital Leases, Net as shown is net of cash and minority interest in cash
and long-term debt and includes our share of long-term debt and capital leases in
unconsolidated JOAs. Years Ended June 30,2005
    
    2004
    
    2003
    
    2002
    
    2001(Dollars in thousands)Long-Term Debt and Capital Leases per Balance Sheet
    
    $
    877,569
    
    
    $
    928,467
    
    
    $
    904,554
    
    
    $
    957,090
    
    
    $
    1,008,473Less: Cash per Balance Sheet
    
    
    (4,262
    )
    
    
    (64,736
    )
    
    
    (3,343
    )
    
    
    (2,029
    )
    
    
    (7,149
    )Less: Minority Interest
Share of Cash and Long-Term
Debt and Capital Leases
    
    
    (216
    )
    
    
    (2,829
    )
    
    
    (7,414
    )
    
    
    (13,789
    )
    
    
    (9,951
    )Add: Our share of Long-Term
Debt and Capital Leases in
Unconsolidated JOAs, net of
minority interest
    
    
    2,421
    
    
    
    2,192
    
    
    
    4,201
    
    
    
    4,279
    
    
    
    4,707Total
    
    $
    875,512
    
    
    $
    863,094
    
    
    $
    897,998
    
    
    $
    945,551
    
    
    $
    996,080
  (e)
    
    EBITDA of Texas-New Mexico Newspapers Partnership.The Texas-New Mexico Newspapers
Partnership agreement, effective March 3, 2003, requires the partnership to make distributions
equal to the earnings of the partnership before depreciation and amortization (EBITDA). Our
33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership has been included in
Adjusted EBITDA Available to Company as it is an integral part of our cash flow from
operations defined by our debt covenants. 16




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Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations Introduction The following analysis of the financial condition and results of operations should be read in
conjunction with the Selected Financial Data and the consolidated financial statements of MediaNews
Group, Inc. and the notes thereto appearing elsewhere herein. Company Overview We are in the business of publishing daily and weekly newspapers and Internet Web sites
related thereto. Our newspapers derive their revenues primarily from advertising and circulation.
Our primary operating expenses (before depreciation and amortization) are employee salaries,
newsprint, marketing and distribution. In addition to our newspaper and related Internet
operations, we own radio stations in Graham and Breckenridge, Texas and a CBS affiliate television
station in Anchorage, Alaska. However, for the fiscal year ended June 30, 2005, the combined
revenues of these non-newspaper operations were not significant to our operations as they comprised
approximately 1.0% of our consolidated revenue. Newspaper revenues tend to follow a distinct and recurring seasonal pattern, with higher
advertising revenues in months containing significant events or holidays. Accordingly, the fourth
calendar quarter, or our second fiscal quarter, is generally our strongest revenue quarter of the
year. Due to generally poor weather and lack of holidays, the first calendar quarter, or our third
fiscal quarter, is generally our weakest revenue quarter of the year. Our advertising revenues, as well as those of the newspaper industry in general, are cyclical
and dependent upon general economic conditions. Historically, advertising revenues have increased
in periods of economic growth and declined during national, regional and local economic downturns. Critical Accounting Policies The preparation of financial statements in accordance with generally accepted accounting
principles at times requires the use of estimates and assumptions. We make our estimates, based on
historical experience, actuarial studies and other assumptions, as appropriate, to assess the
carrying values of assets and liabilities and disclosure of contingent matters. We re-evaluate our
estimates on an ongoing basis. Actual results could differ from these estimates. Critical
accounting policies for us include revenue recognition; accounts receivable allowances;
recoverability of our long-lived assets, including goodwill and other intangible assets, which are
based on such factors as estimated future cash flows and current fair value estimates; and pension
and retiree medical benefits, which require the use of various estimates concerning the work force,
interest rates and plan investment return, and involve the use of advice from consulting actuaries.
Our accounting for federal and state income taxes is sensitive to interpretation of various laws
and regulations and the valuation of deferred tax assets. The notes to our consolidated financial
statements included later in this Form 10-K contain a more complete discussion of our significant
accounting policies. Advertising revenue is earned and recognized when advertisements are published, inserted,
aired or displayed and are net of provisions for estimated rebates, rate adjustments and discounts.
Circulation revenue includes home delivery subscription revenue, single copy and third party
sales. Single copy revenue is earned and recognized based on the date the publication is delivered
to the single copy outlet, net of provisions for returns. Home delivery subscription revenue is
earned and recognized when the newspaper is sold and delivered to the customer or sold to a home
delivery independent contractor. Amounts received in advance of an advertising run date or
newspaper delivery are deferred and recorded on the balance sheet as a current liability (Unearned
Income) and recognized as revenue when earned. The operating results of our unconsolidated JOAs are reported as a single net amount in the
accompanying financial statements in the line item Income from Unconsolidated JOAs. This line
item includes:  
    
    Our proportionate share of net income from JOAs,
    
    The amortization of subscriber lists created by the original purchase by us, as the
subscriber lists are attributable to our earnings in the JOAs, and
    
    Editorial costs, miscellaneous revenue received outside of the JOA, and other charges
incurred by our consolidated subsidiaries directly attributable to providing editorial
content and news for our newspapers party to a JOA. 17




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Operating Results We have provided below certain summary historical consolidated financial data for fiscal years
2005, 2004 and 2003, in each case including the percentage change between periods. Summary Historical Financial DataFiscal Years Ended June 30,2005 vs.
    
    2004 vs.2005
    
    2004
    
    2003
    
    2004
    
    2003(As restated)
    
    (As restated)(Dollars in thousands)INCOME STATEMENT DATA:Total Revenues
    
    $
    779,279
    
    
    $
    753,829
    
    
    $
    738,598
    
    
    
    3.4
    %
    
    
    2.1
    %Income from Unconsolidated JOAs
    
    
    23,291
    
    
    
    22,207
    
    
    
    25,227
    
    
    
    4.9
    
    
    
    (12.0
    )Cost of Sales
    
    
    242,653
    
    
    
    234,784
    
    
    
    221,888
    
    
    
    3.4
    
    
    
    5.8Selling, General and Administrative
    
    
    382,180
    
    
    
    366,636
    
    
    
    346,763
    
    
    
    4.2
    
    
    
    5.7Depreciation and Amortization
    
    
    40,598
    
    
    
    40,742
    
    
    
    40,553
    
    
    
    (0.4
    )
    
    
    0.5Interest Expense
    
    
    49,481
    
    
    
    57,036
    
    
    
    64,252
    
    
    
    (13.2
    )
    
    
    (11.2
    )Other (Income) Expense, Net
    
    
    8,669
    
    
    
    17,365
    
    
    
    19,534
    
    
    
    (50.1
    )
    
    
    (11.1
    )Total Costs and Expenses
    
    
    723,581
    
    
    
    716,563
    
    
    
    692,990
    
    
    
    1.0
    
    
    
    3.4Equity Investment Income, Net
    
    
    10,201
    
    
    
    9,485
    
    
    
    3,709
    
    
    
    7.5
    
    
    
    (c)Gain on Sale of Newspaper Properties
    
    
    114
    
    
    
    6,982
    
    
    
    28,797
    
    
    
    (c)
    
    
    
    (c)Minority Interest
    
    
    (29,334
    )
    
    
    (32,237
    )
    
    
    (34,088
    )
    
    
    (9.0
    )
    
    
    (5.4
    )Net Income
    
    
    39,880
    
    
    
    26,737
    
    
    
    38,312
    
    
    
    (c)
    
    
    
    (c)CASH FLOW DATA:Cash Flows from:Operating Activities
    
    $
    98,964
    
    
    $
    75,155
    
    
    $
    102,694Investing Activities
    
    
    (98,689
    )
    
    
    (19,234
    )
    
    
    (45,415
    )Financing Activities
    
    
    (60,749
    )
    
    
    5,472
    
    
    
    (55,965
    )NON-GAAP FINANCIAL DATA(a):Adjusted EBITDA
    
    $
    154,446
    
    
    $
    152,409
    
    
    $
    169,947
    
    
    
    1.3
    %
    
    
    (10.3
    )%Minority Interest in Adjusted EBITDA
    
    
    (41,152
    )
    
    
    (45,747
    )
    
    
    (49,089
    )
    
    
    (10.0
    )
    
    
    (6.8
    )Combined Adjusted EBITDA of Unconsolidated JOAs
    
    
    38,097
    
    
    
    39,842
    
    
    
    40,371
    
    
    
    (4.4
    )
    
    
    (1.3
    )EBITDA of Texas-New Mexico Newspapers
Partnership(b)
    
    
    9,610
    
    
    
    10,108
    
    
    
    3,275
    
    
    
    (4.9
    )
    
    
    (c)Adjusted EBITDA Available to Company
    
    $
    161,001
    
    
    $
    156,612
    
    
    $
    164,504
    
    
    
    2.8
    %
    
    
    (4.8
    )%
   (a)
    
    Non-GAAP Financial Data.Adjusted EBITDA and Adjusted EBITDA Available to Company are not
measures of performance recognized under GAAP. However, we believe that they are indicators
and measurements of our leverage capacity and debt service ability. Adjusted EBITDA and
Adjusted EBITDA Available to Company should not be considered as an alternative to measure
profitability, liquidity, or performance, nor should they be considered an alternative to net
income, cash flows generated by operating, investing or financing activities, or other
financial statement data presented in our consolidated financial statements. Adjusted EBITDA
is calculated by deducting cost of sales and SG&A expense from total revenues. Adjusted EBITDA
Available to Company is calculated by: (i) reducing Adjusted EBITDA by the minorities
interest in the Adjusted EBITDA generated from the California Newspapers Partnership, The
Denver Post Corporation (through June 10, 2005) and The York Newspaper Company (through April
30, 2004), our less than 100% owned consolidated subsidiaries (Minority Interest in Adjusted
EBITDA); (ii) increasing Adjusted EBITDA by our combined proportionate share of the Adjusted
EBITDA generated by our unconsolidated JOAs in Denver, Salt Lake City and through May 7, 2004,
Charleston (Combined Adjusted EBITDA of Unconsolidated JOAs); and (iii) increasing Adjusted
EBITDA by our proportionate share of EBITDA from the Texas-New Mexico Newspapers Partnership
(see footnote b). See Managements Discussion and Analysis of Financial Condition and Results
of Operations  Reconciliation of GAAP and Non-GAAP Financial Information.(b)
    
    The Texas-New Mexico Newspapers Partnership Agreement.The Texas-New Mexico Newspapers
Partnership agreement, effective March 3, 2003, requires the partnership to make distributions
equal to the earnings of the partnership before depreciation and amortization (EBITDA). Our
33.8% share of the EBITDA of Texas-New Mexico Newspapers Partnership has been included in
Adjusted EBITDA Available to Company as it is an integral part of our cash flows from
operations as defined by our debt covenants.(c)
    
    Not meaningful. 18




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##### Table of Contents



Summary Supplemental Non-GAAP Financial Data Joint operating agencies, or JOAs, represent an operating structure that is unique to the
newspaper industry. Prior to EITF 00-1 Balance Sheet and Income Statement Display under the
Equity Method of Investments in Certain Partnerships and Other Unincorporated Joint Ventures,
which eliminated the use of pro-rata consolidation except in the extractive and construction
industries, we reported the results of our JOA interests on a pro-rata consolidated basis. Under
this method, we consolidated, on a line-item basis, our proportionate share of the JOAs
operations. Although pro-rata consolidation is no longer considered an acceptable method for our
financial reporting under GAAP, we believe it provides a meaningful presentation of the results of
our operations and the amount of operating cash flow available to meet our debt service and capital
expenditure requirements. Our JOA agreements do not restrict cash distributions to the owners and
in general our JOAs make monthly or quarterly distributions. We use pro-rata consolidation to
internally evaluate our performance and present it here because our bank credit agreement and the
indentures governing our senior subordinated notes define cash flows from operations for covenant
purposes using pro-rata consolidation. We also believe financial analysts and investors use the
pro-rata consolidation and the resulting Adjusted EBITDA, combined with capital spending
requirements, and leverage analysis to evaluate our performance. This information should be used
in conjunction with GAAP performance measures in order to evaluate our overall prospects and
performance. Net income determined using pro-rata consolidation is identical to net income
determined under GAAP. In the table below, we have presented the results of operations of our JOAs using pro-rata
consolidation, including the percentage change between periods. Our JOAs include The York
Newspaper Company and Denver Newspaper Agency and the Salt Lake City JOA for all periods presented,
and Charleston Newspapers through May 7, 2004. See Notes 2 and 3 to the consolidated financial
statements for additional discussion of the GAAP accounting for our JOAs. THE INFORMATION IN THE FOLLOWING TABLE IS NOT PRESENTED IN ACCORDANCE WITH
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND DOES NOT COMPLY WITH ARTICLE 11
OF REGULATION S-X FOR PRO FORMA FINANCIAL DATA Summary Selected Non-GAAP Financial DataFiscal Years Ended June 30,2005 vs.
    
    2004 vs.2005
    
    2004
    
    2003
    
    2004
    
    2003(As restated)
    
    (As restated)(Dollars in thousands)PRO-RATA CONSOLIDATED INCOME STATEMENT DATA:Total Revenues
    
    $
    1,081,754
    
    
    $
    1,049,851
    
    
    $
    1,025,471
    
    
    
    3.0
    %
    
    
    2.4
    %Cost of Sales
    
    
    362,456
    
    
    
    355,808
    
    
    
    343,012
    
    
    
    1.9
    
    
    
    3.7Selling, General and Administrative
    
    
    526,755
    
    
    
    508,656
    
    
    
    480,185
    
    
    
    3.6
    
    
    
    5.9Depreciation and Amortization
    
    
    54,021
    
    
    
    55,453
    
    
    
    55,841
    
    
    
    (2.6
    )
    
    
    (0.7
    )Interest Expense
    
    
    49,679
    
    
    
    57,258
    
    
    
    64,491
    
    
    
    (13.2
    )
    
    
    (11.2
    )Other (Income) Expense, Net
    
    
    9,854
    
    
    
    19,225
    
    
    
    18,312
    
    
    
    (48.7
    )
    
    
    5.0Total Costs and Expenses
    
    
    1,002,765
    
    
    
    996,400
    
    
    
    961,841
    
    
    
    0.6
    
    
    
    3.6Gain on Sale of Newspaper Properties
    
    
    114
    
    
    
    6,982
    
    
    
    28,797
    
    
    
    (b)
    
    
    
    (b)Minority Interest
    
    
    (29,334
    )
    
    
    (26,215
    )
    
    
    (26,884
    )
    
    
    11.9
    
    
    
    (2.5
    )Net Income
    
    
    39,880
    
    
    
    26,737
    
    
    
    38,312
    
    
    
    (b)
    
    
    
    (b)CASH FLOW DATA (GAAP BASIS):Cash Flows from:Operating Activities
    
    $
    98,964
    
    
    $
    75,155
    
    
    $
    102,694Investing Activities
    
    
    (98,689
    )
    
    
    (19,234
    )
    
    
    (45,415
    )Financial Activities
    
    
    (60,749
    )
    
    
    5,472
    
    
    
    (55,965
    )PRO-RATA OTHER DATA(a):Adjusted EBITDA
    
    $
    192,543
    
    
    $
    185,387
    
    
    $
    202,274
    
    
    
    3.9
    %
    
    
    (8.3
    )%Minority Interest in Adjusted EBITDA
    
    
    (41,152
    )
    
    
    (38,883
    )
    
    
    (41,045
    )
    
    
    5.8
    
    
    
    (5.3
    )EBITDA of Texas-New Mexico Newspapers Partnership
    
    
    9,610
    
    
    
    10,108
    
    
    
    3,275
    
    
    
    (4.9
    )
    
    
    (b)Adjusted EBITDA Available to Company
    
    $
    161,001
    
    
    $
    156,612
    
    
    $
    164,504
    
    
    
    2.8
    %
    
    
    (4.8
    )%
   (a)
    
    See footnote (a) under Managements Discussion and Analysis of Financial Condition and
Results of Operations  Operating Results for discussion of Adjusted EBITDA, EBITDA of
Texas-New Mexico Newspapers Partnership and Adjusted EBITDA Available to Company. The
Minority Interest in Adjusted EBITDA shown is calculated the same as described in footnote (a)
under Managements Discussion and Analysis of Financial Condition and Results of Operations 
Operating Results except that Minority Interest in Adjusted EBITDA shown here on a pro-rata
basis includes only the minority interest in Adjusted EBITDA of the California Newspapers
Partnership and The Denver Post Corporation (through June 10, 2005), as pro-rata consolidation
factors out of the minority interest associated with The York Newspaper Company through April
30, 2004. See Managements Discussion and Analysis of Financial Condition and Results of
Operations  Reconciliation of GAAP and Non-GAAP Financial Information.(b)
    
    Not meaningful. 19




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##### Table of Contents



Fiscal Year 2005 Executive Overview In fiscal year 2005, we continued to grow advertising revenue. We saw growth in retail,
national, preprint, employment and automotive classified advertising in most of our markets. While
advertising revenue grew, circulation revenue declined slightly, largely due to subscription price
declines in the very competitive Los Angeles market. The trend of significant growth in Internet
advertising revenue continued as Internet-related revenues increased 40.5% in fiscal year 2005,
after adjusting for acquisitions and dispositions. We believe that the Internet is a critical
element of our overall strategy to deliver news and information to a larger, more diverse and
younger audience, which in turn allows our advertising customers to take advantage of our expanded
market reach. During fiscal year 2005, newsprint and employee benefit costs, two of our largest expenses,
continued their trend from fiscal year 2004 and increased at a higher rate as compared to other
operating expenses. Excluding our unconsolidated JOAs, our average cost per metric ton of newsprint
increased almost 8.9% in fiscal year 2005 and 10.7% in fiscal year 2004, which correspondingly
increased cost of sales by $4.6 million and $5.5 million during the respective fiscal years.
Reduced consumption associated with decreases in retail advertising volumes, a shift to preprint
advertising from advertising printed in the newspaper, and small circulation declines helped to
somewhat offset the impact of price increases. Employee benefit costs were driven by increases in
health care costs and post-retirement benefits. Health care costs across the United States
continued to increase during fiscal year 2005. Pension and other post retirement benefit costs
increased due to increases in assumed health care costs and lower discount rates. We also saw
increased spending related to our Internet initiatives and our preparation for compliance with the
requirements of Sarbanes-Oxley. We continue to maintain tight cost controls throughout our
organization and seek to identify areas where further cost control measures can be implemented. Our current year results were also impacted by the following transactions completed during fiscal year 2005.  
    
    In January 2005, we purchased The Park Recordpublished in Park City, Utah.
    
    We took advantage of the lower interest rates available to us in both the bond and
bank financing markets by refinancing a portion of our long-term debt. We amended and
refinanced a portion of our bank credit facility in August 2004 to take advantage of
lower borrowing margins. We also retired $200.0 million of our 8 5/8% bonds in July 2004
with proceeds of our January 2004 issuance of $150.0 million 6 3/8% bonds and cash on
hand.
    
    In June 2005, we purchased the 20% of The Denver Post Corporation which we did not own
for approximately $45.9 million. Our unconsolidated JOAs were also impacted by the operating expense challenges we mentioned
above, most notably in the area of employee benefit costs. However, the Salt Lake City JOA produced
strong year over year revenues and improvements in operating profits, despite being burdened by
increased pension expense. Our interest in the Salt Lake JOA continues to be subject to litigation
by the former owners of The Salt Lake Tribune. Transactions In addition to the fiscal year 2005 transactions described above, certain transactions in
fiscal year 2004 had an impact on the comparisons of our results for the years ended June 30, 2005
and 2004 and comparisons of our results for the years ended June 30, 2004 and 2003. In fiscal year 2004, transactions that affect comparisons include the following:  
    
    We restructured our interest in the Charleston JOA in exchange for $55.0 million in
cash and recorded a pre-tax gain of $8.0 million. We also restructured our interest in
The York Newspaper Company through the exercise of our option to buy out the minority
partners interest and purchase the masthead of the York Daily Recordfor $38.3 million
using a portion of the proceeds from the Charleston Newspapers restructuring.
    
    In January 2004, we purchased two weekly newspapers: the Grunion Gazetteand Downtown
Gazette.These weeklies are distributed in and around Long Beach, California, where we
own the daily newspaper.
    
    We launched IMPACTO USA, a Spanish-language publication in the Los Angeles market that
is home delivered on Saturdays to 250,000 targeted households.
    
    We launched LA.com, an Internet start-up. 20




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##### Table of Contents




    
    We took advantage of the lower interest rates available to us in both the bond and
bank financing markets by refinancing the majority of our long-term debt. This included
refinancing our $300.0 million 8 3/4% bonds due in 2009 with $300.0 million of our 6 7/8%
bonds due in 2013 and refinancing our bank credit facility in December 2003, to take
advantage of lower borrowing margins and increase the amount available under our
revolving credit facility. We also sold $150.0 million of our 6 3/8% bonds in
anticipation of the retirement of $200.0 million of our 8 5/8% bonds, which was
accomplished in July 2004. In fiscal year 2003, acquisition transactions that affect comparisons include CNPs October 1,
2002 purchases of The Reporterin Vacaville, California and the Original Apartment Magazinein
southern California and the January 31, 2003 purchase of the Paradise Postin Paradise, California.
In addition to these acquisition transactions, comparisons are also affected by the formation of
the Texas-New Mexico Newspapers Partnership effective March 3, 2003, after which we no longer
consolidate the results of the New Mexico newspaper properties that we contributed to the
partnership. Our investment in the Texas-New Mexico Newspapers Partnership is accounted for under
the equity method of accounting and the partnerships results are included in Equity Investment
Income, Net. Restatement of Previously Reported Financial Statements We have restated our financial statements and related disclosures for fiscal years 2004
through fiscal years 2001 to correct errors that were identified in accounting for deferred income
taxes related to certain of our acquisitions and dispositions that qualified under Internal Revenue
Code Section 1031 as asset exchanges. We incorrectly treated these exchange transactions as
non-taxable transactions, and therefore we did not provide for deferred income tax expense upon
consummation of the sale portion of these transactions. Rather, we accounted for the basis
differences on the purchase end of the exchange transactions by recording a deferred tax obligation
to recognize the difference in book and tax basis and a corresponding increase in goodwill. The
correction resulted in an increase/(decrease) of the reported amounts of net income of $(0.9)
million $(2.5) million, $0.0 million, and $0.8 million, respectively, for the years ended June 30,
2004, 2003, 2002 and 2001, along with related adjustments to goodwill, deferred income tax
liability and a $23.4 million adjustment to opening retained earnings for fiscal year 2001. The
restatement had no impact on the Companys net cash flows from operating, investing or financing
activities or EBITDA Available to the Company. Comparison of Fiscal Years Ended June 30, 2005 and 2004 Revenues On a same newspaper basis (after adjusting for the aforementioned fiscal year 2005 Park City
and fiscal year 2004 Gazette transactions), the following changes occurred in our significant
revenues categories for the year ended June 30, 2005 as compared to the prior year. Advertising Revenues. Advertising revenues increased by approximately 4.1% for the year ended
June 30, 2005 as compared to the prior year. The increase in advertising revenue was due
principally to increases in national of 6.1%, classified of 3.7% and preprints of 9.6%, as well as
a $7.8 million or 40.5% increase in revenues from our Internet operations, offset in part by a
small decrease in retail ROP (run of press) advertising of 1.9%. The growth in preprint revenues
was due to a trend of major retail advertisers shifting out of ROP advertising and into preprint
advertising. For the year ended June 30, 2005, employment and real estate classified advertising
increased at the majority of our newspapers. These gains, however, were somewhat offset by
declines in classified automotive advertising. Circulation Revenues. Circulation revenues decreased by approximately 3.0% for the year ended
June 30, 2005 as compared to the prior year. The decrease was primarily due to pricing pressures
at some of our newspapers, as well as competition from other non-newspaper media sources, which
resulted in our offering greater discounts to acquire new and hold existing subscribers, in order
to help achieve our home delivery volume goals. Income from Unconsolidated JOAs As noted in our discussion of critical accounting policies, income from unconsolidated JOAs
includes our proportionate share of net income from those JOAs, the amortization of subscriber
lists created by the original purchase by us, editorial costs, miscellaneous revenue and other
charges directly attributable to providing editorial content and news for our 21




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##### Table of Contents



newspapers party to a JOA. The following discussion takes into consideration all of the
associated revenues and expenses described above. The aforementioned Charleston restructuring had
the net impact of decreasing income from unconsolidated JOAs by $1.3 million for the year ended
June 30, 2005. Excluding the impact of the Charleston restructuring, the increase for the year
ended June 30, 2005 was due to improved net income at both the Denver and Salt Lake JOAs. Cost of Sales The aforementioned purchase of The Park Recordin fiscal year 2005, the fiscal year 2004 York
restructuring and weekly newspaper purchases had the net impact of increasing cost of sales by $3.8
million for the year ended June 30, 2005, as compared to the prior year. Excluding these
transactions, cost of sales for the year increased 1.7%. The current year increase in cost of
sales was due in part to an 8.9% increase in our average price per metric ton of newsprint consumed
for the year ended June 30, 2005, as compared to the prior year. Our average price was
approximately $528 per metric ton for the year ended June 30, 2005, as compared to $485 per metric
ton for prior year. Partially offsetting the impact of higher newsprint prices was a small
decrease in our newsprint consumption. Selling, General and Administrative The transactions described above had the net impact of increasing SG&A by $2.7 million for the
year ended June 30, 2005, as compared to the prior year. Excluding these transactions, SG&A
increased 3.5%. The current year increase was primarily the result of increases in employee costs,
including health care and retirement benefits, the curtailment of a pension plan at one of our
subsidiaries, as well as increased costs directly associated with the growth in our advertising
revenues and Internet operations. Expenses related to our Internet operations increased $2.1
million, or 15.0%, for the year ended June 30, 2005. Interest Expense Interest expense for fiscal year 2005 decreased $7.6 million as a result of a $48.4 million,
or 5.3% reduction, in our average debt outstanding to $864.9 million, as well as a 42 basis point
reduction in our weighted average interest rate to 5.59%. The lower weighted average cost of debt
was a result of the November 2003 refinancing of our 8 3/4% Senior Subordinated Notes with our 6
7/8% Senior Subordinated Notes, the restructuring of our bank credit agreement (December 2003 and
August 2004) and the July 2004 repurchase of our 8 5/8% Senior Subordinated Notes funded out of
proceeds from our 6 3/8% Senior Subordinated Notes (issued in January 2004) and borrowings from our
bank credit facility. Savings from our various refinancing efforts were offset in part by
increases in LIBOR over the prior year (the average daily one month rate for LIBOR increased 125
basis points, for the year ended June 30, 2005 as compared to the same period in prior year). The
interest rates under our bank credit facility are based on LIBOR, plus a borrowing margin based on
our leverage ratio. Interest expense was also favorably impacted in the prior year by net
settlements related to our interest rate swap agreements. The net settlements of our interest rate
swap agreements had the effect of decreasing interest expense by $3.0 million for the year ended
June 30, 2004. We had no interest rate swap agreements during fiscal year 2005. Excluding the
impact of the interest rate swaps in the prior year, our weighted average interest rate decreased
by approximately 74 basis points for the year ended June 30, 2005. Other (Income) Expense, Net We include expenses and income items that are not related to current operations in other
(income) expense, net. We incurred charges for the year ended June 30, 2005 related to litigation
expense of $0.8 million associated with the acquisition of Kearns-Tribune, LLC (Salt Lake City),
$(5.8) million reduction in the estimated cost to repurchase an option held by a third party to
acquire one of our newspapers, $9.2 million of repurchase premiums and unamortized discount
associated with the early redemption of our 8 5/8% Senior Subordinated Notes, $0.4 million related
to hedging activities that did not qualify for hedge accounting under SFAS No. 133, $0.7 million in
bank fees and $3.4 million related to various other costs that were not related to ongoing
operations. 22




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##### Table of Contents



Equity Investment Income Net Included in equity investment income, net is our share of the net income (or loss) of our
non-JOA equity investees as further described in Note 2: Significant Accounting Policies and Other
Matters of the notes to consolidated financial statements. The $0.7 million increase in equity investment income, net was primarily related
to an increase in equity income from PowerOne mostly due to a gain on sale recognized by PowerOne
from the sale of one of its product lines. Operating results also improved at CIPS. The increases
at PowerOne and CIPS were partially offset by decreases in income from our other equity
investments. Net Income Net income for fiscal year 2005 was negatively impacted by $9.2 million for redemption
premiums and unamortized discounts associated with the early redemption of our 8 5/8% Senior
Subordinated Notes. Excluding the $9.2 million loss on early extinguishment of debt, pre-tax net
income was $69.2 million for the year ended June 30, 2005. Prior year pre-tax income was impacted
by $9.3 million for redemption premiums, net of unamortized premiums, that were recorded as a
result of redeeming our 8 3/4% Senior Subordinated Notes and a $7.0 million pre-tax gain on sale of
newspaper assets, primarily associated with the Charleston newspapers restructuring. Excluding the
$9.3 million loss on early extinguishment of debt and the $7.0 million pre-tax gain on sale, pre
tax net income was $46.0 million for the year ended June 30, 2004. Our effective tax rate was 34%
for the year ended June 30, 2005, as compared to 39%, as restated, for the year ended June 30,
2004. Comparison of Fiscal Years Ended June 30, 2004 and 2003 Revenues The aforementioned transactions in fiscal years 2004 and 2003 had the net impact of increasing
reported revenues by $2.0 million for the year ended June 30, 2004 as compared to the prior year.
On a same newspaper basis (adjusting for the transactions), the following changes occurred between
fiscal years 2004 and 2003: Advertising
Revenues.Advertising revenues increased 2.5% for the year ended June 30, 2004,
as compared to the prior year. The increase in advertising revenue was due principally to
increases in retail, national and preprint advertising, offset in part by a slight decrease in
classified advertising. Classified employment advertising continued to be a challenge at the
majority of our newspapers in California due to the weak employment market. Our newspapers in the
San Francisco Bay Area market in particular were hard hit by losses in employment advertising. We
also experienced declines in classified automotive advertising in some markets, offset in part by
increases in classified real estate. Beginning in the third quarter of fiscal year 2004, we began
to experience year over year improvements in classified employment advertising in many markets.
Also contributing to the increase was revenue growth from our Internet operations, which increased
37% for the year ended June 30, 2004 as compared to the prior year. The increase in Internet
revenues was a result of new initiatives in online employment, automotive and general classified
advertising and the continued strong market acceptance of the combined print and online packages
that we offer to our advertisers. Circulation Revenues.Circulation revenues decreased by 1.8% for the year ended June 30,
2004, as we have continued to grow circulation by offering discounts to acquire new subscribers
with long-term orders. The lower revenue from selling longer-term orders at a discount is
generally offset with cost savings from writing fewer new orders. Other
Revenues.Other revenues increased 8.0% for the year ended June 30, 2004, in part due
to our obtaining new commercial printing contracts in northern California. Income from Unconsolidated JOAs Our proportionate share of income from the Charleston JOA was $1.1 million less in fiscal year
2004 compared to the prior year. Also impacting Income from Unconsolidated JOAs is a decrease in
income from the Denver JOA, which was partially offset by an increase in income from the Salt Lake
City JOA. Results at the Denver and Salt Lake City JOAs were negatively impacted by accruals for
the Kmart critical vendor program (see further discussion in Note 11: Commitments and
Contingencies), while the prior year results were positively impacted by our share of the Denver
JOAs non-operating gain of $3.8 million related to the sale of its office building. Excluding
these two infrequent items, our share of income from the Denver Newspaper Agency improved on a year
over year basis. 23




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##### Table of Contents



Cost of Sales The aforementioned transactions in fiscal years 2004 and 2003 had the net impact of increasing
cost of sales by $2.4 million for the year ended June 30, 2004 as compared to the prior year.
Excluding the aforementioned transactions, cost of sales increased 5.0% year-over-year on a same
newspaper basis. The fiscal year 2004 increase in cost of sales was due in part to a 10.7%
increase in our average price per metric ton of newsprint consumed in fiscal year 2004 as compared
to the prior year. Partially offsetting the increase in the average price was a slight decrease in
newsprint consumption. Selling, General and Administrative The aforementioned transactions in fiscal years 2004 and 2003 had the net impact of increasing
SG&A by $2.6 million for the year ended June 30, 2004 as compared to the prior year. Excluding the
aforementioned transactions, SG&A increased 5.3% year-over-year on a same newspaper basis. The
fiscal year 2004 increase is primarily the result of large increases in health care costs and
retirement benefits, as well as increases in outside printing for niche publications, promotional
expenses, new product expenses and increased costs associated with the revenue growth in our
Internet operations, including operating expenses of $3.1 million associated with our Internet
start-up LA.com, which had minimal revenues since its launch in January 2004 to offset the related
start-up expenses. At the end of the first quarter of fiscal year 2005, we significantly curtailed
the expenses associated with LA.com. Interest Expense The decrease in interest expense was the result of a decrease in average debt outstanding due
to debt paydowns, as well as a reduction in the weighted average cost of debt. Interest expense
was also impacted by net settlements related to our interest rate swap agreements. The net
settlements of our interest rate swap agreements had the effect of decreasing interest expense by
$3.0 million for the fiscal year ended June 30, 2004 as compared to $2.6 million in the prior year.
The lower weighted average cost of debt was a result of the combination of lower short-term
interest rates associated with our bank credit facility borrowings, the June 2003 refinancing of
our 9.0% Subordinated Promissory Note with a bank term loan, and the November 2003 refinancing of
our 8 3/4% Senior Subordinated Notes with our 6 7/8% Senior Subordinated Notes due 2013. Partially
offsetting the decrease in the weighted average cost of debt for fiscal year 2004 was an increase
in interest expense caused by temporarily paying off lower cost debt under the revolver portion of
our new bank credit agreement (LIBOR plus 1.75%) with proceeds from the third quarter issuance of
our $150.0 million 6 3/8% Senior Subordinated Notes, which was compounded as a result of
significant cash remaining after the payoff of the revolver. The excess cash, in combination with
borrowings under the revolver portion of our bank credit facility, was used to redeem our $200.0
million 8 5/8% Senior Subordinated Notes on July 1, 2004 (the first redemption date). Our average
debt outstanding decreased $31.4 million, or 3.3%, and our weighted average interest rate decreased
60 basis points for the year ended June 30, 2004, as compared to the prior year. The fiscal year
2004 refinancings are expected to further reduce our weighted average cost of borrowings in the
future. Other (Income) Expense, Net Included in other (income) expense, net are those expense and income items that are not
related to current operations. Other (income) expense, net for the year ended June 30, 2004 was
$17.4 million. The charges incurred for the year ended June 30, 2004 include litigation expense of
$2.2 million associated with the acquisition of Kearns-Tribune, LLC (Salt Lake City), $(4.0)
million reduction to reflect the current estimated cost to repurchase an option held by a third
party to acquire one of our newspapers (the estimated cost of purchasing the option fluctuates with
the performance of the newspaper), $2.1 million related to hedging activities, which did not
qualify for hedge accounting under SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities,$9.3 million for the repurchase premiums, net of unamortized premiums associated with
the early redemption of our 8 3/4% Senior Subordinated Notes, $1.0 million in costs associated with
our unsuccessful bid for Freedom Communications, Inc., $1.1 million related to the write-off of
amounts held in escrow and other prepaid acquisition costs to purchase the KTBY license in Alaska
(see Note 5: Acquisitions, Dispositions and Other Transactions), and $5.7 million, net related to
various other costs not related to current operations, including the estimated losses associated
with the critical vendor payments refund demand received from Kmart (see further discussion
regarding Kmart critical vendor payments in Note 11: Commitments and Contingencies). 24




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##### Table of Contents



Equity Investment Income, Net Included in equity investment income, net is our share of the net income (or loss) of our
non-JOA equity investees as further described in Note 2: Significant Accounting Policies and Other
Matters of the notes to consolidated financial statements. The $5.8 million increase in equity
investment income, net was primarily related to the equity income from the Texas-New Mexico
Newspapers Partnership, the formation of which occurred in March 2003. Net Income Net income for fiscal year 2004 was impacted by $9.3 million for redemption premiums, net of
unamortized premiums that were recorded as a result of redeeming our 8 3/4% Senior Subordinated
Notes and a $7.0 million pre-tax gain on sale of newspaper assets, primarily associated with the
Charleston Newspapers restructuring. Excluding the $9.3 million loss on early extinguishment of
debt and the $7.0 million pre-tax gain on sale, pre-tax net income was $46.0 million for the year
ended June 30, 2004. The fiscal year 2003 pre-tax income was impacted by a $28.8 million, as
restated, non-monetary gain recognized in conjunction with the formation of the Texas-New Mexico
Newspapers Partnership. Excluding the $28.8 million gain, as restated, fiscal year 2003 pre-tax
net income was $40.5 million. Also impacting net income was a
$14.0 million, as restated, decrease in income tax expense for the year ended June 30, 2004 as compared to fiscal year 2003, of which
approximately $12.9 million, as restated, is related to deferred income taxes. Our effective tax
rate was 39%, as restated, for the year ended June 30, 2004, as compared to 45%, as restated, for
the prior year. Liquidity and Capital Resources Our sources of liquidity are existing cash and other working capital, cash flows provided from
operating activities, distributions from JOAs and partnerships and the borrowing capacity under our
bank credit facility. Our operations, consistent with the newspaper industry, require little
investment in inventory, as less than 30 days of newsprint is generally maintained on hand;
however, from time to time, we increase our newsprint inventories in anticipation of price
increases. In general, our receivables have been collected on a timely basis. Cash Flow Activity The increase in net cash flows from operating activities of $23.8 million for the year ended
June 30, 2005, was largely attributable to a $4.4 million increase in Adjusted EBITDA Available to
Company, a $12.2 million increase in distributions from unconsolidated JOAs, and an $8.0 million
decrease in distributions paid to minority interests. The net cash outflows related to investing activities increased by $79.5 million, primarily
due to a $64.8 million increase associated with business acquisitions, net of dispositions, and a
$14.8 million increase in capital expenditures. Business acquisitions during fiscal year 2005
included our purchase of the remaining 20% minority interest in The Denver Post Corporation
(approximately $45.9 million) and the purchase of The Park Record(approximately $8.0 million).
Prior year transactions included $38.3 million paid and $51.5 million received, respectively, in
the York and Charleston JOA restructuring transactions. Approximately $26.4 million of the current
year capital expenditures are related to our share of the cost of a new printing and office
facility being constructed for the Salt Lake City JOA. The net cash outflows related to financing activities for the year ended June 30, 2005
included using cash on hand and available borrowings under the revolver portion of our credit
facility to repurchase all of our outstanding 8 5/8% Senior Subordinated Notes for $208.6 million
(including $8.6 million of repurchase premiums). We also used a portion (approximately $53.9
million) of our available borrowings under the revolver portion of our credit facility to fund our
2005 purchases of the 20% remaining interest in The Denver Post Corporation and The Park Record.
In addition, activity for the year ended June 30, 2005 included normal borrowings and paydowns on
long-term debt. Prior years net paydowns consisted of $291.9 million of net proceeds from the
issuance of $300.0 million of our 6 7/8% Senior Subordinated Notes due 2009 which were used along
with available borrowings to repurchase all of our outstanding 8 3/4% Senior Subordinated Notes for
$309.5 million (including $9.5 million of repurchase premiums) and the refinancing of our bank
credit facility, as well as normal borrowings and paydowns on long-term debt. Total fiscal year
2005 net paydowns on long-term debt were $55.0 million, net of refinancing costs, repurchase
premiums, and acquisitions, as compared to $57.4 million in the prior year. 25




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Capital Expenditures Capital ExpendituresFiscal Year 2006 Plan
    
    Fiscal Year 2005 Actual(Dollars in thousands)Wholly-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non Wholly-Owned
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OwnedSubsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subsidiariesand
    
    Non Wholly-
    
    Our Share of
    
    
    
    
    
    Wholly-
    
    and
    
    Our Share ofConsolidated
    
    Owned
    
    Unconsolidated
    
    
    
    
    
    Owned
    
    Consolidated
    
    UnconsolidatedJOAs
    
    Subsidiaries
    
    JOAs
    
    Total
    
    Subsidiaries
    
    JOAs
    
    JOAs
    
    TotalTotal Capital Projects
    
    $
    40,588
    
    
    $
    19,122
    
    
    $
    8,750
    
    
    $
    68,460
    
    
    $
    37,857
    
    
    $
    13,455
    
    
    $
    1,162
    
    
    $
    52,474Less Minority
Partners Share
    
    
    
    
    
    
    (8,752
    )
    
    
    
    
    
    
    (8,752
    )
    
    
    
    
    
    
    (6,072
    )
    
    
    (232
    )
    
    
    (6,304
    )$
    40,588
    
    
    $
    10,370
    
    
    $
    8,750
    
    
    $
    59,708
    
    
    $
    37,857
    
    
    $
    7,383
    
    
    $
    930
    
    
    $
    46,170
 Non-maintenance expenditures planned for fiscal year 2006 include costs for furniture and
fixtures in a new building, and an inserter to address increases in preprint volumes for the Los
Angeles Newspapers Group, installation of an editorial front-end system for the Alameda Newspapers
Group, and a new publishing system for our Internet group, as well as technology infrastructure
improvements. Carryover expenditures from the prior year of approximately $35.5 million are
primarily for new Company-wide advertising and circulation systems and our share of a new printing
and office facility in Salt Lake City, front-end editorial systems for the Los Angeles Newspapers
Group, construction for a new office building in San Bernardino, California, and a building addition
in York, Pennsylvania. Management reviews the capital expenditure plan throughout the year and
modifies it as required to meet our current business needs. Capital expenditures related to these
projects are expected to be funded either through available cash or borrowings under our bank
credit facility. Liquidity at June 30, 2005 At June 30, 2005, our debt structure included our amended and restated bank credit facility
which provides for borrowings of up to $598.8 million, consisting of a $350.0 million revolving
credit facility, a $100.0 million term loan A and a $148.8 million term loan C. Any payments
on the term loans cannot be reborrowed, regardless of whether such payments are scheduled or
voluntary. At June 30, 2005, the balances outstanding under the revolving credit portion of the
bank credit facility, term loan A and term loan C were $152.7 million, $100.0 million and
$147.3 million, respectively, and we had $188.7 million available for future borrowings, net of
$8.6 million in outstanding letters of credit. On September 8, 2005, we entered into an amendment of our bank credit facility (the amended
facility) to take advantage of lower pricing available in the bank loan market. Based on June 30,
2005 outstanding debt, we estimate that the refinancing would have resulted in $2.3 million in
interest savings in fiscal year 2005. The amended facility maintains the $350.0 million revolving
credit facility and $100.0 million term loan A and provides for a $147.3 million term loan B,
which was used to pay off the term loan C facility. During the next twelve months, we will make
scheduled quarterly payments on term loan B of $0.4 million under the amended facility, which we
intend to pay from operating cash flows. Amounts repaid under term loan A and B facilities
will not be available for reborrowing, regardless of whether such payments are scheduled or
voluntary. We may increase the amount of the amended facility by up to $200.0 million, subject to
obtaining commitments of lenders to loan such additional amounts and customary conditions. The
revolving credit facility decreases to $250.0 million on December 30, 2008. In August 2005, we purchased the editorial assets of The Detroit News, published in Detroit,
Michigan, and a limited partnership interest in the Detroit JOA for approximately $25.0 million. In September 2005, the management committee of the Denver JOA authorized the incurrence of up
to $150.0 million of debt by the Denver JOA to finance furniture, fixtures and computers for its
new building and new presses and related equipment and building costs related to the consolidation
of two existing production facilities into one for the Denver JOA. We own a 50% interest in the
Denver JOA. In January 1998, we entered into an option agreement in association with the acquisition
financing of one of our newspaper properties. This option provides the holder the right to
purchase the assets used in the publication of the newspaper, which the option holder can exercise
or put such option to us based on a predetermined formula anytime after January 31, 2003. The
option repurchase price is currently valued at approximately $6.1 million, and is recorded as a 26




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component of other long-term liabilities. If the option were put to us, we expect to fund the
payment with available borrowings from our bank credit facility. As a result, in accordance with
SFAS No. 6, Classification of Short-Term Obligations Expected to be Refinanced, the option
repurchase price remains classified in our balance sheet as long-term. Stephens Media Group (SMG), a 26.28% partner in the California Newspapers Partnership
(CNP), has a right to require CNP to redeem its interest in CNP at its fair market value (plus
interest through closing) any time after January 1, 2005. If such right is exercised, SMGs
interest must be redeemed within two years of the determination of its fair market value. We are
not currently aware of any intentions on the part of SMG to exercise its put. No amounts are
recorded in our financial statements related to SMGs put right. Our ability to service our debt and fund planned capital expenditures depends on our ability
to continue to generate operating cash flows in the future. Based on current levels, we believe our
cash flow from operations, available cash and available borrowings under our bank credit facility
will be adequate to meet our future liquidity needs for at least the next twelve months. We estimate minimum contributions to our defined benefit pension plans in fiscal year 2006
will be approximately $2.5 million to $3.0 million. We expect federal income tax payments to
significantly increase next year because of the impact of alternative minimum taxes. Distributions from Partnerships Set forth below is a description of the ownership structure and earnings-distribution
provisions of our Denver, Salt Lake City and Detroit JOAs, as well as the CNP and the Texas-New
Mexico Newspapers Partnership agreements:  
    
    Through our wholly-owned subsidiary, Kearns-Tribune, LLC, we own a 50% interest in the
Salt Lake City JOA. Under the agreement, 58% of the Salt Lake City JOAs net income, less
their working capital needs and other minor adjustments, is paid to Kearns-Tribune, LLC and
is distributed (generally) weekly.
    
    Through our wholly-owned subsidiary, The Denver Post Corporation, we own 50% of The
Denver Newspaper Agency, LLP. Under the Denver Newspaper Agency JOA agreement, the
partnership is required to distribute 50% of its monthly EBITDA (and other funds available
for distribution), less working capital required by the partnership, to The Denver Post
Corporation.
    
    Through our wholly-owned subsidiary, The Detroit News, Inc., we own a limited partnership
interest in Detroit Newspaper Partnership, L.P. Under the Detroit JOA agreement, the
partnership is required to make fixed preferred distributions to us monthly, as well as
reimburse us for our news and editorial costs. The fixed preferred distributions are as
follows: $5.0 million for years ending July 31, 2006 and 2007; $4.0 million for years ending
July 31, 2008 and 2009; $3.0 million for years ending July 31, 2010 and 2011; $2.0 million
for the year ending July 31, 2012; and $1.9 million for all remaining years.
Beginning in 2009, we may receive incremental distributions based on profit growth of the
Detroit JOA.
    
    Through our wholly-owned subsidiary, West Coast MediaNews LLC, we own a 54.23% interest
in the California Newspapers Partnership (CNP). Under the terms of the partnership
agreement, we are entitled to monthly distributions of the partnerships EBITDA in
proportion to our partnership interest, less working capital required and debt service
payments (total CNP debt, excluding the debt and capital leases we contributed to the
partnership, is $1.5 million at June 30, 2005 of which our share is $0.8 million).
    
    Through our wholly-owned subsidiary, New Mexico-Texas MediaNews LLC, we own a 33.8%
interest in the Texas-New Mexico Newspapers Partnership. Pursuant to the partnership
agreement, the partnership management committee is required to determine the amount of
earnings (before depreciation and amortization) or other partnership funds available for
distribution for each accounting period and distribute (generally monthly) 33.8% of such
funds to New Mexico-Texas MediaNews LLC. 27




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##### Table of Contents



Off-Balance Sheet Arrangements Our share of long-term debt in unconsolidated JOAs (Denver and Salt Lake City) was
approximately $2.4 million at June 30, 2005. Through our wholly-owned subsidiary, Kearns-Tribune, LLC, we own a 6.0% interest in Ponderay
Newsprint Company (Ponderay) and are also guarantors on a several basis of 6.0% of up to $125.0
million Ponderays credit facility, which is due April 12, 2006. The guarantee could be triggered
by Ponderays failure to meet any or all of its bank covenants at which time we could be liable for
our portion or 6.0% of the guarantee. Our share of the guarantee, which is not recorded in our
financial statements, was approximately $3.7 million at June 30, 2005. Contractual Obligations The following table represents our contractual obligations as of June 30, 2005: Less than
    
    
    
    
    
    More thanTotal
    
    1 Year
    
    1-3 Years
    
    3-5 Years
    
    5 Years(Dollars in thousands)Long-Term Debt(1)
    
    $
    871,425
    
    
    $
    3,913
    
    
    $
    17,225
    
    
    $
    293,799
    
    
    $
    556,488Capital Lease Obligations, Net of
Imputed Interest
    
    
    6,144
    
    
    
    175
    
    
    
    452
    
    
    
    579
    
    
    
    4,938Operating Leases
    
    
    24,695
    
    
    
    5,628
    
    
    
    8,927
    
    
    
    3,883
    
    
    
    6,257Purchase Obligations(2)
    
    
    182,276
    
    
    
    61,906
    
    
    
    69,888
    
    
    
    45,267
    
    
    
    5,215Other Long-Term Liabilities Reflected on
the Balance Sheet under GAAP(3)
    
    
    47,359
    
    
    
    
    
    
    
    4,153
    
    
    
    1,807
    
    
    
    41,399Total
    
    $
    1,131,899
    
    
    $
    71,622
    
    
    $
    100,645
    
    
    $
    345,335
    
    
    $
    614,297
  (1)
    
    Does not reflect our September 8, 2005 amended credit facility. At June 30, 2005, and as
reflected in the preceding table, maturities related to the credit facility in effect at that
date were as follows: Fiscal years 2006 through 2007  $1.5 million each year; Fiscal year
2008  $11.5 million; Fiscal year 2009  $26.5 million; Fiscal year 2010  $263.8 million
and thereafter  $95.3 million. However, under the September 8, 2005 amended credit
facility, maturities are not materially different.(2)
    
    Purchase obligations primarily include commitments to purchase newsprint and our share of the
remaining commitments to construct a new printing and office facility for the Salt Lake City
JOA. One of our newsprint contracts requires us to purchase newsprint at market. For purposes
of this disclosure we used the market price as of June 2005. It is difficult to predict the
price of newsprint over the term of the contract.(3)
    
    Reflected on the balance sheet in Other Liabilities (long-term) at June 30, 2005 is $6.1
million related to the amount accrued to repurchase an option held by a third party to
purchase the assets used in the publication of one of our newspaper properties. The option
was exercisable beginning in January 2003; however it is included in Other Liabilities
(long-term) because if the option is put to us, we expect to fund the payment with available
borrowings from our bank credit facility. Near Term Outlook Newsprint Prices A $35 per metric ton announced price increase effective June 1, 2005 only partially took hold
in the market beginning in August. In September, newsprint suppliers announced another price
increase of $35 per metric ton to be effective October 1, 2005. We are uncertain as to how much,
if any, of the recently announced price increases will take hold in the market. The August 2005
RISI (Resource Information Systems, Inc.) price index for 30 pound newsprint was $612 per metric
ton compared to $545 per metric ton in August 2004. As a large buyer of newsprint, our cost of
newsprint continues to be well below the RISI price index. Recently Issued Accounting Standards See Note 2: Significant Accounting Policies and Other Matters  Recently Issued Accounting
Standards, of the notes to our consolidated financial statements. 28




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##### Table of Contents



Reconciliation of GAAP and Non-GAAP Financial Information The following tables have been provided to reconcile the Non-GAAP financial information
(Adjusted EBITDA and Pro-Rata Consolidated Income Statement Data) presented in the Selected
Consolidated Financial Data, and Managements Discussion and Analysis of Financial Condition and
Results of Operations sections of this annual report on Form 10-K to their most directly
comparable GAAP measures (Cash Flows from Operating Activities and GAAP Income Statement Data). Reconciliation of Cash Flows from Operating Activities (GAAP measure) to Adjusted EBITDA (non-GAAP measure). Years Ended June 30,2005
    
    2004
    
    2003
    
    2002
    
    2001(As restated)
    
    (As restated)
    
    (As restated)
    
    (As restated)(Dollars in thousands)NON-GAAP FINANCIAL DATA(a)Cash Flows from Operating Activities (GAAP measure)
    
    $
    98,964
    
    
    $
    75,155
    
    
    $
    102,694
    
    
    $
    72,635
    
    
    $
    42,001Net Change in Operating Assets and Liabilities
    
    
    25,678
    
    
    
    20,126
    
    
    
    8,619
    
    
    
    459
    
    
    
    24,751Distributions Paid to Minority Interest
    
    
    28,167
    
    
    
    36,176
    
    
    
    38,765
    
    
    
    43,406
    
    
    
    39,747Distributions from Unconsolidated JOAs
    
    
    (87,409
    )
    
    
    (75,204
    )
    
    
    (83,621
    )
    
    
    (58,449
    )
    
    
    (38,070
    )Interest Expense
    
    
    49,481
    
    
    
    57,036
    
    
    
    64,252
    
    
    
    75,302
    
    
    
    82,241Bad Debt Expense
    
    
    (8,065
    )
    
    
    (7,405
    )
    
    
    (9,632
    )
    
    
    (10,213
    )
    
    
    (10,916
    )Pension Income (Expense), Net of Cash Contributions
    
    
    (1,463
    )
    
    
    (1,082
    )
    
    
    (31
    )
    
    
    (1,172
    )
    
    
    5,948Direct Costs of the Unconsolidated JOAs, Incurred
Outside of the Unconsolidated JOAs(b)
    
    
    48,587
    
    
    
    46,997
    
    
    
    43,411
    
    
    
    43,211
    
    
    
    16,403Net Cash Related to Other (Income), Expense
    
    
    506
    
    
    
    610
    
    
    
    5,490
    
    
    
    1,505
    
    
    
    6,486Adjusted EBITDA
    
    
    154,446
    
    
    
    152,409
    
    
    
    169,947
    
    
    
    166,684
    
    
    
    168,591Minority Interest in Adjusted EBITDA
    
    
    (41,152
    )
    
    
    (45,747
    )
    
    
    (49,089
    )
    
    
    (45,946
    )
    
    
    (45,647
    )Combined Adjusted EBITDA of Unconsolidated JOAs
    
    
    38,097
    
    
    
    39,842
    
    
    
    40,371
    
    
    
    36,006
    
    
    
    14,205EBITDA of Texas-New Mexico Newspapers Partnership(c)
    
    
    9,610
    
    
    
    10,108
    
    
    
    3,275
    
    
    
    
    
    
    
    Adjusted EBITDA Available to Company
    
    $
    161,001
    
    
    $
    156,612
    
    
    $
    164,504
    
    
    $
    156,744
    
    
    $
    137,149
   (a)
    
    Non-GAAP Financial Data.Adjusted EBITDA and Adjusted EBITDA Available to Company are
not measures of performance recognized under GAAP. However, we believe that they are
indicators and measurements of our leverage capacity and debt service ability. Adjusted EBITDA
and Adjusted EBITDA Available to Company should not be considered as an alternative to measure
profitability, liquidity, or performance, nor should they be considered an alternative to net
income, cash flows generated by operating, investing or financing activities, or other
financial statement data presented in our consolidated financial statements. Adjusted EBITDA
is calculated by deducting cost of sales and SG&A expense from total revenues. Adjusted EBITDA
Available to Company is calculated by: (i) reducing Adjusted EBITDA by the minorities
interest in the Adjusted EBITDA generated from the California Newspapers Partnership, The
Denver Post Corporation (through June 10, 2005) and The York Newspaper Company (through April
30, 2004), our less than 100% owned consolidated subsidiaries (Minority Interest in Adjusted
EBITDA); (ii) increasing Adjusted EBITDA by our combined proportionate share of the Adjusted
EBITDA generated by our unconsolidated JOAs in Denver, Salt Lake City and through May 7, 2004,
Charleston (Combined Adjusted EBITDA of Unconsolidated JOAs); and (iii) increasing Adjusted
EBITDA by our proportionate share of EBITDA of the Texas-New Mexico Newspapers Partnership
(see footnote (c)).(b)
    
    Direct Costs of Unconsolidated JOAs.Direct Costs of the Unconsolidated JOAs, Incurred
Outside of the Unconsolidated JOAs includes the editorial costs, publishing related revenues,
depreciation, amortization, and other direct costs incurred outside of the JOAs by our
consolidated subsidiaries associated with The Salt Lake Tribune, The Denver Post, and through
May 7, 2004, the Charleston Daily Mail. See Note 3: Joint Operating Agencies in the footnotes
to our consolidated financial statements for further description and analysis of this
adjustment.(c)
    
    The Texas-New Mexico Newspapers Partnership.The Texas-New Mexico Newspapers Partnership
agreement, effective March 3, 2003, requires the partnership to make distributions equal to
the earnings of the partnership before depreciation and amortization (EBITDA). Our 33.8% share
of the EBITDA of Texas-New Mexico Newspapers Partnership has been included in Adjusted EBITDA
Available to Company as it is an integral part of our cash flows from operations as defined by
our debt covenants. 29




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##### Table of Contents



Reconciliation of Cash Flows from Operating Activities (GAAP measure) to Adjusted EBITDA
presented on a pro-rata consolidated basis (non-GAAP measure). Years Ended June 30,2005
    
    2004
    
    2003(As restated)
    
    (As restated)(Dollars in thousands)NON-GAAP FINANCIAL DATA(a)Cash Flows from Operating Activities (GAAP measure)
    
    $
    98,964
    
    
    $
    75,155
    
    
    $
    102,694Net Change in Operating Assets and Liabilities
    
    
    25,678
    
    
    
    20,126
    
    
    
    8,619Distributions Paid to Minority Interest
    
    
    28,167
    
    
    
    36,176
    
    
    
    38,765Distributions from Unconsolidated JOAs
    
    
    (87,409
    )
    
    
    (75,204
    )
    
    
    (83,621
    )Interest Expense
    
    
    49,481
    
    
    
    57,036
    
    
    
    64,252Bad Debt Expense
    
    
    (8,065
    )
    
    
    (7,405
    )
    
    
    (9,632
    )Pension Expense, Net of Cash Contributions
    
    
    (1,463
    )
    
    
    (1,082
    )
    
    
    (31
    )Net Cash Related to Other (Income), Expense
    
    
    506
    
    
    
    610
    
    
    
    5,490Combined Adjusted EBITDA of Unconsolidated JOAs(b)
    
    
    38,097
    
    
    
    39,842
    
    
    
    40,371Direct Costs of the Unconsolidated JOAs, Incurred
Outside of the JOAs(c)
    
    
    48,587
    
    
    
    46,997
    
    
    
    43,411Minority Interest in Adjusted EBITDA of The York
Newspaper Company(d)
    
    
    
    
    
    
    (6,864
    )
    
    
    (8,044
    )Adjusted EBITDA
    
    
    192,543
    
    
    
    185,387
    
    
    
    202,274Minority Interest in Adjusted EBITDA
    
    
    (41,152
    )
    
    
    (38,883
    )
    
    
    (41,045
    )EBITDA of Texas-New Mexico Newspapers Partnership
    
    
    9,610
    
    
    
    10,108
    
    
    
    3,275Adjusted EBITDA Available to Company
    
    $
    161,001
    
    
    $
    156,612
    
    
    $
    164,504
   (a)
    
    Non-GAAP Financial Data.Adjusted EBITDA and Adjusted EBITDA Available to Company are not
measures of performance recognized under GAAP. However, we believe that they are indicators
and measurements of our leverage capacity and debt service ability. Adjusted EBITDA and
Adjusted EBITDA Available to Company should not be considered as an alternative to measure
profitability, liquidity, or performance, nor should they be considered an alternative to net
income, cash flows generated by operating, investing or financing activities, or other
financial statement data presented in our consolidated financial statements. Adjusted EBITDA
is calculated by deducting cost of sales and SG&A expense from total revenues. Adjusted
EBITDA Available to Company is calculated by: (i) reducing Adjusted EBITDA by the minorities
interest in the Adjusted EBITDA generated from the California Newspapers Partnership and The
Denver Post Corporation (through June 10, 2005), our less than 100% owned consolidated
subsidiaries (Minority Interest in Adjusted EBITDA) and (ii) increasing Adjusted EBITDA by
our proportionate share of EBITDA of the Texas-New Mexico Newspapers Partnership. Note that
pro-rata consolidation already takes into account our share of the results from our
unconsolidated JOAs and factors out the minority interest associated with The York Newspaper
Company through April 30, 2004.(b)
    
    Combined Adjusted EBITDA of Unconsolidated JOAs.Combined Adjusted EBITDA of Unconsolidated
JOAs is calculated as total revenues, less cost of sales and SG&A expense from the
Unconsolidated JOAs Pro-Rata Adjustment column presented that follows under  Reconciliation
of Income Statement Data presented on a historical GAAP basis to Non-GAAP Income Statement
Data presented on a pro-rata consolidation basis.(c)
    
    Direct Costs of Unconsolidated JOAs.Direct Costs of the Unconsolidated JOAs, Incurred
Outside of the Unconsolidated JOAs includes the editorial costs, publishing related revenues,
depreciation, amortization, and other direct costs incurred outside of the JOAs by our
consolidated subsidiaries associated with The Salt Lake Tribune, The Denver Post,and through
May 7, 2004 the Charleston Daily Mail. See Note 3: Joint Operating Agencies in the footnotes
to our consolidated financial statements for further description and analysis of this
adjustment.(d)
    
    Minority Interest in Adjusted EBITDA of The York Newspaper Company.Minority Interest in
Adjusted EBITDA of The York Newspaper Company is calculated as total revenues, less cost of
sales and SG&A expense from the Adjustment to Eliminate 42.5% Minority Interest in York JOA
column presented that follows under  Reconciliation of Income Statement Data presented on a
historical GAAP basis to Non-GAAP Income Statement Data presented on a pro-rata consolidation
basis. 30




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##### Table of Contents



Reconciliation of Income Statement Data presented on a historical GAAP basis to Non-GAAP Income
Statement Data presented on a pro-rata consolidation basis. See footnotes (1) and (2) at the end of these reconciliations for a description of the
adjustments made. See footnote (a) on the preceding page for a description of our method of
calculating Adjusted EBITDA. All amounts shown in the following reconciliations are in thousands. Year Ended June 30, 2005Adjustment toEliminate 42.5%
    
    UnconsolidatedAs Presented
    
    Minority Interest
    
    JOAs Pro-Rata
    
    As Presented onUnder GAAP
    
    in York JOA(1)
    
    Adjustment(2)
    
    a Pro-Rata BasisTotal Revenues
    
    $
    779,279
    
    
    $
    
    
    
    $
    302,475
    
    
    $
    1,081,754Income from Unconsolidated JOAs
    
    
    23,291
    
    
    
    
    
    
    
    (23,291
    )
    
    
    Cost of Sales
    
    
    242,653
    
    
    
    
    
    
    
    119,803
    
    
    
    362,456Selling, General and Administrative
    
    
    382,180
    
    
    
    
    
    
    
    144,575
    
    
    
    526,755Depreciation and Amortization
    
    
    40,598
    
    
    
    
    
    
    
    13,423
    
    
    
    54,021Interest Expense
    
    
    49,481
    
    
    
    
    
    
    
    198
    
    
    
    49,679Other (Income) Expense, Net
    
    
    8,669
    
    
    
    
    
    
    
    1,185
    
    
    
    9,854Total Costs and Expenses
    
    
    723,581
    
    
    
    
    
    
    
    279,184
    
    
    
    1,002,765Minority Interest
    
    
    (29,334
    )
    
    
    
    
    
    
    
    
    
    
    (29,334
    )Net Income
    
    
    39,880
    
    
    
    
    
    
    
    
    
    
    
    39,880Adjusted EBITDA(3)
    
    $
    154,446
    
    
    $
    
    
    
    $
    38,097
    
    
    $
    192,543
 Year Ended June 30, 2004(As restated)Adjustment toEliminate 42.5%
    
    UnconsolidatedAs Presented
    
    Minority Interest
    
    JOAs Pro-Rata
    
    As Presented onUnder GAAP
    
    in York JOA(1)
    
    Adjustment(2)
    
    a Pro-Rata BasisTotal Revenues
    
    $
    753,829
    
    
    $
    (15,280
    )
    
    $
    311,302
    
    
    $
    1,049,851Income from Unconsolidated JOAs
    
    
    22,207
    
    
    
    
    
    
    
    (22,207
    )
    
    
    Cost of Sales
    
    
    234,784
    
    
    
    (3,192
    )
    
    
    124,216
    
    
    
    355,808Selling, General and Administrative.
    
    
    366,636
    
    
    
    (5,224
    )
    
    
    147,244
    
    
    
    508,656Depreciation and Amortization
    
    
    40,742
    
    
    
    (500
    )
    
    
    15,211
    
    
    
    55,453Interest Expense
    
    
    57,036
    
    
    
    (78
    )
    
    
    300
    
    
    
    57,258Other (Income) Expense, Net
    
    
    17,365
    
    
    
    (264
    )
    
    
    2,124
    
    
    
    19,225Total Costs and Expenses
    
    
    716,563
    
    
    
    (9,258
    )
    
    
    289,095
    
    
    
    996,400Gain on Sale of Newspaper Properties
    
    
    6,982
    
    
    
    
    
    
    
    
    
    
    
    6,982Minority Interest
    
    
    (32,237
    )
    
    
    6,022
    
    
    
    
    
    
    
    (26,215
    )Net Income
    
    
    26,737
    
    
    
    
    
    
    
    
    
    
    
    26,737Adjusted EBITDA(3)
    
    $
    152,409
    
    
    $
    (6,864
    )
    
    $
    39,842
    
    
    $
    185,387
 31




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##### Table of Contents



Year Ended June 30, 2003(As restated)Adjustment toEliminate 42.5%
    
    UnconsolidatedAs Presented
    
    Minority Interest
    
    JOAs Pro-Rata
    
    As Presented onUnder GAAP
    
    in York JOA(1)
    
    Adjustment(2)
    
    a Pro-Rata BasisTotal Revenues
    
    $
    738,598
    
    
    $
    (17,584
    )
    
    $
    304,457
    
    
    $
    1,025,471Income from Unconsolidated JOAs
    
    
    25,227
    
    
    
    
    
    
    
    (25,227
    )
    
    
    Cost of Sales
    
    
    221,888
    
    
    
    (3,542
    )
    
    
    124,666
    
    
    
    343,012Selling, General and Administrative
    
    
    346,763
    
    
    
    (5,998
    )
    
    
    139,420
    
    
    
    480,185Depreciation and Amortization
    
    
    40,553
    
    
    
    (526
    )
    
    
    15,814
    
    
    
    55,841Interest Expense
    
    
    64,252
    
    
    
    (106
    )
    
    
    345
    
    
    
    64,491Other (Income) Expense, Net
    
    
    19,534
    
    
    
    (207
    )
    
    
    (1,015
    )
    
    
    18,312Total Costs and Expenses
    
    
    692,990
    
    
    
    (10,379
    )
    
    
    279,230
    
    
    
    961,841Gain on Sale of Newspaper Properties
    
    
    28,797
    
    
    
    
    
    
    
    
    
    
    
    28,797Minority Interest
    
    
    (34,088
    )
    
    
    7,204
    
    
    
    
    
    
    
    (26,884
    )Net Income
    
    
    38,312
    
    
    
    
    
    
    
    
    
    
    
    38,312Adjusted EBITDA(3)
    
    $
    169,947
    
    
    $
    (8,044
    )
    
    $
    40,371
    
    
    $
    202,274
   (1)
    
    Adjustment to Eliminate 42.5% Minority Interest in York JOA.Eliminates The York Newspaper
Company JOA minority partners 42.5% share from the individual line items with a corresponding
adjustment to GAAP minority interest through April 30, 2004. Effective April 30, 2004, we
acquired the minority interest in The York Newspaper Company. The difference between the
minority interest adjustment provided in the reconciliation of Cash Flows from Operating
Activities (GAAP measure) to Adjusted EBITDA presented on a pro-rata consolidated basis
(non-GAAP measure) and the pro-rata minority interest adjustment above is that certain items
(Depreciation and Amortization, Interest Expense and Other (Income) Expense, Net) are excluded
from Minority Interest in Adjusted EBITDA.(2)
    
    Unconsolidated JOAs Pro-Rata Adjustment.The adjustment to pro-rata consolidate our
unconsolidated JOAs includes our proportionate share, on a line item basis of the income
statements of our unconsolidated JOAs. Our interest in the earnings of the Salt Lake City JOA
is 58%, while our interests in Denver Newspaper Agency and Charleston Newspapers (through May
7, 2004) are 50%. This adjustment also includes the editorial costs, publishing related
revenues, depreciation, amortization, and other direct costs incurred outside of the JOAs by
our consolidated subsidiaries associated with The Salt Lake Tribune, The Denver Post, and the
Charleston Daily Mail(through May 7, 2004). See Note 3: Joint Operating Agencies in the
footnotes to our consolidated financial statements for further description and analysis of the
components of this adjustment.(3)
    
    Adjusted EBITDA.Adjusted EBITDA is a non-GAAP measure. 32




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##### Table of Contents



Item 7A: Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risk arising from changes in interest rates associated with our bank
debt, which includes our bank term loan and bank credit facility. The following table provides information about our debt obligations that are sensitive to
changes in interest rates. The table presents principal cash flows and related weighted-average
interest rates by expected maturity dates. Weighted-average variable rates are based on implied
forward rates as derived from appropriate annual spot rate observations as of the reporting date. Interest Rate Sensitivity
Principal or Notional Amount by Expected Maturity
Average Interest or Swap Rate Years Ended June 30,
    
    
    
    
    
    
    
    
    
    Fair Value20052006
    
    2007
    
    2008
    
    2009
    
    2010
    
    Thereafter
    
    Total
    
    (Liability)(Dollars in thousands)LiabilitiesLong-Term Debt including Current
Portion
Fixed Rate
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    446,492
    
    
    $
    446,492
    
    
    $
    441,188Average Interest Rate
    
    
    7.01
    %
    
    
    7.01
    %
    
    
    7.01
    %
    
    
    7.01
    %
    
    
    7.01
    %
    
    
    7.01
    %Variable Rate
    
    $
    1,472
    
    
    $
    1,472
    
    
    $
    11,472
    
    
    $
    26,472
    
    
    $
    263,754
    
    
    $
    95,321
    
    
    $
    399,963
    
    
    $
    399,963Average
Interest Rate(c)
    
    
    4.42
    %
    
    
    4.42
    %
    
    
    4.42
    %
    
    
    4.42
    %
    
    
    4.42
    %
    
    
    4.42
    %Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    846,455
    (a)
   (a)
    
    The long-term debt (including current portion) of $846.5 million from the Market Risk
table above differs from total long-term debt of $871.4 million reported in Note 6:
Long-Term Debt of the notes to the consolidated financial statements due to the following
(in millions): $
    846.5
    
    Balance per table above24.9
        (b)$
    871.4
    
    Total per Note 6: Long-Term Debt
 (b)
    
    Relates to various notes payable due through 2013. The Market Risk table above excludes
these long-term obligations as we could not practicably estimate fair value due to the lack
of quoted market prices for these types of instruments and our inability to estimate the
fair value without incurring the excessive costs of obtaining an appraisal.(c)
    
    Reflects our September 8, 2005 amended credit facility, which reduced interest rates
and slightly revised maturities. The assumed interest rates for the revolving credit
facility and term loan A is based on LIBOR plus 1.00%. The assumed interest rate for
term loan B is 1.25%. See Note 17: Subsequent Events of the notes to the consolidated
financial statements for further discussion. 33




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##### Table of Contents



DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements contained
herein and elsewhere in this annual report on Form 10-K are based on current expectations. Such
statements are made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995.The terms expect, anticipate, intend, believe, and project and
similar words or expressions are intended to identify forward-looking statements. These statements
speak only as of the date of this Annual Report on Form 10-K. These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results and events to differ
materially from those anticipated and should be viewed with caution. Potential risks and
uncertainties that could adversely affect our ability to obtain these results, and in most
instances are beyond our control, include, without limitation, the following factors: (a) increased
consolidation among major retailers, bankruptcy or other events that may adversely affect business
operations of major customers and depress the level of local and national advertising, (b) an
economic downturn in some or all of our principal newspaper markets that may lead to decreased
circulation or decreased local or national advertising, (c) a decline in general newspaper
readership patterns as a result of competitive alternative media or other factors, (d) increases in
newsprint costs over the level anticipated, (e) labor disputes which may cause revenue declines or
increased labor costs, (f) acquisitions of new businesses or dispositions of existing businesses,
(g) costs or difficulties related to the integration of businesses acquired by us may be greater
than expected, (h) increases in interest or financing costs, (i) rapid technological changes and
frequent new product introductions prevalent in electronic publishing, including the ongoing
evolution of the Internet and (j) other unanticipated events and conditions. It is not possible to
foresee or identify all such factors. We make no commitment to update any forward-looking statement
or to disclose any facts, events, or circumstances after the date hereof that may affect the
accuracy of any forward-looking statements. 34




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##### Table of Contents



Item 8: Financial Statements and Supplementary Data The response to this item is filed as a separate part of this report. See Item 15: Exhibits
and Financial Statement Schedules. 
 Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None 
 Item 9A: Controls and Procedures As of June 30, 2005, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer, President, and Chief
Financial Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures as defined in Rules 15d-15(e) of the Securities Exchange Act of 1934. Based upon that
evaluation, the Chief Executive Officer, President, and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective to provide reasonable assurance that material
information regarding us and our subsidiaries required to be disclosed by us in the reports filed
or submitted by us under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission rules and forms due to the
restatements made as discussed further below. In fiscal years 2004 and prior, the Company did not maintain effective controls over its
accounting for income taxes, including the determination of deferred income tax assets and
liabilities and the related income tax provision as they relate to Internal Revenue Code Section
1031 for asset exchanges in conjunction with purchase business combinations. This control
deficiency resulted in the restatement of the Companys consolidated financial statements for the
years ended June 30, 2004 through 2001. Accordingly, management has determined that this control
deficiency represents a material weakness. During the first quarter
2006, we enhanced our internal controls related to accounting for income taxes and now believe we have effective controls
over accounting for income taxes. The Companys management, including the CEO, President, and CFO, does not expect that our
disclosure controls or our internal controls will prevent all errors and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must
be considered relative to their costs. Our disclosure controls and procedures are designed to
provide reasonable assurance of achieving their objectives. Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within the company have been detected. These inherent
limitations include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple errors or mistakes. Additionally, controls can be
circumvented by the individual acts of some persons or by collusion of two or more people. The
design of any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected. 
 Item 9B: Other Information None 35




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##### Table of Contents



PART III 
 Item 10: Directors and Executive Officers of the Registrant Set forth below are the names, ages and titles and a brief account of the business experience
of each person who is a director, executive officer or other significant employee of ours. Name
    
    Age
    
    TitleRichard B. Scudder
    
    92
    
    Chairman of the Board and DirectorWilliam Dean Singleton.
    
    54
    
    Vice Chairman and Chief Executive Officer and DirectorJoseph J. Lodovic, IV
    
    44
    
    PresidentGerald E. Grilly
    
    58
    
    Executive Vice President and Chief Operating OfficerAnthony F. Tierno
    
    60
    
    Senior Vice President of OperationsRonald A. Mayo
    
    44
    
    Vice President and Chief Financial OfficerJames L. McDougald
    
    52
    
    TreasurerMichael J. Koren
    
    38
    
    Vice President and ControllerSteven M. Barkmeier
    
    44
    
    Vice President TaxCharles M. Kamen
    
    57
    
    Vice President Human ResourcesEric J. Grilly
    
    34
    
    President, MediaNews Group InteractivePatricia Robinson
    
    63
    
    SecretaryJean L. Scudder
    
    51
    
    DirectorHowell E. Begle, Jr.
    
    61
    
    Director
 Each director is elected annually and serves until the next annual meeting of shareholders or
until his/her successor is duly elected and qualified. Our directors are not compensated for their
service as directors. They do, however, receive reimbursement of expenses incurred from the
attendance at Board of Directors meetings. Please see Item 13: Certain Relationships and Related
Transactions for a description of consulting payments made to Mr. Scudder. Our executive officers
are appointed by and serve at the pleasure of the Board of Directors. Business Experience Richard B. Scudderhas served as Chairman of the Board and a Director of MediaNews since 1985. William Dean Singletonhas served as Vice Chairman and Chief Executive Officer and a Director
of MediaNews since 1985. He is also the Publisher of The Denver Posteffective February 2001, the
Publisher of The Salt Lake Tribuneeffective August 2002, and the Publisher of the York Daily
Recordand York Sunday Newseffective May 2004. Joseph J. Lodovic, IV, has served as President of MediaNews since February 2001. Prior
thereto, he served as Executive Vice President and Chief Financial Officer from 1993 to February
2001. Mr. Lodovic has been with MediaNews since 1987. Gerald E. Grillyhas served as Executive Vice President and Chief Operating Officer of
MediaNews since February 2001. Prior thereto he served as President, Publisher and Chief Executive
Officer of The Denver Post Corporation from November 1998 to February 2001. Mr. Gerald Grilly was
employed by McClatchy Company from 1979 to October 1998, most recently as President of McClatchy
Companys The Newspaper Network from 1993 to October 1998. Anthony F. Tiernohas served as Senior Vice President of Operations since February 2001.
Prior thereto, he served as Executive Vice President and Chief Operating Officer of MediaNews from
1993 to February 2001. Mr. Tierno has been with MediaNews since its inception in 1985. Ronald A. Mayohas served as Vice President and Chief Financial Officer since February 2001.
Prior thereto, he served as Vice President Finance and Controller from September 1994 to February
2001. James L. McDougaldhas served as Treasurer since September 1994. Prior thereto, he was
Controller for MediaNews from 1988 to 1994. 36




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##### Table of Contents



Michael J. Korenhas served as Vice President and Controller since July 2001. From 1991 to
2001, Mr. Koren was employed by Ernst & Young LLP, most recently as a Senior Manager. Steven M. Barkmeierhas served as Vice President Tax since July 2004. Prior thereto, he served
as Director of Tax from November 1995 to June 2004. Charles M. Kamenhas served as Vice President Human Resources for MediaNews Group since he
joined the Company in April 2000. Prior thereto, he served as Senior Consultant for Compensation
Resources Group in Dallas, Texas from May 1999 to April 2000. From September 1997 to May 1999, Mr.
Kamen was Senior Consultant and Retirement Practice Leader for Watson Wyatt World Wide in Denver,
Colorado. Eric J. Grillyhas served as President of MediaNews Group Interactive since October 2002.
Prior thereto, he served as Vice President of MediaNews Group Interactive from October 2000 to
October 2002. From May 1999 to October 2000, Mr. Eric Grilly was Vice President of Interactive
Media of The Denver Post Corporation and from June 1998 to May 1999, Mr. Eric Grilly was the Vice
President of Sales at Nando Media, the Interactive Media division of McClatchy Newspapers. Mr.
Eric Grilly is the son of Mr. Gerald E. Grilly. Patricia Robinsonhas served as Secretary of MediaNews since 1986. Ms. Robinson is the sister
of Mr. William Dean Singleton. Jean L. Scudderhas served as a Director of MediaNews since July 1998. Ms. Scudder is the
daughter of Mr. Richard B. Scudder. Howell E. Begle, Jr.has served as a Director of MediaNews since November 1996. Mr. Begle is
Of Counsel to Hughes Hubbard & Reed LLP, which law firm is counsel to MediaNews and its affiliates. Audit Committee Financial Expert We are not a listed issuer as defined in Rule 10A-3 under the Exchange Act and therefore are
not required to have an audit committee comprised of independent directors; our board of directors
acts as our audit committee. Additionally, we do not have an audit committee financial expert, as
that term is defined by Item 401(h) of Regulation S-K. Code of Ethics We have adopted a code of ethics that applies to all employees and officers of MediaNews. You
may obtain a copy of our code of ethics, without charge, by request directed to Ronald A. Mayo, at
MediaNews Group, Inc., 1560 Broadway, Suite 2100, Denver, CO 80202, (303) 563-6360. 37




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##### Table of Contents



Item 11: Executive Compensation The following table sets forth the cash compensation paid or payable to Mr. Singleton and each
of the other four most highly compensated executive officers whose direct or allocated cash
compensation exceeded $100,000 for services rendered to MediaNews in fiscal year 2005. None of our
executive officers have an employment agreement with us except Messrs. Singleton and Lodovic. Annual CompensationAll OtherName and Principal Position
    
    Fiscal Year
    
    Salary
    
    Bonus
    
    Compensation(a)William Dean Singleton
    
    
    2005
    
    
    $
    962,475
    
    
    $
    450,000
    
    
    $
    196,427Vice Chairman, Chief Executive Officer
    
    
    2004
    
    
    
    872,250
    
    
    
    150,000
    
    
    
    115,9332003
    
    
    
    830,250
    
    
    
    200,000
    
    
    
    118,168Joseph J. Lodovic, IV
    
    
    2005
    
    
    $
    639,600
    
    
    $
    400,000
    
    
    $
    60,316President
    
    
    2004
    
    
    
    574,950
    
    
    
    150,000
    
    
    
    47,1402003
    
    
    
    547,350
    
    
    
    200,000
    
    
    
    64,228Gerald E. Grilly
    
    
    2005
    
    
    $
    589,375
    
    
    $
    157,500
    
    
    $
    64,509Executive Vice President &
    
    
    2004
    
    
    
    538,050
    
    
    
    113,750
    
    
    
    15,398Chief Operating Officer
    
    
    2003
    
    
    
    512,500
    
    
    
    175,000
    
    
    
    53,119Anthony F. Tierno
    
    
    2005
    
    
    $
    358,750
    
    
    $
    42,500
    
    
    $
    30,414Senior Vice President of Operations
    
    
    2004
    
    
    
    322,875
    
    
    
    61,250
    
    
    
    19,1642003
    
    
    
    307,500
    
    
    
    42,500
    
    
    
    29,517Eric J. Grilly
    
    
    2005
    
    
    $
    256,250
    
    
    $
    95,500
    
    
    $
    23,355President, MediaNews Group Interactive
    
    
    2004
    
    
    
    206,500
    
    
    
    83,500
    
    
    
    10,2132003
    
    
    
    187,500
    
    
    
    75,000
    
    
    
    17,842
   (a)
    
    Included in All Other Compensation are amounts earned under the deferred
compensation plans described below. During fiscal year 2003, we adopted the non-qualified MediaNews Group Supplemental Executive
Retirement Plan, or the 2003 Plan, which does not qualify as a long-term incentive plan as
defined in Instruction 7 (iii) to Item 402(a)(3) of Regulation S-K. This plan has been offered to
certain of our eligible corporate executives. The 2003 Plan allows participants to defer a portion
of their compensation, including bonuses, if any, on a pre-tax basis. There is no company match on
these deferrals; however, the deferrals earn a return based on notional investment elections made
by the individual participants. In addition, we may, at our discretion, elect to make
contributions to the participants accounts based on a comparison of our actual profits to budgeted
profits during each fiscal year. Any such contribution is subject to vesting, which is generally
ten years from the date of participation in the plan. In addition to the 2003 Plan, in fiscal year
2004 we implemented an executive retiree medical benefit plan. The retiree medical benefit plan
provides for full health care coverage during retirement for the participants in the 2003 plan.
There are minimum age and years of service criteria for eligibility for benefits under this plan. The Company awards discretionary bonuses
to its executive officers who are not covered by employment agreements based on completion of
individual performance criteria determined on an annual basis. Effective June 29, 2005, we adopted the Career Restricted Stock Unit Plan (RSU Plan)
intended to encourage retention and reward performance of selected senior management over a
significant period of time. The RSU plan is administered by our board of directors (or a
designated committee). The RSU Plan provides for the award to members of senior management selected
by our board (or committee) for participation in the Plan of such number of restricted stock units
(RSUs) at such time or times as determined by our board (or committee) in its discretion. Each
RSU represents the right to receive one share of our new class of common stock, Class B (which is
non-voting and does not pay dividends, but which is convertible into Class A in certain
circumstances), subject to vesting and other requirements. RSUs granted to a participant vest upon
the later to occur of:  
    
    the earlier of (x) the completion of 20 years of continuous service with the
Company or its affiliates or (y) attainment of age 67 while still employed by the
Company or its affiliates; or
    
    the date on which the participant (a) has completed at least five years of
participation in RSU Plan and (b) has a combined age and years of continuous service
with the Company or its affiliates of at least 72. 38




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RSUs fully vest upon the occurrence of a Change in Control (as defined) and vest pro rata in
the event of the participants death, disability or termination of employment by the Company
without cause. Any RSUs not so vested are forfeited upon the participants termination of
employment, unless otherwise determined by the board (or committee) in its sole discretion. Shares of our Class B common stock will be issued to holders of vested RSUs upon the earliest
of the participants separation from service, the participants disability and the occurrence of a
Qualified Change in Control (as defined). Recipients of shares issued pursuant to RSUs have the right to require us to repurchase a
number of shares at their then fair market value (as determined by formula outlined in the RSU
plan) that is sufficient to enable them to pay taxes due in connection with such issuance, provided
that our board of directors may suspend such right at any time. At any time following the
six-month anniversary of the date of issuance of shares of such Class B common stock, we have the
right to repurchase such shares at their then fair market value (as determined by formula outlined
in the RSU plan). Such repurchase rights will terminate if we consummate an initial public
offering of our common stock. The issuance of up to 150,000 shares of our Class B common stock is authorized under the RSU
Plan. No awards were granted as of June 30, 2005. However, RSU grants were awarded July 14, 2005
to the following executive officers: Mr. William Dean Singleton, Mr. Joseph J. Lodovic, IV, Mr.
Gerald E. Grilly, Mr. Anthony F. Tierno, Mr. Ronald A. Mayo, Mr. James L McDougald, Mr. Charles M.
Kamen, Mr. Eric J. Grilly, Ms. Elizabeth A. Gaier, and Mr. Stephen M. Hesse. Employment and Other Agreements Under the terms of Mr. Singletons Employment Agreement, which was amended and restated
effective July 1, 2005, Mr. Singleton is currently entitled to receive cash compensation at an
annual rate of $985,950, subject to annual increase beginning January 1, 2006 of not less than 5%,
and a one-time cash bonus of $100,000, which was paid in June 2005. In addition, Mr. Singleton is
entitled to receive a bonus of up to $500,000 for each fiscal year based on a comparison of our
actual profits to budgeted profits during such fiscal year. Other discretionary bonuses may be
paid which are not part of his Employment Agreement, if approved by the Board of Directors. Mr.
Singletons Employment Agreement expires on December 31, 2009, but is automatically renewed for
successive one-year terms unless either party gives notice terminating the Employment Agreement at
least 120 days prior to the expiration of the existing term. Additionally, Mr. Singletons
Employment Agreement may be terminated prior to the expiration of the existing term under certain
circumstances. Mr. Singleton is entitled to severance payments if his employment terminates for
certain reasons. In addition, if the Employment Agreement terminates by expiration at the end of
the initial term or any renewal term, Mr. Singleton is entitled to receive a cash payment equal to
his base annual salary in effect immediately prior to termination, plus an amount equal to the
maximum annual bonus he is eligible to earn. Under Mr. Singletons Employment Agreement, he is
eligible to participate in equity ownership and incentive plans established for executive
personnel. Mr. Singletons Employment Agreement also provides for him to be reimbursed for the
annual premium (up to a maximum premium of $100,000 per year) on up to $40 million of term life
insurance insuring his spouse as part of his estate planning. Mr. Singletons Employment Agreement
contains a two-year non-compete covenant for all geographical areas in which newspapers are owned
or managed by us and or our subsidiaries with paid print circulation in excess of 25,000 at the
time of termination of the Employment Agreement; provided, however that the ownership of up to 5%
of any class of publicly traded securities of any entity shall not be deemed to be a violation. In
the event of his disability, Mr. Singleton has the right to require MediaNews to purchase his
common stock from time to time during his lifetime in an aggregate amount not to exceed $1.0
million in any fiscal year. At June 30, 2005, the total estimated cost (determined actuarially) of
the repurchase would be $27.6 million and such amount is recorded as a component of Putable Common
Stock on our balance sheet. From 1996 through 2002, MediaNews advanced a total of $1.5 million to
the Singleton Irrevocable Trust (see Item 12: Security Ownership of Certain Beneficial Owners and
Management) to fund premiums on cash surrender life insurance policies covering Mr. Singleton and
his wife. The advances are recorded in our consolidated balance sheet as a component of other
long-term assets. Advances will be repaid when the policy is surrendered or earlier at Mr.
Singletons option. No interest is charged to Mr. Singleton on these advances. No funding by
MediaNews of this insurance coverage has occurred subsequent to July 2002. The cash surrender
value life insurance policies were originally purchased in order to mitigate the impact of estate
taxes that may be due on MediaNews stock held in the Singleton Revocable Trust as a result of the
death of Mr. Singleton and his spouse and the resulting need for us to repurchase such shares to
provide liquidity in the Singleton Revocable Trust. 39




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Mr. Lodovics Employment Agreement was amended and restated effective July 1, 2005. Mr.
Lodovic is currently entitled to receive cash compensation at an annual rate of $655,200, subject
to annual increase of not less than 5%, and a one-time cash bonus of $100,000, which was paid in June 2005. In addition, Mr. Lodovic is also
entitled to receive a bonus of up to $400,000 for each fiscal year based on a comparison of our
actual profits to budgeted profits during such year. Other discretionary bonuses may also be paid
which are not part of his employment agreement, if approved by the Board of Directors. Mr.
Lodovics Employment Agreement expires on December 31, 2009, but is automatically renewed for
successive one-year terms unless either party gives notice terminating the Employment Agreement at
least 120 days prior to the expiration of the existing term. Additionally, Mr. Lodovics
Employment Agreement may be terminated prior to the expiration of the existing term under certain
circumstances. Mr. Lodovic is entitled to severance payments if his employment terminates for
certain reasons. In addition, if the Employment Agreement terminates by expiration at the end of
the initial term or any renewal term, Mr. Lodovic is entitled to receive a cash payment equal to
his base annual salary in effect immediately prior to termination, plus an amount equal to the
maximum annual bonus he is eligible to earn. Under Mr. Lodovics Employment Agreement, he is also
eligible to participate in equity ownership and incentive plans established for executive
personnel. Mr. Lodovics Employment Agreement contains a two-year non-compete covenant for all
geographical areas in which newspapers are owned or circulated by us or our subsidiaries with paid
print circulation in excess of 25,000 at the time of termination of the Employment Agreement;
provided, however that the ownership of up to 5% of any class of publicly traded securities of any
entity shall not be deemed to be a violation. Mr. Lodovic is also party to a Shareholder Agreement
with the Company. The Shareholder Agreement entitles Mr. Lodovic, upon termination of his
employment following December 31, 2009, by mutual agreement, or as a result of breach by the
Company or certain other circumstances, to put to us at a price of 100% of the then fair market
value (as determined by formula outlined in the Shareholder Agreement) shares of common stock which
he owns. We also have a call under Mr. Lodovics Shareholder Agreement to acquire, and Mr. Lodovic
has a right to put, such shares following termination of his employment under other circumstances,
at a price equal to a percentage of fair market value (as determined by formula outlined in the
Shareholder Agreement), which increases to 100% on December 31, 2009 (at June 30, 2005, Mr. Lodovic
is entitled to 75% of the fair market value). As of June 30, 2005, the value of Mr. Lodovics put,
as calculated per terms of the Shareholder Agreement, was estimated to be $21.0 million and is
recorded as a component of Putable Common Stock on our balance sheet. In the event of his
disability, Mr. Lodovic has the right to require MediaNews to purchase his common stock from time
to time during his lifetime in an aggregate amount not to exceed $1.0 million in any fiscal year. Compensation Committee Interlocks and Insider Participation Decisions regarding annual compensation of executives other than Messrs. Singleton and Lodovic
are made by Mr. Singleton and Mr. Lodovic. Our Board of Directors is responsible for
approving Mr. Singletons and Mr. Lodovics Employment Agreements, including their compensation.
The Board of Directors of MediaNews does not have a compensation committee. 
 Item 12: Security Ownership of Certain Beneficial Owners and Management The authorized capital stock of MediaNews consists of 3,000,000 shares of Class A common
stock, $0.001 par value, 2,314,346 shares of which are issued of which 2,298,346 are outstanding
and 16,000 are held in treasury and 150,000 shares of Class B common stock, $0.001 par value, none
of which are issued or outstanding at June 30, 2005. We have not declared or paid any cash
dividends on our common stock in the past and we do not currently have plans to pay common stock
cash dividends. Our current long-term debt agreements limit our ability to pay such dividends. 40




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The following table sets forth the number and percentage of shares of our common stock
currently issued and outstanding and beneficially owned by (i) each person known to us to be the
beneficial owner of more than 5.0% of any class of our equity securities; (ii) each executive
officer as defined in Item 402(a)(3) of Regulation S-K; and (iii) all directors and executive
officers of MediaNews as a group. Amount and Nature of
    
    Percentage ofBeneficial Ownership(a)
    
    Ownership ofClass A Common Stock
    
    Class A Common StockWilliam Dean Singleton(b),(c),(l),(m)
    
    
    254,858.9900
    
    
    
    11.09
    %Howell E. Begle, Jr.(b),(d),(l),(m)
    
    
    786,426.5100
    
    
    
    34.22
    %Patricia Robinson(b),(e),(l),(m)
    
    
    786,426.5100
    
    
    
    34.22
    %Joseph J. Lodovic, IV(b),(f)
    
    
    58,199.0000
    
    
    
    2.53
    %Jean L. Scudder(g),(k)
    
    
    384,065.1200
    
    
    
    16.71
    %Charles Scudder(h),(k)
    
    
    260,321.3750
    
    
    
    11.32
    %Elizabeth H. Difani(h),(i),(k)
    
    
    219,073.4575
    
    
    
    9.53
    %Carolyn Miller(h),(j),(k)
    
    
    177,825.5475
    
    
    
    7.74
    %All directors and executives as a group(n)
    
    
    2,140,770.0000
    
    
    
    93.14
    %
   (a)
    
    Beneficial ownership is determined in accordance with the rules of the Securities and
Exchange Commission. Except as indicated by footnote, the persons named in the tables above
have sole voting and investment power with respect to all shares of capital stock indicated as
beneficially owned by them.(b)
    
    The address of each such person is: c/o Mr. Howell E. Begle, Jr., Trustee, 1775 I Street
N.W., Suite 600, Washington, D.C. 20006. Mr. Begle is Of Counsel to Hughes Hubbard & Reed
LLP, which law firm is counsel to us.(c)
    
    These shares are held by a revocable trust for the benefit of the children of Mr. Singleton
(the Singleton Revocable Trust), for which trust Mr. Begle and Mr. Singleton are trustees.(d)
    
    Includes all shares for which Mr. Begle has sole voting power under the Singleton Family
Voting Trust Agreement for MediaNews (the Singleton Family Voting Trust Agreement for
MediaNews) and shared investment power, as a trustee for an irrevocable trust for the benefit
of Mr. Singletons children (the Singleton Irrevocable Trust). Also includes all shares of
common stock held by the Singleton Revocable Trust for which Mr. Begle is a trustee.(e)
    
    These shares are held by the Singleton Irrevocable Trust for which Ms. Robinson serves as a
trustee and as to which she has shared investment power. Ms. Robinson is Mr. Singletons
sister.(f)
    
    Legal ownership of 50% of such shares is held by the Singleton Family Voting Trust. Legal
ownership of the remaining 50% of such shares is held by the Scudder Family Voting Trust.(g)
    
    Includes 123,743.745 shares of common stock held by a trust for the benefit of two of Ms.
Scudders nephews, for which trust Ms. Scudder serves as the sole trustee. Also includes
74,504 shares of common stock held for the benefit of Ms. Scudders son, Benjamin Fulmer, and
daughter, Nina Fulmer, for which Ms. Scudder also serves as the sole trustee. Does not
include the shares held by Charles Scudder, Elizabeth Difani, as trustee and/or custodian for
certain of her children, or Carolyn Miller, as trustee and/or custodian for certain of her
minor children, with respect to which Ms. Scudder has sole voting power pursuant to the
Scudder Family Voting Trust Agreement for MediaNews (the Scudder Family Voting Trust
Agreement). Charles Scudder, Elizabeth Difani and Carolyn Miller are siblings of Ms.
Scudder; all four are the children of Mr. Richard B. Scudder.(h)
    
    Sole voting power with respect to these shares is held by Ms. Scudder pursuant to the Scudder
Family Voting Trust Agreement. See note (g) above.(i)
    
    Ms. Difani holds 132,299.6658 shares as trustee and/or custodian for certain of her children.
Sole voting power with respect to all 219,073.4575 shares is held by Ms. Scudder pursuant to
the Scudder Family Voting Trust Agreement. See note (g) above.(j)
    
    Ms. Miller holds 118,550.365 shares as trustee for certain of her children. Sole voting
power with respect to all 177,825.5475 shares is held by Ms. Scudder pursuant to the Scudder
Family Voting Trust Agreement. See note (g) above.(k)
    
    The address of each person is: c/o Jean L. Scudder, 193 Old Kents Hill Road, Readfield, Maine
04355.(l)
    
    Indicates shared voting power.(m)
    
    Indicates shared investment power.(n)
    
    No directors or officers of MediaNews beneficially own any shares in MediaNews at June 30,
2005 except Mr. Singleton, Ms. Scudder, Mr. Begle, Ms. Robinson and Mr. Lodovic. 41




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Scudder Family Voting Trust Agreement for MediaNews The children of Richard B. Scudder, which includes Charles A. Scudder, Carolyn S. Miller,
Elizabeth H. Difani and Jean L. Scudder, respectively, and Joseph J. Lodovic, IV have entered into
the Scudder Family Voting Trust Agreement for MediaNews (the Scudder Family Voting Trust) in
accordance with which all shares of our common stock held by Charles Scudder, Carolyn Miller,
Elizabeth H. Difani, Jean L. Scudder and 50% of those shares held by Joseph J. Lodovic, IV, were
transferred to the Scudder Family Voting Trust for MediaNews. Under the Scudder Family Voting
Trust for MediaNews, Jean L. Scudder (the Scudder Trustee) exercises all voting rights (subject
to the consent of shareholders holding 50% of the common stock held by the Scudder Family Voting
Trust for MediaNews on such matters as election of directors, mergers, dissolution or
reorganization of MediaNews, sale, exchange or pledge of all or substantially all of the assets of
MediaNews and acquisition or divestiture by MediaNews of any newspaper venture) and substantially
all other rights to which such shareholders would otherwise be entitled until January 31, 2010,
subject to extension by written agreement of one or more beneficiaries of the Scudder Family Voting
Trust Agreement for MediaNews and the Scudder Trustee. Singleton Family Voting Trust Agreement for MediaNews The Singleton Irrevocable Trust, the Singleton Revocable Trust and Joseph J. Lodovic, IV have
entered into the Singleton Family Voting Trust Agreement for MediaNews (the Singleton Family
Voting Trust Agreement for MediaNews) in accordance with which all shares of our common stock held
by the Singleton Irrevocable Trust and the remaining 50% of those shares held by Joseph J. Lodovic,
IV were transferred to the Singleton Family Voting Trust for MediaNews and the shares of our common
stock held by the Singleton Revocable Trust will be transferred to the Singleton Family Voting
Trust for MediaNews upon the death or incapacity of Mr. Singleton. Under the Singleton Family
Voting Trust Agreement for MediaNews, the Singleton Trustees exercise all voting and substantially
all other rights to which such shareholders would otherwise be entitled until January 31, 2010,
subject to extension by written agreement of one or more beneficiaries of the Singleton Family
Voting Trust Agreement for MediaNews. MediaNews Shareholders Agreement The Singleton Revocable Trust, the Singleton Irrevocable Trust, the Singleton Family Voting
Trust for MediaNews, the Scudder Family Voting Trust for MediaNews, certain of the beneficiaries of
such trusts, Joseph J. Lodovic, IV and MediaNews entered into a Shareholders Agreement (the
MediaNews Shareholders Agreement) which provides, among other things, that action by the Board
of Directors with respect to such matters as the issuance of capital stock, declaration of
dividends, redemption of capital stock, certain capital expenditures, mergers or consolidation, and
incurring certain indebtedness requires the unanimous approval of all Directors then serving on the
Board of Directors or approval by the holders of 75% of the shares of Class A Common Stock entitled
to vote on such matters. The MediaNews Shareholders Agreement also provides that until the earlier of (i) the date on
which none of our 6 7/8% Senior Subordinated Notes due October 1, 2013, and our 6 3/8% Senior
Subordinated Notes due April 1, 2014 are outstanding, or (ii) when MediaNews Leverage Ratio (as
defined in the indenture relating to our 6 3/8% Senior Subordinated Notes) is less than 3:1, no
shareholder may sell, transfer, pledge or otherwise encumber their shares or their interest in
their shares, of our common stock to any third party (except to the Company and certain permitted
transfers to family members and other shareholders), without the consent of all our shareholders or
unless all shares of common stock then outstanding are sold in a single transaction or a
contemplated sale to a third party. If any shareholder desires to sell or transfer his shares to us
or the other shareholders without an identified third party buyer, then such shareholder may offer
to sell his shares to us at fair market value determined by appraisal, or if we decline to purchase
such shares, such shareholder may offer to sell his shares to the remaining shareholders at fair
market value. 
 Item 13: Certain Relationships and Related Transactions Management Services We are a party to a consulting agreement, renewable annually, with Mr. Scudder, which
agreement requires us to make annual payments of $275,000. Effective July 1, 2005, this amount was
increased to $300,000. In connection with his consulting services, we provide Mr. Scudder with the
use of a car, which is also used for personal purposes. The cost to us
for providing this car during the last fiscal year and currently has been the cost of
insurance and maintenance. We also pay the compensation for an administrative assistant for Mr.
Scudder. 42




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We are a party to a management agreement with CNP, which agreement provides us with a
management fee of 1.25% of CNPs revenues, thereby reducing our total corporate overhead, the
effect of which is a reduction of the impact minority interest expense has on our consolidated
statement of operations. Other In August 2004, MediaNews purchased the Colorado residence of Mr. Gerald Grilly (COO of
MediaNews) for $2.7 million (subject to adjustment to reflect the proceeds received by MediaNews
upon its resale of the house) in conjunction with his relocation to Los Angeles, California. Mr.
Grillys relocation was requested by MediaNews. In May 2005, we sold the residence for $2.5
million. MediaNews uses Hughes Hubbard & Reed LLP as one of its legal counsel. Mr. Howell Begle, who is
general counsel and a board member of MediaNews, is Of Counsel to Hughes Hubbard & Reed LLP. 
 Item 14: Principal Accountant Fees and Services The following table presents fees incurred for services provided by Ernst & Young LLP for
fiscal years 2005, 2004 and 2003. All audit and non-audit services for which we engaged the independent auditor to perform and
were required to be pre-approved were pre-approved by our board of directors, which acts as our
audit committee. The board of directors considers, among other things, the possible effect of the
performance of such services on the auditors independence in order to ensure that the provision of
such services does not impair the auditors independence. Years Ended June 30,2005
    
    2004
    
    2003(Dollars in thousands)Audit Fees(a)
    
    $
    563
    
    
    $
    617
    
    
    $
    469Audit-Related Fees(b)
    
    
    2
    
    
    
    121
    
    
    
    125Tax Fees(c)
    
    
    65
    
    
    
    5
    
    
    
    58Total
    
    $
    630
    
    
    $
    743
    
    
    $
    652
   (a)
    
    Fees for professional services incurred by the auditors to comply with Generally
Accepted Auditing Standards, reviews of the Companys filings with the Securities Exchange
Commission, and comfort letters.(b)
    
    Fees for professional services which principally include services in connection with
employee benefit plan audits, due diligence and consultation related to mergers and
acquisitions, internal control reviews, attest services not required by statute or
regulation, and consultation concerning financial accounting and reporting standards.(c)
    
    Fees for professional services for tax compliance, tax advice and tax planning. These
services include assistance regarding federal and state tax compliance, return preparation
and tax audits. 43




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AVAILABLE INFORMATION MediaNews consummated exchange offers for its 6 7/8% Senior Subordinated Notes due 2013 and
its 6 3/8% Senior Subordinated Notes due 2014 in April 2004. Because the exchange offers were
registered under the Securities Act of 1933, MediaNews became subject to the reporting requirements
of the Securities Exchange Act of 1934 upon effectiveness of the registration statements for the
exchange offers. Our duty to file reports with the Commission has been suspended in respect of our
fiscal year commencing July 1, 2005 pursuant to Section 15(d) of the Securities Exchange Act of
1934. However, the indentures governing our Senior Subordinated Notes require that we continue to
file quarterly, annual and, if applicable, current reports on Form 8-K, with the Commission on a
voluntary basis. You can inspect and copy our annual, quarterly and current reports and other information filed
with or furnished to the Commission at the public reference facilities of the Commission in Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You can also obtain copies of these
materials from the public reference section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Please call the Commission at 1-800-SEC-0330 for
further information on the public reference rooms. The Commission also maintains a Web site that
contains reports, proxy and information statements and other information regarding registrants that
file electronically with the Commission (http://www.sec.gov). Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 are available free of charge through our Internet site
www.medianewsgroup.com as soon as reasonably practicable after we electronically file the material
with, or furnish it to, the Securities and Exchange Commission. 44




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PART IV 
 Item 15: Exhibits and Financial Statement Schedules  (a)
    
    Financial Statements  1.
    
    The list of financial statements contained in the accompanying Index to
Consolidated Financial Statements and Schedule Covered by Report of Independent
Registered Public Accounting Firm is filed as a part of this Report (see page 46).2.
    
    Financial Statement ScheduleThe financial statement schedule contained in the accompanying Index to Consolidated
Financial Statements and Schedule Covered by Report of Independent Registered Public
Accounting Firm is filed as a part of this Report (see page 46).3.
    
    ExhibitsThe exhibits listed in the accompanying Index to exhibits are filed as a part of this
Annual Report (see page 83). 45




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MEDIANEWS GROUP, INC. Index to Consolidated Financial Statements and Schedule
Covered by Report of Independent Registered Public Accounting Firm The following financial statements of the registrant and its subsidiaries required to be
included in Items 8 and 15(a)(1) are listed below: PageReport of Independent Registered Public Accounting Firm
    
    
    47Consolidated
Balance Sheets as of June 30, 2005 and 2004 (As restated)
    
    
    48Consolidated Statements of Operations  for the Fiscal
Years Ended June 30, 2005, 2004 (As restated) and 2003 (As restated)
    
    
    50Consolidated Statements of Changes in Shareholders Equity for the Fiscal Years Ended June 30, 2005, 2004 (As restated) and 2003 (As restated)
    
    
    51Consolidated
Statements of Cash Flows (As restated) for the Fiscal Years Ended
June 30, 2005, 2004 (As restated) and 2003 (As restated)
    
    
   52Notes to Consolidated Financial Statements (As restated)
    
    
    53
 The following financial statement schedule of the registrant and its subsidiaries required to
be included in Item 15(a)(2) is listed below: Schedule II Valuation and Qualifying Accounts
    
    
    86
 All other schedules for which provision is made in the applicable accounting regulations of
the Securities and Exchange Commission are not required under the related instructions or are
inapplicable and therefore have been omitted or the information is presented in the consolidated
financial statements or related notes. 46




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
MediaNews Group, Inc. We have audited the accompanying consolidated balance sheets of MediaNews Group, Inc. and
subsidiaries as of June 30, 2005 and 2004 (as restated), and the related consolidated statements of operations,
statements of changes in shareholders equity and cash flows for each of the three years in the
period ended June 30, 2005 (as restated). Our audits also included the financial statement schedule listed in
the accompanying index to consolidated financial statements. These financial statements and
schedule are the responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. We were not engaged to perform an audit of the Companys internal control over
financial reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the consolidated financial position of MediaNews Group, Inc. and subsidiaries at
June 30, 2005 and 2004 (as restated), and the consolidated results of their operations and their cash flows for
each of the three years in the period ended June 30, 2005, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule,
when considered in relation to the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein. As discussed in Note 15 to the consolidated financial statements, the Company restated its
consolidated balance sheet as of June 30, 2004 (as restated) and its consolidated statements of operations,
statements of changes in shareholders equity and cash flows for each of the two years in the
period ended June 30, 2004 (as restated). /s/ ERNST & YOUNG LLPErnst & Young LLP
 September 22, 2005
Denver, Colorado 47




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MEDIANEWS GROUP, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30,2005
    
    2004(As restated)(Dollars in thousands)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    4,262
    
    
    $
    64,736Trade accounts receivable, less allowance for
doubtful accounts of $6,901 and $7,625, at June 30,
2005 and 2004, respectively
    
    
    82,284
    
    
    
    77,877Other receivables
    
    
    5,427
    
    
    
    4,048Inventories of newsprint and supplies
    
    
    24,248
    
    
    
    16,526Prepaid expenses and other assets
    
    
    14,616
    
    
    
    8,280Income taxes receivable
    
    
    2,820
    
    
    
    1,445TOTAL CURRENT ASSETS
    
    
    133,657
    
    
    
    172,912PROPERTY, PLANT AND EQUIPMENTLand
    
    
    37,403
    
    
    
    37,226Buildings and improvements
    
    
    105,352
    
    
    
    104,993Machinery and equipment
    
    
    356,510
    
    
    
    342,661Construction in progress
    
    
    43,602
    
    
    
    7,110TOTAL PROPERTY, PLANT AND EQUIPMENT
    
    
    542,867
    
    
    
    491,990Less accumulated depreciation and amortization
    
    
    (210,561
    )
    
    
    (184,614
    )NET PROPERTY, PLANT AND EQUIPMENT
    
    
    332,306
    
    
    
    307,376OTHER ASSETSInvestment in unconsolidated JOAs
    
    
    262,764
    
    
    
    252,807Equity investments
    
    
    91,421
    
    
    
    91,966Subscriber accounts, less accumulated amortization
of $149,397 and $134,487 at June 30, 2005 and 2004,
respectively
    
    
    49,543
    
    
    
    63,980Excess of cost over fair value of net assets acquired
    
    
    392,748
    
    
    
    382,284Newspaper mastheads
    
    
    76,662
    
    
    
    73,436Covenants not to compete and other identifiable
intangible assets, less accumulated amortization of
$31,771 and $30,745 at June 30, 2005 and 2004,
respectively
    
    
    5,175
    
    
    
    5,011Other
    
    
    21,496
    
    
    
    19,398TOTAL OTHER ASSETS
    
    
    899,809
    
    
    
    888,882TOTAL ASSETS
    
    $
    1,365,772
    
    
    $
    1,369,170
 See notes to consolidated financial statements 48




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MEDIANEWS GROUP, INC. & SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30,2005
    
    2004(As restated)(Dollars in thousands, except share data)LIABILITIES AND SHAREHOLDERS EQUITYCURRENT LIABILITIESTrade accounts payable
    
    $
    15,045
    
    
    $
    7,180Accrued employee compensation
    
    
    34,772
    
    
    
    33,801Accrued interest
    
    
    10,428
    
    
    
    17,055Other accrued liabilities
    
    
    15,132
    
    
    
    14,775Unearned income
    
    
    26,577
    
    
    
    26,281Current portion of long-term debt and obligations under capital leases
    
    
    4,088
    
    
    
    5,278TOTAL CURRENT LIABILITIES
    
    
    106,042
    
    
    
    104,370OBLIGATIONS UNDER CAPITAL LEASES
    
    
    5,969
    
    
    
    6,638LONG-TERM DEBT
    
    
    867,512
    
    
    
    916,551OTHER LIABILITIES
    
    
    47,359
    
    
    
    26,450DEFERRED INCOME TAXES, NET
    
    
    98,208
    
    
    
    89,071MINORITY INTEREST
    
    
    153,633
    
    
    
    165,084PUTABLE COMMON STOCK
    
    
    48,556
    
    
    
    SHAREHOLDERS EQUITYCommon stock, par value $0.001; 3,150,000 shares authorized:2,314,346 shares issued and 2,298,346 shares outstanding
    
    
    2
    
    
    
    2Additional paid-in capital
    
    
    
    
    
    
    3,631Accumulated other comprehensive loss, net of taxes:Unrealized loss on hedging
    
    
    (2,330
    )
    
    
    (2,089
    )Minimum pension liability
    
    
    (31,483
    )
    
    
    (17,887
    )Retained earnings
    
    
    74,304
    
    
    
    79,349Common stock in treasury, at cost, 16,000 shares
    
    
    (2,000
    )
    
    
    (2,000
    )TOTAL SHAREHOLDERS EQUITY
    
    
    38,493
    
    
    
    61,006TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    1,365,772
    
    
    $
    1,369,170
 See notes to consolidated financial statements 49




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MEDIANEWS GROUP, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Years Ended June 30,2005
    
    2004
    
    2003(As restated)
    
    (As restated)(Dollars in thousands, except share data)REVENUESAdvertising
    
    $
    610,060
    
    
    $
    582,689
    
    
    $
    570,163Circulation
    
    
    129,344
    
    
    
    132,505
    
    
    
    137,445Other
    
    
    39,875
    
    
    
    38,635
    
    
    
    30,990TOTAL REVENUES
    
    
    779,279
    
    
    
    753,829
    
    
    
    738,598INCOME FROM UNCONSOLIDATED JOAS
    
    
    23,291
    
    
    
    22,207
    
    
    
    25,227COSTS AND EXPENSESCost of sales
    
    
    242,653
    
    
    
    234,784
    
    
    
    221,888Selling, general and administrative
    
    
    382,180
    
    
    
    366,636
    
    
    
    346,763Depreciation and amortization
    
    
    40,598
    
    
    
    40,742
    
    
    
    40,553Interest expense
    
    
    49,481
    
    
    
    57,036
    
    
    
    64,252Other (income) expense, net
    
    
    8,669
    
    
    
    17,365
    
    
    
    19,534TOTAL COSTS AND EXPENSES
    
    
    723,581
    
    
    
    716,563
    
    
    
    692,990EQUITY INVESTMENT INCOME, NET
    
    
    10,201
    
    
    
    9,485
    
    
    
    3,709GAIN ON SALE OF NEWSPAPER PROPERTIES
    
    
    114
    
    
    
    6,982
    
    
    
    28,797MINORITY INTEREST
    
    
    (29,334
    )
    
    
    (32,237
    )
    
    
    (34,088
    )INCOME BEFORE INCOME TAXES
    
    
    59,970
    
    
    
    43,703
    
    
    
    69,253INCOME TAX EXPENSE
    
    
    (20,090
    )
    
    
    (16,966
    )
    
    
    (30,941
    )NET INCOME
    
    $
    39,880
    
    
    $
    26,737
    
    
    $
    38,312NET INCOME PER COMMON SHARE:Net income per common share
    
    $
    17.35
    
    
    $
    11.63
    
    
    $
    16.67Weighted average number of shares outstanding
    
    
    2,298,346
    
    
    
    2,298,346
    
    
    
    2,298,346
 See notes to consolidated financial statements 50




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MEDIANEWS GROUP, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY AccumulatedAdditional
    
    Other
    
    
    
    
    
    Common
    
    TotalCommon
    
    Paid-In
    
    Comprehensive
    
    Retained
    
    Stock in
    
    Shareholders'Stock
    
    Capital
    
    Loss
    
    Earnings
    
    Treasury
    
    Equity(Dollars in thousands)BALANCE AT JUNE 30,
2002, as previously
reported
    
    $
    2
    
    
    $
    3,631
    
    
    $
    (14,030
    )
    
    $
    36,898
    
    
    $
    (2,000
    )
    
    $
    24,501Restatement adjustments
from prior periods, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,598
    )
    
    
    
    
    
    
    (22,598
    )BALANCE AT JUNE 30, 2002,
as restated
    
    
    2
    
    
    
    3,631
    
    
    
    (14,030
    )
    
    
    14,300
    
    
    
    (2,000
    )
    
    
    1,903Comprehensive income:Unrealized gain on
hedging activities, net
of tax expense of $1,075.
    
    
    
    
    
    
    
    
    
    
    1,548
    
    
    
    
    
    
    
    
    
    
    
    1,548Unrealized loss on
hedging activities,
reclassified to
earnings, net of tax
benefit of $348
    
    
    
    
    
    
    
    
    
    
    669
    
    
    
    
    
    
    
    
    
    
    
    669Minimum pension
liability adjustment,
net of tax benefit of
$5,600
    
    
    
    
    
    
    
    
    
    
    (7,538
    )
    
    
    
    
    
    
    
    
    
    
    (7,538
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,312
    
    
    
    
    
    
    
    38,312Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,991BALANCE AT JUNE 30, 2003,
as restated
    
    
    2
    
    
    
    3,631
    
    
    
    (19,351
    )
    
    
    52,612
    
    
    
    (2,000
    )
    
    
    34,894Comprehensive income:Unrealized gain on
hedging activities, net
of tax expense of $194
    
    
    
    
    
    
    
    
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    291Unrealized loss on
hedging activities,
reclassified to
earnings, net of tax
benefit of $1,300
    
    
    
    
    
    
    
    
    
    
    1,884
    
    
    
    
    
    
    
    
    
    
    
    1,884Minimum pension liability
adjustment, net of tax
benefit of $1,867
    
    
    
    
    
    
    
    
    
    
    (2,800
    )
    
    
    
    
    
    
    
    
    
    
    (2,800
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,737
    
    
    
    
    
    
    
    26,737Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,112BALANCE AT JUNE 30, 2004,
as restated
    
    
    2
    
    
    
    3,631
    
    
    
    (19,976
    )
    
    
    79,349
    
    
    
    (2,000
    )
    
    
    61,006Adjustment for putable
common stock
    
    
    
    
    
    
    (3,631
    )
    
    
    
    
    
    
    (44,925
    )
    
    
    
    
    
    
    (48,556
    )Comprehensive income:Unrealized loss on
hedging activities, net
of tax benefit of $426
    
    
    
    
    
    
    
    
    
    
    (697
    )
    
    
    
    
    
    
    
    
    
    
    (697
    )Unrealized loss on
hedging activities,
reclassified to
earnings, net of tax
benefit of $348
    
    
    
    
    
    
    
    
    
    
    456
    
    
    
    
    
    
    
    
    
    
    
    456Minimum pension liability
adjustment, net of tax
benefit of $10,168
    
    
    
    
    
    
    
    
    
    
    (13,596
    )
    
    
    
    
    
    
    
    
    
    
    (13,596
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,880
    
    
    
    
    
    
    
    39,880Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,043
    )BALANCE AT JUNE 30, 2005
    
    $
    2
    
    
    $
    
    
    
    $
    (33,813
    )
    
    $
    74,304
    
    
    $
    (2,000
    )
    
    $
    38,493
 See notes to consolidated financial statements 51




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MEDIANEWS GROUP, INC. & SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended June 30,2005
    
    2004
    
    2003(As restated)
    
    (As restated)(Dollars in thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    39,880
    
    
    $
    26,737
    
    
    $
    38,312Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation
    
    
    25,834
    
    
    
    25,554
    
    
    
    23,771Amortization
    
    
    18,953
    
    
    
    19,584
    
    
    
    20,914Loss on early extinguishment of debt
    
    
    9,236
    
    
    
    9,292
    
    
    
    Net loss (gain), on sale of newspaper assets
    
    
    437
    
    
    
    (6,931
    )
    
    
    (30,018
    )Impairment loss
    
    
    
    
    
    
    
    
    
    
    5,715Provision for losses on accounts receivable
    
    
    8,065
    
    
    
    7,405
    
    
    
    9,632Amortization of debt discount
    
    
    1,051
    
    
    
    934
    
    
    
    1,231Minority interest
    
    
    29,334
    
    
    
    32,237
    
    
    
    34,088Distributions paid to minority interest
    
    
    (28,167
    )
    
    
    (36,176
    )
    
    
    (38,765
    )Proportionate share of net income from unconsolidated JOAs
    
    
    (71,878
    )
    
    
    (69,204
    )
    
    
    (68,638
    )Distributions from unconsolidated JOAs
    
    
    87,409
    
    
    
    75,204
    
    
    
    83,621Equity investment income, net
    
    
    (10,201
    )
    
    
    (9,485
    )
    
    
    (3,709
    )Deferred income tax expense
    
    
    17,728
    
    
    
    16,387
    
    
    
    29,276Change in defined benefit plan liabilities, net of cash contributions
    
    
    1,463
    
    
    
    1,082
    
    
    
    31Change in estimated option repurchase price
    
    
    (5,306
    )
    
    
    (3,491
    )
    
    
    5,993Unrealized loss on hedging activities, reclassified to earnings from
accumulated other comprehensive loss
    
    
    804
    
    
    
    3,184
    
    
    
    1,017Unrealized (gain) loss on swaps
    
    
    
    
    
    
    2,968
    
    
    
    (1,158
    )Change in operating assets and liabilities:Accounts receivable
    
    
    (13,356
    )
    
    
    (6,446
    )
    
    
    (7,583
    )Inventories
    
    
    (7,632
    )
    
    
    (2,113
    )
    
    
    (3,665
    )Prepaid expenses and other assets
    
    
    (4,301
    )
    
    
    808
    
    
    
    2,910Accounts payable and accrued liabilities
    
    
    6,374
    
    
    
    (7,485
    )
    
    
    1,339Unearned income
    
    
    173
    
    
    
    1,341
    
    
    
    (401
    )Change in other assets and liabilities, net
    
    
    (6,936
    )
    
    
    (6,231
    )
    
    
    (1,219
    )NET CASH FLOWS FROM OPERATING ACTIVITIES
    
    
    98,964
    
    
    
    75,155
    
    
    
    102,694CASH FLOWS FROM INVESTING ACTIVITIES:Distributions from equity investments
    
    
    10,997
    
    
    
    10,638
    
    
    
    4,360Investments in equity investments
    
    
    (250
    )
    
    
    (50
    )
    
    
    (1,592
    )Proceeds from the sale of newspapers and other assets
    
    
    483
    
    
    
    56,733
    
    
    
    1,314Business acquisitions, net of cash acquired
    
    
    (58,607
    )
    
    
    (50,072
    )
    
    
    (53,006
    )Cash contributed by partners for business acquisitions
    
    
    
    
    
    
    
    
    
    
    24,178Capital expenditures
    
    
    (51,312
    )
    
    
    (36,483
    )
    
    
    (20,669
    )NET CASH FLOWS FROM INVESTING ACTIVITIES
    
    
    (98,689
    )
    
    
    (19,234
    )
    
    
    (45,415
    )CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of long-term debt, net of issuance costs
    
    
    464,250
    
    
    
    523,983
    
    
    
    113,143Reduction of long-term debt and other liabilities
    
    
    (516,375
    )
    
    
    (509,046
    )
    
    
    (169,108
    )Repurchase premiums and related costs associated with long-term debt.
    
    
    (8,624
    )
    
    
    (9,465
    )
    
    
    NET CASH FLOWS FROM FINANCING ACTIVITIES
    
    
    (60,749
    )
    
    
    5,472
    
    
    
    (55,965
    )INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (60,474
    )
    
    
    61,393
    
    
    
    1,314CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    64,736
    
    
    
    3,343
    
    
    
    2,029CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    4,262
    
    
    $
    64,736
    
    
    $
    3,343
 See notes to consolidated financial statements 52




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MEDIANEWS GROUP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1: Basis of Presentation MediaNews Group, Inc. (MediaNews or the Company), through its subsidiaries, publishes
daily and non-daily newspapers serving markets in nine states. The Company also owns four radio
stations and one television station; the combined revenues of these non-newspaper operations
comprise approximately 1.0% of the Companys consolidated revenue and are not considered
significant to the Companys operations. Note 2: Significant Accounting Policies and Other Matters Significant accounting policies for the Company involve its assessment of the recoverability
of its long-lived assets, including goodwill and other intangible assets, which is based on such
factors as estimated future cash flows and current fair value estimates. The Companys accounting
for pension and retiree medical benefits requires the use of estimates concerning the work force,
interest rates, plan investment return, and involves the use of advice from consulting actuaries.
The Companys accounting for federal and state income taxes is sensitive to interpretation of
various laws and regulations and assumptions on the realization of deferred tax assets. Use of Estimates The preparation of financial statements in accordance with generally accepted accounting
principles, at times, requires the use of estimates and assumptions. The Company uses estimates,
based on historical experience, actuarial studies and other assumptions, as appropriate, to assess
the carrying values of its assets and liabilities and disclosure of contingent matters. The
Company re-evaluates its estimates on an ongoing basis. Actual results could differ from these
estimates. Principles of Consolidation All significant intercompany accounts have been eliminated. Reclassifications For comparability, certain prior year balances have been reclassified to conform to current
reporting classifications. Joint Operating Agencies A joint operating agency (JOA) performs the production, sales, distribution and
administrative functions for two or more newspapers in the same market under the terms of a joint
operating agreement. Editorial control and news at each of the individual newspapers, which are a
party to a joint operating agreement, continue to be separate and outside of a JOA. As of June 30,
2005, the Company, through its subsidiaries, York Newspapers, Inc., Kearns-Tribune, LLC, and The
Denver Post Corporation, participates in JOAs in York, Pennsylvania, Salt Lake City, Utah, and
Denver, Colorado, respectively. The editorial and related expenses of The Denver Postand The Salt
Lake Tribune, are incurred by the Company outside the related JOA. The Company controls the York
JOA prior and subsequent to the 2004 restructuring and, accordingly, consolidates its results, as
well as those of the York Dispatch. However, the editorial costs associated with the York Daily
Record, the other newspaper in the York JOA, were not included in the Companys results prior to
May 1, 2004, because, until then, the newspaper was not owned by MediaNews. The Company also owned
a 50% interest in a JOA in Charleston, West Virginia through May 7, 2004. The Charleston JOA,
accounted for and paid the editorial expenses for both newspapers within the JOA. See Note 3:
Joint Operating Agencies regarding the restructuring of the York and Charleston JOAs in fiscal year
2004. 53




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The operating results from the Companys unconsolidated JOAs are reported as a single net
amount in the accompanying financial statements in the line item Income from Unconsolidated JOAs.
This line item includes:  
    
    The Companys proportionate share of net income from JOAs,
    
    The amortization of subscriber lists created by the original purchase, as the subscriber
lists are attributable to the Companys earnings in the JOAs, and
    
    Editorial costs, miscellaneous revenue received outside of the JOA, and other charges
incurred by the Companys consolidated subsidiaries directly attributable to the JOAs
providing editorial content and news for the Companys newspapers party to the JOAs. Investments in unconsolidated JOAs are included in the consolidated balance sheet under the
line item Investment in Unconsolidated JOAs, for the JOAs the Company does not control (See Note
3: Joint Operating Agencies for further discussion). Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less
when purchased to be cash equivalents. Trade Accounts Receivable Trade accounts receivable are generally from advertisers, commercial printing customers,
single copy newspaper outlets, newspaper subscribers and independent newspaper delivery
contractors. The Company extends unsecured credit to most of its customers. Credit limits, setting
and maintaining credit standards and managing the overall quality of the credit portfolio is
largely decentralized (maintained and managed at the individual newspaper locations). The Company
maintains an allowance for doubtful accounts for estimated losses resulting from the inability of
its customers to make required payments. The allowance for doubtful accounts is based on both the
aging of accounts receivable at period end and specific identification. Inventories Inventories, which largely consist of newsprint, are valued at the lower of cost or market.
Cost is generally determined using the first-in, first-out method. Investments The Company has made the following strategic investments, which are accounted for under the
equity method (for those investments in which the Company has less than 20% ownership, the Company
accounts for these under the equity method as the Company has seats on the board and, therefore,
has significant influence and ties to the entity beyond the Companys invested capital):  
    
    PowerOne Media, LLC, a company that provides software tools and hosts classified
advertising for daily and weekly newspapers throughout the United States (16% ownership
interest),
    
    CIPS Marketing Group, Inc., a total market coverage delivery service in Los Angeles (50%
ownership interest),
    
    Gallup Independent Company, publisher of the Gallup Independentin Gallup, New Mexico
(approximately 38% ownership interest),
    
    Ponderay Newsprint Company, a minority investment in a newsprint mill held by the
Companys subsidiary, Kearns-Tribune, LLC. In addition to its investment, the Company is
guarantor for 6.0% of up to $125.0 million in long-term debt owed by Ponderay and due on
April 12, 2006 (6.0% ownership interest and one seat on the board). The Company has no
amounts related to the guarantee recorded in its financial statements in accordance with the
Financial Accounting Standards Board (FASB) Interpretation No. 45, Guarantors Accounting
and Disclosure 54




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Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.The
guarantee arose from Ponderays April 12, 2000 amended and restated credit agreement that
replaced a previous credit facility which had been used to finance the construction of its
newsprint mill. The guarantee could be triggered by Ponderays failure to meet any or all of
its bank covenants, at which time the Company could be liable for its portion of the
guarantee. At June 30, 2005, the Companys share of the guarantee is $3.7 million. The debt
is collateralized by a deed of trust on Ponderays real property and a mortgage on all of
Ponderays other assets, and
    
    Texas-New Mexico Newspapers Partnership, a minority investment in this partnership, which
was formed on March 3, 2003 (33.8% ownership interest). See Note 5: Acquisitions,
Dispositions and Other Transactions for further discussion.
    
    BIAS Media LLP, formed in 2005 to publish a free entertainment publication in Denver,
Colorado and to operate a related Web site (50% ownership interest). These investments are included in the consolidated balance sheet as a component of long-term
assets under the caption Equity investments. See Note 14: Equity Investments (Non-JOA) for
further information. Property, Plant and Equipment Property, plant, and equipment are recorded at cost. Buildings and machinery and equipment
are depreciated using the straight-line method over the expected useful lives of individual assets.
Buildings and improvements are depreciated over the lesser of 40 years or the term of the lease
and machinery and equipment is depreciated over 3 to 20 years. Goodwill and Other Intangible Assets The Company accounts for goodwill and other intangible assets under the FASB Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets(SFAS No.
142). Under the standard, excess of cost over fair value of net assets acquired (goodwill) and
other indefinite life intangibles (primarily mastheads) are not amortized, but instead are
periodically reviewed for impairment. All other intangibles with a finite useful life continue to
be amortized over their estimated useful lives. Subscriber accounts are amortized using the
straight-line method over periods ranging from 8 to 15 years with a weighted average remaining life
based on the date of acquisitions of approximately 8 years. Other finite lived intangibles are
being amortized over periods not exceeding 10 years. As a result of an indicator of impairment identified at the Companys subsidiary, Alaska
Broadcasting Company, during fiscal year 2003, the Company tested the related carrying value of
goodwill for impairment under SFAS No. 142. Based on the Companys evaluation, all of the recorded
goodwill was determined to be impaired. As a result, a write down of $1.8 million was recorded in
other (income) expense, net during the fiscal year ended June 30, 2003. In addition, as required
by SFAS No. 142, the Company performed an annual impairment test for goodwill and mastheads as of
July 1, 2004 and July 1, 2005. There was no impairment of intangible assets noted as a result of
these tests. Another impairment test will be performed July 1, 2006, unless unexpected events or
circumstances arise that require the Company to test for impairment sooner. Estimated amortization expense for the next five years is as follows at June 30, 2005 (in
thousands): 2006
    
    $
    14,1012007
    
    
    11,2202008
    
    
    7,5992009
    
    
    4,4862010
    
    
    3,750
 Long-Lived Assets FASB SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets,addresses
financial accounting and reporting for the impairment or disposal of long-lived assets. The
carrying value of long-lived assets is reviewed annually. If, at any time, the facts or
circumstances at any of the Companys individual newspaper or other operations 55




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indicate the impairment of long-lived asset values as a result of a continual decline in
performance or as a result of fundamental changes in a market, a determination is made as to
whether the carrying value of the long-lived assets exceeds estimated realizable value. For
purposes of this determination, estimated realizable value is evaluated based on values placed on
comparable assets, generally based on a multiple of revenue and/or operating profit (revenues less
cost of sales and selling, general and administrative expenses); however, other valuation methods
may be used. As a result of an indicator of impairment identified at one of the properties of the
California Newspapers Partnership, the Company determined that at June 30, 2003 the carrying value
of an operating facility exceeded estimated realizable value based on the expected proceeds from
the impending sale of the related assets. Accordingly, an impairment loss of $3.9 million was
recorded in other (income) expense, net for the year ended June 30, 2003 to adjust the long-lived
assets to the estimated realizable value of $2.0 million. The long-lived asset was sold during
fiscal year 2004 and the amount for which it sold did not materially differ from the adjusted net
book value. Debt Discount Debt discount is amortized in a manner that results in a constant rate of interest over the
life of the related debt and is included as a component of interest expense. Income Taxes The Company accounts for income taxes utilizing the liability method of accounting for income
taxes. Under the liability method, deferred income taxes are recognized for the tax consequences
of temporary differences by applying enacted statutory tax rates applicable to differences
between the financial statement carrying amount and the tax basis of existing assets and
liabilities. Revenue Recognition Advertising revenue is earned and recognized when advertisements are published, inserted,
aired or displayed and are net of provisions for estimated rebates, credit and rate adjustments and
discounts. Circulation revenue includes single copy and home delivery subscription revenue.
Single copy revenue is earned and recognized based on the date the publication is delivered to the
single copy outlet, net of provisions for returns. Home delivery subscription revenue net of
discounts is earned and recognized when the newspaper is delivered to the customer or sold to a
home delivery independent contractor. Amounts received in advance of an advertisement or newspaper
delivery are deferred and recorded on the balance sheet as a current liability to be recognized
into income when the revenue has been earned. Disclosures about Segments of an Enterprise and Related Information The Company conducts business in one reporting segment and determines its reporting segment
based on the individual operations that the chief operating decision maker reviews for purposes of
assessing performance and making operating decisions. The individual operations have been
aggregated into one segment because management believes they have similar economic characteristics,
products, services, customers, production processes and distribution methods. The Company believes
that aggregating the operations into one segment helps users understand the Companys performance
and assess its prospects. The Companys newspaper operations, individually and in the aggregate,
generally trend in the same direction because they are impacted by the same economic trends. The
newspapers operating performance are most affected by newsprint prices and the health of the
national economy, particularly conditions within the retail, employment, real estate and automotive
markets. While an individual newspaper may perform better or worse than the Companys newspapers as
a whole due to specific conditions at that newspaper or within its local economy, such variances
generally do not significantly affect the overall year over year performance comparisons of the
Company. While the Company, in addition to its newspapers, operates four radio stations and one
television station, these non-newspaper operations are not significant to the Companys operations
as they comprise approximately 1.0% of our consolidated revenue. 56




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Comprehensive Income Under FASB SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities(SFAS
No. 133), the Companys newsprint and interest rate swap agreements on its variable rate debt were
recorded at fair value and changes in the value of such contracts, net of income taxes, were reported in comprehensive income. As
of June 30, 2005 and 2004, the Company had no outstanding newsprint or interest rate swap
agreements; however, amounts related to terminated newsprint swap agreements remained in other
comprehensive income at June 30, 2004 due to the Companys determination that the hedges became
ineffective prior to the expiration of the original term of the agreements. The amounts in
accumulated other comprehensive loss related to these ineffective hedges were being amortized and
charged to other (income) expense, net over the remainder of the original terms of the agreements
as the forecasted transactions originally contemplated in the hedging agreements continued to be
probable of occurring. At June 30, 2005, only amounts related to one of the terminated newsprint
swap agreements remain in other comprehensive income. Also included in comprehensive income are
the changes in fair value of interest rate swap agreements at one of the Companys unconsolidated
JOAs. See Note 10: Hedging Activities for further discussion. Comprehensive income for the
Company also includes a minimum pension liability adjustment related to two of the Companys
pension plans and a pension plan at one of the Companys unconsolidated JOAs. See Note 8: Employee
Benefit Plans for further discussion. For purposes of calculating income taxes related to
comprehensive income, the Company uses its combined statutory rate for federal and state income
taxes. Dividends The Company has not paid a dividend on its common stock and does not currently plan to pay
cash dividends on its common stock. In addition, the Companys long-term debt agreements contain
covenants which, among other things, limit the Companys ability to pay dividends to its
shareholders. Employees Certain employees of the Companys newspapers are employed under collective bargaining
agreements. Recently Issued Accounting Standards In January 2003, the FASB issued Interpretation No. 46 Consolidation of Variable Interest
Entities(FIN No. 46). FIN No. 46 clarifies the application of Accounting Research Bulletin No.
51, Consolidated Financial Statements, to certain entities in which equity investors do not have
the characteristics of a controlling financial interest or do not have sufficient equity at risk
for the entity to finance its activities without additional subordinated financial support from
other parties. In December 2003, the FASB issued a revised FIN No. 46. Under the revision, for
variable interest entities that existed prior to December 31, 2003, the effective date for
non-public entities is the beginning of the first annual reporting period beginning after December
15, 2004, which for the Company is July 1, 2005. The Company does not believe that the revised FIN
No. 46 will have a material impact on its financial position or results of operations; however, the
Company is still in the process of evaluating the revised rules under FIN No. 46. In December 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003
(the Act) was signed into law. The Act introduces a prescription drug benefit under Medicare
(Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans
that provide a benefit that is at least actuarially equivalent to Medicare Part D. Two of the
Companys subsidiaries and the corporate entity have postretirement benefit plans which offer a
prescription drug benefit and therefore under FASB SFAS No. 106, Employers Accounting for
Postretirement Benefits Other Than Pensions,the plans accumulated postretirement benefit
obligations would be required to be remeasured as a result of the Act. However, on January 12,
2004, the FASB issued a FASB Staff Position on SFAS No. 106 (FSP-SFAS No. 106-1) which permitted
sponsors to make a one-time election to defer accounting for the effects of the Act and the
disclosures related to the plans required by FASB SFAS No. 132 (revised 2003), Employers
Disclosures about Pensions and Other Postretirement Benefits(see further discussion which
follows),until authoritative guidance on the accounting for the federal subsidy is issued or until
certain other events that would require remeasurement occur at which time accounting for the Acts
effects on the plans would be required. At that time, the Company elected to defer accounting for
the effects of the Act under FSP-SFAS No. 106-1. In May 2004, the FASB issued FSP-SFAS No. 106-2,
Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003,which supersedes FSP-SFAS No. 106-1, and provides authoritative guidance
on the accounting for the Act and is effective for the interim or annual period beginning after
June 15, 2004, which for the Company is July 1, 2005. In accordance with FSP-SFAS No. 106-2, the
Company has concluded that the Act is not significant to the Companys postretirement benefit
plans; therefore, the effects of the Act were incorporated in the June 30, 2005 measurement of plan
obligations. 57




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Note 3: Joint Operating Agencies The Company through its wholly-owned subsidiary, The Denver Post Corporation, owns the
masthead of The Denver Postand a 50% interest in the Denver Newspaper Agency (DNA or the Denver
JOA), a partnership which publishes The Denver Postand the Rocky Mountain News,under the terms
of a JOA agreement.DNA is the managing entity of the JOA agreement between The Denver Post
Corporation and E.W. Scripps Company (owner of the Rocky Mountain News). Under the terms of the JOA
agreement, DNA is responsible for performing all the business functions of The Denver Postand the
Rocky Mountain News,including advertising and circulation sales, production and distribution. News
and editorial costs related to The Denver Postare incurred outside of the Denver JOA and are the
sole responsibility of the Company. Conversely, E.W. Scripps Company is solely responsible for the
news and editorial costs of the Rocky Mountain News.In addition to the Companys proportionate
share of income from DNA, the editorial costs, miscellaneous revenues outside of the JOA,
depreciation of editorial assets owned outside of the JOA, and other direct costs of The Denver
Postare included in the line item Income from Unconsolidated JOAs. The Denver JOA agreement
expires in 2051, unless otherwise extended. The Company, through its wholly-owned subsidiary, Kearns-Tribune, LLC, owns the masthead of
The Salt Lake Tribuneand a 50% ownership interest in the Newspaper Agency Corporation (the Salt
Lake City JOA). The Salt Lake City JOA is the managing entity of the JOA agreement between
Kearns-Tribune, LLC and the Deseret News Publishing Company (owner of the Deseret Morning News).
Under the terms of this JOA agreement, the Salt Lake City JOA is responsible for performing all the
business functions of The Salt Lake Tribuneand the Deseret Morning News,including advertising and
circulation sales, production and distribution; however, the Salt Lake City JOA does not own any of
the fixed assets used in its operations. Instead, each partner owns the fixed assets used in the
operations of the Salt Lake City JOA as tenants in common. News and editorial costs related to The
Salt Lake Tribuneare incurred outside of the Salt Lake City JOA and are the sole responsibility of
Kearns-Tribune, LLC. Conversely, Deseret News Publishing Company is solely responsible for the news
and editorial costs of the Deseret Morning News.While Kearns-Tribune, LLC owns 50% of the Salt
Lake City JOA, net income of the Salt Lake City JOA is distributed 58% to Kearns-Tribune, LLC and
42% to the Deseret News Publishing Company principally because The Salt Lake Tribunehas greater
circulation than the Deseret Morning Newsand, therefore, is responsible for a greater portion of
the operating cash flows generated by the Salt Lake City JOA. The Company records its proportionate
share of the results of the Salt Lake City JOA along with the operations of Kearns-Tribune, LLC,
consisting principally of editorial costs, miscellaneous revenues outside of the JOA, amortization
of intangibles, depreciation of fixed assets, and other direct costs of The Salt Lake Tribune,in
the line item Income from Unconsolidated JOAs. The Salt Lake City JOA expires in 2016, unless
otherwise extended. Prior to May 7, 2004, the Company, through its wholly-owned subsidiary, Charleston Publishing
Company, owned the masthead of the Charleston Daily Mailand a 50% interest in Charleston
Newspapers (the Charleston JOA), which publishes the Charleston Gazette(morning) and Charleston
Daily Mail(evening) six days a week and the Sunday Gazette-Mail, under the terms of a JOA
agreement. The managerial responsibility for the news and editorial functions was completely
separate from the JOA; accordingly, the Company was responsible for the news and editorial content
of the Charleston Daily Mail. However, related editorial expenses were incurred and paid within
the Charleston JOA. As a result, all editorial expenses of the three Charleston JOA publications
were included in the Companys proportionate share of income from Charleston Newspapers, which is
included in Income from Unconsolidated JOAs. Amortization of intangibles and other direct costs
associated with the JOA incurred by Charleston Publishing Company were also included in Income from
Unconsolidated JOAs. On May 7, 2004, the Company restructured its ownership interest in the
Charleston JOA. In exchange for $55.0 million in cash (less a net adjustment of approximately $3.5
million for 50% of Charleston Newspapers working capital, long-term employee benefit liabilities
and long-term debt) and a limited partnership interest in a newly formed entity (Charleston
Newspapers Holdings, L.P.), the Company contributed its general partnership interest in Charleston
Newspapers and the masthead of the Charleston Daily Mailto Charleston Newspapers Holdings, L.P.
In addition, in conjunction with the restructuring, the Company agreed to continue to be
responsible for the news and editorial content of the Charleston Daily Mail. Under its agreement
with Charleston Newspapers Holdings, L.P., the Company is reimbursed for the cost of providing the
news and editorial content of the Charleston Daily Mailand is paid a management fee. The
Companys limited partnership interest does not entitle the Company to any share of the profits or
losses of the limited partnership. As a result of the restructuring transaction, the Company
recorded a pre-tax gain of approximately $8.0 million in its fourth quarter of fiscal year 2004 and
wrote off $10.6 million of net intangible assets. 58




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Prior to May 1, 2004, the Company, through its wholly-owned subsidiary, York Newspapers, Inc.
(YNI), owned the masthead of The York Dispatch, a daily evening newspaper, the York Sunday News,
as well as a 57.5% interest in The York Newspaper Company (the York JOA). York Daily Record, Inc.
(YDR) owned the remaining 42.5% in the York JOA and the masthead of the York Daily Record. Under the terms of the York JOA agreement, the York
JOA was responsible for all newspaper publishing operations, other than news and editorial,
including production, sales, distribution and administration, of The York Dispatch, the York Daily
Record, a daily morning newspaper, and the York Sunday News. Because YNI had the controlling
interest and was the controlling partner of the York JOA, the operations of the JOA were
consolidated with those of the Company, with a minority interest reflected for YDRs interest in
the York JOA. Prior to May 1, 2004, the operating results of the York JOA did not include the
editorial costs associated with the publication of the York Daily Recordsince the Company did not
own the newspaper and the costs were incurred outside of the JOA. Effective April 30, 2004, the
Company restructured its interest in the York JOA through the exercise of its call option to
acquire the remaining 42.5% interest in The York Newspaper Company and the masthead of the York
Daily Recordfor approximately $38.3 million. As a result of the option exercise and the
restructuring of the York JOA, the Company became responsible for the news and editorial content of
the York Daily Recordand an affiliate of YDR became responsible for providing the news and
editorial content for The York Dispatch. However, the Company still owns the masthead and all
other tangible and intangible assets of The York Dispatch.Under the restructured JOA, the Company
is entitled to all of the profits and losses of the York JOA and reimburses the affiliate of the
former partner for the cost of providing editorial and news content in The York Dispatchplus a
management fee of $240,000 per year, indexed for inflation. The transaction was accounted for
under the purchase method of accounting. Approximately $4.6 million of the $38.3 million
transaction price was attributable to purchasing the remaining minority interest in The York
Newspaper Company, $5.3 million was attributable to identifiable intangible assets ($3.2 million of
which was related to the York Daily Recordmasthead; the remainder was associated with subscriber
and advertiser lists) and $28.4 million was recorded as goodwill. The following tables present the summarized results for the fiscal years ended June 30, 2005,
2004 and 2003 of the Companys unconsolidated JOAs, on a combined basis, along with related balance
sheet data at June 30, 2005 and 2004. The Salt Lake City JOA data has been presented separately
because, as of June 30, 2005, it is a significant investee of the Company as determined in
accordance with Rule 3-09 of Regulation S-X. Beginning in fiscal year 2005, The Denver JOA data is
no longer combined with the Charleston JOA data as a result of the May 2004 Charleston JOA
restructuring. The fiscal year 2004 and 2003 income statement data combines the Denver JOA and the
Charleston JOA in the column Other Unconsolidated JOAs. The Salt Lake City JOA, Denver JOA and
Other Unconsolidated JOA information is presented at 100%, with the other partners share of income
from the related JOAs subsequently eliminated. The editorial costs, miscellaneous revenues
received outside of the JOA, depreciation, amortization, and other direct costs incurred outside of
the JOAs by our subsidiaries associated with The Salt Lake Tribune, The Denver Post,and through
May 7, 2004, the Charleston Daily Mailare included in the line Associated Revenues and Expenses.
The 20% minority interest associated with The Denver Postthrough June 10, 2005 has not been
reflected in the following tables. Year Ended June 30, 2005Total IncomeAssociated
    
    fromSalt Lake
    
    
    
    
    
    Revenues and
    
    UnconsolidatedCity JOA
    
    Denver JOA
    
    Expenses
    
    JOAs(Dollars in thousands)Income Statement Data:Total revenues
    
    $
    146,904
    
    
    $
    433,183
    
    
    $
    527Cost of sales
    
    
    32,440
    
    
    
    134,488
    
    
    
    33,744Selling, general and administrative
    
    
    53,638
    
    
    
    204,792
    
    
    
    11,069Depreciation and amortization
    
    
    
    
    
    
    18,468
    
    
    
    4,189Other
    
    
    2,485
    
    
    
    (341
    )
    
    
    112Total costs and expenses
    
    
    88,563
    
    
    
    357,407
    
    
    
    49,114Net income
    
    
    58,341
    
    
    
    75,776
    
    
    
    (48,587
    )Partners share of income from
unconsolidated JOAs
    
    
    (24,351
    )
    
    
    (37,888
    )
    
    
    Income from unconsolidated JOAs
    
    $
    33,990
    
    
    $
    37,888
    
    
    $
    (48,587
    )
    
    $
    23,291
 59




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Year Ended June 30, 2004Total IncomeOther
    
    Associated
    
    fromSalt Lake
    
    Unconsolidated
    
    Revenues and
    
    UnconsolidatedCity JOA
    
    JOAs
    
    Expenses
    
    JOAs(Dollars in thousands)Income Statement Data:Total revenues
    
    $
    139,673
    
    
    $
    459,102
    
    
    $
    560Cost of sales
    
    
    31,650
    
    
    
    145,895
    
    
    
    32,911Selling, general and administrative
    
    
    53,482
    
    
    
    212,446
    
    
    
    10,001Depreciation and amortization
    
    
    
    
    
    
    21,630
    
    
    
    4,396Other
    
    
    214
    
    
    
    4,103
    
    
    
    249Total costs and expenses
    
    
    85,346
    
    
    
    384,074
    
    
    
    47,557Net income
    
    
    54,327
    
    
    
    75,028
    
    
    
    (46,997
    )Partners share of income from
unconsolidated JOAs
    
    
    (22,637
    )
    
    
    (37,514
    )
    
    
    Income from unconsolidated JOAs
    
    $
    31,690
    
    
    $
    37,514
    
    
    $
    (46,997
    )
    
    $
    22,207
 Year Ended June 30, 2003Total IncomeOther
    
    Associated
    
    fromSalt Lake
    
    Unconsolidated
    
    Revenues and
    
    UnconsolidatedCity JOA
    
    JOAs
    
    Expenses
    
    JOAs(Dollars in thousands)Income Statement Data:Total revenues
    
    $
    128,636
    
    
    $
    458,068
    
    
    $
    690Cost of sales
    
    
    29,620
    
    
    
    151,926
    
    
    
    31,523Selling, general and administrative
    
    
    46,672
    
    
    
    207,914
    
    
    
    8,393Depreciation and amortization
    
    
    
    
    
    
    23,361
    
    
    
    4,132Other
    
    
    65
    
    
    
    196
    
    
    
    53Gain on sale of assets
    
    
    
    
    
    
    (1,715
    )
    
    
    Total costs and expenses
    
    
    76,357
    
    
    
    381,682
    
    
    
    44,101Net income
    
    
    52,279
    
    
    
    76,386
    
    
    
    (43,411
    )Partners share of income from
unconsolidated JOAs
    
    
    (21,834
    )
    
    
    (38,193
    )
    
    
    Income from unconsolidated JOAs
    
    $
    30,445
    
    
    $
    38,193
    
    
    $
    (43,411
    )
    
    $
    25,227
 June 30, 2005
    
    June 30, 2004Salt Lake
    
    
    
    
    
    Salt LakeCity JOA
    
    Denver JOA
    
    City JOA
    
    Denver JOA(Dollars in thousands)Balance Sheet Data:Current assets
    
    $
    20,349
    
    
    $
    67,467
    
    
    $
    18,021
    
    
    $
    67,602Non-current assets
    
    
    10,825
    
    
    
    151,737
    
    
    
    20,240
    
    
    
    175,452Current liabilities
    
    
    25,686
    
    
    
    51,533
    
    
    
    22,464
    
    
    
    42,710Non-current liabilities
    
    
    7,124
    
    
    
    18,963
    
    
    
    7,017
    
    
    
    13,677
 60




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Note 4: Investment in California Newspapers Partnership On March 31, 1999, through its wholly-owned subsidiary, West Coast MediaNews LLC, the Company
formed the California Newspapers Partnership (CNP) with Stephens Media Group (SMG), previously
known as Donrey Newspapers LLC, and The Sun Company of San Bernardino California (Gannett).
MediaNews, SMG and Gannetts interests in the California Newspapers Partnership are 54.23%, 26.28%
and 19.49%, respectively. The Company is the controlling partner and, therefore, the operations of
the partnership are consolidated with those of the Company with minority interest reflected for
SMGs and Gannetts interests in the partnership. At the formation of CNP, the Company also contributed long-term debt with a remaining balance
of $6.6 million to the partnership. However, in accordance with the partnership agreement, the
Company remains liable for the contributed debt. All principal and interest payments associated
with this debt are charged to the MediaNews capital account of CNP as a distribution.
Approximately $0.8 million, $1.0 million and $2.1 million of principal and interest payments were
made in fiscal years 2005, 2004 and 2003, respectively, by CNP on behalf of the Company. The California Newspapers Partnership is governed by a management committee. The management
committee consists of seven members. MediaNews is entitled to appoint four of the members on the
management committee, SMG is entitled to appoint two, and Gannett is entitled to appoint one.
Decisions of the management committee are by majority vote, except that unanimous votes are
required for certain actions, including asset transfers or sales, asset acquisitions, incurrence of
debt and certain material changes in the partnership business. The California Newspapers Partnership agreement also contains transfer of interests
restrictions. None of the partners were able to transfer their interests before January 1, 2004,
and after that date, transfers may be made only subject to the right of first offer of the
remaining partners to effect the purchase of the transferring partners interest. In addition,
where no partner exercises its right of first offer, any sale of a partners interest must include
the right for the remaining partners to tag-along and sell their interests to the third-party
buyer at the same price. After January 1, 2005, MediaNews has the right to require the other
partners to sell their interests to any third party to which MediaNews sells its interest. SMG has a separate right to require CNP to purchase its interest in the partnership at fair
market value anytime after January 1, 2005. Upon notification of the exercise of this right and
obtaining a valuation of the partnership interest, CNP has two years
to complete the purchase. The Company is not currently aware of any
intentions on the part of SMG to exercise its put. The minority interest liability reflects the fair market value of the net assets at the time
they were contributed to CNP by SMG and Gannett, plus the minority partners share of earnings, net
of distributions since inception. CNP made cash distributions to the Company in the amount of
$33.4 million, $34.5 million and $35.3 million in fiscal years 2005, 2004 and 2003, respectively. Note 5: Acquisitions, Dispositions and Other Transactions Acquisitions Fiscal Year 2005 On January 4, 2005, the Company entered into a Stock Purchase Agreement pursuant to which the
Company purchased all of the outstanding common stock of Diversified Suburban Newspapers, Inc.
(Diversified), the publisher of The Park Record,in Park City, Utah. The Singleton Family
Revocable Trust owned 50% of the outstanding stock of Diversified at the time of purchase. The
purchase price was approximately $8.0 million (plus transaction costs of $0.2 million), subject to
adjustment to reflect final working capital balances. The Company has preliminarily attributed the
purchase price as follows: $0.8 million tangible assets (primarily fixed assets), $3.6 million
identifiable intangible assets ($2.0 million, masthead; $0.4 million, subscriber list; $1.2
million, advertiser list) and $3.8 million was recorded as goodwill. An additional $1.7 million of
goodwill was recorded as the offset to the deferred tax liability established in association with
the difference between the book and tax basis in the Diversified common stock at the date of the
transaction. The Company received a fairness opinion on the purchase price. The transaction was
unanimously approved by the disinterested directors of the Company. 61




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The Singleton Family Revocable Trust holds 254,858.99 shares of the Companys Class A Common
Stock, representing 11.09% of total shares of Class A Common Stock outstanding. Mr. William Dean
Singleton, Vice Chairman, Chief Executive Officer and a director of the Company and Mr. Howell
Begle, Assistant Secretary, General Counsel and a director of the Company, are trustees of The
Singleton Family Revocable Trust. Mr. Singleton is a beneficiary of The Singleton Family Revocable
Trust. During fiscal year 2005, the Company purchased several small weekly publications in its
existing newspaper markets for an aggregate purchase price of approximately $2.1 million. The
estimated fair market value of assets acquired reflects managements current best estimate and is
subject to change in the final allocation of the purchase price. Fiscal Year 2004 In May 2004, the Company restructured its interest in the York JOA and acquired the masthead
and the other identifiable intangible assets of the York Daily Recordas discussed in Note 3: Joint
Operating Agencies. In January 2004, the Company purchased two weekly newspapers; the Grunion Gazetteand Downtown
Gazette,both published in Long Beach, California for $9.3 million. Approximately $0.2 million of
the purchase price was attributable to tangible assets, $2.5 million was attributable to
identifiable intangible assets and $6.6 million was recorded as goodwill. The Company also owns
and operates the Press-Telegram, a daily newspaper published in Long Beach. Fiscal Year 2003 Effective January 31, 2003, CNP acquired substantially all of the operating assets used in the
publication of the Paradise Post,a newspaper published three times weekly in Paradise, California,
plus related publications and a large commercial printing business. The purchase price of
approximately $13.0 million consisted of $11.75 million of cash and estimated transaction costs,
net of working capital, plus future payments under covenants not to compete with a discounted value
of approximately $1.2 million. Contributions from the CNP partners were used to fund the
acquisition. The Companys cash portion of the acquisition was approximately $6.4 million and was
funded with borrowings under the Companys bank credit facility. Approximately $7.2 million of the
purchase price was attributable to tangible assets (primarily fixed assets), $1.3 million was
attributable to identifiable intangible assets ($0.1 million, subscriber lists; $1.2 million,
covenants not to compete) and $4.5 million was recorded as goodwill. Paradise is in close
proximity to the Companys newspaper operations in Chico, California. Effective October 1, 2002, CNP acquired substantially all of the operating assets used in the
publication of the Original Apartment Magazine, a free distribution apartment rental magazine. The
Original Apartment Magazineis published every two weeks in three different zones: Los Angeles/San
Fernando, Orange County, and the Inland Empire and had monthly distribution of approximately
296,000 copies at the date of acquisition. The purchase price was $10.0 million, plus an
additional earnout of up to $6.0 million dependent on future operating performance. Contributions
from the partners in CNP were used to fund the acquisition. The Companys cash portion of the
acquisition was $5.4 million and was funded with borrowings under the Companys bank credit
facility. Approximately $0.3 million of the purchase price was attributable to tangible assets
(primarily fixed assets), $3.5 million was attributable to identifiable intangible assets ($1.0
million, mastheads; $2.3 million, subscriber lists; $0.2 million, covenants not to compete) and
$6.2 million was recorded as goodwill. Effective September 30, 2004 and 2003, the seller earned
$2.6 million and $2.3 million, respectively, of the potential earnout which was paid in November
2004 and 2003. The earnout payments were recorded as adjustments to goodwill. The 2004 payment
reflects the final payment to be made under the earnout agreement. The seller had a separate
consulting agreement with the Company, which ended in August 2005. The Original Apartment Magazine
is operated in conjunction with the Los Angeles Newspaper Group. Effective October 1, 2002, CNP acquired substantially all of the operating assets used in the
publication of The Reporter, a morning daily newspaper and Valu-Pack, a total market coverage
product, both published in Vacaville, California. At the date of purchase, the newspaper had daily
and Sunday paid circulation of approximately 18,000 and 20,000, respectively. The purchase price
of $30.9 million included $30.0 million of cash and estimated transaction costs, net of working
capital, plus future payments under a covenant not to compete with a discounted value of $0.9
million. Contributions from the CNP partners were used to fund the acquisition. The Companys
cash portion of the acquisition was $16.3 million and was funded with borrowings under the
Companys bank credit facility. Approximately $3.5 million of the purchase price was attributable
to tangible assets (primarily fixed assets), $6.8 million was attributable to identifiable
intangible assets ($0.8 62




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million, mastheads; $5.1 million, subscriber lists; $0.9 million, covenants not to compete)
and $20.6 million was recorded as goodwill. Vacaville is in close proximity to the Companys
newspaper operations in Vallejo and the Alameda Newspapers Group, in California. Dispositions Fiscal Year 2005 There were no dispositions in fiscal year 2005. Fiscal Year 2004 In May 2004, MediaNews restructured its interests in the Charleston JOA as discussed in Note
3: Joint Operating Agencies. Fiscal Year 2003 There were no dispositions in fiscal year 2003. Other Transactions Fiscal Year 2005 On June 10, 2005, the Company acquired for approximately $45.9 million the remaining 20% of
The Denver Post Corporation which it did not own. The Company is in the process of determining its
final allocation of the purchase price of the minority interest. Fiscal Year 2004 The Companys subsidiary, Alaska Broadcasting Company (or ABC), owns the license rights to
KTVA, an Anchorage, Alaska affiliate of CBS Broadcasting. Until September 30, 2004, ABC
participated, and was the manager, in a Joint Sales Agreement (or JSA) with KTBY, an affiliate of
Fox Broadcasting, owned by Piedmont Television Holdings LLC (or Piedmont). By the terms of the
JSA and a shared services agreement, ABC performed certain production, sales and administrative
functions of both stations. Responsibility for programming at the individual stations was separate
and remained with the respective licensees. The Company also entered into an agreement to purchase the KTBY license and all the operating
assets of KTBY from Piedmont for $4.5 million and had paid $1.0 million of the purchase price into
an escrow account. The purchase of the KTBY license was subject to FCC (Federal Communications
Commission) approval. Effective September 30, 2004, the Company elected not to extend the JSA and
purchase agreement, and as a result, the agreements were terminated. Upon the termination of the
purchase agreement, the $1.0 million in escrow was forfeited to Piedmont. The escrow deposit was
written-off along with $0.1 million of other prepaid acquisition costs as of June 30, 2004. The termination of the JSA has not had a material impact on operations or the
carrying value of the assets and liabilities of ABC. Fiscal Year 2003 Effective March 3, 2003, MediaNews and Gannett Co., Inc. (Gannett) formed the Texas-New
Mexico Newspapers Partnership. MediaNews contributed substantially all the assets and operating
liabilities of the Las Cruces Sun-News, The Daily Times(Farmington), Carlsbad Current-Argus,
Alamogordo Daily News, and The Deming Highlight, as well as all the weekly and other publications
published by these daily newspapers, in exchange for a 33.8% interest in the Texas-New Mexico
Newspapers Partnership. Gannett contributed the El Paso Times, located in El Paso, Texas, in
exchange for its 66.2% controlling partnership interest. As a result, effective March 3, 2003,
MediaNews no longer consolidates the operations of the entities it contributed to the partnership
and began accounting for its share of the operations of the Texas-New Mexico Newspapers Partnership
under the equity method of accounting. The formation of the partnership was a non-monetary
transaction. The Companys contribution to the Texas-New Mexico Newspapers Partnership was treated
as two 63




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separate, but simultaneous events: (1) a sale, whereby for accounting purposes, the Company
sold to Gannett a 66.2% interest in its New Mexico properties, resulting in the Company recording a
non-monetary gain of approximately $28.8 million, as restated, in fiscal year 2003 (pursuant to
EITF 01-2, Interpretations of APB Opinion No. 29), and (2) the acquisition of a 33.8% interest in
the partnership. Except for the non-monetary recognized gain, the formation of the Texas-New
Mexico Newspapers Partnership did not have a significant impact on the Companys results. Note 6: Long-Term Debt Long-term debt consisted of the following: June 30,2005
    
    2004(Dollars in thousands)Bank Credit Facility (Revolving Portion)
    
    (I)
    
    $
    152,700
    
    
    $
    Bank Term Loan A
    
    (I)
    
    
    100,000
    
    
    
    Bank Term Loan B
    
    (I)
    
    
    
    
    
    
    248,750Bank Term Loan C
    
    (I)
    
    
    147,263
    
    
    
    Various Notes, payable through 2013
    
    (II)
    
    
    24,970
    
    
    
    27,3038.625% Senior Subordinated Notes, due 2011
    
    (III)
    
    
    
    
    
    
    199,3886.875% Senior Subordinated Notes, due 2013
    
    (IV)
    
    
    297,712
    
    
    
    297,5136.375% Senior Subordinated Notes, due 2014
    
    (V)
    
    
    148,780
    
    
    
    148,680871,425
    
    
    
    921,634Less current portion of long-term debt
    
    
    
    
    
    
    (3,913
    )
    
    
    (5,083
    )$
    867,512
    
    
    $
    916,551
   I.
    
    On December 30, 2003, the Company refinanced its bank credit facility. The
credit facility provided for borrowings of up to $600.0 million, consisting of
a $350.0 million revolving credit facility and a $250.0 million term loan B
facility. On August 30, 2004, the Company entered into an amendment and
restatement of the December 30, 2003 bank credit facility which refinanced
term loan B with a $100.0 million term loan A and a $148.8 million term
loan C. The final maturity of the revolving credit facility is December 30,
2009. Prior to the maturity date of the revolving facility, borrowings under
the revolving facility are permitted to be borrowed, repaid and reborrowed
without premium or penalty (other than customary breakage costs). Amounts
repaid under the term loans A and C are not available for reborrowing. The
bank credit facility is guaranteed by the Companys subsidiaries (with certain
exceptions) and secured by first priority liens and security interests in all
of the capital stock (or other ownership interests) of each of the Companys
and the guarantors subsidiaries (with certain exceptions) and its interest in
the Texas-New Mexico Newspapers Partnership. The Company has pledged its
interest in the Denver JOA to secure the bank credit facility (subject to
certain limitations). The bank credit facility contains a number of covenants
that, among other things, restrict the Companys ability and its subsidiaries
ability to dispose of assets, incur additional indebtedness, pay dividends or
make capital contributions, create liens on assets, make investments, make
acquisitions and engage in mergers or consolidations. In addition, the bank
credit facility requires compliance with certain financial ratios, including a
maximum consolidated debt to consolidated operating cash flow ratio, a maximum
consolidated senior debt to consolidated operating cash flow ratio and a
minimum consolidated operating cash flow to consolidated fixed charges ratio.
At June 30, 2005, the Company was in compliance with all such covenants.
Borrowings under the bank credit facility bear interest at rates based upon,
at the Companys option, either 1) the base rate (the higher of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) Bank of Americas prime rate) or 2)
Eurodollar rate plus a spread based on the Companys leverage ratio. At June
30, 2005, Eurodollar borrowing margins varied from 1.125% to 2.00% and base
rate borrowing margins varied from 0.125% to 1.00% on the revolver portion of
the bank credit facility. At June 30, 2005, borrowing margins on the revolver
portion of the bank credit facility were set at 1.75% and 0.75% for the
Eurodollar and base rate borrowings, respectively. The term loan A bears
interest at rates based upon, at the Companys option, Eurodollar or base
rates (derived from prime), plus a borrowing margin based on the Companys 64




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leverage ratio. The Eurodollar and base rate borrowing margins on term loan
A are set at 1.5% and 0.5%, respectively, through August 30, 2005, after
which borrowings will bear interest at the Eurodollar or base rate, at the
Companys option, plus a borrowing margin based on the pricing grid used for
the revolving credit facility. Term loan A requires quarterly principal
payments as follows: $5.0 million beginning in March 2008 through December
2008; $7.5 million from March 2009 through December 2009; and $12.5 million
from March 2010 through September 2010, with the remaining balance due at
maturity on December 30, 2010. Term loan C bears interest based upon, at
the Companys option, Eurodollar or base rates, plus a borrowing margin of
1.5% or 0.5%, respectively. At June 30, 2005, borrowing margins were set at
1.5% and 0.5%, respectively, for the Eurodollar and base rate borrowings.
Term loan C requires quarterly principal payments as follows: $0.4 million
beginning in September 2004 through December 2009, increasing to $35.1 million
from March through September 2010, with the remaining balance due at maturity
on December 30, 2010. In addition to interest, the Company pays an annual
commitment fee of 0.25% to 0.375% on the unused portion of the commitment
based on the Companys leverage ratio. The annual commitment fee is currently
set at 0.375%. At June 30, 2005, the Company had $188.7 million available
under the credit facility for future borrowings, net of $8.6 million in
outstanding letters of credit. The Company incurred debt issuance costs of
$3.8 million related to the December 31, 2003 $600.0 million bank credit
facility, and another $0.3 million related to the amended facility. These
debt issuance costs have been capitalized as a deferred charge, and are being
amortized on a straight-line basis over the term of the bank credit facility
as a component of amortization expense. The Company again amended and
refinanced the facility in September 2005. See Note 17: Subsequent Events for
a complete discussion of the new terms of the amended and refinanced credit
agreement.II.
    
    In connection with various acquisitions, the Companys subsidiaries have
issued notes payable to prior owners and assumed certain debt obligations.
The notes payable and other debt obligations bear interest at rates ranging
from 0.0% to 7.0%. The notes bearing interest at below market rates have been
discounted at rates ranging from 8.5% to 12.0%, which reflects the prevailing
rate at the date of acquisition. The majority of these notes and other debt
obligations are unsecured obligations of the Company.III.
    
    In March 1999, Garden State, the predecessor issuer of MediaNews Group,
Inc., issued $200.0 million of 8.625% Senior Subordinated Notes due 2011, or
8.625% Notes. Interest accruing on the 8.625% Notes was payable
semi-annually, in arrears on January 1 and July 1. On July 1, 2004, the
Company repurchased all of the outstanding borrowings under the 8.625% Notes
using the net proceeds of its 6.375% Notes, together with cash on hand and
borrowings under the bank credit facility. The Company paid $8.6 million in
premiums and related costs associated with the redemption of the 8.625% Notes.
These costs along with $0.6 million of related unamortized debt discount were
charged to other (income) expense, net in the first quarter of fiscal year
2005.IV.
    
    On November 25, 2003, the Company completed the sale of $300.0 million of
its 6.875% Senior Subordinated Notes due 2013 (or 6.875% Notes). The
Company applied the net proceeds of $291.5 million from the sale of the 6.875%
Notes and other available funds to repurchase all of its outstanding $300.0
million 8.75% Notes. Proceeds from the sale of the 6.875% Notes were reduced
by an original issue discount of $2.6 million and debt issuance costs of $6.0
million. The Company reduced the principal amount of the 6.875% Notes by the
amount of the original issue discount and is amortizing the discount as a
component of interest expense using the effective interest method. The debt
issuance costs have been capitalized as a deferred charge, and are being
amortized on a straight-line basis over the term of the 6.875% Notes as a
component of amortization expense. The indebtedness evidenced by the 6.875%
Notes is subordinated and junior in right of payment to obligations under the
bank credit facility and related term loans. No principal payments are
required on the 6.875% Notes until October 1, 2013, at which time all
outstanding principal and interest is due and payable. Semi-annual interest
payments are due and payable on October 1 and April 1 of each year. The
6.875% Notes are general unsecured obligations of the Company ranking equal in
right of payment with the 6.375% Notes. 65




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V.
    
    On January 26, 2004, the Company completed the sale of $150.0 million of its
6.375% Senior Subordinated Notes due 2014 (or 6.375% Notes). The Company
ultimately used the proceeds of the sale of $146.9 million to temporarily
prepay all borrowings under the revolver portion of the bank credit facility.
Such prepayment was reborrowed and used, along with cash on hand, to
repurchase all of the Companys $200.0 million 8.625% Notes on July 1, 2004.
Proceeds from the sale of the 6.375% Notes were reduced by an original issue
discount of $1.4 million and debt issuance costs of $1.8 million. The
principal amount of the 6.375% Notes has been reduced by the amount of the
original issuance discount, which is being amortized as a component of
interest expense using the effective interest method. The debt issuance costs
have been capitalized as a deferred charge and are being amortized on a
straight-line basis over the term of the 6.375% Notes as a component of
amortization expense. The indebtedness evidenced by the 6.375% Notes is
subordinated and junior in right of payment to obligations under the new bank
credit facility and related term loans. No principal payments are required
until April 1, 2014, at which time all outstanding principal and interest is
due and payable. Semi-annual interest payments are due and payable on January
1 and July 1 of each year. The 6.375% Notes are general unsecured obligations
of the Company ranking equal in right of payment with the 6.875% Notes. Maturities of long-term debt for the next five fiscal years and thereafter beginning with the
fiscal year ended June 30, 2005 are shown below (in thousands). As ofJune 30, 20052006
    
    $
    3,9132007
    
    
    3,7152008
    
    
    13,5102009
    
    
    28,3632010
    
    
    265,436Thereafter
    
    
    556,488$
    871,425
 Interest paid during the fiscal years ended June 30, 2005, 2004, and 2003 was approximately
$55.4 million, $52.7 million, and $64.8 million, respectively. Approximately $0.7 million of
interest was capitalized during fiscal year 2005. An immaterial amount of interest was capitalized
during the fiscal years 2004 and 2003. Letters of credit have been issued in favor of an insurance company providing workers
compensation insurance coverage to the Company and its subsidiaries totaling approximately $8.6
million as of June 30, 2005. The fair market value of the 6.875% Notes and 6.375% Notes at June 30, 2005 was approximately
$297.4 million and $143.8 million, respectively. The carrying value of the Companys bank debt,
which has interest rates tied to prime or the Eurodollar, approximates its fair value. Management
cannot practicably estimate the fair value of the remaining long-term debt because of the lack of
quoted market prices for these types of securities and its inability to estimate the fair value
without incurring the excessive costs of obtaining an appraisal. The carrying amount represents
the original issue price net of remaining original issue discounts, if applicable. At times, the Company has entered into interest rate swap agreements to reduce its exposure to
the uncertainty of short-term interest rate fluctuations associated with its outstanding bank debt.
In fiscal year 2004, the Company had swap agreements that swapped fixed-rate interest payments for
variable interest rate payments based on current pricing. The Company entered into these swaps to
mitigate the effects of a protracted and slow economic recovery and to take advantage of the low
interest rates available under a variable rate instrument. At June 30, 2005, the Company had no
outstanding interest rate swap agreements. However, during fiscal years 2004 and 2003, net
settlements of the interest rate swap agreements were recorded as adjustments to interest expense.
These fixed to variable interest rate swaps did not qualify for hedge accounting, and therefore,
changes in their fair value were recognized in other (income) expense, net in the period of change.
As a result of marking these derivative instruments to market, a loss of $3.0 million and a gain
of approximately $1.2 million was recognized in other (income) expense, net for the years ended
June 30, 2004 and 2003, respectively. The net cash settlements of the Companys interest rate swap
agreements had the effect of decreasing interest expense by $3.0 million and $2.6 million for the
years ended June 30, 2004 and 2003. 66




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Note 7: Leases The California Newspapers Partnership leases assets under capital leases. One of the capital
leases was renegotiated during fiscal year 2005 resulting in an adjustment to the asset and the
corresponding liability of approximately $0.5 million. Assets under capital leases and related
accumulated amortization are included in property, plant and equipment in the accompanying
consolidated balance sheets at June 30, as follows: 2005
    
    2004(Dollars in thousands)Building and equipment
    
    $
    6,422
    
    
    $
    6,950Accumulated amortization
    
    
    (3,688
    )
    
    
    (3,471
    )Assets under capital leases, net
    
    $
    2,734
    
    
    $
    3,479
 Amortization on capital lease assets is included with depreciation expense in the accompanying
financial statements. The Company and its subsidiaries also lease certain facilities and equipment under operating
leases, some of which contain renewal or escalation clauses. Rent expense was approximately $8.2
million, $6.1 million and $5.2 million during fiscal years 2005, 2004, and 2003, respectively.
Contingent rentals are not significant. Future minimum payments on capital and operating leases
are as follows at June 30, 2005: Capital
    
    OperatingLeases
    
    Leases(Dollars in thousands)2006
    
    $
    842
    
    
    $
    5,6282007
    
    
    853
    
    
    
    4,7882008
    
    
    867
    
    
    
    4,1392009
    
    
    867
    
    
    
    2,9672010
    
    
    867
    
    
    
    916Thereafter
    
    
    7,802
    
    
    
    6,257Total minimum lease payments
    
    
    12,098
    
    
    $
    24,695Less amount representing interest
    
    
    (5,954
    )Present value of net future lease payments
    
    $
    6,144
 67




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Note 8: Employee Benefit Plans Pension and Post-Retirement Plans In conjunction with the fiscal year 1998 acquisitions of The Sunin Lowell, Massachusetts and
the Daily Newsin Los Angeles, California, the Company assumed non-contributory defined benefit
pension plans, which covered substantially all the employees at the acquired newspapers. Shortly
after the acquisition of Daily News, the Company elected to freeze the plan assumed in conjunction
with that acquisition. Accordingly, all current service cost under that plan has been terminated.
Until April 1, 2005, participants in the plan assumed in conjunction with the acquisition of The
Suncontinued to accrue benefits associated with current services, based on years of service and
estimated compensation prior to retirement. Effective April 1, 2005, the Company froze the defined
benefit plan benefits and recognized a curtailment loss of approximately $0.4 million. The Denver Postsponsors two non-contributory defined benefit pension plans, which cover
substantially all its current employees. Both plans provide benefits based on employees years of
service and compensation during the years immediately preceding retirement. The Denver Postalso
sponsors post-retirement health care and life insurance plans that provide certain union employees
and their spouses with varying amounts of subsidized medical coverage upon retirement and, in some
instances, continued life insurance benefits until age 65, if the employee retires prior to age 65.
Due to the formation of DNA on January 23, 2001, obligations related to the employees of The Denver
Postwho became employees of DNA were transferred to DNAs pension plans along with an amount of
net pension asset actuarially determined to fund the obligation. The Denver Posteditorial
employees, terminated vested employees and retired employees will continue to be covered by the two
non-contributory plans sponsored by The Denver Postas discussed above. The transfer of
obligations and related assets occurred during fiscal years 2002 and 2001. The Companys funding policy for all plans is to make at least the minimum annual
contributions required by the Employee Retirement Income Security Act of 1974. Effective December 31, 2003, the New England Newspapers, Inc., Daily Newsand one of The
Denver Postplans were merged into one plan: the MediaNews Plan. The Denver PostGuild (union)
pension plan remains as a separate plan and a nonqualified pension plan was also created as a
result of the plan merger. The Company also sponsors post-retirement health care for certain former and current
Kearns-Tribune, LLC employees that provided subsidized medical coverage. Effective January 1,
2005, the Company no longer provides post-retirement health care coverage for the majority of
Kearns-Tribune, LLC employees retiring after that date. In conjunction with the partial freeze of
this plan, the Company recognized a small curtailment loss. Effective July 1, 2003, the Company adopted an executive retiree medical benefit plan, which
provides for full health care coverage during the retirement for the eligible participants
(corporate officers). There are minimum age and years of service criteria for eligibility for
benefits under this plan. 68




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The following tables provide a reconciliation of benefit obligations, plan assets and funded
status of the Companys pension and other defined benefit plans as of June 30. The tables also
provide the components of net periodic pension cost associated with those plans as of June 30. Pension Plans
    
    Other Benefits2005
    
    2004
    
    2005
    
    2004(Dollars in thousands)Change in Benefit ObligationBenefit Obligation at Beginning of Year
    
    $
    98,188
    
    
    $
    93,832
    
    
    $
    5,495
    
    
    $
    5,561Service Cost
    
    
    1,038
    
    
    
    1,143
    
    
    
    434
    
    
    
    331Interest Cost
    
    
    5,927
    
    
    
    5,688
    
    
    
    327
    
    
    
    326Amendments
    
    
    (720
    )
    
    
    64
    
    
    
    (128
    )
    
    
    Actuarial Loss (Gain)
    
    
    12,561
    
    
    
    3,335
    
    
    
    (650
    )
    
    
    (216
    )Benefits Paid
    
    
    (5,812
    )
    
    
    (5,874
    )
    
    
    (598
    )
    
    
    (507
    )Benefit Obligation at End of Year
    
    $
    111,182
    
    
    $
    98,188
    
    
    $
    4,880
    
    
    $
    5,495Change in Plan AssetsFair Value of Plan Assets at Beginning of Year
    
    $
    81,387
    
    
    $
    77,944
    
    
    $
    
    
    
    $
    Actual Return on Plan Assets
    
    
    4,949
    
    
    
    8,539
    
    
    
    
    
    
    
    Company Contributions
    
    
    2,056
    
    
    
    778
    
    
    
    598
    
    
    
    507Benefits Paid
    
    
    (5,812
    )
    
    
    (5,874
    )
    
    
    (598
    )
    
    
    (507
    )Fair Value of Plan Assets at End of Year
    
    $
    82,580
    
    
    $
    81,387
    
    
    $
    
    
    
    $
    Reconciliation of Funded StatusFunded Status
    
    $
    (28,602
    )
    
    $
    (16,801
    )
    
    $
    (4,880
    )
    
    $
    (5,495
    )Unrecognized Net Loss
    
    
    48,893
    
    
    
    37,674
    
    
    
    397
    
    
    
    1,117Unrecognized Prior Service Cost
    
    
    3,494
    
    
    
    4,376
    
    
    
    (149
    )
    
    
    Net Prepaid (Accrued) Cost
    
    $
    23,785
    
    
    $
    25,249
    
    
    $
    (4,632
    )
    
    $
    (4,378
    )Assumptions as of June 30Discount Rate
    
    
    5.25
    %
    
    
    6.25
    %
    
    
    5.25
    %
    
    
    6.25
    %Expected Return on Plan Assets
    
    
    8.0
    %
    
    
    8.0
    %
    
    
    N/A
    
    
    
    N/ARate of Compensation Increase
    
    
    3.0
    %
    
    
    3.0
    %
    
    
    N/A
    
    
    
    N/AComponents of Net Periodic CostService Cost
    
    $
    1,038
    
    
    $
    1,143
    
    
    $
    434
    
    
    $
    331Interest Cost
    
    
    5,927
    
    
    
    5,688
    
    
    
    326
    
    
    
    326Expected Return on Plan Assets
    
    
    (6,369
    )
    
    
    (7,041
    )
    
    
    
    
    
    
    Amortization of Deferral
    
    
    440
    
    
    
    462
    
    
    
    (6
    )
    
    
    (2
    )Recognized
Net Actuarial Loss
    
    
    2,040
    
    
    
    1,608
    
    
    
    70
    
    
    
    93Curtailment Loss
    
    
    443
    
    
    
    
    
    
    
    27
    
    
    
    Net Periodic Cost
    
    $
    3,519
    
    
    $
    1,860
    
    
    $
    851
    
    
    $
    748Amounts Recognized in the Consolidated Balance Sheets Consist of:Prepaid Benefit Cost
    
    $
    
    
    
    $
    13,979
    
    
    $
    
    
    
    $
    Accrued Benefit Cost
    
    
    (27,545
    )
    
    
    (16,356
    )
    
    
    (4,632
    )
    
    
    (4,378
    )Intangible Asset
    
    
    3,271
    
    
    
    659
    
    
    
    
    
    
    
    Accumulated Other Comprehensive Loss(1)
    
    
    48,059
    
    
    
    26,967
    
    
    
    
    
    
    
    Net Prepaid (Accrued) Cost
    
    $
    23,785
    
    
    $
    25,249
    
    
    $
    (4,632
    )
    
    $
    (4,378
    )Separate Disclosure for Pension Plans with Accumulated Benefit
Obligation and Projected Benefit Obligation in Excess of Plan
AssetsProjected Benefit Obligation
    
    $
    111,182
    
    
    $
    70,733
    
    
    
    N/A
    
    
    
    N/AAccumulated Benefit Obligation
    
    $
    110,124
    
    
    $
    69,451
    
    
    
    N/A
    
    
    
    N/AFair Value of Plan Assets
    
    $
    82,580
    
    
    $
    53,094
    
    
    
    N/A
    
    
    
    N/A
   (1)
    
    The Companys share of minimum pension liability at DNA (which is unconsolidated) is
included as a component of accumulated other comprehensive loss in the Companys consolidated
balance sheet; however, because the Company does not consolidate the related pension plan, the
obligation has been excluded from the table. Also, accumulated other comprehensive loss as
shown here differs from the accumulated other comprehensive loss as reflected in the
consolidated balance sheet and consolidated statements of changes in shareholders equity as
the consolidated statements reflect the minimum pension liability net of tax. 69




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The Companys estimates of payments to beneficiaries of its pension plans and other
benefits are as follows for each fiscal year ended June 30 (in thousands): 2006
    
    $
    6,5802007
    
    
    6,6602008
    
    
    6,6802009
    
    
    6,7602010
    
    
    6,7602011  2015
    
    
    35,990
 The Companys pension plan allocations at June 30 were as follows: Target
    
    Plan AssetsAllocations
    
    Years Ended June 30,2006
    
    2005
    
    2004Asset Category:Equity securities.
    
    
    70.0
    %
    
    
    66.5
    %
    
    
    62.9
    %Debt securities
    
    
    20.0
    
    
    
    29.3
    
    
    
    35.2Other
    
    
    10.0
    
    
    
    4.2
    
    
    
    1.9Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 The Companys investment policy is to maximize the total rate of return on plan assets to meet
the long-term funding obligations of the plan. Plan assets are invested using a combination of
active management and passive investment strategies. Risk is controlled through diversification
among multiple asset classes, managers, styles and securities. Risk is further controlled both at
the manager and asset level by assigning return targets and evaluating performance against these
targets. Equity securities include common stocks of large, medium, and small companies which are
predominately U.S. based. Fixed-income securities primarily include securities issued or guaranteed
by the U.S. government, mortgage-backed securities and corporate debt obligations. The assumptions used in determining the Companys pension and postretirement benefit
obligation can differ from the actual results. As a result of these differences, as well as other
external economic factors, the assumptions used are periodically revised and updated. The
differences between actual and assumed experience, and the related changes in assumptions, give
rise to actuarial gains and losses in the preceding table, which are recognized over the expected
service period of active participants. The majority of the current year differences are related to
the Company lowering the discount rate used, which increased the minimum pension liability that is
reflected in other comprehensive income. The discount rate used to determine the Companys future
pension obligations is based upon an index of securities with various maturities rated Aa or better
as of the respective measurement dates. The increase in compensation levels assumption is based on
actual past experience and near-term outlook. The expected long-term rate of return on plan assets
is based upon the weighted average expected rate of return and capital market forecasts for each
asset class employed. The Company expects to contribute approximately $2.5 million to $3.0 million to its defined
benefit pension plans in fiscal year 2006. Assumed health care cost trend rates can have a significant effect on the amounts reported for
the health care plans. A one-percentage-point change in assumed health care cost trend rates would
have the following effect: 1-Percentage
    
    1-Percentage PointPoint Increase
    
    DecreaseEffect on total of service and interest cost components
    
    $
    104,000
    
    
    $
    85,000Effect on postretirement benefit obligation
    
    $
    456,000
    
    
    $
    374,000
 The July 1, 2005 assumed trend rate for the increases in health care costs for its
post-retirement plans was 9% trending down over four years to an ultimate rate of 5%. The
Companys policy is to fund the cost of providing postretirement health care and life insurance
benefits when they are entitled to be received. 70




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Deferred Compensation Plan The Company sponsors several deferred compensation plans, which are offered to certain
employees (principally corporate officers, newspaper publishers and operational executives). The
plans allow participants to defer a portion of their compensation, including bonuses on a pre-tax
basis. Participants in one plan are eligible for a Company match based on their deferrals into the
plan, while participants of another plan are eligible for a discretionary Company contribution
award based on operating results. The Company match and discretionary awards are subject to
vesting, over a period of ten years from the date of participation in the plans. No vesting occurs
until the participant has completed three or five full years in the plan (depending on the specific
plan), after which time the participant is 30% or 50% vested; the residual vesting occurs evenly
over the remaining period at 10% per year. The unvested portion of the Company match is subject to
early withdrawal penalties. The compensation deferrals and Company match earn a return based on
notional investment elections made by the individual participants. The discretionary Company
contribution awards earn a return equal to the Companys cost of borrowing under its revolving
credit agreement, which it may use to fund payments on the deferred compensation obligations. These
deferred compensation obligations are recorded in the Companys consolidated balance sheets as a
component of Other Liabilities at the vested value of the deferred compensation, plus the
applicable return on investment, and amounted to $5.8 million and $4.5 million at June 30, 2005 and
2004, respectively. In some cases, the Company has made investments in cash surrender value life
insurance policies, which may be used at the Companys discretion to fund its deferred compensation
liability. The Companys investments in cash surrender value life insurance policies are recorded
in the Companys consolidated balance sheets as a component of Other Assets and amounted to $3.9
million and $3.0 million at June 30, 2005 and 2004, respectively. Other Retirement Plans The Company and several of its newspaper properties participate in retirement/savings plans,
and in addition, contribute to several multi-employer plans on behalf of certain union-represented
employee groups. The majority of the Companys full-time employees are covered by one of these
plans. Total expense for these plans in the fiscal years ended June 30, 2005, 2004, and 2003, was
approximately $4.6 million, $4.1 million, and $3.6 million, respectively. Note 9: Income Taxes The income tax provision (benefit) for each of the three years ended June 30, 2005, 2004 and
2003, consists of the following: Years Ended June 30,2005
    
    2004
    
    2003(As restated)
    
    (As restated)(Dollars in thousands)Current:State
    
    $
    1,331
    
    
    $
    579
    
    
    $
    553Federal
    
    
    1,031
    
    
    
    
    
    
    
    1,112Deferred:State
    
    
    1,167
    
    
    
    (43
    )
    
    
    8,599Federal
    
    
    16,561
    
    
    
    16,430
    
    
    
    20,677Net provision
    
    $
    20,090
    
    
    $
    16,966
    
    
    $
    30,941
 71




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A reconciliation between the actual income tax expense (benefit) for financial statement
purposes and income taxes computed by applying the statutory Federal income tax rate to financial
statement income before income taxes is as follows: Years Ended June 30,2005
    
    2004
    
    2003(As restated)
    
    (As restated)Statutory federal income tax rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Effect of:State income tax net of federal benefit
    
    
    3
    
    
    
    1
    
    
    
    9Dividends received deduction
    
    
    (4
    )
    
    
    (1
    )
    
    
    (1
    )Book/tax basis difference associated
with acquisitions and non-deductible
acquisition costs
    
    
    
    
    
    
    (2
    )
    
    
    1Minority interests
    
    
    
    
    
    
    
    
    
    
    1Other, net
    
    
    
    
    
    
    6
    
    
    
    Financial statement effective tax rate
    
    
    34
    %
    
    
    39
    %
    
    
    45
    %
 Components of the long-term deferred tax assets and liabilities are as follows: June 30,2005
    
    2004(As restated)(Dollars in thousands)Deferred tax assets:Net operating losses and other credits
    
    $
    25,991
    
    
    $
    22,445Deferred employee compensation
    
    
    5,379
    
    
    
    4,175Notes payable
    
    
    2,599
    
    
    
    3,799Pensions
    
    
    9,531
    
    
    
    690Option accrual
    
    
    1,178
    
    
    
    3,776Bad debts
    
    
    1,357
    
    
    
    1,842Other
    
    
    2,009
    
    
    
    1,59648,044
    
    
    
    38,323Valuation allowance
    
    
    (4,837
    )
    
    
    (2,478
    )Deferred tax assets
    
    
    43,207
    
    
    
    35,845Deferred tax liabilities:Fixed assets
    
    
    21,152
    
    
    
    19,856Intangibles
    
    
    50,460
    
    
    
    39,655Partnership interests and equity investments
    
    
    69,803
    
    
    
    65,405Deferred tax liabilities
    
    
    141,415
    
    
    
    124,916Net deferred tax liabilities
    
    $
    98,208
    
    
    $
    89,071
 At June 30, 2005, for financial reporting purposes, the Company has approximately $44.2
million of net operating loss carryforwards (NOLs) for federal tax reporting purposes available to
offset its future taxable income, which expire in 2019 through 2024 and $1.6 million of alternative
minimum tax credit carryforwards. The Company also has approximately $147.0 million of state NOLs
and approximately $4.6 million of state tax credits available to offset future state taxable
income. The state NOLs expire in 2006 through 2025; the state tax credits expire beginning in
2006. The Company projects it will generate taxable income sufficient to utilize substantially all
of the net operating loss carryovers before they expire; however, because of several uncertainties
surrounding its projections, and the resulting uncertainty as to whether all of the net operating
loss carryovers will be used before they expire, the Company has established a valuation allowance
at each period end based upon its estimate of net operating loss and state tax credit carryovers
that are more likely than not to expire unused. The Company made net state and federal income tax payments of approximately $3.7 million, $1.8
million, and $0.6 million, during fiscal years 2005, 2004, and 2003, respectively. 72




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Note 10: Hedging Activities At times, the Company has entered into newsprint and interest rate swap agreements. As of
June 30, 2005, the Company had no outstanding newsprint or interest rate swap agreements. The Company had two newsprint swap agreements: one with Enron North America Corp. (Enron)
and the other with Mirant Americas Energy Marketing, LP (Mirant). Both newsprint hedges were
designated at contract inception as cash flow hedges under SFAS No. 133 and recorded at fair value
with changes in the fair value of such contracts, net of income taxes, reported in comprehensive
income. The periodic net settlements made under the newsprint swap agreements were reflected in
operations in the period the newsprint was consumed. Both newsprint swap agreements were
subsequently determined to be ineffective hedges when the swap counterparties became invalid due to
bankruptcy and the hedges were terminated prior to the original term of the agreements. The
Company accounted for the early termination of the swaps in accordance with SFAS No. 133, which
required the Company to record a liability and a charge to comprehensive income to reflect the fair
value of the derivative instrument as of the date prior to that which the hedge was deemed
ineffective. Since a liquid market for the swap agreements did not exist, the valuation of the
swap was based on a discounted cash flow model and projected future newsprint prices. The
valuation required significant judgment and was subject to assumptions, most notably estimates of
future newsprint prices. The original term of the newsprint swap agreement with Enron expired in
December 2009; the swap was determined to be ineffective the date Enron filed bankruptcy (during
the Companys fiscal year 2002). The original term of the newsprint swap agreement with Mirant
expired in May 2005; the swap was determined to be ineffective the date Mirant filed bankruptcy
(during the Companys fiscal year 2004). The amounts in accumulated other comprehensive loss
related to these ineffective hedges are being amortized and charged to other (income) expense, net
over the remainder of the original terms of the swap agreements as the forecasted transactions
originally contemplated in the hedging arrangements continue to be probable of occurring. The
Enron newsprint swap is being amortized on a straight-line basis. The Mirant newsprint swap was
amortized ratably based on the difference between the floating price (based on the Resource
Information Systems, Inc. RISI price index) and the fixed price of $615.50 per metric ton using
nominal metric tons of 6,250 per quarter. No amounts remain in other comprehensive income related
to the Mirant newsprint swap. Approximately $0.8 million and $3.2 million was reclassified from
accumulated other comprehensive loss to earnings for the years ended June 30, 2005 and 2004 related
to these terminated swaps. The Company did not record any liabilities associated with the
termination of the swaps, except as required by SFAS No. 133. See Note 11: Commitments and
Contingencies for further discussion regarding the settlement of a lawsuit with Enron and a lawsuit
filed by Mirant. See Note 6: Long-Term Debt for further discussion regarding the Companys interest rate
swaps. Note 11: Commitments and Contingencies Commitments The Company currently has a contract to purchase 48,000 metric tons a year, at a variable
price based on the market price for 30 pound newsprint. This contract expires in December 2009. In December 2004, the Company entered into a contract with a newsprint vendor to purchase
newsprint based on market price beginning January 1, 2005 (24,000 metric tons for calendar year
2005) and continuing through December 31, 2009 (36,000 metric tons per year for calendar years 2006
 2009). In fiscal year 1998, in exchange for $2.4 million, the Company granted an option to a third
party to purchase substantially all the assets used in the publication of one of the Companys
newspaper properties, which the third party can exercise or put to the Company based on a
predetermined formula. At June 30, 2005, the option repurchase price was valued at $6.1 million
and is recorded as a component of other long-term liabilities. Changes in the estimated option
repurchase price are recorded as a component of other (income) expense, net. The purchase price of
the option can increase or decrease significantly each period based on the performance of the
publication because a significant component of the option repurchase formula is the twenty-four
month trailing cash flows of the publication. If the purchase option is put to the Company (the
put became exercisable on January 31, 2003 and expires in 2010), the option repurchase price is due
and payable in full. If the option were put to the Company, the Company expects to fund the payment
with available borrowings from its bank credit facility. As a result, in accordance with SFAS No.
6, Classification of Short-Term Obligations Expected to be Refinanced,the option repurchase price
remains classified in the Companys balance sheet as long-term. 73




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The Company is party to a Shareholder Agreement with the Companys President. The Shareholder
Agreement entitles the President, upon termination of his employment following December 31, 2009,
by mutual agreement, or as a result of breach by the Company or certain other circumstances, to put
to the Company at a price of 100% of the then fair market value (as determined by formula outlined in the
Shareholder Agreement) shares of common stock which he owns. The Company also has a call under the
Shareholder Agreement to acquire, and the President has a right to put, such shares following
termination of his employment under other circumstances, at a price equal to a percentage of fair
market value (as determined by formula outlined in the Shareholder Agreement), which increases to
100% on December 31, 2009 (at June 30, 2005, the President has 58,199 shares of Class A common
stock and is entitled to 75% of the fair market value). As of June 30, 2005, the value of the Presidents put, as
calculated per terms of the Shareholder Agreement, was estimated to be $21.0 million and is
recorded as component of Putable Common Stock on the Companys balance sheet. In the event of
his disability, the President has the right to require MediaNews to purchase his common stock from
time to time during his lifetime in an aggregate amount not to exceed $1.0 million in any fiscal
year. Effective July 1, 2005, the Company amended the employment agreement of Mr. William Dean
Singleton, the Companys Vice Chairman of the Board and Chief Executive Officer. Under the amended
employment agreement, Mr. Singleton has the right, in the event of his disability, to require
MediaNews to purchase his common stock from time to time during his lifetime in an aggregate amount
not to exceed $1.0 million in any fiscal year. At June 30, 2005, the total estimated cost
(determined actuarially) of the repurchase would be $27.6 million and such amount is recorded as a
component of Putable Common Stock on the Companys balance sheet. The Company has entered into contractual commitments with regard to the construction of a
printing and office facility for the Salt Lake City JOA. At June 30, 2005, the Companys remaining
commitment is approximately $14.7 million, for the new printing and office facilities. Contingencies Prior to and since the Companys acquisition of Kearns-Tribune, LLC (Kearns Tribune) and The
Salt Lake Tribunein January 2001, the Company has been involved in various legal actions with Salt
Lake Tribune Publishing Company (SLTPC), the holder of an option (the Option Agreement) to
acquire the Tribune Assets (defined as all of the assets used, held for use or usable in connection
with the operation and publication of The Salt Lake Tribune).Kearns Tribune holds certain assets
used in connection with the operation and publication of The Salt Lake Tribune.As of the date of
this report, the Company continues to be involved in litigation with SLTPC, primarily concerning
the option to purchase the Tribune Assets, the option exercise price, and any damages related to
the option exercise. The following is a summary of the ongoing Kearns Tribune litigation as of
June 30, 2005: On May 31, 2002, the United States District Court for the District of Utah (District Court)
issued an Order for Summary Judgment ruling that SLTPC held a valid and enforceable option to
purchase the Tribune Assets owned by Kearns Tribune. However, the District Court also ruled that
one of the key components of the Tribune Assets, stock in the Salt Lake City JOA, was subject to an
anti-alienation provision contained in a Joint Operating Agreement (JOA) between Kearns Tribune
and Deseret News Publishing Company (Deseret Publishing). The anti-alienation provision
precludes the sale, assignment or transfer of the Salt Lake City JOA stock by either party to the
JOA absent a waiver or modification of the provision. Subsequent to the court ruling, Deseret
Publishing notified SLTPC that it would not waive or modify the anti-alienation provision or
consent to the sale or transfer of the Salt Lake City JOA stock to SLTPC. The District Court
certified for immediate appeal to the United States Court of Appeals for the Tenth Circuit the
question of whether the anti-alienation provision contained in the Joint Operating Agreement was
enforceable, as the District Court held in its Summary Judgment Order. The Tenth Circuit affirmed
the District Court ruling that the stock of the Salt Lake City JOA could not be transferred without
the consent of Deseret Publishing. However, the Tenth Circuit remanded to the District Court for
further proceedings on the issue of whether the Tribune Assets other than the stock of the Salt
Lake City JOA could be sold and transferred to SLTPC and remedies could be fashioned that addressed
an exclusion of the Salt Lake City JOA stock from the transfer of the Tribune Assets. Potential
remedies identified by the Tenth Circuit included: 1) an order of specific performance transferring
all the Tribune Assets that can be transferred without triggering the share transfer restriction;
2) damages to compensate SLTPC for the Salt Lake City JOA stock not being transferred; or 3)
equitable relief if a damage award would be insufficient to remedy the failure to transfer the Salt
Lake City JOA stock. In its opinion, the Tenth Circuit also stated that the District Court could
avoid equitable relief altogether and simply award damages to SLTPC if it is found that Kearns
Tribune is liable for failing to perform under the Option Agreement. 74




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Subsequent to the Tenth Circuits ruling, SLTPC filed a motion for partial summary judgment
seeking a ruling that, at the Closing specified in the Option Agreement, Kearns Tribune is
obligated under the Option Agreement to transfer all Tribune Assets except for the Salt Lake City
JOA stock. On June 25, 2003, the District Court granted this motion. Based upon this ruling, the
District Court also reinstated claims by SLTPC against the Company and Deseret Publishing that a
2001 amendment of the JOA interfered with SLTPCs rights under the Option Agreement. Regarding
SLTPCs exercise of the option, still reserved for trial is the question of whether, in an event
those Tribune Assets (excluding the Salt Lake City JOA stock) are not transferred, SLTPC is
entitled to an order that Kearns Tribune specifically perform under the Option Agreement and
transfer those Tribune Assets, or limited to a damages remedy. Also remaining for decision at
trial is the issue of what additional remedies SLTPC might be entitled to if all Tribune Assets
except for the Salt Lake City JOA stock are transferred. A trial date was set for November 3,
2003, but was vacated by the District Court in light of the dispute (discussed below in the next
paragraph) over the exercise price should SLTPC acquire the Tribune assets. There is no trial date
currently set. One issue in dispute is the option exercise price. The terms of the Option Agreement specify
an appraisal process for determination of the fair market value of the Tribune Assets. In this
appraisal process, each party engaged an appraisal firm to value the Tribune Assets at their fair
market value. Kearns Tribunes appraisal valued the Tribune Assets at $380.0 million, whereas
SLTPCs appraisal valued the Tribune Assets at $218.0 million. Because Kearns Tribunes and
SLTPCs appraisals were more than 10% apart, the appraisers appointed by Kearns Tribune and SLTPC
were required to jointly select a third appraiser. Under the terms of the Option Agreement, the
final option purchase price is based on the average of the third appraisal valuation with the
closer of the first two appraisals. On June 11, 2003, the third appraiser issued its final report
valuing the Tribune Assets at $331.0 million. Accordingly, the option exercise price was set at
$355.5 million for the Tribune Assets. After the third appraisers final report was issued, SLTPC
filed a lawsuit in the District Court on June 24, 2003 (the appraisal lawsuit), challenging the
valuation performed by the third appraiser and seeking to set aside the third appraisal and the
$355.5 million exercise price. The District Court ruled that the appraisal process constituted an
arbitration under the Federal Arbitration Act (FAA) and that any challenge must therefore be made
under the procedures set forth in the FAA. The District Court subsequently denied SLTPCs motion
under the FAA procedures seeking to set aside the appraisal, and, as a consequence of its
arbitration rulings, also dismissed the appraisal lawsuit. The District Court had set a date of
October 10, 2003 for the closing to occur. On October 9, 2003, counsel for SLTPC sent a letter to
counsel for MediaNews notifying the Company that SLTPC would not pay the $355.5 million option
exercise price, and raised additional objections to the proposed closing documentation;
accordingly, no closing occurred on October 10, 2003. SLTPC appealed the District Courts rulings
to the Tenth Circuit, and on November 30, 2004, the Tenth Circuit reversed the District Courts
rulings. While taking no position on the merits of the dispute as to the finality of the third
appraisal and the validity of the $355.5 million exercise price, the Tenth Circuit held that the
Option Agreements appraisal procedure did not constitute arbitration within the meaning of the
FAA. The Tenth Circuit accordingly reinstated SLTPCs appraisal lawsuit, which the District Court
had dismissed under the reasoning that the appraisal constituted arbitration. In the reinstated appraisal lawsuit, SLTPC has filed an amended complaint against MediaNews,
Kearns Tribune and the third appraiser, Management Planning Inc. (MPI), seeking relief that
includes (a) the setting aside of the third appraisal; (b) the setting aside of all three
appraisals, so that an entirely new appraisal process must be conducted; or (c) alternatively, if
the exercise price of $355.5 million is held to be final and binding, (i) monetary damages from the
third appraiser for alleged breaches of contractual and fiduciary duties, and (ii) what SLTPC
refers to as an abatement of the purchase price pursuant to allegations that the value of the
Tribune Assets has decreased since SLTPC sought to exercise the option. MediaNews and Kearns
Tribune and MPI have filed separate motions to dismiss SLTPCs amended complaint in the appraisal
lawsuit. All defendants have moved to dismiss the complaint, and the matter is pending before the
District Court. During the time in which the appraisal and exercise price issues were on appeal before the
Tenth Circuit, SLTPCs main action was stayed. In the main action, SLTPCs pending claims against
the Company and Kearns Tribune include claims for damages for breach of contract and breach of
contractual duties (in the event some or all of the Tribune Assets are not transferred to SLTPC)
and for interference with contract (arising out of the amendment of the JOA in 2001). The Company
and Kearns Tribune have pending counterclaims against SLTPC, which include claims for damages for
breaches of contract and interference with contract. Additionally, the Company and Kearns Tribune
have pending counterclaims for declaratory judgment, but no damage claims against Deseret News
Publishing Company (Deseret Publishing). Deseret Publishing has pending claims against SLTPC for
damages, and claims that do not seek damages against the Company and Kearns Tribune as to the
meaning and enforceability of the Option Agreement and related Management and Joint Operating
Agreements. Additionally, depending on the outcome of the appraisal lawsuit, the main action may
include claims by the parties concerning whether the Option Agreement expired when SLTPC did not
exercise it on October 10, 2003 (as the Company and Kearns Tribune have contended), or whether SLTPC still has the opportunity to exercise the
Option Agreement regardless of whether or not the $355.5 million exercise price is found to be
binding and conclusive (as SLTPC contends). 75




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Also pending before the District Court is the Companys declaratory judgment action, which
seeks a ruling that the defendants, including certain individuals who control SLTPC, do not have
any rights as individuals (separate from their corporate entity, SLTPC) to purchase or otherwise
acquire the Tribune Assets. The defendants have since filed counterclaims against the Company and
Kearns Tribune relating to their contention that they have rights as individuals (separate and
apart from the corporate entity, SLTPC) under an alleged oral agreement to acquire the Tribune
Assets. The defendants have also filed a third-party complaint naming as defendants various
individuals and entities, including AT&T, Deseret Publishing, and Dirks Van Essen, one of the three
appraisers of the Tribune Assets. The Company and all of the third-party defendants have filed
summary judgment motions, which are pending before the District Court. In January 2002, certain controlling members of SLTPC filed a separate lawsuit in Colorado
State Court in Denver in their individual capacities. The lawsuit names all the same defendants,
arises from same underlying facts, and seeks overlapping equitable relief and compensatory and
punitive damages as the original federal case filed in Utah in the District Court. The Company and
the other defendants filed motions seeking to have this lawsuit dismissed or, in the alternative,
stayed pending resolution of the federal action. On February 21, 2002, the Colorado court granted
the defendants motion to stay the Colorado action until the Utah federal court action has been
resolved. In January 2003, the Colorado plaintiffs filed a motion to have the stay lifted, which
was denied by the Colorado court. Thus, the Colorado action remains stayed until completion of the
Utah case. The Company is not in a position at this time to predict the likely outcome of this
litigation. However, the Company does not believe that the litigation will have a materially
adverse impact on its financial condition, results of operations, or liquidity. Approximately $0.8
million, $2.2 million and $3.7 million, respectively, was recorded in other (income) expense, net
for the fiscal years ended June 30, 2005, 2004 and 2003, related to the cost of defending these
lawsuits. The cost of defending these lawsuits has been and may continue to be substantial. Other MediaNews sent a notice terminating its newsprint swap agreement with Mirant Americas Energy
Marketing, LP (Mirant) effective September 5, 2003. In March 2005, Mirant filed a lawsuit in
U.S. District Court for the Southern District of New York against the Company alleging breach of
contract and seeking damages in connection with the swap termination in the amount of approximately
$2.0 million, plus interest, costs and attorneys fees. The Company has moved to dismiss Mirants
claims. In January 2004, Kmart Corporation (Kmart) commenced an adversary proceeding against the
Company and certain of its subsidiaries and joint operating agencies in bankruptcy court seeking
the return of certain payments received from Kmart under a critical vendor program with respect
to pre-bankruptcy balances due from Kmart. The Company agreed to settle with Kmart in the fourth
quarter of fiscal year 2005. Settlement under the agreement did not have a material impact on the
financial condition or results of operations of the Company. A series of class action lawsuits were filed against entities involved in the electronic
display of articles (Database Entities) that had previously appeared in newspapers and magazines
(collectively, Media Entities) and had been authored by individuals who were not employees of the
Media Entities. These lawsuits alleged that the Database Entities electronic display infringed
upon the copyrights owned by the freelance authors. The lawsuits were consolidated into a single
action in the Southern District of New York, In re Literary Works in Electronic Databases Copyright
Litigation, MDL No. 1379, Consolidated Case No. 00 Civ. 8049 GBD (S.D.N.Y. 2000). MediaNews had
licensed articles from its various newspapers to one or more of the Database Entities. Although
the Company is not a party to this litigation, various Media Entities have asserted claims for
indemnification against the Company in respect of their potential liability in this litigation. In
2004, the Database Entities negotiated a settlement of these consolidated actions, and MediaNews
agreed to participate in the settlement process. The settlement provides for a claims settlement
process in which a claims administrator would determine the responsibility of the participants
taking into account such factors as the availability of defenses, the existence of a copyright
registration, the date on which the relevant article was originally published, the amount received
by the author of the freelance article for the original publication and the total amount of claims
that are compensated. Settlement under the agreement is not expected to have a material impact on
the financial condition of the Company. 76




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In May 2004, the Company restructured its interest in Charleston Newspapers (Charleston JOA)
and The York Newspaper Company (York JOA). The Company and the other participants in such
restructurings have received civil investigative demands from the Department of Justice seeking
information concerning the recent restructurings of the Charleston and York JOAs. After
discussions with the Department of Justice, several months ago, the Company has proposed potential
amendments to the agreements governing the York JOA to clarify the rights and obligations of the
parties to provide for additional performance based compensation to the manager of The York
Dispatchunder certain circumstances. The proposed amendments remain under review at the
Department of Justice. The Company anticipates that any such amendments would not be material to
its future operating results. The Company and the general partner in Charleston Newspapers Holdings L.P. have had ongoing
discussions with the Department of Justice regarding amendments to the Charleston JOA. Counsel for
the Company has been informed that the staff of the Department of Justice is considering a lawsuit
challenging the Charleston transaction, although it is not clear if the Company would be named as a
defendant. Discussions with the Department of Justice and the general partner regarding the
Department of Justices concerns continue. There can be no assurances as to the outcome of such
discussions. The Company is involved in other litigation arising in the ordinary course of business. In
managements opinion, the outcome of these legal proceedings will not have a material adverse
impact on its financial condition, results of operations, or liquidity. Note 12: Related Party Transactions The Company is party to a consulting agreement, renewable annually, with Mr. Richard B.
Scudder, the Chairman of the Board of MediaNews, which requires annual payments of $275,000.
Effective July 1, 2005, this amount was increased to $300,000. From 1996 through July 2002, the Company advanced to the Singleton Irrevocable Trust funds to
pay the premiums on cash surrender value life insurance policies covering Mr. William Dean
Singleton, the Vice Chairman of the Board and Chief Executive Officer of MediaNews, and his wife.
The cash surrender value life insurance policies were originally purchased in order to mitigate the
impact of estate taxes that may be due on MediaNews stock held in the Singleton Revocable Trust.
The Singleton Revocable Trust benefits Mr. Singletons children. The amount advanced as of June
30, 2005 and 2004 was $1.5 million. Advances will be repaid when the policy is surrendered or
earlier at Mr. Singletons option. No interest is charged on these advances. See Note 11:
Commitments and Contingencies for further discussion of Mr. Singletons amended employment
agreement. The Company has an employment and shareholder agreement with the Companys President. See
Note 11: Commitments and Contingencies for further discussion. The Company uses Hughes Hubbard & Reed LLP as one of its legal counsel. Mr. Howell E. Begle,
Jr., a board member and general counsel of the Company, is Of Counsel to Hughes Hubbard & Reed LLP. The Company is party to a management agreement with the California Newspapers Partnership,
which provides MediaNews with a management fee of 1.25% of revenues and thereby reduces the
Companys total corporate overhead, the effect of which is a reduction of the impact minority
interest expense has on its consolidated statement of operations. In August 2004, the Company purchased the Colorado residence of Mr. Gerald Grilly (the
Companys Chief Operating Officer) for $2.7 million (subject to adjustment to reflect the gross
proceeds received by MediaNews upon its resale of the house) in conjunction with his relocation to
Los Angeles, California. Mr. Grillys relocation was requested by MediaNews. In May 2005, the
Company sold the residence for $2.5 million. See Note 5: Acquisitions, Dispositions and Other Transactions regarding the Companys purchase
of The Park Record,in Park City, Utah. 77




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Note 13: Other (Income) Expense, Net Included in other (income) expense, net are the following items: Years Ended June 30,2005
    
    2004
    
    2003(In millions)Change in estimated option repurchase price
    
    $
    (5.8
    )
    
    $
    (4.0
    )
    
    $
    5.5Lawsuit settlement-newsprint vendor
    
    
    
    
    
    
    
    
    
    
    2.7Impairment loss
    
    
    
    
    
    
    
    
    
    
    5.7Hedging, net
    
    
    0.4
    
    
    
    2.1
    
    
    
    (1.2
    )Bank fees
    
    
    0.7
    
    
    
    0.4
    
    
    
    0.5Salt Lake ownership litigation
    
    
    0.8
    
    
    
    2.2
    
    
    
    3.7Freedom acquisition bid
    
    
    
    
    
    
    1.0
    
    
    
    Debt redemption premiums and write-off of
deferred debt costs
    
    
    9.2
    
    
    
    9.3
    
    
    
    Write-off of KTBY escrow and other prepaid
acquisition costs
    
    
    
    
    
    
    1.1
    
    
    
    Other
    
    
    3.4
    
    
    
    5.3
    
    
    
    2.6$
    8.7
    
    
    $
    17.4
    
    
    $
    19.5
 Note 14: Equity Investments (Non-JOA) The following table represents the summary financial data, on a combined basis, for the
Companys non-JOA equity investments (the entities represented in the table below are included at
100%). Only fiscal years 2005 and 2004 are presented as they are the only years that equity
investments were material to the Companys financial statements. Years Ended June 30,2005
    
    2004(In thousands)Current assets
    
    $
    57,894
    
    
    $
    58,924Non-Current assets
    
    
    192,164
    
    
    
    216,640Current liabilities
    
    
    30,117
    
    
    
    29,723Non-Current liabilities
    
    
    67,404
    
    
    
    92,967Total revenues
    
    
    257,816
    
    
    
    266,865Net Income
    
    
    35,605
    
    
    
    30,260
 78




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Note 15: Restatement of Previously Issued Financial Statements The Company has restated its financial statements for fiscal years 2004, 2003 and 2002 to
correct for errors that were identified in accounting for deferred income taxes related to certain
of the Companys acquisitions and dispositions that qualified under Internal Revenue Code Section
1031 as asset exchanges. The Company incorrectly treated these exchange transactions as
non-taxable transactions, and therefore the Company did not provide for deferred income tax expense
upon consummation of the sale portion of the transaction. Rather, the Company accounted for the
book tax basis differences on the purchase end of the transactions by recording a deferred tax
obligation to recognize the difference in book and tax basis and a corresponding increase to
goodwill. The correction resulted in an increase/(decrease) of the reported amounts of net income
of $(0.9) million, and $(2.5) million, respectively, for both the
quarters and fiscal years ended June 30, 2004 and
2003 along with related adjustments to goodwill, deferred income tax liability and a $22.6 million
adjustment to opening retained earnings for fiscal year 2002. June 30, 2004As Reported
    
    Correction
    
    As Restated(Dollars in thousands)Balance Sheet Data:Equity investments
    
    $
    92,681
    
    
    $
    (715
    )
    
    $
    91,966Excess of cost over fair value of net assets acquired
    
    
    411,469
    
    
    
    (29,185
    )
    
    
    382,284TOTAL OTHER ASSETS
    
    
    918,782
    
    
    
    (29,900
    )
    
    
    888,882TOTAL ASSETS
    
    
    1,399,070
    
    
    
    (29,900
    )
    
    
    1,369,170DEFERRED INCOME TAXES, NET
    
    
    92,957
    
    
    
    (3,886
    )
    
    
    89,071TOTAL LIABILITIES AND MINORITY INTEREST
    
    
    1,312,050
    
    
    
    (3,886
    )
    
    
    1,308,164Retained earnings
    
    
    105,363
    
    
    
    (26,014
    )
    
    
    79,349TOTAL SHAREHOLDERS EQUITY
    
    
    87,020
    
    
    
    (26,014
    )
    
    
    61,006TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    
    1,399,070
    
    
    
    (29,900
    )
    
    
    1,369,170
 Year Ended June 30, 2004
    
    Year Ended June 30, 2003As Reported
    
    Correction
    
    As Restated
    
    As Reported
    
    Correction
    
    As Restated(Dollars in thousands)Statement of Operations Data:GAIN ON SALE OF NEWSPAPER
PROPERTIES
    
    $
    6,982
    
    
    $
    
    
    
    $
    6,982
    
    
    $
    27,399
    
    
    $
    1,398
    
    
    $
    28,797INCOME BEFORE INCOME TAXES
    
    
    43,703
    
    
    
    
    
    
    
    43,703
    
    
    
    67,855
    
    
    
    1,398
    
    
    
    69,253INCOME TAX BENEFIT (EXPENSE)
    
    
    (16,066
    )
    
    
    (900
    )
    
    
    (16,966
    )
    
    
    (27,027
    )
    
    
    (3,914
    )
    
    
    (30,941
    )NET INCOME
    
    
    27,637
    
    
    
    (900
    )
    
    
    26,737
    
    
    
    40,828
    
    
    
    (2,516
    )
    
    
    38,312
 Statement of Cash Flows Data: The correction of the accounting error had no net impact on the fiscal year 2004 and 2003 as
reported amounts of net cash flows from operating, investing or financing activities. Balance Sheet: See Note 1: Significant Accounting Policies and Other Matters  Reclassifications. Certain
reclassifications were made to the fiscal year 2004 as reported balances. 79




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Note 16: Career Restricted Stock Unit Plan Effective June 29, 2005, the Company adopted a Career Restricted Stock Unit (RSU) Plan
intended to encourage retention and reward performance of selected senior management of the Company
and its affiliates over a significant period of time. The RSU Plan is administered by the Companys board of directors (or a designated committee).
The RSU Plan provides for the award to members of senior management selected by the board (or
committee) for participation in the Plan of such number of restricted stock units (RSUs) at such
time or times as determined by the board (or committee) in its discretion. Each RSU represents the
right to receive one share of the Companys new class of Class B common stock (which is non-voting
and does not pay dividends, but which is convertible into Class A in certain circumstances),
subject to vesting and other requirements. RSUs granted to a participant vest upon the later to
occur of:  
    
    the earlier of (x) the completion of 20 years of continuous service with the
Company or its affiliates or (y) attainment of age 67 while still employed by the
Company or its affiliates; or
    
    the date on which the participant (a) has completed at least five years of
participation in the RSU Plan and (b) has a combined age and years of continuous
service with the Company and or affiliates of at least 72. RSUs also fully vest upon the occurrence of a Change in Control (as defined) and vest pro
rata in the event of the participants death, disability or termination of employment by the
Company without cause. Any RSUs not so vested are forfeited upon the participants termination of
employment, unless otherwise determined by the board (or committee) in its sole discretion. Shares of the Companys Class B common stock are issued to holders of vested RSUs upon the
earliest of the participants separation from service, the participants disability and the
occurrence of a Qualified Change in Control (as defined). Recipients of shares issued pursuant to RSUs have the right to require the Company to
repurchase a number of shares at their then fair market value (as determined by formula outlined in
the RSU plan) that is sufficient to enable them to pay taxes due in connection with such issuance,
provided that the board of directors may suspend such right at any time. At any time following the
six-month anniversary of the date of issuance of shares of such Class B common stock, the Company
has the right to repurchase such shares at their then fair market value (as determined by formula
outlined in the RSU plan). Such repurchase rights will terminate if the Company consummates an
initial public offering. The issuance of up to 150,000 shares of the Companys Class B common stock is authorized under
the RSU Plan. No awards were granted as of June 30, 2005.
However, RSU grants were made July 14, 2005 to certain
executive officers. Note 17: Subsequent Events Acquisition  The Detroit News On August 3, 2005, the Company purchased the stock of The Detroit News, Inc., which included
the editorial assets of The Detroit News,published in Detroit, Michigan and a limited partnership
interest in the Detroit Newspaper Partnership, L.P. (Detroit JOA), for approximately $25.0
million. The Company is responsible for the news and editorial content of The Detroit News
pursuant to a JOA agreement. Under the terms of the partnership agreement, the Company will
receive a fixed preferred distribution each month with possible incremental distributions beginning
in 2009 based on profit growth. Under the terms of the Detroit JOA, the Company is reimbursed for
its news and editorial costs. The Antitrust Division of the Department of Justice has requested information and documents
concerning the Detroit JOA and has raised the issue of whether certain recent amendments to the
Detroit JOA agreement require approval of the U.S. Attorney General. The Company and the general
partner in the Detroit JOA have entered into discussions with the Department of Justice concerning
the questions they have raised. There can be no assurances as to the outcome of such discussions. 80




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Amendment to Credit Agreement On September 8, 2005, the Company amended its December 30, 2003 bank credit facility (the
amended facility), by and among MediaNews, the guarantors party thereto, the lenders named
therein and Bank of America, N.A., as administrative agent. The Company amended its bank credit
facility in order to lower its borrowing margins as well as to make certain technical changes to
the agreement. Prior to the amendment, the facility provided for borrowings of up to $598.8
million, consisting of a $350.0 million revolving credit facility, a $100 million term loan A
facility and a $148.8 million term loan C facility (at June 30, 2005, the borrowings on term loan
C were $147.3 million). On September 7, 2005, total borrowings were $176.3 million under the
revolving credit facility, $100.0 million under the term loan A facility and $147.3 million under
the term loan C facility. The amended facility maintains the $350.0 million revolving credit facility and the $100.0
million term loan A and provides for a $147.3 million term loan B facility, which was used to
pay off the term loan C facility. The loans under the amended facility bear interest at rates
based upon, at the Companys option, Eurodollar or base rates, plus a borrowing margin based on the
Companys leverage ratio. The Eurodollar and base rate borrowing margins on term loan A are
based on the pricing grid used for the revolving credit facility. Under the terms of the revolving
credit facility, Eurodollar borrowing margins vary from 0.75% to 1.00% and the base rate borrowing
margin is 0%. Term loan A requires quarterly principal payments as follows: $5.0 million
beginning in March 2008 through December 2008; $7.5 million from March 2009 through December 2009;
and $12.5 million from March 2010 through September 2010, with the remaining balance due at
maturity on December 30, 2010. The revolving credit facility reduces to $250.0 million on December
30, 2008. The term loan B bears interest based upon, at the Companys option, Eurodollar or base
rates, plus a borrowing margin of 1.25% and 0.25%, respectively. Term loan B requires quarterly
principal payments as follows: $0.4 million through December 2009; and $35.2 million from March
2010 through September 2010, with the remaining balance due at maturity on December 30, 2010.
Amounts repaid under the term loan A and B facilities will not be available for re-borrowing.
Borrowings under the revolving facility may be repaid and re-borrowed, subject to usual and
customary conditions for facilities of this nature. The revolving credit facility matures on
December 30, 2009. The Company may increase the amount of the amended facility by up to $200.0
million, subject to obtaining commitments of lenders to loan such additional amounts and to usual
and customary conditions. All other borrowing conditions of the bank credit facility as described in Note 6: Long-Term
Debt continue to apply and have not been amended. Commitment of Denver JOA In September 2005, the management committee of the Denver JOA authorized the incurrence of up
to $150.0 million of debt by the Denver JOA to finance furniture, fixtures and computers for the
new building and new presses and related equipment and building costs related to the consolidation
of two existing production facilities into one for the Denver JOA. The Company owns a 50% interest
in the Denver JOA. 81




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SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly      caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized. MEDIANEWS GROUP, INC.Date: September 26, 2005
    
    By:
    
    /S/ Ronald A. MayoRonald A. Mayo
Vice President and Chief Financial Officer
 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the      following persons on behalf of the registrant in the capacities and on the dates
indicated. SIGNATURE
    
    TITLE
    
    DATE/S/ Richard B. Scudder
    
    Chairman and Director
    
    September 26, 2005(Richard B. Scudder)/S/ Jean L. Scudder
    
    Director
    
    September 26, 2005(Jean L. Scudder)/S/ Howell E. Begle, Jr.
    
    Director
    
    September 26, 2005(Howell E. Begle, Jr.)/S/ William Dean Singleton

(William Dean Singleton)
    
    Vice Chairman, Chief Executive Officer
and Director (Chief Executive Officer)
    
    September 26, 2005/S/ Joseph J. Lodovic, IV
    
    President
    
    September 26, 2005(Joseph J. Lodovic, IV)/S/ Ronald A. Mayo
    
    Vice President and Chief Financial Officer
    
    September 26, 2005(Ronald A. Mayo)/S/ Michael J. Koren

(Michael J. Koren)
    
    Vice President and Controller
(Principal Accounting Officer)
    
    September 26, 2005
 Supplemental Information to be Furnished with Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have Not
Registered Securities Pursuant to Section 12 of the Act No annual report or proxy material has been sent to our security holders. We will furnish to our
security holders an annual report subsequent to this filing. 82




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EXHIBIT INDEX Exhibits 
 3.1
    
    Third Amended and Restated Certificate of Incorporation3.2
    
    Amended and Restated Bylaws of MediaNews Group, Inc.4.1
    
    Registration Rights Agreement dated May 20, 1994, between Affiliated Newspapers
Investments, Inc. (the predecessor to the registrant) and BT Securities Corporation
(incorporated by reference to Exhibit 4.3 to Form S-1/A of Affiliated Newspapers
Investments, Inc., filed May 6, 1994 (File No. 33-75158))4.2
    
    Indenture dated as of November 25, 2003 between MediaNews Group, Inc., as Issuer, and
The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.4 to the
registrants Form 8-K filed January 14, 2004)4.3
    
    Form of MediaNews Group, Inc.s 6 7/8% Senior Subordinated Notes due 2013 (contained in
the Indenture filed as Exhibit 4.4 to the registrants Form 8-K filed January 14, 2004)4.4
    
    Indenture dated as of January 26, 2004 between MediaNews Group, Inc., as Issuer, and
The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.4 to the
registrants From 10-Q for the period ended December 31, 2003)4.5
    
    Form of MediaNews Group, Inc.s 6 3/8% Senior Subordinated Notes due 2014 (contained in
the Indenture filed as Exhibit 4.4 to the registrants Form 10-Q for the period ended
December 31, 2003)10.1
    
    Credit Agreement dated as of December 30, 2003 by and among MediaNews Group, Inc., the
guarantors named therein, the lenders named therein, and Bank of America, N.A., as
administrative agent (the Credit Agreement) (incorporated by reference to Exhibit 10.1 to
the registrants Form 8-K filed January 14, 2004)10.2
    
    First Amendment to Credit Agreement, dated as of January 20, 2004, by and among
MediaNews Group, Inc., the guarantors named therein, the lenders named therein and Bank of
America, N.A., as administrative agent (incorporated by reference to Exhibit 10.12 to the
registrants Form S-4 filed February 23, 2004)10.3
    
    Second Amendment to Credit Agreement, dated as of April 16, 2004, by and among
MediaNews Group, Inc., the guarantors named therein, the lenders named therein and Bank of
America, N.A., as administrative agent (incorporated by reference to Exhibit 10.3 to the
registrants June 30, 2004 Form 10-K10.4
    
    Third Amendment to Credit Agreement, dated as of August 30, 2004, by and among
MediaNews Group, Inc., the guarantors named therein, the lenders named therein and Bank of
America, N.A., as administrative agent (incorporated by reference to Exhibit 10.4 to the
registrants June 30, 2004 Form 10-K10.5
    
    Fourth Amendment to Credit Agreement, dated as of September 8, 2005, by and among
MediaNews Group, Inc., the guarantors named therein, the lenders named therein and Bank of
America, N.A., as administrative agent10.6
    
    Amended and Restated Shareholders Agreement of MediaNews Group, Inc. by and among
MediaNews Group, Inc. and the shareholders named therein, effective as of January 31, 2000,
and amended and restated as of March 16, 2004 (incorporated by reference to Exhibit 10.7 to
the registrants Form S-4/A (File No. 333-113028), filed March 18, 2004)10.7
    
    Amendment to the Amended and Restated Shareholders Agreement of MediaNews Group, Inc.
dated as of June 30, 2005, by and among MediaNews Group, Inc. and the shareholders named
therein, effective as of January 31, 2000, and amended and restated as of March 16, 2004 83




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EXHIBIT INDEX (continued) Exhibits(continued) 
 10.8
    
    Employment Agreement dated July 1, 2005 between MediaNews and William Dean Singleton
(incorporated by reference to Exhibit 99.2 to the registrants Form 8-K filed July 5, 2005)10.9
    
    Employment Agreement dated July 1, 2005 between MediaNews and Joseph J. Lodovic IV
(incorporated by reference to Exhibit 99.3 to the registrants Form 8-K filed July 5, 2005)10.10
    
    Amended and Restated Joint Operating Agreement, dated as of April 30, 2004 by and
between York Newspapers, Inc., York Newspapers Holdings, Inc., The York Newspaper Company,
York Newspapers Holdings, L.P. and York Dispatch Publishing Company, LLC (incorporated by
reference to Exhibit 10.8 to the registrants June 30, 2004 Form 10-K)10.11
    
    Singleton Family Voting Trust Agreement for MediaNews Group, Inc. dated January 31,
2000 (incorporated by reference to Exhibit 10.21 to the registrants Form 10-Q for the
period ended March 31, 2000)10.12
    
    Scudder Family Voting Trust Agreement for MediaNews Group, Inc. dated January 31, 2000
(incorporated by reference to Exhibit 10.22 to the registrants Form 10-Q for the period
ended March 31, 2000)10.13
    
    Amendment and Restatement of Agreement, by and between Kearns-Tribune, LLC and Deseret
News Publishing Company, dated as of January 2, 2001 (incorporated by reference to Exhibit
10.10 to the registrants Form S-4 filed February 23, 2004)10.14
    
    Option Purchase Agreement between Garden State Newspapers, Inc., the predecessor of
MediaNews Group, Inc., and Greenco, Inc., dated as of January 30, 1998 (incorporated by
reference to Exhibit 10.13 to the registrants Form S-4 filed February 23, 2004)10.15
    
    Joint Operating Agreement by and between The Denver Post Corporation, Eastern Colorado
Production Facilities, Inc., The Denver Newspaper Agency LLP and The Denver Publishing
Company, dated as of May 11, 2000 (incorporated by reference to Exhibit 10.14 to the
registrants Form S-4 filed February 23, 2004)10.16
    
    First Amendment to the Joint Operating Agreement by and among The Denver Post
Corporation, Eastern Colorado Production Facilities, Inc., The Denver Newspaper Agency LLP
and The Denver Publishing Company, dated January 22, 2001 (incorporated by reference to
Exhibit 10.15 to the registrants Form S-4 filed February 23, 2004)10.17
    
    Limited Liability Partnership Agreement of The Denver Newspaper Agency LLP dated as of
January 22, 2001 (incorporated by reference to Exhibit 10.16 to the registrants Form S-4
filed February 23, 2004)10.18
    
    Amended and Restated Partnership Agreement for Texas-New Mexico Newspapers
Partnership, by and among Gannett Texas L.P. and New Mexico-Texas MediaNews LLC, dated
March 21, 2003 (incorporated by reference to Exhibit 10.17 to the registrants Form S-4
filed February 23, 2004)10.19
    
    Second Amended and Restated Partnership Agreement for California Newspapers
Partnership, a Delaware General Partnership, by and among West Coast MediaNews LLC; Donrey
Newspapers LLC; The Sun Company of San Bernardino, California; California Newspapers, Inc.;
Media WestSBC, Inc. and MediaWestCNI, Inc., dated as of May 30, 2003 (incorporated by
reference to Exhibit 10.18 to the registrants Form S-4 filed February 23, 2004)10.20
    
    Purchase Agreement, dated as of April 30, 2004, between Buckner News Alliance, Inc.,
MediaNews Group, Inc., York Newspapers Holdings, LLC, MediaNews Group Interactive and York
Daily Record LLC and related side letter (incorporated by reference to Exhibit 10.20 to the
registrants June 30, 2004 Form 10-K) 84




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EXHIBIT INDEX (continued) Exhibits(continued) 
 10.21
    
    Master Restructuring and Purchase Agreement, dated as of May 7, 2004, among Daily
Gazette Company, MediaNews Group, Inc., Charleston Publishing Company and Charleston
Newspapers (incorporated by reference to Exhibit 10.21 to the registrants June 30, 2004
Form 10-K)10.22
    
    Stock Purchase Agreement dated January 4, 2005, by and among MediaNews Group, Inc., as
purchaser, and The Singleton Family Revocable Trust and Peter Bernhard, as sellers
(incorporated by reference to Exhibit 10.1 to the registrants Form 10-Q for the period
ended December 31,2004)10.23
    
    MediaNews Group, Inc. Career RSU Plan (incorporated by reference to Exhibit 99.1 to
the registrants Form 8-K filed July 5, 2005)10.24
    
    Shareholder Agreement dated as of July 1, 2005, as amended as of September 22, 2005,
by and among MediaNews Group, Inc. and Joseph J. Lodovic, IV21.1
    
    Subsidiaries of MediaNews Group, Inc.31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.3
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 200232.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 85




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##### Table of Contents



MEDIANEWS GROUP, INC. AND SUBSIDIARIES
SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
FISCAL YEARS ENDED JUNE 30, 2005, 2004 AND 2003 Balance at
    
    Additions
    
    
    
    
    
    AcquisitionsBeginning of
    
    Charged to
    
    Net
    
    (Dispositions),
    
    Balance atPeriod
    
    Expense, Net
    
    Deductions
    
    Net
    
    End of Period(In thousands)YEAR ENDED JUNE 30, 2005Reserves and allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    7,625
    
    
    $
    8,065
    
    
    $
    (8,874
    )
    
    $
    85
    
    
    $
    6,901YEAR ENDED JUNE 30, 2004Reserves and allowances deducted from asset accounts:
    
    $
    7,887
    
    
    $
    7,405
    
    
    $
    (7,668
    )
    
    $
    1
    
    
    $
    7,625Allowance for doubtful accountsYEAR ENDED JUNE 30, 2003Reserves and allowances deducted from asset accounts:Allowance for doubtful accounts
    
    $
    9,163
    
    
    $
    9,632
    
    
    $
    (10,694
    )
    
    $
    (214
    )
    
    $
    7,887
 See notes to consolidated financial statements. 86