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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                   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, 1997
 
                                       OR
 
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
 
                        COMMISSION FILE NUMBER
                            ------------------------
 
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
             (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                   <C>
              DELAWARE                     76-0425553
  (State or other jurisdiction of       (I.R.S. Employer
   incorporation or organization)      Identification No.)
  1560 BROADWAY, DENVER, COLORADO             80202
               80202                       (Zip code)
  (Address of principal executive
              offices)
</TABLE>
 
       Registrant's telephone number, including area code: (303) 837-0886
                            ------------------------
 
          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. Yes _X_ No ____
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. _X_
 
    State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average or the average bid and
asked prices of such stock, as of a specified date within 60 days prior to the
date of filing.
 
<TABLE>
<CAPTION>
  CLASS OF VOTING STOCK AND NUMBER OF
                 SHARES
HELD BY NON-AFFILIATES AT SEPTEMBER 10,   MARKET VALUE HELD
                  1997                    BY NON-AFFILIATES
----------------------------------------  -----------------
<S>                                       <C>
Class B            173,576 shares            Unavailable
</TABLE>
 
    The following shares of Common Stock are outstanding at September 10, 1997
 
<TABLE>
<CAPTION>
                                                                       NUMBER
CLASS                                                                OF SHARES
-------------------------------------------------------------------  ----------
<S>                                                                  <C>
Class B Common Stock...............................................     173,576
Class D Common Stock...............................................     664,450
Class G Common Stock...............................................     371,960
Class GSI Common Stock.............................................   1,104,130
Class N Common Stock...............................................         230
</TABLE>
 
Documents Incorporated by Reference:  NONE
 
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                                     PART I
 
ITEM 1. BUSINESS
 
GENERAL
 
    Affiliated Newspapers Investments, Inc. (the "Company" or "ANI"), is one of
the largest privately controlled newspaper publishing companies in the United
States. The newspapers currently owned by the Company including the July 31,
1997, acquisition of THE SUN published in Lowell, Massachusetts (the "Lowell
Acquisition"), have combined daily and Sunday paid circulation of approximately
1,187,748 and 1,247,000, respectively, at March 31, 1997. Garden State
Newspapers, Inc. ("Garden State"), a wholly owned subsidiary of ANI, founded in
March 1985 by William Dean Singleton and Richard B. Scudder, currently owns and
operates 26 market dominant daily and 69 weekly newspapers in eight states
(including suburban markets in close proximity to the San Francisco Bay area,
Los Angeles, New York City, Philadelphia and Boston). The Company's principal
sources of revenue are advertising and circulation sales. Other sources of
revenue include commercial printing and electronic media operations. Denver
Newspapers, Inc. ("Denver Newspapers"), a 60% owned subsidiary, operates ANI's
only major metropolitan newspaper, THE DENVER POST, located in Denver, Colorado.
Denver Newspapers also currently owns 3 daily and 7 weekly newspapers published
in Colorado.
 
    The operating results of ANI are the same as the operating results of Garden
State, except for ANI's income in Denver Newspapers and ANI's separate
administrative and debt expenses, since Garden State is ANI's only consolidated
subsidiary. ANI accounts for its investment in Denver Newspapers using the
equity method of accounting.
 
    The Company's newspapers are geographically diverse and generally positioned
in markets with limited direct competition for local newspaper advertising.
Management believes the Company's markets, taken as a whole, have above average
population and sales growth potential. The Company's newspapers are established
franchises with strong local identities and often serve as the primary source of
local news and information in the communities they serve. The Company's
newspapers address the specific needs of the community, providing a unique
combination of social and economic services in a way in which only they can
provide, making them an attractive purchase for both the reader and the
advertiser.
 
    The Company has grown significantly through internal growth and by making
strategic acquisitions in markets which have above average growth potential. The
Company's main acquisition focus is on newspaper markets contiguous to its own,
allowing it to realize certain operating synergies. The Company refers to this
acquisition strategy as clustering. A majority of the Company's newspapers are
located in regional clusters, allowing them to achieve higher operating margins
through efficient use of labor and equipment and by providing opportunities to
cross-sell advertising. Management occasionally divests newspaper properties
which no longer fit a cluster strategy and, in management's opinion, the value
of such newspaper properties has been maximized. This strategy has enabled the
Company to reinvest sale proceeds in newspaper properties which can be
clustered, allowing the Company to achieve greater revenue and EBITDA growth
while reducing its leverage ratio (as defined in Garden State's bank credit
agreement).
 
    Management believes that one of the keys to the Company's improved financial
position and future growth prospects is the successful implementation of its
clustering and acquisition strategy at Garden State. Implementation of this
strategy may include selective dispositions from time to time. Since May 31,
1994, Garden State has acquired 18 daily and 23 weekly newspapers for $322.9
million. During the same period, Garden State disposed of four daily and nine
weekly newspapers for a combined $122.1 million, resulting in realized pre-tax
gains of $49.6 million.
 
    These acquisitions and dispositions at Garden State discussed above would
have resulted in a net increase in debt of $200.8 million if such transactions
had occurred on June 30, 1997, and pro forma net EBITDA of $46.4 million for the
year then ended, representing a debt to EBITDA ratio of 4.3x. Combined
 
                                       1
<PAGE>
with internal growth, the aforementioned acquisitions and dispositions have
resulted in revenue and EBITDA growth from $186.6 million and $37.3 million in
fiscal 1994 to $302.9 million and $68.6 million in fiscal 1997, respectively.
Furthermore, management believes that its cluster acquisitions and its selected
dispositions of newspapers (those which had limited growth prospects and no
longer fit a cluster strategy) have positioned the Company to achieve greater
internal growth in the future than it would have otherwise been able to achieve.
Denver Newspapers also experienced significant revenue and EBITDA growth from
$142.1 million and $22.1 million in fiscal 1994 to $204.5 million and $36.2
million in fiscal 1997, respectively.
 
    Most suburban and small city daily newspapers, such as the newspapers owned
by Garden State, have leading or sole positions in the geographic areas they
serve. Only a few cities in the United States contain more than one primary
daily newspaper, the majority of which are in major metropolitan markets.
Additionally, start-ups of new daily newspapers in suburban markets with a
pre-existing local newspaper are rare. Suburban newspapers address the specific
need 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 in which only it can provide, making it attractive for both
consumers and advertisers.
 
    Sizeable weekly newspapers are generally found in and around metropolitan
areas rather than in smaller towns and cities. Suburban weeklies, such as the
weekly newspapers operated by North Jersey Newspaper Company, a subsidiary of
Garden State, have several advantages over metropolitan dailies, including a
lower cost structure, the ability to publish only on their most profitable days
(i.e., one midweek and one weekend day), the ability to more effectively exploit
zoned advertising and avoid expensive investments in wire services and
syndicated feature material. Zoned advertising permits small merchants,
individual classified and other advertisers to advertise solely in their own
local areas at a cost lower than that of a full-run metropolitan daily
newspaper. Thus, the typical suburban weekly newspaper has a broader advertiser
base and does not rely to the same degree as a metropolitan daily on major
retailers for advertising revenues.
 
INDUSTRY BACKGROUND
 
    Newspaper publishing is the oldest and largest segment of the media
industry. Due to a focus on local news, newspapers remain the dominant medium
for local advertising and, in calendar year 1996, accounted for more than 47.6%
of all local media advertising expenditures in the United States. In addition,
in calendar year 1996, U.S. newspaper advertising expenditures reached an all
time high of approximately $38.2 billion, representing a compounded annual
growth rate of 6.1% since 1980. In the first six months of calendar 1997,
newspaper advertising revenues increased by 9.5%, representing a gain of
approximately $1.7 billion over the same six-month period in 1996. Newspapers
continue to be the best medium for retail advertising which emphasizes the price
of goods, in contrast to television which is generally used for image
advertising.
 
    The number of adult readers of daily and Sunday newspapers is reported to
have increased from 106.0 million and 106.7 million in 1980 to 112.1 million and
128.6 million in 1996, respectively, representing compounded annual growth rates
of 0.4% and 1.2%, respectively. Readers of daily and Sunday newspapers tend to
be more highly educated and have higher incomes than non-newspaper readers. For
instance, 71% of college graduates and 66% of households with income greater
than $40,000 are reported to read a daily newspaper, compared to 61% of high
school graduates and 52% of households with income less than $40,000. Management
believes that newspapers continue to be the most cost-effective means for
advertisers to reach this highly targeted demographic group.
 
    Total morning daily and Sunday national circulation has increased from 29.4
million and 54.7 million in 1980 to 44.8 million and 60.8 million in 1996,
respectively, representing compounded annual growth
 
                                       2
<PAGE>
rates of 2.7% and 0.7%, respectively. Total reported daily national circulation,
including evening editions, however, declined from 62.2 million in 1980 to 57.0
million in 1996, or 0.5% annually. This decrease can be directly attributable to
the declining national circulation of evening newspapers, which is reported to
have decreased from 32.8 million in 1980 to 12.2 million in 1996, or 6.0%
annually, primarily as a result of evening newspapers inability to compete with
existing morning newspapers and from increased competition by evening broadcast
news programming and specialized cable programming such as CNN and Headline
News. Circulation statistics for suburban daily newspapers are not published
separately from circulation statistics for daily newspapers as a whole. Reliable
circulation statistics for weekly newspapers are not available.
 
    Newspaper advertising revenues are cyclical and are generally affected by
changes in national and regional economic conditions. Classified advertising,
which makes up approximately one-third of newspaper advertising revenues, is the
most sensitive to economic improvements or slowdowns as it is primarily affected
by the demand for employment, real estate transactions and automotive sales.
Growth in newspaper advertising has exceeded growth in the Gross Domestic
Product ("GDP") in every calendar year since 1993 and, in calendar year 1996,
newspaper advertising spending grew 5.8% while the GDP grew by only 4.5%.
 
RECENT ACQUISITIONS AND DISPOSITIONS
 
ACQUISITIONS:
 
    On July 31, 1997, a subsidiary of the Company acquired substantially all the
assets used in the publication of THE SUN, an evening newspaper published in
Lowell, Massachusetts. The assets were purchased for $49.0 million in cash plus
a covenant not to compete with the prior owners with a discounted value of
approximately $11.8 million.
 
    On February 28, 1997, a subsidiary of the Company acquired substantially all
the assets used in the publication of the SENTINEL & ENTERPRISE, LEBANON DAILY
NEWS and THE DAILY NONPAREIL, daily newspapers distributed primarily in
Fitchburg and Leominster, Massachusetts; Lebanon, Pennsylvania; and Council
Bluffs, Iowa, respectively, and five weekly newspapers distributed in and around
the same cities, for a total of approximately $51.2 million in cash.
 
    On October 31, 1996, a subsidiary of the Company acquired substantially all
the assets used in the publication of the PASADENA STAR-NEWS, SAN GABRIEL VALLEY
TRIBUNE, WHITTIER DAILY NEWS, TIMES-STANDARD and THE EVENING SUN, daily
newspapers distributed primarily in Pasadena, West Covina, Whittier and Eureka,
California, and Hanover, Pennsylvania, respectively, and seven weekly newspapers
distributed in and around these same cities, for a total of approximately $130.0
million in cash.
 
    In conjunction with the sale of the Johnstown Tribune Publishing Company
(discussed below), the Company acquired substantially all the assets used in the
publication of the NORTH ADAMS TRANSCRIPT and the BRIDGETON NEWS, daily
newspapers published in North Adams, Massachusetts, and Bridgeton, New Jersey,
respectively.
 
    On March 10, 1996, a subsidiary of the Company acquired substantially all
the assets used in the publication of the SAN MATEO COUNTY TIMES, a daily
newspaper, and five weekly newspapers published in San Mateo County, California,
for approximately $15.0 million, including discounted obligations to the seller
of approximately $4.3 million and the assumption of newspaper subscription
obligations of approximately $0.7 million.
 
    On August 31, 1995, a subsidiary of the Company acquired, for approximately
$34.6 million, substantially all of the assets used in the publication of THE
BERKSHIRE EAGLE, the BRATTLEBORO REFORMER and the BENNINGTON BANNER, daily
newspapers published in Pittsfield, Massachusetts; Brattleboro and Bennington,
Vermont, respectively, and THE MANCHESTER JOURNAL, a weekly newspaper published
in Manchester, Vermont.
 
                                       3
<PAGE>
    On November 18, 1994, a subsidiary of the Company acquired from an affiliate
substantially all the assets used in the publication of the GLOUCESTER COUNTY
TIMES and TODAY'S SUNBEAM, daily newspapers distributed in Woodbury and Salem,
New Jersey, respectively, for $9.0 million in cash and the assumption of
subordinated debt with a discounted value of $1.9 million, which is due to
certain shareholders of ANI.
 
DISPOSITIONS:
 
    On February 13, 1997, a subsidiary of the Company sold substantially all the
assets used in the publication of the POTOMAC NEWS and two weekly publications
for $47.7 million in cash plus an adjustment for working capital. The Company
recognized a pre-tax gain on the sale of approximately $30.6 million, net of
selling expenses.
 
    On May 1, 1996, a subsidiary of the Company sold the common stock of the
Johnstown Tribune Publishing Company, which publishes THE TRIBUNE-DEMOCRAT and
two weekly newspapers distributed in and around Johnstown, Pennsylvania, for
$32.6 million in cash and the assets of six daily newspapers and eight weekly
newspapers. The sale of the Johnstown Tribune Publishing Company resulted in a
pre-tax gain of approximately $8.3 million. Immediately upon completion of the
transaction, four of the daily and seven of the weekly newspapers acquired were
sold for $15.7 million to The Denver Post Corporation, a subsidiary of Denver
Newspapers. No gain or loss was recognized on the sale to The Denver Post
Corporation.
 
    On August 1, 1994, a subsidiary of the Company sold substantially all the
assets used in the publication of the BRISTOL PRESS and three weekly newspapers
located in Bristol, Connecticut, and a covenant not to compete for $14.5 million
in cash. The sale resulted in a pre-tax gain of approximately $4.2 million.
 
OPERATING STRATEGY
 
    The Company's strategy is to increase revenues and cash flows through
geographic clustering; targeted marketing programs; local news leadership; high
quality editorial content and presentation; circulation growth; cost control;
and strategic technological investments, as described below:
 
        GEOGRAPHIC CLUSTERING.  The Company has acquired and assembled
    newspapers, and may continue to acquire newspapers, in contiguous markets
    ("clustering"). Clustering enables the Company to realize operating
    efficiencies and economic synergies, such as the sharing of management,
    accounting and production functions. In addition, the Company seeks to
    increase operating cash flows at acquired newspapers through cost
    reductions, including labor and web width reductions, as well as overall
    improved cost management. Clustering also enables management to maximize
    revenues through the cross-selling of advertising among contiguous newspaper
    markets. As a result of clustering, management believes that the Company's
    newspapers are able to obtain higher operating margins than they would
    otherwise be able to achieve on a stand-alone basis.
 
        TARGETED MARKETING PROGRAMS.  Through a strong local presence and active
    community relations, the Company is able to develop programs to maximize its
    advertising revenues. The Company utilizes research, demographic studies and
    zoning (marketing directed to a particular sub-segment of a local area) to
    develop marketing programs and meet the unique needs of specific
    advertisers.
 
        LOCAL NEWS LEADERSHIP.  The Company's newspapers generally have the
    largest local news gathering resources in their markets. As a result of
    emphasizing local news, the Company's newspapers generally are able to
    generate reader loyalty and create franchise value. Because the Company's
    provision of local news is a unique product in its markets, its newspapers
    satisfy the demands of both its readers and advertisers.
 
        HIGH QUALITY EDITORIAL CONTENT AND PRESENTATION.  The Company's
    newspapers are committed to editorial excellence, providing the proper mix
    of local and national news to effectively serve the needs of their local
    markets. The Company's newspapers often receive awards for excellence in
    various areas
 
                                       4
<PAGE>
    in their respective regions and categories. In addition, the Company's
    newspapers are generally produced on modern offset presses and are designed
    to attract readers through attractive layouts and color enhancements.
 
        CIRCULATION GROWTH.  The Company believes that circulation growth is
    essential to the creation of long-term franchise value at its newspapers.
    Accordingly, the Company has and will continue to invest in telemarketing
    and promotional campaigns to increase circulation and readership. The
    Company has also established management incentive programs which reward its
    publishers for circulation growth at each of its daily newspapers. As a
    result of management's commitment to circulation growth, the Company is one
    of the few newspaper groups which has consistently grown in circulation,
    year over year, on a combined basis (excluding the effect of acquistions).
 
        COST CONTROL.  Each of the Company's newspapers emphasizes cost control
    with a particular focus on managing staffing requirements. At newspapers
    with collective bargaining units, management strives to enter into long-term
    agreements with moderate annual increases. In addition, the Company further
    controls labor costs through investments in state-of-the-art production
    equipment that improves production efficiencies. Management is equally
    focused on newsprint cost control. Each of the Company's newspapers benefits
    from discounted newsprint costs through its relationship with MediaNews
    Group, Inc. ("MNG", see MediaNews Group, Inc.'s Management of Newspaper
    Operations) and its buying power, as the 13th largest newspaper group in the
    United States in terms of circulation as of September 30, 1996. The
    Company's newspapers buy newsprint from several suppliers, under
    arrangements covering MNG affiliates, resulting in what management believes
    are some of the most favorable newsprint prices in the industry. Through
    MNG, the Company has available to it fixed price newsprint contracts with
    certain suppliers, expiring over the next two and one-half to three years,
    as well as newsprint purchasing arrangements with certain of its other
    suppliers which delay the adverse effect of newsprint price increases. Based
    on expected newsprint utilization at Garden State, approximately two-thirds
    of the Company's annual newsprint consumption for fiscal 1998 will be
    covered by fixed price contracts, at prices which are currently well below
    market.
 
        In order to further control newsprint costs while improving customer
    satisfaction, beginning in October of 1995, the Company began converting all
    its newspapers to a 50-inch web width. Prior to such conversions, the
    Company's newspapers had either 54 or 55-inch web widths. These conversions
    have permanently reduced the Company's newsprint consumption in excess of
    8%. At June 30, 1997, all the Company's newspapers, except certain recent
    acquisitions (all but one of which are expected to be converted by December
    1997), were printed using a 50-inch web width.
 
        STRATEGIC TECHNOLOGICAL INVESTMENTS.  In the past, MNG has tested the
    electronic delivery of news and advertising to consumers through websites at
    Alameda Newspaper Group and Denver Newspapers, an affiliate of Garden State
    and owner of THE DENVER POST ("Denver Newspapers"). Based on the success of
    its initial online projects and the rate at which electronic advertising as
    a whole is beginning to grow, MNG established MediaNews Technologies ("MNT")
    to develop and maintain websites for each of the Company's daily newspapers.
    MNT is currently developing websites to provide an online editorial presence
    and full online classified services for each of the Company's daily
    newspapers. The Company expects that it will have all its daily newspapers
    online by March 31, 1998. Although the Company believes that providing an
    online product service is important to broadening the presence of the
    newspapers in the communities served and ultimately to increasing the
    Company's revenues through such value added services, the Company believes
    almost all of its customers prefer the newspaper in a printed form. By being
    the leading, and in certain instances the sole, provider of local news in
    most of its markets, management believes that its newspapers are poised to
    respond and to benefit from any changes in the manner in which news and
    information are delivered in the future.
 
                                       5
<PAGE>
    As a result of the implementation of the operating strategy described above,
management believes the Company is positioned to continue to achieve internal
growth. The Company may, from time to time, seek strategic or targeted newspaper
acquisitions and dispositions such as the recently completed Lowell Acquisition.
The Company continually reviews newspaper acquisition candidates that it
believes are underperforming in terms of operating cash flows but have an
established history of strong readership and advertiser loyalty and are
available at attractive prices. Such acquisitions will only be made in
circumstances in which management believes that such acquisitions would
contribute to the Company's overall growth strategy, whether through revenue
growth and/or cost reduction opportunities, and represent attractive values
based on price.
 
MEDIANEWS GROUP, INC.'S MANAGEMENT OF NEWSPAPER OPERATIONS
 
    MNG provides certain corporate services to the Company and its subsidiaries
and other newspaper companies controlled by Messrs. Singleton and Scudder, which
provide the Company the economic efficiencies of sharing corporate overhead with
other newspaper companies. Garden State and Denver Newspapers have engaged MNG
to operate and manage their business affairs and newspapers under the terms of a
management agreement. MNG, which is owned entirely by Messrs. Singleton and
Scudder, allocates its expenses as management fees to each affiliate based upon
the amount of time and resources devoted to each affiliate. Management fees are
based upon MNG's actual expenses, and MNG earns only a nominal profit.
 
    Services provided by MNG to Garden State and Denver Newspapers include
accounting, tax, merger and acquisition, newsprint purchasing, advertiser
contracts and relations management, human resource and labor relations, debt
administration, budget and operating plan review, cash management and some
retail advertising billing services. In addition, MNT, a division of MNG,
provides electronic media services, including website development and
maintenance, to each of the Company's daily newspapers. A significant portion of
MNG's time and resources is devoted to the affairs of Garden State and Denver
Newspapers.
 
    MNG's commitment to editorial quality is an integral part of its overall
management strategy. While MNG does not maintain any centralized editorial
control over the newspapers it manages, MNG does maintain high standards for
local news coverage by utilizing its extensive contacts, trade reputation and
opportunities for career advancement throughout the Company and its affiliates
to attract and retain talented editorial personnel.
 
GARDEN STATE'S NEWSPAPER PROPERTIES
 
    ALAMEDA NEWSPAPER GROUP.  The Alameda Newspaper Group is located in Alameda
County, approximately 20 miles east of San Francisco, California, and publishes
six morning daily newspapers. The Alameda Newspaper Group consists of THE
OAKLAND TRIBUNE, THE DAILY REVIEW, TRI-VALLEY HERALD, THE ARGUS, ALAMEDA
TIMES-STAR and SAN MATEO COUNTY TIMES. All the newspapers except the San Mateo
County Times also publish a Sunday newspaper. These newspapers cover the city of
Oakland, California, and five affluent suburban markets located immediately
south, southeast and southwest of Oakland in Alameda County and San Mateo
County. The Alameda Newspaper Group also publishes THE ALAMEDA ACCENT, SAN BRUNO
HERALD, MILBRAE RECORD PROGRESS, DALY CITY RECORD/BRISBANE BEE, TIMES WEEKEND
and THE COASTSIDE CHRONICLE on Saturday. The Alameda Newspaper Group had total
daily and Sunday paid circulation of approximately 234,000 and 196,000,
respectively, as of March 31, 1997.
 
    SAN GABRIEL VALLEY NEWSPAPER GROUP.  The San Gabriel Valley Newspaper Group
is located in West Covina, California, approximately 10 miles east of Los
Angeles, California, and publishes three morning daily newspapers. The San
Gabriel Valley Newspaper Group consists of the PASADENA STAR-NEWS, SAN GABRIEL
VALLEY TRIBUNE and WHITTIER DAILY NEWS. These newspapers cover the cities of
Pasadena, West Covina and Whittier, California. The San Gabriel Valley Newspaper
Group also publishes the HIGHLANDER newspapers, CHEERS, CLASS FORCE, THE STAR,
WHITTIER REVIEW and THE SHOPPER, weekly newspapers distributed
 
                                       6
<PAGE>
in and around these same cities. The San Gabriel Valley Newspaper Group had
total daily and Sunday paid circulation of approximately 119,500 and 120,000,
respectively, as of March 31, 1997.
 
    YORK.  York Newspaper Company, a partnership owned 57.5% by York Newspaper,
Inc. ("YNI"), a wholly owned subsidiary of Garden State Investments, Inc.,
publishes THE YORK DISPATCH, the YORK SUNDAY NEWS and THE YORK DAILY RECORD in
York, Pennsylvania, approximately 30 miles south of Harrisburg, Pennsylvania.
These newspapers are published under the terms of a joint operating agreement
("JOA"). Under the terms of the JOA, all operations, other than news and
editorial, are controlled by the partnership. YNI maintains its own editorial
staff and produces the editorial content of both THE YORK DISPATCH and the YORK
SUNDAY NEWS. The York Newspaper Company also publishes the Weekly Record each
Tuesday. The York Newspaper Company had a daily and Sunday paid circulation of
approximately 83,000 and 93,000, respectively, as of March 31, 1997.
 
    NORTH JERSEY NEWSPAPERS COMPANY.  North Jersey Newspapers Company is located
in Passaic, New Jersey, approximately 15 miles west of New York City, and
publishes a morning daily newspaper, the HERALD NEWS, seven days a week, and 30
weekly newspapers. The HERALD NEWS had a daily and Sunday paid circulation of
approximately 55,000 and 41,000, respectively, as of March 31, 1997. The
weeklies, most of which are free distribution publications in Bergen, Warren,
Union, Middlesex and Passaic Counties, have a midweek and weekend distribution
of approximately 680,000 and 150,000, respectively, as of March 31, 1997.
 
    LOWELL.  THE SUN, acquired July 31, 1997, is located in Lowell,
Massachusetts, approximately 30 miles north of Boston, and publishes an evening
newspaper five days a week and morning editions on Saturday and Sunday. THE SUN
had daily and Sunday paid circulation of approximately 52,000 and 56,000,
respectively, at March 31, 1997.
 
    EASTON.  THE EXPRESS-TIMES is located in Easton, Pennsylvania, approximately
60 miles north of Philadelphia, Pennsylvania, and publishes a morning newspaper
seven days a week. THE EXPRESS-TIMES also publishes three weekly newspapers: THE
BETHLEHEM STAR, TWO RIVERS SHOPPING TIMES and the HUNTERDON MARKETPLACE, which
are distributed in the area surrounding Easton, Pennsylvania. THE EXPRESS-TIMES
had total daily and Sunday paid circulation of approximately 50,000 and 48,000,
respectively, as of March 31, 1997.
 
    PITTSFIELD.  THE BERKSHIRE EAGLE is located in Pittsfield, Massachusetts,
approximately 30 miles southeast of Albany, New York, and publishes a morning
newspaper seven days a week. THE BERKSHIRE EAGLE also publishes a weekly
newspaper, THE SHOPPER, a broadsheet shopper circulated free to non-subscribers
in Berkshire County. THE BERKSHIRE EAGLE had total daily and Sunday paid
circulation of approximately 30,500 and 35,000, respectively, as of March 31,
1997.
 
    WOODBURY.  The GLOUCESTER COUNTY TIMES is located in Woodbury, New Jersey,
approximately 15 miles south of Philadelphia, Pennsylvania, and publishes an all
day newspaper five days a week and a Sunday newspaper. The GLOUCESTER COUNTY
TIMES also publishes THE ADVERTISER, a weekly shopper. The GLOUCESTER COUNTY
TIMES had total daily and Sunday paid circulation of approximately 29,000 as of
March 31, 1997.
 
    LAS CRUCES.  The Las Cruces Sun-News is located in Las Cruces, New Mexico,
approximately 45 miles north of El Paso, Texas, and publishes a morning
newspaper seven days a week. The LAS CRUCES SUN-NEWS also publishes the VOZ DEL
VALLE, a weekly Spanish language newspaper, and THE SHOPPING TIMES, a weekly
shopper. The LAS CRUCES SUN-NEWS had total daily and Sunday paid circulation of
approximately 22,000 and 22,500, respectively, as of March 31, 1997.
 
    EUREKA.  The TIMES-STANDARD is located in Eureka, California, approximately
250 miles north of San Francisco, and publishes a morning newspaper seven days a
week. The TIMES-STANDARD also publishes two weekly newspapers, THE BUYER'S GUIDE
and ON THE MARKET, which are distributed in and around the areas
 
                                       7
<PAGE>
surrounding Eureka, California. The TIMES-STANDARD had daily and Sunday
circulation of approximately 21,500 and 23,000, respectively, as of March 31,
1997.
 
    LEBANON.  The LEBANON DAILY NEWS is located in Lebanon, Pennsylvania,
approximately 35 miles northeast of York, Pennsylvania, and 30 miles east of
Harrisburg, Pennsylvania. The LEBANON DAILY NEWS publishes an evening newspaper
five days a week and morning editions on Saturday and Sunday. The LEBANON DAILY
NEWS also publishes the PALM ADVERTISER, a weekly newspaper, which is
distributed in and around Lebanon, Pennsylvania. Daily and Sunday paid
circulation at the LEBANON DAILY NEWS was approximately 21,000 at March 31,
1997.
 
    HANOVER.  THE EVENING SUN is located in Hanover, Pennsylvania, approximately
20 miles southwest of York, Pennsylvania, and 40 miles south of Harrisburg,
Pennsylvania. THE EVENING SUN publishes an evening newspaper five days a week
and morning editions on Saturday and Sunday. THE EVENING SUN also publishes a
weekly newspaper, THE COMMUNITY SUN. THE EVENING SUN had daily and Sunday paid
circulation of approximately 21,000 and 20,500, respectively, as of March 31,
1997.
 
    FITCHBURG.  The SENTINEL & ENTERPRISE is located in Fitchburg,
Massachusetts, approximately 40 miles northwest of Boston, Massachusetts, and
approximately 30 miles west of Lowell, Massachusetts, and publishes an evening
newspaper five days a week and morning editions on Saturday and Sunday. The
SENTINEL & ENTERPRISE also publishes two weekly newspapers: NORTH COUNTY LEADER
and THE INDEPENDENT, which are distributed in and around areas surrounding
Fitchburg, Massachusetts. The SENTINEL & ENTERPRISE had total daily and Sunday
paid circulation of approximately 19,500 and 20,000, respectively, as of March
31, 1997.
 
    COUNCIL BLUFFS.  THE DAILY NONPAREIL is located in Council Bluffs, Iowa,
which is adjacent to Omaha, Nebraska, on the Missouri River. THE DAILY NONPAREIL
publishes an evening newspaper five days a week and morning editions on Saturday
and Sunday. In addition, THE DAILY NONPAREIL also publishes two weekly
newspapers: THE MIDLANDS SHOPPER GUIDE and THE POTTAWATOMIE BULLETIN. At March
31, 1997, THE DAILY NONPAREIL had daily and Sunday paid circulation of
approximately 16,000 and 18,000, respectively.
 
    BRATTLEBORO.  The BRATTLEBORO REFORMER is located in Brattleboro, Vermont,
approximately 65 miles east of Albany, New York, and publishes a morning
newspaper seven days a week. The BRATTLEBORO REFORMER had daily and Sunday
circulation of approximately 11,000 and 12,500, respectively, as of March 31,
1997.
 
    SALEM.  TODAY'S SUNBEAM is located in Salem, New Jersey, approximately 35
miles south of Philadelphia, Pennsylvania, and publishes a morning paper six
days a week. TODAY'S SUNBEAM also publishes THE RECORD, a weekly newspaper.
TODAY'S SUNBEAM had total daily and Sunday circulation of approximately 10,000
as of March 31, 1997.
 
    BRIDGETON.  The BRIDGETON NEWS is located in Bridgeton, New Jersey,
approximately 40 miles south of Philadelphia, Pennsylvania, and publishes an
evening newspaper six days a week. The BRIDGETON NEWS had daily circulation of
approximately 9,000 as of March 31, 1997.
 
    NORTH ADAMS.  The NORTH ADAMS TRANSCRIPT is located in North Adams,
Massachusetts, approximately 30 miles east of Albany, New York, and publishes an
evening newspaper six days a week and a weekly newspaper, THE TRANSCRIPT
SPOTLIGHT. The NORTH ADAMS TRANSCRIPT had daily circulation of 8,000 at March
31, 1997.
 
    BENNINGTON.  The BENNINGTON BANNER is located in Bennington, Vermont,
approximately 35 miles east of Albany, New York, and publishes a morning
newspaper seven days a week. The BENNINGTON BANNER also publishes the MANCHESTER
JOURNAL, a paid weekly newspaper distributed on Wednesdays in Manchester,
Vermont, and The BENNINGTON SHOPPER, a free weekly shopper. The BENNINGTON
BANNER had daily and Sunday circulation of approximately 8,000 as of March 31,
1997.
 
                                       8
<PAGE>
    GRAHAM.  THE GRAHAM LEADER is located in Graham, Texas, approximately 90
miles northwest of Fort Worth, Texas. THE GRAHAM LEADER is a biweekly newspaper
with a total paid circulation of approximately 4,900 as of March 31, 1997. THE
GRAHAM LEADER also publishes the LAKE COUNTRY SUN and the LAKE COUNTRY SHOPPER
each Thursday. In addition, the JACKSBORO GAZETTE-NEWS and THE JACK COUNTY
HERALD are weekly newspapers published each Monday and Thursday, respectively.
Graham Newspapers recently purchased THE OLNEY ENTERPRISE, a weekly newspaper.
 
DENVER NEWSPAPERS--UNCONSOLIDATED SUBSIDIARY
 
    THE DENVER POST.  THE DENVER POST had daily and Sunday paid circulation of
approximately 354,000 and 475,000, respectively, as of March 31, 1997. THE
DENVER POST is a traditional broadsheet-formatted newspaper. Management believes
that THE DENVER POST is one of the most respected newspapers in its region,
serving as the preferred choice for printed news. Management also believes that
THE DENVER POST'S editorial quality and content, as well as its broadsheet
format, provide it with a competitive advantage which has contributed to THE
DENVER POST being more successful than its primary competitor at attracting
newspaper readers moving into the Denver metropolitan area. As of March 31,
1997, THE DENVER POST had daily and Sunday circulation market share of
approximately 52.0% and 53.0%, respectively. In addition, THE DENVER POST'S
advertising linage market share averaged approximately 52.0% in fiscal 1997.
 
    Effective the second quarter of fiscal year 1995, Media General exercised
its warrant to acquire a 40% interest in Denver Newspapers for $40,000 and
received 40 shares of newly issued Class A common stock of Denver Newspapers. As
a result of Media General exercising its warrant, ANI reduced its equity pick-up
of Denver Newspapers from 100 percent to 60 percent effective the second quarter
of fiscal 1995.
 
    EASTERN COLORADO PUBLISHING COMPANY.  Eastern Colorado publishes the FORT
MORGAN TIMES, the JOURNAL-ADVOCATE and the LAMAR DAILY NEWS, daily newspapers
published in Fort Morgan, Sterling and Lamar, Colorado, with combined daily
circulation of approximately 12,000 as of March 31, 1997. Each of these daily
newspapers also publishes a weekly newspaper which includes the MORGAN TIMES
REVIEW, J. A. SHOPPER and the TRI-STATE TRADER. These weekly newspapers are
distributed free in and around each of the daily newspaper's geographic markets.
Eastern Colorado also publishes the AKRON NEWS REPORTER, BRUSH NEWS-TRIBUNE and
JULESBURG ADVOCATE, paid weekly newspapers distributed in Akron, Brush and
Julesburg, Colorado. In addition, on July 1, 1997, Eastern Colorado purchased
THE BURLINGTON RECORD and THE PLAINS DEALER, weekly newspapers published in
Burlington, Colorado.
 
ADVERTISING AND CIRCULATION REVENUE
 
    Advertising revenues are the largest component of a newspaper's revenues
followed by circulation revenues. Advertising rates in a given market are 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
trends can impact the decisions of advertisers and advertising rates.
 
    Advertising revenue includes RETAIL (local and national department stores,
specialty shops and other retailers), NATIONAL (national advertising accounts),
and CLASSIFIED advertising (employment, automotive,
 
                                       9
<PAGE>
real estate and personals). The contributions of Retail, National, Classified
and circulation revenues to total revenues for fiscal years 1997, 1996 and 1995
were as follows:
 
<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED JUNE 30,
                                                             -------------------------------------
                                                                1997         1996         1995
                                                                -----        -----        -----
<S>                                                          <C>          <C>          <C>
Retail.....................................................          42%          44%          47%
National...................................................           3            3            3
Classified.................................................          35           34           34
Circulation................................................          16           16           14
Other......................................................           4            3            2
                                                                    ---          ---          ---
                                                                    100%         100%         100%
                                                                    ---          ---          ---
                                                                    ---          ---          ---
</TABLE>
 
    Retail revenues as a percentage of total revenues have declined over the
last two years as a result of the strong performance of classified advertising
associated with a strong economy and low unemployment. In addition, circulation
grew at a higher rate as a result of price increases in fiscal 1996 associated
with higher newsprint prices.
 
NEWSPRINT
 
    Newsprint represents one of the largest costs of producing a newspaper. The
Company's newspapers buy newsprint from several suppliers under arrangements
covering MNG affiliates, resulting in what management believes are some of the
most favorable newsprint prices in the industry. In fiscal years 1997, 1996 and
1995, the Company's subsidiaries consumed approximately 76,000, 62,400 and
61,600 tons of newsprint, respectively, and during the same periods incurred
newsprint expense of approximately $41.1 million, $42.5 million and $30.5
million, respectively. Newsprint expense as a percentage of revenue for fiscal
year 1997, 1996 and 1995 was 13.6%, 18.5% and 14.3%, respectively. Newsprint
expense varies between years because of fluctuations in prices and consumption.
Newsprint expense as a percentage of revenue decreased in fiscal 1997 over
fiscal 1996, primarily because of a decrease of approximately 25.0% in the
average cost per ton of newsprint consumed. The increase between 1996 and 1995
was due to an increase of approximately 37.6% in the average cost per ton of
newsprint consumed at all of Garden State's newspapers.
 
    The steady increase in newsprint prices came to a halt in the second quarter
of calendar 1996 and, beginning in May, 1996, newsprint suppliers began lowering
prices. From May 1996 to December 1996 the discounts offered by newsprint
suppliers continued to accelerate as newsprint supply outpaced demand. Believing
that newsprint demand was beginning to strengthen, several newsprint suppliers
announced a $75 per metric ton increase in newsprint effective March 1, 1997,
which was only partially successful as it has taken the newsprint suppliers
several months to obtain the full $75 per ton increase and not all publishers,
including the Company, are currently paying the full increase. However, because
of an industry wide year-over-year increase in newsprint consumption and a
strike at Fletcher Challenge, several suppliers have announced a $35 to $40 per
ton increase effective October 1, 1997, which would bring average transaction
prices to approximately $600 per metric ton on the East Coast and $610 per
metric ton on the West Coast. To hedge the historically volatile and cyclical
nature of newsprint prices, MNG has entered into fixed price contracts with
certain of its newsprint suppliers. MNG currently has 86,000 tons of newsprint
available under these fixed price contracts with a weighted average price of
$532 per metric ton over the next two and one-half to three years. MNG expects
to allocate approximately 60,000 metric tons of the fixed price newsprint for
fiscal 1998 to Garden State, with the remaining being allocated to Denver
Newspapers. These fixed price contracts and the allocations thereunder currently
allow Garden State to purchase the majority of its newsprint at prices below the
announced October 1, 1997, price increase, as well as below current prices.
Accordingly, announced and future newsprint price increases during the
 
                                       10
<PAGE>
periods of the fixed price contracts are not expected to have a significant
impact on the Company's future cash flows from operations.
 
EMPLOYEE RELATIONS
 
    Garden State and Denver Newspapers combined employ approximately 4,400
full-time and 2,300 part-time employees, of which approximately 2,200 are
unionized. Currently, THE DENVER POST has agreements with the Guild and
Typographical unions, which expire on December 31, 1997. There are five
additional collective bargaining units at THE DENVER POST, of which three have
contracts that expired as of June 30, 1997. These three union contracts are
currently being negotiated and THE DENVER POST believes they will be able to
negotiate long-term favorable contracts and avoid any strikes or work slowdowns.
Approximately 600 full-time and part-time employees are unionized at Garden
State. There has never been a strike or work stoppage against any of the
Company's newspapers during the Company's ownership, and the Company believes
that its relations with its employees are generally good.
 
SEASONALITY
 
    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 the Company's
second fiscal quarter, is the Company's strongest revenue quarter of the year.
Due to generally poor weather and a lack of holidays, the first calendar
quarter, or the Company's third fiscal quarter, is the Company's weakest revenue
quarter of the year.
 
COMPETITION
 
    GENERAL
 
    Each of the Company's newspapers competes to varying degrees with magazines,
radio, television and cable television, as well as with some weekly publications
and other advertising media, including electronic media, for advertising and
circulation revenue. Competition for newspaper advertising is largely based upon
circulation, price and the content of the newspaper. A newspaper's coverage of
the market, generally determined by household penetration, is of significant
importance to advertisers and directly affects a newspaper's share of total
advertising revenues in the market. Management believes, however, that
advertisers generally regard newspaper advertising as the most effective method
of advertising promotions and pricing as compared to television, which is
generally used to advertise image.
 
    GARDEN STATE
 
    Garden State's suburban and small city daily newspapers are the dominant
local news and information source, with strong name recognition in their market
and no direct competition from similar daily newspapers published in their
markets. However, as with most small daily newspapers, some circulation
competition exists from larger daily newspapers which are usually published in
nearby metropolitan areas. Management believes larger daily newspapers with
circulation in Garden State's newspaper markets generally do not compete in any
meaningful way for local advertising revenues, a newspaper's main source of
revenues. Garden State's daily newspapers capture the largest share of local
advertising as a result of their direct coverage of the market. In addition,
management believes advertisers generally regard newspaper advertising as the
most effective method of advertising promotions and pricing as compared to
television, which is generally used to advertise image. Free weekly newspapers
generally depend solely upon advertising revenue and the distribution of
preprinted advertising circulars.
 
    DENVER NEWSPAPERS
 
    The DENVER POST competes with the ROCKY MOUNTAIN NEWS, which is owned by The
E. W. Scripps Company. Competition for newspaper advertising in Denver is
largely based upon circulation, reader
 
                                       11
<PAGE>
demographics and price. The competition experienced by the Eastern Colorado
newspapers is similar to that of Garden State, as previously discussed.
 
    ELECTRONIC MEDIA
 
    Many newspaper companies have begun publishing news and other content on the
world wide web. In addition, there are several new start-up companies which have
developed sites on the world wide web which are, by design, advertising and/or
subscription supported. Many of these sites target specific types of advertising
such as employment or auto classified.
 
    Due to many issues associated with advertising on the world wide web, such
as fragmentation and lack of meaningful research on viewers and penetration
levels, the Company does not view the world wide web as a competitive threat
today. However, as the issues mentioned above are resolved, advertising on the
world wide web will likely grow to meaningful levels. Accordingly, the Company
has developed a strategy which it believes will allow it to participate in the
advertising growth on the world wide web.
 
    In April 1997, MNG moved the electronic media group of Alameda Newspaper
Group to its Denver headquarters and established MNT, the electronic publishing
division of MNG. MNT is responsible for developing a world wide website for the
Company and each of its daily newspapers. In addition, MNT has and is continuing
to develop strategic alliances to enhance content, functionality and delivery.
Such strategic alliances include Microsoft, Pantheon and Ad-One Classified. The
Company believes the design, functionality and content of its websites will
attract viewers to continually return to its website(s) for news and
information, a key for advertisers. The Company expects to have websites
developed for all of its daily newspapers by March 31, 1998.
 
ITEM 2. PROPERTY
 
    Garden State's production facilities are, in most cases, complete newspaper
and office facilities. The principal operating facilities owned by Garden State
are located in Hayward, San Mateo, Union City, West Covina, Whittier and Eureka,
California; Council Bluffs, Iowa; Passaic, Butler, Westwood, Paramus, Bridgeton
and Woodbury, New Jersey; Easton, York, Hanover and Lebanon, Pennsylvania;
Pittsfield, North Adams and Fitchburg, Massachusetts; Las Cruces, New Mexico;
Bennington and Brattleboro, Vermont; and Graham, Texas. Facilities located in
Oakland, Pasadena and Pleasanton, California, are operated under long-term
leases. The principal operating facilities of Denver Newspapers are located in
Denver, Fort Morgan, Lamar and Sterling, Colorado. Denver Newspapers also leases
certain facilities in Denver, Colorado.
 
    The Company's management believes that all of its properties are generally
well maintained, in good condition and suitable for current operations. All of
the Company's equipment is adequately insured.
 
ITEM 3. LEGAL PROCEEDINGS
 
    The Company is involved in a number of legal proceedings which have arisen
in the ordinary course of business. In the opinion of management, the outcome of
these legal proceedings will not have a material adverse impact on the Company's
financial position or results of operations.
 
REGULATION AND ENVIRONMENTAL MATTERS
 
    Substantially all of the Company's facilities are subject to federal, state
and local laws concerning, among other things, emissions to the air, water
discharges, handling and disposal of wastes or otherwise relating to protection
of the environment. Compliance with these laws has not had, and management does
not expect it to have, a material effect upon the capital expenditures, net
income or competitive position of the Company. Environmental laws and
regulations and their interpretation, however, have changed rapidly in recent
years and may continue to do so in the future. Environmental Assessment Reports
of the
 
                                       12
<PAGE>
Company's properties have identified historic activities on certain of these
properties, as well as current and historic uses of properties in surrounding
areas, which may affect the Company's properties and require further study or
remedial measures. No material remedial measures are currently anticipated or
planned by the Company or required by regulatory authorities with respect to the
Company's properties. However, no assurance can be given that existing
Environmental Assessment Reports reveal all environmental liabilities, that any
prior owner of the Company's properties did not create a material environmental
condition not known to the Company, or that a material environmental condition
does not otherwise exist as to any such property.
 
    Subsidiaries of the Company which deliver newspapers by second-class mail
are required to obtain permits from, and to file an annual statement of
ownership with, the United States Postal Service.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
    None.
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
 
    The Class B common stock has no established trading market and is not widely
held. As of September 18, 1997, there were 8 holders of record of the Company's
Class B common stock.
 
    The Company's Class D, G, GSI and N common stock is not registered;
therefore, no public market exists for these classes of common stock. On
September 10, 1997, the Class D, G, GSI and N common stock had 7, 11, 10 and 12
holders of record, respectively.
 
    ANI has never paid cash dividends on its common stock and does not intend to
pay any cash dividends on its common stock in the foreseeable future. The
Company's long-term debt contains covenants which, among other things, restrict
the payment of dividends by ANI to its shareholders. In addition, as a holding
company, ANI's ability to pay cash dividends will be dependent on the receipt of
dividends or other payments from its subsidiaries. Certain debt agreements of
subsidiaries maturing prior to July 1, 1999, prohibit such subsidiaries from
paying dividends to ANI. Other debt agreements of the subsidiaries restrict the
subsidiaries from paying dividends to ANI prior to July 1, 1999, and then only
to the extent the Company achieves certain cash flow levels.
 
                                       13
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                      FISCAL YEAR ENDED JUNE 30,
                                         -----------------------------------------------------
                                           1997       1996       1995       1994       1993
                                         ---------  ---------  ---------  ---------  ---------
                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                      <C>        <C>        <C>        <C>        <C>
INCOME STATEMENT DATA(a):
Revenues
  Advertising..........................  $ 242,914  $ 197,954  $ 179,268  $ 159,653  $ 148,237
  Circulation..........................     48,451     39,930     30,517     25,198     25,642
  Other................................     11,537      7,546      3,260      1,792      1,931
                                         ---------  ---------  ---------  ---------  ---------
Total Revenues.........................    302,902    245,430    213,045    186,643    175,810
Cost of Sales..........................    106,476     98,469     79,098     68,531     63,930
Selling, General and Administrative....    125,697    100,290     88,889     79,217     76,864
Management Fees........................      2,205      2,008      1,666      1,552      1,402
Depreciation and Amortization..........     24,689     21,841     18,709     19,900     21,094
Interest Expense.......................     48,370     41,932     38,611     25,982     24,064
Gain on Sale of Newspaper Property.....     30,575      8,291      4,153      6,536     --
Income (Loss) in Unconsolidated
  Subsidiary...........................      9,287      2,541      5,748      8,646    (15,051)
Income (Loss) Before Income Taxes,
  Cumulative Effect of Accounting
  Change and Extraordinary Loss........     27,332    (12,789)    (5,436)   (13,260)   (28,845)
Net Income (Loss)......................     17,494    (10,932)    (8,293)   (10,749)    32,593
Earnings (Loss) Per Share..............  $    7.56  $   (4.72) $   (3.58) $   (7.54) $   12.30
 
OTHER FINANCIAL DATA:
Capital Expenditures...................  $   8,836  $   8,079  $   4,284  $   3,380  $   6,564
Cash Flow from:
  Operating Activities.................     31,238      8,658     22,876      7,039      4,971
  Investing Activities.................   (148,657)     6,900      1,255    (15,840)   (12,734)
  Financing Activities.................    121,748    (28,226)   (15,742)     9,305      7,841
EBITDA(b)..............................     68,524     44,663     43,392     37,343     33,614
 
BALANCE SHEET DATA:
Total Assets...........................  $ 428,560  $ 245,665  $ 252,926  $ 251,158  $ 278,283
Long-Term Debt and Capital Leases......    482,401    325,700    324,442    322,937    231,341
Other Long-Term Liabilities and
  Obligations..........................      5,488      8,101      5,042      3,852    110,036
Total Shareholders' Deficit............   (114,023)  (131,517)  (120,585)  (112,292)   (99,637)
</TABLE>
 
------------------------
 
(FOOTNOTES ON THE FOLLOWING PAGE)
 
                                       14
<PAGE>
(a) Revenues and operating expenses are affected by the following acquisition
    and disposition transactions:
 
    (i) On November 30, 1992, a subsidiary of the Company acquired the
        circulation list and the rights to the name of THE OAKLAND TRIBUNE.
        Concurrently, the former owner ceased its publication of THE OAKLAND
        TRIBUNE, and the Company began publishing its own version of THE OAKLAND
        TRIBUNE, using the existing facilities and resources of the Alameda
        Newspaper Group. THE OAKLAND TRIBUNE, in its current form, has
        substantial editorial and advertising overlap with other publications of
        the Alameda Newspaper Group and, thus, is not run as a stand-alone
        newspaper.
 
    (ii) On May 31, 1994, a subsidiary of the Company purchased the assets of
         THE EXPRESS-TIMES, which contributed $1.5 million to fiscal 1994
         revenues of the Company.
 
   (iii) On June 27, 1994, a subsidiary of the Company closed the YPSILANTI
         PRESS, a daily newspaper published in Ypsilanti, Michigan, and sold its
         circulation list for $9.0 million. The sale resulted in a pre-tax gain
         of approximately $6.5 million. This newspaper contributed approximately
         $4.3 million in fiscal 1993 and $4.1 million of revenues in fiscal 1994
         prior to its disposition.
 
    (iv) On August 1, 1994, a subsidiary of the Company sold substantially all
         the assets used in the publication of the BRISTOL PRESS and three
         weekly newspapers distributed in and around Bristol, Connecticut for
         $14.5 million. The sale resulted in a pre-tax gain of approximately
         $4.2 million. This newspaper contributed $6.2 million of revenue in
         fiscal 1994 and $0.5 million of revenue prior to its sale in fiscal
         1995.
 
    (v) On November 18, 1994, a subsidiary of the Company acquired substantially
        all the assets used in the publication of the GLOUCESTER COUNTY TIMES
        and TODAY'S SUNBEAM, daily newspapers located in Woodbury and Salem, New
        Jersey, respectively, for $10.9 million. These newspapers contributed
        $8.4 million of revenues to the Company in fiscal 1995.
 
    (vi) On August 31, 1995, a subsidiary of the Company acquired substantially
         all the assets used in the publication of THE BERKSHIRE EAGLE,
         BENNINGTON BANNER and BRATTLEBORO REFORMER, daily newspapers published
         in Pittsfield, Massachusetts; Bennington and Brattleboro, Vermont,
         respectively, for approximately $34.6 million. These newspapers
         contributed $21.6 million of revenues in fiscal year 1996.
 
   (vii) On March 10, 1996, a subsidiary of the Company acquired substantially
         all the assets used in the publication of the SAN MATEO COUNTY TIMES, a
         daily newspaper, and five weekly newspapers published in San Mateo
         County, California, for approximately $15.0 million. These newspapers
         contributed $4.0 million of revenue to the Company in fiscal 1996.
 
  (viii) On May 1, 1996, a subsidiary of the Company sold the common stock of
         the Johnstown Tribune Publishing Company which publishes THE
         TRIBUNE-DEMOCRAT and two weekly newspapers distributed in and around
         Johnstown, Pennsylvania, for $50.6 million. The sale resulted in a
         pre-tax gain of approximately $8.3 million. These newspapers
         contributed approximately $14.9 million of revenues in fiscal 1996
         prior to its sale and $17.4 million in fiscal 1995. In connection with
         the sale of the Johnstown Tribune Publishing Company described above,
         the Company acquired the NORTH ADAMS TRANSCRIPT and the BRIDGETON NEWS,
         daily newspapers published in North Adams, Massachusetts, and
         Bridgeton, New Jersey, respectively. These newspapers contributed
         revenue of approximately $1.2 million in fiscal 1996.
 
    (ix) On October 31, 1996, a subsidiary of the Company acquired substantially
         all the assets used in the publication of the PASADENA STAR-NEWS, SAN
         GABRIEL VALLEY TRIBUNE, WHITTIER DAILY NEWS, TIMES-STANDARD and THE
         EVENING SUN, daily newspapers distributed primarily in Pasadena, West
         Covina, Whittier and Eureka, California, and Hanover, Pennsylvania,
         respectively, and seven weekly
 
                                       15
<PAGE>
         newspapers distributed in and around these same cities, for a total of
         approximately $130.0 million. These newspapers contributed $45.9
         million of revenue to the Company in fiscal year 1997.
 
    (x) On February 13, 1997, a subsidiary of the Company sold substantially all
        the assets used in the publication of the POTOMAC NEWS and two weekly
        publications for $47.7 million in cash plus an adjustment for working
        capital. The Company recognized a pre-tax gain on the sale of
        approximately $30.6 million, net of selling expenses, in its third
        fiscal quarter. These newspapers contributed approximately $7.5 million
        of revenues in fiscal 1997 prior to their sale and approximately $12.0
        million in fiscal 1996.
 
    (xi) On February 28, 1997, a subsidiary of the Company acquired
         substantially all the assets used in the publication of the SENTINEL &
         ENTERPRISE, LEBANON DAILY NEWS and THE DAILY NONPAREIL, daily
         newspapers located in Fitchburg and Leominster, Massachusetts; Lebanon,
         Pennsylvania; and Council Bluffs, Iowa, respectively, and five weekly
         newspapers distributed in and around these same cities, for a total of
         approximately $51.2 million in cash. These newspapers combined
         contributed approximately $7.9 million of revenue to the Company in
         fiscal year 1997.
 
(b) EBITDA represents total revenues less cost of sales, selling, general and
    administrative expense and management fees charged by MNG. Although EBITDA
    is not a measure of performance calculated in accordance with GAAP, the
    Company believes that EBITDA is an indicator and measurement of its leverage
    capacity and debt service ability. EBITDA should not be considered as a
    measure of profitability, liquidity or as an alternative to net income, cash
    flows generated by operating, investing or financing activities or other
    financial statement data presented in the Company's consolidated financial
    statements or any other GAAP measure as an indicator of the Company's
    performance.
 
                                       16
<PAGE>
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
of the Company should be read in conjunction with the Selected Financial Data
and the Company's Consolidated Financial Statements. ANI is a holding company
and has no newspaper operations or sources of income of its own. ANI's
newspapers are operated through Garden State's subsidiaries and its
unconsolidated subsidiary, Denver Newspapers.
 
OVERVIEW
 
    The Company's Garden State subsidiary is in the business of owning and
operating market dominant daily and weekly suburban newspapers. Denver
Newspapers operates the Company's only major metropolitan newspaper, THE DENVER
POST. The Company's newspapers derive their revenues primarily from advertising
and circulation. The Company's primary operating expenses (before depreciation
and amortization) are employee salaries, newsprint, marketing and distribution.
 
    Since its inception, the Company has made leveraged acquisitions. A majority
of the value of the assets acquired was allocated to intangible assets,
principally subscriber accounts and goodwill, which management believes are
generally the most valuable assets of a newspaper. As a result of the
amortization expense associated with these intangible assets, as well as the
interest expense associated with acquisition indebtedness, debt fees and
make-whole premiums and historical dividends in connection with preferred stock
that was redeemed, the Company has accumulated a significant deficit since its
inception.
 
    Since July 1, 1994, subsidiaries of the Company have completed several
strategic transactions that have affected its financial condition and results of
operations. The following is a summary of these transactions. The revenue
numbers provided below are from the actual results of operations of the
respective newspapers since their date of acquisition or prior to their
disposition.
 
    FISCAL 1997 TRANSACTIONS
 
    On February 28, 1997, a subsidiary of the Company acquired substantially all
the assets used in the publication of the SENTINEL & ENTERPRISE, LEBANON DAILY
NEWS and THE DAILY NONPAREIL, daily newspapers located in Fitchburg and
Leominster, Massachusetts; Lebanon, Pennsylvania; and Council Bluffs, Iowa,
respectively, and five weekly newspapers distributed in and around the same
cities. These newspapers combined contributed approximately $7.9 million in
revenues in fiscal year 1997.
 
    On February 13, 1997, a subsidiary of the Company sold substantially all the
assets used in the publication of the POTOMAC NEWS and two weekly publications.
The Company realized a pre-tax gain on the sale of approximately $30.6 million,
net of selling expenses, in its third fiscal quarter. These newspapers
contributed approximately $7.5 million of revenue in fiscal year 1997 prior to
its sale and approximately $12.0 million in fiscal year 1996.
 
    On October 31, 1996, a subsidiary of the Company acquired substantially all
of the assets used in the publication of the PASADENA STAR-NEWS, SAN GABRIEL
VALLEY TRIBUNE, WHITTIER DAILY NEWS, TIMES-STANDARD and THE EVENING SUN, daily
newspapers distributed primarily in Pasadena, West Covina, Whittier and Eureka,
California, and Hanover, Pennsylvania, respectively, and seven weekly newspapers
distributed in and around these same cities. These newspapers combined
contributed approximately $45.9 million in revenues in fiscal year 1997.
 
    FISCAL 1996 TRANSACTIONS
 
    On May 1, 1996, a subsidiary of the Company sold the common stock of the
Johnstown Tribune Publishing Company which publishes THE TRIBUNE DEMOCRAT and
two weekly newspapers located in
 
                                       17
<PAGE>
Johnstown, Pennsylvania. The sale resulted in a pre-tax gain of approximately
$8.3 million in fiscal 1996. The TRIBUNE DEMOCRAT and two weekly newspapers
contributed combined revenues of $14.9 million and approximately $17.4 million
in fiscal years ended June 30, 1996 and 1995, respectively. In conjunction with
the sale, a subsidiary of the Company also acquired the assets used in the
publication of the NORTH ADAMS TRANSCRIPT and the BRIDGETON NEWS, daily
newspapers published in North Adams, Massachusetts, and Bridgeton, New Jersey,
respectively. The NORTH ADAMS TRANSCRIPT and the BRIDGETON NEWS contributed
combined revenues of $1.2 million in fiscal year 1996.
 
    On March 10, 1996, a subsidiary of the Company acquired substantially all
the assets used in the publication of the SAN MATEO COUNTY TIMES, a daily
newspaper, and five weekly newspapers published in San Mateo County, California.
These publications contributed combined revenues of approximately $4.0 million
in fiscal year 1996.
 
    On August 31, 1995, a subsidiary of the Company purchased substantially all
the assets used in the publication of THE BERKSHIRE EAGLE, BRATTLEBORO REFORMER
and BENNINGTON BANNER, daily newspapers published in Pittsfield, Massachusetts;
Brattleboro and Bennington, Vermont, respectively, and the MANCHESTER JOURNAL, a
weekly newspaper published in Manchester, Vermont (the "New England Newspapers"
acquistion). These publications contributed combined revenues of approximately
$21.6 million in fiscal year 1996.
 
    FISCAL 1995 TRANSACTIONS
 
    On November 18, 1994, a subsidiary of the Company purchased substantially
all the assets used in the publication of the GLOUCESTER COUNTY TIMES and
TODAY'S SUNBEAM, daily newspapers published in Woodbury and Salem, New Jersey,
respectively. These publications contributed combined revenues of approximately
$8.4 million in fiscal year 1995.
 
    On August 1, 1994, a subsidiary of the Company sold substantially all the
assets used in the publication of the BRISTOL PRESS, and three weekly newspapers
located in Bristol, Connecticut. The sale resulted in a pre-tax gain of
approximately $4.2 million in fiscal 1995. The BRISTOL PRESS and the three
weekly newspapers contributed combined revenues of approximately $0.5 million
and $6.2 million in fiscal years ended 1995 and 1994, respectively.
 
RESULTS OF OPERATIONS
 
    Set forth below is certain summary historical financial data for fiscal
1997, 1996 and 1995, in each case including the percentage change between fiscal
years.
 
                                       18
<PAGE>
                       SUMMARY HISTORICAL FINANCIAL DATA
                             (DOLLARS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                            FISCAL YEAR ENDED JUNE 30,      FISCAL YEAR ENDED JUNE 30
                                          -------------------------------  ----------------------------
                                            1997       1996       1995     1997 VS.1996   1996 VS.1995
                                          ---------  ---------  ---------  -------------  -------------
<S>                                       <C>        <C>        <C>        <C>            <C>
Total Revenues..........................  $ 302,902  $ 245,430  $ 213,045         23.4%          15.2%
Cost of Sales...........................    106,476     98,469     79,098          8.1           24.5
Selling, General and Administrative.....    125,697    100,290     88,889         25.3           12.8
Management Fees.........................      2,205      2,008      1,666          9.8           20.5
Depreciation & Amortization.............     24,689     21,841     18,709         13.0           16.7
Interest Expense........................     48,370     41,932     38,611         15.3            8.6
Other...................................      7,995      4,511      2,405         77.2           87.5
                                          ---------  ---------  ---------
    Total Costs and Expenses............    315,432    269,051    229,378         17.2           17.3
Income in Unconsolidated Subsidiary.....      9,287      2,541      5,748        265.5          (55.8)
Income (Loss)...........................  $  17,494  $ (10,932) $  (8,293)          (a)          31.8%
</TABLE>
 
------------------------
 
(a) not meaningful
 
COMPARISON OF FISCAL YEARS ENDED JUNE 30, 1997 AND 1996
 
REVENUES
 
    Revenues increased $57.5 million or 23.4% in fiscal year 1997 as compared to
fiscal year 1996. The increase in revenue was attributable to the New England
Newspapers acquisition; the March 1996 acquisition of the SAN MATEO COUNTY
TIMES; the April 30, 1996, acquisition of the NORTH ADAMS TRANSCRIPT and the
BRIDGETON NEWS; the October 31, 1996, acquisition of the PASADENA STAR-NEWS, SAN
GABRIEL VALLEY TRIBUNE, WHITTIER DAILY NEWS, TIMES-STANDARD and THE EVENING SUN;
and the February 28, 1997, acquisition of the SENTINEL & ENTERPRISE, LEBANON
DAILY NEWS and THE DAILY NONPAREIL. Combined, the acquisitions discussed above
increased revenues approximately $78.5 million in fiscal year 1997. These
revenue increases were partially offset by a $19.4 million decline in revenue
resulting from the sale of the Johnstown Tribune Publishing Company on May 1,
1996, and the POTOMAC NEWS on February 13, 1997. Excluding the newspaper
operations described above, the Company's remaining newspaper operations ("same
newspaper basis") combined posted a $1.6 million decrease in operating revenues
for fiscal year 1997. However, excluding Alameda Newspaper Group (without San
Mateo), on a same newspaper basis the Company posted a $3.6 million or 3.3%
increase in operating revenues. The increase in operating revenue at these
newspapers was primarily attributable to a combined 9.6% and 2.2% gain in
classified and retail revenue, respectively. Without the acquisition of the SAN
MATEO COUNTY TIMES, year-over-year comparisons of the Alameda Newspaper Group
continued to be negatively affected by declines in circulation revenue caused by
increased use of discounts and a significant number of out-of-business accounts
(loss of certain accounts as a result of store mergers or bankruptcies);
however, such comparisons turned positive late in the fourth quarter of fiscal
1997 and are expected to show continued improvement throughout fiscal 1998.
 
COST OF SALES
 
    Cost of sales increased $8.0 million or 8.1% in fiscal year 1997 compared to
fiscal 1996. The aforementioned acquisitions caused cost of sales to increase
approximately $25.8 million in fiscal year 1997. However, this increase was
offset in part by a $7.0 million decrease in cost of sales resulting from the
sale of the Johnstown Tribune Publishing Company and the POTOMAC NEWS. Excluding
acquisition and disposition transactions, cost of sales decreased approximately
$10.6 million or 13.4%. The decrease in cost of sales on a same newspaper basis
was almost entirely the result of a 25% decrease in the average cost of
 
                                       19
<PAGE>
newsprint. Excluding newsprint, cost of sales on a same newspaper basis
increased approximately $0.4 million or 1.0% in fiscal year 1997.
 
SELLING, GENERAL AND ADMINISTRATIVE
 
    Selling, general and administrative ("SG&A") expenses increased $25.4
million or 25.3% in fiscal year 1997 as compared to fiscal year 1996. The
aforementioned acquisitions resulted in SG&A expense increases of $29.3 million;
however, this was in part offset by a $6.1 million reduction in SG&A expense
associated with the sale of the Johnstown Tribune Publishing Company and the
POTOMAC NEWS. Excluding the acquisition and disposition transactions, SG&A
expense increased $2.2 million or 2.4%. The increase in SG&A expense is
associated with increases in advertising and circulation expenditures, which
were primarily related to ongoing efforts to increase advertising linage and
circulation.
 
OTHER EXPENSE
 
    Other expense, net, increased $3.5 million. The majority of the increase is
attributable to a second quarter fiscal year 1997 charge to write off
approximately $4.4 million of fees and other costs associated with Garden
State's credit facility entered into on October 31, 1996. The increase was
partially offset by $1.1 million of financing costs recorded in the same period
of fiscal year 1996 associated with the New England Newspapers acquisition.
 
DENVER NEWSPAPERS--UNCONSOLIDATED SUBSIDIARY
 
    Net income applicable to common stock of Denver Newspapers increased $11.2
million in fiscal 1997 compared to fiscal 1996. The increase in fiscal 1997 was
primarily the result of a $17.4 million increase in operating profit, offset by
a $6.9 million increase in tax expense, as compared to the prior year. The
increase in operating profit was primarily attributable to a $21.4 million or
11.7% increase in revenues and $8.9 million decrease in newsprint expense, which
was offset by increased operating cost, primarily associated with higher sales
and circulation at THE DENVER POST and the inclusion of a full year's operations
of Eastern Colorado (acquired May 1, 1996). The majority of the increase in
operating revenues is attributable to a 11% growth in advertising linage, which
was the result of an increase in market size as well as market share at THE
DENVER POST. Newsprint expense decreased at THE DENVER POST primarily as a
result of a 24% decrease in the average cost of newsprint consumed, which was
partially offset by a 11% increase in consumption. Denver Newspapers'
acquisition of three daily and three paid weekly newspapers in Eastern Colorado
accounted for approximately 3.4% of the increase in net income applicable to
common stock.
 
NET INCOME
 
    ANI recorded net income of approximately $17.5 million in fiscal 1997;
however, after excluding the pretax gain on the sale of the POTOMAC NEWS of
$30.6 million, the effect of the $4.4 million charge described above, and the
$8.8 million extraordinary loss from the prepayment of Garden State's senior
notes, ANI would have recorded an adjusted net income of $0.1 million, as
compared to an adjusted net loss of $17.8 million in fiscal year 1996, as
adjusted to exclude the gain on the sale of the Johnstown Tribune Publishing
Company, the write-off of fees and other costs associated with the Garden State
credit facility, and start-up costs associated with the acquisition and
integration of the SAN MATEO COUNTY TIMES. The increase in adjusted net income
is primarily attributable to a $21.0 million increase in operating profit and a
$6.7 million increase in the equity pick-up from Denver Newspapers offset by a
$6.4 million increase in interest expense, primarily associated with increased
debt related to 1997 acquisitions and a $2.9 million reduction in tax benefits.
 
                                       20
<PAGE>
COMPARISON OF FISCAL YEARS ENDED JUNE 30, 1996 AND 1995
 
REVENUES
 
    Revenues increased $32.4 million or 15.2% in fiscal year 1996 as compared to
fiscal year 1995. The increase in revenue was primarily attributable to the
November 18, 1994, acquisition of the GLOUCESTER COUNTY TIMES and TODAY'S
SUNBEAM; the New England Newspapers acquisition; the March, 1996, acquisition of
the SAN MATEO COUNTY TIMES; and the April 30, 1996, acquisition of the NORTH
ADAMS TRANSCRIPT and BRIDGETON NEWS. Combined, the acquisitions discussed above
accounted for a $31.7 million increase in revenues in fiscal 1996. These revenue
increases were partially offset by a $3.1 million decline in revenue resulting
from the sale of the BRISTOL PRESS on August 1, 1994, and the sale of the
Johnstown Tribune Publishing Company on April 30, 1996. Excluding the newspaper
operations described above, the Company's remaining newspaper operations posted
a combined increase in revenues of approximately $3.8 million or 2.0%. All of
the Company's newspapers were impacted by a soft retail market in the last half
of the Company's fiscal year; however, retail advertising at Alameda Newspaper
Group and North Jersey Newspapers Company was particularly hard hit because of
major retailers filing for bankruptcy and/or store closings in their markets.
The Company's newspapers located in the northeastern United States were also
affected by the heavy snow in the winter of 1996. While retail advertising
declined slightly on a same newspaper basis, the Company experienced 3.9% and
7.5% growth in classified and circulation revenue, respectively. Overall revenue
growth, on a same newspaper basis, ranged from 0.4% to 10.2% for fiscal year
1996 compared to fiscal year 1995.
 
COST OF SALES
 
    Cost of sales increased $19.4 million or 24.5% in fiscal 1996 compared to
fiscal 1995. Approximately $12.3 million of the increase was attributable to the
aforementioned acquisitions. However, this increase was offset in part by a $0.8
million decrease in cost of sales resulting from the sale of the BRISTOL PRESS
and the Johnstown Tribune Publishing Company. Excluding acquisition and
disposition transactions, cost of sales increased approximately $7.9 million or
11.1%. The increase in cost of sales at existing newspapers was entirely the
result of increased newsprint cost associated with a 43% increase in the average
cost per ton of newsprint for fiscal 1996 compared to fiscal 1995. However, the
newsprint price increase was partially offset by an approximate 3,500 ton or
6.0% decrease in usage at the Company's existing newspapers, primarily
associated with efforts to conserve newsprint and the conversion to the 50-inch
web width at the majority of newspapers during fiscal 1996. Excluding newsprint,
cost of sales on a same newspaper basis decreased $0.9 million in fiscal 1996.
 
SELLING, GENERAL AND ADMINISTRATIVE
 
    Selling, general and administrative ("SG&A") expenses increased $11.4
million or 12.8% in fiscal 1996 compared to fiscal 1995. The aforementioned
acquisitions resulted in SG&A expense increases of $11.7 million; however, this
was in part offset by a $1.3 million reduction in SG&A expense associated with
the sale of the BRISTOL PRESS and the Johnstown Tribune Publishing Company.
Excluding the acquisition and disposition transactions, SG&A expense increased
$1.0 million or .2%. The small increase in SG&A expense at the Company's
existing newspapers was the result of the Company's continuing efforts to
control its operating expenses.
 
OTHER EXPENSE
 
    Other expense increased $2.1 million as a result of writing off
approximately $1.1 million of fees and other costs associated with the Garden
State credit facility entered into on August 31, 1995, which was used in the
aforementioned August 31, 1995 and March 10, 1996, acquisitions. Other expense
also increased $0.3 million as a result of certain start-up costs incurred in
conjunction with the combination and integration of the SAN MATEO COUNTY TIMES
operations with those of Alameda Newspaper Group.
 
                                       21
<PAGE>
DENVER NEWSPAPERS--UNCONSOLIDATED SUBSIDIARY
 
    Net income applicable to common stock of Denver Newspapers, before the
cumulative effect of accounting change, decreased $3.2 million in fiscal 1996
compared to fiscal 1995. The decrease in income was primarily the result of a
43.5% increase in the average cost of newsprint consumed in fiscal 1996, which
was only partially offset by the 12.9% growth in revenue in the most recent
fiscal year. The Company's share of Denver Newspapers' net income applicable to
common stock also declined as a result of Media General exercising their common
stock warrant and acquiring a 40% interest in Denver Newspapers effective the
second quarter of fiscal 1995. As a result, for the fiscal year ended June 30,
1996, the Company recorded 60% of Denver Newspapers' net income applicable to
common stock compared to 100% for the first quarter and 60% for the second,
third and fourth quarters of fiscal 1995.
 
NET INCOME
 
    ANI recorded a loss of approximately $10.9 million in fiscal 1996; however,
after excluding the gain on the sale of the Johnstown Tribune Publishing
Company, the write-off of fees and other costs associated with the Garden State
credit facility and start-up costs associated with the acquisition and
integration of the SAN MATEO COUNTY TIMES. ANI would have recorded an adjusted
loss of $17.8 million compared to a fiscal 1995 adjusted loss of $10.6 million,
after adjusting the loss to exclude the fiscal 1995 gain on the sale of the
BRISTOL PRESS of $4.2 million and the cumulative effect of accounting change of
$2.9 million and the gain on sale of common stock by Denver Newspapers. The
increase in the adjusted loss was primarily attributable to a $3.2 million
decrease in the equity pick-up of income in Denver Newspapers, a $3.3 million
increase in interest expense, primarily associated with the 1996 acquisitions
discussed above and a $1.9 million decrease in operating profit at Garden State.
These reductions in income were offset by a $1.9 million increase in tax
benefits in fiscal 1996, the majority of which was associated with the sale of
the Johnstown Tribune Publishing Company.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    The principal sources of liquidity for the Company and its subsidiaries are
existing cash and other working capital, cash flow provided from their operating
activities and the borrowing capacity under revolving credit agreements. The
Company's operations, consistent with the newspaper industry, require little
investment in inventory, as less than 30 days of newsprint is generally
maintained on hand. The Company may, from time to time, increase its newsprint
inventories in anticipation of price increases. In general, the Company's
receivables have been collected on a timely basis.
 
JUNE 30, 1997 COMPARED TO JUNE 30, 1996
 
    Net cash flows from operating activities were approximately $31.2 million
and $8.7 million for fiscal years ended June 30, 1997 and 1996, respectively.
The $22.5 million increase in cash flow from operating activities was primarily
the result of a $21.0 million increase in operating profit, before depreciation
and amortization expense, for the fiscal year ended June 30, 1997, compared to
the fiscal year ended June 30, 1996, which was partially offset by a $6.4
million increase in interest expense for the same period.
 
    Net cash flows from investing activities were ($148.7) million and $6.9
million for fiscal years ended June 30, 1997 and 1996, respectively. The $155.6
million change was primarily the result of funds totaling approximately $187.6
million used to acquire the PASADENA STAR-NEWS, WHITTIER DAILY REVIEW, SAN
GABRIEL VALLEY TRIBUNE, TIMES-STANDARD, THE EVENING SUN, THE SENTINEL &
ENTERPRISE, LEBANON DAILY NEWS and THE DAILY NONPAREIL and certain other weekly
newspapers, in fiscal year 1997 less proceeds received from the sale of the
POTOMAC NEWS and other assets of $47.8 million, compared to approximately $15.0
million received in fiscal year 1996 related to net acquisition and disposition
activity. Capital expenditures increased by approximately $0.8 million primarily
as a result of the previously announced press upgrade in Easton and new
front-end systems in Potomac and Las Cruces.
 
                                       22
<PAGE>
    Net cash flows from financing activities were $121.7 million and ($28.2)
million for fiscal years ended June 30, 1997 and 1996, respectively. The change
of approximately $149.9 million was primarily attributable to the Company
borrowing approximately $133.0 million related to net acquisition and
disposition activity in fiscal 1997 as compared to paydowns of approximately
$15.0 million related to net acquisition and disposition activity and $13.0
million of paydowns in the normal course in fiscal 1996. In addition, the
Company paid make-whole premiums and other financing fees and expenses of
approximately $14.0 million in fiscal 1997 associated with acquisitions and the
prepayment of its 10.89% senior notes compared to financing fees and expenses of
$1.1 million paid in fiscal 1996.
 
JUNE 30, 1996 COMPARED TO JUNE 30, 1995
 
    Net cash flows from operating activities were approximately $8.7 million and
$22.9 million for fiscal years 1996 and 1995, respectively. The decrease in cash
flow from operating activities was primarily the result of negative
year-over-year change in operating assets and liabilities of $12.4 million and
increased interest and debt expense of $2.7 million. The majority of the change
was associated with an increase in accounts payable and accrued expenses in 1995
largely caused by a one time $6.1 million increase in accrued interest, combined
with an increase in accounts receivable, net of the impact of the acquisition
and disposition transactions. A $1.3 million increase in operating profit
(excluding depreciation and amortization) partially offset the decline in
operating cash flow.
 
    Net cash flows from investing activities were $6.9 million and $1.3 million
for the fiscal years 1996 and 1995, respectively. The $5.6 million decrease was
a result of the Company receiving a net $5.5 million in proceeds from
acquisition and disposition transactions in fiscal 1995 as compared to a net of
$15.0 million related to net acquisition and disposition activity in 1996. The
Company also increased capital spending in fiscal 1996 by $3.8 million,
primarily associated with the previously announced Alameda Newspaper Group press
project and press modifications associated with web width reductions.
 
    Net cash flows from financing activities were $(28.2) million and $(15.7)
million for fiscal years 1996 and 1995, respectively. The decrease of $12.5
million was primarily attributable to the Company prepaying $47.0 million of
debt out of proceeds from the sale of the Johnstown Tribune Publishing Company,
as well as approximately $13.0 million of paydowns in the normal course in
fiscal 1996 as compared to paydowns of approximately $14.0 million associated
with dispositions in fiscal 1995. Paydowns were offset partially by borrowings
of $37.3 million, the majority of which was borrowed in conjunction with the
previously discussed New England Newspapers and San Mateo acquisitions in fiscal
1996.
 
CAPITAL EXPENDITURES
 
    The Company has a capital expenditure plan which includes normal maintenance
capital expenditures of approximately $1.5 million for fiscal 1998. In addition,
the plan also anticipates expenditures during fiscal 1998 of $2.7 million
associated with business computer system upgrades, front end systems and
mailroom upgrades at several of the Company's newspapers, all of which are
expected to improve efficiencies and/or the quality of the newspaper. Management
reviews the capital expenditure plan periodically and modifies it as required to
meet the Company's current business needs. Capital expenditures related to these
projects are expected to be funded either through available cash or borrowings
under the Garden State credit facility.
 
LIQUIDITY
 
    As of June, 1997, Garden State had approximately $22.0 million available for
borrowings under the RCB of the Garden State credit facility, excluding
approximately $5.0 million in letters of credit outstanding. Commitments under
the Garden State credit facility will also continue to reduce in accordance with
the terms disclosed in the June 30, 1997, Consolidated Financial Statements
appearing elsewhere herein.
 
                                       23
<PAGE>
The Garden State debt instruments contain covenants which, among other things,
limit capital expenditures, require the maintenance of certain financial ratios
and place limitations on the payment of dividends and other distributions.
 
    Effective with the completion of the Offering (as described below), the
Garden State credit facility will be amended. Such amendment will decrease the
interest rate on borrowings under the Garden State credit facility and provide
the Company with greater flexibility and liquidity. Terms of the proposed
amendment are described in the notes to the Consolidated Financial Statements.
 
    The purchase of Garden State's Class A common stock and the Series A and C
preferred stock by ANI was financed with debt issued by the Company. The
repayment of the Company's debt, which does not have scheduled interest payments
until January 1, 2000, is in part dependent upon Garden State's and Denver
Newspapers' ability to pay dividends to the Company. Garden State's debt
agreements discussed above prohibit the payment of dividends to the Company
prior to June 30, 1999. The Senior Discount Debentures restrict the Company's
ability to incur additional debt and pay dividends.
 
    The Company and its subsidiaries currently generates sufficient cash flows
to meet its capital expenditure and debt service requirements. Such debt service
requirements increase substantially in fiscal year 2000 as a result of interest
on its Senior Discount Debentures becoming current and payable on a semi-annual
basis. While there can be no assurance the Company currently expects to have
sufficient internally generated funds to service interest when due; however, a
portion of the face amount may be required to be refinanced at maturity. There
can be no assurance that the Company will be able to refinance its debt when
due. However, based on current and projected cash flows and debt levels, the
Company believes there is minimal refinance risk.
 
THE PROPOSED OFFERING
 
    In September 1997, Garden State anticipates issuing $200.0 million of Senior
Subordinated Notes due in 2009 (the "Offering"). The issuance of the Senior
Subordinated notes will provide Garden State with additional liquidity and
flexibility, as well as fixed rate long-term debt, at rates which Garden State
currently believes are attractive.
 
    The following table sets forth, based on balances outstanding at June 30,
1997, after giving effect to borrowings associated with the Lowell Acquisition
and the Offering, the approximate expected scheduled maturities of long-term
debt of the Company for the periods presented. (In thousands)
 
<TABLE>
<CAPTION>
FISCAL
----------------------------------------------------------------------------------
<S>                                                                                 <C>
1998..............................................................................  $    2,247
1999..............................................................................       4,410
2000..............................................................................       4,604
2001..............................................................................       6,670
2002..............................................................................      38,979
Thereafter........................................................................     483,021
                                                                                    ----------
                                                                                    $  539,931
                                                                                    ----------
                                                                                    ----------
</TABLE>
 
                                       24
<PAGE>
    The following table sets forth the annual commitment reductions for RCA, RCB
and RCC, as well as annual payments under Term A Loan, giving effect to the
amended Bank Credit Agreement. (In thousands)
 
<TABLE>
<CAPTION>
                                                                                      TERM A
                                                      RCA         RCB        RCC       LOAN
                                                   ----------  ---------  ---------  ---------
<S>                                                <C>         <C>        <C>        <C>
1998.............................................  $   10,000  $  --      $   4,000  $  --
1999.............................................      31,000     --          7,500     --
2000.............................................      31,000     --          7,500     --
2001.............................................      31,000     --         12,000     --
2002.............................................      31,000     --         12,000      3,750
Thereafter.......................................      33,000     27,000     33,000     11,250
                                                   ----------  ---------  ---------  ---------
                                                   $  167,000  $  27,000  $  76,000  $  15,000
                                                   ----------  ---------  ---------  ---------
                                                   ----------  ---------  ---------  ---------
</TABLE>
 
    The net proceeds of the Offering, estimated to be approximately $195.0
million after deducting fees and expenses of the Offering, will be used to pay
off the outstanding balance of approximately $17.0 million and retire the bank
credit facility of NJNI, a subsidiary of Garden State. Pending repayment of the
NJNI bank credit facility, which is required to occur within 90 days from the
Issue Date, such proceeds related thereto will be invested in cash equivalents.
The remainder will be used to prepay outstanding borrowings under the Garden
State credit facility. Subject to compliance with certain tests contained in the
Garden State credit facility, and after giving effect to the Offering, there
would be approximately $199.0 million available for borrowings, of which $101.0
million would be available only for acquisitions.
 
DENVER NEWSPAPERS--UNCONSOLIDATED SUBSIDIARY
 
    Denver Newspapers is well capitalized and currently produces cash flows
significantly in excess of its capital expenditure and debt service
requirements; accordingly, management does not anticipate making any additional
capital contributions to Denver Newspapers. At September 1, 1997, Denver
Newspapers had $15.5 million available under its revolving credit facility,
excluding $1.6 million in outstanding letters of credit. In addition, at June
30, 1997, Denver Newspapers had working capital of approximately $3.6 million.
 
    Denver Newspapers' revolving credit facility and shareholder agreement
prohibit the payment of common stock dividends to ANI until the revolving credit
facility and the 9% preferred stock have been repaid in full. Denver Newspapers'
revolving credit facility expires June 30, 2000. Denver Newspapers' preferred
stock is mandatorily redeemable on the earlier of (a) June 30, 1999; (b) the
date on which such redemption is permissible under Denver Newspapers' credit
agreement; (c) the date on which Denver Newspapers ceases to own directly at
least 51% of all the outstanding capital stock of The Denver Post Corporation;
or (d) the date on which Denver Newspapers, directly or indirectly, causes or
permits The Denver Post Corporation to dispose of substantially all of the
assets of The Denver Post Corporation.
 
NEAR TERM OUTLOOK
 
    The steady increase in newsprint prices came to a halt in the second quarter
of calendar 1996 and, beginning in May 1996, newsprint suppliers began lowering
prices. From May 1996 to December 1996, the discounts offered by newsprint
suppliers continued to accelerate as newsprint supply outpaced demand. Believing
that newsprint demand was beginning to strengthen, several newsprint suppliers
announced a $75 per metric ton increase in newsprint effective March 1, 1997,
which was only partially successful as it has taken the newsprint suppliers
several months to obtain the full $75 per ton increase and not all publishers,
including the Company, are currently paying the full increase. However, because
of an industry wide year-over-year increase in newsprint consumption, combined
with a strike at Fletcher Challenge, several suppliers have announced a $35 to
$40 per ton increase as of October 1, 1997, which would bring
 
                                       25
<PAGE>
average transaction prices to approximately $600 per metric ton on the East
Coast and $610 per metric ton on the West Coast. If the price increase is
successful, the increase is not expected to have a significant impact on the
Company's future cash flows from operations, as the Company expects to purchase
approximately two-thirds of its fiscal 1998 newsprint requirements under fixed
price contracts at a weighted average price of approximately $532 per metric
ton. MNG has entered into fixed price contracts expiring over the next two and
one-half to three years on behalf of the Company and its affiliates. Such
contracts cover the purchase of approximately 86,000 metric tons per year, of
which 60,000 metric tons is expected to be allocated to Garden State each year,
with the remainder allocated to Denver Newspapers.
 
    The Company and its subsidiaries may, from time to time, consider the
acquisition of daily and weekly newspapers, as favorable investment
opportunities are identified. In the event an investment opportunity is
identified, management expects that it would be able to arrange financing on
terms and conditions satisfactory to the Company to the extent current resources
are insufficient.
 
                           FORWARD-LOOKING STATEMENTS
 
    This 10-K includes "Forward-Looking Statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this 10-K,
including without limitation, certain statements under "Management's Discussion
and Analysis of Financial Condition and Results of Operations," "Business" and
statements located elsewhere herein regarding the Company's financial position
and operating strategy, may constitute forward-looking statements. Although the
Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations ("Cautionary Statements")
include the following: (1) costs or difficulties related to the integration of
businesses acquired by the Company (including clustering) may be greater than
expected; (2) unanticipated increases may occur in financing and other costs,
such as newsprint or labor costs; (3) general economic or business conditions,
either nationally or in the regions in which the Company conducts business, may
be less favorable than expected; and (4) competition, including from other
newspapers, other traditional forms of advertising and newer forms made possible
by the internet and otherwise. All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the cautionary statements.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
    The response to this item is filed as a separate part of this report (see
page 35).
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE
 
    None.
 
                                       26
<PAGE>
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
    Set forth below are the names, ages and title as of June 30, 1997, and a
brief account of the business experience of each person who is a director,
executive officer or other significant employee of the Company.
 
<TABLE>
<CAPTION>
NAME                                          AGE                          TITLE
----------------------------------------      ---      ----------------------------------------------
<S>                                       <C>          <C>
Richard B. Scudder......................          84   Chairman of the Board and Director
 
William Dean Singleton..................          45   Vice Chairman, President, Chief Executive
                                                       Officer and Director
 
Joseph J. Lodovic, IV...................          36   Executive Vice President, Chief Financial
                                                       Officer
 
Anthony F. Tierno.......................          52   Executive Vice President, Chief Operating
                                                       Officer
 
E. Michael Fluker.......................          60   Senior Vice President, Administration
 
Ronald A. Mayo..........................          35   Vice President of Finance and Controller
 
James L. McDougald......................          43   Treasurer
 
Peter M. Miller.........................          48   Director
 
Patricia Robinson.......................          55   Director and Secretary
 
Howell E. Begle, Jr.....................          53   Director, Assistant Secretary and General
                                                       Counsel
</TABLE>
 
    Each director is elected annually and serves until the next annual meeting
of shareholders or until his successor is duly elected and qualified. The
directors of ANI are not compensated for their service as directors. They do,
however, receive reimbursement of expenses incurred from the attendance at Board
of Directors meetings. The executive officers of ANI are appointed by and serve
at the pleasure of the Board of Directors.
 
BUSINESS EXPERIENCE
 
    RICHARD B. SCUDDER was elected Chairman of the Board and a director of ANI
in February, 1994. He has served as Chairman of the Board and a director of
Garden State since 1985.
 
    WILLIAM DEAN SINGLETON was elected Vice Chairman, President, Chief Executive
Officer and a director of ANI in February , 1994. He has served as Vice
Chairman, President, Chief Executive Officer and a director of Garden State
since 1985.
 
    JOSEPH J. LODOVIC, IV was appointed Executive Vice President and Chief
Financial Officer of ANI in February, 1994. He has served as Executive Vice
President and Chief Financial Officer of Garden State since November, 1993.
Prior thereto, he served as Vice President and Treasurer of Garden State from
1989 to 1993.
 
    ANTHONY F. TIERNO was appointed Executive Vice President and Chief Operating
Officer of ANI in February 1994. He has served as Executive Vice President and
Chief Operating Officer of Garden State since November, 1993. Prior thereto, he
served as Vice President of Garden State's eastern United States operations from
1987 to 1993. Mr. Tierno has been with Garden State since its inception in 1985.
 
    E. MICHAEL FLUKER was appointed Senior Vice President, Administration, of
ANI in February, 1994. He has served as Senior Vice President, Administration,
for Garden State since November, 1993. Prior
 
                                       27
<PAGE>
thereto, he served as Executive Vice President and Chief Financial Officer of
Garden State from 1989 to 1993.
 
    RONALD A. MAYO has served as Vice President of Finance and Controller since
September, 1994. From 1984 to 1994, Mr. Mayo was employed by Ernst & Young LLP,
most recently as a Senior Manager.
 
    JAMES L. MCDOUGALD has served as Treasurer since September, 1994. Prior
thereto, he was Controller for Garden State from 1988 to 1994.
 
    PETER M. MILLER was elected a Director of ANI in February 1994. He has
served as a Director of Garden State since 1985 and Denver Newspapers since
1987. From 1991 through 1994, Mr. Miller has served as Senior Vice President of
Marketing of Environmental Technologies Corporation, a subsidiary of Envirotech
Systems, Inc. Mr. Miller is a son-in-law of Mr. Scudder.
 
    PATRICIA ROBINSON was elected Secretary of ANI in February, 1994, and a
director of ANI in May, 1994. She has also served as Secretary of Garden State
since 1991 and as Secretary of Denver Newspapers since 1991. Ms. Robinson is the
sister of Mr. Singleton.
 
    HOWELL E. BEGLE, JR. was elected Director, General Counsel and Assistant
Secretary of ANI in February 1994. Mr. Begle is Of Counsel to Verner, Liipfert,
Bernhard, McPherson and Hand, Chartered, which law firm is counsel to the
Company.
 
ITEM 11. EXECUTIVE COMPENSATION
 
    The business and affairs of the Company are managed by MNG pursuant to the
terms of a Management Agreement. MNG allocates its expenses as management fees
to the Company and each affiliate based on the amount of time and resources
devoted to each affiliate. See "Certain Relationships and Related
Transactions--MediaNews Group, Inc." The following table sets forth the cash
compensation paid or payable to Mr. Singleton and any executive officer whose
allocated cash compensation exceeded $100,000 for services rendered to the
Company in fiscal 1997.
 
<TABLE>
<CAPTION>
                                                                                  ANNUAL COMPENSATION
                                                                                 ----------------------
<S>                                                                 <C>          <C>         <C>         <C>
                                                                      FISCAL                               ALL OTHER
NAME AND PRINCIPAL POSITION                                            YEAR        SALARY      BONUS     COMPENSATION
------------------------------------------------------------------  -----------  ----------  ----------  -------------
William Dean Singleton............................................        1997   $  550,000  $  100,000    $  11,410
Vice Chairman, President                                                  1996      350,000      80,000        7,800
and Chief Executive Officer                                               1995      350,000     100,000        7,800
 
Joseph J. Lodovic IV(a),(b).......................................        1997   $  242,567  $  138,415    $   4,642
Executive Vice President,                                                 1996      188,325      --           46,816
Chief Financial Officer                                                   1995      139,493      29,700        4,000
 
Anthony F. Tierno.................................................        1997   $  200,005  $    7,500    $  10,396
Executive Vice President                                                  1996      192,503       2,500        9,620
and Chief Operating Officer                                               1995      120,979      12,500        5,117
</TABLE>
 
------------------------
 
(a) A portion of Mr. Lodovic's compensation is allocated by MNG to other
    affiliated companies which it manages. The amounts shown here are the
    amounts allocated to ANI's consolidated and unconsolidated subsidiaries
    based on the methods discussed above.
 
(b) All Other Compensation in 1996 includes a relocation bonus.
 
EMPLOYMENT AGREEMENTS
 
    No executive officer of the Company has an employment agreement except Mr.
Singleton. Under the terms of his employment agreement with Garden State, which
was amended and renewed effective
 
                                       28
<PAGE>
June 30, 1996 (the "Employment Agreement"), Mr. Singleton is entitled to receive
cash compensation at an annual rate of not less than $550,000 (of which Garden
State is obligated to pay a portion), subject to annual review and adjustment by
the Board of Directors of Garden State. In addition, Mr. Singleton is entitled
to receive a bonus of up to $100,000 for each fiscal year based on a comparison
of actual profits of Garden State to budgeted profits during such fiscal year.
The Employment Agreement expires by its terms on June 30, 2001, but will be
automatically renewed for successive one-year terms unless Garden State or Mr.
Singleton gives notice terminating the Employment Agreement at least 120 days
prior to the expiration of the existing term. The Employment Agreement contains
a five-year non-compete covenant for all counties and geographical areas in
which newspapers are owned or circulated by Garden State or its Subsidiaries
(currently or in the future).
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
    Decisions regarding annual compensation in excess of $175,000 are made by
the Board of Directors of Directors of Garden State, as the officers of ANI are
also officers of Garden State. In addition, the Board of Directors of Garden
State and Denver Newspapers is responsible for approving Mr. Singleton's
Employment Agreement, including his compensation. The Board of Directors of
Garden State does not have a Compensation Committee. Compensation of executive
officers of MNG, who are also executive officers of the Company, is approved by
Mr. Singleton. See "Certain Relationships and Related Transactions--MediaNews
Group, Inc."
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    The authorized capital stock of ANI consists of 2,314,346 shares of unissued
Class A common stock, $.01 par value, 173,576 shares of Class B common stock,
$.01 par value, 664,450 shares of Class D common stock, $.01 par value, 500,000
shares of Class G common stock, $0.1 par value, 1,500,000 shares of Class GSI
common stock, $0.01 par value, and 230 shares of Class N common stock $.01 par
value (collectively the "ANI Common Stock"), all of which have equal voting
rights but differ with respect to dividends and liquidation. ANI has not
declared or paid any cash dividends on its common stock in the past and does not
intend to do so in the foreseeable future. The Company's long-term debt limits
the ability of ANI to pay such dividends.
 
    The following tables set forth the number and percentage of shares of ANI
common stock currently issued and outstanding and beneficially owned by (i) each
person known to ANI to be the beneficial owner
 
                                       29
<PAGE>
of more than 5.0% of any class of ANI's equity securities; and (ii) all
directors and executive officers of ANI as a group.
 
<TABLE>
<CAPTION>
                                                            AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(A)
                                                      --------------------------------------------------------
<S>                                                   <C>           <C>        <C>                 <C>
                                                        CLASS D      CLASS G       CLASS GSI         CLASS N
                                                         COMMON      COMMON          COMMON          COMMON
NAME                                                    STOCK(N)    STOCK(N)        STOCK(N)        STOCK(N)
----------------------------------------------------  ------------  ---------  ------------------  -----------
William Dean Singleton(c)...........................       --          --                 552,065   (l)     --
Howell E. Begle, Jr.(b)(d)..........................       332,225(l)   185,980(l)            552,065   (l)        115(l)
Patricia Robinson(b)(e).............................       332,225(l)   185,980(l)         --             115(l)
Jean L. Scudder(f)(j)...............................    249,168.75     46,495          138,016.25       28.75
Charles Scudder(g)(j)...............................     83,056.25     46,495          138,016.25       28.75
Elizabeth A. Difani(g)(h)(j)........................       --          46,495          138,016.25       28.75
Carolyn Miller(g)(i)(j).............................       --          46,495          138,016.25       28.75
All directors and executives as a group(m)..........       332,225    185,980             552,065         115
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                       PERCENTAGE OF CLASS
                                                                        --------------------------------------------------
<S>                                                                     <C>          <C>          <C>          <C>
                                                                          CLASS D      CLASS G     CLASS GSI     CLASS N
                                                                          COMMON       COMMON       COMMON       COMMON
NAME                                                                     STOCK(N)     STOCK(N)     STOCK(N)     STOCK(N)
----------------------------------------------------------------------  -----------  -----------  -----------  -----------
William Dean Singleton(c).............................................      --           --            50.00%      --
Howell E. Begle, Jr.(b)(d)............................................       50.00%       50.00%       50.00%       50.00%
Patricia Robinson(b)(e)...............................................       50.00%       50.00%      --            50.00%
Jean L. Scudder(f)(j).................................................       37.50%       12.50%       12.50%       12.50%
Charles Scudder(g)(j).................................................       12.50%       12.50%       12.50%       12.50%
Elizabeth A. Difani(g)(h)(j)..........................................      --            12.50%       12.50%       12.50%
Carolyn Miller(g)(i)(j)...............................................      --            12.50%       12.50%       12.50%
All directors and executives as a group(m)............................       50.00%       50.00%       50.00%       50.00%
</TABLE>
 
------------------------
 
(FOOTNOTES ON THE FOLLOWING TWO PAGES.)
 
(a) Beneficial ownership is determined in accordance with the rules of the
    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. None of such shares
    is known by ANI to be shares with respect to which the beneficial owner has
    the right to acquire such shares.
 
(b) The address of each such person is: c/o Howell E. Begle, Jr., Trustee, 901
    15th Street, N.W., Suite 700, Washington, D.C. 20005. Mr. Begle is Of
    Counsel to the law firm of Verner, Liipfert, Bernhard, McPherson and Hand,
    Chartered, which law firm is counsel to the Company.
 
(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. Mr. Singleton disclaims any beneficial
    ownership in the shares held in the Singleton Revocable Trust.
 
(d) Includes the following shares, for which Mr. Begle has sole voting power
    under the Singleton Family Voting Trust Agreement for ANI (the "Singleton
    Family Voting Trust Agreement for ANI") and shared investment power, as a
    trustee for an irrevocable trust for the benefit of Mr. Singleton's children
    (the "Singleton Irrevocable Trust"), held by the Singleton Irrevocable
    Trust: 332,225 shares of Class D common stock, 185,980 Class G common stock
    and 115 shares of Class N common stock. Also includes 552,065 shares of
    Class GSI common stock held by the Singleton Revocable Trust, for which Mr.
    Begle is a trustee.
 
                                       30
<PAGE>
(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) Includes 166,112.5 shares of Class D common stock held by a trust for the
    benefit of Ms. Scudder's nephews, for which trust Ms. Scudder serves as the
    sole trustee. Does not include the shares held by Charles Scudder, Elizabeth
    Difani, as custodian for her minor children, or Carolyn Miller, as custodian
    for her minor children, with respect to which Ms. Scudder has sole voting
    power pursuant to the Scudder Family Voting Trust Agreement for ANI (the
    "Scudder Family Voting Trust Agreement").
 
(g) Sole voting power with respect to these shares is held by Ms. Scudder
    pursuant to the Scudder Family Voting Trust Agreement. See note (f) above.
 
(h) Ms. Difani holds these shares as custodian for her minor children. Sole
    voting power with respect to these shares is held by Ms. Scudder pursuant to
    the Scudder Family Voting Trust Agreement. See note (f) above.
 
(i) Ms. Miller holds those shares as custodian for her minor children. Sole
    voting power with respect to these shares is held by Ms. Scudder pursuant to
    the Scudder Family Voting Trust Agreement. See note (f) above.
 
(j) The address of each person is: c/o Jean L. Scudder, Rural Route 1, Box 75,
    Readfield, Maine 04355.
 
(k) Indicates shared voting power.
 
(l) Indicates shared investment power.
 
(m) No directors or officers of ANI beneficially own any shares in ANI except
    Mr. Singleton, Mr. Begle and Ms. Robinson. See note (c) above.
 
(n) Assuming conversion of each of the shares of Class D, Class G, Class GSI and
    Class N common stock to shares of Class A common stock, as provided for in
    the ANI Certificate of Incorporation, the shares of Class A common stock
    will be held as follows: 552,065 shares by the Singleton Revocable Trust;
    518,320 shares by the Singleton Irrevocable Trust; 166,112.5 shares by a
    trust for the benefit of Ms. Scudder's nephews; 267,596.25 shares by Mr.
    Scudder; 123,026.66 shares by Ms. Difani, as custodian for her minor
    children; and 184,540 shares by Ms. Miller, as custodian for her minor
    children.
 
SCUDDER FAMILY VOTING TRUST AGREEMENT FOR ANI
 
    The children of Richard B. Scudder, Charles A. Scudder, Carolyn S. Miller,
Elizabeth H. Difani and Jean L. Scudder entered into the Scudder Family Voting
Trust Agreement for ANI (the "Scudder Family Voting Trust Agreement for ANI") in
accordance with which 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 ANI on such matters as
election of directors, mergers, dissolution or reorganization of ANI, sale,
exchange or pledge of all or substantially all of the assets of ANI and
acquisition or divestiture by ANI of any newspaper venture) and substantially
all other rights to which such shareholders would otherwise be entitled until
May 20, 2004, subject to extension by written agreement of one or more
beneficiaries of the Scudder Family Voting Trust Agreement for ANI and the
Scudder Trustee.
 
SINGLETON FAMILY VOTING TRUST AGREEMENT FOR ANI
 
    The Singleton Irrevocable Trust entered into the Singleton Family Voting
Trust Agreement for ANI (the "Singleton Family Voting Trust Agreement for ANI")
in accordance with which (i) the shares of Class D, Class G and Class N common
stock of ANI held by the Singleton Irrevocable Trust were transferred to the
Singleton Revocable Trust for ANI and (ii) the shares of Class GSI common stock
of
 
                                       31
<PAGE>
ANI to be held by the Singleton Revocable Trust will be transferred to the
Singleton Family Voting Trust for ANI upon the death or incapacity of Mr.
Singleton. As a result, Howell E. Begle, as Trustee (the "Singleton Trustee"),
is considered the beneficial owner of 50% of the outstanding Class D common
stock, Class G common stock and Class N common stock of ANI. Under the Singleton
Family Voting Trust Agreement for ANI, the Singleton Trustee exercises all
voting and substantially all other rights to which such shareholders would
otherwise be entitled until May 20, 2004, subject to extension by written
agreement of one or more beneficiaries of the Singleton Family Voting Trust
Agreement for ANI and the Singleton Trustee.
 
ANI SHAREHOLDERS' AGREEMENT
 
    The Singleton Revocable Trust, the Singleton Family Voting Trust for ANI,
the Scudder Family Voting Trust for ANI, certain of the beneficiaries of such
trusts and ANI entered into a Shareholders' Agreement (the "ANI Shareholders'
Agreement") which provides, among other things, that action by the Board of
Directors with respect to such matters as the declaration of dividends,
redemption of capital stock, certain capital expenditures, mergers or
consolidation, incurring indebtedness or paying compensation to the officers of
ANI in excess of certain amounts will require the unanimous approval of all
Directors then serving on the Board of Directors or approval by the holders of
75% of the shares of common stock entitled to vote on such matters.
 
    The ANI Shareholders' Agreement also provides that until the earlier of (i)
the date on which the shares of Class D common stock, Class G common stock,
Class GSI common stock and Class N common stock of ANI are automatically
converted into shares of Class A common stock of ANI, pursuant to the terms of
the Certificate of Incorporation of ANI, or (ii) when ANI's Leverage Ratio is
less than 3:1, no shareholder may sell, transfer, pledge or otherwise encumber
their shares, nor their interest in their shares, of ANI common stock (other
than Class B common stock) to any third party, except certain permitted
transfers to family members and other shareholders, without the consent of all
the shareholders of ANI or unless all shares of ANI common stock then
outstanding are sold in a single transaction or a series of related
transactions. Upon the expiration of such time period, and in the event of a
contemplated sale to a third party, ANI, and thereafter the remaining
shareholders, may exercise a right of first refusal. If any shareholder desires
to sell or transfer his shares to ANI or the other shareholders without an
identified third party buyer, then such shareholder may offer to sell his shares
to ANI at fair market value determined by appraisal, or if ANI declines to
purchase such shares, such shareholder may offer to sell his shares to the
remaining shareholders at fair market value.
 
DENVER NEWSPAPERS SHAREHOLDERS' AGREEMENT
 
    ANI, Denver Newspapers and Media General, Inc. ("Media General") are parties
to the Second Amended and Restated Stock and Warrant Purchase and Shareholders'
Agreement of Denver Newspapers (the "Denver Newspapers Shareholders' Agreement")
which provides, among other things, that one-half of the directors of Denver
Newspapers shall be elected by ANI and one-half of the directors shall be
elected by Media General. Pursuant to such Agreement, without the prior
unanimous approval of all of the directors of Denver Newspapers, the common
stockholders and the preferred stockholders (pursuant to the ANI Amended and
Restated Certificate of Incorporation), Denver Newspapers and its subsidiaries
are restricted from, among other things, paying certain dividends, redeeming its
capital stock, making capital expenditures in excess of certain amounts,
merging, consolidating or liquidating, paying compensation in excess of certain
amounts, incurring additional debt or amending any material term of its existing
debt. The Agreement also provides that the directors of Denver Newspapers
elected by Media General will not unreasonably withhold their approval for any
dividend on common stock proposed by any member of the board of directors as
long as payment in full of the Denver Newspapers 9% Preferred Stock, including
accrued and unpaid dividends, shall have been made. The Denver Newspapers
Shareholders' Agreement contains certain restrictions on the transfer of shares
of Denver Newspapers' capital stock, as well as
 
                                       32
<PAGE>
certain rights of first refusal and tag-along rights, and Media General has
certain registration rights with respect to the shares of Denver Newspapers
Class A common stock.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
MEDIANEWS GROUP, INC.
 
    The Company's subsidiaries have engaged MNG to operate and manage the
business and affairs of its newspapers under the terms of a management
agreement. MNG, which is owned entirely by Messrs. Singleton and Scudder, also
manages other affiliated newspapers. All of the executive officers of MNG are
also executive officers of the Company, and compensation of the executive
officers of the Company, with the exception of Mr. Singleton whose compensation
is paid as described under "Executive Compensation," are paid by MNG. The
Company believes that the salaries paid to its executive officers, through
either Garden State or MNG, are not greater than those which would be paid to
executives of an unaffiliated management company. Pursuant to the management
agreement, MNG allocates its expenses as management fees to each affiliate based
on the amount of time and resources devoted to each affiliate. The weighted
average of the salary allocations is then used to apportion general overhead of
MNG, such as office rent and related operating expenses. MNG is also party to a
consulting agreement, renewable annually, with Mr. Scudder which requires annual
payments of $150,000. Costs related to such agreement are included in MNG's
expenses and, thus, are included in the management fee allocation discussed
above.
 
    MNT, a division of MNG, provides electronic media services including website
development and maintenance, internet access and online publishing capabilities
for all the newspapers managed by MNG. The cost of providing these services will
be allocated based on revenue of the newspapers for which such services are
provided. As of June 30, 1997, the Company had not been charged any fees
associated with MNT; however, beginning in fiscal year 1998, MNT will charge a
portion of its operating expenses to the Company. MNT charges to the Company for
fiscal year 1998 are expected to be approximately $1.5 million. The Company will
record electronic media advertising revenues by the Company's newspapers, in its
consolidated statement of operations of such newspaper.
 
    The Company reimburses MNG for any expenses directly incurred by MNG on
behalf of the Company that are not included in the management fee. For fiscal
1997, the Company paid approximately $2.2 million to MNG in management fees. The
Company believes that the management fees paid to MNG are not greater than the
costs the Company would expect to bear to obtain these services elsewhere.
 
    MNG does not own and does not expect to own any interest in the Company, nor
has MNG made any direct capital investment in the Company. While MNG's principal
business is the management of newspaper operations, the Company does not believe
its success is dependent on MNG. If the Management Agreement should terminate,
management believes the Company could obtain management services from other
sources, including current employees of MNG.
 
TAX SHARING AGREEMENT
 
    ANI and Garden State are part of the same affiliated group and file
consolidated returns for federal income tax purposes. ANI and Garden State
entered into a tax sharing agreement (the "Tax Sharing Agreement") to determine
the manner in which the members of the consolidated group will share federal
income tax benefits and costs. Pursuant to the Tax Sharing Agreement, the income
tax liability of Garden State and any of Garden State's consolidated
subsidiaries is computed separately from ANI on a consolidated return basis. If
income tax is due from Garden State and its consolidated subsidiaries, Garden
State will pay the amount of the tax as a tax sharing payment to ANI. In the
event that Garden State's federal income tax is reduced due to a net operating
loss or credit carryback under applicable federal income tax law, it will
receive credit for the amount of such reduction from ANI. This credit amount(s)
will be carried on ANI's financial records as an amount payable to Garden State,
which credit Garden State will be able to utilize to offset future obligations
to make tax sharing payments to ANI. Under the terms of
 
                                       33
<PAGE>
the Tax Sharing Agreement, Garden State will receive the benefit of loss
carryforwards which it generates. Similar principles will apply under the Tax
Sharing Agreement for state and local income tax purposes. Although the payments
of dividends by Garden State are restricted under the terms of its debt
instruments, Garden State will be permitted under those agreements to make tax
sharing payments.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
    (a) Financial Statements
 
    1. The list of financial statements contained in the accompanying Index to
Consolidated Financial Statements and Schedules Covered by Report of Independent
Auditor is filed as a part of this Report (see page 35).
 
        2.  Financial Statement Schedules
 
    The list of financial statement schedules contained in the accompanying
Index to Consolidated Financial Statements and Schedules Covered by Report of
Independent Auditor is filed as part of the Report (see page 35).
 
        3.  Exhibits
 
    The exhibits listed in the accompanying index are filed as a part of this
annual report (See page 81).
 
    (b) Reports on Form 8-K
 
    No reports on Form 8-K were filed during the fourth quarter of fiscal 1997.
 
                                       34
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
                           ITEMS 8, 14(a) (1) AND (2)
            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
                   COVERED BY REPORTS OF INDEPENDENT AUDITORS
 
    The following financial statements of the registrant and its subsidiaries
required to be included in Items 8 and 14(a)(1) are listed below:
 
AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
<TABLE>
<CAPTION>
                                                                                                                PAGE
                                                                                                                -----
<S>                                                                                                          <C>
Report of Independent Auditors.............................................................................          36
Consolidated Balance Sheets as of June 30, 1997 and 1996...................................................          38
Consolidated Statements of Operations for the Years Ended June 30, 1997, 1996 and 1995.....................          40
Consolidated Statements of Changes in Shareholders' Deficit for the Years Ended June 30, 1997, 1996 and
  1995.....................................................................................................          41
Consolidated Statements of Cash Flows for the Years Ended June 30, 1997, 1996 and 1995.....................          42
Notes to Consolidated Financial Statements.................................................................          43
</TABLE>
 
    The following financial statement schedules of the registrant and its
subsidiaries required to be included in Item 14(a)(2) are listed below:
 
<TABLE>
<S>          <C>                                                                          <C>
Schedule I   Condensed Financial Information of Registrant..............................         62
Schedule II  Valuation and Qualifying Accounts..........................................         63
</TABLE>
 
    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.
 
DENVER NEWSPAPERS, INC.
 
<TABLE>
<S>                                                                                     <C>
Report of Independent Auditor.........................................................          64
Consolidated Balance Sheets as of June 30, 1997 and 1996..............................          66
Consolidated Statements of Operations for the Years Ended June 30, 1997, 1996 and
  1995................................................................................          68
Consolidated Statements of Changes in Shareholders' Equity for the Years Ended June
  30, 1997, 1996 and 1995.............................................................          69
Consolidated Statements of Cash Flows for the Years Ended June 30, 1997, 1996 and
  1995................................................................................          70
Notes to Consolidated Financial Statements............................................          71
</TABLE>
 
Financial Statement Schedule
 
<TABLE>
<S>          <C>                                                                          <C>
Schedule II  Valuation and Qualifying Accounts and Reserves.............................         80
</TABLE>
 
                                       35
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS
 
To The Shareholders and Board of Directors
Affiliated Newspapers Investments, Inc.
 
    We have audited the accompanying consolidated balance sheets of Affiliated
Newspapers Investments, Inc. and subsidiaries (the "Company") as of June 30,
1997 and 1996, and the related consolidated statements of operations, changes in
shareholders' deficit, and cash flows for each of the three years in the period
ended June 30, 1997. Our audits also included the financial statement schedules
I and II. These financial statements and schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Affiliated Newspapers Investments, Inc. and subsidiaries at June 30, 1997 and
1996, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended June 30, 1997, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
 
                                          ERNST & YOUNG LLP
 
Denver, Colorado
August 22, 1997
 
                                       36
<PAGE>
                 (This page has been left blank intentionally.)
 
                                       37
<PAGE>
            AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                     JUNE 30,
                                                            --------------------------
                                                                1997          1996
                                                            ------------  ------------
                                                                  (IN THOUSANDS)
<S>                                                         <C>           <C>
CURRENT ASSETS
  Cash and cash equivalents...............................  $      8,944  $      4,615
  Trade accounts receivable, less allowance for doubtful
    accounts of $4,252 and $2,426 at June 30, 1997 and
    1996, respectively....................................        32,849        24,888
  Receivable from affiliates..............................         1,983         1,403
  Other receivables.......................................         1,353         1,201
  Inventories of newsprint and supplies...................         6,170         3,966
  Prepaid expenses and other assets.......................         3,295         2,780
                                                            ------------  ------------
    TOTAL CURRENT ASSETS..................................        54,594        38,853
 
PROPERTY, PLANT AND EQUIPMENT
  Land....................................................         8,307         5,168
  Buildings and improvements..............................        43,462        32,687
  Machinery and equipment.................................       126,450        87,522
                                                            ------------  ------------
    Total Property, Plant and Equipment...................       178,219       125,377
  Less accumulated depreciation and amortization..........       (57,670)       50,027
                                                            ------------  ------------
    NET PROPERTY, PLANT AND EQUIPMENT.....................       120,549        75,350
 
OTHER ASSETS
  Investment in Denver Newspapers, Inc....................        14,113         4,826
  Investment in partnership...............................         6,365         6,369
  Subscriber accounts, less accumulated amortization of
    $45,808 and $48,594 at June 30, 1997 and 1996,
    respectively..........................................        69,960        44,220
  Excess of cost over fair value of net assets acquired,
    less accumulated amortization of $12,718 and $13,267
    at June 30, 1997 and 1996, respectively...............       154,294        65,715
  Covenants not to compete and other identifiable
    intangible assets, less accumulated amortization of
    $15,861 and $19,673 at June 30, 1997 and 1996,
    respectively..........................................         6,685         8,461
  Other...................................................         2,000         1,871
                                                            ------------  ------------
    TOTAL OTHER ASSETS....................................       253,417       131,462
                                                            ------------  ------------
TOTAL ASSETS..............................................  $    428,560  $    245,665
                                                            ------------  ------------
                                                            ------------  ------------
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       38
<PAGE>
            AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                     LIABILITIES AND SHAREHOLDERS' DEFICIT
 
<TABLE>
<CAPTION>
                                                                     JUNE 30,
                                                            --------------------------
                                                                1997          1996
                                                            ------------  ------------
                                                              (IN THOUSANDS, EXCEPT
                                                                   SHARE DATA)
<S>                                                         <C>           <C>
 
CURRENT LIABILITIES
 
  Trade accounts payable..................................  $      6,286  $      5,884
 
  Accrued employee compensation...........................         7,208         4,498
 
  Accrued interest........................................         7,830         8,114
 
  Other accrued liabilities...............................         8,676         5,562
 
  Unearned income.........................................        10,746         7,048
 
  Income taxes............................................         1,308           373
 
  Current portion of long-term debt.......................         6,247        11,190
                                                            ------------  ------------
 
  TOTAL CURRENT LIABILITIES...............................        48,301        42,669
 
OBLIGATIONS UNDER CAPITAL LEASES..........................         7,477         7,520
 
LONG-TERM DEBT............................................       468,677       306,990
 
OTHER LIABILITIES.........................................         5,092         7,728
 
DEFERRED INCOME TAXES.....................................        13,036        12,275
 
SHAREHOLDERS' DEFICIT.....................................
 
  Common stock, $.01 par value; authorized 5,152,602 and
    4,628,692 shares at June 30, 1997 and 1996,
    respectively, 2,314,346 shares issued and
    outstanding...........................................            23            23
 
  Additional paid-in capital..............................         3,611         3,611
 
  Deficit.................................................      (117,657)     (135,151)
                                                            ------------  ------------
 
  TOTAL SHAREHOLDERS' DEFICIT.............................      (114,023)     (131,517)
                                                            ------------  ------------
 
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT...............  $    428,560  $    245,665
                                                            ------------  ------------
                                                            ------------  ------------
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       39
<PAGE>
            AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                FISCAL YEAR ENDED JUNE 30,
                                                              -------------------------------
                                                                1997       1996       1995
                                                              ---------  ---------  ---------
                                                              (IN THOUSANDS, EXCEPT PER SHARE
                                                                           DATA)
<S>                                                           <C>        <C>        <C>
REVENUES
  Advertising...............................................  $ 242,914  $ 197,954  $ 179,268
  Circulation...............................................     48,451     39,930     30,517
  Other.....................................................     11,537      7,546      3,260
                                                              ---------  ---------  ---------
    TOTAL OPERATING REVENUES................................    302,902    245,430    213,045
COSTS AND EXPENSES
  Cost of sales.............................................    106,476     98,469     79,098
  Selling, general and administrative.......................    125,697    100,290     88,889
  Management fees...........................................      2,205      2,008      1,666
  Depreciation and amortization.............................     24,689     21,841     18,709
  Interest expense..........................................     48,370     41,932     38,611
  Other.....................................................      7,995      4,511      2,405
                                                              ---------  ---------  ---------
    TOTAL COSTS AND EXPENSES................................    315,432    269,051    229,378
GAIN ON SALE OF NEWSPAPER PROPERTY..........................     30,575      8,291      4,153
GAIN ON SALE OF STOCK BY UNCONSOLIDATED SUBSIDIARY..........     --         --            996
INCOME IN UNCONSOLIDATED SUBSIDIARY.........................      9,287      2,541      5,748
                                                              ---------  ---------  ---------
INCOME (LOSS) BEFORE INCOME TAXES, CUMULATIVE EFFECT OF
  ACCOUNTING CHANGE AND EXTRAORDINARY LOSS..................     27,332    (12,789)    (5,436)
INCOME TAX BENEFIT (EXPENSE)................................     (1,066)     1,857         (1)
                                                              ---------  ---------  ---------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE
  AND EXTRAORDINARY LOSS....................................     26,266    (10,932)    (5,437)
CUMULATIVE EFFECT OF ACCOUNTING CHANGE AT UNCONSOLIDATED
  SUBSIDIARY................................................     --         --         (2,856)
EXTRAORDINARY LOSS (net of taxes of $689)...................      8,772     --         --
                                                              ---------  ---------  ---------
NET INCOME (LOSS)...........................................  $  17,494  $ (10,932) $  (8,293)
                                                              ---------  ---------  ---------
                                                              ---------  ---------  ---------
INCOME (LOSS) PER COMMON SHARE:
  Income (loss) before extraordinary loss, and cumulative
    effect of accounting change.............................  $   11.35  $   (4.72) $   (2.35)
  Cumulative effect of accounting change at unconsolidated
    subsidiary..............................................     --         --          (1.23)
  Extraordinary loss........................................      (3.79)    --         --
                                                              ---------  ---------  ---------
    Income (loss) per common share..........................  $    7.56  $   (4.72) $   (3.58)
                                                              ---------  ---------  ---------
                                                              ---------  ---------  ---------
Weighted average number of shares outstanding...............  2,314,346  2,314,346  2,314,346
                                                              ---------  ---------  ---------
                                                              ---------  ---------  ---------
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       40
<PAGE>
            AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
 
          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
 
<TABLE>
<CAPTION>
                                                                  ADDITIONAL                 TOTAL
                                                       COMMON      PAID-IN-               SHAREHOLDERS'
                                                        STOCK       CAPITAL     DEFICIT     DEFICIT
                                                     -----------  -----------  ---------  -----------
                                                                      (IN THOUSANDS)
<S>                                                  <C>          <C>          <C>        <C>
BALANCE AT JUNE 30, 1994...........................   $       1    $   3,633   $(115,926)  $(112,292)
  Net loss.........................................      --           --          (8,293)     (8,293)
                                                            ---   -----------  ---------  -----------
BALANCE AT JUNE 30, 1995...........................           1        3,633    (124,219)   (120,585)
  Net income.......................................                   --         (10,932)    (10,932)
  Change in par value of common stock..............          22          (22)     --          --
                                                            ---   -----------  ---------  -----------
BALANCE AT JUNE 30, 1996...........................          23        3,611    (135,151)   (131,517)
  Net income.......................................      --           --          17,494      17,494
                                                            ---   -----------  ---------  -----------
BALANCE AT JUNE 30, 1997...........................   $      23    $   3,611   $(117,657)  $(114,023)
                                                            ---   -----------  ---------  -----------
                                                            ---   -----------  ---------  -----------
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       41
<PAGE>
            AFFILIATED NEWSPAPERS INVESTMENTS, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                  FISCAL YEAR ENDED JUNE 30,
                                                                -------------------------------
                                                                  1997       1996       1995
                                                                ---------  ---------  ---------
                                                                        (IN THOUSANDS)
<S>                                                             <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)...........................................  $  17,494  $ (10,932) $  (8,293)
  Adjustments to reconcile net income (loss) to net cash from
    operating activities:
    Depreciation..............................................     10,707      9,762      7,216
    Amortization..............................................     12,775     11,499     10,804
    Gain on sale of newspaper assets..........................    (30,579)    (8,622)    (4,137)
    Income from unconsolidated subsidiary, net................     (9,287)    (2,541)    (3,888)
    Provision for losses on accounts receivable...............      3,092      2,510      2,876
    Amortization of debt discount.............................     18,525     16,214     14,382
    Debt issue cost and repurchase premiums...................     13,969      1,092     --
    Distributions in excess of (less than) earnings from
      investment in partnership...............................         23       (610)       (28)
    Deferred income tax benefit...............................     (3,226)    (2,373)      (428)
    Change in operating assets and liabilities:
      Increase in accounts receivable.........................     (5,408)    (3,403)    (2,150)
      (Increase) decrease in inventories......................     (1,163)     1,799     (2,470)
      (Increase) decrease in prepaid expenses and other
        assets................................................       (455)      (558)       717
      Increase (decrease) in accounts payable and accrued
        liabilities...........................................      5,139     (5,047)     4,880
      Increase in unearned income.............................        747         22      1,504
      Change in affiliate account balances....................       (580)       363        761
      Change in other assets and liabilities..................       (535)      (517)     1,130
                                                                ---------  ---------  ---------
NET CASH FLOWS FROM OPERATING ACTIVITIES......................     31,238      8,658     22,876
CASH FLOWS FROM INVESTING ACTIVITIES:
  Sale of newspaper property and other assets.................     47,776     50,647     14,864
  Business acquisitions.......................................   (187,597)   (35,668)    (9,325)
  Purchase of machinery and equipment.........................     (8,836)    (8,079)    (4,284)
                                                                ---------  ---------  ---------
NET CASH FLOWS FROM INVESTING ACTIVITIES......................   (148,657)     6,900      1,255
CASH FLOW FROM FINANCING ACTIVITIES:
  Issuance of long-term debt..................................    259,450     37,300     --
  Reduction of long-term debt.................................   (120,773)   (60,240)   (14,007)
  Reduction of non-operating liabilities......................     (2,960)    (4,194)    (1,735)
  Debt issue cost and repurchase premiums.....................    (13,969)    (1,092)        --
                                                                ---------  ---------  ---------
NET CASH FLOWS FROM FINANCING ACTIVITIES......................    121,748    (28,226)   (15,742)
                                                                ---------  ---------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..........      4,329    (12,668)     8,389
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR................      4,615     17,283      8,894
                                                                ---------  ---------  ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR......................  $   8,944  $   4,615  $  17,283
                                                                ---------  ---------  ---------
                                                                ---------  ---------  ---------
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       42
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
 
PRINCIPLES OF CONSOLIDATION
 
    The Consolidated Financial Statements include the accounts of Affiliated
Newspapers Investments, Inc. (the "Company" or "ANI"), Garden State Newspapers,
Inc. ("Garden State") and its subsidiaries. All intercompany accounts have been
eliminated upon consolidation.
 
OPERATING AGENCY
 
    One of the Company's subsidiaries is a participant in a joint operating
agency. The joint operating agency performs the production, sales, distribution
and administrative functions for the subsidiary and another newspaper publishing
company under a joint operating agreement. The Company includes its prorata
portion of the revenues and expenses generated by the operations of the agency
on a line-by-line basis in its statements of operations (See Note 2).
 
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.
 
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.
 
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.
 
INTANGIBLE ASSETS
 
    Intangible assets acquired are recorded at their estimated fair values as of
the date of acquisition. The excess of cost over fair value of net assets
acquired is being amortized using the straight-line method over a period of 40
years. Subscriber accounts are amortized using the straight-line method over
periods ranging from 6 to 15 years, with a weighted average remaining life,
based on the dates of acquisitions, of 9 years. Other intangibles recognized are
being amortized using the straight-line method, generally over periods not
exceeding 10 years.
 
LONG-LIVED ASSETS
 
    The carrying value of long-lived assets is reviewed annually; however, if at
any time the facts or circumstances at any of the Company's individual newspaper
operations indicate impairment of asset values, as a result of continual
declines in performance or as a result of fundamental changes in a newspaper's
market, a determination is made as to whether the carrying value of the
newspaper's long-lived assets exceeds estimated realizable value. For purposes
of this determination, estimated realizable value is evaluated based on values
placed on comparable newspaper properties, generally based on a multiple of
revenue and operating profit (before depreciation and amortization).
 
                                       43
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 1: SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (CONTINUED)
DEBT DISCOUNT
 
    Debt discount is amortized in a manner which results in a constant rate of
interest over the life of the related debt.
 
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 bases of existing assets and liabilities.
 
USE OF ESTIMATES
 
    The preparation of financial statements in accordance with generally
accepted accounting principles at times requires the use of estimates and
assumptions that affect the reported amount of assets, liabilities, revenues and
expenses. Actual results could differ from these estimates.
 
NOTE 2: INVESTMENT IN PARTNERSHIP
 
    Effective March 1990, York Newspapers, Inc. ("YNI"), a subsidiary of Garden
State entered into a general partnership, York Newspaper Company (the "Agency")
with York Daily Record, Inc. ("YDR"). YNI, YDR and the Agency entered into a
joint operating agreement (the "JOA") under which the Agency is responsible for
all newspaper publishing operations, other than news and editorial, including
production, sales, distribution and administration. The Agency publishes THE
YORK DISPATCH, a daily evening paper, THE YORK DAILY RECORD, a daily morning
paper, and the YORK SUNDAY NEWS. YNI has a 57.5% interest in the Agency. YNI's
investment in the Agency is recorded in the accompanying consolidated balance
sheets under the equity method. The Company's investment in the Agency, which
originally represented the net book value of assets and liabilities contributed
to the Agency, was approximately $6.4 million at each of the fiscal years ended
June 30, 1997 and 1996. The Agency made cash distributions to YNI in the amount
of $7.2 million, $4.9 million and $4.8 million in fiscal years 1997, 1996 and
1995.
 
    In September, 1996, YNI signed a call/put agreement under which YNI can
purchase YDR's interest in the agency or YDR can put its interest in the Agency
to YNI. The base call and put price is $32.0 million and $25.0 million,
respectively, and is adjusted annually based on changes in the consumer price
index (not to exceed 2 1/2%). The call option may be exercised on January 1,
2004, and expires on January 1, 2005. The put may be exercised at any time after
the expiration of the call through June 30, 2008.
 
    The Company is not currently responsible for any liabilities of the Agency,
contingent or otherwise. Management believes that the Agency is well capitalized
and does not anticipate the Agency requiring any capital contributions from its
partners in the near future.
 
NOTE 3: ACQUISITIONS AND DISPOSITIONS
 
ACQUISITIONS
 
    On February 28, 1997, a subsidiary of the Company acquired substantially all
the assets used in the publication of the SENTINEL & ENTERPRISE, LEBANON DAILY
NEWS and THE DAILY NONPAREIL, daily newspapers
 
                                       44
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 3: ACQUISITIONS AND DISPOSITIONS (CONTINUED)
distributed primarily in Fitchburg and Leominster, Massachusetts; Lebanon,
Pennsylvania; and Council Bluffs, Iowa, respectively, and five weekly newspapers
distributed in and around the same cities, for a total of approximately $51.2
million in cash. Proceeds from the sale of the POTOMAC NEWS (discussed below)
and borrowings under the subsidiary's Bank Credit Agreement were used to fund
the acquisition.
 
    On October 31, 1996, a subsidiary of the Company acquired substantially all
the assets used in the publication of the PASADENA STAR-NEWS, SAN GABRIEL VALLEY
TRIBUNE, WHITTIER DAILY NEWS, TIMES-STANDARD, TIMES-STANDARD and THE EVENING
SUN, daily newspapers distributed primarily in Pasadena, West Covina, Whittier
and Eureka, California, and Hanover, Pennsylvania, respectively, and seven
weekly newspapers distributed in and around these same cities, for a total of
approximately $130.0 million in cash.
 
    In conjunction with the sale of the Johnstown Tribune Publishing Company
described below, a subsidiary of the Company acquired substantially all the
assets used in the publication of the NORTH ADAMS TRANSCRIPT and the BRIDGETON
NEWS, daily newspapers published in North Adams, Massachusetts, and Bridgeton,
New Jersey, respectively. In conjunction with acquiring the assets of the
BRIDGETON NEWS, the Company also assumed $0.8 million of payments due on
non-competition agreements.
 
    On March 10, 1996, a subsidiary of the Company acquired substantially all
the assets used in the publication of the SAN MATEO COUNTY TIMES, a daily
newspaper, and five weekly newspapers published in San Mateo County, California,
for approximately $15.0 million, including obligations to the seller with a
discounted value of approximately $4.3 million and the assumption of newspaper
subscription obligations of approximately $0.7 million.
 
    On August 31, 1995, a subsidiary of the Company acquired substantially all
the assets used in the publication of THE BERKSHIRE EAGLE, the BRATTLEBORO
REFORMER and the BENNINGTON BANNER, daily newspapers published in Pittsfield,
Massachusetts; Brattleboro, Vermont; and Bennington, Vermont, respectively, and
the MANCHESTER JOURNAL, a weekly newspaper published in Manchester, Vermont
(collectively referred to as "New England Newspapers"). The purchase price
consisted of $1.1 million in cash, the assumption of $20.5 million of long-term
debt and a covenant not to compete payable to the prior owners with a discounted
value of approximately $2.7 million. In addition, the Company assumed a working
capital deficit of approximately $2.0 million and an underfunded pension plan
liability and other obligations, valued at approximately $8.3 million.
 
    On November 18, 1994, a subsidiary of the Company acquired substantially all
the assets used in the publication of the GLOUCESTER COUNTY TIMES and TODAY'S
SUNBEAM, daily newspapers distributed in Woodbury and Salem, New Jersey,
respectively, from an affiliate of the Company. The assets were purchased for
$9.0 million in cash plus the assumption of a $1.9 million discounted note
payable to certain of ANI's shareholders. The purchase price was based on the
fair market value of the assets acquired, as determined by an independent
appraisal of the assets.
 
    All the acquisitions discussed above were accounted for as purchases.
Accordingly, the results of their operations were included since the date of
acquisition. The assets acquired and liabilities assumed have been recorded at
their estimated fair market value at the date of acquisition. These fair values
of the newspapers acquired in fiscal 1997 are based on independent appraisals
and management's best estimate and are subject to change in the final allocation
of the purchase price. The excess of cost over fair value of net assets acquired
and intangible assets related to subscriber lists are being amortized on a
straight line basis over 40 and 15 to 6 years, respectively.
 
                                       45
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 3: ACQUISITIONS AND DISPOSITIONS (CONTINUED)
DISPOSITIONS
 
    On February 13, 1997, a subsidiary of the Company sold substantially all the
assets used in the publication of the POTOMAC NEWS and two weekly publications
for $47.7 million in cash plus an adjustment for working capital. The Company
recognized a pre-tax gain on the sale of approximately $30.6 million, net of
selling expenses.
 
    On May 1, 1996, Garden State sold the common stock of The Johnstown Tribune
Publishing Company, which publishes THE TRIBUNE-DEMOCRAT, to American Publishing
(1991), Inc. in exchange for $32.6 million in cash and substantially all the
assets used in the publication of the following daily and weekly newspapers:
 
<TABLE>
<CAPTION>
         NEWSPAPER LOCATION                    DAILY PUBLICATION                     WEEKLY PUBLICATION
------------------------------------  ------------------------------------  ------------------------------------
<S>                                   <C>                                   <C>
Bridgeton, New Jersey                 BRIDGETON NEWS                        None
Fort Morgan, Colorado                 FORT MORGAN TIMES                     MORGAN TIMES REVIEW(A)
Sterling, Colorado                    JOURNAL-ADVOCATE                      J. A. SHOPPER(A)
Lamar, Colorado                       LAMAR DAILY NEWS                      TRI-STATE TRADER(A)
Sidney, Nebraska                      SIDNEY TELEGRAPH                      HIGH PLAINS SHOPPING GUIDE(A)
North Adams, Massachusetts            NORTH ADAMS TRANSCRIPT                THE TRANSCRIPT SPOTLIGHT(A)
Akron, Colorado                       None                                  AKRON NEWS REPORTER(B)
Brush, Colorado                       None                                  BRUSH NEWS-TRIBUNE(B)
Julesburg, Colorado                   None                                  JULESBURG ADVOCATE(B)
</TABLE>
 
------------------------
 
(a) Free weekly distribution
 
(b) Paid weekly distribution
 
    In connection with the above newspaper acquisitions, Garden State assumed
non-compete and other long-term obligations with a discounted value of
approximately $1.0 million. In addition, Garden State purchased net working
capital for approximately $1.0 million. As a result of the exchange, Garden
State recognized a pre-tax gain of approximately $8.3 million in its fourth
quarter.
 
    Immediately after the purchase of the above described newspapers, Garden
State contributed all of the newly acquired assets and liabilities of the
Sidney, Nebraska, and the Akron, Brush, Fort Morgan, Julesburg, Lamar and
Sterling, Colorado, daily and weekly newspapers to a newly formed corporation,
Eastern Colorado Publishing Company ("Eastern Colorado"). The common stock of
Eastern Colorado was then sold to The Denver Post Corporation, a 60% owned
subsidiary of ANI, for approximately $15.7 million, including the assumption of
$0.2 million of discounted non-compete payments and other long-term obligations
associated with the newspapers acquired. No gain or loss was realized on the
sale of Eastern Colorado common stock. The sales price of Eastern Colorado was
deemed to be fair based on an independent appraisal of the transaction.
 
    On August 1, 1994, the Company sold substantially all the assets used in the
publication of the Bristol Press and three weekly newspapers located in Bristol,
Connecticut, and a covenant not to compete in Bristol, Connecticut, for a total
of $14.5 million in cash. The sale resulted in a pre-tax gain of approximately
$4.2 million.
 
                                       46
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 3: ACQUISITIONS AND DISPOSITIONS (CONTINUED)
UNAUDITED PRO FORMA OPERATING RESULTS
 
    The following table sets forth the unaudited pro forma operating results had
the October 31, 1996, acquisition, the February 13, 1997, disposition, and the
February 28, 1997, acquisition (described above) occurred as of July 1, 1995 and
1996 (In thousands):
 
<TABLE>
<CAPTION>
                                                                  JUNE 30, 1997  JUNE 30, 1996
                                                                  -------------  -------------
<S>                                                               <C>            <C>
Revenues........................................................   $   333,885    $   325,990
                                                                  -------------  -------------
                                                                  -------------  -------------
Net Income Before Extraordinary Items...........................   $    28,247    $    (8,336)
                                                                  -------------  -------------
                                                                  -------------  -------------
Net Income (Loss)...............................................   $    19,475    $    (8,336)
                                                                  -------------  -------------
                                                                  -------------  -------------
Earnings (Loss) Per Share.......................................   $      8.41    $     (3.60)
                                                                  -------------  -------------
                                                                  -------------  -------------
</TABLE>
 
NOTE 4: LONG-TERM DEBT
 
DEBT RESTRUCTURING
 
    As a result of certain refinancings and debt prepayments on October 31,
1996, associated with acquisitions, Garden State incurred debt issuance costs of
approximately $4.4 million and paid approximately $9.5 million of make-whole
premiums to the holders of the senior secured notes, who were prepaid in full.
The make-whole premiums have been included in the accompanying Consolidated
Statements of Operations as an extraordinary loss net of applicable income tax
benefits. The Company charged the $4.4 million of the debt issuance cost to
fiscal year 1997 expense and, as such, the cost has been included in other
expense in the accompanying Consolidated Statements of Operations.
 
LONG-TERM DEBT
 
    Long-term debt consisted of the following at each year-end:
<TABLE>
<CAPTION>
                                                                                                     JUNE 30,
                                                                                              ----------------------
<S>                                                                                <C>        <C>         <C>
                                                                                                 1997        1996
                                                                                              ----------  ----------
 
<CAPTION>
                                                                                                  (IN THOUSANDS)
<S>                                                                                <C>        <C>         <C>
Bank Credit Agreement............................................................         (I) $  211,000  $    7,500
10.89% Senior Secured Notes, due through March 31, 2004..........................        (II)     --          76,880
NJNI bank credit facility........................................................       (III)     16,750      --
Various Notes, payable through December, 2002....................................        (IV)     12,966      16,361
12.00% Senior Subordinated Secured Notes, due July 1, 2004                                (V)    100,000     100,000
Notes payable to certain shareholders of ANI.....................................        (VI)      2,629       2,328
Senior Discounted Debentures, due 2006...........................................       (VII)    131,579     115,111
                                                                                              ----------  ----------
                                                                                                 474,924     318,180
Less current portion of long-term debt...........................................                  6,247      11,190
                                                                                              ----------  ----------
                                                                                              $  468,677  $  306,990
                                                                                              ----------  ----------
                                                                                              ----------  ----------
</TABLE>
 
    I.  In conjunction with the October 31, 1996, acquisition previously
discussed, Garden State entered into a $240.0 million amended and restated bank
credit facility (the "Bank Credit Agreement") which was
 
                                       47
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 4: LONG-TERM DEBT (CONTINUED)
subsequently increased to $285.0 million on January 22, 1997. The Bank Credit
Agreement is comprised of the following components at June 30, 1997:
 
        a.  A $167.0 million Senior Secured Revolving Credit Facility ("RCA")
    for acquisition financing which matures on June 30, 2003. The commitment
    under RCA is subject to a reduction schedule as follows: $10.0 million
    reduction on December 31, 1997; $15.0 million reduction on June 30, 1998;
    $28.0 million reduction on June 30, 1999 through 2002, and a final maturity
    on June 30, 2003. A portion of the proceeds from RCA were used to purchase
    the newspaper assets acquired on October 31, 1996. As of June 30, 1997,
    $47.0 million was borrowed in conjunction with the acquisition of THE SUN
    discussed in Note 13. Borrowings under RCA are secured by the assets
    acquired with the proceeds of the borrowings under RCA.
 
        b.  A $27.0 million Senior Secured Revolving Credit Facility ("RCB")
    with sublimits of $7.0 million available for standby letters of credit and
    $5.0 million available for same day borrowings under a swingline facility.
    No principal payments are required under RCB until March 31, 2004, at which
    time the commitment is terminated and all then outstanding balances are due
    and payable. As of June 30, 1997, approximately $22.0 million was available
    under RCB. RCB is secured by a first priority lien on the common stock and
    substantially all of the assets of GSI.
 
        c.  A $15.0 million Senior Secured Term Loan ("Term A Loan") with a
    final maturity of March 31, 2004. Term A Loan requires quarterly
    installments beginning June 30, 2002, with total annual payments of $3.75
    million, $7.5 million and $3.75 million in fiscal years ending June 30,
    2002, 2003 and 2004, respectively. Proceeds from Term A Loan were used to
    refinance debt assumed in the August 1995 New England Newspapers
    acquisition. Term A Loan is secured by a first priority lien on
    substantially all of the assets of New England Newspapers, Inc.
 
        d.  A $76.0 million Senior Secured Term Loan ("Term B Loan") with a
    final maturity of March 31, 2004. Term B Loan requires quarterly principal
    payments commencing on September 30, 1997, with annual reductions of $4.0
    million in fiscal year 1998, $7.5 million in fiscal years 1999 and 2000,
    $12.0 million in fiscal years 2001 and 2002, $14.0 million in 2003 and $19.0
    million in 2004. Proceeds from Term B Loan were used to prepay Garden
    State's 10.89% Senior Secured Notes on October 31, 1996, as further
    described below. Term B Loan is secured by a first priority lien on the
    common stock and substantially all of the assets of GSI.
 
    All borrowings under the Bank Credit Agreement, except loans under the
swingline facility, bear interest at rates based upon, at Garden State's option,
Eurodollar or prime, plus a spread based on Garden State's leverage. Borrowings
under the swingline facility bear interest at prime plus a spread based on
Garden State's leverage. Interest on prime borrowings under the Bank Credit
Agreement is payable quarterly. Interest on Eurodollar borrowings is due at the
end of the applicable interest rate period or quarterly if the interest rate
period exceeds three months. In addition, Garden State pays an annual commitment
fee of 0.50% on the unused commitment under RCA and RCB. If the ratio of total
debt to operating cash flow is less than 4.00 to 1.00, the commitment fee is
reduced to 0.375%.
 
    Garden State has requested an amendment of its Bank Credit Agreement which
would, among other things, change Term B Loan into a revolving credit facility
("RCC"), reduce the Company's borrowing spreads (in most cases by .375%), and
change the amortization of the RCA commitment. This amendment is being requested
in conjunction with a proposed bond offering and would be effective upon
successful completion of the bond offering (see Note 13 for discussion).
 
                                       48
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 4: LONG-TERM DEBT (CONTINUED)
     II. In May, 1994, Garden State issued 10.89% Senior Secured Notes. As
previously discussed, these Notes were prepaid in full on October 31, 1996.
 
    III. NJN Investments, Inc. ("NJNI") entered into a bank credit facility in
May 1994. The bank credit facility is secured by the stock of NJNI and its
subsidiaries and is non-recourse to the Company. The bank credit agreement, as
subsequently amended, provides for maximum borrowings of $23.5 million, as of
June 30, 1997. Borrowings bear interest at rates based upon, at NJNI's option,
LIBOR or prime plus a spread based on NJNI's leverage.
 
    Commitments under the bank credit facility are permanently reduced each
quarter, based on the following annual amounts. Mandatory principal payments are
required to the extent the principal balance is in excess of the commitment.
 
<TABLE>
<CAPTION>
FISCAL YEAR                                                              COMMITMENT REDUCTION
-----------------------------------------------------------------------  ---------------------
<S>                                                                      <C>
1998...................................................................      $   6,000,000
1999...................................................................         17,500,000
</TABLE>
 
    The NJNI bank credit facility contains certain restrictive covenants which
restrict the incurrence of additional debt and capital expenditures. In
addition, the agreement requires NJNI to meet certain financial ratios based on
leverage, debt service coverage, and cash flow, each as defined in the NJNI bank
credit facility. Proceeds from the bond offering (see Note 13) will be used to
pay off and terminate the NJNI bank credit facility.
 
    IV. In connection with various acquisitions, Garden State has issued notes
payable to prior owners, including non-compete agreements, and assumed certain
debt obligations. The notes payable and debt obligations bear interest at rates
ranging from zero to 9%. Obligations bearing interest at below market rates were
discounted at rates ranging from 7.8% to 12.0%.
 
     V. In May 1994, Garden State issued $100.0 million of 12% Senior
Subordinated Secured Notes due July 1, 2004. Interest accruing on the Senior
Subordinated Secured Notes is payable semi-annually in arrears on January 1 and
July 1. The indebtedness evidenced by the Senior Subordinated Secured Notes is
subordinated and junior in right of payment under the Bank Credit Agreement and
notes payable to prior owners. No principal payments are required until July 1,
2004, at which time the outstanding principal amount is due and payable. The
Senior Subordinated Secured Notes are secured by a second lien on the stock of
Garden State Investments, Inc., a subsidiary of Garden State and holding company
for all of Garden State's operating subsidiaries except the newspapers acquired
on October 31, 1996 and July 31, 1997.
 
    VI. In connection with the acquisition of the GLOUCESTER COUNTY TIMES and
TODAY'S SUNBEAM, Garden State assumed notes payable to certain shareholders of
ANI with a face value of $2.7 million on November 18, 1994. The notes bear
interest at prime but have been discounted at 13.5%. The notes are subordinate
to all Garden State's senior indebtedness, and Garden State is prohibited from
paying principal or interest on the notes until all senior debt has been repaid
in full.
 
   VII. In May 1994, the Company issued 173,576 units of 13.25% Senior Discount
Debentures Units (the "Debenture Units" or "Debentures"), consisting of $1,000
principal amount of Senior Discount Debentures and one share of the Company's
Class B common stock. The Debenture Units were issued at a 48.1% discount,
resulting in proceeds to the Company of $90.1 million, excluding the related
debt issuance
 
                                       49
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 4: LONG-TERM DEBT (CONTINUED)
cost. The Debenture Units were separable 60 days after their issuance and,
accordingly, the Class B common stock was separately valued. The Company
allocated $3.6 million of the Debenture Unit proceeds to the Class B common
stock, which has been included in additional paid-in capital in the accompanying
Consolidated Balance Sheet. The Debentures mature on July 1, 2006 and, beginning
July 1, 1999, will begin paying interest currently at a rate of 13.25%, payable
semi-annually in arrears on January 1 and July 1. The original discount of $87.1
million is being amortized to recognize a yield to maturity of 13.6% per annum.
The carrying value represents the principal at maturity of $173.6 million less
the unamortized discount of $42.0 million at June 30, 1997.
 
    Collectively, the Garden State Bank Credit Agreement and Senior Secured
Notes contain certain restrictive covenants which relate to the incurrence of
additional debt, capital expenditures and distributions. Additionally, the
agreements require the maintenance of certain financial ratios based on
leverage, debt service coverage, interest coverage and cash flow. Borrowings
under the Garden State bank credit facility and the Senior Secured Notes are
secured by substantially all of Garden State's tangible and intangible assets
and the stock of Garden State and its subsidiaries. The Debentures restrict
ANI's ability to sell certain assets, incur debt and pay dividends.
 
    Maturities of the Company's long-term debt for the five fiscal years ending
June 30, 2002, are as follows (in thousands):
 
<TABLE>
<S>                                                                 <C>
1998..............................................................  $   6,247
1999..............................................................     32,670
2000..............................................................     38,013
2001..............................................................     42,347
2002..............................................................     45,392
Thereafter........................................................    310,255
                                                                    ---------
                                                                    $ 474,924
                                                                    ---------
                                                                    ---------
</TABLE>
 
    Interest paid during the fiscal years ended June 30, 1997, 1996 and 1995 was
approximately $30.8 million, $27.2 million and $19.4 million, respectively.
 
    Letters of credit have been issued in favor of an insurance company
providing workers compensation insurance coverage to the Company totalling
approximately $2.1 million as of June 30, 1997. In addition, Garden State issued
approximately $3.1 million of additional letters of credit in support of its
obligations under non-compete agreements entered into in connection with the
August 31, 1995, acquisitions described in Note 3.
 
    The fair market value of the Senior Subordinated Secured Notes and the
Senior Discount Debentures at June 30, 1997, was approximately $112.5 million
and $156.2 million, respectively. The carrying value of long-term debt, which
has interest rates tied to prime or LIBOR, approximates the fair value of such
financial instruments. 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 its fair value without
incurring the excessive costs of obtaining an appraisal. The carrying amount
represents its original issue price net of remaining original issue discounts,
if applicable.
 
                                       50
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 4: LONG-TERM DEBT (CONTINUED)
INTEREST RATE SWAPS
 
    Effective April 1, 1997, Garden State entered into a two-year interest rate
swap agreement with a notional principal amount of $50.0 million and a fixed
annual interest rate of 6.455%, plus the applicable spread. The Company uses
interest rate swaps to manage its floating rate debt to minimize, in part, the
Company's exposure to the uncertainty of floating interest rates and because of
requirements under the Bank Credit Agreement. The Company accounts for the
differences paid or received under this agreement as an adjustment to interest
expense. As of June 30, 1997, the interest rate swap had a market loss of $0.3
million. Garden State is exposed to credit loss related to the interest rate
swap to the extent such interest rate swap has a market gain and the
counterparty to the agreement fails to perform under the agreement. The Company
does not anticipate that the counterparty will fail to meet its obligation
because of its high credit rating.
 
NOTE 5: LEASES
 
    A subsidiary of the Company leases an operating facility under a capital
lease. Assets under capital leases and related accumulated amortization are
included in property, plant and equipment in the accompanying Consolidated
Balance Sheets as follows:
<TABLE>
<CAPTION>
                                                                                   JUNE 30,
                                                                             --------------------
<S>                                                                          <C>        <C>
                                                                               1997       1996
                                                                             ---------  ---------
 
<CAPTION>
                                                                                (IN THOUSANDS)
<S>                                                                          <C>        <C>
Building...................................................................  $   6,934  $   6,934
Accumulated amortization...................................................      1,811      1,579
                                                                             ---------  ---------
  Assets under capital leases, net.........................................  $   5,123  $   5,355
                                                                             ---------  ---------
                                                                             ---------  ---------
</TABLE>
 
    The Company's subsidiaries also lease certain facilities and equipment under
operating leases, some of which contain renewal and escalation clauses. Rent
expense was approximately $2.0 million, $2.1 million and $1.9 million for the
fiscal years ended June 30, 1997, 1996 and 1995, respectively. Contingent
rentals are not significant. Future minimum payments on capital and operating
leases are as follows:
 
<TABLE>
<CAPTION>
                                                                           CAPITAL    OPERATING
FISCAL YEARS ENDING JUNE 30,                                               LEASES      LEASES
------------------------------------------------------------------------  ---------  -----------
<S>                                                                       <C>        <C>
                                                                              (IN THOUSANDS)
1998....................................................................  $     821   $   2,323
1999....................................................................        821       2,171
2000....................................................................        867       1,924
2001....................................................................        931       1,628
2002....................................................................        931       1,501
Thereafter..............................................................     15,904       2,955
                                                                          ---------  -----------
    Total minimum lease payments........................................     20,275   $  12,502
                                                                                     -----------
                                                                                     -----------
Less amount representing interest.......................................     12,798
                                                                          ---------
    Present value of net future lease payments..........................  $   7,477
                                                                          ---------
                                                                          ---------
</TABLE>
 
                                       51
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 6: CAPITAL STOCK
 
    ANI has authorized six and issued five classes of common stock
(collectively, the "Common Stock"), each with $.01 par value, as follows:
 
<TABLE>
<CAPTION>
TITLE OF CLASS                                                AUTHORIZED SHARES  ISSUED SHARES
------------------------------------------------------------  -----------------  -------------
<S>                                                           <C>                <C>
Class A Common Stock........................................       2,314,346          --
Class B Common Stock........................................         173,576          173,576
Class D Common Stock........................................         664,450          664,450
Class G Common Stock........................................         500,000          371,960
Glass GSI Common Stock......................................       1,500,000        1,104,130
Class N Common Stock........................................             230              230
</TABLE>
 
    The holders of the common stock will have the right to vote, as a class, for
the election of directors and for all other purposes, and all other rights with
respect to each class of common stock will be identical, except rights with
respect to dividends. Dividends may be declared and paid on (i) the Class B
common stock only to the extent of the assets of the Corporation legally
available; therefore, in an aggregate amount equal to (7.5%) of the sum of: (a)
the amount of the dividends then being declared upon the Class B common stock
and (b) the aggregate amounts simultaneously declared and paid as dividends on
the Class D, G, GSI and N common stock; and (ii) the Class D common stock only
to the extent of the earned surplus of ANI attributable to the Available
Separate Consolidated Net Income (as defined in ANI's Amended and Restated
Certificate of Incorporation) of Denver Newspapers; (iii) the Class G common
stock to the extent of the earned surplus of ANI attributable to the Available
Separate Consolidated Net Income of Garden State; (iv) the Class GSI common
stock to the extent of the earned surplus of ANI attributable to the Available
Separate Consolidated Net Income of Garden State Investments, Inc.; and (v) the
Class N common stock to the extent of the earned surplus of ANI attributable to
the Available Separate Consolidated Net Income of North Jersey Newspapers
Investments, Inc.
 
    The Board of Directors may, in its discretion, declare dividends on only one
class of common stock to the exclusion of the other classes except Class B.
Under certain circumstances, on the fifth anniversary but not later than the
tenth anniversary of the May 20, 1994 restructuring, the Class D, G, GSI and N
common stock will be automatically converted to Class A common stock, based on
the then appraised values.
 
NOTE 7: RETIREMENT PLANS
 
    Garden State and a majority 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. Substantially all
of Garden State's full-time employees are covered by these plans. Total expense
for these plans for the fiscal years ended June 30, 1997, 1996 and 1995, was
approximately $2.1 million, $1.4 million, and $1.6 million, respectively.
 
    In general, Garden State contributes one or two percent of an employee's
salary to the plan for each employee who works at least 1,000 hours annually and
is not covered by a collective bargaining agreement. Garden State, at its
discretion, may contribute an additional one or two percent for each participant
in the plan who makes a voluntary contribution of at least two percent of his or
her salary. Garden State's contribution may be suspended annually at
management's discretion.
 
    A non-contributory defined benefit pension plan was assumed in connection
with the August 31, 1995, acquisition. On September 23, 1995, Garden State
elected to freeze the plan. Accordingly, all current
 
                                       52
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 7: RETIREMENT PLANS (CONTINUED)
service cost under the plan was terminated as of September 23, 1995. As of June
30, 1997 and 1996, the net present value of accumulated benefit obligations
exceeded the fair market value of plan assets by approximately $2.0 and $3.9
million, respectively.
 
NOTE 8: INCOME TAXES
 
    The income tax provision (benefit) for each of the three years ended June
30, 1997, 1996 and 1995, consists of the following:
 
<TABLE>
<CAPTION>
                                                                    1997       1996       1995
                                                                  ---------  ---------  ---------
<S>                                                               <C>        <C>        <C>
                                                                          (IN THOUSANDS)
Current:
  State.........................................................  $   3,429  $     441  $     285
  Federal.......................................................        863         75        144
Deferred:
  State.........................................................       (213)      (539)       347
  Federal.......................................................     (3,013)    (1,834)      (775)
                                                                  ---------  ---------  ---------
Net (benefit) provision.........................................  $   1,066  $  (1,857) $       1
                                                                  ---------  ---------  ---------
                                                                  ---------  ---------  ---------
</TABLE>
 
    A reconciliation between the actual income tax expense for financial
statement purposes and income taxes computed by applying the statutory Federal
income tax rate to financial statement earnings before income taxes for the
three years ended June 30, 1997, 1996 and 1995 is as follows:
 
<TABLE>
<CAPTION>
                                                                           1997         1996         1995
                                                                           -----        -----        -----
<S>                                                                     <C>          <C>          <C>
Statutory Federal income tax rate.....................................          35%         (35%)        (35%)
  Effect of:
    Operating losses..................................................         (21)          29           39
    State income tax net of federal benefit...........................          10            3            9
    Book/tax basis difference associated with acquisitions and
      non-deductible acquisition costs................................           3          (12)         (20)
    Sale of assets....................................................         (25)      --           --
    Extraordinary loss................................................           4       --           --
    Other, net........................................................      --           --                7
                                                                                --           --           --
Financial statement effective tax rate................................           6%         (15%)          0%
                                                                                --           --           --
                                                                                --           --           --
</TABLE>
 
                                       53
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 8: INCOME TAXES (CONTINUED)
    Components of the long-term deferred tax liabilities as of June 30, 1997 and
1996 are as follows:
 
<TABLE>
<CAPTION>
                                                                           1997        1996
                                                                        ----------  ----------
<S>                                                                     <C>         <C>
                                                                            (IN THOUSANDS)
Deferred tax assets:
  Net operating losses and other credits..............................  $   14,566  $   23,593
  Other...............................................................       8,604       7,421
                                                                        ----------  ----------
                                                                            23,170      31,014
  Valuation allowance.................................................     (14,904)    (20,363)
                                                                        ----------  ----------
  Deferred tax assets.................................................       8,266      10,651
 
Deferred tax liabilities:
  Fixed assets........................................................       8,679       8,129
  Intangibles.........................................................       8,391      12,990
  Other...............................................................       4,232       1,807
                                                                        ----------  ----------
  Deferred tax liabilities............................................      21,302      22,926
                                                                        ----------  ----------
Net deferred tax liabilities..........................................  $   13,036  $   12,275
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
    In fiscal years 1997 and 1996, the Company generated federal taxable income
which was offset by operating loss carryforwards. However, since not all the
federal taxable income could be offset with operating loss carryforwards, the
Company did incur alternative minimum tax which can be carried forward as a
credit to future taxes payable. The Company's current year utilization of
operating loss carryforwards also reduced the Company's valuation allowance by
$5.5 million, which was recorded as a benefit in current year income tax
expense.
 
    At June 30, 1997, the Company has approximately $37.0 million of net
operating loss carryforwards for tax reporting purposes available to offset its
future taxable income which expire in 2005 through 2011 and $1.3 million of
alternative minimum tax credit carryforwards.
 
    The Company made state and federal tax payments of approximately $3.0
million, $0.6 million, and $0.8 million during fiscal years 1997, 1996 and 1995,
respectively.
 
NOTE 9: RELATED PARTY TRANSACTIONS
 
    MediaNews Group, Inc., an affiliate of certain of the Company's
shareholders, provides management services to the Company and its subsidiaries.
Related management fees are shown on the accompanying Consolidated Statements of
Operations.
 
NOTE 10: COMMITMENTS AND CONTINGENCIES
 
    The Company's subsidiaries are involved in a number of legal proceedings
which have arisen in the ordinary course of business. In the opinion of
management, the outcome of these legal proceedings will not have a material
adverse impact on the Company's financial position or results of operations.
 
    Under the terms of a newsprint contract, Garden State, through MNG, has
agreed to purchase 1,000 tons per month of newsprint at a fixed price for the
period September 1, 1997 through August 31, 2000.
 
                                       54
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 10: COMMITMENTS AND CONTINGENCIES (CONTINUED)
Management does not expect that it will purchase less than the required amount;
however, if it should default on the purchase obligation, MNG and/or Garden
State would be responsible for damages, if any, incurred by the seller.
 
    The Company has guaranteed up to $5.0 million of the Denver Post
Corporation's bank credit facility through the period ended December 1, 1997.
Based on the current financial position of the Denver Post Corporation, the
Company does not believe its exposure to loss is likely.
 
NOTE 11: INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
 
BASIS OF ACCOUNTING
 
    Prior to September 28, 1994, when Media General, Inc. ("Media General")
exercised its warrant to acquire a 40 percent interest in Denver Newspapers,
Inc. ("Denver Newspapers"), the Company owned all of Denver Newspapers' common
stock. As was the case prior to the exercise of the warrant, the Company
accounts for its investment in Denver Newspapers using the equity method because
the Denver Newspapers shareholder agreement provides Media General with a 50
percent representation on the board of directors.
 
    Prior to the exercise of the Denver Newspapers warrant by Media General, the
Company recorded 100 percent of the net income applicable to common stock of
Denver Newspapers. As a result of Media General exercising its warrant, the
Company reduced its equity pick-up of Denver Newspapers' net income applicable
to common stock from 100 percent to 60 percent effective with the second quarter
of fiscal 1995. In addition, upon Media General exercising its Denver Newspapers
warrant, Denver Newspapers issued 40 new shares of Class A common stock for
$1,000 per share, resulting in a gain of approximately $1.0 million from the
sale of common stock of an unconsolidated subsidiary, which was recorded during
the quarter ended December 31, 1994.
 
    The Company has not provided for deferred taxes on the gain on sale of
common stock or on the undistributed earnings of Denver Newspapers due to the
Company's recognition of operating loss carryforwards for financial reporting
purposes as offsets to deferred tax liabilities. Such operating loss
carryforwards are expected to be realized prior to the expiration of the loss
carryforwards.
 
    The Company's investment in Denver Newspapers at June 30, 1997, was less
than the book value of the underlying 60 percent of common equity in Denver
Newspapers as a result of the gain of approximately $1.0 million on the sale of
the 40 percent interest in Denver Newspapers not being sufficient to fully
offset the Denver Newspapers' losses previously recorded at 100 percent prior to
Media General's exercise of its warrant. Media General also owns 100 percent of
Denver Newspapers' preferred stock, which accretes dividends at the rate of $2.7
million per year.
 
SUMMARIZED FINANCIAL INFORMATION OF DENVER NEWSPAPERS, INC.
 
    The following is summarized balance sheet information for Denver Newspapers
as of June 30, 1997 and 1996, and summarized statements of operations for the
fiscal years ended June 30, 1997, 1996 and 1995 (in thousands):
 
                                       55
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 11: INVESTMENT IN UNCONSOLIDATED SUBSIDIARY (CONTINUED)
    SUMMARIZED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                               JUNE 30,
                                                                        ----------------------
<S>                                                                     <C>         <C>
                                                                           1997        1996
                                                                        ----------  ----------
                                            ASSETS
Current assets........................................................  $   43,807  $   38,604
Noncurrent assets.....................................................     116,292     101,305
                                                                        ----------  ----------
  Total assets........................................................  $  160,099  $  139,909
                                                                        ----------  ----------
                                                                        ----------  ----------
 
                             LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities...................................................  $   40,243  $   33,270
Noncurrent liabilities................................................      39,206      41,466
Mandatorily redeemable preferred stock................................      53,175      53,175
Shareholders' equity..................................................      27,475      11,998
                                                                        ----------  ----------
  Total liabilities and shareholders' equity..........................  $  160,099  $  139,909
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
    SUMMARIZED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                               FISCAL YEAR ENDED JUNE 30,
                                                           ----------------------------------
<S>                                                        <C>         <C>         <C>
                                                              1997        1996        1995
                                                           ----------  ----------  ----------
Total revenues...........................................  $  204,453  $  183,037  $  162,086
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Cost of sales............................................  $  102,042  $  106,368  $   83,026
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Net income before cumulative effect of accounting change
  and extraordinary credit...............................  $   18,177  $    6,936  $   10,900
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Cumulative effect of accounting change...................  $   --      $   --      $   (2,856)
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Net income applicable to common stock....................  $   15,477  $    4,236  $    5,344
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
</TABLE>
 
    In December, 1990, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 106 ("SFAS 106"), which requires Denver
Newspapers to recognize, as an expense, the future projected cost of providing
post-retirement health care and life insurance benefits as the employee provides
services instead of when the benefits are paid. Denver Newspapers has four plans
that required the adoption of SFAS 106 on July 1, 1994. Denver Newspapers'
adoption of SFAS 106 in the first quarter of fiscal 1995 resulted in a $4.4
million (pre-tax) cumulative effect of an accounting change, and a $2.9 million
net of tax charge to fiscal year 1995 earnings. Denver Newspapers intends to
fund this obligation from continuing operations.
 
NOTE 12: COMBINED SUMMARIZED FINANCIAL INFORMATION OF AFFILIATED NEWSPAPERS
         INVESTMENTS, INC. AND DENVER NEWSPAPERS, INC.
 
    The combined summarized financial statements include the accounts of ANI and
Denver Newspapers. The companies have common ownership, management, and each
have the same fiscal year-end. All
 
                                       56
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 12: COMBINED SUMMARIZED FINANCIAL INFORMATION OF AFFILIATED NEWSPAPERS
         INVESTMENTS, INC. AND DENVER NEWSPAPERS, INC. (CONTINUED)
significant intercompany balances and transactions have been eliminated. The
summarized combined financial information has been presented to supplement the
presentation contained in the consolidated financial statements of the Company.
The Company has a significant economic interest in Denver Newspapers and may be
dependent, in part, upon dividends from Denver Newspapers to service its debt in
the future.
 
    The following is the combined summarized balance sheet information for ANI
and Denver Newspapers as of June 30, 1997 and 1996 (in thousands):
 
    SUMMARIZED COMBINED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                              JUNE 30,
                                                                      ------------------------
<S>                                                                   <C>          <C>
                                                                         1997         1996
                                                                      -----------  -----------
                                            ASSETS
Current assets......................................................  $    98,401  $    77,457
Noncurrent assets...................................................      476,146      303,291
                                                                      -----------  -----------
  Total assets......................................................  $   574,547  $   380,748
                                                                      -----------  -----------
                                                                      -----------  -----------
 
                            LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities.................................................  $    88,544  $    75,939
Noncurrent liabilities..............................................      533,488      375,979
Minority interest...................................................       13,363        7,172
Mandatorily redeemable preferred stock..............................       53,175       53,175
Shareholders' deficit...............................................     (114,023)    (131,517)
                                                                      -----------  -----------
  Total liabilities and combined shareholders' deficit..............  $   574,547  $   380,748
                                                                      -----------  -----------
                                                                      -----------  -----------
</TABLE>
 
    The following is the combined summarized statements of operations for ANI
and Denver Newspapers for the fiscal years ended June 30, 1997, 1996 and 1995
(in thousands):
 
                                       57
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 12: COMBINED SUMMARIZED FINANCIAL INFORMATION OF AFFILIATED NEWSPAPERS
         INVESTMENTS, INC. AND DENVER NEWSPAPERS, INC. (CONTINUED)
    SUMMARIZED COMBINED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                               FISCAL YEAR ENDED JUNE 30,
                                                           ----------------------------------
<S>                                                        <C>         <C>         <C>
                                                              1997        1996        1995
                                                           ----------  ----------  ----------
Revenues.................................................  $  507,355  $  428,467  $  375,131
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Cost of sales............................................  $  208,518  $  204,837  $  162,124
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Gain on sale of newspaper property.......................  $   30,575  $    8,291  $    4,153
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Gain on sale of stock by Denver Newspapers...............  $   --      $   --      $      996
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Minority interest in (income) applicable to common
  stock..................................................  $   (6,191) $   (1,695) $   (2,458)
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Income (Loss) before cumulative effect of accounting
  change and extraordinary loss..........................  $   26,266  $  (10,932) $   (2,738)
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Extraordinary loss.......................................  $    8,772  $   --      $   --
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Cumulative effect of accounting change...................  $   --      $   --      $   (2,856)
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
Net income (loss) applicable to common stock.............  $   17,494  $  (10,932) $   (8,293)
                                                           ----------  ----------  ----------
                                                           ----------  ----------  ----------
</TABLE>
 
NOTE 13: SUBSEQUENT EVENT
 
ACQUISITION
 
    On July 31, 1997, Garden State acquired substantially all the assets used in
publication of THE SUN, an evening newspaper distributed primarily in Lowell,
Massachusetts. The assets were purchased for $49.0 million in cash plus a
covenant not to compete with the prior owners with a discounted value of
approximately $11.8 million. The newspaper has daily and Sunday circulation of
approximately 52,000 and 56,000, respectively.
 
    The acquisition will be accounted for as a purchase; accordingly, the
consolidated financial statements will include the operations of the acquired
newspaper from August 1, 1997.
 
PROPOSED BOND OFFERING
 
    In September 1997, Garden State anticipates issuing $200.0 million of Senior
Subordinated Notes due in 2009. The issuance of the Senior Subordinated Notes
will provide the Company with additional liquidity and flexibility, as well as
providing fixed rate long-term debt, at rates which Garden State currently
believes are attractive. If completed, Garden State will use the net proceeds to
reduce existing bank debt at Garden State and pay off and terminate the NJNI
bank credit facility.
 
    The following unaudited table sets forth, after giving effect to borrowings
associated with the July 31, 1997, acquisition of THE SUN, the Offering and the
paydown of debt associated with the Offering, the
 
                                       58
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
NOTE 13: SUBSEQUENT EVENT (CONTINUED)
approximate expected scheduled maturities of long-term debt of the Company for
the periods indicated. (In thousands)
 
<TABLE>
<CAPTION>
FISCAL
----------------------------------------------------------------------------------
<S>                                                                                 <C>
1998..............................................................................  $    2,247
1999..............................................................................       4,410
2000..............................................................................       4,604
2001..............................................................................       6,670
2002..............................................................................      38,979
Thereafter........................................................................     483,021
                                                                                    ----------
                                                                                    $  539,931
                                                                                    ----------
                                                                                    ----------
</TABLE>
 
    The following unaudited table sets forth the annual commitment reductions
for RCA, RCB and RCC, as well as annual payments under Term A Loan, giving
effect to the amended Garden State Bank Credit Agreement. (In thousands)
 
<TABLE>
<CAPTION>
                                                                                      TERM A
                                                      RCA         RCB        RCC       LOAN
                                                   ----------  ---------  ---------  ---------
<S>                                                <C>         <C>        <C>        <C>
                                                   $   10,000  $  --      $   4,000  $  --
1998.............................................      31,000     --          7,500     --
1999.............................................      31,000     --          7,500     --
2000.............................................      31,000     --         12,000     --
2001.............................................      31,000     --         12,000      3,750
2002.............................................      33,000     27,000     33,000     11,250
                                                   ----------  ---------  ---------  ---------
Thereafter.......................................  $  167,000  $  27,000  $  76,000  $  15,000
                                                   ----------  ---------  ---------  ---------
                                                   ----------  ---------  ---------  ---------
</TABLE>
 
    Giving effect to the Offering and the related paydown of debt, the Company
will have $101.0 million available under RCA for future acquisitions, $76.0
million under RCC for future acquisitions and general corporate purposes and
$22.0 million available under RCB, net of approximately $5.0 million in letters
of credit outstanding.
 
                                       59
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
           SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             (PARENT COMPANY ONLY)
                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                               JUNE 30,
                                                                                        -----------------------
<S>                                                                                     <C>          <C>
                                                                                           1997         1996
                                                                                        -----------  ----------
 
<CAPTION>
                                                                                        (DOLLARS IN THOUSANDS,
                                                                                          EXCEPT SHARE DATA)
<S>                                                                                     <C>          <C>
ASSETS
Cash..................................................................................  $   --       $      200
Other Assets..........................................................................            1           1
                                                                                        -----------  ----------
  Total Assets........................................................................  $         1  $      201
                                                                                        -----------  ----------
                                                                                        -----------  ----------
 
LIABILITIES
Due to (from) affiliate...............................................................  $       (15) $      120
Long-term debt........................................................................      131,579     115,113
Long-term deferred taxes..............................................................          520         520
Investment in subsidiaries............................................................      (18,059)     15,965
                                                                                        -----------  ----------
  Total Liabilities...................................................................      114,025     131,718
 
SHAREHOLDERS' DEFICIT:
Common stock, $.01 par value; 5,152,602 and 4,628,692 shares authorized at June 30,
  1997 and 1996, respectively; 2,314,346 shares issued and outstanding................           23          23
Additional paid-in capital............................................................        3,611       3,611
Deficit...............................................................................     (117,658)   (135,151)
                                                                                        -----------  ----------
  Total shareholders' deficit.........................................................     (114,024)   (131,517)
                                                                                        -----------  ----------
Total Liabilities and Shareholders' Deficit...........................................  $         1  $      201
                                                                                        -----------  ----------
                                                                                        -----------  ----------
</TABLE>
 
                 See notes to consolidated financial statements
 
                                       60
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
           SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                             (PARENT COMPANY ONLY)
                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                                                       YEAR ENDED JUNE 30,
                                                                                ----------------------------------
<S>                                                                             <C>         <C>         <C>
                                                                                   1997        1996        1995
                                                                                ----------  ----------  ----------
 
<CAPTION>
                                                                                          (IN THOUSANDS)
<S>                                                                             <C>         <C>         <C>
Income in subsidiaries........................................................  $   42,797  $    3,802  $    6,796
Interest expense..............................................................     (16,466)    (14,518)    (12,805)
Other.........................................................................         (65)        (60)        (60)
Gain on sale of common stock by unconsolidated subsidiary.....................      --          --             996
                                                                                ----------  ----------  ----------
 
Income (loss) before income taxes, cumulative effect of accounting change of
  unconsolidated subsidiary and extraordinary loss............................      26,266     (10,776)     (5,073)
Income tax expense............................................................      --            (156)       (364)
                                                                                ----------  ----------  ----------
 
Income (loss) before cumulative effect of accounting change of unconsolidated
  subsidiary and extraordinary loss...........................................      26,266     (10,932)     (5,437)
 
Cumulative effect of accounting change of unconsolidated subsidiary...........      --          --          (2,856)
Extraordinary loss from subsidiary............................................       8,772      --          --
                                                                                ----------  ----------  ----------
Net income (loss).............................................................  $   17,494  $  (10,932) $   (8,293)
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
</TABLE>
 
                 See notes to consolidated financial statements
 
                                       61
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
           SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
 
                             (PARENT COMPANY ONLY)
                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                        YEAR ENDED JUNE 30,
                                                                                 ---------------------------------
<S>                                                                              <C>         <C>         <C>
                                                                                    1997        1996       1995
                                                                                 ----------  ----------  ---------
 
<CAPTION>
                                                                                          (IN THOUSANDS)
<S>                                                                              <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Income (loss)................................................................  $   17,494  $  (10,932) $  (8,293)
  Income from subsidiaries.....................................................     (34,025)     (3,802)    (4,936)
  Amortization of debt discount................................................      16,466      14,518     12,805
  Deferred tax expense.........................................................      --             156        364
  Change in affiliated account balance.........................................        (135)         60         60
                                                                                 ----------  ----------  ---------
    NET CASH FLOWS FROM OPERATING ACTIVITIES...................................        (200)     --         --
CASH AT BEGINNING OF YEAR......................................................         200         200        200
                                                                                 ----------  ----------  ---------
CASH AT END OF YEAR............................................................  $   --      $      200  $     200
                                                                                 ----------  ----------  ---------
                                                                                 ----------  ----------  ---------
</TABLE>
 
                 See notes to consolidated financial statements
 
                                       62
<PAGE>
                    AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
                 SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
 
                FISCAL YEARS ENDED JUNE 30, 1996, 1995 AND 1994
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                 BALANCE AT      ADDITIONS                                BALANCE AT
                                                BEGINNING OF    CHARGED TO        NET      ACQUISITIONS     END OF
                                                   PERIOD      EXPENSE, NET   DEDUCTIONS   (DISPOSITIONS)   PERIOD
                                                -------------  -------------  -----------  -------------  -----------
<S>                                             <C>            <C>            <C>          <C>            <C>
YEAR ENDED JUNE 30, 1997
  Reserves and allowances deducted from asset
    accounts:
  Allowance for uncollectible accounts........    $   2,426      $   3,567     $   3,595     $   1,854     $   4,252
 
YEAR ENDED JUNE 30, 1996
  Reserves and allowances deducted from asset
    accounts:
  Allowance for uncollectible accounts........    $   1,931      $   2,510     $   2,474     $     459     $   2,426
 
YEAR ENDED JUNE 30, 1995
  Reserves and allowances deducted from asset
    accounts:
  Allowance for uncollectible accounts........    $   2,321      $   2,876     $   3,343     $      77     $   1,931
</TABLE>
 
                                       63
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS
 
The Board of Directors
Denver Newspapers, Inc.
 
    We have audited the accompanying consolidated balance sheets of Denver
Newspapers, Inc. and subsidiaries (the "Company") as of June 30, 1997 and 1996,
and the related consolidated statements of operations, changes in shareholders'
equity, and cash flows for each of the three years in the period ended June 30,
1997. Our audits also included the financial statement schedule II. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Denver
Newspapers, Inc. and subsidiaries at June 30, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1997, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
 
    As discussed in Note 7 to the consolidated financial statements, effective
July 1, 1994, the Company changed its method of accounting for post-retirement
benefits.
 
                                          ERNST & YOUNG LLP
 
Denver, Colorado
August 29, 1997
 
                                       64
<PAGE>
                 (This page has been left blank intentionally.)
 
                                       65
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                                     ASSETS
<TABLE>
<CAPTION>
                                                                                                   JUNE 30,
                                                                                            ----------------------
<S>                                                                                         <C>         <C>
                                                                                               1997        1996
                                                                                            ----------  ----------
 
<CAPTION>
                                                                                                (IN THOUSANDS)
<S>                                                                                         <C>         <C>
CURRENT ASSETS:
  Cash and cash equivalents...............................................................  $    3,974  $    8,947
  Trade accounts receivable, less allowance for doubtful accounts (1997--$2,917;
    1996--$2,055).........................................................................      25,742      21,586
  Inventories of newsprint and supplies...................................................      10,158       4,380
  Prepaid expenses and other assets.......................................................       1,501       1,431
  Deferred income taxes...................................................................       2,432       2,260
                                                                                            ----------  ----------
    TOTAL CURRENT ASSETS..................................................................      43,807      38,604
 
PROPERTY, PLANT AND EQUIPMENT
  Land....................................................................................       6,925       6,935
  Buildings and improvements..............................................................      21,924      21,920
  Machinery and equipment.................................................................      84,846      80,745
  Construction-in-progress................................................................      16,164         135
                                                                                            ----------  ----------
                                                                                               129,859     109,735
Accumulated depreciation and amortization.................................................     (47,354)    (42,308)
                                                                                            ----------  ----------
  NET PROPERTY, PLANT AND EQUIPMENT.......................................................      82,505      67,427
 
OTHER ASSETS
  Subscriber accounts less accumulated amortization of $114 and $19 at June 30, 1997 and
    1996, respectively....................................................................       1,383       1,737
  Excess of cost over fair value of net assets acquired, less accumulated amortization of
    $301 and $48 at June 30, 1997 and 1996, respectively..................................      10,368      11,582
  Net pension asset.......................................................................      21,147      20,096
  Other...................................................................................         889      33,787
                                                                                            ----------  ----------
    TOTAL OTHER ASSETS....................................................................         463      33,878
                                                                                            ----------  ----------
TOTAL ASSETS..............................................................................  $  160,099  $  139,909
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       66
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
                    CONSOLIDATED BALANCE SHEETS (CONTINUED)
 
                      LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
                                                                                                   JUNE 30,
                                                                                            ----------------------
<S>                                                                                         <C>         <C>
                                                                                               1997        1996
                                                                                            ----------  ----------
 
<CAPTION>
                                                                                                (IN THOUSANDS)
<S>                                                                                         <C>         <C>
 
CURRENT LIABILITIES:
  Trade accounts payable..................................................................  $   15,157  $    9,728
  Accrued employee compensation...........................................................       4,603       4,166
  Other accrued liabilities...............................................................       6,882       6,579
  Due to affiliates.......................................................................          38         122
  Income taxes payable....................................................................       3,738       1,769
  Unearned income.........................................................................       8,960       8,401
  Current portion of other liabilities and capital leases.................................         865       2,505
                                                                                            ----------  ----------
    TOTAL CURRENT LIABILITIES.............................................................      40,243      33,270
 
OBLIGATIONS UNDER CAPITAL LEASES..........................................................       2,238       2,993
 
LONG-TERM DEBT............................................................................       9,500      14,000
 
OTHER LIABILITIES.........................................................................       7,778       6,495
 
DEFERRED INCOME TAXES.....................................................................      19,690      17,978
 
MANDATORILY REDEEMABLE 9% CUMULATIVE PREFERRED STOCK, PAR VALUE $25,000 PER SHARE; 1,200
  SHARES AUTHORIZED, ISSUED AND OUTSTANDING...............................................      53,175      53,175
 
SHAREHOLDERS' EQUITY:
Common stock, par value $1 per share; Class A, authorized 120 shares; 40 shares issued and
  outstanding; Class B, authorized 120 shares; 60 shares issued and outstanding...........      --          --
Additional paid-in capital................................................................       7,762       7,762
Retained earnings.........................................................................      19,713       4,236
                                                                                            ----------  ----------
    TOTAL SHAREHOLDERS' EQUITY............................................................      27,475      11,998
                                                                                            ----------  ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................................  $  160,099  $  139,909
                                                                                            ----------  ----------
                                                                                            ----------  ----------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       67
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                                   FISCAL YEAR ENDED JUNE 30,
                                                                               ----------------------------------
                                                                                  1997        1996        1995
                                                                               ----------  ----------  ----------
                                                                                         (IN THOUSANDS)
<S>                                                                            <C>         <C>         <C>
REVENUES.....................................................................  $  204,453  $  183,037  $  162,086
COSTS AND EXPENSES:
  Cost of sales..............................................................     102,042     106,368      83,026
  Selling, general and administrative........................................      65,495      57,190      55,338
  Management fees............................................................         740         641         575
  Depreciation and amortization..............................................       5,860       6,577       5,743
  Interest expense...........................................................         741         805         636
  Other income, net..........................................................        (122)       (147)       (271)
                                                                               ----------  ----------  ----------
TOTAL COSTS AND EXPENSES.....................................................     174,756     171,434     145,047
                                                                               ----------  ----------  ----------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE........      29,697      11,603      17,039
INCOME TAX EXPENSE...........................................................     (11,520)     (4,667)     (6,139)
                                                                               ----------  ----------  ----------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE.........................      18,177       6,936      10,900
CUMULATIVE EFFECTIVE OF ACCOUNTING CHANGE, NET OF TAXES OF $1,538............      --          --          (2,856)
                                                                               ----------  ----------  ----------
NET INCOME...................................................................      18,177       6,936       8,044
ACCRETION OF DIVIDENDS ON PREFERRED STOCK....................................      (2,700)     (2,700)     (2,700)
                                                                               ----------  ----------  ----------
NET INCOME APPLICABLE TO COMMON STOCK........................................  $   15,477  $    4,236  $    5,344
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       68
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
 
<TABLE>
<CAPTION>
                                                                                         ADDITIONAL       TOTAL
                                                                              RETAINED     PAID-IN    SHAREHOLDERS'
                                                                              EARNINGS     CAPITAL       EQUITY
                                                                              ---------  -----------  -------------
                                                                                         (IN THOUSANDS)
<S>                                                                           <C>        <C>          <C>
BALANCE AT JUNE 30, 1994....................................................  $  (7,306)  $   9,704    $     2,398
  Net income................................................................      8,044      --              8,044
  Exercise of common stock warrant..........................................     --              20             20
  Accretion of dividends on preferred stock.................................       (738)     (1,962)        (2,700)
                                                                              ---------  -----------  -------------
BALANCE AT JUNE 30, 1995....................................................     --           7,762          7,762
  Net income................................................................      6,936      --              6,936
  Accretion of dividends on preferred stock.................................     (2,700)     --             (2,700)
                                                                              ---------  -----------  -------------
BALANCE AT JUNE 30, 1996....................................................      4,236       7,762         11,998
  Net income................................................................     18,177      --             18,177
  Accretion of dividends on preferred stock.................................     (2,700)     --             (2,700)
                                                                              ---------  -----------  -------------
BALANCE AT JUNE 30, 1997....................................................  $  19,713   $   7,762    $    27,475
                                                                              ---------  -----------  -------------
                                                                              ---------  -----------  -------------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       69
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                    FISCAL YEAR ENDED JUNE 30,
                                                                                ----------------------------------
                                                                                   1997        1996        1995
                                                                                ----------  ----------  ----------
                                                                                          (IN THOUSANDS)
<S>                                                                             <C>         <C>         <C>
OPERATING ACTIVITIES:
  Net income..................................................................  $   18,177  $    6,936  $    8,044
  Adjustments to reconcile net income to net cash from operating activities:
    Cumulative effect of accounting change....................................      --          --           2,856
    Depreciation..............................................................       5,500       6,510       5,743
    Amortization..............................................................         360          67      --
    Deferred income taxes.....................................................       1,540        (256)     (2,489)
    Change in operating assets and liabilities:
      Increase in accounts receivable, net....................................      (4,302)     (4,220)     (2,086)
      (Increase) decrease in inventories......................................      (4,888)      2,100      (1,501)
      Decrease in income taxes receivable.....................................      --          --             521
      Increase in prepaid expenses and other current assets...................        (496)       (106)       (838)
      Increase in pension assets..............................................      (1,051)     (1,053)       (916)
      Increase (decrease) in accounts payable and current liabilities.........       8,699      (1,819)      6,361
      Other...................................................................         370         746       1,693
                                                                                ----------  ----------  ----------
        NET CASH FROM OPERATING ACTIVITIES....................................      23,909       8,905      17,388
INVESTING ACTIVITIES:
  Purchase of newspaper properties............................................      --         (15,716)     --
  Sale of newspaper property..................................................       1,987      --          --
  Purchases of property, plant and equipment, net of capital leases...........     (18,907)     (3,745)    (14,353)
  Decrease in short-term investments..........................................      --           1,327      --
                                                                                ----------  ----------  ----------
        NET CASH FROM INVESTING ACTIVITIES....................................     (16,920)    (18,134)    (14,353)
FINANCING ACTIVITIES:
  Issuance of long-term debt..................................................       9,000      17,500       9,000
  Principal payments on long-term debt........................................     (15,099)     (6,007)    (12,000)
  Principal payments on capital lease obligations.............................      (3,163)     (1,086)       (729)
  Preferred stock dividend....................................................      (2,700)     --          --
  Net proceeds from exercise of common stock warrant..........................      --          --              20
                                                                                ----------  ----------  ----------
        NET CASH FROM FINANCING ACTIVITIES....................................     (11,962)     10,407      (3,709)
                                                                                ----------  ----------  ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS..........................      (4,973)      1,178        (674)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR................................       8,947       7,769       8,443
                                                                                ----------  ----------  ----------
CASH AND CASH EQUIVALENTS AT END OF YEAR......................................  $    3,974  $    8,947  $    7,769
                                                                                ----------  ----------  ----------
                                                                                ----------  ----------  ----------
</TABLE>
 
          See accompanying notes to consolidated financial statements.
 
                                       70
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
 
    Denver Newspapers, Inc. ("Denver Newspapers") and its subsidiaries are in
the business of publishing daily and weekly newspapers.
 
PRINCIPLES OF CONSOLIDATION
 
    The consolidated financial statements include the accounts of Denver
Newspapers and its wholly owned subsidiary, The Denver Post Corporation ("DPC"),
and DPC's wholly owned subsidiary, Eastern Colorado Publishing Company ("Eastern
Colorado") (collectively referred to as "the Company"). At June 30, 1997, 60
percent of the Company's common stock was held by Affiliated Newspapers
Investments, Inc. and 40 percent was held by Media General, Inc. All
intercompany accounts were eliminated upon consolidation.
 
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.
 
INVENTORIES
 
    Inventories, which largely consist of newsprint, are valued at the lower of
cost or market. Effective July 1, 1996, the Company elected to change its method
of determining the cost of inventories from last in, first out to first in,
first out. The effect of the accounting change was not material.
 
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 the individual assets.
 
INTANGIBLE ASSETS
 
    Intangible assets acquired are recorded at their estimated fair values as of
the date of acquisition. The excess of cost over fair value of net assets
acquired is being amortized using the straight-line method over a period of 40
years. Subscriber accounts are amortized using the straight-line method over 15
years.
 
IMPAIRMENT OF LONG-LIVED ASSETS
 
    The carrying value of long-lived assets is reviewed annually; however, if at
any time the facts or circumstances at any of the Company's individual newspaper
operations indicate impairment of asset values as a result of continual declines
in performance or as a result of fundamental changes in a newspaper's market, a
determination is made as to whether the carrying value of the newspaper's long-
lived assets exceeds it estimated realizable value. For purposes of this
determination, estimated realizable value is based on values placed on
comparable newspaper properties, generally based on a multiple of revenue and
operating profit (before depreciation and amortization).
 
INCOME TAXES
 
    The Company accounts for income taxes using the asset and liability method
of accounting. Deferred taxes are recognized for the tax consequences of
temporary differences by applying enacted statutory rates
 
                                       71
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
1. SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS (CONTINUED)
to differences between the financial statement carrying amount and the tax basis
of existing assets and liabilities. The effect on deferred taxes of a change in
tax rates is recognized in income in the period that includes the enactment
date.
 
FINANCIAL INSTRUMENTS
 
    The carrying value of long-term debt at June 30, 1997, approximates the fair
value of such financial instruments. Management cannot practicably estimate the
fair value of its mandatorily redeemable preferred stock because of the lack of
quoted market prices for this type of security and its inability to estimate its
fair value without incurring the excessive costs of obtaining an appraisal. The
carrying amount represents its original issue price plus accumulated and unpaid
dividends.
 
ADVERTISING COSTS
 
    The Company expenses all advertising cost as incurred. Advertising costs
included in the Consolidated Statements of Operations for the years ended June
30, 1997, 1996 and 1995, were approximately $5.3 million, $4.0 million and $4.1
million, respectively.
 
USE OF ESTIMATES
 
    The preparation of financial statements in accordance with generally
accepted accounting principles at times requires the use of estimates and
assumptions that affect the reported amount of assets, liabilities, revenues and
expenses. Actual results could differ from these estimates.
 
2. ACQUISITIONS AND DISPOSITION
 
    ACQUISITIONS
 
    On May 1, 1996, DPC purchased from Garden State Newspapers, Inc., an
affiliate of the Company, the common stock of Eastern Colorado, which publishes
the daily and weekly newspapers listed below:
 
<TABLE>
<CAPTION>
         NEWSPAPER LOCATION                    DAILY PUBLICATION                     WEEKLY PUBLICATION
------------------------------------  ------------------------------------  ------------------------------------
<S>                                   <C>                                   <C>
Fort Morgan, Colorado                 FORT MORGAN TIMES                     MORGAN TIMES REVIEW(A)
Sterling, Colorado                    JOURNAL-ADVOCATE                      J. A. SHOPPER(A)
Lamar, Colorado                       LAMAR DAILY NEWS                      TRI-STATE TRADER(A)
Sidney, Nebraska                      SIDNEY TELEGRAPH                      HIGH PLAINS SHOPPING GUIDE(A)
Akron, Colorado                       None                                  AKRON NEWS REPORTER(B)
Brush, Colorado                       None                                  BRUSH NEWS-TRIBUNE(B)
Julesburg, Colorado                   None                                  JULESBURG ADVOCATE(B)
</TABLE>
 
------------------------
 
(a) Free weekly distribution
 
(b) Paid weekly distribution
 
    The common stock of Eastern Colorado was purchased for approximately $15.7
million, including the assumption of $0.2 million of discounted non-compete
payments and other long-term obligations associated with the newspapers
acquired. The sales price of Eastern Colorado was deemed to be fair based on an
independent appraisal of the transaction.
 
                                       72
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
2. ACQUISITIONS AND DISPOSITION (CONTINUED)
    The acquisition was accounted for as a purchase; accordingly, the operations
of Eastern Colorado have been included since the date of acquisition. The assets
acquired and liabilities assumed have been recorded at their estimated fair
value at the date of acquisition. These fair values were based on management's
best estimate. The excess of cost over fair value of net assets acquired and
intangible assets related to subscriber lists are being amortized on a straight
line basis over 40 and 15 years, respectively.
 
    DISPOSITION
 
    On July 31, 1996, Eastern Colorado sold substantially all the assets used in
the publication of the SIDNEY TELEGRAPH and the HIGH PLAINS SHOPPING GUIDE for
approximately $2.0 million in cash. The sale price approximated the value
allocated to the assets as of April 30, 1996, in the acquistions discussed
above.
 
3. LONG-TERM DEBT
 
    On June 30, 1996, the Company restructured its existing revolving bank
credit facility (the "Agreement") to increase the credit commitment to $27.0
million, which includes a $25.0 million revolving loan commitment and a $2.0
million letter of credit commitment. At June 30, 1997, approximately $1.6
million of the letter of credit commitment was used in support of workers'
compensation insurance. The principal borrowings under the Agreement bear
interest at a variable rate based on either the bank's prime rate of interest or
a LIBOR rate. The Company also pays an annual fee of one-fourth of one percent
on the unused commitment, payable quarterly. On June 30, 2000, all letters of
credit drawings (if any) and any outstanding balance under the revolving loan
commitment are due and payable.
 
    Interest paid during the fiscal year ended June 30, 1997, 1996 and 1995 was
approximately $0.7 million, $0.8 million and $0.6 million, respectively. In
fiscal year 1997, the Company capitalized $0.3 million of interest.
 
    The Agreement contains restrictions and limitations with respect to
additional debt, capital expenditures and lease arrangements. In addition, the
Agreement requires the maintenance of certain financial ratios, operating
statistics and cash flow levels. All of DPC's and its subsidiaries' assets and
common stock are pledged as collateral under the Agreement.
 
4. LEASES
 
    The Company leases certain equipment, vehicles and office space under
various operating and capital leases. Several of these leases contain renewal
and purchase options and escalation clauses. Accumulated amortization on capital
leases is included in accumulated depreciation in the accompanying consolidated
balance sheets.
 
    Property, plant and equipment includes the following amounts for assets
under capital leases:
<TABLE>
<CAPTION>
                                                                                 JUNE 30,
                                                                           --------------------
<S>                                                                        <C>        <C>
                                                                             1997       1996
                                                                           ---------  ---------
 
<CAPTION>
                                                                              (IN THOUSANDS)
<S>                                                                        <C>        <C>
Machinery and equipment..................................................  $   7,391  $   6,314
Accumulated amortization.................................................     (2,896)    (2,957)
                                                                           ---------  ---------
Machinery and equipment under capital leases, net........................  $   4,495  $   3,357
                                                                           ---------  ---------
                                                                           ---------  ---------
</TABLE>
 
                                       73
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
4. LEASES (CONTINUED)
    Future minimum lease payments, by year and in the aggregate, for
noncancellable operating and capital leases with initial or remaining terms of
one year or more, consisted of the following at June 30, 1997:
 
<TABLE>
<CAPTION>
                                                                            CAPITAL    OPERATING
                                                                            LEASES      LEASES
                                                                           ---------  -----------
<S>                                                                        <C>        <C>
                                                                               (IN THOUSANDS)
1998.....................................................................  $     973   $   2,237
1999.....................................................................      1,166       2,051
2000.....................................................................        603       2,394
2001.....................................................................        370       2,186
2002.....................................................................        316       1,953
Thereafter...............................................................        279       3,599
                                                                           ---------  -----------
Total minimum obligations................................................      3,707   $  14,420
                                                                                      -----------
                                                                                      -----------
Less amount representing interest........................................        690
                                                                           ---------
Present value of net minimum obligations.................................      3,017
Less current portion.....................................................        779
                                                                           ---------
Long-term obligations under capital lease................................  $   2,238
                                                                           ---------
                                                                           ---------
</TABLE>
 
    Rental expense was approximately $2.9 million, $2.6 million and $2.5 million
for the years ended June 30, 1997, 1996, and 1995, respectively.
 
5. EMPLOYEE PENSION PLANS
 
    The Company sponsors two noncontributory defined benefit pension plans which
cover substantially all employees other than certain union employees covered by
multi-employer pension plans under collective bargaining agreements. The plan
covering salaried and management employees provides benefits based on employees'
years of service and compensation during the years immediately preceding
retirement. The plan covering certain union employees provides benefits of
stated amounts based on length of service. The Company's funding policy for both
plans is to make the minimum annual contributions required by the Employee
Retirement Income Security Act of 1974.
 
    The components of net periodic pension income for the Company's two
qualified defined benefit plans for the years ended June 30, 1997, 1996 and 1995
are as follows:
 
<TABLE>
<CAPTION>
                                                                  1997       1996       1995
                                                                ---------  ---------  ---------
<S>                                                             <C>        <C>        <C>
                                                                        (IN THOUSANDS)
Service cost-benefits earned during the period................  $   1,498  $   1,282  $   1,004
Interest cost on projected benefit obligations................      2,484      2,240      2,187
Return on plan assets.........................................     (9,094)    (6,470)    (6,697)
Net amortization and deferral.................................      4,061      1,895      2,590
                                                                ---------  ---------  ---------
Net pension income............................................  $  (1,051) $  (1,053) $    (916)
                                                                ---------  ---------  ---------
                                                                ---------  ---------  ---------
</TABLE>
 
                                       74
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
5. EMPLOYEE PENSION PLANS (CONTINUED)
    The following table sets forth the funding status and amounts recognized in
the Company's consolidated balance sheets at June 30, 1997, 1996 and 1995
related to the Company's defined benefit plans:
 
<TABLE>
<CAPTION>
                                                                                     1997       1996       1995
                                                                                   ---------  ---------  ---------
<S>                                                                                <C>        <C>        <C>
                                                                                           (IN THOUSANDS)
Actuarial present value of benefit obligations:
  Accumulated benefit obligations, including vested benefits of $31,005, $29,542
    and $28,060 for 1997, 1996 and 1995, respectively............................  $  32,279  $  29,904  $  28,403
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
Plan assets at fair value comprised of common stock, bond and U.S. Government
  obligation funds...............................................................  $  59,817  $  52,940  $  48,393
Projected benefit obligations....................................................     36,540     32,460     30,861
                                                                                   ---------  ---------  ---------
Excess of plan assets over projected benefit obligations.........................     23,277     20,480     17,532
Unrecognized gain from past experience different from that assumed...............     (3,716)    (2,134)      (404)
Unamortized balance of prior service liability...................................      1,586      1,750      1,915
                                                                                   ---------  ---------  ---------
Net pension asset recognized in the consolidated balance sheets..................  $  21,147  $  20,096  $  19,043
                                                                                   ---------  ---------  ---------
                                                                                   ---------  ---------  ---------
</TABLE>
 
    The weighted-average discount rate used in determining the actuarial present
value of the projected benefit obligations was 7.5% at June 30, 1997 and 1996,
and 8.5% at June 30, 1995. The rate of increase in future compensation levels
used in determining the actuarial present value of the projected benefit
obligations was 6.25% and the expected long-term rate of return on plan assets
was 10.0% for all periods.
 
    Certain union employees are covered under multi-employer defined benefit
plans administered by the unions. The amounts contributed and charged to pension
cost for these plans totaled approximately $1.2 million, $0.7 million and $1.2
million for the years ended June 30, 1997, 1996 and 1995, respectively.
 
6. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
 
    Effective July 1, 1994 the Company adopted the provisions of Statement of
Financial Accounting Standards No. 106 ("SFAS 106"), "Employers Accounting for
Postretirement Benefits Other Than Pensions." SFAS 106 requires that the
estimated cost of providing such postretirement benefits be accrued during the
employee's active service period and that prior service cost be recognized
immediately or amortized over a period not to exceed 20 years. The Company has
elected to recognize the accumulated prior service cost for postretirement
benefits immediately.
 
    Upon adoption of SFAS 106, the Company recorded the discounted value of
expected future benefits attributable to employees' service prior to July 1,
1994 as a cumulative effect of an accounting change. The accounting change
resulted in a one-time $2.9 million non-cash charge to earnings which was net of
a $1.5 million deferred tax benefit. Prior to the adoption of SFAS 106, the
Company recognized the cost of these postretirement benefits as paid.
 
    The Company's postretirement health care and life insurance plans (the
"Plans") provide certain of the Company's 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.
 
                                       75
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (CONTINUED)
    The unfunded accumulated postretirement benefits obligation as of June 30,
1997 and 1996 consisted of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                             JUNE 30,     JUNE 30,
                                                                               1997         1996
                                                                            -----------  -----------
<S>                                                                         <C>          <C>
Retirees..................................................................   $   2,652    $   2,412
Fully eligible active plant participants..................................         499          272
Other active plan participants............................................       1,898        2,956
                                                                            -----------  -----------
Accumulated postretirement benefit obligation.............................       5,049        5,640
Unrecognized net loss.....................................................         (56)        (746)
                                                                            -----------  -----------
Accrued postretirement benefit obligation.................................   $   4,993    $   4,894
                                                                            -----------  -----------
                                                                            -----------  -----------
</TABLE>
 
    Net periodic postretirement benefit cost for the years ended June 30, 1997,
1996 and 1995 included the following components (in thousands):
 
<TABLE>
<CAPTION>
                                                                       FISCAL YEAR ENDED JUNE 30,
                                                                  -------------------------------------
                                                                     1997         1996         1995
                                                                  -----------  -----------  -----------
<S>                                                               <C>          <C>          <C>
Service cost....................................................   $      96    $     123    $      96
Interest cost on accumulated post-retirement benefit
  obligations...................................................         352          396          370
Net amortization and deferral...................................      --               46       --
                                                                       -----        -----        -----
Net postretirement benefit expense..............................   $     448    $     565    $     466
                                                                       -----        -----        -----
                                                                       -----        -----        -----
</TABLE>
 
    In determining the Accumulated Postretirement Benefit Obligation ("APBO"),
the weighted average discount rate of 7.5% was assumed at July 1, 1997 and 1996.
The June 30, 1997 and 1996, assumed health care cost trend rate was 7.5%
declining to 5.0% in fiscal year 2001 and thereafter. A 1.0% increase in the
assumed health care cost trend rate would increase the accumulated
postretirement benefit obligation by approximately $900,000 and the service cost
and interest cost components of the net postretirement benefit expense for
fiscal year 1997 by an immaterial amount. 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.
 
    The Company has also accrued $1.1 million for early retirement incentives
which consist of supplemental retirement benefits for certain employees who
retire between the age of sixty-two and sixty-five. These supplemental
retirement benefits consist of cash payments to supplement the retiree's
pension.
 
                                       76
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7. INCOME TAXES
 
    The income tax provision (benefit) for each of the three years ended June
30, 1997, 1996 and 1995 consists of the following (in thousands):
 
<TABLE>
<CAPTION>
                                                                    1997       1996       1995
                                                                  ---------  ---------  ---------
<S>                                                               <C>        <C>        <C>
Current:
  Federal.......................................................  $   9,363  $   4,922  $   7,090
  State.........................................................        617     --         --
 
Deferred:
  State.........................................................        691        488     --
  Federal.......................................................        849       (743)      (951)
                                                                  ---------  ---------  ---------
                                                                  $  11,520  $   4,667  $   6,139
                                                                  ---------  ---------  ---------
                                                                  ---------  ---------  ---------
</TABLE>
 
    A reconciliation between the actual income tax expense for financial
statement purposes and income taxes computed by applying the statutory federal
income tax rate to financial statement earnings before taxes is as follows:
 
<TABLE>
<CAPTION>
                                                                          FISCAL YEAR ENDED JUNE 30,
                                                                     -------------------------------------
<S>                                                                  <C>          <C>          <C>
                                                                        1997         1996         1995
                                                                        -----        -----        -----
Statutory federal income tax rate..................................          35%          35%          35%
Effect of:
  State income taxes, net of federal benefit.......................           3            3       --
  Other, net.......................................................           1            2            1
                                                                             --           --           --
                                                                             39%          40%          36%
                                                                             --           --           --
                                                                             --           --           --
</TABLE>
 
                                       77
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7. INCOME TAXES (CONTINUED)
    Temporary differences which give rise to significant components of the
Company's deferred tax liabilities and assets at June 30, 1997 and 1996, are as
follows:
<TABLE>
<CAPTION>
                                                                               JUNE 30
                                                                        ----------------------
<S>                                                                     <C>         <C>
                                                                           1997        1996
                                                                        ----------  ----------
 
<CAPTION>
                                                                            (IN THOUSANDS)
<S>                                                                     <C>         <C>
Deferred tax assets:
  Allowance for bad debt..............................................  $      967  $      745
  Postretirement and other pension....................................       2,312       2,384
  Other...............................................................       3,020       2,643
                                                                        ----------  ----------
Total deferred tax assets.............................................       6,299       5,772
 
Deferred tax liabilities:
  Capital lease and fixed assets......................................     (14,421)    (13,674)
  Pension Asset.......................................................      (7,769)     (7,687)
  Other...............................................................      (1,367)       (129)
                                                                        ----------  ----------
 
Deferred tax liabilities, net.........................................     (17,258)    (15,718)
Current deferred tax assets, net......................................       2,432       2,260
                                                                        ----------  ----------
Long-term deferred tax liabilities....................................  $  (19,690) $  (17,978)
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
    The Company made federal and state income tax payments of $8.6 million, $3.8
million and $6.2 million during the fiscal years ended June 30, 1997, 1996 and
1995, respectively. The Company has state enterprise zone credits of $1.0
million expiring in 1997 through 2002. The Company has no federal or state
operating loss carryforwards.
 
8. MANDATORILY REDEEMABLE PREFERRED STOCK
 
    The Company previously authorized and issued 1,200 shares of 9% non-voting
cumulative preferred stock with a stated value of $30.0 million (the "9%
Preferred Stock"), which is currently held by Media General, Inc. The holder of
the 9% Preferred Stock is entitled to receive yearly dividends at the rate of 9%
or $2,700,000 per year. The carrying value of the 9% Preferred Stock includes
the accretion of accumulated and unpaid dividends as of June 30, 1997, in the
amount of $23.2 million.
 
    Beginning January 1, 1997, the Company can pay an annual preferred stock
dividend of $2.7 million provided the Company has complied with certain
financial conditions as defined in the Company's bank credit facility. The
Company's 9% Preferred Stock is mandatorily redeemable on the earlier of (a)
June 30, 1999, (b) the date on which such redemption is permissible under DPC's
credit agreement, (c) the date on which the Company ceases to own directly at
least 51% of all the outstanding capital stock of DPC, or (d) the date on which
the Company, directly or indirectly, causes or permits DPC to dispose of
substantially all of its assets. In January 1997, the Company paid a preferred
stock dividend of $2.7 million.
 
                                       78
<PAGE>
                    DENVER NEWSPAPERS, INC. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
9. RELATED PARTY TRANSACTIONS
 
    MediaNews Group, Inc., an affiliate of the Company, provides management
services to the Company for a fee. The cost of management services provided has
been included as management fees in the Consolidated Statements of Operations.
 
10. COMMITMENTS AND CONTINGENCIES
 
    CONTINGENCIES
 
    The Company is involved in a number of legal proceedings which have arisen
in the ordinary course of business. In the opinion of management, the outcome of
these legal proceedings will not have a material adverse impact on the Company's
financial position or results of operations.
 
    COMMITMENTS
 
    Under the terms of a newsprint contract, the Company, through MNG, has
agreed to purchase 2,000 tons per month of newsprint at a fixed price for the
period September 1, 1997 through August 31, 2000. Management does not expect
that it will purchase less than the required amount; however, if it should
default on the purchase obligation, MNG and/or the Company would be responsible
for damages, if any, incurred by the seller.
 
    In fiscal year 1997, THE DENVER POST began the expansion of its production
facility and press capacity. The total cost of this project is estimated to be
approximately $26.3 million. As of June 30, 1997, approximately $16.0 million
had been spent on the project.
 
11. SUBSEQUENT EVENT
 
    On July 1, 1997, Eastern Colorado purchased substantially all the assets
used in the publication of THE BURLINGTON RECORD and THE PLAINS DEALER, weekly
newspapers located in Burlington, Colorado, for $0.4 million in cash and seller
notes with a discounted value of approximately $1.2 million. The acquisition
will be accounted for as a purchase; accordingly, the Consolidated Financial
Statements will include the operations of the acquired newspapers from July 1,
1997.
 
                                       79
<PAGE>
                            DENVER NEWSPAPERS, INC.
 
          SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
 
                FISCAL YEARS ENDED JUNE 30, 1997, 1996 AND 1995
 
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                           BALANCE AT     ADDITIONS                                   BALANCE AT
                                          BEGINNING OF    CHARGED TO       NET                          END OF
                                             PERIOD      EXPENSE, NET   DEDUCTIONS    ACQUISITIONS      PERIOD
                                          ------------   ------------   ----------   --------------   ----------
<S>                                       <C>            <C>            <C>          <C>              <C>
YEAR ENDED JUNE 30, 1997
  Reserves and allowances deducted from
    asset accounts:
    Allowance for uncollectable
      accounts..........................     $2,055         $3,079       $(2,217)       $--             $2,917
                                             ------         ------      ----------         -----      ----------
                                             ------         ------      ----------         -----      ----------
 
YEAR ENDED JUNE 30, 1996
  Reserves and allowances deducted from
    asset accounts:
    Allowance for uncollectable
      accounts..........................     $2,239         $3,029       $(3,243)       $     30        $2,055
                                             ------         ------      ----------         -----      ----------
                                             ------         ------      ----------         -----      ----------
 
YEAR ENDED JUNE 30, 1995
  Reserves and allowances deducted from
    asset accounts:
    Allowance for uncollectable
      accounts..........................     $1,998         $2,401       $(2,160)       $--             $2,239
                                             ------         ------      ----------         -----      ----------
                                             ------         ------      ----------         -----      ----------
</TABLE>
 
                                       80
<PAGE>
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
 EXHIBIT
   NO.     DESCRIPTION
---------  -------------------------------------------------------------------------------------------------------
<C>        <S>
   3.1*    --Second Amended and Restated Certificate of Incorporation
 
   3.2*    --Form of Fourth Amended and Restated Certificate of Incorporation.
 
   3.3*    --Restated Bylaws.
 
   3.4*    --Form of Restated Bylaws.
 
   3.5*    --Form of Certificate of Incorporation of Garden State Investments, Inc.
 
   4.1*    --Form of Indenture.
 
   4.2*    --Form of Second Pledge Agreement to be dated as of the Closing Date between Garden State Investments,
             Inc., Bank of New York, Wilmington Trust Company and William J. Wade.
 
  10.1*    --Form of New Senior Note Agreement between Garden State Newspapers, Inc. and certain of its
             subsidiaries, as obligors, and John Hancock Mutual Life Insurance Company, Lender.
 
  10.2*    --Form of New Garden State Credit Facility Agreement.
 
  10.3*    --Form of New NJNI Credit Facility Agreement.
 
  10.4*    --Management Agreement dated July 1, 1988 between MediaNews Group, Inc. and the Registrant.
 
  10.5*    --Employment Agreement dated April 26, 1985 between Garden State Newspapers, Inc. and William Dean
             Singleton, with April 30, 1986, October 1, 1988, and February 10, 1993 Amendments.
 
  10.6*    --Amended and Restated Partnership Agreement of North Jersey Newspapers Company dated December 31, 1991
             between North Jersey Newspapers, Inc., and Affiliated Newspapers Investment Company.
 
  10.7*    --Joint Operating Agreement dated January 13, 1989 among York Daily Record, Inc., York Newspapers,
             Inc., and The York Newspapers Company.
 
  10.8*    --Form of Tax Sharing Agreement by and between Garden State Newspapers, Inc. and Affiliated Newspapers
             Investments, Inc.
 
  10.9*    --Form of Used Equipment Trade Agreement between Alameda Newspaper Group and Man Roland, Inc.
 
  10.10*   --Form of Used Equipment Trade Agreement between North Jersey Newspapers Company and Man Roland, Inc.
 
  10.11*   --Form of Agreement between Garden State Newspapers, Inc. and North Jersey Newspapers Company for an
             option to purchase three Colormatic Presses.
 
  10.12*   --Consulting Agreement dated November 16, 1993 between J. Allan Meath and Garden State Newspapers, Inc.
 
  10.13*   --Letter Agreement between Media General, Garden State Newspapers, Inc. and Affiliated Newspapers
             Investment Company, dated as of March 16, 1994.
 
  10.14*   --Purchase Agreement dated March 25, 1994 between Thomson Newspapers and Affiliated Newspapers
             Investments, Inc.
 
  10.15*   --Amendment dated May 3, 1994 to Letter Agreement between Media General, Garden State Newspapers, Inc.
             and Affiliated Newspapers Investment Company dated as of March 16, 1994.
</TABLE>
 
                                       81
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT
   NO.     DESCRIPTION
---------  -------------------------------------------------------------------------------------------------------
<C>        <S>
  10.16*   --Form of Amendment and Restatement of Trust Agreement among Garden State Newspapers, Inc., Alameda
             Newspapers, Inc., Graham Newspapers, Inc., The Johnstown Tribune Publishing Company, Mid-States
             Newspapers, Inc., and York Newspapers, Inc.; John Hancock Mutual Life Insurance Company, John Hancock
             Variable Life Insurance Company and Mellon Bank N.A., as Trustee of AT&T Master Pension Trust;
             Bankers Trust Company, a New York banking corporation; Wilmington Trust Company, a Delaware banking
             corporation; and William J. Wade.
 
  10.17*   --Form of Amended and Restated Pledge Agreement among Garden State Newspapers, Inc., its subsidiaries,
             John Hancock Mutual Life Insurance Company, John Hancock Variable Life Insurance Company and Mellon
             Bank, N.A., as Trustee of AT&T Master Pension Trust, Bankers Trust Company, a New York banking
             corporation, Wilmington Trust Company, a Delaware banking corporation, and William J. Wade.
 
  10.18*   --Form of Asset Purchase Agreement dated July 15, 1994 among Mid-State Newspapers, Inc., as Seller;
             Garden State Newspapers, Inc., as guarantor; Bristol Acquisition Corp., as Purchaser.
 
  10.19*   --Consulting Agreement dated November 16, 1993 between J. Allan Meath and Garden State Newspapers, Inc.
 
  10.20*   --Letter Agreement dated November 9, 1993 by and among The Times Mirror Company, Affiliated Newspapers
             Investment Company, Denver Newspapers, Inc., Denver Media Holdings, Inc., NJN Holdings, L.P., The
             Singleton Family Irrevocable Trust, The Scudder Family Voting Trust for Denver Newspapers, Inc.; The
             Singleton Family Revocable Trust, The Scudder Family Voting Trust for Affiliated Newspapers
             Investment Company, Media General, Inc., Garden State Newspapers, Inc., North Jersey Newspapers,
             Inc., and Montclair Newspapers, Inc., as amended February 3, 1994.
 
  10.21*   --Management Agreement dated July 1, 1988 between MediaNews Group, Inc. and Garden State Newspapers,
             Inc.
 
  10.22*   --Management Agreement dated July 1, 1988 between MediaNews Group, Inc. and Denver Newspapers, Inc.
 
  10.23*   --Letter Agreement dated March 17, 1994 between Norwest Bank Colorado, N.A. and the Denver Post
             Corporation.
 
  10.24*   --Purchase Agreement dated March 25, 1994 between Thomson Newspapers and Affiliated Newspapers
             Investments, Inc.
 
  10.25*   --Amendment dated May 3, 1994 to Letter Agreement between Media General, Garden State Newspapers, Inc.
             and Affiliated Newspapers Investment Company dated March 16, 1994.
 
  10.26*   --Amendment dated April 29, 1994 between The Times Mirror Company and Denver Newspapers, Inc. to Letter
             Agreement dated November 9, 1993 by and among The Times Mirror Company, Affiliated Newspapers
             Investment Company, Denver Newspapers, Inc., Denver Media Holdings, Inc., NJN Holdings, L.P., The
             Singleton Family Irrevocable Trust, The Scudder Family Voting Trust for Denver Newspapers, Inc., The
             Singleton Family Revocable Trust, The Scudder Family Voting Trust for Affiliated Newspapers
             Investment Company, Media General, Inc., Garden State Newspapers, Inc., North Jersey Newspapers,
             Inc., and Montclair Newspapers, Inc., as amended February 3, 1994.
 
  10.27*   --Asset purchase agreement and assumed debt agreements related to THE GLOUCESTER COUNTY TIMES and
             TODAY'S SUNBEAM asset acquisition.
</TABLE>
 
                                       82
<PAGE>
<TABLE>
<CAPTION>
 EXHIBIT
   NO.     DESCRIPTION
---------  -------------------------------------------------------------------------------------------------------
<C>        <S>
  10.28*   --Denver Newspapers, Inc. warrant exercise subscription notice dated September 27, 1994.
 
  10.29**  --Asset Purchase Agreement dated July 31, 1995, by and among EPC Holding, Inc., The Eagle Publishing
             Company, Reformer Publishing Corporation, Middletown Press Publishing Corporation, and Eagle Street
             Realty Trust, as Sellers, and New England Newspapers, Inc., Brattleboro Publishing Company,
             Connecticut Newspapers, Inc. and Pittsfield Publications, Inc., as Purchasers.
 
  10.30**  --Asset Purchase Agreement dated July 31, 1995, by and among Banner Publishing Corporation and Eagle
             Street Realty Trust, as Sellers, and New England Newspapers, Inc. and North Eastern Publishing
             Company, as Purchasers.
 
  10.31**  --Asset Purchase Agreement dated August 24, 1995, by and among Connecticut Newspapers, Inc., as Seller,
             and Middletown Acquisition Corp., as Purchaser.
 
  10.32**  --$42.0 million Credit Agreement dated August 31, 1995, among Garden State Newspapers, Inc., The Bank
             of New York and Bankers Trust Company, as Agents.
 
  10.33**  --Agreement dated April 29, 1996, by and among American Publishing (1991) Inc., Berkshire Newspapers,
             Inc., Evening News Company, Sidney Publication Company, Sterling Publishing Company and Garden State
             Investments, Inc.
 
  10.34**  --Agreement dated April 30, 1996, by and among Garden State Investments, Inc. and The Denver Post
             Corporation for the sale/purchase of the capital stock of Eastern Colorado Publishing Company.
 
  12.1*    --Computation of Ratio Earnings to Fixed Charges.
 
  27       --Financial Data Schedule
</TABLE>
 
------------------------
 
*   Previously filed as exhibits to registration statement of Form S-1 (No.
    33-75158), amendments thereto and Garden State Form 8-K.
 
**  Previously filed.
 
                                       83
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
<TABLE>
<S>                             <C>  <C>
                                     AFFILIATED NEWSPAPERS INVESTMENTS, INC.
 
Date: September 18, 1997        By:          /s/ JOSEPH J. LODOVIC, IV
                                     ------------------------------------------
                                               Joseph J. Lodovic, IV
                                            EXECUTIVE VICE PRESIDENT AND
                                              CHIEF FINANCIAL OFFICER
</TABLE>
 
    Pursuant to the requirements of the Securities 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
------------------------------  --------------------------  -------------------
 
                                Vice Chairman, President,
  /s/ WILLIAM DEAN SINGLETON      Chief Executive Officer
------------------------------    and Director (Chief       September 18, 1997
   (William Dean Singleton)       Executive Officer)
 
                                Executive Vice President
  /s/ JOSEPH J. LODOVIC, IV       and Chief Financial
------------------------------    Officer (Chief Financial  September 18, 1997
   (Joseph J. Lodovic, IV)        Officer)
 
    /s/ RICHARD B. SCUDDER
------------------------------  Director                    September 18, 1997
     (Richard B. Scudder)
 
     /s/ PETER M. MILLER
------------------------------  Director                    September 18, 1997
      (Peter M. Miller)
 
    /s/ PATRICIA ROBINSON
------------------------------  Director and Secretary      September 18, 1997
     (Patricia Robinson)
 
   /s/ HOWELL E. BEGLE, JR.     Director, Assistant
------------------------------    Secretary                 September 18, 1997
    (Howell E. Begle, Jr.)        and General Counsel
 
      /s/ RONALD A. MAYO        Vice President Finance and
------------------------------    Controller (Principal     September 18, 1997
       (Ronald A. Mayo)           Accounting Officer)
 
                                       84