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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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Quarterly Report Pursuant to Section 13 or 15 (d) of

the Securities Exchange
Act of 1934



For the quarterly period ended June 30, 2004



Commission File Number: 333-112246



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Morris Publishing Group, LLC

Morris Publishing Finance Co.*

(Exact name of Registrants as specified in their charters)



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|                        |  |                                         
|----------------------- |  | ----------------------------------------
|Georgia                 |  | 58-1445060                              
|Georgia                 |  | 20-0183044                              
|(State of organization) |  | (I.R.S. Employer Identification Numbers)



725 Broad Street

Augusta, Georgia 30901

(Address of principal executive offices)



(706) 724-0851

(Registrants Telephone number)



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Indicate by
check mark whether the Registrants (1) have filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) have been subject to such filing requirements for the past 90 days.



Yes ̈No x



Indicate by check mark whether the Registrants are accelerated filers (as defined in Rule
12b-2 of the Act).



Yes ̈No x



|* | Morris Publishing Finance Co. meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure
format.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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1



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##### Table of Contents

MORRIS PUBLISHING GROUP, LLC

MORRIS PUBLISHING FINANCE CO.

QUARTERLY REPORT

FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 2004



TABLE OF CONTENTS



|                                                                                                                                         |  |     
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                                         |  | Page
|                                                                                                                                         | 
|PART I.                                                                                                                                  |  |     
|                                                                                                                                         | 
|Item 1. Financial Statements:                                                                                                            |  |     
|Unaudited condensed consolidated balance sheets as of June 30, 2004 and December 31, 2003                                                |  | 4   
|Unaudited condensed consolidated statements of income for the three and six months period ended June 30, 2004 and 2003 (as restated)     |  | 5   
|Unaudited condensed consolidated statements of cash flows for the three and six months period ended June 30, 2004 and 2003 (as restated) |  | 6   
|Notes to condensed consolidated financial statements                                                                                     |  | 7   
|Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations                                            |  | 11  
|Item 3.
Quantitative and Qualitative Disclosures about Market Risk                                                                       |  | 15  
|Item 4.
Controls and Procedures                                                                                                          |  | 15  
|                                                                                                                                         | 
|PART II.                                                                                                                                 |  |     
|                                                                                                                                         | 
|Item 1.
Legal Proceedings.                                                                                                               |  | 16  
|Item 2.
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities                                                 |  | 16  
|Item 3.
Defaults Upon Senior Securities.                                                                                                 |  | 16  
|Item 4.
Submission of Matters to a Vote of Security Holders.                                                                             |  | 16  
|Item 5.
Other Information                                                                                                                |  | 16  
|Item 6.
Exhibits and Reports on Form 8-K                                                                                                 |  | 16  



Morris Publishing Group, LLC is a
wholly-owned subsidiary of Morris Communications Company, LLC, a privately held media company. Morris Publishing Finance Co., a wholly-owned subsidiary of Morris Publishing Group, LLC, was incorporated in 2003 for the sole purpose of serving as a
co-issuer of Morris Publishings 7% Senior Subordinated Notes Due 2013 in order to facilitate their issuance. Morris Publishing Finance Co. does not have any operations or assets of any kind and will not have any revenues. Separate financial
statements for Morris Publishing Finance Co. are not provided. In this report, Morris Publishing, we, us and our refer to Morris Publishing Group, LLC and its subsidiaries. Morris
Communications refers to Morris Communications Company. Morris Publishing Group was formed in 2001 and took over the operations of the newspaper business segment of our Parent, Morris Communications. Discussions of Morris Publishing and our
operations prior to November 2001 refer to our business as previously conducted by the Morris Communications newspaper business segment.



FORWARD LOOKING STATEMENTS



This report contains forward-looking statements. These are statements that relate to future periods and include statements regarding our anticipated performance. You may
find discussions containing such forward-looking statements in Managements discussion and analysis of financial condition and results of operations in Item 2 of this report.



Generally, the words anticipates, believes, expects, intends, estimates, projects, plans and similar expressions identify forward-looking
statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results, to differ materially from any future
results, performance or achievements expressed or implied by these forward-looking statements.



Although we believe that these statements are based upon reasonable assumptions, we can give no assurance that these statements will be realized. Given these uncertainties, you are cautioned not to place undue
reliance on these forward-looking statements. These forward-looking statements are made as of the date of this report. We assume no obligation to update or revise them or provide reasons why actual results may differ. Important factors that could
cause our actual results to differ materially from our expectations include, without limitation:



| |  | delay in any economic recovery or the recovery not being as robust as might otherwise have been anticipated;
| | - | ------------------------------------------------------------------------------------------------------------



| |  | increases in financing, labor, health care and/or other costs, including costs of raw materials, such as newsprint;
| | - | -------------------------------------------------------------------------------------------------------------------



2



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##### Table of Contents

| |  | general economic or business conditions, either nationally, regionally or in the individual markets in which we conduct business (and, in particular, the Jacksonville, Florida
market), may deteriorate and have an adverse impact on our advertising or circulation revenues or on our business strategy; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | other risks and uncertainties.
| | - | ------------------------------



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##### Table of Contents

PART I



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



Morris Publishing Group, LLC

(Formerly Morris Communications Company, LLC

Newspaper Business Segment)



Unaudited condensed consolidated balance sheets



|                                                                                                                                    |  |              |          |   |                  |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ---------------- | - | -------- | -
|(Dollars in thousands)                                                                                                              |  | June 30,2004 |          |   | December 31,2003 |  
|ASSETS                                                                                                                              |  |              |          |   |                  |   |          |  
|CURRENT ASSETS:                                                                                                                     |  |              |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                           |  | $            | 10,076   |   |                  | $ | 7,342    |  
|Accounts receivable, net of allowance for doubtful accounts of $3,038 at June 30, 2004 and $2,793 at December 31, 2003              |  |              | 50,677   |   |                  |   | 52,177   |  
|Inventories                                                                                                                         |  |              | 3,712    |   |                  |   | 3,796    |  
|Deferred income taxes                                                                                                               |  |              | 2,414    |   |                  |   | 2,458    |  
|Prepaid and other current assets                                                                                                    |  |              | 1,124    |   |                  |   | 1,086    |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total current assets                                                                                                                |  |              | 68,003   |   |                  |   | 66,859   |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|LOAN RECEIVABLE FROM MORRIS COMMUNICATIONS                                                                                          |  |              | 39,500   |   |                  |   | 4,500    |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|NET PROPERTY AND EQUIPMENT                                                                                                          |  |              | 149,161  |   |                  |   | 150,353  |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|OTHER ASSETS:                                                                                                                       |  |              |          |   |                  |   |          |  
|Goodwill                                                                                                                            |  |              | 185,972  |   |                  |   | 185,552  |  
|Intangible assets, net of accumulated amortization of $49,999 at June 30, 2004 and $47,251 at December 31, 2003                     |  |              | 23,857   |   |                  |   | 26,258   |  
|Deferred loan costs and other assets, net of accumulated loan amortization of $1,267 at June 30, 2004 and $576 at December 31,
2003 |  |              | 13,092   |   |                  |   | 13,611   |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|                                                                                                                                    |  |              | 222,921  |   |                  |   | 225,421  |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total assets                                                                                                                        |  | $            | 479,585  |   |                  | $ | 447,133  |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|LIABILITIES AND MEMBERS DEFICIT                                                                                                    |  |              |          |   |                  |   |          |  
|CURRENT LIABILITIES:                                                                                                                |  |              |          |   |                  |   |          |  
|Current maturities of long-term debt                                                                                                |  | $            | 1,688    |   |                  | $ | 563      |  
|Accounts payable                                                                                                                    |  |              | 8,040    |   |                  |   | 7,542    |  
|Accrued interest                                                                                                                    |  |              | 9,155    |   |                  |   | 8,989    |  
|Due to Morris Communications                                                                                                        |  |              | 770      |   |                  |   | 339      |  
|Deferred revenues                                                                                                                   |  |              | 17,466   |   |                  |   | 16,678   |  
|Accrued employee costs                                                                                                              |  |              | 11,987   |   |                  |   | 10,590   |  
|Other accrued liabilities                                                                                                           |  |              | 3,261    |   |                  |   | 2,083    |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total current liabilities                                                                                                           |  |              | 52,367   |   |                  |   | 46,784   |  
|LONG-TERM DEBT, less current portion                                                                                                |  |              | 536,312  |   |                  |   | 524,437  |  
|DEFERRED INCOME TAXES, less current portion                                                                                         |  |              | 22,086   |   |                  |   | 22,528   |  
|POSTRETIREMENT BENEFITS DUE TO MORRIS COMMUNICATIONS                                                                                |  |              | 21,400   |   |                  |   | 19,547   |  
|OTHER LONG-TERM LIABILITIES                                                                                                         |  |              | 3,329    |   |                  |   | 3,298    |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total liabilities                                                                                                                   |  |              | 635,494  |   |                  |   | 616,594  |  
|COMMITMENTS AND CONTINGENCIES (NOTE 5)                                                                                              |  |              |          |   |                  |   |          |  
|MEMBERS DEFICIT                                                                                                                    |  |              | (155,909 | ) |                  |   | (169,461 | )
|                                                                                                                                    |  |              |          |   |                  |   |          |  
|Total liabilities and members deficit                                                                                              |  | $            | 479,585  |   |                  | $ | 447,133  |  
|                                                                                                                                    |  |              |          |   |                  |   |          |  



See
notes to condensed consolidated financial statements.



4



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##### Table of Contents

Morris Publishing Group, LLC

(Formerly Morris Communications Company, LLC

Newspaper Business Segment)



Unaudited condensed consolidated statements of income



|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|--------------------------------------------------------------- |  | -------------------------- | ------- | ------------------------ | ------------------------ | - | ------- |  | ------------------------ | ------- |  | - | -------
|                                                                |  | Three Months EndedJune 30, |         | Six Months EndedJune 30,
|(Dollars in thousands)                                          |  | 2004                       |         |                          | 2003                     |   | 2004    |  | 2003                    
|                                                                |  |                            |         |                          | (As restated,See Note 6) |   |         |  | (As restated,See Note 6)
|NET OPERATING REVENUES:                                         |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|Advertising                                                     |  | $                          | 92,306  |                          |                          | $ | 88,719  |  | $                        | 178,138 |  | $ | 171,053
|Circulation                                                     |  |                            | 17,431  |                          |                          |   | 17,810  |  |                          | 35,296  |  |   | 35,745 
|Other                                                           |  |                            | 4,890   |                          |                          |   | 4,597   |  |                          | 9,204   |  |   | 9,095  
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|Total net operating revenue                                     |  |                            | 114,627 |                          |                          |   | 111,126 |  |                          | 222,638 |  |   | 215,893
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|OPERATING EXPENSES:                                             |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|Labor and employee benefits                                     |  |                            | 44,956  |                          |                          |   | 42,295  |  |                          | 88,449  |  |   | 83,921 
|Newsprint, ink and supplements                                  |  |                            | 13,512  |                          |                          |   | 13,037  |  |                          | 26,534  |  |   | 25,435 
|Other operating costs (excluding depreciation and amortization) |  |                            | 29,739  |                          |                          |   | 27,008  |  |                          | 59,043  |  |   | 53,804 
|Depreciation and amortization                                   |  |                            | 5,169   |                          |                          |   | 4,155   |  |                          | 10,308  |  |   | 9,890  
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|Total operating expenses                                        |  |                            | 93,376  |                          |                          |   | 86,495  |  |                          | 184,334 |  |   | 173,050
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|Operating income                                                |  |                            | 21,251  |                          |                          |   | 24,631  |  |                          | 38,304  |  |   | 42,843 
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|OTHER EXPENSES:                                                 |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|Interest expense, including amortization of debt issuance costs |  |                            | 8,008   |                          |                          |   | 5,563   |  |                          | 15,820  |  |   | 11,419 
|Other, net                                                      |  |                            | (259    | )                        |                          |   | 53      |  |                          | 130     |  |   | 130    
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|Total other expense                                             |  |                            | 7,749   |                          |                          |   | 5,616   |  |                          | 15,950  |  |   | 11,549 
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|INCOME BEFORE INCOME TAXES                                      |  |                            | 13,502  |                          |                          |   | 19,015  |  |                          | 22,354  |  |   | 31,294 
|PROVISION FOR INCOME TAXES                                      |  |                            | 5,306   |                          |                          |   | 7,344   |  |                          | 8,838   |  |   | 12,173 
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        
|NET INCOME                                                      |  | $                          | 8,196   |                          |                          | $ | 11,671  |  | $                        | 13,516  |  | $ | 19,121 
|                                                                |  |                            |         |                          |                          |   |         |  |                          |         |  |   |        



See
notes to condensed consolidated financial statements.



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##### Table of Contents

Morris Publishing Group, LLC

(Formerly Morris Communications Company, LLC

Newspaper Business Segment)



Unaudited condensed consolidated statements of cash flows



|                                                                                         |  |                          |         |   |                          |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ------------------------ | - | ------- | -
|                                                                                         |  | Six Months EndedJune 30, |        
|(Dollars in thousands)                                                                   |  | 2004                     |         |   | 2003                     |  
|                                                                                         |  |                          |         |   | (as restated,see note 6) |  
|OPERATING ACTIVITIES:                                                                    |  |                          |         |   |                          |   |         |  
|Net income                                                                               |  | $                        | 13,516  |   |                          | $ | 19,121  |  
|Adjustments to reconcile net income to cash provided by operating activities:            |  |                          |         |   |                          |   |         |  
|Depreciation and amortization                                                            |  |                          | 10,308  |   |                          |   | 9,890   |  
|Deferred income taxes                                                                    |  |                          | (398    | ) |                          |   | (1,064  | )
|Amortization of debt issuance costs                                                      |  |                          | 691     |   |                          |   | 580     |  
|Loss on disposal of assets                                                               |  |                          | 426     |   |                          |   | 64      |  
|Loss on extinguishment of debt                                                           |  |                          |         |   |                          |   |         |  
|Changes in assets and liabilities, net of effects of businesses acquired:                |  |                          |         |   |                          |   |         |  
|Accounts receivable                                                                      |  |                          | 1,575   |   |                          |   | 2,566   |  
|Inventories                                                                              |  |                          | 84      |   |                          |   | 350     |  
|Prepaids and other current assets                                                        |  |                          | (38     | ) |                          |   | (458    | )
|Other assets                                                                             |  |                          | (222    | ) |                          |   | (123    | )
|Accounts payable                                                                         |  |                          | 485     |   |                          |   | (1,039  | )
|Due to Morris Communications                                                             |  |                          | 419     |   |                          |   |         |  
|Accrued employee costs                                                                   |  |                          | 1,397   |   |                          |   | (484    | )
|Accrued interest                                                                         |  |                          | 166     |   |                          |   | (3,050  | )
|Deferred revenues and other liabilities                                                  |  |                          | 1,961   |   |                          |   | 1,653   |  
|Postretirement obligations due to Morris Communications                                  |  |                          | 1,853   |   |                          |   | 243     |  
|Other long-term liabilities                                                              |  |                          | 31      |   |                          |   | 86      |  
|                                                                                         |  |                          |         |   |                          |   |         |  
|Net cash provided by operating activities                                                |  |                          | 32,254  |   |                          |   | 28,335  |  
|INVESTING ACTIVITIES:                                                                    |  |                          |         |   |                          |   |         |  
|Capital expenditures                                                                     |  |                          | (6,783  | ) |                          |   | (9,432  | )
|Acquisition of businesses, net of cash acquired                                          |  |                          | (737    | ) |                          |   |         |  
|                                                                                         |  |                          |         |   |                          |   |         |  
|Net cash used in investing activities                                                    |  |                          | (7,520  | ) |                          |   | (9,432  | )
|FINANCING ACTIVITIES:                                                                    |  |                          |         |   |                          |   |         |  
|Repayment of long-term debt due Morris Communications                                    |  |                          | 0       |   |                          |   | 6,000   |  
|Proceeds from long-term debt                                                             |  |                          | 13,000  |   |                          |   | 0       |  
|Loan receivable from Morris Communications                                               |  |                          | (35,000 | ) |                          |   | 0       |  
|Net change due to allocations and intercompany reimbursements with Morris Communications |  |                          | 0       |   |                          |   | (25,582 | )
|                                                                                         |  |                          |         |   |                          |   |         |  
|Net cash used in financing activities                                                    |  |                          | (22,000 | ) |                          |   | (19,582 | )
|NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                                     |  |                          | 2,734   |   |                          |   | (679    | )
|CASH AND CASH EQUIVALENTS, beginning of period                                           |  |                          | 7,342   |   |                          |   | 7,993   |  
|                                                                                         |  |                          |         |   |                          |   |         |  
|CASH AND CASH EQUIVALENTS, end of period                                                 |  | $                        | 10,076  |   |                          | $ | 7,314   |  
|                                                                                         |  |                          |         |   |                          |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                       |  |                          |         |   |                          |   |         |  
|Interest paid                                                                            |  | $                        | 14,879  |   |                          | $ |         |  
|Interest paid to Morris Communications                                                   |  | $                        |         |   |                          | $ | 10,736  |  
|Income taxes paid to Morris Communications                                               |  | $                        | 9,235   |   |                          | $ | 9,582   |  



See
notes to condensed consolidated financial statements.



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##### Table of Contents

MORRIS PUBLISHING GROUP, LLC

(FORMERLY MORRIS COMMUNICATIONS COMPANY, LLC NEWSPAPER BUSINESS SEGMENT)



Notes to Condensed consolidated financial statements (unaudited)

(Dollars in Thousands)



|1. | NATURE OF OPERATIONS AND BASIS OF PRESENTATION
|-- | ----------------------------------------------



Basis of Presentation and Nature of Operations  Morris Publishing Group, LLC (Morris Publishing or the
Company) was formerly named MCC Newspapers, LLC prior to July 2003. Prior to the formation of MCC Newspapers, LLC in 2001, the Morris Communications Company, LLC (Morris Communications or the parent) newspaper
business segment operated as a division of Morris Communications.



These condensed consolidated financial statements of Morris Publishing, a wholly owned subsidiary of Morris Communications, include the consolidated financial statements of Morris Publishing subsequent to July 2003 and the combined
financial statements of the Morris Communications Company, LLC Newspaper Business Segment for all periods prior to July 2003. Morris Communications legally transferred the net assets of its newspaper business segment to the Company. As a result, the
Company has accounted for the assets and liabilities at historical cost, in a manner similar to that in pooling of interest accounting.



The accompanying condensed consolidated financial statements furnished here reflect all adjustments, which are in the opinion of management, necessary for
the fair presentation of the Companys financial position and results of operations. All such adjustments are of a normal recurring nature. Results of operations for the interim 2004 periods are not necessarily indicative of results expected
for the full year. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been
condensed or omitted, the Company believes that the disclosures herein are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the audited consolidated
financial statements and the notes thereto for the year ended December 31, 2003. The accounting policies employed are the same as those shown in Note 1 to the consolidated financial statements as of December 31, 2003 and 2002 and for each of three
years ended December 31, 2003.



|2. | TRANSACTIONS WITH MORRIS COMMUNICATIONS
|-- | ---------------------------------------



The Company receives certain services from, and has entered into certain transactions with, the parent. In 2003, costs of the services that are allocated
to the Company were based on actual direct costs incurred or based on the Parents estimate of expenses relative to the services provided to the Company. The parent utilized factors such as percentage of revenues, number of employees and other
applicable factors in estimating the proportion of corporate expenses to allocate to the Company. The Company believes that these allocations were made on a reasonable basis, and approximate all of the material incremental costs it would have
incurred had it been operating on a stand alone basis; however, there has been no independent study or any attempt to obtain quotes from third parties to determine what costs of obtaining such services from third parties would have been. In 2004,
these costs are based on allocated costs and 4% of revenues for management fees.



Cash Management Prior to August 2003, the Companys cash was immediately transferred to Morris Communications, which used the cash to meet its and the Companys obligations. The
net amounts due to and (due from) Morris Communications, which have been deemed contributions from (distributions to) Morris Communications were approximately $(45,694) for the year ended December 31, 2003.



Management Fee The Company was charged with certain
corporate allocations from Morris Communications. Prior to August 7, 2003, these allocations were based on a combination of specifically identified costs, along with an estimate of 60% of the non-identifiable expenses relating to the Company.
Subsequent to August 7, 2003, a fee equal to 4% of the revenues is charged to the Company, as defined in the management agreement. These corporate allocation expenses totaled $8,906, and $6,544 for the six months ended June 30, 2004 and 2003,
respectively, and represent corporate costs incurred by Morris Communications on behalf of the Company, including executive, legal, secretarial, tax, internal audit, risk management, employee benefit administration, airplane usage and other support
services.



Technology and Shared Services FeeThe Company was charged with certain technology and shared services allocated from Morris Communications. These costs were allocated at 100% prior to August 7, 2003. Subsequent to August 7, 2003, these costs were allocated based on actual
costs, as defined in the management agreement. These technology and shared services expenses incurred by Morris Communications on behalf of the Company totaled $6,347 and $8,145 for the six months ended June 30, 2004 and 2003, respectively.



7



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##### Table of Contents

Debt and Debt Related Allocations The Company also charged corporate interest
and amortization expense based on the corporate debt and related deferred debt cost allocations of Morris Communications to the Company. Prior to August 7, 2003, the Company was allocated Morris Communications debt, deferred debt costs,
interest and amortization expenses. The allocated portion of Morris Communications debt is presented as due to Morris Communications and the deferred debt costs are presented as part of deferred loan costs and other assets on the accompanying
consolidated financial statements. Interest expense, including amortization of debt issuance costs, recorded by the Company related to this debt was $11,419 for the six months ended June 30, 2003, and is included in interest expense in the
accompanying consolidated financial statements.



Employees 401(k) Plan  Historically, the Company has participated in Morris Communications deferred compensation 401(k) plan, which is available to all employees. Under this plan, contributions by employees
to the 401(k) plan are matched by Morris Communications up to 5% of pay. Expenses were allocated to the Company based on specific identification of employer matching contributions of $2,161 and $1,964 for the six months ended June 30, 2004 and 2003,
respectively.



Retiree Health Care Benefits
 Historically, the Company has participated in Morris Communications retiree health care plan, which provides certain health care benefits for eligible retired employees and their dependents. In June 2003, Morris Communications and the
Company formally amended the plan, which requires the Company to be separately liable for its portion of the postretirement benefit obligation. Accordingly, the Company and Morris Communications completed a formal actuarial valuation of the
postretirement obligation for the Company as of and for the year ended December 31, 2003.



Under Morris Communications plan, full-time employees who were hired before January 1, 1992 and retire after ten years of service are eligible for these benefits. Full-time employees hired on or after January 1,
1992 must have 25 years of service to be eligible. Generally, this plan pays a percentage of most medical expenses (reduced for any deductible) after payments made by government programs and other group coverage. This plan is unfunded. Expenses
related to this plan have been allocated to the Company based on total headcount. The expenses allocated to the Company, and the related contributions recorded were $1,853 and $258 for the six months ended June 30, 2004 and 2003, respectively.



The Company was also allocated its portion of the
postretirement benefit obligation. The amounts allocated to the Company, based on total headcount were $21,400 and $19,547 as of June 30, 2004 and December 31, 2003, respectively.



The following is an estimate of the Companys net periodic benefit cost for 2004:



|                                           |  |   |      
|------------------------------------------ |  | - | -----
|Components of net periodic benefit cost:   |  |   |      
|Service cost                               |  | $ | 723  
|Interest cost                              |  |   | 2,200
|Recognized net actuarial loss              |  |   | 782  
|                                           |  |   |      
|Net periodic benefit cost                  |  | $ | 3,705
|                                           |  |   |      
|Estimated Net Benefit Payments During 2004 |  | $ | 1,021



The Medicare
Prescription Drug, Improvement, and Modernization Act of 2003 will provide a federal subsidy beginning in 2006 to postretirement medical plans which provide prescription drug benefits to retirees. The subsidy will provide plan sponsors 28% of
individual retirees annual prescription drug costs between $250 and $5,000 for retirees who are eligible for but opt out of Medicare Part D Prescription coverage.



This subsidy, when integrated with current claim costs, would have the effect of decreasing liabilities and costs reported
under the current accounting guidance for plans which are at least actuarially equivalent to the Medicare Part D benefit.



The following is a comparison of the benefits offered by the Companys retiree health care plan and the Medicare D plan:



|                          |  |                                                       |  |                         
|------------------------- |  | ----------------------------------------------------- |  | ------------------------
|                          |  | Medicare Part D                                       |  | Morris Publishing       
|                          |  |                                                      
|Deductible                |  | $250                                                  |  | $0                      
|                          |  |                                                      
|Coinsurance Non-preferred |  | 75% for the first $2,250 then 95% in excess of $5,100 |  | 100% Preferred/80%      
|                          |  |                                                      
|Copay                     |  | none                                                  |  | $10 (generic) up to $40 
|                          |  |                                                      
|Retiree Cost              |  | $420/year                                             |  | $0 with medical coverage



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From this comparison of benefits, it is fairly evident the Companys postretirement medical benefits
are at least actuarially equivalent to Medicare Part D. Once more guidance is issued the cost savings will be calculated for the plan going forward.



Health and Disability Plan  The Company has participated in Morris Communications health and disability plan for active
employees. Accordingly, Morris Communications has allocated to the Company certain expenses associated with the payment of current obligations and the estimated amounts incurred but not yet reported. In June 2003, Morris Communications and the
Company formally amended the plan, which requires Morris Communications and the Company to be separately liable for its portion of the postretirement benefit obligation. Accordingly, the Company and Morris Communications completed a formal actuarial
valuation of the costs incurred but not yet reported. The expense allocated to the Company based on the formal actuarial valuation or total headcount, was $7,174 and $6,305 for the six months ended June 30, 2004 and 2003, respectively.



The Company was also allocated its portion of the health and disability
obligation. The amounts allocated to the Company, based on total headcount, were $2,294 and $2,205 as of June 30, 2004 and December 31, 2003, respectively.



Workers Compensation Expense  The Company has participated in Morris Communications workers compensation
self-insurance plan. Accordingly, Morris Communications has allocated to the Company certain expenses associated with the payment of current obligations and the estimated amounts incurred but not yet reported. The expenses allocated to the Company,
based on a percentage of total salaries expense, were $1,077 and $636 for the six months ended June 30, 2004 and 2003, respectively.



Property and Equipment  Historically, the Company has occupied and utilized certain property and equipment owned by the parent. Title
to this property and equipment, along with the related depreciation and amortization, was passed to the Company on August 7, 2003. The Company was allocated $1,686 in depreciation and amortization expense for the six months ended June 30, 2003.
Morris Communications conveyed legal title to the Company of the net property and equipment of $28,954 as of August 7, 2003, which is included in property and equipment in the accompanying financial statements.



Loan Receivable from Morris Communications  Under its
debt arrangements, the Company is permitted to loan up to $40 million to Morris Communications, LLC or any of its wholly-owned subsidiaries outside the Publishing Group. The Company distinguishes between intercompany transactions incurred in the
ordinary course of business and settled on a monthly basis (which do not bear interest) and those of a more long-term nature which are subject to an interest accrual.



The interest-bearing portion of the intercompany loan from Morris Communications bears interest at the same rate as the
borrowings under the Credit Agreement (for 2003, this rate was LIBOR + 2.25%). Interest is accrued on the average outstanding long-term balance each month. As of June 30, 2004, $39,500 was outstanding as an intercompany loan due from Morris
Communications. The Company has recorded $496 in interest income related to these borrowings during 2004.



|3. | ACQUISITIONS
|-- | ------------



In March 2004, the Company acquired Capital City Weekly, a weekly newspaper located in Juneau, Alaska. The acquisition was accounted for as a purchase and
had an aggregate purchase price, including closing costs of approximately $770. The purchase price was allocated to the estimated fair value of assets and liabilities acquired. The excess purchase price over the $49 fair value of the net assets was
allocated with $377 allocated to goodwill, $294 allocated to subscriber and advertiser relations, and $50 allocated to noncompetition agreements. The subscriber and advertiser relations are being amortized over a 15-year life and the noncompetition
agreement over a 5-year life. The results of operations have been recorded in the condensed consolidated statements of income from the date of acquisition. The pro forma effect on net income had the acquisition been reflected as of the beginning of
the period acquired and the previously reported period would not have been material.



During April, 2004, Morris Communications, LLC contributed the ownership of Skirt Charleston, a monthly free publication located in Charleston, South Carolina, to the Company. As a result, there has been a change in
reporting entity during the second quarter and the Company has restated its beginning members interests and its 2003 condensed consolidated financial statements to reflect the net assets and results of the operations for the new reporting
entity from November 2003, the time of the Skirt Charleston acquisition by Morris Communications, LLC. All transfers have been recorded at their historical carrying amounts, which approximated $1,335. The excess capital contribution over the $168
fair value of the net assets was allocated with $804 allocated to goodwill.



|4. | LONG-TERM DEBT
|-- | --------------



Our net borrowing during the quarter ended June 30, 2004, resulted in an increase in our debt of $13.0 million against our revolving credit facility. The
revolving credit loan terminates September 30, 2010. Under our current credit agreement, interest is at either the alternative base rate (ABR) or the Eurodollar rate, plus applicable margin as defined. The ABR is the greater of



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the federal funds rate plus 0.5% or prime. The Eurodollar rate is the LIBOR rate. As of June 30, 2004, the interest rate on the revolver loans was 3.531%.



Long-term debt at June 30, 2004, and December 31, 2003
consisted of the following (in thousands):



|                         |  |              |         |                  |   |        
|------------------------ |  | ------------ | ------- | ---------------- | - | -------
|                         |  | June 30,2004 |         | December 31,2003
|Senior Subordinated Debt |  | $            | 300,000 |                  | $ | 300,000
|Senior Credit Facilities |  |              | 238,000 |                  |   | 225,000
|                         |  |              |         |                  |   |        
|Total Long-Term Debt     |  | $            | 538,000 |                  | $ | 525,000
|                         |  |              |         |                  |   |        



|5. | COMMITMENTS & CONTINGENCIES
|-- | ---------------------------



The Company and its subsidiaries are parties to several claims and lawsuits arising in the course of their normal business activities. Although the
ultimate outcome of these suits cannot be ascertained at this time, it is the opinion of management that these matters, when resolved, will not have a material effect on the Companys condensed consolidated financial statements.



|6. | RESTATEMENT
|-- | -----------



As previously disclosed in the Companys annual report for the year ended December 31, 2003, the Companys management determined that the
allocations made to goodwill and intangible assets for certain acquisitions accounted for under the purchase method of accounting required revision. Prior to this revision, the Company did not separately identify indefinite and definite lived
intangible assets from goodwill. See Note 10 to the audited consolidated financial statements for the year ended December 31, 2003 for further discussion on the restatement. As a result, goodwill, intangible assets, deferred taxes, members
deficit and amortization expense have been restated from the amounts previously reported in accordance with accounting standards generally accepted in the United States of America. The decrease in goodwill was primarily attributable to amounts being
allocated from goodwill to identifiable intangible assets. A summary of the significant effects of the restatement is as follows:



|                              |  |                                  |        |                                |   |                       |  |             |        |  |   |       
|----------------------------- |  | -------------------------------- | ------ | ------------------------------ | - | --------------------- |  | ----------- | ------ |  | - | ------
|                              |  | Three Months Ended June 30, 2003 |        | Six Months Ended June 30, 2003
|                              |  | As PreviouslyReported            |        | As Restated                    |   | As PreviouslyReported |  | As Restated
|At June 30, 2003:             |  |                                  |        |                                |   |                       |  |             |        |  |   |       
|Depreciation and amortization |  | $                                | 2,787  |                                | $ | 4,155                 |  | $           | 7,154  |  | $ | 9,890 
|Operating income              |  |                                  | 25,999 |                                |   | 24,631                |  |             | 45,579 |  |   | 42,843
|Net income                    |  |                                  | 12,507 |                                |   | 11,671                |  |             | 20,792 |  |   | 19,121



|7. | SUBSEQUENT EVENTS
|-- | -----------------



On July 16, 2004, the Company realigned various aspects of its credit facility. The $225,000 term loan under the August 7, 2003 agreement was increased
and split into two pieces, a $100,000 Series A Term Loan and a $150,000 Series C Term Loan. At the same time, the revolving credit line was reduced from $175,000 to $150,000. The total facility remains unchanged at $400,000. This amendment was
affected principally to reduce interest rates on the term loan portion of the credit facility. Debt covenants generally remain unchanged. Scheduled principal payments have changed somewhat with the replacement of the single term loan with the two
term loans (A and C), but the final payment is still scheduled for March 31, 2011.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------



The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements as of and for the
three and six months ended June 30, 2004 and 2003 and with our consolidated financial statements for the year ended December 31, 2003.



Overview



Morris Publishing was formed in 2001 as MCC Newspapers, LLC to own and operate the newspaper business historically operated by our parent, Morris Communications. Discussions of Morris Publishing and our
results of operations include the business as previously conducted by the Morris Communications newspaper business segment. We changed our name to Morris Publishing Group, LLC in July 2003.



Morris Publishing is in the business of owning and operating newspapers in mid-sized to small
markets across the United States. Our newspapers derive their revenues primarily from advertising and circulation. We also print and distribute periodical publications and operate commercial printing operations as part of our newspaper operations in
some of our markets. Other revenues consist primarily of commercial printing revenues. Our primary operating expenses (before depreciation and amortization) are personnel costs and newsprint, ink and supplements. Our earnings are sensitive to
changes in newsprint prices. Historically newsprint prices have fluctuated substantially.



The financial information we have included in this document reflects the historical results of operations and cash flows of Morris Publishing with allocations made for corporate and other services provided to us by
Morris Communications. Operating costs and expenses reflect our direct costs together with certain allocations by Morris Communications for corporate services, debt and other shared services that have been charged to us based on usage or other
methodologies we believe are appropriate for such expenses. In the opinion of management, these allocations have been made on a reasonable basis and approximate all the material incremental costs we would have incurred had we been operating on a
stand-alone basis; however, there has been no independent study or any attempt to obtain quotes from third parties to determine what the costs of obtaining such services would have been.



We restated our condensed consolidated financial statements for the three and six months ended June 30, 2003. This managements
discussion and analysis of financial condition and results of operations gives effect to this restatement.



We have one reporting segment with two primary sources of revenue: Advertising and Circulation. For the quarter ended June 30, 2004, the advertising segment represented 80.5% of total operating revenues. Retail,
Classified and National advertising revenue represented 51.5%, 41.0%, and 7.5% respectively, of total advertising revenue. Circulation revenue comprised 15.2% of total operating revenue.



The following Business Summary discusses our results of operations:



Advertising revenue is primarily determined by the linage, rate and mix of advertisement. The advertising rate depends largely on our market
reach, primarily through circulation, and market dominance. Circulation revenue is based on the number of copies sold.



Our total revenue for the quarter ended June 30, 2004 exceeded the comparable period last year by 3.2%. Advertising revenues were 4.0% above the comparable period.
Circulation revenue was 2.1% less than the second quarter last year and was partially offset by an increase in other revenue of 6.4%.



Circulation growth continues to be challenging. Recently enacted telemarketing rules adopted by the Federal Trade Commission and Federal Communications Commission,
including the National Do-Not-Call Registry and regulations has impacted our ability to source subscriptions through telemarketing. Historically, this has accounted for an estimated 30% of our new starts in circulation. We have several initiatives
underway to lessen the impact of this legislation. We are focusing on retaining current customers through stronger retention efforts; lengthening the subscriptions periods for new and existing customers; offering enhanced payment methods; and
increasing service levels.



During the second quarter of 2004, overall costs
were up 8.0% compared to the same period last year; despite a 9.8% rise in the average price per ton of newsprint and a 24.5% increase in employee benefits. We will continue to experience cost pressure from newsprint and health care costs throughout
the remainder of the year.



Primarily due to refinancing our total debt and
issuing $300,000 million of 7% Senior Subordinated Notes due 2013, our weighted-average interest rate increased over the same period last year by $2.0 million, or 33.4% in the second quarter of 2004 compared with the same period in 2003.



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Recent Events



On July 16, 2004 various aspects of our senior credit facility were realigned. We amended the terms of our $400 million senior credit facilities, replacing our $225
million Tranche B Term Loans with $100 million of new Tranche A Term Loans and $150 million of Tranche C Term Loans. We also reduced our Revolving Credit Commitments from $175 million to $150 million. The immediate impact of the amendment was to
reduce interest rates by 0.75% on the Tranche A Term Loans and 0.50% on the Tranche C Term Loans, below the then applicable rate on the Tranche B Term Loans.



Critical accounting policies and estimates



Critical accounting policies are those that are most significant to the portrayal of our financial position and results of operations and require difficult, objective and
complex judgments by management in order to make estimates about the effect of matters that are inherently uncertain. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts in our
consolidated financial statements. We evaluate our estimates on an on-going basis, including those related to our revenues, allowances for bad debts, asset impairments, post-retirement benefits, self-insurance and casualty, management fees, income
taxes and commitments and contingencies. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities. Although actual results have historically been reasonably consistent with managements expectations, the actual results may differ from these estimates or our estimates may be affected by different
assumptions or conditions.



We believe there have been no significant changes
during the quarter ended June 30, 2004 to the items that we disclosed as our critical accounting policies and estimates in Managements Discussion and Analysis of Financial Condition and Results of Operations in our Prospectus dated May 13,
2004 filed with the securities and Exchange Commission on Form 424b3.



Results of operations for the three months ended June 30, 2004 and June 30, 2003



Operating revenues.The table below presents operating revenue for newspaper operations for the three months ended June 30, 2004 compared to the three months ended June 30, 2003:



|                         |  |                            |         |                              |   |         |                                         |   |       |   |  |      |   
|------------------------ |  | -------------------------- | ------- | ---------------------------- | - | ------- | --------------------------------------- | - | ----- | - |  | ---- | --
|                         |  | Three Months endedJune 30, |         | Changeover sameperiod in2003 |   |         | Percentagechange oversame periodin 2003 |  
|(Dollars in Thousands)   |  | 2004                       |         | 2003                         |   |        
|Operating revenues:      |  |                            |         |                              |   |         |                                         |   |       |   |  |      |   
|Advertising              |  |                            |         |                              |   |         |                                         |   |       |   |  |      |   
|Retail                   |  | $                          | 47,590  |                              | $ | 47,020  |                                         | $ | 570   |   |  | 1.2  | % 
|Classified               |  |                            | 37,829  |                              |   | 34,993  |                                         |   | 2,836 |   |  | 8.1  | % 
|National                 |  |                            | 6,887   |                              |   | 6,706   |                                         |   | 181   |   |  | 2.7  | % 
|                         |  |                            |         |                              |   |         |                                         |   |       |   |  |      |   
|Total                    |  |                            | 92,306  |                              |   | 88,719  |                                         |   | 3,587 |   |  | 4.0  | % 
|Circulation              |  |                            | 17,431  |                              |   | 17,810  |                                         |   | (379  | ) |  | (2.1 | %)
|Other                    |  |                            | 4,890   |                              |   | 4,597   |                                         |   | 293   |   |  | 6.4  | % 
|                         |  |                            |         |                              |   |         |                                         |   |       |   |  |      |   
|Total operating revenues |  | $                          | 114,627 |                              | $ | 111,126 |                                         | $ | 3,501 |   |  | 3.2  | % 
|                         |  |                            |         |                              |   |         |                                         |   |       |   |  |      |   



Operating revenues increased by $3.5
million, to $114.6 million for the quarter ended June 30, 2004 from $111.1 million for the quarter ended June 30, 2003. Advertising revenue increased $3.6 million, or 4.0%. All the major advertising categories showed gains over the same period last
year. Classified continued to grow primarily on the strength of all its categories with the exception of automotive which was down by 1.5%. Real estate continued strong up by 18.7% over the same period last year. Housing affordability continues to
remain strong fueled by favorable mortgage rates. Help wanted gained just over 11% compared to the same period last year. This category continues to show some sustained growth nationally and we are beginning to benefit from this growth. The all
other category consisting primarily of private party advertising was up over the same period last year by just over 7.4%. Circulation revenue was down by $0.4, to $17.4 million for the quarter ended June 30, 2004 from $17.8 million. This was
partially offset by a gain in the other revenue category of $0.3, to $4.9 million from $4.6 million in the comparable period.



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Operating expenses.The table below presents operating costs for newspaper operations for the three months ended
June 30, 2004 compared to the three months ended June 30, 2003:



|                               |  |                            |        |                              |   |                                         |  |   |       |  |      |  
|------------------------------ |  | -------------------------- | ------ | ---------------------------- | - | --------------------------------------- |  | - | ----- |  | ---- | -
|                               |  | Three Months endedJune 30, |        | Changeover sameperiod in2003 |   | Percentagechange oversame periodin 2003 | 
|(Dollars in Thousands)         |  | 2004                       |        | 2003                         |   |                                        
|Operating expenses:            |  |                            |        |                              |   |                                         |  |   |       |  |      |  
|Labor and employee benefits    |  | $                          | 44,956 |                              | $ | 42,295                                  |  | $ | 2,661 |  | 6.3  | %
|Newsprint, ink and supplements |  |                            | 13,512 |                              |   | 13,037                                  |  |   | 475   |  | 3.6  | %
|Other operating costs          |  |                            | 29,739 |                              |   | 27,008                                  |  |   | 2,731 |  | 10.1 | %
|Depreciation and amortization  |  |                            | 5,169  |                              |   | 4,155                                   |  |   | 1,014 |  | 24.4 | %
|                               |  |                            |        |                              |   |                                         |  |   |       |  |      |  
|Total operating expenses       |  | $                          | 93,376 |                              | $ | 86,495                                  |  | $ | 6,881 |  | 8.0  | %
|                               |  |                            |        |                              |   |                                         |  |   |       |  |      |  



Operating expenses increased by $6.9
million, to $93.4 million for the quarter ended June 30, 2004 from $86.5 million during the quarter ended June 30, 2003. Labor and employee benefits increased $2.7 million, or 6.3%. Employee benefits accounted for $1.7 million of the increase and
were up 24.5% over the same period last year. Total salaries and wages were up by $1.0 million, or 2.7%. Newsprint, ink and supplements increased by $0.5 million, or 3.6%, to $13.5 million. An increase in the average price of newsprint of 9.8% was
partially offset by consumption. Other operating costs increased by $2.7 million, or 10.1%, primarily due to an increase in insurance of $0.4 million, rent of $0.3 million, distribution costs of $0.3 million, professional services of $0.7 and all
other of $0.9 million. Depreciation and amortization increased $1.0 million, or 24.4% primarily resulting from asset additions.



Interest expense. Interest expense, including amortization of debt issuance cost, net of interest income, increased $2.0 million, or 37.5%, in the quarter ended
June 30, 2004 from $5.6 million for the quarter ended June 30, 2003.



Provision for income taxes. The provision for income taxes decreased by $2.0 million, or 27.8%, to $5.3 million in the quarter ended June 30, 2004 from $7.3 million for the quarter ended June 30, 2003. The decrease in the provision
was caused by a decrease in income.



Net income. As a result of the
factors described above, our net income decreased by $3.5 million, or 29.8% to $8.2 million from $11.7 million for the quarter ended June 30, 2003.



Results of operations for the six months ended June 30, 2004 and June 30, 2003



Operating revenues. The table below presents operating revenue for newspaper operations for the six months ended June 30, 2004
compared to the six months ended June 30, 2003:



|                         |  |                          |         |                              |   |         |                                         |   |       |   |  |      |   
|------------------------ |  | ------------------------ | ------- | ---------------------------- | - | ------- | --------------------------------------- | - | ----- | - |  | ---- | --
|                         |  | Six Months endedJune 30, |         | Changeover sameperiod in2003 |   |         | Percentagechange oversame periodin 2003 |  
|(Dollars in Thousands)   |  | 2004                     |         | 2003                         |   |        
|Operating revenues:      |  |                          |         |                              |   |         |                                         |   |       |   |  |      |   
|Advertising              |  |                          |         |                              |   |         |                                         |   |       |   |  |      |   
|Retail                   |  | $                        | 92,075  |                              | $ | 91,384  |                                         | $ | 691   |   |  | 0.8  | % 
|Classified               |  |                          | 72,273  |                              |   | 67,295  |                                         |   | 4,978 |   |  | 7.4  | % 
|National                 |  |                          | 13,790  |                              |   | 12,374  |                                         |   | 1,416 |   |  | 11.4 | % 
|                         |  |                          |         |                              |   |         |                                         |   |       |   |  |      |   
|Total                    |  |                          | 178,138 |                              |   | 171,053 |                                         |   | 7,085 |   |  | 4.1  | % 
|Circulation              |  |                          | 35,296  |                              |   | 35,745  |                                         |   | (449  | ) |  | (1.3 | %)
|Other                    |  |                          | 9,204   |                              |   | 9,095   |                                         |   | 109   |   |  | 1.2  | % 
|                         |  |                          |         |                              |   |         |                                         |   |       |   |  |      |   
|Total operating revenues |  | $                        | 222,638 |                              | $ | 215,893 |                                         | $ | 6,745 |   |  | 3.1  | % 
|                         |  |                          |         |                              |   |         |                                         |   |       |   |  |      |   



Operating revenues increased by $6.7
million, to $222.6 million for the six months ended June 30, 2004 from $215.9 million for the six months ended June 30, 2003. Advertising revenue increased $7.0 million, or 4.1%. All categories showed gains over the same period last year. Retail
remains up despite declines in the department store category primarily from store closings by Kmart in some of our markets and reduced spending by Eckerds Drugs due to their impending sale. Classified continued to grow primarily on the
strength of all its categories with the exception of automotive. Help wanted was 10.5% over the same period last year. We continue to benefit from a strengthening employment market. The all other category consisting primarily of private party
advertising was up over the same period last year by just over 7.7%. Automotive was down by 3.4% compared to the same period last year. The increase in advertising revenue was offset by a shortfall in circulation revenue.



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Operating expenses. The table below presents operating costs for newspaper operations for the six months ended
June 30, 2004 compared to the six months ended June 30, 2003:



|                               |  |                          |         |                              |   |                                         |  |   |        |  |     |  
|------------------------------ |  | ------------------------ | ------- | ---------------------------- | - | --------------------------------------- |  | - | ------ |  | --- | -
|                               |  | Six Months endedJune 30, |         | Changeover sameperiod in2003 |   | Percentagechange oversame periodin 2003 | 
|(Dollars in Thousands)         |  | 2004                     |         | 2003                         |   |                                        
|Operating expenses:            |  |                          |         |                              |   |                                         |  |   |        |  |     |  
|Labor and employee benefits    |  | $                        | 88,449  |                              | $ | 83,921                                  |  | $ | 4,528  |  | 5.4 | %
|Newsprint, ink and supplements |  |                          | 26,534  |                              |   | 25,435                                  |  |   | 1,099  |  | 4.3 | %
|Other operating costs          |  |                          | 59,043  |                              |   | 53,804                                  |  |   | 5,239  |  | 9.7 | %
|Depreciation and amortization  |  |                          | 10,308  |                              |   | 9,890                                   |  |   | 418    |  | 4.2 | %
|                               |  |                          |         |                              |   |                                         |  |   |        |  |     |  
|Total operating expenses       |  | $                        | 184,334 |                              | $ | 173,050                                 |  | $ | 11,284 |  | 6.5 | %
|                               |  |                          |         |                              |   |                                         |  |   |        |  |     |  



Operating expenses increased by $11.3
million, to $184.3 million for the six months ended June 30, 2004 from $173.0 million during the six months ended June 30, 2003. Labor and employee benefits increased $4.5 million, or 5.4%. Employee benefits accounted for $3.2 million of the
increase and were up 22.5% over the same period last year. Total salaries and wages were up by $1.3 million or 1.9%. Newsprint, ink and supplements increased by $1.1 million, or 4.3%, to $26.5 million. An increase in the price of newsprint of 8.4%
was partially offset by a decrease in consumption. Other operating costs increased by $5.2 million, or 9.7%, primarily due to an increase in management fees of $0.6 million, insurance of $0.7 million, rent of $0.6 million and distribution costs of
$0.6 million All other costs in this category were up $1.5 million or 5.2%. Depreciation and amortization increased $0.4 million, or 4.2%.



Interest expense. Interest expense, including amortization of debt issuance cost, net of interest income, increased $3.9 million, or 34.2%, in the six months ended
June 30, 2004 from $11.4 million for the six months ended June 30, 2003.



Provision for income taxes. The provision for income taxes decreased by $3.3 million, or 27.4%, to $8.8 million in the six months ended June 30, 2004 from $12.2 million for the six months ended June 30, 2003. The decrease in the
provision was caused by a decrease in income.



Net income. As a result
of the factors described above, our net income decreased by $5.6 million, or 29.3%, from $19.1 million for the six months ended June 30, 2003.



Liquidity and capital resources



Our principal sources of liquidity are existing cash and cash equivalents, cash flows provided from operating activities and borrowing capacity under revolving credit
facilities. We believe that cash on hand, cash flows provided from operating activities and amounts available as revolving credit under our credit facilities will be sufficient to meet our operating requirements for the next three years.



Our primary needs for cash are funding operating expenses, debt service on the new credit
facilities and the senior subordinated notes, capital expenditures, income taxes, dividends and loans to affiliates, acquisitions and working capital. We have pursued, and will continue to pursue, a business strategy that includes selective
acquisitions and new product development.



Cash was $10.1 million at June 30,
2004, compared with $7.3 million at December 31, 2003. We generally use all available cash to pay down debt. We expect to maintain relatively low cash balances in order to reduce our revolving loan balance and/or make loans and distributions to our
parent.



Our net borrowing during the quarter resulted in an increase in our
debt of $13.0 million, which we borrowed under our revolving credit facility.



Our credit facility and indenture allows us to make loans to our parent. During the quarter, an additional $17.5 million was loaned to Morris Communications making the total loan outstanding $39.5 million. The loan is re-payable on demand
and bears the same interest rate as our revolving credit facilityLIBOR plus 2.25% which at June 30, 2004 was 3.375%.



We expect our capital expenditures will be approximately $20.0 to $25.0 million in 2004, of which, as of June 30, 2004, we have spent approximately $6.8 million.



Cash flows for the six months ended June 30, 2004 and June 30, 2003



Operating activities. Net cash flows provided by operating
activities increased by $4.0 million to $32.3 million in the first six months of 2004 as compared to the same period in 2003.



Investing activities. Net cash flows used in investing activities decreased by $1.9 million to $7.5 million in the first six months of 2004.



Financing activities. Net cash flows used in financing activities increased by $2.4
million from $19.6 million in the first six months of 2003 to $22.0 million in the first six months of 2004.



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As of June 30, 2004, our total debt was $538.0 million and our annualized cost of debt capital was approximately 5.5%. On
such date, approximately $84.0 million could be borrowed and used for general corporate purposes under the most restrictive covenants in our debt arrangements. As of June 30, 2004, we were in compliance with all covenants under our debt
arrangements.



|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------



There have been no material changes regarding the Companys critical accounting policies from the critical accounting policies discussed under the Companys
market risk position from the information provided in our Prospectus dated May 13, 2004 filed with the Securities and Exchange Commission on Form 424b3. The quantitative and qualitative disclosures about market risk are discussed under the caption
Market Risk in Managements Discussion and Analysis of Financial Condition and Results of Operations.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------



Our management carried out an evaluation, with the participation of our chief executive officer and chief financial officer, of the effectiveness of our disclosure
controls and procedures as of June 30, 2004. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed
by the company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. There
were no changes in our internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



There has not been any change in the companys internal control over financial reporting
in connection with the evaluation required by Rule 13A-15(d) under the Exchange Act that occurred during the quarter ended June 30, 2004 that has materially affected, or is reasonably likely to materially affect, the Companys internal control
over financial reporting.



15



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##### Table of Contents

PART II

OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------



None.



|Item 2. | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities.
|------- | ---------------------------------------------------------------------------------



None.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------



None.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------



None.



|Item 5. | Other Information.
|------- | ------------------



None.



|Item 6. | Exhibits and Report on Form 8-K.
|------- | --------------------------------



(a) Exhibits



|              |  |                              
|------------- |  | -----------------------------
|ExhibitNumber |  | Exhibit Description          
|              | 
|31.1          |  | Rule 13a-14(a) Certifications
|              | 
|32.1          |  | Section 1350 Certifications  



(b) Reports on Form 8-K:



| | (1) | Form 8-K filed May 18, 2004 reporting under Item 12 Morris Publishings announcement by press release of its results for the first quarter of 2004, and reporting the
distribution to note holders of its 2003 annual report and its first quarter report for 2004.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Form 8-K filed June 25, 2004 reporting under Item 9 Morris Publishings announcement by press release that Morris Publishing engaged J.P. Morgan Securities, Inc. to seek to
arrange and syndicate restructured term loans under its senior credit facilities.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SIGNATURES



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



|                      |  |  |  |                              |  |                    |  |                                                                   
|--------------------- |  |  |  | ---------------------------- |  | ------------------ |  | ------------------------------------------------------------------
|                      |  |  |  | MORRIS PUBLISHING GROUP, LLC
|                      |  |  | 
|Date: August 11, 2004 |  |  |  | By:                          |  | /s/ Steve K. Stone
|                      |  |  |  |                              |  |                    |  | Steve K. Stone                                                    
|                      |  |  |  |                              |  |                    |  | Chief Financial Officer                                           
|                      |  |  |  |                              |  |                    |  | (On behalf of the Company, and as its principal financial officer)



SIGNATURES



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



|                      |  |  |  |                               |  |                    |  |                                                                   
|--------------------- |  |  |  | ----------------------------- |  | ------------------ |  | ------------------------------------------------------------------
|                      |  |  |  | MORRIS PUBLISHING FINANCE CO.
|                      |  |  | 
|Date: August 11, 2004 |  |  |  | By:                           |  | /s/ Steve K. Stone
|                      |  |  |  |                               |  |                    |  | Steve K. Stone                                                    
|                      |  |  |  |                               |  |                    |  | Chief Financial Officer                                           
|                      |  |  |  |                               |  |                    |  | (On behalf of the Company, and as its principal financial officer)



17