<PAGE>   1

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

                                   FORM 10-K
                           -------------------------

<TABLE>
<CAPTION>
   (MARK ONE)
<S>              <C>
      [X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                               SECURITIES EXCHANGE ACT OF 1934
                        FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000 OR
      [ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                               SECURITIES EXCHANGE ACT OF 1934
             FOR THE TRANSITION PERIOD FROM -------- TO --------
                        COMMISSION FILE NUMBER 1-9329
</TABLE>

                           -------------------------
                                 PULITZER INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                           -------------------------

<TABLE>
<S>                                            <C>
                   DELAWARE                                      43-1819711
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                     Identification Number)
</TABLE>

                          900 NORTH TUCKER BOULEVARD,
                           ST. LOUIS, MISSOURI 63101
                    (Address of principal executive offices)

                                 (314) 340-8000
              (Registrant's telephone number, including area code)

                           -------------------------

   Securities registered pursuant to Section 12(b) of the Act: Common Stock,
              par value $.01 per share -- New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None
                           -------------------------

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

     Indicate by check mark 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.  [ ]

     The aggregate market value of the voting stock held by non-affiliates of
the registrant was approximately $421,801,009 as of the close of business on
March 16, 2001.

     The number of shares of Common Stock, $.01 par value, outstanding as of
March 16, 2001 was 8,906,694.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's definitive Proxy Statement to be used in
connection with its Annual Meeting of Stockholders to be held on April 24, 2001
are incorporated by reference into Part III of this Report.

The registrant's fiscal year ends on the last Sunday of December in each year.
For ease of presentation, the registrant has used December 31 as the fiscal
year-end in this Annual Report. Except as otherwise stated, the information in
this Report on Form 10-K is as of December 31, 2000.
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<PAGE>   2

ITEM 1. BUSINESS

INTRODUCTION

     Pulitzer Inc. (the "Company") was capitalized on March 18, 1999 with
approximately $550 million in cash and all the other assets of Pulitzer
Publishing Company ("Old Pulitzer") (other than broadcasting assets) as a result
of the Spin-off (as defined below) and is operating the newspaper publishing and
related "new media" businesses formerly operated by Old Pulitzer. The Company
was organized as a corporation in 1998 and, prior to the Spin-off, was a
wholly-owned subsidiary of Old Pulitzer. Prior to the Broadcast Transaction (as
defined below), Old Pulitzer was engaged in newspaper publishing and television
and radio broadcasting.

     Pursuant to an Amended and Restated Agreement and Plan of Merger, dated as
of May 25, 1998 (the "Merger Agreement"), by and among Old Pulitzer, the Company
and Hearst-Argyle Television, Inc. ("Hearst-Argyle"), on March 18, 1999
Hearst-Argyle acquired, through the merger (the "Merger") of Old Pulitzer with
and into Hearst-Argyle, Old Pulitzer's television and radio broadcasting
operations (collectively, the "Broadcasting Business") in exchange for the
issuance to Old Pulitzer's stockholders of 37,096,774 shares of Hearst-Argyle's
Series A common stock. Old Pulitzer's Broadcasting Business consisted of nine
network-affiliated television stations and five radio stations owned and
operated by Pulitzer Broadcasting Company and its wholly-owned subsidiaries.
Prior to the Merger, Old Pulitzer's newspaper publishing and related new media
businesses were contributed to the Company in a tax-free "spin-off" to Old
Pulitzer stockholders (the "Spin-off"). The Merger and Spin-off are collectively
referred to as the "Broadcast Transaction."

     Old Pulitzer's historical basis in its newspaper publishing and related new
media assets and liabilities has been carried over to the Company. The Broadcast
Transaction represents a reverse-spin transaction and, accordingly, the
Company's results of operations for periods prior to the consummation of the
Broadcast Transaction are identical to the historical results previously
reported by Old Pulitzer. The results of the Broadcasting Business owned by Old
Pulitzer prior to the Merger are reported as discontinued operations in the
financial statements included in Item 8 of this Annual Report on Form 10-K.

RECENT EVENTS

     On January 11, 2000, the Company acquired in an asset purchase The
Pantagraph, a daily and Sunday newspaper that serves the central Illinois cities
of Bloomington and Normal, and a group of seven community newspapers known as
the Illinois Valley Press, from The Chronicle Publishing Company of San
Francisco for an aggregate of $180 million, excluding acquisition costs and a
separate payment for working capital (the "Pantagraph Acquisition"). The Company
funded this acquisition with internal cash generated from the sale of a portion
of its marketable security investments.

     On May 1, 2000, the Company, Pulitzer Technologies, Inc., a wholly-owned
subsidiary of the Company (together with the Company, the "Pulitzer Parties")
and The Herald Company, Inc. ("Herald") completed the transfer of their
respective interests in the assets and operations of the St. Louis Post-Dispatch
(the "Post-Dispatch") and certain related businesses to a new joint venture (the
"Venture"), known as St. Louis Post-Dispatch LLC ("PD LLC"). The Company
controls and manages PD LLC. Under the terms of the operating agreement
governing PD LLC (the "Operating Agreement"), the Pulitzer Parties hold a 95
percent interest in the results of operations of PD LLC and Herald holds a 5
percent interest. Previously, under the terms of the St. Louis Agency Agreement,
which had governed the operations of the Post-Dispatch since 1961, the Company
and Herald generally shared its operating profits and losses, as well as its
capital expenditures, on a 50-50 basis. Also, under the terms of the Operating
Agreement, Herald received on May 1, 2000 a cash distribution of $306 million
from PD LLC. This distribution was financed by a $306 million loan (the "Loan")
to PD LLC from a group of institutional lenders (the "Lenders") led by
Prudential Capital Group, a division of The Prudential Insurance Company of
America. The Venture is treated as a purchase for accounting purposes.

     On August 10, 2000, the Company acquired the assets of the Suburban
Newspapers of Greater St. Louis, LLC and the stock of The Ladue News, Inc.
(collectively the "Suburban Journals") for

                                        2
<PAGE>   3

ITEM 1. BUSINESS -- CONTINUED

$165 million, excluding acquisition costs and a separate payment for working
capital of approximately $7 million (the "Journals Acquisition"). The Suburban
Journals are a group of 36 weekly papers and various niche publications that
serve the greater St. Louis, Missouri metropolitan area. The Company funded this
acquisition with internal cash generated from the sale of a portion of its
marketable security investments.

     The Pantagraph Acquisition, Venture and Journals Acquisition are
collectively referred to as the "Newspaper Transactions."

GENERAL

     Pulitzer Inc. is the successor to the company founded by the first Joseph
Pulitzer in 1878 to publish the original St. Louis Post-Dispatch. The Company
and its predecessors have operated continuously since 1878 under the direction
of the Pulitzer family. Michael E. Pulitzer, a grandson of the founder,
currently serves as Chairman of the Board of the Company.

     The Company is engaged in newspaper publishing and related "new media"
businesses. Its newspaper operations include two major metropolitan dailies: the
Post-Dispatch, the only major daily newspaper serving the greater St. Louis
metropolitan area; and the Arizona Daily Star (the "Star"), serving the Tucson
metropolitan area. Both daily newspapers have weekly "total market coverage"
sections that provide advertisers with market saturation, and both offer
alternative delivery systems that provide advertisers with either targeted or
total market coverage. Each of these publications also operates electronic news,
information and communication web sites on the Internet.

     In addition to its metropolitan dailies, the Company's wholly-owned
subsidiary Pulitzer Newspapers, Inc. ("PNI") publishes 13 dailies that serve
markets in the Midwest, Southwest and West, as well as a number of weekly and
bi-weekly publications (the "PNI Group"). The PNI Group's 13 daily newspapers
have a combined average daily circulation of approximately 205,000.

     With the addition of the Suburban Journals in August of 2000, the Company's
St. Louis newspaper operations now include a group of 36 weekly papers and
various niche publications that focus on providing local news and editorial
content to the communities that they serve. The Suburban Journals have a
combined average weekly circulation of approximately 1,455,000.

                                        3
<PAGE>   4

ITEM 1. BUSINESS -- CONTINUED

     The Company's revenues are derived primarily from advertising and
circulation, which averaged approximately 98 percent of total revenue over the
last five years. Advertising rates and rate structures and resulting revenues
vary among publications based, among other things, on circulation, type of
advertising, local market conditions and competition. The following table sets
forth certain historical financial information regarding the Company's
operations for the periods and at the dates indicated.

<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                         ------------------------------------------------------
                                          2000(1)       1999       1998       1997     1996(2)
                                         ----------   --------   --------   --------   --------
                                                             (IN THOUSANDS)
<S>                                      <C>          <C>        <C>        <C>        <C>
Operating revenues:
  Advertising:
     Retail............................  $  112,773   $ 91,926   $ 92,286   $ 89,715   $ 74,356
     National..........................      23,266     16,052     11,013      9,371      9,250
     Classified........................     135,134    112,058    101,078     94,429     76,568
                                         ----------   --------   --------   --------   --------
          Total........................     271,173    220,036    204,377    193,515    160,174
     Preprints.........................      43,276     32,624     31,495     31,277     25,430
                                         ----------   --------   --------   --------   --------
          Total advertising............     314,449    252,660    235,872    224,792    185,604
  Circulation..........................      81,505     74,957     77,147     76,588     70,240
  Other................................      11,587      6,553      4,724      3,552      3,154
                                         ----------   --------   --------   --------   --------
          Total operating revenues.....  $  407,541   $334,170   $317,743   $304,932   $258,998
                                         ==========   ========   ========   ========   ========
Operating income (loss):
  Operations...........................  $   71,707   $ 70,810   $ 63,650   $ 60,987   $ 41,017
  Stock option cash-outs and
     bonuses(3)........................                (26,685)
  St. Louis Agency adjustment..........      (9,363)   (25,029)   (20,729)   (19,450)   (13,972)
                                         ----------   --------   --------   --------   --------
          Total........................  $   62,344   $ 19,096   $ 42,921   $ 41,537   $ 27,045
                                         ==========   ========   ========   ========   ========
Depreciation and amortization..........  $   33,657   $ 17,091   $ 14,054   $ 13,007   $  8,660
                                         ==========   ========   ========   ========   ========
Operating margins(4)...................        17.6%      21.2%      20.0%      20.0%      15.8%
Assets.................................  $1,282,873   $979,625   $546,393   $464,311   $398,416
                                         ==========   ========   ========   ========   ========
</TABLE>

---------------

(1) Comparability of 2000 amounts is affected by the Newspaper Transactions and
    by an extra week of operations in 2000 resulting from a 53-week year.

(2) Comparability of 1996 amounts is affected by the acquisition of Scripps
    League Newspapers, Inc. (subsequently renamed Pulitzer Newspapers, Inc.) on
    July 1, 1996.

(3) In 1999, Old Pulitzer recorded expense of $26.7 million representing the
    cost of stock option cash-outs and bonuses paid to publishing employees in
    connection with the Broadcast Transaction.

(4) Operating margins represent operating income compared to operating revenues.
    Operating income used in margin calculations excludes the St. Louis Agency
    adjustment (see "-- Agency Agreements.") and stock option cash-outs and
    bonuses (both of which are recorded as operating expenses for financial
    reporting purposes).

OPERATING STRATEGY

     The Company's long-term operating strategy is to maximize each newspaper
property's growth and profitability through maintenance of editorial excellence,
leadership in locally responsive news, and prudent control of costs. Management
believes that editorial excellence and leadership in locally responsive news
will, over the long-term, allow the Company to maximize its market share in each
of its respective markets. In addition, providing a portfolio of products
designed to serve each property's broader market area as well as niche
audiences, and including both print and new media delivery, is considered a key
to maintaining and strengthening the Company's local market franchises.
Experienced local managers implement the Company's

                                        4
<PAGE>   5

ITEM 1. BUSINESS -- CONTINUED

strategy in each market, with centralized management providing oversight and
guidance in all areas of planning and operations.

     The Company has developed "new media" operations that are designed to
enhance, complement and add value to its traditional newspaper publishing
businesses by providing consumer and advertiser services through electronic
dissemination of information via the world wide web/Internet. At the center of
the Company's Internet strategy are the websites developed in conjunction with
the Company's newspaper properties. Each of the websites takes full advantage of
the newspapers' extensive intelligence of the communities they serve, strong
advertiser relationships and substantial marketing expertise to produce
in-depth, relevant, locally focused online publications. The Company's objective
in these operations is to build audience to generate revenues in support of its
publishing franchises.

     The Company complements its internal growth strategies with a disciplined
and opportunistic acquisition strategy that is focused on acquiring publishing
properties that the Company believes are a good fit with its operating strategy,
possess attractive growth potential, generate strong cash flows and will offer
an attractive return on investment. Management believes generally that the
Company's reputation, financial position, cash flow and conservative capital
structure, among other factors, will assist the Company in pursuing
acquisitions.

     The Company believes that cost controls are an important tool in the
management of media properties that are subject to significant fluctuations in
advertising volume. The Company believes that prudent control of costs will
permit it to respond quickly when positive operating conditions offer
opportunities to expand market share and profitability and, alternatively, when
deteriorating operating conditions require cost reductions to protect
profitability. The Company's disciplined budgeting process is one of the key
elements in controlling costs. The Company employs production technology in all
of its media operations in order to minimize production costs and produce an
attractive and timely news product for its readers.

     The Company's operations are geographically diverse, placing the Company in
the Midwest, Southwest and Western regions of the United States. Due to the
close relationship between economic activity and advertising volume, the Company
believes that geographic diversity will provide the Company with valuable
protection from regional economic variances.

COMBINED ST. LOUIS OPERATIONS

     The Company serves the greater St. Louis metropolitan area with the daily
Post-Dispatch and, as of August 10, 2000, the Suburban Journals' weekly
newspapers, as well as with its STLtoday.com news and information Internet web
site (formerly postnet.com). St. Louis is currently the 17th largest
metropolitan statistical area in the United States with a population of
approximately 2.6 million. The following table sets forth historical revenue
information for the Company's combined St. Louis operations for the periods
indicated.

<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                          ----------------------------------------------------
                                          2000(1)      1999       1998       1997       1996
                                          --------   --------   --------   --------   --------
<S>                                       <C>        <C>        <C>        <C>        <C>
Operating revenues (in thousands):
  Advertising(2)........................  $225,137   $190,652   $179,341   $170,973   $158,556
  Circulation...........................    60,555     60,759     63,208     63,216     63,858
  Other.................................     6,123      3,040      2,127      1,073      1,729
                                          --------   --------   --------   --------   --------
          Total.........................  $291,815   $254,451   $244,676   $235,262   $224,143
                                          ========   ========   ========   ========   ========
</TABLE>

---------------

(1) Comparability of 2000 amounts is affected by the Journals Acquisition and by
    an extra week of operations in 2000 resulting from a 53-week year.

(2) Advertising includes revenues from preprinted inserts.

                                        5
<PAGE>   6

ITEM 1. BUSINESS -- CONTINUED

ST. LOUIS POST-DISPATCH

     Founded in 1878 by the first Joseph Pulitzer, the Post-Dispatch has a long
history of reporting and editorial excellence and innovation in newspaper
publishing under the direction of the Pulitzer family. The Post-Dispatch is a
morning daily and Sunday newspaper serving primarily the greater St. Louis
metropolitan area.

     As a result of the PD LLC Venture, established May 1, 2000, the Company
holds a 95 percent interest in the results of operations of PD LLC and Herald
holds a 5 percent interest. Prior to May 1, 2000, under the terms of the St.
Louis Agency Agreement, which had governed the operations of the Post-Dispatch
since 1961, the Company and Herald generally shared its operating profits and
losses, as well as its capital expenditures, on a 50-50 basis.

     The following table sets forth for the past five years certain circulation
and advertising information for the Post-Dispatch. See "-- Agency Agreements."

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                               -----------------------------------------------
                                                2000      1999      1998      1997      1996
                                               -------   -------   -------   -------   -------
<S>                                            <C>       <C>       <C>       <C>       <C>
Post-Dispatch:
  Circulation(1):
     Daily...................................  300,099   307,375   324,059   319,887   319,203
     Sunday..................................  492,092   509,110   520,635   530,442   540,434
Advertising linage (in thousands of inches):
  Retail.....................................      728       774       832       841       819
  General....................................      204       152       102        91       101
  Classified.................................    1,135     1,082     1,004     1,003     1,007
                                               -------   -------   -------   -------   -------
          Total..............................    2,067     2,008     1,938     1,935     1,927
  Part run(2)................................      834       836       571       607       792
                                               -------   -------   -------   -------   -------
          Total inches.......................    2,901     2,844     2,509     2,542     2,719
                                               =======   =======   =======   =======   =======
</TABLE>

---------------

(1) Amounts for 2000 are based on internal records of the Company for the
    twelve-month period ended December 31. Amounts for prior years are based on
    ABC Audit Reports for the twelve-month periods ended September 30.

(2) Part run inches represent advertisements that are published in selected
    copies (i.e., less than the full press run) of a daily edition of the
    newspaper to specifically target certain geographic locations. The
    advertisements typically appear in a special news and advertising section
    designed specifically for the targeted geographic locations.

     The Post-Dispatch has consistently been a leader in technological
innovation in the newspaper industry. The Company's commitment to the ongoing
enhancement of its operating systems has enabled the Post-Dispatch to offer a
continually improving product to both readers and advertisers while also
realizing substantial savings in labor cost. The Company believes the
Post-Dispatch has adequate facilities to sustain up to at least a 35 percent
increase in daily circulation without incurring significant capital
expenditures.

     The Post-Dispatch is distributed primarily through independent home
delivery carriers and single copy dealers. Home delivery accounted for
approximately 75 percent of circulation for the daily Post-Dispatch and
approximately 55 percent of circulation for the Sunday edition during 2000. In
order to build a stronger, more direct relationship with its readers, the Post
Dispatch has purchased a number of routes from independent carriers and dealers
over the past year and it may continue to purchase additional routes from time
to time in the future.

                                        6
<PAGE>   7

ITEM 1. BUSINESS -- CONTINUED

SUBURBAN JOURNALS OF GREATER ST. LOUIS

     With the addition of the Suburban Journals in August of 2000, the Company's
St. Louis newspaper operations now include a group of 36 weekly papers and
various niche publications that provide comprehensive community-oriented local
news packages to the communities that they serve. The publications primarily
represent controlled-distribution newspapers and, depending on the community
served, are published once, twice or three times per week. The Suburban Journals
have a combined average weekly circulation of approximately 1,455,000.

     The Suburban Journals' newspapers are organized by geographic area into
nine publication groups throughout the St. Louis metropolitan area. Each group
has a news and advertising staff based in its local community that is overseen
by a local publisher. The groups are supported by centralized production
facilities, distribution systems and administrative services. In addition, a
centralized advertising department provides sales support for classified,
national and major/regional advertisers that wish to target readers across
several publication groups.

ST. LOUIS INTERNET OPERATIONS

     The Company's STLtoday.com (www.STLtoday.com) Web site provides the St.
Louis community with comprehensive news, business, sports, entertainment and
neighborhood information. The site also features enhanced online advertiser
services in the three major classified advertising categories -- autos, real
estate and jobs. In addition, the Web site offers St. Louis at Work -- a
regional workforce initiative which brings together a public-private partnership
to attract, train and retain a multi-skilled talent pool for the metro area. As
a part of the initiative, stlouisatwork.com was created to become the online
career destination for regional employers and job candidates. The following
table sets forth some key statistics for the STLtoday.com Web site for the
periods indicated.

<TABLE>
<CAPTION>
                                                              FOURTH QUARTER
                                                              ---------------
                                                               2000     1999    % CHANGE
                                                              ------   ------   --------
                                                              (IN THOUSANDS)
<S>                                                           <C>      <C>      <C>
STLtoday.com (Launched 1/96):
  Average page views per day(1).............................  385.7    279.7      37.9%
  Average sessions per day(2)...............................  121.5     75.7      60.5%
</TABLE>

---------------

(1)  A "page view" occurs when a web server provides a web page to a website
     visitor.

(2)  A "session" is a collection of "page views" seen by a particular visitor at
     one time.

ARIZONA DAILY STAR

     Founded in 1877, the Star is published in Tucson, Arizona, by the Company's
wholly-owned subsidiary, Star Publishing Company. The Star, a morning and Sunday
newspaper, and the Tucson Citizen (the "Citizen"), an afternoon newspaper owned
by Gannett Co., Inc. ("Gannett"), are southern Arizona's leading dailies. The
Star and the Citizen are published through an agency operation (the "Tucson
Agency") pursuant to an Agency Agreement, dated March 28, 1940, as amended and
restated (the "Tucson Agency Agreement"), and have a combined weekday
circulation of approximately 138,000. Tucson is currently the 69th largest
metropolitan statistical area in the United States with a population of
approximately 814,000.

     The Tucson Agency operates through TNI Partners Inc. ("TNI Partners"), an
agency partnership that is owned half by the Company and half by Gannett. TNI
Partners is responsible for all aspects of the business of the two newspapers
other than editorial opinion and gathering and reporting news. Net income or net
loss of TNI Partners is allocated equally to the Star and the Citizen. The
Company reports its 50 percent share of TNI Partners' operating results as a
single component of operating income in its statement of consolidated income.

                                        7
<PAGE>   8

ITEM 1. BUSINESS -- CONTINUED

     As a result of the Tucson Agency, the financial performance of the
Company's Star Publishing Company subsidiary is directly affected by the
operations and performance of both the Star and the Citizen.

     The following table sets forth certain information concerning circulation
and combined advertising linage of the Star and the Citizen and operating
revenues of TNI Partners for the past five years.

<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                          ----------------------------------------------------
                                            2000       1999       1998       1997       1996
                                          --------   --------   --------   --------   --------
<S>                                       <C>        <C>        <C>        <C>        <C>
Circulation(1):
  Star daily............................    98,469     97,644     96,142     96,101     96,198
  Citizen daily.........................    39,543     40,599     42,444     44,009     46,062
  Star Sunday...........................   171,726    173,071    174,173    175,659    178,820
Combined advertising linage (in
  thousands of inches):
  Full run (all zones)
     Retail.............................     1,713      1,703      1,581      1,587      1,499
     General............................        97         83         81         51         45
     Classified.........................     2,033      2,068      1,852      1,713      1,684
                                          --------   --------   --------   --------   --------
          Total.........................     3,843      3,854      3,514      3,351      3,228
     Part run(2)........................       256        303        314        264        201
                                          --------   --------   --------   --------   --------
          Total inches..................     4,099      4,157      3,828      3,615      3,429
                                          ========   ========   ========   ========   ========
TNI Partners operating revenues (in
  thousands):
  Advertising...........................  $ 93,560   $ 87,550   $ 84,550   $ 80,408   $ 74,832
  Circulation...........................    22,786     22,234     21,856     22,046     22,388
  Other.................................     4,804      4,642      3,956      3,620      2,976
                                          --------   --------   --------   --------   --------
          Total.........................  $121,150   $114,426   $110,362   $106,074   $100,196
                                          ========   ========   ========   ========   ========
</TABLE>

---------------

(1) Amounts for 2000 are based on the internal records of the Company. Amounts
    for prior years are based on ABC Audit Reports for the 52-week period ended
    December 31.

(2) Part run inches represent advertisements that are published in selected
    copies (i.e., less than the full press run) of a daily edition of the
    newspaper to specifically target certain geographic locations. The
    advertisements typically appear in a special news and advertising section
    designed specifically for the targeted geographic locations.

     In 2000, the Star's daily edition accounted for approximately 71 percent of
the combined daily circulation of the Tucson Agency publications. The Star's
daily and Sunday editions accounted for approximately 56 percent of the agency's
total advertising linage.

     The Star and the Citizen are printed at TNI Partners' modern, computerized
facility equipped with two, eight-unit Metro offset presses. The writing,
editing and composing functions have been computerized, increasing efficiency
and reducing workforce requirements.

     "Starnet," Star's website on the internet (www.azstarnet.com), serves the
Tucson community with local news, sports and entertainment content and enhanced
online advertiser services featuring the three major classified advertising
categories -- automotive, real estate and help wanted. In addition, Starnet also
serves as a city portal, providing community information and acting as a
community center and marketplace, enabling businesses and individuals to build
relationships with each other and the Star.  Starnet generates revenue from
online advertising and from service and transaction fees, all of which are
included in TNI Partners' other operating revenue.

                                        8
<PAGE>   9

ITEM 1. BUSINESS -- CONTINUED

     The following table sets forth some key statistics for the azstarnet.com
website for the periods indicated.

<TABLE>
<CAPTION>
                                                              FOURTH QUARTER
                                                              ---------------
                                                              2000      1999    % CHANGE
                                                              -----     -----   --------
                                                              (IN THOUSANDS)
<S>                                                           <C>       <C>     <C>
Starnet.com (Launched 6/95):
  Average page views per day(1).............................   146       135      8.1%
  Average sessions per day(2)...............................    41        40      2.5%
</TABLE>

---------------

(1) A "page view" occurs when a web server provides a web page to a website
    visitor.

(2) A "session" is a collection of "page views" seen by a particular visitor at
    one time.

PULITZER NEWSPAPERS, INC.

     The PNI Group publishes 13 dailies that serve markets in the Midwest,
Southwest and West, as well as a number of weekly and bi-weekly publications.
The PNI Group's daily newspapers publish morning or afternoon editions during
the week and, generally, morning editions on the weekend. Home delivery through
independent contract carriers accounts for the significant portion of each
newspaper's circulation. The 13 daily newspapers in the PNI Group, ranked in
order of circulation based on ABC Publisher's Statements for the six-month
period ended September 30, 2000 (except where noted), are:

<TABLE>
<CAPTION>
                                                                          CIRCULATION
                                                                        ---------------
                                                                        DAILY    SUNDAY
                                                                        ------   ------
<S>                                        <C>                          <C>      <C>
The Pantagraph...........................  Bloomington, Illinois        48,213   52,724
The Daily Herald.........................  Provo, Utah                  30,960   32,578
The Napa Valley Register.................  Napa, California             18,785   19,486
Santa Maria Times........................  Santa Maria, California      17,726   19,666
The World................................  Coos Bay, Oregon             14,192   15,747
The Hanford Sentinel.....................  Hanford, California          13,258   13,031
The Arizona Daily Sun....................  Flagstaff, Arizona           11,312   13,537
Troy Daily News..........................  Troy, Ohio                   10,838   12,298
The Daily Chronicle......................  DeKalb, Illinois              9,820   11,369
The Daily Journal........................  Park Hills, Missouri          8,792    8,851
The Garden Island........................  Lihue, Hawaii                 8,202    9,187
The Lompoc Record........................  Lompoc, California            7,968    8,346
The Daily News...........................  Rhinelander, Wisconsin(1)     4,786    5,531
</TABLE>

---------------

(1) Amounts are based on the internal records of the Company.

     In addition, the PNI Group also publishes more than 30 weekly newspapers
and various niche publications associated with its dailies. These include weekly
newspaper groups operated in conjunction with its properties in Bloomington,
Provo and Hanford.

     The markets served by the PNI Group are attractive because they generally
have desirable demographic characteristics and above-average growth rates.
Collectively, the PNI Group's markets exceed U.S. averages in such key measures
as annual household growth rate, median household income and median years of
school completed. In addition, the median home value in these markets exceeds
the U.S. median.

     Further, these markets, which are often not served by major metropolitan
media, tend to be characterized by less media competition, which gives the
Company an opportunity to sustain and expand market share. A

                                        9
<PAGE>   10

ITEM 1. BUSINESS -- CONTINUED

strong focus on local reporting and editorial excellence is considered a key to
long-term success in these markets. The following table sets forth the operating
revenues of the PNI Group for the past five years.

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                              ------------------------------------------------
                                              2000(1)     1999      1998      1997     1996(2)
                                              --------   -------   -------   -------   -------
                                                               (IN THOUSANDS)
<S>                                           <C>        <C>       <C>       <C>       <C>
Operating revenues:
  Advertising...............................  $ 89,312   $62,008   $56,531   $53,819   $27,048
  Circulation...............................    20,950    14,198    13,939    13,372     6,382
  Other.....................................     5,464     3,513     2,597     2,479     1,425
                                              --------   -------   -------   -------   -------
Total.......................................  $115,726   $79,719   $73,067   $69,670   $34,855
                                              ========   =======   =======   =======   =======
</TABLE>

---------------

(1) Comparability of 2000 amounts is primarily affected by the Pantagraph
    Acquisition and by an extra week of operations in 2000 resulting from a
    53-week year.

(2) Amounts include revenues for the six-month period from July 1, 1996 to
    December 31, 1996, subsequent to the acquisition of Scripps League
    Newspapers, Inc. (subsequently renamed Pulitzer Newspapers, Inc.) on July 1,
    1996.

ACQUISITION STRATEGY

     One of the Company's primary growth strategies has been a disciplined and
opportunistic acquisition program. In evaluating acquisition opportunities, the
Company generally requires that candidates: (i) be in businesses related to the
Company's core publishing competencies; (ii) have strong cash flows; (iii)
possess good growth or economic characteristics and, where possible, offer a
clustering opportunity with respect to present or future properties; (iv)
provide an opportunity for its disciplined management approach to add value; and
(v) offer an attractive return on investment.

AGENCY AGREEMENTS

     Newspapers in approximately 13 cities operate under joint operating or
agency agreements. Agency agreements generally provide for newspapers servicing
the same market to share certain printing and other facilities and to pool
certain revenues and expenses in order to decrease aggregate expenses and
thereby allow the continuing operation of multiple newspapers serving the same
market. The Newspaper Preservation Act of 1970 permits joint operating
agreements between newspapers under certain circumstances without violation of
the Federal antitrust laws.

     St.  Louis Agency.  As a result of the PD LLC Venture, established May 1,
2000, the Company holds a 95 percent interest in the results of operations of PD
LLC and Herald holds a 5 percent interest. Prior to May 1, 2000, under the terms
of the St. Louis Agency Agreement, which had governed the operations of the
Post-Dispatch since 1961, the Company and Herald generally shared its operating
profits and losses, as well as its capital expenditures, on a 50-50 basis. Under
the St. Louis Agency Agreement, for fiscal 2000 (for operating results through
April 30, 2000), 1999, 1998, 1997 and 1996 the Company paid Herald $9,363,000,
$25,029,000, $20,729,000 $19,450,000 and $13,972,000, respectively, for Herald's
share of the operating income of the St. Louis Agency.

     Tucson Agency.  The Tucson Agency Agreement has, since 1940, governed the
joint operations of the Star and Citizen.  TNI Partners, as agent for the
Company and Gannett, is responsible for advertising and circulation, printing
and delivery and collection of all revenues of the Star and the Citizen.  The
Board of Directors of TNI Partners presently consists of three directors chosen
by the Company and three chosen by Gannett. Budgetary, personnel and other
non-news and editorial policy matters, such as advertising and circulation
policies and rates or prices, are determined by the Board of Directors of TNI
Partners. Each newspaper is responsible for its own news and editorial content.
Revenues and expenses are recorded by TNI Partners, and the resulting profit is
generally split 50-50 between the Company and Gannett. The Company

                                        10
<PAGE>   11

ITEM 1. BUSINESS -- CONTINUED

reports its 50 percent share of TNI Partners' operating results as a single
component of operating income in its statement of consolidated income. Both
partners have certain administrative costs that are borne separately. As a
result of the Tucson Agency, the Star and the Citizen benefit from increases and
can be adversely affected by decreases in each other's circulation.

     The Tucson Agency Agreement runs through June 1, 2015, and contains renewal
provisions for successive periods of 25 years each.

COMPETITION

     The Company's publications compete for readership and advertising revenues
in varying degrees with other metropolitan, suburban, neighborhood and national
newspapers and other publications as well as with television, radio, cable,
Internet, online services and other new media technologies, direct mail, yellow
page directories, billboards and other news and advertising media. Competition
for advertising is based upon circulation levels, readership demographics, price
and advertiser results. Competition for circulation is generally based upon the
content, journalistic quality and price of the publication. In St. Louis and its
surrounding suburban communities, the Company's print competition for
circulation and advertising revenues includes paid suburban daily newspapers,
independently owned community newspapers and shoppers and direct mail
advertisers. These community newspapers and shoppers and direct mail companies
target selected geographic markets throughout the St. Louis metropolitan area.

     Due to the agency relationship existing in Tucson, the Star and the Citizen
cannot be viewed as competitors for advertising or circulation revenues. The
Star and the Citizen compete primarily against other media and against
Phoenix-area and suburban, neighborhood and national newspapers and other
publications.

RAW MATERIALS

     Fluctuations in the price of newsprint significantly impact the results of
the Company's newspaper operations, where newsprint expense typically accounts
for approximately 15 to 20 percent of total operating expenses. During 2000, the
Company consumed approximately 100,100 metric tons of newsprint in its St. Louis
and PNI Group newspaper operations at a total cost of approximately $56.5
million. Consumption at the Post-Dispatch represented approximately 71 percent
of the 100,100 metric tons used in 2000. In the last five years, the Company's
average cost per ton of newsprint has varied from a low of $510 per metric ton
in 1999 to a high of $646 per metric ton in 1996. During the first quarter of
2001, the Company's average cost per metric ton for newsprint has been
approximately $595. On March 1, 2001, the Company's newsprint suppliers
increased the price of newsprint by $50 per metric ton. This price increase will
begin to impact the Company's newsprint expense in the second quarter of 2001.

     The Company obtains the newsprint necessary for its St. Louis and PNI Group
operations from eight separate mills, three of which are located in Canada and
five in the United States. The Company has guaranteed the future supply of
certain volume levels through multi-year agreements with six of its newsprint
suppliers. The Company believes that the absence of agreements with the
remaining two newsprint suppliers will not affect the Company's ability to
obtain newsprint at competitive prices.

     TNI Partners obtains the newsprint necessary for the Tucson Agency's
operations pursuant to an arrangement with Gannett, the owner of the
Citizen.  Gannett purchases newsprint on behalf of TNI Partners under various
contractual arrangements and agreements. Newsprint is also purchased on the spot
market. Pulitzer's 50 percent share of TNI Partners' newsprint consumption and
cost for the 2000 fiscal year was approximately 13,100 metric tons and $7
million, respectively.

EMPLOYEES

     At December 31, 2000, the Company had approximately 3,000 full-time
employees. At the Post-Dispatch in St. Louis, a majority of the approximately
1,200 full-time employees is represented by unions. The Company considers its
relationship with its employees to be good.
                                        11
<PAGE>   12

ITEM 1. BUSINESS -- CONTINUED

     The Post-Dispatch has contracts with substantially all of its production
unions, with expiration dates ranging from March 2002 through February 2010. In
addition, the Post-Dispatch has a multi-year contract with the St. Louis
Newspaper Guild that expires in January 2003. All of the Post-Dispatch's labor
contracts contain no strike provisions.

     TNI Partners' contract with Tucson Graphic Communications Union Local No.
212, covering certain pressroom employees, expires on May 31, 2001. In each of
the last several years, this contract has been renegotiated for a one-year term.

ITEM 2. PROPERTIES

     The corporate headquarters of the Company is located at 900 North Tucker
Boulevard, St. Louis, Missouri. The general character, location and approximate
size of the principal physical properties used by the Company for its newspaper
publishing and related new media businesses at December 31, 2000 are set forth
below. Leases on the properties indicated as leased by the Company expire at
various dates through June 2007.

     The Company believes that all of its owned and leased properties used in
connection with its operating activities are in good condition, well maintained
and generally adequate for its current and immediately foreseeable operating
needs.

<TABLE>
<CAPTION>
                                                              APPROXIMATE AREA IN
                                                                  SQUARE FEET
                                                              -------------------
GENERAL CHARACTER OF PROPERTY                                  OWNED      LEASED
-----------------------------                                 --------   --------
<S>                                                           <C>        <C>
Printing plants, business and editorial offices, and
  warehouse space located in:
  St. Louis, Missouri(1)....................................  607,800    149,300
  St. Louis, Missouri(2)....................................  141,200     69,400
  Tucson, Arizona(3)........................................  265,000    138,800
  Washington, D.C...........................................               2,250
  Bloomington, Illinois.....................................   84,300     12,900
  Provo, Utah...............................................   26,400     14,900
  Troy, Ohio................................................   36,600
  Hanford, California.......................................   29,900      5,500
  Lihue, Hawaii.............................................    8,500     20,900
  Flagstaff, Arizona........................................   23,200      2,600
  Santa Maria, California...................................   20,800      3,600
  Napa, California..........................................   21,000
  DeKalb, Illinois..........................................   16,100
  Coos Bay, Oregon..........................................   15,200
  Park Hills, Missouri......................................   22,700
  Petaluma, California......................................    9,000
  Rhinelander, Wisconsin....................................    6,400
</TABLE>

---------------

(1) Property is owned by and used in the operations of PD LLC.

(2) Property primarily includes locations operated by the Suburban Journals in
    the greater St. Louis area.

(3) The 265,000 square foot facility in Tucson, Arizona is used in the
    production of the Star and the Citizen and is jointly owned with Gannett
    pursuant to the Tucson Agency.

ITEM 3. LEGAL PROCEEDINGS

     Subsequent to Old Pulitzer's acquisition of Scripps League Newspaper, Inc.
("Scripps League") on July 1, 1999, Barry H. Scripps commenced an action against
Edward W. Scripps, Betty Knight Scripps and PNI. Barry H. Scripps is the child
of Edward W. Scripps and Betty Knight Scripps. Barry H. Scripps, a

                                        12
<PAGE>   13

ITEM 3. LEGAL PROCEEDINGS -- CONTINUED

former minority shareholder and executive employee of Scripps League, alleges
that the defendant Betty Knight Scripps formed and implemented a wrongful scheme
to transfer the ownership of Scripps League outside the Scripps family in
violation of the Scripps League corporate mission by: (i) inducing the defendant
Edward W. Scripps to breach their life-long promises to Barry H. Scripps to
retain the ownership of Scripps League Newspapers in the family and ultimately
turn over its management and control to Barry Scripps; (ii) engineering an
unlawful freeze-out of Barry H. Scripps as a minority shareholder from Scripps
League and its subsidiaries; and (iii) tortiously causing Scripps League to
breach its promise to Barry H. Scripps of permanent employment. The claims
asserted are for breach of promise against Edward W. Scripps and Betty Knight
Scripps, breach of employment contract against PNI as successor to Scripps
League, interference with contract against Betty Knight Scripps, breach of
fiduciary duty against Betty Knight Scripps, and promissory estoppel against
Edward W. and Betty Knight Scripps. Barry H. Scripps seeks (i) money damages,
together with interest and counsel fees in the amount to be proven at trial
against Edward W. and Betty Knight Scripps; (ii) judgment rescinding each of the
actions that Betty Knight Scripps caused to be taken that allegedly froze out
Barry H. Scripps as a stockholder in Scripps League; and (iii) damages against
PNI for loss of income plus interest and counsel fees in an amount to be proven
at trial for breach of the purported employment agreement. Edward W. Scripps and
Betty Knight Scripps, jointly and severally, agreed to indemnify the Company and
its affiliates, officers, directors, stockholders, employees, agents, successors
and assigns at all times after the closing for any and all losses arising from
Barry H. Scripps' claims. On March 26, 1998, the Court issued an order granting
defendants' motion for summary judgment and dismissed all of Barry H. Scripps'
charges and claims against all defendants, and on April 29, 1998, a final
judgment was entered with respect to that order. Barry H. Scripps filed a notice
of appeal on May 21, 1998, and Barry H. Scripps' brief in connection with that
appeal was filed with the Appeals Court of the Commonwealth of Massachusetts on
March 18, 1999. The Appeals Court of the Commonwealth of Massachusetts held oral
argument on Barry H. Scripps' appeal on January 9, 2001.

     The Company has been involved, from time to time, in various claims and
lawsuits incidental to the ordinary course of its business, including such
matters as libel, slander and defamation actions and complaints alleging
discrimination. While the results of litigation cannot be predicted, management
believes the ultimate outcome of such existing litigation will not have a
material adverse effect on the consolidated financial statements of the Company
and its subsidiaries.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not Applicable.

                                        13
<PAGE>   14

                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

     Prior to the Spin-off, the Company's common stock and Class B common stock
did not trade in a public market. Old Pulitzer's common stock was listed and
traded on the New York Stock Exchange, Inc. (the "NYSE") under the symbol "PTZ."
The separate existence of Old Pulitzer ceased on March 18, 1999 after the
completion of the Broadcast Transaction. The shares of the Company's Common
Stock are listed on the NYSE and, as of March 19, 1999, trade under the symbol
"PTZ." The shares of the Company's Class B Common Stock do not trade in a public
market.

     At March 16, 2001, there were approximately 412 record holders of the
Company's common stock and 28 record holders of its Class B common stock.

     The following table sets forth the range of high and low sales prices for
Pulitzer Inc. and Old Pulitzer common stock and dividends paid for each
quarterly period in the past two years:

<TABLE>
<CAPTION>
                                                                HIGH(1)    LOW(1)    DIVIDEND(2)
                                                                -------    ------    -----------
<S>                                                             <C>        <C>       <C>
2000
First Quarter...............................................    $44.44     $32.81       0.16
Second Quarter..............................................     42.00      34.56       0.16
Third Quarter...............................................     45.69      38.75       0.16
Fourth Quarter..............................................     47.70      39.90       0.16
</TABLE>

<TABLE>
<CAPTION>
                                                                HIGH(1)    LOW(1)    DIVIDEND(2)
                                                                -------    ------    -----------
<S>                                                             <C>        <C>       <C>
1999
First Quarter (12/28/98-3/18/99)............................    $88.88     $77.50       $0.00
First Quarter (3/19/99-3/28/99).............................     43.38      41.44        0.00
Second Quarter..............................................     45.44      39.88        0.15
Third Quarter...............................................     48.56      42.88        0.15
Fourth Quarter..............................................     46.50      36.25        0.15
</TABLE>

---------------
(1) Share prices for the first quarter of 1999 through 3/18/99 relate to the
    common stock of Old Pulitzer before the Spin-off. Share prices for 1999
    subsequent to 3/18/99 and all of 2000 relate to the common stock of the
    Company.

(2) In 2000, the Company declared and paid cash dividends of $0.64 per share of
    common stock and Class B common stock. In 1999, the Company declared and
    paid cash dividends of $0.45 per share of common stock and Class B common
    stock. Old Pulitzer did not declare a quarterly dividend in the first
    quarter of 1999 due to its acceleration and declaration in December 1998.

     On January 3, 2001, the Board of Directors of the Company announced for the
first quarter of 2001 a 6.3 percent increase in the dividend on its common stock
and Class B common stock to $0.17 per share from $0.16 per share. The cash
dividend was paid on February 1, 2001. On March 13, 2001, the Board of Directors
of the Company declared a dividend of $0.17 payable on May 1, 2001. Future
dividends will depend upon, among other things, the Company's earnings,
financial condition, cash flows, capital requirements and other relevant
considerations, including the limitations under any credit agreement or other
agreement to which the Company may become a party in the future.

                                        14
<PAGE>   15

ITEM 6. SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                         ------------------------------------------------------
                                            2000        1999       1998       1997       1996
                                         ----------   --------   --------   --------   --------
                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                      <C>          <C>        <C>        <C>        <C>
OPERATING RESULTS
Operating Revenues -- net.............   $  407,541   $334,170   $317,743   $304,932   $258,998
                                         ----------   --------   --------   --------   --------
Operating Expenses:
  Payroll and other personnel
     expense..........................      161,339    133,594    123,085    116,619     97,434
  Newsprint expense...................       56,464     45,293     50,758     49,870     50,878
  Stock option cash-outs and
     bonuses..........................                  26,685
  St. Louis Agency adjustment.........        9,363     25,029     20,729     19,450     13,972
  Depreciation........................       13,495      9,785      7,959      7,175      5,623
  Amortization........................       20,162      7,306      6,095      5,832      3,037
  Other expenses......................      106,861     89,347     87,131     84,804     79,406
                                         ----------   --------   --------   --------   --------
          Total operating expenses....      367,684    337,039    295,757    283,750    250,350
                                         ----------   --------   --------   --------   --------
Equity in earnings of Tucson newspaper
  partnership.........................       22,487     21,965     20,935     20,355     18,397
                                         ----------   --------   --------   --------   --------
Operating income......................       62,344     19,096     42,921     41,537     27,045
Interest income.......................       19,033     25,377      4,967      4,391      4,509
Interest expense......................      (16,537)
Net gain (loss) on marketable
  securities and investments..........       (2,197)      (111)     1,322        260
Equity in losses of joint venture
  investment..........................       (1,728)
Net other expense.....................       (1,569)    (2,697)    (2,139)    (1,202)    (5,870)
                                         ----------   --------   --------   --------   --------
Income from continuing operations
  before provision for income taxes...       59,346     41,665     47,071     44,986     25,684
Provision for income taxes............       23,595     18,708     20,055     19,227     10,892
Minority interest in net earnings of
  subsidiary..........................          849
                                         ----------   --------   --------   --------   --------
Income from continuing operations.....       34,902     22,957     27,016     25,759     14,792
Discontinued operations, net of tax...                 (21,449)    49,268     40,269     42,708
                                         ----------   --------   --------   --------   --------
NET INCOME............................   $   34,902   $  1,508   $ 76,284   $ 66,028   $ 57,500
                                         ==========   ========   ========   ========   ========
Basic Earnings Per Share of Stock:
  Income from continuing operations...   $     1.60   $   1.02   $   1.21   $   1.17   $   0.67
  Discontinued operations.............                   (0.95)      2.20       1.82       1.95
                                         ----------   --------   --------   --------   --------
  Basic earnings per share............   $     1.60   $   0.07   $   3.41   $   2.99   $   2.62
                                         ==========   ========   ========   ========   ========
  Weighted average number of shares
     outstanding......................       21,757     22,578     22,381     22,110     21,926
                                         ==========   ========   ========   ========   ========
Diluted Earnings Per Share of Stock:
  Income from continuing operations...   $     1.60   $   1.02   $   1.19   $   1.15   $   0.66
  Discontinued operations.............                   (0.95)      2.16       1.79       1.92
                                         ----------   --------   --------   --------   --------
  Diluted earnings per share..........   $     1.60   $   0.07   $   3.35   $   2.94   $   2.58
                                         ==========   ========   ========   ========   ========
  Weighted average number of shares
     outstanding......................       21,786     22,601     22,753     22,452     22,273
                                         ==========   ========   ========   ========   ========
Dividends per share of common and
  Class B common stock................   $     0.64   $   0.45   $   0.75   $   0.52   $   0.46
                                         ==========   ========   ========   ========   ========
OTHER DATA
Cash and marketable securities........   $  194,313   $557,891   $110,171   $ 62,749   $ 73,052
Working capital.......................      218,619    595,530    124,675     75,830     78,927
Total assets..........................    1,282,873    979,625    546,393    464,311    398,416
Long-Term Debt........................      306,000
Stockholders' equity..................      799,701    813,451    385,357    310,777    249,937
</TABLE>

                                        15
<PAGE>   16

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     Statements in this Annual Report on Form 10-K concerning the Company's
business outlook or future economic performance, anticipated profitability,
revenues, expenses or other financial items, together with other statements that
are not historical facts, are "forward-looking statements" as that term is
defined under the Federal Securities Laws. Forward-looking statements are
subject to risks, uncertainties and other factors which could cause actual
results to differ materially from those stated in such statements. Such risks,
uncertainties and factors include, but are not limited to, industry cyclicality,
the seasonal nature of the business, changes in pricing or other actions by
competitors or suppliers, and general economic conditions, as well as other
risks detailed in the Company's filings with the Securities and Exchange
Commission including this Annual Report on Form 10-K.

GENERAL

     The Company was organized as a corporation in 1998 and is engaged in
newspaper publishing and related new media operations, operating the newspaper
properties operated by Pulitzer Publishing Company ("Old Pulitzer") prior to the
Spin-off (as defined below). Prior to the Spin-off, the Company was a
wholly-owned subsidiary of Old Pulitzer.

     As of May 25, 1998, Old Pulitzer, the Company and Hearst-Argyle Television,
Inc. ("Hearst-Argyle") entered into an Amended and Restated Agreement and Plan
of Merger (the "Merger Agreement") pursuant to which Hearst-Argyle agreed to
acquire Old Pulitzer's television and radio broadcasting operations
(collectively, the "Broadcasting Business") in exchange for the issuance to Old
Pulitzer's stockholders of 37,096,774 shares of Hearst-Argyle's Series A common
stock. The Broadcasting Business consisted of nine network-affiliated television
stations and five radio stations owned and operated by Pulitzer Broadcasting
Company and its wholly-owned subsidiaries. On March 18, 1999, the Broadcasting
Business was acquired by Hearst-Argyle through the merger (the "Merger") of Old
Pulitzer into Hearst-Argyle. Prior to the Merger, Old Pulitzer's newspaper
publishing and related new media businesses were contributed to the Company in a
tax-free "spin-off" to Old Pulitzer stockholders (the "Spin-off"). The Merger
and Spin-off are collectively referred to as the "Broadcast Transaction."

     Old Pulitzer's historical basis in its newspaper publishing and related new
media assets and liabilities has been carried over to the Company. The Broadcast
Transaction represents a reverse-spin transaction and, accordingly, the
Company's results of operations for periods prior to the consummation of the
Broadcast Transaction are identical to the historical results of operations
previously reported by Old Pulitzer. Results of the Company's newspaper
publishing and related new media businesses are reported as continuing
operations, and the results of the Broadcasting Business owned by Old Pulitzer
prior to the Merger are reported as discontinued operations, in the financial
statements included in Item 8 of this Annual Report on Form 10-K.

     The Company's operating revenues are significantly influenced by a number
of factors, including overall advertising expenditures, the appeal of newspapers
in comparison to other forms of advertising, the performance of the Company in
comparison to its competitors in specific markets, the strength of the national
economy and general economic conditions and population growth in the markets
served by the Company.

     The Company's business tends to be seasonal, with peak revenues and profits
generally occurring in the fourth and, to a lesser extent, second quarters of
each year as a result of increased advertising activity during the Christmas and
spring holiday periods. The first quarter is historically the weakest quarter
for revenues and profits.

RECENT EVENTS

     On January 11, 2000, the Company acquired in an asset purchase The
Pantagraph, a daily and Sunday newspaper that serves the central Illinois cities
of Bloomington and Normal, and a group of seven community newspapers known as
the Illinois Valley Press, from The Chronicle Publishing Company of San
Francisco for an aggregate of $180 million, excluding acquisition costs and a
separate payment for working capital (the

                                        16
<PAGE>   17

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

"Pantagraph Acquisition"). The Company funded this acquisition with internal
cash generated from the sale of a portion of its marketable security
investments.

     On May 1, 2000, the Company, Pulitzer Technologies, Inc., a wholly-owned
subsidiary of the Company (together with the Company, the "Pulitzer Parties")
and The Herald Company, Inc. ("Herald") completed the transfer of their
respective interests in the assets and operations of the Post-Dispatch and
certain related businesses to a new joint venture (the "Venture"), known as St.
Louis Post-Dispatch LLC ("PD LLC"). The Company controls and manages PD LLC.
Under the terms of the operating agreement governing PD LLC (the "Operating
Agreement"), the Pulitzer Parties hold a 95 percent interest in the results of
operations of PD LLC and Herald holds a 5 percent interest. Previously, under
the terms of the St. Louis Agency Agreement, which had governed the operations
of the Post-Dispatch since 1961, the Company and Herald generally shared its
operating profits and losses, as well as its capital expenditures, on a 50-50
basis. Also, under the terms of the Operating Agreement, Herald received on May
1, 2000 a cash distribution of $306 million from PD LLC. This distribution was
financed by a $306 million loan (the "Loan") to PD LLC from a group of
institutional lenders (the "Lenders") led by Prudential Capital Group, a
division of The Prudential Insurance Company of America. The Venture and the
Loan are treated as a purchase for accounting purposes.

     On August 10, 2000, the Company acquired the assets of the Suburban
Newspapers of Greater St. Louis, LLC and the stock of The Ladue News, Inc.
(collectively the "Suburban Journals") for $165 million, excluding acquisition
costs and a separate payment for working capital of approximately $7 million
(the "Journals Acquisition"). The Suburban Journals are a group of 36 weekly
papers and various niche publications that serve the greater St. Louis, Missouri
metropolitan area. The Company funded this acquisition with internal cash
generated from the sale of a portion of its marketable security investments.

     The Pantagraph Acquisition, Venture and Journals Acquisition are
collectively referred to as the "Newspaper Transactions."

2000 COMPARED WITH 1999

CONTINUING OPERATIONS -- PUBLISHING

     Operating revenues for the year ended December 31, 2000 increased 22
percent to $407.5 million from $334.2 million in 1999. The increase primarily
reflected higher advertising revenues and the contribution from The Pantagraph,
acquired in January 2000, and the Suburban Journals, acquired in August 2000. In
addition, the revenue comparison was favorably affected by an extra week of
operations in 2000; fiscal 2000 contained 53 weeks, versus 52 weeks in fiscal
1999. Excluding the results of properties acquired and the additional week in
2000, revenues for the full year of 2000 increased 5 percent over 1999.

     Newspaper advertising revenues increased $61.8 million, or 24.5 percent, in
2000. The current year increase primarily reflected the addition of advertising
revenue from The Pantagraph and Suburban Journals, the additional week of
operations, and higher revenue at the Post-Dispatch. At the Post-Dispatch, gains
were primarily driven by increases in national and classified advertising,
reflecting rate increases in January 2000 as well as a prior classified rate
increase in mid-1999. On a comparable basis, advertising revenues increased 5.9
percent from the prior year, reflecting the Post-Dispatch gains as well as solid
increases at many of the PNI Group locations.

     Circulation revenues increased approximately $6.5 million, or 8.7 percent,
in 2000. The higher circulation revenues reflected the addition of circulation
revenue from The Pantagraph.

     Other publishing revenues increased $5.0 million, or 76.8 percent, in 2000,
primarily reflecting higher revenues from the Company's "new media" operations
and the addition of revenue from properties acquired in 2000.

                                        17
<PAGE>   18

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

     Operating expenses, excluding the St. Louis Agency adjustment, increased
14.8 percent to $358.3 million in 2000 from $312 million in 1999. The prior year
included $26.7 million of stock option cash-out and bonus payments to publishing
employees. Excluding these costs from 1999, the results of properties acquired
in 2000, the 53rd week of operations in 2000 and new goodwill amortization in
2000 related to the Company's increased interest in the Post-Dispatch, operating
expenses increased 5.9 percent to $301.6 million in 2000 from $284.7 million in
1999. The increase on a comparable basis primarily reflected higher overall
personnel costs of $7.6 million, higher newsprint costs of $3.2 million and
higher depreciation and amortization expense of approximately $2.7 million. A
substantial portion of the increased expenses was related to investments in
expanded sales staffs and online capabilities at many of the Company's
newspapers.

     Equity in the earnings of the Tucson newspaper partnership increased 2.4
percent to $22.5 million in 2000 from $22 million in 1999. The increase in 2000
was primarily the result of the 53rd week of operations at the Star.

     The Company reported operating income for fiscal 2000 of $62.3 million
compared to operating income of $19.1 million in 1999. Excluding the stock
option cash-out and bonus payments of $26.7 million from the prior year,
operating income would have increased 36.2 percent to $62.3 million from $45.8
million. The significant current year increase primarily reflected the impact of
the Company's increased interest in the results of operations of the
Post-Dispatch and contributions from The Pantagraph and Suburban Journals to
operating income in 2000.

     Interest income for 2000 decreased to $19 million from $25.4 million in the
prior year. The decrease reflected the lower average balance of invested funds
in the current year due to the outflow of approximately $180 million of combined
cash and marketable securities on January 11, 2000 in connection with the
Pantagraph Acquisition and $165 million on August 10, 2000 in connection with
the Journals Acquisition. The comparison also reflected the prior year inflow of
approximately $429 million of net cash in connection with the Broadcast
Transaction on March 18, 1999.

     The Company reported interest expense of $16.5 million in 2000. The current
year interest expense results from the $306 million borrowing by PD LLC on May
1, 2000 to fund the cash distribution to Herald under the terms of the Operating
Agreement.

     The Company incurred a net realized loss on marketable securities and
investments of $2.2 million in 2000 compared with a net realized loss of
$111,000 in 1999. The current year loss resulted from marketable security
investment losses of $3.9 million and the $2.1 million iOwn investment
write-down that were partially offset by limited partnership gains of $3.8
million. The prior year loss resulted from marketable security investment losses
of $2.2 million, partially offset by limited partnership investment gains of
$2.1 million.

     During 2000, the Company reported its equity in the losses of a joint
venture investment of $1.7 million. As of December 31, 2000, the Company has a
remaining investment balance of approximately $1.9 million in this joint
venture.

     Net other expense for 2000 was $1.6 million compared with $2.7 million in
the prior year. The higher expense in the prior year resulted primarily from a
loss of $1.1 million related to the sale of the Company's newspaper property in
Hamilton, Montana in May 1999.

     The effective income tax rate for 2000 was 39.8 percent compared with a
rate of 44.9 percent in the prior year. The decline in the current year
effective tax rate reflected lower state income taxes in 2000 and the prior year
impact of the Hamilton newspaper sale that increased the 1999 rate. The Company
expects its effective tax rate for 2001 to be approximately 41 percent.

     The Company reported income from continuing operations of $34.9 million, or
$1.60 per diluted share, for the year ended December 31, 2000, compared with $23
million, or $1.02 per diluted share, in the prior year. The current year
comparison is impacted by the following items in 2000: (i) dilution from the
Newspaper Transactions that reduced current year earnings approximately $8.1
million, or $0.37 per diluted
                                        18
<PAGE>   19

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

share, (ii) an increase in non-operating investment losses that lowered 2000
earnings by approximately $1.2 million, or $0.06 per diluted share, and (iii)
the 53rd week that contributed approximately $786,000, or $0.04 per diluted
share, to current year earnings. In addition, the comparison between years is
also impacted by the following prior year items: (i) stock option cash-out and
bonus payments of $26.7 million (pretax) that reduced 1999 earnings by $15.5
million, or $0.68 per diluted share, and (ii) the loss from the sale of the
Hamilton newspaper property of $1.9 million, or $0.09 per diluted share.

     Fluctuations in the price of newsprint significantly impact the results of
the Company's newspaper operations, where newsprint expense typically accounts
for approximately 15 to 20 percent of total operating costs. The Company's
average cost for newsprint for the year ended December 31, 2000 was
approximately $560 per metric ton, compared to approximately $510 per metric ton
in 1999. For the full year of 2000, the Company's newsprint cost and metric tons
consumed, including its 50 percent share related to the operations of TNI
Partners, were approximately $63.5 million and 113,200 metric tons,
respectively. Based on the Company's current level of newspaper operations,
expected annual newsprint consumption for 2001 is estimated to be in the range
of 121,000 to 123,000 metric tons. During the first quarter of 2001, the
Company's average cost for newsprint has been approximately $595 per metric ton.
On March 1, 2001, the Company's newsprint suppliers increased the price of
newsprint by $50 per metric ton. This price increase will begin to impact the
Company's newsprint expense in the second quarter of 2001.

1999 COMPARED WITH 1998

CONTINUING OPERATIONS -- PUBLISHING

     Operating revenues for the year ended December 31, 1999 increased 5.2
percent to $334.2 million from $317.7 million in 1998. The gain primarily
reflected higher advertising revenues and the contribution from the Troy Daily
News acquired in October 1998. In addition to the acquisition of the Troy Daily
News in 1998, the Company sold its daily newspapers in Hamilton, Montana and
Haverhill, Massachusetts in May 1999 and June 1998, respectively. Excluding the
results of these properties acquired and sold from both 1999 and 1998, revenues
for the full year of 1999 increased 4 percent.

     Newspaper advertising revenues increased $16.8 million, or 7.1 percent, in
1999. The 1999 increase included advertising revenue gains of 9.7 percent at the
PNI Group and 6.3 percent at the Post-Dispatch. The gains primarily reflected
growth in classified advertising, and higher national advertising revenue at the
Post-Dispatch. At the PNI Group, volume increases at most locations, along with
new advertising from the Troy Daily News, accounted for a significant portion of
the higher advertising revenue. At the Post-Dispatch, rate increases in January
1999 and higher national, classified and part-run advertising volume accounted
for the current year advertising revenue increase. Excluding the results of
properties acquired and sold from both 1999 and 1998, advertising revenues for
the full year of 1999 increased 6.2 percent.

     Circulation revenues decreased approximately $2.2 million, or 2.8 percent,
in 1999. The lower circulation revenues primarily reflected declines in paid
circulation at the Post-Dispatch, which were partially offset by new circulation
revenue from the Troy Daily News. The decline in circulation revenues at the
Post-Dispatch was in part related to the significantly higher revenues in the
third quarter of 1998 reflecting the positive impact on circulation related to
Mark McGwire's pursuit of the Major League Baseball home run record.

     Other publishing revenues increased $1.8 million, or 38.7 percent, in 1999,
resulting primarily from higher commercial printing revenue at the PNI Group and
higher revenues from the Company's "new media" operations.

     Operating expenses, excluding the St. Louis Agency adjustment, increased to
$312 million in 1999 from $275 million in 1998, an increase of 13.4 percent. The
significant increase resulted from $26.7 million of stock option cash-out and
bonus payments to publishing employees. Excluding these costs, operating
expenses increased 3.7 percent to $285.3 million in 1999. The increase on a
comparable basis reflected higher overall personnel costs of $10.2 million and
higher depreciation and amortization of $3 million, due in part to the

                                        19
<PAGE>   20

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

acquisition of the Troy Daily News in October 1998. These expense increases were
partially offset by a decline in newsprint costs of $5.1 million, reflecting
lower newsprint prices in 1999. Excluding the results of properties acquired and
sold from both 1999 and 1998, as well as the St. Louis Agency adjustment and
stock option cash-out and bonus payments, expenses for 1999 increased 2.4
percent.

     Equity in the earnings of the Tucson newspaper partnership increased $1
million from 1998 to $22 million. The increase in 1999 was primarily a result of
gains in advertising revenue at the Star driven by an approximately 9.7 percent
increase in full run advertising volume (linage in inches).

     The Company reported operating income for fiscal 1999 of $19.1 million
compared to operating income of $42.9 million in 1998. The decrease in 1999
income resulted from the stock option cash-out and bonus payments of $26.7
million. Excluding these costs, operating income would have increased 6.7
percent to $45.8 million. The increase on a comparable basis reflected the
advertising revenue gains and lower newsprint expense in 1999.

     Interest income for 1999 increased to $25.4 million from $5 million in the
prior year. The increase reflected the inflow of approximately $429 million of
net cash in connection with the Broadcast Transaction on March 18, 1999.

     The Company incurred a net realized loss on marketable securities and
investments of $111,000 in 1999 compared to a gain of $1.3 million in the prior
year. The 1999 loss reflected net realized losses of approximately $2.2 million
related to the sale of marketable debt securities partially offset by the
favorable performance of two limited partnership investments that generated
gains of approximately $2.1 million. The 1998 gain of $1.3 million primarily
reflected the favorable performance of two limited partnership investments.

     Net other expense for 1999 was $2.7 million compared with $2.1 in the prior
year. The 1999 expense included an approximate $1.1 million loss related to the
sale of the Company's newspaper property in Hamilton, Montana on May 21, 1999
while the prior year included a loss of approximately $869,000 related to the
sale of the Company's newspaper property in Haverhill, Massachusetts on June 1,
1998.

     The effective income tax rate for 1999 was 44.9 percent compared with a
rate of 42.6 percent in the prior year. The higher rate in 1999 primarily
reflected the impact of the Hamilton newspaper sale.

     The Company reported income from continuing operations of $23 million, or
$1.02 per diluted share, for the year ended December 31, 1999, compared with $27
million, or $1.19 per diluted share, in the prior year. The decline in 1999
income resulted from the stock option cash-out and bonus payments of $26.7
million ($15.5 million after-tax). Excluding these costs, income from continuing
operations would have increased 42.3 percent to $38.4 million, or $1.70 per
diluted share. The increase on a comparable basis reflected the advertising
revenue gains, lower newsprint expense and higher interest income in 1999.
Earnings per share for 1999 and 1998 reflect losses from the sales of the
Hamilton (1999) and Haverhill (1998) newspaper properties of $0.09 and $0.02 per
share, respectively.

DISCONTINUED OPERATIONS -- BROADCASTING

     For 1999, the Company reported a loss from discontinued operations of $21.4
million, or $0.95 per diluted share, compared to income of $49.3 million, or
$2.16 per diluted share, in the prior year. The 1999 loss resulted from a
combination of $25.3 million of stock option cash-out and bonus payments to
broadcasting employees at the time of the Merger and a loss on extinguishment of
debt of approximately $18 million (approximately $17.2 million prepayment
penalty and $750,000 write-off of deferred financing fees). In addition, only
the broadcasting operations through the date of the Merger on March 18, 1999
were included in 1999, compared to a full year of normal broadcasting operations
in the prior year. (See Note 4 to the consolidated financial statements included
in Item 8.)

                                        20
<PAGE>   21

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

LIQUIDITY AND CAPITAL RESOURCES

     As of December 31, 2000, the Company had $306 million of outstanding debt
compared with no outstanding debt in the prior year. The new borrowing was made
on May 1, 2000 to fund a $306 million cash distribution to Herald under the
terms of the PD LLC Operating Agreement. The aggregate principal amount of the
Loan is payable on April 28, 2009 and bears interest at an annual rate of 8.05
percent. The Loan is guaranteed by the Company pursuant to a Guaranty Agreement
with the Lenders. In turn, pursuant to an Indemnity Agreement entered into
between Herald and the Company, Herald agreed to indemnify the Company for any
payments that the Company may make under the Guaranty Agreement.

     The terms of the Loan contain certain covenants and conditions including
the maintenance of cash flow and various other financial ratios, minimum net
worth requirements and limitations on the incurrence of other debt. In addition,
the Loan agreement requires that PD LLC maintain a minimum reserve balance
consisting of cash and investments in U.S. government securities, totaling
approximately $9,800,000 as of December 31, 2000. The Loan agreement provides
for a $3,750,000 quarterly increase in the minimum reserve balance over the
nine-year term of the Loan.

     As of December 31, 2000, the Company had a combined balance of cash and
marketable securities of approximately $194 million compared with a balance of
approximately $558 million as of December 31, 1999. The decline since December
31, 1999 primarily reflects the Company's payment of the $180 million
acquisition price for The Pantagraph on January 11, 2000 and $165 million for
the Suburban Journals on August 10, 2000.

     As of December 31, 2000, commitments for capital expenditures were
approximately $5.6 million, relating to normal capital equipment replacements.
Capital expenditures to be made by the Company in fiscal 2001 are estimated to
be in the range of $13 to $15 million. In addition, as of December 31, 2000, the
Company had a capital contribution commitment of approximately $11.9 million
related to a limited partnership investment.

     On July 16, 1999, the Company's Board of Directors approved the repurchase
of up to $50 million of its common stock in the open market. On May 1, 2000, the
Company announced that its Board of Directors had authorized the repurchase of
an additional $50 million of its common stock. During the third quarter of 2000,
the Company's Board of Directors amended the Company's repurchase program to
provide for both the purchase of Class B shares and the purchase of shares in
privately negotiated transactions. On August 16, 2000, the Company purchased
1,000,000 shares of Class B common stock from Michael E. Pulitzer, the Company's
Chairman of the Board, for $40.1 million. As of December 31, 2000, the Company
had repurchased 1,000,000 shares of Class B common stock and 527,300 shares of
common stock for a combined purchase price of approximately $61.9 million.

     The Company generally expects to generate sufficient cash from operations
to cover ordinary capital expenditures, working capital requirements and
dividend payments.

GROSS-UP TRANSACTION

     In connection with the September 1986 purchase of Old Pulitzer Class B
common stock from certain selling stockholders (the "1986 Selling
Stockholders"), Old Pulitzer agreed, under certain circumstances, to make an
additional payment to the 1986 Selling Stockholders in the event of a Gross-Up
Transaction. A "Gross-Up Transaction" was defined to mean, among other
transactions, (i) any merger, in any transaction or series of related
transactions, of more than 85 percent of the voting securities or equity of Old
Pulitzer pursuant to which holders of Old Pulitzer common stock receive
securities other than Old Pulitzer common stock and (ii) any recapitalization,
dividend or distribution, or series of related recapitalizations, dividends or
distributions, in which holders of Old Pulitzer common stock receive securities
(other than Old Pulitzer common stock) having a Fair Market Value (as defined
herein) of not less than 33 1/3 percent of the Fair Market Value of the shares
of Old Pulitzer common stock immediately prior to such transaction. The amount
                                        21
<PAGE>   22

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

of the additional payment, if any, would equal (x) the product of (i) the amount
by which the Transaction Proceeds (as defined herein) exceeds the Imputed Value
(as defined herein) multiplied by (ii) the applicable percentage (i.e., 50
percent for the period from May 13, 1996 through May 12, 2001) multiplied by
(iii) the number of shares of Old Pulitzer common stock issuable upon conversion
of the shares of Old Pulitzer Class B common stock owned by the 1986 Selling
Stockholders, adjusted for, among other things, stock dividends and stock
splits; less (y) the sum of any additional payments previously received by the
1986 Selling Stockholders; provided, however, that in the event of any
recapitalization, dividend or distribution, the amount by which the Transaction
Proceeds exceeds the Imputed Value shall not exceed the amount paid or
distributed pursuant to such recapitalization, dividend or distribution in
respect of one share of Old Pulitzer common stock.

     The term "Transaction Proceeds" was defined to mean, in the case of a
merger, the aggregate Fair Market Value (as defined herein) of the consideration
received pursuant thereto by the holder of one share of Old Pulitzer common
stock, and, in the case of a recapitalization, dividend or distribution, the
aggregate Fair Market Value of the amounts paid or distributed in respect of one
share of Old Pulitzer common stock plus the aggregate Fair Market Value of one
share of Old Pulitzer common stock following such transaction. The "Imputed
Value" for one share of Old Pulitzer common stock on a given date was defined to
mean an amount equal to $28.82 compounded annually from May 12, 1986 to such
given date at the rate of 15 percent per annum, the result of which is $154.19
at May 12, 1998. There was no specific provision for adjustment of the $28.82
amount, but if it were adjusted to reflect all stock dividends and stock splits
of Old Pulitzer since September 30, 1986, it would have equaled $15.72, which if
compounded annually from May 12, 1986 at the rate of 15 percent per annum would
have equaled $84.11 at May 12, 1998.

     "Fair Market Value," in the case of any consideration other than cash
received in a Gross-Up Transaction, was defined to mean the fair market value
thereof as agreed to by a valuation firm selected by Old Pulitzer and a
valuation firm selected by the 1986 Selling Stockholders, or, if the two
valuation firms do not agree on the fair market value, the fair market value of
such consideration as determined by a third valuation firm chosen by the two
previously selected valuation firms. Any such agreement or determination shall
be final and binding on the parties.

     As a result of the foregoing, the amount of additional payments, if any,
that may be payable by the Company with respect to the Merger and the
distribution of the Company's common stock and Class B common stock in the
Spin-off (the "Distribution") cannot be determined at this time. However, if the
Distribution were determined to be a Gross-Up Transaction and if the Fair Market
Value of the Transaction Proceeds with respect to the Merger and the
Distribution were determined to exceed the Imputed Value, then the additional
payments to the 1986 Selling Stockholders would equal approximately $5.9 million
for each $1.00 per share by which the Transaction Proceeds exceed the Imputed
Value. Accordingly, depending on the ultimate resolution of the meaning and
application of various provisions of the Gross-Up Transaction agreements,
including the determination of Imputed Value and Fair Market Value of the
Transaction Proceeds, in the opinion of the Company's management, the amount of
an additional payment, if any, could be material to the consolidated financial
statements of the Company. The additional payment, if any, to the 1986 Selling
Stockholders would be recorded directly to additional paid-in capital as the
payment of this contingent amount would be a direct cost of the disposal of Old
Pulitzer's Broadcasting Business.

     In the opinion of the Company's management, the amount of additional
payment, if any, is not likely to have a material adverse effect on the
Company's existing day-to-day newspaper publishing and related new media
properties. The amount of additional payment, if any, will reduce, however, the
amount of cash available to the Company to finance potential acquisition
opportunities in the future.

MERGER AGREEMENT INDEMNIFICATION

     Pursuant to the Merger Agreement, the Company is obligated to indemnify
Hearst-Argyle against losses related to: (i) on an after tax basis, certain tax
liabilities, including (A) any transfer tax liability attributable to the
Spin-off, (B) with certain exceptions, any tax liability of Old Pulitzer or any
subsidiary of Old Pulitzer
                                        22
<PAGE>   23

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS -- CONTINUED

attributable to any tax period (or portion thereof) ending on or before the
closing date of the Merger, including tax liabilities resulting from the
Spin-off, and (C) any tax liability of the Company or any subsidiary of the
Company; (ii) liabilities and obligations under any employee benefit plans not
assumed by Hearst-Argyle; (iii) any liabilities for payments made pursuant to a
Gross-Up Transaction; and (iv) certain other matters as set forth in the Merger
Agreement.

PD LLC OPERATING AGREEMENT

     During the first ten years of its term, PD LLC is restricted from making
distributions (except under specified circumstances), capital expenditures and
member loan repayments unless it has set aside out of its cash flow a reserve
equal to the product of $15,000,000 and the number of years since May 1, 2000,
but not in excess of $150,000,000. On May 1, 2010, Herald will have a one-time
right to require PD LLC to redeem Herald's interest in PD LLC. The redemption
price for Herald's interest will be determined pursuant to a formula yielding an
amount which will result in the present value to May 1, 2000 of the after-tax
cash flows to Herald (based on certain assumptions) from PD LLC, including the
initial distribution and the special distribution described below, if any, being
equal to $275,000,000. In the event that PD LLC has an increase in the tax basis
of its assets as a result of Herald's recognizing taxable income from certain
transactions effected under the agreement governing the contributions of the
Company and Herald to PD LLC and the Operating Agreement, Herald generally will
be entitled to receive a special distribution from PD LLC in an amount that
corresponds, approximately, to the present value after-tax benefit to the
members of PD LLC of the tax basis increase. Upon the termination of PD LLC,
which will be on May 1, 2015 (unless Herald exercises the redemption right
described above), Herald will be entitled to the liquidation value of its
interest in PD LLC. The Company may purchase Herald's interest at that time for
an amount equal to what Herald would be entitled on liquidation. That amount
will be equal to the amount of its capital account, after allocating the gain or
loss that would result from a cash sale of PD LLC's assets for their fair market
value at that time. Herald's share of such gain or loss generally will be 5
percent, but will be reduced (but not below 1 percent) to the extent that the
present value to May 1, 2000 of the after-tax cash flows to Herald from PD LLC,
including the initial distribution, the special distribution described above, if
any, and the liquidation amount (based on certain assumptions), exceeds
$325,000,000.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The primary raw material used in the Company's operations is newsprint,
typically representing 15 to 20 percent of operating expenses. The Company
consumed approximately 113,200 metric tons of newsprint during 2000 at an
average cost of approximately $560 per metric ton. Historically, newsprint has
been subject to significant price fluctuations from year to year, unrelated in
many cases to general economic conditions. In the last five years, the Company's
average cost per ton of newsprint has varied from a low of $510 per metric ton
in 1999 to a high of $646 per metric ton in 1996. The Company attempts to obtain
the best price available by combining newsprint purchases for its different
newspaper locations but does not enter into derivative contracts in an attempt
to reduce the impact of year to year price fluctuations on its consolidated
newsprint expense.

     The Loan bears interest at a fixed annual rate of 8.05 percent.
Consequently, if held to maturity, the Loan will not expose the Company to
market risks associated with general fluctuations in interest rates.

     As of December 31, 2000, the Company had a combined balance of cash and
marketable securities of approximately $194 million. The Company anticipates
that a portion of these funds will be used in connection with its capital stock
repurchase program. In addition, the Company may fund potential newspaper
acquisitions with a portion of its available cash and marketable securities.
Subsequent to December 31, 2000, the Company liquidated its marketable security
investments and reinvested the proceeds in cash equivalents.

                                        23
<PAGE>   24

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following consolidated financial statements of Pulitzer Inc. and
Subsidiaries are filed as part of this report. Supplementary unaudited data with
respect to the quarterly results of operations of the Company are set forth in
the Notes to Consolidated Financial Statements.

PULITZER INC. AND SUBSIDIARIES

     Independent Auditors' Report

     Statements of Consolidated Income for each of the Three Years in the Period
        Ended December 31, 2000

     Statements of Consolidated Financial Position at December 31, 2000 and 1999

     Statements of Consolidated Stockholders' Equity for each of the Three Years
        in the Period Ended December 31, 2000

     Statements of Consolidated Cash Flows for each of the Three Years in the
        Period Ended December 31, 2000

     Notes to Consolidated Financial Statements for the Three Years in the
        Period Ended December 31, 2000

                                        24
<PAGE>   25

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
  Pulitzer Inc.:

     We have audited the accompanying statements of consolidated financial
position of Pulitzer Inc. and subsidiaries as of December 31, 2000 and 1999, and
the related consolidated statements of income, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. 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, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies at December 31,
2000 and 1999, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.

/s/ DELOITTE & TOUCHE LLP

Saint Louis, Missouri
February 12, 2001

                                        25
<PAGE>   26

                         PULITZER INC. AND SUBSIDIARIES

                       STATEMENTS OF CONSOLIDATED INCOME

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                             -----------------------------------------
                                                                2000           1999           1998
                                                             -----------    -----------    -----------
                                                             (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S>                                                          <C>            <C>            <C>
OPERATING REVENUES -- NET:
  Advertising:
     Retail..............................................     $112,773       $ 91,926       $ 92,286
     National............................................       23,266         16,052         11,013
     Classified..........................................      135,134        112,058        101,078
                                                              --------       --------       --------
          Total..........................................      271,173        220,036        204,377
     Preprints...........................................       43,276         32,624         31,495
                                                              --------       --------       --------
          Total advertising..............................      314,449        252,660        235,872
  Circulation............................................       81,505         74,957         77,147
  Other..................................................       11,587          6,553          4,724
                                                              --------       --------       --------
          Total operating revenues.......................      407,541        334,170        317,743
                                                              --------       --------       --------
OPERATING EXPENSES:
  Payroll and other personnel expense....................      161,339        133,594        123,085
  Newsprint expense......................................       56,464         45,293         50,758
  Stock option cash-outs and bonuses (Note 13)...........                      26,685
  St. Louis Agency adjustment............................        9,363         25,029         20,729
  Depreciation...........................................       13,495          9,785          7,959
  Amortization...........................................       20,162          7,306          6,095
  Other expenses.........................................      106,861         89,347         87,131
                                                              --------       --------       --------
          Total operating expenses.......................      367,684        337,039        295,757
                                                              --------       --------       --------
  Equity in earnings of Tucson newspaper partnership
     (Note 3)............................................       22,487         21,965         20,935
                                                              --------       --------       --------
  Operating income.......................................       62,344         19,096         42,921
  Interest income........................................       19,033         25,377          4,967
  Interest expense.......................................      (16,537)
  Net gain (loss) on marketable securities and
     investments.........................................       (2,197)          (111)         1,322
  Equity in losses of joint venture investment...........       (1,728)
  Net other expense......................................       (1,569)        (2,697)        (2,139)
                                                              --------       --------       --------
INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION FOR
  INCOME TAXES...........................................       59,346         41,665         47,071
PROVISION FOR INCOME TAXES (Note 11).....................       23,595         18,708         20,055
MINORITY INTEREST IN NET EARNINGS OF SUBSIDIARY (Note
  3).....................................................          849
                                                              --------       --------       --------
INCOME FROM CONTINUING OPERATIONS........................       34,902         22,957         27,016
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAX
  (Note 4)...............................................                     (21,449)        49,268
                                                              --------       --------       --------
NET INCOME...............................................     $ 34,902       $  1,508       $ 76,284
                                                              ========       ========       ========
BASIC EARNINGS PER SHARE OF STOCK (Note 14):
  Income from continuing operations......................     $   1.60       $   1.02       $   1.21
  Income (loss) from discontinued operations.............                       (0.95)          2.20
                                                              --------       --------       --------
  Earnings per share.....................................     $   1.60       $   0.07       $   3.41
                                                              ========       ========       ========
  Weighted average number of shares outstanding..........       21,757         22,578         22,381
                                                              ========       ========       ========
DILUTED EARNINGS PER SHARE OF STOCK (Note 14):
  Income from continuing operations......................     $   1.60       $   1.02       $   1.19
  Income (loss) from discontinued operations.............                       (0.95)          2.16
                                                              --------       --------       --------
  Earnings per share.....................................     $   1.60       $   0.07       $   3.35
                                                              ========       ========       ========
  Weighted average number of shares outstanding..........       21,786         22,601         22,753
                                                              ========       ========       ========
</TABLE>

          See accompanying notes to consolidated financial statements.
                                        26
<PAGE>   27

                         PULITZER INC. AND SUBSIDIARIES

                 STATEMENTS OF CONSOLIDATED FINANCIAL POSITION

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                                ----------------------
                                                                   2000         1999
                                                                ----------    --------
                                                                    (IN THOUSANDS)
<S>                                                             <C>           <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................    $   67,447    $106,177
  Marketable securities (Note 6)............................       126,866     451,714
  Trade accounts receivable (less allowance for doubtful
     accounts of $2,587 and $2,362).........................        53,912      42,175
  Inventory.................................................         5,468       5,146
  Income taxes receivable...................................         1,612      18,279
  Prepaid expenses and other................................        12,888      13,067
                                                                ----------    --------
     Total current assets...................................       268,193     636,558
                                                                ----------    --------
PROPERTIES:
  Land......................................................         7,959       5,611
  Buildings.................................................        53,922      45,034
  Machinery and equipment...................................       139,340     107,796
  Construction in progress..................................         2,984       7,158
                                                                ----------    --------
     Total..................................................       204,205     165,599
  Less accumulated depreciation.............................        93,398      81,995
                                                                ----------    --------
     Properties -- net......................................       110,807      83,604
                                                                ----------    --------
INTANGIBLE AND OTHER ASSETS:
  Intangible assets -- net of amortization (Note 7).........       838,012     188,263
  Receivable from The Herald Company (Note 3)...............                    35,901
  Restricted cash (Note 8)..................................         9,810
  Other.....................................................        56,051      35,299
                                                                ----------    --------
     Total intangible and other assets......................       903,873     259,463
                                                                ----------    --------
       TOTAL................................................    $1,282,873    $979,625
                                                                ==========    ========
</TABLE>

                                                                     (Continued)

                                        27
<PAGE>   28

                         PULITZER INC. AND SUBSIDIARIES

                 STATEMENTS OF CONSOLIDATED FINANCIAL POSITION

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                                ----------------------
                                                                   2000         1999
                                                                ----------    --------
                                                                    (IN THOUSANDS)
<S>                                                             <C>           <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Trade accounts payable....................................    $   14,463    $ 15,109
  Salaries, wages and commissions...........................        14,886      12,481
  Interest payable..........................................         4,424
  Pension obligations (Note 9)..............................           611         288
  Acquisition payable.......................................         9,707       9,707
  Other.....................................................         5,483       3,443
                                                                ----------    --------
     Total current liabilities..............................        49,574      41,028
                                                                ----------    --------
LONG-TERM DEBT..............................................       306,000
                                                                ----------    --------
PENSION OBLIGATIONS (Note 9)................................        28,470      26,549
                                                                ----------    --------
POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT OBLIGATIONS (Note
  10).......................................................        87,318      86,902
                                                                ----------    --------
OTHER LONG-TERM LIABILITIES.................................        11,810      11,695
                                                                ----------    --------
COMMITMENTS AND CONTINGENCIES (Note 15)
STOCKHOLDERS' EQUITY (Note 12):
  Preferred stock, $.01 par value; authorized -- 100,000,000
     shares in 2000 and 1999; issued and outstanding -- none
  Common stock, $.01 par value; authorized -- 100,000,000
     shares in 2000 and 1999; issued -- 9,414,704 in 2000
     and 8,513,203 in 1999..................................            94          85
  Class B common stock, convertible, $.01 par value;
     authorized -- 100,000,000 shares in 2000 and 1999;
     issued -- 13,265,521 in 2000 and 14,131,814 in 1999....           133         141
  Additional paid-in capital................................       427,214     425,451
  Retained earnings.........................................       434,580     413,676
  Accumulated other comprehensive loss......................          (368)     (4,196)
                                                                ----------    --------
     Total..................................................       861,653     835,157
  Treasury stock -- at cost; 527,971 and 527,471 shares of
     common stock in 2000 and 1999, respectively, and
     1,000,000 shares of Class B common stock in 2000.......       (61,952)    (21,706)
                                                                ----------    --------
     Total stockholders' equity.............................       799,701     813,451
                                                                ----------    --------
       TOTAL................................................    $1,282,873    $979,625
                                                                ==========    ========
</TABLE>

                                                                     (Concluded)

          See accompanying notes to consolidated financial statements.
                                        28
<PAGE>   29

                         PULITZER INC. AND SUBSIDIARIES

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                         ACCUMULATED
                                                      CLASS B   ADDITIONAL                  OTHER                       TOTAL
                                             COMMON   COMMON     PAID-IN     RETAINED   COMPREHENSIVE   TREASURY    STOCKHOLDERS'
                                             STOCK     STOCK     CAPITAL     EARNINGS   INCOME (LOSS)     STOCK        EQUITY
                                             ------   -------   ----------   --------   -------------   ---------   -------------
                                                                                (IN THOUSANDS)
<S>                                          <C>      <C>       <C>          <C>        <C>             <C>         <C>
BALANCES AT JANUARY 1, 1998................   $68      $271     $ 135,542    $362,828      $    --      $(187,932)    $310,777
Comprehensive income:
 Net income................................                                    76,284                                   76,284
 Other comprehensive income, net of
   tax-minimum pension liability
   adjustment..............................                                                   (915)                       (915)
                                                                                                                      --------
 Comprehensive income......................                                                                             75,369
                                                                                                                      --------
 Issuance of common stock grants...........                            68                                                   68
 Common stock options exercised............     3                   7,182                                                7,185
 Conversion of Class B common stock to
   common stock............................     1        (1)
 Common stock issued under Employee Stock
   Purchase Plan...........................                         1,370                                                1,370
 Tax benefit from stock options
   exercised...............................                         7,412                                                7,412
 Cash dividends declared $0.75 per share of
   common and Class B common...............                                   (16,783)                                 (16,783)
 Purchase of treasury stock................                                                                   (41)         (41)
                                              ---      ----     ---------    --------      -------      ---------     --------
BALANCES AT DECEMBER 31, 1998..............    72       270       151,574     422,329         (915)      (187,973)     385,357
Comprehensive income (loss):
 Net income................................                                     1,508                                    1,508
 Other comprehensive income, net of
   tax-minimum pension liability
   adjustment..............................                                                    894                         894
 Other comprehensive income, net of
   tax-unrealized loss on marketable
   securities..............................                                                 (4,175)                     (4,175)
                                                                                                                      --------
 Comprehensive (loss)......................                                                                             (1,773)
                                                                                                                      --------
 Issuance of common stock grants...........                           610                                                  610
 Common stock options exercised............     1                   2,280                                                2,281
 Conversion of Class B common stock to
   common stock............................    12       (12)
 Common stock issued under Employee Stock
   Purchase Plan...........................                           191                                                  191
 Tax benefit from stock options
   exercised...............................                         2,318                                                2,318
 Cash dividends declared $0.45 per share of
   common and Class B common...............                                   (10,161)                                 (10,161)
 Purchase of treasury stock................                                                               (21,816)     (21,816)
 Cancellation of treasury stock............            (117)     (187,966)                                188,083
 Divestiture of Broadcasting Business, net
   of Transaction costs and Working Capital
   Adjustment..............................                       456,444                                              456,444
                                              ---      ----     ---------    --------      -------      ---------     --------
BALANCES AT DECEMBER 31, 1999..............    85       141       425,451     413,676       (4,196)       (21,706)     813,451
Comprehensive income:
 Net income................................                                    34,902                                   34,902
 Other comprehensive income, net of
   tax-minimum pension liability
   adjustment..............................                                                   (118)                       (118)
 Other comprehensive income, net of
   tax-unrealized gain on marketable
   securities..............................                                                  3,946                       3,946
                                                                                                                      --------
 Comprehensive income......................                                                                             38,730
                                                                                                                      --------
Issuance of common stock grants............                           451                                                  451
 Common stock options exercised............                           300                                                  300
 Conversion of Class B common stock to
   common stock............................     8        (8)
 Common stock issued under Employee Stock
   Purchase Plan...........................     1                     997                                                  998
 Tax benefit from stock options
   exercised...............................                            15                                                   15
 Cash dividends declared $0.64 per share of
   common and Class B common...............                                   (13,998)                                 (13,998)
 Purchase of treasury stock................                                                               (40,246)     (40,246)
                                              ---      ----     ---------    --------      -------      ---------     --------
BALANCES AT DECEMBER 31, 2000..............   $94      $133     $ 427,214    $434,580      $  (368)     $ (61,952)    $799,701
                                              ===      ====     =========    ========      =======      =========     ========
</TABLE>

                                                                     (Continued)
          See accompanying notes to consolidated financial statements.
                                        29
<PAGE>   30

                         PULITZER INC. AND SUBSIDIARIES

                       STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                        COMMON STOCK       CLASS B COMMON STOCK
                                                     ------------------    --------------------
                                                               HELD IN                 HELD IN
                                                     ISSUED    TREASURY     ISSUED     TREASURY
                                                     ------    --------    --------    --------
                                                                   (IN THOUSANDS)
<S>                                                  <C>       <C>         <C>         <C>
SHARE ACTIVITY:
BALANCES AT JANUARY 1, 1998........................   6,798       (25)       27,125     (11,701)
  Issuance of common stock grants..................       1
  Common stock options exercised...................     318
  Conversion of Class B common stock to common
     stock.........................................     105                    (105)
  Common stock issued under Employee Stock Purchase
     Plan..........................................      21
  Purchase of treasury stock.......................                (1)
                                                     ------     -----      --------    --------
BALANCES AT DECEMBER 31, 1998......................   7,243       (26)       27,020     (11,701)
  Issuance of common stock grants..................       8
  Common stock options exercised...................      97
  Conversion of Class B common stock to common
     stock.........................................   1,187                  (1,187)
  Common stock issued under Employee Stock Purchase
     Plan..........................................       5
  Purchase of treasury stock.......................              (528)
  Cancellation of treasury stock...................     (27)       27       (11,701)     11,701
                                                     ------     -----      --------    --------
BALANCES AT DECEMBER 31, 1999......................   8,513      (527)       14,132          --
  Issuance of common stock grants..................       2
  Common stock options exercised...................       8
  Conversion of Class B common stock to common
     stock.........................................     866                    (866)
  Common stock issued under Employee Stock Purchase
     Plans.........................................      26
  Purchase of treasury stock.......................                (1)                   (1,000)
                                                     ------     -----      --------    --------
BALANCES AT DECEMBER 31, 2000......................   9,415      (528)       13,266      (1,000)
                                                     ======     =====      ========    ========
</TABLE>

                                                                     (Concluded)

          See accompanying notes to consolidated financial statements.
                                        30
<PAGE>   31

                         PULITZER INC. AND SUBSIDIARIES

                     STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             ---------   ---------   --------
<S>                                                          <C>         <C>         <C>
CONTINUING OPERATIONS
CASH FLOWS FROM OPERATING ACTIVITIES:
  Income from continuing operations........................  $  34,902   $  22,957   $ 27,016
  Adjustments to reconcile income from continuing
     operations to net cash provided by operating
     activities:
     Depreciation..........................................     13,495       9,785      7,959
     Amortization..........................................     20,162       7,306      6,095
     Deferred income taxes.................................      5,488      (4,938)    (1,400)
     Loss on sale of assets................................      3,918       3,279
     Equity in losses of joint venture investment..........      1,728
     Changes in assets and liabilities (net of the effects
       of the purchase and sale of properties) which
       provided (used) cash:
       Trade accounts receivable...........................     (1,762)        483     (6,701)
       Inventory...........................................      1,165      (2,559)     2,743
       Other assets........................................        746       9,059      4,642
       Trade accounts payable and other liabilities........      3,899      11,810      2,217
       Income taxes receivable/payable.....................     16,667     (21,111)      (238)
                                                             ---------   ---------   --------
NET CASH FROM OPERATING ACTIVITIES.........................    100,408      36,071     42,333
                                                             ---------   ---------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures.....................................     (8,722)    (10,920)   (15,269)
  Purchases of publishing properties, net of cash
     acquired..............................................   (685,759)               (23,055)
  Sales of publishing properties...........................                  3,300      2,590
  Purchases of marketable securities.......................    (93,220)   (907,636)
  Sales of marketable securities...........................    414,523     445,424
  Investment in joint ventures and limited partnerships....     (9,384)    (12,396)    (3,900)
  Increase in restricted cash..............................     (9,810)
  Decrease (increase) in notes receivable..................        180          79         (1)
                                                             ---------   ---------   --------
NET CASH FROM INVESTING ACTIVITIES.........................   (392,192)   (482,149)   (39,635)
                                                             ---------   ---------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of long-term debt.................    306,000
  Dividends paid...........................................    (13,998)    (13,535)   (13,409)
  Proceeds from exercise of stock options..................        300       2,281      7,185
  Proceeds from employee stock purchase plan...............        998         191      1,370
  Purchase of treasury stock...............................    (40,246)    (21,816)       (41)
                                                             ---------   ---------   --------
NET CASH FROM FINANCING ACTIVITIES.........................    253,054     (32,879)    (4,895)
                                                             ---------   ---------   --------
CASH USED IN CONTINUING OPERATIONS.........................    (38,730)   (478,957)    (2,197)
                                                             ---------   ---------   --------
                                                                                  (Continued)
</TABLE>

                                        31
<PAGE>   32

                         PULITZER INC. AND SUBSIDIARIES

                     STATEMENTS OF CONSOLIDATED CASH FLOWS

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             ---------   ---------   --------
<S>                                                          <C>         <C>         <C>
DISCONTINUED OPERATIONS
  Operating activities.....................................                (21,206)    73,254
  Investing activities:
     Capital expenditures..................................                 (1,488)    (9,930)
     Purchase of broadcasting assets
     Sale (purchase) of investment in limited
       partnership.........................................                  5,000     (1,000)
  Financing activities:
     Proceeds from issuance of long-term debt..............                700,000
     Repayments of long-term debt..........................               (172,705)   (12,705)
     Payment of Spin-off and Merger Transaction costs......                (31,763)
     Payment of working capital adjustment related to
       Merger..............................................                 (2,875)
                                                             ---------   ---------   --------
CASH PROVIDED BY DISCONTINUED OPERATIONS...................                474,963     49,619
                                                             ---------   ---------   --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......    (38,730)     (3,994)    47,422
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.............    106,177     110,171     62,749
                                                             ---------   ---------   --------
CASH AND CASH EQUIVALENTS AT END OF YEAR...................  $  67,447   $ 106,177   $110,171
                                                             =========   =========   ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid (received) during the year for:
     Interest paid.........................................  $  12,113   $   8,429   $ 13,789
     Interest received.....................................    (23,323)    (19,816)    (4,898)
     Income taxes..........................................     20,059      35,550     46,653
     Income tax refunds....................................    (18,049)     (3,671)      (983)
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
  ACTIVITIES:
  Divestiture of broadcasting business -- decrease in Net
     Liabilities of Broadcasting Business and increase in
     Additional Paid-in Capital............................                495,335
  Spin-off and Merger Transaction costs -- decrease in
     Other Assets and decrease in Additional Paid-In
     Capital...............................................                  4,253
  Increase in Dividends Payable and decrease in Retained
     Earnings..............................................                             3,374
  Cancellation of treasury stock:
     Decrease in Treasury Stock and Class B Common Stock...                    117
     Decrease in Treasury Stock and Additional Paid-in
       Capital.............................................                187,966
</TABLE>

                                                                     (Concluded)

          See accompanying notes to consolidated financial statements.
                                        32
<PAGE>   33

                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

1. BASIS OF PRESENTATION

     On March 18, 1999, the spin-off of the newspaper publishing and new media
businesses formerly operated by Pulitzer Publishing Company ("Old Pulitzer") was
completed with Pulitzer Inc. (the "Company") commencing operations as an
independent publicly traded publishing and new media company (the "Spin-off").
Following the Spin-off, Old Pulitzer with its remaining broadcasting business
("Broadcasting Business") was merged with and into Hearst-Argyle Television,
Inc. ("Hearst-Argyle") in exchange for the issuance to Old Pulitzer's
stockholders of 37,096,774 shares of Hearst-Argyle's Series A common stock (the
"Merger"). The Merger and Spin-off are collectively referred to as the
"Broadcast Transaction."

     As a result of the Broadcast Transaction, the Company is the continuing
entity for financial reporting purposes. Old Pulitzer's historical basis in its
newspaper publishing and related new media assets and liabilities has been
carried over to the Company. The distribution of the net liabilities of the
Broadcasting Business has been recorded as a capital contribution to the
Company. The Broadcast Transaction represents a reverse-spin transaction and,
accordingly, the Company's results of operations for periods prior to the
consummation of the Broadcast Transaction are identical to the historical
results previously reported by Old Pulitzer. Results of the Company's newspaper
publishing and related new media businesses are reported as continuing
operations in the statements of consolidated income. The results of the
Broadcasting Business prior to the Merger are reported as discontinued
operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Basis of Consolidation -- The consolidated financial statements include the
accounts of the Company and its subsidiary companies, all of which are
wholly-owned except for the Company's 95 percent ownership interest in the St.
Louis Post-Dispatch LLC. (see Note 3) All significant intercompany transactions
have been eliminated from the consolidated financial statements.

     Fiscal Year -- The Company's fiscal year ends on the last Sunday of the
calendar year, which in 2000 resulted in a 14 week fourth quarter and a 53-week
year. In 1999 and 1998, the fourth quarter was 13 weeks and the year was 52
weeks. For ease of presentation, the Company has used December 31 as the
year-end.

     Cash Equivalents -- For purposes of reporting cash flows, the Company
considers all highly liquid investments purchased with an original maturity of
three months or less to be cash equivalents.

     Marketable Securities -- Marketable securities consist of fixed income
securities, including, but not limited to, debt securities issued by the U.S.
government and related agencies, municipal securities, corporate securities and
various asset-backed securities. Marketable securities are recorded at fair
value with net unrealized gains and losses reported, net of tax, as a component
of other comprehensive income. The basis of cost used in determining realized
gains and losses is specific identification. The fair value of all securities is
determined by quoted market prices. All of the Company's marketable securities
represent "available-for-sale" securities as defined by the provisions of
Statement of Financial Accounting Standards No. 115.

     Inventory Valuation -- Inventory, which consists primarily of newsprint, is
stated at the lower of cost (determined primarily using the last-in, first-out
method) or market. If the first-in, first-out cost method had been used,
inventory would have been $726,000 and $27,000 higher than reported at December
31, 2000 and 1999, respectively. Ink and other miscellaneous supplies are
expensed as purchased.

     Property and Depreciation -- Property is recorded at cost. Depreciation is
computed using the straight-line method over the estimated useful lives of the
individual assets. Buildings are depreciated over 20 to 50 years and all other
property over lives ranging from 3 to 15 years.

     Intangible Assets -- Goodwill and mastheads acquired subsequent to the
effective date of Accounting Principles Board Opinion No. 17 ("Opinion No. 17")
are being amortized over a life of 40 years while all

                                        33
<PAGE>   34
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

other intangible assets are being amortized over lives ranging from 4 to 23
years. In addition, the intangible asset relating to the Company's additional
minimum pension liability under Statement of Financial Accounting Standards No.
87 is adjusted annually, as necessary, when a new determination of the amount of
the additional minimum pension liability is made.

     Long-Lived Assets -- The Company considers the possible impairment of its
properties and intangible assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. Management
periodically evaluates the recoverability of long-lived assets by reviewing the
current and projected cash flows of each of its properties. If a permanent
impairment were deemed to exist, any write-down would be charged to operations.
For the periods presented, there has been no impairment.

     Employee Benefit Plans -- The Company and its subsidiaries have several
noncontributory defined benefit pension plans covering a significant portion of
their employees. Benefits under the plans are generally based on salary and
years of service. The Company's liability and related expense for benefits under
the plans are recorded over the service period of active employees based upon
annual actuarial calculations. Plan funding strategies are influenced by tax
regulations. Plan assets consist primarily of government bonds and corporate
equity securities.

     The Company provides retiree medical and life insurance benefits under
varying postretirement plans at several of its operating locations. In addition,
the Company provides postemployment disability benefits to certain former
employee groups prior to retirement. The significant portion of these benefits
results from plans at the St. Louis Post-Dispatch (the "Post-Dispatch"). The
Company's liability and related expense for benefits under the postretirement
plans are recorded over the service period of active employees based upon annual
actuarial calculations. The Company accrues postemployment disability benefits
when it becomes probable that such benefits will be paid and when sufficient
information exists to make reasonable estimates of the amounts to be paid. All
of the Company's postretirement and postemployment benefits are funded on a
pay-as-you-go basis.

     Income Taxes -- Deferred tax assets and liabilities are recorded for the
expected future tax consequences of events that have been included in either the
financial statements or tax returns of the Company. Under this asset and
liability approach, deferred tax assets and liabilities are determined based on
temporary differences between the financial statement and tax bases of assets
and liabilities by applying enacted statutory tax rates applicable to future
years in which the differences are expected to reverse.

     Stock-Based Compensation Plans -- The Company applies the provisions of
Accounting Principles Board Opinion No. 25 ("APB 25"), Accounting for Stock
Issued to Employees, and related interpretations to account for its employee
stock option plans.

     Earnings Per Share of Stock -- Basic earnings per share of stock is
computed using the weighted average number of common and Class B common shares
outstanding during the applicable period. Diluted earnings per share of stock is
computed using the weighted average number of common and Class B common shares
outstanding and common stock equivalents. (see Note 14)

     Segment Information -- During 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information. Prior to the Broadcast Transaction (see Note
1), the Company's operations included both a publishing and broadcasting
segment. As a result of the Broadcast Transaction, the broadcasting segment has
been presented as a discontinued operation in the consolidated financial
statements with detail segment disclosures included in Note 4. Segment
disclosures for the Company's remaining operating segment, publishing, are
presented in the consolidated financial statements as continuing operations,
with such operations managed on an individual property basis. The individual
properties are aggregated into the publishing segment for reporting purposes.
See additional publishing segment disclosures included in Note 17.
                                        34
<PAGE>   35
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     Derivative Instruments and Hedging Activities -- In June 1998, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. ("SFAS") 133, Accounting for Derivative Instruments and Hedging
Activities, which after being amended by SFAS Nos. 137 and 138, is effective for
fiscal years beginning after June 15, 2000. SFAS 133 establishes accounting and
reporting standards for derivative instruments including certain derivative
instruments embedded in other contracts and hedging activities. The Company
adopted SFAS 133 on January 1, 2001 and there was no significant impact on the
financial position or results of operations of the Company.

     Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting period. Actual results may differ
from those estimates.

     Reclassifications -- In response to accounting rules recently issued by the
Emerging Issues Task Force, the Company's 50 percent share of the operating
results of TNI Partners has been presented as a single component of operating
income in accompanying statements of consolidated income. (see Note 3)
Previously, the Company included its pro rata share of the partnership's revenue
and expense in its consolidated revenue and expense categories. The Company's
prior year statements of consolidated income have been reclassified to conform
to the current year presentation. Certain other reclassifications have also been
made to the 1999 and 1998 consolidated financial statements to conform to the
2000 presentation.

3. AGENCY AGREEMENTS

     On May 1, 2000, the Company and The Herald Company, Inc. ("Herald")
completed the transfer of their respective interests in the assets and
operations of the Post-Dispatch and certain related businesses to a new joint
venture (the "Venture"), known as St. Louis Post-Dispatch LLC ("PD LLC"). The
Company controls and manages PD LLC. Under the terms of the operating agreement
governing PD LLC (the "Operating Agreement"), the Company holds a 95 percent
interest in the results of operations of PD LLC and Herald holds a 5 percent
interest. Herald's 5 percent interest is reported as "Minority Interest in Net
Earnings of Subsidiary" in the statements of consolidated income. Also, under
the terms of the Operating Agreement, Herald received on May 1, 2000 a cash
distribution of $306,000,000 from PD LLC. This distribution was financed by a
$306,000,000 borrowing by PD LLC. (see Note 8) The Venture is treated as a
purchase for accounting purposes.

     During the first ten years of its term, PD LLC is restricted from making
distributions (except under specified circumstances), capital expenditures and
member loan repayments unless it has set aside out of its cash flow a reserve
equal to the product of $15,000,000 and the number of years since May 1, 2000,
but not in excess of $150,000,000. On May 1, 2010, Herald will have a one-time
right to require PD LLC to redeem Herald's interest in PD LLC. The redemption
price for Herald's interest will be determined pursuant to a formula yielding an
amount which will result in the present value to May 1, 2000 of the after-tax
cash flows to Herald (based on certain assumptions) from PD LLC, including the
initial distribution and the special distribution described below, if any, being
equal to $275,000,000. In the event that PD LLC has an increase in the tax basis
of its assets as a result of Herald's recognizing taxable income from certain
transactions effected under the agreement governing the contributions of the
Company and Herald to PD LLC and the Operating Agreement, Herald generally will
be entitled to receive a special distribution from PD LLC in an amount that
corresponds, approximately, to the present value after-tax benefit to the
members of PD LLC of the tax basis increase. Upon the termination of PD LLC,
which will be on May 1, 2015 (unless Herald exercises the redemption right
described above), Herald will be entitled to the liquidation value of its
interest in PD LLC. The Company may purchase Herald's interest at that time for
an amount equal to what Herald would be

                                        35
<PAGE>   36
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

entitled on liquidation. That amount will be equal to the amount of its capital
account, after allocating the gain or loss that would result from a cash sale of
PD LLC's assets for their fair market value at that time. Herald's share of such
gain or loss generally will be 5 percent, but will be reduced (but not below 1
percent) to the extent that the present value to May 1, 2000 of the after-tax
cash flows to Herald from PD LLC, including the initial distribution, the
special distribution described above, if any, and the liquidation amount (based
on certain assumptions), exceeds $325,000,000.

     Prior to May 1, 2000, the Company and Herald were parties to the St. Louis
Agency Agreement, dated March 1, 1961, as amended. For many years, the
Post-Dispatch (published by the Company) was the afternoon and Sunday newspaper
serving St. Louis, and the Globe-Democrat (formerly published by The Herald
Company) was the morning paper and also published a weekend edition. Although
separately owned, from 1961 through February 1984, the publication of both the
Post-Dispatch and the Globe-Democrat was governed by the St. Louis Agency
Agreement. From 1961 to 1979, the two newspapers controlled their own news,
editorial, advertising, circulation, accounting and promotion departments and
Old Pulitzer managed the production and printing of both newspapers. In 1979,
Old Pulitzer assumed full responsibility for advertising, circulation,
accounting and promotion for both newspapers. In February 1984, after a number
of years of unfavorable financial results at the St. Louis Agency, the
Globe-Democrat was sold by Herald and the St. Louis Agency Agreement was revised
to eliminate any continuing relationship between the two newspapers and to
permit the repositioning of the daily Post-Dispatch as a morning newspaper.
Following the renegotiation of the St. Louis Agency Agreement at the time of the
sale of the Globe-Democrat, Herald retained the contractual right to receive
one-half the profits (as defined), and the obligation to share one-half the
losses (as defined), of the operations of the St. Louis Agency, which consisted
solely of the publication of the Post-Dispatch after February 1984. For
operations prior to May 1, 2000, Herald's 50 percent share of the St. Louis
Agency profit is reported as an operating expense under the caption "St. Louis
Agency adjustment" in the statements of consolidated income. The St. Louis
Agency Agreement also provided for Herald to share one-half the cost of, and to
share in a portion of the proceeds from the sale of, capital assets used in the
production of the Post-Dispatch.

     In Tucson, Arizona, a separate partnership, TNI Partners, ("TNI"), acting
as agent for the Arizona Daily Star (the "Star," a newspaper owned by the
Company) and the Tucson Citizen (the "Citizen," a newspaper owned by Gannett
Co., Inc.), is responsible for printing, delivery, advertising, and circulation
of the Star and the Citizen. TNI collects all of the receipts and income
relating to the Star and the Citizen and pays all operating expenses incident to
the partnership's operations and publication of the newspapers. Each newspaper
is solely responsible for its own news and editorial content. Net income or net
loss of TNI is allocated equally to the Star and the Citizen. The Company's 50
percent share of TNI's operating results is presented as a single component of
operating income in the accompanying statements of consolidated income.

                                        36
<PAGE>   37
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     Summarized financial information for TNI is as follows:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              -----------------
                                                               2000      1999
                                                              -------   -------
                                                               (IN THOUSANDS)
<S>                                                           <C>       <C>
Current assets..............................................  $16,677   $19,397
Current liabilities.........................................  $ 7,879   $ 7,738
Partners' equity............................................  $ 8,798   $11,659
</TABLE>

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                       ------------------------------
                                                         2000       1999       1998
                                                       --------   --------   --------
                                                               (IN THOUSANDS)
<S>                                                    <C>        <C>        <C>
Operating revenues...................................  $121,150   $114,426   $110,362
Operating income.....................................  $ 44,974   $ 43,930   $ 41,870
Pulitzer's share of operating income.................  $ 22,487   $ 21,965   $ 20,935
</TABLE>

4. DISCONTINUED OPERATIONS

     Discontinued operations represent the Broadcasting Business owned by Old
Pulitzer prior to the Merger, including the allocation of all long-term debt
balances and related interest expense amounts of Old Pulitzer prior to the
Merger.

     The net liability balance of the Broadcasting Business as of March 18,
1999, including the $700,000,000 of Broadcast Debt (as defined in Note 8), was
contributed to "Additional Paid-in Capital" of the Company at the time of the
Merger (see Note 12). The asset and liability balances of the Broadcasting
Business as of March 18, 1999 (immediately prior to the Merger) are included
below.

<TABLE>
<CAPTION>
                                                                MARCH 18, 1999
                                                               (PRIOR TO MERGER)
                                                               -----------------
                                                                (IN THOUSANDS)
<S>                                                            <C>
ASSETS
Trade accounts receivable (less allowance for doubtful
  accounts of $558).........................................       $  40,819
Program rights..............................................           5,941
Other current assets........................................           4,812
                                                                   ---------
     Total current assets...................................          51,572
                                                                   ---------
Properties -- net...........................................          82,844
                                                                   ---------
Intangible assets -- net....................................          93,109
                                                                   ---------
Other assets................................................           2,019
                                                                   ---------
     Total assets of Broadcasting Business..................         229,544
                                                                   ---------
LIABILITIES
Trade accounts payable and accrued expenses.................           7,848
Program contracts payable...................................           5,599
                                                                   ---------
     Total current liabilities..............................          13,447
Long-term debt (Note 8).....................................         700,000
Pension obligations (Note 9)................................           3,035
Postretirement benefit obligations (Note 10)................           2,812
Other long term liabilities.................................           5,585
Commitments and contingencies (Note 15).....................
                                                                   ---------
     Total liabilities of Broadcasting Business.............         724,879
                                                                   ---------
NET LIABILITIES OF BROADCASTING BUSINESS....................       $(495,335)
                                                                   =========
</TABLE>

                                        37
<PAGE>   38
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     In connection with the Merger, the Company made a cash payment to
Hearst-Argyle in the amount of $2,875,000, representing the difference between
$41,000,000 and the working capital balance of the Broadcasting Business on the
date of the Merger ("Working Capital Adjustment"). Based upon the March 18, 1999
asset and liability balances included above, the Broadcasting Business had a
working capital balance of $38,125,000 at the time of the Merger.

     The net income/(loss) from operations of the Broadcasting Business, without
allocation of any general corporate expense, is reflected in the statements of
consolidated income as "Income (Loss) from Discontinued Operations, Net of Tax"
and is summarized as follows:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                              ------------------------
                                                               1999(A)         1998
                                                              ----------    ----------
                                                                   (IN THOUSANDS)
<S>                                                           <C>           <C>
Operating revenues..........................................   $ 45,622      $239,746
                                                               --------      --------
Operating expenses:
  Operations................................................     15,951        72,438
  Selling, general and administrative.......................     11,616        51,898
  Stock option cash-outs and bonuses........................     25,305
  Depreciation and amortization.............................      3,881        21,048
                                                               --------      --------
     Total operating expenses...............................     56,753       145,384
                                                               --------      --------
Operating income (loss).....................................    (11,131)       94,362
Interest expense............................................      3,128        13,503
Loss on extinguishment of debt(b)...........................     17,955
                                                               --------      --------
Income (loss) before income taxes...........................    (32,214)       80,859
Income tax provision (benefit)..............................    (10,765)       31,591
                                                               --------      --------
Net income (loss)...........................................   $(21,449)     $ 49,268
                                                               ========      ========
</TABLE>

---------------

(a)  Broadcasting results for 1999 reflect operations only through March 18,
     1999, the date of the Merger, and include approximately $25,305,000 of
     stock option cash-outs and bonus payments to broadcasting employees in
     connection with the Merger on March 18, 1999. (see Note 13)

(b)  On March 18, 1999, in connection with the Spin-off and Merger, Old Pulitzer
     prepaid its existing long-term debt and incurred a prepayment penalty of
     approximately $17,205,000. This prepayment penalty, along with the
     write-off of deferred financing fees of approximately $750,000, has been
     included in the results of discontinued operations for 1999. (see Note 8)

5. ACQUISITION OF PROPERTIES

     On January 11, 2000, the Company acquired in an asset purchase The
Pantagraph, a daily and Sunday newspaper that serves the central Illinois cities
of Bloomington and Normal, and a group of seven community newspapers known as
the Illinois Valley Press, from The Chronicle Publishing Company of San
Francisco for an aggregate of $180 million, excluding acquisition costs and a
separate payment for working capital (the "Pantagraph Acquisition"). The Company
funded this acquisition with internal cash generated from the sale of a portion
of its marketable security investments.

     On August 10, 2000, the Company acquired the assets of the Suburban
Newspapers of Greater St. Louis, LLC and the stock of The Ladue News, Inc.
(collectively the "Suburban Journals") for $165 million, excluding acquisition
costs and a separate payment for working capital of approximately $7 million
(the "Journals Acquisition"). The Suburban Journals are a group of weekly papers
and various niche publications that serve the greater St. Louis, Missouri
metropolitan area. The Company has made a

                                        38
<PAGE>   39
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

preliminary purchase price allocation as of December 31, 2000, subject to a
final working capital adjustment and pending an evaluation surrounding certain
litigation existing prior to the acquisition date. The Company funded this
acquisition with internal cash generated from the sale of a portion of its
marketable security investments.

     In connection with the Pantagraph Acquisition, the Venture (see Note 3) and
the Journals Acquisition (collectively the "Newspaper Transactions"), the
Company recorded goodwill and mastheads of approximately $611,000,000.

     The following supplemental unaudited pro forma information shows the
results of operations of the Company for the year ended December 31, 2000, 1999
and 1998 assuming the Newspaper Transactions and the Loan (as defined in Note 8)
had been consummated at the beginning of each year. The unaudited pro forma
financial information is not necessarily indicative either of results of
operations that would have occurred had the Newspaper Transactions and Loan
occurred at the beginning of the year or of future results of operations (in
thousands, except per share amounts).

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                       ------------------------------
                                                         2000       1999       1998
                                                       --------   --------   --------
                                                                (UNAUDITED)
<S>                                                    <C>        <C>        <C>
Operating revenues -- net............................  $440,018   $416,695   $396,389
                                                       ========   ========   ========
Operating income.....................................  $ 71,657   $ 44,507   $ 63,447
                                                       ========   ========   ========
Income from continuing operations....................  $ 31,502   $ 11,222   $ 12,809
                                                       ========   ========   ========
Basic earnings per share of stock:
  Income from continuing operations..................  $   1.45   $   0.50   $   0.57
                                                       ========   ========   ========
  Weighted average number of shares outstanding......    21,757     22,578     22,381
                                                       ========   ========   ========
Diluted earnings per share of stock:
  Income from continuing operations..................  $   1.45   $   0.50   $   0.56
                                                       ========   ========   ========
  Weighted average number of shares outstanding......    21,786     22,601     22,753
                                                       ========   ========   ========
</TABLE>

                                        39
<PAGE>   40
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

6. MARKETABLE SECURITIES

     Investments classified as available-for-sale securities at December 31,
2000 and 1999 consisted of the following:

<TABLE>
<CAPTION>
                                                           GROSS        GROSS
                                             AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                               COST        GAINS        LOSSES      VALUE
                                             ---------   ----------   ----------   --------
                                                             (IN THOUSANDS)
<S>                                          <C>         <C>          <C>          <C>
December 31, 2000:
  Debt securities issued by the U.S.
     government and agencies...............  $ 80,933       $369       $  (170)    $ 81,132
  Municipal securities.....................     5,522                     (164)       5,358
  Corporate securities.....................    17,791         55          (200)      17,646
  Mortgage-backed securities...............     5,652         87           (12)       5,727
  Other debt securities....................    17,344         48          (389)      17,003
                                             --------       ----       -------     --------
     Total investments.....................  $127,242       $559       $  (935)    $126,866
                                             ========       ====       =======     ========
December 31, 1999:
  Debt securities issued by the U.S.
     government and agencies...............  $314,027       $ 12       $(4,260)    $309,779
  Municipal securities.....................    11,352                     (354)      10,998
  Corporate securities.....................    69,646         62        (1,536)      68,172
  Mortgage-backed securities...............    11,795                     (279)      11,516
  Other debt securities....................    51,749         41          (541)      51,249
                                             --------       ----       -------     --------
     Total investments.....................  $458,569       $115       $(6,970)    $451,714
                                             ========       ====       =======     ========
</TABLE>

     For the year ended December 31, 2000, proceeds from sales of marketable
securities were $414,523,000 resulting in gross realized gains and losses of
$344,000 and $4,262,000, respectively. For the year ended December 31, 1999,
proceeds from sales of marketable securities were $445,424,000 resulting in
gross realized gains and losses of $850,000 and $3,041,000, respectively. In
addition, net unrealized gains of $3,946,000 and losses of $4,175,000, after
tax, are included in other comprehensive loss for the years ended December 31,
2000 and 1999, respectively.

     The contractual maturity schedule of investments classified as
available-for-sale securities at December 31, 2000 was as follows:

<TABLE>
<CAPTION>
                                                              AMORTIZED     FAIR
                                                                COST       VALUE
                                                              ---------   --------
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
Due in one year or less.....................................  $ 26,661    $ 26,729
Due after one year through five years.......................    77,865      77,636
Due after five years through ten years......................     5,085       5,022
Due after ten years.........................................    17,631      17,479
                                                              --------    --------
     Total investments......................................  $127,242    $126,866
                                                              ========    ========
</TABLE>

     Actual maturities may differ from contractual maturities because some
borrowers have the right to call or prepay obligations without prepayment
penalties.

                                        40
<PAGE>   41
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

7. INTANGIBLE ASSETS

     Intangible assets consist of the following:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,
                                                              --------------------
                                                                2000        1999
                                                              --------    --------
                                                                 (IN THOUSANDS)
<S>                                                           <C>         <C>
Goodwill and mastheads......................................  $797,954    $182,766
Intangible pension asset (Note 9)...........................     2,442       1,096
Advertising base, subscriber lists & other..................    80,602      27,184
                                                              --------    --------
          Total.............................................   880,998     211,046
Less accumulated amortization...............................    42,986      22,783
                                                              --------    --------
Total intangible assets -- net..............................  $838,012    $188,263
                                                              ========    ========
</TABLE>

8. FINANCING ARRANGEMENTS

     In connection with the Venture (see Note 3), on May 1, 2000, PD LLC
borrowed $306,000,000 (the "Loan") from a group of institutional lenders (the
"Lenders") led by Prudential Capital Group, a division of The Prudential
Insurance Company of America. The aggregate principal amount of the Loan is
payable on April 28, 2009 and bears interest at an annual rate of 8.05 percent.
The Loan is guaranteed by the Company pursuant to a Guaranty Agreement dated as
of May 1, 2000 ("Guaranty Agreement") with the Lenders. In turn, pursuant to an
Indemnity Agreement dated as of May 1, 2000 ("Indemnity Agreement") entered into
between Herald and the Company, Herald agreed to indemnify the Company for any
payments that the Company may make under the Guaranty Agreement.

     The terms of the Loan contain certain covenants and conditions including
the maintenance of cash flow and various other financial ratios, minimum net
worth requirements and limitations on the incurrence of other debt. In addition,
the Loan agreement requires that PD LLC maintain a minimum reserve balance
consisting of cash and investments in U.S. government securities, totaling
approximately $9,800,000 as of December 31, 2000. The Loan agreement provides
for a $3,750,000 quarterly increase in the minimum reserve balance over the
nine-year term of the Loan.

     On March 17, 1999, Old Pulitzer borrowed $700,000,000 from Chase Manhattan
Bank pursuant to a borrowing agreement (the "Broadcast Debt"). Prior to the
Broadcast Transaction, on March 18, 1999, Old Pulitzer used a portion of the
proceeds from the Broadcast Debt to prepay its existing long-term debt, pay a
related prepayment penalty and pay certain transaction costs resulting from the
Broadcast Transaction. The balance of the proceeds of the Broadcast Debt,
together with existing cash balances, was contributed to the Company in the
Spin-off, and the Broadcast Debt was assumed by Hearst-Argyle at the time of the
Merger. Accordingly, all related interest expense for 1999 and 1998 has been
allocated to the Broadcasting Business and reported as discontinued operations
in the statements of consolidated income. (see Note 4)

                                        41
<PAGE>   42
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

9. PENSION PLANS

     The pension cost components for the Company's pension plans are as follows:

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                              ----------------------------
                                                                2000      1999      1998
                                                              --------   -------   -------
                                                                     (IN THOUSANDS)
<S>                                                           <C>        <C>       <C>
Service cost for benefits earned during the year............  $  3,275   $ 3,212   $ 4,439
Interest cost on projected benefit obligation...............     8,792     7,598     8,864
Expected return on plan assets..............................   (10,118)   (8,715)   (9,891)
Amortization of prior service cost..........................       284       (18)      (23)
Amortization of transition obligation.......................       181       211       221
Amortization of gain........................................    (1,756)     (239)     (376)
Cost for special termination benefits.......................       761
                                                              --------   -------   -------
Net periodic pension cost...................................  $  1,419   $ 2,049   $ 3,234
                                                              ========   =======   =======
</TABLE>

     The Company's net periodic pension cost components disclosed above for 1998
include amounts related to Broadcasting employees who participated in two of the
Company's defined benefit pension plans prior to the Merger. No detailed
information regarding the components of net periodic pension cost and funded
status of the plans, as it relates to Broadcasting, is available for 1998.
However, a portion of the Company's pension cost has been allocated to
Broadcasting's active employees and included in "Discontinued Operations" in the
statements of consolidated income. Pension cost allocated to Broadcasting, based
on payroll costs, amounted to approximately $1,408,000 for 1998. As of the date
of the Merger, Hearst-Argyle assumed the ongoing liabilities related to
Broadcasting active employees.

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Change in benefit obligation:
Benefit obligation at beginning of year.....................  $116,622   $144,119
Service cost................................................     3,275      3,212
Interest cost...............................................     8,792      7,598
Actuarial (gain)/loss.......................................     3,704    (15,059)
Benefits paid...............................................    (7,161)    (6,619)
Special termination benefits................................       761
Reduction for Broadcasting divestiture......................              (16,629)
                                                              --------   --------
Benefit obligation at end of year...........................   125,993    116,622
                                                              --------   --------
Change in plan assets:
Fair value of plan assets at beginning of year..............   122,261    128,806
Actual return (loss) on plan assets.........................    (1,189)    15,871
Employer contributions......................................       714        591
Benefits paid...............................................    (7,161)    (6,619)
Reduction for Broadcasting divestiture......................              (16,388)
                                                              --------   --------
Fair value of plan assets at end of year....................   114,625    122,261
                                                              --------   --------
</TABLE>

                                        42
<PAGE>   43
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Funded status -- benefit obligation in excess of plan
  assets; (plan assets in excess of benefit obligation).....    11,368     (5,639)
Unrecognized net actuarial gain.............................    17,281     32,041
Unrecognized prior service cost.............................    (1,684)        39
Unrecognized transition obligation..........................      (554)      (735)
                                                              --------   --------
Net amount recognized.......................................  $ 26,411   $ 25,706
                                                              ========   ========
Amounts recognized in the statement of financial position
  consist of:
  Accrued benefit liability.................................  $ 29,081   $ 26,837
  Intangible asset (Note 7).................................    (2,442)    (1,096)
  Accumulated other comprehensive income....................      (228)       (35)
                                                              --------   --------
Net amount recognized.......................................  $ 26,411   $ 25,706
                                                              ========   ========
</TABLE>

     The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for the pension plans with accumulated benefit obligations
in excess of plan assets were $17,785,000, $17,573,000 and $0, respectively, at
December 31, 2000 and $15,319,000, $14,546,000 and $0, respectively, at December
31, 1999.

     Pursuant to the Merger Agreement, actuarial calculations were performed to
separate Broadcasting active employees from the pension plans as of the date of
the Merger. The pension obligations computed for Broadcasting active employees
and a proportionate share of pension plan assets were transferred to Hearst-
Argyle in 1999.

     The projected benefit obligation was determined using assumed discount
rates of 7.5%, 7.75% and 6.5% at December 31, 2000, 1999 and 1998, respectively.
The expected long-term rate of return on plan assets was 8.5% for 2000, 1999 and
1998. For those plans that pay benefits based on final compensation levels, the
actuarial assumptions for overall annual rate of increase in future salary
levels was 5% for 2000, 5% for 1999, and 4% for 1998.

     Certain of the Company's employees participate in multi-employer retirement
plans sponsored by their respective unions. Amounts charged to operations,
representing the Company's required contributions to these plans in 2000, 1999
and 1998, were approximately $952,000, $963,000 and $920,000, respectively.

     The Company also sponsors an employee savings plan under Section 401(k) of
the Internal Revenue Code. This plan covers substantially all employees.
Contributions by the Company amounted to approximately $1,919,000, $1,687,000
and $2,121,000 for 2000, 1999 and 1998, respectively. Contributions related only
to Broadcasting employees amounted to approximately $205,000 and $704,000 for
1999 and 1998, respectively. Pursuant to the Merger Agreement, Broadcasting
employee savings plan balances as of the date of the Merger were transferred to
an employee savings plan sponsored by Hearst-Argyle.

                                        43
<PAGE>   44
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

10. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS

     The net periodic postretirement benefit cost components related to
continuing operations are as follows:

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                              ---------------------------
                                                               2000      1999      1998
                                                              -------   -------   -------
                                                                    (IN THOUSANDS)
<S>                                                           <C>       <C>       <C>
Service cost for benefits earned during the year............  $ 1,213   $ 1,040   $   933
Interest cost on projected benefit obligation...............    5,117     4,020     4,384
Amortization of prior service cost..........................   (1,143)   (1,287)   (1,293)
Amortization of net gain....................................     (884)   (1,131)   (1,008)
                                                              -------   -------   -------
Net periodic postretirement benefit cost....................  $ 4,303   $ 2,642   $ 3,016
                                                              =======   =======   =======
</TABLE>

     Postretirement benefit cost for broadcasting active employees and certain
retirees is included in "Discontinued Operations" in the statements of
consolidated income for 1998 in the amount of $207,000.

     The Company funds its postretirement benefit obligation on a pay-as-you-go
basis and, for 2000, 1999 and 1998, made payments of $4,560,000, $4,110,000 and
$3,958,000, respectively.

<TABLE>
<CAPTION>
                                                               DECEMBER 31, }
                                                              -----------------
                                                               2000      1999
                                                              -------   -------
                                                               (IN THOUSANDS)
<S>                                                           <C>       <C>
Benefit obligation at beginning of year.....................  $68,223   $70,002
Service cost................................................    1,213     1,040
Interest cost...............................................    5,117     4,020
Actuarial (gain)/loss.......................................    6,283    (2,729)
Benefits paid...............................................   (4,560)   (4,110)
                                                              -------   -------
Benefit obligation at end of year...........................   76,276    68,223
                                                              -------   -------
Plan assets at beginning and end of year....................       --        --
                                                              -------   -------
Funded status...............................................   76,276    68,223
Unrecognized net actuarial gain.............................    6,026    11,667
Unrecognized prior service cost.............................    1,627     3,821
                                                              -------   -------
Net amount recognized -- accrued benefit cost...............  $83,929   $83,711
                                                              =======   =======
</TABLE>

     As of the date of the Merger, Hearst-Argyle assumed the postretirement
obligation and costs related to Broadcasting active employees and certain
retirees.

     For 2000 measurement purposes, health care cost trend rates of 8.5%, 7.5%
and 7% were assumed for indemnity plans, PPO plans and HMO plans, respectively.
For 2000, these rates were assumed to decrease gradually to 5.5% through the
year 2011 and remain at that level thereafter. For 1999 measurement purposes,
health care cost trend rates of 9%, 8% and 6% were assumed for indemnity plans,
PPO plans and HMO plans, respectively. For 1999, the rates were assumed to
decrease gradually to 5.5% through the year 2010 and remain at that level
thereafter.

     Administrative costs related to indemnity plans were assumed to increase at
a constant annual rate of 6% for 2000, 1999 and 1998. The assumed discount rate
used in estimating the accumulated postretirement benefit obligation was 7.5%,
7.75% and 6.5% for 2000, 1999 and 1998, respectively.

                                        44
<PAGE>   45
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     Assumed health care cost trend rates have a significant effect on the
amounts reported for the postretirement health care plans. A
one-percentage-point change in assumed health care cost trend rates would have
the following effects on reported amounts for 2000:

<TABLE>
<CAPTION>
                                                              CONTINUING OPERATIONS
                                                                1-PERCENTAGE-POINT
                                                              ----------------------
                                                              INCREASE     DECREASE
                                                              ---------    ---------
                                                                  (IN THOUSANDS)
<S>                                                           <C>          <C>
Effect on net periodic postretirement benefit cost..........   $1,185       $  (997)
Effect on postretirement benefit obligation.................   $9,336       $(7,757)
</TABLE>

     The Company's postemployment benefit obligation, representing certain
disability benefits at the Post-Dispatch, was $3,389,000 and $3,191,000 at
December 31, 2000 and 1999, respectively.

11. INCOME TAXES

     Provisions for income taxes (benefits) consist of the following:

<TABLE>
<CAPTION>
                                                       CONTINUING OPERATIONS            DISCONTINUED OPERATIONS
                                                            YEARS ENDED                       YEARS ENDED
                                                           DECEMBER 31,                      DECEMBER 31,
                                                 ---------------------------------      -----------------------
                                                  2000         1999         1998          1999           1998
                                                 -------      -------      -------      ---------      --------
                                                          (IN THOUSANDS)                    (IN THOUSANDS)
<S>                                              <C>          <C>          <C>          <C>            <C>
Current:
  Federal..................................      $17,068      $20,647      $19,152      $(12,083)      $26,736
  State and local..........................        1,195        2,564        2,303           113         5,119
Deferred:
  Federal..................................        4,983       (4,006)      (1,250)        1,216          (222)
  State and local..........................          349         (497)        (150)          (11)          (42)
                                                 -------      -------      -------      --------       -------
     Total.................................      $23,595      $18,708      $20,055      $(10,765)      $31,591
                                                 =======      =======      =======      ========       =======
</TABLE>

     Factors causing effective tax rates to differ from the statutory Federal
income tax rate were:

<TABLE>
<CAPTION>
                                                                                               DISCONTINUED
                                                                   CONTINUING OPERATIONS        OPERATIONS
                                                                        YEARS ENDED            YEARS ENDED
                                                                        DECEMBER 31,           DECEMBER 31,
                                                                  ------------------------    --------------
                                                                  2000      1999      1998    1999      1998
                                                                  ----      ----      ----    ----      ----
<S>                                                               <C>       <C>       <C>     <C>       <C>
Statutory rate..............................................       35%       35%       35%    (35)%      35%
Amortization of intangibles.................................        3         4         3
Sale of newspaper property -- book basis goodwill in excess
  of tax basis..............................................                  3
State and local income taxes, net of U.S. Federal income tax
  benefit...................................................        2         4         3                 4
Other-net...................................................                 (1)        2       2
                                                                   --        --        --     ---        --
     Total..................................................       40%       45%       43%    (33)%      39%
                                                                   ==        ==        ==     ===        ==
</TABLE>

                                        45
<PAGE>   46
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     In connection with the PD LLC Venture transaction in May 2000, the Company
recorded a net deferred tax asset of approximately $15,965,000. The Company's
deferred tax assets and liabilities, net, which have been included in other
assets in the statements of consolidated financial position, consisted of the
following:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                                ------------------
                                                                 2000       1999
                                                                -------    -------
                                                                  (IN THOUSANDS)
<S>                                                             <C>        <C>
Deferred tax assets:
  Pensions and employee benefits............................    $18,940    $13,419
  Postretirement benefit costs..............................     32,330     17,757
  Other.....................................................      1,144      3,523
                                                                -------    -------
     Total..................................................     52,414     34,699
                                                                -------    -------
Deferred tax liabilities:
  Depreciation..............................................     15,519     13,350
  Amortization..............................................     14,156      6,595
                                                                -------    -------
     Total..................................................     29,675     19,945
                                                                -------    -------
Net deferred tax asset......................................    $22,739    $14,754
                                                                =======    =======
</TABLE>

     The Company had no valuation allowance for deferred tax assets as of
December 31, 2000, 1999 and 1998.

12. STOCKHOLDERS' EQUITY

     On March 18, 1999, all common and Class B common shares of treasury stock
held by Old Pulitzer were canceled. The cancellation of the treasury shares
reduced the number of shares of common and Class B common stock issued but did
not change the number of shares of common and Class B common stock outstanding.
In addition, the cancellation did not change the total balance of stockholders'
equity. Immediately following the Spin-off, on March 18, 1999, the number of
shares of common and Class B common stock of the Company outstanding was
identical to the number of shares of common and Class B common stock of Old
Pulitzer outstanding immediately prior to the Spin-off.

     The net liability balance of the Broadcasting Business as of March 18,
1999, including the $700,000,000 of Broadcast Debt, was contributed to
"Additional Paid-in Capital" of the Company at the time of the Merger (see Notes
4 and 8). This capital contribution has been recorded net of Transaction costs
of approximately $36,016,000 and the estimated Working Capital Adjustment of
approximately $2,875,000 related to the Merger.

     Each share of the Company's common stock is entitled to one vote and each
share of Class B common stock is entitled to ten votes on all matters. Holders
of outstanding shares of the Company's Class B common stock representing 94.7%
of the combined voting power of the Company have deposited their shares in a
voting trust (the "Voting Trust"). Each share of the Company's Class B common
stock is convertible into one share of the Company's common stock at the
holder's option subject to the limitations imposed by the Voting Trust on the
shares of Class B common stock deposited thereunder. The Voting Trust permits
the conversion of the Class B common stock deposited in the Voting Trust into
common stock in connection with certain permitted transfers, including, without
limitation, sales which are exempt from the registration requirements of the
Securities Act of 1933, as amended, sales which meet the volume and manner of
sale requirements of Rule 144 promulgated thereunder and sales which are made
pursuant to registered public offerings.

                                        46
<PAGE>   47
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     The trustees generally hold all voting rights with respect to the shares of
Class B common stock subject to the Voting Trust; however, in connection with
certain matters, including any proposal for a merger, consolidation,
recapitalization or dissolution of the Company or disposition of all or
substantially all its assets, the calling of a special meeting of stockholders
and the removal of directors, the Trustees may not vote the shares deposited in
the Voting Trust except in accordance with written instructions from the holders
of the Voting Trust Certificates. The Voting Trust may be terminated with the
written consent of holders of two-thirds in interest of all outstanding Voting
Trust Certificates. Unless extended or terminated by the parties thereto, the
Voting Trust expires on March 18, 2009.

     In 2000, the Company declared and paid cash dividends of $0.64 per share of
common stock and Class B common stock. In 1999, the Company declared and paid
cash dividends of $0.45 per share of common stock and Class B common stock. A
cash dividend of $0.15 per share of common stock and Class B common stock was
declared in December 1998 and paid to stockholders in January 1999. This
dividend represented the acceleration of the Company's dividend historically
declared in the first quarter of each fiscal year.

     On July 16, 1999, the Company's Board of Directors approved the repurchase
of up to $50,000,000 of its common stock in the open market. On May 1, 2000, the
Company announced that its Board of Directors had authorized the repurchase of
an additional $50,000,000 of its common stock. During the third quarter of 2000,
the Company's Board of Directors amended the Company's repurchase program to
provide for both the purchase of Class B shares and the purchase of shares in
privately negotiated transactions. On August 16, 2000, the Company purchased
1,000,000 shares of Class B common stock from Michael E. Pulitzer, the Company's
Chairman of the Board, for approximately $40,100,000. As of December 31, 2000,
the Company had repurchased 1,000,000 shares of Class B common stock and 527,300
shares of common stock for a combined purchase price of approximately
$61,900,000. The repurchased shares have been included in treasury stock of the
Company.

13. COMMON STOCK PLANS

     Since 1986, Old Pulitzer maintained employee stock option plans ("Prior
Option Plans") that provided for the issuance of incentive stock options to key
employees and outside directors. On March 18, 1999, immediately prior to the
Broadcast Transaction and pursuant to the Merger Agreement, Old Pulitzer
redeemed all outstanding stock options, whether or not vested, and terminated
the Prior Option Plans. Old Pulitzer redeemed the stock options at a cash-out
value ("Cash-Out Value") equal to the difference between the option exercise
price and the average daily closing price of Old Pulitzer common stock for the
10 trading days ending on March 16, 1999. The total Cash-Out Value amounted to
approximately $35.2 million, including $1.2 million recorded as deferred
compensation in other long-term liabilities of Old Pulitzer. In addition to the
stock option cash-outs, bonus payments made at the time of the Broadcast
Transaction were also expensed in 1999. Total stock option cash-out and bonus
expense of approximately $52 million was recorded in 1999, including
approximately $26,685,000 related to publishing employees recorded in continuing
operations and approximately $25,305,000 related to broadcasting employees
recorded in discontinued operations.

     On May 12, 1999, the Company's stockholders approved the adoption of the
Pulitzer Inc. 1999 Stock Option Plan (the "Option Plan"). The Option Plan
provides for the issuance of stock options to key employees and outside
directors for the purchase of up to a maximum of 3,000,000 shares of common
stock. Under the Option Plan, options to purchase 3,000 shares of common stock
will be automatically granted to each non-employee director on the day following
each annual meeting of the Company's stockholders and will vest on the date of
the next annual meeting of the Company's stockholders. Total shares available
for issue to outside directors under this automatic grant feature are limited to
a maximum of 200,000. The issuance of all other options will be administered by
a committee of the Board of Directors, subject to the Option Plan's

                                        47
<PAGE>   48
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

terms and conditions. Specifically, for incentive stock option grants, the
exercise price per share may not be less than the fair market value of a share
of common stock at the date of grant. In addition, exercise periods may not
exceed ten years and the minimum vesting period is established at six months
from the date of grant. Option awards to an individual employee may not exceed
200,000 shares in a calendar year. In general, employee option grants provide
for an exercise term of ten years from the date of grant and vest in equal
installments over a three-year period.

     Transactions under the Option Plans and Prior Option Plans are summarized
as follows:

<TABLE>
<CAPTION>
                                                                                       WEIGHTED
                                                                                       AVERAGE
                                                            SHARES      PRICE RANGE     PRICE
                                                           ---------   -------------   --------
<S>                                                        <C>         <C>             <C>
Common Stock Options:
Outstanding, January 1, 1998.............................  1,225,931   $ 9.27-$58.81    $31.13
  Granted (weighted average value at grant date of
     $38.78).............................................      5,001          $88.28    $88.28
  Canceled...............................................     (3,813)  $21.53-$58.81    $46.64
  Exercised..............................................   (317,511)  $ 9.27-$58.81    $22.63
                                                           ---------
Outstanding, December 31, 1998...........................    909,608   $ 9.27-$88.28    $34.34
  Granted (weighted average value at grant date of
     $6.98)..............................................  1,014,559   $39.69-$46.31    $40.03
  Canceled...............................................     (8,265)  $18.55-$88.28    $69.84
  Canceled and cashed-out................................   (806,040)  $ 9.27-$58.81    $35.27
  Exercised..............................................    (96,553)  $ 9.27-$58.81    $23.63
                                                           ---------
Outstanding, December 31, 1999...........................  1,013,309   $39.69-$46.31    $40.03
  Granted (weighted average value at grant date of
     $5.38)..............................................    533,500   $37.31-$43.87    $43.60
  Canceled...............................................    (48,757)  $39.69-$39.88    $39.78
  Exercised..............................................     (7,544)  $39.69-$39.88    $39.77
                                                           ---------
Outstanding, December 31, 2000...........................  1,490,508   $37.31-$46.31    $41.31
                                                           ---------
Exercisable, December 31, 2000...........................    338,685   $39.69-$46.31    $40.16
                                                           ---------
Shares Available for Grant at December 31, 2000..........  1,501,948
                                                           =========
</TABLE>

     Since 1986, Old Pulitzer maintained restricted stock purchase plans ("Prior
Stock Plans") that provided for the awarding of a grant or right to purchase at
a particular price shares of common stock to employees, subject to restrictions
on transferability. As of February 16, 1999, in anticipation of the Broadcast
Transaction, the Compensation Committee of Old Pulitzer's Board of Directors
approved the immediate vesting of all outstanding, unvested shares of restricted
stock previously awarded under the Prior Stock Plans. On March 17, 1999,
immediately prior to the Broadcast Transaction, the Prior Stock Plans were
terminated.

                                        48
<PAGE>   49
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     On May 12, 1999, the Company's stockholders approved the adoption of the
Pulitzer Inc. Key Employees' Restricted Stock Purchase Plan (the "Restricted
Plan"). The Restricted Plan provides that an employee may receive, at the
discretion of a committee of the Board of Directors, a grant or right to
purchase at a particular price, shares of common stock subject to restrictions
on transferability. A maximum of 500,000 shares of common stock may be granted
and purchased by employees under the Restricted Plan. Compensation expense equal
to the fair market value of common stock awards on the date of grant is
recognized over the vesting period of the grants. Transactions under the
Restricted Plan and Prior Stock Plans are summarized as follows:

<TABLE>
<CAPTION>
                                                                                        WEIGHTED
                                                                                        AVERAGE
                                                            SHARES      PRICE RANGE      PRICE
                                                            -------   ---------------   --------
<S>                                                         <C>       <C>               <C>
Common Stock Grants:
Outstanding, January 1, 1998..............................    3,688   $21.38 - $47.44    $34.95
  Granted.................................................    1,184       $57.84         $57.84
  Vested..................................................   (1,594)  $21.38 - $47.44    $30.66
                                                            -------
Outstanding, December 31, 1998............................    3,278   $24.53 - $57.84    $45.31
  Granted.................................................    8,341   $39.88 - $41.88    $40.43
  Canceled................................................     (171)      $41.88         $41.88
  Vested..................................................   (3,278)  $24.53 - $57.84    $45.31
                                                            -------
Outstanding, December 31, 1999............................    8,170   $39.88 - $41.88    $40.40
  Granted.................................................    1,384   $41.31 - $42.88    $42.74
  Canceled................................................     (500)      $41.88         $41.88
  Outstanding, December 31, 2000..........................    9,054   $39.88 - $42.88    $40.68
                                                            -------
Shares Available for Grant at December 31, 2000...........  490,946
                                                            =======
</TABLE>

     As required by SFAS 123, the Company has estimated the fair value of its
option grants since December 31, 1994 by using the binomial options pricing
model with the following assumptions:

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                                -------------------------
                                                                2000      1999      1998
                                                                -----     -----     -----
<S>                                                             <C>       <C>       <C>
Expected Life (years).......................................       7         7         7
Risk-free interest rate.....................................     5.5%      5.8%      5.7%
Volatility..................................................    21.1%     28.2%     35.4%
Dividend yield..............................................     1.6%      1.4%      1.0%
</TABLE>

     As discussed in Note 2, the Company applies the provisions of APB 25 to
account for its stock option plans. If compensation expense for the Company was
determined on the estimated fair value of the options granted consistent with
Statement of Financial Accounting Standards No. 123, Accounting for Stock Based
Compensation, the Company's net income and earnings per share would have been as
follows:

<TABLE>
<CAPTION>
                                                                        YEARS ENDED DECEMBER 31,
                                                                -----------------------------------------
                                                                  2000            1999            1998
                                                                ---------       ---------       ---------
                                                                (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S>                                                             <C>             <C>             <C>
Pro forma net income (loss).................................     $32,542         $(1,119)        $73,441
Pro forma earnings per share:
  Basic.....................................................     $  1.50         $ (0.05)        $  3.28
  Diluted...................................................     $  1.49         $ (0.05)        $  3.23
</TABLE>

                                        49
<PAGE>   50
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

     The Company maintains employee stock purchase plans (the "Purchase Plans")
that allow eligible employees to authorize payroll deductions for the periodic
purchase of the Company's common stock at a price generally equal to 85 percent
of the common stock's then fair market value. In general, all employees of the
Company and its subsidiaries are eligible to participate in the Purchase Plans
after completing at least one year of service. Subject to appropriate adjustment
for stock splits and other capital changes, the Company may sell a total of
600,000 shares of its common stock under the Purchase Plans. Shares sold under
the Purchase Plans may be either authorized and unissued or held by the Company
in its treasury. As of December 31, 2000, the Company had sold and issued 31,225
shares of common stock under the Purchase Plans.

14. EARNINGS PER SHARE

     Weighted average shares of common and Class B common stock and common stock
equivalents used in the calculation of basic and diluted earnings per share are
summarized as follows:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                              ------------------------
                                                               2000     1999     1998
                                                              ------   ------   ------
                                                                   (IN THOUSANDS)
<S>                                                           <C>      <C>      <C>
Weighted average shares outstanding (Basic EPS).............  21,757   22,578   22,381
Stock option equivalents....................................      29       23      372
                                                              ------   ------   ------
Weighted average shares and equivalents (Diluted EPS).......  21,786   22,601   22,753
                                                              ======   ======   ======
</TABLE>

     Stock option equivalents included in the Diluted EPS calculation were
determined using the treasury stock method. Under the treasury stock method and
Statement of Financial Accounting Standards No. 128, Earnings per Share,
outstanding stock options are dilutive when the average market price of the
Company's common stock exceeds the option price during a period. In addition,
proceeds from the assumed exercise of dilutive options along with the related
tax benefit are assumed to be used to repurchase common shares at the average
market price of such stock during the period.

15. COMMITMENTS AND CONTINGENCIES

     At December 31, 2000, the Company and its subsidiaries had construction and
equipment commitments of approximately $5,571,000.

     The Company is an investor in one limited partnership requiring future
capital contributions. As of December 31, 2000, the Company's unfunded capital
contribution commitment related to this investment was approximately
$11,931,000.

     The Company and its subsidiaries are involved, from time to time, in
various claims and lawsuits incidental to the ordinary course of its business,
including such matters as libel, slander and defamation actions and complaints
alleging discrimination. While the results of litigation cannot be predicted,
management believes the ultimate outcome of such existing litigation will not
have a material adverse effect on the consolidated financial statements of the
Company and its subsidiaries.

     In connection with the September 1986 purchase of the Company's Class B
common stock from certain selling stockholders (the "1986 Selling
Stockholders"), the Company agreed, under certain circumstances, to make an
additional payment to the 1986 Selling Stockholders in the event of a Gross-Up
Transaction (as defined herein). A "Gross-Up Transaction" was defined to mean,
among other transactions, (i) any merger, in any transaction or series of
related transactions, of more than 85 percent of the voting securities or equity
of Old Pulitzer pursuant to which holders of Old Pulitzer common stock receive
securities other than Old Pulitzer common stock and (ii) any recapitalization,
dividend or distribution, or series of related recapitalizations, dividends or
distributions, in which holders of Old Pulitzer common stock receive securities
(other than

                                        50
<PAGE>   51
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

Old Pulitzer common stock) having a Fair Market Value (as defined herein) of not
less than 33 1/3 percent of the Fair Market Value of the shares of Old Pulitzer
common stock immediately prior to such transaction. The amount of the additional
payment, if any, would equal (x) the product of (i) the amount by which the
Transaction Proceeds (as defined herein) exceeds the Imputed Value (as defined
herein) multiplied by (ii) the applicable percentage (i.e., 50 percent for the
period from May 13, 1996 through May 12, 2001) multiplied by (iii) the number of
shares of Old Pulitzer common stock issuable upon conversion of the shares of
Class B common stock owned by the 1986 Selling Stockholders, adjusted for, among
other things, stock dividends and stock splits; less (y) the sum of any
additional payments previously received by the 1986 Selling Stockholders;
provided, however, that in the event of any recapitalization, dividend or
distribution, the amount by which the Transaction Proceeds exceeds the Imputed
Value shall not exceed the amount paid or distributed pursuant to such
recapitalization, dividend or distribution in respect of one share of Old
Pulitzer common stock.

     The term "Transaction Proceeds" was defined to mean, in the case of a
merger, the aggregate Fair Market Value (as defined herein) of the consideration
received pursuant thereto by the holder of one share of Old Pulitzer common
stock, and, in the case of a recapitalization, dividend or distribution, the
aggregate Fair Market Value of the amounts paid or distributed in respect of one
share of Old Pulitzer common stock plus the aggregate Fair Market Value of one
share of Old Pulitzer common stock following such transaction. The "Imputed
Value" for one share of Old Pulitzer common stock on a given date was defined to
mean an amount equal to $28.82 compounded annually from May 12, 1986 to such
given date at the rate of 15 percent per annum, the result of which is $154.19
at May 12, 1998. There was no specific provision for adjustment of the $28.82
amount, but if it were adjusted to reflect all stock dividends and stock splits
of Old Pulitzer since September 30, 1986, it would have equaled $15.72, which if
compounded annually from May 12, 1986 at the rate of 15 percent per annum would
have equaled $84.11 at May 12, 1998.

     "Fair Market Value," in the case of any consideration other than cash
received in a Gross-Up Transaction, was defined to mean the fair market value
thereof as agreed to by a valuation firm selected by the Company and a valuation
firm selected by the 1986 Selling Stockholders, or, if the two valuation firms
do not agree on the fair market value, the fair market value of such
consideration as determined by a third valuation firm chosen by the two
previously selected valuation firms. Any such agreement or determination shall
be final and binding on the parties.

     As a result of the foregoing, the amount of additional payments, if any,
which may be payable by the Company with respect to the Merger and the
distribution of the Company's common and Class B common stock in the Spin-off
(the "Distribution") cannot be determined at this time. However, if the
Distribution were determined to be a Gross-Up Transaction and if the Fair Market
Value of the Transaction Proceeds with respect to the Merger and the
Distribution were determined to exceed the Imputed Value, then the additional
payments to the 1986 Selling Stockholders would equal approximately $5.9 million
for each $1.00 by which the Transaction Proceeds exceed the Imputed Value.
Accordingly, depending on the ultimate resolution of the meaning and application
of various provisions of the Gross-Up Transaction agreements, including the
determination of Imputed Value and Fair Market Value of the Transaction
Proceeds, in the opinion of the Company's management, the amount of an
additional payment, if any, could be material to the consolidated financial
statements of the Company.

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The Company has estimated the following fair value amounts for its
financial instruments using available market information and appropriate
valuation methodologies. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The

                                        51
<PAGE>   52
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

use of different market assumptions and/or estimation methodologies may have a
material effect on the estimated fair value amounts.

     Cash and Cash Equivalents, Marketable Securities, Accounts Receivable and
Accounts Payable -- The carrying amounts of these items are a reasonable
estimate of their fair value.

     Long-Term Debt -- Interest rates that are currently available to the
Company for issuance of debt with similar terms and remaining maturities are
used to estimate fair value. The fair value estimate of the Company's long-term
debt as of December 31, 2000 was $297,010,000.

     The fair value estimates presented herein are based on pertinent
information available to management as of December 31, 2000 and 1999. Although
management is not aware of any facts that would significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date, and current
estimates of fair value may differ from the amounts presented herein.

17. NEWSPAPER PUBLISHING REVENUES

     The Company's consolidated newspaper publishing revenues consist of the
following:

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Combined St. Louis Operations...............................  $291,815   $254,451   $244,676
Pulitzer Newspapers, Inc. ..................................   115,726     79,719     73,067
                                                              --------   --------   --------
     Total..................................................  $407,541   $334,170   $317,743
                                                              ========   ========   ========
</TABLE>

18. QUARTERLY FINANCIAL DATA (UNAUDITED)

     Operating results for the years ended December 31, 2000 and 1999 by
quarters are as follows:

<TABLE>
<CAPTION>
                                             FIRST    SECOND     THIRD      FOURTH
                                            QUARTER   QUARTER   QUARTER    QUARTER     TOTAL
                                            -------   -------   --------   --------   --------
                                                (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S>                                         <C>       <C>       <C>        <C>        <C>
2000
OPERATING REVENUES -- NET.................  $90,911   $97,504   $101,238   $117,888   $407,541
NET INCOME................................    9,873    10,987      5,012      9,030     34,902
BASIC EARNINGS PER SHARE OF STOCK (Note
  14):
  Earnings per share......................  $  0.45   $  0.50   $   0.23   $   0.43   $   1.60
                                            =======   =======   ========   ========   ========
  Weighted average shares outstanding.....   22,122    22,128     21,634     21,141     21,757
                                            =======   =======   ========   ========   ========
DILUTED EARNINGS PER SHARE OF STOCK (Note
  14):
  Earnings Per Share......................  $  0.45   $  0.50   $   0.23   $   0.43   $   1.60
                                            =======   =======   ========   ========   ========
  Weighted Average Shares Outstanding.....   22,162    22,129     21,669     21,185     21,786
                                            =======   =======   ========   ========   ========
</TABLE>

                                        52
<PAGE>   53
                         PULITZER INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 -- (CONTINUED)

<TABLE>
<CAPTION>
                                               FIRST    SECOND     THIRD    FOURTH
                                              QUARTER   QUARTER   QUARTER   QUARTER    TOTAL
                                              -------   -------   -------   -------   --------
                                                 (IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<S>                                           <C>       <C>       <C>       <C>       <C>
1999
OPERATING REVENUES -- NET...................  $79,924   $84,607   $82,781   $86,858   $334,170
INCOME (LOSS) FROM CONTINUING OPERATIONS....   (8,516)    9,692    10,153    11,628     22,957
(LOSS) FROM DISCONTINUED OPERATIONS.........  (21,449)                                 (21,449)
NET INCOME..................................  (29,965)    9,692    10,153    11,628      1,508
BASIC EARNINGS PER SHARE OF STOCK (Note 14):
  Continuing operations.....................  $ (0.38)  $  0.43   $  0.45   $  0.52   $   1.02
  Discontinued operations...................    (0.95)                                   (0.95)
                                              -------   -------   -------   -------   --------
  Earnings Per Share........................  $ (1.33)  $  0.43   $  0.45   $  0.52   $   0.07
                                              =======   =======   =======   =======   ========
  Weighted Average Shares Outstanding.......   22,604    22,647    22,638    22,423     22,578
                                              =======   =======   =======   =======   ========
DILUTED EARNINGS PER SHARE OF STOCK (Note
  14):
  Continuing operations.....................  $ (0.38)  $  0.43   $  0.45   $  0.52   $   1.02
  Discontinued operations...................    (0.95)                                   (0.95)
                                              -------   -------   -------   -------   --------
  Earnings Per Share........................  $ (1.33)  $  0.43   $  0.45   $  0.52   $   0.07
                                              =======   =======   =======   =======   ========
  Weighted Average Shares Outstanding.......   22,604    22,667    22,675    22,458     22,601
                                              =======   =======   =======   =======   ========
</TABLE>

     Earnings per share are computed independently for each of the quarters
presented. Therefore, the sum of the quarterly earnings per share may not equal
the total for the year.

                                *  *  *  *  *  *

                                        53
<PAGE>   54

                          INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
  PULITZER INC.:

     We have audited the consolidated financial statements of Pulitzer Inc. and
its subsidiaries as of December 31, 2000 and 1999, and for each of the three
years in the period ended December 31, 2000, and have issued our report thereon
dated February 12, 2001; such report is included elsewhere in this Form 10-K.
Our audits also included the consolidated financial statement schedule of
Pulitzer Inc. and its subsidiaries, listed in the accompanying index at Item
14(a)2.(ii). This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

/s/  DELOITTE & TOUCHE LLP

Saint Louis, Missouri
February 12, 2001

                                        54
<PAGE>   55

                                  SCHEDULE II
                         PULITZER INC. AND SUBSIDIARIES
           SCHEDULE II -- VALUATION & QUALIFYING ACCOUNTS & RESERVES

               FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 & 1998

<TABLE>
<CAPTION>
                                             BALANCE AT    CHARGED TO    CHARGED TO                      BALANCE
                                             BEGINNING      COSTS &        OTHER                        AT END OF
               DESCRIPTION                   OF PERIOD      EXPENSES      ACCOUNTS     DEDUCTIONS        PERIOD
               -----------                   ----------    ----------    ----------    ----------       ---------
                                                                        (IN THOUSANDS)
<S>                                          <C>           <C>           <C>           <C>              <C>
YEAR ENDED DECEMBER 31, 2000
Valuation Accounts:
  Allowance for Doubtful Accounts........      $2,362        $3,377         $336(a)      $3,488(b)       $2,587
Reserves:
  Accrued Medical Plan...................       1,106         4,663            0          4,853(c)          916
  Workers Compensation...................       1,524         1,531            0          1,861           1,194
YEAR ENDED DECEMBER 31, 1999
Valuation Accounts:
  Allowance for Doubtful Accounts
     Continuing Operations...............      $1,723        $2,840         $119(a)      $2,320(b)       $2,362
     Discontinued Operations.............         597           365           82(a)       1,044(b)(e)         0
Reserves:
  Accrued Medical Plan --
     Continuing Operations...............       1,077         4,562            0          4,533(c)        1,106
  Workers Compensation
     Continuing Operations...............         883         1,065            0            424(d)        1,524
     Discontinued Operations.............         317           144            0            461(d)            0
YEAR ENDED DECEMBER 31, 1998
Valuation Accounts:
  Allowance for Doubtful Accounts
     Continuing Operations...............      $1,626        $2,181         $ 82(a)      $2,166(b)       $1,723
     Discontinued Operations.............         785           211          187(a)         586(b)          597
Reserves:
  Accrued Medical Plan --
     Continuing Operations...............       1,043         4,719            0          4,685(c)        1,077
  Workers Compensation
     Continuing Operations...............       1,089           796            0          1,002             883
     Discontinued Operations.............         868           314            0            865             317
</TABLE>

---------------
(a) Accounts reinstated, cash recoveries, etc.

(b) Accounts written off

(c) Amount represents:

<TABLE>
<CAPTION>
                                                      2000      1999      1998
                                                     ------    ------    ------
<S>                                                  <C>       <C>       <C>
Claims paid......................................    $4,056    $3,889    $4,118
Service fees.....................................     1,030       662       575
Cash refunds.....................................      (233)      (18)       (8)
                                                     ------    ------    ------
                                                     $4,853    $4,533    $4,685
                                                     ======    ======    ======
</TABLE>

(d) Amount includes transfer of liability to Pulitzer, Inc.

(e) Amount includes a reduction of approximately $558,000 due to the Spin-off of
    Broadcast operations.

                                        55
<PAGE>   56

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

     Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information set forth under the caption "Management" in the Company's
definitive Proxy Statement to be used in connection with the 2001 Annual Meeting
of Stockholders is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

     The information set forth under the caption "Executive Compensation" in the
Company's definitive Proxy Statement to be used in connection with the 2001
Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information set forth under the caption "Principal Stockholders" in the
Company's definitive Proxy Statement to be used in connection with the 2001
Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information set forth under the caption "Compensation Committee
Interlocks and Insider Participation" in the Company's definitive Proxy
Statement to be used in connection with the 2001 Annual Meeting of Stockholders
is incorporated herein by reference.

                                        56
<PAGE>   57

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) DOCUMENT LIST

     1. Financial Statements

          The following financial statements are set forth in Part II, Item 8 of
     this report.

     PULITZER INC. AND SUBSIDIARIES:

        (i) Independent Auditors' Report.

        (ii) Statements of Consolidated Income for each of the Three Years in
               the Period Ended December 31, 2000.

        (iii) Statements of Consolidated Financial Position at December 31, 2000
               and 1999.

        (iv) Statements of Consolidated Stockholders' Equity for each of the
               Three Years in the Period Ended December 31, 2000.

        (v) Statements of Consolidated Cash Flows for each of the Three Years in
               the Period Ended December 31, 2000.

        (vi) Notes to Consolidated Financial Statements for the Three Years in
               the Period Ended December 31, 2000.

     2. Supplementary Data and Financial Statement Schedules

        (i) Supplementary unaudited data with respect to quarterly results of
               operations is set forth in Part II, Item 8 of this Annual Report.

        (ii) Financial Statement Schedule II - Valuation and Qualifying Accounts
               and Reserves and opinion thereon are set forth in Part II, Item 8
               of this Annual Report.

     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.

     3. Exhibits Required by Securities and Exchange Commission Regulation S-K

     (a) The following exhibits are filed as part of this Annual Report:

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>           <C>  <S>
   10.39      --   Pulitzer Inc. Deferred Compensation Plan.
   10.40      --   Pulitzer Inc. 2000 Stock Purchase Plan, as Amended and
                   Restated.
   10.41      --   Robert C. Woodworth Restricted Stock Unit Award.
   21         --   Subsidiaries of Registrant.
   23         --   Independent Auditors' Consent.
   24         --   Power of Attorney.
</TABLE>

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>         <S>
   (b) The following exhibits are incorporated herein by reference:
   3.1      -- Restated Certificate of Incorporation of Pulitzer
               Inc.(viii)
   3.2      -- Amended and Restated By-laws of Pulitzer Inc.(viii)
   4.1      -- Form of Pulitzer Inc. Common Stock Certificate.(viii)
   9.1      -- Pulitzer Inc. Voting Trust Agreement, dated as of March
               18, 1999, between the holders of voting trust
               certificates and Michael E. Pulitzer, Emily Rauh
               Pulitzer, Ronald H. Ridgway, Cole C. Campbell, David E.
               Moore and Robert C. Woodworth.(ix)
</TABLE>

                                        57
<PAGE>   58

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>         <S>
  10.1      -- Agreement, dated March 1, 1961, effective January 1,
               1961, between The Pulitzer Publishing Company, a Missouri
               corporation, and the Globe-Democrat Publishing Company,
               as amended on September 4, 1975, April 12, 1979 and
               December 22, 1983.(viii)
  10.2.1    -- Amended and Restated Joint Operating Agreement, dated
               December 22, 1988, between Star Publishing Company and
               Citizen Publishing Company.(viii)
  10.2.2    -- Partnership Agreement, dated December 22, 1988, between
               Star Publishing Company and Citizen Publishing
               Company.(viii)
  10.3      -- Agreement, dated as of May 12, 1986, among The Pulitzer
               Publishing Company, Clement C. Moore, II, Gordon C. Weir,
               William E. Weir, James R. Weir, Kenward G. Elmslie,
               Stephen E. Nash and Manufacturers Hanover Trust Company,
               as Trustees, and Christopher Mayer.(viii)
  10.4      -- Letter Agreement, dated September 29, 1986, among The
               Pulitzer Publishing Company, Trust Under Agreement Made
               by David E. Moore, Frederick D. Pulitzer, Michael E.
               Pulitzer, Jr., Robert S. Pulitzer, Joseph Pulitzer, IV,
               Joseph Pulitzer, Jr., Michael E. Pulitzer, Stephen E.
               Nash and Manufacturers Hanover Trust Company, as
               Trustees, Kenward G. Elmslie, Gordon C. Weir, William E.
               Weir, James R. Weir, Peter W. Quesada, T. Ricardo
               Quesada, Elinor P. Hempelmann, The Moore Foundation,
               Inc., Mariemont Corporation, Z Press Inc. and Clement C.
               Moore, II.(viii)
  10.5      -- Letter Agreement, dated May 12, 1986, among The Pulitzer
               Publishing Company, Peter W. Quesada, T. Ricardo Quesada,
               Kate Davis Pulitzer Quesada and Elinor P.
               Hempelmann.(viii)
  10.6      -- Agreement, dated as of September 29, 1986, among The
               Pulitzer Publishing Company, Peter W. Quesada, T. Ricardo
               Quesada, Kate Davis Pulitzer Quesada and Elinor
               Hempelmann.(viii)
  10.7.1    -- Amendment, dated March 9, 1992, to the Pulitzer
               Publishing Company Annual Incentive Compensation
               Plan.(viii)
  10.7.2    -- The Pulitzer Publishing Company Annual Incentive
               Compensation Plan.(viii)
  10.7.3    -- Pulitzer Publishing Company Newspaper Operations Annual
               Incentive Plan.(viii)
  10.8.1    -- Amendment, dated September 16, 1997, to Pulitzer
               Retirement Savings Plan.(v)
  10.8.2    -- Amendment, dated January 28, 1997, to Pulitzer Retirement
               Savings Plan.(iv)
  10.8.3    -- Amendment, dated October 30, 1996, to Pulitzer Retirement
               Savings Plan.(iv)
  10.8.4    -- Amendment, dated July 31, 1996, to Pulitzer Retirement
               Savings Plan.(iv)
  10.8.5    -- Amendment, dated October 25, 1995, to Pulitzer Retirement
               Savings Plan.(iv)
  10.8.6    -- Amendment, dated October 25, 1995, to Pulitzer Retirement
               Savings Plan.(ii)
  10.8.7    -- Amendment, dated January 24, 1995, to Pulitzer Retirement
               Savings Plan.(i)
  10.8.8    -- Amended and Restated Pulitzer Retirement Savings Plan.(i)
  10.9.1    -- Amendment, dated October 25, 1995, to Pulitzer Publishing
               Company Pension Plan.(iv)
  10.9.2    -- Amended and Restated Pulitzer Publishing Company Pension
               Plan.(i)
  10.10.1   -- Amendment, dated October 29, 1997, to Pulitzer Publishing
               Company Supplemental Executive Benefit Pension
               Plan.(viii)
  10.10.2   -- Amendment, dated June 23, 1992, to Pulitzer Publishing
               Company Supplemental Executive Benefit Pension
               Plan.(viii)
  10.10.3   -- Amendment, dated January 1, 1992, to Pulitzer Publishing
               Company Supplemental Executive Benefit Pension
               Plan.(viii)
  10.10.4   -- Amendment, dated January 18, 1990, to Pulitzer Publishing
               Company Supplemental Executive Benefit Pension
               Plan.(viii)
  10.10.5   -- Amendment, dated October 26, 1989, to Pulitzer Publishing
               Company Supplemental Executive Benefit Pension
               Plan.(viii)
</TABLE>

                                        58
<PAGE>   59

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>         <S>
  10.10.6   -- Amendment, dated November 6, 1987, to Pulitzer Publishing
               Company Supplemental Executive Benefit Pension
               Plan.(viii)
  10.10.7   -- Pulitzer Publishing Company Supplemental Executive
               Benefit Pension Plan dated March 18, 1986.(viii)
  10.11     -- Employment Agreement, dated October 1, 1986, between the
               Pulitzer Publishing Company and Joseph Pulitzer,
               Jr.(viii)
  10.12     -- Stock Purchase Agreement by and among Pulitzer Publishing
               Company and Mr. Edward W. Scripps, Mrs. Betty Knight
               Scripps, and the Edward W. Scripps and Betty Knight
               Scripps Charitable Remainder Unitrust dated as of May 4,
               1996.(iii)
  10.13     -- Split Dollar Life Insurance Agreement, dated December 27,
               1996, between Pulitzer Publishing Company and Richard A.
               Palmer, Trustee of the Michael E. Pulitzer 1996 Life
               Insurance Trust.(iv)
  10.14     -- Split Dollar Life Insurance Agreement, dated December 30,
               1996, between Pulitzer Publishing Company and Rebecca H.
               Penniman and Nicholas G. Penniman V, Trustees of the
               Nicholas G. Penniman IV Irrevocable 1996 Trust.(iv)
  10.15     -- Amended and Restated Agreement and Plan of Merger by and
               among Pulitzer Publishing Company, Pulitzer Inc. and
               Hearst-Argyle Television, Inc., dated as of May 25,
               1998.(vi)
  10.16     -- Contribution and Assumption Agreements, dated as of March
               18, 1999 by and between Pulitzer Publishing Company and
               Pulitzer Inc.(ix)
  10.17     -- Letter Agreement, dated May 25, 1998, by and among
               Pulitzer Publishing Company, Pulitzer Inc. and
               Hearst-Argyle Television, Inc.(viii)
  10.18     -- Letter Agreement, dated March 18, 1999, between Pulitzer
               Inc. and Emily Rauh Pulitzer.(ix)
  10.19     -- Letter Agreement, dated March 18, 1999, between Pulitzer
               Inc. and David E. Moore.(ix)
  10.20     -- Pulitzer Inc. Registration Rights Agreement.(ix)
  10.21     -- Pulitzer Inc. 1999 Key Employees' Restricted Stock
               Purchase Plan.(viii)
  10.22     -- Pulitzer Inc. 1999 Stock Option Plan.(viii)
  10.23     -- Pulitzer Inc. 1999 Employee Stock Purchase Plan.(viii)
  10.24     -- Employment Agreement, dated December 18, 1998, between
               Pulitzer Inc. and Robert C. Woodworth.(vii)
  10.25     -- Employment Agreement, dated August 26, 1998 between
               Pulitzer Inc. and Terrance C.Z. Egger.(viii)
  10.26     -- Employment and Consulting Agreement, dated as of June 1,
               1999, between Pulitzer Inc. and Michael E. Pulitzer.(x)
  10.27     -- Employment Agreement, dated as of June 1, 1999, between
               Pulitzer Inc. and Ronald H. Ridgway.(x)
  10.28     -- Split Dollar Life Insurance Agreement, dated as of June
               16, 1999, by and among Pulitzer Inc. and James E. Elkins
               and Diana K. Walsh.(x)
  10.29     -- Split Dollar Life Insurance Agreement, dated as of June
               24, 1999, by and among Pulitzer Inc. and Tansy K. Ridgway
               and Brian H. Ridgway.(x)
  10.30     -- Asset Purchase Agreement, as of October 4, 1999, by and
               between The Chronicle Publishing Company and Pulitzer
               Inc.(x)
  10.31     -- Joint Venture Agreement, dated as of May 1, 2000, among
               Pulitzer Inc., Pulitzer Technologies, Inc., The Herald
               Company, Inc. and St. Louis Post-Dispatch LLC.(xi)
  10.32     -- Operating Agreement of St. Louis Post-Dispatch LLC, dated
               as of May 1, 2000.(xi)
</TABLE>

                                        59
<PAGE>   60

<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<C>         <S>
  10.33     -- Indemnity Agreement, dated as of May 1, 2000, between The
               Herald Company, Inc. and Pulitzer Inc.(xi)
  10.34     -- St. Louis Post-Dispatch LLC Note Agreement, dated as of
               May 1, 2000.(xii)
  10.35     -- Pulitzer Inc. Guaranty Agreement, dated as of May 1,
               2000.(xii)
  10.36     -- License Agreement, dated as of May 1, 2000, by and
               between Pulitzer Inc. and St. Louis Post-Dispatch
               LLC.(xii)
  10.37     -- Non-Confidentiality Agreement, dated as of May 1,
               2000.(xii)
  10.38     -- Asset Sale and Purchase Agreement among Journal Register
               Company, Journal Register East, Inc., Suburban Newspapers
               of Greater St. Louis, LLC, Journal Company, Inc. and
               Pulitzer Inc. and SLSJ LLC dated as of June 24,
               2000.(xiii)
</TABLE>

---------------
(i)    Incorporated by reference to Pulitzer Publishing Company's Annual Report
       on Form 10-K for the fiscal year ended December 31, 1994.

(ii)   Incorporated by reference to Pulitzer Publishing Company's Annual Report
       on Form 10-K for the fiscal year ended December 31, 1995.

(iii)  Incorporated by reference to Pulitzer Publishing Company's Quarterly
       Report on Form 10-Q for the quarterly period ended March 31, 1996.

(iv)   Incorporated by reference to Pulitzer Publishing Company's Annual Report
       on Form 10-K for the fiscal year ended December 31, 1996.

(v)   Incorporated by reference to Pulitzer Publishing Company's Annual Report
      on Form 10-K for the fiscal year ended December 31, 1997.

(vi)   Incorporated by reference to Pulitzer Publishing Company's Current Report
       on Form 8-K filed on January 22, 1999.

(vii)  Incorporated by reference to Pulitzer Publishing Company's Registration
       Statement (File No. 333-69701) on Form S-3.

(viii) Incorporated by reference to Pulitzer Inc.'s Report on Form 10 (File No.
       1-14541), as amended.

(ix)   Incorporated by reference to Pulitzer Publishing Company's Annual Report
       on Form 10-K for the fiscal year ended December 31, 1998.

(x)   Incorporated by reference to Pulitzer Inc.'s Annual Report on Form 10-K
      for the fiscal year ended December 31, 1999.

(xi)   Incorporated by reference to Pulitzer Inc.'s Current Report on Form 8-K
       dated May 1, 2000 and filed on May 2, 2000.

(xii)  Incorporated by reference to Pulitzer Inc.'s Quarterly Report on Form
       10-Q for the quarterly period ended March 26, 2000.

(xiii) Incorporated by reference to Pulitzer Inc.'s Quarterly Report on Form
       10-Q for the quarterly period ended June 25, 2000.

(c) REPORTS ON FORM 8-K.

     On October 10, 2000, the Company filed a Current Report on Form 8-K/A to
disclose financial statements and pro forma financial information related to its
acquisition of the Suburban Journals on August 10, 2000.

                                        60
<PAGE>   61

                                   SIGNATURES

     Pursuant to the requirements of Section 13 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, on the 20th day of March, 2001.

                                          PULITZER INC.

                                          By:    /s/ ROBERT C. WOODWORTH
                                            ------------------------------------
                                                   Robert C. Woodworth,
                                          President and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant in
the capacities indicated on the dates indicated.

<TABLE>
<CAPTION>
                  SIGNATURE                                    TITLE                        DATE
                  ---------                                    -----                        ----
<C>                                            <S>                                     <C>

          /s/ MICHAEL E. PULITZER*             Director; Chairman                      March 20, 2001
---------------------------------------------
            (Michael E. Pulitzer)

           /s/ ROBERT C. WOODWORTH             Director; President and Chief           March 20, 2001
---------------------------------------------    Executive Officer (Principal
            (Robert C. Woodworth)                Executive Officer)

            /s/ RONALD H. RIDGWAY              Director; Senior Vice                   March 20, 2001
---------------------------------------------    President -- Finance (Principal
             (Ronald H. Ridgway)                 Financial and Accounting Officer)

             /s/ KEN J. ELKINS*                Director                                March 20, 2001
---------------------------------------------
               (Ken J. Elkins)

             /s/ DAVID E. MOORE*               Director                                March 20, 2001
---------------------------------------------
              (David E. Moore)

              /s/ WILLIAM BUSH*                Director                                March 20, 2001
---------------------------------------------
               (William Bush)

          /s/ EMILY RAUH PULITZER*             Director                                March 20, 2001
---------------------------------------------
            (Emily Rauh Pulitzer)

             /s/ ALICE B. HAYES*               Director                                March 20, 2001
---------------------------------------------
              (Alice B. Hayes)

         /s/ JAMES M. SNOWDEN, JR.*            Director                                March 20, 2001
---------------------------------------------
           (James M. Snowden, Jr.)
</TABLE>

                                          By:     /s/ RONALD H. RIDGWAY
                                            ------------------------------------
                                                     Ronald H. Ridgway*
                                                      attorney-in-fact

                                        61
<PAGE>   62

                                 PULITZER INC.

                 REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED

                               DECEMBER 31, 2000

                                 EXHIBIT INDEX

     10.39 Pulitzer Deferred Compensation Plan

     10.40 Pulitzer Inc. 2000 Stock Purchase Plan, as Amended and Restated

     10.41 Robert C. Woodworth Restricted Stock Unit Award

     21     Subsidiaries of Registrant

     23     Independent Auditors' Consent

     24     Power of Attorney