##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 10-K





|                                                                                                              |  |                                                                                             
|------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------
|(Mark One)                                                                                                    |  |                                                                                             
|x                                                                                                             |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|                                                                                                             
|For the fiscal year ended December 28, 2003 or                                                               
|                                                                                                             
|o                                                                                                             |  | 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




PULITZER INC.


(Exact name of registrant as specified in its
charter)





|                                |  |                       
|------------------------------- |  | ----------------------
|Delaware                        |  | 43-1819711            
|(State or other jurisdiction of |  | (I.R.S. Employer      
|incorporation or organization)  |  | Identification Number)

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.


Indicate by
checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).

Yes X No


The aggregate
market value of the voting stock held by non-affiliates of the
registrant as of the last business day of the registrants
most recently completed second fiscal quarter was approximately
$457,951,666.


The number of
shares of Common Stock, $.01 par value, and Class B Common
Stock, $.01 par value, outstanding as of February 27, 2004,
was 9,816,310 and 11,736,592, respectively.



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---

TABLE OF CONTENTS



|                                                                     |                                                                                                         |  |  |  |  |  |  | 
|-------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                                                     | ITEM 1. BUSINESS.                                                                                      
|                                                                     | ITEM 2. PROPERTIES                                                                                     
|                                                                     | ITEM 3. LEGAL AND REGULATORY PROCEEDINGS                                                               
|                                                                     | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                            
|PART II                                                             
|                                                                     | ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                      
|                                                                     | ITEM 6. SELECTED FINANCIAL DATA                                                                        
|                                                                     | ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
|                                                                     | ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                    
|                                                                     | ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                    
|PULITZER INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
|                                                                     | ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE           
|                                                                     | ITEM 9A CONTROLS AND PROCEDURES                                                                        
|PART III                                                            
|                                                                     | ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                            
|                                                                     | ITEM 11. EXECUTIVE COMPENSATION                                                                        
|                                                                     | ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|                                                                     | ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                
|                                                                     | ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                        
|PART IV                                                             
|                                                                     | ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                              
|SIGNATURES                                                          
|EXHIBIT INDEX                                                       
|Amended and Restated By-laws                                        
|Robert C. Woodworth Restricted Stock Unit Award                     
|Form of Restricted Stock Unit Award                                 
|Robert C. Woodworth Stock Option Award                              
|Form of Stock Option Award                                          
|Stock Option Award for Alan G. Silverglat                           
|Form of Stock Option Award                                          
|2003 Incentive Plan                                                 
|Mark G. Contreros Resticted Stock Award                             
|Subsidiaries of the Registrant                                      
|Independent Auditors' Consent                                       
|Power of Attorney                                                   
|Certification of President and CEO                                  
|Certification of Senior VP and CFO                                  
|1350 Certification of President and CEO                             
|1350 Certification of Senior VP and CFO                             



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##### Table of Contents



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 27, 2004, are
incorporated by reference into Part III of this Report.

The registrants fiscal year ends on the
last Sunday of the calendar year. For 2003, the Companys
fiscal year began on December 30, 2002 and ended on
December 28, 2003. In 2003, 2002 and 2001, the fourth
quarter was 13 weeks and the year was 52 weeks. For
ease of presentation, the Company has presented December 31
as the year-end. Except as otherwise stated, the information in
this Report on Form 10-K is as of December 28, 2003.



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##### Table of Contents






ITEM 1. BUSINESS.

Introduction

Pulitzer Inc. (together with its subsidiaries and
affiliated entities, the Company) is a newspaper
publishing company with integrated Internet operations in 14
United States markets, the largest of which is St. Louis,
Missouri. For fiscal 2003, the Companys St. Louis
operations contributed approximately 72 percent of reported
revenue.

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
Post-Dispatch). The Company and its
predecessors have operated continuously since 1878 with the
involvement of the Pulitzer family. Michael E. Pulitzer, a
grandson of the founder, currently serves as Chairman of the
Board of the Company.

The Companys newspaper holdings include
operations in St. Louis, Missouri, where its subsidiary,
St. Louis Post-Dispatch LLC (PD LLC), publishes
the Post-Dispatch, the only major daily newspaper serving
the greater St. Louis metropolitan area, and in Tucson, Arizona,
where its subsidiary, Star Publishing Company (Star
Publishing), publishes the Arizona Daily Star(the
Star). In Tucson, Star Publishing shares, on
an equal basis, the combined results of the Starand the
Tucson Citizen(the Citizen),published by the Gannett Co., Inc. (Gannett).

The St. Louis newspaper operations include
the Suburban Journals (the Suburban Journals),
acquired by Suburban Journals of Greater St. Louis LLC in
August 2000. The Suburban Journals are a group of 38 weekly
papers and various niche publications that focus on providing
local news and editorial content to the communities that they
serve and have a combined average weekly distribution of
1.3 million.

As a result of the May 1, 2000, transaction
that created PD LLC, PD LLC operates the Post-Dispatch.
Pulitzer Inc. and one of its subsidiaries hold a 95 percent
interest in the results of PD LLC operations. Prior to
May 1, 2000, Pulitzer Inc. shared the operating profits and
losses of the Post-Dispatch on a 50-50 basis with The
Herald Company, Inc. (Herald). See 
Agency Agreements.

Pulitzer Inc.s wholly owned subsidiary,
Pulitzer Newspapers, Inc. (PNI), and its
subsidiaries (collectively, the PNI Group) publish
12 dailies that serve markets in the Midwest, Southwest and
West, as well as more than 65 weekly newspapers, shoppers
and niche publications. The PNI Groups 12 daily newspapers
had a combined average daily circulation of approximately
188,000 at the date of the most recent ABC published statements.

During 2003 the PNI Group acquired several weekly
newspapers and specialty publications (in separate
transactions), that complement its daily newspapers in several
markets, principally in Napa, California; Provo, Utah; Coos Bay,
Oregon; and Rhinelander, Wisconsin. The PNI Group also acquired
several weekly newspapers (in separate transactions) in 2002 and
2001. The 2003, 2002, and 2001 acquisitions are collectively
referred to as the PNI Acquisitions. In January
2001, the PNI Group acquired, in an asset purchase, The
Lompoc Record, a daily newspaper located in Lompoc,
California. In 2001, the PNI Group sold its daily newspaper
located in Troy, Ohio, and its weekly newspaper property in
Petaluma, California (collectively, the Sale
Transactions). The operating results of the newspapers
divested in the Sale Transactions are presented as discontinued
operations in the Companys consolidated financial
statements included in Item 8 of this Annual Report on
Form 10-K.

Initial Capitalization

Pulitzer Inc. was capitalized on March 18,
1999, with approximately $550 million in cash and all the other
assets (other than broadcast assets) of Pulitzer Publishing
Company (Old Pulitzer) as a result of the Spin-off
(as defined below) and, through its subsidiaries and affiliated
entities, is now operating the principal newspaper publishing
and related new-media businesses formerly operated by Old
Pulitzer (including subsidiaries) and certain other newspapers
acquired since the Broadcast Transaction (as defined below).
Pulitzer Inc. was organized as a corporation in 1998 and, prior
to the Spin-off, was a wholly owned subsidiary

2



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##### Table of Contents



ITEM 1. BUSINESS 
Continued


of Old Pulitzer. Prior to the Broadcast
Transaction, 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, Pulitzer Inc. 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 net liability balance of the Broadcasting
Business as of March 18, 1999, including
$700.0 million of Broadcast Debt, was contributed to
Additional Paid-in Capital of Pulitzer Inc. at the
time of the Merger.

Historical Financial Information

The Companys revenues are derived primarily
from advertising and circulation, which have respectively
averaged approximately 78.2 percent and 20.1 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.

|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |        |         |         | 
|----------------------------- | ------------ | ------------------------ | ------------------------ | ------- | ------- | ------- | --------- | ---------- | ------- | ------- | --------- | ------ | ------- | ------- | --------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | 
|                              |              |                         
|                              |              | Years Ended December 31,
|                              |              |                         
|                              |              | 2003                     |                          | 2002(1) |         | 2001(1) |           | 2000(1)(2) |         | 1999   
|                              |              |                          |                          |         |         |         |           |            |         |        
|                              |              |                         
|                              |              | (In thousands)          
|Operating revenues:           |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       
|                              | Advertising: |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |        |        
|                              |              | Retail                   |                          | $       | 120,205 |         |           | $          | 118,741 |         |           | $      | 118,738 |         |           | $      | 110,289 |         |         | $      | 89,030  |        
|                              |              | National                 |                          |         | 29,000  |         |           |            | 26,706  |         |           |        | 26,049  |         |           |        | 23,216  |         |         |        | 15,965  |        
|                              |              | Classified               |                          |         | 122,638 |         |           |            | 125,777 |         |           |        | 132,134 |         |           |        | 133,043 |         |         |        | 109,966 |        
|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       
|                              |              |                          | Total                    |         |         | 271,843 |           |            |         | 271,224 |           |        |         | 276,921 |           |        |         | 266,548 |         |        |         | 214,961 | 
|                              |              | Preprints                |                          |         | 63,249  |         |           |            | 55,935  |         |           |        | 47,679  |         |           |        | 42,388  |         |         |        | 31,673  |        
|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       
|                              |              |                          | Total advertising        |         |         | 335,092 |           |            |         | 327,159 |           |        |         | 324,600 |           |        |         | 308,936 |         |        |         | 246,634 | 
|                              | Circulation  |                          |                          | 80,639  |         |         |           | 80,751     |         |         |           | 81,200 |         |         |           | 80,517 |         |         |         | 73,748 |        
|                              | Other        |                          |                          | 6,933   |         |         |           | 8,050      |         |         |           | 7,706  |         |         |           | 7,706  |         |         |         | 3,874  |        
|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       
|                              |              |                          | Total operating revenues |         | $       | 422,664 |           |            | $       | 415,960 |           |        | $       | 413,506 |           |        | $       | 397,159 |         |        | $       | 324,256 | 
|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       
|Operating income(3)(4)        |              | $                        | 87,193                   |         |         | $       | 82,885    |            |         | $       | 43,391    |        |         | $       | 60,390    |        |         | $       | 18,093  |       
|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       
|Depreciation and amortization |              | $                        | 19,135                   |         |         | $       | 18,719    |            |         | $       | 40,508    |        |         | $       | 31,985    |        |         | $       | 15,462  |       
|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       
|Assets                        |              | $                        | 1,309,673                |         |         | $       | 1,287,246 |            |         | $       | 1,288,763 |        |         | $       | 1,282,873 |        |         | $       | 979,625 |       
|                              |              |                          |                          |         |         |         |           |            |         |         |           |        |         |         |           |        |         |         |         |       



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|    |                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Certain reclassifications have been made to the
    prior years consolidated financial statements to conform
    to the 2003 presentation.

3



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##### Table of Contents



ITEM 1. BUSINESS 
Continued




|    |                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The year ended December 31, 2000, includes
    an extra week of operations resulting from a 53-week year. All
    other years presented include 52 weeks of operations.                                                                                                                                                 
|   
|(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. See Item 3 Legal and
    Regulatory Proceedings for additional information on the
    Broadcast Transaction.
|   
|(4) | Includes St. Louis Agency adjustments of
    $9.4 million and $25.0 million in 2000 and 1999,
    respectively. See Item 1. Business  Agency
    Agreements and Item 7.  PD LLC
    Operating Agreement for additional information on the St.
    Louis Agency adjustment.                                        

Operating Strategy

The Companys long-term operating strategy
is to maximize revenue and operating income growth at each of
its operations through maintenance of editorial excellence,
leadership in local news, a focus on local advertisers, and
prudent control of costs. Management believes that editorial
excellence and leadership in local news will, over the
long-term, allow the Company to maximize its share of audience
and advertising revenue in each of its respective markets. In
addition, providing a portfolio of products designed to serve
each market area through integrated print and online media is a
principal component of the Companys goal to strengthen its
franchises. The responsibility for developing and implementing a
newspapers business strategy rests with local managers
while corporate executives provide guidance and allocate
resources.

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 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 knowledge about and news coverage of
the communities they serve, strong advertiser and newspaper
reader relationships and substantial marketing expertise to
produce in-depth, relevant, and locally focused online
publications. The Companys objective in these operations
is to attract a wider 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 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 operates in the Midwest, Southwest
and Western regions of the United States, although
72 percent of 2003 total revenues were generated by the St.
Louis operations.

St. Louis Operations

The Companys subsidiaries serve the greater
St. Louis metropolitan area with the daily
Post-Dispatch,the Suburban Journals weekly newspapers,
STLtoday.com, a local news and information web site, and STL
Distribution Services LLC (DS LLC), a local
distribution company. St. Louis is currently the 18th
largest metropolitan statistical area in the United States with
a population of approximately 2.7 million. The following

4



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##### Table of Contents



ITEM 1. BUSINESS 
Continued


table sets forth the combined operating revenues
from continuing operations of all the Companys
St. Louis operations for the past five years.

|                                   |                |                          |   |         |         |      |   |         |         |      |   |         |         |  |   |         |         |  |   |         |         | 
|---------------------------------- | -------------- | ------------------------ | - | ------- | ------- | ---- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                   |                |                         
|                                   |                | Years Ended December 31,
|                                   |                |                         
|                                   |                | 2003                     |   | 2002    |         | 2001 |   | 2000(1) |         | 1999
|                                   |                |                          |   |         |         |      |   |         |         |     
|Operating revenues (in thousands): |                |                          |   |         |         |      |   |         |         |      |   |         |         |  |   |         |         |  |   |        
|                                   | Advertising(2) |                          | $ | 242,277 |         |      | $ | 236,551 |         |      | $ | 237,465 |         |  | $ | 225,137 |         |  | $ | 190,652 |        
|                                   | Circulation    |                          |   | 59,890  |         |      |   | 59,808  |         |      |   | 60,225  |         |  |   | 60,555  |         |  |   | 60,759  |        
|                                   | Other          |                          |   | 1,751   |         |      |   | 2,184   |         |      |   | 2,086   |         |  |   | 3,761   |         |  |   | 1,539   |        
|                                   |                |                          |   |         |         |      |   |         |         |      |   |         |         |  |   |         |         |  |   |        
|                                   |                | Total                    |   | $       | 303,918 |      |   | $       | 298,543 |      |   | $       | 299,776 |  |   | $       | 289,453 |  |   | $       | 252,950 | 
|                                   |                |                          |   |         |         |      |   |         |         |      |   |         |         |  |   |         |         |  |   |        



---



|    |                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Beginning in August 2000, the operating revenues
    include the Suburban Journals. In addition, the year ended
    December 31, 2000, includes an extra week of operations
    resulting from a 53-week fiscal year. All other years presented
    include 52 weeks of operations.
|   
|(2) | Advertising includes revenues from preprinted
    inserts and online advertising.                                                                                                                                                                                                  

St. Louis Post-Dispatch

Founded in 1878 by the first Joseph Pulitzer, and
celebrating its 125-year anniversary in December 2003, the
Post-Dispatchhas a long history of reporting and
editorial excellence and innovation in newspaper publishing
under the direction of the Pulitzer family. The Post-Dispatchis a morning daily and Sunday newspaper serving primarily
the greater St. Louis metropolitan area. The
Post-Dispatchhas won 17 Pulitzer prizes in its
125 years of continuous publication.

As a result of the May 1, 2000 transactions
that created PD LLC, Pulitzer Inc. and one of its subsidiaries
hold 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-Dispatchsince 1961, Pulitzer Inc. and Herald
generally shared the Post-Dispatchs operating
profits and losses, as well as its capital expenditures, on a
50-50 basis. See Agency Agreements.

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

|                                             |                 |                          |              |      |         |       |  |       |         |       |  |       |         |       |  |       |         |       |  |       |         |       | 
|-------------------------------------------- | --------------- | ------------------------ | ------------ | ---- | ------- | ----- |  | ----- | ------- | ----- |  | ----- | ------- | ----- |  | ----- | ------- | ----- |  | ----- | ------- | ----- | 
|                                             |                 |                         
|                                             |                 | Years Ended December 31,
|                                             |                 |                         
|                                             |                 | 2003                     |              | 2002 |         | 2001  |  | 2000  |         | 1999 
|                                             |                 |                          |              |      |         |       |  |       |         |      
|Post-Dispatch:                               |                 |                          |              |      |         |       |  |       |         |       |  |       |         |       |  |       |         |       |  |      
|                                             | Circulation(1): |                          |              |      |         |       |  |       |         |       |  |       |         |       |  |       |         |       |  |       |        
|                                             |                 | Daily                    |              |      | 286,619 |       |  |       | 288,894 |       |  |       | 292,777 |       |  |       | 300,920 |       |  |       | 307,375 |      
|                                             |                 | Sunday                   |              |      | 463,850 |       |  |       | 470,271 |       |  |       | 474,638 |       |  |       | 487,080 |       |  |       | 509,110 |      
|Advertising linage (in thousands of inches): |                 |                          |              |      |         |       |  |       |         |       |  |       |         |       |  |       |         |       |  |      
|                                             | Retail          |                          |              | 786  |         |       |  | 787   |         |       |  | 670   |         |       |  | 728   |         |       |  | 774   |        
|                                             | General         |                          |              | 199  |         |       |  | 203   |         |       |  | 210   |         |       |  | 204   |         |       |  | 152   |        
|                                             | Classified      |                          |              | 995  |         |       |  | 1,043 |         |       |  | 1,142 |         |       |  | 1,135 |         |       |  | 1,082 |        
|                                             |                 |                          |              |      |         |       |  |       |         |       |  |       |         |       |  |       |         |       |  |      
|                                             |                 |                          | Total        |      |         | 1,980 |  |       |         | 2,033 |  |       |         | 2,022 |  |       |         | 2,067 |  |       |         | 2,008 | 
|                                             | Part run(2)     |                          |              | 484  |         |       |  | 546   |         |       |  | 719   |         |       |  | 834   |         |       |  | 836   |        
|                                             |                 |                          |              |      |         |       |  |       |         |       |  |       |         |       |  |       |         |       |  |      
|                                             |                 |                          | Total inches |      |         | 2,464 |  |       |         | 2,579 |  |       |         | 2,741 |  |       |         | 2,901 |  |       |         | 2,844 | 
|                                             |                 |                          |              |      |         |       |  |       |         |       |  |       |         |       |  |       |         |       |  |      



---



|    |                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts for 2003 are based on internal records of
    PD LLC for the twelve-month period ended September 30.
    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

5



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##### Table of Contents



ITEM 1. BUSINESS 
Continued




| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | advertisements typically appear in a special news
    and advertising sections designed specifically for the targeted
    geographic locations.

The Post-Dispatchis printed at two
computerized facilities equipped with a total of six presses.
The writing, editing and composing functions have been
computerized, increasing efficiency and reducing workforce
requirements. The Post-Dispatch has sufficient press capacity to
meet current and projected circulation, advertising and
editorial requirements.

The Post-Dispatchis distributed primarily
through independent home delivery carriers and single copy
dealers (contracted directly by the Post-Dispatch or
through DS LLC). Home delivery accounted for approximately
75 percent of circulation for the daily Post-Dispatchand approximately 59 percent of circulation for the
Sunday edition during 2003. In order to build a stronger, more
direct relationship with readers of the Post-Dispatch, PD
LLC has purchased a number of circulation routes from
independent carriers and dealers over the past five years, and
it may continue to purchase additional routes from time to time
in the future. As of December 31, 2003, PD LLC owned
approximately 70 percent of its circulation routes covering
approximately 70 percent of the Post-Dispatchs
home delivery and approximately 75 percent of single copy
distribution. In 2002 PD LLC began direct billing of the
majority of its home delivery subscribers.

Suburban Journals of Greater St.
Louis

With the addition of the Suburban Journals in
August 2000, the Companys St. Louis newspaper
operations now include a group of 38 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 one to three times per week. In
December 2003 the Suburban Journals had a combined average
weekly distribution of approximately 1.3 million, some of
which is duplicated, delivered by independent carriers to homes
and outlets.

The Suburban Journals 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 and is managed 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.

The Suburban Journals are printed at two
facilities equipped with a total of three presses. The writing,
editing and composing functions have been computerized,
increasing efficiency and reducing workforce requirements.

The Suburban Journals and the Post-Dispatchand STLtoday.com have contracted to permit the cross-sale of
advertising products into each publication and STLtoday,
allowing for increased sales efforts and greater operating
efficiencies in the St. Louis marketplace.

St. Louis Internet Operations

STLtoday.com (www.STLtoday.com) and other
affiliated local Web sites provide the St. Louis metropolitan
area with comprehensive news, business, sports, entertainment
and neighborhood information. The sites also feature enhanced
online advertiser services in the three major classified
advertising categories  automotive, real estate and
help wanted. In addition, the Web sites offer 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, PD LLC created stlouisatwork.com to
become the online career destination for regional employers and
job candidates and conducted an online auction supported by
print advertising, both demonstrating PD LLCs plans for
future integration of print and online activities. The Company
expects activities of this nature to continue. The following
table sets forth page view

6



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##### Table of Contents



ITEM 1. BUSINESS 
Continued


statistics and the percentage change compared
to comparable periods in 2002 for the combined St. Louis Web
sites.

|                     |               |                |  |          |  |                |  |             |   |  |  |        |  |  |  |      |  
|-------------------- | ------------- | -------------- |  | -------- |  | -------------- |  | ----------- | - |  |  | ------ |  |  |  | ---- | -
|                     |               |                |  | % Change |  |                |  | % Change to
|                     |               | 2003 Full Year |  | vs. 2002 |  | 2003 Qtr. 4    |  | 2002 Qtr. 4
|                     |               |                |  |          |  |                |  |            
|                     |               | (In thousands) |  |          |  | (In thousands) |  |            
|St. Louis Web sites: |               |                |  |          |  |                |  |             |   |  |  |        |  |  |  |     
|                     | Page views(1) |                |  | 277,646  |  |                |  | 53.6        | % |  |  | 85,194 |  |  |  | 66.9 | %



---



|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | A page view occurs when a web server
    provides a Web page to a Web site visitor.

STL Distribution Services Operations

Pulitzer Inc. and one of its subsidiaries hold a
95 percent interest in the results of operations of DS LLC,
a distribution company that delivers periodicals for the
Post-Dispatch, The Ladue Newsand product samples,
telephone books and periodicals for other distribution clients
throughout the St. Louis Metropolitan area.

Pulitzer Newspapers, Inc.

The PNI Group publishes 12 daily newspapers
that serve markets in the Midwest, Southwest and West, as well
as more than 65 weekly newspapers, shoppers and niche
publications associated with its daily newspapers. 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 a significant portion of each newspapers
circulation. The 12 daily newspapers in the PNI Group,
ranked in order of daily circulation based on ABC
Publishers Statements for the six-month period ended
September 30, 2003 (except where noted), are:

|                         |       |  |                           |             |  |        |        |         |  |  |        |         | 
|------------------------ | ----- |  | ------------------------- | ----------- |  | ------ | ------ | ------- |  |  | ------ | ------- | 
|                         |       |  |                           |            
|                         |       |  |                           | Circulation
|                         |       |  |                           |            
|                         |       |  |                           | Daily       |  | Sunday
|                         |       |  |                           |             |  |       
|The Pantagraph           |       |  | Bloomington, Illinois     |             |  |        | 47,646 |         |  |  | 51,177 |        
|The Daily Herald         |       |  | Provo, Utah               |             |  |        | 29,199 |         |  |  | 34,959 |        
|Santa Maria Times        |       |  | Santa Maria, California   |             |  |        | 18,245 |         |  |  | 18,894 |        
|The Napa Valley Register |       |  | Napa, California          |             |  |        | 17,970 |         |  |  | 18,607 |        
|The Sentinel             |       |  | Hanford, California       |             |  |        | 13,255 |         |  |  | 13,431 |        
|The World                |       |  | Coos Bay, Oregon(1)       |             |  |        | 13,080 |         |  |  | 15,060 |        
|Arizona Daily Sun        |       |  | Flagstaff, Arizona        |             |  |        | 11,659 |         |  |  | 13,100 |        
|Daily Chronicle          |       |  | DeKalb, Illinois          |             |  |        | 9,086  |         |  |  | 10,271 |        
|The Garden Island        |       |  | Lihue, Hawaii             |             |  |        | 8,209  |         |  |  | 9,022  |        
|Daily Journal            |       |  | Park Hills, Missouri      |             |  |        | 8,189  |         |  |  | 8,109  |        
|The Lompoc Record        |       |  | Lompoc, California        |             |  |        | 7,230  |         |  |  | 7,660  |        
|The Daily News           |       |  | Rhinelander, Wisconsin(2) |             |  |        | 4,184  |         |  |  | 4,625  |        
|                         |       |  |                           |             |  |        |        |         |  |  |        |        
|                         | Total |  |                           |             |  |        |        | 187,952 |  |  |        | 204,915 | 
|                         |       |  |                           |             |  |        |        |         |  |  |        |        



---



|    |                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------
|(1) | Sunday circulation represents the weekend edition
    of The (Coos Bay) World, which is published on Saturdays.
|   
|(2) | Amounts are based on the internal records of the
    Company.                                                  

Collectively, the markets served by the PNI Group
exceed U.S. averages in such key measures as annual population
and household growth rates, and average retail spending per
household. PNI publishers work within a decentralized
environment and are given substantial autonomy to operate their
newspapers. Publishers do share a set of broad strategic
priorities which include advertising market share growth,
circulation copies growth, e-media audience and revenue growth
and growth in profits and margins and are encouraged to share
best ideas with one another.

7



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##### Table of Contents



ITEM 1. BUSINESS 
Continued


The following table sets forth the operating
revenues from continuing operations of the PNI Group for the
past five years.

|                    |             |                          |   |        |         |      |   |         |         |      |   |        |         |  |   |        |         |  |   |        |        | 
|------------------- | ----------- | ------------------------ | - | ------ | ------- | ---- | - | ------- | ------- | ---- | - | ------ | ------- |  | - | ------ | ------- |  | - | ------ | ------ | 
|                    |             |                         
|                    |             | Years Ended December 31,
|                    |             |                         
|                    |             | 2003                     |   | 2002   |         | 2001 |   | 2000(1) |         | 1999
|                    |             |                          |   |        |         |      |   |         |         |     
|                    |             |                         
|                    |             | (In thousands)          
|Operating revenues: |             |                          |   |        |         |      |   |         |         |      |   |        |         |  |   |        |         |  |   |       
|                    | Advertising |                          | $ | 92,815 |         |      | $ | 90,608  |         |      | $ | 87,135 |         |  | $ | 83,799 |         |  | $ | 55,982 |       
|                    | Circulation |                          |   | 20,749 |         |      |   | 20,943  |         |      |   | 20,975 |         |  |   | 19,962 |         |  |   | 12,989 |       
|                    | Other       |                          |   | 5,182  |         |      |   | 5,866   |         |      |   | 5,620  |         |  |   | 3,945  |         |  |   | 2,335  |       
|                    |             |                          |   |        |         |      |   |         |         |      |   |        |         |  |   |        |         |  |   |       
|                    |             | Total                    |   | $      | 118,746 |      |   | $       | 117,417 |      |   | $      | 113,730 |  |   | $      | 107,706 |  |   | $      | 71,306 | 
|                    |             |                          |   |        |         |      |   |         |         |      |   |        |         |  |   |        |         |  |   |       



---



|    |                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In January 2000, the PNI Group acquired The
    Pantagraph which operates in Bloomington, Illinois. In
    addition, the year ended December 31, 2000 includes an
    extra week of operations resulting in a 53-week year. All other
    years presented include 52 weeks of operations.

PNI Internet Operations

The PNI Group operates Web sites in each of its
markets providing viewers 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.
The PNI Group generates revenue from online advertising and from
service and transaction fees.

The following table sets forth the total page
views for the combined PNI Group Web sites in 2003 and the
fourth quarter thereof and the respective percentage changes in
page views from the comparable periods in 2002.

|                        |               |                   |  |          |  |                |  |          |    |  |  |        |  |  |  |       |   
|----------------------- | ------------- | ----------------- |  | -------- |  | -------------- |  | -------- | -- |  |  | ------ |  |  |  | ----- | --
|                        |               | Full Year 2003(2) |  | % Change |  | 2003 Qtr. 4    |  | % Change
|                        |               |                   |  |          |  |                |  |         
|                        |               | (In thousands)    |  |          |  | (In thousands) |  |         
|Combined PNI Web Sites: |               |                   |  |          |  |                |  |          |    |  |  |        |  |  |  |      
|                        | Page views(1) |                   |  | 88,894   |  |                |  | (10.8    | )% |  |  | 22,366 |  |  |  | (14.0 | )%



---



|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | A page view occurs when a web server
    provides a Web page to a Web site visitor.                                                                              
|   
|(2) | Beginning in January 2003, the PNI Group changed
    the manner in which it records page view data. 2003 data may not
    be comparable with 2002 reported results.

Tucson Operations

Founded in 1877, the Staris published in
Tucson, Arizona, by Pulitzer Inc.s wholly owned
subsidiary, Star Publishing Company. The Star, a morning
and Sunday newspaper, and the Citizen, an afternoon
newspaper owned by Gannett, are southern Arizonas leading
dailies. The Starand the Citizenare 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).
In 2003 the Starand the Citizenhad a combined
weekday circulation of approximately 137,000 and a Sunday
circulation of approximately 171,000 delivered by independent
carriers to homes and single-copy outlets. Tucson is currently
the 55th largest metropolitan statistical area in the United
States with a population of approximately 844,000.

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

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

8



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##### Table of Contents



ITEM 1. BUSINESS 
Continued


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

|                                                            |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         | 
|----------------------------------------------------------- | -------------------- | ------------------------ | -------------- | ------- | ----- | ------- | - | ------- | ----- | ------- | - | ------- | ----- | ------- | - | ------- | ----- | ------- | - | ------- | ----- | ------- | 
|                                                            |                      |                         
|                                                            |                      | Years Ended December 31,
|                                                            |                      |                         
|                                                            |                      | 2003                     |                | 2002    |       | 2001    |   | 2000    |       | 1999   
|                                                            |                      |                          |                |         |       |         |   |         |       |        
|Circulation(1):                                             |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|                                                            | Stardaily            |                          |                | 103,844 |       |         |   | 103,048 |       |         |   | 101,034 |       |         |   | 98,469  |       |         |   | 97,644  |      
|                                                            | Citizendaily         |                          |                | 33,370  |       |         |   | 36,056  |       |         |   | 38,067  |       |         |   | 39,543  |       |         |   | 40,599  |      
|                                                            |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|                                                            |                      |                          | Combined Daily |         |       | 137,214 |   |         |       | 139,104 |   |         |       | 139,101 |   |         |       | 138,012 |   |         |       | 138,243 | 
|                                                            | StarSunday           |                          |                | 170,669 |       |         |   | 171,350 |       |         |   | 171,485 |       |         |   | 171,726 |       |         |   | 173,071 |      
|Combined advertising linage (in thousands of
    inches):   |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|                                                            | Full run (all zones) |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |         |      
|                                                            |                      | Retail                   |                |         | 1,499 |         |   |         | 1,593 |         |   |         | 1,571 |         |   |         | 1,713 |         |   |         | 1,703 |        
|                                                            |                      | General                  |                |         | 89    |         |   |         | 99    |         |   |         | 89    |         |   |         | 97    |         |   |         | 83    |        
|                                                            |                      | Classified               |                |         | 1,560 |         |   |         | 1,554 |         |   |         | 1,618 |         |   |         | 2,033 |         |   |         | 2,068 |        
|                                                            |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|                                                            |                      |                          | Total          |         |       | 3,148   |   |         |       | 3,246   |   |         |       | 3,278   |   |         |       | 3,843   |   |         |       | 3,854   | 
|                                                            | Part run(2)          |                          |                | 72      |       |         |   | 92      |       |         |   | 207     |       |         |   | 256     |       |         |   | 303     |      
|                                                            |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|                                                            |                      |                          | Total inches   |         |       | 3,220   |   |         |       | 3,338   |   |         |       | 3,485   |   |         |       | 4,099   |   |         |       | 4,157   | 
|                                                            |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|100% of TNI Partners operating revenues (in
    thousands): |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|                                                            | Advertising          |                          | $              | 83,673  |       |         | $ | 82,876  |       |         | $ | 82,732  |       |         | $ | 93,560  |       |         | $ | 87,550  |      
|                                                            | Circulation          |                          |                | 22,935  |       |         |   | 21,358  |       |         |   | 21,350  |       |         |   | 22,786  |       |         |   | 22,234  |      
|                                                            | Other                |                          |                | 199     |       |         |   | 344     |       |         |   | 2,286   |       |         |   | 4,804   |       |         |   | 4,642   |      
|                                                            |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        
|                                                            |                      |                          | Total          |         | $     | 106,807 |   |         | $     | 104,578 |   |         | $     | 106,368 |   |         | $     | 121,150 |   |         | $     | 114,426 | 
|                                                            |                      |                          |                |         |       |         |   |         |       |         |   |         |       |         |   |         |       |         |   |        



---



|    |                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Amounts for 2003 are based on the internal
    records of Star Publishing. 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 special news and advertising sections designed
    specifically for the targeted geographic locations.

The Starand the Citizenare
printed at TNI Partners 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 Publishings Web
site (www.azstarnet.com), and Citizens Web site
(www.tucsoncitizen.com) serve the Tucson metropolitan
area 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, the Web sites also serve 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
Starand Citizen. The Web sites generate revenue
from online advertising and from service and transaction fees,
all of which are included in TNI Partners other operating
revenue.

9



---



##### Table of Contents



ITEM 1. BUSINESS 
Continued


The following table sets forth the total page
views for the Tucson Agency Web sites in 2003 and the fourth
quarter thereof and the percentage changes in page views from
the comparable periods in 2002.

|                           |               |                |  |          |  |                |  |          |   |  |  |        |  |  |  |    |   
|-------------------------- | ------------- | -------------- |  | -------- |  | -------------- |  | -------- | - |  |  | ------ |  |  |  | -- | --
|                           |               | Full Year 2003 |  | % Change |  | 2003 Qtr. 4    |  | % Change
|                           |               |                |  |          |  |                |  |         
|                           |               | (In thousands) |  |          |  | (In thousands) |  |         
|Combined Tucson Web Sites: |               |                |  |          |  |                |  |          |   |  |  |        |  |  |  |   
|                           | Page views(1) |                |  | 79,103   |  |                |  | 15       | % |  |  | 19,504 |  |  |  | (3 | )%



---



|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | A page view occurs when a web server
    provides a Web page to a Web site visitor.

Acquisition Strategy

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

Agency Agreements

The Newspaper Preservation Act of 1970 permits
joint operating agreements between newspapers under certain
circumstances without violation of the Federal antitrust laws.
Agency agreements generally allow newspapers operating in 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 in the same market. Newspapers in 12 cities
operate under joint operating or agency agreements.

St. Louis
Agency.As a result of the May 1,
2000 transaction which created PD LLC, Pulitzer Inc. and one of
its subsidiaries hold 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-Dispatchsince 1961, Pulitzer Inc.
and Herald generally shared the Post-Dispatchsoperating 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) and 1999 Pulitzer Inc. paid Herald
$9.4 million and $25.0 million, 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 Starand Citizen. TNI Partners,
as agent for Star Publishing and Gannett, is responsible for
advertising and circulation, printing and delivery and
collection of all revenues of the Starand the
Citizen. The Board of Directors of TNI Partners presently
consists of three directors chosen by Star Publishing 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 Star Publishing and Gannett. The Company
reports its 50 percent share of TNI Partners
operating results as a single component of operating income in
its consolidated statements of income. Both partners have
certain administrative costs that are borne and reported
separately. As a result of the Tucson Agency, the Starand the Citizenbenefit from increases and can be
adversely affected by decreases in each others circulation.

The current term of the Tucson Agency Agreement
expires on June 1, 2015, but it contains an option, which
may be exercised by either party, to renew the agreement for
successive periods of 25 years each.

10



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##### Table of Contents



ITEM 1. BUSINESS 
Continued


Competition

Company 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 on
audience size and composition, circulation levels, readership
demographics, price and advertiser results. Competition for
circulation is generally based on the content, journalistic
quality and price of the publication. Competition for
circulation and advertising may include some or all of the
following: paid suburban daily newspapers, independently owned
community newspapers and shoppers, yellow pages and direct mail
advertisers. The community newspapers and shoppers and direct
mail companies generally target selected geographic markets
throughout their respective distribution areas.

Due to the agency relationship existing in
Tucson, the Starand the Citizencannot be viewed
as competitors for advertising or circulation revenues. The
Starand the Citizencompete primarily against
other media and suburban, neighborhood and national newspapers
and other publications.

Raw Materials

The primary raw material used in the
Companys operations is newsprint, representing
12.0 percent to 15.7 percent of operating expenses
over the last five years. For 2003, the Company consumed
approximately 102,000 metric tonnes of newsprint, including its
50 percent share related to the operations of TNI Partners.
Based on the Companys current level of newspaper
operations, expected annual newsprint consumption for 2004 is
estimated to be in the range of 103,000 metric tonnes.
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 annual cost per metric tonne of newsprint
has varied from its lowest price by approximately
27.8 percent. For every one-dollar change in the
Companys average annual cost per metric tonne of
newsprint, 2004 pre-tax income would change by approximately
$103,000, assuming annual newsprint consumption of 103,000
metric tonnes. The Company attempts to obtain the best price
available by combining newsprint purchases for its different
newspaper locations with those of other newspaper companies. The
Company considers its relationship with newsprint producers to
be good. The Company has not entered into derivative contracts
for newsprint.

Employees

At December 31, 2003, the Company had
approximately 3,800 full-time equivalent employees working at
its operations, including TNI Partners. At the Post-Dispatchin St. Louis, unions represent approximately 77 percent
of employees. The Company considers its relationship with its
employees to be good.

The Post-Dispatchhas contracts with
substantially all of its production unions with expiration dates
ranging from August 2004 through February 2010. The
Post-Dispatchis currently in contract negotiations with
two unions: the St. Louis Newspaper Guild (Newspaper
Guild), covering approximately 590 newsroom, sales and
certain administrative employees, and the Graphics
Communications International Union (GCIU) Local
No. 505, covering less than 20 production employees. The
Newspaper Guild contract expired in January 2003, but has
remained in effect under an evergreen contract
provision. The GCIU contract expired in September 2002. All
Post-Dispatchlabor contracts contain no-strike clauses.

TNI Partners contract with Tucson Graphic
Communications Union Local No. 212, covering certain
pressroom employees, expires on May 31, 2005.

INTERNET INFORMATION

Copies of the Companys Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 are available free of charge
through the Companys Web site

11



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##### Table of Contents



ITEM 1. BUSINESS 
Continued


(www.pulitzerinc.com)as soon as reasonably practicable after the Company
electronically files the reports with, or furnishes them to, the
Securities and Exchange Commission.

###

GOVERNANCE

Additionally, the Companys Code of Ethics
for Senior Financial Officers, Code of Business Conduct and
Ethics, Corporate Governance Guidelines, Audit Committee
Charter, Compensation Committee Charter, Corporate Governance
Committee Charter and Nominating Committee Charter are available
on the Companys website at www.pulitzerinc.com.
Copies of these documents also are available in print to any
stockholder who requests a copy. The Company intends to disclose
any amendments to, or waivers granted with respect to, a
provision of the Code of Ethics for Senior Financial Officers on
the Companys website within five business days following
the date of the amendment or waiver

Effective January 29, 2004, the Board of
Directors of Pulitzer Inc., in accordance with the listing
standards of the New York Stock Exchange, elected to avail
itself of the exemption for a controlled company and
determined that it need not have a majority of independent
directors on its Board or have compensation, corporate
governance, and nominating committees composed entirely of
independent directors.




ITEM 2. PROPERTIES

The corporate headquarters of the Company are
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, 2003 are set forth below. Leases on the
properties indicated as leased by the Company expire at various
dates through October 2013.

The Company believes that its owned and leased
properties used in connection with its operating activities
generally are in good condition, well maintained and adequate
for its current and immediately foreseeable operating needs. In
2002 the Post-Dispatchexpanded its main production
facility, adding approximately 110,000 square feet of owned
space in St. Louis and enabling the Post-Dispatchto
eliminate operations previously conducted in other facilities.

12



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##### Table of Contents



ITEM 2. PROPERTIES  Continued


|                                                                                     |                         |                     |  |         |  |  |  |        | 
|------------------------------------------------------------------------------------ | ----------------------- | ------------------- |  | ------- |  |  |  | ------ | 
|                                                                                     |                         |                    
|                                                                                     |                         | Approximate Area in
|                                                                                     |                         | Square Feet        
|                                                                                     |                         |                    
|General Character of Property                                                        |                         | Owned               |  | Leased 
|                                                                                     |                         |                     |  |        
|Printing plants, business and editorial offices,
    and warehouse space located in: |                         |                     |  |         |  |  |  |       
|                                                                                     | St. Louis, Missouri(1)  |                     |  | 649,714 |  |  |  | 17,541 | 
|                                                                                     | St. Louis, Missouri(2)  |                     |  | 150,322 |  |  |  | 42,013 | 
|                                                                                     | St. Louis, Missouri(3)  |                     |  | 96,360  |  |  |  | 37,400 | 
|                                                                                     | Tucson, Arizona(4)      |                     |  | 220,816 |  |  |  | 60,875 | 
|                                                                                     | Washington, D.C.        |                     |  |         |  |  |  | 2,420  | 
|                                                                                     | Bloomington, Illinois   |                     |  | 84,326  |  |  |  | 13,396 | 
|                                                                                     | Provo, Utah             |                     |  | 40,858  |  |  |  | 24,180 | 
|                                                                                     | Hanford, California     |                     |  | 29,942  |  |  |  | 4,325  | 
|                                                                                     | Lihue, Hawaii           |                     |  | 8,505   |  |  |  | 20,902 | 
|                                                                                     | Flagstaff, Arizona      |                     |  | 23,170  |  |  |  | 2,600  | 
|                                                                                     | Santa Maria, California |                     |  | 20,815  |  |  |  | 1,620  | 
|                                                                                     | Napa, California        |                     |  | 20,984  |  |  |  | 3,000  | 
|                                                                                     | DeKalb, Illinois        |                     |  | 16,098  |  |  |  | 2,880  | 
|                                                                                     | Coos Bay, Oregon        |                     |  | 16,500  |  |  |  |        | 
|                                                                                     | Park Hills, Missouri    |                     |  | 22,706  |  |  |  |        | 
|                                                                                     | Lompoc, California      |                     |  | 10,500  |  |  |  | 17,500 | 
|                                                                                     | Rhinelander, Wisconsin  |                     |  | 9,611   |  |  |  |        | 



---



|    |                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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) | Property is owned and used in the operations of
    DS LLC.                                                                                                                           
|   
|(4) | The 220,816 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 AND REGULATORY
PROCEEDINGS

In October 2001 the Internal Revenue Service
(IRS) formally proposed that Old Pulitzers
taxable income for the tax year ended March 18, 1999 be
increased by approximately $80.4 million based on the
assertion that Old Pulitzer was required to recognize a taxable
gain in that amount as a result of the Spin-off. The Company is
obligated under the Merger Agreement to indemnify Hearst-Argyle
against any tax liability attributable to the Spin-off and has
the right to control any proceedings relating to the
determination of such tax liability. If the IRS were completely
successful in its proposed adjustment, the Companys
indemnification obligation would be approximately
$29.3 million, plus applicable interest. Any income tax
indemnification payment would be recorded as an adjustment to
additional paid-in capital, and any related interest expense
would be reflected as a component of net income in the period
recognized.

The Company does not believe that Old Pulitzer
realized any taxable gain in connection with the Spin-off, and
in January 2002, it contested the IRS proposed increase in
a formal written protest filed with the IRS Appeals Office. In a
recent letter addressed to the Companys representatives,
the IRS Appeals Officer indicated that he supports the position
asserted by the IRS and is inclined to sustain substantially the
entire amount of the IRS proposed increase in Old
Pulitzers taxable income. The Companys
representatives have responded to the IRS Appeals Officers
letter and are continuing their discussions with him regarding
the Companys position. While there can be no assurance
that the Company will completely prevail in its position, it
continues to believe that the IRS position is not
supported by the facts or applicable legal authority. The
Company intends to vigorously contest the IRS
determination and has not accrued any liability in connection

13



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##### Table of Contents



ITEM 3. LEGAL AND REGULATORY
PROCEEDINGS  Continued


with this matter. If the Company and the IRS are
unable to resolve their differences in the IRS Appeals Office,
the Company likely will pursue its case before the United States
Tax Court.

On August 30, 2002, the Company, on behalf
of Old Pulitzer, filed with the IRS amended federal corporate
income tax returns for the years ended December 1997 and 1998
and March 1999 in which refunds of tax in the aggregate amount
of approximately $8.1 million, plus interest, were claimed.
These refund claims were based on the Companys contention
that Old Pulitzer was entitled to deduct certain fees and
expenses which it had not previously deducted and which Old
Pulitzer had incurred in connection with its investigation of
several strategic alternatives and potential transactions prior
to its decision to proceed with the Broadcast Transaction. Under
the Merger Agreement, the Company is entitled to any amounts
recovered from the IRS as a result of these refund claims,
although there can be no assurance that the IRS will approve all
or any portion of these refund claims. Discussions between the
Companys representatives and the IRS regarding these
refund claims have only recently commenced, and no receivable
has been recognized in connection with these refund claims. Any
income tax refunds would be recorded as an adjustment to
additional paid-in-capital, and any related interest received
would be reflected as a component of net income in the period
recognized.

A group of independent carriers engaged in the
business of delivering the Post-Dispatchpursuant to a
home delivery contract has filed suit against Pulitzer Inc., PD
LLC and Suburban Journals LLC (collectively the
Defendants) in the Missouri Circuit Court,
Twenty-Second Judicial Circuit (City of St. Louis).
Plaintiffs Third Amended Petition sets forth three claims
for relief. First, the petition alleges that the decision to
purchase the Suburban Journals with their separate delivery
system and separate carriers breached the plaintiffs
exclusive territorial delivery rights under the plaintiffs
contract. The petition further alleges that PD LLC and
Suburban Journals LLC are alter egos of Pulitzer Inc. and that
Pulitzer Inc. on its own and through its control, ownership and
authority over its alter egos violated the exclusive territory
of the plaintiffs. Finally, the petition alleges that the
purchase of the Suburban Journals and certain other conduct
tortiously interfered with the plaintiffs contractual
relationship. The plaintiffs seek unspecified damages in excess
of $25,000, plus punitive damages in an unspecified amount for
the alleged tortious interference. The Defendants have denied
any liability, are vigorously defending the suit and believe
that they have meritorious defenses and, therefore, the Company
has not accrued a liability in connection with this lawsuit.
While the ultimate outcome of litigation cannot be predicted
with certainty, management, based on its understanding of the
facts, does not believe the ultimate resolution of this
litigation will have a materially adverse effect on the
Companys consolidated financial position. However,
depending upon the period of resolution, such effect could be
material to the consolidated financial results of an individual
period.

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, complaints alleging discrimination, and
complaints related to product distribution practices. While the
ultimate outcome of litigation cannot be predicted with
certainty, management, based on its understanding of the facts,
does not believe the ultimate resolution of these matters will
have a materially adverse effect on the Companys
consolidated financial position or annual results of operations.
However, depending upon the period of resolution, such effect
could be material to the consolidated financial results of an
individual period.




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

Not Applicable.

14



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##### Table of Contents






PART II






|        |                                                                              
|------- | -----------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS COMMON EQUITY
    AND RELATED STOCKHOLDER MATTERS

The shares of Pulitzer Inc.s common stock
are listed on The New York Stock Exchange, Inc. and trade under
the symbol PTZ. The shares of Pulitzer Inc.s
Class B common stock do not trade in a public market.

At February 27, 2004, there were
approximately 356 record holders of Pulitzer Inc.s common
stock and 26 record holders of its Class B common stock.

As of December 31, 2003, holders of
outstanding shares of Pulitzer Inc.s Class B common
stock represented 92.4 percent of the combined voting power
of Pulitzer Inc., with holders of Pulitzer Inc.s common
stock representing the balance of the voting power. As of
December 31, 2003, holders of approximately
95.5 percent of the outstanding shares of Pulitzer
Inc.s Class B common stock representing
88.3 percent of the combined voting power have deposited
their shares in a voting trust (the Voting Trust).
Each share of the Pulitzer Inc.s Class B common stock
is convertible into one share of Pulitzer Inc.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.

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

|               |  |      |       |     |  |             |       |  |  |   |      | 
|-------------- |  | ---- | ----- | --- |  | ----------- | ----- |  |  | - | ---- | 
|               |  | High |       | Low |  | Dividend(1)
|               |  |      |       |     |  |            
|2003           |  |      |       |     |  |             |       |  |  |   |      | 
|First Quarter  |  | $    | 49.25 |     |  | $           | 40.75 |  |  | $ | 0.18 | 
|Second Quarter |  |      | 52.00 |     |  |             | 42.30 |  |  |   | 0.18 | 
|Third Quarter  |  |      | 54.19 |     |  |             | 46.73 |  |  |   | 0.18 | 
|Fourth Quarter |  |      | 54.65 |     |  |             | 48.90 |  |  |   | 0.18 | 

|               |  |      |       |     |  |             |       |  |  |   |       | 
|-------------- |  | ---- | ----- | --- |  | ----------- | ----- |  |  | - | ----- | 
|               |  | High |       | Low |  | Dividend(2)
|               |  |      |       |     |  |            
|2002           |  |      |       |     |  |             |       |  |  |   |       | 
|First Quarter  |  | $    | 55.18 |     |  | $           | 49.29 |  |  | $ | 0.175 | 
|Second Quarter |  |      | 55.80 |     |  |             | 45.08 |  |  |   | 0.175 | 
|Third Quarter  |  |      | 51.50 |     |  |             | 41.50 |  |  |   | 0.175 | 
|Fourth Quarter |  |      | 49.50 |     |  |             | 40.12 |  |  |   | 0.175 | 



---



|    |                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------
|(1) | In 2003 the Company declared and paid cash
    dividends of $0.72 per share of common stock and Class B
    common stock.
|   
|(2) | In 2002 the Company declared and paid cash
    dividends of $0.70 per share of common stock and Class B
    common stock.

On January 5, 2004, the Board of Directors
of the Company announced for the first quarter of 2004 a
5.6 percent increase in the quarterly dividend on Pulitzer
Inc.s common stock and Class B common stock to $0.19
per share from $0.18 per share. The cash dividend was paid on
February 2, 2004. 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 the
$306.0 million borrowing by PD LLC from a group of
investors led by Prudential Capital Group (the
Loan), any credit agreement or other agreement to
which the Company may become a party in the future. See
Item 7. Managements Discussion and Analysis of
Financial Condition and Results of Operations 
Liquidity and Capital Resources.

15



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##### Table of Contents






ITEM 6. SELECTED FINANCIAL
DATA

|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |         |         | 
|----------------------------------------------------------------------- | --------------------------------------------- | ---------------------------------------- | ------- | ------- | ------- | ------- | ------- | ---------- | ------- | ---------- | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                        |                                               |                                         
|                                                                        |                                               | Years Ended December 31,                
|                                                                        |                                               |                                         
|                                                                        |                                               | 2003                                     |         | 2002(1) |         | 2001(1) |         | 2000(1)(2) |         | 1999(1)(3)
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |           
|                                                                        |                                               |                                         
|                                                                        |                                               | (In thousands, except per share amounts)
|OPERATING RESULTS                                                       |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Operating Revenues  net                                                |                                               | $                                        | 422,664 |         |         | $       | 415,960 |            |         | $          | 413,506 |         |         | $ | 397,159 |         |         | $ | 324,256 |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Operating Expenses:                                                     |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        | Payroll and other personnel expense           |                                          |         | 181,422 |         |         |         | 180,027    |         |            |         | 174,626 |         |   |         | 157,224 |         |   |         | 129,047 |        
|                                                                        | Newsprint expense                             |                                          |         | 43,368  |         |         |         | 41,055     |         |            |         | 56,372  |         |   |         | 55,539  |         |   |         | 44,403  |        
|                                                                        | Stock option cash-outs and bonuses(3)         |                                          |         | 0       |         |         |         | 0          |         |            |         | 0       |         |   |         | 0       |         |   |         | 26,685  |        
|                                                                        | St. Louis Agency adjustment(4)                |                                          |         | 0       |         |         |         | 0          |         |            |         | 0       |         |   |         | 9,363   |         |   |         | 25,029  |        
|                                                                        | Depreciation                                  |                                          |         | 14,613  |         |         |         | 14,286     |         |            |         | 14,330  |         |   |         | 12,916  |         |   |         | 9,298   |        
|                                                                        | Amortization                                  |                                          |         | 4,522   |         |         |         | 4,433      |         |            |         | 26,178  |         |   |         | 19,069  |         |   |         | 6,164   |        
|                                                                        | Other expenses                                |                                          |         | 107,610 |         |         |         | 111,018    |         |            |         | 116,113 |         |   |         | 105,145 |         |   |         | 87,502  |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        |                                               | Total operating expenses                 |         |         | 351,535 |         |         |            | 350,819 |            |         |         | 387,619 |   |         |         | 359,256 |   |         |         | 328,128 | 
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Equity in earnings of Tucson newspaper partnership                      |                                               |                                          | 16,064  |         |         |         | 17,744  |            |         |            | 17,504  |         |         |   | 22,487  |         |         |   | 21,965  |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Operating income                                                        |                                               |                                          | 87,193  |         |         |         | 82,885  |            |         |            | 43,391  |         |         |   | 60,390  |         |         |   | 18,093  |        
|Interest income                                                         |                                               |                                          | 3,687   |         |         |         | 4,235   |            |         |            | 7,573   |         |         |   | 19,017  |         |         |   | 25,372  |        
|Interest expense                                                        |                                               |                                          | (20,395 | )       |         |         | (20,593 | )          |         |            | (24,609 | )       |         |   | (16,537 | )       |         |   | 0       |        
|Net gain (loss) on marketable securities                                |                                               |                                          | 502     |         |         |         | 1,100   |            |         |            | 602     |         |         |   | (3,918  | )       |         |   | (2,191  | )      
|Net gain (loss) on investments                                          |                                               |                                          | (1,790  | )       |         |         | (9,091  | )          |         |            | (5,607  | )       |         |   | (7      | )       |         |   | 2,080   |        
|Net other income (expense)                                              |                                               |                                          | 74      |         |         |         | 132     |            |         |            | (204    | )       |         |   | (109    | )       |         |   | (189    | )      
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Income from continuing operations before
    provision for income taxes |                                               |                                          | 69,271  |         |         |         | 58,668  |            |         |            | 21,146  |         |         |   | 58,836  |         |         |   | 43,165  |        
|Provision for income taxes                                              |                                               |                                          | 25,306  |         |         |         | 22,371  |            |         |            | 8,021   |         |         |   | 23,389  |         |         |   | 18,061  |        
|Minority interest in net earnings of subsidiary                         |                                               |                                          | 1,788   |         |         |         | 1,598   |            |         |            | 839     |         |         |   | 849     |         |         |   |         |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Income from continuing operations                                       |                                               |                                          | 42,177  |         |         |         | 34,699  |            |         |            | 12,286  |         |         |   | 34,598  |         |         |   | 25,104  |        
|Discontinued operations, net of tax                                     |                                               |                                          | 0       |         |         |         | 0       |            |         |            | (1,624  | )       |         |   | 304     |         |         |   | (23,596 | )      
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Net Income                                                              |                                               | $                                        | 42,177  |         |         | $       | 34,699  |            |         | $          | 10,662  |         |         | $ | 34,902  |         |         | $ | 1,508   |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Basic Earnings/(Loss) Per Share of Stock:                               |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        | Income from continuing operations             |                                          | $       | 1.97    |         |         | $       | 1.63       |         |            | $       | 0.58    |         |   | $       | 1.59    |         |   | $       | 1.11    |        
|                                                                        | Discontinued operations                       |                                          |         | 0.00    |         |         |         | 0.00       |         |            |         | (0.08   | )       |   |         | 0.01    |         |   |         | (1.04   | )      
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        | Basic earnings per share                      |                                          | $       | 1.97    |         |         | $       | 1.63       |         |            | $       | 0.50    |         |   | $       | 1.60    |         |   | $       | 0.07    |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        | Weighted average number of shares outstanding |                                          |         | 21,404  |         |         |         | 21,279     |         |            |         | 21,192  |         |   |         | 21,757  |         |   |         | 22,578  |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Diluted Earnings/(Loss) Per Share of Stock:                             |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        | Income from continuing operations             |                                          | $       | 1.95    |         |         | $       | 1.62       |         |            | $       | 0.58    |         |   | $       | 1.59    |         |   | $       | 1.11    |        
|                                                                        | Discontinued operations                       |                                          |         | 0.00    |         |         |         | 0.00       |         |            |         | (0.08   | )       |   |         | 0.01    |         |   |         | (1.04   | )      
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        | Diluted earnings per share                    |                                          | $       | 1.95    |         |         | $       | 1.62       |         |            | $       | 0.50    |         |   | $       | 1.60    |         |   | $       | 0.07    |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|                                                                        | Weighted average number of shares outstanding |                                          |         | 21,627  |         |         |         | 21,447     |         |            |         | 21,364  |         |   |         | 21,786  |         |   |         | 22,601  |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        
|Dividends per share of common and Class B
    common stock              |                                               | $                                        | 0.72    |         |         | $       | 0.70    |            |         | $          | 0.68    |         |         | $ | 0.64    |         |         | $ | 0.45    |        
|                                                                        |                                               |                                          |         |         |         |         |         |            |         |            |         |         |         |   |         |         |         |   |         |        

16



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##### Table of Contents



ITEM 6. SELECTED FINANCIAL
DATA  Continued


|                               |  |                          |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |         | 
|------------------------------ |  | ------------------------ | --------- | ---- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- |  |  | - | ------- | 
|                               |  |                         
|                               |  | Years Ended December 31,
|                               |  |                         
|                               |  | 2003                     |           | 2002 |  | 2001 |           | 2000 |  | 1999
|                               |  |                          |           |      |  |      |           |      |  |     
|OTHER DATA                     |  |                          |           |      |  |      |           |      |  |      |           |  |  |   |           |  |  |   |         | 
|Cash and marketable securities |  | $                        | 176,196   |      |  | $    | 194,394   |      |  | $    | 193,739   |  |  | $ | 194,313   |  |  | $ | 557,891 | 
|Working capital                |  |                          | 214,436   |      |  |      | 225,548   |      |  |      | 221,002   |  |  |   | 218,619   |  |  |   | 595,530 | 
|Total assets                   |  |                          | 1,309,673 |      |  |      | 1,287,246 |      |  |      | 1,288,763 |  |  |   | 1,282,873 |  |  |   | 979,625 | 
|Long-term debt                 |  |                          | 306,000   |      |  |      | 306,000   |      |  |      | 306,000   |  |  |   | 306,000   |  |  |   | 0       | 
|Stockholders equity           |  |                          | 851,444   |      |  |      | 815,218   |      |  |      | 797,217   |  |  |   | 799,701   |  |  |   | 813,451 | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Certain reclassifications have been made to the
    prior years consolidated financial statements to conform
    to the 2003 presentation.                                                                                                                                                                                                                                                                                                    
|   
|(2) | The year ended December 31, 2000, includes
    an extra week of operations resulting from a 53-week year. All
    other years presented include 52 weeks of operations.                                                                                                                                                                                                                                                                        
|   
|(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. 1999 discontinued operations,
    net of tax, include approximately $25.3 million of stock
    option cash-outs and bonus payments to employees of the
    Broadcasting Business in connection with the Merger on
    March 18, 1999.
|   
|(4) | See Item 1. Business 
    Agency Agreements and Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations   PD LLC Operating Agreement
    for additional information on the St. Louis Agency adjustment.                                                                                                                                                                                    






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|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 other
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 (including newsprint
suppliers), outcome of labor negotiations, capital or similar
requirements, and general economic conditions, any of which may
impact advertising and circulation revenues and various types of
expenses, 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. Although the Company
believes that the expectations reflected in
forward-looking statements are reasonable, it cannot
guarantee future results, levels of activity, performance or
achievements. Accordingly, investors are cautioned not to place
undue reliance on any such forward-looking
statements, and the Company disclaims any obligation to
update the information contained herein or to publicly announce
the result of any revisions to such forward-looking
statements to reflect future events or
developments.

General

Pulitzer Inc. (together with its subsidiaries and
affiliated entities, the Company) is engaged in
newspaper publishing and related new-media businesses,
operating, through its subsidiaries, the newspaper properties
owned by Pulitzer Publishing Company (Old Pulitzer)
prior to the Spin-off (as defined below). Prior to the Spin-off,
Pulitzer Inc. was a wholly owned subsidiary of Old Pulitzer.

Pulitzer Inc. was capitalized on March 18,
1999, with approximately $550 million in cash and all the other
assets (other than broadcast assets) of Pulitzer Publishing
Company (Old Pulitzer) as a result of the Spin-off
(as defined below) and, through its subsidiaries, is now
operating the principal newspaper publishing and related
new-media businesses formerly operated by Old Pulitzer
(including subsidiaries) as well as certain other newspapers
acquired since the Broadcast Transaction (as defined below).
Pulitzer Inc. was organized as

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

a corporation in 1998 and, prior to the Spin-off,
was a wholly owned subsidiary of Old Pulitzer. Prior to the
Broadcast Transaction, 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, Pulitzer Inc. 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 net liability balance of the Broadcasting
Business as of March 18, 1999, including
$700.0 million of broadcast debt, was contributed to
Additional Paid-in Capital of Pulitzer Inc. at the
time of the Merger.

The Companys revenues are derived primarily
from advertising and circulation, which have respectively
averaged approximately 78.2 percent and 20.1 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 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 changes 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.

Acquisition and Disposition of
Properties

In 2003 the Company acquired businesses,
principally those focused on distribution operations in
St. Louis, and weekly newspapers and niche publications
that complement the PNI Groups (as defined below) daily
newspaper operations in Provo, Utah; Napa, California; Coos Bay,
Oregon; and Rhinelander, Wisconsin; for an aggregate purchase
price of approximately $17.4 million. In 2002 the Company
acquired businesses, principally St. Louis newspaper
distribution businesses, for an aggregate purchase price of
approximately $9.1 million.

In 2001 the Company recorded a pre-tax loss of
$2.7 million related to the sale of its newspapers located
in Troy, Ohio and Petaluma, California, and the sale of its
St. Louis Internet Access Provider (ISP)
business (the Sale Transactions). These amounts are
included in 2001, 2000 and 1999 net income as a separate line,
Loss from Discontinued Operations, Net of Tax along
with the operating results of these newspaper and ISP businesses.

On January 31, 2001, the Company, through
Pulitzer Newspapers, Inc. and its wholly owned subsidiaries,
(collectively, the PNI Group), acquired, in an asset
purchase, The Lompoc Record, a daily newspaper

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

located in Lompoc, California. In addition,
during 2001, the PNI Group acquired several weekly newspapers
(in separate transactions) that complement its daily newspapers
in several markets. In 2001 the St. Louis Post-Dispatch
(PD LLC) also acquired several distribution
businesses in St. Louis. The cumulative cost of the 2001
acquisitions was approximately $41.1 million.

Critical Accounting Policies

The process of preparing financial statements
requires management to make estimates and judgments that affect
the carrying values of the Companys consolidated assets
and liabilities as well as recognition of revenues and expenses.
These estimates and judgments are based on the Companys
historical experience, actuarial assumptions and understanding
of current facts and circumstances. Certain of the
Companys accounting policies are considered critical, as
these policies are important to the presentation of the
Companys consolidated financial statements and require
significant or complex judgment by management.

Management has identified the practices used to
determine the allowance for doubtful accounts associated with
trade accounts receivable, the liability for both unpaid and
unreported dental, medical and workers compensation
claims, the liability for pension and postretirement and
postemployment benefit obligations, and the accounting and
related impairment testing of Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets(SFAS No. 142), as
critical accounting policies involving the use of estimates and
judgments.

The Company evaluates its allowance for doubtful
trade accounts receivable based on customers credit
history, payment trends, current aging analysis and other
economic factors to the extent available. It is possible that
reported results could be different based upon the
customers ability and willingness to pay amounts billed.

The Company evaluates its liability for unpaid
and unreported dental, medical and workers compensation
claims based on historical payment trends and administration
costs present for the Company and also generally present in the
United States. The Company uses actuarial assumptions to
calculate estimated future claim costs based on historical
trends. Reported results could be different if historical trends
differ from actual payment results.

The Company evaluates its liability for pension
and postretirement and postemployment benefit plans based upon
estimates and actuarial assumptions of future plan service
costs, future interest costs on projected benefit obligations,
rates of compensation increases, employee turnover rates,
anticipated mortality rates, expected investment returns on plan
assets, asset allocation assumptions of plan assets, and other
factors. If management used different estimates and assumptions
regarding these plans, the funded status of the plans could vary
significantly and the Company could recognize different amounts
of expense from the amounts reported over future periods.

The Company has identified the accounting and
related impairment testing of SFAS No. 142 as a critical
accounting policy having a material impact on the Companys
financial presentation. SFAS No. 142, among other things,
eliminates the amortization of goodwill and certain identified
intangible assets. The Company tests intangible assets,
including goodwill, that are not subject to amortization for
impairment annually, or more frequently if events or changes in
circumstances indicate that the assets might be impaired, using
a two step impairment assessment. The first step of the
impairment test identifies potential impairment and compares the
fair value with their carrying amount, including goodwill. The
Company evaluates impairment at each of its St. Louis, PNI, and
Tucson reporting units. If the fair value exceeds the carrying
amount, goodwill is not considered impaired, and the second step
of the impairment test is not necessary. If the carrying amount
exceeds the fair value, the second step of the impairment test
shall be performed to measure the amount of impairment loss, if
any. In accordance with the provisions of SFAS No. 142, the
Company conducted the first step of impairment tests as of the
beginning of its 2002 fiscal year. The Company assessed the fair
value by considering each reporting units expected future
cash flows; recent purchase prices paid for entities within its

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

industry, and the Companys market
capitalization. The Companys discounted cash flow
evaluation utilizes a discount rate that corresponds to the
Companys weighted average cost of capital. Given
consideration of these factors, the Company concluded that the
fair value of each reporting unit exceeded the carrying amounts
of its net assets and, accordingly, no impairment loss was
recognized. Subsequent annual impairment tests indicate that the
fair value of the reporting units continues to exceed their
carrying amounts. Subsequent impairments, if any, would be
classified as operating expense.

If management used different estimates and
assumptions for future cash flows, weighted-average cost, tax
rates and other estimates and assumptions used in determining
the fair value of each of the Companys reporting units,
the results of the Companys impairment testing could vary
significantly from the results reported above.

2003 Compared with 2002

Executive Overview

Net income for the Company increased to
$42.2 million, or $1.95 per diluted share, in 2003,
compared to $34.7 million, or $1.62 per diluted share in
2002. The increase in 2003 net income principally resulted from
increased advertising revenue at the newspaper operations in St.
Louis and at the PNI Group, coupled with tight control over
operating expenses (mainly lower circulation distribution
expense, reduced spending on promotional activities, and lower
bad debt expense, resulting from better collection experience in
St. Louis). 2003 net income also benefited from the
Companys interest rate swap contracts as a result of
declining interest rates during the year, and lower effective
state income tax rates.

Advertising results were mixed during 2003.
Advertising revenues for the first three quarters of 2003 were
negatively affected by uncertainty over the economy and the war
in Iraq. Third quarter advertising results, compared to the
comparable 2002 period, were also affected by the presence in
2002 of more than $1.2 million in incremental revenue
related to casino and shopping mall grand openings. 2003
advertising revenue rebounded during the last quarter of 2003
due to increased spending by local retailers, the introduction
of several special sections and new advertising products in St.
Louis, and 2003 PNI Group acquisitions. For the year,
advertising revenue increased 2.4 percent compared to 2002.
As a result of the advertising revenue increase and tight
control over operating expense, operating income increased
5.2 percent to $87.2 million from $82.9 million
in 2002.

Operating Results

Operating revenue for 2003 was
$422.7 million, an increase of 1.6 percent compared to
$416.0 million in 2002. Significant revenue growth in the
retail, national, classified real estate and preprint
advertising categories was partially offset by decreased
employment and automotive classified revenue.

Retail advertising revenue increased
1.2 percent to $120.2 million in 2003 from
$118.7 million in the prior year. The increase was driven
by a 13.7 percent rise revenue from small to mid-size
advertisers in St. Louis and the PNI Groups
acquisitions in California, Oregon, Utah and Wisconsin. These
increases were partially offset by weakness in the department
store, furniture and home improvement categories. Preprint
revenue increased 13.1 percent to $63.2 million in
2003 from $55.9 million in 2002. The increase in preprint
revenue was due primarily to a restructuring of the total market
coverage (TMC) operations in St. Louis in May
2002 which resulted in increased preprint volume, and to price
increases implemented during 2003.

National advertising revenue increased
8.6 percent in 2003, to $29.0 million compared to
$26.7 million in 2002. The increase resulted, principally,
from increased revenue gains in the pharmaceutical,
telecommunication, and automotive categories.

Classified advertising revenue decreased
2.5 percent to $122.6 million from $125.8 million
in 2002. The decrease in classified revenue was principally
driven by continued weakness in help wanted advertising, which

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

decreased by 8.9 percent for the year, and a
sluggish automotive category. Demand for employment advertising
decreased due, in part, to the slow economy and employer
concerns over the Iraqi war (the 2003 average
U.S. unemployment rate increased to 6.0 percent
compared to 5.8 percent in 2002 and 4.7 percent in
2001). Help wanted revenue declines were more pronounced in
St. Louis, where help wanted advertising revenue decreased
10.9 percent in 2003 compared to a decrease of
1.3 percent at PNI. Automotive advertising decreased by
6.3 percent in 2003 (the U.S. auto industry reported
car and truck sales of 16.7 million units in 2003, down
about 1 percent from 2002, and the lowest level of sales
since 1998). The decreases in help wanted and automotive
advertising revenue were partially offset by gains in real
estate revenue.

Real estate revenue increased 9.3 percent in
2003, with increases of 7.0 percent and 15.0 percent
in St. Louis and at the PNI Group, respectively. Real
estate gains resulted from record home sales caused, in part, by
historically low interest rates. The Companys classified
advertising revenue percentage change for 2003 versus 2002 are
summarized in the table below:

|                 |  |                                           |      |      |  |      |      |      |  |      |      |    |  |  |       |    |  |  |       |   
|---------------- |  | ----------------------------------------- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | -- |  |  | ----- | -- |  |  | ----- | --
|                 |  |                                           |      | 4th  |  | 3rd  |      | 2nd  |  | 1st 
|                 |  | Full Year                                 |      | Qtr. |  | Qtr. |      | Qtr. |  | Qtr.
|                 |  | 2003                                      |      | 2003 |  | 2003 |      | 2003 |  | 2003
|                 |  |                                           |      |      |  |      |      |      |  |     
|                 |  |                                          
|                 |  | Classified advertising revenue percentage
|                 |  | change from comparable prior year period 
|Automotive       |  |                                           | (6.3 | )%   |  |      | (1.0 | )%   |  |      | (5.8 | )% |  |  | (9.2  | )% |  |  | (9.2  | )%
|Help Wanted      |  |                                           | (8.9 | )%   |  |      | 1.6  | %    |  |      | (8.7 | )% |  |  | (13.9 | )% |  |  | (11.8 | )%
|Real Estate      |  |                                           | 9.3  | %    |  |      | 18.8 | %    |  |      | 8.6  | %  |  |  | 4.5   | %  |  |  | 6.5   | % 
|                 |  |                                           |      |      |  |      |      |      |  |      |      |    |  |  |       |    |  |  |       |   
|Total Classified |  |                                           | (2.5 | )%   |  |      | 5.6  | %    |  |      | (1.8 | )% |  |  | (7.2  | )% |  |  | (6.7  | )%
|                 |  |                                           |      |      |  |      |      |      |  |      |      |    |  |  |       |    |  |  |       |   

The following table presents the annual and
quarterly percentage fluctuations in total advertising revenue
in 2003 versus 2002:

|              |  |                                          |     |      |  |      |     |      |  |      |      |    |  |  |     |   |  |  |      |   
|------------- |  | ---------------------------------------- | --- | ---- |  | ---- | --- | ---- |  | ---- | ---- | -- |  |  | --- | - |  |  | ---- | --
|              |  |                                          |     | 4th  |  | 3rd  |     | 2nd  |  | 1st 
|              |  | Full Year                                |     | Qtr. |  | Qtr. |     | Qtr. |  | Qtr.
|              |  | 2003                                     |     | 2003 |  | 2003 |     | 2003 |  | 2003
|              |  |                                          |     |      |  |      |     |      |  |     
|              |  |                                         
|              |  | Reported advertising revenue percentage 
|              |  | change from comparable prior year period
|              |  | prior year                              
|St. Louis     |  |                                          | 2.4 | %    |  |      | 7.6 | %    |  |      | (1.4 | )% |  |  | 5.0 | % |  |  | (1.9 | )%
|PNI           |  |                                          | 2.4 | %    |  |      | 6.1 | %    |  |      | 3.6  | %  |  |  | 1.0 | % |  |  | (1.6 | )%
|Pulitzer Inc. |  |                                          | 2.4 | %    |  |      | 7.2 | %    |  |      | 0.0  | %  |  |  | 3.9 | % |  |  | (1.8 | )%

Circulation revenues decreased $0.1 million,
or 0.1 percent, in 2003. Other publishing revenues
decreased $1.1 million, or 13.9 percent, in 2003 due
principally to decreased commercial printing revenue.

Operating expense increased 0.2 percent in
2003 to $351.5 million compared to $350.8 million in
2002. Labor and employee benefits costs increased
0.8 percent, reflecting higher pension expense,
post(retirement healthcare benefit expense, and higher employee
healthcare costs. These increases were partially offset by a
2.2 percent reduction in full(time equivalent employees
(FTEs) related to improved distribution efficiencies
in St. Louis, the integration of STLtoday.com operations into
the Post-Dispatchduring the second quarter of 2002, and
operating efficiencies at the PNI Group resulting from the
combination of certain weekly and daily newspaper operations.

Newsprint expense increased 5.6 percent in
2003 to $43.4 million from $41.1 million in 2002,
resulting, principally, from a 3.5 percent increase in
newsprint prices and higher newsprint consumption associated
with the PNI Groups 2003 acquisitions and the redesign and
expansion of the editorial content of the Suburban Journals in
St. Louis.

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

Depreciation and amortization expense increased
2.2 percent to $19.1 million in 2003 compared to
$18.7 million in 2002. The increase is principally due to
increased depreciation expense associated with the
Companys new St. Louis production facility, which was
placed in service in late 2002.

Other operating expense decreased
3.1 percent to $107.6 million from $111.0 million
in 2002. The decrease in other expense resulted from: (i) a
$1.8 million reduction in bad debt expense due,
principally, to improved collection efforts in St. Louis and the
absence, in 2003, of bad debt expense related to the acquisition
of St. Louis distribution businesses in 2002 and 2001;
(ii) decreased circulation distribution expense related to
improved home delivery distribution efficiencies in
St. Louis and the elimination of the Post-Dispatch
TMC product in May 2002; and (iii) reduced promotion and
marketing expense. These expense savings were partially offset
by increased premiums for property and liability insurance and
higher legal and professional fees.

Equity in earnings of Tucson newspaper
partnership (TNI) decreased 9.5 percent due,
principally, to increased employee benefit costs, primarily
pension and long-term disability expense, increased relocation
costs, higher executive separation costs, and increased
newsprint prices.

Non-Operating Items

Interest income for 2003 decreased
12.9 percent to $3.7 million from $4.2 million in
2002. The decrease primarily reflected lower average interest
rates on invested funds during the year.

The Company reported interest expense of
$20.4 million in 2003 compared to $20.6 million in
2002. The 2003 to 2002 decrease in interest expense reflects the
benefit from the Companys fixed-to-variable interest rate
swap contracts. These interest expense savings were partially
offset by the absence in 2003 of capitalized interest costs,
present in 2002, associated with the new St. Louis production
facility which was placed in service in late 2002.

During 2003, interest rates have been at
historically low rates. It is anticipated that, as the
U.S. economy improves, interest rates will increase,
reducing the benefits of the Companys fixed-to-variable
interest rate swaps, and resulting in higher interest expense.

The Company reported a gain on marketable
securities of $0.5 million in 2003 compared with a 2002
gain of $1.1 million. 2003 and 2002 results included a net
loss on investments of $1.8 million and $9.1 million,
respectively, to adjust the carrying value of certain
non-operating investments.

The effective income tax rate for 2003 declined
to 36.5 percent from 38.1 percent for 2002 primarily
because of a lower provision for state income taxes reflecting
the benefits of the Companys tax planning.

Net Income

For 2003 the Company reported net income of
$42.2 million, or $1.95 per diluted share, compared to
$34.7 million, or $1.62 per diluted share, in 2002.
The increase in 2003 net income reflected higher operating
revenues, primarily reflecting increased preprint and national
advertising, tight cost control over operating expenses, and
lower valuation adjustments to the Companys portfolio of
non-operating investments compared to the prior year.

Fully diluted weighted average shares of stock
outstanding increased to 21.6 million in 2003 from
21.4 million in 2002. The increase was primarily caused by
an increase in the price of Pulitzer Inc.s stock over the
course of the year which resulted in an increase in the number
of common stock equivalents, the exercise of employee stock
options and the issuance of shares under the employee stock
purchase plans. A 1.0 percent change in fully diluted
shares of stock outstanding results in an approximate $0.02
change in fully diluted earnings per share.

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

2002 Compared with 2001

Executive Summary

Net income in 2002 was $34.7 million, or
$1.62 per diluted share, compared to $10.7 million, or
$0.50 per diluted share in 2001. Net income in 2001 included
results from newspapers in Troy, Ohio and Petaluma, California,
and the ISP business, all of which were sold by the Company in
fiscal 2001. Excluding the results of businesses sold in 2001
and the related gain or loss from their sale, 2001 income from
continuing operations was $12.3 million, or $0.58 per
diluted share.

Operating income in 2002 increased to
$82.9 million from $43.4 million in 2001. The increase
in operating income was due principally to: (i) the
elimination of $21.6 million of amortization expense of
certain intangible assets in 2002 related to the adoption of
SFAS No. 142; (ii) savings of $14.2 million from
lower newsprint costs, principally resulting from a
21.9 percent reduction in the average newsprint price per
metric tonne of newsprint; and (iii) increased retail and
national advertising revenue, particularly preprint revenue. The
expense savings and advertising revenue increases were partially
offset by increased labor costs, principally related to higher
employee benefit costs and increased incentive compensation
expense.

Operating Results

Operating revenues from continuing operations for
the year ended December 31, 2002 increased 0.6 percent, to
$416.0 million from $413.5 million in 2001.

Advertising revenues increased $2.6 million,
or 0.8 percent, in 2002. The increase reflected a national
advertising revenue increase of 2.5 percent, coupled with
strong growth in preprint revenue, which increased
17.3 percent over the prior year. These increases were
partially offset by a 4.8 percent decline in classified
revenue, principally due to continued weakness in help wanted
advertising.

In 2002 help wanted revenue decreased
21.5 percent versus 2001 results. The declines were most
pronounced at the Companys combined St. Louis operations,
where help wanted revenue decreased 23.9 percent. At the
Companys PNI newspapers, 2002 help wanted revenue
decreased 10.8 percent compared to 2001. The Company
believes that the decline in help wanted revenue reflected a
slowing economy, which saw overall U.S. civilian
unemployment rates increase from 4.2 percent at the start
of 2001 to 6.0 percent at the close of 2002. Revenue in
each of the remaining classified categories grew in 2002, with
revenue in the automotive, real estate, and other classified
categories increasing 5.3 percent, 1.9 percent and
8.3 percent, respectively.

Circulation revenues decreased $0.4 million,
or 0.6 percent, in 2002. Other publishing revenues
increased $0.3 million, or 4.5 percent, in 2002.

Operating Expense

Operating expenses reported for 2002 decreased
9.5 percent to $350.8 million from $387.6 million
in 2001. Operating expenses were lower for two principal
reasons: the absence of $21.6 million in amortization
expense due to the elimination of amortization of certain
intangible assets in 2002 in accord with SFAS No. 142
adopted as of July 1, 2002, and lower newsprint pricing and
volume, which resulted in newsprint expense savings of
$15.3 million, or 27.2 percent, largely due to a
21.9 percent reduction in the average price per metric
tonne of newsprint.

In addition, other operating expenses, which
consist of distribution, employment termination inducements,
legal and professional fees, news and editorial features and
wire services, office and production supplies, promotion and
marketing, provisions for uncollectible accounts receivable,
repairs and maintenance, telecommunication and utility, and
sundry expenses, decreased $5.1 million principally due to
reductions in the provision for uncollectible accounts
receivable, lower inducement costs (which declined by
$2.0 million compared to the prior year) and decreased
promotion spending.

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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

The expense savings were partially offset by
increased labor costs, which increased $5.6 million, or
3.2 percent, principally related to higher employee benefit
costs and increased incentive compensation expense.

Total FTEs decreased by 68 or 1.7 percent.
The largest decrease was at the Companys St. Louis
operations where FTEs decreased by 45, or 2.3 percent.

Equity in the earnings of the Tucson Agency for
2002 increased 1.4 percent to $17.7 million from
$17.5 million the in prior year. The increase primarily
reflected expense savings related to lower newsprint costs,
partially offset by weak demand in retail and classified
advertising.

Operating Income

For 2002 the Company reported operating income
from continuing operations of $82.9 million compared to
$43.4 million in 2001. The increase in operating income was
due principally to the elimination of $21.6 million of
amortization expense of certain intangible assets in 2002
related to the adoption of SFAS No. 142, savings of
$15.3 million from lower newsprint costs, principally
resulting from a 21.9 percent reduction in the average
price per metric tonne of newsprint, and increased retail and
national advertising revenue, particularly preprint revenue. The
expense savings and advertising revenue increases were partially
offset by increased labor costs, principally related to higher
employee benefit costs, increased incentive compensation
expense, and declines in classified advertising revenue.

Non-Operating Items

Interest income for 2002 decreased to
$4.2 million from $7.6 million in 2001, primarily
reflecting lower average interest rates on invested funds during
the year.

The Company reported interest expense of
$20.6 million in 2002 compared to $24.6 million in
2001, reflecting the benefit from fixed-to-variable interest
rate swaps and the capitalization of interest costs associated
with the newly constructed St. Louis production facility.

The Company reported a gain on marketable
securities of $1.1 million in 2002 compared with a 2001
gain of $0.6 million. 2002 and 2001 results included a net
loss on investments of $9.1 million and $5.6 million,
respectively, to adjust the carrying value of certain
non-operating investments.

The effective income tax rate from continuing
operations for 2002 was 38.1 percent, compared to
37.9 percent in 2001.

Income from Continuing
Operations

For 2002 the Company reported net income from
continuing operations of $34.7 million, or $1.62 per
diluted share, compared to $12.3 million, or $0.58 per
diluted share, in 2001. The increase in 2002 income from
continuing operations primarily reflected decreased operating
expenses resulting from the absence of $21.6 million of
amortization expense of certain intangible assets in 2002, a
$15.3 million reduction in newsprint costs due principally
to a 21.9 percent reduction in the average price per metric
tonne of newsprint, lower interest expense reflecting the
benefit of interest rate swap transactions, and increased retail
and national advertising revenue, particularly preprint revenue.
The expense savings and revenue increases were partially offset
by higher labor costs and continued weakness in help wanted
classified revenue.

Fully diluted weighted average shares of stock
outstanding remained relatively unchanged at 21.4 million
in 2002 compared to 2001. An increase in shares issued due to
the exercise of employee stock options and the purchase of
shares under the employee stock purchase plans was offset by a
decrease in the number of common stock equivalents associated
with a decline in the weighted average per share market stock
price of the Companys common stock in 2002 compared to
2001. A 1.0 percent change in fully diluted shares of stock
results in an approximate $0.02 change in fully diluted earnings
per share.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

Discontinued Operations

In 2002 the Company reported no gain or loss from
discontinued operations compared to a loss of $1.6 million,
or $0.08 per diluted share, in 2001. Discontinued operations in
2001 included the operating results and gain or loss on the sale
of the Companys Troy, Ohio, and Petaluma, California
newspapers, and St. Louis ISP business.

Liquidity and Capital Resources

As of December 31, 2003, the Company had a
balance of unrestricted cash and marketable securities of
$176.2 million compared with $194.4 million as of
December 31, 2002.

At both December 31, 2003, and
December 31, 2002, the Company had $306.0 million of
outstanding debt pursuant to a loan agreement between PD LLC and
a group of institutional lenders led by Prudential Capital Group
(the Loan). 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 agreements with respect to the Loan (the
Loan Agreements) 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 Agreements and the PD LLC Operating Agreement (the
Operating Agreement) require that PD LLC maintain a
minimum reserve balance consisting of cash and investments in
U.S. government securities, totaling approximately
$54.8 million as of December 31, 2003. The Loan
Agreements and the Operating Agreement provide for a
$3.75 million quarterly increase in the minimum reserve
balance through May 1, 2010, when the amount will total
$150.0 million. There is no requirement for the Company to
maintain the reserve balance subsequent to May 1, 2010.

The Company spent approximately
$12.5 million on land, buildings and equipment in 2003. As
of December 31, 2003, the Company had remaining capital
commitments for buildings and equipment replacements of
approximately $3.3 million. In addition, as of December 31,
2003, the Company had a capital contribution commitment of up to
$7.1 million related to a limited partnership investment.

In order to build a stronger, more direct
relationship with the readers of the Post-Dispatch and
increase circulation, PD LLC has purchased a number of
distribution businesses from independent carriers and dealers
over the past four years, and it may continue to purchase
additional distribution businesses from time to time in the
future. As of December 31, 2003, PD LLC owned circulation
routes covering approximately 75 percent of the
Post-Dispatchs home delivery and single copy
distribution in the newspapers designated market.

The Companys Board of Directors previously
authorized the repurchase of up to $100.0 million of
Pulitzer Inc.s outstanding capital stock. The
Companys repurchase program provides for the purchase of
both common and Class B common shares in either the open market
or in privately negotiated transactions. As of December 31,
2003, the Company had repurchased under this authority 1,000,000
shares of Class B common stock and 532,857 shares of common
stock for a combined purchase price of $62.2 million,
leaving $37.8 million in remaining share repurchase
authority.

The Company generally expects to generate
sufficient cash from operations to cover capital expenditures,
working capital requirements, stock repurchases, and dividend
payments. Operating cash flows are dependent upon, among other
things, the continued acceptance of newspaper advertising at
current or increased levels and the availability and pricing of
raw materials, principally newsprint.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

Contractual Obligations

The Companys significant contractual
obligations are set forth below.

Table of Contractual
Obligations

|                                               |  |                 |       |          |  |          |      |        |  |      |      |  |  |   |      |  |  |   |       | 
|---------------------------------------------- |  | --------------- | ----- | -------- |  | -------- | ---- | ------ |  | ---- | ---- |  |  | - | ---- |  |  | - | ----- | 
|                                               |  |                
|                                               |  | Payments due in
|                                               |  |                
|                                               |  |                 |       | 2005 and |  | 2007 and |      | Beyond
|                                               |  | Total           |       | 2004     |  | 2006     |      | 2008   |  | 2008
|                                               |  |                 |       |          |  |          |      |        |  |     
|                                               |  |                
|                                               |  | (In millions)  
|Contractual Obligations                        |  |                 |       |          |  |          |      |        |  |      |      |  |  |   |      |  |  |   |       | 
|Long-term debt obligations                     |  | $               | 306.0 |          |  | $        | 0.0  |        |  | $    | 0.0  |  |  | $ | 0.0  |  |  | $ | 306.0 | 
|Interest payments(1)                           |  |                 | 129.3 |          |  |          | 24.6 |        |  |      | 49.3 |  |  |   | 49.3 |  |  |   | 6.1   | 
|Consulting and executive employment agreements |  |                 | 4.0   |          |  |          | 3.0  |        |  |      | 1.0  |  |  |   | 0.0  |  |  |   | 0.0   | 
|Operating lease obligations                    |  |                 | 7.3   |          |  |          | 1.4  |        |  |      | 3.2  |  |  |   | 0.6  |  |  |   | 2.1   | 
|Purchase obligations for capital goods         |  |                 | 3.1   |          |  |          | 3.1  |        |  |      | 0.0  |  |  |   | 0.0  |  |  |   | 0.0   | 
|                                               |  |                 |       |          |  |          |      |        |  |      |      |  |  |   |      |  |  |   |       | 
|Total(2)                                       |  | $               | 449.7 |          |  | $        | 32.1 |        |  | $    | 53.5 |  |  | $ | 49.9 |  |  | $ | 314.2 | 
|                                               |  |                 |       |          |  |          |      |        |  |      |      |  |  |   |      |  |  |   |       | 



---



|    |                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------
|(1) | Represents interest payments on the
    Companys long-term debt obligation absent any impact of
    interest rate swaps.
|   
|(2) | Totals do not include:                                                                                                   



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i) Future cash requirements for pension,
    post-retirement and post-employment obligations. The period in
    which these obligations will be settled in cash is not readily
    determinable and are subject to numerous future events and
    assumptions. The Companys estimate of cash requirements
    for these obligations in 2004 is approximately $7.9 million.                                                                                                                                
|
| | (ii) At December 31, 2003, other
    long-term liabilities consisted, principally, of deferred income
    taxes and deferred compensation. The Company does not expect
    deferred tax reversals to significantly impact expected tax
    payments in 2004. Deferred compensation payments are dependent
    on the timing of employee withdrawals. The deferred compensation
    liability is fully funded by an asset presented as
    Other  non-current in the Companys financial
    statements.    
|
| | (iii) At December 31, 2003, the Company
    had an unfunded capital contribution commitment related to a
    limited partnership in which it is an investor of up to
    $7.1 million. The limited liability partnership (the
    Partnership) controls the timing of partner
    contributions, which it uses to make investments. Accordingly,
    the Company does not know when capital contributions, if any,
    will be required. The capital contribution commitment expires on
    June 10, 2010.
|
| | (iv) The Companys obligations with
    respect to the PD LLC Operating Agreement. See  PD
    LLC Operating Agreement.                                                                                                                                                                                                                                                                                                                                                                                    

Cash Flows  2003 Compared to
2002

Continuing Operations

Cash from operations is the Companys
primary source of liquidity. Cash provided from operating
activities for 2003 was $80.7 million compared to $98.2
million in 2002. The decrease was due, principally, to the
timing of income tax payments and the payment of a security
deposit related to an interest rate swap contract entered into
in 2003 (in contrast, in 2002 the Company received the repayment
of a swap-related security deposit when it terminated prior swap
contracts). These uses of cash were partially offset by
increased operating income in 2003 compared to 2002 and
increases in trade accounts payable and accrued expenses.

Cash required for investing activities during
2003 was $126.7 million compared to $200.4 million in
2002. The decreased use of cash was due to the Companys
expenditure of $37.1 million, net, for the purchase of

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

marketable securities in 2003 compared to the net
purchase of $111.9 of marketable securities in 2002. In
addition, cash used for capital expenditures decreased by
$12.6 million in 2003 to $12.5 million due principally
to the completion of the Post-Dispatchs new St.
Louis production facility in 2002. These reductions in cash
flows from investing activities were partially offset by a $15.9
million increase (to $44.0 million) in cash used for the
discretionary funding of retirement benefits and an
$8.3 million increase in cash required for acquisitions.

Cash required for financing activities during
2003 was $7.9 million compared to $10.0 million in
2002. The reduction was principally due to increased proceeds
from the exercise of employee stock options.

Cash Flows  2002 Compared to
2001

Continuing Operations

Cash provided from operating activities for 2002
was $98.2 million compared to $66.0 million in 2001.
The increase was due, principally, to the timing of income tax
payments and refunds, and the return of the security deposits
related to terminated interest rate swap contracts. These
sources of cash were partially offset by increased trade
receivables and newsprint inventory balances, and reductions in
trade accounts payable and accrued expenses.

Cash required for investing activities during
2002 was $200.4 million compared to $51.2 million
generated in 2001. The increased use of cash was due to the
Companys expenditure of $111.9 million, net, for the
purchase of marketable securities in 2002. In 2001 the Company
generated $126.1 million, net, from the sale of marketable
securities. In addition, the Company made discretionary
contributions of $28.1 million to fund long-term retirement
obligations. Capital expenditures increased by
$11.3 million in 2002 to $25.1 million due, principally, to
increased expenditures related to the Post-Dispatchsexpansion of its St. Louis production facility. In addition,
the Company paid $9.7 million of acquisition payable costs
related to the 1996 purchase of Scripps League Newspapers, which
is now part of the PNI Group. These reductions in cash flows
from investing activities were partially offset by a
$32.0 million decrease in cash used for acquisitions and
reduced investments in limited partnerships in 2002 versus 2001.

Cash required for financing activities during
2002 was $10.0 million compared to $12.0 million in
2001. The reduction was principally due to increased proceeds
from the exercise of employee stock options.

Discontinued Operations

The Company reported no discontinued operations
in 2002. In 2001 cash from operating activities of discontinued
operations was $1.5 million, reflecting the net results of
the operations of the PNI Groups newspapers in Troy, Ohio
and Petaluma, California, and the ISP operations in St. Louis.

Cash from investing activities of discontinued
operations was $19.5 million for 2001, reflecting proceeds from
the sale of the of the PNI Groups newspapers in Troy,
Ohio, and Petaluma, California, and the Companys ISP
operations, less the cash used for capital expenditures for
these properties.

Merger Agreement
Indemnification

Pursuant to the Merger Agreement, Pulitzer Inc.
is obligated to indemnify Hearst-Argyle Television, Inc.
(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 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 Pulitzer Inc. or any
subsidiary of Pulitzer Inc.; (ii) liabilities and
obligations under any employee benefit plans not assumed by
Hearst-Argyle; and (iii) certain other matters as set forth
in the Merger Agreement.

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

Internal Revenue Services
Matters

In October 2001 the Internal Revenue Service
(IRS) formally proposed that Old Pulitzers
taxable income for the tax year ended March 18, 1999 be
increased by approximately $80.4 million based on the
assertion that Old Pulitzer was required to recognize a taxable
gain in that amount as a result of the Spin-off. Pulitzer Inc.
is obligated under the Merger Agreement to indemnify
Hearst-Argyle against any tax liability attributable to the
Spin-off and has the right to control any proceedings relating
to the determination of such tax liability. If the IRS were
completely successful in its proposed adjustment, the
Companys indemnification obligation would be approximately
$29.3 million, plus applicable interest. Any income tax
indemnification payment would be recorded as an adjustment to
additional paid-in capital, and any related interest expense
would be reflected as a component of net income in the period
recognized.

The Company does not believe that Old Pulitzer
realized any taxable gain in connection with the Spin-off, and
in January 2002, it contested the IRS proposed increase in
a formal written protest filed with the IRS Appeals Office. In a
recent letter addressed to the Companys representatives,
the IRS Appeals Officer indicated that he supports the position
asserted by the IRS and is inclined to sustain substantially the
entire amount of the IRS proposed increase in Old
Pulitzers taxable income. The Companys
representatives have responded to the IRS Appeals Officers
letter and are continuing their discussions regarding the
Companys position. While there can be no assurance that
the Company will completely prevail in its position, it
continues to believe that the IRS position is not
supported by the facts or applicable legal authority. The
Company intends to vigorously contest the IRS
determination and has not accrued any liability in connection
with this matter. If the Company and the IRS are unable to
resolve their differences in the IRS Appeals Office, the Company
likely will pursue its case before the United States Tax Court.

Potential Income Tax Refund

On August 30, 2002, the Company, on behalf
of Old Pulitzer, filed with the IRS amended federal corporate
income tax returns for the years ended December 1997 and 1998
and March 1999 in which refunds of tax in the aggregate amount
of approximately $8.1 million, plus interest, were claimed.
These refund claims were based on the Companys contention
that Old Pulitzer was entitled to deduct certain fees and
expenses which it had not previously deducted and which Old
Pulitzer had incurred in connection with its investigation of
several strategic alternatives and potential transactions prior
to its decision to proceed with the Broadcast Transaction. Under
the Merger Agreement, the Company is entitled to any amounts
recovered from the IRS as a result of these refund claims,
although there can be no assurance that the IRS will approve all
or any portion of these refund claims. Discussions between the
Companys representatives and the IRS regarding these
refund claims have only recently commenced, and no receivable
has been recognized in connection with these refund claims. Any
income tax refunds would be recorded as an adjustment to
additional paid-in-capital, and any related interest received
would be reflected as a component of net income in the period
recognized.

Provision for Income Taxes

The Company has incurred capital losses that
exceed capital gains available during the prescribed carry-back
periods by approximately $2.2 million. The Company expects to
generate capital gains of at least this amount during prescribed
carry-forward periods. Accordingly, the Company has recognized
the tax benefit of approximately $0.9 million associated
with these capital losses.

PD LLC Operating Agreement

On May 1, 2000, Pulitzer Inc. and The Herald
Company, Inc. (Herald) completed the transfer of
their respective interests in the assets and operations of the
Post-Dispatchand certain related businesses to a new
joint venture (the Venture), known as PD LLC.
Pulitzer Inc. is the managing member of PD LLC. Under the terms
of the operating agreement governing PD LLC (the Operating
Agreement), Pulitzer Inc. and another subsidiary hold a
95 percent interest in the results of operations of PD LLC
and Herald holds a

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|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

5 percent interest. Heralds
5 percent interest is reported as Minority Interest
in Net Earnings of Subsidiary in the consolidated
statements of income. Also, under the terms of the Operating
Agreement, Herald received on May 1, 2000 a cash distribution of
$306.0 million from PD LLC (the Initial
Distribution). This distribution was financed by a
$306.0 million borrowing by PD LLC (the Loan).
Pulitzer Inc.s entry into the Venture was 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 $15.0 million and the number of years since
May 1, 2000, but not in excess of $150.0 million (the
Reserve). PD LLC is not required to maintain the
Reserve after May 1, 2010. On May 1, 2010, Herald will
have a one-time right to require PD LLC to redeem Heralds
interest in PD LLC, together with Heralds interest, if
any, in another limited liability company in which Pulitzer Inc.
is the managing member and which is engaged in the business of
delivering publications and products in the greater St. Louis
metropolitan area (DS LLC). The May 1, 2010
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, and from DS LLC, being equal to
$275.0 million. 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 Pulitzer Inc.
and one of its subsidiaries and Herald to PD LLC and the
Operating Agreement or from the transactions effected in
connection with the organization of DS LLC, Herald generally
will be entitled to receive a special distribution from PD LLC
in an amount that corresponds, approximately, to the present
value of the after-tax benefit to the members of PD LLC of the
tax basis increase. Upon the termination of PD LLC and DS 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 interests in PD LLC and DS LLC, to
be paid in cash by Pulitzer Inc. That amount will be equal to
the amount of Heralds capital accounts, after allocating
the gain or loss that would result from a cash sale of PD LLC
and DS 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 and from DS LLC, including the Initial Distribution, the
special distribution described above, if any, and the
liquidation amount (based on certain assumptions), exceeds
$325.0 million.

The actual amount payable to Herald either on
May 1, 2010 or upon the termination of PD LLC and DS LLC on
May 1, 2015 will depend on such variables as future cash
flows, the amounts of any distributions to Herald prior to such
payment, PD LLC and DS LLCs rate of growth and market
valuations of newspaper properties. While the amount of such
payment cannot be predicted with certainty, Pulitzer Inc.
currently estimates (assuming a 5 percent annual growth
rate in Heralds capital accounts, no special distribution
as described above and consistent newspaper property valuation
multiples) that the amount of such payment would not exceed $100
million. Pulitzer Inc. further believes that it will be able to
finance such payment either from available cash reserves or with
the proceeds of a debt issuance.

New Accounting Pronouncements

In July 2001 FASB issued SFAS No. 141,
Business Combinations(SFAS No. 141), and
SFAS No. 142. SFAS No. 141 requires that all business
combinations be accounted for under the purchase method. The
statement further requires separate recognition of intangible
assets that meet certain criteria. The statement applies to all
business combinations initiated after June 30, 2001. The
adoption of SFAS No. 141 did not have a material impact on
the consolidated results of operations, financial position or
liquidity of the Company.

In 2002 the Company adopted SFAS No. 142,
which requires an intangible asset that is acquired to be
initially recognized and measured based on its fair value. The
statement also provides that goodwill and other

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|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

indefinite-lived intangible assets should not be
amortized, but shall be tested for impairment annually, or more
frequently if circumstances indicate potential impairment,
through a comparison of fair value to their carrying amount.

SFAS No. 142, among other things, eliminates
the amortization of goodwill and certain identified intangible
assets. The Company tests intangible assets, including goodwill,
that are not subject to amortization for impairment annually, or
more frequently if events or changes in circumstances indicate
that the assets might be impaired, using a two step impairment
assessment. The first step of the impairment test identifies
potential impairment and compares the fair value with their
carrying amount, including goodwill. The Company evaluates
impairment at each of its St. Louis, PNI, and Tucson reporting
units. If the fair value exceeds the carrying amount, goodwill
is not considered impaired, and the second step of the
impairment test is not necessary. If the carrying amount exceeds
the fair value, the second step of the impairment test shall be
performed to measure the amount of impairment loss, if any. In
accordance with the provisions of SFAS No. 142, the Company
conducted the first step of impairment tests as of the beginning
of its 2002 fiscal year. The Company assessed the fair value by
considering each reporting units expected future cash
flows; recent purchase prices paid for entities within its
industry, and the Companys market capitalization. The
Companys discounted cash flow evaluation utilizes a
discount rate that corresponds to the Companys weighted
average cost of capital. Given consideration of these factors,
the Company concluded that the fair value of each reporting unit
exceeded the carrying amounts of its net assets and,
accordingly, no impairment loss was recognized. Subsequent
annual impairment tests indicate that the fair value of the
reporting units continue to exceed their carrying amounts.
Subsequent impairments, if any, would be classified as operating
expense.

Upon adoption of SFAS No. 142, the
transition provisions of SFAS No. 141, Business
Combinations,also became effective. These transition
provisions specify criteria for determining whether an acquired
intangible asset should be recognized separately from goodwill.
Intangible assets that meet certain criteria will qualify for
recording on the balance sheet and will be amortized in the
income statement. Such intangible assets will be subject to a
periodic impairment test based on estimated fair value. At the
beginning of the Companys 2002 fiscal year, in accordance
with the provisions of SFAS No. 142, the Company
reclassified the net carrying value of certain intangible assets
in the amount of $41.0 million to goodwill (See Note 6).

In 2001 the Company early adopted SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144).In
accordance with the provisions of SFAS No. 144, the
operations and related gains and losses on properties sold in
2001 have been presented as discontinued operations in the
accompanying consolidated statements of income.

In June 2002 FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities(SFAS 146), which requires that a
liability for a cost associated with exit or disposal activities
be recognized and measured initially at fair value in the period
in which the liability is incurred. SFAS 146 is effective for
exit or disposal activities initiated after December 31,
2002. The adoption of SFAS No. 146 did not have a material
impact on the Companys consolidated financial condition or
results of operations.

In December 2002, the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. This
pronouncement amends SFAS No. 123 to provide alternative methods
of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements for fiscal years ending
December 15, 2002 and for interim periods beginning after
December 15, 2002, respectively, about the method of
accounting for stock-based employee compensation and the effect
of the method used on reported results. The adoption of SFAS
No. 148 did not have a material impact on the
Companys consolidated financial condition or results of
operations.

In April 2003 FASB issued SFAS No. 149,
Amendment of Statement 133 on Derivative Instruments and
Hedging Activities(SFAS No. 149). SFAS
No. 149 amends and clarifies financial accounting and
reporting

30



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##### Table of Contents



|        |                                                                                                          
|------- | ---------------------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS 
    Continued

for derivative instruments and for hedging
activities under SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 149 is
effective for contracts entered into or modified after
June 30, 2003 and for hedging relationships designated
after June 30, 2003. The Companys adoption of SFAS
No. 149 did not have a material impact on the consolidated
financial statements.

In May 2003 FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity(SFAS
No. 150). SFAS No. 150 established standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. SFAS
No. 150 was effective for financial instruments entered
into or modified after May 31, 2003, and otherwise was
effective at the beginning of the first interim period beginning
after June 15, 2003.The Company adopted the
applicable provisions of SFAS No. 150 during 2003 which did
not have a material impact on the Companys consolidated
financial condition or results of operations.

On November 7, 2003, the FASB issued Staff
Position 150-3, which deferred indefinitely the application of
those provisions of SFAS No. 150 associated with
mandatorily redeemable financial instruments. Accordingly, the
Company presents its consolidated results of operations,
financial position, and cash flows absent any potential impact
of SFAS No. 150. The Company cannot predict and,
accordingly, is not able to determine what the ultimate impact
on the Companys consolidated financial statements, if any,
might be from future FASB action concerning SFAS No. 150.

In November 2002 FASB issued Financial
Interpretation (FIN) No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN
No. 45 requires a guarantor to recognize, at the inception
of the guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. It also provides
additional guidance on the disclosure of the guarantee. The
recognition and measurement provisions are effective for
guarantees made or modified after December 31, 2002. The
disclosure provisions are effective for fiscal periods ending
after December 15, 2002. The Companys adoption of the
measurement provisions of FIN No. 45 did not have a
material impact on the consolidated financial statements.

In January 2003 FASB issued FIN No. 46,
Consolidation of Variable Interest Entities. FIN
No. 46 provides guidance surrounding consolidation based on
controlling financial interest and provides new quantitative
guidelines to various variable interest entities as defined in
the statement. The interpretation applies immediately to
variable interest entities created after January 31, 2003,
and in the first fiscal year or interim period beginning after
June 15, 2003 to variable interest entities acquired before
February 1, 2003. In December 2003, FASB issued FIN
No. 46R to clarify certain provisions of FIN No. 46.
Application of FIN No. 46R is required for public entities
that have interests in structures commonly referred to as
special-purpose entities for periods ending after
December 15, 2003. Application by public entities for all
other types of variable interest entities is required for
periods ending after March 15, 2004. The Company adopted
the appropriate provisions of FIN No. 46 and No. 46R during
2003, which did not have a material impact on the consolidated
financial statements. The Company does not believe it will be
required to consolidate or disclose any information related to
variable interest entities.

In December 2003, the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Act),
was signed into law. The Act introduced a prescription drug
benefit under Medicare (Medicare Part D) and a federal
subsidy to sponsors of retiree health care benefit plans that
provide a benefit that is at least actuarially equivalent (as
that term is defined in the Act) to Medicare Part D. At present,
detailed regulations necessary to implement the Act have not
been issued. Additionally, certain accounting issues raised by
the Act are not explicitly addressed in existing accounting
literature, such as FASB Statement No. 106,
Employers Accounting for Postretirement Benefits Other
than Pensions. FASB Staff Position 106-1, Accounting and
Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003(FSP
106-1), which is effective for interim or annual financial
statements for fiscal years which ended after December 7,
2003, permits a sponsor of a postretirement health care plan
that provides a prescription drug benefit to make a one-time
election to defer accounting for the effects of the Act.

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ITEM
7.                            MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  Continued


As the Company uses a September 30, 2003
measurement date and the Act was enacted after the measurement
date, the Company will be eligible to make the one time election
to defer or adopt the provisions of FSP 106-1 during the quarter
ended March 31, 2004. Accordingly, the Companys
measures of the accumulated postretirement benefit obligation
(APBO) or net periodic postretirement benefit cost
in the accompanying financial statements and footnotes do not
reflect the effects of the Act on the plan. Based upon
information currently available including the current provisions
of the Companys plans, management believes the potential
impact of adopting the Act will decrease the APBO by
approximately $12 million and result in an annual benefit
approximating $1.5 million. Specific authoritative guidance
on the accounting for the federal subsidy is pending and that
guidance, when issued, could require the sponsor to change
previously reported information.






|         |                                                               
|-------- | --------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK

Newsprint

The primary raw material used in the
Companys operations is newsprint, representing
12.0 percent to 15.7 percent of operating expenses
over the last five years. For 2003, the Company consumed
approximately 102,000 metric tonnes of newsprint, including its
50 percent share related to the operations of TNI Partners.
Based on the Companys current level of newspaper
operations, expected annual newsprint consumption for 2004 is
estimated to be in the range of 103,000 metric tonnes.
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 annual cost per metric tonne of newsprint
has varied from its lowest price by approximately
27.8 percent. For every one dollar change in the
Companys average annual cost per metric tonne of
newsprint, 2004 pre-tax income would change by approximately
$103,000, assuming annual newsprint consumption of 103,000
metric tonnes. The Company attempts to obtain the best price
available by combining newsprint purchases for its different
newspaper locations with those of other newspaper companies. The
Company considers its relationship with newsprint producers to
be good. The Company has not entered into derivative contracts
for newsprint. The following chart illustrates fluctuations in
newsprint price per metric tonne from January 2000 to December
2003 as calculated by Resources Information Systems, Inc.
(RISI):

(PERFORMANCE GRAPH)

32



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|         |                                                                           
|-------- | --------------------------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK  Continued

Loan/ Swaps

At December 31, 2003, the Company had
$306.0 million of outstanding debt pursuant to the Loan.
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.

The Company is a party to two interest rate swap
contracts that convert a portion of the Companys fixed
rate debt to a variable rate. The interest rate swaps have a
combined $150.0 million notional amount and mature on
April 28, 2009. Under the terms of the agreements, the
Company pays interest at a variable rate based upon LIBOR plus a
combined adjustment average of 3.3392 percent and receives
interest at a fixed rate of 8.05 percent. The floating
interest rates re-price semiannually. The Company accounts for
the swaps as fair value hedges and employs the short cut method.
These transactions result in approximately 49 percent of
the Companys long-term interest cost being subject to
variable interest rates.

As of December 31, 2003, the fair value of
the interest rate swaps represented an unrealized gain of
$6.3 million, which is offset by an unrealized loss of
$6.3 million on the related portion of the Companys
long-term debt.

Changes in market interest rates may cause the
Company to incur higher or lower net interest expense. For
example, for every 1.0 percent change in the variable
interest rates associated with the Companys interest
swaps, the Companys interest expense would change by
approximately $1.5 million.




ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

The following consolidated financial statements
of Pulitzer Inc. and Subsidiaries are filed as part of this
Annual Report on Form 10-K. 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



| |                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------
| | Consolidated Statements of Income for each of the
    Three Years in the Period Ended December 31, 2003                  
|
| | Consolidated Statements of Financial Position at
    December 31, 2003, and December 31, 2002                            
|
| | Consolidated Statements of Stockholders
    Equity for each of the Three Years in the Period Ended December
    31, 2003
|
| | Consolidated Statements of Cash Flows for each of
    the Three Years in the Period Ended December 31, 2003              
|
| | Notes to Consolidated Financial Statements for
    each of the Three Years in the Period Ended December 31, 2003         

33



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INDEPENDENT AUDITORS REPORT

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

We have audited the accompanying consolidated
statements of financial position of Pulitzer Inc. and
subsidiaries (the Company) as of December 31,
2003 and 2002, and the related consolidated statements of
income, stockholders equity, and cash flows for each of
the three years in the period ended December 31, 2003.
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 Company at December 31, 2003 and
2002, and the results of their operations and their cash flows
for each of the three years in the period ended
December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 2 to the consolidated
financial statements, in 2002 the Company changed its method of
accounting for goodwill and other intangible assets to conform
to Statement of Financial Accounting Standards No. 142.

/s/ DELOITTE & TOUCHE LLP

Saint Louis, Missouri

February 20, 2004


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PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |         |         |         | 
|----------------------------------------------------------------------- | --------------------------------------------------------------- | ----------------------------------------- | ------------------------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | ------- | 
|                                                                        |                                                                 |                                          
|                                                                        |                                                                 | Years Ended December 31,                 
|                                                                        |                                                                 |                                          
|                                                                        |                                                                 | 2003                                      |                          | 2002    |         | 2001   
|                                                                        |                                                                 |                                           |                          |         |         |        
|                                                                        |                                                                 |                                          
|                                                                        |                                                                 | (In thousands, except earnings per share)
|OPERATING REVENUES  NET:                                               |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Advertising:                                                    |                                           |                          |         |         |         |        |         |         |         |        |         |        
|                                                                        |                                                                 | Retail                                    |                          | $       | 120,205 |         |        | $       | 118,741 |         |        | $       | 118,738 |        
|                                                                        |                                                                 | National                                  |                          |         | 29,000  |         |        |         | 26,706  |         |        |         | 26,049  |        
|                                                                        |                                                                 | Classified                                |                          |         | 122,638 |         |        |         | 125,777 |         |        |         | 132,134 |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        |                                                                 |                                           | Total                    |         |         | 271,843 |        |         |         | 271,224 |        |         |         | 276,921 | 
|                                                                        |                                                                 | Preprints                                 |                          |         | 63,249  |         |        |         | 55,935  |         |        |         | 47,679  |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        |                                                                 |                                           | Total advertising        |         |         | 335,092 |        |         |         | 327,159 |        |         |         | 324,600 | 
|                                                                        | Circulation                                                     |                                           |                          | 80,639  |         |         |        | 80,751  |         |         |        | 81,200  |        
|                                                                        | Other                                                           |                                           |                          | 6,933   |         |         |        | 8,050   |         |         |        | 7,706   |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        |                                                                 |                                           | Total operating revenues |         |         | 422,664 |        |         |         | 415,960 |        |         |         | 413,506 | 
|OPERATING EXPENSES:                                                     |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Payroll and other personnel expense                             |                                           |                          | 181,422 |         |         |        | 180,027 |         |         |        | 174,626 |        
|                                                                        | Newsprint expense                                               |                                           |                          | 43,368  |         |         |        | 41,055  |         |         |        | 56,372  |        
|                                                                        | Depreciation                                                    |                                           |                          | 14,613  |         |         |        | 14,286  |         |         |        | 14,330  |        
|                                                                        | Amortization                                                    |                                           |                          | 4,522   |         |         |        | 4,433   |         |         |        | 26,178  |        
|                                                                        | Other expenses                                                  |                                           |                          | 107,610 |         |         |        | 111,018 |         |         |        | 116,113 |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        |                                                                 |                                           | Total operating expenses |         |         | 351,535 |        |         |         | 350,819 |        |         |         | 387,619 | 
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Equity in earnings of Tucson newspaper
    partnership (Note 4) |                                           |                          | 16,064  |         |         |        | 17,744  |         |         |        | 17,504  |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Operating income                                                |                                           |                          | 87,193  |         |         |        | 82,885  |         |         |        | 43,391  |        
|                                                                        | Interest income                                                 |                                           |                          | 3,687   |         |         |        | 4,235   |         |         |        | 7,573   |        
|                                                                        | Interest expense                                                |                                           |                          | (20,395 | )       |         |        | (20,593 | )       |         |        | (24,609 | )      
|                                                                        | Net gain on marketable securities                               |                                           |                          | 502     |         |         |        | 1,100   |         |         |        | 602     |        
|                                                                        | Net loss on investments                                         |                                           |                          | (1,790  | )       |         |        | (9,091  | )       |         |        | (5,607  | )      
|                                                                        | Net other income (expense)                                      |                                           |                          | 74      |         |         |        | 132     |         |         |        | (204    | )      
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|INCOME FROM CONTINUING OPERATIONS BEFORE
    PROVISION FOR INCOME TAXES |                                                                 |                                           | 69,271                   |         |         |         | 58,668 |         |         |         | 21,146 |        
|PROVISION FOR INCOME TAXES (Note 13)                                    |                                                                 |                                           | 25,306                   |         |         |         | 22,371 |         |         |         | 8,021  |        
|MINORITY INTEREST IN NET EARNINGS OF SUBSIDIARY
    (Note 4)            |                                                                 |                                           | 1,788                    |         |         |         | 1,598  |         |         |         | 839    |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|INCOME FROM CONTINUING OPERATIONS                                       |                                                                 |                                           | 42,177                   |         |         |         | 34,699 |         |         |         | 12,286 |        
|LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX
    (Note 5)              |                                                                 |                                           |                          |         |         |         |        |         |         |         | (1,624 | )      
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|NET INCOME                                                              |                                                                 | $                                         | 42,177                   |         |         | $       | 34,699 |         |         | $       | 10,662 |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|BASIC EARNINGS PER SHARE OF STOCK (Note 16):                            |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Income from continuing operations                               |                                           | $                        | 1.97    |         |         | $      | 1.63    |         |         | $      | 0.58    |        
|                                                                        | Loss from discontinued operations                               |                                           |                          | 0.00    |         |         |        | 0.00    |         |         |        | (0.08   | )      
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Earnings per share                                              |                                           | $                        | 1.97    |         |         | $      | 1.63    |         |         | $      | 0.50    |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Weighted average number of shares outstanding                   |                                           |                          | 21,404  |         |         |        | 21,279  |         |         |        | 21,192  |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|DILUTED EARNINGS PER SHARE OF STOCK (Notes 15 and
    16):              |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Income from continuing operations                               |                                           | $                        | 1.95    |         |         | $      | 1.62    |         |         | $      | 0.58    |        
|                                                                        | Loss from discontinued operations                               |                                           |                          | 0.00    |         |         |        | 0.00    |         |         |        | (0.08   | )      
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Earnings per share                                              |                                           | $                        | 1.95    |         |         | $      | 1.62    |         |         | $      | 0.50    |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        
|                                                                        | Weighted average number of shares outstanding                   |                                           |                          | 21,627  |         |         |        | 21,447  |         |         |        | 21,364  |        
|                                                                        |                                                                 |                                           |                          |         |         |         |        |         |         |         |        |        

(Concluded)

See accompanying notes to consolidated financial
statements.

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PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION

|                             |                                                                                           |                                   |       |         |         |           |   |         |         |           | 
|---------------------------- | ----------------------------------------------------------------------------------------- | --------------------------------- | ----- | ------- | ------- | --------- | - | ------- | ------- | --------- | 
|                             |                                                                                           |                                  
|                             |                                                                                           | December 31,                     
|                             |                                                                                           |                                  
|                             |                                                                                           | 2003                              |       | 2002   
|                             |                                                                                           |                                   |       |        
|                             |                                                                                           |                                  
|                             |                                                                                           | (In thousands)                   
|ASSETS                       |                                                                                           |                                   |       |         |         |           |   |        
|CURRENT ASSETS:              |                                                                                           |                                   |       |         |         |           |   |        
|                             | Cash and cash equivalents                                                                 |                                   | $     | 27,552  |         |           | $ | 81,517  |        
|                             | Marketable securities (Note 8)                                                            |                                   |       | 148,644 |         |           |   | 112,877 |        
|                             | Trade accounts receivable (less allowance for
    doubtful accounts of $3,843 and $4,004) |                                   |       | 54,700  |         |           |   | 53,771  |        
|                             | Inventory                                                                                 |                                   |       | 7,566   |         |           |   | 6,165   |        
|                             | Income taxes receivable                                                                   |                                   |       | 7,097   |         |           |   |         |        
|                             | Prepaid expenses and other                                                                |                                   |       | 9,171   |         |           |   | 11,020  |        
|                             |                                                                                           |                                   |       |         |         |           |   |        
|                             |                                                                                           | Total current assets              |       |         | 254,730 |           |   |         | 265,350 |          
|                             |                                                                                           |                                   |       |         |         |           |   |        
|PROPERTIES:                  |                                                                                           |                                   |       |         |         |           |   |        
|                             | Land                                                                                      |                                   |       | 9,758   |         |           |   | 9,275   |        
|                             | Buildings                                                                                 |                                   |       | 73,192  |         |           |   | 66,932  |        
|                             | Machinery and equipment                                                                   |                                   |       | 156,425 |         |           |   | 152,727 |        
|                             | Construction in progress                                                                  |                                   |       | 1,256   |         |           |   | 6,142   |        
|                             |                                                                                           |                                   |       |         |         |           |   |        
|                             |                                                                                           | Total                             |       |         | 240,631 |           |   |         | 235,076 |          
|                             | Less accumulated depreciation                                                             |                                   |       | 124,550 |         |           |   | 117,074 |        
|                             |                                                                                           |                                   |       |         |         |           |   |        
|                             |                                                                                           | Properties  net                  |       |         | 116,081 |           |   |         | 118,002 |          
|INTANGIBLE AND OTHER ASSETS: |                                                                                           |                                   |       |         |         |           |   |        
|                             | Goodwill (Note 6)                                                                         |                                   |       | 811,409 |         |           |   | 797,719 |        
|                             | Intangible assets  net of amortization
    (Note 6)                                      |                                   |       | 37,217  |         |           |   | 38,210  |        
|                             | Restricted cash and investments (Notes 8 and 9)                                           |                                   |       | 54,810  |         |           |   | 39,810  |        
|                             | Other                                                                                     |                                   |       | 35,426  |         |           |   | 28,155  |        
|                             |                                                                                           |                                   |       |         |         |           |   |        
|                             |                                                                                           | Total intangible and other assets |       |         | 938,862 |           |   |         | 903,894 |          
|                             |                                                                                           |                                   |       |         |         |           |   |        
|                             |                                                                                           |                                   | TOTAL |         | $       | 1,309,673 |   |         | $       | 1,287,246 | 
|                             |                                                                                           |                                   |       |         |         |           |   |        

(Continued)

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PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION

|                                                                    |                                                                                                                                                                     |                            |         |         |         |           |         |         |         |           | 
|------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------- | ------- | --------- | ------- | ------- | ------- | --------- | 
|                                                                    |                                                                                                                                                                     |                           
|                                                                    |                                                                                                                                                                     | December 31,              
|                                                                    |                                                                                                                                                                     |                           
|                                                                    |                                                                                                                                                                     | 2003                       |         | 2002   
|                                                                    |                                                                                                                                                                     |                            |         |        
|                                                                    |                                                                                                                                                                     |                           
|                                                                    |                                                                                                                                                                     | (In thousands)            
|LIABILITIES AND STOCKHOLDERS
    EQUITY                            |                                                                                                                                                                     |                            |         |         |         |           |         |        
|CURRENT LIABILITIES:                                                |                                                                                                                                                                     |                            |         |         |         |           |         |        
|                                                                    | Trade accounts payable                                                                                                                                              |                            | $       | 9,995   |         |           | $       | 9,419   |        
|                                                                    | Salaries, wages and commissions                                                                                                                                     |                            |         | 15,595  |         |           |         | 15,708  |        
|                                                                    | Interest payable                                                                                                                                                    |                            |         | 3,582   |         |           |         | 3,893   |        
|                                                                    | Pension obligations (Note 10)                                                                                                                                       |                            |         | 1,356   |         |           |         | 1,959   |        
|                                                                    | Other                                                                                                                                                               |                            |         | 9,766   |         |           |         | 8,823   |        
|                                                                    |                                                                                                                                                                     |                            |         |         |         |           |         |        
|                                                                    |                                                                                                                                                                     | Total current liabilities  |         |         | 40,294  |           |         |         | 39,802  |          
|LONG-TERM DEBT (Notes 9 and 18)                                     |                                                                                                                                                                     |                            | 306,000 |         |         |           | 306,000 |        
|PENSION OBLIGATIONS (Note 10)                                       |                                                                                                                                                                     |                            | 5,239   |         |         |           | 36,085  |        
|POSTRETIREMENT AND POSTEMPLOYMENT BENEFIT
    OBLIGATIONS (Note 11) |                                                                                                                                                                     |                            | 61,265  |         |         |           | 67,992  |        
|                                                                    |                                                                                                                                                                     |                            |         |         |         |           |         |        
|OTHER LONG-TERM LIABILITIES                                         |                                                                                                                                                                     |                            | 45,431  |         |         |           | 22,149  |        
|COMMITMENTS AND CONTINGENCIES (Note 17)                             |                                                                                                                                                                     |                            |         |         |         |           |         |        
|STOCKHOLDERS EQUITY (Note 14):                                     |                                                                                                                                                                     |                            |         |         |         |           |         |        
|                                                                    | Preferred stock, $.01 par value;
    authorized  100,000,000 shares in 2003 and 2002;
    issued and outstanding  none                                            |                            |         |         |         |           |         |         |        
|                                                                    | Common stock, $.01 par value;
    authorized  100,000,000 shares in 2003 and 2002;
    issued  9,682,134 in 2003 and 9,498,045 in 2002                            |                            |         | 97      |         |           |         | 95      |        
|                                                                    | Class B common stock, convertible, $.01 par
    value; authorized  100,000,000 shares in 2003 and
    2002; issued  11,834,592 in 2003 and 11,835,242 in
    2002 |                            |         | 118     |         |           |         | 118     |        
|                                                                    | Additional paid-in capital                                                                                                                                          |                            |         | 384,291 |         |           |         | 374,937 |        
|                                                                    | Retained earnings                                                                                                                                                   |                            |         | 477,437 |         |           |         | 450,653 |        
|                                                                    | Accumulated other comprehensive loss                                                                                                                                |                            |         | (10,151 | )       |           |         | (10,363 | )      
|                                                                    |                                                                                                                                                                     |                            |         |         |         |           |         |        
|                                                                    |                                                                                                                                                                     | Total                      |         |         | 851,792 |           |         |         | 815,440 |          
|                                                                    | Unamortized restricted stock grant                                                                                                                                  |                            |         | (303    | )       |           |         | (208    | )      
|                                                                    | Treasury stock  at cost; 1,061 and 330
    shares of common stock in 2003 and 2002, respectively, and 0
    shares of Class B common stock in 2003 and 2002        |                            |         | (45     | )       |           |         | (14     | )      
|                                                                    |                                                                                                                                                                     |                            |         |         |         |           |         |        
|                                                                    |                                                                                                                                                                     | Total stockholders equity |         |         | 851,444 |           |         |         | 815,218 |          
|                                                                    |                                                                                                                                                                     |                            |         |         |         |           |         |        
|                                                                    |                                                                                                                                                                     |                            | TOTAL   |         | $       | 1,309,673 |         |         | $       | 1,287,246 | 
|                                                                    |                                                                                                                                                                     |                            |         |         |         |           |         |        

(Concluded)

See accompanying notes to consolidated financial
statements.

37



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |         |        |  
|------------------------------- | ------------------------------------------------------------------------ | ------------------------------------------ | -- | ------- | - | ---------- | --- | -------- | - | ------------- | ------- | -------- | - | ----------- | ------- | -------- | - | - | ------- | - | ------ | - | ------- | ------ | - | - | ---- | ---- | - | - | ------- | ------- | ------ | -
|                                |                                                                          |                                            |    |         |   |            |     |          |   | Accumulated   |         |          |   |             |         |         
|                                |                                                                          |                                            |    |         |   |            |     |          |   | Other         |         |          |   |             |         | Total   
|                                |                                                                          |                                            |    | Class B |   | Additional |     |          |   | Comprehensive |         |          |   | Unamortized |         | Stock-  
|                                |                                                                          | Common                                     |    | Common  |   | Paid-in    |     | Retained |   | Income        |         | Treasury |   | Restricted  |         | holders
|                                |                                                                          | Stock                                      |    | Stock   |   | Capital    |     | Earnings |   | (Loss)        |         | Stock    |   | Stock Grant |         | Equity  
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |         
|                                |                                                                          |                                           
|                                |                                                                          | (In thousands)                            
|Balances at January 1, 2001     |                                                                          | $                                          | 94 |         |   | $          | 133 |          |   | $             | 427,214 |          |   | $           | 434,580 |          |   | $ | (368    | ) |        | $ | (61,952 | )      |   | $ | (100 | )    |   | $ | 799,601 |        
|Comprehensive income:           |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Net income                                                               |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         | 10,662   |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 10,662  |       
|                                | Other comprehensive income(loss), net of tax:                            |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |         |       
|                                |                                                                          | Minimum pension liability adjustment       |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   | (2,343 | ) |         |        |   |   |      |      |   |   |         |         | (2,343 | )
|                                |                                                                          | Unrealized gain on marketable securities   |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   | 229    |   |         |        |   |   |      |      |   |   |         |         | 229    |  
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Comprehensive income                                                     |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 8,548   |       
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Issuance of common stock grants                                          |                                            |    |         |   |            |     |          |   |               |         | 767      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 767     |       
|                                | Common stock options exercised                                           |                                            |    | 1       |   |            |     |          |   |               |         | 1,787    |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 1,788   |       
|                                | Conversion of Class B common stock to common
    stock                   |                                            |    | 2       |   |            |     | (2       | ) |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |         |       
|                                | Common stock issued under Employee Stock Purchase
    Plan               |                                            |    |         |   |            |     |          |   |               |         | 658      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 658     |       
|                                | Tax benefit from stock options exercised                                 |                                            |    |         |   |            |     |          |   |               |         | 221      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 221     |       
|                                | Cash dividends declared $0.68 per Share of common
    and Class B common |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         | (14,402  | ) |   |         |   |        |   |         |        |   |   |      |      |   |   |         | (14,402 | )     
|                                | Amortization of Restricted Stock                                         |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      | 80   |   |   |         | 80      |       
|                                | Purchase of treasury stock                                               |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         | (44    | ) |   |      |      |   |   |         | (44     | )     
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|Balances at December 31, 2001   |                                                                          |                                            | 97 |         |   |            | 131 |          |   |               | 430,647 |          |   |             | 430,840 |          |   |   | (2,482  | ) |        |   | (61,996 | )      |   |   | (20  | )    |   |   | 797,217 |        
|Comprehensive income:           |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Net income                                                               |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         | 34,699   |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 34,699  |       
|                                | Other comprehensive income(loss), net of tax:                            |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |         |       
|                                |                                                                          | Minimum pension liability adjustment       |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   | (8,206 | ) |         |        |   |   |      |      |   |   |         |         | (8,206 | )
|                                |                                                                          | Unrealized gain on marketable securities   |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   | 325    |   |         |        |   |   |      |      |   |   |         |         | 325    |  
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Comprehensive income                                                     |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 26,818  |       
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Issuance of common stock grants                                          |                                            |    |         |   |            |     |          |   |               |         | 841      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 841     |       
|                                | Common stock options exercised                                           |                                            |    | 1       |   |            |     |          |   |               |         | 4,090    |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 4,091   |       
|                                | Conversion of Class B common stock to common
    stock                   |                                            |    | 2       |   |            |     | (2       | ) |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |         |       
|                                | Common stock issued under Employee Stock Purchase
    Plan               |                                            |    |         |   |            |     |          |   |               |         | 904      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 904     |       
|                                | Tax benefit from stock options exercised                                 |                                            |    |         |   |            |     |          |   |               |         | 328      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 328     |       
|                                | Cash dividends declared $0.70 per Share of common
    and Class B common |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         | (14,886  | ) |   |         |   |        |   |         |        |   |   |      |      |   |   |         | (14,886 | )     
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               | 250     |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   | (250 | )    |   |   |         |        
|                                | Amortization of Restricted Stock                                         |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      | 62   |   |   |         | 62      |       
|                                | Retirement of Treasury Stock                                             |                                            |    | (5      | ) |            |     | (11      | ) |               |         | (62,123  | ) |             |         |          |   |   |         |   |        |   |         | 62,139 |   |   |      |      |   |   |         |         |       
|                                | Purchase of treasury stock                                               |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         | (157   | ) |   |      |      |   |   |         | (157    | )     
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|Balances at December 31, 2002   |                                                                          |                                            | 95 |         |   |            | 118 |          |   |               | 374,937 |          |   |             | 450,653 |          |   |   | (10,363 | ) |        |   | (14     | )      |   |   | (208 | )    |   |   | 815,218 |        
|Comprehensive income:           |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Net income                                                               |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         | 42,177   |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 42,177  |       
|                                | Other comprehensive income(loss), net of tax:                            |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |         |       
|                                |                                                                          | Minimum pension liability adjustment       |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   | 311    |   |         |        |   |   |      |      |   |   |         |         | 311    |  
|                                |                                                                          | Unrealized (loss) on marketable securities |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   | (99    | ) |         |        |   |   |      |      |   |   |         |         | (99    | )
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|                                | Comprehensive income                                                     |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 42,389  |       
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|Issuance of common stock grants |                                                                          |                                            |    |         |   |            |     |          |   |               | 1,187   |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   | 1,187   |        
|                                | Common stock options exercised                                           |                                            |    | 2       |   |            |     |          |   |               |         | 6,583    |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 6,585   |       
|                                | Common stock issued under Employee Stock Purchase
    Plan               |                                            |    |         |   |            |     |          |   |               |         | 922      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 922     |       
|                                | Tax benefit from stock options exercised                                 |                                            |    |         |   |            |     |          |   |               |         | 462      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         | 462     |       
|                                | Cash dividends declared $0.72 per Share of common
    and Class B common |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         | (15,393  | ) |   |         |   |        |   |         |        |   |   |      |      |   |   |         | (15,393 | )     
|                                | Restricted Stock Grant                                                   |                                            |    |         |   |            |     |          |   |               |         | 200      |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      | (200 | ) |   |         |         |       
|                                | Amortization of Restricted Stock                                         |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      | 105  |   |   |         | 105     |       
|                                | Purchase of treasury stock                                               |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         | (31    | ) |   |      |      |   |   |         | (31     | )     
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        
|Balances at December 31, 2003   |                                                                          | $                                          | 97 |         |   | $          | 118 |          |   | $             | 384,291 |          |   | $           | 477,437 |          |   | $ | (10,151 | ) |        | $ | (45     | )      |   | $ | (303 | )    |   | $ | 851,444 |        
|                                |                                                                          |                                            |    |         |   |            |     |          |   |               |         |          |   |             |         |          |   |   |         |   |        |   |         |        |   |   |      |      |   |   |         |        

(Continued)

See accompanying notes to consolidated financial
statements.

38



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                              |                                                             |                |       |                |   |        |      |          |   |  |        |        |   |  |        |       | 
|----------------------------- | ----------------------------------------------------------- | -------------- | ----- | -------------- | - | ------ | ---- | -------- | - |  | ------ | ------ | - |  | ------ | ----- | 
|                              |                                                             |                |       |                |   |       
|                              |                                                             |                |       | Class B Common
|                              |                                                             | Common Stock   |       | Stock         
|                              |                                                             |                |       |               
|                              |                                                             |                |       | Held in        |   |        |      | Held in 
|                              |                                                             | Issued         |       | Treasury       |   | Issued |      | Treasury
|                              |                                                             |                |       |                |   |        |      |         
|                              |                                                             |               
|                              |                                                             | (In thousands)
|Share Activity:               |                                                             |                |       |                |   |        |      |          |   |  |        |        |   |  |        |      
|Balances at January 1, 2001   |                                                             |                | 9,415 |                |   |        | (528 | )        |   |  | 13,266 |        |   |  | (1,000 | )    
|                              | Common stock options exercised                              |                |       | 44             |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Conversion of Class B common stock to common
    stock      |                |       | 207            |   |        |      |          |   |  |        | (207   | ) |  |        |       | 
|                              | Common stock issued under Employee Stock Purchase
    Plan  |                |       | 14             |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Purchase of treasury stock                                  |                |       |                |   |        |      | (1       | ) |  |        |        |   |  |        |       | 
|                              |                                                             |                |       |                |   |        |      |          |   |  |        |        |   |  |        |      
|Balances at December 31, 2001 |                                                             |                | 9,680 |                |   |        | (529 | )        |   |  | 13,059 |        |   |  | (1,000 | )    
|                              | Common stock options exercised                              |                |       | 100            |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Conversion of Class B common stock to common
    stock      |                |       | 224            |   |        |      |          |   |  |        | (224   | ) |  |        |       | 
|                              | Common stock issued under Employee Stock Purchase
    Plan  |                |       | 20             |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Restricted Stock Grant                                      |                |       | 6              |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Retirement of treasury stock                                |                |       | (532           | ) |        |      | 532      |   |  |        | (1,000 | ) |  |        | 1,000 | 
|                              | Purchase of treasury stock                                  |                |       |                |   |        |      | (3       | ) |  |        |        |   |  |        |       | 
|                              |                                                             |                |       |                |   |        |      |          |   |  |        |        |   |  |        |      
|Balances at December 31, 2002 |                                                             |                | 9,498 |                |   |        | 0    |          |   |  | 11,835 |        |   |  | 0      |      
|                              | Common stock options exercised                              |                |       | 159            |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Common stock issued under Employee Stock Purchase
    Plans |                |       | 21             |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Restricted Stock Grant                                      |                |       | 4              |   |        |      |          |   |  |        |        |   |  |        |       | 
|                              | Purchase of treasury stock                                  |                |       |                |   |        |      | (1       | ) |  |        |        |   |  |        |       | 
|                              |                                                             |                |       |                |   |        |      |          |   |  |        |        |   |  |        |      
|Balances at December 31, 2003 |                                                             |                | 9,682 |                |   |        | (1   | )        |   |  | 11,835 |        |   |  | 0      |      
|                              |                                                             |                |       |                |   |        |      |          |   |  |        |        |   |  |        |      

(Concluded)

See accompanying notes to consolidated financial
statements.

39



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##### Table of Contents






PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |         |        |        |  
|------------------------------------- | ------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------- | -------- | ------ | ------ | -------- | -------- | ------ | ------ | ------- | ------- | ------ | ------ | -
|                                      |                                                                                                              |                                                                                                                         
|                                      |                                                                                                              | Years Ended December 31,                                                                                                
|                                      |                                                                                                              |                                                                                                                         
|                                      |                                                                                                              | 2003                                                                                                                     |                                              | 2002     |        | 2001  
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |       
|                                      |                                                                                                              |                                                                                                                         
|                                      |                                                                                                              | (In thousands)                                                                                                          
|CONTINUING OPERATIONS                 |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|CASH FLOWS FROM OPERATING ACTIVITIES: |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|                                      | Income from continuing operations                                                                            |                                                                                                                          | $                                            | 42,177   |        |        | $        | 34,699   |        |        | $       | 12,286  |       
|                                      | Adjustments to reconcile income from continuing
    operations to net cash provided by operating activities: |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |         |       
|                                      |                                                                                                              | Depreciation                                                                                                             |                                              |          | 14,613 |        |          |          | 14,286 |        |         |         | 14,330 |       
|                                      |                                                                                                              | Amortization                                                                                                             |                                              |          | 4,522  |        |          |          | 4,433  |        |         |         | 26,178 |       
|                                      |                                                                                                              | Stock-based compensation                                                                                                 |                                              |          | 1,292  |        |          |          | 903    |        |         |         | 847    |       
|                                      |                                                                                                              | Deferred income taxes                                                                                                    |                                              |          | 22,249 |        |          |          | 23,256 |        |         |         | 8,361  |       
|                                      |                                                                                                              | Gain on sale of assets                                                                                                   |                                              |          | (502   | )      |          |          | (1,100 | )      |         |         | (602   | )     
|                                      |                                                                                                              | Net loss on investments                                                                                                  |                                              |          | 1,790  |        |          |          | 9,091  |        |         |         | 5,607  |       
|                                      |                                                                                                              | Changes in assets and liabilities (net of the
    effects of the purchase of properties) which provided
    (used) cash: |                                              |          |        |        |          |          |        |        |         |         |        |       
|                                      |                                                                                                              |                                                                                                                          | Trade accounts receivable                    |          |        | (664   | )        |          |        | (1,738 | )       |         |        | 969    |  
|                                      |                                                                                                              |                                                                                                                          | Inventory                                    |          |        | (1,398 | )        |          |        | (1,041 | )       |         |        | 209    |  
|                                      |                                                                                                              |                                                                                                                          | Other assets                                 |          |        | (4,542 | )        |          |        | 3,162  |         |         |        | (6,246 | )
|                                      |                                                                                                              |                                                                                                                          | Trade accounts payable and other liabilities |          |        | 8,172  |          |          |        | 5,206  |         |         |        | 8,832  |  
|                                      |                                                                                                              |                                                                                                                          | Income taxes (receivable)/payable            |          |        | (7,033 | )        |          |        | 7,065  |         |         |        | (4,722 | )
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|NET CASH FROM OPERATING ACTIVITIES    |                                                                                                              |                                                                                                                          | 80,676                                       |          |        |        | 98,222   |          |        |        | 66,049  |        
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|CASH FLOWS FROM INVESTING ACTIVITIES: |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|                                      | Capital expenditures                                                                                         |                                                                                                                          |                                              | (12,526  | )      |        |          | (25,124  | )      |        |         | (13,856 | )     
|                                      | Purchases of newspaper properties and routes, net
    of cash acquired                                       |                                                                                                                          |                                              | (17,424  | )      |        |          | (9,117   | )      |        |         | (41,130 | )     
|                                      | Acquisition payable                                                                                          |                                                                                                                          |                                              |          |        |        |          | (9,707   | )      |        |         |         |       
|                                      | Purchases of marketable securities                                                                           |                                                                                                                          |                                              | (335,554 | )      |        |          | (218,118 | )      |        |         | (19,824 | )     
|                                      | Sales of marketable securities                                                                               |                                                                                                                          |                                              | 298,501  |        |        |          | 106,256  |        |        |         | 145,968 |       
|                                      | Cash received from gain on investment                                                                        |                                                                                                                          |                                              | 825      |        |        |          |          |        |        |         |         |       
|                                      | Investment in joint ventures and limited
    partnerships                                                    |                                                                                                                          |                                              | (1,584   | )      |        |          | (1,689   | )      |        |         | (4,778  | )     
|                                      | Increase in restricted cash and investments                                                                  |                                                                                                                          |                                              | (15,000  | )      |        |          | (15,000  | )      |        |         | (15,000 | )     
|                                      | Discretionary funding of retirement obligations                                                              |                                                                                                                          |                                              | (43,962  | )      |        |          | (28,097  | )      |        |         |         |       
|                                      | Decrease (increase) in notes receivable                                                                      |                                                                                                                          |                                              |          |        |        |          | 200      |        |        |         | (170    | )     
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|NET CASH FROM INVESTING ACTIVITIES    |                                                                                                              |                                                                                                                          | (126,724                                     | )        |        |        | (200,396 | )        |        |        | 51,210  |        
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|CASH FLOWS FROM FINANCING ACTIVITIES: |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|                                      | Dividends paid                                                                                               |                                                                                                                          |                                              | (15,393  | )      |        |          | (14,886  | )      |        |         | (14,402 | )     
|                                      | Proceeds from exercise of stock options                                                                      |                                                                                                                          |                                              | 6,585    |        |        |          | 4,091    |        |        |         | 1,788   |       
|                                      | Proceeds from employee stock purchase plan                                                                   |                                                                                                                          |                                              | 922      |        |        |          | 904      |        |        |         | 658     |       
|                                      | Purchase of treasury stock                                                                                   |                                                                                                                          |                                              | (31      | )      |        |          | (157     | )      |        |         | (44     | )     
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|NET CASH FROM FINANCING ACTIVITIES    |                                                                                                              |                                                                                                                          | (7,917                                       | )        |        |        | (10,048  | )        |        |        | (12,000 | )      
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|CASH FROM CONTINUING OPERATIONS       |                                                                                                              |                                                                                                                          | (53,965                                      | )        |        |        | (112,222 | )        |        |        | 105,259 |        
|                                      |                                                                                                              |                                                                                                                          |                                              |          |        |        |          |          |        |        |         |        
|(Continued)                          

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                           |                                                                    |                          |         |        |        |      |          |         |        |   |         |        |        |  
|-------------------------------------------------------------------------- | ------------------------------------------------------------------ | ------------------------ | ------- | ------ | ------ | ---- | -------- | ------- | ------ | - | ------- | ------ | ------ | -
|                                                                           |                                                                    |                         
|                                                                           |                                                                    | Years Ended December 31,
|                                                                           |                                                                    |                         
|                                                                           |                                                                    | 2003                     |         | 2002   |        | 2001
|                                                                           |                                                                    |                          |         |        |        |     
|DISCONTINUED OPERATIONS                                                    |                                                                    |                          |         |        |        |      |          |         |        |   |         |       
|                                                                           | Operating activities                                               |                          |         |        |        |      |          |         |        |   |         | 1,532  |       
|                                                                           | Investing activities:                                              |                          |         |        |        |      |          |         |        |   |         |        |       
|                                                                           |                                                                    | Capital expenditures     |         |        |        |      |          |         |        |   |         |        | (15    | )
|                                                                           |                                                                    | Sale of properties       |         |        |        |      |          |         |        |   |         |        | 19,516 |  
|                                                                           |                                                                    |                          |         |        |        |      |          |         |        |   |         |       
|CASH FROM DISCONTINUED OPERATIONS                                          |                                                                    |                          |         |        |        |      |          |         |        |   | 21,033  |       
|                                                                           |                                                                    |                          |         |        |        |      |          |         |        |   |         |       
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                   |                                                                    |                          | (53,965 | )      |        |      | (112,222 | )       |        |   | 126,292 |       
|CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                             |                                                                    |                          | 81,517  |        |        |      | 193,739  |         |        |   | 67,447  |       
|                                                                           |                                                                    |                          |         |        |        |      |          |         |        |   |         |       
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                   |                                                                    | $                        | 27,552  |        |        | $    | 81,517   |         |        | $ | 193,739 |       
|                                                                           |                                                                    |                          |         |        |        |      |          |         |        |   |         |       
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                          |                                                                    |                          |         |        |        |      |          |         |        |   |         |       
|                                                                           | Cash paid (received) during the year for:                          |                          |         |        |        |      |          |         |        |   |         |        |       
|                                                                           |                                                                    | Interest paid            |         | $      | 20,706 |      |          | $       | 21,586 |   |         | $      | 24,634 |  
|                                                                           |                                                                    | Interest received        |         |        | (4,082 | )    |          |         | (3,605 | ) |         |        | (9,161 | )
|                                                                           |                                                                    | Income taxes             |         |        | 10,941 |      |          |         | 2,003  |   |         |        | 3,914  |  
|                                                                           |                                                                    | Income tax refunds       |         |        | (968   | )    |          |         | (9,897 | ) |         |        | (2,896 | )
|SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND
    FINANCING ACTIVITIES: |                                                                    |                          |         |        |        |      |          |         |        |   |         |       
|                                                                           | Issuance of restricted stock grants and
    restricted stock units |                          |         | (2,271 | )      |      |          | (1,130  | )      |   |         | (1,350 | )     
|                                                                           | Retirement of treasury stock                                       |                          |         |        |        |      |          | (62,139 | )      |   |         |        |       

(Concluded)

See accompanying notes to consolidated financial
statements.

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001




|   |                      
|-- | ---------------------
|1. | BASIS OF PRESENTATION

The consolidated financial statements reflect the
results of Pulitzer Inc. and its subsidiaries and affiliated
entities (collectively, the Company) newspaper
publishing and new-media operations located in 14 United
States markets.

The Companys newspaper holdings include
operations in St. Louis, Missouri, where the St. Louis
Post-DispatchLLC (PD LLC) publishes the
St. Louis Post-Dispatch (the
Post-Dispatch) and Suburban Journals of
Greater St. Louis LLC publishes the Suburban Journals, and in
Tucson, Arizona, where Star Publishing Company (Star
Publishing) publishes the Arizona Daily Star(the
Star). In Tucson, Star Publishing shares, on
an equal basis, the combined results of the Starand the
Tucson Citizen(the Citizen),published by Gannett Co., Inc. (Gannett).

Pulitzer Newspapers, Inc. and its subsidiaries
(the PNI Group) publish 12 dailies that serve
markets in the Midwest, Southwest and West, and more than
65 weekly newspapers, shoppers and niche publications.

Pulitzer Inc. was capitalized on March 18,
1999 with approximately $550.0 million in cash and all the other
assets (other than broadcast assets) of Pulitzer Publishing
Company (Old Pulitzer) as a result of the Spin-off
(as defined below) and is now operating the principal newspaper
publishing and related new-media businesses formerly operated by
Old Pulitzer (including its subsidiaries) and certain other
newspapers acquired since the Broadcast Transaction (as defined
below). Pulitzer Inc. 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, 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, Pulitzer Inc. 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.



|   |                                               
|-- | ----------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES

Basis of Consolidation  The
consolidated financial statements include the accounts of
Pulitzer Inc and its subsidiary companies, all of which are
wholly-owned except for Pulitzer Inc.s (including another
subsidiary) 95 percent interest in the results of operations of
the PD LLC and STL Distribution Services LLC (DS
LLC), a distribution company serving the St. Louis market
(see Note 4). All significant intercompany transactions
have been eliminated from the consolidated financial statements.

Revenue Recognition  Advertising
revenue is recognized when ads are published. Circulation
revenue is recognized when the newspaper is delivered to the
customer. Other revenue is recognized when the product or
service has been delivered.

Fiscal Year  The Companys fiscal
year ends on the last Sunday of the calendar year. For 2003, the
Companys fiscal year began on December 30, 2002 and
ended on December 28, 2003. In 2003, 2002 and 2001, the
fourth quarter was 13 weeks and the year was 52 weeks.
For ease of presentation, the Company has presented
December 31 as the year-end for each of the last three
fiscal years.

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Continued

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 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
(SFAS) No. 115.

Accounts receivable  The Company
evaluates its allowances for uncollectable trade accounts
receivable based on customers credit history, payment
trends, and other economic factors.

Inventory Valuation  Inventory, which
consists primarily of newsprint, is stated at the lower of cost
or market. In the first quarter of fiscal 2002, the Company
changed its method of determining the cost of newsprint
inventories from the last-in, first-out (LIFO)
method to the first-in, first-out (FIFO) method. The
Company believes that the FIFO method better measures the
current value of such inventories and provides a more
appropriate matching of revenues and expenses. The effect of
this change was immaterial to the consolidated financial results
of the prior reporting periods of the Company and, therefore,
did not require retroactive restatement of the results for those
periods. Ink and other miscellaneous supplies are generally
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. The Company depreciates buildings over 15 to
35 years and all other property over lives ranging from 3
to 15 years.

Intangible Assets Other Than Goodwill 
Intangible assets other than goodwill are amortized over lives
ranging from 4 to 23 years. In addition, the intangible
asset relating to the Companys additional minimum pension
liability under SFAS 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 domestic
and foreign corporate equity securities, government and
corporate bonds, and cash.

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 employee groups
prior to retirement at 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

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Continued

probable that such benefits will be paid and when
sufficient information exists to make reasonable estimates of
the amounts to be paid.

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 expected 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. As a consequence, compensation
expense is not recorded by the Company for the issuance of stock
options or for shares purchased under the employee stock
purchase plans.

Earnings Per Share of Stock  Basic
earnings per share of stock are computed using the weighted
average number of common and Class B common shares
outstanding during the applicable period. Diluted earnings per
share of stock are computed using the weighted average number of
common and Class B common shares outstanding and common
stock equivalents (see Note 16).

Segment Information  The Company
aggregates its St. Louis operations and its PNI Group
operations into one reportable segment, publishing.

Derivative Instruments and Hedging
Activities  In June 1998 the Financial Accounting
Standards Board (FASB) issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging
Activities, which after being amended by SFAS Nos. 137 and
138, was effective for fiscal years beginning after
June 15, 2000. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments including certain
derivative instruments embedded in other contracts and hedging
activities. The Company recorded no transition adjustment upon
adoption of SFAS No. 133 on January 1, 2001.

In December 2001 and August 2003 the Company
executed fixed-to-floating interest rate swap contracts in the
current combined amount of $150.0 million. The swap
contracts mature with the Companys debt on April 28,
2009. The Company accounts for all swaps as fair value hedges
and employs the short cut method. These interest rate swap
contracts have the effect of converting the interest cost for
$150.0 million of the Companys debt from fixed rate
to variable rate. As of December 28, 2003, approximately
49 percent of the Companys long-term interest cost is
subject to variable rates.

In October 2002 the Company terminated other
executed swap contracts totaling $75.0 million, resulting
in a net gain of $5.0 million. The Company initially
recognized the $5.0 million cash receipt, representing the
increased fair value of the long-term debt at the date of the
swap terminations, as an increase in long-term liabilities with
subsequent, ratable amortization as a reduction of interest
expense over the remaining life of the original interest rate
swap contracts which would have expired on April 28, 2009.

New Accounting Pronouncements  In July
2001 FASB issued SFAS No. 141, Business Combinations(SFAS No. 141), and SFAS No. 142,
Goodwill and Other Intangible Assets (SFAS
No. 142). SFAS No. 141 requires that all
business combinations be accounted for under the purchase
method. The statement further requires separate recognition of
intangible assets that meet certain criteria. The statement
applies to all business combinations initiated after
June 30, 2001. The adoption of SFAS No. 141 did not
have a material impact on the consolidated results of
operations, financial position or liquidity of the Company.

In 2002 the Company adopted SFAS No. 142,
which requires an intangible asset that is acquired to be
initially recognized and measured based on its fair value. The
statement also provides that goodwill and other

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Continued

indefinite-lived intangible assets should not be
amortized, but shall be tested for impairment annually, or more
frequently if circumstances indicate potential impairment,
through a comparison of fair value to their carrying amount.

SFAS No. 142, among other things, eliminates
the amortization of goodwill and certain identified intangible
assets. The Company tests intangible assets, including goodwill,
that are not subject to amortization for impairment annually, or
more frequently if events or changes in circumstances indicate
that the assets might be impaired, using a two step impairment
assessment. The first step of the impairment test identifies
potential impairment and compares the fair value with their
carrying amount, including goodwill. The Company evaluates
impairment at each of its St. Louis, PNI, and Tucson
reporting units. If the fair value exceeds the carrying amount,
goodwill is not considered impaired, and the second step of the
impairment test is not necessary. If the carrying amount exceeds
the fair value, the second step of the impairment test shall be
performed to measure the amount of impairment loss, if any. In
accordance with the provisions of SFAS No. 142, the Company
conducted the first step of impairment tests as of the beginning
of its 2002 fiscal year. The Company assessed the fair value by
considering each reporting units expected future cash
flows; recent purchase prices paid for entities within its
industry, and the Companys market capitalization. The
Companys discounted cash flow evaluation utilizes a
discount rate that corresponds to the Companys weighted
average cost of capital. Given consideration of these factors,
the Company concluded that the fair value of each reporting unit
exceeded the carrying amounts of its net assets and,
accordingly, no impairment loss was recognized. Subsequent
annual impairment tests indicate that the fair value of the
reporting units continue to exceed their carrying amounts.
Subsequent impairments, if any, would be classified as an
operating expense.

Upon adoption of SFAS No. 142, the
transition provisions of SFAS No. 141 also became
effective. These transition provisions specify criteria for
determining whether an acquired intangible asset should be
recognized separately from goodwill. Intangible assets that meet
certain criteria will qualify for recording on the balance sheet
and will be amortized in the income statement. Such intangible
assets will be subject to a periodic impairment test based on
estimated fair value. At the beginning of the Companys
2002 fiscal year, in accordance with the provisions of SFAS
No. 142, the Company reclassified the net carrying value of
certain intangible assets in the amount of $41.0 million to
goodwill (See Note 6).

In 2001 the Company early adopted SFAS
No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (SFAS No. 144).In
accordance with the provisions of SFAS No. 144, the
operations and related gains and losses on properties sold in
2001 have been presented as discontinued operations in the
accompanying consolidated statements of income.

In June 2002 FASB issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities(SFAS 146), which requires that a
liability for a cost associated with exit or disposal activities
be recognized and measured initially at fair value in the period
in which the liability is incurred. SFAS 146 is effective for
exit or disposal activities initiated after December 31,
2002. The adoption of SFAS No. 146 did not have a material
impact on the Companys consolidated financial condition or
results of operations.

In December 2002 the FASB issued SFAS
No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. This
pronouncement amends SFAS No. 123 to provide alternative methods
of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of
SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements for fiscal years ending
December 15, 2002 and for interim periods beginning after
December 15, 2002, respectively, about the method of
accounting for stock-based employee compensation and the effect
of the method used on reported results. The adoption of

45



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Continued

SFAS No. 148 did not have a material impact
on the Companys consolidated financial condition or
results of operations.

In April 2003 FASB issued SFAS No. 149,
Amendment of Statement 133 on Derivative Instruments and
Hedging Activities(SFAS No. 149). SFAS
No. 149 amends and clarifies financial accounting and
reporting for derivative instruments and for hedging activities
under SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 149 is
effective for contracts entered into or modified after
June 30, 2003 and for hedging relationships designated
after June 30, 2003. The Companys adoption of SFAS
No. 149 did not have a material impact on the consolidated
financial statements.

In May 2003 FASB issued SFAS No. 150,
Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity(SFAS
No. 150). SFAS No. 150 established standards for how
an issuer classifies and measures certain financial instruments
with characteristics of both liabilities and equity. SFAS
No. 150 was effective for financial instruments entered
into or modified after May 31, 2003, and otherwise was
effective at the beginning of the first interim period beginning
after June 15, 2003. The Company adopted certain provisions
of SFAS No. 150 during 2003 which did not have a material
impact on the Companys consolidated financial condition or
results of operations.

On November 7, 2003, the FASB issued Staff
Position 150-3, which deferred indefinitely the application of
those provisions of SFAS No. 150 associated with the
redemption of non-controlling interests in limited life
entities. The provisions, as previously written, would have
applied to Heralds five percent interest in the results of
operations of PD LLC and DS LLC (See note 4). Accordingly, the
Company presents its consolidated results of operations,
financial position, and cash flows absent any potential impact
of the deferred provisions of SFAS No. 150. The Company
cannot predict and, accordingly, is not able to determine what
the ultimate impact on the Companys consolidated financial
statements, if any, might be from future FASB action concerning
SFAS No. 150.

In November 2002 FASB issued Financial
Interpretation (FIN) No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN
No. 45 requires a guarantor to recognize, at the inception
of the guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. It also provides
additional guidance on the disclosure of the guarantees. The
recognition and measurement provisions are effective for
guarantees made or modified after December 31, 2002. The
disclosure provisions are effective for fiscal periods ending
after December 15, 2002. The Companys adoption of the
measurement provisions of FIN No. 45 did not have a
material impact on the consolidated financial statements.

In January 2003 FASB issued FIN No. 46,
Consolidation of Variable Interest Entities. FIN
No. 46 provides guidance surrounding consolidation based on
controlling financial interest and provides new quantitative
guidelines to various variable interest entities as defined in
the statement. The interpretation applies immediately to
variable interest entities created after January 31, 2003,
and in the first fiscal year or interim period beginning after
June 15, 2003 to variable interest entities acquired before
February 1, 2003. In December 2003, FASB issued FIN
No. 46R to clarify certain provisions of FIN No. 46.
Application of FIN No. 46R is required for public entities
that have interests in structures commonly referred to as
special-purpose entities for periods ending after
December 15, 2003. Application by public entities for all
other types of variable interest entities is required for
periods ending after March 15, 2004. The Company adopted
the appropriate provisions of FIN No. 46 and No. 46R during
2003, which did not have a material impact on the consolidated
financial statements. The Company does not believe it will be
required to consolidate or disclose any information related to
variable interest entities.

46



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                                           
|-- | ----------------------------------------------------------
|2. | SUMMARY OF SIGNIFICANT ACCOUNTING
    POLICIES  Continued

In December 2003, the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (the Act),
was signed into law. The Act introduced a prescription drug
benefit under Medicare (Medicare Part D) and a federal
subsidy to sponsors of retiree health care benefit plans that
provide a benefit that is at least actuarially equivalent (as
that term is defined in the Act) to Medicare Part D. At present,
detailed regulations necessary to implement the Act have not
been issued. Additionally, certain accounting issues raised by
the Act are not explicitly addressed in existing accounting
literature, such as FASB Statement No. 106,
Employers Accounting for Postretirement Benefits Other
than Pensions. FASB Staff Position 106-1, Accounting and
Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003(FSP 106-1), which is effective for interim
or annual financial statements for fiscal years which ended
after December 7, 2003, permits a sponsor of a
postretirement health care plan that provides a prescription
drug benefit to make a one-time election to defer accounting for
the effects of the Act. As the Company uses a September 30,
2003 measurement date and the Act was enacted after the
measurement date, the Company will be eligible to make the one
time election to defer or adopt the provisions of FSP 106-1
during the quarter ended March 31, 2004. Accordingly, the
Companys measures of the accumulated postretirement
benefit obligation ( the APBO) or net periodic
postretirement benefit cost in the accompanying financial
statements and footnotes do not reflect the effects of the Act
on the plan. Based upon information currently available
including the current provisions of the Companys plans,
management believes the potential impact of adopting the Act
will decrease the APBO by approximately $12 million and
result in an annual benefit approximating $1.5 million.
Specific authoritative guidance on the accounting for the
federal subsidy is pending and that guidance, when issued, could
require the sponsor to change previously reported information.

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  Certain
reclassifications have been made to the 2002 and 2001
consolidated financial statements to conform to the 2003
presentation.



|   |                                            
|-- | -------------------------------------------
|3. | STOCK-BASED EMPLOYEE COMPENSATION
    PLANS

At December 31, 2003, the Company has two
stock-based employee compensation plans, which are described
more fully in Note 15. The Company accounts for those plans
under the recognition and measurement principals of APB Opinion
No. 25, Accounting for Stock Issued to Employees,
and related Interpretations. Stock-based employee compensation
cost associated with restricted stock grants and restricted
stock awards is reflected in income for 2003, 2002 and 2001. No
stock-based employee compensation cost is reflected in net
income for stock option plans as all options granted under those
plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following
table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition

47



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                                        
|-- | -------------------------------------------------------
|3. | STOCK-BASED EMPLOYEE COMPENSATION
    PLANS  Continued

provisions of FASB Statement No. 123,
Accounting for Stock-Based Compensation(SFAS
No. 123), to stock-based employee compensation.

|                                                                                                                                                   |                       |                                    |        |      |  |      |        |      |  |   |        |      | 
|-------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | ---------------------------------- | ------ | ---- |  | ---- | ------ | ---- |  | - | ------ | ---- | 
|                                                                                                                                                   |                       |                                   
|                                                                                                                                                   |                       | Year Ended December 31,           
|                                                                                                                                                   |                       |                                   
|                                                                                                                                                   |                       | 2003                               |        | 2002 |  | 2001
|                                                                                                                                                   |                       |                                    |        |      |  |     
|                                                                                                                                                   |                       |                                   
|                                                                                                                                                   |                       | (In thousands, except earnings per
|                                                                                                                                                   |                       | share)                            
|Net income, as reported                                                                                                                            |                       | $                                  | 42,177 |      |  | $    | 34,699 |      |  | $ | 10,662 |     
|Add: Stock-based employee compensation expense
    included in reported net income, net of related tax effects                                     |                       |                                    | 808    |      |  |      | 549    |      |  |   | 508    |     
|Deduct: Total stock-based employee compensation
    expense determined under fair value based method for all awards,
    net of related tax effect |                       |                                    | (4,949 | )    |  |      | (5,136 | )    |  |   | (4,865 | )   
|                                                                                                                                                   |                       |                                    |        |      |  |      |        |      |  |   |        |     
|Pro forma net income                                                                                                                               |                       | $                                  | 38,036 |      |  | $    | 30,112 |      |  | $ | 6,305  |     
|                                                                                                                                                   |                       |                                    |        |      |  |      |        |      |  |   |        |     
|Pro forma earnings per share:                                                                                                                      |                       |                                    |        |      |  |      |        |      |  |   |        |     
|                                                                                                                                                   | Basic  as reported   |                                    | $      | 1.97 |  |      | $      | 1.63 |  |   | $      | 0.50 | 
|                                                                                                                                                   | Basic  pro forma     |                                    | $      | 1.78 |  |      | $      | 1.42 |  |   | $      | 0.30 | 
|Pro forma earnings per share:                                                                                                                      |                       |                                    |        |      |  |      |        |      |  |   |        |     
|                                                                                                                                                   | Diluted  as reported |                                    | $      | 1.95 |  |      | $      | 1.62 |  |   | $      | 0.50 | 
|                                                                                                                                                   | Diluted  pro forma   |                                    | $      | 1.76 |  |      | $      | 1.40 |  |   | $      | 0.30 | 

As required by SFAS No. 123, the Company has
estimated the fair value of its option grants by using the
binomial options pricing model with the following assumptions:

|                        |  |              |      |      |  |      |      |   |  |  |      |  
|----------------------- |  | ------------ | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                        |  |             
|                        |  | Year Ended  
|                        |  | December 31,
|                        |  |             
|                        |  | 2003         |      | 2002 |  | 2001
|                        |  |              |      |      |  |     
|Expected life (years)   |  |              | 7    |      |  |      | 7    |   |  |  | 7    |  
|Risk-free interest rate |  |              | 3.5  | %    |  |      | 4.5  | % |  |  | 5.0  | %
|Volatility              |  |              | 21.3 | %    |  |      | 27.0 | % |  |  | 21.0 | %
|Dividend yield          |  |              | 1.5  | %    |  |      | 1.5  | % |  |  | 1.4  | %



|   |                  
|-- | -----------------
|4. | AGENCY AGREEMENTS

PD LLC Operating Agreement

On May 1, 2000, Pulitzer Inc. and The Herald
Company, Inc. (Herald) completed the transfer of
their respective interests in the assets and operations of the
Post-Dispatchand certain related businesses to a new
joint venture (the Venture), known as PD LLC.
Pulitzer Inc. is the managing member of PD LLC. Under the terms
of the operating agreement governing PD LLC (the Operating
Agreement), Pulitzer Inc. and one of its subsidiaries hold
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 consolidated
statements of income. Also, under the terms of the Operating
Agreement, Herald received on May 1, 2000 a cash
distribution of $306.0 million from PD LLC (the
Initial Distribution). This distribution was
financed by a $306.0 million borrowing by PD LLC (the
Loan). Pulitzer Inc.s entry into the Venture
was 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 $15.0 million and the number of years since
May 1, 2000, but not in

48



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                  
|-- | ---------------------------------
|4. | AGENCY AGREEMENTS 
    Continued

excess of $150.0 million (the
Reserve). PD LLC is not required to maintain the
Reserve after May 1, 2010. On May 1, 2010, Herald will
have a one-time right to require PD LLC to redeem Heralds
interest in PD LLC, together with Heralds interest, if
any, in another limited liability company in which Pulitzer Inc.
is the managing member and which is engaged in the business of
delivering publications and products in the greater
St. Louis metropolitan area (DS LLC). The
May 1, 2010 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, and from DS
LLC, being equal to $275.0 million. 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 Pulitzer Inc. and one of its subsidiaries and
Herald to PD LLC and the Operating Agreement or from the
transactions effected in connection with the organization of DS
LLC, Herald generally will be entitled to receive a special
distribution from PD LLC in an amount that corresponds,
approximately, to the present value of the after-tax benefit to
the members of PD LLC of the tax basis increase. Upon the
termination of PD LLC and DS 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
interests in PD LLC and DS LLC, to be paid in cash by Pulitzer
Inc. That amount will be equal to the amount of Heralds
capital accounts, after allocating the gain or loss that would
result from a cash sale of PD LLC and DS 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 and from DS LLC, including the Initial
Distribution, the special distribution described above, if any,
and the liquidation amount (based on certain assumptions),
exceeds $325.0 million.

The actual amount payable to Herald either on
May 1, 2010 or upon the termination of PD LLC and DS LLC on
May 1, 2015 will depend on such variables as future cash
flows, the amounts of any distributions to Herald prior to such
payment, PD LLC and DS LLCs rate of growth and market
valuations of newspaper properties. While the amount of such
payment cannot be predicted with certainty, Pulitzer Inc.
currently estimates (assuming a 5 percent annual growth
rate in Heralds capital accounts, no special distribution
as described above and consistent newspaper property valuation
multiples) that the amount of such payment would not exceed
$100 million. Pulitzer Inc. further believes that it will
be able to finance such payment either from available cash
reserves or with the proceeds of a debt issuance.

Prior to May 1, 2000, the operations of the
Post-Dispatchand certain related businesses, referred to
as the St. Louis Agency, were governed by the
St. Louis Agency Agreement dated March 1, 1961, as
amended, between Pulitzer Inc. and Herald. Under that agreement,
Pulitzer Inc. and Herald generally shared the operating profits
and losses, as well as capital expenditures of the
Post-Dispatch, on a 50-50 basis.

TNI Partners

In Tucson, Arizona, a separate partnership, TNI
Partners, (TNI), acting as agent for the Star
Publishing and Gannett, is responsible for printing, delivery,
advertising, and circulation of the Starand the
Citizen. TNI collects all of the receipts and income
relating to the Starand 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 Publishing
and Gannett. The Companys 50 percent share of
TNIs operating results is reported as Equity in
earnings of Tucson newspaper partnership in the
accompanying consolidated statements of income.

49



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                  
|-- | ---------------------------------
|4. | AGENCY AGREEMENTS 
    Continued

Summarized financial information for TNI is as
follows:

|                    |  |                     |        |      |  |   |        | 
|------------------- |  | ------------------- | ------ | ---- |  | - | ------ | 
|                    |  |                    
|                    |  | Year Ended Dec. 31,
|                    |  |                    
|                    |  | 2003                |        | 2002
|                    |  |                     |        |     
|                    |  |                    
|                    |  | (In thousands)     
|Current assets      |  | $                   | 15,935 |      |  | $ | 17,102 | 
|Current liabilities |  | $                   | 9,315  |      |  | $ | 8,582  | 
|Partners equity    |  | $                   | 6,620  |      |  | $ | 8,520  | 

|                                                                                                                          |  |                         |         |      |  |      |         |  |  |   |         | 
|------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                                                                                                                          |  |                        
|                                                                                                                          |  | Year Ended December 31,
|                                                                                                                          |  |                        
|                                                                                                                          |  | 2003                    |         | 2002 |  | 2001
|                                                                                                                          |  |                         |         |      |  |     
|                                                                                                                          |  |                        
|                                                                                                                          |  | (In thousands)         
|Operating revenues                                                                                                        |  | $                       | 106,807 |      |  | $    | 104,578 |  |  | $ | 106,368 | 
|Operating income                                                                                                          |  | $                       | 32,128  |      |  | $    | 35,488  |  |  | $ | 35,008  | 
|Companys share of operating income before
    depreciation, amortization, and general and administrative
    expenses(1) |  | $                       | 16,064  |      |  | $    | 17,744  |  |  | $ | 17,504  | 



---



|    |                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Companys share of Stardepreciation, amortization, and general and administrative
    expenses are reported as operating expenses on the
    Companys consolidated statements of income. In aggregate,
    these amounts totaled $2.3 million per year for 2003, 2002
    and 2001.



|   |                        
|-- | -----------------------
|5. | DISCONTINUED OPERATIONS

The Company did not sell any newspaper operations
or other businesses in 2003 or 2002 and, as a result, did not
report any gains or losses from discontinued operations during
2003 and 2002. In 2001 the Company recorded a net loss of
$1.6 million related to the operation and sale of the
newspapers located in Troy, Ohio, and Petaluma, California, and
the operation and sale of the St. Louis Internet Access Provider
(ISP) business (the Sale Transactions)
and are presented as discontinued operations in the accompanying
consolidated statements of income.

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

|                         |  |                   |        |  
|------------------------ |  | ----------------- | ------ | -
|                         |  | Year Ended       
|                         |  | December 31, 2001
|                         |  |                  
|                         |  | (In thousands)   
|Operating revenues       |  | $                 | 2,466  |  
|Operating expenses       |  |                   | 3,211  |  
|                         |  |                   |        |  
|Operating loss           |  |                   | (745   | )
|Interest expense         |  |                   | 0      |  
|Loss on sale of assets   |  |                   | (2,671 | )
|                         |  |                   |        |  
|Loss before income taxes |  |                   | (3,416 | )
|Income tax benefit       |  |                   | 1,792  |  
|                         |  |                   |        |  
|Net loss                 |  | $                 | (1,624 | )
|                         |  |                   |        |  

50



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                     
|-- | ------------------------------------
|6. | GOODWILL AND OTHER INTANGIBLE ASSETS

On December 31, 2001, the Company adopted
SFAS No. 142 and the transition provisions of SFAS
No. 141, as discussed in more detail in Note 2. As a
result, the Company ceased amortizing goodwill and reclassified
the December 31, 2001, carrying value of certain intangible
assets to goodwill. Changes in the carrying amounts of goodwill
and intangible assets for the Company for the year ended
December 31, 2003 and 2002, were as follows:

|                                           |  |                |         |            |  |   |         |  
|------------------------------------------ |  | -------------- | ------- | ---------- |  | - | ------- | -
|                                           |  |                |         | Intangible
|                                           |  | Goodwill       |         | Assets    
|                                           |  |                |         |           
|                                           |  |               
|                                           |  | (In thousands)
|Balance at December 31, 2001               |  | $              | 747,571 |            |  | $ | 83,268  |  
|Intangible assets reclassified to goodwill |  |                | 41,034  |            |  |   | (41,034 | )
|Additions during the period                |  |                | 9,114   |            |  |   | 404     |  
|Amortization expense                       |  |                |        |            |  |   | (4,428  | )
|                                           |  |                |         |            |  |   |         |  
|Balance at December 31, 2002               |  | $              | 797,719 |            |  | $ | 38,210  |  
|                                           |  |                |         |            |  |   |         |  

|                             |  |                |         |            |  |   |        |  
|---------------------------- |  | -------------- | ------- | ---------- |  | - | ------ | -
|                             |  |                |         | Intangible
|                             |  | Goodwill       |         | Assets    
|                             |  |                |         |           
|                             |  |               
|                             |  | (In thousands)
|Balance at December 31, 2002 |  | $              | 797,719 |            |  | $ | 38,210 |  
|Additions during the period  |  |                | 13,690  |            |  |   | 3,529  |  
|Amortization expense         |  |                |        |            |  |   | (4,522 | )
|                             |  |                |         |            |  |   |        |  
|Balance at December 31, 2003 |  | $              | 811,409 |            |  | $ | 37,217 |  
|                             |  |                |         |            |  |   |        |  

As required by SFAS No. 142, the results for
the prior years have not been restated. The reconciliation of
reported net income and earnings per share to adjusted net
income for the full year ended December 31, 2001, was as
follows:

|                                                                  |  |   |        | 
|----------------------------------------------------------------- |  | - | ------ | 
|(In thousands, except share data)                                
|Reported net income                                               |  | $ | 10,662 | 
|Add back: goodwill amortization                                   |  |   | 13,680 | 
|Add back: intangible asset amortization reclassed
    to goodwill |  |   | 1,033  | 
|                                                                  |  |   |        | 
|Adjusted net income                                               |  | $ | 25,375 | 
|                                                                  |  |   |        | 
|Basic EPS:                                                        |  |   |        | 
|Reported net income per share                                     |  | $ | 0.50   | 
|Add back: goodwill amortization                                   |  |   | 0.65   | 
|Add back: intangible asset amortization reclassed
    to goodwill |  |   | 0.05   | 
|                                                                  |  |   |        | 
|Adjusted net income per basic share                               |  | $ | 1.20   | 
|                                                                  |  |   |        | 
|Diluted EPS:                                                      |  |   |        | 
|Reported net income per share                                     |  | $ | 0.50   | 
|Add back: goodwill amortization                                   |  |   | 0.64   | 
|Add back: intangible asset amortization reclassed
    to goodwill |  |   | 0.05   | 
|                                                                  |  |   |        | 
|Adjusted net income per diluted share                             |  | $ | 1.19   | 
|                                                                  |  |   |        | 

51



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                                     
|-- | ----------------------------------------------------
|6. | GOODWILL AND OTHER INTANGIBLE
    ASSETS  Continued

Other intangible assets at December 31, 2003
and December 31, 2002 were as follows:

|                         |                                  |                               |   |              |        |      |   |        |        |  |   |        |        | 
|------------------------ | -------------------------------- | ----------------------------- | - | ------------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|                         |                                  |                               |   | Accumulated  |        | Net 
|                         |                                  | Cost                          |   | Amortization |        | Cost
|                         |                                  |                               |   |              |        |     
|                         |                                  |                              
|                         |                                  | (In thousands)               
|December 31, 2003        |                                  |                               |   |              |        |      |   |        |        |  |   |       
|Other intangible assets: |                                  |                               |   |              |        |      |   |        |        |  |   |       
|                         | Advertising base                 |                               | $ | 33,552       |        |      | $ | 7,487  |        |  | $ | 26,065 |       
|                         | Subscriber lists                 |                               |   | 23,300       |        |      |   | 14,040 |        |  |   | 9,260  |       
|                         | Long-term pension asset          |                               |   | 1,260        |        |      |   |        |        |  |   | 1,260  |       
|                         | Non-compete agreements and other |                               |   | 5,341        |        |      |   | 4,709  |        |  |   | 632    |       
|                         |                                  |                               |   |              |        |      |   |        |        |  |   |       
|                         |                                  | Total other intangible assets |   | $            | 63,453 |      |   | $      | 26,236 |  |   | $      | 37,217 | 
|                         |                                  |                               |   |              |        |      |   |        |        |  |   |       
|December 31, 2002        |                                  |                               |   |              |        |      |   |        |        |  |   |       
|Other intangible assets: |                                  |                               |   |              |        |      |   |        |        |  |   |       
|                         | Advertising base                 |                               | $ | 31,816       |        |      | $ | 5,928  |        |  | $ | 25,888 |       
|                         | Subscriber lists                 |                               |   | 22,024       |        |      |   | 11,387 |        |  |   | 10,637 |       
|                         | Long-term pension asset          |                               |   | 996          |        |      |   |        |        |  |   | 996    |       
|                         | Non-compete agreements and other |                               |   | 5,088        |        |      |   | 4,399  |        |  |   | 689    |       
|                         |                                  |                               |   |              |        |      |   |        |        |  |   |       
|                         |                                  | Total other intangible assets |   | $            | 59,924 |      |   | $      | 21,714 |  |   | $      | 38,210 | 
|                         |                                  |                               |   |              |        |      |   |        |        |  |   |       

Pretax amortization expense of other intangible
assets for the year ended December 31, 2003, was
$4.5 million, and over the next five years is estimated to
be: $4.7 million for 2004, $4.6 million for 2005,
$4.4 million for 2006, $2.4 million for 2007 and
$1.9 million for 2008.



|   |                                              
|-- | ---------------------------------------------
|7. | ACQUISITION AND DISPOSITION OF
    PROPERTIES

In 2003 Pulitzer Inc.s subsidiaries
acquired businesses, principally those focused on distribution
operations in St. Louis, and weekly newspapers and niche
publications that compliment the PNI Groups daily
newspaper operations in Provo, Utah; Napa, California; Coos Bay,
Oregon; and Rhinelander, Wisconsin, for an aggregate price of
approximately $17.4 million. In 2002 Pulitzer Inc.
subsidiaries acquired businesses, principally St. Louis
newspaper distribution businesses, totaling $9.1 million.

In 2001 the Company recorded a pre-tax loss of
$2.7 million related to the sale of newspapers located in
Troy, Ohio and Petaluma, California, and the sale of the St.
Louis ISP business (the Sale Transactions). These
amounts are included in 2001 net income as a separate line, in
combination with operating results for these businesses, as
Loss from Discontinued Operations, Net of Tax.

On January 31, 2001, the PNI Group acquired,
in an asset purchase, The Lompoc Record, a daily
newspaper located in Lompoc, California. In addition, during
2001, the PNI Group acquired several weekly newspapers (in
separate transactions) that complement its daily newspapers in
several markets. In 2001 the PD LLC also acquired several
distribution businesses in St. Louis.

Pro forma results for the 2003, 2002, and 2001
acquisitions have not been provided because the impact is not
significant to the Companys consolidated results of
operations or financial position.

52



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                      
|-- | ---------------------
|8. | MARKETABLE SECURITIES

Investments classified as available-for-sale
securities at December 31, 2003 and 2002 consisted of the
following:

|                                                               |                      |                |         |            |  |            |     |       |  |   |     |      |   |   |         |         | 
|-------------------------------------------------------------- | -------------------- | -------------- | ------- | ---------- |  | ---------- | --- | ----- |  | - | --- | ---- | - | - | ------- | ------- | 
|                                                               |                      |                |         | Gross      |  | Gross      |     |      
|                                                               |                      | Amortized      |         | Unrealized |  | Unrealized |     | Fair 
|December 31, 2003:                                             |                      | Cost           |         | Gains      |  | Losses     |     | Value
|                                                               |                      |                |         |            |  |            |     |      
|                                                               |                      |               
|                                                               |                      | (In thousands)
|Debt securities issued by the U.S. Government and
    agencies |                      | $              | 153,697 |            |  | $          | 257 |       |  | $ | (96 | )    |   | $ | 153,858 |        
|Corporate securities                                           |                      |                | 31,467  |            |  |            | 141 |       |  |   | (95 | )    |   |   | 31,513  |        
|Asset-backed and mortgage-backed Securities                    |                      |                | 15,371  |            |  |            | 162 |       |  |   | (8  | )    |   |   | 15,525  |        
|                                                               |                      |                |         |            |  |            |     |       |  |   |     |      |   |   |         |        
|                                                               | Total investments(1) |                | $       | 200,535    |  |            | $   | 560   |  |   | $   | (199 | ) |   | $       | 200,896 | 
|                                                               |                      |                |         |            |  |            |     |       |  |   |     |      |   |   |         |        

|                                                               |                      |                |         |            |  |            |     |       |  |   |    |    |   |   |         |         | 
|-------------------------------------------------------------- | -------------------- | -------------- | ------- | ---------- |  | ---------- | --- | ----- |  | - | -- | -- | - | - | ------- | ------- | 
|                                                               |                      |                |         | Gross      |  | Gross      |     |      
|                                                               |                      | Amortized      |         | Unrealized |  | Unrealized |     | Fair 
|December 31, 2002:                                             |                      | Cost           |         | Gains      |  | Losses     |     | Value
|                                                               |                      |                |         |            |  |            |     |      
|                                                               |                      |               
|                                                               |                      | (In thousands)
|Debt securities issued by the U.S. Government and
    agencies |                      | $              | 115,472 |            |  | $          | 417 |       |  |   |    |    |   | $ | 115,889 |        
|Corporate securities                                           |                      |                | 19,415  |            |  |            | 99  |       |  | $ | (3 | )  |   |   | 19,511  |        
|Asset-backed and mortgage-backed Securities                    |                      |                | 7,971   |            |  |            | 6   |       |  |   |    |    |   |   | 7,977   |        
|                                                               |                      |                |         |            |  |            |     |       |  |   |    |    |   |   |         |        
|                                                               | Total investments(1) |                | $       | 142,858    |  |            | $   | 522   |  |   | $  | (3 | ) |   | $       | 143,377 | 
|                                                               |                      |                |         |            |  |            |     |       |  |   |    |    |   |   |         |        



---



|    |                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fair value of investments includes
    $148.6 million and $52.3 million reported as
    marketable securities and restricted cash and investments,
    respectively, on the Companys Consolidated Statements of
    Financial Position at December 31, 2003, and
    $112.9 million and $30.5 million at December 31,
    2002.

For the year ended December 31, 2003,
proceeds from the sale of marketable securities were
$298.5 million resulting in gross realized gains and losses
of $550,000 and $48,000, respectively. In addition, net
unrealized losses of $0.2 million, after tax, are included
in accumulated other comprehensive income for the year ended
December 31, 2003.

For the year ended December 31, 2002,
proceeds from sales of marketable securities were
$106.3 million, resulting in gross realized gains and
losses of $1.1 million and $38,000, respectively. In
addition, net unrealized gains of $0.3 million, after tax,
are included in accumulated other comprehensive income for the
year ended December 31, 2002.

The amortized cost and fair value of
available-for-sale securities as of December 31, 2003 and
2002, by contractual maturity, are shown in the following
tables. Contractual maturities may differ from actual maturities
as borrowers may have the right to call or repay obligations
with or without call or prepayment penalties. Asset-backed and
mortgage-backed securities are not included in the maturity
categories in the

53



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                      
|-- | -------------------------------------
|8. | MARKETABLE SECURITIES 
    Continued

following maturity summary, as actual maturities
may differ from contractual maturities because the underlying
mortgages may be called or prepaid without any penalties.

|                                            |                   |                |         |            |  |   |         |         | 
|------------------------------------------- | ----------------- | -------------- | ------- | ---------- |  | - | ------- | ------- | 
|                                            |                   | Amortized      |         |           
|December 31, 2003:                          |                   | Cost           |         | Fair Value
|                                            |                   |                |         |           
|                                            |                   |               
|                                            |                   | (In thousands)
|Due in one year or less                     |                   | $              | 71,891  |            |  | $ | 71,950  |        
|Due after one year through five years       |                   |                | 113,273 |            |  |   | 113,420 |        
|Asset-backed and mortgage-backed securities |                   |                | 15,371  |            |  |   | 15,526  |        
|                                            |                   |                |         |            |  |   |         |        
|                                            | Total investments |                | $       | 200,535    |  |   | $       | 200,896 | 
|                                            |                   |                |         |            |  |   |         |        

|                                            |                   |                |        |            |  |   |        |         | 
|------------------------------------------- | ----------------- | -------------- | ------ | ---------- |  | - | ------ | ------- | 
|                                            |                   | Amortized      |        |           
|December 31, 2002:                          |                   | Cost           |        | Fair Value
|                                            |                   |                |        |           
|                                            |                   |               
|                                            |                   | (In thousands)
|Due in one year or less                     |                   | $              | 70,071 |            |  | $ | 70,100 |        
|Due after one year through five years       |                   |                | 62,784 |            |  |   | 63,268 |        
|Due after five years through ten years      |                   |                | 2,032  |            |  |   | 2,032  |        
|Asset-backed and mortgage-backed securities |                   |                | 7,971  |            |  |   | 7,977  |        
|                                            |                   |                |        |            |  |   |        |        
|                                            | Total investments |                | $      | 142,858    |  |   | $      | 143,377 | 
|                                            |                   |                |        |            |  |   |        |        



|   |                       
|-- | ----------------------
|9. | FINANCING ARRANGEMENTS

In connection with the Venture (see Note 4),
on May 1, 2000, PD LLC borrowed $306.0 million (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 May 1, 2000 (Guaranty
Agreement) with the Lenders. In turn, pursuant to an
Indemnity Agreement dated May 1, 2000 (Indemnity
Agreement) between Herald and Pulitzer Inc., Herald agreed
to indemnify Pulitzer Inc. for any payments that Pulitzer Inc.
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 and the Operating Agreement require that PD
LLC maintain a minimum reserve balance, consisting of cash and
investments in U.S. government securities, totaling
approximately $54.8 million as of December 31, 2003.
The Loan agreement and the Operating Agreement provide for a
$3.75 million quarterly increase in the minimum reserve balance
through May 1, 2010, when the amount will total
$150.0 million.

In December 2001 and August 2003 the Company
executed fixed-to-floating interest rate swap contracts in the
current combined amount of $150.0 million. The swap
contracts mature with the Companys debt on April 28,
2009. The Company accounts for all swaps as fair value hedges
and employs the short cut method. These interest rate swap
contracts have the effect of converting the interest cost for
$150.0 million of the Companys debt from fixed rate
to variable rate. As of December 31, 2003, approximately
49 percent of the Companys long-term interest cost is
subject to variable rates.

In October 2002 the Company terminated other swap
contracts totaling $75.0 million, resulting in a net gain of
$5.0 million. The Company initially recognized the
$5.0 million cash receipt, representing the increased fair
value of the long-term debt at the date of the swap
terminations, as an increase in long-term

54



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|   |                                       
|-- | --------------------------------------
|9. | FINANCING ARRANGEMENTS 
    Continued

liabilities with subsequent, ratable amortization
as a reduction of interest expense over the remaining life of
the original interest rate swap contracts which would have
expired on April 28, 2009.

As of December 31, 2003, the fair value of
the interest rate swaps represented an unrealized gain of
$6.3 million, which was offset by an unrealized loss of
$6.3 million on the related portion of the long-term debt.



|    |              
|--- | -------------
|10. | PENSION PLANS

The Company and its subsidiaries have several
funded and unfunded noncontributory defined benefit pension
plans that together cover 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 domestic
and foreign corporate equity securities, government and
corporate bonds, and cash.

The Company uses a September 30 measurement
date for all of its pension plan obligations.

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

|                                                 |  |                         |        |      |  |      |         |   |  |   |         |  
|------------------------------------------------ |  | ----------------------- | ------ | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                 |  |                        
|                                                 |  | Year Ended December 31,
|                                                 |  |                        
|                                                 |  | 2003                    |        | 2002 |  | 2001
|                                                 |  |                         |        |      |  |     
|                                                 |  |                        
|                                                 |  | (In thousands)         
|Service cost for benefits earned during the year |  | $                       | 4,366  |      |  | $    | 4,228   |   |  | $ | 3,775   |  
|Interest cost on projected benefit obligation    |  |                         | 9,293  |      |  |      | 9,127   |   |  |   | 9,043   |  
|Expected return on plan assets                   |  |                         | (9,862 | )    |  |      | (10,379 | ) |  |   | (10,003 | )
|Amortization of prior service cost               |  |                         | 313    |      |  |      | 284     |   |  |   | 284     |  
|Amortization of transition obligation            |  |                         | 55     |      |  |      | 318     |   |  |   | 181     |  
|Amortization of (gain)/loss                      |  |                         | 401    |      |  |      | 25      |   |  |   | (494    | )
|Cost for special termination benefits            |  |                         | 128    |      |  |      | 127     |   |  |   | 380     |  
|                                                 |  |                         |        |      |  |      |         |   |  |   |         |  
|Net periodic pension cost                        |  | $                       | 4,694  |      |  | $    | 3,730   |   |  | $ | 3,166   |  
|                                                 |  |                         |        |      |  |      |         |   |  |   |         |  

55



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                          
|--- | -------------------------
|10. | PENSION PLANS  Continued

|                                                                          |                                        |                |         |         |   |   |         |         |  
|------------------------------------------------------------------------- | -------------------------------------- | -------------- | ------- | ------- | - | - | ------- | ------- | -
|                                                                          |                                        | Dec. 31        |         | Dec. 31
|                                                                          |                                        | 2003           |         | 2002   
|                                                                          |                                        |                |         |        
|                                                                          |                                        |               
|                                                                          |                                        | (In thousands)
|Change in benefit obligation:                                             |                                        |                |         |         |   |   |         |        
|Benefit obligation at beginning of year                                   |                                        | $              | 147,224 |         |   | $ | 135,103 |        
|Service cost                                                              |                                        |                | 4,366   |         |   |   | 4,228   |        
|Interest cost                                                             |                                        |                | 9,293   |         |   |   | 9,127   |        
|Actuarial loss                                                            |                                        |                | 7,499   |         |   |   | 7,556   |        
|Benefits paid                                                             |                                        |                | (8,767  | )       |   |   | (8,917  | )      
|Plan amendments                                                           |                                        |                | 559     |         |   |   | 0       |        
|Special termination benefits                                              |                                        |                | 128     |         |   |   | 127     |        
|                                                                          |                                        |                |         |         |   |   |         |        
|Benefit obligation at end of year                                         |                                        |                | 160,302 |         |   |   | 147,224 |        
|                                                                          |                                        |                |         |         |   |   |         |        
|Change in plan assets:                                                    |                                        |                |         |         |   |   |         |        
|Fair value of plan assets at beginning of year                            |                                        |                | 97,721  |         |   |   | 99,828  |        
|Actual gain (loss) on plan assets                                         |                                        |                | 18,067  |         |   |   | (4,572  | )      
|Employer contributions                                                    |                                        |                | 12,597  |         |   |   | 11,382  |        
|Benefits paid                                                             |                                        |                | (8,767  | )       |   |   | (8,917  | )      
|                                                                          |                                        |                |         |         |   |   |         |        
|Fair value of plan assets at end of year                                  |                                        |                | 119,618 |         |   |   | 97,721  |        
|                                                                          |                                        |                |         |         |   |   |         |        
|Funded status  benefit obligation in
    excess of plan assets           |                                        |                | 40,684  |         |   |   | 49,503  |        
|Unrecognized net actuarial loss                                           |                                        |                | (26,733 | )       |   |   | (27,843 | )      
|Unrecognized prior service cost                                           |                                        |                | (1,362  | )       |   |   | (1,115  | )      
|Unrecognized transition obligation                                        |                                        |                | 0       |         |   |   | (55     | )      
|                                                                          |                                        |                |         |         |   |   |         |        
|Net amount recognized as of September 30,
    2003 measurement date       |                                        |                | 12,589  |         |   |   | 20,490  |        
|Fourth quarter contribution                                               |                                        |                | (23,988 | )       |   |   | (476    | )      
|Net amount recognized                                                     |                                        | $              | (11,399 | )       |   | $ | 20,014  |        
|                                                                          |                                        |                |         |         |   |   |         |        
|Amounts recognized in the Statement of Financial
    Position consist of: |                                        |                |         |         |   |   |         |        
|                                                                          | Accrued benefit liability              |                | $       | 6,595   |   |   | $       | 38,044  |  
|                                                                          | Intangible asset (Note 6)              |                |         | (1,260  | ) |   |         | (996    | )
|                                                                          | Accumulated other comprehensive income |                |         | (16,734 | ) |   |         | (17,034 | )
|Net amount recognized                                                     |                                        | $              | (11,399 | )       |   | $ | 20,014  |        
|                                                                          |                                        |                |         |         |   |   |         |        

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 $160.3 million, $149.9 million and
$119.6 million, respectively, at September 30, 2003,
and were $147.2 million, $136.1 million and
$97.7 million, respectively, at September 30, 2002.

Additional Information

|                                                                                    |  |              |      |      |  |   |       | 
|----------------------------------------------------------------------------------- |  | ------------ | ---- | ---- |  | - | ----- | 
|                                                                                    |  |             
|                                                                                    |  | Year Ended  
|                                                                                    |  | December 31,
|                                                                                    |  |             
|                                                                                    |  | 2003         |      | 2002
|                                                                                    |  |              |      |     
|Increase/(decrease) in minimum liability included
    in other comprehensive income |  | $            | (311 | )    |  | $ | 8,206 | 
|                                                                                    |  |              |      |      |  |   |       | 

56



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                          
|--- | -------------------------
|10. | PENSION PLANS  Continued

Assumptions

Weighed-average assumptions used to determine
benefit obligations at December 31

|                              |  |      |     |      |  |  |      |  
|----------------------------- |  | ---- | --- | ---- |  |  | ---- | -
|                              |  | 2003 |     | 2002
|                              |  |      |     |     
|Discount rate                 |  |      | 6.0 | %    |  |  | 6.5  | %
|Rate of compensation increase |  |      | 3.5 | %    |  |  | 3.75 | %

Weighed-average assumptions used to determine
net periodic benefit cost for years ended
December 31

|                                         |  |      |      |      |  |      |     |   |  |  |     |  
|---------------------------------------- |  | ---- | ---- | ---- |  | ---- | --- | - |  |  | --- | -
|                                         |  | 2003 |      | 2002 |  | 2001
|                                         |  |      |      |      |  |     
|Discount rate                            |  |      | 6.5  | %    |  |      | 7.0 | % |  |  | 7.5 | %
|Expected long-term return on plan assets |  |      | 8.5  | %    |  |      | 9.0 | % |  |  | 8.5 | %
|Rate of compensation increase            |  |      | 3.75 | %    |  |      | 4.0 | % |  |  | 5.0 | %

The assumptions related to the expected long-term
return on plan assets were developed through an analysis of
historical market returns, current market conditions, and the
funds actual past experience in allocating among asset
classes. The Company uses estimates for future market returns
that are lower than actual long-term historical returns in order
to reflect recent market activity and the potential that future
returns may be lower than long-term historical trends would
indicate.

Plan Assets

The weighted-average asset allocation of the
Companys pension fund at December 31, 2003 and 2002,
was as follows:

Asset Allocation versus Policy
Allocation

|              |  |                   |            |               |  |      |     |   |  |  |     |  
|------------- |  | ----------------- | ---------- | ------------- |  | ---- | --- | - |  |  | --- | -
|              |  |                   |            |              
|              |  |                   |            | Allocation of
|              |  |                   |            | Plan Assets  
|              |  |                   |            | at           
|              |  |                   |            | December 31  
|              |  |                   |            |              
|Asset Classes |  | Policy Allocation |            | 2003          |  | 2002
|              |  |                   |            |               |  |     
|Equities      |  |                   | 65% to 70% |               |  |      | 68  | % |  |  | 67  | %
|Bonds         |  |                   | 35% to 30% |               |  |      | 32  | % |  |  | 33  | %
|Total         |  |                   | 100%       |               |  |      | 100 | % |  |  | 100 | %

The Pulitzer Statement of Investment Policy
outlines the governance structure for decision making, sets
investment objectives and restrictions, and establishes criteria
for selecting and evaluating investment managers. The use of
derivatives is strictly prohibited, except on a case-by-case
basis where the manager has a proven capability, and only to
hedge quantifiable risks such as exposure to foreign currencies.
An Investment Committee, consisting of Company executives and
supported by independent consultants, is responsible for
monitoring compliance with the Investment Policy.

The pension fund holds no Company securities
(common stock or other), directly or through separate accounts.

57



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                          
|--- | -------------------------
|10. | PENSION PLANS  Continued

Cash Flows

Contributions

Based on the Company forecast at
December 31, 2003, the Company expects to contribute
$1.4 million to the pension plan in 2004.

Estimated Future Benefit
Payments

The Company anticipates future benefit payments,
which reflect future service, to be paid from the pension trust
as follows:

|                |  |                  |      | 
|--------------- |  | ---------------- | ---- | 
|Year            |  | Pension Benefits
|                |  |                 
|                |  | (In millions)   
|2004            |  | $                | 9.6  | 
|2005            |  |                  | 9.6  | 
|2006            |  |                  | 9.6  | 
|2007            |  |                  | 9.7  | 
|2008            |  |                  | 9.8  | 
|Years 2009-2013 |  | $                | 51.1 | 

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, were approximately $0.8 million in both 2003 and
2002, and approximately $0.9 million in 2001. These amounts
have been recognized as an operating expense.

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 $2.1 million for
2003, 2002 and 2001.

11. POSTRETIREMENT AND POSTEMPLOYMENT
BENEFITS

The Company provides retiree medical and life
insurance benefits under varying postretirement plans at several
of its operating locations. The level and adjustment of
participant contributions vary depending on the specific
postretirement plan. In addition, the PD LLC provides
postemployment disability benefits to certain employee groups
prior to retirement at 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.

The Company uses a September 30 measurement
date for all of its postretirement plans.

58



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




11. POSTRETIREMENT AND POSTEMPLOYMENT
BENEFITS  Continued


The net periodic postretirement benefit cost
components for the Companys postretirement plans are as
follows:

|                                                 |  |                         |       |      |  |      |        |   |  |   |        |  
|------------------------------------------------ |  | ----------------------- | ----- | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                                 |  |                        
|                                                 |  | Year Ended December 31,
|                                                 |  |                        
|                                                 |  | 2003                    |       | 2002 |  | 2001
|                                                 |  |                         |       |      |  |     
|                                                 |  |                        
|                                                 |  | (In thousands)         
|Service cost for benefits earned during the year |  | $                       | 2,327 |      |  | $    | 2,006  |   |  | $ | 1,732  |  
|Interest cost on projected benefit obligation    |  |                         | 6,680 |      |  |      | 6,292  |   |  |   | 6,380  |  
|Expected return on plan assets                   |  |                         | (766  | )    |  |      | 0      |   |  |   | 0      |  
|Amortization of prior service cost               |  |                         | 10    |      |  |      | (1,143 | ) |  |   | (1,143 | )
|Amortization of net gain                         |  |                         | 360   |      |  |      | 360    |   |  |   | 360    |  
|                                                 |  |                         |       |      |  |      |        |   |  |   |        |  
|Net periodic postretirement benefit cost         |  | $                       | 8,611 |      |  | $    | 7,515  |   |  | $ | 7,329  |  
|                                                 |  |                         |       |      |  |      |        |   |  |   |        |  

For 2003, 2002 and 2001, the Company made
postretirement benefit payments of $5.4 million,
$5.9 million, and $5.3 million, respectively.

|                                                         |  |                |         |         |  |   |         |  
|-------------------------------------------------------- |  | -------------- | ------- | ------- |  | - | ------- | -
|                                                         |  | Dec. 31        |         | Dec. 31
|                                                         |  | 2003           |         | 2002   
|                                                         |  |                |         |        
|                                                         |  |               
|                                                         |  | (In thousands)
|Benefit obligation at beginning of year                  |  | $              | 106,378 |         |  | $ | 92,525  |  
|Service cost                                             |  |                | 2,327   |         |  |   | 2,006   |  
|Interest cost                                            |  |                | 6,680   |         |  |   | 6,292   |  
|Actuarial loss                                           |  |                | 13,225  |         |  |   | 11,326  |  
|Benefits paid                                            |  |                | (5,518  | )       |  |   | (5,771  | )
|                                                         |  |                |         |         |  |   |         |  
|Benefit obligation at end of year                        |  |                | 123,092 |         |  |   | 106,378 |  
|Change in Plan Assets:                                   |  |                |         |         |  |   |         |  
|Fair value of plan assets at beginning of year           |  |                | 14,472  |         |  |   | 0       |  
|Actual return on plan assets                             |  |                | 651     |         |  |   | 472     |  
|Employer contributions                                   |  |                | 13,485  |         |  |   | 19,770  |  
|Benefits paid                                            |  |                | (5,518  | )       |  |   | (5,770  | )
|                                                         |  |                |         |         |  |   |         |  
|Fair Value of Plan assets at end of year                 |  |                | 23,090  |         |  |   | 14,472  |  
|                                                         |  |                |         |         |  |   |         |  
|Funded status                                            |  |                | 100,002 |         |  |   | 91,906  |  
|Unrecognized net actuarial loss                          |  |                | (29,701 | )       |  |   | (16,065 | )
|Unrecognized prior service cost                          |  |                | 15      |         |  |   | (652    | )
|                                                         |  |                |         |         |  |   |         |  
|Net amount recognized as of 9/30/03 measurement
    date |  |                | 70,316  |         |  |   | 75,189  |  
|Fourth quarter contribution                              |  |                | (12,743 | )       |  |   | (10,669 | )
|                                                         |  |                |         |         |  |   |         |  
|Net amount recognized  accrued benefit
    cost         |  | $              | 57,573  |         |  | $ | 64,520  |  
|                                                         |  |                |         |         |  |   |         |  

59



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)


11. POSTRETIREMENT AND POSTEMPLOYMENT
BENEFITS  Continued

Assumptions

Weighed-average assumptions used to determine
benefit obligations at December 31

|                              |  |      |     |      |  |  |      |  
|----------------------------- |  | ---- | --- | ---- |  |  | ---- | -
|                              |  | 2003 |     | 2002
|                              |  |      |     |     
|Discount rate                 |  |      | 6.0 | %    |  |  | 6.5  | %
|Rate of Compensation increase |  |      | 3.5 | %    |  |  | 3.75 | %

Weighed-average assumptions used to determine
net periodic benefit cost for years ended
December 31

|                                         |  |      |     |      |  |      |     |   |  |  |     |  
|---------------------------------------- |  | ---- | --- | ---- |  | ---- | --- | - |  |  | --- | -
|                                         |  | 2003 |     | 2002 |  | 2001
|                                         |  |      |     |      |  |     
|Discount rate                            |  |      | 6.5 | %    |  |      | 7.0 | % |  |  | 7.5 | %
|Expected long-term return on plan assets |  |      | 4.0 | %    |  |      | 4.0 | % |  |  | N/A |  

The assumptions related to the expected long-term
return on plan assets were developed through an analysis of
historical market returns and current market conditions. The
Company uses estimates for future market returns that are lower
than actual long-term historical returns in order to reflect
recent market activity and the potential that future returns may
be lower than long-term historical trends would indicate.

Assumed health care cost trend rates at
December 31

|                                                                                      |                   |      |      |      |   |  |      |     |  
|------------------------------------------------------------------------------------- | ----------------- | ---- | ---- | ---- | - |  | ---- | --- | -
|                                                                                      |                   | 2003 |      | 2002
|                                                                                      |                   |      |      |     
|Health care cost trend rate assumed for next year                                     |                   |      |      |      |   |  |      |    
|                                                                                      |  Indemnity plans |      |      | 13.0 | % |  |      | 8.5 | %
|                                                                                      |  PPO plans       |      |      | 12.0 | % |  |      | 7.5 | %
|                                                                                      |  HMO plans       |      |      | 10.0 | % |  |      | 7.0 | %
|Rate to which the cost trend rate is assumed to
    decline (the ultimate trend rate) |                   |      | 5.5  | %    |   |  | 5.5  | %  
|Year that the rate reaches the ultimate trend rate                                    |                   |      | 2014 |      |   |  | 2012 |    

Administrative costs related to indemnity plans
were assumed to increase at a constant annual rate of
6.0 percent for 2003, 2002 and 2001.

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 2003:

|                                                   |  |                       |        |          |  |   |         |  
|-------------------------------------------------- |  | --------------------- | ------ | -------- |  | - | ------- | -
|                                                   |  |                      
|                                                   |  | Continuing Operations
|                                                   |  | 1-percentage-point   
|                                                   |  |                      
|                                                   |  | Increase              |        | Decrease
|                                                   |  |                       |        |         
|                                                   |  |                      
|                                                   |  | (In thousands)       
|Effect on net periodic postretirement benefit cost |  | $                     | 1,467  |          |  | $ | (1,163  | )
|Effect on postretirement benefit obligation        |  | $                     | 16,839 |          |  | $ | (13,023 | )

60



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




11. POSTRETIREMENT AND POSTEMPLOYMENT
BENEFITS  Continued


Plan Assets

The weighted-average asset allocation of the
Companys postretirement fund at December 31, 2003 and
2002, was as follows:

Asset Allocation versus Policy
Allocation

|              |  |            |     |                |  |      |     |   |  |  |     |  
|------------- |  | ---------- | --- | -------------- |  | ---- | --- | - |  |  | --- | -
|              |  |            |     |               
|              |  |            |     | Allocation of 
|              |  |            |     | Plan Assets at
|              |  |            |     | December 31,  
|              |  | Policy     |     |               
|Asset Classes |  | Allocation |     | 2003           |  | 2002
|              |  |            |     |                |  |     
|Equities      |  |            | 0   | %              |  |      | 0   | % |  |  | 0   | %
|Bonds         |  |            | 100 | %              |  |      | 100 | % |  |  | 100 | %
|Total         |  |            | 100 | %              |  |      | 100 | % |  |  | 100 | %

The Pulitzer Statement of Investment Policy
outlines the governance structure for decision making, sets
investment objectives and restrictions, and establishes criteria
for selecting and evaluating investment managers. The use of
derivatives is strictly prohibited, except on a case-by-case
basis where the manager has a proven capability, and only to
hedge quantifiable risks such as exposure to foreign currencies.
An Investment Committee, consisting of Company executives and
supported by independent consultants, is responsible for
monitoring compliance with the Investment Policy.

The postretirement fund holds no Company
securities (common stock or other), directly or through separate
accounts.

The Companys postemployment benefit
obligation, representing certain disability benefits at the
Post-Dispatch, was $3.7 million and
$3.5 million at December 31, 2003 and 2002,
respectively.

Cash Flows

Contributions

Based on its forecast at December 31, 2003,
the Company expects to contribute $6.5 million to its
postretirement plans in 2004.

Estimated Future Benefit
Payments

The Company anticipates future benefit payments,
which reflect future services, to be paid either with future
contributions to the plan or directly from plan assets, as
follows:

|                |  |               |      | 
|--------------- |  | ------------- | ---- | 
|Year            |  | Benefit Plans
|                |  |              
|                |  | (In millions)
|2004            |  | $             | 6.5  | 
|2005            |  |               | 6.6  | 
|2006            |  |               | 7.0  | 
|2007            |  |               | 7.3  | 
|2008            |  |               | 7.6  | 
|Years 2009-2013 |  | $             | 41.8 | 

See Note 2 for a discussion of the effect which
the 2003 Medicare Law may have on the liabilities and annual
expenses associated with of the Companys postemployment
and postretirement benefit plans.

61



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                           
|--- | --------------------------
|12. | RELATED PARTY TRANSACTIONS

The Company retained, and incurred costs for
legal services provided by a law firm in which a director of the
Company is a partner in the approximate amounts of
$1.6 million, $1.1 million and $1.3 million in
2003, 2002 and 2001, respectively. The Company retained and
compensated a financial advisory services firm, in which another
director of the Company is an executive officer, in the
approximate amount of $0.2 million per year in 2003, 2002
and 2001.



|    |             
|--- | ------------
|13. | INCOME TAXES

Provisions for income taxes consist of the
following for continuing operations:

|          |                 |                                  |   |        |        |      |   |        |        |  |   |       |       | 
|--------- | --------------- | -------------------------------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ----- | ----- | 
|          |                 |                                 
|          |                 | Continuing Operations Year Ended
|          |                 | December 31,                    
|          |                 |                                 
|          |                 | 2003                             |   | 2002   |        | 2001
|          |                 |                                  |   |        |        |     
|          |                 |                                 
|          |                 | (In thousands)                  
|Current:  |                 |                                  |   |        |        |      |   |        |        |  |   |      
|          | Federal         |                                  | $ | 2,931  |        |      | $ | (815   | )      |  | $ | 2,460 |      
|          | State and local |                                  |   | 126    |        |      |   | (70    | )      |  |   | 172   |      
|Deferred: |                 |                                  |   |        |        |      |   |        |        |  |   |      
|          | Federal         |                                  |   | 21,335 |        |      |   | 21,420 |        |  |   | 5,037 |      
|          | State and local |                                  |   | 914    |        |      |   | 1,836  |        |  |   | 352   |      
|          |                 |                                  |   |        |        |      |   |        |        |  |   |      
|          |                 | Total                            |   | $      | 25,306 |      |   | $      | 22,371 |  |   | $     | 8,021 | 
|          |                 |                                  |   |        |        |      |   |        |        |  |   |      

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

|                                        |       |                         |    |                         |   |      |    |      |   |  |    |    |   |  |     |     |   
|--------------------------------------- | ----- | ----------------------- | -- | ----------------------- | - | ---- | -- | ---- | - |  | -- | -- | - |  | --- | --- | --
|                                        |       |                         |    |                        
|                                        |       | Continuing Operations   |    | Discontinued Operations
|                                        |       | Year Ended December 31, |    | Year Ended December 31,
|                                        |       |                         |    |                        
|                                        |       | 2003                    |    | 2002                    |   | 2001 |    | 2001
|                                        |       |                         |    |                         |   |      |    |     
|Statutory rate                          |       |                         | 35 | %                       |   |      | 35 | %    |   |  | 35 | %  |   |  | (35 | )% 
|Amortization of intangibles             |       |                         |    |                         |   |      |    |      |   |  | 8  |    |   |  | 1   |    
|Book basis of goodwill in excess of tax |       |                         |    |                         |   |      |    |      |   |  |    |    |   |  | (14 | )  
|State and local income taxes and other  |       |                         | 2  |                         |   |      | 3  |      |   |  | (5 | )  |   |  | (4  | )  
|                                        |       |                         |    |                         |   |      |    |      |   |  |    |    |   |  |     |    
|                                        | Total |                         |    | 37                      | % |      |    | 38   | % |  |    | 38 | % |  |     | (52 | )%
|                                        |       |                         |    |                         |   |      |    |      |   |  |    |    |   |  |     |    

62



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                         
|--- | ------------------------
|13. | INCOME TAXES  Continued

The Companys deferred tax assets and
liabilities, net, which have been included in other assets or
other liabilities in the consolidated statements of financial
position, consisted of the following:

|                           |                                |                |         |              |        |   |        |        |        | 
|-------------------------- | ------------------------------ | -------------- | ------- | ------------ | ------ | - | ------ | ------ | ------ | 
|                           |                                | December 31,   |         | December 31,
|                           |                                | 2003           |         | 2002        
|                           |                                |                |         |             
|                           |                                |               
|                           |                                | (In thousands)
|Deferred tax assets:       |                                |                |         |              |        |   |        |       
|                           | Pensions and employee benefits |                | $       | 8,363        |        |   | $      | 13,822 |       
|                           | Postretirement benefit costs   |                |         | 22,187       |        |   |        | 24,805 |       
|Other                      |                                |                | 3,715   |              |        |   | 3,868  |       
|                           |                                |                |         |              |        |   |        |       
|                           |                                | Total          |         |              | 34,265 |   |        |        | 42,495 | 
|Deferred tax liabilities:  |                                |                |         |              |        |   |        |       
|                           | Depreciation                   |                |         | 16,765       |        |   |        | 15,115 |       
|                           | Amortization                   |                |         | 44,232       |        |   |        | 31,932 |       
|                           |                                |                |         |              |        |   |        |       
|                           |                                | Total          |         |              | 60,997 |   |        |        | 47,047 | 
|                           |                                |                |         |              |        |   |        |       
|Net deferred tax liability |                                | $              | (26,732 | )            |        | $ | (4,552 | )     
|                           |                                |                |         |              |        |   |        |       

The Company had no valuation allowance for
deferred tax assets as of year-end 2003 and 2002.



|    |                     
|--- | --------------------
|14. | STOCKHOLDERS EQUITY

Each share of Pulitzer Inc.s common stock
is entitled to one vote, and each share of Class B common
stock is entitled to ten votes on all matters. As of
December 31, 2003, holders of outstanding shares of
Class B common stock represented 92.4 percent of the
combined voting power of Pulitzer Inc., with holders of common
stock representing the balance of the voting power. As of
December 31, 2003, holders of approximately
95.5 percent of the outstanding shares of Class B
common stock representing 88.3 percent of the combined
voting power have deposited their shares in a voting trust (the
Voting Trust). Each share of Class B common
stock is convertible into one share of 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.

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 Pulitzer Inc. 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 2003, 2002, and 2001 Pulitzer Inc. declared
and paid cash dividends of $0.72, $0.70, and $0.68,
respectively, per share of common stock and Class B common
stock.

63



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                                     
|--- | ------------------------------------
|14. | STOCKHOLDERS EQUITY 
    Continued

On July 16, 1999, the Pulitzer Inc. Board of
Directors approved the repurchase of up to $50.0 million of
its common stock in the open market. On May 1, 2000,
Pulitzer Inc. announced that its Board of Directors had
authorized the repurchase of an additional $50.0 million of
its common stock. During the third quarter of 2000, the Board of
Directors amended 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,
Pulitzer Inc. purchased 1,000,000 shares of Class B common
stock from Michael E. Pulitzer, the Companys Chairman of
the Board, for approximately $40.1 million. As of
December 31, 2003, Pulitzer Inc. had repurchased 1,000,000
shares of Class B common stock and 532,857 shares of common
stock for a combined purchase price of approximately
$62.2 million, leaving $37.8 million in remaining
stock repurchase authority. The repurchased shares have been
included in treasury stock of the Company. In 2002, Pulitzer
Inc. retired 531,796 shares of common stock and 1,000,000 shares
of Class B common stock held in treasury stock. No shares
were retired in 2003.



|    |                   
|--- | ------------------
|15. | COMMON STOCK PLANS

On May 22, 2003, Pulitzer Inc.s
stockholders approved the adoption of the Pulitzer Inc. 2003
Incentive Plan (the 2003 Incentive Plan). The 2003
Incentive Plan combines the Pulitzer Inc. 1999 Stock Option Plan
(the Predecessor Option Plan) and the Pulitzer Inc.
1999 Key Employees Restricted Stock Purchase Plan (the
Predecessor Stock Plan) into a single restated plan.
The 2003 Incentive Plan authorizes Pulitzer Inc. to make equity
and cash incentive awards to eligible employees and directors of
Pulitzer Inc. and its subsidiaries, including stock options,
stock appreciation rights, restricted stock and restricted stock
unit grants, performance shares, and performance-based cash
incentive awards. Pulitzer Inc. may issue up to 4.5 million
shares of common stock under the 2003 Incentive Plan, reduced by
the combined number of shares issued under the Predecessor
Option Plan and the Predecessor Stock Plan (together, the
Predecessor Plans). Other limitations apply to
annual awards that may be made to or earned by individual
participants. The Compensation Committee of the Board of
Directors administers the 2003 Incentive Plan.

As of December 31, 2003, of the
4.5 million shares reserved for issuance under the 2003
Incentive Plan (including the Predecessor Plans), 1,399,147
shares remained available for future awards.

Stock Options

Under the 2003 Incentive Plan, options to
purchase 3,000 shares of common stock were automatically granted
each non-employee director on the day following the 2003 annual
meeting of Pulitzer Inc. stockholders. Similar option grants
were made in prior years under the Predecessor Plan Option Plan.
In the future, non-employee directors will no longer be entitled
to receive automatic annual option grants; however, the Board of
Directors, in its discretion, may elect to grant options to
non-employee directors at any time and from time to time. Within
limits, the Compensation Committee (or the Board of Directors in
the case of options granted to non-employee directors), acting
in its discretion, determines the terms and conditions of
options granted under the 2003 Incentive Plan. In general, the
exercise price of an option may not be less than the market
value of the shares covered by the option on the date it is
granted, except that the minimum exercise price is 85% of market
value in the case of options granted to employees that are not
incentive stock options under the Internal Revenue
Code. Unless terminated sooner, options granted under the 2003
Incentive Plan expire if they are not exercised within ten years
after they are granted.

64



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                                   
|--- | ----------------------------------
|15. | COMMON STOCK PLANS 
    Continued

Stock option transactions under the 2003
Incentive Plan (including the Predecessor Option Plan) are
summarized as follows:

|                               |                                                              |        |           |             |   |          |              |              |  |   |       |       | 
|------------------------------ | ------------------------------------------------------------ | ------ | --------- | ----------- | - | -------- | ------------ | ------------ |  | - | ----- | ----- | 
|                               |                                                              |        |           |             |   | Weighted
|                               |                                                              |        |           |             |   | Average 
|                               |                                                              | Shares |           | Price Range |   | Price   
|                               |                                                              |        |           |             |   |         
|Common Stock Options:          |                                                              |        |           |             |   |          |              |              |  |   |       |      
|Outstanding, January 1, 2001   |                                                              |        | 1,490,508 |             |   | $        | 37.31$46.31 |              |  | $ | 41.31 |      
|                               | Granted (weighted average value at grant date of
    $13.01) |        |           | 561,857     |   |          | $            | 43.76$54.20 |  |   | $     | 48.92 | 
|                               | Canceled                                                     |        |           | (25,373     | ) |          | $            | 39.69$43.87 |  |   | $     | 42.48 | 
|                               | Exercised                                                    |        |           | (44,510     | ) |          | $            | 39.69$43.87 |  |   | $     | 40.16 | 
|                               |                                                              |        |           |             |   |          |              |              |  |   |       |      
|Outstanding, December 31, 2001 |                                                              |        | 1,982,482 |             |   | $        | 37.31$54.20 |              |  | $ | 41.31 |      
|                               | Granted (weighted average value at grant date of
    $13.43) |        |           | 466,324     |   |          | $            | 42.86$54.70 |  |   | $     | 43.41 | 
|                               | Canceled                                                     |        |           | (67,936     | ) |          | $            | 39.69$50.45 |  |   | $     | 45.47 | 
|                               | Exercised                                                    |        |           | (100,607    | ) |          | $            | 39.69$50.45 |  |   | $     | 40.66 | 
|                               |                                                              |        |           |             |   |          |              |              |  |   |       |      
|Outstanding, December 31, 2002 |                                                              |        | 2,280,263 |             |   | $        | 37.31$54.70 |              |  | $ | 43.53 |      
|                               | Granted (weighted average value at grant date of
    $13.32) |        |           | 578,141     |   |          | $            | 42.49$52.92 |  |   | $     | 51.58 | 
|                               | Canceled                                                     |        |           | (66,576     | ) |          | $            | 42.86$53.15 |  |   | $     | 45.71 | 
|                               | Exercised                                                    |        |           | (158,758    | ) |          | $            | 39.69$50.45 |  |   | $     | 41.88 | 
|                               |                                                              |        |           |             |   |          |              |              |  |   |       |      
|Outstanding, December 31, 2003 |                                                              |        | 2,633,070 |             |   | $        | 37.31$54.70 |              |  | $ | 45.36 |      
|                               |                                                              |        |           |             |   |          |              |              |  |   |       |      
|Exercisable, December 31, 2003 |                                                              |        | 1,616,871 |             |   | $        | 37.31$54.70 |              |  | $ | 43.19 |      
|                               |                                                              |        |           |             |   |          |              |              |  |   |       |      

Restricted Stock Awards

As indicated in the preceding section relating to
stock options, the 2003 Incentive Plan also restated and
replaced the Predecessor Stock Plan. Under the 2003 Incentive
Plan, the Company may issue shares of common stock or rights to
acquire shares of common stock to employees, directors and other
personnel on such terms and conditions and subject to such
restrictions as the Compensation Committee (or the Board of
Directors in the case of awards to non-employee directors), in
its discretion, determines. Ordinarily, restricted stock is
issued for nominal consideration and is subject to forfeiture
conditions and transfer restrictions during a specified period
of time contingent on continuing employment or service with the
Company and/or upon the attainment of performance goals. The
principal distinction between restricted stock awards and
restricted stock unit awards is that, in the case of a unit
award, no shares are issued to the participant unless and until
the vesting criteria are satisfied. Under current accounting
rules, compensation equal to the fair market value of the common
stock covered by a restricted stock or restricted stock unit
award is recognized over the forfeitability period or the
vesting period, as the case may be.

Under the 2003 Incentive Plan (including the
Predecessor Stock Plan), the Company granted restricted stock
unit awards for 41,067, 20,533 and 28,000 shares of common stock
for the years ended December 31, 2003, 2002 and 2001, at a
price of $50.44, $42.86 and $48.22, respectively.

65



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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




|    |                                   
|--- | ----------------------------------
|15. | COMMON STOCK PLANS 
    Continued

Restricted stock and restricted stock unit
transactions under the 2003 Incentive Plan (including the
Predecessor Stock Plan) are summarized as follows:

|                                            |           |        |         |             |   |          |              |              |  |   |       |       | 
|------------------------------------------- | --------- | ------ | ------- | ----------- | - | -------- | ------------ | ------------ |  | - | ----- | ----- | 
|                                            |           |        |         |             |   | Weighted
|                                            |           |        |         |             |   | Average 
|                                            |           | Shares |         | Price Range |   | Price   
|                                            |           |        |         |             |   |         
|Common Stock Grants:                        |           |        |         |             |   |          |              |              |  |   |       |      
|Outstanding, January 1, 2001                |           |        | 9,054   |             |   | $        | 39.88$42.88 |              |  | $ | 40.68 |      
|                                            | Canceled  |        |         | (1,033      | ) |          | $            | 41.88$42.88 |  |   | $     | 41.99 | 
|                                            |           |        |         |             |   |          |              |              |  |   |       |      
|Outstanding, December 31, 2001              |           |        | 8,021   |             |   | $        | 39.88$42.88 |              |  | $ | 40.51 |      
|                                            | Granted   |        |         | 5,949       |   |          | $            | 42.03$42.03 |  |   | $     | 42.03 | 
|                                            | Canceled  |        |         | (660        | ) |          | $            | 41.88$42.88 |  |   | $     | 42.40 | 
|                                            | Exercised |        |         | (6,020      | ) |          | $            | 39.88$39.88 |  |   | $     | 39.88 | 
|                                            |           |        |         |             |   |          |              |              |  |   |       |      
|Outstanding, December 31, 2002              |           |        | 7,290   |             |   | $        | 41.31$42.88 |              |  | $ | 42.10 |      
|                                            | Granted   |        |         | 3,946       |   |          | $            | 50.69$50.69 |  |   | $     | 50.69 | 
|                                            | Canceled  |        |         | (572        | ) |          | $            | 41.31$42.88 |  |   | $     | 42.54 | 
|                                            | Exercised |        |         | (421        | ) |          | $            | 41.88$41.88 |  |   | $     | 41.88 | 
|                                            |           |        |         |             |   |          |              |              |  |   |       |      
|Outstanding Stock Grants, December 31, 2003 |           |        | 10,243  |             |   | $        | 42.03$50.69 |              |  | $ | 45.39 |      
|                                            |           |        |         |             |   |          |              |              |  |   |       |      
|Outstanding Stock Units, December 31, 2003  |           |        | 139,680 |             |   | $        | 39.88$53.06 |              |  | $ | 45.87 |      
|                                            |           |        |         |             |   |          |              |              |  |   |       |      

The Company maintains employee stock purchase
plans (the Purchase Plans) that allow eligible
employees to authorize payroll deductions for the periodic
purchase of Pulitzer Inc.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 are
eligible to participate in the Purchase Plans following their
respective hire dates. Subject to appropriate adjustment for
stock splits and other capital changes, Pulitzer Inc. 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 Pulitzer Inc. in its
treasury. Pulitzer Inc. sold and issued 20,735, 19,712, and
14,080 shares of common stock under the Purchase Plans for 2003,
2002 and 2001, respectively. As of December 31, 2003, of
the 600,000 shares reserved for issuance under the Purchase
Plans, 514,248 shares remained available for future sale.

16. 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:

|                                                          |  |                         |        |      |  |      |        |  |  |  |        | 
|--------------------------------------------------------- |  | ----------------------- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                          |  |                        
|                                                          |  | Year Ended December 31,
|                                                          |  |                        
|                                                          |  | 2003                    |        | 2002 |  | 2001
|                                                          |  |                         |        |      |  |     
|                                                          |  |                        
|                                                          |  | (In thousands)         
|Weighted average shares outstanding (Basic EPS)           |  |                         | 21,404 |      |  |      | 21,279 |  |  |  | 21,192 | 
|Common stock equivalents (Note 15)                        |  |                         | 223    |      |  |      | 168    |  |  |  | 172    | 
|                                                          |  |                         |        |      |  |      |        |  |  |  |        | 
|Weighted average shares and equivalents
    (Diluted EPS) |  |                         | 21,627 |      |  |      | 21,447 |  |  |  | 21,364 | 
|                                                          |  |                         |        |      |  |      |        |  |  |  |        | 

Common stock equivalents included in the Diluted
EPS calculation were determined using the treasury stock method
for the potential dilutive impact of stock options, restricted
stock and restricted stock units. Under the treasury stock
method and SFAS No. 128, Earnings per Share,
outstanding stock options are dilutive when the average market
price of Pulitzer Inc. 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

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




16. EARNINGS PER SHARE 
Continued


are assumed to be used to repurchase common
shares at the average market price of such stock during the
period.

17. COMMITMENTS AND
CONTINGENCIES

Capital Commitments

At December 31, 2003, the Company had
construction and equipment commitments of approximately
$3.1 million.

Investment Commitments

At December 31, 2003, the Company had an
unfunded capital contribution commitment related to a limited
partnership in which it is an investor of up to
$7.1 million.

Rental Expense and Lease Commitments

Rental expense for 2003, 2002 and 2001 amounted
to $2.0 million, $2.6 million and $2.6 million,
respectively. Approximate future minimum annual real estate
lease payments are as follows:

|            |       |                |       |       | 
|----------- | ----- | -------------- | ----- | ----- | 
|            |       | (In thousands)
|2004        |       | $              | 1,408 |      
|2005        |       |                | 1,249 |      
|2006        |       |                | 1,103 |      
|2007        |       |                | 840   |      
|2008        |       |                | 627   |      
|Later years |       |                | 2,091 |      
|            |       |                |       |      
|            | Total |                | $     | 7,318 | 
|            |       |                |       |      

Merger Agreement Indemnification

Pursuant to the Merger Agreement, Pulitzer Inc.
is obligated to indemnify Hearst-Argyle Television, Inc.
(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
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
Pulitzer Inc. or any subsidiary of Pulitzer Inc.;
(ii) liabilities and obligations under any employee benefit
plans not assumed by Hearst-Argyle, and (iii) certain other
matters as set forth in the Merger Agreement.

Tax Contingency

In October 2001 the Internal Revenue Service
(IRS) formally proposed that Old Pulitzers
taxable income for the tax year ended March 18, 1999 be
increased by approximately $80.4 million based on the
assertion that Old Pulitzer was required to recognize a taxable
gain in that amount as a result of the Spin-off. Pulitzer Inc.
is obligated under the Merger Agreement to indemnify
Hearst-Argyle against any tax liability attributable to the
Spin-off and has the right to control any proceedings relating
to the determination of such tax liability. If the IRS were
completely successful in its proposed adjustment, Pulitzer
Inc.s indemnification obligation would be approximately
$29.3 million, plus applicable interest. Any income tax
indemnification

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




17. COMMITMENTS AND
CONTINGENCIES  Continued


payment would be recorded as an adjustment to
additional paid-in capital, and any related interest expense
would be reflected as a component of net income in the period
recognized.

The Company does not believe that Old Pulitzer
realized any taxable gain in connection with the Spin-off, and
in January 2002, it contested the IRS proposed increase in
a formal written protest filed with the IRS Appeals Office. In a
recent letter addressed to the Companys representatives,
the IRS Appeals Officer indicated that he supports the position
asserted by the IRS and is inclined to sustain substantially the
entire amount of the IRS proposed increase in Old
Pulitzers taxable income. The Companys
representatives have responded to the IRS Appeals Officers
letter and are continuing their discussions regarding the
Companys position. While there can be no assurance that
the Company will completely prevail in its position, it
continues to believe that the IRS position is not
supported by the facts or applicable legal authority. The
Company intends to vigorously contest the IRS
determination and has not accrued any liability in connection
with this matter. If the Company and the IRS are unable to
resolve their differences in the IRS Appeals Office, the Company
likely will pursue its case before the United States Tax Court.

Potential Income Tax Refund

On August 30, 2002, the Company, on behalf
of Old Pulitzer, filed with the IRS amended federal corporate
income tax returns for the years ended December 1997 and 1998
and March 1999 in which refunds of tax in the aggregate amount
of approximately $8.1 million, plus interest, were claimed.
These refund claims were based on the Companys contention
that Old Pulitzer was entitled to deduct certain fees and
expenses which it had not previously deducted and which Old
Pulitzer had incurred in connection with its investigation of
several strategic alternatives and potential transactions prior
to its decision to proceed with the Broadcast Transaction. Under
the Merger Agreement, the Company is entitled to any amounts
recovered from the IRS as a result of these refund claims,
although there can be no assurance that the IRS will approve all
or any portion of these refund claims. Discussions between the
Companys representatives and the IRS regarding these
refund claims have only recently commenced, and no receivable
has been recognized in connection with these refund claims. Any
income tax refunds would be recorded as an adjustment to
additional paid-in-capital, and any related interest received
would be reflected as a component of net income in the period
recognized.

Provision for Income Taxes

The Company has incurred capital losses that
exceed capital gains available during the prescribed carry-back
periods by approximately $2.2 million. The Company expects to
generate capital gains of at least this amount during prescribed
carry-forward periods. Accordingly, the Company has recognized
the tax benefit of approximately $0.9 million associated
with these capital losses.

PD LLC Operating Agreement Contingent
Payments

See Note 4 regarding certain obligations of
PD LLC and Pulitzer Inc. in respect of the Venture.

Legal Contingencies

A group of independent carriers engaged in the
business of delivering the Post-Dispatchpursuant to a
home delivery contract has filed suit against Pulitzer Inc., PD
LLC and Suburban Journals LLC (collectively the
Defendants) in the Missouri Circuit Court,
Twenty-Second Judicial Circuit (City of St. Louis).
Plaintiffs Third Amended Petition sets forth three claims
for relief. First, the petition alleges that the decision to
purchase the Suburban Journals with their separate delivery
system and separate carriers breached the plaintiffs
exclusive territorial delivery rights under the plaintiffs
contract. The petition further alleges that

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)




17. COMMITMENTS AND
CONTINGENCIES  Continued


PD LLC and Suburban Journals LLC are alter
egos of Pulitzer Inc. and that Pulitzer Inc. on its own and
through its control, ownership and authority over its alter egos
violated the exclusive territory of the plaintiffs. Finally, the
petition alleges that the purchase of the Suburban Journals and
certain other conduct tortiously interfered with the
plaintiffs contractual relationship. The plaintiffs seek
unspecified damages in excess of $25,000, plus punitive damages
in an unspecified amount for the alleged tortious interference.
The Defendants have denied any liability, are vigorously
defending the suit and believe that they have meritorious
defenses and, therefore, the Company has not accrued a liability
in connection with this lawsuit. While the ultimate outcome of
litigation cannot be predicted with certainty, management, based
on its understanding of the facts, does not believe the ultimate
resolution of this litigation will have a materially adverse
effect on the Companys consolidated financial position.
However, depending upon the period of resolution, such effect
could be material to the consolidated financial results of an
individual period.

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, complaints alleging discrimination, and
product distribution practices. While the ultimate outcome of
litigation cannot be predicted with certainty, management, based
on its understanding of the facts, does not believe the ultimate
resolution of these matters will have a material adverse effect
on the Companys consolidated financial position or results
of operations. However, depending upon the period of resolution,
such effects could be material to the consolidated financial
results of an individual period.

18. 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.
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
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 and Interest Rate
Swaps  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 for the
Companys long-term debt. As of December 31, 2003, the
fair-values were:

|                                                 |  |                |         |            |  |   |         |  
|------------------------------------------------ |  | -------------- | ------- | ---------- |  | - | ------- | -
|                                                 |  | Carrying Value |         | Fair Value
|                                                 |  |                |         |           
|                                                 |  |               
|                                                 |  | (In thousands)
|Long-term debt                                   |  | $              | 316,389 |            |  | $ | 338,359 |  
|Deferred gain on interest rate swap terminations |  |                | (4,088  | )          |  |   |         |  
|Interest rate swaps (asset)                      |  |                | (6,301  | )          |  |   | (6,301  | )
|                                                 |  |                |         |            |  |   |         |  
|Total                                            |  | $              | 306,000 |            |  | $ | 332,058 |  
|                                                 |  |                |         |            |  |   |         |  

The fair value estimates presented herein are
based on pertinent information available to management as of
year-end 2003. 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.

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##### Table of Contents



PULITZER INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

YEARS ENDED DECEMBER 31, 2003, 2002 AND
2001  (Continued)


19. NEWSPAPER PUBLISHING
REVENUES

The Companys consolidated newspaper
publishing revenues from continuing operations consist of the
following for the years ended:

|                     |       |                         |         |         |  |      |         |         |  |   |         |         | 
|-------------------- | ----- | ----------------------- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- | 
|                     |       |                        
|                     |       | Year Ended December 31,
|                     |       |                        
|                     |       | 2003                    |         | 2002    |  | 2001
|                     |       |                         |         |         |  |     
|                     |       |                        
|                     |       | (In thousands)         
|St. Louis Operations |       | $                       | 303,918 |         |  | $    | 298,543 |         |  | $ | 299,776 |        
|PNI Group            |       |                         | 118,746 |         |  |      | 117,417 |         |  |   | 113,730 |        
|                     |       |                         |         |         |  |      |         |         |  |   |         |        
|                     | Total |                         | $       | 422,664 |  |      | $       | 415,960 |  |   | $       | 413,506 | 
|                     |       |                         |         |         |  |      |         |         |  |   |         |        

20. QUARTERLY FINANCIAL DATA
(UNAUDITED)

Operating results for the years ended
December 31, 2003 and 2002 by quarters are as follows:

|                                                   |  |                                           |        |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 
|-------------------------------------------------- |  | ----------------------------------------- | ------ | ------- |  | ------- | ------- | ------- |  | ----- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                   |  | First                                     |        | Second  |  | Third   |         | Fourth  |  |      
|                                                   |  | Quarter                                   |        | Quarter |  | Quarter |         | Quarter |  | Total
|                                                   |  |                                           |        |         |  |         |         |         |  |      
|                                                   |  |                                          
|                                                   |  | (In thousands, except earnings per share)
|2003                                               |  |                                           |        |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 
|OPERATING REVENUES  NET                           |  | $                                         | 98,232 |         |  | $       | 107,112 |         |  | $     | 103,252 |  |  | $ | 114,068 |  |  | $ | 422,664 | 
|NET INCOME                                         |  | $                                         | 7,056  |         |  | $       | 11,428  |         |  | $     | 9,380   |  |  | $ | 14,313  |  |  | $ | 42,177  | 
|BASIC EARNINGS PER SHARE OF STOCK (Note 16):       |  | $                                         | 0.33   |         |  | $       | 0.53    |         |  | $     | 0.44    |  |  | $ | 0.67    |  |  | $ | 1.97    | 
|                                                   |  |                                           |        |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 
|DILUTED EARNINGS PER SHARE OF STOCK
    (Note 16): |  | $                                         | 0.33   |         |  | $       | 0.53    |         |  | $     | 0.43    |  |  | $ | 0.66    |  |  | $ | 1.95    | 
|                                                   |  |                                           |        |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 

|                                                   |  |                                           |         |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 
|-------------------------------------------------- |  | ----------------------------------------- | ------- | ------- |  | ------- | ------- | ------- |  | ----- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                                   |  | First                                     |         | Second  |  | Third   |         | Fourth  |  |      
|                                                   |  | Quarter                                   |         | Quarter |  | Quarter |         | Quarter |  | Total
|                                                   |  |                                           |         |         |  |         |         |         |  |      
|                                                   |  |                                          
|                                                   |  | (In thousands, except earnings per share)
|2002                                               |  |                                           |         |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 
|OPERATING REVENUES  NET                           |  | $                                         | 100,043 |         |  | $       | 103,997 |         |  | $     | 103,541 |  |  | $ | 108,379 |  |  | $ | 415,960 | 
|NET INCOME                                         |  | $                                         | 6,823   |         |  | $       | 6,973   |         |  | $     | 8,672   |  |  | $ | 12,231  |  |  | $ | 34,699  | 
|BASIC EARNINGS PER SHARE OF STOCK (Note 16):       |  | $                                         | 0.32    |         |  | $       | 0.33    |         |  | $     | 0.41    |  |  | $ | 0.57    |  |  | $ | 1.63    | 
|                                                   |  |                                           |         |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 
|DILUTED EARNINGS PER SHARE OF STOCK
    (Note 16): |  | $                                         | 0.32    |         |  | $       | 0.32    |         |  | $     | 0.40    |  |  | $ | 0.57    |  |  | $ | 1.62    | 
|                                                   |  |                                           |         |         |  |         |         |         |  |       |         |  |  |   |         |  |  |   |         | 

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

* * * * * *

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##### Table of Contents



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 (the
Company) as of December 31, 2003 and 2002, and
for each of the three years in the period ended
December 31, 2003, and have issued our report thereon dated
February 20, 2004 (which expresses an unqualified opinion
and includes an explanatory paragraph referring to the adoption
of a new accounting principle); 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 15(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 20, 2004


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##### Table of Contents



SCHEDULE II

PULITZER INC. AND SUBSIDIARIES

Schedule II  Valuation &
Qualifying Accounts & Reserves

For The Years Ended December 31, 2003,
2002 & 2001

|                             |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |        |  
|---------------------------- | --------------------------------------------------------- | -------------- | - | ---------- | - | ---------- | - | ---------- |  | ------- | - | --- | --- |  | - | ------ | --- |  | - | ------ | -
|                             |                                                           |                |   |            |   |            |   |            |  | Balance
|                             |                                                           | Balance At     |   | Charged to |   | Charged to |   |            |  | At End 
|                             |                                                           | Beginning      |   | Costs &    |   | Other      |   |            |  | Of     
|Description                  |                                                           | Of Period      |   | Expenses   |   | Accounts   |   | Deductions |  | Period 
|                             |                                                           |                |   |            |   |            |   |            |  |        
|                             |                                                           |               
|                             |                                                           | (In thousands)
|Year Ended December 31, 2003 |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|Valuation Accounts:          |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|                             | Allowance for Doubtful Accounts                           |                | $ | 4,004      |   |            | $ | 3,150      |  |         | $ | 555 | (a) |  | $ | 3,866  | (b) |  | $ | 3,843  |  
|Reserves:                    |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|                             | Accrued (Prepaid) Medical Plan                            |                |   | (3,030     | ) |            |   | 16,015     |  |         |   |     |     |  |   | 13,530 | (c) |  |   | (545   | )
|                             | Workers Compensation                                      |                |   | 2,254      |   |            |   | 1,736      |  |         |   |     |     |  |   | 3,058  |     |  |   | 932    |  
|Year Ended December 31, 2002 |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|Valuation Accounts:          |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|                             | Allowance for Doubtful Accounts                           |                | $ | 6,024      |   |            | $ | 5,206      |  |         | $ | 506 | (a) |  | $ | 7,732  | (b) |  | $ | 4,004  |  
|Reserves:                    |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|                             | Accrued (Prepaid) Medical Plan                            |                |   | (207       | ) |            |   | 5,738      |  |         |   |     |     |  |   | 8,561  | (c) |  |   | (3,030 | )
|                             | Workers Compensation                                      |                |   | 2,592      |   |            |   | 2,518      |  |         |   |     |     |  |   | 2,856  |     |  |   | 2,254  |  
|Year Ended December 31, 2001 |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|Valuation Accounts:          |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|                             | Allowance for Doubtful Accounts Continuing
    Operations |                | $ | 2,587      |   |            | $ | 6,968      |  |         | $ | 338 | (a) |  | $ | 3,869  | (b) |  | $ | 6,024  |  
|Reserves:                    |                                                           |                |   |            |   |            |   |            |  |         |   |     |     |  |   |        |     |  |   |       
|                             | Accrued Medical Plan                                      |                |   | 916        |   |            |   | 3,971      |  |         |   |     |     |  |   | 5,094  | (c) |  |   | (207   | )
|                             | Workers Compensation                                      |                |   | 1,194      |   |            |   | 3,403      |  |         |   |     |     |  |   | 2,005  |     |  |   | 2,592  |  



---



|    |                                     
|--- | ------------------------------------
|(a) | Account reinstated, cash recoveries.
|   
|(b) | Account written off                 
|   
|(c) | Amount represents:                  

|                      |  |      |        |      |  |      |       |  |  |   |       | 
|--------------------- |  | ---- | ------ | ---- |  | ---- | ----- |  |  | - | ----- | 
|                      |  | 2003 |        | 2002 |  | 2001
|                      |  |      |        |      |  |     
|Claims paid           |  | $    | 11,439 |      |  | $    | 6,291 |  |  | $ | 4,350 | 
|Prepaid contributions |  |      | 789    |      |  |      | 1,460 |  |  |   | 0     | 
|Service fees          |  |      | 1,302  |      |  |      | 810   |  |  |   | 744   | 
|                      |  |      |        |      |  |      |       |  |  |   |       | 
|                      |  | $    | 13,530 |      |  | $    | 8,561 |  |  | $ | 5,094 | 
|                      |  |      |        |      |  |      |       |  |  |   |       | 

72



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

Not applicable.






|        |                        
|------- | -----------------------
|ITEM 9A | CONTROLS AND PROCEDURES

As of the end of the period covered by this
report, the Companys management, including the President
and Chief Executive Officer and Senior Vice President-Finance
and Chief Financial Officer, carried out an evaluation of the
effectiveness of the design and operation of the Companys
disclosure controls and procedures pursuant to Exchange Act Rule
13a-15. Based upon that evaluation, the Companys President
and Chief Executive Officer and Senior Vice President-Finance
concluded that the Companys disclosure controls and
procedures are effective in alerting them to material
information, on a timely basis, required to be included in the
Companys periodic SEC filings. There have been no
significant changes in the Companys internal controls or
in other factors which could significantly affect internal
controls subsequent to the date the Companys management
carried out its evaluation.




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 2004 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
2004 Annual Meeting of Stockholders is incorporated herein by
reference.






|         |                                                        
|-------- | -------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
    OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER
MATTERS


The information set forth under the caption
Principal Stockholders in the Companys
definitive Proxy Statement to be used in connection with the
2004 Annual Meeting of Stockholders is incorporated herein by
reference.

73



---



##### Table of Contents



EQUITY COMPENSATION PLANS

The following table provides information as of
the last day of the 2003 fiscal year regarding securities issued
under the Companys equity compensation plans that were in
effect during fiscal 2003:

Equity Compensation Plan Information

|                                                               |       |                   |           |                   |  |                      |       |       |  |  |           |           | 
|-------------------------------------------------------------- | ----- | ----------------- | --------- | ----------------- |  | -------------------- | ----- | ----- |  |  | --------- | --------- | 
|                                                               |       |                   |           |                   |  | Number of           
|                                                               |       |                   |           |                   |  | securities          
|                                                               |       | Number of         |           |                   |  | remaining available 
|                                                               |       | securities to be  |           |                   |  | for future issuance 
|                                                               |       | issued upon       |           | Weighted-average  |  | under equity        
|                                                               |       | exercise of       |           | exercise price of |  | compensation        
|                                                               |       | outstanding       |           | outstanding       |  | plans (excluding    
|                                                               |       | options, warrants |           | options, warrants |  | securities reflected
|Plan category                                                  |       | and rights(1)     |           | and rights(1)     |  | in column (a))      
|                                                               |       |                   |           |                   |  |                     
|                                                               |       | (a)               |           | (b)               |  | (c)                 
|Equity compensation plans approved by security
    holders     |       |                   | 2,772,750 |                   |  | $                    | 43.07 |       |  |  | 1,399,147 |          
|Equity compensation plans not approved by
    security holders |       |                   | 0         |                   |  |                      | 0     |       |  |  | 0         |          
|                                                               |       |                   |           |                   |  |                      |       |       |  |  |           |          
|                                                               | Total |                   |           | 2,772,750         |  |                      | $     | 43.07 |  |  |           | 1,399,147 | 



---



|    |                                         
|--- | ----------------------------------------
|(1) | Includes 139,680 restricted stock units.






|         |                                                   
|-------- | --------------------------------------------------
|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 2004 Annual Meeting
of Stockholders is incorporated herein by reference.






|         |                                           
|-------- | ------------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND
    SERVICES

The information set forth under the captions
Audit Fees, Audit-Related Fees,
Tax Fees and All Other Fees in the
Companys definitive Proxy Statement to be used in
connection with the 2004 Annual Meeting of Stockholders is
incorporated herein by reference.




PART IV






|         |                                                                     
|-------- | --------------------------------------------------------------------
|ITEM 15. | 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 Annual Report.

PULITZER INC. AND SUBSIDIARIES:



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | (i) Independent Auditors Report.                                                                                              
|
| | (ii) Consolidated Statements of Income for
    each of the Three Years in the Period Ended December 31,
    2003.              
|
| | (iii) Consolidated Statements of Financial
    Position at December 31, 2003, and December 31, 2002.                           
|
| | (iv) Consolidated Statements of
    Stockholders Equity for each of the Three Years in the
    Period Ended December 31, 2003.
|
| | (v) Consolidated Statements of Cash Flows
    for each of the Three Years in the Period Ended
    December 31, 2003.           

74



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| |                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------
| | (vi) Notes to Consolidated Financial
    Statements for each of the Three Years in the Period Ended
    December 31, 2003.

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 & Qualifying Accounts & 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:

|            |    |     |  |   |  |                                                                                                                                                                                                                                                                                                                                                        
|----------- | -- | --- |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    |     |  |  
|            |    |     |  |  
|            | 3  | .2  |  |  |  | Amended and Restated By-laws of Pulitzer Inc.                                                                                                                                                                                                                                                                                                          
|            | 10 | .45 |  |  |  | Robert C. Woodworth Restricted Stock Unit Award
    dated as of December 10, 2003.                                                                                                                                                                                                                                                                     
|            | 10 | .46 |  |  |  | Form of Restricted Stock Unit Award for Robert C.
    Woodworth dated as of December 10, 2003.                                                                                                                                                                                                                                                         
|            | 10 | .47 |  |  |  | Robert C. Woodworth Stock Option Award dated as
    of December 10, 2003.                                                                                                                                                                                                                                                                              
|            | 10 | .48 |  |  |  | Form of Stock Option Award for Robert C.
    Woodworth dated as of December 10, 2003.                                                                                                                                                                                                                                                                  
|            | 10 | .49 |  |  |  | Stock Option Award for Alan G. Silverglat dated
    as of December 10, 2003.                                                                                                                                                                                                                                                                           
|            | 10 | .50 |  |  |  | Form of Stock Option Award for Alan G. Silverglat
    dated as of December 10, 2003.                                                                                                                                                                                                                                                                   
|            | 10 | .51 |  |  |  | Pulitzer Inc. 2003 Incentive Plan                                                                                                                                                                                                                                                                                                                      
|            | 10 | .52 |  |  |  | Mark G. Contreras Restricted Stock Award
    Dated October 29, 2003.                                                                                                                                                                                                                                                                                   
|            | 21 |     |  |  |  | Subsidiaries of Registrant.                                                                                                                                                                                                                                                                                                                            
|            | 23 |     |  |  |  | Independent Auditors Consent.                                                                                                                                                                                                                                                                                                                         
|            | 24 |     |  |  |  | Power of Attorney.                                                                                                                                                                                                                                                                                                                                     
|            | 31 | .1  |  |  |  | Certification by Robert C. Woodworth, President
    and Chief Executive Officer of Pulitzer Inc., pursuant to
    Exchange Act Rule 13a-14(a), as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002, in
    connection with Pulitzer Inc.s Annual Report on
    Form 10-K for the year ended December 28, 2003.                   
|            | 31 | .2  |  |  |  | Certification by Alan G. Silverglat, Senior Vice
    President-Finance and Chief Financial Officer of Pulitzer Inc.,
    pursuant to Exchange Act Rule 13a-14(a), as adopted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
    in connection with Pulitzer Inc.s Annual Report on
    Form 10-K for the year ended December 28, 2003.
|            | 32 | .1  |  |  |  | Certification by Robert C. Woodworth, President
    and Chief Executive Officer of Pulitzer Inc., pursuant to 18
    U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, in
    connection with Pulitzer Inc.s Annual Report on
    Form 10-K for the year ended December 28, 2003.                        
|            | 32 | .2  |  |  |  | Certification by Alan G. Silverglat, Senior Vice
    President-Finance and Chief Financial Officer of Pulitzer Inc.,
    pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002, in
    connection with Pulitzer Inc.s Annual Report on
    Form 10-K for the year ended December 28, 2003.     

75



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(b) The following exhibits are incorporated
herein by reference:

|            |    |      |  |   |  |                                                                                                                                                                                                                                                                     
|----------- | -- | ---- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    |      |  |  
|            |    |      |  |  
|            | 3  | .1   |  |  |  | Restated Certificate of Incorporation 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)  
|            | 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 | .3.1 |  |  |  | Amendment, dated September 16, 1997, to
    Pulitzer Retirement Savings Plan. (v)                                                                                                                                                                                   
|            | 10 | .3.2 |  |  |  | Amendment, dated January 28, 1997, to
    Pulitzer Retirement Savings Plan. (iv)                                                                                                                                                                                    
|            | 10 | .3.3 |  |  |  | Amendment, dated October 30, 1996, to
    Pulitzer Retirement Savings Plan. (iv)                                                                                                                                                                                    
|            | 10 | .3.4 |  |  |  | Amendment, dated July 31, 1996, to Pulitzer
    Retirement Savings Plan. (iv)                                                                                                                                                                                       
|            | 10 | .3.5 |  |  |  | Amendment, dated October 25, 1995, to
    Pulitzer Retirement Savings Plan. (iv)                                                                                                                                                                                    
|            | 10 | .3.6 |  |  |  | Amendment, dated October 25, 1995, to
    Pulitzer Retirement Savings Plan. (ii)                                                                                                                                                                                    
|            | 10 | .3.7 |  |  |  | Amendment, dated January 24, 1995, to
    Pulitzer Retirement Savings Plan. (i)                                                                                                                                                                                     
|            | 10 | .3.8 |  |  |  | Amended and Restated Pulitzer Retirement Savings
    Plan. (i)                                                                                                                                                                                                      
|            | 10 | .4.1 |  |  |  | Amendment, dated October 25, 1995, to
    Pulitzer Publishing Company Pension Plan. (iv)                                                                                                                                                                            
|            | 10 | .4.2 |  |  |  | Amended and Restated Pulitzer Publishing Company
    Pension Plan. (i)                                                                                                                                                                                              
|            | 10 | .5.1 |  |  |  | Amendment, dated October 29, 1997, to
    Pulitzer Publishing Company Supplemental Executive Benefit
    Pension Plan. (viii)                                                                                                                                       
|            | 10 | .5.2 |  |  |  | Amendment, dated June 23, 1992, to Pulitzer
    Publishing Company Supplemental Executive Benefit Pension Plan.
    (viii)                                                                                                                                          
|            | 10 | .5.3 |  |  |  | Amendment, dated January 1, 1992, to
    Pulitzer Publishing Company Supplemental Executive Benefit
    Pension Plan. (viii)                                                                                                                                        
|            | 10 | .5.4 |  |  |  | Amendment, dated January 18, 1990, to
    Pulitzer Publishing Company Supplemental Executive Benefit
    Pension Plan. (viii)                                                                                                                                       
|            | 10 | .5.5 |  |  |  | Amendment, dated October 26, 1989, to
    Pulitzer Publishing Company Supplemental Executive Benefit
    Pension Plan. (viii)                                                                                                                                       
|            | 10 | .5.6 |  |  |  | Amendment, dated November 6, 1987, to
    Pulitzer Publishing Company Supplemental Executive Benefit
    Pension Plan. (viii)                                                                                                                                       
|            | 10 | .5.7 |  |  |  | Pulitzer Publishing Company Supplemental
    Executive Benefit Pension Plan dated March 18, 1986. (viii)                                                                                                                                                            
|            | 10 | .5.8 |  |  |  | Amendment, dated January 29, 2003, to the
    Pulitzer Inc. Supplemental Executive Benefit Pension Plan.
    (xviii)                                                                                                                                                
|            | 10 | .6   |  |  |  | Employment Agreement, dated October 1, 1986,
    between the Pulitzer Publishing Company and Joseph Pulitzer, Jr.
    (viii)                                                                                                                                        
|            | 10 | .7   |  |  |  | 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)                 

76



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|            |    |     |  |   |  |                                                                                                                                                                                                                                                 
|----------- | -- | --- |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    |     |  |  
|            |    |     |  |  
|            | 10 | .8  |  |  |  | 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 | .9  |  |  |  | Split Dollar Life Insurance Agreement, dated
    December 31, 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 | .10 |  |  |  | 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 | .11 |  |  |  | Contribution and Assumption Agreements, dated as
    of March 18, 1999 by and between Pulitzer Publishing
    Company and Pulitzer Inc. (ix)                                                                                                    
|            | 10 | .12 |  |  |  | Letter Agreement, dated May 25, 1998, by and
    among Pulitzer Publishing Company, Pulitzer Inc. and
    Hearst-Argyle Television, Inc. (viii)                                                                                                 
|            | 10 | .13 |  |  |  | Letter Agreement, dated March 18, 1999,
    between Pulitzer Inc. and Emily Rauh Pulitzer. (ix)                                                                                                                                                 
|            | 10 | .14 |  |  |  | Letter Agreement, dated March 18, 1999,
    between Pulitzer Inc. and David E. Moore. (ix)                                                                                                                                                      
|            | 10 | .15 |  |  |  | Pulitzer Inc. Registration Rights Agreement. (ix)                                                                                                                                                                                               
|            | 10 | .16 |  |  |  | Pulitzer Inc. 1999 Key Employees Restricted
    Stock Purchase Plan. (viii)                                                                                                                                                                    
|            | 10 | .17 |  |  |  | Pulitzer Inc. 1999 Stock Option Plan. (viii)                                                                                                                                                                                                    
|            | 10 | .18 |  |  |  | Pulitzer Inc. 1999 Employee Stock Purchase Plan.
    (viii)                                                                                                                                                                                     
|            | 10 | .19 |  |  |  | Employment Agreement, dated December 18,
    1998, between Pulitzer Inc. and Robert C. Woodworth. (vii)                                                                                                                                         
|            | 10 | .20 |  |  |  | Employment Agreement, dated August 26, 1998
    between Pulitzer Inc. and Terrance C.Z. Egger. (viii)                                                                                                                                           
|            | 10 | .21 |  |  |  | Employment and Consulting Agreement, dated as of
    June 1, 1999, between Pulitzer Inc. and Michael E.
    Pulitzer. (x)                                                                                                                       
|            | 10 | .22 |  |  |  | Employment Agreement, dated as of June 1,
    1999, between Pulitzer Inc. and Ronald H. Ridgway. (x)                                                                                                                                            
|            | 10 | .23 |  |  |  | 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 | .24 |  |  |  | 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 | .25 |  |  |  | Asset Purchase Agreement, as of October 4,
    1999, by and between The Chronicle Publishing Company and
    Pulitzer Inc. (x)                                                                                                                  
|            | 10 | .26 |  |  |  | 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 | .27 |  |  |  | Operating Agreement of St. Louis Post-Dispatch
    LLC, dated as of May 1, 2000. (xi)                                                                                                                                                           
|            | 10 | .28 |  |  |  | Indemnity Agreement, dated as of May 1,
    2000, between The Herald Company, Inc. and Pulitzer Inc. (xi)                                                                                                                                       
|            | 10 | .29 |  |  |  | St. Louis Post-Dispatch LLC Note Agreement, dated
    as of May 1, 2000. (xii)                                                                                                                                                                  
|            | 10 | .30 |  |  |  | Pulitzer Inc. Guaranty Agreement, dated as of
    May 1, 2000. (xii)                                                                                                                                                                            
|            | 10 | .31 |  |  |  | License Agreement, dated as of May 1, 2000,
    by and between Pulitzer Inc. and St. Louis Post-Dispatch LLC.
    (xii)                                                                                                                         
|            | 10 | .32 |  |  |  | Non-Confidentiality Agreement, dated as of May 1,
    2000. (xii)                                                                                                                                                                               
|            | 10 | .33 |  |  |  | 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)

77



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|            |    |       |  |   |  |                                                                                                                                       
|----------- | -- | ----- |  | - |  | --------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    |       |  |  
|            |    |       |  |  
|            | 10 | .34   |  |  |  | Pulitzer Inc. Deferred Compensation Plan. (xiv)                                                                                       
|            | 10 | .35   |  |  |  | Pulitzer Inc. 2000 Stock Purchase Plan, as
    Amended and Restated. (xiv)                                                            
|            | 10 | .36   |  |  |  | Robert C. Woodworth Restricted Stock Unit Award
    dated December 11, 2000. (xiv)                                                    
|            | 10 | .37   |  |  |  | Amendment No. 1 dated as of June 1, 2001, to
    Operating Agreement of St. Louis Post-Dispatch LLC, dated May 1,
    2000. (vx)      
|            | 10 | .38   |  |  |  | Pulitzer Inc. Executive Transition Plan. (xvi)                                                                                        
|            | 10 | .39   |  |  |  | Pulitzer Inc. Annual Incentive Compensation Plan.
    (xvi)                                                                           
|            | 10 | .39.1 |  |  |  | Amendment 2002-1 of Pulitzer Inc. Annual
    Incentive Plan. (xviii)                                                                  
|            | 10 | .40   |  |  |  | Robert C. Woodworth Restricted Stock Unit Award
    dated as of December 6, 2001. (xvii)                                              
|            | 10 | .41   |  |  |  | Split Dollar Life Insurance Agreement Dated as of
    January 24, 2002, by and among Pulitzer, Inc. and Robert C
    Woodworth. (xvii)
|            | 10 | .42   |  |  |  | Robert C. Woodworth Restricted Stock Unit Award
    dated as of December 11, 2002. (xviii)                                            
|            | 10 | .43   |  |  |  | Robert C. Woodworth Restricted Stock Unit Award
    dated as of February 21, 2003. (xviii)                                            
|            | 10 | .44   |  |  |  | Form of Stock Option Award for Robert C.
    Woodworth and Alan G. Silverglat dated as of February 21, 2003.
    (xviii)              
|            | 10 | .45   |  |  |  | Robert C. Woodworth Restricted Stock Unit Award
    dated as of December 10, 2003.                                                    
|            | 10 | .46   |  |  |  | Form of Restricted Stock Unit Award for Robert C.
    Woodworth dated as of December 10, 2003.                                        
|            | 10 | .47   |  |  |  | Robert C. Woodworth Stock Option Award dated as
    of December 10, 2003.                                                             
|            | 10 | .48   |  |  |  | Form of Stock Option Award for Robert C.
    Woodworth dated as of December 10, 2003.                                                 
|            | 10 | .49   |  |  |  | Stock Option Award for Alan G. Silverglat dated
    as of December 10, 2003.                                                          
|            | 10 | .50   |  |  |  | Form of Stock Option Award for Alan G. Silverglat
    dated as of December 10, 2003.                                                  
|            | 10 | .51   |  |  |  | Pulitzer Inc. 2003 Incentive Award.                                                                                                   
|            | 10 | .52   |  |  |  | Mark G. Contreras Restricted Stock Award
    Dated October 29, 2003.                                                                  




|       |                                                                                                                                                
|------ | -----------------------------------------------------------------------------------------------------------------------------------------------
|(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.                   

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|        |                                                                                                                                      
|------- | -------------------------------------------------------------------------------------------------------------------------------------
|(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.     
|       
|(xiv)   | Incorporated by reference to Pulitzer Inc.s
    Annual Report on Form 10-K for the fiscal year ended
    December 31, 2000.         
|       
|(xv)    | Incorporated by reference to Pulitzer Inc.s
    Quarterly Report on Form 10-Q for the quarterly period ended
    July 1, 2001.      
|       
|(xvi)   | Incorporated by reference to Pulitzer Inc.s
    Quarterly Report on Form 10-Q for the quarterly period ended
    September 30, 2001.
|       
|(xvii)  | Incorporated by reference to Pulitzer Inc.s
    Annual Report on Form 10-K for the fiscal year ended
    December 30, 2001.         
|       
|(xviii) | Incorporated by reference to Pulitzer Inc.s
    Annual Report on Form 10-K for the fiscal year ended
    December 29, 2002.         

(b) REPORTS ON FORM 8-K

On October 27, 2003, the Company filed a
Current Report on Form 8-K reporting under Item 12,
Results of Operations and Financial Condition, attaching a press
release announcing its consolidated financial results for the
third quarter ended September 28, 2003.

On November 11, 2003, the Company filed a
Current Report on Form 8-K reporting under Item 12,
Results of Operations and Financial Condition, attaching a press
release announcing changes from results presented in its
October 27, 2003 consolidated financial results for the
third quarter ended September 28, 2003 to present
third-quarter earnings in compliance with FASB staff position
No. 150-3.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of
Section 13-15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 4th
day of March, 2004.



| |              
| | -------------
| | 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 below by the
following persons on behalf of the Registrant in the capacities
indicated on the dates indicated.

|                                                  |  |                                                                                   |  |              
|------------------------------------------------- |  | --------------------------------------------------------------------------------- |  | -------------
|Signature                                         |  | Title                                                                             |  | Date         
|                                                  |  |                                                                                   |  |              
|/s/ ROBERT C. WOODWORTH(Robert C. Woodworth)      |  | Director; President and Chief Executive Officer
    (Principal Executive Officer) |  | March 4, 2004
|/s/ ALAN G. SILVERGLAT(Alan G. Silverglat)        |  | Senior Vice President  Finance
    (Principal Financial and Accounting Officer)  |  | March 4, 2004
|                                                 
|/s/ WILLIAM BUSH*(William Bush)                   |  | Director                                                                          |  | March 4, 2004
|                                                 
|/s/ SUSAN T. CONGALTON*(Susan T. Congalton)       |  | Director                                                                          |  | March 4, 2004
|                                                 
|/s/ KEN J. ELKINS*(Ken J. Elkins)                 |  | Director                                                                          |  | March 4, 2004
|                                                 
|/s/ ALICE B. HAYES*(Alice B. Hayes)               |  | Director                                                                          |  | March 4, 2004
|                                                 
|/s/ RICHARD W. MOORE*(Richard W. Moore)           |  | Director                                                                          |  | March 4, 2004
|                                                 
|/s/ EMILY RAUH PULITZER*(Emily Rauh Pulitzer)     |  | Director                                                                          |  | March 4, 2004
|                                                 
|/s/ MICHAEL E. PULITZER*(Michael E. Pulitzer)     |  | Director; Chairman                                                                |  | March 4, 2004
|                                                 
|/s/ RONALD H. RIDGWAY*(Ronald H. Ridgway)         |  | Director                                                                          |  | March 4, 2004
|                                                 
|/s/ JAMES M. SNOWDEN, JR.*(James M. Snowden, Jr.) |  | Director                                                                          |  | March 4, 2004



| |     |                       
| | --- | ----------------------
| | By: | /s/ ALAN G. SILVERGLAT

| |                    
| | -------------------
| |                    
| | Alan G. Silverglat*
| | attorney-in-fact   

80



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##### Table of Contents



PULITZER INC.

Report on Form 10-K for the Fiscal Year
Ended

December 31, 2003







EXHIBIT INDEX


| |    |     |  |                                                                                                                                                                                                                                                                                                                                                        
| | -- | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3  | .2  |  | Amended and Restated By-Laws of Pulitzer Inc.                                                                                                                                                                                                                                                                                                          
| | 10 | .45 |  | Robert C. Woodworth Restricted Stock Unit Award
    dated as of December 10, 2003.                                                                                                                                                                                                                                                                     
| | 10 | .46 |  | Form of Restricted Stock Unit Award for Robert C.
    Woodworth dated as of December 10, 2003.                                                                                                                                                                                                                                                         
| | 10 | .47 |  | Robert C. Woodworth Stock Option Award dated as
    of December 10, 2003.                                                                                                                                                                                                                                                                              
| | 10 | .48 |  | Form of Stock Option Award for Robert C.
    Woodworth dated as of December 10, 2003.                                                                                                                                                                                                                                                                  
| | 10 | .49 |  | Stock Option Award for Alan G. Silverglat dated
    as of December 10, 2003.                                                                                                                                                                                                                                                                           
| | 10 | .50 |  | Form of Stock Option Award for Alan G. Silverglat
    dated as of December 10, 2003.                                                                                                                                                                                                                                                                   
| | 10 | .51 |  | Pulitzer Inc. 2003 Incentive Award.                                                                                                                                                                                                                                                                                                                    
| | 10 | .52 |  | Mark G. Contreras Restricted Stock Award
    Dated October 29, 2003.                                                                                                                                                                                                                                                                                   
| | 21 |     |  | Subsidiaries of Registrant.                                                                                                                                                                                                                                                                                                                            
| | 23 |     |  | Independent Auditors Consent.                                                                                                                                                                                                                                                                                                                         
| | 24 |     |  | Power of Attorney.                                                                                                                                                                                                                                                                                                                                     
| | 31 | .1  |  | Certification by Robert C. Woodworth, President
    and Chief Executive Officer of Pulitzer Inc., pursuant to
    Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002, in connection with Pulitzer
    Inc.s Annual Report on Form 10-K for the year ended
    December 28, 2003.                   
| | 31 | .2  |  | Certification by Alan G. Silverglat, Senior Vice
    President-Finance and Chief Financial Officer of Pulitzer Inc.,
    pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002, in connection
    with Pulitzer Inc.s Annual Report on Form 10-K for the
    year ended December 28, 2003.
| | 32 | .1  |  | Certification by Robert C. Woodworth, President
    and Chief Executive Officer of Pulitzer Inc., pursuant to 18
    U.S.C. Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002, in connection with Pulitzer
    Inc.s Annual Report on Form 10-K for the year ended
    December 28, 2003.                        
| | 32 | .2  |  | Certification by Alan G. Silverglat, Senior Vice
    President-Finance of Pulitzer Inc., pursuant to 18 U.S.C.
    Section 1350, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002, in connection with Pulitzer
    Inc.s Annual Report on Form 10-K for the year ended
    December 28, 2003.