PULITZER INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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PULITZER INC.
(Exact name of registrant as specified in its charter)
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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)

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant as of the last business day of the registrant's most recently
completed second fiscal quarter was approximately $476,518,158.

The number of shares of Common Stock, $.01 par value, outstanding as of
March 10, 2003, was 9,520,916.

Indicate by checkmark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes X No ____

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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 May 22, 2003,
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 2002, the Company's fiscal year began on December 31, 2002 and ended on
December 29, 2002. In 2002 and 2001, the fourth quarter was 13 weeks and the
year was 52 weeks. In 2000, the fourth quarter was 14 weeks and the year was 53
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 29, 2002.

ITEM 1. BUSINESS.

INTRODUCTION

Pulitzer Inc. (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 2002, the Company's combined St. Louis
operations contributed approximately 64 percent of total revenue including
revenue associated with the Company's operations in Tucson, Arizona.

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 under the direction of the Pulitzer family. Michael E. Pulitzer, a
grandson of the founder, currently serves as Chairman of the Board of the
Company.

The Company is engaged in newspaper publishing with integrated new-media
businesses. Its newspaper operations include operations in St. Louis, Missouri,
where the Company publishes the Post-Dispatch, the only major daily newspaper
serving the greater St. Louis metropolitan area, and in Tucson, Arizona, where
the Company publishes the Arizona Daily Star (the "Star"). In Tucson, the
Company shares, on an equal basis, the combined results of the Star and the
Tucson Citizen (the "Citizen"), published by the Gannett Co., Inc. ("Gannett").

The Company's wholly owned subsidiary Pulitzer Newspapers, Inc. ("PNI")
publishes 12 dailies with integrated Internet operations that serve markets in
the Midwest, Southwest and West, as well as a number of weekly and bi-weekly
publications (the "PNI Group"). In January 2000, the PNI Group acquired, in an
asset purchase, its largest newspaper, The Pantagraph, that serves the central
Illinois cities of Bloomington and Normal. The PNI Group's 12 daily newspapers
had a combined average daily circulation of approximately 188,000 for 2002.

As a result of the May 1, 2000, transaction that created the St. Louis
Post-Dispatch LLC ("PD LLC"), the Company controls and manages the Post-Dispatch
and holds a 95 percent interest in the results of its operations. Prior to May
1, 2000, the Company shared the operating profits and losses of the
Post-Dispatch on a 50-50 basis with The Herald Company, Inc. ("Herald").
See -- Agency Agreements.

The Company's St. Louis newspaper operations include the Suburban Journals
of Greater St. Louis (the "Suburban Journals"), acquired in August 2000. The
Suburban Journals are a group of 37 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 approximately
1,400,000, with some households receiving multiple copies.

In January 2001, the Company, through its PNI Group, acquired, in an asset
purchase, The Lompoc Record, a daily newspaper located in Lompoc, California. In
addition, during the second half of 2000 and the first nine months of 2001, the
PNI Group acquired several weekly newspapers (in separate transactions) that
complement its daily newspapers in several markets. These acquisitions are
collectively referred to as the "PNI Acquisitions." Also, in 2001, PNI sold its
daily newspaper located in Troy, Ohio, and its weekly newspaper property in
Petaluma, California (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.

The PD LLC transaction, the Pantagraph acquisition and the Suburban
Journals acquisition are collectively referred to as the "Newspaper
Transactions."

INITIAL CAPITALIZATION

The Company was capitalized on March 18, 1999, with approximately $550.0
million in cash and all the other assets of Pulitzer Publishing Company ("Old
Pulitzer") (other than broadcasting assets) as a result of the Spin-off (as
defined below) and is now operating the principal newspaper publishing and
related new-media businesses formerly operated by Old Pulitzer and certain other
newspapers acquired since the Broadcast Transaction (as defined below). The
Company was organized as a corporation in 1998 and, prior to the Spin-
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ITEM 1. BUSINESS -- CONTINUED

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

Old Pulitzer's historical basis in its newspaper publishing and related
new-media assets and liabilities has been carried over to the Company. The
Broadcast Transaction represents a reverse-spin transaction and, accordingly,
the Company's results of operations for periods prior to the consummation of the
Broadcast Transaction are identical to the historical results previously
reported by Old Pulitzer.

HISTORICAL FINANCIAL INFORMATION

The Company's revenues are derived primarily from advertising and
circulation, which have respectively averaged approximately 77.0 percent and
21.0 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.

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ITEM 1. BUSINESS -- CONTINUED

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(1) In 2000 the Company completed the Newspaper Transactions. In addition, 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.

(2) 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.

(3) See "Agency Agreements" for additional information on the St. Louis Agency
adjustment.

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

(5) Certain reclassifications have been made to the 2001 consolidated financial
statements to conform to the 2002 presentation.

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 locally responsive news, a focus on local
advertisers, and prudent control of costs. Management believes that editorial
excellence and leadership in locally responsive news will, over the long-term,
allow the Company to maximize its 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.
Experienced local managers implement the Company's strategy in each market, with
centralized management providing oversight and guidance, in all areas of
planning and operations.

The Company has developed new-media operations that are designed to
enhance, complement and add value to its traditional newspaper publishing
businesses by providing consumer and advertiser services through electronic
dissemination of information via the 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 Web sites takes full advantage of the
newspapers' extensive knowledge about 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 conservative capital
structure, among other factors, will assist the Company in pursuing
acquisitions.

The Company believes that cost controls are an important tool in the
management of media properties that are subject to significant fluctuations in
advertising volume. The Company believes that prudent control of costs will
permit it to respond quickly when positive operating conditions offer
opportunities to expand market share and profitability and, alternatively, when
deteriorating operating conditions require cost reductions to protect
profitability. The Company's disciplined budgeting process is one of the key
elements in controlling costs.

The Company operates in the Midwest, Southwest and Western regions of the
United States, although 64 percent of 2002 total revenues (including the
Company's 50 percent interest in the operations of TNI) originated in St. Louis.

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ITEM 1. BUSINESS -- CONTINUED

COMBINED ST. LOUIS OPERATIONS

The Company serves the greater St. Louis metropolitan area with the daily
Post-Dispatch and, as of August 10, 2000, the Suburban Journals' weekly
newspapers, as well as with its STLtoday.com portal for all St. Louis news and
information Internet Web sites. The Company also owns and operates STL
Distribution Services, an independent distribution company serving the St. Louis
metropolitan area. St. Louis is currently the 17th largest metropolitan
statistical area in the United States with a population of approximately 2.6
million. The following table sets forth the operating revenues from continuing
operations of the Company's combined St. Louis operations for the past five
years.

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(1) On August 10, 2000, the Company acquired 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.

ST. LOUIS POST-DISPATCH

Founded in 1878 by the first Joseph Pulitzer, the Post-Dispatch has a long
history of reporting and editorial excellence and innovation in newspaper
publishing under the direction of the Pulitzer family. The Post-Dispatch is a
morning daily and Sunday newspaper serving primarily the greater St. Louis
metropolitan area. The Post-Dispatch has won 17 Pulitzer prizes in its 124 years
of continuous publication.

As a result of the PD LLC transaction on May 1, 2000, the Company holds a
95 percent interest in the results of operations of PD LLC and Herald holds a 5
percent interest. Prior to May 1, 2000, under the terms of the St. Louis Agency
Agreement, which had governed the operations of the Post-Dispatch since 1961,
the Company and Herald generally shared 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.

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ITEM 1. BUSINESS -- CONTINUED

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(1) Amounts for 2002 are based on internal records of the Company 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
advertisements typically appear in a special news and advertising section
designed specifically for the targeted geographic locations.

The Company's commitment to the ongoing enhancement of its operating
systems has enabled the Post-Dispatch to offer a continually improving product
to both readers and advertisers while also realizing substantial savings in
labor cost.

The Post-Dispatch is distributed primarily through independent home
delivery carriers and single copy dealers (contracted directly by the
Post-Dispatch or through STL Distribution Services LLC, a distribution
subsidiary of the Company ("DS LLC")). Home delivery accounted for approximately
77 percent of circulation for the daily Post-Dispatch and approximately 60
percent of circulation for the Sunday edition during 2002. 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 four years, and it may continue to purchase additional routes from
time to time in the future. As of December 31, 2002, PD LLC owned circulation
routes covering approximately 68 percent of the Post-Dispatch's home delivery
distribution. In 2002 PD LLC took over the function of billing subscribers
directly in order to further enhance its relationship with home delivery
subscribers. Previously, that function was carried out by independent delivery
contractors.

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 37 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 2002 the Suburban
Journals had a combined average weekly distribution of approximately 1.4
million, delivered by independent carriers to homes and outlets.

The Suburban Journals' newspapers are organized by geographic area into
nine publication groups throughout the St. Louis metropolitan area. Each group
has a news and advertising staff based in its local community 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 results of the Suburban Journals are included herein for reporting
purposes as part of the Company's combined St. Louis operations, which include
the Post-Dispatch and STLtoday, one of St. Louis's leading local Web sites.
Advertising personnel from the Suburban Journals, the Post-Dispatch and STLtoday
have the ability to cross-sell advertising products into each publication,
allowing for increased sales efforts and greater operating efficiencies in the
St. Louis marketplace.

ST. LOUIS INTERNET OPERATIONS

The Company's STLtoday.com (www.STLtoday.com) and other local affiliated
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 -- autos, real estate and jobs. 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-

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ITEM 1. BUSINESS -- CONTINUED

skilled talent pool for the metro area. As a part of the initiative, the Company
created stlouisatwork.com to become the online career destination for regional
employers and job candidates. The following table sets forth page view
statistics and the percentage change compared to comparable periods in 2001 for
the combined St. Louis Web sites.

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

STL DISTRIBUTION SERVICES OPERATIONS

The Company owns and operates STL Distribution Services, an independent
distribution company delivering newspapers, product samples, telephone books and
other periodicals for the Post-Dispatch, The Ladue News and other distribution
clients throughout the St. Louis Metropolitan area.

PULITZER NEWSPAPERS, INC.

The PNI Group publishes 12 dailies that serve markets in the Midwest,
Southwest and Western regions of the United States. 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, 2002
(except where noted), are:

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(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.

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

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. Further, these markets,

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ITEM 1. BUSINESS -- CONTINUED

which are often not served by major metropolitan media, tend to be characterized
by less media competition, which gives the Company an opportunity to sustain and
expand market share. A strong focus on local reporting and editorial excellence
is considered a key to long-term success in these markets.

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

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(1) In January of 2000, the Company acquired The Pantagraph. 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. PNI generates revenue from online
advertising and from service and transaction fees.

The following table sets forth page view statistics for the Combined PNI
Group Web sites and the percentage change compared to comparable periods in
2001.

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

TUCSON OPERATIONS

Founded in 1877, the Star is published in Tucson, Arizona, by the Company's
wholly owned subsidiary, Star Publishing Company ("Star Publishing"). The Star,
a morning and Sunday newspaper, and the Citizen, an afternoon newspaper owned by
Gannett, are southern Arizona's leading dailies. The Star and the Citizen are
published through an agency operation (the "Tucson Agency") pursuant to an
Agency Agreement, dated March 28, 1940, as amended and restated (the "Tucson
Agency Agreement"), and in 2002 had a combined weekday circulation of
approximately 139,000 and a Sunday circulation of 171,000 delivered by
independent carriers to homes and single-copy outlets. Tucson is currently the
69th largest metropolitan statistical area in the United States with a
population of approximately 877,000.

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

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ITEM 1. BUSINESS -- CONTINUED

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

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

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(1) Amounts for 2002 are based on the internal records of the Company. Amounts
for prior years are based on ABC Audit Reports for the 52-week period ended
December 31.

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

The Star and the Citizen are 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 on the Internet (www.azstarnet.com),
serves 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, Starnet also serves as a city portal, providing community information
and acting as a community center and marketplace, enabling businesses and
individuals to build relationships with each other and the Star. Starnet
generates revenue from online advertising and from service and transaction fees,
all of which are included in TNI Partners' other operating revenue.

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ITEM 1. BUSINESS -- CONTINUED

The following table sets forth page view statistics for Combined Tucson Web
sites and the percentage change compared to comparable periods in 2001.

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(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 publishing
competencies; (ii) have strong cash flows; (iii) possess good growth or economic
characteristics, where possible, (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 an attractive
return on investment.

AGENCY AGREEMENTS

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

St. Louis Agency. As a result of the May 1, 2000, PD LLC transaction, the
Company holds a 95 percent interest in the results of operations of PD LLC, and
Herald holds a 5 percent interest. Prior to May 1, 2000, under the terms of the
St. Louis Agency Agreement, which had governed the operations of the
Post-Dispatch since 1961, the Company and Herald generally shared the
Post-Dispatch's operating profits and losses, as well as its capital
expenditures, on a 50-50 basis. Under the St. Louis Agency Agreement, for fiscal
2000 (for operating results through April 30, 2000), 1999 and 1998 the Company
paid Herald $9.4 million, $25.0 million and $20.7 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 Star and Citizen. TNI Partners, as agent for the Company
and Gannett, is responsible for advertising and circulation, printing and
delivery and collection of all revenues of the Star and the Citizen. The Board
of Directors of TNI Partners presently consists of three directors chosen by the
Company and three chosen by Gannett. Budgetary, personnel and other non-news and
editorial policy matters, such as advertising and circulation policies and rates
or prices, are determined by the Board of Directors of TNI Partners. Each
newspaper is responsible for its own news and editorial content. Revenues and
expenses are recorded by TNI Partners, and the resulting profit is generally
split 50-50 between the Company and Gannett. The Company reports its 50 percent
share of TNI Partners' operating results as a single component of operating
income in its consolidated statement of income. Both partners have certain
administrative costs that are borne and reported separately. As a result of the
Tucson Agency, the Star and the Citizen benefit from increases and can be
adversely affected by decreases in each other's circulation.

The 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.

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ITEM 1. BUSINESS -- CONTINUED

COMPETITION

The Company's publications compete for readership and advertising revenues
in varying degrees with other metropolitan, suburban, neighborhood and national
newspapers and other publications as well as with television, radio, cable,
Internet, online services and other new-media technologies, direct mail, yellow
page directories, billboards and other news and advertising media. Competition
for advertising is based 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. In its markets, the Company's print competition for circulation
and advertising revenues may include some or all of the following: paid suburban
daily newspapers, independently owned community newspapers and shoppers, yellow
pages and direct mail advertisers. These community newspapers and shoppers and
direct mail companies target selected geographic markets throughout their
respective distribution areas.

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

RAW MATERIALS

The primary raw material used in the Company's operations is newsprint,
representing 11.9 percent to 16.0 percent of operating expenses over the last
five years. For 2002, the Company's annual newsprint metric tonnes consumption,
including its 50 percent share related to the operations of TNI Partners, was
approximately 102,000 metric tonnes. Based on the Company's current level of
newspaper operations, expected annual newsprint consumption for 2003 is
estimated to be in the range of 104,000 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 tonne of newsprint has varied from its peak
price by approximately 28.0 percent. For every one-dollar change in the
Company's average annual cost per metric tonne of newsprint, pre-tax income
would change by approximately $104,000, assuming annual newsprint consumption of
104,000 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 publishing 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, 2002, the Company had approximately 3,900 full-time
equivalent employees working at its operations, including TNI Partners. At the
Post-Dispatch in St. Louis, approximately 77 percent of employees are
represented by unions. The Company considers its relationship with its employees
to be good.

The Post-Dispatch has contracts with substantially all of its production
unions, with expiration dates ranging from August 2003 through February 2010.
The Post-Dispatch is 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 #505, covering approximately 20 production
employees. The Newspaper Guild contract expired in January 2003. The GCIU
contract expired in September 2002. All Post-Dispatch labor contracts contain
no-strike provisions.

TNI Partners' contract with Tucson Graphic Communications Union Local No.
212, covering certain pressroom employees, expires on May 31, 2003. In each of
the last several years, this contract has been renegotiated for a one-year term.

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ITEM 1. BUSINESS -- CONTINUED

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

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, 2002 are set forth
below. Leases on the properties indicated as leased by the Company expire at
various dates through January 2012.

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-Dispatch expanded its main production facility, adding
approximately 110,000 square feet of owned space in St. Louis and enabling the
Company to eliminate operations previously conducted in other facilities.

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(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.

12

ITEM 3. LEGAL AND REGULATORY PROCEEDINGS

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

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.

The Company does not believe that Old Pulitzer realized any taxable gain in
connection with the Spin-off and has contested the IRS' proposed increase in a
formal written protest filed with the Appeals Office of the IRS in January 2002.
While there can be no assurance that the Company will completely prevail in its
position, it believes that the IRS' position is not supported by the facts or
applicable legal authorities and intends to vigorously contest the IRS'
determination. It thus has not accrued any liability in connection with this
matter. If the IRS were completely successful in its proposed adjustment, the
Company's indemnification obligation would be approximately $29.3 million, plus
applicable interest, and any indemnification payment would be recorded as an
adjustment to additional paid-in capital.

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 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 in March 1999. 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. Pending IRS review, no receivable has been
recognized in connection with these refund claims and any funds received for
income tax refunds would be recorded as an adjustment to additional
paid-in-capital.

In February 1998 a group of independent newspaper dealers engaged in the
business of reselling the Post-Dispatch in vending machines and to retail
establishments filed suit against the Company in the Missouri Circuit Court,
Twenty-Second Judicial Circuit (St. Louis City). The court has dismissed four of
the six counts in the suit. In the remaining counts, the plaintiffs allege that
the Company's actions have tortiously interfered with their business expectancy
of being able to sell their branches and constituted malicious trespass on their
intangible property by, among other things, allegedly reducing the value of
their routes. The plaintiffs seek punitive damages with respect to the tortious
interference count and statutory double damages if they should prevail on the
malicious trespass count. The plaintiffs cite as harmful acts the Company's
purchase of various home delivery routes and branches, the Company's home
subscription pricing compared to its single copy pricing, and allegedly more
favorable rates, fees and allowances that the Company provides to its carriers
and other branch dealers. The Company has denied any liability, is vigorously
defending the suit and believes that it has meritorious defenses, and,
therefore, 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

13

ITEM 3. LEGAL AND REGULATORY PROCEEDINGS -- CONTINUED

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. However, depending upon the period of resolution, such
effects 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 materially 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.

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

Not Applicable.

14

PART II

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

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

At March 10, 2003, there were approximately 374 record holders of the
Company's common stock and 26 record holders of its Class B common stock.

The following table sets forth the range of high and low sales prices for
the Company's common stock and dividends paid for each quarterly period in the
past two years:

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

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

(2) In 2001 the Company declared and paid cash dividends of $0.68 per share of
common stock and Class B common stock.

On January 6, 2003, the Board of Directors of the Company announced for the
first quarter of 2003 a 2.9 percent increase in the quarterly dividend on its
common stock and Class B common stock to $0.18 per share from $0.175 per share.
The cash dividend was paid on February 3, 2003. 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

ITEM 6. SELECTED FINANCIAL DATA

16

ITEM 6. SELECTED FINANCIAL DATA -- CONTINUED

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

(1) 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.

(2) 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.

(3) See Item 1. Business -- "Agency Agreements" for additional information on
the St. Louis Agency adjustment.

(4) Certain reclassifications have been made to the 2001 consolidated financial
statements to conform to the 2002 presentation.

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), 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

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

The Company was capitalized on March 18, 1999, with approximately $550.0
million in cash and all the other assets of Pulitzer Publishing Company ("Old
Pulitzer") (other than broadcasting assets) as a result of the Spin-off (as
defined below) and is now operating the principal newspaper publishing and
related new-media businesses formerly operated by Old Pulitzer and certain other
newspapers acquired since the Broadcast Transaction (as defined below). The
Company was organized as a corporation in 1998 and, prior to the Spin-off, was a
wholly-owned subsidiary of Old Pulitzer. Prior to the Broadcast Transaction, Old
Pulitzer was engaged in newspaper publishing and television and radio
broadcasting.

17

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

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

Old Pulitzer's historical basis in its newspaper publishing and related
new-media assets and liabilities has been carried over to the Company. The
Broadcast Transaction represents a reverse-spin transaction and, accordingly,
the Company's results of operations for periods prior to the consummation of the
Broadcast Transaction are identical to the historical results previously
reported by Old Pulitzer.

The 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 the Company at the time of the Merger.

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

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

ACQUISITION AND DISPOSITION OF PROPERTIES

In 2002 the Company acquired businesses, principally those focused on
distribution operations in St. Louis, totaling $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 net income as a separate
line, "Loss from Discontinued Operations, Net of Tax."

On January 31, 2001, the Company, through PNI and its wholly owned
subsidiaries, (collectively, 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. These
acquisitions are collectively referred to as the "PNI Acquisitions." In 2001 the
Company also acquired several distribution businesses in St. Louis.

On August 10, 2000, the Company acquired the assets of the Suburban
Newspapers of Greater St. Louis, LLC and the stock of The Ladue News, Inc.
(collectively the "Suburban Journals"), a group of 37 weekly papers and various
niche publications (the "Journals Acquisition").

On May 1, 2000, the Company and The Herald Company, Inc. ("Herald")
completed the transfer of their respective interests in the assets and
operations of the St. Louis Post-Dispatch (the "Post-Dispatch") and certain
related businesses to a new joint venture, known as St. Louis Post-Dispatch LLC
("PD LLC"). Under the terms of the operating agreement governing PD LLC (the
"Operating Agreement"), the Company holds a 95 percent interest in the results
of operations of PD LLC and Herald holds a 5 percent interest. Previously,
18

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

under the terms of the St. Louis Agency Agreement, the Company and Herald
generally shared the Post-Dispatch's operating profits and losses, as well as
its capital expenditures, on a 50-50 basis. Under the terms of the Operating
Agreement, Herald received on May 1, 2000, a cash distribution of $306.0 million
from PD LLC. This distribution was financed by the $306.0 million Loan.

On January 11, 2000, the Company acquired The Pantagraph, a daily and
Sunday newspaper that serves the central Illinois cities of Bloomington and
Normal.

The PD LLC transaction, The Pantagraph acquisition and the Journals
Acquisition are collectively referred to as the "Newspaper Transactions."

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 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 its 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 financial statements and require
significant or complex judgment by management.

Management has identified the allowance for doubtful accounts associated
with trade accounts receivable, the liability for both unpaid and unreported
medical and workers compensation claims, and the liability for pension and
postretirement and postemployment benefit obligations as critical accounting
policies as a result of the judgment involved in the use of estimates.

The Company evaluates its allowance for doubtful trade accounts receivable
based on customers' credit history, payment trends and other economic factors to
the extent available. It is possible that reported results could be different
based upon changes in economic conditions that could impact creditors' ability
to pay.

The Company evaluates its liability for unpaid and unreported medical and
workers compensation claims based on historical payment trends and
administration costs. 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 its adoption of Statement of Financial
Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible Assets, as
a critical accounting policy having material impact on the Company's financial
presentation. SFAS No. 142 requires that an intangible asset that is acquired
shall be initially recognized and measured based on its fair value. The
statement also provides that goodwill and other 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. No impairment was recognized
as a result of the impairment testing of goodwill and other indefinite-lived
assets conducted by the Company upon adoption of SFAS No. 142 in January 2002 In
addition, as a result of the adoption of SFAS No. 142, approximately $21.6
million of amortization expense present in 2001 was not recorded in 2002. An
annual impairment test was subsequently performed and indicated that the fair
value exceeded the carrying amount of goodwill. Subsequent impairments, if any,
would be classified as an operating expense.

19

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

2002 COMPARED WITH 2001

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
St. Louis Internet service provider ("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 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 $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 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.

REVENUE

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.
On a comparable basis, excluding the results of properties acquired for both
years for comparable non-ownership periods, operating revenues for 2002
increased 0.4 percent, to $415.0 million

Advertising revenues, as reported, increased $3.6 million, or 1.1 percent,
in 2002. The increase reflected retail and national revenue increases of 2.4 and
2.5 percent, respectively, coupled with strong growth in preprint revenue, which
increased 17.6 percent over the prior year. These increases were partially
offset by a 6.3 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 reflects 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 decreased $0.7 million, or 6.8 percent, in 2002 due
principally to decreased commercial printing revenue.

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 and lower newsprint pricing and volume, which resulted in
newsprint expense savings of $14.2 million, or 25.2 percent, largely on the
strength of 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 $6.4
million principally due to reductions in the
20

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

provision for uncollectible accounts receivable, lower inducement costs, which
declined by $2.0 million compared to the prior year, and decreased promotion
spending.

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 full time equivalent employees ("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 newspaper partnership for 2002
increased 1.4 percent to $17.7 million from $17.5 million the 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 $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 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 by
declines in classified advertising revenue.

NON-OPERATING ITEMS

Interest income for 2002 decreased to $4.2 million from $7.6 million in
2001. The decrease primarily reflected 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. The 2002 to 2001 decrease in interest expense reflects
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 loss on marketable securities and investments of
$7.8 million in 2002 compared with a loss of $3.8 million in 2001. The losses in
both years resulted from an adjustment to the carrying value of several
non-operating investments, partially offset by realized gains on the sale of
marketable securities.

The Company reported no losses in its equity of joint venture investments
in 2002 compared with $1.2 million in the prior year.

The effective income tax rate from continuing operations for 2002 was 38.1
percent, approximately the same as 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 $14.2 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.

21

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 include the operating results and gain or loss
on the sale of newspapers located in Troy, Ohio, and Petaluma, California, and
the results of operations and gain on the sale of the Company's St. Louis ISP
business.

2001 COMPARED WITH 2000

Income statement comparisons of 2001 results with 2000 are affected by an
extra week of operations in 2000. The Company's 2001 fiscal year contained 52
weeks, versus 53 weeks in the 2000 fiscal year.

REVENUE

Revenues from continuing operations for the year ended December 31, 2001
increased 4.1 percent to $413.5 million from $397.2 million in 2000. The
increase reflected the year 2001 contributions from the Suburban Journals and
the PNI Acquisitions. On a comparable basis, excluding the results of properties
acquired for both years for comparable non-ownership periods and the extra week
from 2000, revenues for 2001 decreased 3.4 percent. The decline reflected weak
advertising demand at the Company's newspapers, principally in classified help
wanted advertising in 2001.

Advertising revenues, as reported, increased $13.0 million, or 4.2 percent,
in 2001. The increase reflected the addition of revenue from the Suburban
Journals and the PNI Acquisitions. On a comparable basis, as defined above,
advertising revenues for 2001 declined 4.9 percent due to weakness in the retail
and classified categories, which decreased by 5.5 percent and 10.1 percent,
respectively. These declines were partially offset by gains in national revenue,
up 12.5 percent, and strength in the preprint category, which increased by 3.8
percent.

The decrease in comparable retail revenue can be attributable in large part
to reduced spending by major accounts resulting from the overall economic
slowdown in 2001 and the effects of September 11. These declines were partially
mitigated by the Company's strategy of increasing its resources focused on local
retail accounts.

In 2001 comparable help wanted revenue represented the largest decline in
the classified category, closing the year 23.8 percent under comparable
prior-year results. The Company believes that the decline in comparable help
wanted revenue reflects a slowing economy in 2001. The most significant
comparable employment revenue declines occurred at the Post-Dispatch and at the
combined newspaper operations in Tucson, where help wanted revenues decreased by
25.7 percent and 26.1 percent, respectively.

Circulation revenues reported for 2001 increased $0.7 million, or 0.8
percent, in 2001. The higher circulation revenues primarily reflected the
addition of circulation revenue from the PNI Acquisitions and increased revenue
at the Post-Dispatch, mitigated by the impact of the 53rd week in 2000. On a
comparable basis, as defined above, circulation revenue increased 2.7 percent.

Other publishing revenues increased $2.6 million, or 34.2 percent, in 2001,
resulting primarily from the addition of commercial printing revenue from the
PNI Acquisitions and higher online revenues, mitigated by the impact of the 53rd
week in 2000. On a comparable basis, other publishing revenue increased 35.3
percent.

OPERATING EXPENSE

Operating expenses reported for 2001, excluding the St. Louis Agency
adjustment from the prior year, increased 10.8 percent to $387.6 million in 2001
from $349.9 million in 2000. On a comparable basis, excluding: (i) the results
of properties acquired for comparable non-ownership periods from both years,
(ii) the extra week from 2000, (iii) employment termination costs from both
years, (iv) incremental goodwill

22

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

amortization in 2001 related to the Company's increased interest in the results
of the Post-Dispatch, expenses for 2001 increased $2.1 million or 0.6 percent.

The higher expenses on a comparable basis primarily reflected increased
employee benefit costs related to higher workers compensation claims and
increased medical insurance expense, and increased bad debt expense related to
the Kmart bankruptcy and the acquisition of circulation routes in St. Louis.
These increases were partially offset by lower newsprint and payroll costs.

Total full time equivalent employees ("FTEs") decreased by 149, or 3.6
percent. The largest decreases were at the Post-Dispatch and TNI Partners, where
FTEs levels declined by 8.5 percent and 5.7 percent, respectively.

Equity in the earnings of the Tucson newspaper partnership for 2001
decreased 22.2 percent to $17.5 million from $22.5 million in the prior year.
The decrease primarily reflected weak demand in retail and classified
advertising, particularly help wanted, and the impact of the extra week of
operating income in the prior year.

OPERATING INCOME

For 2001 the Company reported operating income of $43.4 million compared to
$60.4 million in 2000. The decrease in operating income for 2001 primarily
reflected the decline in comparable advertising revenues, higher employee
benefit costs and incremental goodwill amortization related to the Company's
increased interest in the results of operations of the Post-Dispatch.

NON-OPERATING ITEMS

Interest income for 2001 decreased to $7.6 million from $19.0 million in
2000. The decrease primarily reflected the lower average balance of invested
funds in 2001 due to the cash outflows of $41.0 million in connection with the
PNI Acquisitions and the purchase of newspaper routes, and $686.0 million in
2000 (partially offset by $306.0 million of long-term debt proceeds), in
connection with the Newspaper Transactions, the purchase of additional newspaper
routes, and the repurchase of capital stock. In addition, lower average interest
rates also contributed to the decline in 2001 interest income.

The Company reported interest expense of $24.6 million in 2001 compared to
$16.5 million in 2000. Interest expense for 2001 reflected a full twelve-month
period for which the $306.0 million PD LLC borrowing was outstanding compared
with eight months in 2000. See Note 8 to the consolidated financial statements
included in Item 8 of this annual report on Form 10-K.

The Company reported a loss on marketable securities and investments of
$3.8 million in 2001 compared with a loss of $2.2 million in 2000. The losses in
both years resulted from an adjustment to the carrying value of several
non-operating investments, partially offset by realized gains on the sale of
marketable securities, as well as limited partnership gains.

The Company reported its equity in the losses of a joint venture investment
of $1.2 million in 2001 compared with $1.7 million in the prior year.

The effective income tax rate from continuing operations for 2001 was 37.9
percent compared with a rate of 39.8 percent in 2000. The lower effective tax
rate in 2001 primarily resulted from lower state income taxes.

INCOME FROM CONTINUING OPERATIONS

For 2001 the Company reported net income from continuing operations of
$12.3 million, or $0.58 per diluted share, compared to $34.6 million, or $1.59
per diluted share, in 2000. The decline in 2001 net income from continuing
operations primarily reflected weak advertising demand, lower interest income
and higher interest expense in 2001. In addition, results were affected by the
impact of intangible amortization from the

23

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

Venture (as defined below) and the Journals Acquisition that closed in the
second and third quarters, respectively, of the prior year.

DISCONTINUED OPERATIONS

The Company reported a loss from discontinued operations of $1.6 million,
or $0.08 per diluted share, in 2001 compared with income of $0.3 million, or
$0.01 per diluted share, in the prior year. Discontinued operations in both
years include the operating results of properties sold during 2001 (newspapers
located in Troy, Ohio, and Petaluma, California and the St. Louis ISP business).
In addition, the 2001 amount also includes the net after-tax loss of $1.2
million from the sale of these properties. The loss in the 2001 amount primarily
reflected the loss from the sale of these properties and the impact of only a
partial year of operating results (through the dates of sale) in 2001.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2002, the Company had a balance of unrestricted cash and
marketable securities of $194.4 million compared with an unrestricted cash
balance of $193.7 million as of December 31, 2001.

At both December 31, 2002, and December 31, 2001, 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.

In December 2001 the Company entered into an interest rate swap contract to
convert $50.0 million of the Company's fixed rate cost to a variable rate. In
May 2002 the Company entered into a second interest rate swap contract to
convert an additional $100.0 million of the Company's fixed rate cost to a
variable rate. As executed, these interest rate swaps had notional amounts of
$50.0 million and $100.0 million with maturities on April 28, 2009 and floating
interest rates that re-priced semiannually. In October 2002 the Company
terminated interest rate swap contracts totaling $75.0 million in exchange for a
cash payment of $5.0 million. The remaining $75.0 million interest rate swap is
designated as a fair-value hedge. The Company continues to employ the shortcut
method on the remaining interest rate swap. The Company will initially recognize
the $5.0 million cash receipt as an increase in other deferred liabilities with
subsequent, ratable amortization as a reduction of interest expense over the
remaining life of the original interest rate swap. As of December 31, 2002,
approximately 24.5 percent of the Company's long-term interest cost was subject
to variable interest rates compared to approximately 16.3 percent at the end of
2001.

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 $39.8 million as of December 31, 2002. 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.

The Company spent approximately $25.1 million on land, buildings and
equipment in 2002. As of December 31, 2002, the Company had remaining capital
commitments for buildings and equipment replacements of approximately $4.5
million. In addition, as of December 31, 2002, the Company had a capital
contribution commitment of up to $9.1 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

24

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

in the future. As of December 31, 2002, PD LLC owned circulation routes covering
approximately 68.0 percent of the Post-Dispatch's home delivery distribution in
the newspaper's designated market.

The Company's Board of Directors previously authorized the repurchase of up
to $100.0 million of the Company'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, 2002, the Company had repurchased under this authority 1,000,000
shares of Class B common stock and 532,126 shares of common stock for a combined
purchase price of $62.1 million, leaving $37.9 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.

CASH FLOWS -- 2002 COMPARED TO 2001

CONTINUING OPERATIONS

Cash from operations is the Company's primary source of liquidity. Cash
provided from operating activities for 2002 was $98.2 million compared to $66.0
million in 2001. The increase was due to higher income from continuing
operations and accelerated tax deductions that lowered taxable income (and
deferred the payment of certain tax liabilities). The accelerated tax deductions
related primarily to acquisition amortization, contributions to health and
welfare trusts, and the payment of employee deferred compensation balances in
the current year. These sources of cash were partially offset by current pension
plan and health and welfare trust contributions and increased newsprint
inventory balances.

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 Company's
expansion 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 PNI. 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 used in 2001. The reduction in cash used was
principally due to increased proceeds from the exercise of employee stock
options and increased contributions to the Company's employee stock purchase
plans, partially offset by increased dividend payments.

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 Company's newspapers in Troy, Ohio and
Petaluma, California, and the Company's ISP operations.

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

25

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

CASH FLOWS -- 2001 COMPARED TO 2000

CONTINUING OPERATIONS

Cash provided from operating activities for 2001 was $66.0 million compared
to $98.4 million in 2000. The decrease was due principally to lower income from
continuing operations resulting from reduced operating revenue associated with
the slow-down in economic activity during 2001, and the timing and receipt of
income tax refunds that increased income tax receivable.

Cash generated from investing activities during 2001 was $51.2 million
compared to $392.1 million used in 2000. The increase in cash from investing
activities resulted from a $644.6 million reduction in cash used for
acquisitions in 2001 compared to 2000 and reduced investments in limited
partnerships. These increases resulting from decreased acquisition activity were
partially offset by decreased receipts from the sale of marketable securities
(the Company generated $126.1 million, net, from the sale of marketable
securities in 2001 compared to $321.3 million, net, from the sale of marketable
securities in 2000). In addition, 2001 capital expenditures increased by $5.2
million to $13.9 million compared to $8.6 million in 2000.

Cash required for financing activities during 2001 was $12.0 million
compared to $253.1 million generated in 2000. The reduction in cash from
financing activities was due to the Company not issuing any long-term debt in
2001. In 2000 the Company generated $306.0 million from the issuance of
long-term debt in connection with the Venture (see Note 8). The 2000 issuance of
long-term debt was partially offset by the purchase of $40.1 million in
outstanding Class B common stock. Purchases of treasury stock totaled
approximately $0.1 million in 2001 compared to $40.2 million in 2000.

DISCONTINUED OPERATIONS

Cash from operating activities of discontinued operations totaled $1.5
million in 2001 compared to $2.0 million in 2000, reflecting the net results of
the operations of the Company's newspapers in Troy, Ohio, and Petaluma,
California, and the Company's ISP operations.

Cash from investing activities of discontinued operations was $19.5 million
for 2001, reflecting proceeds from the sale of the Company's newspapers in Troy,
Ohio and Petaluma, California, and the Company's ISP operations, less the cash
used for capital expenditures for these properties. Cash used in investing
activities of discontinued operations was $0.1 million for 2000, reflecting cash
used for capital expenditures for these properties.

MERGER AGREEMENT INDEMNIFICATION

Pursuant to the Merger Agreement, the Company is obligated to indemnify
Hearst-Argyle against losses related to: (i) on an after-tax basis, certain tax
liabilities, including (A) any transfer tax liability attributable to the
Spin-off, (B) with certain exceptions, any tax liability of Old Pulitzer or any
subsidiary of Old Pulitzer attributable to any tax period (or portion thereof)
ending on or before the closing date of the Merger, including tax liabilities
resulting from the Spin-off, and (C) any tax liability of the Company or any
subsidiary of the Company; (ii) liabilities and obligations under any employee
benefit plans not assumed by Hearst-Argyle, and (iii) certain other matters as
set forth in the Merger Agreement.

In October 2001 the 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.

Because the Company disagrees with the IRS' position and, in fact, believes
that Old Pulitzer did not realize any taxable gain in connection with the
Spin-off, the Company has contested the IRS' proposed increase in a formal
written protest filed with the Appeals Office of the IRS in January 2002. While
there can be no assurance that the Company will completely prevail in its
position, it believes that the IRS' position is not supported by the facts or
applicable legal authorities and intends to vigorously contest the IRS'
26

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

determination. It thus has not accrued any liability in connection with this
matter. 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 tax indemnification payment would be recorded as an
adjustment to additional paid-in capital.

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 in March 1999. 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. Pending IRS review, no receivable has been
recognized in connection with these refund claims and any funds received for
income tax refunds would be recorded as an adjustment to additional
paid-in-capital.

PROVISION FOR INCOME TAXES

The Company has incurred capital losses that exceed capital gains available
during prescribed carry-back periods by approximately $6.6 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 $2.4 million associated with these capital losses.

PD LLC OPERATING AGREEMENT

On May 1, 2000, the Company and The Herald Company, Inc. ("Herald")
completed the transfer of their respective interests in the assets and
operations of the Post-Dispatch and certain related businesses to a new joint
venture (the "Venture"), known as PD LLC. The Company controls and manages PD
LLC. Under the terms of the operating agreement governing PD LLC (the "Operating
Agreement"), the Company holds a 95 percent interest in the results of
operations of PD LLC and Herald holds a 5 percent interest. Herald's 5 percent
interest is reported as "Minority Interest in Net Earnings of Subsidiary" in the
consolidated statements of income for 2002, 2001 and 2000. Under the terms of
the Operating Agreement, Herald received on May 1, 2000, a cash distribution of
$306.0 million from PD LLC. This distribution was financed by the $306.0 million
Loan. The Company's entry into the Venture was treated as a purchase for
accounting purposes.

During the first 10 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 DS LLC. The redemption price for Herald's
interest will be determined pursuant to a formula yielding an amount which will
result in the present value to May 1, 2000 of the after-tax cash flows to Herald
(based on certain assumptions) from PD LLC, including the initial distribution
and the special distribution described below, if any, and from DS LLC, being
equal to $275.0 million. Should Herald exercise its option, payment of this
redemption price is expected to be made out of available cash resources
(including the Reserve) or new debt offerings. In the event that PD LLC has an
increase in the tax basis of its assets as a result of Herald's recognizing
taxable income from certain transactions effected under the agreement governing
the contributions of the Company and Herald to

27

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

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 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 interest in PD LLC and
DS LLC. The Company may purchase Herald's interest at that time for an amount
equal to what Herald would be entitled to receive on liquidation of PD LLC and
DS LLC. 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's
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.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 141, Business Combinations ("SFAS
No. 141") and SFAS No. 142, Goodwill and Other Intangible Assets. 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 results of operations, financial position or liquidity of
the Company.

In 2002 the Company adopted SFAS No. 142, which requires that an intangible
asset that is acquired shall be initially recognized and measured based on its
fair value. The statement also provides that goodwill and other 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 asset 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 its 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 its 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.
An annual impairment test was subsequently performed and indicated the fair
value exceeded the carrying amount of goodwill. 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

28

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

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. In
January 2002 in accord with the provisions of SFAS No. 142, the Company
reclassified the net carrying value of certain intangible assets in the amount
of $41 million to goodwill. Refer to Note 5 for more information on the
Company's goodwill and other acquired intangible assets.

In 2001 the Company early adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. 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.

On April 30, 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections ("SFAS 145"), to update, clarify and simplify certain existing
pronouncements. The adoption of SFAS 145 is not expected to have a material
impact on the Company's consolidated financial position or results of
operations.

In June 2002 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards 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, with early application encouraged. The adoption of SFAS 146 is not
expected to have a material impact on the Company's consolidated financial
position or results of operations.

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 and have been implemented herein. The Company
will adopt the measurement provisions of FIN 45 as required in 2003 and does not
expect a material impact on its consolidated financial position.

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.
Although the Company has not finalized its analysis of FIN No. 46, the Company
does not believe it will be required to consolidate or disclose any information
related to variable interest entities.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary raw material used in the Company's operations is newsprint,
representing 11.9 percent to 16.0 percent of operating expenses over the last
five years. For 2002, 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 2003 is estimated to be in the range of 104,000
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 peak price by approximately 28.0 percent.
For every one-dollar change in the Company's average annual cost per metric
tonne of newsprint, pre-tax income would change by approximately $104,000,
assuming annual newsprint consumption of 104,000 metric tonnes. The Company
attempts to obtain the best price available by combining

29

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

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.

At December 31, 2002, 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.

At December 31, 2002, the Company was a party to an interest rate swap
contract to convert a portion of the Company's fixed rate debt to a variable
rate. The interest rate swap has a $75.0 million notional amount and matures on
April 28, 2009. Under the terms of the agreement, the Company pays interest at a
variable rate based upon LIBOR plus 2.5975 percent and receives interest at a
fixed rate of 8.05 percent. The floating interest rate re-prices semiannually.
The impact of the swap results in approximately 24.5 percent of the Company's
long-term debt being subject to variable interest rates.

As of December 31, 2002, the fair value of the interest rate swap
represented an unrealized gain of $7.0 million, which is offset by an unrealized
loss of $7.0 million on the related portion of the Company's long-term debt.

Changes in market interest rates may cause the Company to incur higher net
interest expense. For example, for every 1.0 percent increase in variable
interest rates beyond 8.05 percent, the Company would incur approximately $0.8
million in additional annual interest expense.

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, 2002

Consolidated Statements of Financial Position at December 31, 2002, and
December 31, 2001

Consolidated Statements of Stockholders' Equity for each of the Three Years
in the Period Ended December 31, 2002

Consolidated Statements of Cash Flows for each of the Three Years in the
Period Ended December 31, 2002

Notes to Consolidated Financial Statements for each of the Three Years in
the Period Ended December 31, 2002

30

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,
2002 and 2001, and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 2002. 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,
2002 and 2001, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 2002, 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 12, 2003

31

PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

See accompanying notes to consolidated financial statements.
32

PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Continued)

33

PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Concluded)

See accompanying notes to consolidated financial statements.
34

PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Continued)
See accompanying notes to consolidated financial statements.
35

PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Concluded)

See accompanying notes to consolidated financial statements.
36

PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

37

PULITZER INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Concluded)

See accompanying notes to consolidated financial statements.
38

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

1. BASIS OF PRESENTATION

The consolidated financial statements reflect the results of Pulitzer Inc.
(the "Company") and subsidiaries' newspaper publishing and new-media operations
located in 14 United States markets.

The Company is engaged in newspaper publishing and related new-media
businesses. Its newspaper operations include operations in St. Louis, Missouri,
where the Company publishes the St. Louis Post-Dispatch (the "Post-Dispatch")
and the Suburban Journals, and operates STL Distribution Services, and in
Tucson, Arizona, where the Company publishes the Arizona Daily Star (the
"Star"). In Tucson, the Company shares, on an equal basis, the combined results
of the Star and the Tucson Citizen (the "Citizen"), published by Gannett Co.,
Inc. ("Gannett").

The Company's wholly owned subsidiary, Pulitzer Newspapers, Inc. ("PNI"),
publishes 12 dailies that serve markets in the Midwest, Southwest and West, as
well as a number of weekly and bi-weekly publications (the "PNI Group"). In
January of 2000, the PNI Group acquired, in an asset purchase, its largest
newspaper, The Pantagraph, that serves the central Illinois cities of
Bloomington and Normal. The PNI Group's 12 daily newspapers have a combined
average daily circulation of approximately 188,000 for 2002.

The Company was capitalized on March 18, 1999 with approximately $550.0
million in cash and all the other assets of Pulitzer Publishing Company ("Old
Pulitzer") (other than broadcasting assets) as a result of the Spin-off (as
defined below) and is now operating the principal newspaper publishing and
related new-media businesses formerly operated by Old Pulitzer and certain other
newspapers acquired since the Broadcast Transaction (as defined below). The
Company was organized as a corporation in 1998 and, prior to the Spin-off, was a
wholly owned subsidiary of Old Pulitzer. Prior to the Broadcast Transaction, Old
Pulitzer was engaged in newspaper publishing and television and radio
broadcasting.

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

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation -- The consolidated financial statements include the
accounts of the Company and its subsidiary companies, all of which are
wholly-owned except for the Company's 95 percent interest in the results of
operations of the St. Louis Post-Dispatch LLC and STL Distribution Services LLC
("DS LLC"), a distribution company serving the St. Louis market (see Note 3).
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 2002, the Company's fiscal year began on December 31, 2001
and ended on December 29, 2002. In 2002 and 2001 the fourth quarter was 13 weeks
and the year was 52 weeks. In 2000 the fourth quarter was 14 weeks and the year

39

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED

was 53 weeks. For ease of presentation, the Company has presented December 31 as
the year-end for each of the last three fiscal years.

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 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 former
employee groups prior to retirement at the Post-Dispatch. The Company's
liability and related

40

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED

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.

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

Segment Information -- The Company aggregates its combined St. Louis
operations and PNI. operating segments 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, is 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, the Company entered into an interest rate swap contract
to convert $50.0 million of the Company's fixed rate cost to a variable rate. In
May 2002, the Company entered into a second interest rate swap contract to
convert an additional $100.0 million of the Company's fixed rate cost to a
variable rate. As executed, the interest rate swaps had respective $50.0 million
and $100.0 million notional amounts with maturities on April 28, 2009, and the
floating interest rates that re-price semi-annually.

In October 2002 the Company terminated interest rate swap contracts
totaling $75.0 million in exchange for a cash payment of $5.0 million. The
remaining $75.0 million interest rate swap is designated as a fair-value hedge.
The Company continues to employ the shortcut method on the remaining interest
rate swap. The Company will initially recognize the $5.0 million cash receipt,
representing the increased fair value of the long-term debt at the date of the
swap termination, 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. As of December 31, 2002, approximately 24.5
percent of the Company's long-term interest cost is subject to variable interest
rates.

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. 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

41

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED

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 that an intangible
asset that is acquired shall be initially recognized and measured based on its
fair value. The statement also provides that goodwill and other 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 asset 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 its 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 its 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.
An annual impairment test was subsequently performed and indicated that the fair
value exceeded the carrying amount of goodwill. 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 5).

In 2001 the Company early adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. 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, with early application encouraged. The Company believes that the adoption
of SFAS 146 will not have a material impact on the Company's consolidated
financial condition or results of operations.

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
42

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED

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, and have been implemented herein. The Company will adopt the
measurement provisions of FIN 45 as required in 2003 and does not expect 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.
Although the Company has not finalized its analysis of FIN No. 46, the Company
does not believe it will be required to consolidate or disclose any information
related to variable interest entities.

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 2001
and 2000 consolidated financial statements to conform to the 2002 presentation.

3. AGENCY AGREEMENTS

On May 1, 2000, the Company and The Herald Company, Inc. ("Herald")
completed the transfer of their respective interests in the assets and
operations of the Post-Dispatch and certain related businesses to a new joint
venture (the "Venture"), known as PD LLC. The Company controls and manages PD
LLC. Under the terms of the operating agreement governing PD LLC (the "Operating
Agreement"), the Company holds a 95 percent interest in the results of
operations of PD LLC and Herald holds a 5 percent interest. Herald's 5 percent
interest is reported as "Minority Interest in Net Earnings of Subsidiary" in the
consolidated statements of income for 2002, 2001, and 2000. Under the terms of
the Operating Agreement, Herald received on May 1, 2000 a cash distribution of
$306.0 million from PD LLC. This distribution was financed by a $306.0 million
borrowing by PD LLC ("Loan"). The Company'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
the Company 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 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. Should Herald exercise its option, payment of this redemption price is
expected to be made out of available cash resources (including the Reserve) or
new debt offerings. In the event that PD LLC has an

43

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

3. AGENCY AGREEMENTS -- CONTINUED

increase in the tax basis of its assets as a result of Herald's recognizing
taxable income from certain transactions effected under the agreement governing
the contributions of the Company and Herald to PD LLC and the Operating
Agreement 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
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 interest in PD LLC and DS LLC. The Company may purchase
Herald's interest at that time for an amount equal to what Herald would be
entitled to receive on liquidation of PD LLC and DS LLC. 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's 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.

Prior to May 1, 2000, the operations of the Post-Dispatch and 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 the Company
and Herald. Under that agreement, the Company and Herald generally shared the
operating profits and losses, as well as capital expenditures, on a 50-50 basis.
For operations prior to May 1, 2000, Herald's 50 percent share of the St. Louis
Agency profit is reported as an operating expense under the caption "St. Louis
Agency adjustment" in the accompanying consolidated statements of income.

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

Summarized financial information for TNI is as follows:

44

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

3. AGENCY AGREEMENTS -- CONTINUED

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

(1) The Company's share of Star depreciation, 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 2002 and 2001, and $2.5 million for 2000.

4. DISCONTINUED OPERATIONS

The Company did not sell any newspaper operations or other businesses in
2002 and, as a result, did not report any gains or losses from discontinued
operations during 2002. In 2001 the Company recorded a net loss of $1.6 million
related to the operation and sale of its newspapers located in Troy, Ohio, and
Petaluma, California, and the operation and sale of its St. Louis Internet
Access Provider (ISP) business (the "Sale Transactions"). The operating results
and related gain or loss on the sale of these properties in 2001 along with
their operating results for 2000 have been 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:

5. 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 twelve months
ended December 31, 2002, were as follows:

45

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

5. GOODWILL AND OTHER INTANGIBLE ASSETS -- CONTINUED

As required by SFAS No. 142, the results for the prior year's fourth
quarter and full year have not been restated. The reconciliation of reported net
income and EPS to adjusted net income for the quarter and full year ended
December 31, 2001 and 2000, was as follows:

Other intangible assets at December 31, 2002, and December 31, 2001 were as
follows:

Pretax amortization expense of other intangible assets for the year ended
December 31, 2002, was $4.4 million, and over the next five years is estimated
to be: $4.4 million per year for 2003 and 2004, $4.3 million for 2005, $4.1
million for 2006 and $2.2 million for 2007.

46

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

6. ACQUISITION AND DISPOSITION OF PROPERTIES

In 2002 the Company acquired businesses, principally those focused on
distribution operations in St. Louis, totaling $9.1 million. In 2001, the
Company recorded a net loss of $1.6 million related to the operation and sale of
its newspapers located in Troy, Ohio, and Petaluma, California, and the
operation and sale of its St. Louis Internet Access Provider (ISP) business (the
"Sale Transactions"). These amounts are included in 2001 net income on a
separate line, "Loss from Discontinued Operations, Net of Tax."

On January 31, 2001, the Company, through its PNI and its wholly owned
subsidiaries (collectively, 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. These
acquisitions are collectively referred to as the "PNI Acquisitions." In 2001 the
Company also acquired several distribution businesses in St. Louis.

On August 10, 2000, the Company acquired the assets of the Suburban
Newspapers of Greater St. Louis, LLC and the stock of The Ladue News, Inc.
(collectively the "Suburban Journals") for approximately $172.0 million,
excluding acquisition costs and a separate payment for working capital of
approximately $7.0 million (the "Journals Acquisition"). The Suburban Journals
are a group of weekly papers and various niche publications that serve the
greater St. Louis, Missouri metropolitan area. The Company funded this
acquisition with internal cash generated from the sale of a portion of its
marketable securities investments.

On January 11, 2000, the Company, through PNI Group, acquired in an asset
purchase The Pantagraph, a daily and Sunday newspaper that serves the central
Illinois cities of Bloomington and Normal, and a group of seven community
newspapers known as the Illinois Valley Press, from The Chronicle Publishing
Company of San Francisco for an aggregate of $180.0 million, excluding
acquisition costs ("The Pantagraph Acquisition"). The Company funded this
acquisition with internal cash generated from the sale of a portion of its
marketable securities investments. In 2000, the Company also acquired several
distribution businesses in St. Louis.

In connection with The Pantagraph Acquisition, the Venture (See Note 3) and
the Journals Acquisition (collectively, the "Newspaper Transactions"), the
Company recorded goodwill of approximately $616.0 million.

Pro forma results for the 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.

7. MARKETABLE SECURITIES

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

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

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

47

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

7. MARKETABLE SECURITIES -- CONTINUED

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 thousand, respectively. In addition, net unrealized gains
of $0.3 million, after tax, are included in other comprehensive income for the
year ended December 31, 2002.

As of December 31, 2001, the Company had no investments classified as
available-for-sale securities. For the year ended December 31, 2001, proceeds
from the sale of marketable securities were $146.0 million resulting in gross
realized gains and losses of $1.2 million and $0.6 million, respectively. In
addition, net unrealized gains of $0.2 million, after tax, are included in other
comprehensive income for the year ended December 31, 2001.

The amortization cost and fair value of available-for-sale securities as of
December 31, 2002, by contractual maturity, are shown in the following table.
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 following maturity summary, as actual maturities may
differ from contractual maturities because the underlying mortgages may be
called or prepaid without any penalties.

8. FINANCING ARRANGEMENTS

In connection with the Venture (see Note 3), 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
the Company, Herald agreed to indemnify the Company for any payments that the
Company may make under the Guaranty Agreement.

The terms of the Loan contain certain covenants and conditions including
the maintenance of cash flow and various other financial ratios, minimum net
worth requirements and limitations on the incurrence of other debt. In addition,
the Loan agreement 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 $39.8 million as of December 31, 2002. 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, the Company entered into an interest rate swap contract
to convert $50.0 million of the Company's fixed rate cost to a variable rate. In
May 2002, the Company entered into a second interest rate swap contract to
convert an additional $100.0 million of the Company's fixed rate cost to a
variable rate. As

48

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

8. FINANCING ARRANGEMENTS -- CONTINUED

executed, the interest rate swaps had respective $50.0 million and $100.0
million notional amounts with maturities on April 28, 2009, and the floating
interest rates that re-price semi-annually.

In October 2002 the Company terminated interest rate swap contracts
totaling $75.0 million in exchange for a cash payment of $5.0 million. The
remaining $75.0 million interest rate swap is designated as a fair-value hedge.
The Company continues to employ the shortcut method on the remaining interest
rate swap. The Company will initially recognize the $5.0 million cash receipt,
representing the increased fair value of the long-term debt at the date of the
swap termination, 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. As of December 31, 2002, approximately 24.5
percent of the Company's long-term interest cost is subject to variable interest
rates.

As of December 31, 2002, the fair value of the interest rate swap
represented an unrealized gain of $7.0 million which was offset by an unrealized
loss of $7.0 million on the related portion of the long-term debt.

9. PENSION PLANS

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

49

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

9. PENSION PLANS -- CONTINUED

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 $147.2 million, $136.1 million and $98.2 million,
respectively, at December 31, 2002, and were $135.1 million, $127.6 million and
$100.3 million, respectively, at December 31, 2001.

The projected benefit obligation was determined using assumed discount
rates of 6.5, 7.0 and 7.5 percent at year-end 2002, 2001 and 2000, respectively.
The expected long-term rate of return on plan assets was 8.5 percent, 9.0
percent and 8.5 percent for 2002, 2001 and 2000, respectively. For those plans
that pay benefits based on final compensation levels, the actuarial assumptions
for overall annual rate of increase in future salary levels was 3.75 percent,
4.0 percent and 5.0 percent for 2002, 2001 and 2000, respectively.

Certain of the Company's employees participate in multi-employer retirement
plans sponsored by their respective unions. Amounts charged to operations,
representing the Company's required contributions to these plans in 2002, 2001
and 2000, were approximately $0.8 million, $0.9 million and $1.0 million,
respectively. 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 2002 and
2001 and $1.9 million for 2000.

10. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS

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

50

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

10. POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS -- CONTINUED

The Company generally funds its postretirement benefit obligation on a
pay-as-you-go basis. For 2002, 2001 and 2000, the Company made payments of $5.9
million, $5.3 million, and $4.6 million, respectively.

For 2002 and 2001 measurement purposes, health care cost trend rates of
8.5, 7.5 and 7.0 percent were assumed for indemnity plans, PPO plans and HMO
plans, respectively. For 2002, these rates were assumed to decrease gradually to
5.5 percent through the year 2012 and remain at that level thereafter. For 2002
measurement purposes, a 4.0 percent long-term rate of return was assumed on
invested fund assets.

Administrative costs related to indemnity plans were assumed to increase at
a constant annual rate of 6.0 percent for 2002, 2001 and 2000. The assumed
discount rate used in estimating the accumulated postretirement benefit
obligation was 6.5, 7.0 and 7.5 percent for 2002, 2001 and 2000, respectively.

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 2002:

The Company's postemployment benefit obligation, representing certain
disability benefits at the Post-Dispatch, was $3.5 million at December 31, 2002
and 2001.

51

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

11. INCOME TAXES

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

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

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:

The Company had no valuation allowance for deferred tax assets as of
year-end 2002 and 2001.

52

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

12. STOCKHOLDERS' EQUITY

Each share of the Company's common stock is entitled to one vote, and each
share of Class B common stock is entitled to ten votes on all matters. As of
December 31, 2002, holders of outstanding shares of the Company's Class B common
stock represented 92.6 percent of the combined voting power of the Company, with
holders of the Company's common stock representing the balance of the voting
power. As of December 31, 2002, approximately 95.5 percent of the holders of
outstanding shares of the Company's Class B common stock representing 88.4
percent of the combined voting power have deposited their shares in a voting
trust (the "Voting Trust"). Each share of the Company's Class B common stock is
convertible into one share of the Company's common stock at the holder's option
subject to the limitations imposed by the Voting Trust on the shares of Class B
common stock deposited thereunder. The Voting Trust permits the conversion of
the Class B common stock deposited in the Voting Trust into common stock in
connection with certain permitted transfers, including, without limitation,
sales which are exempt from the registration requirements of the Securities Act
of 1933, as amended, sales which meet the volume and manner of sale requirements
of Rule 144 promulgated thereunder and sales which are made pursuant to
registered public offerings.

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

In 2002, 2001, and 2000 the Company declared and paid cash dividends of
$0.70, $0.68 and $0.64, respectively, per share of common stock and Class B
common stock.

On July 16, 1999, the Company's Board of Directors approved the repurchase
of up to $50.0 million of its common stock in the open market. On May 1, 2000,
the Company announced that its Board of Directors had authorized the repurchase
of an additional $50.0 million of its common stock. During the third quarter of
2000, the Company's Board of Directors amended the Company's repurchase program
to provide for both the purchase of Class B shares and the purchase of shares in
privately negotiated transactions. On August 16, 2000, the Company purchased
1,000,000 shares of Class B common stock from Michael E. Pulitzer, the Company's
Chairman of the Board, for approximately $40.1 million. As of December 31, 2002,
the Company had repurchased 1,000,000 shares of Class B common stock and 532,126
shares of common stock for a combined purchase price of approximately $62.1
million, leaving $37.9 million in remaining stock repurchase authority. The
repurchased shares have been included in treasury stock of the Company. In 2002,
the Company retired 531,796 shares of common stock and 1,000,000 shares of Class
B common stock held in treasury stock.

13. COMMON STOCK PLANS

On May 12, 1999, the Company's stockholders approved the adoption of the
Pulitzer Inc. 1999 Stock Option Plan (the "Option Plan"). The Option Plan
provides for the issuance of stock options to key employees and outside
directors for the purchase of up to a maximum of 3,000,000 shares of common
stock. Under the Option Plan, options to purchase 3,000 shares of common stock
will be automatically granted to each non-employee director on the day following
each annual meeting of the Company's stockholders and will vest on the date of
the next annual meeting of the Company's stockholders. Total shares available
for issue to outside directors under this automatic grant feature are limited to
a maximum of 200,000. The issuance of all other options will be administered by
a committee of the Board of Directors, subject to the Option Plan's
53

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

13. COMMON STOCK PLANS -- CONTINUED

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

Transactions under the 1999 Stock Option Plan are summarized as follows:

On May 12, 1999, the Company's stockholders approved the adoption of the
Pulitzer Inc. Key Employees' Restricted Stock Purchase Plan (the "Restricted
Plan"). The Restricted Plan provides that an employee may receive, at the
discretion of a committee of the Board of Directors, a grant or right to
purchase at a particular price, shares of common stock subject to restrictions
on transferability. Restricted stock vests in three or four years after the
grant date, depending upon which subsidiary the employee works for. A maximum of
500,000 shares of common stock may be granted and purchased by employees under
the Restricted Plan. Compensation expense equal to the fair market value of
common stock awards on the date of grant is recognized over the vesting period
of the grants.

Additionally, under the Key Employee's Restricted Stock Purchase Plan, the
Company has granted restricted stock unit awards of 20,533, 28,000, and 25,000
for the years ended December 31, 2002, 2001 and 2000, at a price of $42.86,
$48.22, and $44.20, respectively. Compensation is recognized ratably over a
three-year vesting period.

54

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

13. COMMON STOCK PLANS -- CONTINUED

Transactions under the Restricted Plan are summarized as follows:

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

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

The Company maintains employee stock purchase plans (the "Purchase Plans")
that allow eligible employees to authorize payroll deductions for the periodic
purchase of the Company's common stock at a price generally equal to 85 percent
of the common stock's then fair market value. In general, all employees of the
Company and its subsidiaries are eligible to participate in the Purchase Plans
following their respective hire dates. Subject to appropriate adjustment for
stock splits and other capital changes, the Company may sell

55

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

13. COMMON STOCK PLANS -- CONTINUED

a total of 600,000 shares of its common stock under the Purchase Plans. Shares
sold under the Purchase Plans may be either authorized and unissued or held by
the Company in its treasury. The Company sold and issued 19,712, 14,080 and
26,280 shares of common stock under the Purchase Plans for 2002, 2001, and 2000,
respectively.

14. EARNINGS PER SHARE

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

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

15. COMMITMENTS AND CONTINGENCIES

CAPITAL COMMITMENTS

At December 31, 2002, the Company and its subsidiaries had construction and
equipment commitments of approximately $4.5 million.

INVESTMENT COMMITMENTS

At December 31, 2002, the Company had an unfunded capital contribution
commitment related to a limited partnership in which it is an investor of up to
$9.1 million.

56

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

15. COMMITMENTS AND CONTINGENCIES -- CONTINUED

RENTAL EXPENSE AND LEASE COMMITMENTS

Rental expense for 2002, 2001 and 2000 amounted to $2.8 million, $2.5
million and $1.7 million, respectively. Approximate future minimum annual real
estate lease payments are as follows:

TAX CONTINGENCY

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

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.

The Company does not believe that Old Pulitzer realized any taxable gain in
connection with the Spin-off and has contested the IRS' proposed increase in a
formal written protest filed with the Appeals Office of the IRS in January, 2002
While there can be no assurance that the Company will completely prevail in its
position, it believes that the IRS' position is not supported by the facts or
applicable legal authorities and intends to vigorously contest the IRS'
determination. It thus has not accrued any liability in connection with this
matter. 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 indemnification payment would be recorded as an
adjustment to additional paid-in capital.

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

57

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

15. COMMITMENTS AND CONTINGENCIES -- CONTINUED

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 in March 1999. 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. Pending IRS review, no receivable has been recognized in
connection with these refund claims. Any funds received for income tax refunds
would be recorded as an adjustment to additional paid-in-capital.

PD LLC OPERATING AGREEMENT CONTINGENT PAYMENTS

See Note 3 regarding certain obligations of PD LLC and the Company in
respect of the Venture.

LEGAL CONTINGENCIES

In February 1998 a group of independent newspaper dealers engaged in the
business of reselling the Post-Dispatch in vending machines and to retail
establishments filed suit against the Company in the Missouri Circuit Court,
Twenty-Second Judicial Circuit (St. Louis City). The court has dismissed four of
the six counts in the suit. In the remaining counts, the plaintiffs allege that
the Company's actions have tortiously interfered with their business expectancy
of being able to sell their branches, and constituted malicious trespass on
their intangible property by, among other things, allegedly reducing the value
of their routes. The plaintiffs seek punitive damages with respect to the
tortious interference count and statutory double damages if they should prevail
on the malicious trespass count. The plaintiffs cite as harmful acts the
Company's purchase of various home delivery routes and branches, the Company's
home subscription pricing compared to its single copy pricing, and allegedly
more favorable rates, fees and allowances that the Company provides to its
carriers and other branch dealers. The Company has filed a motion to dismiss the
remaining two counts in the case. The Company has denied any liability, is
vigorously defending the suit and believes that it has meritorious defenses,
and, therefore, 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 these matters will have a materially adverse effect on
the Company's consolidated financial position. However, depending upon the
period of resolution, such effects 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.

16. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

58

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

16. FAIR VALUE OF FINANCIAL INSTRUMENTS -- CONTINUED

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 Swap -- 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, 2002, the fair-values were:

The fair value estimates presented herein are based on pertinent
information available to management as of year-end 2002. Although management is
not aware of any facts that would significantly affect the estimated fair value
amounts, such amounts have not been comprehensively revalued for purposes of
these financial statements since that date, and current estimates of fair value
may differ from the amounts presented herein.

17. NEWSPAPER PUBLISHING REVENUES

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

18. QUARTERLY FINANCIAL DATA (UNAUDITED)

Operating results for the years ended December 31, 2002 and 2001 by
quarters are as follows:

59

PULITZER INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000 -- (CONTINUED)

18. QUARTERLY FINANCIAL DATA (UNAUDITED) -- CONTINUED

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

* * * * * *

60

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, 2002 and 2001, and for each
of the three years in the period ended December 31, 2002, and have issued our
report thereon dated February 12, 2003 (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 12, 2003

61

SCHEDULE II

PULITZER INC. AND SUBSIDIARIES

SCHEDULE II -- VALUATION & QUALIFYING ACCOUNTS & RESERVES

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 & 2000

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

(b) Accounts written off

(c) Amount represents:

62

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

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information set forth under the caption "Management" in the Company's
definitive Proxy Statement to be used in connection with the 2003 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 2003
Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information set forth under the caption "Principal Stockholders" in the
Company's definitive Proxy Statement to be used in connection with the 2003
Annual Meeting of Stockholders is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information set forth under the caption "Compensation Committee
Interlocks and Insider Participation" in the Company's definitive Proxy
Statement to be used in connection with the 2003 Annual Meeting of Stockholders
is incorporated herein by reference.

ITEM 14. CONTROLS AND PROCEDURES

Within the 90 days prior to the date of this report, the Company's
management, including the President and Chief Executive Officer and Senior Vice
President-Finance, 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-14. 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 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.

63

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, 2002.

(iii) Consolidated Statements of Financial Position at December 31,
2002, and December 31, 2001.

(iv) Consolidated Statements of Stockholders' Equity for each of the
Three Years in the Period Ended December 31, 2002.

(v) Consolidated Statements of Cash Flows for each of the Three Years in
the Period Ended December 31, 2002.

(vi) Notes to Consolidated Financial Statements for each of the Three
Years in the Period Ended December 31, 2002.

2. Supplementary Data and Financial Statement Schedules

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

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

All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore, have
been omitted.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(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.

(a) REPORTS ON FORM 8-K.

The Company did not file any Current Reports on Form 8-K during the fourth
quarter of 2002.

67

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 29th day of January, 2003.

PULITZER INC.

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

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

By: /s/ ALAN G. SILVERGLAT
------------------------------------
Alan G. Silverglat*
attorney-in-fact

68

302 CERTIFICATIONS

I, Robert C. Woodworth, certify that:

1. I have reviewed this annual report on Form 10-K of Pulitzer Inc.;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 25, 2003 /s/ Robert C. Woodworth
-----------------------
Robert C. Woodworth
President and Chief Executive Officer

302 CERTIFICATIONS

I, Alan G. Silverglat, certify that:

1. I have reviewed this annual report on Form 10-K of Pulitzer Inc.;

2. Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have indicated in
this annual report whether there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 25, 2003 /s/ Alan G. Silverglat
----------------------
Alan G. Silverglat
Senior Vice President-Finance

PULITZER INC.

REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED

DECEMBER 31, 2002

EXHIBIT INDEX

10.5.8 Amendment, dated January 29, 2003, to the Pulitzer Inc.
Supplemental Executive Benefit Pension Plan.

10.39.1 Amendment 2002-1 of the Pulitzer Inc. Annual Incentive Plan.

10.42 Robert C. Woodworth Restricted Stock Unit Award dated as of
December 11, 2002.

10.43 Robert C. Woodworth Restricted Stock Unit Award dated as of
February 21, 2003.

10.44 Form of Stock Option Award for Robert C. Woodworth and Alan
G. Silverglat dated as of February 21, 2003.

21 Subsidiaries of Registrant.

22 Independent Auditors' Consent.

24 Power of Attorney.

99.1 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 29, 2002.

99.2 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 29, 2002.