PULITZER INC - 10-Q Quarterly Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended SEPTEMBER 28, 2003
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OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
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COMMISSION FILE NUMBER 1-14541

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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)

NO CHANGES
(Former name, former address and former fiscal year,
if changed since last report)

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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 [ ]

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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

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

YES [X] NO [ ]

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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PULITZER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED -- IN THOUSANDS, EXCEPT EARNINGS PER SHARE)

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See notes to consolidated financial statements.

(Concluded)

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PULITZER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED--- IN THOUSANDS)

See notes to consolidated financial statements.

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PULITZER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED--- IN THOUSANDS)

(Continued)

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PULITZER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED--- IN THOUSANDS, EXCEPT SHARE DATA)

(Concluded)

See notes to consolidated financial statements.

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PULITZER INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED--- IN THOUSANDS)

(Continued)

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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the period for:
Interest paid $ 15,431 $ 15,621
Interest received (2,690) (2,484)
Income taxes paid 9,884 74
Income tax refunds (334) (5,903)

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Issuance of restricted stock awards $ (250)
Increase in dividends payable and decrease in retained earnings $ 3,857 $ 3,728

See notes to consolidated financial statements. (Concluded)

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PULITZER INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Pulitzer Inc. (the "Company") reports on a fiscal year ending the last Sunday in
the calendar year. In 2003, the Company's fiscal year began on December 30, 2002
and will end on December 28, 2003. For fiscal 2002, the Company's fiscal year
began on December 31, 2001 and ended on December 29, 2002.

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, ("PD LLC") and STL Distribution
Services LLC ("DS LLC"), and 50 percent interest in the results of operations of
the Tucson Newspaper Agency ("TNI"). All significant intercompany transactions
have been eliminated from the consolidated financial statements.

Interim Adjustments - In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly the Company's
consolidated financial position as of September 28, 2003 and September 29, 2002
and the results of operations and cash flows for the nine-month periods ended
September 28, 2003 and September 29, 2002. These consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and related notes thereto included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 2002. Consolidated results of
operations and cash flows for interim periods are not necessarily indicative of
the results to be expected for the full year.

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 (primarily outstanding stock options).
Weighted average shares used in the calculation of basic and diluted earnings
per share are summarized as follows:

Common stock equivalents included in the diluted earnings per share calculation
were determined using the treasury stock method. Under the treasury stock
method, outstanding stock options are dilutive when the average market price of
the Company's common stock exceeds the option exercise 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.

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

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

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Stock-Based Employee Compensation - The Company accounts for its stock-based
employee compensation plans under the recognition and measurement principles of
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. No stock-based employee compensation
cost is reflected in net income for stock options granted, as options granted
under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following table illustrates
the effect on net income and earnings per share if the Company had applied the
fair value recognition provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, Accounting for Stock-Based Compensation, ("SFAS No. 123"), to
stock-based employee compensation.

New Accounting Pronouncements - In November 2002 the Financial Accounting
Standards Board ("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's
adoption of the measurement provisions of FIN No. 45 in 2003 did not have a
material impact on the consolidated financial statements.

In January 2003, FASB issued FIN No. 46, Consolidation of Variable Interest
Entities ("FIN No. 46"). 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 to variable interest entities acquired before February 1,
2003, for the first interim or annual period ending after December 15, 2003. The
Company does not expect that the adoption of the provisions of FIN No. 46, as
required in 2003, will have a material impact on the consolidated financial
statements.

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

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

In May 2003, FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity ("SFAS No.
150"). SFAS No. 150 sought to establish standards for how an issuer

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classifies and measures certain financial instruments with characteristics of
both liabilities and equity. SFAS No. 150 was effective for financial
instruments entered into or modified after May 31, 2003, and otherwise was
effective at the beginning of the first interim period beginning after June 15,
2003.

The Company had determined that SFAS No. 150, as it existed through FASB Staff
Positions 150-2, dated October 16, 2003, required the Company to recognize a
liability associated with the liquidation in 2015 of the capital accounts of The
Herald Company, Inc. ("Herald"), reflecting Herald's minority interest in two of
the Company's subsidiaries, St. Louis Post-Dispatch LLC ("PD LLC") and STL
Distribution Services LLC ("DS LLC"). In this regard, in accordance with SFAS
No. 150, the Company determined that if the liquidation of Herald's interests
were to have occurred at September 28, 2003, the Company would have recognized a
liability in the estimated amount of $45 million, as determined pursuant to SFAS
No. 150. This estimated liability was expected to change over time, and to
differ from the ultimate, actual liability to Herald as determined pursuant to
the operating agreements governing PD LLC and DS LLC.

On November 7, 2003, the FASB issued Staff Position 150-3, which deferred
indefinitely the application of those provisions of SFAS No. 150 that relate to
Herald's interests in PD LLC and DS LLC. Accordingly, the Company presents its
consolidated results of operations, financial position, and cash flows absent
any potential impact of SFAS No. 150. The Company cannot predict and,
accordingly, is not able to determine what the ultimate impact to the Company's
consolidated financial statements, if any, might be from future FASB action
concerning SFAS No. 150.

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

Reclassifications - Certain reclassifications have been made to the 2002
consolidated financial statements to conform with the presentation made in 2003.

2. TUCSON NEWSPAPER PARTNERSHIP

In Tucson, Arizona, a separate partnership, TNI Partners ("TNI"), acting as
agent for the Arizona Daily Star (the "Star", a newspaper owned by the Company)
and the Tucson Citizen (the "Citizen", a newspaper owned by Gannett Co., Inc.,
"Gannett"), 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, including the
news and editorial costs of each newspaper. Each newspaper is solely responsible
for its own news and editorial content. Net pre-tax income or 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:

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(1) The Company's share of Star depreciation, amortization, and general and
administrative expenses is reported as operating expenses on the Company's
consolidated statements of income. In aggregate, these amounts totaled $590,000
and $561,000 for the third quarter of 2003 and 2002, respectively, and
$1,848,000 and $1,814,000 for the first nine months of 2003 and 2002,
respectively.

3. ACQUISITION OF PROPERTIES

In the third quarter of 2003 and 2002, the Company acquired businesses totaling
$3.1 million and $1.8 million, respectively. In the nine months ended 2003 and
2002, the Company acquired businesses totaling $6.1 million and $8.1 million,
respectively. Pro forma results of these acquisitions were not material and are,
therefore, not presented. In addition, on October 7, 2003, PD LLC entered into
definitive agreements to acquire the distribution businesses of a group of
independent newspaper dealers engaged in the business of reselling the St. Louis
Post-Dispatch in vending machines and to retail establishments ("single copy
routes"). These transactions are expected to be completed by December 31, 2003.
At the completion of the purchase of these distribution businesses, PD LLC will
own more than 75 percent of the St. Louis Post-Dispatch single copy routes in
the greater St. Louis metropolitan area.

4. GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amounts of goodwill and other intangible assets for the
Company for the nine months ended September 28, 2003 were as follows:

Other intangible assets at September 28, 2003 and December 29, 2002 were as
follows:

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Pretax amortization expense of other intangible assets for the third quarter and
nine months ended September 28, 2003 was $1.1 million and $3.3 million,
respectively, and annually over the next six years is estimated to be: $4.5
million for 2003, $4.7 million for 2004, $4.6 million for 2005, $4.3 million for
2006, $2.3 million for 2007, and $1.8 million for 2008.

5. COMMITMENTS AND CONTINGENCIES

CAPITAL COMMITMENTS

As of September 28, 2003, the Company and its subsidiaries had construction and
equipment commitments of approximately $4.0 million.

INVESTMENT COMMITMENTS

As of September 28, 2003, the Company had an unfunded capital contribution
commitment of approximately $7.1 million related to its investment in a limited
partnership not associated with or involved in the Company's operations.

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. If
the IRS were completely successful in its proposed adjustment, the Company's
indemnification obligation would be approximately $29.3 million, plus applicable
interest. Any income tax indemnification payment would be recorded as an
adjustment to additional paid-in capital, and any related interest expense would
be reflected as a component of net income in the period recognized.

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

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 refunds claims
were based on the Company's contention that Old Pulitzer was entitled to deduct
certain fees and expenses which it had not previously deducted and which Old
Pulitzer had incurred in connection with its investigation of several strategic
alternatives and potential transactions prior to its decision to proceed with
the Broadcast Transaction. Under the Merger Agreement, the Company is entitled
to any amounts recovered from the IRS as a result of these refund claims,

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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, and any
related interest received would be reflected as a component of net income in the
period recognized.

PD LLC Operating Agreement Contingency

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 2003 and 2002. Also, 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 (the "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 DS LLC, 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. 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 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 interests 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 its 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.

During the third quarter of 2003, the Company gave consideration to SFAS No.
150, as discussed more fully in the New Accounting Pronouncements section of
Note 1. In this regard, in accordance with SFAS No. 150, the Company determined
that if the liquidation of Herald's interests in PD LLC and DS LLC were to have
occurred at September 28, 2003, the Company would have recognized a liability in
the estimated amount of $45 million, as determined pursuant to SFAS No. 150.
This estimated liability was expected to change over time, and to differ from
the ultimate, actual liability to Herald as determined pursuant to the operating
agreements governing PD LLC and DS LLC.

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"). The suit alleged,
among other counts, that the Company's actions 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. On October 7, 2003, PD LLC entered
into definitive agreements to acquire the distribution businesses of those
dealers. The selling dealers also agreed to dismiss with prejudice, coincident
with the sale of their

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distribution businesses, their appeal of the decisions of the Court dismissing,
in the Company's favor, all their claims in the litigation.

The Company has been involved, from time to time, in various claims and lawsuits
incidental to the ordinary course of its business, including such matters as
libel, slander and defamation actions, complaints alleging discrimination, and
complaints related to product distribution practices. While the ultimate outcome
of litigation cannot be predicted with certainty, management, based on its
understanding of the facts, does not believe the ultimate resolution of these
matters will have a materially adverse effect on the Company's consolidated
financial position or annual results of operations. However, depending upon the
period of resolution, such effect could be material to the consolidated
financial results of an individual period.

6. OPERATING REVENUES

The Company's consolidated operating revenues consist of the following:

* * * * * *

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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Statements in this Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q.
Although the Company believes that the expectations reflected in
"forward-looking statements" are reasonable, it cannot guarantee future results,
levels of activity, performance or achievements. Accordingly, investors are
cautioned not to place undue reliance on any such "forward-looking statements,"
and the Company disclaims any obligation to update the information contained
herein or to publicly announce the result of any revisions to such
"forward-looking statements" to reflect future events or developments.

GENERAL

Pulitzer Inc. (together with its subsidiaries, the "Company") is a newspaper
publishing company with integrated Internet operations in 14 markets, the
largest of which is St. Louis, Missouri. For the third quarter and first
nine-months of 2003, the Company's combined St. Louis operations contributed
approximately 72 percent of reported revenue and 64 percent after 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"). At the Tucson
Newspaper Agency ("TNI"), the Company shares, on an equal basis, the combined
financial results of the Star and the Tucson Citizen (the "Citizen"), published
by Gannett Co., Inc. ("Gannett").

The Post-Dispatch had average daily circulation for the third quarter and
12-month period ended September 28, 2003 of approximately 285,000 and 287,000,
respectively, compared to an average daily circulation of approximately 283,000
and 289,000 for the third quarter and 12-month period ended September 29, 2002,
respectively (the Post-Dispatch uses an October - September annual circulation
audit period). In Tucson, the combined daily circulation of the Star and the
Citizen for the third quarter and first nine months of 2003 was approximately
129,000 and 137,000, respectively, compared to combined average daily
circulation of approximately 132,000 and 139,000 for the third quarter and first
nine months of 2002, respectively.

Pulitzer Inc.'s wholly owned subsidiary, Pulitzer Newspapers, Inc. ("PNI"), and
its subsidiaries publish 12 daily newspapers with integrated new media
operations that serve markets in the Midwest, Southwest and West, as well as a
number of weekly and bi-weekly publications (the "PNI Group"). The PNI Group's
12 daily newspapers had a combined average daily circulation of approximately
186,000 and 189,000 for the third quarter and first nine months of 2003,
respectively, compared to an average daily circulation of approximately 187,000
and 188,000 for the third quarter and first nine months of 2002, respectively.

The Company owns and operates electronic news, information and communication Web
sites in each of its markets, including STLtoday.com, the preeminent local
Internet site in St. Louis, and, in partnership with Gannett, azstarnet.com, one
of Tucson's leading local Internet sites.

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

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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 BUSINESSES

In the third quarter of 2003 and 2002, the Company acquired businesses totaling
$3.1 million and $1.8 million, respectively. In the nine months ended 2003 and
2002, the Company acquired businesses totaling $6.1 million and $8.1 million,
respectively. Pro forma results of these acquisitions were not material and are,
therefore, not presented. In addition, on October 7, 2003, PD LLC entered into
definitive agreements to acquire the distribution businesses of a group of
independent newspaper dealers engaged in the business of reselling the
Post-Dispatch in vending machines and to retail establishments ("single copy
routes"). These transactions are expected to be completed by December 31, 2003.
At the completion of the purchase of these distribution businesses, PD LLC will
own more than 75 percent of the Post-Dispatch its single copy routes in the
greater St. Louis metropolitan area.

CRITICAL ACCOUNTING POLICIES

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

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

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 customers' ability to pay.

The Company evaluates its liability for unpaid and unreported dental, 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 the accounting and related impairment testing of SFAS
No. 142 as a critical accounting policy having a material impact on the
Company's financial presentation. SFAS No. 142 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. 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.

-17-

THIRD QUARTER ENDED SEPTEMBER 28, 2003 COMPARED WITH QUARTER ENDED SEPTEMBER 29,
2002

SUMMARY

Third quarter 2003 net income was $9.4 million, or $0.43 per diluted share,
compared to net income of $8.7 million, or $0.40 per diluted share, in the prior
year.

Third quarter operating income decreased to $19.1 million from $19.8 million in
the prior year. The principal factors related to this decrease were lower
advertising revenue, particularly in St. Louis and Tucson, higher newsprint
expense, primarily reflecting a 9.1 percent increase in the average cost per
metric tonne of newsprint, and increased depreciation expense associated with
the Company's new St. Louis production facility, which was placed in service in
late 2002. These revenue decreases and expense increases were partially offset
by decreased labor and employee benefit expenses and decreased allowances for
uncollectible account receivables resulting from improved collections.

REVENUE

Revenues for the quarter ended September 28, 2003 decreased 0.3 percent, to
$103.3 million from $103.5 million in 2002. Third quarter advertising revenues
decreased to $81.8 million in 2003 from $81.9 million in 2002.

Retail advertising revenue decreased 1.9 percent, to $28.5 million from $29.0
million in 2002, due to weaknesses in the major department store category and
the absence, in 2003, of approximately $1.2 million of retail advertising
revenue present in 2002 related to the grand opening of a new riverboat casino
and a major shopping center in St. Louis. Third quarter national advertising
revenue decreased 2.7 percent, to $6.4 million from $6.6 million in 2002, due to
decreased advertising in the automotive, telecommunication, and travel
categories. Classified revenue decreased 1.7 percent to $32.5 million from $33.0
million due to weakness in help wanted and automotive advertising, partially
offset by growth in real estate advertising. For the quarter ended September 28,
2003, help wanted revenue decreased 11.6 percent in St. Louis and increased 1.8
percent at PNI, while automotive revenue decreased 4.3 percent in St. Louis and
10.7 percent at PNI. Real estate revenue increased 3.4 percent and 21.2 percent
in St. Louis and at PNI, respectively. Third quarter preprint revenue increased
9.6 percent to $14.5 million from $13.2 in 2002 principally on the strength
increased preprint volume from retail and national advertisers.

OPERATING EXPENSE

Total operating expenses decreased 0.3 percent to $87.3 million for the third
quarter of 2003 from $87.6 million in 2002. Expenses were lower principally due
to a 2.4 percent reduction in employee related expenses, primarily the result of
reduced employment levels and lower workers' compensation expense, decreased
allowance for uncollectible account receivables resulting from improved
collections, and decreased promotion expense. Full-time equivalent ("FTE")
employees decreased 1.9 percent from the third quarter of 2002.

These expense savings were partially offset by increased newsprint expense,
primarily reflecting a 9.1 percent increase in the average cost per metric tonne
of newsprint, and increased depreciation expense associated with the Company's
new St. Louis production facility, which was placed in service in late 2002.

Equity in the earnings of TNI for the third quarter of 2003 decreased 17.4
percent to $3.2 million from $3.9 million in 2002. In Tucson, operating revenue
decreased 0.4 percent for the third quarter. Advertising revenue decreased 2.1
percent due to weakness in the grocery, financial services and new construction
categories, and softness in national advertising, principally in the
pharmaceutical and travel segments. Operating expense increased 7.2 percent due
to increased labor and circulation expense.

OPERATING INCOME

For the third quarter of 2003, the Company's operating income decreased 3.5
percent to $19.1 million compared to $19.8 million in the prior year quarter.
The decrease in 2003 third quarter operating income was due, principally, to
lower advertising revenue and decreased equity in the earnings of TNI.

-18-

NON-OPERATING ITEMS

Interest expense, net of interest income, increased for the third quarter of
2003 to $4.0 million from $3.4 million in 2002, principally, due to the absence,
in 2003, of capitalized interest present in 2002, and lower yields on the
Company's invested funds. These expense increases were partially offset by
savings from the Company's interest rate swaps.

The Company reported a gain on marketable securities of $0.5 million in the
third quarter of 2003 compared to a gain of $44,000 in 2002. The Company
reported a loss on investments of $0.2 million in the third quarter of 2003
compared to a loss of $1.9 million in 2002. The third quarter of 2003 loss
represented valuation adjustments to the carrying value of certain new media
investments, partially offset by a $0.8 million gain on the distribution of the
Company's interest in a mutual insurance holding company. The loss in the third
quarter of 2002 resulted from adjustments to the carrying value of certain new
media investments.

The Company's effective tax rate for the third quarter was 37.0 percent compared
to 38.5 percent for the third quarter of 2002 due to lower state income taxes.

NET INCOME

The Company reported net income of $9.4 million, or $0.43 per diluted share for
the third quarter of 2003, compared with net income of $8.7 million, or $0.40
per diluted share in 2002. The increase in net income in third quarter of 2003
compared to the prior year resulted, principally, from the reduction in
operating income previously discussed being more than offset by the combination
of: (a) lower valuation adjustments to the carrying value of certain
non-operating investments, (b) increased net gains on the sale of marketable
securities, (c) reductions in losses incurred on investments, and (d) lower
income tax rates.

NINE MONTHS ENDED SEPTEMBER 28, 2003 COMPARED WITH SEPTEMBER 29, 2002

SUMMARY

Net income for the first nine months of 2003 was $27.9 million, or $1.29 per
diluted share, compared to net income of $22.5 million, or $1.05 per diluted
share, in the prior year.

Operating income for the first nine months of 2003 increased to $59.7 million
from $57.7 million in the prior year. The increase in operating income was due,
principally, to increased national and preprint advertising revenue, lower
distribution costs and decreased bad debt expense, partially offset by increased
newsprint expense and increased depreciation expense associated with the
Company's new St. Louis production facility, which was placed in service in late
2002.

REVENUE

Revenues for the nine month period ended September 28, 2003 increased 0.3
percent, to $308.6 million from $307.6 million in 2002. Nine-month advertising
revenues increased 0.7 percent, to $243.1 million from $241.3 million in 2002.

Retail advertising revenue decreased 1.1 percent, to $84.9 million from $85.9
million in 2002. Retail advertising revenues for the first nine months of 2003
were negatively affected by weakness in the major department store and furniture
categories. These decreases were partially offset by growth in local territory
advertising, particularly in St. Louis. National advertising revenue for the
first nine months of 2003 increased 12.1 percent, to $20.8 million from $18.5
million in 2002 due to increased advertising in the automotive,
telecommunication, and healthcare categories. Classified revenue decreased 4.8
percent to $93.4 million from $98.1 million due to weakness in help wanted and
automotive advertising, partially offset by growth in real estate advertising.
For the nine month period ended September 28, 2003, help wanted revenue
decreased 13.5 percent in St. Louis and 4.2 percent at PNI, while automotive
revenue decreased 7.2 percent in St. Louis and 9.9 percent at PNI. Real estate
revenue increased 5.0 percent and 10.4 percent in St. Louis and at PNI,
respectively. Preprint revenue for the first nine months of 2003 increased 13.2
percent, to $44.0 million from $38.9 million in 2002.

-19-

OPERATING EXPENSE

Total operating expenses decreased 0.9 percent to $260.5 million for the first
nine months of 2003 from $262.8 million in 2002. Expenses were lower principally
due to lower distribution costs resulting from the reduction of product
duplication in St. Louis during the second quarter of 2002, reduced bad debt
expense relating to the absence of Kmart-driven reserve increases present last
year and better overall collection experience, and lower employee-related
expenses, primarily the result of reduced employment levels and lower workers'
compensation expenses. These expense savings were partially offset by increased
newsprint expense and higher depreciation expense. The average cost per metric
tonne of newsprint increased 3.4 percent. FTEs decreased 1.7 percent.

Equity in the earnings of TNI for the first nine months of 2003 decreased 10.1
percent to $11.6 million from $12.9 million in 2002. In Tucson, advertising
revenue increased 1.3 percent, principally due to growth in the classified and
preprint categories. Operating expense increased 8.2 percent due to higher labor
costs, including advertising staff increases, higher benefit costs, and
increased direct mail and production expense incurred for distribution of
non-subscriber advertising products.

OPERATING INCOME

For the first nine months of 2003, the Company's operating income increased 3.4
percent to $59.7 million compared to $57.7 million in the prior year. The
increase in 2003 in operating income was due, principally, to lower operating
expenses.

NON-OPERATING ITEMS

Interest expense, net of interest income, increased for the first nine months of
2003 to $12.9 million from $12.2 million in 2002 due to the absence in 2003 of
capitalized interest that was present in 2002, and lower yields on invested
funds. These expense increases were partially offset by savings from the
Company's interest rate swaps.

The Company reported a gain on the sale of marketable securities of $0.5 million
in the first nine months of 2003 compared to a gain of $44,000 in 2002. The
Company reported a loss on investments of $1.3 million in the first nine months
of 2003 compared to a loss of $7.9 million in 2002. The loss in 2003 represents
valuation adjustments to the carrying value of certain new media investments,
partially offset by a $0.8 million gain on the distribution of the Company's
interest in a mutual insurance holding company. The loss in the first nine
months of 2002 resulted from adjustments to the carrying value of certain new
media investments.

The Company's effective tax rate for the first nine months of 2003 was 37.0
percent compared to 37.9 percent for the first nine months of 2002 due to lower
state income taxes.

NET INCOME

The Company reported net income of $27.9 million, or $1.29 per diluted share for
the first nine months of 2003, compared with net income of $22.5 million, or
$1.05 per diluted share in 2002. The increase in net income during 2003 results
principally from increased operating income and reductions in non-operating
items, and the effective tax rate, as previously discussed.

LIQUIDITY AND CAPITAL RESOURCES

As of September 28, 2003, the Company had an unrestricted cash and marketable
securities balance of $206.1 million compared to $194.4 million as of December
29, 2002. The increase resulted principally from an increase in net income,
partially offset by the discretionary funding of certain employee benefit
obligations and the purchase of capital equipment.

At both September 28, 2003 and December 29, 2002, the Company had $306.0 million
of outstanding debt pursuant to a loan agreement between St. Louis Post-Dispatch
LLC ("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 and August 2003 the Company executed fixed-to-floating interest rate swap
contracts in the combined amount of $150.0 million. The swap contracts mature
with the Company's debt on April 28, 2009. The Company accounts for all swaps as
fair value hedges and employs the short cut method. These interest rate swap
contracts that have the effect of converting the interest cost for $150.0
million of the Company's debt from fixed rate to variable rate. As of September
28, 2003, approximately 49 percent of the Company's long-term interest cost was
subject to variable rates.

-20-

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

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 require that PD LLC maintain a minimum reserve balance
consisting of cash and investments in U.S. government securities, totaling
approximately $51.1 million as of September 28, 2003. The Loan Agreements and
the PD LLC 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 expects to spend approximately $14.0 million to $15.0 million on
property, plant and equipment in 2003. As of September 28, 2003, the Company had
capital commitments for buildings and equipment replacements of approximately
$4.0 million. In addition, as of September 28, 2003, the Company had an unfunded
capital contribution commitment of approximately $7.1 million related to its
investment in a limited partnership not associated with or involved in the
Company's operations.

In order to build a stronger, more direct relationship with the readers of the
Post-Dispatch, PD LLC has purchased a number of distribution businesses from
independent carriers and dealers over the past four years, and it may continue
to purchase additional distribution businesses from time to time in the future.
As of September 28, 2003, PD LLC owned circulation routes covering approximately
74 percent of the Post-Dispatch's daily home delivery and 57 percent of single
copy distribution in the newspaper's designated market.

On October 7, 2003, PD LLC entered into definitive agreements to acquire the
single copy distribution businesses of certain dealers. These transactions are
expected to be completed by December 31, 2003. At the completion of the purchase
of these distribution businesses, PD LLC will own more than 75 percent of the
Post-Dispatch single copy routes in the greater St. Louis metropolitan area.

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
September 28, 2003, the Company had repurchased under this authority 1,000,000
shares of Class B common stock and 532,732 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. Cash flows from operations are dependent upon, among other
things, the continued acceptance of newspaper advertising at current or
increased levels and the availability of raw materials, principally newsprint.

CASH FLOWS

Cash flow from operations is the Company's primary source of liquidity. Cash
provided from operating activities for the first nine months of 2003 was $59.4
million compared to $58.2 million in 2002. The increase results principally from
increased net income and funds provided from changes in current assets and
liabilities, including increased income taxes payable.

Cash used for investing activities during the first nine months of 2003 was
$65.2 million compared to $169.8 million used in the first nine months 2002. The
Company expended $25.7 million, net, for the purchase of marketable securities
in the first nine months of 2003 compared to a net expenditure of $102.9 million
in the first nine months of 2002. In addition, the Company made discretionary
contributions of $10.8 million to fund long-term retirement obligations during
the first nine months of 2003 compared to discretionary funding of long-term
obligations of $18.1 million in 2002. Capital expenditures decreased by $9.9
million in the first nine months of 2003 to $9.4 million from $19.3 million in
2002 due, principally, to the completion of the Company's expansion of its St.
Louis production facility in 2002. Contributions to limited partnership
investments and restricted cash, and the purchase of newspaper properties and
distribution businesses made up the balance of cash used for investing
activities for the first nine months of 2003.

-21-

Cash used for financing activities during the first nine months of 2003 was $7.5
million compared to $7.6 million used in the first nine months of 2002. The
decrease was due to increased proceeds from the exercise of stock options,
partially offset by increased dividend payments in the first nine months of 2003
versus 2002.

OTHER

Merger Agreement Indemnification

Pursuant to the Merger Agreement (see Note 5 "Commitments and Contingencies" to
the consolidated financial statements included in Part I, Item 1 of this Form
10-Q ("Note 5")), the Company is obligated to indemnify Hearst-Argyle
Television, Inc. ("Hearst-Argyle") against losses related to: (i) on an after
tax basis, certain tax liabilities, including (A) any transfer tax liability
attributable to the Spin-off (see Note 5), (B) with certain exceptions, any tax
liability of Old Pulitzer (see Note 5), 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 Internal Revenue Service ("IRS") formally proposed that Old
Pulitzer's taxable income for the tax year ended March 18, 1999 be increased by
approximately $80.4 million based on the assertion that Old Pulitzer was
required to recognize a taxable gain in that amount as a result of the Spin-off.
The Company is obligated under the Merger Agreement to indemnify Hearst-Argyle
against any tax liability attributable to the Spin-off and has the right to
control any proceedings relating to the determination of such tax liability. If
the IRS were completely successful in its proposed adjustment, the Company's
indemnification obligation would be approximately $29.3 million, plus applicable
interest. Any income tax indemnification payment would be recorded as an
adjustment to additional paid-in capital, and any related interest expense would
be reflected as a component of net income in the period recognized.

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

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 refunds claims
were based on the Company's contention that Old Pulitzer was entitled to deduct
certain fees and expenses which it had not previously deducted and which Old
Pulitzer had incurred in connection with its investigation of several strategic
alternatives and potential transactions prior to its decision to proceed with
the Broadcast Transaction. Under the Merger Agreement, the Company is entitled
to any amounts recovered from the IRS as a result of these refund claims,
although there can be no assurance that the IRS will approve all or any portion
of these refund claims. 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, and any
related interest received would be reflected as a component of net income in the
period recognized.

Provision for Income Taxes

The Company has incurred capital losses that exceed capital gains available
during prescribed carry-back periods by approximately $3.2 million. The Company
expects to generate capital gains of at least this amount during prescribed
carry-forward periods. Accordingly, the Company has recognized the tax benefit
of approximately $1.2 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

-22-

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 2003
and 2002. Also, 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 (the "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 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 interests in PD LLC and DS LLC. The Company may purchase Herald's
interests 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 its 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.

During the third quarter of 2003, the Company gave consideration to SFAS No.
150, as discussed more fully in the New Accounting Pronouncements section of
Note 1 to the consolidated financial statements included in Part I, Item of this
Form 10-Q. In this regard, in accordance with SFAS No. 150, the Company
determined that if the liquidation of Herald's interests in PD LLC and DS LLC
were to have occurred at September 28, 2003, the Company would have recognized a
liability in the estimated amount of $45 million, as determined pursuant to SFAS
No. 150. This estimated liability was expected to change over time, and to
differ from the ultimate, actual liability to Herald as determined pursuant to
the operating agreements governing PD LLC and DS LLC.

New Accounting Pronouncements

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's adoption of
the measurement provisions of FIN No. 45 in 2003 did not have a material impact
on the consolidated financial statements.

In January 2003, FASB issued FIN No. 46, Consolidation of Variable Interest
Entities ("FIN No. 46"). 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 to variable interest entities acquired before February 1,
2003, for the first interim or annual period ending after December 15, 2003. The
Company does not expect that the adoption of the provisions of FIN No. 46, as
required in 2003, will have a material impact on the consolidated financial
statements.

-23-

In December 2002 the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure. This pronouncement amends SFAS No.
123, Accounting for Stock-Based Compensation ("SFAS No. 123") to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In addition, this
statement amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The required disclosures are included in this
report in Item 1.

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

In May 2003, FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity ("SFAS No.
150"). SFAS No. 150 sought to establish standards for how an issuer classifies
and measures certain financial instruments with characteristics of both
liabilities and equity. SFAS No. 150 was effective for financial instruments
entered into or modified after May 31, 2003, and otherwise was effective at the
beginning of the first interim period beginning after June 15, 2003.

The Company had determined that SFAS No. 150, as it existed through FASB Staff
Position 150-2, dated October 16, 2003, required the Company to recognize a
liability associated with the liquidation in 2015 of the capital accounts of The
Herald Company, Inc. ("Herald"), reflecting Herald's minority interest in two of
the Company's subsidiaries, St. Louis Post-Dispatch LLC ("PD LLC") and STL
Distribution Services LLC ("DS LLC"). In this regard, in accordance with SFAS
No. 150, the Company determined that if the liquidation of Herald's interests
were to have occurred at September 28, 2003, the Company would have recognized a
liability in the estimated amount of $45 million, as determined pursuant to SFAS
No. 150. This estimated liability was expected to change over time, and to
differ from the ultimate, actual liability to Herald as determined pursuant to
the operating agreements governing PD LLC and DS LLC.

On November 7, 2003, the FASB issued Staff Position 150-3, which deferred
indefinitely the application of those provisions of SFAS No. 150 that relate to
Herald's interests in PD LLC and DS LLC. Accordingly, the Company presents its
consolidated results of operations, financial position, and cash flows absent
any potential impact of SFAS No. 150. The Company cannot predict and,
accordingly, is not able to determine what the ultimate impact to the Company's
consolidated financial statements, if any, might be from future FASB action
concerning SFAS No. 150.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

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The primary raw material used in the Company's operations is newsprint,
representing 12.0 percent to 16.7 percent of operating expenses over the last
five years. Based on the Company's current level of newspaper operations
(including its interest in TNI), 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 time to time,
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 low
point by approximately 27.8 percent. For the first nine months of 2003, the
Company's average cost per metric tonne of newsprint increased 3.4 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 companies. The
Company considers its relationship with newsprint producers to be good. The
Company has not entered into derivative contracts for newsprint.

At September 28, 2003, the Company had $306.0 million of outstanding debt
pursuant to the Loan. The Loan bears interest at a fixed annual rate of 8.05
percent.

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

Changes in market interest rates may cause the Company to incur higher net
interest expense. For example, for every one percent increase in variable
interest rates, the Company would incur approximately $1.5 million in additional
annual interest expense.

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ITEM 4. CONTROLS AND PROCEDURES

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As of the end of the period covered by this Quarterly Report on Form 10-Q, the
Company's management, including its 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-15. Based upon that evaluation, the Company's
President and Chief Executive Officer and Senior Vice President-Finance
concluded that, as of the end of the period covered by this report, 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 changes in the Company's
internal control over financial reporting during the period covered by this
report that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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Please see Note 5 "Commitments and Contingencies" to the consolidated
financial statements included in Part I, Item 1. of this Form 10-Q.

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

31.1 Certification by Robert C. Woodworth, President and Chief
Executive Officer of Pulitzer Inc., pursuant to Exchange Act Rule
13a-14(a), in connection with Pulitzer Inc.'s Quarterly Report on
Form 10-Q for the quarter ended September 28, 2003.

31.2 Certification by Alan G. Silverglat, Senior Vice President-Finance
of Pulitzer Inc., pursuant to Exchange Act Rule 13a-14(a), in
connection with Pulitzer Inc.'s Quarterly Report on Form 10-Q for
the quarter ended September 28, 2003.

32.1 Certification by Robert C. Woodworth, President and Chief
Executive Officer of Pulitzer Inc., pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, in connection with Pulitzer Inc.'s Quarterly Report on
Form 10-Q for the quarter ended September 28, 2003.

32.2 Certification by Alan G. Silverglat, Senior Vice President-Finance
of Pulitzer Inc., pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in
connection with Pulitzer Inc.'s Quarterly Report on Form 10-Q for
the quarter ended September 28, 2003.

(b) Reports on Form 8-K.

The Company filed a Current Report on Form 8-K on July 22, 2003
furnishing its press release which announced its consolidated
financial results for the second quarter ended June 29, 2003, and
which also contained confirmation of the Company's full year 2003
base earnings guidance (as defined therein), and the Company's
statistical report for the period and quarter ended June 29, 2003.

The Company filed a Current Report on Form 8-K on October 27, 2003
furnishing its press release which announced its consolidated
financial results for the third quarter ended September 28, 2003,
and which also contained confirmation of the Company's full year
2003 base earnings guidance (as defined therein), and the
Company's statistical report for the period and quarter ended
September 28, 2003.

The Company filed a Current Report on Form 8-K on November 11,
2003 furnishing its press release which advised that the Company's
consolidated financial statements for the third quarter ended
September 28, 2003 to be filed on Form 10-Q will comply with FASB
Staff Position 150-3, and which announced its consolidated
financial results for the third quarter and nine months ended
September 28, 2003 in accord with SFAS 150-3. The press release
also contained confirmation of the Company's full year 2003 base
earnings guidance (as defined therein). FASB Staff Position 150-3
indefinitely deferred the implementation of certain provisions of
SFAS No. 150.

All other items of this report are not applicable for the current quarter.

SIGNATURES

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

PULITZER INC.
(Registrant)

Date: November 12, 2003 /s/ Alan G. Silverglat
-----------------------
(Alan G. Silverglat)
Senior Vice President-Finance
(on behalf of the Registrant and
as principal financial officer)

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EXHIBIT INDEX

31.1 Certification by Robert C. Woodworth, President and Chief Executive
Officer of Pulitzer Inc., pursuant to Exchange Act Rule 13a-14(a), in
connection with Pulitzer Inc.'s Quarterly Report on Form 10-Q for the
quarter ended September 28, 2003.

31.2 Certification by Alan G. Silverglat, Senior Vice President-Finance of
Pulitzer Inc., pursuant to Exchange Act Rule 13a-14(a), in connection
with Pulitzer Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 28, 2003.

32.1 Certification by Robert C. Woodworth, President and Chief Executive
Officer of Pulitzer Inc., pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection
with Pulitzer Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 28, 2003.

32.2 Certification by Alan G. Silverglat, Senior Vice President-Finance of
Pulitzer Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with
Pulitzer Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 29, 2003.

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