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For Immediate Release
September 15, 2003

MORRIS PUBLISHING GROUP LLC ANNOUNCES SECOND QUARTER RESULTS

AUGUSTA, Ga. - Morris Publishing Group LLC ("the Company") today announced its results of operations for the second quarter ended June 30, 2003. The Company reported that revenue increased by 2.0% in the second quarter over the same period a year ago, driven by growth in all advertising categories: retail, classified and national. Total revenues for the second quarter were $111.1 million.

Total advertising revenues were up 2.5% for the second quarter and up 2.5% year to date, driven by all three categories of advertising. Retail advertising was up 1.7% for the second quarter and 1.6 % year to date. Classified advertising revenue was up 2.3% for the second quarter and 3.3% year to date. National revenue was up 9.8% for the second quarter and 5.5% year to date. Circulation revenue was down 0.7% for the second quarter and 0.8% year to date.

William S. Morris IV, chief executive officer, said this quarter's revenue represents a continued stable growth trend. "We are pleased with our revenue improvement in the second quarter, particularly that increases were seen in all categories of advertising."

EBITDA (net income before net interest expense, including amortization of debt issuance costs, provision for income taxes, depreciation and amortization expense) for the June 2003 fiscal quarter was $28.7 million. The results represent lower EBITDA than the same period last year due to the planned expenses associated with investments in shared services initiatives. EBITDA margin for the June 2003 fiscal quarter was 25.8%, in line with the full-year 2002 EBITDA margin.

On August 7, 2003, the Company and its parent, Morris Communications Company LLC ("Morris Communications") realigned various aspects of their debt and capital structure, including the following:

  • The Company issued $250.0 million in aggregate principal amount of its 7% Senior Subordinated Notes due 2013, issued under an Indenture with Wachovia Bank, National Association, as trustee.
  • The Company entered into new $400.0 million senior secured credit facilities, which rank senior to the notes and are guaranteed by Morris Communications and its restricted subsidiaries, including all of the Company's existing subsidiaries.
  • The Company repaid its intercompany debt due to its parent, Morris Communications, which in turn repaid its existing senior secured credit facilities. As a result, the Company incurred a non-cash financing loss on extinguishment of debt of approximately $6.4 million related to the write-off of unamortized deferred loan costs.
  • Morris Communications contributed various real estate and trademarks primarily used in the newspaper business to the Company. The Company distributed to Morris Communications various parcels of real estate and related personal property that are not part of the newspaper business. These contributions and distributions will not affect the combined financial statements of the Company.
  • The Company entered into a management agreement with Morris Communications, whereby Morris Communications and its subsidiary, MStar Solutions, will provide a wide range of management and general corporate services to the Company for certain fees payable by the Company.

Total debt outstanding at June 30, 2003, proforma for these and other related transactions was $550.0 million. Morris Publishing Group LLC is a wholly owned subsidiary of Morris Communications Company LLC, a privately held media company based in Augusta, Ga.. Morris Publishing Group was formed in 2001 and assumed the operations of the newspaper business segment of its parent, Morris Communications. Morris Publishing publishes 26 daily, 10 nondaily and 23 free community newspapers in the United States.

Second Quarter information follows:
Morris Publishing Group LLC
Income Statement
For the quarter ended June 30, 2003
(Dollars in thousands) Three Months EndedJune 30, 2003 2002 (unaudited)

OPERATING REVENUES:
Advertising $ 88,719 $86,540
Circulation 17,810 17,938
Other 4,597 4,504
Total operating revenues 111,126 108,982

OPERATING EXPENSES:
Labor and employee benefits 42,295 39,291
Newsprint, ink and supplements 13,037 12,050
Other operating costs (excluding depreciation and amortization) 27,008 23,874
Depreciation and amortization 2,787 4,501
Total operating expenses 85,127 79,716
Operating income 25,999 29,266

OTHER EXPENSE:
Interest expense, including amortization of debt issuance costs 5,563 6,230
Other, net 53 93
5,616 6,323
INCOME BEFORE INCOME TAXES 20,383 22,943
PROVISION FOR INCOME TAXES 7,876 8,859
NET INCOME $ 12,507 $ 14,084

The follow table reconciles net income to EBITDA:
(Dollars in thousands) Three Months Ended June 30, 2003 2002
NET INCOME $ 12,507 $ 14,084

Add:
Interest Expense, including amortization of debt issuance costs 5,563 6,230
Interest Income (4) (5)
Provision for Income Taxes 7,876 8,859
Depreciation and amortization expense 2,787 4,501
EBITDA $ 28,729 $ 33,669