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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002
OR

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

For the transition period from            to           

Commission File Number

MediaNews Group, Inc.

(Exact name of registrant as specified in its charter)

     
Delaware
(State or other Jurisdiction of
Incorporation or organization)
  76-0425553
(I.R.S. Employer
Identification Number)
     
1560 Broadway
Denver, Colorado
(Address of principal executive offices)
  80202
(Zip Code)

Registrant’s telephone number, including area code: (303) 563-6360

Indicate by check mark whether a registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities and 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 [  ]



 


TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK
ITEM 4: CONTROLS AND PROCEDURES
PART II — OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
ITEM 2: CHANGES IN SECURITIES
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
CERTIFICATIONS
EXHIBIT INDEX
EX-99.1 Certification Pursuant to 18 USC Sec. 1350
EX-99.2 Certification Pursuant to 18 USC Sec. 1350


Table of Contents

INDEX TO MEDIANEWS GROUP, INC.
REPORT ON FORM 10-Q FOR THE QUARTER ENDED
SEPTEMBER 30, 2002

                 
Item No.       Page

     
       
PART I — FINANCIAL INFORMATION
       
  1    
Financial Statements
    3  
  2    
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    3  
  3    
Quantitative and Qualitative Disclosure of Market Risk
    3  
  4    
Controls and Procedures
    3  
       
PART II — OTHER INFORMATION
       
  1    
Legal Proceedings
    3  
  2    
Changes in Securities
    3  
  3    
Defaults Upon Senior Securities
    3  
  4    
Submission of Matters to a Vote of Security Holders
    4  
  5    
Other Information
    4  
  6    
Exhibits and Reports on Form 8-K
    4  

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PART I

ITEM 1: FINANCIAL STATEMENTS

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information on page 9 of this Form 10-Q.

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information on page 9 of this Form 10-Q.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

The information required by this item is filed as part of this Form 10-Q. See Index to Financial Information on page 9 of this Form 10-Q.

ITEM 4: CONTROLS AND PROCEDURES

Within 90 days prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer, President and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. We have determined that there have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to our most recent evaluation.

PART II

ITEM 1: LEGAL PROCEEDINGS

The information required by this item is filed as part of this Form 10-Q as Note 6 of the Notes to Unaudited Condensed Consolidated Financial Statements. See Index to Financial Information on page 9 of this Form 10-Q.

ITEM 2: CHANGES IN SECURITIES

There were no changes in the rights of security holders during the quarter for which this report is filed.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES

There were no defaults upon senior securities during the quarter for which this report is filed.

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

There were no matters submitted to a vote of security holders during the quarter for which this report is filed.

ITEM 5: OTHER INFORMATION

None.

ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Reports on Form 8-K

There were no reports on Form 8-K during the quarter for which this report is filed.

FORWARD-LOOKING STATEMENTS

Certain statements contained herein and elsewhere in this report are forward-looking statements that are based on our current expectations. Such statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The terms “expect,” “anticipate,” “intend,” “believe,” and “project” and similar words or expressions are intended to identify forward-looking statements. These statements speak only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results and events to differ materially from those anticipated and should be viewed with caution. Potential risks and uncertainties that could adversely affect our ability to obtain these results, which in most instances are beyond our control, include, without limitation, the following factors: (a) increased consolidation among major retailers, bankruptcy or other events that may adversely affect business operations of major customers and depress the level of local and national advertising, (b) an economic downturn in some or all of our principal newspaper markets that may lead to decreased circulation or decreased local or national advertising, (c) a decline in general newspaper readership patterns as a result of competitive alternative media or other factors, (d) increases in newsprint costs over the level anticipated, (e) labor disputes which may cause revenue declines or increased labor costs, (f) acquisitions of new businesses or dispositions of existing businesses, (g) costs or difficulties related to the integration of businesses acquired by us may be greater than expected, (h) increases in interest or financing costs, (i) rapid technological changes and frequent new product introductions prevalent in electronic publishing, including the evolution of the Internet and (j) other unanticipated events and conditions. It is not possible to foresee or identify all such factors. We make no commitment to update any forward-looking statement or to disclose any facts, events, or circumstances after the date hereof that may affect the accuracy of any forward-looking statements.

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SIGNATURES

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

             
            MEDIANEWS GROUP, INC.
 
Dated:   November 13, 2002

  By:   /s/ Ronald A. Mayo

Ronald A. Mayo
Vice President,
Chief Financial Officer and
Duly Authorized Officer of Registrant

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CERTIFICATIONS

I, William Dean Singleton, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of MediaNews Group, Inc.;

2.     Based on my knowledge, this quarterly 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 quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.     The registrant’s other certifying officers 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 we 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 quarterly 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 quarterly report (the “Evaluation Date”); and

c) presented in this quarterly 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 officers 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 function):

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 officers and I have indicated in this quarterly report whether or not 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: November 13, 2002

 
/S/ William Dean Singleton

(William Dean Singleton)
Vice Chairman, Chief Executive Officer and Director

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CERTIFICATIONS

I, Joseph J. Lodovic, IV, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of MediaNews Group, Inc.;

2.     Based on my knowledge, this quarterly 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 quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.     The registrant’s other certifying officers 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 we 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 quarterly 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 quarterly report (the “Evaluation Date”); and

c) presented in this quarterly 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 officers 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 function):

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 officers and I have indicated in this quarterly report whether or not 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: November 13, 2002

 
/S/ Joseph J. Lodovic, IV

(Joseph J. Lodovic, IV)
President

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CERTIFICATIONS

I, Ronald A. Mayo, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of MediaNews Group, Inc.;

2.     Based on my knowledge, this quarterly 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 quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report;

4.     The registrant’s other certifying officers 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 we 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 quarterly 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 quarterly report (the “Evaluation Date”); and

c) presented in this quarterly 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 officers 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 function):

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 officers and I have indicated in this quarterly report whether or not 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: November 13, 2002

 
/S/ Ronald A. Mayo

(Ronald A. Mayo)
Vice President and Chief Financial Officer

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MEDIANEWS GROUP, INC.
Index to Financial Information

           
      Page
     
Item 1: Financial Statements:
       
 
Condensed Consolidated Balance Sheets
    10  
 
Unaudited Condensed Consolidated Statements of Operations
    12  
 
Unaudited Condensed Consolidated Statements of Cash Flows
    13  
 
Notes to Unaudited Condensed Consolidated Financial Statements
    14  
Item 2: Management’s Discussion and Analysis of Financial Condition and Results Of Operations
    20  
Item 3: Quantitative and Qualitative Disclosure of Market Risk
    26  

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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

                   
      (Unaudited)        
      September 30,   June 30,
      2002   2002
     
 
      (In thousands)
ASSETS
               
CURRENT ASSETS
               
Cash and cash equivalents
  $ 6,568     $ 2,029  
Accounts receivable, less allowance for doubtful accounts of $10,732 at September 30, 2002 and $10,669 at June 30, 2002
    80,053       79,008  
Inventories of newsprint and supplies
    11,607       10,205  
Prepaid expenses and other assets
    7,163       7,760  
Income taxes receivable
    4,516       6,137  
 
   
     
 
 
TOTAL CURRENT ASSETS
    109,907       105,139  
 
PROPERTY, PLANT AND EQUIPMENT
           
Land
    37,225       37,225  
Buildings and improvements
    104,249       103,915  
Machinery and equipment
    309,478       306,630  
 
   
     
 
 
TOTAL PROPERTY, PLANT AND EQUIPMENT
    450,952       447,770  
Less accumulated depreciation and amortization
    149,678       144,418  
 
   
     
 
 
NET PROPERTY, PLANT AND EQUIPMENT
    301,274       303,352  
 
OTHER ASSETS
               
Investment in unconsolidated JOAs
    241,575       244,549  
Subscriber accounts, less accumulated amortization of $117,134 at September 30, 2002 and $112,595 at June 30, 2002
    93,764       98,303  
Excess of cost over fair value of net assets acquired
    381,945       381,945  
Newspaper mastheads
    146,242       146,242  
Covenants not to compete and other identifiable intangible assets, less accumulated amortization of $34,106 at September 30, 2002 and $33,581 at June 30, 2002
    3,930       4,455  
Other
    39,603       39,199  
 
   
     
 
 
TOTAL OTHER ASSETS
    907,059       914,693  
 
 
TOTAL ASSETS
  $ 1,318,240     $ 1,323,184  
 
   
     
 

See notes to unaudited condensed consolidated financial statements

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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

                   
      (Unaudited)        
      September 30,   June 30,
      2002   2002
     
 
      (In thousands, except share data)
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
CURRENT LIABILITIES
               
Trade accounts payable
  $ 10,549     $ 12,417  
Accrued liabilities
    62,174       65,332  
Unearned income
    20,703       21,085  
Current portion of long-term debt and obligations under capital leases
    4,857       7,707  
 
   
     
 
 
TOTAL CURRENT LIABILITIES
    98,283       106,541  
 
LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL LEASES
    941,077       949,383  
 
OTHER LIABILITIES
    27,374       30,462  
 
DEFERRED INCOME TAXES
    61,141       56,290  
 
MINORITY INTEREST
    157,466       156,007  
 
SHAREHOLDERS’ EQUITY
           
Common stock, par value $0.001; 3,000,000 shares authorized, 2,314,346 shares issued and 2,298,346 shares outstanding
    2       2  
Additional paid-in capital
    3,631       3,631  
Accumulated other comprehensive loss, net of taxes
    (12,754 )     (14,030 )
Retained earnings
    44,020       36,898  
Common stock in treasury, at cost, 16,000 shares
    (2,000 )     (2,000 )
 
   
     
 
 
TOTAL SHAREHOLDERS’ EQUITY
    32,899       24,501  
 
 
   
     
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 1,318,240     $ 1,323,184  
 
   
     
 

See notes to unaudited condensed consolidated financial statements

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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                     
        Three Months Ended September 30,
       
        2002   2001
       
 
        (In thousands, except share data)
REVENUES
               
 
Advertising
  $ 134,819     $ 134,885  
 
Circulation
    34,745       35,656  
 
Other
    10,068       8,630  
 
 
   
     
 
   
TOTAL REVENUES
    179,632       179,171  
 
COSTS AND EXPENSES
               
 
Cost of sales
    60,960       65,160  
 
Selling, general and administrative
    86,899       83,113  
 
Depreciation and amortization
    10,671       12,601  
 
Interest expense
    16,995       20,362  
 
Other (income) expense, net
    (1,778 )     1,256  
 
 
   
     
 
   
TOTAL COSTS AND EXPENSES
    173,747       182,492  
 
EQUITY INCOME IN UNCONSOLIDATED JOAS
    14,580       10,942  
 
MINORITY INTEREST
    (8,466 )     (7,849 )
 
 
   
     
 
INCOME (LOSS) BEFORE INCOME TAXES
    11,999       (228 )
INCOME TAX (EXPENSE) BENEFIT
    (4,877 )     100  
 
 
   
     
 
NET INCOME (LOSS)
  $ 7,122     $ (128 )
 
 
   
     
 
NET INCOME (LOSS) PER COMMON SHARE:
               
 
Net income (loss) per common share
  $ 3.10     $ (0.06 )
 
 
   
     
 
 
Weighted average number of shares outstanding
    2,298,346       2,298,346  
 
 
   
     
 

See notes to unaudited condensed consolidated financial statements

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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                         
            Three Months Ended September 30,
           
            2002   2001
           
 
            (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
               
 
Net income (loss)
  $ 7,122     $ (128 )
 
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
               
     
Depreciation and amortization
    10,671       12,601  
     
Provision for losses on accounts receivable
    2,451       2,078  
     
Amortization of debt discount
    575       717  
     
Gain on sale of assets
    (652 )     (1,337 )
     
Equity income in unconsolidated JOAs
    (14,580 )     (10,942 )
     
Equity (income) losses in non-JOA equity investments
    (244 )     406  
     
Change in defined benefit plan assets
    (68 )     (552 )
     
Deferred income tax expense (benefit)
    4,024       (106 )
     
Minority interest
    8,466       7,849  
     
Unrealized loss on hedging activities, reclassified to earnings from accumulated other comprehensive loss
    327        
     
Unrealized gain on interest rate swaps
    (2,413 )      
 
Change in operating assets and liabilities
    (6,184 )     (3,634 )
 
 
   
     
 
       
NET CASH FLOWS FROM OPERATING ACTIVITIES
    9,495       6,952  
CASH FLOWS FROM INVESTING ACTIVITIES:
               
 
Distributions from unconsolidated JOAs
    16,656       14,701  
 
Distributions from non-JOA investments
    441        
 
Investments in non-JOA equity investments
    (500 )     (650 )
 
Purchases of machinery and equipment
    (3,154 )     (3,464 )
 
Proceeds from the sale of assets
    275       2,553  
 
 
   
     
 
   
NET CASH FLOWS FROM INVESTING ACTIVITIES
    13,718       13,140  
CASH FLOWS FROM FINANCING ACTIVITIES:
               
 
Issuance of long-term debt
    15,700       16,945  
 
Reduction of long-term debt and other liabilities
    (27,368 )     (25,940 )
 
Distributions paid to minority interest
    (7,006 )     (8,984 )
 
 
   
     
 
   
NET CASH FLOWS FROM FINANCING ACTIVITIES
    (18,674 )     (17,979 )
INCREASE IN CASH AND CASH EQUIVALENTS
    4,539       2,113  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    2,029       7,149  
 
 
   
     
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 6,568     $ 9,262  
 
 
   
     
 
SUPPLEMENTAL CASH FLOW DISCLOSURES:
               
 
Interest paid
  $ 14,080     $ 16,051  
 
 
   
     
 
 
Income taxes (refunded)
  $ (682 )   $ (91 )
 
 
   
     
 

See notes to unaudited condensed consolidated financial statements

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MEDIANEWS GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: Significant Accounting Policies and Other Matters

Basis of Quarterly Financial Statements

     The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements and should be read in conjunction with the consolidated financial statements and footnotes thereto included in MediaNews Group, Inc.’s (“MediaNews” or the “Company”) Annual Report on Form 10-K for the year ended June 30, 2002. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended September 30, 2002 are not necessarily indicative of the results that may be expected for future interim periods or for the year ended June 30, 2003.

Joint Operating Agencies

     A joint operating agency (“JOA”) performs the production, sales, distribution and administrative functions for two or more newspapers in the same market under the terms of a JOA agreement. Editorial control and news at each of the individual newspapers, which are parties to a JOA agreement, continue to be separate and outside of the joint operating agency. The Company, through its subsidiaries, York Newspapers, Inc., Charleston Publishing Company, Kearns-Tribune, LLC, and The Denver Post Corporation, participates in joint operating agencies in York, PA, Charleston, WV, Salt Lake City, UT and Denver, CO, respectively.

     In July 2000, the Emerging Issues Task Force (EITF) reached a consensus on Issue 00-1, Balance Sheet and Income Statement Display under the Equity Method of Investments in Certain Partnerships and Other Unincorporated Joint Ventures, effective for periods ending after June 15, 2000, which prohibits the use of pro-rata consolidation except in the extractive and construction industries. Prior to adoption of EITF 00-1, the Company accounted for all of its JOA operations using the pro-rata consolidation method. Upon adoption of EITF 00-1, effective June 30, 2000, the Company began accounting for its unconsolidated JOA investments under the equity method. Accordingly, the Company now reports its share of the unconsolidated JOA operations as a net amount in the consolidated statement of operations under the financial statement line item “Equity Income in Unconsolidated JOAs.” Equity income in unconsolidated JOAs also includes the amortization of subscriber lists recorded in conjunction with the original purchase of the newspaper and an interest in the corresponding JOA, as the subscriber lists are attributable to the Company’s earnings in the JOA. The Company’s investments in unconsolidated JOAs are included in the consolidated balance sheet under the line item “Investment in Unconsolidated JOAs.”

     While the operating results of the Denver JOA and the Salt Lake JOA are accounted for under the equity method, the editorial expenses related to the newspapers the Company owns, which are published by these JOAs, continue to be included in the Company’s operating expenses as these expenses are incurred outside of the related JOA. Editorial costs at Denver and Salt Lake are incurred by our consolidated subsidiaries The Denver Post Corporation and Kearns-Tribune, LLC, respectively. The Charleston JOA, on the other hand, accounts for editorial expenses within the JOA, thus these are not operating expenses of our wholly-owned subsidiary, Charleston Publishing Company. As a result, Charleston editorial expenses are included in “Equity Income in Unconsolidated JOAs” rather than operating expenses. The York JOA results a