High Yield presentation v6

Slide1: 

INVESTOR PRESENTATION February 2004 P u b l i s h i n g G r o u p, L L C

Forward looking statements: 

Forward looking statements This presentation contains forward-looking statements as that term is used under the Private Securities Litigation Act of 1995. These forward-looking statements are based on the current assumptions, expectations and projections of the Company's management about future events. Although we believe that these statements are based on reasonable assumptions, the Company can give no assurance that they will prove to be correct. Numerous factors, including those related to market conditions and those detailed in the confidential offering memorandum and from time-to-time in the Company’s filings with the Securities and Exchange Commission, may cause results of the Company to differ materially from those anticipated in these forward-looking statements. Many of the factors that will determine the Company’s future results are beyond the ability of the Company to control or predict. These forward-looking statements are subject to risks and uncertainties and, therefore, actual results may differ materially. The Company cautions you not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. All references to “Company” and “MORRIS PUBLISHING GROUP, LLC” as used throughout this presentation refer to MORRIS PUBLISHING GROUP, LLC and its subsidiaries. All references to “Issuer” as used throughout this presentation refer to MORRIS PUBLISHING GROUP, LLC

Definitions & sources of information: 

Earnings before net interest expense, including amortization of debt issuance costs, provision for income taxes, depreciation and amortization expense (“EBITDA”) is not a measure of performance defined in accordance with accounting principles generally accepted in the United States of America. However, we believe that EBITDA is useful to investors in evaluating our performance because it is a commonly used financial analysis tool for measuring and comparing media companies in areas of operating performance. EBITDA should not be considered as an alternative to net income as an indicator of our performance or as an alternative to net cash provided by operating activities as a measure of liquidity and may not be comparable to similarly titled measures used by other companies. Data on our market position and market share within our industry is based, in part, on  independent industry publications, government publications, reports by market research firms or other published independent sources, including Newspaper Association of America and Audit Bureau of Circulation statistics. Definitions & sources of information

Senior management team of Morris Publishing Group, LLC: 

Senior management team of Morris Publishing Group, LLC William S. Morris IV President & Chief Executive Officer Years of experience: 13 Carl N. Cannon Executive Vice President Years of experience: 38 James C. Currow Executive Vice President Years of experience: 39 Craig S. Mitchell Senior Vice President Finance & Treasurer & Secretary Years of experience: 9 Steve K. Stone Senior Vice President & CFO Years of experience: 24

Years of history and experience: 

Years of history and experience 1785 1929 1945 1983 1995 1966 1970 2000 Founding of the Augusta Gazette, now The Augusta Chronicle William S. Morris Jr., father of today’s CEO, joins Augusta Chronicle William S. Morris Jr., purchases controlling interest in the newspaper and fully acquires in 1955 William S. Morris III becomes publisher of the Augusta newspapers Morris Communications Company is established Morris purchases The Florida Times-Union Acquires Topeka, KS based Stauffer Communications and started online services William S. Morris III serves as Chairman of the Newspaper Association of America William S. Morris IV is named President of Morris Communications 1996 2001 William S. Morris IV is named CEO of Morris Publishing

Summarized corporate structure: 

Summarized corporate structure Morris Communications Company, LLC Morris Publishing Group, LLC, a Georgia LLC Other Subsidiaries MCC Outdoor Morris Book Publishing, LLC MCC Magazines, LLC MCC Radio, LLC MStar Solutions, LLC Best Read Guides Franchise Company, LLC MCC Events, LLC Shivers Investments, LLC Morris Air, LLC Morris Publishing Finance Co., a Georgia Corp. Operating Subsidiaries 9 months ending September 30, 2003: % Operating revenues 77% 23% % EBITDA 93% 7%

Investment considerations: 

Investment considerations Strong management with an average of approximately 30 years of publishing experience Relatively less cyclical publishing business Leading competitive position in all of our markets Complement print media with leading local websites Operating strategy focused on increasing readership & reducing costs Low leverage and strong cash flow generating model

Geographically diverse, focused on local markets: 

Geographically diverse, focused on local markets Total 2002 revenues = $433.4 million Daily circulation>50,000 Daily circulation<50,000 Corporate headquarters AR Conway FL Jacksonville St. Augustine Winter Haven GA Athens Augusta Savannah KS Dodge City Newton Pittsburgh Topeka MI Hillsdale Holland MN Brainerd MO Hannibal Independence/ Blue Springs NE Grand Island York OK Ardmore Shawnee SD Yankton TX Amarillo Lubbock 26 daily newspapers TN Oak Ridge AK Juneau Kenai Morris also publishes 11 non-daily and 23 free community newspapers Source: DemographicsNow

Stability in revenue base: 

Stability in revenue base Year-over-Year revenue change Morris Publishing 9mos’03 revenues Total = $322.9 million Circulation 17% Other 4% Advertising 79% 1 Industry includes newspaper revenue of Gannett, Journal Register, Knight Ridder, New York Times, McClatchy, Pulitzer

Relatively less cyclical advertising mix: 

Relatively less cyclical advertising mix 9mos’03 Morris ad revenue segmentation Category advertising spend Source: Newspaper Association of America; Wall Street research Source: Company Total = $256 million Classified 40% National 7% Retail 53% Year-over-Year change

Morris classifieds are more stable than peers: 

Morris classifieds are more stable than peers Classified revenue, Year-over-Year % change Source: SEC filings and Company financials Morris Gannett Journal Register Knight Ridder E.W. Scripps Tribune

Newspapers take the largest share of local advertising . . .: 

Newspapers take the largest share of local advertising . . . Source: Wall Street research U.S. local advertising market mix - 2003E Newspaper 43% Broadcast TV 15% Cable TV 5% Radio 18% Yellow Pages 14% Other 2% Outdoor 4%

. . . and deliver significant results for their customers : 

. . . and deliver significant results for their customers Medium most used to check advertising prior to making a purchase Source: Scarborough Research

Competition from other local media: 

Competition from other local media 2002 market share by media Source: BEA, Company analysis Newspaper is the primary media source $207 $62 $51 $37 $51 $42 45% 51% 55% 58% 45% 53%

Leader in daily circulation: 

Leader in daily circulation % share of daily circulation 1 Includes Aiken, SC Source: Audit Bureau of Circulation, Most Recent Audit Reports, 2001 and 2002

Key daily newspapers: 

Key daily newspapers Dominant media in an isolated market - 96.5% of daily newspaper circulation Household income is expected to grow almost 40% faster than the national average through 2007 Household growth is expected to exceed U.S. average by 29% through 2007 Limited daily newspaper competition Rapidly growing market with strong manufacturing and tourist sectors and nation’s 5th largest cargo port Household growth in the MSA is projected to grow 19% faster through 2007 Among the highest profit margins of any newspaper in the Morris group Household income expected to grow 37% faster than the U.S. average through 2007 High advertising and newsroom color capacity through renovation of packaging and distribution facility and new press Stable and consistent cash flow performance with little to no print competition Source: DemographicsNow SRC, LLC Demographic data copyrighted 2002 by Experian/Applied Geographic Solutions

The Florida Times-Union : 

The Florida Times-Union Circulation of 166,812 daily and 228,865 on Sundays Population grew 21% between 1990 and 2000 Consistently generates one of the highest cash flow margins in the company A strong advertising market share among major Morris newspapers Penetration is 33% for Daily and 45% for Sunday in the Jacksonville market Average readership in the core market is 37% for Daily and 56% for Sunday newspapers Strong internet presence 2002–2007 Household growth Source: DemographicsNow Upside potential from Super Bowl 2005

Growing online focus and initiatives: 

Growing online focus and initiatives Every Morris daily newspaper has a complementary website Source: Borell Associates Inc., 2003 2002 share of local advertising spending Newspaper sites Three portals (MSN, AOL & Yahoo) TV & Radio sites Online Yellow pages Online verticals Preferred medium to get local information Source: Technographics Research, March 27, 2003

Industry leading websites driving growth: 

Industry leading websites driving growth NAA Digital Edge Awards1 1 Awards presented 1998-2002 Source: Company data Morris page impressions (millions) 1998 - 2002 CAGR = 76% Source: Newspaper Association of America

High editorial quality and targeted market focus: 

Readership Niche publications High editorial quality and targeted market focus Source: Morris reader behavior study, October 2002

Key initiatives to further improve profitability: 

Key initiatives to further improve profitability Participating in Shared Service Center Simplifying, standardizing & centralizing most administrative functions Leveraging purchase power Participation in a newsprint consortium Cost synergies by leveraging technologies Expect to fully implement by end of 2005, and save up to $10 million per year Creation of operating efficiencies Consolidation of printing and back office production activities by producing our weekly newspapers, free distribution shoppers, additional niche or regional publications using the facilities of daily newspapers

Slide22: 

FINANCIAL OVERVIEW

Historical revenue mix: 

Historical revenue mix ($ millions) $329.3 $341.7 $356.8 $341.9 $343.0 $251.4 $255.9 $77.7 $77.1 $76.5 $74.8 $71.9 $53.9 $53.5 $25.1 $22.1 $429.5 $433.4 $437.5 $455.4 $443.9 $319.0 $332.9 $13.6 $18.5 $20.8 $22.5 Year-over-year change 3.4% 2.6% (3.9)% (0.9)% 1.2% $13.5

Cost structure and profitability : 

Cost structure and profitability Historical operating costs ($ millions)

EBITDA comparison to peers: 

EBITDA comparison to peers 2000 EBITDA margins 2001 EBITDA margins 2002 EBITDA margins 1 Average of Dow Jones, Lee Enterprises, Tribune, Journal Register, Knight Ridder, Media General, Hollinger, MediaNews, McClatchy, Liberty Group Publishing, New York Times, RR Donnely Morris Morris Morris

Near-term profitability: 

Near-term profitability EBITDA margin Strategic investment in “Shared Service Center” Duplicative work force during transition phase Cost synergies by leveraging technologies Consolidation of printing, production & back office activities 28-30% Target

Growing cash flows: 

Growing cash flows Pre-tax free cash flow Pre-tax free cash flow/EBITDA $ millions Note: Pre-tax free cash flow is defined as EBITDA less interest expense, less capex, less change in working capital

Summarized corporate structure: 

Summarized corporate structure Morris Communications Company, LLC Morris Publishing Group, LLC, a Georgia LLC Other Subsidiaries MCC Outdoor Morris Book Publishing, LLC MCC Magazines, LLC MCC Radio, LLC MStar Solutions, LLC Best Read Guides Franchise Company, LLC MCC Events, LLC Shivers Investments, LLC Morris Air, LLC Morris Publishing Finance Co., a Georgia Corp. Operating Subsidiaries 9 months ending on Sept 30, 2003: Revenues $322.9 $94.2 % Revenues 77.4% 22.6% EBITDA $75.1 $5.4 % EBITDA 93.3% 6.7% ¹Shivers Investments, LLC is an unrestricted subsidiary

Capital structure: 

Capital structure ($ millions)

Leverage profile: 

Leverage profile Credit statistics Total debt LTM debt/EBITDA