868512--3/31/2006--HOLLINGER_INTERNATIONAL

related topics

{investment, property, distribution}

{financial, litigation, operation}

{product, market, service}

{stock, price, operating}

{cost, operation, labor}

{condition, economic, financial}

{tax, income, asset}

{debt, indebtedness, cash}

{control, financial, internal}

{loan, real, estate}

The Company may face interference by its controlling stockholder that will prevent it from recovering on its claims. The results of ongoing SEC investigations may have a material adverse effect on the Company s business and results of operations. The Company s controlling stockholder has taken actions that trigger the Special Monitor provisions of the Court Order. Pending litigation could have a material adverse effect on the Company. The Company s senior management team is required to devote significant attention to matters arising from actions of prior management. Risks Relating to the Company s Business and the Industry The Company s revenue is cyclical and dependent upon general economic conditions in the Company s target markets. The Company is a holding company and relies on the Company s subsidiaries to meet its financial obligations. The Company has substantial potential tax liabilities. The Company has substantial accruals for tax contingencies in a foreign jurisdiction; if payments are required, a portion may be paid with funds denominated in U.S. dollars. Newsprint represents the Company s single largest raw material expense and changes in the price of newsprint could affect net income. Competition in the newspaper industry originates from many sources. The advent of new technologies and industry practices, such as the provision of newspaper content on free Internet sites, may decrease sales or force the Company to make other changes that harm operating performance. The Company s publications have experienced declines in circulation in the past and may do so in the future. The Company may experience labor disputes, which could slow down or halt production or distribution of the Company s newspapers or other publications. A substantial portion of the Company s operations are concentrated in one geographic area. The Company s internal control over financial reporting is not effective as of December 31, 2005 and weaknesses in the Company s internal controls and procedures could have a material adverse effect on the Company. Overstatement of circulation figures in the past may result in the loss of advertisers in the future. Risks Related to Voting Control by a Single Stockholder There could be a change of control of the Company through a change in control of Hollinger Inc. under circumstances not approved by the independent directors of the Company. The Company is a party to a Business Opportunities Agreement with Hollinger Inc., the terms of which limit the Company s ability to pursue certain business opportunities in certain countries. If Hollinger Inc. sought protection from its creditors or became the subject of bankruptcy or insolvency proceedings there may be harm to, and there may be a change of control of, the Company.

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868512--3/31/2006--HOLLINGER_INTERNATIONAL_INC