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UNITED
STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-K



ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES
EXCHANGE ACT OF 1934



|                                            |  |                              
|------------------------------------------- |  | -----------------------------
|For the fiscal year ended December 26, 2004 |  | Commission file number 1-7553
|                                            |  |                              

| |  |                                                        |  | 
| |  | ------------------------------------------------------ |  | 
| |  | Knight-Ridder, Inc.                                    |  | 
| |  | (Exact name of registrant as specified in its charter) |  | 



|                                                               |  |  |  |                                     
|-------------------------------------------------------------- |  |  |  | ------------------------------------
|Florida                                                        |  |  |  | 38-0723657                          
|(State or other jurisdiction of incorporation or organization) |  |  |  | (I.R.S. Employer Identification No.)
|                                                               |  |  |  |                                     
|                                                               |  |  |  |                                     
|50 West San Fernando Street Suite 1500 San Jose, CA            |  |  |  | 95113                               
|(Address of principal executive offices)                       |  |  |  | (Zip Code)                          



Registrants
telephone number, including area code: (408) 938-7700



Securities registered pursuant to Section 12(b) of the Act:



|                                                                   |  |  |  |                                          
|------------------------------------------------------------------ |  |  |  | -----------------------------------------
|Title of each class                                                |  |  |  | Name of each exchange on which registered
|Common Stock, $0.02 1/12 par value Preferred Share Purchase Rights |  |  |  | New York Stock Exchange                  



Securities registered pursuant to Section 12(g) of the Act: NONE



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
[    ]



Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. []



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

Yes [X]                 No [    ]



The aggregate market value of voting stock, which consists solely of shares of common stock held by non-affiliates of the
registrant, was approximately $4.8 billion as of June 25, 2004 (computed by reference to the closing price as reported by the New York Stock Exchange).



The registrant had 75.5 million shares of common stock (par value $0.02 1/12 per share), net of treasury stock, issued and outstanding as of February 25,
2005.



DOCUMENTS INCORPORATED BY REFERENCE



Portions of Registrants Proxy Statement for its
Annual Meeting of Shareholders are incorporated by reference into Part III.





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Table of Contents



|                           |  |                                                                                                             |  |   
|-------------------------- |  | ----------------------------------------------------------------------------------------------------------- |  | --
|PART I                     |  |                                                                                                             |  | 1 
|Forward Looking Statements |  |                                                                                                            
|Item 1.                    |  | Business                                                                                                    |  | 1 
|Item 2.                    |  | Properties                                                                                                  |  | 5 
|Item 3.                    |  | Legal Proceedings                                                                                           |  | 5 
|Item 4.                    |  | Submission of Matters to a Voteof Security Holders                                                          |  | 6 
|                           |  |                                                                                                            
|PART II                    |  |                                                                                                             |  | 6 
|Item 5.                    |  | Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 6 
|Item 6.                    |  | Selected Financial Data                                                                                     |  | 8 
|Item 7.                    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                       |  | 10
|Item 7A.                   |  | Quantitative and Qualitative DisclosuresAbout Market Risk                                                   |  | 20
|Item 8.                    |  | Financial Statements and Supplementary Data                                                                 |  | 21
|Item 9.                    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                        |  | 21
|Item 9A.                   |  | Controls and Procedures                                                                                     |  | 21
|                           |  |                                                                                                            
|PART III                   |  |                                                                                                             |  | 23
|Item 10.                   |  | Directors and Executive Officers of the Registrant                                                          |  | 23
|Item 11.                   |  | Executive Compensation                                                                                      |  | 24
|Item 12.                   |  | Security Ownership of Certain BeneficialOwners and Management and Related Stockholder Matters               |  | 24
|Item 13.                   |  | Certain Relationships and Related Transactions                                                              |  | 24
|Item 14.                   |  | Principal Accounting Fees and Services                                                                      |  | 24
|                           |  |                                                                                                            
|PART IV                    |  |                                                                                                             |  | 24
|Item 15.                   |  | Exhibits, Financial Statement Schedules                                                                     |  | 24
|Signatures                 |  | 52                                                                                                         
|Exhibit Index              |  | 53                                                                                                         
|Schedule II                |  | S-1                                                                                                        
|Exhibits                   |  |                                                                                                            





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PART I



FORWARD-LOOKING STATEMENTS

In
addition to historical information, this Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act. In particular, these include statements related to future actions, future
performance or results of current and anticipated initiatives and the outcome of contingencies and other uncertainties. We try, whenever possible, to identify such statements by using the words such as anticipate, believe,
estimate, expect, plan, project and similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results and events to differ materially
from those anticipated.

Potential risks and uncertainties that could adversely affect our ability to obtain these results
include, without limitation, the following factors: (a) increased consolidation among major retailers 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) an increase in newsprint costs over the levels anticipated; (e) labor disputes or shortages that may cause revenue declines or increased labor costs; (f) disruptions in electricity and natural gas supplies and increases
in energy costs; (g) our ability to attract and retain qualified employees, including senior management; (h) increases in health and welfare, pension and postretirement costs; (i) increases in business insurance costs; (j) a decline in the value of
companies that we invest in that must be recorded as a charge to earnings; (k) acquisitions of new businesses or dispositions of existing businesses; (l) increases in interest or financing costs or availability of credit; (m) rapid technological
changes and frequent new product introductions prevalent in electronic publishing, including the evolution of the Internet; and, (n) acts of war, terrorism, natural disaster or other events that may adversely affect our operations or the operations
of our key suppliers.



Item 1. Business



GENERAL

Knight Ridder was formed in 1974 by a merger between Knight Newspapers, Inc. and Ridder Publications, Inc. Charles Landon Knight
purchased the Akron Beacon Journal in 1903. John S. Knight, who inherited the Beacon Journal from his father in 1933, founded Knight Newspapers. Ridder Publications was founded in 1892 when Herman Ridder acquired the German-language Staats-Zeitung
in New York. Both groups flourished, each taking its stock public in 1969. The 1974 merger created a company with operations coast-to-coast. Knight Ridder was reincorporated in Florida in 1976 and along with its consolidated subsidiaries is referred
to collectively in this Report on Form 10-K as we, our and us.

We are the nations
second-largest newspaper publisher based on circulation, with products in print and online. We publish 31 daily and 53 nondaily newspapers in 28 U.S. markets, with a readership of approximately 9.0 million dailyand 12.7 million on Sunday. Our Internet operations develop and manage our online properties, including Real Cities (www.Realcities.com), the largest national network of city and regional Web sites in more than 105
U.S. markets. The online city sites for markets in which we have newspapers are highly integrated with the related newspaper operations. Financial information about our business segments is provided in Note 5. Business Segments in the
Notes to Consolidated Financial Statements included in this Form 10-K. We also have investments in a variety of Internet and technology companies, and two newsprint companies.

Our executive offices are located at 50 West San Fernando Street, Suite 1500, San Jose, CA 95113, and our telephone number at this address
is (408) 938-7700.



RECENT EVENTS

In February 2004, we completed the acquisition of Alliance Newspapers. Alliance is a group of seven weekly newspapers and one monthly newspaper serving
the area north of Fort Worth in Denton and Northeast Tarrant Counties. Alliance offers total market coverage with circulation of approximately 25,000.

In April 2004, Broad Street Community Newspapers (BSCN) acquired certain assets of the News Star and Publiset. The Star products will help grow BSCNs community newspapers in the Philadelphia
metro area.

In May 2004, Knight Ridder, Gannett Co., Inc. and Tribune Company each acquired a one-third interest in
CrossMedia Services, Inc., a provider of Web-based marketing solutions for national and local retailers. We also acquired the assets of four community newspapers and three shopper publications previously owned by Superior Publishing Corporation. The
acquired newspapers include the (Duluth, MN) Budgeteer News, The (Cloquet, MN) Pine Journal, The Daily Telegram in Superior, WI, and the Lake County News-Chronicle in Two Harbors, MN. The purchase also included the Manneys Shopper zones in
Superior, Cloquet and Two Harbors.

In June 2004, we acquired a 35.6% undiluted ownership interest in CityXpress, a provider
of online auctions for newspapers. The remaining interests are owned by Lee Enterprises, management and employees of CityXpress and other shareholders.

In August 2004, we acquired the assets of The (Flower Mound) Messenger, the leading bi-weekly in the Flower Mound suburb of Fort Worth. The paper is published every two weeks and mailed to
approximately 28,500 households in Flower Mound and the surrounding communities of Highland Village, Copper Canyon, Double Oak and Lantana.

In November 2004, we issued $200 million of 10-year senior notes at a coupon rate of 4.625%. Proceeds were used to reduce the companys outstanding commercial paper.

Also, in November 2004, we announced the following management changes, which became effective on January 1, 2005. Art Brisbane, formerly
president & publisher of The Kansas City Star, and Hilary Schneider, formerly president and CEO of Knight Ridder Digital (KRD), became senior vice presidents of the company. Steve Rossi, formerly president of the Newspaper Division, became the
senior vice president/CFO.



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In February 2005, we acquired the assets of Priceless, LLC, a group of five free-distribution newspapers with a combined daily circulation of
more than 55,000, located in the Peninsula south of San Francisco, CA. The five newspapers are the Palo Alto Daily News, San Mateo Daily News, Redwood City Daily News, Burlingame Daily News and Los Gatos Daily News.

Today, our newspaper sales teams serve the needs of local advertisers by selling a rich mix of media products, including the newspaper,
online, niche publications and direct mail. In the help-wanted arena, the vast majority of recruiters recognize the value of our joint print and online recruitment products in the local marketplace. This reflects the efforts of our sales teams to
integrate print and online and our local sales approach. In the automotive category, we have seen similar gains from a focused sales effort across a portfolio of products, including print, Cars.com and niche publications. We closed 2004 with a 60%
online market share in the important franchise dealer category. Another example of the power of local print and online is CityXpress. Working with this new print/online model, we implemented a unique event auction that drives advertising revenue and
store traffic for participating merchants.

CrossMedia, a provider of Web-based marketing solutions for national and local
retailers, provides online shopping with the ability to use the Web to find items to purchase in stores. CrossMedia, together with our project Catalyst, an online listings platform that offers person-to-person listings for merchandise, pets and
other categories, are important vehicles to develop local opportunities and leverage our core assets in local sales, brands and marketing.

By leveraging our strong sales force with true local relationships and knowledge, and our investments to localize advertising, we are uniquely positioned to serve our advertisers, readers and online users by bringing extensive reach
through our branded print and online products.



NEWSPAPERS

We are the nations second-largest newspaper publisher based on circulation. We have 31 daily and 53 nondaily newspapers in 28
U.S. markets, with a readership of approximately 9.0 million daily and 12.7 million on Sunday.

Approximately 78.0% of our
newspaper operating revenue comes from the sale of newspaper advertising. The newspaper business is seasonal, with the strongest advertising revenue coming in the fourth quarter, followed by the second  and then by the remaining two.

Local management appointed by our executive management in San Jose operates each of our newspapers. Each newspaper manages
its own news coverage, sets its own editorial policies and establishes local business practices. The corporate staff, however, sets the basic business, accounting, financial and reporting policies. The corporate staff also provides editorial
services and quality control.

The company-owned news bureau in Washington, D.C., serves each newspaper. Supplemental news,
graphic and photographic services are provided by Knight Ridder/Tribune.

All of our newspapers compete for advertising and
readers time and attention with broadcast, satellite and cable television, the Internet and other computer services, radio, magazines, suburban newspapers, free shoppers, billboards and direct mail. In some cases, the newspapers also compete
with other newspapers published in nearby cities and towns  particularly in Miami, St. Paul and Fort Worth. In Detroit and Fort Wayne, we have jointoperating agreements with a
second newspaper. Our other newspapers are the only daily and Sunday papers of general circulation published in their communities.

Our newspapers rely on local sales operations for local retail and classified advertising. Our larger newspapers are assisted by our national sales team for retail and national advertising, the Newspaper National Network and by
Newspapers First. Newspapers First, a national advertising sales cooperative, is the primary sales representative for many of our newspapers, many of the leading newspaper groups and several leading independent newspapers. It acts as an interface to
national advertisers across the country. We own 27.5% of the voting stock of Newspapers First. Newspaper National Network, the sales arm of the Newspaper Association of America, was established in 1994 to focus national selling on behalf of the
newspaper industry. It represents all our newspapers and more than 500 others. Like Newspapers First, it offers one-stop shopping and one order, one bill.

The following newspapers are our largest based on revenue:



THE PHILADELPHIA INQUIRER AND PHILADELPHIA DAILY NEWS

Philadelphia Newspapers, Inc. publishes
two of the most respected and nationally acclaimed newspapers in the country: The Philadelphia Inquirer and the Philadelphia Daily News. The Inquirer, Philadelphias largest newspaper, is long renowned for its excellence in reporting and has
won 18 Pulitzer Prizes. The Daily News, the citys second largest paper, is embraced by readers for its in-depth sports coverage, local investigative reporting and editorial flair. Both newspapers are available on the Internet at
www.philly.com.

The primary market area for these two papers spans nine counties throughout southeastern
Pennsylvania and southwestern New Jersey. The Philadelphia region contains more than 2.9 million households, making it the nations fourth-largest Designated Market Area (DMA).



THE MIAMI HERALD AND EL NUEVO HERALD

The Miami Herald Publishing Co. is Floridas largest newspaper company. It publishes The Miami Herald, el Nuevo Herald, in-flight magazines, hotel tourist books, real estate magazines, the Florida Keys Keynoter and The
(Tavernier, FL) Reporter.

The Miami Herald has won 18 Pulitzer Prizes, and it is sold in South Florida. Its International
Edition circulates in the Caribbean basin and is available in most Latin American capitals. El Nuevo Herald, serving the growing number of Spanish readers in South Florida, is one of the largest Spanish-language newspapers in the United States. Both
newspapers are available worldwide through PEPC Worldwide, Newspapers Direct and the Internet at www.herald.com and www.elherald.com.

South Florida, which includes the Miami and Fort Lauderdale metropolitan areas, is one of the top retail markets in the United States. Total retail sales surpassed $57.5 billion in 2004 and on a per
household basis exceeded those of many major markets, including Chicago, Washington, D.C. and New York. Tourism is a major driver of the economy in South Florida, attracting more than 20 million visitors a year from all over the world.



THE KANSAS CITY STAR

The Kansas City Star, founded in 1880 is one of the largest newspapers in the Midwest. The Star has won eight Pulitzer Prizes and serves the Kansas City
metropolitan area,



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encompassing 11 counties in
Missouri and Kansas. The Star is available on the Internet at www.KansasCity.com.



NEWSPRINT

We consumed approximately 641,000 metric tons of newsprint in 2004, excluding newsprint consumed by
Detroit Newspapers (described below). Approximately 13.2% of our total operating expenses during the year were for newsprint. Purchases are made under long-term agreements with 14 newsprint producers, each having one or more newsprint mills. In
2004, we purchased approximately 60.8% of our newsprint consumption from eight mills in the United States, 33.8% from 13 mills in Canada and 5.5% from other offshore sources. We believe that the current sources for newsprint are adequate to meet our
current and foreseeable demand.

Approximately 92% of the newsprint we consumed contained some recycled content. The average
content was 56% recycled fiber, which translates into an overall recycled newsprint average of 52%.

Knight Ridder, Cox
Enterprises and Media General, each owns a third interest in SP Newsprint Co. (SP Newsprint). SP Newsprint is the fifth-largest newsprint manufacturing company in North America. SPs mill in Dublin, GA, produces more than 562,000 metric tons
per year of 100% recycled-content newsprint. Its plant in Newberg, OR, produces more than 396,000 metric tons per year of newsprint with at least 40% of recycled content. SP Newsprint provides recycled-content newsprint to its owners and more than
250 publishers and commercial printers. Its SP Newsprint Recycling Corp. subsidiary recycles more than 1.1 million short tons of recovered material each year.

We also own a 13.5% equity interest in Ponderay Newsprint Company in Usk, WA, which produced more than 260,000 metric tons of newsprint in 2004.

Our ownership in SP Newsprint and Ponderay provides a natural hedge against price volatility for approximately 50% of our newsprint
expense. In 2004, these two companies provided approximately 20% of our total newsprint consumption. We enter into firm purchase commitments annually with these two companies. We estimate these purchase commitments will total approximately $53
million of newsprint in 2005, at current market prices. We have included a hypothetical effect on newsprint expense from a 10% increase in the average price per ton of newsprint under the caption Newsprint, in Item 7A of this report.



SHARED SERVICES

We have a Shared Services Center located in Miami, FL. Through this operation, which reports directly to our corporate headquarters, we have centralized
the maintenance of our financial systems and processing, purchasing and strategic sourcing activities as well as many internal consulting initiatives for all Knight Ridder companies. Centralized purchasing includes commodities such as newsprint,
ink, computers/software, newspaper delivery bags, credit card processing, office supplies, travel, employee relocation and telecommunications.



TECHNOLOGY

We will continue to drive our
systems and technology infrastructure toward the current state of the art, to remain competitive. Expense reduction initiatives helped reducetelecommunications and data transmission costs
while increasing capacity. We continue to enhance the consumer experience and capabilities at KRDs Web sites, including registration and email marketing, enhance online classified capabilities, an improved e-commerce engine, and a new retail
shopping experience provided through CrossMedia Services. Ensuring our systems are compliant with the Sarbanes-Oxley 404 guidelines, where relevant, was a major focus at all our business units.



OWNERSHIP INTERESTS IN MINORITY INTEREST AND UNCONSOLIDATED COMPANIES, JOINT
VENTURES AND PARTNERSHIPS

For strategic and operational reasons, we invest in various companies with ownership percentages ranging from
13.5% to 75%. Following are the more significant investments in unconsolidated companies, joint ventures and partnerships.

Knight Ridder, Tribune and Gannett ownCareerBuilder, LLC,and CrossMedia Services, Inc.in equal parts. CareerBuilder is in the online recruitment and career development business. CrossMedia is a provider of Web-based
marketing solutions for national and local retailers, effectively serving as an advertising and marketing service provider that enables us to localize the Internet. We also own 20.2% of Classified Ventures, a consortium of six newspaper
publishing companies that provides online classified listing services.

We own a 50% equity interest in Detroit
Newspapers, a joint operating agency for Detroit Free Press, Inc., our wholly-owned subsidiary, and The Detroit News, Inc., a wholly-owned subsidiary of Gannett. In 1989, business operations of the Detroit Free Press and The Detroit News were
transferred to Detroit Newspapers under a joint operating agreement that expires in 2089. We show our share of revenue and expenses as a net amount in the Other line, under Operating Revenue in the Consolidated Income Statement. Under
our agreement, we are committed to supply 50% of their annual newsprint requirements. We intend to fulfill this commitment and we have the necessary means and resources available to meet this obligation.

We own a 75% equity interest in the Fort Wayne Newspapers Agency and consolidate the results of its operations. The minority
shareholders interest in the income has been reflected as an expense in the Consolidated Statement of Income in the caption Minority interest in earnings of consolidated subsidiaries. Also included in this caption is a contractual
minority interest resulting from a joint operating agreement that runs through 2021 between The Miami Herald Publishing Co. and Cox Newspapers, Inc., covering the publication of The Miami Herald and The Miami News. The Miami News ceased publication
in 1988.

We own a 49.5% equity interest in the voting stock of the Seattle Times Company, based in Seattle, WA. We
also own a 65% interest in the nonvoting stock of the Seattle Times Company.

We are a one-third partner with Cox
Enterprises and Media General in SP Newsprint Co. (SP Newsprint). SP Newsprint is the

fifth-largest newsprint manufacturing company
in North America. We also own a 13.5% equity interest in Ponderay Newsprint Company in Usk, WA, which produced more than 260,000 metric tons of newsprint in 2004. We account for our investment in Ponderay under the equity



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method, since we exercise
significant influence, as defined by generally accepted accounting principles. We purchase newsprint from these companies. Our investment in these newsprint mills provides a natural hedge for about 50% of our exposure to price changes.

Newspapers First, a national advertising sales cooperative, is the primary sales representative for many of our large
newspapers, many of the leading newspaper groups and several leading independents, as described above. We own 27.5% of the voting stock of Newspapers First.

Knight Ridder/Tribune, a joint venture of Knight Ridder and Tribune, offers stories, graphics, illustrations, photos and paginated pages for print publishers and Web-ready content for online
publishers. All our newspapers, our Washington, D.C. bureau and our foreign bureaus produce Knight Ridder/Tribune editorial material, which is also supplied by a number of other newspapers. The joint venture also includes the NewsCom e-commerce
platform that licenses photos and other editorial material from more than 60 content providers to print, broadcast and other media organizations.



EMPLOYEES

We have approximately 18,000 full
time equivalent employees (FTEs). Approximately 28% are represented by 67 local unions and work under multiyear collective bargaining agreements. Individual newspapers that have one or more collective bargaining agreements are in Akron, Detroit,
Duluth, Fort Wayne, Grand Forks, Kansas City, Lexington, Monterey, Philadelphia, St. Paul, San Jose, State College, Superior and Wichita. These agreements are renegotiated in the years in which they expire. During 2005, there will be negotiations
for new collective bargaining agreements in Grand Forks, Kansas City, Monterey, St. Paul, State College, Superior and Wichita, representing approximately 800 employees.



RISK FACTORS

Credit losses.We extend unsecured credit to most of our customers. We recognize that extending credit and setting appropriate reserves for receivables is largely a subjective decision based on knowledge of the customer and
the industry. Credit exposure also includes the amount of estimated unbilled sales. Credit limits, setting and maintaining credit standards, and managing the overall quality of the credit portfolio is largely decentralized. The level of credit is
influenced by the customers credit history with us and other available information, including industry-specific data.

We maintain a reserve account for estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability
to pay, additional allowances might be required. We use a combination of the percentage-of-sales, specific identification and the aging-of-accounts-receivable methods to establish allowances for losses on accounts receivable. Payment in advance for
some advertising and circulation revenue has assisted us in maintaining historical bad debt losses at less than 1% of revenue.

Newsprint.We consumed approximately 641,000 metric tons of newsprint in 2004, excluding Detroit. This expense represented 13.2% of our 2004 total operating expenses. A sustained increase in newsprint prices could adversely
affect our profitability. Newsprint prices for the past five years have rangedfrom approximately $425 to $625 per metric ton. We anticipate a low double-digit increase in newsprint prices
in 2005.

Debt. By balancing the mix of variable-versus fixed-rate borrowings, we manage the interest-rate risk of
our debt. Note 3. Debt on pages 38 and 39 of this report includes information related to the contractual interest rates and fair value of the individual borrowings. At various times, we have entered into interest rate swap agreements to
manage interest rate exposure in order to achieve a desired proportion of variable-rate versus fixed-rate debt. The fair value of the swaps at December 26, 2004 and December 28, 2003 was $34.2 million and $46.9 million, respectively. As of the end
of fiscal 2004, approximately 60% of our borrowings were variable-rate. We do not trade or engage in hedging for speculative purposes and hedging activities are transacted only with highly rated financial institutions, reducing the exposure to
credit risk.

A hypothetical 50 basis point increase in LIBOR would increase interest expense associated with variable-rate
borrowings by approximately $5.3 million and $4.6 million in 2004 and 2005, respectively. The fair value of our fixed-rate debt and interest rate swaps is sensitive to changes in interest rates. A hypothetical 50 basis points increase in interest
rates would decrease the fair value of the fixed-rate debt and interest rate swaps by $20.8 million in 2005. This change in fair value of debt obligations excludes commercial paper and other short-term variable-rate borrowings, as changes in
interest rates would not significantly affect the fair market value of these instruments.

Senior management.Our
ability to maintain our competitive position is dependent on the services of our senior management team. If we were unable to retain the existing senior management personnel, develop future senior management within our existing ranks or attract
other qualified senior management personnel, our business would be adversely affected.

Employee benefits.Health
insurance costs have increased significantly faster than inflation on an annual basis over the past few years. We also anticipate that in coming years, the cost of health care will continue to escalate, causing an increase to our expenses and
employee contributions. In response to these trends, we have restructured and consolidated our health insurance plans.

Our
pension and other retirement benefit costs have increased in recent years largely due to stock market and interest rate conditions. We will continue to reassess our benefits offering to remain competitive and manage our costs. Under our discussion
of Critical Accounting Policies and Estimates in Item 7, Managements Discussion and Analysis of Financial Condition and Results of Operations, we provide an estimate of the impact from a change in the discount rate used in the valuation of our
pension plans.

Competition and customer consolidation.We are subject to aggressive competition in all areas of our
business. Our newspapers compete for advertising and readers with other newspapers, broadcast, satellite and cable television, the Internet and other computer services, radio, magazines, suburban newspapers, free shoppers, billboards and direct
mail. We could also be adversely affected by continued customer consolidation in the retail and national sectors, where we have experienced increased merger activity.

Circulation.The newspaper publishing industry was widely affected this past year by the enacted do-not-call rules and a series of circulation copy count restatements, which were isolated to
certain other newspaper companies, but affected the credibility



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of our industry. Moreover,
the newspaper publishing industry has experienced difficulty in recent years in sustaining circulation copy and revenue growth. A prolonged decline in circulation copies could have a material effect on the rate and volume of advertising revenue. We
have implemented and strengthened various actions aimed at compliance with industrywide accepted practices in accounting and reporting of circulation copies and revenue. We have also established a companywide circulation and content task force to
find solutions to reverse industry trends.

Self-insurance and deductibles on casualty insurance.We are self-insured
for the majority of our health insurance costs, including claims filed and claims incurred but not reported. We also have deductibles of up to $1 million on various casualty insurance programs, which we have determined to be adequate for the type of
risk. We estimate the liability under our health insurance and casualty programs on an actuarial undiscounted basis using individual case-based valuations and statistical analysis that are based upon judgment and historical experience. The final
cost of many of these claims may not be known for several years, however. We rely on the advice of consulting actuaries and administrators in determining an adequate liability for self-insurance claims. At December 26, 2004 and December 28, 2003,
self-insurance and casualty insurance accruals totaled $72.6 million and $73.2 million, respectively. In connection with our insurance program, letters of credit totaling $56.5 million are required to support certain projected workers
compensation obligations. We continuously review the adequacy of our insurance coverage.



WEB SITE ACCESS TO OUR REPORTS

Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and all amendments to those reports are available free of charge on our Web site, www.kri.com, as soon as reasonably practicable after such reports are electronically filed with or furnished to the Securities and Exchange Commission.

Information regarding corporate governance at Knight Ridder, including our corporate governance principles, code of
business ethics and information regarding our officers, directors and board committees (including our Audit, Compensation, and Nominating and Corporate Governance committee charters) is also available on our Web site. The information on our Web site
is not incorporated by reference into, or as part of, this Report on Form 10-K.



Item 2. Properties

We have newspaper facilities in 28 markets located in 17 states. These facilities vary in
size from 39,300 square feet at State College, PA, to 1.8 million square feet in Philadelphia, PA. In total, they occupy about 11.0 million square feet. Approximately 2.3 million of the square feet are leased from others. All of the owned property
is owned-in-fee. We own substantially all of our production equipment, although certain office equipment is leased. We also own land in Kansas City and Detroit, where new production plants are under construction.

In 2004, we listed for sale certain land adjacent to our facility in Miami. As a condition of the sale, the buyer agrees to provide
parking and truck access sufficient to accommodateour operational needs. The sale of the land is expected to be completed in 2005.

The following table sets forth our principal properties by location:



|                                         |  |                                 |  |        
|---------------------------------------- |  | ------------------------------- |  | -------
|                                         |  | APPROXIMATE AREA IN SQUARE FEET
|                                         |  | OWNED                           |  | LEASED 
|Administration  San Jose, CA            |  |                                 |  | 43,506 
|                                         |  |                                
|Publishing, including printing plants,   |  |                                 |  |        
|distribution centers, business           |  |                                 |  |        
|and editorial offices, and warehouse     |  |                                 |  |        
|space located in:                        |  |                                 |  |        
|Akron, OH                                |  | 332,912                         |  | 129,939
|Charlotte, NC                            |  | 465,240                         |  | 151,755
|Columbia, SC                             |  | 245,000                         |  | 34,875 
|Contra Costa, CA                         |  | 362,388                         |  | 69,260 
|Detroit, MI                              |  | 1,296,594                       |  | 506,132
|Fort Worth, TX                           |  | 841,613                         |  | 62,691 
|Kansas City, MO                          |  | 358,499                         |  | 192,126
|Lexington, KY                            |  | 254,958                         |  | 30,500 
|Miami, FL                                |  | 811,877                         |  | 342,488
|Philadelphia, PA                         |  | 1,501,011                       |  | 324,449
|San Jose, CA                             |  | 410,000                         |  | 161,670
|St. Paul, MN                             |  | 301,678                         |  | 137,711
|Washington, DC                           |  |                                 |  | 26,671 
|Internet Operations  KRD  San Jose, CA |  | -                               |  | 65,507 

* Expiration of leases range from 2005 to 2051.



Our facilities are maintained in good condition and are suitable for current
and foreseeable operations. During the three years ended December 26, 2004, we spent $260.5 million (excluding Detroit) for additions to property, plant and equipment.



Item 3. Legal Proceedings

Knight Ridders wholly-owned subsidiary, MediaStream, Inc.
(MediaStream), was named as one of a number of defendants in two separate class action lawsuits that have been consolidated with one other similar lawsuit by the Judicial Panel on Multi-District Litigation under the caption In re
Literary Works in Electronic Databases Copyright Litigation, M.D.L. Docket No. 1379 (the Multi-District Litigation). The two lawsuits originally filed against MediaStream in September 2000 were: The Authors Guild, Inc. et al. v.
The Dialog Corporation et al., andPosner et al. v. Gale Group Inc. et al. These lawsuits were brought by or on behalf of free-lance authors who allege that the defendants have infringed plaintiffs copyrights by making
plaintiffs works available on databases operated by the defendants. The plaintiffs are seeking to be certified as class representatives of all similarly situated free-lance authors. In the Multi-District Litigation, plaintiffs seek actual
damages, statutory damages and injunctive relief, among other remedies.

The two lawsuits were initially stayed pending
disposition by the U.S. Supreme Court of New York Times Company et al.v. Tasini et al., No. 00-21. On June 25, 2001, the Supreme Court ruled that the defendants in Tasini did not have a privilege under Section 201 of the Copyright Act
to republish articles previously appearing in print publications absent the authors separate permission for electronic republication. The judge has ordered the parties in the Multi-District Litigation to



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try to resolve the claims
through mediation, which commenced November 2001, and the parties have agreed to a limited stay to respond to the complaint during such mediation, which may be terminated by the plaintiffs upon 30-days prior written notice. In September 2001, the
plaintiffs submitted an amended complaint, which named Knight Ridder as an additional defendant and made reference to Knight Ridder Digital.

Settlement discussions that originally commenced during the mediation are continuing, and plaintiffs and defendants in the Multi-District Litigation are in the process of obtaining and exchanging signatures to a proposed
settlement agreement. In the event that the foregoing parties are unable to finally settle this matter and the litigation resumes, Knight Ridder and MediaStream intend to contest liability and vigorously defend their positions in the litigation,
including opposing class certification. In addition, MediaStream has indemnity agreements from various content providers supplying articles to MediaStreams databases that could mitigate its potential exposure. If the settlement agreement is
not finally concluded and the litigation resumes, there can be no assurance that we willprevail in the above legal proceedings and management cannot estimate the exposure if we do not
prevail. In such case, a ruling against us in the proceedings described above may have a material adverse effect on our financial condition and results of operation. In addition to the matters described above, we are also involved in litigation and
administrative proceedings, primarily libel and copyright infringement actions, bankruptcy proceedings involving the companys advertisers, and environmental and other legal proceedings that have arisen in the ordinary course of business. In
the opinion of management, except as set forth above, our liability, if any, under any other pending litigation or administrative proceedings, will not materially affect our consolidated financial position or results of operations.



Item 4. Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of shareholders
through the solicitation of proxies or otherwise during the fiscal quarter ended December 26, 2004.



PART II



Item 5. Market for Registrants Common Equity and Related Stockholder Matters

Our common stock is listed
on the New York Stock Exchange (NYSE) under the symbol KRI. Our stock is also traded onexchanges in Philadelphia, Chicago, Boston, San Francisco, Los Angeles and Cincinnati and through
the Intermarket Trading System. Options are traded on the Philadelphia Exchange.



COMMON STOCK MARKET PRICE AND DIVIDENDS

The average daily stock trading volume for the years 2004 and 2003 was
422,000 and 429,000 shares, respectively. The following table presents the high and low sales price of our common stock (as reported by the NYSE) and the cash dividends declared on our common stock by fiscal quarter for the two most recent fiscal
years:



|            |  |      |       |      |   |           |  |      |       |      |   |           |  |   |       |  |   |     
|----------- |  | ---- | ----- | ---- | - | --------- |  | ---- | ----- | ---- | - | --------- |  | - | ----- |  | - | ----
|            |  |      |       | 2004 |   |           |  |      |       | 2003 |   |          
|            |  |      |       |      |   | CASH      |  |      |       |      |   | CASH     
|            |  |      |       |      |   | DIVIDENDS |  |      |       |      |   | DIVIDENDS
|            |  | HIGH |       | LOW  |   | DECLARED  |  | HIGH |       | LOW  |   | DECLARED 
|1st Quarter |  | $    | 78.19 |      | $ | 71.96     |  | $    | 0.320 |      | $ | 67.72     |  | $ | 58.63 |  | $ | 0.27
|2nd Quarter |  |      | 80.00 |      |   | 71.96     |  |      | 0.320 |      |   | 71.06     |  |   | 58.50 |  |   | 0.27
|3rd Quarter |  |      | 73.49 |      |   | 62.24     |  |      | 0.345 |      |   | 70.45     |  |   | 65.86 |  |   | 0.32
|4th Quarter |  |      | 71.07 |      |   | 64.96     |  |      | 0.345 |      |   | 76.49     |  |   | 66.22 |  |   | 0.32



During the fiscal
years ended 2004 and 2003, we paid $103.6 million and $94.9 million, respectively, in cash dividends. We expect to continue our policy of paying regular cash dividends, although there is no assurance as to future dividends because they are dependent
on future earnings, capital requirements and financial condition.

As of February 25, 2005, we had 75.5 million shares
outstanding, net of treasury stock, which were held in all 50 states by 8,393 shareholders of record. The closing price of our common stock on February 25, 2005, was $65.79 as reported by the NYSE.



6



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PURCHASES OF EQUITY SECURITIES

On July 27, 2004, the Board of Directors approved the repurchase of up to 6 million shares of our common stock. The following sets
forth our common stock repurchases, both open market and private transactions, for the fourth quarter of 2004:



|                                   |  |              |  |                |       |                     |           |                  |          
|---------------------------------- |  | ------------ |  | -------------- | ----- | ------------------- | --------- | ---------------- | ---------
|                                   |  |              |  |                |       | TOTAL NUMBER OF     |           | MAXIMUM         
|                                   |  |              |  |                |       | SHARES PURCHASED    |           | NUMBER OF SHARES
|                                   |  | TOTAL NUMBER |  |                |       | AS PART OF PUBLICLY |           | THAT MAY YET BE 
|                                   |  | OF SHARES    |  | AVERAGE PRICE  |       | ANNOUNCED           |           | PURCHASED UNDER 
|FISCAL PERIOD                      |  | PURCHASED    |  | PAID PER SHARE |       | PROGRAM             |           | THE PROGRAM     
|September 27 through October 31    |  | 68,000       |  | $              | 67.30 |                     | 68,000    |                  | 5,845,300
|November 1 through November 28     |  | 76,000       |  |                | 69.46 |                     | 76,000    |                  | 5,769,300
|November 29 through December 26(1) |  | 861,923      |  |                | 66.20 |                     | 856,000   |                  | 4,913,300
|Total                              |  | 1,005,923    |  |                |       |                     | 1,000,000 |                  |          

(1) In December 2004, we repurchased 738,000 shares of our common stock pursuant to a contract, which will
settle within nine months from the purchase date. The estimated cost of repurchasing the shares was paid in advance. We pay based on the closing price as reported by the NYSE at the beginning of the contract and the difference between that price and
the volume weighted-average price (VWAP) over the life of the contract is settled at the end of the contract period in cash or shares, at our option (limited to the number of shares multiplied by the change in share price). Had we settled as of
December 26, 2004, we would have received $4.7 million, or 71,202 shares of our common stock.



Outside of the stock repurchase program, we acquired 5,923 shares of our common stock in 2004 with an aggregate cost of $397,848 and an average price of $67.17 per share as a result of certain stock
options exercised. The difference between the aggregate market value of the options exercised and the exercise value of the options was recorded in additional capital. The difference in the aggregate market value of the repurchased shares and the
exercise price of the options was recorded in treasury stock in the accompanying Consolidated Balance Sheet.



COMMON STOCK GRANTS

During the fiscal years ended 2004, 2003 and 2002, we issued 4,739 shares,
5,429 shares and 4,666 shares, respectively, of our common stock to our nonemployee directors pursuant to an annual retainer fee payable half in common stock and half in cash or common stock, at a directors election.

For information regarding our equity compensation plans, please refer to Item 12  Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters, and Note 6, Capital Stock in our consolidated financial statements, included in this report.



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Item 6. Selected Financial Data



5YEAR FINANCIAL HIGHLIGHTS

The following information was compiled from our audited consolidated financial
statements. The accompanying consolidated financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 26, 2004 should be read to obtain a better understanding of
this information. Amounts are in thousands, except per share data, ratios and 5-year compounded annual growth rate (1999  2004 CAGR).



|                                                                                                       |  |          |   |  |         |           |   |  | 
|------------------------------------------------------------------------------------------------------ |  | -------- | - |  | ------- | --------- | - |  | 
|                                                                                                       |  | 5-year   |   |  | Dec. 26 |           |   | 
|SUMMARY OF OPERATIONS                                                                                  |  | CAGR (%) |   |  | 2004    |           |   | 
|Operating Revenue                                                                                      |  |          |   |  |         |           |   |  | 
|Advertising                                                                                            |  | 0.0      | % |  | $       | 2,351,028 |   |  | 
|Circulation                                                                                            |  | 0.7      |   |  |         | 543,933   |   |  | 
|Other                                                                                                  |  | (5.1     | ) |  |         | 119,188   |   |  | 
|Total Operating Revenue                                                                                |  | (0.1     | ) |  |         | 3,014,149 |   |  | 
|Operating Costs                                                                                        |  |          |   |  |         |           |   |  | 
|Labor and employee benefits                                                                            |  | 0.9      |   |  |         | 1,207,376 |   |  | 
|Newsprint, ink and supplements                                                                         |  | (1.9     | ) |  |         | 396,075   |   |  | 
|Other operating costs                                                                                  |  | 2.5      |   |  |         | 724,773   |   |  | 
|Depreciation and
amortization(6)                                                                       |  | (11.3    | ) |  |         | 100,685   |   |  | 
|Total Operating Costs                                                                                  |  | 0.1      |   |  |         | 2,428,909 |   |  | 
|Operating Income                                                                                       |  | (1.2     | ) |  |         | 585,240   |   |  | 
|Interest expense, net                                                                                  |  | (10.9    | ) |  |         | (54,596   | ) |  | 
|Other, net                                                                                             |  | (7.8     | ) |  |         | (29,350   | ) |  | 
|Income taxes                                                                                           |  | (5.2     | ) |  |         | (175,051  | ) |  | 
|Income before cumulative effect of change in accounting                                                |  |          |   |  |         |           |   |  | 
|principle of unconsolidated
company                                                                    |  | (0.8     | ) |  |         | 326,243   |   |  | 
|Cumulative effect of change in
accounting principle of unconsolidated company, net of taxes(7)         |  |          |   |  |         |           |   |  | 
|Net Income                                                                                             |  | (0.8     | ) |  | $       | 326,243   |   |  | 
|Operating income
margin(8)                                                                             |  |          |   |  |         | 19.4      | % |  | 
|SHARE DATA                                                                                             |  |          |   |  |         |           |   |  | 
|Basic weighted-average number of
shares                                                                |  |          |   |  |         | 77,910    |   |  | 
|Diluted weighted-average number of
shares                                                              |  |          |   |  |         | 78,950    |   |  | 
|Earnings per share                                                                                     |  |          |   |  |         |           |   |  | 
|Basic:     Income
before cumulative effect of change in accounting principle of unconsolidated company |  | 0.6      |   |  | $       | 4.19      |   |  | 
|Cumulative effect of change in accounting principle of
unconsolidated company(7)                       |  |          |   |  |         |           |   |  | 
|Net income                                                                                             |  | 0.6      |   |  |         | 4.19      |   |  | 
|Diluted:  Income before cumulative
effect of change in accounting principle of unconsolidated company  |  | 3.4      |   |  |         | 4.13      |   |  | 
|Cumulative effect of change in accounting principle of
unconsolidated company(7)                       |  |          |   |  |         |           |   |  | 
|Net income                                                                                             |  | 3.4      |   |  |         | 4.13      |   |  | 
|Dividends declared per common
share                                                                    |  | 8.4      |   |  |         | 1.33      |   |  | 
|Common stock price:
High                                                                               |  |          |   |  |         | 78.48     |   |  | 
|Low                                                                                                    |  |          |   |  |         | 62.18     |   |  | 
|Close                                                                                                  |  |          |   |  |         | 66.29     |   |  | 
|Price/earnings
ratio(9)                                                                                |  |          |   |  |         | 16.1      |   |  | 
|OTHER FINANCIAL DATA                                                                                   |  |          |   |  |         |           |   |  | 
|Number of shares repurchased                                                                           |  |          |   |  |         | 4,287     |   |  | 
|Cost                                                                                                   |  |          |   |  | $       | 305,636   |   |  | 
|Payment of cash
dividends                                                                              |  |          |   |  | $       | 103,617   |   |  | 
|At year end                                                                                            |  |          |   |  |         |           |   |  | 
|Total assets                                                                                           |  |          |   |  | $       | 4,222,278 |   |  | 
|Total debt                                                                                             |  |          |   |  |         | 1,497,907 |   |  | 
|Shareholders equity                                                                                   |  |          |   |  |         | 1,447,156 |   |  | 
|Return on average shareholders
equity(10)                                                             |  |          |   |  |         | 22.2      | % |  | 
|Total debt/total capital ratio                                                                         |  |          |   |  |         | 50.9      | % |  | 



8



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| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  | ------- | --------- | - | ------- | - | --------- | ------- |  | - | ---------- | - |  | - | --------- | -
| |  | Dec. 28 |           |   | Dec. 29 |   |           | Dec. 30 |  |   | Dec. 31    |  
| |  | 2003(1) |           |   | 2002(2) |   |           | 2001(3) |  |   | 2000(4)(5) |  
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  | $       | 2,280,322 |   |         | $ | 2,255,883 |         |  | $ | 2,290,335  |   |  | $ | 2,547,496 |  
| |  |         | 559,234   |   |         |   | 572,973   |         |  |   | 594,726    |   |  |   | 605,074   |  
| |  |         | 106,435   |   |         |   | 97,979    |         |  |   | 97,565     |   |  |   | 140,415   |  
| |  |         | 2,945,991 |   |         |   | 2,926,835 |         |  |   | 2,982,626  |   |  |   | 3,292,985 |  
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  |         | 1,176,627 |   |         |   | 1,124,484 |         |  |   | 1,177,554  |   |  |   | 1,220,221 |  
| |  |         | 383,099   |   |         |   | 353,331   |         |  |   | 440,782    |   |  |   | 460,463   |  
| |  |         | 706,217   |   |         |   | 718,963   |         |  |   | 717,962    |   |  |   | 755,932   |  
| |  |         | 112,441   |   |         |   | 124,695   |         |  |   | 184,573    |   |  |   | 187,597   |  
| |  |         | 2,378,384 |   |         |   | 2,321,473 |         |  |   | 2,520,871  |   |  |   | 2,624,213 |  
| |  |         | 567,607   |   |         |   | 605,362   |         |  |   | 461,755    |   |  |   | 668,772   |  
| |  |         | (70,794   | ) |         |   | (74,969   | )       |  |   | (100,833   | ) |  |   | (116,652  | )
| |  |         | (33,799   | ) |         |   | (81,723   | )       |  |   | (53,523    | ) |  |   | (26,830   | )
| |  |         | (166,943  | ) |         |   | (166,943  | )       |  |   | (122,575   | ) |  |   | (210,927  | )
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  |         | 296,071   |   |         |   | 281,727   |         |  |   | 184,824    |   |  |   | 314,363   |  
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  |         |           |   |         |   | (24,279   | )       |  |   |            |   |  |   |           |  
| |  | $       | 296,071   |   |         | $ | 257,448   |         |  | $ | 184,824    |   |  | $ | 314,363   |  
| |  |         | 19.3      | % |         |   | 20.7      | %       |  |   | 15.5       | % |  |   | 20.3      | %
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  |         | 80,401    |   |         |   | 83,066    |         |  |   | 76,074     |   |  |   | 75,370    |  
| |  |         | 81,477    |   |         |   | 84,726    |         |  |   | 85,694     |   |  |   | 89,105    |  
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  |         |           |  
| |  | $       | 3.68      |   |         | $ | 3.39      |         |  | $ | 2.33       |   |  | $ | 4.02      |  
| |  |         |           |  
| |  |         |           |   |         |   | (0.29     | )       |  |   |            |   |  |   |           |  
| |  |         | 3.68      |   |         |   | 3.10      |         |  |   | 2.33       |   |  |   | 4.02      |  
| |  |         |           |  
| |  |         | 3.63      |   |         |   | 3.33      |         |  |   | 2.16       |   |  |   | 3.53      |  
| |  |         |           |  
| |  |         |           |   |         |   | (0.29     | )       |  |   |            |   |  |   |           |  
| |  |         | 3.63      |   |         |   | 3.04      |         |  |   | 2.16       |   |  |   | 3.53      |  
| |  |         | 1.18      |   |         |   | 1.02      |         |  |   | 1.00       |   |  |   | 0.92      |  
| |  |         | 76.49     |   |         |   | 70.20     |         |  |   | 65.17      |   |  |   | 59.81     |  
| |  |         | 58.50     |   |         |   | 51.35     |         |  |   | 52.02      |   |  |   | 44.13     |  
| |  |         | 76.09     |   |         |   | 61.77     |         |  |   | 65.17      |   |  |   | 56.88     |  
| |  |         | 21.0      |   |         |   | 20.3      |         |  |   | 30.2       |   |  |   | 16.1      |  
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  |         | 4,322     |   |         |   | 4,034     |         |  |   | 2,994      |   |  |   | 9,049     |  
| |  | $       | 289,194   |   |         | $ | 257,101   |         |  | $ | 171,795    |   |  | $ | 464,835   |  
| |  | $       | 94,937    |   |         | $ | 84,832    |         |  | $ | 84,198     |   |  | $ | 81,002    |  
| |  |         |           |   |         |   |           |         |  |   |            |   |  |   |           |  
| |  | $       | 4,190,026 |   |         | $ | 4,164,658 |         |  | $ | 4,213,376  |   |  | $ | 4,243,526 |  
| |  |         | 1,453,560 |   |         |   | 1,502,105 |         |  |   | 1,623,587  |   |  |   | 1,672,272 |  
| |  |         | 1,489,245 |   |         |   | 1,461,479 |         |  |   | 1,560,288  |   |  |   | 1,541,470 |  
| |  |         | 20.1      | % |         |   | 18.6      | %       |  |   | 11.9       | % |  |   | 18.9      | %
| |  |         | 49.4      | % |         |   | 50.7      | %       |  |   | 51.0       | % |  |   | 52.0      | %







Notes to Selected Financial Data

Certain amounts presented as retail revenue in prior years have been reclassified as national revenue to conform to the 2004 presentation. We made this change in
the second quarter of 2004 to make our reporting consistent with peer newspaper companies. Additionally, certain amounts presented in the 2003 Consolidated Balance Sheet have been reclassified to conform to the 2004 presentation, specifically
related to the Annual Incentive Deferral Plan and to Pension assets and Employee benefits.

|(1) | In 2003, we wrote-off $1.6 million representing the remaining balance of our cost basis Internet-related investments, as an other-than-temporary decline.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | In 2002, we recorded pre-tax charges totaling $25.5 million related to our investment in CareerBuilder. The charges were for the relocation of offices and abandonment of
certain assets ($7.5 million) and $18.0 million for the conversion of CareerBuilder from a corporation into a limited liability company. We sold our stock in MatchNet plc, and recorded a pre-tax loss of $4.3 million. Additionally, we recorded
other-than-temporary declines in a number of other cost basis Internet-related investments of $3.1 million pre-tax.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | In 2001, we had a $78.5 million pre-tax restructuring charge relating to a work force reduction program. Also in this year, we sold our holdings in InfoSpace, Inc.,
AT&T, Webvan Group, Inc. and other smaller Internet-related investments at a pre-tax loss of $11.9 million. We recorded other-than-temporary declines in a number of other cost basis Internet-related investments of $16.1 million pre-tax.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | We report on a fiscal year ending on the last Sunday in the calendar year. Results for each of the fiscal years presented are for 52 weeks, except for the year ended 2000,
which includes 53 weeks.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Beginning in 2000, certain newspaper delivery costs, which were previously reported as contra-revenue, were reclassified to other operating costs consistent
  with the provisions of EITF 99-19. Accordingly, the 5-year compound annual growth rate for circulation revenue, calculated from 1999 as the base year, is   not meaningful as the 1999 amount is not comparable to the 2000 through
2004 amounts.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Beginning in 2002, we discontinued the amortization of goodwill and indefinite-lived intangible assets under the provisions of Statement of Financial
  Accounting Standard (SFAS) 142.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | The cumulative effect of change in accounting principle in 2002 relates to the implementation of SFAS 142  Goodwill and Other Intangible Assets by our
  equity method investee, CareerBuilder.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Operating income margin is defined as Operating Income divided by Total Operating Revenue.
|--- | ------------------------------------------------------------------------------------------

|(9) | Price/earnings ratio is computed by dividing the closing market price as reported by the NYSE by diluted earnings per share.
|--- | ----------------------------------------------------------------------------------------------------------------------------

|(10) | Return on average shareholders equity is computed by dividing net income before the cumulative effect of change in accounting principle in 2002. Average
shareholders equity is the average of shareholders equity on the first day and the last day of the fiscal year.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations

The
following discussion should be read in conjunction with Item 6. Selected Financial Data, and with the consolidated financial statements that appear elsewhere in this Form 10-K.

Certain amounts presented as retail revenue in prior years have been reclassified as national revenue to conform to the 2004 presentation.
We made this change in the second quarter of 2004 to make our reporting consistent with peer newspaper companies. Additionally, certain amounts presented in the 2003 Consolidated Balance Sheet have been reclassified to conform to the 2004
presentation, specifically related to the Annual Incentive Deferral Plan and to Pension assets and Employee benefits.



GLOSSARY OF TERMS

The following defined terms
are used in our Managements Discussion and Analysis of Financial Condition and Results of Operations.

Classified Locally placed advertisements listed together and organized by category, such as real estate sales, employment opportunities or automobile sales, and display-type advertisements in these same categories.

Content SyndicationRevenue generated from the distribution of news and other content by third-party providers.

Full-runAdvertising appearing in all editions of a newspaper.

Home DeliveryCirculation newspapers sold by subscription and delivered to a specific address.

LinageA measure of the volume of space sold as newspaper advertising; refers to the number of column-inches in a six-column
newspaper layout.

National Display advertising by national advertisers that promotes products or brand names on a
nationwide basis.

News Hole The portion of the newspaper designated for editorial and news content.

Newspaper In Education (nie) A newspaper-sponsored program that recruits business sponsors to underwrite the cost of
providing, at a discounted price, papers to be used in classrooms. Many programs also offer teacher training, ready-made curriculum and special-topic sections geared to particular age groups.

Part-run Advertising appearing in select editions or zones of a newspapers market. Part-run advertising is translated into
full-run equivalent linage (also referred to as factored) based on the ratio of the circulation in a particular zone to the total circulation of a newspaper.

Preprint Advertising supplements prepared by advertisers and inserted into a newspaper.

Recruitment PackagesSpecial help wanted advertising packages, often combining print and online, which offer a variety of features: in-newspaper advertisements, expanded listings on the Web,
online or by-telephone job applications and screening of résumés.

Retail Display advertising
from local merchants, such as department and grocery stores, selling goods and services to the public.

Run-Of-Press
(ROP) All advertising printed on our presses and appearing within a newspaper.

Single Copy Circulation
Newspapers sold by street vendors, in news racks or at stores and other businesses.

Supplements (as in Newsprint,
Ink and Supplements) All special sections purchased for distribution in the newspaper, including TV books and Sunday magazines and comics.

Total Market Coverage Products (TMC) Advertising material packaged, often in special printed covers (also known as jackets) for delivery to non-subscribing households; especially appealing to advertisers who want high
household penetration in specific neighborhoods, ZIP codes or zones.

Unique Visitors Number of persons who visited a
Web site or network of sites at least once in the month. Visitors to multiple Web sites in a network in a given month are counted only once as a unique visitor for that network. In separate individual Web site totals, they are counted once as a
unique visitor for each site visited.

UpsellIncremental advertising sold in conjunction with another product, such
as primarily newspaper ads republished on the Web for an additional charge. An example of an upsell is a recruitment newspaper ad that is packaged with an online job posting.

Verticals All the advertising in print and online in a category (for example, recruitment, automotive or real estate). A variety of
advertising products are offered within each vertical, including print classified listings and upsells to enhanced services, such as expanded information online, résumé databases or job fairs.

Web Width The width of the rolls of newsprint used on a printing press, which affects newsprint consumption.

ZoningDefining newspaper delivery areas in a way that allows customers to purchase advertising to be distributed only within a
specified geographic area; zoned ads cost less than full-run advertising and are particularly attractive to businesses that draw their customers from specific neighborhoods. See Part-Run.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES

General. Managements discussion and analysis of the financial condition and results of operations are based upon the consolidated financial
statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenue and expenses, cash flows and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to incentives, bad debts, inventories, investments, intangible
assets, income taxes, financing arrangements, restructurings, long-term service contracts, pensions and other postretirement benefits, and contingencies and litigation. We base our estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

We have identified the following accounting policies as critical
to our business operations and the understanding of our results of operations. Refer to the Notes to the Consolidated Financial Statements included in Part IV, Item 15 of this Form 10-K, for a detailed description of our accounting policies.

Revenue recognition. Revenue recognition varies by source. Advertising revenue is recognized when advertisements are
published. Circulation revenue is recognized when the newspaper is delivered to the customer. Other revenue is recognized when



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the related product or
service has been delivered. Revenue is recorded net of estimated incentive offerings, including special pricing agreements, promotions and other volume-based incentives. Revisions to these estimates are charged to income in the period in which the
facts that give rise to the revision become known.

Allowance for bad debts. We maintain a reserve account for
estimated losses resulting from the inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be
required. We use a combination of the percentage-of-sales, specific identification and the aging-of-accounts-receivable methods to establish allowances for losses on accounts receivable. Payment in advance for some advertising and circulation
revenue and credit background checks, have assisted us in maintaining historical bad debt losses of less than 1% of revenue.

Barter Transactions. We enter into barter transactions with other businesses and we exchange our advertising and circulation for advertising products and distribution rights for our newspapers. We also donate space to
nonprofit organizations as part of our community outreach commitment. The barter transactions, typically with terms of one year or less, are valued at fair market value based on our advertising rates for the particular type of advertisement.

At December 26, 2004, we had approximately $9.5 million of future media advertisement, products and services arising from
bartered transactions in net accounts receivable, which will be charged to expense as they are used. We also have as of year end $20.6 million in deferred advertising and circulation revenue arising from bartered transactions, which will be recorded
as revenue when the advertisements are published and/or the copies are delivered, respectively. During the fiscal years ended 2004, 2003 and 2002, we recognized $15.1 million, $8.9 million and $6.2 million, respectively, in bartered advertising and
circulation revenue.

We periodically assess the recoverability of our barter credits and receivables. Factors considered in
evaluating recoverability include managements plans with respect to advertising, circulation and other expenditures for which barter credits and receivables can be used. Any impairment losses are charged to operations, as they are determined.

Equity and cost method investment valuation and accounting. We hold minority interests in companies having
operations or technology in areas within our strategic focus and we record these investments at cost. We record an investment impairment charge when we believe an investment has experienced a decline in value that is other than temporary. Future
adverse changes in market conditions or poor operating results of underlying investments could result in losses or an inability to recover the carrying value of the investments. In these cases, an impairment charge could be required in the future.

Goodwill and Other Identified Intangible Asset Impairment. Goodwill and other identified intangible assets arising
from our acquisitions are subjected to periodic review for impairment. SFAS No. 142 requires an annual evaluation at the reporting unit level of the fair value of goodwill and compares the calculated fair value of the reporting unit to its book
value to determine whether an impairment has occurred.Impairment is the condition that exists when the carrying amount of goodwill or other identified intangible asset exceeds its implied
fair value. Any impairment charge would be based on the most recent estimates of the recoverability of the recorded goodwill and intangibles balances. If the remaining book value assigned to goodwill and other intangible assets acquired in an
acquisition is higher than the amounts we currently would expect to realize based on updated financial and cash flow projections from the reporting unit, we would write down these assets. We also record our share of impairment charges recorded by
our equity method investees. No impairment charges have been recorded to date relating to goodwill and other identified intangibles, except for an impairment recorded in 2002 for CareerBuilder, one of our equity method investee.

Pension and postretirement benefits. We have significant pension and postretirement benefit costs and credits that are developed
from actuarial valuations. These valuation assumptions include health care cost trend rates, salary growth, long-term return on plan assets, discount rates and other factors. Our health care cost trend assumptions are developed based on historical
cost data, the near-term outlook and an assessment of likely long-term trends. The salary growth assumptions reflect our long-term actual experience and future and near-term outlook. Long-term return on plan assets is determined based on historical
results of the portfolio and managements expectation of the current economic environment. The discount rate assumption is based on current investment yields on AA-rated corporate long-term bond yields. Actual results that differ from these
assumptions are accumulated and amortized over the future life of the plan participants. For an explanation of these assumptions, see Note 10. Pension and Other Postretirement Benefit Plans on pages 45 through 48. While we believe that
the assumptions used are appropriate, significant differences in actual experience or significant changes in assumptions would affect the pension and other postretirement benefits costs and obligations.

Self-insurance and deductibles on casualty insurance.We are self-insured for the majority of our health insurance costs, including
claims filed and claims incurred but not reported. We also have deductibles of up to $1 million on various casualty insurance programs, which we have determined to be adequate for the type of risk. We estimate the liability under our health
insurance and casualty programs on an actuarial undiscounted basis using individual case-based valuations and statistical analysis and are based upon judgment and historical experience; however, the final cost of many of these claims may not be
known for several years. We also rely on the advice of consulting actuaries and administrators in determining an adequate liability for self-insurance claims. At December 26, 2004 and December 28, 2003, self-insurance and casualty insurance accruals
totaled $72.6 million and $73.2 million, respectively. In connection with our insurance program, letters of credit totaling $56.5 million are required to support certain projected workers compensation obligations. We continuously review the
adequacy of our insurance coverage.

Income taxes. Income taxes are accounted for in accordance with SFAS 109
 Accounting for Income Taxes,which



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requires the liability
method of accounting for income taxes whereby deferred income taxes are recorded for the future tax consequences attributable to differences between the financial statement and tax bases of assets and liabilities. Deferred tax assets and liabilities
are determined using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Deferred tax assets and liabilities are revalued to reflect new tax rates in the period changes are
effective.

We file a federal consolidated income tax return and state consolidated, combined or separate income tax returns
depending upon state requirements. Each of these filing jurisdictions may audit the tax returns filed and propose adjustments. We maintain a liability to cover the cost of additional tax exposures on the filing of federal and state income tax
returns. Adjustments arise from a variety of factors, including different interpretation of statutes and regulations.

Legal. We are involved in certain claims and litigation related to our operations, including ordinary routine litigation incidental to our business. See Note 13. Commitments and Contingencies on pages 49 through 51
for further information. Our management reviews and determines which liabilities, if any, arising from these claims and litigation could have a material adverse effect on our consolidated financial position, liquidity, results of operations or
properties. Management assesses the likelihood of any adverse judgments or outcomes as well as potential ranges of probable losses. Determination of the amount of reserves required for these contingencies is made after analysis and discussion with
legal counsel.

Commitments and contingencies.We have ongoing purchase commitments with SP Newsprint and Ponderay,
our two newsprint mill investments. These future commitments are for the purchase of a minimum of $37.9 million and $15.8 million of newsprint in 2005 with SP Newsprint and Ponderay, respectively, at current market prices. We also have a sales
commitment with Detroit Newspapers to supply 50% of their newsprint requirements, which in 2005 will be approximately $24.8 million. We have the resources necessary to fulfill these commitments in 2005.



BUSINESS SUMMARY

We report two operating business segments: Newspaper and Online. The Newspaper segment represented 96.2% of total operating revenue. Advertising revenue within this segment represented 74.5% of total
operating revenue. Retail, Classified and National advertising revenue represented 46.3%, 36.9% and 16.8%, respectively, of total advertising revenue. Circulation revenue comprised 18.0% of total operating revenue. For further information, please
refer to Note 5. Business Segments under the Consolidated Financial Statements contained in this report.

Advertising revenue is primarily determined by the linage, rate and mix of advertisement. The advertising rate depends largely on our market reach, primarily through circulation, and competitive factors. Circulation revenue is based
on the number of copies sold and the subscription rate charged to customers.

Our overall circulation makes us the second
largest newspaper company in the United States. We operate in several large metropolitan areas, and ours are the leading newspapers in most of the locations we serve.

To expand our core revenue sources we launched a Revenue Task Force in 2003 to identify new sources of revenue. We have been implementing those initiatives that we believe best fit ourstrategy and have the highest return. We focused on the following areas: national, automotive and help wanted, sales force staffing, paid content, niche publications, retail majors and ROP zoning. We
also established a national marketing group in response to the rapidly evolving retail and national environments. Together, these initiatives added over $55 million of advertising revenue in 2004.

From 2001 through 2003, our larger markets were particularly hard hit in the classified employment category, the result of the nationwide
downturn in hiring. In 2004, classified employment revenue was up 12.5%. The major increases compared to 2003 were in Contra Costa 23.1%, St. Paul 20.8%, San Jose 17.5%, Miami 13.5% and Fort Worth 13.4%.

Our Retail category increased 1.2% compared to last year. Department store advertising was soft. Traditional department stores, like
Macys and Dillards face strong competition from large department stores and they are working hard to realign and redefine their business strategies.

National advertising increased 2.9% compared to the prior year. The largest increase was in telecommunications, up 2.9% for the year. Telecommunications was up 20.4% in 2003 and its only real strength
was a 7.4% increase in the fourth quarter of 2004. National auto, the second largest segment, was up slightly. Entertainment, computers, airlines and travel were soft. Pharmaceuticals, a relatively small segment, was up 90.2%.

During 2005, we expect advertising revenue to grow in the mid single digits, with half of this increase coming from core business and the
other half from new initiatives. We expect national and classified revenue to be somewhat stronger than retail revenue. Retail revenue is generally healthy, with the exception of department stores. National revenue continues to be solid. Classified
revenue assumes some rebound in auto revenue and sustained strength in employment and real estate revenue.

In recent years,
many newspapers nationwide have experienced declines in circulation copies. Increased competition, particularly from the Internet, has caused the decline in copies. We have increased discounting as a primary tactic to grow circulation, which caused
our revenue to decline. Nevertheless, growing both circulation copies and growing revenue remains a challenge to our industry and us.

Our plans for the coming year include telemarketing and selective discounting, along with increased use of crew sales, kiosks, single-copy insert coupons and direct mail promotions. Telemarketing rules adopted by the Federal Trade
Commission and Federal Communications Commission, including the National Do-Not-Call Registry and regulations, have had an impact on our ability to source subscriptions through telemarketing, but we have expanded our use of other sources of new
subscribers to offset much of that impact. There are two favorable factors: (a) not everyone elected to be included on the register, and (b) our newspapers will still be able to contact persons with whom they have an established business
relationship or from whom they obtained express consent. In response to the economic downturn, newspapers have focused attention on cost reduction. In 2001, we implemented a work force reduction program. In 2002, we launched an Operations Task Force
to identify savings that could be applied companywide. The Task Force teams investigated opportunities for cost reductions throughout the company in content, production, technology, people, administration, vendor



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management, smaller papers
and circulation. We began implementing their recommendations in 2003. To date, we have realized incremental savings of more than $100 million.

In 2004, overall operating costs were up 2.1%, due to a 3.4% rise in newsprint, ink and supplement costs and a 2.6% increase in labor and employee benefits. FTEs were down 1.2% in 2004, following declines of 5.6% and 1.8% in
2002 and 2003, respectively. For the coming year, we anticipate increases in newsprint and benefits (primarily pension and postretirement benefits) in the low double digits. During 2005, we expect health care costs to be up and we anticipate an
increase in pension costs due to a lower discount rate. FTEs should be down about 1%, despite additions for various Revenue Task Force initiatives. During 2005, we expect the price of newsprint to rise in the low double digits, but we expect the
newsprint, ink and supplements line will increase only in the high single digits due to decreases in consumption and lower increases in ink and supplements.

Our online segment performed very well in 2004. Revenue of $114.6 million was up 43.7% and operating income of $36.0 million was up 136.7% from 2003. KRD unique visitors averaged 9.9 million per month,
up 23.6%. The strong results reflect increases in all of KRDs revenue streams. KRD management is focused on growing revenue, expanding product offerings, managing costs and increasing unique visitors. Theteam is also focused on maximizing the benefit of the recent AOL and MSN traffic agreements with CareerBuilder. We project a solid trajectory of growth for online in 2005.

We have entered into interest rate swap agreements to adjust the mix of fixed and floating rate debt. Our weighted-average cost of debt,
including the benefit of swaps, was 4.3% at the end of fiscal 2004. Our debt balance increased by $44.3 million from $1.454 billion in 2003 to $1.498 billion in 2004.

Losses from investees decreased over the past year and we expect further improvement in 2005 as the price per ton of newsprint is projected to increase, benefiting our newsprint mill investees.

Our effective tax rate was lower in 2004 than in 2003, mainly due to the favorable resolution of tax matters from prior
years. We anticipate our effective tax rate to be in the 36% to 37% range in 2005.

Our shares outstanding decreased in
2004, the result of our continued commitment to allocate free cash flow to share repurchases.

Our businesses continue to
provide sufficient cash for our operations and capital expenditures. Moreover, we intend to use future cash flow for the payment of dividends and repurchase of shares, as well as strategic acquisitions.



CONSOLIDATED RESULTS OF OPERATIONS: FOR THE FISCAL YEARS ENDED DECEMBER 26, 2004,
DECEMBER 28, 2003 AND DECEMBER 29, 2002:

Our fiscal year ends on the last Sunday of the calendar year. The following table sets forth
the consolidated results of operations for the 52-week periods ended December 26, 2004, December 28, 2003 and December 29, 2002 (in thousands, except per share data):



|                                                       |  |      |           |      |   |           |  |   |           |   |       |      |  |      |  
|------------------------------------------------------ |  | ---- | --------- | ---- | - | --------- |  | - | --------- | - | ----- | ---- |  | ---- | -
|                                                       |  |      |           |      |   |           |  |   | % CHANGE  |  
|                                                       |  | 2004 |           | 2003 |   | 2002      |  |   | 04-03     |   | 03-02 |     
|Operating revenue                                      |  | $    | 3,014,149 |      | $ | 2,945,991 |  | $ | 2,926,835 |   |       | 2.3  |  | 0.7  |  
|Operating income                                       |  |      | 585,240   |      |   | 567,607   |  |   | 605,362   |   |       | 3.1  |  | (6.2 | )
|Net income before cumulative effect of change in       |  |      |           |      |   |           |  |   |           |   |       |      |  |      |  
|accounting principle of unconsolidated company         |  |      | 326,243   |      |   | 296,071   |  |   | 281,727   |   |       | 10.2 |  | 5.1  |  
|Cumulative effect of change in accounting principle    |  |      |           |      |   |           |  |   |           |   |       |      |  |      |  
|of unconsolidated company                              |  |      | -         |      |   | -         |  |   | (24,279   | ) |       | *    |  | *    |  
|Net income                                             |  | $    | 326,243   |      | $ | 296,071   |  | $ | 257,448   |   |       | 10.2 |  | 15.0 |  
|Diluted earnings per share before cumulative effect of |  |      |           |      |   |           |  |   |           |   |       |      |  |      |  
|change in accounting principle of unconsolidated       |  |      |           |      |   |           |  |   |           |   |       |      |  |      |  
|company                                                |  | $    | 4.13      |      | $ | 3.63      |  | $ | 3.33      |   |       | 13.8 |  | 9.0  |  
|Cumulative effect of change in accounting principle    |  |      |           |      |   |           |  |   |           |   |       |      |  |      |  
|of unconsolidated company                              |  |      | -         |      |   | -         |  |   | (0.29     | ) |       | *    |  | *    |  
|Diluted earnings per share                             |  | $    | 4.13      |      | $ | 3.63      |  | $ | 3.04      |   |       | 13.8 |  | 19.4 |  

* Percent not meaningful



Diluted earnings per share for 2002 included charges of $0.29 per share for the cumulative effect of change in accounting
principle of Career Holdings, an equity method investee, related to its adoption of SFAS 142.

In 2004, we earned $4.13 per
diluted share, up 13.8% from the $3.63 per diluted share earning in 2003. Included in this years earnings per share was $0.26 from the favorable resolution of tax matters from prior years, including interest. Net incomefor the year was $326.2 million, up 10.2% from the previous year. Overall operating costs in 2004 rose just 2.1%, with FTEs down 1.2% for the year. The price per ton of newsprint was up 5.0% over the
previous year, less than anticipated and reflecting our implementation of lighter-weight newsprint across most of our newspapers. In addition, we benefited from reduced interest expense and lower weighted average shares outstanding.



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NEWSPAPER DIVISION

Operating Revenue. The following table summarizes the results of the Newspaper Division for the fiscal years ended December 26, 2004, December
28, 2003 and December 29, 2002 (in thousands):



|                              |  |      |           |      |   |           |  |          |           |  |       |   |  |      |  
|----------------------------- |  | ---- | --------- | ---- | - | --------- |  | -------- | --------- |  | ----- | - |  | ---- | -
|                              |  |      |           |      |   |           |  | % CHANGE |          
|                              |  | 2004 |           | 2003 |   | 2002      |  | 04-03    |           |  | 03-02 |  
|Operating revenue             |  |      |           |      |   |           |  |          |           |  |       |   |  |      |  
|Advertising                   |  |      |           |      |   |           |  |          |           |  |       |   |  |      |  
|Retail                        |  | $    | 1,076,284 |      | $ | 1,066,227 |  | $        | 1,083,027 |  | 0.9   |   |  | (1.6 | )
|National                      |  |      | 384,846   |      |   | 375,927   |  |          | 325,252   |  | 2.4   |   |  | 15.6 |  
|Classified                    |  |      | 785,350   |      |   | 766,713   |  |          | 798,849   |  | 2.4   |   |  | (4.0 | )
|Total                         |  |      | 2,246,480 |      |   | 2,208,867 |  |          | 2,207,128 |  | 1.7   |   |  | 0.1  |  
|Circulation                   |  |      | 543,933   |      |   | 559,234   |  |          | 572,973   |  | (2.7  | ) |  | (2.4 | )
|Other                         |  |      | 109,146   |      |   | 98,153    |  |          | 91,431    |  | 11.2  |   |  | 7.4  |  
|Total operating revenue       |  | $    | 2,899,559 |      | $ | 2,866,254 |  | $        | 2,871,532 |  | 1.2   |   |  | (0.2 | )
|                              |  |      |           |      |  
|Average circulation           |  |      |           |      |   |           |  |          |           |  |       |   |  |      |  
|Daily                         |  |      | 3,737     |      |   | 3,771     |  |          | 3,802     |  | (0.9  | ) |  | (0.8 | )
|Sunday                        |  |      | 5,097     |      |   | 5,142     |  |          | 5,148     |  | (0.9  | ) |  | (0.1 | )
|                              |  |      |           |      |  
|Advertising linage (full-run) |  |      |           |      |   |           |  |          |           |  |       |   |  |      |  
|Retail                        |  |      | 14,166    |      |   | 14,527    |  |          | 15,883    |  | (2.5  | ) |  | (8.5 | )
|National                      |  |      | 3,374     |      |   | 3,255     |  |          | 2,508     |  | 3.6   |   |  | 29.8 |  
|Classified                    |  |      | 18,557    |      |   | 18,317    |  |          | 18,192    |  | 1.3   |   |  | 0.7  |  
|Total                         |  |      | 36,097    |      |   | 36,099    |  |          | 36,583    |  | 0.0   |   |  | (1.3 | )



Total advertising
revenue for 2004 was 1.7% higher than for 2003. All advertising revenue categories increased: a 2.4% increase in classified revenue, a 0.9% increase in retail revenue and a 2.4% increase in national revenue. Total advertising revenue for 2003 was
0.1% higher than for 2002. A 15.6% increase in national revenue in 2003 compared to 2002 was offset by a 4.0% decline in classified revenue and a 1.6% decline in retail revenue.

Retail revenue increased 0.9% from 2003 to 2004 due to an 8.3% increase in part-run retail revenue and a 2.1% increase in preprint
revenue, partially offset by a 2.5% decrease in full-run linage. Specialized publications revenue, up 7.3%, and alternative distribution revenue, up 4.5%, also contributed to the increase in retail revenue. Contra Costa, Charlotte, Kansas City,
Philadelphia and Fort Worth were responsible for most of the increase, up 5.5%, 4.4%, 2.9%, 1.6% and 1.1%, respectively. Compared with 2002, retail advertising revenue in 2003 decreased 1.6% due to an 8.0% full-run retail revenue decrease, a 5.3%
decrease in part-run retail revenue and a 30.9% decrease in database marketing revenue, partially offset by a 10.1% increase in preprint revenue. Philadelphia, Contra Costa and San Jose were responsible for most of the decrease, down 11.5%, 3.7% and
1.6%, respectively.

National revenue increased primarily in Akron, Charlotte, St. Paul, Fort Worth and Miami in 2004
compared to 2003, up 6.7%, 6.5%, 5.3%, 5.2% and 3.9%, respectively. An 18.4% increase in preprint revenue and a 24.5% increase in part-run ROP linage drove the 2004 increase over 2003. The increase in national was due to telecommunication, travel,
health, automotive, entertainment and financial. National advertising revenue increased 15.6% in 2003 from 2002 due to a 26.0% increase in preprint revenue and a 349.4% increase in database marketing revenue. Akron, Contra Costa, Philadelphia, San
Jose and Charlotte had the largest increases, up 50.1%, 43.9%, 30.3%, 23.1% and 11.0%, respectively.

Classified revenue
increased 2.4% in 2004 compared to 2003. Increases in classified real estate and employment drove the overall increase in classified revenue, up 6.6% and 5.4%, respectively, partially offset by classified auto, down 4.8%. St. Paul, Miami, Contra
Costa, Philadelphia and Akron were responsible for most of the increase in classified real estate, up 33.2%, 15.9%, 14.9%, 14.1% and 13.1%, respectively. Contra Costa, St. Paul, San Jose, Miami, Fort Worth and Charlotte were responsible for most of
the increase in classified employment, up 23.1%, 20.8%, 17.5%, 13.5%, 13.4% and 12.1%, respectively. Classified other revenue also drove the increase in classified revenue, increasing 5.6%, with Miami up 7.6%, Fort Worth up 6.8%, Kansas City up
5.1%, Philadelphia up 4.3% and Akron up 3.8%.

Classified advertising revenue decreased 4.0% in 2003 from 2002 due to a
full-run ROP classified revenue decrease of 6.4%, driven by declines in the recruitment category. San Jose, Contra Costa, Philadelphia, St. Paul and Kansas City were responsible for most of the decrease in classified employment, down 33.1%, 24.0%,
19.2%, 17.2% and 16.2%. Declines in classified auto in our largest markets were responsible for most of the decrease, with Charlotte down 7.4%, Fort Worth down 3.3% and Akron down 2.8%.

Circulation revenue declined by 2.7% in 2004 compared with 2003 largely due to a 1.9% reduction in the average subscription rate resulting
from increased discounts. Including Detroit and Fort Wayne, circulation copies decreased 0.9% for both daily and Sunday. The increase in Kansas City, St. Paul, Fort Worth, Akron and Contra Costa were more than offset by decreases in Philadelphia and
San Jose for daily circulation, while increases in St. Paul, Miami, Fort Worth and Akron were more than offset by decreases in San Jose and Philadelphia for Sunday circulation. Circulation revenue decreased 2.4% in 2003 from 2002 due to a 3.3%
reduction in the average subscription rate resulting from increased discounts on subscription rates. Circulation copies were



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down 0.8% daily and down
0.1% Sunday. Increases in St. Paul, Fort Worth, Kansas City, Miami and Akron were more than offset by decreases in Philadelphia and Charlotte for daily circulation. Increases in Fort Worth, Contra Costa, St. Paul and Kansas City were offset by
decreases in Charlotte for Sunday circulation.

From 2003 to 2004, other revenue increased by 11.2% as a result of increases
in augmentation, alternate distribution revenue, earnings from Detroit, newsprint waste and photo reprint revenue. Other revenue increased 7.4% in 2003 from 2002 due to an increase in augmentation, alternate distribution, commercial print and
newsprint waste revenue.



Operating Costs. The following
table summarizes operating costs for the periods ended December 26, 2004, December 28, 2003 and December 29, 2002 (in thousands):



|                               |  |      |           |      |   |           |  |          |           |  |       |   |  |      |  
|------------------------------ |  | ---- | --------- | ---- | - | --------- |  | -------- | --------- |  | ----- | - |  | ---- | -
|                               |  |      |           |      |   |           |  | % CHANGE |          
|                               |  | 2004 |           | 2003 |   | 2002      |  | 04-03    |           |  | 03-02 |  
|Operating costs                |  |      |           |      |   |           |  |          |           |  |       |   |  |      |  
|Labor and employee benefits    |  | $    | 1,152,749 |      | $ | 1,128,814 |  | $        | 1,076,976 |  | 2.1   |   |  | 4.8  |  
|Newsprint, ink and supplements |  |      | 406,641   |      |   | 393,747   |  |          | 375,776   |  | 3.3   |   |  | 4.8  |  
|Other operating costs          |  |      | 651,841   |      |   | 648,167   |  |          | 654,602   |  | 0.6   |   |  | (1.0 | )
|Depreciation and amortization  |  |      | 92,658    |      |   | 103,595   |  |          | 113,941   |  | (10.6 | ) |  | (9.1 | )
|Total operating costs          |  | $    | 2,303,889 |      | $ | 2,274,323 |  | $        | 2,221,295 |  | 1.3   |   |  | 2.4  |  



Labor and employee
benefits increased 2.1% in 2004 compared with 2003. A 2.3% increase in the average wage rate per employee was partially offset by a 1.7% reduction in FTEs. In addition, employee benefits increased by 1.4%. Pension costs increased by 18.2% ($10.7
million) and health insurance expenses decreased by 10.1% ($11.0 million). The increase in pension cost was due to a lower discount rate and a decline in the market value of pension plan assets.

Labor and employee benefits increased 4.8% in 2003 compared with 2002. A 1.1% increase in the average wage rate per employee was partially
offset by a 1.8% reduction in FTEs. In addition, employee benefits increased by 19.6% due to a $15.4 million favorable adjustment in 2002 to postretirement benefit expenses in Philadelphia related to a structural change in the Guilds severance
plan. Within employee benefits, pension costs increased by 21.9% ($10.6 million) and health insurance expenses increased by 13.3% ($12.8 million). The increase in pension cost was due to declines in market value of pension plan assets.

Newsprint, ink and supplements expense increased 3.3% in 2004 compared with 2003. This increase was driven largely by a 4.9% increase
in the average cost per ton of newsprint. The increase in 2003 from 2002 resulted from a 5.4% increase in the average cost per ton of newsprint and a 1.5% increase in ink expense.

Other operating costs increased 0.6% in 2004 when compared with 2003, due to tight cost controls in all areas. Other operating costs
decreased by 1.0% in 2003 from 2002.

Depreciation and amortization expense decreased 10.6% in 2004 compared with 2003 due
to lower levels of capital spending in recent years. Depreciation and amortization expense decreased 9.1% in 2003 compared to 2002.



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ONLINE DIVISION

Operating Revenue and Costs.The following table summarizes operating revenue and costs for the periods ended December 26, 2004, December 28, 2003
and December 29, 2002 (in thousands):



|                                |  |      |         |      |   |        |  |   |          |   |  |       |   |  |       |  
|------------------------------- |  | ---- | ------- | ---- | - | ------ |  | - | -------- | - |  | ----- | - |  | ----- | -
|                                |  |      |         |      |   |        |  |   | % CHANGE |  
|                                |  | 2004 |         | 2003 |   | 2002   |  |   | 04-03    |   |  | 03-02 |  
|Operating revenue               |  |      |         |      |   |        |  |   |          |   |  |       |   |  |       |  
|Advertising                     |  |      |         |      |   |        |  |   |          |   |  |       |   |  |       |  
|Retail                          |  | $    | 11,400  |      | $ | 8,664  |  | $ | 4,756    |   |  | 31.6  |   |  | 82.1  |  
|National                        |  |      | 9,319   |      |   | 7,068  |  |   | 4,706    |   |  | 31.8  |   |  | 50.2  |  
|Classified                      |  |      | 83,829  |      |   | 55,723 |  |   | 39,293   |   |  | 50.4  |   |  | 41.8  |  
|Total                           |  |      | 104,548 |      |   | 71,455 |  |   | 48,755   |   |  | 46.3  |   |  | 46.6  |  
|Other                           |  |      | 10,042  |      |   | 8,282  |  |   | 6,548    |   |  | 21.3  |   |  | 26.5  |  
|Total operating revenue         |  |      | 114,590 |      |   | 79,737 |  |   | 55,303   |   |  | 43.7  |   |  | 44.2  |  
|                                |  |      |         |      |   |        |  |   |          |   |  |       |   |  |       |  
|Operating costs                 |  |      |         |      |   |        |  |   |          |   |  |       |   |  |       |  
|Labor and employee benefits     |  |      | 30,211  |      |   | 26,363 |  |   | 27,087   |   |  | 14.6  |   |  | (2.7  | )
|Other operating costs           |  |      | 45,027  |      |   | 34,483 |  |   | 31,935   |   |  | 30.6  |   |  | 8.0   |  
|Depreciation and amortization   |  |      | 3,345   |      |   | 3,677  |  |   | 5,154    |   |  | (9.0  | ) |  | (28.7 | )
|Total operating costs           |  |      | 78,583  |      |   | 64,523 |  |   | 64,176   |   |  | 21.8  |   |  | 0.5   |  
|Operating income (loss)         |  | $    | 36,007  |      | $ | 15,214 |  | $ | (8,873   | ) |  | 136.7 |   |  | *     |  
|                                |  |      |         |      |   |        |  |   |          |   |  |       |   |  |       |  
|Average monthly unique visitors |  |      | 9,908   |      |   | 8,016  |  |   | 6,738    |   |  | 23.6  |   |  | 19.0  |  

* Percent not meaningful



Revenue for the Online Division was up 43.7% in 2004 compared with 2003, driven largely by increases in recruitment and
upsell revenue categories. Revenue in 2003 compared with 2002 was up 44.2%, driven by increases all upsell revenue categories, resulting from the implementation of a new upsell strategy and launching of retail upsell packages. Reach for KRD
properties, defined as the percentage of all online users in the nation who used any of KRDs Web sites, increased from 5.5% in 2002 to 5.9% in 2003 and to 6.6% in 2004. Average monthly unique visitors increased from 6.7 million in 2002 to 8.0
million in 2003 and to 9.9 million in 2004. Our audience grew by 29% in our top markets in 2004 and by 9% in all of our other markets compared with 2003. The growth resulted from enhancements to our local Web sites, making them more user-friendly to
our advertisers and readers. Highly valuable and frequently updated content increased visibility of our sites in Web search engines. Strategies that combined print with online ads drew people to classifieds and other areas of our sites.

The cost of labor and employee benefits increased by 14.6% in 2004 compared with 2003, driven largely by a 12.8% increase in FTEs.
Labor and employee benefits expenses declined 2.7% in 2003 from 2002 due to a 5.8% reduction in FTEs. Other operating costs increased 30.6% in 2004 compared with 2003 as a result of fees for sales, other professional fees, and technology
consultants. In 2003 other operating costs increased from 2002 due to fees for sales, technology consultants and other professional fees. The decrease in depreciation and amortization expense in 2004 was due to write-offs of assets in 2003.
Depreciation and amortization expense decreased in 2003 from 2002 due to write-offs of certain assets, including a significant amount of outdated software, in the second half of 2002.



CORPORATE EXPENSES AND OTHER NON-OPERATING ITEMS

Interest expense decreased $16.2 million, or 22.9%, in 2004 compared with 2003 and by $4.2 million, or 5.6%, in 2003 from 2002. The decrease in each year was due primarily to lower weighted-average
interest rates and a decline in the average debt balance in 2003 compared to 2002. During 2003 interest rates were at historically low levels and it is anticipated that as the U.S. economy improves, interest rates will increase, resulting in higher
interest expense in the future. Capitalized interest expense, which reduced net interest expense for 2004, increased by $2.7 million in 2004 over 2003 due largely to the construction of our new Kansas City production plant.

For the year 2004, losses from equity investments decreased slightly to $23.9 million from $24.1 million in 2003. Income from newsprint
mill investments, due to the increase in the cost per ton of newsprint, was offset by increased losses from our investment in the Seattle Times and CareerBuilder.

For the year 2003, losses from equity investments declined to $24.1 million from $62.3 million in 2002. The improved results in 2003 were attributable to an $8.3 million reduction in losses from our
newsprint mill investments due to the increase in the cost per ton of newsprint that began in the latter part of 2003. In addition, our loss from our equity investment in CareerBuilder declined by $27.5 million as one-time charges, described below
for 2002, did not recur in 2003. The Seattle Times also added to the losses from equity investments in 2003, offset somewhat by income from Classified Ventures and Knight Ridder/Tribune Information Services.



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One-time charges in 2002 related to our investment in CareerBuilder LLC were: (a) a $7.5 million charge in the first quarter for severance
expense and other costs resulting from the relocation of offices and abandonment of certain assets, and (b) an $18 million charge ($0.13 per share after tax) associated with the conversion of CareerBuilder from a corporation into a limited liability
company. The conversion resulted in a taxable gain to CareerBuilder to the extent the fair value of its assets was greater than the tax basis on the date of the conversion. There was no gain recognized for financial accounting purposes upon this
conversion. Accordingly, CareerBuilder recorded a tax expense and paid taxes of approximately $36.0 million. We recorded our 50% share of this expense as part of the loss from equity investments.

CareerBuilders conversion to an LLC also triggered the recognition of a tax loss in 2002. Since the acquisition of our interest in
CareerBuilder, we had recorded tax benefits in the form of deferred taxes for our share of the losses arising from CareerBuilders operating results. The conversion allowed us to recognize these losses for income tax purposes as the conversion
was treated as a sale of the stock of CareerBuilder for its fair market value. This capital loss was carried back and applied against taxes paid in prior years. We received a tax refund of $36.0 million related to the loss carry-back claim. Because
we had previously recorded the losses for financial statement reporting, the recognition of the tax loss did not affect our results of operations. Following the conversion to an LLC, our share of CareerBuilders operating results is included in
our consolidated tax returns. Unlike C corporations, which are separate entities subject to income tax, LLCs generally are not taxable entities, and their operating results are included in those of its members.



ACQUISITIONS AND DISPOSITIONS

In November 2001, CareerBuilder acquired Headhunter.net, an online recruitment and career development business, for $9.25 per share in cash, or
approximately $217 million. The acquisition was funded by capital contributions from both Knight Ridder and Tribune. Our share was $108.5 million. On October 2, 2002, we and Tribune each sold one-third of our respective interest in CareerBuilder to
Gannett for $98.2 million. Our share of the proceeds was approximately $49 million. The sale price was equal to our carrying value and no gain or loss was recorded on the sale. We currently own a 33.3% interest in CareerBuilder, through KRD.

On January 8, 2002, we sold our stock in MatchNet plc, realizing proceeds of $651,000 and recording an aggregate pre-tax
loss of approximately $4.3 million. Additionally, we recorded other-than-temporary declines in a number of other cost-basis Internet-related investments of $3.1 million in 2002. As of December 29, 2002, the carrying value of the remaining cost-basis
investments was $1.6 million.

On March 3, 2003, we sold our one-third share of InfiNet Company to Gannett for approximately
$4.5 million, and recorded a $1.0 million pre-tax gain on the sale.

On May 5, 2003, we amended our agreement with the
Journal Gazette Company to extend our joint operating agreement in Fort Wayne, IN, to the year 2050. Under the amended terms, we increased our partnership interest from 55% to 75%. The joint operating agreement governs the partnership and operation
of Fort Wayne Newspapers, theagency that handles advertising sales, printing, distribution and administration of the two daily newspapers. The transaction resulted in a $42 million
increase in our goodwill balance on the Consolidated Balance Sheet.

During 2004, we made $43.7 million in acquisitions
consisting of the following:

In February 2004, we completed the acquisition of Alliance Newspapers. Alliance is a group of
seven weekly newspapers and one monthly newspaper serving the area north of Fort Worth in Denton and Northeast Tarrant Counties. Alliance offers total market coverage with circulation of approximately 25,000.

In April 2004, Broad Street Community Newspapers (BSCN) acquired certain assets of the News Star and Publiset. The Star products will help
grow BSCNs community newspapers in the Philadelphia metro area.

In May 2004, Knight Ridder, Gannett and Tribune each
acquired a one-third interest in CrossMedia Services, Inc., a provider of Web-based marketing solutions for national and local retailers. We also acquired the assets of four community newspapers and three shopper publications previously owned by
Superior Publishing Corporation. The acquired newspapers include the (Duluth MN) Budgeteer News, The (Cloquet MN) Pine Journal, The Daily Telegram in Superior, WI, and the Lake County News-Chronicle in Two Harbors, MN. The purchase also included the
Manneys Shopper zones in Superior, Cloquet and Two Harbors.

In June 2004, we acquired a 35.6% undiluted ownership
interest in CityXpress, a provider of online auctions for newspapers. The remaining is owned by Lee Enterprises, management and employees of CityXpress and other shareholders.

In August 2004, we acquired the assets of The (Flower Mound) Messenger, the leading bi-weekly in the Flower Mound suburb of Fort Worth.
The paper is published every two weeks and mailed to approximately 28,500 households in Flower Mound and the surrounding communities of Highland Village, Copper Canyon, Double Oak and Lantana.



LIQUIDITY AND CAPITAL RESOURCES

Cash was $24.5 million at December 26, 2004, compared with $33.5 million at December 28, 2003. During 2004, cash flows from operating activities were used
to fund treasury stock purchases of $305.2 million and pay dividends of $103.6 million. During 2003, cash flows from operating activities were used to fund treasury stock purchases of $286.0 million and pay dividends of $94.9 million and to reduce
debt by $49.6 million.

Cash provided by operating activities was $457.5 million in 2004, compared with $443.5 million in
2003. The increase was due to lower cash contributions in excess of pension and other retirement benefit plan expenses, lower change in accounts receivable and higher net income. Cash provided by operating activities was $443.5 million in 2003,
compared with $409.6 million in 2002. The increase was due to contribution in excess of pension and other postretirement benefit expenses and an increase in other assets and accounts payable.

At December 26, 2004, working capital was $70.0 million, compared with $71.0 million at December 28, 2003. Increases in net accounts
receivable, inventories, prepaid expenses and other current assets (primarily the recording of the land held



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for sale in Miami, FL) and a
decrease in the current portion of long-term debt, were essentially offset by increases in accrued expenses and other liabilities, accrued compensation and withholdings, deferred circulation revenue and income taxes payable. The increase in working
capital from 2003 to 2004 was due primarily to an increase in prepaid expenses of $11.3 million, an increase in accounts receivable of $9.7 million and an increase in inventory of $6.2 million, partially offset by an increase in federal and state
income taxes payable of $14.5 million and an increase in other current liabilities of $13.8 million. At December 26, 2003, working capital was $71.0 million, compared with $72.4 million at December 28, 2002. The decrease in working capital from 2002
to 2003 was due primarily to a decline in accrued compensation of $30.3 million and a decline in short-term borrowings of $19.8 million, partially offset by an increase in federal and state income taxes payable of $16.4 million.

During 2004, cash required for investing activities was primarily for the purchase of $117.3 million of property, plant and equipment, and
the acquisition and additional investment in businesses of $43.7 million. During 2003, cash required for investing activities was primarily for the purchase of $73.2 million of property, plant and equipment, and the acquisition and additional
investment in businesses of $44.5 million.

We invest excess cash in short-term investments, depending on projected cash
needs from operations, capital expenditures and other business purposes. We supplement our internally generated cash flow with a combination of short- and long-term borrowings. Average outstanding commercial paper during the year was $210.7 million,
with an average effective interest rate of 1.9%. At December 2004, our $1 billion revolving credit agreement, which supports the commercial paper and our letters of credit outstanding, had remaining availability of $789 million. The revolving credit
facility matures in 2009.

In 2001, 2002 and 2004, we entered into certain interest rate swap agreements. We entered into
these agreements to manage interest rate exposure by achieving a desired proportion of fixed rate versus variable rate debt. The swap agreements expire at various dates in 2005, 2007, 2009 and 2011 and effectively convert an aggregate principal
amount of $700 million of fixed-rate long-term debt into variable-rate borrowings. The variable interest rates are based on the three- or six-month LondonInterBank Offering Rate (LIBOR)
plus a rate spread. For the year ended December 26, 2004, the weighted-average variable interest rates under these agreements were 4.3% versus the fixed rates of 8.0%. The fair value of the swap agreements at December 26, 2004 and December 28, 2003,
totaled $34.2 million and $46.9 million, respectively, recorded on the consolidated balance sheet as other noncurrent assets, with the offsetting adjustment to the carrying value of the long-term debt. We do not trade or engage in hedging for
speculative or trading purposes, and hedging activities are transacted only with highly rated financial institutions, reducing the exposure to credit risk.

In 2004, we issued $200 million in 10-year fixed rate senior notes, which we used to pay down our outstanding commercial paper. As of the end of December 26, 2004, our percentage of variable rate
borrowings stands at approximately 60%.

At December 26, 2004, our short- and long-term debt was rated by the three major
credit-rating agencies listed below. There was no change from 2003:



|                  |  |            |  |          
|----------------- |  | ---------- |  | ---------
|                  |  | SHORT-TERM |  | LONG-TERM
|                  |  | DEBT       |  | DEBT     
|Moodys           |  | P1         |  | A2       
|Standard & Poors |  | A-1        |  | A        
|Fitch             |  | F1         |  | A        



We have a $1 billion
revolving credit facility and term loan agreement, which support our commercial paper. We also have $200 million in extendable commercial notes. Our future ability to borrow funds and the interest rates on those funds could be adversely impacted by
a decline in our debt ratings and by negative conditions in the debt capital markets.

During 2004, we repurchased 4.3
million common shares at a total cost of $305.2 million and an average cost of $71.30 per share. At the end of fiscal 2004, authorization remained to purchase 4.9 million shares.

Our operations have historically generated strong positive cash flow that along with our commercial paper program, revolving credit lines
and our ability to issue public debt, have provided adequate liquidity to meet short- and long-term cash requirements, including requirements for working capital and capital expenditures.



The following table summarizes our contractual obligations and other commercial commitments as of December 26, 2004 (in
thousands):



|                              |  |                        |  |                  |  |              |  |              |  |                
|----------------------------- |  | ---------------------- |  | ---------------- |  | ------------ |  | ------------ |  | ---------------
|Contractual Obligations       |  | TOTAL                  |  | LESS THAN 1 YEAR |  | 1-3 YEARS    |  | 3-5 YEARS    |  | AFTER 5 YEARS  
|Long-term debt                |  | $1,287,228             |  | $         -      |  | $  99,352    |  | $299,195     |  | $   888,681    
|Commercial Paper (a)          |  | 210,679                |  |                  |  |              |  |              |  | 210,679        
|Operating leases              |  | 93,130                 |  | 21,866           |  | 32,027       |  | 17,459       |  | 21,778         
|Total contractual obligations |  | $1,591,037             |  | $21,866          |  | $131,379     |  | $316,654     |  | $1,121,138     
|                              | 
|                              |  | PAYMENTS DUE BY PERIOD
|                              |  |                        |  |                  |  |              |  |              |  |                
|Other Commercial Commitments  |  | TOTAL                  |  | LESS THAN 1 YEAR |  | 1-3 YEARS    |  | 3-5 YEARS    |  | AFTER 5 YEARS  
|Standby letters of credit (b) |  | $     56,500           |  | $56,500          |  | $          - |  | $          - |  | $             -
|Guarantees (c)                |  | 9,653                  |  | 9,653            |  |              |  |              |  |                
|Capital lease obligations     |  |                        |  |                  |  |              |  |              |  |                
|Total commercial commitments  |  | $     66,153           |  | $66,153          |  | $          - |  | $          - |  | $             -

(a) Commercial paper is supported by $1 billion revolving credit facility, which matures in 2009.

(b) In connection with our insurance program, letters of credit are required to support certain projected workers compensation
obligations.

(c) We guarantee 13.5% of the debt of Ponderay Newsprint Company, a newsprint mill investment. For the years ended December 26,
2004 and December 28, 2003, these guarantees totaled $9.7 million and $13.2 million, respectively.



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We have ongoing purchase commitments with SP Newsprint and Ponderay, our two newsprint mill partnership investments. These future commitments
are for the purchase of a minimum of 77,000 metric tons and 28,400 metric tons of newsprint annually with SP Newsprint and Ponderay, respectively. In 2004 and 2003, we paid SP Newsprint $60.4 million and $62.4 million, respectively, and paid
Ponderay $15.7 million and $14.9 million, respectively.

Our capital-spending program includes normal replacements,
productivity improvements, capacity increases, building construction and expansion and purchase of printing press equipment. Over the past three years, capital expenditures have totaled $260.5 million (excluding Detroit) for additions and
improvements to properties.

Additions to property, plant and equipment amounted to $117.3 million ($145.6 million,
including Detroit) in 2004. This was a $44.1 million increase over the $73.2 million ($99.2 million, including Detroit) we spent in 2003. Expenditures in 2004 included $74.1 million for a new production plant in Kansas City scheduled for completion
in 2006, $29.7 million for our share of the cost of the new production plant in Detroit scheduled for completion in 2005, $3.7 million for production equipment replacement in Philadelphia, $2.3 million for a cart loading system in San Jose and $2.2
million for an inserting machine in Akron. In 2005, we expect approximately $111.2 million ($132.6 million, including Detroit) in capital expenditures, primarily for the new plant in Kansas City and our share of the Detroit plant investment.



OFF-BALANCE SHEET ARRANGEMENTS

We guarantee 13.5% of the debt of Ponderay Newsprint Companys credit facility in connection with a 2000 restatement of Ponderays credit
facility. We guarantee the portion of the credit facility that matures in April 2006. The guarantee could be triggered by Ponderays failure to meet any of its bank covenants, at which time we could be liable for the full portion of this
guarantee. We account for these guarantees as off-balance sheet instruments, that for 2004 and 2003 totaled $9.7 million and $13.2 million, respectively.

We are a one-third partner of SP Newsprint Co. In November 2002, SP Newsprint amended and restated its credit agreement with certain lenders. The agreement stipulates that if SPs consolidated
liquidity falls below $5 million, it would be in default of the agreement. We and the other partners would be required to make an equity contribution, in sufficient amount to cure the default. Our contribution is limited to approximately $6.7
million. The obligation ends when SP Newsprint first meets certain conditions including, but not limited to, predetermined leverage and fixed-charge coverage ratios and certain liquidity requirements. We also had a demand obligation to SP Newsprint
Co. for $6.7 million. The obligation arose in August 1985 in connection with an advance to us (and the other partners) by SP. In 2003, SP Newsprint requested and we repaid this obligation.



RECENT PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (SFAS 143). Under these rules, a
liability for a long-lived asset retirement obligation should be recognized in the period in which it is incurred andshould be initially measured at its fair value. Changes in the
liability due to the passage of time are recognized as operating expenses in the income statement and referred to as accretion expenses. SFAS 143 is required to be implemented for fiscal years beginning after June 15, 2002. The adoption of SFAS 143
did not have a material impact on our results of operations or financial position.

In June 2002, the FASB issued SFAS
No. 146  Accounting for Costs Associated with Exit or Disposal Activities. SFAS 146 requires recording costs associated with exit or disposal activities at fair value when a liability has been incurred. Under previous guidance,
certain exit costs were accrued upon our commitment to an exit plan, which is generally before an actual liability has been incurred. The requirements of SFAS 146 are effective prospectively for exit or disposal activities initiated after December
31, 2002. The adoption of SFAS 146 did not have a material impact on our results of operations or financial position.

In
April 2003, the FASB issued SFAS No. 149  Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities. SFAS 149 is effective for contracts with derivative instruments and hedging relationships entered
into or modified after June 30, 2003. SFAS 149 requires that contracts with comparable characteristics be accounted for similarly. This statement also amends the definition of an underlying security to conform it to language used in the FASBs
Financial Interpretation (FIN) 45  Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. We account for our hedges with comparable characteristics
similarly; accordingly, the adoption of SFAS 149 did not have a material impact on our results of operations or financial position.

In May 2003, the FASB issued SFAS No. 150  Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity, which addresses how to classify and measure certain financial
instruments with characteristics of both liabilities (or an asset, in some circumstances) and equity. SFAS 150 requirements apply to issuers classification and measurement of freestanding financial instruments, including those that comprise
more than one option or forward contract. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 did not have a material impact on our results of operations or financial position.

In December 2003,
the FASB issued SFAS No. 132 (revised 2003)  Employers Disclosures about Pensions and Other Postretirement Benefits.This Statement revises employers disclosures about pension plans and other postretirement
benefit plans. It does not change the measurement or recognition provisions of SFAS Statements No. 87, Employers Accounting for Pensions, No. 88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension
Plans and for Termination Benefits, and No. 106, Employers Accounting for Postretirement Benefits Other Than Pensions. This Statement retains the disclosure requirements contained in the original version of SFAS Statement No. 132,
Employers Disclosures about Pensions and Other Postretirement Benefits. It requires additional disclosures about the assets, obligations,



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cash flows and net periodic
benefit cost of defined benefit pension plans and other postretirement benefit plans. It requires that information be provided separately for pension plans and for other postretirement benefit plans. The revised Statement is effective for financial
statements with fiscal years ending after December 15, 2003. The adoption of SFAS No. 132 (revised 2003) did not have a material impact on our results of operations or financial position.

In November 2002, the FASB issued FASB Interpretation No. 45  Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45
also requires additional disclosures by a guarantor in its interim and annual financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees issued or modified
after December 31, 2002. The disclosure requirements are effective for financial statements of interim or annual periods ending after December 15, 2002. We have certain existing guarantees that when modified will require us to record a liability on
our balance sheet for the fair market value of the guarantee. The adoption of FIN 45 did not have a material impact on our results of operations or financial condition.

In January 2003, the FASB issued FIN No. 46  Consolidation of Variable Interest Entities. In December 2003, the FASB issued Interpretation No. 46 (revised December 2003) (FIN
46R), which replaces FIN 46. This interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, defines what these variable interest entities are and provides guidelines on identifying them and assessing an
enterprises interests in a variable interest entity to decide whether to consolidate that entity. Generally, application of FIN 46R is required in financial statements of public entities that have interests in variable interest entities or
potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities for all other types of entities is required in financial statements for periods ending
after March 15, 2004. The adoption of FIN 46 or FIN 46R did not have a material impact on our results of operations or financial condition.

In May 2004, the FASB issued FASB Staff Position (FSP) 106-2  Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act. which provides guidance on
how companies should account for the impact of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the Act) on its postretirement health care plans. To encourage employers to retain or provide postretirement drug
benefits, beginning in 2006 the federal government will provide non-taxable subsidy payments to employers that sponsor prescription drug benefits to retirees that are actuarially equivalent to the Medicare benefit. Although formal
guidance in determining actuarial equivalence has not been provided, we expect that our prescription drug plan will qualify for the government subsidy. Effective July 1, 2004, Knight Ridder prospectively adopted FSP 106-2. Adoption of FSP 106-2
reduced the accumulated postretirement benefit obligation by approximately $9.2 million and resulted in an unrecognized actuarial gain of a similar amount. The unrecognized actuarial gain will be amortized over the estimated expected service life ofthe participants. Adoption resulted in a $600,000 reduction in postretirement benefits cost for the two fiscal quarters ended December 26, 2004.

On December 16, 2004, the FASB issued SFAS No. 123 (revised 2004), Share-Based Payment, which is a revision of SFAS 123,Accounting for Stock-Based Compensation. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to
be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The new standard will be effective for public entities (excluding small business issuers) in the first interim or annual reporting
period beginning after June 15, 2005, irrespective of the entitys fiscal year. Early adoption is permitted in periods in which financial statements have not yet been issued. SFAS 123(R) allows for two transition alternatives for public
companies: (a) modified-prospective transition or (b) modified-retrospective transition. Under the modified-prospective transition method, companies are required to recognize compensation cost for share-based payments to employees based on their
grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied. Measurement and attribution of compensation cost for awards that were granted prior to, but not vested as of the date SFAS 123(R) is
adopted would be based on the same estimate of the grant-date fair value and the same attribution method used previously under SFAS 123 (either for financial statement recognition or pro forma disclosure purposes). Prior periods are not restated.
For periods prior to adoption, the financial statements are unchanged (and the pro forma disclosures previously required by SFAS 123 continue to be required under the new Standard to the extent those amounts differ from those in the income
statement). For periods subsequent to adoption, the impact of this transition method generally is the same as if the modified-retrospective method were applied. Accordingly, pro forma disclosure will not be necessary for periods after the adoption
of the new Standard. Under the modified-retrospective transition method, companies are allowed to restate prior periods by recognizing compensation cost in the amounts previously reported in the pro forma footnote disclosure under the provisions of
SFAS 123. New awards and unvested awards would be accounted for in the same manner as the modified-prospective method. Because of the mid-year effective date, companies are permitted to apply the modified-retrospective transition alternative either
(a) to all periods presented or (b) to the start of the fiscal year in which SFAS 123(R) is adopted. We are currently evaluating the alternative transition methods and expect to adopt SFAS 123(R), as required, for our third quarter beginning June
27, 2005. Had we adopted SFAS 123 in 2004, our diluted earnings per share would have been $0.19 lower.



Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Borrowings. By balancing the mix of
variable- versus fixed-rate borrowings, we manage the interest-rate risk of our debt. Note 3. Debt on pages 38 and 39 of this report includes information related to the contractual interest rates and fair value of the individual
borrowings. At various times, we have entered into interest rate swap agreements to manage interest rate exposure in order to achieve a desired proportion of variable-rate versus



20



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fixed-rate debt. The fair
value of the swaps at December 26, 2004 and December 28, 2003 was $34.2 million and $46.9 million, respectively. As of the end of fiscal 2004, approximately 60% of our borrowings were variable-rate. We do not trade or engage in hedging for
speculative purposes and hedging activities are transacted only with highly rated financial institutions, reducing the exposure to credit risk.

A hypothetical 50 basis point increase in LIBOR would increase interest expense associated with variable-rate borrowings by approximately $5.3 million and $4.6 million in 2004 and 2005, respectively. The fair value of our
fixed-rate debt and interest rate swaps is sensitive to changes in interest rates. A hypothetical 50 basis points increase in interest rates would decrease the fair value of the fixed-rate debt and interest rate swaps by $20.8 million in 2005. This
change in fair value of debt obligations excludes commercial paper and other short-term variable-rate borrowings as changes in interest rates would not significantly affect the fair market value of these instruments.

Newsprint.We consumed approximately 641,000 metric tons of newsprint in 2004, excluding Detroit. This represented 13.2% of our
2004 total operating expenses. Under the caption Newsprint on page 3 of this report, we have included information on our suppliers, the long-term purchase agreements used to manage the related risk of price increases, and natural hedges
we have in place through our investment in newsprint mills. We have also in the past entered into newsprint hedges to take advantage of market conditions and further manage the risk of price increases. As of the end of fiscal 2004, we do not have
any outstanding newsprint hedges.

A hypothetical 10% increase in newsprint costs would increase newsprint expense by
approximately $36 million. Our ownership in SP Newsprint and Ponderay provide a hedge against price volatility for approximately 50% of our newsprint expense. This $36 million increase in newsprint costs would be partially offset by $18 million in
earnings from our newsprint mill investments, and would increase our Earnings from Equity Investees on our Consolidated Statement of Income. Therefore, our pre-tax earnings would decrease by approximately $18 million.



Item 8. Financial Statements and Supplementary Data

The consolidated financial statements, together with the
report thereon of our Independent Registered Public Accounting Firm, Ernst & Young, LLP, dated February 21, 2005, the Selected Quarterly Financial Data (unaudited) and Schedule II  Valuation and Qualifying Accounts are set forth in Item 15
of this Form 10-K.



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.



Item 9A. Controls and Procedures



CONCLUSION REGARDING THE EFFECTIVENESS OF DISCLOSURES CONTROLS AND PROCEDURES

As of the end of the period covered by
this report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15, under the supervision and with the participation of management, including the
chief executive officer and chief financial officer. That evaluation revealed no significant deficiencies or material weaknesses in our disclosure controls and procedures. It confirmed that these current practices are effective in alerting us,
within the time periods specified by the Securities and Exchange Commission, to any material information regarding Knight Ridder and its consolidated subsidiaries. Moreover, it confirmed our ability to record, process, summarize and report such
information on an equally timely basis. Our management, including the chief executive officer and chief financial officer, also conducted an evaluation of our internal control over financial reporting to determine whether any changes occurred during
the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, the chief executive officer and chief financial officer
concluded that there has been no such change during the period covered by this report.



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal
financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on our evaluation under the framework in Internal Control  Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 26, 2004.

Our managements assessment of the effectiveness of our internal control over financial reporting as of December 26,
2004 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.



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##### Table of Contents



Report of
Independent Registered Public Accounting Firm



The Board of
Directors and Shareholders of Knight-Ridder, Inc.

We have audited managements assessment, included in the
accompanying Managements Report on Internal Control Over Financial Reporting, that Knight-Ridder, Inc. maintained effective internal control over financial reporting as of December 26, 2004, based on criteria established in Internal Control
 Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Knight-Ridder, Inc.s management is responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of the companys internal control over
financial reporting based on our audit.



We
conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control
over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating managements assessment, testing and evaluating the design and operating
effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.



A companys internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could
have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



In our opinion, managements assessment that Knight-Ridder, Inc. maintained effective internal control over financial reporting as of
December 26, 2004, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, Knight-Ridder, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 26, 2004,
based on the COSO criteria.



We also
have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the 2004 consolidated financial statements of Knight-Ridder, Inc. and our report dated February 21, 2005 expressed an unqualified
opinion thereon.



/s/ Ernst
& Young LLP



San Jose, California

February 21, 2005





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##### Table of Contents



PART III



Item 10. Directors and Executive Officers of the Registrant

We have adopted a written code of ethics that
applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is posted on our Web site, www.kri.com, on the Corporate
Governance page, under the Investing section. Any amendments to, or waivers of, this code of ethics will be disclosed on our Web site promptly following the date of such amendment or waiver.

The following table includes certain information regarding the Companys executive officers. Each holds the offices indicated until
his or her successor is chosen and qualified at the regular meeting of the Board of Directors to be held immediately following the 2005 Annual Meeting of Shareholders. Unless otherwise indicated, the age of each executive officer listed below is as
of February 1, 2005.



Information regarding Mr. Ridder is
incorporated by reference from the discussion under the heading Nominees for Election for a Three-Year Term Expiring in 2008 in our Proxy Statement for the 2005 Annual Meeting of Shareholders.



|                   |  |     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------------------ |  | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name               |  | Age |  | Recent Positions Held as of February 11, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Marshall Anstandig |  | 56  |  | Mr. Anstandig joined us in 1998 as Vice President/Senior Labor and Employment Counsel. He previously served as a partner in the law firm of
Brown & Bain, P.A. from 1996 to 1998.                                                                                                                                                                                                                                                                                                               
|Art Brisbane       |  | 54  |  | Mr. Brisbane has served as our Senior Vice President since January 2005. He previously served as Publisher of The Kansas City Star from 1997 to
2004 and Editor from 1992 to 1997.                                                                                                                                                                                                                                                                                                              
|Jerome Ceppos      |  | 58  |  | Mr. Ceppos has served as our Vice President/News since 1999. He previously served as Vice President and Executive Editor of the San Jose
Mercury News from 1995 to 1999.                                                                                                                                                                                                                                                                                                                        
|Mary Jean Connors  |  | 52  |  | Ms. Connors has served as our Senior Vice President since April 2003. She previously served as Vice President/Human Resources from 1989 to
2003.                                                                                                                                                                                                                                                                                                                                                
|Arden Dickey       |  | 51  |  | Mr. Dickey has served as our Vice President/Circulation and Regional Call Centers since 2002. He previously served as Assistant Vice
President/Circulation and Regional Call Centers from 2000 to 2002 and Vice President/Circulation of The Miami Herald from 1992 to 2000.                                                                                                                                                                                                                    
|Gary R. Effren     |  | 48  |  | Mr. Effren has served as our Vice President/Finance since January 2005. Previously, Mr. Effren served as Senior Vice President/Finance and Chief
Financial Officer from 2001 to 2004, and Vice President/Controller from 1995 to 2001.                                                                                                                                                                                                                                                          
|Polk Laffoon IV    |  | 59  |  | Mr. Laffoon has served as our Vice President/Corporate Relations since 1994 and Corporate Secretary since 1999.                                                                                                                                                                                                                                                                                                                                                                                 
|Tally C. Liu       |  | 54  |  | Mr. Liu became our Vice President/Internal Audit in 2002. He previously served as Senior Vice President/Finance and Operations of Knight Ridder
Digital, the Companys Internet operation, from 2000 to 2002 and Vice President/Finance of the Company from 1990 to 2000.                                                                                                                                                                                                                       
|Sharon Mandell     |  | 41  |  | Ms. Mandell joined us as Vice President/Technology in February 2004. She previously served as Chief Technology Officer of Knight Ridder Digital
from 2002 to 2004, Vice President of Technology of Tribune Publishing from 2001 to 2002 and Vice President and Chief Technology Officer of Tribune Interactive from 1999 to 2001.                                                                                                                                                               
|Larry D. Marbert   |  | 51  |  | Mr. Marbert has served as our Vice President/Production and Facilities since 1998.                                                                                                                                                                                                                                                                                                                                                                                                              
|Larry Olmstead     |  | 47  |  | Mr. Olmstead has served as our Vice President/Staff Development and Diversity since 2002. He previously served as Assistant Vice President/News
of Knight Ridder from 2001 to 2002 and Managing Editor of TheMiami Herald from 1996 to 2001.                                                                                                                                                                                                                                                    
|Michael Petrak     |  | 46  |  | Mr. Petrak has served as our Vice President/Marketing since 2001. He previously served as Executive Vice President and General Manager of The
Kansas City Star from 1997 to 2001.                                                                                                                                                                                                                                                                                                               
|Steven B. Rossi    |  | 55  |  | Mr. Rossi has served as our Senior Vice President and Chief Financial Officer since January 2005. He previously served as President/Newspaper
Division from 2001 to 2004, Senior Vice President/Operations from 1998 to 2001 and Executive Vice President and General Manager of Philadelphia Newspapers from 1992 to 1998.                                                                                                                                                                     
|Hilary Schneider   |  | 43  |  | Ms. Schneider has served as our Senior Vice President since January 2005. She previously served as Vice President of Knight Ridder and President
and Chief Executive Officer of Knight Ridder Digital, the Companys Internet operations, since 2002. Served as Chief Executive Officer of Red Herring Communications from 2000 to 2002, President and Chief Executive Officer of Times Mirror
Interactive from 1999 to 2000 and General Manager of The Baltimore Sun Company from 1998 to 1999.
|Bryon Traynor      |  | 47  |  | Mr. Traynor has served as our Vice President/Shared Services since 2002. He was previously a partner at Andersen Business Consulting from 1996
to 2002.                                                                                                                                                                                                                                                                                                                                         
|Alice Wang         |  | 35  |  | Ms. Wang joined us as our Vice President/Corporate Development in May 2003. She was previously employed by Credit Suisse First Boston
Corporation as Director/ Media and Telecommunications Group in 2002 and Vice President from 1999 to 2001.                                                                                                                                                                                                                                                 
|Gordon Yamate      |  | 49  |  | Mr. Yamate has served as our Vice President and General Counsel since 2000. He previously served as Vice President, General Counsel and
Corporate Secretary of Liberate Technologies from 1999 to 2000 and a partner in the law firm of McCutchen, Doyle, Brown & Enersen from 1988 to 1999.                                                                                                                                                                                                    



The balance of the
information required by this section is incorporated by reference from the Proxy Statement for the 2005 Annual Meeting of Shareholders under the captions Item 1: Election of Directors, and Section 16(a) Beneficial Ownership
Reporting Compliance.



The information required by this
item with respect to our directors, Section 16(a) beneficial ownership reporting compliance, our Audit Committee and our audit committee financial experts is incorporated by reference from our Proxy Statement for the 2005 Annual Meeting of
Shareholders under the captions Item 1: Election of Directors, Section 16(a) Beneficial Ownership Reporting Compliance and Audit Committee.



23



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Item 11. Executive Compensation

The information required by this item is incorporated by reference from our
Proxy Statement for the 2005 Annual Meeting of Shareholders under the captions Director Compensation, and Executive Compensation, but only up to and including the section entitled Performance of Knight Ridder
Stock.



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The
information set forth under the captions Principal Holders of the Companys Stock and Stock Ownership of Directors and Officers under the heading Information About Knight Ridder Stock Ownership and
Equity Compensation Plan Information included in our Proxy Statement for our 2005 Annual Meeting of Shareholders is incorporated herein by reference.



Item 13. Certain Relationships and Related Transactions

The sections entitled Compensation Committee
Interlocks and Insider Participation and Certain Relationships and Related Transactions in the Proxy Statement for our 2005 Annual Meeting of Shareholders are incorporated herein by reference.



Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated by
reference from the Proxy Statement for our 2005 Annual Meeting of Shareholders under the captions Fees and Services of Ernst & Young and Audit Committee Pre-approval Policies and Procedures.



PART IV



Item 15. Exhibits, Financial Statement Schedules

|(a)(1) | The following consolidated financial statements of Knight-Ridder, Inc. and its subsidiaries are filed as part of this Form 10-K:
|------ | --------------------------------------------------------------------------------------------------------------------------------

| | (i) | Report of Independent Registered Public Accounting Firm
| | --- | -------------------------------------------------------

| | (ii) | Consolidated Balance Sheet as of December 26, 2004 and December 28, 2003
| | ---- | ------------------------------------------------------------------------

| | (iii) | Consolidated Statement of Income for the fiscal years ended December 26, 2004, December 28, 2003 and December 29, 2002
| | ----- | ----------------------------------------------------------------------------------------------------------------------

| | (iv) | Consolidated Statement of Cash Flows for the fiscal years ended December 26, 2004, December 28, 2003 and December 29, 2002
| | ---- | --------------------------------------------------------------------------------------------------------------------------

| | (v) | Consolidated Statement of Shareholders Equity for the fiscal years ended December 26, 2004, December 28, 2003 and December 29, 2002
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

| | (vi) | Notes to Consolidated Financial Statements
| | ---- | ------------------------------------------

|(a)(2) | Financial statement schedule required to be filed by Item 8 of this Form, and by Item 15(d) is shown below:
|------ | -----------------------------------------------------------------------------------------------------------

Schedule II  Valuation and qualifying accounts

All other schedules for which provision is made in the applicable accounting regulation of the SEC are not required under the related instructions, or are inapplicable, or have been shown in the
consolidated financial statements or notes thereto, and therefore have been omitted from this section.

|(a)(3) | The list of exhibits is incorporated by reference as part of this Form 10-K.
|------ | ----------------------------------------------------------------------------



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##### Table of Contents



Report of
Independent Registered Public Accounting Firm



The Board of
Directors and Shareholders of Knight-Ridder, Inc.

We have audited the accompanying consolidated balance sheets of
Knight-Ridder, Inc. as of December 26, 2004 and December 28, 2003, and the related consolidated statements of income, shareholders equity, and cash flows for each of the three years in the period ended December 26, 2004. Our audits also
included the financial statement schedule listed in the Index at Item 15d. These financial statements and schedule are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.



We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position
of Knight-Ridder, Inc. at December 26, 2004 and December 28, 2003, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 26, 2004, in conformity with U.S. generally accepted
accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.



We also have audited, in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Knight-Ridder, Inc.s internal control over financial reporting as of December 26, 2004, based on criteria established in Internal Control 
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2005 expressed an unqualified opinion thereon.



/s/ Ernst & Young LLP



San Jose, California

February 21, 2005



25



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##### Table of Contents



Knight Ridder Consolidated Balance
Sheet

(In thousands, except share data)



|                                                                              |  |               |            |   |               |   |            |  
|----------------------------------------------------------------------------- |  | ------------- | ---------- | - | ------------- | - | ---------- | -
|ASSETS                                                                        |  | DEC. 26, 2004 |            |   | DEC. 28, 2003 |  
|CURRENT ASSETS                                                                |  |               |            |   |               |   |            |  
|Cash                                                                          |  | $             | $24,483    |   |               | $ | 33,536     |  
|Accounts receivable, net of allowances of
$23,987 in 2004                     |  |               |            |   |               |   |            |  
|and $24,245 in 2003                                                           |  |               | 410,303    |   |               |   | 400,624    |  
|Inventories                                                                   |  |               | 48,027     |   |               |   | 41,823     |  
|Prepaids                                                                      |  |               | 34,662     |   |               |   | 23,410     |  
|Deferred income taxes                                                         |  |               | 16,116     |   |               |   | 19,899     |  
|Other current assets                                                          |  |               | 16,204     |   |               |   | 3,184      |  
|Total Current Assets                                                          |  |               | 549,795    |   |               |   | 522,476    |  
|INVESTMENTS AND OTHER
ASSETS                                                  |  |               |            |   |               |   |            |  
|Equity in unconsolidated companies and joint
ventures                         |  |               | 343,471    |   |               |   | 295,240    |  
|Pension asset                                                                 |  |               | 137,614    |   |               |   | 156,523    |  
|Fair value of interest rate swap
agreements                                   |  |               | 34,224     |   |               |   | 46,881     |  
|Other                                                                         |  |               | 71,423     |   |               |   | 113,543    |  
|Total Investments and Other
Assets                                            |  |               | 586,732    |   |               |   | 612,187    |  
|PROPERTY, PLANT AND
EQUIPMENT                                                 |  |               |            |   |               |   |            |  
|Land and improvements                                                         |  |               | 79,261     |   |               |   | 92,371     |  
|Buildings and leasehold
improvements                                          |  |               | 493,256    |   |               |   | 490,649    |  
|Equipment                                                                     |  |               | 1,281,463  |   |               |   | 1,293,866  |  
|Construction and equipment installations in
progress                          |  |               | 173,295    |   |               |   | 87,663     |  
|                                                                              |  |               | 2,027,275  |   |               |   | 1,964,549  |  
|Less accumulated depreciation and
amortization                                |  |               | (1,080,129 | ) |               |   | (1,035,902 | )
|Property, Plant and Equipment,
net                                            |  |               | 947,146    |   |               |   | 928,647    |  
|GOODWILL AND OTHER IDENTIFIED INTANGIBLE
ASSETS                               |  |               |            |   |               |   |            |  
|Goodwill                                                                      |  |               | 1,799,061  |   |               |   | 1,790,229  |  
|Newspaper mastheads                                                           |  |               | 288,296    |   |               |   | 284,284    |  
|Other, net of accumulated amortization of
$56,703 in 2004 and $49,872 in 2003 |  |               | 51,248     |   |               |   | 52,203     |  
|Total Goodwill and Other Identified Intangible
Assets, net                    |  |               | 2,138,605  |   |               |   | 2,126,716  |  
|Total Assets                                                                  |  | $             | 4,222,278  |   |               | $ | 4,190,026  |  



See Notes to Consolidated
Financial Statements.



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##### Table of Contents



Knight Ridder Consolidated Balance
Sheet

(In thousands, except share data)



|                                                                         |  |               |           |   |               |   |           |  
|------------------------------------------------------------------------ |  | ------------- | --------- | - | ------------- | - | --------- | -
|LIABILITIES AND SHAREHOLDERS EQUITY                                     |  | Dec. 26, 2004 |           |   | Dec. 28, 2003 |  
|CURRENT
LIABILITIES                                                      |  |               |           |   |               |   |           |  
|Accounts
payable                                                         |  | $             | 164,359   |   |               | $ | 162,627   |  
|Accrued
expenses and other liabilities                                   |  |               | 104,662   |   |               |   | 90,545    |  
|Accrued
compensation and withholdings                                    |  |               | 95,090    |   |               |   | 83,851    |  
|Deferred
circulation revenue                                             |  |               | 84,826    |   |               |   | 78,078    |  
|Income taxes
payable                                                     |  |               | 30,869    |   |               |   | 16,360    |  
|Current portion
of long-term debt                                        |  |               | -         |   |               |   | 20,000    |  
|Total Current
Liabilities                                                |  |               | 479,806   |   |               |   | 451,461   |  
|NONCURRENT
LIABILITIES                                                   |  |               |           |   |               |   |           |  
|Long-term
debt                                                           |  |               | 1,497,907 |   |               |   | 1,433,560 |  
|Fair value of
interest rate swap agreements                              |  |               | 34,224    |   |               |   | 46,881    |  
|Deferred
income taxes                                                    |  |               | 267,477   |   |               |   | 296,432   |  
|Postretirement
benefits other than pensions                              |  |               | 113,119   |   |               |   | 117,162   |  
|Employment
benefits                                                      |  |               | 269,026   |   |               |   | 208,005   |  
|Other
noncurrent liabilities                                             |  |               | 111,988   |   |               |   | 146,970   |  
|Total
Noncurrent Liabilities                                             |  |               | 2,293,741 |   |               |   | 2,249,010 |  
|MINORITY
INTEREST IN CONSOLIDATED SUBSIDIARIES                           |  |               | 1,575     |   |               |   | 310       |  
|                                                                         |  |              
|COMMITMENTS
AND CONTINGENCIES                                            |  |               | -         |   |               |   | -         |  
|                                                                         |  |              
|SHAREHOLDERS EQUITY                                                     |  |               |           |   |               |   |           |  
|Common stock,
$0.02 1/12 par value; shares authorized                   |  |               |           |   |               |   |           |  
|250,000,000;
shares issued  76,276,000 in 2004 and                      |  |               |           |   |               |   |           |  
|79,264,000 in
2003                                                       |  |               | 1,589     |   |               |   | 1,651     |  
|Additional
capital                                                       |  |               | 1,093,486 |   |               |   | 1,074,483 |  
|Retained
earnings                                                        |  |               | 489,254   |   |               |   | 512,997   |  
|Accumulated
other comprehensive loss                                     |  |               | (136,060  | ) |               |   | (98,509   | )
|Treasury stock,
at cost, 20,000 shares in 2004 and 25,000 shares in 2003 |  |               | (1,113    | ) |               |   | (1,377    | )
|Total
Shareholders Equity                                               |  |               | 1,447,156 |   |               |   | 1,489,245 |  
|Total
Liabilities and Shareholders Equity                               |  | $             | 4,222,278 |   |               | $ | 4,190,026 |  



See Notes to Consolidated
Financial Statements.



27



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##### Table of Contents



Knight Ridder Consolidated
Statement of Income

(In thousands, except per share data)



|                                                                                                             |  |                            |           |   |               |   |           |               |  |   |           |  
|------------------------------------------------------------------------------------------------------------ |  | -------------------------- | --------- | - | ------------- | - | --------- | ------------- |  | - | --------- | -
|                                                                                                             |  | FOR THE FISCAL YEARS ENDED |          
|                                                                                                             |  | DEC. 26, 2004              |           |   | DEC. 28, 2003 |   |           | DEC. 29, 2002 | 
|OPERATING REVENUE                                                                                            |  |                            |           |   |               |   |           |               |  |   |           |  
|Advertising                                                                                                  |  |                            |           |   |               |   |           |               |  |   |           |  
|Retail                                                                                                       |  | $                          | 1,087,684 |   |               | $ | 1,074,891 |               |  | $ | 1,087,783 |  
|National                                                                                                     |  |                            | 394,165   |   |               |   | 382,995   |               |  |   | 329,958   |  
|Classified                                                                                                   |  |                            | 869,179   |   |               |   | 822,436   |               |  |   | 838,142   |  
|Total                                                                                                        |  |                            | 2,351,028 |   |               |   | 2,280,322 |               |  |   | 2,255,883 |  
|Circulation                                                                                                  |  |                            | 543,933   |   |               |   | 559,234   |               |  |   | 572,973   |  
|Other                                                                                                        |  |                            | 119,188   |   |               |   | 106,435   |               |  |   | 97,979    |  
|Total Operating
Revenue                                                                                      |  |                            | 3,014,149 |   |               |   | 2,945,991 |               |  |   | 2,926,835 |  
|                                                                                                             |  |                            |          
|OPERATING COSTS                                                                                              |  |                            |           |   |               |   |           |               |  |   |           |  
|Labor and
employee benefits                                                                                  |  |                            | 1,207,376 |   |               |   | 1,176,627 |               |  |   | 1,124,484 |  
|Newsprint, ink
and supplements                                                                               |  |                            | 396,075   |   |               |   | 383,099   |               |  |   | 353,331   |  
|Other
operating costs                                                                                        |  |                            | 724,773   |   |               |   | 706,217   |               |  |   | 718,963   |  
|Depreciation
and amortization                                                                                |  |                            | 100,685   |   |               |   | 112,441   |               |  |   | 124,695   |  
|Total Operating
Costs                                                                                        |  |                            | 2,428,909 |   |               |   | 2,378,384 |               |  |   | 2,321,473 |  
|                                                                                                             |  |                            |          
|OPERATING INCOME                                                                                             |  |                            | 585,240   |   |               |   | 567,607   |               |  |   | 605,362   |  
|Other
Income (Expense)                                                                                       |  |                            |           |   |               |   |           |               |  |   |           |  
|Interest
expense                                                                                             |  |                            | (54,596   | ) |               |   | (70,794   | )             |  |   | (74,969   | )
|Interest
expense capitalized                                                                                 |  |                            | 4,746     |   |               |   | 2,079     |               |  |   | 718       |  
|Interest
income                                                                                              |  |                            | 230       |   |               |   | 250       |               |  |   | 381       |  
|Interest
expense, net                                                                                        |  |                            | (49,620   | ) |               |   | (68,465   | )             |  |   | (73,870   | )
|Equity in
losses, net of earnings, of unconsolidated companies and joint ventures                            |  |                            | (23,883   | ) |               |   | (24,077   | )             |  |   | (62,262   | )
|Minority
interest in earnings of consolidated subsidiaries                                                   |  |                            | (9,911    | ) |               |   | (10,391   | )             |  |   | (11,103   | )
|Other,
net                                                                                                   |  |                            | (532      | ) |               |   | (1,660    | )             |  |   | (9,457    | )
|Total Other
Expense                                                                                          |  |                            | (83,946   | ) |               |   | (104,593  | )             |  |   | (156,692  | )
|Income
before income taxes and cumulative effect of change in accounting principle of unconsolidated company |  |                            | 501,294   |   |               |   | 463,014   |               |  |   | 448,670   |  
|Income
taxes                                                                                                 |  |                            | 175,051   |   |               |   | 166,943   |               |  |   | 166,943   |  
|Net income
before cumulative effect of change in accounting principle of unconsolidated company              |  |                            | 326,243   |   |               |   | 296,071   |               |  |   | 281,727   |  
|Cumulative
effect of change in accounting principle of unconsolidated company, net of tax                    |  |                            |           |   |               |   |           |               |  |   | (24,279   | )
|Net
Income                                                                                                   |  | $                          | 326,243   |   |               | $ | 296,071   |               |  | $ | 257,448   |  
|                                                                                                             |  |                            |          
|NET INCOME PER SHARE  BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE OF UNCONSOLIDATED COMPANY  |  |                            |           |   |               |   |           |               |  |   |           |  
|Basic                                                                                                        |  | $                          | 4.19      |   |               | $ | 3.68      |               |  | $ | 3.39      |  
|Diluted                                                                                                      |  |                            | 4.13      |   |               |   | 3.63      |               |  |   | 3.33      |  
|CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE OF UNCONSOLIDATED
COMPANY                                |  |                            |           |   |               |   |           |               |  |   |           |  
|Basic                                                                                                        |  | $                          |          |   |               | $ |          |               |  | $ | (0.29     | )
|Diluted                                                                                                      |  |                            |          |   |               |   |          |               |  |   | (0.29     | )
|NET INCOME PER SHARE                                                                                         |  |                            |           |   |               |   |           |               |  |   |           |  
|Basic                                                                                                        |  | $                          | 4.19      |   |               | $ | 3.68      |               |  | $ | 3.10      |  
|Diluted                                                                                                      |  |                            | 4.13      |   |               |   | 3.63      |               |  |   | 3.04      |  
|AVERAGE SHARES OUTSTANDING                                                                                   |  |                            |           |   |               |   |           |               |  |   |           |  
|Basic                                                                                                        |  |                            | 77,910    |   |               |   | 80,401    |               |  |   | 83,066    |  
|Diluted                                                                                                      |  |                            | 78,950    |   |               |   | 81,477    |               |  |   | 84,726    |  
|Dividends
per Share                                                                                          |  | $                          | 1.33      |   |               | $ | 1.18      |               |  | $ | 1.02      |  



See Notes to Consolidated
Financial Statements.



28



---

##### Table of Contents



Knight Ridder Consolidated
Statement of Cash Flows

(In thousands)



|                                                                                  |  |                            |          |   |               |   |          |               |  |   |          |  
|--------------------------------------------------------------------------------- |  | -------------------------- | -------- | - | ------------- | - | -------- | ------------- |  | - | -------- | -
|                                                                                  |  | FOR THE FISCAL YEARS ENDED |         
|                                                                                  |  | DEC. 26, 2004              |          |   | DEC. 28, 2003 |   |          | DEC. 29, 2002 | 
|CASH
PROVIDED BY OPERATING ACTIVITIES                                             |  |                            |          |   |               |   |          |               |  |   |          |  
|Net
income                                                                        |  | $                          | 326,243  |   |               | $ | 296,071  |               |  | $ | 257,448  |  
|Noncash items
deducted from (included in) income:                                 |  |                            |          |   |               |   |          |               |  |   |          |  
|Depreciation                                                                      |  |                            | 93,037   |   |               |   | 104,588  |               |  |   | 115,669  |  
|Amortization
of other identified intangible assets                                |  |                            | 6,831    |   |               |   | 6,822    |               |  |   | 6,814    |  
|Amortization
of other assets                                                      |  |                            | 817      |   |               |   | 1,031    |               |  |   | 2,204    |  
|Provision
(benefit) for deferred income taxes                                     |  |                            | (4,318   | ) |               |   | (1,045   | )             |  |   | 103,932  |  
|Provision for
bad debts and adjustments                                           |  |                            | 11,118   |   |               |   | 18,228   |               |  |   | 19,862   |  
|Cumulative
effect of change in accounting principle of unconsolidated             |  |                            |          |   |               |   |          |               |  |   |          |  
|company                                                                           |  |                            |          |   |               |   |          |               |  |   | 24,279   |  
|Losses (gains)
on sales, exchange and write-down of investments                   |  |                            | (750     | ) |               |   | (910     | )             |  |   | 7,435    |  
|Minority
interest in earnings of consolidated subsidiaries                        |  |                            | 9,911    |   |               |   | 10,391   |               |  |   | 11,103   |  
|Other items,
net                                                                  |  |                            | (33,529  | ) |               |   | (27,020  | )             |  |   | 1,347    |  
|Cash items not
deducted from (included in) income:                                |  |                            |          |   |               |   |          |               |  |   |          |  
|Contributions
lower than (in excess of) pension and other postretirement          |  |                            |          |   |               |   |          |               |  |   |          |  
|benefit
expenses                                                                  |  |                            | 17,350   |   |               |   | (11,109  | )             |  |   | (151,300 | )
|Distributions
(in excess of) less than losses, net of earnings from investees     |  |                            | (25,674  | ) |               |   | (23,855  | )             |  |   | 39,608   |  
|Change in
certain assets and liabilities, excluding balances from the             |  |                            |          |   |               |   |          |               |  |   |          |  
|acquisition of
businesses:                                                        |  |                            |          |   |               |   |          |               |  |   |          |  
|Accounts
receivable                                                               |  |                            | (16,407  | ) |               |   | (44,546  | )             |  |   | (5,853   | )
|Inventories                                                                       |  |                            | (6,204   | ) |               |   | 2,108    |               |  |   | (691     | )
|Other
assets                                                                      |  |                            | 29,703   |   |               |   | 66,565   |               |  |   | 28,010   |  
|Accounts
payable                                                                  |  |                            | 1,678    |   |               |   | 46,245   |               |  |   | 19,316   |  
|Income taxes
payable                                                              |  |                            | 14,509   |   |               |   | 16,360   |               |  |   | (53,117  | )
|Other
liabilities                                                                 |  |                            | 33,166   |   |               |   | (16,384  | )             |  |   | (16,425  | )
|Net Cash
Provided by Operating Activities                                         |  |                            | 457,481  |   |               |   | 443,540  |               |  |   | 409,641  |  
|CASH
REQUIRED FOR INVESTING ACTIVITIES                                            |  |                            |          |   |               |   |          |               |  |   |          |  
|Purchases of
property, plant and equipment                                        |  |                            | (117,260 | ) |               |   | (73,187  | )             |  |   | (70,012  | )
|Acquisition
of, and investments in, businesses                                    |  |                            | (43,655  | ) |               |   | (44,533  | )             |  |   |          |  
|Proceeds from
sales of investments                                                |  |                            | 815      |   |               |   | 13,490   |               |  |   | 51,333   |  
|Other items,
net                                                                  |  |                            | 1,704    |   |               |   | (2,463   | )             |  |   |          |  
|Net Cash
Required for Investing Activities                                        |  |                            | (158,396 | ) |               |   | (106,693 | )             |  |   | (18,679  | )
|CASH
REQUIRED FOR FINANCING ACTIVITIES                                            |  |                            |          |   |               |   |          |               |  |   |          |  
|Purchase of
treasury stock                                                        |  |                            | (305,238 | ) |               |   | (285,964 | )             |  |   | (257,101 | )
|Net decrease
in commercial paper                                                  |  |                            | (154,725 | ) |               |   | (49,647  | )             |  |   | (112,097 | )
|Proceeds from
issuance of long-term debt                                          |  |                            | 197,936  |   |               |   |          |               |  |   |          |  
|Repayment of
long-term debt                                                       |  |                            |          |   |               |   |          |               |  |   | (850     | )
|Payment of
cash dividends                                                         |  |                            | (103,617 | ) |               |   | (94,937  | )             |  |   | (84,832  | )
|Proceeds from
stock option exercises and stock purchases (including tax benefits) |  |                            | 78,787   |   |               |   | 99,119   |               |  |   | 77,216   |  
|Other items,
net                                                                  |  |                            | (21,281  | ) |               |   | (11,212  | )             |  |   | (11,255  | )
|Net Cash
Required for Financing Activities                                        |  |                            | (308,138 | ) |               |   | (342,641 | )             |  |   | (388,919 | )
|Net Increase
(Decrease) in Cash                                                   |  |                            | (9,053   | ) |               |   | (5,794   | )             |  |   | 2,043    |  
|Cash at
beginning of year                                                         |  |                            | 33,536   |   |               |   | 39,330   |               |  |   | 37,287   |  
|Cash at end of
year                                                               |  | $                          | 24,483   |   |               | $ | 33,536   |               |  | $ | 39,330   |  
|SUPPLEMENTAL CASH FLOW INFORMATION                                                |  |                            |          |   |               |   |          |               |  |   |          |  
|Noncash
investing activities:                                                     |  |                            |          |   |               |   |          |               |  |   |          |  
|Write-down of
investments                                                         |  | $                          | -        |   |               | $ | (1,550   | )             |  | $ | (3,086   | )
|Noncash
financing activities:                                                     |  |                            |          |   |               |   |          |               |  |   |          |  
|Issuance of
treasury stock associated with long-term incentive plan               |  |                            |          |   |               |   |          |               |  |   |          |  
|Treasury
stock                                                                    |  |                            |          |   |               |   | 12,176   |               |  |   |          |  
|Issuance of
common stock in exchange for treasury stock                           |  |                            |          |   |               |   |          |               |  |   |          |  
|Treasury
Stock                                                                    |  |                            | (398     | ) |               |   | (3,230   | )             |  |   | (235     | )
|Additional
capital                                                                |  |                            | 398      |   |               |   | 3,230    |               |  |   | 235      |  



See Notes to Consolidated
Financial Statements.



29



---

##### Table of Contents



Knight Ridder Consolidated
Statement of Shareholders Equity

(in thousands, except share data)



|                                                                      |  |            |   |  |            |  
|--------------------------------------------------------------------- |  | ---------- | - |  | ---------- | -
|                                                                      |  |            |   |  |            |  
|                                                                      |  |            |   |  |            |  
|                                                                      |  | COMMON     |   |  | TREASURY   |  
|                                                                      |  | SHARES     |   |  | SHARES     |  
|BALANCE AT DECEMBER 30,
2001                                          |  | 84,012,749 |   |  | (34,757    | )
|Issuance of common shares under stock option
plan                     |  | 1,418,183  |   |  |            |  
|Issuance of common shares under stock purchase
plan                   |  | 226,267    |   |  |            |  
|Issuance of treasury shares to nonemployee
directors                  |  |            |   |  | 4,666      |  
|Purchase of treasury shares                                           |  |            |   |  | (4,033,531 | )
|Retirement of treasury shares                                         |  | (3,839,789 | ) |  | 3,839,789  |  
|Tax benefits arising from employees stock
plans                       |  |            |   |  |            |  
|Issuance of options to employees of
equity-method investee            |  |            |   |  |            |  
|Comprehensive income:                                                 |  |            |   |  |            |  
|Net income                                                            |  |            |   |  |            |  
|Additional minimum pension liability, net of
tax of $61,935           |  |            |   |  |            |  
|Comprehensive income                                                  |  |            |   |  |            |  
|Cash dividends declared                                               |  |            |   |  |            |  
|BALANCE AT DECEMBER 29,
2002                                          |  | 81,817,410 |   |  | (223,833   | )
|Issuance of common shares under stock option
plan                     |  | 1,551,028  |   |  |            |  
|Issuance of common shares under stock purchase
plan                   |  | 216,910    |   |  |            |  
|Issuance of treasury shares under long-term
incentive plan            |  |            |   |  | 194,658    |  
|Issuance of treasury shares to nonemployee
directors                  |  |            |   |  | 5,429      |  
|Purchase of common shares from
employees                              |  |            |   |  | (53,489    | )
|Purchase of treasury shares                                           |  |            |   |  | (4,269,000 | )
|Retirement of treasury shares                                         |  | (4,321,573 | ) |  | 4,321,573  |  
|Tax benefits arising from employees stock
plans                       |  |            |   |  |            |  
|Issuance of options to employees of
equity-method investee            |  |            |   |  |            |  
|Other                                                                 |  |            |   |  | 22         |  
|Comprehensive income:                                                 |  |            |   |  |            |  
|Net income                                                            |  |            |   |  |            |  
|Change in additional minimum pension
liability, net of tax of $14,367 |  |            |   |  |            |  
|Change in additional minimum pension liability
of                     |  |            |   |  |            |  
|unconsolidated companies, net of tax of
$11,286                       |  |            |   |  |            |  
|Comprehensive income                                                  |  |            |   |  |            |  
|Cash dividends declared                                               |  |            |   |  |            |  
|BALANCE AT DECEMBER 28,
2003                                          |  | 79,263,775 |   |  | (24,641    | )
|Issuance of common shares under stock option
plan                     |  | 1,084,508  |   |  |            |  
|Issuance of common shares under stock purchase
plan                   |  | 213,153    |   |  |            |  
|Issuance of treasury shares to nonemployee
directors                  |  |            |   |  | 4,739      |  
|Purchase of common shares from
employees                              |  |            |   |  | (5,923     | )
|Purchase of treasury shares                                           |  |            |   |  | (4,281,000 | )
|Retirement of treasury shares                                         |  | (4,285,015 | ) |  | 4,285,015  |  
|Tax benefits arising from employees stock
plans                       |  |            |   |  |            |  
|Issuance of options to employees of
equity-method investee            |  |            |   |  |            |  
|Other                                                                 |  |            |   |  | 1,908      |  
|Comprehensive income:                                                 |  |            |   |  |            |  
|Net income                                                            |  |            |   |  |            |  
|Change in additional minimum pension
liability, net of tax of $20,983 |  |            |   |  |            |  
|Change in additional minimum pension liability
of                     |  |            |   |  |            |  
|unconsolidated subsidiaries, net of tax of
$1,507                     |  |            |   |  |            |  
|Unrealized loss on derivative instruments
of                          |  |            |   |  |            |  
|unconsolidated companies, net of tax of
$364                          |  |            |   |  |            |  
|Comprehensive income                                                  |  |            |   |  |            |  
|Cash dividends
declared                                               |  |            |   |  |            |  
|BALANCE AT DECEMBER 26,
2004                                          |  | 76,276,421 |   |  | (19,902    | )



See Notes to Consolidated
Financial Statements.



30



---

##### Table of Contents



Knight Ridder Consolidated
Statement of Shareholders Equity, continued

(in thousands, except share data)



| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   |           |  
| |  | ------ | ----- | - | ---------- | - | --------- | -------- |  | - | ------------- | - |  | -------- | -------- | - | ----- | - | -------- | - |  | - | --------- | -
| |  |        |       |   |            |   |           |          |  |   | ACCUMULATED   |   |  |          |          |   |       |  
| |  |        |       |   |            |   |           |          |  |   | OTHER         |   |  |          |          |   |       |  
| |  | COMMON |       |   | ADDITIONAL |   |           | RETAINED |  |   | COMPREHENSIVE |   |  | TREASURY |          |   |       |  
| |  | STOCK  |       |   | CAPITAL    |   |           | EARNINGS |  |   | INCOME (LOSS) |   |  | STOCK    |          |   | TOTAL |  
| |  | $      | 1,750 |   |            | $ | 984,830   |          |  | $ | 575,649       |   |  | $        |         |   |       | $ | (1,941   | ) |  | $ | 1,560,288 |  
| |  |        | 30    |   |            |   | 64,829    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 64,859    |  
| |  |        | 5     |   |            |   | 12,352    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 12,357    |  
| |  |        |       |   |            |   | 30        |          |  |   |               |   |  |          |          |   |       |   | 260      |   |  |   | 290       |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   | (257,101 | ) |  |   | (257,101  | )
| |  |        | (80   | ) |            |   | (47,236   | )        |  |   | (197,679      | ) |  |          |          |   |       |   | 244,995  |   |  |   |           |  
| |  |        |       |   |            |   | 11,789    |          |  |   | (1,077        | ) |  |          |          |   |       |   |          |   |  |   | 10,712    |  
| |  |        |       |   |            |   | 1,125     |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 1,125     |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   | 257,448       |   |  |          |          |   |       |   |          |   |  |   | 257,448   |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          | (103,667 | ) |       |   |          |   |  |   | (103,667  | )
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 153,781   |  
| |  |        |       |   |            |   |           |          |  |   | (84,832       | ) |  |          |          |   |       |   |          |   |  |   | (84,832   | )
| |  | $      | 1,705 |   |            | $ | 1,027,719 |          |  | $ | 549,509       |   |  | $        | (103,667 | ) |       | $ | (13,787  | ) |  | $ | 1,461,479 |  
| |  |        | 30    |   |            |   | 73,452    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 73,482    |  
| |  |        | 4     |   |            |   | 12,583    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 12,587    |  
| |  |        |       |   |            |   | 441       |          |  |   |               |   |  |          |          |   |       |   | 12,176   |   |  |   | 12,617    |  
| |  |        |       |   |            |   | 57        |          |  |   |               |   |  |          |          |   |       |   | 303      |   |  |   | 360       |  
| |  |        | 2     |   |            |   | 3,228     |          |  |   |               |   |  |          |          |   |       |   | (3,230   | ) |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   | (285,964 | ) |  |   | (285,964  | )
| |  |        | (90   | ) |            |   | (56,413   | )        |  |   | (237,646      | ) |  |          |          |   |       |   | 289,124  |   |  |   | (5,025    | )
| |  |        |       |   |            |   | 12,689    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 12,689    |  
| |  |        |       |   |            |   | 727       |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 727       |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   | 1        |   |  |   | 1         |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   | 296,071       |   |  |          |          |   |       |   |          |   |  |   | 296,071   |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          | 24,048   |   |       |   |          |   |  |   | 24,048    |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          | (18,890  | ) |       |   |          |   |  |   | (18,890   | )
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 301,229   |  
| |  |        |       |   |            |   |           |          |  |   | (94,937       | ) |  |          |          |   |       |   |          |   |  |   | (94,937   | )
| |  | $      | 1,651 |   |            | $ | 1,074,483 |          |  | $ | 512,997       |   |  | $        | (98,509  | ) |       | $ | (1,377   | ) |  | $ | 1,489,245 |  
| |  |        | 22    |   |            |   | 54,551    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 54,573    |  
| |  |        | 5     |   |            |   | 12,833    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 12,838    |  
| |  |        |       |   |            |   | 82        |          |  |   |               |   |  |          |          |   |       |   | 264      |   |  |   | 346       |  
| |  |        |       |   |            |   | 245       |          |  |   |               |   |  |          |          |   |       |   | (398     | ) |  |   | (153      | )
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   | (305,238 | ) |  |   | (305,238  | )
| |  |        | (89   | ) |            |   | (60,497   | )        |  |   | (246,369      | ) |  |          |          |   |       |   | 305,492  |   |  |   | (1,463    | )
| |  |        |       |   |            |   | 11,183    |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 11,183    |  
| |  |        |       |   |            |   | 750       |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 750       |  
| |  |        |       |   |            |   | (144      | )        |  |   |               |   |  |          |          |   |       |   | 144      |   |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   | 326,243       |   |  |          |          |   |       |   |          |   |  |   | 326,243   |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          | (32,228  | ) |       |   |          |   |  |   | (32,228   | )
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          | (4,283   | ) |       |   |          |   |  |   | (4,283    | )
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   |           |  
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          | (1,040   | ) |       |   |          |   |  |   | (1,040    | )
| |  |        |       |   |            |   |           |          |  |   |               |   |  |          |          |   |       |   |          |   |  |   | 288,692   |  
| |  |        |       |   |            |   |           |          |  |   | (103,617      | ) |  |          |          |   |       |   |          |   |  |   | (103,617  | )
| |  | $      | 1,589 |   |            | $ | 1,093,486 |          |  | $ | 489,254       |   |  | $        | (136,060 | ) |       | $ | (1,113   | ) |  |   | 1,447,156 |  



See Notes to Consolidated
Financial Statements.



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Notes to Consolidated Financial Statements



NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

We report on a fiscal year ending on the last Sunday in the calendar year. Results for each of the fiscal years presented are for 52 weeks.

Our basis of consolidation is to include in the consolidated financial statements all of our accounts and those of our more-than-50%-owned subsidiaries. All significant intercompany transactions
and account balances have been eliminated.

We own a 75% equity interest in the Fort Wayne Newspapers Agency and
consolidate the results of its operations. The minority shareholders interest in the partners income has been reflected as an expense in the Consolidated Statement of Income in the caption Minority interest in earnings of
consolidated subsidiaries. Also included in this caption is a contractual minority interest resulting from a joint operating agreement that runs through 2021 between The Miami Herald Publishing Co. and Cox Newspapers, Inc., covering the
publication of The Miami Herald and The Miami News. The Miami News ceased publication in 1988.

We own a 50% equity interest
in Detroit Newspapers, a joint operating agency between Detroit Free Press, Inc., our wholly-owned subsidiary, and The Detroit News, Inc., a wholly-owned subsidiary of Gannett. In 1989, business operations of the Detroit Free Press and The
Detroit News were transferred to Detroit Newspapers under a joint operating agreement that expires in 2089. We show our share of revenue and expenses as a net amount in the Other line, under Operating Revenue in the Consolidated
Statement of Income.

Investments in entities in which we have an equity interest of at least 20% but not more than 50% are
accounted for under the equity method. We also account for our 13.5% investment in Ponderay Newsprint Company under the equity method, since we exercise significant influence over the operating and fiscal policies of Ponderay. We record our share of
earnings or losses and increase or decrease the investment by the equivalent amount. Dividends are recorded as a reduction to our investment.

Revenue recognition. Revenue recognition varies by source. Advertising revenue is recognized when advertisements are published. Circulation revenue is recognized when the newspaper is delivered to the customer. Other
revenue is recognized when the related product or service has been delivered. Revenue is recorded net of estimated incentive offerings, including special pricing agreements, promotions and other volume-based incentives. Revisions to these estimates
are charged to income in the period in which the facts that give rise to the revision become known.

Cash
includes cash and cash equivalents, consisting of highly liquid investments with maturities of 12 months or less from the date of purchase, overnight repurchase agreements of government securities and investment-grade commercial paper.

Accounts receivable are mostly from advertisers and newspaper subscribers. We extend unsecured credit to most of our
customers. We recognize that extending credit and setting appropriate reserves for receivables is largely a subjective decision based on knowledge of the customer and the industry. Credit limits, setting and maintaining credit standards, and
managing the overall quality of the credit portfolio is largely decentralized. The level of credit is influenced by thecustomers credit history with us and other available
information, including industry-specific data.

We maintain a reserve account for estimated losses resulting from the
inability of our customers to make required payments. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to pay, additional allowances might be required. We use a combination of the
percentage-of-sales, specific identification and the aging-of-accounts-receivable methods to establish allowances for losses on accounts receivable. Payment in advance for some advertising and circulation revenue has assisted us in maintaining
historical bad debt losses at less than 1% of revenue.

We also maintain a reserve for estimated adjustments to customer
invoices resulting mostly from disputes, in the normal course of business, related to size, placement, or color of the ad. We base our estimates on historical trends and current customer-specific information.

We enter into barter transactions with other businesses and we exchange our advertising and circulation for advertising products and
distribution rights for our newspapers. We also donate space to non-profit organizations as part of our community outreach commitment. The barter transactions, typically with terms of one year or less, are valued at fair market value based on our
advertising rates for the particular type of advertisement.

At December 26, 2004, we had approximately $9.5 million of
future media advertisement, products and services arising from bartered transactions in net accounts receivable, which will be charged to expense as they are used. We also have as of year end $20.6 million in deferred advertising and circulation
revenue arising from bartered transactions, which will be recorded as revenue when the advertisements are published and/or the copies are delivered, respectively. During the fiscal years ended 2004, 2003 and 2002, we recognized $15.1 million, $8.9
million and $6.2 million, respectively, in bartered advertising and circulation revenue.

We periodically assess the
recoverability of our barter credits and receivables. Factors considered in evaluating recoverability include managements plans with respect to advertising, circulation and other expenditures for which barter credits and receivables can be
used. Any impairment losses are charged to operations, as they are determined.

Inventories are priced at
the lower of cost (first-in, first-out method) or market value. Most of the inventory consists of newsprint. Newsprint inventory varies from approximately a 30-day to a 45-day supply, depending on availability and market conditions. Damaged
newsprint is generally returned to the manufacturer or supplier within 30 days for full credit. Obsolete inventory is generally not a factor. Inventories also include ink and other supplies used in printing newspapers.

Other assets includes investments in companies in which we own less than a 20% interest and are recorded at the lower
of cost or estimated fair value. These investments are reviewed for appropriate classification at the time of purchase and re-evaluated as of each balance sheet date.

Property, Plant and Equipment is recorded at cost, and depreciation and amortization is computed principally by the



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straight-line method over
the estimated useful lives of the assets as follows:



|                           |  |                                    
|-------------------------- |  | -----------------------------------
|TYPE OF ASSET              |  | DEPRECIATION OR AMORTIZATION PERIOD
|Land improvements          |  | 5 to 10 years                      
|Buildings and improvements |  | 10 to 40 years                     
|Equipment                  |  | 3 to 25 years                      



We capitalize interest
expense as part of the cost of constructing major facilities and equipment. For the years ended 2004, 2003 and 2002, capitalized interest amounted to $4.7 million, $2.1 million, and $718,000, respectively. Expenditures for maintenance, repairs and
minor renovations are charged to expense as incurred. Upon sale or disposition of property and equipment, the cost and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is recognized.

In November 2004, we announced our intent to sell approximately 10 acres of land in downtown Miami, adjacent to The Miami
Herald. The land is being marketed and we expect the sale to be completed in 2005. In accordance with SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, at December 26, 2004, the land held for sale of $10.3
million is included in the caption Other current assets. In accordance with SFAS No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the land held for sale is carried on
the balancesheet at the lower of its carrying amount or fair value less cost to sell.

Deferred circulation revenue arises as a normal part of business from advance subscription payments for newspapers.

Current portion of long-term debt represents the portion of long-term debt payable within our next fiscal year. Long term debt payable within the next fiscal year is classified as
Long-term debt if management has the ability and intent to refinance for a period in excess of one year. Commercial paper is classified as Long-term debt as the commercial paper is supported by a revolving credit facility
maturing more than one year after the end of the last fiscal period.

Income Taxes are accounted for in
accordance with SFAS 109  Accounting for Income Taxes,which requires the liability method of accounting for income taxes. Deferred tax liabilities and assets are future tax consequences attributable to differences between
the financial statement and tax basis of assets and liabilities. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. Deferred tax assets and liabilities are revalued to reflect new tax rates in the period changes are enacted.

Long-term debt represents the carrying amounts of debentures, notes payable, other indebtedness with maturities longer than one year, and commercial paper backed by a revolving credit agreement and debt maturing
within the next fiscal year that management has the ability and intent to refinance at maturity for a period in excess of one year.



In accordance with SFAS 107  Disclosures about Fair Value of Financial Instruments,the following table presents the carrying
amounts and estimated fair values of our financial instruments as of December 26, 2004 and December 28, 2003 (in thousands):



|                              |  |                |           |            |   |                |  |            |           |  |   |          
|----------------------------- |  | -------------- | --------- | ---------- | - | -------------- |  | ---------- | --------- |  | - | ---------
|                              |  | 2004           |           | 2003      
|                              |  | CARRYINGAMOUNT |           | FAIR VALUE |   | CARRYINGAMOUNT |  | FAIR VALUE
|Long-term debt                |  | $              | 1,497,907 |            | $ | 1,667,079      |  | $          | 1,453,560 |  | $ | 1,647,544
|Interest rate swap agreements |  |                | 34,224    |            |   | 34,224         |  |            | 46,881    |  |   | 46,881   
|Total                         |  | $              | 1,532,131 |            | $ | 1,701,303      |  | $          | 1,500,441 |  | $ | 1,694,425



Fair value of
interest rate swap agreements are shown separately in our Consolidated Balance Sheet. Fair value of long-term debt and interest rate swap agreements are estimated using a discounted cash flow analysis based on our current incremental
borrowing rates for similar types of borrowing arrangements.

Comprehensive incomeis defined as net
income or loss and other changes in shareholders equity from certain other transactions and events from sources other than shareholders. Comprehensive income is reflected in the Consolidated Statement of Shareholders Equity.
Accumulated other comprehensive loss is reported in the Consolidated Balance Sheet. Additional information regarding other comprehensive loss is contained in Note 12, Accumulated Other Comprehensive Loss.

In accordance with theSFAS 144  Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of, we review long-lived assets and related intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of such assetsmay
not be fully recoverable. To date, no such impairment has been indicated. If a review indicates that the carrying value of these assets would not be recoverable as measured based on estimated undiscounted cash flows over their remaining life, the
carrying amount would be adjusted to fair value. The cash flow estimates used contain our best estimates, using appropriate and customary assumptions and projections.

We account for stock-based compensation plans using the intrinsic value method in accordance with APB Opinion 25  Accounting for Stock Issued to Employeesand disclose the
general and pro forma financial information required by SFAS 123 and SFAS 148.

In December 2002, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) 148  Accounting for Stock-Based Compensation  Transition and Disclosure. SFAS 148 amends SFAS 123 Accounting for
Stock-Based Compensation to require prominent disclosures in both annual and interim financial statements about the method of accounting



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for stock-based employee
compensation and the effect of the method used on reported results. SFAS 148 was effective for financial statements issued beginning in 2003. As allowed by SFAS 123, we follow the disclosure requirements of SFAS 123, but continue to account for our
employee stock option plans inaccordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, which results in no charge to
earnings when stock options are issued at fair market value.



Disclosures required by SFAS 123 and SFAS 148 are as follows:



|                             |  |      |       |   |      |   |       |      |  |   |       |  
|---------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|Option value information     |  | 2004 |       |   | 2003 |   |       | 2002 | 
|Fair value per option (a)(b) |  | $    | 11.22 |   |      | $ | 14.16 |      |  | $ | 11.65 |  
|Valuation assumptions        |  |      |       |   |      |   |       |      |  |   |       |  
|Expected option term (years) |  |      | 4.3   |   |      |   | 4.3   |      |  |   | 4.3   |  
|Expected volatility          |  |      | 18.2  | % |      |   | 20.7  | %    |  |   | 21.4  | %
|Expected dividend yield      |  |      | 1.9   | % |      |   | 1.7   | %    |  |   | 1.6   | %
|Risk-free interest rate      |  |      | 3.5   | % |      |   | 3.4   | %    |  |   | 3.0   | %

(a) Weighted averages of option grants during each period

(b) Estimated using Black-Scholes option pricing model under the valuation assumptions indicated



The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of subjective assumptions, including the expected stock price volatility. Because our stock options
have characteristics significantly different from those oftraded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the
existing models, in managements opinion, do not necessarily provide a reliable single measure of the fair value of our stock options.



For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options vesting period. In addition,
the 15% discount in market value under the Employees Stock Purchase Plan is treated as compensation expense for pro forma purposes. Our reported and pro forma information is as follows (in thousands, except for earnings per share data):



|                                                                            |  |      |         |      |   |         |  |   |        
|--------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | - | -------
|                                                                            |  | 2004 |         | 2003 |   | 2002   
|Net income, as reported                                                     |  | $    | 326,243 |      | $ | 296,071 |  | $ | 257,448
|Less: Stock-based employee compensation expense determined under fair
value |  |      |         |      |   |         |  |   |        
|based method for all awards, net of related tax effects                     |  |      | 14,947  |      |   | 14,631  |  |   | 15,040 
|Pro forma net income                                                        |  | $    | 311,296 |      | $ | 281,440 |  | $ | 242,408
|Basic earnings per share, as reported                                       |  | $    | 4.19    |      | $ | 3.68    |  | $ | 3.10   
|Pro forma basic earnings per share                                          |  |      | 4.00    |      |   | 3.50    |  |   | 2.92   
|Diluted earnings per share, as reported                                     |  | $    | 4.13    |      | $ | 3.63    |  | $ | 3.04   
|Pro forma diluted earnings per share                                        |  |      | 3.94    |      |   | 3.45    |  |   | 2.86   



On December 16, 2004,
the FASB issued SFAS No. 123 (revised 2004),Share-Based Payment, which is a revision of SFAS 123,Accounting for Stock-Based Compensation. Generally, the approach in SFAS 123(R) is similar to the approach
described in SFAS 123. However, SFAS 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an
alternative. The new standard will be effective for public entities (excluding small business issuers) in the first interim or annual reporting period beginning after June 15, 2005, irrespective of the entitys fiscal year. Early adoption is
permitted in periods in which financial statements have not yet been issued. SFAS 123(R) allows for two transition alternatives for public companies: (a) modified-prospective transition or (b) modified-retrospective transition. Under the
modified-prospective transition method, companies are required to recognize compensation cost for share-based payments to employees based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are
first applied. Measurement and attribution of compensation cost for awards that were granted prior to, but not vested as ofthe date SFAS 123(R) is adopted would be based on the same
estimate of the grant-date fair value and the same attribution method used previously under SFAS 123 (either for financial statement recognition or pro forma disclosure purposes). Prior periods are not restated. For periods prior to adoption, the
financial statements are unchanged (and the pro forma disclosures previously required by SFAS 123 continue to be required under the new Standard to the extent those amounts differ from those in the income statement). For periods subsequent to
adoption, the impact of this transition method generally is the same as if the modified-retrospective method were applied. Accordingly, pro forma disclosure will not be necessary for periods after the adoption of the new Standard. Under the
modified-retrospective transition method, companies are allowed to restate prior periods by recognizing compensation cost in the amounts previously reported in the pro forma footnote disclosure under the provisions of SFAS 123. New awards and
unvested awards would be accounted for in the same manner as the modified-prospective method. Because of the mid-year effective date, companies are permitted to apply the modified-retrospective transition alternative either (a) to all periods
presented or (b) to the start of the fiscal year in which



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SFAS 123(R) is adopted. We
are currently evaluating the alternative transition methods and expect to adopt SFAS 123(R), as required, for our third quarter beginning June 27, 2005. Had we adopted SFAS 123 in 2004, our diluted earnings per share would have been $0.19 lower.

Shares used to calculate earnings per share are as follows (in thousands):



|                                      |  |        |  |        |  |       
|------------------------------------- |  | ------ |  | ------ |  | ------
|                                      |  | 2004   |  | 2003   |  | 2002  
|Basic weighted-average shares         |  |        |  |        |  |       
|outstanding                           |  | 77,910 |  | 80,401 |  | 83,066
|Effect of dilutive stock options      |  | 1,040  |  | 1,076  |  | 1,660 
|Diluted weighted-average shares       |  |        |  |        |  |       
|outstanding                           |  | 78,950 |  | 81,477 |  | 84,726
|Weighted average shares of stock      |  |        |  |        |  |       
|options included in the               |  |        |  |        |  |       
|determination of common equivalent    |  |        |  |        |  |       
|shares for the calculation of diluted |  |        |  |        |  |       
|earnings per share                    |  | 7,690  |  | 8,772  |  | 8,562 
|Weighted average shares of stock      |  |        |  |        |  |       
|options excluded from the             |  |        |  |        |  |       
|calculation of diluted earnings       |  |        |  |        |  |       
|per share because their               |  |        |  |        |  |       
|impact is antidilutive                |  | 1,926  |  | 220    |  | 115   



Advertising
costs are expensed when incurred. Advertising expense for the years ended December 26, 2004, December 28, 2003 and December 29, 2002, was $15.4 million, $17.8 million and $18.6 million, respectively.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to
make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates.

Certain amounts in prior years have been reclassified to conform to the 2004 presentation related primarily to the presentation of certain
categories of what was formerly retail revenue as national revenue. We made this change in the second quarter of 2004 so that our reporting would be consistent both internally and among peer newspapers. Additionally, certain amounts presented in the
2003 Consolidated Balance Sheet have been reclassified to conform to the 2004 presentation, specifically related to the Annual Incentive Deferral Plan and to Pension assets and Employee benefits.



RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations (SFAS 143). Under these rules, a
liability for a long-lived asset retirement obligation should be recognized in the period in which it is incurred and should be initially measured at its fair value. Changes in the liability due to the passage of time are recognized as operating
expenses in the income statement and referred to as accretion expenses. SFAS 143 is required to be implemented for fiscal years beginning after June 15, 2002. The adoption of SFAS 143 did not have a material impact on our results of operations or
financial position.

In June 2002, the FASB issued SFAS No. 146  Accounting for Costs Associated with Exit or
DisposalActivities. SFAS 146 requires recording costs associated with exit or disposal activities at fair value when a liability has been incurred. Under previous
guidance, certain exit costs were accrued upon our commitment to an exit plan, which is generally before an actual liability has been incurred. The requirements of SFAS 146 are effective prospectively for exit or disposal activities initiated after
December 31, 2002. The adoption of SFAS 146 did not have a material impact on our results of operations or financial position.

In November 2002, the FASB issued FASB Interpretation No. 45  Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45). FIN 45
requires that upon issuance of a guarantee, a guarantor must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45 also requires additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The disclosure requirements are effective for financial statements
of interim or annual periods ending after December 15, 2002. We have certain existing guarantees that when modified will require us to record a liability on our balance sheet for the fair market value of the guarantee.

In January 2003, the FASB issued FIN No. 46  Consolidation of Variable Interest Entities. In December 2003, the
FASB issued Interpretation No. 46 (revised December 2003) (FIN 46R), which replaces FIN 46. This interpretation of Accounting Research Bulletin No. 51, Consolidated Financial Statements, defines what these variable interest entities are
and provides guidelines on identifying them and assessing an enterprises interests in a variable interest entity to decide whether to consolidate that entity. Generally, application of FIN 46R is required in financial statements of public
entities that have interests in variable interest entities or potential variable interest entities commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities for all other types of
entities is required in financial statements for periods ending after March 15, 2004. The adoption of FIN 46 or FIN 46R did not have a material impact on our results of operations or financial condition.

In April 2003, the FASB issued SFAS No. 149  Amendment of Statement No. 133 on Derivative Instruments and Hedging
Activities. SFAS 149 is effective for contracts with derivative instruments and hedging relationships entered into or modified after June 30, 2003. SFAS 149 requires that contracts with comparable characteristics be accounted for
similarly. This statement also amends the definition of an underlying security to conform it to language used in the FASBs Financial Interpretation (FIN) 45  Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others. We account for our hedges with comparable characteristics similarly; accordingly, the adoption of SFAS 149 did not have a material impact on our results of operations or
financial position.

In May 2003, the FASB issued SFAS No. 150  Accounting for Certain Financial Instruments with
Characteristics of



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both Liabilities and
Equity, which addresses how to classify and measure certain financial instruments with characteristics of both liabilities (or an asset, in some circumstances) and equity. SFAS 150 requirements apply to issuers classification and
measurement of freestanding financial instruments, including those that comprise more than one option or forward contract. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS 150 did not have a material impact on our results of operations or financial position.

In December 2003, the FASB issued SFAS No. 132 (revised 2003)  Employers Disclosures about Pensions and Other
Postretirement Benefits.This Statement revises employers disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition provisions of SFAS Statements No. 87,
Employers Accounting for Pensions, No. 88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and No. 106, Employers Accounting for Postretirement
Benefits Other Than Pensions. This Statement retains the disclosure requirements contained in the original version of SFAS Statement No. 132, Employers Disclosures about Pensions and Other Postretirement Benefits. It requires
additional disclosures about the assets, obligations, cash flows and net periodic benefit cost of defined benefit pension plans and other postretirement benefit plans. It requires that information be provided separately for pension plans and for
other postretirement benefit plans. The revised Statement is effective for financial statements with fiscal years ending after December 15, 2003. The adoption of SFAS No. 132 (revised 2003) did not have a material impact on our results of operations
or financial position.

In May 2004, the FASB issued FASB Staff Position (FSP) 106-2  Accounting and
Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act. which provides guidance on how companies should account for the impact of the Medicare Prescription Drug, Improvement and Modernization
Act of 2003 (the Act) on its postretirement health care plans. To encourage employers to retain or provide postretirement drug benefits, beginning in 2006 the federal government will provide nontaxable subsidy payments to employers that
sponsor prescription drug benefits to retirees that are actuarially equivalent to the Medicare benefit. Although formal guidance in determining actuarial equivalence has not been provided, we expect that our prescription drug plan will
qualify for the government subsidy. Effective July 1, 2004, Knight Ridder prospectively adopted FSP 106-2. Adoption of FSP 106-2 reduced the accumulated postretirement benefit obligation by approximately $9.2 million and resulted in an unrecognized
actuarial gain of a similar amount. The unrecognized actuarial gain will be amortized over the estimated expected service life of the participants. Adoption resulted in a $600,000 reduction in postretirement benefits cost for the six months ended
December 26, 2004.



NOTE 2. INCOME TAXES

Our income tax expense is determined under the provision of Statement of Financial Accounting Standards 109, Accounting for Income Taxes, which requires
the use of the liability method.

Substantially all of our earnings are subject to domestic taxation. No material foreign
income taxes have been imposed on reported earnings.



Federal,
state and local income taxes (benefits) consist of the following (in thousands):



|                             |  |         |         |          |      |        |         |      |          |         |  |         |        |          |  |   |        |  |   |        
|---------------------------- |  | ------- | ------- | -------- | ---- | ------ | ------- | ---- | -------- | ------- |  | ------- | ------ | -------- |  | - | ------ |  | - | -------
|                             |  | 2004    |         |          | 2003 |        |         | 2002
|                             |  | CURRENT |         | DEFERRED |      |        | CURRENT |      | DEFERRED |         |  | CURRENT |        | DEFERRED
|Federal income taxes         |  | $       | 166,679 |          | $    | (3,694 | )       |      | $        | 145,701 |  | $       | (2,725 | )        |  | $ | 45,218 |  | $ | 98,825 
|State and local income taxes |  |         | 12,690  |          |      | (624   | )       |      |          | 22,287  |  |         | 1,680  |          |  |   | 17,793 |  |   | 5,107  
|Total                        |  | $       | 179,369 |          | $    | (4,318 | )       |      | $        | 167,988 |  | $       | (1,045 | )        |  | $ | 63,011 |  | $ | 103,932



Cash payments of
income taxes for the years 2004, 2003 and 2002 were $171.0 million, $114.1 million and $114.4 million, respectively.

The
differences between income tax expense shown in the financial statements and the amounts determined by applying the federal statutory rate of 35% in each year are as follows (in thousands):



|                                                 |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                 |  | 2004 |         |   | 2003 |   |         | 2002 | 
|Federal statutory income tax                     |  | $    | 175,453 |   |      | $ | 162,055 |      |  | $ | 157,034 |  
|State and local income taxes, net of tax benefit |  |      | 15,688  |   |      |   | 15,579  |      |  |   | 14,885  |  
|Tax settlements and other, net                   |  |      | (16,090 | ) |      |   | (10,691 | )    |  |   | (4,976  | )
|Total                                            |  | $    | 175,051 |   |      | $ | 166,943 |      |  | $ | 166,943 |  



Our
effective tax rate was lower in 2004 than in 2003, mainly due to the favorable resolution of tax matters from prior years.



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The deferred tax asset and
liability at the fiscal year end is comprised of the following components (in thousands):



|                                                                          |  |      |         |      |   |        
|------------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|                                                                          |  | 2004 |         | 2003
|DEFERRED TAX ASSETS                                                       |  |      |         |      |   |        
|Postretirement benefits other than pensions (including amounts related
to |  |      |         |      |   |        
|partnerships in which we participate)                                     |  | $    | 66,826  |      | $ | 72,224 
|Minimum pension liability                                                 |  |      | 79,708  |      |   | 58,854 
|Accrued interest                                                          |  |      | 4,952   |      |   | 10,039 
|Capital loss carryforward                                                 |  |      | 4,445   |      |   | 4,675  
|State net operating loss carryforward                                     |  |      | 15,825  |      |   | 16,057 
|Other nondeductible accruals                                              |  |      | 46,858  |      |   | 46,038 
|Deferred Tax Assets                                                       |  | $    | 218,614 |      | $ | 207,887
|Valuation allowance on carryforward items                                 |  |      | 12,392  |      |   | 13,060 
|Net Deferred Tax Assets                                                   |  | $    | 206,222 |      | $ | 194,827
|DEFERRED TAX LIABILITIES                                                  |  |      |         |      |   |        
|Depreciation and amortization                                             |  | $    | 348,263 |      | $ | 345,309
|Compensation and benefit accruals                                         |  |      | 31,063  |      |   | 52,905 
|Equity in partnerships and investees                                      |  |      | 69,545  |      |   | 64,288 
|Other                                                                     |  |      | 8,712   |      |   | 8,858  
|Deferred tax liabilities                                                  |  | $    | 457,583 |      | $ | 471,360
|Net deferred tax liability                                                |  | $    | 251,361 |      | $ | 276,533



The components of
deferred taxes included in the Consolidated Balance Sheet are as follows (in thousands):



|                           |  |      |         |      |   |        
|-------------------------- |  | ---- | ------- | ---- | - | -------
|                           |  | 2004 |         | 2003
|Current asset              |  | $    | 16,116  |      | $ | 19,899 
|Noncurrent liability       |  |      | 267,477 |      |   | 296,432
|Net deferred tax liability |  | $    | 251,361 |      | $ | 276,533



We also maintain a
liability to cover the cost of additional tax exposure items on the filing of the federal and state income tax returns. As of December 26, 2004 and December 28, 2003, this liability amounted to $31.8 million and $63.9 million, respectively.



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Note 3. Debt

In January 2004, we
entered into additional interest rate swap agreements, converting $200 million of fixed rate debt for variable rate debt. We entered into these agreements to manage interest rate exposure by achieving a desired proportion of fixed rate versus
variable rate debt.

In July 2004, we amended and restated our revolving credit facility. We extended its maturity to July 2009 and increased our credit capacity
to $1 billion from $895 million.

In November 2004, we issued $200 million of senior notes payable. The 10-year notes were
issued at a coupon rate of 4.625%. Proceeds were used to reduce the companys outstanding commercial paper.



Debt consisted of the following (in thousands):



|                                                                      |  |          |           |          |   |          
|--------------------------------------------------------------------- |  | -------- | --------- | -------- | - | ---------
|                                                                      |  | DEC. 26, |           | DEC. 28,
|                                                                      |  | 2004     |           | 2003    
|Long-term debt:                                                       |  |          |           |          |   |          
|Commercial paper due at various dates through February 14, 2005,
at   |  |          |           |          |   |          
|an effective interest rate of 2.27% as of December 26, 2004
and       |  |          |           |          |   |          
|1.09% as of December 28, 2003(a)                                      |  | $        | 210,679   |          | $ | 365,404  
|Debentures due on April 15, 2009, bearing interest at 9.875%, net
of  |  |          |           |          |   |          
|unamortized discount of $709 in 2004 and $874 in 2003                 |  |          | 199,291   |          |   | 199,126  
|Debentures due on November 1, 2027, bearing interest at 7.15%,
net    |  |          |           |          |   |          
|of unamortized discount of $4,484 in 2004 and $4,680 in 2003          |  |          | 95,516    |          |   | 95,320   
|Debentures due on March 15, 2029, bearing interest at 6.875%, net
of  |  |          |           |          |   |          
|unamortized discount of $2,949 in 2004 and $3,070 in 2003             |  |          | 297,051   |          |   | 296,930  
|Notes payable due on November 1, 2007, bearing interest at
6.625%,    |  |          |           |          |   |          
|net of unamortized discount of $648 in 2004 and $877 in 2003          |  |          | 99,352    |          |   | 99,123   
|Notes payable due on June 1, 2011, bearing interest at 7.125%, net
of |  |          |           |          |   |          
|unamortized discount of $1,857 in 2004 and $2,147 in 2003             |  |          | 298,144   |          |   | 297,853  
|Senior notes payable due on November 1, 2014, bearing interest
at     |  |          |           |          |   |          
|4.625%, net of unamortized discount of $2,030 in 2004                 |  |          | 197,970   |          |   | -        
|Senior notes payable due on December 15, 2005, bearing interest
at    |  |          |           |          |   |          
|6.3%, net of unamortized discount of $96 in 2004 and $196 in
2003(b)  |  |          | 99,904    |          |   | 99,804   
|Total debt                                                            |  |          | 1,497,907 |          |   | 1,453,560
|Less amounts payable in one year                                      |  |          | -         |          |   | 20,000   
|Total long-term debt                                                  |  | $        | 1,497,907 |          | $ | 1,433,560

(a) Commercial paper is supported by a $1 billion revolving credit facility, which matures in July 2009.
Debt covenants of the facility require us to maintain certain debt-to-cash flow ratio. Other provisions place restrictions on liens and prohibit cross-default.

(b) This amount has been excluded from less amounts payable in one year because management has the ability and intent to refinance this debt with commercial paper, which is supported by our $1 billion revolving credit
facility, which matures in 2009.



Interest payments during
2004 and 2003 were $64.0 million and $65.6 million, respectively.

We enter into certain interest rate swap agreements to
manage interest rate exposure by achieving a desired proportion of fixed-rate versus variable-rate debt. In accordance with SFAS 133  Accounting for Derivative Instruments and Hedging Activities, we account for our interest
rate swap agreements as fair-value hedges. Accordingly, changes to the fair market value of these agreements (due to movements in the benchmark interest rate) are recorded as both an asset and offsetting liability on the Consolidated Balance Sheet
in the caption Fair value of interest rate swap agreements. There was no ineffectiveness associated with the swaps during fiscal years 2004 and 2003. Also, we do not trade or engage in hedging for investment purposes.

The swap agreements expire at various dates in 2005, 2007, 2009 and 2011, matching the expiration and nominal value of the underlying
debt, and effectively convert an aggregate principal amount of $700 million of fixed-rate, long-term debt into variable-rate borrowings. The variable interest rates arebased on three- or
six-month LIBOR, plus a rate spread. For the year ended December 26, 2004, the weighted-average variable interest rate under these agreements was 4.3% versus a fixed rate of 8.0%. The fair value of the swap agreements at December 26, 2004 and
December 28, 2003, totaled $34.2 million and $46.9 million, respectively, and were recorded on the Balance Sheet as other noncurrent assets, with an offsetting noncurrent liability.

We guarantee 13.5% of the debt of Ponderay Newsprint Companys credit facility, which amounted to $9.7 million as of December 26,
2004. The guarantee arose in April 2000 when Ponderay restated its credit agreement with a bank consortium to replace a facility used to finance construction of the newsprint mill. We guarantee the portion of the credit facility that matures in
April 2006. The guarantee could be triggered by Ponderays failure to meet any of its bank covenants, at which time we could be liable for the full portion of this guarantee. This guarantee, accounted as an off-balance sheet instrument, totaled
$9.7 million and $13.2 million for 2004 and 2003, respectively.

We are a one-third partner of SP Newsprint Co. In November
2002, SP Newsprint amended and restated its credit agreement



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with certain lenders. The
agreement stipulates that should SPs consolidated liquidity fall below $5 million, it would be in default of its covenant and we and the other partners would be required to make a sufficient equity contribution (limited to approximately $6.7
million), in sufficient amount to cure the default. As of December 2004, we contributed equity of $2 million in connection with this agreement. The obligation ends when SP Newsprint first meets certain conditions including, but not limited to,
predetermined leverage and fixed-charge coverage ratios and certain liquidity requirements. We also had a demand obligation to SP Newsprint Co. for $6.7 million. The obligation arose in August 1985 in connection with an advance to us (and the other
partners) by SP. In 2003, SP Newsprint requested and we repaid this obligation.



The following table presents the approximate annual maturities of debt, net of discounts and excluding the fair market value of interest rate swaps, for the years after 2004 (in thousands):



|           |  |   |          
|---------- |  | - | ---------
|2005       |  | $ | -        
|2006       |  |   | -        
|2007       |  |   | 99,352   
|2008       |  |   | -        
|2009       |  |   | 509,874  
|Thereafter |  |   | 888,681  
|Total      |  | $ | 1,497,907



NOTE 4. UNCONSOLIDATED
COMPANIES AND JOINT VENTURES

The caption Equity in unconsolidated companies and joint ventures in the Consolidated
Balance Sheet represents our equity in the net assets of Detroit Newspapers; Seattle Times and subsidiaries; Newspapers First, a company responsible for the sales and servicing of retail, national and classified advertising accounts for a group of
newspapers; SP Newsprint Co. and Ponderay Newsprint Company, two newsprint mill partnerships; CareerBuilder, LLC, a company in the business of providing online recruitment and career development services; ClassifiedVentures, LLC, an online classified listings services; Knight Ridder/Tribune Information Services, Inc., a provider of online access to news wires, features, graphics and photographic content to
different media markets; Tribe, an online knowledge-sharing community; CityXpress, Corp., a company that provides online marketplaces, including event auctions, continuous business-to-consumer marketplaces, and ecommerce-enabled classifieds;
CrossMedia Services, Inc., an online advertising and marketing agency that enables us to localize the Internet; Media Consortium LLC, a purchasing consortium; Newscom, LLC, a company that provides online access to news wires, features, graphics and
photographic content to the media; Wave South Florida, a company devoted to the recreational boating and water sport industry through specialized publications and online auctions.

Following is our ownership interest in unconsolidated companies and joint ventures as of December 26, 2004:



|                                                 |  |            
|------------------------------------------------ |  | -----------
|                                                 |  | % OWNERSHIP
|COMPANY                                          |  | INTEREST   
|CareerBuilder, LLC                               |  | 33.3       
|Classified Ventures                              |  | 20.2       
|CityXpress Corp                                  |  | 35.6       
|CrossMedia Services, Inc.                        |  | 33.3       
|Detroit Newspaper Agency                         |  | 50.0       
|Knight Ridder/Tribune Information Services, Inc. |  | 50.0       
|Media Consortium LLC                             |  | 20.0       
|Newscom, LLC                                     |  | 50.0       
|Newspapers First                                 |  | 27.5       
|Ponderay Newsprint Company                       |  | 13.5       
|Seattle Times Company:                           |  |            
|Voting Stock                                     |  | 49.5       
|Nonvoting stock                                  |  | 65.0       
|SP Newsprint Co.                                 |  | 33.3       
|Tribe Networks, Inc.                             |  | 19.0       
|Wave South Florida                               |  | 40.0       



Summary financial
information for our unconsolidated companies, joint ventures and partnerships accounted for under the equity method is as follows (in thousands):



|                                                                                                       |  |      |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------------------------------------------------------ |  | ---- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                                       |  | 2004 |           |   | 2003 |   |           | 2002 | 
|Current assets                                                                                         |  | $    | 337,946   |   |      | $ | 312,075   |      |  | $ | 308,005   |  
|Property, plant and equipment, net, and other assets                                                   |  |      | 1,705,488 |   |      |   | 1,666,533 |      |  |   | 1,685,431 |  
|Current liabilities                                                                                    |  |      | 250,068   |   |      |   | 317,593   |      |  |   | 269,076   |  
|Long-term debt and other noncurrent liabilities                                                        |  |      | 596,918   |   |      |   | 576,824   |      |  |   | 620,976   |  
|Revenue                                                                                                |  |      | 1,759,494 |   |      |   | 1,500,202 |      |  |   | 1,423,174 |  
|Gross profit                                                                                           |  |      | 965,634   |   |      |   | 839,451   |      |  |   | 440,371   |  
|Earnings (losses) before cumulative effect of change in accounting principle
of unconsolidated company |  |      | 39,600    |   |      |   | 41,129    |      |  |   | (31,818   | )
|Cumulative effect of change in accounting principal of unconsolidated
company                          |  |      | -         |   |      |   | -         |      |  |   | (48,557   | )
|Earnings (losses), net                                                                                 |  |      | 39,600    |   |      |   | 41,129    |      |  |   | (80,375   | )
|Our share of:                                                                                          |  |      |           |   |      |   |           |      |  |   |           |  
|Net assets                                                                                             |  |      | 349,365   |   |      |   | 295,240   |      |  |   | 301,680   |  
|Equity losses, net of earnings, of unconsolidated companies and joint
ventures                         |  |      | (23,883   | ) |      |   | (24,077   | )    |  |   | (62,262   | )
|Dividends and cash distributions received                                                              |  | $    | 2,916     |   |      | $ | 3,125     |      |  | $ | 7,375     |  



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On June 25, 2004, The
Seattle Times sold certain parcels of land for net proceeds of $30 million. The Seattle Times used the proceeds to reduce its debt. Currently, the entire pre-tax gain of $24 million has been deferred due to certain unresolved contingencies. When
resolved, Knight Ridder, as a 49.5% owner of The Seattle Times, will record its pro-rata share of the gain for accounting purposes. We did not receive any cash in connection with this transaction.



NOTE 5. BUSINESS SEGMENTS

We report the results of our operations in two segments: newspapers and online. We also report certain administrative activities under the corporate
segment. Our operations are in the U.S. and no single customer accounted for 10% or more of our consolidated operating revenue.

Our newspaperssegment is comprised of 31 daily and 53 nondaily newspapers in 28 U.S. markets, with a readership of approximately 9.0 million daily and 12.6 million on Sunday. Revenue is principally derived from advertising
and newspaper sales. Advertising revenue accounted for about 78.0% of newspaper revenue in 2004. Advertising revenue comes from the three basic categories  retail, national and classified. Circulation revenue results from the sale of
newspapers. Circulation of daily and Sunday newspapers accounted for 18.0% of consolidated revenue in 2004. Other revenue is generated from commercial job printing, niche and book publications, newsprint waste sales and other miscellaneous sources.
We believe that our newspapers are economically similar and that the long-term prospects for our newspapers support this conclusion. We have established an operating profit objective in the mid-20% range for our newspapers. We also believe that the
nature of the products and services, production processes, customers, and distribution methods are identical for our newspapers and support aggregation of our newspapers as a single segment.

Online. Online revenue, which represents approximately 3.8% of consolidated revenue for 2004, consists primarily of online
recruitment and other classified advertising, Web banner advertising and revenue from content syndication. Approximately 69% of the online segment revenue is attributable to sales made by, or in combination with, our newspapers.

The profitability measure employed by management and our chief operating decision maker for making decisions about allocating resources to
segments and assessing segment performance is operating profit. Operating profit excludes interest income and expense, equity in losses of unconsolidated companies and joint ventures, minority interest in earnings of consolidated subsidiaries,
income tax expense and other non-operating income and expense items. Also, inter-segment revenue of $1.6 million is excluded from the computation of operating profit.

We centrally manage key aspects of our operations through our shared-service center, established to realize economies of scale, to use our resources efficiently and to promote common business
fundamentals, policies and procedures. Our newspapers also have access to news stories from our centrally managed Washington and foreign bureaus. Nearly 50% of our newspapers non-labor operating expenses are allocated by corporate, directly or
through our shared services center in Miami. That operation, which reports directly to corporate headquarters, negotiates procurement contracts for products and services used by all of our newspapers. Allocated expenses include pension, health and
welfare self-insurance, workers compensation, and casualty and property insurance. Procurement under our shared services contracts include expenditures for newsprint, ink, computer software and hardware, office supplies and telecommunications,
among others. The cost to operate our shared services center and other corporate operations managed on a common basis are allocated to the segments.



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The accounting policies of the reportable operating segments are the same as those described in the Summary of Significant Accounting
Policies (see Note 1). Financial data for our segments are as follows (in thousands):



|                              |  |               |           |   |               |   |           |               |  |   |           |  
|----------------------------- |  | ------------- | --------- | - | ------------- | - | --------- | ------------- |  | - | --------- | -
|                              |  | DEC. 26, 2004 |           |   | DEC. 28, 2003 |   |           | DEC. 29, 2002 | 
|Operating revenue             |  |               |           |   |               |   |           |               |  |   |           |  
|Newspapers                    |  | $             | 2,899,559 |   |               | $ | 2,866,254 |               |  | $ | 2,871,532 |  
|Online                        |  |               | 114,590   |   |               |   | 79,737    |               |  |   | 55,303    |  
|Total                         |  | $             | 3,014,149 |   |               | $ | 2,945,991 |               |  | $ | 2,926,835 |  
|Operating income              |  |               |           |   |               |   |           |               |  |   |           |  
|Newspapers                    |  | $             | 595,670   |   |               | $ | 591,931   |               |  | $ | 650,237   |  
|Online                        |  |               | 36,007    |   |               |   | 15,214    |               |  |   | (8,873    | )
|Corporate                     |  |               | (46,437   | ) |               |   | (39,538   | )             |  |   | (36,002   | )
|Total                         |  | $             | 585,240   |   |               | $ | 567,607   |               |  | $ | 605,362   |  
|Depreciation and amortization |  |               |           |   |               |   |           |               |  |   |           |  
|Newspapers                    |  | $             | 92,658    |   |               | $ | 103,595   |               |  | $ | 113,941   |  
|Online                        |  |               | 3,345     |   |               |   | 3,677     |               |  |   | 5,154     |  
|Corporate                     |  |               | 4,682     |   |               |   | 5,169     |               |  |   | 5,600     |  
|Total                         |  | $             | 100,685   |   |               | $ | 112,441   |               |  | $ | 124,695   |  
|Assets                        |  |               |           |   |               |   |           |               |  |   |           |  
|Newspapers                    |  | $             | 3,776,862 |   |               | $ | 3,701,790 |               |  | $ | 3,673,374 |  
|Online                        |  |               | 136,165   |   |               |   | 119,705   |               |  |   | 118,743   |  
|Corporate                     |  |               | 220,682   |   |               |   | 275,184   |               |  |   | 372,541   |  
|Total                         |  | $             | 4,133,709 |   |               | $ | 4,096,679 |               |  | $ | 4,164,658 |  
|Capital Expenditures          |  |               |           |   |               |   |           |               |  |   |           |  
|Newspapers                    |  | $             | 111,971   |   |               | $ | 70,051    |               |  | $ | 66,654    |  
|Online                        |  |               | 598       |   |               |   | 884       |               |  |   | 1,074     |  
|Corporate                     |  |               | 4,691     |   |               |   | 2,252     |               |  |   | 2,284     |  
|Total                         |  | $             | 117,260   |   |               | $ | 73,187    |               |  | $ | 70,012    |  



The newspaper segment
reports all goodwill and indefinite-lived intangible assets.



NOTE 6.
CAPITAL STOCK

At year-end 2004, we had 20 million shares of preferred stock authorized and available for future issuance. No preferred
stock was issued or outstanding.

We have a shareholder rights agreement. The agreement grants each holder of a common share
a right, under certain conditions, to purchase from us a unit consisting of one one-hundredth of a share of preferred stock at a price of $150, subject to adjustment. The rights provide that in the event we are a surviving corporation in a merger,
each holder of a right will be entitled to receive, upon exercise, common shares having a value equal to two times the exercise price of the right. In the event we engage in a merger or other business combination transaction in which we are not the
surviving corporation, the rights agreement provides that proper provision shall be made so that each holder of a right will be entitled to receive, upon the exercise thereof at the then-current exercise price of the right, common stock of the
acquiring company having a value equal to two times the exercise price of the right. No rights certificates will be distributed until 10 days following a public announcement that a person or group of affiliated or associated persons has acquired, or
obtained the right to acquire, beneficial ownership of 20% or more of our outstanding common stock, or 10 business days following the commencement of a tender offer or exchange offer for 20% or more of our outstanding stock. Until such time, the
common share certificates of the company evidence the rights. The rights are not exercisable until distributed and will expire on July 10, 2006, unless we redeem or exchange them sooner. We have theoption to redeem the rights in whole, but not in part, at a price of $0.01 per right, subject to adjustment. Our Board of Directors has reserved 1,500,000 preferred shares for issuance upon exercise of the rights.

The Employees Stock Purchase Plan provides for the sale of common stock to our employees at a price equal to 85% of the market value at
the end of each purchase period. Participants under the plan received 213,153 shares in 2004, 216,910 shares in 2003 and 226,267 shares in 2002. The purchase price of shares issued in 2004 under this plan ranged from $54.88 to $64.70, and the market
value on the purchase dates of such shares ranged from $64.56 to $76.12.

The Employee Stock Option Plan provides for the
issuance of nonqualified stock options and incentive stock options. Options are issued at prices not less than fair market value at date of grant. Options vest over three years from the date of grant (except for grants of 100 shares, which vest in
one year). Options vesting over three years vest annually in three equal installments, and all options expire no later than 10 years from the date of grant. The option plan provides for the discretionary grant of stock appreciation rights
(SARs) in tandem with previously granted options, which allow a holder to receive in cash, stock or combinations thereof the difference between the exercise price and the fair market value of the stock at date of exercise. As of December 26,
2004, there were no SARs granted. Shares of common stock relating to options outstanding under this plan are reserved at the date of grant.

Proceeds from the issuance of shares under the Employees Stock Purchase Plan and the Employee Stock Option Plan are included in shareholders equity and did not affect earnings in any of the three fiscal years ended
2004.



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Transactions under the Employee Stock Option Plan are summarized as follows:



|                              |  |                  |   |  |                    |      
|----------------------------- |  | ---------------- | - |  | ------------------ | -----
|                              |  |                  |   |  | WEIGHTED-AVERAGE  
|                              |  |                  |   |  | EXERCISE PRICE PER
|                              |  | NUMBER OF SHARES |   |  | SHARE             
|Outstanding December 30, 2001 |  | 9,999,610        |   |  | $                  | 52.39
|2002: Exercised               |  | (1,416,183       | ) |  |                    | 45.79
|Forfeited/expired             |  | (258,258         | ) |  |                    | 58.13
|Granted                       |  | 2,115,327        |   |  |                    | 62.32
|Outstanding December 29, 2002 |  | 10,440,496       |   |  | $                  | 55.15
|2003: Exercised               |  | (1,529,026       | ) |  |                    | 49.56
|Forfeited/expired             |  | (214,298         | ) |  |                    | 59.43
|Granted                       |  | 1,865,798        |   |  |                    | 74.77
|Outstanding December 29, 2003 |  | 10,562,970       |   |  | $                  | 59.34
|2004: Exercised               |  | (1,064,508       | ) |  |                    | 50.49
|Forfeited/expired             |  | (239,110         | ) |  |                    | 64.93
|Granted                       |  | 1,801,907        |   |  |                    | 68.32
|Outstanding December 26, 2004 |  | 11,061,259       |   |  | $                  | 61.53



We also maintain a
Compensation Plan for Nonemployee Directors. The purpose of the plan is to attract and retain the services of qualified individuals who are not employees to serve as members of the Board of Directors. In 1997, there were 200,000 shares authorized
for issuance under the plan. As of December 26, 2004, there were 176,997 shares available for issuance under the Plan. Nonemployee directors receive the following compensation: (1) an annual retainer fee payable half in ourcommon stock and half in cash or stock, at the directors election; (2) board and committee meeting attendance fees; (3) an annual stock option grant; and (4) for certain directors, annual phantom
shares and retirement benefits. All options vest in three equal installments over a three-year period from the date of grant and expire no later than ten years from the date of grant. The expiration dates for options granted range from December 16,
2007, to December 13, 2014.



Stock transactions under the
Compensation Plan for Nonemployee Directors are summarized as follows:



|                              |  |                  |   |  |                    |      
|----------------------------- |  | ---------------- | - |  | ------------------ | -----
|                              |  |                  |   |  | WEIGHTED-AVERAGE  
|                              |  |                  |   |  | EXERCISE PRICE PER
|                              |  | NUMBER OF SHARES |   |  | SHARE             
|Outstanding December 31, 2001 |  | 132,000          |   |  | $                  | 55.59
|2002: Exercised               |  | (2,000           | ) |  |                    | 51.72
|Forfeited/expired             |  | -                |   |  |                    | -    
|Granted                       |  | 28,000           |   |  |                    | 62.16
|Outstanding December 29, 2002 |  | 158,000          |   |  | $                  | 56.80
|2003: Exercised               |  | (22,002          | ) |  | $                  | 54.31
|Forfeited/expired             |  | (13,998          | ) |  |                    | 59.04
|Granted                       |  | 40,000           |   |  |                    | 75.21
|Outstanding December 29, 2003 |  | 162,000          |   |  | $                  | 61.47
|2004: Exercised               |  | (20,000          | ) |  |                    | 53.79
|Forfeited/expired             |  | (8,000           | ) |  |                    | 50.67
|Granted                       |  | 45,000           |   |  |                    | 67.32
|Outstanding December 26, 2004 |  | 179,000          |   |  | $                  | 64.28



The following table
summarizes information about stock options outstanding under the Employee Stock Option Plan and the Compensation Plan for Nonemployee Directors at December 26, 2004:



|                          |  |             |  |             |  |                |       |        |           |                |   |      
|------------------------- |  | ----------- |  | ----------- |  | -------------- | ----- | ------ | --------- | -------------- | - | -----
|                          |  | OUTSTANDING |  | EXERCISABLE
|                          |  |             |  | WEIGHTED-   |  | WEIGHTED-      |       |        |           | WEIGHTED-     
|Stock Options Outstanding |  |             |  | AVERAGE     |  | AVERAGE        |       |        |           | AVERAGE       
|Exercise Price Range      |  | SHARES      |  | LIFE(A)     |  | EXERCISE PRICE |       | SHARES |           | EXERCISE PRICE
|$32.38 - $52.38           |  | 1,613,012   |  | 3.1         |  | $              | 47.01 |        | 1,613,012 |                | $ | 47.01
|52.39 -   54.81           |  | 1,709,203   |  | 6.0         |  |                | 54.76 |        | 1,709,203 |                |   | 54.76
|54.82 -   61.87           |  | 1,098,003   |  | 5.2         |  |                | 58.09 |        | 1,090,446 |                |   | 58.07
|61.88 -   62.22           |  | 1,586,942   |  | 8.0         |  |                | 62.16 |        | 1,032,186 |                |   | 62.16
|62.23 -   66.84           |  | 1,560,473   |  | 7.0         |  |                | 62.38 |        | 1,513,613 |                |   | 62.32
|66.85 -   75.20           |  | 1,806,134   |  | 9.4         |  |                | 67.73 |        | 150,625   |                |   | 70.65
|75.21 -   77.75           |  | 1,866,492   |  | 9.0         |  |                | 75.34 |        | 583,503   |                |   | 75.21
|Total                     |  | 11,240,259  |  | 7.0         |  | $              | 61.58 |        | 7,692,588 |                | $ | 57.95

(a) Average contractual life remaining in years



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At year-end 2004, options with an average exercise price of $57.95 were exercisable on 7.7 million shares; at year-end 2003, options with an
average exercise price of $54.54 were exercisable on 7.0 million shares; at year-end 2002, options with an average exercise price of $51.86 were exercisable on 6.7 million shares.

At December 26, 2004, our stock option plans and stock purchase plan had the following shares available for issuance:



|                              |  |          
|----------------------------- |  | ---------
|                              |  | SHARES   
|Employee Stock Option Plan    |  | 1,631,092
|Employees Stock Purchase Plan |  | 470,362  
|Nonemployee Directors Plan    |  | 176,997  
|Total                         |  | 2,278,451



See Note 1.
Summary of Significant Accounting Policies on pages 32 through 36 of this report for the pro forma information, as required by SFAS 123 and SFAS 148, regarding net income and earnings per share determined as if we had accounted for our stock
options under the fair-value method of those statements.

In 1997, shareholders approved a long-term incentive plan. Under
the plan, an executives ability to receive a stock award was contingent upon and related directly to the total shareholder return (TSR) in the companys stock over a three-year period, compared to the return received by holders of stock
in the other peer companies. The plan originally covered a three-year performance period from January 1, 1997, through December 31, 1999. The initial performance period ended on December 31, 1999, and no shares vested because we did not meet the
specified performance targets. The plan was extended for an additional three-year period beginning on January 1, 2000, and ending on December 31, 2002, with an initial grant of 342,012 restricted shares for participants. The grant of such shares was
restricted, as the vesting of these shares was triggered upon the achievement of certain performance goals, as described above. The total number of shares vested, including dividends, was 343,707. The performance goals were achieved and, in
accordance with the plan, 194,658 shares were distributed to participants in January 2003. The remaining number of shares was withheld to cover the related income tax expense and these shares were subsequently retired. The original plan was not
extended after December 31, 2002.

We accrued compensation expense for the plan over the performance period when it appeared
probable that performance goals would be met. Total compensation expense recognized in 2002 was approximately $6.4 million and the total accrual related to the plan was approximately $21.7 million, which was included in accrued compensation at
December 29, 2002.



NOTE 7. RELATED PARTY TRANSACTIONS

We generate revenue from CareerBuilder and Classified Ventures products for online advertisements placed in our markets. In 2004, we recorded $49.1
million in revenue related to CareerBuilder products, and $16.2 million related to Classified Ventures products. We also had $4.4 million and $9.0 million in expenses for products and services provided by CareerBuilder and Classified Ventures,
respectively, related to the uploading and hosting of online advertising on behalf ofour newspapers advertisers. During 2003, we recorded $31.0 million in revenue related to
CareerBuilder and $10.3 million related to Classified Ventures products. The expenses recorded related to services provided by CareerBuilder and Classified Ventures were $2.9 million and $6.4 million.

We have ongoing purchase commitments with SP Newsprint and Ponderay, our two newsprint mill partnership investments. These future
commitments are for the purchase of a minimum of 77,000 metric tons and 28,400 metric tons of newsprint in 2005 with SP Newsprint and Ponderay, respectively, at current market prices. For 2004, 2003 and 2002, we had purchases from SP Newsprint of
approximately $60.4 million, $63.7 million and $62.8 million, respectively. We had purchases from Ponderay of approximately $15.7 million, $14.5 million and $13.1 million for 2004, 2003 and 2002, respectively. We also have a sales commitment with
the Detroit Newspapers to supply them with 50% of their newsprint requirements, which in 2005 will be approximately $23.8 million. In 2004, 2003 and 2002, we supplied approximately $25.5 million, $24.0 million and $24.1 million, respectively, of
newsprint to Detroit Newspapers. We have the resources necessary to fulfill these commitments in 2005.

We sell products
provided by some of our investees and incur marketing expenses to promote these branded products. These marketing expenses include radio, billboards, newspaper advertisements, direct mail campaigns and other promotional items. We do not record
revenue related to these cross-branding promotions. Also, from time to time, we may engage in transactions with other equity investees but, in the aggregate, they are not considered significant.



NOTE 8. GOODWILL AND OTHER IDENTIFIED INTANGIBLE ASSETS

In June 2001, the FASB issued SFAS 142  Goodwill and Other Intangible Assets.Under SFAS 142, goodwill and other indefinite-lived
intangible assets are no longer amortized, but are reviewed at least annually for impairment. Goodwill and other indefinite-lived intangible assets are required to be tested for impairment between annual tests if an event occurs or circumstances
change that would indicate the carrying amount may be impaired. Separable intangible assets that are not deemed to have an indefinite life continue to be amortized over their useful lives. The amortization provisions of SFAS 142 apply to goodwill
and intangible assets acquired after June 30, 2001. Beginning December 31, 2001, we have applied the new accounting rules and have ceased amortization of goodwill and other indefinite-lived intangible assets.

We completed our initial evaluation of goodwill and other indefinite-lived intangible assets during the second quarter of 2002 and no
impairment was indicated. We perform our annual review for impairment during the fourth quarter of each year. Impairment testing is done at a reporting unit level. Reporting units are one level below the business segment level, but can be combined
when reporting units within the same segment have similar economic characteristics. Under the criteria set forth by SFAS 142, we have 29 reporting units. An impairment loss generally would be recognized when the carrying amount of the reporting
units net assets exceeds the estimated fair value of the reporting unit. The estimated fair value of a reporting unit is determined using a discounted cash flow analysis. As of October 1, 2004, we performed our annual



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evaluation of goodwill and
other indefinite-lived intangible assets and determined that no impairment exists.

We owned 50% of CareerBuilder (formerly
Career Holdings, Inc.), when it completed its evaluation of goodwill in the second quarter of 2002. Our investment in CareerBuilder is recorded under the equity method of accounting. We reflected our share of CareerBuilders impairment of
goodwill, $24.3 million, or$0.29 per diluted share, arising from its adoption of SFAS 142 in the second quarter ended June 30, 2002, as a year- to-date cumulative effect of a change in
accounting principle consistent with CareerBuilders characterization of the write-down. No further impairment has been identified as a result of CareerBuilders annual evaluation of goodwill and other indefinite-lived intangible assets.



Goodwill and other identifiable intangible assets, along with
their original weighted-average lives, at December 26, 2004, consisted of the following (in thousands):



|                                                        |  |        |        |              |   |        |  |              |           |  |     
|------------------------------------------------------- |  | ------ | ------ | ------------ | - | ------ |  | ------------ | --------- |  | ----
|                                                        |  | GROSS  |        | ACCUMULATED  |   | NET    |  | WEIGHTED-   
|                                                        |  | AMOUNT |        | AMORTIZATION |   | AMOUNT |  | AVERAGE LIFE
|Intangible assets continuing to be amortized:           |  |        |        |              |   |        |  |              |           |  |     
|Advertiser lists                                        |  | $      | 43,558 |              | $ | 29,707 |  | $            | 13,851    |  | 12.2
|Subscriber lists                                        |  |        | 33,651 |              |   | 26,382 |  |              | 7,269     |  | 9.5 
|Other                                                   |  |        | 1,460  |              |   | 614    |  |              | 846       |  | 7.9 
|Total                                                   |  | $      | 78,669 |              | $ | 56,703 |  | $            | 21,966    |  | 11.0
|Goodwill and other identified intangible assets         |  |        |        |              |   |        |  |              |           |  |     
|not being amortized:                                    |  |        |        |              |   |        |  |              |           |  |     
|Goodwill                                                |  |        |        |              |   |        |  | $            | 1,799,061 |  |     
|Newspaper mastheads                                     |  |        |        |              |   |        |  |              | 288,296   |  |     
|Intangible pension asset                                |  |        |        |              |   |        |  |              | 28,612    |  |     
|Other                                                   |  |        |        |              |   |        |  |              | 670       |  |     
|Total                                                   |  |        |        |              |   |        |  | $            | 2,116,639 |  |     
|Total goodwill and other identifiable intangible assets |  |        |        |              |   |        |  | $            | 2,138,605 |  |     



Estimated annual
aggregate amount of amortization of other identified intangible assets expense will be approximately $6.8 million for 2005 through 2006, $4.1 million in 2007 and $1.3 million for 2008 through 2009.

The defined benefit pension plans we sponsored were affected by increased benefit obligations due to declines in interest rates. The
accumulated benefit obligation exceeded the fair value ofplan assets for many of our pension plans. SFAS 87  Employers Accounting for Pension Plans required
recognition of an additional minimum liability for those deficient plans. We recorded $28.6 million and $23.3 million at December 2004 and 2003, respectively, as an intangible pension asset which is not amortized.



The following is a summary of the balances of goodwill and other identified
intangible assets as of December 28, 2003 and December 26, 2004 (in thousands):



|                    |  |              |           |               |   |                 |  |   |                  |   |              |   |        |  |   |          
|------------------- |  | ------------ | --------- | ------------- | - | --------------- |  | - | ---------------- | - | ------------ | - | ------ |  | - | ---------
|                    |  |              |           |               |   |                 |  |   | ADDITIONS TO     |   |             
|                    |  |              |           | CHANGE IN     |   |                 |  |   | GOODWILL AND     |   |             
|                    |  |              |           | BALANCE Of    |   | AMORTIZATION OF |  |   | OTHER IDENTIFIED |   |             
|                    |  | DECEMBER 28, |           | INTANGIBLE    |   | OTHER           |  |   | INTANGIBLE       |   | DECEMBER 26,
|                    |  | 2003         |           | PENSION ASSET |   | INTANGIBLES     |  |   | ASSETS           |   | 2004        
|Goodwill            |  | $            | 1,790,229 |               | $ | -               |  | $ | -                |   |              | $ | 8,832  |  | $ | 1,799,061
|Newspaper mastheads |  |              | 284,284   |               |   |                 |  |   |                  |   |              |   | 4,012  |  |   | 288,296  
|Other               |  |              | 52,203    |               |   | 5,276           |  |   | (6,831           | ) |              |   | 600    |  |   | 51,248   
|Total               |  | $            | 2,126,716 |               | $ | 5,276           |  | $ | (6,831           | ) |              | $ | 13,444 |  | $ | 2,138,605



The $13.4 million
increase in goodwill and other identified intangible assets related to certain acquisitions in the second and third quarters of 2004.



NOTE 9. ACQUISITIONS AND DISPOSITIONS

In
January 2002, we sold our stock in MatchNet plc, realizing proceeds of $651,000 and recording an aggregate pre-tax loss of approximately $4.3 million.

On October 2, 2002, we and Tribune each sold one-third of our respective interests in CareerBuilder to Gannett for $98.2 million. Our share of the proceeds was approximately $49million. The sale price was our carrying value and no gain or loss was recorded on the sale. We currently own a 33.3% interest in CareerBuilder through Knight Ridder Digital.

In March 2003, we sold our one-third share of InfiNet Company to Gannett for approximately $4.5 million. We recorded a $1.0 million
pre-tax gain on the sale.

In May 2003, we amended our agreement with the Journal Gazette Company to extend the joint
operating agreement in Fort Wayne, Indiana, to the year 2050. Under the amended terms we increased our partnership interest from 55% to 75%. The joint operating agreement governs the partnership and



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operation of Fort Wayne
Newspapers, the agency that handles advertising sales, printing, distribution and administration of the two daily newspapers. The transaction resulted in a $42 million increase in our goodwill balance on the Consolidated Balance Sheet.

During 2004, we made $43.7 million in acquisitions consisting of the following:

In February 2004, we completed the acquisition of Alliance Newspapers. Alliance is a group of seven weekly newspapers and one monthly
newspaper serving the area north of Fort Worth in Denton and Northeast Tarrant Counties. Alliance offers total market coverage with circulation of approximately 25,000.

In April 2004, Broad Street Community Newspapers (BSCN) acquired certain assets of the News Star and Publiset. The Star products will help grow BSCNs community newspapers in the Philadelphia
metro area.

In May 2004, Knight Ridder, Gannett and Tribune each acquired a one-third interest in CrossMedia Services,
Inc., a provider of Web-based marketing solutions for national and localretailers. We also acquired the assets of four community newspapers and three shopper publications previously owned
by Superior Publishing Corporation. The acquired newspapers include the (Duluth MN) Budgeteer News, The (Cloquet MN) Pine Journal, The Daily Telegram in Superior, WI, and the Lake County News-Chronicle in Two Harbors, MN. The purchase also included
the Manneys Shopper zones in Superior, Cloquet and Two Harbors.

In June 2004, we acquired a 35.6% undiluted ownership
interest in CityXpress, a provider of online auctions for newspapers. The remaining is owned by Lee Enterprises, management and employees of CityXpress and other shareholders.

In August 2004, we acquired the assets of The (Flower Mound) Messenger, the leading bi-weekly in the Flower Mound suburb of Fort Worth.
The paper is a tabloid published every two weeks and mailed to approximately 28,500 households in Flower Mound and the surrounding communities of Highland Village, Copper Canyon, Double Oak and Lantana.



NOTE 10. PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS

The following is a summary of the components of net periodic benefit cost for the defined benefit pension plans and defined benefit postretirement plans
(other benefits), along with the total amounts charged to pension expense for multi-employer defined benefit pension plans, defined contribution plans and other agreements. We use a measurement date of the last day of our fiscal year for the
majority of our pension and other postretirement benefit plans (in thousands).



|                                     |  |      |          |   |                 |   |          |      |  |   |          |   |  |               |        |   |      |   |        |   |  |   |        |  
|------------------------------------ |  | ---- | -------- | - | --------------- | - | -------- | ---- |  | - | -------- | - |  | ------------- | ------ | - | ---- | - | ------ | - |  | - | ------ | -
|                                     |  |      |          |   | PENSIONBENEFITS |   |          |      |  |   |          |   |  | OTHERBENEFITS |        |   |      |  
|                                     |  | 2004 |          |   | 2003            |   |          | 2002 |  |   | 2004     |   |  | 2003          |        |   | 2002 |  
|Defined benefit plans:               |  |      |          |   |                 |   |          |      |  |   |          |   |  |               |        |   |      |   |        |   |  |   |        |  
|Service cost                         |  | $    | 38,779   |   |                 | $ | 34,238   |      |  | $ | 35,558   |   |  | $             | 1,507  |   |      | $ | 1,741  |   |  | $ | 2,955  |  
|Expected expenses paid by plan or    |  |      |          |   |                 |   |          |      |  |   |          |   |  |               |        |   |      |   |        |   |  |   |        |  
|company                              |  |      | 2,902    |   |                 |   | 3,021    |      |  |   | 3,112    |   |  |               | 375    |   |      |   | -      |   |  |   | -      |  
|Interest cost                        |  |      | 90,528   |   |                 |   | 87,589   |      |  |   | 83,600   |   |  |               | 8,706  |   |      |   | 10,785 |   |  |   | 11,526 |  
|Expected return on plan assets       |  |      | (110,710 | ) |                 |   | (111,564 | )    |  |   | (109,091 | ) |  |               |        |   |      |   | -      |   |  |   | (730   | )
|Recognized net actuarial (gain) loss |  |      | 8,227    |   |                 |   | 3,513    |      |  |   | (5,455   | ) |  |               | 3,253  |   |      |   | 2,212  |   |  |   | 224    |  
|Amortization of prior service cost   |  |      | 4,293    |   |                 |   | 5,153    |      |  |   | 5,468    |   |  |               | (3,120 | ) |      |   | (3,878 | ) |  |   | (4,103 | )
|Amortization of transition asset     |  |      | (18      | ) |                 |   | (44      | )    |  |   | -        |   |  |               |        |   |      |   | -      |   |  |   | -      |  
|Settlement charge                    |  |      |          |   |                 |   | -        |      |  |   | -        |   |  |               |        |   |      |   | -      |   |  |   | (7,817 | )
|Immediate loss recognition           |  |      |          |   |                 |   | -        |      |  |   | -        |   |  |               |        |   |      |   | 799    |   |  |   | -      |  
|Adjustments                          |  |      |          |   |                 |   | (94      | )    |  |   | -        |   |  |               |        |   |      |   | -      |   |  |   | -      |  
|Net expense                          |  |      | 34,001   |   |                 |   | 21,812   |      |  |   | 13,192   |   |  |               | 10,721 |   |      |   | 11,659 |   |  |   | 2,055  |  
|Multi-employer union plans           |  |      | 13,522   |   |                 |   | 11,184   |      |  |   | 13,247   |   |  |               |        |   |      |   | -      |   |  |   | -      |  
|Defined contribution plans           |  |      | 11,742   |   |                 |   | 12,189   |      |  |   | 11,920   |   |  |               |        |   |      |   | -      |   |  |   | -      |  
|Other                                |  |      | 980      |   |                 |   | 1,596    |      |  |   | 2,273    |   |  |               |        |   |      |   | -      |   |  |   | -      |  
|Net periodic benefit cost            |  | $    | 60,245   |   |                 | $ | 46,781   |      |  | $ | 40,632   |   |  | $             | 10,721 |   |      | $ | 11,659 |   |  | $ | 2,055  |  



Service cost in 2002
included approximately $6.7 million related to accelerating the retirement of certain employees under a work force reduction program and settlement cost related to the termination of a plan for which benefits were replaced by a multi-employer
pension plan.



Weighted-average assumptions used each year in
accounting for defined benefit plans were:



|                               |  |      |   |  |                 |   |  |      |   |  |      |   |  |               |   |  |       |  
|------------------------------ |  | ---- | - |  | --------------- | - |  | ---- | - |  | ---- | - |  | ------------- | - |  | ----- | -
|                               |  |      |   |  | PENSIONBENEFITS |   |  |      |   |  |      |   |  | OTHERBENEFITS |   |  |       |  
|                               |  | 2004 |   |  | 2003            |   |  | 2002 |   |  | 2004 |   |  | 2003          |   |  | 2002  |  
|Discount rate as of year end   |  | 5.94 | % |  | 6.25            | % |  | 6.75 | % |  | 5.20 | % |  | 6.25          | % |  | 6.75  | %
|Expected return on plan assets |  | 8.74 |   |  | 9.00            |   |  | 9.00 |   |  |      |   |  |               |   |  | 6.50  |  
|Rate of compensation increase  |  | 3.80 |   |  | 3.80            |   |  | 3.80 |   |  |      |   |  |               |   |  | 4.50  |  
|Medical trend rate:            |  |      |   |  |                 |   |  |      |   |  |      |   |  |               |   |  |       |  
|Initial                        |  |      |   |  |                 |   |  |      |   |  | 9.25 |   |  | 10.00         |   |  | 10.00 |  
|Reducing to this percentage by |  |      |   |  |                 |   |  |      |   |  |      |   |  |               |   |  |       |  
|the seventh year               |  |      |   |  |                 |   |  |      |   |  | 5.00 |   |  | 5.00          |   |  | 5.00  |  



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The Expected Long-term Rate
of Return on Assets assumption was developed through analysis of historical market returns, current long-term expectations by asset class and expected allocation of plan assets. Overall, for 2004 it was projected that our plans would achieve an
8.74% net annual long-term future rate of return.

Beginning with 2004, the discount rate as of year-end directly reflects
each plans expected future cash flows and the available yields on high quality fixed income investments with durations appropriate for those projected cash flows. Weighted by each plans obligation, the overall discount rate is 5.94% as
of December 26, 2004 for pension obligations, and 5.20% for other benefit obligations.

We sponsor a defined contribution
retirement plan under section 401(k) of the Internal Revenue Code. The provisions of this plan allow for voluntary employee contributions on a pre-tax basis of up to 75% of an employees salary (20% on an after-tax basis), subject to certain
annual limitations. The plan allows participants to invest their savings in various investments, including our common stock. We make matching contributions, which are allocated to eligible participants. Non- union and certain union employees are
eligible after meeting certain service requirements. We made contributions to this plan of $11.7 million, $12.2 million and $11.9 million in 2004, 2003, and 2002, respectively.



The assumed health-care-cost trend rate has a significant effect on the amounts reported. A one-percentage-point change in
the assumed health-care-cost trend rate would have the following effects (in thousands):



|                                                                    |  |                 |       |                 |   |        |  
|------------------------------------------------------------------- |  | --------------- | ----- | --------------- | - | ------ | -
|                                                                    |  | ONE-PERCENTAGE- |       | ONE-PERCENTAGE- |  
|                                                                    |  | POINT INCREASE  |       | POINT DECREASE  |  
|Effect on total of service and interest cost components in 2004     |  | $               | 521   |                 | $ | (449   | )
|Effect on postretirement benefit obligation as of December 26, 2004 |  |                 | 5,358 |                 |   | (4,704 | )



The following table
sets forth the funded status and amounts recognized in the Consolidated Balance Sheet for our benefit plans, excluding liabilities of Detroit Newspapers that are reported net in the Consolidated Balance Sheet under the caption Equity in
unconsolidated companies and joint ventures (in thousands):



|                                               |  |      |           |   |                 |   |           |      |  |   |           |   |  |               |          |   |      |   |          |   |  |   |          |  
|---------------------------------------------- |  | ---- | --------- | - | --------------- | - | --------- | ---- |  | - | --------- | - |  | ------------- | -------- | - | ---- | - | -------- | - |  | - | -------- | -
|                                               |  |      |           |   | PENSIONBENEFITS |   |           |      |  |   |           |   |  | OTHERBENEFITS |          |   |      |  
|                                               |  | 2004 |           |   | 2003            |   |           | 2002 |  |   | 2004      |   |  | 2003          |          |   | 2002 |  
|Change in benefit obligation                   |  |      |           |   |                 |   |           |      |  |   |           |   |  |               |          |   |      |   |          |   |  |   |          |  
|Benefit obligation at beginning of year        |  | $    | 1,459,050 |   |                 | $ | 1,289,876 |      |  | $ | 1,124,854 |   |  | $             | 166,109  |   |      | $ | 156,495  |   |  | $ | 133,621  |  
|Service cost                                   |  |      | 38,779    |   |                 |   | 34,238    |      |  |   | 35,558    |   |  |               | 1,507    |   |      |   | 1,741    |   |  |   | 2,955    |  
|Interest cost                                  |  |      | 90,528    |   |                 |   | 87,589    |      |  |   | 83,600    |   |  |               | 8,706    |   |      |   | 10,785   |   |  |   | 11,526   |  
|Plan participants contributions               |  |      |           |   |                 |   | -         |      |  |   | -         |   |  |               | 2,102    |   |      |   | 2,077    |   |  |   | 1,901    |  
|Amendments                                     |  |      | 28        |   |                 |   | 414       |      |  |   | 15,752    |   |  |               | (29,440  | ) |      |   | (22,211  | ) |  |   | -        |  
|Actuarial loss (gain)                          |  |      | 54,432    |   |                 |   | 107,484   |      |  |   | 113,261   |   |  |               | (3,165   | ) |      |   | 34,325   |   |  |   | 37,770   |  
|Benefits paid                                  |  |      | (65,081   | ) |                 |   | (60,551   | )    |  |   | (63,808   | ) |  |               | (16,832  | ) |      |   | (17,103  | ) |  |   | (20,523  | )
|Effect of plan settlement                      |  |      |           |   |                 |   | -         |      |  |   | (19,341   | ) |  |               | -        |   |      |   | -        |   |  |   | (10,755  | )
|Prior Service Cost Adjustment                  |  |      |           |   |                 |   |           |      |  |   |           |   |  |               | 1,691    |   |      |   |          |   |  |   |          |  
|Benefit obligation at end of year              |  | $    | 1,577,736 |   |                 | $ | 1,459,050 |      |  | $ | 1,289,876 |   |  | $             | 130,678  |   |      | $ | 166,109  |   |  | $ | 156,495  |  
|Change in plan assets                          |  |      |           |   |                 |   |           |      |  |   |           |   |  |               |          |   |      |   |          |   |  |   |          |  
|Fair value of plan assets at beginning of year |  | $    | 1,240,603 |   |                 | $ | 1,045,143 |      |  | $ | 1,079,956 |   |  | $             | -        |   |      | $ | -        |   |  | $ | 10,892   |  
|Actual return on plan assets                   |  |      | 129,094   |   |                 |   | 229,534   |      |  |   | (86,868   | ) |  |               | -        |   |      |   | -        |   |  |   | 732      |  
|Company contributions                          |  |      | 12,495    |   |                 |   | 29,730    |      |  |   | 138,039   |   |  |               | 14,730   |   |      |   | 15,026   |   |  |   | 17,753   |  
|Plan participants contributions               |  |      |           |   |                 |   | -         |      |  |   | -         |   |  |               | 2,102    |   |      |   | 2,077    |   |  |   | 1,901    |  
|Benefits paid                                  |  |      | (65,081   | ) |                 |   | (60,551   | )    |  |   | (63,808   | ) |  |               | (16,832  | ) |      |   | (17,103  | ) |  |   | (20,523  | )
|Expenses paid by plan                          |  |      | (2,961    | ) |                 |   | (3,253    | )    |  |   | (2,835    | ) |  |               |          |   |      |   | -        |   |  |   | -        |  
|Effect of plan settlement                      |  |      |           |   |                 |   | -         |      |  |   | (19,341   | ) |  |               |          |   |      |   | -        |   |  |   | (10,755  | )
|Fair value of plan assets at end of year       |  | $    | 1,314,150 |   |                 | $ | 1,240,603 |      |  | $ | 1,045,143 |   |  | $             | -        |   |      | $ | -        |   |  | $ | -        |  
|Funded status of plan                          |  | $    | (263,586  | ) |                 | $ | (218,447  | )    |  | $ | (244,733  | ) |  | $             | (130,678 | ) |      | $ | (166,109 | ) |  | $ | (156,495 | )
|Unrecognized net actuarial loss                |  |      | 324,991   |   |                 |   | 297,110   |      |  |   | 310,833   |   |  |               | 64,496   |   |      |   | 71,290   |   |  |   | 39,976   |  
|Unrecognized prior service cost                |  |      | 25,559    |   |                 |   | 29,825    |      |  |   | 34,564    |   |  |               | (46,840  | ) |      |   | (22,211  | ) |  |   | (3,878   | )
|Unrecognized transition asset                  |  |      |           |   |                 |   | (18       | )    |  |   | (63       | ) |  |               |          |   |      |   | -        |   |  |   | -        |  
|Net prepaid (accrued) benefit cost             |  | $    | 86,964    |   |                 | $ | 108,470   |      |  | $ | 100,601   |   |  | $             | (113,022 | ) |      | $ | (117,030 | ) |  | $ | (120,397 | )



In mid-2004, the
Company amended its postretirement benefit provisions to make changes effective January 1, 2005 to medical benefits for future retirees, medical benefits for certain existing retiree groups, and to exchange existing retiree life insurance benefits
for employer-funded Health Reimbursement Accounts. The net impact of these changes was to reduce the obligation by $29.4 million as of July 1, 2004 and to reduce expense for the third and fourth quarters by $1.9 million in total.

Effective July 1, 2004 the Company also recognized the impact of the Medicare Prescription Drug, Improvement and Modernization Act of
2003. Under the Act, beginning in 2006 the government will provide non-taxable subsidy payments to employers who maintain prescription drug benefits for retirees covered by Medicare, as long as those benefits are actuarially equivalent
to the prescription drug benefits to be offered by Medicare. The Company will qualify for these payments. The



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impact was to reduce the
obligation by an additional $9.2 million as of July 1, 2004, and to reduce expense for the third and fourth quarters by an additional $600,000 in total.

Certain changes to postretirement benefit provisions were made in late 2003. Retiree life insurance benefits were eliminated for substantially all employees retiring after January of 2004. In addition,
changes were made in the cost-sharing arrangement for retiree medical benefits for certain collectively bargainedemployees of the Detroit Free Press. There was no effect on the
postretirement expense recorded for fiscal year 2003. The effect of these changes was to reduce the future benefit obligation by $20.5 million as of the beginning of 2004, and to reduce 2004 expense by $4.0 million.

In 2002, we amended the LA Guild plan, which increased the benefit by $7.3 million. A prior service cost was not established for this
amendment because of plan termination.



At the end of 2004 and
2003, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans and pension plans with an accumulated benefit obligation in excess of plan assets, were as follows (in thousands):



|                               |  |                   |           |                                                                                        |   |           |  |      |           |  |   |          
|------------------------------ |  | ----------------- | --------- | -------------------------------------------------------------------------------------- | - | --------- |  | ---- | --------- |  | - | ---------
|                               |  | ALL PENSION PLANS |           | THOSE PLANS WHOSE ACCUMULATEDBENEFIT OBLIGATION EXCEEDS THEFAIR VALUE OF PLANS ASSETS
|Year ended                     |  | 2004              |           | 2003                                                                                   |   | 2004      |  | 2003
|Projected benefit obligation   |  | $                 | 1,577,736 |                                                                                        | $ | 1,459,050 |  | $    | 1,524,034 |  | $ | 1,273,451
|Accumulated benefit obligation |  |                   | 1,449,048 |                                                                                        |   | 1,334,855 |  |      | 1,396,592 |  |   | 1,158,263
|Fair value of plan assets      |  |                   | 1,314,150 |                                                                                        |   | 1,240,603 |  |      | 1,261,581 |  |   | 1,059,330



Amounts recognized in
the Consolidated Balance Sheet for plans we sponsor consist of (in thousands):



|                                     |  |                  |          |   |                |   |          |      |  |   |          |   |  |      |          |   |      |   |          |   |  |   |          |  
|------------------------------------ |  | ---------------- | -------- | - | -------------- | - | -------- | ---- |  | - | -------- | - |  | ---- | -------- | - | ---- | - | -------- | - |  | - | -------- | -
|                                     |  | PENSION BENEFITS |          |   | OTHER BENEFITS |  
|                                     |  | 2004             |          |   | 2003           |   |          | 2002 |  |   | 2004     |   |  | 2003 |          |   | 2002 |  
|Prepaid benefit cost                 |  | $                | 139,064  |   |                | $ | 157,310  |      |  | $ | 148,509  |   |  | $    | -        |   |      | $ | -        |   |  | $ | -        |  
|Accrued benefit liability            |  |                  | (52,100  | ) |                |   | (48,841  | )    |  |   | (47,908  | ) |  |      | (113,022 | ) |      |   | (117,030 | ) |  |   | (120,397 | )
|Additional minimum liability         |  |                  | (209,011 | ) |                |   | (150,523 | )    |  |   | (192,572 | ) |  |      |          |   |      |   |          |   |  |   |          |  
|Deferred tax asset                   |  |                  | 68,552   |   |                |   | 47,569   |      |  |   | 61,936   |   |  |      |          |   |      |   |          |   |  |   |          |  
|Intangible pension asset             |  |                  | 28,612   |   |                |   | 23,336   |      |  |   | 26,969   |   |  |      |          |   |      |   |          |   |  |   |          |  
|Accumulated other comprehensive loss |  |                  | 111,847  |   |                |   | 79,619   |      |  |   | 103,667  |   |  |      |          |   |      |   |          |   |  |   |          |  
|Net prepaid (accrued) benefit cost   |  | $                | 86,964   |   |                | $ | 108,470  |      |  | $ | 100,601  |   |  | $    | (113,022 | ) |      | $ | (117,030 | ) |  | $ | (120,397 | )



During recent periods,
the defined benefit pension plans we sponsor were affected by increased benefit obligations due to the decline in interest rates used to measure these obligations. As a result, for each of the three years ended in fiscal 2004, the accumulated
benefit obligation exceeded the fair value of plan assets for many of our plans. SFAS 87 requires recognition of an additional minimum liability for those deficient plans and, as a result, the accumulated other comprehensive losses recorded as of
2004, 2003, and 2002 were $111.8 million, $79.6 million, and $103.7 million, respectively.

In addition, as of December 26,
2004, we reflected our share of the Detroit News Agencys, Seattle Times Companys and SP Newsprints minimum pension liability by recording a decrease in our investment in the unconsolidated subsidiaries, and byrecognizing an Accumulated Other Comprehensive Loss, net of tax effect, of $23.2 million.

In 2002, with the concurrence of the Philadelphia Guild employees, we transferred certain severance obligations formerly accounted for as postretirement benefits under a company-sponsored plan to a multi-employer pension plan.
Concurrent with the transfer, we contributed $3 million to the multi-employer plan. An employer participating in a multi-employer plan recognizes as net pension expense the required contribution each period and a liability solely for any
contributions due and unpaid. Accordingly, upon the transfer we recognized a gain of $15 million, consisting of the previously recorded $18 million postretirement benefit obligation for the Guild plan at the date of the transfer, net of the $3
million contribution.



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Our asset allocation for our pension plans at the end of 2004 and 2003 and our target allocation range, by asset category, are as follows:



|                  |  |                   |  |                                       |  |     
|----------------- |  | ----------------- |  | ------------------------------------- |  | ----
|                  |  | TARGET ALLOCATION |  | PERCENTAGE OF PLAN ASSETS AT YEAR END
|Asset Category    |  | RANGE             |  | 2004                                  |  | 2003
|Equity securities |  | 40% - 70%         |  | 68%                                   |  | 66% 
|Debt securities   |  | 23% - 45%         |  | 28%                                   |  | 27% 
|Real estate       |  | 0% -   8%         |  | 3%                                    |  | 4%  
|Other             |  | 0% - 10%          |  | 1%                                    |  | 3%  
|Total             |  |                   |  | 100%                                  |  | 100%



These results
represent a weighted average, taking into account a number of different plans and investment policies. Statements of investment policy covering the plans outline the governance structure for making decisions, set objectives and restrictions,
including policy allocation ranges and outline criteria for selecting and evaluating managers. Investment managers are given tailored directives that take their capabilities into account.Use of derivatives is permitted only where the manager meets special guidelines. Pension investment committees are responsible for monitoring compliance with the policies.

The pension funds do not hold Knight Ridder securities (common stock or other) directly or in separately managed accounts.



EXPECTED CASH FLOWS

Information about the expected cash flows for the pension and other postretirement benefit plans are as follows (in thousands):



|                       |  |                  |       |                |   |                |  |   |       
|---------------------- |  | ---------------- | ----- | -------------- | - | -------------- |  | - | ------
|Employer Contributions |  | PENSION BENEFITS |       |               
|                       |  | FUNDED PLANS     |       | UNFUNDED PLANS |   | OTHER BENEFITS
|2005 (expected)        |  | $                | 7,059 |                | $ | 2,926          |  | $ | 15,269



Information about the
expected benefit payments for the next 10 years are as follows (in thousands):



|                 |  |                  |         |                |   |                |  |   |        
|---------------- |  | ---------------- | ------- | -------------- | - | -------------- |  | - | -------
|Benefit Payments |  | PENSION BENEFITS |         |               
|                 |  | FUNDED PLANS     |         | UNFUNDED PLANS |   | OTHER BENEFITS
|2005             |  | $                | 63,860  |                | $ | 2,926          |  | $ | 15,269 
|2006             |  |                  | 65,178  |                |   | 2,886          |  |   | 16,656 
|2007             |  |                  | 67,424  |                |   | 2,846          |  |   | 18,030 
|2008             |  |                  | 72,725  |                |   | 2,808          |  |   | 19,384 
|2009             |  |                  | 76,060  |                |   | 2,780          |  |   | 20,698 
|2010-2014        |  |                  | 463,301 |                |   | 13,390         |  |   | 121,433



Knight Ridder makes
contributions to its funded pension plans, and benefits are paid from plan assets. In the case of unfunded pension plans and other benefits plans, Knight Ridder pays benefits directly to participants.



EMPLOYEE LABOR ARRANGEMENTS

We have approximately 18,000 FTEs. Approximately 28% of our full time employees are represented by 67 local unions and work under multiyear collective
bargaining agreements.Individual newspapers that have one or more collective bargaining agreements are in Akron, Detroit, Duluth, Fort Wayne, Grand Forks, Kansas City, Lexington,
Monterey, Philadelphia, St. Paul, San Jose, State College, Superior and Wichita. These agreements are renegotiated in the years in which they expire. During 2005, there will be negotiations for new collective bargaining agreements in Grand Forks,
Kansas City, Monterey, St. Paul, State College, Superior and Wichita, representing approximately 800 employees.



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NOTE 11. QUARTERLY OPERATIONS
(UNAUDITED)

The newspaper business is seasonal, with the strongest advertising revenue coming in the fourth quarter, followed (at some
distance) by the second  and then by the remaining two. Classified advertising revenue in the past has been a reflection of the overall economy and has not been significantly affected by seasonal trends. The following table summarizes our
quarterly results of operations (in thousands, except per share data):



|     |  |                     |  |         |         |        |   |         |  |        |         |  |   |        
|---- |  | ------------------- |  | ------- | ------- | ------ | - | ------- |  | ------ | ------- |  | - | -------
|     |  |                     |  | QUARTER
|     |  | Description         |  | FIRST   |         | SECOND |   | THIRD   |  | FOURTH
|2004 |  | Operating revenue   |  | $       | 712,271 |        | $ | 760,216 |  | $      | 722,213 |  | $ | 819,449
|     |  | Operating income    |  |         | 111,059 |        |   | 155,009 |  |        | 134,018 |  |   | 185,154
|     |  | Net income          |  |         | 55,937  |        |   | 86,262  |  |        | 76,879  |  |   | 107,165
|     |  | Earnings per share: |  |         |         |        |   |         |  |        |         |  |   |        
|     |  | Basic               |  |         | 0.71    |        |   | 1.10    |  |        | 1.00    |  |   | 1.39   
|     |  | Diluted             |  |         | 0.70    |        |   | 1.08    |  |        | 0.99    |  |   | 1.38   
|2003 |  | Operating revenue   |  | $       | 699,313 |        | $ | 743,952 |  | $      | 707,214 |  | $ | 795,512
|     |  | Operating income    |  |         | 110,551 |        |   | 150,794 |  |        | 128,995 |  |   | 177,267
|     |  | Net income          |  |         | 50,672  |        |   | 77,218  |  |        | 69,149  |  |   | 99,032 
|     |  | Earnings per share: |  |         |         |        |   |         |  |        |         |  |   |        
|     |  | Basic               |  |         | 0.62    |        |   | 0.96    |  |        | 0.86    |  |   | 1.24   
|     |  | Diluted             |  |         | 0.62    |        |   | 0.95    |  |        | 0.85    |  |   | 1.22   



NOTE 12. ACCUMULATED OTHER
COMPREHENSIVE LOSS

A minimum pension liability adjustment is required when the actuarial present value of accumulated pension benefit
obligation exceeds plan assets and accrued pension liabilities, less allowable intangible assets. Minimum pension liability adjustments, net of income taxes, are recorded as a component of other comprehensive loss.

The following table presents the components of other comprehensive income for 2004, 2003 and 2002 as shown in the Statement of
Shareholders Equity (in thousands):



|                                                                           |  |      |         |   |      |   |         |      |  |   |          |  
|-------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | -------- | -
|                                                                           |  | 2004 |         |   | 2003 |   |         | 2002 | 
|Net Income                                                                 |  | $    | 326,243 |   |      | $ | 296,071 |      |  | $ | 257,448  |  
|Change in additional minimum pension liability                             |  |      | (32,228 | ) |      |   | 24,048  |      |  |   | (103,667 | )
|Change in additional minimum pension liability of unconsolidated
companies |  |      | (4,283  | ) |      |   | (18,890 | )    |  |   |          |  
|Unrealized loss on derivative instruments of unconsolidated
company        |  |      | (1,040  | ) |      |   |         |      |  |   |          |  
|Total accumulated comprehensive income (loss)                              |  |      | (37,551 | ) |      |   | 5,158   |      |  |   | (103,667 | )
|Total                                                                      |  | $    | 288,692 |   |      | $ | 301,229 |      |  | $ | 153,781  |  



Included in
accumulated other comprehensive loss is $111.8 million, net of tax of $68.6 million, for our additional minimum pension liability. The additional minimum pension liability for our unconsolidated companies included in total accumulated comprehensive
loss is $23.2 million, net of tax of $12.8 million. Also included in total accumulated comprehensive loss is $1.0 million, net of tax of $364,000, for the unrealized loss on derivative instruments for the Seattle Times.



NOTE 13. COMMITMENTS AND CONTINGENCIES

Lease commitments

We lease office and warehouse
space under noncancelable lease agreements with expiration dates ranging from 2005 through 2051. Certain leases include renewal provisions at our option and require us to pay for certain common area maintenance and other costs.

At December 26, 2004, we had lease commitments currently estimated to aggregate approximately $93.1 million, as follows (in thousands):



|           |  |   |       
|---------- |  | - | ------
|2005       |  | $ | 21,866
|2006       |  |   | 17,873
|2007       |  |   | 14,154
|2008       |  |   | 10,612
|2009       |  |   | 6,847 
|Thereafter |  |   | 21,778
|Total      |  | $ | 93,130



Payments under the
lease contracts were $25.1 million in 2004, $25.3 million in 2003 and $25.9 million in 2002.



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Agreement with Officers and Others

The Compensation Committee of the Board of Directors authorized us to enter into income security agreements with certain key executives designated by the Committee. Participants are entitled to receive the following, if after a
change in control (as defined in the agreements), an executives employment is terminated for any reason other than (a) death, (b) disability, (c) retirement, (d) cause, or (e) resignation by the participant for any reason other than good
reason, each as defined in the agreement:

| |  |  | Lump sum cash severance payment equal to three times the greater of (i) the sum of the salary and cash bonus payable to the participant for the last full calendar
year preceding the severance payment or (ii) the sum of the participants annualized salary and the maximum cash bonus the participant could have earned for the then current calendar year.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Three years of life insurance and health plan coverage.
| | - |  | -------------------------------------------------------

| |  |  | Accelerated vesting of stock issued and stock options granted, in accordance with the provisions of Knight Ridders ESOP.
| | - |  | -------------------------------------------------------------------------------------------------------------------------

| |  |  | A gross-up payment for any excise taxes related to the above compensation.
| | - |  | --------------------------------------------------------------------------



Incentive Compensation Plans

The Board of Directors approved and adopted a cash-based long-term incentive plan in 2003. This plan is intended to motivate and reward executives for achieving Total Shareholders Return (TSR) equal to or greater than the median TSR
of the companies in our comparison group. Under the plan, participants were selected to participate in the plan prior to the commencement of the three-year performance period ending December 2005; however, participants may be added due to subsequent
promotions and removed if they leave the company before the end of the three-year term, as specified by the plan. Participants are eligible to receive a cash award at the end of each performance period if certain specified performance targets are
achieved.

For the three year plan ending in December 2005, we recognized compensation expense of $4.8 million and $5.5
million for 2004 and 2003, respectively, totaling $10.3 million accrued under the current plan. The accrued compensation represents 50.4% of the maximum payout, based on our standing as of December 26, 2004 and our assessment of the likelihood that
we will meet the performance goals at the end of the three-year term.

Participants in the MBO bonus plan may defer a
portion or the entire amount due, subject to IRS guidelines and net of certain taxes. The deferred amounts are fully funded. As of 2004 and 2003, we showed a liability of $36.8 million and $35.4 million, respectively, for amounts deferred, with a
corresponding asset, both classified as noncurrent.



Self-insurance
and deductibles on casualty insurance

We are self-insured for the majority of our health insurance costs, including claims filed and
claims incurred but not reported. We also have deductibles of up to $1 million on various casualty insurance programs, which we have determined to be adequate for the type of risk. We estimate the liability under our health insurance and casualty
programs on an actuarial undiscounted basis using individual case-based valuations, statistical analysis, judgment and historical experience; however, the final cost of many of these claims may not be known for several years. We

also rely on the advice of consulting actuaries and administratorsin determining an adequate
liability for self-insurance claims. At December 26, 2004 and December 28, 2003, self-insurance and casualty insurance accruals totaled $72.6 million and $73.2 million, respectively. In connection with our insurance program, letters of credit
totaling $56.5 million are required to support certain projected workers compensation obligations. We continuously review the adequacy of our insurance coverage.



Rebate reserve

We
record accruals for customer rebates in the period the advertisement is published, based upon contractual obligations and historical experience. These accruals may increase or decrease if future rebates differ from historical experience. In
accordance with advertising contracts, if a customer does not meet the required contractual spending levels, we have the right to short rate the customer. Short rate means that a customer may be charged a higher rate for their actual
volume. Rebates are recognized as a reduction of revenue.



Purchase
and sales commitments

We have ongoing purchase commitments with SP Newsprint and Ponderay, our two newsprint mill investments. These
future commitments are for the purchase of a minimum of $37.9 million and $15.8 million of newsprint in 2005 with SP Newsprint and Ponderay, respectively, at current market prices. We also have a sales commitment with Detroit Newspapers to supply
50% of their newsprint requirements, which in 2005 will be approximately $24.8 million. We have the resources necessary to fulfill these commitments in 2005.



Legal matters

Knight Ridders wholly-owned
subsidiary, MediaStream, Inc. (MediaStream), was named as one of a number of defendants in two separate class action lawsuits that have been consolidated with one other similar lawsuit by the Judicial Panel on Multi-District Litigation
under the caption In re Literary Works in Electronic Databases Copyright Litigation, M.D.L. Docket No. 1379 (the Multi-District Litigation). The two lawsuits originally filed against MediaStream in September 2000 were: The
Authors Guild, Inc. et al. v. The Dialog Corporation et al., and Posner et al. v. Gale Group Inc. et al. These lawsuits were brought by or on behalf of free-lance authors who allege that the defendants have infringed
plaintiffs copyrights by making plaintiffs works available on databases operated by the defendants. The plaintiffs are seeking to be certified as class representatives of all similarly situated free-lance authors. In the Multi-District
Litigation, plaintiffs seek actual damages, statutory damages and injunctive relief, among other remedies.

The two
lawsuits were initially stayed pending disposition by the U.S. Supreme Court of New York Times Company et al. v. Tasini et al., No. 00-21. On June 25, 2001, the Supreme Court ruled that the defendants in Tasini did not have a privilege
under Section 201 of the Copyright Act to republish articles previously appearing in print publications absent the authors separate permission for electronic republication. The judge has ordered the parties in the Multi-District Litigation to
try to resolve the claims through mediation, which commenced November 2001, and the parties have agreed to a limited stay to respond to the complaint during such mediation, which may be terminated by the plaintiffs upon 30-days prior written notice.
In September 2001, the plaintiffs submitted an amended complaint, which named Knight Ridder as an additional defendant and made



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reference to Knight Ridder
Digital.

Settlement discussions that originally commenced during the mediation are continuing, and plaintiffs and
defendants in the Multi-District Litigation are in the process of obtaining and exchanging signatures to a proposed settlement agreement. In the event that the foregoing parties are unable to finally settle this matter and the litigation resumes,
Knight Ridder and MediaStream intend to contest liability and vigorously defend their positions in the litigation, including opposing class certification. In addition, MediaStream has indemnity agreements from various content providers supplying
articles to MediaStreams databases that could mitigate its potential exposure. If the settlement agreement is not finally concluded and the litigation resumes, there can be no assurance that we will prevail in the above legal proceedings and
management cannot estimate the exposure if we do not prevail. In such case, a ruling against us in the proceedings described above may have a material adverse effect on our financial condition and results of operation. In addition to the matters
described above, we are also involved in litigation and administrative proceedings, primarily libel and copyright infringement actions, bankruptcy proceedings involving the companys advertisers, and environmental and other legal proceedings
that have arisen in the ordinary course of business. In the opinion of management, except as set forth above, our liability, if any, under any other pending litigation or administrative proceedings, will not materially affect our consolidated
financial position or results of operations.



NOTE 14. DETAIL OF
OTHER, NET

The Other, net line within Other income (expense) on the consolidated statement of
income for the fiscal years ended 2004, 2003 and 2002 is summarized in the table below (in millions):



|                                           |  |      |      |   |      |   |      |      |  |   |      |  
|------------------------------------------ |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                           |  | 2004 |      |   | 2003 |   |      | 2002 | 
|Realized gain/(loss) on sale of investment |  | $    | 0.8  |   |      | $ | -    |      |  | $ | -    |  
|Realized losses on sales of marketable     |  |      |      |   |      |   |      |      |  |   |      |  
|securities                                 |  |      |      |   |      |   |      |      |  |   | (4.3 | )
|Other-than-temporary impairment of         |  |      |      |   |      |   |      |      |  |   |      |  
|cost-basis Internet-related                |  |      |      |   |      |   |      |      |  |   |      |  
|investments                                |  |      |      |   |      |   | (1.6 | )    |  |   | (3.1 | )
|Other                                      |  |      | (0.3 | ) |      |   | (0.1 | )    |  |   | (2.1 | )
|Total                                      |  | $    | (0.5 | ) |      | $ | (1.7 | )    |  | $ | (9.5 | )



In December 2004, we
sold the domain name for Cars.com and recorded a gain of approximately $800,000.

In June 2003, we wrote off $1.6 million
representing the remaining balance of our cost basis internet-related investments, as an other-than-temporary decline.

In
January 2002, we sold our stock in MatchNet plc, for $651,000 and recorded a pre-tax loss of approximately $4.3 million. Additionally, we recorded other-than-temporary declines in a number of other cost-basis Internet-related investments of $3.1
million in 2002.



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Signatures



Pursuant to the
requirements of Section 13 or 15(d) 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.



|       |  |               |  |  |  |     |  |                                     
|------ |  | ------------- |  |  |  | --- |  | ------------------------------------
|       |  |               |  |  |  |     |  | Knight-Ridder, Inc. Registrant      
|       |  |               |  | 
|Dated: |  | March 2, 2005 |  |  |  | By: |  | /s/ P. Anthony Ridder               
|       |  |               |  |  |  |     |  | P. Anthony Ridder                   
|       |  |               |  |  |  |     |  | Chairman and Chief Executive Officer



Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                          |  |                              |  |              
|--------------------------------------------------------- |  | ---------------------------- |  | -------------
|Signer                                                    |  | Title                        |  | Date         
|                                                          |  |                             
|/s/ P. Anthony Ridder                                     |  | Principal Executive Officer  |  | March 2, 2005
|Chairman and Chief Executive Officer                      |  |                              |  |              
|                                                          |  |                              |  |              
|                                                          |  |                             
|/s/ Steven B. Rossi                                       |  | Principal Financial Officer  |  | March 2, 2005
|Senior Vice President/Finance and Chief Financial Officer |  |                              |  |              
|                                                          |  |                              |  |              
|                                                          |  |                             
|/s/ Gary R. Effren                                        |  | Principal Accounting Officer |  | March 2, 2005
|Vice President/Finance                                    |  |                              |  |              
|                                                          |  |                              |  |              
|                                                          |  |                             
|Mark A. Ernst*                                            |  | Director                     |  |              
|Kathleen Foley Feldstein*                                 |  | Director                     |  |              
|Thomas P. Gerrity*                                        |  | Director                     |  |              
|Ronald D. Mc Cray*                                        |  | Director                     |  |              
|Kathleen Foley Feldstein*                                 |  | Director                     |  |              
|Pat Mitchell*                                             |  | Director                     |  |              
|M. Kenneth Oshman*                                        |  | Director                     |  |              
|Vasant Prabhu*                                            |  | Director                     |  |              
|P. Anthony Ridder*                                        |  | Director                     |  |              
|Gonzalo F. Valdes-Fauli*                                  |  | Director                     |  |              
|John E. Warnock*                                          |  | Director                     |  |              



The Board of Directors

|      |  |                               
|----- |  | ------------------------------
|      | 
|By: * |  | /s/ Steven B. Rossi           
|      |  | Steven B. Rossi               
|      |  | Attorney-in-fact March 2, 2005



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Exhibit Index



Exhibits marked
with an asterisk are management contracts or compensatory plans or arrangements filed pursuant to Item 601(b)(10)(iii)(A) of Regulation S-K. Unless otherwise indicated, all other documents listed are filed with this report.



|        |  |                                                                                                                                                                                                                                                                                                                                          
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                              
|2       |  | Disposition of Assets, dated as of March 18, 1998, is incorporated by reference to the Registrants Report on Form 8-K filed March 31, 1998.                                                                                                                                                                                             
|3.1     |  | Amended and Restated Articles of Incorporation of Registrant (amended and restated as of February 3, 1998), are incorporated by reference to the Registrants Report on
Form 10-K filed March 13, 1998.                                                                                                                                  
|3.2     |  | Bylaws of Registrant (as amended to date) is incorporated by reference to the Registrants Report on Form 10-K filed March 5, 2003.                                                                                                                                                                                                      
|4.1     |  | Indenture, dated as of February 15, 1986, between Registrant and Manufacturers Hanover Trust Company, as Trustee, is incorporated by reference to Exhibit 4 to the
Registrants Registration Statement on Form S-3 (No. 33-28010).                                                                                                       
|4.2     |  | First Supplemental Indenture, dated as of April 15, 1989, to the Indenture, dated as of February 15, 1986, between Registrant and Chase Manhattan Bank (as successor to
Manufacturers Hanover Trust Company), as Trustee, is incorporated by reference to the Registrants Report on Form 8-K, filed April 30, 1989.                     
|4.3     |  | Rights Agreement, dated as of June 21, 1996, between Registrant and Chase Mellon Shareholder Services, LLC, is incorporated by reference to the Registrants Report on
Form 8-K filed July 10, 1996.                                                                                                                                     
|4.4     |  | First Amendment to Rights Agreement, dated as of July 25, 2000, between Registrant and Chase Mellon Shareholder Services, LLC. as Rights Agent, is incorporated by reference to
the Registrants Report on Form 8-A/A filed August 10, 2000.                                                                                             
|4.5     |  | Indenture, dated as of November 4, 1997, between Registrant and The Chase Manhattan Bank of New York, as Trustee, is incorporated by reference to Exhibit 4.1 to the
Registrants Registration Statement on Form S-3 (No. 333-37603).                                                                                                    
|4.6     |  | First Supplemental Indenture, dated as of June 1, 2001, between Registrant; The Chase Manhattan Bank of New York, as original Trustee; and The Bank of New York, as series
Trustee, is incorporated by reference to Exhibit 4 to the Registrants Report on Form 8-K filed June 1, 2001.                                                 
|4.7     |  | Second Supplemental Indenture, dated as of November 1, 2004, among Registrant, JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as trustee, and The Bank of
New York Trust Company, N.A., as series trustee for the Notes is incorporated by reference to the Registrants Report on Form 8-K filed on November 4, 2004.
|10.1    |  | Registrants Employee Stock Option Plan (as amended through January 28, 2003) is incorporated by reference to the Registrants Report on Form 10-K filed March 5,
2003.*                                                                                                                                                                 
|10.2    |  | Registrants Compensation Plan for Nonemployee Directors (as amended through April 22, 2003) is incorporated by reference to Exhibit 99 to the Registrants
Registration Statement on Form S-8 filed November 26, 2003 (No. 333-110794).*                                                                                                
|10.3    |  | Registrants Annual Incentive Plan (as amended and restated effective as of January 1, 2004).*                                                                                                                                                                                                                                           
|10.4    |  | Registrants Long-Term Incentive Plan (as adopted effective as of January 1, 2003) is incorporated by reference to the Registrants Report on Form 10-K filed March
5, 2003.*                                                                                                                                                            
|10.5    |  | Executive Officers Retirement Agreement dated as of December 19, 1991, is incorporated by reference to the Registrants Form 10-K filed March 23,
1994.*                                                                                                                                                                                
|10.6    |  | Executive Income Security Agreement (as amended effective as of October 24, 2000) is incorporated by reference to the Registrants Form 10-K filed March 28,
2001.*                                                                                                                                                                      
|10.7    |  | Registrants Annual Incentive Deferral Plan (effective as of November 1, 1996) is incorporated by reference to the Registrants Form 10-K filed March 29,
2002.*                                                                                                                                                                         
|10.8    |  | First Amendment to the Knight-Ridder, Inc. Annual Incentive Deferral Plan is incorporated by reference to the Registrants Form 10-K filed March 29,
2002.*                                                                                                                                                                              
|10.9    |  | Second Amendment to the Knight-Ridder, Inc. Annual Incentive Deferral Plan (as amended effective as of January 1, 2000) is incorporated by reference to the Registrants
Form 10-K filed March 29, 2002.*                                                                                                                                
|10.10   |  | Third Amendment to the Knight-Ridder, Inc. Annual Incentive Deferral Plan (as amended effective October 1, 2001) is incorporated by reference to the Registrants Form
10-K filed March 29, 2002.*                                                                                                                                       
|10.11   |  | Commercial Paper Dealer Agreement dated as of December 13, 2004, between Registrant, as Issuer and SunTrust Capital Markets, Inc., as Dealer is incorporated by reference to
the Registrants Report on Form 8-K filed on December 17, 2004.                                                                                             
|12      |  | Computation of earnings-to-fixed-charges ratio.                                                                                                                                                                                                                                                                                          
|14      |  | Registrants Code of Business Ethics (as amended through January 27, 2004) is incorporated by reference to Exhibit 14 to the Registrants Report on Form 8-K filed
January 4, 2004.                                                                                                                                                      
|21      |  | Subsidiaries of Registrant.                                                                                                                                                                                                                                                                                                              
|23      |  | Consent of Independent Certified Public Accountants.                                                                                                                                                                                                                                                                                     
|24      |  | Powers of Attorney.                                                                                                                                                                                                                                                                                                                      
|31.1    |  | Certification of Chief Executive Officer pursuant to Rule 13a-15(a) and Rule 15d-15(a) of the Securities Exchange Act, as amended.                                                                                                                                                                                                       



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|        |  |                                                                                                                                                      
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                          
|31.2    |  | Certification of Chief Financial Officer pursuant to Rule 13a-15(a) and Rule 15d-15(a) of the Securities Exchange Act, as amended.                   
|32      |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Act, as amended.

* Denotes a management contract or compensatory plan or arrangement.



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Schedule II



Item 15(d)

Knight-Ridder, Inc. and Subsidiaries

Valuation and Qualifying Accounts

For the Three Years Ended December 26, 2004

(in thousands)



|                                         |  |          |              |          |   |            |  |          |        |  |   |            
|---------------------------------------- |  | -------- | ------------ | -------- | - | ---------- |  | -------- | ------ |  | - | -----------
|COLUMN
A                                 |  | COLUMN B |              | COLUMN C |   | COLUMN D   |  | COLUMN E
|                                         |  |          |              |          |   | ADDITIONS  |  |          |        |  |   |            
|                                         |  |          | BALANCE AT   |          |   | CHARGED TO |  |          |        |  |   | BALANCES AT
|                                         |  |          | BEGINNING OF |          |   | COSTS AND  |  |          |        |  |   | END OF     
|Description                              |  | PERIOD   |              | EXPENSES |   | DEDUCTIONS |  | PERIOD  
|Year ended
December 26, 2004             |  |          |              |          |   |            |  |          |        |  |   |            
|Accounts
receivable                     |  |          |              |          |   |            |  |          |        |  |   |            
|Allowance for
bad debts                  |  | $        | 18,857       |          | $ | 16,886     |  | $        | 18,600 |  | $ | 17,143     
|Reserve for
adjustments                  |  |          | 5,388        |          |   | 11,728     |  |          | 10,272 |  |   | 6,844      
|Accrued
expenses and other liabilities  |  |          |              |          |   |            |  |          |        |  |   |            
|Reserve for
rebates                      |  |          | 10,824       |          |   | 15,704     |  |          | 17,852 |  |   | 8,676      
|                                         |  | $        | 35,069       |          | $ | 44,318     |  | $        | 46,724 |  | $ | 32,663     
|Year ended
December 28, 2003             |  |          |              |          |   |            |  |          |        |  |   |            
|Accounts
receivable                     |  |          |              |          |   |            |  |          |        |  |   |            
|Allowance for
bad debts                  |  | $        | 20,076       |          | $ | 19,230     |  | $        | 20,449 |  | $ | 18,857     
|Reserve for
adjustments                  |  |          | 5,277        |          |   | 5,408      |  |          | 5,297  |  |   | 5,388      
|Accrued
expenses and other liabilities  |  |          |              |          |   |            |  |          |        |  |   |            
|Reserve for
rebates                      |  |          | 14,321       |          |   | 14,448     |  |          | 17,945 |  |   | 10,824     
|                                         |  | $        | 39,674       |          | $ | 39,086     |  | $        | 43,691 |  | $ | 35,069     
|Year ended
December 29, 2002             |  |          |              |          |   |            |  |          |        |  |   |            
|Accounts
receivable                     |  |          |              |          |   |            |  |          |        |  |   |            
|Allowance for
bad debts                  |  | $        | 23,697       |          | $ | 26,828     |  | $        | 30,449 |  | $ | 20,076     
|Reserve for
adjustments                  |  |          | 3,950        |          |   | 6,384      |  |          | 5,057  |  |   | 5,277      
|Accrued
expenses and other liabilities  |  |          |              |          |   |            |  |          |        |  |   |            
|Reserve for
rebates                      |  |          | 16,718       |          |   | 19,511     |  |          | 21,908 |  |   | 14,321     
|                                         |  | $        | 44,365       |          | $ | 52,723     |  | $        | 57,414 |  | $ | 39,674     



S-1