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 28, 1997 Commission file number 1-7553

                               KNIGHT-RIDDER, INC.
             (Exact name of registrant as specified in its charter)

                      A Florida corporation NO. 38-0723657
      (State or other jurisdiction of (I.R.S. Employer Identification No.)
                         incorporation or organization)

                      One Herald Plaza Miami, Florida 33132
                    (Address of principal executive offices)

        Registrant's telephone number, including area code (305) 376-3800

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

      Title of each  class          Name of each  exchange  on which  registered
Common Stock, $.02 1/12 Par Value             New York Stock Exchange
                                              Frankfurt 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 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  amendments  to
this Form 10-K. [ ]

State the aggregate market value of the voting stock held by  non-affiliates  of
the  registrant.  (The  aggregate  market  value is computed by reference to the
price at which the stock was sold as of March 6, 1998:  $4,480,605,092.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest  practicable date: March 6, 1998 - 79,302,745 one
class Common Stock, $.02 1/12 Par Value

                       DOCUMENTS INCORPORATED BY REFERENCE

(1)   Portions of definitive Proxy Statement dated March 27, 1998, in connection
      with the Annual Meeting of  Shareholders to be held on April 28, 1998, are
      incorporated into Part III.
(2)   Portions of the Company's Form 10-K filed March 10, 1997 are  incorporated
      into Part IV.
(3)   Portions of the Company's Form 10-K filed March 20, 1996 are  incorporated
      into Part IV.
(4)   Portions of the Company's Form 10-K filed March 24, 1995 are  incorporated
      into Part IV.
(5)   Portions of the Company's Form 10-K filed March 23, 1994 are  incorporated
      into Part IV.
(6)   Rights Agreement filed July 9, 1996 on Form 8-A is incorporated  into Part
      IV.
(7)   Registration  Statement No. 33-28010 on Form S-3 is incorporated into Part
      IV.
(8)   Registration Statement No. 333-37603 on Form S-3 is incorporated into Part
      IV.

                                       1
<PAGE>
<TABLE>
<CAPTION>

                      Table of Contents for 1997 Form 10-K
                                                                                                       Page
PART I

<S>     <C>                                                                                             <C>
 Item 1.  Business .................................................................................    3-8
 Item 2.  Properties ...............................................................................      8
 Item 3.  Legal Proceedings ........................................................................      9
 Item 4.  Submission of Matters to a Vote of Security Holders ......................................      9

PART II

 Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters .....................   9-10
 Item 6.  Selected Financial Data ..................................................................  11-14
 Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations ....  15-26
 Item 8.  Financial Statements and Supplementary Data ..............................................  27-48
 Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure .....     49


PART III

 Item 10. Directors and Executive Officers of the Registrant .......................................  49-51
 Item 11. Executive Compensation ...................................................................     52
 Item 12. Security Ownership of Certain Beneficial Owners and Management ...........................     52
 Item 13. Certain Relationships and Related Transactions ...........................................     52


PART IV

 Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ..........................  52-55

SIGNATURES .........................................................................................  56-58

SCHEDULES ..........................................................................................     59

EXHIBITS ...........................................................................................     59
</TABLE>

                                       2
<PAGE>
PART I

Item 1. BUSINESS


                                  THE COMPANY

Knight-Ridder,  Inc., was formed in 1974 by a merger between Knight  Newspapers,
Inc., and Ridder Publications, Inc.

In 1903,  Charles  Landon  Knight  purchased  the Akron Beacon  Journal.  Knight
Newspapers was founded by John S. Knight,  who inherited the Beacon Journal from
his father in 1933.  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  merger  created  a company  with
operations coast to coast.

Knight-Ridder,  Inc., was  incorporated in Florida in 1976, is  headquartered in
Miami, Florida, and employs about 22,000 people.

Recent Developments

In 1997,  Knight Ridder  acquired four newspapers  indirectly  owned by The Walt
Disney Company, exchanged its newspaper in Boulder, Colo., for two newspapers in
California owned by the E.W. Scripps Co. and sold four of its newspapers.  Also,
in 1997,  Knight  Ridder  sold  Knight-Ridder  Information,  Inc.  (KRII) and in
December  the  company  announced  its intent to sell  Technimetrics,  Inc.  The
company's  announcement  to  divest  KRII  and  Technimetrics  resulted  in  the
reclassification  of its former Business  Information  Services (BIS) segment as
discontinued operations.

                                   NEWSPAPERS

Knight Ridder has 31 daily newspapers and 18 nondaily newspapers.

Operating revenue is derived  primarily from the sale of newspaper  advertising.
Due to seasonal  factors such as heavier  retail  selling  during the winter and
spring holiday seasons,  advertising income fluctuates  significantly throughout
the year.  Consecutive  quarterly  results are not uniform or comparable and are
not indicative of the results over an entire year.

Each of Knight  Ridder's  newspapers is operated on a  substantially  autonomous
basis by local  management  appointed by corporate  headquarters in Miami.  Each
newspaper  is free  to  manage  its own  news  coverage,  set its own  editorial
policies  and  establish  most  business  practices.  Basic  business  policies,
however, are set by the corporate staff in Miami. Editorial services and quality
control also are provided by the corporate staff.

Each newspaper is served by the company-owned news bureau in Washington,  D.C. A
supplemental  news service provided by KRT Information  Services,  a partnership
between Knight Ridder and Tribune Co.,  distributes  editorial material produced
by all Knight Ridder  newspapers and by 16 foreign  correspondents.  The service
also distributes  editorial computer graphics and deadline photos via the Knight
Ridder-owned PressLink Online.

All of the company's  newspapers  compete for  advertising and readers' time and
attention with broadcast, satellite and cable television, the Internet and other
computer  services,  radio,  magazines,   nondaily  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,  Knight  Ridder has
joint operating agreements with a second newspaper.  The rest of Knight Ridder's
newspapers are the only daily and Sunday papers of general circulation published
in their communities.

The  newspapers  rely on local sales  operations for local retail and classified
advertising.  The larger  papers are  assisted  by  Newspapers  First and by the
Newspaper  National  Network,  a sales force created by a group of some 50 major
newspapers, in obtaining national or general advertising.

                                       3
<PAGE>
                   Source of Knight Ridder Operating Revenue

The table below  presents the relative  percentage  contributions  by individual
papers to the company's  overall  operating  revenue in 1997, 1996 and 1995. The
percentage  contributions of each paper to operating revenue are not necessarily
indicative of contributions to operating profit.

                                           1997           1996         1995
                                           ----           ----         ----
  The Philadelphia Inquirer and
    Philadelphia Daily News .............  19.0%          21.3%        21.7%
  The Miami Herald ......................  11.4           13.3         14.3
  San Jose Mercury News .................  10.4           12.0         11.9
  The Kansas City Star(1) ...............   6.1
  Fort Worth Star-Telegram(1) ...........   4.9
  Detroit Free Press(2) .................   7.0            7.7          8.5
  The Charlotte Observer ................   6.2            6.9          6.8
  Saint Paul Pioneer Press ..............   4.1            4.7          4.8
  Contra Costa Newspapers(3) ............   3.9            4.4          1.0
  Akron Beacon Journal ..................   3.6            4.0          4.0
  All other .............................  23.4           25.7         27.0
                                          -----          -----        -----
                                          100.0%         100.0%       100.0%
                                          =====          =====        =====


(1) The Kansas City Star and Fort Worth Star-Telegram were acquired on May 9,
    1997.  This table presents their partial year contribution percentage.
(2) Knight Ridder portion of Detroit Newspapers.
(3) Contra Costa Newspapers was acquired on Oct. 31, 1995.

                                   Newsprint

Knight Ridder consumed  752,000 metric tons of newsprint in 1997.  Approximately
16.8%  of the  company's  total  operating  expenses  during  the  year  was for
newsprint.  Purchases  are made under  long-term  agreements  with 18  newsprint
producers.  Knight Ridder purchases  approximately 70% of its annual consumption
from mills in the  United  States  with the  remainder  purchased  from mills in
Canada and one in Korea.  In the opinion of management,  sources are adequate to
meet current demands.

Approximately  83% of the  newsprint  consumed  by the  company  contained  some
recycled  content;  the average  content of these rolls was 47% recycled  fiber.
This translates into an overall recycled newsprint average of 39%.

Knight  Ridder is a  one-third  partner  with Cox  Newspapers,  Inc.,  and Media
General, Inc., in Southeast Paper Manufacturing Co., a newsprint mill in Dublin,
Ga. The mill produced  456,000 metric tons in 1997, using more than 600,000 tons
of recycled  newsprint  as the  principal  raw  material and coal as the primary
energy  source.  Knight  Ridder  also  owns a 13.5%  equity  share  of  Ponderay
Newsprint Company in Usk, Wash., which produced more than 232,000 metric tons in
1997. Knight Ridder's purchases from these two mills reached 22.6% of our annual
consumption for 1997, proving an important hedge against price volatility.

                                   Technology

Efforts to improve the quality of products  continued  during 1997.  The company
completed the  installation of new publishing  systems in Duluth,  Contra Costa,
Columbia and Grand Forks (made  necessary by the flood).  Systems  installations
are under way in Akron, Biloxi, Macon, Myrtle Beach,  Philadelphia and San Jose,
and have been approved for Charlotte.

The Charlotte Observer completed a full conversion to Flexographic printing, and
a press replacement project was completed in Duluth.

Major press  replacement  projects are well under way at The Miami Herald and in
Akron.  New presses were approved for Fort Worth.  Significant  renovations  are
continuing at the business and editorial offices in Detroit and Philadelphia.

                           General Advertising Sales

Knight  Ridder  newspapers  depend most  heavily on three agents for the sale of
general advertising.

                                       4
<PAGE>

Newspapers First, a national advertising sales cooperative, is the primary sales
representative for the larger Knight Ridder  newspapers,  Detroit Newspapers and
several leading independents.  It allows customers to place ads in a combination
of newspapers.

Newspaper  National  Network (NNN),  Knight Ridder's second general sales agent,
was established in 1994 to focus on national  selling on behalf of the newspaper
industry.  It represents  all the Knight Ridder  newspapers,  plus more than 500
others. Like Newspapers First, it makes the purchase of newspaper  advertising a
"one-stop shopping," "one-order, one-bill" prospect.

Sawyer,   Ferguson   and  Walker,   Inc.,  a  private   company,   sells  sales-
representative  services for Knight  Ridder's  medium to small markets and helps
with regional retail advertising sales.

                             Knight Ridder/Tribune

Knight  Ridder/Tribune  Information  Services (KRT) is a joint venture of Knight
Ridder and Tribune Co. that offers news  stories,  graphics,  illustrations  and
photos for print and online publishers and animations for TV broadcasters.  This
year, KRT added three new products: graphic packages and news animations for Web
publishers and a regional news service for the Southeast.

The daily  interactive  packages and graphics help Web  publishers  offer unique
content,  complete with sound and motion.  KRT also provides  newspaper  clients
with complementary stories, photos and graphics that they can use to promote the
online content.  This lets them use print  circulation to build traffic on their
Web sites.

For print  customers,  KRT  expanded  coverage of news,  features,  business and
sports in the Southeastern United States,  creating a premium service called KRT
South.


             The Philadelphia Inquirer and Philadelphia Daily News

1997 Revenue was $546.5 million.  Philadelphia Newspapers, Inc. (PNI), publisher
of The  Philadelphia  Inquirer and  Philadelphia  Daily News reached an all-time
record profit level in 1997. PNI also reported year-over-year  circulation gains
for the Sunday and daily  Inquirer and the Daily News for the  six-month  period
ended Sept. 30, 1997.

The  year's  achievements  include  the  launch  of a New  Business  Development
Department  for  entrepreneurial  projects,  which  resulted in the  start-up or
acquisition  of new  revenue-producing  enterprises;  implementing  a  strategic
planning process;  winning a Pulitzer Prize, The Inquirer's 18th, and publishing
two record-breaking  recruitment  advertising  sections,  in terms of volume and
revenue dollars.  Also in 1997, both newspapers moved into new,  technologically
advanced  newsrooms,  part of the $30 million  renovation  of PNI's  Center City
Philadelphia location.

Advertising  revenue was up 11.1% in 1997, with particularly strong performances
in classified and general, up 16.8% and 22.3%, respectively. Retail strengthened
in the last months of the year, and is expected to continue to perform well.

Opportunities  to grow  advertising  in PNI's  products  within the  nine-county
Philadelphia  Metropolitan  market remain  attractive  as the market  features a
diverse economy,  including the state's largest  manufacturing center, more than
80 higher  education  institutions  and an  extensive  hospital  and health care
industry.

In 1996,  Philadelphia  had income per capita 15.2% above the U.S.  average;  by
2015 it is projected to be 9.1% above.

                                       5
<PAGE>
                                The Miami Herald

1997 Revenue was $324.4 million. The Miami Herald,  Florida's largest newspaper,
is sold primarily in Miami-Dade,  Broward and Monroe counties. Its International
Satellite  Edition is  distributed  in 29  countries  in Latin  America  and the
Caribbean.

El Nuevo Herald, an award-winning  Spanish-language newspaper (102,744 daily and
127,028 Sunday),  is available to Herald subscribers for a 7-cent daily delivery
charge or through single-copy sales.

Retail  expansion  in 1997 was fueled by a wave of new  entertainment  retailing
projects like  BeachPlace in Broward;  more are planned for both  Miami-Dade and
Broward.

Several retailers are expanding:  Bloomingdale's  opened a new store;  Dillard's
will occupy 10 former Mervyn's  locations;  Nordstrom and OfficeMax each plan to
open several stores.

Advertising revenue was up 3.1% in 1997. Retail was significantly better for the
first time since the  aftermath  of  Hurricane  Andrew.  Classified  was up only
slightly, reflecting Miami's relatively high unemployment rate.

In 1997, The Herald launched three new online  products:  HomeHunter,  CarHunter
and an entertainment  guide,  JustGo. On its 10th  anniversary,  el Nuevo Herald
extended solo  distribution  to more than 1,000  single-copy  racks.  The Herald
retooled its Sunday magazine,  Tropic.  It expanded  partnerships with NBC 6 and
Channel 23 and agreed to produce a pilot  program with Silver King  Broadcasting
featuring  the Herald  newsroom.  Attendance  was  strong at the first  Americas
Conference.  A partnership  with the Florida Marlins  contributed to the largest
single-copy  sales day in  Herald  history  when the team won the World  Series.
Installation of state-of-the-art offset presses is ongoing.

The Miami/Fort  Lauderdale DMA population is expected to grow 26.7% between 1996
and 2015, compared with 18.0% for the U.S.

The  Miami/Fort  Lauderdale  market in 1996 had income per capita 0.7% above the
U.S. average; by 2015 it is projected to be 6.8% above.

                             San Jose Mercury News

1997  Revenue was $299.3  million.  In 1997,  Time  magazine  named the San Jose
Mercury News the "most tech-savvy" newspaper in America. The Mercury News serves
Silicon Valley, which encompasses San Jose, California's third-largest city, and
surrounding communities. The region became the national leader in exports and is
the world  leader in high  technology.  Business  Week  reported:  "In 1996,  on
average,  one Valley company went public every five  days...More than 50,000 new
jobs were created, while wages grew five times the national average."

Sharing in Silicon  Valley's  economic  boom, the Mercury News has introduced or
developed  products  in the past year to  compensate  for a retail  market  that
didn't grow as quickly as other segments.

Advertising  revenue was up 5.0% in 1997.  Classified was up just slightly after
the  major  gains  of  1996  and  1995,  and  retail  rebounded  strongly  after
year-earlier  consolidations in the market.  General,  up 25%, has been the high
point,  driven  by  high-tech  products  and  services,  telecommunications  and
exports.

Mercury  Center  reflects the  newspaper's  innovative  initiatives.  The online
edition added Just Go/Bay Area, an online  entertainment  guide;  HomeHunter,  a
real estate  site;  and Bay Area Yellow  Pages,  an online  directory.  Existing
products expanded: the Talent Scout recruitment site, for example,  introduced a
branded job fair.

Founded in 1993, Mercury Center  (www.mercurycenter.com)  averaged more than 1.2
million  users  per month in 1997.  The  site's  stature  as a news  source  was
demonstrated during October's market tremors, registering over 2 million hits in
a single day.

                                       6
<PAGE>

Nuevo Mundo, serving the nation's fourth-largest Hispanic market, celebrated its
first anniversary.  The Spanish-language free weekly ended the year with average
circulation of 56,900 copies.

The  population  of the San Jose  Metropolitan  Statistical  Area  (MSA),  which
includes  only Santa Clara  County,  is expected to grow 21.0%  between 1996 and
2015; the U.S. average is 18.0%.

In 1996, San Jose had income per capita 33.7% above the U.S. average; by 2015 it
is projected to be 32.6% above.

                              The Kansas City Star

1997  Revenue  was $265.4  million.  The Kansas City Star serves the Kansas City
metro and outlying  areas on both sides of the Kansas and Missouri  state lines.
The Star's primary market area consists of 11 counties in the two states.

After a relatively slow period of economic growth, Kansas City became a boomtown
in 1996.  Higher  personal  incomes,  stronger  economic  output  and  increased
employment  in retail and  service  industries  have led to a tight job  market.
Recruitment for the more than 19,000 new jobs created in 1997 brought an upsurge
in help-wanted advertising, with a nearly 20% increase in revenue.

Kansas  City's  retail  landscape  has also been  changing  with the addition of
several major retailers.  Kohl's, Jacobson's,  Target and Home Depot entered the
market in late 1996 and early 1997,  with  Nordstrom set to debut in early 1998.
Coupled with the addition of a major mall, retail advertising  increased 9.5% in
1997.

Advertising revenue was up 10.1% in 1997 and is expected to increase about 7% in
1998. The profit margin was in the low 30s and is expected to remain steady.

The  Star's  online   community  site,   kansascity.com,   and  online  product,
kcstar.com,  continue to grow and improve.  The kansascity.com site won the 1997
Newspaper  Association of America  Digital Edge award for best use of classified
online.  The site saw a 461%  year-over-year  increase in traffic for  November.
StarDirect,  a subsidiary offering turnkey database marketing  solutions,  saw a
108%  increase  in  revenue.  Additionally,  revenue  increased  44%  for  Grand
Communications, the event marketing subsidiary.

Kansas City in 1996 had income per capita 3.4% above the U.S.  average;  by 2015
it is projected to be 2.5% above.

                            Fort Worth Star-Telegram

1997 Revenue was $212.6  million.  The  Star-Telegram  is located in the western
portion of the Dallas/Fort  Worth market.  The four-county Fort  Worth/Arlington
PMSA  metropolitan  area ranks as the 32nd most  populous in the U.S.  and third
largest in Texas in 1997.

The number of jobs hit a historic  high in 1997,  with 2% growth  projected  for
1998.  Unemployment  is just over 3%. In far North Fort  Worth,  the Texas Motor
Speedway and a FedEx national distribution hub opened. Intel Corp. plans to open
a $1.3 billion  manufacturing  facility by the year 2000, and Nokia and Motorola
Fort Worth are expanding,  making the area a new national technology center. The
area  is  home to  such  Fortune  500  companies  as  American  Airlines,  Tandy
Corporation and Burlington Northern Santa Fe Railroad.

The 1.8  million-square-foot  Grapevine  Mills  opened and a major  expansion of
North East Mall is under way,  including new Nordstrom and JCPenney stores.  The
Bass  Performing Arts Hall will open in 1998.  Renovation of historic  buildings
and  construction of new housing are driving  development of Sundance Square and
downtown Fort Worth.

Ad revenue was up 6.5% in 1997,  and we project about a 6% gain in 1998.  Profit
margin was in the mid-20s.

                                       7
<PAGE>
The  Star-Telegram  continues  its  intensely  zoned  approach  to  local  news,
advertising  and  customer   service.   The  Arlington   Star-Telegram  set  new
circulation  and  advertising  records in the face of aggressive  competition in
1997. In 1998, Northeast Tarrant County will be served by four distinct editions
of the successful weekly Hometown Star. Star-Telegram Online Services, under the
banner  Star-Telegram.com,  is undergoing a major  strategic  repositioning  and
expansion  of  advertising  opportunities.  La  Estrella,  with its two distinct
bilingual and Spanish-predominant weekly editions, continues to develop.

Fort  Worth/Arlington's  population has grown 57% since 1980, and is expected to
grow 39.9% between 1996 and 2015, compared with 18.0% for the U.S.

                               Detroit Free Press

1997 Revenue (Knight Ridder's share) was $201.7 million.  The Detroit Free Press
is the largest newspaper in Michigan.  The combined Sunday edition,  The Detroit
News and Free Press, ranks sixth in circulation in the nation.

The two newspapers are published by Detroit Newspapers (DN), an agency combining
the business operations of the two newspapers. This joint operating agency (JOA)
was formed in 1989.  The profits (or losses) are split  equally  between the two
partners,  Knight Ridder and Gannett Co. The Free Press is an a.m. paper and The
News is a p.m. paper. On weekends, they publish combined editions.

On July 13, 1995,  six of DN's 11 unions  struck over  proposed  changes in work
rules.  In February  1997, the unions made an  unconditional  offer to return to
work.

In normal  times,  Detroit will generate  approximately  $450 million in revenue
from its two newspapers.  Total  advertising at the end of 1997 was at about 90%
of prestrike levels.

Retail advertising was at nearly 80%; general was about the same, and classified
was slightly improved from prestrike levels.

Circulation  continued to improve;  as of the ABC Publisher's  Statement for the
six months ended Sept. 30, 1997, it was at approximately  71.6% of its prestrike
level for the daily  Free  Press and 74.4% for the  combined  Sunday  paper.  DN
continues to rebound in both advertising and  circulation.  The company returned
to profitability in the fourth quarter of 1996.

Detroit in 1996 had income per capita 15.3% above the U.S.  average;  in 2015 it
is projected to be 9.1% above.

                             The Charlotte Observer

1997 Revenue was $171.9 million. The Charlotte Observer, the largest-circulation
daily in North and South  Carolina,  is sold  primarily  in a  15-county  region
across the two states.  The Observer enjoyed strong  advertising growth in 1997,
with retail  revenue up 8.7%,  general up 2.2% and classified up 13.3% over last
year. Continued growth is expected in 1998.

Population in the Charlotte  Metropolitan  Statistical Area (MSA) is expected to
grow 26.9% between 1996 and 2015, compared with the U.S. average of 18.0%.


Item 2. PROPERTIES

The company has daily  newspaper  facilities in 28 markets located in 18 states.
These  facilities  vary in size  from  7,300  square  feet at the  Florida  Keys
Keynoter   operation  in  Marathon,   Fla.,  to  2.8  million   square  feet  in
Philadelphia.   In  total,   they  occupy  about  10.5   million   square  feet.
Approximately  2.1 million of the total  square  footage is leased from  others.
Virtually all the owned property is owned in fee. The company owns substantially
all of its production  equipment,  although  certain office equipment is leased.
The company  also owns land for future  expansion  in Columbus  and Macon,  Ga.,
Detroit and San Jose.

Knight Ridder properties are maintained in excellent operating condition and are
suitable for present and  foreseeable  operations.  During the three years ended
Dec.  28,  1997,  the company  spent  approximately  $311.6  million for capital
additions  and  improvements  to  its  properties,  excluding  discontinued  BIS
operations.

                                       8
<PAGE>

Item 3.  LEGAL PROCEEDINGS

On July 13, 1995, six unions struck the Detroit Free Press, The Detroit News and
the Detroit Newspaper Agency, which operates both newspapers.  Subsequently, the
unions filed numerous  unfair labor practice  charges against the newspapers and
the Agency.  In June 1997,  after a lengthy trial,  a National  Labor  Relations
Board  (NLRB)  administrative  law judge ruled that the strike was caused by the
unfair labor practices of the Agency and The Detroit News and  recommended  that
the Agency and the  newspapers  reinstate  all  strikers,  displacing  permanent
replacements  if  necessary.  The Agency and the  newspapers  have  appealed the
decision, which is pending before the NLRB.

Various libel actions and  environmental  and other legal  proceedings that have
arisen in the ordinary  course of business  are pending  against the company and
its subsidiaries.  In the opinion of management,  the ultimate  liability to the
company and its  subsidiaries  as a result of all legal  proceedings,  including
Detroit,  will  not  be  material  to  its  financial  position  or  results  of
operations.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters  were  submitted  to the vote of security  holders of  Knight-Ridder,
Inc., during the quarter ended December 28, 1997.


PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

                                   KRI Stock

Knight  Ridder  common  stock is listed on the New York Stock  Exchange  and the
Frankfurt Stock Exchange under the symbol KRI.

The stock is also traded in  exchanges in  Philadelphia,  Chicago,  Boston,  San
Francisco,  Los Angeles and  Cincinnati,  and  through the  Intermarket  Trading
System.  Options are traded on the Philadelphia Exchange.

Knight Ridder stock split two-for-one in 1996. The company's 81.6 million shares
outstanding  at  December  28,  1997,  were  held  in all 50  states  by  11,723
shareholders of record.

                          Market Price of Common Stock

The last closing price of the company's common stock prior to the preparation of
this report was $55.06 on Jan. 30, 1998.

The average stock trading volume per day for the years 1997,  1996, and 1995 was
271,016,  181,805, and 132,300,  respectively.  The following table presents the
company's common stock market data:

<TABLE>
<CAPTION>
                         1997                  1996                    1995
                 -------------------     ----------------      --------------------
Quarter            High        Low        High      Low         High         Low
                 --------     ------     -------  -------      -------     --------

<S>              <C>          <C>        <C>      <C>          <C>         <C>     
1st ...........  42 3/8       37 3/8     36 1/16  29 7/8       28 1/16     25 1/8
2nd ...........  49           35 3/4     38 7/16  32 11/16     28 7/8      26 3/16
3rd ...........  55 13/16     48 3/4     38       32 7/16      29 3/16     27 5/8
4th ...........  57 1/8       49 1/8     42       35 3/8       33 5/16     28 1/8
</TABLE>

                                       9
<PAGE>

                            Treasury Stock Purchases

The table below is a summary of treasury stock purchases since 1987:

                               Shares                         Cost
                              Purchased                      (000s)
                             ----------                    ----------
1997 ......................  13,824,300                    $  643,375
1996 ......................   6,219,100                       221,768
1995 ......................  11,508,600                       319,363
1994 ......................   5,044,600                       136,977
1993 ......................   1,500,000                        40,693
1992
1991
1990 ......................   5,325,400                       129,909
1989 ......................   5,522,200                       131,885
1988 ......................   9,099,200                       198,279
1987 ......................   2,000,000                        38,728


                                   Dividends

Common stock  dividend  history and policy appears in Item 6. "11 Year Financial
Highlights",   Item  7.  "Management's  Discussion  and  Analysis  of  Financial
Condition  and  Results  of  Operations",  Quarterly  Operations,  and  Item  8.
"Financial  Statements and Supplementary  Data", Note E, incorporated  herein by
reference.

                                       10
<PAGE>
<TABLE>
<CAPTION>
Item 6. SELECTED FINANCIAL DATA

11-YEAR FINANCIAL HIGHLIGHTS

The following data was compiled from the  consolidated  financial  statements of Knight Ridder and  subsidiaries.  The  consolidated
financial  statements and related notes and  discussions for the year ended Dec. 28, 1997 (Items 7 and 8) should be read in order to
obtain a better understanding of this data.
------------------------------------------------------------------------------------------------------------------------------------
                                           Compound
                                          Growth Rate
(In thousands, except per share        ----------------            Dec. 28              Dec. 29              Dec. 31
data and ratios)                       5-Year   10-Year             1997                 1996                 1995
                                       ------   -------          -----------          -----------          -----------
<S>                                   <C>       <C>          <C>                  <C>                  <C>        
SUMMARY OF OPERATIONS
Operating Revenue
  Advertising ........................   8.8%      4.2%         $ 2,202,251          $ 1,793,424          $ 1,672,970
  Circulation ........................   4.3       4.7              567,757              501,826              495,315
  Other ..............................  21.7       8.6              106,777               78,974               81,897
                                                                -----------          -----------          -----------
    Total Operating Revenue ..........   8.2       4.4            2,876,785            2,374,224            2,250,182
                                                                -----------          -----------          -----------
Operating Costs
  Labor, newsprint and other
    operating costs ..................   6.7       4.0            2,214,026            1,920,444            1,923,179
  Depreciation and amortization ......  11.8       7.1              156,731              120,647               98,741
                                                                -----------          -----------          -----------
    Total Operating Costs ............   7.0       4.2            2,370,757            2,041,091            2,021,920
                                                                -----------          -----------          -----------
Operating Income .....................  14.6       5.5              506,028              333,133              228,262
  Interest expense ...................  12.4       6.6             (102,662)             (73,137)             (59,512)
  Other, net(1) ......................  82.6      30.2              290,486               50,213               14,067
  Income taxes, net ..................  29.2       9.7             (297,348)            (124,829)             (72,861)
                                                                -----------          -----------          -----------
Income from continuing operations(1)..  24.0      10.3              396,504              185,380              109,956
Discontinued BIS operations(2) .......                               16,511               82,493               57,426
Discontinued broadcast operations(2)
Cumulative effect of changes in
  accounting principles(3) ...........                                                                      (7,320)
                                                                -----------          -----------          -----------
Net Income(1) ........................  58.8      10.3          $   413,015          $   267,873          $   160,062
                                                                ===========          ===========          ===========
Operating income percentage (profit
  margin) ............................                                 17.6%                14.0%                10.1%
-----------------------------------------------------------------------------------------------------------------------
SHARE DATA(4)
Basic weighted-average number of
  shares .............................                               88,475               96,021               99,451
Diluted weighted-average number of
  shares .............................                              101,314               97,420              100,196
Earnings per share
Basic:
Continuing operations(1)..............  29.3      13.2          $      4.48          $      1.93          $      1.11
Discontinued BIS operations(2) .......                                 0.19                 0.86                 0.57
Discontinued broadcast operations(2)
Cumulative effect of changes in
  accounting principles(3) ...........                                                                          (0.07)
Net income(1) ........................  65.2      13.2                 4.67                 2.79                 1.61
Diluted:
Continuing operations(1)..............  26.3      11.9          $      3.91          $      1.90                $1.10
Discontinued BIS operations(2) .......                                 0.17                 0.85                 0.57
Discontinued broadcast operations(2)
Cumulative effect of changes in
  accounting principles(3) ...........                                                                          (0.07)
Net income(1) ........................  61.6      11.9                 4.08                 2.75                 1.60
Dividends declared per common
  share(5) ...........................   2.7       4.5                 0.80                 0.58-1/2             0.74
Common stock price
  High ...............................                                   57-1/8               42                   33-5/16
  Low ................................                                   35-3/4               29-7/8               25-1/8
  Close ..............................                                   50-3/16              39-1/4               31-1/4
Shareholders' equity per common
  share ..............................   7.8       7.0          $     15.65          $     12.12          $     11.43
Price/earnings ratio(6) ..............                               21.8:1               21.6:1               28.4:1
-----------------------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA
Common stock acquired ................                          $   643,375          $   221,768          $   319,363
Payment of cash dividends ............                               78,335               74,262               74,377
Ratio of earnings to fixed
  charges (7) ........................                                7.1:1                4.0:1                3.2:1
At Year End
  Total assets .......................                          $ 4,355,142          $ 2,860,907          $ 2,966,321
  Long-term debt (excluding current
    maturities) ......................                            1,599,133              771,335            1,000,721
  Total debt .........................                            1,668,830              821,335            1,013,850
  Shareholders' equity ...............                            1,551,673            1,131,508            1,110,970
  Return on average shareholders'
    equity(8) ........................                                 30.8%                23.9%                14.3%
  Current ratio ......................                                1.2:1                1.0:1                1.1:1
  Total debt/total capital ratio .....                                 51.8%                42.1%                47.7%
</TABLE>

                                                                  11
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
(In thousands, except per share           Dec. 25          Dec. 26          Dec. 27          Dec. 29      
data and ratios)                           1994              1993             1992             1991       
                                        -----------      -----------      -----------      -----------
<S>                                     <C>              <C>              <C>              <C>             
SUMMARY OF OPERATIONS
Operating Revenue
  Advertising .....................     $ 1,583,373      $ 1,481,631      $ 1,444,144      $ 1,429,661     
  Circulation .....................         484,581          474,420          460,014          439,029     
  Other ...........................          66,968           56,772           39,932           35,127     
                                        -----------      -----------      -----------      -----------
    Total Operating Revenue .......       2,134,922        2,012,823        1,944,090        1,903,817     
                                        -----------      -----------      -----------      -----------
Operating Costs
  Labor, newsprint and other
    operating costs ...............       1,730,158        1,655,138        1,597,983        1,593,847     
  Depreciation and amortization ...          96,613           96,233           89,665           86,896     
                                        -----------      -----------      -----------      -----------
    Total Operating Costs .........       1,826,771        1,751,371        1,687,648        1,680,743     
                                        -----------      -----------      -----------      -----------
Operating Income ..................         308,151          261,452          256,442          223,074     
  Interest expense ................         (44,216)         (44,403)         (52,358)         (68,806)    
  Other, net(1) ...................           1,802            2,987           13,868           35,832     
  Income taxes, net ...............        (106,493)         (83,281)         (82,496)         (67,965)    
                                        -----------      -----------      -----------      -----------
Income from continuing operations(1)        159,244          136,755          135,456          122,135     
Discontinued BIS operations (2) ...          11,656           11,334           10,630            9,933     
Discontinued broadcast operations (2)                                                                      
Cumulative effect of changes in
  accounting principles(3) ........                                          (105,200)
                                        -----------      -----------      -----------      -----------
Net Income(1) .....................     $   170,900      $   148,089      $    40,886      $   132,068     
                                        ===========      ===========      ===========      ===========     
Operating income percentage (profit
  margin) .........................            14.4%            13.0%            13.2%            11.7%    
-----------------------------------------------------------------------------------------------------------
SHARE DATA(4)
Basic weighted-average number
  of shares .......................         107,888          109,702          108,948          102,586     
Diluted weighted-average number of
  shares ..........................         108,551          110,663          110,356          103,594     
Earnings per share
Basic:
Continuing operations(1)...........     $      1.48      $      1.25      $      1.24      $      1.19     
Discontinued BIS operations(2) ....            0.10             0.10             0.11             0.10     
Discontinued broadcast operations(2)
Cumulative effect of changes in
  accounting principles(3) ........                                             (0.97)
Net income(1) .....................            1.58             1.35             0.38             1.29
Diluted:  
Continuing operations(1)...........     $      1.47      $      1.24      $      1.22      $      1.18     
Discontinued BIS operations(2)                 0.10             0.10             0.10             0.09     
Discontinued broadcast operations(2)
Cumulative effect of changes in
  accounting principles(3) ........                                             (0.95)
Net income(1) .....................            1.57             1.34             0.37             1.27     
Dividends declared per common
  share(5) ........................            0.73             0.70             0.70             0.70     
Common stock price
  High ............................              30-1/2           32-1/2           32-1/16          28-3/4 
  Low .............................              23-1/4           25-5/16          25-3/8           21-7/8 
  Close ...........................              25-7/16          29-11/16         29-1/16          25-3/8 
Shareholders' equity per common
  share ...........................     $     11.58      $     11.33      $     10.75      $     10.72     
Price/earnings ratio(6) ...........          17.3:1           23.9:1           23.8:1           21.5:1     
-----------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA
Common stock acquired .............     $   136,977      $    40,693      $        --      $        --     
Payment of cash dividends .........          77,942           76,787           75,992           71,087     
Ratio of earnings to fixed
  charges(7) ......................           5.2:1            4.4:1            3.8:1            2.8:1     
At Year End
  Total assets ....................     $ 2,409,239      $ 2,399,067      $ 2,431,307      $ 2,305,731     
  Long-term debt (excluding current
    maturities) ...................         411,504          410,388          495,941          556,797     
  Total debt ......................         411,504          451,075          560,245          606,840     
  Shareholders' equity ............       1,224,654        1,243,169        1,181,812        1,148,620     
  Return on average shareholders'
    equity(8) .....................            13.9%            12.2%            12.5%            12.9%    
  Current ratio ...................           1.0:1            1.0:1            1.1:1            1.1:1     
  Total debt/total capital ratio ..            25.2%            26.6%            32.2%            34.6%    
</TABLE>

                                                      12
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
(In thousands, except per share         Dec. 30          Dec. 31        Dec. 31        Dec. 31
data and ratios)                          1990            1989            1988           1987
                                      -----------      -----------     ----------    -----------
<S>                                   <C>              <C>            <C>            <C>        
SUMMARY OF OPERATIONS
Operating Revenue
  Advertising .....................   $ 1,556,932      $ 1,577,449     $1,523,030    $ 1,464,447
  Circulation .....................       403,188          385,214        370,898        357,553
  Other ...........................        31,981           32,212         29,743         46,922
                                      -----------      -----------     ----------    -----------
    Total Operating Revenue .......     1,992,101        1,994,875      1,923,671      1,868,922
                                      -----------      -----------     ----------    -----------
Operating Costs
  Labor, newsprint and other
    operating costs ...............     1,617,138        1,593,186      1,571,525      1,494,003
  Depreciation and amortization ...        91,553           91,780         84,657         78,807
                                      -----------      -----------     ----------    -----------
    Total Operating Costs .........     1,708,691        1,684,966      1,656,182      1,572,810
                                      -----------      -----------     ----------    -----------
Operating Income ..................       283,410          309,909        267,489        296,112
  Interest expense ................       (71,784)         (84,492)       (62,456)       (49,550)
  Other, net(1) ...................        17,019           57,505         26,732         20,053
  Income taxes, net ...............       (88,076)        (108,883)       (86,484)      (117,369)
                                      -----------      -----------     ----------    -----------
Income from continuing operations(1)      140,569          174,039        145,281        149,246
Discontinued BIS operations (2) ...         8,476            5,797          1,494           (512)
Discontinued broadcast operations (2)                       67,366          9,608          6,429
Cumulative effect of changes in
  accounting principles(3) ........
                                      -----------      -----------     ----------    -----------
Net Income(1) .....................   $   149,045      $   247,202     $  156,383    $   155,163
                                      ===========      ===========     ==========    ===========
Operating income percentage (profit
  margin) .........................          14.2%            15.5%          13.9%          15.8%
-------------------------------------------------------------------------------------------------------
SHARE DATA(4)
Basic weighted-average number
  of shares .......................       100,098          103,110        111,842        114,794
Diluted weighted-average number of
  shares ..........................       101,366          104,878        113,406        117,292
Earnings per share
Basic:
Continuing operations(1)...........   $      1.40      $      1.69     $     1.30    $      1.30
Discontinued BIS operations(2) ....          0.09             0.06           0.01          (0.01)
Discontinued broadcast operations(2)                          0.65           0.09           0.06
Cumulative effect of changes in
  accounting principles(3) ........ 
Net income(1)......................          1.49             2.40           1.40           1.35
Diluted:
Continuing operations(1)...........   $      1.39      $      1.66     $     1.28    $      1.27
Discontinued BIS operations(2).....          0.08             0.06           0.01
Discontinued broadcast operations(2)                          0.64           0.09           0.05
Cumulative effect of changes in
  accounting principles(3) ........
Net income(1) .....................          1.47             2.36           1.38           1.32
Dividends declared per common
  share(5) ........................          0.67             0.62-1/4       0.57-1/4       0.51-1/2
Common stock price
  High ............................            29               29-3/16        23-7/8         30-5/8
  Low .............................            18-1/2           21-7/16        17-7/8         16-5/8
  Close ...........................            22-15/16         29-3/16        22-11/16       20-1/16
Shareholders' equity per common
  share ...........................   $      9.05      $      8.92     $     7.74    $      7.93
Price/earnings ratio(6) ...........        16.5:1           21.2:1         17.7:1         15.8:1
-------------------------------------------------------------------------------------------------------
OTHER FINANCIAL DATA
Common stock acquired .............   $   129,909      $   131,885     $  198,279    $    38,728
Payment of cash dividends .........        66,422           63,260         62,990         57,426
Ratio of earnings to fixed
  charges(7) ......................         3.3:1            3.6:1          3.8:1          5.3:1
At Year End
  Total assets ....................   $ 2,244,919      $ 2,112,184     $2,340,576    $ 1,904,117
  Long-term debt (excluding current
    maturities) ...................       803,914          660,900        727,043        508,203
  Total debt ......................       823,958          712,940      1,037,075        553,235
  Shareholders' equity ............       894,913          917,145        821,625        901,498
  Return on average shareholders'
    equity(8) .....................          16.5%            28.4%          18.2%          18.1%
  Current ratio ...................         1.2:1            1.2:1          1.1:1          1.2:1
  Total debt/total capital ratio ..          47.9%            43.7%          55.8%          38.0%
</TABLE>

                                                    13
<PAGE>

(1) Other,  net, Income from Continuing  Operations and Net Income include:  the
    gains from the sales of TKR Cable and our newspapers in Long Beach,  Calif.,
    Boca Raton,  Fla.,  Milledgeville,  Ga., and Newberry,  S.C., as well as the
    gain on the Boulder,  Colo., exchange in 1997; the gain on Netscape in 1996;
    and the gain from the sale of Pasadena  Star-News  in 1989.  Net income also
    includes the gains on the sales of KRII in 1997, KRF in 1996, and the JoC in
    1995.
(2) All years have been  restated to present the Business  Information  Services
    Division  (BIS) as  discontinued  operations.  Results of  operations of the
    company's  BIS  Division  (discontinued  in 1997),  and  Broadcast  Division
    (discontinued  in  1989)  and the  gains on the  sales of BIS and  broadcast
    assets are presented as  "discontinued  BIS  operations"  and  "discontinued
    broadcast operations," respectively.
(3) For 1995, the cumulative effect of change in accounting principle represents
    an  adjustment  from  the   implementation   of  FAS   116--Accounting   for
    Contributions  Received and  Contributions  Made.  For 1992,  the cumulative
    effect of change in accounting  principle  represents  adjustments  from the
    implementation   of  FAS   109--Accounting   for   Income   Taxes   and  FAS
    106--Accounting for Postretirement Benefits Other than Pensions.
(4) All share data is restated for a stock split in 1996.
(5) The Board of Directors declared a $0.20 per share dividend on Jan. 28, 1997.
    The quarterly dividend previously paid in January was paid in February.
(6) Price/earnings ratio is computed by dividing closing market price by diluted
    earnings  per  share  from  continuing  operations.  1995 and 1992  earnings
    exclude  the  effects of changes in  accounting  principles.  Earnings  also
    exclude the gains from the sales of TKR Cable,  our four  newspapers in Long
    Beach, Calif., Boca Raton, Fla., Milledgeville,  Ga., and Newberry, S.C., as
    well as the gain on the Boulder  exchange  in 1997;  the gain on Netscape in
    1996; and the gain from the sale of the Pasadena Star-News in 1989.
(7) The ratio of earnings to fixed charges is computed by dividing  earnings (as
    adjusted   for  fixed   charges  and   undistributed   equity   income  from
    unconsolidated  subsidiaries) by fixed charges for the period. Fixed charges
    include the interest on debt  (before  capitalized  interest),  the interest
    component of rental expense, and the proportionate share of interest expense
    on  guaranteed  debt  of  certain  equity-method  investees  and on  debt of
    50%-owned companies.
(8) Return on average  shareholders'  equity is computed by dividing  net income
    before the cumulative effect of changes in accounting principles in 1995 and
    1992, including the results of discontinued operations in 1987 through 1997,
    by average shareholders' equity. Average shareholders' equity is the average
    of  shareholders'  equity on the  first  day and the last day of the  fiscal
    year.

                                       14
<PAGE>

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

                    Glossary of Newspaper Advertising Terms

The following  definitions may be helpful when reading  Management's  Discussion
and Analysis of Operations.

RETAIL. Display advertising from local merchants, such as department and grocery
stores, selling goods and services to the public.
GENERAL.  Display advertising by national  advertisers that promotes products or
brand names on a nationwide basis.
CLASSIFIED. Small, locally placed ads listed together and organized by category,
such as real estate sales,  employment  opportunities  or automobile  sales, and
display-type advertisements in these categories.
FULL-RUN. Advertising appearing in all editions of a newspaper.
PART-RUN.  Advertising  appearing in select  editions or zones of a  newspaper's
market.  Part-run  advertising  is translated  into full-run  equivalent  linage
(referred to as factored)  based on the ratio of the circulation in a particular
zone to the total circulation of a newspaper.
RUN-OF-PRESS (ROP).  All   advertising  printed  on Knight  Ridder  presses  and
appearing within a newspaper.
PREPRINT.  Advertising  supplements  prepared by advertisers and inserted into a
newspaper.

Knight  Ridder is the nation's  second-largest  newspaper  publisher in terms of
revenue  and  circulation,  with  products  in print  and  online.  The  company
publishes 31 daily newspapers in 28 U.S.  markets,  reaching 9.0 million readers
daily and 12.6 million on Sunday. It maintains 34 associated Web sites.

In 1997,  the gross revenue from these  businesses  was about $2.9 billion.  The
company  is  also  involved  in  other   newspaper   businesses   and  newsprint
manufacturing  through  business  arrangements,  including  joint  ventures  and
partnerships.

Newspaper  revenue is derived  principally  from  advertising and newspaper copy
sales.  Newspaper  advertising  currently accounts for about 77% of consolidated
revenue.  This revenue comes from the three basic  categories of  advertising --
retail, general and classified discussed herein.

Newspaper  advertising  volume is  categorized as either  run-of-press  (ROP) or
preprint.  Volume for ROP advertising is measured in terms of either full-run or
part-run advertising linage and reported in six-column inches. A six-column inch
consists of one inch of  advertising in one column of a newspaper page when that
page is divided into six columns of equal size. By using  part-run  advertising,
advertisers can direct their messages to selected market segments.

Circulation  revenue  results from the sale of newspapers.  Circulation of daily
and Sunday newspapers currently accounts for about 20% of consolidated  revenue.
It is reported at the net wholesale  price for  newspapers  delivered or sold by
independent contractors and at the retail price for newspapers delivered or sold
by employees.

Other newspaper revenue comes from commercial job printing,  alternate  delivery
services,  niche  publications,  online  services,  newsprint waste sales,  book
publishing,  newspaper  trucking  services,  audiotext  and other  miscellaneous
sources.

                                       15
<PAGE>
On April 4, 1997,  the  company  announced  that it would  divest  Knight-Ridder
Information,  Inc. (KRII). On Dec. 11, 1997, the company announced that it would
sell Technimetrics,  Inc., its global diversified information subsidiary.  These
announcements   resulted  in  the   reclassification   of  the  former  Business
Information Services (BIS) segment as discontinued operations.  KRII was sold to
M.A.I.D plc on Nov. 14, 1997, for $420 million plus a working  capital  purchase
price  adjustment  of  approximately  $15 million.  Prior to July 1996,  the BIS
segment included  Knight-Ridder  Financial (KRF). KRF was sold on July 26, 1996,
to Global  Financial  Information  Corporation for $275 million.  Prior to April
1995, the BIS segment  included the Journal of Commerce (JoC).  The JoC was sold
on April 3, 1995, to the Economist Group of London for $115 million.

                             Results of Operations

SUMMARY OF OPERATIONS. A summary of the company's operations, certain share data
and other  financial  data for the past 11 years is provided in Item 6. Compound
growth  rates for the past  five- and  10-year  periods  are also  included,  if
applicable. A review of this summary and of the supplemental information in Item
6 will provide a better  understanding of the following  discussion and analysis
of  operating  results  and  of  the  financial   statements  as  a  whole.  The
supplemental  information  contains  financial  data for the  company's  largest
newspapers and information  regarding the company's  properties,  technology and
the raw materials used in operations.

RESULTS OF OPERATIONS: 1997 VS. 1996

Diluted  earnings per share from continuing  operations was $3.91, up $2.01 from
the $1.90  reported in 1996. The $3.91 includes three one-time gains on sales: a
$1.27 gain on the sale of TKR Cable,  a $.24 gain on the  exchange  of the Daily
Camera in Boulder,  Colo., and a $.10 gain on the sale of four  newspapers.  The
$1.90  includes  an  $.08  gain  on  the  sale  of our  Netscape  Communications
Corporation (Netscape),  investment, net of adjustments in the carrying value of
certain  investments.  Excluding the one-time gains from 1997 and 1996,  diluted
EPS for 1997 was $2.30,  which was up $.48,  or 26.4%,  from the $1.82 earned in
1996.

Operating income in 1997 was $506.0 million,  up $172.9 million,  or 51.9%, from
1996. The results include operations from four newspapers acquired from The Walt
Disney  Company in May and from two  newspapers  received in exchange  from E.W.
Scripps Co. for the Boulder,  Colo.  newspaper in August.  They exclude  results
from the  Boulder  Daily  Camera  after  August and for the Long Beach  (Calif.)
Press-Telegram,   the  Boca  Raton  (Fla.)  News,   The   (Milledgeville,   Ga.)
Union-Recorder  and the Suburban  Newberry  (S.C.)  Observer after their date of
sale in December  1997.  On a pro forma basis for the former  Disney and Scripps
newspapers (that is, including full-year results in 1997 and 1996) and excluding
the sold newspapers from both 1997 and 1996 (comparable basis), operating income
was up $122.9  million,  or 30.2%,  from 1996.  The  increase was due to an 8.0%
increase  in total  advertising  revenue  offset in part by a 2.7%  increase  in
operating costs.

OPERATING REVENUE. Total company revenue of $2.9 billion was up 21.2% from 1996.
On a comparable basis, total operating revenue was up 6.7%.

Newspaper  advertising revenue increased by $408.8 million, or 22.8%, in 1997 on
a  full-run  ROP  linage  increase  of  18.0%.  On  a  comparable  basis,  total
advertising revenue improved by 8.0% from 1996 on a full-run ROP linage increase
of 6.7%. The following  table  summarizes  the percentage  change in revenue and
full-run ROP linage from 1996 as reported in our financial  statements,  as well
as results on a comparable basis.

                                                       Pro Forma But Excluding
                                                         Divested Newspapers*
                                                     -------------------------
                                         % Change                     % Change
                           % Change   in Full-Run      % Change    in Full-Run
Advertising Category     in Revenue    ROP Linage    in Revenue     ROP Linage
                         ----------   -----------    ----------    -----------
Retail .................     22.8          19.0           5.7           5.6
General ................     23.8          16.7          11.8           8.4
Classified .............     22.6          17.3           9.6           7.6
  Total ................     22.8          18.0           8.0           6.7

* Including full-year results in 1997 and 1996 for the former Disney and Scripps
  newspapers and excluding the sold newspapers from both 1997 and 1996.

                                       16
<PAGE>

Retail advertising  revenue improved by $187.0 million, or 22.8%, from 1996 on a
19.0% increase in full-run ROP linage. On a comparable basis, retail advertising
revenue  increased  5.7% from  1996,  with  increases  seen at almost all of our
newspapers.

General advertising revenue was up $47.3 million, or 23.8%, from 1996 on a 16.7%
increase in full-run ROP linage.  On a  comparable  basis,  general  advertising
revenue was up 11.8%.

Classified  advertising  revenue was up $174.6 million, or 22.6%, from 1996 on a
17.3%  increase  in full-run  ROP  linage.  On a  comparable  basis,  classified
advertising revenue was up 9.6%. The increase was due primarily to help wanted.

Circulation  revenue improved by $65.9 million, or 13.1%. On a comparable basis,
circulation  revenue increased 0.5% on an average daily circulation  increase of
16,912 copies,  or 0.4%, and an average  Sunday  circulation  decrease of 27,719
copies, or 0.5%.

Other revenue increased $27.8 million, or 35.2%, during 1997 due to increases in
commercial print and augmentation revenue.

OPERATING EXPENSES. Labor and employee benefits costs were up $165.2 million, or
17.1%. On a comparable  basis,  labor and employee  benefits costs were up $67.7
million,  or 6.2%, on a 2.9% increase in the work force and an average wage rate
increase of 4.2%.

Newsprint,  ink and supplements costs decreased by $5.9 million, or 1.2%, due to
a 20.7%  decrease in the average  cost per ton of  newsprint,  offset in part by
increased   newsprint   consumption  of  129,000  tons  for  the  year,  due  to
acquisitions, greater ad volume and some increased newshole.

Depreciation  and  amortization  increased  $36.1  million,  or  29.9%,  due  to
amortization  expense  associated  with the  acquisition  of the  former  Disney
newspapers.

Other operating expenses increased by $134.3 million,  or 27.9%. On a comparable
basis,  other operating expenses were up $71.6 million,  or 12.6%.  Expenditures
for circulation promotion accounted for a large part of the increase.

NON-OPERATING  ITEMS.  Net interest expense  increased $33.6 million,  or 55.8%,
from 1996, due to higher debt levels associated with the Disney acquisition. The
average debt balance for the year increased $150.8 million from 1996, due to the
debt assumed with the former Disney newspaper acquisition.

Equity in earnings of unconsolidated  companies and joint ventures  decreased by
$19.1  million,  or  63.8%,  due to the  absence  of  earnings  from  the  cable
investment  (sold in January  1997) and lower  income  from our  newsprint  mill
investments.

The "Other, net" line of the non-operating section increased $265.7 million over
1996, due to the gain on TKR Cable, the Boulder exchange and the four newspapers
sold in  December.  The  1996  results  included  the  gain  on the  sale of our
investment in Netscape,  net of the  reduction in the carrying  value of certain
other investments.

INCOME TAXES. The effective income tax rate on a continuing operations basis for
1997 was 42.9%,  up from 40.2% in 1996.  The rate increase was due to additional
nondeductible goodwill amortization from the Disney acquisition.

OTHER.  Net income in 1997  includes  an  after-tax  gain on the sale of Knight-
Ridder  Information,  Inc., of $15.3 million,  or $.15 per share (diluted),  and
income from  discontinued  BIS  operations,  net of  applicable  taxes,  of $1.3
million, or $.02 per share (diluted).

RESULTS OF OPERATIONS: 1996 VS. 1995

Diluted  earnings per share from continuing  operations were $1.90, up $.80 from
the $1.10  reported in 1995.  The $1.90 includes an $.08 gain on the sale of our
Netscape  investment,  net of  adjustments  in the  carrying  value  of  certain
investments.  Excluding this gain,  diluted EPS for 1996 was $1.82, which was up
$.72 from $1.10 earned in 1995.

                                       17
<PAGE>

Operating income in 1996 was $333.1 million,  up $104.9 million,  or 45.9%, from
1995. The results include Detroit, which was rebuilding throughout the year from
a  strike  that  began  on July 13,  1995.  They  also  include  a full  year of
operations for Contra Costa  Newspapers  (CCN),  which was purchased on Oct. 31,
1995. And, finally, they reflect a 52-week year for 1996 as opposed to a 53-week
year for 1995,  an anomaly of our  fiscal-year  reporting  convention.  On a pro
forma basis for CCN (that is, full-year  results for 1995,  including the period
in which the company did not own CCN), but excluding Detroit from both years and
the 53rd  week from  1995  (comparable  basis),  operating  income  was up $72.8
million,  or 27.0%,  from 1995. The increase was due to a 5.2% increase in total
advertising  revenue and  improvement in operating  profit in  Philadelphia  and
other large markets.

OPERATING REVENUE.  Total company revenue of $2.4 billion was up 5.5% from 1995.
On a comparable basis, total operating revenue was up 4.0%.

Advertising revenue increased by $120.5 million, or 7.2%, in 1996 on a full- run
ROP linage increase of 10.0%. On a comparable basis,  total advertising  revenue
improved by 5.2% from 1995. The following table summarizes the percentage change
in revenue  and  full-run  ROP linage  from 1995 as  reported  in our  financial
statements,  as well as  results  on a pro forma  basis for CCN,  but  excluding
Detroit:

                                                              Pro Forma
                                                       Contra Costa Newspapers
                                                        But Excluding Detroit
                                                     -------------------------
                                         % Change                     % Change
                           % Change   in Full-Run      % Change    in Full-Run
Advertising Category     in Revenue    ROP Linage    in Revenue*    ROP Linage
                         ----------   -----------    -----------   -----------
Retail ...............        1.7           4.7          (0.3)         (4.6)
General ..............        8.9          21.5           7.5           5.0
Classified ...........       13.2          14.3          10.9           4.3
  Total ..............        7.2          10.0           5.2           0.1

* Excludes the 53rd week from 1995 results.

Retail  advertising  revenue improved by $14.0 million,  or 1.7%, from 1995 on a
4.7% increase in full-run ROP linage. On a comparable basis,  retail advertising
revenue  decreased  0.3% from 1995,  primarily as a result of  department  store
consolidations in Philadelphia and Northern California.  Excluding these markets
and Detroit, retail was up 1.9% in the rest of the markets on a 52-week basis.

General  advertising revenue was up $16.3 million, or 8.9%, from the prior year,
with an increase in full-run ROP linage of 21.5%. On a comparable basis, general
advertising revenue was up 7.5%.

Classified  revenue improved by $90.2 million,  or 13.2%, on a 14.3% increase in
full-run ROP volume from 1995. Employment  advertising revenue, up 22.8% for the
year, was the strength of our classified  revenue  performance.  On a comparable
basis,  classified  advertising revenue was up 10.9%.  Philadelphia and San Jose
contributed more than half of the classified revenue improvement.

Circulation  revenue  improved by $6.5  million,  or 1.3%,  on an average  daily
circulation  decrease  of  217,957  copies,  or  5.9%,  and  an  average  Sunday
circulation  decrease of 307,088 copies,  or 6.0%. The circulation  copy decline
reflects the impact of the Detroit strike.

Other revenue  decreased $2.9 million,  or 3.6%,  during 1996, partly due to the
decline of newsprint waste sales and one less week in the fiscal year.

OPERATING EXPENSES. Labor and employee benefits costs were down $2.4 million, or
0.2%, with a 4.3% decrease in the work force, excluding Detroit. The decrease in
labor and employee benefits costs was due primarily to the reduction in the work
force,  the fourth quarter 1995 charge for buyouts and separation  costs and the
impact of the 53rd week.  These  reductions were partly offset by an increase in
the average wage per employee of 3.8%, (excluding Detroit and CCN).

                                       18
<PAGE>

Newsprint, ink and supplements costs increased by $25.4 million, or 5.7%, due to
an 11.5%  increase in the  average  cost per ton of  newsprint  offset by a 4.0%
decrease in newsprint consumption from the prior year.

Depreciation and amortization  increased $21.9 million,  or 22.2%, due mostly to
the acquisition of CCN.

Other  operating  costs  decreased 5.1% from 1995. On a pro forma basis for CCN,
but excluding  Detroit and the impact of the 53rd week,  other  operating  costs
were down 1.6% from the prior year.

NON-OPERATING  ITEMS.  Net interest expense  increased $11.2 million,  or 22.8%,
from 1995, due primarily to higher debt levels. The average debt balance for the
year  increased  $325.2  million  from 1995,  due largely to the $221.8  million
repurchase of 6.2 million shares in 1996 and the $360 million acquisition of CCN
in the fourth quarter of 1995.

Equity in earnings of unconsolidated  companies and joint ventures  increased by
$9.2 million  during 1996 due to earnings  improvements  from our newsprint mill
investments, which benefited from the rise in newsprint prices.

The "Other, net" line of the non-operating  section increased $25.0 million over
1995,  mostly  as a result  of the 1996  gain on the sale of our  investment  in
Netscape,  net  of the  reduction  in  the  carrying  values  of  certain  other
investments.

INCOME TAXES. The effective income tax rate on a continuing operations basis for
1996 was 40.2%,  up from 39.9% in 1995.  The increase was due to a change in the
distribution of income to states with higher income tax rates.

OTHER.  Net income in 1996  includes a  one-time  after-tax  gain on the sale of
Knight-Ridder  Financial of $86.3 million,  or $.89 per share  (diluted),  and a
loss from discontinued BIS operations, net of applicable taxes, of $3.8 million,
or $.04 per share (diluted).

RESULTS OF OPERATIONS: 1995 VS. 1994

Diluted earnings per share from continuing  operations was $1.10,  down $.37, or
25.2%, from $1.47 per share in 1994. The decline in earnings per share from 1994
was due to the  impact  of the  Detroit  strike,  the  increase  in the  cost of
newsprint from 1994 and fourth quarter  charges related to buyout and separation
expenses.

Operating income in 1995 was $228.3 million, down from $308.2 million in 1994 on
a $115.3 million, or 5.4%, increase in revenue. Operating income as a percentage
of revenue was 10.1%,  compared  with 14.4% in 1994.  The  decline in  operating
income from 1994 was due primarily to:

  - A $72.7 million  decline from Detroit's  prior year  operating  profit  as a
    result of the strike that began on July 13, 1995.

  - A nearly 40% increase in the cost of newsprint from 1994,  which resulted in
    a $105.9 million expense increase.

  - Charges related to buyout and separation  expenses of about $16 million,  of
    which $15.3 million was charged in the fourth quarter of 1995.

Excluding the Detroit  operations  and buyout and  separation  charges from both
years, operating income would have been up 1.8% from 1994.

OPERATING  REVENUE.  Total  operating  revenue  of $2.3  billion  was up  $115.3
million, or 5.4%, from 1994.

                                       19
<PAGE>
Advertising  revenue increased by $89.6 million, or 5.7%, in 1995 on a full- run
ROP linage increase of 2.8%. The 1995 results reflect:  reduction in revenue due
to the  Detroit  strike,  two  months  of  revenue  recorded  for  Contra  Costa
Newspapers  (CCN),  acquired on Oct. 31, 1995, and an additional week of revenue
(53 weeks vs. 52 weeks) in 1995.  Excluding  the impact of these items from 1995
results,  advertising  revenue would have increased by 5.8%. The following table
summarizes the percentage change in revenue and full-run ROP linage from 1994 as
reported in our financial  statements,  as well as results excluding Detroit and
CCN:

                                                       Excluding Detroit and
                                                      Contra Costa Newspapers
                                                     -------------------------
                                         % Change                     % Change
                           % Change   in Full-Run      % Change    in Full-Run
Advertising Category     in Revenue    ROP Linage    in Revenue     ROP Linage
                         ----------   -----------    ----------    -----------
Retail ................       1.9          (0.6)          3.8          (2.4)
General ...............      (1.1)          2.9           0.6           1.3
Classified ............      12.6           6.7          14.3           5.4
  Total ...............       5.7           2.8           7.5           1.3

Retail advertising  revenue improved $15.3 million, or 1.9%, from 1994 on a 0.6%
decrease in full-run  ROP linage.  The  increase in average  rates and  preprint
revenue offset the decrease in full-run ROP linage.

General  advertising  revenue was $182.5  million,  down from the $184.5 million
reported in 1994, with an increase in full-run ROP linage of 2.9%.

Classified  revenue  improved by $76.3 million,  or 12.6%, on a 6.7% increase in
full-run ROP volume.  San Jose contributed nearly half of the classified revenue
improvement.  Employment  advertising  revenue,  up 24.6% for the year,  was the
strength of our classified revenue performance.

Circulation  revenue  improved by $10.7  million,  or 2.2%,  on an average daily
circulation   increase  of  52,866  copies,  or  1.5%,  and  an  average  Sunday
circulation  increase of 10,754 copies, or 0.2%.  Circulation copies reflect the
impact of the Detroit strike, offset by additional circulation from CCN.

Other revenue increased $14.9 million,  or 22.3%,  during 1995, due primarily to
increased  revenue from  newsprint  waste sales,  commercial  printing and other
lines of  business  developed  to  augment  the  revenue  of our core  newspaper
business.

OPERATING EXPENSES.  Labor and employee benefits costs were up $41.8 million, or
4.5%, with a 4.5% increase in the work force. The increase in the work force was
due to the CCN  acquisition.  The increase in labor and employee  benefits costs
was due primarily to a fourth quarter  charge for buyouts and separation  costs,
the impact of the 53rd week and the addition of CCN. This was partly offset by a
decrease in labor costs as a result of the Detroit strike.  The average wage per
employee, excluding severance, Detroit and CCN, increased 2.9% from 1994.

Newsprint,  ink and supplements costs increased by $110.9 million, or 33.0%, due
to a nearly 40%  increase in the  average  cost of  newsprint,  offset by a 0.2%
decrease in newsprint consumption from the prior year.

Depreciation and amortization increased $2.1 million, or 2.2%, due mostly to the
acquisition of CCN.

Other operating costs increased 8.6% from 1994, due primarily to  strike-related
costs in Detroit.

NON-OPERATING  ITEMS.  Net interest expense  increased $11.0 million,  or 29.0%,
from 1994, due primarily to higher debt levels. The average debt balance for the
year  increased  $146.0  million  from 1994,  due largely to the $319.4  million
repurchase of 11.5 million  shares in 1995 and the $360 million  acquisition  of
CCN in the fourth quarter of 1995.

Equity in earnings of unconsolidated  companies and joint ventures  increased by
$13.0 million during 1995 due to earnings  improvements  from our newsprint mill
investments, which benefited from the rise in newsprint prices.

The "Other, net" line  of the non-operating  section decreased $6.6 million from
1994, due to the reduction in the carrying value of certain investments.

INCOME TAXES. The effective income tax rate from continuing  operations for 1995
was 39.9%, down slightly from 40.1% in 1994.

                                       20
<PAGE>

OTHER. Net income in 1995 includes a one-time  after-tax gain on the sale of the
Journal of Commerce (JoC) of $53.8  million,  or $.54 per share  (diluted),  and
income from  discontinued  BIS  operations,  net of  applicable  taxes,  of $3.7
million, or $.03 per share (diluted).

In the first quarter of 1995, the company adopted Financial  Accounting Standard
(FAS) 116 -- Accounting for Contributions Received and Contributions Made. Under
this  standard,   unconditional  promises,  including  multiyear  promises,  are
recognized  in the period in which the promise is made.  The adoption of FAS 116
resulted in a $7.3 million charge (net of tax) to operations,  or $.07 per share
(diluted), and was recorded as a cumulative effect adjustment.

                                  A Look Ahead

As we look ahead, we expect another strong year in 1998.  Advertising revenue on
a pro forma basis will likely  increase in the  mid-single  digits and newspaper
profits will continue to grow,  most notably in Detroit,  where all the momentum
is positive.

The average price of newsprint for 1998 is expected to increase in the mid teens
compared to 1997.  This will be offset,  in part, by improved  earnings from our
newsprint mill investments.

The company  expects to buy back close to 4 million  common  shares in the first
part  of  1998.  After  those  purchases  are  completed,  we  plan  to use  our
substantial free cash flow to reduce our debt level.

IMPACT OF YEAR 2000.  The Year 2000 issue results from computer  programs  using
two digits  rather than four to define the  applicable  year.  Company  computer
programs  that have  time-sensitive  software may recognize a date using "00" as
the year 1900 rather than the year 2000.  This could result in a system failure,
disruption  of  operations,  and/or a  temporary  inability  to  conduct  normal
business  activities.  Based  on a  recent  assessment,  the  company  currently
believes that with  modifications  to existing  software and  conversions to new
software, the Year 2000 issue will not pose significant operational problems. If
such  modifications  and  conversions  are not made,  or are not  completed in a
timely way, the Year 2000 issue could have a material  impact on operations.  In
addition,  formal  communications  with all significant  suppliers and customers
have been  initiated to determine  the extent to which related  interfaces  with
company  systems are  vulnerable if these third parties fail to remediate  their
own Year 2000 issues.  There can be no assurance that these third-party  systems
will be converted on a timely basis and that they will not adversely  affect the
company's systems.

The company will utilize  both  internal and external  resources to complete and
test Year 2000 modifications and expects to substantially  complete this process
no later than mid-1999.  The total  estimated cost of this project is in a range
of  $70  million  to  $80  million,   funded   through   operating  cash  flows.
Approximately  50% of the total will relate to purchased  hardware and software,
which will be capitalized.  The remainder will be expensed as incurred.  Through
1997,  related costs incurred were not material.  In certain cases, an expedited
system  replacement  schedule will also bring enhanced  functionality and should
serve to reduce future capital requirements.

Certain  statements  contained  herein and in other  sections of this report are
forward-looking statements. These are based on management's current knowledge of
factors  affecting  Knight  Ridder's  business.   Actual  results  could  differ
materially from those currently  anticipated.  Investors are cautioned that such
forward-looking  statements  involve risk and  uncertainty,  including,  but not
limited to, the effects of national and local economies on revenue, negotiations
and relations with labor unions,  unforeseen  changes to newsprint  prices,  the
effects of acquisitions and the evolution of the Internet.

                   Significant Acquisitions and Divestitures

In January  1997,  the  company  and  Tele-Communications,  Inc.,  closed on the
previously  announced  sale of the  company's  interest  in all but one of their
jointly owned cable investments. The remaining system, in Kentucky, accounts for
a small  portion of the  original  investment.  That sale is  expected  to close
later. The after-tax gain on the sale of TKR Cable was $128.3 million.  The sale
yielded net after-tax proceeds of $270 million.

                                       21
<PAGE>
On May 9,  1997,  the  company  completed  the  acquisition  of four  newspapers
indirectly  owned by The Walt Disney Company for $1.65 billion.  The acquisition
was  accomplished  through the merger of a wholly owned subsidiary with and into
Cypress Media,  Inc.,  formerly known as ABC Media,  Inc., the owner of the four
newspapers.  The  newspapers  are:  The Kansas  City Star,  the Fort Worth Star-
Telegram,  the Belleville  (Ill.)  News-Democrat and The Times Leader in Wilkes-
Barre,  Pa. The four  newspapers  have combined daily and Sunday  circulation of
635,000 and 898,000, respectively.

On Aug. 24, 1997,  the company  exchanged its newspaper in Boulder,  Colo.,  the
Daily Camera, for two newspapers in California owned by the E.W. Scripps Co.

On Nov. 14, 1997, the company  completed the sale of Knight-Ridder  Information,
Inc., (KRII) to M.A.I.D plc for $420 million.  The after-tax gain on the sale of
KRII was $15.3 million.

In December 1997, the company  closed on the sale of four  newspapers,  the Long
Beach  Press-Telegram,  the Boca Raton News, The (Milledgeville)  Union-Recorder
and the suburban  Newberry  (S.C.)  Observer.  The sale of these four newspapers
resulted  in an  after-tax  gain of $10.3  million.  The sale of the Boca Raton,
Milledgeville and Newberry  newspapers to Community  Newspaper  Holdings,  Inc.,
also  included  the  transfer  to the  company of The Daily Sun and the  Buyer's
Guide, a shopper,  in Warner Robins,  Ga., and the Byron (Ga.) Gazette, a weekly
newspaper,  all of which  are  located  in  fast-growing  suburbs  in our  Macon
newspapers'  market.  The sale of a fifth  newspaper,  the Post-Tribune in Gary,
Ind., to Hollinger International, Inc., closed on Feb. 2, 1998.

Also in December 1997, the company announced the intended sale of Technimetrics,
Inc.,   its  global   diversified   information   subsidiary.   The  results  of
Technimetrics have been reclassified as Discontinued BIS Operations,  along with
the rest of the former BIS segment.

In July 1996, the company sold Knight-Ridder Financial (KRF) to Global Financial
Information  Corporation for $275 million. The after-tax gain on the sale of KRF
was $86.3 million.

In October 1995, the company  acquired 100% of the outstanding  shares of Lesher
Communications,  Inc. (Lesher), for $360 million. Lesher, based in Walnut Creek,
Calif.,  publishes four daily newspapers in contiguous  Contra Costa and eastern
Alameda County markets in the East Bay area of Northern  California.  Lesher was
renamed Contra Costa Newspapers, Inc. (CCN), in November 1995.

In April 1995,  the company  sold the JoC to the  Economist  Group of London for
$115 million. The after-tax gain on the sale of the JoC was $53.8 million.

                            Capital Spending Program

The  company's   capital   spending   program   includes  normal   replacements,
productivity  improvements,   capacity  increases,   building  construction  and
expansion  and printing  press  equipment.  Over the past three  years,  capital
expenditures  have totaled  $311.6  million for  additions and  improvements  to
properties, excluding the discontinued BIS operations.

A large  portion of the 1997  expenditures  was for the Miami press project that
began in 1995. The $108.0 million press expansion is expected to be completed in
1998.  Another  large  component  of 1997  expenditures  was the  $32.0  million
renovation of the Philadelphia  Broad Street facility that began in 1995 and the
$27.2 million  replacement of three presses at Akron. Both of these projects are
expected to be completed in 1998.

Also  included  in capital  expenditures  is an $11.5  million  project  (before
insurance  recoveries) for the replacement of the Grand Forks  production  plant
and building that were destroyed by a flood in April 1997.

                                       22
<PAGE>
                              Quarterly Operations

The company's  largest source of revenue,  retail  advertising,  is seasonal and
tends to fluctuate  with retail sales in markets  served.  Historically,  retail
advertising is higher in the second and fourth  quarters.  General  advertising,
while not as seasonal as retail,  is lower during the summer months.  Classified
advertising revenue has in the past been a reflection of the overall economy and
has not been  significantly  affected by seasonal  trends.  The following  table
summarizes the company's  quarterly results of operations (in thousands,  except
per share data):

<TABLE>
<CAPTION>

                                                                                QUARTER
                                             ---------------------------------------------------------------------------------
Description                                      First                 Second                 Third                 Fourth
                                             ------------           -----------           -------------           ------------
<S>                                          <C>                    <C>                    <C>                    <C>      
1997
Operating revenue .........................  $ 600,830              $ 711,598              $ 748,747              $ 815,610
Operating income ..........................     98,169                136,977                107,936                162,946
Income from continuing operations .........    175,458(a)              60,950                 73,467(b)              86,629(c)
Net gain on sale of BIS operations                                                                                   15,261(d)
Income (loss) from BIS operations, net ....       (726)                   350                    545                  1,081
Net income ................................    174,732                 61,300                 74,012                102,971
Earnings per share(1)
Basic:
Income from continuing operations .........       1.88(a)                0.67                   0.85(b)                1.04(c)
Net gain on sale of BIS operations                                                                                     0.18(d)
Income from BIS operations, net                                                                                        0.01
Net income ................................       1.88                   0.67                   0.85                   1.23
Diluted:
Income from continuing operations .........       1.85(a)                0.60                   0.69(b)                0.84(c)
Net gain on sale of BIS operations                                                                                     0.15(d)
Income from BIS operations, net                                                                                        0.01
Net income ................................       1.85                   0.60                   0.69                   1.00
Dividends declared per common share .......       0.20                   0.20                   0.20                   0.20

1996
Operating revenue .........................  $ 570,756              $ 595,582              $ 576,887              $ 630,999
Operating income ..........................     49,639                 78,647                 73,948                130,899
Income from continuing operations .........     22,994                 41,481                 39,340                 81,565(f)
Net gain (adjustment) on sale of BIS
  operations                                                                                  90,901(e)              (4,646)(e)
Income (loss) from BIS operations, net ....        523                    872                 (3,984)                (1,173)
Net income ................................     23,517                 42,353                126,257                 75,746
Earnings per share(1)
Basic:
Income from continuing operations .........       0.23                   0.42                   0.41                   0.87(f)
Net gain (adjustment) on sale of BIS
  operations                                                                                    0.96(e)               (0.05)(e)
Income (loss) from BIS operations, net ....       0.01                   0.01                  (0.04)                 (0.01)
Net income ................................       0.24                   0.43                   1.33                   0.81
Diluted:
Income from continuing operations .........       0.23                   0.42                   0.41                   0.86(f)
Net gain (adjustment) on sale of BIS
  operations ..............................                                                     0.94(e)               (0.05)(e)
Income (loss) from BIS operations, net ....       0.01                   0.01                  (0.04)                 (0.02)
Net income ................................       0.24                   0.43                   1.31                   0.79
Dividends declared per common share .......       0.18-1/2               0.20                   0.20                        (g)
</TABLE>

                                                                 23

<PAGE>
<TABLE>
<CAPTION>
Quarterly Operations (Continued)
                                                                                QUARTER
                                             ---------------------------------------------------------------------------------
Description                                      First                 Second                 Third                 Fourth
                                             ------------           -----------           -------------           ------------
<S>                                          <C>                    <C>                    <C>                    <C>      

1995
Operating revenue .........................  $ 537,133              $ 565,726              $ 515,975              $ 631,348
Operating income ..........................     64,323                 81,642                 15,438                 66,859
Income from continuing operations .........     29,356                 42,278                  3,793                 34,529
Net gain on sale of BIS operations ........                            53,765(h)
Income (loss) from BIS operations, net ....      6,317                 (1,923)                 2,797                 (3,530)
Income before cumulative effect of
  change in accounting principle ..........     35,673                 94,120                  6,590                 30,999
Cumulative effect of change in
  accounting principle for
  contributions ...........................     (7,320)
Net income ................................     28,353                 94,120                  6,590                 30,999
Earnings per share(1)
Basic:
Income from continuing operations .........       0.28                   0.43                   0.04                   0.36
Net gain on sale of BIS operations ........                              0.54(h)
Income (loss) from BIS operations, net ....       0.06                  (0.02)                  0.03                  (0.04)
Income before cumulative effect of
  change in accounting principle ..........       0.34                   0.95                   0.07                   0.32
Cumulative effect of change in
  accounting principle for
  contributions ...........................      (0.07)
Net income ................................       0.27                   0.95                   0.07                   0.32
Diluted:
Income from continuing operations .........       0.28                   0.42                   0.04                   0.35
Net gain on sale of BIS operations ........                              0.54(h)
Income (loss) from BIS operations, net ....       0.06                  (0.02)                  0.03                  (0.03)
Income before cumulative effect of
  change in accounting principle ..........       0.34                   0.94                   0.07                   0.32
Cumulative effect of change in
  accounting principle for
  contributions ...........................      (0.07)
Net income ................................       0.27                   0.94                   0.07                   0.32
Dividends declared per common share .......       0.18-1/2               0.18-1/2               0.18-1/2               0.18-1/2
</TABLE>

(1)  Amounts do not total to the annual  earnings per share because each quarter
     and the year are calculated  separately based on average outstanding shares
     (basic) and average  outstanding and equivalent shares (diluted) during the
     periods.
(a)  Includes  the  after-tax  gain of $128.3  million  on the sale of TKR Cable
     ($1.38 per share, basic; $1.36 per share, diluted).
(b)  Includes  the  after-tax  gain of  $24.5  million  on the  Boulder,  Colo.,
     exchange ($.28 per share, basic; $.23 per share, diluted).
(c)  Includes the after-tax gain of $10.3 million on the sale of four newspapers
     ($.12 per share, basic; $.10 per share, diluted).
(d)  Gain on the sale of KRII.
(e)  Gain  (adjustment)  on the sale of KRF.  
(f)  Includes the after-tax gain of $8.1 million on the sale of Netscape, net of
     adjustments in the carrying value of certain  investments  ($.09 per share,
     basic and diluted).
(g)  The Board of Directors declared a $.20 per share dividend on Jan. 28, 1997.
     The  quarterly  dividend  previously  paid in January was paid on Feb.  24,
     1997,  to  shareholders  of record as of the close of business on Feb.  12,
     1997.
(h)  Gain on the sale of the Journal of Commerce.

                                       24

<PAGE>
                        Financial Position and Liquidity

1997 VS. 1996. The principal change in the company's  financial  position during
1997 was the acquisition of four newspapers  indirectly owned by The Walt Disney
Company for $1.65 billion.  The transaction was financed through the issuance of
$660 million of the company's  convertible preferred stock and the assumption of
$990 million of pre-existing debt.

Also during  1997,  the company  authorized a common  stock  buyback  program to
repurchase in the open market a minimum of 15 million shares over 12 months.  In
1997, 13.8 million shares were bought back.

The company  utilized  proceeds from the sale of its cable investment in January
1997, its subsidiary Knight-Ridder Information,  Inc., in November 1997 and four
of its  newspapers in December  1997 to fund the stock  buyback  program and pay
down debt. In November  1997,  the company  issued $100 million of notes payable
that mature in 2007 and $100  million of  debentures  maturing in 2027.  The new
debt  was  used  to  reduce   commercial  paper   borrowings.   The  total-debt-
to-total-capital ratio increased to 51.8%, from 42.1% in 1996. Standard & Poor's
and Moody's downgraded the company's commercial paper and long-term bonds during
the year. The downgrades  resulted from the increased  leverage  associated with
the Disney  newspaper  acquisition  combined  with the  company's  common  stock
repurchase  program.  Standard & Poor's and Moody's commercial paper rating went
from  A1+ and P1 to A1 and P2,  respectively.  Standard  &  Poor's  and  Moody's
long-term  bond  ratings went from AA- and A to A and A3,  respectively.  During
1997,  Duff & Phelps  Credit  Rating Co. began rating the  company's  commercial
paper and long-term  bonds.  The commercial paper and long-term bonds were rated
D1 and A, respectively.

Average outstanding  commercial paper during the year was $286.7 million, with a
weighted-average  interest  rate of 5.6%.  At year-end  1997,  commercial  paper
outstanding  was $30.0  million and  aggregate  unused  credit lines were $612.3
million.

During 1997, net cash provided by operating activities increased $5.2 million to
$231.7 million.  The  increase was  attributed  to higher  earnings,  operating
profits from the former Disney newspapers, and other changes in working capital.

Cash and short-term investments were $160.3 million at the end of 1997, a $137.4
million increase from last year. The increased cash level will be used for stock
repurchases in the first quarter of 1998. The ratio of current assets to current
liabilities was 1.2:1 at year end vs. 1.0:1 at the end of 1996.

The company's operations have historically  generated strong positive cash flow,
which, along with the company's commercial paper program, revolving credit lines
and ability to issue public debt,  has provided  adequate  liquidity to meet the
company's short-term and long-term cash requirements, including requirements for
acquisitions.  

1996 VS. 1995. The principal change in the company's  financial  position during
1996  was the  application  of some  KRF  after-tax  sale  proceeds  toward  the
repurchase of 6.2 million shares for $221.8 million and the reduction of debt by
$193 million.  The  total-debt-to-total-capital  ratio decreased to 42.1%,  from
47.7% in 1995.

Average outstanding  commercial paper during the year was $495.0 million, with a
weighted-average  interest rate of 5.5%.  During 1996,  the company's  revolving
credit and term loan  agreement,  which backed up the commercial  paper program,
decreased from $800 million to $650 million. At year-end 1996,  commercial paper
outstanding  was $366.5  million and  aggregate  unused credit lines were $283.5
million.

During 1996, net cash provided by operating activities increased $114.0 million,
to $226.5 million.  The increase was attributed to higher  earnings,  reflecting
the improvements in Detroit's and Philadelphia's operations and other changes in
working capital.

Cash and  short-term  investments  were $22.9 million at the end of 1996, a $3.1
million  decrease from 1995. The ratio of current assets to current  liabilities
was 1.0:1 at year end vs. 1.1:1 at the end of 1995.  

1995 VS. 1994. The principal changes in the company's  financial position during
1995 were an  increase  of $602.3  million of debt in  connection  with the $360
million CCN acquisition and the $319.4 million repurchase of 11.5 million shares
of the company's  common stock. In early 1995, the company sold the JoC for $115
million.   The   after-tax   proceeds   offset   other   debt   increases.   The
total-debt-to-total-capital  ratio  increased to 47.7% in 1995, up from 25.2% in
1994.

Average outstanding  commercial paper during the year was $263.8 million, with a
weighted-average  interest rate of 5.9%.  During 1995,  the company's  revolving
credit and term loan agreement, which backs up the commercial paper program, was
increased from $500 million to $800 million. At year-end 1995,  commercial paper
outstanding  was $563.2  million and  aggregate  unused credit lines were $236.8
million.

                                       25
<PAGE>

In December  1995,  the company  issued $100  million  principal  amount of 6.3%
senior notes due Dec. 15, 2005.

During 1995, net cash provided by operating  activities decreased $201.6 million
to $112.6 million. After excluding the gain on the sale of JoC, the decrease was
attributed to lower earnings as a result of the Detroit strike,  newsprint price
increases, severance costs and other changes in working capital.

Cash and short-term  investments  were $26.0 million at the end of 1995, a $16.8
million  increase from 1994. The ratio of current assets to current  liabilities
was 1.1:1 at year end vs. 1.0:1 at the end of 1994.

Shareholders' equity reflected  unrealized gains on investments,  net of tax, of
$42.9 million. This represents the unrealized gains on investments available for
sale that are  carried  on the  balance  sheet at fair  market  value,  with the
unrealized gains (net of tax) reported as a separate  component of shareholders'
equity.

                           Effect of Changing Prices

The  Consumer  Price  Index,  a widely  used  measure of the impact of  changing
prices, has increased only moderately in recent years, up between 2% and 6% each
year since 1990.  Historically,  when inflation was at higher levels, the impact
on the company's operations was not significant.

The  principal  effect of inflation  on the  company's  operating  results is to
increase reported costs. Subject to normal competitive  conditions,  the company
generally  has  demonstrated  the ability to raise sales  prices to offset these
cost increases.

                                       26
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See  Quarterly  Operations in Item 7 and Schedule II,  Valuation and  Qualifying
Accounts

CONSOLIDATED BALANCE SHEET

(In thousands of dollars,               Dec. 28        Dec. 29        Dec. 31
except share data)                        1997           1996          1995
                                      -----------    -----------    -----------
ASSETS
Current Assets
  Cash, including short-term
    cash investments of
    $140,210 in 1997, $50 in
    1996 and 1995 ................   $   160,291    $    22,880    $    26,012
  Accounts receivable, net of
    allowances of $14,963 in
    1997, $12,685 in 1996 and
    $14,348 in 1995 ..............       374,746        356,079        339,264
  Inventories ....................        50,332         42,941         73,349
  Prepaid expense ................        15,844         90,314         21,543
  Other current assets ...........        39,902         53,513         42,754
                                     -----------    -----------    -----------
        Total Current Assets .....       641,115        565,727        502,922
                                     -----------    -----------    -----------
Investments and Other Assets
  Equity in unconsolidated
    companies and joint
    ventures .....................       197,585        330,267        321,658
  Net assets of discontinued
    BIS operations ...............        24,673        352,102        453,189
  Other ..........................       172,859        132,425        222,593
                                     -----------    -----------    -----------
        Total Investments and
          Other Assets ...........       395,117        814,794        997,440
                                     -----------    -----------    -----------
Property, Plant and Equipment
  Land and improvements ..........        89,375         77,526         77,617
  Buildings and improvements .....       444,952        387,509        384,314
  Equipment ......................     1,127,875        994,455        991,263
  Construction and equipment
    installations in progress ....       111,883        110,590         55,845
                                     -----------    -----------    -----------
                                       1,774,085      1,570,080      1,509,039
  Less accumulated depreciation ..      (727,571)      (701,232)      (667,210)
                                     -----------    -----------    -----------
        Net Property, Plant and
          Equipment ..............     1,046,514        868,848        841,829
                                     -----------    -----------    -----------
Excess of Cost Over Net Assets
Acquired and Other Intangibles
  Less accumulated amortization
    of $197,966 in 1997,
    $150,491 in 1996 and
    $131,992 in 1995 .............     2,272,396        611,538        624,130
                                     -----------    -----------    -----------
        Total ....................   $ 4,355,142    $ 2,860,907    $ 2,966,321
                                     ===========    ===========    ===========

               See "Notes to Consolidated Financial Statements."

                                       27
<PAGE>
CONSOLIDATED BALANCE SHEET (Continued)

(In thousands of dollars,                  Dec. 28        Dec. 29      Dec. 31
except share data)                           1997           1996         1995
                                         -----------    -----------  -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Accounts payable ...................   $  172,021   $  223,962   $  127,532
  Accrued expenses and other
    liabilities ......................      131,491      103,730      105,317
  Accrued compensation and
    amounts withheld from
    employees ........................      119,036       96,426      101,357
  Federal and state income
    taxes ............................       33,920                       195
  Deferred revenue ...................       72,491       70,452       72,134
  Dividends payable ..................                                 17,978
  Short-term borrowings and
    current portion of long-
    term debt ........................       69,697       50,000       13,129
                                         ----------   ----------   ----------
        Total Current
          Liabilities ................      598,656      544,570      437,642
                                         ----------   ----------   ----------
Noncurrent Liabilities
  Long-term debt .....................    1,599,133      771,335    1,000,721
  Deferred federal and state
    income taxes .....................      282,695      142,727      134,460
  Postretirement benefits other
    than pensions ....................      150,485      158,811      169,057
  Employment benefits and other
    noncurrent liabilities ...........      171,225      109,909      112,713
                                         ----------   ----------   ----------
        Total Noncurrent
          Liabilities ................    2,203,538    1,182,782    1,416,951
                                         ----------   ----------   ----------
Minority Interests in
Consolidated Subsidiaries ............        1,275        2,047          758
                                         ----------   ----------   ----------
Commitments and Contingencies (Note I)
Shareholders' Equity
  Preferred  stock,  $1.00 par
    value;  shares  authorized --
    2,000,000;  shares issued --
    1,754,930 in 1997, and 0 in
    1996 and 1995 ....................        1,755
  Common stock, $.02-1/12
    par value; shares
    authorized -- 250,000,000;
    shares issued -- 81,597,631
    in 1997, 93,340,652 in 1996
    and 97,196,308 in 1995 ...........        1,700        1,945        2,025
  Additional capital .................      911,572      308,320      295,360
  Retained earnings ..................      636,646      819,572      770,643
  Unrealized gains on
    investments ......................                     1,671       42,942
                                         ----------   ----------   ----------
        Total Shareholders'
          Equity .....................    1,551,673    1,131,508    1,110,970
                                         ----------   ----------   ----------
        Total ........................   $4,355,142   $2,860,907   $2,966,321
                                         ==========   ==========   ==========

                                       28

<PAGE>
CONSOLIDATED STATEMENT OF INCOME
                                                     Year Ended
                                     -----------------------------------------
(In thousands of dollars,              Dec. 28        Dec. 29        Dec. 31
except per share data)                   1997           1996           1995
                                     -----------    -----------    -----------
Operating Revenue
  Advertising
    Retail .......................   $ 1,008,736    $   821,768    $   807,758
    General ......................       246,096        198,797        182,516
    Classified ...................       947,419        772,859        682,696
                                     -----------    -----------    -----------
        Total ....................     2,202,251      1,793,424      1,672,970
    Circulation ..................       567,757        501,826        495,315
    Other ........................       106,777         78,974         81,897
                                     -----------    -----------    -----------
        Total Operating Revenue ..     2,876,785      2,374,224      2,250,182
                                     -----------    -----------    -----------
Operating Costs
  Labor and employee benefits ....     1,132,227        967,069        969,476
  Newsprint, ink and
    supplements ..................       466,329        472,207        446,841
  Other operating costs ..........       615,470        481,168        506,862
  Depreciation and amortization ..       156,731        120,647         98,741
                                     -----------    -----------    -----------
        Total Operating Costs ....     2,370,757      2,041,091      2,021,920
                                     -----------    -----------    -----------
Operating Income .................       506,028        333,133        228,262
                                     -----------    -----------    -----------
Other Income (Expense)
  Interest expense ...............      (102,662)       (73,137)       (59,512)
  Interest expense capitalized ...         5,376          6,397          1,889
  Interest income ................         3,404          6,488          8,576
  Equity in earnings of
    unconsolidated companies
    and joint ventures ...........        10,800         29,868         20,661
  Minority interests in
    earnings of consolidated
    subsidiaries .................       (11,503)        (9,293)        (8,809)
  Other, net (Note G) ............       282,409         16,753         (8,250)
                                     -----------    -----------    -----------
        Total ....................       187,824        (22,924)       (45,445)
                                     -----------    -----------    -----------
Income before income taxes .......       693,852        310,209        182,817
Income taxes .....................       297,348        124,829         72,861
                                     -----------    -----------    -----------
Income From Continuing
Operations .......................       396,504        185,380        109,956
Net gain on sale of
  discontinued BIS operations,
  net of applicable income
  taxes of $8,365 in 1997,
  $69,631 in 1996 and $38,933
  in 1995 (Notes B and G) ........        15,261         86,255         53,765
Income/(loss) from discontinued
  BIS operations, net of
  applicable income taxes of
  $1,119 in 1997, $4,305 in
  1996 and $8,608 in 1995 (Note G)         1,250         (3,762)         3,661
                                     -----------    -----------    -----------
Income Before Cumulative Effect
of Change in Accounting
Principle ........................       413,015        267,873        167,382
Cumulative effect of change in
  accounting principle for
  contributions ..................                                      (7,320)
                                     -----------    -----------    -----------
        Net Income ...............   $   413,015    $   267,873    $   160,062
                                     ===========    ===========    ===========

                                       29
<PAGE>
CONSOLIDATED STATEMENT OF INCOME (Continued)

                                                      Year Ended
                                       ----------------------------------------
                                         Dec. 28        Dec. 29        Dec. 31
                                           1997           1996           1995
                                       -----------   -----------    -----------
Earnings Per Share
  Basic:
    Income from continuing
      operations ................      $      4.48   $      1.93    $      1.11
    Net gain on sale of
      discontinued BIS
      operations (Notes B
      and G) ....................              .17           .90            .54
    Income/(loss) from
      discontinued BIS
      operations, net (Note G) ..              .02          (.04)           .03
                                       -----------   -----------    -----------
    Income before cumulative
      effect of change in
      accounting principle ......             4.67          2.79           1.68
    Cumulative effect of change
      in accounting principle
      for contributions .........                                         (.07)
                                       -----------   -----------    -----------
        Net Income ..............      $      4.67   $      2.79    $      1.61
                                       ===========   ===========    ===========
  Diluted:
    Income from continuing
      operations ................      $      3.91   $      1.90    $      1.10
    Net gain on sale of
      discontinued BIS
      operations (Notes B
      and G) ....................              .15           .89            .54
    Income/(loss) from
      discontinued BIS
      operations, net (Note G) ..              .02          (.04)           .03
                                       -----------   -----------    -----------
    Income before cumulative
      effect of change in
      accounting principle ......             4.08          2.75           1.67
    Cumulative effect of change
      in accounting principle
      for contributions .........                                         (.07)
                                       -----------   -----------    -----------
        Net Income ..............      $      4.08   $      2.75    $      1.60
                                       ===========   ===========    ===========
Average Shares Outstanding
(000s)
  Basic .........................           88,475        96,021         99,451
                                       ===========   ===========    ===========
  Diluted .......................          101,314        97,420        100,196
                                       ===========   ===========    ===========

               See "Notes to Consolidated Financial Statements."

                                       30
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
                                                       Year Ended
                                        --------------------------------------
                                          Dec. 28      Dec. 29       Dec. 31
(In thousands of dollars)                   1997         1996          1995
                                        ----------    ----------    ----------
Cash Provided by (Required for)
Operating Activities
  Net income .........................   $ 413,015    $ 267,873    $ 160,062
    Noncash items deducted from
      (included in) income:
      Cumulative effect of
        change in accounting
        principle ....................                                 7,320
      Gains on sales/exchanges
        of investee/
        subsidiaries (Note G) ........    (283,126)
      Net gain on sale of
        discontinued BIS
        operations ...................     (15,261)     (86,255)     (53,765)
      Depreciation ...................      94,138       86,976       75,197
      Amortization of excess of
        cost over net assets
        acquired .....................      47,475       18,500       11,504
      Amortization of other
        assets .......................      15,118       15,171       12,040
      Provision (benefit) for deferred
        taxes ........................     (14,750)      40,647       (7,367)
      Earnings of investees in
        excess of distributions ......     (14,658)     (21,293)     (16,250)
      Minority interests in
        earnings of
        consolidated
        subsidiaries .................      11,503        9,293        8,809
      Other items, net ...............      38,656       (9,648)      34,996
  Change in certain assets and
        liabilities:
    Accounts receivable ..............     (33,853)     (42,908)     (18,620)
    Inventories ......................        (326)      30,474      (32,292)
    Other current assets .............         380     (159,718)       2,227
    Accounts payable .................     (83,969)      86,251      (19,235)
    Federal and state income
      taxes ..........................       9,623          972      (55,078)
    Other liabilities ................      47,724       (9,826)       3,006
                                         ---------    ---------    ---------
       Net Cash Provided by
         Operating Activities ........     231,689      226,509      112,554
                                         ---------    ---------    ---------
Cash Provided by (Required for)
Investing Activities
  Proceeds from sale of
    investee, net (Note G) ...........     130,654
  Proceeds from sale of
    subsidiaries, net (Note G) .......      50,491
  Proceeds from sale of
    discontinued BIS
    operations, net (Note G) .........     416,983      271,859      114,907
  Change in net noncurrent
    assets of discontinued BIS
    operations .......................       1,996        4,249        4,523
  Acquisition of Contra Costa
    Newspapers, Inc. (Note G) ........                              (335,755)
  Proceeds from sales of
    securities available for
    sale .............................     241,894
  Additions to property, plant
    and equipment ....................    (106,614)    (112,896)     (92,086)
  Other items, net ...................      (8,165)      45,142      (46,081)
                                         ---------    ---------    ---------
       Net Cash Provided by
         (Required for)
         Investing Activities ........     727,239      208,354     (354,492)
                                         ---------    ---------    ---------

                                       31
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

                                                     Year Ended
                                      ----------------------------------------
                                        Dec. 28        Dec. 29        Dec. 31
(In thousands of dollars)                 1997           1996           1995
                                      ----------     ----------     ----------
Cash Provided by (Required for)
Financing Activities
  Proceeds from sale of
    commercial paper, notes
    payable and senior notes
    payable .......................      833,600        601,010      1,092,620
  Reduction of total debt .........     (976,611)      (793,525)      (490,274)
                                      ----------     ----------     ----------
       Net Change in Total Debt ...     (143,011)      (192,515)       602,346
  Payment of cash dividends .......      (78,335)       (74,262)       (74,377)
  Sale of common stock to
    employees .....................       70,531         72,202         75,437
  Purchase of treasury stock ......     (643,375)      (221,768)      (319,363)
  Other items, net ................      (27,327)       (21,652)       (25,346)
                                      ----------     ----------     ----------
       Net Cash Provided by
         (Required for)
         Financing Activities .....     (821,517)      (437,995)       258,697
                                      ----------     ----------     ----------
         Net Increase
           (Decrease) in Cash .....      137,411         (3,132)        16,759
Cash and short-term cash
  investments at beginning of
  the year ........................       22,880         26,012          9,253
                                      ----------     ----------     ----------
Cash and short-term cash
  investments at end of the
  year ............................   $  160,291     $   22,880     $   26,012
                                      ==========     ==========     ==========
Supplemental Cash Flow
Information
  Noncash investing activities
    (Note G)
    Securities received as
      proceeds on the sale of
      investee ....................   $  229,163
  Noncash financing activities
    (Note G)
    Issuance of preferred stock
      for the acquisition of
      the Disney newspapers
        Preferred stock ...........        1,755
        Additional capital ........      658,245
    Long-term debt assumed on
      the acquisition of the
      Disney newspapers ...........      990,000

               See "Notes to Consolidated Financial Statements."

                                       32
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                                   Preferred      Common
(In thousands of dollars, except     Shares       Shares        Preferred       Common     Additional     Retained      Treasury
share data)                       Outstanding   Outstanding       Stock          Stock       Capital      Earnings       Stock
                                  -----------   -----------     ---------       -------    ----------     ---------    ----------
<S>                               <C>           <C>             <C>             <C>         <C>           <C>          <C>       
Balance at Dec. 25, 1994 ........          --   105,785,440     $      --       $ 2,204     $ 326,392     $ 896,058    $       --
  Issuance of common shares
    under stock option plans ....                   152,150                           2         3,429
  Issuance of treasury shares
    under stock option plans ....                 2,167,760                                    (9,712)                   (62,712)
  Issuance of treasury shares
    under stock purchase plan ...                   599,558                                    (2,407)                   (16,925)
  Purchase of treasury shares ...               (11,508,600)                                                             319,363
  Retirement of 8,741,282
    treasury shares..............                                                  (181)      (26,830)     (212,715)    (239,726)
  Tax benefits arising from
    employee stock plans ........                                                               4,488
  Unrealized gains on
    investments .................                                                                            42,942
  Net income ....................                                                                           160,062
  Cash dividends declared on
    common stock -- $.74 per
    share .......................                                                                           (72,762)
                                    ---------    ----------     ---------       -------     ---------     ---------    ---------
Balance at Dec. 31, 1995 ........          --    97,196,308     $      --       $ 2,025     $ 295,360     $ 813,585    $      --
  Issuance of common shares
    under stock option plans ....                 1,040,938                          22        26,589           (11)
  Issuance of common shares
    under stock purchase plan ...                   126,808                           3         3,724            (1)
  Issuance of treasury shares
    under stock option plans ....                   868,752                                    (7,661)                   (30,783)
  Issuance of treasury shares
    under stock purchase plan ...                   326,946                                    (1,278)                   (11,645)
  Purchase of treasury shares ...                (6,219,100)                                                             221,768
  Retirement of 5,023,402
    treasury shares .............                                                  (105)      (16,586)     (162,649)    (179,340)
  Expenses related to capital
    transactions ................                                                                (203)
  Tax benefits arising from
    employee stock plans ........                                                               8,375
  Reductions in unrealized gains
    on investments ..............                                                                           (41,271)
  Net income ....................                                                                           267,873
  Cash dividends declared on
    common stock -- $.58-1/2
    per share(1) ................                                                                           (56,283)
                                    ---------    ----------     ---------       -------     ---------     ---------    ---------
Balance at Dec. 29, 1996 ........          --    93,340,652     $      --       $ 1,945     $ 308,320     $ 821,243    $      --
  Issuance of common shares
    under stock option plans ....                    89,318                           2         2,395
  Issuance of treasury shares
    under stock option plans ....                 1,604,447                                   (28,149)                   (70,785)
  Issuance of treasury shares
    under stock purchase plan ...                   387,514                                    (2,222)                   (17,218)
  Issuance of convertible
    preferred shares ............   1,754,930                       1,755                     658,245
  Purchase of treasury shares ...               (13,824,300)                                                             643,375
  Retirement of 11,832,339
    treasury shares .............                                                  (247)      (37,519)     (517,606)    (555,372)
  Tax benefits arising from
    employee stock plans ........                                                              10,502
  Reductions in unrealized gains
    on investments ..............                                                                            (1,671)
  Net income ....................                                                                           413,015
  Cash dividends declared on
    common stock -- $.80 per
    share .......................                                                                           (78,335)
                                    ---------    ----------     ---------       -------     ---------     ---------    ---------
Balance at Dec. 28, 1997 ........   1,754,930    81,597,631     $   1,755       $ 1,700     $ 911,572     $ 636,646    $      --
                                    =========    ==========     =========       =======     =========     =========    =========

(1)  The Board of Directors declared a $.20 per share dividend on Jan. 28, 1997. The quarterly  dividend previously paid in January
     was paid on Feb. 24, 1997, to shareholders of record as of the close of business on Feb. 12, 1997.

                                        See "Notes to Consolidated Financial Statements."

                                                                33
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Knight  Ridder is the nation's  second-largest  newspaper  publisher in terms of
circulation  and  revenue,  with  products  in print  and  online.  The  company
publishes 31 daily newspapers in 28 U.S.  markets,  reaching 9.0 million readers
daily and 12.6 million on Sunday.  It maintains 34 associated  Web sites and has
investments in two newsprint mills.

The company  reports on a fiscal  year,  ending the last Sunday in the  calendar
year.  Results for 1997 and 1996 are for the 52 weeks ended Dec. 28 and Dec. 29,
respectively, and results for 1995 are for the 53 weeks ended Dec. 31.

The  BASIS  OF  CONSOLIDATION  is  to  include  in  the  consolidated  financial
statements  all the  accounts  of  Knight  Ridder  and  its  more-than-50%-owned
subsidiaries.  All significant  intercompany  transactions  and account balances
have been eliminated in consolidation.

The company is a 50%  partner in the DETROIT  NEWSPAPER  AGENCY  (DNA),  a joint
operating agency between Detroit Free Press,  Inc., a wholly owned subsidiary of
Knight Ridder,  and The Detroit News, Inc., a wholly owned subsidiary of Gannett
Co.,  Inc. In 1989,  business  operations of the Free Press and The Detroit News
were  transferred to the DNA. Under the joint operating  agreement that  expires
in the year 2089,  as of Dec. 26, 1994,  profits are split  equally  between the
partners.  The  Consolidated  Statement of Income  includes,  on a  line-by-line
basis, the company's pro rata share of the revenue and expense  generated by the
operation of the agency.

INVESTMENTS  in companies in which  Knight  Ridder has an equity  interest of at
least 20% but not more than 50% are accounted for under the equity method. Under
this method,  the company  records its share of earnings as income and increases
the investment by the equivalent  amount.  Dividends are recorded as a reduction
in the investment.

The investment  caption "EQUITY IN UNCONSOLIDATED  COMPANIES AND JOINT VENTURES"
in the  Consolidated  Balance Sheet  represents the company's  equity in the net
assets of DNA; the Seattle Times Company and  subsidiaries;  Newspapers First, a
company  responsible  for  the  sales  and  servicing  of  general,  retail  and
classified  advertising  accounts  for a group of  newspapers;  Southeast  Paper
Manufacturing   Co.  and  Ponderay   Newsprint   Company,   two  newsprint  mill
partnerships;  TKR Cable Company and TKR Cable Partners,  cable television joint
ventures   (all   but  one  of  the   cable   companies   jointly   owned   with
TeleCommunications,  Inc. (TCI),  were sold in January 1997);  InfiNet,  a joint
venture  that  allows  newspapers  to  offer  Internet  access  to  subscribers;
Destination  Florida, a company that provided online travel information services
(ceased  operation  in  1997);  and  Interealty  (formerly  known as PRC  Realty
Systems, Inc.), a software system producer for the real estate industry.

The company  owns 49-1/2% of the voting  common  stock and 65% of the  nonvoting
common  stock of the  SEATTLE  TIMES  COMPANY,  owns 32% of the voting  stock of
NEWSPAPERS  FIRST, is a one-third  partner in the SOUTHEAST PAPER  MANUFACTURING
CO., and owns a 13-1/2% equity share of PONDERAY NEWSPRINT COMPANY.  The company
is a one-third partner in INFINET and owns a 25% interest in INTEREALTY.

The investment in unconsolidated  companies and joint ventures at Dec. 28, 1997,
includes  $171.0  million  representing  the  company's  share of  undistributed
earnings  (excluding  the DNA)  accumulated  since  the  investment  dates.  The
company's share of the earnings of the unconsolidated  companies (except for the
DNA) of $10.8  million in 1997,  $29.9 million in 1996 and $20.7 million in 1995
is included in the caption "EQUITY IN EARNINGS OF  UNCONSOLIDATED  COMPANIES AND
JOINT  VENTURES" in the  Consolidated  Statement of Income.  Dividends  and cash
distributions  received from the  unconsolidated  companies  and joint  ventures
(excluding  the DNA) were $3.1 million in 1997,  $18.6  million in 1996 and $3.2
million in 1995 and were offset against the investment account.

FORT WAYNE  NEWSPAPERS,  INC.  is the only  consolidated  subsidiary  that has a
minority  ownership  interest.  The minority  shareholders'  interest in the net
income of this  subsidiary has been reflected as an expense in the  Consolidated
Statement  of  Income  in  the  caption  "MINORITY   INTERESTS  IN  EARNINGS  OF
CONSOLIDATED  SUBSIDIARIES."  Also  included  in this  caption is a  contractual
minority  interest  resulting from a JOA that runs through the year 2021 between
The Miami  Herald  Publishing  Company and Cox  Newspapers,  Inc.,  covering the
publication of The Herald and The Miami News, which ceased  publication in 1988.
The company's liability to the minority interest shareholders is included in the
Consolidated   Balance  Sheet  caption,   "MINORITY  INTERESTS  IN  CONSOLIDATED
SUBSIDIARIES."

                                       34
<PAGE>

"CASH AND SHORT-TERM  CASH  INVESTMENTS"  includes  currency and checks on hand,
demand  deposits  at  commercial  banks,   overnight  repurchase  agreements  of
government  securities and investment-grade  commercial paper with maturities of
90 days or less.  Cash and short-term  investments  are recorded at cost. Due to
the short-term nature of marketable securities, cost approximates market value.

The majority of the company's  "ACCOUNTS  RECEIVABLE" as of Dec. 28, 1997,  Dec.
29, 1996, and Dec. 31, 1995, are from  advertisers,  newspaper  subscribers  and
information users.  Credit is extended based on the evaluation of the customer's
financial condition, and generally collateral is not required. Credit losses are
provided  for in the  financial  statements  and  consistently  have been within
management's expectations.

"INVENTORIES" are priced at the lower of cost (first-in,  first-out FIFO method)
or market.  Most of the inventory is newsprint,  ink and other  supplies used in
printing newspapers.

"OTHER  ASSETS"  includes  investments  in companies in which Knight Ridder owns
less  than a 20%  interest.  These  investments  are  reviewed  for  appropriate
classification at the time of purchase and re-evaluated as of each balance sheet
date.  Investments  available  for sale are carried on the balance sheet at fair
market  value,  with the  unrealized  gains/losses  (net of tax)  reported  as a
separate component of shareholders'  equity.  Unrealized gains (net of tax) were
zero at Dec. 28, 1997,  $1.7 million at Dec. 29, 1996, and $42.9 million at Dec.
31, 1995. Upon the sale of an investment,  the gain/loss is calculated  based on
the original cost,  less the proceeds from the sale.  Investments are classified
as  "held-to-maturity"  when the company has the positive  intent and ability to
hold the investment to maturity.

"PROPERTY,  PLANT AND  EQUIPMENT"  is recorded at cost,  and the  provision  for
depreciation  for financial  statement  purposes is computed  principally by the
straight-line method over the estimated useful lives of the assets.

"EXCESS OF COST OVER NET ASSETS  ACQUIRED  AND OTHER  INTANGIBLES"  includes the
unamortized  excess of cost over the fair  market  value on the  purchase  of at
least a 50% interest in a company's net tangible and  intangible  assets arising
from  these  acquisitions.  The  excess of cost  over net  assets  acquired  and
intangible  assets from  acquisitions  accounted  for as purchases and occurring
subsequent  to Oct. 31, 1970,  totaled,  at Dec.  28, 1997,  approximately  $2.5
billion,  including $390.9 million of intangible assets. The excess of cost over
net assets  acquired is being amortized over a 40-year period on a straight-line
basis,  unless management  concludes a shorter term is more  appropriate.  Other
intangibles acquired through acquisitions, consist of trademarks, subscriber and
advertiser  lists and  mastheads  which are being  amortized on a  straight-line
basis over periods ranging from 5 to 40 years, with a  weighted-average  life of
26.5 years.  If, in the opinion of  management,  an  impairment in value occurs,
based on the undiscounted cash flow method, any necessary additional write-downs
will be charged to expense.

"DEFERRED REVENUE" arises as a normal part of business from advance subscription
payments  for  newspapers.  Revenue is  recognized  in the period in which it is
earned.

"SHORT-TERM  BORROWINGS  AND  CURRENT  PORTION OF LONG TERM DEBT"  includes  the
carrying  amounts  of  commercial  paper and other  short-term  borrowings  with
original  maturities  of less than one year,  and the portion of long-term  debt
payable  within twelve  months.  The carrying  amounts of short-term  borrowings
approximate  fair value.  "LONG-TERM  DEBT"  represents the carrying  amounts of
debentures, notes payable and other indebtedness with maturities longer than one
year. Fair values, disclosed in Note C, are estimated using discounted cash flow
analyses based on the company's current incremental  borrowing rates for similar
types of borrowing arrangements.

In the first  quarter of 1995,  the company  adopted FAS 116 --  ACCOUNTING  FOR
CONTRIBUTIONS  RECEIVED AND  CONTRIBUTIONS  MADE.  Under FAS 116,  unconditional
promises, including multiyear promises, are recognized in the period the promise
is made.  The adoption of FAS 116 resulted in a $7.3 million charge (net of tax)
to  operations,  or $.07 per share,  and was  recorded  as a  cumulative  effect
adjustment.

                                       35
<PAGE>
In 1996,  the  company  adopted  FAS 121 --  ACCOUNTING  FOR THE  IMPAIRMENT  OF
LONG-LIVED  ASSETS.  FAS  121  requires  impairment  losses  to be  recorded  on
long-lived assets when indicators of impairment are present and the undiscounted
cash flows  estimated  to be generated by those assets are less than the assets'
carrying amount. The adoption of FAS 121 did not materially impact the financial
statements.  Also in 1996,  the company  implemented  FAS 123 -- ACCOUNTING  FOR
STOCK-BASED  COMPENSATION.  Under  this  statement,  the  company  accounts  for
stock-based  compensation plans under the provisions of APB 25 -- Accounting for
Stock Issued to Employees,  and  discloses  the general and pro forma  financial
information required by FAS 123 (see Note E).

In 1997,  the  company  adopted  FAS 128 -- EARNINGS  PER SHARE  (EPS).  FAS 128
replaced the calculation of primary and fully diluted EPS with basic and diluted
EPS. Unlike primary EPS, basic EPS will typically be higher than primary EPS due
to the exclusion of any dilutive  effects of options,  warrants and  convertible
securities from the  calculation.  Diluted EPS is very similar to the previously
reported fully diluted EPS. All EPS amounts for all periods  presented have been
restated where appropriate, to conform to the FAS 128 requirements.

"BASIC   EARNINGS  PER  SHARE"  is  computed  by  dividing  net  income  by  the
weighted-average  number of common  shares  outstanding.  "DILUTED  EARNINGS PER
SHARE" is  computed  by dividing  net income by the  weighted-average  number of
common and common equivalent shares  outstanding.  Quarterly  earnings per share
may not add to the total  for the  year,  since  each  quarter  and the year are
calculated separately based on average outstanding shares during the period.

In 1997,  the company also adopted FAS 129 --  DISCLOSURE OF  INFORMATION  ABOUT
CAPITAL  STRUCTURE.  FAS 129  establishes  standards for disclosing  information
about an entity's  capital  structure.  The adoption of this  statement  did not
result in additional required  disclosures.  FAS 130 -- REPORTING  COMPREHENSIVE
INCOME and FAS 131 --  DISCLOSURES  ABOUT  SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION are effective  beginning in 1998. FAS 130 establishes  standards for
reporting  and  displaying  comprehensive  income,  while FAS 131  abandons  the
"industry segment approach" in favor of the "management approach" for disclosure
purposes.  Adoption of FAS 130 is not expected to result in a significant change
from  the  current  required  disclosures  and  the  adoption  of FAS 131 is not
expected to result in additional disclosures.

USE OF ESTIMATES -- The  preparation of financial  statements in conformity with
generally accepted  accounting  principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Certain  amounts in 1996 and 1995 have been  reclassified to conform to the 1997
presentation.

B. INCOME TAXES

The company's income tax expense is determined under the liability method, which
requires adjusting previously deferred taxes for changes in tax rates.

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

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

<TABLE>
<CAPTION>
                                                    1997                          1996                          1995
                                          ------------------------      ------------------------      -------------------------
                                           Current        Deferred       Current        Deferred        Current       Deferred
                                          ---------      ---------      ---------      ---------      ---------      ----------
<S>                                       <C>            <C>            <C>             <C>           <C>            <C>       
Federal income taxes ...................  $ 286,645      $ (33,176)     $ 127,610       $ 28,075      $ 100,568       $(10,128)
State and local income taxes ...........     64,519        (11,156)        29,913         13,167         26,721          3,241
                                          ---------      ---------      ---------       --------      ---------       ---------
  Total ................................  $ 351,164      $ (44,332)     $ 157,523       $ 41,242      $ 127,289       $ (6,887)
                                          =========      =========      =========       ========      =========       ======== 
Provision for:
  Continuing operations ................  $ 312,098      $ (14,750)      $ 84,182       $ 40,647      $  80,228       $ (7,367)
  Discontinued operations ..............     39,066        (29,582)        73,341            595         47,061            480
                                          ---------      ---------      ---------       --------      ---------       ---------
    Total ..............................  $ 351,164      $ (44,332)     $ 157,523       $ 41,242      $ 127,289       $ (6,887)
                                          =========      =========      =========       ========      =========       ======== 
</TABLE>

                                                                 36
<PAGE>

Cash  payments  of income  taxes for the years  1997,  1996 and 1995 were $278.5
million, $147.2 million and $130.1 million, respectively. Payments in 1997, 1996
and 1995 include the tax impact  resulting from one-time gains. The 1997 payment
included the tax impact from the sale of our cable  investment,  Knight-  Ridder
Information,  Inc.,  and our  newspaper  in Long Beach,  Calif.,  as well as the
Boulder  exchange.  Payments in 1996 and 1995  included  the tax impact from the
sale of Knight-Ridder Financial and the Journal of Commerce, respectively.

                           Effective Income Tax Rates

The differences  between income tax expense for continuing  operations  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):

                                            1997          1996        1995
                                         ---------     ---------    --------
Federal statutory income tax .........   $ 242,848    $ 108,573    $  63,986
State and local income taxes, net of
  federal benefit ....................      34,300       13,612       11,421
Statutory rate applied to
  nondeductible amortization of the
  excess of cost over net assets
  acquired ...........................      13,482        2,781        2,712
Other items, net .....................       6,718         (137)      (5,258)
                                         ---------    ---------    ---------
  Total ..............................   $ 297,348    $ 124,829    $  72,861
                                         =========    =========    =========

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

                                            1997         1996         1995
                                         ---------    ---------    ---------
Deferred Tax Assets
Postretirement benefits other than
  pensions (including amounts relating
  to partnerships in which the company
  participates) ......................   $  88,016    $  95,764    $  85,789
Compensation and benefit accruals ....     (15,855)      (6,802)      21,768
Accrued interest .....................       8,165       10,576        8,073
Other nondeductible accruals .........      51,651       43,594       30,068
                                         ---------    ---------    ---------
  Gross deferred tax assets ..........   $ 131,977    $ 143,132    $ 145,698
                                         =========    =========    =========

Deferred Tax Liability
Depreciation and amortization ........   $ 341,872    $ 196,116    $ 154,242
Equity in partnerships and investees .      46,845       73,499       52,708
Unrealized appreciation in equity
  securities .........................       1,210       33,478
Research and experimental expenditures      10,964       12,232
Other ................................       4,010       11,066       31,924
                                         ---------    ---------    ---------
  Gross deferred tax liability .......   $ 392,727    $ 292,855    $ 284,584
                                         ---------    ---------    ---------
  Net deferred tax liability .........   $ 260,750    $ 149,723    $ 138,886
                                         =========    =========    =========

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

                                            1997         1996         1995
                                         ---------    ---------    ---------
Current asset ........................   $  23,445    $  24,296    $  26,160
Noncurrent liability .................     282,695      142,727      134,460
Discontinued BIS operations - net
  liability ..........................       1,500       31,292       30,586
                                         ---------    ---------    ---------
  Net deferred tax liability .........   $ 260,750    $ 149,723    $ 138,886
                                         =========    =========    =========

                                       37
<PAGE>

C. DEBT

Debt consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                                 Dec. 28           Dec. 29          Dec. 31
                                                   1997              1996             1995
                                               -----------         ---------      -----------
<S>                                               <C>              <C>              <C>      
Commercial paper due at various dates
  through March 25, 1998, at an
  effective interest rate of 5.6% as
  of Dec. 28, 1997. Amounts are net of
  unamortized discounts of $207 in 1997,
  $1,683 in 1996 and $5,502 in 1995(a) ....... $    29,793         $ 364,817      $   557,698
Senior secured bank debt due on Sept.
  15, 1999,  advanced  under a $1.2
  billion  credit  agreement  with a variable
  interest rate indexed to
  LIBOR plus 27  1/2 basis points(b) .........     990,000
Debentures due on April 15, 2009,
  bearing interest at 9.875%, net of
  unamortized discount of $1,867 in
  1997, $2,032 in 1996 and $2,211 in
  1995 .......................................     198,133           197,968          197,789
Debentures due on Nov. 1, 2027,
  bearing interest at 7.15%, net of
  unamortized discount of $5,739 in
  1997 .......................................      94,261
Notes payable, bearing interest at
  8.5%, subject to mandatory pro rata
  amortization of 25% annually
  commencing Sept. 1, 1998, through
  maturity on Sept. 1, 2001, net of
  unamortized discount of $383 in
  1997, $555 in 1996 and $726 in 1995 ........     159,617           159,445          159,274
Notes payable due on Nov. 1, 2007,
  bearing interest at 6.625%, net of
  unamortized discount of $2,179 in
  1997 .......................................      97,821
Senior notes payable due on Dec. 15,
  2005, bearing interest at 6.3%, net
  of unamortized discount of $795 in
  1997, $895 in 1996 and $911 in 1995 ........      99,205            99,105           99,089
                                               -----------         ---------      -----------
                                                 1,668,830           821,335        1,013,850
Less amounts payable in one year(c) ..........      69,697            50,000           13,129
                                               -----------         ---------      -----------
    Total long-term debt ..................... $ 1,599,133         $ 771,335      $ 1,000,721
                                               ===========         =========      ===========
</TABLE>

(a)  Commercial  paper is  supported by $642.3  million of revolving  credit and
     term loan  agreements, $400 million of which matures on Oct. 25, 2001,  and
     $242.3  million of which matures on Oct. 23, 1998.  
(b)  Senior secured bank debt is  collateralized by all personal property assets
     and four recorded first  mortgages of Cypress  Media,  Inc., a wholly owned
     subsidiary.
(c)  In 1997,  this  represents  $39.9  million for the 8.5% note payable due on
     Sept. 1, 1998, and $29.8 million of commercial paper due within the next 12
     months and which management does not intend to refinance.

Interest  payments during 1997, 1996 and 1995 were $87.2 million,  $70.9 million
and $45.4 million, respectively.

                                       38
<PAGE>
The following table presents the approximate  annual  maturities of debt for the
years after 1997 (in thousands):

1998 ..................................... $    69,697
1999 .....................................   1,029,904
2000 .....................................      39,904
2001 .....................................      39,904
2002
2003 and thereafter ......................     489,421
                                           -----------
  Total .................................. $ 1,668,830
                                           ===========

The carrying amounts and fair values of debt as of Dec. 28, 1997, are as follows
(in thousands):

                                          Carrying               Fair
                                           Amount                Value
                                        -----------          -----------
Commercial paper .....................  $    29,793          $    29,793
Senior secured bank debt .............      990,000              990,000
9.875% Debentures ....................      198,133              249,878
7.15% Debentures .....................       94,261              102,234
8.5% Notes payable ...................      159,617              171,775
6.625% Notes payable .................       97,821              100,598
6.3% Senior notes payable ............       99,205               99,013
                                        -----------          -----------
  Total ..............................  $ 1,668,830          $ 1,743,291
                                        ===========          ===========

D. UNCONSOLIDATED COMPANIES AND JOINT VENTURES

Summary  financial  information for the company's  unconsolidated  companies and
joint  ventures that are accounted for under the equity method is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                    1997                     1996                   1995
                                                ----------               ----------             ----------
<S>                                             <C>                      <C>                    <C>       
Current assets ................................ $  212,939               $  258,037             $  274,815
Property, plant and equipment and
  other assets ................................  1,158,224                4,076,604              3,671,364
Current liabilities ...........................    143,683                  287,782                323,199
Long-term debt and other noncurrent
  liabilities .................................    394,253                2,893,716              2,572,060
Net sales .....................................    806,587                1,417,668              1,248,694
Gross profit ..................................    124,650                  449,383                376,545
Net income ....................................     24,428                   55,104                  6,517
Company's share of:
  Net assets ..................................    197,585                  330,267                321,658
  Net income ..................................     10,800                   29,868                 20,661
</TABLE>

In 1989,  the Detroit  Free Press and The Detroit News began  operating  under a
joint operating  agreement as the Detroit Newspaper Agency (DNA).  Balance sheet
amounts for the DNA at Dec. 28, 1997,  Dec.  29,  1996,  and Dec. 31, 1995,  are
included  above,  and the net  assets  contributed  to the DNA are  included  in
"Equity in  unconsolidated  companies  and joint  ventures" in the  Consolidated
Balance Sheet.

In January 1997, the company and Tele-Communications, Inc. closed on the sale of
the company's  interest in all but one of their jointly owned cable investments.
See Note G.

E. CAPITAL STOCK

In 1991,  shareholders  authorized 2 million shares of Series B preferred  stock
for future  issuance  (which is  convertible  into 20  million  shares of common
stock).

                                       39
<PAGE>

In 1997,  the Board of  Directors  authorized  1,758,242  of Series B  preferred
stock,  $1.00  par  value  per  share,  for  issuance  in  connection  with  the
acquisition of four  newspapers  that were  indirectly  owned by The Walt Disney
Company on May 9, 1997.  The Series B  preferred  stock is  convertible  into 10
shares of common  stock.  If and when  dividends  and  other  distributions  are
declared  by the Board of  Directors,  holders of the Series B  preferred  stock
shall be entitled to receive the  dividends  or other  distribution  paid on the
number of shares of the corporation's common stock into which such share of this
series is  convertible.  Each  holder of this  series is  entitled  to vote with
respect to all matters upon which holders of the corporation's  common stock are
entitled to vote.

On June 21, 1996, the Board of Directors  declared a two-for-one  stock split in
the form of a 100% common stock  dividend  that was payable on July 31, 1996, to
shareholders  of record on July 10, 1996.  The  financial  statements  have been
restated to give retroactive  recognition to the stock split in prior periods by
reclassifying  from  retained  earnings  to  common  stock  the par value of the
additional  shares  arising from the split.  In addition,  all references in the
financial  statements  to  number  of shares  and per  share  amounts  have been
restated.

Concurrent  with the stock  split,  the company  executed a rights  agreement to
replace a similar  agreement that expired on July 10, 1996. The agreement grants
each holder of a common share a right,  under  certain  conditions,  to purchase
from the company 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 the company is 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 the company  engages
in a merger or other  business  combination  transaction in which the company is
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 the company's  outstanding common stock,
or 10 business  days  following the  commencement  of a tender offer or exchange
offer for 20% or more of the company's  outstanding  stock. Until such time, the
rights are evidenced by the common share certificates of the company. The rights
are not exercisable  until  distributed and will expire on July 10, 2006, unless
earlier redeemed or exchanged by the company.

The company has the option to redeem the rights in whole,  but not in part, at a
price of $.01 per right subject to adjustment.  The company's Board of Directors
has  reserved  for  issuance  upon  exercise of the rights  1,500,000  preferred
shares.

The  Employees  Stock  Purchase  Plan  provides  for the sale of common stock to
employees  of the  company and its  subsidiaries  at a price equal to 85% of the
market value at the end of each  purchase  period.  Participants  under the plan
received  387,514  shares in 1997,  453,754 shares in 1996 and 599,558 shares in
1995. The purchase price of shares issued in 1997 under this plan ranged between
$34.00 and $43.46,  and the market  value on the  purchase  dates of such shares
ranged from $40.00 to $51.13.

The Employee Stock Option Plans provide for the issuance of  nonqualified  stock
options and incentive stock options.  Options are issued at prices not less than
market  value at date of grant and until 1994 were  exercisable  at issue  date.
Options  granted after March 1994 are  exercisable  in three equal  installments
vesting over a three-year period from the date of grant.  There is no expiration
date for the granting of options, but options must expire no later than 10 years
from the date of grant. The option plan provides for the discretionary  grant of
stock  appreciation  rights (SARs) 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.

Proceeds  from the  issuance  of  shares  under  these  plans  are  included  in
shareholders' equity and do not affect income.

                                       40
<PAGE>
Transactions under the Employee Stock Option Plans are summarized as follows:

                                                                 Weighted-
                                                                 Average
                                          Number of           Exercise Price
                                             Shares             Per Share
                                         -----------         ---------------
Outstanding
  Dec. 25, 1994 .......................   8,646,724              $ 25.68
    Exercised .........................  (2,319,910)               24.21
    Expired
    Forfeited .........................     (24,800)               26.24
    Granted ...........................   1,345,300                32.16
Outstanding
  Dec. 31, 1995 .......................   7,647,314                27.26
    Exercised .........................  (1,909,690)               25.95
    Expired ...........................      (8,650)               29.54
    Forfeited .........................    (148,579)               28.70
    Granted ...........................   1,324,450                39.25
Outstanding
  Dec. 29, 1996 .......................   6,904,845                29.89
    Exercised .........................  (1,693,765)               26.54
    Expired ...........................    (340,341)               29.00
    Forfeited .........................     (25,873)               32.55
    Granted ...........................   1,412,668                51.65
Outstanding
  Dec. 28, 1997 .......................   6,257,534                35.74

In 1997, the company  established a long-term  incentive  plan. The plan rewards
participants   whose   leadership  helps  the  company  reach  levels  of  total
shareholder return, as defined.  The plan covers a single three year performance
period from Jan. 1, 1997 through Dec. 31, 1999. Participants received an initial
grant of 252,406  shares of restricted  Knight Ridder common stock.  The initial
grant of common stock was restricted as the vesting of these shares is triggered
upon the occurrence of certain performance goals.

In 1997, the company established 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  of the  company  to serve as members of the
Board of Directors. Part of the compensation plan includes the issuance of stock
options.  Options vest in three equal  installments over a three-year period and
expire no later than 10 years from the date of grant.  In 1997,  26,000  options
were granted.

At Dec. 28, 1997,  shares of the company's  authorized but unissued common stock
were reserved for issuance as follows:

                                               Shares
                                             ---------
Employee Stock Option Plans ................ 2,176,761
Employees Stock Purchase Plan .............. 1,421,106
Nonemployee Directors Stock Option
  Plan .....................................   174,000
                                             ---------
  Total .................................... 3,771,867
                                             =========

As required by FAS 123, pro forma information  regarding net income and earnings
per share has been  determined  as if the company had accounted for its employee
stock options under the fair value method of that statement.  The fair value for
these  options was estimated at the date of grant using a  Black-Scholes  option
pricing model with the following weighted-average assumptions for 1997, 1996 and
1995,  respectively:  risk-free rates of 5.7%, 6.1% and 5.5%; dividend yields of
1.6%,  2.0% and 2.5%;  volatility  factors of the  expected  market price of the
company's common stock of 0.14, 0.16 and 0.17; and a  weighted-average  expected
life of the option of 6.4, 6.5 and 6.5 years. The  weighted-average  fair values
of the stock  options  for 1997,  1996 and 1995 were  $12.44,  $9.65 and  $6.94,
respectively.

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 highly
subjective assumptions,  including the expected stock price volatility.  Because
the  company's  employee  stock  options  have   characteristics   significantly
different from those traded 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 its employee stock options.

                                       41
<PAGE>

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.  The company's 1997, 1996 and 1995
pro forma  information  follows (in  thousands,  except for  earnings  per share
information):

                                          1997           1996          1995
                                       ---------      ---------     ---------
Net income ..........................  $ 407,274      $ 264,600     $ 158,461
Basic earnings per share ............       4.60           2.76          1.59
Diluted earnings per share ..........       4.02           2.72          1.58

The pro forma  effect on net  income is not  necessarily  representative  of the
effect in future  years  because it does not take into  consideration  pro forma
compensation expense related to grants made prior to 1995.

The exercise  price of options  outstanding  at Dec. 28,  1997,  ranged  between
$22.66 and $52.78.  The  weighted-average  remaining  contractual  life of those
options  for  1997,  1996  and  1995 is 6.4,  7.3 and 7.1  years,  respectively.
3,643,950,  4,305,845 and 5,323,930 options were exercisable at the end of 1997,
1996 and 1995, respectively.

In 1997,  the company  adopted FAS 128 -- EARNINGS PER SHARE (EPS).  EPS amounts
for all periods  presented  have been restated as  appropriate to conform to the
FAS  128  requirements.  In  1997,  the  Series  B  preferred  stock,  which  is
convertible  into 10 shares of common  stock,  and stock options are included in
the diluted EPS calculation,  but excluded from the basic EPS  calculation.  The
1997 diluted EPS  calculation  includes  10,931,741  weighted-average  shares of
Series B preferred stock and 1,906,912  weighted-average  stock options. In 1996
and earlier,  the only difference between the basic and diluted EPS calculations
is the  dilutive  impact  of  options  that  are  included  in the  diluted  EPS
calculation.

F. RETIREMENT PLANS

The  company  and  its  subsidiaries   maintain   several   company-administered
noncontributory defined benefit plans covering most nonunion employees. Benefits
are based on years of service and  compensation  or stated amounts for each year
of  service.  The  company's  funding  policy for  defined  benefit  plans is to
contribute  annually not less than the ERISA minimum funding  standards nor more
than the maximum  amount which can be deducted for federal  income tax purposes.
The company also  contributes to certain  multi-employer  union defined  benefit
plans,  company-administered  and jointly administered negotiated plans covering
union  employees.  The  funding  policy  for  these  plans  is  to  make  annual
contributions in accordance with applicable agreements.

The  company  also  sponsors  certain  defined  contribution  plans  established
pursuant to Section  401(k) of the  Internal  Revenue  Code.  Subject to certain
dollar limits,  employees may contribute a percentage of their salaries to these
plans, and the company will match a portion of the employees' contributions.

A summary of the components of net periodic pension cost for the defined benefit
plans (both  company-administered  non-negotiated and single-employer negotiated
plans) is  presented  here,  along  with the total  amounts  charged  to pension
expense for  multi-employer  union defined benefit plans,  defined  contribution
plans and other agreements (in thousands):

                                          1997          1996         1995
                                       ---------     ---------    ---------
Defined benefit plans:
  Service cost ....................... $  30,116     $  28,562    $  21,550
  Interest cost ......................    61,458        56,698       51,725
  Actual return on plan assets .......  (173,445)     (106,651)    (137,554)
  Net amortization and deferral ......    99,825        43,681       84,042
                                       ---------     ---------    ---------
    Net ..............................    17,954        22,290       19,763
Multi-employer union plans ...........    11,125         9,157        9,484
Defined contribution plans ...........    10,742         9,022        8,389
Other ................................     1,968         1,412        1,808
                                       ---------     ---------    ---------
  Net periodic pension cost .......... $  41,789     $  41,881    $  39,444
                                       =========     =========    =========

                                       42
<PAGE>

Assumptions used each year in accounting for defined benefit plans were:

                                         1997        1996       1995
                                         -----       -----      -----
Discount rate as of year end ............ 7.0%        7.5%      7.25%
Expected long-term rate of return on
  assets assumed in determining
  pension expense ....................... 8.5         8.5       8.5
Rate of increase in compensation
  levels as of year end ................. 4.5         4.5       4.5

The following  table sets forth the funded status and amounts  recognized in the
Consolidated Balance Sheet for the defined benefit plans (in thousands):

<TABLE>
<CAPTION>
                                              Dec. 28, 1997                 Dec. 29, 1996                   Dec. 31, 1995
                                     -----------------------------  ----------------------------    ----------------------------
                                        Plans Whose    Plans Whose    Plans Whose    Plans Whose      Plans Whose    Plans Whose
                                      Assets Exceed    Accumulated  Assets Exceed    Accumulated    Assets Exceed    Accumulated
                                        Accumulated       Benefits    Accumulated       Benefits      Accumulated       Benefits
                                           Benefits  Exceed Assets       Benefits  Exceed Assets         Benefits  Exceed Assets
                                         (20 plans)      (7 plans)     (16 plans)      (9 plans)       (17 plans)     (11 plans)
                                        -----------  -------------  -------------  -------------    -------------  -------------
<S>                                       <C>             <C>           <C>             <C>             <C>             <C>     
Actuarial present value of benefit
obligations:
  Vested benefit obligations ........... $  767,330       $ 31,543      $ 601,284       $ 74,766        $ 564,319      $  83,275
                                         ==========       ========      =========       ========        =========      =========
  Accumulated benefit obligations ...... $  781,678       $ 32,484      $ 612,444       $ 77,021        $ 574,642      $  85,581
                                         ==========       ========      =========       ========        =========      =========

Projected benefit obligation ........... $  911,835       $ 43,497      $ 709,412       $ 87,467        $ 672,691      $ 100,273
Plan assets at fair value ..............  1,056,230          2,529        810,102         49,809          717,475         55,019
                                         ----------       --------      ---------       --------        ---------      ---------
Projected benefit obligation less
  than (in excess of) plan assets ......    144,395        (40,968)       100,690        (37,658)          44,784        (45,254)
Unrecognized net (gain) loss ...........   (138,206)        11,438        (96,564)        11,704          (15,441)        15,032
Prior service cost not yet
  recognized in net periodic pension
  cost .................................     38,940          3,971         33,135         11,283           24,865         12,522
Unrecognized net (asset) obligation
  at the date FAS 87 was adopted,
  net of amortization ..................    (13,441)           865        (18,592)         1,738          (23,689)         2,190
Adjustment required to recognize
  minimum liability ....................                    (5,922)                      (14,279)                        (18,071)
                                         ----------       --------      ---------       --------        ---------      ---------
Net pension asset (liability)
  recognized in the Consolidated
  Balance Sheet ........................ $   31,688       $(30,616)     $  18,669       $(27,212)       $  30,519      $ (33,581)
                                         ==========       ========      =========       ========        =========      =========
</TABLE>

Of the seven plans whose accumulated  benefits exceed assets, one is a qualified
pension plan. This qualified plan has vested benefits of $2.4 million and assets
of $2.5 million.

Net pension  assets are  included in "Other"  noncurrent  assets and net pension
liabilities   are  included  in  "Employment   benefits  and  other   noncurrent
liabilities." In 1995 and 1996, net pension  liabilities related to discontinued
operations were included in "Net assets of discontinued BIS  operations."  These
net pension liabilities were assumed by corporate in 1997.  Substantially all of
the assets of the  company-administered  plans are invested in listed stocks and
bonds.

G. ACQUISITIONS AND DISPOSITIONS

                                  Acquisitions

On May 9, 1997,  the  company  completed  the  acquisition  of four  newspapers,
indirectly owned by The Walt Disney Company,  for $1.65 billion. The acquisition
was  accomplished  through the merger of a wholly owned subsidiary with and into
Cypress Media, Inc.  ("Media"),  formerly known as ABC Media, Inc., the owner of
the four  newspapers.  Media owns  newspapers  in Kansas City,  Mo., Fort Worth,
Texas, Belleville,  Ill., and Wilkes-Barre,  Pa. The company intends to continue
to manage and operate Media as a newspaper  company.  The four  newspapers  have
combined daily and Sunday circulation of 635,000 and 898,000, respectively.

                                       43
<PAGE>

The acquisition was accounted for under the purchase method.  The purchase price
was  allocated  based on the  estimated  fair market  value of net  tangible and
intangible  assets  acquired.  The fair  market  value of the net  tangible  and
intangible assets of Media was approximately $317.3 million at date of purchase,
including  $351.6 million of intangible  assets,  which are being amortized on a
straight-line  basis over periods ranging from 10 years to 40 years.  The excess
of purchase price over these net assets,  of  approximately  $1.33 billion,  has
been recorded as goodwill and is being amortized on a  straight-line  basis over
40 years.

Pursuant to the  merger,  the company  issued  1,754,930  shares of its Series B
convertible  preferred stock.  Each share of preferred stock is convertible into
10 shares of common stock.  At the effective time of the merger,  Media had $990
million of bank debt, which was assumed by the company. The company's results of
operations include Media from May 9, 1997.

The pro forma  unaudited  results of  operations,  as though  the  former  Media
newspapers acquisition had occurred at the beginning of the fiscal year in which
the acquisition took place as well as for the comparable preceding year, were as
follows (in thousands of dollars, except share data):

                                           1997                     1996
                                       -----------              -----------
Operating revenue ...................  $ 3,058,791              $ 2,873,946
Income before income taxes ..........      695,466                  313,038
Net income ..........................      413,932                  255,602
Earnings per share
  Basic .............................  $      4.68              $      2.66
  Diluted ...........................         4.09                     2.22

On Aug. 24, 1997, the company exchanged its newspaper in Boulder, Colo., for two
newspapers  in  California  owned by the E.W.  Scripps Co. The  Monterey  County
Herald  has  circulation  of 34,000  daily and 38,000  Sunday,  and the San Luis
Obispo Telegram-Tribune has circulation of 36,000 Monday through Saturday.

The exchange was accounted for under the purchase method.  The fair market value
of the two newspapers  received in the exchange was approximately $56.6 million,
and that value was allocated to the net tangible and intangible  assets of these
newspapers.  The fair market value of the  identified  tangible  and  intangible
assets was  approximately  $51.5  million at date of exchange,  including  $16.7
million of intangible assets, which are being amortized on a straight-line basis
over periods ranging from 10 years to 40 years.  The excess of the fair value of
these newspapers over their net assets, of approximately $5.1 million,  has been
recorded as goodwill  and is being  amortized on a  straight-line  basis over 40
years. The company's results of operations  include Boulder through Aug. 24, and
Monterey  and San Luis Obispo from that same date  through the end of the fiscal
year.

On Oct. 31, 1995, the company acquired 100% of the outstanding  shares of Lesher
Communications,  Inc.,  ("Lesher") for $360 million.  The difference between the
purchase price of $360 million and the cash  distribution  of $335.8 million was
due to certain assumed  liabilities.  Lesher, a privately held newspaper company
based in Walnut Creek,  Calif.,  published  four daily  newspapers in contiguous
Contra Costa and eastern Alameda County markets in the East Bay area of Northern
California.  Lesher,  renamed Contra Costa  Newspapers,  Inc., (CCN) in November
1995, continues to publish four newspapers.

The acquisition was accounted for under the purchase method.  The purchase price
was allocated,  based on the estimated fair market value of the net tangible and
intangible  assets of CCN. The fair market value of the tangible and  intangible
assets was  approximately  $106.2 million at date of purchase,  including  $22.6
million of intangible assets, which are being amortized on a straight-line basis
over  periods  ranging  from 15 to 40 years.  The excess of purchase  price over
these net assets, of approximately $253.8 million, has been recorded as goodwill
and is being  amortized on a  straight-line  basis over 40 years.  The company's
results of operations include CCN from Oct. 31, 1995, forward.

The pro forma  unaudited  results  of  operations,  as  though  the  former  CCN
newspapers  acquisition  had  occurred at the  beginning of the 1995 fiscal year
were: (1) revenues,  $2.4 billion; (2) net income,  $161.7 million and (3) basic
earnings per share, $1.63, and diluted earnings per share, $1.61.

                                       44
<PAGE>

                                  Dispositions

Related to Continuing Operations:

In July 1997,  the company  announced  that it would sell its newspapers in Boca
Raton, Fla., Gary, Ind., Long Beach,  Calif.,  Milledgeville,  Ga. and Newberry,
S.C.  Combined daily and Sunday  circulation  for the Boca Raton,  Gary and Long
Beach  newspapers  is  188,448  and  213,487,  respectively.  The  Milledgeville
newspaper has circulation of 8,153 (five days a week) and the Newberry newspaper
has circulation of 6,500 (three days a week).

In December  1997,  the company sold all of these  newspapers  except the one in
Gary.  The sale of the Boca Raton,  Newberry  and  Milledgeville  newspapers  to
Community Newspaper Holdings, Inc., also included the transfer to the company of
The Daily Sun and the Buyer's Guide, a shopper,  in Warner Robins,  Ga., and the
Byron (Ga.) Gazette,  a weekly  newspaper.  The Long Beach newspaper was sold to
Garden State Newspapers,  an affiliate of Media News Group. On Feb. 2, 1998, the
company  closed on the sale of the Gary  newspaper to  Hollinger  International,
Inc.

The proceeds from the sale of the four newspapers were $50.7 million. The pretax
and  after-tax  gains  from their sale were  $18.1  million  and $10.3  million,
respectively.

On Aug. 24, 1997, the company exchanged its newspaper in Boulder, Colo., for two
newspapers in California owned by the E.W. Scripps Co. The exchange  resulted in
a pretax and an after-tax gain of $43.2 million and $24.5 million, respectively.

In January 1997, the company and  Tele-Communications,  Inc., closed on the sale
of the  company's  interest  in  all  but  one  of  their  jointly  owned  cable
investments.  The total sales price was $377.6  million and resulted in a pretax
and an after-tax gain of $221.8 million and $128.3  million,  respectively.  The
remaining  system,  in Kentucky,  accounts  for a small  portion of the original
investment. That sale is expected to close later.

In November  1996,  the company sold its  investment in Netscape  Communications
Corporation,  resulting in an after-tax gain of $8.1 million, net of adjustments
in the carrying value of certain other investments.

Related to Discontinued Operations:

On April 4,  1997,  the  company  announced  that it  would  sell  Knight-Ridder
Information,  Inc.  (KRII).  The  announcement  resulted in its former  Business
Information Services (BIS) segment (excluding one business called Technimetrics)
being  reclassified  as  discontinued  operations  in the quarter ended June 29,
1997.  On Dec.  11,  1997,  the  company  announced  that  it  would  also  sell
Technimetrics.  Since this business was previously  included in the BIS segment,
it was similarly reclassified and included in discontinued operations.

On Nov. 14,  1997,  the company sold KRII to M.A.I.D plc for $420 million plus a
working capital purchase price adjustment of approximately $15 million. The sale
resulted  in a  pretax  gain of $23.6  million  and an  after-tax  gain of $15.3
million.

On July 26,  1996,  the company  sold  Knight-Ridder  Financial  (KRF) to Global
Financial  Information  Corporation  for $275 million.  The pretax and after-tax
gains from the sale of KRF were $155.9 million and $86.3 million, respectively.

On April  3,  1995,  the  company  sold the  Journal  of  Commerce  (JoC) to the
Economist Group of London for $115 million.  The pretax and after-tax gains from
the sale of the JoC were $92.7 million and $53.8 million, respectively.

H. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The company and its subsidiaries have defined  postretirement benefit plans that
provide  medical and life  insurance for retirees and eligible  dependents.  The
company's  postretirement  benefit expense is determined under the provisions of
FAS  106  --  EMPLOYERS'  ACCOUNTING  FOR  POSTRETIREMENT  BENEFITS  OTHER  THAN
PENSIONS.  This statement  requires that the cost of these  benefits,  which are
primarily  for health care and life  insurance,  be  recognized in the financial
statements throughout the employees' active working careers.

                                       45
<PAGE>
The company valued the accumulated  postretirement  benefit obligation using the
following assumptions:

                                           1997           1996         1995
                                           -----          -----        -----
Discount rate at the end of the
  year .................................... 7.0%           7.5%        7.25%
Return on plan assets ..................... 8.5            8.5         8.5
Annual rate of increase in
  salaries ................................ 4.5            4.5         4.5
Medical trend rate:
  Projected ............................... 8.0            9.0        10.0
  Reducing to this percentage in
    2001 and thereafter ................... 5.5            5.5         5.5

The following  tables  present the funded status of the company's  benefit plans
(excluding  liabilities of the DNA that are reported in the Consolidated Balance
Sheet under the caption "Equity in unconsolidated companies and joint ventures")
and the components of 1997, 1996 and 1995 periodic expense (in thousands):
<TABLE>
<CAPTION>

                                                    1997                          1996                            1995
                                          ------------------------      ------------------------        ------------------------
                                                              Life                          Life                            Life
                                                         Insurance                     Insurance                       Insurance
                                            Medical            and        Medical            and          Medical            and
                                              Plans    Other Plans          Plans    Other Plans            Plans    Other Plans
                                          ---------    -----------      ---------    -----------        ---------       --------
<S>                                        <C>            <C>            <C>            <C>              <C>            <C>     
Accumulated postretirement benefit
obligation:
  Retirees .............................   $ 60,845       $ 13,873       $ 58,225       $ 13,519         $ 69,180       $ 13,313
  Fully eligible active plan
    participants .......................     13,054          5,931         12,369          5,157           16,778          5,440
  Other active plan participants .......     18,706         20,209         17,650         14,568           21,617         16,243
                                          ---------       --------      ---------       --------        ---------       --------
Accumulated benefit obligation in
  excess of plan assets ................     92,605         40,013         88,244         33,244          107,575         34,996
Fair value of assets                                        12,386
Unfunded status ........................     92,605         27,627         88,244         33,244          107,575         34,996
Unrecognized net reduction
  (increase) in prior service costs ....     23,664           (135)        27,693           (158)          31,723           (180)
Unrecognized net gain (loss) ...........      2,746          3,978          1,493          8,295          (10,633)         5,576
                                          ---------       --------      ---------       --------        ---------       --------
Accrued liability recognized in the
  balance sheet ........................  $ 119,015       $ 31,470      $ 117,430       $ 41,381        $ 128,665       $ 40,392
                                          =========       ========      =========       ========        =========       ========

Net periodic postretirement benefit 
cost includes the following components:

  Service cost .........................           $   3,524                     $   3,769                       $  4,414
  Interest cost ........................              10,988                        11,229                         11,742
  Amortization .........................              (4,812)                       (4,600)                        (5,095)
  Actual return on plan assets .........                (773)
                                                   ---------                     ---------                       --------
  Net periodic postretirement
    benefit cost .......................           $   8,927                     $  10,398                       $ 11,061
                                                   =========                     =========                       ========
Impact of 1% increase in medical trend rate:
  Aggregate impact on 1997 service
    cost and interest cost .............           $     945
                                                   =========
  Increase in Dec. 28, 1997, accumulated
    postretirement benefit obligation ..           $   5,843
                                                   =========
</TABLE>

A pretax gain resulting from curtailments,  settlements and special  termination
benefits  under  these  plans  was  $8.6  million  in  1996,  which  related  to
restructuring of plans.

                                       46
<PAGE>

I. COMMITMENTS AND CONTINGENCIES

At Dec.  28,  1997,  the company had lease  commitments  currently  estimated to
aggregate  approximately  $54.9  million  that expire from 1998  through 2051 as
follows (in thousands):

1998 .......................................  $ 13,908
1999 .......................................    11,615
2000 .......................................     9,208
2001 .......................................     6,610
2002 .......................................     4,330
2003 and thereafter ........................     9,211
                                              --------
  Total ....................................  $ 54,882
                                              ========

Payments under the lease contracts were $15.6 million in 1997,  $14.2 million in
1996 and $12.7 million in 1995.

In  connection  with the  company's  insurance  program,  letters  of credit are
required to support certain projected worker compensation  obligations.  At Dec.
28, 1997,  the company had  approximately  $40.3  million of undrawn  letters of
credit outstanding.

On July 13, 1995, six unions struck the Detroit Free Press, The Detroit News and
the Detroit Newspaper Agency, which operates both newspapers.  Subsequently, the
unions filed numerous  unfair labor practice  charges against the newspapers and
the Agency.  In June 1997,  after a lengthy trial,  a National  Labor  Relations
Board  (NLRB)  administrative  law judge ruled that the strike was caused by the
unfair labor practices of the Agency and The Detroit News and  recommended  that
the Agency and the  newspapers  reinstate  all  strikers,  displacing  permanent
replacements  if  necessary.  The Agency and the  newspapers  have  appealed the
decision, which is pending before the NLRB.

Various libel actions and  environmental  and other legal  proceedings that have
arisen in the ordinary  course of business  are pending  against the company and
its subsidiaries.  In the opinion of management,  the ultimate  liability to the
company and its  subsidiaries  as a result of all legal  proceedings,  including
Detroit,  will  not  be  material  to  its  financial  position  or  results  of
operations.

                                       47

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Shareholders
Knight-Ridder, Inc.

We have audited the accompanying  consolidated  balance sheet of Knight- Ridder,
Inc., and  subsidiaries  as of Dec. 28, 1997,  Dec. 29, 1996, and Dec. 31, 1995,
and the related consolidated  statements of income, cash flows and shareholders'
equity  for the years  then  ended.  Our  audits  also  included  the  financial
statement schedule listed in the Index at Item 14(a). 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 and schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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., and  subsidiaries  at Dec. 28, 1997, Dec. 29, 1996, and Dec. 31, 1995, and
the consolidated  results of their operations and their cash flows for the years
then ended in conformity with 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.

As discussed in Note A to the financial statements,  in 1995 the company changed
its method of accounting for contributions.

                                                           /s/ Ernst & Young LLP
                                                           ---------------------
Miami, Florida
Jan. 26, 1998


                                       48

<PAGE>
Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         Not Applicable

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

1997 Proxy  Statement  page 2,  "Election of  Directors";  page 3, "Nominees for
Election as  Directors  for Terms Ending  2001;  pages 3 through 5,  "Continuing
Directors";   page   7,   "Compensation   Committee   Interlocks   and   Insider
Participation";  page 16, "Certain  Relationships";  and page 16, "Section 16(a)
Beneficial Ownership Reporting Compliance".


KNIGHT RIDDER EXECUTIVE COMMITTEE

Alvah H. Chapman Jr., 76
--------------------------------------------------------------------------------
Served as  chairman of the  Executive  Committee  1984 to 1995;  chairman of the
board 1982 to 1989;  chief  executive  officer 1976 to 1988;  president  1973 to
1982;  executive vice  president 1967 to 1973;  vice president 1966 to 1967; The
Miami Herald general manager 1962 to 1969. B.S.,  business  administration,  The
Citadel, 1942.

Mary Jean Connors, 45
--------------------------------------------------------------------------------
Senior vice president/human resources since 1996; vice president/human resources
1989 to 1996.  Served as Philadelphia  Newspapers,  Inc.,  vice  president/human
resources 1988 to 1989;  assistant to the senior vice  president/news for Knight
Ridder 1988; The Miami Herald assistant managing  editor/personnel 1985 to 1988;
held various editing positions at The Miami Herald 1980 to 1985. B.A.,  English,
Miami University in Oxford, Ohio, 1973.

John C. Fontaine, 66
--------------------------------------------------------------------------------
Retired president and a partner in the law firm of Hughes Hubbard & Reed. Served
as executive vice  president  1994 to 1995;  senior vice president 1987 to 1993;
general  counsel 1980 to 1993.  Prior to that, a partner  with Hughes  Hubbard &
Reed. LL.B., Harvard Law School,  1956; B.A.,  political science,  University of
Michigan, 1953.

Ross Jones, 55
--------------------------------------------------------------------------------
Senior vice  president and chief  financial  officer since 1993.  Served as vice
president/finance  in 1993;  vice  president  and  treasurer of Reader's  Digest
Association,  Inc.,  1985 to 1993 and in  other  positions  there  1977 to 1985.
Served as  manager  at Brown  Brothers  Harriman  & Co.  1970 to 1977.  Advanced
Management Program,  Harvard Business School,  1988; M.B.A.,  finance,  Columbia
University Business School, 1970; B.A., classics, Brown University, 1965.

Frank McComas, 52
--------------------------------------------------------------------------------
Senior vice  president/operations  since 1996; vice president/operations 1995 to
1996.  Served as  publisher,  The  (Columbia)  State,  1988 to 1995;  publisher,
Bradenton  Herald,  1980 to 1988; held various positions at The Miami Herald and
The Charlotte  Observer,  1970 to 1980.  Advanced  Management  Program,  Harvard
Business School, 1994; B.B.A. in business administration, Kent State University,
1968.

Bernard H. Ridder Jr., 81
--------------------------------------------------------------------------------
Former  chairman of the board 1979 to 1982;  former  chairman  of the  Executive
Committee 1976 to 1984;  former vice chairman of the board 1974 to 1979.  Served
as president and chief executive officer of Ridder  Publications,  Inc., 1969 to
1974. B.A., history, Princeton University, 1938.

                                       49
<PAGE>

P. Anthony Ridder, 57
--------------------------------------------------------------------------------
Chairman of the Executive  Committee since 1995;  Knight Ridder chairman and CEO
since  1995.  Served  as  president  1989 to 1995;  president  of the  Newspaper
Division 1986 to 1995; chairman of the Operating Committee since 1985. Served as
publisher  of the San Jose Mercury  News 1977 to 1986;  general  manager 1975 to
1977;  business manager 1969 to 1975. B.A.,  economics,  University of Michigan,
1962.

KNIGHT RIDDER OFFICERS

Marty Claus, 49
--------------------------------------------------------------------------------
Vice  president/news  since 1993.  Served as Detroit Free Press managing editor/
business and features from 1987 to 1992; held various  editing  positions at the
Free Press 1977 to 1987. Held various  writing and editing  positions at the San
Bernardino (Calif.) Sun-Telegram 1970 to 1977. B.A., journalism,  Michigan State
University Honors College, 1970.

Gary R. Effren, 41
--------------------------------------------------------------------------------
Vice  president/controller  since  1995.  Served as  assistant  vice  president/
assistant treasurer 1993 to 1995;  assistant to the vice  president/finance  and
treasurer 1989 to 1993; director of corporate  accounting 1986 to 1989; business
manager  of  Viewdata  Corp.  of  America  1984 to 1986;  manager  of  financial
reporting 1983 to 1984.  M.B.A.,  University of Miami,  1989; B.S.,  accounting,
Rider College, 1978; CPA.

Virginia Dodge Fielder, 49
--------------------------------------------------------------------------------
Vice   president/research   since  1989.  Served  as  vice   president/news  and
circulation  research  1986 to 1989.  Served as  director/news  and  circulation
research 1981 to 1985;  editorial  research  manager,  Chicago Sun-Times 1979 to
1981; held various  positions at Lexington  Herald-Leader  1976 to 1979.  Ph.D.,
mass  communications,   Indiana  University,  1976;  M.A.,  journalism,  Indiana
University, 1974; B.A., psychology, Transylvania University, 1970.

Douglas C. Harris, 58
--------------------------------------------------------------------------------
Vice president and secretary since 1986. Served as vice president/personnel 1977
to 1985;  director/personnel 1972 to 1977. Formerly with Peat, Marwick, Mitchell
and Co. as  director  of college and  special  recruiting.  Advanced  Management
Program, Harvard Business School, 1987; Ed.D., counseling and guidance,  Indiana
University,  1968; M.S.,  student  personnel,  Indiana  University,  1964; B.S.,
business administration, Murray State University, 1961.

Clark Hoyt, 55
--------------------------------------------------------------------------------
Vice president/news  since 1993. Served as chief of the Knight Ridder Washington
Bureau  1987 to 1993;  news editor 1985 to 1987;  managing  editor,  The Wichita
Eagle 1981 to 1985; various editing positions,  Detroit Free Press 1977 to 1981;
various reporting  positions,  Detroit Free Press and Washington  Bureau.  B.A.,
English literature, Columbia College, 1964.

Robert D. Ingle, 58
--------------------------------------------------------------------------------
Vice president/new media since 1995. Served as president and executive editor of
the San Jose Mercury News 1981 to 1995;  managing editor,  The Miami Herald 1977
to 1981;  various  editing  positions,  The  Miami  Herald  1962 to 1977.  B.A.,
journalism and political science, University of Iowa, 1962.

Mindi Keirnan, 42
--------------------------------------------------------------------------------
Vice president/operations  since 1996; assistant vice president/assistant to the
chairman  and CEO 1995 to 1996.  Served as assistant  to the  president  1994 to
1995;  managing  editor/news,  Saint Paul  Pioneer  Press 1991 to 1994;  various
editing positions at Gannett News Service, Crain's Chicago Business, the Detroit
Free Press and the Tallahassee  Democrat 1977 to 1991. B.S.,  political science,
Florida State University, 1984.

                                       50
<PAGE>

Polk Laffoon IV, 52
--------------------------------------------------------------------------------
Vice  president/corporate  relations  since  1994.  Served as  assistant  to the
president 1992 to 1994; assistant circulation  director/distribution,  The Miami
Herald 1991 to 1992; executive assistant to the vice president/marketing 1989 to
1991;  Living  Today  editor,   1987  to  1989.  Served  as  director  and  vice
president/investor  relations,  Taft  Broadcasting  Co.  1982 to  1987.  M.B.A.,
marketing, Wharton School, 1970; B.A., English, Yale, 1967.

Tally C. Liu, 47
--------------------------------------------------------------------------------
Vice   president/finance   and   administration   since  1994.  Served  as  vice
president/finance  and  controller  1993 to 1994;  vice president and controller
1990 to 1993. Served as San Jose Mercury News vice president and chief financial
officer 1987 to 1990 and in various  roles 1983 to 1987;  held  various  finance
positions,  Boca Raton News, 1978 to 1983. M.B.A.,  Florida Atlantic University,
1977; B.S., business administration, National Chen-Chi University, 1973; CPA.

Larry D. Marbert, 44
--------------------------------------------------------------------------------
Vice president/technology  since 1994. Served as Philadelphia Newspapers,  Inc.,
senior  vice   president/operations  1991  to  1994;  vice  president/operations
research  and planning  1988 to 1991;  vice  president/production  1986 to 1988;
Knight Ridder director of  production/Newspaper  Division 1981 to 1986;  various
production  positions,  The Miami Herald 1977 to 1981. M.S., management science,
Auburn  University,   1977;  B.S.,   University  of  North  Carolina,   business
administration, 1976.

Cristina Lagueruela Mendoza, 51
--------------------------------------------------------------------------------
Vice  president/general  counsel since 1993;  vice  president/associate  general
counsel  1992 to 1993;  associate  general  counsel  1990 to 1992.  Served  as a
partner in Murai, Wald, Biondo, Moreno & Mendoza,  P.A., 1988 to 1990; associate
1984 to 1988.  J.D.,  University  of Miami Law  School,  1982;  M.A.,  political
science,  University of Miami, 1967; B.A.,  political science,  Chatham College,
1966.

Alan G. Silverglat, 51
--------------------------------------------------------------------------------
Vice president/treasurer since 1995. Served as senior vice president/finance and
planning for Business  Information  Services  Division  1983 to 1995;  other BIS
positions  1980  to  1983.   Formerly  with  Ernst  &  Young.   B.S.,   business
administration, University of Missouri, 1968; CPA.

Jerome S. Tilis, 55
--------------------------------------------------------------------------------
Vice  president/marketing  since 1987.  Served as  president of the Detroit Free
Press 1985 to 1989; senior vice president of Philadelphia Newspapers, Inc., 1980
to 1985;  vice  president  of  advertising  sales  and  marketing  1979 to 1980;
advertising director 1977 to 1979. Advanced Management Program, Harvard Business
School, 1984; B.S., chemistry, Hunter College, 1964.

Robert Woodworth, 50
--------------------------------------------------------------------------------
Vice president since June.  Served as president and publisher of The Kansas City
Star  Company 1993 to 1997;  president  and general  manager  1988 to 1993;  and
executive vice president and general  manager of the Fort Worth Star-  Telegram,
1986 to 1988. M.B.A., Darden School of Business,  University of Virginia;  B.A.,
economics, Allegheny College.

                                       51
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

1997 Proxy  Statement,  pages 7 and 8,  "Compensation  Committee  Interlocks and
Insider Participation";  page 8, "Executive  Compensation";  pages 8 through 10,
"Compensation Committee Report"; page 11, "Senior Executive Compensation";  page
12, "Stock Options Granted";  pages 12 and 13, "Stock Options Exercised";  pages
13 and 14,  "Long-Term  Incentive Plan"; page 14, "Pension  Benefits";  page 15,
"Performance of the Company's Stock"; and page 16, "Compensation of Directors"

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

1997 Proxy Statement,  page 1, "Common Stock Outstanding and Principal  Holders"
and page 6, "Security Ownership of Management"

See Note E in Item 8.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

1997 Proxy Statement,  page 16, "Certain  Relationships";  page 3, "Nominees for
Election as Directors  for Terms Ending  2001";  pages 3 through 5,  "Continuing
Directors";  pages  7 and 8,  "Compensation  Committee  Interlocks  and  Insider
Participation"; and page 1, "Common Stock Outstanding and Principal Holders"


PART IV

ITEM 14  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

  (a)

       1.   The following  consolidated  financial  statements of Knight-Ridder,
            Inc.  and  subsidiaries,  included  in  the  annual  report  of  the
            registrant to its shareholders for the year ended December 28, 1997,
            are included in Item 8:

            Consolidated  Balance Sheet - December 28, 1997,  December 29, 1996,
            and December 31, 1995

            Consolidated  Statement  of Income - Years ended  December 28, 1997,
            December 29, 1996, and December 31, 1995

            Consolidated  Statement  of Cash Flows - Years  ended  December  28,
            1997, December 29, 1996, and December 31, 1995

            Consolidated   Statement  of  Shareholders'  Equity  -  Years  ended
            December 28, 1997, December 29, 1996, and December 31, 1995

            Notes to consolidated financial statements

       2.   The  following   consolidated   financial   statement   schedule  of
            Knight-Ridder, Inc. and subsidiaries is included in Item 14(d):

            Schedule II - Valuation and qualifying accounts

            All other  schedules for which  provision is made in the  applicable
            accounting  regulation of the Securities and Exchange Commission 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.

                                       52
<PAGE>

       3.   Exhibits

            No. 2    -   Acquisition  Agreement,  dated as of April 4, 1997,  is
                         incorporated  by reference to the  Company's  Form 10-Q
                         filed May 9, 1997.

                     -   Acquisition  and  Plan of  Merger,  dated  as of May 9,
                         1997,  is  incorporated  by reference to the  Company's
                         Form 8-K filed May 22, 1997.

            No. 3(i) -   Amended  and  Restated  Articles  of  Incorporation  of
                         Knight-Ridder, Inc. (totally amended and restated as of
                         February, 1998) are filed herein.

                (ii) -   Bylaws  of  Knight-Ridder,   Inc.  (As  Amended Through
                         January 28, 1997), are incorporated by reference to the
                         Company's Form 10-Q filed May 9, 1997.

            No. 4    -   Indenture,  dated as of April 6, 1989, is  incorporated
                         by reference to the Company's Registration Statement on
                         Form S-3, effective April 7, 1989. (No. 33-28010)

                     -   Rights  Agreement,  dated  as  of  June  21,  1996,  is
                         incorporated  by  reference to the  Company's  Form 8-A
                         filed July 9, 1996.

                     -   Indenture, dated as of October 9, 1997, is Incorporated
                         by reference to the Company's Registration Statement on
                         Form S-3, effective October 10, 1997 (No. 333-37603).


                                       53
<PAGE>

            No. 10   -   Knight-Ridder,  Inc.  Compensation Plan for Nonemployee
                         Directors dated July 1, 1997 is filed herein.

                     -   Stock Purchase Agreement between Knight-Ridder Business
                         Information  Services,  Inc. and M.A.I.D plc, dated  as
                         of October 1, 1997 is  incorporated by reference to the
                         Company's Form 10-Q filed November 12, 1997.

                     -   Consulting  Agreement is  incorporated  by reference to
                         the Company's Form 10-Q filed on August 14, 1997.

                     -   Knight-Ridder,   Inc.   Long-Term   Incentive  Plan  is
                         incorporated  by reference to the  Company's  Form 10-Q
                         filed on May 9, 1997.

                     -   Knight-Ridder  Annual Incentive Plan is incorporated by
                         reference to the Company's Form 10-K filed on March 24,
                         1995.

                     -   Amendment  to  the   Employee   Stock  Option  Plan  is
                         incorporated  by reference to the  Company's  Form 10-K
                         filed on March 23, 1994.

                     -   Executive Officer's Retirement Agreement dated July 19,
                         1993 is incorporated by reference to the Company's Form
                         10-K filed on March 23, 1994.

                     -   Executive Officer's Retirement Agreement dated December
                         19, 1991 is  incorporated by reference to the Company's
                         Form 10-K filed on March 23, 1994.

                     -   Executive  Officer's   Consulting/Retirement  Agreement
                         dated  September 20, 1989 is  incorporated by reference
                         to the Company's Form 10-K filed on March 24, 1995.

                     -   Knight-Ridder   Local  Incentive  Plan  description  is
                         incorporated  by reference to the  Company's  Form 10-K
                         filed on March 20, 1996.

            No. 11   -   Statement re Computation of Per Share Earnings is filed
                         herein.

            No. 12   -   Statement re  Computation  of Earnings to Fixed Charges
                         Ratio From  Continuing  Operations  is filed  herein.

            No. 21   -   Subsidiaries of the Registrant is filed herein.

            No. 23   -   "Consent of Independent  Certified Public  Accountants"
                         is filed herein.

            No. 24   -   "Power  of   Attorney"   for  M.   Kenneth   Oshman  is
                         incorporated  by reference to the  Company's  Form 10-K
                         filed on March 10, 1997.  "Power of Attorney" for James
                         I.  Cash,  Jr.  is  incorporated  by  reference  to the
                         Company's Form 10-K filed on March 20, 1996. "Powers of
                         Attorney"  for  all  other  members  of  the  Board  of
                         Directors   are   incorporated   by  reference  to  the
                         Company's Form 10-K filed on March 24, 1995.

            No. 27   -   "Financial Data Schedule" is filed herein.

                                       54
<PAGE>

   (b) Reports on Form 8-K filed during the fourth quarter of 1997:

       Form 8-K dated and filed October 8, 1997

         Item 5.  Other   Events;   Financial   statements   restated   for  the
                  reclassification  of  the  company's   discontinued   Business
                  Information  Services  segment  (excluding one business called
                  Technimetrics) for the years ended December 29, 1996, December
                  31, 1995 and December 25, 1994. Pro forma financial statements
                  of the company's  acquisition  of ABC Media,  Inc.,  which was
                  indirectly owned by The Walt Disney Company,  restated for the
                  reclassification  of  the  company's   discontinued   Business
                  Information  Services  segment for the quarter ended March 30,
                  1997 and the year ended December 29, 1996.

       Form 8-K dated November 14, 1997, filed November 26, 1997

         Item 2.  Disposition of Assets
         Item 7.  Financial   Statements   and  Exhibits;   pro forma  financial
                  statements filed.


   (c) Exhibits

       The  response  to this  portion  of Item 14 is  submitted  as a  separate
       section of this report.

   (d) Financial Statement Schedules

       The  response  to this  portion  of Item 14 is  submitted  as a  separate
       section of this report.

                                       55
<PAGE>
                                   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.


                                   /s/ P. Anthony Ridder
Dated March 13, 1998               ---------------------------------------------
                               By      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.


                                   /s/ P. Anthony Ridder
Dated March 13, 1998               ---------------------------------------------
                                       P. Anthony Ridder
                                       Chairman and
                                       Chief Executive Officer

                                   /s/ Ross Jones
Dated March 13, 1998               ---------------------------------------------
                                       Ross Jones
                                       Chief Financial Officer and
                                       Senior Vice President/Finance

                                   /s/ Gary R. Effren
Dated March 13, 1998               ---------------------------------------------
                                       Gary R. Effren
                                       Vice President/Controller
                                       (Chief Accounting Officer)



                                       56

<PAGE>

                                   /s/ James I. Cash, Jr.*
                                   ---------------------------------------------
                                       James I. Cash, Jr.
                                       Director

                                   /s/ Alvah H. Chapman, Jr.*
                                   ---------------------------------------------
                                       Alvah H. Chapman, Jr.
                                       Director

                                   /s/ Joan Ridder Challinor *
                                   ---------------------------------------------
                                       Joan Ridder Challinor
                                       Director

                                   /s/ John C. Fontaine*
                                   ---------------------------------------------
                                       John C. Fontaine
                                       Director

                                   /s/ Peter C. Goldmark, Jr.*
                                   ---------------------------------------------
                                       Peter C. Goldmark, Jr.
                                       Director

                                   /s/ Barbara Barnes Hauptfuhrer*
                                   ---------------------------------------------
                                       Barbara Barnes Hauptfuhrer
                                       Director

                                   /s/ Jesse Hill, Jr.*
                                   ---------------------------------------------
                                       Jesse Hill, Jr.
                                       Director

                                   /s/ C. Peter McColough*
                                   ---------------------------------------------
                                       C. Peter McColough
                                       Director

                                   /s/ M. Kenneth Oshman*
                                   ---------------------------------------------
                                       M. Kenneth Oshman
                                       Director

                                   /s/ Thomas L. Phillips*
                                   ---------------------------------------------
                                       Thomas L. Phillips
                                       Director


                                       57

<PAGE>


                                   /s/ P. Anthony Ridder*
                                   ---------------------------------------------
                                       P. Anthony Ridder
                                       Director

                                   /s/ Randall L. Tobias*
                                   ---------------------------------------------
                                       Randall L. Tobias
                                       Director

                                   /s/ Gonzalo F. Valdes-Fauli*
                                   ---------------------------------------------
                                       Gonzalo F. Valdes-Fauli
                                       Director

                                   /s/ John L. Weinberg*
                                   ---------------------------------------------
                                       John L. Weinberg
                                       Director


Dated March 13, 1998          * By /s/ Ross Jones
                                   ---------------------------------------------
                                       Ross Jones
                                       Attorney-in-fact


                                       58
<PAGE>

                           ANNUAL REPORT ON FORM 10-K

                          ITEM 14 (a) (2), (c) and (d)

                               SUPPLEMENTARY DATA

                                CERTAIN EXHIBITS

                          YEAR ENDED DECEMBER 28, 1997

                      KNIGHT-RIDDER, INC. AND SUBSIDIARIES

                                 MIAMI, FLORIDA

                                       59
<PAGE>
<TABLE>
<CAPTION>
                                                                                                             SCHEDULE  II

                                             VALUATION AND QUALIFYING ACCOUNTS
                                           KNIGHT-RIDDER, INC. AND SUBSIDIARIES
                                                 (IN THOUSANDS OF DOLLARS)


COLUMN  A                                        COLUMN B               COLUMN C                COLUMN D        COLUMN E
---------                                      ------------            ----------              ----------      ----------
                                                                        ADDITIONS
                                                                ---------------------------
                                                 BALANCE AT       CHARGED        CHARGED
                                                 BEGINNING        TO COSTS         TO                            BALANCE
                                                    OF              AND           OTHER                          AT END
DESCRIPTION                                       PERIOD          EXPENSES       ACCOUNTS      DEDUCTIONS       OF PERIOD
-----------                                    ------------     ------------   ------------   ------------     ----------
<S>                                              <C>             <C>              <C>         <C>            <C>        
YEAR ENDED DECEMBER 28, 1997:

   RESERVES AND ALLOWANCES
     DEDUCTED FROM ASSET ACCOUNT:
       ACCOUNTS RECEIVABLE
             ALLOWANCES .......................  $   12,685      $  23,332    $   752 (1)     $ 21,806 (2)   $    14,963
       VALUATION ALLOWANCE FOR
             DEFERRED TAXES ...................       1,357                                                        1,357
                                                 ----------      ---------      -----         --------       -----------
                                                 $   14,042      $  23,332    $   752         $ 21,806       $    16,320

YEAR ENDED DECEMBER 29, 1996:

   RESERVES AND ALLOWANCES
     DEDUCTED FROM ASSET ACCOUNT:
       ACCOUNTS RECEIVABLE
             ALLOWANCES .......................  $  $14,348      $  19,315    $ 2,097 (1)     $ 23,075 (2)    $   12,685
       VALUATION ALLOWANCE FOR
             DEFERRED TAXES ...................       1,357                                                        1,357
                                                 ----------      ---------      -----         --------        ----------
                                                 $   15,705      $  19,315    $ 2,097         $ 23,075        $   14,042


YEAR ENDED DECEMBER 31, 1995:

   RESERVES AND ALLOWANCES
     DEDUCTED FROM ASSET ACCOUNT:
       ACCOUNTS RECEIVABLE
             ALLOWANCES .......................  $   13,728      $  17,211    $ 2,918 (1)     $ 19,509 (2)    $   14,348
       VALUATION ALLOWANCE FOR
             DEFERRED TAXES ...................       3,985                                      2,628 (3)         1,357
                                                 ----------      ---------      -----         --------        ----------
                                                 $   17,713      $  17,211    $ 2,918          $ 22,137        $   15,705
</TABLE>


(1)  Represents  amounts for the former BIS division  included in "Income (loss)
     from discontinued BIS operations" in the Consolidated Statement of Income.
(2)  Represents  uncollectible  accounts  written-off,  net of  recoveries,  and
     dispositions of subsidiaries' balances.
(3)  Represents net reduction in valuation  allowance which was determined to be
     no longer required.