##### Table of Contents









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549




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FORM 10-K



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Annual Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934


For the fiscal year ended December 31, 2001

Commission File Number 1-15168

CERIDIAN CORPORATION

(Exact name of Registrant as specified in its
charter)


|                                                                        |  |                                               
|----------------------------------------------------------------------- |  | ----------------------------------------------
|Delaware(State or other jurisdiction of
	incorporation or organization) |  | 41-1981625(I.R.S. Employer Identification No.)

3311 East Old Shakopee Road

Minneapolis, Minnesota 55425


(Address of principal executive
offices)


Telephone No.: (952) 853-8100

(Registrants telephone number, including
area code)




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Securities Registered Pursuant to
Section 12(b) of the Act:

|                                                                                                                              |  |                                                                                                   
|----------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------
|Title of each class:Common stock, par value $.01 per
	share
	Rights to Purchase Class A Junior Participating
	Preferred Stock |  | Name of each exchange on which registered:The New York Stock Exchange
	The New York Stock Exchange

Indicate by check mark whether the Registrant
(1) has filed all reports required 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. [X] Yes [ ] 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 the Registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of the voting stock of
Ceridian as of March 25, 2002, excluding outstanding shares
beneficially owned by executive officers and directors of
Ceridian, was $3,090,799,442.

The number of shares of Ceridian common stock
outstanding as of March 25, 2002 was 147,348,208.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for Annual
Meeting of Stockholders to be held on May 22, 2002:
Part III



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TABLE OF CONTENTS



|                                                                                              |                                                                               |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                                                       
|                                                                                              | Item 1. Business                                                             
|                                                                                              | Item 2. Properties                                                           
|PART II                                                                                      
|                                                                                              | Item 5. Market for Registrants Common Equity and Related Stockholder Matters
|CERIDIAN CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (Dollars in millions)
|PART III                                                                                     
|                                                                                              | Item 10. Directors and Executive Officers of the Registrant                  
|                                                                                              | Item 11. Executive Compensation                                              
|                                                                                              | Item 12. Security Ownership of Certain Beneficial Owners and Management      
|                                                                                              | Item 13. Certain Relationships and Related Transactions                      
|PART IV                                                                                      
|                                                                                              | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K     
|SIGNATURES                                                                                   
|EX-10.8 Executive Empl. Agreement - R. Turner                                                
|EX-10.9 Executive Empl. Agreement - J. Eickhoff                                              
|EX-10.10 Executive Empl. Agreement - T. Holcombe                                             
|EX-10.11 Executive Empl. Agreement - G. Krow                                                 
|EX-10.12 Executive Empl. Agreement - G. Nelson                                               
|EX-10.13 Amended/Restated 2001 Long-Term Stk. Plan                                           
|EX-10.14 Form of Non-Statutory Stock Option Agrmt.                                           
|EX-10.15 Form of Restricted Stock Award Agreement                                            
|EX-10.17 Amended/Restated 2001 Director Plan                                                 
|EX-10.18 Form of Non-Statutory Stock Option Agrmt.                                           
|EX-10.19 Form of Restricted Stock Award Agreement                                            
|EX-10.20 2002 Employee Stock Incentive Plan                                                  
|EX-10.21 Form of Non-Qualified Stock Option Agrmt.                                           
|EX-10.22 Form of Restricted Stock Award Agreement                                            
|EX-10.35 Deferred Compensation Plan                                                          
|EX-21.01 Subsidiaries of Ceridian                                                            
|EX-23.01 Consent of Independent Auditors KPMG LLP                                            
|EX-24.01 Power of Attorney                                                                   



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CERIDIAN CORPORATION




PART I





This Annual Report on Form 10-K contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. The statements
regarding Ceridian Corporation and its subsidiaries contained in
this report that are not historical in nature, particularly
those that utilize terminology such as may,
will, should, likely,
expects, anticipates,
estimates, believes or
plans, or comparable terminology, are
forward-looking statements based on current expectations and
assumptions, and entail various risks and uncertainties that
could cause actual results to differ materially from those
expressed in such forward-looking statements. Important factors
known to us that could cause material differences are identified
in Managements Discussion and Analysis of Financial
Condition and Results of Operations under the caption
Cautionary Factors That Could Affect Future Results,
included in Part II, Item 7 of this report. You should
carefully consider each cautionary factor and all of the other
information in this report. We undertake no obligation to
correct or update any forward-looking statements, whether as a
result of new information, future events or otherwise. You are
advised, however, to consult any future disclosures we make on
related subjects in future reports to the SEC.

We own or have the rights to various trademarks,
trade names or service marks, including the following:
Ceridian Corporation® and logo,
CobraServ®, Comchek®, Comchek
eCash®, Comdata Corporation® and logo,
Comdata®, LifeWorks®,
LoadMatcherTM, MOTRS®,
PowerpayTM, Signature®, Stored
Value Systems® and logo, and
TrendarTM. The trademarks
MasterCard®, Visa®,
Windows®, and Microsoft® referred to in
this report are the registered trademarks of others.




Item 1. Business

General

Ceridian Corporation, formerly known as New
Ceridian Corporation, was formed on August 8, 2000 and is
incorporated in Delaware. Our principal executive office is
located at 3311 East Old Shakopee Road, Minneapolis,
Minnesota 55425, and our telephone number is (952) 853-8100.

Ceridian Corporation was formed as a result of
the spin-off of the human resource solutions division and human
resource solutions and Comdata subsidiaries of Arbitron Inc.,
formerly known as Ceridian Corporation (which entity this report
refers to as Old Ceridian or Ceridians
predecessor). On March 30, 2001, we became an
independent public company when Old Ceridian distributed all of
our outstanding common stock to its stockholders in a tax-free
spin-off transaction (which transaction this report refers to as
the spin-off). Despite the legal form of the
spin-off, because of the relative significance of our businesses
to Old Ceridian, we are considered the divesting entity and
treated as the accounting successor to Old Ceridian
for financial reporting purposes. As used in this report,
references to Ceridian, the Company,
we, our or us mean Ceridian
Corporation, formerly known as New Ceridian Corporation,
together with our consolidated subsidiaries, and include the
historical operating results and activities of the businesses
and operations that constituted Old Ceridian prior to the
spin-off, as well as the continuing operations of the operations
that were transferred to us by Old Ceridian in the spin-off,
unless the context otherwise indicates.

We refer you to Part II, Item 7 and
Item 7A of this report for additional description of our
business.

Human Resource Solutions

The businesses comprising our human resource
solutions business (referred to in this report as
HRS) offer a broad range of managed business
solutions for human resource and employee effectiveness services
designed to help employers more effectively manage their work
forces and information that is integral to human resource
processes. Our human resource management products and services
are provided in the United States, Canada and the United
Kingdom. During 2001, we began to integrate our businesses
formerly known as Ceridian Employer Services, Ceridian
Performance Partners and Ceridian Benefit





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Services into a combined human resource solutions
business within HRS. HRS revenue for the years 2001, 2000
and 1999 was as follows:


|     |                |      |  |      |                |  |  |   |                | 
|---- | -------------- | ---- |  | ---- | -------------- |  |  | - | -------------- | 
|2001 |                | 2000 |  | 1999
|     |                |      |  |     
|$    | 866.3  million |      |  | $    | 866.9  million |  |  | $ | 828.1  million | 

Payroll processing and tax filing services
accounted for about 72 percent of the $866.3 million
of revenue in 2001, with about 72 percent of 2001 payroll
processing and tax filing revenue derived from the United States.



| |       
| | ------
| | Market

The market for human resource solutions covers a
comprehensive range of information management and
employer/employee assistance services and software. These
products and services include:



| |   |                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | transaction-oriented administrative services and
	software products, primarily in areas such as payroll
	processing, tax filing and benefits administration; and                       
|
| |  | management support software and services,
	primarily in areas such as human resource administration,
	regulatory compliance, work-life effectiveness and employee
	assistance programs.

The market for these solutions is expected to
continue to grow as organizations seek to reduce costs, improve
productivity and add services for employees by outsourcing
administrative services and further automating internal
processes. According to the consulting firms IDC and
Gartner-Dataquest, human resource outsourcing in the United
States is expected to grow at an annual rate of between 15% and
25% over the next three to four years. The demand for human
resource solutions is also expected to increase as organizations
acquire managed human resource services from third parties to
obtain assistance in adapting to the increasing scope and
complexity of laws and regulations governing businesses and
increasingly complicated work-life issues faced by employers and
employees.

We generally classify employers in the human
resource solutions market into three categories, each of which
represents a distinct market opportunity for us:

|                 |  |                          |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|---------------- |  | ------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Type of Employer |  | Size of Employer         |  | Typical Characteristics                                                                                                                                                                                                                                                                                                                                                                                
|                 |  |                          |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|Small            |  | Fewer than 100 employees |  | Tend to be relatively more price sensitive, to
	require less customization or flexibility in product and service
	offerings and to switch more readily from one provider to another                                                                                                                                                                                                                    
|                
|Medium           |  | 100 to 1,000 employees   |  | Human resource management needs tend to be more
	complex, and therefore often require more customization and
	flexibility in products and services, greater integration among
	data processing systems and a greater variety of products and
	services                                                                                                                                                 
|                
|Large            |  | Over 1,000 employees     |  | Human resource management needs tend to be the
	most complex, and therefore often require the most customization
	and flexibility in products and services, the greatest
	integration among data processing systems and the greatest
	variety of products and services  has the greatest
	reliance on integral legacy systems which increase integration
	complexity and challenge migration decisions

We believe, however, that with regard to any size
employer, a provider of a transaction-based service, such as
payroll processing or tax filing services, is afforded
attractive opportunities to complement

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that core service with additional products and
services that are natural adjuncts to that core service, such as
401(k) and retirement plan administration, COBRA notification,
flexible spending account administration, employee self-service,
benefits eligibility and enrollment, and employee assistance and
work-life services. An ability to wrap value-added services
around a core service or product will, we believe, lead to
revenue growth and our ability to command higher margins.


Products
and Services

Our human resource management solutions include:



| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | payroll processing and tax filing services;                                                                                             
|
| |  | payroll and human resource information systems
	software;                                                                               
|
| |  | integrated payroll and human resource
	administration services, including tax deposit services and
	integrated human resource solutions;
|
| |  | benefits administration services;                                                                                                       
|
| |  | qualified plan administration services; and                                                                                             
|
| |  | work-life effectiveness and employee assistance
	programs.                                                                              

Payroll Processing and Tax Filing Services.Our payroll processing for
customers in the United States consists primarily of preparing
and furnishing employee payroll checks, direct deposit advices
and supporting journals and summaries. For small business
customers, we may handle the transmission of customer payroll
funds. We also supply quarterly and annual social security,
Medicare and federal, state and local income tax withholding
reports required to be filed by employers and employees. Our
payroll tax filing services for customers in the United States
consist primarily of collecting funds for federal, state and
local employment taxes from customers based on payroll
information provided by the customers, remitting funds collected
to the appropriate taxing authorities, filing applicable returns
and handling related regulatory correspondence and amendments.
Our tax filing services are provided not only to employers who
utilize our payroll processing service, but also to local and
regional payroll processors. Payroll-related services are
typically priced on a fee-per-item-processed basis.

Our revenue from payroll tax filing services in
the United States also includes investment income earned from
tax filing deposits temporarily held pending remittance to
taxing authorities on behalf of our customers. We hold our
customers deposits in a trust. This trust invests
primarily in high quality collateralized short-term investments,
money market funds, U.S. Treasury and Agency securities,
AAA rated asset-backed securities and corporate securities rated
A3/ A or better. The duration of these investments is carefully
managed to meet the liquidity needs of the trust. About
83 percent of our 2001 tax filing revenue was attributable
to this investment income. Due to the significance of this
investment income, our quarterly revenue and profitability
fluctuate as a result of changes in interest rates and in the
amount of tax filing deposits held. We use derivative securities
such as interest rate collars and swaps to manage interest rate
risk on customer deposits on a global basis as further described
in Item 7A of this report. Because the volume of payroll
items processed increases in the first and fourth quarters of
each year in connection with employers year-end reporting
requirements, and because the amount of tax filing deposits also
tends to be greatest in the first quarter, our HRS revenue and
profitability tend to be greater in those quarters.

We provide human resource information systems
(commonly referred to as HRIS) software that runs in
Microsoft Windows environments and serves as a
front-end to our payroll processing system, allowing
our customers to utilize a common database for both payroll and
other HRIS purposes. This enables the customer to create a
single database of employee information for on-line inquiry,
updating and reporting in payroll and other areas important to
human resource administration and management, such as employee
data tracking, government compliance, compensation analysis and
benefits administration. We also provides HRIS software for
Microsoft operating environments that incorporates open,
industry standard technology, is scalable, and can be utilized
with an existing interface as a front-end for our

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payroll processing and tax filing services. We
have versions of this software that serve as a fully integrated
front-end to the payroll processing system.


We recently introduced a new version of our
Source 500 product, an HRIS, payroll, benefits, recruiting and
employee self-service solution. Because of the importance of
being able to integrate our payroll processing and tax filing
systems with other systems and applications utilized by our
customers, we have also developed interfaces to exchange
employee-related information between our payroll system and the
HRIS systems of major software vendors, such as Oracle
Corporation, SAP and PeopleSoft Inc.

Through our Small Business Solutions group, we
provide Internet payroll processing, tax filing, unemployment
compensation management and related services, primarily for
small employers located in the United States and Canada. Our
Powerpay product is a web-based solution that allows customers
to complete payroll transactions via the Internet. The Powerpay
product also provides smaller businesses with access to
services, such as new hire reporting, tax filing, direct
deposit, optional benefits programs, unemployment filing and
special reports services that were previously only available to
larger companies.

Additionally, we have a license agreement with
Ultimate Software Group, Inc. to allow us to use that
companys UltiPro software as part of an on-line payroll
service offering to mid-market customers. We continue to develop
this product for later market release.

Our Source 500 product suite provides an
integrated HR/payroll and benefits solution with outsourced
payroll and tax filing services to larger customers primarily in
the 1,000 and up employee range. It is available in a
hosted ASP environment (Source Assist) or can be managed
in-house as an installed application. We recently introduced
eSource, a web-enabled, fully hosted solution. eSource includes
integrated time and Source self service features, as well as
wage attachments and disbursements, internet payroll management,
and customization features within the core product offering.

Benefits Administration and Qualified Plan
Administration Services.We
provide employee health and welfare benefits administration and
qualified plan administration services to our customers.
Employee health and welfare benefits administration services
include health insurance portability (i.e., the
Consolidated Omnibus Budget Reconciliation Act, or COBRA, the
Health Insurance Portability and Accountability Act of 1996, or
HIPAA, and state-mandated continuation coverage) compliance
services. We provide our portability services through the trade
name CobraServ. Health and welfare benefits administration
services also encompass benefits provided to active employees,
such as annual health plan enrollment, ongoing employee
enrollment and eligibility services, tuition refund plans,
transportation reimbursement under the Transportation Equity
Act, and Internal Revenue Code Section 125 plans including
fully administered and self-administered flexible spending
accounts and premium-only plans. We also provide administration
services for benefits provided to retired and inactive
employees, including retiree healthcare, disability, surviving
dependent, family leave and severance benefits.

Our qualified plan administration services
include 401(k) plan administration, profit sharing
administration, defined benefit plan administration, ESOP
administration and Qualified Domestic Relations Order
administration.

Work-Life Effectiveness and Employee
Assistance Programs.We are a
market leader in providing customers and their employees with a
single source for fully integrated work-life and employee
assistance programs to clients of all sizes throughout the
United States, Canada and the United Kingdom. Services are
delivered through on-line access and telephonic and face-to-face
resources.

The services and programs we provide may be
customized to meet an individual customers particular
needs. Our portfolio of products allows a customer to choose the
mix, level and mode of access to services that best meet its
needs. These products range from high touch
technology capabilities allowing employees to access
specific information on-line to comprehensive person-to-person
consultation and referral services. Also included are
specialized service options, such as assistance with college
selection, elder care assessment and facility review services,
and health and welfare services. These services address employee
effectiveness issues and seek to improve employee retention and
productivity, and to reduce absenteeism as well as increase the
customers recruitment success. Master degree level
consultants

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provide confidential assistance 24 hours a
day to customers employees to help them address issues
ranging from everyday matters to crisis situations. Supporting
these consultants are research and subject matter experts who
provide specialized expertise or referrals in areas such as
parenting/ child care, elder care, disabilities, addiction
disorders, mental health, health and wellness, financial, legal,
managerial/ supervisory and education/ schooling issues. We have
also entered into arrangements with some service and product
providers to provide additional leading edge services and
expertise to our customers.




| |                         
| | ------------------------
| | International Operations

Approximately 20 percent of HRS 2001
revenue was obtained from customers outside of the United
States. Our international HRS operations are primarily conducted
in the United Kingdom, through Centrefile Limited, and Canada,
through Ceridian Canada Ltd. Centrefile Limited provides payroll
processing services and HRIS software in the United Kingdom.
Centrefiles services do not involve the handling or
transmission of customer payroll funds.

Ceridian Canadas operations handle payroll
as well as tax filing funds for our Canadian customers. These
Canadian operations collect payroll and payroll tax amounts from
customers and remit tax amounts to applicable governmental
authorities and make direct deposits of payroll amounts to
employees bank accounts. As a result, revenue from our
payroll processing services in Canada includes investment income
received from temporarily holding these amounts in trust. About
26 percent of the 2001 revenue of this Canadian business
was attributable to this investment income. The Canadian trust
invests in securities issued by the government and provinces of
Canada, highly rated Canadian banks and corporations, asset
backed trusts and mortgages. We earn income from the trust and
charge fees for services similar to those provided in the United
States. We also provide for interest rate risk in Canada as
further described in Item 7A of this report.



| |          
| | ---------
| | Customers

We target employers of all sizes in diverse
industries. Our existing customer base covers a wide range of
industries and markets. Our products and services are generally
provided under written license or service agreements, with
contracts for repetitive services generally terminable upon
relatively short notice.

Customer retention is an important factor in the
amount and predictability of revenue and profits in our HRS
businesses. In providing some of our services, particularly
payroll processing and tax filing services, we incur
installation and conversion costs in connection with new
customers that need to be recovered before the contractual
relationship will provide incremental profit. The length of time
it takes for a contract to become profitable depends on a number
of factors such as the number of employees covered by the
contract, the complexity of the services involved, the amount of
customization of services required and the number of locations
in which the customers employees are located. Generally,
it takes several months of a service contract before a customer
is adding incremental profit. The longer we are able to retain a
customer, the more profitable that contract will likely be.



| |                    
| | -------------------
| | Sales and Marketing

Payroll processing, tax filing and human resource
management services are marketed in the United States through
our direct sales force operating throughout the country. We have
established marketing relationships with banks, accounting
firms, insurance companies and others pursuant to which these
products and services are offered to the business clients of
these entities. The most significant source of customer leads
for these transaction-based products and services are referrals
from these marketing relationships and existing customers, and
other direct marketing efforts, such as telemarketing, direct
mail and trade shows. Our operations in the United Kingdom and
Canada utilize their own direct sales forces. Customer leads for
the products and services of these businesses are generally
obtained through referrals, trade shows, product demonstration
seminars, third party resellers and direct sales efforts.

We utilize cooperative marketing relationships
with other companies offering products or services that
complement our businesses as well as informal marketing
alliances with human resource consulting

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firms. We are exploring similar cooperative
arrangements with other software, insurance and human resource
services providers. We are also seeking to further integrate and
coordinate the sales and marketing efforts of our businesses and
to sell a greater variety of our products and services to the
customers of our various businesses.




| |            
| | -----------
| | Competition

The human resource solutions industry is highly
competitive. Competition comes from national, regional and local
third party transaction processors, as well as from software
companies, consulting firms, governments, enterprise wide
providers of financial services and internally developed and
operated systems and software.

The majority of all payroll processing and tax
filing in the United States, Canada and the United Kingdom is
supported in-house, with the remainder supported by third party
providers. In the United States, Automatic Data Processing, Inc.
is the largest third party provider of payroll processing in
terms of revenue, with us, Paychex, Inc. and ProBusiness
Services, Inc. comprising the other three large, national
providers in terms of revenue. ADP serves all sizes of
employers, while Paychex generally focuses on small employers
and ProBusiness generally focuses on large employers. Other
third party payroll and tax filing providers are generally
regional and local competitors, although larger, national
providers of benefits administration or 401(k) processing
services may contemplate expansion into outsourced payroll
processing. In both the United Kingdom and Canada, we believe
that our respective subsidiaries are the largest outsourced
payroll processing providers in terms of revenue, in each case
competing with several other national providers, including a
subsidiary of ADP, and local providers. Competition in both the
payroll processing and HRIS software areas also comes from a
number of large, national software companies that provide both
payroll processing software for in-house processing as well as
HRIS software, often in conjunction with other enterprise
management software applications.

Apart from payroll processing and tax filing
services, our businesses generally compete with a variety of
national and regional application software companies, consulting
firms and human resource services providers. Generally, the
market for these products and services is evolving and is not
dominated by a small number of competitors.

Currently, we believe the principal competitive
factors in the human resource solutions industry are:



| |   |                                           
| | - | ------------------------------------------
| |  | customer service;                         
|
| |  | leadership in technology applications;    
|
| |  | choice of services;                       
|
| |  | performance;                              
|
| |  | price;                                    
|
| |  | functionality;                            
|
| |  | ease and flexibility of use;              
|
| |  | customer support; and                     
|
| |  | industry standard technology architecture.

We believe that the ability to integrate human
resource management software applications with customers
other in-house applications and the ability to provide
client/server-based solutions and solutions delivered through
the Internet are becoming increasingly important competitive
factors. While we believe our businesses will be able to compete
effectively in the overall human resource solutions market, our
ability to compete effectively will depend in large measure on
our ability to timely develop and implement new technology,
particularly that which incorporates industry standard
architecture and client/server and Internet-based solutions, and
provide leading-edge customer service.

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| |                         
| | ------------------------
| | Research and Development

We intend to continue to invest substantial
resources to extend the functionality of our proprietary payroll
processing systems and further develop a comprehensive and fully
integrated suite of employee administrative services. For
example, we are developing several products that are focused on
the Internet. In addition, we expect to introduce additional
enhancements to our Source 500 product.

The table below reflects the amount of research
and development expenses for our HRS businesses for the periods
indicated.

|                         |  |                       |      |      |  |      |      |   |  |   |      |  
|------------------------ |  | --------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                         |  |                      
|                         |  | Years Ended          
|                         |  | December 31,         
|                         |  |                      
|                         |  | 2001                  |      | 2000 |  | 1999
|                         |  |                       |      |      |  |     
|                         |  |                      
|                         |  | (dollars in millions)
|Research and development |  | $                     | 54.7 |      |  | $    | 54.8 |   |  | $ | 52.0 |  
|Percent of revenue       |  |                       | 6.3  | %    |  |      | 6.3  | % |  |   | 6.3  | %

Comdata

Our Comdata subsidiary provides transaction
processing and regulatory compliance services to the
transportation and other industries. Comdatas revenue from
products and services for the years 2001, 2000 and 1999 was as
follows:

|     |                |      |  |      |                |  |  |   |                | 
|---- | -------------- | ---- |  | ---- | -------------- |  |  | - | -------------- | 
|2001 |                | 2000 |  | 1999
|     |                |      |  |     
|$    | 316.0  million |      |  | $    | 308.8  million |  |  | $ | 298.9  million | 

Approximately 81 percent of Comdatas
revenue for 2001 was attributable to its transportation business.



| |                  
| | -----------------
| | Principal Markets

The trucking segment of the transportation
industry is comprised of both long haul fleets and local fleets.
Private fleets predominate in the local fleet segment, but play
a lesser role in the long haul fleet segment. Common carriers,
which provide trucking services to companies that do not have
fleets of trucks of their own, predominate in the long haul
fleet segment, which is comprised of less-than-truckload and
truckload components. The less-than-truckload component, which
involves trucks that make multiple stops to load and unload, is
characterized by large capital requirements and a relatively
high degree of consolidation. The truckload component, which
involves the transportation of full loads directly from shipper
to final destination without going through any sorting
terminals, is highly fragmented and, Comdata believes, is
growing at the expense of the less-than-truckload component.

The majority of Comdatas trucking company
customers are common carriers serving the truckload component of
the long haul segment. Many of these carriers do not employ
their drivers, but instead contract with individual
owner-operators. These owner-operators usually settle their
expenses with the common carrier after the completion of each
trip. Drivers for truckload carriers often spend weeks on the
road at a time, creating a number of unique conditions and
business opportunities. Truckload carriers are challenged to
monitor and control fuel purchases, provide driver services to
aid in recruitment and improve retention, obtain necessary
licenses and permits, and effectively manage the routing and
logistics of the long-distance trips.

Stored Value Systems, Inc., a wholly owned
subsidiary of Comdata (which we refer to in this report as
SVS), provides electronic private label cards that
can be assigned a cash value. The market for these private label
cards includes merchants, such as retailers and oil companies
through gas stations, who (1) use traditional paper gift
certificates or gift cards, (2) give store credits in
connection with the return of products, and (3) make
monetary promotions. Comdata is marketing its private label cash
card to these merchants, namely major retailers and gas
stations, for use with their customers. Comdatas payment
services division also provides a card-based funds transfer
system for use by employers and others for,

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among other things, expense reimbursements,
payroll delivery and termination pay. Comdata markets this
card-based funds transfer system to temporary staffing
companies, universities, professional employment organizations,
custodial companies, the restaurant and hospitality industries,
and retailers, including the customers of SVS.


As in the case of our HRS business, Comdata is a
money flow business that is technology oriented. There are
numerous actual and potential synergies between HRS and Comdata.
HRS is marketing Comdatas cash or funds transfer cards to
customers of its business who have a large number of employees
that do not have bank accounts. For these employees, using a
cash or funds transfer card accepted by a number of merchants
and automated teller machines may be an attractive alternative
to paying fees at local check cashing services. In addition,
Comdata is marketing the services of our work-life effectiveness
services and employee assistance programs.

Services

Comdata provides transaction processing and
regulatory compliance services primarily to the transportation
industry. With the acquisition of SVS and the creation of its
payment services division, Comdata also provides these services
to other industries, including the retail, temporary staffing,
oil company, restaurant and grocery store sectors. Comdata
provides services to trucking companies, truck stops and truck
drivers in the long haul segment of the trucking industry, and
is expanding its service offerings to the local fleet segment.
These services primarily involve the use of a proprietary funds
transfer card that facilitates truck driver transactions and
provides transaction control and trip information for trucking
firms. Additionally, Comdata provides assistance in obtaining
regulatory permits and other compliance services, driver
relations services, local fueling services and discounted
telecommunications services in its markets. Through SVS and
Comdatas payment services division, Comdata provides its
specialty card products and services to customers outside of the
transportation industry. Comdata operates primarily in the
United States and Canada and continues to evaluate whether to
expand its business into Mexico.

Trucking Company Services (The Comchek
Card).Comdatas funds
transfer system, most commonly initiated through the use of
Comdatas proprietary Comchek card, is designed to enable
truck drivers to obtain funding for purchases and cash advances
at truck stops and other locations en route to their
destination. Drivers may use the Comchek card to purchase fuel,
lodging and other approved items, obtain cash advances from ATM
machines or through the use of Comchek drafts, make long
distance phone calls and make direct deposits of pay,
settlements (for non-employee owner-operators) or trip advances
to personal bank accounts. In 2001, Comdata processed
approximately 81.3 million funds transfer transactions
involving approximately $12.5 billion for the
transportation industry.

Use of the Comchek card allows the trucking
company customer greater control over its expenses by allowing
it to set limits on the use of the cards, such as by designating
locations where the cards may be used, the frequency with which
they may be used, phone numbers which may be called and the
amount of authorized use. Use of a Comchek card also enables
Comdata to capture and provide transaction and trip-related
information to trucking company customers (usually within
24 hours after the completion of a given trip). This
information greatly enhances a customers ability to track
and plan fuel purchases and other trip expenses and settle with
drivers. Comdata also provides trucking companies with a
Windows-based software application that provides trucking
companies with on-line access to Comdatas computer system
for data on fuel purchases and other trip information, and
facilitates pre- and post-trip planning functions.
Comdatas MOTRS (Modular Over The Road System) Web-based
application enables customers to go on-line for local dial-up
access, interactive reporting capabilities, the latest diesel
fuel prices and related information from their desktop.

Use of a Comchek card typically generates a
Comchek draft, which is payable through a Comdata bank account.
Comdata funds the underlying transaction when the truck stop (or
other payee) negotiates the draft by depositing it in its bank
account. Comdata bills the trucking company for the amount of
the draft plus a portion of the service fee, and collects from
the truck stop the balance of the service fee. The

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trucking company remits payment to Comdata by
wire transfer or check, typically within six days, although
Comdata may bill trucking companies in advance for all funds
transfers authorized for any purpose in connection with a
particular trip. Risks associated with fraudulent or
unauthorized transactions are allocated between Comdata and its
customers based upon which party may be at fault under a
specific circumstance and based upon which party is in the
better position to control or eliminate these types of
transactions. Comdata believes that historically the number of
fraudulent or unauthorized transactions has been minimal
compared to the aggregate dollar amount of funds Comdata has
transferred annually. Comdata is licensed by 38 states as a
seller of checks or money transmitter and, pursuant to these
licenses, undergoes annual audits by several states with respect
to the integrity of its funds transfer methods and procedures.


Approximately 12.5 percent of Comdatas
funds transfer revenue is derived from transactions that do not
involve the Comchek card. When a truck driver makes a request at
a truck stop for a funds transfer, Comdata verifies that the
drivers company has established sufficient credit. Upon
presentation of valid identification, the truck stop obtains an
authorization number from Comdata and issues a Comchek draft.
Comdata also provides information gathering and processing
services in connection with fueling transactions that Comdata
does not fund, but instead are billed directly by the truck stop
to the trucking company. Fees for these direct bill
transactions are substantially lower. Comdata also provides fuel
price tracking reports and management within a network of truck
stops, including cost/plus fuel purchase programs.

Comdatas regulatory compliance division
determines the permits needed for a designated trip, truck and
load; purchases those permits on behalf of the customer; and
delivers them by facsimile machine to a truck stop where they
can be picked up by the driver. Comdata also provides regulatory
compliance services, such as processing and auditing of driver
trip logs, reporting of fuel taxes, annual licensing and motor
vehicle registration verification. Vehicle escort services for
oversized loads are also provided.

Comdatas LoadMatcher offers a computerized
shipment interchange system to help trucking companies find
loads for their return trips and reduce empty backhauls. By
making specific shipment information available to customers on a
subscription basis, available shipments can be matched with
available cargo space on a nationwide basis. Comdata generates
and delivers invoices on behalf of trucking companies to their
customers, and also purchases trucking company freight bills in
addition to providing necessary invoicing.

Truck Stop Services.Comdata maintains a nationwide
electronic data network with 24-hour independent truck stop
service centers that utilize point-of-sale devices and other
computer equipment to facilitate communication with
Comdatas database and operations centers. The service
centers act as Comdatas agents pursuant to a service
center agreement, and typically also offer the funds transfer
services of other companies.

Comdatas merchant services division
provides fueling centers with PC-based, point of sale systems
that automate the various transactions that occur at a fuel
purchase desk, systems which enable customers to transact
card-based fuel purchases at the fuel pump, UPC scanning devices
and truck stop management software. These systems accept many
types of fuel purchase cards currently used by drivers.

Local Fueling.Comdata is a provider of fuel
management and payment systems for local transportation fleets.
Comdata provides local fleet operators with Comchek MasterCard
fleet cards that offer the fleet operators transaction control
and trip-related information gathering features similar to those
of the Comchek card.

Payment Services and Comchek eCash.SVS provides, among other
services, debit cards to major retailers that are used as gift
cards, gift certificates, credits for returned product and
retail promotions. SVS believes that its cards provide benefits
to retailers and their customers, including ease of use and
controls previously difficult to realize. Cards and other
services available through SVS may potentially have benefits in
e-commerce, facilitating transactions between on-line merchants
and their customers.

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Building upon its transaction processing and
funds transfer capabilities, Comdata established its payment
services division in 1999 for the purpose of extending
Comdatas products and services to customers outside the
transportation industry. Comchek eCash, marketed through the
payment services division, is a card-based service allowing
employers, universities or others to post or load payment of
wages and other payments, such as expense reimbursements, to
Comchek cards issued to employees, students and other
recipients. Cardholders, in turn, may access these funds in a
number of ways, including withdrawal of cash from ATMs,
point-of-sale purchases at stores or issuance of a Comdata
negotiable draft. Long distance telephone service is also
available through the card.

Sales
and Marketing

Comdata markets its card-based financial and data
management services to several industries, the largest of which
is the trucking industry. Comdata markets its services to the
trucking industry through a direct sales force domiciled at its
headquarters in Brentwood, Tennessee, and operating throughout
the United States and Canada. Comdata provides services to more
than 18,000 over-the-road and local trucking fleets with more
than one million active cards. Comdata also provides services to
more than 13,000 truck stops, travel centers and repair
facilities nationwide. Contracts generally range from one to
three years in duration.

Through SVS, Comdata markets its private label
cash cards, electronic payroll cards and ancillary services
through a direct sales force operating in Louisville, Kentucky.
SVS has contracts with approximately 140 retailers and oil
companies to provide cash cards and/or payroll services. These
contracts are generally three years in duration.

Comdata emphasizes the selling of a greater
variety of its products and services to its existing customers
and customers of HRS businesses.

Competition

The principal competitive factors relevant to
funds transfers are marketing efforts, pricing, reliability of
computer and communications systems and time required to effect
transactions. The major credit and debit card companies, such as
Visa, MasterCard, American Express and Discover, are significant
competitors of Comdata in that they make cash available to, and
facilitate purchases of fuel and other products by, holders of
their cards on a nationwide basis. Several other companies also
offer similar funds transfer services, including Concord EFS,
T-Chek, Multi-Service Corporation and Viastar Services
Corporation. In addition, truck stops often negotiate directly
with trucking companies for a direct billing relationship. Some
of Comdatas competitors, including TCH, LLC, an affiliate
of Flying J, Inc., also operate or franchise nationwide
truck stop chains. In addition, Comdata competes with service
centers, such as truck stops, that offer similar products and
services. Comdata also faces increasing competition in the funds
transfer area from ATMs that participate in national networks.

While the majority of regulatory services
continue to be performed in-house, at least one other nationwide
company, Xerofax, and several regional companies, including The
Permit Company, provide permit services similar to those
provided by Comdata. Competition in this market is influenced by
price, the expertise of personnel and the ease with which
permits may be ordered and received. In addition, Comdata
believes that technological advances, such as the Internet, will
impact the way regulatory services are defined. These advances
may give rise to new competitors or change the way this service
is offered.

Comdata believes that one of its competitive
weaknesses is that its information technology infrastructure is,
in many instances, a mainframe based, legacy system built over
many years. This legacy system makes innovation cumbersome and
comparatively expensive. Many of Comdatas competitors are
either web-born or web-enabled and,
thus, able to take better advantage of transaction and
information delivery available through the Internet and
information technology systems architectures which are more open
than that of Comdatas. Another one of Comdatas
competitive weaknesses is that unlike competitors with a brand
relationship with a credit card association, such as Visa and
MasterCard,

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Comdatas proprietary Comchek card does not
possess ubiquitous acceptance. Finally, some of Comdatas
competitors possess greater financial and other resources than
Comdata.


Comdata believes that its competitive strengths
include its:



| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | ability to provide services to trucking companies
	and drivers at a large number of locations in the continental
	United States and Canada;
|
| |  | ability to offer a variety of services,
	frequently tailored to an individual customers needs;                                            
|
| |  | proprietary databases regarding funds transfers
	and fuel purchases;                                                                       
|
| |  | long-term relationships in the transportation
	industry;                                                                                   
|
| |  | high quality of customer service; and                                                                                                      
|
| |  | product design innovation.                                                                                                                 

SVS and Comdatas payment services division
compete with a number of national companies in providing private
label cards, including American Express and ValueLink, an
affiliate of First Data Corporation. SVS and Comdatas
payment services division compete on the bases of price, systems
and technology. Comdata believes that one of the competitive
weaknesses of SVS and its payment services division is that most
of their competitors have established relationships with many of
the potential customers of SVS and Comdatas payment
services division because these competitors provide additional
and unrelated products and services to these customers, such as
credit card processing and check authorization services. By
providing these other services which SVS and Comdatas
payment services division do not provide, these competitors have
an advantage of being able to bundle their products and services
together and present them to existing customers with whom they
have established relationships. Another competitive weakness of
SVS and Comdatas payment services division is that their
competitors have greater financial, sales and marketing
resources and better brand name recognition than SVS and
Comdatas payment services division.

Comdata believes the competitive strengths of SVS
and Comdatas payment services division are:



| |   |                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------
| |  | leading edge information and communications
	systems which provide real-time connectivity with
	retailers existing platforms; and
|
| |  | experience in transaction processing and related
	services providing for reduced time of implementation of cash
	card solutions.  

Network
and Data Processing Operations

Comdatas principal communications center
for its funds transfer business is located near its headquarters
in Brentwood, Tennessee, with a secondary center located in
suburban Dallas, Texas. Comdata receives telecommunications
services from MCI WORLDCOM Network Services, Inc. and Sprint
Corporation. Substantially all of Comdatas internal data
processing functions, including its payment processing systems,
are conducted in a facility located near Nashville, Tennessee.

Regulation

Many states require persons engaged in the
business of selling or issuing payment instruments, such as the
Comchek draft, or in the business of transmitting funds to
obtain a license from the appropriate state agency. In some
states, Comdata is required to post bonds or other collateral to
secure its obligations to its customers in those states. Comdata
believes that it is currently in compliance in all material
respects with the regulatory requirements applicable to its
business. The failure to comply with the requirements of any
particular state could significantly harm Comdatas
business in that state.

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Research
and Development

Comdatas research and development
activities principally include applications development to
enhance existing products and services. For example, Comdata
migrated from a VISA platform to a MasterCard platform to
provide local fueling customers with its new Comchek MasterCard
fleet card product. This platform migration required Comdata to
enhance its systems to support this new platform. Comdata
anticipates a continuing need to develop applications to enhance
its existing products and services to meet the needs of its
customers. Further, Comdata expects to develop applications to
bring additional features to its products and services, thus
enhancing their use in new segments and industries.

The table below reflects the amount of research
and development expenses for Comdata for the periods indicated.

|                         |  |                       |     |      |  |      |     |   |  |   |     |  
|------------------------ |  | --------------------- | --- | ---- |  | ---- | --- | - |  | - | --- | -
|                         |  |                      
|                         |  | Years Ended          
|                         |  | December 31,         
|                         |  |                      
|                         |  | 2001                  |     | 2000 |  | 1999
|                         |  |                       |     |      |  |     
|                         |  |                      
|                         |  | (dollars in millions)
|Research and development |  | $                     | 4.4 |      |  | $    | 8.0 |   |  | $ | 8.6 |  
|Percent of revenue       |  |                       | 1.4 | %    |  |      | 2.6 | % |  |   | 2.9 | %

The decrease in the amount of research and
development expense in 2001 was due largely to development cost
savings resulting from the termination of an outsourced
transaction processing contract.

Additional Financial Information About
Segments

We refer you to Note D, Segment Data,
to our consolidated financial statements for additional
financial information about our business segments. This
information may be found in Part II, Item 8 of this
report.

Other Investments and Divestitures

In addition to the spin-off transaction described
previously under the heading General, we refer you
to Note F, Investing Activity, to our consolidated
financial statements for further information on our investing
and divesting activities. This information may be found in
Part II, Item 8 of this report.

Intellectual Property

We own or license a number of trademarks,
tradenames, copyrights, service marks, trade secrets and other
intellectual property rights that relate to our products and
services, including several mentioned in this report. Although
we believe that these intellectual property rights are, in the
aggregate, of material importance to our businesses, we believe
that none of our businesses is materially dependent upon any
particular trademark, tradename, copyright, service mark,
license or other intellectual property right. We believe,
however, that the Ceridian and Comdata
names, marks and logos are of material importance to us.

We have entered into confidentiality agreements
with most of our employees and consultants. In addition, we have
entered into license agreements with customers of our
businesses, which agreements impose restrictions on these
customers use of our proprietary software and other
intellectual property rights.

Employees

As of March 1, 2002, we employed
approximately 9,415 people on a full-or part-time basis,
including 7,169 full-time and 592 part-time employees
of HRS and 1,558 full-time and 96 part-time employees
of Comdata. None of our employees is covered by a collective
bargaining agreement.

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Backlog

Although our businesses are typically
characterized by long-term customer relationships that result in
a high level of recurring revenue, a substantial portion of our
customer contracts used by our businesses are terminable by our
customers upon relatively short notice periods, including
contracts that have been extended beyond their original terms.
In addition, orders for products and services are terminable by
our customers, and no order for one of our products or services
is considered firm until it is delivered or installed and begins
producing revenue. The timing of the delivery or installation of
our products and services is largely dependent upon the
customer. As such, we do not believe that meaningful backlog
information can be provided for our businesses.

Item 1A. Executive Officers of the
Registrant

The following provides information on our
executive officers as of March 1, 2002:

|                       |  |                                                                                
|---------------------- |  | -------------------------------------------------------------------------------
|Name (Age)             |  | Current Position                                                               
|                       |  |                                                                                
|Ronald L. Turner (55)  |  | Chairman, President and Chief Executive Officer                                
|John R. Eickhoff (61)  |  | Executive Vice President and Chief Financial
	Officer                          
|Loren D. Gross (56)    |  | Vice President and Corporate Controller                                        
|Tony G. Holcombe (46)  |  | Executive Vice President and President of
	Ceridian Employer/ Employee Services
|Shirley J. Hughes (56) |  | Senior Vice President of Human Resources                                       
|Gary A. Krow (47)      |  | Executive Vice President and President of Comdata                              
|Gary M. Nelson (50)    |  | Executive Vice President, General Counsel and
	Corporate Secretary             

Our executive officers have served in their
current positions with Ceridian since our inception in August
2000, with the following exceptions: Mr. Holcombe became
President of Ceridian Employer/ Employee Services in March 2001
at the time the HRS businesses were contributed to Ceridian in
connection with the spin-off; Mr. Krow has served as
President of our Comdata subsidiary since November 1999; and
Mr. Nelson became Executive Vice President, General Counsel
and Corporate Secretary in October 2001 after serving as our
Vice President, General Counsel and Secretary from August 2000
to October 2001.

Our executive officers are elected by our Board
of Directors and serve at the pleasure of the Board of Directors
and the Chief Executive Officer. They are customarily elected
each year at the meeting of the Board of Directors held in
conjunction with the annual meeting of stockholders. There are
no immediate family relationships between or among any of our
executive officers.

Our executive officers held the following
positions with Ceridians predecessor and certain other
entities since March 1997:

Ronald L. Turner served as Director from July
1998 to March 2001; Chairman from May 2000 to March 2001; Chief
Executive Officer from January 2000 to March 2001; President
from April 1998 to March 2001; Chief Operating Officer from
April 1998 to January 2000; and Executive Vice President of
Operations from March 1997 to April 1998.

John R. Eickhoff served as Executive Vice
President and Chief Financial Officer from January 25, 2000
to March 2001; Executive Vice President of Strategic Development
from January 3, 2000 to January 25, 2000; and
Executive Vice President and Chief Financial Officer from May
1995 to January 2000.

Loren D. Gross served as Vice President and
Corporate Controller from July 1993 to March 2001.

Tony G. Holcombe served as Executive Vice
President from November 1999 to March 2001; President of
Ceridian Employer/ Employee Services from July 2000 to March
2001; President of Ceridian Employer Services from November 1999
to July 2000; and Vice President and President of Comdata from

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May 1997 to November 1999. Mr. Holcombe was
President and Chief Executive Officer of National Processing,
Inc., which provides transaction processing services and
customized processing solutions, from October 1994 to March 1997.


Shirley J. Hughes served as Senior Vice President
of Human Resources from June 1998 to March 2001. Ms. Hughes
was Vice President of Human Resources of Mercy Health Services,
a non-profit integrated health care delivery system currently
named Trinity Health Services, from October 1994 to June 1998.

Gary A. Krow served as Executive Vice President
from November 1999 to March 2001. Mr. Krow was Executive
Vice President and Chief Operating Officer of Comdata from
January 1999 until November 1999; and Executive Vice President,
Transportation Services, of Comdata from January 1997 until
December 1998.

Gary M. Nelson served as Vice President and
General Counsel from July 1997 to March 2001; and Secretary from
October 1998 to March 2001. From 1983 to July 1997,
Mr. Nelson was a partner in the Oppenheimer
Wolff & Donnelly LLP law firm.




Item 2. Properties

Our principal executive offices are located at
3311 East Old Shakopee Road, Minneapolis, Minnesota 55425. As of
March 1, 2002, the principal computer and office facilities
used in our businesses were located in the metropolitan areas of
Minneapolis, Minnesota; Atlanta, Georgia; Los Angeles,
California; Nashville, Tennessee; Dallas, Texas; Boston,
Massachusetts; St. Petersburg, Florida; Philadelphia,
Pennsylvania; Manitoba, Ontario, and Quebec, Canada; and London,
England.

The following table summarizes the usage and
location of our facilities as of March 1, 2002:

Facilities

(In thousands of square feet)


|                                |       |      |       |          |  |       |     |     |  |  |       |       | 
|------------------------------- | ----- | ---- | ----- | -------- |  | ----- | --- | --- |  |  | ----- | ----- | 
|                                |       | U.S. |       | Non-U.S. |  | Total
|                                |       |      |       |          |  |      
|Type of Property Interest       |       |      |       |          |  |       |     |     |  |  |       |      
|Owned                           |       |      | 393   |          |  |       |    |     |  |  | 393   |      
|Leased                          |       |      | 1,920 |          |  |       | 377 |     |  |  | 2,297 |      
|                                |       |      |       |          |  |       |     |     |  |  |       |      
|                                | Total |      |       | 2,313    |  |       |     | 377 |  |  |       | 2,690 | 
|Property Interest by Segment    |       |      |       |          |  |       |     |     |  |  |       |      
|HRS                             |       |      | 1,491 |          |  |       | 364 |     |  |  | 1,855 |      
|Comdata                         |       |      | 435   |          |  |       | 13  |     |  |  | 448   |      
|Corporate                       |       |      | 387   |          |  |       |    |     |  |  | 387   |      
|                                |       |      |       |          |  |       |     |     |  |  |       |      
|                                | Total |      |       | 2,313    |  |       |     | 377 |  |  |       | 2,690 | 
|Utilization of Property         |       |      |       |          |  |       |     |     |  |  |       |      
|Office, Computer Center & Other |       |      | 2,110 |          |  |       | 369 |     |  |  | 2,479 |      
|Leased or Subleased to Others   |       |      | 203   |          |  |       | 8   |     |  |  | 211   |      
|                                |       |      |       |          |  |       |     |     |  |  |       |      
|                                | Total |      |       | 2,313    |  |       |     | 377 |  |  |       | 2,690 | 

We conduct a substantial portion of our
operations in leased facilities, including our
207,000 square feet Minneapolis headquarters complex in
Minneapolis, Minnesota. Most of these leases contain renewal
options and require payment for taxes, insurance and
maintenance. Space subject to assigned leases is not included in
the table above, and we remain secondarily liable under all of
those leases. As of March 1, 2002, the assigned leases
consisted of 242,308 square feet of space and future rental
obligations totaled $3.7 million. We do not anticipate any
material non-performance by the assignees of those leases.

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None of our owned facilities is subject to any
major encumbrances. We believe that our facilities are adequate
for their intended purposes, are adequately maintained and are
reasonably necessary for current and anticipated output levels
of those businesses.

Item 3. Legal Proceedings

Ceridian and its subsidiaries are involved in a
number of judicial and administrative proceedings considered
normal in the nature of our current and past operations,
including employment-related disputes, contract disputes,
government proceedings, customer disputes, and tort claims. In
some proceedings, the claimant seeks damages as well as other
relief, which, if granted, would require substantial
expenditures on our part.

Some of these matters raise difficult and complex
factual and legal issues, and are subject to many uncertainties,
including the facts and circumstances of each particular action,
and the jurisdiction, forum and law under which each action is
proceeding. Because of this complexity, final disposition of
some of these proceedings may not occur for several years. As
such, we are not always able to estimate the amount of our
possible future liabilities. There can be no certainty that we
may not ultimately incur charges in excess of presently or
future established financial accruals or insurance coverage.
Although occasional adverse decisions (or settlements) may
occur, it is managements opinion that the final
disposition of these proceedings will not, considering the
merits of the claims and available reserves, have a material
adverse effect on our financial position or results of
operations.

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

No matters were submitted to a vote of our
stockholders during the fourth quarter of 2001.

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PART II









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


Our common stock is listed and trades on The New
York Stock Exchange under the symbol CEN. The
approximate number of holders of record of our common stock on
March 1, 2002 was 11,400. We have not declared or paid any
cash dividends on our common stock since our inception, and our
board of directors presently intends to retain all earnings for
use in the business for the foreseeable future. The transfer
agent and registrar for our common stock is the Bank of New York.

The following table sets forth the high and low
sale prices of our common stock as reported on the NYSE
Composite Tape for each quarterly period since the spin-off and
ending December 31, 2001.

|     |  |  |  |    |  |    |       |    |  |   |       |  |  |   |       | 
|---- |  |  |  | -- |  | -- | ----- | -- |  | - | ----- |  |  | - | ----- | 
|2001 |  |  |  | 2Q |  | 3Q |       | 4Q
|     |  |  |  |    |  |    |       |   
|High |  |  |  |    |  | $  | 20.55 |    |  | $ | 19.95 |  |  | $ | 19.43 | 
|Low  |  |  |  |    |  |    | 13.99 |    |  |   | 13.65 |  |  |   | 13.90 | 

For informational purposes, the following table
sets forth the high and low sales price of Old Ceridians
common stock as reported on the NYSE Composite Tape for each
quarterly period beginning on January 1, 2000 and ending at
the time of the spin-off.

|     |  |    |       |  |  |  |  |  |  |  |  |  |  |  |  | 
|---- |  | -- | ----- |  |  |  |  |  |  |  |  |  |  |  |  | 
|2001 |  | 1Q |       |  |  |  |  | 
|     |  |    |       |  |  |  |  | 
|High |  | $  | 23.06 |  |  |  |  |  |  |  |  |  |  |  |  | 
|Low  |  |    | 14.75 |  |  |  |  |  |  |  |  |  |  |  |  | 

|     |  |    |       |    |  |    |       |    |  |   |       |  |  |   |       | 
|---- |  | -- | ----- | -- |  | -- | ----- | -- |  | - | ----- |  |  | - | ----- | 
|2000 |  | 1Q |       | 2Q |  | 3Q |       | 4Q
|     |  |    |       |    |  |    |       |   
|High |  | $  | 23.06 |    |  | $  | 26.44 |    |  | $ | 29.00 |  |  | $ | 29.19 | 
|Low  |  |    | 14.75 |    |  |    | 18.13 |    |  |   | 21.31 |  |  |   | 19.81 | 

In March 2001, we issued 145,818,709 unregistered
shares of our common stock to Old Ceridian in connection with
the transfer to us by Old Ceridian of assets and liabilities
representing the HRS business and all of the outstanding capital
stock of the HRS and Comdata subsidiaries. No underwriting
commissions or discounts were paid with respect to these sales
of unregistered securities. The issuance of the shares of our
common stock to Old Ceridian was made in reliance on
Rule 506 of Regulation D and Section 4(2) under
the Securities Act of 1933. The 145,819,709 shares that
were issued to Old Ceridian were then transferred on
March 30, 2001 to Old Ceridians stockholders in
connection with the spin-off. The issuance of the shares of our
common stock to Old Ceridians stockholders in connection
with the spin-off was made in reliance on the position of the
Division of Corporation Finance Staff set forth in Staff Legal
Bulletin No. 4 dated September 16, 1997.

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##### Table of Contents



Item 6. Selected Financial
Data

|                                                         |                                             |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |       |         |       | 
|-------------------------------------------------------- | ------------------------------------------- | -------------------------------------------- | ------- | ---- | ------- | ---- | ------- | ---- | ------- | ---- | ------- | ---- | ------- | ---- | ------- | ---- | ------- | ---- | ------- | ----- | ------- | ----- | 
|                                                         |                                             |                                             
|                                                         |                                             | (Dollars in millions, except per share data)
|                                                         |                                             | 2001                                         |         | 2000 |         | 1999 |         | 1998 |         | 1997
|                                                         |                                             |                                              |         |      |         |      |         |      |         |     
|Revenue                                                  |                                             | $                                            | 1,182.3 |      |         | $    | 1,175.7 |      |         | $    | 1,127.0 |      |         | $    | 967.6   |      |         | $    | 909.7   |      
|                                                        
|Earnings from continuing operations(1)                   |                                             | $                                            | 49.5    |      |         | $    | 79.5    |      |         | $    | 104.4   |      |         | $    | 125.3   |      |         | $    | 0.7     |      
|Discontinued operations                                  |                                             |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      
|                                                         | Arbitron(2)                                 |                                              |         | 5.2  |         |      |         | 20.7 |         |      |         | 40.9 |         |      |         | 36.6 |         |      |         | 42.7  |        
|                                                         | Computing Devices International(3)          |                                              |         |     |         |      |         |     |         |      |         |     |         |      |         | 25.4 |         |      |         | 437.0 |        
|                                                         |                                             |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      
|                                                         |                                             |                                              | Total   |      |         | 5.2  |         |      |         | 20.7 |         |      |         | 40.9 |         |      |         | 62.0 |         |       |         | 479.7 | 
|                                                         |                                             |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      
|Net earnings                                             |                                             | $                                            | 54.7    |      |         | $    | 100.2   |      |         | $    | 145.3   |      |         | $    | 187.3   |      |         | $    | 480.4   |      
|                                                         |                                             |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      
|                                                        
|Earnings Per Common Share                                |                                             |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      
|                                                         | Basic                                       |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |       |        
|                                                         |                                             | Continuing operations                        |         | $    | 0.34    |      |         | $    | 0.55    |      |         | $    | 0.72    |      |         | $    | 0.87    |      |         | $     |        |      
|                                                         |                                             | Net earnings                                 |         | $    | 0.37    |      |         | $    | 0.69    |      |         | $    | 1.01    |      |         | $    | 1.30    |      |         | $     | 3.06    |      
|                                                         | Diluted                                     |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |       |        
|                                                         |                                             | Continuing operations                        |         | $    | 0.33    |      |         | $    | 0.54    |      |         | $    | 0.71    |      |         | $    | 0.85    |      |         | $     |        |      
|                                                         |                                             | Net earnings                                 |         | $    | 0.37    |      |         | $    | 0.68    |      |         | $    | 0.98    |      |         | $    | 1.27    |      |         | $     | 3.01    |      
|                                                         | Shares used in calculations (in
	thousands) |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |       |        
|                                                         |                                             | Basic                                        |         |      | 146,069 |      |         |      | 145,229 |      |         |      | 144,524 |      |         |      | 144,070 |      |         |       | 156,835 |      
|                                                         |                                             | Diluted                                      |         |      | 148,596 |      |         |      | 146,734 |      |         |      | 147,964 |      |         |      | 147,597 |      |         |       | 159,481 |      
|                                                        
|Balance Sheet Data                                       |                                             |                                              |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      |         |      
|Working capital                                          |                                             | $                                            | 198.6   |      |         | $    | 241.5   |      |         | $    | 174.7   |      |         | $    | 186.9   |      |         | $    | 218.1   |      
|Total assets(4)                                          |                                             | $                                            | 1,910.6 |      |         | $    | 2,088.0 |      |         | $    | 1,988.5 |      |         | $    | 1,216.9 |      |         | $    | 1,187.5 |      
|Debt obligations                                         |                                             | $                                            | 237.9   |      |         | $    | 500.6   |      |         | $    | 611.3   |      |         | $    | 54.5    |      |         | $    | 3.0     |      
|Stockholders equity                                     |                                             | $                                            | 1,061.1 |      |         | $    | 936.2   |      |         | $    | 812.2   |      |         | $    | 623.7   |      |         | $    | 563.9   |      
|                                                        
|Equity Per Common Share                                  |                                             | $                                            | 7.24    |      |         | $    | 6.42    |      |         | $    | 5.61    |      |         | $    | 4.35    |      |         | $    | 3.81    |      
|Common shares outstanding at end of year
	(in thousands) |                                             |                                              | 146,485 |      |         |      | 145,754 |      |         |      | 144,734 |      |         |      | 143,514 |      |         |      | 147,884 |      
|                                                        
|Number of Employees at End of
	Year(5)                   |                                             |                                              | 9,500   |      |         |      | 9,700   |      |         |      | 9,500   |      |         |      | 8,200   |      |         |      | 6,600   |      
|                                                        



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Earnings from continuing operations include
	unusual losses of $48.3 ($31.7 after-tax) in 2001, unusual
	losses of $30.5 ($18.7 after-tax) in 2000, unusual gains of
	$27.7 ($24.3 after-tax) in 1998, and in 1997 unusual losses
	of $302.6 (with no tax offset), consisting of asset write-downs
	of $199.4 and accrued exit costs of $103.2, and the recognition
	of a FAS 109 one-time tax benefit of $169.2 representing
	the future value of Ceridians net operating losses and
	future tax deductions. Income tax provisions of continuing and
	discontinued operations for years after 1997 are not reduced by
	the tax benefit from utilizing net operating loss carryforwards
	as in 1997. The unusual losses in 2001 and 2000 and the recovery
	in 2000 of a portion of an amount accrued for exit costs in 1997
	are further described in Note C to the consolidated
	financial statements.
|   
|(2) | Includes earnings, net of costs related to the
	spin-off, as further described in Note C to the consolidated
	financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(3) | Includes gain from the December 1997 sale of
	Computing Devices International and its earnings prior to the
	sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(4) | Not including payroll and tax filing funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(5) | Continuing operations only.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

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

The following discussion should be read in
conjunction with Ceridians consolidated financial
statements and the notes related to those consolidated financial
statements contained in Part II, Item 8 of this
report. This discussion contains forward-looking statements that
involve risks and uncertainties. Ceridians actual results
could differ materially from those anticipated by the
forward-looking information due to competitive factors and other
factors discussed under Cautionary Factors That Could
Affect Future Results and may be impacted by accounting
judgments discussed under Critical Accounting
Policies, both of which appear at the end of this
discussion.

Overview

On July 18, 2000, Ceridian announced its
intention to separate its division and subsidiaries and
subsidiaries from its media information business, Arbitron, into
two independent, publicly-traded companies. The separation was
effected by a spin-off on March 30, 2001 of New Ceridian
Corporation, a new entity consisting of HRS and Comdata, as
further described in Part I, Item 1 of this report
under the heading General and Note A,
Accounting Policies, under the heading Basis
of Consolidation. Notwithstanding the legal form of the
spin-off, because of the relative significance of HRS and
Comdata to Ceridian, New Ceridian Corporation (now called
Ceridian Corporation) is considered as the divesting
entity and treated as the accounting successor for
financial reporting purposes. Therefore, Arbitron is treated as
a discontinued operation in the accompanying consolidated
financial statements of Ceridian.

Results of Operations

Comparison
of Annual Periods Ended December 31, 2001, 2000 and
1999

Consolidated Statements of Operations
Highlights

(Dollars in millions, except per share data)


|                                                                    |  |                          |         |      |  |      |         |  |  |   |         | 
|------------------------------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                                                                    |  |                         
|                                                                    |  | Years ended December 31,
|                                                                    |  |                         
|                                                                    |  | 2001                     |         | 2000 |  | 1999
|                                                                    |  |                          |         |      |  |     
|Revenue                                                             |  | $                        | 1,182.3 |      |  | $    | 1,175.7 |  |  | $ | 1,127.0 | 
|Net earnings                                                        |  | $                        | 54.7    |      |  | $    | 100.2   |  |  | $ | 145.3   | 
|Earnings from continuing operations                                 |  | $                        | 49.5    |      |  | $    | 79.5    |  |  | $ | 104.4   | 
|Earnings and gain/loss from disposition of
	discontinued operations |  | $                        | 5.2     |      |  | $    | 20.7    |  |  | $ | 40.9    | 
|Diluted shares used in calculations (in thousands)                  |  |                          | 148,596 |      |  |      | 146,734 |  |  |   | 147,964 | 
|Net earnings per diluted share                                      |  | $                        | 0.37    |      |  | $    | 0.68    |  |  | $ | 0.98    | 
|Earnings from continuing operations per diluted
	share              |  | $                        | 0.33    |      |  | $    | 0.54    |  |  | $ | 0.71    | 

Revenue for 2001 of $1,182.3 million was up
$6.6 million over 2000. A weakening economy and
divestitures of a small HRS training business in the third
quarter of 2001 and a Comdata phone resale business early in the
third quarter of 2000 contributed to the flat year-over-year
comparison. Earnings from continuing operations in 2001 of
$49.5 million were down $30.0 million from the prior
year, and were negatively affected by the ongoing economic
slowdown, a significant incremental investment in the HRS sales
force, and net unusual losses of $48.3 million.

Revenue of $1,175.7 million in 2000 was up
4.3% over 1999. The increase in consolidated revenue in 2000
compared to 1999 resulted primarily from the acquisitions of ABR
Information Services, Inc. (ABR) and Stored Value
Systems, Inc. (SVS). The revenue comparison was
negatively impacted by lower order levels and customer retention
rates in the HRS business. Earnings from continuing operations
declined by $24.9 million from 1999 to 2000 and were
negatively impacted by incremental goodwill amortization related
to the ABR and SVS acquisitions and net unusual losses of
$30.5 million.

Operational and economic factors affecting these
results are further discussed in the annual comparisons sections
entitled Consolidated Results  
Overview and Business Segment Results that

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appear later in this discussion. The net unusual
losses included asset write-downs and exit costs related to
actions taken to restructure operations in the first quarter of
2001 and the first quarter of 2000, a litigation settlement in
the second quarter of 2001, and nonrecurring gains in 2001.
These events are further described in the section entitled
Unusual Items appearing later in this discussion.


The results of Arbitrons discontinued
operations, appearing in the table above, included its operating
earnings until July 18, 2000 as well as a loss on
disposition of $55.0 million, reduced by its operating
earnings from July 18, 2000 until March 30, 2001, and
are described in Note C, Supplementary Data to Statements
of Operations, under the heading Discontinued
Operations. The loss on disposition of $55.0 million
($29.7 million after-tax), included $50.4 million for
costs related to the spin-off and $4.6 million for the
effect of a change in the timing of Arbitron revenue recognition.

On January 23, 2002, Ceridian announced
that, beginning in the first quarter of 2002 with completion
expected by year-end, computer data processing activities at 25
HRS district offices will be consolidated into four regional
computer data centers. This action is expected to result in
annualized savings of approximately $12.0 million. During
the first quarter of 2002, the Company expects to record a
charge of $8.0 million to $10.0 million related to
this consolidation effort.

In the following tables, the amount of goodwill
amortization for the period is presented separately from other
selling, general and administrative expense
(SG&A). Beginning January 1, 2002, goodwill
amortization will no longer be charged to costs and expenses and
instead the carrying value of goodwill will be evaluated for
impairment at least annually and any resulting impairment of
value (asset write-down) recognized at that time. A
further description of this change appears in Note A,
Accounting Policies, under the heading New
Accounting Pronouncements. In the following tables and
text, R&D expense represents research and
development costs, EBIT represents earnings before
interest and taxes, and percentage relationships in the tables
that are not meaningful are represented by NM. The
references to Other relate to the corporate center
operations of Ceridian not allocated to the business segments.

2001
Compared to 2000

Statements of Operations Comparisons

(Dollars in millions)


|                                    |  |        |         |            |  |              |         |   |  |      |       |      |  |  |       |   |  |  |       |   |  |  |       |  
|----------------------------------- |  | ------ | ------- | ---------- |  | ------------ | ------- | - |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|                                    |  |        |         |            |  |              |         |   |  |     
|                                    |  |        |         | Increase   |  |             
|                                    |  | Amount |         | (Decrease) |  | % of Revenue
|                                    |  |        |         |            |  |             
|                                    |  | 2001   |         | 2000       |  | $            |         | % |  | 2001 |       | 2000
|                                    |  |        |         |            |  |              |         |   |  |      |       |     
|Revenue                             |  | $      | 1,182.3 |            |  | $            | 1,175.7 |   |  |      | 6.6   |      |  |  | 0.6   |   |  |  | 100.0 |   |  |  | 100.0 |  
|Cost of revenue                     |  |        | 573.6   |            |  |              | 559.0   |   |  |      | 14.6  |      |  |  | 2.6   |   |  |  | 48.5  |   |  |  | 47.5  |  
|Goodwill amortization               |  |        | 35.1    |            |  |              | 34.5    |   |  |      | 0.6   |      |  |  | 2.0   |   |  |  | 3.0   |   |  |  | 2.9   |  
|SG&A expense                        |  |        | 369.5   |            |  |              | 324.8   |   |  |      | 44.7  |      |  |  | 13.8  |   |  |  | 31.3  |   |  |  | 27.6  |  
|R&D expense                         |  |        | 59.0    |            |  |              | 62.8    |   |  |      | (3.8  | )    |  |  | (6.0  | ) |  |  | 5.0   |   |  |  | 5.3   |  
|Other expense (income)              |  |        | 48.2    |            |  |              | 31.7    |   |  |      | 16.5  |      |  |  | 52.2  |   |  |  | 4.1   |   |  |  | 2.7   |  
|Total costs and expenses            |  |        | 1,085.4 |            |  |              | 1,012.8 |   |  |      | 72.6  |      |  |  | 7.2   |   |  |  | 91.8  |   |  |  | 86.1  |  
|EBIT                                |  |        | 96.9    |            |  |              | 162.9   |   |  |      | (66.0 | )    |  |  | (40.6 | ) |  |  | 8.2   |   |  |  | 13.9  |  
|Interest income                     |  |        | 6.5     |            |  |              | 4.7     |   |  |      | 1.8   |      |  |  | 39.0  |   |  |  | 0.6   |   |  |  | 0.4   |  
|Interest expense                    |  |        | (19.0   | )          |  |              | (39.8   | ) |  |      | 20.8  |      |  |  | (52.3 | ) |  |  | (1.6  | ) |  |  | (3.4  | )
|Earnings before income taxes        |  |        | 84.4    |            |  |              | 127.8   |   |  |      | (43.4 | )    |  |  | (34.0 | ) |  |  | 7.1   |   |  |  | 10.9  |  
|Income taxes                        |  |        | 34.9    |            |  |              | 48.3    |   |  |      | (13.4 | )    |  |  | (27.9 | ) |  |  | 2.9   |   |  |  | 4.1   |  
|Earnings from continuing operations |  | $      | 49.5    |            |  | $            | 79.5    |   |  |      | (30.0 | )    |  |  | (37.7 | ) |  |  | 4.2   |   |  |  | 6.8   |  

Consolidated
Results  Overview

Comparing 2001 to 2000, consolidated revenue
increased by 0.6%, as Comdata revenue increased by 2.3% while
HRS revenue declined by 0.1%. The key factors adversely
affecting revenue in the comparison for HRS were a lower number
of customer employees related to the general economic slowdown
in 2001, the weakness of the Canadian dollar and pound sterling
against the U.S. dollar, the third quarter 2001 sale

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of the Usertech training business, and lower
earnings on invested payroll and tax filing funds. The key
factors affecting revenue growth for Comdata were increased
utilization of retail cash cards, the sale of the phone resale
business in mid-2000, and the impact of the general economic
slowdown and falling diesel fuel prices in late 2001 on the
transportation business. Revenue comparisons are further
discussed in the following section entitled Business
Segment Results.


Total costs and expenses for 2001 increased by
$72.6 million over the comparable 2000 amount. HRS costs
and expenses increased by $23.2 million from 2000 to 2001
with an increase of $44.1 million in selling expense offset
in part by a $33.4 million decrease in net unusual losses.
Comdatas costs and expenses increased by
$54.6 million from 2000 to 2001 including a first quarter
2001 unusual charge of $6.6 million for termination of an
outsourced transaction processing contract (the outsourced
contract) and a second quarter 2001 unusual charge of
$52.4 million related to settlement of litigation. These
charges were offset in part by estimated savings of
$10.8 million from the outsourced contract termination
including $4.0 million in cost of revenue,
$3.1 million in SG&A expense and $3.7 million in
R&D expense. Comdata unusual charges recorded in 2000 were
$2.6 million. The increase in total costs and expenses for
the Companys business segments was reduced by a net
increase of $5.2 million in unusual gains not allocated to
the business segments (Other). Comparative costs and
expenses are further discussed in the following sections
entitled Business Segment Results and the section
entitled Unusual Items later in this discussion.

Interest income increased by $1.8 million
over the 2000 amount, even though interest rates declined. The
increase was largely due to interest on a state tax refund
received during 2001 and an accumulation of cash in the first
quarter of 2001 in preparation for the spin-off of Arbitron.
Interest expense decreased by $20.8 million due primarily
to the refinancing of the Companys debt in connection with
the spin-off, which is further described in Note I,
Financing, and lower interest rates. The average
interest rates on borrowings under the revolving credit
agreements of a Canadian subsidiary decreased from 6.14% in 2000
to 5.49% in 2001 and on the U.S. revolving credit facility
from 6.79% in 2000 to 4.73% in 2001. Income taxes decreased by
$13.4 million in comparison with 2000 due primarily to the
decrease in pre-tax earnings. The effective tax rate for 2001
increased to 41.3% compared to 37.8% for 2000, as the ratio of
nondeductible goodwill expense to pre-tax income increased. Due
to a new accounting rule that eliminates goodwill amortization
after January 1, 2002, the effective tax rate for 2002 is
expected to be approximately 36%.

Business
Segment Results

Segment Comparisons

(Dollars in millions)


|        |       |        |       |            |  |              |       |         |  |      |       |       |   |  |       |       |   |  |      |       |  |  |      |       | 
|------- | ----- | ------ | ----- | ---------- |  | ------------ | ----- | ------- |  | ---- | ----- | ----- | - |  | ----- | ----- | - |  | ---- | ----- |  |  | ---- | ----- | 
|        |       |        |       |            |  |              |       |         |  |     
|        |       |        |       | Increase   |  |             
|        |       | Amount |       | (Decrease) |  | % of Revenue
|        |       |        |       |            |  |             
|        |       | 2001   |       | 2000       |  | $            |       | %       |  | 2001 |       | 2000 
|        |       |        |       |            |  |              |       |         |  |      |       |      
|Revenue |       |        |       |            |  |              |       |         |  |      |       |       |   |  |       |       |   |  |      |       |  |  |      |      
|HRS     |       | $      | 866.3 |            |  | $            | 866.9 |         |  |      | (0.6  | )     |   |  | (0.1  | )     |   |  | 73.3 |       |  |  | 73.7 |      
|Comdata |       |        | 316.0 |            |  |              | 308.8 |         |  |      | 7.2   |       |   |  | 2.3   |       |   |  | 26.7 |       |  |  | 26.3 |      
|        | Total |        | $     | 1,182.3    |  |              | $     | 1,175.7 |  |      |       | 6.6   |   |  |       | 0.6   |   |  |      | 100.0 |  |  |      | 100.0 | 
|EBIT    |       |        |       |            |  |              |       |         |  |      |       |       |   |  |       |       |   |  |      |       |  |  |      |      
|HRS     |       | $      | 48.7  |            |  | $            | 72.5  |         |  |      | (23.8 | )     |   |  | (32.8 | )     |   |  | 5.6  |       |  |  | 8.4  |      
|Comdata |       |        | 33.9  |            |  |              | 81.3  |         |  |      | (47.4 | )     |   |  | (58.3 | )     |   |  | 10.7 |       |  |  | 26.3 |      
|Other   |       |        | 14.3  |            |  |              | 9.1   |         |  |      | 5.2   |       |   |  | NM    |       |   |  | NM   |       |  |  | NM   |      
|        | Total |        | $     | 96.9       |  |              | $     | 162.9   |  |      |       | (66.0 | ) |  |       | (40.6 | ) |  |      | 8.2   |  |  |      | 13.9  | 

HRS.HRS revenue in
2001 decreased by $0.6 million compared to 2000 as
increases totaling $16.8 million in the work-life and
benefits services businesses and $11.5 million in HRS
operations in Canada and the United Kingdom largely offset a
decrease of $28.9 million in the U.S. payroll and
training businesses. Ceridian sold its Usertech training
business during the third quarter of 2001. The reduction in

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U.S. payroll services revenue related
primarily to the impact of a general economic slowdown on
customer employment levels, a significant decrease in interest
rates, and, to a lesser extent, customer-requested installation
delays, particularly in late 2001. This reduction was offset in
part by a targeted price increase in the first quarter of 2001.
Revenue performance for Canada and the UK was reduced by
$7.7 million in the annual comparison due to the weakness
of the Canadian dollar and pound sterling against the
U.S. dollar. Interest income from investment of payroll and
tax filing funds and benefits services customer deposits
included in HRS revenue decreased by $13.4 million as the
average yield fell from 6.07% for the 2000 period to 5.50% for
the 2001 period. The average balance of these investments
was down by 2.0% in comparison with 2000 largely due to a
decrease in the number of employees of existing customers and
reduced U.S. Federal income tax withholding resulting from
tax legislation effective in July 2001.


During 2001, Ceridian had in place interest rate
contracts with an average floor of 5.23% covering an average of
$758.3 million of short-term payroll and tax filing fund
investments that, along with longer term investments and
floating rate debt, reduced the impact of the decline in
interest rates during the year. Interest rate contracts are
further discussed in Note A, Accounting
Policies, under the heading Cash and Investments,
including Derivatives and Note J, Commitments
and Contingencies, and in Part II, Item 7A of
this report.

HRS costs and expenses increased by
$23.2 million from 2000 to 2001. Cost of revenue for 2001
increased by $11.8 million over 2000 as direct costs rose
in line with revenue increases in the work-life, benefits
services and non-U.S. businesses. Also increasing cost of
revenue for HRS were $1.2 million of incremental costs
associated with increased volume in the employee assistance
services of the work-life services business after
September 11, 2001, and generally higher compensation
costs. The increase in HRS SG&A expense amounted to
$46.0 million over the 2000 amount. The increase was due
largely to an increase in selling expense of $44.1 million,
reflecting the addition of approximately 160 sales
personnel in U.S. operations in late 2000 and early 2001,
reorganization costs and higher compensation levels. General and
administrative expense increased by $1.9 million as
improved organizational efficiency and reduced provisions for
incentive payouts largely offset the impact of management
reorganization costs and higher compensation levels in 2001.
R&D expense, reflecting U.S. payroll, benefit services
and tax filing services product development efforts changed
little from the 2000 level. The decrease from $37.0 million
in 2000 to $3.6 million in 2001 in net unusual losses is
further discussed in the section below entitled Unusual
Items.

Comdata.Comdata
revenue for 2001 increased by $7.2 million compared to
2000. The comparison was negatively affected by the divestiture
of a phone resale business that recorded $8.9 million of
2000 revenue before its sale in July 2000. The revenue
comparison was positively impacted by an increase of
$15.7 million in the retail cash card business. The revenue
comparison was adversely affected by the impact of the economic
slowdown on the over-the-road trucking market, which resulted in
a reduction in the number of customer fueling transactions.
Revenue was also adversely affected by lower diesel fuel prices,
particularly in late 2001, and lower revenue from permitting
services.

Comdatas costs and expense increased by
$54.6 million from 2000 to 2001 due largely to the
litigation costs of $52.4 million recorded in the second
quarter of 2001. Without regard to these litigation costs, total
costs and expenses would have increased by $2.2 million in
comparison with 2000. Cost of revenue increased by
$2.8 million in 2001, as increased costs associated with
higher revenue from the retail cash card business were largely
offset by the effect of the sale of the phone resale business in
July 2000 and cost reduction efforts. The divested business
reported $6.8 million in cost of revenue in 2000. The cost
reduction efforts saved $5.4 million of which
$4.0 million related to bringing an outsourced transaction
processing service in-house and $1.4 million related to
other cost reduction efforts. The bad debt provision of
$12.9 million for 2001 increased by $1.0 million over
the 2000 amount as Comdata continues its efforts to improve the
quality of customer accounts in the face of the general economic
slowdown. Selling, general and administrative expenses were
little changed in comparison with 2000 as additional goodwill
and other intangibles amortization costs resulting principally
from the acquisition of the remaining interest in SVS in March
2000 was more than offset by $3.1 million of administrative
expense savings from the termination of the outsourced contract.
R&D expense decreased by $3.7 million due largely to
development cost

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savings resulting from the outsourced contract
termination. Other expense (income) in 2001 included litigation
costs of $52.4 million and a first quarter
$6.6 million charge resulting from the outsourced contract
termination. Other expense (income) in 2000 included
$2.6 million of first quarter unusual charges for severance
and other exit costs related primarily to facility closures.
These unusual charges are further described in the section below
entitled Unusual Items.


Other.Other
includes the unallocated amounts related to the corporate center
operations of Ceridian. The reported EBIT for 2001 relates to
gains of $15.6 million from the sale of marketable
securities described in Note F, Investing
Activity, and a provision for legal costs of
$1.3 million. The reported EBIT for 2000 relates to the
recovery of accruals in the amount of $10.0 million from
unusual charges recorded in 1997, reduced by $0.9 million
of severance costs included in the first quarter 2000 unusual
charges. Further details on unusual charges and recoveries are
provided in the section below entitled Unusual Items.

2000
Compared to 1999

Statements of Operations Comparisons

(Dollars in millions)


|                                    |  |        |         |            |  |              |         |   |  |      |       |      |  |  |       |   |  |  |       |   |  |  |       |  
|----------------------------------- |  | ------ | ------- | ---------- |  | ------------ | ------- | - |  | ---- | ----- | ---- |  |  | ----- | - |  |  | ----- | - |  |  | ----- | -
|                                    |  |        |         |            |  |              |         |   |  |     
|                                    |  |        |         | Increase   |  |             
|                                    |  | Amount |         | (Decrease) |  | % of Revenue
|                                    |  |        |         |            |  |             
|                                    |  | 2000   |         | 1999       |  | $            |         | % |  | 2000 |       | 1999
|                                    |  |        |         |            |  |              |         |   |  |      |       |     
|Revenue                             |  | $      | 1,175.7 |            |  | $            | 1,127.0 |   |  |      | 48.7  |      |  |  | 4.3   |   |  |  | 100.0 |   |  |  | 100.0 |  
|Cost of revenue                     |  |        | 559.0   |            |  |              | 553.1   |   |  |      | 5.9   |      |  |  | 1.1   |   |  |  | 47.5  |   |  |  | 49.1  |  
|Goodwill amortization               |  |        | 34.5    |            |  |              | 25.3    |   |  |      | 9.2   |      |  |  | 36.0  |   |  |  | 2.9   |   |  |  | 2.2   |  
|SG&A expense                        |  |        | 324.8   |            |  |              | 306.8   |   |  |      | 18.0  |      |  |  | 5.9   |   |  |  | 27.6  |   |  |  | 27.2  |  
|R&D expense                         |  |        | 62.8    |            |  |              | 60.6    |   |  |      | 2.2   |      |  |  | 3.6   |   |  |  | 5.3   |   |  |  | 5.4   |  
|Other expense (income)              |  |        | 31.7    |            |  |              | (4.4    | ) |  |      | 36.1  |      |  |  | NM    |   |  |  | 2.7   |   |  |  | (0.4  | )
|Total costs and expenses            |  |        | 1,012.8 |            |  |              | 941.4   |   |  |      | 71.4  |      |  |  | 7.6   |   |  |  | 86.1  |   |  |  | 83.5  |  
|EBIT                                |  |        | 162.9   |            |  |              | 185.6   |   |  |      | (22.7 | )    |  |  | (12.2 | ) |  |  | 13.9  |   |  |  | 16.5  |  
|Interest income                     |  |        | 4.7     |            |  |              | 6.4     |   |  |      | (1.7  | )    |  |  | (26.3 | ) |  |  | 0.4   |   |  |  | 0.6   |  
|Interest expense                    |  |        | (39.8   | )          |  |              | (24.7   | ) |  |      | (15.1 | )    |  |  | 60.7  |   |  |  | (3.4  | ) |  |  | (2.2  | )
|Earnings before income taxes        |  |        | 127.8   |            |  |              | 167.3   |   |  |      | (39.5 | )    |  |  | (23.6 | ) |  |  | 10.9  |   |  |  | 14.8  |  
|Income taxes                        |  |        | 48.3    |            |  |              | 62.9    |   |  |      | (14.6 | )    |  |  | (23.1 | ) |  |  | 4.1   |   |  |  | 5.6   |  
|Earnings from continuing operations |  | $      | 79.5    |            |  | $            | 104.4   |   |  |      | (24.9 | )    |  |  | (23.8 | ) |  |  | 6.8   |   |  |  | 9.3   |  

Consolidated
Results  Overview

The increase in consolidated revenue in 2000
compared to 1999 resulted primarily from the acquisitions of ABR
in June 1999 and a majority interest in SVS in March 1999 and
the remaining interest in May 2000. A decline in the customer
retention rate for payroll and tax filing during 1999 and
attrition in the sales force during 2000 negatively affected HRS
revenue. Revenue comparisons are further discussed in the
following section entitled Business Segment Results.

The increase in costs and expenses from 1999 to
2000 was due in large part to the previously mentioned
acquisitions, including the amortization of goodwill and other
intangibles recorded as a result of these purchase transactions.
These increases were offset by lower selling expenses, due
primarily to attrition of sales personnel and reduced
commissions due to lower sales in HRS. General and
administrative expense increased by $37.1 million of which
about one-third related to increased acquisition amortization.
The remainder of the increase in general and administrative
expense related to the less than full year operations in 1999 of
ABR and SVS and to higher benefits and occupancy costs. Research
and development expense remained at about the same level as the
prior year, as 1999 efforts related to the Year 2000
event were replaced in 2000 with product development activities.
Other expense (income) for the 2000 period included the first
quarter net unusual losses of $30.5 million. Comparative
costs and

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expenses are further discussed in the following
section entitled Business Segment Results and in the
section entitled Unusual Items later in this
discussion.


Interest expense increased from
$24.7 million in the 1999 period to $39.8 million
in 2000, largely as a result of the financing arrangements for
the acquisition of ABR in June 1999. Including capitalized
interest costs of $1.7 million in 1999 and
$2.4 million in 2000, total interest costs amounted to
$26.4 million in the 1999 period and
$42.2 million in 2000, an increase of $15.8 million.
In 2000, Ceridians interest bearing debt included fixed
rate borrowings, represented by the 7.25% senior notes sold
in June 1999, and revolving credit facilities with floating
rates in the U.S. and Canada. The weighted-average borrowings
for 2000 amounted to $574.2 million compared to
$381.3 million in 1999. During 2000, the fixed rate debt
was reduced by the repurchase of notes with a face value of
$20.0 million. Floating rate debt was reduced by payments
of $19.6 million on the Canada facility and
$75.0 million of the U.S. facility. The average
interest rate on the Canada facility increased from 5.52% in
1999 to 6.14% in 2000 and on the U.S. facility from 5.71%
in 1999 to 6.79% in 2000. The effective tax rate for 2000 was
37.8% compared to a rate of 37.6% for 1999.

Business
Segment Results

Segment Comparisons

(Dollars in millions)


|        |       |        |       |            |  |              |       |         |  |      |       |       |   |  |       |       |   |  |      |       |  |  |      |       | 
|------- | ----- | ------ | ----- | ---------- |  | ------------ | ----- | ------- |  | ---- | ----- | ----- | - |  | ----- | ----- | - |  | ---- | ----- |  |  | ---- | ----- | 
|        |       |        |       |            |  |              |       |         |  |     
|        |       |        |       | Increase   |  |             
|        |       | Amount |       | (Decrease) |  | % of Revenue
|        |       |        |       |            |  |             
|        |       | 2000   |       | 1999       |  | $            |       | %       |  | 2000 |       | 1999 
|        |       |        |       |            |  |              |       |         |  |      |       |      
|Revenue |       |        |       |            |  |              |       |         |  |      |       |       |   |  |       |       |   |  |      |       |  |  |      |      
|HRS     |       | $      | 866.9 |            |  | $            | 828.1 |         |  |      | 38.8  |       |   |  | 4.7   |       |   |  | 73.7 |       |  |  | 73.5 |      
|Comdata |       |        | 308.8 |            |  |              | 298.9 |         |  |      | 9.9   |       |   |  | 3.3   |       |   |  | 26.3 |       |  |  | 26.5 |      
|        | Total |        | $     | 1,175.7    |  |              | $     | 1,127.0 |  |      |       | 48.7  |   |  |       | 4.3   |   |  |      | 100.0 |  |  |      | 100.0 | 
|EBIT    |       |        |       |            |  |              |       |         |  |      |       |       |   |  |       |       |   |  |      |       |  |  |      |      
|HRS     |       | $      | 72.5  |            |  | $            | 113.4 |         |  |      | (40.9 | )     |   |  | (36.0 | )     |   |  | 8.4  |       |  |  | 13.7 |      
|Comdata |       |        | 81.3  |            |  |              | 72.2  |         |  |      | 9.1   |       |   |  | 12.6  |       |   |  | 26.3 |       |  |  | 24.2 |      
|Other   |       |        | 9.1   |            |  |              |      |         |  |      | 9.1   |       |   |  | NM    |       |   |  | NM   |       |  |  | NM   |      
|        | Total |        | $     | 162.9      |  |              | $     | 185.6   |  |      |       | (22.7 | ) |  |       | (12.2 | ) |  |      | 13.9  |  |  |      | 16.5  | 

HRS.In 2000,
revenue performance in HRS was adversely affected by a reduction
of $25.5 million in revenue from the U.S. payroll and
training services businesses. Each of these businesses
experienced decreases in their customer retention rates in 1999
and lower levels of orders during 2000. In consideration of its
customer retention goals for 2000, Ceridian did not implement
any across-the-board U.S. payroll services price increase
in 2000 as was done in early 1999. Sales of payroll software
products in 2000 were limited by an extended rollout period for
the enhanced Source 500 product, and attrition in the sales
force during 2000 reduced both U.S. payroll product and
services sales. Training services revenue declined in 2000 as
major software vendors, whose software products were supported
by our training, experienced reduced demand for their products.
The payroll businesses in Canada and the United Kingdom reported
an aggregate revenue increase of $15.0 million, while the
work-life/employee assistance services business reported a small
increase in revenue in this comparison. The benefits services
business, acquired with ABR in June 1999, contributed
substantially to the increase in HRS revenue, although this
business showed a modest increase in revenue in the 2000 period
that compares to the 1999 post-acquisition period. In 2000,
investment income from payroll and tax filing customer deposits
increased by $16.4 million over the 1999 period as
average balances increased by 7.1% and the yield increased by 49
basis points to 6.07%.

In 2000, cost of revenue increased as the effect
of a full year of these costs in 2000 for ABR and SVS, compared
to a partial year in 1999, more than offset the cost reduction
related to lower sales levels in the U.S. payroll and
training businesses. The migration of existing small business
payroll customers to

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the Powerpay product and higher depreciation also
contributed to the increase. Selling expense declined, which
reflects both reduced commissions due to lower sales and a
reduction in personnel, primarily in U.S. payroll
operations. Increased general and administrative costs relate
primarily to higher acquisition and software amortization
expenses and higher occupancy and benefit costs. Increased
research and development expense related primarily to product
development efforts in the U.S. payroll and tax filing
businesses. Other expense (income) in 2000 included net unusual
losses of $37.0 million, comprised of charges of
$41.2 million, reduced by a recovery of unused accruals of
$4.2 million from similar charges in 1997. The comparison
of expenses was also affected by the addition of the benefit
services business through the ABR acquisition in June 1999.


Comdata.Revenue
increased in 2000 compared to 1999 as revenue grew by
$17.1 million in the retail cash card business of SVS. The
increase is due in part to the inclusion of two more months of
SVS operations in 2000 than in 1999. The difference in revenue
recognized in 1999 and not in 2000 due to the July 2000 sale of
the phone resale business and from the sales in 1999 of two
small businesses that provided telephone debit cards and audio
tapes was $17.7 million. Revenue from transportation
products and services, other than the phone resale business that
was sold, increased despite one-time sales of Year
2000 related equipment upgrades in 1999.
Increased fuel prices during 2000 also provided some benefit to
the revenue comparison.

Costs and expenses decreased due primarily to the
elimination of costs and expenses of the businesses sold in July
2000 and 1999 as described above. Reductions in bad debt
expense, telecommunications costs, and salary and benefits costs
also contributed to the decrease. These reductions were offset
in part by higher SVS costs and expenses, including additional
amortization of goodwill and other intangibles related to the
acquisition of the remaining interest in SVS in May 2000. Other
increases to costs and expenses included a second quarter 2000
scheduled increase in contracted transaction processing costs,
the cessation of payments received for transitional services
provided to the buyer of a former Comdata business, and
$2.6 million of unusual losses recorded in the first
quarter of 2000 for staff reductions and excess space costs
resulting from a consolidation of operations.

Other.Other EBIT
relates to the first quarter 2000 recovery of accruals in the
amount of $10.0 million from unusual losses recorded in
1997, reduced by $0.9 million of severance costs included
in the first quarter 2000 unusual losses.

Unusual
Items

The comparison of Ceridians earnings from
continuing operations is significantly affected by a number of
unusual items.

Unusual Losses (Gains or Recoveries)

(Dollars in millions)


|                                                                        |  |             |       |      |  |   |       |  
|----------------------------------------------------------------------- |  | ----------- | ----- | ---- |  | - | ----- | -
|                                                                        |  |            
|                                                                        |  | Years Ended
|                                                                        |  | December 31
|                                                                        |  |            
|                                                                        |  | 2001        |       | 2000
|                                                                        |  |             |       |     
|Gain on sale of marketable securities                                   |  | $           | (15.6 | )    |  | $ |      |  
|Accrued exit costs (severance, occupancy and
	contract terminations)    |  |             | 9.9   |      |  |   | 26.4  |  
|Recoveries of 2000 severance in 2001 and 1997
	other exit costs in 2000 |  |             | (3.2  | )    |  |   | (14.2 | )
|Impairment loss due to asset write-downs                                |  |             | 6.1   |      |  |   | 18.3  |  
|Gain on derivative securities                                           |  |             | (2.6  | )    |  |   |      |  
|Litigation settlements and other legal costs                            |  |             | 53.7  |      |  |   |      |  
|                                                                        |  |             |       |      |  |   |       |  
|Total unusual losses reported in other expense
	(income)                |  | $           | 48.3  |      |  | $ | 30.5  |  
|                                                                        |  |             |       |      |  |   |       |  

The gain on sale of marketable securities of
$15.6 million related to the sale of HotJobs.com, Ltd.
common stock and is further described in Note F,
Investing Activity. The gain on derivative securities

24



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of $2.6 million, related to the adoption of
Financial Accounting Standard No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended,
is further described in Note J, Commitments and
Contingencies, under the heading Interest Rate
Contracts. The litigation costs include a settlement of
$49.0 million and associated costs of $3.4 million
related to litigation involving Comdata, as further described in
Note K, Legal Matters, and a provision of
$1.3 million for litigation costs not allocated to the
business segments, recorded in the second quarter of 2001.


During the first quarter of 2001, Ceridian took
certain actions, described below, that were expected to improve
operational efficiency, take advantage of technological
opportunities and further focus its human resource businesses.
These actions resulted in accrued exit costs of
$9.9 million and asset write-downs of $6.1 million.
The Company also recovered $3.2 million of costs accrued
during the first quarter of 2000, due to a revision of the
estimated cost related to those actions.

In February 2001, Comdata decided to terminate
the outsourced contract and bring those activities in-house.
This action was intended to improve management control over
development activities and reduce costs. The termination charge
of $6.6 million was recorded and paid during the first
quarter of 2001. In order to implement the in-house operation,
Comdata hired a number of personnel from the outsourcing
contractor and made incremental investments in capitalized
equipment and software of $7.4 million in the same quarter.
During the course of 2001, Comdata realized cost savings of
approximately $10.8 million related to this action.

In March 2001, HRS transferred most of its
work-life/employee assistance operation in Boston, Mass. into a
related operation in Philadelphia, Penn. and the Company decided
to sell its Usertech employee training business. As a result of
these actions, unrecoverable goodwill of $1.9 million
related to Usertech and $1.1 million of equipment related
to the Boston operation were recorded as asset write-downs.
Usertech was sold in the third quarter of 2001. In addition,
$2.3 million of severance costs for approximately 250
employees and $1.0 million of excess facility costs were
charged to operations and recorded as accrued exit costs. The
accrued exit costs were paid in full by December 31, 2001.
These charges were offset in part by the recovery of
$3.2 million of the estimated severance costs accrued in
the first quarter of 2000, due primarily to a reduction in the
scale of the downsizing of the St. Louis, Mo. customer
services operations. Also in March, 2001, HRS reassessed its
strategy for developing software to serve its middle market
payroll and tax filing customers and conducted an impairment
review of internally developed software related to this effort.
As a result, $3.1 million of unrecoverable cost related to
this software development effort was recognized as an asset
write-down.

On January 25, 2000, Ceridian announced that
it would be taking actions to improve customer service and the
quality of operations, particularly in the U.S. payroll
business. The principal actions taken to achieve these
objectives included decentralization of the U.S. payroll
business customer service operations, termination of certain
product development efforts, and realignment of certain
management responsibilities and consolidation of similar
operations. Decentralization of U.S. payroll customer
service operations involved the downsizing of staff and space
usage in a centralized facility in St. Louis, Mo. and
the transfer of these responsibilities to district offices. The
termination of certain product development efforts required a
reassessment of the recoverability of goodwill and other
intangibles and capitalized development costs, which resulted in
a reduction in the carrying values of those assets and staff
reductions. Realignment of certain management responsibilities
involved staffing changes in a number of senior management
positions. The consolidation of similar operations led to staff
reductions as well as the identification of excess space and
furnishings and related charges for asset write-downs and future
rental obligations.

In March 2000, Ceridian approved plans to execute
these actions and recorded as other expense (income) charges of
$44.7 million in first quarter 2000. These charges included
$26.4 million of accrued exit costs and $18.3 million
for asset write-downs. Exit costs for severance involved
involuntary termination notices for approximately
500 employment positions, primarily in HRS, of which
approximately 466 had been eliminated by December 31, 2000
with the remainder in early 2001. The other exit costs were
primarily the lease cost for idled facilities and contract
termination fees. At December 31, 2001, payments

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of $15.6 million in 2000 and
$6.3 million in 2001, along with the recovery of
$3.2 million in 2001, reduced the remaining amount of
accrued exit costs from these actions to $1.3 million
related to lease obligations. Asset write-downs included the
write-off of capitalized software amounts related to a software
development contract that was terminated in the first quarter
2000, certain property and equipment abandoned at a number of
idled facilities, and various goodwill and intangible asset
balances with respect to two previous acquisitions.


With respect to accrued amounts related to
certain actions taken by Ceridian in 1997, Ceridian paid the
remaining $6.4 million of accrued costs during the year
ended December 31, 2000. Additionally, during the first
quarter of 2000, Ceridian credited other expense (income) with a
recovery of $14.2 million of unused accruals established in
connection with these 1997 actions. This recovery relates to the
reversal of the amount accrued in excess of the settlement
amount for a securities litigation matter that was finalized on
March 31, 2000.

Financial Condition

Consolidated Statements of Cash Flows
Highlights

(Dollars in millions)


|                                    |  |                          |        |      |  |      |        |   |  |   |        |  
|----------------------------------- |  | ------------------------ | ------ | ---- |  | ---- | ------ | - |  | - | ------ | -
|                                    |  |                         
|                                    |  | Years ended December 31,
|                                    |  |                         
|                                    |  | 2001                     |        | 2000 |  | 1999
|                                    |  |                          |        |      |  |     
|Operating activities                |  | $                        | 183.0  |      |  | $    | 269.2  |   |  | $ | 197.7  |  
|Investing activities                |  |                          | (106.7 | )    |  |      | (107.9 | ) |  |   | (812.2 | )
|Financing activities                |  |                          | (56.1  | )    |  |      | (101.3 | ) |  |   | 572.0  |  
|                                    |  |                          |        |      |  |      |        |   |  |   |        |  
|Net cash flows provided (used)      |  | $                        | 20.2   |      |  | $    | 60.0   |   |  | $ | (42.5  | )
|                                    |  |                          |        |      |  |      |        |   |  |   |        |  
|Cash and equivalents at end of year |  | $                        | 138.7  |      |  | $    | 118.5  |   |  | $ | 58.5   |  

Reconciliation of Earnings to Cash Inflows
(Outflows) from Operating Activities

(Dollars in millions)


|                                                       |  |                          |       |      |  |      |       |   |  |   |        |  
|------------------------------------------------------ |  | ------------------------ | ----- | ---- |  | ---- | ----- | - |  | - | ------ | -
|                                                       |  |                         
|                                                       |  | Years ended December 31,
|                                                       |  |                         
|                                                       |  | 2001                     |       | 2000 |  | 1999
|                                                       |  |                          |       |      |  |     
|Earnings from continuing operations                    |  | $                        | 49.5  |      |  | $    | 79.5  |   |  | $ | 104.4  |  
|Provision for deferred income taxes                    |  |                          | 30.7  |      |  |      | 45.4  |   |  |   | 62.2   |  
|Impairment loss from asset write-downs                 |  |                          | 6.1   |      |  |      | 18.3  |   |  |   |       |  
|Depreciation and amortization                          |  |                          | 105.4 |      |  |      | 97.2  |   |  |   | 80.1   |  
|Gains on marketable and derivative securities          |  |                          | (19.2 | )    |  |      |      |   |  |   |       |  
|Provision for doubtful accounts                        |  |                          | 15.8  |      |  |      | 14.8  |   |  |   | 16.8   |  
|Other reconciling items                                |  |                          | (9.0  | )    |  |      | (6.8  | ) |  |   | (4.1   | )
|                                                       |  |                          |       |      |  |      |       |   |  |   |        |  
|From continuing operations earnings                    |  |                          | 179.3 |      |  |      | 248.4 |   |  |   | 259.4  |  
|From continuing operations working capital
	activities |  |                          | 4.5   |      |  |      | (4.0  | ) |  |   | (109.2 | )
|                                                       |  |                          |       |      |  |      |       |   |  |   |        |  
|Operating cash flows from continuing operations        |  |                          | 183.8 |      |  |      | 244.4 |   |  |   | 150.2  |  
|From discontinued operations                           |  |                          | (0.8  | )    |  |      | 24.8  |   |  |   | 47.5   |  
|                                                       |  |                          |       |      |  |      |       |   |  |   |        |  
|Cash flows provided by operating activities            |  | $                        | 183.0 |      |  | $    | 269.2 |   |  | $ | 197.7  |  
|                                                       |  |                          |       |      |  |      |       |   |  |   |        |  

Cash
Flows

Cash
Balances

Cash and equivalents increased by
$20.2 million to $138.7 million during 2001 as
operating cash flows provided funds for investing, primarily for
capital assets, at a level comparable to 2000 and a continuing
reduction of debt. During 2000, cash and equivalents increased
by $60.0 million to $118.5 million during 2000 as
strong operating cash flows fully funded investing activities
and provided

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funding for debt reduction. During 1999, cash and
equivalents decreased by $42.5 million as investing
requirements, primarily for the acquisition of ABR, reduced
existing cash balances and utilized external financing.


Operations

Operating cash flows for 2001 decreased by
$86.2 million from the 2000 level due primarily to lower
cash flows from earnings, which in 2001 were reduced by the
$34.1 million after-tax effect payment of the Comdata
litigation costs. Without regard to the effect of these
litigation costs, 2001 operating cash flows from continuing
operations of $183.8 million would have been
$217.9 million and operating cash flows from continuing
operations earnings of $179.3 million would have been
$213.4 million. Working capital activities of continuing
operations provided $8.5 million more cash during 2001 than
was the case in the comparable 2000 period. This change reflects
a net cash inflow of $42.8 million from liquidation of
receivables in the current year, compared to a net cash outflow
from a build-up of receivables of $55.0 million in 2000.
When comparing the working capital cash flows for 2001 to 2000,
the total $97.8 million increase in cash provided by
receivables related substantially to Comdata receivables
activity and was offset in part by a decrease of
$54.6 million in cash provided by Comdata drafts payable in
those periods. The relationship of the period-end date and the
timing of weekly draft clearing operations at Comdata
significantly affected the amount of drafts payable and
receivables outstanding at the end of 2001. The year 2001 ended
on a Monday rather than on a weekend as it had in 2000, which
permitted the weekly settlement of an additional amount of
receivables and drafts payable in the year 2001 reporting period
compared to 2000.

Operating cash flows increased by
$71.5 million in 2000 over the 1999 level as an improvement
in cash flows from working capital items more than offset a
decrease in operating cash flows from continuing operations
earnings. After adjustment for noncash items included in
earnings, operating cash flows from continuing operations
earnings in 2000 decreased by $11.0 million from the 1999
level for reasons previously discussed under Results of
Operations. Cash flows from working capital activities for
2000 improved by $105.2 million over 1999. The principal
factor in this improvement was a $33.5 million increase in
Comdata drafts payable during 2000 compared to a
$7.8 million decrease in the comparable 1999 period.
The relationship of the period-end date and the timing of weekly
draft clearing operations can significantly affect the amount of
drafts payable and receivables outstanding. The increase in
receivables outstanding during 2000 utilized $55.0 million
in cash flows, compared to a use of $79.0 million in 1999.
An increase in Comdata receivables during 2000 was offset in
part by net collections in HRS. Operating cash flows increased
by $34.0 million during 1999, as higher utilization of net
operating losses to reduce current income tax payments and a
higher proportion of noncash depreciation and amortization
expense in net earnings offset the reduction in net earnings.

Investing

Investing cash flows in 2001 included capital
expenditures of $43.2 million for property and equipment
and $50.8 million for software and development costs, of
which $23.6 million of software and development spending
took place during the first quarter. Investing cash flows also
included a first quarter payment of $10.0 million to
Ultimate Software Group, Inc. (Ultimate) to acquire
a non-exclusive software license, $5.0 million of which is
included in purchased software. Proceeds from sales of
businesses and assets of $18.7 million for 2001 principally
represent the sale of common stock of HotJobs.com, Ltd., which
provided proceeds of $15.6 million. Cash expended for
acquisitions during 2001 of $30.2 million primarily
represented minority investments intended to expand product
offerings in HRS and $5.0 million of the payment to
Ultimate. Further information is provided in Note F,
Investing Activity.

Investing cash flows in 2000 included
$65.1 million expended for investments in and advances to
businesses, including the May acquisition of the remaining
ownership interest in SVS and payments related to purchase
acquisitions made during the second quarter of 2000 and in prior
years. Capital expenditures during 2000 amounted to
$97.0 million, including software development costs of
$30.5 million. Capital expenditures in 2000 also involved
$28.5 million, including furnishings and

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capitalized interest, for a new Ceridian
headquarters facility and the renovation of an office facility
for use by the HRS benefits services business. In November 2000,
Ceridian sold and leased back real property in Bloomington,
Minn., constituting the Ceridian headquarters facility, for
$41.0 million in cash. The annual rental cost under the
lease is approximately $4.2 million over a 20-year period.
In September 2000, Ceridian also sold property in Palm Harbor,
Fla., formerly used in HRS benefits services operations, for
cash proceeds of $12.8 million.


Cash flows from investing activities during 1999
principally involved expenditures of $681.5 million for the
acquisitions of ABR in June 1999 and $20.3 million for a
majority interest in SVS in February 1999. Capital expenditures
amounted to $107.2 million during 1999, primarily for
Ceridians headquarters facility, renovation of an office
facility in St. Petersburg, Fla., and hardware and software to
be used in internal financial systems. Total expenditures for
the headquarters building totaled $27.1 million at
December 31, 1999, including $24.6 million incurred in
1999. The renovation of the St. Petersburg office facility
resulted in renovation expenditures of $10.4 million after
Ceridian acquired ABR and $25.7 million in total as of
December 31, 1999.

Financing

Financing activities in 2001 largely involved
transactions related to the spin-off, further described in
Note I, Financing. At the time of the spin-off,
advances of $235.0 million from the January 2001 credit
facility, the $225.0 million Arbitron payment and existing
cash balances funded the required early retirement of the
$430.0 million of senior notes outstanding and payment of
the $50.0 million balance outstanding under the
$250.0 million domestic revolving credit facility dated
July 1997. The redemption of senior notes required a payment of
$456.5 million, which included $26.5 million under a
make-whole provision of the senior notes agreement,
based on the relationship of the nominal interest rate of the
senior notes to a certain market rate. The establishment of the
January 2001 credit facility resulted in the payment of
$1.0 million for origination costs that will be amortized
over the term of the facility. During the second quarter of
2001, Ceridian drew an additional $50.0 million of advances
on the January 2001 credit facility in connection with the
litigation settlement described in Note K, Legal
Matters. During 2001, the Company reduced outstanding
advances by payments of $50.0 million to
$235.0 million. Another $2.0 million of the credit
line was utilized for letters of credit at December 31,
2001. In addition, payments of $18.8 million and currency
translation adjustments of $0.3 million extinguished the
balance of $19.1 million outstanding on the Canadian
revolving credit agreements at December 31, 2000 leaving
only a $0.9 million letter of credit outstanding at
December 31, 2001. Financing cash flows in 2001 also
included cash inflows of $9.1 million from exercises of
stock options and employee stock plan purchases.

The $225.0 million payment liability,
combined with other assets and liabilities of Arbitron, resulted
in net liabilities of discontinued operations of
$182.9 million at the time of the spin-off, which increased
the Companys retained earnings in that amount when the
spin-off took place. This amount is subject to adjustment based
on the filing of certain tax returns as discussed in
Note B, Income Taxes. Additionally, the par
value of Ceridians common stock was established as
$.01 per share compared to $.50 per share prior to the
spin-off and no treasury common stock was retained by Ceridian,
resulting in a reduction of additional paid-in capital of
$262.2 million. Further details on financing and equity
transactions are presented in Note C, Supplementary
Data to Statement of Operations under the heading
Discontinued Operations and in the Statements of
Stockholders Equity.

Financing cash outflows in 2000 included the
repurchase on the open market of $20.0 million face amount
of Ceridians outstanding senior notes, a reduction of the
amount outstanding under the U.S. revolving credit
agreement of $75.0 million, and payments of
$19.6 million under the Canadian revolving credit
facilities. Financing cash inflows included $15.8 million
of cash proceeds from exercises of stock options and employee
stock plan purchases.

Cash flows from financing activities during 1999
primarily involved financing arrangements related to the
acquisition of ABR. Proceeds from stock option exercises and
employee stock plan purchases provided $24.2 million of
financing inflows during 1999. Ceridian repurchased
235,518 shares of its

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common stock at an average price of
$21.86 per share during the third and fourth quarters of
1999, resulting in financing outflows of $5.1 million.


For further information on financing cash flows,
see Note I, Financing, and the following
section entitled Liquidity and Capital Resources.

Liquidity
and Capital Resources

Ceridian expects to meet its liquidity needs from
existing cash balances, cash flows from operations and
borrowings under external credit facilities. Cash balances and
cash flows are discussed under the section entitled
Financial Condition above. Cash flows from
operations are primarily influenced by the same factors that
influence revenue as discussed in a preceding section of this
discussion entitled Results of Operations and in
several of the items in the following section entitled
Cautionary Factors That Could Affect Future Results.
Cautionary factors of particular relevance include those that
refer to the effects of government regulations on such matters
as the timing of tax payments, interest rates, employee
benefits, and funds transfer activities; our ability to attract
new customers and retain our existing customers; and general
economic conditions.

With regard to external financing, at
December 31, 2001, Ceridian had $113.0 million
available under its $350.0 million revolving credit
facility, which continues until March 2006, and may request an
additional commitment of up to $150.0 million. At
December 31, 2001, Ceridian remained in compliance with all
financial covenant tests in this credit facility, which are
described in Note I, Financing. The Company
also believes that up to $150.0 million of financing could
be arranged through a securitization of Comdata receivables and
may choose to do so if the financing costs were lower than other
alternatives. Any receivables sold under such a securitization
are likely to remain on the Companys balance sheet along
with any balance of related borrowings.

Ceridians expenditures for capital assets
and software presently planned for 2002 total approximately
$108.0 million with an estimated allocation of
$96.0 million to HRS and $12.0 million to Comdata.
Ceridian also plans to continue to grow its business through
strategic acquisitions.

Ceridian has entered into lease and royalty
commitments that are not reflected on its balance sheet at
December 31, 2001, under generally accepted accounting
principles. The table below describes the annual cash payments
for which Ceridian is obligated under its on-balance-sheet debt
and off-balance-sheet lease and significant royalty commitment
at that date.

Financial Commitments at December 31,
2001

(Dollars in millions)


|                           |  |      |      |      |  |      |      |      |  |      |      |            |  |       |      |  |  |  |       |  |  |  |       |  |  |   |       | 
|-------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---------- |  | ----- | ---- |  |  |  | ----- |  |  |  | ----- |  |  | - | ----- | 
|                           |  | 2002 |      | 2003 |  | 2004 |      | 2005 |  | 2006 |      | Thereafter |  | Total
|                           |  |      |      |      |  |      |      |      |  |      |      |            |  |      
|Debt payments              |  | $    | 1.5  |      |  |      | 1.4  |      |  |      |     |            |  |       |     |  |  |  | 235.0 |  |  |  |      |  |  | $ | 237.9 | 
|Lease payments             |  | $    | 40.9 |      |  |      | 38.1 |      |  |      | 33.5 |            |  |       | 27.7 |  |  |  | 23.6  |  |  |  | 135.9 |  |  | $ | 299.7 | 
|Ultimate minimum royalties |  | $    | 6.0  |      |  |      |     |      |  |      | 6.0  |            |  |       | 6.0  |  |  |  | 6.3   |  |  |  | 8.4   |  |  | $ | 32.7  | 

Debt obligations are described above under the
heading Financing and in Note I,
Financing. Since Ceridian has the capability and
intention of continuing its use of short-term borrowings under
the January 2001 revolving credit facility until the facility
matures in 2006, the outstanding balance is treated as due on
that maturity date.

Ceridian conducts a substantial portion of its
operations in leased facilities. Most of these leases contain
renewal options and require payments for taxes, insurance and
maintenance. Ceridian remains secondarily liable for future
rental obligations related to assigned leases totaling
$3.8 million at December 31, 2001. Ceridian does not
anticipate any material non-performance by the assignees of
these leases.

In March 2001, Ceridian entered into an agreement
with Ultimate in which Ceridian was granted a non-exclusive
license to use Ultimates software as part of a Web-enabled
integrated ASP offering to

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middle market Ceridian customers. Ceridian made
an immediate payment of $10.0 million, of which
$5.0 million was contingent upon successful transfer of the
technology to Ceridian. Ceridian also agreed to make additional
payments commencing upon transfer of technology, based on the
number of Ceridian customers employees paid by using the
software and subject to minimum and maximum amounts. The
transfer of technology was accomplished in February 2002, at
which time the requirement for minimum monthly payments in 2002
was eliminated in consideration for an advance payment of
$6.0 million, representing the minimum monthly payments for
the year 2003. Ceridian then remains obligated to future minimum
monthly payments of $0.5 million per month from January
2004 until January 1, 2006, when the minimum monthly
payment will escalate at a rate of 5% per annum. The
noncancelable term of the contract extends for seven years until
March 2008 at which time either party may terminate the
agreement, provided that at least two years prior written notice
has been provided to the other party.


Critical
Accounting Policies

Ceridians significant accounting policies
are described in Note A, Accounting Policies.
We consider the most critical of those policies to be revenue
recognition and software and development costs recoverability.

Revenue recognition is primarily affected by the
timing of transaction processing and the terms and life of the
specific contracts entered into by the Company. When the fair
value of each element of a sales arrangement containing a
software product, installation and conversion, and transaction
processing elements can be objectively determined, the amounts
and timing of revenue recognition from this arrangement are
determined for each of the elements in the arrangement. When the
fair values of the elements of this arrangement are not
determinable, all revenue from the arrangement is recognized
equally over the transaction processing term.

HRS revenue is generated by service fees, income
from investment of payroll and tax filing funds, software
licenses or subscription fees, and installation and data
conversion services. Generally, transaction processing contracts
are for a period of one year and service fees for these
contracts are recognized as revenue when services have been
completed and the amount is billable. Fees for work-life and
employee assistance services are generally contract-based and
involve prepayments for services based on the number of customer
employees served and the level of service. Revenue from
prepayments on these contracts is deferred and recognized as the
services are performed. Investment income is recognized as
earned. Software license revenue is recognized when the software
is delivered, a signed contract exists, the sale price is fixed
and collectibility is probable. Revenue from installation and
conversion services is non-refundable; is determined on a time
and materials basis; and, along with related costs, is deferred
and recognized over the installation and conversion period,
generally two to four months.

Comdata revenue is generated from funds transfer,
regulatory permit, and retail cash card transaction services as
well as sales of point of sale terminals and retail cash cards.
Revenue from funds transfer and retail cash card fees is
recognized at the time these transactions take place. Revenue
from regulatory permit services is recognized as the services
are performed. Payments received from retailers upon delivery of
retail cash card stock are recognized as revenue over the period
of expected use by the retailer. Revenue from sales of terminals
is recognized upon delivery where a signed contract exists, the
sale price is fixed and collectibility is probable.

With regard to the recoverability of capitalized
software and development costs, we regularly perform an
assessment of our ability to recover the costs invested in these
assets. The amount of these costs shown on our balance sheet at
December 31, 2001 was $92.9 million. The elements of
software and development costs were purchased software of
$27.3 million and internally developed software of
$65.6 million. These assets represent the amounts we have
invested in these assets, reduced by amortization expense
charged against our earnings as the software was used in our
operations and by any write-downs as a result of our
recoverability analysis. Our recoverability analysis considers
projected future cash flows from the utilization of the
underlying software. The projections of future cash flows, which
are determined by management, are affected by such factors as
technological change, competitive offerings,

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marketplace expectations and project development.
Changes in any of these factors may result in future write-downs
of the carrying value of these assets. The amount of the
write-down, if any, is largely dependent on managements
estimates of future cash flows and the selection of an
appropriate discount rate. As a result of software
recoverability testing during the past three years, we recorded
asset write-down losses of $3.1 million in 2001,
$9.0 million in 2000 and none in 1999.


Cautionary Factors That Could Affect Future
Results

You should carefully consider each of the
following risks and all of the other information in this report.
The risks and uncertainties described in this report are not
only the ones we will face. Additional risks and uncertainties
not presently known to us or that we currently believe to be
immaterial may also adversely affect our businesses. If any of
the risks and uncertainties develops into actual events, our
business, financial condition or results of operations could be
materially affected. If that happens, the trading prices of our
common stock could decline significantly.

Our revenue depends in large part on our
ability to retain customers.

Customer retention is an important factor in the
amount and predictability of revenue and profits in each of our
businesses. Our ability to retain our customers depends on a
number of factors, including:



| |   |                                              
| | - | ---------------------------------------------
| |  | customer satisfaction;                       
|
| |  | product and service offerings by competitors;
|
| |  | customer service levels; and                 
|
| |  | price.                                       

In providing some of our services, particularly
payroll processing and tax filing services, we incur
installation and conversion costs in connection with new
customers that will need to be recovered before the contractual
relationship will provide incremental profit. Longer customer
relationships are likely to be more profitable.

Changes in governmental regulations
relating to employee benefits, funds transfer and other matters
may negatively impact our revenue and earnings.

Changes in or the elimination of governmental
regulations may adversely affect our revenue and earnings.
Changes in governmental regulations are difficult to predict and
could be significant. For example, the extent and type of
benefits that employers are required to or may choose to provide
employees and the amount and type of federal or state taxes
employers and employees are required to pay will affect the
associated new products or services that we may sell. As another
example, Comdata is currently licensed on the state level by the
banking or financial institutions departments of numerous
states. Continued licensing by these states is subject to
ongoing satisfaction of compliance requirements regarding safety
and soundness, including, for example, posting of surety bonds
to guarantee payment of funds in transit. Changes in this
regulatory environment, including the implementation of new or
varying measures by the U.S. federal government, may
significantly affect or change the manner in which Comdata
currently conducts some of the aspects of its business.

Our future revenue growth will depend on
our ability to continue selling our products and services to our
existing customers, introducing new or enhanced products and
services, attracting and retaining new customers and selling
additional products and services to existing
customers.

We expect that a portion of our anticipated
future revenue growth in each of our business segments will be
derived from:



| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | the continued selling of products and services to
	our existing customers;             
|
| |  | the planned introduction of new or enhanced
	products and services in our HRS business;

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| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | the selling of products and services to new
	customers; and                
|
| |  | the selling of additional products and services
	to our existing customers.

How successful we will be in these efforts will
depend on a variety of factors, including:



| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | our product and service offerings;                                                                                                       
|
| |  | effective sales and marketing efforts;                                                                                                   
|
| |  | our ability to attract new and retain new and
	existing customers;                                                                       
|
| |  | the level of market acceptance and the avoidance
	of difficulties or delays in development or introduction of new
	products and services;
|
| |  | our ability to integrate technology and
	information systems into our HRS products and services; and                                     
|
| |  | our successful implementation of products and
	services for new and existing customers.                                                  

There can be no assurance that we will achieve
our revenue growth objectives from our cross-selling efforts and
selling of new products and services. The inability to
cross-sell our products and services, attract and retain new
customers or successfully develop and implement new and enhanced
products and services could harm our business.

Economic factors and litigation may harm
our business and operating results.

Trade, monetary and fiscal policies, and
political and economic conditions may substantially change, with
corresponding impacts on the industries that we serve,
particularly those more economically sensitive industries such
as trucking. Approximately 81 percent of Comdatas
revenue for 2001 was attributable to its transportation
business. Comdatas results of operations are, therefore,
dependent on the level of activity in the transportation
industry, which, in turn, is affected by general economic
conditions. For example, a decrease in the number of truck
drivers would decrease the number of Comchek transactions and
could adversely affect Comdatas revenues. Similarly, since
a significant portion of our fueling transactions are priced by
reference to the amount spent on the transaction, our revenue
can be significantly affected by changes in diesel fuel prices.
Falling diesel fuel prices directly reduce the amounts of
revenue and earnings related to these transactions. Rising
diesel fuel prices increase our revenue and earnings but also
increase the capital requirements of Comdata and subject Comdata
to greater credit or bad debt risks with respect to its
customers that purchase diesel fuel using a Comdata payment
method.

Changes in trade, monetary and fiscal policies,
and political and economic conditions could also affect
employment levels, with a corresponding impact on our payroll
processing and tax filing businesses. Decreased employment
levels, as well as slowed economic conditions could negatively
effect wage and bonus payments, orders and the timing of product
installations, and negatively impact the operating results of
our HRS business.

Our future operating results may also be harmed
by adverse judgments, settlements, unanticipated costs or other
effects of legal and administrative proceedings now pending or
that may be instituted in the future.

Any problems or delays we may experience in
effecting system upgrades and conversions could harm our
business.

We expect to continue our efforts to transition
to new or enhanced data processing systems and/or software in
several of our business units, including systems that process
customer data and internal management information systems. The
successful implementation of these new or enhanced systems will
be critical to the effective delivery of products and services
and the efficient operation of our businesses. Problems or
delays with the installation or initial operation of the new or
enhanced systems could disrupt or increase costs in connection
with our delivery of services and with our operations planning,
financial

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reporting and management. From time to time, we
have experienced these types of problems or delays. For example,
in 1997, we terminated a payroll processing development project
and incurred an unusual loss of $150.0 million.


Our ability to remain competitive depends
on our ability to adapt to changing technology.

As a provider of information management and data
processing services, we will need to adapt and respond to the
technological advances offered by our competitors and the
technological requirements of our customers, including those
related to the Internet, in order to maintain and improve upon
our competitive position. For example, management intends to
focus on developing and fully implementing a strategy for our
HRS business to provide services over the Internet. As another
example, Comdatas credit, debit and cash cards could be
replaced by a next-generation payment method. There can be no
assurance that we will develop and release new products and
services or product and service enhancements within the
projected time frames and within targeted costs. Significant
delays, difficulties or added costs in introducing new products
and services or enhancements, either through internal
development, acquisitions or cooperative relationships with
other companies, could adversely affect the market acceptance of
our products and services and our operating results.

Our strategy to make acquisitions of and
investments in complementary businesses, products and
technologies involves risks that could harm our business and
operating results.

One of our growth strategies is to make
acquisitions of and investments in complementary businesses,
products and technologies that will enable us to add products
and services for our core customer base and for adjacent
markets, and to expand each of our businesses geographically.
Our ability to make these acquisitions and investments will
depend on:



| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | the availability of suitable acquisition
	candidates and investments at acceptable costs;
|
| |  | our ability to compete effectively for these
	acquisition candidates and investments; and
|
| |  | the availability of capital to complete these
	acquisitions and investments.             

These risks could be heightened if we complete
several acquisitions or investments within a relatively short
period of time. The benefits of an acquisition or investment may
often take considerable time to develop, and we cannot guarantee
that any acquisition or investment will in fact produce the
revenue, earnings or business synergies that we anticipated.

In addition, implementation of this strategy
entails a number of risks, including:



| |   |                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------
| |  | inaccurate assessment of undisclosed liabilities;                                                                                          
|
| |  | entry into markets in which we may have limited
	or no experience;                                                                         
|
| |  | potential loss of key employees or customers of
	the acquired businesses;                                                                  
|
| |  | difficulties in assimilating the operations and
	products of an acquired business or in realizing projected
	efficiencies and cost savings;
|
| |  | reallocation of significant amounts of capital
	from operating initiatives to acquisitions; and                                            
|
| |  | increase in our indebtedness and a limitation in
	our ability to access additional capital when needed.                                    

In addition, some acquisitions and investments
may require the consent of the lenders under our credit
facility, and we cannot predict whether approvals would be
forthcoming or the terms on which the lenders would approve
these transactions. Also, from an accounting perspective,
acquisitions and investments may involve non-recurring charges
and significant charges from periodic reassessments of the
recoverable value of goodwill that could harm our operating
results.

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Our credit facility may restrict our
operating flexibility.

The governing documents for our credit facility
contain a number of significant provisions that, among other
things, restrict our ability to:



| |   |                                            
| | - | -------------------------------------------
| |  | sell assets;                               
|
| |  | incur more indebtedness;                   
|
| |  | grant or incur liens on our assets;        
|
| |  | make investments or acquisitions;          
|
| |  | repurchase or redeem capital stock;        
|
| |  | engage in mergers or consolidations; and   
|
| |  | engage in transactions with our affiliates.

These restrictions could hurt our ability to
finance our future operations or capital needs or make
acquisitions that may be in our best interest. In addition, our
credit facility requires that we satisfy several financial
covenants. Our ability to comply with these financial
requirements and other restrictions may be affected by events
beyond our control, and our inability to comply with them could
result in a default under the credit facility. If a default
occurs under our credit facility, the lenders under this
facility could elect to declare all of the outstanding
borrowings, as well as accrued interest and fees, to be due and
payable and require us to apply all of our available cash to
repay those borrowings. In addition, a default may result in
higher rates of interest and the inability to obtain additional
capital.

The markets we serve may attract new
competitors or cause current competitors to focus more on these
markets, which could harm our business.

New competitors could decide to enter the markets
we serve or current competitors could decide to focus more on
these markets, and thereby intensify the highly competitive
conditions that already exist. These new entrants and existing
competitors could offer or introduce new technologies or a
different service model, or could treat the services to be
provided by one of our businesses as one component of a larger
product or service offering. These developments could enable
these new and existing competitors to offer similar products or
services at reduced prices. Any of these or similar developments
could harm our business and results of operations.

The Internal Revenue Service may determine
that the spin-off does not qualify as a tax-free distribution
and thus treat the spin-off as taxable to Ceridian and its
stockholders, which could subject Ceridian and its stockholders
to material amount of taxes.

Old Ceridian received a favorable letter ruling
from the Internal Revenue Service to the effect that, for United
States federal income tax purposes, the spin-off generally will
be tax-free to Old Ceridian and it stockholders. Even though Old
Ceridian received a favorable letter ruling from the IRS, it is
possible that Old Ceridian and its stockholders could be subject
to a material amount of taxes as a result of the spin-off if the
representations and undertaking of Old Ceridian and Ceridian
made to the IRS in connection to obtaining the letter ruling are
determined to be inaccurate. For a description of material
United States federal income tax consequences to Old
Ceridians stockholders of the spin-off, we refer you to
our Information Statement, which is an exhibit to our
Registration Statement on Form 10, as amended, under the
heading The Spin-Off  Material
U.S. Federal Income Tax Consequences of the Spin-Off.

If the corporate restructuring transactions
and spin-off were not legal dividends, they could be held
invalid by a court and harm our financial condition and results
of operations.

The corporate restructuring transactions and the
spin-off were subject to Delaware corporate law. There can be no
assurance that a court will not later determine that the
spin-off and one or more of the

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corporate restructuring transactions were invalid
under Delaware law and reverse the transaction. The resulting
complications, costs and expenses could harm our financial
condition and results of operations.


We will be subject to risks related to our
international operations, which may harm our operating
results.

We have international operations in Canada and
the United Kingdom, which in 2001 provided about 20 percent
of the revenue from our HRS division and subsidiaries. Our
Centrefile Limited subsidiary provides payroll processing
services and human resource information systems software in the
United Kingdom. Our Canadian operations handle and hold payroll
as well as tax filing funds for our Canadian customers. Comdata
also operates in Canada and is considering expanding into
Mexico. Apart from the risks described in this section of the
report, international operations are subject to various
additional risks which could adversely affect those operations
or our business as a whole, including:



| |   |                                                                        
| | - | -----------------------------------------------------------------------
| |  | costs of customizing products and services for
	foreign customers;     
|
| |  | difficulties in managing and staffing
	international operations;       
|
| |  | reduced protection for intellectual property
	rights in some countries;
|
| |  | longer sales and payment cycles;                                       
|
| |  | the burdens of complying with a wide variety of
	foreign laws;         
|
| |  | exposure to local economic conditions; and                             
|
| |  | unfavorable currency exchange rates.                                   

We expect to continue to implement our
plans to improve the performance of our U.S. payroll
business, and we cannot assure you that our efforts and the
amount we invest in these plans will improve the financial
performance of our U.S. payroll business.

We have ongoing and continued initiatives to
invest in and improve the performance of our U.S. payroll
business. These initiatives include:



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | transitioning small business customers to
	Powerpay, our Internet payroll product;                                                             
|
| |  | improving our customer service model;                                                                                                          
|
| |  | improving customer retention;                                                                                                                  
|
| |  | continuing product enhancements;                                                                                                               
|
| |  | investing in our Six Sigma program, an effort
	that focuses on helping organizations produce products and
	services better, faster and cheaper;
|
| |  | consolidating and improving efficiencies at our
	payroll processing centers; and                                                               
|
| |  | increasing the investment in our sales efforts.                                                                                                

We cannot assure you that our efforts and the
amount we invest in this process will improve the financial
performance of our U.S. payroll business, and if so, by how
much. If these initiatives are less successful than planned, or
the level of investment needs to be increased, our business
could be harmed.

We are continuing to integrate some of our
HRS businesses under one management structure. Difficulties or
problems we may experience in this integration process may harm
our business and operating results.

Certain of our HRS businesses currently provide:



| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | payroll processing services and software, tax
	filing services, human resource management systems software and
	other similar services and products;                     
|
| |  | services designed to help organizations address
	workplace effectiveness issues and improve employee recruitment,
	retention and productivity and reduce absenteeism; and

35



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| |   |                                                                                                 
| | - | ------------------------------------------------------------------------------------------------
| |  | employee health and welfare benefits
	administration and qualified plan administration services.

We are continuing to integrate all of these
businesses under one management structure in a combined business
within our HRS segment. Difficulties or problems we may
experience in this integration process may harm our business and
operating results.

Government regulation changes on timing or
amount of remittances and changes in interest rates may reduce
our investment income from customer deposits.

Our payroll and tax filing business in the United
States and Canada has historically derived significant revenue
and earnings from the investment of customer deposits, and this
revenue and earnings are an integral part of our payroll and tax
filing business. Changes in governmental regulations on the
timing and amount of remittances may reduce the period of time
we are allowed to hold these remittances, as well as the amount
of such remittances, and may decrease our revenue and earnings
from this source. If governmental regulations change in this
fashion, we would likely seek to require customers who permit us
to retain earnings on their deposits to pay us additional fees
in lieu of this lost investment income.

In addition, changes in interest rates will
affect our revenue and earnings from this source. The average
yield on our investment of customer deposits was
5.5 percent in 2001. Interest rate changes are difficult to
predict and could be significant. We expect to continue to
lessen the impact of interest rate decreases by the use of
derivative securities such as interest rate contract
transactions that are described in more detail in Note J,
Commitments and Contingencies and under
Part II, Item 7A of this report. There can be no
assurance that we will be able to use derivative securities such
as collars and swaps or obtain them on favorable terms, or to
what extent any decrease in investment income would be offset by
the use of these derivative securities. If we were unable to
secure derivative securities on favorable terms and interest
rates decrease, our financial results would be harmed.

Our ability to improve operating margins in
our HRS business will depend on the degree to which and the
speed with which we will be able to increase operational
efficiencies and reduce operating costs.

Our ability to improve profit margins in our HRS
business will depend on factors that include the degree to which
and the speed with which we will be able to increase operational
efficiencies and reduce operating costs. Delays or difficulties
in implementing and consolidating process improvements, such as
those designed to reduce printing, telecommunication and
customer service costs, or quickly and effectively installing
new customers or new products and services, and in consolidating
various functions, including administrative functions,
eliminating duplicate operations and consolidating facilities
could adversely affect the timing or effectiveness of cost
reduction and margin improvement efforts.

The failure of our benefit services
subsidiary to comply with applicable laws relating to employee
benefits administration could result in substantial taxes,
penalties and liabilities that could harm our
business.

As a result of the benefits services our benefit
services subsidiary provides, it may be subject to potential
legal liability as a provider of portability compliance
services. As a provider of COBRA (Consolidated Omnibus Budget
Reconciliation Act) compliance services, our benefit services
subsidiary is subject to excise taxes for noncompliance with
provisions of COBRA. In addition to the excise tax liability
that may be imposed on our benefit services subsidiary,
substantial excise taxes may be imposed under COBRA on our
customers. In addition, as a provider of HIPAA (Health Insurance
Portability and Accountability Act of 1996) compliance and
administration services, our benefit services subsidiary is
subject to ERISA (Employee Retirement Income Security Act of
1974) penalties for noncompliance with various provisions of
HIPAA.

Under various service agreements with its
customers, our benefit services subsidiary assumes financial
responsibility for the payment of the taxes and/ or penalties
assessed against its customers if a court of competent
jurisdiction in a final nonappealable decision determines that
our benefit services subsidiary failed to comply with COBRA,
failed to comply with HIPAA or liabilities were incurred by its
customers arising out of the failure of our benefit services
subsidiary to fulfill the obligations under its

36



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##### Table of Contents



agreements with its customers, unless these
taxes, penalties or liabilities are attributable to the
customers failure to comply with COBRA or HIPAA or with
the terms of the agreement the customer has with our benefit
services subsidiary. These taxes, penalties and liabilities
could, in some cases, be substantial and could harm our business
and operating results. Additionally, the failure of our benefit
services subsidiary to comply with applicable provisions of
COBRA or HIPAA or to fulfill its obligations under its customer
agreements could harm its reputation, its relationship with its
customers and its ability to gain new customers.


The failure of our HRS business to comply
with applicable laws relating to payroll tax and retirement plan
administration could result in substantial taxes, penalties and
liabilities that could harm our business.

Our HRS customers transfer to our HRS division or
its subsidiaries contributed employer and employee tax funds and
employer and employee contributions to qualified retirement
plans. Our HRS division or its subsidiaries process the data
received from its customers and remit the funds along with a tax
return to the appropriate taxing authorities when due.
Retirement plan assets are remitted to investment vehicles
selected by the plan administrator or plan sponsor. Tracking,
processing and paying these tax liabilities and administering
retirement plans is complex. Mistakes may occur in connection
with this service. Our HRS division or its subsidiaries and its
customers are subject to large cash penalties imposed by tax
authorities for late filings or underpayment of taxes or
required plan contributions. Under service agreements with its
customers, our HRS division or its subsidiaries assume financial
responsibility for the payment of the penalties assessed against
its customers arising out of the failure of our HRS division or
its subsidiaries to fulfill its obligations under its agreements
with these customers, unless these penalties are attributable to
the customers failure to comply with the terms of the
agreement the customer has with our HRS division or its
subsidiaries. These penalties could, in some cases, be
substantial and could harm its business and operating results.
Additionally, the failure of our HRS division or its
subsidiaries to fulfill its obligations under its customer
agreements could harm our reputation, its relationship with our
customers and its ability to gain new customers.

Our HRS business is seasonal which may
cause our operating results to fluctuate
significantly.

Our HRS business is seasonal with generally
higher revenues during the first quarter as a result of higher
payroll funds being processed due to year-end bonuses being paid
and additional year-end services required, such as the
preparation and distribution of W-2s, and during the fourth
quarter as result of special reporting requirements. We expect
this trend to continue, which could cause our quarterly
operating results to fluctuate significantly.

The business and results of operations of
our Comdata subsidiary are heavily dependent on several of its
vendors and suppliers, the loss of whom could adversely affect
our consolidated results of operations.

Comdatas business is dependent on several
significant vendors and suppliers, the loss of whom could
adversely affect not only Comdatas results of operations
but our consolidated results of operations as well. For example,
Comdatas current business relies upon its relationships
with third party suppliers, such as MasterCard, to effect and
support transactions, including access to the Cirrus ATM network
and the Maestro point-of-sale debit network. The ability of
Comdata to continue to provide some of its services in the
manner in which it currently delivers them may be affected by
actions taken by MasterCard or other similar card associations.
Any adverse change in Comdatas relationship with these
vendors could likely adversely affect Comdatas business
and results of operations and could harm our consolidated
results of operations as well.

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##### Table of Contents



Item 7A. Quantitative and
Qualitative Disclosures about Market Risk

Our market risk exposure is primarily interest
rate risk related to revenue derived from payroll and tax filing
fund investments. This risk exposure is partially offset by
interest expense on floating rate debt obligations. This
investment income included in revenue varies as a function of
short-term U.S. and Canadian interest rates. We use interest
rate collars or swaps to hedge the risk of falling interest
rates. The table below indicates the hypothetical change in our
after-tax investment income, net of interest expense, over a
one-year period due to an immediate and sustained change in the
annual average interest rate. The base scenario utilizes a
federal funds rate of 1.75% at December 31, 2001.

|                                 |  |                                    
|-------------------------------- |  | -----------------------------------
|Percent Change in Interest Rates |  | Hypothetical Change in Net Interest
|Expressed in Basis Points        |  | Income from Base Scenario          
|                                 |  |                                    
|                                 |  | (in millions of dollars)           
|300 Rise                         |  | 5.6                                
|200 Rise                         |  | 3.6                                
|100 Rise                         |  | 1.8                                
|50 Rise                          |  | 0.9                                
|25 Rise                          |  | 0.5                                
|Base Scenario                    |  |                                    
|25 Decline                       |  | (0.5)                              
|50 Decline                       |  | (0.9)                              
|100 Decline                      |  | (1.8)                              

Computations in the table above are based on
assumptions about the amounts of payroll and tax filing funds
and the relative levels of short-term market interest rates
within U.S. and Canadian markets and should not be relied on as
precise indicators of future expected results. Included in the
computations are the effects of interest rate changes on income
and expense related to all short-term and floating rate assets
and liabilities owned or issued by Ceridian or its subsidiaries,
including interest rate contracts. The interest rate contracts
that are or will be effective for 2002 cover an average of
$800.0 million of payroll and tax filing investments with
an average floor strike rate of 5.08% and an average cap strike
rate of 6.02%. In addition, we have entered into forward
contracts with floors ranging from 4.50% to 6.07% in order to
continue coverage at the current level through 2003 and with
various maturity dates ranging out to December 2007. We expect
to obtain additional contracts when market conditions are
favorable to replace maturing contracts. We refer you to
Note J, Commitments and Contingencies, found in
Part II, Item 8 of this report for additional
information on interest rate contracts.

Ceridians exposure to foreign exchange
market risk is negligible. Our foreign operations consist of
payroll and human resource operations in Canada and the UK.
These foreign operations serve their respective domestic
markets, with all revenues and expenses denominated in local
currency. Other intercompany charges between U.S. and
non-U.S. based operations are not material. Translation
adjustments on investments in foreign operations are reported in
comprehensive income and are not hedged.

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|        |                                             
|------- | --------------------------------------------
|Item 8. | Financial Statements and Supplementary
	Data

1. Index to Consolidated Financial
Statements

The following financial statements and reports
are filed as part of this report:

|                                                                                                      |  |      |       | 
|----------------------------------------------------------------------------------------------------- |  | ---- | ----- | 
|                                                                                                      |  | Page
|                                                                                                      |  |     
|Independent Auditors Report                                                                          |  |      | 40    | 
|Consolidated Statements of Operations for the
	years ended December 31, 2001, 2000 and 1999           |  |      | 41    | 
|Consolidated Balance Sheets as of
	December 31, 2001 and 2000                                         |  |      | 42    | 
|Consolidated Statements of Cash Flows for the
	years ended December 31, 2001, 2000 and 1999           |  |      | 43    | 
|Consolidated Statements of Stockholders
	Equity for the years ended December 31, 2001, 2000 and 1999 |  |      | 44    | 
|Notes to Consolidated Financial Statements for
	the three years ended December 31, 2001               |  |      | 45-64 | 

2. Index to Financial Statement
Schedules

The following financial statement schedule and
report is filed as part of this report and should be read in
conjunction with the Consolidated Financial Statements:

|                                                              |  |  |    | 
|------------------------------------------------------------- |  |  | -- | 
|                                                              |  | 
|Schedule II. Valuation and Qualifying Accounts                |  |  | 65 | 
|Independent Auditors Report on Financial
	Statement Schedule |  |  | 66 | 

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Independent Auditors Report

The Board of Directors and Stockholders of

Ceridian Corporation:


We have audited the accompanying consolidated
balance sheets of Ceridian Corporation and subsidiaries as of
December 31, 2001 and 2000, and the related consolidated
statements of operations, cash flows and stockholders
equity for each of the years in the three-year period ended
December 31, 2001. These consolidated financial statements
are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States
of America. 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 consolidated
financial statements referred to above present fairly, in all
material respects, the financial position of Ceridian
Corporation and subsidiaries as of December 31, 2001 and
2000, and the results of their operations and their cash flows
for each of the years in the three-year period ended
December 31, 2001, in conformity with accounting principles
generally accepted in the United States of America.

[KPMG SIGNATURE]

Minneapolis, Minnesota

January 22, 2002, except as to Note F,


which is as of February 5, 2002


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|                                      |                                             
|------------------------------------- | --------------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS | (Dollars in millions, except per share data)




|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |         |       | 
|------------------------------------------- | ----------------------------------- | ------------------------ | ------- | ------- | ------- | ---- | ------- | ------- | ------- | - | ------- | ------- | ----- | 
|                                            |                                     |                         
|                                            |                                     | Years Ended December 31,
|                                            |                                     |                         
|                                            |                                     | 2001                     |         | 2000    |         | 1999
|                                           
|                                           
|Revenue                                     |                                     | $                        | 1,182.3 |         |         | $    | 1,175.7 |         |         | $ | 1,127.0 |        
|Costs and Expenses                          |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                            | Cost of revenue                     |                          |         | 573.6   |         |      |         | 559.0   |         |   |         | 553.1   |      
|                                            | Selling, general and administrative |                          |         | 404.6   |         |      |         | 359.3   |         |   |         | 332.1   |      
|                                            | Research and development            |                          |         | 59.0    |         |      |         | 62.8    |         |   |         | 60.6    |      
|                                            | Other expense (income)              |                          |         | 48.2    |         |      |         | 31.7    |         |   |         | (4.4    | )    
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                            |                                     | Total costs and expenses |         |         | 1,085.4 |      |         |         | 1,012.8 |   |         |         | 941.4 | 
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|Earnings before interest and taxes          |                                     |                          | 96.9    |         |         |      | 162.9   |         |         |   | 185.6   |        
|                                           
|                                            | Interest income                     |                          |         | 6.5     |         |      |         | 4.7     |         |   |         | 6.4     |      
|                                            | Interest expense                    |                          |         | (19.0   | )       |      |         | (39.8   | )       |   |         | (24.7   | )    
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|Earnings before income taxes                |                                     |                          | 84.4    |         |         |      | 127.8   |         |         |   | 167.3   |        
|Income tax provision                        |                                     |                          | 34.9    |         |         |      | 48.3    |         |         |   | 62.9    |        
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|Earnings from continuing operations         |                                     |                          | 49.5    |         |         |      | 79.5    |         |         |   | 104.4   |        
|                                           
|Discontinued operations                     |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                            | Gain (Loss) on disposition          |                          |         | 5.2     |         |      |         | (6.9    | )       |   |         |        |      
|                                            | Earnings from operations            |                          |         |        |         |      |         | 27.6    |         |   |         | 40.9    |      
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|Net earnings                                |                                     | $                        | 54.7    |         |         | $    | 100.2   |         |         | $ | 145.3   |        
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|Basic earnings per share                    |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                            | Continuing operations               |                          | $       | 0.34    |         |      | $       | 0.55    |         |   | $       | 0.72    |      
|                                            | Net earnings                        |                          | $       | 0.37    |         |      | $       | 0.69    |         |   | $       | 1.01    |      
|Diluted earnings per share                  |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                            | Continuing operations               |                          | $       | 0.33    |         |      | $       | 0.54    |         |   | $       | 0.71    |      
|                                            | Net earnings                        |                          | $       | 0.37    |         |      | $       | 0.68    |         |   | $       | 0.98    |      
|Shares used in calculations (in
	thousands) |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                            | Weighted average shares (basic)     |                          |         | 146,069 |         |      |         | 145,229 |         |   |         | 144,524 |      
|                                            | Dilutive securities                 |                          |         | 2,527   |         |      |         | 1,505   |         |   |         | 3,440   |      
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                            | Weighted average shares (diluted)   |                          |         | 148,596 |         |      |         | 146,734 |         |   |         | 147,964 |      
|                                            |                                     |                          |         |         |         |      |         |         |         |   |         |        
|                                           

See notes to consolidated financial statements.

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|                            |                                             
|--------------------------- | --------------------------------------------
|CONSOLIDATED BALANCE SHEETS | (Dollars in millions, except per share data)




|                                                                                                    |                                          |              |                                                              |       |       |         |         |       |       |         | 
|--------------------------------------------------------------------------------------------------- | ---------------------------------------- | ------------ | ------------------------------------------------------------ | ----- | ----- | ------- | ------- | ----- | ----- | ------- | 
|                                                                                                    |                                          |             
|                                                                                                    |                                          | December 31,
|                                                                                                    |                                          |             
|                                                                                                    |                                          | 2001         |                                                              | 2000 
|                                                                                                   
|                                                                                                   
|ASSETS                                                                                              |                                          |              |                                                              |       |       |         |         |      
|Current assets                                                                                      |                                          |              |                                                              |       |       |         |         |      
|Cash and equivalents                                                                                |                                          | $            | 138.7                                                        |       |       | $       | 118.5   |      
|Short-term investments                                                                              |                                          |              | 22.0                                                         |       |       |         | 40.1    |      
|Trade and other receivables                                                                         |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    | Trade, less allowance of $16.2 and $17.4 |              |                                                              | 376.4 |       |         |         | 438.3 |      
|                                                                                                    | Other                                    |              |                                                              | 21.8  |       |         |         | 22.6  |      
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    |                                          | Total        |                                                              |       | 398.2 |         |         |       | 460.9 |        
|Current portion of deferred income taxes                                                            |                                          |              | 31.7                                                         |       |       |         | 41.8    |      
|Net assets of discontinued operations                                                               |                                          |              |                                                             |       |       |         | 28.2    |      
|Other current assets                                                                                |                                          |              | 25.0                                                         |       |       |         | 25.9    |      
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    |                                          |              | Total current assets                                         |       |       | 615.6   |         |       |       | 715.4   | 
|                                                                                                   
|Property, plant and equipment, net                                                                  |                                          |              | 159.3                                                        |       |       |         | 160.4   |      
|Goodwill, net                                                                                       |                                          |              | 859.6                                                        |       |       |         | 897.9   |      
|Other intangible assets, net                                                                        |                                          |              | 116.2                                                        |       |       |         | 128.4   |      
|Software and development costs, net                                                                 |                                          |              | 92.9                                                         |       |       |         | 57.0    |      
|Prepaid pension cost                                                                                |                                          |              | 10.7                                                         |       |       |         | 128.1   |      
|Deferred income taxes, less current portion                                                         |                                          |              | 4.3                                                          |       |       |         |        |      
|Other noncurrent assets                                                                             |                                          |              | 52.0                                                         |       |       |         | 0.8     |      
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    |                                          |              | Total assets before payroll and tax filing funds             |       |       | 1,910.6 |         |       |       | 2,088.0 | 
|Payroll and tax filing funds                                                                        |                                          |              | 2,126.4                                                      |       |       |         | 2,945.0 |      
|                                                                                                   
|                                                                                                    |                                          |              | Total assets                                                 |       | $     | 4,037.0 |         |       | $     | 5,033.0 | 
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                   
|LIABILITIES AND STOCKHOLDERS
	EQUITY                                                               |                                          |              |                                                              |       |       |         |         |      
|Current liabilities                                                                                 |                                          |              |                                                              |       |       |         |         |      
|Short-term debt and current portion of long-term
	obligations                                       |                                          | $            | 1.5                                                          |       |       | $       | 0.3     |      
|Accounts payable                                                                                    |                                          |              | 31.2                                                         |       |       |         | 31.7    |      
|Drafts and customer funds payable                                                                   |                                          |              | 160.1                                                        |       |       |         | 172.1   |      
|Customer advances                                                                                   |                                          |              | 11.8                                                         |       |       |         | 14.5    |      
|Deferred income                                                                                     |                                          |              | 35.9                                                         |       |       |         | 38.5    |      
|Accrued taxes                                                                                       |                                          |              | 66.2                                                         |       |       |         | 76.0    |      
|Employee compensation and benefits                                                                  |                                          |              | 64.0                                                         |       |       |         | 65.8    |      
|Other accrued expenses                                                                              |                                          |              | 46.3                                                         |       |       |         | 75.0    |      
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    |                                          |              | Total current liabilities                                    |       |       | 417.0   |         |       |       | 473.9   | 
|                                                                                                   
|Long-term obligations, less current portion                                                         |                                          |              | 236.4                                                        |       |       |         | 500.3   |      
|Deferred income taxes                                                                               |                                          |              | 24.8                                                         |       |       |         | 67.7    |      
|Employee benefit plans                                                                              |                                          |              | 140.1                                                        |       |       |         | 75.7    |      
|Deferred income and other noncurrent liabilities                                                    |                                          |              | 31.2                                                         |       |       |         | 34.2    |      
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    |                                          |              | Total liabilities before payroll and tax filing
	obligations |       |       | 849.5   |         |       |       | 1,151.8 | 
|Payroll and tax filing obligations                                                                  |                                          |              | 2,126.4                                                      |       |       |         | 2,945.0 |      
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    |                                          |              | Total liabilities                                            |       |       | 2,975.9 |         |       |       | 4,096.8 | 
|                                                                                                   
|Stockholders equity                                                                                |                                          |              |                                                              |       |       |         |         |      
|Common Stock, $.01 and $.50 par, authorized
	500,000,000 shares, issued 146,487,624 and 161,685,596 |                                          |              | 1.5                                                          |       |       |         | 80.8    |      
|Additional paid-in capital                                                                          |                                          |              | 870.1                                                        |       |       |         | 1,122.7 |      
|Retained earnings                                                                                   |                                          |              | 319.4                                                        |       |       |         | 81.8    |      
|Treasury common stock, 2,662 and
	15,931,215 shares                                                 |                                          |              |                                                             |       |       |         | (342.9  | )    
|Accumulated other comprehensive income                                                              |                                          |              | (129.9                                                       | )     |       |         | (6.2    | )    
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                    |                                          |              | Total stockholders equity                                   |       |       | 1,061.1 |         |       |       | 936.2   | 
|                                                                                                   
|                                                                                                    |                                          |              | Total liabilities and stockholders equity                   |       | $     | 4,037.0 |         |       | $     | 5,033.0 | 
|                                                                                                    |                                          |              |                                                              |       |       |         |         |      
|                                                                                                   

See notes to consolidated financial statements.


42



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##### Table of Contents



|                                      |                      
|------------------------------------- | ---------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS | (Dollars in millions)




|                                                                                     |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |       |        |  
|------------------------------------------------------------------------------------ | ------------------------------------------------------------------------ | ----------------------------------------------------- | ------ | ----- | ------ | ---- | ----- | ----- | ------ | - | ------ | ----- | ------ | -
|                                                                                     |                                                                          |                                                      
|                                                                                     |                                                                          | Years Ended December 31,                             
|                                                                                     |                                                                          |                                                      
|                                                                                     |                                                                          | 2001                                                  |        | 2000  |        | 1999
|                                                                                    
|                                                                                    
|Cash Flows from Operating Activities                                                 |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|Net earnings                                                                         |                                                                          | $                                                     | 54.7   |       |        | $    | 100.2 |       |        | $ | 145.3  |      
|Adjustments to reconcile net earnings to net cash
	provided by operating activities: |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|                                                                                     | Discontinued operations                                                  |                                                       |        | (5.2  | )      |      |       | (20.7 | )      |   |        | (40.9 | )     
|                                                                                     | Deferred income tax provision                                            |                                                       |        | 30.7  |        |      |       | 45.4  |        |   |        | 62.2  |       
|                                                                                     | Impairment loss from asset write-downs                                   |                                                       |        | 6.1   |        |      |       | 18.3  |        |   |        |      |       
|                                                                                     | Depreciation and amortization                                            |                                                       |        | 105.4 |        |      |       | 97.2  |        |   |        | 80.1  |       
|                                                                                     | Gain on marketable and derivative securities                             |                                                       |        | (19.2 | )      |      |       |      |        |   |        |      |       
|                                                                                     | Provision for doubtful accounts                                          |                                                       |        | 15.8  |        |      |       | 14.8  |        |   |        | 16.8  |       
|                                                                                     | Other                                                                    |                                                       |        | (9.0  | )      |      |       | (6.8  | )      |   |        | (4.1  | )     
|                                                                                     | Decrease (Increase) in trade and other receivables                       |                                                       |        | 42.8  |        |      |       | (55.0 | )      |   |        | (79.0 | )     
|                                                                                     | Increase (Decrease) in accounts payable                                  |                                                       |        | (0.7  | )      |      |       | (8.2  | )      |   |        | 0.5   |       
|                                                                                     | Increase (Decrease) in drafts and customer funds
	payable                |                                                       |        | (12.0 | )      |      |       | 33.5  |        |   |        | (7.8  | )     
|                                                                                     | Increase (Decrease) in employee compensation and
	benefits               |                                                       |        | (1.6  | )      |      |       | 4.0   |        |   |        | (4.3  | )     
|                                                                                     | Increase (Decrease) in accrued taxes                                     |                                                       |        | (3.9  | )      |      |       | 25.1  |        |   |        | 9.8   |       
|                                                                                     | Increase (Decrease) in other current assets and
	liabilities             |                                                       |        | (20.1 | )      |      |       | (3.4  | )      |   |        | (28.4 | )     
|                                                                                     | Cash provided (used) by operating activities
	of discontinued operations |                                                       |        | (0.8  | )      |      |       | 24.8  |        |   |        | 47.5  |       
|                                                                                     |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|                                                                                     |                                                                          | Net cash provided by operating activities             |        |       | 183.0  |      |       |       | 269.2  |   |        |       | 197.7  |  
|                                                                                    
|Cash Flows from Investing Activities                                                 |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|Expended for property, plant and equipment                                           |                                                                          |                                                       | (43.2  | )     |        |      | (66.5 | )     |        |   | (75.3  | )    
|Expended for software and development costs                                          |                                                                          |                                                       | (50.8  | )     |        |      | (30.5 | )     |        |   | (29.5  | )    
|Proceeds from sales of businesses and assets                                         |                                                                          |                                                       | 18.7   |       |        |      | 56.3  |       |        |   | 11.1   |      
|Expended for investments and business
	acquisitions, less cash acquired              |                                                                          |                                                       | (30.2  | )     |        |      | (65.1 | )     |        |   | (714.9 | )    
|Cash used by investing activities of discontinued
	operations                        |                                                                          |                                                       | (1.2   | )     |        |      | (2.1  | )     |        |   | (3.6   | )    
|                                                                                     |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|                                                                                     |                                                                          | Net cash provided by (used for) investing
	activities |        |       | (106.7 | )    |       |       | (107.9 | ) |        |       | (812.2 | )
|                                                                                    
|Cash Flows from Financing Activities                                                 |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|Revolving credit and overdrafts, net                                                 |                                                                          |                                                       | 166.4  |       |        |      | (95.1 | )     |        |   | 108.4  |      
|Borrowings of other debt                                                             |                                                                          |                                                       |       |       |        |      |      |       |        |   | 444.8  |      
|Repayment of other debt                                                              |                                                                          |                                                       | (456.6 | )     |        |      | (20.6 | )     |        |   | (0.3   | )    
|Repurchase of common stock                                                           |                                                                          |                                                       |       |       |        |      | (1.4  | )     |        |   | (5.1   | )    
|Proceeds from exercise of stock options and other                                    |                                                                          |                                                       | 9.1    |       |        |      | 15.8  |       |        |   | 24.2   |      
|Cash provided by financing activities of
	discontinued operations                    |                                                                          |                                                       | 225.0  |       |        |      |      |       |        |   |       |      
|                                                                                     |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|                                                                                     |                                                                          | Net cash provided by (used for) financing
	activities |        |       | (56.1  | )    |       |       | (101.3 | ) |        |       | 572.0  |  
|                                                                                    
|Net Cash Flows Provided (Used)                                                       |                                                                          |                                                       | 20.2   |       |        |      | 60.0  |       |        |   | (42.5  | )    
|Cash and equivalents at beginning of year                                            |                                                                          |                                                       | 118.5  |       |        |      | 58.5  |       |        |   | 101.0  |      
|                                                                                     |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|Cash and equivalents at end of year                                                  |                                                                          | $                                                     | 138.7  |       |        | $    | 118.5 |       |        | $ | 58.5   |      
|                                                                                     |                                                                          |                                                       |        |       |        |      |       |       |        |   |        |      
|                                                                                    

|                                          |  |                          |      |      |  |      |      |   |  |   |      |  
|----------------------------------------- |  | ------------------------ | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                          |  |                         
|                                          |  | Years Ended December 31,
|                                          |  |                         
|Interest and Income Taxes Paid (Refunded) |  | 2001                     |      | 2000 |  | 1999
|                                         
|                                         
|Interest paid                             |  | $                        | 16.6 |      |  | $    | 40.3 |   |  | $ | 21.0 |  
|Income taxes paid                         |  | $                        | 15.3 |      |  | $    | 10.6 |   |  | $ | 8.0  |  
|Income taxes refunded                     |  | $                        | (1.3 | )    |  | $    | (5.4 | ) |  | $ | (0.5 | )
|                                         

See notes to consolidated financial statements.


43



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##### Table of Contents



CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY


(Dollars in millions)





|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------ |  | ------ | ------- | ------ |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | --------------------------- | ----------- | - |  | - | ----------- | - |  | - | ----------- | -
|                                                                         |  |        |         |       
|                                                                         |  | Amount |         | Shares
|                                                                         |  |       
|                                                                         |  |       
|                                                                         |  | 2001   |         | 2000   |  | 1999 |         | 2001 |  | 2000 |         | 1999
|                                                                        
|                                                                        
|Common Shares Issued                                                     |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Beginning balance                                                        |  | $      | 80.8    |        |  | $    | 80.8    |      |  | $    | 80.8    |      |  |                             | 161,685,596 |   |  |   | 161,685,596 |   |  |   | 161,685,596 |  
|Exercises of stock options                                               |  |        |        |        |  |      |        |      |  |      |        |      |  |                             | 411,376     |   |  |   |            |   |  |   |            |  
|Restricted stock awards, net                                             |  |        |        |        |  |      |        |      |  |      |        |      |  |                             | 60,555      |   |  |   |            |   |  |   |            |  
|Employee stock purchase plans                                            |  |        |        |        |  |      |        |      |  |      |        |      |  |                             | 195,984     |   |  |   |            |   |  |   |            |  
|Spin-off adjustments (Note C)                                            |  |        | (79.3   | )      |  |      |        |      |  |      |        |      |  |                             | (15,865,887 | ) |  |   |            |   |  |   |            |  
|                                                                         |  |       
|Ending balance  issued                                                  |  | $      | 1.5     |        |  | $    | 80.8    |      |  | $    | 80.8    |      |  |                             | 146,487,624 |   |  |   | 161,685,596 |   |  |   | 161,685,596 |  
|                                                                        
|Treasury Stock  Common
	Shares                                          |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Beginning balance                                                        |  | $      | (342.9  | )      |  | $    | (364.6  | )    |  | $    | (390.8  | )    |  |                             | (15,931,215 | ) |  |   | (16,951,228 | ) |  |   | (18,171,620 | )
|Repurchases                                                              |  |        |        |        |  |      | (1.4    | )    |  |      | (5.1    | )    |  |                             |            |   |  |   | (54,953     | ) |  |   | (235,518    | )
|Exercises of stock options                                               |  |        | 1.1     |        |  |      | 16.4    |      |  |      | 27.2    |      |  |                             | 51,571      |   |  |   | 762,875     |   |  |   | 1,265,599   |  
|Restricted stock awards, net                                             |  |        | 0.2     |        |  |      |        |      |  |      | (1.0    | )    |  |                             | 8,782       |   |  |   | 1,350       |   |  |   | (32,524     | )
|Employee stock purchase plans                                            |  |        | 0.1     |        |  |      | 6.7     |      |  |      | 5.1     |      |  |                             | 2,313       |   |  |   | 310,741     |   |  |   | 239,369     |  
|Acquisitions                                                             |  |        |        |        |  |      |        |      |  |      |        |      |  |                             |            |   |  |   |            |   |  |   | (16,534     | )
|Spin-off adjustments (Note C)                                            |  |        | 341.5   |        |  |      |        |      |  |      |        |      |  |                             | 15,865,887  |   |  |   |            |   |  |   |            |  
|                                                                         |  |        |         |       
|Ending balance  treasury                                                |  | $      |        |        |  | $    | (342.9  | )    |  | $    | (364.6  | )    |  |                             | (2,662      | ) |  |   | (15,931,215 | ) |  |   | (16,951,228 | )
|                                                                         |  |       
|Common Shares Outstanding                                                |  |        |         |        |  |      |         |      |  |      |         |      |  |                             | 146,484,962 |   |  |   | 145,754,381 |   |  |   | 144,734,368 |  
|                                                                         |  |       
|Additional Paid-In Capital                                               |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Beginning balance                                                        |  | $      | 1,122.7 |        |  | $    | 1,126.2 |      |  | $    | 1,110.5 |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Exercises of stock options                                               |  |        | 5.1     |        |  |      | (6.0    | )    |  |      | (8.3    | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|Tax benefit from stock options                                           |  |        | 0.9     |        |  |      | 3.3     |      |  |      | 10.2    |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Restricted stock awards, net                                             |  |        | 0.7     |        |  |      | 0.6     |      |  |      | 1.8     |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Employee stock purchase plans                                            |  |        | 2.9     |        |  |      | (1.4    | )    |  |      | 0.5     |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Acquisitions                                                             |  |        |        |        |  |      |        |      |  |      | 11.5    |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Spin-off adjustments (Note C)                                            |  |        | (262.2  | )      |  |      |        |      |  |      |        |      |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |       
|Ending balance                                                           |  | $      | 870.1   |        |  | $    | 1,122.7 |      |  | $    | 1,126.2 |      |  | Comprehensive Income (Loss)
|                                                                         |  |       
|Retained Earnings (Deficit)                                              |  |        |         |        |  |      |         |      |  |      |         |      |  |                             | 2001        |   |  |   | 2000        |   |  |   | 1999        |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Beginning balance                                                        |  | $      | 81.8    |        |  | $    | (18.4   | )    |  | $    | (163.7  | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|Net earnings                                                             |  |        | 54.7    |        |  |      | 100.2   |      |  |      | 145.3   |      |  | $                           | 54.7        |   |  | $ | 100.2       |   |  | $ | 145.3       |  
|Spin-off adjustments (Note C)                                            |  |        | 182.9   |        |  |      |        |      |  |      |        |      |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Ending balance                                                           |  | $      | 319.4   |        |  | $    | 81.8    |      |  | $    | (18.4   | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |     
|Accumulated Other Comprehensive Income
	(Loss)                           |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Foreign currency translation                                             |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Beginning balance                                                        |  | $      | (8.7    | )      |  | $    | (3.2    | )    |  | $    | (3.6    | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|Rate changes, net                                                        |  |        | (1.6    | )      |  |      | (5.5    | )    |  |      | 0.4     |      |  |                             | (1.6        | ) |  |   | (5.5        | ) |  |   | 0.4         |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Ending balance                                                           |  |        | (10.3   | )      |  |      | (8.7    | )    |  |      | (3.2    | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Unrealized gain on securities                                            |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Beginning balance                                                        |  | $      | 11.7    |        |  | $    |        |      |  | $    |        |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Change in unrealized gain, net of income taxes of
	$10.2, $6.4 and none  |  |        | 18.9    |        |  |      | 11.7    |      |  |      |        |      |  |                             | 18.9        |   |  |   | 11.7        |   |  |   |            |  
|Less realized gain, net of income taxes of $9.1
	in 2001                 |  |        | (16.8   | )      |  |      |        |      |  |      |        |      |  |                             | (16.8       | ) |  |   |            |   |  |   |            |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Ending balance                                                           |  |        | 13.8    |        |  |      | 11.7    |      |  |      |        |      |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Pension liability adjustment                                             |  |        |         |        |  |      |         |      |  |      |         |      |  |                             |             |   |  |   |             |   |  |   |             |  
|Beginning balance                                                        |  | $      | (9.2    | )      |  | $    | (8.6    | )    |  | $    | (9.5    | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|Pension liability change, net of income taxes of
	$65.8 in 2001 (Note G) |  |        | (124.2  | )      |  |      | (0.6    | )    |  |      | 0.9     |      |  |                             | (124.2      | ) |  |   | (0.6        | ) |  |   | 0.9         |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Ending balance                                                           |  |        | (133.4  | )      |  |      | (9.2    | )    |  |      | (8.6    | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Total ending balance                                                     |  | $      | (129.9  | )      |  | $    | (6.2    | )    |  | $    | (11.8   | )    |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|Total Stockholders Equity                                               |  | $      | 1,061.1 |        |  | $    | 936.2   |      |  | $    | 812.2   |      |  |                             |             |   |  |   |             |   |  |   |             |  
|                                                                         |  |        |         |       
|Total Comprehensive Income
	(Loss)                                       |  |        |         |        |  |      |         |      |  |      |         |      |  | $                           | (69.0       | ) |  | $ | 105.8       |   |  | $ | 146.6       |  
|                                                                         |  |        |         |        |  |      |         |      |  |      |         |      |  |                            
|                                                                        

See notes to consolidated financial statements.


44



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##### Table of Contents



(Dollars in millions, except per share data)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(For the three years ended December 31, 2001)

INDEX TO NOTES

|   |  |    |  |                                               
|-- |  | -- |  | ----------------------------------------------
|45 |  | A. |  | Accounting Policies                           
|49 |  | B. |  | Income Taxes                                  
|50 |  | C. |  | Supplementary Data to Statements of Operations
|52 |  | D. |  | Segment Data                                  
|54 |  | E. |  | Capital Assets                                
|55 |  | F. |  | Investing Activity                            
|56 |  | G. |  | Retirement Plans                              
|58 |  | H. |  | Stock Plans                                   
|60 |  | I. |  | Financing                                     
|61 |  | J. |  | Commitments and Contingencies                 
|62 |  | K. |  | Legal Matters                                 
|63 |  | L. |  | Payroll and Tax Filing Funds                  
|64 |  | M. |  | Supplementary Quarterly Data                  

A. ACCOUNTING POLICIES

Basis of Consolidation

Ceridian Corporation (Ceridian or the
Company), as presented in these consolidated
financial statements, was formed in connection with the reverse
spin-off of the human resource solutions division and
subsidiaries (HRS) and the Comdata subsidiaries
(Comdata) of the predecessor company (formerly
called Ceridian Corporation and now known as Arbitron Inc.) from
its media information division and subsidiaries
(Arbitron) on March 30, 2001. As a result of
the relative significance of HRS and Comdata, the historical
results of the operations of Arbitron are presented as
discontinued operations as further described in Note C.
Further information on the HRS and Comdata business segments
appears in Note D.

The consolidated financial statements
of Ceridian include the accounts of subsidiaries and investments
in which Ceridian has a majority interest.

Investments in other affiliated
companies where Ceridian has significant influence are accounted
for by the equity method. Other investments are accounted for by
the cost method.

All material intercompany
transactions have been eliminated from the consolidated
financial statements.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards
Board (FASB) issued Financial Accounting Standard
No. (FAS) 141, Business Combinations,
and FAS 142, Goodwill and Other Intangible
Assets. FAS 141 requires that the purchase method of
accounting be used for all business combinations initiated after
June 30, 2001 as well as all purchase method business
combinations completed after June 30, 2001. FAS 141
also specifies criteria that intangible assets must meet to be
recognized and reported apart from goodwill. FAS 142
requires that goodwill and intangible assets with indefinite
useful lives, arising from acquisitions occurring after
June 30, 2001, no longer be amortized, but instead be
tested for impairment at least annually in accordance with the
provisions of FAS 142. Goodwill and intangible assets
acquired in business combinations completed before July 1,
2001 continued to be amortized in accordance with appropriate
pre-FAS 142 and 144 requirements until January 1,
2002. FAS 142 also requires that intangible assets with
definite useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and
reviewed for impairment in accordance with FAS 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets.

FAS 144, issued in October 2001,
supercedes FAS 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, removing from its scope any reference to goodwill
impairment and offering guidance on using cash flows to value
long-lived assets. In addition, FAS 144 supercedes the
accounting and reporting provisions for the disposal of a
business presented in Accounting Principles Board Opinion
No. 30, Reporting the Results of Unusual and
Infrequently Occurring Events and Transactions, primarily
by broadening the definition of a discontinued
operation to include business components not considered
business segments.

The Company adopted the provisions of
FAS 141 as of July 1, 2001 and FAS 142 and
FAS 144 as of January 1, 2002.

Under transition provisions of
FAS 141 and FAS 142, as of January 1, 2002, the
Company must evaluate its existing intangible assets and
goodwill that were acquired in a purchase business combination
occurring before July 1, 2001, make any necessary
reclassifications of intangible assets and goodwill to conform
with the new criteria in FAS 141 for recognition apart from
goodwill, and conduct an impairment review of the carrying
values of intangible assets and goodwill at that date. Also as
of January 1, 2002, the

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Company will be required to reassess the useful
lives and residual values of all intangible assets acquired in
purchase business combinations, and make any necessary
amortization period adjustments by March 31, 2002. Also by
March 31, 2002, any intangible asset identified as having
an indefinite useful life must be tested for impairment in
accordance with the provisions of FAS 142, and any
impairment loss as of January 1, 2002 recognized as the
cumulative effect of a change in accounting principle in the
first quarter of 2002.

In connection with the transitional
goodwill impairment evaluation, FAS 142 requires the
Company to perform an assessment by June 30, 2002 to
determine whether goodwill was impaired as of the date of
adoption. Any transitional impairment loss will be measured as
of January 1, 2002 and reflected as a first quarter 2002
cumulative effect of a change in accounting principle in the
Companys statement of earnings as soon as practicable but
not later than December 31, 2002.

As of January 1, 2002, the
Company had unamortized goodwill in the amount of $860.9 and
unamortized identifiable intangible assets in the amount of
$114.9 (after the required reclassification to goodwill of the
assembled workforce intangible asset of $1.3) both of which are
subject to the transition provisions of FAS 141 and
FAS 142.

The pro forma effect of cessation of
goodwill amortization prescribed by FAS 142 would increase
earnings from continuing operations by $29.6 or $0.20 per
diluted common share for the year 2000 and $30.3, or
$0.20 per diluted common share, for the year 2001.

Because of the extensive effort
needed to implement FAS 141, FAS 142 and FAS 144,
it is not practicable to reasonably estimate the impact of their
implementation on the Companys financial statements at the
date of this report, including whether any transitional
impairment losses will be required to be recognized as the
cumulative effect of a change in accounting principle.

Stock-Based Compensation

Ceridian accounts for stock-based compensation
under APB Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations. Therefore,
compensation expense is not recorded with respect to
Ceridians fixed stock option plans, since the exercise
price is set at the market price on the date of grant, or for
Ceridians employee stock purchase plan. Compensation
expense for outstanding restricted stock awards, none of which
is performance-based, is recognized by charging the fair value
of the award at the time of grant to operations ratably over the
vesting period. Grants of stock options to consultants or
independent contractors are accounted for under the fair value
method. Ceridian also reports under the disclosure-only
provisions of FAS 123, Accounting for Stock-Based
Compensation.

Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Estimates that could
significantly affect the results of operations or financial
condition of the Company include the capitalization,
amortization and write-down of capital assets, hedging of
interest rates on payroll and tax filing fund investments,
actions to restructure or discontinue operations, and the
assessment of contingencies. Further discussion on these
estimates can be found in related disclosures elsewhere in these
notes to consolidated financial statements.

Changes in Presentation

Certain prior year amounts have been reclassified
to conform to the current years presentation.

Cash and Investments, including
Derivatives

Investments that are readily convertible to cash
within three months of purchase are classified in the balance
sheet as cash equivalents. Investments of payroll and tax filing
funds in marketable securities are carried at amortized cost and
separately presented in the balance sheet as further described
in Note L. Other investments in equity securities or debt
securities with longer maturities are considered
available-for-sale and reported in the balance sheet as
short-term investments. Derivative securities are held only for
the purpose of hedging interest rate risk and not for
speculative activity. Hedging activities may include the use of
interest rate swaps, collars, caps and floors, designated as
hedges of variable income from investments of payroll and tax
filing funds and corporate cash. These derivative securities
typically function as cash flow hedges of the designated item.
Further discussion of derivatives appears in Note J.

Property, Plant and Equipment

Property, plant and equipment are carried at cost
and depreciated for financial statement purposes using
straight-line and accelerated methods at rates based on the
estimated lives of the assets, which are generally as follows:

|                        |  |           
|----------------------- |  | ----------
|                       
|Buildings               |  | 40 years  
|Building improvements   |  | 5-15 years
|Machinery and equipment |  | 3-8 years 
|Computer equipment      |  | 3-6 years 
|                       

Repairs and maintenance are expensed
as incurred. Gains or losses on dispositions are included in
results of operations. Capitalized interest of $2.4 in 2000 and
$1.7 in 1999 related to the construction of a headquarters
facility in Bloomington, Minn. and the renovation of an office
facility in St. Petersburg, Fla. used by certain benefits
services operations.

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(Dollars in millions, except per share data)


The carrying value of long-lived
assets is reviewed whenever events or changes in circumstances
such as market value, asset utilization, physical change, legal
factors or other matters indicate that the carrying value may
not be recoverable. When the review indicates that the carrying
value of the asset or group of assets representing the lowest
level of identifiable cash flows exceeds the sum of the expected
future cash flows (undiscounted and without interest charges),
an impairment loss is recognized. The amount of the impairment
loss is the amount by which the carrying value exceeds the fair
value of the impaired asset or group of assets.

Earnings Per Share

Basic earnings per share represents earnings
divided by the weighted average number of common shares
outstanding for the reporting period. Diluted earnings per share
represents earnings divided by the sum of the weighted average
number of common shares outstanding plus shares derived from
potentially dilutive securities. For Ceridian, potentially
dilutive securities includes in the money fixed
stock options outstanding. The numbers of shares added for stock
options is determined by the treasury stock method, which
assumes exercise of these options and the use of any proceeds to
repurchase a portion of these shares at the average market price
for the period. The option shares excluded from the calculation
of potentially dilutive securities, because the exercise price
exceeded the average market price for the year, at each
December 31 were 5,691,000 for 2001, 5,747,000 for 2000 and
849,000 for 1999.

Goodwill and Other Intangibles

Goodwill, which represents the excess purchase
price over the fair value of net assets of businesses acquired,
is assigned to operating units based on the benefits derived
from the acquisition and, until January 1, 2002, amortized
on a straight-line basis over the expected periods to be
benefited, ranging up to 40 years.

Other intangible assets represents
amounts assigned to intangible assets at the time of a purchase
acquisition and includes such items as customer lists,
technology, covenants not to compete, tradenames, and other
rights. Such costs are amortized on a straight-line basis over
the following periods:

|               |  |            
|-------------- |  | -----------
|              
|Customer lists |  | 10-15 years
|Tradenames     |  | 30 years   
|Technology     |  | 7-8 years  
|Other          |  | 3-20 years 
|              

Recorded amounts are regularly
reviewed and recoverability assessed. The review considered
factors such as whether the amortization of the goodwill and
other intangible assets for each operating unit over its
remaining life can be recovered through forecasted undiscounted
cash flows.

Software and Development Costs

Ceridian capitalizes purchased software that is
ready for service and development costs for marketable software
incurred from the time of technological feasibility until the
software is ready for use. Under the provisions of SOP 98-1,
Ceridian capitalizes costs associated with software developed or
obtained for internal use when both the preliminary project
stage is completed and Ceridian management has authorized
further funding for the project which it deems probable of
completion and use for the function intended. Capitalized
internal-use software costs include only (1) external
direct costs of materials and services consumed in developing or
obtaining the software, (2) payroll and payroll-related
costs for employees who are directly associated with and who
devote time to the project, and (3) interest costs
incurred, when material, while developing the software.
Capitalization of these costs ceases no later than the point at
which the project is substantially complete and ready for its
intended purpose.

Research and development costs and
other computer software maintenance costs related to software
development are expensed as incurred. Software development costs
are amortized using the straight-line method over a range of
three to seven years, but not exceeding the expected life of the
product.

The carrying value of software and
development costs is regularly reviewed and a loss is recognized
when the value of estimated undiscounted cash flow benefit
related to the asset falls below the unamortized cost.

Income Taxes

The provision for income taxes is based on income
recognized for financial statement purposes and includes the
effects of temporary differences between such income and that
recognized for tax return purposes. Ceridian and its eligible
subsidiaries file a consolidated U.S. federal income tax
return. Except for selective dividends, Ceridian intends to
reinvest the unremitted earnings of its
non-U.S. subsidiaries and postpone their remittance
indefinitely. Accordingly, no provision for U.S. income
taxes was required on such earnings during the three years ended
December 31, 2001.

Revenue Recognition

Revenue recognition is primarily affected by the
timing of transaction processing and the terms and life of the
specific contracts entered into by the Company. When the fair
value of each element of a sales arrangement containing a
software product, installation and conversion, and transaction
processing elements can be objectively determined, the amounts
and timing of revenue recognition from this arrangement are
determined for each of the elements in the arrangement. When the
fair values of the elements of this arrangement are not
determinable, all revenue from the arrangement is recognized
equally over the transaction processing term.

HRS revenue is generated by service
fees, income from investment of payroll and tax filing funds (as
further described in Note L), software licenses or subscription
fees, and installation and data conversion services. Generally,
transaction processing contracts are for a period of one year
and service fees for these

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(Dollars in millions, except per share data)


contracts are recognized as revenue when services
have been completed and the amount is billable. Fees for
work-life and employee assistance services are generally
contract-based and involve prepayments for services based on the
number of customer employees served and the level of service.
Revenue from prepayments on these contracts is deferred and
recognized as the services are performed. Investment income is
recognized as earned. Software license revenue is recognized
when the software is delivered, a signed contract exists, the
sale price is fixed and collectibility is probable. Revenue from
installation and conversion services is non-refundable; is
determined on a time and materials basis; and, along with
related costs, is deferred and recognized over the installation
and conversion period, generally two to four months.

Comdata revenues are generated from
funds transfer, regulatory permit, and retail cash card
transaction services as well as sales of point of sale terminals
and retail cash cards. Revenue from funds transfer and retail
cash card fees is recognized at the time these transactions take
place. Revenue from regulatory permit services is recognized as
the services are performed. Payments received from retailers
upon delivery of retail cash card stock are recognized as
revenue over the period of expected use by the retailer. Revenue
from sales of terminals is recognized upon delivery where a
signed contract exists, the sale price is fixed and
collectibility is probable.

Comdata revenue does not include the
costs of goods and services for which funds are advanced by
Comdata (e.g., fuel purchased, permit provided or face amount of
the Comchek purchased and cashed). However, Comdata pays the
issuing agent (e.g., truck stop or state agency) for the full
cost of the goods and services provided and, accordingly, bills
the customer for such cost as well as the transaction fee. As a
result, Ceridians accounts receivable includes both the
cost of the goods and services purchased and the transaction
fees. Ceridians drafts and customer funds payable includes
the amount due to the issuing agent for the cost of the goods
and services.

Translation of Foreign Currencies

Local currencies have been determined to be
functional currencies for Ceridians international
operations. Foreign currency balance sheets are translated at
the end-of-period exchange rates and earnings statements at the
average exchange rates for each period. The resulting
translation gains or losses are described as foreign
currency translation and reported in accumulated
other comprehensive income (loss) in the accompanying
Statements of Stockholders Equity. Gains and losses from
translation of assets and liabilities denominated in other than
the functional currency of the operation are recorded in results
of operations as other expense (income).

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B. INCOME TAXES

At December 31, 2001, Ceridian had
U.S. net operating loss carryforwards of $4.4 and future
tax deductions of $171.7. If the net operating loss is not used,
it will expire in 2010.

Ceridian remains subject to income
tax audits in various jurisdictions for 1989 and subsequent
years under tax sharing agreements related to the disposition of
certain operations. Ceridian considers its tax accruals adequate
to cover any U.S. and international tax deficiencies not
recoverable through deductions in future years.

As a result of the spin-off described
in Notes A and C, deferred tax assets related to the net
operating loss carryforwards, tax credit carryforwards, timing
differences and accrued income taxes attributable to the former
parent corporation and its subsidiaries remained with the
predecessor company, now known as Arbitron Inc. The final amount
to be retained by Arbitron Inc. will be determined by the filing
of the income tax returns for the old consolidated group for the
periods ended December 31, 2001 and prior. Changes to the
allocation of these items between Ceridian and Arbitron Inc.
will affect Ceridians deferred income taxes, accrued
income taxes and the net liabilities of discontinued operations
credited to retained earnings at the time of the spin-off.

|                                      |               |                 |       |      |      |      |      |       |      |       |      |       |      |       | 
|------------------------------------- | ------------- | --------------- | ----- | ---- | ---- | ---- | ---- | ----- | ---- | ----- | ---- | ----- | ---- | ----- | 
|                                     
|                                     
|Components of Earnings and Taxes from
|Continuing Operations                 |               | 2001            |       | 2000 |      | 1999
|                                     
|                                     
|Earnings Before Income Taxes          |               |                 |       |      |      |      |      |       |      |       |      |      
|                                      | U.S.          |                 | $     | 57.8 |      |      | $    | 107.4 |      |       | $    | 154.3 |     
|                                      | International |                 |       | 26.6 |      |      |      | 20.4  |      |       |      | 13.0  |     
|                                      |               |                 |       |      |      |      |      |       |      |       |      |      
|                                      |               |                 | Total |      | $    | 84.4 |      |       | $    | 127.8 |      |       | $    | 167.3 | 
|                                      |               |                 |       |      |      |      |      |       |      |       |      |      
|Income Tax Provision                  |               |                 |       |      |      |      |      |       |      |       |      |      
|                                      | Current       |                 |       |      |      |      |      |       |      |       |      |       |     
|                                      |               | U.S.            |       | $    | 0.6  |      |      | $     | 0.8  |       |      | $     |     |      
|                                      |               | State and other |       |      | 3.6  |      |      |       | 2.1  |       |      |       | 0.7  |      
|                                      |               |                 |       |      |      |      |      |       |      |       |      |      
|                                      |               |                 | 4.2   |      |      |      | 2.9  |       |      |       | 0.7  |      
|                                      |               |                 |       |      |      |      |      |       |      |       |      |      
|                                      | Deferred      |                 |       |      |      |      |      |       |      |       |      |       |     
|                                      |               | U.S.            |       |      | 22.3 |      |      |       | 35.0 |       |      |       | 55.0 |      
|                                      |               | State and other |       |      | 8.4  |      |      |       | 10.4 |       |      |       | 7.2  |      
|                                      |               |                 |       |      |      |      |      |       |      |       |      |      
|                                      |               |                 | 30.7  |      |      |      | 45.4 |       |      |       | 62.2 |      
|                                      |               |                 |       |      |      |      |      |       |      |       |      |      
|                                      |               |                 | Total |      | $    | 34.9 |      |       | $    | 48.3  |      |       | $    | 62.9  | 
|                                      |               |                 |       |      |      |      |      |       |      |       |      |      
|                                     

|                                            |                      |      |      |      |  |      |      |      |  |   |      |      | 
|------------------------------------------- | -------------------- | ---- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                           
|                                           
|Effective Rate Reconciliation               |                      | 2001 |      | 2000 |  | 1999
|                                           
|                                           
|U.S. statutory rate                         |                      |      | 35   | %    |  |      | 35   | %    |  |   | 35   | %   
|                                            |                      |      |      |      |  |      |      |      |  |   |      |     
|Income tax provision at U.S. statutory rate |                      | $    | 29.5 |      |  | $    | 44.8 |      |  | $ | 58.5 |     
|State income taxes, net                     |                      |      | (0.1 | )    |  |      | 1.6  |      |  |   | 1.6  |     
|Goodwill                                    |                      |      | 8.9  |      |  |      | 8.5  |      |  |   | 6.3  |     
|Other                                       |                      |      | (3.4 | )    |  |      | (6.6 | )    |  |   | (3.5 | )   
|                                           
|                                            | Income tax provision |      | $    | 34.9 |  |      | $    | 48.3 |  |   | $    | 62.9 | 
|                                            |                      |      |      |      |  |      |      |      |  |   |      |     
|                                           

|                                                                            |  |              |        |      |  |   |        |  
|--------------------------------------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | -
|                                                                           
|                                                                           
|                                                                           
|Tax Effect of Items That Comprise a Significant Portion of the Net Deferred
|Tax Asset and Deferred Tax Liability                                       
|                                                                           
|                                                                            |  |             
|                                                                            |  | December 31,
|                                                                            |  |             
|                                                                            |  | 2001         |        | 2000
|                                                                           
|                                                                           
|Deferred Tax Asset                                                          |  |              |        |      |  |   |        |  
|Net operating loss carryforwards                                            |  | $            | 1.5    |      |  | $ | 16.6   |  
|Restructuring and other accruals                                            |  |              | 41.7   |      |  |   | 46.4   |  
|Employment related accruals                                                 |  |              | 34.9   |      |  |   |       |  
|Other                                                                       |  |              | 40.6   |      |  |   | 29.7   |  
|                                                                            |  |              |        |      |  |   |        |  
|Total                                                                       |  |              | 118.7  |      |  |   | 92.7   |  
|                                                                            |  |              |        |      |  |   |        |  
|Deferred Tax Liability                                                      |  |              |        |      |  |   |        |  
|Employment related accruals                                                 |  |              |       |      |  |   | (36.4  | )
|Intangibles                                                                 |  |              | (67.6  | )    |  |   | (54.4  | )
|Other                                                                       |  |              | (40.1  | )    |  |   | (28.1  | )
|                                                                            |  |              |        |      |  |   |        |  
|Total                                                                       |  |              | (107.7 | )    |  |   | (118.9 | )
|                                                                            |  |              |        |      |  |   |        |  
|Net Deferred Tax Asset (Liability)                                          |  | $            | 11.0   |      |  | $ | (26.2  | )
|                                                                            |  |              |        |      |  |   |        |  
|Net Deferred Tax Asset (U.S.)                                               |  |              |        |      |  |   |        |  
|Current portion                                                             |  | $            | 31.7   |      |  | $ | 41.8   |  
|Noncurrent portion                                                          |  |              | 4.3    |      |  |   |       |  
|                                                                            |  |              |        |      |  |   |        |  
|Total                                                                       |  | $            | 36.0   |      |  | $ | 41.8   |  
|                                                                            |  |              |        |      |  |   |        |  
|Deferred Tax Liability                                                      |  |              |        |      |  |   |        |  
|Current portion                                                             |  | $            | 0.2    |      |  | $ | 0.3    |  
|Noncurrent portion                                                          |  |              | 24.8   |      |  |   | 67.7   |  
|                                                                            |  |              |        |      |  |   |        |  
|Total                                                                       |  | $            | 25.0   |      |  | $ | 68.0   |  
|                                                                            |  |              |        |      |  |   |        |  
|Deferred Tax Liability by Geography                                         |  |              |        |      |  |   |        |  
|United States                                                               |  | $            | 1.1    |      |  | $ | 49.3   |  
|International                                                               |  |              | 23.9   |      |  |   | 18.7   |  
|                                                                            |  |              |        |      |  |   |        |  
|Total                                                                       |  | $            | 25.0   |      |  | $ | 68.0   |  
|                                                                            |  |              |        |      |  |   |        |  
|                                                                           



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C. SUPPLEMENTARY DATA TO STATEMENTS OF
OPERATIONS

|                                                                 |  |                          |       |      |  |      |      |   |  |   |      |  
|---------------------------------------------------------------- |  | ------------------------ | ----- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                                                
|                                                                
|                                                                 |  |                         
|                                                                 |  | Years Ended December 31,
|                                                                 |  |                         
|Other Expense (Income)                                           |  | 2001                     |       | 2000 |  | 1999
|                                                                
|                                                                
|Litigation costs                                                 |  | $                        | 53.7  |      |  | $    |     |   |  | $ |     |  
|Asset write-downs                                                |  |                          | 6.1   |      |  |      | 18.3 |   |  |   |     |  
|Accrued exit costs, net of recoveries                            |  |                          | 6.7   |      |  |      | 12.2 |   |  |   |     |  
|Foreign currency translation expense (income)                    |  |                          | 1.0   |      |  |      | 0.5  |   |  |   | 0.5  |  
|Gain on sale of marketable securities                            |  |                          | (15.6 | )    |  |      |      |   |  |   |      |  
|Gain on derivative securities                                    |  |                          | (2.6  | )    |  |      |      |   |  |   |      |  
|Loss (Gain) on sale of assets                                    |  |                          | (1.1  | )    |  |      | 0.2  |   |  |   | (5.5 | )
|Minority interest and equity in operations of
        affiliates |  |                          |      |      |  |      | 0.8  |   |  |   | 2.0  |  
|Other expense (income)                                           |  |                          |      |      |  |      | (0.3 | ) |  |   | (1.4 | )
|                                                                 |  |                          |       |      |  |      |      |   |  |   |      |  
|Total                                                            |  | $                        | 48.2  |      |  | $    | 31.7 |   |  | $ | (4.4 | )
|                                                                 |  |                          |       |      |  |      |      |   |  |   |      |  
|                                                                

Unusual Losses (Gains)

During second quarter 2001, the Company incurred
litigation costs of $53.7 of which $52.4 related to the
litigation discussed in Note K. During the first nine months of
2001, Ceridian recognized a gain of $15.6 from the sale of its
holdings of HotJobs.com, Ltd. common stock, as further described
in Note F and a gain from derivative securities described in
Note J.

During first quarter 2001, the
Company recorded accrued exit costs of $9.9, less recoveries of
$3.2 from first quarter 2000 charges, and impairment losses from
asset write-downs of $6.1. The accrued exit costs and asset
write-downs resulted from a decision by Comdata in February to
bring certain transaction processing operations in-house and by
HRS in March 2001 to consolidate certain work-life/employee
assistance operations, prepare a small business for sale, and
write off excess costs related to a software development
project. The accrued exit costs include a $6.6 charge for the
termination by Comdata of an outsourced transaction processing
contract, severance costs of $2.3 (representing 250 HRS
employees terminated during 2001), and excess HRS facility costs
of $1.0. The first quarter 2001 recovery of $3.2 from the first
quarter 2000 estimated HRS severance costs was due primarily to
a reduction in the scale of downsizing of the St. Louis,
Mo. customer service operations. The HRS impairment losses
involved surplus furniture and equipment, excess software
development costs and goodwill related to the small business
disposition.

In March 2000, Ceridian approved
plans to streamline management and improve customer service and
the quality of operations, primarily in HRS, and recorded as
other expense (income) charges of $44.7. These charges included
$26.4 of accrued exit costs and $18.3 for asset write-downs.
Exit costs for severance involved involuntary termination
notices for approximately 500 employment positions, primarily in
HRS, of which approximately 466 had been eliminated by
December 31, 2000 with the remainder in early 2001. The
other exit costs were primarily the lease cost for idled
facilities and contract termination fees. Asset write-downs
included the write-off of capitalized software amounts related
to a software development contract that was terminated in the
first quarter 2000, certain property and equipment abandoned at
a number of idled facilities, and various goodwill and
intangible asset balances with respect to two previous
acquisitions.

These charges recognize that certain
costs were appropriately recognized as liabilities upon approval
of the related plan or involved impairments of asset values
identified in the periods indicated. The impairment of goodwill
and intangible assets considered

situations in which the sum of related estimated
future cash flows (undiscounted and without interest) was less
than the carrying amount of such assets, including attributed
portions of unallocated excess cost over net assets acquired.
The amount of the impairment loss was the excess of the carrying
amount of the impaired asset over the fair value of the asset.
Generally, fair value represented the expected future cash flows
from the use of the asset or group of assets, discounted at a
rate commensurate with the risks involved.


Additionally, during first quarter
2000, Ceridian credited other expense (income) with a recovery
of $14.2 representing the reversal of an amount accrued in 1997
in excess of the settlement amount for a securities litigation
matter that was finalized on March 31, 2000.

|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |       |  
|------------------------------ | -------------------------- | ------------------ | ----- | --------- |  | --------- | ---- | ----------- | - | ----- | --- | ---- | - | - | --- | ---- | - | - | ----- | ----- | -
|                              
|                              
|                               |                            |                   
|                               |                            | Accrued Exit Costs
|                               |                            |                   
|                               |                            | Asset              |       |           |  | Occupancy |      | Contract    |   |      
|                               |                            | Write-downs        |       | Severance |  | Costs     |      | Termination |   | Total
|                              
|                              
|2000                           |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Total initial charges          |                            | $                  | 18.3  |           |  | $         | 16.4 |             |   | $     | 8.7 |      |   | $ | 1.3 |      |   | $ | 44.7  |      
|Less non-cash asset write-offs |                            |                    | (18.3 | )         |  |           |     |             |   |       |    |      |   |   |    |      |   |   | (18.3 | )    
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Total accrued costs            |                            | $                  |      |           |  |           | 16.4 |             |   |       | 8.7 |      |   |   | 1.3 |      |   |   | 26.4  |      
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Utilization:                   |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|                               | 2000 cash payments         |                    |       |           |  |           |      | (9.2        | ) |       |     | (5.1 | ) |   |     | (1.3 | ) |   |       | (15.6 | )
|                               | 2001 cash payments         |                    |       |           |  |           |      | (3.5        | ) |       |     | (2.8 | ) |   |     |     |   |   |       | (6.3  | )
|                               | 2001 recoveries            |                    |       |           |  |           |      | (3.2        | ) |       |     |     |   |   |     |     |   |   |       | (3.2  | )
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Balance at December 31, 2001   |                            |                    |       |           |  | $         | 0.5  |             |   | $     | 0.8 |      |   | $ |    |      |   | $ | 1.3   |      
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|2001                           |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Total initial charges          |                            | $                  | 6.1   |           |  | $         | 2.3  |             |   | $     | 1.0 |      |   | $ | 6.6 |      |   | $ | 16.0  |      
|Less non-cash asset write-offs |                            |                    | (6.1  | )         |  |           |     |             |   |       |    |      |   |   |    |      |   |   | (6.1  | )    
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Total accrued costs            |                            | $                  |      |           |  |           | 2.3  |             |   |       | 1.0 |      |   |   | 6.6 |      |   |   | 9.9   |      
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Utilization:                   |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|                               | 2001 cash payments         |                    |       |           |  |           |      | (2.3        | ) |       |     | (1.0 | ) |   |     | (6.6 | ) |   |       | (9.9  | )
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|Balance at December 31, 2001   |                            |                    |       |           |  | $         |     |             |   | $     |    |      |   | $ |    |      |   | $ |      |      
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|                               | Total at December 31, 2001 |                    |       |           |  |           | $    | 0.5         |   |       | $   | 0.8  |   |   | $   |     |   |   | $     | 1.3   |  
|                               |                            |                    |       |           |  |           |      |             |   |       |     |      |   |   |     |      |   |   |       |      
|                              

50



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##### Table of Contents



(Dollars in millions, except per share data)


Discontinued Operations

On July 18, 2000, Ceridian announced its
intention to separate HRS and Comdata from its media information
division and subsidiaries (Arbitron) into two independent,
publicly traded companies.

On March 30, 2001, all of the
outstanding shares of common stock of Ceridians
predecessor (formerly known as Ceridian Corporation and now
known as Arbitron Inc.) were distributed to its stockholders in
a tax-free reverse spin-off transaction. Ceridian Corporation
now comprises the HRS and Comdata business segments of the
predecessor and is treated as the accounting successor to the
predecessor. Therefore, the consolidated financial statements of
Ceridian include its post-spin financial results as well as the
historical financial results of the businesses that constituted
its predecessor prior to the spin-off.

The spin-off required new financing
arrangements for the Company. Under the terms of agreements
related to the spin-off, Arbitron furnished $225.0 from its own
borrowings toward the retirement of the debt of the predecessor
outstanding immediately prior to the spin-off. The $225.0
payment liability, combined with other assets and liabilities of
Arbitron, resulted in net liabilities of discontinued operations
of $182.9 at the time of the spin-off, which increased the
Companys retained earnings in that amount when the
spin-off took place. The net liabilities of discontinued
operations are subject to adjustments that may result from the
filing of income tax returns for the predecessor as discussed in
Note B. Additionally, the par value of the Companys common
stock was established as $.01 per share, compared to a par
value of $.50 per share for the predecessors common
stock, and no treasury common stock was distributed to the
Company, resulting in a reduction of additional paid-in capital
of $262.2. Further details on these transactions are presented
in Note I and in the Statements of Stockholders
Equity.

Earnings from discontinued operations
of Arbitron after July 18, 2000 and until the date of the
spin-off were first applied to the reduction of the spin-off
charges of $39.4, net of income taxes. At December 31,
2000, the net amount of spin-off charges was reduced to a loss
of $6.9 by applying an estimated $32.5 expected to be earned by
the discontinued operations prior to the spin-off. The actual
earnings of discontinued operations after July 18, 2000
exceeded the estimate by $5.2, which reduced the loss from
disposition from $6.9 to $1.7.

Summarized operating results, gain
(loss) on disposition and net assets of Arbitron as a
discontinued operation are presented in accompanying tables.
Spin-off charges included $26.5 for a pre-payment premium
related to the required early retirement of the senior notes,
$3.4 for the write-off of deferred debt discount and expenses
and $20.5 for other spin-related costs, primarily for investment
banker, legal and accounting fees.



---

Summarized Operating Results and Gain (Loss)
on Disposition


of Discontinued Operations





|                                                                                                                |  |                          |         |      |  |      |         |   |  |   |         | 
|--------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- | - |  | - | ------- | 
|                                                                                                                |  |                         
|                                                                                                                |  | Years Ended December 31,
|                                                                                                                |  |                         
|                                                                                                                |  | 2001                     |         | 2000 |  | 1999
|                                                                                                               
|                                                                                                               
|Earnings from Operations                                                                                        |  |                          |         |      |  |      |         |   |  |   |         | 
|Revenue of Arbitron                                                                                             |  | $                        | 60.2    |      |  | $    | 206.8   |   |  | $ | 190.1   | 
|Earnings before income taxes of Arbitron                                                                        |  | $                        | 9.0     |      |  | $    | 77.3    |   |  | $ | 65.9    | 
|Net earnings of Arbitron                                                                                        |  | $                        | 5.2     |      |  | $    | 47.6    |   |  | $ | 40.9    | 
|Less net earnings after measurement date of
        July 18, 2000 applied against loss on disposition           |  |                          | (5.2    | )    |  |      | (20.0   | ) |  |   |         | 
|                                                                                                                |  |                          |         |      |  |      |         |   |  |   |         | 
|Earnings from discontinued operations of Arbitron                                                               |  | $                        |        |      |  | $    | 27.6    |   |  | $ | 40.9    | 
|                                                                                                                |  |                          |         |      |  |      |         |   |  |   |         | 
|Gain (Loss) on Disposition                                                                                      |  |                          |         |      |  |      |         |   |  |   |         | 
|Spin-off charges (net of income taxes of $11.0)                                                                 |  | $                        |        |      |  | $    | (39.4   | ) |  |   |         | 
|2000 earnings after measurement date applied
        against loss on disposition (net of income taxes of $12.5) |  |                          |        |      |  |      | 20.0    |   |  |   |         | 
|2001 earnings until spin-off date (net of income
        taxes of $3.8 and $7.5)                                |  |                          | 5.2     |      |  |      | 12.5    |   |  |   |         | 
|                                                                                                                |  |                          |         |      |  |      |         |   |  |   |         | 
|Gain (Loss) on disposition of Arbitron                                                                          |  | $                        | 5.2     |      |  | $    | (6.9    | ) |  |   |         | 
|                                                                                                                |  |                          |         |      |  |      |         |   |  |   |         | 
|Discontinued Operations Per Share
        Results                                                               |  |                          |         |      |  |      |         |   |  |   |         | 
|Earnings from operations per basic share                                                                        |  | $                        |        |      |  | $    | 0.19    |   |  | $ | 0.28    | 
|Earnings from operations per diluted share                                                                      |  | $                        |        |      |  | $    | 0.19    |   |  | $ | 0.28    | 
|Gain (Loss) from disposition per basic share                                                                    |  | $                        | 0.04    |      |  | $    | (0.05   | ) |  | $ |        | 
|Gain (Loss) from disposition per diluted share                                                                  |  | $                        | 0.04    |      |  | $    | (0.05   | ) |  | $ |        | 
|Shares used in basic calculation (in thousands)                                                                 |  |                          | 146,069 |      |  |      | 145,229 |   |  |   | 144,524 | 
|Shares used in diluted calculation (in thousands)                                                               |  |                          | 148,596 |      |  |      | 146,734 |   |  |   | 147,964 | 
|                                                                                                               

Summarized Net Assets of Discontinued
Operations




|                         |  |                 |      | 
|------------------------ |  | --------------- | ---- | 
|                         |  | At December 31,
|                         |  |                
|                         |  | 2000           
|                        
|                        
|Current assets           |  | $               | 51.7 | 
|Noncurrent assets        |  |                 | 45.1 | 
|                         |  |                 |      | 
|Total assets             |  |                 | 96.8 | 
|Current liabilities      |  |                 | 66.5 | 
|Noncurrent liabilities   |  |                 | 2.1  | 
|                         |  |                 |      | 
|Net assets (liabilities) |  | $               | 28.2 | 
|                         |  |                 |      | 
|                        

51



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##### Table of Contents



(Dollars in millions, except per share data)


D. SEGMENT DATA

|                                             |  |                          |         |      |  |      |         |  |  |   |         | 
|-------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                                             |  |                         
|                                             |  |                         
|GEOGRAPHIC SEGMENT DATA                      |  | Years Ended December 31,
|                                             |  |                         
|                                             |  | 2001                     |         | 2000 |  | 1999
|                                            
|                                            
|U.S. Operations                              |  |                          |         |      |  |      |         |  |  |   |         | 
|Revenue                                      |  | $                        | 1,008.4 |      |  | $    | 1,013.4 |  |  | $ | 979.7   | 
|Property, plant and equipment at December 31 |  |                          | 147.8   |      |  |      | 147.8   |  |  |   | 176.9   | 
|Non-U.S. Operations                          |  |                          |         |      |  |      |         |  |  |   |         | 
|United Kingdom Operations                    |  |                          |         |      |  |      |         |  |  |   |         | 
|Revenue                                      |  | $                        | 68.5    |      |  | $    | 61.3    |  |  | $ | 57.8    | 
|Property, plant and equipment at December 31 |  |                          | 3.3     |      |  |      | 3.9     |  |  |   | 4.1     | 
|Canadian Operations                          |  |                          |         |      |  |      |         |  |  |   |         | 
|Revenue                                      |  |                          | 105.4   |      |  |      | 101.0   |  |  |   | 89.5    | 
|Property, plant and equipment at December 31 |  |                          | 8.2     |      |  |      | 8.7     |  |  |   | 7.1     | 
|                                             |  |                          |         |      |  |      |         |  |  |   |         | 
|Total
        Non-U.S. Operations            |  |                          |         |      |  |      |         |  |  |   |         | 
|Revenue                                      |  | $                        | 173.9   |      |  | $    | 162.3   |  |  | $ | 147.3   | 
|Property, plant and equipment at December 31 |  |                          | 11.5    |      |  |      | 12.6    |  |  |   | 11.2    | 
|                                             |  |                          |         |      |  |      |         |  |  |   |         | 
|Total Worldwide                              |  |                          |         |      |  |      |         |  |  |   |         | 
|Revenue                                      |  | $                        | 1,182.3 |      |  | $    | 1,175.7 |  |  | $ | 1,127.0 | 
|Property, plant and equipment at December 31 |  |                          | 159.3   |      |  |      | 160.4   |  |  |   | 188.1   | 
|                                            

Ceridian operates in the information services
industry principally in the U.S. and provides products and
services primarily to the human resource and transportation
information markets. These businesses collect, manage and
analyze data and process transactions on behalf of customers,
report information resulting from such activities to customers,
and provide customers with related software applications and
services. The technology-based products and services of these
businesses are typically provided through long-term customer
relationships that result in a high level of recurring revenue.
The business segments are distinguished primarily by reference
to the markets served and the nature of the services provided.
Selected business segment information is provided in an
accompanying table.

HRS offers a broad range of services
and software designed to help employers more effectively manage
their work forces and information that is integral to human
resource processes. These products and services include
transaction-oriented administrative services and software
products, primarily in areas such as payroll processing and tax
filing, as well as management support software and services in
areas such as benefits administration, qualified plan
administration, skills management, regulatory compliance,
work-life effectiveness and employee assistance programs.
Revenue from payroll and tax filing services also includes
investment income earned by Ceridian from deposits temporarily
held pending remittance on behalf of customers to taxing
authorities and customers employees. These activities are
conducted primarily in the U.S. and, to a lesser extent, through
subsidiaries in the United Kingdom (UK) and Canada.

Comdata provides transaction
processing and decision support services to the transportation
industry, primarily trucking companies, truck stops and truck
drivers, in both the long haul and local markets in the
U.S. These services primarily involve the use of a
proprietary funds transfer card which facilitates truck driver
transactions and provides transaction control and trip
information for trucking firms. Additionally, Comdata provides
assistance in obtaining regulatory permits and other compliance
services, driver relations services, local fueling services and
discounted telecommunications services in its markets. With the
acquisition of a majority interest in Stored Value Systems, Inc.
in 1999 (the remaining interest was acquired in 2000), Comdata
extended its transaction processing activities by providing
card-based services primarily to retailers in the form of gift
cards and certificates, credits for product returns and retail
promotions.

The Other segment includes the
unallocated amounts related to corporate center operations. The
assets of corporate center operations include cash and
equivalents as well as deferred income tax and pension assets.

Ceridian measures business segment
results by reference to earnings before interest and taxes
(EBIT), adjusted for unusual gains and losses.
Unusual gains and losses in 2001 and 2000 are discussed in Note
C. Expenses incurred by corporate center operations are charged
or allocated to the business segments except for those included
in unusual gains and losses, which are reported in the Other
segment.

Revenue from sales between business
segments is not material. The operations of Ceridian are
conducted primarily in the U.S. and revenue from sales between
U.S. and non-U.S. entities is not material. Operations in Canada
and the UK relate largely to the HRS segment. Geographic data
for or at the end of each of the last three years, presented
above, is determined by reference to the location of operation.

52



---



##### Table of Contents



(Dollars in millions, except per share data)


BUSINESS SEGMENTS




|                                                 |  |                          |         |      |  |      |         |   |  |   |         | 
|------------------------------------------------ |  | ------------------------ | ------- | ---- |  | ---- | ------- | - |  | - | ------- | 
|                                                 |  |                         
|                                                 |  | Years Ended December 31,
|                                                 |  |                         
|                                                 |  | 2001                     |         | 2000 |  | 1999
|                                                 |  |                          |         |      |  |     
|HRS                                              |  |                          |         |      |  |      |         |   |  |   |         | 
|Revenue                                          |  | $                        | 866.3   |      |  | $    | 866.9   |   |  | $ | 828.1   | 
|EBIT before unusual losses and gains             |  | $                        | 52.3    |      |  | $    | 109.5   |   |  | $ | 113.4   | 
|Unusual (losses) gains                           |  |                          | (3.6    | )    |  |      | (37.0   | ) |  |   |        | 
|                                                 |  |                          |         |      |  |      |         |   |  |   |         | 
|EBIT                                             |  | $                        | 48.7    |      |  | $    | 72.5    |   |  | $ | 113.4   | 
|Total assets before payroll and tax filing funds |  | $                        | 1,302.7 |      |  | $    | 1,264.7 |   |  | $ | 1,296.4 | 
|Payroll and tax filing funds                     |  |                          | 2,126.4 |      |  |      | 2,945.0 |   |  |   | 2,271.7 | 
|                                                 |  |                          |         |      |  |      |         |   |  |   |         | 
|Total assets at December 31                      |  | $                        | 3,429.1 |      |  | $    | 4,209.7 |   |  | $ | 3,568.1 | 
|Depreciation and amortization                    |  | $                        | 82.7    |      |  | $    | 78.1    |   |  | $ | 63.5    | 
|Expended for property, plant and equipment       |  | $                        | 34.1    |      |  | $    | 43.3    |   |  | $ | 37.8    | 
|                                                
|Comdata                                          |  |                          |         |      |  |      |         |   |  |   |         | 
|Revenue                                          |  | $                        | 316.0   |      |  | $    | 308.8   |   |  | $ | 298.9   | 
|EBIT before unusual losses and gains             |  | $                        | 92.9    |      |  | $    | 83.9    |   |  | $ | 72.2    | 
|Unusual (losses) gains                           |  |                          | (59.0   | )    |  |      | (2.6    | ) |  |   |        | 
|                                                 |  |                          |         |      |  |      |         |   |  |   |         | 
|EBIT                                             |  | $                        | 33.9    |      |  | $    | 81.3    |   |  | $ | 72.2    | 
|Total assets at December 31                      |  | $                        | 520.1   |      |  | $    | 572.6   |   |  | $ | 468.4   | 
|Depreciation and amortization                    |  | $                        | 21.7    |      |  | $    | 18.5    |   |  | $ | 15.6    | 
|Expended for property, plant and equipment       |  | $                        | 8.9     |      |  | $    | 7.9     |   |  | $ | 11.7    | 
|                                                
|Other                                            |  |                          |         |      |  |      |         |   |  |   |         | 
|EBIT before unusual losses and gains             |  | $                        |        |      |  | $    |        |   |  | $ |        | 
|Unusual (losses) gains                           |  |                          | 14.3    |      |  |      | 9.1     |   |  |   |        | 
|                                                 |  |                          |         |      |  |      |         |   |  |   |         | 
|EBIT                                             |  | $                        | 14.3    |      |  | $    | 9.1     |   |  | $ |        | 
|Total assets at December 31                      |  | $                        | 87.8    |      |  | $    | 250.7   |   |  | $ | 223.7   | 
|Depreciation and amortization                    |  | $                        | 1.0     |      |  | $    | 0.6     |   |  | $ | 1.0     | 
|Expended for property, plant and equipment       |  | $                        | 0.2     |      |  | $    | 15.3    |   |  | $ | 25.8    | 
|                                                
|Total Ceridian                                   |  |                          |         |      |  |      |         |   |  |   |         | 
|Revenue                                          |  | $                        | 1,182.3 |      |  | $    | 1,175.7 |   |  | $ | 1,127.0 | 
|EBIT before unusual losses and gains             |  | $                        | 145.2   |      |  | $    | 193.4   |   |  | $ | 185.6   | 
|Unusual (losses) gains                           |  |                          | (48.3   | )    |  |      | (30.5   | ) |  |   |        | 
|                                                 |  |                          |         |      |  |      |         |   |  |   |         | 
|EBIT                                             |  | $                        | 96.9    |      |  | $    | 162.9   |   |  | $ | 185.6   | 
|Total assets before payroll and tax filing funds |  | $                        | 1,910.6 |      |  | $    | 2,088.0 |   |  | $ | 1,988.5 | 
|Payroll and tax filing funds                     |  |                          | 2,126.4 |      |  |      | 2,945.0 |   |  |   | 2,271.7 | 
|                                                 |  |                          |         |      |  |      |         |   |  |   |         | 
|Total assets at December 31                      |  | $                        | 4,037.0 |      |  | $    | 5,033.0 |   |  | $ | 4,260.2 | 
|Depreciation and amortization                    |  | $                        | 105.4   |      |  | $    | 97.2    |   |  | $ | 80.1    | 
|Expended for property, plant and equipment       |  | $                        | 43.2    |      |  | $    | 66.5    |   |  | $ | 75.3    | 
|                                                

53



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(Dollars in millions, except per share data)


E. CAPITAL ASSETS




|                                     |  |              |        |      |  |   |        |  
|------------------------------------ |  | ------------ | ------ | ---- |  | - | ------ | -
|                                     |  |             
|                                     |  | December 31,
|                                     |  |             
|                                     |  | 2001         |        | 2000
|                                    
|                                    
|Property, Plant and Equipment        |  |              |        |      |  |   |        |  
|Land                                 |  | $            | 13.2   |      |  | $ | 12.1   |  
|Machinery and equipment              |  |              | 263.4  |      |  |   | 235.0  |  
|Buildings and improvements           |  |              | 84.2   |      |  |   | 80.7   |  
|                                     |  |              |        |      |  |   |        |  
|Total property, plant and equipment  |  |              | 360.8  |      |  |   | 327.8  |  
|Accumulated depreciation             |  |              | (201.5 | )    |  |   | (167.4 | )
|                                     |  |              |        |      |  |   |        |  
|Property, plant and equipment, net   |  | $            | 159.3  |      |  | $ | 160.4  |  
|                                     |  |              |        |      |  |   |        |  
|                                    
|Goodwill                             |  |              |        |      |  |   |        |  
|Goodwill                             |  | $            | 979.6  |      |  | $ | 988.1  |  
|Accumulated amortization             |  |              | (120.0 | )    |  |   | (90.2  | )
|                                     |  |              |        |      |  |   |        |  
|Goodwill, net                        |  | $            | 859.6  |      |  | $ | 897.9  |  
|                                     |  |              |        |      |  |   |        |  
|                                    
|Other Intangibles                    |  |              |        |      |  |   |        |  
|Customer lists                       |  | $            | 39.0   |      |  | $ | 36.1   |  
|Trademarks                           |  |              | 50.8   |      |  |   | 49.2   |  
|Technology                           |  |              | 43.4   |      |  |   | 43.7   |  
|Other                                |  |              | 34.0   |      |  |   | 35.1   |  
|                                     |  |              |        |      |  |   |        |  
|Total other intangible assets        |  |              | 167.2  |      |  |   | 164.1  |  
|Accumulated amortization             |  |              | (51.0  | )    |  |   | (35.7  | )
|                                     |  |              |        |      |  |   |        |  
|Other intangible assets, net         |  | $            | 116.2  |      |  | $ | 128.4  |  
|                                     |  |              |        |      |  |   |        |  
|                                    
|Software and Development Costs       |  |              |        |      |  |   |        |  
|Purchased software                   |  | $            | 51.9   |      |  | $ | 29.8   |  
|Software development costs           |  |              | 85.6   |      |  |   | 60.0   |  
|                                     |  |              |        |      |  |   |        |  
|Total software and development costs |  |              | 137.5  |      |  |   | 89.8   |  
|Accumulated amortization             |  |              | (44.6  | )    |  |   | (32.8  | )
|                                     |  |              |        |      |  |   |        |  
|Software and development costs, net  |  | $            | 92.9   |      |  | $ | 57.0   |  
|                                     |  |              |        |      |  |   |        |  
|                                    

|                                                                |       |                          |      |       |  |      |      |      |  |   |      |      | 
|--------------------------------------------------------------- | ----- | ------------------------ | ---- | ----- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|                                                                |       |                         
|                                                                |       | Years Ended December 31,
|                                                                |       |                         
|Depreciation and Amortization                                   |       | 2001                     |      | 2000  |  | 1999
|                                                               
|                                                               
|Depreciation and amortization of property, plant
	and equipment |       | $                        | 42.6 |       |  | $    | 39.2 |      |  | $ | 36.5 |     
|Amortization of goodwill                                        |       |                          | 35.1 |       |  |      | 34.5 |      |  |   | 25.3 |     
|Amortization of other intangible assets                         |       |                          | 15.2 |       |  |      | 14.4 |      |  |   | 11.1 |     
|Amortization of software and development costs                  |       |                          | 12.5 |       |  |      | 9.1  |      |  |   | 7.2  |     
|                                                                |       |                          |      |       |  |      |      |      |  |   |      |     
|                                                                | Total |                          | $    | 105.4 |  |      | $    | 97.2 |  |   | $    | 80.1 | 
|                                                                |       |                          |      |       |  |      |      |      |  |   |      |     
|                                                               

54



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(Dollars in millions, except per share data)


F. INVESTING ACTIVITY

At December 31, 2001 and 2000, short-term
investments included $22.0 of U.S. government agency debt
securities carried at cost (which approximates fair value) and
money market securities supporting benefits services customer
funds payable. At December 31, 2000, short-term investments
also included 1,580,023 shares of HotJobs.com, Ltd. common
stock with an estimated fair value of $18.1 at that date,
which also represented the unrealized gain on these securities.
During 2001, the HotJobs.com, Ltd. shares were sold in a series
of transactions for aggregate proceeds and gains of $15.6. Gain
or loss on these securities was recognized as the securities
were sold.

In March 2001, Ceridian entered into
an agreement with Ultimate Software Group, Inc.
(Ultimate) in which Ceridian was granted a
non-exclusive license to use Ultimates software as part of
a Web-enabled integrated ASP offering to middle market Ceridian
customers. Ceridian made an immediate payment of $10.0, of which
$5.0 was contingent upon successful transfer of the technology
to Ceridian. Ceridian also agreed to make additional payments
commencing upon transfer of technology, based on the number of
Ceridian customers employees paid by using the software
and subject to minimum and maximum amounts. The transfer of
technology was accomplished in February 2002, at which time the
requirement for minimum monthly payments in 2002 was eliminated
in consideration for an advance payment of $6.0, representing
the minimum monthly payments for the year 2003. Ceridian then
remains obligated to future minimum monthly payments of
$0.5 per month from January 2004 until January 1,
2006, when the minimum monthly payment will escalate at a rate
of 5% per annum. The noncancelable term of the contract
extends for seven years until March 2008 at which time either
party may terminate the agreement, provided that at least two
years prior written notice has been provided to the other party.
Under the agreement, Ceridian may not, without Ultimate board
approval, acquire an equity interest in Ultimate greater than
14.99% through purchases in the open market or from third
parties.

In December 2001, Ceridian made
minority investments in two strategic alliance partners to
expand its HRS product offerings. The aggregate amount included
in other noncurrent assets for these investments was $16.9.

In May 2000, Comdata completed the
acquisition of Stored Value Systems, Inc. (SVS) by
exercising an option to purchase the remaining interest and
paying $50.9. Comdata had acquired a majority interest in SVS in
March 1999 for $20.3. As a result of the acquisition, Comdata
recorded goodwill of $52.4 and intangibles of $11.0 to be
amortized over periods of 2 to 10 years. Other business
acquisitions during 2000 resulted in payments of $14.2,
principally for a payroll service that operates primarily in the
UK.

Proceeds from sales of assets during
2000 primarily involved the November sale and leaseback of the
real property constituting the Ceridian headquarters facility
for $41.0. The gain of $1.2 from this transaction will be
recognized over the term of the lease. The September sale of
property in Palm Harbor, Fla., formerly used in Ceridians
benefits services operations, provided proceeds of $12.8 and the
excess of the proceeds over the carrying value of the property
reduced goodwill related to the acquisition of ABR Information
Services, Inc. (ABR).

As of June 7, 1999, Ceridian
acquired ABR as a result of a tender offer for all outstanding
shares of ABR common stock at a price of $25.50 per share
in cash and a subsequent merger on July 22, 1999. ABR
provided comprehensive benefits administration, payroll and
human resource services to employers of all sizes.

The purchase price of $751.8 included
$720.9 for tendered shares, $12.7 for ABR shares converted to
the right to receive $25.50 per share and $6.7 for Ceridian
direct acquisition costs. The purchase price also included the
exchange of Ceridian stock options valued at $11.5 for any
unexercised ABR stock options outstanding.

The value assigned to the net assets
of ABR, including adjustments during the year following the
acquisition, amounted to $71.2, and the Company recorded
goodwill of $592.8 and intangibles of $87.9 to be amortized over
periods ranging from 4 to 30 years.

The 1999 net investing cash outflows
related to the ABR acquisition, after reduction for cash and
equivalents acquired of $77.4, amounted to $681.5. These
outflows included payments of $720.9 for shares tendered in
June, $12.7 deposited in July for the remaining shares, and
payments of $6.4 for Ceridian direct acquisition costs and $18.9
for ABR liabilities directly related to the acquisition. The
directly related ABR liabilities assumed included payments
during 1999 of $11.4 paid in July to buy out vested ABR stock
options and $7.5 for investment consulting fees.

55



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(Dollars in millions, except per share data)


G. RETIREMENT PLANS

|                                                                 |  |               |        |      |  |   |       |  
|---------------------------------------------------------------- |  | ------------- | ------ | ---- |  | - | ----- | -
|                                                                
|                                                                
|                                                                 |  |              
|                                                                 |  | September 30,
|Funded Status of Defined Benefit                                 |  |              
|Retirement Plans at Measurement Date                             |  | 2001          |        | 2000
|                                                                
|                                                                
|Change in Projected Benefit Obligation During
        the Period |  |               |        |      |  |   |       |  
|At beginning of period                                           |  | $             | 587.2  |      |  | $ | 577.3 |  
|Service cost                                                     |  |               | 2.7    |      |  |   | 3.0   |  
|Interest cost                                                    |  |               | 44.2   |      |  |   | 44.6  |  
|Employee contributions                                           |  |               | 0.2    |      |  |   | 0.2   |  
|Arbitron spin-off                                                |  |               | (15.0  | )    |  |   |      |  
|Amendments                                                       |  |               |       |      |  |   | 19.5  |  
|Actuarial (gain) loss                                            |  |               | 17.3   |      |  |   | (7.4  | )
|Benefits paid                                                    |  |               | (47.8  | )    |  |   | (50.0 | )
|                                                                 |  |               |        |      |  |   |       |  
|At end of period                                                 |  | $             | 588.8  |      |  | $ | 587.2 |  
|                                                                 |  |               |        |      |  |   |       |  
|Change in Fair Value of Plan Assets During the
        Period    |  |               |        |      |  |   |       |  
|At beginning of period                                           |  | $             | 639.7  |      |  | $ | 576.3 |  
|Actual return on plan assets                                     |  |               | (96.7  | )    |  |   | 90.8  |  
|Arbitron spin-off                                                |  |               | (13.4  | )    |  |   |      |  
|Amendments                                                       |  |               |       |      |  |   | 19.2  |  
|Employee contributions                                           |  |               | 0.2    |      |  |   | 0.2   |  
|Employer contributions                                           |  |               | 3.5    |      |  |   | 3.2   |  
|Benefits paid                                                    |  |               | (47.8  | )    |  |   | (50.0 | )
|                                                                 |  |               |        |      |  |   |       |  
|At end of period                                                 |  | $             | 485.5  |      |  | $ | 639.7 |  
|                                                                 |  |               |        |      |  |   |       |  
|Funded Status of Plan                                            |  | $             | (103.3 | )    |  | $ | 52.5  |  
|Unrecognized net loss                                            |  |               | 214.4  |      |  |   | 43.5  |  
|Unrecognized prior service cost                                  |  |               | 2.2    |      |  |   | 6.8   |  
|                                                                 |  |               |        |      |  |   |       |  
|Prepaid pension cost                                             |  | $             | 113.3  |      |  | $ | 102.8 |  
|                                                                 |  |               |        |      |  |   |       |  
|Balance Sheet Presentation                                       |  |               |        |      |  |   |       |  
|Prepaid pension asset                                            |  | $             |       |      |  | $ | 118.9 |  
|Intangible pension asset                                         |  |               | 3.1    |      |  |   | 1.3   |  
|Accrued benefit liability                                        |  |               | (89.0  | )    |  |   | (26.6 | )
|Accumulated other comprehensive income                           |  |               | 199.2  |      |  |   | 9.2   |  
|                                                                 |  |               |        |      |  |   |       |  
|Prepaid pension cost                                             |  | $             | 113.3  |      |  | $ | 102.8 |  
|                                                                 |  |               |        |      |  |   |       |  



---

|                                 |  |      |      |      |  |      |      |   |  |  |      |  
|-------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|Assumptions Used in Calculations |  | 2001 |      | 2000 |  | 1999
|                                
|                                
|Discount rate                    |  |      | 7.43 | %    |  |      | 7.70 | % |  |  | 7.50 | %
|Rate of compensation increase    |  |      | 4.01 | %    |  |      | 4.02 | % |  |  | 4.00 | %
|Expected return on plan assets   |  |      | 9.44 | %    |  |      | 9.47 | % |  |  | 9.50 | %
|                                



---

|                                   |       |      |       |      |   |      |       |      |   |   |       |      |  
|---------------------------------- | ----- | ---- | ----- | ---- | - | ---- | ----- | ---- | - | - | ----- | ---- | -
|Net Periodic Pension Cost (Credit) |       | 2001 |       | 2000 |   | 1999
|                                  
|                                  
|Service cost                       |       | $    | 2.8   |      |   | $    | 3.0   |      |   | $ | 2.9   |     
|Interest cost                      |       |      | 44.3  |      |   |      | 44.6  |      |   |   | 41.4  |     
|Expected return on plan assets     |       |      | (57.4 | )    |   |      | (58.5 | )    |   |   | (55.2 | )   
|Net amortization and deferral      |       |      | 4.6   |      |   |      | 4.8   |      |   |   | 6.0   |     
|                                   |       |      |       |      |   |      |       |      |   |   |       |     
|                                   | Total |      | $     | (5.7 | ) |      | $     | (6.1 | ) |   | $     | (4.9 | )
|                                   |       |      |       |      |   |      |       |      |   |   |       |     
|                                  

Pension Benefits

Ceridian maintains a defined benefit pension plan
for U.S. employees (the U.S. plan) that
closed to new participants effective January 2, 1995.
Assets of the U.S. plan consist principally of equity
securities, U.S. government securities, and other fixed
income obligations and do not include securities issued by
Ceridian. Benefits under this plan are generally calculated on
final or career average earnings and years of participation in
the plan. Most participating employees are required to
contribute to the plan as a condition of active participation.
Certain former employees are inactive participants in the
U.S. plan. The plan is funded in accordance with funding
requirements under the Employee Retirement Income Security Act
of 1974, based on determinations of an independent consulting
actuary. Ceridian also sponsors a plan for its employees in the
United Kingdom and a nonqualified supplemental retirement plan.

The funded status of these plans at
their 2001 and 2000 measurement dates and changes in funded
status for the annual periods then ended are shown in the
accompanying tables, along with the net periodic pension cost
and assumptions used in calculations for each of the last three
years.

For 2001, due primarily to the effect
of depressed stock market values at the measurement date on the
valuation of plan assets of the U.S. plan, the accrued
benefit obligation of this plan exceeded the fair value of plan
assets by $56.9. As a result, the prepaid pension cost related
to this plan was reclassified to recognize the unfunded
liability, with the remainder (net of income taxes and a small
intangible asset amount) reported as a loss in accumulated other
comprehensive income, which reduces stockholders equity.

At December 31, 2001 and 2000,
respectively, prepaid pension cost also included $7.6 and $7.9
held in benefit protection trusts for certain nonqualified plan
participants and an intangible pension asset of $3.1 and $1.3.

The expense recognized by Ceridian
with respect to employer contributions to its defined
contribution retirement plans was $9.7 in 2001, $9.2 in 2000 and
$7.8 in 1999.

Plan amounts include those related to
participating employees of Arbitron discontinued operations
until December 31, 2000. Pension obligations and related
plan assets were transferred to Arbitron prior to the time of
the spin-off. Ceridian retained responsibility for all
participants in the qualified and nonqualified defined benefit
plans who terminated employment before January 1, 2001, or
were receiving benefits under Ceridians long-term
disability insurance plan immediately before January 1,
2001.

56



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(Dollars in millions, except per share data)


Postretirement Benefits

Ceridian provides health care and life insurance
benefits for eligible retired employees, including individuals
who retired from operations of Ceridian that were subsequently
sold or discontinued. Ceridian sponsors several health care
plans in the U.S. for both pre- and post-age 65
retirees. Company contributions to these plans differ for
various groups of retirees and future retirees. Employees hired
on or after January 1, 1992 may enroll at retirement in
company-sponsored plans with no company subsidy. Employees hired
before and retiring after January 1, 1992 may enroll in
plans that subsidize pre-age 65 coverage only. Employees
who retired prior to January 1, 1992 are subject to various
cost-sharing policies depending on when retirement began and
eligibility for Medicare. This is a closed group. Most retirees
outside the United States are covered by governmental health
care programs, and Ceridians cost is not significant.

The following tables present the
amounts and changes in the aggregate benefit obligation at the
beginning and end of and for each of the last two measurement
periods and the components of net periodic postretirement
benefit cost for the plans for the last three years. Ceridian
does not prefund these costs.

|                                     |       |               |      |      |  |   |      |      | 
|------------------------------------ | ----- | ------------- | ---- | ---- |  | - | ---- | ---- | 
|                                    
|                                    
|                                     |       |              
|                                     |       |              
|                                     |       | September 30,
|Funded Status of Postretirement      |       |              
|Health Care and Life Insurance Plans |       | 2001          |      | 2000
|                                    
|                                    
|Change in Benefit Obligation         |       |               |      |      |  |   |      |     
|At beginning of period               |       | $             | 37.6 |      |  | $ | 41.8 |     
|Service cost                         |       |               | 0.1  |      |  |   | 0.2  |     
|Interest cost                        |       |               | 2.7  |      |  |   | 3.0  |     
|Participant contributions            |       |               | 1.3  |      |  |   | 1.0  |     
|Arbitron spin-off                    |       |               | (0.3 | )    |  |   |     |     
|Actuarial loss (gain)                |       |               | 7.8  |      |  |   | (4.9 | )   
|Benefits paid                        |       |               | (6.8 | )    |  |   | (3.5 | )   
|                                     |       |               |      |      |  |   |      |     
|At end of period                     |       | $             | 42.4 |      |  | $ | 37.6 |     
|                                     |       |               |      |      |  |   |      |     
|Change in Plan Assets                |       |               |      |      |  |   |      |     
|At beginning of period               |       | $             |     |      |  | $ |     |     
|Company contributions                |       |               | 5.5  |      |  |   | 2.5  |     
|Participant contributions            |       |               | 1.3  |      |  |   | 1.0  |     
|Benefits paid                        |       |               | (6.8 | )    |  |   | (3.5 | )   
|                                     |       |               |      |      |  |   |      |     
|At end of period                     |       | $             |     |      |  | $ |     |     
|                                     |       |               |      |      |  |   |      |     
|Funded Status of Plan                |       |               |      |      |  |   |      |     
|Benefit obligation, net              |       | $             | 42.4 |      |  | $ | 37.6 |     
|Unrecognized actuarial gain          |       |               | 6.0  |      |  |   | 14.8 |     
|                                     |       |               |      |      |  |   |      |     
|At end of period                     |       | $             | 48.4 |      |  | $ | 52.4 |     
|                                     |       |               |      |      |  |   |      |     
|                                    
|Current portion                      |       | $             | 6.0  |      |  | $ | 6.0  |     
|Noncurrent portion                   |       |               | 42.4 |      |  |   | 46.4 |     
|                                     |       |               |      |      |  |   |      |     
|                                     | Total |               | $    | 48.4 |  |   | $    | 52.4 | 
|                                     |       |               |      |      |  |   |      |     
|                                    




|                                         |                           |      |      |      |  |      |      |     |  |   |      |     | 
|---------------------------------------- | ------------------------- | ---- | ---- | ---- |  | ---- | ---- | --- |  | - | ---- | --- | 
|Net Periodic Postretirement Benefit
Cost |                           | 2001 |      | 2000 |  | 1999
|                                        
|                                        
|Service cost                             |                           | $    | 0.1  |      |  | $    | 0.2  |     |  | $ | 0.1  |    
|Interest cost                            |                           |      | 2.7  |      |  |      | 3.0  |     |  |   | 3.0  |    
|Actuarial gain amortization              |                           |      | (0.9 | )    |  |      | (0.5 | )   |  |   | (0.2 | )  
|                                         |                           |      |      |      |  |      |      |     |  |   |      |    
|                                         | Net periodic benefit cost |      | $    | 1.9  |  |      | $    | 2.7 |  |   | $    | 2.9 | 
|                                         |                           |      |      |      |  |      |      |     |  |   |      |    
|                                        

The assumed health care cost trend
rate used in measuring the benefit obligation is 7% for
pre-age 65 and 5.75% for post-age 65 in 2001, with
pre-age 65 rates declining at a rate of 1% per year to
an ultimate rate of 5.75% in 2003. A one percent increase in
this rate would increase the benefit obligation at
September 30, 2001 by $2.7 and the aggregate service and
interest cost for the 2001 measurement period by $0.2. A one
percent decrease in this rate would decrease the benefit
obligation at September 30, 2001 by $2.5 and the aggregate
service and interest cost for the 2001 measurement period by
$0.2. The weighted average discount rates used in determining
the benefit obligation at the measurement dates were 7.5% for
2001 and 7.75% for 2000.

Plan amounts include those related to
participating employees of the Arbitron discontinued operations
until December 31, 2000. Ceridians postretirement and
postemployment plans will continue to provide coverage for all
eligible Arbitron employees who terminated employment covered by
the plan on or prior to December 31, 2000.

57



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(Dollars in millions, except per share data)


H. STOCK PLANS

|                                                                                         |  |              |                |             |  |             |            |                |  |            |            |   |  |  |             |   |  |   |       | 
|---------------------------------------------------------------------------------------- |  | ------------ | -------------- | ----------- |  | ----------- | ---------- | -------------- |  | ---------- | ---------- | - |  |  | ----------- | - |  | - | ----- | 
|                                                                                        
|                                                                                        
|Stock Plans                                                                              |  | Weighted-   
|                                                                                         |  | Average     
|                                                                                         |  | Option Price |                |             |  | Available   |            | Exercise Price
|                                                                                         |  | Per Share    |                | Outstanding |  | Exercisable |            | for Grant      |  | of Options
|                                                                                        
|                                                                                        
|At December 31, 1998                                                                     |  |              | $3.09  $33.16 |             |  |             | 13,491,668 |                |  |            | 4,360,924  |   |  |  | 4,917,356   |   |  | $ | 21.65 | 
|                                                                                        
|Authorized                                                                               |  |              |                |             |  |             |            |                |  |            |            |   |  |  | 12,695,048  |   |  |   |       | 
|ABR conversion                                                                           |  |              | 5.08  42.64   |             |  |             | 844,393    |                |  |            | 428,335    |   |  |  |             |   |  |   |       | 
|Granted                                                                                  |  |              | 19.94  38.97  |             |  |             | 3,891,970  |                |  |            |            |   |  |  | (3,891,970  | ) |  |   | 22.73 | 
|Became exercisable                                                                       |  |              | 6.47  34.58   |             |  |             |            |                |  |            | 3,038,429  |   |  |  |             |   |  |   |       | 
|Exercised                                                                                |  |              | 3.76  29.00   |             |  |             | (1,265,599 | )              |  |            | (1,265,599 | ) |  |  |             |   |  |   | 14.98 | 
|Canceled                                                                                 |  |              | 6.47  36.78   |             |  |             | (1,031,166 | )              |  |            | (70,019    | ) |  |  | 932,488     |   |  |   | 25.36 | 
|Expired                                                                                  |  |              | 7.65           |             |  |             | (1,860     | )              |  |            | (1,860     | ) |  |  | (2,695,048  | ) |  |   | 7.65  | 
|ESPP purchases                                                                           |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (239,073    | ) |  |   |       | 
|UK Plans                                                                                 |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (296        | ) |  |   |       | 
|Restricted stock, net                                                                    |  |              |                |             |  |             |            |                |  |            |            |   |  |  | 37,864      |   |  |   |       | 
|Performance units forfeited                                                              |  |              |                |             |  |             |            |                |  |            |            |   |  |  | 14,660      |   |  |   |       | 
|                                                                                        
|At December 31, 1999                                                                     |  |              | $3.09  $42.64 |             |  |             | 15,929,406 |                |  |            | 6,490,210  |   |  |  | 11,771,029  |   |  | $ | 22.26 | 
|                                                                                        
|Authorized                                                                               |  |              |                |             |  |             |            |                |  |            |            |   |  |  | 333,834     |   |  |   |       | 
|Granted                                                                                  |  |              | 16.00  27.88  |             |  |             | 1,466,653  |                |  |            |            |   |  |  | (1,466,653  | ) |  |   | 22.55 | 
|Became exercisable                                                                       |  |              | 10.53  38.97  |             |  |             |            |                |  |            | 3,116,997  |   |  |  |             |   |  |   |       | 
|Exercised                                                                                |  |              | 3.09  27.41   |             |  |             | (762,875   | )              |  |            | (762,875   | ) |  |  |             |   |  |   | 13.70 | 
|Canceled                                                                                 |  |              | 11.82  38.97  |             |  |             | (2,990,630 | )              |  |            | (672,055   | ) |  |  | 884,531     |   |  |   | 24.99 | 
|Expired                                                                                  |  |              | 7.15           |             |  |             | (4,000     | )              |  |            | (4,000     | ) |  |  |             |   |  |   | 7.15  | 
|ESPP purchases                                                                           |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (310,379    | ) |  |   |       | 
|UK Plans                                                                                 |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (362        | ) |  |   |       | 
|Restricted stock, net                                                                    |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (17,366     | ) |  |   |       | 
|                                                                                        
|At December 31, 2000                                                                     |  |              | $3.76  $42.64 |             |  |             | 13,638,554 |                |  |            | 8,168,277  |   |  |  | 11,194,634  |   |  | $ | 22.18 | 
|                                                                                        
|Granted                                                                                  |  |              | 18.46  22.50  |             |  |             | 4,814,250  |                |  |            |            |   |  |  | (4,814,250  | ) |  |   | 18.52 | 
|Became exercisable                                                                       |  |              | 16.00  38.97  |             |  |             |            |                |  |            | 896,345    |   |  |  |             |   |  |   |       | 
|Exercised                                                                                |  |              | 3.76  21.19   |             |  |             | (51,571    | )              |  |            | (51,571    | ) |  |  |             |   |  |   | 17.51 | 
|Canceled                                                                                 |  |              | 16.00  35.63  |             |  |             | (274,188   | )              |  |            | (83,008    | ) |  |  | 163,210     |   |  |   | 23.05 | 
|ESPP purchases                                                                           |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (2,313      | ) |  |   |       | 
|Restricted stock, net                                                                    |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (11,444     | ) |  |   |       | 
|                                                                                        
|At March 30, 2001                                                                        |  |              | $3.76  $42.64 |             |  |             | 18,127,045 |                |  |            | 8,930,043  |   |  |  | 6,529,837   |   |  | $ | 21.20 | 
|                                                                                        
|Authorized under new plans                                                               |  |              |                |             |  |             |            |                |  |            |            |   |  |  | 29,075,495  |   |  |   |       | 
|Adjust 2001 option grants                                                                |  |              |                |             |  |             | 1,612,002  |                |  |            |            |   |  |  | (1,612,002  | ) |  |   |       | 
|Adjust prior option grants                                                               |  |              |                |             |  |             | 19,925,736 |                |  |            | 9,608,778  |   |  |  | (19,925,736 | ) |  |   |       | 
|Adjust restricted stock                                                                  |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (69,583     | ) |  |   |       | 
|                                                                                        
|At March 31, 2001, adjusted                                                              |  |              | $2.79  $31.66 |             |  |             | 21,537,738 |                |  |            | 9,608,778  |   |  |  | 7,468,174   |   |  | $ | 15.81 | 
|                                                                                        
|Granted                                                                                  |  |              | 13.71  20.42  |             |  |             | 530,541    |                |  |            |            |   |  |  | (530,541    | ) |  |   | 17.55 | 
|Became exercisable                                                                       |  |              | 14.25  27.29  |             |  |             |            |                |  |            | 2,338,476  |   |  |  |             |   |  |   |       | 
|Exercised                                                                                |  |              | 2.79  18.61   |             |  |             | (411,376   | )              |  |            | (411,376   | ) |  |  |             |   |  |   | 12.94 | 
|Canceled                                                                                 |  |              | 2.87  27.29   |             |  |             | (1,263,536 | )              |  |            | (361,801   | ) |  |  | 1,263,536   |   |  |   | 16.40 | 
|Expired                                                                                  |  |              | 2.87           |             |  |             | (714       | )              |  |            | (714       | ) |  |  | 714         |   |  |   | 2.87  | 
|ESPP purchases                                                                           |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (167,925    | ) |  |   |       | 
|UK Plans                                                                                 |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (28,059     | ) |  |   |       | 
|Restricted stock, net                                                                    |  |              |                |             |  |             |            |                |  |            |            |   |  |  | (48,180     | ) |  |   |       | 
|                                                                                        
|At December 31, 2001                                                                     |  |              | $3.71  $31.66 |             |  |             | 20,392,653 |                |  |            | 11,173,363 |   |  |  | 7,957,719   |   |  | $ | 15.88 | 
|                                                                                        
|Common shares reserved for future issuance at
        December 31, 2001 were 28,350,372.
|                                                                                        

During the three-year period ended
December 31, 2001, Ceridian maintained stock-based
compensation plans for directors, officers, other employees,
consultants and independent contractors.

The Amended and Restated 2001
Director Performance Incentive Plan authorizes the issuance of
up to 350,000 shares in connection with awards of stock
options, non-performance restricted stock and deferred stock to
non-employee directors. An annual grant of a non-qualified stock
option to purchase 4,000 shares is made to each
eligible director with such grants becoming fully exercisable
six months after the date of grant. The exercise price of the
options is the fair market value of the underlying stock at the
date of grant, and the options expire in ten years.

A one-time award of non-performance
restricted shares is made to each non-employee director when the
director first joins the Board with restrictions on transfer
that will ordinarily lapse annually over a five-year period. The
number of shares awarded will have a fair market value equal to
two and one-half times the then current annual retainer paid to
non-employee directors.

Additionally, at least one-half of
the annual Board retainer for each non-employee director is also
provided in the form of restricted stock, deferred stock or a
combination of the two. The restrictions on transfer of the
retainer awards will lapse at the conclusion of the
directors service.

The Amended and Restated 2001
Long-Term Stock Incentive Plan (2001 LTSIP)
authorizes the issuance until November 27, 2010 of up to
27,000,000 common shares in connection with awards of stock
options, restricted stock awards and performance unit awards to
eligible participants.

At the time of the spin-off, holders
of 18,127,045 Ceridian stock options and 59,870 unvested
restricted stock awards had their awards adjusted in number,
kind and exercise price to preserve the intrinsic value of their
holdings based upon their employment status, which increased
these amounts to 21,537,738 and 69,583, respectively. Other
terms of the options were not changed. Stock options granted
under the 2001 LTSIP during 2001 included 4,814,250 prior to the
spin-off, 1,612,002 as a result of the spin-off adjustment and
530,541 after the spin-off for a total granted of 6,956,793.

Eligible participants in the 2001
LTSIP include all employees of Ceridian and any non-employee
director, consultant and independent contractor of Ceridian.

Stock options awarded under the 2001
LTSIP generally vest annually either over a three-year period or
on a specific date if certain performance criteria were
satisfied, have either a 5-year or 10-year term and have an
exercise price that may not be less than the fair market value
of the underlying stock at the date of grant.

The 2001 LTSIP gives discretion to
the Compensation and Human Resources Committee (the committee

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(Dollars in millions, except per share data)


of the Board of Directors of Ceridian that
administers the 2001 LTSIP) to determine the effect that a
change of control of Ceridian will have upon awards made under
that plan. The vesting of stock option and restricted stock
awards granted in 2001 under the 2001 LTSIP will accelerate upon
a change of control of Ceridian.

Ceridian has reserved 725,495 common
shares for issuance under stock-based compensation plans for its
employees in the United Kingdom (the UK Plans).

The Employee Stock Purchase Plan
(ESPP) provides for the issuance of up to
1,000,000 shares of newly issued or treasury common stock
of Ceridian to eligible employees. The purchase price of the
stock to ESPP participants is 85% of the lesser of the fair
market value on either the first day or the last day of the
applicable three-month offering period. In connection with the
spin-off, ESPP activity was suspended for the first two offering
periods in 2001.

As reported in Note A, Ceridian
adopted the disclosure-only provisions of FAS 123 and
continues to account for stock-based compensation as in prior
years. Therefore, no expense is recorded with respect to
Ceridians stock option or employee stock purchase plans.

The following disclosure, including
referenced tables, is provided with respect to the provisions of
FAS 123.

Ceridian employs the Black-Scholes option pricing
model for determining the fair value of stock option grants and
ESPP purchases, as presented in an accompanying table. Weighted
average exercise prices for stock option activity and options
outstanding at December 31, 2001, 2000 and 1999 are
included in the Stock Plans table.


Further information on outstanding
and exercisable stock options by exercise price range as of the
end of the current year is disclosed in an accompanying table.
Ceridian is required to report the pro forma effect on net
earnings and earnings per share that would have resulted if the
fair value method of accounting for stock-based compensation
issued in those years had been adopted. The application of the
fair value method would have resulted in the determination of
compensation cost for grants of stock options and purchases
under the ESPP. Such compensation cost would then be allocated
to the related period of service. The results of this
calculation and the assumptions used appear in the accompanying
pro forma table.

|                                                 |  |                     |            |                     |  |          |      |             |  |          |       |  |  |  |            |  |  |   |       | 
|------------------------------------------------ |  | ------------------- | ---------- | ------------------- |  | -------- | ---- | ----------- |  | -------- | ----- |  |  |  | ---------- |  |  | - | ----- | 
|                                                
|                                                
|                                                
|Stock Option Information as of December 31, 2001
|                                                
|                                                 |  |                     |            |                    
|                                                 |  | Options Outstanding |            | Options Exercisable
|                                                 |  |                     |            |                    
|                                                 |  |                     |            | Weighted            |  |          |      |            
|                                                 |  |                     |            | Average             |  | Weighted |      |             |  | Weighted
|                                                 |  |                     |            | Remaining           |  | Average  |      |             |  | Average 
|Range of                                         |  | Number              |            | Contractual         |  | Exercise |      | Number      |  | Exercise
|Exercise Prices                                  |  | Outstanding         |            | Life                |  | Price    |      | Exercisable |  | Price   
|                                                 |  |                     |            |                     |  |          |      |             |  |         
|$ 3.71  $13.27                                  |  |                     | 1,225,834  |                     |  |          | 3.20 |             |  | $        | 9.00  |  |  |  | 1,182,347  |  |  | $ | 8.90  | 
|$13.71  $13.71                                  |  |                     | 5,786,445  |                     |  |          | 4.08 |             |  | $        | 13.71 |  |  |  | 15,488     |  |  | $ | 13.71 | 
|$13.74  $14.80                                  |  |                     | 3,427,522  |                     |  |          | 7.50 |             |  | $        | 14.68 |  |  |  | 1,549,304  |  |  | $ | 14.63 | 
|$14.81  $15.78                                  |  |                     | 3,003,937  |                     |  |          | 5.43 |             |  | $        | 15.33 |  |  |  | 2,770,651  |  |  | $ | 15.33 | 
|$15.82  $20.29                                  |  |                     | 3,121,339  |                     |  |          | 6.07 |             |  | $        | 18.19 |  |  |  | 2,166,580  |  |  | $ | 18.03 | 
|$20.35  $20.35                                  |  |                     | 2,614,677  |                     |  |          | 6.81 |             |  | $        | 20.35 |  |  |  | 2,614,677  |  |  | $ | 20.35 | 
|$20.42  $31.66                                  |  |                     | 1,212,899  |                     |  |          | 6.59 |             |  | $        | 28.91 |  |  |  | 874,316    |  |  | $ | 23.15 | 
|                                                
|                                                 |  |                     | 20,392,653 |                     |  |          |      |             |  |          |       |  |  |  | 11,173,363 |  |  |   |       | 
|                                                

|                                          |  |      |      |      |  |      |       |   |  |   |       |  
|----------------------------------------- |  | ---- | ---- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                         
|                                         
|Pro Forma Effect of Fair Value Accounting |  | 2001 |      | 2000 |  | 1999
|                                         
|                                         
|Net earnings as reported                  |  | $    | 54.7 |      |  | $    | 100.2 |   |  | $ | 145.3 |  
|Pro forma net earnings                    |  | $    | 35.7 |      |  | $    | 87.1  |   |  | $ | 126.3 |  
|Diluted earnings per share as reported    |  | $    | 0.37 |      |  | $    | 0.68  |   |  | $ | 0.98  |  
|Pro forma diluted earnings per share      |  | $    | 0.24 |      |  | $    | 0.59  |   |  | $ | 0.85  |  
|                                         
|Weighted-Average Assumptions              |  |      |      |      |  |      |       |   |  |   |       |  
|Expected lives in years                   |  |      | 4-8  |      |  |      | 4-8   |   |  |   | 4-8   |  
|Expected volatility                       |  |      | 38.7 | %    |  |      | 40.4  | % |  |   | 37.4  | %
|Expected dividend rate                    |  |      |     |      |  |      |      |   |  |   |      |  
|Risk-free interest rate                   |  |      | 4.0  | %    |  |      | 5.0   | % |  |   | 6.3   | %
|                                         

|                                                             |  |        |           |            |  |        |      |            |  |        |           |            |  |   |      |  |  |  |           |  |  |   |      | 
|------------------------------------------------------------ |  | ------ | --------- | ---------- |  | ------ | ---- | ---------- |  | ------ | --------- | ---------- |  | - | ---- |  |  |  | --------- |  |  | - | ---- | 
|                                                            
|                                                            
|                                                            
|Weighted Average Fair Values of Grants, Awards and Purchases
|                                                            
|                                                             |  |        |           |            |  |       
|                                                             |  | 2001   |           | 2000       |  | 1999  
|                                                             |  |        |           |            |  |       
|                                                             |  | Shares |           | Fair Value |  | Shares |      | Fair Value |  | Shares |           | Fair Value
|                                                             |  |       
|                                                             |  |       
|Stock options                                                |  |        | 6,956,793 |            |  | $      | 5.39 |            |  |        | 1,466,653 |            |  | $ | 7.65 |  |  |  | 3,891,970 |  |  | $ | 7.97 | 
|ESPP                                                         |  |        | 167,925   |            |  | $      | 4.10 |            |  |        | 310,379   |            |  | $ | 4.95 |  |  |  | 239,073   |  |  | $ | 6.85 | 
|                                                            

Stock Rights Plan

For holders of Ceridian common stock at
November 9, 2001, the Company distributed one right for
each outstanding share entitling the holder to purchase from the
Company one ten-thousandth of a share of an unissued class of
preferred stock for $75 dollars. In the event of a certain
effort to acquire the Company, the holder would have the right
to exercise the right for cash, property or securities of the
issuer with a value of twice the exercise price. At
December 31, 2001, no such event had occurred.

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(Dollars in millions, except per share data)


I. FINANCING

|                                             |                                                                     |              |       |      |  |   |       |     | 
|-------------------------------------------- | ------------------------------------------------------------------- | ------------ | ----- | ---- |  | - | ----- | --- | 
|                                            
|                                            
|                                             |                                                                     |             
|                                             |                                                                     | December 31,
|                                             |                                                                     |             
|Debt Obligations                             |                                                                     | 2001         |       | 2000
|                                            
|                                            
|Revolving credit agreements and overdrafts   |                                                                     | $            | 236.4 |      |  | $ | 69.1  |    
|Senior notes, net of discount                |                                                                     |              |      |      |  |   | 430.0 |    
|Other long-term debt obligations             |                                                                     |              | 1.5   |      |  |   | 1.5   |    
|                                             |                                                                     |              |       |      |  |   |       |    
|Total debt obligations                       |                                                                     |              | 237.9 |      |  |   | 500.6 |    
|                                             | Less short-term debt and current portions of
        long-term debt |              |       | 1.5  |  |   |       | 0.3 | 
|                                             |                                                                     |              |       |      |  |   |       |    
|Long-term obligations, less current portions |                                                                     | $            | 236.4 |      |  | $ | 500.3 |    
|                                             |                                                                     |              |       |      |  |   |       |    
|                                            

Under an agreement with a syndicate of commercial
banks dated January 31, 2001, Ceridian entered into a
$350.0 domestic revolving credit facility, of which $50.0 may be
used for letters of credit, that expires in March 2006. This
January 2001 credit facility also permits the Company to request
that the bank syndicate use its best efforts to provide
additional commitments so long as the total commitment does not
exceed $500.0. The January 2001 credit facility is unsecured and
its pricing for both loans and letters of credit is based on
Ceridians senior unsecured debt ratings and LIBOR. The
interest rate on borrowings under this facility was 3.125% as of
December 31, 2001. Under the terms of the January 2001
credit facility, consolidated debt must not exceed its
stockholders equity as of the end of any fiscal quarter,
and the ratio of earnings before interest and taxes to interest
expense on a rolling four quarter basis must be at least 2.75 to
1. This facility also contains covenants that, among other
things, limit liens, subsidiary debt, contingent obligations,
operating leases, minority equity investments and divestitures.
The January 2001 credit facility replaced a $250.0 domestic
revolving credit facility with similar terms that was arranged
with a commercial bank syndicate in July 1997. At
December 31, 2000, advances of $50.0 and $1.7 of letters of
credit were outstanding under the July 1997 credit facility.

Senior notes with a face amount of
$450.0 were sold in a Rule 144A offering in June 1999. The
senior notes had a five-year term, a coupon interest rate of
7.25% per annum payable semiannually beginning
December 1, 1999. The senior notes were sold at an original
issue discount of $4.4 that, along with $0.8 of issue costs, was
amortized to interest expense based on the term of the notes.
Ceridian applied the net proceeds from the sale of the senior
notes, along with Ceridian funds and an advance of $210.0 on the
July 1997 credit facility, to fund the acquisition of ABR
Information Services, Inc. During first quarter 2000, Ceridian
repurchased on the open market senior notes with a face amount
of $20.0.

At the time of the spin-off, advances
of $235.0 from the January 2001 credit facility, the $225.0
Arbitron payment and existing cash balances funded the required
early retirement of the $430.0 of senior notes outstanding and
payment of the $50.0 balance outstanding under the $250.0
domestic revolving credit facility dated July 1997 at the time
of the spin-off. The redemption of senior notes required a
payment of $456.5, which included $26.5 under a
make-whole provision of the senior notes agreement,
based on the relationship of the nominal interest rate of the
senior notes to a certain market rate. The establishment of the
January 2001 credit facility also resulted in the payment of
$1.0 for origination costs that will be amortized over its term.
Further information on the spin-off appears under the heading
Discontinued Operations in Note C.

Under the January 2001 credit
facility, in addition to the spin-off financing, the Company
borrowed $50.0 in June 2001 in connection with the settlement of
litigation and repaid a total of $50.0 during 2001. At
December 31, 2001, advances of $235.0 and a letter of
credit in the amount of $2.0 were outstanding under the January
2001 credit facility and the Company was in compliance with all
of its covenants. In addition, payments of $18.8 and translation
adjustments of $0.3 extinguished the balance of $19.1
outstanding at December 31, 2000 on the Companys
Canadian revolving credit agreements leaving only a $0.9 letter
of credit outstanding at December 31, 2001. During 2000 and
1999, the balance on the Canadian revolving credit agreements
had been reduced by payments of $19.6 and $15.2, respectively.
An overdraft facility of a subsidiary in the UK had $1.4
outstanding at December 31, 2001.

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(Dollars in millions, except per share data)


J. COMMITMENTS AND CONTINGENCIES

Interest Rate Contracts

Ceridians risk management policy is to
hedge a substantial portion of its interest rate exposure from
its investment of payroll and tax filing funds, as further
described in Note L, viewed within the context of
managements expectation of the future economic
environment. Due to liquidity requirements for payroll and tax
filing obligations, a large percentage of payroll and tax filing
funds are held in overnight-maturing investments that are
subject to interest rate variability. This variability can be
offset by purchases of longer-term instruments and by offsetting
the variable rate income with floating rates on the
Companys debt obligations. The remaining interest rate
risk may be managed with derivative securities such as interest
rate collars or swaps.

During the three-year period ended
December 31, 2001, Ceridian maintained in effect interest
rate contracts that function as cash flow hedges of the
designated item for the purpose of hedging interest rate risk on
invested payroll and tax filing funds. The counterparties to
these arrangements are commercial banks with debt ratings of A
or better. These arrangements, which do not require collateral,
require the banks to pay Ceridian the amount by which a
one-month LIBOR index of short-term interest rates falls below a
specified floor strike level. Alternatively, when this index
exceeds a specified cap strike level, Ceridian is required to
pay out the excess above the cap strike level. The risk of
accounting loss through non-performance by the counterparties
under any of these arrangements is considered negligible.

At December 31, 2001, Ceridian
had nine interest rate contracts in effect with an aggregate
notional amount of $800.0, remaining terms of 6 to 42 months,
floor strike levels ranging from 4.54% to 6.07% (averaging
5.12%) and cap strike levels ranging from 4.54% to 7.32%
(averaging 6.12%). The risk of accounting loss through
non-performance by the counterparties under any of these
arrangements is considered negligible.

Until January 2001, neither these
hedging arrangements nor the related trust investments and
offsetting liability to customers were required to be reflected
in Ceridians balance sheets. On January 1, 2001,
FAS 133, Accounting for Derivative Instruments and
Hedging Activities, as amended became effective for
Ceridian. Therefore, at that date, the Companys interest
rate collars were recorded on its balance sheet at fair value,
resulting in recognition of a liability of $0.4 along with a
credit to accumulated other comprehensive income of $0.1 (net of
deferred income taxes) and a pre-tax charge to earnings of $0.5.
As a result of an interpretation of this accounting standard by
the FASB, effective for Ceridian in second quarter 2001, the
interest rate collars became a fully effective hedge and no
further gain or loss is expected to be reported as other income
(expense) in addition to the $2.6 gain recognized in first
quarter 2001.

As of December 31, 2001, the
interest rate collars and one interest rate swap acquired in
late December 2001 were revalued to reflect a noncurrent asset
of $24.3 and an unrealized gain of $14.1 in accumulated other
comprehensive income, net of $7.6 recorded as deferred income
taxes. The unrealized gain will be realized and reported as
revenue as cash is received or paid on collar settlements. As of
December 31, 2001, the Company expects to record $20.4 of
this amount in revenue during the next 12 months as
settlements occur.

Leasing

Ceridian conducts a substantial portion of its
operations in leased facilities. Most of these leases contain
renewal options and require payments for taxes, insurance and
maintenance. Ceridian remains secondarily liable for future
rental obligations related to assigned leases totaling $3.8 at
December 31, 2001. Ceridian does not anticipate any
material non-performance by the assignees of these leases.

Virtually all leasing arrangements
for equipment and facilities are operating leases and the rental
payments under these leases are charged to operations as
incurred. The amounts in the accompanying tables do not include
assigned leases or obligations recorded as liabilities.

In November 2000, Ceridian sold and
leased back under an operating lease real property constituting
its newly constructed headquarters facility. Under the terms of
the lease, annual rental costs will be $4.2 over a 20-year
period.

The amounts of rental expense and
sublease income for each of the three years ended
December 31, 2001 appear in the Rental Expense table.

|                       |  |      |      |      |  |      |      |   |  |   |      |  
|---------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                      
|                      
|Rental Expense         |  | 2001 |      | 2000 |  | 1999
|                      
|                      
|Rental expense         |  | $    | 44.2 |      |  | $    | 39.8 |   |  | $ | 35.9 |  
|Sublease rental income |  |      | (0.5 | )    |  |      | (0.3 | ) |  |   | (1.8 | )
|                       |  |      |      |      |  |      |      |   |  |   |      |  
|Net rental expense     |  | $    | 43.7 |      |  | $    | 39.5 |   |  | $ | 34.1 |  
|                       |  |      |      |      |  |      |      |   |  |   |      |  
|                      

Future minimum noncancelable lease
payments on operating leases existing at December 31, 2001,
and which have an initial term of more than one year, are
described in the Future Minimum Lease Payments table.

|                              |  |   |       | 
|----------------------------- |  | - | ----- | 
|                              |  |  
|                             
|                             
|                              |  |  
|                             
|Future Minimum Lease Payments
|                             
|                             
|2002                          |  | $ | 40.9  | 
|2003                          |  |   | 38.1  | 
|2004                          |  |   | 33.5  | 
|2005                          |  |   | 27.7  | 
|2006                          |  |   | 23.6  | 
|Thereafter                    |  |   | 135.9 | 
|                             

61



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##### Table of Contents



(Dollars in millions, except per share data)


K. LEGAL MATTERS

Ceridian and its subsidiaries are involved in a
number of judicial and administrative proceedings considered
normal in the nature of their current and past operations,
including employment-related disputes, contract disputes,
government proceedings, customer disputes, and tort claims. In
some proceedings, the claimant seeks damages as well as other
relief, which, if granted, would require substantial
expenditures on the part of Ceridian.

Some of these matters raise difficult
and complex factual and legal issues, and are subject to many
uncertainties, including the facts and circumstances of each
particular action, and the jurisdiction, forum and law under
which each action is proceeding. Because of this complexity,
final disposition of some of these proceedings may not occur for
several years. As such, Ceridian is not always able to estimate
the amount of its possible future liabilities. There can be no
certainty that Ceridian may not ultimately incur charges in
excess of presently or future established accruals or insurance
coverage. Although occasional adverse decisions (or settlements)
may occur, it is the opinion of management that the final
disposition of these proceedings will not, considering the
merits of the claims and available reserves, have a material
adverse effect on Ceridians financial position or results
of operations.

Effective as of May 21, 2001,
Comdata and Ceridian, without admitting any wrongdoing or
liability and to avoid the expense of further litigation,
entered into a Settlement Agreement and Release with the
Flying J Plaintiffs which resulted in a payment to
Flying J, Inc., which operates a chain of truck stops, its
affiliated entities, and NCR Corporation (the
Flying J Plaintiffs) of $49.0; additional
related legal costs of $3.4; license agreements entered into
between Comdata and plaintiff TCH LLC and Comdata and
Flying J; and a complete dismissal with prejudice of all
the lawsuits. The forms of the license agreements with
Flying J, Inc. and TCH LLC are substantially similar in
form to other license agreements granted by Comdata relating to
(i) processing of the Comdata card services over third
party point-of-sale systems; and (ii) processing of third
party cards on Comdatas Trendar point-of-sale system.

62



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(Dollars in millions, except per share data)


L. PAYROLL AND TAX FILING FUNDS



---

Investments of Payroll and Tax Filing
Funds





|                                                   |  |                   |         |                   |  |      |         |        |  |   |         |  |  |   |         | 
|-------------------------------------------------- |  | ----------------- | ------- | ----------------- |  | ---- | ------- | ------ |  | - | ------- |  |  | - | ------- | 
|                                                   |  |                   |         |                  
|                                                   |  | December 31, 2001 |         | December 31, 2000
|                                                   |  |                  
|                                                   |  |                  
|                                                   |  | Cost              |         | Market            |  | Cost |         | Market
|                                                  
|                                                  
|Money market securities and other cash equivalents |  | $                 | 1,491.0 |                   |  |      | 1,491.0 |        |  |   | 2,154.3 |  |  | $ | 2,154.3 | 
|Held-to-maturity investments:                      |  |                   |         |                   |  |      |         |        |  |   |         |  |  |   |         | 
|U.S. government and agency securities              |  |                   | 100.1   |                   |  |      | 103.5   |        |  |   | 211.9   |  |  |   | 212.3   | 
|Canadian and provincial government securities      |  |                   | 87.3    |                   |  |      | 90.2    |        |  |   | 118.9   |  |  |   | 119.5   | 
|Corporate debt securities                          |  |                   | 166.2   |                   |  |      | 170.4   |        |  |   | 141.6   |  |  |   | 141.5   | 
|Asset-backed securities                            |  |                   | 184.1   |                   |  |      | 194.3   |        |  |   | 226.8   |  |  |   | 230.2   | 
|Mortgage-backed and other securities               |  |                   | 97.7    |                   |  |      | 101.0   |        |  |   | 91.5    |  |  |   | 91.9    | 
|                                                   |  |                   |         |                   |  |      |         |        |  |   |         |  |  |   |         | 
|Total held-to-maturity investments                 |  |                   | 635.4   |                   |  |      | 659.4   |        |  |   | 790.7   |  |  |   | 795.4   | 
|                                                   |  |                   |         |                   |  |      |         |        |  |   |         |  |  |   |         | 
|Payroll and tax filing funds                       |  | $                 | 2,126.4 |                   |  | $    | 2,150.4 |        |  | $ | 2,945.0 |  |  | $ | 2,949.7 | 
|                                                   |  |                   |         |                   |  |      |         |        |  |   |         |  |  |   |         | 



---

Investments of Payroll and Tax Filing Funds by
Maturity Date





|                           |       |                   |         |         |  |   |         |         | 
|-------------------------- | ----- | ----------------- | ------- | ------- |  | - | ------- | ------- | 
|                           |       |                  
|                           |       | December 31, 2001
|                           |       |                  
|                           |       | Cost              |         | Market 
|                          
|                          
|Due in one year or less    |       | $                 | 1,634.4 |         |  | $ | 1,639.3 |        
|Due in one to three years  |       |                   | 362.2   |         |  |   | 376.9   |        
|Due in three to five years |       |                   | 129.8   |         |  |   | 134.2   |        
|                           |       |                   |         |         |  |   |         |        
|                           | Total |                   | $       | 2,126.4 |  |   | $       | 2,150.4 | 
|                           |       |                   |         |         |  |   |         |        
|                          

In connection with its U.S. payroll tax
filing services, Ceridian collects funds for payment of taxes
due, holds such funds in trust until payment is due, remits the
funds to the appropriate taxing authority, files federal, state
and local tax returns, and handles related regulatory
correspondence and amendments. In addition to tax filing
services, Ceridians Canadian subsidiary also collects
funds for payment to customers employees and holds the
funds in trust until payday.

The U.S. trust funds are
invested primarily in high quality collateralized short-term
investments or money market mutual funds. These funds may also
be invested in U.S. Treasury and Agency securities, AAA
rated asset-backed securities and corporate securities rated
A3/A- or better. The Canadian trust funds are invested in
securities issued by the government and provinces of Canada,
highly rated Canadian banks and corporations, asset-backed
trusts and mortgages.

For such services, Ceridian derives
its payroll and tax filing revenue from fees charged and from
investment income it receives on payroll and tax filing deposits
temporarily held pending remittance on behalf of customers to
customers employees and taxing authorities.

Due to the positive intent and
ability of the Company to hold the marketable debt securities
until maturity and supporting historical experience, these
securities are classified as held-to-maturity and are measured
by amortized cost. Disposition of these securities before
maturity is expected to be limited to unusual circumstances such
as significant deterioration of the issuers
creditworthiness or a major business combination or disposition.

As identified on the consolidated
balance sheet, payroll and tax filing funds and the offsetting
obligations amounted to $2,126.4 at December 31, 2001 and
$2,945.0 at December 31, 2000. This amount varies
significantly during the year and averaged $1,867.7 and
$1,915.9, respectively, for the years 2001 and 2000. The
accompanying tables provide cost and market price information
for various classifications of payroll and tax filing fund
investments and amounts by maturity date.

63



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##### Table of Contents



(Dollars in millions, except per share data)


M. SUPPLEMENTARY QUARTERLY DATA (Unaudited)




|                                            |                                     |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       | 
|------------------------------------------- | ----------------------------------- | ------------------------ | ----- | ------- | ----- | ------- | ----- | ------- | ----- | ------- | ----- | ------- | ----- | ------- | ----- | ------- | ----- | - | ----- | ------- | ----- | - | ----- | ------- | ----- | - | ----- | ------- | ----- | - | ----- | ------- | ----- | 
|                                            |                                     |                          |       |        
|                                            |                                     | 2001                     |       | 2000   
|                                            |                                     |                          |       |        
|                                            |                                     | 4th                      |       | 3rd     |       | 2nd     |       | 1st     |       | 4th     |       | 3rd     |       | 2nd     |       | 1st    
|                                            |                                     | Quarter                  |       | Quarter |       | Quarter |       | Quarter |       | Quarter |       | Quarter |       | Quarter |       | Quarter
|                                           
|                                           
|Revenue                                     |                                     | $                        | 301.7 |         |       | $       | 280.9 |         |       | $       | 290.1 |         |       | $       | 309.6 |         |       | $ | 303.7 |         |       | $ | 279.3 |         |       | $ | 283.1 |         |       | $ | 309.6 |        
|Costs and Expenses                          |                                     |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |        
|                                            | Cost of revenue                     |                          |       | 144.7   |       |         |       | 141.0   |       |         |       | 142.2   |       |         |       | 145.7   |       |   |       | 134.2   |       |   |       | 135.4   |       |   |       | 141.1   |       |   |       | 148.3   |      
|                                            | Selling, general and administrative |                          |       | 102.3   |       |         |       | 92.2    |       |         |       | 97.2    |       |         |       | 112.9   |       |   |       | 91.4    |       |   |       | 84.3    |       |   |       | 88.3    |       |   |       | 95.3    |      
|                                            | Research and development            |                          |       | 13.9    |       |         |       | 14.0    |       |         |       | 15.2    |       |         |       | 15.9    |       |   |       | 16.7    |       |   |       | 15.8    |       |   |       | 15.2    |       |   |       | 15.1    |      
|                                            | Other expense (income)(1)           |                          |       |        |       |         |       | (1.9    | )     |         |       | 52.5    |       |         |       | (2.4    | )     |   |       | (0.5    | )     |   |       | 0.8     |       |   |       | 0.3     |       |   |       | 31.1    |      
|                                            |                                     |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |        
|                                            |                                     | Total costs and expenses |       |         | 260.9 |         |       |         | 245.3 |         |       |         | 307.1 |         |       |         | 272.1 |   |       |         | 241.8 |   |       |         | 236.3 |   |       |         | 244.9 |   |       |         | 289.8 | 
|                                           
|Earnings (Loss) before interest and
	taxes  |                                     |                          | 40.8  |         |       |         | 35.6  |         |       |         | (17.0 | )       |       |         | 37.5  |         |       |   | 61.9  |         |       |   | 43.0  |         |       |   | 38.2  |         |       |   | 19.8  |        
|Interest income                             |                                     |                          | 0.5   |         |       |         | 2.5   |         |       |         | 1.7   |         |       |         | 1.8   |         |       |   | 1.9   |         |       |   | 1.0   |         |       |   | 0.8   |         |       |   | 1.0   |        
|Interest expense                            |                                     |                          | (2.5  | )       |       |         | (3.5  | )       |       |         | (4.0  | )       |       |         | (9.0  | )       |       |   | (9.9  | )       |       |   | (10.4 | )       |       |   | (9.6  | )       |       |   | (9.9  | )      
|                                           
|Earnings (Loss) before income taxes         |                                     |                          | 38.8  |         |       |         | 34.6  |         |       |         | (19.3 | )       |       |         | 30.3  |         |       |   | 53.9  |         |       |   | 33.6  |         |       |   | 29.4  |         |       |   | 10.9  |        
|Income tax provision (benefit)              |                                     |                          | 16.0  |         |       |         | 14.0  |         |       |         | (7.5  | )       |       |         | 12.4  |         |       |   | 19.6  |         |       |   | 13.3  |         |       |   | 11.0  |         |       |   | 4.4   |        
|                                           
|Earnings (Loss) from continuing
	operations |                                     |                          | 22.8  |         |       |         | 20.6  |         |       |         | (11.8 | )       |       |         | 17.9  |         |       |   | 34.3  |         |       |   | 20.3  |         |       |   | 18.4  |         |       |   | 6.5   |        
|Discontinued operations(2)                  |                                     |                          |      |         |       |         |      |         |       |         |      |         |       |         | 5.2   |         |       |   | (17.7 | )       |       |   | 15.2  |         |       |   | 8.8   |         |       |   | 14.4  |        
|                                           
|Net earnings (Loss)                         |                                     | $                        | 22.8  |         |       | $       | 20.6  |         |       | $       | (11.8 | )       |       | $       | 23.1  |         |       | $ | 16.6  |         |       | $ | 35.5  |         |       | $ | 27.2  |         |       | $ | 20.9  |        
|                                            |                                     |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |        
|                                           
|Earnings (Loss) per share(3)                |                                     |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |        
|                                            | Basic                               |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |         |      
|                                            |                                     | Continuing operations    |       | $       | 0.16  |         |       | $       | 0.14  |         |       | $       | (0.08 | )       |       | $       | 0.12  |   |       | $       | 0.24  |   |       | $       | 0.14  |   |       | $       | 0.13  |   |       | $       | 0.04  | 
|                                            |                                     | Net earnings             |       | $       | 0.16  |         |       | $       | 0.14  |         |       | $       | (0.08 | )       |       | $       | 0.16  |   |       | $       | 0.11  |   |       | $       | 0.24  |   |       | $       | 0.19  |   |       | $       | 0.14  | 
|                                            | Diluted                             |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |         |      
|                                            |                                     | Continuing operations    |       | $       | 0.15  |         |       | $       | 0.14  |         |       | $       | (0.08 | )       |       | $       | 0.12  |   |       | $       | 0.23  |   |       | $       | 0.14  |   |       | $       | 0.13  |   |       | $       | 0.04  | 
|                                            |                                     | Net earnings             |       | $       | 0.15  |         |       | $       | 0.14  |         |       | $       | (0.08 | )       |       | $       | 0.16  |   |       | $       | 0.11  |   |       | $       | 0.24  |   |       | $       | 0.19  |   |       | $       | 0.14  | 
|Shares used in calculations (in
	thousands) |                                     |                          |       |         |       |         |       |         |       |         |       |         |       |         |       |         |       |   |       |         |       |   |       |         |       |   |       |         |       |   |       |        
|                                            | Weighted average shares (basic)     |                          |       | 146,376 |       |         |       | 146,149 |       |         |       | 145,950 |       |         |       | 145,790 |       |   |       | 145,699 |       |   |       | 145,380 |       |   |       | 145,051 |       |   |       | 144,787 |      
|                                            | Dilutive securities                 |                          |       | 2,903   |       |         |       | 3,207   |       |         |       |        |       |         |       | 766     |       |   |       | 1,763   |       |   |       | 2,150   |       |   |       | 1,704   |       |   |       | 738     |      
|                                            | Weighted average shares (diluted)   |                          |       | 149,279 |       |         |       | 149,356 |       |         |       | 145,950 |       |         |       | 146,556 |       |   |       | 147,462 |       |   |       | 147,530 |       |   |       | 146,755 |       |   |       | 145,525 |      
|                                           



|    |                                                                                                                                                                                                                                                     
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 2001 unusual losses (gains) of $(2.1)
	for the first quarter, $52.4 for second quarter, and $(2.0) for
	the third quarter and first quarter 2000 unusual losses of $30.5
	as described in Note C to the consolidated financial
	statements.
|   
|   
|(2) | For information on discontinued operations, see
	Note C to the consolidated financial statements.                                                                                                                                                   
|   
|   
|(3) | For information on the calculation of earnings
	per share, see Note A to the consolidated financial
	statements.                                                                                                                                    

64



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##### Table of Contents



SCHEDULE II




CERIDIAN CORPORATION AND
SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS


(Dollars in millions)


|                                           |  |                          |       |      |  |      |       |   |  |   |       |  
|------------------------------------------ |  | ------------------------ | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                           |  |                         
|                                           |  | Years Ended December 31,
|                                           |  | 2001                     |       | 2000 |  | 1999
|Allowance for Doubtful Accounts Receivable |  |                          |       |      |  |     
|Balance at beginning of year               |  | $                        | 17.4  |      |  | $    | 17.5  |   |  | $ | 19.7  |  
|Additions charged to costs and expenses    |  |                          | 15.8  |      |  |      | 14.8  |   |  |   | 16.8  |  
|Write-offs and other adjustments(1)        |  |                          | (17.0 | )    |  |      | (14.9 | ) |  |   | (19.0 | )
|Balance at end of year                     |  | $                        | 16.2  |      |  | $    | 17.4  |   |  | $ | 17.5  |  



---



|    |                                                                                      
|--- | -------------------------------------------------------------------------------------
|(1) | Other adjustments include the effect of
	acquisitions and dispositions of businesses.

65



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##### Table of Contents



INDEPENDENT AUDITORS REPORT ON FINANCIAL
STATEMENT SCHEDULE

THE BOARD OF DIRECTORS AND STOCKHOLDERS

CERIDIAN CORPORATION:


Under date of January 22, 2002, except as to
note F, which is as of February 5, 2002, we reported on the
consolidated balance sheets of Ceridian Corporation and
subsidiaries as of December 31, 2001 and 2000, and the
related consolidated statements of operations, cash flows and
stockholders equity for each of the years in the
three-year period ended December 31, 2001, as contained in
Ceridians 2001 Annual Report to Stockholders. These
consolidated financial statements and our report thereon are
incorporated by reference in the Annual Report on Form 10-K
for the year 2001. In connection with our audits of the
aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedule as
listed in the accompanying index (see Item 14.(a)2.). This
financial statement schedule is the responsibility of
Ceridians management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement
schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.



| |                 
| | ----------------
| | [KPMG SIGNATURE]

Minneapolis, Minnesota

January 22, 2002


66



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##### Table of Contents



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

None.




PART III







Item 10. Directors and Executive
Officers of the Registrant

We refer you to our Proxy Statement for our 2002
Annual Meeting of Stockholders and the heading Election of
Directors for information regarding our directors and
nominees for director. This information is incorporated by
reference into this item of the report.

We refer you to our Proxy Statement for our 2002
Annual Meeting of Stockholders and the heading Other
Matters  Section 16(a) Beneficial Ownership
Reporting Compliance for information regarding compliance
with Section 16(a) of the Securities Exchange Act of 1934.
This information is incorporated by reference into this item of
the report.

Information regarding our executive officers is
found in Item 1A of this report under the heading
Executive Officers of the Registrant.




Item 11. Executive
Compensation

We refer you to our Proxy Statement for our 2002
Annual Meeting of Stockholders and the headings Director
Compensation, Report of Compensation and Human
Resources Committee, Stock Price Performance
Graph, Executive Compensation, and
Executive Employment Agreements and Change of Control
Arrangements. This information is incorporated by
reference into this item of the report.




Item 12. Security Ownership of
Certain Beneficial Owners and Management

We refer you to our Proxy Statement for our 2002
Annual Meeting of Stockholders and the heading Share
Ownership Information. This information is incorporated by
reference into this item of the report.




Item 13. Certain Relationships and
Related Transactions

None.




PART IV






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

(a)1. Financial Statements of
Registrant

We refer you to the Index of Consolidated
Financial Statements included in Part II, Item 8
of this report.

(a)2. Financial Statement Schedules of
Registrant

We refer you to the Index of Financial
Statement Schedules included in Part II, Item 8
of this report.

67



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##### Table of Contents



(a)3. Exhibits

The following is a complete list of exhibits
filed or incorporated by reference as part of this report.

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.01    |  | Amended and Restated Certificate of Incorporation
	of Ceridian Corporation (formerly known as New Ceridian
	Corporation) (incorporated by reference to Exhibit 3.1 to
	Ceridians Registration Statement on Form 10 (File
	No. 001-16149)).                                                                                                                                                                                                                                                                      
|3.02    |  | Amendment to Amended and Restated Certificate of
	Incorporation of Ceridian Corporation (formerly known as New
	Ceridian Corporation) (incorporated by reference to
	Exhibit 3.02 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                                                                                                                                                                                         
|3.03    |  | Amended and Restated Bylaws of Ceridian
	Corporation (formerly known as New Ceridian Corporation)
	(incorporated by reference to Exhibit 3.2 to
	Ceridians Registration Statement on Form 10 (File
	No. 001-16149)).                                                                                                                                                                                                                                                                                            
|4.01    |  | Rights Agreement, dated as of November 6,
	2001, between Ceridian Corporation and The Bank of New York, as
	Rights Agent, including the form of Certificate of Resignation,
	Preferences and Rights of Series A Preferred Stock as
	Exhibit A, the form of Rights Certificate as Exhibit B
	and the Summary of Rights to Purchase Preferred Stock as
	Exhibit C (incorporated by reference to Exhibit 4.1 to
	Ceridians Current Report on Form 8-K filed by
	Ceridian on November 6, 2001 (File No. 001-15168)).
|10.01   |  | Distribution Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001 (exhibits and schedules omitted)
	(incorporated by reference to Exhibit 10.1 to
	Ceridians Registration Statement on Form 10 (File
	No. 001-16149)).                                                                                                                                                                     
|10.02   |  | Amendment No. 1 to Distribution Agreement
	between Arbitron Inc., formerly known as Ceridian Corporation,
	and Ceridian Corporation, formerly known as New Ceridian
	Corporation, dated March 30, 2001 (exhibits and schedules
	omitted) (incorporated by reference to Exhibit 10.02 to
	Ceridians Annual Report on Form 10-K for the year
	ended December 31, 2000 (File No. 001-16149)).                                                                                                                      
|10.03   |  | Personnel Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001 (incorporated by reference to
	Exhibit 10.2 to Ceridians Registration Statement on
	Form 10 (File No. 001-16149)).                                                                                                                                                                                                          
|10.04   |  | Amendment No. 1 to Personnel Agreement
	between Arbitron Inc., formerly known as Ceridian Corporation,
	and Ceridian Corporation, formerly known as New Ceridian
	Corporation, dated as of April 3, 2001 (incorporated by
	reference to Exhibit 10.02 to Ceridians Quarterly
	Report on Form 10-Q, for the quarterly period ended
	March 31, 2001 (File No. 001-15168)).                                                                                                                                        
|10.05   |  | Tax Matters Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001 (incorporated by reference to
	Exhibit 10.3 to Ceridians Registration Statement on
	Form 10 (File No. 001-16149)).                                                                                                                                                                                                        
|10.06   |  | Transition Services Agreement between Arbitron
	Inc., formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001 (incorporated by reference to
	Exhibit 10.4 to Ceridians Registration Statement on
	Form 10 (File No. 001-16149)).                                                                                                                                                                                                

68



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|        |  |                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                       
|10.07   |  | Sublease Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001 (incorporated by reference to
	Exhibit 10.5 to Ceridians Registration Statement on
	Form 10 (File No. 001-16149)).
|10.08*  |  | Executive Employment Agreement between Ceridian
	Corporation and Ronald L. Turner, dated January 29, 2002.                                                                                                                                                                                            
|10.09*  |  | Executive Employment Agreement between Ceridian
	Corporation and John R. Eickhoff, dated January 29, 2002.                                                                                                                                                                                            
|10.10*  |  | Executive Employment Agreement between Ceridian
	Corporation and Tony G. Holcombe, dated January 29, 2002.                                                                                                                                                                                            
|10.11*  |  | Executive Employment Agreement between Ceridian
	Corporation and Gary A. Krow, dated January 29, 2002.                                                                                                                                                                                                
|10.12*  |  | Executive Employment Agreement between Ceridian
	Corporation and Gary M. Nelson, dated January 29, 2002.                                                                                                                                                                                              
|10.13*  |  | Ceridian Corporation Amended and Restated 2001
	Long-Term Stock Incentive Plan.                                                                                                                                                                                                                       
|10.14*  |  | Form of Ceridian Corporation Non-Statutory Stock
	Option Award Agreement (under the Amended and Restated 2001
	Long-Term Stock Incentive Plan).                                                                                                                                                       
|10.15*  |  | Form of Ceridian Corporation Restricted Stock
	Award Agreement (under the Amended and Restated 2001 Long-Term
	Stock Incentive Plan).                                                                                                                                                                 
|10.16*  |  | Ceridian Corporation Employee Stock Purchase Plan
	(incorporated by reference to Exhibit 10.7 to
	Ceridians Registration Statement on Form 10 (File
	No. 001-16149)).                                                                                                                                
|10.17*  |  | Ceridian Corporation Amended and Restated 2001
	Director Performance Incentive Plan.                                                                                                                                                                                                                  
|10.18*  |  | Form of Ceridian Corporation Non-Statutory Stock
	Option Award Agreement (under the Amended and Restated 2001
	Director Performance Incentive Plan).                                                                                                                                                  
|10.19*  |  | Form of Ceridian Corporation Restricted Stock
	Award Agreement (under the Amended and Restated 2001 Director
	Performance Incentive Plan).                                                                                                                                                            
|10.20*  |  | Ceridian Corporation 2002 Employee Stock
	Incentive Plan.                                                                                                                                                                                                                                             
|10.21*  |  | Form of Ceridian Corporation Non-Qualified Stock
	Option Award Agreement (under the 2002 Employee Stock Incentive
	Plan).                                                                                                                                                                             
|10.22*  |  | Form of Ceridian Corporation Restricted Stock
	Award Agreement (under the 2002 Employee Stock Incentive Plan).                                                                                                                                                                                        
|10.23*  |  | Ceridian Corporation Benefit Equalization Plan,
	as amended (incorporated by reference to Exhibit 10.14 to
	Arbitron Inc.s (formerly known as Ceridian Corporation)
	Annual Report on Form 10-K for the year ended
	December 31, 1994 (File No. 1-1969)).                                            
|10.24*  |  | Ceridian Corporation Benefit Equalization Plan,
	First Declaration of Amendment (incorporated by reference to
	Exhibit 10.18 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                                   
|10.25*  |  | Ceridian Corporation Benefit Equalization Plan,
	Second Declaration of Amendment (incorporated by reference to
	Exhibit 10.19 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                                  
|10.26*  |  | Ceridian Corporation Benefit Equalization Plan,
	Third Declaration of Amendment (incorporated by reference to
	Exhibit 10.20 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                                   

69



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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                            
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                            
|10.27*  |  | Ceridian Corporation Employees Benefit
	Protection Trust Agreement, dated as of December 1, 1994,
	between Ceridian Corporation and First Trust National
	Association (incorporated by reference to Exhibit 10.15 to
	Arbitron Inc.s (formerly known as Ceridian Corporation)
	Annual Report on Form 10-K for the year ended
	December 31, 1994 (File No. 1-1969)).                                                      
|10.28*  |  | First Declaration of Amendment to Ceridian
	Corporation Employees Benefit Protection Trust Agreement,
	effective as of January 1, 1999, between Ceridian
	Corporation and US Bank National Association (incorporated by
	reference to Exhibit 10.22 to Ceridians Annual Report
	on Form 10-K for the year ended December 31, 2000
	(File No. 001-16149)).                                                                
|10.29*  |  | Second Declaration of Amendment to Ceridian
	Corporation Employees Benefit Protection Trust Agreement,
	dated as of March 26, 2001, between Ceridian Corporation
	and US Bank National Association (incorporated by reference to
	Exhibit 10.23 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                                    
|10.30*  |  | Third Declaration of Amendment to Ceridian
	Corporation Employees Benefit Protection Trust Agreement,
	dated as of August 1, 2001, between Ceridian Corporation
	and US Bank National Association (incorporated by reference
	to Exhibit 10.02 to Ceridians Quarterly Report on
	Form 10-Q for the quarterly period ended September 30,
	2001 (File No. 001-15168)).                                                     
|10.31*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan) (incorporated by
	reference to Exhibit 10.17 to Arbitron Inc.s
	(formerly known as Ceridian Corporation) Annual Report on
	Form 10-K for the year ended December 31, 1998 (File
	No. 1-1969)).                                                                                                                             
|10.32*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), First Declaration
	of Amendment (incorporated by reference to Exhibit 10.25 to
	Ceridians Annual Report on Form 10-K for the year
	ended December 31, 2000 (File No. 001-16149)).                                                                                                                                         
|10.33*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), Second
	Declaration of Amendment (incorporated by reference to
	Exhibit 10.26 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                                                                                                       
|10.34*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), Third Declaration
	of Amendment (incorporated by reference to Exhibit 10.01 to
	Ceridians Quarterly Report on Form 10-Q for the
	quarterly period ended September 30, 2001 (File
	No. 001-15168)).                                                                                                                        
|10.35*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), Fourth
	Declaration of Amendment.                                                                                                                                                                                                                                                                                          
|10.36*  |  | Form of Indemnification Agreement between
	Ceridian Corporation and its Directors (incorporated by
	reference to Exhibit 10.27 to Ceridians Annual Report
	on Form 10-K for the year ended December 31, 2000
	(File No. 001-16149)).                                                                                                                                                                                      
|10.37   |  | Credit Agreement, dated as of January 31,
	2001 among Ceridian Corporation (formerly known as New Ceridian
	Corporation), as the borrower, Bank of America, N.A., as the
	Administrative Agent and L/ C issuer, Other Lenders thereto
	(exhibits and schedules omitted) (incorporated by reference to
	Exhibit 10.28 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).
|10.38   |  | Credit Agreement, dated as of January 30,
	1998, between The Toronto-Dominion Bank and Ceridian Canada Ltd.
	(exhibits and schedules omitted) (incorporated by reference to
	Exhibit 10.26 to Arbitron Inc.s (formerly known as
	Ceridian Corporation) Annual Report on Form 10-K for the
	year ended December 31, 1995 (File No. 1-1969)).                                                                               

70



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|        |  |                                                                                                                                                                                                                                                                                                                                                   
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                   
|10.39   |  | Amending Agreement to Credit Agreement, dated as
	of March 27, 2001, between The Toronto-Dominion Bank and
	Ceridian Canada Ltd. (incorporated by reference to
	Exhibit 10.30 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                              
|10.40   |  | Guarantee Agreement, dated as of January 30,
	1998, between Arbitron Inc. (formerly known as Ceridian
	Corporation) and The Toronto-Dominion Bank (incorporated by
	reference to Exhibit 10.27 to Arbitron Inc.s
	(formerly known as Ceridian Corporation) Annual Report on
	Form 10-K for the year ended December 31, 1997 (File
	No. 1-1969)). 
|10.41   |  | Amendment to Guarantee Agreement, dated as of
	March 27, 2001, between Ceridian Corporation (formerly
	known as New Ceridian Corporation) and The Toronto-Dominion Bank
	(incorporated by reference to Exhibit 10.32 to
	Ceridians Annual Report on Form 10-K for the year
	ended December 31, 2000 (File No. 001-16149)).                       
|10.42   |  | Credit Agreement, dated as of March 2, 1998,
	between Canadian Imperial Bank of Commerce and Ceridian Canada
	Ltd. (exhibits and schedules omitted) (incorporated by reference
	to Exhibit 10.28 to Arbitron Inc.s (formerly known as
	Ceridian Corporation) Annual Report on Form 10-K for the
	year ended December 31, 1997 (File No. 1-1969)).
|10.43   |  | Amendment Number 1 to Credit Agreement,
	dated as of August 30, 1999, between Canadian Imperial Bank
	of Commerce and Ceridian Canada Ltd. (incorporated by reference
	to Exhibit 10.34 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                    
|10.44   |  | Amendment Number 2 to Credit Agreement,
	dated as of July 5, 2000, between Canadian Imperial Bank of
	Commerce and Ceridian Canada Ltd. (incorporated by reference to
	Exhibit 10.35 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                       
|10.45   |  | Third Amendment to Credit Agreement, dated as of
	March 27, 2001, between Canadian Imperial Bank of Commerce
	and Ceridian Canada Ltd. (incorporated by reference to
	Exhibit 10.36 to Ceridians Annual Report on
	Form 10-K for the year ended December 31, 2000 (File
	No. 001-16149)).                                                        
|10.46   |  | Guarantee Agreement, dated as of March 27,
	2001, between Ceridian Corporation (formerly known as New
	Ceridian Corporation) and Canadian Imperial Bank of Commerce
	(incorporated by reference to Exhibit 10.37 to
	Ceridians Annual Report on Form 10-K for the year
	ended December 31, 2000 (File No. 001-16149)).                           
|21.01   |  | Subsidiaries of Ceridian.                                                                                                                                                                                                                                                                                                                         
|23.01   |  | Consent of Independent Auditors  KPMG
	LLP.                                                                                                                                                                                                                                                                                                      
|24.01   |  | Power of Attorney.                                                                                                                                                                                                                                                                                                                                



---



|  |                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------
|* | Management contract or compensatory plan or
	arrangement required to be filed as an exhibit to this report.

We will provide you with copies of any of the
exhibits listed above, upon request and payment of its
reasonable expenses in furnishing such exhibits. We will also
provide to the Securities and Exchange Commission, upon request,
any exhibit or schedule to any of the foregoing exhibits which
has not been filed.

(b) Reports on Form 8-K

On October 17, 2001, we filed a Current
Report on Form 8-K, dated October 17, 2001, containing
a press release reporting our third quarter 2001 earnings
results.

On November 6, 2001, we filed a Current
Report on Form 8-K, dated November 6, 2001, providing
information related to a Shareholder Rights Plan adopted by our
Board of Directors on October 24, 2001.

71



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##### Table of Contents






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, as of March 27,
2002.



| |                     
| | --------------------
| | CERIDIAN CORPORATION



| |    |                     
| | -- | --------------------
| | By | /s/ Ronald L. Turner

| |                                                
| | -----------------------------------------------
| |                                                
| | Ronald L. Turner                               
| | Chairman, President 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 indicated as of March 27, 2002.

|                                                                                                 |  |                                                                                                       
|------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------------
|/s/ John /s/ Ronald L. Turner                                                                    |  | R. Eickhoff                                                                                           
|                                                                                                 |  |                                                                                                       
|Ronald L. Turner
	Chairman, President and Chief Executive Officer (Principal
	Executive Officer) |  | John R. Eickhoff
	Executive Vice President and Chief
	Financial Officer
	(Principal Financial Officer)
|                                                                                                
|/s/ Loren D. Gross                                                                               |  |                                                                                                       
|                                                                                                 |  |                                                                                                       
|Loren D. Gross
	Vice President and Corporate Controller
	(Principal Accounting Officer)          |  |                                                                                                       
|                                                                                                
|/s/ Bruce R. Bond                                                                                |  | /s/ William J. Cadogan                                                                                
|                                                                                                 |  |                                                                                                       
|Bruce R. Bond, Director                                                                          |  | William J. Cadogan, Director                                                                          
|                                                                                                
|/s/ Nicholas D. Chabraja                                                                         |  | /s/ Robert H. Ewald                                                                                   
|                                                                                                 |  |                                                                                                       
|Nicholas D. Chabraja, Director                                                                   |  | Robert H. Ewald, Director                                                                             
|                                                                                                
|/s/ Ronald T. LeMay                                                                              |  | /s/ George R. Lewis                                                                                   
|                                                                                                 |  |                                                                                                       
|Ronald T. LeMay, Director                                                                        |  | George R. Lewis, Director                                                                             
|                                                                                                
|/s/ Carole J. Uhrich                                                                             |  |                                                                                                       
|                                                                                                 |  |                                                                                                       
|Carole J. Uhrich, Director                                                                       |  |                                                                                                       

72



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##### Table of Contents



CERIDIAN CORPORATION

ANNUAL REPORT ON FORM 10-K


EXHIBIT INDEX

|        |  |                                                                                                                                                                                                                                                                                                                                                                 
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                 
|3.01*   |  | Amended and Restated Certificate of Incorporation
	of Ceridian Corporation (formerly known as New Ceridian
	Corporation).                                                                                                                                                                                                                                       
|3.02*   |  | Amendment to Amended and Restated Certificate of
	Incorporation of Ceridian Corporation (formerly known as New
	Ceridian Corporation).                                                                                                                                                                                                                          
|3.03*   |  | Amended and Restated Bylaws of Ceridian
	Corporation (formerly known as New Ceridian Corporation).                                                                                                                                                                                                                                                              
|4.01*   |  | Rights Agreement, dated as of November 6,
	2001, between Ceridian Corporation and The Bank of New York, as
	Rights Agent, including the form of Certificate of Resignation,
	Preferences and Rights of Series A Preferred Stock as
	Exhibit A, the form of Rights Certificate as Exhibit B
	and the Summary of Rights to Purchase Preferred Stock as
	Exhibit C.
|10.01*  |  | Distribution Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001.                                                                                                                                                                         
|10.02*  |  | Amendment No. 1 to Distribution Agreement
	between Arbitron Inc., formerly known as Ceridian Corporation,
	and Ceridian Corporation, formerly known as New Ceridian
	Corporation, dated March 30, 2001.                                                                                                                                                         
|10.03*  |  | Personnel Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001.                                                                                                                                                                            
|10.04*  |  | Amendment No. 1 to Personnel Agreement
	between Arbitron Inc., formerly known as Ceridian Corporation,
	and Ceridian Corporation, formerly known as New Ceridian
	Corporation, dated as of April 3, 2001.                                                                                                                                                       
|10.05*  |  | Tax Matters Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001.                                                                                                                                                                          
|10.06*  |  | Transition Services Agreement between Arbitron
	Inc., formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001.                                                                                                                                                                  
|10.07*  |  | Sublease Agreement between Arbitron Inc.,
	formerly known as Ceridian Corporation, and Ceridian
	Corporation, formerly known as New Ceridian Corporation, dated
	February 14, 2001.                                                                                                                                                                             
|10.08   |  | Executive Employment Agreement between Ceridian
	Corporation and Ronald L. Turner, dated January 29, 2002.                                                                                                                                                                                                                                                      
|10.09   |  | Executive Employment Agreement between Ceridian
	Corporation and John R. Eickhoff, dated January 29, 2002.                                                                                                                                                                                                                                                      
|10.10   |  | Executive Employment Agreement between Ceridian
	Corporation and Tony G. Holcombe, dated January 29, 2002.                                                                                                                                                                                                                                                      
|10.11   |  | Executive Employment Agreement between Ceridian
	Corporation and Gary A. Krow, dated January 29, 2002.                                                                                                                                                                                                                                                          
|10.12   |  | Executive Employment Agreement between Ceridian
	Corporation and Gary M. Nelson, dated January 29, 2002.                                                                                                                                                                                                                                                        
|10.13   |  | Ceridian Corporation Amended and Restated 2001
	Long-Term Stock Incentive Plan.                                                                                                                                                                                                                                                                                 
|10.14   |  | Form of Ceridian Corporation Non-Statutory Stock
	Option Award Agreement (under the Amended and Restated 2001
	Long-Term Stock Incentive Plan).                                                                                                                                                                                                                 
|10.15   |  | Form of Ceridian Corporation Restricted Stock
	Award Agreement (under the Amended and Restated 2001 Long-Term
	Stock Incentive Plan).                                                                                                                                                                                                                           
|10.16*  |  | Ceridian Corporation Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                                              
|10.17   |  | Ceridian Corporation Amended and Restated 2001
	Director Performance Incentive Plan.                                                                                                                                                                                                                                                                            



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                       
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                       
|10.18   |  | Form of Ceridian Corporation Non-Statutory Stock
	Option Award Agreement (under the Amended and Restated 2001
	Director Performance Incentive Plan).                                                                                  
|10.19   |  | Form of Ceridian Corporation Restricted Stock
	Award Agreement (under the Amended and Restated 2001 Director
	Performance Incentive Plan).                                                                                            
|10.20   |  | Ceridian Corporation 2002 Employee Stock
	Incentive Plan.                                                                                                                                                                             
|10.21   |  | Form of Ceridian Corporation Non-Qualified Stock
	Option Award Agreement (under the 2002 Employee Stock Incentive
	Plan).                                                                                                             
|10.22   |  | Form of Ceridian Corporation Restricted Stock
	Award Agreement (under the 2002 Employee Stock Incentive Plan).                                                                                                                        
|10.23*  |  | Ceridian Corporation Benefit Equalization Plan,
	as amended.                                                                                                                                                                          
|10.24*  |  | Ceridian Corporation Benefit Equalization Plan,
	First Declaration of Amendment.                                                                                                                                                      
|10.25*  |  | Ceridian Corporation Benefit Equalization Plan,
	Second Declaration of Amendment.                                                                                                                                                     
|10.26*  |  | Ceridian Corporation Benefit Equalization Plan,
	Third Declaration of Amendment.                                                                                                                                                      
|10.27*  |  | Ceridian Corporation Employees Benefit
	Protection Trust Agreement, dated as of December 1, 1994,
	between Ceridian Corporation and First Trust National
	Association.                                                               
|10.28*  |  | First Declaration of Amendment to Ceridian
	Corporation Employees Benefit Protection Trust Agreement,
	effective as of January 1, 1999, between Ceridian
	Corporation and US Bank National Association.                              
|10.29*  |  | Second Declaration of Amendment to Ceridian
	Corporation Employees Benefit Protection Trust Agreement,
	dated as of March 26, 2001, between Ceridian Corporation
	and US Bank National Association.                                  
|10.30*  |  | Third Declaration of Amendment to Ceridian
	Corporation Employees Benefit Protection Trust Agreement,
	dated as of August 1, 2001, between Ceridian Corporation
	and US Bank National Association.                                   
|10.31*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan).                                                                                                                                       
|10.32*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), First Declaration
	of Amendment.                                                                                                      
|10.33*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), Second
	Declaration of Amendment.                                                                                                     
|10.34*  |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), Third Declaration
	of Amendment.                                                                                                      
|10.35   |  | Ceridian Corporation Deferred Compensation Plan
	(formerly known as Executive Investment Plan), Fourth
	Declaration of Amendment.                                                                                                     
|10.36*  |  | Form of Indemnification Agreement between
	Ceridian Corporation and its Directors.                                                                                                                                                    
|10.37*  |  | Credit Agreement, dated as of January 31,
	2001 among Ceridian Corporation (formerly known as New Ceridian
	Corporation), as the borrower, Bank of America, N.A., as the
	Administrative Agent and L/ C issuer, Other Lenders thereto.
|10.38*  |  | Credit Agreement, dated as of January 30,
	1998, between The Toronto-Dominion Bank and Ceridian Canada Ltd.                                                                                                                           
|10.39*  |  | Amending Agreement to Credit Agreement, dated as
	of March 27, 2001, between The Toronto-Dominion Bank and
	Ceridian Canada Ltd.                                                                                                      
|10.40*  |  | Guarantee Agreement, dated as of January 30,
	1998, between Arbitron Inc. (formerly known as Ceridian
	Corporation) and The Toronto-Dominion Bank.                                                                                    
|10.41*  |  | Amendment to Guarantee Agreement, dated as of
	March 27, 2001, between Ceridian Corporation (formerly
	known as New Ceridian Corporation) and The Toronto-Dominion Bank.                                                              



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##### Table of Contents



|        |  |                                                                                                                                                                     
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                                                                                                         
|        |  |                                                                                                                                                                     
|10.42*  |  | Credit Agreement, dated as of March 2, 1998,
	between Canadian Imperial Bank of Commerce and Ceridian Canada
	Ltd.                                                  
|10.43*  |  | Amendment Number 1 to Credit Agreement,
	dated as of August 30, 1999, between Canadian Imperial Bank
	of Commerce and Ceridian Canada Ltd.                          
|10.44*  |  | Amendment Number 2 to Credit Agreement,
	dated as of July 5, 2000, between Canadian Imperial Bank of
	Commerce and Ceridian Canada Ltd.                             
|10.45*  |  | Third Amendment to Credit Agreement, dated as of
	March 27, 2001, between Canadian Imperial Bank of Commerce
	and Ceridian Canada Ltd.                              
|10.46*  |  | Guarantee Agreement, dated as of March 27,
	2001, between Ceridian Corporation (formerly known as New
	Ceridian Corporation) and Canadian Imperial Bank of Commerce.
|21.01   |  | Subsidiaries of Ceridian.                                                                                                                                           
|23.01   |  | Consent of Independent Auditors  KPMG
	LLP.                                                                                                                        
|24.01   |  | Power of Attorney.                                                                                                                                                  



---



|  |                           
|- | --------------------------
|* | Incorporated by Reference.