<PAGE>
              FORM 10-K.--- ANNUAL REPORT PURSUANT TO SECTION 13
               OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)
(X)   ANNUAL  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF  THE  SECURITIES
      EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001 OR ( ) TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

For the transition period from__________________ to ___________________________

Commission file number 2-28286
                       --------------------------------------------------------

The Bureau of National Affairs,Inc.
-------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)

             Delaware                                            53-0040540
--------------------------------                            -------------------
 (State or other jurisdiction of                              (I.R.S. Employer
  incorporation or organization)                            Identification No.)

1231 25th St., N.W., Washington, D.C. _                                20037
-------------------------------------------------------------------------------
(Address of principal executive offices)                             (Zip Code)

Registrant's Telephone Number, including Area Code               (202) 452-4200

Securities Registered pursuant to Section 12(b) of the Act:   None

Securities registered pursuant to Section 12(g) of the Act: Class A common
stock, $1.00 par value.

      Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No _____.

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

    The market value of the Class A voting stock held by non-affiliates of the
registrant as of February 23, 2002 was $140,267,770. All voting stock is owned
by employees of the registrant and its subsidiaries. The market value of the
Class B and Class C non-voting stock held by non-affiliates as of February 23,
2002 was $182,374,949 and $13,960,343 respectively. In determining the above,
The Bureau of National Affairs, Inc. (the "Company"), has assumed that all of
its officers, directors, and persons known to the Company to be the beneficial
owners of more than five percent of each class of the Company's common stock are
affiliates. Such assumption should not be deemed conclusive for any other
purpose.
                                                                  Page 1 of 88

<PAGE>2



      The number of shares outstanding of each of the registrant's classes of
common stock, as of February 23, 2002 was 15,572,273 Class A common shares,
19,553,068 Class B common shares, and 1,431,830 Class C common shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Company's definitive Proxy Statement, filed with the SEC
on March 29, 2002, are incorporated by reference into Part III of this Form
10-K.


                      The Bureau of National Affairs, Inc.
                              Index to Form 10-K
                  For the fiscal year ended December 31, 2001


                                                                        Page No.
                                     PART I.
Item 1.     Business....................................................    3

Item 2.     Properties..................................................   12

Item 3.     Legal Proceedings...........................................   13

Item 4.     Submission of Matters to a Vote of Security Holders.........   13

Item X.     Executive Officers of the Registrant........................   13

                                    PART II.
Item 5.     Market for the Registrant's Common Stock and Related
              Security Holder Matters...................................   15

Item 6.     Selected Financial Data and Selected Quarterly Data.........   16

Item 7.     Management's Discussion and Analysis of Financial
              Condition and Results of Operations.......................   18

Item 7a.    Quantitative and Qualitative Disclosures About Market Risk..   22

Item 8.     Financial Statements and Supplementary Data.................   23

Item 9.     Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosure.......................   47

                                    PART III.
Item 10.    Directors and Executive Officers of Registrant..............   47

Item 11.    Executive Compensation......................................   47

Item 12.    Security Ownership of Beneficial Owners and Management......   47

Item 13.    Certain Relationships and Related Transactions..............   47

                                    PART IV.
Item 14.    Exhibits, Financial Statement Schedules, and
            Report on Form 8-K..........................................   48

SIGNATURES..............................................................   50

EXHIBIT INDEX...........................................................   51


<PAGE>3
                                     PART I

Item 1.     Business
            --------
General Development of Business and Narrative Description of Business

Business of BNA and Subsidiary Companies

The Bureau of National Affairs, Inc. (BNA), is a leading publisher of
specialized legal and regulatory information. BNA was founded in 1929, and was
incorporated in its present form as an employee-owned company in 1946. BNA is
independent, for profit, and is the oldest fully employee-owned company in the
United States.

BNA and four of its publishing subsidiary companies, Tax Management Inc., Pike &
Fischer, Inc., Institute of Management and Administration, Inc. (IOMA), and
Kennedy Information, Inc., provide legal, regulatory, and general business
advisory information in labor, economic, tax, health care, environment and
safety, consulting, recruiting, and other markets to business, professional, and
academic users. They prepare, publish, and market subscription information
products in print, compact disc, and online formats, books, pamphlets,
magazines, and research and advisory reports, and hold conferences.

Sales are made principally in the United States through field sales
representatives who are supported by direct mail, space advertising, and
telemarketing. Customers include lawyers, accountants, business executives,
human resource professionals, health care administrative professionals,
consultants, labor unions, trade associations, educational institutions,
government agencies, and libraries mostly in the United States.

The Company provides most of its products for electronic delivery via Lotus
Notes and the World Wide Web. Online products are also available through
database vendors such as LEXIS/NEXIS and West Publishing Company.

BNA Software, a division of Tax Management Inc., develops, produces, and markets
tax and financial planning software. Sales are made to accountants, lawyers, tax
and financial planners, government agencies, and others. The products are
marketed through direct mail, space advertising, and BNA field sales
representatives. STF Services Corporation converts government-approved paper
forms into interactive electronic forms that are marketed directly and licensed
to publishers, including BNA and Tax Management.

BNA International Inc. publishes  international tax and intellectual  property
information  in print and  electronic  formats,  and is BNA's agent outside of
North America for sale of its U.S. products.

The McArdle  Printing Co., Inc.  provides  printing  services to  mid-Atlantic
area  customers.  It  utilizes  modern  equipment  and its  customers  include
publishers,  trade  associations,  professional  societies,  other  non-profit
organizations,   financial  institutions,   and  governmental   organizations.
Approximately  42 percent of its business is derived  from the BNA  publishing
companies.
                                                                       Continued
<PAGE>4
Review Of Operations

2001 was a difficult year for BNA, and that was fully reflected in the company's
financial results. Revenue growth was low, and comparable profits declined from
the prior year's all-time highs. Profits were expected to be down as a result of
amortization expenses associated with two major acquisitions. However, the
economic downturn, and its depressing effect on revenue growth, was the major
reason why profits declined as much as they did. Earnings per share were $.35
for 2001, down 40.7 percent from the split-adjusted, comparable figure for 2000.

Consolidated revenues were nearly $306 million, an increase of 2.9 percent.
Added revenues from the two recently acquired businesses, Kennedy Information
and STF, accounted for more than all of the growth in consolidated revenues.
Legal and tax markets remained strong for BNA and its subsidiary companies, but
the poor economy resulted in revenue declines in other markets. In particular,
following several years of impressive growth, IOMA and McArdle suffered
significant revenue declines that could not be fully offset with cost
reductions.

The consolidated operating profit for 2001 of $14.5 million was down 48.4
percent from the record level of 2000. Tax Management publishing and BNA Books
were the only business units to report higher operating profits, both on strong
revenue growth. Revenue problems for the other business units, and
acquisition-related expenses, were the major factors accounting for the decline
in consolidated operating profit.

The increased amortization expenses related to acquisitions, which are not cash
expenses, present a new dilemma for BNA stockholders in evaluating BNA's
financial progress. While financial reporting standards require the amortization
of intangible assets and goodwill resulting from acquisitions, the actual values
of the acquired businesses do not necessarily decline as the amortization
expense implies; more likely, the values of the businesses grow along with the
growth of the businesses. Recognizing this economic reality, financial reporting
standards have been modified, effective for 2002, to no longer require that
goodwill be amortized, but instead be subject to periodic write-downs if
recorded valuations are not supported by annual measures of fair value. However,
the other intangible assets will continue to be amortized, reducing reported
profits. In this environment, cash flow measures take on increased relevance for
measuring economic financial progress, vis-a-vis income statement profits. The
two cash flow measures on the Results In Brief page show 2001 declines of
approximately 11 and 18 percent, much better measures--we believe--of the
economic declines caused by the economy than the reductions in income statement
profits.

Total non-operating income was up $.5 million in 2001. BNA had a large gain from
the sales of publications in 2001 compared to a loss from asset sales in the
prior year. Interest expense was up sharply in 2001 due to the
acquisition-related borrowings. Investment income was down due to lower
investment levels and declining market yields.

Following the November 2000 acquisition of Kennedy Information, BNA acquired the
long-coveted STF Services Corporation in April 2001. STF is the dominant
provider of interactive electronic, government-approved forms, serving primarily
the tax market. It sells its products directly to end users, and also licenses
them to publishers, including BNA and Tax Management. Like Kennedy, STF has
demonstrated strong profitability that is expected to continue and to enhance
the financial strength of consolidated BNA. As noted earlier, amortization
expenses related to these acquisitions did contribute to the decline in reported
profits. However, both companies do have strong cash flows and are expected, in
time, also to contribute to reported profits.
<PAGE>5
Stock repurchases, mostly from estates of Class B stockholders, were again
high in 2001.  Although employee investments in Class A stock were up
significantly in 2001, total shares outstanding continued to decline.  Over the
last five years, shares outstanding have been reduced by 15 percent, and this
has had a positive effect on earnings per share.  This trend is expected to
continue over the foreseeable future. Operating cash flows have provided most of
the cash needed for the net buybacks, with financial reserves providing the
balance, and are expected to continue to do so.

BNA's cash and financial investments declined by $4.3 million in 2001 to $148
million. The liquidity provided by these financial reserves, as well as the
strong operating cash flows generated annually by the businesses, keeps BNA
ready to respond to business challenges and opportunities, to make the
investments necessary to ensure future growth, to satisfy debt retirement
obligations, and to meet the stock repurchase obligations inherent in an
employee-owned company.

Reviews of the parent and subsidiaries' operations follow.

Parent Company

Terrorism, recession, anthrax, power outages, floods: it was, without a doubt,
the worst of times. But the devastating events of 2001 seemed to bring out the
best in BNA and its people again and again. For throughout this difficult year,
BNA employees repeatedly came together, providing the strength we needed to
react, to respond, and to recover.

The economic recession resulted in a very tough selling environment. As a
result, parent company revenues declined slightly. Strict controls on the cost
side, however, made up for most of the revenue shortfall, and operating profit,
while below the extraordinary level of 2000, was significantly above
expectations.

BNA continued its transformation into a Web publisher. Electronic products now
represent more than 40 percent of the parent's subscription revenue base, and
almost three-quarters of that electronic revenue is generated by Web products.
Revenue from our Web product line grew almost 50 percent in 2001.

Heavy investment continued to be made during the course of the year on improving
the infrastructure supporting this Web growth. As a result, both the
functionality and the stability of our Web product line improved markedly in
2001. The year also saw the completed development of the first product on our
new, next-generation Web platform, known as BWD. In 2002, we will continue the
development of that platform and begin building other Web products on it. The
new platform will provide more customer-friendly functionality and greater
editorial control over the Web services.

The Publishing Group's Legal and Business Publishing product line grew both
revenues and profits last year as the attorney marketplace proved to be more
resistant to recession than some other professional markets. All three of our
legal decisional services on the Web -- Labor and Employment Law Library,
Employee Benefits Library, and Intellectual Property Library -- were subject to
intense customer scrutiny and input during 2001. This resulted in major user
interface improvements that enhanced both usability and functionality. A new
legal notification service, Expert Evidence Report, was launched in August, and
in the fall, a Web version of BNA's successful portfolio product, Corporate
Practice Series, was launched.

The 2000 realignment of the editorial and marketing operations into business
units increased BNA's ability to marshal resources and deploy them quickly. As a
result, Legal and Business Publishing was able to conceive, develop, and launch,
within a 12-month period, a complex reference product consisting of a database
<PAGE>6
of laws and regulations coupled with outside experts' comments, analyses, and
practical advice. The launch in January 2002 of ERISA Enforcement and Compliance
Library could not have been accomplished that quickly without a combined
editorial and marketing business unit leading the effort. Finally, several new
notification services were researched, developed, and tested in 2001, leading to
the January 2002 launch of Privacy & Security Law Report and Wage, Hour & Leave
Report. The first tracks regulatory activity as federal and state governments
try to balance privacy rights with the need for enhanced security, while the
second covers an increasingly complex area of employment law.

The Publishing Group's Professional Publishing product line saw a drop in both
revenues and profitability. The human resources and environment markets were
particularly hard hit by the economic downturn and by cheaper alternative
information sources. The Human Resources Division took a hard look at its
flagship product, the HR Library, and revamped and upgraded that product in both
its Web and CD formats. An alliance with an outside software company was key to
developing two new products, HR AnswerSource: Professional Edition, and HR
AnswerSource: Manager Edition, combining innovative Web technology with BNA's
trusted, high-quality HR content. These products, along with the improved HR
Library, were launched together at the start of 2002.

Product development in the Environment, Health & Safety Division was focused on
two major efforts in 2001: the development and release of an enhanced interface
to the Environment and Safety Library and the development of a new safety
product. The new ESLW interface was released late in the year and has garnered
very positive feedback. The new safety product, which integrates topical access
to notification, reference, analytical, and decisional services with detailed
links to external Websites and to subscribers' internal information, will be
released in spring 2002.

Late in 2001, BNA sold the Medicare/Medicaid Library, generating a substantial
gain. Despite being a high-quality product, its divestiture made good business
sense.

The plan for a Subscriber Relations Group became a reality in 2001. The group
combines all BNA units having primary responsibility for contact with customers.
This includes the Sales Department, the former Circulation Department, and all
other customer service, support, and training units within BNA. The operations
were merged in June when several downtown call centers were moved to our
Rockville facility. Once the move was complete, much effort was focused on
reengineering department processes, eliminating redundancies, and replacing
print-era business practices with those designed to efficiently accommodate
electronic sales and servicing needs. These efforts will continue as we strive
to be the customer-focused company that the Web market demands.

During 2001, the interdepartmental team overseeing the project to replace BNA's
customer systems completed the work of gathering requirements for order entry
and accounts receivable, which constitute the core components of that system.
They then reviewed major commercially available software packages that perform
those functions, and narrowed the choice of vendors down to two. It is
anticipated that, by the end of 2002, development and testing of the new system
will be completed, and implementation will begin.

One of the big stories of 2001 was, without a doubt, the remarkable resiliency
BNA employees demonstrated in responding to a number of unprecedented events. In
June, the West End of Washington, D.C., where BNA is headquartered, unexpectedly
lost all electrical power for more than three days. Extraordinary creativity,
resourcefulness, and hard work by many BNA employees across all departments kept
damage to a minimum. The Dailies and the Web products were out of commission for
less than one day. Once power was restored, we immediately devoted resources to
<PAGE>7
preparing ourselves for the future. As a result, BNA now has the ability to
continue creating and maintaining our products without disruption if such an
outage should occur again.

Thankfully, no members of the BNA family were lost during the events of
September 11, but many lost relatives and friends. Those events and the
subsequent anthrax crisis not only affected each of us individually, but also
caused significant business disruption and led to increased security measures
and a plan for more in 2002.

The multiple challenges of 2001 were unique and difficult. But BNA people
responded and recovered, and as a result we end the year stronger and better
prepared to meet the challenges of 2002 and beyond.

BNA Books

The Book Division had another record-breaking year in 2001, generating more than
$10 million in revenues, up nearly 7 percent over 2000. Operating profit also
grew. The division has more than doubled its revenues since 1995 and has
consistently contributed strong operating profits.

The publication of the much-anticipated fourth edition of The Developing Labor
Law, co-published with the American Bar Association's Labor & Employment Law
Section, contributed heavily towards the division's success in 2001.

In addition to annual supplements to a growing list of highly respected
treatises, the Book Division also published International Labor & Employment
Laws, Volume II; the fifth edition of Patents and the Federal Circuit; and
Medical Ethics: Analysis of the Issues Raised by the Codes, Opinions, and
Statements, a companion volume to the previously published Medical Ethics:
Codes, Opinions, and Statements. The Web version of BNA's Directory of State and
Federal Courts, Judges, and Clerks also was launched late in the year.

Finally, the division launched its new home page complete with e-commerce
capabilities, which users have lauded as informative and easy to use. The new
shopping cart has made ordering online even more convenient for customers, and
much more cost effective for the division.

Tax Management Inc.

Despite the weak economy, revenues and operating profits continued to grow at a
healthy pace for Tax Management. Total revenues, including those of BNA
Software, grew 7.9 percent, which was an even faster growth rate than the
previous year. Operating profits were up 6 percent.

Revenues from TM information services increased 5.6 percent while operating
profits jumped almost 19 percent due to the elimination of a paper-based forms
service and other cost control measures.

Throughout the past year, significant enhancements were made to TM products. For
example, the TM journals, Daily Tax Highlights and Summaries, and additional
primary source documents were added to the Web-based library products. An
improved library platform was created so all TM tax products could be used
together seamlessly. This new platform has received accolades in the trade press
and has been well received by customers. And finally, the company created price
points and product combinations that customers have found attractive.
<PAGE>8
The intellectual property created by the world's leading tax minds is the
hallmark of Tax Management's publishing efforts. This hallmark continues to be
the foundation and guiding principle of TM's publishing activities.

BNA Software

BNA Software revenues grew 16.5 percent due in part to a large multi-year
contract with a key government agency. Operating profits, however, declined 28
percent because of higher editorial expenditures incurred in developing new
products.

Two new editions of the BNA Fixed Assets New Dimension product were released in
2001. ND.server is a client/server-based fixed asset system capable of handling
hundreds of thousands of assets. ND.web is a "best in class" fixed asset system
that is entirely Web-based. It is capable of handling millions of assets and
serving the needs of large organizations. Sales of the PC-based fixed asset
software line continued at a strong pace throughout the year.

Both the software and information services segments of Tax Management are well
positioned to prosper as the economy improves.

BNA International Inc.

BNA International continued to grow in 2001 despite difficult market conditions
from midyear. Revenues from BNAI services increased by 8.7 percent, with much of
this growth coming from recently launched services.

New products such as Tax Planning International Transfer Pricing and World
e-commerce & IP Report produced strong sales performances. Tax Planning
International Web Library was launched in 2001, and intensive efforts are being
made to migrate tax customers to this platform. Intellectual property and
Internet law Web libraries will be launched in 2002. New initiatives designed to
retain more subscribers and sell more products to them were very successful.

Efforts to expand the successful stable of Internet law and tax products
resulted in the launch of World Data Protection Report in January and Tax
Planning International Financing in September. BNAI's offering was recently
further enhanced with the introduction of Tax Planning International Mergers &
Acquisitions and World Money Laundering Review.

Plans for the coming year are focused on achieving further profitable growth
from the introduction of Web products, and from pursuing new publishing
opportunities in the market for international information.

Pike & Fischer, Inc.

A significant contraction of the telecommunications industry worldwide was the
principal reason Pike & Fischer revenues were down slightly in 2001. Telecom
revenues which, in recent years, have accounted for at least one-third of total
revenues, fell 16 percent in 2001 from the prior year. Thanks to growth in other
areas of the business, however, notably privacy and Internet law, total 2001
revenues were off only 2.3 percent from 2000.

Pike & Fischer's conference business was negatively affected both by the slowing
economy and by the impact of the September terrorist attacks. An October
conference in San Francisco on digital discovery had to be rescheduled for early
2002. Nevertheless, revenues from the conference business increased by a small
amount over 2000. An expansion of the conference business is planned for 2002.
<PAGE>9
The company continued to develop its e-commerce presence on the Internet with
the introduction of a pay-per-view option for its Web subscription services. Web
versions of Pike & Fischer's Criminal Practice Manual and Green Markets
newsletter also were introduced in 2001.

As 2001 came to a close, Pike & Fischer undertook a major revamping of its
selling efforts. In the future, the company will rely more heavily on tele-rep
sales rather than direct mail marketing to bring in new subscribers. This, along
with additional refinements to the corporate reorganization, will enable Pike &
Fischer to expand its revenue base and increase profitability.

BNA Washington Inc.

BNAW, BNA's real estate subsidiary company, posted a very successful year. For
the fifth straight year building operating expenses declined due to lower
depreciation expenses. However, the year will be remembered for several serious
challenges to building operations that were successfully dealt with.

In June there was an extended power outage and late in the summer there was yet
another interruption of electrical service to the 25th Street buildings due to
severe flooding. The terrorist attacks and the subsequent bioterrorism threat to
mail also had an effect on the facilities' operations. These challenges were met
head-on and BNAW continued to provide safe and productive facilities and support
to the business operations of the corporation.

An uninterrupted power source (UPS) system was installed to supply battery power
when needed to the data center and telephone system. Electrical equipment was
also installed to facilitate rapid connection of emergency power generators.
Security of the 25th Street buildings was stepped up, and a study was completed
of security enhancements and upgrades, which will be implemented early in 2002.
The fire alarm system in the North and South buildings was upgraded.

In June, renovation of 12,000 square feet of office space in the Rockville
building was completed. This space was used to establish the new Customer
Contact Center, which centralized the call centers located in a number of
different departments. The computer room was enlarged to accommodate hardware to
support business operations and business continuity plans. Downtown, BNA
Software moved into newly leased and renovated office space in the 23rd Street
building, and the copy center was enlarged to provide additional space for new
equipment and staff needed to support increased reproduction requirements.

BNAW continues to be in a good position to handle BNA's evolving business
requirements, operations, and office space needs.

The McArdle Printing Co., Inc.

The McArdle Printing Company's performance, like the printing industry as a
whole, was adversely affected by the overall economy. Printing sales dropped
11.4 percent from 2000's record levels. During the first quarter of 2001,
management recognized the downward trend in print sales, especially in financial
printing, which had been a key contributor to McArdle's 2000 sales growth. The
company responded with a workforce reduction months before September's events
brought the nation's economic woes into even sharper focus.

There were bright spots in McArdle's sales year. Sales to new customers in 2001
increased 30 percent over 2000, including several new major accounts. Other
established accounts saw significant growth. These factors, along with
additional cost containment measures instituted in the fourth quarter, allowed
<PAGE>10
McArdle to post a break-even year in spite of the decline in total revenue.
McArdle remains a strong and viable member of the BNA family and of the printing
industry. Ranked among the top 400 printers in the nation for several years,
McArdle climbed to 181 for 2001.

McArdle also received a "Best Workplace in America" award sponsored by the
Printing Industry of America (PIA).

The year 2001 provided an opportunity for McArdle to continue to fine-tune its
processes and procedures to more efficiently respond to the needs of its
customers. With its excellent facility, modern equipment, and knowledgeable and
creative employees, McArdle is well positioned to meet the challenges of the
current economic environment.

Institute of Management & Administration, Inc.

After three years of double-digit growth, IOMA finished its fourth year as a BNA
company with a drop in revenues that could not be offset by cost-cutting
measures and an accelerated sales effort.

One reason for the decrease in IOMA revenues was a planned reduction in new
products. Growth from two new subscription products, Financial Executive's News
and Purchasing Law Report, and two reference services did not replace
subscribers lost because of the weak economy, or the decline of mature products.

Despite weak subscription sales, growth occurred in non-subscription areas.
IOMA's list rental business rebounded in 2001, partially fueled by excellent
sales of e-mail lists. IOMA also saw the first revenues from new conference
sponsorship and custom publishing programs. Revenues from Yearbook and other
books remained stable.

Online product development also moved forward. The circulation of IOMA's nine
"e-zines" grew from 6,000 to 28,000 subscribers. In addition, 100 percent of
IOMA's content is now available, in a pay-by-the-article format, available at
www.managementlibrary.com. Licensing revenues from this database increased
during 2001.

Still, the primary business focus remains mid-priced business-to-business
newsletters and reference guides. To support these middle-market products, IOMA
continued to expand its multi-tier in-house sales operation. While the cost of
the program contributed to the 2001 operating loss, by year-end it had become
the company's most cost-effective sales channel.

IOMA's historical growth, as well as the expansion of its ability to develop a
variety of products and to respond to customers in customized ways, places the
company in a better position to penetrate the lower and mid-levels of BNA's
traditional professional markets. IOMA expects to rebound from a difficult 2001.

Kennedy Information, Inc.

2001 presented significant challenges to Kennedy Information, given its reliance
on cyclical revenue streams. In particular, the company's conferences and
advertising-driven products were impacted by the weak economy and events of
September 11.

The company's four fall conferences were all, unfortunately, scheduled to take
place in New York City. The terrorist attacks and resultant uncertainty in New
<PAGE>11
York dampened clients' willingness to travel to that venue, forcing the
cancellation of one event and significantly suppressing attendance at the
others. In addition, the weak economy impacted 2001 results, contributing to
lower demand for corporate recruitment-related products. Economic uncertainty
and cost-cutting pressures also led to the postponement and diminution of
advertising in core products like Consulting magazine, as well as newer launches
like Shareholder Value magazine. Several new product initiatives during the year
were delayed until the economic environment improves.

Lower-than-planned revenues led to a series of painful cost-cutting initiatives
that reestablished the company's ongoing profitability.

There were many bright spots as well. The company was able to add several key
hires that will enhance capabilities for years to come. And the weak economy
also eliminated a variety of competitors, enhancing our position in key markets.

Kennedy Information has an appropriate cost structure in place for the current
environment. At the same time, the company is developing several exciting new
product launches and is poised to adjust to and capitalize on the economic
recovery when it does materialize.

STF Services Corporation

STF became part of the BNA family in April 2001 and continues to expand its
three revenue sources: direct sales of its SuperForm tax forms service, the
licensing of privately labeled versions of SuperForm (through resale/marketing
channels), and the licensing of specialized forms content that is integrated
with third-party professional and legal research products.

The trend toward Internet-based information delivery helped fuel growth and
contributed to increased operating profit while STF's Internet-savvy forms
technology contributed to consistently strong subscription renewal rates.

The underlying architecture of the company's forms technology was redesigned in
2001 as part of a multi-year development plan. STF is now poised to realize a
new generation of forms software that promises to reduce production costs and
make seamless the sharing of data, as well as the integration of STF forms with
other software systems.

In addition, the company plans two new products for release in the first half of
2002. One new product will leverage the expertise of BNA and IOMA in the human
resource field. The other will concentrate on the process of registration and
maintenance of legal business entities such as corporations and LLPs through
various filings with the secretaries of state. Both products will be offered
through resale licensing channels as well as marketed by STF directly to end
user professionals.

As the preeminent source of intelligent, interactive government forms, STF will
continue its profitable growth trajectory in the coming year by applying the
latest technologies to the content that professionals need to succeed in their
chosen fields.
<PAGE>12
Item 1.     Business
            --------
General Development of Business and Narrative Description of Business,
------------------------------------------------------------------------
Continued
---------
The Bureau of National Affairs, Inc. ("BNA" or the "Company"), operates
primarily in the publishing, printing, and software industries. Publishing
operations consist of the production and marketing of information products in
print and electronic form. Printing operations consist of printing services to
internal and outside customers. Software operations consist of the production
and marketing of software programs and interactive electronic forms. Activities
in other industry segments are less than ten percent of total revenue.

Publishing of legal, regulatory, and business advisory information is very
competitive. Some of the Company's publishing competitors are much larger and
have greater resources. Consolidation within the industry in recent years has
resulted in even larger competitors. At the same time, technological advances
have made it easier for smaller publishers to produce, market, and deliver
competing products. Many government agencies now provide direct access to their
information, resulting in another form of competition. Additionally, a plethora
of internet web sites offer "business information" at little or no cost. The
Company produces value-added information and competes on the basis of
comprehensiveness and timeliness (quality), product line breadth, brand
reputation, variety of format offerings, price, and customer service.

The Company's subsidiary, The McArdle Printing Company, Inc. (McArdle), competes
with a number of commercial and financial printers for 58 percent of its
business. McArdle competes on the basis of the breadth of its print capabilities
and related services, price, and customer service.

BNA Software competes with a number of tax and financial planning software
publishers. It competes on the basis of product features and functions, quality
and reliability, timeliness of product updates, ease of use, brand recognition,
customer support, and price. STF is the dominant provider of electronic forms
with little direct competition.

The number of employees of BNA and its subsidiary companies was 2,121 on
December 31, 2001.

Item 2.     Properties
            ----------
BNA Washington Inc. owns and manages the buildings presently used by BNA and
some of its Washington area subsidiaries. Principal operations are conducted in
three adjacent owned buildings at 1227-1231 25th Street, N.W., Washington, D.C.
The office building at 1227 25th Street is being used primarily by BNA and also
for commercial leasing. BNA also leases office space for its use at 1250 23rd
Street, N.W., Washington, D.C.

BNA's Subscriber  Relations  Department  operates in an owned facility at 9435
Key West Avenue,  Rockville,  Maryland.  Pike & Fischer,  Inc.  leases  office
space for its operations at 1010 Wayne Avenue, Silver Spring,  Maryland.  IOMA
conducts its operations from leased offices at 29 West 35th Street,  New York,
New York.  Kennedy  Information,  Inc.  conducts  its  operations  from leased
offices  at One  Kennedy  Place,  Fitzwilliam,  New  Hampshire.  STF  Services
Corporation  leases office space for its  operations  at 26 Corporate  Circle,
East Syracuse,  New York. BNA International  Inc. conducts its operations from
leased offices at Heron House,  10 Dean Farrar Street,  London,  England.  The
McArdle  Printing  Co.,  Inc.  owns its  office  and plant  facilities  at 800
Commerce Drive, Upper Marlboro, Maryland.
<PAGE>13
Item 3.     Legal Proceedings
            -----------------
The Company is involved in certain legal actions arising in the ordinary course
of business. In the opinion of management the ultimate disposition of these
matters will not have a material adverse effect on the Company's consolidated
financial statements.

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

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 2001.


Item X.     EXECUTIVE OFFICERS OF THE REGISTRANT
            ------------------------------------

The following persons were executive officers of The Bureau of National Affairs,
Inc., at December 31, 2001. Executive officers are elected annually by the Board
of Directors and serve until their successors are elected.

          Name           Age           Present position and prior experience
--------------------     ---           -------------------------------------
William A. Beltz          72           Chairman of the Board
                                         Elected chairman in 1994. Served as
                                         president from 1979 to 1995 and
                                         chief executive officer from 1980
                                         until 1996.  Joined BNA in 1956.

Jacqueline M. Blanchard   52           Vice President for Human Resources
                                         Elected vice president in 1994.
                                         Joined BNA in 1984.


Eunice L. Bumgardner      41           Vice President and General Counsel
                                         Elected vice president in 1996 and
                                         general counsel in 1995. Joined
                                         BNA in 1994.


Carol A. Clark            45           Vice President for Information Technology
                                         Elected vice president in 2001.
                                         Previously served as Technology
                                         Director since 1997. Joined BNA in
                                         1983.


Sandra C. Degler          62           Vice Chairman of the Board
                                         Elected vice chairman in 1998. Served
                                         as president of Tax Management Inc.
                                         from 1983 to 2000. Joined BNA in 1963.
<PAGE>14
Item X.              EXECUTIVE OFFICERS OF THE REGISTRANT  (Continued)
                     ------------------------------------

          Name           Age           Present position and prior experience
--------------------     ---           -------------------------------------
George J. Korphage        55           Vice President and Chief Financial
                                         Officer   Elected vice president in
                                         1988 and chief financial officer in
                                         1989.  Joined BNA in 1972.


Gilbert S. Lavine         50           Treasurer
                                         Elected to present position in 1998.
                                         Joined BNA in 1985.

Gregory C. McCaffery      41           Vice President and Editor-in-Chief
                                         Elected vice president and editor
                                         in chief in 2000. Previously was
                                         director of marketing and product
                                         development since 1996.
                                         Joined BNA in 1986.


Mary Patricia Swords      56           Vice President of Subscriber Relations
                                         Elected to present position in 1996.
                                         Joined BNA in 1977.


Robert L. Velte           54           Vice President for Strategic Development
                                         Elected to vice president in 1995.
                                         Joined BNA in 1976.


Paul N. Wojcik            53           President and Chief Executive Officer
                                         Elected president in 1995 and
                                         chief executive officer in 1997.
                                         Joined BNA in 1972.
<PAGE>15
                                     PART II


Item 5.     Market for the Registrant's Common Stock and Related Security
            -------------------------------------------------------------
            Holder Matters
            --------------
Market Information, Holders, and Dividends

There is no established public trading market for any of BNA's three classes of
stock, but the Stock Purchase and Transfer Plan provides a market in which Class
A stock can be bought and sold.

The Board of Directors semi-annually establishes the price at which Class A
shares can be bought and sold through the Stock Purchase and Transfer Plan and
declares cash dividends. In accordance with the corporation's bylaws, the price
and dividends on non-voting Class B and Class C stock are the same as on Class A
stock. Dividends have been paid continuously for 51 years, and they are expected
to continue.

As of March 1, 2002, there were 1,187 Class A shareholders, 280 Class B
shareholders, and 26 Class C shareholders. During 2001, the Company repurchased
1,809,143 shares of Class B stock and 27,315 shares of Class C stock from
retired employees.

Established stock price and dividends declared during 2001 and 2000 were as
follows:

      Stock Price
            January 1, 2000 - March 26, 2000                $7.80
            March 27, 2000 - September 24, 2000              8.45
            September 25, 2000 - March 25, 2001              8.85
            March 26, 2001 - September 23, 2001              9.60
            September 24, 2001 - December 31, 2001           9.75

      Record  Date and Dividend Amount
            March 25, 2000                                   $.14
            September 23, 2000                                .14
            March 24, 2001                                    .15
            September 22, 2001                                .15

The principal market for trading of voting shares of common stock of The Bureau
of National Affairs, Inc., is through the Trustee of the Stock Purchase and
Transfer Plan.
<PAGE>16
                                     PART II

Item 6.     Selected Financial Data
            -----------------------
                      The Bureau of National Affairs, Inc.
           Consolidated Operating and Financial Summary: 2001-1997
             (Dollar amounts in thousands, except per share data)


                                   2001     2000      1999     1998      1997
                                -----------------------------------------------

Operating Revenues              $305,965  $297,399 $283,959  $271,328  $246,290
Operating Expenses               260,653   250,728  226,228   291,489   269,365
-------------------------------------------------------------------------------
Operating Profit                  23,306    20,600   20,062    14,476    28,034
Non-operating Income:
  Investment Income                8,542     9,327    9,516     9,077     8,016
  Interest Expense                (6,000)   (1,654)  (1,026)     (899)      (59)
  Other Income (Expense)           4,421    (1,200)     112      (432)      427
-------------------------------------------------------------------------------
Income Before Income Taxes
  and Cumulative Effect of
  Accounting Change               21,439    34,507   31,908    28,346    28,446
Income Taxes                       8,177    11,353   10,898     8,753     8,885
                               ------------------------------------------------
Income from Operations            13,262    23,154   21,010    19,593    19,561
Cumulative Effect of
  Accounting Change (a)              ---    (7,470)     ---       ---       ---
                               ------------------------------------------------
Net Income                       $13,262   $15,684  $21,010   $19,593   $19,561
-------------------------------================================================
Profit Ratios (b):
  % of Operating Revenues            4.3       7.8      7.4       7.2       7.9
  % of Avg Stockholders'Equity      21.9      33.5     28.7      26.6      26.8
-------------------------------------------------------------------------------
Earnings Per Share from Operations  $.35      $.59     $.52      $.47      $.45
Cumulative Effect of Accounting
Change (a)                           ---      (.19)     ---       ---       ---
                               ------------------------------------------------
Total earnings per share             .35       .40      .52       .47       .45
                               ================================================
Dividends Per Share                  .30       .28      .26       .24       .22
-------------------------------================================================
Balance Sheet Data:
  Total Assets                  $387,538  $371,000 $322,728  $324,449  $300,900
  Long-Term Debt                  84,000    59,000   14,000    14,000       ---
-------------------------------================================================
Employee Data:
  Number of Employees              2,121     2,085    2,007     2,055     1,893
  Total Employment Costs        $162,060  $150,345 $146,628  $137,386  $128,095
-------------------------------================================================
Stockholder Data at Year-End:
  Number of Stockholders           1,807     1,782    1,836     1,791     1,752
  Common Shares Outstanding
    (In thousands)                37,492    38,797   40,305    41,140    42,499
-------------------------------================================================
Per share figures and number of shares outstanding have been adjusted to reflect
the five-for-one stock split effective September 23, 2001.

(a) Includes the  cumulative  effects of the change in accounting  for selling
expenses in 2000.

(b) Based on net income  excluding  the  cumulative  effect of the  accounting
change.
<PAGE>17
Selected Quarterly Data

The following is quarterly financial information (unaudited) for 2001 and 2000
(in thousands of dollars).

                                    First     Second     Third      Fourth
                                   Quarter    Quarter   Quarter    Quarter
              2001 (a)              Ended      Ended     Ended      Ended
                                   March 24   June 19   Sept. 11   Dec. 31
------------------------------------------------------------------------------
Revenues                           $65,925    $69,978   $71,366   $98,696
Gross Profit                        29,439     29,766    33,401    46,970
Net Income                           3,439      1,636     3,305     4,882

Earnings Per Share:                $   .09    $   .04   $   .09    $  .13


                                    First     Second     Third      Fourth
              2000 (a)             Quarter    Quarter   Quarter    Quarter
                                    Ended      Ended     Ended      Ended
                                   March 25   June 17   Sept. 9    Dec. 31
------------------------------------------------------------------------------

Revenues                           $63,293    $66,503   $64,108   $103,495
Gross Profit                        28,318     29,986    29,599     51,683
Income Before Cumulative Effect
  of Accounting Change               4,180      4,239     4,375     10,360
Cumulative Effect of Accounting
  Change                            (7,470)       ---       ---        ---
Net Income                          (3,290)     4,239     4,375     10,360

Earnings Per Share:
Income Before Cumulative Effect of
  Accounting Change                $   .10    $   .11   $   .11   $    .27
Cumulative Effect of Accounting
  Change                              (.19)       ---       ---        ---
                                   -----------------------------------------
Net Income                         $  (.09)   $   .11   $   .11   $    .27

(a)   Earnings per share figures adjusted to reflect the five-for-one stock
      split effective September 23, 2001.
<PAGE>18
                                     PART II

Item 7.     Management's Discussion and Analysis of Financial Condition
            -----------------------------------------------------------
            and Results of Operations
            -------------------------
FORWARD-LOOKING STATEMENTS

This Annual Report contains and incorporates by reference certain statements
that are not statements of historical fact but are forward-looking statements.
The use of such words as "believes," "expects," "estimates," "could," "should,"
and "will," and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause actual results to differ from those projected. Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as of the date hereof.

2001 vs. 2000

BNA's financial results in 2001 were adversely affected by two significant
factors. Acquisition-related expenses, primarily interest and non-cash
amortization expenses, reduced profits. In addition, the lingering economic
slowdown had a pervasive effect on BNA's business, reducing revenue growth and
profits.

Consolidated revenues of $305.9 million were up 2.9 percent compared to the
prior year while operating expenses increased 8.2 percent. The operating profit
was down 48.4 percent due to declines in each of the three operating segments.
Net income was $13.3 million, a decline of 42.7 percent, and earnings per share
were down 40.7 percent, to $.35, compared to the 2000 income before cumulative
effect of accounting change. Excluding the revenues and operating expenses of
two acquired businesses, consolidated revenues were essentially even with last
year, and operating profit was down 22.7 percent. The consolidated federal,
state, and local effective income tax rate increased to 38.1 percent in 2001
from 32.9 percent in 2000, mainly due to a higher state and local tax
assessment, which accounted for 4.4 percent of the increase.

The publishing operating segment --which aggregates the Parent with Tax
Management Inc. (excluding Software), IOMA, Pike & Fischer, Inc., BNA
International Inc., Kennedy Information, Inc., and BNA Washington Inc.--
generated 87 percent of consolidated revenues. Publishing revenues were up 3.0
percent, reflecting the acquisition of Kennedy, new products, and price
increases. Operating expenses increased 6.0 percent. Excluding the results of
Kennedy, revenues were flat, and operating expenses were up 1.2 percent. Fifteen
new products were launched in 2001. Development expenses for new products and
improvements on existing products were $4.0 million in 2001 and 2000. Operating
expenses in 2001 also include an identifiable $5.3 million for developing
improved business and publishing systems, compared to $4.8 million in 2000.
Operating profit was down 30.3 percent compared to 2000.

The printing operating segment, which includes The McArdle Printing Company,
Inc., experienced an 11.4 percent decrease in sales, reflecting a 14.3 percent
decrease from external customers and a 7.0 percent decrease in intersegment
revenues. Sales to commercial customers suffered from the general economic
slowdown, especially the reduced demand for financial printing caused by subdued
capital markets. Intercompany revenues continue to decline as Publishing segment
subscribers migrate from print to electronic products. Operating expenses
decreased 5.7 percent, due to lower variable costs and workforce reductions.
Printing operating profit was $174,000 in 2001, compared to $2.6 million in
2000.
<PAGE>19
The Software operating segment now combines BNA Software, a division of Tax
Management Inc., with STF Services Corporation, which was acquired in April
2001. Software revenues increased 29.4 percent due partially to the addition of
STF, but also because of a $1.9 million sale to a government agency. Operating
expenses were up 85 percent, reflecting higher BNA Software fulfillment costs
and higher staffing costs for product development and support, STF's operating
expenses, and amortization expenses related to the STF acquisition. Excluding
STF's results, revenues were up 16.5 percent and operating expenses were up 33.8
percent. The segment incurred a $.6 million operating loss in 2001 compared to a
$4.1 million operating profit in 2000.

Non-operating income increased $.5 million in 2001. Gains on sales of two
publications totaled $4.4 million. Investment income was lower due to lower
investment balances and lower market yields. Interest expense was up
substantially as a result of borrowings to finance the acquisitions of Kennedy
and STF.

2000 vs. 1999

Consolidated revenues of $297.4 million were up 4.7 percent over the prior year.
Operating expenses increased 3.3 percent, and operating profit increased 20.3
percent to $28 million. Excluding the financial results of BNA Communications,
which was sold in 1999, revenues grew 5.6 percent, and operating expenses were
up 4.3 percent. Net income for 2000 was negatively impacted by the adoption of a
new accounting standard. As discussed in Note 3 to the consolidated financial
statements, the Company adopted SEC Staff Accounting Bulletin No. 101: Revenue
Recognition in Financial Statements, effective January 1, 2000. The cumulative
effect of the accounting change was a net expense of $7.5 million. Net income
was $15.7 million and earnings per share were $.40. Excluding the cumulative
effect of the accounting change, income was $23.2 million, a 10.2 percent
increase from 1999 and earnings per share were $.59, an increase of 13.5
percent, also reflecting fewer outstanding shares. The consolidated federal,
state, and local effective income tax rate decreased to 32.9 percent in 2000
from 34.2 percent in 1999, mainly due to lower effective state and local taxes.

The publishing operating segment generated 86.9 percent of consolidated
revenues. Publishing revenues were up 4.7 percent, reflecting the acquisition of
Kennedy, new products and price increases. Operating expenses increased 4.0
percent. Excluding the results of Kennedy, revenues were up 3.9 percent, and
operating expenses were up 2.9 percent. Eighteen new products were launched in
2000. Development expenses for new products and improvements on existing
products were $4.0 million compared to $4.9 million in 1999. Operating expenses
in 2000 also include an identifiable $4.8 million for developing improved
business and publishing systems, compared to $5.6 million in 1999. Operating
profit was 13.6 percent higher than in 1999.

The printing operating segment achieved a 7.7 percent growth in revenues,
reflecting a 15.5 percent increase in revenues from external customers and a 2.3
percent decrease in intersegment revenues. Sales to external customers have
improved due to increased business from existing customers and to the addition
of new customers. Intersegment revenues are expected to continue to decline as
the Publishing product sales mix migrates from print to electronic format
products. Operating expenses increased 7.2 percent, including higher selling
expenses related to higher external sales. Printing operating profit increased
15.2 percent.

Software operating segment revenues increased 5.8 percent. Operating expenses
were down 7.3 percent as certain development costs were capitalized and
improvements made to production processes led to fewer software revisions.
Operating profit improved 66.2 percent.
<PAGE>20
Non-operating income was $2.1 million lower in 2000 due to higher interest
expense related to the Kennedy acquisition, slightly lower investment income,
and net losses on sales of assets, including an additional loss on the sale of
BNA Communications.

Cash Flows, Liquidity, and Financial Resources

The Company maintains its financial reserves in cash and investment securities,
which, along with its operating cash flows, are sufficient to fund ongoing
expenditures for operations and to support employee ownership. Cash provided
from operating activities decreased $16.5 million in 2001, reflecting a 4.1
percent increase in collections, and an 11.2 percent increase in operating
expenditures.

Capital expenditures netted to $30.4 million including $25.5 million for the
purchase of STF and $9.4 million for property and equipment additions and
capitalized software; $4.2 million was received in the sales of publications and
$.3 million was received as a purchase price adjustment for Kennedy Information.
Capital expenditures for 2002, are expected to be approximately $12.1 million.

Cash provided by financing activities netted to $.9 million. The Company
borrowed $25 million to partially finance the STF acquisition. Sales of Class A
capital stock to employees totaled $7.6 million. Capital stock repurchases
amounted to $20.1 million, most of which were mandatory tenders. In addition,
the Company paid cash dividends of $11.5 million in 2001.

The Company's commitment to employee ownership is supported by its policy to
repurchase all stock tendered by stockholders that is in excess of employee
stock plan purchases. As of December 31, 2001, capital stock with a current
market value of $23.1 million and $14.4 million are known or expected to be
tendered in 2002 and 2003, respectively. The actual amount repurchased will
likely be higher.

Contractural cash obligations as of December 31, 2001 were as follows (in
thousands of dollars):

                                           Payments Due by Period
Contractual                       Less than      1-3          4-5       After 5
Obligations:            Total       1 Year      Years        Years       Years
-------------------------------------------------------------------------------
Long-Term Debt        $ 84,000     $  ---      $14,000      $15,000     $55,000
Operating Leases        33,762      7,713       12,894       10,343       2,812
-------------------------------------------------------------------------------
Total                 $117,762     $7,713      $26,894      $25,343     $57,812

With nearly $148 million in cash and investment portfolios and a $5 million loan
facility, the financial position and liquidity of the Company remains very
strong. Since subscription monies are collected in advance, cash flows from
operations, along with existing financial reserves and proceeds from the sales
of capital stock, have been sufficient in past years to meet all operational
needs, new product introductions, debt repayments, most capital expenditures,
and, in addition, provide funds for dividend payments and the repurchase of
stock tendered by shareholders. Should more funding become necessary or
desirable in the future, the Company believes that it has additional debt
capacity based on its operating cash flows and real estate equity.

Other Disclosures

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
<PAGE>21
the reporting period. The Company evaluates its estimates and assumptions on an
ongoing basis based on a combination of historical information and various other
assumptions that are believed to be reasonable under the particular
circumstances. Actual results may differ from these estimates based on different
assumptions or conditions. The Company believes the critical accounting policies
that most impact the consolidated financial statements are described below.

The Company has $76.7 million of goodwill at year-end 2001. As described in Note
7 to the Company's financial statements, goodwill will no longer be amortized
beginning in 2002. Goodwill amortization expense was $3.6 million in 2001.
Although amortization expense will no longer be recorded, the carrying amount of
goodwill is now subject to periodic testing. The initial test will be completed
during the second quarter of 2002, and annual testing is required thereafter.
Goodwill that is not supported by measures of fair value will be written down to
its fair value, resulting in an impairment expense. Fair values will be
determined by estimating the price at which related net assets could be sold,
and/or by projecting future cash flows. Because fair value measures are
dependent on acquisition-price multiples and projections of future cash flows,
they are subject to change and therefore must be tested at least annually. If
estimates of future cash flows are not achieved, or if acquisition-price
multiples decline, measures of fair value may decline, resulting in an
impairment expense.

The Company has postretirement benefit liabilities totaling $71.6 million at
year-end 2001, as described in Note 4 to the Company's financial statements.
Independent actuaries use a number of assumptions to compute these liabilities,
and related benefit expenses. These include life expectancies, retirement ages,
health care cost trends, rates of compensation increases, discount rates, and
returns on plan assets. Changes in these assumptions can and do change the
amounts of postretirement benefit liabilities and related expenses. The Company,
in consultation with the actuaries, periodically reviews the assumptions and
revises them when appropriate.

The Company has $37.2 million of intangible assets, as summarized in Note 9 to
the Company's financial statements, at year-end 2001. Most of these are
identified assets of Kennedy and STF at the time of their respective
acquisitions, and their initial values and estimated lives were established by
independent appraisals. In addition, intangible assets include software that is
used internally and software developed for sale. The Company periodically
evaluates the recoverability of the intangible assets, which are amortized, and
their estimated remaining lives. If an impairment in value occurs, an impairment
expense will be recorded reducing earnings, and estimated amortization periods
may be reduced.

The Company has recorded $29.6 million of net deferred tax assets as of year-end
2001. The ultimate realization of deferred tax assets is dependent upon future
taxable income during the periods in which those temporary differences become
deductible. The Company has consistently achieved profitability and taxable
income. In the opinion of management, this trend will continue, and it is more
likely than not that the recorded deferred tax assets will be fully realized and
no valuation allowance is necessary.
<PAGE>22
Accounting Pronouncements

The Financial Accounting Standards board issued SFAS No. 143, Accounting for
Asset Retirement Obligations, in August 2001, and SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, in October 2001. SFAS 143
requires that the fair value of an asset retirement obligation be recorded as a
liability in the period in which it incurs a legal obligation. SFAS 144 serves
to clarify and further define the provisions of SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
SFAS 144 does not apply to goodwill and other intangible assets that are not
amortized. The Company will adopt these statements effective January 1, 2002.
The effect of adopting these Statements is not expected to have a material
effect on the Company's future financial position or overall trends in results
of operations.


Item 7a. Quantitative And Qualitative Disclosures About Market Risk
         ----------------------------------------------------------
The Company is exposed to interest rate risks in its investment portfolio and
its term debt liability. A hypothetical ten percent increase in market interest
rates would result in higher interest expense on its term debt, but the increase
would be immaterial.

The maturity dates and average interest yields for fixed-income securities debt
held in the Company's investment portfolio as of December 31, 2001 was as
follows (in thousands of dollars):

Expected Maturity Date
-------------------------------------------------------------------------------
                      2002      2003      2004     2005      2006    Thereafter
-------------------------------------------------------------------------------
Municipal Bonds      $5,723   $12,218   $22,854   $5,396    $8,911    $42,630

Average Interest Rate  5.5%      5.1%      5.3%     5.1%      5.4%       5.4%

Corporate Debt       $1,564    $7,859     $ 992     ----      ----       ----

Average Interest Rate  7.8%      6.4%      5.4%
-------------------------------------------------------------------------------

The Company manages interest rate risk in its investment portfolio by
diversifying the maturities of its fixed-income investments. Approximately 61
percent of these instruments at year-end 2001 mature within five years.
Shorter-term maturity investments reduce the risk that any decline in their fair
value will have a permanent adverse effect on the Company's financial position.
The Company does not hold securities for trading purposes, or use derivative
financial instruments.
<PAGE>23
                                     PART II

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



                  THE BUREAU OF NATIONAL AFFAIRS, INC.

                   Consolidated Financial Statements

                       December 31, 2001 and 2000

              (With Independent Auditors' Report Thereon)


<PAGE>24
                      Independent Auditors' Report


The Board of Directors and Stockholders
The Bureau of National Affairs, Inc.:

We have audited the consolidated  financial  statements of The Bureau of
National  Affairs,  Inc. and  subsidiaries as listed in the accompanying
index in Part IV, Item  14(a)(1).  In connection  with our audits of the
consolidated  financial  statements,  we have also audited the financial
statement  schedule as listed in the accompanying index in Part IV, Item
14(a)(2).  These  consolidated  financial  statements  and the financial
statement schedule are the  responsibility of the Company's  management.
Our  responsibility  is to  express  an  opinion  on these  consolidated
financial  statements and the financial  statement schedule 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 The
Bureau of National  Affairs,  Inc. 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.  Also in our opinion,  the related  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.



                        s\ KPMG LLP
                        KPMG LLP

Washington, D.C.
February 27, 2002





<PAGE>25
                 THE BUREAU OF NATIONAL AFFAIRS, INC.
                      CONSOLIDATED BALANCE SHEETS
                       DECEMBER 31, 2001 AND 2000
                       (In thousands of dollars)


                                 ASSETS

                                                          December 31,
                                                   --------------------------
                                                      2001            2000
                                                   ----------     -----------
    CURRENT ASSETS:
    Cash and cash equivalents (Note 5)             $  23,972      $   16,190
    Short-term investments (Note 5)                    7,288           3,971
    Receivables (Note 9)                              45,097          48,985
    Inventories (Note 9)                               3,726           4,542
    Prepaid expenses                                   4,440           4,444
    Deferred selling expenses (Note 3)                 6,265           8,320
    Deferred income taxes (Note 8)                     5,951           3,027
                                                   ----------     -----------
    Total current assets                              96,739          89,479

    MARKETABLE SECURITIES (Note 5)                   116,656         132,098
    PROPERTY AND EQUIPMENT (Note 9)                   36,465          37,126
    DEFERRED INCOME TAXES (Note 8)                    23,637          24,950
    GOODWILL (Note 7)                                 76,700          57,082
    INTANGIBLE AND OTHER ASSETS (Note 9)              37,341          30,265
                                                   ----------     -----------
    Total assets                                   $ 387,538      $  371,000
                                                   ==========     ===========





                                                             (Continued)


<PAGE>26
                  THE BUREAU OF NATIONAL AFFAIRS, INC.
                      CONSOLIDATED BALANCE SHEETS
                       DECEMBER 31, 2001 AND 2000
                       (In thousands of dollars)


                  LIABILITIES AND STOCKHOLDERS' EQUITY

                                                          December 31,
                                                   --------------------------
                                                      2001            2000
                                                   ----------     -----------
    CURRENT LIABILITIES:
    Payables and accrued liabilities (Note 9)      $   44,721     $    37,600
    Deferred revenues (Note 3)                        132,378         133,206
                                                   ----------     -----------
    Total current liabilities                         177,099         170,806

    LONG-TERM DEBT (Note 10)                           84,000          59,000
    POSTRETIREMENT BENEFITS, less current portion      65,734          69,757
    (Note 4)
    OTHER LIABILITIES                                   5,829           5,324
                                                   ----------     -----------
    Total liabilities                                 332,662         304,887
                                                   ----------     -----------

    COMMITMENTS AND CONTINGENCIES (Notes 11 & 12)

    STOCKHOLDERS' EQUITY (Note 12):
    Common stock issued, $1.00 par value --
     Class A -- 30,000,000 shares
      in 2001; 6,478,864 in 2000                       30,000           6,479
     Class B -- 24,634,865 shares
      in 2001; 4,926,973 in 2000                       24,635           4,927
     Class C -- 2,531,680 shares
      in 2001; 506,336 in 2000                          2,532             506
    Additional paid-in capital                          1,249          48,920
    Retained earnings                                  86,373          84,604
    Treasury stock, at cost                           (89,181)        (78,986)
    Elements of other comprehensive income:
     Net unrealized (loss) on marketable                (719)           (314)
      securities
     Foreign currency translation adjustment             (13)            (23)
                                                   ----------     -----------
    Total stockholders' equity                         54,876          66,113
                                                   ----------     -----------
    Total liabilities and stockholders' equity     $  387,538     $   371,000
                                                   ==========     ===========


      See accompanying notes to consolidated financial statements.

<PAGE>27
                  THE BUREAU OF NATIONAL AFFAIRS, INC.
                   CONSOLIDATED STATEMENTS OF INCOME
             YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
          (In thousands of dollars, except per share amounts)


                                                           Percent of Operating
                                                                Revenue
                                                           ---------------------
                                  2001    2000     1999     2001   2000   1999
                               -------- -------- --------  ------ ------ ------
OPERATING REVENUES
(Note 3)                       $305,965 $297,399 $283,959  100.0% 100.0% 100.0%
                               -------- -------- --------  ------ ------ ------
OPERATING EXPENSES
 (Notes 3,4,7,9 and 11):
 Editorial, production, and     166,389  157,813  155,228   54.4   53.1   54.7
 Selling                         66,282   62,776   60,307   21.7   21.1   21.2
 General and administrative      55,537   46,156   42,856   18.1   15.5   15.1
 Profit sharing                   3,281    2,620    2,262    1.1    0.9    0.8
                               -------- -------- --------  ------ ------ ------
                                291,489  269,365  260,653   95.3   90.6   91.8
                               -------- -------- --------  ------ ------ ------
OPERATING PROFIT                 14,476   28,034   23,306    4.7    9.4    8.2
                               -------- -------- --------  ------ ------ ------
NON-OPERATING INCOME:
 Investment income (Note 5)       8,542    9,327    9,516    2.8    3.1    3.4
 Interest expense (Note 10)      (6,000)  (1,654)  (1,026)  (2.0)  (0.5)  (0.4)
 Other income (expense)           4,421   (1,200)     112    1.5   (0.4)   ---
                               -------- -------- --------  ------ ------ ------
TOTAL NON-OPERATING INCOME        6,963    6,473    8,602    2.3    2.2    3.0
                               -------- -------- --------  ------ ------ ------
INCOME BEFORE PROVISION FOR
 INCOME TAXES                    21,439   34,507   31,908    7.0   11.6   11.2
PROVISION FOR INCOME TAXES
 (Note 8)                         8,177   11,353   10,898    2.7    3.8    3.8
                               -------- -------- --------  ------ ------ ------

INCOME BEFORE CUMULATIVE
 EFFECT OF ACCOUNTING CHANGE     13,262   23,154   21,010    4.3%   7.8%   7.4%
                               ======== ======== ========  ====== ====== ======
CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING FOR SELLING EXPENSE
 (Note 3)                           ---   (7,470)    ---
                               -------- -------- --------
NET INCOME                     $ 13,262 $ 15,684 $ 21,010
                               ======== ======== ========

EARNINGS PER SHARE (Note 12)

INCOME BEFORE CUMULATIVE
 EFFECT OF ACCOUNTING CHANGE      $ .35    $ .59    $ .52
CUMULATIVE EFFECT OF
 ACCOUNTING CHANGE                  ---     (.19)     ---
                               -------- -------- --------
NET INCOME                        $ .35    $ .40    $ .52
                               ======== ======== ========

      See accompanying notes to consolidated financial statements.

<PAGE>28
                  THE BUREAU OF NATIONAL AFFAIRS, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
             YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
                       (In thousands of dollars)


                                              2001         2000         1999
                                           ---------    ---------    ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                $  13,262    $  15,684    $  21,010
 Items with different cash requirements
  than that reflected in net income--
   Cumulative effect of accounting change        ---        7,470          ---
   Depreciation and amortization              14,794       11,129       10,637
   (Gain) on sales of securities              (1,711)        (913)      (1,497)
   (Gain)loss on sales of assets              (4,421)       1,200         (112)
   Others                                        483         (137)        (407)
 Changes in operating assets and liabilities--
  Receivables                                  3,251       (4,248)         773
  Deferred revenues                             (276)       4,301         (859)
  Payables and accrued liabilities            (3,018)       4,656       (1,182)
  Postretirement benefits                        122         (372)       1,023
  Deferred income taxes                       (1,392)         246        1,827
  Deferred selling expenses                    1,972           72          866
  Inventories                                    772          200          (52)
  Other assets and liabilities--net              750        1,814         (209)
                                           ---------    ---------    ---------
Net cash provided from operating activities   24,588       41,102       31,818
                                           ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures
  Acquisition of businesses (net of
   $1,293 cash acquired in 2001)             (25,219)     (46,360)         ---
  Purchases of equipment and furnishings      (3,558)      (3,345)      (2,803)
  Capitalized software                        (4,840)      (4,345)      (6,642)
  Building improvements                         (972)        (267)        (328)
  Proceeds from sales of assets                4,156          156        1,120
  Purchase of publishing assets                  ---       (2,255)      (2,526)
                                           ---------    ---------    ---------
  Net cash used for capital expenditures     (30,433)     (56,416)     (11,179)
                                           ---------    ---------    ---------


                                                             (Continued)


<PAGE>29
                  THE BUREAU OF NATIONAL AFFAIRS, INC.
                 CONSOLIDATED STATEMENTS OF CASH FLOWS
             YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
                       (In thousands of dollars)


                                              2001         2000         1999
                                           ---------    ---------    ---------
 Securities investments
  Proceeds from sales and maturities         162,655      102,403       57,142
  Purchases                                 (149,924)    (107,805)     (59,880)
                                           ---------    ---------    ---------
  Net cash provided by (used for)
   securities investments                     12,731       (5,402)      (2,738)
                                            ---------    ---------   ---------
Net cash used for investing activities       (17,702)     (61,818)     (13,917)
                                           ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Sales of capital stock to employees           7,552        6,481        6,493
 Purchases of treasury stock                 (20,163)     (19,588)     (12,816)
 Dividends paid                              (11,493)     (11,187)     (10,637)
 Borrowings                                   25,000       45,000          ---
                                           ---------    ---------    ---------
 Net cash provided by (used for)
financing activities                             896       20,706      (16,960)
                                           ---------    ---------    ---------
NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                          7,782          (10)         941

CASH AND CASH EQUIVALENTS,
 beginning of year                            16,190       16,200       15,259
                                           ---------    ---------    ---------
CASH AND CASH EQUIVALENTS, end of year     $  23,972    $  16,190    $  16,200
                                           =========    =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
  Interest paid                            $   5,436    $     968    $   1,063
  Income taxes paid                           13,110       11,730        8,973

NONCASH INVESTING ACTIVITIES-
Acquisitions of businesses:
  Fair value of assets acquired            $  33,447    $  47,561
  Cash paid                                  (26,753)     (46,360)
                                           ---------    ---------
  Liabilities assumed                      $   6,694    $   1,201
                                           =========    =========


      See accompanying notes to consolidated financial statements.



<PAGE>30
<TABLE>
                  THE BUREAU OF NATIONAL AFFAIRS, INC.
       CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
             YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
                       (In thousands of dollars)
<CAPTION>
                                   Comprehensive  Capital  Additional                          Accum.
                                      Income       Stock    Paid-In    Retained   Treasury  Comprehensive
                                     (Note 13)    Issued    Capital    Earnings    Stock       Income
                                   ------------   -------  ---------   --------   --------  -------------
<S>                                <C>            <C>      <C>         <C>        <C>       <C>
BALANCE, January 1, 1999                          $11,912   $39,782     $69,734   $(50,418)  $   3,011
 Net Income                          $ 21,010         ---       ---      21,010        ---         ---
 Other Comprehensive Income, net
  of tax:
   Unrealized (loss) on
    marketable securities              (5,883)        ---       ---         ---        ---      (5,883)
   Currency translation
    adjustment                             15         ---       ---         ---        ---          15
                                   ------------
 Comprehensive Income                $ 15,142
                                   ============
 Sales of Class A treasury
  shares to employees                                 ---     4,639         ---      1,854         ---
 Repurchases of shares                                ---       ---         ---    (12,816)        ---
 Cash dividends--$.26 per share                       ---       ---     (10,637)       ---         ---
                                                  -------  ---------   --------   --------  -------------
BALANCE, December 31, 1999                         11,912    44,421      80,107    (61,380)     (2,857)
 Net Income                          $ 15,684         ---       ---      15,684        ---         ---
 Other Comprehensive Income, net
  of tax:
   Unrealized gain on
    marketable securities               2,488         ---       ---         ---        ---       2,488
   Currency translation
    adjustment                             32         ---       ---         ---        ---          32
                                   ------------
  Comprehensive Income             $   18,204
                                   ============
 Sales of Class A treasury
  shares to employees                                 ---     4,499         ---      1,982         ---
 Repurchases of shares                                          ---         ---    (19,588)        ---
 Cash dividends--$.28 per share                                 ---     (11,187)       ---         ---
                                                  -------  ---------  ---------   --------   ------------
 BALANCE, December 31, 2000                        11,912    48,920      84,604    (78,986)       (337)
  Net Income                       $   13,262         ---       ---      13,262        ---         ---
  Other Comprehensive Income, net
   of tax:
    Unrealized (loss) on
     marketable securities              (405)         ---       ---         ---        ---        (405)
    Currency translation
     adjustment                           10          ---       ---         ---        ---          10
                                   ------------
  Comprehensive Income             $  12,867
                                   ============
 Sales of Class A treasury
  shares to employees                                 ---     5,103         ---      2,449         ---
 Retirement of Class A treasury
  shares                                             (479)   (7,040)        ---      7,519         ---
 Five-for-One stock split                          45,734   (45,734)        ---        ---         ---
 Repurchases of shares                                ---       ---         ---    (20,163)        ---
 Cash dividends--$.30 per share                       ---       ---     (11,493)       ---         ---
                                                  -------  ---------  ---------   --------   ------------
BALANCE, December 31, 2001                        $57,167  $  1,249   $  86,373   $(89,181)  $    (732)
                                                  =======  =========  =========   ========   ============
</TABLE>
      See accompanying notes to consolidated financial statements.


<PAGE>31
                  THE BUREAU OF NATIONAL AFFAIRS, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999

(1)   PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

      The accompanying  consolidated  financial  statements  include the
      accounts of The Bureau of National  Affairs,  Inc.  (the  Parent),
      and  its  subsidiary   companies   (consolidated,   the  Company).
      Material   intercompany   transactions   and  balances  have  been
      eliminated.  Certain prior year  balances  have been  reclassified
      to conform to the current year presentation.

      The carrying value of financial  assets and  liabilities  reported
      in  the  financial   statements,   other  than   long-term   debt,
      approximates  fair value.  The reported amounts of some assets and
      liabilities,   and  the  disclosures  of  contingent   assets  and
      liabilities,  result from  management  estimates  and  assumptions
      which are required to prepare  financial  statements in conformity
      with  accounting  principles  generally  accepted  in  the  United
      States  of  America.   Estimates  and  assumptions  are  used  for
      measuring  such items as  postretirement  benefits,  deferred  tax
      assets,  the allowance for doubtful  accounts,  intangible assets,
      and  goodwill.  Estimates  and  assumptions  may also  affect  the
      reported  amounts of revenues  and expenses  during the  reporting
      period.  Actual results could differ from those estimates.

(2)   ACQUISITIONS AND DISPOSITIONS

      In April 2001, the Company  acquired all of the outstanding  stock
      of    STF    Services     Corporation    (STF).    STF    converts
      government-approved  paper forms into interactive electronic forms
      that are marketed  directly and licensed to publishers,  including
      the Company.  The Company  paid $26.8  million in cash and assumed
      liabilities  of $6.7  million.  Additional  monies  could  also be
      paid if  performance  targets are  exceeded  for fiscal years 2002
      through 2004. The  acquisition  was partially  financed with a $25
      million  loan  from an  insurance  company.  The  acquisition  was
      accounted  for as a purchase  and,  accordingly,  STF's  financial
      results  have been  included  with those of the Company  since the
      acquisition date. Based on an independent  appraisal, a portion of
      the  purchase  price  was  allocated  to  identifiable  intangible
      assets  that are being  amortized  over three to five  years.  The
      majority of the  purchase  price was  assigned to goodwill  and is
      being amortized over 12 years.

      In November 2000,  the Company  acquired all of the publishing and
      operating  assets  of  Kennedy  Information,   LLC  (Kennedy),   a
      publisher   of   newsletters,    magazines,    directories,    and
      conferences.  The Company  paid $46.4  million in cash and assumed
      liabilities of $1.2 million.  Additional monies could also be paid
      out if  performance  targets are  exceeded  for fiscal  years 2002
      through 2004. The  acquisition  was partially  financed with a $45
      million  loan  from an  insurance  company.  The  acquisition  was
      accounted for as a purchase and, accordingly,  Kennedy's financial
      results  have been  included  with those of the Company  since the
      acquisition date. Based on an independent  appraisal, a portion of
      the  purchase  price  was  allocated  to  identifiable  intangible
      assets  that are  being  amortized  over  three to 10  years.  The
      majority of the  purchase  price was  assigned to goodwill  and is
      being amortized over 25 years.

      The following  unaudited pro forma information  presents a summary
      of  consolidated  results of  operations  of the Company  combined
      with  Kennedy and STF as if the  acquisition  had  occurred at the
      beginning   of   1999.   The  pro   forma   information   includes
      adjustments for interest  expense that would have been incurred to
      finance the  purchase,  and  amortization  of  goodwill  and other
      intangible   assets,   together  with  related  income  taxes  (in
      thousands, except per share data).

                                       2001        2000        1999
                                   ----------   ----------   ----------
        Revenues                   $  309,678   $  313,482   $  295,295
        Net Income                 $   14,766   $   12,435   $   14,720
        Earnings per share         $      .39   $      .31   $      .36

                                                            (Continued)

<PAGE>32
      On a pro forma basis,  earnings per share would have  increased by
      $.04 in 2001,  and decreased by $.09 and $.16,  for 2000 and 1999,
      respectively.   However,  these  pro  forma  results  may  not  be
      indicative of the results of operations  which would have resulted
      had STF,  Kennedy,  and the  Company  been a  consolidated  entity
      during  those  years or of future  results  of  operations  of the
      consolidated   entities,  and  are  not  indicative  of  what  the
      purchase price would have been at that time.

      The  Company  sells  publications  from  time to  time.  Sales  of
      publishing  assets have resulted in gains of $4,430,000,  $16,000,
      and $569,000,  for 2001, 2000, and 1999  respectively,  which have
      been  recorded  as  other  income.   The  revenues  and  operating
      expenses of the publications sold were not significant.

      During 2000,  the Company  purchased  subscriber  lists from other
      publishers.   The  total  cost  was   $3,255,000,   consisting  of
      $2,255,000  in cash and the  balance in assumed  liabilities.  The
      cost was assigned to subscription lists.

      In August 1999, the Company sold BNA  Communications  Inc. (BNAC),
      a  media-based  training  enterprise.  The  sales  price  was $2.1
      million,  consisting  of  cash  and  royalty  receivables,  and an
      after-tax  loss of $188,000  was  recorded in 1999.  In 2000,  the
      collection  of  the  receivable  became  doubtful  and  was  fully
      reserved,  resulting in an additional  after-tax loss of $613,000.
      BNAC's  revenues  were  $2,262,000  in 1999  (prior to the  sale);
      operating expenses were $2,460,000 in 1999.

      During 1999,  the Company  purchased  subscriber  lists from other
      publishers.   The  total  cost  was   $3,085,000,   consisting  of
      $2,526,000  in cash and the  balance in assumed  liabilities.  The
      cost was assigned to subscription lists.




(3)         RECOGNITION OF REVENUES AND SELLING EXPENSES

      Subscription  revenues and related sales  commission  expenses are
      deferred and  amortized  over the  subscription  terms,  which are
      primarily one year.  The deferred  revenues,  which consist almost
      entirely of deferred subscription  revenues, are classified on the
      balance  sheet  as a  current  liability;  however,  the  cost  to
      fulfill   the   Company's   subscription    obligation   will   be
      substantially  less  than the  liability  amount  shown.  Software
      revenues are recognized at the time of shipment,  net of a reserve
      for  returns.  Advertising  expenses  were  $10,275,000  in  2001,
      $8,423,000 in 2000 and $11,963,000 in 1999.

      Prior to  2000,  the  Company  deferred  all  subscription-related
      field-selling  expenses.  Effective  January 1, 2000,  the Company
      adopted  SEC  Staff   Accounting   Bulletin   No.   101,   Revenue
      Recognition  in Financial  Statements;  which permits the deferral
      of only direct and incremental  expenses (sales  commissions) when
      related  revenues  are  deferred.  The  cumulative  effect of this
      change in accounting  was to write off  $12,276,000  in previously
      deferred  selling  expenses,  resulting  in a non-cash  expense of
      $7,470,000 after taxes.



                                                             (Continued)


<PAGE>33

(4)         EMPLOYEE BENEFIT PLANS

      The Company has  noncontributory  defined  benefit  pension  plans
      covering   employees   of  the  Parent  and   certain   subsidiary
      companies.  Benefits  are based on years of  service  and  average
      annual  compensation  for the highest  paid five years  during the
      last 10 years of service.  The plans provide for  five-year  cliff
      vesting.

      Pension  expense is  recorded  on an accrual  basis in  accordance
      with  financial  reporting   standards.   Components  of  the  net
      pension expense,  based on the actuarial study as of January 1 for
      each year, were as follows (in thousands of dollars):

                                                 2001        2000       1999
                                               ---------   ---------  ---------
 Service cost benefits earned during the year   $ 4,863    $  4,472    $ 4,689
 Interest cost                                    7,642       7,183      6,514
 Expected return on plan assets during the year  (7,409)     (7,436)    (7,058)
 Recognized net actuarial gain and amortization
  of transition assets and prior service costs     (454)     (1,042)      (164)
                                               ---------   ---------  ---------
         Net pension expense                    $ 4,642    $  3,177   $  3,981
                                               =========   =========  =========

      In addition to providing  pension  benefits,  the Company  extends
      certain   health   care  and  life   insurance   benefits   (other
      postretirement  benefits)  to  retired  employees.   Most  of  the
      Company's  employees  are  eligible  for  these  benefits  if they
      retire while working for the Company.

      Other  postretirement  benefits  expense is recorded in accordance
      with financial  reporting standards which require that the present
      value of these  benefits  be  accrued  during  employees'  working
      careers.  Components of the postretirement  benefit expense, based
      on the  actuarial  study as of  January 1 for each  year,  were as
      follows (in thousands of dollars):

                                                  2001        2000      1999
                                               ---------   ---------  --------
 Service cost benefits earned during the year   $ 1,989    $  1,911   $  2,004
 Interest cost                                    3,611       3,477      2,889
 Expected return on plan assets during the year  (1,489)     (1,053)      (539)
 Recognized net actuarial gain                     (649)       (775)      (734)
 Amortization of prior service cost                 (54)        (54)       (55)
                                               ----------  ---------- --------
         Other postretirement benefits expense  $ 3,408    $  3,506   $  3,565
                                               ==========  ========== ========

                                                             (Continued)


<PAGE>34

      The   following   table  sets  forth  the   changes  in   benefits
      obligations  and assets,  the funded status of the plans,  and the
      liabilities  recognized  in  the  Company's  Consolidated  Balance
      Sheets  as  of  December  31  (in  thousands  of  dollars,  except
      percentages):

                                                                 Other
                                      Pension Benefits      Postretirement
                                                               Benefits
                                    --------------------- --------------------
                                       2001       2000       2001      2000
                                    ---------- ---------- ---------- ---------
   Change in benefit obligation:
   Benefit obligation--January 1    $ 101,455  $  88,768  $  50,872  $  43,872
   Service cost                         4,863      4,472      1,989      1,911
   Interest cost                        7,642      7,183      3,611      3,477
   Actuarial (gain) loss                5,889      7,739     (1,667)     3,221
   Benefits paid                       (5,083)    (6,707)    (1,759)    (1,609)
                                    ---------- ---------- ---------- ---------
   Benefit obligation--December 31    114,766    101,455     53,046     50,872
                                    ---------- ---------- ---------- ---------
   Change in plan assets:
   Fair value of plan assets-Jan.1     89,430     89,384     17,520     12,414
   Actual return on plan assets        (1,680)     6,610       (557)       106
   Employer contribution                4,000        ---      2,000      5,000
   Benefits paid                       (4,919)    (6,564)       ---        ---
                                    ---------- ---------- ---------- ---------
   Fair value of plan assets--Dec.31   86,831     89,430     18,963     17,520
                                    ---------- ---------- ---------- ---------
   Projected benefit obligation in
    excess of plan assets              27,935     12,025     34,083     33,352
   Unrecognized transition asset          376        751        ---        ---
   Unrecognized net gain (loss)        (1,889)    13,233     10,779     11,861
   Unrecognized prior service cost         69          4        287        292
                                    ---------- ---------- ---------- ---------
   Accrued liability                   26,491     26,013     45,149     45,505
     Less current portion               4,165        164      1,741      1,597
                                    ---------- ---------- ---------- ---------
   Long-term portion                $  22,326  $  25,849  $  43,408  $  43,908
                                    ========== ========== ========== =========

   Assumed discount rate                 7.0%      7.25%       7.0%     7.25%
   Assumed rate of compensation
    increase                             5.0%       5.0%       ---       ---
   Expected long term rate of
    return on assets                     8.5%       8.5%       8.5%      8.5%

      Plan assets  include  cash  equivalents,  equity  securities,  and
      fixed income  securities.  The benefit  obligations as of December
      31, 2001 have been calculated by an independent actuary.

                                                             (Continued)


<PAGE>35

      The Company's  funding  practice with respect to pension  benefits
      is to  contribute  amounts  which,  at a  minimum,  satisfy  ERISA
      requirements.  The  Company  contributed  $4,000,000  in 2001 and,
      due to Internal Revenue Service funding limitations,  none in 2000
      or   1999.   The   Company's   policy   with   respect   to  other
      postretirement  benefits  is to fund these  benefits as claims and
      premiums  are paid or through a Voluntary  Employees'  Beneficiary
      Association (VEBA) trust.

      The  December  31,  2001  postretirement  benefit  obligation  was
      determined  using an  assumed  health  care cost trend rate of 4.5
      percent  in 2002  and each  year  thereafter  over  the  projected
      payout  period of the  benefits.  A one  percent  increase  in the
      assumed  health care cost trend rate for each year would  increase
      the year-end  postretirement  benefit  obligation  by $9.1 million
      and the 2001  postretirement  benefit  expense by $1.1 million.  A
      one percent  decrease  in the assumed  health care cost trend rate
      would  decrease  the  postretirement  benefit  obligation  by $7.3
      million and the postretirement benefit expense by $.9 million.

      In  addition,  some  acquired  subsidiary  companies  have defined
      contribution  pension  plans  and  union-sponsored  multi-employer
      pension  plans.  Contributions  under  some of these  plans are at
      the  discretion  of the  Board  of  Directors  of  the  respective
      subsidiary   companies.   Pension  expense  for  these  plans  was
      $1,467,000 in 2001, $1,282,000 in 2000, and $1,126,000 in 1999.


 (5)  INVESTMENTS AND INVESTMENT INCOME

      Cash and investments were as follows (in thousands of dollars):

                                                        December 31,
                                                  --------------------------

                                                     2001           2000
                                                  -----------    -----------

        Cash and cash equivalents                 $   23,972     $    16,190
        Short-term investments                         7,288           3,971
        Marketable securities                        116,656         132,098
                                                  -----------    -----------

        Total                                     $  147,916     $   152,259
                                                  ===========    ===========

      Cash  equivalents  consist  of  short-term  investments,   with  a
      maturity  of  three  months  or  less  at the  time  of  purchase.
      Short-term investments consist of other fixed-income  investments,
      maturing  in one year or less.  Marketable  securities  consist of
      fixed-income  securities maturing in more than one year and equity
      securities.

                                                             (Continued)


<PAGE>36

      Investment  income  consisted of the following (in thousands
        of dollars):

                                              2001        2000        1999
                                            ---------   ---------   ----------
        Interest income                     $   6,066   $   7,592   $   6,561
        Dividend income                           765         822       1,458
        Net gain on sales of securities         1,711         913       1,497
                                            ---------   ---------   ----------
        Total                               $   8,542   $   9,327   $   9,516
                                            =========   =========   ==========

      Proceeds  from  the  sales  and  maturities  of  securities   were
      $162,655,000,  $102,403,000,  and  $57,142,000 in 2001,  2000, and
      1999,  respectively.  Gross realized gains and (losses) from these
      sales were  $1,909,000  and  $(198,000)  in 2001,  $1,043,000  and
      $(130,000) in 2000,  and  $1,587,000  and  $(90,000) in 1999.  The
      specific  identification  method  is  used in  computing  realized
      gains and losses.

      The   Company's   investment    securities   are   classified   as
      available-for-sale  and are reported at their fair values  (quoted
      market price), which were as follows (in thousands of dollars):

                                                Gross      Gross
                                  Amortized   Unrealized Unrealized    Fair
        December 31, 2001           Cost        Gains     Losses      Value
                                  ----------  ---------- ---------- -----------

        Equity securities         $   11,238  $     ---  $     (697)  $ 10,541
        Municipal bonds              100,273      1,248      (1,753)    99,768
        Corporate debt                13,538        127         (30)    13,635
                                  ----------  ---------- ---------- -----------
        Total                     $  125,049  $   1,375  $   (2,480)  $123,944
                                  ==========  ========== ========== ===========

        December 31, 2000

        Equity securities         $   13,131  $     232  $     (804)  $ 12,559
        Municipal bonds              117,565      1,562      (1,529)   117,598
        Corporate debt                 5,856         91         (35)     5,912
                                  ----------  ---------- ---------- -----------
        Total                     $  136,552  $   1,885  $   (2,368)  $136,069
                                  ==========  ========== ========== ===========


                                                             (Continued)


<PAGE>37
      Fair  values  of  the  Company's   fixed-income   securities   are
      inversely   affected   by  changes  in  market   interest   rates.
      Generally,  the longer the  maturity of  fixed-income  securities,
      the larger the  exposure to the risks and rewards  resulting  from
      changes in market  interest rates.  Contractual  maturities of the
      fixed-income  securities  as of December  31, 2001 were as follows
      (in thousands of dollars):

                                                  Amortized         Fair
                                                     Cost          Value
                                                  -----------    -----------

        Within one year                           $    7,159     $     7,288
        One through five years                        57,852          58,255
        Five through ten years                        19,744          19,457
        Over ten years                                29,056          28,403
                                                  -----------    -----------
        Total                                     $  113,811     $   113,403
                                                  ===========    ===========


(6)         OTHER INCOME (EXPENSE)

      Other  income   (expense)  was  comprised  of  the  following  (in
      thousands of dollars):

                                               2001        2000        1999
                                            ---------   ----------  ----------
        Gain on sales of publishing assets  $   4,430   $      16   $     569
        Loss on sale of BNAC                      ---      (1,035)       (283)
        Loss on disposals of property
           and equipment                           (9)       (181)       (174)
                                            ---------   ----------  ----------
        Total                               $   4,421   $  (1,200)  $     112
                                            =========   ==========  ==========

(7)         GOODWILL

      Goodwill  represents  the cost of  acquired  assets  in  excess of
      their fair value at the  respective  dates of their  acquisitions,
      net  of  accumulated  amortization  of  $10,653,000  in  2001  and
      $7,086,000 in 2000.

      Goodwill  acquired  before  mandatory  amortization  rules, in the
      amount  of  $634,000,   has  not  been   amortized   because,   in
      management's  opinion,  it has  continuing  value.  Other goodwill
      has been  amortized  on a  straight-line  basis,  over periods not
      exceeding  forty years.  Amortization  expense was  $3,567,000 for
      2001, $1,093,000 for 2000, and $902,000 for 1999.

      The recoverability of goodwill has been evaluated  periodically to
      determine if an  impairment  has  occurred.  The Company  measured
      the  potential  impairment  of recorded  goodwill by comparing the
      undiscounted  value of expected future operating cash flows to its
      book value,  and recorded  impairments  when  appropriate.  If any
      impairment had occurred,  goodwill would have been written down to
      its fair value.

      During 2001, the Financial  Accounting Standards Board issued SFAS
      No. 142, Goodwill and Other Intangible  Assets.  SFAS 142 requires
      that  goodwill  and  intangible  assets with  indefinite  lives no
      longer be  amortized,  but  instead  be tested for  impairment  at
      least  annually.   The  Company  will  adopt  SFAS  142  effective
      January  1,  2002,  and  the  initial   impairment  test  will  be
      completed during the second quarter of 2002.
                                                             (Continued)


<PAGE>38
(8)         INCOME TAXES

      The total income tax expense  (benefit)  was  allocated as follows
      (in thousands of dollars):

                                            2001         2000          1999
                                          ----------  -----------   -----------
     Income Statement Provision for       $   8,177   $  11,353     $  10,898
     Income Taxes
     Stockholders' Equity--Change in:
       Unrealized gain (loss) on
        marketable securities                  (217)      1,339        (3,167)
       Foreign currency translation
        adjustment                                5          18             8
                                          ----------  -----------   -----------
     Total                                $   7,965   $  12,710     $   7,739
                                          ==========  ==========    ===========

      The  provision  for income taxes  consisted of the  following  (in
      thousands of dollars):

                                              2001        2000        1999
                                            ---------   ---------   ----------
        Taxes currently payable:
           Federal                          $   5,746   $   9,924   $   8,352
           State and local                      3,697       1,456         850
                                            ---------   ---------   ----------
                                                9,443      11,380       9,202
                                            ---------   ---------   ----------
        Deferred tax provision:
           Federal                               (666)         93       1,017
           State and local                       (600)       (120)        679
                                            ---------   ---------   ----------
                                               (1,266)        (27)      1,696
                                            ---------   ---------   ----------
        Total                               $   8,177   $  11,353   $  10,898
                                            =========   =========   ==========

      State and local  income tax expense  includes  $1.5  million for a
      disputed audit assessment.  Reconciliation  of the U.S.  statutory
      rate to the Company's  consolidated  effective income tax rate was
      as follows:

                                               Percent of Pretax Income
                                            --------------------------------
                                              2001        2000        1999
                                            --------    --------    --------
        Federal statutory rate                35.0%       35.0%       35.0%
        State and local income taxes, net
         of federal income tax benefit         9.4         2.5         3.1
        Goodwill amortization and other
          nondeductible expenses               3.7         1.7         2.1
        Tax exempt interest exclusion         (8.2)       (5.7)       (5.0)
        Dividends received exclusion          (0.8)       (0.6)       (1.0)
        Federal tax credit                    (1.0)        ---         ---
                                            --------    --------    --------
        Total                                 38.1%       32.9%       34.2%
                                            ========    ========    ========

                                                             (Continued)


<PAGE>39
      Deferred tax assets and  liabilities are the future tax effects of
      temporary  differences  between assets and liabilities as reported
      in the financial  statements and as reported on tax returns.  They
      are estimated by using enacted tax rates  expected to apply in the
      years in which  those  temporary  differences  are  expected to be
      recovered  or  settled.  Changes  in tax rates are  recognized  in
      income in the period that  includes the  enactment  date.  The tax
      effects of  temporary  differences  that gave rise to the deferred
      tax  assets  and  liabilities  were as follows  (in  thousands  of
      dollars):

                                                         December 31,
                                                  --------------------------
                                                     2001            2000
                                                  -----------    -----------
   Deferred tax assets:
     Other postretirement benefits                 $   18,214     $   18,243
     Pension expense                                   10,806         10,624
     Inventories                                        2,179          2,041
     Annual leave                                       2,055          1,828
     Amortization of acquired intangible assets         1,133            371
     Tax loss carryforwards                               703            453
     Depreciation                                         203            (65)
     Others                                             2,597          2,282
                                                  -----------    -----------
   Total deferred tax assets                           37,890         35,777
                                                  -----------    -----------
   Deferred tax liabilities:
     Capitalized software                              (4,677)        (3,208)
     Deferred selling expenses                         (2,498)        (3,246)
     Others                                            (1,127)        (1,346)
                                                  -----------    -----------
   Total deferred tax liabilities                      (8,302)        (7,800)
                                                  -----------    -----------
   Net deferred tax assets                         $   29,588     $   27,977
                                                  ===========    ===========

      The ultimate  realization of deferred tax assets is dependent upon
      future taxable income during the periods in which those  temporary
      differences  become  deductible.   The  Company  has  consistently
      achieved  profitability  and  taxable  income.  In the  opinion of
      management,  based on expected  future  earnings and available tax
      planning strategies,  it is more likely than not that the recorded
      deferred  tax  assets  will be  fully  realized  and no  valuation
      allowance is necessary.  To the extent not utilized,  the tax loss
      carryforwards expire in 2005 through 2021.


(9)         OTHER BALANCE SHEET INFORMATION

      Certain   year-end   balances   consisted  of  the  following  (in
      thousands of dollars):

                                                     2001           2000
                                                  -----------    -----------
        Receivables:
           Customers                              $   42,122     $    46,405
           Others                                      5,172           4,609
           Allowance for doubtful accounts            (2,197)         (2,029)
                                                  -----------    -----------
        Total                                     $   45,097     $    48,985
                                                  ===========    ===========

                                                             (Continued)

<PAGE>40


                                                     2001           2000
                                                  -----------    -----------
        Inventories:
           Materials and supplies                 $    2,204     $     3,103
           Work in process                               358             196
           Finished goods                              1,164           1,243
                                                  -----------    -----------
        Total                                     $    3,726     $     4,542
                                                  ===========    ===========

      Inventories are valued at the lower of cost  (principally  average
      cost method) or market.

                                                     2001           2000
                                                  -----------    -----------
        Property and Equipment, at cost:
           Land                                   $    4,250     $     4,250
           Buildings and improvements                 50,922          49,962
           Furniture and equipment                    52,017          55,297
           Accumulated depreciation                  (70,724)        (72,383)
                                                  -----------    -----------
        Total                                     $   36,465     $    37,126
                                                  ===========    ===========

      The Company uses the  straight-line  method of depreciation  based
      on  estimated  useful  lives  ranging  from  five to 45 years  for
      buildings  and  improvements,  and three to 10 years for furniture
      and  equipment.  Depreciation  expense  was  $5,227,000  in  2001,
      $6,450,000  in 2000,  and  $7,114,000  in 1999.  Expenditures  for
      maintenance and repairs are expensed while major  replacements and
      improvements are capitalized.

                                                     2001           2000
                                                  -----------    -----------
        Intangible and other assets:
           Amortizable assets--
             Software                             $   14,271     $     9,952
             Customer lists                           10,526           9,158
             Copyrights                                8,087           9,002
             Others                                    4,323           2,040
                                                  -----------    -----------
                                                      37,207          30,152
        Other receivables                                134             113
                                                  -----------    -----------
        Total                                     $   37,341     $    30,265
                                                  ===========    ===========

                                                             (Continued)


<PAGE>41
      Amortizable  assets are  expensed  evenly  over  their  respective
      estimated  lives,  ranging  from  three to 10 years.  Amortization
      expenses for these assets were  $6,000,000 in 2001,  $3,586,000 in
      2000, and $2,621,000 in 1999.  Accumulated  amortization for these
      amortizable assets was $11,418,000 in 2001 and $9,230,000 in 2000.

                                                     2001           2000
                                                  -----------    -----------
        Payables and accrued liabilities:
           Accounts payable                       $   19,699     $    20,483
           Employee compensation and benefits         17,851          15,521
           Postretirement benefits, current
             portion                                   5,906           1,761
           Income taxes                                1,265            (165)
                                                  -----------    -----------
        Total                                     $   44,721     $    37,600
                                                  ===========    ===========


(10)  LONG-TERM DEBT

      Long-term  debt  consisted  of  the  following  (in  thousands  of
        dollars):
                                                        December 31,
                                                  --------------------------
                                                     2001           2000
                                                  -----------    -----------
    Note payable, unsecured, variable interest
     (LIBOR plus.2%; 4.6% for 2001,               $   14,000     $    14,000
      6.76% for 2000),due 2003-2004
    Notes payable, unsecured, 8.15%, due
      2005-2010                                       45,000          45,000
    Notes payable, unsecured, 6.99%, due
      2007-2011                                       25,000             ---
                                                  -----------    -----------
        Total                                     $   84,000     $    59,000
                                                  ===========    ===========

      Maturities  of  long-term  debt are as  follows:  2003  and  2004,
      $7,000,000  each;  2005 and 2006,  $7,500,000  each;  2007 through
      2010,  $10,500,000  each; 2011,  $13,000,000.  The current rate of
      the variable  bank note,  effective  through  February 4, 2002, is
      2.41%.  Based on the borrowing  rates available to the Company for
      loans with similar  terms and average  maturities,  the fair value
      of  long-term  debt was  $88,000,000  in 2001 and  $59,000,000  in
      2000.

      The  Company  also  has a $5  million  loan  facility  and a  $1.5
      million  unsecured  line of credit,  of which $.5 million is being
      used to secure a letter of credit.

(11)  COMMITMENTS AND CONTINGENCIES

      The Company has non-cancelable  operating leases for office space,
      equipment  and  vehicles.  Total rent  expense was  $7,981,000  in
      2001, $6,468,000 in 2000, and $6,222,000 in 1999.


                                                             (Continued)

<PAGE>42
      As of December 31,  2001,  future  minimum  lease  payments  under
      non-cancelable   operating   leases  were  as   follows:   2002 --
      $7,713,000;   2003 --  $6,825,000;   2004 --  $6,069,000;  2005 --
      $5,530,000; 2006 -- $4,813,000; thereafter -- $2,812,000.

      The Company is involved in certain  legal  actions  arising in the
      ordinary  course of  business.  In the opinion of  management  the
      ultimate  disposition  of these  matters  will not have a material
      adverse effect on the consolidated financial statements.

 (12) STOCKHOLDERS' EQUITY

      In  April  2001,   the   stockholders   approved  an  increase  in
      authorized  shares of common  stock and  approved  a  five-for-one
      stock split.  All per share amounts  included in the  accompanying
      financial  statements  have been  restated  to  reflect  the stock
      split.

      Ownership  and  transferability  of Class A,  Class B, and Class C
      stock  are   substantially   restricted   to  current  and  former
      employees   by   provisions   of  the  Parent's   certificate   of
      incorporation  and bylaws.  Ownership  of Class A stock,  which is
      voting,  is  restricted  to  active  employees.  Class B stock and
      Class C stock  are  nonvoting.  No class of stock  has  preference
      over another upon  declaration of dividends or liquidation.  As of
      December  31,  2001,  authorized  shares of Class A,  Class B, and
      Class C were 30,000,000,  30,000,000,  and 5,000,000 respectively.
      As of December  31, 2000,  authorized  shares of Class A, Class B,
      and Class C were 6,700,000, 5,300,000, and 1,000,000 respectively.

      Treasury share  transactions,  adjusted for the stock split,  were
      as follows:
                                                 Treasury Stock Shares
                                           ----------------------------------
                                            Class A     Class B     Class C
                                           ----------   ---------   ---------
       Balance, January 1, 1999            14,848,280   2,536,880   1,035,385
       Sales to employees                    (877,735)       ---         ---
       Repurchases                            400,345   1,288,940     23,940
       Conversions of Class A to Class B
        and Class C                           656,520   (642,140)    (14,380)
                                           ----------------------------------
       Balance, December 31, 1999          15,027,410   3,183,680   1,044,945

       Sales to employees                    (755,920)       ---         ---
       Repurchases                            313,300   1,947,500      23,350
       Conversions of Class A to Class B    1,568,285  (1,568,285)       ---
                                           ----------------------------------
       Balance, December 31, 2000          16,133,075   3,562,895   1,068,295

       Retirement of Class A shares        (2,394,320)       ---         ---
       Sales to employees                    (799,997)       ---         ---
       Repurchases                            267,784   1,809,143      27,315
       Conversions of Class A to Class B    1,159,000  (1,159,000)       ---
                                           ----------------------------------
       Balance, December 31, 2001          14,365,542   4,213,038   1,095,610
                                           ==================================

                                                             (Continued)


<PAGE>43

      The  Company's  commitment  to employee  ownership is supported by
      its policy to repurchase all stock tendered by  stockholders  that
      is in excess of  employee  stock plan  purchases.  As of  December
      31,  2001,  capital  stock  with a current  market  value of $23.1
      million and $14.4  million are known or expected to be tendered in
      2002 and 2003,  respectively.  The actual amount  repurchased will
      likely be higher.

      Earnings  per  share  have  been  computed  based on the  weighted
      average of all  outstanding  shares of stock  which,  adjusted for
      the stock split, were 38,078,978 in 2001,  39,564,405 in 2000, and
      40,794,080 in 1999.

      The  differences  between  amortized  cost and  fair  value of the
      Company's  investment  securities  result in  unrealized  gains or
      losses,  which  are  reported,  net  of  tax,  as a  component  of
      Stockholders'  Equity.  Assets and  liabilities  of the  Company's
      United Kingdom  subsidiary  are  denominated in British pounds and
      translated  into U.S.  dollars at  year-end  exchange  rates.  Any
      resulting gain or loss is reflected,  net of taxes, as a component
      of Stockholders' Equity.


(13)  OTHER COMPREHENSIVE INCOME

      Comprehensive  income  encompasses  all  changes in  Stockholders'
      Equity except those arising from transactions  with  shareholders,
      and includes net income and other comprehensive income.

      Elements  of  other  comprehensive  income  are  shown  below  (in
      thousands of dollars):

                                              2001        2000        1999
                                           ----------  ----------  ----------
    Holding gains (losses) on securities
      arising during the year              $   1,089   $   4,740   $  (7,553)
    Less net gains included in net income      1,711         913       1,497
                                           ----------  ----------  ----------
    Changes in unrealized gains (losses)        (622)      3,827      (9,050)
    Less income taxes                           (217)      1,339      (3,167)
                                           ----------  ----------  ----------
    Net unrealized gains(losses)                (405)      2,488      (5,883)
                                           ----------  ----------  ----------
    Currency translation gains                    15          50          23
    Less income taxes                              5          18           8
                                           ----------  ----------  ----------
    Net currency translation gains                10          32          15
                                           ----------  ----------  ----------
    Other comprehensive income             $    (395)  $   2,520   $  (5,868)
                                           ==========  ==========  ==========


                                                             (Continued)


<PAGE>44

(14)  SEGMENTS AND RELATED INFORMATION

      Operating  segments are components of an enterprise whose separate
      financial   information   is  reviewed   regularly  by  the  chief
      operating  decision-maker  in deciding  how to allocate  resources
      and  in   assessing   performance.   Operating   segments  may  be
      aggregated  for   presentation   purposes  if  they  have  similar
      economic characteristics.

      The  Company has three  primary  operating  segments,  Publishing,
      Printing,  and Software.  Publishing  operations consist primarily
      of the creation,  production and marketing of legal and regulatory
      and  general   business   advisory   information,   in  print  and
      electronic  formats.  Publishing  aggregates the operations of the
      Parent  with  Tax  Management  Inc.  (excluding  its BNA  Software
      division),   and  also  includes  the  Parent's  other  publishing
      subsidiary    companies.    Customers   are   primarily   lawyers,
      accountants,  human resource  professionals,  business executives,
      health  care  administrative  professionals,  trade  associations,
      educational institutions, government agencies, and libraries.

      Printing  includes the  operations  of The McArdle  Printing  Co.,
      Inc.  Software  combines  the  operations  of BNA Software and STF
      Services   Corporation.   The  All  Other  segment   includes  the
      operations,  prior  to its  sale in  1999,  of BNA  Communications
      Inc., a media-based training enterprise.

      Intersegment  revenues  approximate  current  market  prices.  The
      Company  did not derive 10 percent  or more of its  revenues  from
      any one customer or government  agency or from foreign sales,  nor
      did it have 10 percent or more of its assets in foreign locations.

      Operating segment information is presented below:


   Year Ended December 31, 2001    Publishing  Printing  Software   Total
   ----------------------------    ----------  --------  --------  --------
   Revenues from external
    customers                      $  266,193  $ 20,799  $ 18,973  $305,965
   Intersegment revenues                 ---     14,882       912    15,794
   Operating profit                    14,896       174      (594)   14,476
   Interest expense                     5,910       170        56     6,136
   Identifiable assets                335,143    17,077    37,663   389,883
   Depreciation and amortization       10,571       979     3,244    14,794
   Capital expenditures                 6,399       478    29,222    36,099


                                                             (Continued)
<PAGE>45


   Year Ended December 31, 2000    Publishing  Printing  Software   Total
   ----------------------------    ----------  --------  --------  --------
   Revenues from external
    customers                      $  258,483  $ 24,258  $ 14,658  $297,399
   Intersegment revenues                 ---     15,995      ---     15,995
   Operating profit                    21,357     2,594     4,083    28,034
   Interest expense                     1,635       268      ---      1,903
   Identifiable assets                353,335    18,059     2,564   373,958
   Depreciation and amortization       10,037     1,092      ---     11,129
   Capital expenditures                55,037       513     1,935    57,485


                                                               All
Year Ended December 31, 1999 Publishing  Printing  Software   Other     Total
---------------------------- ----------  --------  --------  -------  ---------
Revenues from external
 customers                   $ 246,835   $21,003   $13,859   $ 2,262   $283,959
Intersegment revenues             ---     16,373      ---       ---      16,373
Operating profit (loss)         18,796     2,251     2,457      (198)    23,306
Interest expense                 1,026       353      ---         29      1,408
Identifiable assets            307,296    19,077       650       ---    327,023
Depreciation and amortization    9,417     1,060      ---        160     10,637
Capital expenditures            12,186       568        2        129     12,885

      Reconciliation  of items  differing from  consolidated  totals are
      shown below:

                                              2001       2000       1999
                                           ---------  ----------  ---------
     Total interest expense for
       reportable segments                 $  6,136   $   1,903   $   1,408
     Elimination of intersegment
       interest expense                        (136)       (249)       (382)
                                           ---------  ----------  ---------
       Consolidated interest expense       $  6,000   $   1,654   $   1,026
                                           ---------  ----------  ---------

     Total assets for reportable segments  $389,883   $ 373,958   $ 327,023
     Elimination of intersegment assets      (2,345)     (2,958)     (4,295)
                                           ---------  ----------  ---------
       Consolidated assets                 $387,538   $ 371,000   $ 322,728
                                           =========  ==========  =========

<PAGE>46
         SCHEDULE V - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                     THE BUREAU OF NATIONAL AFFAIRS, INC.
                YEARS ENDED DECEMBER 31, 2001, 2000, AND 1999
                            (In Thousands of Dollars)

--------------------------------------------------------------------------------
                               Column A   Column B  Column C  Column D  Column E
--------------------------------------------------------------------------------
                                               Additions
                                          -------------------
                                              (1)      (2)
                                          -------------------

                                Balance   Charged    Charged             Balance
                                   at     to Costs  to Other                at
                               Beginning    and     Accounts- Deductions- End of
           Description         of Period  Expenses  Describe  Describe    Period
--------------------------------------------------------------------------------

VALUATION ACCOUNTS DEDUCTED
  FROM ASSETS TO WHICH THEY APPLY:
-----------------------------------
Allowance for Doubtful Accounts
 Receivable:
  Year ended December 31, 2001    $2,029   $2,255   $186(a,b) $2,273(c)  $2,197
  Year ended December 31, 2000     1,451    1,127     26(a,b)    575(c)   2,029
  Year ended December 31, 1999     1,714      738   (146)(a)     855(c)   1,451

Notes:
(a)     Charged to deferred subscription revenue; portion of allowance for
        doubtful accounts receivable not included in revenues.

(b)     Includes $65 acquired with Kennedy Information, Inc.

(c)     Net accounts written off.

<PAGE>47
                                     PART II

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

There were no changes in or disagreements with accountants on accounting and
financial disclosures during the three years ended December 31, 2001 or through
the date of this Form 10K.


                                    PART III

Except as set forth in this Form 10-K under Part I, Item X, "EXECUTIVE OFFICERS
OF THE REGISTRANT," the information required by Items 10, 11, 12, and 13, is
contained in the Company's definitive Proxy Statement (the "Proxy Statement")
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, to
be filed with the SEC within 120 days of December 31, 2001. Such information is
incorporated herein by reference.


Item 10.    Directors and Executive Officers of the Registrant
            --------------------------------------------------
The information required under this Item 10 is contained in the Proxy Statement
under the headings "I. Election of Directors" and "Biographical Sketches of
Nominees," and is incorporated herein by reference. Information related to
Executive Officers is omitted from the Proxy Statement in reliance on
Instruction 3 to Regulation S-K, Item 401(b), and included as Item X of Part I
of this report.

Item 11.    Executive Compensation
            ----------------------
The information required under this Item 11 is contained in the Proxy Statement
under the headings "III. Executive Compensation" and "V. Employee Benefit Plans"
and is incorporated herein by reference.

Item 12.    Security Ownership of Beneficial Owners and Management
            ------------------------------------------------------
The information required under this Item 12 is contained in the Proxy Statement
under the heading "I. Election of Directors" and is incorporated herein by
reference.

Item 13.    Certain Relationships and Related Transactions
            ----------------------------------------------
The information required under this Item 13 is contained in the Proxy Statement
under the heading "III. Executive Compensation" and is incorporated herein by
reference.
<PAGE>48
                                     PART IV

Item 14.    Exhibits, Financial Statement Schedules, and Report on Form 8-K
            ---------------------------------------------------------------
The following documents are filed as part of this report.

(a)(1)      Financial Statements:                                      Page
            ---------------------------------------                    ----
            Report of Independent Auditors                              24

            Consolidated Balance Sheets as of December 31,
              2001 and 2000.                                            25
            Consolidated Statements of Income, Consolidated             27
              Statements of Cash Flows, and Consolidated
              Statements of Changes in Stockholders' Equity
              for each of the years ended December 31, 2001,
              2000, and 1999
            Notes to Consolidated Financial Statements                  31


   (2)      Financial Statement Schedule:
            ----------------------------
            Report of Independent Auditors as to the
              financial statement schedule                              24

      V     Valuation and Qualifying Accounts and Reserves              46

            All other schedules are omitted because they are not applicable or
            the required information is shown in the financial statements or
            notes thereto.
<PAGE>49
(a)(3)      Exhibits:
            --------
       3.1  Certificate of Incorporation, as amended*

       3.2  By laws, as amended*

      11    Statement re: Computation of Per Share Earnings is contained in the
            2001 Consolidated Financial Statements in the Notes to Consolidated
            Financial Statements, Note 12, "Stockholders' Equity," at page 42 of
            this Form 10-K.

      22    Subsidiaries of the Registrant.*

      28.1  Proxy Statement for the Annual Meeting of security holders to be
            held on April 19, 2002**

      28.2  Annual Report on Form 11-K related to the BNA 401(k) Plan for the
            fiscal year ended December 31, 2001.*

      *     Filed herewith.

      **    Incorporated by reference to the Company's Definitive Proxy
            Statement, to be filed with the SEC within 120 days of December 31,
            2001.

            Upon written or oral request to the Company's General Counsel, a
            copy of any of the above exhibits will be furnished at cost.


(b)         Reports on Form 8-K:
            -------------------
            None.
<PAGE>50
                                  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.

                     THE BUREAU OF NATIONAL AFFAIRS, INC.

                  By:   __________________________________
                        Paul N. Wojcik, Chief Executive Officer

                  Date: __________________________________

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


By:s/Paul N. Wojcik                          By: s/George J. Korphage
---------------------------                  ---------------------------
Paul N. Wojcik,                              George J. Korphage, Vice President
President and Chief Executive Officer        and Chief Financial Officer
Director                                     (Chief Accounting Officer)
                                             Director

Date:  3/7/2002                              Date:  3/7/2002
---------------------------                  -----------------------------


By:s/Wm A. Beltz    3/7/02                   By:s/David P. McFarland  3/7/02
---------------------------                  -------------------------------
William A. Beltz       Date                  David P. McFarland      Date
Chairman of the Board of Directors           Director


By:s/Cynthia J. Bolbach 3/7/02               By:s/Gregory C. McCaffery 3/7/02
------------------------------               --------------------------------
Cynthia J. Bolbach     Date                  Gregory C. McCaffery    Date
Director                                     Director


By:s/Eunice Bumgardner 3/7/02                By:s/Jonathan Newcomb   3/7/02
-----------------------------                ------------------------------
Eunice Lin Bumgardner  Date                  Jonathan Newcomb         Date
Director                                     Director


By:s/Richard Cornfield 3/7/02                By:s/Frederick Schenk  3/7/02
-----------------------------                -----------------------------
Richard H.Cornfield    Date                  Frederick A. Schenck     Date
Director                                     Director


By:s/David Foster    3/7/02                  By:s/Daniel Toohey     3/7/02
---------------------------                  -----------------------------
David L. Foster        Date                  Daniel W. Toohey         Date
Director                                     Director


By:s/Sandra Degler   3/7/02                  By:s/Robert Velte      3/7/02
---------------------------                  -----------------------------
Sandra C. Degler       Date                  Robert L. Velte          Date
Director                                     Director

By:s/John E. Jenc    3/7/02
---------------------------
John E. Jenc           Date
Director
<PAGE>51
                                  EXHIBIT INDEX

                                                                Sequential Page
Number            Exhibit Description                                 Number
------            ------------------------------------------------------------

 3.1              Certificate of Incorporation, as amended               52

 3.2              By laws, as amended                                    65

11                Statement re: Computation of Per Share Earnings
                   is contained in the 2001 Consolidated Financial
                   Statements in the Notes to Consolidated Financial
                   Statements, Note 12, "Stockholders' Equity,"          42

21                Subsidiaries of the Registrant                         79

99.1              Proxy Statement for the Annual Meeting of
                   Stockholders to be held on April 19, 2002             **

99.2              Annual Report on Form 11-K related to the
                   BNA 401(k) Plan for the fiscal year ended
                   December 31, 2001 (incorporated by reference
                   into the Form 10-K).                                  80


              **  The Definitive Proxy Statement is expected to be filed
                   with the SEC within 120 days of December 31, 2001.