UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)

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

(  )  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004
Commission file number 2-28286

The Bureau of National Affairs, Inc.

A Delaware Corporation                                 53-0040540
                                           (I.R.S. Employer Identification No.)

1231 25th St., N. W.,                                 (202)452-4200
Washington, D.C. 20037                              (telephone number)

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 )

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

      The market value of the Class A voting stock held by non-affiliates of the
registrant as of February 26, 2005 was $152,431,632. 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 26,
2005 was $208,759,128 and $0, 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.

      The number of shares outstanding of each of the registrant's classes of
common stock, as of February 26, 2005 was 13,624,898 Class A common shares,
17,914,599 Class B common shares, and 12,440 Class C common shares.


                                                                    Page 1 of 56

<PAGE>2

                           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.

                       DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the Company's definitive Proxy Statement, to be filed with the
SEC on or about March 25, 2005, 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, 2004

                                                                        Page No.
                                     PART I.
Item 1.     Business....................................................   3
Item 2.     Properties..................................................  11
Item 3.     Legal Proceedings...........................................  12
Item 4.     Submission of Matters to a Vote of Security Holders.........  12
Item X.     Executive Officers of the Registrant........................  12

                                    PART II.
Item 5.     Market for the Registrant's Common Stock and Related
              Security Holder Matters...................................  14
Item 6.     Selected Financial Data and Selected Quarterly Data.........  15
Item 7.     Management's Discussion and Analysis of Financial
              Condition and Results of Operations.......................  17
Item7a      Quantitative and Qualitative Disclosures About Market Risk..  21
Item 8.     Financial Statements and Supplementary Data.................  22
Item 9.     Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure....................  46
Item 9a.    Controls and Procedures ....................................  46
Item 9b.    Other Information ..........................................  46

                                    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
Item 14.    Principal Accounting Fees and Services......................  47

                                    PART IV.
Item 15.    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 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 its publishing subsidiary companies, Tax Management 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, 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 the Web
and Lotus Notes. Online products also are available through online services such
as LexisNexis and West Group.

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.

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, telesales, and BNA field sales
representatives. STF Services Corporation, a subsidiary company, converts
government-approved paper forms into interactive electronic forms that are
marketed directly and licensed to publishers, including BNA and Tax Management.

The McArdle Printing Co., Inc. provides printing services to mid-Atlantic area
customers. Its customers include publishers, trade associations, professional
societies, other non-profit organizations, financial institutions, and
governmental organizations. Approximately 29 percent of its business is derived
from the BNA publishing companies.

                                                                       Continued
<PAGE>4


Review Of Operations

2004 was a very good year for BNA. All-time highs were achieved for revenues,
operating profit, and earnings per share. The positive trends evident at the end
of 2003, continued strong cost management, and an improved business climate
combined to produce these results. Net income finished the year at $22.6
million, up 40 percent over 2003, and earnings per share jumped 50 percent to
$.69.

Consolidated revenues were $321.3 million in 2004, an increase of $9.4 million.
Publishing revenues increased $2.9 million due mostly to strong Tax Management
renewal sales and IOMA's successful new revenue channels. Printing revenues
jumped $5.5 million in 2004, reflecting business from new customers and
additional job awards from existing customers. Software revenues were up $1.1
million with product-related services providing most of the growth.

The 2004 consolidated operating profit of nearly $38 million, a BNA record by a
wide margin, was up $12.4 million or 48.5 percent over the prior year. The
advance was widespread, as nine of the eleven business units improved their
operating results. In addition to the revenue growth, pervasive cost containment
efforts were a major factor in 2004's success. Consolidated operating expenses
were down $3.0 million in total. Although McArdle and IOMA incurred large
fulfillment cost increases related to their large revenue gains, eight business
units had lower expenses in 2004 while the other one had only a small increase.

Total non-operating income declined $1.6 million due mostly to lower gains from
sales of investments and other assets.

Stock purchases by employees remained strong, but continued to be exceeded by
stock redemptions--predominately mandatory tenders by Class B and C
stockholders. Net stock repurchases during 2004, including $4.8 million for
Class C shares, were $22.1 million, reducing outstanding shares by 5.7 percent.
Over the last eight years, BNA has paid $113 million for net repurchases that
have reduced outstanding shares by 28 percent. Repurchases of Class C shares,
which are essentially complete, totaled $20 million during this period. Net
repurchases of stock, due to Class B stock tenders, are expected to continue.
Operating cash flows have usually provided most of the cash needed for the net
buybacks and are expected to continue to do so, with financial reserves
providing the balance.

BNA's cash and financial investments decreased nearly $5 million in 2004 due to
the heavy stock repurchases, but stood at a healthy $120 million at year-end.
The liquidity provided by these financial reserves, as well as the strong
operating cash flows generated annually by the businesses, keeps BNA prepared to
respond to business challenges and opportunities, to make the investments
necessary to ensure future growth, to satisfy debt retirement obligations, and
to make stock repurchases in support of continued employee ownership.

Reviews of the parent and subsidiary companies' operations follow.

Parent Company

A slightly improved business climate and strong cost management led the parent
company to post another record operating profit in 2004. Operating profit grew
more than 7 percent as managers across the company continued to carefully
monitor expenditures and increase productivity.

The parent company also took a bold step in addressing lackluster new sales by
instituting a major restructuring of the core business's selling approach.
Launched in late April 2004, the new sales organization now consists of three
customer-centric segmented divisions: Corporate, Legal, and Tax & Accounting.
For the first time, BNA customers are sold to by sales professionals who
specialize in a given customer's market.


<PAGE>5



The list of new products in 2004 included few traditional news and reference
offerings. Instead, product development focused heavily on custom content
management and delivery capabilities in response to customer input. Significant
enhancements included adding indexes and redesigning the notification platform's
search interface; providing the capabilities to track regulatory developments by
citation and to build links from third-party information management systems to
BNA reference content; and creating, on BNA's new Web delivery platform, the
ability to produce customized websites with content and graphics meeting client
specifications.

The parent's Legal & Business Publishing Unit recorded another year of growth in
both revenues and profits, thanks to successful product launches and
enhancements to existing products. Strategic alliances also have continued to
prove beneficial, and the unit's already strong renewal rates improved in 2004.

The segmentation of the sales force is paying dividends for the Legal & Business
Publishing Unit. In 2004, the large law program expanded from eight to 21
specialized sales professionals spread throughout the country. These
professionals focus on the large law firm market and the top-200 corporate
market, driving both new sales and retention of existing revenues. In addition,
a new specialized sales force was introduced for the small and mid-sized law
firm and corporate counsel markets.

To help legal account executives further penetrate the corporate counsel market,
the unit launched Corporate Counsel Library, a subset of the Corporate Practice
Series. The portfolios selected for this series are designed to answer the needs
of corporate counsel in smaller corporations who do not need the full portfolio
package.

During 2004, the unit worked on developing electronic versions of three
reference file products. Web versions of the BNA/ACCA Compliance Manual,
Corporate Governance Manual, and Health Care Program Compliance Guide will be
launched in early 2005, and are expected to do very well in this climate of
heightened awareness of corporate governance and compliance concerns.

Also, development of a significantly revised version of Labor and Employment Law
Library has begun. The new version will include an enhanced search engine
specifically designed for the legal market, as well as increased visibility of
the service's unique system of classifying and headnoting court decisions.

The Environment, Health & Safety (EHS) Publishing Unit addressed a continuing
revenue erosion by expanding its international and domestic offerings and
further developing its relationships with new business partners. The Global EHS
Library, a reference service providing detailed coverage of 30 jurisdictions
around the world, was launched in February. In December, EHS Legislative Alert
was launched, providing daily coverage of state legislatures.

In addition, a multinational semiconductor manufacturer became the unit's second
large customer for custom, citation-based monitoring of regulatory activity. The
first client, a multinational oil and gas company, expanded its contract for
custom monitoring in 2004. The EHS unit also held the first of its new audio
conferences late in 2004, with several new audio conferences scheduled for the
first quarter of 2005.

Alliances also were central to the EHS unit's activities in 2004. EHS and a
strategic partner formally launched a citation-based system to monitor changes
in state and federal EHS regulations. A contract to develop a similar product
was signed late in 2004 with another provider of environmental management
systems. And in the spring of 2004, the unit forged an alliance with NAEM, a
leading environmental association, to survey environmental companies. The survey
was published in October.


<PAGE>6


The restructuring of the Human Resources & Payroll Publishing Unit and the
revamping of major products over the past two years paid handsome dividends in
2004. Despite a decline in revenues, profitability was up 53 percent over the
prior year.

Significant upgrades to the unit's major reference products have added popular
features such as a "Fast Answers" section, enhanced usability, and a common user
interface. The products are now presented to the market as a unified suite with
bundled and simplified pricing to encourage larger transaction size. The unit
has expanded its target market beyond end-user HR practitioners to make more
sales to HR advisors and intermediaries who are licensing BNA-hosted websites to
provide to their clients. Another growing revenue source is transactional sales
of reports and audio conferences.

Revenues for the Health Care Publishing Unit again showed good growth in 2004,
due in large part to the continued success of Pharmaceutical Law & Industry
Report and Health Care Daily Report. In October, Medicare Drug Watch was
launched in response to the new Medicare prescription drug benefit program. The
service, a daily Web-only product, moves into somewhat new territory for the
division by adding access to key documents and customized Web news searches to
BNA's standard news reporting.

BNA Books

The Book Division experienced another busy and profitable year, closing out 2004
with the release in December of 20 titles. The division's operating margin
exceeded 31 percent in 2004, despite revenues finishing below 2003's record
level.

The division published a total of 46 titles in 2004, including three new titles:
Tortious Interference: A State-by-State Survey and Wage and Hour Laws: A
State-by-State Survey, both co-published with the ABA Labor and Employment Law
Section, and Patent Infringement Remedies. The publication of a fourth edition
of Covenants Not to Compete: A State-by-State Survey, a respected BNA/ABA title,
was highly anticipated and well received, and contributed heavily toward
revenues.

New editions of Drafting Patent License Agreements; McCarthy's Desk Encyclopedia
of Intellectual Property; Patent, Trademark, and Copyright Laws; Equal
Employment Law Update; Whistleblowing: The Law of Retaliatory Discharge; and
International Labor and Employment Laws were very successful as well. The
division also published annual supplements to its list of established treatises.

The Book Division's partnership with the American Bar Association continues to
be a mutually beneficial one. BNA Books is the official publisher for three ABA
Sections--Labor and Employment Law, Intellectual Property Law, and Health Law.
In 2004, several contracts for new titles were signed with each of the sections.
In addition, the division partnered with Google to be part of the experimental
"Google Print" program. The program makes the division's titles more available
to Web searchers with a direct link for purchase on the division's website.

The year was both challenging and successful for the division. BNA Books
continues to add highly regarded experts in their fields to its list of authors,
and the division's reputation for being the treatise publisher of choice
continues to grow.


<PAGE>7


Tax Management Inc.

Growing revenues and lower operating expenses led Tax Management to record
profitability in 2004. Revenues, including BNA Software, grew nearly 5 percent
for the year.

Strong renewals of TM services fueled the increase, and more than compensated
for lower new service sales. New sales, which were affected by a mid-year
restructuring of the field sales force, are expected to rebound in 2005.

TM Portfolios Plus on the Web and Tax Practice Series were the top-selling
products for 2004. TM's federal and state portfolio libraries continued to
expand, with the addition of 11 new federal titles and two new state titles. In
addition, the two new federal tax acts passed last fall necessitated substantial
updates to the federal portfolios and Tax Practice Series, as well as to various
BNA Software programs.

The usability of TM's Web-based tax library was significantly improved,
particularly site navigation. The library now allows subscribers to initiate
research by Internal Revenue Code section or by Treasury Regulation and link
directly to relevant portfolios and analysis.

Tax Management remains the leading analytical service in a highly competitive
tax market. Competitive pricing, strong marketing, better integration with the
parent company's tax products, and a leveraging of the segmented field sales
force should lead to continued growth in 2005.

BNA Software

BNA Software's operating profit rebounded significantly in 2004 to its highest
level since 2000. Both revenue growth and cost containment efforts were
responsible for the turnaround.

BNA Software's revenues grew more than 7 percent in 2004 due to strong sales of
services associated with BNA Corporate Tax Audit Analyzer and BNA Fixed Assets.
New sales goals were exceeded in the BNA Estate Tax Planner product family as
BNA captured share from competitors exiting this market. BNA Fixed Asset Web
continued to gain momentum as revenues nearly doubled from 2003.

Total operating expenses declined more than 14 percent. Lower staffing and
amortization expenses resulted in a large reduction in editorial expenses. The
unit lowered production and distribution expenses by implementing Web-based
product updates and expanding online documentation. Selling expenses also
declined as business growth from cost-effective channels increased.

BNA Software continued to extend its distribution channels with new national
reseller agreements for Income Tax Planner and Fixed Assets. Management will
focus in 2005 on growing revenues from these agreements and pursuing new
alliances.


BNA International Inc.

Despite a challenging sales environment, a restructuring of its sales effort,
and a transformation of its product line, BNA International grew its revenues
and improved its operating profit in 2004.


<PAGE>8


With an increasingly Web-based product line, the company reduced its direct
marketing costs and increased the number of sales representatives. These changes
led to significant increases in site license sales and higher sales of BNA
services. An improved Web platform, the addition of country-by-country
portfolios to the tax product line, and the launch of Corporate Restructuring
aided the increased sales effort. Additional BNAI products on LexisNexis and
Westlaw resulted in licensing revenues that exceeded expectations and, going
forward, more products will be made available on these platforms.

Future product development efforts will be guided by the results of extensive
research carried out in 2004 among existing and past subscribers. A number of
new products and enhancements to existing products will emerge from this
project.

BNAI recognized the need to enhance its products and change its sales approach
to satisfy the needs of its increasingly demanding markets. Now, with many of
these changes in place, and more planned for 2005, the company faces the future
confident in its ability to maintain its profitability.


BNA Washington Inc.

BNA's facilities in downtown Washington and suburban Maryland operated safely
and efficiently during 2004. There were no interruptions to facility operations
at the downtown offices, and the new emergency generator at the Rockville,
Maryland, facility ensured the uninterrupted operation of BNA's Customer Contact
Center during occasional power outages caused by severe summer storms. Higher
maintenance costs for operating BNA's aging facilities, combined with utility
rate increases which went into effect much sooner than anticipated, pushed
building expenses slightly above the prior year's level.

BNA Washington's largest outside tenant signed a 12-year renewal on a lease that
will continue to contribute substantial revenues. Lease renewal negotiations
with the smaller food service tenant were initiated, and an agreement is
expected during the first quarter of 2005.

A new subtenant was added at the 23rd Street location during the second quarter
of 2004. At year-end, nearly 75 percent of BNA space available on the sublease
market was occupied, with active interest in the remaining space.

The evaluation of options for BNA's long-term real estate needs remained a top
priority throughout 2004. A BNA management task force worked with real estate
and engineering experts to analyze key operational and financial factors for
options ranging from overhauling BNA's existing buildings to relocating to other
facilities in the Washington metropolitan area. The number of potential options
has been narrowed significantly. Work will continue in 2005 toward the goal of
recommending to the BNA Board of Directors the option that best supports the
future operational and economic success of the company.


The McArdle Printing Company, Inc.

The McArdle Printing Company, faced with a very competitive printing market and
continuing declines in BNA printing needs, still achieved double-digit revenue
growth in 2004. Commercial sales increased 25.7 percent, while intercompany
sales decreased 13 percent compared to 2003. This revenue growth in turn led an
improved profit performance that exceeded expectations.

Excess capacity, aggressive pricing, and consolidation combined to make printing
a challenging industry in 2004. McArdle recognized the need to differentiate its
services from competitors, and began positioning itself as a provider of
customized communications solutions to its clients, and improving its
traditional print services while adding design, fulfillment, and expanded
mailing capabilities to its offerings. These services played a key role in the
significant increase in new customers, and in the increased revenues from
existing customers.


<PAGE>9


Going forward, McArdle will focus on enhancing its services, growing its revenue
base, and improving its profitability, while continuing to serve BNA's still
substantial printing needs.


Pike & Fischer, Inc.

Change and new product development were constants at Pike & Fischer in 2004, as
the company continued to redefine itself following the August termination of a
60-year-old contract to provide editorial services to another publishing
company.

In 2003, Pike & Fischer had restructured its operations and divested a number of
smaller publications. Strong performance by its remaining product line and
greater than expected royalty revenues, however, mitigated the effect of the
divestitures on total revenues. The restructured operations resulted in a
substantial reduction in expenses, and led to greatly improved profitability in
2004.

Pike & Fischer's newly-formed Communications Media Analysis Group also had a
strong year, doubling the circulation of its flagship product Broadband Daily,
launching VoIP Monitor, publishing a series of special reports and producing
ancillary audio conferences, and providing consulting services for high-end
telecommunications clients. The CMA Group is well positioned for continued
growth in 2005.

On the more traditional legal publishing front, the company redesigned and
re-launched its five Web reference services and e-letters, and produced a series
of successful books and audio conferences.

On January 1, 2005, Pike & Fischer was merged into IOMA, where it will operate
as a division of IOMA. With the myriad strategic and organizational changes
effected over the last two years now complete, Pike & Fischer is well positioned
to cover the fast-changing telecommunications front for the industry and for
professionals who specialize in the field.


Institute of Management and Administration, Inc.

IOMA's continued creation and development of new revenue streams resulted in
revenue growth of more than 8 percent in 2004, and allowed the company to
maintain the operating profit level it achieved in 2003 despite higher expenses.
While 53 percent of IOMA revenues still came from traditional subscriptions to
newsletters and guides, the company generated nearly $6 million from product
lines that have been developed in the last three years. IOMA is now profitably
creating and selling conferences, audio conferences, an expanded list of
reference guides, custom and published research, consulting, site and
third-party licenses, and professional certification programs. All of these
programs leverage existing IOMA management content in its core markets.

The growth of these ancillary distribution channels allows IOMA to attract new
customers and then cross-market heavily. Besides $300 newsletters, IOMA offered
information products at price points from $8 to more than $85,000 in 2004.

 IOMA Conference Division, which grew substantially in 2003, grew 47 percent in
2004. Audioconference Division revenues grew 146 percent in 2004, and the
division now averages four new programs a week. IOMA's new Research and
Consulting Division, created in 2004, will be a key part of corporate growth in
2005. These successes were partially offset by decreasing subscription revenues
and royalties. Essential steps to stop this decline have shown signs of success;
renewal rates are now the highest in the company's history and subscription
marketing results are improving.


<PAGE>9


The year-end merger of IOMA and Pike & Fischer creates the potential to leverage
resources and distribution channels more effectively and should result in cost
savings and enhanced market opportunities.


Kennedy Information, Inc.

Kennedy Information and its core markets, consulting and recruiting, began to
recover in 2004. Revenues grew by 7.5 percent and operating results showed
substantial improvement.

Kennedy's four market-focused business units - Consulting, Recruiting, Consumer
Careers, and Business & Finance - made great progress despite challenging market
conditions. The Consulting Unit, Kennedy Information Research Group, had an
outstanding year, increasing revenues by 7.5 percent and profits by 33 percent.
The Recruiting Unit, however, continued to feel the effects of slow job creation
in the overall economy. As job creation strengthens, this unit is positioned to
improve. The Business & Finance Unit successfully launched the Senior IR
Leadership Network (SIRLN). This high-value, subscription-based network for top
investor relations officers at large public companies had more than 30 corporate
members by year-end. A Global IR Leadership Network, focusing on top European
companies, was established in early 2005, and it holds great promise for future
growth. Finally, the Consumer Career Unit's Executive Agent and
ExecutiveRegistry services showed good growth during 2004, and both are
profitable. Efforts to increase revenue growth for these services will be the
focus in 2005. An agreement signed in late 2004, with CareerBuilder.com(TM), is
an important step in that direction, expanding on the Consumer Unit's existing
partnerships with Business Week, The Wall Street Journal, and Monster.com(TM).

Magazine advertising began an erratic recovery in 2004. Online advertising grew
rapidly, although from a small base, while print advertising recovered modestly.
The magazine group is focusing on selling advertising campaigns that include
print and online ads, bundled with sponsored Web events, seminars, and audio
conferences.

Overall, the company is well positioned for growth in revenues and profit in the
coming years.


STF Services Corporation

STF's operating margin remained among the highest of the BNA companies in 2004,
despite declines in royalties from its two largest licensees.

New product sales were a focus during 2004. SuperForm Sales Tax Rates/Forms,
launched in late 2003, was aggressively marketed during 2004, and significant
revenues were generated from retail sales and a new licensing agreement for this
product. SuperForm Doing Business Forms, consisting of forms filed over a
business's life cycle, was launched very successfully in late 2004. New product
development will continue in 2005, with an emphasis in the sales tax area.

STF continued an aggressive licensing program, with two new major licensees
signed during 2004. These agreements will begin producing revenues in early
2005. At the end of 2004, several additional agreements were in advanced
negotiations. These include traditional private label agreements as well as
licenses to embed STF forms technology directly into customer workflow.


<PAGE>11


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 commercial 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. The internet provides ready access to business
information made available by direct and indirect commercial competitors, and
government agencies. 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 71 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 1,802 on
December 31, 2004.

BNA stock may be purchased only by active employees, and may be held only by
employees, former employees, and by their heirs. Therefore, financial
information and reports filed with the Securities and Exchange Commission (SEC)
are not available to the general public on BNA's corporate internet website,
www.bna.com. The Company provides paper copies of filings to stockholders upon
request, free of charge.

Item 2.     Properties
            ----------
BNA Washington Inc. owns and manages four buildings used by BNA and Tax
Management Inc. Principal operations are conducted in three adjacent owned
buildings on 25th Street, N.W., Washington, D.C, one of which is partially
leased out. BNA also leases office space for its use on 23rd Street, N.W.,
Washington, D.C. BNA's Subscriber Relations Group operates in an owned facility
in Rockville, Maryland.

IOMA conducts its operations from leased offices in New York, New York. Pike &
Fischer, a division of IOMA, leases office space for its operations in Silver
Spring, Maryland. Kennedy Information, Inc. conducts its operations from leased
offices in Peterborough, New Hampshire. STF Services Corporation leases office
space for its operations in East Syracuse, New York. BNA International Inc.
conducts its operations from leased offices in London, England. The McArdle
Printing Co., Inc. owns its office and plant facilities in Upper Marlboro,
Maryland.


<PAGE>12


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, 2004.


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

The following persons were executive officers of The Bureau of National Affairs,
Inc., at December 31, 2004. Executive officers are elected annually by the Board
of Directors and serve until their successors are elected.

          Name              Age           Present position and prior experience
--------------------------------------------------------------------------------
Cynthia J. Bolbach           57           Vice President and Corporate Secretary
                                           Elected corporate secretary in 1995
                                           and vice president in 2002. Joined
                                           BNA in 1972.

Eunice L. Bumgardner         44           Vice President and General Counsel
                                           Elected vice president in 1996 and
                                           general counsel in 1995.  Joined
                                           BNA in 1994.

Carol A. Clark               48           Vice President
                                           Elected vice president in 2001.
                                           Previously served as Technology
                                           Director since 1997.
                                           Joined BNA in 1983.

Sandra C. Degler             65           Chairman of the Board
                                           Elected chairman in 2004 and vice
                                           chairman in 1998. Served as president
                                           of Tax Management Inc. from 1983 to
                                           2000. Joined BNA in 1963.

George J. Korphage           58           Vice President and Chief Financial
                                           Officer
                                           Elected vice president in 1988 and
                                           chief financial officer in 1989.
                                           Joined BNA in 1972.

Gilbert S. Lavine            53           Treasurer
                                           Elected to present position in 1998.
                                           Joined BNA in 1985.


<PAGE>13


Item X.     EXECUTIVE OFFICERS OF THE REGISTRANT  (Continued)
            ------------------------------------


      Name                  Age           Present position and prior experience


Gregory C. McCaffery         44           Vice President and Chief Operating
                                           Officer
                                           Elected vice president in 2000
                                           and chief operating officer in
                                           2003. Previously was director of
                                           marketing and product development
                                           since 1996. Joined BNA in 1986.

Robert L. Velte              57           Vice President
                                           Elected vice president in 1995.
                                           Joined BNA in 1976.


Paul N. Wojcik               56           Vice Chariman, President and Chief
                                           Executive Officer
                                           Elected vice chairman in 2004,
                                           president in 1995 and CEO in 1997.
                                           Joined BNA in 1972.


<PAGE>14


                                     PART II


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

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.

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 through 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 54 years, and they are expected
to continue.

As of February 26, 2005, there were 1,378 Class A shareholders, 325 Class B
shareholders, and 3 Class C shareholders. During 2004, the Company repurchased
1,255,756 shares of Class B stock and 426,653 shares of Class C stock from
former employees.

Established stock price and dividends declared during 2004 and 2003 were as
follows:

      Stock Price
            January 1, 2003 - March 23, 2003                     $10.50
            March 24, 2003 - September 21, 2003                   11.00
            September 22, 2003 - March 21, 2004                   11.25
            March 22, 2004 - September 19, 2004                   11.75
            September 20, 2004 - December 31, 2004                12.00

      Record Date and Dividend Amount
            March 22, 2003                                         $.15
            September 20, 2003                                      .15
            March 20, 2004                                          .15
            September 18, 2004                                      .16


<PAGE>15


                                     PART II

Item 6.     Selected Financial Data
            -----------------------
                      The Bureau of National Affairs, Inc.
             Consolidated Operating and Financial Summary: 2004-2000
      (Dollar amounts in thousands, except per share and profit margin data)

                                  2004     2003      2002      2001      2000
                               --------  --------  --------  --------  --------
Operating Revenues             $321,256  $311,824  $309,790  $305,965  $297,399
Operating Expenses              283,304   286,274   281,900   291,489   269,365
-------------------------------------------------------------------------------
Operating Profit                 37,952    25,550    27,890    14,476    28,034
Non-operating Income:
  Investment Income               3,713     4,644     6,235     8,542     9,327
  Interest Expense               (5,620)   (5,710)   (5,829)   (6,000)   (1,654)
  Other Income (Expense)            (44)      724       191     4,421    (1,200)
-------------------------------------------------------------------------------
Income Before Income Taxes
 and Cumulative Effect of
 Accounting Changes              36,001    25,208    28,487    21,439    34,507
Income Taxes                     13,442     9,123     9,670     8,177    11,353
                               ------------------------------------------------
Income from Operations           22,559    16,085    18,817    13,262    23,154
Cumulative Effect of
 Accounting Changes (a)              --        --    (4,440)       --    (7,470)
                               ------------------------------------------------
Net Income                     $ 22,559  $ 16,085  $ 14,377  $ 13,262  $ 15,684
-------------------------------================================================
Profit Margins (% of revenues):
  Operating Profit                 11.8       8.2       9.0       4.7       9.4
  Earnings (b)                      7.0       5.2       6.1       4.3       7.8
-------------------------------------------------------------------------------
Earnings Per Share from Operations $.69      $.46      $.53      $.35      $.59
Cumulative Effect of
 Accounting Changes (a)              --        --      (.12)       --      (.19)
                               ------------------------------------------------
Total Earnings Per Share           $.69      $.46      $.41      $.35      $.40
                               ================================================
Dividends Per Share                $.31      $.30      $.30      $.30      $.28
-------------------------------================================================
Balance Sheet Data:
  Total Assets                 $318,347  $330,282  $340,293  $376,423  $358,552
  Long-Term Debt-
   less current portion          62,500    70,000    75,000    84,000    59,000
-------------------------------================================================
Employee Data:
  Number of Employees             1,802     1,878     1,999     2,121     2,085
  Total Employment Costs       $172,595  $174,363  $166,005  $162,060  $150,345
-------------------------------================================================
Stockholder Data at Year-End:
  Number of Stockholders          1,711     1,786     1,834     1,807     1,782
  Common Shares Outstanding
 (In thousands)                  31,719    33,653    34,922    37,492    38,797
-------------------------------================================================

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 changes in accounting for goodwill in
2002, and for selling expenses in 2000.

(b) Based on net income excluding the cumulative effects of the accounting
changes.


<PAGE>16


Selected Quarterly Data

The following is quarterly financial information (unaudited) for 2004 and 2003
(in thousands of dollars).

                                       First     Second    Third     Fourth
                2004                  Quarter    Quarter   Quarter   Quarter
                                       Ended      Ended     Ended     Ended
                                      March 27   June 19   Sept. 11  Dec. 31
------------------------------------------------------------------------------
Revenues                               $69,913   $69,901   $72,994   $108,448
Gross Profit                            31,143    31,744    34,755     56,134
Net Income                               3,701     3,435     5,954      9,469

Earnings Per Share                       $ .11     $ .11      $.18       $.29


                                      Quarter    Quarter   Quarter   Quarter
                2003                   Ended      Ended     Ended     Ended
                                      March 22   June 14   Sept. 6   Dec. 31
------------------------------------------------------------------------------
Revenues                               $65,860   $69,725   $74,936   $101,303
Gross Profit                            27,708    31,319    36,180     45,020
Net Income                               2,310     2,266     6,116      5,393

Earnings Per Share                       $ .07     $ .06      $.18      $ .15


<PAGE>17


                                     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.

2004 vs. 2003
-------------
BNA financial results for 2004 showed strong improvement through the entire
year. Consolidated operating profit and net income exceeded last year's results,
due to large improvements in all three segments' operating results.

Consolidated revenues increased 3.0 percent to $321.3 million, while operating
expenses were down 1.0 percent. As a result, the consolidated operating profit
was up 48 percent to $38.0 million. Net income was $22.6 million, a 40 percent
increase over 2003. Earnings per share were $.69, up 50 percent, due to the
improved net income and fewer outstanding shares. As explained below,
year-to-year comparisons for both the Publishing and Software segments were
favorably affected by certain 2003 events.

The publishing segment -which aggregates the Parent with Tax Management Inc.
(excluding BNA Software), IOMA, Pike & Fischer, Inc., BNA International Inc.,
Kennedy Information, Inc., and BNA Washington Inc.- generated 84 percent of
consolidated revenues. Publishing revenues were up 1.1 percent in 2004 to $269.3
million. Parent and Tax Management combined subscription and online revenues
were up 0.7 percent. Legal and tax products continued to generate respectable
revenue gains, while revenues from the other major market lines continued to
decline, albeit at a slower rate. Nearly all the other publishing units had
higher revenues. Publishing revenues are expected to grow by a low single-digit
percentage rate in 2005. Publishing operating expenses were down 1.8 percent
compared to last year, which had included a $1.6 million net expense for a
voluntary early retirement program (recorded in general and administrative
expenses). Excluding this one-time 2003 expense, operating expenses were down
1.2 percent, despite higher staffing expenses, due to lower fulfillment and
selling costs. Six new products were launched in 2004. Identifiable development
expenses for new products and improvements on existing products were $8.0
million in 2004 and $8.3 million in 2003. Operating expenses in 2004 also
include an identifiable $4.8 million for developing improved business and
publishing systems, compared to $4.9 million in 2003. The publishing segment's
operating profit was up 22 percent compared to 2003, excluding the one-time
expense.

The printing segment, which includes results of The McArdle Printing Company,
Inc., grew revenues by 11.4 percent in 2004. Intersegment revenues, expected to
decline as publishing segment subscribers continue to migrate from print to
electronic products, were down 13.0 percent. But commercial sales were up 26
percent, despite a very price-sensitive competitive environment, due mostly to
an upturn in financial printing work. Total printing revenues in 2005 are
expected to show little change. Operating expenses were up 9.3 percent,
reflecting higher variable costs. The segment operating profit was $392,000 in
2004 compared to a $283,000 loss in 2003.


<PAGE>18


The software segment combines BNA Software, a division of Tax Management Inc.,
with STF Services Corporation. Software segment revenues were up 3.3 percent in
2004 and operating expenses decreased 14.0 percent. BNA Software revenues were
up 7.3 percent and ongoing expenses decreased 5.4 percent due to lower
fulfillment costs and cost containment efforts. BNA Software recorded a $4.1
million operating profit in 2004; it posted a $1.8 million profit in 2003,
excluding a $1.8 million writedown of capitalized development costs (recorded as
an editorial expense). STF experienced lower revenues from both intersegment and
external customers, resulting in a 6.3 percent decline in total STF revenues
compared to 2003. Operating expenses decreased 12.2 percent due to lower
amortization and staffing costs, and STF achieved a 19.6 percent increase in its
operating profit. The total software segment recorded a $5.8 million operating
profit in 2004 compared to a $1.4 million profit in 2003. Software revenues are
expected to grow by a low single-digit percentage in 2005.

Investment income and net other income fell $1.6 million due to lower gains from
sales of securities and other assets. Interest expense decreased $90,000 due to
less debt and higher capitalized interest. Other comprehensive income reflected
a smaller unrealized holding gain in 2004 compared to 2003.

The consolidated federal, state, and local effective income tax rate increased
to 37.3 percent in 2004 from 36.2 percent in 2003, mainly due to lower exempt
interest income.


2003 vs. 2002
-------------
The weak business climate continued to adversely affect BNA's revenues, asset
valuations, and investment income, particularly in the first half of the year.
Although there were improvements in the last half, they weren't strong enough to
impact 2003 results to a significant degree. Cost containment efforts mitigated
a sharp increase in employee benefit expenses, but consolidated profits declined
from comparable prior year levels.

Consolidated revenues increased 0.7 percent to $311.8 million, while operating
expenses increased 1.6 percent. As a result, the consolidating operating profit
was down 8.4 percent, reflecting lower Printing and Software segment results.
Excluding the effect of a 2002 change in accounting, net income declined 14.5
percent in 2003 to $16.1 million, and earnings per share were down 13.2 percent
to $.46.

The publishing segment generated 85 percent of consolidated revenues. Publishing
revenues were up 1.3 percent. Publishing revenues in 2003 benefited from a large
one-year increase from new contracts with online partners. Operating expenses
increased just $1.2 million in total, despite a $7.5 million increase in health
care and postretirement expenses and a $1.8 million charge for a voluntary early
retirement program. Depreciation and amortization expenses were down $1.7
million from 2002, which had included a larger intangible asset writedown. Cost
containment efforts, including staff reductions, and lower fulfillment costs,
reflecting the continuing migration of subscribers to electronic products, held
the total publishing segment expenses to only a 0.5 percent increase. Ten new
products were launched in 2003. Identifiable development expenses for new
products and improvements on existing products were $8.3 million in 2003 and
$5.7 million in 2002. Operating expenses in 2003 also include an identifiable
$4.9 million for developing improved business and publishing systems, compared
to $3.3 million in 2002. Publishing operating profit was up 10.3 percent
compared to 2002.

The printing segment experienced a 6.1 percent decrease in sales, reflecting a
2.3 percent decrease from commercial customers and an 11.9 percent decrease in
intersegment revenues. Sales to commercial customers suffered from the general
economic slowdown and industry-wide excess capacity. Intercompany revenues
continue to decline as publishing segment subscribers migrate from print to
electronic products. Operating expenses decreased 3.3 percent, reflecting lower
variable costs and workforce reductions. Printing operating loss was $283,000 in
2003, compared to a profit of $748,000 in 2002.


<PAGE>19


The software segment's revenues were down $1.1 million compared to 2002, which
had included a one-time $1.3 million STF contract termination settlement. BNA
Software revenues increased 3.9 percent reflecting strong demand for its tax and
financial planning products, but STF revenues were lower due to the terminated
contract. The segment operating expenses increased 13.0 percent over 2002, which
had included a $450,000 credit for a tax penalty abatement. Marketing expense,
primarily related to new products, increased $0.7 million and amortization
expenses, including a writedown of capitalized product development costs, were
up $0.8 million. The segment recorded a $1.4 million operating profit in 2003
compared to a $5.0 million operating profit in 2002.

Non-operating income decreased from $597,000 in 2002 to a $342,000 net expense
in 2003. Other income reflected higher gains from asset sales, but investment
income was lower due to lower investment balances and lower market yields.
Interest expense was slightly lower.

The consolidated federal, state, and local effective income tax rate increased
to 36.2 percent in 2003 from 33.9 percent in 2002, mainly due to higher state
and local taxes.

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 by
operating activities increased $5.8 million in 2004 to $38.4 million, reflecting
a 3.5 percent increase in collections, and a 1.8 percent reduction in operating
expenditures.

Cash used for investing activities netted to $11.2 million. Capital expenditures
netted to $5.2 million. Capital expenditures for 2005 are expected to be
approximately $5 million. Cash used for the investment portfolio was $6.0
million.

Cash used for financing activities netted to $37.3 million. Capital stock
repurchases amounted to $29.2 million, including mandatory tenders. Debt
principal repayments amounted to $5 million, and the Company paid cash dividends
of $10.2 million in 2003. Sales of Class A capital stock to employees totaled
$7.1 million.

The Company's stockholders, when selling stock, are required to first tender
them to the Company or to its employee stock purchase plan. The Company has
supported the continuance of employee ownership through its practice of
repurchasing stock tendered by stockholders, but is not required to do so.
Capital stock with a market value of $5.4 million as of December 31, 2004, is
known or expected to be tendered in 2005. The actual amount repurchased will
likely be higher.

Contractual cash obligations as of December 31, 2004, were as follows (in
thousands of dollars):

                                 Payments Due by Period
                        ------------------------------------------------------
Contruactural                       Less than      1-3        4-5      After 5
Obligations:                Total     1 Year      Years      Years      Years
------------------------------------------------------------------------------
Term Debt                 $ 70,000   $  7,500   $ 18,000   $ 21,000   $ 23,500
Operating Leases            16,716      6,462      8,245      1,491        518
Deferred Real Estate Tax     6,382         --      6,382         --         --
------------------------------------------------------------------------------
Total                     $ 93,098   $ 13,962   $ 32,627   $ 22,491   $ 24,018


<PAGE>20


With over $120 million in cash and investment portfolios, the financial position
and liquidity of the Company remains very strong. The 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
the reporting period. The Company evaluates its estimates and assumptions on an
ongoing basis using a combination of historical information and other
information that is believed to be relevant. 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 $73.5 million of goodwill at year-end 2004. The carrying amount
of goodwill is subject to annual testing. Goodwill that is not supported by
measures of fair value must be written down, resulting in an impairment expense.
The Company updated its analysis of goodwill as of December 31, 2004, and
determined that there was no impairment.

The Company has $23.2 million of intangible assets at year-end 2004, as
summarized in Note 9 to the Company's financial statements. Most of this is
software that is used internally. In addition, intangible assets include
identified assets of Kennedy and STF at the time of their respective
acquisitions. 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 must be recorded, and
amortization periods may be reduced. Amortization expense was $6.6 million in
2004, and $10.2 million in 2003 including $2.4 million in impairment charges.

Kennedy has goodwill and intangible assets amounting to $35.5 million. Operating
losses or other revenue base deterioration could result in future impairment
losses.

The Company has recorded $31.5 million of net deferred income tax assets as of
year-end 2004, as described in Note 8 to the consolidated financial statements.
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 income tax assets will be fully
realized.

The Company has pension and other postretirement benefit liabilities totaling
$77.0 million at year-end 2004, as described in Note 4 to the Company's
financial statements. Independent actuaries use a number of assumptions to
compute these liabilities, the accumulated benefit obligations, and the related
benefit expenses. These include life expectancies, retirement ages, health care
cost trends, 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. Total expenses for the postretirement benefits that were subject to
estimates and assumptions were $19.3 million in 2004 and $18.1 million in 2003.


<PAGE>21


Accounting Pronouncements
-------------------------
In response to the enactment of the American Job Creation Act of 2004 (the "Jobs
Act"), the FASB issued FASB Staff Position (FSP) No. 109-1, "Application of FASB
Statement No. 109, Accounting for Income Taxes, for the Tax Deduction Provided
to U.S. Based Manufacturers" (FSP 109-1), and FSP No.109-2, "Accounting and
Disclosure Guidance for the Foreign Earnings Repatriation Provisions within the
American Jobs Creation Act of 2004".

FSP No. 109-1 clarifies how to apply SFAS No. 109 to the new law's tax deduction
for income attributable to "domestic production activities." The fully phased-in
tax deduction is up to nine percent of the lesser of taxable income or
"qualified production activities income," as defined by the Jobs Act. The staff
position requires that the deduction be accounted for as a special deduction in
the period earned, not as a tax-rate reduction. As a result, a reduction in
income tax expense for the domestic production activities will be recognized in
the quarterly period(s) in which expenses are eligible for the deduction.

The FASB also recently issued the following pronouncements: SFAS No. 151,
Inventory Costs--An Amendment of ARB No. 43, Chapter 4; and SFAS No. 123
(revised 2004), Share-Based Payment. The adoption of these accounting standards
is not expected to have an impact on the Company's financial position.


Item 7a.    Quantitative And Qualitative Disclosures About Market Risk
            ----------------------------------------------------------
The Company is exposed to interest rate risks in its investment portfolio. A
hypothetical ten percent increase in market interest rates would result in a
decline in the market value of the Company's fixed-income securities.

The maturity dates and average interest yields for fixed-income securities debt
held in the Company's investment portfolio as of December 31, 2004, was as
follows (in thousands of dollars):

Expected Maturity Date
--------------------------------------------------------------------------------
                           2005     2006     2007     2008     2009   Thereafter
--------------------------------------------------------------------------------
Municipal Bonds           $11,919  $18,969  $25,327  $ 5,873  $ 7,074   $22,731

Average Interest Yield       2.5%     4.9%     4.9%     6.0%     5.0%      4.9%

Corporate Debt                 --      --      $672     $495       --        --

Average Interest Yield                         2.8%     3.5%
--------------------------------------------------------------------------------

The expected yield from $2,390,000 invested in corporate debt mutual funds with
no fixed maturity date is 7.6 percent.

The Company manages interest rate risk in its investment portfolio by
diversifying the maturities of its fixed-income investments. Approximately 74
percent of these instruments at year-end 2004 mature within five years.
Shorter-term maturity investments reduce the risk that an increase in market
interest rates 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>22



                                     PART II


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


                      THE BUREAU OF NATIONAL AFFAIRS, INC.

                        Consolidated Financial Statements

                        December 31, 2004, 2003, and 2002

                   (With Independent Auditors' Report Thereon)















<PAGE>23


             Report of Independent Registered Public Accounting Firm

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

We have audited the accompanying consolidated balance sheets of The Bureau of
National Affairs, Inc. and subsidiaries ("the Company") as of December 31, 2004
and 2003, and the related consolidated statements of income, shareholders'
equity and comprehensive income, cash flows and the consolidated financial
statement schedule included as Item 15(a)(2) on the Company's Form 10-K for each
of the years in the three-year period ended December 31, 2004. These
consolidated financial statements and related consolidated 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
related consolidated financial statement schedule based on our audits.

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

In our opinion, the 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, 2004 and 2003, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 2004, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the consolidated 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.

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of The Bureau of
National Affairs, Inc. and subsidiaries' internal control over financial
reporting as of December 31, 2004, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO), and our report dated March 11,
2005 expressed an unqualified opinion on management's assessment of, and the
effective operation of, internal control over financial reporting.

                        s/ KPMG LLP
                        -----------
                        KPMG LLP

McLean, Virginia
March 11, 2005


<PAGE>24


             Report of Independent Registered Public Accounting Firm

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

We have audited management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting, included in
Item 9a to The Bureau of National Affairs, Inc. and subsidiaries' ("the
Company") 2004 Form 10-K, that the Company maintained effective internal control
over financial reporting as of December 31, 2004, based on criteria established
in Internal Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company's management is
responsible for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting. Our responsibility is to express an opinion on management's
assessment and an opinion on the effectiveness of the Company's internal control
over financial reporting based on our audit.

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

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

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

In our opinion, management's assessment that The Bureau of National Affairs,
Inc. and subsidiaries maintained effective internal control over financial
reporting as of December 31, 2004, is fairly stated, in all material respects,
based on criteria established in Internal Control--Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Also, in our opinion, The Bureau of National Affairs, Inc. and subsidiaries
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on criteria established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheets of
The Bureau of National Affairs, Inc. and subsidiaries as of December 31, 2004
and 2003, and the related consolidated statements of income, shareholders'
equity and comprehensive income, cash flows and the consolidated financial
statement schedule for each of the years in the three-year period ended December
31, 2004. Our report dated March 11, 2005 expressed an unqualified opinion on
those consolidated financial statements and the related consolidated financial
statement schedule.

                        s\ KPMG LLP
                        -----------
                        KPMG LLP

McLean, Virginia
March 11, 2005


<PAGE>25



                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

               (In thousands of dollars, except per share amounts)


                                                            Percent of Operating
                                                                         Revenue
                                                            --------------------
                                   2004     2003     2002    2004   2003   2002
                                 -------- -------- -------- ------ ------ ------
Operating Revenues (Note 3)      $321,256 $311,824 $309,790 100.0% 100.0% 100.0%
                                 -------- -------- -------- ------ ------ ------
Operating Expenses
(Notes 3,4,9, and 11):
  Editorial, production, and
   distribution                   171,300  171,597  166,775  53.3   55.0   53.8
  Selling                          55,316   56,698   55,354  17.2   18.2   17.9
  General and administrative       56,688   57,979   59,771  17.7   18.6   19.3
                                 -------- -------- -------- ------ ------ ------
Total Operating Expenses          283,304  286,274  281,900  88.2   91.8   91.0
                                 -------- -------- -------- ------ ------ ------
Operating Profit                   37,952   25,550   27,890  11.8    8.2    9.0
                                 -------- -------- -------- ------ ------ ------
Non-Operating Income:
  Investment income (Note 5)        3,713    4,644    6,235   1.1    1.5    2.0
  Interest expense (Note 10)       (5,620)  (5,710)  (5,829) (1.7)  (1.8)  (1.9)
  Other income(expense)(Note 6)       (44)     724      191    --    0.2    0.1
                                 -------- -------- -------- ------ ------ ------
Total Non-Operating Income         (1,951)    (342)     597  (0.6)  (0.1)   0.2
                                 -------- -------- -------- ------ ------ ------
Income Before Income Taxes         36,001   25,208   28,487  11.2    8.1    9.2
Provision for income taxes
(Note 8)                           13,442    9,123    9,670   4.2    2.9    3.1
                                 -------- -------- -------- ------ ------ ------
Income before cumulative
  effect of accounting change      22,559   16,085   18,817   7.0%   5.2%   6.1%
                                                            ====== ====== ======
Cumulative effect of accounting
  change (Note 7)                     --        --   (4,440)
                                 -------- -------- --------
Net Income                       $ 22,559 $ 16,085 $ 14,377
                                 ======== ======== ========

Earnings Per Share (Note 12)
Income before cumulative
  effect of accounting change    $    .69 $    .46 $    .53
Cumulative effect of accounting
  change (Note 7)                      --       --     (.12)
                                 -------- -------- --------
Net Income Per Share             $    .69 $    .46 $    .41
                                 ======== ======== ========



          See accompanying notes to consolidated financial statements.


<PAGE>26


                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003
                            (In thousands of dollars)


                                     ASSETS

                                                          December 31,
                                                   --------------------------
                                                      2004            2003
                                                   ----------     -----------
    Current Assets:
      Cash and cash equivalents (Note 5)           $   8,442      $   18,488
      Short-term investments (Note 5)                 11,752          25,450
      Receivables (Note 9)                            30,827          32,260
      Inventories (Note 9)                             3,535           3,802
      Prepaid expenses                                 3,864           4,560
      Deferred selling expenses (Note 3)               3,474           4,625
      Deferred income taxes (Note 8)                   8,554           8,197
                                                   ----------     -----------
    Total Current Assets                              70,448          97,382

    Marketable Securities (Note 5)                    99,817          80,985
    Property and Equipment (Note 9)                   28,297          30,519
    Deferred Income Taxes (Note 8)                    22,955          23,368
    Goodwill (Note 7)                                 73,452          73,852
    Intangible and Other Assets (Note 9)              23,378          24,176
                                                   ----------     -----------
    Total Assets                                   $ 318,347      $  330,282
                                                   ==========     ===========


          See accompanying notes to consolidated financial statements.

                                                                     (Continued)


<PAGE>27


                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003

                            (In thousands of dollars)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                          December 31,
                                                   --------------------------
                                                      2004            2003
                                                   ----------     -----------
    Current Liabilities:
      Current portion of long-term debt (Note 10)  $    7,500     $     5,000
      Payables and accrued liabilities (Note 9)        44,963          43,730
      Deferred revenues (Note 3)                      112,085         114,954
                                                   ----------     -----------
    Total Current Liabilities                         164,548         163,684

    Long-Term Debt, less current portion (Note 10)     62,500          70,000
    Postretirement Benefits, less current portion
     (Note 4)                                          67,518          64,302
    Other Liabilities                                   8,682           7,793
                                                   ----------     -----------
    Total Liabilities                                 303,248         305,779
                                                   ----------     -----------

    Commitments and Contingencies (Notes 11 and 12)

    Stockholders' Equity (Note 12):
      Common stock issued, $1.00 par value --
        Class A - 30,000,000 shares                    30,000          30,000
        Class B - 24,634,865 shares                    24,635          24,635
        Class C - 2,531,680 shares                      2,532           2,532
      Additional paid-in capital                       15,910          11,350
      Retained earnings                               108,030          95,631
      Treasury stock, at cost                        (166,154)       (139,470)
      Elements of other comprehensive income:
        Net unrealized gain (loss) on
         marketable securities                            354             (17)
        Foreign currency translation adjustment          (208)           (158)
                                                   ----------     -----------
    Total Stockholders' Equity                         15,099          24,503
                                                   ----------     -----------
    Total Liabilities and Stockholders' Equity     $  318,347     $   330,282
                                                   ==========     ===========


          See accompanying notes to consolidated financial statements.


<PAGE>28


                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

                            (In thousands of dollars)


                                             2004         2003         2002
                                          ----------   ----------   ----------
Cash Flows from Operating Activities:
  Net income                              $  22,559    $  16,085    $  14,377
  Items with different cash requirements
  than that reflected in net income -
   Cumulative effect of accounting change        --           --        4,440
   Depreciation and amortization             10,282       14,292       15,117
   (Gain) on sales of securities               (314)      (1,174)      (1,629)
   (Gain) loss on sales of assets                44         (724)        (191)
   Capitalized interest                        (367)        (195)         (62)
   Others                                     1,140        1,079          580

  Changes in operating assets and liabilities -
   Receivables                                2,026        2,919        1,845
   Deferred revenues                         (2,824)      (4,215)      (4,642)
   Payables and accrued liabilities           1,754        1,822       (4,647)
   Postretirement benefits                    2,333        3,923         (940)
   Deferred income taxes                       (116)      (2,390)         114
   Deferred selling expenses                  1,151        1,199          441
   Inventories                                  267         (207)         128
   Other assets and liabilities - net           494          197        1,266
                                          ----------   ----------   ----------
Net cash provided by operating activities    38,429       32,611       26,197
                                          ----------   ----------   ----------

Cash Flows from Investing Activities:
  Capital expenditures -
   Purchase of equipment and furnishings     (1,706)        (903)      (1,414)
   Capitalized software                      (3,884)      (3,347)      (3,060)
   Building improvements                        (69)        (585)        (183)
   Business purchase price adjustments          400         (447)        (753)
   Proceeds from sales of assets                175          523           48
   Purchase of publishing assets               (102)        (136)        (358)
                                          ----------   ----------   ----------
Net cash (used for) capital expenditures     (5,186)      (4,895)      (5,720)
                                          ----------   ----------   ----------



          See accompanying notes to consolidated financial statements.

                                                                     (Continued)


<PAGE>29


                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

                            (In thousands of dollars)

                                             2004         2003         2002
                                          ----------   ----------   ----------

  Investment securities -
   Proceeds from sales and maturities        83,806      122,471      130,355
   Purchases                                (89,811)    (113,473)    (119,683)
                                          ----------   ----------   ----------

Net cash provided by (used for)
  investment securities                      (6,005)       8,998       10,672
                                          ----------   ----------   ----------
Net cash provided by (used for)
  investing activities                      (11,191)       4,103        4,952
                                          ----------   ----------   ----------
Cash Flows from Financing Activities:
  Sales of capital stock to employees         7,118        8,497        7,056
  Purchases of treasury stock               (29,242)     (22,782)     (32,959)
  Dividends paid                            (10,160)     (10,471)     (10,733)
  Repayment of borrowings                    (5,000)      (5,000)      (4,000)
                                          ----------   ----------   ----------
Net cash (used for) financing activities    (37,284)     (29,756)     (40,636)
                                          ----------   ----------   ----------
Net Increase (Decrease) in Cash
  and Cash Equivalents                      (10,046)       6,958       (9,487)

Cash and Cash Equivalents,
  beginning of year                          18,488       11,530       21,017
                                          ----------   ----------   ----------
Cash and Cash Equivalents, end of year    $   8,442    $  18,488    $  11,530
                                          ==========   ==========   ==========


Supplemental Cash Flow Information:
  Interest paid                           $   5,588    $    5,597    $    5,802
  Income taxes paid                          13,650        10,325         9,360


          See accompanying notes to consolidated financial statements.


<PAGE>30

<TABLE>
                      THE BUREAU OF NATIONAL AFFAIRS, INC.
    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002

                            (In thousands of dollars)

                                   Comprehensive  Capital  Additional                         Accum. Other
                                      Income       Stock    Paid-In    Retained    Treasury   Comprehensive
                                     (Note 13)    Issued    Capital    Earnings      Stock       Income
                                   -------------  -------  ----------  ---------  ----------  -------------
<S>                                <C>            <C>      <C>         <C>        <C>         <C>
Balance, January 1, 2002                          $57,167  $  1,249    $ 86,373   $ (89,181)  $    (732)
 Net Income                          $ 14,377          --        --      14,377          --          --
 Other Comprehensive Income, net
  of tax:
   Unrealized (loss) on marketable
    securities                         (1,092)         --        --          --          --      (1,092)
   Currency translation adjustment        (66)         --        --          --          --         (66)
                                   -------------
  Comprehensive Income               $ 13,219
                                   =============

  Sales of Class A treasury shares
   to employees                                        --     4,614          --       2,442          --
  Repurchases of shares                                --        --          --     (32,959)         --
  Cash dividends--$.30 per share                       --        --     (10,733)         --          --
                                   -------------  -------  ----------  ---------  ----------  -------------
 Balance, December 31, 2002                        57,167     5,863      90,017    (119,698)     (1,890)
  Net Income                         $ 16,085          --        --      16,085          --          --
  Other Comprehensive Income, net
   of tax:
    Unrealized gain on marketable
     securities                         1,794          --        --          --          --       1,794
    Currency translation adjustment       (79)         --        --          --          --         (79)
                                   -------------
  Comprehensive Income               $ 17,800
                                   =============
  Sales of Class A treasury shares
   to employees                                        --     5,487          --       3,010          --
  Repurchases of shares                                --        --          --     (22,782)         --
  Cash dividends--$.30 per share                       --        --     (10,471)         --          --
                                   -------------  -------  ----------  ---------  ----------  -------------
 Balance, December 31, 2003                        57,167    11,350      95,631    (139,470)       (175)
  Net Income                         $ 22,559          --        --      22,559          --          --
  Other Comprehensive Income, net
   of tax:
    Unrealized gain on marketable
     securities                           371          --        --          --          --         371
    Currency translation adjustment       (50)         --        --          --          --         (50)
                                   -------------
  Comprehensive Income             $   22,880
                                   =============

  Sales of Class A treasury shares
   to employees                                        --     4,560          --       2,558          --
  Repurchases of shares                                --        --          --     (29,242)         --
  Cash dividends--$.31 per share                       --        --     (10,160)         --          --
                                                  -------  ----------  ---------  ----------   ------------
 Balance, December 31, 2004                       $57,167  $ 15,910    $108,030   $(166,154)   $    146
                                                  =======  ==========  =========  ==========   ============
</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, 2004, 2003, AND 2002


(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, and the allowance
     for doubtful accounts, and for evaluating the possible impairment of
     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

     During 2002, the Company purchased publishing assets, primarily customer
     lists, from another publisher. The total cost was $846,000, consisting of
     $772,000 in cash, payable over four years, and the balance in assumed
     liabilities. In 2003, the Company purchased customer lists for $38,000.


(3) RECOGNITION OF REVENUES AND SELLING EXPENSES

     Revenues, net of appropriate reserve for returns, are recognized when
     products are delivered to customers. Deferred revenues consist almost
     entirely of deferred subscription revenues. Subscription revenues and
     related sales commission expenses are deferred and amortized over the
     subscription terms, which are primarily for one year.

     Advertising costs are expensed as incurred and were $6,797,000, $7,524,000,
     and $7,478,000 in 2004, 2003, and 2002 respectively.


(4) EMPLOYEE BENEFIT PLANS

     The Company has noncontributory defined benefit pension plans covering
     employees of the Parent. Benefits are based on years of service and average
     annual compensation. The plans provide for five-year cliff vesting. In
     addition to providing pension benefits, the Company extends certain health
     care and life insurance benefits (other postretirement benefits) to retired
     employees of the Parent.

                                                                     (Continued)


<PAGE>32


     The following table sets forth the obligations and funded status of the
     plans as of December 31 (in thousands of dollars):

                                                                           Other
                                                                  Postretirement
                                           Pension Benefits        Benefits
                                         ------------------- -------------------
                                            2004     2003       2004     2003
                                         --------- --------- --------- ---------
     Change in projected benefit obligation:
     Benefit obligation - January 1      $160,697  $136,022  $ 87,168  $ 68,689
     Service cost                           7,677     6,974     4,345     3,140
     Voluntary early retirement program        --     1,760        --        --
     Interest cost                          9,451     8,784     6,294     4,599
     Plan amendment                            --       699        --        --
     Actuarial loss                         6,944    11,394    34,141    12,754
     Benefits paid                         (7,726)   (4,936)   (2,816)   (2,014)
     Curtailments                              --       ---      (388)       --
                                         --------- --------- --------- ---------
     Benefit obligation - December 31     177,043   160,697   128,744    87,168
                                         --------- --------- --------- ---------
     Change in plan assets:
     Fair value of plan assets -
       January 1 -                        106,557    85,126    21,934    17,269
     Actual return on plan assets          13,915    14,202     2,153     4,665
     Employer contribution                 14,000    12,000        --        --
     Benefits paid                         (7,552)   (4,771)       --        --
                                         --------- --------- --------- ---------
     Fair value of plan assets -
     December 31                          126,920   106,557    24,087    21,934
                                         --------- --------- --------- ---------
     Funded status                        (50,123)  (54,140) (104,657)  (65,234)
     Unrecognized net loss                 30,892    30,291    46,375    13,895
     Unrecognized prior service cost          681       743      (125)     (179)
                                         --------- --------- --------- ---------
     Net amount recognized                (18,550)  (23,106)  (58,407)  (51,518)
     Less current portion                  (6,633)   (8,287)   (2,806)   (2,035)
                                         --------- --------- --------- ---------
     Long-term portion                   $(11,917) $(14,819) $(55,601) $(49,483)
                                         ========= ========= ========= =========

     Assumed discount rate                   5.7%      6.0%      5.7%      6.0%
     Assumed rate of compensation increase   5.0%      5.0%       --        --


     The Company's funding practice for the pension plan is to contribute
     amounts which, at a minimum, satisfy ERISA requirements. The Company
     contributed $14,000,000 in 2004, $12,000,000 in 2003, and $9,198,000 in
     2002. 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. Pending
     actuarially computed requirements, the Company expects to contribute $12
     million to its pension plan and none to its other postretirement benefit
     plan in 2005.

                                                                     (Continued)


<PAGE>33


     The following benefit payments, which reflect expected future service, as
     appropriate, are expected to be paid (in thousands of dollars):

                                                                    Other
                                                    Pension     Postretirement
                                                    Benefits      Benefits
                                                  -----------   --------------
     2005                                         $   7,673     $    3,126
     2006                                             8,000          3,591
     2007                                             8,508          4,117
     2008                                             9,323          4,609
     2009                                            10,184          5,196
     Years 2010 - 2014                               64,895         34,759


     Pension accounting requires the calculation of two benefit obligation
     amounts. The projected benefit obligation is the present value cost of the
     Plan providing future benefits, calculated by using years of service as of
     the measurement date and assuming future compensation increases. The
     accumulated benefit obligation is similar, but it is calculated using
     current compensation levels. The following shows pension benefit
     obligations, as calculated by an independent actuary, and plan assets (in
     thousands of dollars):

                                                      Pension Benefits
                                                  --------------------------
                                                     2004            2003
                                                  ----------     -----------
       Projected benefit obligation               $ 177,043      $  160,697
       Accumulated benefit obligation               139,611         125,006
       Fair value of plan assets                    126,920         106,557



     Components of pension expense, based on the actuarial study as of January 1
     for each year, were as follows (in thousands of dollars):

                                                  2004       2003       2002
                                               ---------  ---------  ---------
     Service cost -- benefits earned
       during the year                         $  7,677   $  6,974   $  5,807
     Interest cost                                9,451      8,784      8,024
     Expected return on plan assets              (8,822)    (7,042)    (7,172)
     Voluntary early retirement program              --      1,760         --
     Amortization of net actuarial loss           1,250      1,261         --
     Amortization of prior service cost              62         62         --
     Amortization of transition assets               --         --       (334)
                                               ---------  ---------  ---------
     Pension expense                           $  9,618   $ 11,799   $  6,325
                                               =========  =========  =========

     Assumed discount rate                         6.0%       6.5%       7.0%
     Assumed rate of compensation increase         5.0%       5.0%       5.0%
     Expected long-term return on plan assets      8.5%       8.5%       8.5%

                                                                     (Continued)


<PAGE>34


     In addition, some 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
     $1,206,000 in 2004, $1,342,000 in 2003, and $1,460,000 in 2002.

     Components of other postretirement benefit expense, based on the actuarial
     study as of January 1 for each year, were as follows (in thousands of
     dollars):

                                                  2004       2003       2002
                                               ---------  ---------  ---------
     Service cost -- benefits earned
       during the year                         $  4,345   $  3,140   $  2,185
     Interest cost                                6,294      4,599      3,688
     Expected return on plan assets              (1,864)    (1,382)    (1,612)
     Amortization of net actuarial (gain)loss     1,393         --       (505)
     Amortization of prior service cost             (54)       (54)       (54)
     Curtailments                                  (388)        --         --
                                               ---------  ---------  ---------
     Other postretirement benefits expense     $  9,726   $  6,303   $  3,702
                                               =========  =========  =========

     Assumed discount rate                         6.0%       6.5%       7.0%
     Expected long-term return on plan assets      8.5%       8.5%       8.5%

     The postretirement benefit obligation as of year-end 2004 was determined
     using an assumed health care cost trend rate of 10 percent for 2005,
     gradually declining to 4.5 percent in 2010 and threreafter. A one percent
     increase in the assumed health care cost trend rate for each year would
     increase the 2004 year-end postretirement benefit obligation by $24.5
     million and the 2004 postretirement benefit service and interest expense by
     $2.6 million. A one percent decrease in the assumed health care cost trend
     rate would decrease the postretirement benefit obligation by $19.4 million
     and the postretirement benefit service and interest cost by $2.0 million.

     In developing the long-term rate of return assumptions for pension and
     other postretirement plan assets, the Company considers the historical
     average long-term rate of earnings, and the expected future long-term
     performance of individual asset categories. The Company assumes an average
     annual long-term return of 8.5 percent based on an asset allocation of 60
     percent in equity assets with an expected long-term return of 10 percent,
     and 40 percent in fixed income assets with an expected long-term return of
     6.5 percent.

     Plan assets allocations as of December 31, were as follows:

                                                                    Other
                                                                Postretirement
                                          Pension Benefits         Benefits
                                         ------------------  ------------------
                                           2004      2003      2004      2003
                                         --------  --------  --------  --------
     Equity securities                       64%       62%       69%       66%
     Fixed income securities                 29        30        27        30
     Cash equivalents                         7         8         4         4
                                         --------  --------  --------  --------
     Total                                  100%      100%      100%      100%
                                         ========  ========  ========  ========

                                                                     (Continued)
<PAGE>35


     The pension plan assets are actively managed by equity and fixed income
     investment professionals emphasizing a long-term horizon. The authorized
     allocation range for the equity portfolio is 35-70 percent of plan assets,
     although the typical range is 50-70 percent, with the balance of assets
     allocated to the fixed income portfolio. Up to 15 percent of the assets may
     be invested in international equity funds. Risk is managed by maintaining
     broadly diversified portfolios as well as by reallocating assets between
     the equity and fixed income portfolios.

     The postretirement benefits plan assets are actively managed by equity and
     fixed income investment professionals emphasizing a long-term horizon. The
     authorized allocation range for the equity portfolio is 40-75 percent of
     plan assets, although the typical range is 50-70 percent, with the balance
     of assets allocated to the fixed income portfolio. Risk is managed by
     maintaining broadly diversified portfolios as well as by reallocating
     assets between the equity and fixed income portfolios.


 (5) INVESTMENTS AND INVESTMENT INCOME

     Cash and investments consisted of the following (in thousands of dollars):

                                                         December 31,
                                                  --------------------------
                                                     2004           2003
                                                  -----------    -----------
     Cash and cash equivalents                    $    8,442     $   18,488
     Short-term investments                           11,752         25,450
     Marketable securities                            99,817         80,985
                                                  -----------    -----------
     Total                                        $  120,011     $  124,923
                                                  ===========    ===========

     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.

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

                                               2004        2003        2002
                                            ---------   ---------   ---------
     Interest income                        $  2,859    $  2,882    $  3,771
     Dividend income                             540         588         835
     Net gain on sales of securities             314       1,174       1,629
                                            ---------   ---------   ---------
     Total                                  $  3,713    $  4,644    $  6,235
                                            =========   =========   =========

     Proceeds from the sales and maturities of securities were $83,806,000,
     $122,471,000, and $130,355,000 in 2004, 2003, and 2002 respectively. Gross
     realized gains and (losses) from these sales were $371,000 and $(57,000) in
     2004, $1,247,000 and $(73,000) in 2003, and $1,717,000 and $(88,000) in
     2002. The specific identification method is used in computing realized
     gains and losses.

                                                                     (Continued)
<PAGE>36


     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, 2004            Cost       Gains       Losses       Value
     -----------------         ----------  ----------  ----------  ----------
     Equity securities         $   15,667  $   1,081   $    (629)  $  16,119
     Municipal bonds               91,941        780        (828)     91,893
     Corporate debt                 3,418        151         (12)      3,557
                               ----------  ----------  ----------  ----------
     Total                     $  111,026  $   2,012   $  (1,469)  $ 111,569
                               ==========  ==========  ==========  ==========

                                             Gross       Gross
                               Amortized   Unrealized  Unrealized     Fair
     December 31, 2003           Cost         Gains      Losses       Value
     -----------------         ----------  ----------  ----------  ----------
     Equity securities         $  14,198   $     398   $  (1,039) $   13,557
     Municipal bonds              88,034       1,218        (732)     88,520
     Corporate debt                4,230         128          --       4,358
                               ----------  ----------  ----------  ----------
     Total                     $ 106,462   $   1,744   $  (1,771)  $ 106,435
                               ==========  ==========  ==========  ==========

     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, 2004, were as follows (in
     thousands of dollars):

                                                  Amortized         Fair
                                                     Cost          Value
                                                  -----------    -----------
        Within one year                           $   11,923     $    11,919
        One through five years                        58,889          58,410
        Five through ten years                         9,972          10,216
        Over ten years                                12,334          12,515
        No fixed maturity date                         2,241           2,390
                                                  -----------    -----------
        Total                                     $   95,359     $    95,450
                                                  ===========    ===========

(6) OTHER INCOME (EXPENSE)

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

                                               2004        2003        2002
                                            ---------   ----------  ----------
    Gain on sales of publishing assets      $     59    $     739   $     160
    Gains (losses) on disposals of asset        (103)         (15)         31
                                            ---------   ----------  ----------
    Total                                   $    (44)   $     724   $     191
                                            =========   ==========  ==========

     The revenues and operating expenses of publications sold were not
     significant.


<PAGE>37


(7) GOODWILL

     Effective January 1, 2002, the Company adopted Statement of Financial
     Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS
     142), which revised the accounting and financial reporting standards for
     acquired goodwill and other intangible assets. Under SFAS 142, goodwill and
     indefinite-lived intangible assets are no longer amortized but instead are
     subject to an annual test for impairment, which could result in a charge to
     operations when their carrying amount exceeds their estimated fair value.

     Under the provisions of SFAS 142, a transition test of the $77 million of
     goodwill as of January 1, 2002, resulted in a writedown of $4.4 million;
     this was recorded on the consolidated statements of income as a Cumulative
     Effect of Accounting Change.

     The Company updated its analysis of goodwill impairment as of December 31,
     2004, and determined that there was no further impairment because the
     estimated fair value of applicable reporting units was in excess of their
     carrying amount.

     Goodwill assigned to the operating segments and the changes in the carrying
     amount of goodwill for the three years ended December 31, 2004, are as
     follows:


                                   Publishing  Printing  Software     Total
     ----------------------------- ----------  --------  ---------   --------
     Balance, January 1, 2002       $ 54,047   $    917  $  21,736   $ 76,700
     Reclass assembled workforce         411         --         --        411
     Subscriber list writeoff            (20)        --         --        (20)
     Business acquisition purchase
       price adjustments                  --         --      1,131      1,131
     Impairment charge                (4,440)        --         --     (4,440)
                                    ---------  --------- ----------  --------
     Balance, December 31, 2002       49,998        917     22,867     73,782
     Business acquisition purchase
       price adjustments                  --         --         70         70
                                    ---------  ---------  ---------  ---------
     Balance, December 31, 2003       49,998        917     22,937     73,852
     Business acquisition purchase
       price adjustment                   --         --       (400)      (400)
                                    ---------  ---------  ---------  ---------
     Balance, December 31, 2004     $ 49,998   $    917   $ 22,537   $ 73,452
                                    =========  =========  =========  =========

<PAGE>38


(8) INCOME TAXES

     Income tax expense (benefit) was allocated as follows (in thousands of
     dollars):
                                                     2004      2003      2002
                                                   --------  --------  --------
     Income Statement Provision for Income Taxes   $ 13,442  $  9,123  $  9,670
     Stockholders' Equity -- Change in:
       Unrealized gain (loss) on
         marketable securities                          199       963      (587)
       Foreign currency translation adjustment          (27)      (43)      (36)
                                                   --------  --------  --------
        Total                                      $ 13,614  $ 10,043  $  9,047
                                                   ========  ========  ========

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

                                               2004        2003        2002
                                            ---------   ---------   ---------
     Taxes currently payable:
       Federal                              $ 11,132    $  9,407    $  8,127
       State and local                         2,402       2,269       1,373
                                            ---------   ---------   ---------
                                              13,534      11,676       9,500
                                            ---------   ---------   ---------
     Deferred tax provision:
       Federal                                  (170)     (2,090)        338
       State and local                            78        (463)       (168)
                                            ---------   ---------   ---------
                                                 (92)     (2,553)        170
                                            ---------   ---------   ---------
     Total                                  $ 13,442    $  9,123    $  9,670
                                            =========   =========   =========

     Reconciliation  of the U.S.  statutory  rate to the Company's  consolidated
     effective income tax rate was as follows:

                                                 Percent of Pretax Income
                                            ---------------------------------
                                               2004        2003        2002
                                            ---------   ---------   ---------
     Federal statutory rate                    35.0%       35.0%       35.0%
     State and local income taxes, net
       of federal income tax benefit            4.5         4.7         2.7
     Others                                     0.6         0.6         0.3
     Tax exempt interest exclusion             (2.5)       (3.7)       (3.6)
     Dividends received exclusion              (0.3)       (0.4)       (0.5)
                                            --------    --------    --------
     Total                                     37.3%       36.2%       33.9%
                                            ========    ========    ========

                                                                     (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,
                                                  --------------------------
                                                      2004           2003
                                                  -----------    -----------
     Deferred tax assets:
       Other postretirement benefits              $   23,676     $   20,891
       Pension benefits                                7,602          9,462
       Inventories                                     1,533          1,688
       Annual leave                                    2,354          2,045
       Amortization of acquired intangible assets        397          1,161
       Accounts receivable allowances                    603            599
       Medical claims                                  1,179          1,093
       Others                                          1,711          1,723
                                                  -----------    -----------
     Total deferred tax assets                        39,055         38,662
                                                  -----------    -----------
       Deferred tax liabilities:
       Capitalized software                           (4,441)        (3,852)
       Deferred selling expenses                      (1,377)        (1,843)
       Others                                         (1,728)        (1,402)
                                                  -----------    -----------
     Total deferred tax liabilities                   (7,546)        (7,097)
                                                  -----------    -----------
     Net deferred tax assets                      $   31,509     $   31,565
                                                  ===========    ===========

     The ultimate realization of deferred tax assets is dependent upon future
     taxable income during the periods in which those temporary differences
     become deductible. Uncertainties surrounding income tax law changes, shifts
     in operations between state taxing jurisdictions, and future operating
     income levels may affect the ultimate realization of all or some of these
     deferred tax assets. 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 deferred tax assets, which are recorded net of $473,000 and
     $430,000 valuation allowances in 2004 and 2003, respectively, will be fully
     utilized.


(9) OTHER BALANCE SHEET INFORMATION

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

                                                      2004           2003
                                                  -----------    -----------
     Receivables:
       Customers                                  $   29,738     $   30,527
       Others                                          3,186          3,868
       Allowance for doubtful accounts                (2,097)        (2,135)
                                                  -----------    -----------
     Total                                        $   30,827     $   32,260
                                                  ===========    ===========

                                                                     (Continued)
<PAGE>40


                                                      2004           2003
                                                  -----------    -----------
     Inventories:
       Materials and supplies                     $    2,130     $    2,089
       Work in process                                   304            436
       Finished goods                                  1,101          1,277
                                                  -----------    -----------
     Total                                        $    3,535     $    3,802
                                                  ===========    ===========

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

                                                      2004           2003
                                                  -----------    -----------
     Property and equipment, at cost:
       Land                                       $    4,250     $    4,250
       Buildings and improvements                     51,759         51,690
       Furniture and equipment                        46,693         49,007
       Accumulated depreciation                      (74,405)       (74,428)
                                                  -----------    -----------
     Total                                        $   28,297     $   30,519
                                                  ===========    ===========

     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 $3,728,000 in 2004, $4,140,000 in 2003, and
     $4,843,000 in 2002. Expenditures for maintenance and repairs are expensed,
     while major replacements and improvements are capitalized.

     Intangible and other assets
       Amortizable assets:                            2004           2003
                                                  -----------    -----------
         Gross carrying amount--
           Software                               $   29,199     $   25,040
           Customer lists                             14,292         14,638
           Copyrights                                  9,145          9,145
           Others                                      2,182          4,801
                                                  -----------    -----------
                                                      54,818         53,624
                                                  -----------    -----------
       Accumulated amortization--
           Software                                  (15,546)       (13,057)
           Customer lists                            (11,190)        (9,464)
           Copyrights                                 (3,801)        (2,887)
           Others                                     (1,044)        (4,279)
                                                  -----------    -----------
                                                     (31,581)       (29,687)
                                                  -----------    -----------
       Net intangible assets                          23,237         23,937

       Other receivables                                 141            239
                                                  -----------    -----------
       Total                                      $   23,378     $   24,176
                                                  ===========    ===========

                                                                     (Continued)
<PAGE>41


     Events and changes in circumstances can indicate that the value of some
     intangible assets may have been impaired. When this occurs, the assets are
     revalued based on projected future profit contributions and any resulting
     impairment losses are recorded as amortization expense. In 2003, the
     Company's subsidiary, Kennedy Information, Inc. (Kennedy) reduced its
     magazine publishing schedules due to continuing weak advertising revenues,
     resulting in an impairment loss of $617,000 in its advertiser base. In
     2002, Kennedy incurred lower than expected newsletter renewal sales due to
     the poor economy and to the liquidation of a significant customer,
     resulting in an impairment loss of $1,916,000 in its customer lists. These
     losses are included in general and administrative expenses of the
     Publishing segment. Also in 2003, BNA Software experienced lower sales of
     its Web-based application software product than previously expected and
     reduced its expectations of future sales, resulting in an impairment loss
     of $1,803,000 in the carrying value of the related capitalized development
     costs. This loss is included in editorial expenses of the Software segment.

     Amortization expenses for intangible assets were $6,554,000 in 2004,
     $10,152,000 in 2003, and $10,274,000 in 2002. Amortizable assets are
     expensed evenly over their respective estimated lives, ranging from three
     to 10 years. As of December 31, 2004, future estimated amortization
     expenses were as follows: 2005 - $6,302,000; 2006 - $4,965,000; 2007 -
     $3,200,000; 2008 - $2,711,000; 2009 - $2,365,000.

                                                      2004            2003
                                                  -----------     -----------
     Payables and accrued liabilities:
       Accounts payable                           $   18,324      $   15,848
       Employee compensation and benefits             15,239          15,507
       Postretirement benefits, current portion        9,439          10,322
       Income taxes                                    1,961           2,053
                                                  -----------     -----------
       Total                                      $   44,963      $   43,730
                                                  ===========     ===========

(10) TERM DEBT

     Term debt consisted of the following (in thousands of dollars):

                                                            December 31,
                                                     --------------------------
                                                         2004           2003
                                                     -----------    -----------
      Note payable, unsecured, variable interest
        (LIBOR plus 0.2%; 1.6% for 2004
        and 1.5% for 2003)                           $       --    $    5,000
      Notes payable, unsecured, 8.15%, due 2005-2010     45,000        45,000
      Notes payable, unsecured, 6.99%, due 2007-2011     25,000        25,000
                                                     -----------   -----------
      Total                                              70,000        75,000
      Less current portion                               (7,500)       (5,000)
                                                     -----------   -----------
      Long-term portion                              $   62,500    $   70,000
                                                     ===========   ===========

      Maturities of term debt are as follows: 2005 and 2006, $7,500,000 each;
      2007 through 2010, $10,500,000 each; 2011, $13,000,000. Based on the
      borrowing rates available to the Company for loans with similar terms and
      average maturities, the fair value of total term debt was $77,720,000 in
      2004, and $84,270,000 in 2003.

      The Company also has a $1.5 million unsecured line of credit, of which
      $993,000 is being used to secure letters of credit.

                                                                     (Continued)
<PAGE>42


(11) COMMITMENTS AND CONTINGENCIES

     The Company has non-cancelable operating leases for office space,
     equipment, and vehicles. Total rent expense was $7,597,000 in 2004,
     $8,115,000 in 2003, and $8,012,000 in 2002.As of December 31, 2004, future
     minimum lease payments under non-cancelable operating leases were as
     follows: 2005 - $6,462,000; 2006 - $5,649,000; 2007 - $2,596,000; 2008 -
     $969,000; 2009 - $522,000; thereafter - $518,000.

     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

     Ownership and transferability of Class A, Class B, and Class C stock are
     substantially restricted to current and former employees by the Parent's
     articles of incorporation. 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, 2004, authorized shares of
     Class A, Class B, and Class C were 30,000,000, 30,000,000, and 5,000,000
     respectively.

     Treasury share transactions were as follows:

                                                   Treasury Stock Shares
                                            ----------------------------------
                                             Class A     Class B     Class C
                                            ----------  ----------  ----------
     Balance, January 1, 2002               14,365,542   4,213,038   1,095,610
     Sales to employees                       (689,055)        ---         ---
     Repurchases                               226,956   2,898,819     133,749
     Conversions of Class A to Class B         761,408    (761,408)         --
                                           -----------  ----------  ----------
     Balance, December 31, 2002             14,664,851   6,350,449   1,229,359
     Sales to employees                       (776,526)         --          --
     Repurchases                               464,773     717,614     863,228
     Conversions of Class A to Class B       1,266,913  (1,266,913)         --
                                           -----------  ----------  ----------
     Balance, December 31, 2003             15,620,011   5,801,150   2,092,587
     Sales to employees                       (560,355)         --          --
     Repurchases                               812,230   1,255,756     426,653
     Conversions of Class A to Class B         473,375    (473,375)         --
                                           -----------  ----------  ----------
     Balance, December 31, 2004             16,345,261   6,583,531   2,519,240
                                           ===========  ==========  ==========

     The Company's stockholders, when selling stock, are required to first
     tender them to the Company. The Company has supported the continuance of
     employee ownership through its practice of repurchasing stock tendered by
     stockholders, but is not required to do so. Capital stock with a market
     value of $5.4 million as of December 31, 2004, is known or expected to be
     tendered in 2005. 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 was 32,502,117 in 2004, 34,642,462 in
     2003, and 35,490,169 in 2002.

                                                                     (Continued)
<PAGE>43


     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 reported, net of taxes, as a component of
     Stockholders' Equity.

(13) OTHER COMPREHENSIVE INCOME (LOSS)

     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 (loss) are shown below (in thousands
     of dollars):

                                                  2004       2003       2002
                                               ---------  ---------  ---------
     Holding gains (losses) on securities
      arising during the year                  $    884   $  3,931   $    (50)
     Less net gains included in net income          314      1,174      1,629
                                               ---------  ---------  ---------
     Changes in unrealized gains (losses)           570      2,757     (1,679)
     Less income taxes                              199        963       (587)
                                               ---------  ---------  ---------
     Net unrealized gains (losses)                  371      1,794     (1,092)
                                               ---------  ---------  ---------
     Currency translation gains (losses)            (77)      (122)      (102)
     Less income taxes                              (27)       (43)       (36)
                                               ---------  ---------  ---------
     Net currency translation gains (losses)        (50)       (79)       (66)
                                               ---------  ---------  ---------
     Other comprehensive income (loss)         $    321   $  1,715   $ (1,158)
                                               =========  =========  =========


(14) SEGMENTS

     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 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.

     The Printing segment is the operations of The McArdle Printing Co., Inc,
     which provides printing and related services to mid-Atlantic customers. The
     Software segment aggregates the operations of BNA Software, which develops,
     produces, and markets tax and financial planning software, with STF
     Services Corporation, which develops, produces, and markets interactive,
     government- approved forms software.

                                                                     (Continued)
<PAGE>44


     Intersegment revenues approximate current market prices and are eliminated
     upon consolidation. 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 (in thousands of dollars):

     Year Ended December 31, 2004      Publishing  Printing  Software    Total
     --------------------------------  ----------  --------  --------  --------
     Revenues from external customers   $269,312   $ 26,814  $ 25,130  $321,256
     Intersegment revenues                    --     10,903     2,299    13,202
     Operating profit                     31,727        392     5,833    37,952
     Interest expense                      5,717         21        --     5,738
     Identifiable assets                 279,657     17,010    38,382   335,049
     Depreciation and amortization         7,636        871     1,775    10,282
     Capital expenditures                  5,375        350        36     5,761


     Year Ended December 31, 2003      Publishing  Printing  Software    Total
     --------------------------------  ----------  --------  --------  --------
     Revenues from external customers   $266,447   $ 21,333  $ 24,044  $311,824
     Intersegment revenues                    --     12,536     2,507    15,043
     Operating profit (loss)              24,386       (283)    1,447    25,550
     Interest expense                      5,815         50        --     5,865
     Identifiable assets                 286,514     17,023    35,531   339,068
     Depreciation and amortization         9,034        901     4,357    14,292
     Capital expenditures                  4,759        183       476     5,418

     Year Ended December 31, 2002      Publishing  Printing  Software    Total
     --------------------------------  ----------  --------  --------  --------
     Revenues from external customers  $262,929    $ 21,826  $ 25,035  $309,790
     Intersegment revenues                   --      14,235     2,664    16,899
     Operating profit                    22,099         748     5,043    27,890
     Interest expense                     6,037          81         5     6,123
     Identifiable assets                291,873      17,454    37,424   346,751
     Depreciation and amortization       10,696         913     3,508    15,117
     Capital expenditures                 4,538         406       824     5,768

     Reconciliation of items differing from consolidated totals are shown below
     (in thousands of dollars):
                                                        2004     2003     2002
                                                      -------  -------  -------
     Total interest expense for reportable segments   $ 5,738  $ 5,865  $ 6,123
     Elimination of intersegment interest expense        (118)    (155)    (294)
                                                      -------  -------  -------
     Consolidated interest expense                    $ 5,620  $ 5,710  $ 5,829
                                                      =======  =======  =======

                                                   2004       2003       2002
                                                 --------   --------   --------
    Total assets for reportable segments         $335,049   $339,068   $346,751
     Elimination of intersegment assets           (16,702)    (8,786)    (6,458)
                                                 --------   --------   --------
     Consolidated assets                         $318,347   $330,282   $340,293
                                                 ========   ========   ========







<PAGE>45


          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                  YEARS ENDED DECEMBER 31, 2004, 2003, AND 2002
                            (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, 2004   $2,135    $  917  $(52)(a)   $903(b)   $2,097
   Year ended December 31, 2003    2,015       755   272 (a)    908(b)    2,135
   Year ended December 31, 2002    2,197       457   178 (a)    817(b)    2,015

Allowance for Obsolete Inventory:
   Year ended December 31, 2004   $  535    $   26                        $ 561
   Year ended December 31, 2003      448        87                          535
   Year ended December 31, 2002      657      (209)                         448

Allowance for Deferred Tax Assets:
   Year ended December 31, 2004   $  430    $   43                        $ 473
   Year ended December 31, 2003      317       113                          430
   Year ended December 31, 2002      182       135                          317



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

(b) Net accounts written off.


<PAGE>46


                                     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, 2004 or through
the date of this Form 10K.

Item 9a.    Controls and Procedures
            -----------------------
Conclusion regarding the Effectiveness of Disclosure Controls and Procedures

The disclosure control system was designed to ensure that information is
accumulated and communicated to the Company's management to allow timely
decisions regarding required disclosure. The Company carried out an evaluation,
under the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and Chief Financial Officer, of
the Company's disclosure controls and procedures. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of the end of the
period covered by this annual report.

Management's Report on Internal Control Over Financial Reporting

The Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting. The internal control system
was designed to provide reasonable assurance to the Company's management and
board of directors regarding the preparation and fair presentation of financial
statements.

Management, including the Company's Chief Executive Officer and Chief Financial
Officer, assessed the effectiveness of the Company's internal control over
financial reporting as of December 31, 2004. In making this assessment, it used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control - Integrated Framework. Based on
that assessment, the Company believes that, as of December 31, 2004, its
internal control over financial reporting is effective based on those criteria.

Management's assessment of the Company's internal control over financial
reporting as of December 31,2004 has been audited by KPMG LLP, an independent
registered public accounting firm, as stated in their report which is included
herein.

Item 9b.    Other Information
            -----------------
None.


<PAGE>47


                                    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, 13, and 14, 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, 2002. 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.

The Company has adopted a code of ethics, as defined in Regulation S-K, that
applies to the Company's Chief Executive Officer, its senior financial officers,
and any persons who perform similar functions for the Company and any of its
subsidiary companies. The code of ethics is posted on the Company's Internet
website, the address of which is www.bna.com. The Company intends to satisfy the
disclosure requirements with respect to any amendments to, and/or waivers of,
the provisions of the code of ethics by posting the required information on its
Internet website.


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.


Item 14.    Principal Accounting Fees and Services
            --------------------------------------
The information required under this Item 14 is contained in the Proxy Statement
under the heading "IV. Audit Committee Report" and is incorporated herein by
reference.


<PAGE>48


                                     PART IV


Item 15.    Exhibits and Financial Statement Schedules
            ------------------------------------------
The following documents are filed as part of this report.

(a)(1)      Financial Statements:                                       Page

            Reports of Independent Registered Public Accounting Firm     23

            Consolidated Statements of Income for each
              of the years ended December 31, 2004, 2003, and 2002       25

            Balance Sheets as of December 31, 2004 and 2003              26

            Consolidated Statements of Cash Flows, and
              Consolidated Statements of Changes in Stockholders'
              Equity and Comprehensive Income for each of
              the years ended December 31, 2004, 2003, and 2002          28

            Notes to Consolidated Financial Statements                   31

   (2)      Financial Statement Schedule:

   II       Valuation and Qualifying Accounts and Reserves For
              the years ended December 31, 2004, 2003, and 2002          45

(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
            2004 Consolidated Financial Statements in the Notes to Consolidated
            Financial Statements, Note 12, "Stockholders' Equity," at page of
            this Form 10-K.

      21    Subsidiaries of the Registrant.**

      31.1  Certification of the Chief Executive Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350.

      31.2  Certification of the Chief Financial Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350.

      32.1  Certification of the Chief Executive Officer pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350.

      32.2  Certification of the Chief Financial Officer pursuant to Section
            906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350.

      99.1  Proxy  Statement for the Annual  Meeting of security  holders to be
            held on April 16, 2005.***


<PAGE>49


      *     Incorporated by reference to the Company's 2001 Form 10-K,
            Commission File Number 2-28286, filed on March 29, 2002. The
            exhibit numbers indicated above correspond to the exhibit
            numbers in that filing.

      **    Filed herewith.

      ***   Incorporated by reference to the Company's Definitive Proxy
            Statement, to be filed with the SEC within 120 days of December 31,
            2004.

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


<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: s/ Paul N. Wojcik
                         ---------------------------------------
                         Paul N. Wojcik, Chief Executive Officer

                              Date: March 10, 2005


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 on the dates indicated.


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

Date: March 10, 2005                        Date: March 10, 2005
---------------------------                 ---------------------------------



By:  s/Sandra C. Degler    3/10/05          By:  s/Gregory C. McCaffery 3/10/05
-----------------------------------         -----------------------------------
Sandra C. Degler            Date            Gregory C. McCaffery         Date
Chairman of the Board of Directors          Director


By:  s/Paul A. Blakely     3/10/05         By:  s/Jonathan Newcomb     3/10/05
-----------------------------------        ------------------------------------
     Paul A. Blakely        Date           Jonathan Newcomb              Date
     Director                              Director


By:  s/Cynthia J. Bolbach  3/10/05         By:  s/Susan E. Rice        3/10/05
-----------------------------------        ------------------------------------
     Cynthia  J. Bolbach    Date           Susan E. Rice                 Date
     Director                              Director


By:  s/Eunice Lin Bumbardner 3/10/05       By:  s/Ellen Taus           3/10/05
-----------------------------------        ------------------------------------
     Eunice Lin Bumgardner  Date           Ellen Taus                    Date
     Director                              Director


By:  s/Neil R. Froemming   3/10/05         By:  s/Daniel W. Toohey     3/10/05
-----------------------------------        ------------------------------------
     Neil R. Froemming       Date          Daniel W. Toohey              Date
     Director                              Director


By:                                        By:  s/Robert L. Velte      3/10/05
-----------------------------------        ------------------------------------
     Gerald S. Hobbs         Date          Robert L. Velte               Date
     Director                              Director


<PAGE>51


                                  EXHIBIT INDEX




                                                                Sequential Page
Number      Exhibit Description                                      Number
------      ----------------------------------------------      ---------------
  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 2004 Consolidated Financial
             Statements in the Notes to Consolidated Financial
             Statements, Note 12, "Stockholders' Equity,"              42

 21         Subsidiaries of the Registrant                             52

 31.1       Certification of the Chief Executive Officer
              pursuant to Section 302 of the Sarbanes-Oxley
              Act of 2002, 18 U.S.C. section 1350.                     53

 31.2       Certification of the Chief Financial Officer
              pursuant to Section 302 of the Sarbanes-Oxley
              Act of 2002, 18 U.S.C. section 1350.                     54

 32.1       Certification of the Chief Executive Officer
              pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002, 18 U.S.C. section 1350.                     55

 32.2       Certification of the Chief Financial Officer
              pursuant to Section 906 of the Sarbanes-Oxley
              Act of 2002, 18 U.S.C. section 1350.                     56

 99.1       Proxy Statement for the Annual Meeting of
              Stockholders to be held on April 16, 2005                **


            * Incorporated by reference to the Company's 2001 Form 10-K,
              Commission File Number 2-28286, filed on March 29, 2002. The
              exhibit numbers indicated above correspond to the exhibit
              numbers in that filing.

           ** The Definitive Proxy Statement is expected to be filed with the
              SEC within 120 days of December 31, 2004.