**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, 2006** | **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:**

**Securities          registered pursuant to Section 12(g) of the Act**

----

**FORWARD            -LOOKING STATEMENTS**

**DOCUMENTS        INCORPORATED BY REFERENCE**

| **TABLE****OF                  CONTENTS** |
|-------------------------------------------|
|                                      |   |   |
| .                                         |   | Page                  No. |
|                                      | PART                  I. |   |
| Item                  1.                  | Business | 3 |
| Item                1A.                   | Risk                Factors |  4 |
| Item                1B.              | Unresolved                Staff Comments |  5 |
| Item                  2.                  | Properties | 5 |
| Item                  3.                  | Legal                  Proceedings | 6 |
| Item                  4.                  | Submission                  of Matters to a Vote                  of Security Holders  | 6 |
| Item                  X.                  | Executive                  Officers of the                  Registrant  | 6 |
|                                      |   |   |
|                                      | PART                  II. |   |
| Item                  5.                  | Market                  for the Registrant's Common Stock and                  Related Security |   |
|                                      | Holder                  Matters | 8 |
| Item                  6.             | Selected                  Financial Data and Selected                  Quarterly Data. | 9 |
| Item                  7.             | Management's                  Discussion and Analysis of Financial Condition                  and |   |
|                                      | Results                  of Operations | 10 |
| Item7A.                                   | Quantitative                  and Qualitative Disclosures About                  Market Risk | 15 |
| Item                  8.             | Financial                  Statements and Supplementary                  Data | 17 |
| Item                  9.             | Changes                  in and Disagreements with                  Accountants on Accounting |   |
|                                      | and                  Financial                  Disclosure | 45 |
| Item                  9A.            | Controls                  and Procedures | 45 |
| Item 9B.                        | Other                  Information | 45 |
|                                      |   |   |
|                                      | PART                  III. |   |
| Item                  10.            | Directors                  and Executive Officers of                  Registrant | 46 |
| Item                  11.            | Executive                  Compensation | 46 |
| Item                  12.            | Security                  Ownership of Beneficial Owners and                  Management | 46 |
| Item                  13.            | Certain                  Relationships and Related                  Transactions | 46 |
| Item                  14.            | Principal                  Accounting Fees and                  Services | 46 |
|                                      |   |   |
|                                      | PART                  IV. |   |
| Item                  15.            | Exhibits                  and Financial Statement                  Schedules | 47 |
|                                      |   |   |
| SIGNATURES                                |   | 49 |
|                                      |   |   |
| EXHIBIT                  INDEX            |    | 50 |

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Business

**Business        of BNA and Subsidiary Companies**

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Table                of Contents

Risk        Factors

**Negative        Economic Conditions**

**Competition**

**Technological        Changes**

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Table            of Contents

**Legal        And Regulatory Changes**

**Distribution        Arrangements**

**Employment        Costs**

**Outside          Authors**

Unresolved        Staff Comments

Properties

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Table              of Contents

Legal        Proceedings

Submission        of Matters to a Vote of        Security Holders

EXECUTIVE        OFFICERS OF THE        REGISTRANT

| Name                                   | Age    |   | Present                    position and prior experience                                                             |
|---------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------|
| Cynthia                    J. Bolbach       | 59     |   | Vice                  President and Corporate Secretary                                                              |
|                                        |   |   |     Corporate                    Secretary since 1995                                            |
|                                        |   |   |     and                    vice president since 2002. Joined                                     |
|                                        |   |   |     BNA                    in 1972                                                               |
|                                        |   |   |                                                                                                                 |
| Eunice                    L. Bumgardner     | 46     |   | Vice                    President & General                    Counsel        |
|                                        |   |   |     Vice                    president since 1996 and                                             |
|                                        |   |   |     general                    counsel since 1995. Joined                                        |
|                                        |   |   |     BNA                    in 1994.                                                              |
|                                        |   |   |                                                                                                                 |
| Carol                    A. Clark      | 50     |   | Vice                    President                                                 |
|                                        |   |   |     Vice                    president since 2001                                                 |
|                                        |   |   |     Previously                    served as technology director                                  |
|                                        |   |   |     since                    1997. Joined BNA in 1983.                                           |
|                                        |   |   |                                                                                                                 |
| Sandra                    C. Degler    | 67     |   | Chairman                    of the Board                                                                             |
|                                        |   |   |     Chairman                    since 2004 and vice chairman                                     |
|                                        |   |   |     1998-2004.                    Served as president of                                         |
|                                        |   |   |     Tax                    Management Inc. from 1983 to 2000.                                    |
|                                        |   |   |     Joined                    BNA in 1963.                                                       |
|                                        |   |   |                                                                                                                 |
| George                    J. Korphage       | 60     |   | Vice                    President and Chief Financial Officer                                                        |
|                                        |   |   |     Vice                    president since 1988 and chief financial                             |
|                                        |   |   |     officer                    since 1989. Joined BNA in 1972.                                   |
|                                        |   |   |                                                                                                                 |
| Gilbert                  S. Lavine          | 55     |   | Treasurer                                                                                                            |
|                                        |   |   |     Treasurer                  since 1998.  Joined BNA in 1985.                             |
|                                        |   |   |                                                                                                                 |
| Gregory                  C. McCaffery  | 46     |   |  Vice                  President and Chief Operating Officer                                                    |
|                                        |   |   |      Vice                  president since 2000 and chief operating                    |
|                                        |   |   |      officer                  since 2003.  Joined BNA in                  1986         |

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Table            of Contents

EXECUTIVE          OFFICERS OF THE          REGISTRANT

| Name                          | Age    |   | Present                  position and prior experience                                      |
|------------------------------------|--------|--------|---------------------------------------------------------------------------------------------|
|                               |   |   |                                                                                        |
| James                  R. Schneble | 52     |   | Controller                                                                                  |
|                               |   |   |     Controller                  since 1990. Joined BNA in 1985.         |
|                               |   |   |                                                                                        |
| Paul                  N. Wojcik    | 58     |   | Vice                  Chairman, President and Chief                                         |
|                               |   |   | Executive                  Officer                                                          |
|                               |   |   |     Vice                  chairman since 2004,                          |
|                               |   |   |     president since                  1995 and CEO since 1997. |
|                               |   |   |     Joined                  BNA in 1972.                                |

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Table            of Contents

Market for the        Registrant's Common Stock and Related Security Holder Matters

| Stock                      Price                                                                                     |   |   |   |
|----------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|         January                      1, 2005 - March 20, 2005      |   | $      | 12.00  |   |
|         March                      21, 2005 - September 18, 2005        |   |   | 12.75  |   |
|         September                      19, 2005 - March 19, 2006   |   |   | 13.00  |   |
|         March                      20, 2006 - December 23, 2006              |   |   | 13.75  |   |
|         December                      24, 2006 - December 31, 2006      |   |   | 14.00  |   |

| Record                  Date and Dividend Amount                                    |   |   |   |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|--------|
|         March                  19, 2005     |   | $      | .16    |   |
|         September                  17, 2005 |   |   | .16    |   |
|         March                  18, 2006     |   |   | .17    |   |
|         September                  16, 2006 |   |   | .17    |   |

|                                                                        |   |  Total                  Number    |   |  Average                         |   |
|-----------------------------------------------------------------------------|--------|----------------------------------------|--------|---------------------------------------|--------|
|                                                                        |   |  of                   Shares |   |  Price                           |   |
|  Four-Week                Period                                       |   | Purchased                              |   |  Paid                  per Share |   |
|     September                13, 2006 - October 7, 2006 |   |                                   | 56,296 |                                  | $      | 13.75 |   |
|     October                8, 2006 - November 4, 2006   |   |                                   | 96,414 |                                  | $      | 13.75 |   |
|     November                5, 2006 - December 2, 2006  |   |                                   | 33,347 |                                  | $      | 13.75 |   |
|     December                3, 2006 - December 31, 2006 |   |                                   | 64,915 |                                  | $      | 13.94 |   |

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Table            of Contents

Selected      Financial Data

**The      Bureau of National Affairs, Inc.**

**Consolidated      Operating and Financial Summary:      2006-2002**

|                                                                              |   | 2006   |    | 2005   |   | 2004    |   | 2003   |       | 2002    |   |
|-----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|--------|------------|---------|--------|
|                                                                              |   |   |    |   |   |    |   |   |       |    |   |
| Operating                  Revenues                                               |   | $      | 344,862 |   | $      | 329,036 |   | $      | 322,604    |    | $      | 311,962 |   | $ | 304,831 |   |
| Operating                  Expenses (a)                                           |   |   | 313,887 |   |   | 286,992 |   |   | 283,039    |    |   | 286,445 |   |   | 281,807 |   |
| Operating                  Profit                                                 |   |   | 30,975  |   |   | 42,044  |   |   | 39,565     |    |   | 25,517 |   |   | 23,024 |   |
| Non-operating                  Income (Expense) :                            |   |   |    |   |   |    |   |   |       |    |   |   |   |   |   |   |
|     Investment                  Income                        |   |   | 5,883   |   |   | 4,132   |   |   | 3,713      |    |   | 4,644 |   |   | 6,235 |   |
|     Interest                  Expense                         |   |   | (5,604  | )      |   | (5,907  | )      |   | (5,620     | )       |   | (5,710 | ) |   | (5,829 | ) |
|     Other                  Income (Expense), net              |   |   | (19     | )      |   | (28     | )      |   | (44   | )  |   | 724  |   |   | 191 |   |
| Income                  Before Income Taxes and                                   |   |   |    |   |   |    |   |   |       |    |   |   |   |   |   |   |
|     Cumulative                  Effect of Accounting Change   |   |   | 31,235  |   |   | 40,241  |   |   | 37,614     |    |   | 25,175 |   |   | 23,621 |   |
| Income                  Taxes                                                     |   |   | 11,864  |   |   | 16,085  |   |   | 14,136     |    |   | 9,100 |   |   | 7,725 |   |
| Income                  from Operations                                           |   |   | 19,371  |   |   | 24,156  |   |   | 23,478     |    |   | 16,075 |   |   | 15,896 |   |
| Cumulative                  Effect of Accounting Change (b)                       |   |   | ---     |   |   | ---     |   |   | ---        |    |   | --- |   |   | (4,440 | ) |
| Net                  Income                                                       |   | $      | 19,371  |   | $      | 24,156  |   | $      | 23,478     |    | $      | 16,075 |   | $ | 11,456 |   |
| Profit                  Margins (% of revenues):                                  |   |   |    |   |   |    |   |   |       |    |   |   |   |   |   |   |
| Operating                  Profit                                                 |   |   | 9.0     |   |   | 12.8    |   |   | 12.3  |    |   | 8.2 |   |   | 7.6 |   |
| Earnings                  (c)                                                     |   |   | 5.6     |   |   | 7.3     |   |   | 7.3   |    |   | 5.2 |   |   | 5.0 |   |
| Earnings                  Per Share from Operations                               |   | $      | .64     |   | $      | .77     |   | $      | .72        |    | $      | .46 |   | $ | .44 |   |
| Cumulative                  Effect of Accounting Change (b)                       |   |   | ---     |   |   | ---     |   |   | ---        |    |   | --- |   |   | (.12 | ) |
| Total                  Earnings Per Share                                         |   | $      | .64     |   | $      | .77     |   | $      | .72        |    | $      | .46 |   | $ | .32 |   |
| Dividends                  Per Share                                              |   | $      | .34     |   | $      | .32     |   | $      | .31        |    | $      | .30 |   | $ | .30 |   |
| Balance                  Sheet Data:                                              |   |   |    |   |   |    |   |   |       |    |   |   |   |   |   |   |
|     Total                  Assets                             |   | $      | 337,172 |   | $      | 321,711 |   | $      | 324,413    |    | $      | 336,741 |   | $ | 346,964 |   |
|     Long-Term                  Debt-less current portion      |   |   | 44,500  |   |   | 55,000  |   |   | 62.500     |    |   | 70,000 |   |   | 75,000 |   |
| Employee                  Data:                                                   |   |   |    |   |   |    |   |   |       |    |   |   |   |   |   |   |
|     Number                  of Employees                      |   |   | 1,728   |   |   | 1,729   |   |   | 1,802      |    |   | 1,878 |   |   | 1,999 |   |
|     Total                  Employment Costs                   |   | $      | 182,008 |   | $      | 177,138 |   | $      | 172.595    |    | $      | 174,363 |   | $ | 166,005 |   |
| Stockholder                  Data at Year-End:                                    |   |   |    |   |   |    |   |   |       |    |   |   |   |   |   |   |
|     Number                  of Stockholders                   |   |   | 1,655   |   |   | 1,673   |   |   | 1,711      |    |   | 1,786 |   |   | 1,834 |   |
|     Common                  Shares Outstanding (in thousands) |   |   | 30,155  |   |   | 30,204  |   |   | 31,719     |    |   | 33,653 |   |   | 34,922 |   |

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Table            of Contents

Management's      Discussion and Analysis of Financial Condition and Results of      Operations

**Overview**

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Table              of Contents

**Results      of      Operations**
**.  **

**2006      vs. 2005**

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Table                    of                    Contents

** **

**2005      vs. 2004**

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Table                of Contents

** **

**Cash      Flows, Liquidity, and Financial Resources**

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Table                of                Contents

|                                          |   | Payments                Due by Period |   |
|-----------------------------------------------|--------|---------------------------------------|--------|
|  Contractual                Obligations: |   |  Total                           |   | Less                than1                Year |   | 1-3Years |   | 4-5Years |   | After                5Years |   |
| Term                Debt (includes interest)  |   | $                                     | 66,879 |   | $ | 14,588 |   | $ | 26,712 |   | $ | 25,579 |   | $ | --- |   |
| Operating                Leases               |   |                                  | 8,016  |   |   | 5,356 |   |   | 2,600 |   |   | 60 |   |   | --- |   |
| Planned                Pension Contributions  |   |                                  | 14,000 |   |   | 14,000 |   |   | --- |   |   | --- |   |   | --- |   |
| Deferred                Real Estate Tax       |   |                                  | 6,760  |   |   | 6,760  |   |   | --- |   |   | --- |   |   | --- |   |
| Total                                         |   | $                                     | 95,655 |   | $ | 40,704 |   | $ | 29,312 |   | $ | 25,639 |   | $ | --- |   |

**Critical      Accounting Policies**

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Table                of Contents

**Accounting      Pronouncements**

*“Accounting for Uncertainty in Income Taxes, an interpretation              of FASB              Statement No. 109.” *

*“Fair Value              Measurements”*

*“Employers’Accounting for Defined Benefit Pension and other Postretirement              Plans” *

Quantitative And Qualitative      Disclosures About Market      Risk

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Table          of Contents

|                                      |   |   |       |   |   |       |   |   |   |   |   |       |   |
|-------------------------------------------|--------|--------|------------|--------|--------|------------|--------|--------|--------|--------|--------|------------|--------|
|  Expected              Maturity Date |   | 2007   |       | 2008   |   | 2009       |   | 2010   |   | 2011   |   | Thereafter |   |
|                                      |   |   |       |   |   |       |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Municipal                Bonds            |   | $      | 20,363     |   | $      | 7,229      |   | $      | 8,391  |   | $      | 10,139     |   | $ | 4,497 |   | $ | 44,767 |   |
|                                      |   |   |       |   |   |       |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Average              Interest Yield  |   |   |  4.6% |   |   |  5.6% |   |   | 5.3%   |   |   |  4.9% |   |   | 4.9% |   |   | 4.8% |   |
|                                      |   |   |       |   |   |       |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Corporate                Debt             |   | $      | 3,514      |   |   | -----      |   |   | ------ |   |   | ------     |   |   | ------ |   |   | ------ |   |
|                                      |   |   |       |   |   |       |   |   |   |   |   |       |   |   |   |   |   |   |   |
| Average                Interest Yield     |   |   | 6.5%       |   |   |       |   |   |   |   |   |       |   |   |   |   |   |   |   |

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Table            of Contents

Financial      Statements and Supplementary Data

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Table          of Contents

**Report      of Independent Registered Public Accounting Firm**

*Share-Based Payment*

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Table          of Contents

**THE      BUREAU OF NATIONAL AFFAIRS, INC.**

**CONSOLIDATED      STATEMENTS OF INCOME**

**YEARS      ENDED DECEMBER 31, 2006, 2005, AND 2004**

|                                                                       |   | 2006   |    |  2005   |   |  2004   |   |
|----------------------------------------------------------------------------|--------|--------|---------|--------------|--------|--------------|--------|
|                                                                       |   |   |    |    |   |    |   |
| **Operating                  Revenues**(Note                  3)** ** |   | $      | 344,862 |         | $      | 329,036      |   | $ | 322,604 |   |
| **Operating                  Expenses**                                    |   |   |    |         |   |         |   |   |   |   |
|  (Notes                  3,4,9, and 11):                              |   |   |    |         |   |         |   |   |   |   |
| Editorial,                  production, and distribution                   |   |   | 184,477 |         |   | 175,753      |   |   | 171,055 |   |
| Selling                                                                    |   |   | 58,324  |         |   | 52,389       |   |   | 55,296 |   |
| General                  and administrative                                |   |   | 59,510  |         |   | 58,850       |   |   | 56,688 |   |
| Goodwill                  impairment                                       |   |   | 11,576  |         |   | ---          |   |   | --- |   |
| **Total                  Operating Expenses**                              |   |   | 313,887 |         |   | 286,992      |   |   | 283,039 |   |
| **Operating                  Profit**                                      |   |   | 30,975  |         |   | 42,044       |   |   | 39,565 |   |
| **Non-Operating                  Income (Expense):**                       |   |   |    |         |   |         |   |   |   |   |
| Investment                  income (Note                  5)               |   |   | 5,883   |         |   | 4,132        |   |   | 3,713 |   |
| Interest                  expense (Note                  10)               |   |   | (5,604  | )            |   | (5,907       | )      |   | (5,620 | ) |
| Other                  income (expense) (Note                  6)          |   |   | (19     | )            |   | (28          | )      |   | (44 | ) |
| **Total                  Non-Operating Income (Expense)**                  |   |   | 260     |         |   | (1,803       | )      |   | (1,951 | ) |
| **Income                  Before Income Taxes**                            |   |   | 31,235  |         |   | 40,241       |   |   | 37,614 |   |
| Provision                  for income taxes (Note                  8)      |   |   | 11,864  |         |   | 16,085       |   |   | 14,136 |   |
| **Net                  Income**                                            |   | $      | 19,371  |         | $      | 24,156       |   | $ | 23,478 |   |
|                                                                       |   |   |    |         |   |         |   |   |   |   |
|                                                                       |   |   |    |         |   |         |   |   |   |   |
| **Earnings                  Per Share** (Note                  12)    |   | $      | .64     |         | $      | .77          |   | $ | .72 |   |

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Table          of Contents

**THE      BUREAU OF NATIONAL AFFAIRS, INC.**

**CONSOLIDATED      BALANCE SHEETS**

**DECEMBER      31, 2006 AND 2005**

**ASSETS**

|                                                                                 |   | December                31,    |    |
|--------------------------------------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                                                 |   |  2006                                    |    |  2005 |   |
| **Current                Assets:**                                                   |   |                                          |    |   |   |   |   |
|     Cash                and cash equivalents (Note 5)            |   | $                                             | 24,001  |   | $ | 9,056 |   |
|     Short-term                investments (Note 5)               |   |                                          | 23,877  |   |   | 11,731 |   |
|     Receivables                (Note 9)                          |   |                                          | 44,282  |   |   | 37,825 |   |
|     Inventories                (Note 9)                          |   |                                          | 3,699   |   |   | 3,206 |   |
|     Prepaid                expenses                              |   |                                          | 5,106   |   |   | 5,327 |      |
|     Deferred                selling expenses (Note 3)            |   |                                          | 4,535   |   |   | 4,675 |   |
|     Deferred                income                taxes (Note 8) |   |                                          | 1,984   |   |   | 10,969 |   |
| **Total                Current Assets**                                              |   |                                          | 107,484 |   |   | 82,789 |   |
| **Marketable                Securities**(Note                5)                      |   |                                          | 94,063  |   |   | 97,898 |   |
| **Property                and Equipment**(Note                9)                     |   |                                          | 25,836  |   |   | 26,709 |   |
| **Deferred                Income Taxes**(Note                8)                      |   |                                          | 29,548  |   |   | 21,436 |   |
| **Goodwill**(Note                7)                                                  |   |                                          | 61,790  |   |   | 73,366 |   |
| **Intangible              and Other Amortizable Assets** (Note 9)               |   |                                          | 13,720  |   |   | 17,971 |   |
| **Other                Assets** (Note 9)                                        |   |                                          | 4,731   |   |   | 1,542 |   |
| **    Total                Assets**                              |   | $                                             | 337,172 |   | $ | 321,711 |   |

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Table          of Contents

**THE      BUREAU OF NATIONAL AFFAIRS, INC.**

**CONSOLIDATED      BALANCE SHEETS**

**DECEMBER      31, 2006 AND 2005**

**LIABILITIES      AND STOCKHOLDERS’ EQUITY**

|                                                                                                        |   |  December                31, |           |
|-------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|----------------|
|                                                                                                        |   | 2006                              |           | 2005 |   |
| **Current                Liabilities:**                                                                     |   |                              |           |   |   |   |   |
|     Current                portion of long-term debt (Note 10)                          |   | $                                 | 10,500         |   | $ | 7,500 |   |
|     Payables                and                accrued liabilities (Note 9)             |   |                              | 63,278         |   |   | 51,146 |   |
|     Deferred                revenues (Note 3)                                           |   |                              | 135,660        |   |   | 131,593 |   |
| **    Total                Current Liabilities**                                        |   |                              | 209,438        |   |   | 190,239 |   |
| **Long-Term                Debt,**                less current portion (Note 10)                            |   |                              | 44,500         |   |   | 55,000 |   |
| **Postretirement                Benefits,**                less current portion (Note 4)                    |   |                              | 77,279         |   |   | 66,475 |   |
| **Other                Liabilities**                                                                        |   |                              | 1,360          |   |   | 8,473 |   |
| **Total                Liabilities**                                                                        |   |                              | 332,577        |   |   | 320,187 |   |
| **Commitments                and Contingencies** (Notes                2, 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                                           |   |                              | 23,876         |   |   | 22,730 |   |
|     Retained                earnings                                                    |   |                              | 123,431        |   |   | 114,330 |   |
|     Treasury                stock,                at cost - 27,011,236 shares           |   |                              |           |   |   |   |   |
| in                2006 and 26,962,894 in 2005                                                               |   |                              |  (201,034 | )  |   |  (192,610 | )  |
|     Accumulated                other comprehensive income (loss):                       |   |                              |           |   |   |   |   |
|         Net                unrealized gain on marketable securities |   |                              | 1,492          |   |   | 569 |   |
|         Foreign                currency translation adjustment      |   |                              | (241           | ) |   | (65 | ) |
|         Minimum                pension liability adjustment         |   |                              | (96            | ) |   | (597 | ) |
| **Total                Stockholders’ Equity**                                                         |   |                              | 4,595          |   |   | 1,524 |   |
| **Total                Liabilities and Stockholders’ Equity**                                         |   | $                                 | 337,172        |   | $ | 321,711 |   |

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Table          of Contents

**THE      BUREAU OF NATIONAL AFFAIRS, INC.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**YEARS      ENDED DECEMBER 31, 2006, 2005, AND 2004**

|                                                                                                           |   | 2006   |                        | 2005   |   | 2004    |   |
|----------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------|--------|--------|---------|--------|
|                                                                                                           |   |   |                        |   |   |    |   |
| **Cash                Flows from Operating Activities:**                                                       |   |   |                        |   |   |    |   |   |   |   |
|     Net                income                                                              |   | $      | 19,371                      |   | $      | 24,156  |   | $ | 23,478 |   |
|     Adjustments                to                reconcile net income to net               |   |   |                        |   |   |    |   |   |   |   |
|         cash                provided by operating activities-          |   |   |                        |   |   |    |   |   |   |   |
|  Goodwill                impairment                                                                       |   |   | 11,576                      |   |   | ---     |   |   |  --- |   |
|         Depreciation                and amortization                   |   |   | 8,534                       |   |   | 9,762   |   |   | 10,282 |   |
|         Deferred              income              taxes                |   |   |     118 |   |   | 4,091   |   |   | 578 |   |
|         (Gain)                on sales of securities                   |   |   | (1,347                      | )      |   | (347    | )      |   | (314 | ) |
|         Capitalized                interest                            |   |   | --                          |   |   | ---     |   |   | (367 | ) |
|         Others                                                         |   |   | 1,125                       |   |   | 1,965   |   |   | 1,184 |   |
|     Changes                in operating assets and liabilities -                      |   |   |                        |   |   |    |   |   |   |   |
|         Receivables                                                    |   |   | (5,963                      | )      |   | (7,981  | )      |   | 1,990 |      |
|         Deferred                revenues                               |   |   | 4,067                       |   |   | 5,988   |   |   | (4,136 | ) |
|         Payables                and                accrued liabilities |   |   | 3,435                       |   |   | (161    | )      |   | 1,754 |   |
|         Postretirement                benefits                         |   |   | 5,106                       |   |   | 3,649   |   |   | 2,333 |   |
|         Deferred                selling expenses                       |   |   | 140                         |   |   | (968    | )      |   | 1,131 |   |
|         Inventories                                                    |   |   | (493                        | )      |   | 329     |   |   | 267 |   |
|         Other                assets and liabilities - net              |   |   | (985                        | )      |   | (1,067  | )      |   | 249 |   |
| Net                cash provided by operating activities                                                       |   |   | 44,684                      |   |   | 39,416  |   |   | 38,429 |   |
| **Cash                Flows from Investing Activities:**                                                       |   |   |                        |   |   |    |   |   |   |   |
|     Purchase                of                equipment and furnishings                    |   |   | (4,570                      | )      |   | (1,776  | )      |   | (1,706 | ) |
|     Capitalized                software                                                    |   |   | (1,032                      | )      |   | (1,160  | )      |   | (3,884 | ) |
|     Building                improvements                                                   |   |   | (403                        | )      |   | ---     |   |   | (69 | ) |
|     Business                purchase price adjustments                                     |   |   | ---                         |   |   | 86      |   |   | 400 |   |
|     Proceeds                from                sales of assets                            |   |   | 26                          |   |   | ---     |   |   | 175 |   |
|     Purchase                of                publishing assets                            |   |   | (50                         | )      |   | ---     |   |   | (102 | ) |
|     Investment              security sales and maturities                                  |   |   | 66,821                      |   |   | 57,282  |   |   | 83,806 |   |
|     Investment              securities purchases                                           |   |   | (71,424                     | )      |   | (55,971 | )      |   | (89,811 | ) |
| Net                cash (used for) investing activities                                                        |   |   | (10,632                     | )      |   | (1,539  | )      |   | (11,191 | ) |

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Table          of Contents

**THE      BUREAU OF NATIONAL AFFAIRS, INC.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**YEARS      ENDED DECEMBER 31, 2006 2005, AND 2004**

|                                                                                                     |   | 2006   |         | 2005   |   |  2004 |   |
|----------------------------------------------------------------------------------------------------------|--------|--------|--------------|--------|--------|------------|--------|
| **Cash                Flows from Financing Activities:**                                                 |   |   |         |   |   |       |   |   |   |   |
|     Receipts                for                capital stock sales to employees |   |   | 12,617       |   |   | 11,479     |   |   | 7,118 |   |
|     Purchases                of                treasury stock                        |   |   | (13,954      | )      |   | (31,115    | )      |   | (29,242 | ) |
|     Dividends                paid                                                    |   |   | (10,270      | )      |   | (10,127    | )      |   | (10,160 | ) |
|     Repayment                of                borrowings                            |   |   | (7,500       | )      |   | (7,500     | )      |   | (5,000 | ) |
|     Net                cash (used for) financing activities                          |   |   | (19,107      | )      |   | (37,263    | )      |   | (37,284 | ) |
| **Net                Increase (Decrease) in Cash and Cash Equivalents**                                  |   |   | 14,945  |   |   | 614        |   |   | (10,046 | ) |
| **Cash                and Cash Equivalents,** beginning                of year                      |   |   | 9,056        |   |   | 8,442      |   |   | 18,488 |   |
| **Cash                and Cash Equivalents,**end                of year                                  |   | $      | 24,001       |   | $      | 9,056      |   | $ | 8,442 |   |
|                                                                                                     |   |   |         |   |   |       |   |   |   |   |
|                                                                                                     |   |   |         |   |   |       |   |   |   |   |
| **Supplemental                Cash Flow Information:**                                                   |   |   |         |   |   |       |   |   |   |   |
| Interest                paid                                                                             |   | $      | 4,840        |   | $      | 5,480      |   | $ | 5,588 |   |
| Income                taxes paid                                                                         |   |   | 11,761       |   |   | 12,229     |   |   | 13,650 |   |

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Table          of Contents

**THE      BUREAU OF NATIONAL AFFAIRS, INC.**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE      INCOME**

**YEARS      ENDED DECEMBER 31, 2006, 2005, AND 2004**

|                                                                                                                                                |   |    | Comprehensive                  |    |    |  Capital |   |    |  Additional |    |    |           |   |    |           |   |    |  Accum.                Other |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------|--------------------------------|---------|---------|---------------|--------|---------|------------------|---------|---------|----------------|--------|---------|----------------|--------|---------|-----------------------------------|---------|
|                                                                                                                                                |   |    |  Income                   |    |    |  Stock   |   |    |  Paid-In    |    |    |  Retained |   |    |  Treasury |   |    |  Comprehensive               |    |
|                                                                                                                                                |   |    |  (Note                13) |    |    | Issued        |   |    |  Capital    |    |    |  Earnings |   |    |  Stock    |   |    |  Income                      |    |
| **Balance,              January 1, 2004**                                                                                                           |   |    |                           |    |  $ | 57,167   |   |  $ | 11,350           |    |  $ | 86,983         |   |  $ | (139,470       | )      |  $ | 100                               |    |
| Net                Income                                                                                                                           |   | $       | 23,478                         |    |    | ---           |   |    | ---              |    |    | 23,478         |   |    | ---            |   |    | ---                               |    |
| Other                Comprehensive Income, net of tax:                                                                                              |   |    |                                |    |    |               |   |    |                  |    |    |                |   |    |                |   |    |                                   |    |
|      Unrealized gain                on marketable                securities        |   |    | 371                            |    |    | ---           |   |    | ---              |    |    | ---            |   |    | ---            |   |    | 371                               |    |
|     Currency                translation adjustment                                                                              |   |    | (50                            | )       |    | ---           |   |    | ---              |    |    | ---            |   |    | ---            |   |    | (50                               | )       |
| Comprehensive                Income                                                                                                                 |   | $       | 23,799                         |    |    |               |   |    |                  |    |    |                |   |    |                |   |    |                                   |    |
| 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           |    |    | 100,301        |   |    | (166,154       | )      |    | 421                               |    |
| Net                Income                                                                                                                           |   | $       | 24,156                         |    |    | ---           |   |    | ---              |    |    | 24,156         |   |    | --             |   |    | ---                               |    |
| Other                Comprehensive Income, net of tax:                                                                                              |   |    |                                |    |    |               |   |    |                  |    |    |                |   |    |                |   |    |                                   |    |
|     Unrealized (loss)                on marketable securities                                                              |   |    | (60                            | )  |    | ---           |   |    | ---              |    |    | ---            |   |    | ---            |   |    | (60                               | )  |
|    Currency              translation adjustment                                                                                      |   |    | 143                            |    |    | ---           |   |    | ---              |    |    | ---            |   |    | ---            |   |    | 143                               |    |
|   Minimum              pension liability              adjustment                                                                          |   |    |  (597                     | )  |    |          |   |    |             |    |    |           |   |    |           |   |    |  (597                        | )  |
| Comprehensive                Income                                                                                                                 |   |  $ | 23,642                         |    |    |               |   |    |                  |    |    |                |   |    |                |   |    |                                   |    |
| Sales                of Class A treasury shares to employees                                                                                        |   |    |                                |    |    | ---           |   |    | 6,820            |    |    | ---            |   |    | 4,659          |   |    | ---                               |    |
| Repurchases                of shares                                                                                                                |   |    |                                |    |    | ---           |   |    | ---              |    |    | ---            |   |    | (31,115        | )      |    | ---                               |    |
| Cash                dividends--$.32 per share                                                                                                       |   |    |                                |    |    | ---           |   |    | ---              |    |    | (10,127        | )      |    | ---            |   |    | ---                               |    |
| **Balance,                December 31, 2005**                                                                                                       |   |    |                                |    |    | 57,167        |   |    | 22,730           |    |    | 114,330        |   |    | (192,610       | )      |    | (93                               | )  |
| Net                Income                                                                                                                           |   | $       | 19,371                         |    |    | ---           |   |    | ---              |    |    | 19,371         |   |    | ---            |   |    | ---                               |    |
| Other                Comprehensive Income, net of tax:                                                                                              |   |    |                                |    |    |               |   |    |                  |    |    |                |   |    |                |   |    |                                   |    |
|     Unrealized gain                on marketable securities                                                                |   |    | 923                            |    |    | ---           |   |    | ---              |    |    | ---            |   |    | ---            |   |    | 923                               |    |
|     Currency                translation adjustment                                                                              |   |    | (176                           | )  |    | ---           |   |    | ---              |    |    | ---            |   |    | ---            |   |    | (176                              | )       |
|     Minimum                pension liability adjustment                                                                         |   |    | 501                            |    |    | ---           |   |    | ---              |    |    | ---            |   |    | ---            |   |    | 501                               |    |
| Comprehensive                Income                                                                                                                 |   | $       | 20,619                         |    |    |               |   |    |                  |    |    |                |   |    |                |   |    |                                   |    |
| Sales                of Class A treasury shares to employees                                                                                        |   |    |                                |    |    | ---           |   |    | 7,011            |    |    | ---            |   |    | 5,530          |   |    | ---                               |    |
| Repurchases                of shares                                                                                                                |   |    |                                |    |    | ---           |   |    | ---              |    |    | --             |   |    | (13,954        | )      |    | ---                               |    |
| Shares              classified as liabilities                                                                                                       |   |    |                           |    |    |  ---     |   |    | (6,310           | )  |    | ---            |   |    | ---            |   |    | ---                               |    |
| Stock              Compensation expense                                                                                                             |   |    |                           |    |    |  ---     |   |    |  445        |    |    | ---            |   |    | ---            |   |    | ---                               |    |
| Cash                dividends--$.34 per share                                                                                                       |   |    |                                |    |    | ---           |   |    | ---              |    |    | (10,270        | )      |    | ---            |   |    | ---                               |    |
| **Balance,                December 31, 2006**                                                                                                       |   |    |                                |    | $       | 57,167        |   | $       | 23,876           |    | $       | 123,431        |   | $       | (201,034       | )      | $       | 1,155                             |    |

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Table                  of Contents

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Table                of Contents

|                                                    |   |  Pension                Benefits |    | Other                Postretirement  Benefits |   |
|---------------------------------------------------------|--------|---------------------------------------|---------|----------------------------------------------------|--------|
|                                                    |   | 2006                                  |    | 2005                                               |   | 2006 |   | 2005 |   |
| Change                in projected benefit obligation:  |   |                                  |    |                                               |   |   |   |   |   |
| Benefit                obligation -- January 1          |   | $                                     | 190,889 |                                               | $      | 177,043 |   | $ | 139,923 |   | $ | 128,744 |   |
| Service                cost                             |   |                                  | 8,160   |                                               |   | 7,814 |   |   | 5,610 |   |   | 4,936 |   |
| Interest                cost                            |   |                                  | 10,404  |                                               |   | 9,961 |   |   | 7,835 |   |   | 7,361 |   |
| Actuarial                (gain) loss                    |   |                                  | (4,768  | )                                                  |   | 3,939 |   |   | (9,895 | ) |   | 1,948 |   |
| Benefits                paid                            |   |                                  | (7,090  | )                                                  |   | (7,868 | ) |   | (3,141 | ) |   | (3,066 | ) |
| Benefit                obligation -- December 31        |   |                                  | 197,595 |                                               |   | 190,889 |   |   | 140,332 |   |   | 139,923 |   |
| Change                in plan assets:                   |   |                                  |    |                                               |   |   |   |   |   |   |   |   |   |
| Fair                value of plan assets -- January 1   |   |                                  | 139,666 |                                               |   | 126,920 |   |   | 25,050 |   |   | 24,087 |   |
| Actual                return on plan assets             |   |                                  | 21,190  |                                               |   | 6,440 |   |   | 1,470 |   |   | 963 |   |
| Employer                contribution                    |   |                                  | 14,000  |                                               |   | 14,000 |   |   | --- |   |   | --- |   |
| Benefits                paid                            |   |                                  | (6,898  | )                                                  |   | (7,694 | ) |   | --- |   |   | --- |   |
| Fair                value of plan assets -- December 31 |   |                                  | 167,958 |                                               |   | 139,666 |   |   | 26,520 |   |   | 25,050 |   |
| Funded                status                            |   |                                  | (29,637 | )                                                  |   | (51,223 | ) |   | (113,812 | ) |   | (114,873 | ) |
| Unrecognized                net loss                    |   |                                  | 22,144  |                                               |   | 38,008 |   |   | 35,063 |   |   | 46,934 |   |
| Unrecognized                prior service cost          |   |                                  | 557     |                                               |   | 619 |   |   | (17 | ) |   | (71 | ) |
| Net                amount recognized                    |   | $                                     | (6,936  | )                                                  | $      | (12,596 | ) | $ | (78,766 | ) | $ | (68,010 | ) |
|                                                    |   |                                  |    |                                               |   |   |   |   |   |   |   |   |   |
| Assumed                discount rate                    |   |                                  | 5.8%    |                                               |   | 5.5% |   |   | 5.8% |   |   | 5.5% |   |
| Assumed                rate of compensation increase    |   |                                  | 4.75%   |                                               |   | 4.75% |   |   | --- |   |   | --- |   |

|                                                  |   |  Pension                Benefits  |   | Other                Postretirement Benefits               |   |
|-------------------------------------------------------|--------|---------------------------------------------|--------|------------------------------------------------------------|--------|
|                                                  |   | 2006                                        |   |  2005         |   | 2006  |   |  2005 |   |
| Accrued                benefit liability              |   | $                                           | (7,093 | )                                                          | $      | (14,248 | ) | $ | (78,766 | ) | $ | (68,010 | ) |
| Intangible                asset                       |   |                                        | ---    |                                                       |   | 643 |   |   | --- |   |   | --- |   |
| Accumulated                other comprehensive income |   |                                        | 157    |                                                       |   | 1,009 |   |   | --- |   |   | --- |   |
| Net                amount recognized                  |   | $                                           | (6,936 | )                                                          | $      | (12,596 | ) | $ | (78,766 | ) | $ | (68,010 | ) |

*“Employers’ Accounting for            Defined Benefit Pension and other Postretirement Plans”*

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Table                of Contents

|                             |   |     |   | Other          |   |
|----------------------------------|--------|----------|--------|----------------|--------|
|                             |   | Pension  |   | Postretirement |   |
|                             |   | Benefits |   | Benefits       |   |
| 2007                             |   | $        | 9,045  |           | $      | 3,444 |   |
| 2008                             |   |     | 9,536  |           |   | 3,955 |   |
| 2009                             |   |     | 10,287 |           |   | 4,581 |   |
| 2010                             |   |     | 11,165 |           |   | 5,243 |   |
| 2011                             |   |     | 12,253 |           |   | 5,881 |   |
| Years                2012 - 2016 |   |     | 75,354 |           |   | 39,295 |   |

|                                                    |   |                Pension                Benefits |        |
|---------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------|-------------|
|                                                    |   | 2006                                                                                                                      |        | 2005 |   |
| Projected                benefit obligation             |   | $                                                                                                                         | 197,595     |   | $ | 190,889 |   |
| Accumulated                benefit obligation           |   |                                                                                                                      |        |   |   |   |   |
| Qualified                plan                           |   |                                                                                                                      | 160,172     |   |   |  152,192 |   |
| Supplemental                plan                        |   |                                                                                                                      |  1,732 |   |   | 1,722 |   |
| Fair                value of plan assets-qualified plan |   |                                                                                                                      | 167,958     |   |   | 139,666 |   |

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Table          of Contents

|                                                           |   | 2006   |    | 2005   |   | 2004    |   |
|----------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|
| Service                cost -- benefits earned during the year |   | $      | 8,160   |   | $      | 7,814   |   | $ | 7,677 |   |
| Interest                cost                                   |   |   | 10,404  |   |   | 9,961   |   |   | 9,451 |   |
| Expected                return on plan assets                  |   |   | (12,051 | )      |   | (10,960 | )      |   | (8,822 | ) |
| Amortization                of net actuarial loss              |   |   | 1,957   |   |   | 1,343   |   |   | 1,250 |   |
| Amortization                of prior service cost              |   |   | 62      |   |   | 62      |   |   | 62 |   |
| Pension                expense                                 |   | $      | 8,532   |   | $      | 8,220   |   | $ | 9,618 |   |
| Assumed                discount rate                           |   |   | 5.5%    |   |   | 5.7%    |   |   | 6.0% |   |
| Assumed                rate of compensation increase           |   |   | 4.75%   |   |   | 5.0%    |   |   | 5.0% |   |
| Expected                long-term return on plan assets        |   |   | 8.5%    |   |   | 8.5%    |   |   | 8.5% |   |

|                                                           |   | 2006   |   | 2005   |   | 2004   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Service                cost -- benefits earned during the year |   | $      | 5,610  |   | $      | 4,936  |   | $ | 4,345 |   |
| Interest                cost                                   |   |   | 7,835  |   |   | 7,361  |   |   | 6,294 |   |
| Expected                return on plan assets                  |   |   | (2,129 | )      |   | (2,047 | )      |   | (1,864 | ) |
| Amortization                of net actuarial loss              |   |   | 2,636  |   |   | 2,473  |   |   | 1,393 |   |
| Amortization                of prior service cost              |   |   | (54    | )      |   | (54    | )      |   | (54 | ) |
| Curtailments                                                   |   |   | ---    |   |   | ---    |   |   | (388 | ) |
| Other                postretirement benefits expense           |   | $      | 13,898 |   | $      | 12,669 |   | $ | 9,726 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |
| Assumed                discount rate                           |   |   | 5.5%   |   |   | 5.7%   |   |   | 6.0% |   |
| Expected                long-term return on plan assets        |   |   | 8.5%   |   |   | 8.5%   |   |   | 8.5% |   |

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Table            of Contents

|                                   |   |  Pension                Benefits  |     | Other                Postretirement Benefits |   |
|----------------------------------------|--------|---------------------------------------------|----------|---------------------------------------------------|--------|
|                                   |   | 2006                                        |     | 2005                                              |   | 2006 |   | 2005 |   |
| Equity                securities       |   |                                        | 65%      |                                              |   | 65% |   |   | 70% |   |   | 69% |   |
| Fixed                income securities |   |                                        |  27 |                                              |   | 29 |   |   | 28 |   |   | 30 |   |
| Cash                equivalents        |   |                                        |  8  |                                              |   | 6 |   |   | 2 |   |   | 1 |   |
| Total                                  |   |                                        | 100%     |                                              |   | 100% |   |   | 100% |   |   | 100% |   |

|                                     |   |  December                31, |    |
|------------------------------------------|--------|-----------------------------------|---------|
|                                     |   | 2006                              |    | 2005 |   |
| Cash                and cash equivalents |   | $                                 | 24,001  |   | $ | 9,056 |   |
| Short-term                investments    |   |                              | 23,877  |   |   | 11,731 |   |
| Marketable                securities     |   |                              | 94,063  |   |   | 97,898 |   |
| Total                                    |   | $                                 | 141,941 |   | $ | 118,685 |   |

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Table          of Contents

|                                           |   | 2006   |        | 2005   |   | 2004  |   |
|------------------------------------------------|--------|--------|-------------|--------|--------|-------|--------|
| Interest                income                 |   | $      | 4,091       |   | $      | 3,284 |   | $ | 2,859 |   |
| Dividend                income                 |   |   | 445    |   |   | 501   |   |   | 540 |   |
| Net                gain on sales of securities |   |   | 1,347  |   |   | 347   |   |   | 314 |   |
| Total                                          |   | $      | 5,883       |   | $      | 4,132 |   | $ | 3,713 |   |

| December                  31,2006 |   | AmortizedCost |    | GrossUnrealizedGains |   | GrossUnrealizedLosses |   | FairValue |   |
|-----------------------------------|--------|---------------|---------|----------------------|--------|-----------------------|--------|-----------|--------|
| Equity                securities  |   | $             | 15,913  |                 | $      | 1,565                 |   | $         | (99    | ) | $ | 17,379 |   |
| Municipal                bonds    |   |          | 94,611  |                 |   | 1,077                 |   |      | (302   | ) |   | 95,386 |   |
| Corporate                debt     |   |          | 5,121   |                 |   | 73                    |   |      | (19    | ) |   | 5,175 |   |
| Total                             |   | $             | 115,645 |                 | $      | 2,715                 |   | $         | (420   | ) | $ | 117,940 |   |

| December                31, 2005 |   | AmortizedCost |    | GrossUnrealizedGains |   | GrossUnrealizedLosses |   | FairValue |   |
|----------------------------------|--------|---------------|---------|----------------------|--------|-----------------------|--------|-----------|--------|
| Equity                securities |   | $             | 14,638  |                 | $      | 1,085                 |   | $         | (55    | ) | $ | 15,668 |   |
| Municipal                bonds   |   |          | 86,396  |                 |   | 633                   |   |      | (792   | ) |   | 86,237 |   |
| Corporate                debt    |   |          | 7,722   |                 |   | 53                    |   |      | (51    | ) |   | 7,724 |   |
| Total                            |   | $             | 108,756 |                 | $      | 1,771                 |   | $         | (898   | ) | $ | 109,629 |   |

----

Table          of Contents

|                                 |   |            |   |  Gross                Unrealized Losses            |   |
|--------------------------------------|--------|-----------------|--------|---------------------------------------------------------|--------|
| December              31, 2006       |   | FairValue  |   | Less                than 12                Months  |   | More                than 12                Months |   |
|  Equity              Securities |   | $               | 2,935  |                                                    | $      | (99 | )  | $ | --- |   |
|  Municipal              bonds   |   |            | 33,160 |                                                    |   | (28 | ) |   | (274 | ) |
|  Corporate              Debt    |   |            | 3,514  |                                                    |   | --- |   |   | (19 | ) |
|  Total                          |   | $               | 39,609 |                                                    | $      | (127 | ) | $ | (293 | ) |

|                                   |   |      |   |  Gross                  Unrealized Losses        |   |
|----------------------------------------|--------|-----------|--------|-------------------------------------------------------|--------|
|  December                31, 2005 |   | FairValue |   | Less                  than 12                  Months |   | More                  than 12                  Months |   |
|  Equity                Securities |   | $         | 3,187  |                                                  | $      | --- |   | $ | (55 | ) |
|  Municipal                bonds   |   |      | 53,419 |                                                  |   | (233 | ) |   | (559 | ) |
|  Corporate                Debt    |   |      | 5,242  |                                                  |   | (27 | ) |   | (24 | ) |
|  Total                            |   | $         | 61,848 |                                                  | $      | (260 | ) | $ | (638 | ) |

|                                      |   |  Amortized     |   |  Fair  |    |
|-------------------------------------------|--------|-----------------------------------------|--------|-------------|---------|
|                                      |   |  Cost                              |   |  Value |    |
|  Within              one year        |   | $                                       | 23,984 |        | $       | 23,877 |   |
|  One              through five years |   |                                    | 30,203 |        |    | 30,255 |   |
|  Five              through ten years |   |                                    | 20,733 |        |    | 21,053 |   |
|  Over              ten years         |   |                                    | 23,224 |        |    | 23,715 |   |
|  No              fixed maturity date |   |                                    | 1,588  |        |    | 1,661 |   |
| Total                                     |   | $                                       | 99,732 |        | $  | 100,561 |   |

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Table          of Contents

|                                              |   | 2006   |   | 2005   |   | 2004 |   |
|---------------------------------------------------|--------|--------|--------|--------|--------|------|--------|
| Gain                on sales of publishing assets |   | $      | --     |   | $      | --   |   | $ | 59 |   |
| Loss                on disposals of assets        |   |   | (19    | )      |   | (28  | )      |   | (103 | ) |
| Total                                             |   | $      | (19    | )      | $      | (28  | )      | $ | (44 | ) |

|                                       |   |             Publishing    |    |  Printing |   |  Software |   |  Total |   |
|--------------------------------------------|--------|------------------------------------------------------------------------------------------------------|---------|----------------|--------|----------------|--------|-------------|--------|
| Balance,              January 1, 2004      |   | $                                                                                                    | 49,998  |           | $      | 917            |   | $           | 22,937 |   | $ | 73,852 |   |
| Business              acquisition purchase |   |                                                                                                 |    |           |   |           |   |        |   |   |   |   |   |
| price                adjustments           |   |                                                                                                 | ---     |           |   | ---            |   |        | (400   | )  |   | (400 | )  |
| Balance,              December 31, 2004    |   |                                                                                                 | 49,998  |           |   | 917            |   |        | 22,537 |   |   | 73,452 |   |
| Business              acquisition purchase |   |                                                                                                 |    |           |   |           |   |        |   |   |   |   |   |
| price                adjustments           |   |                                                                                                 | ---     |           |   | ---            |   |        | (86    | ) |   | (86 | ) |
| Balance,              December 31, 2005    |   |                                                                                                 | 49,998  |           |   | 917            |   |        | 22,451 |   |   | 73,366 |   |
| Goodwill              impairment           |   |                                                                                                 | (11,576 | )              |   | ---            |   |        | ---    |   |   | (11,576 | )  |
| Balance,              December 31, 2006    |   | $                                                                                                    | 38,422  |           | $      | 917            |   | $           | 22,451 |   | $ | 61,790 |   |

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Table            of Contents

|                                                                           |   | 2006   |   | 2005   |   | 2004   |   |
|--------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Income                Statement Provision for Income Taxes                     |   | $      | 11,864 |   | $      | 16,085 |   | $ | 14,136 |   |
| Stockholders'                Equity -- Change in:                              |   |   |   |   |   |   |   |   |   |   |
| Unrealized                gain (loss) on marketable securities                 |   |   | 499    |   |   | (33    | )      |   | 199 |   |
|     Foreign                currency translation adjustment |   |   | (95    | )      |   | 77     |   |   | (27 | )     |
|     Minimum                pension liability adjustment    |   |   | 351    |   |   | (412   | )      |   | --- |   |
| Total                                                                          |   | $      | 12,619 |   | $      | 15,717 |   | $ | 14,308 |   |

|                                    |   | 2006   |   | 2005   |   | 2004   |   |
|-----------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Taxes                currently payable: |   |   |   |   |   |   |   |   |   |   |
| Federal                                 |   | $      | 8,051  |   | $      | 9,828  |   | $ | 11,132 |   |
| State                and local          |   |   | 3,687  |   |   | 2,164  |   |   | 2,402 |   |
|                                    |   |   | 11,738 |   |   | 11,992 |   |   | 13,534 |   |
| Deferred                tax provision:  |   |   |   |   |   |   |   |   |   |   |
| Federal                                 |   |   | 495    |   |   | 1,549  |   |   | 325 |   |
| State                and local          |   |   | (369   | )      |   | 2,544  |   |   | 277 |   |
|                                    |   |   | 126    |   |   | 4,093  |   |   | 602 |   |
| Total                                   |   | $      | 11,864 |   | $      | 16,085 |   | $ | 14,136 |   |

|                                                              |   |  Percent                of Pretax Income |                  |
|-------------------------------------------------------------------|--------|-----------------------------------------------|-----------------------|
|                                                              |   | 2006                                          |                  | 2005 |   | 2004 |   |
| Federal                statutory rate                             |   |                                          | 35.0%                 |   |   | 35.0% |   |   | 35.0% |   |
| State                and local income taxes, net of               |   |                                          |                       |   |   |  |   |   |  |   |
|     federal                income tax benefit |   |                                          | 6.9                   |   |   |  4.7 |   |   | 4.5 |   |
| Reduction              in net deferred tax assets                 |   |                                          | ---                   |   |   |  2.9  |   |   | --- |   |
| Tax                exempt interest exclusion                      |   |                                          | (3.5)                 |   |   | (2.4) |   |   | (2.4) |   |
| Dividends                received exclusion                       |   |                                          | (0.2                ) |   |   | (0.2) |   |   | (0.2) |   |
| Others                                                            |   |                                          | (0.2)                 |   |   |  --- |   |   |  0.7 |   |
| Total                                                             |   |                                          | 38.0%                 |   |   | 40.0% |   |   | 37.6% |   |

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Table          of Contents

|                                                                              |   |  December                31, |         |
|-----------------------------------------------------------------------------------|--------|-----------------------------------|--------------|
|                                                                              |   | 2006                              |         | 2005 |   |
| Deferred                tax assets:                                               |   |                              |         |   |   |
|     Other                postretirement benefits              |   | $                                 | 31,229       |   | $ | 26,329 |   |
|     Pension                benefits                           |   |                              | ---          |   |   | 1,038 |   |
|     Minimum                pension liability adjustment       |   |                              | 61           |   |   | 412 |   |
|     Inventories                                               |   |                              | 1,506        |   |   | 1,614 |   |
|                 Defered revenues                                        |   |                              | ---          |   |   | 5,126 |   |
|     Annual                leave                               |   |                              | 2,215        |   |   | 2,052 |   |
|     Accounts                receivable allowances             |   |                              | 658          |   |   | 727 |   |
|     Medical                claims                             |   |                              | 1,270        |   |   | 1,255 |   |
| Amortization                of acquired intangible assets                         |   |                              | 2,313        |   |   |  --- |   |
|     Others                                                    |   |                              | 2,058        |   |   | 1,828 |   |
| Valuation                allowance                                                |   |                              |  (658   | )  |   | (536 | ) |
| Total                deferred tax assets                                          |   |                              | 40,652       |   |   | 39,845 |   |
| Deferred                tax (liabilities):                                        |   |                              |         |   |   |   |   |
| Pension                benefit                                                    |   |                              |  (2,874 | )  |   | --- |   |
|     Capitalized                software                       |   |                              | (2,815       | ) |   | (3,512 | ) |
|     Deferred                selling expenses                  |   |                              | (1,802       | ) |   | (1,853 | ) |
|     Amortization                of acquired intangible assets |   |                              | ---          |   |   | (397 | ) |
| Others                                                                            |   |                              | (1,629       | ) |   | (1,678 | ) |
| Total                deferred tax (liabilities)                                   |   |                              | (9,120       | ) |   | (7,440 | ) |
| Net                deferred tax assets                                            |   | $                                 | 31,532       |   | $ | 32,405 |   |

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Table          of Contents

|                                                                                    |   |  2006 |   | 2005   |   |
|-----------------------------------------------------------------------------------------|--------|------------|--------|--------|--------|
|  Receivables:                                                                      |   |       |        |   |   |   |   |
|      Customers                                                 |   | $          | 43,187 |   | $      | 37,363 |   |
|      Others                                                    |   |       | 3,197  |   |   | 3,058 |   |
|      Allowance              for              doubtful accounts |   |       | (2,102 | )      |   | (2,596 | ) |
|  Total                                                                             |   | $          | 44,282 |   | $      | 37,825 |   |

|                                                                                 |   | 2006   |   | 2005   |   |
|--------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Inventories:                                                                         |   |   |   |   |   |
|     Materials                    and                    supplies |   | $      | 1,969  |   | $      | 1,856 |   |
|     Work                    in                    process        |   |   | 539    |   |   | 308 |   |
|     Finished                    goods                            |   |   | 1,191  |   |   | 1,042 |   |
| Total                                                                                |   | $      | 3,699  |   | $      | 3,206 |   |

|                                                                             |   | 2006   |    | 2005   |   |
|----------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
| Property                and equipment, at cost:                                  |   |   |    |   |   |
|     Land                                                     |   | $      | 4,250   |   | $      | 4,250 |   |
|     Buildings                and                improvements |   |   | 52,162  |   |   | 51,759 |   |
|     Furniture                and                equipment    |   |   | 48,507  |   |   | 47,840 |   |
|     Accumulated                depreciation                  |   |   | (79,083 | )      |   | (77,140 | ) |
| Total                                                                            |   | $      | 25,836  |   | $      | 26,709 |   |

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Table            of Contents

| Intangible                    and other amortizable assets:                                 |   | 2006   |    | 2005   |   |
|---------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|
|     Gross                    carrying amount--                          |   |   |    |   |   |   |   |
|         Software                                    |   | $      | 25,627  |   | $      | 30,368 |   |
|         Customer                    lists           |   |   | 6,996   |   |   | 13,733 |   |
|         Copyrights                                  |   |   | 9,145   |   |   | 9,145 |   |
|        Other                    amortizable assets       |   |   | 1,171   |   |   | 2,182 |   |
|                                                                                        |   |   | 42,939  |   |   | 55,428 |   |
| Accumulated                    amortization--                                               |   |   |    |   |   |   |   |
|         Software                                    |   |   | (16,995 | )      |   | (19,247 | ) |
|         Customer                    lists           |   |   | (6,276  | )      |   | (12,285 | ) |
|         Copyrights                                  |   |   | (5,630  | )      |   | (4,716 | ) |
|         Other                    amortizable assets |   |   | (318    | )      |   | (1,209 | ) |
|                                                                                        |   |   | (29,219 | )      |   | (37,457 | ) |
| Total                                                                                       |   | $      | 13,720  |   | $      | 17,971 |   |

|                                                                            |   | 2006   |   | 2005   |   |
|---------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Payables                and accrued liabilities:                                |   |   |   |   |   |   |   |
|     Accounts                payable and accrued liabilities |   | $      | 28,952 |   | $      | 17,833 |   |
|     Employee                compensation and benefits       |   |   | 17,725 |   |   | 15,804 |   |
|     Postretirement                benefits, current portion |   |   | 8,580  |   |   | 15,783 |   |
|     Income                taxes                             |   |   | 1,711  |   |   | 1,726 |   |
| Share-based                liabilities (Note 12)                                |   |   | 6,310  |   |   | --- |   |
| Total                                                                           |   | $      | 63,278 |   | $      | 51,146 |   |

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Table          of Contents

|                                                          |   | 2006   |   | 2005   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|
| Notes                payable, unsecured, 8.15%, due 2007-2010 |   | $      | 30,000 |   | $      | 37,500 |   |
| Notes                payable, unsecured, 6.99%, due 2007-2011 |   |   | 25,000 |   |   | 25,000 |   |
| Total                term debt                                |   |   | 55,000 |   |   | 62,500 |   |
| Current                portion                                |   |   | 10,500 |   |   | 7,500 |   |
| Long-term                portion                              |   | $      | 44,500 |   | $      | 55,000 |   |

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Table                  of Contents

*Accounting for*
*Stock Issued to Employees*
*Accounting for Stock-Based Compensation*
* *
* *
*Accounting for              Stock-Based Compensation - Transition and Disclosure, an amendment              of FASB              Statement No. 123, *

*Share-Based              Payment*

|                                             |   |  Treasury                Stock Shares |       |
|--------------------------------------------------|--------|--------------------------------------------|------------|
|                                             |   | Class                A                     |       | Class                B |   | Class                C |   |
| Balance,                January 1, 2004          |   |                                       | 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 |   |
| Sales                to employees                |   |                                       | (910,735   | ) |   | --- |   |   | --- |   |
| Repurchases                                      |   |                                       | 592,751    |   |   | 1,832,846 |   |   | --- |   |
| Conversions                of Class A to Class B |   |                                       | 1,021,449  |   |   | (1,021,449 | ) |   | --- |   |
| Balance,                December 31, 2005        |   |                                       | 17,048,726 |   |   | 7,394,928 |   |   | 2,519,240 |   |
| Sales                to employees                |   |                                       | (972,101   | ) |   | --- |   |   | --- |   |
| Repurchases                                      |   |                                       | 520,467    |   |   | 499,976 |   |   | --- |   |
| Conversions                of Class A to Class B |   |                                       | 538,253    |   |   | (538,253 | ) |   | --- |   |
| Balance,                December 31, 2006        |   |                                       | 17,135,345 |   |   | 7,356,651 |   |   | 2,519,240 |   |

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Table          of Contents

|                                                           |   | 2006   |   | 2005   |   | 2004   |   |
|----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| Holding                gains on securities                     |   |   |   |   |   |   |   |   |   |   |
|     arising                during the year |   | $      | 2,769  |   | $      | 254    |   | $ | 884 |   |
| Less                net gains included in net income           |   |   | 1,347  |   |   | 347    |   |   | 314 |   |
| Changes                in unrealized gains                     |   |   | 1,422  |   |   | (93    | )      |   | 570 |   |
| Less                income taxes                               |   |   | 499    |   |   | (33    | )      |   | 199 |   |
| Net                unrealized gains (losses)                   |   |   | 923    |   |   | (60    | )      |   | 371 |   |
| Currency                translation gains (losses)             |   |   | (271   | )      |   | 220    |   |   | (77 | ) |
| Less                income taxes                               |   |   | (95    | )      |   | 77     |   |   | (27 | ) |
| Net                currency translation gains (losses)         |   |   | (176   | )      |   | 143    |   |   | (50 | ) |
| Minimum                pension liability adjustment            |   |   | 852    |   |   | (1,009 | )      |   | --- |   |
| Less                income taxes                               |   |   | 351    |   |   | (412   | )      |   | --- |   |
| Net                minimum pension liability adjustment        |   |   | 501    |   |   | (597   | )      |   | --- |   |
| Other                comprehensive income (loss)               |   | $      | 1,248  |   | $      | (514   | )      | $ | 321 |    |

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Table                  of Contents

| Year                  Ended December 31, 2006     |   | Publishing |         | Printing |   | Software |   | Total  |   |
|---------------------------------------------------|--------|------------|--------------|----------|--------|----------|--------|--------|--------|
| Revenues                  from external customers |   | $          | 279,209      |     | $      | 37,886   |   | $      | 27,767 |   | $ | 344,862 |   |
| Intersegment                  revenues            |   |       | ---          |     |   | 10,680   |   |   | 3,084  |   |   | 13,764 |   |
| Operating                  profit                 |   |       | 18,826       |     |   | 3,103    |   |   | 9,046  |   |   | 30,975 |   |
| Interest                  expense                 |   |       | 5,706        |     |   | 8        |   |   | 1      |   |   | 5,715 |   |
| Identifiable                  assets              |   |       | 289,845      |     |   | 22,260   |   |   | 43,715 |   |   | 355,820 |   |
| Depreciation                  and amortization    |   |       | 7,119        |     |   | 995      |   |   | 420    |   |   | 8,534 |   |
| Goodwill                impairment                |   |       |  11,576 |     |   | ---      |   |   | ---    |   |   | 11,576 |   |
| Capital                  expenditures             |   |       | 2,418        |     |   | 3,556    |   |   | 21     |   |   | 6,005 |   |

| Year                Ended December 31, 2005     |   | Publishing |    | Printing |   | Software |   | Total  |   |
|-------------------------------------------------|--------|------------|---------|----------|--------|----------|--------|--------|--------|
| Revenues                from external customers |   | $          | 272,619 |     | $      | 31,024   |   | $      | 25,393 |   | $ | 329,036 |   |
| Intersegment                revenues            |   |       | ---     |     |   | 10,773   |   |   | 2,416  |   |   | 13,189 |   |
| Operating                profit                 |   |       | 32,666  |     |   | 3,012    |   |   | 6,366  |   |   | 42,044 |   |
| Interest                expense                 |   |       | 6,032   |     |   | 9        |   |   | ---    |   |   | 6,041 |   |
| Identifiable                assets              |   |       | 275,582 |     |   | 18,427   |   |   | 47,469 |   |   | 341,478 |   |
| Depreciation                and amortization    |   |       | 7,659   |     |   | 921      |   |   | 1,182  |   |   | 9,762 |   |
| Capital                expenditures             |   |       | 2,025   |     |   | 889      |   |   | 22     |   |   | 2,936 |   |

----

Table          of Contents

| Year                Ended December 31, 2004     |   | Publishing |    | Printing |   | Software |   | Total  |   |
|-------------------------------------------------|--------|------------|---------|----------|--------|----------|--------|--------|--------|
| Revenues                from external customers |   | $          | 272,619 |     | $      | 26,814   |   | $      | 23,171 |   | $ | 322,604 |   |
| Intersegment                revenues            |   |       | ---     |     |   | 10,903   |   |   | 2,299  |   |   | 13,202 |   |
| Operating                profit                 |   |       | 35,034  |     |   | 392      |   |   | 4,139  |   |   | 39,565 |   |
| Interest                expense                 |   |       | 5,717   |     |   | 21       |   |   | ---    |   |   | 5,738 |   |
| Identifiable                assets              |   |       | 280,213 |     |   | 17,010   |   |   | 43,892 |   |   | 341,115 |   |
| Depreciation                and amortization    |   |       | 7,636   |     |   | 871      |   |   | 1,775  |   |   | 10,282 |   |
| Capital                expenditures             |   |       | 5,375   |     |   | 350      |   |   | 36     |   |   | 5,761 |   |

|                                                          |   | 2006   |    | 2005   |   | 2004    |   |
|---------------------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|
| Total                interest expense for reportable segments |   | $      | 5,715   |   | $      | 6,041   |   | $ | 5,738 |   |
| Elimination                of intersegment interest expense   |   |   | (111    | )      |   | (134    | )      |   | (118 | ) |
| Consolidated                interest expense                  |   | $      | 5,604   |   | $      | 5,907   |   | $ | 5,620 |   |
|                                                          |   |   |    |   |   |    |   |   |   |   |
| Total                assets for reportable segments           |   | $      | 355,820 |   | $      | 341,478 |   | $ | 341,115 |   |
| Elimination                of intersegment assets             |   |   | (18,648 | )      |   | (19,767 | )      |   | (16,702 | ) |
| Consolidated                assets                            |   | $      | 337,172 |   | $      | 321,711 |   | $ | 324,413 |   |

|                                |   | Quarter                  Ended 2006 |   |
|-------------------------------------|--------|-------------------------------------|--------|
|                                |   | March                  25           |   | June                  17 |   | September                  9 |   | December                  31 |   |
|                                |   |                                |   |   |   |   |   |   |   |
| Revenues                            |   | $                                   | 72,074 |   | $ | 75,479 |   | $ | 76,257 |   | $ | 121,052 |   |
| Gross                  Profit       |   |                                | 32,352 |   |   | 34,349 |   |   | 34,525 |   |   | 59,159 |   |
| Net                  Income         |   |                                | 4,165  |   |   | 5,239 |   |   | 5,004 |   |   | 4,963 |   |
|                                |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  Per Share |   | $                                   | .14    |   | $ | .17 |   | $ | .17 |   | $ | .17 |   |

|                                |   | Quarter                  Ended 2005 |   |
|-------------------------------------|--------|-------------------------------------|--------|
|                                |   | March                  26           |   | June                  18 |   | September                  10 |   | December                  31 |   |
|                                |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                            |   | $                                   | 72,475 |   | $ | 74,622 |   | $ | 76,464 |   | $ | 105,475 |   |
| Gross                  Profit       |   |                                | 33,136 |   |   | 34,231 |   |   | 36,301 |   |   | 49,615 |   |
| Net                  Income         |   |                                | 5,102  |   |   | 5,483 |   |   | 6,393 |   |   | 7,178 |   |
|                                |   |                                |   |   |   |   |   |   |   |   |   |   |   |
| Earnings                  Per Share |   | $                                   | .16    |   | $ | .17 |   | $ | .20 |   | $ | .23 |   |

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Table              of Contents

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Table          of Contents

| Column                  A                                    |   | Column                  B   |   | Column                  C   |   | Column                  D   |    | Column                  E |                           |
|--------------------------------------------------------------|--------|-----------------------------|--------|-----------------------------|--------|-----------------------------|---------|---------------------------|--------------------------------|
|                                                         |   |                        |   | Additions                   |   |                        |    |                      |                           |
|                                                         |   |                        |   | (1)                         |   | (2)                         |    |                      |                           |   |   |
|                                                         |   |                        |   |                        |   | Charged                  to |    |                      |                           |   |   |
|                                                         |   | Balance                  at |   | Charged                  to |   | Other                       |    |                      |                           | Balance                  at |   |
|                                                         |   | Beginning                   |   | Costs                  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, 2006                |   | $                           | 2,596  |                        | $      | 571                         |    | $                         | (440)(a                        | ) | $ | 625 (b | ) | $ | 2,102 |   |
| Year                  ended December 31, 2005                |   |                        | 2,097  |                        |   | 537                         |    |                      | 190 (a                    | ) |   | 228 (b | ) |   | 2,596 |   |
| Year                  ended December 31, 2004                |   |                        | 2,135  |                        |   | 917                         |    |                      |                    (52)(a | ) |   | 903 (b | ) |   | 2,097 |   |
|                                                         |   |                        |   |                        |   |                        |    |                      |                           |   |   |   |   |   |   |   |
| Allowance                  for Obsolete Inventory:           |   |                        |   |                        |   |                        |    |                      |                           |   |   |   |   |   |   |   |
| Year                  ended December 31, 2006                |   | $                           | 588    |                        | $      | 92                          |    |                      |                           |   |   |   |   | $ | 680 |   |
| Year                  ended December 31, 2005                |   |                        | 561    |                        |   | 27                          |    |                      |                           |   |   |   |   |   | 588 |   |
| Year                  ended December 31, 2004                |   |                        | 535    |                        |   | 26                          |    |                      |                           |   |   |   |   |   | 561 |   |
|                                                         |   |                        |   |                        |   |                        |    |                      |                           |   |   |   |   |   |   |   |
| Allowance                  for Deferred Tax Assets:          |   |                        |   |                        |   |                        |    |                      |                           |   |   |   |   |   |   |   |
| Year                  ended December 31, 2006                |   | $                           | 536    |                        | $      | 122                         |    |                      |                           |   |   |  |   | $ | 658 |   |
| Year                  ended December 31, 2005                |   |                        | 413    |                        |   | 123                         |    |                      |                           |   |   |   |   |   | 536 |   |
| Year                  ended December 31, 2004                |   |                        | 447    |                        |   | (34                         | )  |                      |                           |   |   |   |   |   | 413 |   |

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Table            of Contents

Changes        in and        Disagreements with Accountants on Accounting and Financial        Disclosure

Controls        and        Procedures

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Table            of Contents

Directors        and Executive Officers of the Registrant

**"I. Election of Directors"**
**"Biographical Sketches of Nominees,"**

*www.bna.com*
*. *

Executive        Compensation

**"IV. Executive Compensation"**

Security Ownership        of        Beneficial Owners and Management

**"I. Election of Directors"**

Certain Relationships        and Related Transactions

**"IV. Executive Compensation"**

Principal        Accounting Fees and Services

**"V. Audit Committee Disclosure"**

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Table            of Contents

Exhibits and Financial Statement          Schedules

| (a)                    (1)       | Financial                    Statements                                                          | Page   |
|----------------------------------|--------------------------------------------------------------------------------------------------|--------|
|                             | Reports                    of Independent Registered Public Accounting Firm                      | 18     |
|                             |                                                                                             |   |
|                             | Consolidated                    Statements of Income for the years                               |   |
|                             |     ended                    December 31, 2006, 2005 , and 2004              | 19     |
|                             | Balance                    Sheets as of December 31, 2006 and 2005                               |   |
|                             | Consolidated                    Statements of Cash Flows and Consolidated                        |   |
|                             | Statements                    of Changes in Stockholders' Equity and                             | 20     |
|                             | Comprehensive                    Income for each of the years                                    |   |
|                             |     ended                    December 31, 2006, 2005 and 2004           | 22     |
|                             | Notes                    to Consolidated Financial Statements                                    | 25     |
|                             |                                                                                             |   |
|     (2)      | Financial                    Statement Schedule:                                                 |   |
|      II | Valuation                    and Qualifying Accounts and Reserves                                |   |
|                             |     for                    the years ended December 31, 2006, 2005, and 2004 | 44     |

| (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                    2006                         |
|                       | Consolidated                    Financial Statements in the Notes to Consolidated  Financial                    Statements,       |
|                       | Note                  12, "Stockholders' Equity"                                                                                  |
|                       |                                                                                                                                   |
| 21                         | Subsidiaries                    of Registrant.***                                                                                      |
|                       |                                                                                                                                   |
| 23.1                  | Consent                  of Independent Registered Public Accounting Firm                                                              |
|                       |                                                                                                                                   |
| 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 21, 2007**** |

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Table              of              Contents

| *      | Incorporated                    by reference to the Company’s 2001 Form                    10-K                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   | Commission                    File Number 2-28286, filed on March 29,                    2002.                                       |
|   | The                    exhibit number indicated above corresponds to the                                                             |
|   | exhibit                    number in that filing.                                                                                    |
|   |                                                                                                                                 |
| **     | Incorporated                    by reference to the 8K filed by the Company on                                                       |
|   | September                    8, 2005. The exhibit number indicated above                    corresponds                              |
|   | to                    the exhibit number 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,                    2006.                                             |
|   |                                                                                                                                 |
|   | Upon                    written or oral request to the Company’s General                    Counsel, a copy                    |
|   | of                    any of the above exhibits will be furnished at                    cost.                                        |

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Table              of Contents

SIGNA

| By:                       s/Paul N. Wojcik                                                                | By:  s/George J. Korphage                                                                                 |
|----------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|
|          Paul                      N. Wojcik                      |          George                    J. Korphage,                        |
|          President                    and Chief Executive Officer |          Vice                    President and Chief Financial Officer |
|          Director                                                 |         (Chief                    Accounting Officer)                       |
|                                                                                                           |          Director                                                      |
|                                                                                                           |                                                                                                                |
|  Date:  March 28, 2007                                                                               |  Date:  March 28,                    2007                                                                 |

|  By:              s/Sandra Degler                                                                       | March                28, 2007     |  By:               s/Gregory C. McCaffrey                                     | March                28, 2007     |
|--------------------------------------------------------------------------------------------------------------|-----------------------------------|-----------------------------------------------------------------------------------------|-----------------------------------|
|         Sandra                C.                Degler          | Date                              |          Gregory              C. McCaffrey | Date                              |
|         Chairman              of the              Board of Directors |                              |          Director                          |                              |
|                                                                                                         |                              |                                                                                    |                              |
|  By:              s/Paul A. Blakely                                                                     | March              28, 2007       |  By:                 s/Jonathan Newcomb                                       | March              28, 2007       |
|          Paul              A.              Blakely              | Date                              |          Jonathan              Newcomb     | Date                              |
|          Director                                               |                              |          Director                          |                              |
|                                                                                                         |                              |                                                                                    |                              |
|  By:              s/Cynthia J. Bolbach                                                                  | March              28, 2007       |  By:               s/Susan E. Rice                                            | March              28, 2007       |
|          Cynthia              J. Bolbach                        | Date                              |          Susan                E. Rice      | Date                              |
|          Director                                               |                              |          Director                          |                              |
|                                                                                                         |                              |                                                                                    |                              |
|  By:              s/Eunice Lin Bumgardner                                                               | March              28, 2007       |  By:               s/Ellen Taus                                               | March              28, 2007       |
|          Eunice              Lin Bumgardner                     | Date                              |          Ellen              Taus           | Date                              |
|          Director                                               |                              |          Director                          |                              |
|                                                                                                         |                              |                                                                                    |                              |
|  By:               s/Neil R. Froemming                                                             | March               28, 2007 |  By:               s/Daniel W. Toohey                                         | March              28, 2007       |
|          Neil              R. Froemming                         | Date                              |          Daniel              W. Toohey     | Date                              |
|          Director                                               |                              |          Director                          |                              |
|                                                                                                         |                              |                                                                                    |                              |
|  By:              s/Gerald S. Hobbs                                                                     | March               28, 2007 |  By:               s/Robert L. Velte                                          | March              28, 2007  |
|          Gerald              S. Hobbs                           | Date                              |          Robert              L. Velte      | Date                              |
|          Director                                               |                              |          Director                          |                              |
|                                                                                                         |                              |                                                                                    |                              |
|  By:               s/Margaret S. Hullinger                                                         | March              28, 2007  |                                                                                    |                              |
|          Margaret              S. Hullinger                     | Date                              |                                                                                    |                              |
|          Director                                               |                              |                                                                                    |                              |

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Table          of Contents

| Number                         |   | Exhibit                Description                                                                                     | Sequential                Page |
|--------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|--------------------------------|
|                           |   |                                                                                                                   |  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                2006                 |                           |
|                           |   |     Consolidated                financial Statements in the Notes to Consolidated  Financial  |                           |
|       |   |     Statements              ,              Note 12 "Stockholders Equity,"                          | 38                             |
|                           |   |                                                                                                                   |                           |
|     21     |   | Subsidiaries                of Registrant                                                                              | 51                             |
|                           |   |                                                                                                                   |                           |
| 23.1                      |   | Consent              of Independent Registered Public Accounting Firm                                             | 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                21, 2007 | **                             |
|                           |   |                                                                                                                   |                           |
| *                              |   | Incorporated                by reference to the Company’s 2001 Form 10-K                                         |                           |
|                           |   | Commission                File Number 2-28286, filed on March 29, 2002.                                                |                           |
|                           |   | The                exhibit number indicated above corresponds to the                                                   |                           |
|                           |   | exhibit                number in that filing.                                                                          |                           |
|                           |   |                                                                                                                   |                           |
|  **                       |   | The              Definitive Proxy Statement is expected to be filed with                                               |                           |
|                           |   | the              SEC within 120 days of December 31, 2006.                                                             |                           |

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