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

     For the fiscal year ended December 31,1997
                               ------------------------------------

                                        OR

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

     For the transition period from            to
                                   ------------   -----------------

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

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

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

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

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

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

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

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

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

The  market  value of the Class A voting  stock  held by  non-affiliates  of the
registrant as of February 28, 1998 was $96,654,418. All voting stock is owned by
employees of the registrant and its subsidiaries.  The market value of the Class
B and Class C non-voting  stock held by  non-affiliates  as of February 28, 1998
was  $131,418,334,  and $4,400,769  respectively.  In determining the above, The
Bureau of National  Affairs,  Inc. (the "Company"),  has assumed that all of its
officers,  directors,  and  persons  known to the  Company to be the  beneficial
owners of more than five percent of each class of the Company's common stock are
affiliates.  Such  assumption  should  not be  deemed  conclusive  for any other
purpose.

The number of shares  outstanding of each of the registrant's  classes of common
stock,  as of February 28, 1998 was 3,534,418  Class A common shares,  4,541,132
Class B common shares, and 403,413 Class C common shares.

                                                                   Page 1 of 166

<PAGE>2





                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Company's  definitive  Proxy  Statement,  filed with the SEC on
March 27, 1998, are incorporated by reference into Part III of this Form 10-K.


                      The Bureau of National Affairs, Inc.
                               Index to Form 10-K
                   For the fiscal year ended December 31, 1997



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

Item 2.   Properties............................................   11

Item 3.   Legal Proceedings.....................................   11

Item 4.   Submission of Matters to a Vote of Security Holders...   11

Item X.   Executive Officers of the Registrant..................   12

                                    PART II.

Item 5.   Market for the Registrant's Common Stock and
               Related Security Holder Matters..................   14

Item 6.   Selected Financial Data...............................   15

Item 7.   Management's Discussion and Analysis of Financial
               Condition and Results of Operations..............   16

Item 8.   Financial Statements and Supplementary Data...........   20

Item 9.   Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure..............   42

                                    PART III.

Item 10.  Directors and Executive Officers of Registrant........   42

Item 11.  Executive Compensation................................   42

Item 12.  Security Ownership of Beneficial Owners and Management   42

Item 13. Certain Relationships and Related Transactions.........   42

                                    PART IV.

Item 14. Exhibits, Financial Statement Schedules, and Report on
                    Form 8-K....................................   43

SIGNATURES......................................................   45

EXHIBITS........................................................   44

INDEX...........................................................   46


<PAGE> 3

FORWARD-LOOKING STATEMENTS

     This Annual  Report on Form 10-K  contains  and  incorporates  by reference
certain   statements  that  are  not  statements  of  historical  fact  but  are
forward-looking  statements.  The use of such words as "believes"  and "expects"
and similar  expressions  are intended to identify  forward-looking  statements.
Such  statements  are subject to certain  risks and  uncertainties,  which could
cause actual results to differ from those  projected.  Readers are cautioned not
to place undue reliance on these forward-looking  statements which speak only as
of the date hereof.

                                     PART I


Item 1.           Business

General Development of Business and Narrative Description of Business


Business of BNA and Subsidiaries

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

BNA and its publishing  subsidiaries,  Tax  Management  Inc. and Pike & Fischer,
Inc., are engaged in providing  labor,  legal,  economic,  tax, health care, and
other regulatory information to business, professional, and academic users. They
prepare, publish, and market subscription information services in print, compact
disc, and online formats, books, pamphlets, and research reports.

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

Online products are marketed through database vendors such as LEXIS/NEXIS,  West
Publishing Company, Dialog, Legislate,  Cambridge Information Group. Since 1996,
the Company  began  offering  many of its products for  electronic  delivery via
Lotus Notes and the World Wide Web.

BNA Software, a division of Tax Management Inc., develops, produces, and markets
tax and financial  planning  software for use on personal  computers.  Sales are
made to  accountants,  lawyers,  tax and  financial  planners,  and others.  The
products are marketed  through  direct mail,  space  advertising,  and BNA field
sales representatives.

BNA International  Inc. is the company's agent outside of North America for sale
of its domestic  services and also engages in independent  publishing  activity,
including adaptation of the Company's domestic products for sales abroad.

The McArdle Printing Co., Inc.  provides  printing services to mid-Atlantic area
customers.  It utilizes modern equipment and its customers  include  publishers,
trade  associations,  professional  societies,  other non-profit  organizations,
financial institutions and governmental organizations.  Approximately 55 percent
of its business is derived from the BNA publishing companies.

BNA Communications Inc. is engaged in the business of producing, publishing, and
marketing  multimedia programs for training in the equal employment  opportunity
and safety and health related fields. The programs promote awareness, facilitate
regulatory compliance, and develop skills for managers and employees in industry
and government.

In  January  of  1998,  the  Company   acquired   Institute  of  Management  and
Administration,  Inc. (IOMA), a New York City-based newsletter company. As a BNA
subsidiary  IOMA will  build on its  15-year  history  and will  provide a solid
platform for leveraging BNA's content in lower price-point market segments.

                                                                    (Continued)
<PAGE>4

Review of Operations

BNA began its second 50 years as an  employee-owned  company  in grand  fashion.
Record financial results and accolades highlighted the year 1997. Large gains in
both operating profit and non-operating income led to a 34.1 percent increase in
net  income.  Earnings  per  share,  reflecting  the higher net income and fewer
outstanding shares, rose 35.8 percent.

Consolidated  revenues  advanced  4.9 percent to $244  million,  buoyed by large
increases from Tax Management,  BNA Software,  McArdle, and BNA Books. Increases
in expenses  were again held to modest  levels.  As a result,  the  consolidated
operating profit rose 37.8 percent over the previous year and was 8.2 percent of
revenues,  the highest level since 1989.  Most business  units  recorded  higher
operating profits, including BNA Communications' progression from a 1996 loss to
a 1997 profit.

Non-operating income increased $1.3 million,  reflecting a 13.9 percent increase
in investment income and a gain from the sale of a publication.

Net income of $19.6  million was 8 percent of  revenues,  the  highest  earnings
margin in the  company's  history.  And return on equity of 26.8 percent was the
highest since 1981.

Cash and  investment  balances  rose  nearly 6 percent  to $144.2  million.  The
increase was generated by strong cash flows from  operations and market gains on
investment  securities,  reduced  by  dividends  paid to  shareholders,  capital
expenditures,  and net repurchases of BNA stock.  Stock  repurchases,  primarily
from estates of Class B shareholders, were the highest in the company's history,
but they were easily financed by internal cash flows.

BNA's  financial  strength  and  liquidity,  in  addition to  providing  current
investment  income,  ensures  that the  company  has the  resources  to  finance
business   challenges  and  opportunities  and  to  meet  the  stock  repurchase
obligations inherent in employee ownership.

A review of 1997 operations of the parent company and each subsidiary follows.



Parent Company

Strong  and steady  financial  progress,  prestigious  honors  and  awards,  and
reorganizations  designed  to carry the  parent  company  successfully  into the
future, all combined to make 1997 a very good year.

For  the  second   consecutive  year,  the  parent  company  saw  a  substantial
improvement in its operating profit.  Parent company revenues increased only 1.1
percent;  however, declines in operating expenses in just about every department
resulted in a 73 percent improvement over 1996's operating profit.

As we began our second 50 years of employee  ownership,  the formula for success
remained the same:  high  quality  products  produced,  sold,  distributed,  and
supported in a high quality manner by BNA's employee owners. Making that formula
work,  however,  in a rapidly changing business  environment  required continual
evaluation and experimentation with our product line and business methods.

                                                                     (Continued)

<PAGE>5

The opening days of 1997 saw the  establishment of the Electronic  Commerce Unit
in our Sales and Marketing  Department.  This unit,  working in partnership with
our sales  representatives,  was very  successful in  establishing  a strong and
growing  market for our  notification  services on the World Wide Web. There was
also an extensive  reorganization  on the marketing  side with the creation of a
group of market managers who have the  responsibility  of growing both new sales
and revenues in each of our product lines.

On the content side, the Editorial Department dissolved the Dailies Division and
established in its place the Business Information  Division,  consisting of both
daily and weekly  notification  services addressed to corporate as well as legal
markets. The year also saw the creation of an environmental news bureau designed
to provide better  coverage for our  environmental  news  publications  at lower
cost. In this electronic  information age, the Information Technology Department
plays a significant role both in product creation and product maintenance.  That
department got a new leader in 1997, someone from outside BNA but with extensive
industry  experience.  He  wasted  little  time in  overhauling  the  department
extensively to meet the myriad challenges of the near future.

Organizing  and preparing for the future did not take all the attention in 1997.
Improving our core product line to meet  immediate  competitive  challenges  and
developing new products to grow the business were keys to 1997's success.

In the critical human resources  information  market,  the company  continued to
improve its  market-leading  BNA's Human  Resources  Library on CD, adding model
policies,  a  quick  search  tool  for  streamlined  research,  and  performance
appraisal and job description software. These improvements,  along with creative
marketing and a strong selling effort,  led to new sales and revenue records for
this product in 1997 despite head-to-head competition from a strong competitor.

In  another  highly  competitive  area,  environment  information,  the  company
launched BNA's  Environmental  Compliance  Series on CD. This reference  product
offers  practical,  step-by-step  guidance on complying with  pollution  control
requirements  and  plain-English  explanations  of  federal  and state  laws and
regulations.  The compliance series is sold both as a stand-alone product and as
part of the market-leading BNA's Environment Library on CD.

BNA's newest product line,  health care  information,  had two great  successes.
First, it created the year's best-selling new notification service, BNA's Health
Care Fraud Report.  Then, the American Association of Law Libraries (AALL) named
BNA's Health Law and Business Library (HLB) the best new product in 1997. HLB is
a   portfolio   series   that  was   launched  in  both  print  and  CD  formats
simultaneously.  This was the kind of  product  that  took  significant  upfront
investment and development  time before being released,  and it was particularly
gratifying  to have  that  sort of  long-term  investment  in  quality  products
recognized by the law library community, one of our key market groups.

One of BNA's  flagship  products,  The United States Law Week,  was  extensively
revamped in 1997 in  response to new  technological  capabilities  and  changing
market  needs.  With the new,  easy-to-use  format  and new  features-especially
Supreme  Court Today,  a searchable  online  database of the U.S.  Supreme Court
docket  combined  with  digests  of  lower  court  decisions-  Law Week has been
repositioned to remain a vital tool for attorneys into the coming decades.

                                                                     (Continued)
<PAGE>6

The Business  Information  Division launched two very untraditional  products in
1997. The first was a daily fax and e-mail notification  service that followed a
major  transportation  bill through Congress.  If the bill ultimately fails, the
publication will cease, but if it results in major legislation, this "temporary"
product  could well become the basis of a major new  notification  service.  The
second product launched was a biweekly notification service on lobbying, ethics,
and  campaign  finance  reform.   That  product,   priced   significantly  below
traditional  BNA  services,  was designed to test the  proposition  that BNA can
profitably  create  products  for  market  segments  that  will not  accept  our
traditional pricing.

The  ability  to move  quickly  to  respond  to  market  needs  for  specialized
notification services is partially attributable to the continued  implementation
of PS2000, a single  publishing  system designed to produce all of BNA's diverse
product  lines.  In  1997,  BNA  adopted  a  standardized  "new  look"  for  the
notification  services produced on the new system.  This  standardized  approach
reduced both the time and the cost of producing new notification  services.  All
of BNA's  daily  publications  are  currently  produced  on PS2000,  and all our
notification services will be on the new system by spring of 1998.

Efforts to support our customers and their use of BNA's electronic products were
strengthened in 1997.  Trainers from BNA PLUS,  BNA's  subscriber  support unit,
conducted more than 500 sessions during the year. Customer response was positive
and  enthusiastic,  with many  subscribers  mentioning  the  superiority  of our
product support.

Record numbers of BNA journalists  were  interviewed as experts in their subject
areas  on  television  and  radio  in  1997.  On news  and  analysis  broadcasts
nationwide, BNA is emerging as a trusted source.

The most notable  setback in 1997 was the decision to stop work on PHOENIX,  the
project to create a new  circulation  and billing system for BNA. As the project
neared completion,  deadlines were consistently missed and questions arose as to
whether it would work and whether it could be reliably  maintained.  Rather than
risk  the  possibility  of  a  system  failure  that  could  greatly  jeopardize
relationships  with our  subscribers,  as other  publishers with system failures
have  experienced,  the project was halted and resources  were  redirected  into
ensuring that the present  system is Year 2000  compliant.  The decision to stop
work on PHOENIX resulted in a pre-tax write-off of $1.2 million in 1997.

The year ended on a very high note. BNA was named one of Fortune magazine's "100
Best Companies To Work For In America."  This  prestigious  honor,  added to the
best new product award from the AALL and the eighth  straight award from Working
Mother  magazine for being one of the "100 Best Companies For Working  Mothers,"
made 1997 a banner year for outside recognition of our company.

Internally,  we celebrated 50 years of employee ownership. In a video history of
BNA created to commemorate our  anniversary,  Chairman  Emeritus John D. Stewart
noted that during  those 50 years we had amassed a "pretty  good track  record."
We're off to a pretty good start to the next 50 years.

                                                                     (Continued)
<PAGE>7


BNA Books

BNA Books  contributed  almost $2  million in  operating  profit to BNA in 1997,
representing an extraordinary 27.5 percent margin. This marks the fourth year in
a  row  that  the  division  has  produced  record  profits.  Revenues  grew  an
unprecedented 33 percent.

The  publication  of the fifth edition of the BNA/ABA  treatise How  Arbitration
Works,  the  leading  work in the field,  and  continued  good sales of existing
products contributed heavily to the division's success in 1997. Other new titles
included  International  Labor and  Employment  Laws, a new supplement to Sexual
Harassment in Employment Law, and Trade Secrets:  A State-by-State  Survey,  the
third  treatise  in a  series  on  protecting  confidential  information  in the
workplace.

Late in the year, the division  released its first electronic  product,  the ABA
Labor and Employment Law Section Working Papers on CD, a collection of materials
authored by Section members. In all, Books published 32 titles in 1997.

The division's  growing product line should make it a steady  contributor to BNA
for years to come.


SUBSIDIARY COMPANIES

Tax Management Inc.

Tax Management and BNA Software revenues increased 14.3 percent in 1997 to a new
high of $55  million.  Combined  net income  was nearly 57 percent  ahead of the
prior year.

Record-breaking  new service  sales,  following  similar  strong sales in recent
years,  produced service revenues of nearly $44 million for the print and CD-ROM
products.  Tax Management's  operating profit was 76.5 percent ahead of 1996, as
operating  expenses rose slightly and circulation of CD-ROM  products  increased
sharply.

Tax Management's Guide to the Taxpayer Relief Act of 1997 culminated an updating
process that began early in the  legislative  process when we began tracking the
legislation. Extensive coverage was provided in the Tax Management Weekly Report
and  Tax  Practice  Series  Bulletin.  Its  specialized  journals,  such  as Tax
Management  International  Journal,  and  its  news  publications,  such  as Tax
Management  Financial  Products  Report,  focused  on  more  specific  areas  of
interest.

The new law, one of the more  challenging  pieces of tax  legislation in several
years,  undoubtedly  has many  implications  that will not be  discovered  until
practitioners grapple with the new rules in the context of planning for specific
clients. A worldwide network of top-flight tax  practitioners,  together with an
in-house staff of tax professionals,  make Tax Management  services a constantly
evolving and uniquely valuable resource.

The IRS  Practice  Adviser  was  launched  in  November  on the same disc as Tax
Practice  Series.  The new product  replaces  the IRS  Practice & Policy  binder
service.  The combination of compliance and audit information on the same CD-ROM
is expected to appeal to a large market of tax professionals, including enrolled
agents.

                                                                     (Continued)

<PAGE>8

BNA Software

BNA Software  experienced strong growth in 1997. Revenues were up 26 percent and
operating  profits  increased  almost  38  percent.  Total  circulation  for the
division's  products increased a healthy 9 percent,  with renewal rates climbing
to new highs.

This performance  reflects the successful operation of its core business coupled
with above-average  demand for its services due to the complexity of the new tax
legislation.  The quick  update to the  market-leading  BNA Income  Tax  Planner
helped thousands of CPAs, financial planners, and other financial  practitioners
understand and advise their clients about the effects of the new legislation.

Results from a multi-year  strategy  emphasizing  new product  development  also
played an important part in the division's success. Sales of products introduced
in the latter part of 1996 (BNA Fixed Assets Next  Dimension,  BNA 706 Preparer,
and BNA Sales & Use Tax Rates and Forms)  continued strong in 1997. In addition,
another new product, the BNA 709 Preparer, was launched during the year.

BNA Software's  excellent  portfolio of products,  strong team, and future plans
create great optimism for 1998 and beyond.


BNA International Inc.

Revenues from BNAI  services were 8.3 percent  higher than the previous year due
to  the  continuing  growth  of  established  products  and  new  ones  such  as
International Taxation of Low-Tax Transactions and International  Licensing. The
difficult  Japanese  economy and  financial  problems  in other Asian  countries
resulted in a decrease in foreign sales of BNA and Tax Management services after
the record levels of the previous year.

New marketing initiatives generated high sales of several BNAI services at lower
costs.  Based on this  initial  success,  BNAI  will  extend  these  new  direct
marketing programs to a broader range of services in 1998.

BNAI took steps in 1997 to ensure growth in future years. A product  development
manager was added and the editorial  staff was improved  with new talent.  Those
new resources were not without short-term cost,  however,  and BNAI's net income
decreased  49.5  percent in 1997  following  an 80.2  percent  increase in 1996.
Nevertheless,  BNAI remains solidly  profitable and is now better  positioned to
grow its bottom line.

The first result of the increased  focus on product  development  was the launch
late in the year of World  Telecom  Law  Report,  aimed at the  rapidly  growing
international  telecommunications market. The introduction of Asia-Pacific Focus
is the first in a series of  specialized  quarterly  supplements to Tax Planning
International.  The additional  resources required to develop these new services
will continue to be directed toward identifying new publishing  opportunities in
the international tax, legal, and business markets.

BNAI's  focus  will  continue  to be on  achieving  profitable  growth  from the
introduction  of innovative  products for the growing  market for  international
information,  while  increasing  the  circulation  of  BNA  and  Tax  Management
publications outside of North America.

                                                                     (Continued)
<PAGE>9

Pike & Fischer, Inc.

Pike & Fischer concentrated in 1997 on developing and acquiring new products and
enhancing  existing  services.  The company  launched two new  newsletters,  ADR
Report and Pesticide  Report;  acquired two others,  Food Protection  Report and
Food Talk;  and  introduced  a series of seven  interactive  FCC Forms  software
programs in 1997. In addition, the company developed a CD-ROM version of the BNA
Criminal  Practice Manual, a service that had been transferred to Pike & Fischer
in 1996, and restyled the Manual's  "Current  Reports"  section as a stand-alone
publication with a new title, The Criminal Practice Report.

Growth initiatives,  however,  were not enough to compensate for the significant
shortfall in royalty  revenues  Pike & Fischer  received from one of its outside
publishing  partners.  Royalty  revenues  were down 20 percent from 1996 levels.
Total operating revenues for the year declined 6.7 percent as a result.

Aware early in 1997 that  royalty  revenues  would not be at  customary  levels,
management  made every  effort to hold  growth in  expenses  to a  minimum,  and
succeeded  in keeping the overall  increase in expenses to 2.1 percent  from the
year before. Even a modest increase in expenses,  however, when coupled with the
sharp decline in royalty  revenues,  meant that  operating  profits in 1997 were
down from 1996's  historic  high.  Operating  profit margin  nevertheless  was a
respectable 16.5 percent of operating revenues.

With its healthy  profitability,  prospects  for revenue  growth from 1997's new
product initiatives,  and a largely stabilized royalty revenue situation, Pike &
Fischer will be a significant contributor to BNA's financial goals in 1998.


BNA Communications Inc.

New sales and marketing  strategies and organizational  restructuring  delivered
results in 1997 as revenues increased 10.2 percent over 1996. Operating expenses
were below 1996 levels, resulting in a net income of $107,000 compared to a loss
in 1996. BNAC's cash flow was strong enough to repay all of its outstanding debt
to the parent by year-end.

BNAC's Human Resources  Division was repositioned from a supplier of video-based
training  programs  to a provider  of  full-service  training  solutions.  A new
manager  of  consulting  and  training  services  was hired to  direct  this new
emphasis.   Successful  new  products  on  the  HR  side  included  Respect  vs.
Harassment,  a groundbreaking training program that combines diversity awareness
and harassment prevention with skills needed to heal problems in the workplace.

BNAC's Safety Division enjoyed a very successful launch of OSHA-SMART:  Forklift
Safety,  a new three-video  series that helps  organizations  comply with OSHA's
newly-revised  forklift  standard.  Other new releases  include 12 new titles in
BNAC's  state-of-the-art  Training On A Disk  (TOADR)  CD-ROM  training  series.
Existing  programs have been  repackaged  into successful new series focusing on
topics such as Behavior/ Motivation and Respiratory Compliance.

The challenge for 1998 is to grow from a stable, profitable business into a full
strategic partner in the BNA family.

                                                                     (Continued)
<PAGE>10

BNA Washington Inc.

Operating  expenses for all  BNAW-owned  buildings in 1997 were 2.5 percent less
than the prior year.  Through  aggressive  management and cost control measures,
the cost of operating our buildings has remained  essentially  flat for the last
five years.

Renovation  activity  during the year was  modest.  A small  number of  projects
occurred  to take care of employee  growth and  changes in business  operations.
About 250  employees  were  affected in 1997 by "churn"  (moving  personnel  and
reconfiguring  office  space)  compared to twice that number in the two previous
years.

Planning  for the  Accounting  & Finance  and  Human  Resources  Departments  to
relocate to the 23rd Street building in 1998 began in earnest in the 4th quarter
of 1997. This move will free up much-needed  space on 25th Street,  particularly
for the Editorial Department.

As part of our  observance  of BNA's 50th  anniversary  of  employee  ownership,
display  units  recounting  BNA's  history  were  installed  in the  link  lobby
connecting  the  North  and  South   Buildings.   BNAW  worked  closely  on  the
installation with BNA's Corporate Relations staff, who created the exhibit.


The McArdle Printing Co., Inc.

McArdle  Printing  Company's  operating  revenues  increased by 11.5 percent due
primarily to a 23.8 percent increase in commercial sales. Revenues for printing,
binding, and mailing BNA publications  increased by 3 percent and BNA, including
Tax  Management,  continues  to be McArdle's  largest  customer,  generating  55
percent of McArdle's total revenues.

In 1997,  McArdle  invested $2.9 million in new equipment to expand the capacity
and scope of the printing  operation.  Two new presses and  automated  finishing
equipment  were  purchased to support BNA's  advertising  program and to provide
services required by current and potential  customers.  The additional  capacity
and capabilities  have provided and will continue to provide  opportunities  for
revenue growth.

These  investments-combined  with  efforts  to  increase  sales  in  established
markets, and to improve quality, service, and responsiveness-have contributed to
faster revenue growth. Excellent progress has been made in expanding capacity of
the electronic  pre-press,  press, and bindery operations to ensure that quality
and service levels are maintained as the business grows.

McArdle's profitability,  however, felt the impact of these major investments as
net income dropped in 1997. With an excellent  facility,  modern equipment,  and
knowledgeable and productive employees, McArdle is well-positioned and confident
that profitability will rebound in 1998.

                                                                     (Continued)
<PAGE>11


                                     PART I


Item 1.           Business

General  Development  of Business and  Narrative  Description  of Business,
Continued

The  Bureau  of  National  Affairs,  Inc.  ("BNA"  or the  "Company"),  operates
primarily in the business information publishing industry. Operations consist of
the  production  and marketing of  information  products in print and electronic
form, and outside printing  services.  Activities in other industry segments are
less than 10 percent of total revenue.

As a response to customer demand, advances in technology,  and competition,  the
Company now offers many products in CD-ROM or online delivery formats.  CD-ROM's
allow  the  economical  addition  of  value-added  features  such  as  searching
capabilities and additional  information content.  Online delivery provides more
timely receipt.

The business information industry is very competitive. Some competitors are much
larger  and  have  more  resources  than  BNA.  In  recent  years,  mergers  and
acquisitions  of many of the  Company's  competitors  have  created  even larger
organizations with ownership interests outside of the United States. The Company
has invested  heavily to upgrade its product  offerings to take advantage of new
technologies.  The resulting electronic products, with some features superior to
those of print, have competed successfully in their markets.

The number of  employees of BNA and its  subsidiaries  was 1,893 at December 31,
1997.

Item 2.           Properties

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

BNA's  Circulation  Department and BNA  Communications  Inc. operate in an owned
facility at 9435 Key West  Avenue,  Rockville,  Maryland.  Pike & Fischer,  Inc.
leases office space for its  operations  at 4600  East-West  Highway,  Bethesda,
Maryland.  BNA International Inc. conducts its operations from leased offices at
Heron House, 10 Dean Farrar Street,  London,  England. The McArdle Printing Co.,
Inc. owns its office and plant facilities at 800 Commerce Drive, Upper Marlboro,
Maryland.

Item 3.           Legal Proceedings

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

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

No  matters  were  submitted  to a vote of  security  holders  during the fourth
quarter of the fiscal year ended December 31, 1997.




<PAGE>12


                                     PART I

Item X.             EXECUTIVE OFFICERS OF THE REGISTRANT

The following persons were executive officers of The Bureau of National Affairs,
Inc., at December 31, 1997. Executive officers are elected annually by the Board
of Directors and serve until their successors are elected.

          Name                 Age        Present position and prior experience
-----------------------       ---        -------------------------------------
William A. Beltz               68        Chairman of the Board
                                           Elected chairman in 1994. Served as
                                           president from 1979 to 1995 and
                                           chief executive officer from 1980
                                           until 1996.  Joined BNA in 1956.

Jacqueline M. Blanchard        48        Vice President for Human Resources
                                           Elected to vice president in 1994.
                                           Previously  was director of labor
                                           and employee relations.  Joined BNA
                                           in 1984.

John P. Boylan, Jr.            58        Vice President for Administration
                                           Elected to present position in 1986.
                                           Joined BNA in 1974 after employment
                                           at Fisher-Stevens, Inc. (a former
                                           BNA subsidiary) since 1962.

Eunice L. Bumgardner           37       Vice President and General Counsel
                                           Elected vice president in 1996 and
                                           general counsel in 1995. Joined BNA
                                           in 1994 as associate general counsel.
                                           From 1991 to 1994 was senior
                                           associate at LeBoeuf, Lamb, Greene
                                           & MacRae, LLP.

Kathleen D. Gill               51       Vice President and Editor in Chief
                                           Elected to vice president and
                                           executive editor in 1993, and
                                           editor in chief in 1997. Joined
                                           BNA in 1970.

Daniel C. Horsey               42        Vice President  and Director of
                                         Information Technology
                                           Elected  to vice  president  in 1997.
                                           Previously   was   employed   by  the
                                           Thomson   Corporation  from  1993  to
                                           1997,    most   recently   as   Chief
                                           Technology    Officer    of   Thomson
                                           Electronic   Information   Resources.
                                           Joined BNA in 1997.

                                                                    (Continued)

<PAGE>13





Item X.           EXECUTIVE OFFICERS OF THE REGISTRANT  (Continued)

Name                          Age        Present position and prior experience

John E. Jenc                   55        Treasurer
                                           Elected to present position in 1990.
                                           Joined BNA in 1981.

George J. Korphage             51        Vice President and Chief Financial
                                         Officer
                                           Elected  vice  president  in 1988 and
                                           chief  financial   officer  in  1989.
                                           Joined BNA in 1972.

Mary Patricia Swords           52        Vice President and Director of Sales
                                         and Marketing
                                           Elected to present  position in 1996.
                                           Previously  was  regional  manager of
                                           Mountain  sales  region  since  1985.
                                           Joined BNA in 1977.

Robert L. Velte                50        Vice President for Strategic
                                         Development
                                           Elected  to vice  president  in 1995.
                                           Previously   was   president  of  BNA
                                           Communications since 1986. Joined BNA
                                           Communications in 1976.

Paul N. Wojcik                 49        President and Chief Executive Officer
                                           Elected president in 1995 and chief
                                           executive officer in 1997.
                                           Previously was chief operating
                                           officer from 1995  to   1996, and
                                           general counsel from 1988 to 1995.
                                           Joined   BNA  in  1972.




<PAGE>14


                                     PART II


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

Market Information, Holders, and Dividends

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

The Board of  Directors  establishes  semi-annually  the price at which  Class A
shares can be bought and sold through the Stock  Purchase and Transfer  Plan and
declares cash dividends.  In accordance with the corporation's bylaws, the price
and dividends on non-voting Class B and Class C stock are the same as on Class A
stock. Dividends have been paid continuously for 48 years, and they are expected
to continue.

As of  March 1,  1998,  there  were  1,559  Class A  shareholders,  234  Class B
shareholders,  and 31 Class C  shareholders.  The  company  repurchased  441,678
shares of Class B stock and 9,583 shares of Class C stock from retired employees
or their estates in the 12 months ending March 1, 1998.

Established  stock  price and  dividends  declared  during 1996 and 1997 were as
follows:

         Stock Price
                  January 1, 1996 - March 23, 1996             $24.75
                  March 24, 1996 - September 21, 1996           26.00
                  September 22, 1996 - March 22, 1997           27.00
                  March 23, 1997 - September 20, 1997           28.50
                  September 21, 1997 - December 31, 1997        29.75

         Record  Date and Dividend Amount
                  March 23, 1996                              $   .50
                  September 21, 1996                              .50
                  March 22, 1997                                  .55
                  September 20, 1997                              .55

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




<PAGE>15


                                     PART II

Item 6.          Selected Financial Data


                      The Bureau of National Affairs, Inc.
             Consolidated Operating and Financial Summary: 1997-1993
              (Dollar amounts in thousands, except per share data)



                                   1997      1996      1995      1994      1993
                               --------  --------  --------  --------  --------
Operating Revenues             $244,061  $232,632  $226,497  $215,491  $200,818
Operating Expenses              223,999   218,074   218,628   204,507   191,144
                               --------  --------  --------  --------  --------
Operating Profit                 20,062    14,558     7,869    10,984     9,674
Non-operating Income:
  Investment Income, net          7,957     6,989     6,452     4,614     5,759
  Other Income                      427        82     3,257       459       303
                               --------  --------  --------  --------  --------
Income from Operations Before
  Income Taxes                   28,446    21,629    17,578    16,057    15,736
Income Taxes                      8,885     7,041     5,487     4,397     4,482
                               --------  --------  --------  --------  --------
Net Income                     $ 19,561  $ 14,588  $ 12,091  $ 11,660  $ 11,254
                               ========  ========  ========  ========  ========
Profit Ratios (b):
  % of Operating Revenues           8.0       6.3       5.3       5.4       5.6
  % of Average Stockholders'
       Equity                      26.9      20.9      19.8      21.7      22.7
                               --------  --------  --------  --------  --------
Total Earnings per Share          2.24      1.65      1.38      1.36      1.32
Dividends per Share                1.10      1.00      0.94      0.90      0.90
                               ========  ========  ========  ========  ========
Balance Sheet Data:
  Total Assets                 $300,900  $299,311  $278,752  $270,599  $251,517
  Long-Term Debt                   --        --        --         107     1,332
                               ========  ========  ========  ========  ========
Employee Data:
  Number of Employees             1,893     1,915     1,863     1,854     1,796
  Total Employment Costs       $128,095  $124,322  $119,488  $120,599  $111,443
                               ========  ========  ========  ========  ========
Stockholder Data at Year-End:
  Book Value per Share         $   8.65  $   8.15  $   7.59  $   6.36  $   6.14
  Number of Stockholders          1,752     1,741     1,717     1,627     1,568
  Common Shares Outstanding
     (In thousands)               8,500     8,848     8,858     8,652     8,553
                               ========  ========  ========  ========  ========



<PAGE>16






                                     PART II

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

1997 vs. 1996 - Consolidated

Consolidated  revenues of $244 million were up 4.9 percent from the prior year's
$233 million.  Operating profit of $20.1 million was  significantly  higher than
last  year.  Net  income,  at $19.6  million,  was a record  high for the fourth
straight year.

Service revenues (from  subscriptions and online products) increased 2.1 percent
over 1996 due to modest  business  growth in the combined  subscription  revenue
base for  print  and  electronic  products.  Revenues  for  electronic  products
continued to grow,  while print  products--although  still the dominant  service
revenue  source--declined.  Service  revenues were 84.1 percent of  consolidated
revenues in 1997 and 86.4 percent in 1996.  Non-service revenues (from software,
outside  printing,  training media,  books,  and other units)  increased by 22.5
percent.  Large  revenue  increases  were  recorded  for  each of  these  units.
Increases in  non-service  revenues in 1998 are not expected to continue at such
high levels.

Consolidated  operating  expenses  were only 2.7 percent  higher in 1997 than in
1996.  Services expenses were essentially  unchanged.  Increases in salaries and
staffing costs were offset by lower distribution and selling expenses.

Thirteen new subscription  services were launched in 1997.  Development expenses
for new products,  improvements on existing  products,  and new delivery methods
were $4.6 million compared to $6.4 million in 1996.  Operating  expenses in 1997
also include an identifiable  $5.1 million for developing  improved business and
publishing   systems  and  the  write-off  of  an  abandoned   business  system.
Non-service  operating expenses were 23.5 percent higher in 1997,  primarily for
increased  royalties,  production  costs,  and selling  expenses  related to the
higher sales activity.

Investment income was 13.9 percent higher than in 1996 due to larger portfolios.
Other  non-operating  income for 1997 included a gain of $.4 million on the sale
of a publication.

The  consolidated  federal,  state, and local effective income tax rate was 31.2
percent in 1997 compared to 32.6 percent in 1996.

Earnings per share were $2.24 per share compared to $1.65 per share in 1996.


                                                                   (Continued)


<PAGE>17


1996 vs. 1995 - Consolidated

Consolidated  revenues of $233 million were up 2.7 percent from the prior year's
$226 million.  Operating profit of $14.6 million was  significantly  higher than
last year. Net income,  also at $14.6  million,  was a record high for the third
straight year.

Service revenues (from  subscriptions and online products) increased 2.6 percent
over 1995 due to modest  business  growth in the combined  subscription  revenue
base for print and CD-ROM  products.  This  slower  growth rate is the result of
slightly lower renewal rates,  federal government budget  uncertainties early in
the year,  and lower new sales in the major CD-ROM  products  launched  over the
past three years.  Higher online service revenues from  renegotiated  agreements
mitigated the decline in total subscription  growth.  Service revenues were 86.4
percent of  consolidated  revenues in both 1996 and 1995.  Non-service  revenues
(from  software,  outside  printing,  training  media,  books,  and other units)
increased by 3.3 percent. The increase resulted from large increases for outside
printing and books, a small increase for software,  and a reduction for training
media.

Consolidated  operating  expenses were slightly  lower in 1996 than in 1995. For
services,  expense increases  occurred in salaries and staffing costs and CD-ROM
production  and royalty costs related to growing  circulation  and new products.
Selling expenses and initial  fulfillment  expenses,  related to new sales, were
lower in 1996. The 1995 expenses had included a $2.1 million charge for a change
in accounting for advertising  expenses (as discussed in Note 2 to the financial
statements).  On a more  comparable  basis,  excluding the  advertising  charge,
operating  expenses  increased  only 0.7  percent  over the  prior  year and the
comparable operating profit increased 46.7 percent.

Six new services were launched in 1996,  including a mix of print,  CD-ROM,  and
electronic  delivery.  In  addition,  development  efforts  for  the  electronic
delivery of notification  services was completed.  Development  expenses for new
products,  improvements on existing products, and new delivery methods were $6.4
million  compared  to $6.6  million  in 1995.  Operating  expenses  in 1996 also
include an  identifiable  $5.3  million for  developing  improved  business  and
publishing  systems  compared  to $5.5  million in 1995.  Non-service  operating
expenses were 2 percent lower in 1996,  primarily related to cost reductions for
the training media business unit.

Investment income was 8.3 percent higher than in 1995 due to larger  portfolios.
Other  non-operating  income for 1995 had included  $3.2 million of gains on the
sale of a former printing plant site and sales of publications.

The  consolidated  federal,  state, and local effective income tax rate was 32.6
percent in 1996 compared to 31.2 percent in 1995.  The increase in the effective
rate is due to the large increase in operating income which is taxed at a higher
rate than tax-exempt investment income.

Earnings per share were $1.65 per share compared to $1.38 per share in 1995.

                                                                   (Continued)

<PAGE>18


Deferred Tax Assets

The Company has recorded $19.2 million of net deferred tax assets as of year-end
1997.  In assessing  the  realizability  of the deferred tax assets,  management
considers  whether it is more likely than not that the  deferred tax assets will
be realized.  The ultimate  realization of deferred tax assets is dependent upon
the  generation  of future  taxable  income  during the  periods in which  those
temporary differences become deductible. The Company has a consistent history of
profitability  and  taxable  income,  and  management  believes  this trend will
continue.  In the  opinion of  management,  it is more  likely than not that the
existing  deferred tax assets will be realized in future years, and no valuation
allowance is necessary.

Financial Resources and Cash Flows

The Company maintains its financial reserves in cash and investment  securities,
which,  along with its operating cash flows, are sufficient to fund ongoing cash
expenditures  for operations and to support  employee  ownership.  Cash provided
from  operating  activities  increased  18  percent  to $35.1  million  in 1997,
reflecting a 6.2 percent  increase in collections,  and 4.5 percent  increase in
expenditures.

Cash outlays for investing  activities netted to $14.7 million,  reflecting $8.8
million   reinvested   in  the  Company's   investment   portfolio  and  capital
expenditures of $5.9 million.  Capital  expenditures for 1998 are budgeted to be
over $7 million,  excluding the 1998 purchase of a publishing  company discussed
below.

Cash used for financing  activities  netted to $19.9  million.  The Company paid
$15.5 million for  repurchases  of Class A, Class B, and Class C capital  stock,
including $10 million paid to the estates of retirees.  Sales of Class A capital
stock to employees of $5.3 million  partially offset the large  repurchases.  In
addition,  the Company paid cash dividends of $9.7 million in 1997. During 1998,
the Company  will redeem over $8 million of Class B and Class C stock,  which is
expected to again exceed sales of capital stock to employees.

With  $144.2  million  in cash and  investment  portfolios  and no term  debt at
year-end 1997, the financial  position and liquidity of the Company remains very
strong.  Since  subscription  monies are  collected in advance,  cash flows from
operations,  along with existing  financial reserves and proceeds from the sales
of capital  stock,  have been  sufficient in past years to meet all  operational
needs, new product introductions, capital expenditures, debt repayments, and, in
addition,  provide  funds for  dividend  payments  and the  repurchase  of stock
tendered by  shareholders.  Should more funding become necessary or desirable in
the future,  the Company has  substantial  debt capacity  based on its operating
cash flows and real estate  equity.  This  capacity was  partially  utilized for
financing the 1998 acquisition discussed below.

Subsequent Event

In January  1998,  the Company  purchased  all of the  outstanding  stock of the
Institute of Management & Administration,  Inc. (IOMA), a newsletter  publisher,
for a total cost of $17.8  million in cash and the  guarantee of $1.4 million of
IOMA liabilities.

The acquisition was financed with Company funds and a $15 million unsecured bank
loan.  Although no principal payments are required in 1998, the Company may make
such payments if it is determined to be in the Company's best interests. IOMA is
profitable  and is expected to continue to be so.  However,  the  acquisition is
expected  to be  initially  dilutive  to the  Company's  net income  because the
negative effects of interest  expense and the amortization of intangible  assets
and goodwill are expected, for several years, to exceed IOMA earnings.

                                                                    (Continued)


<PAGE>19


Year 2000 Compliance

The Year  2000  compliance  issue  concerns  the  inability  of  certain  of the
Company's  older computer  programs to properly  recognize a date using "00" for
the applicable year as the year 2000 rather than the year 1900. This could cause
miscalculations or other business disruptions.

For the last  several  years,  the Company has been  replacing  its business and
publishing systems. The publishing systems are all operational and are Year 2000
compliant  (all data  residing on one  non-compliant  system is  scheduled to be
migrated off by 1999).  Most of the business  systems must be replaced with Year
2000  compliant  systems.  The new  business  systems  are in various  stages of
completion, but are expected to be operational by mid-1999. The cost to complete
these  projects  is expected to be $2.5  million  over the next two years.  Some
business systems will not be replaced, but will be made Year 2000 compliant with
code changes. The cost of remediation,  including code modification, testing and
implementation,  is expected to be approximately  $3.8 million over the next two
years.  Because  the  Company has already  been  incurring  substantial  systems
expenses over the last several  years,  the 1998-1999  expenses  related to Year
2000  compliance are not expected to materially  impact the Company's  financial
results.

The Company  believes that,  when  operational,  the new systems and remediation
projects will solve the Year 2000 compliance  problem.  However, if the projects
are not  completed  on a timely  basis,  Year 2000  non-compliance  could have a
material impact on the operations of the Company.

Accounting Pronouncement

In June, 1997, the Financial  Accounting Standards Board (FASB) issued Statement
No. 130, which requires the presentation of comprehensive  income in an entity's
financial  statements.  Comprehensive income represents all changes in equity of
an entity during the reporting period, including net income and charges directly
to  equity  which  are  excluded  from  net  income.  Upon  adoption,  financial
statements  for  earlier  periods  provided  for  comparative  purposes  must be
restated. The Company plans to adopt this statement in 1998.


<PAGE>20




                                     PART II


Item 8.           Financial Statements and Supplementary Data











                      THE BUREAU OF NATIONAL AFFAIRS, INC.

                        Consolidated Financial Statements

                           December 31, 1997 and 1996

                   (With Independent Auditors' Report Thereon)















<PAGE>21




                          Independent Auditors' Report



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

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

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of The Bureau of
National Affairs,  Inc. as of December 31, 1997 and 1996, and the results of its
operations  and its cash  flows for each of the years in the  three-year  period
ended  December  31,  1997 in  conformity  with  generally  accepted  accounting
principles.  Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly,  in all material  respects,  the information set forth
therein.


                                    s\ KPMG Peat Marwick LLP
                                    ------------------------
                                    KPMG Peat Marwick LLP

Washington, D.C.
February 20, 1998





<PAGE>22




                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
                            (In thousands of dollars)


                                     ASSETS

                                                             December 31,
                                                        ------------------
                                                            1997      1996
                                                        --------  --------
CURRENT ASSETS:
Cash and cash equivalents (Note 4)                      $ 19,421    $ 18,898
Short-term investments (Note 4)                            9,013       9,306
Receivables (Note 8)                                      41,307      45,111
Inventories (Note 8)                                       5,440       5,397
Prepaid expenses                                           3,368       4,240
Deferred selling expenses (Note 2)                        23,244      23,841
                                                        --------    --------

Total current assets                                     101,793     106,793

MARKETABLE SECURITIES (Note 4)                           115,809     108,020
PROPERTY AND EQUIPMENT (Note 8)                           47,852      49,557
DEFERRED INCOME TAXES (Note 7)                            22,296      22,341
GOODWILL (Note 6)                                          8,924       9,237
OTHER ASSETS (Note 8)                                      4,226       3,363
                                                        --------    --------

Total assets                                            $300,900    $299,311
                                                        ========    ========

                                                               (Continued)



<PAGE>23




                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
                            (In thousands of dollars)


                      LIABILITIES AND STOCKHOLDERS' EQUITY

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

                                                             1997        1996
                                                        ---------   ---------
CURRENT LIABILITIES:
Payables and accrued liabilities (Note 8)               $  33,529   $  37,328
Deferred income taxes (Note 7)                              3,120       3,635
Deferred subscription revenue (Note 2)                    121,934     119,821
                                                         ---------  ---------

Total current liabilities                                 158,583     160,784

POSTRETIREMENT BENEFITS, less current portion
  (Note 3)                                                 65,410      63,487
OTHER LIABILITIES                                           3,356       2,915
                                                        ---------   ---------

Total liabilities                                         227,349     227,186
                                                        ---------   ---------

COMMITMENTS AND CONTINGENCIES (Notes 9 & 10)

STOCKHOLDERS' EQUITY (Notes 4 & 10):
Common stock issued, $1.00 par value
  Class A - 6,478,864 shares                                6,479       6,479
  Class B - 4,926,973 shares                                4,927       4,927
  Class       506,336 shares                                  506         506
Additional paid-in capital                                 35,668      31,772
Retained earnings                                          60,242      50,369
Treasury stock, at cost                                   (37,329)    (23,178)
Net unrealized gain on marketable securities                3,126       1,348
Foreign currency translation adjustment                       (68)        (98)
                                                        ---------   ---------

Total stockholders' equity                                 73,551      72,125
                                                        ---------   ---------

Total liabilities and stockholders' equity              $ 300,900   $ 299,311
                                                        =========  ==========


                See accompanying notes to consolidated financial
                                  statements.


<PAGE>24

                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
                            (In thousands of dollars)


                                                            Percent of Operating
                                                                  Revenue
                                                            -----  -----  -----

                                  1997      1996      1995   1997   1996   1995
                              --------  --------  --------  -----  -----  -----

OPERATING REVENUES (Notes 1
   and 2)                     $244,061  $232,632  $226,497  100.0% 100.0% 100.0%
                              --------  --------  --------  -----  -----  -----

OPERATING EXPENSES (Notes 1,2,3,6,8 and 9):
  Editorial, production, and
    distribution               134,179   131,295   128,671   55.0   56.4   56.8
  Selling, including $2,055
    in 1995 for effect of
    advertising adjustment      51,362    50,828    57,172   21.0   21.9   25.2
  General and administrative    36,371    34,681    31,819   14.9   14.9   14.1
  Profit sharing                 2,087     1,270       966    0.9    0.5    0.4
                              --------  --------  --------  -----  -----  -----

                               223,999   218,074   218,628   91.8   93.7   96.5
                              --------  --------  --------  -----  -----  -----

OPERATING PROFIT                20,062    14,558     7,869    8.2    6.3    3.5
                              --------  --------  --------  -----  -----  -----

NON-OPERATING INCOME:
  Investment income (Note 4)     7,957     6,989     6,452    3.2    3.0    2.8
  Other income (Note 5)            427        82     3,257    0.2     --    1.4
                              --------  --------  --------  -----  -----  -----

TOTAL NON-OPERATING INCOME       8,384     7,071     9,709    3.4    3.0    4.2
                              --------  --------  --------  -----  -----  -----

INCOME BEFORE PROVISION FOR
  INCOME TAXES                  28,446    21,629    17,578   11.6    9.3    7.7

PROVISION FOR INCOME TAXES
   (Note 7)                      8,885     7,041     5,487    3.6    3.0    2.4
                              --------  --------  --------  -----  -----  -----

NET INCOME                    $ 19,561  $ 14,588  $ 12,091    8.0%   6.3%   5.3%
                              ========  ========  ========  =====  =====  =====

EARNINGS PER SHARE (Note 10)  $   2.24  $   1.65  $   1.38
                              ========  ========  ========

                See accompanying notes to consolidated financial
                                  statements.


<PAGE>25




                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
                            (In thousands of dollars)


                                                  1997       1996       1995
                                               ---------  ---------  ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                   $ 19,561   $ 14,588   $ 12,091
  Items with different cash requirements
    than that reflected in net income
      Deferred subscription revenue               2,445      2,295     (2,431)
      Depreciation and amortization               8,798      8,887     10,216
      Accrued postretirement benefits expense     2,133      7,357      2,096
      Provision for deferred income taxes        (1,530)    (4,110)    (3,713)
      Deferred selling expenses                     465      1,385      7,701
      (Gain) on sales of securities                (948)      (542)      (672)
      (Gain) on disposals of property                (7)       (24)    (2,223)
      (Gain) on sales of publishing assets         (420)       (58)      (981)
      Others                                        197        233         22
  Changes in operating assets and liabilities
      Receivables                                 3,947     (1,970)     5,876
      Payables and accrued liabilities              642      2,643     (1,634)
      Inventories                                   (47)       871        551
      Film production costs                        (140)       (70)      (184)
      Other assets and liabilities--net              29     (1,730)    (1,276)
                                               ---------  ---------   --------

Net cash provided from operating activities      35,125     29,755     25,439
                                               ---------  ---------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures
  Purchases of equipment and furnishings         (5,670)    (4,002)    (4,574)
  Building improvements                            (256)      (132)      (664)
  Proceeds from the sales of property                17         37      3,367
  Proceeds from sales of publishing assets          184         17        943
  Purchase of publishing assets                    (185)        --         --
                                               ---------  ---------   --------

  Net cash used for capital expenditures         (5,910)    (4,080)      (928)
                                               ---------  ---------  ---------


                                                                    (Continued)


<PAGE>26





                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
                            (In thousands of dollars)


                                                    1997       1996       1995
                                               ---------- ---------- ----------
 Securities investments
  Proceeds from sales and maturities              58,075     75,250     75,373
  Purchases                                      (66,824)   (90,587)   (90,983)
                                               ---------- ---------- ----------

  Net cash used for securities investments        (8,749)   (15,337)   (15,610)
                                               ---------- ---------- ----------
Net cash used for investing activities           (14,659)   (19,417)   (16,538)
                                               ---------- ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Sales of capital stock to employees              5,313      5,306      6,385
  Purchases of treasury stock                    (15,568)    (5,625)    (1,590)
  Dividends paid                                  (9,688)    (8,884)    (8,254)
  Repayment of borrowings                           --         --         (107)
                                               ---------- ---------- ----------

  Net cash used for financing activities         (19,943)    (9,203)    (3,566)
                                               ---------- ---------- ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS            523      1,135      5,335

CASH AND CASH EQUIVALENTS, beginning of year      18,898     17,763     12,428
                                               ---------- ---------- ----------

CASH AND CASH EQUIVALENTS, end of year          $ 19,421   $ 18,898   $ 17,763
                                               ========== ========== ==========


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
  Interest paid                                 $     41   $     23   $     95
  Income taxes paid                                9,490     10,884      8,121



                See accompanying notes to consolidated financial
                                  statements.



<PAGE>27




<TABLE>

                      THE BUREAU OF NATIONAL AFFAIRS, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
                            (In thousands of dollars)



<CAPTION>


                                                       Capital Stock Issued        Additional
                                                  -------------------------------    Paid-In   Retained     Treasury
                                                    Class A    Class B    Class C    Capital   Earnings      Stock       Other
                                                  ---------  ---------  ---------  ---------  ----------  ----------  -----------
<S>                                               <C>        <C>        <C>        <C>        <C>          <C>        <C>
BALANCE, January 1, 1995                          $   6,479  $   4,927  $     506  $  22,722  $  40,828    $(18,604)  $  (1,815)
 Sale of Class A treasury shares to employees          --         --         --        4,973       --         1,412        --
 Repurchase of shares                                  --         --         --         --         --        (1,590)       --
 Net income                                            --         --         --         --       12,091        --          --
 Cash dividends--$.94 per share                        --         --         --         --       (8,254)       --          --
 Change in net unrealized gain (loss) on
   marketable securities                               --         --         --         --         --          --         3,478
 Currency translation adjustment                       --         --         --         --         --          --            45
                                                  ---------  ---------  ---------  ---------  ----------  ----------  ----------

BALANCE, December 31, 1995                            6,479      4,927        506     27,695     44,665     (18,782)      1,708
 Sale of Class A treasury shares to employees          --         --         --        4,077       --         1,229        --
 Repurchase of shares                                  --         --         --         --         --        (5,625)       --
 Net income                                            --         --         --         --       14,588        --          --
 Cash dividends--$1.00 per share                       --         --         --         --       (8,884)       --          --
 Change in net unrealized gain (loss) on
   marketable securities                               --         --         --         --         --          --          (408)
 Currency translation adjustment                       --         --         --         --         --          --           (50)
                                                  ---------  ---------  ---------  ---------  ----------  ---------   ----------

BALANCE, December 31, 1996                            6,479      4,927        506     31,772  $  50,369   $ (23,178)  $   1,250
 Sale of Class A treasury shares to employees          --         --         --        3,896       --         1,417        --
 Repurchase of shares                                  --         --         --         --         --       (15,568)       --
 Net income                                            --         --         --         --       19,561        --          --
 Cash dividends--$1.10 per share                       --         --         --         --       (9,688)       --          --
 Change in net unrealized gain (loss) on
   marketable securities                               --         --         --         --         --          --         1,778
 Currency translation adjustment                       --         --         --         --         --          --            30
                                                   --------- ---------- ---------  ---------  ----------  ----------  ----------

BALANCE, December 31, 1997                        $   6,479  $   4,927  $     506  $  35,668  $  60,242   $ (37,329)  $   3,058
                                                  ========== ========== =========  =========  ==========  ==========  ==========
<FN>


    See accompanying notes to consolidated financial statements.

</FN>
  
</TABLE>

<PAGE>28





                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995



(1)      PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

The accompanying  consolidated  financial statements include the accounts of The
Bureau  of  National  Affairs,   Inc.  (the  "Parent"),   and  its  subsidiaries
(consolidated,  the "Company").  The Company operates  primarily in the business
information publishing industry.  Operations consist primarily of the production
and marketing of specialized labor, legal, economic, tax, health care, and other
regulatory  information  services in print and electronic  formats,  and outside
printing  services.  Activities in other industry  segments provide less than 10
percent  of  total  revenues.  Customers  are  primarily  lawyers,  accountants,
business executives,  human resource  professionals,  health care administrative
professionals,  labor  unions,  trade  associations,  educational  institutions,
government  agencies,  and  libraries.  The Company did not derive 10 percent or
more of its revenues from any one customer or government  agency or from foreign
sales, nor did it have ten percent or more of its assets in foreign locations.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets and  liabilities,  and  disclosures  of
contingent assets and liabilities,  at the date of the financial  statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Material  intercompany  transactions and balances have been eliminated.  Certain
prior  year  balances  have been  reclassified  to  conform  with  current  year
presentation.

(2)      RECOGNITION OF SUBSCRIPTION REVENUES AND SELLING EXPENSES

Subscription  revenues  and related  field  selling  expenses  are  deferred and
amortized over the subscription  terms,  which are primarily one year.  Deferred
subscription  revenue is  classified  on the  balance  sheet as a current  item;
however  the  fulfillment  of the  Company's  subscription  liability  will  use
substantially less current assets than the liability amount shown.

During 1995,  the Company  adopted the  provisions of the American  Institute of
Certified Public  Accountants'  Statement of Position (SOP) 93-7,  "Reporting on
Advertising  Costs",  which  requires  that  advertising  costs be  expensed  as
incurred.  Prior to 1995,  the Company's  policy was to defer and amortize these
costs in the same  manner  as field  selling  costs.  The  adoption  of SOP 93-7
increased  1995  operating  expenses  because  $5,379,000 of currently  incurred
advertising  costs were  expensed,  and in addition,  $2,055,000  of  previously
deferred  advertising  costs were also  required to be  expensed.  The effect of
expensing 1995 advertising costs as incurred, compared to the prior amortization
method,  was to  decrease  1995 net  income by  $1,064,000,  or $0.12 per share.
Advertising   expense  in  1997  and  1996  was   $5,488,000,   and  $5,302,000,
respectively.

<PAGE>29


                      THE BUREAU OF NATIONAL AFFAIRS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





(3)      EMPLOYEE BENEFIT PLANS

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

The Company's  funding  practice is to contribute  amounts which,  at a minimum,
satisfy  ERISA  requirements.  No  contributions  were  allowed  in 1996  due to
Internal Revenue Service funding  limitations.  The Company contributed $872,000
in 1997, and $3,899,000 in 1995.

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


                                                   1997      1996        1995
                                               ---------  ---------  ---------

Service cost benefits earned during the year   $  3,862   $ 4,131    $  3,207
Interest cost                                     5,769     5,437       4,939
Actual return on plan assets during the year
   (gain) loss                                  (13,437)   (8,719)    (14,287)
Net asset gain (loss) deferred for later
   recognition                                    7,786     3,427      10,146
Amortization of transition assets and
   unrecognized prior service costs                (101)     (117)       (174)
                                               --------   --------   ---------

Net pension expense                            $  3,879   $ 4,159    $  3,831
                                               ========   ========   =========


                                                                    (Continued)

<PAGE>30




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


                                                              December 31,
                                                       ---------   ---------
                                                           1997        1996
                                                       ---------   ---------

Actuarial present value of benefit obligations:
   Vested benefits                                     $ 49,340    $ 48,228
   Nonvested benefits                                    13,700      10,846
                                                       ---------   ---------

Accumulated benefit obligation                           63,040      59,074
Projected future compensation                            21,386      18,924
                                                       ---------   ---------

Projected benefit obligation                             84,426      77,998
Plan assets at fair value                                81,146      72,055
                                                       ---------   ---------

Projected benefit obligation in excess of
  plan assets                                             3,280       5,943
Unrecognized net asset                                    1,878       2,253
Unrecognized net gain (loss)                             11,594       5,917
Unrecognized prior service cost                          (1,765)     (2,029)
                                                       ---------   ---------
Accrued pension liability                                14,987      12,084
  Less--Current Portion                                     105        --
                                                       ---------   ---------

Long-term portion                                      $ 14,882    $ 12,084
                                                       =========   =========

Assumed discount rate                                      6.75%       7.25%
Assumed rate of compensation increase                       5.0%        5.0%
Expected long term rate of return on assets                 8.0%        8.0%


Plan assets include equity securities,  fixed income  securities,  and temporary
investments.  Calculations of benefit  obligations as of December 31, 1997, have
been  estimated  by an  independent  actuary and are  subject to  revision  upon
completion of a detailed actuarial study.

In addition,  some acquired subsidiaries have defined contribution pension plans
and union-sponsored  multi-employer  pension plans.  Contributions under some of
these plans are at the  discretion  of the Board of Directors of the  respective
subsidiaries.  Total  contributions  under  these  plans were  $946,000 in 1997,
$825,000 in 1996, and $775,000 in 1995.

The Company also has a cash profit sharing plan based on operating income before
taxes, as defined,  covering  employees of the Parent and certain  subsidiaries.
Profit sharing expense was $2,087,000 in 1997,  $1,270,000 in 1996, and $966,000
in 1995.


                                                                    (Continued)
<PAGE>31



In addition to providing  pension  benefits,  the Company extends certain health
care and life  insurance  benefits  (other  postretirement  benefits) to retired
employees.  Most of the Company's  employees are eligible for these  benefits if
they retire while working for the Company. The Company's policy is to fund these
benefits  either  as  claims  and  premiums  are  paid or  through  a  Voluntary
Employees' Beneficiary Association (VEBA) trust established in 1997. The company
contributed $3,000,000 to the VEBA in 1997.

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


                                                   1997       1996       1995
                                               ---------  ---------  ---------

Service cost benefits earned during the year   $  1,659      1,980   $  1,505
Interest cost                                     2,609      2,636      2,493
Unrecognized prior service cost                     (55)       (55)      --
Amortization of net gain                           (793)      (451)      (844)
                                               ---------  ---------  ---------

Other postretirement benefits expense          $  3,420      4,110   $  3,154
                                               =========  =========  =========

The following table sets forth the liabilities for these benefits  recognized in
the Company's Consolidated Balance Sheets (in thousands of dollars):



                                                           December 31,
                                                       --------    --------
                                                           1997        1996
                                                       --------    --------

Actuarial present value of benefit obligation:
  Retirees                                             $ 13,466    $ 13,199
  Fully eligible active plan participants                 1,432       1,260
  Other active plan participants                         25,887      20,478
                                                       --------    --------

Accumulated benefit obligation                           40,785      34,937
Plan assets at fair value                                 3,000        --
                                                       --------    --------
Projected benefit obligation in excess of
  plan assets                                            37,785      34,937
  Unrecognized net gain                                  13,408      16,976
  Unrecognized prior service cost                           517         567
                                                       --------    --------

Accrued other postretirement benefits liability          51,710      52,480
  Less--current portion                                   1,182       1,077
                                                       --------    --------

Long-term portion                                      $ 50,528    $ 51,403
                                                       ========    ========

Assumed discount rate                                      6.75%       7.25%
Assumed rate of compensation increase                       5.0%        5.0%


                                                                    (Continued)
<PAGE>32




Calculations of benefit obligations as of December 31, 1997, have been estimated
by an  independent  actuary  and are subject to revision  upon  completion  of a
detailed  actuarial study. The December 31, 1997 accumulated  benefit obligation
was  determined  using an assumed  health care cost trend rate of 5.5 percent in
1998, declining to 4.5 percent per year in the year 2001 and thereafter over the
projected payout period of the benefits.

The  effect of a one  percent  increase  in the  health  care cost trend rate at
December  31,  1997  would  have  resulted  in  a  $7,053,000  increase  in  the
accumulated   benefit   obligation   and  a  $876,000   increase   in  the  1997
postretirement benefit expense.


(4)      INVESTMENTS AND INVESTMENT INCOME

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

                                                           December 31,
                                                       --------    --------
                                                           1997        1996
                                                       --------    --------

Cash and cash equivalents                              $ 19,421    $ 18,898
Short-term investments                                    9,013       9,306
Marketable securities                                   115,809     108,020
                                                       --------    --------

Total                                                  $144,243    $136,224
                                                       ========    ========


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

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


                                                   1997       1996      1995
                                               ---------  --------- ---------


Interest income                                $  5,380   $  4,929  $  4,906
Dividend income                                   1,688      1,541       969
Net gain on sales of securities                     948        542       672
Interest expense                                    (59)       (23)      (95)
                                               ---------  --------- ---------

Total                                          $  7,957   $  6,989  $  6,452
                                               =========  ========= =========


Proceeds  from  the  sales  and  maturities  of  securities  were   $58,075,000,
$75,250,000,  and  $75,373,000  in 1997,  1996,  and 1995,  respectively.  Gross
realized  gains and (losses) from these sales were  $1,096,000 and $(149,000) in
1997,  $713,000 and $(171,000) in 1996, and $867,000 and $(195,000) in 1995. The
specific identification method is used in computing realized gains and losses.


                                                                    (Continued)
<PAGE>33




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



                                              Gross        Gross
                                 Amortized  Unrealized   Unrealized     Fair
December 31, 1997                   Cost       Gain        Losses       Value
                                ----------  ----------   ----------   --------

Equity securities                 $ 26,067    $  1,776    $     --    $ 27,843
U.S. Government securities           6,014           7          (5)      6,016
Municipal bonds                     83,558       3,013         (77)     86,494
Corporate debt                       4,406          70          (7)      4,469
                                  --------    --------    ---------   --------

Total                             $120,045    $  4,866    $    (89)   $124,822
                                  ========    ========    =========   ========


December 31, 1996

Equity securities                 $ 30,716    $    872    $   (113)   $ 31,475
U.S. Government securities           6,403          28         (55)      6,376
Municipal bonds                     76,651       1,448         (76)     78,023
Corporate debt                       1,481        --           (29)      1,452
                                  --------    --------    --------    --------

Total                             $115,251    $  2,348    $   (273)   $117,326
                                  ========    ========    ========    ========


The differences between amortized cost and fair value result in unrealized gains
or  losses,  which  are  reported,  net  of  tax,  as a  separate  component  of
Stockholders' Equity.

Fair values of the Company's  investment  securities  are inversely  affected by
changes  in market  interest  rates.  Generally,  the  longer  the  maturity  of
fixed-income  securities,  the  larger  the  exposure  to the risks and  rewards
resulting from changes in market interest rates.  Contractual  maturities of the
fixed-income securities as of December 31, 1997 were as follows (in thousands of
dollars):


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


Within one year                                  $  8,914          $  9,013
One through five years                             32,946            33,370
Five through ten years                             24,225            25,351
Over ten years                                     27,892            29,245
                                                 --------          --------

Total                                            $ 93,977          $ 96,979
                                                 ========          ========





<PAGE>34




(5)      OTHER INCOME

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



                                                   1997      1996       1995
                                               --------   -------   --------


Gain on sales of publishing assets             $    420   $    58   $    981
Gain on sale of land                                 --        --      2,408
Gain (loss) on disposals of other property
   and equipment                                      7        24       (185)
Other                                                --        --         53
                                               --------   -------   --------

Total                                          $    427   $    82   $  3,257
                                               ========   =======   ========



(6)      GOODWILL

Goodwill  represents  the excess of the cost of purchased  publications  and the
capital stock of subsidiaries  over the fair value of net assets at the dates of
their respective acquisitions,  net of accumulated amortization of $4,209,000 in
1997 and $3,896,000 in 1996.

Goodwill  acquired prior to November 1, 1970, in the amount of $634,000,  is not
being amortized because, in management's opinion, it has continuing value. Other
goodwill is amortized on a straight-line basis, using forty years.  Amortization
expense was $313,000 for 1997, 1996, and 1995.


(7)      INCOME TAXES

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


                                                   1997      1996       1995
                                               --------   --------  --------


Income Statement-Provision for Income Taxes    $  8,885   $ 7,041   $  5,487
Stockholders' Equity--Change in:
  Unrealized gain (loss) on marketable
    securities                                      957      (220)     1,873
  Foreign currency translation adjustment            16       (27)        24
                                               --------   --------  --------

Total                                          $  9,858   $ 6,794   $  7,384
                                               ========   ========  ========

                                                                   (Continued)
<PAGE>35




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



                                                   1997      1996       1995
                                               --------   --------  ---------
Taxes currently payable:
   Federal                                     $  9,158   $ 9,365   $  7,933
   State and local                                1,257     1,786      1,267
                                               --------   --------  ---------

                                                 10,415    11,151      9,200
                                               --------   --------  ---------
Deferred tax provision:
   Federal                                         (927)   (3,364)    (3,007)
   State and local                                 (603)     (746)      (706)
                                               --------   --------  ---------

                                                 (1,530)   (4,110)    (3,713)
                                               --------   --------  ---------

Total                                          $  8,885   $ 7,041   $  5,487
                                               ========   ========  =========

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



                                                  Percent of Pretax Income
                                               ----------------------------

                                                   1997      1996       1995
                                               ---------  --------  ---------

Federal statutory rate                             35.0%     35.0%      35.0%
State and local income taxes, net of Federal
   income tax benefit                               1.7       3.1        2.1
Goodwill amortization and other
   nondeductible expenses                           1.2       1.5        1.8
Tax exempt interest exclusion                      (4.9)     (5.3)      (6.7)
Dividends received exclusion                       (1.5)     (1.7)      (1.3)
Others, net                                        (0.3)       --        0.3
                                                --------   -------   --------

Total                                              31.2%     32.6%      31.2%
                                                ========   =======   ========



                                                                    (Continued)



<PAGE>36




The tax effects of  temporary  differences  that gave rise to the  deferred  tax
assets and liabilities were as follows (in thousands of dollars):


                                                              December 31,
                                                      ------------------------
                                                          1997           1996
                                                      ---------      ---------
Deferred tax assets:
   Other postretirement benefits                      $ 20,828       $ 20,998
   Pension expense                                       6,143          4,917
   Inventories                                           2,070          1,965
   Annual leave                                          1,871          1,822
   Others                                                2,308          2,314
                                                      ---------      ---------

Total deferred tax assets                               33,220         32,016
                                                      ---------      ---------

Deferred tax liabilities:
   Deferred selling expenses                            (9,169)        (9,401)
   Depreciation                                         (2,859)        (3,066)
   Others                                               (2,016)          (843)
                                                      ---------      ---------

Total deferred tax liabilities                         (14,044)       (13,310)
                                                      ---------      ---------

Net deferred tax assets                               $ 19,176       $ 18,706
                                                      =========      =========


In the opinion of  management,  it is more likely than not that the deferred tax
assets  will  be  realized  in  future  years,  and no  valuation  allowance  is
necessary.


(8)      OTHER BALANCE SHEET INFORMATION

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



                                                           1997        1996
                                                       ---------   ---------
          Receivables:
             Customers                                 $ 37,958    $ 40,150
             Others                                       4,925       6,619
             Allowance for doubtful accounts             (1,576)     (1,658)
                                                       ---------   ---------

          Total                                        $ 41,307    $ 45,111
                                                       =========   =========

                                                                   (Continued)

<PAGE>37







                                                           1997        1996
                                                       --------    --------
          Inventories
             Materials and supplies                    $  3,742    $  3,213
             Work in process                                218         466
             Finished goods                               1,480       1,718
                                                       --------    --------

          Total                                        $  5,440    $  5,397
                                                       ========    ========

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



                                                           1997        1996
                                                       ---------   ---------
Property and Equipment (at cost):
   Land                                                $  4,250    $  4,250
   Buildings and improvements                            49,197      48,941
   Furniture, fixtures and equipment                     63,195      60,273
   Accumulated depreciation                             (68,790)    (63,907)
                                                       ---------   ---------

                                                       $ 47,852    $ 49,557
                                                       =========   =========


The Company uses straight-line and accelerated methods of depreciation based on
estimated useful lives ranging from 5 to 45 years for buildings and improvements
and 5 to 11 years for furniture, fixtures and equipment.  Depreciation expense
was $7,358,000 in 1997, $7,577,000 in 1996, and $8,761,000 in 1995. Expenditures
for maintenance and repairs are expensed while major replacements and
improvements are capitalized.



                                                           1997        1996
                                                       --------    --------
 Other Assets:
   Amortizable assets--
     Customer lists                                    $    620    $    607
     Film production costs                                  498         850
     Lease commissions                                      307         360
     State information database                           1,000          --
     Software                                             1,299       1,194
     Other                                                  197          --
                                                       --------    --------

                                                          3,921       3,011
Notes and other receivables                                 305         352
                                                       --------    --------

Total                                                  $  4,226    $  3,363
                                                       ========    ========



                                                                    (Continued)

<PAGE>38

Film production  costs are amortized using the revenue  forecast  method.  Other
amortizable  assets are expensed evenly over their  respective  estimated lives,
ranging from 3 to 10 years. Amortization expense for these assets was $1,127,000
in 1997, $997,000 in 1996, and $1,142,000 in 1995.

Accumulated amortization for customer lists was $789,000 in 1997 and $617,000 in
1996.

                                                           1997        1996
                                                       --------    --------
 Payables and accrued liabilities:
   Accounts payable                                    $ 18,060    $ 22,551
   Employee compensation and benefits                    13,321      13,503
   Postretirement benefits                                1,182       1,077
   Income taxes                                             966         197
                                                       --------    --------

Total                                                  $ 33,529    $ 37,328
                                                       ========    ========



(9)      COMMITMENTS AND CONTINGENCIES

The Company has non-cancelable  operating leases for office space, computing and
office  equipment,  and  vehicles.  Total rent expense was  $4,786,000  in 1997,
$3,944,000 in 1996, and $3,851,000 in 1995.

As of December 31, 1997,  future  minimum lease  payments  under  non-cancelable
operating  leases were as follows:  1998 - $4,869,000;  1999 - $4,683,000;  2000
-$3,533,000; 2001 - $3,289,000; 2002 - $3,269,000; thereafter - $14,201,000.

The Company has a $1,500,000  unsecured line of credit. As of December 31, 1997,
$400,000 of the line had been used to secure a letter of credit.

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


<PAGE>39

 (10)    STOCKHOLDERS' EQUITY

Ownership  and  transferability  of Class A,  Class  B,  and  Class C stock  are
substantially  restricted  to current and former  employees by provisions of the
Parent's  certificate of incorporation  and bylaws.  Ownership of Class A stock,
which is voting,  is restricted to active  employees.  Class B stock and Class C
stock  are  nonvoting.  No class of  stock  has  preference  over  another  upon
declaration  of  dividends  or  liquidation.  As of December  31, 1997 and 1996,
authorized  shares of Class A, Class B, and Class C were  6,700,000,  5,300,000,
and 1,000,000, respectively.

The  Company's  commitment  to employee  ownership is supported by its policy to
repurchase  all  Class B and  Class  C stock  tendered  by  shareholders.  As of
December 31, 1997,  the total market value of Class B and Class C stock known or
expected  to be  tendered  in the  future  was as  follows:  1998--  $7,970,000;
1999--none,  2000--$29,000,  2001--none,  2002--$924,000,   2003--$219,000,  and
2004--$7,811,000.  The  Company,  as a matter of policy,  is also  committed  to
repurchase  any Class A stock tendered by  shareholders  to the Stock Purchase &
Transfer Plan Trustee which the Trustee is unable to purchase with proceeds from
the sale of Class A stock to employees.

Treasury share transactions were as follows:

                                                   Treasury Stock Shares
                                            ------------------------------------

                                              Class A      Class B      Class C
                                            ----------   ----------   ----------
Balance, January 1, 1995                     3,077,433      107,551       75,448

Sale of Class A shares to employees           (271,896)        --           --
Repurchase of shares                              --         56,793        9,245
Conversion of Class A shares to Class
   B shares                                    109,573     (109,573)        --
                                            ----------   ----------   ----------

Balance, December 31, 1995                   2,915,110       54,771       84,693

Sale of Class A shares to employees           (204,932)        --           --
Repurchase of shares                            29,490      177,780        6,964
Conversion of Class A shares to Class
   B shares                                    148,092     (148,092)        --
                                            ----------   ----------   ----------

Balance, December 31, 1996                   2,887,760       84,459       91,657

Sale of Class A shares to employees           (185,961)        --           --
Repurchase of shares                           114,189      408,999       11,266
Conversion of Class A shares to Class
   B shares                                    143,773     (143,773)        --
                                            ----------   ----------   ----------

Balance, December 31, 1997                   2,959,761      349,685      102,923
                                            ==========   ==========   ==========


                                                                    (Continued)

<PAGE>40

Earnings per share have been computed  based on the aggregate  weighted  average
number  of all  outstanding  shares  of  stock,  which  was  8,733,778  in 1997,
8,859,586 in 1996, and 8,759,516 in 1995.

Assets  and  liabilities  of  the  Company's   United  Kingdom   subsidiary  are
denominated  in British  pounds and  translated  into U.S.  dollars at  year-end
exchange rates. Any resulting gain or loss is reflected,  net of taxes, directly
in Stockholders' Equity in the accompanying Consolidated Balance Sheets.


(11)     SUBSEQUENT EVENT

In January,  1998,  the Company  purchased all of the  outstanding  stock of the
Institute of Management & Administration,  Inc. (IOMA), a newsletter  publisher,
for a total cost of $17.8  million in cash and the  guarantee of $1.4 million of
IOMA  liabilities.  The  purchase  cost will be  assigned  to assets,  primarily
intangible assets, based on the Company's assessment of their respective values,
and to goodwill.

The acquisition was partially  financed with a $15 million  unsecured bank loan.
Half of the outstanding  principal is due in 2003 and the remainder in 2004. The
operative  interest rate on the loan is the London  Interbank  Offered Rate plus
 .2%; the initial rate, effective through mid-April 1998, is 5.825%.

IOMA  is  profitable  and  is  expected  to  continue  to be  so.  However,  the
acquisition  is expected to be dilutive to the Company's net income  because the
negative effects of interest  expense and the amortization of intangible  assets
and goodwill are expected, for several years, to exceed IOMA earnings.


<PAGE>41

         SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                 YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
                           (In Thousands of Dollars)


--------------------------------------------------------------------------------
             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,
   1997                        $1,658    $841    $107 (a)    $816 (b)     $1,576
 Year ended December 31,
   1996                         1,628     742      92 (a)     804 (b)      1,658
 Year ended December 31,
   1995                         1,446     860      62 (a)     740 (b)      1,628






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

<PAGE>42

                                     PART II


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

There were no changes in or  disagreements  with  accountants  on accounting and
financial  disclosures  during the two years ended  December 31, 1997 or through
the date of this Form 10K.


                                    PART III


Except as set forth in this Form 10-K under Part I, Item X, "EXECUTIVE  OFFICERS
OF THE  REGISTRANT,"  the  information  required by Items 10, 11, 12, and 13, is
contained in the Company's  definitive  Proxy Statement (the "Proxy  Statement")
filed pursuant to Regulation  14A under the Securities  Exchange Act of 1934, to
be filed with the SEC within 120 days of December 31, 1997. Such  information is
incorporated herein by reference.


Item 10. Directors and Executive Officers of the Registrant

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

Item 11. Executive Compensation

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

Item 12. Security Ownership of Beneficial Owners and Management

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

Item 13. Certain Relationships and Related Transactions

The information  required under this Item 13 is contained in the Proxy Statement
under the heading "III.  Executive  Compensation" and is incorporated  herein by
reference.


<PAGE>43

                                     PART IV


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

                  The following documents are filed as part of this report.



(a) (1)  Financial Statements:

               Report of Independent Auditors                         21

                  Consolidated Balance Sheets as of December 31,      22
                    1997 and 1996.

                  Consolidated Statements of Income,  Consolidated    24
                    Statements of Cash Flows, and Consolidated 
                    Statements  of Changes in Stockholders' Equity
                    for each of the years ended December 31,
                    1997, 1996, and 1995

                  Notes to Consolidated Financial Statements          28


   (2)   Financial Statement Schedule:

                  Report of Independent Auditors as to the            21
                    financial statement schedule

                  VIII     Valuation and Qualifying Accounts
                            and Reserves                              41



                  All  other   schedules  are  omitted   because  they  are  not
                  applicable  or  the  required  information  is  shown  in  the
                  financial statements or notes thereto.


<PAGE>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 1997 Consolidated  Financial Statements in the Notes to
                  Consolidated  Financial  Statements,  Note 10,  "Stockholders'
                  Equity," at page 39 of this Form 10-K.

         22       Subsidiaries of the Registrant.*

         28.1     Proxy Statement for the Annual Meeting of security holders to
                  be held on April 18, 1998**

         28.2     Annual Report on Form 11-K related to the  Company's  Deferred
                  Stock  Purchase  Plan for the fiscal year ended  December  31,
                  1997.*

         *        Filed herewith.

         **       Incorporated  by reference to the Company's  Definitive  Proxy
                  Statement,  to be  filed  with  the  SEC  within  120  days of
                  December 31, 1997.

         ***      Incorporated  by  reference to the  Company's  1993 Form 10-K,
                  Commission File Number  2-28286,  filed on March 31, 1994. The
                  exhibit  numbers  indicated  above  correspond  to the exhibit
                  numbers in that filing.

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


(b)               Reports on Form 8-K:

No reports on Form 8-K were  filed  during the fourth  quarter of the year ended
December 31, 1997.

<PAGE>45

                                   SIGNATURES


Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        THE BUREAU OF NATIONAL AFFAIRS, INC.


                   By:    s\Paul N. Wojcik
                          ----------------
                          Paul N. Wojcik, Chief Executive Officer

                     Date: March 12, 1998
                           --------------

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


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

Date: March 12, 1998                    Date:  March 12, 1998
      --------------                           --------------


By: s\William A. Beltz        3/12/98     By:  s\Gregory C. McCaffrey   3/12/98
    ------------------        -------          ----------------------   -------
    William A. Beltz          Date             Gregory C. McCaffrey     Date
    Chairman of the Board of Directors         Director

By: s\Jacqueline M. Blanchard 3/12/98     By:  s\Frederick A. Schenck   3/12/98
    ------------------------- -------          ----------------------   -------
    Jacqueline M. Blanchard   Date             Frederick A. Schenck     Date
    Director                                   Director

By: s\Christopher R. Curtis   3/12/98     By:  s\Mary P. Swords         3/12/98
    -----------------------   -------          ----------------         -------
    Christopher R. Curtis     Date             Mary P. Swords           Date
    Director                                   Director

By: s\Sandra C. Degler        3/12/98     By:  s\Daniel W. Toohey       3/12/98
    ------------------        -------          ------------------       -------
    Sandra C. Degler          Date             Daniel W. Toohey         Date
    Director                                   Director

By: s\Kathleen D. Gill        3/12/98     By:  s\Loene Trubkin          3/12/98
    ------------------        -------          ---------------          -------
    Kathleen D. Gill          Date             Loene Trubkin            Date
    Director                                   Director

By: s\John E. Jenc            3/12/98     By:  s\Robert L. Velte        3/12/98
    --------------            -------          -----------------        -------
    John E. Jenc              Date             Robert L. Velte          Date
    Director                                   Director

By: s\Eileen Z. Joseph        3/12/98
    ------------------        -------
    Eileen Z. Joseph          Date
    Director


<PAGE>46

                                  EXHIBIT INDEX


Exhibit                                                         Sequential Page
Number                     Description                                   Number

 3.1                       Certificate of Incorporation, as amended**

 3.2                       Bylaws, as amended                              47

11                         Statement re:  Computation of Per Share
                             Earnings is contained in the 1997
                             Consolidated Financial Statements in
                             the Notes to Consolidated Financial
                             Statements, Note 10, "Stockholders'
                             Equity,"                                      39

22                         Subsidiaries of the Registrant                 155

28.1                       Proxy Statement for the Annual Meeting of
                             Stockholders to be held on April 18, 1998      *

28.2                       Annual Report on Form 11-K related to the      156
                             Company's Deferred Stock Purchase Plan for
                             the fiscal year ended December 31, 1997.        


   *          The  Definitive  Proxy  Statement is expected to be filed with the
              SEC within 120 days of December 31, 1997.

  **          Incorporated  by reference to the Company's  Form 10K,  commission
              File Number 2-28286,  filed on March 31, 1994. The exhibit numbers
              indicated above correspond to the exhibit numbers in that filing.


<PAGE>47

                                                               EXHIBIT 3.2

                                     BYLAWS

                                       OF

                      THE BUREAU OF NATIONAL AFFAIRS, INC.

<PAGE>48
                                       
                                TABLE OF CONTENTS

                                                                   Page Number
         Section I - Offices                                                   
                  Delaware Office                                        1
                  Other Offices                                          1

         Section II - Seal                                               1

         Section III - Meetings of Stockholders                          2
                  Place of Meeting                                       2
                  Notice of Meeting                                      2
                  Annual Meeting                                         2
                  Special Meetings                                       3
                  Quorum                                                 4
                  Voting Rights                                          4
                  Manner of Voting                                       5
                  Nominations of Directors                               6

         Section IV - Determination of Eligible Stockholders             7
                  Closing Transfer Books                                 7
                  Record Date for Stockholders                           7

<PAGE>49                                                      
                                                                   Page Number

         Section V - Directors                                           8
                  Eligibility                                            8
                  Powers                                                 8
                  Number; Election; Term                                 9
                  Meetings                                              10
                  Quorum                                                11
                  Annual Statement                                      11
                  Indemnification                                       11
                  Indemnification - Fiduciaries                         14

         Section VI - Executive and Other Committees                    17
                  Powers                                                17
                  Meetings                                              19

         Section VII - Compensation of Directors                        19

         Section VIII - Officers                                        20
                  Appointment and Tenure                                20
                  Chairman of the Board                                 21
                  President                                             22
                  Chief Executive Officer                               23
                  Vice-Presidents                                       24
                  President Pro Tem                                     25
                  Secretary                                             25
                  Treasurer                                             26
                  Chief Financial Officer                               26
                  Bonding of Officers                                   27
                  Delegation of Powers                                  27
                                       
<PAGE>50

                                                                   Page Number

         Section IX - Capital Stock                                     27
                  Amount                                                27
                  Eligible Stockholders                                 28
                           Class A Stock                                28
                           Class B Stock                                29
                           Class C Stock                                31
                           Transfer on Death                            32
                  Consideration for Class A Stock                       33
                  Rate of Exchange of Class B Stock                     33
                  Form of Certificates                                  33
                  Transfer of Stock                                     33
                  Purchase of Class A and Class B Stock by Corporation  34
                  Redemption of Class B Stock by the Corporation        37
                  Purchase Price                                        37
                           Class A Stock                                37
                           Class B Stock                                38
                  Fractional Shares                                     40
                  Dissolution of Distribution of Assets                 40
                  Lost Certificate                                      40

         Section X - Distribution and Marketing of Stock                41
                  Stock Transfer in Conformity with Section             41
                  Stock Purchase and Transfer Plan                      41
                           Operation by Trustee                         41
                           Eligibility for Participation                41
                           Stock Purchase Fund                          42
                           Functions of Stock Purchase Fund             42
                                      
<PAGE>51

                                                                   Page Number

                           Priorities in Purchase and Sale of Stock     43
                           Price of Class A Stock                       44
                           Issuance of Class A Stock to Fund            45
                           Settlement Dates                             45
                           Payroll Deductions for Purchase of Stock     45
                           Offers to Buy                                47
                           Place and Sale of Stock                      50
                  Register of Supplemental Bids                         50
                           Stock Transfer Pursuant to Supplemental Bids 51
                           Priority in Execution                        51
                           Annual Statement of Trustee                  51
                           Sale of Stock of the Corporation             51

         Section XI -      Optional Agreements For Transfer Of
                           Class A Stock On Termination Of Employment   52

         Section XII - Books and Accounts                               56
                  Place                                                 56
                  Inspection                                            56

         Section XIII - Checks                                          57

         Section XIV - Dividends; Reserves                              57
                  Dividends                                             57
                  Reserves                                              57

         Section XV - Definitions                                       57
                                      
<PAGE>52
                                                                   Page Number

         Section XVI - Notices                                          58
                  Form                                                  58
                  Waiver                                                58

         Section XVII - Amendments                                      58

         Footnotes                                                      59
<PAGE>53

                                     BY-LAWS
                                       OF
                      THE BUREAU OF NATIONAL AFFAIRS, INC.


                               SECTION I - OFFICES

1.   Delaware Office

     The principal  office of the  Corporation in the State of Delaware shall be
at 100 West Tenth Street in the City of Wilmington and County of New Castle; and
the resident agent in charge thereof shall be the Corporation Trust Company, 100
West Tenth Street, Wilmington, Delaware.<F74> (a)

2.   Other Offices

     The  Corporation  may  also  have  an  office  or  offices  in the  City of
Washington,  District  of  Columbia,  and at such  other  places as the Board of
Directors may from time to time designate or appoint,  or as the business of the
Corporation may require.

                                SECTION II - SEAL

     The  corporate  seal  shall  have   inscribed   thereon  the  name  of  the
Corporation,  the  year  of  its  incorporation,  and  the  words  "Incorporated
Delaware, 1946."


(a) Footnotes showing prior versions of changed provisions appear at end of 
By-Laws in numerical and chronological order of the By-Laws changes. 

                                        1

<PAGE>54

                     SECTION III - MEETINGS OF STOCKHOLDERS

1.   Place of Meeting

     Meetings  of  stockholders  shall  be  held  at  the  main  office  of  the
Corporation  in the City of Washington,  District of Columbia,  or at such other
place as may be fixed by resolution of the Board of Directors.<F121>

2.   Notice of Meeting

     Written notice of all meetings of  stockholders  stating the time and place
thereof shall be mailed by the Secretary,  postage prepaid,  to each stockholder
of record,  at his or her post office  address as it appears on the books of the
Corporation.

     In the case of a regular annual meeting,  such notice shall be so mailed at
least 40 days in advance  thereof;  and in the case of a special  meeting,  such
notice shall be so mailed at least 10 days<F132> in advance  thereof.  Notice of
any  special  meeting of  stockholders  shall also state the purpose or purposes
thereof,  and may  provide  for the  transaction  of such other  business as may
properly come before the meeting.

3.   Annual Meeting

     (a) An annual meeting of  stockholders  shall be held at 10 o'clock A.M. on
the succeeding  Saturday.  At such meeting,  the  stockholders  entitled to vote
thereat<F55>  shall elect a Board of  Directors<F3>  and may transact such other
business as may  properly be brought  before the  meeting.  If the  election for
directors  is not held on the day  designated  third  Saturday  in April of each
year,<F2> but if that day be a legal holiday then on the next herein,  the Board
of  Directors  shall  cause  the  election  to be  held as  soon  thereafter  as
conveniently may be.

                                       2

<PAGE>55

     (b) No  change  of the time or  place  of a  meeting  for the  election  of
directors  as fixed by  these  By-Laws  shall be made  within  sixty  (60)  days
preceding  the day on which  such  election  is to be held.  In the event of any
change in such time or place for such  election  of  directors,  notice  thereof
shall be given to each stockholder at least twenty (20) days before the election
is held,  in person or by letter  mailed to his or her last  known  post  office
address.

     (c) At least  ten  (10)  days  before  every  election  of  directors,  the
Secretary  shall  prepare and make a complete list of  stockholders  entitled to
vote at said elections,  arranged in  alphabetical  order (with the residence of
each and the number of voting shares held by each).  Such list shall be open for
said ten (10) days to the examination of any stockholder at the place where said
election  is to be held and shall be  produced at the time and place of election
and  kept  open  during  the  whole  time  thereof  for  the  inspection  of any
stockholder  who may be present.  The original or duplicate  stock ledger of the
Corporation  shall be the  only  evidence  as to the  stockholders  entitled  to
examine such list.

4.   Special Meetings

     Special  meetings of the  stockholders  for any purpose or purposes  may be
called by the  President,  and shall be called by the  President or Secretary at
the  request  in writing or by vote of a  majority  of the  directors  or at the
request in writing of  stockholders of record owning a majority in amount of the
shares of the stock of the  Corporation  outstanding  and entitled to vote. Such
request shall state the purpose or purposes of the proposed meeting.

                                       3

<PAGE>56

5.   Quorum

     At any  meeting of  stockholders  the  holders of a majority of the Class A
stock<F56>  outstanding  and  entitled  to vote  thereat,  present  in person or
represented by proxy,  shall be requisite and shall  constitute a quorum for the
transaction of business, except as otherwise provided by law, by the Certificate
of  Incorporation,  or  herein.  In the  absence of a quorum,  the  stockholders
entitled to vote at said  meeting,  present in person or  represented  by proxy,
shall have power to adjourn the meeting  from time to time until a quorum  shall
be secured,  whereupon  any  business  may be  transacted  which might have been
transacted at the meeting as originally notified or fixed.

6.   Voting Rights

     (a) At every meeting of  stockholders,  each  stockholder  entitled to vote
thereat shall have one vote for each share of Class A stock <F56>  registered in
his name on the books of the Corporation.<F4>

     (b) The original or duplicate stock ledger of the Corporation  shall be the
only evidence as to the  stockholders  entitled to vote.  The Board of Directors
may,  however,  close the transfer books of the Corporation or fix a record date
for the  determination  of its  stockholders  entitled  to vote,  as provided in
Section IV of these By-Laws.  Except where the transfer books shall have been so
closed or a record date for voting  stockholders have been so fixed, no share of
stock  shall be voted on at any  election  for  directors  which shall have been
transferred  on the  books of the  Corporation  within  twenty  (20)  days  next
preceding such election.

     (c) Except as otherwise  provided in the  Certificate of  Incorporation  or
By-Law,<F5> all questions before any meeting of stockholders shall be decided by
a vote of the  holders of a majority  of the  shares of stock  entitled  to vote
thereat.

                                       4

<PAGE>57

7.   Manner of Voting

     (a) The vote for  directors  at any  meeting  of  stockholders  shall be by
ballot. The vote upon any other question at any meeting of stockholders shall be
by ballot or viva voce, as may be determined by the presiding officer: PROVIDED,
That  if  objection  be  raised  by any  stockholder  to the  manner  of  voting
designated by the presiding officer upon any such question, the manner of voting
shall be  determined  by the  holders  of the  majority  of the  shares of stock
present or represented at any such meeting and entitled to vote thereat.

     (b) Each  stockholder  entitled to vote at any meeting of stockholders  may
vote (i) in  person,  or (ii) by proxy  appointed  by an  instrument  in writing
subscribed  by him and bearing a date no more than six (6) months  prior to said
meeting,  unless said instrument  provides for a longer period,  or (iii) at any
election  for  directors,  but on no  other  question,  by mail as  provided  in
sub-paragraph (c) of this Paragraph 7.

     (c) At any election for directors, any stockholder entitled to vote thereat
may submit his vote or votes for  directors  by mailing to the  Secretary of the
Corporation or his  designees<F201>  a written ballot  subscribed by him setting
forth the names of the  directors  for whom he desires to vote and the number of
shares to be voted for each director;<F6> PROVIDED, That said ballot in order to
be effective as the vote of the  stockholder,  must be received by the Secretary
of the  Corporation  or his  designees<F201>  not later  than the day before the
meeting for such election of directors.

     (d) If at any meeting of stockholders there shall be presented in behalf of
a  stockholder  more than one proxy  signed by him on any  question  before said
meeting,  or if at any election for directors there shall be presented in behalf

                                     5

<PAGE>58

of a stockholder  more than one proxy signed by him  authorizing  the casting of
votes in his  behalf  or more than one  ballot  mailed  by him  pursuant  to the
preceding  subparagraph  or both a proxy  and a  mailed  ballot,  then  all such
proxies and mailed ballot  signed by such  stockholder  shall be invalid  unless
identical.

     (e) A proxy may be withdrawn  for filing  written  notice  thereof with the
Secretary at any time prior to the  presiding  officer's  call for a vote at any
meeting of stockholders.<F7>  

8.   Nominations of Directors

     (a)  At  least  forty-five  (45)  days  prior  to  any  annual  meeting  of
stockholders  a list of  nominations  for  directors,  prepared by a  Nominating
Committee  to be  appointed  by the Board of  Directors,  shall be mailed by the
Secretary to each Class A<F56> stockholder. The Committee shall make at least as
many  nominations  as  there  are  directorships  to be  filled  at  the  annual
meeting,<F8> but may nominate  candidates in excess of such number.  Three<F216>
nominees shall be neither  stockholders of the Corporation nor active or retired
officers  or  employees  of  the   Corporation  or  of  one  of  its  subsidiary
corporations.<F170>  Said list shall  also  state the total  number of shares of
Class A stock of the Corporation then outstanding.<F56>

     (b) Any Class A<F56>  stockholder or  stockholders  owning at least two (2)
percent of the  outstanding  Class A<F56> shares of the  Corporation  may submit
additional  nominations  to the  Nominating  Committee not less than thirty (30)
<F189> days prior to such annual  meeting.<F50> Each additional  nomination made
pursuant to this  sub-paragraph  shall be accompanied  by the nominee's  written
acceptance of his or her nomination.<F190>

                                       6

<PAGE>59

     (c) A final list of nominations,  including  nominations made in the manner
provided  by  sub-paragraph  (b)  together  with  nominations  made  pursuant to
sub-paragraph (a), shall be mailed by the Secretary to Class A<F56> stockholders
not less than twenty-two (22)<F191> days prior to such annual meeting.<F192>


               SECTION IV - DETERMINATION OF ELIGIBLE STOCKHOLDERS

1.   Closing Transfer Books

     The Board of Directors  may, in its  discretion,  close the stock  transfer
books of the  Corporation  for a period not exceeding  fifty (50) days preceding
the date of any  meeting  of the  stockholders,  or the date for  payment of any
dividend,  or the date for the allotment of rights, or the date when any change,
conversion,  or exchange of capital  stock shall go into  effect,  or a date for
obtaining the consent of the stockholders for any purpose.

2.   Record Date for Stockholders

     In lieu of closing  the stock  transfer  books as  aforesaid,  the Board of
Directors may fix in advance a date not exceeding  fifty (50) days preceding the
date  of any  meeting  of  stockholders,  or the  date  for the  payment  of any
dividend,  or the date for the allotment of rights, or the date when any change,
conversion  or exchange  of capital  stock  shall go into  effect,  or a date in
connection  with  obtaining the consent of  stockholders  for any purpose,  as a
record date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting and adjournment thereof, or entitled to receive and
exercise the other rights and privileges referred to in this paragraph.  In such
case only  stockholders  of record on the date so fixed shall be entitled to the
notice, voting rights, and other rights and privileges referred to herein above,
notwithstanding  the transfer of any stock on the books of the Corporation after
such record date fixed as aforesaid.

                                       7

<PAGE>60

                              SECTION V - DIRECTORS

1.   Eligibility

     (a) Three<F217> persons who are not stockholders of the Corporation and not
active or retired  officers or  employees  of the  Corporation  or of one of its
subsidiary corporations shall be elected or appointed as directors.

     (b) Other than the persons  elected or appointed  as directors  pursuant to
sub-paragraph  (a) above,  no person shall be elected or appointed as a director
unless he is a holder of Class A or Class B stock and, in addition, is an active
or retired  officer or employee of the  Corporation  or of one of its subsidiary
corporations,  and any director elected or appointed  pursuant to this Paragraph
who ceases to fulfill these  requirements  shall be disqualified to exercise any
of the powers or duties of director  and shall be deemed to have  resigned  from
such position.<F171>  

2.   Powers

     The  property  and  business  of this  Corporation  shall  be  managed  and
controlled by its Board of Directors. The Board of Directors shall have power --

     (a) To purchase or otherwise acquire for the Corporation property, real and
personal,  tangible and intangible, and any rights or privileges, at such prices
and upon such terms as the Board may deem proper.

     (b) To pay for such  property,  rights,  or  privileges in whole or in part
with money,  services,  stock,  bonds,  debentures,  or other  securities of the
Corporation, or by the delivery of other property of the Corporation.
               
                                       8

<PAGE>61

     (c) To create,  make, and issue  mortgages,  bonds,  deeds of trust,  trust
agreements,  and negotiable or transferable instruments and securities,  secured
by mortgages or otherwise, and to do every act and thing necessary to effectuate
the same.

     (d) To appoint agents, clerks, assistants,  factors, and to dismiss them at
its discretion,  to fix their duties and emoluments and to change them from time
to time, and to require security as it may deem proper.

     (e) To confer on any  officer of the  Corporation  the power of  selecting,
discharging, or suspending employees.

     (f) To determine by whom and in what manner the Corporation's bills, notes,
receipts,  acceptances,  endorsements,  checks,  releases,  contracts,  or other
documents shall be signed.

     (g) To exercise any and all powers of the Corporation,  including the power
to do all lawful acts and things on behalf of the  Corporation  which are not by
statute or by the  Certificate of  Incorporation  or by these Bylaws directed or
required to be exercised or done by the stockholder.

3.   Number; Election; Term

     The Board of Directors shall consist of fifteen(15)<F214> members who shall
be elected by the Class A<F56>  stockholders  at the regular  annual  meeting of
stockholders.<F150>  The Board of Directors so elected  shall be composed of (i)
the three<F218> (3) nominees eligible only under sub- paragraph (a) of Paragraph
1 hereof who shall have received the highest  number of votes among the nominees
eligible  only  under that  provision,  and (ii) the  twelve(12)<F218>  nominees
eligible  only  under  sub-paragraph  (b) of  Paragraph  1 hereof who shall have
received the highest number of votes among the nominees eligible only under that

                                       9

<PAGE>62

provision.<F173>  Each director  shall hold office until the  succeeding  annual
election  and until his  successor  shall have been  elected and shall have duly
qualified: PROVIDED, that if there be a vacancy in the Board by reason of death,
resignation,  or otherwise,  such vacancy shall be filled for the unexpired term
by majority vote of all the remaining directors, although less than a quorum.

4.   Meetings

     (a) After each  election of  directors  at a meeting of  stockholders,  the
newly  elected  directors  shall  meet for the  purposes  of  organization,  the
election of officers,  and the transaction of other business,  at such place and
time as may be designated by the stockholders at such annual meeting,  or in the
absence of such designation, as may be fixed by written consent of a majority of
the newly elected  directors.  If a majority of the directors be present at such
place and time, no prior notice of such meeting need be given to the directors.

     (b)  Regular  meetings  of the  Board  of  Directors  shall be held at 9:00
a.m.<F213> on the  Thursday<F186>  after the first Saturday in each month except
January and  August<F215>  at the main office of the  Corporation in Washington,
District of  Columbia,  and/or at such other times and places as may be fixed by
resolution of the Board or by written waiver of all its  members.<F174> No other
notice of any regular meeting shall be required.

     (c)  Special  meetings  of the  Board of  Directors  may be  called  by the
Chairman of the  Board<F99>  or the President at any time upon notice to all the
directors;  and upon  the  written  request  of two or more  directors,  special
meetings  shall be called by the  President or Secretary  upon one day's notice.
Such meetings may be held within or without the State of Delaware,  at such time
and place indicated in the notice or waiver of notice thereof.

                                       10

<PAGE>63

5.  Quorum

     At all meetings of the Board of Directors four directors shall constitute a
quorum for the transaction of business,  but if less than four be present at any
meeting they may adjourn from time to time without further notice until a quorum
is  secured.  The act of a majority of the  directors  present at any meeting at
which there is a quorum  shall be the act of the Board of  Directors,  except as
may  otherwise  be  specifically  provided by statute or by the  Certificate  of
Incorporation or by these By-Laws.

6.  Annual Statement

     The Board of Directors shall present at each annual meeting of stockholders
a full and clear statement of business and conditions of the Corporation.

7.<F196> Indemnification

     Any person who was or is a party,  or who was or is threatened to be made a
party, to any threatened,  pending,  or completed  action,  suit, or proceeding,
whether civil, criminal,  administrative,  investigative, or otherwise by reason
of the fact that he or she is or was a director or officer of the Corporation or
of one of the Corporation's subsidiaries shall be indemnified by the Corporation
to the fullest extent now or hereafter  permitted by law.  Without  limiting the
generality of the foregoing.

     (a) The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened,  pending, or completed action,
suit, or proceeding, whether civil, criminal,  administrative,  or investigative
(other than an action by or in the right of the  Corporation),  by reason of the
fact that he or she is or was a director or officer of the Corporation or one of
its subsidiaries against expenses (including attorney's fees), judgment, fines

                                       11

<PAGE>64

and  amounts  paid  in settlement actually and reasonably incurred by him or her
in connection with such action,  suit,  or proceeding,  if he or she is acted in
good  faith  and in a  manner he or she  reasonably  believed  to be in the best
interests  of the  Corporation,  and,  with  respect to any  criminal  action or
proceeding,  had no  reasonable  cause  to  believe  his or  her  conduct  to be
unlawful. The termination of any action, suit or proceeding by judgment,  order,
settlement,  conviction,  or upon a plea of nolo  contendere or its  equivalent,
shall not, of itself,  create a presumption  that the person did not act in good
faith  and in a manner  which he or she  reasonably  believed  to be in the best
interests of the Corporation  and, with cause to believe that his or her conduct
was unlawful.

     (b) The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened,  pending,  or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason  of the fact that he or she is or was a  director  or  officer  of the
Corporation or one of its subsidiaries  against expenses  (including  attorney's
fees)  actually and  reasonably  incurred by him or her in  connection  with the
defense or  settlement  of such  action or suit if he or she acted in good faith
and  in a  manner  reasonably  believed  to be in  the  best  interests  of  the
Corporation,  except that no  indemnification  shall be made with respect to any
claim,  issue,  or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his or her duty of the
Corporation unless and only to the extent that the Court of Chancery of Delaware
or the Court in which  such  action or suit was  brought  shall  determine  upon
application that,  despite the adjudication of liability,  such person is fairly
and  reasonably  entitled  to  indemnity  for such  expenses  which the Court of
Chancery of Delaware or such other Court shall deem proper.

                                       12

<PAGE>65

     (c) To the extent  that a director or officer of the  Corporation  has been
successful on the merits in defense of any action,  suit, or proceeding referred
to in Subparagraph  (a) and (b) of this  Paragraph,  or in defense of any claim,
issue,  or matter  therein,  he or she  shall be  indemnified  against  expenses
(excluding  attorneys'  fees) actually and reasonably  incurred by him or her in
connection therewith.

     (d) Any  indemnification  under  Subparagraph  (a) or (b) of this Paragraph
(unless ordered by a court) shall be made by the Corporation  only as authorized
in the  specific  case  upon a  determination  that the  indemnification  of the
director or officer is proper in the circumstances because he or she has met the
applicable  standard  of  conduct  set forth in  Subparagraph  (a) or (b).  Such
determination  may be made (i) by the Board of Directors by a majority vote of a
quorum consisting of directors who were or are not parties to such action, suit,
or proceeding, or (ii) if such a quorum is not obtainable, or even if obtainable
a quorum of disinterested  directors so directs, by independent legal counsel in
a written opinion, or (iii) by the stockholders. Such determination shall not be
arbitrary  but shall be made in  keeping  with the  precepts  expressed  in this
Paragraph.  Upon such  determination,  the  Board of  Directors  shall  promptly
authorize   indemnification   in  accordance  with  such  determination  and  in
accordance with Subparagraphs (a) and (b) of this Paragraph.

     (e) Expenses  incurred in defending a civil or criminal  action,  suit,  or
proceeding may be paid by the Corporation in advance of the final disposition of
such action,  suit, or proceeding as authorized by the Board of Directors in the
manner  provided  by  Subparagraph  (d) of this  Paragraph  upon  receipt  of an
undertaking  by or on behalf of the  director or officer  involved to repay such
amounts unless it shall  ultimately be determined  that he or she is entitled to
be indemnified by the Corporation.

                                       13

<PAGE>66

     (f) The  indemnification  provided  in this  Paragraph  shall not be deemed
exclusive of any other rights to which those  indemnified  may be entitled under
any by-law,  agreement,  vote of stockholders,  or disinterested  directors,  or
otherwise, both as to action in his or her official capacity and as to action in
any other capacity while holding such office,  and shall continue as to a person
who has ceased to be a director or officer and shall inure to the benefit of the
heirs, executors, and administrators of such a person.

     (g) It shall  be  conclusively  presumed  that  every  person  entitled  to
mandatory  indemnification  under  this  Paragraph  served  the  Corporation  in
reliance hereon.  Any such person may continue to rely on the provisions of this
Paragraph, as presently constituted,  even after its amendment, unless and until
he or she is given  written  notice of such  amendment  or unless he or she is a
member of the Board of Directors which so amends this Paragraph.

     (h) For the purposes of this  Paragraph,  references  to the  "Corporation"
include all  subsidiaries of the  Corporation  and all constituent  corporations
absorbed in a  consolidation  or merger as well as the  resulting  or  surviving
corporation  so that any person  who is or was a  director  or officer of such a
constituent corporation shall stand in the same position under the provisions of
this Paragraph  with respect to the resulting or surviving  corporation as he or
she would if he or she had served the resulting or surviving  corporation in the
same capacity.

8.<F197> Indemnification-Fiduciaries

     Any person who was or is a party,  or who was or is threatened to be made a
party, to any threatened,  pending,  or completed  action,  suit, or proceeding,
whether civil, criminal,  administrative,  investigative, or otherwise by reason
of the fact that he or she is or was serving at the  request of the  Corporation
or at the request of one of the Corporation's  subsidiaries as a trustee or as a

                                       14

<PAGE>67

"fiduciary" as the term "fiduciary" is defined in the Employee Retirement Income
Security Act of 1974, as the Act may be amended, under any employee benefit plan
at any time established or maintained by the Corporation shall be indemnified by
the Corporation to the fullest extent now or hereafter permitted by law. Without
limiting the generality of the foregoing.

     (a) The Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened,  pending, or completed action,
suit, or proceeding, whether civil, criminal,  administrative,  or investigative
by reason of the fact that he or she is or was  serving  at the  request  of the
Corporation  or at the  request of one of the  Corporation's  subsidiaries  as a
trustee or fiduciary against expenses  (including  attorneys' fees),  judgments,
fines, and amounts paid in settlement actually and reasonably incurred by him or
her in connection with such action,  suit, or proceeding,  if he or she acted in
good  faith  and in a  manner  he or she  reasonably  deemed  to be in the  best
interests of the  participants  of the employee  benefit plan or plans  involved
and/or  their  beneficiaries,  and,  with  respect  to any  criminal  action  or
proceeding,  had no  reasonable  cause  to  believe  his or  her  conduct  to be
unlawful. The termination of any action, suit or proceeding by judgment,  order,
settlement,  conviction,  or upon a plea of nolo  contendere or its  equivalent,
shall not, of itself,  create a presumption  that the person did not act in good
faith  and in a  manner  which  he or she  reasonably  believed  to be in or not
opposed to the exclusive  purposes of providing  benefits to participants of the
employee  benefit  plan or plans  involved  and  their  beneficiaries,  and with
respect to any criminal  action or proceeding,  had reasonable  cause to believe
that his or her conduct was unlawful.

     (b) In any proceeding  involving a trustee or fiduciary no  indemnification
shall be provided  with respect to any claim,  issue,  or matter as to which the
trustee or fiduciary  shall have been  adjudged to have dealt with the assets of
the employee  benefit  plan or plans  involved in his or her own interest or for

                                      15

<PAGE>68

his or her own account or to have received consideration for his or her personal
account from a party  dealing with the plan.  This  Paragraph  shall not provide
indemnification for any bank, trust company, insurance company,  partnership, or
other entity or person not an officer, director, or employee of the Corporation,
even though retained as an investment advisor, actuary,  custodian,  trustee, or
consultant  to any plan, or for any director,  officer,  agent,  employee of any
such bank,  trust company,  insurance  company,  partnership,  other entity,  or
person. 

     (c) Any  indemnification  under  Subparagraph (a) of this Paragraph (unless
ordered by a court) shall be made by the  Corporation  only as authorized in the
specific case upon a determination  that the  indemnification  of the trustee or
fiduciary  is  proper  in the  circumstances  because  he or  she  has  met  the
applicable  standard of conduct set forth in Subparagraph (a) of this Paragraph.
Such  determination  may be made (i) by  independent  legal counsel in a written
opinion, or (ii) by the stockholders.  Such determination shall not be arbitrary
but shall be made in keeping with the precepts expressed in this Paragraph. Upon
any  such  determination,  the  Board of  Directors  shall  promptly  authorized
indemnification  in accordance  with such  determination  and in accordance with
Subparagraphs (a) and (d) of this Paragraph.

     (d) Expenses  incurred in defending a civil or criminal  action,  suit,  or
proceeding,  as contemplated by this Paragraph may be paid by the Corporation in
advance of the final  disposition  of such action,  suit,  or  proceeding,  upon
authorization  by the  Board of  Directors  and  upon  receipt  by the  Board of
Directors of an undertaking by or on behalf of the trustee or fiduciary to repay

                                       16

<PAGE>69

such  amounts  unless  it  shall  ultimately  be  determined  that  he or she is
entitled to be indemnified by the Corporation.

     (e) The  indemnification  provided  in this  Paragraph  shall not be deemed
exclusive of any other rights to which those  indemnified  may be entitled under
any agreement,  vote of stockholders,  or otherwise, both as to action in his or
her official  capacity and as to action in another  capacity  while holding such
office,  and shall  continue  as to a person  who has  ceased to be a trustee or
fiduciary  and  shall  inure  to  the  benefit  of  the  heirs,  executors,  and
administrators of such a person.

     (f) It shall  be  conclusively  presumed  that  every  person  entitled  to
mandatory  indemnification  under this Paragraph served the Corporation or other
organization or enterprise at the Corporation's  request in reliance hereon. Any
such  person  may  continue  to rely on the  provisions  of this  Paragraph,  as
presently constituted,  even after their amendment unless and until he or she is
given  written  notice of such  amendment or unless he or she is a member of the
Board of Directors which so amends this Paragraph.


                   SECTION VI - EXECUTIVE AND OTHER COMMITTEES

1.  Powers

     (a) The Board of Directors  may, by resolution or  resolutions  passed by a
majority of the whole Board,  designate an Executive  Committee  and one or more
other committees, each consisting of two or more directors.

     (b) The  Executive  Committee  shall have such  powers and duties as may be
directed or authorized  by the Board of  Directors from time to  time, including

                                       17

<PAGE>70

the  authority  to exercise all  powers of  the Board  when  the Board is not in
session; and during the intervals between meetings of the Board of Directors the
Executive Committee shall advise with and aid the officers of the Corporation in
all  matters  concerning  its  interest  and  the  management  of its  business:
PROVIDED,  That the Executive Committee shall not have the power to make, alter,
amend,  or  repeal  the  By-Laws,  nor to fill  any  vacancies  on the  Board of
Directors  or  the  Executive  Committee.  Vacancies  in the  membership  of the
Executive Committee shall be filled by the Board of Directors.

     (c)<F194>  The Audit  Committee of the Board of Directors  shall consist of
three to five members of the Board of Directors  elected  annually by a majority
of the Board of Directors at the Directors'  meeting  immediately  following the
annual meeting of stockholders. The Committee shall consist, so far as possible,
of  non-employee  directors  and in no case  shall an  operating  officer of the
Corporation  be  elected  to  serve as a member  of the  Committee.  Immediately
following  election of the Committee,  the Board of Directors shall elect one of
its members to serve as chairman of the  Committee.  No member of the  Committee
shall serve as chairman for more than two consecutive years.

     The duties and functions of the Audit Committee shall be as follows: (i) to
make  recommendations  to the  Board  of  Directors  concerning  the  selection,
retention,  or termination  of the  independent  auditors;  (ii) review with the
Board of  Directors  and the  independent  auditors  the  accounting  principles
bearing upon the financial  statements,  and in  particular  with respect to any
changes in accounting  principles;  (iii) review the proposed scope of the audit
and the report of the independent auditors, and review the auditors' statements,
if any, regarding weaknesses in internal accounting controls, and the corrective
action  taken by  management;  (iv)  review  the audit and non-  audit  services
performed  by the  independent  auditors and the related  fees;  (v) review with

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<PAGE>71

management and the  independent  auditors  recommendations  made by the auditors
with  respect  to changes  in  accounting  procedures  and  internal  accounting
controls, growing out of the results of the audit; (vi) maintain minutes of each
meeting of the Audit Committee, copies of which should be furnished to the Board
of  Directors,  and report  regularly  on Committee  activities  to the Board of
Directors and make recommendations as appropriate;  and (vii) perform such other
duties as may be directed or authorized  by the Board of Directors  from time to
time.

     Vacancies in the  membership  of the Audit  Committee  shall be filled by a
majority of the Board of Directors at the first regular  meeting of the Board of
Directors following the occurrence of a vacancy or vacancies on the Committee.

     (d)<F195> Other committees  designated by the Board of Directors shall have
such powers as may be specifically delegated to them by resolution of the Board.

2.  Meetings

     The Executive Committee and any other committees shall meet at stated times
or on notice to all by any of its  members.  Each  committee  shall keep regular
minutes of its proceedings, shall report the same to the Board of Directors, and
shall fix its rules of procedure,  but an affirmative  vote of a majority of the
whole  Committee  shall  be  necessary  in  every  case  for the  action  of the
Committee.


                   SECTION VII - COMPENSATION OF<F158> DIRECTORS

     Directors  and  members  of  committees  who  are  on  the  payroll  of the
Corporation  or of one  of its  subsidiary  corporations<F165>  shall<F167>  not
receive any salary or fee for their  services as such,  but by resolution of the
Board  they  shall  be  allowed  reimbursement for  their  traveling  and  other

                                     19

<PAGE>72


reasonably  necessary expenses for attendance at any regular or special meeting:
Provided, That nothing herein contained shall preclude any director or member of
a  committee  from  serving  the  Corporation  in  any  other  capacity  upon  a
compensated basis.<F159>

  
                             SECTION VIII - OFFICERS

1.  Appointment and Tenure

     (a) The officers of the Corporation shall be a Chairman and a Vice Chairman
<F160> of the Board,<F86> a President, one or more Vice-Presidents, a Secretary,
and a  Treasurer.  The Chairman of the Board and the  President  may be the same
person, the<F87> Secretary and the Treasurer may be the same person, and a Vice-
President  may  hold  at the  same  time  the  office  of Vice  Chairman  of the
Board,<F161>  Secretary,  or Treasurer.  The Chairman and Vice Chairman<F162> of
the  Board<F100>, the  President,  and one  Vice-President  shall be chosen from
among the directors;  the other officers may, but need not be, chosen from among
the  directors.  No person shall be an officer of the  Corporation  unless he or
she, if eligible to purchase stock under the Corporation's  By-Laws, is a holder
of Class A stock or Class B stock, and any officer who ceases to hold any shares
of stock in the Corporation  shall be disqualified to exercise any of the powers
or  duties  of  an  officer   and  shall  be  deemed  to  have   resigned   from
office.<F59><F220>

     (b) The directors shall at their first meeting after each annual meeting of
stockholders choose a Chairman and a  Vice Chairman<F160> of  the Board,  a<F88>
President, a Vice-President,  a Secretary, and a Treasurer. They may also choose
additional  Vice-Presidents,  an Assistant Secretary,  and one or more Assistant
Treasurers.<F175>  In  the  event  that  the  Board  shall  elect  two  or  more
Vice-Presidents,    it   may<F193>    designate    one   of   them   as   Senior
Vice-President.<F113>  The directors shall designate  either the Chairman of the

                                      20

<PAGE>73

Board or the President,  in their discretion,  as the Chief Executive Officer of
the Corporation.<F101>

     (c)  The  officers  of  the  Corporation  shall  hold  office  until  their
successors  are  chosen  and  qualify  in their  stead.  Any  officer  chosen or
appointed  by  the  Board  of  Directors  may be  removed  at  any  time  by the
affirmative vote of a majority of the whole Board of Directors,  with or without
cause.  If the office of any officer or officers  becomes vacant for any reason,
the vacancy shall be filled by the  affirmative  vote of a majority of the whole
Board of Directors.

2.  Chairman of the Board

     (a)  The  Chairman  of the  Board  shall  preside  at all  meetings  of the
stockholders  and the Board of  Directors.  He shall  serve as  chairman  of the
Executive Committee, if such committee is designated, and of any other committee
designated by the Board of Directors, except as otherwise provided by resolution
of the Board.

     (b) On  behalf  of the  Board of  Directors,  and in  association  with the
President,  he shall make to  stockholders  an annual  statement of the business
operations and financial  condition of the  Corporation  and such reports as the
Board shall direct.

     (c) He shall oversee  generally,  on behalf of the Board of Directors,  the
operation and  administration  of all employee benefit plans and of any plan for
the sale and purchase of the stock of the Corporation.

                                       21

<PAGE>74

     (d) He shall  consult  with and advise  the  President,  or any  officer or
manager  as the  President  requests,  regarding  such  matters or  problems  as
mutually may be chosen by him and the President.

     (e) He shall  perform such other  functions and duties as may be prescribed
by the Board of Directors.

     (f) In  the  absence  or  disability  of the  Chairman  of the  Board,  the
foregoing  stated  functions  shall be  performed  by the Vice  Chairman  of the
Board.<F102><F163>  

3.  President

     (a) The President  shall be  responsible  for the active  management of the
day-to-day  business and  operations of the  Corporation.  He shall be the chief
administrative  officer and shall appoint and have  supervision and direction of
the operating and staff managers of the business,  except as otherwise  provided
in this Section.

     (b) He shall  make  such  undertakings,  and  execute  such  contracts  and
agreements,  in the name of the Corporation,  as may be necessary to the normal,
budgeted operations of the Corporation, subject to any limitations prescribed by
the Board of Directors.

     (c) He shall be  responsible  for  submitting  for approval to the Board of
Directors,  or to such committee of the Board as it shall  determine,  not later
than 45<F111> days preceding each fiscal year, a proposed  operating  budget and
financial forecast for such succeeding fiscal year.

                                       22

<PAGE>75

     (d) He shall  submit to the  Board of  Directors  an  annual  report of the
operations of the  Corporation,  not later than the regular meeting of directors
next  preceding  the  annual  meeting  of  stockholders,  and he  shall  make to
stockholders, in association with the Chairman of the Board, an annual statement
of the business operations of the Corporation.

     (e) He shall  perform such other  functions and duties as may be prescribed
by the Board of Directors.

     (f) In the absence or disability  of the  President,  the foregoing  stated
functions shall be performed by the Senior Vice-President.<F103><F114>

4.  Chief Executive Officer

     (a)  The  Chief  Executive  Officer  (the  Chairman  of  the  Board  or the
President, as the Board of Directors may designate) shall have final supervisory
power  over  the   business  and  affairs  of  the   Corporation   and  ultimate
responsibility   and   accountability   to  the  Board  of  Directors   for  the
Corporation's  total efforts and total results. He shall see that all orders and
resolutions  of the Board of Directors are carried into effect.  It shall be his
duty to assure that  adequate  planning and attention are given to the long-term
stability and growth of the Corporation.  He shall develop  over-all  objectives
and broad basic  policies and plans of the  Corporation  for the approval of the
Board of Directors.

     (b) He shall  conducts  the  Corporation's  external  financial  and  legal
relations  and  shall  be  the  Corporation's  principal  representative  in its
relations  with the public,  the  community,  other  businesses,  and government
agencies.

                                       23

<PAGE>76

     (c) Except  where by law the  signature of the  President  is required,  he
shall execute all deeds, bonds, mortgages, and other obligations and instruments
(other than such contracts and  agreements  that may be necessary to the normal,
budgeted operations of the Corporation) in the name of the Corporation.

     (d) He shall  approve the  appointment  by the  President of the  principal
operating  and staff  managers  of the  business,  and shall have final  general
responsibility for the setting and adjusting of the salaries of all employees of
the Corporation.

     (e) He shall have general  supervision  and direction of the other officers
in their  corporate  capacities  and shall see that their  corporate  duties are
properly performed.<F104> 

     (f) In the  absence  or  disability  of the  President,  when  he has  been
designated the Chief Executive Officer,  the foregoing stated functions shall be
performed  by the  Chairman of the Board.  In the absence or  disability  of the
Chairman of the Board, when he has been designated the Chief Executive  Officer,
the foregoing  stated  functions  shall be performed by the Vice Chairman of the
Board.<F164.  

5.<F92>     Vice-Presidents

     In the absence or  disability of both the President and the Chairman of the
Board,<F105> the Senior Vice-President<F116> shall be vested with all the powers
and be required to perform all the duties of the President.  The  Vice-President
or  Vice-Presidents  shall perform such duties as may be prescribed by the Board
of Directors.<F117>

                                       24

<PAGE>77

6.<F93> President Pro Tem

     In the absence or disability of the  President  and the  Vice-President  or
Vice-Presidents, the Board may appoint from its own number a president pro tem.

7.<F94> Secretary

     (a) The Secretary shall attend all meetings of the Board of Directors,  the
stockholders,  and the Executive  Committee.  He shall act as clerk thereof, and
shall record all votes and all of the  proceedings of such meetings in a book to
be kept for that  purpose;  and  shall  perform  like  duties  for the  standing
committees of the Board of Directors when required.

     (b) He shall  give or  cause  to be  given  proper  notice  of  meeting  of
stockholders and directors, whenever required.<F106>  

     (c) He shall record and effectuate all proper transfers of stock, and shall
keep an account of stock registered and transferred,  in such manner and subject
to such regulations as the Board of Directors may prescribe.

     (d) He shall have  custody of the seal of the  Corporation  and shall affix
the seal to contracts, agreements, deeds, mortgages and other instruments of the
Corporation  requiring  a seal;  and when the  seal is so  affixed,  it shall be
attested by his signature, or by the signature of the Treasurer.

     (e) He  shall  perform  all  other  functions  incident  to the  office  of
Secretary,  and such  other  functions  as the Board of  Directors  or the Chief
Executive Officer may prescribe.<F107>  

                                       25

<PAGE>78

8.  Treasurer

     (a) The  Treasurer  shall have custody of the funds and  securities  of the
Corporation and shall deposit all monies and other valuable  effects in the name
and to the credit of the  Corporation in such  depositories as may be designated
by the  Board of  Directors.  The  Treasurer  shall  disburse  the  funds of the
Corporation  as may be  ordered by the Board of  Directors  and either the Chief
Executive  Officer or the  President,  in  relation to their  functions,  taking
proper vouchers for such disbursements,  and shall render to the Chief Executive
Officer and the  directors,  whenever they may require it, an account of all his
or her transactions as Treasurer.

     (b) The  Treasurer  shall  invest  funds  of the  Corporation  pursuant  to
guidelines  established  by the Board of Directors  and shall perform such other
duties  as are  properly  required  of him or  her by the  Board  of  Directors,
including   the   payment   of   dividends   as   declared   by  the   Board  of
Directors.<F184>  

9.  Chief Financial Officer

     The Chief Financial  Officer (a vice president)  shall have  responsibility
for the financial management of the business, including: obtaining financing for
the  business;  managing the  accounting  system and other  financial  reporting
systems;  formulating  financial  plans and  evaluating  performance  under such
plans; complying with the financial reporting requirements of appropriate taxing
and  other  regulatory  agencies;   and  consulting  with  other  company  units
concerning  the  financial  aspects  of their  activities.  The Chief  Financial
Officer  shall  also be  responsible  for  maintaining  accurate  records of all
financial  transactions  of the  Corporation.  In  relation  thereto,  the Chief
Financial  Officer shall  establish and supervise the functions of the office of
the  Controller  of the  Corporation.  He or she  shall be the  primary  liaison
between the  Corporation  and its  independent  auditors and shall render to the
Chief  Executive  Officer and the  directors,  whenever  they may require it, an
account of the financial condition of the Corporation, and at the meeting of the

                                       26

<PAGE>79

Board of Directors next preceding the annual  meeting of  stockholders he or she
shall make a like report for the preceding fiscal year.

10. Bonding of Officers

     Any  officer  shall  give  the  Corporation  a bond at the  expense  of the
Corporation,  if required to do so by the Board of Directors, in such sum and in
form and with security  satisfactory to the Board, for the faithful  performance
of the duties of his or her office and the  restoration to the  Corporation,  in
case of his or her death,  resignation,  retirement,  or removal from office, of
all books, papers, vouchers, money and other property of whatever kind belonging
to  the   Corporation   in  his  or  her   possession   or  under   his  or  her
control.<F185>  

11.<F96> Delegation of Powers

     In case of the absence or disability of any officer of the Corporation,  or
for any other  reason  deemed  sufficient  by a majority  of the whole  Board of
Directors,  the Board may  delegate  any or all of the  powers or duties of such
officer to any other officer, or to any director, for the time being.


                      SECTION IX - CAPITAL STOCK<F11>  

1.  Amount

     The total number of shares of stock which the  Corporation is authorized to
issue is thirteen million  (13,000,000)  shares divided into three classes:  one
class  designated  as Class A common  shares shall  consist of six million seven
hundred thousand  (6,700,000) shares,  $1.00 par value per share and with voting
rights,  another class designated as Class B common shares shall consist of five
million three hundred thousand (5,300,000) shares, $1.00 par value per share and

                                       27

<PAGE>80

without  voting  rights,  and another class  designated as Class C common shares
shall  consist  of one  million  (1,000,000)  shares,  $1.00 par value per share
without voting rights.<F208><F219>  

2.  Eligible Stockholders

    (a) Class A Stock

         (i) The shares of Class A stock shall be issued only to persons (1) who
are officers or  employees of  the  Corporation or of a  subsidiary  eighty (80)
percent or more of whose stock is owned by the  Corporation and (2) who  possess
such  other  qualifications as the  Board of  Directors shall  from time to time
prescribe by  resolution  (all such officers and employees  being hereinafter in
this Section IX referred to as "officers and employees of the  Corporation") and
to a trustee under a stock bonus plan of the Corporation.<F136>  

         (ii) Except  as provided  in Sections V and  VIII of these  By-Laws, in
respect of  qualifications  of directors  and  officers,  no officers  and<F137>
employees of the Corporation  shall be obligated or required to subscribe for or
own any stock of the  Corporation;  and the subscription or failure to subscribe
for any shares of stock of the  Corporation  shall in no way affect or prejudice
the position,  status,  tenure,  continued  employment,  or  advancement  of any
officer or<F138> employee.

                                       28

<PAGE>81

    (b) Class B Stock

         (i) The  Class B  stock shall be  issued only  in exchange for  Class A
stock (A) to officers or employees of the Corporation upon retirement because of
age or disability, or (B) upon  the  death  of  officers  or  employees  of  the
Corporation,  to the estates of such officers or employees, to the dependents of
such  officers or  employees,  or to persons who are the natural  objects of the
bounty of such officers or employees:  Provided, That death occurs (1) while the
officers or employees  are in the service of the  Corporation  or on military or
disability  leave,  or (2)  within 90 days  after  retirement  because of age or
disability.<F122>  

         (ii) No person  shall be obligated  or required to accept Class B stock
in exchange for Class A stock.

         (iii) Any person qualified under sub-paragraph (b)(i)  above to receive
Class B stock in exchange for Class A stock who elects to exercise such right of
exchange  shall so notify the  Secretary  of the  Corporation  in writing at the
following times:

              (A) In the  case of  an  officer or  employee of  the  Corporation
entitled to exchange  Class A stock for Class B stock  upon  retirement,  within
ninety (90) days  after  retirement,  and  in  the case  of  anyone  entitled to
exchange Class A stock for Class B stock  upon the death of a retired officer or
employee,  within one  hundred eighty (180) days after the death of such officer
or employee;

                                       29

<PAGE>82

              (B) In the case of anyone entitled to  exchange  Class A stock for
Class B stock upon the death of an officer or employee of the Corporation  while
in the service of the Corporation or on  military  or disability  leave,  within
one hundred (180) days after such death.<F123>  

     PROVIDED,  however,  that  with  respect  to an  exchange  involving  stock
distributed to a qualified  person under a stock bonus plan of the  Corporation,
the  aforesaid  ninety  (90) day and one  hundred  and eighty  (180) day periods
<F124>  for notification  shall begin to run upon  distribution of stock by  the
trustee of said plan.<F61>

         (iv) In  the event that a holder of Class A  stock elects to exercise a
right  to  exchange  such stock  for Class B  stock  and  that at  such time the
Corporation does not  have  available  authorized  Class B  stock  with which to
effectuate such exchange,  said  holder of Class A stock shall be so informed by
the  Corporation  and such Class A  stock may be retained by the holder  thereof
until  receipt of notification  from the  Corporation  that  Class B stock is so
available.   Upon  receipt of  such  notification  from  the  Corporation,   the
exchange shall promptly be effected:   Provided,  That nothing  contained herein
shall  preclude  such  holder  of  Class  A  stock  prior  to  receipt  of  such
notification  from the  Corporation from  tendering any or all of such shares of
Class A stock (A) to the  Corporation for  purchase  by  it in  accordance  with
Paragraph  7  of  this  Section  or (B) for  purchase  in  accordance  with  the
provisions of  the Stock  Purchase and  Transfer Plan of the Corporation.<F125>
  

                                       30

<PAGE>83

    (c) Class C Stock

     The Class C common stock of the  Corporation may be issued only in exchange
for Class A stock to  officers  and  employees  of any  subsidiary  corporation,
eighty (80) percent or more of whose stock is owned by the Corporation or to the
officers  and  employees  of the  Corporation  assigned  to  such  a  subsidiary
corporation,  upon the  disposition of that  subsidiary or upon reduction of the
Corporation's stock ownership to less than eighty (80) percent.  The exchange of
Class A stock  for Class C stock  shall be at the  option  of such  officer  and
employee and shall be on a share for share basis.  An election to exercise  such
right of exchange shall be made by so notifying the Secretary of the Corporation
in  writing  by the  later of July 19,  1986,  or  ninety  (90)  days  after the
disposition or reduction.

     Any  holder  of Class C stock  may at any time,  by  written  notice to the
Secretary  of the  Corporation,  tender  any or all  shares of such stock to the
Corporation for purchase by it. The Board of Directors may accept or reject such
tender,  in whole or in part;  and if it accepts the tender or any part thereof,
the  Corporation  shall purchase the shares of stock so accepted at the price in
effect for purchase and sale of shares of Class A stock of the Corporation under
the  Stock  Purchase  and  Transfer  Plan of the  Corporation.  If the  Board of
Directors rejects such tender in whole or in part, the shares may be transferred
to any  person  whomsoever,  subject,  however,  to a  continuing  right  of the
Corporation  to purchase  any and all of said  shares in the event that,  and at
such times as, any or all of such shares are  presented  for  transfer,  and the
price payable by the  Corporation  shall be the price in effect for the purchase
and  sale of Class A stock of the  Corporation  under  the  Stock  Purchase  and
Transfer Plan of the Corporation. Except as provided above, no shares of Class C
stock may be transferred or pledged  without the written consent of the Board of
Directors.

     The Corporation  shall have the right to redeem from the holder thereof all
or any part of the  outstanding  shares of Class C stock (a) one (1) year  after
the death of the officer or employee,  or (b) ninety (90) days after the officer
or  employee  has held the Class C stock for the number of years equal to his or
her  years  of  service as an officer or  employee of  the  Corporation  or  the

                                       31

<PAGE>84

the  subsidiary   company  while  the  subsidiary was owned at least eighty (80)
percent by the  Corporation,  whichever  shall first occur.  Prior to exercising
such right of redemption, the Corporation shall notify the holder of the Class C
stock by written notice to the address of such holder as it appears on the stock
books of the Corporation and shall give the holder the opportunity to tender the
shares to the  Corporation  in accordance  with the previous  paragraph.  If the
holder  fails to tender the shares,  the  Corporation  may exercise the right to
redeem the outstanding shares of Class C stock at a price per share equal to the
book value per  outstanding  share at the close of the next  preceding  calendar
year, as determined by independent  auditors,  and the said holder shall have no
further rights, privileges, or powers in respect of such stock.<F204>  

    (d) Transfer on Death<F221>  

     Notwithstanding  any  provision  of this  Paragraph  2 of Section IX to the
contrary,  any holder of shares of Class A,  Class B, or Class C stock  shall be
entitled to hold such shares in  transfer-on-death  ("TOD") form pursuant to the
provisions of Chapter 8 of Part III, Title 12 of the Delaware Code ("Uniform TOD
Security Registration Act") subject to such conditions as the Board of Directors
may  establish  by  resolution   from  time  to  time  and  in  accordance  with
registration procedures to be adopted by the Secretary of the Corporation.  Upon
receipt of (i) an  affidavit  of the  personal  representative  of the  deceased
owner's  estate or such  other  proof of death of the  deceased  owner as may be
satisfactory to the Secretary of the Corporation,  and (ii) satisfaction of such
other requirements as the Corporate  Secretary may establish,  shares of Class A
stock,  Class B stock, or Class C stock  transferred upon the death of the owner
pursuant to TOD  registration  shall be  registered in the name of the surviving
beneficiary(ies). Shares of any class of the Corporation's stock received by any
person   as  a   surviving   beneficiary   (or   the   surviving   beneficiary's
representatives, if applicable) under a TOD registration of such shares shall be
subject to the provisions of the Corporation's  Certificate of Incorporation and
By-Laws in the same  manner as if such  shares had been  received by such holder
under a will or under the laws of descent and distribution. Without limiting the
generality  of the foregoing  sentence,  any such shares shall be subject to the
Corporation's  redemption  or  repurchase  rights  applicable  to  the  personal

                                       32

<PAGE>85

representative  of any  deceased  holder  of the  Corporation's  stock or to any
recipient of the  Corporation's  stock under a will or under the laws of descent
and distribution.


3.  Consideration for Class A Stock

     The Class A stock  shall be issued  for money  only,  at such  price as the
Board of  Directors  may from time to time  prescribe by  resolution,  except as
issued   pursuant   to  the   provisions   of  a   stock   bonus   plan  of  the
Corporation.<F62>  

4.  Rate of Exchange of Class B Stock

     The  exchange  of Class A stock for  Class B stock  shall be on a share for
share basis.<F126>  

5.  Form of Certificates

     The  certificates  of stock of the  Corporation  shall, as to each class of
stock,  be  numbered  consecutively  and  shall be  entered  in the books of the
Corporation as they are issued. Each certificate shall exhibit the holder's name
and the number of shares of stock  represented  thereby,  and shall be signed by
the President or a Vice-President,  and by either the Secretary,  the Treasurer,
the Assistant Secretary or the Assistant Treasurer.

6.  Transfer of Stock

     (a) Except as provided in<F64>  Paragraph 7 of this Section and in Sections
X and XI,<F16> no shares of Class A and Class B<F65> stock may be transferred or
pledged without the written consent or  authorization  of the Board of Directors
or of  such  officer  as  may be  designated  by it to  grant  such  consent  or
authorization.

                                       33

<PAGE>86

     (b) All transfers of stock of the Corporation  shall be made upon its books
by  the  person  named  in  the  certificate  or  by  his  lawfully  constituted
representative,  and upon surrender of the  certificate  for  cancellation.  For
purposes of this Paragraph 6(b) and Article IV, Section 1A,  Paragraph 16 of the
Corporation's  Certificate of  Incorporation,  a transfer of stock registered in
TOD form that occurs upon the death of the holder  thereof shall be deemed to be
made "by the person named in the certificate," provided that the Corporation has
received an  affidavit of the personal  representative  of the deceased  owner's
estate or such other proof of death of the deceased owner as may be satisfactory
to the Secretary of the Corporation.<F222>  

     (c) The Corporation  shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof,  and  accordingly  shall
not be bound to recognize  any  equitable or other claims to or interest in such
shares on the part of any person,  whether or not it shall have express or other
notice thereof, save as expressly provided by the laws of Delaware.

7.  Purchase of Class A and Class B<F65> Stock by Corporation

     (a) Any holder of Class A<F66> stock may at any time, by written  notice to
the  Secretary  of the  Corporation,  tender  any or  all of his  shares  to the
Corporation for purchase by it. The Board of Directors may accept or reject such
tender,  in whole or in part;  and if it accepts the tender or any part thereof,
the  Corporation  shall purchase the shares of Class A<F66> stock so accepted at
the price provided for in sub-paragraph (a) of Paragraph 9 hereof, determined as
of the date of presentation for transfer.<F18>

    (b) In the event of (i)<F19>  the  resignation,  retirement,  dismissal  or
death of any officer or employee of the Corporation who owns any shares of Class

                                       34

<PAGE>87
 
A<F66> stock thereof or (ii) the distribution of shares of Class A<F66> stock of
the Corporation by a trustee under any stock bonus plan of the Corporation,<F20>
the  Corporation  shall have the exclusive  right,  subject to the provisions of
sub-paragraph  (b) of  Paragraph  2 of this  Section  and to the  provisions  of
Section X and Section XI of the  By-Laws,<F21>  for a period of ninety (90) days
from the occurrence of such  event<F22> to purchase any or all such Class A<F66>
stock so owned or so  distributed.<F23>  If the  Board of  Directors  elects  to
exercise such right of purchase, it shall notify the stockholder or his personal
representative   or  the   distributee   under  a  stock   bonus   plan  of  the
Corporation<F24>  within said period of ninety (90) days by written  notice sent
to the stockholder or his representative at the address of the stockholder as it
appears  on the stock  books of the  Corporation  and by  written  notice to the
distributee  at his address as it appears on the  records of the  Administrative
Committee established under the stock bonus plan,<F127> and within not more than
one (1) year after such exercise of its right to purchase the Corporation  shall
pay the said stockholder or his representative or the said  distributee<F25> the
applicable price per share specified in sub-paragraph (a) of Paragraph 9 of this
Section,  determined as of the date of such separation or such distribution<F26>
and with interest at the rate of six  percentum  (6%) per annum from the date of
such purchase until the date of payment. Upon the exercise by the Corporation of
its  right  to  purchase  any  such  shares  of  Class  A<F66>  stock,  the said
stockholder or his  representative  or the said  distributee<F27>  shall have no
further  rights,  privileges,  or powers in respect of such stock. If payment of
the purchase price for such shares is not made by the Corporation at the time of
such purchase,  the Corporation  shall within a reasonable time thereafter issue
to the stockholder or his representative or the distributee<F28> a note or other
evidence  of  indebtedness  fixing  the  amount  to be paid  by the  Corporation
pursuant  to  sub-paragraph  (a) of  Paragraph  9 of this  Section  and  bearing
interest at the rate of six percent  (6%) per annum from the date of purchase to
the date of payment. If the Board of Directors elects not to exercise such right

                                      35

<PAGE>88

of  purchase  within  the said  period of ninety  (90)  days,  the shares may be
retained by or transferred to any person  whatsoever,  subject to the continuing
right of the  Corporation  to  purchase  all or any of said  shares in the event
that, and at such times as, any or all of such shares are presented for transfer
to any other person,  and the price payable by the Corporation shall be<F29> the
applicable price per share specified in sub-paragraph (a) of Paragraph 9 of this
Section,30 determined as of the date of presentation for transfer.<F31>

     (c) The  Corporation  shall have the right to purchase  Class  A<F56> stock
through  the  Stock  Purchase  Plan for the  purposes  set forth in  Section  X,
Paragraph 4, of the By-Laws.<F51>

     (d) Any holder of Class B stock may at any time,  by written  notice to the
Secretary of the  Corporation,  tender any or all his shares to the  Corporation
for purchase by it. The Board of Directors may accept or reject such tender,  in
whole or in  part;  and if it  accepts  the  tender  or any  part  thereof,  the
Corporation  shall  purchase  the shares so  accepted at a price  determined  in
accordance  with the provisions of  sub-paragraph  (b)(i) of Paragraph 9 hereof.
Where shares are tendered by several  stockholders,  the Board of Directors  may
accept all or any part thereof as it deems proper,  either in the  chronological
order of tender, or according to a percentage of all shares tendered,  or by any
combination  of these  methods,  at its  discretion.  If the Board of  Directors
rejects such tender in whole or in part,  the shares may be  transferred  to any
person  whatsoever,  subject  to the  continuing  right  of the  Corporation  to
purchase any or all of said shares in the event that,  and at such times as, any
or all of such shares are presented  for transfer to any other  person,  and the
price  payable  by the  Corporation  shall be a price  per share  determined  in
accordance with the provisions of  sub-paragraph  (b)(ii) of paragraph 9 hereof,
determined as of the date of presentation for transfer.<F67>  

                                       36

<PAGE>89

8.  Redemption of Class B Stock by the Corporation

     The  Corporation  shall have the right at any time (a) after the expiration
of eight (8) years from the date of  retirement of an officer or employee or one
(1) year after the death of such retired  officer or employee,  whichever of the
two periods is longer,  to redeem from the holder thereof all or any part of the
outstanding  shares of Class B stock issued to such retired officer or employee,
and (b) after  the  expiration  of eight (8) years  from the date of death of an
officer or employee (i) while in the service of the  Corporation  or on military
or disability  leave or (ii) who dies within ninety (90) days after  retirement,
to redeem from the holder thereof all or any part of the  outstanding  shares of
Class B stock issued in exchange for Class A stock to the estate, dependents, or
persons who are the natural  objects of the bounty of such  employee or officer.
If the  Corporation  elects to exercise  such right of  redemption,  it shall so
notify the holder of the Class B stock by written  notice sent to the address of
such holder as it appears on the stock books of the  Corporation  and, upon such
exercise by the Corporation of its right to redeem any of such shares of Class B
stock,  the said holder shall have no further rights,  privileges,  or powers in
respect of such  stock.<F128> The Corporation  shall make payment for the shares
redeemed at a price per share  determined in accordance  with the  provisions of
sub-paragraph (b)(iii) of Paragraph 9 hereof, as of the date of redemption.<F68>

9.  Purchase Price

    (a) Class A<F66> Stock

     The  price to be paid by the  Corporation  for any  shares of Class A <F66>
stock acquired by it pursuant to a tender under  Subparagraph (a) of Paragraph 7
of this  Section,  or pursuant to notice or demand  under  sub-paragraph  (b) of
Paragraph 7 of this Section shall be as follows:

                                       37

<PAGE>90

         (i)  During  the  period ending December  31, 1950, the book  value per
outstanding  share  for the next  preceding  calendar  year,  as  determined  by
independent auditors.

         (ii) From  and after  January 1, 1951,  the book value per  outstanding
share at the close of<F32> the next  preceding  calendar  year, as determined by
independent  auditors:   PROVIDED,  That  if  the  book  value  per  outstanding
share,<F33> as so determined,  exceeds ten times the average annual net earnings
per outstanding  share,<F34> if any, of the Corporation (after taxes,  including
income taxes) for the next  preceding  three  calendar  years,  as determined by
independent  auditors  then the price  shall be the  average of such two figures
(book value and ten times average net earnings) per outstanding share.

    (b) Class B Stock

         (i) The price to  be paid by  the Corporation for any shares of Class B
stock acquired by it  pursuant to tender under  Subparagraph  (d) of Paragraph 7
hereof shall be:

              (A) The price in effect for purchase and sale of shares of Class A
stock of the Corporation  under  the  Stock  Purchase and  Transfer  Plan of the
Corporation, if tender is made prior to the  time  that  the  Corporation  shall
first have  the right  under  Paragraph  8 hereof to redeem  such  Class B stock
from the holder thereof; or

              (B) The price  determined  for the  purchase of  Class A  stock in
accordance with the provisions of sub-paragraph  (a) of  Paragraph 9 hereof,  if
tender is made at a time  when the Corporation shall  first have the right under

                                      38

<PAGE>91

Paragraph 8 hereof to redeem such Class B stock from the holder thereof. <F129>

         (ii) Except as provided for in Subparagraph  (iv) hereof,  the price to
be  paid by  the  Corporation for any  share  of Class B  stock  acquired  by it
pursuant  to the  exercise of its  right under  sub-paragraph (d) of Paragraph 7
hereof after rejection of tender shall be:

              (A) The  price in  effect  for the  purchase and sale of shares of
Class A stock of the  Corporation  under the Stock  Purchase  and  Transfer Plan
of the Corporation,  if the stock is presented  for  transfer  prior to the time
that the  Corporation  shall  first have  the right under  Paragraph 8 hereof to
redeem such Class B stock from the holder thereof; or

              (B) The  price  determined  for  the purchase of  Class A stock in
accordance with the provisions  of sub-paragraph  (a) of Paragraph 9  hereof, if
the stock is  presented for  transfer at a time when the Corporation shall first
have the right under  Paragraph 8  hereof  to redeem  such  Class B  stock  from
the  holder thereof.<F130>  

         (iii) Except as provided for in sub-paragraph (iv) hereof, the price to
be paid by the  Corporation for any share of Class B stock acquired  by it under
Paragraph 8 hereof shall be a price determined in accordance with the provisions
of sub-paragraph (a) of Paragraph 9 hereof.

         (iv) If the  Corporation shall refuse a  tender of  Class B stock  made
pursuant to the provisions of sub-paragraph (d) of Paragraph 7 hereof within six

                                      39

<PAGE>92

months  prior to the time at which the  Corporation  shall  first have the right
under  Paragraph 8 hereof to redeem such Class B stock from the holder  thereof,
<F131> the price to be paid by the Corporation  upon acquisition of such Class B
stock  either  under the  provisions  of  sub-paragraph  (d) of  Paragraph  7 or
Paragraph 8 hereof shall be the price in effect at the time of  acquisition  for
the  purchase  and sale of Class A stock under the Stock  Purchase  and Transfer
Plan of the Corporation.<F69>

10. Fractional Shares

     No  fractional  shares  of<F70>  stock  may be  subscribed  for,  issued or
exchanged,  except as the Board of Directors may by  resolution  determine to be
necessary  or  advisable  in the  effectuation  of a  stock  bonus  plan  of the
Corporation.<F35> The Board of Directors may, in its discretion, provide for the
payment  of a sum of  money  to  cover  fractional  interests  arising  from  an
exchange, redemption or acquisition of stock by the Corporation.

11. Dissolution or Distribution of Assets

     In the event of dissolution  of, or any  distribution of the assets of, the
Corporation,  the  holders  of Class A stock,  Class B stock,  and Class C stock
shall  be  entitled  to  participate  ratably,  share  for  share,  and  without
preference of any class over the others.<F205>  

12. Lost Certificate

     If a certificate of stock of the Corporation be lost or destroyed,  another
certificate of the same tenor and for the same number of shares may be issued in
its  stead,  upon  proof  of  such  loss or  destruction  and  the  giving  of a
satisfactory  bond  of  indemnity  in an  amount  sufficient  to  indemnify  the
Corporation against any claim:  PROVIDED,  That the Board of Directors may waive
the requirement of a bond if in its judgment it is proper to do so.

                                       40

<PAGE>93

                SECTION X - DISTRIBUTION AND MARKETING OF STOCK<F36>

1.  Stock Transfer in Conformity with Section

     For all  transfers  of  Corporation  stock  made  in  conformity  with  the
requirements  of this Section,  approval by the Board of Directors  shall not be
required.

2.  Stock Purchase and Transfer Plan

     The Board of Directors  shall set up a Stock  Purchase  and  Transfer  Plan
which shall contain the following features:

    (a) Operation by Trustee

     The Plan  shall be  operated  in  accordance  with the  provisions  of this
Section by a Trustee,  who shall be  designated  by the Board and shall serve at
the  pleasure  of the  Board.  The Board  may  designate  one or more  Assistant
Trustees with powers to perform any of the Trustee's duties herein prescribed in
the absence of the Trustee.<F198>  

    (b) Eligibility for Participation

     Except as  otherwise  provided  in this  Section,  officers  and  employees
eligible to  participate  shall be persons (1) who are  officers or employees of
the  Corporation or of a subsidiary  corporation  eighty (80) percent or more of
whose  stock  is  owned  by the  Corporation  and (2)  who  possess  such  other
qualifications  as the Board of Directors  shall from time to time  prescribe by
resolution (all such officers and employees being  hereinafter in this Section X
referred to as "officers and  employees").<F140>  The term  "stockholder,"  used
without  qualification,  means any holder of Class A stock<F66> whether he is an
officer or<F138> employee or not.

                                       41

<PAGE>94

    (c) Stock Purchase Fund

     The  Board of  Directors  shall  set up a Stock  Purchase  Fund  under  the
direction  and  control of the  Trustee.  The Trustee is  empowered  to select a
depository  with which this fund is to be deposited.  Withdrawal of amounts from
the account with the depository may be made upon the signature of the Trustee or
his duly designated agent.

    (d) Functions of Stock Purchase Fund

     The functions of the Stock Purchase Fund shall be:

         (i) To accept deductions from the weekly or biweekly salary of eligible
officers and<F137>  employees  authorizing  deductions for the purchase of Class
A<F66> stock of the  Corporation.  The deducted amounts shall remain in the Fund
to the credit of the  respective  officers  and<F137>  employees  until they are
applied to the purchase of stock. In the event of termination of employment, any
amount in the Stock Purchase Fund to the credit of the officer or<F138> employee
shall be refunded.

         (ii) To  maintain  a  list  of  "offers to buy"  from eligible officers
and<F137> employees.

         (iii) To  purchase  from  stockholders    Class A<F66>   stock  of  the
Corporation,  so far as  available,  up to the amount  sufficient to satisfy the
claims of those  who (1) have  deposited  funds  with the Fund  through  payroll
deductions and (2) have listed with the Trustee "offers to buy."

         (iv) To purchase from the Corporation  such treasury Class A<F66> stock
or unissued Class A<F66> stock as the Board of  Directors  may  authorize  to be

                                       42

<PAGE>95

purchased,  for the  purpose  of  satisfying  the  demands of those who (1) have
deposited  funds with the Fund through  payroll  deductions  and (2) have listed
with the Trustee "offers to buy".

         (v) To sell  stock to  the  Corporation for  the purposes  set forth in
Section X, Paragraph 4, of the By-Laws.<F52>  

    (e) Priorities in Purchase and Sale of Stock

     The Trustee shall observe the following  rules as to priorities in purchase
and distribution of Class A<F66> stock:

         (i) When  the number of shares which can be  purchased with accumulated
funds from payroll  deductions  and by calling upon  officers and  employees who
have submitted  "offers to buy" exceeds the  total of shares which are available
to the Fund for  distribution,  the claims of those  who have contributed  funds
through payroll  deductions shall be satisfied before satisfaction of any of the
claims of those who have submitted "offers to buy".

         (ii) When the number of shares offered to the Fund by stockholders plus
the  shares  subject to  purchase  by  the Fund  under the  optional  agreements
provided for in Section XI  of these  Bylaws  exceeds the  number of shares  for
which  there is a demand  through  payroll  deductions and  "offers to buy," the
Trustee  shall  apply  such funds  as  are available to  purchase  stock  in the
following  order of priority:

              (aa) Such shares of  stock  held  by  a   former  officer or<F138>
employee, or the heirs or legatees of a former officer or <F138> employee, whose
employment  has been  terminated  for  three  years or more and  whose  stock is
subject to purchase by the Fund  pursuant to the  agreement set forth in Section
XI of these Bylaws.

                                       43

<PAGE>96

              (bb) All  other  stock  offered to the  Fund  for  purchase in the
chronological order in which such offers have been received  in  writing  by the
Trustee: PROVIDED,  however,  that,  whenever the Trustee has unsatisfied offers
of stock from two or more stockholders, not more than three thousand two hundred
(3,200) shares  may be  purchased from a  stockholder  having a higher  priority
until three thousand two hundred (3,200) shares (or all shares offered,  if less
than three thousand  two hundred  (3,200)) have  been  purchased  from each such
stockholder having  a lower  priority.  Where  two or more offers  of stock  are
received  simultaneously  by the Trustee, the order shall be determined  by lot.
<F209>  

    (f) Price of Class A<F56> Stock

     Not more than  70<F80> days and not less than 15 days prior to (1) the date
of record for voting at the regular annual meeting of  stockholders  and (2) the
date which follows such record date by six months,  the Board of Directors shall
determine  the price of the Class A<F56> stock for purchase and sale by the fund
during the six-month  periods  beginning with the two dates specified above. The
price set shall not be below  the book  value per share as  determined  from the
most  recent  period  financial  statement  available  to the  Board at the time
determination  is made.  The price  shall be the same for stock  purchase by the
Stock  Purchase Fund and for stock sold by the Fund.  Announcement  of the price
shall be made to all stockholders and eligible officers  and<F137>  employees at
least one week<F112> in advance of the effective date.

                                       44

<PAGE>97
        
    (g) Issuance of Class A<F56> Stock to Fund

     The Board of  Directors  shall  determine  twice each year  whether to make
available  treasury or unissued  Class A  stock<F56>  for  purchase by the Stock
Purchase  Fund  and,  if it  decided  to make  such  stock  available,  it shall
determine  the  maximum  number of  shares to be sold to the Fund.  The price at
which such stock shall be sold shall be the same as the price fixed for purchase
and sale of stock by the Stock Purchase Fund.<F120>

    (h) Settlement Dates

     On the dates designated below, money accumulated in the Stock Purchase Fund
shall  be  applied  to the  purchase  of Class A  stock<F66>  in the name of the
officers and<F137> employees  authorizing payroll deductions for the purpose. As
of these dates the Trustee of the Fund shall also make  available,  to those who
have submitted "offers to buy," stock to satisfy these offers to the extent that
such stock is available to the Fund. Stock  certificates shall be issued to each
officer or<F138> employee for shares then fully paid through payroll  deductions
or by  satisfaction of "offers to buy" as soon as possible after each settlement
date.  The  settlement  dates are the days next  preceding each of the following
dates:

         (i) Record date  fixed prior to  (a)  regular  stockholders'  meetings:
(b) special stockholders' meeting; and (c) payment of dividends.

         (ii) Date  six  months  after  record  date  of  regular  stockholders'
meetings.

    (i) Payroll Deductions for Purchase of Stock

     Eligible officers and<F137> employees may, upon written authorization, have
deducted from their  salaries and paid into the Stock  Purchase Fund  designated
amounts each pay period to be applied on purchase of Class A  stock<F66>  of the
Corporation, subject to the following rules:

                                       45

<PAGE>98

         (i) Limitations on Amount

     Deductions from salary for such purchase shall not be in excess of 80 times
the  current  price  per  share  and  not  less  than  one  dollar  ($1.00)  per
week.<F210>  

         (ii) When Deductions Begin

     Deductions  from payroll for the purpose of this  subparagraph  shall begin
with  salary  for  the  first  full  pay  period<F156>   after  receipt  of  the
authorization,  except  that  deductions  from  payroll  authorized  within  the
forty-two<F202>  days  preceding  the close of the then current Plan shall begin
with salary for the first full week of the succeeding Plan period. <F152>

         (iii) Change in Amount of Authorized Deduction

     Any  eligible  officer  or<F138>  employee  who has  authorized  a  payroll
deduction  for the  purposes of this  subparagraph  may increase or decrease the
amount of the deduction  authorized,  subject to the  limitations of subdivision
(i) of this  subparagraph,  by giving written notice to the Trustee of the Stock
Purchase Fund.  Such notice shall take effect with salary for the first full pay
period<F156> after submission of notice,  except that if such notice is received
within the forty-two<F202>  days preceding the close of the then current Plan it
shall take  effect with  salary for the first full week of the  succeeding  Plan
period.<F153>

                                       46

<PAGE>99

         (iv) Withdrawal of Authorization

     Any  eligible  officer  or<F138>  employee  who has  authorized  a  payroll
deduction for the purposes of this  subparagraph may withdraw his  authorization
at any time by giving  written notice to the Trustee of the Stock Purchase Fund.
Such notice  shall take  effect with salary for the first full pay  period<F156>
after  submission of notice.<F47>  Upon request,  and with two weeks' notice,  a
person  withdrawing  from the Plan may have  refunded any amount  deducted  from
salary which has not at that time been applied to the purchase of stock. <F82>

         (v) No Fractional Shares

     No fractional  shares shall be purchased or distributed.  On any settlement
date,  the Stock Purchase Fund shall refund to any office  or<F138>  employee on
request any amount remaining after application of the deductions to the purchase
of full shares of stock.

    (j) "Offers to Buy"

     Eligible  officers   and<F137>   employees  may  at  any  time  before  the
forty-second<F202>  day  preceding  the close of the then current Plan submit to
the  Trustee   "offers  to  buy"  shares  of  the  Class  A  stock<F66>  of  the
Corporation.<F48>  Such  "offers  to  buy"  may be  either  (a)  limited,  to be
satisfied at the price  currently  established,  in which case they shall become
void at any time the  price of the stock is  changed,  or (b)  unlimited,  to be
satisfied at any price which may prevail at the time stock becomes available for
purchase  from the Fund,  in which case the offer shall  remain in effect  until
withdrawn or satisfied.

     Stock  may be  sold by the  Trustee  in  satisfaction  of  "offers  to buy"
whenever he has stock  available for sale after the  satisfaction  of all claims
arising from those who have authorized payroll deductions for purchase of stock:
PROVIDED, however, that no treasury or unissued stock shall be issued to satisfy

                                       47

<PAGE>100

such "offers to buy" except at the following  settlement dates: (1) the day next
preceding the record date for the regular annual  stockholders'  meeting and (2)
the day next preceding the date six months after such record date.

         (i) Filing

     "Offers to buy" must be  submitted in writing in a form  prescribed  by the
Board of Directors and filed with the Trustee.

         (ii) Records

     The  Trustee  shall keep a record of "offers to buy" filed with him,  which
shall  show the name,  date of  filing,  terms of offer,  and date and extent of
satisfaction  or date of withdrawal or decrease.  He shall assign to each "offer
to buy" a listing  number,  which  shall  show the time  sequence  in which such
"offers to buy" have been  filed.  When two or more  offers are  received at the
same time, priority among them shall be determined by lot.

         (iii)    Obligations Entailed

     "Offers to buy" when filed,  shall constitute a binding obligation upon the
person  filing the same to execute the  purchase at any time when called upon by
the Trustee to do so. If the offeror does not then execute the purchase,  all of
his  "offers  to buy"  shall  be  canceled  by the  Trustee  and  the  offeror's
subsequent  "offers to buy" shall not be accepted  prior to the beginning of the
next Plan period.<F157>  

                                       48

<PAGE>101

         (iv) Limitations on Amount

     "Offers to buy" may be satisfied by the Trustee,  if stock is available for
each  eligible  officer and employee  without  limitation  in amount:  PROVIDED
however,  that shares made  available to the Trustee  from  unissued or treasury
stock may not be sold to any one  individual in excess of that amount  necessary
to permit  such  individual  to purchase a total of three  thousand  two hundred
(3,200)  shares  of  stock  through  "offers  to  buy"  in  any  period  of  six
months.<F211>  

         (v) Withdrawal or Decrease in Amount

     Any  person  who has filed an "offer to buy"  may,  on two  weeks'  written
notice, withdraw such offer or decrease the amount thereof.<F49>  

         (vi) Increase in Amount

     An  "offer to buy" may not be  increased  in  amount,  but any  person  who
already has filed an "offer to buy" may file one or more  additional  "offers to
buy" up to the applicable limits.  Allotments of stock shall not be made to such
additional offer until the first offer has been satisfied.

         (vii) Fulfillment

     Offers to buy" shall be  satisfied  in order of priority  based on the date
when the "offer to buy" is listed according to the following system:

                                       49

<PAGE>102

     When the  Trustee  has  available  shares  for sale to makers of "offers to
buy," he shall allot to each "live"  listing  number in  numerical  sequence one
hundred and sixty (160) shares,  or the full amount of the "offer to buy" if the
"offer" is for fewer than one hundred and sixty (160) shares,  until all listing
numbers have received  their  allotments or until all the available  shares have
been  allotted.  If  additional  shares  for  allotment  remain,  they  shall be
allocated  in the same  manner,  one  hundred  and sixty  (160) or fewer (if the
unfulfilled  "offer to buy" is less than one hundred  sixty (160)  shares  being
allotted to each number in rotation until all available  shares are sold.  After
each such  allotment the "live" listing shall be  reconstituted,  beginning with
the first "offer to buy" that was not satisfied in the previous  allotment,  and
the same procedure followed on subsequent allotments.<F212>"  

    (k) Place and Sale of Stock

     All  stock  under  this  Plan  is to be  issued,  sold,  and  paid  for  in
Washington,  D.C.  No notice of  participation  in the Plan is  effective  until
received and accepted at the principal office of the Corporation.

3.  Register of Supplemental Bids

     The  Trustee of the Stock  Purchase  and  Transfer  Plan  shall  maintain a
Register of Supplemental  Bids. In this Register shall be entered bids for Class
A<F66> of the Corporation which have been communicated in writing to the Trustee
by eligible officers and<F137>  employees.  The Register shall show in the order
of receipt  the name of the  bidder,  the price at which he bid for  stock,  the
number of shares bid for,  and the date as of which the bid expires  (unless the
bid is open).  Any bid may be withdrawn  upon one week's  written  notice to the
Trustee.  The Register shall be open for  inspection at the principal  office of
the Corporation at all reasonable  hours to stockholders  and eligible  officers

                                      50

<PAGE>103

and<F137>  employees.  The Trustee  shall reply  promptly to mail  inquiries  of
stockholders and eligible officers and<F137> employees respecting the Register.

    (a) Stock Transfer Pursuant to Supplemental Bids

     Whenever the Trustee shall  certify that the Stock  Purchase Fund is unable
to absorb stock subject to purchase by the Fund pursuant to agreements  provided
for in Section XI of these  Bylaws,  or offered  for sale by  stockholders,  any
stockholder  may offer his stock in  satisfaction  of the  registered  bids, and
transfer shall be made upon the books of the Corporation from the offerer to the
bidder.

    (b) Priority in Execution

     When two or more bids at the same price have been registered,  bids at that
price will be satisfied in time order of their registration.

    (c) Annual Statement of Trustee

     The Trustee shall send once each year to all Class A<F56>  stockholders and
eligible  officers  and<F137>  employees a statement  of the manner in which the
system of  Supplemental  Bids will be operated and the conditions  which must be
met by those who wish to avail themselves of its use.

4.  Sale of Stock of the Corporation.

     (a)<F97> In the event the Board of Directors, during any six months' period
specified in Subparagraph  (f) of Paragraph 2 of this Section X, shall determine
that the orderly and  successful  operation  of the Stock  Purchase and Transfer
Plan  requires,  and  that  the  best  interests  of  the  Corporation  and  its
stockholders  and employees  will be served by, the purchase by the  Corporation
through the Stock Purchase Fund of the whole,  or any part, of the Class A <F66>

                                      51

<PAGE>104

stock of the Corporation,  which,  during such six months' period, is subject to
purchase by the Fund pursuant to agreements  provided for in Section XI of these
By-Laws or is offered for sale by stockholders,  but which the Fund is unable to
absorb  unless  purchased  by the  Corporation,  the  Trustee  shall sell to the
Corporation  all,  or such  part of,  the said  unabsorbed  stock as the  Board,
through its designated  officer,  shall notify the Trustee the Corporation  will
purchase, at the price determined pursuant to Subparagraph (f) of Paragraph 2 of
Section X for the  purchase  and sale of stock by the Fund  during  the said six
months' period.<F53> 

     (b) In the event that,  during any six months' period in sub-paragraph  (f)
of  Paragraph  2 of this  Section X, any Class A stock  offered  for sale by the
trustee under a stock bonus plan of the  Corporation  in order to effectuate the
purposes of such plan is not absorbed through the Stock Purchase Fund, including
purchases by the Corporation  pursuant to Subparagraph  (a) of this Paragraph 4,
the Trustee shall sell to the Corporation,  and the Corporation  shall purchase,
the stock so offered,  at the price determined  pursuant to sub-paragraph (f) of
Paragraph 2 of Section X for the  purchase  and sale of stock by the Fund during
the said six months' period.<F98>


                  SECTION XI - OPTIONAL AGREEMENTS FOR TRANSFER OF
           CLASS A<F66> STOCK ON TERMINATION OF EMPLOYMENT<F37><F223>

1.   The  Corporation shall, prior to January 1, 1998,  offer to all officer and
employee holders of Class A stock the option to execute the following agreement:

    Agreement  between The Bureau of National Affairs,  Inc., party of the first
part,  and  _____________,  holder of one or more shares of the Class A stock of
The Bureau of National Affairs, Inc., party of the second part:

                                       52

<PAGE>105

    In  consideration  of  mutual  advantages  accruing  therefrom,  the parties
hereby covenant and agree as follows:

     1. The party of the second part will,  within not more than three (3) years
of his or her separation from employment by The Bureau of National Affairs, Inc.
(herein called the  Corporation) or by a subsidiary  eighty (80) percent or more
of  whose  stock is owned by the  Corporation,  offer  all  Class A stock of the
Corporation  held by him or her to be  purchased  under the Stock  Purchase  and
Transfer  Plan set up pursuant  to Section X of the By-laws of the  Corporation.
Such offer or offers may be made at any time within the said three (3) years for
any part or all of the Class A stock so held.

     2. In the event  that the Stock  Purchase  Fund,  provided  for in the said
Plan, is unable to purchase any or all of the shares  offered,  the party of the
second part may, at that time, at his or her option,  accept  Supplemental Bids,
if any,  registered with the Trustee of the Plan. If such  Supplemental Bids are
not  accepted,  the party of the  second  part may  retain his or her shares for
later offers through the Stock Purchase and Transfer Plan,  including acceptance
of Supplemental Bids.

     3.  If at the  end of  three  (3)  years  after  termination  of his or her
employment,  the party of the second part still retains any Class A stock of the
Corporation,  she or he shall offer it forthwith for purchase  through the Stock
Purchase  Fund.  If the Stock  Purchase Fund is unable to purchase any or all of
the shares so  offered,  the  Trustee of the Plan shall so notify her or him and
she or he may  thereafter  retain such shares as have not been  purchased or may
dispose of them by accepting  Supplemental  Bids.  Upon receipt of  notification
from the Trustee that the Fund is able to purchase any part or all of the shares
then held,  the party of the second part shall,  within sixty (60) days from the
mailing of such  notification,  which  shall state the number of shares the Fund

                                       53

<PAGE>106

can  purchase  from the  stockholder,  present  such  shares to the  Trustee for
purchase by the Fund. A like  procedure  shall be followed until all shares held
by the party of the second part have been purchased by the Fund.

        
     4. If the party of the second part,  or his/her  heirs or legatees,  offers
any or all of  his/her  shares for sale  other  than as herein  specified,  this
agreement shall become null and void.

     5. This agreement shall be binding upon the heirs and legatees of the party
of the second part.

     6. Nothing  herein  contained  shall diminish the right of the party of the
second  part to  exchange  Class A stock  for  Class B stock of the  Corporation
pursuant to Paragraph 2(b) of Section IX of the By-laws.

     7. The  provisions of Paragraph 7(b) of Section IX of the By-laws shall not
apply to the party of the second part, or his/her heirs or legatees,  so long as
this agreement is in force and effect.

2.  The Corporation  shall,  on and after January 1, 1998,  offer to all officer
and  employee  holders  of Class A stock the  option to  execute  the  following
agreement:

     Agreement between The Bureau of National Affairs,  Inc., party of the first
part,  and  _____________,  holder of one or more shares of the Class A stock of
The Bureau of National Affairs, Inc., party of the second part:

     In  consideration  of mutual  advantages  accruing  therefrom,  the parties
hereby covenant and agree as follows:

                                       54

<PAGE>107

     1. The party of the second part will,  within not more than one (1) year of
his or her separation  from employment by The Bureau of National  Affairs,  Inc.
(herein called the  Corporation) or by a subsidiary  eighty (80) percent or more
of  whose  stock is owned by the  Corporation,  offer  all  Class A stock of the
Corporation  held by him or her to be  purchased  under the Stock  Purchase  and
Transfer  Plan set up pursuant  to Section X of the By-laws of the  Corporation.
Such  offer or offers  may be made at any time  within the said one (1) year for
any part or all of the Class A stock so held.

     2. In the event  that the Stock  Purchase  Fund,  provided  for in the said
Plan, is unable to purchase any or all of the shares  offered,  the party of the
second part may, at that time, at his or her option,  accept  Supplemental Bids,
if any,  registered with the Trustee of the Plan. If such  Supplemental Bids are
not  accepted,  the party of the  second  part may  retain his or her shares for
later offers through the Stock Purchase and Transfer Plan,  including acceptance
of Supplemental Bids.

     3.  If at  the  end  of  one  (1)  year  after  termination  of  his or her
employment,  the party of the second part still retains any Class A stock of the
Corporation,  she or he shall offer it forthwith for purchase  through the Stock
Purchase  Fund.  If the Stock  Purchase Fund is unable to purchase any or all of
the shares so  offered,  the  Trustee of the Plan shall so notify her or him and
she or he may  thereafter  retain such shares as have not been  purchased or may
dispose of them by accepting  Supplemental  Bids.  Upon receipt of  notification
from the Trustee that the Fund is able to purchase any part or all of the shares
then held,  the party of the second part shall,  within sixty (60) days from the
mailing of such  notification,  which  shall state the number of shares the Fund
can  purchase  from the  stockholder,  present  such  shares to the  Trustee for
purchase by the Fund. A like  procedure  shall be followed until all shares held
by the party of the second part have been purchased by the Fund.

                                       55

<PAGE>108

     4. If the party of the second part,  or his/her  heirs or legatees,  offers
any or all of  his/her  shares for sale  other  than as herein  specified,  this
agreement shall become null and void.

     5. This agreement shall be binding upon the heirs and legatees of the party
of the second part.

     6. Nothing  herein  contained  shall diminish the right of the party of the
second  part to  exchange  Class A stock  for  Class B stock of the  Corporation
pursuant to Paragraph 2(b) of Section IX of the by-laws.

     7. The  provisions of Paragraph 7(b) of Section IX of the by-laws shall not
apply to the party of the second part, or his/her heirs or legatees,  so long as
this agreement is in force and effect.


                   SECTION XII - BOOKS AND ACCOUNTS<F38>  

1.  Place

     The books,  accounts,  and records of the Corporation  shall be kept at the
main office of the Corporation in the City of Washington,  District of Columbia,
or at such other place or places  within or without the State of Delaware as may
from time to time be designated by resolution of the Board of Directors, but the
original or duplicate stock ledger shall be kept at the principal  office of the
Corporation in Wilmington, Delaware.

2.  Inspection

     The directors  shall  determine from time to time under what conditions and
regulations the accounts and books of the Corporation,  or any of them, shall be
open to the  inspection  of  stockholders,  subject to the rights of  inspection
granted to stockholders by law.

                                       56

<PAGE>109

                           SECTION XIII - CHECKS<F39>

     All  checks,  drafts,  orders for the  payment  of money,  and notes of the
Corporation  shall  be  signed  by such  officer  or  officers  as the  Board of
Directors may from time to time designate.

         
                     SECTION XIV - DIVIDENDS; RESERVES<F40>

1.  Dividends

     Dividends  may be  declared  by the Board of  Directors  at any  regular or
special meeting.  The holders of Class A stock, Class B stock, and Class C stock
shall  be  entitled  to  participate  ratably,  share  for  share,  and  without
preference of any class over the others in all dividends when and as declared by
the Board of Directors.<F206>  

2.  Reserves

     Before  declaration  of any dividend or any  distribution  of profits,  the
Board of  Directors  may set  aside  from  time to time out of the  funds of the
Corporation  available  for  dividends  such  sum or  sums as the  Board  in its
discretion  may think proper as a reserve fund for any proper  purpose,  and the
Board may alter or abolish any such reserve or reserves.


                       SECTION XV - DEFINITIONS<F41><F147>

     Except  as  the  context  may  otherwise  require,   the  unqualified  word
"stockholder"  as used in  these  By-Laws  shall  mean  the  holders  of Class A
<F66> stock of the  Corporation  and shall not include  holders of  Class B<F72>
stock or Class C<F207> stock of the Corporation.

                                       57

<PAGE>110

     As used in Sections IX, X and XI of these  By-Laws,  the terms  "separation
from  employment",  "dismissal"  and other terms of like import do not include a
lay-off of less than ninety (90) days' duration.<F148>  


                           SECTION XVI - NOTICES<F42>

1.  Form

     Whenever  under the  provisions of these  By-Laws  notice is required to be
given to any  stockholder,  director,  or officer,  it shall not be construed to
require  personal  notice,  but such notice may be given in writing by mail,  by
depositing  the same in the post  office or  letter-box  in a  postpaid,  sealed
wrapper, addressed to such stockholder,  director, or officer at such address as
appears  for him on the  books of the  Corporation,  or in  default  of any such
address,  to the  stockholder,  director,  or officer at his last known place of
address  or at the  general  post  office  in the City of  Wilmington,  State of
Delaware;  and any such notice  shall be deemed to be given at the time that the
same shall be thus mailed.

2.  Waiver

     Any  stockholder,  director,  or officer  may waive in  writing  any notice
required  to be given  under  these  By-Laws,  whether  before or after the time
stated herein.


                         SECTION XVII - AMENDMENTS<F43>

     These By-Laws may be  supplemented,  amended,  altered,  or repealed by the
affirmative  vote  of  the  holders  of a  majority  of  the  stock  issued  and
outstanding  and  entitled  to  vote  thereat  at  any  regular  meeting  of the
stockholders,  or at any special  meeting of the  stockholders  if notice of the
proposed  action in respect of the  By-Laws  be  contained  in the notice of the
meeting;  or by the  affirmative  vote  of a  majority  of the  whole  Board  of
Directors at a regular meeting.

                                       58

<PAGE>111

<TABLE>
<S>         <C>
                                    FOOTNOTES
<FN>
    

Footnote  1 <F1>

         As  amended  1/3/48 by  directors'  resolution.  Previously,  agent was
Delaware Charter Company and address was 927 Market Street.

Footnote  2 <F2>

     Originally  read:  "An annual  meeting of  stockholders  shall be held at 2
o'clock  p.m.  on the first  Saturday  in  December,"  etc.  Amended  12/6/47 by
stockholders'  resolution to read: "at 2 o'clock p.m. on the second  Saturday of
May", etc. Further amended 5/13/50 by stockholders' resolution to read as shown.

Footnote  3 <F3>

     Words "in accordance with the provisions for cumulative voting contained in
Article  V of the  Certificate  of  Incorporation,"  originally  appearing  here
stricken 3/27/48 by stockholders' resolution.

Footnote  4 <F4>

     Words  ":  Provided,  That  cumulative  voting  shall be in  effect  at all
elections  for  directors,  as  prescribed  by Article V of the  Certificate  of
Incorporation"  originally  appearing  here  stricken  3/27/48 by  stockholders'
resolution.

Footnote  5 <F5>

     Words "and subject to the provisions for cumulative  voting in Article V of
the Certificate of Incorporation," originally appearing here stricken 3/27/48 by
stockholders' resolution.

                                       59

<PAGE>112

Footnote  6 <F6>

     Words  "subscribed by him" inserted,  and word "and"  substituted for comma
preceding "the number of shares", 10/18/47 by directors' resolution.

     Words  ",  and an oath or  affirmation  before  a  notary  public  or other
official  authorized  to  administer  oaths that the said ballot is the true and
voluntary act and deed of the  stockholder"  originally  appearing here stricken
10/18/47 by director's resolution.

Footnote  7 <F7>

     Sub-paragraph (e) inserted 10/18/47 by Board resolution.

Footnote  8 <F8>

     The "(a)"  immediately  following title of Paragraph 8 and the words "to be
filled" at the annual meeting" inserted 10/18/47 by Board resolution.

Footnote  9 <F9>

     Sub-paragraph (b) as amended 10/18/47 by Board resolution. Originally read,
without paragraph  identification,  as follows: "Any stockholder or stockholders
owning  at least  five (5) per cent of the  outstanding  shares  of stock of the
Corporation  may submit  additional  nominations to the Nominating  Committee no
less than twenty-five (25) days prior to the annual meeting, and such additional
names  together  with the list of  original  nominations  shall be placed upon a
final list of  nominations  to be mailed to  stockholders  not less than fifteen
(15) days prior to such meeting."

Footnote  10 <F10>

     Sub-paragraph (c) inserted 10/18/47 by Board resolution.

Footnote 11 <F11> 

     Entire Section  amended 7/7/50 by Board  resolution to read as shown except
as to subsequent changes noted by the indicated footnotes.

         Original Section stated below.

     In the first line of Paragraph 4 of original Section,  words "sub-paragraph
(a) and (b)" substituted for "sub-paragraph (b)" 4/2/49 by Board resolution.

                                       60

<PAGE>113

     In  sub-paragraph  (a) of Paragraph 5 of original  Section,  sentence added
4/2/49 by Board  resolution as follows:  If the Board of Directors  rejects such
tender  in  whole  or in part,  the  shares  may be  transferred  to any  person
whatsoever,  subject to the continuing  right of the Corporation to purchase any
or all of said shares at any time,  upon demand by the Board of Directors and at
the  applicable  price per  share  specified  in  Paragraph  6 of this  Section,
determined as of the date of demand."

     Section IX originally read as follows:

     "1. Eligible Stockholders

         (a) The capital  stock of the  Corporation, consisting of 30,000 shares
of common stock  without par  value, shall be  issued  only to  persons  who are
employees  or  officers  of  the   Corporation,   and  who  possess  such  other
qualifications  as the Board of Directors  shall from time to time  prescribe by
resolution.

         "(b) Except  as provided in Sections  V and  VIII of  these By-Laws, in
respect of the qualification of directors, President and one Vice-President,  no
officer  or  employee  of the  Corporation  shall  be obligated  or  required to
subscribe for or own  any  stock  of the  Corporation;  and the subscription  or
failure  to subscribe for any shares of stock of the Corporation shall in no way
affect or  prejudice  the  position,  status,  tenure, continued  employment, or
advancement of any officer or employee.

    "2. Form of Certificate

     The   certificates   of  stock  of  the   Corporation   shall  be  numbered
consecutively  and shall be entered in the books of the  Corporation as they are
issued.  Each  certificate  shall  exhibit the  holder's  name and the number of
shares of stock represented  thereby,  and shall be signed by the President or a
Vice-President,  and by either  the  Secretary,  the  Treasurer,  the  Assistant
Secretary or the Assistant Treasurer.

    "3. Consideration for Stock

     The stock of this Corporation shall be issued for money only, at such price
as the Board of Directors may from time to time prescribe by resolution.

    "4. Transfer of Stock

         (a) Except as  provided  in sub-paragraph  (b) of  Paragraph 5 of  this
Section, no shares of stock may  be transferred  or pledged  without the written
consent or authorization  of the Board of Directors or of such officer as may be
designated by it to grant such consent or authorization.

                                       61

<PAGE>114

         "(b) All transfers of stock of the  Corporation shall  be made upon its
books   by  the   person  named  in   the  certificate  or   by   his   lawfully
constituted  representative,  and  upon  surrender  of   the   certificate   for
cancellation.

         "(c) The Corporation shall be entitled to treat the holder of record of
any share or  shares  of stock as the  holder in fact thereof,  and  accordingly
shall not be bound to recognize any  equitable or other claims to or interest in
such shares on the part of any person,  whether  or not it shall have express or
other notice thereof, save as expressly provided by the laws of Delaware.

    "5. Purchase of Stock by Corporation

         (a) Any  stockholder  may  at  any  time,  by  written  notice  to  the
Secretary of the Corporation, tender any or all of his shares to the Corporation
for purchase by it. The Board of Directors may accept or reject such tender,  in
whole or in  part;  and if it  accepts  the  tender  or any  part  thereof,  the
Corporation  shall  purchase the shares so accepted at the price provided for in
Paragraph 6 of this Section.  Where shares are tendered by several stockholders,
the Board of Directors  may accept all or any part  thereof as it deems  proper,
either in the chronological order of tender, or according to a percentage of all
shares tendered, or by any combination of these methods, in its discretion.

         "(b) In the event of the resignation, retirement, dismissal or death of
any officer or employee of the Corporation who owns any shares of stock thereof,
the Corporation  shall have the exclusive right for a period of ninety (90) days
from the  occurrence of the said event to purchase any or all of the shares held
by such  person.  If the Board of  Directors  elects to  exercise  such right of
purchase,  it shall so notify the  stockholder  or his  personal  representative
within said  period of ninety  (90) days,  and within not more than one (1) year
after such exercise of its right to purchase the Corporation  shall pay the said
stockholder or his  representative  the applicable  price per share specified in
Paragraph 6 of this Section,  determined as of the date of such  separation  and
with interest at the rate of six percentum  (6%) per annum from the date of such
purchase until the date of payment.  Upon the exercise by the Corporation of its
right to purchase any such of stock, the said stockholder or his  representative
shall have no further rights, privileges, or powers in respect of such stock. If
payment of the purchase price for such shares is not made by the  Corporation at
the time of such  purchase,  the  Corporation  shall  within a  reasonable  time
thereafter  issue  to the  stockholder  or his  representative  a note or  other
evidence  of  indebtedness  fixing  the  amount  to be paid  by the  Corporation
pursuant to Paragraph 6 of this Section and bearing  interest at the rate of six
percentum  (6%) per annum from the date of purchase  to the date of payment.  If
the Board of Directors  elects not to exercise such right of purchase within the
said period of ninety (90) days, the  shares may be  retained by or  transferred

                                       62

<PAGE>115

to any person whatsoever,  subject to the continuing right of the Corporation to
purchase  all or any of said  shares at any time,  no matter by whom such shares
are held, upon demand by the Board of Directors and at the applicable  price per
share  specified in Paragraph 6 of this  Section,  determined  as of the date of
demand.

    "6. Purchase Price

     The  price to be paid by the  Corporation  for any  shares  acquired  by it
pursuant to a tender under  sub-paragraph (a) of Paragraph 5 of this Section, or
pursuant  to notice or demand  under  sub-paragraph  (b) of  Paragraph 5 of this
Section shall be as follows:

         (a) During the period  from  January 1, 1947 to  December 31, 1947, the
original issuance price of such shares.

         (b) During the period  from  January 1, 1948 to  December 31, 1950, the
book value per outstanding share for the next preceding  calendar year, as deter
mined by independent auditors.

         (c) From  and   after   January  1,  1951,    the   book    value   per
outstanding  share  for the next  preceding  calendar  year,  as  determined  by
independent  auditors:  PROVIDED,  That if the  book  value  of all  outstanding
shares, as so determined,  exceeds ten times the average annual net earnings, if
any, of the  Corporation  (after  taxes,  including  income  taxes) for the next
preceding three calendar years, as determined by independent auditors,  then the
price shall be the average of such two figures (book value and ten times average
net earnings) per outstanding share.

    "7. Lost Certificate

     If a certificate of stock of the Corporation be lost or destroyed,  another
certificate of the same tenor and for the same number of shares may be issued in
its  stead,  upon  proof  of  such  loss or  destruction  and  the  giving  of a
satisfactory  bond  of  indemnity  in an  amount  sufficient  to  indemnify  the
Corporation against any claim:  Provided,  That the Board of Directors may waive
the requirement of a bond if in its judgment it is proper to do so."

Footnote  12 <F12>

     Words "or to a trustee  designated or appointed under a stock bonus plan of
the Corporation"  inserted by directors'  resolution of 11/3/51. For language in
effect prior to 7/7/50, see footnote 11.

                                       63

<PAGE>116

Footnote  13 <F13>

     Words "to heirs,  legatees or beneficiaries  upon the death of employees or
officers"  substituted  for "to heirs or legatees of  employees  or officers who
die" by  directors'  resolution  of 11/3/51.  For  language  in effect  prior to
7/7/50, see footnote 11.

Footnote  14 <F14>

     Words  "Provided,  That the said sixty * * * of the  Corporation"  added by
directors'  resolution of 11/3/51.  For language in effect prior to 7/7/50,  see
footnote 11.

Footnote  15 <F15>

     Words "except as issued pursuant to the provisions of a stock bonus plan of
the  Corporation"  added by directors'  resolution  of 11/3/51.  For language in
effect prior to 7/7/50, see footnote 11.

Footnote  16 <F16>

     Words  "and  in  Sections  X and  XI"  inserted  12/1/51  by  stockholders'
resolution.

Footnote  17 <F17>

     Words "in the event * * * the  Corporation  shall be" substituted for words
"at any time upon the  demand  of the  Board of  Directors  and at"  12/1/51  by
stockholders' resolution.

Footnote  18 <F18>

     Words "presentation for transfer"  substituted for word "demand" 12/1/51 by
stockholders' resolution.

Footnote  19 <F19>

     Designation "(i)" added by directors' resolution of 11/3/51.

Footnote  20 <F20>

     Words  "or  (ii)  the  distribution  of  shares  of  common  stock  of  the
Corporation by a trustee under any stock bonus plan of the Corporation" added by
directors' resolution of 11/3/51.

Footnote  21 <F21>

     Words "and to the  provisions  of Section X and Section XI of the  By-Laws"
inserted 12/1/51 by stockholders' resolution.

                                       64

<PAGE>117

Footnote  22 <F22>

     Word "such" substituted for "the said" by directors' resolution of 11/3/51.

Footnote  23 <F23>

     Words  "such  common  stock  so owned or so  distributed"  substituted  for
"shares of such common stock held by such person" by  directors'  resolution  of
11/3/51.

Footnote  24 <F24>

     Words "or the  distributee  under a stock  bonus  plan of the  Corporation"
inserted by directors' resolution of 11/3/51.

Footnote  25 <F25>

     Words  "or the said  distributee"  inserted  by  directors'  resolution  of
11/3/51.

Footnote  26 <F26>

     Words "or such distribution" inserted by directors' resolution of 11/3/51.

Footnote  27 <F27>

     Words  "or the said  distributee"  inserted  by  directors'  resolution  of
11/3/51.

Footnote 28 <F28>

     Words "or the distributee" inserted by directors' resolution of 11/3/51.

Footnote 29 <F29>

     Words "in the event * * * the  Corporation  shall be" substituted for words
"at any time,  upon the  demand of the Board of  Directors  and at"  12/1/51  by
stockholders' resolution.

Footnote  30 <F30>

     Words   "determined  as  of  the  date  of  demand"   deleted   12/1/51  by
stockholders' resolution.

Footnote  31 <F31>

     Comma  substituted  for  period  and  words  "determined  as of the date of
presentation for transfer" added 12/8/51 by directors' resolution.

                                       65

<PAGE>118

Footnote  32 <F32>

     Words "at the close of" substituted for word "for" 12/1/51 by stockholders'
resolution.

Footnote  33 <F33>

     Words "per  outstanding  share"  substituted  for words "of all outstanding
shares" 12/1/51 by stockholders' resolution.

Footnote  34 <F34>

     Words "per outstanding share" added 12/1/51 by stockholders' resolution.

Footnote  35 <F35>

     Words  "except as the Board * * * of the  Corporation"  added by directors'
resolution of 11/3/51.

Footnote  36 <F36>

     New Section X, titled Distribution and Marketing of Stock, added 12/1/51 by
stockholders' resolution.

Footnote  37 <F37>

     New Section XI, titled Optional  Agreements for Transfer of Common Stock on
Termination of Employment, added 12/1/51 by stockholders' resolution.

Footnote  38 <F38>

     Renumbered  as  shown  12/1/51  by  stockholders'  resolution.   Originally
numbered X.

Footnote  39 <F39>

     Renumbered  as  shown  12/1/51  by  stockholders'  resolution.   Originally
numbered XI.

Footnote  40 <F40>

     Renumbered  as  shown  12/1/51  by  stockholders'  resolution.   Originally
numbered XII. Entire Section amended 7/7/50 by Board resolution to read as shown
in footnote 73. It originally read:

                                       66

<PAGE>119

     "1. Declaration

     Dividends upon the stock of the Corporation may be declared by the Board of
Directors at any regular or special meeting.

    2. Reserves

     Before  declaration  of any dividend or any  distribution  of profits,  the
Board of  Directors  may set  aside  from  time to time out of the  funds of the
Corporation  available  for  dividends  such  sum or  sums as the  Board  in its
discretion may think proper as a reserve fund for any proper  purposes,  and the
Board may alter or abolish any such reserve or reserves."

Footnote  41 <F41>

     Section  inserted  7/7/50  by  Board  resolution,   as  new  Section  XIII.
Renumbered as shown 12/1/51 by stockholders' resolution.

Footnote  42 <F42>

     Renumbered  as  shown  12/1/51  by  stockholders'  resolution.   Originally
numbered XIII; then renumbered XIV 7/7/50 by director's resolution.

Footnote  43 <F43>

     Renumbered  as  shown  12/1/51  by  stockholders'  resolution.   Originally
numbered XIV; then renumbered XV 7/7/50 by director's resolution.

Footnote  44 <F44>

     Subdivision  (i) as  amended  9/21/52  by Board  resolution,  except  as to
subsequent change noted by the indicated  footnote.  Originally read as follows:
"(i) Limitations on Amount. Deductions from salary for such purpose shall be not
in excess of ten  ($10.00)  dollars  and not less than one  ($1.00)  dollar  per
week."

Footnote  45 <F45>

     Subdivision (ii) as amended 4/3/54 by Board resolution.  Originally read as
follows:  "(ii) When Deductions Begin.  Deductions from payroll for the purposes
of this  sub-paragraph  shall  begin  with  salary for the first full pay period
after receipt of the authorization."

                                       67

<PAGE>120

Footnote  46 <F46>

     Second sentence of subdivision (iii) as amended 4/3/54 by Board resolution.
Originally  read as follows:  "Such notice shall take effect with salary for the
first full payroll period after submission of notice."

Footnote  47 <F47>

     Second sentence of subdivision (iv) as amended 4/3/54 by Board  resolution.
Originally  read as follows:  "Such notice shall take effect with salary for the
first full payroll period after submission of notice."

Footnote  48 <F48>

     First sentence of sub-paragraph  (j) as amended 4/3/54 by Board resolution.
Originally  read as follows:  "Eligible  employees may at any time submit to the
Trustee "offers to buy" shares of the common stock of the Corporation."

Footnote  49 <F49>

     Subdivision (v) as amended 4/3/54 by Board  resolution.  Originally read as
follows:  "(v)  Withdrawal  or Decrease  in Amount.  Any person who has filed an
'offer to buy'  may,  on one  week's  written  notice,  withdraw  such  offer or
decrease the amount thereof."

Footnote  50 <F50>

     Sub-paragraph (b) as amended 3/5/55 by Board resolution. Previously read as
follows  (as amended  10/18/47 by Board  resolution):  "(b) Any  stockholder  or
stockholders  owning  at least  five (5) per cent of the  outstanding  shares of
stock of the  Corporation  may submit  additional  nominations to the Nominating
Committee not less than twenty-five (25) days prior to such annual meeting."<F9>

Footnote  51 <F51>

     Sub-paragraph (c) inserted 6/10/55 by Board resolution.

Footnote  52 <F52>

     Sub-paragraph (v) inserted 6/10/55 by Board resolution.

Footnote  53 <F53>

     Paragraph 4(a) inserted 6/10/55 by Board resolution.

                                       68

<PAGE>121

Footnote  54 <F54>

     Subdivision  (iv) as  amended  8/8/55  by Board  resolution,  except  as to
subsequent change noted by the indicated  footnote.  Originally read as follows:
"(iv) Limitation on Amount.  'Offers to buy' may be satisfied by the Trustee, if
stock is  available,  for each eligible  employee in any calendar  year, up to a
total of 100  shares:  Provided,  however,  that shares  made  available  to the
Trustee from unissued or treasury stock may not be sold to any one individual in
excess of 50 shares in any period of six months."

Footnote  55 <F55>

     Words  "entitled to vote  thereat"  inserted by  directors'  resolution  of
12/6/58.

Footnote  56 <F56>

     Words "Class A" inserted by directors' resolution of 12/6/58.

Footnote  57 <F57>

     Paragraph 1 as amended by directors' resolution of 12/6/58. Originally read
as follows:  "1.  Eligibility.  - No person  shall be elected or  appointed as a
director  unless he is a stockholder  of the  Corporation,  and any director who
ceases to hold any shares of stock of the  Corporation  shall be disqualified to
exercise  any of the  powers or duties of  director  and shall be deemed to have
resigned from such office."

Footnote  58 <F58>

     Words  "other than the  President"  inserted by  directors'  resolution  of
12/6/58.

Footnote  59 <F59>

     Last sentence of  sub-paragraph  (a) inserted by  directors'  resolution of
12/6/58.

Footnote  60 <F60>

     Paragraph 1 as amended by directors' resolution of 12/6/58. Previously read
as follows:  "1. Amount. - The total authorized capital stock of the Corporation
consists of 45,000 shares divided into 30,000 shares of common stock without par
value and 15,000  shares of  preferred  stock  having a par share of ten dollars
($10.00) per share and without voting rights.

Footnote  61 <F61>

     Paragraph 2 as amended by directors'  resolution  of 12/6/58,  except as to
subsequent change indicated in sub-paragraph (a)(i). Previously read as follows:

                                       69

<PAGE>122

    "2. Eligible Stockholders

         "(a) Common stock

              (i) The shares of common  stock  shall be issued only  to  persons
who are  employees  or officers of the  Corporation  and who possess  such other
qualifications  as the Board of Directors  shall from time to time  prescribe by
resolution,  or to a trustee designated or appointed under a stock bonus plan of
the Corporation.<F12>  

              "(ii) Except as provided in Sections V and VIII of these  By-Laws,
in respect of qualifications of directors, President and one Vice- President, no
officer or  employee  of the  Corporation  shall be  obligated  or  required  to
subscribe  for or own any  stock of the  Corporation;  and the  subscription  or
failure to subscribe for any shares of stock of the Corporation  shall in no way
affect or prejudice the  position,  statue,  tenure,  continued  employment,  or
advancement of any officer or employee.<F138>  

         "(b) Preferred stock

              (i) The  shares of  preferred  stock  shall   be  issued  only  in
exchange for common stock to employees or officers of the Corporation upon their
retirement because of age or disability, and to heirs, legatees or beneficiaries
upon  the  death  of  employees or  officers<F13>  while  in  the service of the
Corporation.

              "(ii)  No  person   shall  be  obligated  or  required  to  accept
preferred  stock in exchange for common stock.  Any person  qualified under sub-
paragraph  (b)(i) above to receive  preferred stock in exchange for common stock
who elects to exercise  such right of exchange  shall so notify the Secretary of
the  Corporation  in writing  within sixty (60) days after the occurrence of the
event  which gave rise to such right:  Provided,  That the said sixty (60) days'
period for notification  shall begin to run upon distribution with respect to an
exchange  involving common stock distributed to a qualified person under a stock
bonus plan of the Corporation.<F14>"

Footnote 62 <F62>

     Paragraph 3 as amended by directors' resolution of 12/6/58. Previously read
as  follows:  "3.  Consideration  for Common  Stock.  - The common  stock of the
Corporation  shall be  issued  for  money  only,  at such  price as the Board of
Directors  may from  time to time  prescribe  by  resolution,  except  as issued
pursuant to the provisions of a stock bonus plan of the Corporation.<F15>  

                                       70

<PAGE>123

Footnote  63 <F63>

     Paragraph 4 as amended by directors'  resolution  of 12/6/58,  except as to
subsequent changes noted by the indicated footnotes. Originally read as follows:
"4.  Rate of Exchange  of  Preferred  Stock for Common  Stock.  The  exchange of
preferred  stock for common stock shall be at the rate of one share of preferred
stock for each ten dollars  ($10.00)  of the then  current  repurchase  price of
common stock so exchanged, as specified in Paragraph 9 of this Section."

Footnote  64 <F64>

     Words  "sub-paragraphs (a) and (b) of" deleted by directors'  resolution of
12/6/58.

Footnote  65 <F65>

     Words "Class A and Class B"  substituted  for word  "common" by  directors'
resolution of 12/6/58.

Footnote  66 <F66>

     Words "Class A" substituted  for word "common" by directors'  resolution of
12/6/58.

Footnote  67 <F67>

     Sub-paragraph (d) inserted by directors' resolution of 12/6/58.

Footnote  68  <F68>

     Paragraph 8 as amended by directors' resolution of 12/6/58. Originally read
as  follows:  "8.  Redemption  of  Preferred  Stock  by the  Corporation.  - The
Corporation  shall  have the right at any time to redeem  all or any part of the
outstanding  shares  of  preferred  stock of the  Corporation.  If the  Board of
Directors  elects to exercise the right to redeem less than all such outstanding
shares,  the  Corporation  shall  redeem a pro rata  number of shares  from each
holder of preferred  stock,  but no  fractional  shares  shall be redeemed.  The
Corporation  shall make  payment for the shares  redeemed at the price per share
provided for in sub-paragraph (b) of Paragraph 9 of this Section."

Footnote  69 <F69>

     Sub-paragraph   (b)  as  amended  by  directors'   resolution  of  12/6/58.
Originally read as follows:  "(b) Preferred  Stock.  The price to be paid by the
Corporation  for any shares of preferred stock acquired by it pursuant to notice
or demand under Paragraph 8 of this Section shall be ten dollars and fifty cents
($10.50) per share."

                                       71

<PAGE>124

Footnote  70 <F70>

     Words "the common stock or the preferred" deleted by directors'  resolution
of 12/6/58.

Footnote  71 <F71>

     Paragraph 11 as amended by  directors'  resolution  of 12/6/58.  Originally
read as follows:  "11.  Dissolution or Distribution of Assets. - In the event of
dissolution  of, or any  distribution  of the assets of,  the  Corporation,  the
holders of the  preferred  stock shall be entitled to be paid the full par value
of ten dollars ($10.00) per share before any amount shall be paid to the holders
of the common stock."

Footnote  72 <F72>

     Words "Class B" substituted for word  "preferred" by directors'  resolution
of 12/6/58.

Footnote  73 <F73>

     Paragraph 1 as amended by directors' resolution of 12/6/58. Originally read
as follows: "1. Dividends. - Dividends may be declared by the Board of Directors
at any  regular  or  special  meeting.  The  registered  owner of each  share of
preferred  stock shall be entitled to receive  dividends as declared at the rate
of seven  percentum  (7%) per  annum,  payable  quarterly  on the first  days of
January, April, July, and October of each year. No dividend shall be paid on the
common stock unless (a) dividends on the preferred  stock have been declared and
paid  for  the  preceding  four  quarters,  and  (b) if any  quarterly  dividend
installment  on the preferred  stock  thereafter  remains  undeclared and unpaid
since the issuance thereof,  a dividend is  simultaneously  declared and paid on
the  preferred  stock in an amount per share equal to the amount of the dividend
paid  on the  common  stock,  up to the  amount  of the  undeclared  and  unpaid
dividends on the preferred stock. Subject to the foregoing, the registered owner
of each share of common  stock shall be entitled to dividends as declared by the
Board of Directors."

Footnote  74 <F74>

     As amended 2/7/59 by directors' resolution. Previously read as follows: "1.
Delaware  Office.  - The  principal  office of the  Corporation  in the State of
Delaware  shall be at 927 Market Street in the City of Wilmington  and County of
New Castle;  and the resident agent in charge  thereof shall be the  Corporation
Guarantee and Trust Company, 927 Market Street, Wilmington, Delaware   1  "

Footnote  75 <F75>

     Paragraph 1 as amended by directors' resolution of 3/7/59.  Previously read
as  follows:  "1.  Amount.  - The total  number  of  shares  of stock  which the
Corporation  is  authorized to issue is thirty- five  thousand  (35,000)  shares
divided into two classes:  one class  designated  as Class A common shares shall
consist  of thirty thousand (30,000) shares  without  par value and  with voting

                                       72

<PAGE>125

rights, and the other class designated as Class B common shares shall consist of
five  thousand (5,000) shares without  par value and without voting rights.<F60>  

Footnote  76 <F76>

     Paragraph 2(a)(i) as amended by directors' resolution of 3/7/59. Previously
read as  follows:  "(i) The shares of Class A stock  shall be issued in place of
and upon  surrender of  certificates  for an equal  number of  previously-issued
shares of capital  stock of the  Corporation  having no par  value;  or shall be
issued only to persons who are officers or employees of the  Corporation and who
possess such other  qualifications  as the Board of Directors shall from time to
time prescribe by  resolution,  or to trustees  designated or appointed  under a
stock bonus plan of the Corporation."

Footnote  77 <F77>

     "eight hundred (800)" substituted for figure "200" by directors' resolution
of 3/7/59.

Footnote  78 <F78>

     "two  thousand   (2,000)"   substituted  for  figure  "500"  by  directors'
resolution of 3/7/59.

Footnote  79 <F79>

     "two hundred (200)"  substituted for "fifty (50)" by directors'  resolution
of 3/7/59.

Footnote  80 <F80>

     Figure "70" substituted for figure "30" by directors' resolution of 3/7/59.

Footnote  81 <F81>

     Words "two times" substituted for word "one-half" by directors'  resolution
of 3/7/59.

Footnote  82 <F82>

     Last sentence of  subdivision  (iv)  inserted by  directors'  resolution of
3/7/59.

Footnote  83 <F83>

     "Two hundred (200)" substituted for figure "50" by directors' resolution of
3/7/59.

Footnote  84 <F84>

     "Twenty  (20)"  substituted  for word  "ten" by  directors'  resolution  of
3/7/59.

                                       73

<PAGE>126

Footnote  85 <F85>

     Words "and the Chairman of the Board," inserted by directors' resolution of
12/5/59.

Footnote  86 <F86>

     Words "a Chairman  of the Board,"  inserted  by  directors'  resolution  of
12/5/59.

Footnote  87 <F87>

     Words "Chairman of the Board and the President may be the same person, the"
inserted by directors' resolution of 12/5/59.

Footnote  88 <F88>

     Words  "Chairman  of the Board,  a" inserted by  directors'  resolution  of
12/5/59.

Footnote  89 <F89>

     Paragraph 2 inserted by directors' resolution of 12/5/59.

Footnote  90 <F90>

     Renumbered  as  shown  by  directors'  resolution  of  12/5/59.  Previously
numbered 2.

Footnote  91 <F91>

     Words  "preside at all  meetings of the  stockholders  and  directors;  to"
deleted by directors' resolution of 12/5/59.

Footnote  92 <F92>

     Renumbered  as  shown  by  directors'  resolution  of  4/17/64.  Originally
numbered 3; then renumbered 4 by directors' resolution of 12/5/59.

Footnote  93 <F93>

     Renumbered  as  shown  by  directors'  resolution  of  4/17/64.  Originally
numbered 4; then renumbered 5 by directors' resolution of 12/5/59.

Footnote  94 <F94>

     Renumbered  as  shown  by  directors'  resolution  of  4/17/64.  Originally
numbered 5; then renumbered 6 by directors' resolution of 12/5/59.

                                       74

<PAGE>127

Footnote  95 <F95>

     Renumbered  as  shown  by  directors'  resolution  of  4/17/64.  Originally
numbered 6; then renumbered 7 by directors' resolution of 12/5/59.

Footnote  96 <F96>

     Renumbered  as  shown  by  directors'  resolution  of  6/11/75.  Originally
numbered 7;  renumbered 8 by directors'  resolution of 12/5/59;  renumbered 9 by
directors' resolution of 4/17/64.

Footnote  97 <F97>

     Designation "(a)" added by directors' resolution of 2/9/63.

Footnote  98 <F98>

     Sub-paragraph (b) inserted by directors' resolution of 2/9/63.

Footnote  99 <F99>

     Words "the  Chairman of the Board,"  inserted by  directors'  resolution of
4/17/64.

Footnote  100 <F100>

     Words "The  Chairman of the Board,"  inserted by  directors'  resolution of
4/17/64.

Footnote  101 <F101>

     Last sentence of  sub-paragraph  (b) inserted by  directors'  resolution of
4/17/64.

Footnote  102 <F102>

     Paragraph 2 as amended by directors' resolution of 4/17/64. Originally read
as follows:

"2.  Chairman of the Board

     The Chairman of the Board shall preside at all meetings of the stockholders
and the Board of Directors, and shall perform such other functions and duties as
may be prescribed by the Board of Directors. In the absence of disability of the
Chairman of the Board,  or when such office is vacant,  the foregoing  functions
shall be performed by the President.<F89>"

                                       75

<PAGE>128

Footnote  103 <F103>

     Paragraph 3 as amended by directors' resolution of 4/17/64. Previously read
as follows:

"3.<F90> President

     (a) The President shall be the Chief Executive  Officer of the Corporation.
It shall be his duty to<F91> have general and active  management of the business
of the  Corporation;  and to see that all orders and resolutions of the Board of
Directors are carried into effect.

     "(b) He shall execute all contracts,  agreements,  deeds, bonds, mortgages,
and other obligations and instruments in the name of the Corporation; shall keep
in safe custody the deal of the Corporation and, when authorized by the Board of
Directors,  shall  affix the same to any  instrument  requiring  it; and when so
affixed the seal shall be  attested by the  signature  of the  Secretary  or the
Treasurer.

     "(c) He shall  have the  general  supervision  and  direction  of the other
officers  of the  Corporation  and  shall see that  their  duties  are  properly
performed.

     "(d) He shall submit a report of the operations of the  Corporation for the
year to the directors at their meeting next  preceding the annual meeting of the
stock holders and to the stockholders at their annual meeting."

Footnote  104 <F104>

     Paragraph 4 inserted by directors' resolution of 4/17/64.

Footnote  105 <F105>

     Words "both the  President and the Chairman of the Board"  substituted  for
"the President" by directors' resolution of 4/17/64.

Footnote  106 <F106>

     Words ", and shall  perform  such other duties as may be assigned to him by
the Board of Directors or the  President,  under whose  supervision he shall be"
deleted by directors' resolution of 4/17/64.

Footnote  107 <F107>

     Sub-paragraphs (d) and (e) inserted by directors' resolution of 4/17/64.

                                       76

<PAGE>129

Footnote  108 <F108>

     Sub-paragraph   (b)  as  amended  by  directors'   resolution  of  4/17/64.
Originally read as follows:

     "(b) He shall  disburse the funds of the  Corporation  as may be ordered by
the  Board of  Directors  or the  President,  taking  proper  vouchers  for such
disbursements,  and shall render to the  President  and directors at the regular
annual  meeting of  stockholders,  or whenever the  President  or directors  may
require it, an account of all his transactions as Treasurer and of the financial
condition of the  Corporation.  At the regular meeting of the Board of Directors
next preceding the annual  stockholders  meeting,  he shall render a like report
for the preceding year:  PROVIDED,  That in 1947 such report may cover only such
portion of the current year as may be feasible."

Footnote  109 <F109>

     Sentence "He shall  perform such other duties as the Board of Directors may
from time to time  prescribe or require."  deleted by  directors'  resolution of
4/17/64.

Footnote  110 <F110>

     Sub-paragraph (d) inserted by directors' resolution of 4/17/64.

Footnote  111 <F111>

     Numerals "45"  substituted  for numerals  "30" by directors'  resolution of
11/7/64.

Footnote  112 <F112>

     Words "one week" substituted for words "two weeks" by directors' resolution
of 8/4/65.

Footnote  113 <F113>

     Sentence   "In  the  event  that  the  Board   shall   elect  two  or  more
Vice-Presidents,  it  shall  designate  one of them as  Senior  Vice-President."
inserted by directors' resolution of 12/4/65.

Footnote  114 <F114>

     Words "Senior Vice-President" substituted for words "Chairman of the Board"
by directors' resolution of 12/4/65.

Footnote  115 <F115>

     Sub-paragraph (f) inserted by directors' resolution of 12/4/65.

                                       77

<PAGE>130

Footnote  116 <F116>

     Words "Senior  Vice-President"  substituted  for words  "Vice-President  or
Vice-Presidents  (in  the  order  designated  by  the  Board  of  Directors)  by
directors' resolution of 12/4/65.

Footnote  117 <F117>

     Last  sentence  of  Paragraph  5 as amended  by  directors'  resolution  of
12/4/65.  Originally read as follows:  "The  Vice-President  or  Vice-Presidents
shall  also  perform  such  other  duties as may be  prescribed  by the Board of
Directors."

Footnote  118 <F118>

     Words "or the Assistant  Treasurer"  inserted by  directors'  resolution of
12/4/65.

Footnote  119 <F119>

     Phrase ", as the Board may designate" inserted by directors'  resolution of
12/4/65.

Footnote  120 <F120>

     Last  sentence,  previously  designated as  subdivision  (i) made a part of
sub-paragraph  (g), and  subdivision  (ii) deleted by  directors'  resolution of
12/4/65.  Subdivision (ii) read as follows:  "(ii) The dates on which such stock
shall be made available  shall be the effective  dates on which the price of the
stock is set.  Announcement  of the number of shares made available  shall be at
least two weeks in advance of the effective date."

Footnote  121 <F121>

     Paragraph 1 as amended by directors' resolution of 3/4/67.  Originally read
as follows:

"1.      Place of Meeting

     All  meetings  of  stockholders  shall  be held at the main  office  of the
Corporation in the City of Washington, District of Columbia."

Footnote  122 <F122>

     Paragraph 2(b)(i) as amended by directors' resolution of 9/6/67. Previously
read as follows:

              "(i) The  shares of Class B stock shall be issued only in exchange
for  Class A stock  (A) to  officers  and  employees  of the  Corporation  after
retirement  because of age or disability,  or (B) after the death of officers or
employees of the Corporation,  to the estates of such officers or employees,  to
the dependents of such officers or employees, or to persons who are the  natural

                                       78

<PAGE>131

objects of the bounty of such officers or employees: Provided, That death occurs
while the  officers or  employees  are in the service of the  Corporation  or on
military  or  disability  leave,  or  within  three  years  less 30  days  after
retirement because of age or disability of officers or employees who executed an
Optional  Agreement  pursuant to the By-Laws of the Corporation for the transfer
of stock upon  termination  of  employment,  or within 60 days after  retirement
because of age or  disability  of officers or employees who did not execute such
an Optional Agreement."

Footnote  123 <F123>

     Paragraph  2(b)(iii)  (A) and (B) as amended by  directors'  resolution  of
9/6/67. Previously read as follows:

              "(A) In  the  case of  an officer  or employee of the  Corporation
entitled to exchange Class A stock for Class B stock upon retirement, and in the
case of anyone  entitled  to  exchange  Class A stock for Class B stock upon the
death of a retired  officer  or  employee,  within  sixty  (60)  days  after the
retirement of the officer or employee, or, in the event such officer or employee
has executed an Optional  Agreement  pursuant to the By-Laws of the  Corporation
for the transfer of stock upon termination of employment, within three (3) years
less thirty (30) days after retirement of the officer or employee;

              "(B) In the case of anyone entitled to exchange  Class A stock for
Class B stock upon the death of an officer or employee of the Corporation  while
in the service of the  Corporation  or on military or disability  leave,  within
sixty (60) days after such death,  or, in the event such officer or employee has
executed an Optional  Agreement  pursuant to the By-Laws of the  Corporation for
the transfer of stock upon  termination  of  employment,  within three (3) years
less thirty (30) days after the death of such officer or employee."

Footnote  124 <F124>

     Words  "ninety  (90) day and one  hundred  and  eighty  (180) day  periods"
substituted  for words  "sixty (60) day  periods" by  directors'  resolution  of
9/6/67.

Footnote  125 <F125>

     Subdivision (iv) inserted by directors' resolution of 9/6/67.

Footnote  126 <F126>

     Paragraph 4 as amended by directors' resolution of 9/6/67.  Previously read
as follows:

                                       79

<PAGE>132

"4. Rate of Exchange of Class B Stock

     The  exchange  of Class A stock for  Class B stock  shall be on a share for
share basis:  Provided,  however,  that after eight hundred (800)<F77> shares of
Class A stock have been  exchanged  for a like number of shares of Class B stock
by (a) any one retired officer or employee of the Corporation, or (b) any or all
persons  who  received  the  Class A stock  from  any one  deceased  officer  or
employee,  such person or persons may  thereafter  have Class B stock  exchanged
only in an amount equal to one-third of the remaining Class A stock held by such
person or persons; and provided, further, that no more than two thousand (2,000)
<F78> shares of Class B stock  shall be issued  in  exchange  for Class A  stock
to any one  retired  officer or  employee of the  Corporation or  to  any or all
persons who have  received the Class A  stock from  any one deceased officer  or
employee.<F63>"

Footnote  127 <F127>

     Words "by written notice sent to the stockholder or his  representative  at
the  address  of the  stockholder  as it  appears  on  the  stock  books  of the
Corporation  and by  written  notice to the  distributee  at his  address  as it
appears on the records of the  Administrative  Committee  established  under the
stock bonus plan" inserted by directors' resolution of 9/6/67.

Footnote  128 <F128>

     First two sentences of Paragraph 8 substituted by directors'  resolution of
9/6/67  for the  following:  "The  Corporation  shall have the right at any time
after the  expiration  of eight (8) years from the date of (a)  retirement of an
officer or employee, or (b) death of an officer or employee while in the service
of the Corporation or on military or disability leave, to redeem from the holder
thereof  all or any part of the  outstanding  shares of Class B stock  issued in
exchange  for  Class A stock  to such  officer  or  employee  or to the  estate,
dependents, or persons who are the natural objects of the bounty of such officer
or employee."

Footnote  129 <F129>

     Paragraph 9(b)(i)(A) and (B) as amended by directors' resolution of 9/6/67.
Previously read as follows:

              "(A) The price in effect for  purchase and sale of shares of Class
A stock of the  Corporation  under the Stock  Purchase and Transfer  Plan of the
Corporation,  if  tender  is made  within  eight  years  after  the  date of the
retirement or death which gave rise to the right to obtain Class B stock, or

              "(B) The price  determined for  the  purchase  of Class A stock in
accordance with the provisions of  sub-paragraph  (a) of Paragraph 9 hereof,  if
tender is made eight or more years after the retirement or death which gave rise
to the right to obtain Class B stock."

                                       80

<PAGE>133

Footnote  130 <F130>

     Paragraph  9(b)(ii)(A)  and (B) as  amended  by  directors'  resolution  of
9/6/67. Previously read as follows:

              "(A) The price in effect  for the  purchase  and sale of shares of
Class A stock of the  Corporation  under the Stock Purchase and Transfer Plan of
the Corporation, if the stock is presented for transfer within eight years after
the retirement or death which gave rise to the right to obtain Class B stock, or

              "(B) The  price determined  for the  purchase  of Class A stock in
accordance with the provisions of  sub-paragraph  (a) of Paragraph 9 hereof,  if
the stock is presented for transfer at eight or more years after the date of the
retirement or death which gave rise to the right to obtain Class B stock.

Footnote  131 <F131>

     Words  "to the time at which the  Corporation  shall  first  have the right
under  Paragraph 8 hereof to redeem such Class B stock from the holder  thereof"
substituted for words "to the expiration of the eight-year period after the date
of the retirement or death which gave rise to the right to obtain Class B stock"
by directors' resolution of 9/6/67.

Footnote  132 <F132>

     Figure  "10"  substituted  for  figure  "20" by  directors'  resolution  of
12/2/67.

Footnote  133 <F133>

     Words and figure "seven hundred thousand  (700,000)"  substituted for words
and figure "one hundred forty  thousand  (140,000)" by directors'  resolution of
1/24/68.

Footnote  134 <F134>

     Words and figure " six hundred  thousand  (600,000)"  substituted for words
and figure "one hundred twenty thousand  (120,000)" by directors'  resolution of
1/24/68.

Footnote  135 <F135>

     Words and figure "one hundred thousand (100,000)" substituted for words and
figure "twenty thousand (20,000)" by directors' resolution of 1/24/68.

                                       81

<PAGE>134

Footnote  136 <F136>

     Paragraph   2(a)(i)  as  amended  by  directors'   resolution  of  1/24/68.
Previously  read as  follows:  "(i) The shares of Class A stock  shall be issued
only to person who are officers or employees of the  Corporation and who possess
such  other  qualifications  as the Board of  Directors  shall from time to time
prescribe by  resolution,  or to trustee  designated or appointed  under a stock
bonus plan of the Corporation.<F76>"

Footnote  137 <F137>

     Words "officers and" inserted by directors' resolution of 1/24/68.

Footnote  138 <F138>

     Words "officer or" inserted by directors' resolution of 1/24/68.

Footnote  139 <F139>

     Proviso as amended by directors' resolution of 1/24/68.  Originally read as
follows: "Provided, however, that the Trustee may designate an agent with powers
to perform his duties  herein  prescribed  by filing with the  Secretary  of the
Corporation a statement delegating such powers."

Footnote  140 <F140>

     Words "officers and employees  eligible to participate  shall be person (1)
who are officers or employees of the Corporation or of a subsidiary  corporation
eighty (80) percent or more of whose stock is owned by the  Corporation  and (2)
who possess such other  qualifications as the Board of Directors shall from time
to  time  prescribe  by  resolution  (all  such  officers  and  employees  being
hereinafter  in  this  Section  X  referred  to as  'officers  and  employees')"
substituted  for words  "employees  eligible to  participate  shall be 'eligible
stockholders' as defined in Section IX, Paragraph  2(a)(i) of these By-Laws " by
directors' resolution of 1/24/68.

Footnote  141 <F141>

     Words  "prior to April 7,  1968,"  inserted  by  directors'  resolution  of
1/24/68.

Footnote  142 <F142>

     Words  "and on and after  April 7,  1968,  be not in  excess of  forty-five
dollars ($45) per week and not less than one dollar  ($1.00) per week"  inserted
by directors' resolution of 1/24/68.

                                       82

<PAGE>135

Footnote  143 <F143>

     Sentence  "Effective  April 7, 1968,  the words and  figures  'twenty  (20)
shares'  wherever they appear in this  subdivision  (vii) shall read 'forty (40)
shares'." inserted by directors' resolution of 1/24/68.

Footnote  144 <F144>

     Words "officer and" inserted by directors' resolution of 1/24/68.

Footnote  145 <F145>

     Words "employee of, and" deleted by directors' resolution of 1/24/68.

Footnote  146 <F146>

     Words  "(herein  called the  Corporation)  or by a  subsidiary  eighty (80)
percent  or more of  whose  stock  is  owned  by the  Corporation"  inserted  by
directors' resolution of 1/24/68.

Footnote  147 <F147>

     Title of Section changed from  "DEFINITION OF STOCKHOLDER" to "DEFINITIONS"
by directors' resolution of 1/24/68.

Footnote  148 <F148>

     Second  paragraph  of Section  XV  inserted  by  directors'  resolution  of
1/24/68.

Footnote  149 <F149>

     Word and number  "thirteen  (13)"  substituted  for word and number "eleven
(11)" by directors' resolution of 2/10/68.

Footnote  150 <F150>

     Words "at the regular annual meeting of stockholders" inserted and sentence
"The first election or elections  shall be held at one or more special  meetings
of  stockholders  until all eleven (11)  directors are elected,  and  thereafter
directors  shall be  elected at the  regular  annual  meeting of  stockholders."
deleted by directors' resolution of 2/10/68.

Footnote  151 <F151>

     Word and number  "twelve (12)"  substituted  for word and number  "thirteen
(13)<F149>" by directors' resolution of 12/7/68.

                                       83

<PAGE>136

Footnote  152 <F152>

     Subdivision (ii) as amended by directors' resolution of 4/5/69.  Previously
read as follows:  "(ii) When Deductions  Begin.  Deductions from payroll for the
purposes of this  sub-paragraph  shall begin with salary for the third full week
after  receipt of the  authorization,  except that at the  beginning  of any six
months'  period of the Plan,  authorized  payroll  deductions  shall  begin with
salary for the first full week of the new six months' period.<F45>"

Footnote  153 <F153>

     Second sentence of subdivision (iii) as amended by directors' resolution of
4/5/69.  Previously read as follows:  "Such notice shall take effect with salary
for the third full week after submission of notice.<F46>"

Footnote  154 <F154>

     Word  "twenty-eight"   substituted  for  word  "fourteenth"  by  directors'
resolution of 4/5/69.

Footnote  155 <F155>

     Subdivision (i) as amended by directors'  resolution of 8/6/69.  Previously
read as follows:

         "(i)  Limitations on Amount

     Deductions   from  salary  for  such  purpose   shall  prior  to  April  7,
1968,<F141>,  be not in excess of two times<F81> the current price per share and
not less than one dollar  ($1.00) per  week<F44> and on and after April 7, 1968,
be not in  excess  of  forty-five  dollars  ($45) per week and not less than one
dollar ($1.00) per week.<F142>"

Footnote  156 <F156>

     Words  "first full pay period"  substituted  for words "third full week" by
directors' resolution of 8/6/69.

Footnote  157 <F157>

     Second sentence of subdivision  (iii) inserted by directors'  resolution of
8/67/69.

Footnote  158 <F158>

     Words "OFFICERS AND" deleted by directors' resolution of 12/17/69.

                                       84

<PAGE>137

Footnote  159 <F159>

     Section VII as amended by  directors'  resolution  of 12/17/69.  Previously
read as follows:

     "Officers other than the President<F58> and the Chairman of the Board,<F85>
directors,  and  members of  committees  shall not receive any salary or fee for
their  services as such,  but by  resolution  of the Board they shall be allowed
reimbursement  for their traveling and other reasonably  necessary  expenses for
attendance  at any regular or special  meeting:  PROVIDED,  That nothing  herein
contained  shall preclude any officer,  director,  or member of a committee from
serving the Corporation in any other capacity upon a compensated basis."

Footnote  160 <F160>

     Words "and a Vice Chairman" inserted by directors' resolution of 12/17/69.

Footnote  161 >F161>

     Words  "Vice  Chairman  of the  Board"  substituted  for word  "either"  by
directors' resolution of 12/17/69.

Footnote  162 <F162>

     Words "and Vice Chairman" inserted by directors' resolution of 12/17/69.

Footnote  163 <F163>

     Words "Vice  Chairman of the Board"  substituted  for word  "President"  by
directors' resolution of 12/17/69.

Footnote  164 <F164>

     Last sentence of  sub-paragraph  (f) inserted by  directors'  resolution of
12/17/69.

Footnote  165 <F165>

     Words  "who  are  on  the  payroll  of  the  Corporation  or of  one of its
subsidiary corporations" inserted by directors' resolution of 1/10/70.

Footnote  166 <F166>

     Words "or of one of its  subsidiary  corporations"  inserted by  directors'
resolution of 2/7/70.

                                       85

<PAGE>138

Footnote  167 <F167>

     Words "and members of committees"  and words "who are on the payroll of the
Corporation or of one of its subsidiary  corporations"  transposed by directors'
resolution of 2/7/70.

Footnote  168 <F168>

     Words and figure "five hundred fifty thousand  (550,000)"  substituted  for
words and figure "six hundred  thousand  (600,000)" by directors'  resolution of
4/18/70.

Footnote  169 <F169>

     Words and figure "one hundred fifty  thousand  (150,000)"  substituted  for
words and figure "one hundred  thousand  (100,000)" by directors'  resolution of
4/18/70.

Footnote  170 <F170>

     Sentence "One nominee shall be neither a stockholder of the Corporation nor
an active or retired  officer or  employee of the  Corporation  or of one of its
subsidiary corporations." inserted by directors' resolution of 6/9/71.

Footnote  171 <F171>

     Paragraph 1 as amended by directors' resolution of 6/9/71.  Previously read
as follows:

         "1. Eligibility

     No person shall be elected or appointed as a director unless he is a holder
of Class A or Class B stock and, in addition, is an active or retired officer or
employee of the Corporation or one of its subsidiary corporations,<F166> and any
director  who ceases to fulfill  these  requirements  shall be  disqualified  to
exercise  any of the  powers or duties of  director  and shall be deemed to have
resigned from such position.<F57>"

Footnote  172 <F172>

     Word and number  "thirteen  (13)"  substituted  for word and number "twelve
(12)<F151>" by directors' resolution of 6/9/71.

Footnote  173 <F173>

     Second sentence of Paragraph 3 inserted by directors' resolution of 6/9/71.

                                       86

<PAGE>139

Footnote  174 <F174>

     First sentence of sub-paragraph (b) as amended by directors'  resolution of
9/8/71.  Originally read as follows: "Regular meetings of the Board of Directors
shall be held on the  first  Saturday  in each  month at the main  office of the
Corporation in Washington,  District of Columbia, and/or at such other times and
places as may be fixed by  resolution  of the Board or by written  waiver of all
its members."

Footnote  175 <F175>

     Words  "one  or  more  Assistant  Treasurers"  substituted  for  words  "an
Assistant Treasurer" by directors' resolution of 1/5/72.

Footnote  176 <F176>

     Words "an" substituted for word "the" by directors' resolution of 1/5/73.

Footnote  177 <F177>

     Words and figure "five hundred  thousand  (500,000)"  substituted for words
and figure "five hundred  fifty  thousand  (550,000)<F134><F168>"  by directors'
resolution of 4/21/73.

Footnote  178 <F178>

     Words and figure "two hundred thousand (200,000)" substituted for words and
figure  "one  hundred  fifty  thousand   (150,000)<F135><F169>"   by  directors'
resolution of 4/21/73.

Footnote  179 <F179>

     Paragraph 1 as amended by directors' resolution of 5/14/75. Previously read
as follows:

         "1. Amount

     The total number of shares of stock which the  Corporation is authorized to
issue is seven hundred thousand (700,000)<F133> shares divided into two classes:
one class  designated  as Class A common  shares  shall  consist of five hundred
thousand  (500,000)<F177>  shares without par value and with voting rights,  and
the other class designated as Class B common shares shall consist of two hundred
thousand  (200,000)<F178>  shares without par value per share and without voting
rights.<F75> "

Footnote  180 <F180>

     Sentence "Effective  September 22, 1975, the words and figures 'two hundred
(200)' wherever they appear in this  subdivision  (bb) shall read 'eight hundred
(800)'." inserted by directors' resolution of 5/14/75.

                                       87

<PAGE>140

Footnote  181 F<181>

     Subdivision (i) as amended by directors' resolution of 5/14/75.  Previously
read as follows:

         "(i) Limitations on Amount

     Deductions from salary for such purchase shall prior to October 5, 1969, be
not in excess of forty-five  dollars ($45) per week and not less than one dollar
($1.00)  per week and on and after  October  5,  1969,  be not in excess of five
times the  current  price per share  and not less than one  dollar  ($1.00)  per
week.<F155>"

Footnote  182 <F182>

     Subdivision (iv) as amended by directors' resolution of 5/14/75. Previously
read as follows:

         "(iv) Limitations on Amount

     'Offers to buy' may be satisfied by the Trustee, if stock is available, for
each eligible officer or<F138> employee without limitation in amount:  Provided,
however,  that shares made  available to the Trustee  from  unissued or treasury
stock may not be sold to any one  individual in excess of that amount  necessary
to permit such individual to purchase a total of  two hundred  (200)<F83> shares
of stock through 'offers to buy' in any period of six months.<F54>

Footnote  183 <F183>

     Subdivision (iv) as amended by directors' resolution of 5/14/75. Previously
read as follows:

         "(vii) Fulfillment

     'Offers to buy shall be  satisfied  in order of priority  based on the date
when the 'offer to buy' is listed according to the following system:

     "When the  Trustee  has  available  shares for sale to makers of 'offers to
buy,' he shall allot to each 'live' listing number in numerical  sequence twenty
(20)<F84> shares, or the full amount of the 'offer to buy' if the 'offer' is for
fewer than twenty  (20)<F84>  shares,  until all listing  numbers have  received
their  allotments  or until all the  available  shares  have been  allotted.  If
additional  shares for  allotment  remain,  they shall be  allocated in the same
manner,  twenty  (20)<F84> or fewer (if the  unfulfilled  'offer to buy' is less
than twenty  (20))<F84>  shares being  allotted to each number in rotation until
all available  shares are sold.  Effective  April 7, 1968, the words and figures
'twenty (20) shares' wherever they appear in this  subdivision  (vii) shall read
'forty (40) shares'.<F143> After each such allotment the 'live' listing shall be

                                       88

<PAGE>141

reconstituted, beginning with the first 'offer to buy' that was not satisfied in
the  previous   allotment,   and  the  same  procedure  followed  on  subsequent
allotments."

Footnote  184 <F184>

     Paragraph 8 as amended by directors' resolution of 6/11/75. Previously read
as follows:

"8.<F95> Treasurer

     (a) The  Treasurer  shall have custody of the funds and  securities  of the
Corporation,  shall  keep  full  and  accurate  accounts  of  the  receipts  and
disbursements  in books  belonging  to the  Corporation,  and shall  deposit all
monies  and  other  valuable  effects  in the  name  and to  the  credit  of the
Corporation in such depositories as may be designated by the Board of Directors.

     "(b) The Treasurer  shall  disburse the funds of the  Corporation as may be
ordered by the Board of Directors and either the Chief Executive  Officer or the
President,  in relation to their  functions,  taking  proper  vouchers  for such
disbursements,  and  shall  render  to  the  Chief  Executive  Officer  and  the
directors,  whenever they may require it, an account of all his  transactions as
Treasurer and of the financial condition of the Corporation,  and at the meeting
of the Board of Directors next preceding the annual meeting of  stockholders  he
shall make a like report for the preceding fiscal year.<F108>  

     "(c) He shall give the  Corporation  a bond,  if  required  to do so by the
Board of Directors,  in such sum and in form and with security  satisfactory  to
the  Board,  for the  faithful  performance  of the duties of his office and the
restoration to the Corporation,  in case of his death, resignation,  retirement,
or removal from office, of all books, papers, vouchers, money and other property
of whatever kind  belonging to the  Corporation  in his  possession or under his
control.<F109>  

     "(d) He shall perform such other functions as the Board of Directors or the
Chief Executive Officer may prescribe.<F110>"

Footnote  185 <F185>

     Paragraphs 9 and 10 inserted by directors' resolution of 6/11/75.

Footnote  186 <F186>

     Word "Thursday"  substituted for word "Wednesday" by directors'  resolution
of 9/10/75.

                                       89

<PAGE>142

Footnote  187 <F187>

     Words  and  figure  "one  million  eighty  hundred  thousand   (1,800,000)"
substituted  for  words and  figure  "two  million  (2,000,000)"  by  directors'
resolution of 4/16/77.

Footnote  188 <F188>

     Words and figure "one million (1,000,000)" substituted for words and figure
"eight hundred thousand (800,000)" by directors' resolution of 4/16/77.

Footnote  189 <F189>

     Words  and  figure   "thirty  (30)"   substituted   for  words  and  figure
"twenty-five (25)" by directors' resolution of 1/12/78.

Footnote  190 <F190>

     Sentence "Each  additional  nomination made pursuant to this  sub-paragraph
shall  be  accompanied  by  the  nominee's  written  acceptance  of  his  or her
nomination." inserted by directors' resolution of 1/12/78.

Footnote  191 <F191>

     Words and figure "twenty-two (22)" substituted for word and figure "fifteen
(15)" by directors' resolution of 1/12/78.

Footnote  192 <F192>

     Period  substituted for colon and proviso deleted by directors'  resolution
of 1/12/78.  Proviso read as follows:  "PROVIDED,  however, that each nominee on
such list shall have filed with the Nominating Committee a written acceptance of
his nomination not less than twenty (20) days prior to the meeting;  nominations
which are not so accepted shall be deemed withdrawn.<F10>"

 Footnote  193 <F193>

     Words  "may"  substituted  for word  "shall" by  directors'  resolution  of
11/8/79.

Footnote  194 <F194>

     Sub-paragraph (c) inserted by directors' resolution of 5/8/80.

                                       90

<PAGE>143

Footnote  195 <F195)

     Sub-paragraph  renumbered  as shown by  directors'  resolution  of  5/8/80.
Previously numbered (c).

 Footnote  196 <F196>

     Paragraph 7 inserted by directors' resolution of 6/12/80.

 Footnote  197 <F197>

     Paragraph 8 inserted by directors' resolution of 6/12/80.

Footnote  198 <F198>

     Sub-paragraph   (a)  as  amended  by  directors'   resolution  of  11/6/80.
Previously read as follows:

         "(a)     Operation by Trustee

     The Plan  shall be  operated  in  accordance  with the  provisions  of this
Section  by a  Trustee,  who  shall  be  the  Treasurer  or  an<F176>  Assistant
Treasurer<F118> of the Corporation,  as the Board may designate:<F119> Provided,
however,  that the  Trustee  may  designate  an agent or  agents,  including  an
Assistant  Trustee at the place of  business of a  subsidiary  whose stock is at
least eighty (80) percent owned by the  Corporation,  with powers to perform any
of his duties herein  prescribed by filing with the Secretary of the Corporation
a statement delegating such powers.<F139>"

Footnote  199 <F199>

     Paragraph 1 as amended by directors' resolution of 7/12/84. Previously read
as follows:

"1. Amount.

     The total number of shares of stock which the  Corporation is authorized to
issue is two million eight hundred thousand  (2,800,000) shares divided into two
classes:  one class  designated  as Class A common  shares shall  consist of one
million eight hundred  thousand  (1,800,000)<F187>  shares without par value and
with voting  rights,  and the other class  designated  as Class B common  shares
shall  consist of one  million  (1,000,000)<F188>  shares  without par value and
without voting rights.<F179>"

                                       91

<PAGE>144

Footnote  200 <F200>

     Subdivision (vii) as amended by directors' resolution of 9/6/84. Previously
read as follows:

         "(vii) Fulfillment

     'Offers to buy' shall be satisfied  in order of priority  based on the date
when the 'offer to buy' is listed according to the following system:

     "When the  Trustee  has  available  shares for sale to makers of 'offers to
buy,' he shall allot to each 'live' listing  number in numerical  sequence forty
(40)  shares,  or the full  amount of the  'offer to buy' if the  'offer' is for
fewer than forty (40)  shares,  until all listing  numbers have  received  their
allotments or until all the available  shares have been allotted.  If additional
shares for allotment remain,  they shall be allocated in the same manner,  forty
(40) or fewer (if the unfulfilled  'offer to buy' is less than forty (40) shares
being allotted to each number in rotation  until all available  shares are sold.
Effective  September 22, 1975,  the word and figures  'forty (40)' wherever they
appear in this  subdivision  (vii) shall read 'one hundred sixty  (160)'.  After
each such  allotment the 'live' listing shall be  reconstituted,  beginning with
the first 'offer to buy' that was not satisfied in the previous  allotment,  and
the same procedure followed on subsequent allotments.<F183>"

Footnote  201 <F201>

     Words "or his designees" inserted by directors' amendment of 2/7/85.

Footnote  202 <F202>

     Word  "forty-two"   substituted  for  word   "twenty-eight"  by  directors'
resolution of 3/7/85.

Footnote  203 <F203>

     Section IX,  Paragraph 1 as amended by  directors'  resolution  of 6/12/86.
Previously read as follows:

"1. Amount

     The total number of shares of stock which the  Corporation is authorized to
issue is three million  (3,000,000)  shares divided into two classes:  one class
designated  as Class A common  shares shall consist of one million eight hundred
thousand  (1,800,000)  shares without par value and with voting rights,  and the
other class designated as Class B common shares shall consist of one million two
hundred    (1,200,000)   shares   without   par   value   and   without   voting
rights.<F199>"

                                       92

<PAGE>145

Footnote  204 <F204>

     Sub-paragraph (c) added by directors' resolution of 6/12/86.

Footnote  205 <F205>

     Comma added after word "stock" and phrase amended by directors'  resolution
of 6/12/86.  Previously read as follows: "and Class B stock shall be entitled to
participate  ratably,  share for share,  and without  preference of either Class
over the other.<F71>  

Footnote  206 <F206>

     Comma added after word "stock" and phrase amended by directors'  resolution
of 6/12/86.  Previously read as follows: "and Class B stock shall be entitled to
participate  ratably,  share for share,  and without  preference of either Class
over  the  other  in  all  dividends  when  and as  declared  by  the  Board  of
Directors.<F73>  

Footnote  207 <F207>

     The words "or Class C" added by directors' resolution of 6/12/86.

Footnote  208 <F208>

     Section IX,  Paragraph 1 as amended by  directors'  resolution  of 9/10/87.
Previously read as follows:

"1. Amount

     The total number of shares of stock which the  Corporation is authorized to
issue is three million two hundred and fifty thousand (3,250,000) shares divided
into three classes:  one class designated as Class A common shares shall consist
of one million eight hundred thousand  (1,800,000)  shares without par value and
with voting  rights,  another  class  designated  as Class B common shares shall
consist of one million two hundred thousand (1,200,000) shares without par value
and without voting rights, and another class designated as Class C common shares
shall consist of two hundred and fifty  thousand  (250,000)  shares  without par
value and without voting rights.<F203>"

Footnote  209 <F209>

     Section X, Paragraph  2(e)(ii)(bb)  as amended by directors'  resolution of
9/10/87. Previously read as follows:

     "(bb) All other stock offered to the Fund for purchase in the chronological
order in which  such  offers  have been  received  in  writing  by the  Trustee:
PROVIDED,  however,  that,  whenever the Trustee has unsatisfied offers of stock
from two or more  stockholders,  not more  than two  hundred  (200)<F79>  shares  
 
                                       93

<PAGE>146

may be purchased from a stockholder  having a higher  priority until two hundred
(200)<F79>  shares (or all shares offered,  if less than two hundred  (200)<F79>
have  been  purchased  from  each  such  stockholder  having  a lower  priority.
Effective September 22, 1975, the words and figures 'two hundred (200)' wherever
they appear in this  subdivision  (bb) shall read 'eight  hundred  (800)'.<F180>
Where two or more offers of stock are  received  simultaneously  by the Trustee,
the order shall be determined by lot."

Footnote  210 <F210>

     Section  X,  Paragraph  1(i)(i)  as amended  by  directors'  resolution  of
9/10/87. Previously read as follows:

         "(i) Limitation on Amount

     Deductions from salary for such purchase shall prior to September 22, 1975,
be not in excess of five times the current price per share and not less than one
dollar ($1.00) per week and on and after September 20, 1975, be not in excess of
twenty  times the current  price per share and not less than one dollar  ($1.00)
per week.<F181>"

Footnote  211 <F211>

     Section  X,  Paragraph  2(j)(iv)  as amended by  directors'  resolution  of
9/10/87. Previously read as follows:

         "(iv) Limitation on Amount

     'Offers to buy' may be satisfied by the Trustee, if stock is available, for
each  eligible  officer or  employee  without  limitation  in amount:  Provided,
however,  that shares made  available to the Trustee  from  unissued or treasury
stock prior to September  22,  1975,  may not be sold to any one  individual  in
excess of that amount necessary to permit such individual to purchase a total of
two hundred (200) shares of stock  through  'offers to buy' in any period of six
months;  and provided,  further,  that shares made available to the Trustee from
unissued or treasury  stock on and after  September 22, 1975, may not be sold to
any one individual in excess of that amount  necessary to permit such individual
to purchase a total of eight hundred  (800) shares of stock  through  'offers to
buy' in any period of six months.<F184>"

                                       94

<PAGE>147

Footnote  212 <F212>

     Section X,  Paragraph  2(j)(vii)  as amended by  directors'  resolution  of
9/10/87. Previously read as follows:

         "(vii) Fulfillment

     'Offers to buy shall be  satisfied  in order of priority  based on the date
when the 'offer to buy' is listed according to the following system:

     "When the  Trustee  has  available  shares for sale to makers of 'offers to
buy,' he shall allot to each 'live' listing  number in numerical  sequence forty
(40)  shares,  or the full  amount of the  'offer to buy' if the  'offer' is for
fewer than forty (40)  shares,  until all listing  numbers have  received  their
allotments or until all the available  shares have been allotted.  If additional
shares for allotment remain,  they shall be allocated in the same manner,  forty
(40) or fewer (if the unfulfilled  'offer to buy' is less than forty (40) shares
being allotted to each number in rotation  until all available  shares are sold.
After each such allotment the 'live' listing shall be  reconstituted,  beginning
with the first 'offer to buy' that was not satisfied in the previous  allotment,
and the same procedure followed on subsequent allotments."

Footnote  213 <F213>

     Section V, Paragraph  4(b) as amended by directors'  resolution of 4/15/89.
Previously read as follows:

     "(b) Regular  meetings of the Board of Directors shall be held at 8:30 a.m.
on the first  Thursday after the first Saturday in each month at the main office
of the  Corporation  in Washington,  District of Columbia,  and/or at such other
times and places as may be fixed by resolution of the Board or by written waiver
of all its members. No other notice of any regular meeting shall be required."

Footnote  214 <F214>

     Section V,  Paragraph  3 as amended by  directors'  resolution  of 4/21/90.
Previously read as follows:

"3. Number; Election; Term

     The Board of Directors  shall  consist of thirteen (13 members who shall be
elected  by  the  Class  A  stockholders   at  the  regular  annual  meeting  of
stockholders.  The Board of  Directors  so elected  shall be composed of (i) the
nominee  eligible only under  sub-paragraph  (a) of Paragraph 1 hereof who shall
have received the highest number of votes among the nominees eligible only under
that  provision,  and (ii)  the twelve  (12) nominees  eligible  only under sub-

                                       95

<PAGE>148

paragraph (b) of Paragraph 1 hereof who shall have  received the highest  number
of votes among the nominees  eligible only under that  provision.  Each director
shall hold office until the succeeding  annual  election and until his successor
shall have been elected and shall have duly qualified:  PROVIDED,  That if there
be a vacancy in the Board by reason of death,  resignation,  or otherwise,  such
vacancy  shall be filled  for the  unexpired  term by  majority  vote of all the
remaining directors, although less than a quorum."

Footnote  215 <F215>

     Section V, Paragraph  4(b) as amended by directors'  resolution of 7/12/90.
Previously read as follows:

     "(b) Regular  meetings of the Board of Directors shall be held at 9:00 a.m.
on the Thursday after the first Saturday in each month at the main office of the
Corporation in Washington,  District of Columbia, and/or at such other times and
places as may be fixed by  resolution  of the Board or by written  waiver of all
its members. No other notice of any regular meeting shall be required."

Footnote  216 <F216>

     Section  III,  Paragraph  8(a) as amended by  stockholders'  resolution  of
4/21/90. Previously read as follows:

     "(a) At  least  forty-five  (45)  days  prior  to  any  annual  meeting  of
stockholders  a list of  nominations  for  directors,  prepared by a  Nominating
Committee  to be  appointed  by the Board of  Directors,  shall be mailed by the
Secretary to each Class A stockholder. The Committee shall make at least as many
nominations as there are  directorships to be filled at the annual meeting,  but
may nominate candidates in excess of such number. One nominee shall be neither a
stockholder of the  Corporation  nor an active or retired officer or employee of
the Corporation or of one of its subsidiary  corporations.  Said list shall also
state the  total  number  of  shares  of Class A stock of the  Corporation  then
outstanding."

Footnote  217 <F217>

     Section V, Paragraph 1 as amended by  stockholders'  resolution of 4/21/90.
Previously read as follows:

    "(a) One  person who is not a  stockholder  of the  Corporation  and  not an
active  or  retired  officer or  employee  of  the  Corporation or of one of its
subsidiary corporations shall be elected or appointed as a director.

    "(b) Other  than  the  person  elected  or  appointed  as  director pursuant
to sub-paragraph  a)  above, no  person  shall  be  elected or  appointed  as  a
director unless  he is a  holder  of  Class A or Class B stock and, in addition,
is an active or retired officer or employee of the Corporation or of one of  its

                                       96

<PAGE>149

subsidiary  corporations, and any director elected or appointed pursuant to this
Paragraph  who  ceases  to  fulfill  these   requirements shall  be disqualified
to exercise any of the powers or duties of director and shall be  deemed to have
resigned from such position."

Footnote  218 <F218>

     Section V, Paragraph 3 as amended by  stockholders'  resolution of 4/21/90.
Previously read as follows:

     "The Board of Directors  shall consist of fifteen (15) members who shall be
elected  by  the  Class  A  stockholders   at  the  regular  annual  meeting  of
stockholders.  The Board of  Directors  so elected  shall be composed of (i) the
nominee  eligible only under  sub-paragraph  (a) of Paragraph 1 hereof who shall
have received the highest number of votes among the nominees eligible only under
that  provision,  and  (ii) the  thirteen  (13)  nominees  eligible  only  under
sub-paragraph  (b) of  Paragraph  1 hereof who shall have  received  the highest
number of votes among the  nominees  eligible  only under that  provision.  Each
director  shall hold office until the succeeding  annual  election and until his
successor shall have been elected and shall have duly qualified:  Provided, That
if there  be a  vacancy  in the  Board  by  reason  of  death,  resignation,  or
otherwise,  such vacancy shall be filled of the unexpired  term by majority vote
of all the remaining directors, although less than a quorum."

Footnote  219 <F219>

     Section IX,  Paragraph 1 as amended by  directors'  resolution of 11/11/93.
Previously read as follows:

     "The total number of shares of stock which the Corporation is authorized to
issue is thirteen million  (13,000,000)  shares divided into three classes:  one
class  designated  as Class A common  shares shall  consist of seven million two
hundred thousand  (7,200,000) shares,  $1.00 par value per share and with voting
rights,  another class designated as Class B common shares shall consist of four
million eight hundred thousand (4,800,000) shares, $1.00 par value per share and
without  voting  rights,  and another class  designated as Class C common shares
shall  consist  of one  million  (1,000,000)  shares,  $1.00 par value per share
without voting rights.<F208>"

Footnote 220 <F220>

     Section  VIII,  Paragraph  1(a),  as amended by  directors'  resolution  of
5/8/97. Previously read as follows:

     "The officers of the  Corporation  shall be a Chairman and a Vice Chairman
<F160> of the Board,<F86> a President, one or more Vice-Presidents, a Secretary,
and a  Treasurer.  The Chairman of the Board and the  President  may be the same
person, the<F87> Secretary and the Treasurer may be the same person, and a Vice-
President  may  hold  at the  same  time  the  office  of Vice  Chairman  of the
Board,<F161>  Secretary,  or Treasurer.  The Chairman and Vice Chairman<F162> of
the  Board<F100>,  the President,  and one  Vice-President  shall be chosen from
among the directors;  the other officers may, but need not be, chosen from among
the directors.  No person shall be an officer of the Corporation  unless he is a
holder of Class A stock or Class B stock, and any officer who ceases to hold any
shares of stock in the Corporation  shall be disqualified to exercise any of the
powers or  duties of an  officer  and  shall be  deemed  to have  resigned  from
office.<F59>

Footnote 221 <F221>

     Sub-paragraph (d) added by directors' resolution of 10/09/97.

                                       97

<PAGE>150

Footnote 222 <F222>

     Sentence "For purposes of this  Paragraph  6(b) and Article IV, Section 1A,
Paragraph 16 of the Corporation's  Certificate of  Incorporation,  a transfer of
stock  registered  in TOD form that occurs upon the death of the holder  thereof
shall be deemed to be made "by the person  named in the  certificate,"  provided
that the Corporation has received an affidavit of the personal representative of
the deceased  owner's  estate or such other proof of death of the deceased owner
as may be  satisfactory  to the  Secretary  of  the  Corporation."  inserted  by
directors' resolution of 10/09/97.

Footnote 223 <F223>

     Section XI, as amended by  directors'  resolution  of 11/06/97.  Previously
read as follows:

     The Corporation  shall offer to all officer  and<F144>  employee holders of
Class A<F66> stock the option to execute the following agreement:

     Agreement between The Bureau of National Affairs,  Inc., party of the first
part,  and  ________________<F145>,  holder of  one or more  shares of the Class
A<F66> stock of The Bureau of National Affairs, Inc., party of the second part:

     In  consideration  of mutual  advantages  accruing  therefrom,  the parties
hereby covenant and agree as follows:

     1. The party of the second part will,  within not more than three (3) years
of his  separation  from  employment  by The Bureau of  National  Affairs,  Inc.
(herein called the Corporation) or by a subsidiary eight (80) percent or more of
whose stock is owned by the Corporation,<F146> offer all Class  A<F66>  stock of
the Corporation  held  by him  to  be  purchased  under the  Stock  Purchase and
Transfer  Plan set up pursuant to Section X of  the By-Laws of the  Corporation.
Such offer or offers may be made at any time within the said three (3) years for
any part or all of the Class A<F66> stock so held.

     2. In  the  event  that the  Stock Purchase Fund,  provided for in the said
Plan,  is unable to purchase any or all of the shares offered,  the party of the
second part may, at that time,  at his option, accept Supplemental Bids, if any,
registered with  the  Trustee of the Plan.  If such  Supplemental  Bids  are not
accepted,  the party of the second  part may retain his shares for later  offers
through the Stock  Purchase  and  Transfer, including acceptance of Supplemental
Bids.

     3. If at the end of three (3) years after  termination  of his  employment,
the  party of the  second  part  still  retains  any Class  A<F66>  stock of the
Corporation, he shall offer it forthwith for purchase through the Stock Purchase
Fund. If the Stock  Purchase Fund is unable to purchase any or all of the shares
so  offered,  the  Trustee of the Plan shall so notify him and he may thereafter

                                       98

<PAGE>151

retain  such shares  as have  not been  purchased  or he may  dispose of them by
accepting  Supplemental Bids.  Upon  receipt of  notification  from  the Trustee
that the Fund is able to purchase any  part or all of the shares  then held, the
party of the second part shall, within sixty  (60) days from the mailing of such
notification, which shall state the number of shares the Fund can  purchase from
the stockholder,  present such  shares  to the Trustee for purchase by the Fund.
A like procedure shall be  followed  until all shares  held by  the party of the
second part have been purchased by the Fund.

     4. If the party of the second  part, or  his heirs or  legatees, offers any
or  all of his  shares for  sale other  than as herein specified, this agreement
shall become null and void.

     5. This agreement  shall  be binding  upon  the  heirs and  legatees of the
party of the second part.

     6. Nothing herein contained  shall  diminish the  right of the party of the
second  part to  exchange  Class  A<F66>  stock  for Class  B<F72>  stock of the
Corporation pursuant to Paragraph 2(b) of Section IX of the By-Laws.

     7. The  provisions of Paragraph  7(b) of Section  IX of the  By-Laws  shall
not apply  to the party  of the second  part,  his heirs, or legatees so long as
this  agreement is in force and effect.

                                       99

</FN>
</TABLE>

<PAGE>152

                                      INDEX


Amending bylaws  58
Annual Meeting   2
Annual Report  11
Audit Committee  18
Board of Directors,  see Directors
Bonding
---Of officers 27
Books and accounts 56
Budget 22
Chairman of the Board
---In general 21
---Absence or disability 22
Checks 57
Chief Executive Officer
---In general  23
---Absence or disability 24
Chief Financial Officer 26
Class A Stock  28
Class B Stock 29
Class C Stock 31
Committees
---Audit 18
---Executive 17
---Meetings  19
---Nominating  6
---Other  19
Compensation
---Of directors 19
Controller  26
Directors, Board of
---Committees  17
---Compensation 19
---Delegating powers of officers  27
---Electing officers  20
---Eligibility 8
---Nomination of     6
---Meetings 10
---Number, election, terms 9
---Outside directors  8
---Powers 8
---Quorum 11
---Setting price of stock  44
---Voting for  5
Dividends  57
Executive Committee 17
Indemnification 11
List of stockholders 3
Lost stock certificates 40

<PAGE>153

Meetings
---Annual meeting  2
---Board of Directors 10
---Special meeting of stockholders  3
Nominating Committee  6
Notice
---In general 58
---Board of Directors meetings  10
---Annual meeting 2
---Special meeting of stockholders 2
---Waiver 58
Offers to buy 47
Officers--See also specific offices
---Appointment and tenure 20, 21 
---Absence or  disability  27  
---Bonding  27  
---Chairman  of the Board  20,  21
---Chief Executive  Officer  21,  23
---Chief  Financial  Officer  26
---Controller  26
---Delegation  of  powers  27
---President  20,  22
---President  pro  tem  25
---Secretary  20, 25
---Senior Vice President 23, 24
---Term 21
---Treasurer 20, 26
---Vacancy  21
---Vice  Chairman of the Board 20
---Vice  Presidents  20, 24
Outside  Directors 8
Optional  agreements  52 
Payroll  deductions  45
President
---In general 22
---Absence or disability 23 
President pro tem 25
Price of stock  44
Proxies 5 
Quorum  
---at  stockholders' meetings 4 
---at Board of  Directors' meetings 11  
Record Date 7
Reserves  57 
Seal 1, 25 
Secretary  20, 25
Senior Vice President 23, 24 
Special meetings 
---Of stockholders 3

<PAGE>154

Stock
---Amount 27
---Certificates
-----In  general  33 
-----Lost  40
---Class A 28 
---Class B 29  
---Class C 31
---Dividends 57
---Exchange of A for B 30, 33
---Fractional shares 40 
---Price
-----Purchase of Class A 34, 37 
-----Purchase of Class B 38 
-----Set under SPTP 44
---Purchase by corporation 34 
---Redemption of Class B stock 37
---Stock Purchase and Transfer Plan 41
---Transfer 33
Stock Purchase and Transfer Plan
---In general 41
---Availability of treasury or unissued stock  45
---Eligibility 41
---Offers to buy 47
---Payroll deductions 45
---Priorities  in purchase and sale of stock 43 
---Sale of stock to  corporation 51  
---Supplemental  bids 50  
---Trustee  41  
Stockholders  
---Definition of 57
---Eligibility  
-----Class  A 28  
-----Class  B 29  
-----Class C 31 
---List of 3
---Voting  rights 4 
---Record date 7 
Supplemental bids 50 
Transfer on Death 32, 34 
Treasurer 20, 26 
Two percent nominations 6
Vacancy 
---Board 10 
---Officer 21 
Vice chairman of the Board 20 
Vice presidents 20, 24 
Voting 
----Manner of 5

<PAGE>155

                                                                 EXHIBIT 22



                           SUBSIDIARIES OF REGISTRANT


                                 STATE OF
                              INCORPORATION    RELATIONSHIP

BNA Communications Inc.           Delaware     100% owned by Registrant

BNA International Inc.            Delaware     100% owned by Registrant

BNA Washington Inc.               Delaware     100% owned by Registrant

The McArdle Printing Co., Inc.    Delaware     100% owned by Registrant

Pike & Fischer, Inc.              Delaware     100% owned by Registrant

Tax Management Inc. (a)           Delaware     100% owned by Registrant

BNA Holdings Inc.                 Delaware     100% owned by Registrant




     (a) Tax  Management  Inc. owns 100% of TM Holding  Company Inc., a Delaware
corporation.

<PAGE>156

                                                                 EXHIBIT 28.2


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 11-K

(Mark One)
     (X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES  EXCHANGE ACT
OF 1934
     For the fiscal year ended December 31, 1997
                                       OR
     ( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934

For the transition period from _______________________ to _____________________

Commission  file number 2-28286, as exhibit 28.2

     A. Full title of the plan and the address of the plan,  if  different  from
that of the issuer named below:
         THE BNA DEFERRED STOCK PURCHASE PLAN

     B. Name of  issuer  of the  securities  held  pursuant  to the plan and the
address of its principal executive office:

         The Bureau of National Affairs, Inc.
         1231 25th Street, N. W.
         Washington, D. C.  20037

         Index to form 11-K:

            Financial Statements -
               Report of Independent Auditors                          159 
               Statements of Net Assets Available for Benefits         160
                 December 31, 1997 and 1996
               Statements of Changes in Net Assets Available           161
                 for Benefits - Years Ended December 31, 1997,
                 1996, and 1995
               Notes to Financial Statements - December 31,            162
                 1997, 1996, and 1995
                 Financial Statement Schedules                         165


<PAGE>157



                                    SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Deferred  Stock  Purchase  Plan  Administrative  Committee  has duly caused this
annual report to be signed by the undersigned thereunto duly authorized.

           THE BNA DEFERRED STOCK PURCHASE PLAN


           Date     March 19, 1998
                    -------------


           By       s\John E. Jenc
                    --------------
                    John E. Jenc
                    Chairman of the Administrative Committee






<PAGE>158











                      THE BNA DEFERRED STOCK PURCHASE PLAN

                              Financial Statements

                           December 31, 1997 and 1996

                   (With Independent Auditors' Report Thereon)





<PAGE>159




                          Independent Auditors' Report



The Administrative Committee of
 The BNA Deferred Stock Purchase Plan:

We have audited the accompanying statements of net assets available for benefits
of The BNA Deferred  Stock  Purchase Plan (the Plan) as of December 31, 1997 and
1996, and the related statements of changes in net assets available for benefits
for each of the years in the three-year  period ended  December 31, 1997.  These
financial  statements  are the  responsibility  of the  Plan's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for benefits
for each of the  years in the  three-year  period  ended  December  31,  1997 in
conformity with generally accepted accounting principles.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements taken as a whole.  The supplemental  schedules of investments at fair
value and  reportable  transactions  are presented for the purpose of additional
analysis and are not a required part of the basic  financial  statements but are
supplementary  information  required  by the  Department  of  Labor's  Rules and
Regulations for Reporting and Disclosure  under the Employee  Retirement  Income
Security Act of 1974.  The  Supplemental  schedules  have been  subjected to the
auditing procedures applied in the audit of the basic financial  statements and,
in our opinion,  are fairly  stated in all material  respects in relation to the
basic financial statements taken as a whole.


                                                s\ KPMG Peat Marwick LLP
                                                ------------------------
                                                KPMG Peat Marwick LLP


Washington, D.C.
February 13, 1998




<PAGE>160







                      THE BNA DEFERRED STOCK PURCHASE PLAN

                 STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

                           DECEMBER 31, 1997 AND 1996


                                                   1997                   1996
                                            -----------            -----------
Investments, at fair value (Note 2)
   (Cost of $26,776,601 in 1997 and
   $23,251,129 in 1996)                     $42,231,999            $35,843,148
Cash and cash equivalents                       310,679                244,079
Accrued Interest                                  1,234                   --
                                            -----------            -----------
    Net assets available for benefits       $42,543,912            $36,087,227
                                            ===========            ===========








                 See accompanying notes to financial statements.


<PAGE>161






                      THE BNA DEFERRED STOCK PURCHASE PLAN

           STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

                  YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995



                                             1997          1996          1995
                                         -----------   -----------   -----------
Additions to net assets attributed to:
Investment income
  Dividends (Note 1)                     $ 1,515,099   $ 1,300,662   $ 1,130,027
  Interest                                    13,057         6,809         4,942
  Unrealized appreciation of
   investments (Note 2)                    3,782,258     2,922,045     3,281,122
                                         -----------   -----------   -----------
                                           5,310,414     4,229,516     4,416,091

Contributions by participants
 (Note 1)                                  3,939,638     3,645,888     3,239,757
                                         -----------   -----------   -----------

 Total additions                           9,250,052     7,875,404     7,655,848
                                         -----------   -----------   -----------

Deductions from net assets attributed to:
Distributions to participants
  (Note 1)                                 2,793,141     2,911,627     1,927,127
Administrative costs (Note 3)                    226           357           393
                                         -----------   -----------   -----------

 Total deductions                          2,793,367     2,911,984     1,927,520
                                         -----------   -----------   -----------

   Net increase                            6,456,685     4,963,420     5,728,328

Net assets available for benefits:
   Beginning of year                      36,087,227    31,123,807    25,395,479
                                         -----------   -----------   -----------

   End of year                           $42,543,912   $36,087,227   $31,123,807
                                         ===========   ===========   ===========










                 See accompanying notes to financial statements.





<PAGE>162




                      THE BNA DEFERRED STOCK PURCHASE PLAN

                          NOTES TO FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995



(1)      SUMMARY DESCRIPTION OF PLAN

The BNA Deferred Stock Purchase Plan (the "Plan") is a contributory benefit plan
sponsored  by The Bureau of National  Affairs,  Inc.  (the  "Company"),  for the
benefit of  employees of the Company and certain of its  subsidiaries.  The Plan
was  established  in 1982 with an  effective  date of January  1,  1983,  and is
subject to the provisions of the Employee Retirement Income Security Act of 1974
("ERISA").  The Plan is designed to provide  benefits to  participants  or their
beneficiaries,  and  encourages  savings  through  investments  in the Company's
Common Stock.

Employees are eligible to  participate  in the Plan upon  completion of one full
year of service.  To participate,  eligible  employees  authorize the Company to
contribute,  on their behalf, a salary reduction amount to a Trust (the "Trust")
established  by the Plan.  Such  contributions  may be between 1% and 15% of the
participant's  compensation  for each Plan  year,  subject  to  certain  ceiling
limitations provided in the Plan, by tax laws, and by ERISA.

The Trust maintains  separate  accounts for each  participant in the Plan. These
accounts are credited with the participants' salary reduction  contributions and
dividend  income.  These cash  balances  are used to purchase  shares of Company
Class A Common  Stock,  which are  credited to the  accounts  of the  individual
participants.  Share and cash balances in the  participants'  accounts are fully
vested.  Distributions  of  participants'  equity  can be made in the  event  of
retirement,  death, qualifying hardships, or other severance of service. If upon
terminating  employment,  a  participant's  account  value exceeds  $3,500,  the
participant may opt to delay distribution until reaching age 59 1/2.

The Company's  Class A Common Stock,  which is voting,  may only be purchased by
employees.  Former employees and, in some cases,  their  beneficiaries  may hold
Class A Common Stock for up to three years.  The Company's  Class B Common Stock
is  issued  to  employees  in  exchange  for  Class A Common  Stock  upon  their
retirement. The Company's Class C Common Stock is issued in exchange for Class A
Common Stock to employees of any subsidiary, upon disposition of the subsidiary.
The Trust may convert  Class A Common Stock for cash, or exchange it for Class B
or Class C Common  Stock,  if  necessary  to  comply  with the  above  ownership
restrictions. Proceeds from such transactions are held for the Plan participants
in their accounts.  Dividends received from Class B and Class C Common Stock are
not reinvested in Company stock, but earn interest income.

An administrative  committee  appointed by the Company's Board of Directors acts
as administrator of the Plan. An officer of the Company serves as the Trustee.


                                                                    (Continued)


<PAGE>163






                      THE BNA DEFERRED STOCK PURCHASE PLAN

                        NOTES TO THE FINANCIAL STATEMENTS


(2)      INVESTMENTS

At December 31, 1997, the Trust held 1,328,349  shares of the Company's  Class A
Common  Stock and 91,214  shares of the  Company's  Class B Common  Stock,  each
valued at $29.75 per share, for 1,252 plan  participants.  At December 31, 1996,
the Trust held 1,240,077 shares of the Company's Class A Common Stock and 87,447
shares of the Company's  Class B Common Stock,  each valued at $27.00 per share,
for 1,206 plan participants.

The  fair  value  of  the  stock  is set by the  Company's  Board  of  Directors
semiannually  for the Stock  Purchase and Transfer Plan (SPTP).  The Plan values
its  investments in the Company's stock at the then most current price fixed for
the SPTP market.

The following  information  summarizes the Plan's  investment  and  distribution
transactions during 1996 and 1997 involving the Company's Common Stock.

                                                       Number           Fair
                                                      of Shares         Value
                                                     ----------    -------------


Balance, January 1, 1996                              1,251,300    $ 30,969,675

Acquired                                                185,635       4,828,694

Distributed to participants                            (109,411)     (2,877,266)

Appreciation during the year in the market
   value of shares of Company stock held
   at year end                                                        2,922,045

                                                     -----------   -------------

Balance, December 31, 1996                            1,327,524      35,843,148
                                                     -----------   -------------

Acquired                                                185,961       5,313,443

Distributed to participants                             (93,922)     (2,706,850)

Appreciation during the year in the market
   value of shares of Company stock held
   at year end                                                        3,782,258

                                                     -----------   -------------

Balance, December 31, 1997                            1,419,563    $ 42,231,999
                                                     ===========   =============


The  Company's  Board of  Directors  have  fixed the fair  value of the stock at
$32.50 per share, effective March 23, 1998.



(3)      ADMINISTRATIVE COSTS

The Company pays most of the  administrative  costs of the Plan.  Such costs are
not reflected in the accompanying financial statements.

                                                                    (Continued)


<PAGE>164




(4)      INCOME TAXES

The Plan received its latest  favorable  determination  letter from the Internal
Revenue Service on January 19, 1996  indicating  that the Plan, as designed,  is
qualified under the applicable  requirements of the Internal Revenue Code and is
therefore  exempt  from  federal  income  taxes.  It is the intent of the Plan's
management  that the Plan remain  qualified and its underlying  trust remain tax
exempt under the applicable provisions of the Internal Revenue Code.



<PAGE>165





                                                                      Schedule 1

                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                      THE BNA DEFERRED STOCK PURCHASE PLAN

                            INVESTMENTS AT FAIR VALUE
                                DECEMBER 31, 1997



                                                         Fair
                        Description                      Value          Cost
-------------------------------------------------    ------------   ------------


1,419,563 shares Bureau of National Affairs, Inc.
  Common Stock                                      $ 42,231,999   $ 26,776,601




<PAGE>166



                                                                     Schedule 2
                      THE BUREAU OF NATIONAL AFFAIRS, INC.
                      THE BNA DEFERRED STOCK PURCHASE PLAN

                       SCHEDULE OF REPORTABLE TRANSACTIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1997



                                            Number of
Number                                      Purchases      Purchase
                                            or Distri-     Price or
of Shares       Description                  butions         Value         Gain
---------   -----------------------------   ----------   ----------   ----------

185,961     Purchases:
              Bureau of National Affairs,
              Inc., Common Stock               81        $5,313,443


 93,922     Distributions:
              Bureau of National Affairs
              Inc., Common Stock              180        $2,706,850     $918,879












Note: The items listed above represent  transactions or a series of transactions
which are in excess of 5% of the market value of Plan assets at January 1, 1997,
($1,804,361) and are reportable  under Section  2520.103.6 of Chapter XXV of the
Department of Labor Employee  Retirement  Income  Security Act annual  reporting
requirements.