<PAGE> 1
FORM 10-Q.--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended September 10, 1994
--------------------------------------------
or
[ ] Transition Report Pursuant to Section 13 of 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.
- - -----------------------------------------------------------------
(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 Number)
1231 25th St., N.W. Washington, D.C. 20037
- - ------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(202) 452-4200
- - -----------------------------------------------------------------
(Registrant's telephone number, including Area Code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months and
(2) has been subject to the filing requirements for the past 90
days. Yes ___X___ No ______
The number of shares outstanding of each of the issuer's classes of
common stock, as of September 10, 1994 was 3,305,576 Class A common
shares, 4,822,206 Class B common shares, and 436,328 Class Common
shares.
<PAGE>2
-2-
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 36-WEEKS ENDED SEPTEMBER 10, 1994 and SEPTEMBER 11, 1993
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
36 Weeks Ended
-----------------------------------
Sept. 10, 1994 Sept. 11, 1993
---------------- ----------------
<S> <C> <C>
OPERATING REVENUES $ 142,818 $ 133,957
---------------- ----------------
OPERATING EXPENSES:
Editorial, production and distribution 82,104 76,811
Selling 33,888 28,809
General and administrative 21,907 22,598
Profit sharing 361 449
---------------- ----------------
138,260 128,667
---------------- ----------------
Operating Profit 4,558 5,290
NON-OPERATING INCOME (EXPENSE):
Investment Income 3,464 4,560
Interest Expense (126) (326)
Other 479 171
---------------- ----------------
Total Non-Operating Income 3,817 4,405
---------------- ----------------
INCOME BEFORE INCOME TAXES 8,375 9,695
PROVISION FOR INCOME TAXES 2,378 2,565
---------------- ----------------
NET INCOME $ 5,997 $ 7,130
================ ================
EARNINGS PER SHARE $ .70 $ .83
================ ================
WEIGHTED AVERAGE SHARES OUTSTANDING 8,582,263 8,544,598
================ ================
</TABLE>
<PAGE>3
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 12-WEEKS ENDED SEPTEMBER 10, 1994 and SEPTEMBER 11, 1993
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
12 Weeks Ended
-----------------------------------
Sept. 10, 1994 Sept. 11, 1993
---------------- ----------------
<S> <C> <C>
OPERATING REVENUES $ 48,375 $ 46,084
---------------- ----------------
OPERATING EXPENSES:
Editorial, production and distribution 26,920 26,480
Selling 11,727 9,583
General and administrative 7,058 7,913
Profit sharing 235 166
45,940 44,142
---------------- ----------------
Operating Profit 2,435 1,942
---------------- ----------------
NON-OPERATING INCOME (EXPENSE):
Investment Income 1,043 1,563
Interest Expense (30) (69)
Other 447 56
---------------- ----------------
Total Non-Operating Income 1,460 1,550
---------------- ----------------
INCOME BEFORE INCOME TAXES 3,895 3,492
PROVISION FOR INCOME TAXES 1,316 806
---------------- ----------------
NET INCOME $ 2,579 $ 2,686
================ ================
EARNINGS PER SHARE $ .30 $ .31
================ ================
WEIGHTED AVERAGE SHARES OUTSTANDING 8,569,225 8,554,827
================ ================
</TABLE>
<PAGE>4
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 10, 1994 AND DECEMBER 31, 1993
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
September 10, December 31,
ASSETS 1994 1993
----------------------------------- -------------- --------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 11,318 $ 10,982
Short-term investments, at fair value 6,760 8,804
Accounts receivable (net of allowance
for doubtful accounts of $1,396
in 1994 and $1,376 in 1993) 38,052 41,181
Inventories, at lower of average cost
or market 7,055 6,975
Prepaid expenses 2,358 2,289
Deferred selling expenses 28,952 24,234
-------------- --------------
Total current assets 94,495 94,465
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MARKETABLE SECURITIES 67,511 65,265
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PROPERTY AND EQUIPMENT - at cost:
Land 5,176 5,176
Building and improvements 47,959 47,864
Furniture, fixtures and equipment 58,140 53,832
-------------- --------------
111,275 106,872
Less-Accumulated depreciation 51,382 45,490
-------------- --------------
Net property and equipment 59,893 61,382
-------------- --------------
DEFERRED INCOME TAXES 18,662 16,562
-------------- --------------
GOODWILL 9,959 10,175
-------------- --------------
OTHER ASSETS 3,325 3,668
-------------- --------------
Total assets $ 253,845 $ 251,517
============== ==============
</TABLE>
<PAGE>5
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 10, 1994 AND DECEMBER 31, 1993
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
September 10, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
----------------------------------- -------------- --------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 12,541 $ 15,569
Employee compensation and benefits
payable 16,445 13,423
Income taxes payable 442 38
Deferred income taxes 6,399 4,540
Current portion of long-term debt 215 4,186
Deferred subscription revenue 108,792 107,834
Dividends payable 3,881 ---
-------------- --------------
Total current liabilities 148,715 145,590
POSTRETIREMENT BENEFITS, less current portion 52,172 49,162
LONG-TERM DEBT, less current portion 1,169 1,332
OTHER LIABILITIES 2,935 2,949
-------------- --------------
Total liabilities 204,991 199,033
-------------- --------------
STOCKHOLDERS' EQUITY:
Capital stock, common, $1.00 par value-
Class A - Voting; Authorized 6,700,000
shares; issued 6,478,864 shares 6,479 6,479
Class B - Nonvoting; authorized
5,300,000 shares; issued 4,926,973 shares
in 1994 and 4,919,490 shares in 1993 4,927 4,919
Class C - Nonvoting; authorized 1,000,000
shares; issued 506,336 shares 506 506
Additional paid-in capital 20,955 18,423
Retained earnings 35,166 36,933
Treasury stock at cost - 3,348,063 shares
in 1994 and 3,351,887 shares in 1993 (18,735) (16,360)
Net unrealized (loss) gain on marketable
securities (410) 1,614
Foreign currency translation adjustment (34) (30)
-------------- --------------
Total stockholders' equity 48,854 52,484
-------------- --------------
Total liabilities and
stockholders'equity $ 253,845 $ 251,517
============== ==============
</TABLE>
<PAGE>6
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 36-WEEKS ENDED SEPTEMBER 10, 1994 and SEPTEMBER 11, 1993
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
36 Weeks Ended
-----------------------------------
Sept. 10, 1994 Sept. 11, 1993
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,997 $ 7,130
Items with different cash requirements
than that reflected in net income -
Deferred subscription revenue 958 (4,526)
Depreciation and amortization 6,680 6,551
Accrued postretirement benefits expense 4,652 4,754
Provision for deferred income taxes 850 (2,020)
Deferred selling expense (4,718) (706)
(Gain) on sales of securities (405) (1,632)
(Gain) on sales of businesses and publications (503) (170)
(Gain) loss on disposals of equipment 24 (1)
Others (27) 119
Changes in operating assets and liabilities -
Accounts receivable 3,090 9,896
Accounts payable and accrued liabilities (137) 1,299
Inventory (80) (1,290)
Film production costs (402) (300)
Other assets and liabilities - net 78 (316)
---------------- ----------------
Net cash provided from operating activities 16,057 18,788
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -
Purchase of equipment and furnishings (4,407) (4,857)
Building improvements (95) (662)
Proceeds from sales of businesses and publications 543 174
Proceeds from sales of property 3 5
---------------- ----------------
Net cash (used for) capital expenditures (3,956) (5,340)
---------------- ----------------
Net cash (used for) investment portfolio (3,912) (8,583)
---------------- ----------------
Net cash (used for) investing activities (7,868) (13,923)
---------------- ----------------
</TABLE>
<PAGE>7
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 36-WEEKS ENDED SEPTEMBER 10, 1994 and SEPTEMBER 11, 1993
(Unaudited)
(In Thousands of Dollars)
<TABLE>
<CAPTION>
36 Weeks Ended
-----------------------------------
Sept. 10, 1994 Sept. 11, 1993
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of borrowings $ (4,134) $ (3,124)
Sales of capital stock to employees 3,273 1,707
Purchase of treasury stock (3,108) (1,074)
Dividends paid (3,884) (3,842)
---------------- ----------------
Net cash (used for) financing activities (7,853) (6,333)
---------------- ----------------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS 336 (1,468)
CASH AND CASH EQUIVALENTS, beginning of period 10,982 10,553
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of period $ 11,318 $ 9,085
================ ================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 125 $ 321
Income taxes paid 960 3,293
</TABLE>
<PAGE>8
-8-
THE BUREAU OF NATIONAL AFFAIRS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 10, 1994
(UNAUDITED)
NOTE 1: General
- - ---------------
The information in this report has not been audited. Results for
the thirty six weeks are not necessarily representative of the year
because of the seasonal nature of activities. The financial information
furnished herein reflects all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management,
necessary to a fair statement of the results reported for the periods
shown and has been prepared in conformity with generally accepted
accounting principles applied on a consistent basis.
Notes contained in the 1993 Annual Report to security holders are
hereby incorporated by reference. Note disclosures which would
substantially duplicate those contained in the 1993 Annual Report to
security holders have been omitted. Certain prior year balances have
been restated to conform to current year presentation.
NOTE 2: Inventories
- - --------------------
Inventories consisted of the following (in thousands):
September 10, 1994 December 31, 1993
------------------ -----------------
Materials and supplies $4,159 $4,579
Work in process 430 94
Finished goods 2,466 2,302
-------- --------
$7,055 $6,975
======== ========
NOTE 3: Stockholders' Equity
- - ------------------------------
Treasury stock as of September 10, 1994 and December 31, 1993,
respectively, consisted of: Class A, 3,173,288 and 3,289,445 shares;
Class B, 104,767 and no shares; and Class C, 70,008 and 62,442 shares.
NOTE 4: Line of Credit
- - ------------------------
During 1994, the Company arranged a $10 million unsecured line of
bank credit to be used for corporate borrowing and letters of credit. As
of September 10, 1994, $9.6 million of the credit line was unused.
<PAGE>9
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PART I
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Position
It is presumed that users of this interim report have read or have
access to the audited financial statements and management's discussion
and analysis contained in the 1993 Annual Report to security holders,
hereby incorporated by reference. This interim report is intended to
provide an update of the disclosures contained in the 1993 Annual Report
to security holders and, accordingly, disclosures which would
substantially duplicate those contained therein have been omitted.
RESULTS OF OPERATIONS
Thirty-six weeks 1994 compared to thirty-six weeks 1993
Consolidated net income of $6 million in the thirty-six weeks ended
September 10, 1994 was 15.9 percent lower than the net income recorded
for the first thirty-six weeks of 1993. Although consolidated revenues
of $142.8 million increased $8.9 million, or 6.6 percent over the same
period of 1993, operating expenses were up 7.5 percent and non-operating
income declined 13.3 percent.
Service revenues (print and CD subscriptions and online products)
amounted to 87.7 percent of consolidated revenues for the period and
were up 6.5 percent due to price increases and sales of new
publications. New subscription sales were up 31.3 percent, mainly due
to high sales of new CD products. Not all of these sales will result in
additional revenue, as some existing print subscriptions were canceled
in favor of the comparable CD product.
Other revenues increased 7.1 percent as most divisions recorded
increases over prior year results. Printing sales to outside customers
increased $1.9 million, and information-on-demand and training media
sales were also higher. These increases were partially offset by
declines in software and books revenues.
Operating expenses increased 7.5 percent compared to the prior
year. Editorial and production costs were up 10.0 percent and 7.3
percent, respectively, due in part to the cost of developing a new
publishing system. Distribution costs were lower than the same period
of 1993 because of the increased proportion of CD product sales which
have relatively low fulfillment costs. Selling expenses increased 17.6
percent reflecting costs of attaining record new sales over the last
year.
<PAGE>10
-10-
The consolidated operating profit decreased $732,000. Investment
income decreased $1,096,000 due to lower gains on sales of securities.
Earnings per share for the first thirty-six weeks of 1994 were $.70
per share compared to $.83 per share for 1993.
The decrease in earnings was expected and reflects expenditures to
develop a more efficient publishing systems, the conversion of print
products into marketable electronic formats, higher selling expenses
associated with the higher new sales, and lower investment gains.
Financial results for 1994, in comparison with those of the prior year,
are expected to remain lower for the balance of the year.
Twelve weeks ended September 10, 1994 compared to twelve weeks ended
September 11, 1993.
Consolidated revenues increased by 5.0 percent in the latest twelve
weeks of 1994 compared to 1993; operating profit was up 25.4 percent
mainly due to lower general and administrative expenses and a favorable
adjustment, based on the latest actuarial study, for post-retirement
benefit expenses. Consolidated net income was down 4.0 percent due to
lower investment income and a higher effective tax rate. The 1993
provision for taxes had been reduced by $268,000 due to tax rate changes
enacted during that quarter.
FINANCIAL POSITION
Cash provided from operating activities was $16.1 million in the
first thirty-six weeks of 1994, compared to $18.8 million for the first
thirty-six weeks of 1993. Operating expenditures increased 8.5 percent
over 1993 due to factors explained above. Customer receipts increased
5.4 percent.
Cash used for investing activities netted to $7.9 million
reflecting a $3.9 million addition to the Company's investment
portfolio, capital expenditures of $4.5 million, less collections of $.5
million from prior sales of businesses and publications.
Cash used for financing activities included a scheduled $4 million
repayment of a bank loan and $3.9 million paid out to stockholders as
cash dividends.
With $85.6 million in cash and investment portfolios, the financial
position and liquidity of the Company remains very strong.
<PAGE>11
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PART II
Item 1 Legal Proceedings
- - ------
There were no material legal proceedings during
the first thirty-six weeks of 1994.
Item 2 Change in Securities
- - ------
There were no changes in securities.
Item 3 Defaults upon Senior Securities
- - ------
There were no defaults upon senior securities.
Item 4 Submission of Matters to a Vote of Securities
- - ------ Holders
There were no matters submitted to a vote for
security holders.
Item 5 Other Information
- - ------
No other information is presented herein.
Item 6 Exhibits and Reports on Form 8-K
- - ------
No reports were filed on Form 8-K during the
quarter ended September 10, 1994.
<PAGE>12
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SIGNATURES
Pursuant to the requirements 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.
------------------------------------
Registrant
10/21/94 s/ William A. Beltz
- - --------- --------------------------------------
Date William A. Beltz
President and Chief Executive Officer
10/21/94 s/ George J. Korphage
- - --------- ---------------------------------------
Date George J. Korphage
Vice President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
September 10, 1994 10-Q filing and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-3
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-10-1994
<CASH> 11,318
<SECURITIES> 6,760
<RECEIVABLES> 39,448
<ALLOWANCES> 1,396
<INVENTORY> 7,055
<CURRENT-ASSETS> 94,495
<PP&E> 111,275
<DEPRECIATION> 51,382
<TOTAL-ASSETS> 253,845
<CURRENT-LIABILITIES> 148,715
<BONDS> 1,169
<COMMON> 11,912
0
0
<OTHER-SE> 36,942
<TOTAL-LIABILITY-AND-EQUITY> 253,845
<SALES> 142,818
<TOTAL-REVENUES> 142,818
<CGS> 82,104
<TOTAL-COSTS> 82,104
<OTHER-EXPENSES> 55,720
<LOSS-PROVISION> 436
<INTEREST-EXPENSE> 126
<INCOME-PRETAX> 8,375
<INCOME-TAX> 2,378
<INCOME-CONTINUING> 5,997
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,997
<EPS-PRIMARY> .70
<EPS-DILUTED> .70
</TABLE>
