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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 June 18, 1994
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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
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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
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(Address of principal executive offices) (Zip Code)
(202) 452-4200
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(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 June 18, 1994 was 3,278,991 Class A common
shares, 4,857,619 Class B common shares, and 438,879 Class Common
shares.
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 24-WEEKS ENDED JUNE 18, 1994 and JUNE 19,1993
(Unaudited)
(In Thousands of Dollars)
24 Weeks Ended
-------------------------------
June 18, 1994 June 19, 1993
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OPERATING REVENUES $ 94,443 $ 87,873
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OPERATING EXPENSES:
Editorial, production and distribution 55,184 50,331
Selling 22,161 19,226
General and administrative 14,849 14,685
Profit sharing 126 283
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92,320 84,525
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Operating Profit 2,123 3,348
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NON-OPERATING INCOME (EXPENSE):
Investment Income 2,421 2,997
Interest Expense (96) (257)
Other 32 115
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Total Non-Operating Income 2,357 2,855
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INCOME BEFORE INCOME TAXES 4,480 6,203
PROVISION FOR INCOME TAXES 1,062 1,759
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NET INCOME $ 3,418 $ 4,444
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EARNINGS PER SHARE $ .40 $ .52
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WEIGHTED AVERAGE SHARES OUTSTANDING 8,588,745 8,541,966
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 12-WEEKS ENDED JUNE 18, 1994 and JUNE 19,1993
(Unaudited)
(In Thousands of Dollars)
12 Weeks Ended
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June 18, 1994 June 19, 1993
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OPERATING REVENUES $ 48,120 $ 44,346
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OPERATING EXPENSES:
Editorial, production and distribution 28,509 25,347
Selling 11,436 10,022
General and administrative 7,642 7,507
Profit sharing (10) 99
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47,577 42,975
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Operating Profit 543 1,371
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NON-OPERATING INCOME (EXPENSE):
Investment Income 1,259 1,269
Interest Expense (39) (162)
Other 7 110
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Total Non-Operating Income 1,227 1,217
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INCOME BEFORE INCOME TAXES 1,770 2,588
PROVISION FOR INCOME TAXES 318 673
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NET INCOME $ 1,452 $ 1,915
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EARNINGS PER SHARE $ .17 $ .22
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WEIGHTED AVERAGE SHARES OUTSTANDING 8,614,699 8,557,111
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 18, 1994 AND DECEMBER 31, 1993
(Unaudited)
(In Thousands of Dollars)
June 18, December 31,
ASSETS 1994 1993
--------------------------------- ------------- -------------
CURRENT ASSETS:
Cash and cash equivalents $ 10,401 $ 10,982
Short-term investments, at fair value 6,720 8,804
Accounts receivable (net of
allowance for doubtful accounts
of $1,372 in 1994 and $1,376 in 1993) 32,973 41,181
Inventories, at lower of average
cost or market 7,860 6,975
Prepaid expenses 2,233 2,289
Deferred selling expenses 27,012 24,234
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Total current assets 87,199 94,465
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MARKETABLE SECURITIES 68,661 65,265
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PROPERTY AND EQUIPMENT - at cost:
Land 5,176 5,176
Building and improvements 47,935 47,864
Furniture, fixtures and equipment 56,885 53,832
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109,996 106,872
Less-Accumulated depreciation 49,441 45,490
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Net property and equipment 60,555 61,382
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DEFERRED INCOME TAXES 18,913 16,562
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GOODWILL 10,031 10,175
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OTHER ASSETS 3,312 3,668
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Total assets $ 248,671 $ 251,517
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 18, 1994 AND DECEMBER 31, 1993
(Unaudited)
(In thousands of dollars)
June 18, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
------------------------------------- ------------- -------------
CURRENT LIABILITIES:
Accounts payable $ 14,210 $ 15,569
Employee compensation and benefits
payable 13,332 13,423
Income taxes payable 64 38
Deferred income taxes 5,630 4,540
Current portion of long-term debt 211 4,186
Deferred subscription revenue 107,297 107,834
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Total current liabilities 140,744 145,590
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POSTRETIREMENT BENEFITS, less current portion 52,950 49,162
LONG-TERM DEBT, less current portion 1,224 1,332
OTHER LIABILITIES 3,074 2,949
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Total liabilities 197,992 199,033
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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 506,336 506 506
Additional paid-in capital 20,479 18,423
Retained earnings 36,467 36,933
Treasury stock at cost -3,336,684 shares
in 1994 and 3,351,887 shares in 1993 (18,015) (16,360)
Net unrealized gain (loss) on
marketable securities (105) 1,614
Foreign currency translation adjustment (59) (30)
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Total stockholders' equity 50,679 52,484
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Total liabilities and stockholders'
equity $ 248,671 $ 251,517
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 24-WEEKS ENDED JUNE 18, 1994 and JUNE 19,1993
(Unaudited)
(In Thousands of Dollars)
24 Weeks Ended
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June 18, 1994 June 19, 1993
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,418 $ 4,444
Items with different cash requirements
than that reflected in net income--
Deferred subscription revenue (537) (743)
Depreciation and amortization 4,444 4,357
Accrued postretirement benefits expense 3,788 3,347
Provision for deferred income taxes (320) (1,344)
Deferred selling expenses (2,778) (161)
(Gain) on sales of securities (366) (1,098)
(Gain) on sales of businesses
and publications (29) (114)
Others (91) (47)
Changes in operating assets and liabilities--
Accounts receivable 8,193 9,334
Accounts payable and accrued liabilities (3,905) (1,906)
Inventory (885) (941)
Film production costs (253) (233)
Other assets and liabilities--net 375 314
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Net cash provided from operating activities 11,054 15,209
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CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures--
Purchase of equipment and furnishings (2,886) (3,006)
Building improvements (71) (507)
Proceeds from sales of businesses
and publications 69 87
Proceeds from sales of property 3 5
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Net cash (used for) capital expenditures (2,885) (3,421)
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Net cash (used for) investment portfolio (2,387) (10,673)
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Net cash (used for) investing activities (5,272) (14,094)
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 24-WEEKS ENDED JUNE 18, 1994 and JUNE 19,1993
(Unaudited)
(In Thousands of Dollars)
24 Weeks Ended
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June 18, 1994 June 19, 1993
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Repayments of borrowings $ (4,083) $ (92)
Sale of capital stock to employees 2,658 1,297
Purchase of treasury stock (1,054) (427)
Dividends paid (3,884) (3,842)
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Net cash (used for) financing activities (6,363) (3,064)
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NET (DECREASE) IN CASH AND CASH EQUIVALENTS (581) (1,949)
CASH AND CASH EQUIVALENTS, beginning of period 10,982 10,553
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CASH AND CASH EQUIVALENTS, end of period $ 10,401 $ 8,604
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid 94 238
Income taxes paid 885 3,257
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THE BUREAU OF NATIONAL AFFAIRS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 18, 1994
(UNAUDITED)
NOTE 1: General
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The information in this report has not been audited. Results
for the twenty four 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
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Inventories consisted of the following (in thousands):
June 18, 1994 December 31, 1993
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Materials and supplies $4,944 $4,579
Work in process 478 94
Finished goods 2,438 2,302
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$7,860 $6,975
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NOTE 3: Stockholders' Equity
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Treasury stock as of June 18, 1994 and December 31, 1993,
respectively, consisted of: Class A, 3,199,873 and 3,289,445 shares;
Class B, 69,354 and no shares; and Class C, 67,457 and 62,442 shares.
NOTE 4: Line of Credit
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During the second quarter, the Company arranged a $10 million
unsecured line of bank credit to be used for letters of credit and
corporate cash borrowing. As of June 18, 1994, there were no borrowings
under the line of credit.
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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
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Twenty-four weeks 1994 compared to twenty-four weeks 1993
Consolidated net income of $3.4 million in the twenty-four weeks
ended June 18, 1994 was 23.1 percent lower than the net income recorded
for the first twenty-four weeks of 1993. Although consolidated revenues
of $94.4 million increased $6.6 million, or 7.5 percent over the same
period of 1993, operating expenses were up 9.2 percent and non-operating
income declined 19.2 percent.
Service revenues (print and CD subscriptions and online products)
amounted to 88 percent of consolidated revenues for the period and were
up 6.6 percent due to price increases and sales of new publications.
New subscription sales were up 30.8 percent, mainly due to high sales of
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 14.6 percent as most divisions recorded
increases over prior year results. Printing sales to outside customers
increased $1.4 million. There were also higher information-on-demand,
software, and book sales. These increases were partially offset by a
decline in training media revenues.
Operating expenses increased 9.2 percent compared to the prior
year. Editorial and production costs were up 12.6 percent and 12.7
percent, respectively, due to outside services and higher staffing
expenses related to new products and the Company's development of 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
15.3 percent reflecting costs of attaining record new sales over the
last year.
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The consolidated operating profit decreased $1,225,000. Investment
income decreased $576,000 due to lower gains on sales of securities.
Earnings per share for the first twenty-four weeks of 1994 were
$.40 per share compared to $.52 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 June 18, 1994 compared to twelve weeks ended June 19
1993.
Consolidated revenues increased by 8.5 percent in the latest twelve
weeks of 1994 compared to 1993; operating profit was down 60.4 percent;
and consolidated net income was down 24.2 percent. The revenue and
expense factors mentioned above also affected the second quarter's
comparisons.
FINANCIAL POSITION
Cash provided from operating activities was $11.1 million in the
first twenty-four weeks of 1994, compared to $15.2 million for the first
twenty-four weeks of 1993. Operating expenditures increased 11.9
percent over 1993 due to factors explained above. Customer receipts
increased 5.8 percent.
Cash used for investing activities amounted to $5.3 million
reflecting a $2.4 million increase in the Company's investment portfolio
and capital expenditures of $2.9 million.
Cash used for financing activities included a scheduled $4 million
repayment of a bank loan. The Company received $1.6 million in cash
from the sale of Class A capital stock to employees, net of repurchased
capital stock. Almost $3.9 million was paid out to stockholders as cash
dividends.
With $85.8 million in cash and investment portfolios, the financial
position and liquidity of the Company remains very strong.
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PART II
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Item 1 Legal Proceedings
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There were no material legal proceedings during
the first twenty-four weeks of 1994.
Item 2 Change in Securities
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There were no changes in securities.
Item 3 Defaults upon Senior Securities
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There were no defaults upon senior securities.
Item 4 Submission of Matters to a Vote of Securities
Holders
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There were no matters submitted to a vote for
security holders.
Item 5 Other Information
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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 June 18, 1994.
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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
July 22, 1994 s\ William A. Beltz
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Date William A. Beltz
President and Chief Executive Officer
July 22, 1994 s\ George J. Korphage
- - --------------- -------------------------------------------
Date George J. Korphage
Vice President and Chief Financial Officer
