<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 March 26, 1994
---------------------------------------
or
[ ] Transition Report Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
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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
- - -------------------------------------------------------------
(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 March 26, 1994 was 3,262,706 Class A common
shares, 4,926,530 Class B common shares, and 442,770 Class Common
shares.
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<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE 12-WEEKS ENDED MARCH 26, 1994 and MARCH 27, 1993
(Unaudited)
(In Thousands of Dollars)
<CAPTION>
12 Weeks Ended
---------------------------------
March 26, 1994 March 27, 1993
---------------------------------
<S> <C> <C>
OPERATING REVENUES $ 46,323 $ 43,527
--------------- ---------------
OPERATING EXPENSES:
Editorial, production and distribution 26,675 24,984
Selling 10,725 9,204
General and administrative 7,207 7,178
Profit sharing 136 184
44,743 41,550
--------------- ---------------
Operating Profit 1,580 1,977
--------------- ---------------
NON-OPERATING INCOME (EXPENSE):
Investment Income 1,162 1,728
Interest Expense (57) (95)
Other Income (Expense), Net 25 5
--------------- ---------------
TOTAL NON-OPERATING INCOME 1,130 1,638
--------------- ---------------
INCOME BEFORE INCOME TAXES 2,710 3,615
PROVISION FOR INCOME TAXES 744 1,086
--------------- ---------------
NET INCOME $ 1,966 $ 2,529
=============== ===============
EARNINGS PER SHARE $ .23 .30
=============== ===============
WEIGHTED AVERAGE SHARES OUTSTANDING 8,573,606 8,526,042
=============== ===============
</TABLE>
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 26, 1994 AND DECEMBER 31, 1993
(Unaudited)
(In Thousands of Dollars)
March 26, December 31,
ASSETS 1994 1993
------ -----------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 17,886 $ 10,982
Short-term investments, at fair value 6,507 8,804
Accounts receivable (net of
allowance for doubtful accounts
of $1,218 in 1994 and $1,376 in 1993) 31,279 41,181
Inventories, at lower of average
cost or market 7,182 6,975
Prepaid expenses 1,737 2,289
Deferred selling expenses 25,235 24,234
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Total current assets 89,826 94,465
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MARKETABLE SECURITIES 66,309 65,265
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PROPERTY AND EQUIPMENT - at cost:
Land 5,176 5,176
Building and improvements 47,910 47,864
Furniture, fixtures and equipment 55,419 53,832
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108,505 106,872
Less-Accumulated depreciation 47,459 45,490
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Net property and equipment 61,046 61,382
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DEFERRED INCOME TAXES 17,968 16,562
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GOODWILL 10,103 10,175
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OTHER ASSETS 3,553 3,668
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Total assets $ 248,805 $ 251,517
============= =============
<PAGE>4
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THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 26, 1994 AND DECEMBER 31, 1993
(Unaudited)
(In Thousands of Dollars)
March 26, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1994 1993
- - ------------------------------------ -----------------------------
CURRENT LIABILITIES:
Accounts payable $ 12,379 $ 15,569
Employee compensation and benefits
payable 12,804 13,423
Income taxes payable 315 38
Deferred income taxes 4,917 4,540
Current portion of long-term debt 207 4,186
Deferred subscription revenue 107,661 107,834
Dividends payable 3,884 -
------------- -------------
Total current liabilities 142,167 145,590
POSTRETIREMENT BENEFITS, less current portion 51,057 49,162
LONG-TERM DEBT, less current portion 1,279 1,332
OTHER LIABILITIES 3,241 2,949
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Total liabilities 197,744 199,033
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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 4,926,530 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 19,745 18,423
Retained earnings 35,015 36,933
Treasury stock at cost - 3,279,724 shares
in 1994 and 3,351,887 in 1993 (16,065) (16,360)
Net unrealized gain on marketable securities 502 1,614
Foreign currency translation adjustment (48) (30)
Total stockholders' equity 51,061 52,484
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Total liabilities and stockholders' equity $ 248,805 $ 251,517
============= =============
<PAGE>5
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<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 12-WEEKS ENDED MARCH 26, 1994 and MARCH 27, 1993
(Unaudited)
(In Thousands of Dollars)
<CAPTION>
12 Weeks Ended
---------------------------------
March 26, 1994 March 27, 1993
---------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,966 $ 2,529
Items with different cash requirements
than reflected in net income--
Deferred subscription revenue (173) (431)
Depreciation and amortization 2,216 2,171
Accrued postretirement benefits expense 1,895 1,674
Provision for deferred income taxes (420) (782)
Deferred selling expenses (1,001) 162
(Gain) on sales of securities (200) (867)
(Gain) on disposals of property and equipment - (5)
(Gain) on sales of businesses and publications (25) -
Others (196) (112)
Changes in operating assets and liabilities--
Accounts receivable 10,041 10,077
Accounts payable and accrued liabilities (5,754) 493
Inventory (207) (51)
Film production costs (161) (106)
Other assets and liabilities--net 896 (212)
--------------- ---------------
Net cash provided from operating activities 8,877 14,540
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures--
Purchase of equipment and furnishings (1,385) (1,782)
Building improvements (46) (144)
Proceeds from sale of businesses and publications 65 8
Proceeds from sales of property - 5
--------------- ---------------
Net cash used for capital expenditures (1,366) (1,913)
Net cash provided by investment portfolio 1,800 1,279
--------------- ---------------
Net cash provided from (used in) investing activities 434 (634)
--------------- ---------------
</TABLE>
<PAGE>6
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<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 12-WEEKS ENDED MARCH 26, 1994 and MARCH 27, 1993
(Unaudited)
(In Thousands of Dollars)
<CAPTION>
12 Weeks Ended
---------------------------------
March 26, 1994 March 27, 1993
---------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of capital stock to employees $ 1,715 $ 516
Purchase of treasury stock (90) (198)
Repayments of borrowings (4,032) (46)
--------------- ---------------
Net cash provided from (used in) financing activities (2,407) 272
--------------- ---------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 6,904 14,178
CASH AND CASH EQUIVALENTS, beginning of period 10,982 10,553
--------------- ---------------
CASH AND CASH EQUIVALENTS, end of period $ 17,886 $ 24,731
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 52 $ 101
Income taxes paid 28 154
</TABLE>
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THE BUREAU OF NATIONAL AFFAIRS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 26, 1994
(UNAUDITED)
NOTE 1: General
- - ----------------
The information in this report has not been audited. Results
for the twelve 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):
March 26, 1994 December 31, 1993
-------------- -----------------
Materials and supplies $4,356 $4,579
Work in process 479 94
Finished goods 2,347 2,302
-------- --------
$7,182 $6,975
======== ========
NOTE 3: Stockholders' Equity
- - ------------------------------
Treasury stock as of March 26, 1994 and December 31, 1993,
respectively, consisted of: Class A, 3,216,158 and 3,289,445 shares;
Class B, no shares; and Class C, 63,566 and 62,442 shares.
<PAGE>8
-8-
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
- - ---------------------
Twelve weeks 1994 compared to twelve weeks 1993
- - -----------------------------------------------
Consolidated net income of $1.9 million in the twelve weeks ended
March 26, 1994 was 22.3 percent lower than the net income recorded for
the first twelve weeks of 1993. Although first quarter consolidated
revenues of $46.3 million increased $2.8 million, or 6.4 percent,
operating expenses were up 7.7 percent and non-operating income declined
31 percent.
Service revenues (print and CD subscriptions and online products)
amounted to 88.7 percent of consolidated revenues for the quarter and
were up 6.4 percent due to price increases and sales of new
publications. New sales were up 22.5 percent, mainly due to high
subscription sales of CD format products. Not all of these sales will
translate directly into revenue for the Company, as some print
subscriptions are cancelled in favor of a CD product.
Other revenues increased 6.3 percent. Information-on-demand sales
increased 9.3 percent and printing sales to outside customers were up
48.3 percent. These increases were partially offset by declines in
Software division revenues, Book division sales, and training media
revenues.
Operating expenses increased 7.7 percent compared to the prior
year. Editorial and production costs were up 9.8 percent and 12.3
percent, respectively, due to outside services and higher staffing
expenses related to new products and the Company's development of
business and publishing systems. Distribution costs were lower than the
same period of 1993, which had included the expenses of an additional
binder mailing, and because fulfillment costs are lower for CD's
relative to that of print products. Selling expenses increased 16.5
percent due to recognizing deferred expenses related to last year's
record level new sales. Selling costs relative to new sales continue to
be within targeted levels, but have increased as a percentage of total
sales because of the CD-for-print substitution factor.
<PAGE>9
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The consolidated operating profit decreased $397,000. Investment
income decreased $566,000 due to lower gains on sales of securities.
Earnings per share for the first twelve weeks of 1994 were $.23 per
share compared to $.30 per share for 1993.
The decrease in earnings was anticipated. The Company's 1994
budget projects lower operating earnings due to expenditures to develop
more efficient business and publishing systems, the conversion of print
products into marketable electronic formats and the higher selling
expenses associated with record sales levels. In addition, investment
income is expected to be lower than last year's record level.
FINANCIAL POSITION
- - ------------------
Cash provided from operating activities was $8.9 million in the
first twelve weeks of 1994, compared to $14.5 million for the first
twelve weeks of 1993. Operating expenditures increased 22.5 percent
over 1993 due to factors explained above. Customer receipts increased
5.7 percent.
Cash provided from investing activities netted to $434,000,
reflecting $1.8 million from the Company's investment portfolio less
capital expenditures of $1.4 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.
With $90.7 million in cash and investment portfolios, the financial
position and liquidity of the Company remains very strong.
<PAGE>10
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PART II
-------
Item 1 Legal Proceedings
There were no material legal proceedings during
the first twelve 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
The annual meeting for stockholders' was held
April 16,1994. A proxy statement pursuant to
Rule 14a was distributed to all stockholders in
connection with this meeting.
Results of the election of directors are
included in the attached letter to stockholders
dated April 19, 1994.
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 March 26, 1994.
<PAGE>11
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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
s\ William A. Beltz
- - -------- --------------------------------------
Date William A. Beltz
President and Chief Executive Officer
s\ George J. Korphage
- - --------- ----------------------
Date George J. Korphage
Vice President and Chief Financial Officer
<PAGE>12
April 19, 1994
Dear BNA Stockholder:
At the 48th annual meeting of stockholders held April 16, 1994, the
following individuals were elected as members of the Corporation's Board of
Directors for the ensuing year: William A. Beltz, Jacqueline M. Blanchard,
Jack Boylan, Robert B. Brooks, Christopher R. Curtis, Sandra C. Degler,
Kathleen D. Gill, John A. Jenkins, George J. Korphage, John V. Schappi,
Frederick A. Schenck, Mary Patricia Swords, Daniel W. Toohey, Loene Trubkin,
and Paul N. Wojcik.
The following table provides pertinent statistical data on the election
for directors. As of the record date of March 26, 1994, there were 3,262,706
shares of Class A common stock outstanding. The total number of shares voted
was 2,818,800.
Stockholder Candidates
----------------------
Name Shares Voted For
------------------ ----------------
Wojcik, Paul N. 1,938,603
Korphage, George J. 1,631,044
Gill, Kathleen D. 1,607,811
Beltz, William A. 1,602,203
Swords, Mary Patricia 1,561,336
Degler, Sandra C. 1,537,399
Schappi, John V. 1,475,238
Blanchard, Jacqueline M. 1,450,680
Jenkins, John A. 1,313,830
Brooks, Robert B. 1,221,713
Boylan, Jack 1,026,935
Curtis, Christopher R. 1,008,317
Jenc, Jack 962,640
Hecker, U. Joseph 888,435
Harris, Anthony A. 885,299
Sedmak, Nancy 847,322
McIntosh, Toby J. 796,316
McFarland, David P. 717,201
Mooney, Mark E. 643,618
Neuman, Deanne E. 632,342
Masters, Donald A. 377,126
Lott, Bernard 282,989
Nonstockholder Candidates
Trubkin, Loene 1,577,996
Toohey, Daniel W. 1,566,336
Schenck, Frederick A. 1,402,033
<PAGE>13
As is his custom at each annual meeting of stockholders, Mr. William
A. Beltz, Chairman of the Board and President of the Corporation, reported on
acquisition inquiries from other corporations. Mr. Beltz reported that
during 1993 he had received two inquiries concerning the acquisition of the
Corporation and one concerning the Corporation's subsidiary, BNA
Communications, Inc. The first two were from brokers who said they were
representing anonymous clients, and the third was a letter from a private
firm. Mr. Beltz reported that he was instructed by the Board of Directors in
each case to respond that the Corporation is wholly owned by its employees
and not for sale.
At the meeting of the Board of Directors held immediately after the
stockholders meeting, the following were elected to the offices named.
William A. Beltz, Chairman of the Board, President and Chief Executive
Officer; John V. Schappi, Vice Chairman of the Board and Vice President for
Human Resources; John P. Boylan, Jr., Vice President for Administration;
Robert B. Brooks, Vice President and Director of Sales and Marketing;
Kathleen D. Gill, Vice President and Executive Editor; George J. Korphage,
Vice President for Accounting and Finance and Chief Financial Officer; Paul
N. Wojcik, Vice President, General Counsel, and Corporate Secretary; John E.
Jenc, Treasurer; Gilbert S. Lavine, Assistant Treasurer; and Cynthia J.
Bolbach, Assistant Corporate Secretary.
The following directors were elected to serve on standing committees
of the Board of Directors for the ensuing term of the Board, as indicated:
Audit Committee. Daniel W. Toohey, Chair, Frederick A. Schenck,
and Loene Trubkin.
Budget Committee. George J. Korphage, Chair, Sandra C. Degler, John
A. Jenkins, Mary Patricia Swords, and Paul N. Wojcik.
Corporate Investment Committee. George J. Korphage, Chair, William A.
Beltz, Sandra C. Degler, and Paul N. Wojcik.
Executive Compensation Committee. Frederick A. Schenck, Chair,
Daniel W. Toohey, and Loene Trubkin.
Executive Committee. William A. Beltz, Chair, Sandra C. Degler,
Kathleen D. Gill, George J. Korphage, and Paul N. Wojcik.
Retirement Plan Investment Committee. George J. Korphage, Chair,
William A. Beltz, Sandra C. Degler, and Paul N. Wojcik.
Retirement Plan Administrative Committee. Diane L. Harris, Chair,
Paul A. Blakely, Anthony A. Harris, Bernard H. Mower, David A. Sayre,
and Paul N. Wojcik.
Deferred Stock Purchase Plan Administrative Committee. Paul N.
Wojcik, Chair, Kathleen D. Gill, and John E. Jenc.
<PAGE>14
In addition, the Board created a committee to deal with management
development and succession issues. It elected the following to serve on the
committee: Loene Trubkin, Chair, William A. Beltz, Daniel W. Toohey,
Frederick A. Schenck, and John V. Schappi.
The Board also adopted a resolution reaffirming the commitment to
employee ownership. A copy of the resolution is attached. Finally, any
stockholder proposal intended to be presented at the 1995 annual meeting of
stockholders, and to be included in BNA's proxy statement relating to that
meeting, must be received by the Corporate Secretary on or before November
24, 1994.
Cordially,
s/ Paul N. Wojcik
------------------
<PAGE>15
RESOLUTION ON EMPLOYEE OWNERSHIP:
- - ---------------------------------
RESOLVED, That the Board of Directors fully endorses and reaffirms the
first corporate objective, which is "[t]o continue ownership by employees
only and to encourage the widest possible participation because our
experience demonstrates the success of employee ownership in encouraging
excellent team performance, in providing a fair distribution of rewards for
that performance, and in supplying a brake on unhealthy forms of growth," and
FURTHER RESOLVED, That the Chairman of the Board and/or the President
of the Corporation is hereby directed to refer all inquiries concerning the
availability of the Corporation for acquisition to the full Board of
Directors for appropriate consideration and response in light of that
corporate objective.
