<PAGE> 1
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 (Fee Required)
For the fiscal year ended December 31, 1994
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
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 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 (l) 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 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 25, 1995 was $67,957,516 (all voting
stock is owned by employees of the registrant and its subsidiaries). In
determining this figure, The Bureau of National Affairs, Inc. (the
"Company"), has assumed that all of its
Page 1 of 61 Pages
<PAGE> 2
officers, directors, and persons known to the Company to be the beneficial
owners of more than five percent of the Company's Class A 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 25, 1995 was 3,414,982 Class A common
shares, 4,819,666 Class B common shares, and 430,888 Class C common
shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's definitive Proxy Statement, filed with the
SEC on March 24, 1995 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, 1994
Page No.
PART I.
Item 1. Business.............................................. 3-12
Item 2. Properties............................................ 12
Item 3. Legal Proceedings..................................... 12
Item 4. Submission of Matters to a Vote of Security Holders... 12
Item X. Executive Officers of the Registrant.................. 13-14
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters............................. 15
Item 6. Selected Financial Data............................... 16
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 17-20
Item 8. Financial Statements and Supplementary Data........... 21-42
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................. 43
PART III.
Item 10. Directors and Executive Officers of Registrant........ 43
Item 11. Executive Compensation................................ 43
Item 12. Security Ownership of Beneficial Owners and
Management.......................................... 43
Item 13. Certain Relationships and Related Transactions........ 43
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and
Report on Form 8-K.................................. 44-45
SIGNATURES........................................................... 46
EXHIBIT INDEX........................................................ 47
<PAGE> 3
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 looseleaf
subscription information services in print and compact disc 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, Cambridge Information Group, and others.
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 for sale of its domestic
services in the United Kingdom, Europe, Africa, and Asia, 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 technology in printing
information products for publishers, trade associations, professional
societies, other non-profit organizations, financial institutions and
governmental organizations. Approximately 58 percent of its business is
derived from the BNA publishing companies.
BNA Communications Inc. (BNAC) is engaged in the business of producing,
publishing, and marketing programs for training in the Equal Employment
Opportunity and safety and health related fields. The programs promote
awareness, compliance, prevention, and training for managers and employees
in industry and government, using audio visual and printed materials.
<PAGE> 4
Item 1 General Development of Business and Narrative Description
of Business (Continued)
----------------------------------------------------------
REVIEW OF OPERATIONS
BNA's vital signs were very definitely positive in 1994. The year
saw continued growth in total circulation units. New subscription sales
were 25 percent higher than the previous year's record. Operating profit
rose by 13.5 percent from 1993. And net income was the highest ever in the
company's history.
These achievements are particularly significant in light of the
revolutionary changes underway in the information industry and the
substantial investments in new products and technologies the company has
made in order to maintain its position as an industry leader.
Consolidated revenues, which passed the $200 million mark for the
first time in 1993, rose to $215.5 million in 1994, a gain over the prior
year of 7.3 percent. Higher revenues were achieved by the parent company
and by all major divisions and subsidiaries.
The 13.5 percent increase in consolidated operating profit to just
short of $11 million was due mainly to the parent company's performance.
Parent revenues of $150 million were up by 6.6 percent, but operating
expenses increased by only 4.1 percent. Tax Management's operating profit
was down, but for good reason: record new subscription sales resulted in
much higher selling expenses for the year.
Consolidated net income of $11.7 million was 3.6 percent higher than
in the previous year. The substantial increase in operating profit did
not carry through to the bottom line because investment income, which can
fluctuate widely from year to year, declined sharply in 1994.
Non-operating income of $5.1 million in 1994, consisting primarily
of investment income, was down from the previous year's $6.1 million,
which had included nearly $2 million of securities capital gains resulting
from falling interest rates in 1993. Conversely, rising interest rates
during 1994 produced one of the worst years in bond market history and put
pressure on the market value of the corporate investment portfolio.
A shift during the year into investments with shorter maturities
limited growth in interest and dividend income but shielded the
portfolio's market value from the falling bond market, providing a larger
year-end base on which to realize future investment returns.
The final $5 million in debt on the company's books was paid off in
the course of 1994, and BNA ended the year with cash and investment
balances totalling $85.6 million. The company's financial strength and
liquidity provides ample resources to fund its continued healthy growth
during turbulent times in our industry.
<PAGE> 5
A REVIEW OF 1994 OPERATIONS OF THE PARENT COMPANY AND EACH SUBSIDIARY FOLLOWS:
PARENT COMPANY
The parent company moved forward with electronic publishing in a
major way in 1994. CD-ROM products accounted for more than half of the
year's new subscription sales, and royalties of several million dollars
were received from online distributors of BNA information, primarily
LEXIS/NEXIS and Westlaw.
The integration of electronic product development with the core
publishing activity during the year resulted in the disbanding of the
Electronic Media Division as a separate business unit. Its functions and
personnel were reassigned to the Editorial, Sales & Marketing, and
Production Departments, and expenses and revenues formerly charged and
credited to EMD now are assigned to the core services that supply the
information used for online products.
BNA's ENVIRONMENT LIBRARY ON CD-ROM (ELCD) was by far the
company's best selling product in 1994. It has become the recognized
market leader for environmental information since its launch in the summer
of 1993. An arduous interdepartmental effort to convert 28 looseleaf
binders of state environmental laws and regulations from print to
electronic format was completed in June of 1994, and the print version,
which had become increasingly unmanageable and prohibitively costly, was
discontinued.
The parent company had five CD-ROM products on the market by the end
of 1994. BNA's HUMAN RESOURCES LIBRARY ON CD-ROM (HRCD), introduced in
the fall of 1993, was second to ELCD in 1994 sales, while two disk
products launched in the second half of the year -- BNA's PAYROLL LIBRARY ON
CD-ROM (PYCD) and BNA's SAFETY LIBRARY ON CD-ROM (SLCD) -- quickly
achieved market acceptance and are expected to contribute substantially to
1995 sales.
Meanwhile, developmental work continues on three more CD-ROM
libraries, enhancements of existing libraries are in progress, and a
number of initiatives involving other electronic media have been
undertaken.
New subscription sales in 1994 reached a record-breaking $36.5
million, 25 percent ahead of 1993, 56 percent higher than in 1992, and 86
percent above 1991. The productivity of field sales representatives, as
measured by average weekly service sales (AWSS), rose 19 percent in 1994
and 68 percent over the last three years.
CD-ROM products received much attention in 1994, but print products
remained very strong, accounting for nearly half of all new subscriptions
added during the year. Leading print products for the parent company
included LABOR RELATIONS REPORTER with its new AMERICANS WITH DISABILITIES
ACT CASES section, ENVIRONMENT REPORTER, OCCUPATIONAL SAFETY & HEALTH
REPORTER, and EMPLOYMENT DISCRIMINATION REPORT.
Also high on the list of top-selling print services were HEALTH CARE
FACILITIES GUIDE, a 1994 addition to the new and growing Health Care
Services Division, and the company's well established dailies -- DAILY
<PAGE> 6
LABOR REPORT, DAILY TAX REPORT, and DAILY REPORT FOR EXECUTIVES.
One new print product has been approved for introduction, and
prepublication work is underway in the Health Care Services Division.
Several other proposals are being researched by the New Product
Development Unit. Two are well along in the process and show promise for
launch before the end of 1995.
The expansion of both print and electronic product lines is driving
the development of the company's new multimillion dollar publishing
system, now dubbed PS2000. The five-year project is on schedule, and the
system already is being used to produce PYCD and its companion print
service, BNA's PAYROLL ADMINISTRATION GUIDE. Migration of other services
to PS2000 will be influenced by the need to publish simultaneously in
print and electronic format.
BNA has maintained its reputation for excellent customer support and
service despite the record volume of new subscription sales and a whole
new set of demands as customers learn to find and use information
presented electronically.
BNA PLUS received more than 125,000 calls during 1994, about half of
which concerned CD-ROM products. Working closely with the CD-ROM technical
support group in Information Systems and with field sales representatives,
PLUS personnel contributed significantly to the success of these new
products.
BNA BOOKS
The BNA Book division set several records in 1994, the most
successful year in its history. Revenues rose to an all-time high of $4.7
million, and the division's operating profit was more than double its
previous record set in 1983. Also, the division published 44 new products
during 1994, another all-time high.
One new work, a three-volume treatise entitled COPYRIGHT LAW AND
PRACTICE, by William Patry, has met with early critical and financial
success and is quickly becoming the standard in the field. A supplement
focusing on the copyright implications of GATT is scheduled for
publication in the first half of 1995.
MEDIA LAW is another new title that has been well received by the
legal community. It was authored by nationally recognized First Amendment
attorney, Rex S. Heinke. And yet another new title, MENTAL AND EMOTIONAL
INJURIES IN EMPLOYMENT LITIGATION by James J. McDonald, Jr., and Francine
B. Kulick, sold over 11,000 copies in less than five months, clearly
making it a best-seller by law book publishing standards.
The division continued to build on its long-term and mutually
beneficial publishing relationship with the Labor and Employment Law
Section of the American Bar Association by releasing supplements to three
Section titles and starting editorial work on four other new treatises.
Also, work is well along to incorporate a BNA/ABA title, EMPLOYEE BENEFITS
LAW, into a new BNA CD-ROM product.
Current and former BNA employees continued to help the division
produce its books in 1994. Almost half of the division's products
released during the year were authored or revised by BNAers. Of
<PAGE> 7
particular note, the twenty-fifth edition of PRIMER OF LABOR RELATIONS was
published, a book that always has been produced by BNA editors.
The 1994-1996 revised plan the division set out for itself in 1993
is meeting with success. The focus on high-quality, renewable products in
BNA's areas of proven leadership holds the promise of long-term
profitability. With the advent of CD-ROM publishing and with the wealth of
BNA Books' proprietary information available, the division can play an
integral part in BNA's publishing plans well into the next century.
TAX MANAGEMENT INC.
Tax Management revenues from services and software rose above $40
million for the first time in 1994. Higher selling costs relating to
record new subscription sales cut into the subsidiary's operating margin,
and investment income was less than in the previous year. The subsidiary
reported an operating profit of $4.3 million and net income of $3.8
million, and paid the parent company a $3.6 million dividend.
New sales of Tax Management print and CD-ROM products passed $8
million, an increase of 32 percent over 1993, and 102 percent higher than
1992. Circulation of the portfolios on CD-ROM continued to grow and Tax
Practice Series successfully was moved from print to CD-ROM and rapidly
gained market penetration.
Tax Management's MULTISTATE TAX PORTFOLIOS, modeled after its highly
respected federal tax portfolio series, was launched in October. This
comprehensive, topic-driven analysis of state tax issues, published in
both print and CD-ROM formats, achieved immediate market acceptance and
holds promise of quickly becoming a major part of Tax Management's
distinguished line of products.
A record number of new and revised portfolios was provided to
federal portfolio subscribers during the year, and the CD-ROM products
were enhanced by the addition of full text documents and new quick-
reference tools.
New advertising and mail promotion programs generated a record
number of new sales and leads for the field sales force. The client
relations unit greatly expanded its telephone training for the CD-ROM
products, while also reaching customers on a regular basis.
Product Specialists served as a vital link to representatives and
customers by training and providing market intelligence and product
development information.
BNA SOFTWARE
1994 was the most profitable year in the history of BNA Software.
Although revenues increased modestly, operating profits rose 20 percent
over the previous year, reaching almost 26 percent of revenues.
Without any new federal tax legislation in 1994, new sales were
slightly lower than the previous year. However, high renewal rates and
lower than budgeted expenditures for production, selling, and
administration paved the way for improved profits.
<PAGE> 8
Since the launch of the BNA INCOME TAX PLANNER FOR WINDOWS in
September, user acceptance has been excellent and the circulation base is
growing rapidly. Other strong sellers for BNA Software continue to be the
BNA ESTATE TAX SPREADSHEET and the BNA FIXED ASSET MANAGEMENT SYSTEM.
Other noteworthy nonfinancial measures of BNA Software's operations
during 1994 were the unsolicited letters of thanks from customers and BNA
representatives for the excellent technical support provided on both Tax
Management CD-ROM and BNA Software products.
With planned new product introductions, new collaborative efforts,
and likely new tax legislation, the division's prospects for 1995 are
excellent.
BNA INTERNATIONAL INC.
1994 was a landmark year for BNA International. The subsidiary had
planned to complete its turnaround by achieving a break-even performance.
The continuing drive to reduce costs and increase revenues, however,
resulted in an operating profit of $171,000, the first in the company's
history.
BNAI revenue grew to $2.6 million, an increase of 6.7 percent over
1993. This was due to gains in circulation of several BNAI services,
higher sales of parent company services, and favorable currency movements.
TAX PLANNING INTERNATIONAL REVIEW and WORLD INTELLECTUAL PROPERTY
REPORT are solidly profitable services for the subsidiary, and
considerable progress was made with others. WORLD FOOD REGULATION REVIEW
made a positive contribution, and the declining circulation of FOREIGN
INVESTMENT IN THE UNITED STATES was reversed by broadening its editorial
scope and re-launching it as DIRECT INVESTMENT IN NORTH AMERICA. The
acquisition of a competing publication increased the circulation of
EASTERN EUROPE REPORTER, which had been acquired from the parent company
in 1993.
With costs under control and circulation of existing products
growing, BNAI management turned its attention to the future. Market
research was carried out which identified several potential subject areas
for new international products. As a result of this research, WORLD
SECURITIES LAW REPORT, a monthly publication covering legislation and
regulation in this increasingly important area, was launched late in the
year. Initial sales are exceeding budget expectations.
The network of sales agents representing BNA and BNAI around the
world was extended to include coverage of Australia, Korea, and New
Zealand. Additional agents were appointed to cover the Japanese market.
Business opportunities in Latin America are also being explored.
PIKE & FISCHER, INC.
New products, especially in the field of telecommunications
regulation, and an acquisition have boosted Pike & Fischer's revenues by
65 percent over the last five years, from $2.9 million in 1989 to $4.8
million in 1994.
<PAGE> 9
Improvements in operating efficiency and a careful eye on costs have
meant that revenue growth was not achieved at the expense of
profitability. In 1994 operating profit was 24 percent of revenues and
net income reached a record-high, besting last year's previous high by 23
percent. Once again, Pike & Fischer was able to increase its dividend to
the parent, this year paying $650,000 to BNA.
Pike & Fischer launched its first CD-ROM product in 1994.
COMMUNICATIONS REGULATION ON CD-ROM covers federal statutes, rules and
regulations governing the telecommunications industry, everything from
broadcast radio to the emerging information superhighway. The service has
been well received by both engineers and lawyers. Management will
continue marketing the CD-ROM as an electronic component of Pike &
Fischer's flagship publication RADIO REGULATION and, in addition, plans to
use it as a distribution medium for electronic versions of several of its
niche market products, such as BROADCAST RULES and PRIVATE RADIO RULES.
Management also paid considerable attention in 1994 to its more
traditional printing operations, trading old offset presses for more
modern equipment. The new equipment has cut in half the time it takes
Pike & Fischer's print shop to process issues and handle reprints,
allowing the company to bring in-house much of its two-color printing for
direct mail promotions, thus saving substantially on the cost of this work
formerly done by outside vendors.
The experience gained in 1994 with electronic products, together
with the flexibility provided by the new presses, positions P&F well for
continued growth with profitability over the next five-year period.
BNA COMMUNICATIONS INC.
BNAC achieved the highest revenue level in its history. Sales of
video-based training products and services rose to $5.9 million, an
increase of 5.6 percent over the prior year. Results across product lines
were mixed as revenue from the company's safety product line increased
significantly while revenue from the human resources product line declined
moderately. However, increased costs associated with revised marketing
strategies and delays in new product development resulted in a net loss
for the year of $153,000.
The significant increase in the company's safety program sales was
attributable to a number of changes designed to reestablish BNAC's place
in the safety training market. These included the creation of a separate
safety sales group; a segmented marketing program, including a separate
SAFETY COMMUNICATOR newsletter, and the highly successful launch of a
subscription-based, renewable safety product called SAFETY TRAINING
SUBSCRIPTION PROGRAM (STSP). Sales of STSP programs continue to exceed
expectations in 1995 and renewals of existing placements are far ahead of
original estimates.
The company successfully launched several new programs in the human
resources product line in the second half of the year. BRAINWAVES AND
SEXUAL HARASSMENT: PLAIN AND SIMPLE were two major new releases in 1994
which have served to maintain the company's dominant position in the
EEO/Diversity training arena. New products were also released that seek
to expand the breadth of the company's offerings in the human resources
subject area. Programs dealing with gender interaction, the costs of
<PAGE> 10
intolerance to businesses, and a primer on labor law for new supervisors
were all released in 1994. New human resource products scheduled for
release in the first half of 1995 include programs on interviewing skills,
peer harassment, and workplace violence.
With its new product releases in place, costs more firmly under
control, and a continuing focus on the expansion of the company's safety
business, BNAC is optimistic that 1995 will be a year of growth and return
to profitability.
BNA WASHINGTON INC.
BNA Washington's 1994 operating revenue from outside tenants was
$1.8 million. Operating costs for all facilities combined were 3 percent
lower than in 1993. Renovation expenses during the year, primarily office
and space redesign and relocation, also were lower.
All subleases in the 23rd Street building expired during 1994 and
BNA will expand into the approximately 10,000 square feet vacated by these
tenants. The last remaining mortgage on a BNA building was paid off in
1994. The sale of the former McArdle Printing Company property in Silver
Spring, Maryland, essentially was completed in 1994; however final
settlement didn't occur until January 31, 1995. The property was sold for
$3.5 million.
Facilities planning continued through the year. Space planning
projections estimate sufficient space through mid-1996. A broad strategic
facility plan was developed during the year, and the early part of 1995
will be spent in evaluating the options in the plan. Consideration will
be given to remaining in the West End, with growth supplemented by leased
space or purchase opportunities. Relocation within the District of
Columbia or nearby suburbs to an existing facility or the development of
new facilities also are being considered.
THE McARDLE PRINTING CO., INC.
McArdle's sales results in 1994 reflect an upturn in the commercial
printing market during the year. This market has been sluggish and highly
competitive in the past three years. It remains highly competitive.
Commercial sales revenue -- sales revenue from all sources other than BNA
- -- increased by 31.3 percent.
Total revenues were $23.9 million, an increase of 6.2 percent above
the previous year. Net income rose by 2.5 percent and McArdle paid a
dividend of $400,000 to the parent company.
Revenues from the printing, binding and mailing of BNA publications
in 1994 were down $1 million, or 7 percent from the prior year. However,
BNA continued to be McArdle's largest customer. This has been the case
since the two were established as independent companies in 1947. BNA and
Tax Management publications accounted for 58 percent of McArdle's
operating revenue for the year, as compared to 66 percent in 1993.
McArdle's top priority continues to be growing its revenues. A core
objective of the company is to increase commercial sales by a minimum of
12 percent on an annual basis. Leading this effort is a comprehensive and
aggressive marketing program, which attained good results in 1994. This
<PAGE> 11
marketing program and the ongoing training of the sales staff will
continue leading efforts to accomplish this goal.
A Total Quality Management (TQM) program, instituted toward the end
of 1993, has progressed as anticipated. The work of the Process
Improvement Teams that have completed their initial tasks was very
successful. New PI Teams and Task Forces continue to be established.
Management remains convinced that the maintenance of this program will
improve quality, productivity, and customer and employee satisfaction on
a lasting basis.
During the latter part of 1994, McArdle initiated steps to establish
an integrated data collection and information system. The system will
provide the Company more accurate and timely information in order to
enhance operations in such areas as communication, productivity,
estimating, billing, inventory control, job tracking, cost control, and
customer satisfaction.
McArdle's desktop publishing work continued to grow during the year.
Both the electronic transmission of copy to the communication operation
and electronic imaging in the prepress operation increased significantly.
The company is committed to the maintenance of the TQM program and
to keeping abreast of rapidly advancing technological changes in the
industry in such areas as electronic imaging and digital printing. With
these commitments and existing facilities and personnel, McArdle is well
positioned to meet BNA's present and future printing needs and to offer
competitively priced, high quality, on-time printing services to the
commercial printing market.
<PAGE> 12
PART I
------
Item 1. Business
--------
General Development of Business and Narrative Description of Business
Cont.
- ---------------------------------------------------------------------
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 has increased its electronic product offerings with CD-ROM
being the most successful. CD-ROM's allow the economical addition of
value-added features such as searching capabilities and additional
information content.
Competition in the business information industry continues to intensify
and some competitors are larger and have greater resources than BNA. The
Company has invested in sales aids to help its sales force demonstrate the
CD-ROM products to customers. Additionally, the Company has embarked on
a plan to redesign its publishing system to more effectively produce
information for electronic or print delivery. This process is expected to
be developed over several years.
The number of employees of BNA and its subsidiaries was 1,854 at December
31, 1994.
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, NW,
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, NW, 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. Property at
the former printing site in Silver Spring, Maryland was sold in January,
1995.
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, 1994.
<PAGE> 13
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, 1994. 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 65 Chairman of the Board, President and
Chief Executive Officer
Elected Chairman in 1994, president and
editor-in-chief in 1979 and chief executive
officer in 1980. Joined BNA in 1956.
Served as president until February, 1995.
Jacqueline M. 45 Vice President for Human Resources
Blanchard Elected to vice president in 1994.
Previously was director of labor and
employee relations since 1987. Joined BNA
in 1984.
John P. Boylan, Jr. 55 Vice President for Administration
Elected to present position in 1986.
Previously was corporate manager of data
processing from 1975 to 1986. Joined BNA
in 1974 after employment at Fisher-Stevens,
Inc. (a former BNA subsidiary) since 1962.
Robert Brooks 45 Vice President and Director of Sales and
Marketing
Elected to present position in 1991.
Previously General Manager of BNA Software
since 1984. Joined BNA in 1974.
Kathleen D. Gill 48 Vice President and Executive Editor
Elected to vice president and executive
editor in 1993. Previously was associate
editor for business and human resources
services since 1987. Joined BNA in 1970.
John E. Jenc 52 Treasurer
Elected to present position in 1990.
Joined BNA as Controller in 1981.
George J. Korphage 48 Vice President and Chief Financial Officer
Elected vice president in 1988 and chief
financial officer in 1989. Previously was
manager of financial planning and analysis
since 1985. Joined BNA in 1972.
(Continued)
<PAGE> 14
Item X. EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
-------------------------------------------------
Name Age Present position and prior experience
- --------------- ------ --------------------------------------
John V. Schappi 65 Vice Chairman of the Board
Elected to Vice Chairman in 1993 and served
as vice-president for human resources from
1987 to 1994. Previously was associate
editor for labor services since 1972.
Joined BNA in 1955. Retired in December
1994.
Paul N. Wojcik 46 Senior Vice President, General Counsel, and
Corporate Secretary
Elected Senior Vice president 1993,
previously was vice president and general
counsel from 1988 to 1993, and served as
corporate secretary since 1989. Served as
corporate counsel and assistant corporate
secretary from 1984 to 1988. Joined BNA in
1972. Elected President and Chief
Operating Officer in February, 1995.
<PAGE> 15
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 45 years, and they are expected to continue.
As of March 1, 1995, there were 1,370 Class A shareholders, 206 Class B
shareholders, and 44 Class C shareholders. The company repurchased
148,246 shares of Class B stock from retired employees or their estates in
the 12 months ending March 1, 1995.
Established stock price and dividends declared during 1994 and 1993 were
as follows:
Stock Price
January 1, 1993 - March 27, 1993 $17.50
March 28, 1993 - September 25, 1993 19.50
September 26, 1993 - March 26, 1994 20.50
March 27, 1994 - September 24, 1994 21.50
September 25, 1994 - December 31, 1994 22.00
Dividends Declared
March 27, 1993 $ .45
September 25, 1993 .45
March 26, 1994 .45
September 24, 1994 .45
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> 16
PART II
-------
Item 6. Selected Financial Data
-----------------------
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED OPERATING AND FINANCIAL SUMMARY:1994-1990
(Dollar amounts in thousands, except per share data)
<CAPTION>
1994 1993 1992 1991 1990
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues $215,491 $200,818 $193,036 $181,347 $175,447
Operating Expenses 204,507 191,144 182,959 171,622 162,735
- ----------------------------------------------------------------------------------
Operating Profit 10,984 9,674 10,077 9,725 12,712
Non-operating Income (Expense):
Investment Income 4,797 6,190 4,411 3,941 4,534
Interest Expense (183) (431) (503) (917) (1,101)
Other Income (Expense), Net 459 303 (850) (55) 1,924
- ----------------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes and Cumulative
Effects of Accounting Changes 16,057 15,736 13,135 12,694 18,069
Income Taxes 4,397 4,482 3,718 4,092 6,428
- ----------------------------------------------------------------------------------
Income from Continuing Operations
Before Cumulative Effects of
Accounting Changes 11,660 11,254 9,417 8,602 11,641
Cumulative Effects of
Accounting Changes (a) -- -- (19,482) -- --
- ----------------------------------------------------------------------------------
Net Income (Loss) $11,660 $11,254 ($10,065) $8,602 $11,641
- -------------------------------------=============================================
Profit Ratios (b)
% of Operating Revenues 5.4 5.6 4.9 4.7 6.6
% of Stockholders' Equity 21.2 21.4 20.2 14.0 20.0
- ----------------------------------------------------------------------------------
Earnings (Loss) Per Share From:
Continuing Operations $1.36 $1.32 $1.11 $1.03 $1.40
Cumulative Effects of
Accounting Changes -- -- (2.30) -- --
Total Earnings (Loss) Per Share 1.36 1.32 (1.19) 1.03 1.40
Dividends Per Share 0.90 0.90 .84 .82 .80
- -------------------------------------=============================================
Balance Sheet Data:
Total Assets $270,599 $251,517 $229,035 $192,592 $185,213
Long-Term Debt 107 1,332 1,534 5,721 8,892
- -------------------------------------=============================================
Employee Data:
Number of Employees 1,854 1,796 1,718 1,797 1,773
Total Employment Costs $120,599 $111,443 $104,345 $95,287 $88,259
- -------------------------------------=============================================
Stockholders' Data at Year-End:
Book Value Per Share $6.36 $6.14 $5.47 $7.34 $7.01
Number of Stockholders 1,627 1,568 1,577 1,523 1,466
Common Shares Outstanding
(In thousands) 8,652 8,553 8,521 8,394 8,294
- -------------------------------------=============================================
<FN>a
(a) Includes the cumulative effects of the changes in accounting for
other postretirement benefits and for income taxes.
<FN>b
(b) Based on net income excluding the cumulative effects of accounting
changes.
</TABLE>
<PAGE> 17
PART II
-------
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------
1994 VS. 1993 - CONSOLIDATED
Consolidated revenues of $215 million were up 7.3 percent from the
prior year's $201 million and operating profit increased 13.5 percent.
Non-operating income was lower than last year, but net income of $11.7
million was the highest in Company history.
Revenues increased in all operating units of the Company in 1994.
Service revenues (from print and CD-ROM subscriptions and online products)
increased 6.7 percent over 1993 due to record setting new sales and higher
prices. Approximately half of the new sales were for CD-ROM products.
Some of the CD-ROM sales replaced print products, and total service
circulation increased only slightly, but since CD-ROM products have more
value-added features, they afford an opportunity for higher pricing than
their print counterparts. Service revenues were 84.8 percent of
consolidated revenues in 1994 and 85.2 percent in 1993. Non-service
revenues (from software, outside printing, training media, books, and
other units) increased 10.6 percent, primarily due to much higher printing
sales to outside customers.
Operating expenses increased 7 percent overall in 1994. For
services, the expense increase was mainly due to higher costs for
salaries, commissions and bonuses on record new sales and the related
royalties on CD-ROM products, depreciation on new equipment, and systems
development costs. Four new services were launched in 1994, including
three in CD-ROM format. Product development expenses totalled $4.7
million, 10.4 percent lower than the $5.3 million in 1993 when 11 new
products were launched. Operating expenses in 1994 also include an
identifiable $6.6 million for developing improved business and publishing
systems. Non-service operating expenses were 12.9 percent higher in 1994,
primarily related to the higher outside printing revenues.
Operating profit increased 13.5 percent in 1994.
Non-operating income declined this year due to lower gains on sales
of securities. In 1993, the Company realized gains on securities sales of
$2 million, resulting from the decline in interest rates in that year.
Realized gains on securities sales were only $.3 million in 1994.
The consolidated federal, state, and local effective income tax rate
was 27.4 percent in 1994 compared to 28.5 percent in 1993. In 1994, a 2.4
percent reduction for research and development credit lowered the
effective income tax rate. In 1993, the effective rate was reduced 2
percent by the effect of the federal income tax rate change on net
deferred tax assets.
Earnings per share were $1.36 per share compared to $1.32 per share
in 1993.
(Continued)
<PAGE> 18
1993 VS. 1992 - CONSOLIDATED
Consolidated revenues of $201 million were up 4 percent from the
prior year's $193 million. Excluding the cumulative effects of accounting
changes recorded in 1992, consolidated net income for 1993 increased 19.5
percent to $11.3 million. This increase in comparable earnings was
primarily the result of higher non-operating income, as operating profit
showed a slight decline.
Service revenues accounted for all of the revenue increase as non-
service revenues declined slightly. Service revenues amounted to 85.2
percent of consolidated revenues in 1993 and 84.6 percent in 1992 and
increased 4.9 percent on higher prices and new print and CD-ROM product
sales. Total service circulation increased only 1 percent as about one-
third of the CD-ROM sales replaced print products, but since CD-ROM
products have more value-added features, they afford an opportunity for
higher pricing than their print counterparts. The increase in service
revenues was negatively affected by the absence of ETSI, the online
network division which was sold in December, 1992. ETSI recorded revenues
of $2,681,000 in 1992 and $2,472,000 in 1991. Non-service revenues
amounted to $29.6 million, and declined .6 percent as higher software
division sales were offset by lower sales for books, information-on-
demand,
training media, and printing sales to outside customers.
Operating expenses increased 4.5 percent in 1993. The expense
increase was mainly due to eleven new services developed and launched in
1993, including four in CD-ROM format, and higher systems development
costs. Product development expenses increased 16.9 percent to $5.3
million, reflecting increased CD-ROM and print service development
efforts. Operating expenses in 1993 include an identifiable $3.9 million
for developing improved business and publishing systems. The overall
expense increase was lessened by the absence of ETSI, which recorded
operating expenses of $4,435,000 in 1992 and $4,813,000 in 1991.
Operating profit declined 4 percent from 1992. The effect on
operating profit from increased product and systems development expenses
was mitigated by the absence of ETSI, which had a $1.8 million operating
loss in 1992, and substantial improvements in the operating results for
the international business unit and the tax planning software business.
Non-operating income nearly doubled as investment income increased
40.3 percent to $6.2 million due to substantially higher gains on sales of
securities and larger portfolio balances. Nearly $2 million in gains were
recorded in 1993, an amount not expected to be matched in 1994. A net
gain on disposal of assets in 1993 compared to a net loss in 1992
increased other net non-operating income $1.1 million.
Earnings per share were $1.32 per share compared to $1.11 per share
(before cumulative effects of accounting changes) in 1992. The
consolidated federal, state, and local effective income tax rate was 28.5
percent in 1993 compared to 28.3 percent in 1992. A significant non-
recurring item lowered the effective income tax rate in each year. In
1993, the effective rate was reduced 2 percent by the effect of the
federal income tax rate change on net deferred tax assets. In 1992, the
effective rate was reduced 2.4 percent by a one-time realization of
previously non-deductible expenses.
(Continued)
<PAGE> 19
DEFERRED TAX ASSETS
In accordance with SFAS 109, the Company has recorded $12.7 million
of net deferred tax assets as of year-end 1994. This amount includes $19
million related to the accrued postretirement benefits liability.
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. Factors supporting this
conclusion are consistent profitable operations, a quality reputation in
the markets served by the Company, a high renewal rate for subscription
products, a growing deferred revenue liability (representing payments and
orders for future fulfillment), and the recent successful introduction of
products using new CD-ROM and electronic delivery methods.
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 amounted to $22.4
million in 1994; this was $1.1 million less than in 1993, partly due to
increased selling expenditures relating to the record new sales in 1994.
In 1992, a change in the subscription billing cycle had boosted cash flows
from operations to $34 million.
Cash outlays for capital expenditures were $6.1 million in 1994,
compared with $9.1 million in 1993, and $5.2 million in 1992. This
included equipment purchases, office furnishings, building improvements,
and customer lists. Capital expenditures for 1995 are budgeted to be
over $9 million.
Sales of Class A capital stock to employees provided $5.6 million of
equity capital in 1994; the Company paid $3.5 million for repurchases of
Class B and Class C capital stock and $7.8 million for dividends. During
1994, the Company paid the remaining $5.4 million of term debt principal,
leaving no outstanding term debt at year-end 1994. Also, the Company
arranged a two-year $10 million unsecured revolving line of credit to be
used for letters of credit and corporate borrowing. At year end 1994,
there had been no borrowing, but $.4 million of the credit line had been
used to secure a letter of credit.
With $85.6 million in cash and investment portfolios, no term debt,
and a $10 million line of credit, the financial position and liquidity of
the Company remains very strong. Should more funding become necessary in
the future, the Company has substantial additional debt capacity based on
(Continued)
<PAGE> 20
its operating cash flows and real estate equity which could be mortgaged.
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 Class B and Class C stock tendered by shareholders.
OTHER INFORMATION
The Company will adopt the provisions of the AICPA Statement of
Position (SOP) 93-7, Reporting on Advertising Costs, in January, 1995.
Accordingly, all advertising costs will now be expensed as incurred;
prior to 1995, advertising costs were amortized over subscription terms.
Such advertising costs that were deferred at December 31, 1994 will
continue to be expensed consistent with the policy in effect in 1994. The
adoption of the new policy will result in a decrease in the Company's 1995
net income of approximately $1.5 million.
In January 1995, the Company sold land in Montgomery County,
Maryland, which had been held for investment, and received net cash
proceeds of $3.4 million. This transaction resulted in a gain of $1.5
million net of taxes, providing additional liquidity, and offsetting the
effect on reported income of SOP 93-7.
<PAGE> 21
PART II
-------
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
THE BUREAU OF NATIONAL AFFAIRS, INC.
Consolidated Financial Statements
December 31, 1994 and 1993
(With Independent Auditors' Report Thereon)
<PAGE> 22
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 consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated 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 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, 1994 and 1993, and the
results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 1994 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 21, 1995
<PAGE> 23
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(In thousands of dollars)
<CAPTION>
Percent of
Operating Revenues
1994 1993 1992 1994 1993 1992
---------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES (Notes 1, 2, and 3) $215,491 $200,818 $193,036 100.0% 100.0% 100.0%
-------- -------- -------- ------ ------ ------
OPERATING EXPENSES (Notes 1, 2, 3, 4, 10 and 11):
Editorial, production, and distribution 121,337 114,648 106,103 56.3 57.1 55.0
Selling 49,759 42,733 43,400 23.1 21.3 22.5
General and administrative 32,283 32,914 32,302 15.0 16.4 16.7
Profit sharing 1,128 849 1,154 .5 .4 .6
-------- -------- -------- ------ ------ ------
204,507 191,144 182,959 94.9 95.2 94.8
-------- -------- -------- ------ ------ ------
OPERATING PROFIT 10,984 9,674 10,077 5.1 4.8 5.2
-------- -------- -------- ------ ------ ------
NON-OPERATING INCOME (EXPENSE):
Investment income (Note 5) 4,797 6,190 4,411 2.2 3.1 2.3
Interest expense (Note 7) (183) (431) (503) (0.1) (0.2) (0.3)
Other income (expense), net (Note 6) 459 303 (850) .2 .1 (0.4)
-------- -------- -------- ------ ------ ------
TOTAL NON-OPERATING INCOME 5,073 6,062 3,058 2.3 3.0 1.6
-------- -------- -------- ------ ------ ------
INCOME BEFORE PROVISION FOR INCOME TAXES AND
CUMULATIVE EFFECTS OF ACCOUNTING CHANGES 16,057 15,736 13,135 7.4 7.8 6.8
PROVISION FOR INCOME TAXES (Note 9) 4,397 4,482 3,718 2.0 2.2 1.9
-------- -------- -------- ------ ------ ------
INCOME BEFORE CUMULATIVE EFFECTS OF
ACCOUNTING CHANGES 11,660 11,254 9,417 5.4% 5.6% 4.9%
====== ====== ======
CUMULATIVE EFFECTS OF ACCOUNTING CHANGES:
Other postretirement benefits, net (Note 4) - - (21,621)
Income taxes (Note 9) - - 2,139
-------- -------- --------
NET INCOME (LOSS) $ 11,660 $ 11,254 $(10,065)
======== ======== ========
EARNINGS (LOSS) PER SHARE (Note 12):
Income before cumulative effects of
accounting changes $ 1.36 $ 1.32 $ 1.11
Cumulative effects of accounting changes-
Other postretirement benefits - - (2.55)
Income taxes - - .25
-------- -------- --------
NET INCOME (LOSS) $ 1.36 $ 1.32 $ (1.19)
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 24
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(In thousands of dollars)
A S S E T S
-----------
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 5) $ 12,428 $ 10,982
Short-term investments (Note 5) 6,045 8,804
Receivables (Note 10) 49,138 41,181
Inventories (Note 10) 6,833 6,975
Prepaid expenses 2,600 2,289
Deferred selling expenses (Note 3) 33,129 24,234
--------- ---------
Total current assets 110,173 94,465
MARKETABLE SECURITIES (Note 5) 67,180 65,265
PROPERTY AND EQUIPMENT (Note 10) 58,815 61,382
DEFERRED INCOME TAXES (Note 9) 20,853 16,562
GOODWILL (Note 8) 9,863 10,175
OTHER ASSETS (Note 10) 3,715 3,668
--------- ---------
Total assets $ 270,599 $ 251,517
========= =========
(Continued)
</TABLE>
<PAGE> 25
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(In thousands of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
1994 1993
-------- ---------
<S> <C> <C>
CURRENT LIABILITIES:
Payables and accrued liabilities (Note 10) $ 29,220 $ 29,030
Deferred income taxes (Note 9) 8,188 4,540
Current portion of long-term debt (Note 7) - 4,186
Deferred subscription revenue (Note 3) 120,579 107,834
--------- ---------
Total current liabilities 157,987 145,590
POSTRETIREMENT BENEFITS, less current portion (Note 4) 54,202 49,162
LONG-TERM DEBT, less current portion (Note 7) 107 1,332
OTHER LIABILITIES 3,260 2,949
--------- ---------
Total liabilities 215,556 199,033
--------- ---------
COMMITMENTS AND CONTINGENCIES
(Notes 11 and 12)
STOCKHOLDERS' EQUITY (Notes 5 and 12):
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 4,919
Class C - 506,336 shares 506 506
Additional paid-in capital 22,722 18,423
Retained earnings 40,828 36,933
Treasury stock, at cost (18,604) (16,360)
Net unrealized gain (loss) on marketable securities (1,722) 1,614
Foreign currency translation adjustment (93) (30)
--------- ---------
Total stockholders' equity 55,043 52,484
--------- ---------
Total liabilities and stockholders' equity $ 270,599 $ 251,517
========= =========
See accompanying notes to consolidated
financial statements.
</TABLE>
<PAGE> 26
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(In thousands of dollars)
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 11,660 $ 11,254 $(10,065)
Items with different cash requirements
than that reflected in net income -
Cumulative effects of accounting changes - - 19,482
Deferred subscription revenue 12,745 8,311 16,197
Depreciation and amortization 9,856 9,686 9,472
Accrued postretirement benefits expense 3,500 3,900 6,600
Provision for deferred income taxes 1,238 701 (3,526)
Deferred selling expenses (8,895) (6,151) (57)
(Gain) on sales of securities (341) (1,969) (698)
Loss on disposals of property 44 8 476
(Gain) loss on sales of publishing assets (503) (311) 374
Others 36 385 216
Changes in operating assets and liabilities -
Receivables (8,046) (6,760) (5,444)
Payables and accrued liabilities 1,552 4,896 1,390
Inventory 142 305 (758)
Film production costs (581) (727) (518)
Other assets and liabilities - net 39 (29) 828
--------- --------- ---------
Net cash provided from operating activities 22,446 23,499 33,969
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -
Purchases of equipment and furnishings (5,641) (7,871) (3,482)
Building improvements (281) (870) (893)
Land costs - (358) (115)
Purchase of building - - (705)
Proceeds from sales of publishing assets 549 1,004 873
Purchase of publishing assets (227) - -
--------- --------- --------
Net cash used for capital expenditures (5,600) (8,095) (4,322)
--------- --------- --------
Investment portfolio -
Proceeds from sales and maturities 65,269 156,284 63,330
Purchases (69,556) (160,963) (84,433)
--------- --------- --------
Net cash used for investment portfolio (4,287) (4,679) (21,103)
--------- --------- --------
Net cash used in investing activities (9,887) (12,774) (25,425)
--------- --------- --------
(Continued)
</TABLE>
<PAGE> 27
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(In thousands of dollars)
<CAPTION>
1994 1993 1992
-------- ---------- --------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings (5,411) (3,188) (173)
Sales of capital stock to employees 5,550 2,781 2,971
Purchases of treasury stock (3,487) (2,196) (776)
Dividends paid (7,765) (7,693) (7,108)
--------- --------- ---------
Net cash used in financing activities (11,113) (10,296) (5,086)
--------- ---------- ----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,446 429 3,458
CASH AND CASH EQUIVALENTS, beginning of year 10,982 10,553 7,095
--------- ---------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 12,428 $ 10,982 $ 10,553
========= ========== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 183 $ 420 $ 504
Income taxes paid 2,578 5,803 8,105
See accompanying notes to consolidated
financial statements.
</TABLE>
<PAGE> 28
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(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, 1992 $6,479 $4,595 $ 506 $ 14,034 $ 50,545 $ (14,427) $ (111)
Sale of Class A treasury shares to employees - - - 2,264 - 707 -
Repurchase of Class A, Class B, and Class C shares - - - - - (776) -
Net loss - - - - (10,065) - -
Cash dividends - $.84 per share - - - - (7,108) - -
Change in net unrealized loss on marketable securities - - - - - - (67)
Currency translation adjustment - - - - - - 72
------- ------- ------- -------- -------- --------- --------
BALANCE, December 31, 1992 6,479 4,595 506 16,298 33,372 (14,496) (106)
Sale of Class A treasury shares to employees - - - 2,125 - 656 -
Issuance of Class B shares in exchange for
Class A shares - 324 - - - (324) -
Repurchase of Class A, Class B, and Class C shares - - - - - (2,196) -
Net income - - - - 11,254 - -
Cash dividends - $.90 per share - - - - (7,693) - -
Change in net unrealized gain/loss on
marketable securities - - - - - - 1,681
Currency translation adjustment - - - - - - 9
------- ------- ------- -------- -------- --------- --------
BALANCE, December 31, 1993 6,479 4,919 506 18,423 36,933 (16,360) 1,584
Sale of Class A treasury shares to employees - - - 4,299 - 1,251 -
Issuance of Class B shares in exchange for
Class A shares - 8 - - - (8) -
Repurchase of Class A, Class B, and Class C shares - - - - - (3,487) -
Net income - - - - 11,660 - -
Cash dividends - $.90 per share - - - - (7,765) - -
Change in net unrealized gain/loss on
marketable securities - - - - - - (3,336)
Currency translation adjustment - - - - - - (63)
------- ------- ------- -------- -------- --------- --------
BALANCE, December 31, 1994 $6,479 $4,927 $ 506 $22,722 $40,828 $(18,604) $(1,815)
======= ======= ======= ======== ======== ========= ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 29
THE BUREAU OF NATIONAL AFFAIRS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(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 busi-
ness information publishing industry. Operations consist primarily of the
production and marketing of information products in print and electronic
form, and outside printing services. Activities in other industry segments
provide less than 10 percent of total revenue. 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 10 percent or more of its
assets in foreign locations. Material intercompany transactions and
balances have been eliminated. Certain prior year balances have been re-
classified to conform with current year presentation.
(2) ACQUISITIONS AND DISPOSITIONS
In December 1992, the Company sold the assets of its online human resource
information business division, Executive Telecom Systems International
(ETSI). The sales price was $1,340,000, and consisted of cash and the
transfer of ETSI's liabilities. The sale resulted in a recorded pre-tax
loss of $512,000, but an after-tax gain of $64,000. In 1992, ETSI's reve-
nues were $2,681,000 and operating expenses were $4,435,000.
(3) RECOGNITION OF SUBSCRIPTION REVENUES AND SELLING EXPENSES
Subscription revenues and related field selling and direct promotion ex-
penses are deferred and amortized over the subscription terms, which are
primarily one year.
The American Institute of Certified Public Accountants has issued Statement
of Position (SOP) 93-7, "Reporting on Advertising Costs", which requires
expensing advertising costs as incurred. The Company will adopt the pro-
visions of SOP 93-7 in 1995. Accordingly, all advertising costs incurred
after adoption will be expensed as incurred; in addition, advertising costs
deferred as of December 31, 1994, must also be expensed in 1995 consis-
tent with the current amortization policy. Because of this one-time tran-
sition expense, adoption will decrease the Company's 1995 after-tax oper-
ating income by approximately $1,500,000.
Deferred subscription revenue is classified on the balance sheet as a cur-
rent item; however the fulfillment of the Company's subscription liability
will use substantially less current assets than the liability amount shown.
(Continued)
<PAGE> 30
(4) EMPLOYEE BENEFIT PLANS
The Company has noncontributory defined benefit pension plans covering em-
ployees 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 ten years of service. The plans provide for five-
year cliff vesting.
The Company's funding practice is to contribute amounts, which at a mini-
mum, satisfy ERISA requirements. The Company contributed $3,217,000 to the
Plan in 1994 and $2,914,000 in 1993, and because of Internal Revenue Ser-
vice funding limitations, none in 1992.
Pension expense is recorded on an accrual basis in accordance with finan-
cial 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):
1994 1993 1992
-------- -------- --------
Service cost - benefits earned
during the year $ 3,448 $ 2,505 $ 2,388
Interest cost 4,526 4,009 3,346
Actual return on plan assets during
the year - (gain)/loss 256 (5,904) (3,825)
Net asset gain/(loss) deferred for
later recognition (4,389) 2,255 305
Amortization of unrecognized plan assets (102) (93) (208)
Special benefits for early retirement - - 275
-------- -------- --------
Net pension expense $ 3,739 $ 2,772 $ 2,281
======== ======== ========
(Continued)
<PAGE> 31
The following table sets forth the funded status of the Plan and the
amounts recognized in the Company's Consolidated Balance Sheets (in
thousands of dollars):
December 31,
-------------------
1994 1993
-------- --------
Actuarial present value of benefit obligations:
Vested benefits $ 39,161 $ 38,062
Nonvested benefits 7,156 7,342
-------- --------
Accumulated benefit obligation 46,317 45,404
Projected future compensation 16,533 17,106
-------- --------
Projected benefit obligation 62,850 62,510
Plan assets at fair value 53,035 52,906
-------- --------
Projected benefit obligation in excess of
plan assets 9,815 9,604
Unrecognized net asset 3,004 3,312
Unrecognized net (loss) (2,928) (3,406)
Unrecognized prior service cost (1,899) (2,040)
-------- --------
Accrued pension liability 7,992 7,470
Less - current portion - 1,562
-------- --------
Long-term portion $ 7,992 $ 5,908
======== ========
Assumed discount rate 8.0% 7.0%
Assumed rate of compensation increase 5.0% 5.0%
Expected long-term rate of return on assets 8.0% 8.0%
Plan assets included equity securities, fixed income securities, and temp-
orary investments. Calculations of benefit obligations as of December 31,
1994, have been estimated by an independent actuary and are subject to re-
vision 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 un-
der some of these plans are at the discretion of the Board of Directors of
the respective subsidiaries. Total contributions under these plans were
$775,000 in 1994, $721,000 in 1993 and $688,000 in 1992.
The Company also has a cash profit sharing plan based on income before
taxes, as defined, covering employees of the Parent and certain subsidi-
aries. Profit sharing expense was $1,128,000 in 1994, $849,000 in 1993,
and $1,154,000 in 1992.
(Continued)
<PAGE> 32
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 as claims and premiums are paid.
Effective January 1, 1992, the Company adopted Statement of Financial Ac-
counting Standards (SFAS) 106 - Employers' Accounting for Postretirement
Benefits Other Than Pensions, changing the accounting method for postre-
tirement benefits from a cash basis to an accrual basis. The accounting
change for the benefits resulted in a one-time, non-cash expense in 1992 of
$21,621,000, net of taxes of $14,079,000, for the transition obligation.
The transition obligation is the actuarially determined accumulated postre-
tirement benefit obligation as of the date of adoption of SFAS 106.
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):
1994 1993 1992
-------- -------- --------
Service cost-benefits earned
during the year $ 1,824 $ 1,993 $ 2,230
Interest cost 2,543 3,073 2,854
Amortization of net gain (331) (39) -
-------- -------- --------
Postretirement benefit expense $ 4,036 $ 5,027 $ 5,084
======== ======== ========
The following table sets forth the amounts recognized in the Company's Con-
solidated Balance Sheets (in thousands of dollars):
December 31,
------------------
1994 1993
------- -------
Actuarial present value of benefit obligation:
Retirees $11,357 $12,765
Fully eligible active plan participants 882 1,029
Other active plan participants 18,355 21,736
------- -------
Accumulated benefit obligation 30,594 35,530
Unrecognized net gain 16,027 8,790
Unrecognized prior service cost 677 -
------- -------
Accrued other postretirement benefits liability 47,298 44,320
Less - current portion 1,088 1,066
------- -------
Long-term portion 46,210 43,254
======= =======
Assumed discount rate 8.0% 7.0%
Assumed rate of compensation increase 5.0% 5.0%
(Continued)
<PAGE> 33
The December 31, 1994 accumulated benefit obligation was determined using
an assumed health care cost trend rate of 9 percent in 1995, gradually de-
clining to 5 percent per year in the year 2001 and thereafter over the pro-
jected payout period of the benefits.
The effect of a one percent increase in the health care cost trend rate at
December 31, 1994 would have resulted in a $5,137,000 increase in the
accumulated benefit obligation and a $1,018,000 increase in the 1994 post-
retirement benefit expense.
Effective January 1, 1994, the Company adopted Statement of Financial Ac-
counting Standards (SFAS) 112 - Employers' Accounting for Postemployment
Benefits. The effect of implementing this standard was not material to the
consolidated financial statements.
(5) INVESTMENTS AND INVESTMENT INCOME
Cash and investments were as follows (in thousands of dollars):
December 31,
---------------------
1994 1993
-------- --------
Cash and cash equivalents $12,428 $10,982
Short-term investments 6,045 8,804
Marketable securities 67,180 65,265
-------- --------
Total $85,653 $85,051
======== ========
Cash equivalents consist of short-term investments, with a maturity of
three months or less at the time of purchase. Short-term investments con-
sist of other fixed-income investments, maturing in one year or less.
Marketable securities consist of equity securities and fixed-income securi-
ties maturing in more than one year.
Investment income consisted of the following (in thousands of dollars):
1994 1993 1992
-------- -------- --------
Interest income $3,629 $3,581 $3,344
Dividend income 827 640 369
Net gain on sales of securities 341 1,969 698
-------- -------- --------
Total $4,797 $6,190 $4,411
======== ======== =======
Proceeds from the sales of securities were $65,269,000 and $156,284,000 in
1994 and 1993, respectively. Gross realized gains and (losses) from these
sales were $588,000 and $(247,000), in 1994, and $2,179,000 and $(210,000)
in 1993. The specific identification method is used in computing realized
gains and losses.
(Continued)
<PAGE> 34
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 Aggregate
December 31, 1994 Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
Equity securities $ 14,791 $ 11 $ (976) $ 13,826
U.S. Government securities 7,949 - (225) 7,724
Municipal bonds 52,933 435 (1,893) 51,475
Corporate debt 200 - - 200
---------- ---------- ---------- ----------
Total $ 75,873 $ 446 $ (3,094) $ 73,225
========== ========== ========== ==========
Gross Gross
Amortized Unrealized Unrealized Aggregate
December 31, 1993 Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
Equity securities $ 15,305 $ 80 $ (110) $ 15,275
U.S. Government securities 2,271 - - 2,271
Municipal bonds 50,567 2,562 ( 51) 53,078
Corporate debt 3,444 1 - 3,445
---------- ---------- ---------- ----------
Total $ 71,587 $ 2,643 $ (161) $ 74,069
========= ========== ========== ==========
The differences between amortized cost and aggregate fair value result in
unrealized gains or losses, which are reported, net of tax, as a separate
component of Stockholders' Equity.
Contractual maturities of the fixed-income securities as of December 31,
1994 were as follows (in thousands of dollars):
Amortized
Cost Fair Value
--------- ----------
Within one year $ 5,957 $ 6,045
One through five years 21,572 21,189
Five through ten years 13,967 13,307
Over ten years 19,586 18,858
--------- ---------
Total $ 61,082 $ 59,399
========= =========
(Continued)
<PAGE> 35
(6) OTHER INCOME (EXPENSE), NET
Other income (expense), net was comprised of the following (in thousands of
dollars):
1994 1993 1992
-------- -------- --------
Gain (loss) on sales of
publishing assets $ 503 $ 311 $ (374)
(Loss) on disposals of
property and equipment (44) (8) (476)
-------- -------- --------
Total $ 459 $ 303 $ (850)
======== ======== ========
(7) DEBT
Debt was as follows (in thousands of dollars):
December 31,
----------------------
1994 1993
--------- ---------
Note payable, at 3-month secondary
market CD rate plus 1/2%, paid in 1994 $ - $ 4,000
Note payable, 8-1/4%, paid in 1994 - 1,411
Others 107 107
--------- ---------
107 5,518
Less - current portion - 4,186
--------- ---------
Long-term portion $ 107 $ 1,332
========= =========
During 1994, the Company arranged a two year, $10,000,000 unsecured re-
volving line of credit to be used for letters of credit and corporate
borrowing. The Company's borrowing rate options are at the prime rate or
the secondary CD rate plus 1/2%, or the LIBOR rate plus 1/4%; facilities
fees are immaterial. The arrangement contains certain restrictive cove-
nants, with which the Company is in compliance. As of December 31, 1994,
there had been no borrowings, but $400,000 of the credit line had been
used to secure a letter of credit.
(8) 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
$3,270,000 in 1994 and $2,958,000 in 1993.
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.
(Continued)
<PAGE> 36
Other goodwill is amortized on a straight-line basis, using forty years for
the publishing acquisitions and ten years for the electronic information
acquisitions. Amortization expense was $312,000 for 1994, $313,000 for
1993, and $334,000 for 1992.
(9) INCOME TAXES
Effective January 1, 1992, the Company adopted Statement of Financial Ac-
counting Standards (SFAS) 109 - Accounting for Income Taxes, changing the
accounting method for income taxes from the deferred method to the asset
and liability method. Under the asset and liability method, deferred tax
assets and liabilities are recognized for future tax consequences attribut-
able to temporary differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
Deferred assets and liabilities are measured using enacted tax rates which
apply to taxable income in future years when those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets
and liabilities for changes in tax rates will be recognized in the period
that includes the enactment date.
The total income tax expense (benefit) was allocated as follows (in
thousands of dollars):
1994 1993 1992
-------- -------- --------
Income before taxes and cumulative effects
of accounting changes $ 4,397 $ 4,482 $ 3,718
Stockholders' Equity -- Change in:
Unrealized gain/loss on
marketable securities (1,795) 902 34
Foreign currency translation adjustment (34) 4 (36)
-------- -------- --------
Total $ 2,568 $ 5,388 $ 3,716
======== ======== ========
The provision for income taxes consisted of the following (in thousands of
dollars):
1994 1993 1992
-------- -------- --------
Taxes currently payable:
Federal $ 2,873 $ 3,398 $ 6,198
State and local 286 383 1,046
-------- -------- --------
3,159 3,781 7,244
-------- -------- --------
Deferred tax provision:
Federal 995 571 (2,840)
State and local 243 130 (686)
-------- -------- --------
1,238 701 (3,526)
-------- -------- --------
Total $ 4,397 $ 4,482 $ 3,718
======== ======== ========
(Continued)
<PAGE> 37
The deferred tax provision for 1993 includes a reduction of $310,000 for
changes in tax rates enacted during that year. The 1992 amounts exclude
tax benefits relating to the cumulative effects of accounting changes for
postretirement benefits (Note 4) of $14,079,000 and for income taxes of
$2,139,000.
Reconciliation of the U.S. statutory rate to the Company's consolidated
effective income tax rate was as follows:
Percent of
Pretax Income
-------------------------------
1994 1993 1992
--------- --------- --------
Federal statutory rate 35.0% 35.0% 34.0%
Rate difference due to level
of taxable income (.8) (.9) -
State and local income taxes,
net of Federal income tax benefit 2.2 2.0 1.8
Goodwill amortization and other
nondeductible expenses 1.8 1.2 1.4
Tax-exempt interest exclusion (6.0) (6.5) (5.9)
Adjustment to deferred taxes for
enacted changes in tax rates - (2.0) -
Research and development credit (2.4) (.1) -
Dividends received exclusion (1.2) (.9) (.7)
Tax benefit from sale of business - - (2.4)
Others, net (1.2) .7 .1
--------- --------- ---------
Total 27.4% 28.5% 28.3%
========= ========= =========
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,
-------------------------
1994 1993
--------- ---------
Deferred tax assets:
Other postretirement benefits $ 19,041 $ 17,870
Pension expense 3,253 3,037
Annual leave 1,724 1,566
Inventories 1,610 1,443
Others 3,002 1,808
--------- ---------
Total deferred tax assets 28,630 25,724
--------- ---------
Deferred tax liabilities:
Deferred selling expenses (13,333) (9,778)
Depreciation (2,535) (2,780)
Others (97) (1,144)
--------- ---------
Total deferred tax liabilities (15,965) (13,702)
--------- ---------
Net deferred tax assets $ 12,665 $ 12,022
========= =========
(Continued)
<PAGE> 38
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 al-
lowance is necessary.
(10) OTHER BALANCE SHEET INFORMATION
Certain year-end balances consisted of the following (in thousands of
dollars):
1994 1993
--------- ---------
Receivables:
Customers $ 45,167 $ 36,576
Others 5,417 5,981
Allowance for doubtful accounts (1,446) (1,376)
--------- ---------
Total $ 49,138 $ 41,181
========= =========
1994 1993
--------- ---------
Inventories:
Materials and supplies $ 4,273 $ 4,579
Work in process 246 94
Finished goods 2,314 2,302
--------- ---------
Total $ 6,833 $ 6,975
========= =========
Inventories are valued at the lower of cost (principally average cost
method) or market.
1994 1993
--------- ---------
Property and Equipment (at cost):
Land $ 5,176 $ 5,176
Buildings and improvements 48,145 47,864
Furniture, fixtures and equipment 58,382 53,832
Accumulated depreciation (52,888) (45,490)
--------- ---------
Total $ 58,815 $ 61,382
========= =========
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 $8,758,000 in 1994, $8,605,000 in 1993, and
$7,702,000 in 1992. Expenditures for maintenance and repairs are expensed
while major replacements and improvements are capitalized.
(Continued)
<PAGE> 39
1994 1993
-------- --------
Other assets:
Amortizable assets
Customer lists $ 912 $ 605
Film production costs 1,749 1,599
Lease commissions 468 533
Software 5 7
Editorial service agreement - 48
Non-compete agreements - 139
-------- --------
3,134 2,931
Notes and other receivables 581 737
-------- --------
Total $ 3,715 $ 3,668
======== ========
Film production costs are amortized using the revenue forecast method.
Other amortizable assets are expensed evenly over their respective esti-
mated lives, ranging from 3 to 10 years. Amortization expense for these
assets was $786,000 in 1994, $1,308,000 in 1993, and $1,436,000 in 1992.
Accumulated amortization for customer lists, the editorial service agree-
ment, non-compete agreements, and other intangible assets was $288,000 in
1994, $4,322,000 in 1993, and $3,511,000 in 1992.
1994 1993
--------- ---------
Payables and accrued liabilities:
Accounts payable $ 16,179 $ 15,569
Employee compensation and benefits 11,945 10,795
Postretirement benefits 1,088 2,628
Income taxes 8 38
--------- ---------
Total $ 29,220 $ 29,030
========= =========
(11) COMMITMENTS AND CONTINGENCIES
The Company has non-cancelable operating leases for office space, data
processing equipment, and vehicles. Total rent expense was $3,699,000 in
1994, $3,673,000 in 1993, and $3,971,000 in 1992 (net of sublease income of
$105,000, $195,000, and $149,000, respectively).
As of December 31, 1994, future minimum lease payments under non-cancelable
operating leases, were as follows: 1995 - $3,467,000; 1996 - $3,345,000;
1997 - $2,752,000; 1998 - $2,651,000; 1999 - $2,632,000; thereafter -
$2,339,000.
The Company has ongoing service agreements with software authors and a
multi-year agreement with a key employee of one of its subsidiaries. The
Company's total financial commitment related to these agreements is
$1,063,000 for the year 1995.
(Continued)
<PAGE> 40
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 consolidat-
ed financial statements.
(12) STOCKHOLDERS' EQUITY
Ownership and transferability of Class A, Class B, and Class C stock are
substantially restricted to employees 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 an-
other upon declaration of dividends or liquidation.
During 1993, the Company's Certificate of Incorporation was amended to in-
crease the authorized Class B stock shares by 500,000 shares and decrease
the authorized Class A stock shares by 500,000 shares, so as to ensure that
future retirees will have the option of exchanging their Class A stock for
Class B stock upon retirement. As of December 31, 1994, 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, 1994, Class B and Class C stock having a total market value
of $220,000 are known or expected to be tendered during 1995. 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.
(Continued)
<PAGE> 41
Treasury share transactions were as follows:
Treasury Stock Shares
------------------------------------
Class A Class B Class C
---------- ----------- -----------
Balance, January 1, 1992 3,011,483 124,079 50,250
Sale of Class A shares to employees (170,953) - -
Repurchase of shares 3,255 36,513 4,737
Conversion of Class A shares to
Class B shares 136,806 (136,806) -
----------- ----------- -----------
Balance, December 31, 1992 2,980,591 23,786 54,987
Sale of Class A shares to employees (143,536) - -
Repurchase of shares 17,502 86,457 7,455
Conversion of Class A shares to
Class B shares 110,243 (110,243) -
Exchange of Class A shares for
newly issued Class B shares 324,645 - -
----------- ----------- -----------
Balance, December 31, 1993 3,289,445 0 62,442
Sale of Class A shares to employees (260,936) - -
Repurchase of shares - 148,992 13,006
Conversion of Class A shares to
Class B shares 41,441 (41,441) -
Exchange of Class A shares for
newly issued Class B shares 7,483 - -
----------- ----------- -----------
Balance, December 31, 1994 3,077,433 107,551 75,448
=========== =========== ===========
Earnings per share have been computed based on the aggregate weighted
average number of all outstanding shares of stock, which was 8,599,118 in
1994, 8,549,522 in 1993, and 8,458,109 in 1992.
Financial statements of the Company's United Kingdom operations denominated
in British pounds are translated into U.S. dollars at year-end exchange
rates, and related gains and losses are reflected, net of taxes, directly
in Stockholders' Equity in the accompanying Consolidated Balance Sheets.
<PAGE> 42
<TABLE>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
THE BUREAU OF NATIONAL AFFAIRS, INC.
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(In Thousands of Dollars)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column F
- ---------------------------------------------------------------------------------------------------------------------
Additions
-------------------------
(l) (2)
Charged to
Balance at Charged to other Balance at
Description beginning costs and accounts-- Deductions end of
of period expenses describe describe period
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
VALUATION ACCOUNTS DEDUCTED FROM
ASSETS TO WHICH THEY APPLY:
Allowance for Doubtful Accounts Receivable:
Year ended December 31, 1994 $1,376 $825 $ (80)(a) $675(b) $1,446
Year ended December 31, 1993 984 685 277 (a) 570(b) 1,376
Year ended December 31, 1992 970 709 - 695(b) 984
Allowance for Note Receivable:
Year ended December 31, 1994 493 - - 493(c) -
Year ended December 31, 1993 607 - - 114(c) 493
Year ended December 31, 1992 623 - - 16(c) 607
Notes:
<FN>a
(a) Charged to deferred subscription revenue; portion of allowance for doubtful accounts receivable
not included in revenues.
<FN>b
(b) Net accounts written off.
<FN>c
(c) Change in estimate.
</TABLE>
<PAGE> 43
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, 1994 or
through the date of this Form 10-K.
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, 1994. 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 "IV. EXECUTIVE COMPENSATION" and "V.
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 "IV. EXECUTIVE COMPENSATION" and is
incorporated herein by reference.
<PAGE> 44
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: Page
--------------------- ----
Report of Independent Auditors 22
Consolidated Balance Sheets as of December 31,
1994 and 1993. 24-25
Consolidated Statements of Income, Consolidated
Statements of Cash Flows, and Consolidated
Statements of Changes in Stockholders' Equity
for each of the years ended December 31, 1994,
1993, and 1992 23, 26-28
Notes to Consolidated Financial Statements 29-41
(2) Financial Statement Schedules:
------------------------------
Report of Independent Auditors as to the
financial statement schedules 22
VIII Valuation and Qualifying Accounts and Reserves 42
All other schedules are omitted because they are not
applicable or the required information is shown in the
financial statements or notes thereto.
<PAGE> 45
(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 1994 Consolidated Financial Statements in the Notes to
Consolidated Financial Statements, Note 12, "Stockholders'
Equity," at page 40 of this Form 10-K.
22 Subsidiaries of the Registrant. *
24.1 Consent of Independent Auditors for 1994, 1993 and 1992
financial statements.
28.1 Proxy Statement for the Annual Meeting of security holders to
be held on April 15, 1995 ***
28.2 Annual Report on Form 11-K related to the Company's Deferred
Stock Purchase Plan for the fiscal year ended December 31,
1994. *
* Filed herewith.
** Incorporated by reference to the Company's 1988 Form 10-K,
Commission File Number 2-28286, filed on March 30, 1989. The
exhibit numbers indicated above correspond to the exhibit
numbers in that filing.
*** Previously filed with the Securities and Exchange Commission.
**** 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, 1994.
<PAGE> 46
SIGNATURE
---------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Ex-
change 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\ William A Beltz
-------------------------------------------
William A. Beltz, Chief Executive Officer
Date: March 9, 1995
-----------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this re-
port has been signed below by the following persons on behalf of the registrant
and in the capacities and on dates indicated.
By: s\ William A. Beltz By: s\ George J. Korphage
------------------------------ --------------------------------
William A. Beltz, George J. Korphage,
Chief Executive Officer Vice President and Chief Financial
Director Officer (Chief Accounting Officer)
Director
Date: 3/9/95 Date: 3/9/95
----------------------------- -----------------------
By: s\ Jacqueline M. Blanchard 3/9/95 By: s\ John V. Schappi 3/9/95
--------------------------- ------- -------------------------- -------
Jacqueline M. Blanchard Date John V. Schappi Date
By: s\ John P. Boylan 3/9/95 By: s\ Frederick A. Schenck 3/9/95
--------------------------- ------- -------------------------- -------
John P. Boylan Date Frederick A. Schenck Date
By: s\ Robert B. Brooks 3/9/95 By: s\ Mary Patricia Swords 3/9/95
--------------------------- ------- -------------------------- -------
Robert B. Brooks Date Mary P. Swords Date
By: s\ Christopher R. Curtis 3/9/95 By: s\ Daniel W.Toohey 3/9/95
--------------------------- ------- -------------------------- -------
Christopher R. Curtis Date Daniel W. Toohey Date
By: s\ Sandra C. Degler 3/9/95 By:
--------------------------- ------- -------------------------- -------
Sandra C. Degler Date Loene Trubkin Date
By: s\ Kathleen D. Gill 3/9/95 By: s\ Paul N. Wojcik 3/9/95
--------------------------- ------- -------------------------- -------
Kathleen D. Gill Date Paul N. Wojcik Date
By: s\ Anthony A. Harris 3/9/95
--------------------------- -------
Anthony A. Harris Date
<PAGE> 47
EXHIBIT INDEX
-------------
Exhibit Sequential Page
Number Description Number
- ------- ----------- ---------------
3.1 Certificate of Incorporation, as amended ***
3.2 By laws, as amended *
11 Statement re: Computation of Per Share Earnings
is contained in the 1994 Consolidated Financial
Statements in the Notes to Consolidated Financial
Statements, Note 12, "Stockholders' Equity,"
22 Subsidiaries of the Registrant 48
24.1 Consent of Independent Auditors for 1994, 1993,
and 1992 financial statements. 49
28.1 Proxy Statement for the Annual Meeting of
Stockholders to be held on April 15, 1995 **
28.2 Annual Report on Form 11-K related to the
Company's Deferred Stock Purchase Plan for
the fiscal year ended December 31, 1994 50
* Incorporated by reference to the Company's
1988 Form 10-K, Commission File Number 2-28286,
filed on March 30, 1989. The exhibit numbers
indicated above correspond to the exhibit numbers
in that filing.
** Previously filed with the Securities and Exchange
Commission.
*** 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.
<PAGE> 48
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> 49
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
The Board Of Directors and Stockholders
The Bureau of National Affairs, Inc.
We consent to the incorporation by reference in the registration statement
(No. 33-58061) on Form S-8 of The Bureau of National Affairs, Inc., filed
on March 14, 1995, of our report dated February 21, 1995, relating to the
consolidated balance sheets of The Bureau of National Affairs, Inc. and
subsidiaries as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in stockholders' equity, and
cash flows and related consolidated financial statement schedules for each
of the years in the three-year period ended December 31, 1993, which
report appears in the December 31, 1993, annual report on Form 10-K of The
Bureau of National Affairs, Inc.
s\ KPMG Peat Marwick LLP
--------------------------
KPMG Peat Marwick LLP
Washington, D.C.
March 24, 1995
<PAGE> 50
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 31,1994
-----------------------------------------------
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: Page
----
Financial Statements -
Report of Independent Auditors 53
Statements of Net Assets Available for Benefits
December 31, 1994 and 1993 54
Statements of Changes in Net Assets Available
for Benefits-Years Ended December 31, 1994,
1993, and 1992 55
Notes to Financial Statements - December 31,
1994, 1993, and 1992 56-58
Financial Statement Schedules 59-60
<PAGE> 51
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 24, 1995
--------------------------------
By: s\ Paul N. Wojcik
----------------------------------
Paul N. Wojcik,
Chairman of the Administrative Committee
of The BNA Deferred Stock Purchase Plan
<PAGE> 52
THE BNA DEFERRED STOCK PURCHASE PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994
AND 1993, TOGETHER WITH INDEPENDENT AUDITORS' REPORT
<PAGE> 53
Independent Auditors' Report
----------------------------
To the Administrative Committee of
The BNA Deferred Stock Purchase Plan:
We have audited the accompanying statement of net assets available for
benefits of The BNA Deferred Stock Purchase Plan (the Plan) as of December
31, 1994 and 1993, 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, 1994. 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, 1994 and 1993, and the changes in net assets
available for benefits for each of the years in the three-year period
ended December 31, 1994 in accordance 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.
March 10, 1995
<PAGE> 54
THE BNA DEFERRED STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1994 AND 1993
1994 1993
----------- -----------
Investments, at fair value (Note 2)
(Cost of $16,981,162 in 1994
and $14,375,338 in 1993) $25,270,784 $21,586,562
Cash 124,695 86,613
----------- -----------
Net assets available for benefits $25,395,479 $21,673,175
=========== ===========
See accompanying notes to financial statements.
<PAGE> 55
<TABLE>
THE BNA DEFERRED STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<CAPTION>
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Dividends (Note 1) $ 978,785 $ 903,129 $ 761,970
Interest 2,804 2,487 3,644
Unrealized appreciation of
investments (Note 2) 1,615,176 2,982,268 441,686
------------ ------------ ------------
2,596,765 3,887,884 1,207,300
Contributions by participants (Note 1) 2,583,564 1,942,839 2,056,977
------------ ------------ ------------
Total additions 5,180,329 5,830,723 3,264,277
------------ ------------ ------------
Deductions from net assets attributed to:
Distributions to participants (Note 1) 1,457,723 1,290,181 1,110,470
Administrative costs (Note 3) 302 390 1,204
------------ ------------ ------------
Total deductions 1,458,025 1,290,571 1,111,674
------------ ------------ ------------
Net increase 3,722,304 4,540,152 2,152,603
Net assets available for benefits:
Beginning of year 21,673,175 17,133,023 14,980,420
------------ ------------ ------------
End of year $25,395,479 $21,673,175 $17,133,023
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE> 56
THE BNA DEFERRED STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
(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 contribution 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, total and permanent
disability, 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 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
(Continued)
<PAGE> 57
of any subsidiary, upon disposition of the subsidiary. The Trust may re-
deem or exchange Class A Common Stock for cash, Class B, or Class C Common
Stock, if necessary to comply with the above ownership restrictions.
Proceeds from such exchanges 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 in a money
market account.
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.
(2) INVESTMENTS
At December 31, 1994, the Trust held 1,078,843 shares of the
Company's Class A Common Stock, 69,829 shares of the Company's Class
B Common Stock, and none of the Company's Class C Common Stock, each
valued at $22.00 per share, for 1,049 plan participants. At
December 31, 1993, the Trust held 973,207 shares of the Company's
Class A Common Stock, 77,580 shares of the Company's Class B Common
Stock and 2,216 shares of the Company's Class C Common Stock, each
valued at $20.50 per share, for 954 plan participants.
The fair value of the stock is set solely by the Company's Board of
Directors semiannually for the Stock Purchase and Transfer Plan
(SPTP). The SPTP is the primary market for sale and purchase of the
Company's Class A Stock. The Plan values its investments in the
Company's stock at the then most current price fixed for the SPTP
market.
(Continued)
<PAGE> 58
The following information summarizes the Plan's investment and
distribution transactions during 1993 and 1994 involving the
Company's Common Stock.
Number Fair
of Shares Value
--------- -----------
Balance, January 1, 1993 973,553 $17,037,178
Acquired 143,536 2,781,133
Distributed to participants (64,086) (1,214,017)
Appreciation during the year in the
market value of shares of Company
stock held at year end - 2,982,268
--------- ------------
Balance, December 31, 1993 1,053,003 21,586,562
Acquired 163,159 3,496,349
Distributed to participants (67,490) (1,427,303)
Appreciation during the year in the
market value of shares of Company
stock held at year end - 1,615,176
--------- -----------
Balance, December 31, 1994 1,148,672 $25,270,784
========= ===========
The Company's Board of Directors have fixed the fair value of the
stock at $24.00 per share, effective March 27, 1995.
(3) ADMINISTRATIVE COSTS
The Company pays most of the administrative costs of the Plan. Such
costs are not reflected in the accompanying financial statements.
(4) INCOME TAXES
The Internal Revenue Service issued a determination letter for the
Plan on April 2, 1986, which stated that the Plan and its underlying
trust qualify under the applicable provisions of the Internal
Revenue Code and therefore are exempt from federal income taxes.
The Plan has since been amended to conform with current tax law
changes. 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> 59
Schedule 1
THE BUREAU OF NATIONAL AFFAIRS, INC.
THE BNA DEFERRED STOCK PURCHASE PLAN
INVESTMENTS AT FAIR VALUE
DECEMBER 31, 1994
Fair
Description Value Cost
- --------------------------------------- ------------ ------------
1,148,672 shares BNA, Inc. Common Stock $ 25,270,784 $ 16,981,162
<PAGE> 60
Schedule 2
THE BUREAU OF NATIONAL AFFAIRS, INC.
THE BNA DEFERRED STOCK PURCHASE PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
Number of Purchase
Number Purchases Price or
of Shares Description or Sales Proceeds Gain
- --------- ------------------------ --------- ---------- --------
Purchases:
163,159 BNA, Inc. Common Stock 36 $3,496,349 -
Sales:
67,490 BNA, Inc. Common Stock 93 1,427,303 $536,778
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, 1994, ($1,079,328) and are reportable under Section 2520.103.6 of
Chapter XXV of the Department of Labor Employee Retirement Income
Security Act annual reporting requirements.
<PAGE> 61
EXHIBIT 24.1
CONSENT OF INDEPENDENT AUDITORS
The Administrative Committee of
The Bureau of National Affairs, Inc.
We consent to the incorporation by reference in the registration statement
(No. 33-58061) on Form S-8 of The Bureau of National Affairs, Inc., filed
on March 14, 1995, of our report dated March 17, 1995 relating to the
statement of net assets available for benefits of the BNA Deferred Stock
Purchase Plan as of December 31, 1994 and 1993, 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, 1994, which report appears in the
December 31, 1994 annual report on Form 11-K of the BNA Deferred Stock
Purchase Plan.
s\ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Washington, D.C.
March 24, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from The
Bureau of National Affairs, Inc. consolidated balance sheet and consolidated
statement of income for the period ended December 31, 1994 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 12,428
<SECURITIES> 6,045
<RECEIVABLES> 50,584
<ALLOWANCES> 1,446
<INVENTORY> 6,833
<CURRENT-ASSETS> 110,173
<PP&E> 111,703
<DEPRECIATION> 52,888
<TOTAL-ASSETS> 270,599
<CURRENT-LIABILITIES> 157,987
<BONDS> 107
<COMMON> 11,912
0
0
<OTHER-SE> 43,131
<TOTAL-LIABILITY-AND-EQUITY> 270,599
<SALES> 215,491
<TOTAL-REVENUES> 215,491
<CGS> 121,337
<TOTAL-COSTS> 121,337
<OTHER-EXPENSES> 82,345
<LOSS-PROVISION> 825
<INTEREST-EXPENSE> 183
<INCOME-PRETAX> 16,057
<INCOME-TAX> 4,397
<INCOME-CONTINUING> 11,660
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,660
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.36
</TABLE>
