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, 1995
-----------------------------------------------
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 24, 1996 was $81,064,640 (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 60 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 24, 1996 was 3,575,531 Class A common
shares, 4,872,991 Class B common shares, and 421,243 Class C common
shares.
DOCUMENTS INCORPORATED BY REFERENCE
-------------------------------------
Portions of the Company's definitive Proxy Statement, filed with the
SEC on March 29, 1996 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, 1995
Page No.
---------
PART I.
Item 1. Business.............................................. 3-12
Item 2. Properties............................................ 13
Item 3. Legal Proceedings..................................... 13
Item 4. Submission of Matters to a Vote of Security Holders... 13
Item X. Executive Officers of the Registrant.................. 14-15
PART II.
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters............................. 16
Item 6. Selected Financial Data............................... 17
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 18-20
Item 8. Financial Statements and Supplementary Data........... 21-41
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................. 42
PART III.
Item 10. Directors and Executive Officers of Registrant........ 42
Item 11. Executive Compensation................................ 42
Item 12. Security Ownership of Beneficial Owners and
Management.......................................... 42
Item 13. Certain Relationships and Related Transactions........ 42
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and
Report on Form 8-K.................................. 43-44
SIGNATURES........................................................ 45
EXHIBIT INDEX..................................................... 46
<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 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, Legislate, Cambridge Information Group,
and others. Beginning in 1996, the Company will offer many of its
products for electronic delivery via Lotus Notes and the Internet.
BNA Software, a division of Tax Management Inc., develops, produces, and
markets tax and financial planning software for use on personal computers.
Sales are made to accountants, lawyers, tax and financial planners, and
others. The products are marketed through direct mail, space advertising,
and BNA field sales representatives.
BNA International Inc. is the Company's agent outside of North America for
sale of its domestic services and also engages in independent publishing
activity, including adaptation of the Company's domestic products for
sales abroad.
The McArdle Printing Co., Inc. provides printing services to mid-Atlantic
area customers. It utilizes modern equipment and technology in printing
information products for publishers, trade associations, professional
societies, other non-profit organizations, financial institutions and
governmental organizations. Approximately 59 percent of its business is
derived from the BNA publishing companies.
BNA Communications Inc. is engaged in the business of producing,
publishing, and marketing multimedia programs for training in the Equal
Employment Opportunity and safety and health related fields. The programs
promote awareness, facilitate regulatory compliance, and develop skills
for managers and employees in industry and government.
<PAGE> 4
Item 1 General Development of Business and Narrative Description
of Business (Continued)
---------------------------------------------------------
REVIEW OF OPERATIONS
Fundamental changes in publishing technologies, an unsettled legislative
and regulatory climate, and new competitive pressures continued to
challenge BNA and its subsidiary companies in 1995. Nevertheless,
consolidated revenues and net income hit new highs.
The changing information industry environment, marked by a growing number
of new players and multiplying new forms of media, required some difficult
choices and a disciplined allocation of resources to maintain the high
quality of existing products while pursuing promising new ways of
organizing and delivering information.
Product development expenditures were stepped up substantially during the
year. BNA and its publishing subsidiaries introduced new CD-ROM products
and enhanced with both proprietary and public domain material those
introduced successfully over the previous two years. CD-ROMs accounted for
about 60 percent of new subscription sales in 1995.
Contracts with principal online vendors were renegotiated during the year
to increase BNA's share of revenue while protecting the integrity of its
core business. Simultaneously, a new online distribution system for
notification services was developed for launch early in 1996.
New print services also were introduced during the year, and several older
services were extensively revamped to reflect changing conditions. About
75 percent of 1995 publishing revenues came from traditional print
services.
Consolidated revenues rose to $226.5 million, a 5.1 percent increase over
1994. Revenues of parent company and Tax Management services, which
accounted for a major share of consolidated revenues, grew 6.2 percent in
1995 as a result of strong new service sales in 1994 and 1995. Aggregate
revenue of the other business units was essentially even with 1994.
Two 1995 transactions affect the comparability of the year's results to
prior years. The McArdle Printing Company's former plant site in Silver
Spring, Md., was sold early in the year resulting in a $2.4 million pre-
tax gain. Included in non-operating income, this gain was mostly offset by
a required new way of accounting for advertising costs, described in Note
2 to the financial statements, which resulted in a one-time $2.1 million
pre-tax charge to operating expense.
The consolidated operating profit, excluding the change in accounting for
advertising expense, was $9.9 million, down nearly 10 percent from 1994.
The decline was due mainly to higher product development costs for the
parent company, higher selling expenses relating to record sales in the
prior year and largely amortized in 1995, and a substantial operating loss
by BNA Communications Inc.
The decline in comparable operating profit was more than offset, however,
by a substantial increase in 1995 investment income. Consolidated net
income of $12.1 million was 3.7 percent higher than the previous year.
<PAGE> 5
Non-operating income, excluding the one-time gain on sale of the Silver
Spring property, was $7.3 million compared to $5.1 million in 1994.
Investment income, reflecting additions to the corporate portfolios and
strong financial markets, rose by 40 percent in 1995. The sale of five
publications -- four of the parent company's California-specific services
and a BNA International product -- produced additional gains.
Cash and investment balances increased by 34 percent to $114.8 million
because of strong operating cash flows, asset sales, net sales of capital
stock, and market gains on the investment securities. BNA's financial
strength and liquidity, in addition to providing current investment
income, ensure that the company has the resources to reinvest in the
business as necessary and to meet repurchase obligations inherent in
employee ownership.
A REVIEW OF 1995 OPERATIONS OF THE PARENT COMPANY AND EACH SUBSIDIARY
FOLLOWS:
PARENT COMPANY
Initial forays into CD-ROM publishing became an integral and profitable
part of the parent's subscription services business in 1995, providing
some reassuring answers to questions about the viability of this delivery
mechanism and our ability to exploit its possibilities. And, while this
transition was neither easy nor inexpensive, we accomplished it in the
traditional BNA way -- by allocating resources in a manner that allowed us
to maintain a high level of quality in our products and services while
protecting and growing the solid financial foundation of the company.
Parent company revenues reached $157 million in 1995, a 4.7 percent
increase over the previous year. Operating expenses increased at a
greater rate, however, primarily driven by a nearly 50 percent increase in
product development costs and significantly higher selling expenses
related to 1994's record-shattering sales year.
Considerable effort in 1995 went into converting our CD-ROM products into
a Windows^TM format. The effort provided a good illustration of the
progress we have made in this area: each product was delivered on time
and on budget. The effort also illustrates a distinguishing
characteristic of the electronic product line -- the need for constant
improvement. This involves not only expanded coverage and continual
attempts to make the products more "user-friendly," but also changes to
accommodate the market's adoption of new technologies. And, while product
improvements do give rise to new sales opportunities, the driving force is
the need to protect the revenue base already established for these
products.
In addition to enhancing existing products, two new CD-ROM products were
launched in 1995. BNA'S INTELLECTUAL PROPERTY LIBRARY ON CD is a new
version of BNA's oldest publication, U.S. PATENTS QUARTERLY. This new
product will enable intellectual property lawyers, who have been among
BNA's most loyal subscribers, to have 50 years of USPQ material on their
desktops. The second CD-ROM product, BNA's EMPLOYEE BENEFITS LIBRARY ON
CD, does not have a print equivalent. Instead, this product combines BNA
and Tax Management information with the full text of relevant public
domain material, to provide a one-stop research product for employee
benefit professionals. It was launched late in the year.
<PAGE> 6
Market response to our CD-ROM products continues to be enthusiastic. Once
again, CD-ROM products accounted for more than half of the year's new
sales. New subscription sales totaled $32.9 million, making 1995 the
second best new sales year in the company's history. The credit goes to
high quality editorial products and an experienced and professional sales
force which made its numbers despite a belt-tightening market, aggressive
competition, and an increasingly complex product line. For the third year
in a row, BNA'S ENVIRONMENT LIBRARY ON CD-ROM was the best selling
product.
Two new print notification services also were introduced during the year.
BNA's MANAGED CARE REPORTER, the latest addition to BNA's growing Health
Care Services Division, was launched. In its first six months, it has
outpaced its first-year projections and continues to exhibit strong
growth. BNA's INSURANCE COVERAGE LITIGATION REPORT was launched in
September. This is our first attempt to bring BNA's news reporting
capabilities to the insurance area. We are convinced that there will be
a significant market for print products for the foreseeable future, and
plans for 1996 include another notification service and a new portfolio
series. Top print sellers in 1995 included some very familiar names:
LABOR RELATIONS REPORTER, ENVIRONMENT REPORTER, and the daily reports.
The need to leverage the company's unique news reporting capabilities led
to a major 1995 initiative that will come to fruition in 1996. Beginning
this spring, all of BNA's notification services, including the dailies,
will be available for electronic delivery via the Lotus Notes Network and
the Internet's World Wide Web. Thus, subscribers will be able to receive
their BNA information at their desktops the day it's published, without
having to wait for the mail or the delays inherent in a long routing list.
Ultimately, BNA must make its information available to subscribers in any
format that meets their needs. To do that economically, the company is in
the midst of a multi-year effort to build a new publishing system, PS2000.
Last year was a breakthrough year for that effort, as we began to migrate
publications to the new system. At the end of 1995, nine BNA publications
were being produced on the new system. The migration to the new system
will in itself be a multi-year effort, but the fact that a single system
is now actually being used to produce reference services such as PAYROLL
ADMINISTRATION GUIDE and BNA'S PAYROLL LIBRARY ON CD, as well as
notification services such as SECURITIES REGULATION AND LAW REPORT -- in
both print and electronic formats -- is a major achievement.
A distinct characteristic of electronic products is the demand for
increased customer support. Subscribers expect our service, like our
products, to be the best. As always, many subscribers turn to their BNA
sales representatives for help, and our sales force has done an
outstanding job of introducing and explaining our new products.
But more was needed. BNA PLUS, the Circulation Department, and the
Information Systems Department all accepted the challenge of making sure
our subscribers got the most out of our products. The PLUS Customer
Support Unit expanded its hours of operation so that West Coast
subscribers could get the support they needed. The unit also began a
training program whereby subscribers can schedule set times for telephone
training especially designed for their knowledge level. In the fall, as
the new Windows^TM products began hitting the market, the Circulation
Department began calling subscribers to determine whether they needed help
in installing and using the new products. And finally, the IS Department
<PAGE> 7
handled those customer needs that were more technical rather than
substantive. This support effort is expensive, but it is an important
element in our subscribers' decisions to purchase, use, and renew BNA's
electronic products.
Careful use of resources also requires us to recognize when our efforts
are not meeting expectations. In 1995, we ended our effort to build a BNA
California business, and sold the four California publications to another
publisher. While the publications were of high quality and well
respected, the financial return did not warrant the level of investment
that would have been required to build that business. BNA also ceased
publishing the BNA CIVIL TRIAL MANUAL and transferred its sister
publication, the BNA CRIMINAL PRACTICE MANUAL, to Pike & Fischer.
Much of 1995 was spent in efforts to solidify the market gains of the new
electronic products. We believe we have done that. But the effort has
not come cheaply, and this year's operating profit fell as a result.
However, we believe we have made great progress in incorporating the
electronic products as an important and growing piece of BNA's strong
product line, which has been and will continue to be the source of the
company's enviable record of growth and success.
BNA BOOKS
The Book Division enjoyed another successful year in 1995, with revenues
of $4.6 million equaling 1994's record year. The Division's profit margin
of $547,000 was the highest ever, both in terms of dollars and as a
percent of revenue. Over 40 titles were published during the year.
The Division continued to build on its successful relationship with the
American Bar Association Section of Labor and Employment Law by releasing
two new treatises: EMPLOYEE DUTY OF LOYALTY and THE RAILWAY LABOR ACT.
Also, the Section's employee benefits law treatise was incorporated in
BNA'S EMPLOYEE BENEFITS LIBRARY ON CD. Supplements to four other BNA/ABA
titles were published and agreements were signed for three new titles with
the Section.
The emphasis on producing high-quality, renewable products has worked well
for the Division. By the end of 1996 almost 80 percent of the Division's
active titles will have renewable lives, which should provide a stable and
growing revenue base for years to come.
TAX MANAGEMENT INC.
Strong renewal of its firmly established services and the introduction of
innovative new products combined to make 1995 a very successful year for
Tax Management. The subsidiary's revenues, including BNA Software,
climbed to $44.8 million, a 10.4 percent gain over the previous year.
Operating profit was up by 11 percent, and net income was 20 percent
higher, permitting the subsidiary to pay the parent company a dividend of
$3.9 million.
New service sales remained strong throughout the year, with a heavy
concentration of CD-ROM products. PORTFOLIO PLUS is widely accepted in
the marketplace and TAX PRACTICE SERIES is making great inroads into the
accounting market.
<PAGE> 8
MULTISTATE TAX PORTFOLIOS, launched in the fall of 1994, exceeded first-
year sales projections and has proven to be a valuable addition to the
product line. Several new portfolios were added to the series during the
year, and coverage of state tax legislation and regulation was expanded in
the MULTISTATE TAX REPORT.
Ongoing editorial work for an expanding line of tax services has been
greatly increased by the addition of full text, forms, and research aids
to TM's CD-ROM products. In addition, PORTFOLIO PLUS and TAX PRACTICE
SERIES were made available in Windows^TM format by year-end, greatly
increasing production and customer service efforts.
The CD-ROM services were expanded further in early 1996 with a new disc
that provides full text of state, as well as federal, tax forms.
Additional enhancements are scheduled throughout the year.
The national debate on various tax proposals is having no immediate impact
on TM's services. Current regulation and litigation is providing
substantial need to revise and update our services. Even if a flat tax
were enacted, the outlook is for substantial need for authoritative
interpretation of the business, estate, and foreign tax consequences.
BNA SOFTWARE
BNA Software finished 1995 with $8.8 million in revenues, a new high for
the division. Operating profit was healthy and ahead of budget, but lower
than 1994.
Slightly lower new sales in 1995 are attributed to the uncertainty about
new tax legislation that existed throughout the year. Renewal sales
remained high, however, and circulation levels increased slightly over the
prior year.
Editorial expenses were up about 10 percent over 1994 due to increased
expenditures in new and existing product development activities. These
activities, along with several new product launches, remain a priority for
1996.
Production and distribution expenditures also were higher due to higher
internal allocations and a series of successful promotional campaigns to
get users to switch to the new BNA INCOME TAX PLANNER FOR WINDOWS^TM.
Over half of the eligible users made the switch and new sales for the
Windows^TM version remained strong throughout the year.
In March 1995, the BNA REAL ESTATE INVESTMENT SPREADSHEET was
discontinued. The circulation of this product had been declining for
several years due to the Tax Reform Act of 1986, which closed many real
estate tax loopholes, and to the extended decline of the real estate
market in general. In September, operations were further streamlined with
the integration of the BNA CORPORATE FOREIGN TAX CREDIT PLANNER into the
BNA CORPORATE TAX PLANNER. This product transition was smooth and well
received by customers.
BNA Software's prospects for 1996 appear bright as the division
strengthens its position in existing markets and enters new segments with
products that are anticipated to be market "firsts."
<PAGE> 9
BNA INTERNATIONAL INC.
1995 was a record year for BNA International as the subsidiary confirmed
its ability to generate meaningful profits. A break-even performance had
been budgeted to allow for new product initiatives. However, the
continuing focus on cost control, revenue growth, and a gain from the sale
of DIRECT INVESTMENT IN NORTH AMERICA to another publisher, resulted in a
net income of $207,000, well above the previous year.
Revenues from BNAI products were up by 6.1 percent over 1994 due to the
success of its new WORLD SECURITIES LAW REPORT and above budget
performance of several services. Foreign sales of parent company and Tax
Management products were sustained at previous years' levels despite
recession in several key markets. Foreign circulation of parent company
and Tax Management products increased by 1.8 percent.
The subsidiary continued to seek efficiency gains, and additional savings
were made in production and editorial costs. TAX PLANNING INTERNATIONAL
and WORLD INTELLECTUAL PROPERTY REPORT generated significant profits,
while EASTERN EUROPE REPORTER joined the list of profitable BNAI services
for the first time.
Having succeeded in putting the company on a profitable path, management's
focus turned to developing a strategy for future growth. This will be
achieved through a combination of new product introductions and continuous
appraisal of acquisition opportunities. The first result of this effort
will be the introduction of a new international tax related loose-leaf
service in late 1996. BNAI will acquire content for this publication by
partnering with an outside organization. If successful, this publishing
model will be actively considered in the future. Research continues into
other potential subject areas for new international products.
With a pattern of profitability established, BNAI will continue to seek
innovative ways of growing by exploiting the potential of international
markets.
PIKE & FISCHER, INC.
Pike & Fischer's net income in 1995 topped $1 million for the first time
ever, even though the company invested heavily in improving both its print
and CD-ROM communications law services.
Nearly 30 years of full-text case law was added to COMMUNICATIONS
REGULATION ON CD-ROM and the 46-year-old RADIO REGULATION print service
was relaunched under the new title COMMUNICATIONS REGULATION. These
investments were necessary to counter new competitive threats to Pike &
Fischer's position as the leading publisher of communications law
reference materials. Market reaction to the upgrade and relaunch has been
highly favorable.
Offsetting these unusual expenditures were better than expected increases
in revenues from the telecommunications and GREEN MARKETS product groups
of 7 percent and 5 percent, respectively. Overall, revenues moved up 3.2
percent to a new high. Net income remained at 20 percent of revenues for
the second year in a row, and Pike & Fischer once again paid a $650,000
dividend to BNA.
<PAGE> 10
The launch of COMMUNICATIONS REGULATION was a large and complicated
project. Over three million new pages were printed, bound, and
distributed free of charge to RADIO REGULATION subscribers. The printing,
binding, boxing, and labeling were all done in-house, with BNA's
Distribution Center providing essential logistical support to get the
finished product to Pike & Fischer's customers.
Even without the rebuilding effort on behalf of the COMMUNICATIONS
REGULATION products, 1995 would have been an especially busy year for the
company. "Print on demand" was introduced for making up loose-leaf books,
the company's leasehold in Bethesda was expanded, and the BNA CRIMINAL
PRACTICE MANUAL was moved to Pike & Fischer from the parent company.
The initiatives undertaken in 1995 will enable Pike & Fischer to continue
contributing to BNA's long-term financial and strategic objectives well
into the future.
BNA COMMUNICATIONS INC.
BNAC's 1995 sales were down 7.8 percent from 1994, reflecting a flat year
for the training media business as a whole as well as a dearth of new
product releases by the subsidiary. However, a number of important steps
were taken to reorganize the company for growth and profitability in 1996.
Significant turnover at all levels of management and among the sales force
adversely affected 1995 operations. The decline in revenue, together with
write-downs of underperforming assets and restructuring costs, led to a
net loss of $756,000.
As the year drew to a close, BNAC took the following steps to restore the
company to a firm financial footing:
o Shifted video production to outside producers and subject
matter experts, thereby eliminating the internal production
unit.
o Contracted with a large technology company to launch a new
line of multimedia CD-ROM safety training programs which
promise new synergies with the parent company.
o Eliminated the export department due to declining
international sales.
o Contracted to install a new computer system to reduce costs
and increase productivity.
These steps combined with new cost controls and an aggressive schedule of
new product releases bode encouragingly for a return to profitable
operations in 1996.
BNA WASHINGTON, INC.
BNAW's 1995 operating revenue from outside tenants was $1.8 million.
Operating costs for all facilities combined were 6 percent lower than in
1994.
Office space planning, utilization, and accommodating growth were major
activities for the subsidiary during the year. Although actual employee
<PAGE> 11
growth was less than projected, the demand for available space, as well as
redesign of existing space, increased in 1995. Numerous space renovation,
expansion, and redesign projects were undertaken affecting some 500
employees and involving almost 60,000 square feet of office space. All
demands were accommodated within existing facilities and, with continued
efficient utilization of available space, the facilities should handle
projected needs through 1996.
The strategic facility planning committee made considerable progress in
1995. The options under consideration are development of new facilities
or relocation to existing space in the District, Maryland, or Virginia.
The committee has reviewed relocation and facility development financial
models for several sites in the District of Columbia and close-in Maryland
and Virginia. In addition, consideration is being given to staying in the
West End and continuing to supplement growth requirements with leased
space in the immediate area. It is expected that the committee will
complete the planning and make recommendations by midyear.
THE McARDLE PRINTING CO., INC.
McArdle's 1995 results show that progress continues to be made growing the
business and improving profitability while enhancing product quality and
responsiveness.
Operating revenues were $24.2 million, a 1.4 percent increase, and
operating profit was essentially even with the previous year. Net income
was lower because 1994 had included substantial tax refunds. The
subsidiary paid the parent company a dividend of $500,000, a 25 percent
increase over 1994.
McArdle's top priorities continue to be improving quality and increasing
revenues. The Total Quality Management (TQM) program, established in
1993, is progressing as planned. In addition to Process Improvement and
Task Force Teams, the TQM effort has been expanded to include more
employees. The company believes that emphasis on quality will pay
dividends in increased sales from existing customers and by attracting new
business.
During the year, McArdle installed a computerized labeling system to
address the more than 12 million mailings annually to BNA subscribers.
This system, which codes, addresses, and prints all required information
on generic envelopes, will reduce BNA's mailing expense by more than
$125,000 annually and bring work previously subcontracted into the
subsidiary.
In the last quarter of 1995, McArdle purchased an integrated printing
operations system which will apply proven state-of-the-art management
information technology to almost every aspect of the company's operations.
The system will provide more timely and accurate information to identify,
react, respond, and track plant operations. It will become operational
during 1996.
The McArdle Printing Company is committed to improving quality through TQM
and by keeping abreast of the rapidly advancing technological changes in
the industry. With these commitments, existing facilities, and personnel,
it is and will remain well positioned to meet BNA's present and future
printing requirements and to offer competitively priced, superior quality,
and on-time printing services to commercial markets.
<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 1,863 at December
31, 1995.
<PAGE> 13
Part I
--------
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, 1995.
<PAGE> 14
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, 1995. 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 66 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. 46 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. 56 Vice President for Administration
Elected to present position in 1986.
Joined BNA in 1974 after employment at
Fisher-Stevens, Inc. (a former BNA
subsidiary) since 1962.
Robert Brooks 46 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. Resigned
January 31, 1996.
Kathleen D. Gill 49 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 53 Treasurer
Elected to present position in 1990.
Joined BNA as Controller in 1981.
George J. Korphage 49 Vice President and Chief Financial Officer
Elected vice president in 1988 and chief
financial officer in 1989. Joined BNA in
1972.
(Continued)
<PAGE> 15
Item X. EXECUTIVE OFFICERS OF THE REGISTRANT (Continued)
-------------------------------------------------
Name Age Present position and prior experience
- ---------------- ---- --------------------------------------
John V. Schappi 66 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.
Mary Patricia Swords 50 Vice President and Director-Elect of Sales
and Marketing
Elected to present position on Februrary 1,
1996. Previously was regional manager of
Mountain sales region since 1985. Joined
BNA in 1977.
Robert L. Velte 48 Vice President for Strategic Development and
President, BNA International, Inc. (BNAI)
Elected to vice president in 1995 and
president of BNAI in 1994. Previously was
president of BNA Communications since 1986.
Joined BNA Communications in 1976.
Paul N. Wojcik 47 President and Chief Operating Officer
Elected President 1995, senior vice
president in 1994 and general counsel in
1988. Joined BNA in 1972.
<PAGE> 16
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 46 years, and they are expected to continue.
As of March 1, 1996, there were 1,514 Class A shareholders, 219 Class B
shareholders, and 40 Class C shareholders. The company repurchased
55,829 shares of Class B stock and 9,069 shares of Class C stock from
retired employees or their estates in the 12 months ending March 1, 1996.
Established stock price and dividends declared during 1995 and 1994 were
as follows:
Stock Price
January 1, 1994 - March 26, 1994 $20.50
March 27, 1994 - September 24, 1994 21.50
September 25, 1994 - March 25, 1995 22.00
March 26, 1995 - September 23, 1995 24.00
September 24, 1995 - December 31, 1995 24.75
Dividends Declared
March 26, 1994 $ .45
September 24, 1994 .45
March 25, 1995 .47
September 23, 1995 .47
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> 17
Part II
---------
Item 6. Selected Financial Data
------------------------
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED OPERATING AND FINANCIAL SUMMARY:1995-1991
(Dollar amounts in thousands, except per share data)
<CAPTION>
1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues $226,497 $215,491 $200,818 $193,036 $181,347
Operating Expenses 218,628 204,507 191,144 182,959 171,622
- ---------------------------------------------------------------------------------------
Operating Profit 7,869 10,984 9,674 10,077 9,725
Non-operating Income (Expense):
Investment Income, net 6,452 4,614 5,759 3,908 3,024
Other Income (Expense), Net 3,257 459 303 (850) (55)
- ---------------------------------------------------------------------------------------
Income from Continuing Operations
Before Income Taxes and Cumulative
Effects of Accounting Changes 17,578 16,057 15,736 13,135 12,694
Income Taxes 5,487 4,397 4,482 3,718 4,092
--------------------------------------------------------------------------------------
Income from Continuing Operations
Before Cumulative Effects of
Accounting Changes 12,091 11,660 11,254 9,417 8,602
Cumulative Effects of
Accounting Changes (a) -- -- -- (19,482) --
- ---------------------------------------------------------------------------------------
Net Income (Loss) $12,091 $11,660 $11,254 ($10,065) $8,602
- ------------------------------------------=============================================
Profit Ratios (b):
% of Operating Revenues 5.3 5.4 5.6 4.9 4.7
% of Average Stockholders' Equity 19.8 21.7 22.7 17.4 14.4
- ---------------------------------------------------------------------------------------
Earnings (Loss) Per Share From:
Continuing Operations $1.38 $1.36 $1.32 $1.11 $1.03
Cumulative Effects of Accounting
Changes -- -- -- (2.30) --
Total Earnings (Loss) Per Share 1.38 1.36 1.32 (1.19) 1.03
Dividends Per Share 0.94 0.90 0.90 .84 .82
- ------------------------------------------=============================================
Balance Sheet Data:
Total Assets $278,752 $270,599 $251,517 $229,035 $192,592
Long-Term Debt -- 107 1,332 1,534 5,721
- ------------------------------------------============================================
Employee Data:
Number of Employees 1,863 1,854 1,796 1,718 1,797
Total Employment Costs $119,488 $120,599 $111,443 $104,345 $95,287
- ------------------------------------------=============================================
Stockholders' Data at Year-End:
Book Value Per Share $7.59 $6.36 $6.14 $5.47 $7.34
Number of Stockholders 1,717 1,627 1,568 1,577 1,523
Common Shares Outstanding
(In thousands) 8,858 8,652 8,553 8,521 8,394
- ------------------------------------------=============================================
<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 accouting changes.
</TABLE>
<PAGE> 18
PART II
---------
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
------------------------------------------------------------
1995 VS. 1994 - CONSOLIDATED
- ----------------------------
Consolidated revenues of $226 million were up 5.1 percent from the prior
year's $215 million. Operating profit was lower than last year, but net
income of $12.1 million was the highest in Company history.
Service revenues (from print and CD-ROM subscriptions and online products)
increased 6.2 percent over 1994 due to continued growth in the combined
subscription revenue base for print and CD-ROM products. This growth has
been fueled by the market acceptance of the CD products, which generated
over half of all new subscription sales dollars this year. Service
revenues were 86.4 percent of consolidated revenues in 1995 and 85.6
percent in 1994. Non-service revenues (from software, outside printing,
training media, books, and other units) declined slightly, as revenues
were generally unchanged from the prior year, except for a 7.8 percent
decline in training media.
Operating expenses increased 6.9 percent overall in 1995. For services,
the expense increase was mainly due to higher salaries, increased postage
and paper rates, higher CD production costs for growing circulations and
new products, increased product development costs, higher selling expenses
related to record prior-year new sales, and an accounting adjustment for
advertising expenses. The operating expense increase was mitigated by
lower press runs for some products and the discontinuance of a costly
print product in June, 1994. Four new services were launched in 1995,
including two in CD format. In addition, Windows^tm versions of the
Company's most successful CD products were developed and launched.
Product development expenses for new products and improvements on existing
products were $6.6 million in 1995 compared to $4.7 million in 1994.
Operating expenses in 1995 also include an identifiable $5.5 million for
developing improved business and publishing systems and $6.6 million in
1994. Non-service operating expenses were 4.8 percent higher in 1995,
primarily related to software product improvement costs.
As described in Note 2 to the financial statements, during 1995 the
Company adopted SOP 93-7 "Reporting on Advertising Costs", which requires
that all advertising costs now be expensed as incurred. Previously,
advertising costs were deferred and expensed over subscription terms.
Implementing this change increased the 1995 operating expenses because
current advertising costs were expensed, and in addition, $2.1 million of
previously deferred advertising costs were also expensed. Operating
profit declined 28.4 percent in 1995. Excluding the previously deferred
advertising costs, the operating profit decline was 9.7 percent.
Non-operating income nearly doubled in 1995 due to higher investment
income related to larger portfolios, and $3.2 million of gains on the sale
of a former printing plant site and sales of publications.
The consolidated federal, state, and local effective income tax rate was
31.2 percent in 1995 compared to 27.4 percent in 1994. In 1994, a 2.4
percent reduction for research and development credit lowered the
effective income tax rate.
(Continued)
<PAGE> 19
Earnings per share were $1.38 per share compared to $1.36 per share in
1994.
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. Net
income of $11.7 million increased 3.6 percent.
Revenues increased in all operating units of the Company in 1994. Service
revenues increased 6.7 percent over 1993 due to record-setting new sales
and higher prices. Approximately half of the new sales were for CD
products. Some of the CD sales replaced print products, but since CD
products have more value-added features, they afford an opportunity for
higher pricing than their print counterparts. Service revenues were 85.6
percent of consolidated revenues in 1994 and 86.1 percent in 1993. Non-
service revenues increased 11.2 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, royalties on CD products, depreciation on
new equipment, and systems development costs. Four new services were
launched in 1994, including three in CD 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 14.6 percent
higher in 1994, primarily related to the higher outside printing revenues.
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.
DEFERRED TAX ASSETS
In accordance with SFAS 109, the Company has recorded $14.4 million of net
deferred tax assets as of year-end 1995. 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
(Continued)
<PAGE> 20
consistent profitable operations, a quality reputation in the markets
served by the Company, a high renewal rate for subscription products, a
large deferred revenue liability (representing payments and orders for
future fulfillment), and the recent successful introduction of products
using new CD 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 $25.4
million in 1995 reflecting a 4.1 percent increase in collections, and only
a 2.8 percent increase in expenditures.
Cash outlays for investing activities netted to $16.5 million, reflecting
$15.6 million transferred to the Company's investment portfolio and
capital expenditures of $5.2 million, which were partially offset by $4.3
million in proceeds from sales of assets. Capital expenditures for 1996
are budgeted to be over $10 million.
Sales of Class A capital stock to employees provided $6.4 million of
equity capital in 1995; the Company paid $1.6 million for repurchases of
Class B and Class C capital stock and $8.3 million for dividends.
With $114.8 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 its
operating cash flows and real estate equity. 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.
<PAGE> 21
Part II
--------
Item 8. Financial Statements and Supplementary Data
--------------------------------------------
THE BUREAU OF NATIONAL AFFAIRS, INC.
Consolidated Financial Statements
December 31, 1995 and 1994
(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 financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Bureau of National Affairs, Inc. as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 1995 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.
As discussed in Note 2 of the consolidated financial statements, the
Company adopted the provisions of the American Institute of Certified
Public Accountants' Statement of Position (SOP) 93-7, "Reporting on
Advertising Costs" in 1995.
s\ KPMG Peat Marwick LLP
--------------------------
KPMG Peat Marwick
Washington, DC
February 20, 1996
<PAGE> 23
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(In thousands of dollars)
<CAPTION>
Percent of
Operating Revenues
----------------------
1995 1994 1993 1995 1994 1993
---------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES (Notes 1 and 2) $226,497 $215,491 $200,818 100.0% 100.0% 100.0%
-------- -------- -------- ------ ------ ------
OPERATING EXPENSES (Notes 1, 2, 3, 8 and 9):
Editorial, production, and distribution 128,671 121,337 114,648 56.8 56.3 57.1
Selling, including $2,055 in 1995 for
effect of advertising adjustment 57,172 49,759 42,733 25.2 23.1 21.3
General and administrative 31,819 32,283 32,914 14.1 15.0 16.4
Profit sharing 966 1,128 849 .4 .5 .4
-------- -------- -------- ------ ------ ------
218,628 204,507 191,144 96.5 94.9 95.2
-------- -------- -------- ------ ------ ------
OPERATING PROFIT 7,869 10,984 9,674 3.5 5.1 4.8
-------- -------- -------- ------ ------ ------
NON-OPERATING INCOME:
Investment income (Note 4) 6,452 4,614 5,759 2.8 2.1 2.9
Other income (Note 5) 3,257 459 303 1.4 .2 .1
-------- -------- -------- ------ ------ ------
TOTAL NON-OPERATING INCOME 9,709 5,073 6,062 4.2 2.3 3.0
-------- -------- -------- ------ ------ ------
INCOME BEFORE PROVISION FOR INCOME TAXES 17,578 16,057 15,736 7.7 7.4 7.8
PROVISION FOR INCOME TAXES (Note 7) 5,487 4,397 4,482 2.4 2.0 2.2
-------- -------- -------- ------ ------ ------
NET INCOME $ 12,091 $ 11,660 $ 11,254 5.3% 5.4% 5.6%
======== ======== ======== ====== ====== ======
EARNINGS PER SHARE (Notes 2 and 10): $ 1.38 $ 1.36 $ 1.32
======== ======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 24
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(In thousands of dollars)
A S S E T S
-----------
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (Note 4) $ 17,763 $ 12,428
Short-term investments (Note 4) 11,123 6,045
Receivables (Note 8) 43,171 49,138
Inventories (Note 8) 6,268 6,833
Prepaid expenses 3,378 2,600
Deferred selling expenses (Note 2) 25,226 33,129
--------- ---------
Total current assets 106,929 110,173
MARKETABLE SECURITIES (Note 4) 85,884 67,180
PROPERTY AND EQUIPMENT (Note 8) 53,265 57,973
DEFERRED INCOME TAXES (Note 7) 19,197 20,853
GOODWILL (Note 6) 9,550 9,863
OTHER ASSETS (Note 8) 3,927 4,557
--------- ---------
Total assets $ 278,752 $ 270,599
========= =========
(Continued)
</TABLE>
<PAGE> 25
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(In thousands of dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
CURRENT LIABILITIES:
Payables and accrued liabilities (Note 8) $ 33,569 $ 33,119
Deferred income taxes (Note 7) 4,788 8,188
Deferred subscription revenue (Note 2) 117,567 120,579
--------- ---------
Total current liabilities 155,924 161,886
POSTRETIREMENT BENEFITS, less current portion (Note 3) 52,418 50,303
OTHER LIABILITIES 3,212 3,367
--------- ---------
Total liabilities 211,554 215,556
--------- ---------
COMMITMENTS AND CONTINGENCIES
(Notes 9 and 10)
STOCKHOLDERS' EQUITY (Notes 4 and 10):
Common stock issued, $1.00 par value -
Class A - 6,478,864 shares 6,479 6,479
Class B - 4,926,973 shares 4,927 4,927
Class C - 506,336 shares 506 506
Additional paid-in capital 27,695 22,722
Retained earnings 44,665 40,828
Treasury stock, at cost (18,782) (18,604)
Net unrealized gain (loss) on marketable securities 1,756 (1,722)
Foreign currency translation adjustment (48) (93)
--------- ---------
Total stockholders' equity 67,198 55,043
--------- ---------
Total liabilities and stockholders' equity $ 278,752 $ 270,599
========= =========
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, 1995, 1994, AND 1993
(In thousands of dollars)
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,091 $ 11,660 $ 11,254
Items with different cash requirements
than that reflected in net income -
Deferred subscription revenue (2,431) 12,745 8,311
Depreciation and amortization 10,216 9,856 9,686
Accrued postretirement benefits expense 2,096 3,500 3,900
Provision for deferred income taxes (3,713) 1,238 701
Deferred selling expenses 7,701 (8,895) (6,151)
(Gain) on sales of securities (672) (341) (1,969)
(Gain) loss on disposals of property (2,223) 44 8
(Gain) on sales of publishing assets (981) (503) (311)
Others 22 36 385
Changes in operating assets and liabilities -
Receivables 5,876 (8,046) (6,760)
Payables and accrued liabilities (1,634) 1,552 4,896
Inventory 551 142 305
Film production costs (184) (581) (727)
Other assets and liabilities - net (1,276) (556) (446)
--------- --------- ---------
Net cash provided from operating activities 25,439 21,851 23,082
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures -
Purchases of equipment and furnishings (4,574) (5,046) (7,454)
Building improvements (664) (281) (870)
Land costs - - (358)
Proceeds from the sales of property 3,367 - -
Proceeds from sales of publishing assets 943 549 1,004
Purchase of publishing assets - (227) -
--------- --------- --------
Net cash used for capital expenditures (928) (5,005) (7,678)
--------- --------- --------
Securities investments-
Proceeds from sales and maturities 75,373 65,269 156,284
Purchases (90,983) (69,556) (160,963)
--------- --------- --------
Net cash used for securities investments (15,610) (4,287) (4,679)
--------- --------- --------
Net cash used for investing activities (16,538) (9,292) (12,357)
--------- --------- --------
(Continued)
</TABLE>
<PAGE> 27
<TABLE>
THE BUREAU OF NATIONAL AFFAIRS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(In thousands of dollars)
<CAPTION>
1995 1994 1993
--------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales of capital stock to employees 6,385 5,550 2,781
Purchases of treasury stock (1,590) (3,487) (2,196)
Dividends paid (8,254) (7,765) (7,693)
Repayment of borrowings (107) (5,411) (3,188)
--------- ---------- ---------
Net cash used for financing activities (3,566) (11,113) (10,296)
--------- ---------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,335 1,446 429
CASH AND CASH EQUIVALENTS, beginning of year 12,428 10,982 10,553
--------- ---------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 17,763 $ 12,428 $ 10,982
========= ========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ 95 $ 183 $ 420
Income taxes paid 8,121 2,578 5,803
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, 1995, 1994, AND 1993
(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, 1993 $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 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 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)
Sale of Class A treasury shares to employees - - - 4,973 - 1,412 -
Repurchase of shares - - - - - (1,590) -
Net income - - - - 12,091 - -
Cash dividends - $.94 per share - - - - (8,254) - -
Change in net unrealized gain (loss) on
marketable securities - - - - - - 3,478
Currency translation adjustment - - - - - - 45
------- ------- ------- -------- -------- --------- --------
BALANCE, December 31, 1995 $6,479 $4,927 $ 506 $27,695 $44,665 $(18,782) $ 1,708
======= ======= ======= ======== ======== ========= ========
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, 1995, 1994, AND 1993
(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 subsid-
iaries (consolidated, the "Company"). The Company operates primarily in
the business information publishing industry. Operations consist pri-
marily of the production and marketing of specialized labor, legal,
economic, tax, health care and other regulatory information services in
print and electronic formats, and outside printing services. Activities
in other industry segments provide less than 10 percent of total
revenue. Customers are primarily domestic lawyers, accountants,
business executives, human resource professionals, health care admin-
istrative professionals, labor unions, trade associations, educational
institutions, government agencies, and libraries. The Company did not
derive 10 percent or more of its revenues from any one customer or
government agency or from foreign sales, nor did it have ten percent or
more of its assets in foreign locations.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
Material intercompany transactions and balances have been eliminated.
Certain prior year balances have been reclassified to conform with
current year presentation.
(2) RECOGNITION OF SUBSCRIPTION REVENUES AND SELLING EXPENSES
Subscription revenues and related field selling expenses are deferred
and amortized over the subscription terms, which are primarily one year.
Deferred subscription revenue is classified on the balance sheet as a
current item; however the fulfillment of the Company's subscription
liability will use substantially less current assets than the liability
amount shown.
During 1995, the Company adopted the provisions of the American
Institute of Certified Public Accountants' Statement of Position (SOP)
93-7, "Reporting on Advertising Costs", which requires that advertising
costs be expensed as incurred. Prior to 1995, the Company's policy was
to defer and amortize these costs in the same manner as field selling
costs. The adoption of SOP 93-7 increased 1995 operating expenses
because $5,379,000 of currently incurred advertising costs were ex-
pensed, and in addition, $2,055,000 of previously deferred advertising
costs were also required to be expensed. The effect of expensing 1995
advertising costs as incurred, compared to the prior amortization
method, was to decrease 1995 net income by $1,064,000, or $0.12 per
share. Advertising expense under the prior amortization method in 1994
and 1993 was $5,870,000 and $6,057,000, respectively.
(Continued)
<PAGE> 30
(3) EMPLOYEE BENEFIT PLANS
The Company has noncontributory defined benefit pension plans covering
employees of the Parent and certain subsidiaries. Benefits are based on
years of service and average annual compensation for the highest paid
five years during the last 10 years of service. The plans provide for
five-year cliff vesting.
The Company's funding practice is to contribute amounts which, at a min-
imum, satisfy ERISA requirements. The Company contributed $3,899,000 to
the Plan in 1995, $3,217,000 in 1994, and $2,914,000 in 1993.
Pension expense is recorded on an accrual basis in accordance with
financial reporting standards. Components of the net pension expense,
based on the actuarial study as of January 1 for each year, were as
follows (in thousands of dollars):
1995 1994 1993
-------- -------- --------
Service cost - benefits earned
during the year $ 3,207 $ 3,448 $ 2,505
Interest cost 4,939 4,526 4,009
Actual return on plan assets during
the year - (gain) loss (14,287) 256 (5,904)
Net asset gain (loss) deferred for
later recognition 10,146 (4,389) 2,255
Amortization of transition assets and
unrecognized prior service costs (174) (102) (93)
-------- -------- --------
Net pension expense $ 3,831 $ 3,739 $ 2,772
======== ======== ========
(Continued)
<PAGE> 31
The following table sets forth the funded status of the Plan and the
liabilities recognized in the Company's Consolidated Balance Sheets (in
thousands of dollars, except percentages):
December 31,
1995 1994
-------- --------
Actuarial present value of benefit obligations:
Vested benefits $ 44,618 $ 37,121
Nonvested benefits 10,711 6,912
-------- --------
Accumulated benefit obligation 55,329 44,033
Projected future compensation 21,923 15,776
-------- --------
Projected benefit obligation 77,252 59,809
Plan assets at fair value 67,595 53,035
-------- --------
Projected benefit obligation in excess of
plan assets 9,657 6,774
Unrecognized net asset 2,628 3,004
Unrecognized net gain (loss) (2,662) 113
Unrecognized prior service cost (1,698) (1,899)
-------- --------
Accrued pension liability 7,925 7,992
Less - current portion 3,900 3,899
-------- --------
Long-term portion $ 4,025 $ 4,093
======== ========
Assumed discount rate 6.75% 8.0%
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
temporary investments. Calculations of benefit obligations as of
December 31, 1995, have been estimated by an independent actuary and are
subject to revision upon completion of a detailed actuarial study.
In addition, some acquired subsidiaries have defined contribution pen-
sion plans and union-sponsored multi-employer pension plans. Contribu-
tions under 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 1995, $775,000 in 1994 and $721,000 in
1993.
The Company also has a cash profit sharing plan based on operating in-
come before taxes, as defined, covering employees of the Parent and
certain subsidiaries. Profit sharing expense was $966,000 in 1995,
$1,128,000 in 1994, and $849,000 in 1993.
In addition to providing pension benefits, the Company extends certain
health care and life insurance benefits ("other postretirement bene-
fits") to retired employees. Most of the Company's employees are
eligible for these benefits
(Continued)
<PAGE>32
if they retire while working for the Company. The Company's policy is
to fund these benefits as claims and premiums are paid.
Postretirement benefits expense is recorded in accordance with financial
reporting standards which require that the present value of these bene-
fits be accrued during employees' working careers. Components of the
postretirement benefit expense, based on the actuarial study as of
January 1 for each year, were as follows (in thousands of dollars):
1995 1994 1993
-------- -------- --------
Service cost-benefits earned
during the year $ 1,505 $ 1,824 $ 1,993
Interest cost 2,493 2,543 3,073
Amortization of net gain (844) (331) (39)
-------- -------- --------
Postretirement benefits expense $ 3,154 $ 4,036 $ 5,027
======== ======== ========
The following table sets forth the liabilities for these benefits recog-
nized in the Company's Consolidated Balance Sheets (in thousands of
dollars):
December 31,
1995 1994
------- -------
Actuarial present value of benefit obligation:
Retirees $11,589 $11,324
Fully eligible active plan participants 985 856
Other active plan participants 24,716 17,978
------- -------
Accumulated benefit obligation 37,290 30,158
Unrecognized net gain 11,549 16,463
Unrecognized prior service cost 622 677
------- -------
Accrued other postretirement benefits liability 49,461 47,298
Less - current portion 1,068 1,088
------- -------
Long-term portion 48,393 46,210
======= =======
Assumed discount rate 6.75% 8.0%
Assumed rate of compensation increase 5.0% 5.0%
The December 31, 1995 accumulated benefit obligation was determined
using an assumed health care cost trend rate of 6 percent in 1996, de-
clining to 5 percent per year in the year 2001 and thereafter over the
projected payout period of the benefits.
The effect of a one percent increase in the health care cost trend rate
at December 31, 1995 would have resulted in a $6,901,000 increase in the
accumulated benefit obligation and an $823,000 increase in the 1995
postretirement benefit expense.
(Continued)
<PAGE> 33
(4) INVESTMENTS AND INVESTMENT INCOME
Cash and investments were as follows (in thousands of dollars):
December 31,
1995 1994
-------- --------
Cash and cash equivalents $ 17,763 $ 12,428
Short-term investments 11,123 6,045
Marketable securities 85,884 67,180
-------- --------
Total $114,770 $ 85,653
======== ========
Cash equivalents consist of short-term investments, with a maturity of
three months or less at the time of purchase. Short-term investments
consist of other fixed-income investments, maturing in one year or less.
Marketable securities consist of equity securities and fixed-income
securities maturing in more than one year.
Investment income consisted of the following (in thousands of dollars):
1995 1994 1993
-------- -------- --------
Interest income $4,906 $3,629 $3,581
Dividend income 969 827 640
Net gain on sales of securities 672 341 1,969
Interest expense (95) (183) (431)
-------- -------- --------
Total $6,452 $4,614 $5,759
======== ======== =======
Proceeds from the sales and maturities of securities were $75,373,000,
$65,269,000 and $156,284,000 in 1995, 1994 and 1993, respectively.
Gross realized gains and (losses) from these sales were $867,000 and
$(195,000) in 1995, $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
December 31, 1995 Cost Gains Losses Fair Value
---------- ---------- ---------- ----------
Equity securities $ 20,355 $ 267 $ (50) $ 20,572
U.S. Government securities 9,632 101 (23) 9,710
Municipal bonds 64,221 2,450 (46) 66,625
Corporate debt 100 - - 100
---------- ---------- ---------- ----------
Total $ 94,308 $ 2,818 $ (119) $ 97,007
========== ========== ========== ==========
Gross Gross
Amortized Unrealized Unrealized
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
========== ========== ========== ==========
The differences between amortized cost and fair value result in unreal-
ized gains or losses, which are reported, net of tax, as a separate
component of Stockholders' Equity.
Fair values of the Company's investment securities are inversely affect-
ed by changes in market interest rates. Generally, the longer the
maturity of fixed-income securities, the larger the exposure to the
risks and rewards resulting from changes in market interest rates.
Contractual maturities of the fixed-income securities as of December 31,
1995 were as follows (in thousands of dollars):
Amortized
Cost Fair Value
--------- ---------
Within one year $ 11,067 $ 11,123
One through five years 20,886 21,458
Five through ten years 23,135 23,931
Over ten years 18,865 19,923
--------- ---------
Total $ 73,953 $ 76,435
========= =========
(Continued)
<PAGE> 35
(5) OTHER INCOME
Other income was comprised of the following (in thousands of dollars):
1995 1994 1993
-------- -------- --------
Gain on sales of publishing assets $ 981 $ 503 $ 311
Gain on sale of land 2,408 - -
(Loss) on disposals of other
property and equipment (185) (44) (8)
Other 53 - -
-------- -------- --------
Total $ 3,257 $ 459 $ 303
======== ======== ========
(6) GOODWILL
Goodwill represents the excess of the cost of purchased publications and
the capital stock of subsidiaries over the fair value of net assets at
the dates of their respective acquisitions, net of accumulated amort-
ization of $3,583,000 in 1995 and $3,270,000 in 1994.
Goodwill acquired prior to November 1, 1970, in the amount of $634,000,
is not being amortized because, in management's opinion, it has con-
tinuing value. Other goodwill is amortized on a straight-line basis,
using forty years. Amortization expense was $313,000 for 1995, $312,000
for 1994, and $313,000 for 1993.
(7) INCOME TAXES
The total income tax expense (benefit) was allocated as follows (in
thousands of dollars):
1995 1994 1993
-------- -------- --------
Income Statement -- Provision for
Income Taxes $ 5,487 $ 4,397 $ 4,482
Stockholders' Equity -- Change in:
Unrealized gain (loss) on
marketable securities 1,873 (1,795) 902
Foreign currency translation adjustment (24) (34) 4
-------- -------- --------
Total $ 7,336 $ 2,568 $ 5,388
======== ======== ========
(Continued)
<PAGE> 36
The provision for income taxes consisted of the following (in thousands
of dollars):
1995 1994 1993
-------- -------- --------
Taxes currently payable:
Federal $ 7,933 $ 2,873 $ 3,398
State and local 1,267 286 383
-------- -------- --------
9,200 3,159 3,781
-------- -------- --------
Deferred tax provision:
Federal (3,007) 995 571
State and local (706) 243 130
-------- -------- --------
(3,713) 1,238 701
-------- -------- --------
Total $ 5,487 $ 4,397 $ 4,482
======== ======== ========
The deferred tax provision for 1993 includes a reduction of $310,000 for
changes in tax rates enacted during that year.
Reconciliation of the U.S. statutory rate to the Company's consolidated
effective income tax rate was as follows:
Percent of
Pretax Income
-------------------------------
1995 1994 1993
--------- --------- ---------
Federal statutory rate 35.0% 35.0% 35.0%
Rate difference due to level
of taxable income - (.8) (.9)
State and local income taxes,
net of Federal income tax benefit 2.1 2.2 2.0
Goodwill amortization and other
nondeductible expenses 1.8 1.8 1.2
Tax-exempt interest exclusion (6.7) (6.0) (6.5)
Dividends received exclusion (1.3) (1.2) (.9)
Adjustment to deferred taxes for
enacted changes in tax rates - - (2.0)
Research and development credit - (2.4) (.1)
Others, net .3 (1.2) .7
--------- --------- ---------
Total 31.2% 27.4% 28.5%
========= ========= =========
(Continued)
<PAGE> 37
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,
1995 1994
--------- ---------
Deferred tax assets:
Other postretirement benefits $ 19,748 $ 19,041
Pension expense 3,217 3,253
Annual leave 1,846 1,724
Inventories 1,731 1,610
Others 2,083 3,002
--------- ---------
Total deferred tax assets 28,625 28,630
--------- ---------
Deferred tax liabilities:
Deferred selling expenses (9,985) (13,333)
Depreciation (3,156) (2,535)
Others (1,075) (97)
--------- ---------
Total deferred tax liabilities (14,216) (15,965)
--------- ---------
Net deferred tax assets $ 14,409 $ 12,665
========= =========
In the opinion of management, it is more likely than not that the
deferred tax assets will be realized in future years, and no valuation
allowance is necessary.
(8) OTHER BALANCE SHEET INFORMATION
Certain year-end balances consisted of the following (in thousands of
dollars):
1995 1994
--------- ---------
Receivables:
Customers $ 39,407 $ 45,167
Others 5,392 5,417
Allowance for doubtful accounts (1,628) (1,446)
--------- ---------
Total $ 43,171 $ 49,138
========= =========
1995 1994
--------- ---------
Inventories:
Materials and supplies $ 4,055 $ 4,273
Work in process 274 246
Finished goods 1,939 2,314
--------- ---------
Total $ 6,268 $ 6,833
========= =========
Inventories are valued at the lower of cost (principally average cost
method) or market.
(Continued)
<PAGE> 38
1995 1994
--------- ---------
Property and Equipment (at cost):
Land $ 4,250 $ 5,176
Buildings and improvements 48,809 48,145
Furniture, fixtures and equipment 59,190 57,315
Accumulated depreciation (58,984) (52,663)
--------- ---------
Total $ 53,265 $ 57,973
========= =========
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 $8,761,000 in 1995, $8,604,000 in 1994, and
$8,552,000 in 1993. Expenditures for maintenance and repairs are
expensed while major replacements and improvements are capitalized.
1995 1994
-------- --------
Other assets:
Amortizable assets -
Customer lists $ 749 $ 910
Film production costs 1,245 1,749
Lease commissions 414 468
Software 976 849
-------- --------
3,384 3,976
Notes and other receivables 543 581
-------- --------
Total $ 3,927 $ 4,557
======== ========
Film production costs are amortized using the revenue forecast method.
Other amortizable assets are expensed evenly over their respective
estimated lives, ranging from 3 to 10 years. Amortization expense for
these assets was $1,142,000 in 1995, $940,000 in 1994, and $1,361,000 in
1993.
Accumulated amortization for customer lists was $451,000 in 1995 and
$290,000 in 1994.
1995 1994
--------- ---------
Payables and accrued liabilities:
Accounts payable $ 16,315 $ 16,179
Employee compensation and benefits 11,862 11,945
Postretirement benefits 4,968 4,987
Income taxes 424 8
--------- ---------
Total $ 33,569 $ 33,119
========= =========
(Continued)
<PAGE> 39
(9) COMMITMENTS AND CONTINGENCIES
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 covenants, with which the Company is in compliance. As of
December 31, 1995, there had been no borrowings, but $500,000 of the
credit line had been used to secure a letter of credit.
The Company has non-cancelable operating leases for office space, data
processing equipment, and vehicles. Total rent expense was $3,851,000
in 1995, $3,699,000 in 1994, and $3,673,000 in 1993 (net of sublease
income of none, $105,000, and $195,000, respectively).
As of December 31, 1995, future minimum lease payments under non-
cancelable operating leases were as follows: 1996 - $3,562,000; 1997 -
$3,397,000; 1998 - $2,777,000; 1999 - $2,664,000; 2000 - $2,231,000;
thereafter - $127,000.
The Company has continuing service agreements with software authors and
a multi-year editorial service agreement with a law firm. The Company's
minimum financial commitment related to these agreements is $1,955,000
for the year 1996. Future minimum amounts will be based on future
activities.
The Company is involved in certain legal actions arising in the ordinary
course of business. In the opinion of management the ultimate disposi-
tion of these matters will not have a material adverse effect on the
consolidated financial statements.
(10) STOCKHOLDERS' EQUITY
Ownership and transferability of Class A, Class B, and Class C stock are
substantially restricted to current and former employees by provisions
of the Parent's certificate of incorporation and bylaws. Ownership of
Class A stock, which is voting, is restricted to active employees.
Class B stock and Class C stock are nonvoting. No class of stock has
preference over another upon declaration of dividends or liquidation.
As of December 31, 1995 and 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 share-
holders. As of December 31, 1995, Class B and Class C stock having a
total market value of $2,690,000 are known or expected to be tendered
during 1996. 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> 40
Treasury share transactions were as follows:
Treasury Stock Shares
-------------------------------------
Class A Class B Class C
----------- ----------- -----------
Balance, January 1, 1993 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
Sale of Class A shares to employees (271,896) - -
Repurchase of shares - 56,793 9,245
Conversion of Class A shares to
Class B shares 109,573 (109,573) -
----------- ----------- -----------
Balance, December 31, 1995 2,915,110 54,771 84,693
=========== =========== ===========
Earnings per share have been computed based on the aggregate weighted
average number of all outstanding shares of stock, which was 8,759,516
in 1995, 8,599,118 in 1994, and 8,549,522 in 1993.
Assets and liabilities of the Company's United Kingdom subsidiary are
denominated in British pounds and translated into U.S. dollars at year-
end exchange rates. Any resulting gain or loss is reflected, net of
taxes, directly in Stockholders' Equity in the accompanying Consolidated
Balance Sheets.
<PAGE> 41
<TABLE>
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
THE BUREAU OF NATIONAL AFFAIRS, INC.
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(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, 1995 $1,446 $860 $ 62 (a) $740(b) $1,628
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
Allowance for Note Reveivable:
Year ended December 31, 1995 - - - - -
Year ended December 31, 1994 493 - - 493(c) -
Year ended December 31, 1993 607 - - 114(c) 493
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> 42
PART II
-------
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
------------------------------------------------------------
There were no changes in or disagreements with accountants on accounting
and financial disclosures during the two years ended December 31, 1995 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, 1995. 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> 43
PART IV
-------
Item 14. Exhibits, Financial Statement Schedule, 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,
1995 and 1994. 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, 1995,
1994, and 1993 23, 26-28
Notes to Consolidated Financial Statements 29-40
(2) Financial Statement Schedule:
----------------------------
Report of Independent Auditors as to the
financial statement schedule 22
VIII Valuation and Qualifying Accounts and Reserves 41
All other schedules are omitted because they are not
applicable or the required information is shown in the
financial statements or notes thereto.
<PAGE> 44
(a)(3) Exhibits:
--------
3.1 Certificate of Incorporation, as amended ****
3.2 By laws, as amended **
11 Statement re: Computation of Per Share Earnings is contained
in the 1995 Consolidated Financial Statements in the Notes to
Consolidated Financial Statements, Note 10, "Stockholders'
Equity," at page 40 of this Form 10-K.
22 Subsidiaries of the Registrant. *
24.1 Consent of Independent Auditors for 1995, 1994 and 1993
financial statements.
28.1 Proxy Statement for the Annual Meeting of security holders to
be held on April 20, 1996 ***
28.2 Annual Report on Form 11-K related to the Company's Deferred
Stock Purchase Plan for the fiscal year ended December 31,
1995. *
* 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, 1995.
<PAGE> 45
SIGNATURE
---------
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
THE BUREAU OF NATIONAL AFFAIRS, INC.
By: s\ William A. Beltz
-----------------------------------------
William A. Beltz, Chief Executive Officer
Date: March 8, 1996
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant
and in the capacities and on dates indicated.
By: s\ 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: March 8, 1996 Date: March 8, 1996
---------------------- ---------------------------
By: s\ J. M. Blanchard 3/8/96 By: s\ John V. Schappi 3/8/96
----------------------- ------- ------------------------ -------
Jacqueline M. Blanchard Date John V. Schappi Date
By: s\ John P. Boylan 3/8/96 By: s\ Frederick A. Schenck 3/8/96
----------------------- ------- ----------------------- -------
John P. Boylan Date Frederick A. Schenck Date
By: s\ Sandra C. Degler 3/7/96 By: s\ Mary P. Swords 3/8/96
----------------------- ------- ----------------------- -------
Sandra C. Degler Date Mary P. Swords Date
By: s\ Kathleen D. Gill 3/7/96 By: s\ Daniel W. Toohey 3/8/96
----------------------- ------- ----------------------- --------
Kathleen D. Gill Date Daniel W. Toohey Date
By: s\ John E. Jenc 3/7/96 By: s\ Loene Trubkin 3/8/96
----------------------- ------- ----------------------- --------
John E. Jenc Date Loene Trubkin Date
By: s\ Eileen Z. Joseph 3/7/96 By: s\ Paul N. Wojcik 3/8/96
----------------------- ------- ----------------------- --------
Eileen Z. Joseph Date Paul N. Wojcik Date
<PAGE> 46
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 1995 Consolidated Financial
Statements in the Notes to Consolidated Financial
Statements, Note 10, "Stockholders' Equity,"
22 Subsidiaries of the Registrant 47
24.1 Consent of Independent Auditors for 1995, 1994,
and 1993 financial statements. 48
28.1 Proxy Statement for the Annual Meeting of
Stockholders to be held on April 20, 1996 **
28.2 Annual Report on Form 11-K related to the
Company's Deferred Stock Purchase Plan for
the fiscal year ended December 31, 1995 49
* 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> 47
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> 48
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. 333-01647) on Form S-8 of The Bureau of National Affairs, Inc., filed
on March 12, 1996, of our report dated February 20, 1996, relating to the
consolidated balance sheets of The Bureau of National Affairs, Inc. and
subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in stockholders' equity, and
cash flows and related consolidated financial statement schedule for each
of the years in the three-year period ended December 31, 1995, which
report appears in the December 31, 1995 annual report on Form 10-K of The
Bureau of National Affairs, Inc. Our report refers to the adoption by the
Company fo the American Institute of Certified Public Accountants Statement of
Position, "Reporting on Advertising Costs" in 1995.
s\ KPMG Peat Marwick LLP
-----------------------
KPMG Peat Marwick LLP
Washington, D.C.
March 26, 1996
<PAGE> 49
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 31,1995
-------------------------------------------
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 52
Statements of Net Assets Available for Benefits
December 31, 1995 and 1994 53
Statements of Changes in Net Assets Available
for Benefits-Years Ended December 31, 1995,
1994, and 1993 54
Notes to Financial Statements - December 31,
1995, 1994, and 1993 55-57
Financial Statement Schedules 58-59
<PAGE> 50
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 22, 1996
------------------------------
By s\ Paul N. Wojcik
-------------------------------
Paul N. Wojcik,
Chairman of the Administrative Committee
of The BNA Deferred Stock Purchase Plan
<PAGE> 51
THE BNA DEFERRED STOCK PURCHASE PLAN
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995
AND 1994, TOGETHER WITH INDEPENDENT AUDITORS' REPORT
<PAGE> 52
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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and the changes in net assets
available for benefits for each of the years in the three-year period
ended December 31, 1995 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
opioion, 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 12, 1996
<PAGE> 53
THE BNA DEFERRED STOCK PURCHASE PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1995 AND 1994
1995 1994
----------- -----------
Investments, at fair value (Note 2)
(Cost of $20,165,114 in 1995
and $16,981,162 in 1994) $30,969,675 $25,270,784
Cash 154,132 124,695
----------- -----------
Net assets available for benefits $31,123,807 $25,395,479
=========== ===========
See accompanying notes to financial statements.
<PAGE> 54
<TABLE>
THE BNA DEFERRED STOCK PURCHASE PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Dividends (Note 1) $ 1,130,027 $ 978,785 $ 903,129
Interest 4,942 2,804 2,487
Unrealized appreciation of
investments (Note 2) 3,281,122 1,615,176 2,982,268
------------ ------------ ------------
4,416,091 2,596,765 3,887,884
Contributions by participants (Note 1) 3,239,757 2,583,564 1,942,839
------------ ------------ ------------
Total additions 7,655,848 5,180,329 5,830,723
------------ ------------ ------------
Deductions from net assets attributed to:
Distributions to participants (Note 1) 1,927,127 1,457,723 1,290,181
Administrative costs (Note 3) 393 302 390
------------ ------------ ------------
Total deductions 1,927,520 1,458,025 1,290,571
------------ ------------ ------------
Net increase 5,728,328 3,722,304 4,540,152
Net assets available for benefits:
Beginning of year 25,395,479 21,673,175 17,133,023
------------ ------------ ------------
End of year $31,123,807 $25,395,479 $21,673,175
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE> 55
THE BNA DEFERRED STOCK PURCHASE PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
(1) SUMMARY DESCRIPTION OF PLAN
The BNA Deferred Stock Purchase Plan (the "Plan") is a contributory
benefit plan sponsored by The Bureau of National Affairs, Inc. (the
"Company"), for the benefit of employees of the Company and certain of its
subsidiaries. The Plan was established in 1982 with an effective date of
January 1, 1983, and is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA"). The Plan is designed to
provide benefits to participants or their beneficiaries, and encourages
savings through investments in the Company's Common Stock.
Employees are eligible to participate in the Plan upon completion of one
full year of service. To participate, eligible employees authorize the
Company to contribute, on their behalf, a salary reduction amount to a
Trust (the "Trust") established by the Plan. Such contributions may be
between 1% and 15% of the participant's compensation for each Plan year,
subject to certain ceiling limitations provided in the Plan, by tax laws,
and by ERISA.
The Trust maintains separate accounts for each participant in the Plan.
These accounts are credited with the participants' salary reduction
contributions and dividend income. These cash balances are used to
purchase shares of Company Class A Common Stock, which are credited to the
accounts of the individual participants. Share and cash balances in the
participants' accounts are fully vested. Distributions of participants'
equity can be made in the event of retirement, death, qualifying
hardships, 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
(Continued)
<PAGE> 56
Class A Common Stock to employees of any subsidiary, upon disposition of
the subsidiary. The Trust may redeem 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, 1995, the Trust held 1,185,198 shares of the Company's
Class A Common Stock and 66,102 shares of the Company's Class B Common
Stock, each valued at $24.75 per share, for 1,133 plan participants. At
December 31, 1994, the Trust held 1,078,843 shares of the Company's Class
A Common Stock and 69,829 shares of the Company's Class B Common Stock,
each valued at $22.00 per share, for 1,049 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>57
The following information summarizes the Plan's investment and
distribution transactions during 1994 and 1995 involving the Company's
Common Stock.
Number Fair
of Shares Value
--------- ------------
Balance, January 1, 1994 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
Acquired 180,079 4,278,988
Distributed to participants (77,451) (1,861,219)
Appreciation during the year in the
market value of shares of Company
stock held at year end - 3,281,122
--------- -----------
Balance, December 31, 1995 1,251,300 $30,969,675
========= ===========
The Company's Board of Directors have fixed the fair value of the stock at
$26.00 per share, effective March 25, 1996.
(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 Plan received its latest favorable determination letter from the
Internal Revenue Service on January 19, 1996 indicating that the Plan, as
designed, is qualified under the applicable requirements of the Internal
Revenue Code and is therefore exempt from federal income taxes. It is the
intent of the Plan's management that the Plan remain qualified and its
underlying trust remain tax exempt under the applicable provisions of the
Internal Revenue Code.
<PAGE> 58
Schedule 1
----------
THE BUREAU OF NATIONAL AFFAIRS, INC.
THE BNA DEFERRED STOCK PURCHASE PLAN
INVESTMENTS AT FAIR VALUE
DECEMBER 31, 1995
Fair
Description Value Cost
- ------------------------------------- ------------ ------------
1,251,300 shares Bureau of National
Affairs, Inc. Common Stock $ 30,969,675 $20,165,114
<PAGE> 59
Schedule 2
----------
THE BUREAU OF NATIONAL AFFAIRS, INC.
THE BNA DEFERRED STOCK PURCHASE PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
Number of Purchase
Number Purchases Price or
of Shares Description or Sales Proceeds Gain
- --------- ------------------------- --------- ---------- -------
Purchases:
180,079 Bureau of National Affairs, Inc.
Common Stock 80 $4,278,988 -
Sales:
77,451 Bureau of National Affairs, Inc.
Common Stock 101 1,861,219 $766,182
Note: The items listed above represent transactions or a series of trans-
actions which are in excess of 5% of the market value of Plan assets
at January 1, 1995, ($1,263,539) 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> 60
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. 333-01647) on Form S-8 of The Bureau of National Affairs, Inc., filed
on March 12, 1996, of our report dated March 12, 1996 relating to the
statement of net assets available for benefits of the BNA Deferred Stock
Purchase Plan as of December 31, 1995 and 1994, 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, 1995, which report appears in the
December 31, 1995 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 26, 1996
<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, 1995 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-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 17,763
<SECURITIES> 11,123
<RECEIVABLES> 44,799
<ALLOWANCES> 1,628
<INVENTORY> 6,268
<CURRENT-ASSETS> 106,929
<PP&E> 112,249
<DEPRECIATION> 58,984
<TOTAL-ASSETS> 278,752
<CURRENT-LIABILITIES> 155,924
<BONDS> 0
<COMMON> 11,912
0
0
<OTHER-SE> 55,286
<TOTAL-LIABILITY-AND-EQUITY> 278,752
<SALES> 226,497
<TOTAL-REVENUES> 226,497
<CGS> 128,671
<TOTAL-COSTS> 128,671
<OTHER-EXPENSES> 89,957
<LOSS-PROVISION> 860
<INTEREST-EXPENSE> 95
<INCOME-PRETAX> 17,578
<INCOME-TAX> 5,487
<INCOME-CONTINUING> 12,091
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,091
<EPS-PRIMARY> 1.38
<EPS-DILUTED> 1.38
</TABLE>
