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EX-31.1 - EXHIBIT 31.1 - BUREAU OF NATIONAL AFFAIRS INCformexhibit31_1.htm
EX-31.2 - EXHIBIT 31.2 - BUREAU OF NATIONAL AFFAIRS INCformexhibit31_2.htm
Washington, D.C. 20549
(Mark One)
(  )
For the quarterly period ended March 27, 2010
Commission file number 2-28286
The Bureau of National Affairs, Inc.
A Delaware Corporation
(I.R.S. Employer Identification No.)
1801 South Bell Street
(703) 341-3000
Arlington, Virginia 22202
(telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yesx No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes o   No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer  o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o 
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).  Yes o No x
The number of shares outstanding of each of the issuer's classes of common stock as of March 27, 2010 was 10,806,946 Class A common shares, 15,321,071 Class B common shares, and 6,450 Class C common shares.

Part I
Item 1.   
Item 2 Management's Discussion and Analysis of Financial Condition and
  Results of Operations
Item 3.  Quantitative and Qualitative Disclosures about Market Risk
Item 4T.  Controls and Procedures
Part II 
Item 1.  Legal Proceedings
Item 1A. 
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.  Defaults Upon Senior Securities
Item 4.  (Removed and Reserved)
Item 5. 
Item 6. 
Exhibit 31.1  
Exhibit 31.2   
Exhibit 32    24


FOR THE 12 WEEKS ENDED MARCH 27, 2010 and MARCH 28, 2009
(All dollars in thousands, except per share amounts)
12 Weeks Ended
March 27, 2010
March 28, 2009
  $ 74,757     $ 75,856  
Editorial, production, and distribution
    37,684       40,967  
    10,872       12,484  
General and administrative
    17,247       13,595  
    65,803       67,046  
    8,954       8,810  
    815       1,066  
    (481 )     (648 )
    9,288       9,228  
    3,121       3,236  
    6,167       5,992  
    66,206       1,594  
  $ 72,373     $ 7,586  
  $ .24     $ .22  
    26,156,884       27,505,285  
DIVIDENDS DECLARED PER SHARE     .21      $  .20  
See accompanying notes to condensed consolidated financial statements.

MARCH 27, 2010 and DECEMBER 31, 2009
(In thousands of dollars)
March 27,
December 31,
Cash and cash equivalents
  $ 22,033   $ 9,757  
Short-term investments
    14,138     14,445  
Receivables (net of allowance for doubtful accounts of
   $1,027 at March 27, 2010 and $1,556 at Dec. 31, 2009)
    30,165     32,604  
    2,529     2,935  
Prepaid expenses
    3,670     3,739  
Deferred income taxes
    5,652     5,652  
   Total current assets
    78,187     69,132  
    96,522     95,305  
    23,642     23,642  
Building and improvements
    95,939     95,939  
Furniture, fixtures and equipment
    46,832     46,734  
      166,413     166,315  
Less-Accumulated depreciation
    52,776     51,279  
   Net property and equipment
    113,637     115,036  
    9,230     51,601  
    46,041     44,962  
    9,367     7,231  
    ---     4,163  
   Total assets
  $ 352,984   $ 387,430  
See accompanying notes to condensed consolidated financial statements.  
MARCH 27, 2010 and DECEMBER 31, 2009
(In thousands of dollars)
March 27,
December 31,
Current portion of long-term debt
  $ 10,500   $ 10,500  
Payables and accrued liabilities
    11,974     16,906  
Employee compensation and benefits payable
    17,951     17,994  
Income taxes payable
    6,668     3,706  
Dividends payable       5,512     ---  
Deferred revenues
    130,620     125,378  
   Total current liabilities
    183,225     174,484  
LONG-TERM DEBT, less current portion
    13,000     13,000  
POSTRETIREMENT BENEFITS, less current portion
    102,489     210,533  
    1,219     1,381  
   Total liabilities
    299,933     399,398  
Common stock issued, $1.00 par value—
   Class A - 30,000,000 shares
    30,000     30,000  
   Class B - 24,634,865 shares
    24,635     24,635  
   Class C - 2,531,680 shares
    2,532     2,532  
Additional paid-in capital
    49,462     47,511  
Retained earnings
    225,061     224,406  
Treasury stock, at cost — 31,032,078 shares at
   March 27, 2010 and 30,913,320 at Dec. 31, 2009
    (281,542 )   (277,749 )
Accumulated other comprehensive income (loss):
   Net unrealized gain on marketable securities
    1,923     1,366  
   Foreign currency translation adjustment
    (96 )   (129 )
   Postretirement benefits adjustment
    1,076     (64,540 )
   Total stockholders' equity (deficit)
    53,051     (11,968
   Total liabilities and stockholders' equity (deficit)
  $ 352,984   $ 387,430  
See accompanying notes to condensed consolidated financial statements. 

FOR THE 12 WEEKS ENDED MARCH 27, 2010 and MARCH 28, 2009
(In thousands of dollars)
12 Weeks Ended
March 27, 2010
March 28, 2009
Net income
  $ 6,167   $ 5,992  
Adjustments to reconcile net income to net
cash provided by operating activities—
Depreciation and amortization
    2,401     2,415  
Deferred income taxes
    (1,879 )   (1,049
Gain on sales of securities
    (74   (97
    (290   (225
Changes in operating assets and liabilities—
    3,031     12,577  
Deferred revenues
    5,082     (7,779
Payables and accrued liabilities
    (1,362   (3,317
Postretirement benefits
    2,433     1,355  
    406     (101
Other assets and liabilities—net
    28     398  
Net cash provided by operating activities
    15,943     10,169  
Proceeds from sales of assets
    ---     29  
Purchase of property and equipment
    (50 )   (704 )
Acquisition of business (net of $56 cash acquired in 2010)
    (565 )   (3,200
Investment securities sales and maturities
    4,451     18,366  
Investment securities purchases
    (5,294 )   (11,427 )
Net cash (used in) provided by investing activities
    (1,458   3,064  
Receipts for capital stock sales to employees
    3,269     3,488  
Purchases of treasury stock
    (5,478 )   (5,660 )
Net cash used in financing activities
    (2,209 )   (2,172
    12,276     11,061  
CASH AND CASH EQUIVALENTS, beginning of period
    9,757     11,139  
  $ 22,033   $ 22,200  
Interest paid
  $ 469   $ 708  
Income taxes paid
    2,037     635  
See accompanying notes to condensed consolidated financial statements.

NOTE 1: General
The primary business of The Bureau of National Affairs, Inc. (BNA, or the “Company”) is the publishing of legal, regulatory, and general business advisory information in labor, economic, tax, health care, environment and safety, consulting, recruiting, and other markets to business, professional, and academic users, mainly in the United States.
BNA also provides printing services to customers in the mid-Atlantic region through its McArdle Printing Co., Inc. subsidiary.  The Company’s software businesses develop, produce, and market tax and financial planning software and electronic tax forms for U.S. customers.
The Company’s financial reporting is based on 13 four-week periods.  There are three periods (twelve weeks) in each of the first three fiscal quarters and four periods in the fourth fiscal quarter.   The information in this report has not been audited.  Results for the twelve weeks are not necessarily representative of the year because of the seasonal nature of activities.  The financial information furnished herein reflects all adjustments (consisting only of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results reported for the periods shown and has been prepared in conformity with generally accepted accounting principles of the United States of America applied on a consistent basis.
These financial statements should be read in conjunction with the Notes to Consolidated Financial Statements contained in the Company’s 2009 Annual Report on Form 10-K.  Note disclosures which would substantially duplicate those contained in the 2009 Annual Report on Form 10-K have been omitted.  Certain prior year balances have been reclassified to conform to the current year presentation.
The reported amounts of certain assets and liabilities, and the disclosures of contingent assets and liabilities, result from management estimates and assumptions which are required to prepare financial statements in conformity with accounting principles generally accepted in the United States of America.  Estimates and assumptions are used for measuring such items as post-retirement benefits, deferred tax assets, and the allowance for doubtful accounts, and for evaluating the possible impairment of intangible assets and goodwill.  Accordingly, estimates and assumptions may also affect the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
The Company has evaluated subsequent events after the balance sheet date through the date the financial statements were issued and did not note any events that would require disclosure.

NOTE 2: Acquisition
During the first quarter of 2009, the Company invested $3.2 million in preferred stock of Llesiant, Inc., a technology partner.  Llesiant is developing the taxonomy-based search engine used by “BNA Convergence,” a delivery platform designed for the legal and corporate markets that allows searching of all BNA content along with a large collection of third-party content. The investment was recorded as a long term investment. During the fourth quarter of 2009, the Company increased its long term investment by $0.8 million. Also during the fourth quarter, the Company purchased 42 percent of the outstanding common stock for $0.3 million and began to recognize its percentage interest in Llesant’s loss using the equity method of accounting ($137,000 at year-end 2009). During the first quarter of 2010, the Company made additional investments of $0.3 million, recognized a further equity-method loss of $67,000, and then purchased the remaining outstanding common stock for $0.3 million on February 12, 2010.
The following table summarizes the consideration paid and the amounts of the assets acquired and the liabilities assumed recognized at the acquisition date (in thousands of dollars):

  $ 4,921  
Recognized amounts of identifiable assets  
 acquired and liabilities assumed:        
Identifiable intangible assets
  $ 3,084  
Deferred taxes
Receivables and other
    (432 )
Deferred revenue
    (160 )
Total identifiable net assets
Equity loss recognized prior to acquisition
    $ 4,921  
The fair value of the acquired identifiable intangible assets is provisional pending receipt of the final valuations for those assets.
NOTE 3: Revenues and Deferred Revenues
The Company derives revenues from publishing and software product sales and from printing and other services.  Revenues are recognized when all of the following criteria are met: there is persuasive evidence that an arrangement exists; delivery has occurred or services have been rendered; the price to the customer is fixed and determinable; and collectibility is reasonably assured.
The majority of publishing sales are by subscription, primarily for one year.  Subscription revenues are deferred and amortized over the subscription terms.  The Company also licenses information content to certain online service providers for access by their customers.   Revenues from these licenses are recognized on either a transactional or subscription basis.  Revenues from other publishing products, such as books, research reports, and special reports, are recognized when the products are shipped, net of a reserve for returns when the right of return exists.
Revenues from printing services are recognized when the materials are shipped.  Revenues from consulting, software data conversion, and training are recognized when the services have been completed.  Revenues from event-related activities, such as conferences, are recognized when the event has been completed.
Software revenues are recognized in accordance with Accounting Standards Codification 985-605, Software—Revenue Recognition (ASC 985-605, formerly AICPA Statement of Position 97-2, Software Revenue Recognition). The majority of software sales are bundled arrangements which include a one-year software program license term and post-sale support, including telephone support and program updates (when and if available) during the license term.  Revenues are deferred and recognized ratably over the license and post-sale support term.  However, when the sale includes a specified upgrade (a specific future program enhancement promised to customers) revenue is deferred until that specified upgrade is delivered.  Revenues from sales of software products with updates provided periodically over a license term, typically one year, are recognized ratably over the license terms.
Deferred revenues at the end of the first quarter of 2010 consisted of $116.3 million of deferred subscription revenues and $14.3 million of deferred software revenues.  Deferred revenues at the end of 2009 consisted of $109.1 million of deferred subscription revenues and $16.3 million of deferred software revenues.

NOTE 4: Inventories
Inventories consisted of the following (in thousands of dollars):
March 27,
December 31,
Materials and supplies
  $ 1,359     $ 1,511  
Work in process
    264       476  
Finished goods
    906       948  
  $ 2,529     $ 2,935  

NOTE 5: Intangible and Other Assets and Goodwill
Intangible and other amortizable assets were as follows (in thousands of dollars):

March 27, 2010
December 31, 2009
Intangible and other amortizable assets:
Gross Carrying
Gross Carrying
  $ 29,395     $ (21,842 )   $ 26,319     $ (21,247 )
 Customer Lists
    6,110       (5,073 )     6,182       (5,017 )
    9,145       (8,585 )     9,145       (8,374 )
    207       (128 )     214       (123 )
  $ 44,857     $ (35,628 )   $ 41,860     $ (34,761 )

Amortization expense for the above assets was $954,000 and $746,000, respectively, in the first quarter of 2010 and 2009.  During the first quarter of 2010, gross intangible and other amortizable assets of $3,075,000 were added and $78,000 were written down. Other assets (non-amortizable) amounted to $138,000 and $132,000 at March 27, 2010, and December 31, 2009, respectively.


Goodwill assigned to the reportable segments and the change in the carrying amount of goodwill for the first quarter of 2010 are as follows (in thousands of dollars):
Balance, January 1, 2009
  $ 21,594     $ 917     $ 22,451     $ 44,962  
Goodwill acquired during year
    1,079       ---       ---       1,079  
Balance, September 12, 2009    
  $ 22,673     $ 917     $ 22,451     $ 46,041  

NOTE 6: Employee Benefit Plans
The Company has noncontributory defined benefit pension plans and provides retiree health care and life insurance benefits (other post-retirement benefits) for certain of its employees.  The net periodic benefit expense is based on estimated values provided by third party actuaries.
The components of net periodic benefit expense were as follows (in thousands of dollars):

12 Weeks Ended
Pension Benefits:
  Service cost
  $ 2,069     $ 1,923  
  Interest cost
    3,171       2,945  
  Expected return on plan assets
    (3,706 )     (2,991 )
  Amortization of prior service cost
    and net actuarial loss
    777       1,140  
  $ 2,311     $ 3,017  
Other Post-Retirement Benefits:
  Service cost
  $ 1,401     $ 1,479  
  Interest cost
    2,241       2,519  
  Expected return on plan assets
    (319 )     (323 )
  Amortization of prior service cost
    and net actuarial loss
    159       946  
  $ 3,482     $ 4,621  

Pension plan contributions were $15 million in 2009 and are expected to be $2 million in 2010.  $2 million was contributed during the first quarter of 2010, while $5 million was contributed during the first quarter of 2009.
During the first quarter, the Company substantially changed the postretirement health benefits for Medicare-eligible retirees of the Parent, from providing self insured  health care benefits to providing a fixed annual stipend to be used to offset health insurance purchased by the retiree.  The change was substantial enough to require a remeasurement of the obligation, resulted in a $109 million reduction in the postretirement benefit obligation and a $65 million increase to accumulated comprehensive income, and a $44 million decrease in deferred income taxes.  Other postretirement benefit expense will be substantially lower for the remainder of 2010 and for future years.


NOTE 7: Segment Information
In thousands of dollars:

12 Weeks Ended:
Total Operating Revenues
Intersegment Operating Revenues
External Operating Revenues
Profit (Loss)
March 27, 2010
  $ 62,342     $ ---     $ 62,342     $ 6,187  
    6,928       2,158       4,770       (221 )
    8,205       560       7,645       2,988  
  $ 77,475     $ 2,718     $ 74,757     $ 8,954  
12 Weeks Ended:                                 
March 28, 2009
  $ 63,200     $ ---     $ 63,200     $ 6,084  
    7,981       2,420       5,561       228  
    7,667       572       7,095       2,498  
  $ 78,848     $ 2,992     $ 75,856     $ 8,810  

NOTE 8: Stockholders' Equity (Deficit)
There is no established public trading market for any of BNA's three classes of stock.  However, employees may purchase the Company’s Class A stock through its Stock Purchase and Transfer Plan and the BNA 401(k) Plan (the “Plans”).  Semi-annually, the Board of Directors establishes the price at which shares can be bought or sold and declares dividends.  Dividends of $.21 per share were declared in March of 2010 and dividends of $.20 per share were declared in March of 2009.
Treasury stock as of March 27, 2010 and December 31, 2009, respectively, consisted of: Class A, 19,193,054 and 19,270,041 shares; Class B, 9,313,794 and 9,118,049 shares; and Class C, 2,525,230 and 2,525,230 shares.  As of March 27, 2010, authorized shares of Class A, Class B, and Class C shares were 30,000,000, 30,000,000, and 5,000,000, respectively.
The Company’s stockholders, when selling stock, are required to first tender shares to the Company.  The Company has supported the continuance of employee ownership through its practice of repurchasing stock tendered by stockholders, but it is not required to do so.  Capital stock with a market value of $6.1 million as of March 27, 2010 is known or expected to be tendered during the next twelve months.  The actual amount will likely be higher.
NOTE 9: Commitments, Contingencies, and Related-Party Transactions
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 consolidated financial statements.  The Company indemnifies certain of its customers for potential copyright infringement lawsuits related to the use of its products.  Any exposure related to these indemnifications is believed to be remote.
A director of one of the Company's subsidiaries is a shareholder of a law firm that provides the subsidiary with editorial services.  Fees incurred for these services were $1,472,000 and $1,382,000 in the first quarter of 2010 and 2009, respectively.

NOTE 10:Fair Value Measurements
In the first quarter of 2008, the Company adopted Accounting Standards Codification 820, Fair Value Measurements and Disclosures (ASC 820, formerly FASB Statement of Financial Accounting Standards No. 157, Fair Value Measurements) for financial assets and liabilities.  In February 2008, the FASB deferred the effective date of ASC 820 until January 1, 2009 for nonfinancial assets and liabilities that are recognized or disclosed at fair value on a nonrecurring basis.  The Company adopted ASC 820 as it pertains to such nonfinancial assets and liabilities in the first quarter of 2009.  There was no material effect on the financial statements upon adoption of this new accounting pronouncement.
ASC 820 discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost).  The statement utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:
Level 1:
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2:
Inputs, other than quoted prices that are observable for the asset or liability, either directly or indirectly.  These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs that reflect the reporting entity’s own assumptions.
Financial assets carried at fair value measured on a recurring basis as of March 27, 2010 and the necessary disclosures are as follows (in thousands of dollars):

as of
Fair Value Measures at 03/27/10
Using Fair Value Hierarchy
Fair Value
as of
Level 1
Level 2
Level 3
 Cash and cash equivalents
$ 22,033     $ 22,033       ---       ---     $ 22,033  
 Short-term investments
  14,138       14,138       ---       ---       14,138  
 Marketable securities
  96,522       96,522       ---       ---       96,522  
$ 132,693     $ 132,693       ---       ---     $ 132,693  

The fair values of short-term investments and marketable securities are based on quoted market prices from various stock and bond exchanges.  The Company chose not to elect the fair value option as prescribed by ASC 820 (formerly FASB Statement of Financial Accounting Standards No. 159, The Fair Value Option For Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115) for its financial assets and liabilities that had not been previously carried at fair value.  Therefore, material financial assets and liabilities not carried at fair value, such as long-term debt, accounts payable, and customer receivables, are reported at their carrying values.  At the end of the first quarter, long-term debt with a carrying value of $23,500,000 had a fair value of $24,752,000.  The fair value of long-term debt is based on quotes for like instruments with similar credit ratings and terms.
NOTE 11: Investments
Proceeds from the sales and maturities of securities for the first quarter of 2010 were $4,451,000.  Gross realized gains from these sales were $74,000.  The specific identification method is used in computing realized gains and losses.
The Company's investment securities are classified as available-for-sale and are reported at their fair values (quoted market price), which were as follows (in thousands of dollars):
March 27, 2010
Equity securities
  $ 18,922     $ 677     $ (841 )   $ 18,758  
Municipal bonds
    87,405       3,164       (86 )     90,483  
Corporate debt
    1,374       45       ---       1,419  
  $ 107,701     $ 3,886     $ (927 )   $ 110,660  
December 31, 2009
Equity securities
  $ 18,122   $ 430     $ (1,498 )   $ 17,054  
Municipal bonds
    88,150     3,237       (102 )     91,285  
Corporate debt
    1,376     35       ---       1,411  
  $ 107,648   $ 3,702     $ (1,600 )   $ 109,750  
The following table summarizes investments with gross unrealized losses by the length of time those investments have been continuously in a loss position (in thousands of dollars):
Gross Unrealized Losses
Less than
More than
March 27, 2010
12 months
12 Months
Equity securities
  $ 10,975     $ ---     $ (841 )
Municipal bonds
    3,362       (7 )     (79 )
Corporate debt
    ---       ---       ---  
  $ 14,337     $ (7 )   $ (920 )
Gross Unrealized Losses
Less than
More than
December 31, 2009
12 months
12 Months
Equity securities
  $ 14,582     $ ---     $ (1,498 )
Municipal bonds
    4,270       (5 )     (97 )
Corporate debt
    ---       ---       ---  
  $ 18,852     $ (5 )   $ (1,595 )

Each quarter, the Company reviews investment securities that have unrealized losses to determine if those losses are other than temporary.  Consideration is given to the credit quality and maturities of the fixed income securities, the financial condition and near-term prospects of the issuers of the equity securities, general market conditions, the length of time and extent to which fair values have been below amortized cost, and the Company’s ability and intent to hold the security to allow for anticipated recovery.  If a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the security is established.  Accordingly, the Company wrote down to fair market value equity security investments that were determined to be other than temporarily impaired in 2009. The write downs amounted to $50,000 in the first quarter of 2009 and are included in investment income in the consolidated statements of income.  At March 27, 2010, 13 securities had an aggregated unrealized loss of 6.1 percent from their amortized cost.  At December 31, 2009, 17 securities had an aggregated unrealized loss of 7.8 percent from their amortized cost.  These securities were reviewed in accordance with the criteria noted above, and their declines in fair value were determined to be not other than temporary.
Fair values of the Company's fixed-income securities are inversely affected 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 March 27, 2010 were as follows (in thousands of dollars):

Within one year
  $ 14,204     $ 14,407  
One through five years
    28,959       30,303  
Five through ten years
    14,106       14,852  
Over ten years
    30,884       31,692  
No fixed maturity date
    626       648  
  $ 88,779     $ 91,902  


Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read along with the unaudited consolidated financial statements included in this Form 10-Q, as well as the Company’s 2009 Annual Report on Form 10-K, which provides a more thorough discussion of the Company’s business and operations. This interim report is intended to provide an update of the disclosures contained in the 2009 Annual Report on Form 10-K and, accordingly, disclosures which would substantially duplicate those contained therein have been omitted.
Forward-Looking Statements
This management discussion contains certain statements that are not statements of historical fact but are forward-looking statements. The use of such words as “believes,” “expects,” “estimates,” “could,” “should,” “will,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ from those projected.  Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.
BNA operates in three business segments: publishing, printing, and software. The publishing segment, which generated 84 percent of consolidated 2009 revenues, provides legal, regulatory, and general business advisory information in tax, labor, economic, health care, environment and safety, consulting, and other markets to business, professional, and academic users. Sales are made principally through field sales representatives. The printing segment provides services to mid-Atlantic area customers, including the BNA publishing segment, other publishers, financial institutions, trade associations, professional societies, other nonprofit organizations, and governmental organizations. The software segment provides tax and financial planning software to accountants, lawyers, tax and financial planners, government agencies, corporations, and others. BNA’s ongoing success is dependent upon: the quality of its products and services; its highly trained and experienced employees; its key relationships with suppliers; and the customers’ need for ongoing information regarding changes and insights in legal, regulatory, tax, and business practices and trends.
In addition to ongoing efforts to improve and provide more product offerings and to operate more efficiently, BNA has been engaged in several multi-year strategic initiatives related to its major publishing activities.
Electronic products now make up over 73 percent of the legal and regulatory subscription base. Their migration to a next-generation web platform, BWD, is complete. Having all BNA products on one robust platform creates the opportunity to create new products, sell into new markets, and enhance existing product offerings with tools and applications that will attract new customers and better retain existing ones. In addition, subsidiary company products are being moved to BWD, improving corporate-wide efficiency and increasing our flexibility to combine and customize product offerings for new or more specialized markets.
BNA’s high quality, proprietary content remains a competitive strength. But the continued expansion and improvement of our web platform has enabled us to enhance the value of that content and improve the sustainability of our offerings. By concentrating on improving and exploiting our web platform, and on creating new functionalities and tools to work with our highly regarded content, BNA is moving beyond being a content provider and positioning itself as a technologically adept provider of information solutions to professional markets.
Pursuant to this strategy, early this year, BNA acquired the remaining interest that it did not already own in Llesiant, a software company that had been working with BNA to create “BNA Convergence”, a new delivery platform designed for the legal and corporate markets. This new platform allows law firms to search all their BNA content along with a large collection of third-party content, using Llesient’s taxonomy–based search engine. Results can be delivered in an increasing variety of formats. Having full control of Llesiant gives BNA the ability to direct the future development and enhancement of its technology to ensure that it best serves BNA’s strategic needs.
To help facilitate the integration of BNA’s quality content with state-of-the art technology, a new Product Research and Development business unit, headed by a Chief Product Officer, was created in 2009. This unit is responsible for developing all new products and services, focusing specifically on how best to integrate the latest technology, processes, and applications with our unique content to provide the better products, tools, and applications that our customers now demand. This unit is also responsible for BNA’s electronic commerce initiatives.
Earlier efforts aimed at the Human Resources and Environment markets, which also combined internal resources with technology partners, matured in recent years despite the challenging environment.  New products and more focused sales efforts led to strong growth for our expanding line of HR Decision Support Networks and our set of Environment, Health, and Safety Tools. The economic environment affected the corporate market for these products last year, but information solutions that enable businesses to meet increasingly stringent compliance needs with fewer in-house resources should remain attractive to cost-conscious customers.
The new product development structure and the improved web platform also enables the easy and quick integration of content across multiple products. For example, in late 2009, new content and tools designed to alert users to tax credits and incentives available for “green” initiatives was integrated into and launched simultaneously on both BNA’s tax and environment web libraries.
BNA’s market-leading news services are also being continually improved, with a major upgrade affecting all of our current awareness services released in the first quarter of 2010. This upgrade included a new “Search My BNA” function that allows, for the first time, subscribers to search all of the BNA services they subscribe to with a single search. Most BNA notification services have now adopted a “continual publishing” model, where news stories are posted online throughout the publication cycle, often minutes after the news breaks.
Using all of BNA’s new capabilities, the company plans to launch the first of a series of “next generation” web libraries for the legal market later this year. These comprehensive “Resource Centers” will focus on specific substantive practice areas and will provide subject matter experts with a one-stop resource that includes all the primary and secondary information, news, analysis, and tools needed to serve their clients.
In an effort to leverage BNA’s strong tax brands, the Company is expanding its presence in the tax training business. In 2008, BNA International (BNAI) acquired European American Tax Institute (EATI), which provides professional training for international tax professionals.  This business was integrated into BNAI, where it complements the Company’s growing portfolio of conferences, special reports, and books for the international tax market. In mid-2009, BNA acquired the assets of the Council for International Tax Education, Inc. (CITE) and the Alliance for Tax, Legal, and Accounting Seminars (ATLAS), both based in White Plains, New York.  The firms are leaders in the creation and delivery of international tax education for multinational companies, offering live instruction courses for legal and tax professionals and financial executives.
BNA pursues a web platform-neutral policy in its information content offerings, allowing customers to choose their format preference. BNA's products have been available for transactional access on the major legal online services—Lexis and Westlaw—for many years. BNA also sells subscriptions to subject libraries of BNA content on these networks, and these have been very popular with major law firms and law schools. In addition, BNA sells subscriptions to its tax products on Thomson Reuters’ Checkpoint platform and Wolters Kluwer’s IntelliConnect platform. These networks and others, in addition to BNA's own online platform and print, cd’s, and dvd’s provide customers with a variety of product delivery options.
As we face the task of continuing BNA’s success, external factors remain a major concern. The economic environment has improved in general, but key markets, such as the large law firms, will continue to restore spending at a slow pace. The corporate and tax markets also remain cautious. In the second half of 2009, all those markets stabilized, but there have not yet been signs of a strong recovery. Because of BNA’s subscription-based business model, market improvements will not be immediately reflected in revenue.
A second significant factor is the rapidly expanding expense related to BNA’s postretirement benefits obligations. Management took a number of major steps in 2009 and in early 2010 to address this issue in a way that would continue to provide BNA’s current retirees with superior benefits without endangering BNA’s future success. The beneficial effects of these changes will be reflected in 2010 financial performance.

Twelve weeks 2010 compared to Twelve weeks 2009
Segment Information (in thousands of dollars)
     12 Weeks Ended   
       03/27/10        03/28/09  
  $ 62,342     $ 63,200  
    4,770       5,561  
    7,645       7,095  
  $ 74,757     $ 75,856  
Intersegment printing revenues
  $ 2,158     $ 2,420  
Intersegment software revenues
  $ 560     $ 572  
Operating Profit:
  $ 6,187     $ 6,084  
    (221 )     228  
    2,988       2,498  
  $ 8,954     $ 8,810  

For the first quarter 2010, consolidated revenues decreased 1.4 percent.  Software segment revenues were up 7.0 percent, but printing segment revenues were down 13.2 percent and publishing segment revenues were down 1.4 percent. Consolidated operating expenses were down 2.0 percent, leading to a 1.6 percent increase in operating profit. Net income for the first quarter was $6.2 million compared to $6.0 million in 2009, and earnings per share were $.24 for the first quarter versus $.22 in 2009.
Publishing segment revenues were down $858,000, or 1.4 percent compared to the prior year.  BNA Parent and Tax Management subscription revenues and BNA Books revenues were up slightly in the first quarter of 2010, but BNA International and BNA Subs, LLC revenues were down. Subscription revenues were dampened by the effect of one fewer calendar day in the quarter (revenues are recognized on a daily basis). Publishing operating expenses were down 1.8 percent due to lower post-retirement benefit plan expenses (see Note 6). Operating profit increased 1.7 percent, to $6.2 million.
Printing segment revenues were down 13.2 percent compared to 2009.  Commercial sales were down 14.2 percent due to lower print volumes, and intersegment revenues were down 10.8 percent.  Operating expenses were down 6.4 percent, reflecting aggressive steps taken to adjust expenses to lower revenues. The operating loss was $221,000 in the first quarter of 2010, compared to an operating profit of $228,000 in 2009.
Total revenues for the software segment (which combines the operations of STF Services Corporation and BNA Software, a division of Tax Management, Inc.) increased 7.0 percent compared to 2009, while expenses were up just 0.9 percent.  BNA Software revenues increased 9.4 percent in the first quarter of 2010.  Operating expenses were up 1.5 percent, and operating profit was $1.9 million in 2010 compared to $1.4 million in the same period of 2009.  STF revenues were essentially even with 2009, but operating expenses were down slightly, leading to a 1.2 percent increase in operating profit. The total software segment’s operating profit increased 19.6 percent to $3.0 million.
Investment income declined due to lower yields and lower gains on sales of securities.  Interest expense was lower due to lower term debt balances.  Other comprehensive income reflected the after-tax change in the postretirement benefit obligation related to the change in benefits described in Note 6.
As expected, revenues have started out slightly weaker in 2010, with printing and subscription revenue trailing last year. Primary information markets stabilized in the second half of last year and are improving in the early part of this year. However, because subscription revenue is recognized evenly over the term of the subscription, the full effect of improving new sales will not be reflected immediately in revenue, but will have a positive impact as the year progresses. The printing market remains challenging, but should also improve in the traditionally stronger second half of the year.
On the expense side, the beneficial effect of changes to the company's postretirement benefits plan, announced late in the first quarter, has begun to be reflected in current results, but the changes made will have a more significant effect on expense as the year progresses.
Financial Position
Cash operating expenditures were down 4.5 percent, but customer cash receipts were up 3.3 percent, leading cash provided from operating activities to increase 57 percent in the first quarter of 2010 to $15.9 million. Cash used in investing activities was $1.5 million. Purchase of the remaining Llesiant stock and other consideration netted to $0.6 million, net capital expenditures were $0.1 million, and net cash used in securities investments totaled $0.8 million. Cash used in financing activities netted to $2.2 million. Capital stock repurchases were $5.5 million, and receipts for sales of capital stock to employees totaled $3.3 million.
With over $132 million in cash and investment portfolios, the financial position and liquidity of the Company remains very strong. The 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, debt repayments, pension contributions, most capital expenditures, and, in addition, provide funds for dividend payments and the repurchase of stock tendered by shareholders.   Should more funding become necessary or desirable in the future, the Company believes that it has sufficient additional debt capacity based on its operating cash flows.

There have been no material changes in market risk since December 31, 2009.
Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of its management, including the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities  Exchange Act  of 1934).    Based  on this evaluation, the CEO and CFO have found such controls to be effective to provide reasonable assurance that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods required by the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting.  There were no changes in the Company’s internal control over financial reporting during the quarter ended March 27, 2010 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.


PART II  Other Information
Item 1.  
There were no material legal proceedings.
Item 1A.  
There were no material changes from the risk factors as previously disclosed in Item 1A of Part I of the Company’s 2009 Annual Report on Form 10-K.
During the twelve weeks ended March 27, 2010, the Company purchased shares of its common stock, as noted in the table below. The Company is not engaged in share repurchases related to a publicly announced plan or program.
Four-week Period
Total Number
 of Shares
 Price Paid
 per Share
January 1, 2010–January 30, 2010
January 31, 2010–February 27, 2010
February 28, 2010–March 27, 2010
There were no defaults upon senior securities.
No other information is presented herein.
Item 6.
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350.
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350.
Certification of the CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. section 1350.


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
  The Bureau of National Affairs, Inc.
May 10, 2010   s/Paul N. Wojcik  
Date    Paul N. Wojcik  
    Chairman and Chief Executive Officer  
May 10, 2010   s/Robert P. Ambrosini  
Date    Robert P. Ambrosini  
    Vice President and Chief Financial Officer