AMERICAN LAWYER MEDIA INC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


[X]		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the quarterly period ended September 30, 2003.
		or
[ ]		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		For the transition period from__________ to_________.

Commission file number: 333-50117

AMERICAN LAWYER MEDIA, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		13-3980414 (I.R.S. Employer Identification Number)


345 Park Avenue South
New York, New York		10010
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 779-9200

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of November 10, 2003, there were 100 shares of the registrant’s common stock, $.01 par value, outstanding.

EXPLANATORY NOTE

The Company is not currently required to file reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is not currently an “issuer” within the meaning of the Sarbanes-Oxley Act of 2002. The Company is filing this quarterly report on Form 10-Q pursuant to a covenant contained in the Indenture dated December 22, 1997 between the Company and The Bank of New York, as Trustee, governing the Company’s 9¾% Senior Notes.

TABLE OF CONTENTS


PART I FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		Consolidated Balance Sheets
		Consolidated Statements of Operations
		Consolidated Statements of Operations
		Consolidated Statement of Changes in Stockholder’s Equity
		Consolidated Statements of Cash Flows
		Notes To Consolidated Financial Statements
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
CERTIFICATION OF CEO
CERTIFICATION OF CFO
CERTIFICATION OF CEO AND CFO

AMERICAN LAWYER MEDIA, INC.

INDEX


			PAGE

PART I
FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		Consolidated Balance Sheets at September 30, 2003 (unaudited) and December 31, 2002		1
		Consolidated Statements of Operations for the Nine Months Ended September 30, 2003 and 2002 (unaudited)		2
		Consolidated Statements of Operations for the Three Months Ended September 30, 2003 and 2002 (unaudited)		3
		Consolidated Statement of Changes in Stockholder’s Equity for the Nine Months Ended September 30, 2003 (unaudited)		4
		Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2003 and 2002 (unaudited)		5
		Notes to Consolidated Financial Statements at September 30, 2003 (unaudited)		6-14
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
		CONDITION AND RESULTS OF OPERATIONS		15
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
		MARKET RISK		28
	ITEM 4. CONTROLS AND PROCEDURES			28
PART II
OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS			29
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS			29
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES			29
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			29
	ITEM 5. OTHER INFORMATION			29
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K			29

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

American Lawyer Media, Inc.
Consolidated Balance Sheets
(In thousands, except share data)


				September 30,			December 31,
				2003			2002

				(unaudited)
			ASSETS
Current assets:
Cash and cash equivalents				$	2,462		$	824
Accounts receivable, net of allowance for doubtful accounts and returns of $2,174 and $2,589, respectively					14,374			15,801
Deferred tax assets, net					5,146			5,146
Inventories, net					614			621
Due from parent					41			735
Other current assets					3,036			2,537

	Total current assets				25,673			25,664
Property, plant and equipment, net of accumulated depreciation and amortization of $23,729 and $20,662, respectively					8,427			11,417
Intangible assets, net of accumulated amortization of $64,116 and $57,952, respectively					113,775			119,939
Goodwill, net					145,540			145,540
Deferred financing costs, net of accumulated amortization of $4,614 and $3,847, respectively					4,117			4,884
Other assets					5,288			5,299

		Total assets		$	302,820		$	312,743

			LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accounts payable				$	4,991		$	3,899
Accrued expenses					14,073			14,888
Accrued interest payable					5,084			923
Deferred income (including deferred subscription income of $17,807 and $17,134, respectively)					21,217			22,170
Other current liabilities					—			379

		Total current liabilities			45,365			42,259

Long-term debt:
Revolving credit facility					24,900			32,300
Senior notes					175,000			175,000

		Total long-term debt			199,900			207,300
Deferred income taxes					14,953			16,133
Other noncurrent liabilities					6,521			7,049

		Total liabilities			266,739			272,741

Stockholder’s equity:
Common stock-$.01 par value; 1,000 shares authorized; 100 issued and outstanding at September 30, 2003 and December 31, 2002					—			—
Paid-in-capital					149,488			150,253
Accumulated deficit					(111,926	)		(108,729	)
Accumulated other comprehensive loss					(1,481	)		(1,522	)

		Total stockholder’s equity			36,081			40,002

		Total liabilities and stockholder’s equity		$	302,820		$	312,743

The accompanying notes to the consolidated financial statements are an integral part of these statements.

American Lawyer Media, Inc.
Consolidated Statements of Operations
(In thousands)
(unaudited)


		For the Nine Months Ended
		September 30,

		2003			2002

REVENUES:
Periodicals:
	Advertising	$	56,923		$	56,774
	Subscription		18,492			17,738
Ancillary products and services			25,523			23,883

	Total revenues		100,938			98,395

OPERATING EXPENSES:
Editorial			15,643			16,182
Production and distribution			18,070			19,208
Selling			20,330			19,756
General and administrative			25,167			25,770
Depreciation, amortization and other charges			11,189			12,570

	Total operating expenses		90,399			93,486

	Operating income		10,539			4,909
Interest expense			(14,909	)		(14,206	)
Other income			—			782

	Loss before income taxes		(4,370	)		(8,515	)
Benefit for income taxes			1,173			2,548

	Net loss	$	(3,197	)	$	(5,967	)

The accompanying notes to the consolidated financial statements are an integral part of these statements.

American Lawyer Media, Inc.
Consolidated Statements of Operations
(In thousands)
(unaudited)


		For the Three Months Ended
		September 30,

		2003			2002

REVENUES:
Periodicals:
	Advertising	$	18,457		$	18,634
	Subscription		6,264			6,194
Ancillary products and services			7,177			6,782

	Total revenues		31,898			31,610

OPERATING EXPENSES:
Editorial			5,242			5,253
Production and distribution			5,778			6,191
Selling			6,741			6,343
General and administrative			7,362			7,028
Depreciation, amortization and other charges			2,796			4,121

	Total operating expenses		27,919			28,936

	Operating income		3,979			2,674
Interest expense			(4,952	)		(4,641	)
Other income			—			928

	Loss before income taxes		(973	)		(1,039	)
Benefit for income taxes			854			1,095

	Net (loss) income	$	(119	)	$	56

The accompanying notes to the consolidated financial statements are an integral part of these statements.

American Lawyer Media, Inc.
Consolidated Statement of Changes in Stockholder’s Equity
(In thousands, except share data)
(unaudited)


												Accumulated
						Additional						Other
				Par		Paid-In			Accumulated			Comprehensive
		Shares		Value		Capital			Deficit			Loss			Total

		Common Stock

Balance at December 31, 2002			100	$	—	$	150,253		$	(108,729	)	$	(1,522	)	$	40,002
Net loss			—		—		—			(3,197	)		—			(3,197	)
Unrealized gain on equity securities available for sale			—		—		—			—			41			41

	Total comprehensive loss		—		—		—			—			—			(3,156	)
Return of capital			—		—		(765	)		—			—			(765	)

Balance at September 30, 2003			100	$	—	$	149,488		$	(111,926	)	$	(1,481	)	$	36,081

The accompanying notes to the consolidated financial statements are an integral part of these statements.

American Lawyer Media, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(unaudited)


		For the Nine Months Ended
		September 30,

		2003			2002

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(3,197	)	$	(5,967	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and other charges			11,189			12,570
Deferred income tax			(1,173	)		(2,863	)
Non-cash interest			767			717
Financing loss from termination of revolving line of credit			—			155
	Decrease (increase) in:
Accounts receivable, net			1,427			2,494
Due from parent			(72	)		—
Inventories			8			137
Other current assets			(499	)		(238	)
Other assets			(57	)		124
	Increase (decrease) in:
Accounts payable			1,092			(1,264	)
Accrued expenses			(816	)		(4,774	)
Accrued interest payable			4,161			4,350
Deferred income			(953	)		(1,787	)
Other noncurrent liabilities			(426	)		(1,410	)

	Net cash provided by operating activities		11,451			2,244

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(2,036	)		(2,452	)
Deferred purchase price from purchase of business			(377	)		(529	)

	Net cash used in investing activities		(2,413	)		(2,981	)

CASH FLOWS FROM FINANCING ACTIVITIES:
(Payment) advance under revolving credit facility			(7,400	)		1,200
Payment of deferred finance costs			—			(1,408	)

	Net cash used in financing activities		(7,400	)		(208	)

	Net increase (decrease) in cash		1,638			(945	)

CASH, beginning of period			824			2,377

CASH, end of period		$	2,462		$	1,432

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period:
	Income taxes	$	7		$	13

	Interest	$	9,988		$	8,349

The accompanying notes to the consolidated financial statements are an integral part of these statements.

American Lawyer Media, Inc.
Notes To Consolidated Financial Statements
September 30, 2003
(unaudited)

1. ORGANIZATION & OPERATIONS

American Lawyer Media, Inc. (“we,” “us,” “our” or the “Company”) is a wholly-owned subsidiary of American Lawyer Media Holdings, Inc. (“Holdings”). We publish national and regional legal publications, including The American Lawyer, New York Law Journal, The National Law Journal and Corporate Counsel. Our operations are based in New York with regional offices in eight states, the District of Columbia and London, England.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the interim financial statements include all adjustments, which are of a normal recurring nature, that management considers necessary to fairly present the financial position and the results of operations for such periods. Results of operations of interim periods are not necessarily indicative of results for a full year. These financial statements should be read in conjunction with the audited consolidated financial statements in our Annual Report on Form 10-K for December 31, 2002.

Principles of Consolidation

The consolidated financial statements include the accounts of American Lawyer Media, Inc. and our wholly-owned subsidiaries which, unless the context otherwise requires, are collectively referred to herein as “we,” “us,” “our,” or the “Company”. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

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 and to disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of

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