-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PbhYVF23NbEe6mOi/pF+zT0NIseLL1Wmy0U1ZVFWsEETacJWR3+WvwK9Gj483a2w 5Pa/B62rFTy/nfE28PysIQ== /in/edgar/work/20000815/0000071023-00-000020/0000071023-00-000020.txt : 20000922 0000071023-00-000020.hdr.sgml : 20000921 ACCESSION NUMBER: 0000071023-00-000020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NELSON THOMAS INC CENTRAL INDEX KEY: 0000071023 STANDARD INDUSTRIAL CLASSIFICATION: [2731 ] IRS NUMBER: 620679364 STATE OF INCORPORATION: TN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13788 FILM NUMBER: 701355 BUSINESS ADDRESS: STREET 1: 501 NELSON PLACE CITY: NASHVILLE STATE: TN ZIP: 37214-1000 BUSINESS PHONE: 6158899000 MAIL ADDRESS: STREET 1: P O BOX 141000 CITY: NASHVILLE STATE: TN ZIP: 37214-1000 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL PUBLISHERS INC DATE OF NAME CHANGE: 19721019 10-Q 1 0001.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 June 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-4095 THOMAS NELSON, INC. (Exact name of Registrant as specified in its charter) Tennessee 62-0679364 (State or other jurisdiction of (I.R.S.Employer incorporation or organization) Identification number) 501 Nelson Place,Nashville, Tennessee 37214-1000 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (615)889-9000 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 [ ] At August 10, 2000, the Registrant had outstanding 13,145,400 shares of Common Stock and 1,085,801 shares of Class B Common Stock. PART I Item 1. Financial Statements THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands)
June 30, March 31, June 30, 2000 2000 1999 (Unaudited) (Unaudited) ----------- ----------- ----------- ASSETS Current assets Cash and cash equivalents $ 1,396 $ 814 $ 940 Accounts receivable, Less allowances of $6,307, $7,171 and $5,908, respectively 74,704 79,052 73,658 Inventories 88,096 74,809 71,070 Prepaid expenses 16,166 13,652 13,370 Assets held for sale 19,839 22,168 - Deferred tax assets 9,679 9,679 6,715 ----------- ----------- ----------- Total current assets 209,880 200,174 165,753 Property, plant and equipment, net 17,718 17,423 25,645 Other assets 8,241 9,904 9,359 Deferred charges 791 959 1,193 Goodwill 70,258 69,770 58,515 ----------- ----------- ----------- TOTAL ASSETS $306,888 $298,230 $260,465 =========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 33,734 $ 27,350 $ 16,513 Accrued expenses 12,917 16,142 14,526 Deferred revenue 8,448 6,553 22 Dividends payable 569 569 569 Income taxes payable 1,042 3,851 276 Current portion of long- term debt & capital lease obligations 5,893 7,592 4,787 ----------- ----------- ---------- Total current liabilities 62,603 62,057 36,693 Long-term debt 108,237 100,359 93,024 Deferred tax liabilities 2,606 2,606 4,432 Other liabilities 1,444 1,476 1,505 Shareholders' equity Preferred stock, $1.00 par value, authorized 1,000,000 shares; none issued - - - Common stock, $1.00 par value, authorized 20,000,000 shares; issued 13,145,400, 13,144,776 and 13,123,260, respectively 13,145 13,145 13,123 Class B common stock, $1.00 par value, authorized 5,000,000 shares; issued 1,085,801, 1,085,819 and 1,101,524 shares, respectively 1,086 1,086 1,102 Additional paid-in capital 43,126 43,126 43,054 Retained earnings 74,641 74,375 67,532 ----------- ----------- ---------- Total shareholders' equity 131,998 131,732 124,811 ----------- ----------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $306,888 $298,230 $260,465 =========== =========== ========== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data)
Three Months Ended June 30, 2000 1999 ------------------------- NET REVENUES $ 65,430 $ 59,116 COST AND EXPENSES: Cost of goods sold 36,943 33,283 Selling, general and administrative 24,627 21,779 Amortization of goodwill and non-compete agreements 619 383 ------------------------ Total expenses 62,189 55,445 ------------------------ OPERATING INCOME 3,241 3,671 Other income(expense) (210) 22 Interest expense 1,819 1,520 ------------------------ Income before income taxes 1,212 2,173 Provision for income taxes 376 793 ------------------------ NET INCOME $ 836 $ 1,380 ======================== Weighted average number of shares outstanding: Basic 14,231 14,279 ======================== Diluted 14,259 14,285 ======================== NET INCOME PER SHARE: Basic $ 0.06 $ 0.10 ======================== Diluted $ 0.06 $ 0.10 ======================== DIVIDENDS DECLARED PER SHARE $ 0.04 $ 0.04 ======================== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Three Months Ended June 30, ------------------------------ 2000 1999 ------------------------------ (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 836 $ 1,380 Adjustments to reconcile net income to net cash used in operations: Depreciation and amortization 2,200 1,975 Loss on sale of fixed assets and assets held for sale 261 - Changes in assets and liabilities, net of acquisitions and disposals: Accounts receivable, net 4,348 4,672 Inventories (13,287) ( 2,912) Prepaid expenses ( 2,514) ( 496) Accounts payable and accrued expenses 3,159 ( 6,520) Deferred revenues 1,895 - Income taxes currently payable and deferred ( 2,809) ( 2,517) ----------------------------- Net cash used in continuing operations ( 5,911) ( 4,418) ----------------------------- Discontinued operations: Changes in discontinued assets - 2 Cash provided by discontinued operations - 50 ----------------------------- Net cash provided by discontinued operations - 52 ----------------------------- Net cash used in operating activities ( 5,911) ( 4,366) ----------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 1,328) ( 337) Proceeds from sale of fixed assets and assets held for sale 2,011 157 Purchase of net assets of acquired companies - net of cash received ( 760) ( 6,151) Changes in other assets and deferred charges 992 317 ----------------------------- Net cash provided by (used in) investing activities 915 ( 6,014) ----------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under line of credit 10,500 13,581 Payments on capital lease obligations - ( 5) Payments on long-term debt ( 4,321) ( 727) Dividends paid ( 569) ( 576) Proceeds from issuance of common stock - - Common stock repurchased and retired - ( 1,649) Other financing activities ( 32) 87 ----------------------------- Net cash provided by financing activities 5,578 10,711 ----------------------------- Net increase in cash and cash equivalents 582 331 Cash and cash equivalents at beginning of period 814 609 ----------------------------- Cash and cash equivalents at end of period $ 1,396 $ 940 ============================= Supplemental disclosures of non-cash investing and financing activities: Dividends accrued and unpaid $ 569 $ 569
THOMAS NELSON, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note A - Basis of Presentation The accompanying unaudited consolidated financial statements reflect all adjustments (which are of a normal recurring nature) that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to SEC rules and regulations. The statements should be read in conjunction with the Summary of Significant Accounting Policies and notes to the consolidated financial statements included in the Company's annual report for the year ended March 31, 2000. The consolidated balance sheet and related information in these notes as of March 31, 2000, have been taken from the audited consolidated financial statements as of that date. Certain reclassifications have been made to conform presentation of the fiscal 2000 financial statements with fiscal 2001 presentation. Note B - New Pronouncements In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", effective, as amended, for fiscal years beginning after June 15, 2000. SFAS No. 133 establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS No. 133 requires all derivatives to be recognized in the statement of financial position and to be measured at fair value. The Company anticipates adopting the provisions of SFAS No. 133 effective April 1, 2001 and is continuing to determine the effects of SFAS No. 133 on the Company's financial statements. Note C - Inventories Components of inventories consisted of the following (in thousands):
June 30, March 31, June 30, 2000 2000 1999 ------------------------------------- Finished goods $ 85,017 $ 66,261 $ 64,705 Raw materials and work in process 3,079 8,548 6,365 ------------------------------------- $ 88,096 $ 74,809 $ 71,070 =====================================
Note D - Cash Dividend On May 25, 2000, the Company's board of directors declared a cash dividend of $.04 per share of Common and Class B Common Stock. The dividend is payable August 21, 2000, to shareholders of record on August 7, 2000. Note E - Operating Segments The Company adopted SFAS No. 131, "Disclosure About Segments of an Enterprise and Related Information", at March 31, 1999, which changes the way the Company reports information about its operating segments. The Company is organized and managed based upon its products. The Company has two reportable business segments, identified as publishing and gift. The publishing segment primarily creates and markets Bibles, inspirational books, videos and hosts inspirational seminars for women. The gift segment primarily designs and markets gift products, including stationery items, albums, journals, candles, etc. Summarized financial information concerning the Company's reportable segments is shown in the following table. The "Other" column includes corporate related items not allocated to reportable segments (in thousands).
Three Months Ended Publishing Gift Other Total - ---------------------------------------------------------------------- June 30, 2000: Revenues $ 46,905 $ 18,525 $ 0 $ 65,430 Operating income 3,922 ( 681) 0 3,241 June 30, 1999: Revenues $ 39,386 $ 19,730 $ 0 $ 59,116 Operating income 3,402 269 0 3,671 As of June 30, 2000: Identifiable assets 133,165 78,392 95,331 306,888 As of June 30, 1999: Identifiable assets: 124,067 71,167 65,231 260,465
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW The following table sets forth for the periods indicated certain selected statements of operations data of the Company expressed as a percentage of net revenues and the percentage change in dollars in such data from the prior fiscal year.
Three Months Ended Fiscal June 30, Year-to-Year ------------------- Increase 2000 1999 (Decrease) ------------------------------------ (%) (%) (%) Net revenues: Publishing 71.7 66.6 19.1 Gift 28.3 33.4 ( 6.1) ------------------------------------ Total net revenues 100.0 100.0 10.7 ------------------------------------ Expenses: Cost of goods sold 56.5 56.3 11.0 Selling, general and administrative 37.6 36.8 (13.1) Amortization of goodwill and non-compete agreements 0.9 0.7 (61.6) ------------------------------------ Total expenses 95.0 93.8 12.2 ------------------------------------ Operating income 5.0 6.2 (11.7) ==================================== Net income 1.3 2.3 (39.4) ====================================
The Company's net revenues fluctuate seasonally, with net revenues in the first fiscal quarter historically being lower than those for the remainder of the year. This seasonality is the result of increased consumer purchases of the Company's products during the traditional holiday periods. Due to this seasonality, the Company has historically incurred a loss or recognized only a small profit during the first quarter of each fiscal year. In addition, the Company's quarterly operating results may fluctuate significantly due to the seasonality of new product introductions, the timing of selling and marketing expenses and changes in sales and product mixes. The following discussion includes certain forward-looking statements. Actual results could differ materially from those reflected by the forward-looking statements and a number of factors may affect future results, liquidity and capital resources. These factors include softness in the general retail environment, the timing of products being introduced into the market, the level of returns experienced by operating divisions, the level of margins achievable in the marketplace and the ability to minimize operating expenses. Although the Company believes it has the business strategy and resources needed for improved operations, future revenue and margin trends cannot be reliably predicted and may cause the Company to adjust its business strategy during the remainder of fiscal 2001. The Company disclaims any intent or obligation to update forward-looking statements. Results of Operations - --------------------- Net revenues for the first three months of fiscal 2001 increased $6.3 million, or 10.7%, over the same period in fiscal 2000. The publishing product net revenues increased $7.5 million, or 19.1%, compared to the prior year primarily due to revenues generated by the recently acquired operations of Women of Faith and Rutledge Hill Press and a strong performance by our core publishing groups across the board. Net revenues from gift products decreased $1.2 million, or 6.1%, primarily due to product availability and distribution issues in the month of April, which the stronger sales permance in May and June did not fully offset. Price increases did not have a material effect on net revenues. The Company's cost of goods sold for the first three months of fiscal 2001 increased by $3.7 million, or 11.0%, over the same period in fiscal 2000 and, as a percentage of net revenues, increased to 56.5% for the first three months of fiscal 2001 from 56.3% in the comparable period in fiscal 2000. This small increase in cost of goods sold as a percentage of net revenues is due to a slight shift in product mix from higher margin book products to lower margin Bible products. Selling, general and administrative expenses for the first three months of fiscal 2001 increased by $2.8 million, or 13.1%, from the same period in fiscal 2000 and as a percentage of net revenues, increased to 37.6% for the first three months of fiscal 2001 versus 36.8% in the same period in fiscal 2000. The increase in selling, general and administrative expenses in dollars and as a percentage of net revenues is directly related to the three prior year acquisitions of Ceres, Rutledge Hill Press and Women of Faith, which were not included in the Company's operations during the first quarter of fiscal 2000. Each of these operations went through its seasonally weakest period in the first quarter. Interest expense for the first three months of fiscal 2001 increased by $299,000, or 19.7%, over the same period in fiscal 2000. The increase in interest expense is directly related to borrowings associated with the three prior year acquisitions. Liquidity and Capital Resources - ------------------------------- At June 30, 2000, the Company had $1.4 in cash and cash equivalents. The primary sources of liquidity to meet the Company's future obligations and working capital needs are cash generated from operations and borrowings available under bank credit facilities. At June 30, 2000, the Company had working capital of $147.3 million. Net cash used in operating activities was $5.9 million and $4.4 million for the first three months of fiscal 2001 and 2000, respectively. Cash used in operations during the first three months of fiscal 2001 was principally attributable to increases in inventory. Inventories grew by $17 million from last year. Approximately $5 million of the increase is attributable to inventories of acquired operations discussed above. Gift and Publishing inventories increased by approximately $8 million and $4 million, respectively. The Gift increase resulted from the Company's move to outsource manufacturing of gift products, coupled with a desire to minimize fill rate issues encountered in the fourth quarter of fiscal 2000. Publishing increases occurred in the Bible area, where the Company also sought to improve fill rates. During the first three months of fiscal 2001, capital expenditures totaled approximately $1.3 million, which was used primarily to purchase computer and warehousing equipment. During the remainder of fiscal 2001, the Company anticipates capital expenditures of approximately $2.7 million, primarily consisting of additional computer and warehousing equipment. The Company's bank credit facilities are unsecured and consist of a $100 million credit facility and a $10 million credit facility (collectively, the "Credit Agreements"). The $100 million credit facility bears interest at either the prime rate or, at the Company's option, LIBOR plus a percentage, subject to adjustment based on certain financial ratios, and matures on December 13, 2005. The $10 million credit facility bears interest at LIBOR plus a percentage, subject to adjustment based on certain financial ratios and matures on July 31, 2001. At June 30, 2000, the Company had $94 million of borrowings outstanding under the Credit Agreements, and $16 million available for borrowing. Due to the seasonality of the Company's business, borrowings under the Credit Agreements typically peak during the third quarter of the fiscal year. The increase in long-term debt at June 30, 2000, over the prior year is primarily attributable to the acqusisions of Rutledge Hill Press and Women of Faith, which occurred in the third and fourth quarters of fiscal 2000, respectively. At June 30, 2000, the Company had outstanding approximately $15.5 million of unsecured senior notes ("Senior Notes"). The Senior Notes bear interest at rates from 6.68% to 9.50% due through fiscal 2008. Under the terms of the Credit Agreements and the Senior Notes, the Company has agreed to limit the payment of dividends and to maintain certain interest coverage and debt-to-total-capital ratios which are similarly calculated for each debt agreement. At June 30, 2000, the Company was in compliance with all covenants of these debt agreements, as amended. Management believes cash generated by operations and borrowings available under the Credit Agreements will be sufficient to fund anticipated working capital requirements for existing operations through the remainder of fiscal 2001. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes in the Company's investment strategies, types of financial instruments held or the risks associated with such instruments which would materially alter the market risk disclosures made in the Company's Annual Report on Form 10-K for the year ended March 31, 2000. PART II Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits required by Item 601 of Regulation S-K Exhibit 11 - Statement re Computation of Per Share Earnings Exhibit 27 - Financial Data Schedule (b) No Form 8-K was filed by the Company during the quarter ended June 30, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Thomas Nelson, Inc. (Registrant) August 14, 2000 BY /s/ Joe L. Powers - ------------------------ ------------------------------- Joe L. Powers Executive Vice President (Principal Financial and Accounting Officer) INDEX TO EXHIBITS Exhibit Number - ----------- 11 -- Statement re Computation of Per Share Earnings 27 -- Financial Data Schedule (for SEC purposes only) EX-27 2 0002.txt
5 This schedule contains summary financial information extracted from the Company's 10-Q for the period ended June 30, 2000, and is qualified in its entirety by reference to such financial statements and the notes thereto. 1,000 3-MOS MAR-31-2001 APR-01-2000 JUN-30-2000 1,396 0 81,011 6,307 88,096 209,880 41,870 24,152 306,888 62,603 108,237 14,231 0 0 117,767 306,888 64,688 65,430 36,943 61,570 619 291 1,819 1,212 376 836 0 0 0 836 0.06 0.06
EX-11 3 0003.txt EXHIBIT 11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (Dollars and Shares in thousands, except per share data)
Three Months Ended June 30, 2000 1999 ------------- ------------ (Unaudited) (Unaudited) BASIC EARNINGS PER SHARE: Weighted average shares outstanding 14,231 14,279 ========== ========== Net income $ 836 $ 1,380 ========== ========== Net income per share $ 0.06 $ 0.10 ========== ========== DILUTED EARNINGS PER SHARE: Weighted average shares outstanding 14,231 14,279 Dilutive effect of common stock options 28 6 ---------- ---------- Total shares 14,259 14,285 ========== ========== Net income $ 836 $ 1,380 ========== ========== Net income per share $ 0.06 $ 0.10 ========== ==========
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