10-K 1 mar2001k.txt FORM 10-K FOR 3/31/2001 =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2001 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 identification number) incorporation or organization) 501 Nelson Place, Nashville, Tennessee 37214-1000 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (615) 889-9000 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered ------------------- ------------------------ Common Stock, Par Value $1.00 per share New York Stock Exchange Class B Common Stock, Par Value $1.00 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 requirement 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 the 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. [ ] As of June 25, 2001, the Registrant had outstanding 13,285,827 shares of Common stock and 1,057,401 of Class B common stock. On such date the aggregate market value of shares of common stock and Class B common stock held by nonaffiliates was approximately $101.2 million. The market value calculation was determined using the closing sale price of the Registrant's common stock and Class B common stock on June 25, 2001, as reported on The New York Stock Exchange, and assumes that all shares beneficially held by executive officers and the directors of the Registrant and shares held in the Thomas Nelson Employee Stock Ownership Plan are shares owned by "affiliates," a status which each of such officers and directors individually disclaims. =============================================================================== DOCUMENTS INCORPORATED BY REFERENCE Documents from which portions Part of Form 10-K are incorporated by reference ------------------------------------- ------------------------------------- PART I ------ Business Page 30 of Annual Report to Shareholders for year ended March 31, 2001 PART II ------- Item 5 - Market for Company's Common Page 31 of Annual Report to Equity and Related Shareholders for year ended Shareholder Matters March 31, 2001 (market price and dividend on only) Item 6 - Selected Financial Data Page 9 of Annual Report to Shareholders for year ended March 31, 2001 Item 7 - Management's Discussion and Pages 10 to 13 of Annual Report to Analysis of Financial Shareholders for year ended Condition and Results March 31, 2001 of Operations Item 7A - Quantitative and Qualitative Page 13 of Annual Report to Disclosures about Market Shareholders for year ended Risk March 31, 2001 Item 8 - Financial Statements and Pages 14 to 31 of Annual Report to Supplementary Data Shareholders for year ended March 31, 2001 PART III -------- Item 10 - Directors and Executive To be included in Company's Proxy Officers of the Company Statement for the Annual Meeting of Shareholders to be held August 23, 2001, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. Item 11 - Executive Compensation To be included in Company's Proxy Statement for the Annual Meeting of Shareholders to be held August 23, 2001, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. Item 12 - Security Ownership of To be included in Company's Proxy Certain Beneficial Owners Statement for the Annual and Management Meeting of Shareholders to be held August 23, 2001, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. Item 13 - Certain Relationships and To be included in Company's Proxy Related Transactions Statement for the Annual Meeting of Shareholders to be held August 23, 2001, to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. PART I Item 1. Business Thomas Nelson, Inc. (the "Company") is a leading publisher, producer and distributor of books emphasizing Christian, inspirational and family value themes, and believes it is the largest commercial publisher of the Bible in English language translations. The Company also designs and markets a broad line of gift and stationery products. The Company believes it is the largest publisher of Christian and inspirational books in the United States and is a major supplier of gift and stationery items. On April 23, 2001, the Company announced that it is actively exploring various strategic alternatives, including the possible merger, sale or recapitalization of its wholly-owned subsidiary, The C.R. Gibson Company. This subsidiary includes the Company's gift product segment. In December, 2000, the Company discontinued its Ceres Candles and Gifts, Inc. ("Ceres") subsidiary and has reported the results from that unit as a discontinued operation. Ceres designs and manufactures high quality candles, primarily under private labels for the specialty and department store markets. It was determined that the full integration of this newly-acquired division was too much of a distraction from the current focus of improving the gift division's long-term profitability. The consolidated financial statements for fiscal years 2001 and 2000 have been restated to show the results of Ceres as a discontinued operation. For fiscal year 2001, the loss from discontinued 0perations (net of tax), including estimated loss on disposal was $8.6 million, compared to an operating loss of $1.0 million for fiscal 2000. During fiscal 2000, the Company completed three business acquisitions. On June 24, 1999, the Company acquired substantially all of the assets of Ceres LLC ("Ceres") for approximately $6.2 million, which included the assumption of certain liabilities. Ceres manufactures and markets high quality candles to specialty and department store markets and is headquartered in Hayward, California. On December 30, 1999, the Company acquired substantially all of the assets of Rutledge Hill Press, Inc. for approximately $4.5 million including the assumption of certain liabilities. Rutledge Hill Press is a Nashville, Tennessee-based publisher that specializes in cooking, quilting, regional interest and Civil War titles. On January 28, 2000, the Company acquired approximately 70% of the outstanding shares of New Life Treatment Centers, Inc. ("NLTC") from a group of investors for approximately $15.4 million in cash. NLTC, headquartered in Plano, Texas, operates two primary businesses. One, Women of Faith, hosts inspirational conferences for women at venues throughout the United States, and the other, Remuda Ranch Center for Anorexia and Bulimia, Inc. ("Remuda Ranch"), operates therapeutic centers in Arizona for women with eating disorders. At the NLTC acquisition date, Remuda Ranch was designated as assets held for sale. During fiscal 2001, the Company paid approximately $0.8 million in cash and issued approximately 108,000 shares of the Company's common stock to acquire an additional 10% of the outstanding shares of NLTC, and, as of March 31, 2001, accepted additional shares of NLTC in lieu of notes receivable from a third party affiliate. At March 31, 2001, the Company owned approximately 95% of the outstanding shares of NLTC. During fiscal 1999, the Company recorded a restructuring charge, including related asset write-downs of $4.7 million ($3 million or $0.19 per basic share, on an after-tax basis). The restructuring initiatives involved the Company's gift manufacturing operations located in Connecticut and included two plant closings and reduction of certain administrative functions. During fiscal 1999, management decided to cease all manufacturing activities in Connecticut. The restructuring resulted in workforce reductions of approximately 300 employees. The products formerly produced at these manufacturing facilities have continued to be designed and distributed by the Company, but are now being manufactured by outside vendors. The restructuring was essentially completed during fiscal 2000, except for the sale of land and buildings, which was completed by March 31, 2001. The following table sets forth the net revenues (in thousands) and the percentage of total net revenues for each of the Company's principal product segments for the periods indicated:
Years Ended March 31, --------------------------------------------------- 2001 2000 1999 --------------------------------------------------- Amount % Amount % Amount % --------------------------------------------------- Publishing $214,147 71.9 $182,001 68.6 $173,904 64.3 Gift 83,818 28.1 83,467 31.4 96,667 35.7 --------------------------------------------------- $297,965 100.0 $265,468 100.0 $270,571 100.0
Additional information regarding the Company's product segments is incorporated by reference to Note T on page 32 of the Annual Report to Shareholders for the year ended March 31, 2001. PUBLISHING The Company's book publishing division publishes and distributes hardcover and trade paperback books emphasizing Christian, inspirational and family value themes. The Company believes it is the largest publisher of Christian and inspirational books in the United States. Books are published by the Company under several imprints including Thomas Nelson(R), Word(R), J. Countryman(R), Tommy Nelson(TM), and Rutledge Hill Press(R), and consist generally of inspirational, trade, gift, children's and reference books emphasizing Christian and family value themes. The Company distributes books primarily through Christian bookstores, general bookstores, mass merchandisers and direct sales to consumers. Occasionally, the Company also distributes books published by other companies to complement its marketing and distribution capabilities. In fiscal 2001, publishing net revenues realized from the distribution of books published by other companies was immaterial. Women of Faith, acquired in the fourth quarter of fiscal 2000, hosts inspirational conferences and has an Internet portal, womenoffaith.com. Both are designed to foster a community setting for Christian women and to provide a forum for them to explore and strengthen their faith. In calendar year 2000, Women of Faith hosted 24 conferences throughout the United States, which attracted over 360,000 participants. Womenoffaith.com has built a base of over 120,000 subscribers in 16 months and receives over 2 million page views per month. The events and the Internet site both provide excellent opportunities to market and sell inspirational products. In fiscal 2001, 2000 and 1999, the Company released over 200 new book titles annually. The Company publishes some of the most well-known communicators in the Christian and inspirational field, including Henry Blackaby, T. Davis Bunn, Larry Burkett, James Dobson, Billy Graham, John Hagee, Barbara Johnson, Thomas Kinkade, Tim LaHaye, Ann Graham Lotz, Max Lucado, John MacArthur, John Maxwell, Frank Peretti, Robert Schuller, Gary Smalley, Charles Stanley, Charles Swindoll and Zig Ziglar. In addition, the Company maintains a backlist of approximately 1,100 titles, which provide a stable base of recurring revenues as many popular titles continue to generate significant sales from year to year. Backlist titles accounted for approximately 44% of the book division's net revenues in fiscal 2001. Authors and titles are supported through the use of radio, television, cooperative advertising, author appearances, in-store promotions, print advertising and other means. The Company's book publishing business is enhanced by the breadth and development of its marketing and distribution channels. In addition to enhancing sales of its products, the Company believes its ability to sign and renew contracts with popular authors is improved because the Company's marketing and distribution capabilities provide exposure for the authors' books to a broader audience than its competitors. See "Marketing, Distribution and Production." The Company believes it is the largest commercial publisher of English translations of the Bible. The Bible is based on ancient manuscripts, which are the surviving reproductions of the original writings. These manuscripts, written in Hebrew, Aramaic or Greek, have been translated into English and other modern languages by biblical scholars and theologians, generally under the auspices of a major Bible society or translation organization. Each of the many English translations available differs in some degree from the others, primarily because of different translation guidelines and principles used as the basis for each translation. The distinctiveness of each translation is also, in part, a result of the evolution of the meaning and use of words within the English language. Virtually all Bibles and Bible products currently published in the United States are based on one of 13 major translations. Of these 13 translations, 12 are protected by copyright laws, which grant the copyright owner the exclusive right, for a limited term, to control the publication of such translation. The Company publishes Bibles and Bible products based on eight of the thirteen major translations, of which three are exclusive to the Company as a result of copyright ownership or licensing arrangements. See "Copyrights and Royalty Agreements." Approximately 55% of the Company's net revenues from Bible publishing in fiscal 2001 were generated through sales of its proprietary Bible products. The following table sets forth the eight major Bible translations, in the English language, currently published by the Company:
Date First Proprietary Translation Published to the Company ----------- ---------- -------------- King James Version (KJV) 1611 No New American Bible (NAB) 1970 No Revised Standard Version, Catholic Edition (RSVCE) 1965 No New King James Version (NKJV) 1982 Yes International Children's Bible (ICB) 1983 Yes New Century Version (NCV) 1984 Yes New Revised Standard Version (NRSV) 1990 No New Living Translation (NLT) 1996 No
The KJV, currently published in its fourth revision, is the most widely distributed of all English translations of the Bible. In 1975, the Company commissioned the fifth revision of the KJV resulting in the publication of the proprietary NKJV in 1982. During March 2000, the Company returned the exclusive rights to the CEV to the American Bible Society. Electronic Bibles and biblical reference books are published under the Nelson Electronic Publishing(TM) imprint. These products include electronic collections centered on Bible study; electronic libraries featuring well-known authors, such as Jack Hayford, John MacArthur, John Maxwell and Charles Stanley; and software for preparing Bible study lessons. The Company has achieved a leadership position in the industry with its electronic publications, and is aggressively pursuing new digital formats of publication and distribution as they develop, such as the Internet, and emerging portable book technologies. The Company continually seeks to expand its Bible product line by developing or aiding in the development of new translations and editions and seeking new publishing opportunities. The Company also continually makes editorial, design and other changes to its existing line of Bibles and other Bible products in an effort to increase their marketability. The Company currently publishes over 1,100 different Bibles and biblical reference products such as commentaries, study guides and other popular Bible help texts. Styles range from inexpensive paperbacks to deluxe leather-bound Bibles to CD-Rom. Different editions of a particular Bible translation are created by incorporating extra material, such as study helps, concordances, indices and Bible outlines, or artwork, into the biblical text. These editions (which are generally proprietary to the Company regardless of whether or not the Company holds proprietary rights to the underlying Bible translation) are targeted to the general market or positioned for sale to specific market segments. GIFT The Company's gift division designs and distributes journals and gift books, photo albums, baby and wedding memory books, scrapbooks, kitchen accessories, stationery and candles. Products are marketed under the C.R. Gibson(R), Creative Papers(R), C.R. Gibson(R)Kids Kollection(TM), Tomorrow's Treasures(TM), Stepping Stones(R), Artworks and Inspirations(R) brand names, the latter of which incorporates Christian and inspirational text or themes. Certain product lines are marketed as collections, with each collection including a variety of products featuring a common design or theme. Designs include original artwork designed in-house, as well as artwork licensed from artists or design groups such as Beatrix Potter(R), Carter's(R) Infant Apparel, Disney(R), Echo(R), Warren Kimble, and Spode(R). MARKETING, DISTRIBUTION AND PRODUCTION The principal market channels through which the Company markets its products domestically are Christian bookstores, which are primarily independently owned; general bookstores, including national chains such as Barnes & Noble and Borders; specialty gift and department stores, such as SteinMart and May Company; mass merchandisers such as Target, K-Mart, Wal-Mart and Sam's Wholesale Club; and directly to consumers through direct mail, telemarketing, inspirational seminars and the Internet. The Company services these market channels through its sales force and through wholesalers or jobbers servicing bookstores, gift stores, other retail outlets and libraries. In addition, the Company sells certain of its products for promotional purposes and sells specially designed or imprinted products to certain customers. The Company's direct marketing operations sell publishing products directly to approximately 100,000 customers consisting of churches, other religious organizations, pastors and other individuals by direct mail and telemarketing. Retail sales also are made during the summer months on a door-to-door, cash sales basis through a student sales organization operated by the Company. As of March 31, 2001, the Company employed a sales force of approximately 270 people and maintained 24-hour-a-day telemarketing capability. These employees service over 53,000 retail accounts and 44,000 church related accounts. Customer orders are usually shipped through a variety of common carriers, as well as by UPS, FedEx and parcel post. No single customer accounted for more than 10% of net revenues during fiscal 2001. The Company contracts with a number of foreign publishers to translate the Company's English titles into foreign languages. The Company typically retains ownership rights to the titles translated. The Company distributes its products internationally in South America, Europe, Australia, New Zealand, South Africa, the Far East, Mexico and Canada. In fiscal 2001, the Company's export operations accounted for less than 10% of the Company's total net revenues. Substantially all of the Company's products are manufactured by domestic and foreign commercial printers, binders and manufacturers which are selected on the basis of competitive bids. The Company may contract separately for paper and certain other supplies used by its manufacturers. COPYRIGHTS AND ROYALTY AGREEMENTS The Company customarily secures copyrights on its books and Bible editions in order to protect its publishing rights. Almost all of the Company's book products are published under royalty agreements with their respective authors or other copyright proprietors. Many of the Company's gift products incorporate copyrighted artwork, which is licensed directly from the artist or the owning entity under a royalty agreement. COMPETITION The Company believes that it is the largest publisher of Christian and inspirational books, the largest commercial publisher of Bibles in English language translations and a major designer of gift and stationery items. The publishing and gift divisions each compete with numerous other companies that publish and distribute Christian and inspirational books or design and distribute gift products, many of which have significantly longer operating histories and larger revenue bases than the Company and certain of which are tax-exempt organizations. While the Company's prices are comparable to those of its competitors, the Company believes that its breadth of product line, established market channels, established sales forces and customer service give it a competitive advantage. The most important factor with respect to the competitive position of the Company's publishing division is the contractual relationships it establishes and maintains with authors. The Company competes with other book publishing companies, both Christian and secular, for signing top authors. The Company's ability to sign and re-sign popular authors depends on a number of factors, including distribution and marketing capabilities, the Company's management team and the royalty and advance arrangements offered. The Company believes its relationships with its authors, which are based on its reputation in the publishing industry, its marketing experience and its management expertise give it a competitive advantage in signing and maintaining contracts with top Christian and inspirational authors. The Company's gift division has many competitors with respect to certain of its product lines, but the Company believes there are few competitors who distribute all of the Company's gift product lines. The gift division also competes with numerous religious publishers and suppliers, including tax-exempt church-owned organizations, in connection with the sale of its church supply products, and with numerous large and small companies in the sale of stationery products, gift wrap and paper tableware. EMPLOYEES As of March 31, 2001, the Company employed approximately 1,080 persons. The Company has not suffered any work stoppages as a result of labor disputes in recent years and considers relations with its employees to be good. EXECUTIVE OFFICERS Officers of the Company are elected by the Board of Directors and serve at the pleasure of the Board of Directors. Following is certain information regarding the executive officers of the Company:
Name Age Position with the Company ------------------------------------------------------------------------- Sam Moore 71 Chairman of the Board, Chief Executive Officer, President and Director S. Joseph Moore 38 Executive Vice President and Director; President, Thomas Nelson Gift Division Joe L. Powers 55 Executive Vice President and Secretary Lee Gessner 48 Executive Vice President, Thomas Nelson Publishing and Sales Group Ray Capp 48 Senior Vice President of the Company; Executive Vice President of the Thomas Nelson Direct Group of Companies Vance Lawson 42 Senior Vice President, Finance and Operations Group Eric Heyden 47 Vice President and General Counsel
Except as indicated below, each executive officer has been an employee of the Company as his/her principal occupation for more than the past five years. Sam Moore has been Chairman of the Board, Chief Executive Officer, President and a Director of the Company since its founding in 1961. Sam Moore is the father of S. Joseph Moore. S. Joseph Moore was appointed Executive Vice President and Director of the Company in 1995 and President of the Thomas Nelson Gift Division in 1996, and prior to such appointments, he served as Divisional Vice President of the Company in various capacities since 1991. S. Joseph Moore is the son of Sam Moore. Joe L. Powers was appointed Executive Vice President of the Company in 1995. Previously, Mr. Powers served as a Vice President of the Company since 1980. Lee Gessner was appointed Executive Vice President of the Company in December of 2000. Previously, Mr. Gessner served as Senior Vice President and Publishing Group Executive with Word Publishing, Publisher and COO of Word Publishing, Senior Vice President of Sales with the Thomas Nelson Publishing Group and Vice President of Sales with Word Publishing since 1989. Ray Capp was appointed Senior Vice President of the Company and Executive Vice President of Thomas Nelson Sales and Internet Development in 2000. Previously, Mr. Capp served as Senior Vice President of the Company since 1995. Prior to joining the Company, Mr. Capp was the President and Chief Operating Officer of Ingram Merchandising Services and Assistant to the Chairman of Ingram Distribution, Inc. since 1992 and Executive Vice President and Chief Operating Officer of Ingram Entertainment from 1987 to 1992. Vance Lawson was appointed Senior Vice President, Finance and Operations Group in 2000. Previously, Mr. Lawson served as Vice President, Finance of the Company since 1993 and had served as Senior Vice President of Finance and Operations at Word since 1988. Eric Heyden has been the Vice President and General Counsel of the Company since 1998, Vice President and Deputy General Counsel of the Company since 1997 and Assistant General Counsel of the Company since 1995. Mr. Heyden was previously Vice President and General Counsel with Knoedler Publishing, Inc. from 1985 to 1995. Item 2. Properties The Company's executive, editorial, sales and production offices are primarily located at its corporate headquarters at 501 Nelson Place in Nashville, Tennessee. These facilities are housed in a 74,000 square foot building completed in 1981, which is owned by the Company subject to a mortgage securing a debt with an outstanding balance at March 31, 2001 of approximately $1,126,000. The Company's major warehouse facilities for its publishing division are located in a building containing approximately 215,000 square feet adjacent to its corporate headquarters in Nashville, Tennessee. This building, which was completed in fiscal 1978, is owned by the Company. An addition to the warehouse and distribution center of approximately 120,000 square feet was completed during fiscal 1993. This addition was financed by a $5,000,000 construction and term loan secured by a mortgage with an outstanding balance of approximately $333,000 at March 31, 2001. The Company maintains offices and other warehousing facilities for its gift division in Beacon Falls, Connecticut (of approximately 112,000 square feet), which are owned by the Company. The Company's significant leased properties are described below:
Square Annual Lease Location Use/Segment Feet Rent Expiration ------------------------------------------------------------------------------- Carmel, IN Retail store/gift 12,500 $ 88,000 09/2004 Hayward, CA Manufacturing and offices/Ceres 54,600 $358,000 05/2005 Monroe, CT Warehousing/gift 114,000 $508,000 09/2005 Nashville, TN Creative and sales office/ 30,000 $357,000 11/2001 publishing and gift Nashville, TN Creative office/publishing 13,700 $284,000 09/2002 Nashville, TN Retail store/gift 3,804 $106,000 05/2007 Nashville, TN Warehousing/publishing 169,400 $599,000 12/2003 Norwalk, CT Warehouse and retail store/gift 28,000 $215,000 09/2001 Plano, TX Office/Women of Faith 16,409 $ 53,000 10/2010 Shelton, CT Warehousing/gift 152,000 $645,000 03/2002
All building improvements on the properties are brick veneer, metal or block construction and are considered adequate and suitable by the Company for the purposes for which they are used. The Company's machinery and equipment are located in Nashville, Tennessee and Beacon Falls, Monroe and Shelton, Connecticut and consist primarily of computer equipment, warehousing and shipping racks, conveyors and other material handling equipment located at the various warehousing facilities and office equipment. Such machinery and equipment are in good repair and adequate for the Company's present operations. All such equipment, other than a portion of the computer equipment that is leased, is owned by the Company. The Company's properties are operated at or near capacity. Additional personnel are employed as required. Item 3. Legal Proceedings Remuda Ranch has certain pending litigation and has received a subpoena from the Department of Defense, Office of the Inspector General, requesting information regarding patients who were covered by a certain third party insurance provider. At issue is whether Remuda Ranch was an authorized and participating provider and was precluded from billing the patients for the difference between the approved benefit and the full cost of the treatment received. Remuda Ranch has challenged whether it was, in fact, an authorized or participating provider at the time of these admissions and has denied that it is required to make any refunds. The Company believes that the results of the above noted litigation will not have a material adverse effect on the financial condition, results of operations or liquidity of the Company. The Company is subject to various other legal proceedings, claims and liabilities which arise in the ordinary course of its business. In the opinion of management, the amount of ultimate liability with respect to these actions will not materially affect the financial position or results of operations of the Company. Item 4. Submission of Matters to a Vote of Security Holders The Company did not submit any matter to a vote of its security holders during the last quarter of its fiscal year ended March 31, 2001. PART II Item 5. Market for the Company's Common Equity and Related Shareholder Matters Incorporated by reference to the Annual Report to Shareholders for the year ended March 31, 2001 (the "Annual Report"). Item 6. Selected Financial Data Incorporated by reference to the Annual Report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Incorporated by reference to the Annual Report. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Incorporated by reference to the Annual Report. Item 8. Financial Statements and Supplementary Data Incorporated by reference to the Annual Report. Includes selected unaudited quarterly financial data for the years ended March 31, 2001 and 2000. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Company Information regarding the directors of the Company and compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is incorporated by reference to the Company's Proxy Statement for the Annual Meeting of Shareholders to be held on August 23, 2001 (the "Proxy Statement"), to be filed within 120 days of March 31, 2001 with the Securities and Exchange Commission (the "Commission") pursuant to Regulation 14A under the Exchange Act. Information regarding the Company's executive officers is contained in Part 1, Item 1 herein. Item 11. Executive Compensation Incorporated by reference to the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management Incorporated by reference to the Proxy Statement. Item 13. Certain Relationships and Related Transactions Incorporated by reference to the Proxy Statement. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents filed as part of Report 1. Financial Statements The following consolidated financial statements of the Company included in the Annual Report are incorporated herein by reference as set forth in Part II, Item 8: Statements of operations -- years ended March 31, 2001, 2000 and 1999 Balance sheets -- March 31, 2001 and 2000 Statements of shareholders' equity -- years ended March 31, 2001, 2000 and 1999 Statements of cash flow -- years ended March 31, 2001, 2000 and 1999 Notes to consolidated financial statements Report of Arthur Andersen LLP, Independent Public Accountants 2. Financial Statement Schedules The following consolidated financial statement schedules are included herein: Page ---- Report of Arthur Andersen LLP, Independent Public Accountants 18 Schedule II -- Valuation and Qualifying Accounts and Reserves 19 Schedules not listed above have been omitted because they are not required,are inapplicable or the required information has been given in the consolidated financial statements or notes thereto. 3. Exhibits The following exhibits are included herein or incorporated by reference as indicated. Exhibit numbers refer to Item 601 of Regulation S-K. Exhibit Number ------- 3.1 -- Thomas Nelson, Inc. Amended and Restated Charter (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (No. 33-80086) and incorporated herein by reference) 3.2 -- Thomas Nelson, Inc. Amended Bylaws (filed as Exhibit 3.2 to the Company's Annual Report on Form 10-K for the year ended March 31, 1999 and incorporated herein by reference) 4.1 -- Loan Agreement dated May 18, 1990, between the Company and The Industrial Development Board of The Metropolitan Government of Nashville and Davidson County (filed as Exhibit 4(e) to the Company's Annual Report on Form 10-K for the year ended March 31, 1990 and incorporated herein by reference) 4.2 -- Promissory Note dated May 18, 1990, of the Company payable to The Industrial Development Board of the Metropolitan Government of Nashville and Davidson County (filed as Exhibit 4(f) to the Company's Annual Report on Form 10-K for the year ended March 31, 1990 and incorporated herein by reference) 4.3 -- Deed of Trust and Security Agreement dated May 18, 1990, from the Company to SunTrust Bank, Nashville, N.A. (filed as Exhibit 4.6 to the Company's Annual Report on Form 10-K for the year ended March 31, 1991 and incorporated herein by reference) 4.4 -- Construction and Term Loan Agreement dated March 31, 1992, between the Company and SunTrust Bank, Nashville, N.A. (filed as Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference) 4.5 -- Promissory Note dated March 31, 1992, of the Company payable to SunTrust Bank, Nashville, N.A. (filed as Exhibit 4.8 to the Company's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference) 4.6 -- Deed of Trust and Security Agreement dated March 31, 1992, from the Company to SunTrust Bank, Nashville, N.A. (filed as Exhibit 4.9 to the Company's Annual Report on Form 10-K for the year ended March 31, 1992 and incorporated herein by reference) 4.7 -- Amended and Restated Credit Agreement dated as of December 13, 1995, and as amended January 3, 1996, among the Company, SunTrust Bank, Nashville, N.A., National City Bank of Louisville, First American National Bank in Nashville, Nationsbank of Texas, N.A. in Dallas, and Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt- Bankverein) in New York (filed as Exhibit 4.1 to the Company's Form 10-Q for the quarter ended December 31, 1995 and incorporated herein by reference) 4.8 -- June 1996 Amendment and Waiver with Respect to Amended and Restated Credit Agreement Dated as of December 13, 1995, among the Company, SunTrust Bank, Nashville, N.A., National City Bank of Louisville, First American National Bank in Nashville, Nationsbank of Texas, N.A. in Dallas, and Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt-Bankverein) in New York (filed as Exhibit 4.12 to the Company's Annual Report on Form 10-K for the year ended March 31, 1996 and incorporated herein by reference) 4.9 -- Second Amendment to Credit Agreement dated as of November 15, 1996, among the Company, SunTrust Bank, Nashville, N.A., National City Bank of Louisville, First American National Bank in Nashville, Nationsbank of Texas, N.A. in Dallas, and Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt-Bankverein) in New York (filed as Exhibit 4.1 to the Company's Current Report on Form 8-K dated January 6, 1997 and incorporated herein by reference) 4.10 -- Third Amendment to Credit Agreement dated as of January 7, 1997, among the Company, SunTrust Bank, Nashville, N.A., National City Bank of Louisville, First American National Bank in Nashville, Nationsbank of Texas, N.A. in Dallas, and Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt-Bankverein) in New York (filed as Exhibit 4.2 to the Company's Current Report on Form 8-K dated January 6, 1997 and incorporated herein by reference) 4.11 -- Fourth Amendment to Credit Agreement dated as of March 31, 1998, among the Company, SunTrust Bank, Nashville, N.A., National City Bank of Louisville, First American National Bank in Nashville, Nationsbank of Texas, N.A. in Dallas, and Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt-Bankverein) in New York (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q dated September 30, 1998 and incorporated herein by reference) 4.12 -- Fifth Amendment to Credit Agreement dated as of November 30, 1998, among the Company, SunTrust Bank, Nashville, N.A., National City Bank of Louisville, First American National Bank in Nashville, Nationsbank of Texas, N.A. in Dallas, and Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt-Bankverein) in New York (filed as Exhibit 4.1 to the Company's Form 10-Q dated December 31, 1998 and incorporated herein by reference) 4.13 -- Note Purchase Agreement dated January 3, 1996, among the Company and Metropolitan Life Insurance Company (filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1995 and incorporated herein by reference) 4.14 -- Letter Amendment No. 1 dated June 28, 1996, to Note Purchase Agreement dated January 3, 1996, among the Company and Metropolitan Life Insurance Company and related waiver, dated as of March 31, 1996 (filed as Exhibit 4.14 to the Company's Annual Report on Form 10-K for the year ended March 31, 1996 and incorporated herein by reference) 4.15 -- Assumption and Amendment Agreement dated as of May 30, 1996, and as amended June 28, 1996, between the Company and Metropolitan Life Insurance Company (filed as Exhibit 4.15 to the Company's Annual Report on Form 10-K for the year ended March 31, 1996 and incorporated herein by reference) 4.16 -- Loan Agreement dated as of September 21, 1989 between C.R. Gibson and Metropolitan Life Insurance Company (filed by C.R. Gibson as Exhibit 4(c) to The C.R. Gibson Company's Registration Statement on Form S-2 (No. 33-43644) dated November 4, 1991 and incorporated herein by reference) 4.17 -- Loan Agreement dated as of June 23, 1994 between C.R. Gibson and Metropolitan Life Insurance Company (filed by C.R. Gibson (Commission File No. 0-4855) as Exhibit 4(b) to C.R. Gibson's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, filed with the Commission on March 14, 1995 and incorporated herein by reference) 4.18 -- Sixth Amendment to Credit Agreement dated as of June 29, 2001, among the Company, SunTrust Bank, Nashville, N.A., Bank of America, N.A. in Nashville, Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt-Bankverein) in New York, National City Bank, Kentucky in Louisville and Amsouth Bank in Nashville. 10.1 -- Thomas Nelson, Inc. Amended and Restated 1990 Deferred Compensation Option Plan for Outside Directors (filed as Exhibit 4.5 to the Company's Registration Statement on Form S-8 (No. 33-80086) dated June 13, 1994 and incorporated herein by reference)* 10.2 -- Thomas Nelson, Inc. Amended and Restated 1992 Employee Stock Incentive Plan (filed as Exhibit 4.6 to the Company's Proxy Statement dated July 26, 1995, for the Annual Meeting of Shareholders held on August 24, 1995 and incorporated herein by reference)* 10.3 -- Severance Agreement dated as of May 17, 1991, between the Company and Sam Moore (filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K for the year ended March 31, 1991 and incorporated herein by reference)* 10.4 -- Employment Agreement dated as of May 13, 1996, between the Company and Sam Moore (filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended March 31, 1996 and incorporated herein by reference)* 10.5 -- Employment Agreement dated as of May 10, 1996, between the Company and S. Joseph Moore (filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended March 31, 1996 and incorporated herein by reference)* 10.6 -- Employment Agreement dated as of May 10, 1996, between the Company and Joe L. Powers (filed as Exhibit 10.9 to the Company's Annual Report on Form 10-K for the year ended March 31, 1996 and incorporated herein by reference)* 10.7 -- Employment Agreement dated as of May 13, 1996, between the Company and Charles Z. Moore (filed as Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended March 31, 1996 and incorporated herein by reference)* 10.8 -- Employment Agreement dated as of December 22, 1994, between the Company and Raymond T. Capp (filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended March 31, 1995 and incorporated herein by reference)* 10.9 -- Employment Agreement dated as of June 23, 1993, between the Company and Vance Lawson (filed as Exhibit 10.13 to the Company's Annual Report on Form 10-K for the year ended March 31, 1994 and incorporated herein by reference)* 10.10 -- Employment Agreement dated as of July 10, 1995, between the Company and Eric Heyden (filed as Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended March 31, 1998 and incorporated herein by reference)* 10.11 -- Asset Purchase Agreement, dated as of November 21, 1996 by and among the Company, Word, Incorporated and Word Direct Partners, L.P. as Sellers and Gaylord Entertainment Company as Buyer (filed as Exhibit 2.1 to the Company's Form 8-K dated January 6, 1997 and incorporated herein by reference) 10.12 -- Amendment No. 1 to the Asset Purchase Agreement dated as of January 6, 1997, by and among the Company, Word, Incorporated and Word Direct Partners, L.P. as Sellers and Gaylord Entertainment Company as Buyer (filed as Exhibit 2.2 to the Company's Form 8-K dated January 6, 1997 and incorporated herein by reference) 10.13 -- Asset Purchase Agreement dated as of January 6, 1997, by and between Nelson Word Limited and Word Entertainment Limited (filed as Exhibit 2.3 to the Company's Current Report on Form 8-K dated January 6, 1997 and incorporated herein by reference) 10.14 -- Subsidiary Asset Purchase Agreement executed on January 6, 1997, and dated as of November 21, 1996, between Word Communications, Ltd. and Word Entertainment (Canada), Inc. (filed as Exhibit 2.4 to the Company's Current Report on Form 8-K dated January 6, 1997 and incorporated herein by reference) 10.15 -- Addendum to Employment Agreement dated as of May 13, 1996, between the Company and Sam Moore (executed on June 22, 2000) (filed as Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended March 31, 2000 and incorporated herein by reference)* 10.16 -- Addendum to Employment Agreement dated as of May 10, 1996, between the Company and S. Joseph Moore (executed on June 22, 2000) (filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended March 31, 2000 and incorporated herein by reference)* 10.17 -- Addendum to Employment Agreement dated as of May 10, 1996, between the Company and Joe L. Powers (executed on June 22, 2000) (filed as Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended March 31, 2000 and incorporated herein by reference)* 10.18 -- Thomas Nelson, Inc. 1997 Deferred Compensation Plan for Non-employee Directors (adopted on May 22, 1997) (filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended March 31, 2000 and incorporated herein by reference)* 11 -- Statement re Computation of Per Share Earnings 13 -- Thomas Nelson, Inc. Annual Report to Shareholders for the year ended March 31, 2001 (to the extent of portions specifically incorporated by reference) 21 -- Subsidiaries of the Company 23 -- Consent of Independent Public Accountants ------------------------------ *Management contract or compensatory plan or arrangement. (b) Reports on Form 8-K The following reports were filed on Form 8-K: - The Company filed a current report on Form 8-K on October 26, 2000 to revise its earnings expectations for the second quarter of fiscal year 2001. - The Company filed a current report on Form 8-K on November 1, 2000 to announce its fiscal year 2001 second quarter earnings. - The Company filed a current report on Form 8-K on January 30, 2001 to announce its fiscal year 2001 third quarter earnings release date and conference call. - The Company filed a current report on Form 8-K on April 23, 2001 to announce its intention to explore strategic alternatives related to The C.R. Gibson(R) Company. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. By: /s/ Sam Moore ------------------------ Sam Moore, Chief Executive Officer and President Date: June 29, 2001 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 Company and in the capacities and on the dates indicated.
Signature Title Date ------------- --------- -------- /s/ Sam Moore Chairman of the Board of June 29, 2001 ----------------------- Directors, Chief Executive Sam Moore Officer and President (Principal Executive Officer) /s/ S. Joseph Moore Executive Vice President June 29, 2001 ----------------------- and Director S. Joseph Moore /s/ Joe L. Powers Executive Vice President June 29, 2001 ----------------------- and Secretary (Principal Joe L. Powers Financial and Accounting Officer) /s/ Brownlee O. Currey, Jr. Director June 29, 2001 ----------------------- Brownlee O. Currey, Jr. /s/ W. Lipscomb Davis, Jr. Director June 29, 2001 ----------------------- W. Lipscomb Davis, Jr. /s/ Robert J. Niebel Director June 29, 2001 ----------------------- Robert J. Niebel /s/ Millard V. Oakley Director June 29, 2001 ----------------------- Millard V. Oakley /s/ Andrew Young Director June 29, 2001 ----------------------- Andrew Young
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Thomas Nelson, Inc.: We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated financial statements included in Thomas Nelson, Inc.'s annual report to shareholders incorporated by reference in this Form 10-K, and have issued our report thereon dated May 18, 2001. Our audit was made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. The schedule listed in the index is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and are not part of the basic consolidated financial statements. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. /s/ Arthur Andersen LLP ------------------------- Nashville, Tennessee May 18, 2001
THOMAS NELSON, INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES March 31, 2001 March 31, 2000 March 31, 1999 ---------------------------------------------------- Reserve for Sales Returns: Balance at beginning of period $5,071,000 $4,844,000 $3,934,000 Additions: 1. Charged to costs and expenses - 227,000 910,000 2. Charged to other accounts - - - Deductions: charge-offs 309,000 - - ---------------------------------------------------- Balance at end of period $4,762,000 $5,071,000 $4,844,000 ==================================================== Reserve for Doubtful Accounts: Balance at beginning of period $1,724,000 $2,138,000 $2,228,000 Additions: 1. Charged to costs and expenses 2,920,000 1,993,000 2,027,000 2. Charged to other accounts - 336,000 - Deductions: charge-offs 2,743,000 2,743,000 2,117,000 ---------------------------------------------------- Balance at end of period $1,901,000 $1,724,000 $2,138,000 ==================================================== Discontinued Operations: Balance at beginning of period $2,424,000 $2,705,000 $5,197,000 Additions: 1. Charged to costs and expenses - - - 2. Charged to other accounts - - - Deductions: charge-offs 459,000 281,000 2,492,000 ---------------------------------------------------- Balance at end of period $1,965,000 $2,424,000 $2,705,000 ==================================================== Restructuring: Balance at beginning of period $ - $3,067,000 $ - Additions: 1. Charged to costs and expenses - - 4,666,000 2. Charged to other accounts - - - Deductions: charge-offs - 3,067,000 1,599,000 ---------------------------------------------------- Balance at end of period $ - $ - $3,067,000 ====================================================
INDEX TO EXHIBITS Exhibit Page Number Number ------- ------ 4.18 -- Sixth Amendment to Credit Agreement dated as of June 29, 2001, among the Company, SunTrust Bank, Nashville, N.A., Bank of America, N.A. in Nashville, Creditanstalt Corporate Finance, Inc. (formerly Creditanstalt-Bankverein) in New York, National City Bank, Kentucky in Louisville and Amsouth Bank in Nashville. 21 11 -- Statement re Computation of Per Share Earnings 28 13 -- Thomas Nelson, Inc. Annual Report to Shareholders for the year ended March 31, 2001 (to the extent of portions specifically incorporated by reference) 21 -- Subsidiaries of the Company 29 23 -- Consent of Independent Public Accountants 30