10-K 1 mar2005k.txt FORM 10-K FOR QUARTER AND YEAR ENDED 3/31/05 (FY 2005) 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, 2005 Commission file number 1-13788 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. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] As of June 13, 2005, the Registrant had outstanding 13,936,675 shares of Common Stock and 916,362 shares 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 $335 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 13, 2005, as reported on The New York Stock Exchange. DOCUMENTS INCORPORATED BY REFERENCE Documents from which portions Part of Form 10-K are incorporated by reference ------------------------------- ------------------------------ PART II Item 5 - Market for Company's Common Page 40 of Annual Report to Equity, Related Shareholder Shareholders for year ended Matters, and Issuer Purchases March 31, 2005 (market price of Equity Securities and dividend information only) Item 6 - Selected Financial Data Page 23 of Annual Report to Shareholders for year ended March 31, 2005 Item 7 - Management's Discussion and Pages 24 to 26 of Annual Report Analysis of Financial Condition to Shareholders for year ended and Results of Operations March 31, 2005 Item 7A - Quantitative and Qualitative Page 26 of Annual Report to Disclosures about Market Risk Shareholders for year ended March 31, 2005 Item 8 - Financial Statements and Pages 28 to 38 of Annual Supplementary Data Report to Shareholders for year ended March 31, 2005 PART III Item 10 - Directors and Executive Officers To be included in Company's Proxy of the Company Statement for the Annual Meeting of Shareholders to be held August 18, 2005, 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 18, 2005, 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 Certain To be included in Company's Proxy Beneficial Owners and Management Statement for the Annual Meeting of Shareholders to be held August 18, 2005, 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 18, 2005 to be filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended. Item 14 - Principal Accountant Fees To be included in Company's Proxy and Services Statement for the Annual Meeting of Shareholders to be held August 18, 2005, 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"), incorporated in 1961, 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 believes it is the largest publisher of Christian and inspirational Bibles and books in the United States. The Company also hosts inspirational conferences. The financial performance of our publishing and conference segments is reflected in Note V to our consolidated financial statements. 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 Bibles and books in the United States. Books are published by the Company under several imprints including Thomas Nelson(R), W PublishingTM, J. Countryman(R), Tommy Nelson(R), Nelson Current, Rutledge Hill Press(R), Cool Springs PressTM, WestBow Press, Caribe-Betania Editores, Nelson Electronic and Reference, World Publishing and our newest imprint, Nelson Ignite, and consist generally of inspirational, trade, gift, children's and reference books emphasizing Christian and family values themes. The Company distributes books primarily through Christian bookstores, general bookstores, mass merchandisers and direct sales to consumers, churches, and ministries. In fiscal 2005, 2004 and 2003, the Company released 452, 480 and 523 new book titles, respectively. The Company publishes and distributes some of the best known communicators in Christian and inspirational publishing, including John Bevere, Lisa Bevere, Henry Blackaby, Dr. Don Colbert, Ted Dekker, John Eldredge, Billy Graham, Franklin Graham, John Hagee, Hank Hanegraaf, Jack Hayford, Benny Hinn, Angela Hunt, Barbara Johnson, Thomas Kinkade, Anne Graham Lotz, Max Lucado, John C. Maxwell, John MacArthur, Frank Peretti, Dr. Charles Stanley and Charles Swindoll. In addition, the Company maintains a backlist of over 4,900 titles, which provides a stable base of recurring revenues as many popular titles continue to generate significant sales from year to year. Backlist titles accounted for approximately 45% of the book division's net revenues in fiscal 2005. Authors and titles are supported through 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 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 fourteen major translations. Of these fourteen translations, thirteen 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 nine of the fourteen major translations, of which three are exclusive to the Company as a result of copyright ownership. Approximately 41% of the Company's net revenues from Bible publishing in fiscal 2005 were generated through sales of its proprietary Bible products. The following table sets forth the nine 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 Standard Bible (NASB) 1960 No Revised Standard Version, Catholic Edition (RSVCE) 1965 No New American Bible (NAB) 1970 No New King James Version(TM) (NKJV)(R) 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(R) in 1982. Electronic Bibles and biblical reference books are published under the Nelson Electronic and Reference PublishingTM imprint. These products include electronic collections centered on Bible study; electronic libraries featuring well-known authors, such as Jack Hayford, John MacArthur, John Maxwell, Max Lucado and Charles Stanley; and software for preparing Bible study lessons. The Company believes it 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 eveloping 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 approximately 3,400 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 to audio and video products. Different editions of a particular Bible translation are created by incorporating additional 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. CONFERENCES Women of Faith(R) hosts inspirational conferences and has an Internet portal, womenoffaith.com. Both are designed to foster a community setting for Christian women and to introduce women to a lifestyle of God's Grace. The Company benefits through conference attendance fees and the sale of Christian products at the conferences. In fiscal year 2005, Women of Faith hosted 28 conferences throughout North America, which attracted approximately 400,000 participants. Womenoffaith.com is an on-line community of women who gather to build relationships with one another. Founded in June 1999, womenoffaith.com created a place where Christian women from all over the world come to share their life experiences and faith with one another. During the last two fiscal years, womenoffaith.com shipped product to over 39,000 unique customers. The conferences and the Internet site both provide opportunities to market and sell inspirational products. MARKETING, DISTRIBUTION AND PRODUCTION The principal market channels through which the Company markets its products domestically are Christian bookstores, which include national chains and stores owned independently; general bookstores, including national chains such as Barnes & Noble(R) and Borders(R); mass merchandisers such as Costco(R), Target(R), Wal-Mart(R) and Sam's(R) Wholesale Club and directly to consumers through direct mail, telemarketing, inspirational conferences 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. As of March 31, 2005, the Company employed a sales force of approximately 125 people and maintained 24-hour-a-day telemarketing capability. These employees service over 17,000 retail accounts and 39,000 church, school and consumer-related accounts. Customer orders are usually shipped through a variety of common carriers, as well as by UPS(R), FedEx(R) and parcel post. No single customer accounted for more than 10% of net revenues during fiscal 2005. The Company contracts with a number of foreign publishers to translate the Company's English titles into foreign languages. The Company typically retains publishing rights to the titles translated. The Company distributes its products internationally in South America, Europe, Australia, New Zealand, Africa, the Far East, Mexico and Canada. In fiscal 2005, 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. The Company's net revenues fluctuate seasonally, with revenues in the first fiscal quarter historically being less than each of the remaining quarters of the year. Seasonality is the result of increased consumer purchases of the Company's products during the traditional calendar year-end holidays. In addition, the Company's quarterly operating results may fluctuate significantly due to new product introductions, the timing of selling and marketing expenses and changes in sales and product mixes. COPYRIGHTS AND ROYALTY AGREEMENTS The Company customarily secures copyright registrations 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. COMPETITION The Company believes that it is the largest publisher of Christian and inspirational Bibles and books in the United States. The Company competes with numerous other companies that publish and distribute Christian and inspirational books, 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 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 and distribution experience and its management expertise, give it a competitive advantage in signing and maintaining contracts with top Christian and inspirational authors. EMPLOYEES As of March 31, 2005, the Company employed approximately 600 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. AVAILABLE INFORMATION The Company files reports with the Securities and Exchange Commission (the "Commission"), including annual reports on Form 10-K, quarterly reports on Form 10-Q and other reports from time-to-time. The Company is an electronic filer and the Commission maintains an Internet site at http://www.sec.gov that contains the reports, proxy and information statements, and other information filed electronically. The Company's website address is www.thomasnelson.com. Please note that the Company's website address is provided as an inactive textual reference only. The Company makes the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K available free of charge through the Company's website, as well as all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Commission. The information provided on the Company's website is not part of this report, and is therefore not incorporated by reference unless such information is otherwise specifically referenced elsewhere in this report. 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 75 Chairman of the Board, Chief Executive Officer and Director Michael S. Hyatt 49 President, Chief Operating Officer and Director Joe L. Powers 59 Executive Vice President, Chief Finacial Officer and Secretary Vance Lawson 46 Senior Vice President, Finance and Operations Group
Except as indicated below, each executive officer has been an employee of the Company as his principal occupation for more than the past five years. Sam Moore has been Chairman of the Board, Chief Executive Officer and a Director of the Company since its founding in 1961. He was also President until January 2004. Michael S. Hyatt was appointed President and Chief Operating Officer of the Company in January 2004. He has been with the Company since February 1998. In February 2003, he was appointed Executive Vice President and Publisher of the Thomas Nelson Book Group. Previously, Mr. Hyatt served as Executive Vice President and Group Publisher for Nelson Books, Tommy Nelson, Rutledge Hill Press, Cool Springs Press and the Nelson Multi Media divisions; Executive Vice President and Publisher of Nelson Books; Senior Vice President and Publisher of Nelson Books and Senior Vice President and Associate Publisher of Nelson Books. Mr. Hyatt was previously a partner with Wolgemuth & Hyatt, a literary agency, from 1992 to 1998. Joe L. Powers was appointed Executive Vice President, Chief Financial Officer and Secretary of the Company in 1995. Previously, Mr. Powers served as a Vice President of the Company since 1980. 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, Incorporated since 1988. 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. The Company's major warehouse facilities, which are owned by the Company, are located in a building containing approximately 275,000 square feet adjacent to its corporate headquarters in Nashville, Tennessee. This includes a 95,000 square foot building, which was completed in fiscal 1976, and additions to the warehouse and distribution center of approximately 120,000 and 60,000 square feet, which were completed during fiscal 1993 and 2003, respectively. The Company has signed a lease commencing August 2005 for 41,000 square feet of office space which will replace the current office space lease of 38,000 square feet expiring November 2005. The Company's significant leased properties are described below:
Square Annual Lease Location Use/Segment Feet Rent Expiration -------------- ------------------------- ------ --------- ---------- Nashville, TN Sales office/publishing 38,000 $745,000 11/2005 Plano, TX Office/Women of Faith 23,931 $340,000 10/2010 Nashville, TN Sales office/publishing 41,000 $580,000 12/2013
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 Plano, Texas and consist primarily of computer equipment, warehousing and shipping racks, conveyors and other material handling equipment 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 and office equipment that is leased, is owned by the Company. The Company's properties are operated near capacity. The warehouse currently operates two daily shifts and could run three daily shifts, if necessary. Additional personnel are employed as required. Item 3. Legal Proceedings On February 3, 2004, the Company received a letter from one of its former customers that has filed for Chapter 11 bankruptcy. It indicated that the Company may have received preference transfers, in the form of cash and returned books, totaling approximately $1.7 million. This claim was settled in April 2005 with a payment of $18,125. The Company is subject to various other legal proceedings, claims and liabilities that 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 5. Market for the Company's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities Incorporated by reference to the Annual Report to Shareholders for the year ended March 31, 2005 (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, 2005 and 2004. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that such information is accumulated and communicated to its management, including its Chairman and Chief Executive Officer (principal executive officer) and Executive Vice President and Secretary (principal financial and accounting officer), as appropriate, to allow timely decisions regarding required disclosure. The Company carried out an evaluation, under the supervision and with the participation of its management, including its Chairman and Chief Executive Officer and its Executive Vice President and Secretary, of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation of these disclosure controls and procedures, the Chairman and Chief Executive Officer and the Executive Vice President and Secretary concluded that the Company's disclosure controls and procedures were effective. Changes in Internal Control Over Financial Reporting There were no changes in the Company's internal controls over financial reporting during the Corporation's fiscal quarter ended March 31, 2005 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Management's Assessment on Internal Control Over Financial Reporting Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) under the Securities Exchange Act of 1934. The Company's internal control over financial reporting is designed to provide reasonable assurance that the controls and procedures will meet their objectives regarding the preparation and fair presentation of published financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. The Company's management assessed the effectiveness of the Company's internal control over financial reporting, based on the criteria in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on management's evaluation under the criteria in Internal Control - Integrated Framework, we concluded that our internal control over financial reporting was effective as of March 31, 2005. Management's assessment of the effectiveness of the Company's internal control over financial reporting as of March 31, 2005 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein. 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 18, 2005 (the "Proxy Statement"), to be filed within 120 days of March 31, 2005 with the Commission pursuant to Regulation 14A under the Exchange Act. Information regarding the Company's executive officers is contained in Part I, Item 1 herein. Item 11. Executive Compensation Incorporated by reference to the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management Information about security ownership of certain beneficial owners is incorporated by reference to the Proxy Statement. The Company does not maintain any equity compensation plans under which stock may be issued except those approved by the Company's shareholders. The table set forth below provides certain information as of March 31, 2005 with respect to the Company's equity compensation plans: EQUITY COMPENSATION PLAN INFORMATION
A B C -------------------- ------------------- -------------------- Number of securities to be issued upon Number of securities exercise of Weighted-average available for future outstanding options, exercise price issurance under equity warrants and rights of outstanding compensation plans -------------------- options, warrants (excluding securities Plan Category Common Class B and rights reflected in Column A) ------------- --------- --------- ------------------- --------------------- Equity compensation Common or plans approved 1,326,486(1) 300,000 $11.94 539,000 Class B by security Common holders -------------------------------------------------------------------------------
(1) Includes 231,684 options exercisable for either Class B or Common shares. Item 13. Certain Relationships and Related Transactions Incorporated by reference to the Proxy Statement. Item 14. Principal Accountant Fees and Services Incorporated by reference to the Proxy Statement. PART IV Item 15. 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: Consolidated statements of income - - years ended March 31, 2005, 2004 and 2003 Consolidated balance sheets -- March 31, 2005 and 2004 Consolidated statements of shareholders' equity and comprehensive income - - years ended March 31, 2005, 2004 and 2003 Consolidated statements of cash flow - - years ended March 31, 2005, 2004 and 2003 Notes to consolidated financial statements Report of KPMG LLP, Independent Registered Public Accounting Firm Report of KPMG LLP, Independent Registered Public Accounting Firm 2. Financial Statement Schedules The following consolidated financial statement schedules are included herein: Page ---- Schedule II -- Valuation and Qualifying Accounts and Allowances 17 Report of KPMG LLP, Independent Registered Public Accounting Firm 20 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. (b) Reports on Form 8-K - On February 2, 2005, the Company furnished a current report on Form 8-K to announce the results and financial condition for the third quarter of fiscal 2005. - On May 16, 2005, the Company furnished a current report on Form 8-K to announce the results and financial condition for the fourth quarter of fiscal 2005. - On May 23, 2005, the Company furnished a current report on Form 8-K to announce that Mr. Jesse T. Correll has decided not to stand for re-election to the Board but would serve the remainder of his term, which expires on August 18, 2005, the date of the Annual Meeting of Shareholders of the Company. 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 -- Note Purchase Agreement dated January 3, 1996, among the Company, The Prudential Insurance Company of America 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) 4.2 -- Letter Amendment No. 1 dated June 28, 1996, to Note Purchase Agreement dated January 3, 1996, among the Company, The Prudential Insurance Company of America 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) 4.3 -- Revolving Credit Agreement dated as of June 28, 2002, among the Company, several banks and other financial institutions from time to time party hereto, and SunTrust Bank, Nashville, in its capacity as Administrative Agent (filed as Exhibit 4.7 to the Company's Annual Report on Form 10-K for the year ended March 31, 2002 and incorporated herein by reference) 4.4 -- First Amendment to Revolving Credit Agreement dated August 27, 2004, among Thomas Nelson, Inc., the Lenders from time totime party thereto and SunTrust Bank, as Administrative Agent (filed as Exhibit 99.1 to the Company's Current Report on Form 8-K dated August 30, 2004 and incorporated herein by reference) 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 -- 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)* 10.4 -- 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)* 10.5 -- 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)* 10.6 -- 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)* 10.7 -- 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)* 10.8 -- 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)* 10.9 -- Amended and Restated Asset Purchase Agreement, dated October 31, 2001 by and between the Company, The C.R. Gibson Company, and C.R. Gibson Sales Company, Inc. and CRG Acquisition Corp., as Buyer. Schedules to the Amended and Restated Asset Purchase Agreement have been omitted. The Company agrees to furnish supplementally a copy of any Schedule to the Commission upon request. (filed as Exhibit 2.1 to the Company's Form 10-Q for the quarter period ended September 30, 2001 and incorporated herein by reference) 10.10 -- Transition Services Agreement, dated November 7, 2001, effective as of October 31, 2001 by and between the Company and CRG Acquisition Corp. (filed as Exhibit 10.1 to the Company's Form 10-Q for the quarter period ended September 30, 2001 and incorporated herein by reference) 10.11 -- Lease Agreement, dated November 7, 2001, effective as of October 31, 2001 by and between the Company, as Tenant, and CRG Acquisition Corp., as Landlord. (filed as Exhibit 10.2 to the Company's Form 10-Q for the quarter period ended September 30, 2001 and incorporated herein by reference) 10.12 -- Employment Agreement dated as of July 7, 2000 between the Company and Mike Hyatt (filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended March 31, 2002 and incorporated herein by reference)* 10.13 -- Employment Agreement dated July 8, 1998, between the Company and Phil Stoner (filed as Exhibit 10.19 to the Company's Annual Report Form 10-K for the year ended March 31, 2002 and incorporated herein by reference)* 10.14 -- Amendment to Thomas Nelson, Inc. Amended and Restated 1992 Employee Stock Incentive Plan (filed as Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended March 31, 2003 and incorporated herein by referece)* 10.15 -- Thomas Nelson, Inc. 2003 Stock Incentive Plan, as adopted on August 21, 2003 (filed as Appendix B to the Company's Proxy Statement dated July 11, 2003, for the Annual Meeting of Shreholders held on August 21, 2003 and incorporated herein by reference)* 10.16 -- Employment Agreement dated May 25, 2004 between the Company and Michael S. Hyatt (filed as Exhibit 10.18 to the Company's Annual Report on Form 10-K for the year ended March 31, 2004 and incorporated herein by reference)* 10.17 -- Employment Agreement dated March 25, 1998 between the Company and Jerry Park* 13 -- Thomas Nelson, Inc. Annual Report to Shareholders for the year ended March 31, 2005 (to the extent of portions specifically incorporated herein by reference) 21 -- Subsidiaries of the Company 23 -- Reports on Schedule and Consents of Independent Registered Accounting Firm 31.1 -- Certification of Sam Moore, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 -- Certification of Joe L. Powers, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 -- Certification of Sam Moore, pursuant to 18 U.S.C. Section 1350 - the Sarbanes-Oxley Act of 2002. 32.2 -- Certification of Joe L. Powers, pursuant to 18 U.S.C. Section 1350 - the Sarbanes-Oxley Act of 2002. ------------------------ *Management contract or compensatory plan or arrangement. The information contained in this Annual Report on Form 10-K includes statements that are forward-looking as defined in Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statemetns. Information concerning factors that could cause actual results to differ materially from those in the forward- looking statements is contained in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Company's 2004 Annual Report to Shareholders, portions of which are incorporated by reference in this Annual Report on Form 10-K. 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 Date: June 14, 2005 Pursuant to the requirements of Section 13 or 15(d) 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 14, 2005 ---------------------------- Directors and Chief Executive Sam Moore Officer /s/ Michael S. Hyatt President and Chief Operating June 14, 2005 ---------------------------- Officer Michael S. Hyatt /s/ Joe L. Powers Executive Vice President, June 14, 2005 ---------------------------- Secretary, and Chief Financial Joe L. Powers Officer /s/ Ronald W. Blue Director June 14, 2005 ----------------------------- Ronald W. Blue /s/ Jesse T. Correll Director June 14, 2005 ----------------------------- Jesse T. Correll /s/ Brownlee O. Currey, Jr. Director June 14, 2005 ----------------------------- Brownlee O. Currey, Jr. /s/ W. Lipscomb Davis, Jr. Director June 14, 2005 ----------------------------- W. Lipscomb Davis, Jr. /s/ S. Joseph Moore Director June 14, 2005 ----------------------------- S. Joseph Moore /s/ Millard V. Oakley Director June 14, 2005 ----------------------------- Millard V. Oakley SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND ALLOWANCES
March 31, March 31, March 31, 2005 2004 2003 ---------- ----------- ----------- Allowance for Sales Returns: --------------------------- Balance at beginning of period $ 6,792,000 $ 6,046,000 $ 4,984,000 Additions: 1. Charged to costs and expenses 41,053,000 40,058,000 38,728,000 Deductions: 1. Charge-offs 40,408,000 39,312,000 37,666,000 ----------- ----------- ----------- Balance at end of period $ 7,437,000 $ 6,792,000 $ 6,046,000 =========== =========== =========== Allowance for Doubtful Accounts: ------------------------------- Balance at beginning of period $ 1,159,000 $ 1,264,000 $ 1,435,000 Additions: 1. Charged to costs and expenses 600,000 1,262,000 1,463,000 Deductions: 1. Charge-offs 657,000 1,368,000 1,633,000 ----------- ----------- ----------- Balance at end of period $ 1,102,000 $ 1,159,000 $ 1,265,000 =========== =========== =========== Discontinued Operations: ----------------------- Balance at beginning of period $ 158,000 $ 128,000 $ 6,313,000 Additions: 1. Charged to costs and expenses - 208,000 - Deductions: 1. Charge-offs 114,000 178,000 6,185,000 ---------- ----------- ----------- Balance at end of period $ 44,000 $ 158,000 $ 128,000 =========== =========== ===========
INDEX TO EXHIBITS Exhibit Page Number Description Number ------ ----------- ------ 10.17 -- Employment Agreement dated March 25, 1998 between the Company and Jerry Park*.................................................19 13 -- Thomas Nelson, Inc. Annual Report to Shareholders for the year ended March 31, 2005 (to the extent of portions specifically incorporated by reference).............23 21 -- Subsidiaries of the Company.....................................52 23 -- Reports on Schedule and Consents of Independent Registered Accounting Firm......................................53 31.1 -- Certification of Sam Moore, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002...............................54 31.2 -- Certification of Joe L. Powers, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002...............................55 32.1 -- Certification of Sam Moore, pursuant to 18 U.S.C. Section 1350 - the Sarbanes-Oxley Act of 2002.........56 32.2 -- Certification of Joe L. Powers, pursuant to 18 U.S.C. Section 1350 - the Sarbanes-Oxley Act of 2002.........57