-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, WO5PEj1ymx4vqOd/L4PUpYxyRUHE3HU5VoOFQNUCX21Y1KwqrSfv2OIkC9op1pRL dyw/yg7Ejt6VPVAUSvPtNw== 0000071023-95-000002.txt : 19950517 0000071023-95-000002.hdr.sgml : 19950517 ACCESSION NUMBER: 0000071023-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NELSON THOMAS INC CENTRAL INDEX KEY: 0000071023 STANDARD INDUSTRIAL CLASSIFICATION: 2731 IRS NUMBER: 620679364 STATE OF INCORPORATION: TN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04095 FILM NUMBER: 95510966 BUSINESS ADDRESS: STREET 1: P.O. BOX 141000 CITY: NASHVILLE STATE: TN ZIP: 37214-1000 BUSINESS PHONE: 6158899000 MAIL ADDRESS: STREET 1: P.O. BOX 141000 CITY: NASHVILLE STATE: TN ZIP: 37214-1000 FORMER COMPANY: FORMER CONFORMED NAME: ROYAL PUBLISHERS INC DATE OF NAME CHANGE: 19721019 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1994 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-4095 THOMAS NELSON, INC. (Exact name of Registrant as specified in its charter) Tennessee 62-0679364 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification number) Nelson Place at Elm Hill Pike, Nashville, Tennessee 37214-1000 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (615)889-9000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ At February 10, 1994, the Registrant had outstanding 9,898,940 shares of Common Stock and 794,003 shares of Class B Common Stock. Part I Item 1. Financial Statements THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
December 31, March 31, December 31, 1994 1994 1993 ____________ _________ ___________ (Unaudited) (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,564 $ 788 $ 2,714 Accounts receivable, less allowances of $13,057, $8,345 and $13,851 respectively 82,673 58,038 61,000 Inventories 65,468 66,994 59,763 Prepaid expenses 21,050 11,400 10,163 Deferred tax asset 12,673 12,673 12,703 _________ _________ _________ Total Current Assets 183,428 149,893 146,343 PROPERTY, PLANT AND EQUIPMENT 27,624 26,179 24,250 Less accumulated depreciation ( 10,624) ( 8,820) ( 7,710) _________ _________ _________ 17,000 17,359 16,540 OTHER ASSETS 12,772 12,054 10,586 DEFERRED CHARGES 3,530 4,179 4,359 GOODWILL 31,618 32,278 32,870 _________ _________ _________ TOTAL ASSETS $ 248,348 $ 215,763 $ 210,698 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 22,070 $ 20,798 $ 21,866 Accrued expenses 18,893 18,618 18,185 Dividends payable 428 428 423 Income taxes currently payable 5,050 4,471 3,678 Current portion of long-term debt 892 878 1,189 Current portion of capital lease obligation 765 723 710 _________ _________ _________ Total Current Liabilities 48,098 45,916 46,051 LONG-TERM DEBT 126,636 102,618 97,288 CAPITAL LEASE OBLIGATION 281 861 1,046 DEFERRED TAX LIABILITY 768 768 1,065 OTHER LIABILITIES 1,413 2,875 3,551 SHAREHOLDERS' EQUITY Preferred stock, $1.00 par value, authorized 1,000,000 shares; none issued - - - Common stock, $1.00 par value, authorized 20,000,000 shares; issued 9,895,678, 9,891,233 and 9,882,221 shares, respectively 9,896 9,891 9,882 Class B common stock, $1.00 par value, authorized 5,000,000 shares; issued 795,233, 799,933 and 801,445 shares, respectively 795 800 801 Additional paid-in capital 20,963 20,982 20,953 Retained earnings 39,017 30,651 29,772 Foreign currency translation adjustments 481 401 289 _________ _________ _________ Total Shareholders' Equity 71,152 62,725 61,697 _________ _________ _________ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 248,348 $ 215,763 $ 210,698 ========= ========= ========= See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data)
Nine Months Ended Three Months Ended December 31, December 31, 1994 1993 1994 1993 __________ __________ __________ __________ (Unaudited) (Unaudited) (Unaudited) (Unaudited) NET REVENUES $ 190,701 $ 169,930 $ 71,086 $ 60,727 COST AND EXPENSES: Cost of goods sold 96,255 87,369 35,634 31,278 Selling, general and administrative 71,394 65,169 25,251 21,577 Amortization of goodwill and non-compete agreements 1,197 1,188 320 200 __________ __________ __________ _________ Total 168,846 153,726 61,205 53,055 __________ __________ __________ _________ OPERATING INCOME 21,855 16,204 9,881 7,672 Other (income) expense ( 164) ( 140) ( 66) ( 78) Interest expense 6,330 5,409 2,300 1,853 __________ __________ __________ _________ Income before income taxes 15,689 10,935 7,647 5,897 Provision for income taxes 5,795 3,717 2,832 2,074 __________ __________ __________ _________ Net income before cumulative effect of change in accounting principle 9,894 7,218 4,815 3,823 Cumulative effect of change in accounting principle for income taxes 0 336 0 0 __________ __________ __________ _________ NET INCOME $ 9,894 $ 7,554 $ 4,815 $ 3,823 ========== ========== ========== ========= Weighted average number of shares outstanding 10,692 10,683 10,693 10,683 Fully-diluted 13,424 13,360 13,425 13,360 NET INCOME PER SHARE: Before cumulative effect of change in accounting principle $ 0.93 $ 0.68 $ 0.45 $ 0.36 Cumulative effect of change in accounting principle 0.00 0.03 0.00 0.00 __________ __________ __________ __________ Net income per share $ 0.93 $ 0.71 $ 0.45 $ 0.36 ========== ========== ========== ========== Fully-diluted - Before cumulative effect of change in accounting principle $ 0.85 $ 0.65 $ 0.40 $ 0.33 Cumulative effect of change in accounting principle 0.00 0.03 0.00 0.00 __________ __________ __________ __________ Net income per share $ 0.85 $ 0.68 $ 0.40 $ 0.33 ========== ========== ========== ========== DIVIDENDS DECLARED PER SHARE $ 0.12 $ 0.12 $ 0.04 $ 0.04 ========== ========== ========== ========== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Nine Months Ended December 31, ______________________________ 1994 1993 (Unaudited) (Unaudited) ____________ ___________ Cash Flows From Operating Activities: Net Income $ 9,894 $ 7,554 Adjustments to reconcile net income to net cash provided by (used in) operations: Depreciation and amortization 4,451 4,273 Changes in assets and liabilities, net of acquisitions: Accounts receivable, net ( 24,135) ( 11,266) Inventories 1,825 ( 5,794) Prepaid expenses ( 9,601) 436 Accounts payable and accrued expenses 822 4,252 Income taxes currently payable and deferred 324 ( 4,680) __________ __________ Net Cash Used In Operating Activities ( 16,420) ( 5,225) __________ __________ Cash Flows From Investing Activities: Capital expenditures ( 1,550) ( 836) Proceeds from sale of property, plant and equipment, excluding effects of disposition ( 2) 32 Purchase of net assets of acquired companies - net of cash ( 187) -- Proceeds from sales of business assets -- 4,155 Changes in other assets and deferred charges ( 1,787) 2,941 __________ __________ Net Cash Used in Investing Activities ( 3,526) 6,292 __________ __________ Cash Flows From Financing Activities: Borrowings under line of credit 24,350 4,154 Payments under warehouse construction loans ( 333) -- Payments under industrial revenue bonds ( 75) ( 70) Payments under capital lease obligation ( 537) ( 399) Dividends paid ( 1,283) ( 1,268) Changes in other liabilities ( 1,462) ( 1,666) Proceeds from issuance of common stock 10 388 Common stock retired ( 28) ( 101) __________ __________ Net Cash Provided by Financing Activities 20,642 1,038 __________ __________ Effect of Translation Rate Changes 80 ( 191) __________ __________ Net Increase in Cash and Cash Equivalents 776 1,914 Cash and Cash Equivalents at Beginning of Period 788 800 __________ __________ Cash and Cash Equivalents at End of Period $ 1,564 $ 2,714 ========== ========== Supplemental Disclosures of Non-cash Investing and Financing Activities: Dividends accrued and unpaid $ 428 $ 423 Capital lease obligation incurred to lease new equipment $ 761 See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (A) - Basis of Presentation The accompanying unaudited consolidated financial statements reflect all adjustments (which are of a normal recurring nature) that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to SEC rules and regulations. The statements should be read in conjunction with the Summary of Significant Accounting Policies and notes to the consolidated financial statements included in the Company's annual report for the year ended March 31, 1994. The balance sheet and related information in these notes as of March 31, 1994, have been taken from the audited consolidated financial statements as of that date. Certain reclassifications have been made to conform presentation of the fiscal 1994 Financial Statements with reclassifications made in fiscal 1995. In March 1994, PPC, Inc. (Pretty Paper Company) became a wholly-owned subsidiary of the Company through a pooling of interest transaction, and accordingly financial statements have been restated to include the accounts and operations of Pretty Paper Company for all periods prior to the combination. (B) - Inventories Components of inventories consisted of the following (in thousands):
December 31, March 31, December 31, 1994 1994 1993 __________ _________ ___________ Finished goods $ 57,767 $ 58,463 $ 55,034 Raw materials and work in process 7,701 8,531 4,729 __________ __________ __________ $ 65,468 $ 66,994 $ 59,763 ========== ========== ==========
(C) - Prepaid Expenses Components of prepaid expenses consisted of the following (in thousands):
December 31, March 31, December 31, 1994 1994 1993 __________ _________ ___________ Direct marketing costs $ 4,711 $ 3,320 $ 2,145 Royalty advances & production costs 14,135 7,096 6,077 Other 2,204 984 1,941 __________ __________ __________ $ 21,050 $ 11,400 $ 10,163 ========== ========== ==========
(D) - Other Assets Components of other assets consisted of the following (in thousands):
December 31, March 31, December 31, 1994 1994 1993 __________ _________ ___________ Prepaid royalties $ 6,621 $ 6,200 $ 6,190 Copyright production masters, net of accumulated amortization of $1,130, $789 and $775, respectively 2,232 1,209 757 Non-compete agreements, net of accumulated amortization of $1,801, $1,214, and $1,040, respectively 3,033 3,489 3,394 Other 886 1,156 245 __________ __________ __________ $ 12,772 $ 12,054 $ 10,586 ========== ========== ==========
(E) - Accrued Expenses Components of accrued expenses consisted of the following (in thousands):
December 31, March 31, December 31, 1994 1994 1993 __________ _________ ___________ Accrued interest $ 404 $ 969 $ 222 Accrued royalties 12,394 9,980 10,419 Accrued payroll 2,071 3,043 2,444 Contractual commitments 1,603 1,626 1,174 Deferred subscriptions revenues 549 699 837 Other 1,872 2,301 3,089 __________ __________ __________ $ 18,893 $ 18,618 $ 18,185 ========== ========== ==========
(F) - Cash Dividend On May 24, 1994, the Company's directors declared a cash dividend of $.04 per share of Common and Class B stock. The dividend was paid August 15, 1994, to shareholders of record on August 1, 1994. On August 25, 1994, the Company's directors declared a cash dividend of $.04 per share of Common and Class B stock. The dividend was paid November 21, 1994, to shareholders of record on November 7, 1994. On November 22, 1994, the Company's directors declared a cash dividend of $.04 per share of Common and Class B stock. The dividend is payable February 15, 1995, to shareholders of record on February 1, 1995. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW The following table sets forth certain selected statements of income data expressed as a percentage of net revenues and the percentage change in dollars in such data from the prior fiscal year.
Nine Months Ended December 31, ___________________ Increase 1994 1993 (Decrease) ________ _______ ________ Net revenues: Bibles 21.4% 22.0% 9.2% Books 33.1% 34.2% 8.5% Gifts 8.8% 8.5% 20.6% Music 34.9% 33.9% 15.8% Other 1.8% 1.4% 14.5% _______ _______ ______ Total 100.0% 100.0% 12.2% Cost and expenses: Cost of goods sold 50.5 51.4 10.2% Selling, general and administrative 37.4 38.4 9.6% Amortization of goodwill and non-compete agreements 0.6 0.7 0.8% _______ _______ _______ Total 88.5 90.5 9.8% _______ _______ _______ Operating income 11.5 9.5 34.9% Income before income taxes 8.2 6.4 43.5% Net income before cumulative effect of change in accounting principle 5.2 4.2 37.1% Net income 5.2 4.4 31.0%
The Company's quarterly operating results may fluctuate significantly due to the seasonality of new product introductions, the timing of selling and marketing expenses, and changes in sales and product mixes. In addition, the Company's net revenues normally fluctuate seasonally, with net revenues in the second and third fiscal quarters historically being greater than those in the first and fourth fiscal quarters. This seasonality is the result of increased consumer purchases of the Company's products during the traditional year-end holidays. Results of Operations Net revenues increased by $20.8 million, or approximately 12%, for the first nine months of fiscal 1995 and $10.4 million, or approximately 17%, for the third quarter of fiscal 1995 when compared to the comparable previous year period. The increase was primarily due to volume increases arising from the introduction of new book, gift, Bible and music products. Price increases did not have a material effect on net revenues. The Company's cost of goods sold increased by $8.9 million for the first nine months of fiscal 1995 and as a percentage of net revenues decreased to 50.5% from 51.4% in the comparable period in fiscal 1994. Cost of goods sold increased for the third quarter of fiscal 1995 by $4.4 million, or approximately 14%, over the comparable period in fiscal 1994, and as a percentage of net revenues decreased to 50.1% from 51.5% in the comparable period in fiscal 1994. The decrease of cost of goods sold, as a percentage of net revenues, was the result of changes in the mix of product types and market channels where these products are distributed. During this period gift and Bible products which have lower gross margins than the Company's other product lines contributed a greater portion of net revenues than in the comparable prior period. In addition, during this period the Company had a greater percentage of its net revenues derived from sales to retail stores and mass merchandisers which have lower gross margins than sales through direct marketing. Selling, general and administrative expenses increased over the previous comparable fiscal year period by $6.2 million for the nine months, or approximately 10%, and for the quarter by $3.7 million, or approximately 17%. These expenses as a percentage of net revenues decreased to 37.4% for the first nine months of fiscal 1995 from 38.4% in the comparable prior year period primarily due to the decreases in salaries and benefits as a percentage of revenues as a result of volume increase arising from the introduction of new products. In addition, sales commissions, as a percentage of revenues, decreased due to the increase in non- commissioned revenues. Amortization of goodwill and non-compete agreements increased 1% from the prior nine months due to purchase price adjustments relating to the acquisition of Word, Incorporated. Interest expense increased 17% and 24% for the first nine months and third quarter, respectively, over the prior year period due to increased borrowings used for working capital needs and higher interest rates. Liquidity and Capital Resources The primary sources of liquidity to meet the Company's future obligations and working capital needs are the cash generated by its operations, collections of its accounts receivable, and the credit available pursuant to its $80 million credit facilities, that may be used for working capital requirements and other business purposes. At December 31, 1994, the Company had approximately $15.2 million available in long-term credit under its credit facilities. As previously addressed, seasonality has a major impact on company revenues which in turn have a direct bearing on the level of borrowings. The Company believes that the current credit facilities will provide for its obligations and working capital needs over the next twelve months. With expanding operations and examining possible business opportunities, the Company will look at expanding its current credit facilities or seek to raise additional capital through public or private financing. During the nine months ended December 31, 1994, capital expenditures totaled approximately $1.6 million. The Company has no plans that will require significant capital expenditures for the remainder of fiscal 1995. PART II Item 6. Exhibits and Reports on Form 8-K (a) Exhibits required by Item 601 of Regulation S-K Exhibit 11 - Statement Regarding Computation of Per Share Earnings for Period Ended December 31, 1994 Exhibit 27 - Financial Data Schedule (b) No Form 8-K was filed by the Company during the quarter ended December 31, 1994. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Thomas Nelson, Inc. (Registrant) February 13, 1994 BY /s/ Joe L. Powers ____________________________ ________________________ Joe L. Powers Vice President (Chief Accounting Officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S 10-Q FOR THE PERIOD ENDED DECEMBER 31, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO. 1,000 9-MOS MAR-31-1995 APR-01-1994 DEC-31-1994 1,564 0 95,730 13,057 65,468 183,428 27,624 10,624 248,348 48,098 126,917 10,691 0 0 60,461 248,348 187,969 190,701 96,255 167,649 1,197 2,680 6,330 15,689 5,795 9,894 0 0 0 9,894 0.93 0.85
EX-11 3 EXHIBIT 11 THOMAS NELSON, INC. AND SUBSIDIARIES STATEMENT OF COMPUTATION OF PER SHARE EARNINGS (Dollars in thousands, except per share data)
Nine Months Ended December 31, ______________________________ 1994 1993 (Unaudited) (Unaudited) ___________ ___________ Earnings Per Share: Weighted Average Shares Outstanding 10,692 10,683 =========== ========== Net Income $ 9,894 $ 7,554 =========== ========== Earnings Per Share: $ 0.93 $ 0.71 =========== ========== Fully Diluted Earnings Per Share: Weighted Average Shares Outstanding 10,692 10,683 Exercise of Subordinated Convertible Bonds ($55,000,000 / $21.25) 2,588 2,588 Dilutive stock options - (1) based on treasury stock method using year-end market price, if higher than average market price 144 89 ___________ ___________ Total Shares 13,424 13,360 =========== =========== Net Income (2) $ 11,471 $ 9,131 =========== =========== Earnings Per Share $ 0.85 $ 0.68 =========== ===========
(1) The effects of dilutive stock options on primary earnings have not been presented because the impact is immaterial. (2) Add back interest savings (net of tax) due to bond conversion. -----END PRIVACY-ENHANCED MESSAGE-----