-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ij1rJkyXzgDGo6FVxZtRsJHMTeog95UwNioShb4GRO6tD+B8qKuNaPXdFTrc6fKt rsgXM+N0Zk5veUFtm6+d2g== 0000071023-98-000010.txt : 19981116 0000071023-98-000010.hdr.sgml : 19981116 ACCESSION NUMBER: 0000071023-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NELSON THOMAS INC CENTRAL INDEX KEY: 0000071023 STANDARD INDUSTRIAL CLASSIFICATION: BOOKS: PUBLISHING OR PUBLISHING AND PRINTING [2731] IRS NUMBER: 620679364 STATE OF INCORPORATION: TN FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13788 FILM NUMBER: 98748627 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 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-4095 THOMAS NELSON, INC. (Exact name of Registrant as specified in its charter) Tennessee 62-0679364 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 501 Nelson Place, Nashville, Tennessee 37214-1000 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (615)889-9000 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] At November 10, 1998, the Registrant had outstanding 13,653,090 shares of Common Stock and 1,106,324 shares of Class B Common Stock. Part I Item 1. Financial Statements THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
September 30, March 31, September 30, 1998 1998 1997 ----------- ---------- ----------- (Unaudited) (Unaudited) ASSETS Current assets Cash and cash equivalents $ 1,978 $ 39,713 $ 23,103 Accounts receivable, less allowances of $6,988, $6,162 and $6,814, respectively 81,888 65,415 76,264 Inventories 75,504 70,590 70,388 Prepaid expenses 11,383 8,177 8,554 Deferred tax assets 3,276 3,276 8,310 ----------- ---------- ----------- Total current assets 174,029 187,171 186,619 Property, plant and equipment 30,051 32,103 32,550 Other assets 9,987 9,843 10,769 Deferred charges 2,086 1,789 2,587 Goodwill 55,783 56,536 57,321 ----------- ---------- ----------- TOTAL ASSETS $ 271,936 $ 287,442 $ 289,846 ============ ========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 17,054 $ 16,701 $ 16,366 Accrued expenses 20,128 21,268 25,422 Dividends payable 590 685 684 Income taxes currently payable 2,763 4,286 6,943 Current portion of long-term debt & capital lease obligations 3,853 3,975 3,369 ----------- ---------- ----------- Total current liabilities 44,388 46,915 52,784 Long-term debt 95,039 79,476 80,769 Capital lease obligations 6 84 109 Deferred tax liabilities 3,364 3,364 3,640 Other liabilities 988 1,207 1,860 Shareholders' equity Preferred stock, $1.00 par value, authorized 1,000,000 shares; none issued - - - Common stock, $1.00 par value, authorized 20,000,000 shares; issued 13,653,090, 16,002,817 and 16,002,670 shares, respectively 13,653 16,003 16,003 Class B common stock, $1.00 par value, authorized 5,000,000 shares; issued 1,106,324, 1,111,924 and 1,112,071 shares, respectively 1,106 1,112 1,112 Additional paid-in capital 48,724 79,057 79,055 Retained earnings 64,668 60,224 54,514 ----------- ---------- ----------- Total shareholders' equity 128,151 156,396 150,684 ----------- ---------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 271,936 $ 287,442 $ 289,846 =========== =========== =========== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data)
Six Months Ended Three Months Ended September 30, September 30, 1998 1997 1998 1997 ----------- ---------- ----------- ----------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) NET REVENUES $ 126,439 $123,077 $ 70,445 $ 68,618 COST AND EXPENSES: Cost of goods sold 67,484 67,831 37,150 38,059 Selling, general and administrative 46,430 42,950 24,274 21,425 Amortization of goodwill and non-compete agreements 817 996 409 493 ----------- ---------- ---------- ----------- Total expenses 114,731 111,777 61,833 59,977 ----------- ---------- ---------- ----------- OPERATING INCOME 11,708 11,300 8,612 8,641 Other income (expense) 387 808 - 298 Interest expense 3,145 3,085 1,655 1,514 ----------- ---------- ---------- ----------- Income before income taxes 8,950 9,023 6,957 7,425 Provision for income taxes 3,311 3,429 2,574 2,822 ----------- ---------- ---------- ----------- NET INCOME $ 5,639 $ 5,594 $ 4,383 $ 4,603 =========== =========== ========== =========== Weighted average number of shares outstanding: Basic 15,886 17,110 15,055 17,111 =========== =========== ========== =========== Diluted 19,160 20,386 18,307 20,417 =========== =========== ========== =========== NET INCOME PER SHARE: Basic $ 0.35 $ 0.33 $ 0.29 $ 0.27 =========== =========== ========== =========== Diluted $ 0.35 $ 0.32 $ 0.27 $ 0.25 =========== =========== ========== =========== DIVIDENDS DECLARED PER SHARE $ 0.08 $ 0.08 $ 0.04 $ 0.04 =========== =========== ========== =========== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
Six Months Ended September 30, -------------------------------- 1998 1997 -------------- -------------- (Unaudited) (Unaudited) CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES: Income from continuing operations $ 5,639 $ 5,594 Adjustments to reconcile net income to net cash provided by (used in) operations: Depreciation and amortization 4,422 3,825 Changes in assets and liabilities, net of acquisitions and disposals: Accounts receivable, net ( 16,473) ( 8,814) Inventories ( 4,914) 1,162 Prepaid expenses ( 3,206) 867 Accounts payable and accrued expenses 562 ( 1,896) Income taxes currently payable and deferred ( 1,523) ( 13,031) ------------- -------------- Net cash used in continuing operations ( 15,493) ( 12,293) ------------- -------------- Discontinued operations: Changes in discontinued assets ( 1,349) ( 760) ------------- -------------- Net cash used in discontinued operations ( 1,349) ( 760) ------------- -------------- Net cash used in operating activities ( 16,842) ( 13,053) ------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures ( 1,384) ( 1,649) Proceeds from sale of business and discontinued assets 1,408 - Changes in other assets and deferred charges ( 2,083) ( 1,210) ------------- -------------- Net cash used in investing activities ( 2,059) ( 2,859) ------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under line of credit 20,500 - Payments under capital lease obligation ( 131) ( 268) Payments on long-term debt ( 5,006) ( 2,271) Dividends paid ( 1,290) ( 1,371) Proceeds from issuance of common stock 47 12 Common stock retired ( 32,757) ( 4) Other financing activities ( 197) ( 554) ------------- -------------- Net cash used in financing activities ( 18,834) ( 4,456) ------------- -------------- Net decrease in cash and cash equivalents ( 37,735) ( 20,368) Cash and cash equivalents at beginning of period 39,713 43,471 ------------- -------------- Cash and cash equivalents at end of period $ 1,978 $ 23,103 ============= ============== Supplemental disclosures of non-cash investing and financing activities: Dividends accrued and unpaid $ 590 $ 685
THOMAS NELSON, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note A - Basis of Presentation The accompanying unaudited consolidated financial statements reflect all adjustments (which are of a normal recurring nature) that are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to SEC rules and regulations. The statements should be read in conjunction with the Summary of Significant Accounting Policies and notes to the consolidated financial statements included in the Company's annual report for the year ended March 31, 1998. The balance sheet and related information in these notes as of March 31, 1998 have been taken from the audited consolidated financial statements as of that date. Certain reclassifications have been made to conform presentation of the fiscal 1998 financial statements with fiscal 1999 presentation. Note B - New Pronouncements Reporting on the Costs of Start-Up Activities: In April 1998, the Accounting Standards Executive Committee ("AcSEC") of the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position 98-5, "Reporting on the Costs of Start-up Activities" ("SOP 98-5"). SOP 98-5 requires the costs of start-up activities and organization costs, as defined, to be expensed as incurred. SOP 98-5 is effective for fiscal years beginning after December 15, 1998. The Company will adopt the pronouncement during the first quarter of fiscal 2000. The Company does not expect the adoption to have a material impact on the Company's results of operations, financial condition or cash flows. Note C - Inventories Components of inventories consisted of the following (in thousands):
September 30, March 31, September 30, 1998 1998 1997 ------------ ---------- ------------ Finished goods $ 62,702 $ 54,503 $ 55,485 Raw materials and work in process 12,802 16,087 14,903 ------------ ---------- ------------ $ 75,504 $ 70,590 $ 70,388 ============ ========== ============
Note D - Cash Dividend On May 21, 1998, the Company's board of directors declared a cash dividend of $.04 per share of Common and Class B Common Stock. The dividend was paid August 17, 1998, to shareholders of record on August 3, 1998. On August 21, 1998, the Company's board of directors declared a cash dividend of $.04 per share of Common and Class B Common Stock. The dividend is payable November 16, 1998, to shareholders of record on November 2, 1998. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW The following table sets forth for the periods indicated certain selected statements of operations data of the Company expressed as a percentage of net revenues and the percentage change in dollars in such data from the prior fiscal year.
Six Months Ended Fiscal September 30, Year-to-Year ---------------- Increase 1998 1997 (Decrease) ------ ------ ---------- (%) (%) (%) Net revenues Publishing 58.1 61.1 ( 2.3) Gift 41.9 38.9 10.7 ------ ------ Total net revenues 100.0 100.0 2.7 ------ ------ Expenses Cost of goods sold 53.4 55.1 ( 0.5) Selling, general and administrative 36.7 34.9 8.1 Amortization of goodwill and non- compete agreements 0.6 0.8 (18.0) ------ ------ Total expenses 90.7 90.8 2.6 ------ ------ Operating income 9.3 9.2 3.6 ====== ====== Net income 4.5 4.5 0.8 ====== ======
The Company's net revenues fluctuate seasonally, with net revenues in the first fiscal quarter historically being lower than those for the remainder of the year. This seasonality is the result of increased consumer purchases of the Company's products during the traditional holiday periods. In addition, the Company's quarterly operating results may fluctuate significantly due to the seasonality of new product introductions, the timing of selling and marketing expenses and changes in sales and product mixes. The following discussion includes certain forward-looking statements. Actual results could differ materially from those reflected by the forward-looking statements and a number of factors may affect future results, liquidity and capital resources. These factors include softness in the general retail environment, the timing of products being introduced into the market, the level of returns experienced by operating divisions, the level of margins achievable in the marketplace and the ability to minimize operating expenses. Although the Company believes it has the business strategy and resources needed for improved operations, future revenue and margin trends cannot be reliably predicted and may cause the Company to adjust its business strategy during the remainder of fiscal 1999. The Company disclaims any intent or obligation to update forward- looking statements. Results of Operations Net revenues for the first six months of fiscal 1999 increased $3.4 million, or 2.7%, and for the second quarter increased $1.8 million, or 2.7%, over the same periods in fiscal 1998. The publishing product net revenues for the first six months decreased $1.7 million, or 2.3%, and for the second quarter decreased $1.0 million, or 2.3%, compared to the prior year. The decreases for both periods were primarily due to the expiration of certain agreements whereby the Company acted as a distributor of publishing products. The Company does not plan to enter into any material distribution agreements in the near future. Net revenues from gift products for the first six months increased $5.1 million, or 10.7%, and for the second quarter increased $2.8 million, or 10.7%. The increases for both periods were primarily due to increased sales of a special selection of products, including scrapbooks, to mass merchandisers. The Company has in the past eighteen months reduced marketing of deeply discounted gift products to mass merchandisers. The current product offerings to mass merchandisers are consistent with the Gift Division's strategy to focus on higher margin product promotions. Price increases did not have a material effect on net revenues. The Company's cost of goods sold decreased for the first six months of fiscal 1999 by $347,000, or 0.5%, and for the second quarter by $909,000, or 2.4%, over the same periods in fiscal 1998 and, as a percentage of net revenues, decreased to 53.4% for the first six months of fiscal 1999 from 55.1% and for the second quarter to 52.7% from 55.5% in the comparable periods in fiscal 1998. The decrease in cost of goods sold, as a percentage of net revenues, for both periods resulted primarily from the expiration of certain distribution agreements referenced above. The cost to the Company for distributed products is greater than the cost for owned products. Selling, general and administrative expenses for the first six months of fiscal 1999 increased by $3.5 million, or 8.1%, and for the second quarter increased $2.8 million, or 13.3%, from the same periods in fiscal 1998. These expenses, expressed as a percentage of net revenues, increased to 36.7% for the first six months of fiscal 1999 versus 34.9% and for the second quarter to 34.5% from 31.2% in the same periods in fiscal 1998. These increases for both periods were primarily attributable to a decline in fees charged for operations services provided to the purchaser of the Company's music business, which was sold in January 1997. The fees for these services were credited to selling, general and administrative expenses and have declined as certain services were discontinued. The Company anticipates that all the services will be discontinued on or about December 31, 1998. In addition, to a lesser extent, the increases for the six months and second quarter were due to increased marketing costs in the Company's direct-to-consumer market. The Company believes that the selling, general and administrative expenses, as a percentage of revenues, for the full year of fiscal 1999 should be comparable to that for fiscal 1998. Interest expense for the first six months of fiscal 1999 increased by $60,000, or 1.9%, over the same period in fiscal 1998 due to increases in indebtedness incurred for repurchases of shares of common stock. Liquidity and Capital Resources At September 30, 1998, the Company had $2.0 million in cash and cash equivalents. The primary sources of liquidity to meet the Company's future obligations and working capital needs are cash generated from operations and borrowings available under bank credit facilities. At September 30, 1998, the Company had working capital of $129.6 million. On June 10, 1998, the Company announced its intention to repurchase up to three million shares of common stock and/or Class B common stock from time to time in the open market or through privately negotiated transactions. As of September 30, 1998, the Company had repurchased approximately 2.4 million shares of common stock in the open market at an aggregate cost to the Company of $32.6 million. Net cash used in operating activities was $16.8 million and $13.1 million for the first six months of fiscal 1999 and 1998, respectively. Cash used in operations during the first six months of fiscal 1999 was principally attributable to an increase in accounts receivable. Cash used in operations during the first six months of fiscal 1998 was principally attributable to the payment of income taxes and an increase in accounts receivable. During the first six months of fiscal 1999, capital expenditures totaled approximately $1.4 million. During the remainder of fiscal 1999, the Company anticipates capital expenditures of approximately $1.5 million primarily consisting of additional computer equipment and warehousing equipment. The Company's bank credit facilities are unsecured and consist of a $75 million credit facility and a $10 million credit facility (collectively, the "Credit Agreements"). The $75 million credit facility bears interest at either the prime rate or, at the Company's option, LIBOR plus a percentage, subject to adjustment based on certain financial ratios, and matures on December 13, 2002. The $10 million credit facility bears interest at the prime rate and matures on July 31, 2000. At September 30, 1998, the Company had $20.5 million outstanding under the Credit Agreements, and $64.5 million available for borrowing. Due to the seasonality of the Company's business, borrowings under the Credit Agreements typically peak during the third quarter of the fiscal year. At September 30, 1998, the Company had outstanding approximately $21.3 million of unsecured senior notes ("Senior Notes"). The Senior Notes bear interest at rates from 6.68% to 9.50% due through fiscal 2006. Under the terms of the Credit Agreements and the Senior Notes, the Company has agreed to limit the payment of dividends and to maintain certain interest coverage and debt-to-total-capital ratios which are similarly calculated for each debt agreement. At September 30, 1998, the Company was in compliance with all covenants of these debt agreements, as amended. At September 30, 1998, the Company had outstanding $53.1 million of 5.75% convertible subordinated notes ("Convertible Subordinated Notes") due November 30, 1999. During the first six months of fiscal 1999, the Company purchased $1.9 million in principal amount of the Convertible Subordinated Notes. Subsequent to September 30, 1998, the Company purchased $13.2 million in principal amount of the Convertible Subordinated Notes. The Convertible Subordinated Notes presently are convertible into common stock at $17.00 per share and are redeemable at the Company's option currently at 101.64% of the principal amount, declining to 100.82% on November 30, 1998, and to 100% on November 30, 1999. This conversion would result in 3,124,118 and 2,350,235 additional shares outstanding as of September 30, 1998 and November 12, 1998, respectively. Management believes cash generated by operations and borrowings available under the Credit Agreements will be sufficient to fund anticipated working capital requirements for existing operations through the remainder of fiscal 1999. Year 2000 Conversion The Company has established a task force to coordinate the implementation of changes to computer systems and applications necessary to become year 2000 compliant with no material adverse effect on customers or disruption to business operations. These actions are necessary to ensure that the systems and applications will recognize and process the year 2000 and beyond. The Company believes that possible risks if compliance is not accomplished could include delays in receiving and/or shipping of products and in invoicing to and/or receiving payments from customers in the days immediately after January 1, 2000. The Company anticipates that, beginning in the third quarter of fiscal 1999, testing will commence for receipt of electronic orders, customer invoicing and other Company systems. The Company also is communicating with suppliers, customers, financial institutions and others with which it does business to determine the status of their being year 2000 compliant. The Company anticipates that its compliance tests will include electronic and other communications with a cross-section of its customers. The Company has also evaluated non-system issues, e.g. security, elevators, timekeeping, etc., relative to the year 2000. The Company expensed approximately $220,000 in costs during the first six months of fiscal 1999 primarily for programmer costs and software upgrades related to becoming year 2000 compliant and expects to incur additional costs of $500,000 and $400,000 for the remainder of fiscal 1999 and for fiscal 2000, respectively. These costs are expected to include programmer costs for modification of software programs, costs for a testing site, software purchases and consulting fees and will be expensed as they are incurred. PART II Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits required by Item 601 of Regulation S-K Exhibit Number ------- 4.1 - 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-Bankverein in New York. 11 - Statement re Computation of Per Share Earnings 27 - Financial Data Schedule (b) No Form 8-K was filed by the Company during the quarter ended September 30, 1998. 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) November 13, 1998 BY Joe L. Powers ------------------------- --------------------- Joe L. Powers Executive Vice President (Principal Financial and Accounting Officer) INDEX TO EXHIBITS Exhibit Number - ------- 4.1 - 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-Bankverein in New York. 11 - Statement re Computation of Per Share Earnings 27 - Financial Data Schedule (for SEC purposes only) EX-27 2
5 This schedule contains summary financial information extracted from the Company's 10-Q for the period ended September 30, 1998, and is qualified in its entirety by reference to such financial statements and the notes thereto. 1,000 6-MOS MAR-31-1999 APR-01-1998 SEP-30-1998 1,978 0 88,876 6,988 75,504 174,029 58,189 28,138 271,936 44,388 95,045 0 0 14,759 113,392 271,936 124,823 126,439 67,484 113,914 817 1,075 3,145 8,950 3,311 5,639 0 0 0 5,639 0.35 0.35
EX-11 3 EXHIBIT 11 STATEMENT RE-COMPUTATION OF PER SHARE EARNINGS (Dollars in thousands, except per share data)
Six Months Ended Three Months Ended September 30, September 30, 1998 1997 1998 1997 --------- --------- --------- --------- (Unaudited)(Unaudited)(Unaudited)(Unaudited) BASIC EARNINGS PER SHARE: Weighted average shares outstanding 15,886 17,110 15,055 17,111 ======== ======== ======= ======= Net income $ 5,639 $ 5,594 $ 4,383 $ 4,603 ======== ======== ======= ======= Net income per share $ 0.35 $ 0.33 $ 0.29 $ 0.27 ======== ======== ======= ======= DILUTED EARNINGS PER SHARE: Weighted average shares outstanding 15,886 17,110 15,055 17,111 Dilutive effect of common stock options 76 41 80 71 Convertible notes 3,198 3,235 3,172 3,235 -------- -------- ------- ------- Total shares 19,160 20,386 18,307 20,417 ======== ======== ======= ======= Net income $ 6,699 $ 6,616 $ 4,903 $ 5,111 ======== ======== ======= ======= Net income per share $ 0.35 $ 0.32 $ 0.27 $ 0.25 ======== ======== ======= ======= Adjusted for interest on convertible debt
EX-4.1 4 FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS FOURTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (the "Fourth Amendment") is entered into as of the 31st day of March, 1998 (the "Effective Date"), by and among THOMAS NELSON, INC., a Tennessee corporation ("Nelson"), SUNTRUST BANK, NASHVILLE, N.A., a national banking association ("SunTrust"), the other banks and lending institutions listed on the signature pages hereof and any assignees of SunTrust or such other banks and lending institutions that become "lenders", (SunTrust and such other banks, lending institutions and assignees are referred to collectively herein as the "Lenders"), and SUNTRUST BANK, NASHVILLE, N.A., in its capacity as agent for the Lenders (the "Agent"). R E C I T A L S: WHEREAS, Lenders, Agent and Nelson entered into an Amended and Restated Credit Agreement dated as of December 13, 1995, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of January 3, 1996, as further amended by that certain Second Amendment to Amended and Restated Credit Agreement dated as of November 15, 1996, and as further amended by that certain Third Amendment to Amended and Restated Credit Agreement dated as of January 7, 1997 (the "Third Amendment") (as amended or otherwise modified from time to time, the "Credit Agreement"), wherein Lenders agreed to extend certain financial accommodations to Nelson; and WHEREAS, Nelson has requested that Lenders consent to Nelson's repurchasing certain of its outstanding debentures and to use proceeds of the Credit Agreement for such purpose, and Lenders are willing to consent to such repurchasing and such use of proceeds, and to modify the application of certain provisions of the Credit Agreement with respect to such repurchasing and such use of proceeds, upon the terms contained herein; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are mutually acknowledged, the parties hereby agree as follows: 1. Defined Terms. All defined terms used and not otherwise defined herein shall have the meaning ascribed to such terms in the Credit Agreement. 2. Debenture Repurchase. As long as no Event of Default exists or is continuing, Nelson may from time to time, at any time prior to November 30, 1999 (the "Completion Date"), purchase up to $55,000,000 of its outstanding 5 3/4% Convertible Subordinated Notes due 1999 in the total original principal amount of $55,000,000 and dated November 30, 1992 (the "Debenture Repurchase"). Nelson proposes to fund the acquisition of the Debenture Repurchase by utilizing a combination of (a) its working capital and available cash, and (b) borrowings under the Revolving Loan Commitments in an amount not to exceed $35,000,000. 3. Lender's Consent. Nelson has requested that lenders consent to the Debenture Repurchase as described in this Fourth Amendment, and that, with respect to the Debenture Repurchase only, Lenders consent to modify certain terms and provisions of the Credit Agreement to permit the use of funds by Nelson as set forth in this Fourth Amendment to assist in consummating the Debenture Repurchase. To the extent the requirements of Section 11.04 and/or Section 11.08 of the Credit Agreement are applicable, Lenders hereby consent to Nelson's request with respect to the Debenture Repurchase as described herein. Lenders further consent to borrowings by Nelson under the Revolving Loan Commitments in an amount not to exceed Thirty-Five Million Dollars ($35,000,000) to partially fund the Debenture Repurchase. Nelson shall be entitled to use borrowings under the Revolving Loan Commitments for the Debenture Repurchase only through the Completion Date. After the Completion Date, Nelson shall not be permitted to borrow under the Revolving Loan Commitments for the purpose of the Debenture Repurchase. 4. Terms of Debenture Repurchase. Nelson hereby covenants with Lenders in connection with the Debenture Repurchase that the Debenture Repurchase shall be completed on or before the Completion Date, and that the purchase price of the Debenture Repurchase shall not exceed $60,000,000 in the aggregate. 5. Section 2.02 of the Credit Agreement. Lenders hereby agree that Section 2.02 of the Credit Agreement is hereby modified to permit the use by Nelson of an amount not to exceed Thirty-Five Million Dollars ($35,000,000) from the funds available under the Revolving Loans to partially fund the Debenture Repurchase. Any borrowing of such funds shall be made in accordance with the Credit Agreement as amended by this Fourth Amendment, including without limitation, Article III and Article IV of the Credit Agreement. 6. Consent of Third Parties. Nelson represents and warrants that any and all consents required to be obtained by Nelson in connection with the Debenture Repurchase and the funding of same have been obtained and delivered to Agent. 7. Fee to Lender. Lenders and Nelson hereby agree that simultaneously with the execution of this Fourth Amendment, Nelson shall pay to Lenders a fee in the amount of Twenty-Five Thousand Dollars ($25,000) in consideration of Lenders' execution of this Fourth Amendment and the agreements set forth herein. 8. Future Transactions. Nelson and Lenders hereby agree that the waivers and modifications set forth herein shall apply only to the Debenture Repurchase, shall terminate on November 30, 1999 and shall not extend to any future debenture acquisitions or uses of proceeds that may be contemplated by Nelson without the express written consent of Lenders. 9. Governing Law. This Fourth Amendment shall be governed by and construed in accordance with the laws of the State of Tennessee. 10. Full Force and Effect. Except as specifically amended by this Fourth Amendment, all other terms and provisions of the Credit Agreement shall remain in full force and effect. 11. No Other Waiver. Except as expressly stated herein, no other waiver of any term or provision of the Credit Agreement shall be inferred or implied. IN WITNESS WHEREOF, the parties have caused this Fourth Amendment to be duly executed as of the Effective Date. THOMAS NELSON, INC. By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- ACCEPTED AND AGREED TO: SUNTRUST BANK, NASHVILLE, N.A., as Agent By: /s/ Allen Oakley ------------------------------------- Title: Senior Vice President ------------------------------------- Acceptance Date: -------------------------- SUNTRUST BANK, NASHVILLE, N.A. By: /s/ Allen Oakley ------------------------------------- Title: Senior Vice President ------------------------------------- Acceptance Date: -------------------------- NATIONSBANK OF TEXAS, N.A. By: /s/ John E. Ball ------------------------------------- Title: Senior Vice President ------------------------------------- Acceptance Date: -------------------------- CREDITANSTALT-BANKVEREIN By: /s/ John G. Taylor ------------------------------------- Title: Senior Associate ------------------------------------- By: /s/ Carl S. Drake ------------------------------------- Title: Vice President ------------------------------------- Acceptance Date: April 4, 1998 --------------------------- NATIONAL CITY BANK, KENTUCKY By: /s/ Kevin L. Anderson ------------------------------------- Title: Vice President ------------------------------------- Acceptance Date: April 6, 1998 --------------------------- FIRST AMERICAN NATIONAL BANK By: /s/ Scott Bane ------------------------------------- Title: Senior Vice President ------------------------------------- Acceptance Date: April 7, 1998 --------------------------- The undersigned join in the execution of this Fourth Amendment in order to acknowledge their consent to the terms and provisions of this Fourth Amendment and to confirm that the execution of this Fourth Amendment by the parties hereto in no way affects the undersigneds' respective obligations under the Amended and Restated Guaranty Agreement executed as of December 13, 1995 by Word, Incorporated, a corporation organized and existing under the laws of the State of Delaware, PPC, Inc., a corporation organized and existing under the laws of the State of North Carolina, Editorial Caribe, Inc., a corporation organized and existing under the laws of the State of Florida, Morningstar Radio Network, Inc., a corporation organized and existing under the laws of the State of Texas, Nelson Word Ltd., a corporation organized and existing under the laws of the United Kingdom, Word Communications, Ltd., a corporation organized and existing under the laws of British Columbia, Canada, Word Direct, Inc., a corporation organized and existing under the laws of the State of Texas, Word Direct Paratners, L.P., a limited partnership organized and existing under the laws of the State of Texas, The C.R. Gibson Company, a corporation organized and existing under the laws of the State of Delaware, 855673 Ontario Limited, a corporation organized and existing under the laws of Ontario, Canada, in favor of SunTrust Bank, Nashville, N.A., a national banking association, in its capacity as agent for banks and other lending institutions parties to the Credit Agreement and each assignee thereof becoming a "Lender" as provided therein. Each person executing this Amendment on behalf of each of the undersigned is duly authorized to so execute and deliver this Amendment on behalf of each of the undersigned entities. WORTHY, INCORPORATED (f/k/a/ WORD, INCORPORATED) By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- PPC, INC. By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- EDITORIAL CARIBE, INC. By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- MORNINGSTAR RADIO NETWORK, INC. By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- C.R. GIBSON (UK) LTD. (f/k/a NELSON MEDIA (UK) LTD.) (f/k/a NELSONWORD LTD.) By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- NELSON MEDIA (CANADA) LTD. (f/k/a WORD COMMUNICATIONS, LTD.) By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- NELSON DIRECT, INC. (f/k/a WORD DIRECT, INC.) By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- NELSON DIRECT PARTNERS, L.P. (f/k/a WORD DIRECT PARTNERS, L.P.) By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- THE C.R. GIBSON COMPANY By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- 855763 ONTARIO LIMITED By: /s/ Joe L. Powers --------------------- Title: Executive Vice President --------------------- -----END PRIVACY-ENHANCED MESSAGE-----