-----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, qWFHhJBYL6eok5Us3t0HYJuN6gs8QFkLEtUMYzSX0Fmxig2skc+tyzDzndQskY3U k+GrHwTQPZM+DfqPfLpeKg== 0000950144-94-001512.txt : 19940822 0000950144-94-001512.hdr.sgml : 19940822 ACCESSION NUMBER: 0000950144-94-001512 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NELSON THOMAS INC CENTRAL INDEX KEY: 0000071023 STANDARD INDUSTRIAL CLASSIFICATION: 2731 IRS NUMBER: 620679664 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: 94544483 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 June 30, 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 Identification Number) incorporation or organization) 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 August 4, 1994, the Registrant had outstanding 9,891,233 shares of Common Stock and 799,933 shares of Class B Common Stock. Part I Item 1. Financial Statements CONSOLIDATED BALANCE SHEETS (Dollars in thousands)
June 30, March 31, June 30, 1994 1994 1993 -------- --------- -------- (Unaudited) (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $1,932 $788 $1,818 Investments Accounts receivable, less allowances of $7,606, $8,345 and $9,478, respectively 56,177 58,038 44,407 Inventories 70,052 66,994 59,461 Prepaid expenses 14,076 11,400 11,678 Deferred tax asset 12,673 12,673 5,482 ------- ------- ------- Total Current Assets 154,910 149,893 122,846 PROPERTY, PLANT AND EQUIPMENT 26,550 26,179 25,553 Less accumulated depreciation (9,174) (8,820) (7,294) ------- ------- ------- 17,376 17,359 18,259 OTHER ASSETS 14,927 12,054 9,346 DEFERRED CHARGES 4,009 4,179 4,872 GOODWILL, less accumulated amortization of $1,307, $1,087 and $643, respectively 32,013 32,278 39,077 ------ ------ ------ TOTAL ASSETS $223,235 $215,763 $194,400 ======== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $19,131 $20,798 $16,249 Income taxes currently payable 17,034 18,618 15,753 Dividends payable 428 428 423 Accrued expenses 0 4,471 41 Current portion of long-term debt 845 878 503 Current portion of capital lease obligation 736 723 1,333 ------- ------- ------ Total Current Liabilities 38,174 45,916 34,302 LONG-TERM DEBT 118,884 102,618 98,847 CAPITAL LEASE OBLIGATION 671 861 877 DEFERRED TAX LIABILITY 768 768 1,065 OTHER LIABILITIES 2,760 2,875 5,117 SHAREHOLDERS' EQUITY Preferred stock, $1.00 par value, authorized 1,000,000 shares; none issued 0 0 0 Common stock, $1.00 par value, authorized 20,000,000 shares; issued 9,891,233, 9,891,233 and 9,879,493 shares, respectively 9,891 9,891 9,880 Class B common stock, $1.00 par value, authorized 5,000,000 shares: issued 799,933, 799,933 and 802,685 shares, respectively 800 800 802 Additional paid-in capital 20,982 20,982 20,642 Retained earnings 29,704 30,651 22,425 Foreign currency translation adjustments 601 401 443 -------- -------- -------- Total Shareholders' Equity 61,978 62,725 54,192 -------- -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $223,235 $215,763 $194,400 ======== ======== ======== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data)
Three Months Ended June 30, 1994 1993 ---------- ---------- (Unaudited) (Unaudited) NET REVENUES $49,103 $44,839 COST AND EXPENSES: Cost of goods sold 25,274 22,957 Selling, general and administrative 22,382 21,445 Amortization of goodwill and non-compete agreements 440 457 ------ ------ 48,096 44,859 ------ ------ OPERATING INCOME (LOSS) 1,007 (20) Other (income) expense (46) 31 Interest expense 1,917 1,698 ------ ------ Loss before income taxes (864) (1,749) Provision for income taxes (320) (584) ------- ------ Loss before cumulative effect of change in accounting principle (544) (1,165) Cumulative effect of change in accounting principle for income taxes 0 336 ------ ------ NET LOSS ($544) ($829) ====== ====== Weighted average number of shares outstanding 10,691 10,682 NET LOSS PER SHARE: Before cumulative effect of change in accounting principle ($0.05) ($.011) Cumulative effect of change in accounting principle 0 0.03 ------- ------- Net loss per share ($0.05) ($0.08) ======= ======= DIVEDENDS DECLARED PER SHARE $0.04 $0.04 ======= ====== See Accompanying Notes
THOMAS NELSON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Three Months Ended
June 30, 1994 1993 ----------- ----------- (Unaudited) (Unaudited) Cash Flows From Operating Activities: Net Loss ($544) ($829) Adjustments to reconcile net income to net cash provided by (used in) operations: Depreciation and amortization 1,545 1,347 Change in assets and liabilities, net of acquisition: Accounts receivable, net 2,361 6,967 Inventories (2,759) (4,080) Prepaid expenses (2,627) (1,737) Accounts payable and accrued expenses (3,941) (4,717) Income taxes currently payable and deferred (4,506) (1,097) ------- ------- Net Cash Used In Operating Activities (10,471) (4,146) -------- ------- Cash Flows From Investing Activities: Capital expenditures (488) (136) Purchase of net assets of acquired company - net of cash (187) 0 Changes in other assets and deferred charges (3,333) (203) ------- ------ Net Cash Used In Investing Activities (4,008) (339) ------- ------ Cash Flows From Financing Activities: Borrowings under line of credit 16,266 5,880 Payments under capital lease obligation (176) (97) Dividends paid (428) (423) Changes in other liabilities (239) (100) Proceeds from issuance of common stock 0 388 Common stock retired 0 (108) ------- --------- Net Cash Provided by Financing Activities 15,423 5,540 ------- --------- Effect of Translation Rate Changes 200 (37) ------- --------- Net Increase in Cash and Cash Equivalents 1,144 1,018 Cash and Cash Equivalents at Beginning of Period 788 800 ------ ------ Cash and Cash Equivalents at End of Period $1,932 $1,818 ====== ====== Supplemental Disclosures of Non-cash Investing and Financing Activities: Dividends accrued and unpaid $428 $423 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 interests 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):
June 30, March 31, June 30, 1994 1994 1993 -------- --------- -------- Finished goods $61,899 $58,463 $53,632 Raw materials and work in process 8,153 8,531 5,829 ------- ------- ------- $70,052 $66,994 $59,461 ======= ======= =======
(C) - Prepaid Expenses Components of prepaid expenses consisted of the following (in thousands):
June 30, March 31 June 30, 1994 1994 1993 -------- -------- -------- Direct marketing costs $ 3,227 $ 3,320 $ 2,156 Royalty advances & production costs 9,427 7,096 7,761 Other 1,422 984 1,761 -------- ------- -------- $14,076 $11,400 $11,678 ======= ======= =======
(D) - Other Assets Components of other assets consisted of the following (in thousands):
June 30, March 31, June 30, 1994 1994 1993 -------- --------- -------- Prepaid royalties $ 9,152 $ 6,200 $ 4,114 Copyright production masters, net of accumulated amortization of $880, $789 and $397, respectively 1,121 1,209 903 Non-compete agreements, net of accumulated amortization of $1,437, $1,214 and $590, respectively 3,266 3,489 3,480 Other 1,388 1,156 849 ---------- -------- ------- $14,927 $12,054 $9,346 ========= ========= =======
(E) - Accrued Expenses Components of accrued expenses consisted of the following (in thousands):
June 30, March 31, June 30, 1994 1994 1993 ------- --------- -------- Accrued interest $ 197 $ 969 $ 165 Accrued royalties 9,658 9,980 9,198 Accrued payroll 1,918 3,043 3,044 Contractual commitments 1,621 1,626 135 Prepaid subscriptions 669 699 731 Other 3,006 2,301 2,480 --------- --------- --------- $ 17,069 $ 18,618 $ 15,753 ========= ========= =========
(F) - Cash Dividend On May 24, 1994, the Company's directors declared a cash dividend of $.04 per share. The dividend is payable on August 15, 1994, to shareholders of record on August 1, 1994. 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.
Three Months Ended June 30, ---------------------- Increase 1994 1993 (Decrease) ---- ---- ---------- Net revenues 100.0% 100.0% 9.5% Cost of goods sold 51.5 51.2 10.1% Selling, general and administrative expenses 45.5 47.8 4.4% Amortization of goodwill & non-compete agreements .9 1.0 (3.7%) ---- ------- ------- 97.9 100.0 7.2% Operating income (loss) 2.1 0.0 - Loss before income taxes (1.8) (3.9) 50.6% Loss before cumulative effect of accounting change (1.1) (2.6) 53.3% Net loss (1.1) (1.8) 34.3%
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 $4.3 million or 10% for the first quarter of fiscal 1995 when compared to the previous year. The increase was due to volume increases arising from the introduction of new book, gift, Bible and music products. Price increases did not have a material effect. The Company's cost of sales increased by $2.3 million or 10% over the first quarter of fiscal 1994, and as a percentage of net revenues increased from the previous year's 51.2% to 51.5%. The increase in cost of sales, as a percentage of net revenues, was the result of changes in the mix of products and market channels. Generally, books, music and gift product lines have greater gross margins than Bible products. Direct marketing revenues, a growing segment of the Company's business, have greater gross margins than sales to retail stores and mass merchandisers. Selling, general and administrative expenses increased over the previous fiscal year quarter by $0.9 million or 4%. These expenses as a percentage of net revenues decreased for the three months compared to the previous year from 47.8% to 45.5%, primarily due to the decreases in advertising, salaries and benefits. The decrease in salaries and benefits relates to synergies realized from the consolidation of certain operational areas. Amortization of goodwill and non-compete agreements decreased 4% over the prior year due to purchase price adjustments relating to the acquisition of Word, Incorporated. Interest expense increased 13% over the prior year due to increased borrowings used for working capital needs. 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 June 30, 1994, the Company had approximately $23.2 million available in long-term credit under its credit facilities. During the three months ended June 30, 1994, capital expenditures totaled approximately $490,000. The Company has no other plans that will require significant capital expenditures for fiscal year ending March 31, 1995. PART II Item 6. Exhibits and Reports on Form 8-K (a) Exhibits required by Item 601 of Regulations S-K - none (b) No Form 8-K was filed by the Company during the three months ended June 30, 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) August 12, 1994 BY /s/ Joe L. Powers ----------------- Joe L. Powers Vice President, Secretary Chief Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----