|
|
|
|
|
|
|
|
|
|
Previous: NATIONAL WESTERN LIFE INSURANCE CO, 10-Q, 1994-08-15 |
Next: NEW ENGLAND ELECTRIC SYSTEM, 35-CERT, 1994-08-15 |
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
<TABLE>
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
June 30, March 31, June 30,
1994 1994 1993
-------- --------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
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
</TABLE>
<TABLE>
THOMAS NELSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
<CAPTION>
Three Months Ended
June 30,
1994 1993
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
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
</TABLE>
<TABLE>
THOMAS NELSON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Three Months Ended
<CAPTION> June 30,
1994 1993
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
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
</TABLE>
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):
<TABLE>
<CAPTION>
June 30, March 31, June 30,
1994 1994 1993
-------- --------- --------
<S> <C> <C> <C>
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
======= ======= =======
</TABLE>
(C) - Prepaid Expenses
Components of prepaid expenses consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, March 31 June 30,
1994 1994 1993
-------- -------- --------
<S> <C> <C> <C>
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
======= ======= =======
</TABLE>
(D) - Other Assets
Components of other assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, March 31, June 30,
1994 1994 1993
-------- --------- --------
<S> <C> <C> <C>
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
========= ========= =======
</TABLE>
(E) - Accrued Expenses
Components of accrued expenses consisted of the following (in thousands):
<TABLE>
<CAPTION>
June 30, March 31, June 30,
1994 1994 1993
------- --------- --------
<S> <C> <C> <C>
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
========= ========= =========
</TABLE>
(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
<TABLE>
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.
<CAPTION>
Three Months Ended
June 30,
---------------------- Increase
1994 1993 (Decrease)
---- ---- ----------
<S> <C> <C> <C>
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%
</TABLE>
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
|
|