<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
For the fiscal year ended February 1, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission File No. 0-20664
BOOKS-A-MILLION, INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 63-0798460
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
402 INDUSTRIAL LANE
BIRMINGHAM, ALABAMA 35211
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 942-3737
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(Title of Class)
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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
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CONTINUED
<PAGE> 2
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 [X].
The aggregate market value of the voting stock held by non-affiliates of
the Registrant (assuming for these purposes, but without conceding, that all
executive officers and directors are "affiliates" of the Registrant) as of April
11, 1997 (based on the closing sale price as reported on the Nasdaq National
Market on such date), was $45,617,067.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
The number of shares outstanding of the Registrant's Common Stock as of
April 11, 1997 was 17,427,593.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
February 1, 1997 are incorporated by reference into Part II of this report.
Portions of the Proxy Statement for the Annual Meeting of Stockholders
to be held on June 4, 1997 are incorporated by reference into Part III of this
report.
<PAGE> 3
PART I
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Certain of the statements set forth herein with respect to store
openings and closings, the profitability of certain product lines, capital
expenditures and future liquidity are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current intentions, assumptions and projections and
are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward-looking statements. Factors that
could cause actual results to differ materially from those in the
forward-looking statements include, among other things, unanticipated increases
in merchandise, salary and distribution costs and the effects of increased
competition on specific stores and the Company generally.
ITEM 1. BUSINESS
GENERAL
Books-A-Million, Inc. (the "Company" or the "Registrant"), is a leading
book retailer and is one of the dominant book retailers in the southeastern
United States. The Company, which was founded in 1917, has developed three
distinct store formats to address the various market areas it serves.
Superstores, the first of which was opened in 1988, average approximately 25,000
square feet and operate under the name "Books-A-Million." Combination book and
greeting card stores, which are operated under the name "Bookland," have
approximately 4,500 square feet and are generally located in smaller markets
that do not readily sustain stand-alone book and greeting card stores.
"Traditional" bookstores, also operated under the name "Bookland," have
approximately 3,500 square feet and are located primarily in malls. All store
formats offer an extensive selection of best sellers and other hardcover and
paperback books, magazines, newspapers, cards and gifts. The Company is also a
wholesaler of books to, among others, bookstores, wholesale clubs, supermarkets,
department stores and mass merchandisers.
The Company was originally incorporated under the laws of the State of
Alabama in 1964 and was reincorporated in Delaware in September 1992. The
principal executive offices of the Company are located at 402 Industrial Lane,
Birmingham, Alabama 35211, and its telephone number is (205) 942-3737. Unless
the context otherwise requires, references to the Company include its wholly
owned subsidiary, American Wholesale Book Company, Inc. ("American Wholesale").
BOOKS-A-MILLION SUPERSTORES
The Company opened its first Books-A-Million superstore in April 1988.
The Company developed its superstores to capitalize on the growing consumer
demand for the convenience, selection and value associated with the superstore
retailing format. Each superstore is designed to be a receptive and open
environment conducive to browsing and reading and includes ample space for
promotional events open to the public, including book autograph sessions and
children's storytelling. The Company operates 91 Books-A-Million superstores as
of February 1, 1997.
Books-A-Million superstores emphasize selection, value and customer
service. Books-A-Million superstores offer an extensive selection of best
sellers and other hardcover and paperback books, magazines, local and
out-of-town newspapers, collectibles, greeting cards and gifts. Books-A-Million
superstores also dedicate space to bargain books that are sold at a discount
from publishers' originally suggested retail prices. Each Books-A-Million
superstore has a centrally located service center staffed with associates who
are knowledgeable about the store's merchandise and who are trained to answer
customers' questions, assist customers in locating books within the store and
place special orders. The majority of the superstores also include an espresso
and coffee bar called Joe Muggs. The Company's superstores are conveniently
located on major, high-traffic roads and in enclosed malls or strip shopping
centers with adequate parking. Books-A-Million superstores are generally open
seven days a week from 9:00 a.m. to 11:00 p.m.
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BOOKLAND STORES
The Company's Bookland stores utilize two formats, the combination and
traditional store formats, which are tailored to the size, demographics and
competitive conditions of the particular market area. Combination stores average
approximately 4,500 square feet and carry a broad selection of best sellers and
other hardcover and paperback books, bargain books, magazines, gifts and
greeting cards. Because of the increased customer traffic it generates, the
combination store format has been particularly successful in smaller market
areas that do not readily sustain stand-alone book and greeting card stores. The
Company has 30 combination stores as of February 1, 1997.
The Company's traditional bookstores average approximately 3,500 square
feet and offer a wide selection of best sellers and other hardcover and
paperback books, magazines and newspapers. The Company's traditional bookstores
are located in multiple types of market areas, but are generally located in
market areas that are larger than those in which combination stores are located.
The Company has 30 traditional bookstores as of February 1, 1997.
MERCHANDISING
The Company employs several value-oriented merchandising strategies.
Books on the Company's best-seller list, which is developed exclusively by the
Company based on its sales and customer demand in its stores, are generally sold
in the Company's superstores at 33% below publishers' suggested retail prices.
In addition, superstore customers can join the Millionaire's Club and save 10%
on all purchases in Books-A-Million superstores, including already discounted
best-sellers. Bookland stores employ a market-by-market pricing strategy, and
many sell books on the Company's best-seller list at 15% to 25% below
publishers' suggested retail prices. In addition, Bookland store customers can
join the Read & Save Rebate program and receive discounts on additional
merchandise purchased. The Company's point-of-sale computer system provides the
data necessary to enable the Company to anticipate consumer demand and customize
store inventory selection to reflect local customer interest and demand.
MARKETING
The Company maintains a regional focus, which involves dedicating space
in its stores to books of regional and local interest and creating special
departments such as regional literature, cooking and religious books. Store
managers are given the flexibility to select titles that are responsive to
consumer demand in that particular market area, and the Company continuously
modifies its title selection in each bookstore to tailor selection to local
consumer preferences. The Company offers frequent promotions that have a
regional flavor, including book autograph sessions with popular regional
authors.
The Company promotes its bookstores principally through the use of
geographically concentrated newspaper advertising and direct mail circulars, as
well as point-of-sale materials posted and distributed in the stores. Store
managers are instrumental in tailoring certain promotions for their particular
market area and in designing store displays. The Company also arranges for
special appearances and book autograph sessions with recognized authors to
attract customers and to build and reinforce customer awareness of its stores. A
substantial portion of the Company's advertising expenses are reimbursed from
publishers through their cooperative advertising programs.
STORE OPERATIONS AND SITE SELECTION
In choosing specific store sites within a market area, the Company
applies standardized site selection criteria that take into account numerous
factors, including the local demographics, desirability of available leasing
arrangements, proximity to existing Company operations and overall level of
retail activity. In general, stores are located on major high-traffic roads
convenient to customers and have adequate parking. The Company generally
negotiates short-term leases with renewal options. The Company periodically
reviews the profitability trends and prospects of each of its stores and
evaluates whether or not any underperforming stores should be closed, converted
to a different format or relocated to more desirable locations.
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PURCHASING
The Company's purchasing decisions are centralized and are made by the
Company's merchandising department. The Company's buyers negotiate terms,
discounts and cooperative advertising allowances for all the Company's
bookstores and decide which books to purchase, in what quantity and for which
stores. The buyers use current inventory and sales information provided by the
Company's in-store point-of-sale computer system to make reorder decisions.
Although the majority of purchases are made by the Company's merchandising
department, individual store managers have the flexibility to influence
purchasing decisions in order to respond to local demand.
The Company purchases merchandise from over 500 vendors. The Company
purchases substantially all of its collectors' supplies from one supplier and
substantially all of its magazines from another supplier, each of which is a
related party. No one vendor accounted for more than 8.3% of the Company's
overall merchandise purchases in the fiscal year ended February 1, 1997. In
general, approximately 80% of the Company's inventory may be returned by the
Company for full credit, which substantially reduces the Company's risk of
inventory obsolescence.
DISTRIBUTION CAPABILITIES
American Wholesale receives a substantial portion of its inventory
shipments, including substantially all of its books, at its facility located in
Florence, Alabama. Orders from the Company's bookstores are processed by
computer and assembled for delivery to the stores on pre-determined weekly
schedules. Substantially all deliveries of inventory from American Wholesale's
facilities are made by their dedicated transportation fleet. At the time
deliveries are made to each of the Company's stores, returns of slow moving or
obsolete books are picked up and returned to the American Wholesale returns
processing center. American Wholesale then returns these books to publishers for
credit.
COMPETITION
The retail bookstore industry is highly competitive and includes
competitors that have substantially greater financial and other resources than
the Company. The Company competes directly with national and regional bookstore
chains, independent bookstores, certain mass merchandisers and greeting card
stores. The Company is one of the top four retail bookstore chains in the
nation. In recent years, competing bookstore chains have been expanding their
businesses and certain leading regional and national chains have developed and
opened superstores. The Company also experiences indirect competition from
retail specialty stores that offer books in a particular area of specialty.
Management believes that the key competitive factors in the retail book industry
are convenience of location, selection, customer service and price.
SEASONALITY
Similar to many retailers, the Company's business is seasonal, with its
highest retail sales, gross profit and net income historically occurring in its
fourth fiscal quarter. This seasonal pattern reflects the increased demand for
books and gifts experienced during the year-end holiday selling season. Working
capital requirements are generally at their highest during the third fiscal
quarter and the early part of the fourth fiscal quarter due to the seasonality
of the Company's business. The Company's results of operations depend
significantly upon net sales generated during the fourth fiscal quarter, and any
significant adverse trend in the net sales of such period would have a material
adverse affect on the Company's results of operations for the full year. In
addition to seasonality, the Company's results of operations may fluctuate from
quarter to quarter as a result of the amount and timing of sales and profits
contributed by new stores as well as other factors. Accordingly, the addition of
a large number of new stores in a particular fiscal quarter could adversely
affect the Company's results of operations for that quarter.
TRADEMARKS
"Books-A-Million," "BAM!" "Read & Save Rebate," "Bookland," "Books &
Co.," "Up All Night Reader," "Kids-A-Million," "Teachers First", "The
Write-Price", and "Book$mart" are registered trademarks of the Company.
Management does not believe that these trademarks are crucial to the
continuation of the Company's operations.
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EMPLOYEES
As of fiscal year end, the Company employed approximately 2,200
full-time associates and 2,000 part-time associates. The number of part-time
associates employed by the Company fluctuates based upon seasonal needs. None of
the Company's associates are covered by a collective bargaining agreement, and
management believes that the Company's relations with its associates are
excellent.
ITEM 2. PROPERTIES
The Company's bookstores are located either in enclosed malls or strip
shopping centers. All of the Company's stores are leased. Generally, these
leases have terms ranging from five to ten years and require the Company to pay
a fixed minimum rental fee or a rental fee based on a percentage of net sales
together with certain customary costs (such as property taxes, common area
maintenance and insurance).
The Company's principal executive offices are located in a 20,550
square foot leased building located in Birmingham, Alabama. The lease, which is
with a related party, extends to January 31, 2001, and the Company has an option
to extend the lease for an additional five years.
American Wholesale owns its wholesale distribution center which is
located in an approximately 251,685 square foot facility located in Florence,
Alabama. During fiscal 1995 and 1996, the Company financed the acquisition and
construction of the wholesale distribution facility through loans obtained from
the proceeds of an industrial revenue bond (the "Bond"), which are secured by a
mortgage interest in this facility. The Company also leases, from a related
party, a second warehouse facility, which is located in an approximately 83,000
square foot facility in Florence, Alabama. In addition, the Company leases all
of its tractor trailers, which comprise its transportation fleet.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently a party to any legal proceedings that it
believes could have a material adverse effect upon its business or financial
condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information under the heading "Market and Dividend Information" on
the inside back cover of the Annual Report to Stockholders for the year ended
February 1, 1997 is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Consolidated Financial
Data" for the years ended January 31, 1993, through February 1, 1997 on page 6
of the Annual Report to Stockholders for the year ended February 1, 1997, is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations" on pages 7 through 9 of the
Annual Report to Stockholders for the year ended February 1, 1997 is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its subsidiary
included in the Annual Report to Stockholders for the year ended February 1,
1997 are incorporated herein by reference:
Consolidated Balance Sheets as of February 1, 1997 and February 3,
1996.
Consolidated Statements of Income for the Fiscal Years Ended February
1, 1997, February 3, 1996, and January 28, 1995.
Consolidated Statements of Stockholders' Investment for the Fiscal
Years Ended February 1, 1997, February 3, 1996, and January 28,1995.
Consolidated Statements of Cash Flows for the Fiscal Years Ended
February 1, 1997, February 3, 1996, and January 28, 1995.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
The information under the heading "Summary of Quarterly Results
(Unaudited)" on page 20 of the Annual Report to Stockholders for the
year ended February 1, 1997 is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The sections under the heading "Proposal I - Election of Directors"
entitled "Nominees for Election - Term Expiring 2000", "Incumbent Director -
Term Expiring 1998" and "Incumbent Directors - Term Expiring 1999" on pages 3
through 4 of the Proxy Statement for the Annual Meeting of Stockholders to be
held June 4, 1997, are incorporated herein by reference for information on the
directors of the Registrant.
EXECUTIVE OFFICERS
The executive officers of the Company are listed below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<S> <C> <C>
Charles C. Anderson 62 Chairman of the Board of Directors
Clyde B. Anderson 36 Chief Executive Officer, President and Director
R. Lew Burdette 38 Executive Vice President, Chief Operating Officer,
and Director
Sandra B. Cochran 38 Executive Vice President, Chief Financial Officer
and Assistant Secretary
Terrance G. Finley 43 Vice President - Merchandising
</TABLE>
Charles C. Anderson has served as the Chairman of the Board of Directors of
the Company for more than 27 years. He also served as the Chief Executive
Officer of the Company from 1964 until July 1992. Mr. Anderson is the father of
Clyde B. Anderson.
Clyde B. Anderson has served as the President of the Company since
November 1987 and as Chief Executive Officer of the Company since July 1992. Mr.
Anderson joined the Company in 1983 and served as the Chief Operating Officer of
the Company from November 1987 to March 1994. Mr. Anderson has served as a
director of the Company since August 1987 and serves on the Board of Directors
and the Compensation Committee of Hibbetts, Inc., a sporting goods retailer. Mr.
Anderson is the son of Charles C. Anderson, the Chairman of the Board of
Directors.
R. Lew Burdette has served as Executive Vice President and Chief
Operating Officer since April 1994. Mr. Burdette served as the Vice President -
Operations of the Company from May 1989 to April 1994. Mr. Burdette joined the
company in 1985 and served as a District Manager before being promoted to
General Merchandise Manager in March 1986. Mr. Burdette was elected to the Board
of Directors in March 1995.
Sandra B. Cochran has served as Executive Vice President since February
1996, Chief Financial Officer since September 1993, and Vice President and
Assistant Secretary of the Company since August 1992. Prior to joining the
Company, Ms. Cochran served as a Vice President (as well as in other capacities)
of SunTrust Securities, Inc., a subsidiary of SunTrust Banks, Inc. for more than
five years.
Terrance G. Finley has served as the Vice President - Merchandising
since April 1994 and was named an executive officer of the Company in March
1995. Mr. Finley served as the General Manager of Book$mart from February 1992
to April 1994. Prior to joining the Company, Mr. Finley served as the Vice
President - Sales for Smithmark Publishers. All executive officers of the
Company are elected annually by and serve at the discretion of the Board of
Directors.
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COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own beneficially more
than 10% of the Company's Common Stock to file reports of ownership and changes
in ownership of such stock with the Securities and Exchange Commission and the
Nasdaq Stock Market, Inc. To the Company's knowledge, based solely upon a review
of the copies of such reports furnished to the Company and written
representations that no other reports were required, its directors, executive
officers and greater than 10% stockholders complied with all applicable Section
16(a) filing requirements during fiscal 1997.
ITEM 11. EXECUTIVE COMPENSATION
The sections under the heading "Executive Compensation," other than
those entitled "Report on Executive Compensation" and "Performance Graph", on
pages 7 through 15 of the Proxy Statement for the Annual Meeting of Stockholders
to be held June 4, 1997 are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section under the heading "Proposal I - Election of Directors"
entitled "Beneficial Ownership of Common Stock" on page 5 and 6 of the Proxy
Statement for the Annual Meeting of Stockholders to be held June 4, 1997 is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The sections under the heading "Executive Compensation" entitled
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" on pages 9 through 11 of the Proxy
Statement for the Annual Meeting of Stockholders to be held June 4, 1997 are
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following Consolidated Financial Statements of
Books-A-Million, Inc. and its subsidiary, included in the Registrant's
Annual Report to Stockholders for the fiscal year ended February 1,
1997 are incorporated by reference in Part II, Item 8:
Consolidated Balance Sheets as of February 1, 1997, and
February 3, 1996.
Consolidated Statements of Income for the Fiscal Years Ended
February 1, 1997, February 3, 1996, and January 28, 1995.
Consolidated Statements of Stockholders' Investment for the
Fiscal Years Ended February 1, 1997, February 3, 1996, and
January 28, 1995.
Consolidated Statements of Cash Flows for the Fiscal Years
Ended February 1, 1997, February 3, 1996, and January 28,
1995.
Notes to Consolidated Financial Statements.
Report of Independent Public Accountants.
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2. Financial Statement Schedules of Books-A-Million, Inc.
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions, or are inapplicable, or the information called for therein
is included elsewhere in the financial statements or related notes thereto
contained or incorporated by reference herein.
3. Exhibits **
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C> <C>
3.1 -- Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to
Registration Statement on Form S-1, File No. 33-52256, originally filed September 21, 1992).
3.2 -- Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to Registration Statement on
Form S-1, File No. 33-52256, originally filed September 21, 1992).
4.1 -- See Exhibits 3.1 and 3.2 hereto incorporated herein by reference to the Exhibits of the same number to
Registration Statement on Form S-1, File No. 33-52256, originally filed September 21, 1992.
10.1 -- Lease Agreement between First National Bank of Florence, Alabama, as Trustee, and Bookland Stores, Inc.
(which is a predecessor of the Registrant), an Alabama corporation, dated January 30, 1991
(incorporated by reference to Exhibit 10.1 to Registration Statement on Form S-1, File No. 33-52256,
originally filed September 21, 1992).
*10.2 -- Stock Option Plan (incorporated by reference to Exhibit 10.6 to Registration Statement on Form S-1,
File No. 33-52256, originally filed September 21, 1992).
*10.3 -- Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.7 to Registration Statement on
Form S-1, File No. 33-52256, originally filed September 21, 1992).
*10.4 -- Amendment to Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.6 to Annual Report
on Form 10-K for the fiscal year ended January 29, 1994, File No. 0-20664, filed on April 29, 1994).
*10.5 -- 401(k) Plan (together with related documents) (incorporated by reference to Exhibit 10.9 to
Registration Statement on Form S-1, File No. 33-52256, originally filed September 21, 1992).
10.6 -- Shareholders Agreement dated as of September 1, 1992 (incorporated by reference to
Exhibit 10.9 to Annual Report on Form 10-K for the fiscal year ended January 31, 1993,
File No. 0-20664, filed May 3, 1993).
*10.7 -- Executive Incentive Plan (incorporated by reference to Exhibit 10.8 to Annual Report on
Form 10-K for the fiscal year ended January 28, 1995, File No. 0-20664, filed
April 28, 1995).
*10.8 -- Amendment to Stock Option Plan (incorporated by reference to Exhibit 10.9 to Annual
Report on Form 10-K for the fiscal year ended January 28, 1995, File No. 0-20664, filed
April 28, 1995).
10.9 -- Short Term Credit Agreement dated as of October 27, 1995, between the Company and AmSouth Bank, N.A.
(incorporated by reference to Exhibit 10.6 to Annual Report on Form 10-K for the fiscal year ended
February 3, 1996, File No. 0-20664, filed May 3, 1996).
</TABLE>
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<TABLE>
<S> <C> <C>
10.10 -- Revolving Loan Agreement dated as of October 27, 1995 between the Company and
AmSouth Bank, N.A. (incorporated by reference to Exhibit 10.10 to Annual Report on
Form 10-K for the fiscal year ended February 3, 1996, File 0-20664, filed May 3, 1996).
10.11 -- Amendment to Short Term Credit Agreement, dated as of November 1, 1996 between the Company and
AmSouth Bank, N.A.
13 -- Portions of the Annual Report to Stockholders for the year ended February 1, 1997 that
are expressly incorporated by reference into Part II of this Report.
21 -- Subsidiary of the Registrant.
23 -- Consent of Independent Public Accountants to the incorporation of their report on the
Company's consolidated financial statements for the fiscal year ended February 1, 1997,
into the Registration Statements on Form S-8. (File Nos. 33-72812 and 33-86980).
27 -- Financial Data Schedule (for SEC use only)
</TABLE>
* The indicated exhibit is a compensatory plan required to be filed as
an exhibit to this Annual Report on Form 10-K.
** The Company has financed certain capital expenditures with proceeds
of an industrial development revenue bond (the "Bond"), for which the
outstanding balance as of February 1, 1997, is less than 10% of the Company's
total assets. The Bond documents have not been included as an exhibit hereto but
the Company will provide such documents to the Securities and Exchange
Commission upon request.
(b) Reports on Form 8-K
Not applicable.
(c) See Item 14(a) (3), the Exhibit Index and the Exhibits attached hereto.
(d) See Item 14(a) (2).
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BOOKS-A-MILLION, INC.
by: /s/ Clyde B. Anderson
-------------------------------------
Clyde B. Anderson
Chief Executive Officer and President
Date: May 2, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
PRINCIPAL EXECUTIVE OFFICER:
/s/ Clyde B. Anderson
- --------------------------------------------
Clyde B. Anderson
Chief Executive Officer and President
Date: May 2, 1997
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Sandra B. Cochran
- --------------------------------------------
Sandra B. Cochran
Executive Vice President, Chief Financial
Officer and Assistant Secretary
Date: May 2, 1997
DIRECTORS:
/s/ Charles C. Anderson
- --------------------------------------------
Charles C. Anderson
Date: May 2, 1997
/s/ Clyde B. Anderson
- --------------------------------------------
Clyde B. Anderson
Date: May 2, 1997
/s/ R. Lew Burdette
- --------------------------------------------
R. Lew Burdette
Date: May 2, 1997
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DIRECTOR:
/s/ Ronald G. Bruno
- --------------------------------------------
Ronald G. Bruno
Date: May 2, 1997
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<PAGE> 14
DIRECTOR:
/s/ John E. Southwood
- --------------------------------------------
John E. Southwood
Date: May 2, 1997
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<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- -------
<S> <C> <C>
3.1 -- Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to
Registration Statement on Form S-1, File No. 33-52256, originally filed September 21, 1992).
3.2 -- Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to Registration Statement
on Form S-1, File No. 33-52256, originally filed September 21, 1992).
4.1 -- See Exhibits 3.1 and 3.2 hereto incorporated herein by reference to the Exhibits of the same
number to the Registration Statement on Form S-1, File No. 33-52256, originally filed
September 21, 1992.
10.1 -- Lease Agreement between First National Bank of Florence, Alabama, as Trustee, and
Bookland Stores, Inc. (which is a predecessor of the Registrant), an Alabama corporation,
dated January 30, 1991 (incorporated by reference to Exhibit 10.1 to Registration Statement
on Form S-1, File No. 33-52256, originally filed September 21, 1992).
10.2 -- Stock Option Plan (incorporated by reference to Exhibit 10.6 to Registration Statement on
Form S-1, file no. 33-52256, originally filed September 21, 1992).
10.3 -- Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.6 to Registration
Statement on Form S-1, File No. 33-52256, originally filed September 21, 1992).
10.4 -- Amendment to Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.6
to Annual Report on 10-K, for the fiscal year ended January 29, 1994, File No. 0-20664,
filed on April 29, 1994).
10.5 -- 401(k) Plan (together with related documents) (incorporated by reference to Exhibit 10.9 to
Registration Statement on Form S-1, File No. 33-52256, originally filed September 21, 1992).
10.6 -- Shareholders Agreement dated as of September 1, 1992, (incorporated by reference to
Exhibit 10.9 to Annual Report on Form 10-K for the fiscal year ended January 31, 1993,
File No. 0-20664 filed May 3, 1993).
10.7 -- Executive Incentive Plan (incorporated by reference to Exhibit 10.8 to Annual Report on
Form 10-K for the fiscal year ended January 28, 1995, File No. 0-20664, filed
April 28, 1995).
10.8 -- Amendment to Stock Option Plan (incorporated by reference to Exhibit 10.9 to Annual Report
on Form 10-K for the fiscal year ended January 28, 1995, File No 0-20664, filed
April 28, 1995).
10.9 -- Short Term Credit Agreement dated as of October 27, 1995 between the Company and AmSouth Bank, N.A.
(incorporated by reference to Exhibit 10.6 to Annual Report on Form 10-K for the fiscal year ended February 3, 1996,
File No. 0-200664, filed May 3, 1996).
10.10 -- Revolving Loan Agreement dated as of October 27, 1995 between the Company and AmSouth Bank, N.A. (incorporated by
reference to Exhibit 10.10 to Annual Report on Form 10-K for the fiscal year ended February 3, 1996, File No.
0-20664, filed May 3, 1996).
10.11 -- Amendment to Short Term Credit Agreement, dated as of November 1, 1996, between the Company and AmSouth
Bank, N.A.
13 -- Portions of the Annual Report to Stockholders for the year ended February 1, 1997 that are expressly
incorporated by reference into Part II of this report.
21 -- Subsidiary of the Registrant.
23 -- Consent of Independent Public Accountants to the incorporation of their report on the
Company's consolidated financial statements for the fiscal year ended February 1, 1997
into the Registration Statements on Form S-8. (File Nos. 33-72812 and 33-86980).
27 -- Financial Data Schedule (for SEC use only).
</TABLE>
-13-
<PAGE> 1
EXHIBIT 10.11
FIRST AMENDMENT
TO SHORT-TERM CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SHORT-TERM CREDIT AGREEMENT dated as of
November 1, 1996 but executed on November 26, 1996 ("this Amendment") is
entered into by BOOKS-A-MILLION, INC., a Delaware corporation ("BAM"), AMERICAN
WHOLESALE BOOK COMPANY, INC., an Alabama corporation ("AWBC"; BAM and AWBC are
sometimes together referred to as the "Borrowers") and AMSOUTH BANK OF ALABAMA,
an Alabama banking corporation (the "Lender").
RECITALS
A. The Borrowers and the Lender have heretofore entered into a
Short-Term Credit Agreement dated as of October 27, 1995 (the "Agreement")
whereby the Lender made available to the Borrowers a revolving credit facility
in an aggregate principal amount outstanding not to exceed $10,000,000 (the
"Revolving Facility"), the proceeds of which were to be used by the Borrowers
for general corporate purposes.
B. The Borrowers have applied to the Lender for an extension of
the Termination Date of the Revolving Facility until June 30, 1997 and for an
increase in the amount of the Maximum Credit Amount to $20,000,000, the
proceeds of which will continue to be used by the Borrowers for general
corporate purposes.
C. The Borrower and the Lender wish to amend the Agreement as
requested by the Borrowers and as further set forth in this Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals and the mutual
obligations and covenants contained herein, the Borrowers and the Lender hereby
agree as follows:
1. Capitalized terms used in this Amendment and not otherwise
defined herein have the respective meanings attributed thereto in the
Agreement.
2. The defined term "Maximum Credit Agreement" set forth in
Article I of the Agreement is hereby deleted and replaced in its entirety, by
the following:
"Maximum Credit Amount shall mean $20,000,000."
3. The defined term "Revolving Facility" set forth in Article I
of the Agreement is hereby amended to read, in its entirety, as follows:
"Revolving Facility shall mean the credit facility made
available to the Borrowers by the Lender under the terms of Article 2
in an aggregate amount of up to $20,000,000 as reduced by the
Borrowers pursuant to Section 2.6 hereof."
<PAGE> 2
4. The defined term "Termination Date" set forth in Article I of
the Agreement is hereby amended to read, in its entirety, as follows:
"Termination Date" means June 30, 1997, as the same may be
extended from time to time in accordance with Section 2.7 hereof."
5. The reference to the figure "$10,000,000" as it refers to the
defined term "Note" in Section 2.1(a) of the Agreement is hereby amended to
refer instead to the figure "$20,000,000."
6. Notwithstanding the execution of this Amendment, all of the
indebtedness evidenced by the Note shall remain in full force and effect, as
modified hereby, and all of the collateral described in the Agreement and the
Loan Documents shall remain subject to the liens, security interests and
assignments of the Agreement and the Loan Documents as security for the
indebtedness evidenced by the Note and all other indebtedness described
therein; and nothing contained in this Amendment shall be construed to
constitute a novation of the indebtedness evidenced by the Note; and nothing
contained in this Amendment should be construed to release, satisfy, discharge,
terminate or otherwise affect or impair in any manner whatsoever (a) the
validity or enforceability of the indebtedness evidenced by the Note; (b) the
liens, security interests, assignments and conveyances effected by the
Agreement or the Loan Documents, or the priority thereof; (c) the liability of
any maker, endorser, surety, guarantor or other person that may now or
hereafter be liable under or on account of the Note or the Agreement or the
Loan Documents; or (d) any other security or instrument now or hereafter held
by the Lender as security for or as evidence of any of the above-described
indebtedness.
7. All references in the Loan Documents to "Credit Agreement"
shall refer to the Agreement as amended by this Amendment, and as the Agreement
may be further amended from time to time.
8. The Borrowers hereby certify that the organization documents
of the Borrowers have not been amended since October 27, 1995.
9. The Borrowers hereby represent and warrant to the Lender that
all representations and warranties contained in the Agreement are true and
correct as of the date hereof (except representations and warranties that are
expressly limited to an earlier date); and the Borrowers hereby certify that no
Event of Default nor any event that, upon notice or lapse of time or both,
would constitute an Event of Default, has occurred and is continuing.
10. Except as hereby amended, the Agreement shall remain in full
force and effect as written. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which when
taken together shall constitute one and the same instrument. The covenants and
agreements contained in this Amendment shall apply to and inure
2
<PAGE> 3
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
11. Nothing contained herein shall be construed as a waiver,
acknowledgment or consent to any breach of or Event of Default under the
Agreement and the Loan Documents not specifically mentioned herein.
12. This Amendment shall be governed by the laws of the State of
Alabama.
3
<PAGE> 4
IN WITNESS WHEREOF, each of the Borrowers and the Lender has caused
this Amendment to be executed and delivered by its duly authorized corporate
officer as of the day and year first above written.
BOOKS-A-MILLION, INC.
By: /S/ SANDRA B. COCHRAN
-------------------------------------
Its EVP & CFO
----------------------------------
AMERICAN WHOLESALE BOOK COMPANY, INC.
By: /S/ SANDRA B. COCHRAN
-------------------------------------
Its VP & CFO
----------------------------------
Hand Delivery Address:
402 Industrial Lane
Birmingham, Alabama 35211
FAX: (205) 945-1772
Attention: Chief Financial Officer
Mailing Address:
Post Office Box 19768
Birmingham, Alabama 35219
FAX: (205) 945-1772
Attention: Chief Financial Officer
<PAGE> 5
AMSOUTH BANK OF ALABAMA
By: /S/ DAVID A. SIMMONS
-------------------------------------
Its Senior Vice President
Hand Delivery Address:
7th Floor, AmSouth-Sonat Tower 1900
Fifth Avenue North
Birmingham, Alabama 35203
FAX: (205) 801-0157
Attention: Regional Banking Department
Mailing Address:
Post Office Box 11007
Birmingham, Alabama 35288
FAX: (205) 801-0157
Attention: Regional Banking Department
<PAGE> 1
EXHIBIT 13
MARKET AND DIVIDEND INFORMATION
Common Stock
The Common Stock of Books-A-Million, Inc. is traded in the Nasdaq
National Market under the symbol BAMM.
The chart below sets forth the high and low stock prices for each quarter of
the fiscal years ending February 1, 1997, and February 3, 1996.
<TABLE>
<CAPTION>
Quarter Ended High Low
-------------------------------------------------------
<S> <C> <C>
January, 1997 7 5/8 5 1/2
October, 1996 8 3/8 6 5/8
July, 1996 12 1/4 6 1/2
April, 1996 11 3/8 9 3/4
January, 1996 15 3/8 7 1/2
October, 1995 18 5/8 12 5/8
July, 1995 16 13 3/8
April, 1995 15 12 3/8
</TABLE>
The closing price on April 11, 1997, was $4.50. No cash dividends have been
declared since completion of the Company's initial public offering. As of April
11, 1997, Books-A-Million, Inc., had approximately 7,844 stockholders, based on
the number of holders of record and individual participants represented by
security position listings.
<PAGE> 2
Books-A-Million
Selected Consolidated Financial Data
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------------------
2/1/97 2/3/96 1/28/95 1/29/94 1/31/93
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
Net sales $ 278,613 $ 229,801 $ 172,366 $ 123,263 $ 95,073
Cost of products sold 206,269 164,124 124,107 89,379 69,590
-----------------------------------------------------------
Gross profit 72,344 65,677 48,259 33,884 25,483
Operating, selling and
administrative expenses 50,636 43,559 31,580 22,191 17,129
Depreciation and amortization 9,540 6,833 4,256 2,991 2,383
Store closing charge -- 2,945 -- -- --
-----------------------------------------------------------
Operating profit 12,168 12,340 12,423 8,702 5,971
Interest income (expense), net (2,826) (474) 601 382 (578)
-----------------------------------------------------------
Income before income taxes 9,342 11,866 13,024 9,084 5,393
Provision for income taxes 3,550 4,390 4,949 3,452 1,703
-----------------------------------------------------------
Net income $ 5,792 $ 7,476 $ 8,075 $ 5,632 $ 3,690
-----------------------------------------------------------
Net income per share $ 0.33 $ 0.43 $ 0.47 $ 0.37 N/A
-----------------------------------------------------------
PRO FORMA PRESENTATION:
Income before income taxes-historical N/A N/A N/A N/A $ 5,393
Provision for income taxes-pro forma N/A N/A N/A N/A 2,049
-----------------------------------------------------------
Net income-pro forma N/A N/A N/A N/A $ 3,344
-----------------------------------------------------------
Net income per share-pro forma N/A N/A N/A N/A $ 0.32
-----------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 17,405 17,371 17,322 15,272 10,500
-----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
As of
-----------------------------------------------------
2/1/97 2/3/96 1/28/95 1/29/94 1/31/93
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital $ 70,629 $ 54,693 $ 50,193 $ 59,182 $ 28,127
Property and equipment, net 63,147 49,253 35,864 15,599 10,353
Total assets 233,539 190,933 163,403 119,134 72,353
Long-term debt 37,645 14,087 4,600 -- --
Stockholders' investment 96,420 90,455 82,444 74,222 37,664
</TABLE>
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Certain of the statements set forth herein with respect to store
openings and closings, the profitability of certain product lines, capital
expenditures and future liquidity are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current intentions, assumptions and projections and
are subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward- looking statements. Factors that
could cause actual results to differ materially from those in the
forward-looking statements include, among other things, unanticipated increases
in merchandise, salary and distribution costs and the effects of increased
competition on specific stores and the Company generally.
No. 6
<PAGE> 3
Books-A-Million
Management's Discussion & Analysis of Financial
Condition & Results of Operations
GENERAL
The Company was founded in 1917 and currently operates over 150 retail
bookstores, including 91 superstores, concentrated in the southeastern United
States.
The Company's growth strategy is focused on opening superstores and
combination stores in new and existing market areas, particularly in the
Southeast. In addition to opening new stores, management intends to continue its
practice of reviewing the profitability trends and prospects of existing stores
and closing or relocating underperforming stores or converting stores to
different formats.
RESULTS OF OPERATIONS
The following table sets forth statement of income data expressed as a
percentage of net sales for the periods presented.
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------------------
2/1/97 2/3/96 1/28/95
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Gross profit 26.0% 28.6% 28.0%
Operating, selling and administrative expenses 18.2% 18.9% 18.3%
Depreciation and amortization 3.4% 3.0% 2.5%
Store closing charge -- 1.3% --
Operating profit 4.4% 5.4% 7.2%
Interest income (expense), net (1.0%) (0.2%) 0.4%
Income before income taxes 3.4% 5.2% 7.6%
Provision for income taxes 1.3% 1.9% 2.9%
Net income 2.1% 3.3% 4.7%
</TABLE>
FISCAL 1997 COMPARED TO FISCAL 1996
Net sales increased $48.8 million, or 21.2%, to $278.6 million in fiscal
1997 from $229.8 million in fiscal 1996. Comparable store sales decreased 2.0%
for fiscal year 1997. The increase in net sales resulted from net sales
generated by 27 new stores opened during fiscal 1997 (including 25 superstores),
and 13 new stores opened in the second half of fiscal 1996. In addition, the
Company closed 7 underperforming stores (see Note 7 of Notes to Consolidated
Financial Statements).
The factors affecting the future trend of comparable store sales include,
among others, overall demand, the Company's marketing programs, pricing
strategies, store operations and competition.
Gross profit increased $6.6 million, or 10.2%, to $72.3 million in fiscal
1997 from $65.7 million in fiscal 1996. Gross profit as a percentage of net
sales decreased to 26.0% in fiscal 1997 from 28.6% in fiscal 1996, due to
increased promotional activity, changes in departmental sales mix and higher
occupancy costs as a percentage of sales.
Operating, selling and administrative expenses increased $7.0 million, or
16.2%, to $50.6 million in fiscal 1997, from $43.6 million in fiscal 1996.
Operating, selling and administrative expenses as a percentage of net sales
decreased to 18.2% in fiscal 1997 from 18.9% in fiscal 1996, primarily due to
strong expense controls related to store selling expenses.
Depreciation and amortization increased $2.7 million, or 39.6%, to $9.5
million in fiscal 1997 from $6.8 million in fiscal 1996. Depreciation and
amortization as a percentage of net sales increased to 3.4% in fiscal 1997 from
3.0% in fiscal 1996, primarily as a result of the significant capital
expenditures for new stores during fiscal 1997 and the second half of fiscal
1996.
Net interest expense was $2.8 million in fiscal 1997 versus net interest
expense of $0.5 million in fiscal 1996. The interest expense resulted from
long-term borrowings incurred to fund capital expenditures and inventory
purchases related to new stores opened during fiscal 1997.
No. 7
<PAGE> 4
Books-A-Million
Management's Discussion & Analysis of Financial
Condition & Results of Operations
FISCAL 1996 COMPARED TO FISCAL 1995
Net sales increased $57.4 million, or 33.3%, to $229.8 million in fiscal
1996 from $172.4 million in fiscal 1995. Comparable store sales increased 0.2%,
however, excluding the fifty-third week in fiscal 1996, comparable store sales
decreased 1.3%. The increase in net sales resulted from net sales generated by
22 new stores opened during fiscal 1996 (including 21 superstores), and 14 new
stores opened in the second half of fiscal 1995. In addition, the Company closed
17 underperforming stores (see Note 7 of Notes to Consolidated Financial
Statements).
Gross profit increased $17.4 million, or 36.1%, to $65.7 million in fiscal
1996 from $48.3 million in fiscal 1995. Gross profit as a percentage of net
sales increased to 28.6% in fiscal 1996 from 28.0% in fiscal 1995, primarily as
a result of lower distribution costs as a percentage of net sales.
Operating, selling and administrative expenses increased $12.0 million, or
37.9%, to $43.6 million in fiscal 1996, from $31.6 million in fiscal 1995.
Operating, selling and administrative expenses as a percentage of net sales
increased to 18.9% in fiscal 1996 from 18.3% in fiscal 1995, primarily due to
increased store selling expenses.
Depreciation and amortization increased $2.5 million, or 60.5%, to $6.8
million in fiscal 1996 from $4.3 million in fiscal 1995. Depreciation and
amortization as a percentage of net sales increased to 3.0% in fiscal 1996 from
2.5% in fiscal 1995, primarily as a result of the significant capital
expenditures for new stores during fiscal 1996 and the second half of fiscal
1995.
The Company decided during fiscal 1996 to accelerate the closing of its
small traditional and combination bookstores in order to concentrate on its
highly successful superstores. As a result, fiscal 1996 results include a
one-time, store- closing charge of $2.9 million for costs associated with the
closings (see Note 7 of Notes to Consolidated Financial Statements).
Net interest expense was $0.5 million in fiscal 1996 versus net interest
income of $0.6 million in fiscal 1995. The interest expense resulted from
long-term borrowings incurred to fund capital expenditures and inventory
purchases related to new stores opened during fiscal 1996.
SEASONALITY AND QUARTERLY RESULTS
Similar to many retailers, the Company's business is seasonal, with its
highest retail sales, gross profit and net income historically occurring in the
fourth fiscal quarter. This seasonal pattern reflects the increased demand for
books and gifts experienced during the year-end holiday selling season. Working
capital requirements are generally highest during the third fiscal quarter and
the early part of the fourth fiscal quarter due to the seasonality of the
Company's business.
In addition, the Company's results of operations may fluctuate from quarter
to quarter as a result of the amount and timing of sales and profits contributed
by new stores as well as other factors. New stores require the Company to incur
pre-opening expenses and often require several months of operation before
generating acceptable sales volumes. Accordingly, the addition of a large number
of new stores in a particular quarter could adversely affect the Company's
results of operations for that quarter.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 1997, the Company amended its short-term credit agreement (the
"Facility") to $20.0 million of borrowing availability from $10.0 million. The
Company also has $50.0 million of borrowing availability under its existing
revolving credit facility (the "Revolving Facility"). As of February 1, 1997,
$30.1 million was outstanding under these facilities. Additionally, as of
February 1, 1997, the Company had outstanding borrowings associated with the
issuance of an industrial revenue bond totaling $7.5 million.
The Company's capital expenditures totaled $23.7 million in fiscal 1997.
These expenditures were primarily used to open new stores, perform renovations
and improvements to existing stores, and for investments in management
information systems. Management estimates that capital expenditures for fiscal
1998 will be approximately $18 million and that such amounts will be used
primarily for new stores, renovation and improvements to existing stores and
investments in management information systems. Management believes that
No.8
<PAGE> 5
Books-A-Million
Management's Discussion & Analysis of Financial
Condition & Results of Operations
existing cash reserves and net cash from operating activities, together with
borrowings under the Company's credit facilities, will be adequate to finance
the Company's planned capital expenditures and to meet the Company's working
capital requirements for fiscal 1998.
RELATED PARTY ACTIVITIES
As discussed in Note 6 of Notes to Consolidated Financial Statements,
the Company conducts business with other entities in which certain officers,
directors and principal stockholders of the Company have controlling ownership
interests. The most significant related-party transactions include inventory
purchases from, and sales to, related parties. As the Company has expanded, the
related-party inventory purchase transactions and related-party sales
transactions have grown proportionately. Management believes the terms of these
related-party transactions are substantially equivalent to those available from
unrelated parties and, therefore, have no significant impact on gross profit.
FINANCIAL POSITION
During fiscal 1997, the Company opened 25 superstores, one combination
bookstore and one traditional bookstore. The store openings resulted in
increased inventory, property and equipment balances and long-term debt balances
at February 1, 1997, compared with February 3, 1996.
No.9
<PAGE> 6
Books-A-Million
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
<CAPTION>
As of
-----------------------
2/1/97 2/3/96
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and temporary cash investments $ 4,776 $ 1,923
Accounts receivable 13,198 8,373
Related party receivables 5,854 4,348
Inventories 141,430 122,008
Prepayments and other 584 720
Deferred income taxes 2,913 2,631
-----------------------
TOTAL CURRENT ASSETS 168,755 140,003
-----------------------
PROPERTY AND EQUIPMENT:
Land 628 628
Buildings 5,367 5,379
Equipment 22,690 16,044
Furniture and fixtures 28,535 21,272
Leasehold improvements 32,796 24,833
Construction in process 804 82
-----------------------
90,820 68,238
Less accumulated depreciation
and amortization 27,673 18,985
-----------------------
NET PROPERTY AND EQUIPMENT 63,147 49,253
-----------------------
OTHER ASSETS:
Goodwill, net 1,581 1,621
Other 56 56
-----------------------
TOTAL OTHER ASSETS 1,637 1,677
-----------------------
TOTAL ASSETS $233,539 $190,933
Liabilities and Stockholders' Investment
Current Liabilities:
Accounts payable:
Trade $ 79,127 $ 69,697
Related party 2,270 1,940
Accrued income taxes 1,961 561
Accrued expenses 14,768 13,112
-----------------------
TOTAL CURRENT LIABILITIES 98,126 85,310
-----------------------
LONG-TERM DEBT 37,645 14,087
-----------------------
DEFERRED INCOME TAXES 1,348 1,081
-----------------------
COMMITMENTS -- --
-----------------------
STOCKHOLDERS' INVESTMENT:
Preferred stock, $.01 par value;
1,000,000 shares authorized,
no shares outstanding -- --
Common stock, $.01 par value;
30,000,000 shares authorized, 17,408,535
and 17,387,102 shares issued and outstanding
at February 1, 1997 and
February 3, 1996, respectively 174 174
Additional paid-in capital 62,829 62,656
Retained earnings 33,417 27,625
-----------------------
TOTAL STOCKHOLDERS' INVESTMENT 96,420 90,455
-----------------------
TOTAL LIABILITIES AND
STOCKHOLDERS' INVESTMENT $233,539 $190,933
=======================
</TABLE>
The accompanying notes are an integral part of these
consolidated balance sheets.
No.10
<PAGE> 7
Books-A-Million
Consolidated Statements of Income
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------
2/1/97 2/3/96 1/28/95
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $ 278,613 $ 229,801 $ 172,366
Cost of products sold,
including warehouse
distribution and store
occupancy costs * 206,269 164,124 124,107
------------------------------------------
GROSS PROFIT 72,344 65,677 48,259
Operating, selling and
administrative expenses 50,636 43,559 31,580
Depreciation and amortization 9,540 6,833 4,256
Store closing charge -- 2,945 --
------------------------------------------
OPERATING PROFIT 12,168 12,340 12,423
Interest income (expense), net (2,826) (474) 601
------------------------------------------
INCOME BEFORE INCOME TAXES 9,342 11,866 13,024
Provision for income taxes 3,550 4,390 4,949
------------------------------------------
NET INCOME $ 5,792 $ 7,476 $ 8,075
==========================================
NET INCOME PER SHARE $ 0.33 $ 0.43 $ 0.47
------------------------------------------
Weighted average number of
shares outstanding 17,405 17,371 17,322
==========================================
</TABLE>
*Inventory purchases from related parties were $23,120, $17,919 and $15,454,
respectively, for the periods presented above.
The accompanying notes are an integral part of these
consolidated statements.
No.11
<PAGE> 8
Books-A-Million
Consolidated Statements of Stockholders' Investment
(Dollars in thousands)
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained
Stock Capital Earnings
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE, JANUARY 29, 1994 $ 87 $ 62,061 $ 12,074
Net income -- -- 8,075
Two-for-one-stock split 86 (86) --
Issuance of stock for employee stock purchase plan -- 51 --
Exercise of stock options -- 96 --
-------------------------------------
BALANCE, JANUARY 28, 1995 173 62,122 20,149
Net income -- -- 7,476
Issuance of stock for employee stock purchase plan -- 86 --
Exercise of stock options 1 448 --
-------------------------------------
BALANCE, FEBRUARY 3, 1996 174 62,656 27,625
Net income -- -- 5,792
Issuance of stock for employee stock purchase plan -- 102 --
Exercise of stock options -- 71 --
-------------------------------------
BALANCE, FEBRUARY 1, 1997 $ 174 $ 62,829 $ 33,417
=====================================
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
No.12
<PAGE> 9
Books-A-Million
Consolidated Statements of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
------------------------------------------
2/1/97 2/3/96 1/28/95
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,792 $ 7,476 $ 8,075
------------------------------------------
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 9,540 6,833 4,256
(Gain) loss on sale of property 114 (269) 54
Deferred income tax provision (benefit), net (15) 254 (967)
(Increase) decrease in assets,
net of effects of acquisition:
Accounts receivable (4,825) (3,624) (1,717)
Related party receivables (1,506) 1,112 (4,735)
Inventories (19,422) (36,469) (25,858)
Prepayments and other 136 (34) 133
Increase (decrease) in liabilities,
net of effects of acquisition:
Accounts payable 9,760 7,822 23,826
Accrued income taxes 1,400 (2,368) 2,929
Accrued expenses 1,696 4,540 3,689
------------------------------------------
Total adjustments (3,122) (22,203) 1,610
------------------------------------------
Net cash provided by
(used in) operating activities 2,670 (14,727) 9,685
------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment 126 3,659 108
Capital expenditures (23,674) (23,901) (24,435)
Acquisition of retail bookstores -- -- (3,343)
------------------------------------------
Net cash used in investing activities (23,548) (20,242) (27,670)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net 173 535 147
Proceeds from issuance of long term debt -- 2,900 4,600
Borrowings under credit facilities 142,933 56,798 --
Repayments under credit facilities (119,375) (50,211) --
------------------------------------------
Net cash provided by
financing activities 23,731 10,022 4,747
------------------------------------------
NET INCREASE (DECREASE) IN CASH
AND TEMPORARY CASH INVESTMENTS: 2,853 (24,947) (13,238)
CASH AND TEMPORARY CASH INVESTMENTS
AT THE BEGINNING OF YEAR 1,923 26,870 40,108
------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS
AT THE END OF YEAR $ 4,776 $ 1,923 $ 26,870
===========================================
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $ 2,693 $ 556 $ 87
Income taxes, net of refunds 2,146 6,362 2,834
===========================================
</TABLE>
The accompanying notes are an integral part of these
consolidated statements.
No.13
<PAGE> 10
Books-A-Million
Notes to Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Books-A-Million, Inc., and its subsidiary (the "Company") are principally
engaged in the sale of books, magazines and related items through a chain of
retail bookstores. The Company presently operates over 150 bookstores in 17
states, which are predominantly located in the southeastern United States. The
Company also serves as a wholesale book distributor for certain other retailers
and wholesalers. The Company presently consists of Books-A-Million, Inc., and
its wholly owned subsidiary, American Wholesale Book Company, Inc. ("American
Wholesale"). During fiscal 1995, the Company merged another wholly owned
subsidiary, Book$mart, Inc. ("Book$mart"), into American Wholesale. All
significant intercompany balances and transactions have been eliminated in
consolidation.
Basis of Presentation
The Company operates on a 52-53 week year, with the fiscal year ending on
the Saturday closest to January 31. Fiscal year 1996 was a 53-week period, while
fiscal years 1997 and 1995 were 52-week periods.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Inventories
Inventories are valued at the lower of cost or market, with cost determined
on a first-in, first-out ("FIFO") basis and market based on the lower of
replacement cost or estimated realizable value.
Property and Equipment
Property and equipment are recorded at cost. Depreciation on equipment and
furniture and fixtures is provided on the straight-line method over the
estimated service lives. Depreciation of leasehold improvements is provided on
the straight-line basis over the periods of the applicable leases.
Maintenance and repairs are charged to expense as incurred. Costs of
renewals and betterments are capitalized by charges to property accounts and
depreciated using applicable annual rates. The cost and accumulated depreciation
of assets sold, retired or otherwise disposed of are removed from the accounts,
and the related gain or loss is credited or charged to income.
Goodwill
The Company has classified as goodwill the cost in excess of fair value of
the net assets acquired of LBK B&C, Inc. The Company is amortizing the goodwill
on a straight-line basis over 40 years. As of February 1, 1997 and February 3,
1996, accumulated amortization of goodwill was $124,000 and $84,000,
respectively. The Company continually evaluates whether events or circumstances
have occurred that indicate the remaining estimated useful life of goodwill may
warrant revision or that the remaining balance of goodwill may not be
recoverable. When factors indicate that goodwill should be evaluated for
possible impairment, the Company uses an estimate of the related operating
profits over the remaining life of the goodwill in measuring recoverability.
Store Opening Costs
Non-capital expenditures incurred in preparation for opening new retail
stores are expensed in the first full month of the stores' operations.
Insurance Accruals
The Company is subject to large deductibles under its workers' compensation
and employee health policies. Insurance coverage is maintained for cumulative
losses in amounts management considers adequate. Amounts are accrued currently
for the estimated cost of claims incurred.
No.14
<PAGE> 11
Books-A-Million
Notes to Consolidated Financial Statements
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes," which
requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the differences between the financial
statement and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to reverse.
Statements of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all short-term, highly liquid investments with original maturities of
90 days or less to be cash equivalents.
Net Income Per Share
Net income per share for each of the periods presented is calculated by
dividing net income by the weighted average number of shares of common stock
outstanding. Common stock equivalents in the form of stock options are excluded
from the calculation since they have no material dilutive effect on per share
figures.
Disclosure of Fair Value of Financial Instruments
In the opinion of management, the carrying value of all financial
instruments approximates fair value.
Legal
The Company is a party to various legal proceedings incidental to its
business. In the opinion of management, after consultation with legal counsel,
the ultimate liability, if any, with respect to those proceedings is not
presently expected to materially affect the financial position or results of
operations of the Company.
Prior-Year Reclassifications
Certain prior-year amounts have been reclassified to conform to the current
year presentation.
2. INCOME TAXES
A summary of the components of the income tax provision is as follows
(dollars in thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
2/1/97 2/3/96 1/28/95
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 3,325 $ 3,481 $ 5,054
State 240 655 862
-----------------------------------
3,565 4,136 5,916
-----------------------------------
Deferred taxes arising from:
Depreciation 463 538 292
Accruals (330) (286) (814)
Inventory (436) 109 (369)
Other 288 (107) (76)
-----------------------------------
(15) 254 (967)
-----------------------------------
Provision for income taxes $ 3,550 $ 4,390 $ 4,949
===================================
</TABLE>
No.15
<PAGE> 12
Books-A-Million
Notes to Consolidated Financial Statements
A reconciliation of the federal statutory income tax rate to the
effective income tax rate is as follows :
<TABLE>
<CAPTION>
Fiscal Year Ended
2/1/97 2/3/96 1/28/95
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Federal statutory income tax rate 34.0% 34.2% 34.4%
State income tax provision 3.0% 3.9% 5.8%
Non-taxable interest income -- -- (1.7%)
Other 1.0% (1.1%) (.5%)
----------------------------
Effective income tax rate 38.0% 37.0% 38.0%
============================
</TABLE>
Temporary differences which created deferred tax assets and liabilities at
February 1, 1997, and February 3, 1996, are detailed below (dollars in
thousands):
<TABLE>
<CAPTION>
As of 2/1/97 As of 2/3/96
---------------------- ----------------------
Current Noncurrent Current Noncurrent
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depreciation $ -- $(1,265) $ -- $ (802)
Accruals 2,175 -- 1,845 --
Inventory 609 -- 361 (188)
Other 129 (83) 425 (91)
------------------------------------------------
Deferred tax asset (liability) $ 2,913 $(1,348) $ 2,631 $(1,081)
================================================
</TABLE>
No valuation allowance is deemed necessary by management, as the realization
of recorded deferred tax assets is considered more likely than not.
Income Tax Audit
The Company is currently being audited by the Internal Revenue Service.
While the outcome of the audit is not determinable at this time, the Company
does not expect the audit findings to have a material adverse impact on the
financial position of the Company.
3. DEBT AND LINES OF CREDIT
The Company has an unsecured revolving credit facility that allows
borrowings up to $50 million for which no principal repayments are due until the
facility expires on October 27, 2000, and a one-year unsecured working capital
line of credit for $20 million, which is subject to annual renewal. Both credit
facilities have certain financial and non-financial covenants with which the
Company is in compliance. As of February 1, 1997, $30.1 million was outstanding
under these revolving credit facilities. The maximum and average outstanding
balances during fiscal 1997 were $58.0 million and $34.0 million, respectively.
The outstanding borrowings as of February 1, 1997, had interest rates ranging
from 5.75% to 6.75%.
During fiscal 1996 and fiscal 1995, the Company financed the acquisition and
construction of certain warehouse and distribution facilities through loans
obtained from the proceeds of an industrial development revenue bond (the
"Bond"), which are secured by a mortgage interest in these facilities. As of
February 1, 1997 and February 3, 1996, there was $7.5 million of borrowings
outstanding under these arrangements, at variable rates. The Bond has a maturity
date of December 1, 2019, with a purchase provision obligating the Company to
repurchase the Bond on December 1, 2001, unless extended by the bondholder. Such
an extension may be renewed annually by the bondholder, at the Company's
request, to a date no more than five years from the renewal date.
In the opinion of management, the carrying value of all debt instruments at
February 1, 1997, approximates fair value.
4. LEASES
The Company leases the premises for its retail bookstores under operating
leases which expire in various years through the year 2011. Many of these leases
contain renewal options and require the Company to pay executory costs (such as
property taxes, maintenance, and insurance). In addition to fixed minimum
rentals, some of the Company's leases require contingent rentals based on a
percentage of sales.
The Company also leases certain office, warehouse and retail store space
from a related party. Rental expense under these leases was $407,000, $239,000
and $167,000 in fiscal 1997, 1996 and 1995, respectively.
No.16
<PAGE> 13
Books-A-Million
Notes to Consolidated Financial Statements
Minimum future rental payments under non-cancelable operating leases having
remaining terms in excess of one year as of February 1, 1997, are as follows (in
thousands):
<TABLE>
<CAPTION>
Fiscal Year
- ---------------------------------------------------------------------
<S> <C>
1998 $ 15,764
1999 14,663
2000 13,852
2001 12,865
2002 12,109
Subsequent years 42,904
--------
$112,157
========
</TABLE>
Rental expense for all operating leases consisted of the following (in
thousands):
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------
2/1/97 2/3/96 1/28/95
- --------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rentals $14,627 $10,852 $ 8,019
Contingent rentals 493 560 474
-------------------------
$15,120 $11,412 $ 8,493
=========================
</TABLE>
5. EMPLOYEE BENEFIT PLANS
401(k) Profit-Sharing Plan
The Company and its subsidiary maintain a 401(k) plan covering all employees
who have completed 12 months of service and who are at least 21 years of age,
and permit participants to contribute from 2% to 15% of compensation to the
plan. Company matching and supplemental contributions are made at management's
discretion. The expense under this plan was $341,000, $214,000 and $242,000 in
fiscal 1997, 1996 and 1995, respectively.
Stock Option Plan
The Company maintains a stock option plan reserving 1,800,000 shares of the
Company's common stock for grants to executive officers, directors, and key
employees. Options granted generally vest over a five-year period, expire on the
sixth anniversary of the date of grant, and have exercise prices generally equal
to the fair market value of the common stock on the date of grant. Options to
purchase 1,156,060 shares have been granted, net of exercises and forfeitures,
since the inception of the plan, of which 402,190 shares were exercisable as of
February 1, 1997, as summarized below:
<TABLE>
<CAPTION>
Number of Shares Option Price
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Outstanding at January 29, 1994 542,900 6 3/8 to 10 7/8
Granted 211,750 11 5/8 to 16 7/8
Exercised (14,840) 6 3/8 to 6 1/2
Forfeited (45,360) 6 3/8 to 10
-------------------------------------
Outstanding at January 28, 1995 694,450 6 3/8 to 16 7/8
Granted 197,500 8 to 12 7/8
Exercised (46,920) 6 3/8 to 10
Forfeited (18,300) 6 3/8 to 16 7/8
-------------------------------------
Outstanding at February 3, 1996 826,730 6 3/8 to 16 7/8
Granted 389,200 5 3/4 to 10 7/8
Exercised (6,600) 6 3/8 to 6 1/2
Forfeited (53,270) 6 3/8 to 14 1/2
-------------------------------------
Outstanding at February 1, 1997 1,156,060 6 3/8 to 16 7/8
=====================================
</TABLE>
No.17
<PAGE> 14
Books-A-Million
Notes to Consolidated Financial Statements
The weighted average exercise price of options outstanding at February 1,
1997, was $ 8.31. The weighted average price of stock options exercised to date
as of February 1, 1997 was $6.65.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, Accounting for Stock-Based Compensation. SFAS No. 123 established financial
accounting and reporting standards for stock-based compensation and for
transactions in which an entity issues its equity instruments to acquire goods
and services for nonemployees. In accordance with SFAS No. 123, the Company
continues to account for and record compensation expense under Accounting
Principles Board Opinion ("APB") No. 25. However, the Company adopted the
disclosure only provisions of SFAS No. 123, as required. If the Company had
recorded compensation expense in accordance with SFAS No. 123 under the fair
value based method, the Company's net income and earnings per share would have
been essentially unchanged as indicated below:
<TABLE>
<CAPTION>
Fiscal Year Ended
---------------------
2/1/97 2/3/96
- -----------------------------------------------------------------
<S> <C> <C>
Net income-as reported $5,792 $7,476
Net income-pro forma 5,727 7,475
Earnings per share-as reported .33 .43
Earnings per share-pro forma .33 .43
</TABLE>
For the purposes of the foregoing calculation, the fair value of each option
grant is estimated on the date of grant using the Black-Scholes option pricing
model. The assumptions used in connection with this model show no expected
dividend yield, a five-year expected life of the options, and an expected stock
price volatility rate of .46 with risk-free interest rates ranging from 5.32% to
6.69%. Based upon these assumptions, the weighted average fair value of options
granted was $5.34 and $3.94 in fiscal 1997 and 1996, respectively.
Employee Stock Purchase Plan
The Company maintains an employee stock purchase plan under which 100,000
shares of the Company's common stock are reserved for purchase by employees at
85% of the fair market value of the common stock. Of the total reserved shares,
32,810 shares have been purchased as of February 1, 1997.
6. RELATED PARTY TRANSACTIONS
Certain majority stockholders of the Company have controlling ownership
interests in other entities with which the Company conducts business.
Transactions between the Company and these various other entities (described as
"related parties") are summarized in the following paragraphs and Note 4.
The Company purchases a portion of its inventories for resale from related
parties; such purchases amounted to $23,120,000, $17,919,000, and $15,454,000 in
fiscal 1997, 1996, and 1995, respectively. The Company sells a portion of its
inventories to related parties; such sales amounted to $9,819,000, $ 7,261,000,
and $7,380,000, in fiscal 1997, 1996 and 1995, respectively.
During fiscal 1996 the Company sold one of its distribution facilities to a
related party. The sales price for the facility was $1,650,000, which resulted
in a gain of $221,000. Management believes the terms of this transaction were
substantially equivalent to those available from unrelated parties.
7. STORE CLOSING CHARGE
During fiscal 1996, the Company recorded a charge of $2.9 million for costs
associated with the anticipated closings of 24 bookstores (see Management's
Discussion and Analysis of Financial Condition and Results of Operations for
more details). The consolidated statements of income for the 53-week period
ended February 3, 1996, reflect this store closing charge. The charge includes
amounts for lease termination costs ($977,000), asset write-downs ($990,000) and
other disposition costs such as warehouse processing and store closing expenses
($978,000). As of the end of fiscal 1997, 24 stores have been closed, resulting
in lease termination costs of $601,000, asset write-downs of $1,005,000 and
other disposition costs of $1,021,000. The remaining balance of the store
closing reserve as of February 1, 1997, was $318,000, which is reflected in
accrued expenses in the accompanying consolidated balance sheet. The majority of
these remaining liabilities are expected to be paid or settled within the 1998
fiscal year.
No.18
<PAGE> 15
Books-A-Million
Report of Independent Public Accountants
To Books-A-Million, Inc.:
We have audited the accompanying consolidated balance sheets of
Books-A-Million, Inc. (a Delaware corporation), and subsidiary as of February 1,
1997, and February 3, 1996, and the related consolidated statements of income,
stockholders' investment, and cash flows for each of the three fiscal years in
the period ended February 1, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Books-A-Million, Inc., and
subsidiary as of February 1, 1997, and February 3, 1996, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended February 1, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Birmingham, Alabama
March 18, 1997
No.19
<PAGE> 16
Books-A-Million
Summary of Quarterly Results
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Fiscal Year Ended February 1, 1997
----------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 56,589 $ 60,455 $ 64,505 $ 97,064 $278,613
Gross profit 14,689 15,615 15,643 26,397 72,344
Operating profit 1,988 1,482 878 7,820 12,168
Net income 981 508 21 4,282 5,792
Net income per share .06 .03 .00 .25 .33*
</TABLE>
<TABLE>
<CAPTION>
Fiscal Year Ended February 3, 1996
-----------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $ 44,014 $ 52,030 $ 48,766 $ 84,991 $229,801
Gross profit 11,434 13,981 13,020 27,242 65,677
Store closing charge -- 2,945 -- -- 2,945
Operating profit (loss) 1,656 (465) 1,270 9,879 12,340
Net income (loss) 1,084 (331) 644 6,079 7,476
Net income (loss) per share .06 (.02) .04 .35 .43
</TABLE>
* The sum of quarterly net income per share is different from annual net income
per share because of differences in rounding.
No.20
<PAGE> 1
EXHIBIT 21
Subsidiary of the Registrant
The Company's sole subsidiary is the following:
American Wholesale Book Company, Inc., an Alabama corporation.
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our reports dated March 18, 1997 incorporated by reference in
this Form 10-K, into the Company's previously filed Registration Statement on
File Nos. 33-72812 and 33-86980.
Arthur Andersen, LLP
Birmingham, Alabama
April 28, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BOOKS-A-MILLION, INC. CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF
INCOME AND CONSOLIDATED STATEMENTS OF CASH FLOWS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10K FOR THE PERIOD ENDED FEBRUARY 1, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> FEB-01-1997
<EXCHANGE-RATE> 1
<CASH> 4,776
<SECURITIES> 0
<RECEIVABLES> 19,052
<ALLOWANCES> 0
<INVENTORY> 141,430
<CURRENT-ASSETS> 168,755<F1>
<PP&E> 90,820
<DEPRECIATION> 27,673
<TOTAL-ASSETS> 233,539<F2>
<CURRENT-LIABILITIES> 98,126
<BONDS> 0<F3>
0<F4>
0
<COMMON> 174
<OTHER-SE> 96,246
<TOTAL-LIABILITY-AND-EQUITY> 233,539
<SALES> 278,613
<TOTAL-REVENUES> 278,613
<CGS> 206,269
<TOTAL-COSTS> 256,905
<OTHER-EXPENSES> 9,540
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,826
<INCOME-PRETAX> 9,342
<INCOME-TAX> 3,550
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,792
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
<FN>
<F1>OTHER CURRENT ASSETS 3,497 OTHER CURRENT ASSETS
<F2> OTHER ASSETS 1,637 OTHER ASSETS
<F3> LONG-TERM DEBT 37,645 LONG-TERM DEBT
<F4>DEFERRED INCOME TAXES 1,348 DEFERRED INCOME TAXES
</FN>
</TABLE>
