<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934.
For the quarterly period ended: October 31, 1998
----------------
- OR -
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934.
For the transaction period from__________to__________
COMMISSION FILE NUMBER 0-20664
BOOKS-A-MILLION, INC.
---------------------
(Exact name of registrant as specified in its charter)
DELAWARE 63-0798460
-------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
402 INDUSTRIAL LANE, BIRMINGHAM, ALABAMA 35211
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(205) 942-3737
--------------
(Registrant's phone number including area code)
NONE
----
(Former name, former address and former fiscal year,
if changed since last period)
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
------- -------
Indicate the number of shares outstanding of each of the issuer's common stock,
as of the latest practicable date: Shares of common stock, par value $.01 per
share, outstanding as of December 15, 1998 were 17,797,325 shares.
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOOKS-A-MILLION, INC. & SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS October 31, January 31,
1998 1998
--------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments $ 3,485 $ 3,909
Accounts receivable 14,135 11,732
Related party receivable 6,119 7,559
Inventories 193,259 151,312
Prepayments and other 2,878 816
Deferred income taxes 4,010 3,098
--------- ---------
TOTAL CURRENT ASSETS 223,886 178,426
--------- ---------
PROPERTY AND EQUIPMENT:
Land 628 628
Buildings 5,367 5,367
Equipment 32,772 28,558
Furniture and fixtures 33,278 31,894
Leasehold improvements 39,452 37,552
Construction-in-process 3,468 783
--------- ---------
114,965 104,782
Less-accumulated depreciation and amortization 48,118 38,968
--------- ---------
NET PROPERTY AND EQUIPMENT 66,847 65,814
--------- ---------
OTHER ASSETS:
Goodwill, net 1,506 1,538
Other 34 38
--------- ---------
TOTAL OTHER ASSETS 1,540 1,576
--------- ---------
TOTAL ASSETS $ 292,273 $ 245,816
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable:
Trade $ 87,038 $ 71,439
Related party 8,580 7,493
Accrued expenses 15,620 13,993
Accrued income taxes -- 2,730
Notes payable 31,263 --
--------- ---------
TOTAL CURRENT LIABILITIES 142,501 95,655
--------- ---------
LONG TERM DEBT 46,917 45,240
--------- ---------
DEFERRED INCOME TAXES 1,507 1,436
--------- ---------
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,
17,337,275 and 17,427,593 shares issued and outstanding at
October 31, 1998 and January 31, 1998, respectively 174 174
Additional paid-in capital 63,003 62,925
Less treasury stock at cost (106,600 shares at October 31, 1998) (252) --
Retained earnings 38,423 40,386
--------- ---------
TOTAL STOCKHOLDERS' INVESTMENT 101,348 103,485
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 292,273 $ 245,816
========= =========
</TABLE>
2
<PAGE> 3
BOOKS-A-MILLION, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
----------------------------- -----------------------------
October 31, November 1, October 31, November 1,
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 78,962 $ 71,613 $ 231,386 $ 211,717
Cost of products sold (including warehouse
distribution and store occupancy costs)(1) 60,242 54,133 174,258 158,010
--------- --------- --------- ---------
GROSS PROFIT 18,720 17,480 57,128 53,707
Operating, selling and administrative
expenses 16,378 13,779 46,965 40,961
Depreciation and amortization 3,368 3,049 9,703 8,464
--------- --------- --------- ---------
OPERATING INCOME (LOSS) (1,026) 652 460 4,282
Interest expense, net 1,328 1,136 3,626 3,320
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (2,354) (484) (3,166) 962
Provision (benefit) for income taxes (895) (184) (1,203) 366
--------- --------- --------- ---------
NET INCOME (LOSS) $ (1,459) $ (300) $ (1,963) $ 596
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 17,404 17,428 17,428 17,425
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE - BASIC(2) $ (0.08) $ (0.02) $ (0.11) $ 0.03
========= ========= ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED 17,404 17,428 17,428 17,426
========= ========= ========= =========
NET INCOME (LOSS) PER SHARE - DILUTED(2) $ (0.08) $ (0.02) $ (0.11) $ 0.03
========= ========= ========= =========
</TABLE>
(1) Inventory purchases from related parties were $7,795, $10,288, $27,578 and
$26,087 respectively, for each of the periods presented above.
(2) Effective January 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 128, Earnings Per Share (EPS), for all periods
presented.
3
<PAGE> 4
BOOKS-A-MILLION, INC. & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
-----------------------------
OCTOBER 31, NOVEMBER 1,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (1,963) $ 596
--------- ---------
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 9,703 8,464
Loss on disposal of property and equipment 75 40
Change in deferred income taxes (841) (16)
(Increase) decrease in current assets:
Accounts receivable (2,403) 3,787
Related party receivable 1,440 (2,873)
Inventories (41,947) (51,367)
Prepayments and other (2,058) (1,530)
Increase (decrease) in current liabilities:
Accounts payable 16,686 31,203
Accrued income taxes (2,730) (1,961)
Accrued expenses 1,631 (1,591)
--------- ---------
Total adjustments (20,444) (15,844)
--------- ---------
Net cash used in operating activities (22,407) (15,248)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (10,899) (10,633)
Proceeds from sale of equipment 116 21
--------- ---------
Net cash used in investing activities (10,783) (10,612)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities 123,315 108,456
Repayments under credit facilities (90,375) (83,141)
Purchase of treasury stock (252) --
Proceeds from sale of common stock, net 78 96
--------- ---------
Net cash provided by financing activities 32,766 25,411
--------- ---------
Net decrease in cash and temporary cash (424) (449)
Cash and temporary cash investments at beginning of period 3,909 4,776
--------- ---------
Cash and temporary cash investments at end of period $ 3,485 $ 4,327
========= =========
</TABLE>
4
<PAGE> 5
BOOKS-A-MILLION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Books-A-Million, Inc. and its Subsidiary (the "Company") for the thirteen and
thirty-nine week periods ended October 31, 1998 and November 1, 1997, have been
prepared in accordance with generally accepted accounting principles for interim
financial information and are presented in accordance with the requirements of
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. These financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto for the fiscal year ended January 31, 1998, included in the Company's
1998 Annual Report on Form 10-K. In the opinion of management, the consolidated
financial statements included herein contain all adjustments (consisting only of
normal recurring adjustments) considered necessary for a fair presentation of
the Company's financial position as of October 31, 1998, and the results of its
operations and cash flows for the thirteen and thirty-nine week periods then
ended.
The Company has experienced, and expects to continue to experience,
significant variability in sales and net income from quarter to quarter.
Therefore, the results of the interim periods presented herein are not
necessarily indicative of the results to be expected for any other interim
period or the full year.
2. NET INCOME PER SHARE
Basic net income per share ("EPS") is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock are exercised
or converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the Company. Diluted EPS is computed similarly to
fully diluted EPS pursuant to APB Opinion No. 15.
The Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128 effective January 31, 1998 and restated EPS for all periods
presented in the consolidated statements of income. A reconciliation of the
weighted average shares for basic and diluted EPS is as follows:
<TABLE>
<CAPTION>
For the Thirteen Weeks Ended
(in thousands)
October 31, 1998 November 1, 1997
---------------------------------------
<S> <C> <C>
Weighted average shares outstanding:
Basic 17,404 17,428
Dilutive effect of stock options outstanding 0 0
---------------------------------------
Diluted 17,404 17,428
=======================================
For the Thirty-nine Weeks Ended
(in thousands)
October 31, 1998 November 1, 1997
---------------------------------------
Weighted average shares outstanding:
Basic 17,428 17,425
Dilutive effect of stock options outstanding 0 1
---------------------------------------
Diluted 17,428 17,426
=======================================
</TABLE>
5
<PAGE> 6
BOOKS-A-MILLION, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. PENDING ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") has issued Statement
No. 131, Disclosures about Segments of an Enterprise and Related Information .
This statement requires that a public business enterprise report financial and
descriptive information about its reportable operating segments. Generally,
financial information is required to be reported on the basis that it is used by
the chief operating decision maker in deciding how to allocate resources and in
assessing performance. This statement also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The Company is currently evaluating the impact on financial reporting and will
adopt the new rules for fiscal 1999 annual reporting.
The AICPA has issued Statement of Position 98-1, Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use. This
statement requires capitalization of external direct costs of materials and
services; payroll and payroll related costs for employees directly associated;
and interest cost during development of computer software for internal use
(planning and preliminary costs should be amortized on a straight-line basis
unless another systematic and rational basis is more representative of the
software's use). This statement is not expected to have a material effect on the
consolidated financial statements.
The AICPA has issued Statement of Position 98-5, Reporting on the Costs
of Start-up Activities. This statement provides guidance on the financial
reporting of start-up costs and organization costs, and requires these costs to
be expensed as incurred. The new rules are not expected to have a significant
impact on the Company's financial reporting upon adoption in fiscal 2000.
4. CONTINGENCIES
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.
6
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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.
RESULTS OF OPERATIONS
Net sales increased 10.3% to $79.0 million in the thirteen weeks ended
October 31, 1998, from $71.6 million in the thirteen weeks ended November 1,
1997. Net sales increased 9.3% to $231.4 million in the thirty-nine weeks ended
October 31, 1998, from $211.7 million in the thirty-nine weeks ended November 1,
1997. For the thirteen and thirty-nine weeks ended October 31, 1998, the
increase in net sales resulted primarily from net sales from new stores.
Comparable store sales decreased 3.3% for the thirteen weeks ended October 31,
1998, and they decreased 3.7% for the thirty-nine weeks ended October 31, 1998.
The comparable sales decrease reflected a continuation of unfavorable trends
encountered in the first two quarters. Sales for the quarter were weaker than
expected on a broad basis, with the exception of sales from departments such as
discounted bestsellers and cafe. This trend is partially due to continued
intensive competition from other book retailers, as well as further pressure
from competitors' Internet book selling activity. Sales during the third quarter
of fiscal 1999 were also adversely affected by severe weather along the Gulf
Coast related to Hurricane Georges. Comparable store sales comparison versus
same period last year was affected by particularly strong sales in connection
with the death of Princess Diana during the third quarter of fiscal 1998. During
the thirteen weeks ended October 31, 1998, six superstores and one Joe Muggs
newsstand were opened.
Gross profit increased $1.2 million or 7.1% to $18.7 million in the
thirteen weeks ended October 31, 1998 from $17.5 million in the thirteen weeks
ended November 1, 1997. In the thirty-nine weeks ended October 31, 1998, gross
profit increased 6.4% to $57.1 million from $53.7 million in the same period
last year. Gross profit as a percentage of net sales for the thirteen weeks
ended October 31, 1998 was 23.7% versus 24.4% in the same period last year.
Gross profit as a percentage of net sales for the thirty-nine weeks ended
October 31, 1998 was 24.7% versus 25.4% in the same period last year. The
decrease as a percentage of net sales for both the thirteen and thirty-nine
week periods was due to increased occupancy costs and warehouse distribution
costs as a percentage of sales.
Operating, selling and administrative expenses increased $2.6 million
or 18.9% to $16.4 million in the thirteen weeks ended October 31, 1998 from
$13.8 million in the thirteen weeks ended November 1, 1997. In the thirty-nine
weeks ended October 31, 1998, operating, selling and administrative expenses
increased 14.7% to $47.0 million from $41.0 million in the same period last
year. Operating, selling and administrative expenses as a percentage of net
sales for the thirteen weeks ended October 31, 1998 increased to 20.7% from
19.2% in the same period last year. For the thirty-nine week period operating,
selling and administrative expenses as a percentage of net sales increased to
20.3% from 19.4% in the same period last year. The increase in this percentage
for the thirteen and thirty-nine week periods was primarily due to higher store
selling expenses as a percentage of net sales. Store selling expenses increased
as a percentage of sales due to the lower comparable store sales.
Depreciation and amortization increased $.4 million or 10.5% to $3.4
million in the thirteen weeks ended October 31, 1998 from $3.0 million in the
thirteen weeks ended November 1, 1997, and in the thirty-nine week period
depreciation and amortization increased $1.2 million, or 14.6% to $9.7 million
from $8.5 million in the same period last year. The increase in depreciation and
amortization is primarily the result of the increased number of superstores
operated by the Company.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Interest expense was $1.3 million in the thirteen weeks ended October
31, 1998, versus $1.1 million for the same period last year, and in the
thirty-nine week period interest expense increased to $3.6 million from $3.3
million in the same period last year. This increase in interest expense resulted
from borrowings incurred due primarily to increased inventory and capital
expenditures related to new stores opened in the first three quarters of fiscal
1999 and the fourth quarter of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the first thirty-nine weeks of fiscal 1999, the Company's cash
requirements have been funded with net cash from operations and with borrowings
under the Company's credit facilities. Similar to many retailers, the Company's
business is seasonal, with its highest retail sales, gross profits and net
income traditionally occurring during the fourth fiscal quarter, reflecting the
increased demand for books and gifts 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.
The Company has a revolving credit facility that allows borrowings up
to $90 million for which no principal repayments are due until the facility
expires on June 3, 2002, and an unsecured working capital line of credit for $10
million, which is subject to annual renewal on June 2, 1999. As of October 31,
1998, $70.7 million was outstanding under these facilities combined.
Additionally, as of October 31, 1998, the Company has outstanding borrowings
associated with the issuance of an industrial revenue bond totaling $7.5
million.
The Company's capital expenditures totaled $10.9 million during the
first thirty-nine weeks of fiscal 1999. These expenditures were primarily used
to open new stores, perform renovations and improvements to existing stores,
invest in management information systems and general corporate purposes.
Management estimates that capital expenditures for the remainder of fiscal 1999
will be approximately $6.0 million, and that such amounts will be used primarily
for new stores, renovations and remodeling of certain existing stores and
investments in management information systems. Management believes that 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 the remainder of fiscal 1999.
STOCK REPURCHASE
On September 1, 1998, Books-A-Million, Inc. announced that its Board of
Directors has authorized the repurchase of up to 1,500,000 shares of its
outstanding common stock in the open market, subject to availability at prices
the Company deems appropriate. As of October 31, 1998, 106,600 shares had been
repurchased.
RELATED PARTY ACTIVITIES
Certain principal stockholders of the Company have controlling
ownership interests in other entities with which the Company conducts business.
Significant transactions between the Company and these various other entities
(described as "related parties") are summarized in the following paragraph.
The Company purchases a portion of its inventories for resale from
related parties; such purchases were $27.6 million in the thirty-nine weeks
ended October 31, 1998, versus $26.1 million in the thirty-nine weeks ended
November 1, 1997. The increase in related party purchases is primarily due to
the sales growth the Company experienced. The Company sells a portion of its
inventories to related parties; such sales amounted to $3.1 million and $6.3
million in the thirty-nine weeks ended October 31, 1998 and November 1, 1997,
respectively. This decrease in related party sales is primarily due to decreased
sales of bargain books to related parties. Management believes these related
party purchases and sales do not have a significant impact on gross profit.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL POSITION
During the thirty-nine weeks ended October 31, 1998, the Company opened
eleven superstores and one Joe Muggs newsstand. Inventory and debt balances at
October 31, 1998 increased as compared to January 31, 1998 due to seasonal
fluctuations in inventory levels and the eleven new superstores opened during
the first three quarters of fiscal 1999. The store openings also resulted in
increased property and equipment balances at October 31, 1998, as compared to
January 31, 1998.
YEAR 2000 COMPLIANCE
During fiscal 1999, the Company has continued to evaluate its
management information systems to identify and address Year 2000 issues. As part
of this evaluation, the Company has classified its Year 2000 issues into the
following categories:
1. Key information systems that are required for standard
operations (including major merchandising, financial,
distribution and warehouse systems).
2. Other information systems that are important but not required
for daily operations (electronic data transfer of purchase
orders and invoices, selling cost tracking reports, automated
sales tax reporting, etc.).
3. Non-information systems items (phone system, security system,
heating and air conditioning systems, etc.).
4. Third party compliance (vendors, wholesale customers, service
organizations such as banks and utilities, etc.).
The Company has reviewed the Year 2000 compliance issues and developed
an implementation program that is classified into the following categories:
1. Evaluation and Initial Assessment
2. Remediation/Reprogramming
3. Testing
4. Contingency Planning
The Company has plans in place to complete the evaluation and
assessment of all systems by May 1, 1999, and expects to complete Year 2000
reprogramming and testing of all systems during calendar 1999. The Company plans
to continue to rely primarily on internal resources in order to complete these
steps. However, third party services will be employed as necessary to meet
deadlines.
The Company's financial systems (excluding sales audit) are third party
vendor software programs which are being upgraded and will be, upon completion
of upgrades in the quarter ending May 1, 1999, certified as Year 2000 compliant
by the software vendors. These upgrades were previously planned and were not
accelerated due to Year 2000 issues.
The sales audit system is an in-house program which is not Year 2000
compliant. The system evaluation will be completed during the quarter ending May
1, 1999, with the necessary re-programming/testing completed during calendar
year 1999.
The Company's distribution systems (excluding the returns system) are
third party vendor software programs which are certified as Year 2000 compliant
by the software vendor.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The returns system has been evaluated during fiscal 1999. Few date
sensitive processes were identified in the programs, which mitigates the Year
2000 compliance risk. The system will be modified as necessary to make the
programs Year 2000 compliant during calendar year 1999.
The Company's merchandising systems are supported by a combination of
in-house developed software and third party software. All third party
merchandising software programs are certified as Year 2000 compliant by the
software vendor. The in-house merchandising programs are not currently Year 2000
compliant. An evaluation of the in-house programs will be completed in the
fourth quarter of fiscal 1999 and reprogramming /testing of the necessary
changes to the system for Year 2000 compliance will be completed during calendar
year 1999.
The Company's point of sale system operates the cash registers in the
stores. The registers run on a personal computer system using a third party
software. Although the point of sale operating system is not Year 2000
compliant, the software has been upgraded in order to accept credit cards with
expiration dates beyond December 31, 1999. The system evaluation will be
completed during the quarter ending May 1, 1999, with the necessary
re-programming/testing completed during calendar year 1999 to make the system
year 2000 compliant.
Other information systems that are not critical to daily operations are
being assessed during the fourth quarter of fiscal 1999 and will be upgraded, if
necessary, during calendar year 1999.
The Company has not deferred any significant information technology
projects in order to address the Year 2000 issue.
Based on present information, the Company believes that its current
plans as outlined above will substantially mitigate the risk of a material
disruption in the Company's operations due to internal Year 2000 factors.
However, possible consequences of the Company not being Year 2000 compliant
include, but are not limited to, loss of revenues, loss of communication
capability with stores, inability to process or quantify merchandise, and
inability to engage in other operational and financial activities.
At the present time, the Company has not established a contingency plan
for possible Year 2000 issues. The Company expects to consider contingency plans
based on the results of its Year 2000 testing and its assessment of related
risks.
Additionally, the Company is in the process of communicating with third
parties in order to assess their Year 2000 readiness and the extent to which the
Company may be vulnerable to any third parties' failure to remediate their Year
2000 issues. The Company is trying to obtain written confirmation of third
parties Year 2000 compliance. However, the Company cannot assure timely
compliance of third parties and may be adversely affected by failure of a
significant third party to become Year 2000 compliant.
Amounts expended to date related to Year 2000 compliance have been
immaterial. The Company currently expects that the total costs of Year 2000
compliance for the Company's current systems will not exceed $400,000, which may
include the lease or purchase of a system on which to do Year 2000 testing.
These costs are not expected to have a significant impact on the Company's
financial reporting.
The costs associated with Year 2000 compliance are based on
management's current views with respect to future events and may be updated as
additional information becomes available. Please refer to the Special Note
Regarding Forward Looking Statements.
10
<PAGE> 11
II - OTHER INFORMATION
ITEM 1: Legal Proceedings
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.
ITEM 2: Changes in Securities
None
ITEM 3: Defaults Upon Senior Securities
None
ITEM 4: Submission of Matters of Vote of Security-Holders
None
ITEM 5: Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
(A) Exhibits
Exhibit 27.1 Financial Data Schedule (for SEC use only)
Exhibit 27.2 Financial Data Schedule - Restated for fiscal 1998
quarterly information (for SEC use only)
Exhibit 27.3 Financial Data Schedule - Restated for fiscal 1997
quarterly information (for SEC use only)
(B) Reports on Form 8-K
There were no reports filed on Form 8-K during the thirteen week
period ended October 31, 1998
11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
BOOKS-A-MILLION, INC.
Date: December 15, 1998
by:/s/ Clyde B. Anderson
---------------------
Clyde B. Anderson
President and
Chief Executive Officer
Date: December 15, 1998
by:/s/ Sandra B. Cochran
---------------------
Sandra B. Cochran
Executive Vice President,
Chief Financial Officer
and Secretary
<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 10-Q FOR THE NINE MONTHS ENDED OCTOBER 31,
1998.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,485
<SECURITIES> 0
<RECEIVABLES> 20,472
<ALLOWANCES> 218
<INVENTORY> 193,259
<CURRENT-ASSETS> 223,886<F1>
<PP&E> 114,965
<DEPRECIATION> 48,118
<TOTAL-ASSETS> 292,273<F2>
<CURRENT-LIABILITIES> 142,501
<BONDS> 0<F3>
0<F4>
0
<COMMON> 174
<OTHER-SE> 101,174
<TOTAL-LIABILITY-AND-EQUITY> 292,273
<SALES> 231,386
<TOTAL-REVENUES> 231,386
<CGS> 174,258
<TOTAL-COSTS> 221,223
<OTHER-EXPENSES> 9,703
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,626
<INCOME-PRETAX> (3,166)
<INCOME-TAX> (1,203)
<INCOME-CONTINUING> (1,963)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,963)
<EPS-PRIMARY> (0.11)<F5>
<EPS-DILUTED> (0.11)<F5>
<FN>
<F1><OTHER CURRENT ASSETS> 6,888
<F2><OTHER ASSETS> 1,540
<F3><LONG TERM DEBT> 46,917
<F4><DEFERRED INCOME TAXES> 1,507
<F5><THE EARNINGS PER SHARE CALCULATIONS HAVE BEEN PREPARED IN ACCORDANCE WITH
SFAS NO. 128 AND BASIC AND DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE
OF PRIMARY AND FULLY DILUTED, RESPECTIVELY.
</FN>
</TABLE>
<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 10-Q FOR THE NINE MONTHS ENDED NOVEMBER 1,
1997.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> NOV-01-1997
<EXCHANGE-RATE> 1
<CASH> 4,327
<SECURITIES> 0
<RECEIVABLES> 18,714
<ALLOWANCES> 576
<INVENTORY> 192,797
<CURRENT-ASSETS> 220,658<F1>
<PP&E> 101,242
<DEPRECIATION> 36,026
<TOTAL-ASSETS> 287,477<F2>
<CURRENT-LIABILITIES> 145,706
<BONDS> 0<F3>
0<F4>
0
<COMMON> 174
<OTHER-SE> 96,938
<TOTAL-LIABILITY-AND-EQUITY> 287,477
<SALES> 211,717
<TOTAL-REVENUES> 211,717
<CGS> 158,010
<TOTAL-COSTS> 198,971
<OTHER-EXPENSES> 8,464
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,320
<INCOME-PRETAX> 962
<INCOME-TAX> 366
<INCOME-CONTINUING> 596
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 596
<EPS-PRIMARY> 0.03<F5>
<EPS-DILUTED> 0.03<F5>
<FN>
<F1>OTHER CURRENT ASSETS 5,396
<F2>OTHER ASSETS 1,603
<F3>LONG TERM DEBT 42,960
<F4>DEFERRED INCOME TAXES 1,699
<F5>THE EARNINGS PER SHARE CALCULATIONS HAVE BEEN PREPARED IN ACCORDANCE WITH SFAS
NO. 128 AND BASIC AND DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE OF
PRIMARY AND FULLY DILUTED, RESPECTIVELY.
</FN>
</TABLE>
<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 10-Q FOR THE NINE MONTHS ENDED NOVEMBER 2,
1996.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-START> FEB-04-1996
<PERIOD-END> NOV-02-1996
<EXCHANGE-RATE> 1
<CASH> 4,281
<SECURITIES> 0
<RECEIVABLES> 22,348
<ALLOWANCES> 100
<INVENTORY> 151,689
<CURRENT-ASSETS> 182,346<F1>
<PP&E> 82,844
<DEPRECIATION> 25,342
<TOTAL-ASSETS> 241,499<F2>
<CURRENT-LIABILITIES> 110,861
<BONDS> 0<F3>
0<F4>
0
<COMMON> 174
<OTHER-SE> 91,946
<TOTAL-LIABILITY-AND-EQUITY> 241,499
<SALES> 181,549
<TOTAL-REVENUES> 181,549
<CGS> 135,602
<TOTAL-COSTS> 170,325
<OTHER-EXPENSES> 6,876
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,912
<INCOME-PRETAX> 2,436
<INCOME-TAX> 926
<INCOME-CONTINUING> 1,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,510
<EPS-PRIMARY> 0.09<F5>
<EPS-DILUTED> 0.09<F5>
<FN>
<F1>OTHER CURRENT ASSETS 4,128
<F2>OTHER ASSETS 1,651
<F3>LONG TERM DEBT 37,255
<F4>DEFERRED INCOME TAXES 1,263
<F5>THE EARNINGS PER SHARE CALCULATIONS HAVE BEEN PREPARED IN ACCORDANCE WITH SFAS
NO. 128 AND BASIC AND DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE OF
PRIMARY AND FULLY DILUTED, RESPECTIVELY.
</FN>
</TABLE>
