<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 30, 1999
----------------
- 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 October 30, 1999 were 18,076,846 shares.
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BOOKS-A-MILLION, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS October 30, 1999 January 30, 1999
---------------- ----------------
<S> <C> <C>
CURRENT ASSETS: $ $
Cash and temporary cash investments 5,839 4,322
Accounts receivable, net 11,313 16,280
Inventories 222,194 175,211
Prepayments and other 4,527 2,938
Deferred income taxes 4,380 3,715
--------- ---------
TOTAL CURRENT ASSETS 248,253 202,466
--------- ---------
PROPERTY AND EQUIPMENT:
Gross property and equipment 121,245 117,006
Less-accumulated depreciation and amortization 58,645 49,629
--------- ---------
NET PROPERTY AND EQUIPMENT 62,600 67,377
--------- ---------
OTHER ASSETS:
Goodwill, net 1,463 1,495
Other 212 213
--------- ---------
TOTAL OTHER ASSETS 1,675 1,708
--------- ---------
TOTAL ASSETS $ 312,528 $ 271,551
========= =========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts payable $ 118,545 $ 103,263
Accrued expenses 16,465 14,705
Accrued income taxes -- 476
Notes payable 24,495 --
--------- ---------
TOTAL CURRENT LIABILITIES 159,505 118,444
--------- ---------
LONG TERM DEBT 36,944 36,944
--------- ---------
DEFERRED INCOME TAXES 1,373 1,141
--------- ---------
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,
18,076,846 and 18,016,525 shares issued and outstanding at
October 30, 1999 and January 30, 1999, respectively 181 180
Additional paid-in capital 70,402 70,124
Less treasury stock at cost (81,600 shares at October 30, 1999) (252) (252)
Retained earnings 44,375 44,970
--------- ---------
TOTAL STOCKHOLDERS' INVESTMENT 114,706 115,022
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 312,528 $ 271,551
========= =========
</TABLE>
SEE ACCOMPANYING NOTES
2
<PAGE> 3
BOOKS-A-MILLION, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
---------------------------- -----------------------------
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
NET SALES $ 91,162 $ 78,962 $ 266,167 $ 231,386
Cost of products sold (including warehouse
distribution and store occupancy costs) (1) 69,081 60,242 198,365 174,258
-------- -------- --------- ---------
GROSS PROFIT 22,081 18,720 67,802 57,128
Operating, selling and administrative expenses 18,983 16,378 55,274 46,965
Depreciation and amortization 3,417 3,368 10,134 9,703
-------- -------- --------- ---------
OPERATING INCOME (LOSS) (319) (1,026) 2,394 460
Interest expense, net 1,172 1,328 3,354 3,626
-------- -------- --------- ---------
LOSS BEFORE INCOME TAXES (1,491) (2,354) (960) (3,166)
Benefit from income taxes (567) (895) (365) (1,203)
-------- -------- --------- ---------
NET LOSS $ (924) $ (1,459) $ (595) $ (1,963)
======== ======== ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - BASIC 17,995 17,404 17,957 17,428
======== ======== ========= =========
NET LOSS PER SHARE - BASIC $ (0.05) $ (0.08) $ (0.03) $ (0.11)
======== ======== ========= =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - DILUTED 17,995 17,404 17,957 17,428
======== ======== ========= =========
NET LOSS PER SHARE - DILUTED $ (0.05) $ (0.08) $ (0.03) $ (0.11)
======== ======== ========= =========
</TABLE>
(1) Inventory purchases from related parties were $9,094, $7,795, $23,935 and
$27,578 respectively, for each of the periods presented above.
SEE ACCOMPANYING NOTES
3
<PAGE> 4
BOOKS-A-MILLION, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
--------------------------------------
OCTOBER 30, 1999 OCTOBER 31, 1998
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (595) $ (1,963)
--------- ---------
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 10,134 9,703
Loss on disposal of property and equipment 78 75
Change in deferred income taxes (433) (841)
(Increase) decrease in current assets:
Accounts receivable 4,967 (963)
Inventories (46,983) (41,947)
Prepayments and other (1,636) (2,058)
Increase (decrease) in current liabilities:
Accounts payable 15,282 16,686
Accrued income taxes (476) (2,730)
Accrued expenses 1,753 1,631
--------- ---------
Total adjustments (17,314) (20,444)
--------- ---------
Net cash used in operating activities (17,909) (22,407)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,069) (10,899)
Proceeds from sale of equipment 1,721 116
--------- ---------
Net cash used in investing activities (5,348) (10,783)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facilities 130,911 123,315
Repayments under credit facilities (106,416) (90,375)
Purchase of treasury stock -- (252)
Proceeds from sale of common stock, net 279 78
--------- ---------
Net cash provided by financing activities 24,774 32,766
--------- ---------
Net increase (decrease) in cash and temporary cash investments 1,517 (424)
Cash and temporary cash investments at beginning of period 4,322 3,909
--------- ---------
Cash and temporary cash investments at end of period $ 5,839 $ 3,485
========= =========
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE> 5
BOOKS-A-MILLION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
Books-A-Million, Inc. and its Subsidiaries (the "Company") for the thirteen and
thirty-nine week periods ended October 30, 1999 and October 31, 1998, 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 30, 1999, included in the Company's
1999 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 30, 1999, 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.
PRIOR YEAR RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to current year
presentation.
2. NET INCOME PER SHARE
Basic net income per share ("EPS") excludes dilution and 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 has
been computed based on the average number of shares outstanding including the
effect of outstanding stock options, if dilutive, in each respective thirteen
and thirty-nine week period. 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 30, 1999 October 31, 1998
---------------------------------------------------------
<S> <C> <C>
Weighted average shares outstanding:
Basic 17,995 17,404
Dilutive effect of stock options outstanding 0 0
---------------------------------------------------------
Diluted 17,995 17,404
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For the Thirty-Nine weeks Ended
(in thousands)
October 30, 1999 October 31, 1998
---------------------------------------------------------
<S> <C> <C>
Weighted average shares outstanding:
Basic 17,957 17,428
Dilutive effect of stock options outstanding 0 0
---------------------------------------------------------
Diluted 17,957 17,428
---------------------------------------------------------
</TABLE>
Options outstanding of 1,231,058 and 1,210,349 for the thirteen weeks
and thirty-nine weeks ended October 30, 1999 and outstanding options of
1,405,610 and 1,389,625 for the thirteen and thirty-nine weeks ended October 31,
1998 were not included in the table above as they were anti-dilutive.
5
<PAGE> 6
BOOKS-A-MILLION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. PENDING ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities, which was originally to be
adopted by the year 2000. This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. In June 1999, the FASB
issued Statement No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement No. 133, which
amends FASB Statement No. 133 to be effective for all fiscal years beginning
after June 15, 2000 (February 4, 2001, for the Company). The Company has not yet
quantified the impact of adopting this statement on its financial statements;
however, the adoption is not expected to have a material impact on the Company's
financial statements.
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. This statement
requires capitalization of certain costs of internal-use software. This
statement was adopted in fiscal 2000 and did not have a significant impact on
the Company's financial statements.
The AICPA has issued SOP 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. This statement was adopted in fiscal 2000 and did not have a
significant impact on the Company's financial statements.
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
This document contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that involve a
number of risks and uncertainties. A number of factors could cause actual
results, performance, achievements of the Company, or industry results to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These factors include,
but are not limited to, the competitive environment in the book retail industry
in general and in the Company's specific market area; inflation; economic
conditions in general and in the Company's specific market areas; the number of
store openings and closings; the profitability of certain product lines, capital
expenditures and future liquidity; liability and other claims asserted against
the Company; uncertainties related to Year 2000 issues; uncertainties related to
the Internet and the Company's Internet initiative; and other factors referenced
herein. In addition, such forward-looking statements are necessarily dependent
upon the assumptions, estimates and dates that may be incorrect or imprecise and
involve known and unknown risks, uncertainties and other factors. Accordingly,
any forward-looking statements included herein do not purport to be predictions
of future events or circumstances and may not be realized. Given these
uncertainties, shareholders and prospective investors are cautioned not to place
undue reliance on such forward-looking statements. The Company disclaims any
obligations to update any such factors or to publicly announce the results of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.
RESULTS OF OPERATIONS
Net sales increased 15.5% to $91.2 million in the thirteen weeks ended
October 30, 1999, from $79.0 million in the thirteen weeks ended October 31,
1998. Net sales increased 15.0% to $266.2 million in the thirty-nine weeks ended
October 30, 1999, from $231.4 million in the thirty-nine weeks ended October 31,
1998. For the thirteen and thirty-nine weeks ended October 30, 1999, the
increase in net sales resulted from new store sales combined with comparable
store sales increases of 12.2% and 7.5% for the thirteen and thirty-nine weeks
ended October 30, 1999, respectively. During the thirteen weeks ended October
30, 1999, three superstores were opened.
Gross profit increased $3.4 million or 18.0% to $22.1 million in the
thirteen weeks ended October 30, 1999 from $18.7 million in the thirteen weeks
ended October 31, 1998, and in the thirty-nine weeks ended October 30, 1999,
gross profit increased 18.7% to $67.8 million from $57.1 million in the same
period last year. Gross profit as a percentage of net sales for the thirteen
weeks ended October 30, 1999 was 24.2% versus 23.7% in the same period last
year. Gross profit as a percentage of net sales for the thirty-nine weeks ended
October 30, 1999, was 25.5% versus 24.7% in the same period last year. The
increase as a percentage of net sales for both the thirteen and thirty-nine week
periods was due to lower warehouse distribution and occupancy costs as a
percentage of net sales.
Operating, selling and administrative expenses increased $2.6 million
or 15.9% to $19.0 million in the thirteen weeks ended October 30, 1999, from
$16.4 million in the thirteen weeks ended October 31, 1998, and in the
thirty-nine weeks ended October 30, 1999, operating, selling and administrative
expenses increased 17.7% to $55.3 million from $47.0 million in the same period
last year. Operating, selling and administrative expenses as a percentage of net
sales for the thirteen weeks ended October 30, 1999, increased slightly to 20.8%
from 20.7% 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 20.8% from 20.3% in the same period last year. The increase in this
percentage for the thirteen and thirty-nine week periods was primarily due to
additional expenses for Internet operations.
Depreciation and amortization remained flat at $3.4 million in the
thirteen weeks ended October 30, 1999, versus $3.4 million in the thirteen weeks
ended October 31, 1998, and in the thirty-nine week period depreciation and
amortization increased $0.4 million or 4.4% to $10.1 million from $9.7 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.
Interest expense was $1.2 million in the thirteen weeks ended October
30, 1999, versus $1.3 million for the same period last year, and in the
thirty-nine week period interest expense decreased to $3.4 million from $3.6
million in the same period last year. This decrease in interest expense resulted
from reduced borrowings as the result of our positive comparable store sales.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
During the first thirty-nine weeks of fiscal 2000, 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 18, 2003, and an unsecured working capital line of credit for
$10 million, which is subject to annual renewal. As of October 30, 1999, $53.9
million was outstanding under these facilities combined. Both credit facilities
have certain financial and non-financial covenants with which the Company is in
compliance. Additionally, as of October 30, 1999, the Company has outstanding
borrowings associated with the issuance of an industrial revenue bond totaling
$7.5 million.
The Company's capital expenditures totaled $7.1 million during the
first thirty-nine weeks of fiscal 2000. These expenditures were primarily used
to open new stores, perform renovations and improvements to existing stores and
invest in management information systems and general corporate purposes.
Management estimates that capital expenditures for the remainder of fiscal 2000
will be approximately $3.0 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 2000.
When necessary, the Company establishes certain reserves for the
closing of under-performing stores. Management feels that this year's activity
will not significantly vary from the number of closings in the prior year.
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 $23.9 million in the thirty-nine weeks
ended October 30, 1999, versus $27.6 million in the thirty-nine weeks ended
October 31, 1998. The decrease in related party purchases is primarily due to
lower cost of purchases. The Company sells a portion of its inventories to
related parties; such sales amounted to $2.1 million and $3.1 million in the
thirty-nine weeks ended October 30, 1999 and October 31, 1998, respectively.
This decrease in related party sales is primarily due to decreased sales of
bargain books to related parties. The Company utilizes the logistics services of
a related party; such services amounted to $348,000 and $0 in the thirty-nine
weeks ended October 30, 1999 and October 31, 1998, respectively. Management
believes these related party activities do not have a significant impact on
gross profit.
FINANCIAL POSITION
During the thirty-nine weeks ended October 30, 1999, the Company opened
ten superstores. Inventory and debt balances at October 30, 1999 increased as
compared to January 30, 1999 due to seasonal fluctuations in inventory levels
and the ten new superstores opened during the first three quarters of fiscal
2000.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
YEAR 2000 COMPLIANCE
During the thirty-nine weeks ended October 30, 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 completed the evaluation, assessment, reprogramming and
testing of all information systems. The Company has developed a contingency plan
for possible Year 2000 issues for both store and corporate operations. The
Company plans to continue to rely primarily on internal resources related to the
contingency plans. However, third party services will be employed as necessary.
The Company's financial systems (excluding sales audit) are third party
vendor software programs which have been upgraded and have been certified as
Year 2000 compliant by the software vendors. The financial systems were tested
by the Company as well to ensure Year 2000 compliance. These upgrades were
previously planned and were not accelerated due to Year 2000 issues.
The Sales Audit system (an in-house system) evaluation, reprogramming,
testing, and implementation (put into production) were completed during the
quarter ended July 31, 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, and were tested by the Company to ensure Year 2000
compliance.
The returns system was evaluated during fiscal 1999. Few date sensitive
processes were identified in the programs, which mitigates the Year 2000
compliance risk. Reprogramming, testing, and implementation were completed
during the quarter ended July 31, 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, and were tested by the Company to ensure Year 2000 compliance.
Evaluation, reprogramming, testing, and implementation of the in-house programs
were completed during the quarter ended July 31, 1999.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's point of sale system operates the cash registers in the
stores. The registers run on a personal computer system using third party
software. The point of sale operating system has been upgraded to be Year 2000
compliant. The system evaluation, reprogramming and testing were completed
during the quarter ending October 30, 1999. The modified version of this system
is active in all retail store locations.
Other information systems that are not critical to daily operations
were assessed during the fourth quarter of fiscal 1999 and have been upgraded,
if necessary.
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.
Additionally, the Company has communicated with third parties in order
to assess their Year 2000 readiness and the extent to which the Company may be
vulnerable to any third party's failure to remedy its 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
approximately $440,000. The Company currently expects that the total costs of
Year 2000 compliance for the Company's current systems will not exceed $500,000.
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.
MARKET RISK
The Company is subject to market risk from interest rate fluctuations
involving its credit facilities. The average amount of debt outstanding under
the Company's credit facilities was $59.0 million during fiscal 1999. However,
the Company utilizes both fixed and variable debt to manage this exposure. On
February 9, 1998, the Company entered into an interest rate swap agreement that
carries a notional principal amount of $30.0 million. The swap effectively fixes
the interest rate on $30.0 million of variable rate debt at 6.73%. The swap
agreement expires on February 9, 2003. A hypothetical increase or decrease of
10% in interest rates would not have a material impact on the Company's
financial condition and results of operations.
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 3i Certificate of Incorporation of Books-A-Million,
Inc. (incorporated herein by reference to Exhibit 3.1 in the
Company's Registration Statement on Form S-1 (Capital
Registration No. 33-52256))
Exhibit 3ii By-Laws of Books-A-Million, Inc. (incorporated
herein by reference to Exhibit 3.2 in the Company's
Registration Statement on Form S-1 (Capital Registration No.
33-52256))
Exhibit 27 Financial Data Schedule (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 30, 1999
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 14, 1999
by:/s/ Clyde B. Anderson
-----------------------
Clyde B. Anderson
Chief Executive Officer
Date: December 14, 1999
by:/s/ Richard S. Wallington
-----------------------
Richard S. Wallington
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
BOOKS-A-MILLION, INC.'S 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 THIRTY-NINE WEEKS ENDED OCTOBER
30, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> OCT-30-1999
<EXCHANGE-RATE> 1
<CASH> 5,839
<SECURITIES> 0
<RECEIVABLES> 12,060
<ALLOWANCES> 747
<INVENTORY> 222,194
<CURRENT-ASSETS> 248,253<F1>
<PP&E> 121,245
<DEPRECIATION> 58,645
<TOTAL-ASSETS> 312,528<F2>
<CURRENT-LIABILITIES> 159,505
<BONDS> 0<F3>
0<F4>
0
<COMMON> 181
<OTHER-SE> 114,525
<TOTAL-LIABILITY-AND-EQUITY> 312,528
<SALES> 266,167
<TOTAL-REVENUES> 266,167
<CGS> 198,365
<TOTAL-COSTS> 253,639
<OTHER-EXPENSES> 10,134
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,354
<INCOME-PRETAX> (960)
<INCOME-TAX> (365)
<INCOME-CONTINUING> (595)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (595)
<EPS-BASIC> (0.03)<F5>
<EPS-DILUTED> (0.03)<F5>
<FN>
<F1>8,907 OTHER CURRENT ASSETS
<F2>1,675 OTHER ASSETS
<F3>36,944 LONG TERM DEBT
<F4>1,373 DEFERRED INCOME TAXES
<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>
