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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2002 Commission file number 0-4095
THOMAS NELSON, INC.
(Exact name of Registrant as specified in its charter)
Tennessee 62-0679364
(State or other jurisdiction of I.R.S. employer identification number)
incorporation or organization)
501 Nelson Place, Nashville, Tennessee 37214-1000
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (615) 889-9000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- -------------------- -------------------------
Common Stock, Par Value $1.00 per share New York Stock Exchange
Class B Common Stock, Par Value $1.00 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 requirement for the past 90 days. YES [X] NO [ ]
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. [ ]
As of June 24, 2002, the Registrant had outstanding 13,343,765 shares of
Common stock and 1,024,795 shares of Class B common stock. On such date the
aggregate market value of shares of common stock and Class B common stock held
by nonaffiliates was approximately $108.5 million. The market value
calculation was determined using the closing sale price of the Registrant's
common stock and Class B common stock on June 24, 2002, as reported on The
New York Stock Exchange.
DOCUMENTS INCORPORATED BY REFERENCE
Documents from which portions
Part of Form 10-K are incorporated by reference
- ------------------------------------ -------------------------------
PART II
Item 5 - Market for Company's Common Page 38 of Annual Report to
Equity and Related Shareholder Shareholders for year ended
Matters March 31, 2002 (market price
and dividend information only)
Item 6 - Selected Financial Data Page 12 of Annual Report to
Shareholders for year ended
March 31, 2002
Item 7 - Management's Discussion and Pages 13 to 19 of Annual Report
Analysis of Financial Condition Shareholders for year ended
and Results of Operations March 31, 2002
Item 7A - Quantitative and Qualitative Page 19 of Annual Report to
Disclosures about Market Risk Shareholders for year ended
March 31, 2002
Item 8 - Financial Statements and Pages 20 to 35 of Annual Report
Supplementary Data to Shareholders for year ended
March 31, 2002
PART III
Item 10 - Directors and Executive To be included in Company's
Officers of the Company Proxy Statement for the Annual
Meeting of Shareholders to be
held August 22, 2002, to be
filed with the Securities and
Exchange Commission pursuant
to Regulation 14A under the
Securities Exchange Act
of 1934, as amended.
Item 11 - Executive Compensation To be included in Company's
Proxy Statement for the Annual
Meeting of Shareholders to be
held August 22, 2002, to be
filed with the Securities and
Exchange Commission pursuant
to Regulation 14A under the
Securities Exchange Act of
1934, as amended.
Item 12 - Security Ownership of Certain To be included in Company's
Beneficial Owners and Proxy Statement for the Annual
Management Meeting of Shareholders to be
held August 22, 2002, to be
filed with the Securities and
Exchange Commission pursuant
to Regulation 14A under the
Securities Exchange Act of
1934, as amended.
Item 13 - Certain Relationships and To be included in Company's
Related Transactions Proxy Statement for the Annual
Meeting of Shareholders to be
held August 22, 2002, to be
filed with the Securities and
Exchange Commission pursuant
to Regulation 14A under the
Securities Exchange Act of
1934, as amended.
PART I
Item 1. Business
- -----------------
Thomas Nelson, Inc. (the "Company") is a leading publisher, producer and
distributor of books emphasizing Christian, inspirational and family value
themes and believes it is the largest commercial publisher of the Bible in
English language translations. The Company believes it is the largest
publisher of Christian and inspirational books in the United States.
On October 11, 2001, the Company announced that it had entered into a
definitive agreement by which the Company would sell and CRG Acquisition Corp.
("CRG") would purchase the Company's gift business, including substantially
all of the assets of the Company's wholly-owned subsidiary, The C.R. Gibson
Company ("C.R. Gibson"). C.R. Gibson is a designer, marketer and distributor
of premium stationery and memory albums. The purchase was consummated on
November 7, 2001 by CRG with an effective date of October 31, 2001 at a
purchase price of $30.5 million, plus the assumption of certain liabilities.
This sale resulted in a loss on disposal of $14.7 million. The Company also
recognized a $40.4 million cumulative effect of a change in accounting
principle charge to write-off goodwill associated with C.R. Gibson.
C.R. Gibson generated an operating income (loss) from discontinued operations
of $(0.8) million, $(3.2) million and $0.3 million in fiscal years 2002, 2001
and 2000, respectively. The Company utilized net proceeds from the sale to
pay down existing debt. The financial statements reflect the gift business
segment as a discontinued operation for all periods presented.
During December 2000, the Company determined it would dispose of its Ceres
candles operation, formerly a division of its gift business segment. This
sale was completed in August 2001 for approximately $1.5 million. This sale
resulted in a loss on disposal of $(0.5) million in fiscal 2002 and $(7.3)
million in fiscal 2001. Ceres generated an operating loss from discontinued
operations of $(1.3) million and $(1.0) million in fiscal years 2001 and 2000,
respectively.
Effective April 1, 2001, Remuda Ranch Center for Anorexia and Bulimia,
Inc. ("Remuda Ranch"), which operates therapeutic centers in Arizona for women
with eating disorders, was reflected as a discontinued operation. For periods
prior to April 1, 2001, Remuda Ranch net assets are reflected as assets held
for sale in accordance with Emerging Issues Task Force Issue No. 87-11,
"Allocation of Purchase Price to Assets to be Sold." Remuda Ranch was a wholly
owned subsidiary of New Life Treatment Center, Inc., acquired during fiscal
2000, and was considered as an asset held for sale from the acquisition date
through March 31, 2001. The Company closed the sale of the Remuda Ranch net
assets in July 2001 for approximately $7.2 million in cash and a $2 million
note receivable. This sale resulted in a loss on disposal of $0.3 million
during fiscal 2002. The operations of Remuda Ranch have been accounted for as
discontinued operations and accordingly, their assets, liabilities and results
of operations are segregated in the accompanying consolidated statements of
operations, balance sheets and statements of cash flows and have been
reclassified for all periods presented, except Remuda Ranch net assets for
periods prior to April 1, 2001 which were classified as assets held for sale.
During fiscal 2000, the Company completed three business acquisitions.
On June 24, 1999, the Company acquired substantially all of the assets of
Ceres LLC for approximately $6.2 million, which included the assumption of
certain liabilities. On December 30, 1999, the Company acquired substantially
all of the assets of Rutledge Hill Press, Inc. for approximately $4.5 million
including the assumption of certain liabilities. Rutledge Hill Press is a
Nashville, Tennessee-based publisher that specializes in cooking, quilting,
regional interest and Civil War titles. On January 28, 2000, the Company
acquired approximately 70% of the outstanding shares of New Life Treatment
Centers, Inc. ("NLTC") from a group of investors for approximately
$15.4 million in cash. NLTC, headquartered in Plano, Texas, operates two
businesses. One, Women of Faith, Inc., hosts inspirational conferences for
women at venues throughout the United States, and the other, Remuda Ranch
Center for Anorexia and Bulimia, Inc. ("Remuda Ranch"), operates therapeutic
centers in Arizona for women with eating disorders. At the NLTC acquisition
date, Remuda Ranch was identified as an asset held for sale. During fiscal
2001, the Company paid approximately $0.8 million in cash and issued
approximately 108,000 shares of the Company's Common stock to acquire an
additional 10% of the outstanding shares of NLTC, and has accepted additional
shares of NLTC in lieu of debt payments from a third party. At March 31,
2002, the Company owned approximately 99% of the outstanding shares of NLTC.
PUBLISHING
The Company's book publishing division publishes and distributes hardcover
and trade paperback books emphasizing Christian, inspirational and family value
themes. The Company believes it is the largest publisher of Christian and
inspirational books in the United States. Books are published by the Company
under several imprints including Thomas Nelson(R), W Publishing,
J. Countryman(R), Tommy Nelson(R) , Rutledge Hill PressTM and Cool Springs
PressTM, and consist generally of inspirational, trade, gift, children's and
reference books emphasizing Christian and family value themes. The Company
distributes books primarily through Christian bookstores, general bookstores,
mass merchandisers and direct sales to consumers. The Company also distributes
books published by other companies on a limited basis to complement its
marketing and distribution capabilities. In fiscal 2002, publishing net
revenues realized from the distribution of books published by other companies
was immaterial.
Women of Faith(R), acquired in the fourth quarter of fiscal 2000, hosts
inspirational conferences and has an Internet portal, womenoffaith.com. Both
are designed to foster a community setting for Christian women and to provide a
forum for them to explore and strengthen their faith. The Company benefits
through seminar attendance fees and the sale of Christian products at seminars.
In fiscal year 2002, Women of Faith hosted 26 conferences throughout the
United States, which attracted over 332,000 participants. Womenoffaith.com is
an on-line community of women who gather to build relationships with one
another. Founded in June 1999, Womenoffaith.com created a place where
Christian women from all over the world come to share their life experiences
and faith with one another. The events and the Internet site both provide
opportunities to market and sell inspirational products.
In fiscal 2002, 2001 and 2000, the Company released over 200 new book
titles annually. The Company publishes and distributes some of the best known
communicators in Christian and inspirational publishing, including Carolyn
Arends, Dr. Don Colbert, John Eldredge, Billy Graham, John Hagee, Hank
Hanegraaf, Jack Hayford, Cynthia Heald, Barbara Johnson, Thomas Kinkade, Anne
Graham Lotz, Max Lucado, Catherine Marshall, John C. Maxwell, Nicole C. Mullen,
Frank Peretti, Mary Lou Retton, Michael W. Smith, Dr. Charles Stanley, Tommy
Tenney, Stephanie Grace Whitson and Bruce Wilkinson. In addition, the Company
maintains a backlist of approximately 1,100 titles, which provide a stable base
of recurring revenues as many popular titles continue to generate significant
sales from year to year. Backlist titles accounted for approximately 50% of
the book division's net revenues in fiscal 2002. Authors and titles are
supported through radio, television, cooperative advertising, author
appearances, in-store promotions, print advertising and other means.
The Company's book publishing business is enhanced by the breadth of its
marketing and distribution channels. In addition to enhancing sales of its
products, the Company believes its ability to sign and renew contracts with
popular authors is improved because the Company's marketing and distribution
capabilities provide exposure for the authors' books to a broader audience than
its competitors. (see "Marketing, Distribution and Production").
The Company believes it is one of the largest commercial publishers of
English translations of the Bible. The Bible is based on ancient manuscripts,
which are the surviving reproductions of the original writings. These
manuscripts, written in Hebrew, Aramaic or Greek, have been translated into
English and other modern languages by biblical scholars and theologians,
generally under the auspices of a major Bible society or translation
organization. Each of the many English translations available differs in some
degree from the others, primarily because of different translation guidelines
and principles used as the basis for each translation. The distinctiveness of
each translation is also, in part, a result of the evolution of the meaning and
use of words within the English language.
Virtually all Bibles and Bible products currently published in the United
States are based on one of 13 major translations. Of these 13 translations, 12
are protected by copyright laws, which grant the copyright owner the exclusive
right, for a limited term, to control the publication of such translation. The
Company publishes Bibles and Bible products based on eight of the thirteen
major translations, of which three are exclusive to the Company as a result of
copyright ownership or licensing arrangements (see "Copyrights and Royalty
Agreements"). Approximately 55% of the Company's net revenues from Bible
publishing in fiscal 2002 were generated through sales of its proprietary Bible
products.
The following table sets forth the eight major Bible translations, in the
English language, currently published by the Company:
Date First Proprietary
Translation Published to the Company
- ----------- ---------- --------------
King James Version (KJV) 1611 No
New American Bible (NAB) 1970 No
Revised Standard Version, Catholic Edition (RSVCE) 1965 No
New King James VersionTM (NKJV)(R) 1982 Yes
International Children's Bible (ICB) 1983 Yes
New Century Version (NCV) 1984 Yes
New Revised Standard Version (NRSV) 1990 No
New Living Translation (NLT) 1996 No
The KJV, currently published in its fourth revision, is the most widely
distributed of all English translations of the Bible. In 1975, the Company
commissioned the fifth revision of the KJV resulting in the publication of the
proprietary NKJV(R) in 1982.
Electronic Bibles and biblical reference books are published under the
Nelson Electronic PublishingTM imprint. These products include electronic
collections centered on Bible study; electronic libraries featuring well-known
authors, such as Jack Hayford, John MacArthur, John Maxwell and Charles
Stanley; and software for preparing Bible study lessons. The Company has
achieved a leadership position in the industry with its electronic
publications, and is aggressively pursuing new digital formats of publication
and distribution as they develop, such as the Internet, and emerging portable
book technologies.
The Company continually seeks to expand its Bible product line by
developing or aiding in the development of new translations and editions and
seeking new publishing opportunities. The Company also continually makes
editorial, design and other changes to its existing line of Bibles and other
Bible products in an effort to increase their marketability. The Company
currently publishes over 1,100 different Bibles and biblical reference products
such as commentaries, study guides and other popular Bible help texts. Styles
range from inexpensive paperbacks to deluxe leather-bound Bibles to CD-Rom.
Different editions of a particular Bible translation are created by
incorporating additional material, such as study helps, concordances, indices
and Bible outlines, or artwork, into the biblical text. These editions (which
are generally proprietary to the Company regardless of whether or not the
Company holds proprietary rights to the underlying Bible translation) are
targeted to the general market or positioned for sale to specific market
segments.
MARKETING, DISTRIBUTION AND PRODUCTION
The principal market channels through which the Company markets its
products domestically are Christian bookstores, which are primarily
independently owned; general bookstores, including national chains such as
Barnes & Noble(R) and Borders(R); mass merchandisers such as Target(R),
Wal-Mart(R) and Sam's(R) Wholesale Club and directly to consumers through
direct mail, telemarketing, inspirational seminars and the Internet. The
Company services these market channels through its sales force and through
wholesalers or jobbers servicing bookstores, gift stores, other retail outlets
and libraries.
The Company's direct marketing operations sell publishing products
directly to approximately 31,500 customers consisting of churches, other
religious organizations, pastors and other individuals by direct mail and
telemarketing.
As of March 31, 2002, the Company employed a sales force of approximately
130 people and maintained 24-hour-a-day telemarketing capability. These
employees service over 30,000 retail accounts and 31,000 church related
accounts. Customer orders are usually shipped through a variety of common
carriers, as well as by UPS(R), FedEx(R) and parcel post. No single customer
accounted for more than 10% of net revenues during fiscal 2002.
The Company contracts with a number of foreign publishers to translate the
Company's English titles into foreign languages. The Company typically retains
publishing rights to the titles translated.
The Company distributes its products internationally in South America,
Europe, Australia, New Zealand, Africa, the Far East, Mexico and Canada. In
fiscal 2002, the Company's export operations accounted for less than 10% of the
Company's total net revenues.
Substantially all of the Company's products are manufactured by domestic
and foreign commercial printers, binders and manufacturers, which are selected
on the basis of competitive bids. The Company may contract separately for
paper and certain other supplies used by its manufacturers.
COPYRIGHTS AND ROYALTY AGREEMENTS
The Company customarily secures copyright registrations on its books and
Bible editions in order to protect its publishing rights. Almost all of the
Company's book products are published under royalty agreements with their
respective authors or other copyright proprietors.
COMPETITION
The Company believes that it is the largest publisher of Christian and
inspirational books and one of the largest commercial publishers of Bibles in
English language translations. The Company competes with numerous other
companies that publish and distribute Christian and inspirational books,
certain of which are tax-exempt organizations. While the Company's prices are
comparable to those of its competitors, the Company believes that its breadth
of product line, established market channels, established sales forces and
customer service give it a competitive advantage.
The most important factor with respect to the competitive position of the
Company is the contractual relationships it establishes and maintains with
authors. The Company competes with other book publishing companies, both
Christian and secular, for signing top authors. The Company's ability to sign
and re-sign popular authors depends on a number of factors, including
distribution and marketing capabilities, the Company's management team and the
royalty and advance arrangements offered. The Company believes its
relationships with its authors, which are based on its reputation in the
publishing industry, its marketing experience and its management expertise give
it a competitive advantage in signing and maintaining contracts with top
Christian and inspirational authors.
EMPLOYEES
As of March 31, 2002, the Company employed approximately 700 persons.
The Company has not suffered any work stoppages as a result of labor disputes
in recent years and considers relations with its employees to be good.
EXECUTIVE OFFICERS
Officers of the Company are elected by the Board of Directors and serve
at the pleasure of the Board of Directors. Following is certain information
regarding the executive officers of the Company:
Name Age Position with the Company
- ---- ----- -------------------------------------------
Sam Moore 72 Chairman of the Board, Chief Executive
Officer, President and Director
Joe L. Powers 56 Executive Vice President and Secretary
Lee Gessner 49 Executive Vice President, Thomas Nelson
Publishing and Sales Group
Vance Lawson 43 Senior Vice President, Finance and
Operations Group
Eric Heyden 48 Vice President and General Counsel
Michael S. Hyatt 47 Executive Vice President and Group Publisher
Philip Stoner 42 Executive Vice President and Publisher,
Bibles, Reference, Electronic and
Spanish Publishing
Except as indicated below, each executive officer has been an employee of
the Company as his/her principal occupation for more than the past five years.
Sam Moore has been Chairman of the Board, Chief Executive Officer,
President and a Director of the Company since its founding in 1961.
Joe L. Powers was appointed Executive Vice President of the Company in
1995. Previously, Mr. Powers served as a Vice President of the Company since
1980.
Lee Gessner was appointed Executive Vice President of the Company in
December, 2000. Previously, Mr. Gessner served as Senior Vice President and
Publishing Group Executive with Word Publishing, Publisher and COO of Word
Publishing, Senior Vice President of Sales with the Thomas Nelson Publishing
Group and Vice President of Sales with Word Publishing since 1989.
Vance Lawson was appointed Senior Vice President, Finance and Operations
Group in 2000. Previously, Mr. Lawson served as Vice President, Finance of the
Company since 1993 and had served as Senior Vice President of Finance and
Operations at Word since 1988.
Eric Heyden has been the Vice President and General Counsel of the Company
since 1998, Vice President and Deputy General Counsel of the Company since 1997
and Assistant General Counsel of the Company since 1995. Mr. Heyden was
previously Vice President and General Counsel with Knoedler Publishing, Inc.
from 1985 to 1995.
Michael S. Hyatt has been with the Company since February 1998. In May
2002, he was appointed Executive Vice President and Group Publisher for Nelson
book, Tommy Nelson, Rutledge Hill Press, Cool Springs Press and the Nelson
Multi Media divisions. Previously, Mr. Hyatt served as Executive Vice
President and Publisher of Nelson Books, Senior Vice President and Publisher of
Nelson Books, and Senior Vice President and Associate Publisher of Nelson
Books. Mr. Hyatt was previously a partner with Wolgemuth & Hyatt, a literary
agency, from 1992 to 1998.
Philip Stoner has been with the Company since May 1990. He was appointed
Executive Vice President and Publisher for all Bible, Reference, Electronic and
Spanish Publishing in June 2001. Previously, Mr. Stoner served as Executive
Vice President and Publisher of Reference, Electronic and Spanish Publishing;
Senior Vice President and Publisher of Reference Product; Vice President of
Reference and Specialty Publishing; Vice President of Reference and Mass
Market; Director of Reference Publishing and Director of Reference Books and
Nelson's Communication Division.
Item 2. Properties
The Company's executive, editorial, sales and production offices are
primarily located at its corporate headquarters at 501 Nelson Place in
Nashville, Tennessee. These facilities are housed in a 74,000 square foot
building completed in 1981, which is owned by the Company subject to a mortgage
securing a debt with an outstanding balance at March 31, 2002 of approximately
$900,000.
The Company's major warehouse facilities for its publishing division are
located in a building containing approximately 215,000 square feet adjacent to
its corporate headquarters in Nashville, Tennessee. This building, which was
completed in fiscal 1978, is owned by the Company. An addition to the
warehouse and distribution center of approximately 120,000 square feet was
completed during fiscal 1993. This addition was financed by a $5,000,000
construction and term loan secured by a mortgage, which, as of March 31, 2002,
is paid in full.
The Company's significant leased properties are described below:
Square Annual Lease
Location Use/Segment Feet Rent Expiration
- -------- ----------- ------- -------- ----------
Nashville, TN Sales office/publishing 38,000 $716,000 11/2005
Nashville, TN Sales office/publishing 12,500 $141,000 09/2002
Nashville, TN Warehousing 169,400 $515,000 12/2005
Plano, TX Office/Women of Faith 23,931 $302,220 10/2010
All building improvements on the properties are brick veneer, metal or
block construction and are considered adequate and suitable by the Company for
the purposes for which they are used.
The Company's machinery and equipment are located in Nashville, Tennessee
and Plano, Texas and consist primarily of computer equipment, warehousing and
shipping racks, conveyors and other material handling equipment located at the
various warehousing facilities and office equipment. Such machinery and
equipment are in good repair and adequate for the Company's present operations.
All such equipment, other than a portion of the computer equipment and office
equipment that is leased, is owned by the Company.
The Company's properties are operated at or near capacity. Additional
personnel are employed as required.
Item 3. Legal Proceedings
- --------------------------
The Company is subject to various legal proceedings, claims and
liabilities that arise in the ordinary course of its business. In the opinion
of management, the amount of ultimate liability with respect to these actions
will not materially affect the financial position or results of operations of
the Company.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company did not submit any matter to a vote of its security holders
during the last quarter of its fiscal year ended March 31, 2002.
PART II
Item 5. Market for the Company's Common Equity and Related Shareholder Matters
- -------------------------------------------------------------------------------
Incorporated by reference to the Annual Report to Shareholders for the
year ended March 31, 2002 (the "Annual Report").
Item 6. Selected Financial Data
- --------------------------------
Incorporated by reference to the Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
- ------------------------------------------------------------------------
Incorporated by reference to the Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
- --------------------------------------------------------------------
Incorporated by reference to the Annual Report.
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
Incorporated by reference to the Annual Report. Includes selected
unaudited quarterly financial data for the years ended March 31, 2002 and 2001.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- ------------------------------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers of the Company
- ---------------------------------------------------------
Information regarding the directors of the Company and compliance with
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is incorporated by reference to the Company's Proxy Statement for the
Annual Meeting of Shareholders to be held on August 22, 2002 (the "Proxy
Statement"), to be filed within 120 days of March 31, 2002 with the Securities
and Exchange Commission (the "Commission") pursuant to Regulation 14A under the
Exchange Act. Information regarding the Company's executive officers is
contained in Part 1, Item 1 herein.
Item 11. Executive Compensation
- --------------------------------
Incorporated by reference to the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- ------------------------------------------------------------------------
Incorporated by reference to the Proxy Statement.
The Company has adopted the 1992 Amended and Restated Employee Stock
Incentive Plan (the "Stock Incentive Plan"), which is administered by the
Company's Compensation Committee. Stock options, stock appreciation rights,
restricted stock, deferred stock, stock purchase rights and other stock-based
awards may be granted to employees under this plan. In addition, up to
140,000 shares of Common stock have been authorized for issuance under this
plan for annual stock option grants to each of the Company's outside directors
for the purchase of 2,000 shares of Common stock. Stock options have been
granted under this plan as indicated in the table below. The options in the
Stock Incentive Plan typically vest over one to three year periods beginning
on the first or fourth anniversary date of the option grant, and at March 31,
2002, there were options to purchase 278,667 shares of Common Stock and
330,000 shares of Class B Common stock exercisable. The weighted average
life of the options outstanding under the Stock Incentive Plan at March 31,
2002, was four years. The Company does not mainain any equity compensation
plans under which stock may be issued except those approved by the Company's
shareholders.
EQUITY COMPENSATION PLAN INFORMATION
A B C
-----------------------------------------------------------------
Number of securities Weighted-average Number of securities
to be issued upon exercise price of remaining available
Plan category exercise of outstand- outstanding for future issuance
ing options, warrants options, warrants under equity compen-
and rights and rights sation plans
----------- ----------- (excluding securities
Common Class B reflected in Column A)
-----------------------------------------------------------------
Equity
compensation
plans approved 941,500 330,000 $9.52 774,825
by security
holders
-----------------------------------------------------------------
Item 13. Certain Relationships and Related Transactions
- --------------------------------------------------------
Incorporated by reference to the Proxy Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of Report
1. Financial Statements
The following consolidated financial statements of the Company included in
the Annual Report are incorporated herein by reference as set forth in Part II
Item 8:
Statements of operations -- years ended March 31, 2002, 2001 and 2000
Balance sheets -- March 31, 2002 and 2001
Statements of shareholders' equity -- years ended March 31, 2002, 2001 and 2000
Notes to consolidated financial statements
Report of Arthur Andersen LLP, Independent Public Accountants
2. Financial Statement Schedules
The following consolidated financial statement schedules are included
herein:
Page
----
Report of Arthur Andersen LLP, Independent Public Accountants..........15
Schedule II -- Valuation and Qualifying Accounts and Reserves..........16
Schedules not listed above have been omitted because they are not
required, are inapplicable or the required information has been given in the
consolidated financial statements or notes thereto.
3. Exhibits
The following exhibits are included herein or incorporated by reference as
indicated. Exhibit numbers refer to Item 601 of Regulation S-K.
Exhibit
Number
- -------
3.1 -- Thomas Nelson, Inc. Amended and Restated Charter (filed as Exhibit 4.1
to the Company's Registration Statement on Form S-8 (No. 33-80086) and
incorporated herein by reference)
3.2 -- Thomas Nelson, Inc. Amended Bylaws (filed as Exhibit 3.2 to the
Company's Annual Report on Form 10-K for the year ended March 31,
1999 and incorporated herein by reference)
4.1 -- Loan Agreement dated as of May 1, 1990, between the Company and The
Industrial Development Board of The Metropolitan Government of
Nashville and Davidson County (filed as Exhibit 4(e) to the Company's
Annual Report on Form 10-K for the year ended March 31, 1990 and
incorporated herein by reference)
4.2 -- Promissory Note dated as of May 1, 1990, of the Company payable to The
Industrial Development Board of the Metropolitan Government of
Nashville and Davidson County (filed as Exhibit 4(f) to the Company's
Annual Report on Form 10-K for the year ended March 31, 1990 and
incorporated herein by reference)
4.3 -- Deed of Trust and Security Agreement dated as of May 1, 1990, from
the Company to A. Stuart Campbell, as Trustee (filed as Exhibit 4.6
to the Company's Annual Report on Form 10-K for the year ended
March 31, 1991 and incorporated herein by reference)
4.4 -- Note Purchase Agreement dated January 3, 1996, among the Company,
The Purdential Insurance Company of America and Metropolitan Life
Insurance Company (filed as Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1995 and
incorporated herein by reference)
4.5 -- Letter Amendment No. 1 dated June 28, 1996, to Note Purchase Agreement
dated January 3, 1996, among the Company and Metropolitan Life
Insurance Company and related waiver, dated as of March 31, 1996
(filed as Exhibit 4.14 to the Company's Annual Report on Form 10-K
for the year ended March 31, 1996 and incorporated herein by
reference)
4.6 -- Assumption and Amendment Agreement dated as of May 30, 1996, and as
amended June 28, 1996, between the Company, The C.R. Gibson Company,
The Prudential Insurance Company of America and Metropolitan Life
Insurance Company (filed as Exhibit 4.15 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1996 and
incorporated herein by reference)
4.7 -- Revolving Credit Agreement dated as of June 28, 2002, among the
Company, several banks and other financial institutions from time to
time party hereto, and SunTrust Bank, Nashville, in its capacity as
Administrative Agent.
10.1 -- Thomas Nelson, Inc. Amended and Restated 1990 Deferred Compensation
Option Plan for Outside Directors (filed as Exhibit 4.5 to the
Company's Registration Statement on Form S-8 (No. 33-80086) dated
June 13, 1994 and incorporated herein by reference)*
10.2 -- Thomas Nelson, Inc. Amended and Restated 1992 Employee Stock Incentive
Plan (filed as Exhibit 4.6 to the Company's Proxy Statement dated
July 26, 1995, for the Annual Meeting of Shareholders held on
August 24, 1995 and incorporated herein by reference)*
10.3 -- Severance Agreement dated as of May 17, 1991, between the Company and
Sam Moore (filed as Exhibit 10.6 to the Company's Annual Report on
Form 10-K for the year ended March 31, 1991 and incorporated herein
by reference)*
10.4 -- Employment Agreement dated as of May 13, 1996, between the Company and
Sam Moore (filed as Exhibit 10.7 to the Company's Annual Report on
Form 10-K for the year ended March 31, 1996 and incorporated herein by
reference)*
10.5 -- Employment Agreement dated as of May 10, 1996, between the Company and
S. Joseph Moore (filed as Exhibit 10.8 to the Company's Annual Report
on Form 10-K for the year ended March 31, 1996 and incorporated herein
by reference)*
10.6 -- Employment Agreement dated as of May 10, 1996, between the Company and
Joe L. Powers (filed as Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the year ended March 31, 1996 and incorporated herein by
reference)*
10.7 -- Employment Agreement dated as of December 22, 1994, between the
Company and Raymond T. Capp (filed as Exhibit 10.15 to the Company's
Annual Report on Form 10-K for the year ended March 31, 1995 and
incorporated herein by reference)*
10.8 -- Employment Agreement dated as of June 23, 1993, between the Company
and Vance Lawson (filed as Exhibit 10.13 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1994 and incorporated
herein by reference)*
10.9 -- Employment Agreement dated as of July 10, 1995, between the Company
and Eric Heyden (filed as Exhibit 10.14 to the Company's Annual
Report on Form 10-K for the year ended March 31, 1998 and incorporated
herein by reference)*
10.10 -- Addendum to Employment Agreement dated as of May 13, 1996, between the
Company and Sam Moore (executed on June 22, 2000) (filed as
Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year
ended March 31, 2000 and incorporated herein by reference)*
10.11 -- Addendum to Employment Agreement dated as of May 10, 1996, between the
Company and S. Joseph Moore (executed on June 22, 2000) (filed as
Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year
ended March 31, 2000 and incorporated herein by reference)*
10.12 -- Addendum to Employment Agreement dated as of May 10, 1996, between the
Company and Joe L. Powers (executed on June 22, 2000) (filed as
Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year
ended March 31, 2000 and incorporated herein by reference)*
10.13 -- Thomas Nelson, Inc. 1997 Deferred Compensation Plan for Non-employee
Directors (adopted on May 22, 1997) (filed as Exhibit 10.18 to the
Company's Annual Report on Form 10-K for the year ended March 31, 2000
and incorporated herein by reference)*
10.14 -- Amended and Restated Asset Purchase Agreement, dated October 31, 2001
by and between the Company, The C.R. Gibson Company, and C.R. Gibson
Sales Company, Inc. and CRG Acquisition Corp., as Buyer. Schedules
to the Amended and Restated Asset Purchase Agreement have been
omitted. The Company agrees to furnish supplementally a copy of
any Schedule to the Commission upon request. (filed as Exhibit 2.1 to
the Company's Form 10-Q for the quarter period ended September 30,
2001 and incorporated herein by reference)
10.15 -- Transition Services Agreement, dated November 7, 2001, effective
as of October 31, 2001 by and between the Company and CRG Acquisition
Corp. (filed as Exhibit 10.1 to the Company's Form 10-Q for the
quarter period ended September 30, 2001 and incorporated herein by
reference)
10.16 -- Lease Agreement, dated November 7, 2001, effective as of October 31,
2001 by and between the Company, as Tenant, and CRG Acquisition Corp.,
as Landlord. (filed as Exhibit 10.2 to the Company's Form 10-Q
for the quarter period ended September 30, 2001 and incorporated
herein by reference)
10.17 -- Employment Agreement dated as of November 11, 2000, between the
Company and Lee Gessner.
10.18 -- Employment Agreement dated as of July 7, 2000, between the Company
and Mike Hyatt.
10.19 -- Employment Agreement dated as of July 8, 1998, between the Company
and Phil Stoner.
11 -- Statement re Computation of Per Share Earnings
13 -- Thomas Nelson, Inc. Annual Report to Shareholders for the year ended
March 31, 2001 (to the extent of portions specifically incorporated
by reference)
21 -- Subsidiaries of the Company
23 -- Consent of Independent Public Accountants
99 -- Letter, dated June 28, 2002 to the Securities and Exchange Commission
to address its requirements with respect to issuers that include
accountants' reports from Arthur Andersen, LLP ("Andersen") issued
after March 14, 2002 in filings with the Commission.
- --------------------------
*Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
No reports on Dorm 8-K were filed during the fourth quarter of
fiscal 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
THOMAS NELSON, INC.
By: /s/ Sam Moore
-------------------------
Sam Moore
Chief Executive Officer
and President
Date: June 29, 2002
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 Company
and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/Sam Moore Chairman of the Board of June 29, 2002
--------------------- Directors, Chief Executive
Sam Moore Officer and President
Principal Executive Officer)
/s/Joe L. Powers Executive Vice President and June 29, 2002
--------------------- Secretary (Principal Financial
Joe L. Powers and Accounting Officer)
/s/Jesse T. Correll Director June 29, 2002
---------------------
Jesse T. Correll
/s/Brownlee O. Currey, Jr. Director June 29, 2002
---------------------
Brownlee O. Currey, Jr.
/s/W. Lipscomb Davis, Jr. Director June 29, 2002
---------------------
W. Lipscomb Davis, Jr.
/s/S. Joseph Moore Director June 29, 2002
---------------------
S. Joseph Moore
/s/Robert J. Niebel Director June 29, 2002
---------------------
Robert J. Niebel
/s/Millard V. Oakley Director June 29, 2002
---------------------
Millard V. Oakley
/s/Andrew Young Director June 29, 2002
---------------------
Andrew Young
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thomas Nelson, Inc.:
We have audited, in accordance with auditing standards generally accepted
in the United States, the consolidated financial statements included in THOMAS
NELSON, INC.'s annual report to shareholders incorporated by reference in
this Form 10-K, and have issued our report thereon dated May 10, 2002 (except
with respect to the matters discussed in Note J to the consolidated financial
statements, as to which the date is June 28, 2002). Our report on the
consolidated financial statements includes an explanatory paragraph with
respect to the change in the method of accounting for goodwill and intangible
assets (as discussed in Note A to the consolidated financial statements).
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The financial statement
schedule listed in the index is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and regulations under the Securities and Exchange
Act of 1934 and are not otherwise a required part of the basic consolidated
financial statements. The financial statement schedule has been subjected to
the auditing procedures applied in the audit of the basic consolidated
financial statements and, in our opinion, fairly states, in all material
respects, the financial data required to be set forth therein in relation to
the basic consolidated financial statements taken as a whole.
/s/ Arthur Andersen LLP
-----------------------
Nashville, Tennessee
May 10, 2002
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- -------------------------------------------------------------------------------
March 31, 2002 March 31, 2001 March 31, 2000
-------------- -------------- --------------
Reserve for Sales Returns:
- --------------------------
Balance at beginning of period $ 4,637,000 $ 4,564,000 $ 4,286,000
Additions:
1. Charged to costs and expenses 36,393,000 36,662,000 41,322,000
2. Charged to other accounts - - -
Deductions: charge-offs 36,076,000 36,589,000 41,044,000
-------------- -------------- --------------
Balance at end of period $ 4,954,000 $ 4,637,000 $ 4,564,000
============== ============== ==============
Reserve for Doubtful Accounts:
- ------------------------------
Balance at beginning of period $ 1,538,000 $ 1,407,000 $ 1,488,000
Additions:
1. Charged to costs and expenses 4,535,000 999,000 1,212,000
2. Charged to other accounts 1,365,000 - -
Deductions: charge-offs 6,003,000 868,000 1,293,000
-------------- -------------- --------------
Balance at end of period $ 1,435,000 $ 1,538,000 $ 1,407,000
============== ============== ==============
Discontinued Operations:
- ------------------------
Balance at beginning of period $ 2,032,000 $ 2,424,000 $ 2,705,000
Additions:
1. Charged to costs and expenses - - -
2. Charged to other accounts 3,812,000 - -
Deductions:
1. Charge-offs 1,265,000 392,000 281,000
2. Charge to other accounts 767,000 - -
-------------- -------------- --------------
Balance at end of period $ 3,812,000 $ 2,032,000 $ 2,424,000
============== ============== ==============
INDEX TO EXHIBITS
Exhibit Page
Number Number
- ------- ------
4.7 -- Revolving Credit Agreement dated as of June 28, 2002,
among the Company, several banks and other financial
institutions from time to time party hereto, and SunTrust
Bank, Nashville, in its capacity as Administrative Agent.......
10.17 -- Employment Agreement dated as of November 11, 2000, between the
Company and Lee Gessner.
10.18 -- Employment Agreement dated as of July 7, 2000, between the Company
and Mike Hyatt.
10.19 -- Employment Agreement dated as of July 8, 1998, between the Company
and Phil Stoner.
11 -- Statement re Computation of Per Share Earnings................
13 -- Thomas Nelson, Inc. Annual Report to Shareholders for
the year ended March 31, 2002 (to the extent of portions
specifically incorporated by reference).......................
21 -- Subsidiaries of the Company...................................
23 -- Consent of Independent Public Accountants.....................
99 -- Letter, dated June 28, 2002 to the Securities and
Exchange Commission to address its requirements with
respect to issuers that include accountants' reports
from Arthur Andersen, LLP ("Andersen") issued after
March 14, 2002 in filings with the Commission.................