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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 December 31, 2002

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-4095


THOMAS NELSON, INC.

(Exact name of Registrant as specified in its charter)


Tennessee 62-0679364
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number


501 Nelson Place, Nashville, Tennessee 37214-1000
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (615) 889-9000



Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12B-2 of the Exchange Act). Yes [X] No [ ]

At February 13, 2003, the Registrant had outstanding 13,343,765 shares of
Common Stock and 1,024,795 shares of Class B Common Stock.







Thomas Nelson, Inc. and Subsidiaries
Consolidated Balance Sheets
(000's omitted, except per share data)
(unaudited)


December 31, March 31, December 31,
2002 2002 2001
------------ ------------ ------------

ASSETS
Current assets:
Cash and cash equivalents $ 1,959 $ 535 $ 659
Accounts receivable, less allowances
of $8,863, $6,389, and $13,315,
respectively 54,873 61,600 64,434
Inventories 37,987 39,195 44,622
Prepaid expenses 13,423 17,571 16,402
Assets held for sale 2,500 2,500 2,500
Refundable income taxes - 7,800 5,450
Deferred income tax benefits 7,966 7,966 12,876
------------ ------------ ------------
Total current assets 118,708 137,167 146,943

Property, plant and equipment, net 11,203 9,242 11,314
Other Assets 8,421 7,541 6,259
Deferred Charges 1,727 2,135 1,290
Goodwill 29,304 29,304 29,304
------------ ------------ ------------
Total Assets $169,363 $185,389 $195,110
============ ============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 23,318 $ 22,258 $ 21,328
Accrued expenses 9,453 15,603 19,726
Deferred revenue 6,805 11,222 5,638
Income taxes currently payable 3,330 500 528
Current portion of long-term debt 3,322 3,322 4,163
------------ ------------ ------------
Total current liabilities 46,228 52,905 51,383

Long term debt 36,930 53,052 63,853
Deferred income taxes 792 792 1,866
Other liabilities 863 1,064 1,217
Minority interest 49 - 119

Shareholders' equity:
Preferred stock, $1.00 par value,
authorized 1,000,000 shares;
none issued - - -
Common stock, $1.00 par value,
authorized 20,000,000 shares;
issued 13,343,765, 13,329,759 and
13,300,393 shares, respectively 13,344 13,330 13,300
Class B stock, $1.00 par value,
authorized 5,000,000 shares;
issued 1,024,795, 1,036,801 and
1,043,501 shares, respectively 1,025 1,037 1,044
Additional paid-in capital 44,023 44,008 43,848
Retained earnings 26,109 19,201 18,480
------------ ------------ ------------
Total shareholders' equity 84,501 77,576 76,672
------------ ------------ ------------
Total Liabilities and Shareholders'
Equity $169,363 $185,389 $195,110
============ ============ ============







Thomas Nelson, Inc. and Subsidiaries
Consolidated Statements of Operations
(000's omitted, except per share data)
(unaudited)

Three Months Ended Nine Months Ended
December 31, December 31,
------------------ ------------------
2002 2001 2002 2001
-------- -------- -------- --------

Net revenues $53,774 $61,167 $157,020 $165,291
Costs and expenses:
Cost of goods sold 32,646 36,297 95,240 99,225
Selling, general and administrative 15,986 19,837 46,974 51,590
Depreciation and amortization 444 823 1,567 2,093
-------- -------- -------- --------
Total expenses 49,076 56,957 143,781 152,908
-------- -------- -------- --------

Operating income 4,698 4,210 13,239 12,383
Other income 27 50 102 125
Interest expense 792 1,208 2,382 3,330
-------- -------- -------- --------
Income from continuing operations
before income taxes 3,933 3,052 10,959 9,178

Provision for income taxes 1,436 1,114 4,000 3,350
Minority interest 11 63 49 119
-------- -------- -------- --------
Income from continuing operations 2,486 1,875 6,910 5,709

Discontinued operations:
Operating loss, net of taxes - - - (766)
Loss on disposal, net of taxes - - - (14,707)
-------- -------- -------- --------
Total loss from discontinued
operations - - - (15,473)
-------- -------- -------- --------
Cumulative effect of change in
accounting principle - - - (40,433)
-------- -------- -------- --------
Net income $ 2,486 $ 1,875 $ 6,910 $(50,197)
======== ======== ======== ========

Weighted average number of shares
Basic 14,369 14,343 14,368 14,343
======== ======== ======== ========
Diluted 14,475 15,103 14,613 15,014
======== ======== ======== ========

Net income (loss) per share, Basic:
Income from continuing operations $ 0.17 $ 0.13 $ 0.48 $ 0.40
Loss from discontinued operations - - - (1.08)
Cumulative effect of change in
accounting principle - - - (2.82)
-------- -------- -------- --------
Net income (loss) per share $ 0.17 $ 0.13 $ 0.48 $ (3.50)
======== ======== ======== ========

Net income (loss) per share, Diluted:
Income from continuing operations $ 0.17 $ 0.12 $ 0.47 $ 0.38
Loss from discontinued operations - - - (1.03)
Cumulative effect of change in
accounting principle - - - (2.69)
-------- -------- -------- --------
Net income (loss) per share $ 0.17 $ 0.12 $ 0.47 $ (3.34)
======== ======== ======== ========





Thomas Nelson, Inc. and Subsidiaries
Statement of Cash Flows
(000's omitted)
(unaudited)


Nine Months Ended
December 31,
2002 2001
---------- ----------


Cash Flows From Operating Activities:
Net income from continuing operations $ 6,910 $ 5,709
Adjustments to reconcile income to net cash
provided by (used in) operations:
Minority interest 49 119
Depreciation and amortization 1,567 2,093
Loss on sale of fixed assets 45 17
Changes in assets and liabilities:
Accounts receivable, net 6,727 (6,585)
Inventories 1,208 6,786
Prepaid expenses 4,148 (1,711)
Accounts payable and accrued expenses 455 5,416
Deferred revenues (4,417) 3,446
Deferred income taxes - 634
Income taxes currently payable 2,830 (476)
Change in other assets and liabilities
and deferred charges (851) (1,051)
---------- ----------
Net cash provided by continuing operations 18,671 14,397
---------- ----------
Discontinued Operations
Loss from discontinued operations - (766)
Loss on disposal - (14,707)
Change in discontinued net assets 2,503 7,435
---------- ----------
Net cash provided by (used in) discontinued
operations 2,503 (8,038)
---------- ----------
Net cash provided by operating activities 21,174 6,359
---------- ----------

Cash Flows From Investing Activities:
Property plant and equipment expenditures (3,669) (751)
Proceeds from sale of fixed assets and
assets held for sale 24 37,844
---------- ----------
Net cash provided by (used in) investing
activities (3,645) 37,093
---------- ----------

Cash Flows From Financing Activities:
Payments under credit agreement, net (13,100) (40,639)
Payments on long-term debt (3,022) (3,145)
Dividends paid - (1,148)
Proceeds from issuance of common stock 17 5
---------- ----------
Net cash used in financing activities (16,106) (44,927)
---------- ----------
Net increase (decrease) in cash and cash
equivalents 1,424 (1,475)
Cash and cash equivalents at beginning of period 535 2,134
---------- ----------
Cash and cash equivalents at end of period $ 1,959 $ 659
========== ==========

Supplemental cash flow information:
Interest paid $ 2,461 $ 5,667
Income taxes paid (received), net $ (6,630) $ 1,869





THOMAS NELSON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note A - Basis of Presentation

The accompanying unaudited consolidated condensed financial statements
reflect all adjustments (which are of a normal recurring nature) that are, in
the opinion of management, necessary for a fair statement of the results for
the interim periods presented. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to Securities and
Exchange Commission rules and regulations. The statements should be read in
conjunction with the Summary of Significant Accounting Policies and notes to
the consolidated financial statements included in the Company's annual report
for the year ended March 31, 2002.

The consolidated balance sheet and related information in these notes as
of March 31, 2002 have been derived from the audited consolidated financial
statements as of that date. Certain reclassifications of prior period amounts
have been made to conform to the current year's presentation.


Note B - New Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS
141 supercedes Accounting Principles Board ("APB") Opinion No. 16, "Business
Combinations" and requires all business combinations to be accounted for using
the purchase method of accounting. In addition, SFAS 141 requires that
identifiable intangible assets be recognized apart from goodwill based on
meeting certain criteria.

SFAS No. 142 supercedes APB Opinion No. 17, "Intangible Assets" and
addresses how intangible assets and goodwill should be accounted for at and
subsequent to their acquisition. SFAS No. 142 requires that goodwill will no
longer be amortized, but tested for impairment by comparing net book carrying
values to fair market values upon adoption and periodically thereafter. The
Company decided to early adopt the provisions of SFAS No. 142 effective April
1, 2001. The Company completed its transition impairment evaluation during
fiscal 2002. The transition impairment loss relating to the goodwill of the
gift reporting unit was $40.4 million.

On October 3, 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," that is applicable to financial
statements issued for fiscal years beginning after December 15, 2001. The
FASB's new rules on asset impairment supersede SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of," and provide a single accounting model for long-lived assets to be
disposed of. The Company adopted the Statement effective April 1, 2002. Such
adoption did not have a material impact on the Company's financial condition
or results of operations.

During July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." The standard requires companies
to recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
Examples of costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a restructuring,
discontinued operations, plant closing, or other exit or disposal activities.
Previous accounting guidance was provided by EITF Issue No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (Including Certain Costs Incurred in a Restructuring)." SFAS No.
146 replaces EITF Issue No. 94-3. The new standard is effective for exit or
restructuring activities initiated after December 31, 2002, although earlier
application is encouraged.

During November 2002, the FASB issued Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." This Interpretation elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about obligations under certain guarantees that it has issued.
It also clarifies that a guarantor is required to recognize, at the inception
of a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement
provisions of this Interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements in this Interpretation are effective for financial statements
of periods ending after December 15, 2002. The Company currently is evaluating
the impact, if any, that the recognition and measurement provisions of this
Interpretation will have on its consolidated financial statements.

During December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123." The standard provides alternative methods of transition
for a voluntary change to the fair value based method of accounting for stock-
based employee compensation. In addition, this standard amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both annual
and interim financial statements about the method of accounting for stock-
based employee compensation and the effect of the method used on reported
results. The transition guidance and annual disclosure provisions are
effective for fiscal years ending after December 15, 2002, and the interim
disclosure provisions are effective for interim periods beginning after
December 15, 2002.


Note C - Inventories

Components of inventories consisted of the following (in thousands):


December 31, March 31, December 31,
2002 2002 2001
------------ ------------ ------------

Finished goods $35,821 $36,736 $40,864
Raw materials and work in process 2,166 2,459 3,758
------------ ------------ ------------
$37,987 $39,195 $44,622
============ ============ ============



Note D - Cash Dividend

On August 24, 2001, the Company's board of directors determined that it
was in the best interest of the Company to use cash for current working capital
needs that had previously been used to pay dividends. The board of directors
will review the Company's dividend policy from time to time in the future.


Note E - Operating Segments

In accordance with SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information," the Company reports information about its
operating segments. The Company is organized and managed based upon its
products and services.

Subsequent to the sale of the Company's gift division during fiscal 2002,
the Company has reassessed its segment reporting and has identified two
reportable business segments: publishing and conferences. The publishing
segment primarily creates and markets Bibles, inspirational books and videos.
The conference segment hosts inspirational and motivational conferences across
North America.

Summarized financial information concerning the Company's reportable segments
is shown in the following table. The "Other" column consists of items related
to discontinued operations (in thousands).




For the Nine Months Ended: Publishing Conferences Other Total
- ------------------------- ---------- ----------- ------- --------

December 31, 2002:
Net Revenues $130,787 $26,233 - $157,020
Operating Income 8,977 4,262 - 13,239

December 31, 2001:
Net Revenues $138,762 $26,529 - $165,291
Operating Income 10,337 2,046 - 12,383

For the Three Months Ended:
- --------------------------
December 31, 2002:
Net Revenues $ 46,216 $ 7,558 - $ 53,774
Operating Income 3,467 1,231 - 4,698

December 31, 2001:
Net Revenues $ 51,382 $ 9,785 - $ 61,167
Operating Income 2,764 1,446 - 4,210

Fiscal Year Ended March 31, 2002:
- ---------------------------------
Net Revenues $188,277 $ 27,275 - $215,552
Operating Income 16,045 518 - 16,563


As of December 31, 2002:
Identifiable Assets $144,566 $ 20,297 $ 4,500 $169,363

As of December 31, 2001:
Identifiable Assets $161,981 $ 23,179 $ 9,950 $195,110

As of March 31, 2002:
Identifiable Assets $149,825 $ 23,264 $12,300 $185,389




Note F - Discontinued Operations

Effective October 31, 2001, the Company sold its gift business, including
substantially all of the assets of the Company's wholly-owned subsidiary, The
C.R. Gibson Company ("Gibson"), at a purchase price of $30.5 million plus the
assumption of certain liabilities. This sale resulted in a loss on disposal of
$15.3 million in fiscal 2002. The Company also recognized a $40.4 million
cumulative effect of a change in accounting principle charge to write-off
goodwill associated with Gibson. The Company utilized the net proceeds from
the sale to pay down existing debt. The financial statements reflect the gift
business segment as discontinued operations 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. The
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.

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 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.


Note G - Depreciation and Amortization

This caption on the accompanying consolidated statements of operations
includes all depreciation and amortization related to publishing rights and
property, plant and equipment.


Note H - Debt

The Company's bank credit facility consists of a $65 million Senior
Unsecured Revolving Credit Facility (the "Credit Facility"). The Credit
Facility bears interest at either the lenders' base rate or, at the Company's
option, the LIBOR plus a percentage, based on certain financial ratios. The
Credit Facility has a term of three years and matures on June 28, 2005. At
December 31, 2002, the Company had outstanding borrowings of $31 million under
the Credit Agreement and had $34 million available for borrowing. Due to the
seasonality of the Company's business, borrowings under the Credit Agreement
will typically peak during the third quarter of the fiscal year.

At December 31, 2002, the Company had outstanding approximately
$8.4 million of unsecured senior notes ("Senior Notes"). The Senior Notes bear
interest at rates from 6.68% to 8.31% due through fiscal 2006.

Under the terms of the Credit Facility and the Senior Notes, the Company
has agreed to limit the payment of dividends and to maintain certain financial
ratios and tangible net worth, which are similarly calculated for each debt
agreement. At December 31, 2002, the Company was in compliance with all
covenants of these debt agreements.


Note I - Royalty Advances

At December 31, 2002, March 31, 2002 and December 31, 2001, prepaid
expenses include $9.2 million, $12.1 million and $11.2 million, respectively,
of royalty advances for products that have released to the market or are
expected to release within the next twelve months. At December 31, 2002,
March 31, 2002 and December 31, 2001, other assets include $3.5 million,
$3.1 million and $2.1 million, respectively, for royalty advances for products
not expected to release to the market within the next twelve months.


Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
- ------------------------------------------------------

NOTE ON FORWARD-LOOKING STATEMENTS

The following discussion includes certain forward-looking statements.
Actual results could differ materially from those in the forward-looking
statements, and a number of factors may affect future results, liquidity and
capital resources. These factors include, but are not limited to, softness in
the general retail environment, the timing of products being introduced to the
market, the level of product returns experienced, the level of margins
achievable in the marketplace, the collectibility of accounts receivable,
recoupment of royalty advances, effects of acquisitions or dispositions,
financial condition of our customers and suppliers, realization of inventory
values at carrying amounts, our access to capital and realization of income
tax and intangible assets. Future revenue and margin trends cannot be
reliably predicted and may cause the Company to adjust its business strategy.
The Company disclaims any intent or obligation to update forward-looking
statements.

CRITICAL ACCOUNTING POLICIES

The Company's discussion and analysis of its financial condition and
results of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires the Company to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. The Company bases
its estimates on historical experience and on various assumptions that are
believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.
The Company believes the following critical accounting policies affect its
more significant judgments and estimates used in the preparation of its
consolidated financial statements. These policies are common with industry
practice and are applied consistently from period to period.

Revenue Recognition: The Company has four primary revenue sources:
sales of publishing product, attendance fees and product sales from its
conferences, royalty income from licensing copyrighted material to third
parties and billed freight. Revenue from the sale of publishing product is
recognized upon shipment to the customer. A reserve for sales returns is
recorded where return privileges exist. The returns reserve is determined by
using a 12-month rolling average return rate, multiplied by gross sales
occurring over the previous four-month period by sales channel. Historical
experience reflects that product is generally returned from and credited to
customers' accounts within the first 120 days of the original sale. The
Company's analysis indicated that its experience changed during fiscal 2002
from 90 days to 120 days. The full amount of the returns reserve, net of
inventory and royalty costs (based on current gross margin rates), is shown as
a reduction of accounts receivable in the accompanying consolidated financial
statements. Returns of publishing products from customers are accepted in
accordance with standard industry practice. Generally, products that are
designated as out-of-print are not returnable 180 days after notice of out-of-
print status is given to the customer. Also, certain sales are not
returnable. Revenue from conferences is recognized as the conferences take
place. Cash received in advance of conferences is included in the accompanying
financial statements as deferred revenue. Royalty income from licensing the
Company's publishing rights is recorded as revenue when earned under the terms
of the applicable license, net of amounts due to authors. Billed freight
consists of shipping and handling charges billed to customers and is recorded
as revenue upon shipment of product.

Allowance for Doubtful Accounts: The Company records an estimated
reserve for bad debts as a reduction to accounts receivable in the accompanying
consolidated financial statements. The reserve for bad debts has two
components: an unallocated reserve and a specific reserve. The unallocated
reserve is calculated using a 10-year rolling bad debt history applied to the
accounts receivable balance, less specific reserves. The Company's credit
department management identifies specific reserves for each customer which we
deem to be a collection risk or files for bankruptcy protection.

Inventories: Inventories are stated at the lower of cost or market
using the first-in, first-out (FIFO) valuation method. The FIFO method of
accounting for inventory was selected to value our inventory at the lower of
market or current cost because the Company continuously introduces new
products, eliminates existing products and redesigns products. Therefore,
inflation does not have a material effect on the valuation of inventory.
Costs of producing publishing products are included in inventory and charged
to operations when product is sold or otherwise disposed. These costs include
paper, printing, binding, outside editorial and design, typesetting, artwork,
international freight and duty costs, when applicable. The Company policy is
to expense all internal editorial, production, warehousing and domestic
freight-in costs as incurred, except for certain indexing, stickering,
typesetting and assembly costs, which are capitalized into inventory. Costs
of abandoned publishing projects are charged to operations when identified.
The Company also maintains a reserve for excess and obsolete inventory as a
reduction to inventory in the accompanying consolidated financial statements.
This reserve is based on historical liquidation recovery rates applied to
inventory quantities identified in excess of a twenty-four month supply on
hand for each category of product.

Royalty Advances/Pre-Production Costs: Royalty advances are typically
paid to authors at contract execution, as is standard in the publishing
industry. These advances are either recorded as prepaid assets or other
(long-term) assets in the accompanying consolidated financial statements,
depending on the expected publication date (availability for shipment) of the
product. Author advances for trade books are generally amortized over five
months beginning when the product is first sold into the market. The
Company's historical experience is that typically 80% of book product sales
occur within the first five months after release into the market. Reference
and video royalty advances are generally amortized over a twelve-month period
beginning with the first sale date of the product, as these products typically
have a longer sales cycle than books. Royalty advances for significant new
Bible products are amortized on a straight-line basis for a period not to
exceed five years (as determined by management).

When royalty advances are earned through product sales at a faster pace
than the amortization period, the amortization expense is accelerated to match
the royalty earnings. Outstanding advances are reviewed monthly for abandoned
projects or titles that appear to have unrecoverable advances. All abandoned
projects and advances that management does not expect to fully recover are
charged to operations when identified.

For authors with multiple book/product contracts, the advance is amortized
over a period that encompasses the publication of all products, generally not
to exceed 24 months or the actual recovery period, whichever is shorter.
Advances to our most important authors are typically expensed as they are
recovered through sales. These authors generally have multiple year and
multiple book contracts, as well as strong sales history of backlist titles
(products published during preceding fiscal years and prior) that can be used
to recover advances over long periods of time.

Many Bible, reference and video products require significant development
costs prior to the actual printing or production of the saleable product.
These products also typically have a longer life cycle. All video pre-
production costs are amortized over 12 months on a straight-line basis. Bible
and reference products typically have the longest life cycle. Pre-production
costs for significant Bible and reference products are recorded as other
assets in the accompanying consolidated financial statements and are amortized
on a straight-line basis, for a period not to exceed five years (as determined
by management).

Goodwill and Intangible Assets: In June 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards ("SFAS")
No. 142, "Goodwill and Other Intangible Assets". SFAS No. 142 requires that
goodwill no longer be amortized, but tested for impairment by comparing net
book carrying values to fair market values upon adoption and periodically
thereafter. The Company has adopted the provisions of SFAS No. 142 as of
April 1, 2001. The election of SFAS No. 142 resulted in a $40.4 million
cumulative effect of a change in accounting principle charge to write-off
goodwill associated with the Company's gift division, which was discontinued
and sold during fiscal 2002. In accordance with SFAS No. 142, goodwill was
tested for impairment by the Company's reporting units: Publishing,
Conferences and Gift. The fair value for the assets of the Publishing and
Conferences reporting units was evaluated using discounted expected cash flows
and current market multiples, and it was determined that no impairment existed
during fiscal 2002. The fair value of the Gift assets was determined by the
actual sales price for that division. Goodwill will be tested for impairment
annually during the fourth fiscal quarter.


OVERVIEW

The following table sets forth for the periods indicated certain selected
statements of operations data of the Company expressed as a percentage of net
revenues and the percentage change in dollars in such data from the prior
fiscal year.



Nine Months Ended Fiscal Year-to-Year
December 31, Increase
2002 2001 (Decrease)
------ ------ ------------------
(%) (%) (%)

Net revenues 100.0 100.0 ( 5.0)
Expenses
Cost of goods sold 60.7 60.0 ( 4.0)
Selling, general and administrative 29.9 31.2 ( 8.9)
Depreciation and amortization 1.0 1.3 (25.1)
------ ------ ------------------
Total expenses 91.6 92.5 ( 6.0)
------ ------ ------------------
Operating income 8.4 7.5 6.9
------ ------ ------------------
Net income from continuing operations 4.4 3.5 21.0
------ ------ ------------------

Loss from discontinued operations,
net of tax - ( 0.5) n/a
Loss on disposal, net of tax - ( 8.9) n/a
Cumulative change in accounting
principle - (24.5) n/a
====== ====== ==================
Net income 4.4 (30.4) n/a
====== ====== ==================


The Company's net revenues fluctuate seasonally, with net revenues in the
first fiscal quarter historically being lower than those for the remainder of
the year. This seasonality is the result of increased consumer purchases of
the Company's products during the traditional holiday periods. In addition,
the Company's quarterly operating results may fluctuate significantly due to
the seasonality of new product introductions, the timing of selling and
marketing expenses and changes in sales and product mixes.


RESULTS OF OPERATIONS
- ---------------------

Consolidated Results -
Third Quarter of Fiscal 2003 Compared with Third Quarter of Fiscal 2002
- -----------------------------------------------------------------------

Net revenues for the three months ended December 31, 2002 decreased
$7.4 million, or 12%, from the same period in the prior year. Net revenues from
publishing products decreased $5.2 million or 10%, primarily due to the weak
retail environment and a comparison to a strong quarter in the prior year when
net revenues increased 12%. The December quarter in the prior year contained
several new releases, which produced over $2.5 million in net sales for that
period, designed to provide comfort and help heal the pain inflicted by the
brutal and tragic attacks of September 11th. We had no comparable releases
in the current year's quarter. Net revenues for the quarter ended
December 31, 2001 were 12% above those reported for the quarter ended
December 31, 2000, due to those products and a general increase in the sale
of religious products, as a whole. In addition, our sales to Kmart this
year were approximately $2 million less than the prior year, as impacted by
Kmart's bankruptcy filing. This year our sales to Kmart were through
distributors, whereas in the past, we shipped directly to Kmart. Net revenues
from conferences decreased $2.2 million or 23%, primarily due to timing of
conference events and the elimination of the children's holiday events that
were held in the previous year's period. The prior year's third quarter
contained an additional conference that had been rescheduled because of
September 11th. Price increases did not have a material effect on revenues
during the period.

The Company's cost of goods sold decreased for the three months ended
December 31, 2002 by $3.7 million, or 10% from the same period in the prior
year, and as a percentage of net revenues, increased to 61% from 59% in the
prior year. This increase as a percentage of net revenues is primarily
attributable to obsolescence of publishing products, slightly offset by
improved margins in conferences. The increase in expenses from obsolescence
for publishing products is primarily attributable to liquidating inventory
produced under the imprint with the "Word" name, as the Company's licensing
agreement using the "Word" name expired. The "Word" name was licensed for use
in fiscal 1998 in conjunction with the sale of the Company's former Word Music
division. The improvement in cost of sales as a percentage of net revenues
for conferences is related to the elimination of the unprofitable holiday
events for children that were held in the previous year.

Selling, general and administrative expenses, excluding depreciation and
amortization, for the three months ended December 31, 2002 decreased
$3.8 million, or 19% from the same period in the prior year. These expenses,
expressed as a percentage of net revenues, decreased to 30% from 32% in the
prior year. The prior year's period contained a $4.4 million charge to fully
reserve the net receivable balance from Kmart, which filed bankruptcy in
January 2002. Increased spending in advertising for publishing products and
increases in general overhead were partially offset by overhead reductions in
the conference segment operations. The increased spending in advertising for
publishing products is due to retail market conditions. The Company has
streamlined the conference segment operations by eliminating certain overhead
and unprofitable activities and consolidating some of its "back-office"
functions with those of the publishing segment. These actions are expected to
continue to produce net savings for future periods.

Depreciation and amortization for the three months ended December 31, 2002
decreased $0.4 million from the same period in the prior year, primarily due
to the prior year containing a disposal of conference internet software that
was abandoned after disparate systems were consolidated.

Interest expense for the three months ended December 31, 2002 was
$0.8 million, a decrease of $0.4 million from the same period in the prior
year due to lower debt levels and interest rates.

The provision for income taxes remains consistent with the prior year at
an effective rate of 36.5%.


Consolidated Results -
First Nine Months of Fiscal 2003 Compared with First Nine Months of Fiscal 2002
- -------------------------------------------------------------------------------

Net revenues for the first nine months of fiscal 2003 decreased
$8.3 million, or 5%, from the same period in the prior year. Publishing product
net revenues decreased $8.0 million, or 6%, primarily due to the weak retail
environment and a comparison to a strong third fiscal quarter in the prior
year. The December quarter in the prior year contained several new releases,
which produced over $2.5 million in net sales for that period, designed to
provide comfort and help heal the pain inflicted by the brutal and tragic
attacks of September 11th. We had no comparable releases in the current year's
quarter. Net revenues for the quarter ended December 31, 2001 were 12% above
those reported for the quarter ended December 31, 2000, due to those products
and a general increase in the sale of religious products, as a whole. In
addition, our sales to Kmart this year were approximately $2 million less than
the prior year, as impacted by Kmart's bankruptcy filing. This year our sales
to Kmart were through distributors, whereas in the past, we shipped directly to
Kmart. Net revenues from conferences decreased $0.3 million, or 1%, primarily
due to the elimination of unprofitable holiday events for children. Price
increases did not have a material effect on net revenues during the period.

The Company's cost of goods sold decreased $4.0 million, or 4% from the
same period in the prior year and, as a percentage of net revenues increased
to 61% from 60% in the prior year's period. This increase as a percentage of
net revenues is primarily attributable to publishing products, slightly offset
by improved margins in conferences. The increase for publishing products is
attributable to a higher level of royalty advance write-offs, free freight
given to customers and obsolescence charges from liquidating inventory
produced under the imprint with the "Word" name, as the Company's licensing
agreement using the "Word" name expired. The "Word" name was licensed for use
in fiscal 1998 in conjunction with the sale of the Company's former Word Music
division. The improvement in cost of sales as a percentage of net revenues
for conferences is related to improved attendance and the elimination of
unprofitable holiday events for children that were held in the previous year.

Selling, general and administrative expenses, excluding depreciation and
amortization, for the nine months ended December 31, 2002 decreased by
$4.6 million, or 9% from the same period in the prior year. These expenses,
expressed as a percentage of net revenues, decreased to 30% from 31% in the
prior year. The prior year's period contained a $4.4 million charge to fully
reserve the net receivable balance from Kmart, which filed bankruptcy in
January 2002. Increased spending in advertising for publishing products and
increases in general overhead were partially offset by overhead reductions in
the conference segment operations. The increased spending in advertising for
publishing products is due to retail market conditions. The Company has
streamlined the conference segment operations by eliminating certain overhead
and unprofitable activities and consolidating some of its "back-office"
functions with those of the publishing segment. These actions are expected to
continue to produce net savings for future periods.

Depreciation and amortization for the nine months ended December 31,
2002 decreased $0.5 million from the same period in the prior year, primarily
due to the prior year containing a disposal of conference internet software
that was abandoned after disparate systems were consolidated.

Interest expense for the nine months ended December 31, 2002 decreased
$0.9 million from the prior year due to lower debt levels and interest rates.

The provision for income taxes remains consistent with the prior year at
an effective rate of 36.5%.

The net loss from discontinued operations for the nine months ended
December 31, 2001 was related to the decision to sell the Company's gift
division, along with the sale of the net assets of Remuda Ranch and Ceres
Candles. The Company also recognized a $40.4 million cumulative effect of a
change in accounting principle charge to write-off goodwill associated with
the gift division.


Liquidity and Capital Resources
- -------------------------------

At December 31, 2002, the Company had approximately $2.0 million in cash
and cash equivalents. The primary sources of liquidity to meet the Company's
future obligations and working capital needs are cash generated from operations
and borrowings available under bank credit facilities. At December 31, 2002,
the Company had working capital of $72.5 million.

Net cash provided by continuing operations was $18.7 million for the nine
months ended December 31, 2002 and $14.4 million for the same period last year.
Cash provided by continuing operations during the nine months ended
December 31, 2002 was principally attributable to income from continuing
operations and collections of accounts receivable and tax refunds.

Fiscal year-to-date, capital expenditures have totaled approximately
$3.7 million, primarily consisting of warehousing, building improvements and
computer software and equipment. During the quarter ended December 31, 2002,
the Company also paid $2.5 million to repurchase its former Beacon Falls
Distribution Center under the terms of a "put option" from the Asset Purchase
Agreement between CRG Acquisition Corp. and Thomas Nelson for the sale of
C.R. Gibson. The Company has engaged the services of a commercial real estate
broker to list the property for sale. During the remainder of fiscal 2003,
the Company anticipates capital expenditures of approximately $1.2 million,
primarily consisting of building improvements and computer software and
equipment.

The Company's bank credit facility consists of a $65 million Senior
Unsecured Revolving Credit Facility (the "Credit Facility"). The Credit
Facility bears interest at either the lenders' base rate or, at the Company's
option, the LIBOR plus a percentage, based on certain financial ratios. The
Credit Facility has a term of three years and matures on June 28, 2005. At
December 31, 2002, the Company had outstanding borrowings of $31 million under
the Credit Agreement and had $34 million available for borrowing.

At December 31, 2002, the Company had outstanding approximately
$8.4 million of unsecured senior notes ("Senior Notes"). The Senior Notes bear
interest at rates from 6.68% to 8.31% due through fiscal 2006.

Under the terms of the Credit Facility and the Senior Notes, the Company
has agreed to limit the payment of dividends and to maintain certain financial
ratios and tangible net worth. At December 31, 2002, the Company was in
compliance with all covenants of these debt agreements.

Management believes cash generated by operations and borrowings available
under the Credit Facility will be sufficient to fund anticipated working
capital requirements for existing operations through the remainder of fiscal
2003. The Company's current cash commitments include current maturities of
debt and operating lease obligations that are disclosed in the Company's
Annual Report on Form 10-K as of and for the year ended March 31, 2002. The
Company also has current inventory purchase and royalty advance commitments in
the ordinary course of business that require cash payments as vendors and
authors fulfill their requirements to the Company in the form of delivering
satisfactory product orders and manuscripts, respectively. The Company has no
off-balance sheet commitments or transactions with any special purpose
entities (SPE's). Management also is not aware of any undisclosed material
related party transactions or relationships with management, officers or
directors.

Effective February 2003, the Company realigned its publishing operations
and management reporting relationships to support its strategy of focusing on
fewer titles and key author relationships. The realignment is expected to
result in a reduction of overhead in future periods, principally through the
net elimination of approximately 30 employee positions. Given the known and
unknown risks and uncertainties associated with this strategy and initiatives,
there can be no assurance regarding the ultimate impact of these initiatives on
the Company's results of oeprations or financial condition.


Item 3. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------

There have been no material changes in the Company's investment
strategies, types of financial instruments held or the risks associated with
such instruments which would materially alter the market risk disclosures made
in the Company's Annual Report on Form 10-K as of and for the year ended
March 31, 2002.


Item 4. Controls and Procedures
- --------------------------------

The Chief Executive Officer and Chief Financial Officer have conducted
an evaluation of the effectiveness of disclosure controls and procedures
pursuant to Exchange Act Rule 13a-14, as of February 14, 2003. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the disclosure controls and procedures are effective in ensuring that
material information required to be filed in this quarterly report has been
made known to them in a timely fashion. There have been no significant
changes in internal controls, or in factors that could significantly affect
internal controls, subsequent to the date the Chief Executive Officer and
Chief Financial Officer completed their evaluation.


PART II

Item 2. Changes in Securities and Use of Proceeds.
- ---------------------------------------------------

The Company's Credit Facility contains restrictions on its ability to pay
cash dividends to shareholders, based on a percentage of the Company's net
income.


Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits required by Item 601 of Regulation S-K

Exhibit
Number
-------

11 - Statement re Computation of Per Share Earnings

99.1 - Certification of President and Chief Executive Officer
relating to Form 10-Q for period ending December 31, 2002

99.2 - Certification of Chief Financial Officer relating to
Form 10-Q for period ending December 31, 2002

(b) No Form 8-K was filed by the Company during the quarter ended
December 31, 2002.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

Thomas Nelson, Inc.
(Registrant)


February 14, 2003 BY /s/ Joe L. Powers
- ----------------- ---------------------
Joe L. Powers
Executive Vice President
(Principal Financial and
Accounting Officer)



INDEX TO EXHIBITS


Exhibit
Number
-------

11 - Statement re Computation of Per Share Earnings

99.1 - Certification of President and Chief Executive Officer relating
to Form 10-Q for period ending December 31, 2002

99.2 - Certification of Chief Financial Officer relating to Form 10-Q
for period ending December 31, 2002