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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, 1997Commission 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
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 New York Stock Exchange
per share
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
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 25, 1997, the Registrant had outstanding
15,997,798 shares of common stock and 1,112,071 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 $192.8 million. The
market value calculation was determined using the closing
sales price of the Registrant's common stock and Class B
common stock on June 25, 1997, as reported on The New York
Stock Exchange, and assumes that all shares beneficially
held by executive officers and the Board of Directors of the
Registrant are shares owned by "affiliates", a status which
each of such officers and directors individually disclaims.
=================================================================
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 Page 31 of Annual Report to
Common Equity and Shareholders for year ended
Related Shareholder March 31, 1997 (market price
Matters and dividend information
only)
Item 6 - Selected Financial Page 10 of Annual Report to
Data Shareholders for year ended
March 31, 1997
Item 7 - Management's Dis- Pages 11 to 13 of Annual Report
cussion and Analysis to Shareholders for year
of Financial Condition ended March 31, 1997
and Results of
Operations
Item 8 - Financial Statements Pages 14 to 29 of Annual
and Supplementary Report to Shareholders Data
for year ended March 31, 1997
PART III
Item 10- Directors and To be included in Company's
Executive Officers Proxy Statement for the
of the Company Annual Meeting of
Shareholders to be held
August 21, 1997, 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 Compen- To be included in Company's
sation Proxy Statement for the
Annual Meeting of
Shareholders to be held
August 21, 1997, 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 To be included in Company's
Certain Beneficial Proxy Statement for the
Owners and Management Annual Meeting of
Shareholders to be held
August 21, 1997, 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 Relation- To be included in Company's
ships and Related Proxy Statement for the
Transactions Annual Meeting of
Shareholders to be held
August 21, 1997, 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 also designs, manufactures and markets
a broad line of gift and stationery products. The Company
believes it is the largest publisher of Christian and
inspirational books and a major producer of gift and stationery
items in the world.
The Company, incorporated under the laws of the State of
Tennessee in 1961, has grown significantly over the last five
years through a combination of internal product development,
expanded product distribution and acquisitions. In November
1992, the Company acquired Word, Incorporated, a leading producer
and publisher of Christian music with complementary operations in
Christian and inspirational book publishing. The Company also
has enhanced its position in the gift products market and related
distribution channels through the acquisition of The C.R. Gibson
Company ("C.R. Gibson"), effective October 31, 1995. C.R.
Gibson, based in Norwalk, Connecticut, is a leading designer,
manufacturer and distributor of paper gift products, including
baby and wedding memory books, stationery, gift wrap and other
products.
During fiscal 1997, the Company analyzed various strategic
alternatives for maximizing value from its music division and in
the third quarter determined to sell the music division, which
included the production of recorded music and related products,
the distribution of recordings for other companies and music
publishing, including songwriter development, print music
publishing and copyright administration. On January 6, 1997, the
Company sold the assets, subject to certain liabilities, of the
music division ("Music Business") for $120 million and realized a
net gain of $16 million (net of goodwill of $17 million).
During the fourth quarter of fiscal 1996, the Company
determined to discontinue its Royal Media division operations as
part of its business strategy to refocus its efforts and
resources on the growth of the Company's core businesses. The
Royal Media division was formed in fiscal 1995 to evaluate and
implement new initiatives in the use of alternative forms of
media and new distribution technologies to further capitalize on
the commercial potential of the Company's intellectual
properties. As a result of the termination of the Royal Media
operations, the Company incurred a net loss of approximately $4.7
million from discontinued operations for the fiscal year ended
March 31, 1996.
The following table sets forth the net revenues (in thousands)
and the percentage of total net revenues for each of the
Company's principal product lines for the periods indicated:
Year Ended March 31,
-----------------------------------------------------
1997 1996 1995
-----------------------------------------------------
Amount % Amount % Amount %
-----------------------------------------------------
Publishing $153,318 63.0 $165,048 75.1 $149,272 85.5
Gift 90,118 37.0 54,790 24.9 25,337 14.5
-----------------------------------------------------
$243,436 100.0 $219,838 100.0 $174,609 100.0
=====================================================
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 the "Nelson" and
"Word" imprints and consist generally of inspirational and
personal experience books, and educational, trade and
reference books emphasizing Christian, inspirational and
family value themes. The Company distributes books
primarily through Christian bookstores, general bookstores,
mass merchandisers and directly to consumers. The Company
also distributes books published by other companies to
complement their marketing and distribution capabilities.
In fiscal 1997, approximately 12% of the book net revenues
related to the distribution of books published by other
companies.
In fiscal 1997 and 1996, the Company
released over 200 new titles annually. The Company
publishes some of the most well-known communicators in the
Christian and inspirational field, including Charles Colson,
James Dobson, Billy Graham, Franklin Graham, Barbara
Johnson, Max Lucado, Frank Peretti, Pat Robertson, Robert
Schuller, Gary Smalley, Charles Stanley, Charles Swindoll,
and Bodie and Brock Thoene. The Company also publishes
books emphasizing positive and inspirational themes by
famous athletes and celebrities, such as Bobby Bowden, Joe
Gibbs, Evander Holyfield, Bill McCartney, Nolan Ryan, Reggie
White and Zig Ziglar. In each of the last three fiscal
years, the Company published over 50% of the top ten
bestselling Christian and inspirational books based on the
monthly Christian Booksellers' Association Nonfiction
Hardcover bestseller lists. In addition, the Company
maintains a backlist of approximately 1,400 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 1997. Authors
and titles are supported through the use of 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 and development 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 the largest commercial
publisher 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 thirteen
major translations. Of these thirteen translations, twelve
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 nine of the thirteen
major translations, of which four are exclusive to the
Company as a result of copyright ownership or licensing
arrangements. See "Copyrights and Royalty Agreements."
Approximately 80% of the Company's net revenues from Bible
publishing in fiscal 1997 were generated through sales of
its proprietary Bible products.
The following table sets forth the nine major Bible
translations 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
The Living Bible (TLB) 1971 No
New American Standard Bible (NAS) 1972 No
Today's English Version (TEV) 1976 Yes
New King James Version (NKJV) 1982 Yes
New Century Version (NCV) 1984 Yes
New Revised Standard Version (NRSV) 1990 No
Contemporary English Version (CEV) 1995 Yes
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 NKJV
in 1982. Among the Company's newer products is the CEV,
translated under the auspices of the American Bible Society,
which is designed to be easy to read and understandable at
virtually any reading level. The new testament portion of
the CEV was first published by the Company in 1991 and the
complete CEV Bible was released in June 1995.
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
1,300 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. Different editions of a particular
Bible translation are created by incorporating extra
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.
GIFT
The Company's gift division more than doubled in size
during fiscal 1996 through the acquisition of C.R. Gibson
and nearly doubled in size again in fiscal 1997, and the
Company believes it now is a major producer of gift and
stationery products in the world. Current product lines
offered by the Company include journals and gift books,
photo albums, baby and wedding memory books, kitchen
accessories, and stationery.
Products are marketed under the C.R. Gibsonr, Pretty
Paperr, Creative Papersr, Stepping Stonesr and Inspirationsr
brand names, the latter of which incorporates Christian and
inspirational text or themes. Certain product lines are
marketed as collections, with each collection including a
variety of products featuring a common design or theme.
Designs include original art work designed in-house as well
as licensed from artists or design groups such as Carol
Endres, Shelly Hely, Disneyr and Gearr.
The Company believes the gift division has significant
opportunities for growth as a result of the range of
complementary gift categories not currently offered and the
breadth of the Company's existing and potential distribution
channels. In addition to its product lines, the C.R. Gibson
acquisition provided the Company access to a dedicated sales
force of more than 100 representatives experienced in
marketing to the general gift, department and specialty
stores and access to C.R. Gibson's manufacturing and
distribution facilities, which allows the Company greater
control over product quality and production schedules.
MARKETING, DISTRIBUTION AND PRODUCTION
The principal market channels through which the Company
markets its publishing products domestically are Christian
bookstores, which are primarily independently owned; general
bookstores, including national chains such as Barnes & Noble
and Borders; specialty gift and department stores, such as
Carlton Cards and the Federated Department Store group; mass
merchandisers such as Target, K-Mart, WalMart and Sam's
Wholesale Club; and directly to consumers through direct
mail and telemarketing. The Company services these market
channels through its sales force, and through wholesalers or
jobbers servicing bookstores, gift stores, other retail
outlets and libraries. In addition, the Company sells
certain of its products for promotional purposes and sells
specially designed or imprinted products to certain
customers.
The Company's direct marketing operations sell
publishing products directly to approximately 200,000
customers consisting of churches, other religious
organizations and pastors by direct mail and telemarketing.
Retail sales also are made during the summer months on a
door-to-door, cash sales basis through a student sales
organization operated by the Company.
As of March 31, 1997, the Company employed a sales
force of approximately 210 people and maintains 24-hour-a-
day telemarketing capability. These employees service over
50,000 retail accounts and 200,000 church related accounts.
Customer orders are usually shipped through a variety of
common carriers, as well as by UPS, RPS and parcel post. No
single customer accounted for more than 10% of net revenues
during fiscal 1997.
The Company contracts with a number of foreign
publishers to translate the Company's English titles to
foreign languages. The Company typically retains ownership
rights to the titles translated.
The Company distributes its products internationally in
South America, Europe, Australia, New Zealand, South Africa,
the Far East, Mexico and Canada. In fiscal 1997, the
Company's international and export operations accounted for
approximately 8% of the Company's total net revenues.
Substantially all of the Company's publishing 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. The Company manufactures a significant
portion of its gift products and purchases its raw materials
(e.g. paper, film and boxes) from a wide group of suppliers.
COPYRIGHTS AND ROYALTY AGREEMENTS
The Company customarily secures copyrights on its
publishing 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. Many of the
Company's gift products incorporate copyrighted art work,
which is licensed directly from the artist or the owning
entity under a royalty agreement.
COMPETITION
The Company believes that it is the largest publisher
of Christian and inspirational books, the largest commercial
publisher of Bibles in English language translations and a
major producer of gift and stationery items. The publishing
and gift divisions each compete with numerous other
companies that publish and distribute Christian and
inspirational books or manufacture and distribute gift
products, many of which have significantly longer operating
histories and larger revenue bases than the Company and
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's publishing division 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 book 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.
The Company's gift division has many competitors with
respect to one or more of its product lines, but the Company
believes there are few competitors who manufacture and
distribute all of the Company's gift product lines. The
gift division also competes with numerous religious
publishers and suppliers, including tax-exempt church-owned
organizations, in connection with the sale of its church
supply products, and with numerous large and small companies
in the production and sale of stationery products, gift wrap
and paper tableware.
EMPLOYEES
As of March 31, 1997, the Company employed
approximately 1,300 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.
MANAGEMENT
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 67 Chairman of the Board, Chief
Executive Officer, President
and Director
S. Joseph Moore 34 Executive Vice President and
Director; President, Thomas
Nelson Gift Division
Joe L. Powers 51 Executive Vice President and
Secretary
Byron D. Williamson 51 President, NelsonWord
Publishing Division
Ray Capp 44 Senior Vice President,
Operations
Charles Z. Moore 63 Senior Vice President,
International and
Diversified Markets
Vance Lawson 38 Vice President, Finance
Phyllis E. Williams 49 Treasurer
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.
S. Joseph Moore was appointed Executive Vice President
and Director of the Company in 1995 and President of the
Thomas Nelson Gift Division in 1996, and prior to such
appointments, he served as Divisional Vice President of the
Company in various capacities since 1991. S. Joseph Moore
is the son of Sam Moore.
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.
Byron D. Williamson has been the President of the
Company's NelsonWord Publishing Division since 1995. Mr.
Williamson was formerly President of the Company's Word
Publishing Division from 1993 to 1995 and Executive Vice
President of the Word Publishing Division of Word from 1988
until Word, Incorporated was acquired by the Company in
November 1992.
Ray Capp was appointed Senior Vice President,
Operations of the Company in 1995. Prior to joining the
Company, Mr. Capp was the President and Chief Operating
Officer of Ingram Merchandising Services and Assistant to
the Chairman of Ingram Distribution, Inc. since 1992 and
Executive Vice President and Chief Operating Officer of
Ingram Entertainment from 1987 to 1992.
Charles Z. Moore has been a Vice President of the
Company since 1983 and was appointed Senior Vice President,
International and Diversified Markets in 1986. Charles
Moore is the brother of Sam Moore.
Vance Lawson has been the Vice President, Finance of
the Company since 1993. Mr. Lawson was formerly Vice
President of Finance and Operations at Word since 1988.
Phyllis E. Williams has been the Treasurer of the
Company since 1992. Mrs. Williams was previously Controller
for the Company since 1988.
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, 1997 of $1,900,000.
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 with an
outstanding balance of $3,000,000 at March 31, 1997. The
Company maintains other offices and warehouse facilities for
its direct marketing division in two locations in Waco,
Texas (of approximately 30,000 and 100,000 square feet each)
which are owned by the Company. The Company also has
offices, manufacturing and warehousing facilities for its
gift division in Beacon Falls, Guilford and Norwalk,
Connecticut (of approximately 112,000, 74,000 and 147,000
square feet, respectively) which are owned by the Company.
The Company leases properties as described below:
Square Annual Lease
Location Use Feet Rent Expiration
- - -------------------------------------------------------------------------
Miami, FL Editorial and sales
office 1,200 $ 16,400 08/1997
Atlanta, GA Editorial office 800 $ 11,100 monthly
Carmel, IN Retail Store 12,500 $ 79,300 09/1999
Cherryville, NC Administrative 77,000 $ 78,000 04/1998
Clifton, NJ Manufacturing 11,000 $ 46,800 10/1998
Dallas, TX Editorial office 17,200 $216,000 12/1999
Nashville, TN Creation and sales
office 17,486 $309,880 11/1998
Nashville, TN Creation and sales
office 34,500 $ 98,800 07/1999
Nashville, TN Warehousing 85,000 $182,000 11/1997
Norwalk, CT Warehousing 10,800 $ 72,000 monthly
Shelton, CT Warehousing 78,300 $481,500 03/2000
Scarborough, Warehousing and
Ontario office 18,500 $103,300 08/1998
(Canada)
All building improvements on the properties are brick
veneer, metal or block construction and are considered
adequate and suitable by the Company for the purpose for
which they are used.
The Company's machinery and equipment are located in
Nashville, Tennessee; Guilford and Norwalk, Connecticut and
Waco, Texas; and consists primarily of computer equipment,
printing and binding equipment, warehousing and shipping
racks, conveyors and other material handling equipment
located at the various warehousing and manufacturing
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 which is leased under
capital leases, is owned by the Company.
The Company's physical properties are operated at
approximate capacity. Additional personnel are employed as
required.
Item 3. Legal Proceedings
The Company is subject to various legal proceedings,
claims and liabilities which 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 Matter 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, 1997.
PART II
Item 5. Market for Company's Common Equity and Related
Shareholder Matters
Incorporated by reference to the Annual Report to
Shareholders for the year ended March 31, 1997 (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 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, 1997 and 1996.
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 21, 1997 (the
"Proxy Statement"), to be filed within 120 days of March 31,
1997 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.
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,
1997, 1996 and 1995
Balance sheets -- March 31, 1997 and 1996
Statements of shareholders' equity -- years ended
March 31, 1997, 1996 and 1995
Statements of cash flow -- years ended March 31, 1997,
1996 and 1995
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............. 18
Schedule VIII -- Valuation and
Qualifying Accounts and Reserves.......... 19
Schedules not listed above have been omitted because they
are not required, are inapplicable or the required
information has been given in the 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
2.1 -- Asset Purchase Agreement, dated as of November 21,
1996 by and among the Company, Word, Incorporated
and Word Direct Partners, L.P. as Sellers and
Gaylord Entertainment Company as Buyer (filed as
Exhibit 2.1 to the Company's Form 8-K dated
January 6, 1997 and incorporated herein by
reference)
2.2 -- Amendment No. 1 to the Asset Purchase Agreement
dated as of January 6, 1997, by and among the
Company, Word, Incorporated and Word Direct
Partners, L.P. as Sellers and Gaylord Entertainment
Company as Buyer (filed as Exhibit 2.2 to the
Company's Form 8-K dated January 6, 1997 and
incorporated herein by reference)
2.3 -- Asset Purchase Agreement dated as of January 6,
1997, by and between Nelson Word Limited and
Word Entertainment Limited (filed as Exhibit 2.3
to the Company's Form 8-K dated January 6, 1997
and incorporated herein by reference)
2.4 -- Subsidiary Asset Purchase Agreement executed on
January 6, 1997, and dated as of November 21,
1996 between Word Communications, Ltd. and Word
Entertainment (Canada), Inc. (filed as Exhibit
2.4 to the Company's Form 8-K dated January 6,
1997 and incorporated herein by reference)
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(b) to the Company's Annual Report on
Form 10-K for the year ended March 31, 1990 and
incorporated herein by reference)
4.1 -- Loan Agreement dated May 18, 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 May 18, 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 May 18,
1990, from the Company to SunTrust Bank, Nashville,
N.A. (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 -- Construction and Term Loan Agreement dated March 31,
1992, between the Company and SunTrust Bank, Nashville,
N.A. (filed as Exhibit 4.7 to Company's Annual
Report on Form 10-K for the year ended March 31,
1992 and incorporated herein by reference)
4.5 -- Promissory Note dated March 31, 1992, of the Company
payable to SunTrust Bank, Nashville, N.A. (filed as
Exhibit 4.8 to Company's Annual Report on Form 10-K
for the year ended March 31, 1992 and incorporated
herein by reference)
4.6 -- Deed of Trust and Security Agreement dated March 31,
1992, from the Company to SunTrust Bank, Nashville,
N.A. (filed as Exhibit 4.9 to Company's Annual
Report on Form 10-K for the year ended March 31,
1992 and incorporated herein by reference)
4.7 -- Indenture dated as of November 30, 1992, by and
between Thomas Nelson, Inc. and Boatmen's Trust
Company (filed as Exhibit 4 to the Company's Form
8-K dated December 11, 1992 and incorporated herein
by reference)
4.8 -- Amended and Restated Credit Agreement dated as of
December 13, 1995, and as amended January 3, 1996,
among the Company, SunTrust Bank, Nashville, N.A.,
National City Bank of Louisville, First American
National Bank in Nashville, Nationsbank of Texas,
N.A. in Dallas, and Creditanstalt-Bankverein in
New York (filed as Exhibit 4.1 to the Company's
Form 10-Q for the quarter ended December 31, 1995
and incorporated herein by reference)
4.9 -- June 1996 Amendment and Waiver with Respect to
Amended and Restated Credit Agreement Dated as of
December 13, 1995, among the Company, SunTrust Bank,
Nashville, N.A., National City Bank of Louisville,
First American National Bank in Nashville,
Nationsbank of Texas, N.A. in Dallas, and
Creditanstalt-Bankverein in New York (filed as
Exhibit 4.12 to the Company's Annual Report on
Form 10-K for the year ended March 31, 1996 and
incorporated herein by reference)
4.10 -- Second Amendment to Credit Agreement dated as of
November 15, 1996, among the Company, SunTrust Bank,
Nashville, N.A., National City Bank of Louisville,
First American National Bank in Nashville,
Nationsbank of Texas, N.A. in Dallas, and
Creditanstalt-Bankverein in New York (filed as
Exhibit 4.1 to the Company's Fom 8-K dated January
6, 1997 and incorporated herein by reference)
4.11 -- Third Amendment to Credit Agreement dated as of
January 7, 1997, among the Company, SunTrust Bank,
Nashville, N.A., National City Bank of Louisville,
First American National Bank in Nashville,
Nationsbank of Texas, N.A. in Dallas, and
Creditanstalt-Bankverein in New York (filed as
Exhibit 4.2 to the Company's Fom 8-K dated
January 6, 1997 and incorporated herein by reference)
4.12 -- Note Purchase Agreement dated January 3, 1996, among
the Company, The Prudential Insurance Company of
America and Metropolitan Life Insurance Company
(filed as Exhibit 4.1 to the Company's Form 10-Q
for the quarter ended December 31, 1995 and
incorporated herein by reference)
4.13 -- Letter Amendment No. 1 dated June 28, 1996, to Note
Purchase Agreement dated January 3, 1996, among the
Company, The Prudential Life Insurance Company of
America 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)
4.14 -- Assumption and Amendment Agreement dated as of
May 30, 1996, and as amended June 28, 1996,
between the Company 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)
4.15 -- Loan Agreement dated as of September 21, 1989
between C.R. Gibson and Metropolitan Life
Insurance Company (filed by C.R. Gibson as
Exhibit 4(c) to The C.R. Gibson Company's
Registration Statement on Form S-2 (No. 33-43644)
dated November 4, 1991 and incorporated herein
by reference)
4.16 -- Loan Agreement dated as of June 23, 1994 between
C.R. Gibson and Metropolitan Life Insurance
Company (filed by C.R. Gibson (Commission File
No. 0-4855) as Exhibit 4(b) to C.R. Gibson's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, filed with the commission
on March 14, 1995 and incorporated herein by
reference)
10.1 -- Tender Offer and Merger Agreement, dated as of
September 13, 1995, as amended by Amendment No.1,
dated as of October 16, 1995, among the Company,
Nelson Acquisition Corp. and C.R. Gibson (filed
as Exhibits (c)(1) and (c)(14) to the Company's
joint Tender Offer Statement on Schedule 14D-1/
Schedule 13D filed September 19, 1995, as amended,
and is incorporated herein by reference)
10.2 -- Thomas Nelson, Inc. Amended and Restated 1986 Stock
Incentive Plan (filed as Exhibit 4.4 to the Company's
Registration Statement on Form S-8 (No. 33-80086)
dated June 13, 1994 and incorporated herein by
reference)*
10.3 -- 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)*
10.4 -- 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)*
10.5 -- Thomas Nelson, Inc. Sales Managers' Stock Plan for
the Varsity Company (filed as Exhibit 4.7 to the
Company's Registration Statement on Form S-8
(No. 33-80086) dated June 13, 1994 and incorporated
herein by reference)*
10.6 -- 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)*
10.7 -- 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)*
10.8 -- 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)*
10.9 -- 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)*
10.10-- Employment Agreement dated as of May 13, 1996, between
the Company and Charles Z. Moore (filed as Exhibit
10.10 to the Company's Annual Report on Form 10-K
for the year ended March 31, 1996 and incorporated
herein by reference)*
10.11-- Employment Agreement dated as of December 7, 1993,
between the Company and Byron Williamson (filed as
Exhibit 10.15 to the Company's Annual Report on
Form 10-K for the year ended March 31, 1994 and
incorporated herein by reference)*
10.12-- 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)*
10.13-- 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)*
11 -- Statement Re Computation of Per Share Earnings
13 -- Thomas Nelson, Inc. Annual Report to Shareholders
for the year ended March 31, 1997 (to the extent
of portions specifically incorporated by
reference)
21 -- Subsidiaries of the Company
23 -- Consent of Independent Public Accountants
27 -- Financial Data Schedule (for SEC use only)
-------------------
*Management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
A Current Report on Form 8-K dated January 6, 1997 (the
"Form 8-K"), was filed by the Company on January 21, 1997.
The Form 8-K included information required pursuant to Item
2 thereunder relating to the disposition by the Company of
the assets of its Music Business to Gaylord Entertainment
Company. The following pro forma financial information was
included in that filing:
i. Thomas Nelson, Inc. and Subsidiaries Unaudited Pro
Forma Condensed Consolidated Balance Sheet at
September 30, 1996
ii. Thomas Nelson, Inc. and Subsidiaries Unaudited Pro
Forma Consolidated Statements of Operations for six
months ended September 30, 1996
iii.Thomas Nelson, Inc. and Subsidiaries Unaudited Pro
Forma Consolidated Statements of Operations for
twelve months ended March 31, 1996.
(c) Exhibits - The response to this portion of Item 14 is
submitted above as a separate section of this report.
(d) Financial Statement Schedules - The response to this portion
of Item 14 is submitted above as a separate section of this
report.
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 27, 1997
Pursuant to the requirements of Section 13 or 15(d) 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 June 27, 1997
- - ------------------ of Directors, Chief
Sam Moore Executive Officer
and President
(Principal Executive
Officer)
/s/ S. Joseph Moore Executive Vice June 27, 1997
- - -------------------- President and
S. Joseph Moore Director
/s/ Joe L. Powers Executive Vice June 27, 1997
- - -------------------- President and
Joe L. Powers Secretary
(Principal
Financial and
Accounting
Officer)
/s/ Brownlee O.
Currey, Jr. Director June 27, 1997
- - --------------------
Brownlee O. Currey, Jr.
/s/ W. Lipscomb
Davis, Jr. Director June 27, 1997
- - --------------------
W. Lipscomb Davis, Jr.
/s/ Robert J. Niebel Director June 27, 1997
- - --------------------
Robert J. Niebel
/s/ Millard V. Oakley Director June 27, 1997
- - --------------------
Millard V. Oakley
/s/ Joe M. Rodgers Director June 27, 1997
- - --------------------
Joe M. Rodgers
/s/ Cal Turner, Jr. Director June 27, 1997
- - --------------------
Cal Turner, Jr.
/s/ Andrew Young Director June 27, 1997
- - --------------------
Andrew Young
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Thomas Nelson, Inc.:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements
included in Thomas Nelson's annual report to shareholders
incorporated by reference in this Form 10-K, and have issued
our report thereon dated May 30, 1997. Our audit was made
for the purpose of forming an opinion on those consolidated
statements taken as a whole. The schedules listed in the
index are the responsibility of the Company's management and
are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the
basic consolidated financial statements. These schedules
have been subjected to the auditing procedures applied in
the audit of the basic consolidated financial statements
and, in our opinion, fairly state 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 30, 1997
THOMAS NELSON, INC. AND SUBSIDIARIES
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
March 31, 1997 March 31, 1996 March 31, 1995
------------------------------------------------
Reserve for Sales Returns:
Balance at beginning of
period $ 4,355,000 $ 3,421,000 $ 2,965,000
Additions:
1. Charged to costs
and expenses 418,000 559,000 456,000
2. Charged to other
accounts - 375,000 -
Deductions: charge-offs - - -
-------------------------------------------------
Balance at end of period $ 4,773,000 $ 4,355,000 $ 3,421,000
=================================================
Reserve for Doubtful
Accounts:
Balance at beginning of
period $ 2,714,000 $ 1,968,000 $ 2,523,000
Additions:
1. Charged to costs
and expenses 2,794,000 3,117,000 2,300,000
2. Charged to other
accounts - 500,000 -
Deductions: charge-offs 3,281,000 2,871,000 2,855,000
-------------------------------------------------
Balance at end of period $ 2,227,000 $ 2,714,000 $ 1,968,000
=================================================
Discontinued Operations:
Balance at beginning of
period $ 4,381,000 $ - $ -
Additions:
1. Charged to costs
and expenses 12,266,000 4,381,000 -
2. Charged to other
accounts - - -
Deductions: charge-offs 7,546,000 - -
-------------------------------------------------
Balance at end of period $ 9,101,000 $ 4,381,000 $ -
=================================================
Reserves acquired in connection with acquisition - C.R. Gibson in 1996.
INDEX TO EXHIBITS
Exhibit Page
Number Number
- - -------- ------
11 -- Statement Re-Computation of Per Share Earnings...
13 -- Thomas Nelson, Inc. Annual Report to Shareholders
for the year ended March 31, 1997 (to the extent
of portions specifically incorporated by reference)
21 -- Subsidiaries of the Company
23 -- Consent of Independent Public Accountants
27 -- Financial Data Schedule (for SEC purposes only)
EXHIBIT 11
STATEMENT RE-COMPUTATION OF PER SHARE EARNINGS
(Dollars and Shares in thousands, except per share data)
March 31, 1997 March 31, 1996 March 31, 1995
------------------------------------------------
Primary Earnings Per Share:
Weighted average shares
outstanding 17,135 15,718 13,374
================================================
Income (Loss) from
continuing operations $ 9,522 ($ 923) $ 10,101
Income (Loss) from
discontinued operations 16,555 ( 9,991) 1,609
------------------------------------------------
Net Income (Loss) $ 26,077 ($ 10,914) $ 11,710
================================================
Income (Loss) Per Share from
continuing operations $ 0.56 ($ 0.06) $ 0.76
Income (Loss) Per Share from
discontinued operations 0.96 ( 0.63) 0.12
------------------------------------------------
Net Income (Loss) Per Share $ 1.52 ($ 0.69) $ 0.88
================================================
Fully-diluted Earnings
Per Share:
Weighted average shares
outstanding 17,135 15,718 13,374
Convertible Notes 3,235 3,235 3,235
Dilutive stock options -
based on treasury stock
method using the year-end
market price, if higher
than the average market
price - 76 111
------------------------------------------------
Total Shares 20,370 19,029 16,720
================================================
Income (Loss) from
continuing operations $ 11,629 $ 1,095 $ 12,232
Income (Loss) from
discontinued operations 16,555 ( 9,991) 1,609
------------------------------------------------
Net Income (Loss) $ 28,184 ($ 8,896) $ 13,841
================================================
Income (Loss) Per Share from
continuing operations $ 0.56 $ 0.05 $ 0.74
Income (Loss) Per Share from
discontinued operations 0.81 ( 0.52) 0.09
------------------------------------------------
Net Income (Loss) Per Share $ 1.37 ($ 0.47) $ 0.83
================================================
Adjusted for interest on convertible debt
Anti-dilutive; use primary earnings per share on Statement of
Operations