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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, 1998 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
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 New York Stock Exchange
$1.00 per share
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has
been subject to such filing requirement for the past 90
days.
YES [ X ] NO [ ]
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of
the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
As of June 25, 1998, the Registrant had outstanding
15,660,729 shares of common stock and 1,111,924
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 $178.4
million. The market value calculation was determined using
the closing sale price of the Registrant's common stock and
Class B common stock on June 25, 1998, as reported on The
New York Stock Exchange, and assumes that all shares
beneficially held by executive officers and the 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 33 of Annual Report to
Common Equity and Shareholders for year ended
Related Shareholder March 31, 1998 (market
Matters price and dividend
information only)
Item 6 - Selected Financial Page 11 of Annual Report to
Data Shareholders for year ended
March 31, 1998
Item 7 - Management's Dis- Pages 12 to 15 of Annual
cussion and Analysis Report to Shareholders for
of Financial Con- year ended March 31, 1998
dition and Results
of Operations
Item 8 - Financial Statements Pages 16 to 31 of Annual
and Supplementary Report to Shareholders for
Data year ended March 31, 1998
PART III
Item 10 - Directors and To be included in Company's
Executive Officers Proxy Statement for the
of the Company Annual Meeting of Share-
holders to be held August 20,
1998, 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 To be included in Company's
Compensation Proxy Statement for the
Annual Meeting of Share-
holders to be held August 20,
1998, 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 To be included in Company's
of Certain Bene- Proxy Statement for the
ficial Owners and Annual Meeting of Share-
Management holders to be held August 20,
1998, 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 Share-
holders to be held August 20,
1998, 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 in the United States and is a major producer
of gift and stationery items.
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 $15.8 million (net of a goodwill write-off 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:
Years Ended March 31,
-------------------------------------------------
1998 1997 1996
-------------------------------------------------
Amount % Amount % Amount %
-------------------------------------------------
Publishing $163,842 64.8 $153,317 63.0 $165,048 75.1
Gift 89,116 35.2 90,119 37.0 54,790 24.9
-------------------------------------------------
$252,958 100.0 $243,436 100.0 $219,838 100.0
=================================================
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 several imprints including Nelson, Word, J.
Countryman(Trademark symbol) and Tommy Nelson(Trademark symbol),
and consist generally of inspirational, trade, gift, children's
and reference books emphasizing Christian and family value
themes. The Company distributes books primarily through
Christian bookstores, general bookstores, mass merchandisers and
direct sales to consumers. The Company also distributes books
published by other companies to complement their marketing and
distribution capabilities. In fiscal 1998, approximately 7% of
the book net revenues related to the distribution of books published
by other companies.
In fiscal 1998, 1997 and 1996, the Company released over 200
new book titles annually. The Company publishes some of the most
well-known communicators in the Christian and inspirational
field, including James Dobson, Billy Graham, Barbara Johnson, Max
Lucado, John Maxwell, Frank Peretti, Pat Robertson, Robert
Schuller, Gary Smalley, Charles Stanley and Charles Swindoll.
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 1,100 titles which provide a stable base of
recurring revenues as many popular titles continue to generate
significant sales from year to year. Backlist titles accounted
for approximately 48% of the book division's net revenues in
fiscal 1998. 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 13 major translations. Of
these 13 translations, 12 are protected by copyright laws which
grant the copyright owner the exclusive right, for a limited
term, to control the publication of such translation. The
Company publishes Bibles and Bible products based on nine of the
13 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 63% of
the Company's net revenues from Bible publishing in fiscal 1998
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 1,200 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 during fiscal 1997. In fiscal 1998, gift
revenues declined slightly due to a change in product focus away
from the mass merchandisers stationery category. 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. Gibson(Registered symbol),
Creative Papers(Registered symbol), C.R. Gibson(Registered symbol)
Kids Kollection(Trademark symbol), Toccata(Trademark symbol),
Tomorrow's Treasures(Trademark symbol), Stepping Stones(Trademark
symbol) and Inspirations(Registered symbol) 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 artwork designed in-
house as well as licensed from artists or design groups such as
Dena, Beatrix Potter, Carter's Infant Apparel, Echo, Warner
Brothers and Dreamworks.
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 both a dedicated sales
force of more than 100 representatives experienced in marketing
to the general gift, department and specialty stores and C.R.
Gibson's manufacturing and distribution facilities.
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, Wal-Mart 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 150,000 customers consisting
of churches, other religious organizations, pastors and other
individuals 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, 1998, the Company employed a sales force of
approximately 225 people and maintained 24-hour-a-day
telemarketing capability. These employees service over 50,000
retail accounts and 150,000 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 1998.
The Company contracts with a number of foreign publishers to
translate the Company's English titles into 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 1998, the Company's export
operations accounted for approximately $20.1 million, or 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 books and
Bible editions in order to protect its publishing rights. Almost
all of the Company's book products are published under royalty
agreements with their respective authors or other copyright
proprietors. 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 certain 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, 1998, the Company employed approximately 1,250
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 68 Chairman of the Board, Chief
Executive Officer, President
and Director
S. Joseph Moore 35 Executive Vice President and
Director; President, Thomas
Nelson Gift Division
Joe L. Powers 52 Executive Vice President and
Secretary
Byron D. Williamson 52 President, NelsonWord Publishing
Division
Ray Capp 45 Senior Vice President, Operations
Charles Z. Moore 64 Senior Vice President,
International and Diversified
Markets
Vance Lawson 39 Vice President, Finance
Phyllis E. Williams 50 Treasurer
Eric Heyden 44 Vice President and Deputy
General Counsel
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. Sam Moore is the father of S. Joseph Moore and
the brother of Charles Z. Moore.
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
and the nephew of Charles Z. 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 and the uncle of S. Joseph Moore.
Vance Lawson has been the Vice President, Finance of the
Company since 1993. Mr. Lawson was formerly Senior 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.
Eric Heyden has been the Vice President and Deputy General
Counsel of the Company since 1997 and was the Assistant General
Counsel of the Company since 1995. Mr. Heyden was previously
Vice President and General Counsel with Knoedler Publishing, Inc.
from 1985 to 1995.
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, 1998 of $1,725,000.
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 $2,332,000 at March 31,
1998. The Company maintains other offices and warehouse
facilities 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 office 1,400 $ 23,800 08/2000
Atlanta, GA Editorial office 800 $ 11,700 09/1998
Carmel, IN Retail store 12,500 $ 79,300 09/1999
Clifton, NJ Manufacturing 11,000 $ 46,800 10/1998
Nashville, TN Creative and sales
office 37,400 $ 313,000 11/2001
Nashville, TN Creative office 13,700 $ 241,600 09/2000
Nashville, TN Warehousing 84,700 $ 236,200 11/2002
Nashville, TN Warehousing 84,700 $ 271,800 12/2005
Norwalk, CT Warehousing 8,000 $ 72,000 monthly
Shelton, CT Warehousing 152,000 $ 559,200 03/2000
Scarborough,
Ontario Warehousing and
(Canada) office 25,700 $ 151,000 08/2003
Kobe, Japan Sales office 2,500 $ 69,500 06/1998
All building improvements on the properties are brick veneer,
metal or block construction and are considered adequate and
suitable by the Company for the purposes for which they are used.
The Company's machinery and equipment are located in Nashville,
Tennessee; Guilford and Norwalk, Connecticut and Waco, Texas; and
consist 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 that 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 Matters to a Vote of Security Holders
The Company did not submit any matter to a vote of its security
holders during the last quarter of its fiscal year ended March
31, 1998.
PART II
Item 5. Market for the Company's Common Equity and Related
Shareholder Matters
Incorporated by reference to the Annual Report to Shareholders
for the year ended March 31, 1998 (the "Annual Report").
Item 6. Selected Financial Data
Incorporated by reference to the Annual Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Incorporated by reference to the Annual Report.
Item 7A. Quantitative and Qualitative Disclosures about Market
Risk
Not Applicable.
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, 1998 and 1997.
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 20, 1998 (the "Proxy
Statement"), to be filed within 120 days of March 31, 1998 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, 1998, 1997
and 1996
Balance sheets -- March 31, 1998 and 1997
Statements of shareholders' equity -- years ended March 31,
1998, 1997 and 1996
Statements of cash flow -- years ended March 31, 1998, 1997
and 1996
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 the 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 the 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 the 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- 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)*
10.2- 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 incor-
porated herein by reference)*
10.3- 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)*
10.4- 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)*
10.5- 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)*
10.6- 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)*
10.7- 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)*
10.8- 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)*
10.9- 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)*
10.10-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)*
10.11-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 incor-
porated herein by reference)*
10.12-Employment Agreement dated as of June 23, 1993, between
the Company and Vance Lawson (filed as Exhibit 10.13
to the Company's Annual Report on Form 10-K for the year
ended March 31, 1994 and incorporated herein by
reference)*
10.13-Employment Agreement dated as of July 10, 1995, between
the Company and Eric Heyden*
11 - Statement Re Computation of Per Share Earnings
13 - Thomas Nelson, Inc. Annual Report to Shareholders for the
year ended March 31, 1998 (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
No Form 8-K was filed by the Company during the last
quarter of its fiscal year ended March 31, 1998.
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 26, 1998
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Company and in the capacities and on the
dates indicated.
Signature Title Date
---------- -------- -------
/s/ Sam Moore Chairman of the Board of June 26, 1998
- --------------------- Directors, Chief
Sam Moore Executive Officer and
President (Principal
Executive Officer)
/s/ S. Joseph Moore Executive Vice President June 26, 1998
- --------------------- and Director
S. Joseph Moore
/s/ Joe L. Powers Executive Vice President June 26, 1998
- --------------------- and Secretary
Joe L. Powers (Principal Financial
and Accounting
Officer)
/s/ Brownlee O.
Currey, Jr. Director June 26, 1998
- ---------------------
Brownlee O. Currey, Jr.
/s/ W. Lipscomb
Davis, Jr. Director June 26, 1998
- ---------------------
W. Lipscomb Davis, Jr.
/s/ Robert J. Niebel Director June 26, 1998
- ---------------------
Robert J. Niebel
/s/ Millard V. Oakley Director June 26, 1998
- ---------------------
Millard V. Oakley
/s/ Joe M. Rodgers Director June 26, 1998
- ---------------------
Joe M. Rodgers
/s/ Cal Turner, Jr. Director June 26, 1998
- ---------------------
Cal Turner, Jr.
/s/ Andrew Young Director June 26, 1998
- ---------------------
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 June 4, 1998. 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
June 4, 1998
THOMAS NELSON, INC. AND SUBSIDIARIES
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
================================================================================
March 31, 1998 March 31, 1997 March 31, 1996
-------------- -------------- --------------
Reserve for Sales
Returns:
Balance at beginning
of period $ 4,773,000 $ 4,355,000 $ 3,421,000
Additions:
1. Charged to costs
and expenses - 418,000 559,000
2. Charged to other
accounts - - 375,000
Deductions: charge-offs 839,000 - -
----------------------------------------------
Balance at end of
period $ 3,934,000 $ 4,773,000 $ 4,355,000
==============================================
Reserve for Doubtful
Accounts:
Balance at beginning
of period $ 2,227,000 $ 2,714,000 $ 1,968,000
Additions:
1. Charged to costs
and expenses 778,000 2,794,000 3,117,000
2. Charged to other
accounts - - 500,000
Deductions: charge-offs 777,000 3,281,000 2,871,000
----------------------------------------------
Balance at end of
period $ 2,228,000 $ 2,227,000 $ 2,714,000
==============================================
Discontinued Operations:
Balance at beginning
of period $ 9,101,000 $ 4,381,000 $ -
Additions:
1. Charged to costs
and expenses - 12,266,000 4,381,000
2. Charged to other
account - - -
Deductions: charge-offs 6,055,000 7,546,000 -
---------------------------------------------
Balance at end of
period $ 3,046,000 $ 9,101,000 $ 4,381,000
==============================================
Reserves acquired in connection with acquisition - C.R. Gibson
in 1996.
INDEX TO EXHIBITS
Exhibit Page
Number Number
- ------- ------
10.14 -- Employment Agreement dated as of July 10, 1995,
between the Company and Eric Heyden
11 -- Statement re Computation of Per Share Earnings
13 -- Thomas Nelson, Inc. Annual Report to Shareholders
for the year ended March 31, 1998 (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)