SOURCE: Thomas Nelson, Inc.

November 08, 2005 06:30 ET

Thomas Nelson Announces Second Quarter (FY 2006) and Six Month Results

NASHVILLE, TN -- (MARKET WIRE) -- November 8, 2005 --Thomas Nelson, Inc. (NYSE: TNM) today announced its financial results for the second quarter of FY 2006, the period ended September 30, 2005:

Net revenue for the three months ended September 30, 2005 was $67.7 million compared to $61.9 million in the prior year. This 9% gain brought net revenue for the fiscal year's first six months to $113.3 million versus $110.9 million a year ago, for a 2% increase year-to-date.

Net income for the quarter was $6.9 million compared to $6.4 million in the prior year, up 8%. For the six months, net income was $7.6 million compared to $8.3 million in the prior year's comparable period, a decline of 8%.

Earnings per share in the second fiscal quarter were $0.46 basic and $0.45 diluted compared to $0.44 and $0.43, respectively, in the prior year. For the six months through September 30, 2005 earnings per share were $0.51 basic and $0.50 diluted compared to $0.57 and $0.55 respectively, in the prior year.

Commenting on the period's results, Michael S. Hyatt, Chief Executive Officer, noted: "We remain on track to deliver stronger financial results as the year progresses. Our product release schedule is heavily weighted toward the third and fourth quarters of this year, and, to a great extent, our results will be shaped by that. The 9% revenue gain in the second quarter shows, I believe, that we're establishing some good sales momentum, and I think we can build on that in the coming quarters."

"While I am confident that we will do our part in producing improved results this year, there are several factors beyond our control that may exert some pressure on us. Without question, the unusually punishing hurricane season -- which still has a few weeks to go -- had an impact on consumer behavior in a geographic market that's important to us. We lost several weeks of sales opportunity in the region, but we're seeing a strong rebound. Perhaps because some people turn to faith in times of adversity, there is also a need to replace Bibles and other important items that may have been lost or damaged in the storms."

"A second consideration," according to Mr. Hyatt, "is higher energy prices. This will likely result in people making fewer shopping trips, as well as depress the amount of discretionary income available. This appears not to have been a major problem for us to date. Our sales through general-market book stores and, separately, through religious book stores, are holding up. But it's something we're watching with interest."

"Our Women of Faith conference and merchandise sector gives us a direct insight into consumer sentiment," noted Mr. Hyatt. "This business requires participants to travel -- typically by car, to tap into their discretionary-spending budgets, and to consider purchasing books and other materials almost on impulse. So far this year, our results here show solid gains, plus, our newest conference series, called Revolve, the same as our Biblezine for young women, is off to a good start."

"The quarter's strong sales performance reflects several very successful titles from our Nelson Books imprint," stated Mr. Hyatt. "'The Total Money Makeover,' by Dave Ramsey, was released two years ago but got a big boost in the recent quarter, thanks to the author's appearance on 'Oprah' and '60 Minutes.' This was our best selling work in the period, and it was one of three Nelson titles that appeared simultaneously on the New York Times bestseller list."

Mr. Hyatt continued: "Titles such as this, as well as 'Here's Johnny!,' Ed McMahon's recollections of the late-night TV icon, have helped us increase our presence in secular bookstores. In fact, our Rutledge Hill imprint, which is aimed squarely at the general market, had a terrific quarter, thanks in large measure to 'Here's Johnny!' I am convinced we can continue to show good gains in the general market while keeping our primary position as the leading supplier to the Christian bookselling industry."

"Looking ahead," said Mr. Hyatt, "We expect Max Lucado's 'Cure for the Common Life' will perform well in our traditional markets, and 'The Great Physician's Rx,' by Jordan Rubin, which is the author's fourth book, and his first with us, will find broad appeal across all our markets. Our relatively new business imprint is about to release John Maxwell's '360 Degree Leader,' his first leadership-focused book since 'Leadership 101,' three years ago," noted Mr. Hyatt. "Those are among the strongest titles from our release schedule for the third quarter."

"We're especially excited about the recently announced fourth-quarter release of 'The Journey: Living by Faith in an Uncertain World,' by Billy Graham," said Mr. Hyatt. "Dr. Graham is, without question, the most renowned and influential evangelist over the past 100 years, and Thomas Nelson is proud to have the trade-book rights to many of his works, including this one, which may be his most important."

Thomas Nelson, Inc. will host a conference call related to this earnings release at 1:30 p.m. CST on Tuesday, November 8, 2005. Individuals may listen to the call by dialing (800) 474-8920. The conference I.D. number for the call is 4555578. The live broadcast of Thomas Nelson's quarterly conference call will be available online by going to www.thomasnelson.com/news and at www.streetevents.com. The online replay will be available shortly after the call and continue through November 16, 2005.

This news release includes certain forward-looking statements (all statements other than those made solely with respect to historical fact) and the actual results may differ materially from those contained in the forward-looking statements due to known and unknown risks and uncertainties. Any one or more of several risks and uncertainties could account for differences between the forward-looking statements that are made here and the actual results, including with respect to our sales, profits, liquidity and capital position. These factors include, but are not limited to: softness in the general retail environment or in the markets for our products; the timing and acceptance of products being introduced to the market; the level of product returns experienced; the level of margins achievable in the marketplace; the collectibility of accounts receivable; the recoupment of royalty advances; the effects of acquisitions or dispositions; the financial condition of our customers and suppliers; the realization of inventory values at carrying amounts; our access to capital; the outcome of any Internal Revenue Service audits; and the realization of income tax and intangible assets. These conditions cannot be predicted reliably, and the Company may adjust its strategy in light of changed conditions or new information. Thomas Nelson disclaims any obligation to update forward-looking statements.

Thomas Nelson, Inc. is a leading publisher and distributor of products emphasizing Christian, inspirational and family value themes and believes it is the largest publisher of Bibles and inspirational products. For more information, visit our website www.thomasnelson.com.

Thomas Nelson's Common stock and Class B Common stock are listed on the New York Stock Exchange (NYSE: TNM).

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

                                  Three Months Ended    Six Months Ended
                                    September 30,        September 30,
                                2005       2004        2005       2004
                             ---------- ----------  ---------- ----------
Net revenues                 $   67,697 $   61,902  $  113,256 $  110,910
Costs and expenses:
  Cost of goods sold             38,649     35,133      65,938     64,071
  Selling, general and
   administrative                17,342     15,541      33,846     31,826
  Depreciation and
   amortization                     727        626       1,454      1,215
                             ---------- ----------  ---------- ----------
  Total costs and expenses       56,718     51,300     101,238     97,112
                             ---------- ----------  ---------- ----------
Operating income                 10,979     10,602      12,018     13,798
Other income (expense)              115         82         402        149
Interest expense                     27        182         165        402
                             ---------- ----------  ---------- ----------
Income from continuing
 operations before income
 taxes                           11,067     10,502      12,255     13,545
Provision for income taxes        4,110      4,044       4,559      5,215

Minority interest                     2          1           3          2
                             ---------- ----------  ---------- ----------
Income from continuing
 operations                       6,955      6,457       7,693      8,328
Discontinued operations:
  Loss on disposal, net of
   applicable taxes                 (42)       (33)        (83)       (33)
                             ---------- ----------  ---------- ----------
Net income                   $    6,913 $    6,424  $    7,610 $    8,295
                             ========== ==========  ========== ==========
Weighted average number
 of shares outstanding:
  Basic                          14,890     14,619      14,855     14,679
                             ========== ==========  ========== ==========
  Diluted                        15,266     15,056      15,259     15,175
                             ========== ==========  ========== ==========
Net income per share, Basic:
  Income from continuing
   operations                $     0.47 $     0.44 $      0.52 $     0.57
  Loss from discontinued
   operations                         -          -       (0.01)         -
                             ---------- ----------  ---------- ----------
  Net income per share       $     0.46 $     0.44 $      0.51 $     0.57
                             ========== ==========  ========== ==========
Net income per share,
 Diluted:
  Income from continuing
   operations                $     0.46 $     0.43 $      0.50 $     0.55
  Loss from discontinued
   operations                         -          -       (0.01)         -
                             ---------- ----------  ---------- ----------
  Net income per share       $     0.45 $     0.43 $      0.50 $     0.55
                             ========== ==========  ========== ==========


                                   Thomas Nelson, Inc. and Subsidiaries
                                  Condensed Consolidated Balance Sheets
                                            (000's omitted)
                                             (unaudited)

                                       September 30, September 30,
                                          2005         2004
ASSETS                                 ----------    ----------
Current assets:
  Cash and cash equivalents            $   25,310    $   22,344
  Accounts receivable, less
   allowances of $7,382 and $7,383,
   respectively                            55,142        49,755
  Inventories                              40,928        39,153
  Prepaid expenses                         23,782        17,467
  Deferred tax assets                       4,797         4,923
                                       ----------    ----------
Total current assets                      149,959       133,642
  Property, plant and equipment, net       18,682        13,117
  Other assets                             11,700         9,665
  Deferred charges                          1,614         1,486
  Intangible assets                         2,013           814
  Goodwill                                 29,304        29,304
                                       ----------    ----------
Total Assets                           $  213,272    $  188,028
                                       ==========    ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                     $   26,795    $   23,859
  Accrued expenses                         10,748         9,284
  Deferred revenue                         12,045         9,429
  Dividends payable                           748           734
  Income taxes currently payable            4,955         5,176
  Current portion of long-term debt         1,154         2,308
                                       ----------    ----------
Total current liabilities                  56,445        50,790
  Long-term debt, less current portion          -         1,154
  Long-term taxes payable                  22,592        21,290
  Deferred tax liabilities                    911         1,021
  Other liabilities                           487           844
  Minority interest                            16            11
Shareholders' equity                      132,821       112,918
                                       ----------    ----------
Total Liabilities and
 Shareholders' Equity                  $  213,272    $  188,028
                                       ==========    ==========

Contact Information

  • Contact:
    Joe L. Powers
    Executive Vice President
    P.O. Box 141000
    Nashville, TN 37214-1000
    Phone: (615) 902-1300
    Fax: (615) 883-6353
    Website: www.thomasnelson.com