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BOOKS A MILLION INC 10-K 2011 Documents found in this filing:UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
For the transition period from __________to__________
Commission File No.0-20664
BOOKS-A-MILLION, INC.
(Exact name of Registrant as specified in its charter)
Registrant's telephone number, including area code: (205) 942-3737
Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $.01 per share>
(Title of Class)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [ ] No [X]
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [] 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].
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer [ ] Accelerated Filer []
Non-Accelerated Filer [X ] Smaller Reporting Company [ ]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
The aggregate market value of the voting stock held by non-affiliates of the Registrant (assuming for these purposes, but without conceding, that all executive officers and directors are "affiliates" of the Registrant) as of July 31, 2010 (based on the closing sale price as reported on the NASDAQ Stock Market on such date), was $44.2 million.
The number of shares outstanding of the Registrant's Common Stock as of April 12, 2011 was 15,741,410.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Annual Meeting of Stockholders to be held on May 24, 2011 are incorporated by reference into Part III of this report.
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BOOKS-A-MILLION, INC. AND SUBSIDIARIES
10-K INDEX
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This document contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. A number of factors could cause the actual results, performance or, achievements of Books-A-Million, Inc. (the “Company,”) or the results of its industry to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, the competitive environment in the book retail industry in general and in the Company’s specific market areas; inflation or deflation; economic conditions in general and in the Company’s specific market areas, including the length of time that the United States economy remains in the current economic downturn; the number of store openings and closings; the profitability of certain product lines, capital expenditures and future liquidity; liability and other claims asserted against the Company; uncertainties related to the Internet and the Company’s Internet operations; the factors described in ITEM 1A. RISK FACTORS herein; and other factors referenced herein. In addition, such forward-looking statements are necessarily dependent upon assumptions, estimates and dates that may be incorrect or imprecise and involve known and unknown risks, uncertainties and other factors. Accordingly, any forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized. Given these uncertainties, stockholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
PART I
General
Books-A-Million, Inc. is a leading book retailer primarily located in the southeastern United States. The Company was founded in 1917 and operates both superstores and traditional bookstores. Superstores, the first of which was opened in 1987, range in size from 8,000 to 39,000 square feet and operate under the names “Books-A-Million,” “Books and Co.” and “2nd & Charles.” Traditional bookstores are smaller stores operated under the names “Bookland” and “Books-A-Million”. These stores range in size from 2,000 to 7,000 square feet and are located primarily in enclosed malls. All store formats generally offer an extensive selection of best sellers and other hardcover and paperback books, magazines, and newspapers. In addition to the retail store formats, we offer our products over the Internet at Booksamillion.com.
We were founded in 1917, originally incorporated under the laws of the State of Alabama in 1964 and reincorporated in Delaware in September 1992. Our principal executive offices are located at 402 Industrial Lane, Birmingham, Alabama 35211, and our telephone number is (205) 942-3737. Unless the context otherwise requires, references to “we,” “our,” “us” or “the Company” include our wholly owned subsidiaries, American Wholesale Book Company, Inc. (“American Wholesale”), Booksamillion.com, Inc., BAM Card Services, LLC and AL Florence Realty 2010, LLC.
Our periodic and current reports filed with the Securities and Exchange Commission (“SEC”) are made available on our website at www.booksamillioninc.com as soon as reasonably practicable. Our code of conduct and key committee charters are also available on our website. These reports are available free of charge to stockholders upon written request. Such requests should be directed to Brian W. White, our Chief Financial Officer. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street N.E., Room 1850, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us, at http: //www.sec.gov.
Business Segments
We have two reportable segments: retail trade and electronic commerce trade. In the retail trade segment we are primarily engaged in the retail sale of books, magazines, games, toys and related products at our retail stores. The retail trade segment includes our distribution center operations which predominantly supplies merchandise to our retail stores. In the electronic commerce trade segment we are engaged in the retail sale of book merchandise over the Internet. This segment is managed separately due to divergent technology and marketing requirements. For additional information on our reportable business segments, see Note 9, "Business Segments," in the notes to consolidated financial statements.
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In both our retail trade and electronic commerce trade segments we sell books, and other merchandise, which consists of gifts, cards, collectibles, magazines, café sales, music, DVDs and other products. Sales as a percentage of net sales by merchandise category are as follows:
General merchandise consists of gifts, cards, collectibles and similar types of products. Café consists of coffee, tea and other edible products, as well as gift items related to our Joe Muggs cafés. Other products include music, DVDs, E-Books and other products.
Retail Stores
We opened our first Books-A-Million superstore in 1987. We developed superstores to capitalize on the growing consumer demand for the convenience, selection and value associated with the superstore retailing format. Each superstore is designed to be a receptive and open environment conducive to browsing and reading and includes ample space for promotional events open to the public, including book autograph sessions and children's storytelling. We operated 201 superstores as of January 29, 2011.
Our superstores emphasize selection, value and customer service. Each of our superstores offers an extensive selection of books, magazines, general merchandise, including gifts, cards, collectibles, music and DVDs and electronic accessories. Each superstore has a service center staffed with associates who are knowledgeable about the store's merchandise and who are trained to answer customers' questions, assist customers in locating books within the store and placing special orders. The majority of our superstores also include a Joe Muggs café, serving Joe Muggs coffee and assorted pastries and other edible items. Our superstores are conveniently located on major, high-traffic roads and in enclosed malls or strip shopping centers with adequate parking, and generally operate for extended hours up to 11:00 pm local time.
Our traditional stores are tailored to the size, demographics and competitive conditions of the particular market area. Traditional stores are located primarily in enclosed malls and generally feature a wide selection of books, magazines, gifts and other products. We had 30 traditional stores as of January 29, 2011.
Merchandising
We employ several value-oriented merchandising strategies. Books on our best-seller list, which is developed by us based on the sales and customer demand in our stores, are generally sold in the Company's superstores at or below publishers' suggested retail prices. In addition, customers can join the Millionaire's Club and save 10% on almost all purchases in any of our stores, including already discounted best-sellers. Our point-of-sale computer system provides data designed to enable us to anticipate consumer demand and customize store inventory selection to reflect local customer interest.
Marketing
We promote our bookstores principally through the use of traditional direct mail, email and online advertising, as well as point-of-sale materials posted and distributed in the stores. In certain markets, radio and newspaper advertising is also used on a selective basis. We also arrange for special appearances and book autograph sessions with recognized authors to attract customers and to build and reinforce customer awareness of our stores. A substantial portion of our advertising expenses are reimbursed from publishers through their cooperative advertising programs.
Store Operations and Site Selection
In choosing specific store sites within a market area, we apply standardized site selection criteria that take into account numerous factors, including the local demographics, desirability of available leasing arrangements, proximity to our existing stores and stores of our competitors and overall level of retail activity. In general, stores are located on major high-traffic roads convenient to customers and have adequate parking. We generally negotiate short-term leases with renewal options. We also periodically review the profitability trends and prospects of each of our stores and evaluate whether or not any underperforming stores should be closed, converted to a different format or relocated to more desirable locations.
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Internet Operations
On Booksamillion.com we sell a wide selection of books, magazines, music, DVDs, E-Books and other products similar to those sold in our Books-A-Million superstores.
Purchasing
Our purchasing decisions are made by our merchandising department on a centralized basis. Our buyers negotiate terms, discounts and cooperative advertising allowances for all of our bookstores and decide which products to purchase, in what quantity and for which stores. The buyers use current inventory and sales information provided by our in-store point-of-sale computer system to make reorder decisions.
We purchase merchandise from over 3,000 vendors. We purchase the majority of our collectors' supplies from Anderson Press, Inc. and substantially all of our magazines from Anderson Media, each of which is a related party. See Note 7, "Related Party Transactions," in the notes to consolidated financial statements. No one vendor accounted for over 10.0% of our overall merchandise purchases in the fiscal year ended January 29, 2011. In general, more than 80% of our inventory may be returned to the vendors for credit, which substantially reduces our risk of inventory obsolescence.
Distribution Capabilities
Our subsidiary, American Wholesale, receives a substantial portion of our inventory shipments, including substantially all of our books, at its two facilities located in Florence and Tuscumbia, Alabama. Orders from our bookstores are processed by computer and assembled for delivery to the stores on pre-determined weekly schedules. Substantially all deliveries of inventory from American Wholesale’s facilities are made by a dedicated transportation fleet. At the time deliveries are made to each of our stores, returns of slow moving or obsolete products are picked up and returned to the American Wholesale returns processing center. American Wholesale then returns these products to vendors for credit.
Competition
The retail book business is highly competitive, and competition within the industry is fragmented. We face direct competition from other superstores, such as Barnes & Noble and Borders, and we also face competition from mass merchandisers, such as Wal-Mart and Costco, and online retailers such as Amazon, Barnes & Noble, Borders and Wal-Mart. Our bookstores also compete with specialty retail stores that offer books in particular subject areas, independent single store operators, variety discounters, drug stores, warehouse clubs, mail order clubs and other retailers offering books. In addition, our bookstores face additional competition from the expanding market for electronic books and may face competition from other categories of retailers entering the retail book market. We believe that the key competitive factors in the retail book industry are convenience of location, selection, customer service and price.
Seasonality
Similar to many retailers, our business is seasonal, with the highest retail sales, gross profit and net income historically occurring in our fourth fiscal quarter. This seasonal pattern reflects the increased demand for books and gifts during the year-end holiday selling season. Working capital requirements are generally at their highest during the third fiscal quarter and the early part of the fourth fiscal quarter due to the seasonality of our business. As a result, our results of operations depend significantly upon net sales generated during the fourth fiscal quarter, and any significant adverse trend in the net sales of such period would likely have a material adverse effect on our results of operations for the full year. In addition to seasonality, our results of operations may fluctuate from quarter to quarter as a result of the amount and timing of sales and profits contributed by new stores as well as other factors. Accordingly, the addition of a large number of new stores in a particular fiscal quarter could adversely affect our results of operations for that quarter.
Trademarks
The primary trademarks of the Company are: “Books-A-Million,” “BAM! Books-A-Million,” “Bookland,” “Books & Co.,” “Millionaire’s Club,” “Sweet Water Press,” “Thanks-A-Million,” “Big Fat Coloring Book,” “Up All Night Reader,” “Read & Save Rebate,” “Readables Accessories for Readers,” “Kids-A-Million,” “Teachers First,” “The Write Price,” “Bambeanos,” “Hold That Thought,” “Book$mart,” “BAMM,” “BAMM.com,” “BOOKSAMILLION.com,” “Chillatte,” “Joe Muggs Newsstand,” “Page Pets,” “JOEMUGGS.com,” “Faithpoint,” “Faithmark,” “Joe Muggs,” “Anderson’s Bookland,” “Snow Joe,” “Summer Says,” “On the John University,” “OTJU,” “American Wholesale Book Company,” “AWBC” and “NetCentral.”
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Employees
As of January 29, 2011, we employed approximately 2,600 full-time associates and 2,700 part-time associates. The number of part-time associates employed fluctuates based upon seasonal needs. None of our associates are covered by a collective bargaining agreement. We believe that relations with our associates are good.
The following risk factors and other information included in this Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected.
Business Strategy
Our future results will depend, among other things, on our success in implementing our business strategy. There can be no assurance that we will be successful in implementing our business strategy or that the strategy will be successful in sustaining acceptable levels of sales growth and profitability.
Intense competition from traditional retail sources and the Internet may adversely affect our business.
The retail book business is highly competitive, and competition within the industry is fragmented. We face direct competition from other superstores, such as Barnes & Noble and Borders, and we also face competition from mass merchandisers, such as Wal-Mart and Costco, and online retailers such as Amazon, Barnes & Noble, Borders and Wal-Mart. Our bookstores also compete with specialty retail stores that offer books in particular subject areas, independent single store operators, variety discounters, drug stores, warehouse clubs, mail order clubs and other retailers offering books. In addition, our bookstores face additional competition from the expanding market for electronic books and may face competition from other categories of retailers entering the retail book market.
Many of our current and potential competitors have longer operating histories, larger customer bases, greater brand recognition and significantly greater financial, marketing and other resources than we have. They may be able to secure merchandise from vendors on more favorable terms and may be able to adopt more aggressive pricing policies. Competitors in both the retail and electronic commerce trade also may be able to devote more resources to technology development, fulfillment and marketing than we are.
Competition in electronic commerce trade may further intensify. The online market is rapidly evolving and intensely competitive, with few barriers to entry. Companies in the retail and electronic commerce trade may enter into business combinations or alliances that strengthen their competitive positions. This increased competition may reduce our sales or operating profits, or both.
Our business is highly seasonal.
Our business is highly seasonal, with sales and earnings generally highest in the fourth fiscal quarter and lowest in the first fiscal quarter. Our results of operations depend significantly upon the holiday selling season in the fourth fiscal quarter. During the fiscal year ended January 29, 2011, approximately 30.9% of our sales and approximately 76.6% of our operating income were generated in the fourth fiscal quarter. If we do not stock popular products in sufficient amounts or if we fail to have sources to timely restock popular products during the busy holiday period such that we fail to meet customer demand, it could significantly affect our revenue and earnings and our future growth. In addition, if we experience less than satisfactory net sales during a fourth fiscal quarter, we may not be able to sufficiently compensate for any losses which may have been incurred during the first three quarters of such fiscal year.
The current economic downturn, along with difficult and volatile conditions in the capital and credit markets, could materially adversely affect our financial position, results of operations and cash flows, and we do not know if these conditions will improve in the near future.
The Company believes that the United States and global economies are presently experiencing extremely challenging times and that general economic conditions could persist or deteriorate further. The Company believes that these conditions have had and may continue to have an adverse impact on spending by the Company’s current retail customer base and potential new customers. Because of these significant challenges, we are continuously reviewing and adjusting our business activities to address the changing economic environment. We are carefully managing our inventory and liquidity and enforcing expense controls while working diligently and prudently to grow our business. Because of the uncertainty in the overall economic environment, the unpredictability of consumer behavior and the concern as to whether economic conditions will improve at a beneficial rate, it is very
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difficult for us to predict how our business may be affected in the future. Our business and financial performance may be adversely affected by current and future economic conditions that cause a further decline in business and consumer spending, including limited or further reduced availability of credit, continued high or increased unemployment levels, higher energy and fuel costs, rising interest rates, financial market volatility and long-term downturn. These conditions could have a negative impact on the earnings, liquidity and capital resources of the Company.
Current economic conditions have accentuated these risks and magnified their potential effect on us and our business. The current economic downturn and difficult conditions in the capital and credit markets may affect our business in a number of ways. For example:
• The economic downturn could have a significant adverse impact on consumer confidence and discretionary consumer spending, which may result in decreased sales
and earnings for us.
• Although we believe that we have sufficient liquidity under our credit agreement to run our business and to provide for our plans for growth, under depressed
economic or extreme market conditions, there can be no assurance that such funds would be available or sufficient and, in such a case, we may not be able to
successfully obtain additional debt financing on favorable terms, or at all.
• Recent market volatility has exerted downward pressure on our stock price, which may make it more difficult for us to raise additional capital in the future.
We do not know if the state of the economy or market conditions will improve in a significant manner in the near future or when any such improvement will occur.
If the Company is unable to continue to open new stores, our growth may decline.
The Company’s growth depends in part on our ability to open new stores and operate them profitably. In general, the rate of expansion depends, among other things, on general economic and business conditions affecting consumer confidence and spending, the availability of desired locations and qualified management personnel, the negotiation of acceptable lease terms and the ability to manage the operational aspects of growth. It also depends upon the availability of adequate capital, which in turn depends in large part upon cash flow generated by the Company.
If stores are opened more slowly than expected, sales at new stores reach targeted levels more slowly than expected (or fail to reach targeted levels) or related overhead costs increase in excess of expected levels, the Company’s ability to successfully implement its expansion strategy would be adversely affected. In addition, the Company may open new stores in certain markets in which the Company is already operating stores, which could adversely affect sales at those existing stores.
Furthermore, increases in the complexity of the Company’s business could place a significant strain on our management, operations, technical performance, financial resources and internal financial control and reporting functions, and there can be no assurance that the Company will be able to manage this effectively. The Company’s current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage our future operations, especially as the Company employs personnel in multiple geographic locations. The Company may not be able to hire, train, retain, motivate and manage required personnel, which may limit our growth. If any of this were to occur, it could damage the Company’s reputation, limit growth, negatively affect operating results and harm the Company’s business.
Our business is dependent upon consumer spending patterns.
Sales of books generally depend upon discretionary consumer spending, which may be affected by general economic conditions, consumer confidence and other factors beyond our control. Weather, among other things, can affect comparable store sales, because inclement weather can require us to close certain stores temporarily and thus reduce store traffic. Even if stores are not closed, customers may decide to avoid going to stores in bad weather. In addition, sales are dependent in part on the strength of new release titles offered by vendors. A decline in consumer spending on books could have a material adverse effect on our financial condition and results of operations.
The Company faces the risk of a shift in consumer spending patterns to e-content.
As technology evolves and consumers shift spending patterns to e-content, the Company may continue to enter new markets in which we have limited experience. The offering of e-content may present new and difficult challenges. The Company’s gross margin of e-content products may be lower than our traditional product lines, and the Company may not recover our investments in this area. These challenges may negatively affect the Company’s operating results.
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The Company’s costs of doing business could increase as a result of changes in federal, state or local laws or regulations.
Changes in federal, state or local laws or regulations, including, but not limited to, laws related to employment, wages, data privacy and information security, taxes and consumer products, could increase the Company’s costs of doing business.
Our business may be affected by our relationships with suppliers and delays in product shipments.
We rely heavily upon our suppliers to provide us with new products as quickly as possible. The loss of any of our suppliers could reduce our product offerings, which could cause us to be at a competitive disadvantage. In addition, we depend upon the business terms we can obtain from suppliers, including competitive prices, unsold product return policies, new release title quantity allocations, advertising and market development allowances, freight charges and payment terms. Our failure to maintain favorable business terms with our suppliers could adversely affect our ability to offer products to consumers at competitive prices. To the extent that our suppliers rely on overseas sources for a large portion of their products, any event causing a disruption of imports, including the imposition of import restrictions in the form of tariffs or quotas and currency fluctuations, could hurt our business.
Our vendor relationships subject us to a number of risks, and we rely on certain vendors that are related parties.
Although we purchase merchandise from over 3,000 vendors and no one vendor accounted for more than 10.0% of our inventory purchases in the fiscal year ended January 29, 2011, we have significant vendors that are important to us. If our current vendors were to stop selling merchandise to us on acceptable terms, we may not be able to acquire merchandise from other suppliers in a timely and efficient manner and on acceptable terms. We have entered into and may, in the future, enter into various transactions and agreements with entities wholly or partially owned by certain stockholders or directors (including certain officers) of the Company, including one such entity that serves as our primary magazine vendor and another that serves as our primary provider of collectors' supplies. We believe that the transactions and agreements that we have entered into with related parties are on terms that are at least as favorable to us as could reasonably have been obtained at such time from unrelated third parties.
The concentration of the Company’s capital stock ownership with certain executive officers, directors and their affiliates may limit its stockholders’ ability to influence corporate matters and may involve other risks.
The Company’s President, Chief Executive Officer and Chairman of the Board, Clyde B. Anderson, and his brother, Terry C. Anderson, who is a director of the Company, together with their family members and affiliates, were the beneficial owners of an aggregate of approximately 53.4% of the Company’s outstanding common stock as of March 25, 2011. This concentrated control may limit the ability of the Company’s other stockholders to influence corporate matters and, as a result, the Company may take actions with which its other stockholders do not agree. In addition, there may be risks related to the relationships members of the Anderson family have with the various entities with which the Company has related party transactions.
If we do not successfully optimize inventory and manage our distribution, our business could be harmed.
If we do not successfully optimize our inventory and operate our distribution centers, it could significantly limit our ability to meet customer demand. Because it is difficult to predict demand, we may not manage our facilities in an optimal way, which may result in excess or insufficient inventory or warehousing, fulfillment or distribution capacity. Additionally, if we open new stores in new geographic areas where we do not currently have a presence, we may not be able to provide those stores with efficient distribution and fulfillment services, which may impact our stores in those markets. We may be unable to adequately staff our fulfillment and customer service centers to meet customer demand. There can be no assurance that we will be able to operate our network effectively.
We rely heavily on the American Wholesale warehouse distribution facilities for merchandise distribution functions and to maintain inventory stock for our retail stores. Our ability to distribute merchandise to our stores and maintain adequate inventory levels may be materially impacted by any material damage incurred at our warehouse facilities caused by inclement weather, fire, flood, power loss, earthquakes, acts of war or terrorism, acts of God and similar factors.
We also rely heavily on our dedicated transportation fleet for deliveries of inventory. As a result, our ability to receive or ship inventory efficiently may be negatively affected by inclement weather, fire, flood, power loss, earthquakes, labor disputes, acts of war or terrorism, acts of God and similar factors.
Any of the inventory risk factors set forth above may adversely affect our financial condition, results of operations and cash flows.
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Failure to retain key personnel could adversely affect our business.
Our continued success depends to a significant extent upon the efforts and abilities of our senior management. The failure to retain our senior management could have a material adverse effect on our business and our results of operations. We do not maintain “key man” life insurance on any of our senior managers.
Failure to attract and retain qualified associates and other labor issues could adversely affect our financial performance.
Our ability to continue to expand our operations depends on our ability to attract and retain a large number of qualified associates. Our ability to meet our labor needs generally while controlling our associate wage and related labor costs is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force, unemployment levels, prevailing wage rates, changing demographics, health and other insurance costs and changes in employment legislation. If we are unable to locate, attract and retain qualified personnel or if our costs of labor or related costs increase significantly, our financial performance could be affected adversely.
We rely extensively on communication and computer systems to process transactions, summarize results and manage our business. Disruptions in these systems could harm our ability to run our business.
Given the number of individual transactions that we have each year, it is critical that we maintain uninterrupted operation of our computer and communications hardware and software systems. Our systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, catastrophic events, such as acts of God, fires, tornadoes, hurricanes, floods, earthquakes, power losses, telecommunications failures, acts of war or terrorism, physical or electronic break-ins and similar events or disruptions, and usage errors by our employees. If our systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer interruptions in our operations in the interim. Any material interruption in our computer operations may have a material adverse effect on our business or results of operations.
Our electronic commerce trade faces business risks, which include:
• competition from other Internet-based companies and traditional retailers;
• risks associated with a failure to manage growth effectively;
• risks of the Internet as a medium for commerce, including Internet security risks;
• risks associated with the need to keep pace with rapid technological change;
• risks of system failure or inadequacy; and
• risks associated with the maintenance of domain names.
If any of these risks materialize, it could have an adverse effect on our electronic commerce trade.
Government regulation of the Internet and e-commerce is evolving, and unfavorable changes could harm our business.
We are subject to general business regulations and laws, as well as regulations and laws specifically governing the Internet and e-commerce. Such existing and future laws and regulations may impede the growth of the Internet or other online services. These regulations and laws may cover taxation, privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, the provision of online payment services, unencumbered Internet access to our services and the characteristics and quality of products and services. It is not always clear how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable resolution of these issues may harm our business.
We could be liable for breaches of security on our website.
A fundamental requirement for e-commerce is the secure storage and transmission of confidential information. Although we have developed systems and processes that are designed to protect consumer information and prevent fraudulent credit card transactions and other security breaches, failure to prevent or mitigate such fraud or breaches may adversely affect our business or results of operations.
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We are subject to a number of risks related to payments that we accept.
We accept payments by a variety of methods, including credit card, debit card, gift cards, direct debit from a customer’s bank account, physical bank check and cash. For certain payment transactions, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower our profit margins. We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, we may be subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers, process electronic funds transfers or facilitate other types of online payments, and our business and operating results could be adversely affected. If one or more of these agreements are terminated and we are unable to replace them on similar terms, or at all, it could adversely affect our operating results. In addition, as we offer new payment options to our customers, we may be subject to additional regulations and compliance requirements and a greater risk of fraud.
We may be unable to protect our intellectual property, which could harm our brand and reputation.
To protect our proprietary rights in our intellectual property, we rely generally on copyright, trademark and trade secret laws. Although we do not believe that our trademarks and other intellectual property are materially important to the continuation of our operations, our failure or inability to maintain or protect our proprietary rights could materially decrease their value, and our brand and reputation could be harmed as a result.
We are subject to certain legal proceedings that may affect our financial condition and results of operations.
We are involved in a number of legal proceedings. In the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial condition or results of operations. However, we can give no assurances that certain lawsuits either now or in the future will not materially affect our financial condition or results of operations.
Changes in our effective income tax rate could affect our results of operations.
Our effective income tax rate is influenced by a number of factors. Changes in the tax laws, the interpretation of existing laws or our failure to sustain our reporting positions on examination could adversely affect our effective income tax rate and, as a result, our results of operations.
Changes in accounting standards could affect our results of operations.
A change in accounting standards or practices can have a significant effect on our reported results of operations. New accounting pronouncements and interpretations of existing accounting rules and practices have occurred and may occur in the future. Changes to existing rules may adversely affect our reported financial results.
If the Company is unable to renew or enter into new leases on favorable terms, our revenue growth may decline.
All of the Company’s stores are located in leased premises. If the cost of leasing existing stores increases, the Company cannot assure that we will be able to maintain our existing store locations as leases expire. In addition, the Company may not be able to enter into new leases on favorable terms or at all, or we may not be able to locate suitable alternative sites or additional sites for new store expansion in a timely manner. The Company’s revenues and earnings may decline if the Company fails to maintain existing store locations, enter into new leases, locate alternative sites or find additional sites for new store expansion.
The Company may engage in acquisitions which, among other things, could negatively impact our business if we fail to successfully complete and integrate them.
To enhance our efforts to grow and compete, the Company may engage in acquisitions. Any future acquisitions are subject to the Company’s ability to negotiate favorable terms for them. Accordingly, the Company cannot assure that future acquisitions will be completed. In addition, to facilitate future acquisitions, the Company may take actions that could dilute the equity interests of our stockholders, increase our debt or cause us to assume contingent liabilities, all of which may have a detrimental effect on the price of our common stock. Finally, if any acquisitions are not successfully integrated with the Company’s business, the Company’s ongoing operations could be adversely affected.
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The occurrence of severe weather events, catastrophic health events or natural disasters could significantly damage or destroy our retail locations, could prohibit consumers from traveling to our retail locations or could prevent us from resupplying our stores or distribution centers, especially during peak shopping seasons.
Unforeseen events, including public health issues, and natural disasters such as earthquakes, hurricanes, snow storms, floods and heavy rains, could disrupt our operations or the operations of our suppliers, as well as the behavior of our consumers. We believe that we take reasonable precautions to prepare particularly for weather-related events, however, our precautions may not be adequate to deal with such events in the future. As these events occur in the future, if they should impact areas in which we have our distribution centers or a concentration of retail stores, such events could have a material adverse effect on our business, financial condition and results of operations, particularly if they occur during peak shopping seasons.
Increases in transportation costs due to rising fuel costs, climate change regulation and other factors may negatively impact our operating results.
We rely upon various means of transportation, including sea and truck, to deliver products from vendors to our distribution centers and from our distribution centers to our stores. Consequently, our results can vary depending upon the price of fuel. The price of oil has fluctuated drastically over the last few years, and may rapidly increase again, which would sharply increase our fuel costs. In addition, efforts to combat climate change through reduction of greenhouse gases may result in higher fuel costs through taxation or other means. Any such future increases in fuel costs would increase our transportation costs for delivery of product to our distribution centers and distribution to our stores, as well as our vendors’ transportation costs, which could harm our operating results.
In addition, labor shortages in the transportation industry could negatively affect transportation costs and our ability to supply our stores in a timely manner. In particular, our business is highly dependent on the trucking industry to deliver products to our distribution centers and our stores. Our operating results may be adversely affected if we or our vendors are unable to secure adequate trucking resources at competitive prices to fulfill our delivery schedules to our distribution centers or our stores.
Our stock price may be subject to volatility.
The trading price of our common stock may fluctuate in response to a number of events and factors, many of which are beyond our control, such as:
• general economic conditions;
• changes in interest rates;
• conditions or trends in the retail book and electronic commerce trade industries;
• fluctuations in the stock market in general;
• quarterly variations in operating results;
• new products, services, innovations and strategic developments by our competitors or us, or business combinations and investments by our competitors or us;
• changes in financial estimates by us (if any) or securities analysts and recommendations by securities nalysts;
• changes in regulation;
• changes in our capital structure, including issuance of additional debt or equity to the public;
• corporate restructurings, including layoffs or closures of facilities;
• changes in the valuation methodology of, or performance by, others in the retail book and electronic trade industries; and
• transactions in our common stock by major investors, and analyst reports, news and speculation.
Any of these events may cause our stock price to rise or fall and may adversely affect our financial condition or results of operations.
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None.
Our bookstores are generally located either in enclosed malls or strip shopping centers. Substantially all of our stores are leased. Generally, these leases have terms ranging from three to ten years and require that we pay a fixed minimum rental fee and/or a rental fee based on a percentage of net sales together with certain customary costs (such as property taxes, common area maintenance and insurance). The Company has one location where it owns the land and related property.
The number of stores located in each state and the District of Columbia as of January 29, 2011 are listed below:
The Company operates two distribution facilities near Florence, Alabama. The combined square footage of these distribution facilities is 248,000 square feet. One of the distribution facilities is leased on a ten year term ending on February 28, 2017. The other facility is leased month-to-month. We believe that the failure to extend the lease for the warehouse facility currently leased on a month-to-month basis would not have a material adverse effect on our business, financial condition or results of operations. Our principal executive offices are located in a 20,550 square-foot leased building located in Birmingham, Alabama. The Birmingham, Alabama office space was leased month-to-month until December 31, 2010. As of January 1, 2011, the Birmingham, Alabama office space is leased on a three year term ending on February 28, 2013. Each of these leases involves related parties, see Note 7, "Related Party Transactions," in the notes to consolidated financial statements.
In addition, we lease approximately 4,025 square feet of office space in Nashville, Tennessee and an additional 28,300 square-foot building located in Birmingham, Alabama for additional corporate office space. The Nashville, Tennessee space is leased on a four year term ending on July 31, 2011. The additional Birmingham space is leased until February 28, 2013.
American Wholesale owns a wholesale distribution center located in an approximately 308,000 square foot facility in Florence, Alabama. During fiscal 1995 and 1996, we financed the acquisition and construction of the wholesale distribution facility through loans obtained from the proceeds of an industrial development revenue bond (the “Bond”). In addition we own the tractors that pull the Company-owned trailers, which comprise our transportation fleet.
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We are a party to various legal proceedings in the normal course of our business. In the opinion of management, after consultation with legal counsel, the ultimate liability, if any, with respect to those proceedings is not presently expected to materially affect our financial condition or results of operations.
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The common stock of Books-A-Million, Inc. is traded on the NASDAQ Global Select Market under the symbol "BAMM." The chart below sets forth the high and low sales prices for the Company's common stock for each quarter of the fiscal years ended January 29, 2011 and January 30, 2010, and the cash dividends declared per share in each such quarter.
The closing price for the Company's common stock on April 12, 2011 was $4.24. As of March 25, 2011, Books-A-Million, Inc. had approximately 6,976 stockholders of record.
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Comparison of 5-Year Cumulative Total Return
Among Books-A-Million, Inc., the NASDAQ Composite Index and the NASDAQ Retail Trade Stock Index
The following indexed line graph indicates the Company’s total return to stockholders from January 27, 2006 to January 28, 2011, the last trading day prior to the Company’s 2011 fiscal year end, as compared to the total return for the NASDAQ Composite Index and the NASDAQ Retail Trade Stock Index for the same period. Total stockholder return for prior periods is not necessarily an indication of future performance.
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Issuer Purchases of Equity Securities
The following table shows common stock repurchases during the thirteen weeks ended January 29, 2011 under the stock repurchase program approved by our board of directors on March 11, 2010 (the "2010 Repurchase Program"), under which we were authorized to purchase up to $5 million of our common stock.
Under the 2010 Repurchase Program, the Company repurchased a total of 394,000 shares at a cost of $2.5 million during the fiscal year ended January 29, 2011.
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ITEM 6. SELECTED FINANCIAL DATA
The following selected consolidated financial data has been derived from the consolidated financial statements of the Company. The data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and notes to financial statements thereto.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company was founded in 1917 and currently operates 231 retail bookstores concentrated primarily in the southeastern United States. Of the 231 stores, 201 are superstores that operate under the names Books-A-Million, Books & Co. and 2nd & Charles, and 30 are traditional stores that operate under the Bookland and Books-A-Million names. In addition to the retail store formats, the Company offers its products over the Internet at www.booksamillion.com. As of January 29, 2011, the Company employed approximately 5,300 full and part-time employees.
The Company’s growth strategy is focused on opening stores in new and existing market areas. In addition to opening new stores, management intends to continue its practice of reviewing the profitability trends and prospects of existing stores and closing or relocating under-performing stores. During fiscal 2011, the Company opened eleven stores, closed three stores and relocated two stores.
The Company’s performance is partially measured based on comparable store sales, which is similar to most retailers. Comparable store sales are determined each fiscal quarter during the year based on all stores that have been open at least 12 full months as of the first day of the fiscal period. Any stores closed during a fiscal period are excluded from comparable store sales as of the first day of the fiscal period in which they close. Remodeled and relocated stores are also included as comparable stores. The factors affecting the future trend of comparable store sales include, among others, overall demand for products the Company sells, the Company’s marketing programs, pricing strategies, store operations and competition.
Current Economic Environment
The United States and global economies continue to experience extremely challenging times and it is possible that current economic conditions could persist or deteriorate further. The Company believes that these conditions have had and may continue to have an adverse impact on spending by the Company’s current retail customer base and potential new customers. Because of these significant challenges, we are continuously reviewing and adjusting our business activities to address the changing economic environment. We are carefully managing our inventory and liquidity and enforcing expense controls while working diligently and prudently to grow our business. Despite overall store number growth in fiscal 2011, the Company reduced its year-end inventory balance by $4.7 million as of January 29, 2011 to $196.8 million, as compared to the fiscal year-end 2010 balance of $201.5 million. The Company opened eleven new stores, closed three stores and relocated two stores in fiscal 2011. Because of the uncertainty in the overall economic environment, the unpredictability of consumer behavior and the concern as to whether economic conditions will improve, it is very difficult for us to predict how our business may be affected in the future. Our business and financial performance may be adversely affected by current and future economic conditions that cause a further decline in business and consumer spending, including limited or further reduced availability of credit, continued high or increased unemployment levels, higher energy and fuel costs, rising interest rates, financial market volatility and long-term downturn. These conditions could have a negative impact on the earnings, liquidity and capital resources of the Company.
Executive Summary
The purpose of this section is to provide a brief summary overview of the 52-week period ended January 29, 2011. Additional detail about the income statement and balance sheet is provided in the pages following this summary.
Income Statement
For the 52-week period ended January 29, 2011, Books-A-Million reported net income of $8.9 million. This represents a 35.4% decrease from the 52-week period ended January 30, 2010. The decrease is attributable to lower sales and higher corporate payroll and legal fees.
Consolidated net revenue decreased $13.7 million, or 2.7%, in the 52-week period ended January 29, 2011, compared to the 52-week period ended January 30, 2010. The decrease is due to a comparable store sales decline of 4.9% in fiscal 2011 compared to fiscal 2010 driven by a weak bestseller publishing lineup compared to the prior year and the transition of certain book categories to an electronic format. The decrease was offset in part by a $5.8 million increase in sales from our stores open less than one year and a $2.1 million increase in commission income.
Gross profit, which includes cost of sales, distribution costs and occupancy costs, decreased $4.1 million, or 2.7%, in the 52-week period ended January 29, 2011, compared to the 52-week period ended January 30, 2010. The decrease is attributable to lower sales, offset by lower occupancy and warehousing cost. Gross profit as a percentage of sales remained flat at 29.9% in fiscal 2011.
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Operating, selling and administrative expenses increased $3.0 million, or 2.6%, in the 52-week period ended January 29, 2011, compared to the 52-week period ended January 30, 2010. The increase was attributable to higher corporate payroll and stock-based compensation, store closing costs, credit card fees, legal fees, store security expenses and repairs and maintenance expenses, offset by lower impairment costs.
Impairment charges decreased $0.8 million in the 52-week period ended January 29, 2011, compared to the 52-week period ended January 30, 2010. The decrease was primarily attributable to an impairment charge recognized in the prior year for a store in Florida that was closed.
Consolidated operating profit was $14.3 million for the 52-week period ended January 29, 2011, compared to $21.7 million for the 52-week period ended January 30, 2010, a decrease of $7.3 million. This decrease was attributable to increased operating, selling and administrative expenses on lower gross profit.
Balance Sheet
Current assets decreased $1.6 million, or 0.8%, in fiscal year 2011 compared to fiscal year 2010. The decrease is attributable to a $4.7 million decrease in inventory and a $1.2 million decrease in accounts and related party receivables, offset by a $3.1 million increase in prepaid expenses and $1.2 million increase in cash and cash equivalents. The reduction in inventory is attributable to a tight focus on inventory reduction and control in response to difficult macro-economic conditions and reduced sales. The decrease in accounts and related party receivables is the result of reduced sales. The increase in prepaid expenses results from a prepaid income tax position due to estimated tax payments and lower pre-tax income level in fiscal year 2011 when compared to fiscal year 2010 when there was an accrual. The increase in cash and cash equivalents is the result of lower inventory levels and higher accounts payable leverage.
Current liabilities increased $5.0 million, or 3.5%, in fiscal year 2011 compared to fiscal year 2010. The increase is attributable to a $5.9 million increase in short-term borrowings, a $1.0 million increase in accounts and related party payables, and a $2.2 million increase in deferred taxes, offset by a $4.8 million decrease in accrued income taxes. Short-term borrowings increased due to reclassification of the industrial revenue bond from long-term to short-term as a result of the bond becoming due in July of 2011. Accounts and related party payables and accrued expenses increased due to timing of payments and worker’s compensation accruals. Deferred income taxes increased due to temporary differences associated with inventory, prepaid expenses, accruals and stock compensation. Accrued income taxes decreased as a result of the prepaid income tax position noted above.
Results of Operations
The following table sets forth statement of income data expressed as a percentage of net sales for the periods presented.
Fiscal 2011 Compared to Fiscal 2010
Consolidated net revenue decreased $13.7 million, or 2.7%, to $495.0 million for the 52-week period ended January 29, 2011 as compared to $508.7 million for the 52-week period ended January 30, 2010.
Comparable store sales for the 52-week period ended January 29, 2011 decreased 4.9% when compared to the same 52-week period in the prior fiscal year. The decrease was due to a weak bestseller publishing lineup compared to the prior year and the transition of certain book categories to an electronic format.
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Our core book department business was down during the year. However, several categories performed well. Entertainment and kid’s based titles demonstrated strength. The entertainment category was driven by ongoing interest in the Star Wars franchise, and the kid’s category continued to be favorably impacted by multiple titles in Jeff Kinney’s Diary of a Wimpy Kid series. Bargain books, gifts and media continued to increase year over year driven by product assortments.
The Company opened eleven new stores during fiscal 2011, resulting in partial year sales of $6.3 million, and closed three stores during fiscal 2011 with partial year sales of $3.1 million.
Net sales for the retail trade segment decreased $16.4 million, or 3.3%, to $486.9 million in the 52-week period ended January 29, 2011, from $503.3 million in the 52-week period ended January 30, 2010. The decrease was due to the 4.9% decrease in comparable store sales as described above, partially offset by the impact of sales from new stores opened in fiscal 2010 and fiscal 2011.
Net sales for the electronic commerce segment increased $2.4 million, or 9.9%, to $26.2 million in the 52-week period ended January 29, 2011, from $23.8 million in the 52-week period ended January 30, 2010. The increase in net sales for the electronic commerce trade segment was primarily due to sales of Nook E-Reading devices and branded accessories and E-book content.
Gross profit, which includes cost of sales, distribution costs and occupancy costs (including rent, common area maintenance, property taxes, utilities and merchant association dues), decreased $4.1 million, or 2.7%, to $148.1 million in the 52-week period ended January 29, 2011, from $152.2 million in the 52-week period ended January 30, 2010. The decrease is attributable to lower sales. Gross profit as a percentage of net sales remained flat at 29.9% in the 52-week period ended January 29, 2011.
Operating, selling and administrative expenses increased $3.0 million, or 2.6%, to $118.2 million in the 52-week period ended January 29, 2011, from $115.1 million in the 52-week period ended January 30, 2010. Operating, selling and administrative expenses as a percentage of net sales increased to 23.9% in the 52-week period ended January 29, 2011 from 22.6% in the 52-week period ended January 30, 2010. The increase was attributable to higher corporate payroll and stock-based compensation, store closing costs, credit card fees, legal fees, store security expenses and repairs and maintenance expenses, offset by lower impairment costs. The increase in stock-based compensation for fiscal 2011 was due to an expense reduction recorded in fiscal 2010 for the forfeiture of stock grants for an employee who resigned in the first quarter of last year.
Impairment charges decreased $0.8 million in the 52-week period ended January 29, 2011, compared to the 52-week period ended January 30, 2010. The decrease was primarily attributable to an impairment charge recognized in the prior year for a store in Florida that was closed.
Depreciation and amortization expenses increased $0.9 million, or 6.6%, to $15.3 million in fiscal 2011, from $14.4 million in fiscal 2010. Depreciation and amortization expenses as a percentage of net sales increased to 3.1% in fiscal 2011 from 2.8% in fiscal 2010. The increase was due to capital investments made for new stores, store relocations and remodels and technology improvements.
Consolidated operating profit was $14.3 million for the 52-week period ended January 29, 2011, compared to $21.7 million for the 52-week period ended January 30, 2010. This 33.9% decrease was attributable to increased operating, selling and administrative expenses on lower gross profit. Operating profit as a percentage of sales was 2.9% for fiscal 2011. Operating profit was 4.3% of sales for fiscal 2010. The decrease as a percentage of sales from fiscal 2010 is attributable to the increase in operating, selling and administrative expenses as outlined above. Operating profit for the retail trade segment decreased $6.5 million to $15.4 million in fiscal 2011, from $21.9 million in fiscal 2010. This decrease was due to higher credit card fees, higher fixtures expense, higher repairs and maintenance expenses and higher store security expenses. Operating profit for the electronic commerce trade segment decreased $0.9 million to $0.2 million in fiscal 2011, from $1.1 million in fiscal 2010. This decrease was caused by higher advertising expense, customer service costs, and legal fees.
Net interest expense remained flat at $0.6 million in fiscal 2011 and fiscal 2010. Average debt for each of the 52-week periods ended January 29, 2011 and January 30, 2010 was $15.3 million.
The effective rate for income tax purposes was 32.9% for fiscal 2011 and 34.2% for fiscal 2010. The decrease in the effective tax rate was due to a drop in tax brackets, favorable uncertain tax position adjustments and federal tax credits recorded during the year.
The Company did not close any stores in fiscal 2011 in a market where the Company does not expect to retain the closed store's customers at another store in the same market. The Company closed one store in fiscal 2010 in a market where the Company does not expect to retain the closed store's customers at another store in the same market. The financial impact of this closing was not reported as discontinued operations in the financial statements as the impact was immaterial.
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Fiscal 2010 Compared to Fiscal 2009
Consolidated net revenue decreased $6.7 million, or 1.3%, to $508.7 million for the 52-week period ended January 30, 2010 as compared to $515.4 million for the 52-week period ended January 31, 2009.
Comparable store sales for the 52-week period ended January 30, 2010 decreased 3.8% when compared to the same 52-week period in the prior fiscal year. The decrease in comparable store sales was attributable to weak economic conditions and the anniversary of very strong sales of the Twilight series by Stephanie Meyer in the prior year.
The Company’s core book department business was down for fiscal 2010 as compared to fiscal 2009. However, several categories performed well. Fiction based titles and political science related titles demonstrated strength. The teen category continued to see an impact from the success of Stephanie Meyer’s Twilight series. Titles such as Sarah Palin’s, Going Rogue, and Glenn Beck’s, Arguing with Idiots, also had a positive impact. Bargain books and gifts continued to increase year over year driven by the broader economic climate and better product assortments.
The Company opened five new stores during fiscal 2010, resulting in partial year sales of $5.6 million, and closed two stores during fiscal 2010 with partial year sales of $1.0 million.
Net sales for the retail trade segment decreased $7.0 million, or 1.4%, to $503.3 million in the 52-week period ended January 30, 2010, from $510.3 million in the 52-week period ended January 31, 2009. The decrease was due to the 3.8% decrease in comparable store sales as described above, partially offset by the impact of sales from new stores opened in fiscal 2009 and fiscal 2010.
Net sales for the electronic commerce segment decreased $1.4 million, or 5.3%, to $23.8 million in the 52-week period ended January 30, 2010, from $25.2 million in the 52-week period ended January 31, 2009. The decrease in net sales for the electronic commerce segment was due to macro-economic conditions and decreased business-to-business sales.
Gross profit, which includes cost of sales, distribution costs and occupancy costs (including rent, common area maintenance, property taxes, utilities and merchant association dues), decreased $1.2 million, or 0.8%, to $152.2 million in the 52-week period ended January 30, 2010, from $153.4 million in the 52-week period ended January 31, 2009. Gross profit as a percentage of net sales increased to 29.9% in the 52-week period ended January 30, 2010, from 29.8% in the 52-week period ended January 31, 2009. The increase is attributable to improved sales of higher margin items, lower occupancy and distribution costs, offset by higher inventory shrinkage and markdowns.
Operating, selling and administrative expenses decreased $3.6 million, or 3.1%, to $115.1 million in the 52-week period ended January 30, 2010, from $118.7 million in the 52-week period ended January 31, 2009. Operating, selling and administrative expenses as a percentage of net sales decreased to 22.6% in the 52-week period ended January 30, 2010 from 23.0% in the 52-week period ended January 31, 2009. The decrease was attributable to reduced corporate salaries and restricted stock expenses, reduced travel expenses, reduced professional fees, reduced repair and maintenance expenses and reduced store opening, closing and remodeling expenses, offset by higher health insurance costs and store associate salaries.
Impairment charges decreased $0.3 million in the 52-week period ended January 30, 2010, compared to the 52-week period ended January 31, 2009. The decrease was attributable to a $0.7 million goodwill impairment charge in the prior year that was not repeated, offset by impairment charges taken on leasehold improvements at various stores.
Depreciation and amortization expenses decreased $0.1 million, or 0.4%, to $14.4 million in fiscal 2010, from $14.5 million in fiscal 2009. Depreciation and amortization expenses as a percentage of net sales remained flat at 2.8% in fiscal 2010 and fiscal 2009.
Consolidated operating profit was $21.7 million for the 52-week period ended January 30, 2010, compared to $18.9 million for the 52-week period ended January 31, 2009. This 14.8% increase was attributable to decreased operating, selling and administrative expenses and impairment charges, partially offset by the decline in gross profit. Operating profit as a percentage of sales was 4.3% for fiscal 2010. Operating profit was 3.7% of sales for fiscal 2009. The increase as a percentage of sales from fiscal 2009 is attributable to the increase in gross margin as a percentage of sales plus the decrease in operating, selling and administrative expenses and impairment charges as outlined above. Operating profit for the electronic commerce segment decreased $0.4 million to $1.1 million in fiscal 2010, from $1.5 million in fiscal 2009. This decrease was caused by decreased sales and higher payroll expense.
Net interest expense decreased $1.3 million, or 66.8%, to $0.6 million in fiscal 2010, from $1.9 million in fiscal 2009, due to lower average debt in fiscal 2010 and lower average interest rates. Average debt for the 52-week period ended January 30, 2010 was $15.3 million compared to $41.3 million for the 52-week period ended January 31, 2009. The decrease in average debt is attributable to higher share repurchases in fiscal 2009, reduced inventory levels and high accounts payable leverage in fiscal 2010.
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The effective rate for income tax purposes was 34.2% for fiscal 2010 and 37.7% for fiscal 2009. The decrease in the effective tax rate was due to a lower effective state tax rate in fiscal 2010, as well as the impact of favorable depreciation adjustments.
The Company closed one store in fiscal 2010 in a market where the Company does not expect to retain the closed store's customers at another store in the same market. The financial impact of this closing was not reported as discontinued operations in the financial statements as the impact was immaterial. The Company did not close any stores in fiscal 2009 in a market where the Company does not expect to retain the closed stores’ customers at another store in the same market.
Critical Accounting Policies
General
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company believes that the likelihood is remote that materially different amounts will be reported related to actual results for the estimates and judgments described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates.
The financial results for the fifty-two weeks ended January 30, 2010 and January 31, 2009 contain certain insignificant reclassifications necessary to conform to the presentation of the fifty-two weeks ended January 29, 2011.
Property and Equipment
Property and equipment are recorded at cost. Depreciation on equipment and furniture and fixtures is provided on the straight-line method over the estimated service lives, which range from three to ten years. Depreciation of buildings and amortization of leasehold improvements, including remodels, is provided on the straight-line basis over the lesser of the assets estimated useful lives (ranging from 5 to 40 years) or, if applicable, the periods of the leases. Determination of useful asset life is based on several factors requiring judgment by management and adherence to generally accepted accounting principles for depreciable periods. Judgment used by management in the determination of useful asset life could relate to any of the following factors: expected use of the asset; expected useful life of similar assets; any legal, regulatory, or contractual provisions that may limit the useful life; and other factors that may impair the economic useful life of the asset. Maintenance and repairs are charged to expense as incurred. Improvement costs are capitalized to property accounts and depreciated using applicable annual rates. The cost and accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the accounts, and the related gain or loss is credited or charged to income.
Other Long-Lived Assets
The Company’s other long-lived assets consist of property and equipment which include leasehold improvements. At January 29, 2011, the Company had $54.7 million of property and equipment, net of accumulated depreciation, accounting for approximately 19.9% of the Company’s total assets. The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets. The Company evaluates long-lived assets for impairment at the individual store level, which is the lowest level at which individual cash flows can be identified. When evaluating long-lived assets for potential impairment, the Company will first compare the carrying amount of the assets to the individual store’s estimated future undiscounted cash flows. If the estimated future cash flows are less than the carrying amount of the assets, an impairment loss calculation is prepared. The impairment loss calculation compares the carrying amount of the assets to the individual store’s fair value based on its estimated discounted future cash flows. If required, an impairment loss is recorded for that portion of the asset’s carrying value in excess of fair value. Impairment losses, excluding goodwill impairment, totaled $0.3 million, $1.0 million and $0.7 million in fiscal 2011, 2010 and 2009, respectively. For all years presented, the impairment losses related to the retail trade business segment.
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Goodwill
At January 29, 2011, the Company had $0.7 million of goodwill, accounting for approximately 0.2% of the Company’s total assets. ASC 350, Goodwill and Other Intangible Assets, requires that goodwill and other unamortizable intangible assets be tested for impairment at least annually or earlier if there are impairment indicators. The Company performs a two-step process for impairment testing of goodwill as required by ASC 350. The first step of this test, used to identify potential impairment, compares the estimated fair value of a reporting unit with its carrying amount. The second step (if necessary) measures the amount of the impairment. The Company completed its annual impairment test on the goodwill during the fourth quarter of fiscal 2011 and determined that no impairment charge was necessary. The Company has noted no subsequent indicators of impairment. Changes in market conditions, among other factors, could have a material impact on these estimates.
Closed Store Expenses
Management considers several factors in determining when to close or relocate a store. Some of these factors are: decreases in store sales from the prior year, decreases in store sales from the current year budget, annual measurement of individual store pre-tax future net cash flows, indications that an asset no longer has an economically useful life, remaining term of an individual store lease, or other factors that would indicate a store in the current location cannot be profitable.
When the Company closes or relocates a store, the Company charges unrecoverable costs to expense. Such costs include the net book value of abandoned fixtures and leasehold improvements, lease termination costs, costs to transfer inventory and usable fixtures, other costs in connection with vacating the leased location, and a provision for future lease obligations, net of expected sublease recoveries. Costs associated with store closings of $0.7 million, $0.2 million and $0.4 million during fiscal 2011, 2010 and 2009, respectively, are included in operating, selling and administrative expenses in the accompanying consolidated statements of income.
Inventories
Inventories are counted throughout the fiscal year. Store inventory counts are performed by an independent inventory service, while warehouse inventory counts are performed internally. All physical inventory counts are reconciled to the Company’s records. The Company’s accrual for inventory shortages is based upon historical inventory shortage results.
Cost is assigned to store and warehouse inventories using the retail inventory method. Using this method, store and warehouse inventories are valued by applying a calculated cost-to-retail ratio to the retail value of inventories. The retail method is an averaging method that is widely used within the retail industry. Inventory costing also requires certain significant management estimates and judgments involving markdowns, the allocation of vendor allowances and shrinkage. These practices affect ending inventories at cost as well as the resulting gross margins and inventory turnover ratios.
The Company estimates and accrues shrinkage for the period between the last physical count of inventory and the balance sheet date. The accrual is calculated based on historical results. As this estimate is based on historical experience, the variances between the estimate of shrinkage and the adjustment resulting from physical inventories are traditionally not significant. Reserves for markdowns are estimated based upon the Company’s history of liquidating non-returnable inventory.
The Company utilizes the last-in, first-out (LIFO) method of accounting for inventories. The cumulative difference between replacement and current cost of inventory over stated LIFO value was $3.4 million as of January 29, 2011 and $3.3 million as of January 30, 2010. The estimated replacement cost of inventory at January 29, 2011 was the current first-in, first out (FIFO) value of $200.2 million.
Vendor Allowances
The Company receives allowances from its vendors under a variety of programs and arrangements, including merchandise placement and cooperative advertising programs. The Company accounts for these allowances under the provisions of ASC 605-50, Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor, which addresses the accounting for vendor allowances. Vendor allowances in excess of incremental direct costs are reflected as a reduction of inventory costs and recognized in cost of products sold upon the sale of the related inventory.
Accrued Expenses
On a monthly basis, certain material expenses are estimated and accrued to properly record those expenses in the period incurred. Such estimates include those made for payroll and employee benefits costs, occupancy costs and advertising expenses among other items. Certain estimates are made based upon analysis of historical results. Differences in management’s estimates and assumptions could result in accruals that are materially different from the actual results.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that result in temporary differences between the amounts recorded in its financial statements and tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
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Seasonality and Quarterly Results
Similar to many retailers, the Company’s business is seasonal, with its highest retail sales, gross profit and net income historically occurring in the fourth fiscal quarter. This seasonal pattern reflects the increased demand for books and gifts experienced during the year-end holiday selling season. Working capital requirements are generally highest during the third fiscal quarter and the early part of the fourth fiscal quarter due to the seasonality of the Company’s business. The Company’s results of operations depend significantly upon net sales generated during the fourth fiscal quarter, and any significant adverse trend in the net sales of such period would likely have a material adverse impact on the Company’s results of operations for the full year.
In addition, the Company’s results of operations may fluctuate from quarter to quarter as a result of the amount and timing of sales and profits contributed by new stores as well as other factors. New stores require the Company to incur pre-opening expenses and often require several months of operation before generating acceptable sales volumes. Accordingly, the addition of a large number of new stores in a particular quarter could adversely affect the Company’s results of operations for that quarter.
Liquidity and Capital Resources
The Company’s primary sources of liquidity are cash flows from operations, including credit terms from vendors, and borrowings under its credit facility. On March 21, 2011, the Company entered into a credit agreement (the “Credit Agreement”) for a new revolving credit facility (the “New Facility”) with Bank of America, N.A. (“Bank of America”), as Administrative Agent, Swing Line Lender and Issuing Bank, and a group of participating financial institutions under which the Company may borrow up to the maximum principal amount of $150.0 million, which may be increased to $200.0 million under certain circumstances, and which will mature on March 21, 2016. The Credit Agreement replaces the $100.0 million credit facility (the “Prior Facility”), which was scheduled to expire in July 2011. Pursuant to the Credit Agreement, the participating financial institutions have agreed to make revolving loans to the Company and to issue, up to a $35.0 million sublimit, letters of credit for the Company. Under the Credit Agreement, Bank of America, in its capacity as Swing Line Lender, has also agreed to make same day advances to the Company in the form of swing line loans up to a $15.0 million sublimit. The obligations of the Company under the Credit Agreement are secured by the inventories, accounts receivable and certain other personal property of the Company, pursuant to the terms of a security agreement with Bank of America and the other lenders. Additionally, the Credit Agreement contains certain financial and non-financial covenants, the most restrictive of which is the maintenance of a minimum fixed charge coverage ratio.
The Company had no borrowings outstanding under the Prior Facility as of January 29, 2011 or January 30, 2010. The face amount of letters of credit issued under the Prior Facility as of January 29, 2011 and January 30, 2010 was $2.1 million on each such date. The maximum and average outstanding borrowings under the Prior Facility (excluding the face amount of letters of credit issued thereunder) during fiscal 2011 were $31.7 million and $15.3 million, respectively. On March 21, 2011, the Company borrowed approximately $13.0 million under the New Facility and used such funds to repay the approximately $11.6 million outstanding under the Prior Facility and the remainder for general corporate purposes.
During fiscal 1996 and fiscal 1995, the Company acquired and constructed certain warehouse and distribution facilities with the proceeds of loans made pursuant to an industrial development revenue bond (the “Bond”). As of January 29, 2011 and January 30, 2010, there was $5.9 million and $6.4 million of borrowings outstanding, respectively, under the Bond, which bears interest at variable rates. The interest rate on the Bond was 1.4% and 1.3% at January 29, 2011 and January 30, 2010, respectively. The Bond has a maturity date of December 1, 2019, with a purchase provision obligating the Company to repurchase the Bond, unless extended by the bondholder. In fiscal 2007, an unrelated bank purchased the Bond from the existing bondholder, and the new bondholder extended the date of the Company’s repurchase obligation of the Bond until July 1, 2011 and did not require a mortgage interest to secure the bond. Such an extension may be renewed annually by the bondholder, at the Company’s request, to a date no more than five years from the renewal date. The Company is currently discussing refinancing options with respect to the Bond and expects to complete the refinancing before the repurchase date. However, there can be no assurances that the Company will be able to complete the refinancing on terms acceptable to the Company. If the Company cannot complete the refinancing before the required repurchase date on July 1, 2011, we anticipate that the obligation will be paid through an additional draw on the Company’s New Facility.
The Company’s capital expenditures totaled $16.8 million, $10.7 million and $19.8 million in fiscal 2011, 2010 and 2009, respectively. These expenditures were used for new store openings, renovation and improvements to existing stores, upgrades of the Company's warehouse distribution facilities and investment in management information systems.
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In connection with an investment in Yogurt Mountain Holding, LLC (“Yogurt Mountain”), the Company entered a line of credit agreement (the “Line of Credit”) with Yogurt Mountain pursuant to which the Company has committed to provide up to $1.5 million to Yogurt Mountain under a non-revolving line of credit through March 2015, bearing interest at 9.0%. Yogurt Mountain must pay an annual commitment fee of ¼ of 1.0% on the unused portion of the commitment. The proceeds from the Line of Credit must be used by Yogurt Mountain for the purpose of new store growth capital requirements. There was $0.8 million in outstanding borrowings by Yogurt Mountain under the Line of Credit as of January 29, 2011. Yogurt Mountain had no borrowings due to the Company at the end of the previous fiscal year.
Financial Position
During fiscal 2011, the Company opened eleven stores, closed three stores and relocated two other stores. Inventory balances decreased $4.7 million to $196.8 million at January 29, 2011, as compared to $201.5 million at January 30, 2010. The reduction in inventory is attributable to a continuing disciplined and focused approach to managing our average inventory balances in our stores and at our warehouses. This was accomplished by lower net receipts from publishers.
Net property and equipment increased $1.6 million due to the acquisition of real estate and capital expenditures, offset by depreciation expense during the year. Additionally, accounts and related party receivables decreased by $1.2 million as of January 29, 2011 as compared with the balance as of January 30, 2010, due to reduced sales. Accounts payable and related party payables increased $1.0 million from fiscal 2010 due to timing of payments to related parties. Accrued expenses increased by $0.8 million due to higher worker’s compensation accruals and property taxes.
Future Commitments
The following table lists the aggregate maturities of various classes of obligations and expiration amounts of various classes of commitments related to Books-A-Million, Inc. at January 29, 2011:
Guarantees
From time to time, the Company enters into certain types of agreements that require the Company to indemnify parties against third-party claims. Generally, these agreements relate to: (a) agreements with vendors and suppliers, under which the Company may provide customary indemnification to its vendors and suppliers in respect of actions they take at the Company’s request or otherwise on its behalf, (b) agreements with vendors who publish books or manufacture merchandise specifically for the Company to indemnify the vendors against trademark and copyright infringement claims concerning the books published or merchandise manufactured on behalf of the Company, (c) real estate leases, under which the Company may agree to indemnify the lessors for claims arising from the Company’s use of the property, and (d) agreements with the Company’s directors, officers and employees, under which the Company may agree to indemnify such persons for liabilities arising out of their relationship with the Company. The Company has directors and officers liability insurance, which, subject to the policy’s conditions, provides coverage for indemnification amounts payable by the Company with respect to its directors and officers up to specified limits and subject to certain deductibles.
The nature and terms of these types of indemnities vary. The events or circumstances that would require the Company to perform under these indemnities are transaction and circumstance specific. The overall maximum amount of obligations cannot be reasonably estimated. Historically, the Company has not incurred significant costs related to performance under these types of indemnities. No liabilities have been recorded for these obligations on the Company’s balance sheet at January 29, 2011 or January 30, 2010, as such liabilities are considered de minimis.
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Cash Flows
Operating activities provided cash of $29.7 million, $32.0 million and $39.2 million in fiscal 2011, 2010 and 2009, respectively, and included the following effects:
Cash used in investing activities in fiscal 2011, 2010 and 2009 reflected a net use of cash of $20.3 million, $10.6 million and $19.8 million, respectively. Cash was used to fund capital expenditures for new store openings, renovation and improvements to existing stores, warehouse distribution purposes and investments in management information systems.
Financing activities used cash of $8.2 million in fiscal 2011 to repay debt ($0.4 million), purchase stock ($3.1 million) and for dividend payments ($4.7 million). Financing activities used cash of $20.3 million in fiscal 2010 to repay debt ($16.1 million), purchase stock ($1.1 million) and for dividend payments ($3.2 million). Financing activities used cash of $19.5 million in fiscal 2009 to repay debt ($12.5 million), to purchase stock ($1.8 million), for dividend payments ($5.0 million) and for excess tax benefit from stock-based compensation ($0.3 million), offset by proceeds from the issuance of stock options ($0.1 million).
Dividends
The Company paid $4.7 million, $3.2 million and $5.0 million in dividends in fiscal 2011, 2010 and 2009, respectively. See the table below for a summary of dividends paid each quarter in fiscal 2011 and 2010.
Impact of Recent Accounting Pronouncements
See Note 2, "Recent Accounting Pronouncements," to the consolidated financial statements for information regarding recent accounting pronouncements.
Related Party Activities
See Note 7, "Related Party Transactions," to the consolidated financial statements for information regarding related party activities.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to market risk from interest rate fluctuations on the New Facility and debt related to an industrial development bond ("the Bond"), which bear an interest rate that varies with LIBOR. We have cash and cash equivalents at financial institutions that are in excess of federally insured limits per institution. With the current financial environment and the instability of financial institutions, we cannot be assured that we will not experience losses on our deposits.
To illustrate the sensitivity of the results of operations to changes in interest rates on our debt, we estimate that a 1052.0% increase or decrease in LIBOR rates would have changed interest expense by $2.3 million for the fiscal year ended January 29, 2011 due to average debt of $21.6 million. The average debt under the Prior Facility and the Bond was $15.3 million and $6.3 million, respectively, for the fiscal year ended January 29, 2011. This fluctuation rate is based on the maximum LIBOR fluctuation in the last three years, which was experienced in fiscal year 2009.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its subsidiaries are included in response to this item:
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Board of Directors and Stockholders
Books-A-Million, Inc.
We have audited the accompanying consolidated balance sheets of Books-A-Million, Inc. and subsidiaries (the “Company”), as of January 29, 2011 and January 30, 2010, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the periods ended January 29, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 29, 2011 and January 30, 2010, and the results of its operations and its cash flows for each of the three years in the periods ended January 29, 2011 in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of January 29, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated April 14, 2011 expressed an unqualified opinion.
/s/ GRANT THORNTON LLP
Atlanta, Georgia
April 14, 2011
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Board of Directors and Stockholders
Books-A-Million, Inc.
We have audited Books-A-Million, Inc. and subsidiaries' (the “Company”) internal control over financial reporting as of January 29, 2011, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A of this Annual Report on Form 10-K. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 29, 2011, based on criteria established in Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of January 29, 2011 and January 30, 2010, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the periods ended January 29, 2011 and our report dated April 14, 2011 expressed an unqualified opinion on those financial statements.
/s/ GRANT THORNTON LLP
Atlanta, Georgia
April 14, 2011
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(In thousands except per share and share amounts)
The accompanying notes are an integral part of these consolidated statements.
31
(In thousands, except per share data)
The accompanying notes are an integral part of these consolidated statements.
.
32
(In thousands)
The accompanying notes are an integral part of these consolidated statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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