Net sales for the 13-week period ended February 1, 2003, decreased 2.7% to $139.4 million from sales of $143.4 million for the 13-week period ended February 2, 2002. Comparable store sales for the quarter decreased 4.9%. Comparable store sales for all book categories decreased 7.0% for comparable 13-week periods. Net income for the quarter was $5.9 million, or $0.36 per diluted share, compared with net income of $6.8 million, or $0.41 per diluted share, in the year-earlier period.
For the 52-week period ended February 1, 2003, net sales were relatively flat at $442.7 million, compared with $442.8 million in the prior year. Comparable store sales decreased 2.6% when compared with the same 52-week period of the prior year. Comparable store sales for all book categories decreased 1.2% when compared with the same 52-week period of the prior year. For fiscal 2003, the Company reported net income before the cumulative effect of an accounting change of $2.6 million, or $0.16 per diluted share, compared with $3.9 million, or $0.23 per diluted share for the year-earlier period. Net income for fiscal 2003, after the cumulative effect of the change in accounting principle, was $1.4 million, or $0.08 per diluted share.
As was previously disclosed, prior to releasing preliminary fourth quarter results, the Company decided to adjust the accounting treatment of its Millionaire's Club Card. The Company now amortizes the membership revenue from sales of the card over its 12-month life, whereas previously, the membership revenue was recorded when received. The cumulative after-tax impact for all periods from 1991 to the beginning of fiscal 2001 has been reflected as a reduction of $885,000 to retained earnings on the balance sheet at the beginning of fiscal 2001. The after-tax reduction to earnings for fiscal 2003, fiscal 2002 and fiscal 2001 was $21,000, $66,000 and $86,000, respectively.
In addition, results for fiscal 2003 were affected by the adoption of Emerging Issues Task Force ("EITF") No. 02-16, Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor. The EITF is a body of the Financial Accounting Standards Board ("FASB"). In its March 20, 2003 meeting, the EITF provided companies the option of adopting certain provisions of EITF No. 02-16 as a cumulative effect of a change in accounting principle or applying the provisions of EITF 02-16 prospectively to applicable new vendor arrangements entered into or modified after January 1, 2003. The Company chose to adopt EITF No. 02-16 as a cumulative effect of a change in accounting principle at the beginning of fiscal 2003, with the result being an after-tax reduction to earnings for fiscal 2003 of $1.2 million, or $0.08 per diluted share.
The re-audit of fiscal years 2002 and 2001 has been completed and, aside from the adjustments recorded for the change in accounting treatment of the Millionaire's Club Card revenue, there were no other adjustments that changed the net income previously reported for fiscal 2002 and 2001.
Books-A-Million is one of the nation's leading book retailers and sells on the Internet at www.booksamillion.com. The Company presently operates 207 stores in 18 states and the District of Columbia. The Company operates four distinct store formats, including large superstores operating under the names Books-A-Million and Books & Co., traditional bookstores operating under the names Books-A-Million and Bookland, and Joe Muggs Newsstands. The Company's wholesale operations include American Wholesale Book Company and Book$mart, both based in Florence, Alabama. NetCentral, Inc., an Internet development and service Company is located in Nashville, Tennessee.
BOOKS-A-MILLION, INC.
Unaudited Consolidated Financial Highlights
(In thousands, except per share data)
13 Weeks 13 Weeks
Ended Ended
Feb. 1, Feb. 2,
2003 2002
-------- --------
(as
restated)
Net sales $139,439 $143,375
Operating income 10,469 11,921
Net income $ 5,893 $ 6,840
======== ========
Earnings per share - basic $ 0.36 $ 0.42
======== ========
Earnings per share - diluted $ 0.36 $ 0.41
======== ========
Weighted average number of shares outstanding:
Basic 16,201 16,156
======== ========
Diluted 16,432 16,484
======== ========
52 Weeks 52 Weeks
Ended Ended
Feb. 1, Feb. 2,
2003 2002
-------- --------
(as
restated)
Net sales $442,660 $442,755
Operating income 8,368 10,750
Income before cumulative effect of change in
accounting principle $ 2,602 $ 3,919
======== ========
Net income $ 1,401 $ 3,919
======== ========
Earnings per share - basic, before cumulative
effect of change in accounting principle $ 0.16 $ 0.24
======== ========
Earnings per share - diluted, before cumulative
effect of change in accounting principle $ 0.16 $ 0.23
======== ========
Earnings per share - basic $ 0.09 $ 0.24
======== ========
Earnings per share - diluted $ 0.08 $ 0.23
======== ========
Weighted average number of shares outstanding:
Basic 16,190 16,667
======== ========
Diluted 16,566 16,945
======== ========
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 actual results, performance, achievements of the Company,
or industry results 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 area; inflation; economic
conditions in general and in the Company's specific market areas; 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 initiative. 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, shareholders and
prospective investors are cautioned not to place undue reliance on
such forward-looking statements. The Company disclaims any obligations
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.
BOOKS-A-MILLION, INC.
Consolidated Statements of Income For 13 and 52 Weeks Ended
February 1, 2003 and February 2, 2002
(In thousands, except per share data)
13 Weeks Ended 52 Weeks Ended
--------------------- ----------------------
Feb. 1, Feb. 2, Feb. 1, Feb. 2,
2003 2002 2003 2002
--------- --------- --------- ---------
(as restated) (as restated)
NET SALES $ 139,439 $ 143,375 $ 442,660 $ 442,755
Cost of sales
(including warehouse,
distribution and
store occupancy
costs) 99,777 99,991 324,280 319,338
--------- --------- --------- ---------
GROSS PROFIT 39,662 43,384 118,380 123,417
Operating, selling
and administrative
expenses 24,946 27,569 93,681 97,092
Depreciation and
amortization 4,247 3,894 16,331 15,575
--------- --------- --------- ---------
OPERATING INCOME 10,469 11,921 8,368 10,750
Interest expense, net 963 887 4,171 4,429
--------- --------- --------- ---------
INCOME BEFORE INCOME
TAXES AND CUMULATIVE
EFFECT OF CHANGE
IN ACCOUNTING
PRINCIPLE 9,506 11,034 4,197 6,321
Income taxes provision 3,613 4,194 1,595 2,402
--------- --------- --------- ---------
INCOME BEFORE CUMULATIVE
EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 5,893 6,840 2,602 3,919
Cumulative effect of
change in accounting
principle, net of
deferred income tax
benefit of $736 -- -- (1,201) --
--------- --------- --------- ---------
NET INCOME $ 5,893 $ 6,840 $ 1,401 $ 3,919
========= ========= ========= =========
Earnings per share:
BASIC:
Income before cumulative
effect of change in
accounting principle $ 0.36 $ 0.42 $ 0.16 $ 0.24
Cumulative effect of
change in accounting
principle -- -- (0.07) --
--------- --------- --------- ---------
Net income $ 0.36 $ 0.42 $ 0.09 $ 0.24
========= ========= ========= =========
Weighted average
shares outstanding 16,201 16,156 16,190 16,667
========= ========= ========= =========
Earnings per share:
DILUTED:
Income before cumulative
effect of change in
accounting principle $ 0.36 $ 0.41 $ 0.16 $ 0.23
Cumulative effect of
change in accounting
principle -- -- (0.08) --
--------- --------- --------- ---------
Net income $ 0.36 $ 0.41 $ 0.08 $ 0.23
========= ========= ========= =========
Weighted average
shares outstanding 16,432 16,484 16,566 16,945
========= ========= ========= =========