During the first quarter of fiscal 2004, the Company changed its inventory valuation method from first-in, first-out (FIFO) to last-in, first-out (LIFO), which resulted in an after-tax reduction to earnings of $102,000.
Commenting on the results, Clyde B. Anderson, Chairman and Chief Executive Officer, said, "During the quarter, sales in our core book business were soft overall, but certain categories - such as diet and health, led by Atkins for Life, and social science, led by several new books on current events - had solid comparable sales increases. Non-book sales, particularly in the gift, collectables and cafe categories, performed solidly.
Anderson continued, "Overall, our sales were lower than anticipated due to weakness in the retail sector as a result of the war in Iraq. Since the end of the war, we have seen our sales trends improve. We hope to see continuing improvements in the book retail environment as the expected economic recovery takes hold. The release of the latest Harry Potter title during the second quarter is also expected to make a positive impact. With aggressive expense control measures already in place, if these stronger sales trends continue, the Company expects to report improved profitability for the remainder of the year."
Books-A-Million is one of the nation's leading book retailers and sells on the Internet at www.booksamillion.com. The Company presently operates 207 stores in 18 states and the District of Columbia. The Company operates three distinct store formats, including large superstores operating under the names Books-A-Million and Books & Co., traditional bookstores operating under the name Books-A-Million and Bookland, and Joe Muggs Newsstands. The Company's wholesale operations include American Wholesale Book Company and Book$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)
First Quarter Ended
----------------------
May 3, May 4,
2003 2002
--------- ---------
Net sales $ 99,433 $ 101,311
Operating income (loss) (812) 754
Loss before cumulative effect of change
in accounting principle $ (1,042) $ (111)
Net loss $ (1,042) $ (1,312)
========= =========
Basic and Diluted Loss Per Share:
Before cumulative effect of change in
accounting principle $ (0.06) $ (0.01)
========= =========
Net loss per share $ (0.06) $ (0.08)
========= =========
Weighted average shares outstanding
-- Basic and Diluted 16,220 16,162
========= =========
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 Thirteen Weeks Ended May 3, 2003 and May 4, 2002
(In thousands, except per share data)
(UNAUDITED)
First Quarter Ended
----------------------
May 3, May 4,
2003 2002
--------- ---------
Net sales $ 99,433 $ 101,311
Cost of sales (including warehouse,
distribution and store occupancy costs) 74,387 73,681
--------- ---------
GROSS PROFIT 25,046 27,630
Operating, selling and administrative
expenses 21,771 22,878
Depreciation and amortization 4,087 3,998
--------- ---------
OPERATING INCOME (LOSS) (812) 754
Interest expense 869 934
--------- ---------
LOSS BEFORE INCOME TAXES (1,681) (180)
Income tax benefit (639) (69)
--------- ---------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (1,042) (111)
Cumulative effect of change in
accounting principle, net of
deferred income tax benefit of $736 -- (1,201)
--------- ---------
NET LOSS $ (1,042) $ (1,312)
========= =========
Loss per share -- Basic and Diluted:
Loss before cumulative effect of change
in accounting principle $ (0.06) $ (0.01)
Cumulative effect of change in accounting
principle -- (0.07)
--------- ---------
Net loss $ (0.06) $ (0.08)
========= =========
Weighted average shares outstanding
-- Basic and Diluted 16,220 16,162
========= =========