UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended January 29, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from___________to______________
Commission File No. 0-20664
BOOKS-A-MILLION, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 63-0798460
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
402 INDUSTRIAL LANE
BIRMINGHAM, ALABAMA 35211
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (205) 942-3737
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class)
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 [ ]
CONTINUED
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 [ ].
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the 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
30, 2004 (based on the closing sale price as reported on the NASDAQ National
Market on such date), was $65,568,068.
The number of shares outstanding of the Registrant's Common Stock as of
April 4, 2005 was 16,191,375.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the fiscal year ended
January 29, 2005 are incorporated by reference into Part II of this report.
Portions of the Proxy Statement for the Annual Meeting of Stockholders to
be held on June 1, 2005 are incorporated by reference into Part III of this
report.
2
PART I
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 areas; 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 ; 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, 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.
ITEM 1. BUSINESS
GENERAL
Books-A-Million, Inc. is a leading book retailer 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 36,000 square feet and operate under the names
"Books-A-Million" and "Books and Co." 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. We also operate newsstands under the name "Joe Muggs Newsstands".
Newsstands range in size from 1,000 to 5,000 square feet and are located in high
traffic areas. All store formats, excluding newsstands, 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 and Joemuggs.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" or "the Company" include our
wholly owned subsidiaries, American Wholesale Book Company, Inc. ("American
Wholesale") and American Internet Service, Inc. ("AIS").
Our periodic and current reports filed with the SEC are made available on
our website at www.booksamillioninc.com as soon as reasonably practicable. Our
corporate governance guidelines, 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 Richard
S. Wallington, our Chief Financial Officer.
BUSINESS SEGMENTS
We have two reportable segments: retail trade and electronic commerce
trade. In the retail trade segment we are engaged in the retail trade of
primarily book merchandise. The retail trade segment includes our distribution
center operations which predominantly supplies merchandise to our retail stores.
In the electronic commerce trade segment we transact business over the Internet
primarily. This segment is managed separately due to divergent technology and
marketing requirements. For additional information, see Note 8 "Business
Segments" in the Notes to Consolidated Financial Statements in the Annual Report
to Stockholders for the year ended January 29, 2005, incorporated herein by
reference.
3
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 168 superstores as of January 29, 2005.
Our superstores emphasize selection, value and customer service. Each of
our superstores offer an extensive selection of best sellers and other hardcover
and paperback books, magazines, local newspapers and gifts, and also dedicate
space to bargain books that are sold at a discount from publishers' originally
suggested retail prices. 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 place special orders. The majority of our superstores also
include a Joe Muggs cafe, serving Joe Muggs coffee and assorted pastries. 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 feature a wide selection of books,
magazines and gift items. We had 34 traditional stores as of January 29, 2005.
Our Joe Muggs newsstands operate in centers with high traffic, are
concentrated in business and entertainment districts and are tailored to the
demographics of the particular market area. Each newsstand carries an extensive
selection of magazines and newspapers, along with hardcover and paperback books.
The newsstands also offer Joe Muggs branded coffee drinks and assorted pastries,
among other items. We operated four newsstands as of January 29, 2005.
MERCHANDISING
We employ several value-oriented merchandising strategies. Books on our
best-seller list, which is developed exclusively by us based on the sales and
customer demand in our stores, are generally sold in the Company's superstores
below publishers' suggested retail prices. In addition, customers can join the
Millionaire's Club and save 10% on all purchases in any of our stores, including
already discounted best-sellers. Our point-of-sale computer system provides the
data necessary 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 direct mail
advertising, as well as point-of-sale materials posted and distributed in the
stores. In certain markets, television 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 takes into account numerous factors,
including the local demographics, desirability of available leasing
arrangements, proximity to our existing operations 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.
4
INTERNET OPERATIONS
Through our wholly owned subsidiary, AIS, we sell a broad range of
products over the Internet under the names Booksamillion.com and Joemuggs.com.
On Booksamillion.com we sell a wide selection of books, magazines and gift items
similar to those sold in our Books-A-Million superstores. We also operate an
online cafe under the name Joemuggs.com where we offer a wide selection of whole
bean coffee, confections and related gift items for purchase over the Internet.
Internet development efforts are assisted through a wholly owned
subsidiary of AIS, NetCentral, Inc., which is based in Nashville, Tennessee. In
addition to providing web development and maintenance for all of our internet
sites and networking initiatives, NetCentral also serves several outside
customers by offering site development, web hosting and technical services.
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 books 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 500 vendors. We purchase the majority of
our collectors' supplies from Anderson Press and substantially all of our
magazines from Anderson Media, each of which is a related party (see "Certain
Relationships & Related Transactions" on pages 14 and 15 of the Proxy). No one
vendor accounted for more than 10.0% of our overall merchandise purchases in the
fiscal year ended January 29, 2005. In general, in excess of 80% of our
inventory may be returned for credit, which substantially reduces our risk of
inventory obsolescence.
DISTRIBUTION CAPABILITIES
American Wholesale receives a substantial portion of its inventory
shipments, including substantially all of its 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 their dedicated transportation fleet. At the
time deliveries are made to each of our stores, returns of slow moving or
obsolete books are picked up and returned to the American Wholesale returns
processing center. American Wholesale then returns these books to publishers for
credit.
COMPETITION
The retail bookstore industry is highly competitive and includes
competitors that have substantially greater financial and other resources than
we have. We compete directly with national bookstore chains, independent
bookstores, booksellers on the Internet and certain mass merchandisers. In
recent years, competing bookstore chains have been expanding their businesses,
and certain leading regional and national chains have developed and opened
superstores and Internet web sites. We also compete indirectly with retail
specialty stores that offer books in a particular area of specialty. Management
believes 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 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.
5
TRADEMARKS
"Books-A-Million," "BAM!," "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," "Book$mart",
"BAMM", "BAMM.com", "BOOKSAMILLION.com", "Chillatte", "Joe Muggs Newsstand,"
"Page Pets," "JOEMUGGS.com", "Laser Line," FAITHPOINT.com", "Joe Muggs,"
"Anderson's Bookland," "Snow Joe," "The Testaments Shoppe" and "NetCentral" are
the primary registered trademarks of the Company. Management does not believe
that these trademarks are materially important to the continuation of our
operations.
EMPLOYEES
As of fiscal year end, we employed approximately 2,700 full-time
associates and 2,200 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. Management believes that relations
with our associates are excellent.
ITEM 2. PROPERTIES
Our bookstores are located either in enclosed malls or strip shopping
centers. All of our stores are leased. Generally, these leases have terms
ranging from five 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).
Our principal executive offices are located in a 20,550 square foot leased
building located in Birmingham, Alabama. We also lease a 37,000 square foot
building located in Irondale, Alabama for additional corporate office space.
Both leases involve related parties (see "Certain Relationships & Related
Transactions" on pages 14 and 15 of the Proxy). The Birmingham, Alabama office
space lease extends to January 31, 2006, and the Irondale, Alabama office space
is leased month-to-month. In addition, we lease approximately 4,025 square feet
of office space in Nashville, Tennessee for the offices of NetCentral. This
lease extends to January 31, 2006.
American Wholesale owns its wholesale distribution center located in an
approximately 290,000 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
revenue bond, which are secured by a mortgage interest in this facility. We also
lease, from a related party, a second 210,000 square foot warehouse facility
located in Tuscumbia, Alabama. In addition we lease all of the tractors that
pull the company-owned trailers, which comprise our transportation fleet.
ITEM 3. LEGAL PROCEEDINGS
We are a party to various legal proceedings incidental to 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 position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information under the heading "Market and Dividend Information" on
page 30 of the Annual Report to Stockholders for the year ended January 29, 2005
is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information under the heading "Selected Consolidated Financial Data"
for the years ended February 3, 2001, through January 29, 2005 on page 4 of the
Annual Report to Stockholders for the year ended January 29, 2005, is
incorporated herein by reference.
6
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information under the heading "Management's Discussion & Analysis of
Financial Condition & Results of Operations" on pages 5 through 12 of the Annual
Report to Stockholders for the year ended January 29, 2005, is incorporated
herein by reference.
ITEM 7.A. MARKET RISK
We are subject to interest rate fluctuations involving our credit facilities.
The average amount of debt outstanding under our credit facilities was $21.6
million during fiscal 2005. To manage this exposure, the Company utilizes
interest rate swaps to fix the interest rate on variable debt. We entered into
two separate $10 million swaps on July 24, 2002. Both expire August 2005 and,
prior to the payoff of the debt, effectively fix the interest rate on $20
million of variable debt at 5.13%. Also, on May 14, 1996, we entered into a $7.5
million interest rate swap with a ten-year term. The swap effectively fixes the
interest rate on $7.5 million of variable rate debt at 7.98% and expires on June
7, 2006. The counter parties to each of these interest rate swaps are parties to
our revolving credit facilities. We believe the credit and liquidity risk of the
counter parties failing to meet their obligations is remote as we settle our
interest position with the banks on a quarterly basis. All of our financial
instruments that are sensitive to market risk are entered into for purposes
other than trading.
To illustrate the sensitivity of the results of operations to changes in
interest rates on its debt we estimate that a 66% increase in LIBOR rates would
have increased interest expense by approximately $7,000 for the year ending
January 29, 2005. Likewise, a 66% decrease in LIBOR rates would have decreased
interest expense by $7,000 for the average outstanding balance for the year
ending January 29, 2005. This hypothetical change in LIBOR rates was calculated
based on the fluctuation in LIBOR in 2003, which was the maximum LIBOR
fluctuation in the last ten years. The estimates also assume a level of debt
consistent with the average outstanding balance for the year-ended January 29,
2005 level and do not consider the effect of the potential termination of the
interest rate swaps associated with the debt will have on interest expense.
The information in note 3 "Debt and Lines of Credit" in the Notes to
Consolidated Financial Statements on page 22 of the Annual Report to
Stockholders for the year ended January 29, 2005 is incorporated herein by
reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its subsidiaries
included in the Annual Report to Stockholders for the year ended January 29,
2005 are incorporated herein by reference:
Consolidated Balance Sheets as of January 29, 2005 and January 31, 2004.
Consolidated Statements of Operations for the Fiscal Years Ended January
29, 2005, January 31, 2004, and February 1, 2003.
Consolidated Statements of Changes in Stockholders' Equity for the Fiscal
Years Ended January 29, 2005, January 31, 2004, and February 1, 2003.
Consolidated Statements of Cash Flows for the Fiscal Years Ended January
29, 2005 January 31, 2004, and February 1, 2003.
Notes to Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm
The information under the heading "Summary of Quarterly Results
(Unaudited)" on page 28 of the Annual Report to Stockholders for the
Fiscal Years Ended January 29, 2005 and January 31, 2004 is incorporated
herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
7
ITEM 9A. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company's Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to our management, including our Chief Executive Officer and
Chief Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance of
achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
As required by SEC Rule 13a-15(b), the Company carried out an evaluation,
under the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and the Company's Chief
Financial Officer, of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of the end of the fiscal quarter
covered by this report. In performing this evaluation, in light of the
pronouncement on February 7, 2005 by the Office of the Chief Accountant of the
SEC in a letter to the AICPA, management focused on our lease accounting
practices. Specifically, as further discussed in Note 11 to the consolidated
financial statements for the year ending January 31, 2004, we determined that:
(i) our practice of depreciating leasehold improvements over a period of ten
years was incorrect, which we corrected by changing the depreciable life for
leasehold improvements to the lesser of the economic useful life of the asset or
the term of the lease; (ii) our practice of using the store opening date as the
starting date for the rent expense calculation was incorrect, which we corrected
by changing the calculation of leasehold expense so that straight-line rent
expense begins on the date we take possession and have the right to control use
of the leased premises; and (iii) our practice of classifying landlord
allowances as a reduction of property and equipment on our balance sheet and as
a reduction in capital expenditures in our statements of cash flows was
incorrect, which we corrected by changing our method of classification so that
landlord allowances are classified as a deferred rent credit on our balance
sheet and as an operating activity in our statement of cash flows. Funds
received from the landlord intended to reimburse the Company for the cost of
leasehold improvements will be recorded as a deferred rent credit resulting from
a lease incentive and amortized over the lease term as a reduction to rent
expense.
Further, after consulting with the Audit Committee and our independent
certified public accountants we determined to restate our financial statements
for the period ended January 31, 2004 and for the first three quarters of fiscal
2005 and to file a Form 10-K/A amending our Annual Report on Form 10-K for our
fiscal year ended January 31, 2004 with restated consolidated financial
statements and Forms 10-Q/A amending our interim condensed consolidated
financial statements for the first three quarters of fiscal 2005. The
restatement is further discussed in "Explanatory Note" in the forepart of the
2004 Form 10-K/A and in Note 11, "Restatement of Financial Statements," to the
accompanying consolidated financial statements for the year ending January 31,
2004. We do not consider the impact of correcting the previously issued
financial statements to be material with respect to any individual reporting
period.
Based on the foregoing, the Company's Chief Executive Officer and Chief
Financial Officer concluded that, as of the end of the period covered by this
Annual Report, the Company's disclosure controls and procedures were effective
at the reasonable assurance level. In concluding that our disclosure controls
and procedures were effective as of January 29, 2005, our management considered,
among other things, the circumstances that resulted in the restatement of our
previously issued financial statements. We also considered the materiality of
the restatement adjustments on our consolidated balance sheet and statement of
operations (as more fully set forth in Note 11, "Restatement of Financial
Statements," to the consolidated financial statements for the year ending
January 31, 2004, in the 2004 Form 10-K/A) and that these non-cash adjustments
have no effect on historical or future cash flows or the timing of payments
under our operating leases.
There was no change in the Company's internal controls over financial
reporting during the Company's fiscal quarter covered by this report, as noted
above, that has materially affected, or is reasonably likely to materially
affect, the Company's internal controls over financial reporting. However, as a
result of the review of our lease accounting policies described above, during
the first quarter of fiscal 2006 we made changes in internal controls over
financial reporting to implement additional review processes over our leasing
arrangements to ensure the collection and communication of information necessary
for the proper accounting for each lease in accordance with generally accepted
accounting principles. The Company implemented the following accounting changes:
(i) we changed the depreciable life for leasehold improvements to the lesser of
the economic useful life of the asset or the term of the lease, (ii) we changed
the calculation to start straight-line rent expense on the date when the Company
takes possession and has the right to control use of the leased premises, and
(iii) we changed our method of classification of landlord allowances. As
explained above, the Company will now classify landlord allowances as a deferred
rent credit on the balance sheet and as an operating activity in the statement
of cash flows. Funds received from the landlord intended to reimburse the
Company for the cost of leasehold improvements will be recorded as a deferred
rent credit resulting from a lease incentive and amortized over the lease term
as a reduction to rent expense. Management believes that these control changes
have fully remediated the issues described above.
8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
The sections under the heading "Proposal I-Election of Directors" entitled
"Nominee for Election - Term Expiring 2008", "Incumbent Directors - Term
Expiring 2006", and "Incumbent Directors - Term Expiring 2007" on pages 3 and 4
of the Proxy Statement for the Annual Meeting of Stockholders to be held June 1,
2005, are incorporated herein by reference for information on the directors of
the Registrant. The information under the heading "Information Concerning the
Board of Directors" on pages 7 through 10 of the Proxy Statement for the Annual
Meeting of Stockholders to be held June 1, 2005 is incorporated herein by
reference.
EXECUTIVE OFFICERS
All of our executive officers are elected annually by and serve at the
discretion of the Board of Directors. Our current executive officers are listed
below:
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
Clyde B. Anderson 44 Executive Chairman of the Board
Sandra B. Cochran 46 President, Chief Executive Officer and Secretary
Terrance G. Finley 51 Executive Vice President - Merchandising of Books-A-
Million, Inc. and President of American Internet
Service, Inc.
Richard S. Wallington 46 Chief Financial Officer
Clyde B. Anderson has served as Executive Chairman of the Board since
February 2004 and has served as a director of the Company since August 1987. Mr.
Anderson served as the Chairman of the Board from January 2000 until February
2004 and also served as the Chief Executive Officer of the Company from July
1992 until February 2004. Mr. Anderson also served as the President of the
Company from November 1987 to August 1999. From November 1987 to March 1994, Mr.
Anderson also served as the Company's Chief Operating Officer. Mr. Anderson
serves on the Board of Directors of Hibbett Sporting Goods, Inc., a sporting
goods retailer. Mr. Anderson is the son of Charles C. Anderson and the brother
of Terry C. Anderson, both members of the Company's Board of Directors.
Sandra B. Cochran was appointed to the position of Chief Executive Officer
in February 2004, in addition to her duties as President and Secretary. Ms.
Cochran has served as President of the Company since August 1999 and Secretary
since June 1998. Ms. Cochran served as the Company's Executive Vice President
from February 1996 to August 1999 and as its Chief Financial Officer from
September 1993 to August 1999. Ms. Cochran previously served as Vice President
and Assistant Secretary of the Company from August 1992 to September 1993. Prior
to joining the Company, Ms. Cochran served as a Vice President (as well as in
other capacities) of SunTrust Securities, Inc., a subsidiary of SunTrust Banks,
Inc. for more than five years. Sandra B. Cochran serves as an officer and a
Board member of certain affiliated companies.
Terrance G. Finley has served as Executive Vice President - Merchandising
of the Company since October 2001 and as the President of American Internet
Service, Inc. since December 1998. Mr. Finley served in various other capacities
in the merchandising department from April 1994 to December 1998. Mr. Finley
served as the General Manager of Book$mart from February 1992 to April 1994.
Prior to joining the Company, Mr. Finley served as the Vice President - Sales
for Smithmark Publishers.
Richard S. Wallington has served as the Chief Financial Officer of the
Company since August 1999. Mr. Wallington served as Vice President and
Controller of the Company from September 1993 to August 1999. Prior to joining
the Company, Mr. Wallington served as the Director of Financial Reporting for
Woodward & Lothrop, a retail department store company.
The section under the heading "Information Concerning Board of Directors"
entitled "Code of Conduct" on page 10 of the Proxy Statement for the Annual
Meeting of Stockholders to be held June 1, 2005 is incorporated herein by
reference.
9
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires our directors, executive officers and persons who own beneficially more
than 10% of the Company's common stock to file reports of ownership and changes
in ownership of such stock with the Securities and Exchange Commission (the
"SEC") and the NASDAQ Stock Market, Inc. Directors, executive officers and
greater than 10% stockholders are required by SEC regulations to furnish us with
copies of all such forms they file. To our knowledge, based solely on a review
of the copies of such reports furnished to us and written representations that
no other reports were required, our directors, executive officers and greater
than 10% stockholders complied with all applicable Section 16(a) filing
requirements during fiscal 2005, with the exception of one filing by each
independent director related to the annual issuance of stock options to them
pursuant to the Stock Option Plan.
ITEM 11. EXECUTIVE COMPENSATION
The sections under the heading "Executive Compensation," other than those
entitled "Report on Executive Compensation", "Compensation Committee Interlocks
and Insider Participation", "Certain Relationships and Related Transactions" and
"Performance Graph", on pages 12 through 18 of the Proxy Statement for the
Annual Meeting of Stockholders to be held June 1, 2005 are incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section under the heading "Information Concerning the Board of
Directors" entitled "Beneficial Ownership of Common Stock" on page 11 of the
Proxy Statement for the Annual Meeting of Stockholders to be held June 1, 2005
is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The sections under the heading "Executive Compensation" entitled
"Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" on pages 14 and 15 of the Proxy
Statement for the Annual Meeting of Stockholders to be held June 1, 2005 are
incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The section under the heading "Information Concerning Board of Directors"
entitled "Auditor Fees and Services" on page 9 of the Proxy Statement for the
Annual Meeting of Stockholders to be held June 1, 2005 is incorporated herein by
reference.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following Consolidated Financial Statements of Books-A-Million, Inc.
and its subsidiaries, included in the Registrant's Annual Report to
Stockholders for the fiscal year ended January 29, 2005 are incorporated
by reference in Part II, Item 8:
Consolidated Balance Sheets as of January 29, 2005, and January 31, 2004.
Consolidated Statements of Operations for the Fiscal Years Ended January
29, 2005, January 31, 2004 and February 1, 2003.
Consolidated Statements of Changes in Stockholders' Equity for the Fiscal
Years Ended January 29, 2005, January 31, 2004 and February 1, 2003.
Consolidated Statements of Cash Flows for the Fiscal Years Ended January
29, 2005, January 31, 2004 and February 1, 2003.
10
Notes to Consolidated Financial Statements.
Report of Independent Registered Public Accounting Firm.
2. Financial Statement Schedule:
The following consolidated financial statement schedule of
Books-A-Million, Inc. is attached hereto:
Report of Independent Registered Public Accounting Firm on Financial
Statement Schedule.
Schedule 2 Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are not applicable and,
therefore, have been omitted.
3. Exhibits
Exhibit Number
--------------
3.1 -- Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 to
Registration Statement on Form S-1, File No. 33-52256,
originally filed September 21, 1992 (the "S-1
Registration Statement")).
3.2 -- Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the S-1 Registration Statement).
4.1 -- See Exhibits 3.1 and 3.2 hereto incorporated herein
by reference to the Exhibits of the same number to the
S-1 Registration Statement.
10.1 -- Lease Agreement between First National Bank of
Florence, Alabama, as Trustee, and Bookland Stores, Inc.
(which is a predecessor of the Registrant), an Alabama
corporation, dated January 30, 1991 (incorporated by
reference to Exhibit 10.1 to the S-1 Registration
Statement).
10.2 -- Amended and Restated Stock Option Plan (incorporated
by reference to Exhibit 10.2 to Annual Report on Form
10-K for the fiscal year ended January 30, 1999, File
No. 0-20664, filed on April 30, 1999).
10.3 -- Employee Stock Purchase Plan (incorporated by
reference to Exhibit 10.7 to the S-1 Registration
Statement).
10.4 -- Amendment to Employee Stock Purchase Plan
(incorporated by reference to Exhibit 10.6 to Annual
Report on Form 10-K for the fiscal year ended January
29, 1994, File No. 0-20664, filed on April 29, 1994).
10.5 -- 1999 Amended and Restated Employee Stock Purchase
Plan (incorporated by reference to Exhibit 10.5 to
Annual Report on Form 10-K for the fiscal year ended
January 29, 2000, File No. 0-20664, filed on April 28,
2000).
10.6 -- 401(k) Plan adopted September 15, 2003, with Suntrust
Bank as Trustee (incorporated by reference to Exhibit
10.6 to Annual Report on Form 10-K for the fiscal year
ended January 31, 2004 File No. 0-20664, filed on April
27, 2004).
10.7 -- Shareholders Agreement dated as of September 1, 1992
(incorporated by reference to Exhibit 10.9 to Annual
Report on Form 10-K for the fiscal year ended January
31, 1993, File No. 0-20664, filed May 3, 1993).
10.8 -- Executive Incentive Plan (incorporated by reference
to Exhibit 10.8 to Annual Report on Form 10-K for the
fiscal year ended January 28, 1995, File No. 0-20664,
filed April 28, 1995).
11
10.19 -- Stock Option Plans for Booksamillion.com, American
Internet Service, Inc., Netcentral, Inc. and Faithpoint,
Inc. (incorporated by reference to Exhibit 10.19 to
Annual Report on Form 10-K for the fiscal year ended
February 3, 2001, File No. 0-20664, filed on May 4,
2001).
10.20 -- Credit agreement dated as of July 1, 2002, between
the Company and Bank of America, N.A.,
SunTrust Bank, N.A., Wells Fargo Bank, N.A., SouthTrust
Bank N.A. and Amsouth Bank, N.A. (incorporated by
reference to Exhibit 10.20 to Form 10-Q for the quarter
ended August 3, 2002).
10.21 -- First amendment of credit agreement dated as of June 14,
2004, between the Company and Bank of America, N.A.,
SunTrust Bank, N.A., Wells Fargo Bank, N.A., SouthTrust
Bank, N.A., and Amsouth Bank, N.A.
13 -- Portions of the Annual Report to Stockholders for the
year ended January 29, 2005 that are expressly
incorporated by reference into Part II of this Report.
21 -- Subsidiaries of the Registrant (incorporated by
reference to Exhibit 21 to Annual Report on Form 10-K
for the fiscal year ended February 3, 2001, File No.
0-20664, filed May 4, 2001).
23 -- Consent of Independent Registered Public Accounting
Firm.
31.1 -- Certification of Clyde B. Anderson, Executive
Chairman of the Board of Books-A-Million, Inc., pursuant
to Rule 13a-14(a) under the Securities Exchange Act of
1934, filed under Exhibit 31 of Item 601 of Regulation
S-K.
31.2 -- Certification of Richard S. Wallington, Chief
Financial Officer of Books-A-Million, Inc., pursuant to
Rule 13a-14(a) under the Securities Exchange Act of
1934, filed under Exhibit 31 of Item 601 of Regulation
S-K.
31.3 -- Certification of Sandra B. Cochran, President and
Chief Executive Officer of Books-A-Million, Inc.,
pursuant to Rule 13a-14(a) under the Securities Exchange
Act of 1934, filed under Exhibit 31 of Item 601 of
Regulation S-K.
32.1 -- Certification of Clyde B. Anderson, Executive
Chairman of the Board of Books-A-Million, Inc., pursuant
to 18 U.S.C. Section 1350, filed under Exhibit 32 of
Item 601 of Regulation S-K.
32.2 -- Certification of Richard S. Wallington, Chief
Financial Officer of Books-A-Million, Inc., pursuant to
18 U.S.C. Section 1350, filed under Exhibit 32 of Item
601 of Regulation S-K.
32.3 -- Certification of Sandra B. Cochran, President and
Chief Executive Officer of Books-A-Million, Inc.,
pursuant to 18 U.S.C. Section 1350, filed under Exhibit
32 of Item 601 of Regulation S-K.
Reports on Form 8-K
None.
(c) See Item 15(a)(3), the Exhibit Index and the Exhibits attached hereto.
(d) See Item 15(a)(2).
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BOOKS-A-MILLION, INC.
by: /s/ Clyde B. Anderson
-------------------------------
Clyde B. Anderson
Executive Chairman of the Board
Date: April 28, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
PRINCIPAL EXECUTIVE OFFICER:
/s/ Clyde B. Anderson
----------------------------------------------
Clyde B. Anderson
Executive Chairman of the Board
Date: April 28, 2005
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Richard S. Wallington
----------------------------------------------
Richard S. Wallington
Chief Financial Officer
Date: April 28, 2005
DIRECTORS:
/s/ Clyde B. Anderson
----------------------------------------------
Clyde B. Anderson
Date: April 28, 2005
/s/ Ronald G. Bruno
----------------------------------------------
Ronald G. Bruno
Date: April 28, 2005
13
DIRECTORS:
/s/ J. Barry Mason
----------------------------------------------
J. Barry Mason
Date: April 28, 2005
/s/ Terry C. Anderson
----------------------------------------------
Terry C. Anderson
Date: April 28, 2005
/s/ William H. Rogers, Jr.
----------------------------------------------
William H. Rogers, Jr.
Date: April 28, 2005
14
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Books-A-Million, Inc.:
We have audited the consolidated financial statements of Books-A-Million, Inc.
and its subsidiaries (the "Company") as of January 29, 2005 and January 31, 2004
and for each of the three fiscal years in the period ended January 29, 2005, and
have issued our report thereon dated April 25, 2005 (which report expresses an
unqualified opinion and includes an explanatory paragraph relating to the
adoption of new accounting principles as described in Note 1 to the consolidated
financial statements); such financial statements and report are included in the
Company's 2005 Annual Report to Stockholders and are incorporated herein by
reference. Our audits also included the financial statement schedule of
Books-A-Million, Inc. listed in Item 15. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Birmingham, Alabama
April 25, 2005
S-1
SCHEDULE 2.
BOOKS-A-MILLION, INC.
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED FEBRUARY 1, 2003, JANUARY 31, 2004, AND JANUARY 29, 2005
CHARGED/
BALANCE AT (CREDITED) (DEDUCTIONS)/
BEGINNING TO COSTS RECOVERIES BALANCE AT
OF YEAR AND EXPENSES NET END OF YEAR
------------ ------------ ------------- -----------
FOR THE YEAR ENDED FEBRUARY 1, 2003:
Allowance for doubtful accounts $ 784,892 $ 276,459 $ (349,396) $ 711,955
FOR THE YEAR ENDED JANUARY 31, 2004:
Allowance for doubtful accounts $ 711,955 $ 534,300 $ (701,010) $ 545,245
FOR THE YEAR ENDED JANUARY 29, 2005:
Allowance for doubtful accounts $ 545,245 $ 241,152 $ (205,845) $ 580,552
S-2