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News NBC Acquisition Corp. Reports Fiscal Year Results February 21, 2006 NBC Acquisition Corp., the parent company of Nebraska Book Company Inc., today announced results for its fiscal year ended March 31, 2006. For the year, consolidated revenues were a record $420.1 million, up $18.0 million from $402.2 million in the fiscal year ended March 31, 2005. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) for the 2006 fiscal year were $61.2 million, up 0.3% from $61.0 million in the prior fiscal year. After adding back a $0.5 million one-time bonus related to the Company’s restricted stock plan, EBITDA was $61.7 million. Net income decreased $1.6 million primarily due to increased interest expense. Mark Oppegard, President and CEO, Nebraska Book Company said, “We are pleased with the operating results of Nebraska Book Company but we continue to challenge ourselves to increase our performance and grow our organization. The overall textbook marketplace is becoming more challenging. Our industry is undergoing change due to increased competition for student transactions and the increased use of technology, however, we believe we are well positioned to meet those challenges and deliver the products and services our customers demand. Our recently completed acquisition of College Bookstores of America, or CBA, makes us an even stronger, more competitive company in the contract management part of our industry and we remain excited about the future prospects for Nebraska Book Company.” The Company’s record revenues included $292.1 million from the College Bookstore division (up 10.8%), $132.6 million from the Textbook division (down 1.0%), and $26.7 million from the Complementary Services division (down 21.0%). Such revenues included inter-company revenues of $31.2 million. Revenues in the College Bookstore division increased due to acquisitions as same store sales for the year ended March 31, 2006 were flat. Revenues in the Textbook division decreased due to an increase in returns and a small decrease in units sold offset partially by price increases. Revenues in the Complementary Services division decreased due to lower revenues in the distance education business that was partially offset by higher revenues from the systems and consulting businesses. Consolidated gross profit was a record $169.2 million for the fiscal year ended March 31, 2006, an increase of $7.7 million or 4.8% over the prior fiscal year. Gross margin was 40.3% for the 2006 fiscal year, a slight increase from the prior fiscal year margin of 40.2% as a slight decline in the College Bookstore division was offset by small increases in the Textbook and Complementary Services divisions. Total operating expenses were $121.7 million in fiscal 2006, an increase of $8.0 million over the prior fiscal year $113.7 million. The increase in operating expenses was primarily due to continued growth of the company which prompted an increase of $3.4 million in personnel costs, $1.4 million in advertising expense, and $2.0 million in rent. Net interest expense was $34.1 million, an increase of $3.0 million compared to the prior fiscal year. The increase was due to an approximate 2% increase in the average interest rate on the Company’s Term Loans and a $0.6 million increase in original issue discount amortization on the Company’s Senior Discount Notes, offset partially by higher interest income and a $0.5 million gain on an interest rate swap agreement. EBITDA (excluding corporate costs) for each of the Company’s operating divisions in fiscal year 2006 was $36.1 million in the College Bookstore division, an increase of $1.4 million or 4.2% over the prior fiscal year, $31.9 million in the Textbook division, a decrease of $0.2 million compared to the prior fiscal year, and $1.2 million in the Complementary Services division, a decrease of $0.6 million compared to the prior fiscal year entirely due to lower results in the distance education business. At March 31, the Company was operating 139 locations around the country and the addition of the College Bookstores of America locations brings the total store count to approximately 240. The Company also announced that, in addition to the CBA stores, subsequent to year end it has acquired or agreed to contract manage bookstores at 10 more locations across the country, including large contract managed stores at Cleveland State University in Cleveland Ohio, Jefferson State Community College in Birmingham Alabama and Chattanooga State Technical Community College in Chattanooga Tennessee. These 10 locations have full year annual revenues of approximately $20 million.
EBITDA for the years ended March 31, 2006 and 2005 and the corresponding change in EBITDA were as follows:
As the Company is highly-leveraged and its equity is not publicly-traded, it believes that a non-GAAP financial measure, EBITDA, is useful in measuring its liquidity and provides additional information for determining its ability to meet debt service requirements. The Senior Subordinated Notes, Senior Discount Notes, and Senior Credit Facility also utilize EBITDA, as defined in those agreements, for certain financial covenants. EBITDA does not represent and should not be considered as an alternative to net cash flows from operating activities as determined by GAAP, and EBITDA does not necessarily indicate whether cash flows will be sufficient for cash requirements. Items excluded from EBITDA, such as interest, taxes, depreciation and amortization, are significant components in understanding and assessing the Company’s financial performance. EBITDA measures presented here may not be comparable to similarly titled measures presented by other companies. The following presentation reconciles EBITDA with net cash flows from operating activities and also sets forth net cash flows from investing and financing activities:
Please note that this press release, including the reconciliation of the differences between net cash flows and EBITDA can also be found on the “Financial Information” page of the Company’s corporate web site at http://www.nebook.com/our_company/financial.asp. NBC Acquisition Corp.’s financial results conference call will be Thursday, June 22nd at 9:00 a.m. CST(10:00 a.m. EDT). Participants will be Mark Oppegard, President and Chief Executive Officer, Barry Major, Chief Operating Officer, and Alan Siemek, Chief Financial Officer. The call can be accessed by calling 888-400-7916. A replay of the call will be available from 12:30 p.m. CST on June 22nd, 2006 until 11:59 CST on June 29th, 2006 by calling 800-475-6701. The access code is 833115. About Nebraska Book Company “Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995 |
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