Thomas Nelson Posts 38% Income Gain for Third Quarter of Fiscal Year 2005

Market Wire, February, 2005

Thomas Nelson, Inc. (NYSE: TNM) today announced its financial results for the third quarter and first nine months of fiscal 2005, the period ended December 31, 2004:

Net Revenues grew 13% in the quarter, reaching $63.4 million. This compares with $56.0 million in the comparable period of the prior fiscal year. Nine-month net revenues were $174.3 million vs. $161.7 million, a gain of 8%.

Nelson achieved a net income gain of 38% in the quarter, earning $5.5 million vs. last year's comparable $4.0 million. Nine-month net income of $13.8 million was an 18% increase from the $11.6 million of the year before.

Basic Income per Share grew to $0.37 in the recent quarter, compared to $0.27 a year ago, a 37% improvement. Diluted earnings, at $0.36 (vs. $0.26) per share showed a gain of 38%. For this year's first nine months, earnings per share were $0.94 basic and $0.91 diluted, an increase of 16% and 15% from the $0.81 basic and $0.79 diluted in the comparable prior year period.

Thomas Nelson's balance sheet continues to show strength with cash and cash equivalents of $21 million as of December 31, 2004 compared to $6.3 million in the prior period. In addition, total debt has been reduced to $2.3 million compared to $5.3 million in the same period last year. Shareholders' equity is $118.5 million compared to $98.5 million a year ago, a 20% gain.

"These recent results show that we are continuing to make progress in our campaign to grow the Company and enhance shareholder value," noted Sam Moore, Thomas Nelson's Chairman and Chief Executive Officer. "We posted increases relative to our comparable prior year showing. It's very gratifying to see that our strategy is driving our business forward and leading to growth in market share.

"I am pleased to report that we are achieving many of our operating objectives without raising the Company's financial risk profile. Our strong product line has been the most obvious source of our strength, and that will always be the key. But it is also important that we maintain strict financial discipline."

According to Mike Hyatt, Thomas Nelson's President, "This quarter is a good example of what Thomas Nelson can do. In Publishing, which accounts for around 85% of our revenue, our top product wasn't a book. Rather, it was a DVD, 'Flo the Lyin' Fly,' created by author Max Lucado, and developed to appeal to kids. And in Bibles, which is our largest product category, the best seller this quarter was also not a book, but, rather, a CD set."

"The point, of course," stated Mr. Hyatt, "is that we can create new products to address new market opportunities, and we can also take the oldest of our businesses and adapt it to the demands of the modern marketplace. We can do both without diluting our efforts -- or our success -- in the more traditional areas.

"The quarter saw the continued growth of the religious and inspirational category at the secular retailers. Our sales to general bookstores grew at twice the rate of our sales to stores within the Christian Bookseller community," noted Mr. Hyatt.

Mr. Hyatt continued: "As a group, religious bookstores remain, by far, our largest sales constituency, and we believe we are the top publishing supplier within that segment. We are committed to helping these stores provide their customers with the best quality products at competitive prices."

Commenting on the Company's outlook, Mr. Moore noted: "While our results continue to improve, the markets in which we operate remain challenging. In particular, consumers are cautious and price-conscious, causing retailers to be highly selective in their ordering patterns. That trend favors us, since we believe we have the most appealing products in our categories. Our entire management team is committed to keeping us in that position of industry leadership."

Thomas Nelson, Inc. will host a conference call related to this earnings release at 1:30 p.m. CDT on Wednesday, February 2, 2005. Individuals may listen to the call by dialing (800) 289-0518. The confirmation number for the call is 244121. The live broadcast of Thomas Nelson's quarterly conference call will be available online by going to www.thomasnelson.com/news and at www.streetevents.com. The online replay will be available shortly after the call and continue through February 10, 2005.

This news release includes certain forward-looking statements (all statements other than those made solely with respect to historical fact) and the actual results may differ materially from those contained in the forward-looking statements due to known and unknown risks and uncertainties. Any one or more of several risks and uncertainties could account for differences between the forward-looking statements that are made today and the actual results, including with respect to our sales, profits, liquidity and capital position. These factors include, but are not limited to: risks relating to our ability to satisfy regulatory requirements with respect to our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, which requires us to perform an evaluation of our internal control over financial reporting and have our auditor attest to such evaluation; softness in the general retail environment or in the markets for our products; the timing and acceptance of products being introduced to the market; the level of product returns experienced; the level of margins achievable in the marketplace; the collectibility of accounts receivable; the recoupment of royalty advances; the effects of acquisitions or dispositions, the financial condition of our customers and suppliers; the realization of inventory values at carrying amounts; our access to capital; the outcome of any future Internal Revenue Service audits; and the realization of income tax and intangible assets. These conditions cannot be predicted reliably and the Company may adjust its strategy in light of changed conditions or new information. Thomas Nelson disclaims any obligation to update forward-looking statements.