Thomas Nelson Announces Second Quarter (FY 2006) and Six Month Results

Market Wire, November, 2005

Thomas Nelson, Inc. (NYSE: TNM) today announced its financial results for the second quarter of FY 2006, the period ended September 30, 2005:

Net revenue for the three months ended September 30, 2005 was $67.7 million compared to $61.9 million in the prior year. This 9% gain brought net revenue for the fiscal year's first six months to $113.3 million versus $110.9 million a year ago, for a 2% increase year-to-date.

Net income for the quarter was $6.9 million compared to $6.4 million in the prior year, up 8%. For the six months, net income was $7.6 million compared to $8.3 million in the prior year's comparable period, a decline of 8%.

Earnings per share in the second fiscal quarter were $0.46 basic and $0.45 diluted compared to $0.44 and $0.43, respectively, in the prior year. For the six months through September 30, 2005 earnings per share were $0.51 basic and $0.50 diluted compared to $0.57 and $0.55 respectively, in the prior year.

Commenting on the period's results, Michael S. Hyatt, Chief Executive Officer, noted: "We remain on track to deliver stronger financial results as the year progresses. Our product release schedule is heavily weighted toward the third and fourth quarters of this year, and, to a great extent, our results will be shaped by that. The 9% revenue gain in the second quarter shows, I believe, that we're establishing some good sales momentum, and I think we can build on that in the coming quarters."

"While I am confident that we will do our part in producing improved results this year, there are several factors beyond our control that may exert some pressure on us. Without question, the unusually punishing hurricane season -- which still has a few weeks to go -- had an impact on consumer behavior in a geographic market that's important to us. We lost several weeks of sales opportunity in the region, but we're seeing a strong rebound. Perhaps because some people turn to faith in times of adversity, there is also a need to replace Bibles and other important items that may have been lost or damaged in the storms."

"A second consideration," according to Mr. Hyatt, "is higher energy prices. This will likely result in people making fewer shopping trips, as well as depress the amount of discretionary income available. This appears not to have been a major problem for us to date. Our sales through general-market book stores and, separately, through religious book stores, are holding up. But it's something we're watching with interest."

"Our Women of Faith conference and merchandise sector gives us a direct insight into consumer sentiment," noted Mr. Hyatt. "This business requires participants to travel -- typically by car, to tap into their discretionary-spending budgets, and to consider purchasing books and other materials almost on impulse. So far this year, our results here show solid gains, plus, our newest conference series, called Revolve, the same as our Biblezine for young women, is off to a good start."

"The quarter's strong sales performance reflects several very successful titles from our Nelson Books imprint," stated Mr. Hyatt. "'The Total Money Makeover,' by Dave Ramsey, was released two years ago but got a big boost in the recent quarter, thanks to the author's appearance on 'Oprah' and '60 Minutes.' This was our best selling work in the period, and it was one of three Nelson titles that appeared simultaneously on the New York Times bestseller list."

Mr. Hyatt continued: "Titles such as this, as well as 'Here's Johnny!,' Ed McMahon's recollections of the late-night TV icon, have helped us increase our presence in secular bookstores. In fact, our Rutledge Hill imprint, which is aimed squarely at the general market, had a terrific quarter, thanks in large measure to 'Here's Johnny!' I am convinced we can continue to show good gains in the general market while keeping our primary position as the leading supplier to the Christian bookselling industry."

"Looking ahead," said Mr. Hyatt, "We expect Max Lucado's 'Cure for the Common Life' will perform well in our traditional markets, and 'The Great Physician's Rx,' by Jordan Rubin, which is the author's fourth book, and his first with us, will find broad appeal across all our markets. Our relatively new business imprint is about to release John Maxwell's '360 Degree Leader,' his first leadership-focused book since 'Leadership 101,' three years ago," noted Mr. Hyatt. "Those are among the strongest titles from our release schedule for the third quarter."

"We're especially excited about the recently announced fourth-quarter release of 'The Journey: Living by Faith in an Uncertain World,' by Billy Graham," said Mr. Hyatt. "Dr. Graham is, without question, the most renowned and influential evangelist over the past 100 years, and Thomas Nelson is proud to have the trade-book rights to many of his works, including this one, which may be his most important."

Thomas Nelson, Inc. will host a conference call related to this earnings release at 1:30 p.m. CST on Tuesday, November 8, 2005. Individuals may listen to the call by dialing (800) 474-8920. The conference I.D. number for the call is 4555578. 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 November 16, 2005.