BooksAMillion Inc. (BAMM, Financial) filed Quarterly Report for the period ended 2008-11-01.
Books-A-Million Inc. is a leading book retailer and is one of the dominant book retailers in the southeastern United States. All stores offer an extensive selection of best sellers and other hardcover and paperback books magazines newspapers cards and gifts. In addition to the retail store formats the company offers its products over the Internet at Booksamillion.com and Joemuggs.com. The company is also a wholesaler of books to among others bookstores wholesale clubs supermarkets department stores and mass merchandisers. BooksAMillion Inc. has a market cap of $31.22 million; its shares were traded at around $1.87 with a P/E ratio of 2.78 and P/S ratio of 0.06. The dividend yield of BooksAMillion Inc. stocks is 10%. BooksAMillion Inc. had an annual average earning growth of 7.1% over the past 10 years.
Operating, selling and administrative expenses were $28.3 million in the thirteen weeks ended November 1, 2008, compared to $29.1 million in the same period last year. Operating, selling and administrative expenses as a percentage of net sales for the thirteen weeks ended November 1, 2008 increased to 25.5% from 24.7% in the same period last year. The increase in operating, selling and administrative expenses stated as a percentage of sales for the thirteen-week period ended November 1, 2008 was due to weak comparable store sales for the period that caused the percentage to increase in spite of a $0.8 million decrease in the amount of the expense. This deleveraging effect, combined with increases in costs associated with store openings, advertising and software licenses, more than offset cost improvements in store and corporate expenses such as payroll and franchise taxes. For the thirty-nine weeks ended November 1, 2008, operating, selling and administrative expenses were $86.7 million, compared to $85.4 million in the prior year period. Operating, selling and administrative expenses as a percentage of net sales for the thirty-nine weeks ended November 1, 2008 increased to 24.8% from 23.3% from the same period last year. The increase in operating, selling and administrative expenses as a percentage of net sales for the thirty-nine week period ended November 1, 2008 was also due to weak comparable store sales for the period. This deleveraging effect, combined with increases in costs associated with store openings, software licenses, business insurance, relocation, training and the one-time charge for severance related to corporate staff reductions of $406,000 ($241,000 net of taxes) recorded in the first quarter ended May 3, 2008, more than offset cost improvements in store and corporate payroll, franchise taxes and advertising.
Our primary sources of liquidity are cash flows from operations, including credit terms from vendors, and borrowings under our credit facility. We have an unsecured revolving credit facility with a group of banks that allows borrowings of up to $100 million, for which no principal repayments are due until the facility expires in July 2011. The credit facility has certain financial and non-financial covenants, the most restrictive of which is the maintenance of a minimum fixed charge coverage ratio. We were in compliance with all of the covenants, including the minimum fixed charge coverage ratio, as of November 1, 2008. As of November 1, 2008 and February 2, 2008 there were outstanding borrowings under this credit facility of $45.2 million and $28.0 million, respectively, and the face amount of letters of credit issued under the credit facility as of each such date was $2.4 million. The maximum and average outstanding balances during the thirteen weeks ended November 1, 2008 were $51.7 million and $45.5 million, respectively, compared to $34.5 million and $14.8 million, respectively, for the same period in the prior year, due to lower sales. The maximum and average outstanding balances during the thirty-nine weeks ended November 1, 2008 were $53.9 million and $43.0 million, respectively, compared to $34.5 million and $4.9 million, respectively for the same period in the prior year. The increase in the maximum and average outstanding balances from the prior year period was due to borrowing associated with the special dividend, lower sales and the share repurchase program.
Inventory balances were $249.2 million as of November 1, 2008, compared to $206.8 million as of February 2, 2008. The inventory increase was due to seasonal fluctuations in inventory and the increase in the number of stores. There were 217 stores open as of November 1, 2008 and 208 stores open as of February 2, 2008 and. Inventory levels are generally the lowest at the end of the fiscal year due to holiday sales and large post holiday returns to vendors. Trade accounts payable balances were $122.3 million as of November 1, 2008, compared to $89.0 million as of February 2, 2008. The increase in accounts payable was due to the increase in inventory and increase in accounts payable leverage. Accrued expenses were $37.6 million as of November 1, 2008, compared to $41.5 million as of February 2, 2008. Accrued expenses decreased due to reductions in bonus accruals due to payment of fiscal year 2008 management bonuses in the first quarter of fiscal year 2009 and reduction of the bonus accrual for fiscal year 2009 as well as the redemption of gift cards in fiscal year 2009. The bonus accrual for fiscal year 2009 was reduced due to the weak sales environment.
Financing activities provided cash of $11.4 million and used cash of $15.9 million in the thirty-nine week periods ended November 1, 2008 and November 3, 2007, respectively. Financing activities provided cash in the thirty-nine week period ended November 1, 2008 from $17.2 million of net borrowings under our credit facility, offset by dividend payments ($4.2 million) and the purchase of treasury stock ($1.7 million). Financing activities used cash in the thirty-nine week period ended November 3, 2007 for dividend payments ($55.4 million) and to purchase treasury stock ($14.4 million), partially offset by net borrowings on the revolving credit facility ($51.0 million).
We are subject to interest rate fluctuations involving our credit facility and debt related to the Bond. During the thirteen and thirty-nine week period ending November 1, 2008 the Company experienced the maximum fluctuation in LIBOR in the last ten years. LIBOR has fluctuated 329% from the highest to the lowest point during the period. As such, our interest expense reported reflects this change. To illustrate the sensitivity of the results of operations to changes in interest rates on our debt, we estimate that a 329% increase or decrease in LIBOR rates would have changed interest expense by $4.5 million for the thirteen weeks ended November 1, 2008 due to average debt of $52,489,000. For the thirty-nine week period ended November 1, 2008, our average debt was $49,900,000. Similar changes in interest rates during this thirty-nine week period would have changed interest expense by $4.2 million. Prior to this year, 2002 experienced the maximum LIBOR fluctuation at 66%.
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10-year financial history of BAMM.
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Books-A-Million Inc. is a leading book retailer and is one of the dominant book retailers in the southeastern United States. All stores offer an extensive selection of best sellers and other hardcover and paperback books magazines newspapers cards and gifts. In addition to the retail store formats the company offers its products over the Internet at Booksamillion.com and Joemuggs.com. The company is also a wholesaler of books to among others bookstores wholesale clubs supermarkets department stores and mass merchandisers. BooksAMillion Inc. has a market cap of $31.22 million; its shares were traded at around $1.87 with a P/E ratio of 2.78 and P/S ratio of 0.06. The dividend yield of BooksAMillion Inc. stocks is 10%. BooksAMillion Inc. had an annual average earning growth of 7.1% over the past 10 years.
Highlight of Business Operations:
Gross profit decreased $3.0 million, or 9.4%, to $29.1 million in the thirteen weeks ended November 1, 2008 when compared with $32.1 million in the same thirteen week period for the prior year. For the thirty-nine weeks ended November 1, 2008, gross profit decreased $5.5 million, or 5.3%, to $98.1 million from $103.5 million in the prior year period. Gross profit as a percentage of net sales for the thirteen weeks ended November 1, 2008 and November 3, 2007 was 26.2% and 27.3%, respectively. Gross profit as a percentage of net sales for the thirty-nine weeks ended November 1, 2008 and November 3, 2007 was 28.1% and 28.2%, respectively. The decrease in gross profit as a percentage of net sales for the thirteen week period ended November 1, 2008 was due to higher occupancy costs partially offset by higher margins and lower markdowns than the same period last year. Occupancy as a percentage of sales has increased in the thirteen weeks ended November 1, 2008 when compared to the same thirteen week period from the prior year due to lower comparable store sales, an increase in the number of total stores and the continued transition from smaller Bookland stores to larger Books-A-Million superstores. Margins are higher due to the mix of sales trending toward higher margin items such as bargain books. The decrease in gross profit as a percentage of net sales for the thirty-nine week period ended November 1, 2008 was also the result of higher occupancy costs largely offset by higher initial margin, lower markdowns and lower promotional discounts than the same period last year. The increase in occupancy costs as a percentage of sales for the thirty-nine weeks ended November 1, 2008 is also attributable to the increase in the number of total stores and the continued transition from smaller Bookland stores to larger Books-A-Million superstores. The increase in initial margin for the thirty-nine weeks ended November 1, 2008 is also the result of sales trending toward higher margin in items such as bargain books.Operating, selling and administrative expenses were $28.3 million in the thirteen weeks ended November 1, 2008, compared to $29.1 million in the same period last year. Operating, selling and administrative expenses as a percentage of net sales for the thirteen weeks ended November 1, 2008 increased to 25.5% from 24.7% in the same period last year. The increase in operating, selling and administrative expenses stated as a percentage of sales for the thirteen-week period ended November 1, 2008 was due to weak comparable store sales for the period that caused the percentage to increase in spite of a $0.8 million decrease in the amount of the expense. This deleveraging effect, combined with increases in costs associated with store openings, advertising and software licenses, more than offset cost improvements in store and corporate expenses such as payroll and franchise taxes. For the thirty-nine weeks ended November 1, 2008, operating, selling and administrative expenses were $86.7 million, compared to $85.4 million in the prior year period. Operating, selling and administrative expenses as a percentage of net sales for the thirty-nine weeks ended November 1, 2008 increased to 24.8% from 23.3% from the same period last year. The increase in operating, selling and administrative expenses as a percentage of net sales for the thirty-nine week period ended November 1, 2008 was also due to weak comparable store sales for the period. This deleveraging effect, combined with increases in costs associated with store openings, software licenses, business insurance, relocation, training and the one-time charge for severance related to corporate staff reductions of $406,000 ($241,000 net of taxes) recorded in the first quarter ended May 3, 2008, more than offset cost improvements in store and corporate payroll, franchise taxes and advertising.
Our primary sources of liquidity are cash flows from operations, including credit terms from vendors, and borrowings under our credit facility. We have an unsecured revolving credit facility with a group of banks that allows borrowings of up to $100 million, for which no principal repayments are due until the facility expires in July 2011. The credit facility has certain financial and non-financial covenants, the most restrictive of which is the maintenance of a minimum fixed charge coverage ratio. We were in compliance with all of the covenants, including the minimum fixed charge coverage ratio, as of November 1, 2008. As of November 1, 2008 and February 2, 2008 there were outstanding borrowings under this credit facility of $45.2 million and $28.0 million, respectively, and the face amount of letters of credit issued under the credit facility as of each such date was $2.4 million. The maximum and average outstanding balances during the thirteen weeks ended November 1, 2008 were $51.7 million and $45.5 million, respectively, compared to $34.5 million and $14.8 million, respectively, for the same period in the prior year, due to lower sales. The maximum and average outstanding balances during the thirty-nine weeks ended November 1, 2008 were $53.9 million and $43.0 million, respectively, compared to $34.5 million and $4.9 million, respectively for the same period in the prior year. The increase in the maximum and average outstanding balances from the prior year period was due to borrowing associated with the special dividend, lower sales and the share repurchase program.
Inventory balances were $249.2 million as of November 1, 2008, compared to $206.8 million as of February 2, 2008. The inventory increase was due to seasonal fluctuations in inventory and the increase in the number of stores. There were 217 stores open as of November 1, 2008 and 208 stores open as of February 2, 2008 and. Inventory levels are generally the lowest at the end of the fiscal year due to holiday sales and large post holiday returns to vendors. Trade accounts payable balances were $122.3 million as of November 1, 2008, compared to $89.0 million as of February 2, 2008. The increase in accounts payable was due to the increase in inventory and increase in accounts payable leverage. Accrued expenses were $37.6 million as of November 1, 2008, compared to $41.5 million as of February 2, 2008. Accrued expenses decreased due to reductions in bonus accruals due to payment of fiscal year 2008 management bonuses in the first quarter of fiscal year 2009 and reduction of the bonus accrual for fiscal year 2009 as well as the redemption of gift cards in fiscal year 2009. The bonus accrual for fiscal year 2009 was reduced due to the weak sales environment.
Financing activities provided cash of $11.4 million and used cash of $15.9 million in the thirty-nine week periods ended November 1, 2008 and November 3, 2007, respectively. Financing activities provided cash in the thirty-nine week period ended November 1, 2008 from $17.2 million of net borrowings under our credit facility, offset by dividend payments ($4.2 million) and the purchase of treasury stock ($1.7 million). Financing activities used cash in the thirty-nine week period ended November 3, 2007 for dividend payments ($55.4 million) and to purchase treasury stock ($14.4 million), partially offset by net borrowings on the revolving credit facility ($51.0 million).
We are subject to interest rate fluctuations involving our credit facility and debt related to the Bond. During the thirteen and thirty-nine week period ending November 1, 2008 the Company experienced the maximum fluctuation in LIBOR in the last ten years. LIBOR has fluctuated 329% from the highest to the lowest point during the period. As such, our interest expense reported reflects this change. To illustrate the sensitivity of the results of operations to changes in interest rates on our debt, we estimate that a 329% increase or decrease in LIBOR rates would have changed interest expense by $4.5 million for the thirteen weeks ended November 1, 2008 due to average debt of $52,489,000. For the thirty-nine week period ended November 1, 2008, our average debt was $49,900,000. Similar changes in interest rates during this thirty-nine week period would have changed interest expense by $4.2 million. Prior to this year, 2002 experienced the maximum LIBOR fluctuation at 66%.
Read the The complete Report
More on BAMM:
Gurus buys and sells of BAMM
10-year financial history of BAMM.
Insider buys/sells of BAMM.
