Neebo, Inc. (the "Company"; NEEB+) today announced financial
results for the fiscal third quarter ended Dec. 31, 2013, and revised
its second quarter results. Neebo, Inc. is a holding company and the
beneficial owner of Nebraska Book Company, Inc., an industry leader in
solutions for the college store marketplace.
Third Quarter Fiscal 2014 Earnings
Although it is reporting its fiscal third quarter results today, the
Company is continuing to investigate certain costing issues within its
inventory system. The Company is not currently able to predict the
outcome of this investigation or the timing of its completion. While it
is possible that this investigation could result in material changes to
the Company's third quarter and revised second quarter financial
statements issued today, it is currently anticipated that the results
will not have any impact on the balances currently reported for cash and
cash equivalents, long-term debt or net cash flows used in operating
activities, or on the Company's liquidity. Should any material change
result, the Company will issue a press release detailing the material
impacts on its published financial statements and reissue the impacted
Second Quarter Fiscal 2014 Earnings Revision
Concurrently with publishing these financial statements for the nine
months ended Dec. 31, 2013, and Dec. 31, 2012, the Company is also
revising its previously published financial statements for the second
quarter and the six months ended Sept. 30, 2013. During second quarter
fiscal 2014, a system error shortened the time period in which deferred
revenue and income are recognized. This resulted in the recognition of
approximately $4.2 million and $1.9 million in deferred revenue and
gross margin, respectively, in the second quarter of fiscal 2014, which
should have been recognized and reported in third quarter fiscal 2014
results. The correction of this issue had no impact on financial
statements reported for the nine months ended Dec. 31, 2013, and Dec.
31, 2012. In conjunction with revising second quarter fiscal year 2014,
the Company is withdrawing its Management's Discussion and Analysis for
the second quarter and the first six months of 2014. Investors are urged
to review the Management's Discussion and Analysis for the third quarter
and the first nine months of 2014 that the Company is issuing today.
Below is a table summarizing the financial impact to the second quarter
P&L of certain revised line items.
Obsolescence (Note 3)
Note 1) The Company corrected its methodology for calculating
deferred rental revenue. The deferred rental revenue adjustment reduces
the amount of revenue recognized in the fiscal quarter ended Sept. 30,
2013, with a corresponding amount recorded in the fiscal quarter ended
Dec. 31, 2013. For the nine months ended Dec. 31, 2013, the statement of
operations was not impacted by this correction.
Note 2) The loyalty card adjustment represents a refinement to the
estimated liability based on historical usage. Due to the seasonality of
the Company's business, management determined that the fiscal quarter
ended Sept. 30, 2013, was the most appropriate quarter to begin
reflecting the refined calculation.
Note 3) The inventory obsolescence adjustment represents a
refinement to the factors used in estimating the reserve that more
accurately reflects the Company's historical experience. Due to the
seasonality of the Company's business, management determined that the
fiscal quarter ended Sept. 30, 2013, was the most appropriate quarter to
begin reflecting the refined calculation.
Note 4) Impact of closed stores moved to discontinued operations in
third quarter fiscal 2014.
Company Extends Credit Facility; In Process of Negotiating ABL
The Company has agreed with its existing lender to extend its credit
facility for six months to Sept. 4, 2014. The extended facility will
provide $40 million in availability, subject to the terms of the
facility agreement. In addition, the Company is in negotiations with
interested parties to enter into a new, multi-year revolving ABL credit
Expedited Supply Chain Strategy Increases Inventory Position by 28
In the second quarter of fiscal 2014, the Company launched an expedited
supply chain strategy, which advanced units to successfully fill demand.
This resulted in accelerated availability of an additional 72,000 units,
increasing the fulfillment of demand in the third quarter. As a result,
the Textbook Division inventory position was improved by 28 percent.
Strategic Staffing Results in SG&A Efficiencies
The Company continues to look for ways to improve efficiencies and
invest in innovative strategies. This involves allocating resources
differently to achieve higher returns. In fiscal year third quarter, the
Company made proactive, strategic changes in staffing within college
stores and related administrative positions, which led to an SG&A
reduction. In addition, the Company staffed college stores team members
to more closely fit the workload week-by-week as activity fluctuated,
rather than hiring staff to fill across-the-board levels.
Selected Financial Data for Fiscal 2014 and Fiscal 2013 Third
Quarters ($ in 000's)
** Adjusted EBITDA is a non-GAAP financial measure. See
additional disclosure below.
Management will hold a conference call on Monday, March 10, 2014, at
9:00 a.m. CST to report the Company's fiscal year 2014 third quarter
To participate in the conference call, interested parties should call
800-230-1093 or 612-332-0107 (international) and dial in 10 minutes
prior to the start time of the call. The participant access code is
318534. A replay of the conference call will be available from March 10,
2014, at 11:00 a.m. CST through March 25, 2014, at 11:59 p.m. To access
the replay, callers should dial 800-475-6701 or 320-365-3844
(international) and use access code 318534.
The unaudited condensed consolidated financial statements as of and for
the three and nine months ended Dec. 31, 2013, and Dec. 31, 2012, as
well as the revised condensed consolidated financial statements for the
three and six months ended Sept. 30, 2013, are located on the Financial
Filings page of the Company's website at http://www.nebook.com/financial/company_filings.asp.
About the Company
Neebo, Inc. is the beneficial owner of Nebraska Book Company, Inc.,
which began in 1915 with a single college store near the University of
Nebraska campus and now operates more than 206 stores, serving more than
2 million students at colleges and universities nationwide. Nebraska
Book Company, Inc. sells and rents more than 8.7 million textbooks
annually and supports technology platforms and e-commerce sites at more
than 1,200 bookstore locations. Additional information about Nebraska
Book Company, Inc. can be found at the Company's website: http://www.nebook.com.
*Neebo, Inc. common stock is not listed, traded or quoted on any U.S.
stock exchange but is quoted on the OTC Pink Market under the symbol
Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements that from time to
time involve risks and uncertainties, as well as assumptions that, if
they do not fully materialize or prove incorrect, could cause the
Company's business and results of operations to differ materially from
those expressed or implied by such forward-looking statements. Such
forward-looking statements include statements that discuss management's
beliefs and assumptions and can be identified by the use of words such
as "will," "may," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "intends," "potential," "continue"
or the negative of such terms, or other comparable terminology. These
forward-looking statements, which include anticipated borrowing
availability under the extended credit facility and the potential
outcome of the Company's investigation of certain costing issues within
its inventory system, speak only as of the date of this press release.
The Company undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise, except to the extent required by applicable
law. Additional information regarding forward-looking statements, as
well as risks and uncertainties that may affect results and could cause
results to differ materially from those expressed in such
forward-looking statements, is contained in the Management's
Discussion and Analysis that was posted on the Company's website
Selected Financial Data
The information contained herein is more fully detailed and explained in
the Company's Dec. 31, 2013, Unaudited Consolidated Financial
Statements and Management's Discussion and Analysis, as well
as the Company's Sept. 30, 2013, Revised Unaudited Consolidated
Financial Statements, which are available at http://www.nebook.com/financial/company_filings.asp.
Consolidated Statement of Operations ($ in 000's)
Income (loss) before reorganization items and income taxes
Income (loss) from continuing operations before income taxes
Income (loss) from discontinued operations, net of tax
Net Revenues by Segment ($ in 000's)
Gross Profit by Segment ($ in 000's)
EBITDA and Adjusted EBITDA ($ in 000's)
Gain on settlement of liabilities subject to compromise
Adjusted EBITDA by Segment ($ in 000's)
Non-GAAP Financial Information
The common definition of EBITDA is "Earnings before Interest, Taxes,
Depreciation and Amortization." In evaluating financial performance, the
Company uses Adjusted EBITDA to evaluate, assess and benchmark its
operational results. Adjusted EBITDA consists of EBITDA adjusted to
exclude the effects of certain specified items of revenue or gain and
expense or loss. The Company's definition of Adjusted EBITDA is EBITDA
plus adjustments to exclude items that impacted EBITDA yet are not
considered a part of our normal operations, such as: cost and benefits
related to the Chapter 11 process and our restructuring, discontinued
operations, one-time severance and voluntary costs, and site closure
costs and cost related to our store divestiture plan. Inter-divisional
profit impacts are also excluded with respect to each business segment
in connection with computing segment Adjusted EBITDA. In addition, we
also exclude certain non-cash data, including share-based compensation.
EBITDA and Adjusted EBITDA are not measures of financial performance
under generally accepted accounting principles ("GAAP"). They should not
be considered in isolation or as a substitute for net income (loss) in
accordance with GAAP. EBITDA and Adjusted EBITDA exclude components that
are significant in understanding and assessing our results of operations
and cash flows. In addition, the Company's measure of Adjusted EBITDA,
as presented in this press release, may not be comparable to similarly
titled measures used by other companies.
However, EBITDA and Adjusted EBITDA are presented, as management
believes the measures are relevant and useful information widely used by
analysts, investors and other interested parties in our industry. The
Company understands certain investors use them to measure the Company's
operating performance. Accordingly, management is disclosing this
information to permit a more comprehensive analysis of the Company's
operating performance. EBITDA and Adjusted EBITDA financial information
are reconciled to net income (loss).
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