Neebo, Inc. Reports Fiscal 2013 Second Quarter Financial Results

LINCOLN, Neb.--(BUSINESS WIRE)--

Neebo, Inc. (the “Company”) today announced financial results for the fiscal second quarter ended September 30, 2012. Neebo, Inc. is a holding company and the beneficial owner of Nebraska Book Company, Inc., an industry leader in solutions for the college bookstore marketplace.

Fiscal 2013 Financial Highlights (six months ended September 30, 2012)

• Debt reduced by $56.8 million, from $218.3 million at June 30, 2012 to $161.5 million at September 30, 2012. The Company made a $25.0 million voluntary prepayment on its senior secured term loan, permanently reducing the outstanding principal amount under this facility. In addition, the Company has repaid the full $31.8 million balance on its Bridge loan.
• Adjusted EBITDA** of $31.8 million for the six months ended September 30, 2012, an increase of $5.9 million over prior year period.
• Gross profit of 40.7% for the six months ended September 30, 2012, up from 39.2% in prior year period.

“I am proud to say that our team has continued to execute on our key strategies for continued growth and profitability,” said Steve Clemente, President and Chief Executive Officer. “Our simple, yet effective approach focuses on best in class guest service, expanding textbook rental programs, growing our site Neebo.com and strengthening our balance sheet through disciplined working capital management, all of which contributed to significant improvements in gross profit and SG&A expenses during the past quarter.”

“We fully intend to remain focused on paying down debt with free cash flow and net working capital improvements as we demonstrate our commitment to disciplined capital management,” explains Alexi Wellman, Chief Financial Officer.

The following table presents selected financial data for continuing operations as of and for the six months ended September 30, 2012 and 2011 ($ in 000's).

		Six months ended
		September 30, 2012						September 30, 2011						Percent Change
Total assets		$	377,389					$	547,144					*
Long-term debt			161,472						452,073					*
Revenues, net of returns			264,065						283,601					-6.9	%
Adjusted EBITDA**			31,837						25,931					22.8	%
Adjusted EBITDA Margin			12.1	%					9.1	%
Net cash flows provided by (used in) operating activities			4,835						(45,615	)				-110.6	%
Net cash flows used in investing activities			(4,769	)					(5,377	)				*
Net cash provided by (used in) financing activities			(72,817	)					117,131					*
Net income (loss) from operations		$	268,518					$	(115,370	)				-332.7	%

* Not Meaningful

** Adjusted EBITDA is a non-GAAP financial measure. See additional disclosure below.

Item Impacting the Six Months Ended September 30, 2012 Comparability

• The Company recorded the impact of fresh start accounting as of June 30, 2012. As a result of fresh start accounting, Adjusted EBITDA was positively impacted by approximately $3.0 million related to the recording of overhead capitalization.

Conference Call

Management will hold a conference call on November 29, 2012 at 11:00AM Eastern Time (10:00AM Central Time) to review the Company's fiscal second quarter financial results. To participate in the call, please dial (800) 553-5275 or (888) 428-4470 (International). Interested parties are asked to dial in ten minutes prior to the start time of the call.

A digitized replay of the call will be available from November 29, 2012 through December 6, 2012. To access the replay, call (800) 475-6701 or (320) 365-3844 (International) and use the access code 271935.

The unaudited condensed consolidated financial statements as of and for the three and six months ended September 30, 2012 and 2011 are located on the Company's website at: http://www.nebook.com/financial/company_filings.asp.

About the Company

Neebo, Inc. is the beneficial owner of the Nebraska Book Company, Inc. Nebraska Book Company, Inc. began in 1915 with a single college store near the University of Nebraska campus and now operates nearly 250 stores serving colleges and universities with more than two million students. Nebraska Book Company, Inc. serves more than 2,500 bookstores, selling six million textbooks annually and installing more than 1,600 technology platforms and e-commerce sites. Additional information about Nebraska Book Company, Inc. can be found at the Company's website: www.nebook.com.

Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements that 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 speak only as of the date on which the statements were made. 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 is contained in Management's Discussion and Analysis.

Selected Financial Data

The information contained herein is more fully detailed and explained in the Company's Unaudited Condensed Consolidated Financial Statements and Management Discussion & Analysis, which is available at: http://www.nebook.com/financial/company_filings.asp.

Consolidated Statement of Operations ($ in 000's)

			Three months ended												Six months ended
															Successor						Predecessor
															three months						three months
			Successor						Predecessor						ended						ended					Predecessor
			September 30, 2012						September 30, 2011						September 30, 2012						June 30, 2012					September 30, 2011
Revenues, net of returns			$	195,911					$	217,744					$	195,911					$	68,153				$	283,601
Costs of sales				113,468						133,453						113,468						43,027					172,547
Gross profit				82,443						84,291						82,443						25,127					111,054
Operating expenses:
Selling, general, and administrative				47,901						48,656						47,901						31,318					85,123
Depreciation				1,758						1,743						1,758						1,642					3,618
Amortization				2,224						1,979						2,224						2,067					3,972
				51,884						52,378						51,884						35,027					92,712
Income (loss) from operations				30,559						31,912						30,559						(9,900	)				18,342
Operating expenses:
Interest expense				10,077						9,417						10,077						8,337					22,182
Interest income				(17	)					-						(17	)					-					(14	)
Goodwill impairment				-						122,639						-						-					122,639
				10,060						132,056						10,060						8,337					144,806
Income (loss) before reorganization items and income taxes				20,499						(100,143	)					20,499						(18,237	)				(126,464	)
Reorganization items				(679	)					8,749						(679	)					(274,817	)				15,266
Income (loss) from continuing operations before income taxes				21,178						(108,892	)					21,178						256,580					(141,731	)
Income tax expense (benefit)				7,785						(16,396	)					7,785						-					(26,353	)
Income (loss) from continuing operations				13,393						(92,496	)					13,393						256,580					(115,378	)
Income (loss) from discontinuing operations, net of tax				(514	)					823						(514	)					(941	)				8
Net income (loss)			$	12,879					$	(91,674	)				$	12,879					$	255,639				$	(115,370	)

Net Revenues by Segment ($ in 000's)

			Three months ended																				Six months ended
																							Successor						Predecessor
																							three months						three months
			Successor										Predecessor										ended						ended					Predecessor
			September 30, 2012					Percent of total					September 30, 2011					Percent of total					September 30, 2012						June 30, 2012					September 30, 2011					Percent of total
College Stores			$	141,760				72.4	%				$	167,497				76.9	%				$	141,760					$	43,762				$	209,919				74.0	%
Textbooks				58,145				29.7	%					55,463				25.5	%					58,145						25,885					81,426				28.7	%
Complementary Services				7,628				3.9	%					8,612				4.0	%					7,628						5,319					15,585				5.5	%
Intersegment				(11,621	)			-5.9	%					(13,829	)			-6.4	%					(11,621	)					(6,813	)				(23,330	)			-8.2	%
Total net revenues			$	195,911				100.0	%				$	217,744				100.0	%				$	195,911					$	68,153				$	283,601				100.0	%

Gross Profit by Segment ($ in 000's)

			Three months ended																			Six months ended
																						Successor						Predecessor
																						three months						three months
			Successor					Percent					Predecessor				Percent					ended						ended					Predecessor				Percent
			September 30, 2012					of net revenues					September 30, 2011				of net revenues					September 30, 2012						June 30, 2012					September 30, 2011				of net revenues
College Stores			$	45,590				32.2	%				$	54,998			32.8	%				$	45,590					$	15,364				$	71,414			34.0	%
Textbooks				33,928				58.3	%					24,821			44.8	%					33,928						9,055					34,560			42.4	%
Complementary Services				3,820				50.1	%					3,684			42.8	%					3,820						2,805					7,058			45.3	%
Intersegment				(894	)			7.7	%					787			-5.7	%					(894	)					(2,098	)				(1,978	)		8.5	%
Total gross profit			$	82,443				42.1	%				$	84,291			38.7	%				$	82,443					$	25,127				$	111,054			39.2	%

EBITDA and Adjusted EBITDA ($ in 000's)

			Three months ended												Six months ended
															Successor						Predecessor
															three months						three months
			Successor						Predecessor						ended						ended					Predecessor
			September 30, 2012						September 30, 2011						September 30, 2012						June 30, 2012					September 30, 2011
EBITDA
Net income (loss)			$	12,879					$	(91,674	)				$	12,879					$	255,639				$	(115,370	)
Interest expense, net				10,060						9,417						10,060						8,337					22,167
Provision (benefit) for income taxes				7,785						(16,396	)					7,785						-					(26,353	)
Depreciation				1,758						1,743						1,758						1,642					3,618
Amortization				2,224						1,979						2,224						2,067					3,972
EBITDA				34,706						(94,930	)					34,706						267,685					(111,966	)
Adjusted EBITDA
EBITDA				34,706						(94,930	)					34,706						267,685					(111,966	)
Goodwill impairment				-						122,639						-						-					122,639
Reorganization of professional fees				(679	)					8,749						(679	)					13,382					15,266
Gain on settlement of liabilities subject to compromise				-						-						-						(288,199	)				-
Discontinued operations				514					$	(822.73	)					514						941					(8	)
Severance and voluntary costs				72						-						72						184					-
Site closures, settlements and other costs				-						-						-						533					-
Other miscellaneous one-time costs				1,309						-						1,309						1,389					-
Adjusted EBITDA			$	35,922					$	35,635					$	35,922					$	(4,085	)			$	25,931

The following table provides Adjusted EBITDA on a segment basis ($ in 000's).

			Three months ended												Six months ended
															Successor						Predecessor
															three months						three months
			Successor						Predecessor						ended						ended				Predecessor
			September 30, 2012						September 30, 2011						September 30, 2012						June 30, 2012				September 30, 2011
College Stores			$	11,276					$	17,660					$	11,276					$	(3,319	)		$	12,582
Textbooks				27,211						18,927						27,211						4,083				23,780
Complementary Services				708						667						708						(49	)			1,273
Corporate Administration				(3,274	)					(1,619	)					(3,274	)					(4,801	)			(11,703	)
Total Adjusted EBITDA			$	35,922					$	35,635					$	35,922					$	(4,085	)		$	25,931

Non-GAAP Financial Information

The common definition of EBITDA is “Earnings before Interest Expense, Taxes, Depreciation and Amortization.” In evaluating financial performance, the Company uses Adjusted EBITDA to evaluate, assess and benchmark its operational results. The Company's definition of Adjusted EBITDA is EBITDA plus adjustments to exclude the effects of mainly nonrecurring items of revenue or gain and expense or loss.

Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles (“GAAP”). Adjusted EBITDA should not be considered in isolation or as a substitute for net income (loss) in accordance with GAAP. Adjusted EBITDA excludes 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, Adjusted EBITDA is presented as management believes the measure is relevant and useful information widely used by analysts, investors and other interested parties in our industry. The Company understands certain investors use it to measure the Company's operating performance and its historical ability to meet financial obligations. Accordingly, management is disclosing this information to permit a more comprehensive analysis of the Company's operating performance, to provide an additional measure of performance and to provide additional information with respect to its ability to meet future debt service, capital expenditure and working capital requirements. Adjusted EBITDA financial information is comparable to net income (loss). Management's Discussion & Analysis contains a reconciliation of Adjusted EBITDA to the Company's GAAP disclosure of net income (loss).