SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-K


                                   (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    FOR THE FISCAL YEAR ENDED MARCH 31, 2001

                                       or
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

        For the transition period from____________ to__________________.



                        COMMISSION FILE NUMBER 333-48221

                           NEBRASKA BOOK COMPANY, INC.
             (Exact name of registrant as specified in its charter)

               KANSAS                                             47-0549819
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                             4700 SOUTH 19TH STREET
                             LINCOLN, NE 68501-0529
                    (Address of Principal executive offices)

                                 (402) 421-7300
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: NONE
        Securities registered pursuant to Section 12(g) of the Act: NONE

    Indicate  by check mark  whether  the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. [X] YES [ ] No

    Indicate by check mark if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K  (229.405  of  this chapter) is not contained herein,  and
will not be  contained,  to the best of  registrant's  knowledge,  in definitive
proxy or information  statements  incorporated  by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]

    THERE ARE NO SHARES OF THE REGISTRANT'S  VOTING STOCK HELD BY NON-AFFILIATES
OF THE REGISTRANT.

    THERE WERE 100 SHARES OF COMMON STOCK OUTSTANDING AS OF JUNE 26, 2001.


                    DOCUMENTS INCORPORATED BY REFERENCE: NONE

                            Total Number of Pages: 59

                             Exhibit Index: PAGE 59

                                       1

<PAGE>
                                TABLE OF CONTENTS


PART I:

Item 1       Business.........................................................3
Item 2       Properties.......................................................13
Item 3       Legal Proceedings................................................14
Item 4       Submission of Matters to a Vote of Security Holders..............14

PART II:

Item 5       Market for Registrant's Common Equity and Related
             Stockholder Matters..............................................15
Item 6       Selected Financial Data..........................................15
Item 7       Management's Discussion and Analysis of Financial Condition and
             Results of Operations............................................16
Item 7A      Quantitative and Qualitative Disclosures about Market Risk.......22
Item 8       Financial Statements and Supplementary Data......................24
Item 9       Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure.............................................43

PART III:

Item 10     Directors and Executive Officers of the Registrant................44
Item 11     Executive Compensation............................................46
Item 12     Security Ownership of Certain Beneficial Owners and Management....49
Item 13     Certain Relationships and Related Transactions....................50

PART IV:

Item 14     Exhibits, Financial Statement Schedules, and Reports on Form 8-K..52
Signatures....................................................................56
Supplemental Information to be Furnished......................................56
Financial Statement Schedule II - Valuation and Qualifying Accounts...........57
Exhibit Index.................................................................59

                                       2


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                                     PART I.

                                ITEM 1. BUSINESS.


RECAPITALIZATION AND PUBLIC REGISTRATION

    Effective September 1, 1995, Nebraska Book Company, Inc. (the "Company") was
acquired in a leveraged buyout by NBC Acquisition Corp.  ("NBC"),  a corporation
owned by investment partnerships affiliated with Olympus Advisory Partners, Inc.
and certain other investors (the "1995  Transaction").  The 1995 Transaction was
accounted for as a purchase business combination.

    Pursuant  to a merger  agreement  dated  January 6, 1998 among NBC;  certain
shareholders  of NBC,  including  members of senior  management;  and NBC Merger
Corp.,  a  newly  created,  indirect  wholly-owned  subsidiary  of  HWH  Capital
Partners,  L.P.("HWH"), NBC Merger Corp. merged with and into NBC (the "Merger")
with NBC as the surviving corporation. As a result of the Merger, which occurred
on February 13, 1998, certain NBC stockholders received a total of approximately
$165.9 million.  In addition,  upon the consummation of the Merger,  the Company
repaid approximately $82.0 million of outstanding  indebtedness.  As a result of
the early  extinguishment of debt in fiscal 1998, the Company  recognized a $4.0
million extraordinary loss, net of taxes.

    Concurrently with the consummation of the Merger, the Company entered into a
senior  secured  credit  agreement  (the  "Credit  Agreement")  with  The  Chase
Manhattan Bank ("Chase"),  as administrative  agent, and other lenders providing
for the following facilities (the "Senior Credit Facility"): (i) a $50.0 million
revolving  credit  facility  maturing  on March 31,  2004  which was  undrawn at
closing (the "Revolving Credit  Facility");  (ii) a $27.5 million tranche A term
loan,  maturing on March 31, 2004 (the "Tranche A Term Loan"); and (iii) a $32.5
million  tranche B term loan,  maturing on March 31,  2006 (the  "Tranche B Term
Loan"  and,  together  with the  Tranche  A Term  Loan,  the "Term  Loans").  In
addition, the Company also raised approximately $103.6 million from the issuance
of senior subordinated notes (the "Senior  Subordinated Notes") and NBC raised a
total of $91.6 million  through (i) the sale of  approximately  $45.6 million of
NBC Acquisition  Corp. Class A Common Stock to HWH (the "Stock Sale");  (ii) the
reinvestment  of  approximately  $4.4 million in NBC Acquisition  Corp.  Class A
Common Stock by the Company's senior management (the "Reinvestment");  and (iii)
net proceeds of approximately $41.6 million from the issuance of senior discount
debentures (the "Senior Discount Debentures").

    The Merger, the repayment of substantially all of the Company's  outstanding
indebtedness,  the Stock Sale, the Reinvestment,  the issuance by the Company of
the Senior  Subordinated  Notes,  the  issuance  by NBC of the  Senior  Discount
Debentures,  the Company's  borrowings  under the Senior Credit Facility and the
application  of  all  proceeds  thereof  are  collectively  referred  to as  the
"Recapitalization."

    During  fiscal 1999,  the Company and NBC filed  Registration  Statements on
Form S-4 with the Securities and Exchange Commission for purposes of registering
debt securities to be issued in exchange for the Company's  Senior  Subordinated
Notes  and  NBC's  Senior  Discount  Debentures.  The  Securities  and  Exchange
Commission declared such Registration Statements effective on July 14, 1998. All
notes were  tendered in the offer to exchange  that was  completed on August 13,
1998.

GENERAL

    The Company is one of the largest  wholesale  distributors  of used  college
textbooks in North America,  offering over 100,000  textbook  titles and selling
more than 7 million books annually  primarily to campuses  located in the United
States.  In  addition,  as of June 26,  2001,  the  Company  owns or manages 108
bookstores on or adjacent to college  campuses  through which it sells a variety
of new and used textbooks and general merchandise. The Company is also a leading
provider of distance education materials to students in nontraditional  courses,
which include correspondence and corporate education courses.  Furthermore,  the
Company  provides  the  college  bookstore  industry  with a variety of services
including  in-store   promotions,   buying  programs,   marketing  services  and
proprietary  information  systems.  With origins dating to 1915, the Company has
built a consistent  reputation  for  excellence in order  fulfillment,  shipping
performance and customer service.

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<PAGE>

    The Company entered the wholesale used textbook  market  following World War
II, when the supply of new  textbooks  could not meet the demand  created by the
return of ex-GI  students.  In 1964, the Company became a national,  rather than
regional,  wholesaler  of used  textbooks  as a result  of its  purchase  of The
College Book Company of California.  During the 1970's the Company continued its
focus on the wholesale  business.  However,  realizing the synergies  that exist
between wholesale operations and college bookstore operations,  in the 1980's it
expanded its efforts in the college  bookstore market under a revised  strategy.
Under this strategy the Company operates  bookstores on or near larger campuses,
typically where the institution-owned college bookstore is contract-managed by a
competitor or where the Company does not have a significant  wholesale presence.
Today,  the  Company  services  the  college  bookstore   industry  through  its
wholesale, college bookstore and complementary services operations.

    WHOLESALE.  The Company is one of the largest wholesale distributors of used
college textbooks in North America.  Its wholesale  operations consist primarily
of selling used textbooks to college bookstores,  buying them back from students
or college bookstores at the end of each school semester and then reselling them
to college  bookstores.  The Company  purchases  used textbooks from and resells
them to college  bookstores at many of the nation's  largest  college  campuses,
including:  University  of Texas,  University  of Southern  California,  Indiana
University,  University of Arizona,  University of Washington, and University of
Minnesota.  Historically, because the demand for used textbooks has consistently
outpaced supply, the Company's wholesale sales have been determined primarily by
the  amount of used  textbooks  that it could  purchase.  The  Company's  strong
relationships  with the  management of  independently-owned  college  bookstores
nationwide  have  provided  important  access  to  valuable  market  information
regarding the  campus-by-campus  supply and demand of  textbooks,  as well as an
ability to procure large quantities of a wide variety of textbooks.  The Company
provides an internally-developed BUYER'S GUIDE to its wholesale customers, which
lists over 42,000 textbook  titles with such details as author,  new copy retail
price, and the Company's repurchase price.

    COLLEGE BOOKSTORES.  College bookstores are the primary outlets for sales of
new and used textbooks to students.  As of June 26, 2001,  the Company  operated
108  college  bookstores  on or  adjacent  to college  campuses  of which 15 are
operated on physical premises which are owned by and leased from the educational
institution  (i.e.,  "contract-managed").  Its college bookstores are located at
some of the nation's largest college campuses including: University of Nebraska,
University  of Michigan,  University  of  Maryland,  Arizona  State  University,
Pennsylvania State University,  University of Kansas, Michigan State University,
University  of  California  -  Berkeley,  Texas A&M  University,  University  of
Florida,  and University of Tennessee.  In addition to generating  profits,  the
Company's  college  bookstore  operations  provide an  exclusive  source of used
textbooks for sale across the Company's wholesale distribution network.

    COMPLEMENTARY   SERVICES.   In  fiscal  1998,  the  Company   completed  two
acquisitions  representing  new  initiatives  for  it in the  college  bookstore
industry.  In  January  1998,  the  Company  acquired  Connect  2 One  (formerly
Collegiate  Stores  Corporation),  a  centralized  buying  service  for over 440
college  bookstores  across the United States.  Through the enhanced  purchasing
power of such a large group of bookstores,  participating bookstores are able to
purchase  certain  general  merchandise at lower prices than those that would be
paid by the stores  individually.  Bookstores  participating  in Connect 2 One's
("C2O") programs also provide the Company with another  potential source of used
textbooks.  With its acquisition of Specialty Books, Inc. ("Specialty Books") in
May 1997, the Company entered the distance  education market,  which consists of
providing  education  materials to students in nontraditional  college and other
courses (such as  correspondence  courses,  continuing  and corporate  education
courses and courses  offered  through  electronic  media such as the  Internet).
Other  services  offered  to college  bookstores  include  the sale of  computer
hardware  and  software,  such as the  Company's  turnkey  bookstore  management
software,  and related  maintenance  contracts.  During fiscal 2001, the Company
licensed  certain  software related to E-commerce to an entity that is partially
owned by NBC's  majority  owner (see  further  discussion  below under  Business
Strategy).  These services  generate revenue and assist the Company in enhancing
and developing customer relationships.

                                       4
<PAGE>

INDUSTRY SEGMENT FINANCIAL INFORMATION

    Revenue,  operating profit or loss, and identifiable  assets attributable to
each of the  Company's  industry  segments  are  disclosed  in the  notes to the
financial statements presented in Item 8 of the Company's Form 10-K.

BUSINESS STRATEGY

    The Company's  objective is to strengthen its position as a leading provider
of products and services to the college  bookstore  market,  thereby  increasing
revenue and cash flow. In order to accomplish its goal,  the Company  intends to
pursue the following strategies:

    ENHANCE  GROWTH IN  WHOLESALE  OPERATIONS.  The  Company  expects the stable
growth of its  wholesale  operations  to  continue,  primarily as a result of an
expected  increase in college  enrollments  and  increased  utilization  of used
textbooks,  as well as  through  the  expansion  of its  own  college  bookstore
network.  Additionally,  the Company recently  introduced an enhanced commission
structure  that rewards  customers who make a long-term  commitment to supplying
the Company with a large portion of their textbooks.

    CAPITALIZE  ON  COLLEGE  BOOKSTORE  OPPORTUNITIES.  The  Company  intends to
increase revenues for its college bookstore  operations by acquiring and opening
bookstores  at selected  college  campuses  and  offering  additional  specialty
products  and  services at its existing  bookstores.  The Company also  believes
there are  opportunities  to  improve  cash flow at its  college  bookstores  by
reducing certain selling,  general and administrative  expenses and by realizing
economies of scale through increased purchasing power for general merchandise as
a result of its ownership of C2O.

    CAPITALIZE ON  E-COMMERCE  OPPORTUNITIES.  During  fiscal 2000,  the Company
began developing and marketing  WebPRISM,  an innovative  software solution that
allows  bookstores to launch their own E-commerce site and  effectively  compete
against online-only textbook sellers.  This software solution enables bookstores
to  offer  textbooks  and  traditional  store  merchandise  on  their  websites.
Additionally,  the Company was developing CampusHub,  E-commerce technology that
enables bookstores to offer  non-traditional  goods and services from brand name
consumer companies on their websites.

       In fiscal 2001, the Company  entered into several  agreements  related to
these software  products with a newly created  entity,  TheCampusHub.com,  Inc.,
which is partially  owned by NBC's  majority  owner.  In  connection  with these
agreements,  the Company has licensed these products to  TheCampusHub.com,  Inc.
who assumed the on-going marketing,  operating and further development costs for
these products.  The three-year  license agreement  requires the payment of $0.5
million  per year from  TheCampusHub.com,  Inc.  to the  Company  and also gives
TheCampusHub.com,  Inc. the option to purchase the  software  products  from the
Company at any time during the term of the agreement. The annual license payment
is  payable  even if the  purchase  option is  exercised  before  the end of the
three-year term. The Company is also providing  certain  management  services to
TheCampusHub.com,  Inc. for three years in return for approximately $0.5 million
per year plus  reimbursement  of certain other direct costs.  In connection with
these  agreements,  the Company also  acquired the option to purchase 25% of the
initial common shares outstanding of TheCampusHub.com, Inc.

    The Company  expects that it will benefit  from such  arrangements  as it is
able to obtain  advanced  E-commerce  technology for its own bookstores  without
encumbering  its core business with the capital  investments and operating costs
necessary to complete  the  development  and  marketing  of these  products.  In
addition,  the Company expects that the license and management fees will provide
an additional source of cash flow for the Company.  Lastly, the Company believes
that it will share, by virtue of its equity option in TheCampusHub.com, Inc., in
future economic value,  if any,  created by the on-going  efforts related to the
software products.

    PURSUE ADDITIONAL GROWTH OPPORTUNITIES.  The Company intends to aggressively
pursue selected growth opportunities in several related markets, including:

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<PAGE>

    o   BUYING  SERVICES.  The Company  believes  that its ownership of C2O will
        enhance the relationship with the Company's  customers by leveraging its
        capabilities  as  being  a  full-service  provider  within  the  college
        bookstore  industry.  This will give the Company  access to all of C2O's
        marketing services and vendor programs.

    o   DISTANCE EDUCATION.  The distance education market continues to grow due
        to the increased  popularity of correspondence  courses,  continuing and
        corporate education courses and courses offered through electronic media
        such as the Internet. Through Specialty Books, the Company believes that
        it is well positioned to take advantage of this growth trend.


INDUSTRY OVERVIEW

    Based on recent industry trade data, the college bookstore  industry remains
strong,  with over 4,800 college stores generating annual sales of approximately
$10.1 billion to college students and other consumers in North America. Sales of
textbooks and other education materials used for classroom  instruction comprise
approximately  two-thirds of that amount.  The Company  expects this market will
continue to grow as a result of  anticipated  increases  in  enrollment  at U.S.
colleges  attributable to the children of the baby boom generation  entering the
college population.

    WHOLESALE  TEXTBOOK  MARKET.  The Company  believes that used textbooks will
continue  to be  attractive  to  both  students  and  college  bookstores.  Used
textbooks  provide  students with a lower-cost  alternative to new textbooks and
bookstores typically achieve higher margins through the sale of used rather than
new textbooks.

    The pricing pattern of textbook  publishing accounts for a large part of the
growth of the used book  market.  Because of  copyright  restrictions,  each new
textbook is produced  by only one  publisher,  which is free to set the new copy
retail price and discount terms to bookstores.  Publishers  generally  offer new
textbooks at prices that enable college  bookstores to achieve a gross margin of
23.0% to 25.0% on new  textbooks.  Historically,  the high  retail  costs of new
textbooks  and the higher  margins  achieved by  bookstores  on the sale of used
textbooks  (approximately  33.0%) have  encouraged  the growth of the market for
used textbooks.

    The used textbook cycle begins with new textbook  publishers,  who purposely
plan obsolescence into the publication of new textbooks. Generally, new editions
of textbooks  are produced  every two to four years.  In the first year of a new
edition, there are few used copies of a new edition available. In the second and
third years,  used  textbooks  become  increasingly  available.  Simultaneously,
publishers  begin to plan an updated edition.  In years four and beyond,  at the
end of the average life cycle of a particular edition, as publishers cut back on
original  production,  used  textbooks  generally  represent a majority (in unit
terms) of the particular edition in use. While the length of the cycle varies by
title (and sometimes is indefinite,  as certain titles are never  updated),  the
basic supply/demand progression remains fairly consistent.

    College bookstores begin to place orders with used textbook wholesalers once
professors  determine  which books will be required for their upcoming  courses,
usually by the end of May for the fall  semester and the end of November for the
spring  semester.  Bookstore  operators must first  determine  their  allocation
between new and used copies for a particular title but, in most cases, they will
order an ample supply of used books because:  (i) used book demand from students
is typically  strong and  consistent;  (ii) many operators only have access to a
limited  supply  from   wholesalers  and  believe  that  not  having  used  book
alternatives could create  considerable  frustration among students and with the
college  administration;  (iii) bookstore  operators earn higher margins on used
books than on new books;  and (iv) both new and used books are sold with  return
privileges,  eliminating any overstock risk (excluding  freight  charges) to the
college bookstore.

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<PAGE>

    New  textbook  ordering  usually  begins  in June,  at which  time the store
operator  augments its expected used book supply by ordering new books.  By this
time,  publishers  typically  will  have just  implemented  their  annual  price
increases.  These regular price increases,  which  historically have run 3.0% to
5.0%,  allow the Company and its  competitors to buy used textbooks based on old
list prices (in May) and to almost  simultaneously sell them based on new higher
prices, thereby creating an immediate margin increase.

    While  price is an  important  factor  in the  store  operator's  purchasing
decision,  available  supply,  as well as service,  usually determine with which
used textbook wholesaler a college bookstore will develop a strong relationship.
Used  textbook  wholesalers  that are able to  significantly  service  a college
bookstore account typically receive preferential treatment from store operators,
both in selling and in buying used textbooks. Pure exclusive supply arrangements
in the Company's market are rare.  However, in the past three to four years, the
Company has been marketing its exclusive  supply  program to the industry.  This
program has grown to approximately  230  participating  bookstores at the end of
fiscal 2001.  The Company also  introduced  the NBC Advantage  program in fiscal
2001.  This  program  rewards  customers  who  make a  long-term  commitment  to
supplying the Company with a large portion of their books.  At the end of fiscal
2001,   approximately  220  bookstores  were   participating  in  this  program,
approximately  130 of which are also  participating  in the  exclusive  program.
Since  the  Company  is  usually  able to sell  the  vast  majority  of the used
textbooks it is able to purchase,  its ability to obtain  sufficient supply is a
critical factor in the Company's success.

    COLLEGE  BOOKSTORE   MARKET.   College  stores  generally  fall  into  three
categories: (i) INSTITUTIONAL -- stores that are primarily owned and operated by
institutions of higher learning (represents  approximately 59.0% of the market);
(ii)  CONTRACT-MANAGED  -- stores owned by  institutions  of higher learning and
managed by outside,  private  companies,  typically found on-campus  (represents
approximately  26.0% of the market);  and (iii) INDEPENDENT  STORES -- privately
owned  and   operated   stores,   generally   located  off  campus   (represents
approximately  15.0% of the market).  In general,  the "captive"  portion of the
college bookstore market includes those contract-managed  stores that sell their
used textbooks to affiliated companies, and institutional and independent stores
to the extent that such used  textbooks  are  repurchased  from students and are
retained by the bookstore for resale without involving a wholesaler.

    The Company  believes that sales at its college  bookstores will continue to
grow as a result of increased  enrollment at colleges and due to the  increasing
number  of  products  and  services  offered  in  these  bookstores,   including
E-commerce  capabilities  provided  through the WebPRISM and CampusHub  software
products described earlier.

PRODUCTS AND SERVICES

     WHOLESALE.   The  Company's   wholesale   operations  are  engaged  in  the
procurement and redistribution of textbooks on college campuses primarily across
the United States.

    The  Company  also  publishes  the  BUYER'S  GUIDE,  which lists over 42,000
textbooks  according to author,  title, new copy retail price, and the Company's
repurchase  price.  The  BUYER'S  GUIDE is an  important  part of the  Company's
inventory control and book procurement  system. The Company updates and reprints
the BUYER'S  GUIDE nine times each year and makes it available in both print and
various  electronic  formats,  including  on all of  the  Company's  proprietary
information systems. A staff of dedicated professionals gathers information from
all over the  country in order to make the  BUYER'S  GUIDE into what the Company
believes to be the most  comprehensive and up-to-date pricing and buying aid for
college bookstores. The Company also maintains a database of over 174,000 titles
in order to better serve its customers.

    COLLEGE  BOOKSTORES.  As of June 26, 2001,the  Company  operated 108 college
bookstores  on or adjacent to college  campuses.  These  bookstores  sell a wide
variety  of  used  and  new  textbooks,   general  books  and  assorted  general
merchandise,  including  apparel,  sundries and gift items.  Over the past three
years,  revenues of the Company's bookstores from activities other than used and
new textbook sales have been between 24% and 28% of total revenues.  The Company
has been, and intends to continue,  selectively  expanding its product offerings
at its bookstores in order to increase sales and profitability.  The Company has
also  installed  WebPRISM and  CampusHub in all of its own  bookstores,  thereby
allowing its  bookstores to further  expand  product  offerings and compete with
online-only textbook sellers.

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<PAGE>

    The college bookstore  operations also provide consulting  services to other
college bookstores.  Using their industry experience,  the Company's specialists
work with  college  bookstore  managers to provide them with systems and support
services. The Company offers assistance in areas such as store planning, systems
and merchandise layouts.

    COMPLEMENTARY SERVICES.  Through C2O, the Company is able to offer a variety
of products and services to  participating  college  bookstores.  C2O negotiates
apparel and general  merchandise  discounts and develops and executes  marketing
programs  for its  membership.  As a  centralized  buying  service  for over 440
participating college bookstores including the Company's own bookstores, C2O has
evolved into a buying group with substantial purchasing power.

    C2O offers a shopping bag program to college  bookstores.  This shopping bag
program  provides  bookstores the  opportunity to purchase  customized bags at a
substantial  discount  while the  Company  generates  a profit due to receipt of
revenue from  advertising  inserts which are placed  inside the bags.  Other C2O
marketing  services  include a freight savings  program,  a check  authorization
program, and retail display allowances for magazine displays.

    Additionally,  a staff of  experienced  C2O  professionals  consult with the
management of bookstores.  Services offered include  strategic  planning,  store
review,  merchandise  planning  and help with other  operational  aspects of the
business.  While  consulting  has  historically  represented a relatively  small
component of C2O's business,  it is nonetheless  strategically  important to the
ongoing success of this aspect of the Company's business.

    Through  Specialty  Books, the Company has access to the market for distance
education  products and services.  Currently,  the Company provides  students at
approximately  60 colleges  with  textbooks  and  materials  for use in distance
education  courses,  and is a leading  provider of textbooks  to  nontraditional
programs and students such as  correspondence or corporate  education  students.
The Company  believes the fragmented  distance  education  market  represents an
opportunity  for the  Company  to  leverage  its  fulfillment  and  distribution
expertise in a rapidly  growing  sector.  Beyond  textbooks,  the Company offers
services and specialty course materials to distance education students including
videotape  duplication and shipping,  shipping of specialty,  nontextbook course
materials  and a sales  and  ordering  function.  Students  can  order  distance
education materials from the Company over the Internet.  The Company believes it
can continue to  significantly  increase the service  operations  revenues  from
distance education products over the next several years,  although presently the
Company's  primary  objective is increased  profitability  through improved cost
containment.

    Other services offered to college bookstores include services related to the
Company's turnkey bookstore  management  software and the sale of other software
and hardware, and related maintenance contracts. These services generate revenue
and assist the Company in gaining access to new sources of used  textbooks.  The
Company has an installed  base of over 300 college  bookstore  locations for its
textbook management control systems,  and it has installed its proprietary total
store  management  system at over 300  college  bookstore  locations.  In total,
including the Company's own  bookstores,  over 600 college  bookstore  locations
utilize the Company's software products.

WHOLESALE PROCUREMENT AND DISTRIBUTION

    Historically,  because  the  demand  for  used  textbooks  has  consistently
exceeded  supply,  the  Company's  sales have been  primarily  determined by the
amount of used  textbooks  that it can purchase.  The Company  believes that, on
average, it is able to fulfill approximately 20% of its demand. As a result, the
Company's success has depended primarily on its inventory  procurement,  and the
Company  continues  to focus its  efforts on  obtaining  inventory.  In order to
ensure its  ability to both obtain and  redistribute  inventory,  the  Company's
wholesale  strategy has emphasized  establishing and maintaining strong customer
and supplier relationships with college bookstores  (primarily,  independent and
institutional college bookstores) through its employee account  representatives.
These 37 account  representatives  (as of March 31,  2001) are  responsible  for
procuring  used textbooks  from  students,  marketing the Company's  services on
campus,  purchasing  overstock  textbooks from bookstores and securing leads for


                                       8
<PAGE>

sale of the Company's systems products.  The Company has been able to maintain a
competitive edge by providing superior service,  made possible primarily through
the development  and  maintenance of ready access to inventory,  information and
supply.  Other  components  of the  wholesale  strategy  and its  implementation
include:  (i) selectively  paying a marginal  premium relative to competitors to
entice  students to sell back more books to the Company;  (ii) gaining access to
competitive  campuses  (where  the campus  bookstore  is  contract-managed  by a
competitor) by opening off-campus, Company-owned college bookstores; (iii) using
technology  to  gain  efficiencies  and  to  improve  customer   service;   (iv)
maintaining a knowledgeable and experienced sales force that is customer-service
oriented;  (v) providing  working  capital  flexibility  for  bookstores  making
substantial  purchases;  and (vi) establishing  long-term supply arrangements by
rewarding  customers  who make a long-term  commitment  to supplying the Company
with a large portion of their books.

    The  two  major  used  textbook  purchasing  seasons  are at the end of each
academic  semester,  May/June and  December/January.  Although the Company makes
book purchases  during other  periods,  the inventory  purchased in May,  before
publishers  announce their price increases in June and July,  allows the Company
to purchase inventory based on the lower retail prices of the previous year. The
combination  of this  purchasing  cycle and the fact that the Company is able to
sell its inventory in relation to retail  prices for the following  year permits
the Company to realize additional gross profit. The Company advances cash to its
representatives  during these two periods,  and the  representatives in turn buy
books directly from students, generally through the on-campus bookstore.

    After the Company  purchases the books, the Company arranges for shipment to
one of its two warehouses  (Nebraska and California) via common carrier.  At the
warehouse, the Company refurbishes damaged books and categorizes and shelves all
other  books in a timely  manner,  and enters  them into the  Company's  on-line
inventory  system.  These  two  locations  function  as  one  facility  allowing
customers to access inventory at both locations.

    Customers place orders by phone, mail, fax or other electronic method.  Upon
receiving an order,  the Company removes the books from available  inventory and
holds them for future shipping.  Customers may return books within 60 days after
the start of classes if a written request is enclosed. Returns currently average
approximately   20.5%  of  sales  and  generally  are   attributable  to  course
cancellations  or  overstocking.  The majority of returns are textbooks that the
Company is able to resell for the next semester.

COLLEGE BOOKSTORE OPERATIONS

    An important aspect of the Company's business strategy is a program designed
to reach new customers through the opening or acquisition of bookstores adjacent
to college  campuses.  In addition to generating sales of new and used textbooks
and  general   merchandise,   these  outlets  enhance  the  Company's  wholesale
operations by increasing the inventory of used books purchased from the campus.

    A desirable campus for a Company-operated  college bookstore is one on which
the Company  does not  currently  buy or sell used  textbooks  either  because a
competitor  of the  Company  contract-manages  the  college's  bookstore  or the
college  bookstore  does not have a strong  relationship  with the Company.  The
Company  generally  will not open a location on a campus  where it already has a
strong  relationship with the college bookstore because some college  bookstores
may view having a competing location as a conflict of interest.

    The  Company  tailors  each  of its own  bookstores  to fit  the  needs  and
lifestyles of the campus on which it is located.  Individual  bookstore managers
are given significant planning and managing responsibilities,  including, hiring
employees,  controlling  cash and inventory,  and  purchasing and  merchandising
product.  The  Company  has staff  specialists  to assist  individual  bookstore
managers  in such areas as store  planning,  merchandise  layout  and  inventory
control.

    As of June 26, 2001 the Company operated 108 college bookstores  nationwide,
having  expanded  from 39  bookstores  in 1996.  During  fiscal 2001 the Company
purchased 4 new bookstores located in Michigan, Oklahoma,  Tennessee, and Texas,
adding estimated combined annual revenues in excess of $6.2 million.  Subsequent


                                       9
<PAGE>

to March 31, 2001,  the Company  acquired  eight  bookstores  located in Norman,
Oklahoma;   Raleigh,  North  Carolina;   Radford,  Virginia;  Orlando,  Florida;
Gainesville, Florida; Chadron, Nebraska; and Bellingham, Washington and sold two
bookstores located in Austin, Texas.

    The table below  highlights  certain  information  regarding  the  Company's
bookstores opened through March 31, 2001.

                Bookstores                                         Approximate
                 Open at   Bookstores    Bookstores    Bookstores     Total
                Beginning     Added        Closed      at End of     Square
                of Fiscal    During        During       Fiscal       Footage
   Fiscal Year    Year     Fiscal Year Fiscal Year(1)    Year     (in thousands)
   ----------- ----------  ----------- -------------- ----------  --------------
       1997         39         12            1            50          438
       1998         50          9            0            59          474
       1999         59          8            2            65          537
       2000         65         35            2            98          733
       2001         98          4            0           102          740

------------

(1) In  fiscal   1997,   the   management   contract   was  not   renewed  on  a
    contract-managed  bookstore.  In fiscal  1999,  the  property  leases at two
    bookstore  locations expired and were not renewed by the Company.  In fiscal
    2000,  the  property  lease at one  bookstore  location  expired and was not
    renewed by the Company and one Triro, Inc.  bookstore location which did not
    meet the Company's expansion criteria described below was closed.

    The  Company  plans to  continue  increasing  the  number of  bookstores  in
operation. The bookstore expansion plan will focus on campuses where the Company
does not already have a strong  relationship  with the on-campus  bookstore.  In
determining to open a bookstore,  the Company looks at several  criteria:  (i) a
large enough market to justify the  Company's  efforts  (typically  this means a
campus of at least 10,000  students);  (ii) a site in close  proximity to campus
with adequate parking and accessibility; (iii) the potential of the bookstore to
have a broad product mix (larger  bookstores  are more  attractive  than smaller
bookstores because a full line of general merchandise can be offered in addition
to textbooks);  (iv) the availability of top-quality management; and (v) certain
other  factors,  including  leasehold  improvement  opportunities  and personnel
costs.

    The Company's bookstores have an average size of 7,300 gross square feet but
range in size  from 900 to  50,000  square  feet.  The  Company  estimates  that
leasehold  improvements,   furniture  and  fixtures,  and  automation  with  the
Company's PRISM system, the Company's proprietary total-store management system,
for new  bookstores  cost  approximately  $100,000 per  bookstore,  after giving
effect to construction allowances.

MANAGEMENT INFORMATION SYSTEMS

    The Company  believes  that it can  enhance  efficiency,  profitability  and
competitiveness through investments in technology.  The Company's MIS operations
process order entry,  control  inventory,  generate purchase orders and customer
invoices,  generate  various sales  reports,  and process and retrieve  textbook
information.  All the Company's  bookstores  operate with IBM RS/6000's.  At the
center  of its MIS  operations  are the  Company's  self-developed,  proprietary
software programs such as PRISM, its whole store management system, and PC-Text,
its  textbook   management  and  inventory  control  system.  This  software  is
maintained  and  continuously  enhanced by the  Company,  which is staffed by an
experienced team of development and design professionals.

    In addition, the Company and its consultants have been developing E-commerce
capabilities  called  WebPRISM and  CampusHub.  These  software  products  allow
college  bookstores to launch their own E-commerce site and effectively  compete
against online-only  textbook sellers by offering textbooks and both traditional
and  non-traditional  store  merchandise  online. As previously  discussed,  the
ongoing  development  of WebPRISM and CampusHub was assumed in fiscal 2001 by an
entity that is partially owned by NBC's majority owner.

                                       10
<PAGE>

    None  of  the  Company's  proprietary  software  programs  are  copyrighted,
although the Company does have registered  trademarks for the names WebPRISM and
CampusHub. In addition to using its software programs for its own management and
inventory  control,  the Company  licenses the use of its  software  programs to
bookstores. Although none of the Company's software programs are material to its
business,  they enhance the efficiency and  cost-effectiveness  of the Company's
operations,  and their use by bookstores  that are customers or suppliers of the
Company  tends  to  solidify  the  relationship  between  the  Company  and such
customers  or  suppliers,  resulting  in  increased  sales or  supplies  for the
Company.

    MIS operations  consist of three  operating  units:  (i) the mainframe unit,
which develops and supports all systems utilized in the Company's warehouses and
corporate offices; (ii) a system sales unit, which markets the Company's college
store management systems to colleges; and (iii) the College Bookstore Management
Systems  ("CBMS"),  which  develops  and  supports  the systems that are sold to
bookstores.

    The Company conducts training courses for all systems users at the Company's
headquarters  in  Lincoln,  Nebraska.  Classes  are small and  provide  hands on
demonstrations  of the various systems.  Printed  reference manuals and training
materials  also  accompany  each system.  The  customer  support unit of CBMS is
staffed with over 40 experienced  personnel.  Personnel are available 24 hours a
day to answer questions on a toll-free number.

CUSTOMERS

    The Company sells its products and services to college bookstores throughout
the United  States,  Canada and Puerto Rico for  ultimate use by the students of
the respective colleges.  The Company's 25 largest wholesale customers accounted
for approximately  5.6% of fiscal 2001 revenues.  No one customer  accounted for
more than 1.0% of the Company's fiscal 2001 revenues.

    The Company's  wholesale  operations purchase from and resell used textbooks
to many of the nation's largest college campuses including: University of Texas,
University of Southern  California,  Indiana University,  University of Arizona,
University of Washington, and University of Minnesota.

    The Company's college bookstores are located on many of the nation's largest
college  campuses  including:  University  of Nebraska,  University of Michigan,
University of Maryland, Arizona State University, Pennsylvania State University,
University  of Kansas,  Michigan  State  University,  University of California -
Berkeley,  Texas A&M  University,  University  of  Florida,  and  University  of
Tennessee.

COMPETITION

    The Company's  wholesale  business  competes in the used textbook  wholesale
distribution  market.  This  market  includes  the  sale of all  used  textbooks
purchased  from  students  by  an   independent   third  party  which  are  then
redistributed  through college  bookstores;  sales to  contract-managed  stores,
which obtain  virtually all of their supply of used  textbooks from within their
chain of stores under common management;  and used textbooks retained by college
bookstores.

    The Company's two major  competitors  in the college store industry and used
textbook  business are Follett  Campus  Resources  ("Follett")  and MBS Textbook
Exchange ("MBS"), which contract-manage approximately 640 stores and 380 stores,
respectively.  The Company  believes  that its market  share of the used college
textbook wholesale distribution market is comparable to that of Follett and MBS,
individually.   The  remaining   competitors  are  smaller  regional  companies,
including Budgetext,  Texas Book Company and Southeastern Book Company.  Most of
the leading companies in the industry also have an established  retail presence,
either through direct store ownership/operation or through contract-management.

                                       11
<PAGE>

    Many of Follett's college  bookstores are located on smaller  campuses.  The
size of the  campus  and  Follett's  presence  there  have  precluded  potential
competitors  such as the Company  from  entering  these  markets,  which in turn
affects  both the  Company's  ability  to buy books and its  ability  to add new
accounts. However, because it is required to supply used texts to all of its own
stores, Follett must balance the demands of its own bookstores with those of its
other independent customers.

    MBS is controlled  by the same  shareholder  that  controls  Barnes & Noble.
Consequently,  MBS supplies approximately 380 Barnes & Noble college stores. MBS
faces the same challenges that Follett faces in supplying existing institutional
accounts.  MBS has a strong  systems  division that  competes  actively with the
Company for new  customers  and also  fulfills  all of the needs of the Barnes &
Noble stores.

    The Company's college bookstore operations compete with other college campus
bookstores,  including  the  on-campus  bookstore in those  locations  where the
Company's bookstore is off-campus.

    Both the Company's wholesale business and bookstore  operations compete with
a number of entities  that have  entered the  college  marketplace,  or enhanced
their sales channel to that marketplace,  through E-commerce.  These competitors
typically  use the Internet to  establish  websites  designed to sell  textbooks
and/or  other  merchandise  directly to  students,  by-passing  the  traditional
college bookstore.  By contrast,  the Company's software products,  WebPRISM and
CampusHub,  are  designed  to sell  textbooks  and other  merchandise  through a
college bookstore website,  not around it. The Company also competes against the
expansion  of  electronic  media as a source of  textbook  information,  such as
on-line  resources,  E-Books,  print-on-demand  textbooks and CD-ROM,  which may
replace  or modify the need for  students  to  purchase  textbooks  through  the
traditional   college  bookstore.   The  Company  does  not  believe  that  such
competition  has had a  material  adverse  impact on the  Company's  results  of
operations.

    There is only one  centralized  buying  service  that is similar to C2O, the
Independent  College Bookstore  Association  ("ICBA").  Participation by college
bookstores  in C2O's or ICBA's  centralized  buying  service is  voluntary,  and
college bookstores may, and some do, belong to both buying associations.

     Presently, the Company believes that its largest competitor in the distance
education market is MBS.

GOVERNMENTAL REGULATION

    The Company is subject to various  federal,  state and local  environmental,
health and safety laws and regulations. Generally, these laws impose limitations
on the discharge of pollutants  and the presence of hazardous  substances in the
workplace  and establish  standards for vehicle and employee  safety and for the
handling  of solid  and  hazardous  wastes.  These  laws  include  the  Resource
Conservation  and  Recovery  Act,  the  Comprehensive   Environmental  Response,
Compensation  and  Liability  Act,  the Clean Air Act, the  Hazardous  Materials
Transportation   Act  and  the  Occupational   Safety  and  Health  Act.  Future
developments,  such as stricter environmental or employee health and safety laws
and regulations thereunder,  could affect the Company's operations.  The Company
does not currently  anticipate  that the cost of its compliance  with, or of any
foreseeable liabilities under, environmental and employee health and safety laws
and regulations will have a material adverse affect on its business or financial
condition.

EMPLOYEES

    As of  March  31,  2001  the  Company  had a total  of  approximately  2,700
employees,  of which  approximately  1,000 are full-time,  approximately 200 are
part-time and  approximately  1,500 are temporary.  The Company has no unionized
employees and believes that its relationship with its employees is satisfactory.

    In view of the  seasonal  nature  of its  wholesale  business,  the  Company
utilizes seasonal labor to improve operating  efficiency.  The Company employs a
small  number of  "flex-pool"  workers  who are  cross-trained  in a variety  of
warehouse  functions.  Over the past eight years, the Company has employed up to
50 flex-pool workers in the Nebraska and California facilities, thereby enabling
the  Company to lower its  wholesale  operating  expenses.  Temporary  employees
augment the flex-pool to meet periodic labor demands.


                                       12
<PAGE>

                               ITEM 2. PROPERTIES.

    The  Company  owns its two  warehouses  (totaling  244,000  square  feet) in
Lincoln,  Nebraska (one of which is also the location of its headquarters),  and
leases its 60,000  square foot  warehouse  in Cypress,  California.  The Cypress
lease expires on August 31, 2002 and has one five-year option to renew.

    Listed  below,  set forth as of March 31, 2001,  are the  Company's  college
bookstores, their location, college served and the school's enrollment.

<TABLE>
<CAPTION>

   Institution                               Location           Enrollment(1) Store Name
   -----------                               --------           ------------- ----------
<S>                                          <C>                    <C>               <C>
   University of Alabama                     Tuscaloosa, AL         19,000    The College Store
   University of Arkansas - Little Rock      Little Rock, AR        10,500    Campus Bookstore
   Northern Arizona University               Flagstaff, AZ          20,000    The College Store
   Northern Arizona University               Flagstaff, AZ          20,000    University Text and Tools
   Coconino Community College                Flagstaff, AZ           3,700    Coconino Community College
                                                                                Bookstore (2)
   Arizona State University                  Tempe, AZ              43,700    The College Store
   Arizona State University                  Tempe, AZ              43,700    Rother's Bookstore
   University of Arizona                     Tucson, AZ             34,300    Arizona Book Store
   University of Arizona                     Tucson, AZ             34,300    Rother's University Bookstore
   University of California - Berkeley       Berkeley, CA           30,400    Ned's Bookstore (2 locations)
   California State University - Northridge  Northridge, CA         27,900    The College Store
   Daytona Beach Community College           Daytona Beach, FL 11,000 & 4,900 College Book Rack
     and Embry-Riddle Aeronautical University
   Miami Dade Community College-Kendall      Miami, FL              18,800    Lemox  College  Book  & Supply
   University of Central Florida             Orlando, FL            28,000    Knight's Corner
   Georgia State University                  Atlanta, GA            24,000    Georgia Book Store
   Drake University                          Des Moines, IA          5,300    University Book Store (2 locations) (2)
   Southern Illinois University              Carbondale, IL         22,400    Saluki   Bookstores  (2 locations)
   Ball Sate University                      Muncie, IN             18,100    Collegiate Book Exchange
   Valparaiso University                     Valparaiso, IN          3,600    University  Book Center (2)
   University of Kansas                      Lawrence, KS           29,100    University Book Shop
   Johnson County Community College          Overland   Park, KS    16,000    The College Store
   University of Louisville                  Louisville, KY         21,100    College Book Warehouse
   Eastern Kentucky University               Richmond, KY           17,500    University Book & Supply
   University of Maryland                    College Park, MD       32,700    Maryland Book Exchange
   Prince George's Community College         Largo, MD              12,300    Prince George's Community
                                                                                College Bookstore (2)
   University of Michigan                    Ann Arbor, MI          37,200    Michigan Book & Supply
   University of Michigan                    Ann Arbor, MI          37,200    Ulrich's Bookstore
   Oakland University                        Auburn Hills, MI       15,100    Textbook Outlet
   Wayne County Community College            Belleville, Detroit &  11,000    Ned's Bookstore (5 locations) (2)
                                               Taylor, MI
   Ferris State University                   Big Rapids, MI          9,700    The College Store
   Michigan State University                 East Lansing, MI       43,000    The College Store
   Michigan State University                 East Lansing, MI       43,000    Ned's Bookstore
   Kettering Engineering &                   Flint, MI               3,200    The Campus Store (2)
     Management Institute
   Eastern Michigan University               Ypsilanti, MI          23,300    Campus Book & Supply
   Eastern  Michigan  University and         Ypsilanti &         23,300 & 600 Ned's Bookstore (3 locations)(2)
     Concordia College                         Ann Arbor, MI
   Mankato State University                  Mankato, MN            11,700    Maverick Bookstore
   Chadron State College                     Chadron, NE             2,800    Chadron Book Shop
   University of Nebraska - Kearney          Kearney, NE             7,200    The Antelope  Bookstore (2)
   University of Nebraska - Lincoln          Lincoln, NE            23,000    Nebraska  Bookstore  (2 locations)
   Nebraska Wesleyan University              Lincoln, NE             1,700    Prairie Wolves Bookstore (2)
   Wayne State College                       Wayne, NE               3,600    Student Bookstore
   University of Nevada Las Vegas            Las Vegas, NV          24,900    Rebelbooks
   State University of New York - Buffalo    Amherst, NY            24,300    The College Store
   State University of New York - Binghamton Vestal, NY             12,300    The Bookbridge
   University of Akron                       Akron, OH              23,200    The College Store
   Ohio University                           Athens, OH             19,200    Specialty Books
   Ohio State University                     Columbus, OH           50,000    College Town
   Wright State University                   Fairborn, OH           16,800    The College Store
   University of Oklahoma                    Norman, OK             21,300    Boomer Book Store
   Oklahoma State University                 Stillwater, OK         21,100    Cowboy Book
   Indiana University of Pennsylvania        Indiana, PA            13,400    The College Store
   University of Pittsburgh                  Pittsburgh, PA         26,200    The College Store
   Pennsylvania State University             State College, PA      40,000    University Book Centre
   College of Charleston                     Charleston, SC         11,600    University Book of Charleston

                                       13
<PAGE>

   Columbia College                          Columbia, SC            1,300    C-Square Bookstore (2)
   University of South Carolina              Columbia, SC           25,500    South Carolina Bookstore
                                                                               (2 locations)
   East Tennessee State University           Johnson City, TN       11,200    The College Store
   University of Tennessee                   Knoxville, TN          26,000    Rocky Top East
   University of Tennessee                   Knoxville, TN          26,000    Rocky Top Books
   University of Texas - Arlington           Arlington, TX          19,100    The College Store
   Austin Community College                  Austin, TX             27,000    Bevo's Northridge
   Austin Community College                  Austin, TX             27,000    Bevo's ACC (2 locations)
   University of Texas                       Austin, TX             48,000    Bevo's West (2 locations)
   Blinn College                             Bryan, TX               7,800    Rother's Bookstore
   Texas A&M University                      College Station, TX    43,400    Rother's Bookstore
   Texas A&M University                      College Station, TX    43,400    Rother's Bookstore (Woodstone)
   Texas A&M University                      College Station, TX    43,400    Rother's  Bookstore (Northgate)
   Southern Methodist University             Dallas, TX             10,000    Varsity Book Store
   University of North Texas                 Denton, TX             26,500    Voertman's
   University of Texas - Pan                 Edinburg &            12,700 &   South Texas Book & Supply
     American and South                        McAllen, TX          12,900      (2 locations)
     Texas Community College
   North Harris County Community College     Houston, TX             9,400    College Bookstore
   University of Houston                     Houston, TX            33,200    Rother's Bookstore
   Texas Tech University                     Lubbock, TX            24,200    Spirit Shop
   Texas Tech University                     Lubbock, TX            24,200    Double T Bookstore (3 locations)
   San Antonio College, St. Philip's         San Antonio, TX  22,000; 21,200; L&M Bookstore
     College, and Palo Alto College                                & 6,900
   University of Texas - San Antonio         San Antonio, TX        18,800    L&M  UTSA Bookstore
   Southwest Texas State University          San Marcos, TX         21,100    Colloquium Bookstore (2 locations)
   Southwest Texas State University          San Marcos, TX         21,100    Rother's Bookstore
   Tarleton State University                 Stephenville, TX        6,400    Rother's Bookstore
   Baylor University                         Waco, TX               13,400    University Bookstore and Spirit Shop
   Baylor University                         Waco, TX               13,400    Rother's Bookstore
   Midwestern State University               Wichita Falls, TX       5,700    Rother's Bookstore
   Virginia Polytechnic and State University Blacksburg, VA         25,000    Tech Bookstore
   Old Dominion University                   Norfolk, VA            19,100    Dominion Bookstore
   Virginia Commonwealth University          Richmond, VA           23,200    The College Store

------------
</TABLE>

(1) Source: National Association of College Stores. Includes part-time students.

(2) Denotes    properties    leased    from    the    educational    institution
    ("contract-managed"  stores).  One  location  at  Drake  University  and one
    location at Concordia College are contract-managed stores.


                           ITEM 3. LEGAL PROCEEDINGS.

    From time to time,  the  Company is subject to legal  proceedings  and other
claims arising in the ordinary course of its business. The Company believes that
currently it is not a party to any  litigation the outcome of which would have a
material adverse affect on its financial condition or results of operations. The
Company  maintains  insurance  coverage  against  claims in an  amount  which it
believes to be adequate.


          ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    No items were submitted to a vote of security  holders of the Company during
the fourth quarter of fiscal 2001.


                                       14
<PAGE>


                                     PART II

 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

    There were no equity  securities of the  registrant  sold by the  registrant
during fiscal 2001.


                        ITEM 6. SELECTED FINANCIAL DATA.

    The following table sets forth selected historical  financial and other data
of the Company as of and for the fiscal years ended March 31, 2001,  2000, 1999,
1998, and 1997, respectively. The selected historical financial data was derived
from the Company's audited financial  statements.  Consistent with the Company's
audited financial statements,  certain prior year amounts have been reclassified
to conform to the current year presentation.  The following table should be read
in conjunction with Item 7,  "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements of the Company
and the related notes thereto included in Item 8 herein.

<TABLE>
<CAPTION>

                                                           Fiscal Years Ended March 31,
                                              ------------------------------------------------------
                                                 2001       2000      1999      1998(1)     1997
                                              ----------- --------- --------- ---------- -----------
<S>                                            <C>        <C>       <C>       <C>          <C>
STATEMENT OF OPERATIONS DATA:                                  (dollars in thousands)
  Revenues                                     $ 301,669  $267,069  $218,638  $ 200,086   $ 173,730
  Costs of sales                                 187,099   164,984   137,989    125,632     110,466
                                              ----------- --------- --------- ---------- -----------
      Gross profit                               114,570   102,085    80,649     74,454      63,264
  Operating expenses:
    Selling, general, and administrative          74,100    65,820    51,289     47,882      40,231
    Depreciation                                   2,956     3,096     2,393      2,531       2,706
    Amortization                                  10,446     9,320     6,149      5,626       4,072
    Stock compensation costs                           -         -         -      8,278         297
                                              ----------- --------- --------- ---------- -----------
      Income from operations                      27,068    23,849    20,818     10,137      15,958
  Other expenses (income):
    Interest expense                              17,487    17,469    17,508     11,284      10,760
    Interest income                                 (615)     (356)     (351)      (328)       (561)
                                              ----------- --------- --------- ---------- -----------
      Income (loss) before income
      taxes and extraordinary item                10,196     6,736     3,661       (819)      5,759
  Income tax expense                               5,857     4,845     2,604        306       2,325
                                              ----------- --------- --------- ---------- -----------
      Income (loss) before extraordinary item      4,339     1,891     1,057     (1,125)      3,434
  Extraordinary loss on extinguishment of
  debt, net of taxes                                   -         -         -     (4,021)          -
                                              ----------- --------- --------- ---------- -----------
      Net income (loss)                        $   4,339  $  1,891  $  1,057  $  (5,146)  $   3,434
                                              =========== ========= ========= ========== ===========

OTHER DATA:
  EBITDA (2)                                   $  40,470  $ 36,265  $ 29,360  $  26,572   $  23,033
  Net cash flows from operating activities         8,839    18,945    10,296     (2,842)     10,774
  Net cash flows from investing activities        (4,994)  (30,244)   (5,067)   (11,548)     (3,427)
  Net cash flows from financing activities        (3,887)   11,690    (6,976)    10,220      (7,471)
  Capital expenditures                             1,759     3,542     2,842      3,690       2,243
  Business acquisition expenditures (3)            2,975    26,072     2,086      7,714       1,252
  Number of bookstores open at end of the
  period                                             102        98        65         59          50

BALANCE SHEET DATA (AT END OF PERIOD):
  Cash and cash equivalents                    $   4,410  $  4,451  $  4,060  $   5,807   $   9,977
  Working capital                                 72,394    62,244    55,442     54,018      55,913
  Total assets                                   165,136   166,100   139,662    148,742     127,146
  Total debt, including current maturities       161,773   166,302   169,257    175,985      79,524
</TABLE>



                                       15
<PAGE>


     (1)  Effective February 13, 1998, NBC consummated a merger among NBC Merger
          Corp.,  NBC and  certain  shareholders  of NBC  pursuant  to which the
          Company's   outstanding  debt  and  NBC's  stock  were   restructured.
          Following  the  Recapitalization,  the  results of  operations  of the
          Company  included  higher  interest  costs due to the financing of the
          Recapitalization, and in fiscal 1998, non-recurring charges associated
          with the extinguishment of debt and buyout of stock options.

     (2)  EBITDA  is  defined  as  income  from  operations  plus  depreciation,
          amortization and non-cash charges relating to stock based compensation
          expense in the  amounts of $8,278 and $297 for the years  ended  March
          31,  1998 and 1997,  respectively.  The Company  believes  that EBITDA
          provides  additional  information  for determining its ability to meet
          debt service requirements. EBITDA does not represent and should not be
          considered  as  an  alternative  to  net  income  or  cash  flow  from
          operations as determined by accounting  principles  generally accepted
          in the  United  States of  America,  and EBITDA  does not  necessarily
          indicate  whether cash flow will be sufficient for cash  requirements.
          EBITDA  should not be  considered by investors as an indicator of cash
          flows from operating  activities,  investing  activities and financing
          activities  as determined in  accordance  with  accounting  principles
          generally  accepted in the United  States of America.  Items  excluded
          from EBITDA,  such as depreciation and  amortization,  are significant
          components in  understanding  and  assessing  the Company's  financial
          performance.  EBITDA  measures  presented  may  not be  comparable  to
          similarly titled measures presented by other registrants.

     (3)  Business acquisition  expenditures  represent  established  businesses
          purchased by the Company.



       ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS.

FISCAL YEAR ENDED MARCH 31, 2001 COMPARED WITH FISCAL YEAR ENDED MARCH 31, 2000.

     REVENUES.  Revenues  for the years  ended  March 31,  2001 and 2000 and the
corresponding increase (decrease) in revenues were as follows:

<TABLE>
<CAPTION>
                                                                 Increase (Decrease)
                                  2001           2000           Amount      Percentage
                             -------------- ---------------  -------------  ----------
<S>                          <C>             <C>              <C>              <C>
Wholesale operations         $ 113,006,804   $ 108,074,521    $ 4,932,283      4.6%
College bookstore operations   182,856,000     158,076,869     24,779,131     15.7%
Complementary services          26,647,451      20,717,793      5,929,658     28.6%
Intercompany eliminations      (20,841,402)    (19,800,260)    (1,041,142)     5.3%
                             -------------- ---------------  -------------  ----------
                             $ 301,668,853   $ 267,068,923    $34,599,930     13.0%
                             ============== ===============  =============  ==========
</TABLE>

    The increase in  wholesale  revenues  was due  primarily to publisher  price
increases.  The increase in college bookstore  revenues was due primarily to the
net addition of 37 new college bookstores either through  acquisition or startup
since  April 1,  1999.  Of the  $24.8  million  increase  in  college  bookstore
revenues,  $19.2 million was  attributable  to new college  bookstores  with the
remainder  accounted for by a 4.6% increase in revenues from stores open for the
full year for both the 2000 and 2001 fiscal years ("same stores"). Complementary
services  revenues  increased  primarily  due to an  increase  in the  Company's
distance  education  program  revenues  and  $0.9  million  attributable  to the
adoption of  management  services and  licensing  agreements in fiscal 2001 with
TheCampusHub.com,  Inc.,  an entity that is  partially  owned by NBC's  majority
owner.  Such growth was  partially  offset by a decrease  in  revenues  from the
Company's system sales program. As the Company's wholesale and college bookstore
operations  have  grown,  the  Company's  intercompany  transactions  have  also
increased.

                                       16
<PAGE>

    GROSS  PROFIT.  Gross profit for fiscal 2001  increased  $12.5  million,  or
12.2%,  to $114.6 million from $102.1 million for fiscal 2000. This increase was
primarily due to higher revenues, partially offset by a decrease in gross margin
percent. Gross margin percent was 38.0% for fiscal 2001 as compared to 38.2% for
fiscal 2000. The decrease in gross margin percent was primarily  attributable to
revenue  mix,  with  the  lower-margin   revenues  from  the  college  bookstore
operations and complementary services comprising 65.0% of total revenues (before
intercompany eliminations) in fiscal 2001 as compared to 62.3% in fiscal 2000.

    SELLING,   GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses for fiscal 2001  increased $8.3 million,  or 12.6%,  to
$74.1  million  from  $65.8  million  for  fiscal  2000.  Selling,  general  and
administrative  expenses as a percentage  of revenues  were 24.6% in both fiscal
years. Approximately $4.9 million of the increase in expenses resulted primarily
from the expected higher expense base associated with the Company's expansion of
its  operations  through  bookstore  acquisitions  and  startups.  Additionally,
expenses increased $2.6 million in the Company's distance education program as a
result of the revenue growth previously discussed.

    AMORTIZATION  EXPENSE.  Amortization  expense for fiscal 2001 increased $1.1
million,  or 12.1%,  to $10.4  million from $9.3  million for fiscal 2000.  This
increase was the result of additional amortization of goodwill related to recent
acquisitions,  offset in part by goodwill  associated with  acquisitions that is
becoming fully amortized.

    INCOME (LOSS) BEFORE  INTEREST AND TAXES.  Income (loss) before interest and
taxes for fiscal  2001 and 2000 and the  corresponding  increase  (decrease)  in
income (loss) before interest and taxes were as follows:

<TABLE>
<CAPTION>
                                                              Increase (Decrease)
                                 2001           2000          Amount    Percentage
                            -------------- -------------- ------------- ----------
<S>                           <C>            <C>           <C>              <C>
Wholesale operations          $27,241,116    $24,832,679   $ 2,408,437      9.7 %
College bookstore operations    9,206,616      9,588,784      (382,168)    (4.0)%
Complementary services         (1,402,666)    (2,449,321)    1,046,655     42.7 %
Corporate administration       (7,977,326)    (8,123,130)      145,804      1.8 %
                            -------------- -------------- ------------- ----------
                              $27,067,740    $23,849,012   $ 3,218,728     13.5 %
                            ============== ============== ============= ==========
</TABLE>

    The increase in wholesale income before interest and taxes was primarily due
to increased  revenues.  Income before interest and taxes for college  bookstore
operations  decreased,  despite  increased  revenues,  as a result of additional
amortization  of  goodwill  related  to  recent  acquisitions.  The loss  before
interest and taxes decreased for the  complementary  services segment  primarily
due to revenues  attributable  to the  aforementioned  management  services  and
licensing agreements with  TheCampusHub.com,  Inc. Despite the Company's growth,
corporate  administrative  costs have remained  relatively stable between fiscal
years.

    INCOME TAXES.  Income tax expense for fiscal 2001 increased $1.1 million, or
20.9%,  to $5.9 million from $4.8  million for fiscal  2000.  This  increase was
primarily the result of an increase in income before income taxes. The Company's
effective  tax rates of 57.4% and 71.9% for the years  ended  March 31, 2001 and
2000,  respectively,  were  significantly  higher  than the  statutory  tax rate
primarily as a result of state income taxes and  non-deductible  amortization on
goodwill associated with recent acquisitions.



                                       17
<PAGE>

FISCAL YEAR ENDED MARCH 31, 2000 COMPARED WITH FISCAL YEAR ENDED MARCH 31, 1999.

     REVENUES.  Revenues  for the years  ended  March 31,  2000 and 1999 and the
corresponding increase (decrease) in revenues were as follows:
<TABLE>
<CAPTION>

                                                                 Increase (Decrease)
                                  2000           1999           Amount     Percentage
                             -------------- --------------- -------------- ----------
<S>                          <C>             <C>              <C>              <C>
Wholesale operations         $ 108,074,521   $  98,751,112    $ 9,323,409      9.4%
College bookstore operations   158,076,869     120,872,556     37,204,313     30.8%
Complementary services          20,717,793      12,637,553      8,080,240     63.9%
Intercompany eliminations      (19,800,260)    (13,623,650)    (6,176,610)    45.3%
                             -------------- --------------- -------------- ----------
                             $ 267,068,923   $ 218,637,571    $48,431,352     22.2%
                             ============== =============== ============== ==========
</TABLE>

    The increase in  wholesale  revenues  was due  primarily to publisher  price
increases,  coupled with an increase in units  shipped and a decrease in returns
as a percent of sales. This increase was partially offset by the  discontinuance
of the  Company's  new book program in the fourth  quarter of fiscal 1999.  That
program generated approximately $2.0 million of revenue in that fiscal year. The
increase in college bookstore  revenues was due primarily to the net addition of
39 new college  bookstores either through  acquisition or startup since April 1,
1998,  including  28 new  bookstores  added  through the Triro,  Inc.  and Ned's
Bookstores acquisitions,  which occurred effective June 4, 1999 and November 12,
1999, respectively. Of the $37.2 million increase in college bookstore revenues,
$34.9  million was  attributable  to new college  bookstores  with the remainder
accounted  for by a 2.9% increase in revenues from stores open for the full year
for both the 1999 and 2000 fiscal years ("same stores").  Complementary services
revenues  increased  primarily due to growth in the Company's distance education
and system sales  programs.  As the Company's  wholesale  and college  bookstore
operations  have  grown,  the  Company's  intercompany  transactions  have  also
increased.

    GROSS  PROFIT.  Gross profit for fiscal 2000  increased  $21.5  million,  or
26.6%,  to $102.1 million from $80.6 million for fiscal 1999.  This increase was
primarily due to higher  revenues,  combined with an increase in gross  margins.
Gross margin was 38.2% for fiscal 2000 as compared to 36.9% for fiscal 1999. The
increase in gross margin was primarily  attributable to increased margins in the
Company's wholesale and college bookstore  operations,  including an increase in
used  textbook  sales through the  Company's  bookstores,  which can generate an
average gross margin of approximately  55%-60% compared to average gross margins
of 35% - 40% for external wholesale sales.

    SELLING,   GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses for fiscal 2000 increased  $14.5 million,  or 28.3%, to
$65.8  million  from  $51.3  million  for  fiscal  1999.  Selling,  general  and
administrative  expenses as a  percentage  of revenues  were 24.6% and 23.5% for
fiscal 2000 and fiscal 1999,  respectively.  The  increase in expenses  resulted
primarily from the expected  higher expense base  associated  with the Company's
expansion of its operations  through  bookstore  acquisitions and startups.  The
Company  has also  incurred  higher  corporate-level  expense  in  fiscal  2000,
primarily  due to additional  personnel and other costs  designed to help manage
its continued growth.

    DEPRECIATION  EXPENSE.  Depreciation expense for the fiscal year ended March
31, 2000 increased $0.7 million, or 29.4%, to $3.1 million from $2.4 million for
the fiscal year ended March 31, 1999.  This increase was primarily the result of
additional  depreciation related to recent  acquisitions,  including Triro, Inc.
and Ned's Bookstores.

    AMORTIZATION  EXPENSE.  Amortization expense for the fiscal year ended March
31, 2000 increased $3.2 million, or 51.6%, to $9.3 million from $6.1 million for
the fiscal year ended March 31, 1999. This increase was the result of additional
amortization of goodwill related to recent  acquisitions,  including Triro, Inc.
and  Ned's  Bookstores,  and was  partially  offset by a  non-compete  agreement
becoming fully amortized in August, 1998.

                                       18
<PAGE>

    INCOME (LOSS) BEFORE  INTEREST AND TAXES.  Income (loss) before interest and
taxes for fiscal  2000 and 1999 and the  corresponding  increase  (decrease)  in
income (loss) before interest and taxes were as follows:
<TABLE>
<CAPTION>

                                                              Increase (Decrease)
                                 2000           1999          Amount     Percentage
                            -------------- -------------- -------------- ----------
<S>                           <C>            <C>            <C>             <C>
Wholesale operations          $24,832,679    $21,590,426    $ 3,242,253     15.0 %
College bookstore operations    9,588,784      8,339,047      1,249,737     15.0 %
Complementary services         (2,449,321)    (2,442,717)        (6,604)    (0.3)%
Corporate administration       (8,123,130)    (6,668,446)    (1,454,684)   (21.8)%
                            -------------- -------------- -------------- ----------
                              $23,849,012    $20,818,310    $ 3,030,702     14.6 %
                            ============== ============== ============== ==========
</TABLE>

    The increase in wholesale income before interest and taxes was primarily due
to increased  revenues.  Income before interest and taxes for college  bookstore
operations increased,  despite incremental  amortization expense of $3.7 million
related  to  goodwill  resulting  from  acquisitions,  as a result of  increased
revenues and improved margins  pertaining  primarily to used textbook sales. The
loss before interest and taxes increased for the complementary  services segment
primarily due to a reduction in the profitability of the Company's  shopping bag
joint  venture.  As  described  earlier,  corporate  administrative  costs  have
increased  primarily as a result of costs  incurred to help manage the Company's
growth.

    INCOME TAXES.  Income tax expense for fiscal 2000 increased $2.2 million, or
86.1%,  to $4.8 million from $2.6  million for fiscal  1999.  This  increase was
primarily  the  result  of  an  increase  in  income  before  income  taxes  and
non-deductible   amortization  on  goodwill  associated  with  the  Triro,  Inc.
acquisition.  The Company's effective tax rate was significantly higher than the
statutory   tax  rate   primarily   as  a  result  of  state  income  taxes  and
non-deductible amortization on goodwill associated with recent acquisitions.

LIQUIDITY AND CAPITAL RESOURCES

    The Company's primary liquidity  requirements are for debt service under the
Senior Credit  Facility,  the Senior  Subordinated  Notes and other  outstanding
indebtedness,  for working  capital,  for capital  expenditures  and for certain
acquisitions.  The Company has historically funded these requirements  primarily
through  internally  generated  cash flow and funds borrowed under the Company's
Revolving Credit Facility.  At March 31, 2001, the Company's total  indebtedness
was approximately  $161.8 million,  consisting of approximately $51.2 million in
Term Loans,  $110.0 million of the Senior Subordinated Notes and $0.6 million of
other indebtedness,  including capital lease obligations.  To provide additional
financing to fund the  Recapitalization,  NBC issued Senior Discount  Debentures
which  provided  $41.6 million in net proceeds (face value of $76.0 million less
original  issue discount of $31.0 million and deferred  financing  costs of $3.4
million).

    Principal and interest  payments  under the Senior  Credit  Facility and the
Senior Subordinated Notes represent significant  liquidity  requirements for the
Company.  Under the terms of the Tranche A and B Loans, the Company is scheduled
to make principal  payments totaling  approximately $6.3 million in fiscal 2002,
$6.8 million in fiscal  2003,  $8.5  million in fiscal  2004,  $11.2  million in
fiscal 2005 and $18.4 million in fiscal 2006. Such scheduled  principal payments
are subject to change upon the annual  payment  and  application  of excess cash
flows (as defined in the Credit Agreement underlying the Senior Credit Facility)
towards Tranche A and B Loan principal  balances.  There was no excess cash flow
payment  obligation at March 31, 2001.  Loans under the Senior  Credit  Facility
bear interest at floating rates based upon the interest rate option  selected by
the Company. The Senior Subordinated Notes require semi-annual interest payments
at a fixed rate of 8.75% and mature on February  15, 2008.  The Senior  Discount
Debentures require semi-annual cash interest payments commencing August 15, 2003
at a fixed rate of 10.75% and mature on February 15, 2009.

    The Company's capital expenditures were $1.8 million, $3.5 million, and $2.8
million for the fiscal years ended March 31, 2001, 2000, and 1999, respectively.
Capital expenditures consist primarily of leasehold improvements and furnishings
for new bookstores,  bookstore renovations,  computer upgrades and miscellaneous


                                       19
<PAGE>

warehouse  improvements.  The Company's ability to make capital  expenditures is
subject to certain restrictions under the Senior Credit Facility.

    Business acquisition expenditures were $3.0 million, $26.1 million, and $2.1
million for the fiscal years ended March 31, 2001, 2000, and 1999, respectively.
Of the $26.1 million in business  acquisition  expenditures  made for the fiscal
year  ended  March  31,  2000,  approximately  $25.2  million  pertains  to  the
acquisitions of Triro, Inc. and Ned's Bookstores. Approximately $14.9 million of
capital  raised by NBC in fiscal 2000 through the issuance of 284,923  shares of
NBC's  Class A  Common  Stock  to HWH  and  members  of  senior  management  was
contributed  to the Company to assist in financing  the  acquisitions  of Triro,
Inc. and Ned's Bookstores.

    In addition,  during  fiscal 2001,  NBC issued  12,237 shares of its Class A
Common Stock to certain of the  Company's  employees.  This  issuance was exempt
from  registration  under the  Securities  Act of 1933, as amended,  pursuant to
Section 3(b) thereof and Rule 505 of Regulation D promulgated  thereunder.  Such
shares were issued at the  Founder's  Price of $52.47 per share.  Proceeds  from
this  issuance,  which totaled  $642,039,  were  utilized for general  operating
activities.

    Subsequent  to March 31,  2001,  the Company  acquired  certain  assets of a
privately  owned college  bookstore  serving Western  Washington  University and
seven Wallace's  Bookstores,  Inc. bookstores serving the University of Florida,
the University of Oklahoma,  North Carolina State University,  the University of
Central Florida,  Radford  University,  and Chadron State College for a total of
approximately   $5.8  million.   Such   acquisitions   were  estimated  to  have
approximately $14 million in annual revenues and were funded through  internally
generated  cash flows.  Future  acquisitions,  if any,  may  require  additional
capital contributions.

    Also subsequent to March 31, 2001, the Company sold certain assets of two of
its college bookstore locations serving the University of Texas in Austin, Texas
for approximately $1.2 million. Annual combined revenues for these two locations
for the year ended March 31, 2001 were approximately $2.4 million.  The sale was
made to one of the Company's largest wholesale customers,  thereby strengthening
the long-term relationship with that customer.

    The  Company's  principal  sources  of  cash to fund  its  future  operating
liquidity needs will be cash from operating  activities and borrowings under the
Revolving  Credit  Facility.  Usage of the Revolving Credit Facility to meet the
Company's  liquidity needs  fluctuates  throughout the year due to the Company's
distinct buying and selling periods, increasing substantially at the end of each
college  semester  (May  and  December).  For the year  ended  March  31,  2001,
weighted-average  borrowings  under the Revolving  Credit Facility  approximated
$15.3 million,  with actual borrowings  ranging from a low of no borrowings to a
high of $46.1  million.  Net cash flows from  operating  activities for the year
ended March 31, 2001 were $8.8  million,  a decrease of $10.1 million from $18.9
million for the year ended March 31, 2000.  This  decrease was  primarily due to
the timing of payments  made on  accounts  payable  balances  and  increases  in
accounts receivable.

    Access to the  Company's  principal  sources  of cash is  subject to various
restrictions.  The  availability  of additional  borrowings  under the Revolving
Credit Facility is subject to the calculation of a borrowing base,  which at any
time is equal to a percentage of eligible accounts receivable and inventory,  up
to a  maximum  of $50.0  million.  The  Senior  Credit  Facility  restricts  the
Company's  ability to make loans or advances  and pay  dividends,  except  that,
among other  things,  the Company may pay  dividends to NBC (i) after August 15,
2003 in an amount not to exceed the amount of  interest  required  to be paid on
the Senior Discount  Debentures and (ii) to pay corporate  overhead expenses not
to exceed  $250,000 per year and any taxes owed by NBC. The indenture  governing
the Senior Discount  Debentures (the  "Indenture")  restricts the ability of NBC
and its Restricted  Subsidiaries  (as defined in the Indenture) to pay dividends
or make  other  Restricted  Payments  (as  defined  in the  Indenture)  to their
respective   stockholders,   subject  to  certain  exceptions,   unless  certain
conditions are met, including that (i) no default under the Indenture shall have
occurred and be  continuing,  (ii) NBC shall be  permitted  by the  Indenture to
incur  additional  indebtedness  and (iii) the amount of the dividend or payment
may not exceed a certain amount based on, among other things, NBC's consolidated


                                       20
<PAGE>

net income.  The indenture  governing  the Senior  Subordinated  Notes  contains
similar   restrictions  on  the  ability  of  the  Company  and  its  Restricted
Subsidiaries  to pay  dividends  or make  other  Restricted  Payments  to  their
respective  stockholders.  Such  restrictions  are not  expected  to affect  the
Company's ability to meet its cash obligations for the foreseeable future.

    As of March 31, 2001, the Company could borrow up to $38.6 million under the
Revolving Credit Facility. The Revolving Credit Facility was unused at March 31,
2001.  Amounts  available  under the Revolving  Credit  Facility may be used for
working capital and general  corporate  purposes  (including up to $10.0 million
for letters of credit),  subject to certain  limitations under the Senior Credit
Facility.

    The Company  believes that funds generated from  operations,  existing cash,
and borrowings under the Revolving Credit Facility will be sufficient to finance
its current operations,  any required excess cash flow payments, planned capital
expenditures   and  internal   growth  for  the   foreseeable   future.   Future
acquisitions,   if  any,  may  require  additional  debt  financing  or  capital
contributions.

SEASONALITY

    The Company's  wholesale and bookstore  operations  experience  two distinct
selling  periods and the wholesale  operations  experience  two distinct  buying
periods.  The peak selling periods for the wholesale  operations  occur prior to
the  beginning  of each  college  semester  in August and  December.  The buying
periods for the wholesale  operations  occur at the end of each college semester
in late  December  and  May.  The  primary  selling  periods  for the  bookstore
operations are in September and January.  In fiscal 2001,  approximately  43% of
the  Company's  annual  revenues  were  earned  in  the  second  fiscal  quarter
(July-September),  while approximately 30% of the Company's annual revenues were
earned in the fourth fiscal quarter (January-March).  Accordingly, the Company's
working  capital  requirements   fluctuate   throughout  the  year,   increasing
substantially at the end of each semester,  in May and December,  as a result of
the buying periods. The Company funds its working capital requirements primarily
through a revolving  credit  facility,  which  historically has been repaid with
cash provided from operations.

IMPACT OF INFLATION

    The Company's  results of operations  and financial  condition are presented
based upon  historical  costs.  While it is difficult to accurately  measure the
impact of inflation due to the imprecise nature of the estimates  required,  the
Company  believes  that the  effects of  inflation,  if any,  on its  results of
operations and financial condition have not been material. However, there can be
no  assurance  that  during a period of  significant  inflation,  the  Company's
results of operations will not be adversely affected.

ACCOUNTING STANDARDS NOT YET ADOPTED

    The Financial Accounting Standards Board has issued SFAS No. 133, ACCOUNTING
FOR DERIVATIVE  INSTRUMENTS AND HEDGING ACTIVITIES,  as amended by SFAS No. 137,
ACCOUNTING FOR DERIVATIVE  INSTRUMENTS AND HEDGING  ACTIVITIES - DEFERRAL OF THE
EFFECTIVE  DATE OF FASB  STATEMENT  NO. 133,  and SFAS No. 138,  ACCOUNTING  FOR
CERTAIN  DERIVATIVE  INSTRUMENTS AND CERTAIN HEDGING  ACTIVITIES.  This standard
requires  that all  derivative  instruments  be recorded in the balance sheet at
fair value. Changes in the fair value of derivatives are recorded in earnings or
other  comprehensive  income,  based on whether the  instrument is designated as
part of a hedge  transaction  and,  if so,  the type of hedge  transaction.  The
initial  adoption  of SFAS No.  133,  which  occurred  on April 1, 2001,  had no
material impact on the Company's financial statements.

"SAFE HARBOR"  STATEMENT UNDER THE PRIVATE  SECURITIES  LITIGATION REFORM ACT OF
1995

    This  Annual  Report on Form 10-K  contains  or  incorporates  by  reference
certain statements that are not historical facts,  including,  most importantly,
information  concerning  possible or assumed future results of operations of the
Company and statements preceded by, followed by or that include the words "may,"
"believes,"  "expects,"  "anticipates,"  or the  negation  thereof,  or  similar
expressions, which constitute "forward-looking statements" within the meaning of
the Private  Securities  Litigation  Reform Act of 1995 (the "Reform Act").  All
statements which address operating performance,  events or developments that are


                                       21
<PAGE>

expected or anticipated to occur in the future, including statements relating to
volume and revenue  growth,  earnings per share growth or statements  expressing
general optimism about future operating results, are forward-looking  statements
within the meaning of the Reform Act. Such  forward-looking  statements  involve
risks, uncertainties and other factors which may cause the actual performance or
achievements of the Company to be materially  different from any future results,
performance  or  achievements  expressed  or  implied  by  such  forward-looking
statements.  For those statements, the Company claims the protection of the safe
harbor for  forward-looking  statements  contained  in the Reform  Act.  Several
important factors could affect the future results of the Company and could cause
those results to differ  materially from those expressed in the  forward-looking
statements  contained  herein.  The factors that could cause  actual  results to
differ  materially  include,  but are not limited to, the  following:  increased
competition; ability to integrate recent acquisitions; loss or retirement of key
members of management; increases in the Company's cost of borrowing or inability
to raise or  unavailability  of additional debt or equity capital;  inability to
purchase a sufficient supply of used textbooks; changes in pricing of new and/or
used textbooks;  changes in general economic conditions and/or in the markets in
which the Company competes or may, from time to time, compete; the impact of the
Internet and E-books on the Company's  operations;  and other risks  detailed in
the Company's  Securities  and Exchange  Commission  filings,  in particular the
Company's Registration  Statement on Form S-4 (No. 333-48221),  all of which are
difficult or impossible to predict  accurately  and many of which are beyond the
control of the Company. The Company will not undertake and specifically declines
any obligation to publicly release the result of any revisions which may be made
to any  forward-looking  statements to reflect events or circumstances after the
date  of  such  statements  or to  reflect  the  occurrence  of  anticipated  or
unanticipated events.


      ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

    The Company's  primary  market risk exposure is, and is expected to continue
to be,  fluctuation  in  Eurodollar  interest  rates.  Of the $161.8  million in
long-term  debt and capital  lease  obligations  outstanding  at March 31, 2001,
approximately  $51.2 million is subject to fluctuations in the Eurodollar  rate.
As provided in the Company's Senior Credit  Facility,  exposure to interest rate
fluctuations  is managed by maintaining  fixed interest rate debt (primarily the
Senior Subordinated Notes) and by entering into interest rate swap agreements to
effectively convert certain variable rate debt into fixed rate debt. The Company
has  separate  five-year  amortizing  interest  rate  swap  agreements  with two
financial  institutions whereby the Company's variable rate Tranche A and B Term
Loans have been effectively converted into debt with a fixed rate of 5.815% plus
an applicable margin (as defined in the Credit  Agreement).  The notional amount
under each agreement as of March 31, 2001 was approximately $25.6 million.  Such
notional  amounts are reduced  periodically  by amounts  equal to the  scheduled
principal  payments on the Tranche A and B Term Loans. The Company is exposed to
credit loss in the event of nonperformance by the counterparties to the interest
rate swap agreements. The Company anticipates the counterparties will be able to
fully satisfy their obligations under the agreements.

                                       22
<PAGE>

    The following table presents  quantitative  information  about the Company's
market risk sensitive instruments (the weighted-average variable rates are based
on implied forward rates in the yield curve at March 31, 2001):

<TABLE>
<CAPTION>

                                                                   Variable to Fixed
                   Fixed Rate Debt       Variable Rate Debt       Interest Rate Swaps
               ----------------------  ---------------------  ----------------------------
                              Weighted-              Weighted-                 Weighted-
                              Average                Average                    Average
                 Principal    Interest  Principal    Interest   Notional      Pay/Receive
                Cash Flows     Rate    Cash Flows(1)  Rate      Amounts          Rates
               -------------  -------  ------------  -------  -------------  -------------
<S>            <C>             <C>     <C>            <C>     <C>            <C>     <C>
Fiscal Year
Ended March 31:
  2002         $     50,412    8.76%   $ 6,287,500    6.90%   $ 48,170,833   5.81% / 4.50%
  2003               45,571    8.76%     6,800,000    7.31%     41,413,542   5.81% / 4.89%
  2004               25,950    8.76%     8,475,000    8.00%     12,275,000   5.81% / 5.44%
  2005               28,881    8.76%    11,187,500    8.39%              -             -
  2006               32,144    8.76%    18,437,500    8.64%              -             -
  Thereafter    110,402,849    8.77%             -      -                -             -
               -------------  -------  ------------  -------  -------------  -------------
    Total      $110,585,807    8.76%   $51,187,500    7.65%   $101,859,375   5.81% / 4.77%
               =============  =======  ============  =======  =============  =============

    Fair Value $ 95,285,793      -     $51,187,500      -     $ (1,004,400)            -
               =============           ============           =============
</TABLE>

(1) Principal cash flows represent scheduled principal payments and are adjusted
    for  anticipated  excess  cash  flow  payments  (as  defined  in the  Credit
    Agreement  underlying  the Senior  Credit  Facility)  to be  applied  toward
    principal  balances.  For Fiscal 2001, there was no excess cash flow payment
    obligation.

    Certain  quantitative  market risk  disclosures  have changed  significantly
since  March 31, 2000 as a result of market  fluctuations,  movement in interest
rates, and principal  payments.  The following table presents  summarized market
risk information for the years ended March 31, 2001 and 2000:

                                                  March 31,      March 31,
                                                    2001           2000
                                               --------------- -------------
Fair Values:
  Fixed rate debt                               $ 95,285,793    $ 88,223,075
  Variable rate debt                              51,187,500      55,625,000
  Interest rate swaps                             (1,004,400)      1,735,657

Overall Weighted-Average Interest Rates:
  Fixed rate debt                                      8.76%           8.76%
  Variable rate debt                                   7.65%           9.46%
  Interest rate swaps receive rate                     4.77%           6.96%


                                       23
<PAGE>


                ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS OF NEBRASKA BOOK COMPANY, INC. FOR THE YEARS
ENDED MARCH 31, 2001, 2000, AND 1999

Independent Auditors' Report...............................................25

Balance Sheets.............................................................26

Statements of Operations...................................................27

Statements of Stockholder's Deficit........................................28

Statements of Cash Flows...................................................29

Notes to Financial Statements..............................................30




                                       24
<PAGE>


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
Nebraska Book Company, Inc.
Lincoln, Nebraska

    We have audited the  accompanying  balance  sheets of Nebraska Book Company,
Inc. (a wholly-owned  subsidiary of NBC Acquisition  Corp.) as of March 31, 2001
and 2000, and the related statements of operations,  stockholder's  deficit, and
cash flows for each of the three years in the period ended March 31, 2001. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

    We conducted our audits in  accordance  with  auditing  standards  generally
accepted in the United States of America.  Those standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

    In our opinion,  such financial  statements  present fairly, in all material
respects,  the financial position of Nebraska Book Company, Inc. as of March 31,
2001 and 2000,  and the results of its operations and its cash flows for each of
the three years in the period ended March 31, 2001 in conformity with accounting
principles generally accepted in the United States of America.




DELOITTE & TOUCHE LLP

Lincoln, Nebraska
May 23, 2001



                                       25
<PAGE>

NEBRASKA BOOK COMPANY, INC.

BALANCE SHEETS
--------------------------------------------------------------------------------

                                                              March 31,
                                                          2001          2000
                                                     ------------- -------------
ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                          $  4,409,505  $  4,450,887
  Receivables                                          31,368,150    24,193,668
  Inventories                                          61,834,563    61,809,630
  Recoverable income taxes                                706,408             -
  Deferred income taxes                                 1,862,166     1,598,793
  Prepaid expenses and other assets                       403,700       427,302
                                                     ------------- -------------
    Total current assets                              100,584,492    92,480,280

PROPERTY AND EQUIPMENT, net of depreciation
& amortization                                         24,474,887    25,760,825

GOODWILL AND OTHER INTANGIBLES, net of amortization    34,178,587    43,183,145

OTHER ASSETS                                            5,897,647     4,676,047
                                                     ------------- -------------
                                                     $165,135,613  $166,100,297
                                                     ============= =============

LIABILITIES AND STOCKHOLDER'S DEFICIT

CURRENT LIABILITIES:
  Accounts payable                                   $ 11,647,964  $ 16,145,566
  Accrued employee compensation and benefits            6,512,773     6,301,111
  Accrued interest                                      1,466,643     1,349,224
  Accrued expenses                                      1,946,675       819,010
  Income taxes payable                                          -       553,893
  Deferred revenue                                        278,982       552,251
  Current maturities of long-term debt                  6,308,450     4,456,324
  Current maturities of capital lease obligations          29,463        59,181
                                                     ------------- -------------
    Total current liabilities                          28,190,950    30,236,560

LONG-TERM DEBT, net of current maturities             155,413,140   161,721,590

CAPITAL LEASE OBLIGATIONS, net of current maturities       22,254        64,856

OTHER LONG-TERM LIABILITIES                               238,970       202,231

DUE TO PARENT                                           7,056,815     4,606,191

COMMITMENTS (Note J)

STOCKHOLDER'S DEFICIT:
  Common stock, voting, authorized 50,000
  shares of $1.00 par value; issued and
  outstanding 100 shares                                      100           100
  Additional paid-in capital                           46,435,726    45,829,948
  Accumulated deficit                                 (72,222,342)  (76,561,179)
                                                     ------------- -------------
    Total stockholder's deficit                       (25,786,516)  (30,731,131)
                                                     ------------- -------------
                                                     $165,135,613  $166,100,297
                                                     ============= =============


See notes to financial statements.



                                       26
<PAGE>

NEBRASKA BOOK COMPANY, INC.

STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------


                                                Year Ended March 31,
                                          2001           2000          1999
                                      -------------  ------------- -------------

REVENUES, net of returns              $301,668,853   $267,068,923  $218,637,571

COSTS OF SALES                         187,098,970    164,984,418   137,988,909
                                      -------------  ------------- -------------

  Gross profit                         114,569,883    102,084,505    80,648,662

OPERATING EXPENSES:
  Selling, general and administrative   74,100,242     65,819,487    51,288,680
  Depreciation                           2,956,135      3,096,013     2,392,701
  Amortization                          10,445,766      9,319,993     6,148,971
                                      -------------  ------------- -------------

                                        87,502,143     78,235,493    59,830,352
                                      -------------  ------------- -------------

INCOME FROM OPERATIONS                  27,067,740     23,849,012    20,818,310

OTHER EXPENSES (INCOME):
  Interest expense                      17,486,737     17,469,487    17,508,601
  Interest income                         (615,430)      (355,935)     (351,231)
                                      -------------  ------------- -------------

                                        16,871,307     17,113,552    17,157,370
                                      -------------  ------------- -------------

INCOME BEFORE INCOME TAXES              10,196,433      6,735,460     3,660,940

INCOME TAX EXPENSE                       5,857,596      4,844,744     2,603,657
                                      -------------  ------------- -------------

NET INCOME                            $  4,338,837   $  1,890,716  $  1,057,283
                                      =============  ============= =============


See notes to financial statements.

                                       27
<PAGE>

NEBRASKA BOOK COMPANY, INC.

STATEMENTS OF STOCKHOLDER'S DEFICIT
--------------------------------------------------------------------------------


                                        Additional
                             Common       Paid-in     Accumulated
                              Stock       Capital       Deficit         Total
                            ---------  ------------  ------------- -------------

BALANCE, April 1, 1998        $ 100    $30,899,952   $(79,509,178) $(48,609,126)

  Contributed capital             -        (23,010)             -       (23,010)

  Net income                      -              -      1,057,283     1,057,283
                            ---------  ------------  ------------- -------------

BALANCE, March 31, 1999         100     30,876,942    (78,451,895)  (47,574,853)

  Contributed capital             -     14,953,006              -    14,953,006

  Net income                      -              -      1,890,716     1,890,716
                            ---------  ------------  ------------- -------------

BALANCE, March 31, 2000         100     45,829,948    (76,561,179)  (30,731,131)

  Contributed capital             -        605,778              -       605,778

  Net income                      -              -      4,338,837     4,338,837
                            ---------  ------------  ------------- -------------

BALANCE, March 31, 2001       $ 100    $46,435,726   $(72,222,342) $(25,786,516)
                            =========  ============  ============= =============

See notes to financial statements.



                                       28
<PAGE>

<TABLE>
<CAPTION>

NEBRASKA BOOK COMPANY, INC.

STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------------


                                                         Year Ended March 31,
CASH FLOWS FROM OPERATING ACTIVITIES:               2001         2000        1999
                                                ------------ ------------ ------------
<S>                                             <C>          <C>          <C>
  Net income                                    $ 4,338,837  $ 1,890,716  $ 1,057,283
  Adjustments to reconcile net income
  to net cash flows from operating activities:
     Depreciation                                 2,956,135    3,096,013    2,392,701
     Amortization of intangibles                 11,814,114   10,692,176    7,491,851
     Loss on disposal of assets                      59,627       18,044       89,800
     Deferred income taxes                       (1,351,000)    (773,000)    (883,200)
     Changes in operating assets and
     liabilities, net of effect of acquisitions:
       Receivables                               (7,184,802)  (3,189,434)     368,840
       Inventories                                  354,360   (4,665,275)      18,827
       Recoverable income taxes                    (706,408)     319,630    4,369,146
       Prepaid expenses and other assets             23,602       84,054     (123,460)
       Other assets                                 (85,526)     797,705   (1,019,776)
       Accounts payable                          (4,497,902)   5,318,621   (5,297,973)
       Accrued employee compensation and
       benefits                                     211,662    2,231,461       28,651
       Accrued interest                             117,419      (77,285)    (362,038)
       Accrued expenses                           1,128,408      133,125      182,985
       Income taxes payable                        (553,893)     552,928            -
       Deferred revenue                            (273,269)     175,695      (87,361)
       Other long-term liabilities                   36,739       11,157       40,470
       Due to parent                              2,450,624    2,328,925    2,029,175
                                                ------------ ------------ ------------
         Net cash flows from operating
         activities                               8,838,727   18,945,256   10,295,921

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property and equipment            (1,759,010)  (3,542,471)  (2,842,036)
  Bookstore acquisitions, net of cash acquired   (2,975,332) (26,072,155)  (2,085,881)
  Proceeds from sale of property and equipment
  and other                                         144,834       65,197       97,586
  Software development costs                       (403,996)    (694,830)    (236,328)
                                                ------------ ------------ ------------

         Net cash flows from investing
         activities                              (4,993,504) (30,244,259)  (5,066,659)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Deferred financing costs                                -      (32,478)    (218,477)
  Principal payments on long-term debt           (4,456,324)  (3,079,413)  (1,327,696)
  Principal payments on capital
  lease obligations                                 (72,320)    (177,411)           -
  Net decrease in revolving credit facility               -            -   (5,400,000)
  Capital contribution                              642,039   14,979,532      (30,319)
                                                ------------ ------------ ------------

         Net cash flows from financing
         activities                              (3,886,605)  11,690,230   (6,976,492)
                                                ------------ ------------ ------------

NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS                                    (41,382)     391,227   (1,747,230)

CASH AND CASH EQUIVALENTS, Beginning of year      4,450,887    4,059,660    5,806,890
                                                ------------ ------------ ------------

CASH AND CASH EQUIVALENTS, End of year          $ 4,409,505  $ 4,450,887  $ 4,059,660
                                                ============ ============ ============

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS
INFORMATION:
  Cash paid (refunded) during the year for:
    Interest                                    $16,000,970  $16,174,589  $16,527,759
    Income taxes                                  6,018,273    2,424,436   (2,911,464)

</TABLE>


See notes to financial statements.
                                       29
<PAGE>


NEBRASKA BOOK COMPANY, INC.

NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


A.  NATURE OF OPERATIONS

    Nebraska Book Company, Inc. (the "Company") is a wholly-owned  subsidiary of
NBC Acquisition Corp. NBC Acquisition  Corp.  ("NBC") was formed for the purpose
of acquiring  all of the  outstanding  capital  stock of the Company,  effective
September  1,  1995.  NBC did  not  have  substantive  operations  prior  to the
acquisition  of the  Company.  The  purchase  price of the  Company  was  $106.0
million,  which was funded primarily through the issuance of long-term debt. The
acquisition  was accounted for by the purchase method of accounting and resulted
in excess  of cost  over  fair  value of net  assets  acquired  ("goodwill")  of
approximately $26.9 million.

    The Company  participates  in the college  bookstore  industry  primarily by
providing used textbooks to college  bookstore  operators,  by operating its own
college bookstores and by providing  proprietary  college bookstore  information
systems and consulting services.

    RECAPITALIZATION:  On February 13, 1998, NBC consummated a Merger  Agreement
among NBC Merger Corp. (a newly created, indirect wholly-owned subsidiary of HWH
Capital Partners,  LP. ["HWH"]), NBC and certain shareholders of NBC pursuant to
which the  Company's  outstanding  debt and NBC's stock were  restructured  (the
"Recapitalization").  Significant  components of the Recapitalization,  together
with the applicable accounting effects, were as follows:

      (i) HWH  contributed  $45.6 million in capital to NBC Merger Corp.,  which
          was then merged into NBC, with NBC being the surviving corporation.

     (ii) Existing management shareholders of NBC reinvested  approximately $4.4
          million  in  NBC.  HWH  and  management   shareholders  were  reissued
          surviving corporation shares of NBC Class A Common Stock.

    (iii) The  Company  obtained   approximately  $170.0  million  in  new  debt
          financing  and retired  substantially  all of its existing  debt.  The
          early  extinguishment of debt resulted in an extraordinary loss on the
          transaction.

     (iv) NBC obtained approximately $45.0 million in debt financing through the
          issuance  of  senior  discount   debentures   (the  "Senior   Discount
          Debentures").

      (v) The Company paid a dividend of  approximately  $72.7 million to NBC to
          be  utilized  in  the  repurchase  of NBC  Common  Stock  and  accrued
          approximately    $2.6   million   for   additional    costs   of   the
          Recapitalization.

     (vi) The Company agreed to purchase management's  outstanding options under
          NBC's  1995  Stock  Incentive  Plan for a cash  payment in lieu of the
          options.  This resulted in stock based  compensation of  approximately
          $8.3  million  for the year ended March 31,  1998.  In  addition,  NBC
          agreed to purchase all outstanding  warrants for  approximately  $16.7
          million.

    (vii)  NBC reacquired its  outstanding  shares of Class A and Class B Common
           Stock of certain  shareholders for approximately  $149.2 million. NBC
           accounted  for this  reacquisition  of  shares  as a  treasury  stock
           transaction,  and such  reacquired  shares were  retired.  As the new
           investor  did not acquire  substantially  all of the common  stock of
           NBC, a new basis of accounting was not established in connection with
           the Recapitalization.

                                       30
<PAGE>

    In connection with the  Recapitalization,  a transaction fee of $4.0 million
was paid to HWH. Additionally, HWH was reimbursed approximately $0.1 million for
expenses incurred by HWH in conjunction with the  Recapitalization.  NBC charged
approximately  $0.6  million  of such  costs to  additional  paid-in  capital as
non-deductible costs of the Recapitalization. Of the remaining $3.5 million, the
Company and NBC recorded  $2.6 million and $0.9 million,  respectively,  as debt
issue costs and are amortizing such costs over the life of the related debt.

B.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The significant accounting policies of the Company are as follows:

    REVENUE  RECOGNITION:  The Company  recognizes revenue from product sales at
the time of shipment. The Company has established a program which, under certain
conditions,  enables its customers to return product. The effect of this program
is estimated  utilizing  actual  historical  return  experience  and amounts are
adjusted accordingly.  The Company recognizes revenues from the licensing of its
software  products upon delivery or installation if the Company is contractually
obligated to install the software.

    SHIPPING  AND  HANDLING  FEES AND COSTS:  Amounts  billed to a customer  for
shipping and handling  have been  classified  as revenues in the  statements  of
operations and approximated $2.9 million, $2.2 million, and $1.5 million for the
years ended March 31, 2001, 2000, and 1999, respectively.  Shipping and handling
costs are included in operating  expenses in the  statements of  operations  and
approximated  $6.8 million,  $5.8 million,  and $4.7 million for the years ended
March 31, 2001, 2000, and 1999, respectively.

    ADVERTISING:  Advertising  costs are expensed as incurred  and  approximated
$2.2 million, $2.3 million, and $2.0 million for the years ended March 31, 2001,
2000, and 1999, respectively.

    USE OF ESTIMATES: The preparation of financial statements in conformity with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make estimates and assumptions  that affect the reported
amounts  of assets and  liabilities  and  disclosure  of  contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from the estimates.

    CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of cash on hand
and in the  bank as well as  short-term  investments  with  maturities  of three
months or less when purchased.

     INVENTORIES:  Inventories  are  stated  at the  lower  of cost  or  market.
Inventories for wholesale operations are determined on the weighted-average cost
method. Other inventories are determined on the first-in, first-out cost method.

    PROPERTY  AND  EQUIPMENT:   Property  and  equipment  are  stated  at  cost.
Depreciation  is  determined  using  a  combination  of  the  straight-line  and
accelerated methods. The majority of property and equipment have useful lives of
five to six years, with the exception of buildings which are depreciated over 30
years.

    SOFTWARE  DEVELOPMENT COSTS: The Company's primary activities  regarding the
internal   development  of  software  revolve  around  its  proprietary  college
bookstore information system (PRISM),  which is utilized by the Company's retail
bookstores  and also  marketed  to the  general  public.  As the PRISM  software
developed  internally  is intended  for both  internal  use and sale to external
customers,  the  Company  adheres to the  guidance  in  Statement  of  Financial
Accounting  Standards  ("SFAS")  No. 86,  ACCOUNTING  FOR THE COSTS OF  COMPUTER
SOFTWARE TO BE SOLD,  LEASED, OR OTHERWISE  MARKETED as required by Statement of
Position  98-1,  ACCOUNTING  FOR THE COSTS OF  COMPUTER  SOFTWARE  DEVELOPED  OR
OBTAINED FOR INTERNAL USE.

    Development  costs included in the research and  development of new software
products and  enhancements  to existing  software  products  associated with the
Company's  proprietary  college  bookstore  information  systems are expensed as
incurred  until   technological   feasibility   has  been   established.   After
technological  feasibility  is  established,  additional  development  costs are
capitalized  and amortized over the lesser of five years or the economic life of
the related product. Recoverability of such capitalized costs is evaluated based


                                       31
<PAGE>

upon estimates of future  undiscounted net revenues.  Software costs capitalized
pertaining to WinPRISM,  the Company's new Windows-based  product,  approximated
$1.1 million and $0.8 million at March 31, 2001 and 2000,  respectively.  During
the fiscal year ended March 31,  2001,  certain  WinPRISM  functionalities  were
completed and released to the general  public.  Amortization  of the capitalized
costs associated with such  functionalities  totaled $0.1 million for the fiscal
year ended March 31, 2001.  During fiscal 2000, the Company also capitalized and
amortized   approximately  $0.3  million  associated  with  the  development  of
WebPRISM, which was licensed to TheCampusHub.com,  Inc. in fiscal 2001 (see Note
O to the consolidated financial statements).

    GOODWILL AND INTANGIBLE ASSETS:  Intangible assets were acquired through the
acquisition of 100% of the stock of the Company effective September 1, 1995, and
the  acquisition  of various  bookstore  operations  and other  businesses.  The
Company monitors events and changes in circumstances  which may require a review
of the carrying  value of goodwill at each  consolidated  balance  sheet date to
assess  recoverability  based on estimated  undiscounted  future  operating cash
flows.  Impairments  are  recognized  in  operating  results  when  a  permanent
diminution  in  value  occurs  based  on  fair  value.  The  assessment  of  the
recoverability  of goodwill will be impacted if estimated  future operating cash
flows are not  achieved.  Goodwill is  amortized on a  straight-line  basis over
periods  ranging from 3-15 years.  Covenants  not to compete are  amortized on a
straight-line basis over the term of the agreements.

    DEBT ISSUE COSTS:  The costs related to the issuance of debt are capitalized
and amortized to interest expense on a straight-line basis over the lives of the
related debt.

    DERIVATIVE FINANCIAL INSTRUMENTS: Interest rate swap agreements are utilized
by the Company to reduce the exposure to  fluctuations  in the interest rates on
its  variable  rate debt.  The  differential  to be  received or paid under such
agreements  is  recognized  in  income  over  the  life  of  the  agreements  as
adjustments to interest expense.

    FAIR VALUE OF  FINANCIAL  INSTRUMENTS:  The  carrying  amounts of  financial
instruments  including  cash  and cash  equivalents,  accounts  receivable,  and
accounts payable  approximate fair value as of March 31, 2001 and 2000,  because
of the  relatively  short  maturity  of these  instruments.  The  fair  value of
long-term  debt,  including the current  maturities,  was  approximately  $146.5
million  and $143.8  million  as of March 31,  2001 and 2000,  respectively,  as
determined  primarily by quoted  market  values.  The fair value of the interest
rate swap agreements  (see note H) approximated  $(1.0) million and $1.7 million
as of March 31, 2001 and 2000 using  quotes  from  brokers  and  represents  the
Company's gain (loss) on settlement if the existing  agreements had been settled
on that date.

     STOCK  BASED  COMPENSATION:   The  Company  accounts  for  its  stock-based
compensation under provisions of Accounting Principles Board ("APB") Opinion No.
25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES and related interpretations.

    INCOME TAXES:  The Company files a  consolidated  federal  income tax return
with its parent and follows a policy of  recording an amount equal to the income
tax  expense  which the  Company  would  have  incurred  had it filed a separate
return. The Company is responsible for remitting tax payments and collecting tax
refunds for the  consolidated  group.  The amount due to parent  represents  the
cumulative  reduction in tax payments made by the Company as a result of the tax
benefit of operating  losses  generated  by the  Company's  parent.  The Company
provides for  deferred  income taxes based upon  temporary  differences  between
financial  statement  and income tax bases of assets  and  liabilities,  and tax
rates in effect for periods in which such temporary differences are estimated to
reverse.

     COMPREHENSIVE  INCOME:  The Company  has no sources of other  comprehensive
income. Therefore, comprehensive income consists solely of net income.

     ACCOUNTING  STANDARDS NOT YET ADOPTED:  The Financial  Accounting Standards
Board has issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES,  as amended by SFAS No. 137,  ACCOUNTING FOR DERIVATIVE  INSTRUMENTS
AND HEDGING  ACTIVITIES - DEFERRAL OF THE EFFECTIVE  DATE OF FASB  STATEMENT NO.
133, and SFAS No. 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN


                                       32
<PAGE>

HEDGING  ACTIVITIES.  This standard requires that all derivative  instruments be
recorded  in the  balance  sheet at fair  value.  Changes  in the fair  value of
derivatives  are recorded in earnings or other  comprehensive  income,  based on
whether the instrument is designated as part of a hedge  transaction and, if so,
the type of hedge  transaction.  The initial  adoption  of SFAS No.  133,  which
occurred on April 1, 2001,  had no material  impact on the  Company's  financial
statements.

     RECLASSIFICATIONS:  Certain items on the prior years'  statements have been
reclassified to conform to the current year presentation.

C.  ACQUISITIONS

    Effective  November  12,  1999,  the  Company  acquired  certain  assets and
liabilities  of Michigan  College Book  Company,  Inc. and Ned's  Berkeley  Book
Company, Inc. (collectively  referred to as "Ned's Bookstores"),  an independent
college bookstore  operation with 11 retail  bookstores  located in Michigan and
California,  for approximately $10.2 million, net of cash acquired.  The Company
accounted for this acquisition  under the purchase method of accounting.  Excess
cost over fair value of net assets  acquired of  approximately  $7.8 million has
been recorded as goodwill and is being  amortized  over a period of three years.
Such  amortization  period was assigned  based upon the factors  outlined in APB
Opinion  No.  17,  INTANGIBLE  ASSETS.  The  results  of  operations  for  Ned's
Bookstores  have been included in the  consolidated  results of the Company from
the date of acquisition.  The acquisition of Ned's Bookstores was funded in part
through a $4.6 million capital  contribution from NBC to the Company. NBC raised
the $4.6  million in capital  through  the sale of 87,922  shares of its Class A
Common Stock to certain shareholders,  including HWH Capital Partners,  L.P. and
members of senior  management  on December 6, 1999.  The  remaining  funding was
provided through available cash funds.

    Effective June 4, 1999, the Company  acquired all of the outstanding  common
stock of Triro, Inc., an independent  college bookstore operation with 17 retail
bookstores  located in Texas, New Mexico, and Arizona,  for approximately  $15.0
million, net of cash acquired.  The Company accounted for this acquisition under
the  purchase  method of  accounting.  Excess cost over fair value of net assets
acquired of  approximately  $9.3  million has been  recorded as goodwill  and is
being  amortized  over a period of three  years.  Such  amortization  period was
assigned  based upon the factors  outlined in APB Opinion No. 17. The results of
operations for Triro, Inc. have been included in the consolidated results of the
Company from the date of acquisition.  The acquisition of Triro, Inc. was funded
in part through a $10.3 million  capital  contribution  from NBC to the Company.
NBC raised the $10.3  million in capital  through the sale of 197,001  shares of
its  Class A  Common  Stock  to  certain  shareholders,  including  HWH  Capital
Partners,  L.P.  and members of senior  management.  The  remaining  funding was
provided  through  available  cash  funds and  borrowings  under  the  Company's
revolving credit facility.

    The following table  summarizing  unaudited pro forma financial  information
assumes the  acquisitions  discussed  above had occurred at the beginning of the
period  presented.   The  unaudited  pro  forma  financial  information  is  not
necessarily  indicative of what the actual results of operations would have been
had the acquisitions occurred at the beginning of the period presented, nor does
it purport to indicate the results of future operations.

                                      Year Ended
                                    March 31, 2000
                                    --------------
   Pro Forma Information:
     Revenues, net of returns       $ 278,137,891
     Net income                           792,147


    Additionally,  the Company from time to time acquires  bookstore  operations
which  generally  are not material in their impact to the Company.  The purchase
generally involves paying cash for the inventory and fixed assets, as well as an
amount  for  goodwill.  Goodwill  recorded  in such  transactions  is  generally
amortized on a straight-line  basis over a period of three years. In fiscal 2001
and  2000,  the  Company  acquired  four  and  two  such  bookstore  operations,
respectively.

                                       33
<PAGE>

D.  RECEIVABLES

    Receivables are summarized as follows:

                                                    March 31,
                                             ------------------------
                                                 2001         2000
                                             -----------  -----------
   Trade  receivables,  less  allowance
    for doubtful accounts of $407,033
    and $175,899 at March 31, 2001 and 2000,
    respectively                             $14,739,915  $12,935,801
   Receivables from book publishers for
   returns                                    11,971,106    7,589,663
   Advances for book buy-backs                 1,784,687    1,738,587
   Computer finance agreements, current
   portion                                       128,544      145,910
   Other                                       2,743,898    1,783,707
                                             -----------  -----------
                                             $31,368,150  $24,193,668
                                             ===========  ===========


   Trade receivables include the effect of estimated product returns. The amount
of estimated product returns at March 31, 2001 and 2000 was  approximately  $2.7
million and $3.3 million, respectively.

E.  INVENTORIES

    Inventories are summarized as follows:

                                                      March 31,
                                              --------------------------
                                                  2001          2000
                                              -----------    -----------
   Wholesale                                  $26,150,304    $25,413,484
   College bookstores                          31,348,415     31,137,643
   Other                                        4,335,844      5,258,503
                                              -----------    -----------
                                              $61,834,563    $61,809,630
                                              ===========    ===========

    Wholesale  inventories include the effect of estimated product returns.  The
amount of estimated product returns at March 31, 2001 and 2000 was approximately
$1.4 million and $1.6 million, respectively.

F.  PROPERTY AND EQUIPMENT

    A summary of the cost of property and equipment follows:

                                                    March 31,
                                         -------------------------------
                                              2001             2000
                                         --------------  ---------------
   Land                                   $  2,412,818     $  2,412,818
   Buildings and improvements               14,733,218       14,443,622
   Leasehold improvements                    6,100,691        5,912,012
   Furniture and fixtures                    4,737,487        4,571,529
   Information systems                       9,277,060        8,352,241
   Automobiles and trucks                      386,074          433,956
   Machinery                                   465,878          425,295
   Projects in process                          40,929            7,147
                                         --------------  ---------------
                                            38,154,155       36,558,620
   Less:  Accumulated depreciation
   & amortization                          (13,679,268)     (10,797,795)
                                         --------------  ---------------
                                          $ 24,474,887     $ 25,760,825
                                         ==============  ===============


                                       34
<PAGE>

G.  GOODWILL AND OTHER INTANGIBLES

    Goodwill and intangible assets and related amortization are as follows:

                                                    March 31,
                                         -------------------------------
                                              2001            2000
                                         --------------  ---------------
    Goodwill                              $ 47,883,906     $ 53,901,655
    Covenants not to compete                   610,000          150,000
    Debt issue costs                        11,288,008       11,288,008
                                         --------------  ---------------
                                            59,781,914       65,339,663
    Less:  Accumulated amortization        (25,603,327)     (22,156,518)
                                         --------------  ---------------
                                          $ 34,178,587     $ 43,183,145
                                         ==============  ===============


H.  LONG-TERM DEBT

    On February 13,  1998,  the Company  obtained  new  financing as part of the
Recapitalization  (See Note A). The new financing  included a  bank-administered
senior  credit  facility  (the  "Senior  Credit  Facility")  provided  through a
syndicate of investors.  The facility was comprised of a $27.5 million term loan
(the  "Tranche A Loan"),  a $32.5 million term loan (the "Tranche B Loan") and a
$50.0 million revolving credit facility (the "Revolving Credit Facility").

    The Revolving Credit Facility expires on March 31, 2004.  Availability under
the Revolving  Credit  Facility is determined by the  calculation of a borrowing
base, which at any time is equal to a percentage of eligible accounts receivable
and inventory. The calculated borrowing base at March 31, 2001 was approximately
$38.6 million. The Revolving Credit Facility was unused at March 31, 2001.

    The interest rate on the Senior Credit  Facility is prime plus an applicable
margin of up to 1.50%  or, on  Eurodollar  borrowings,  Eurodollar  rate plus an
applicable margin of up to 2.50%.  Additionally,  there is a 0.5% commitment fee
for the average  daily  unused  amount of the  Revolving  Credit  Facility.  The
average  borrowings under the Company's  Revolving Credit Facility for the years
ended March 31, 2001 and 2000 were approximately $15.3 million and $14.2 million
at an average rate of 10.7% and 9.3%, respectively.

    The Senior Credit Facility is  collateralized  by  substantially  all of the
assets of the Company and its parent, NBC. Additionally,  NBC has guaranteed the
prompt and complete payment and performance of the Company's  obligations  under
the Senior Credit  Facility.  The Senior Credit  Facility also  stipulates  that
excess cash flows as defined in the credit  agreement  dated  February  13, 1998
(the "Credit  Agreement") shall be applied  initially towards  prepayment of the
term  loans  and then  utilized  to  permanently  reduce  commitments  under the
Revolving Credit Facility.  At March 31, 2001 and 2000, there was no excess cash
flow payment due.

    Additional funding of the  Recapitalization  included the proceeds of $110.0
million  face amount of 8.75%  senior  subordinated  notes due 2008 (the "Senior
Subordinated  Notes") and the issuance by NBC of senior discount debentures (the
"Senior Discount Debentures").

                                       35
<PAGE>

    Borrowings consist of the following:

                                                       March 31,
                                             ---------------------------------
                                                  2001               2000
                                             --------------    ---------------
   Tranche A Loan, due March 31, 2004,
    quarterly  principal  payments, plus
    interest at a floating  rate based
    on Eurodollar rate plus 2.25% (7.20%
    and 8.46% at March 31, 2001 and 2000,
    respectively)                             $ 20,062,500      $ 24,000,000
  Tranche B Loan, due March 31, 2006,
    quarterly principal payments, plus
    interest at a floating rate based
    on Eurodollar rate plus 2.50% (7.45%
    and 8.71% at March 31, 2001 and 2000,
    respectively)                               31,125,000        31,625,000
  Senior subordinated  notes,  unsecured,
    due February 15, 2008, semi-annual
    interest payments at a fixed rate of
    8.75%                                      110,000,000       110,000,000
  Mortgage note payable with an insurance
    company assumed with the acquisition
    of a bookstore facility, due December 1,
    2013, monthly payments of $6,446
    including interest at 10.75%                   534,090           552,914
                                             --------------    ---------------
                                               161,721,590       166,177,914
  Less current maturities                       (6,308,450)       (4,456,324)
                                             --------------    ---------------
                                              $155,413,140      $161,721,590
                                             ==============    ===============

    The  Senior  Credit  Facility  requires  the  Company  to  maintain  certain
financial  ratios and  contains  a number of other  covenants  that among  other
things,  restrict  the  ability  to incur  additional  indebtedness,  dispose of
assets,  make capital  expenditures,  make loans or advances and pay  dividends,
except that, among other things,  the Company may pay dividends to NBC (i) after
August 15, 2003 in an amount not to exceed the amount of interest required to be
paid on NBC's Senior  Discount  Debentures  and (ii) to pay  corporate  overhead
expenses not to exceed $250,000 per year and any taxes due by NBC.

    The indenture  governing the Senior Subordinated Notes restricts the ability
of the Company and its Restricted  Subsidiaries (as defined in the indenture) to
pay dividends or make other Restricted Payments (as defined in the indenture) to
their respective  stockholders,  subject to certain  exceptions,  unless certain
conditions are met, including that (i) no default under the indenture shall have
occurred and be continuing, (ii) the Company shall be permitted by the indenture
to incur additional indebtedness and (iii) the amount of the dividend or payment
may not exceed a certain  amount based on,  among other  things,  the  Company's
consolidated net income.

    The Company has separate five-year  amortizing interest rate swap agreements
with two financial  institutions  whereby the Company's  variable rate Tranche A
and B Term Loans have been effectively  converted into debt with a fixed rate of
5.815% plus the applicable  margin. The notional amount under each agreement was
approximately $25.6 million at March 31, 2001. Such notional amounts are reduced
periodically by amounts equal to the scheduled principal payments on the Tranche
A and B Term  Loans.  The  Company  is  exposed  to credit  loss in the event of
nonperformance by the  counterparties to the interest rate swap agreements.  The
Company  anticipates  the  counterparties  will be able to fully  satisfy  their
obligations under the agreements.


                                       36
<PAGE>

    At March 31, 2001,  the aggregate  maturities of long-term debt for the next
five years were as follows:

   Fiscal Year
   -----------
   2002                              $ 6,308,450
   2003                                6,823,317
   2004                                8,500,950
   2005                               11,216,381
   2006                               18,469,644

I.  INCOME TAXES

    The provision (benefit) for income taxes consists of:

                                                Year Ended March 31,
                                       ----------------------------------------
                                          2001           2000          1999
                                       -----------    -----------   -----------
   Current:
     Federal                           $6,107,168     $4,524,517    $2,967,333
     State                              1,101,428      1,093,227       519,524
   Deferred                            (1,351,000)      (773,000)     (883,200)
                                       -----------    -----------   -----------
                                       $5,857,596     $4,844,744    $2,603,657
                                       ===========    ===========   ===========


    The  following  represents a  reconciliation  between the actual  income tax
expense and income  taxes  computed by applying  the Federal  income tax rate to
income before income taxes:

                                                  Year Ended March 31,
                                         -------------------------------------
                                           2001           2000           1999
                                         -------        -------        -------
   Statutory rate                          34.0%          34.0%         34.0%
   State income tax effect                  5.7            9.5           6.4
   Amortization of goodwill                14.2           22.4          17.5
   Change in estimate of income tax
     liabilities                            2.4            3.7          10.0
   Other                                    1.1            2.3           3.2
                                         -------        -------        -------
                                           57.4%          71.9%         71.1%
                                         =======        =======        =======

The components of the deferred tax assets consist of the following:

                                                      March 31,
                                             --------------------------
                                                 2001           2000
                                             -----------    -----------
   Deferred income tax assets
   (liabilities), current:
     Vacation accruals                       $  484,173     $  420,483
     Inventory                                  544,378        603,037
     Allowance for doubtful accounts            154,510         66,771
     Product returns                            480,069        618,637
     Other deferred tax assets                  321,784           -
     Other deferred tax liabilities            (122,748)      (110,135)
                                             -----------    -----------
                                              1,862,166      1,598,793
                                             -----------    -----------
   Deferred income tax assets,
   noncurrent:
     Deferred compensation agreements            90,713         76,767
     Book over tax goodwill amortization      2,967,716      1,775,263
     Covenant not to compete                  1,468,568      1,587,340
                                             -----------    -----------
                                              4,526,997      3,439,370
                                             -----------    -----------
                                             $6,389,163     $5,038,163
                                             ===========    ===========

    The  non-current  portion  of  deferred  tax assets is  classified  in other
assets.


                                       37
<PAGE>

J.  LEASE OBLIGATIONS

    The Company is obligated under various capital leases for certain  equipment
that expire at various dates through 2003. Capitalized leased equipment included
in property and equipment was  approximately  $27,000 at March 31, 2001,  net of
accumulated amortization.

    The Company leases bookstore  facilities and data processing equipment under
noncancelable  operating  leases  expiring at various dates through fiscal 2013,
many of which contain  options to renew for periods of up to ten years.  Certain
of the leases are based on a percentage of sales, ranging from 2.5% to 10.5%.

    Future minimum  capital lease payments and aggregate  minimum lease payments
under  noncancelable  operating  leases  for the  years  ending  March 31 are as
follows:

                                           Capital      Operating
     Year                                  Leases         Leases
     ----                                ------------  -----------
     2002                                $    32,160   $ 6,627,000
     2003                                     23,091     5,652,000
     2004                                       -        4,513,000
     2005                                       -        3,511,000
     2006                                       -        2,872,000
     Thereafter                                 -        8,451,000
                                         ------------  -----------
   Total minimum lease payments               55,251   $31,626,000
   Amount representing interest               (3,534)  ===========
                                         ------------
   Present value of minimum lease
     payments                            $    51,717
                                         ============

    Total rent  expense for the years ended March 31, 2001,  2000,  and 1999 was
approximately  $9.6  million,  $8.2  million,  and $6.2  million,  respectively.
Percentage  rent expense for the years ended March 31, 2001,  2000, and 1999 was
approximately $2.0 million, $1.8 million, and $1.6 million, respectively.

K.  RETIREMENT PLAN

    The Company  participates  in and  sponsors a 401(k)  compensation  deferral
plan. The plan covers  substantially all employees.  The plan provisions include
employee  contributions  based on a  percentage  of  compensation  along  with a
sponsor base contribution in addition to a limited matching feature. The sponsor
contributions  for  the  years  ended  March  31,  2001,  2000,  and  1999  were
approximately $0.8 million, $0.8 million, and $0.7 million, respectively.

L. DEFERRED COMPENSATION

    The Company has a  non-qualified  deferred  compensation  plan for  selected
employees.  This plan allows participants to voluntarily elect to defer portions
of their  current  compensation.  The  amounts  can be  distributed  upon death,
resignation or termination, voluntary or involuntary. Interest is accrued at the
prime rate adjusted  semi-annually  on January 1 and July 1 and is compounded as
of March 31. The  liability for the deferred  compensation  is included in other
long-term liabilities.

M.  STOCK-BASED COMPENSATION

    NBC has two stock-based  compensation  plans  established to provide for the
granting of options to purchase NBC Class A Common Stock. Details regarding each
of the plans in effect are as follows:

    1998 PERFORMANCE  STOCK OPTION PLAN - This plan provides for the granting of
options to  purchase  52,000  shares of NBC's  Class A Common  Stock to selected
members of senior management of NBC and its affiliates.  All options granted are
intended to be nonqualified  stock options,  although the plan also provides for
incentive  stock options.  NBC will grant a portion of the available  options in
fiscal years 1999-2002 upon the attainment of pre-established financial targets.


                                       38
<PAGE>

Twenty-five  percent of the options granted become exercisable  immediately upon
granting, with the remaining options becoming exercisable in 25% increments over
the subsequent  three years on the anniversary of the date of grant. The options
have an  exercise  price  of not less  than  fair  market  value on the date the
options are  granted  and expire ten years from the date of grant.  At March 31,
2001, there were 29,470 options available for grant under the plan.

    1998 STOCK  OPTION PLAN - This plan  provides for the granting of options to
purchase  31,000  shares of NBC's Class A Common  Stock to  selected  employees,
officers,  and  directors  of NBC and its  affiliates.  All options  granted are
intended to be nonqualified  stock options,  although the plan also provides for
incentive  stock  options.  NBC will grant such options at the  discretion  of a
committee  designated  by the Board of Directors  (the  Committee).  Twenty-five
percent of the options  granted become  exercisable  immediately  upon granting,
with the remaining  options  becoming  exercisable  in 25%  increments  over the
subsequent three years on the anniversary of the date of grant.  Incentive stock
options  have an exercise  price of not less than fair market  value on the date
the options are granted,  while the Committee  determines the exercise price for
nonqualified  options,  which may be below  fair  market  value,  at the time of
grant.  All options expire ten years from the date of grant.  At March 31, 2001,
there were 2,906 options available for grant under the plan.

    No compensation  cost was recognized for the options granted to employees in
fiscal 2001, 2000, and 1999 as the exercise price was greater than the estimated
fair value (including a discount for the holder's minority interest position and
illiquidity  of the Class A Common Stock) of the Company's  Class A Common Stock
on the date of grant.


                                       39
<PAGE>

    A summary of the  Company's  stock-based  compensation  activity  related to
stock  options for each of the plans for the three years ended March 31, 2001 is
as follows:
<TABLE>
<CAPTION>

                                                  Year Ended March 31,
                                      2001                2000              1999
                               ------------------ ------------------ -----------------
                                        Weighted-           Weighted-         Weighted-
                                        Average             Average           Average
                                        Exercise            Exercise          Exercise
                                Number    Price    Number    Price    Number   Price
                               -------- --------- --------- -------- -------- --------
<S>                              <C>      <C>        <C>     <C>      <C>        <C>
1998 PERFORMANCE STOCK
OPTION PLAN:
   Outstanding - beginning
   of year                       9,530    $52.47     9,530   $52.47        -   $    -
   Granted                      13,000     52.47         -        -    9,530    52.47
   Expired/terminated                -         -         -        -        -        -
   Exercised                         -         -         -        -        -        -
                               -------- --------- --------- -------- -------- --------
   Outstanding - end of year    22,530    $52.47     9,530   $52.47    9,530   $52.47
                               ======== ========= ========= ======== ======== ========
</TABLE>

There were 10,398, 4,765, and 2,382 options exercisable at March 31, 2001, 2000,
and 1999,  respectively,  with a  weighted-average  exercise price per option of
$52.47.  All options  outstanding  at March 31,  2001 have an exercise  price of
$52.47 per  option  and a  weighted-average  remaining  contractual  life of 8.7
years.
<TABLE>
<CAPTION>

                                                  Year Ended March 31,
                                      2001                2000              1999
                               ------------------ ------------------ -----------------
                                        Weighted-           Weighted-         Weighted-
                                        Average             Average           Average
                                        Exercise            Exercise          Exercise
                                Number    Price    Number    Price    Number   Price
                               -------- --------- --------- -------- -------- --------
<S>                             <C>       <C>       <C>      <C>      <C>        <C>
1998 STOCK OPTION PLAN:
   Outstanding - beginning
   of year                      24,694    $52.47    13,200   $52.47        -   $    -
   Granted                       3,400     52.47    11,594    52.47   13,200    52.47
   Expired/terminated                -         -      (100)   52.47        -        -
   Exercised                         -         -         -        -        -        -
                               -------- --------- --------- -------- -------- --------
    Outstanding - end of year   28,094    $52.47    24,694   $52.47   13,200   $52.47
                               ======== ========= ========= ======== ======== ========

There were 16,472, 9,448, and 3,300 options exercisable at March 31, 2001, 2000,
and 1999,  respectively,  with a  weighted-average  exercise price per option of
$52.47.  All options  outstanding  at March 31,  2001 have an exercise  price of
$52.47 per  option  and a  weighted-average  remaining  contractual  life of 8.2
years.
</TABLE>

                                       40
<PAGE>

    If the Company  accounted for its  stock-based  compensation  using the fair
value  method   prescribed  by  SFAS  No.  123,   ACCOUNTING   FOR   STOCK-BASED
COMPENSATION,  the  weighted-average  grant-date  fair value of options  granted
under the 1998 Performance  Stock Option Plan in fiscal 2001 and 1999 would have
been $7.37 and $8.85 per option,  respectively.  The weighted-average grant-date
fair value of options  granted  under the 1998 Stock Option Plan in fiscal 2001,
2000, and 1999 would have been $7.68, $9.26, and $8.64 per option, respectively.
The fair value of options  granted  was  estimated  at the date of grant using a
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions:

                               Year Ended       Year Ended       Year Ended
                             March 31, 2001   March 31, 2000   March 31, 1999
                             --------------   --------------   --------------

  Risk-free interest rate            6.26%             6.06%           4.50%
  Dividend yield                        -                 -               -
  Expected volatility                1.00%             1.00%           1.00%
  Expected life (years)                 3                 3               4



    The  pro  forma  impact  on  net  income  of  accounting   for   stock-based
compensation using the fair value method required by SFAS 123 is as follows:

                                          Year Ended March 31,
                                    2001          2000            1999
                              -------------- --------------  --------------
   Net income:
      As reported               $ 4,338,837    $ 1,890,716     $ 1,057,283
      Pro forma                   4,266,002      1,825,059         995,295


N.  SEGMENT INFORMATION

    The  Company's  operating  segments  are  determined  based  on the way that
management  organizes the segments for making operating  decisions and assessing
performance.   Management  has  organized  the  Company's  segments  based  upon
differences in products and services provided.  The Company has three reportable
segments:  wholesale operations,  college bookstore operations and complementary
services.  The wholesale  operations  segment consists primarily of selling used
textbooks  to college  bookstores,  buying  them back from  students  or college
bookstores  at the end of each  college  semester  and  then  reselling  them to
college  bookstores.  The college bookstore  operations segment  encompasses the
operating  activities of the  Company's  102 college  bookstores as of March 31,
2001  located on or adjacent to college  campuses.  The  complimentary  services
segment  includes  book-related  services such as a centralized  buying service,
distance education materials, and computer hardware and software.

    The  accounting  policies of the  Company's  segments  are the same as those
described  in the  summary of  significant  accounting  policies  in Note B. The
Company primarily  accounts for intersegment sales as if the sales were to third
parties (at current market prices). Assets (excluding cash and cash equivalents,
certain receivables and other assets, and inventories), net interest expense and
taxes are not allocated between the Company's segments;  instead,  such balances
are accounted for in a corporate  administrative  division.  The following table
provides selected information about profit or loss and assets on a segment basis
for the three years ended March 31, 2001.

                                       41
<PAGE>
<TABLE>
<CAPTION>

                                                    College
                                     Wholesale     Bookstore   Complimentary
                                     Operations    Operations     Services       Total
                                    ------------  ------------ ------------- -------------
<S>                                 <C>          <C>           <C>          <C>
Year ended March 31, 2001:
  External customer revenues        $ 93,922,712  $182,479,980 $ 25,266,161  $301,668,853
  Intersegment revenues               19,084,092       376,020    1,381,290    20,841,402
  Depreciation and amortization
  expense                                293,408     9,429,428    1,475,914    11,198,750
  Income (loss) before interest
  and taxes                           27,241,116     9,206,616   (1,402,666)   35,045,066
  Total assets                        29,771,356    35,254,893    5,354,837    70,381,086

Year ended March 31, 2000:
  External customer revenues        $ 91,260,331  $157,896,805 $ 17,911,787  $267,068,923
  Intersegment revenues               16,814,190       180,064    2,806,006    19,800,260
  Depreciation and amortization
  expense                                321,936     7,444,799    2,280,512    10,047,247
  Income (loss) before interest
  and taxes                           24,832,679     9,588,784   (2,449,321)   31,972,142
  Total assets                        28,636,070    34,829,430    5,950,258    69,415,758

Year ended March 31, 1999:
  External customer revenues        $ 86,386,611  $120,872,556 $ 11,378,404  $218,637,571
  Intersegment revenues               12,364,501             -    1,259,149    13,623,650
  Depreciation and amortization
  expense                                319,702     3,171,027    1,894,323     5,385,052
  Income (loss) before interest
  and taxes                           21,590,426     8,339,047   (2,442,717)   27,486,756
  Total assets                        28,898,295    23,600,603    4,228,300    56,727,198
</TABLE>


    The following  table  reconciles  segment  information  presented above with
information  as presented in the Company's  financial  statements  for the three
years ended March 31, 2001.
<TABLE>
<CAPTION>

                                                   Year Ended March 31,
                                            2001            2000          1999
                                        -------------  ------------- -------------
<S>                                    <C>           <C>            <C>
Revenues:
  Total for reportable segments         $322,510,255   $286,869,183  $232,261,221
  Elimination of intersegment revenues   (20,841,402)   (19,800,260)  (13,623,650)
                                        -------------  ------------- -------------
    Financial statement total           $301,668,853   $267,068,923  $218,637,571
                                        =============  ============= =============

Depreciation and Amortization
Expense:
  Total for reportable segments         $ 11,198,750   $ 10,047,247  $  5,385,052
  Corporate administration                 2,203,151      2,368,759     3,156,620
                                        -------------  ------------- -------------
    Financial statement total           $ 13,401,901   $ 12,416,006  $  8,541,672
                                        =============  ============= =============

Income (loss) Before Interest and Taxes:
  Total for reportable segments         $ 35,045,066   $ 31,972,142  $ 27,486,756
  Corporate administrative costs          (7,977,326)    (8,123,130)   (6,668,446)
                                        -------------  ------------- -------------
                                          27,067,740     23,849,012    20,818,310
  Interest expense, net                  (16,871,307)   (17,113,552)  (17,157,370)
                                        -------------  ------------- -------------
    Income before taxes                 $ 10,196,433   $  6,735,460  $  3,660,940
                                        =============  ============= =============

Total Assets:
  Total for reportable segments         $ 70,381,086   $ 69,415,758  $ 56,727,198
  Assets not allocated to segments:
    Receivables                           26,829,423     20,923,250    17,544,101
    Recoverable income taxes                 706,408              -         4,902
    Deferred income taxes                  1,862,166      1,598,793     1,468,156
    Property and equipment, net           24,474,887     25,760,825    23,188,485
    Goodwill and other intangibles, net   34,178,587     43,183,145    35,562,090
    Other assets                           6,298,179      4,791,000     3,653,180
    Other                                    404,877        427,526     1,514,255
                                        -------------  ------------- -------------
      Financial statement total         $165,135,613   $166,100,297  $139,662,367
                                        =============  ============= =============

</TABLE>

    The Company's  revenues are attributed to countries based on the location of
the customer. Substantially all revenues generated are attributable to customers
located within the United States.


                                       42
<PAGE>

O.  RELATED PARTY TRANSACTIONS

      In fiscal 2001, the Company entered into several agreements related to its
WebPRISM and CampusHub  E-commerce  software  capabilities  with a newly created
entity,  TheCampusHub.com,  Inc.,  which is  partially  owned by NBC's  majority
owner.  Such  agreements  included  an equity  option  agreement,  a  management
services agreement, and a technology sale and license agreement.

    The equity option agreement  provides the Company the opportunity to acquire
25% of the initial  common  shares  outstanding  of  TheCampusHub.com,  Inc. The
option is being accounted for as a cost method investment in accordance with APB
Opinion No. 18, THE EQUITY METHOD OF ACCOUNTING FOR INVESTMENTS IN COMMON STOCK.
The  management  services  agreement,  which is effective  for a period of three
years,  reimburses  the Company for certain  direct costs  incurred on behalf of
TheCampusHub.com,  Inc.  and also pays the  Company  $0.5  million  per year for
certain shared management and  administrative  support.  Complementary  services
revenue  resulting from the management  services  agreement is recognized as the
services are performed.  The technology sale and license agreement  provides for
the Company to license its E-commerce software capabilities to TheCampusHub.com,
Inc.  for $0.5  million  per year  over a period  of three  years  and  provides
TheCampusHub.com,  Inc. with an option to purchase  such  software  capabilities
from the Company during that three year period.  The license fees are recognized
as complementary services revenue over the term of the agreement.  The Company's
Senior  Credit  Facility  was  amended  in  April,  2000 to  provide  for  these
transactions.  For the year ended March 31, 2001,  revenues  attributable to the
management  services and  technology  sale and license  agreements  totaled $0.9
million,  and reimbursable direct costs incurred on behalf of  TheCampusHub.com,
Inc. totaled $0.9 million.

    During fiscal 2001,  NBC issued 12,237 shares of its Class A Common Stock to
certain of the Company's  employees.  This issuance was exempt from registration
under the Securities  Act of 1933, as amended,  pursuant to Section 3(b) thereof
and Rule 505 of Regulation D promulgated thereunder.  Such shares were issued at
the  Founder's  Price of $52.47 per share.  Proceeds from this  issuance,  which
totaled $642,039, were utilized for general operating activities.

P.      SUBSEQUENT EVENT

       Subsequent  to March 31, 2001,  the Company  entered into an Agreement of
Sale with the University Co-operative Society (the "Co-op") at the University of
Texas in Austin.  Pursuant to the Agreement of Sale,  the Company sold inventory
and  certain  property,  plant  and  equipment  located  at two  of its  college
bookstore   locations   serving  the  University  of  Texas  to  the  Co-op  for
approximately $1.2 million.  The Company also assigned an associated real estate
operating lease to the Co-op.

    Also subsequent to March 31, 2001, the Company  acquired certain assets of a
privately  owned college  bookstore  serving Western  Washington  University and
seven Wallace's  Bookstores,  Inc. bookstores serving the University of Florida,
the University of Oklahoma,  North Carolina State University,  the University of
Central Florida,  Radford  University,  and Chadron State College for a total of
approximately  $5.8  million.  The Company will  account for these  acquisitions
under the purchase  method of accounting with any excess cost over fair value of
net assets acquired being recorded as goodwill.


       ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                           AND FINANCIAL DISCLOSURE.

    There were no changes in or disagreements with accountants on accounting and
financial disclosure for the fiscal year ended March 31, 2001.


                                       43
<PAGE>

                                    PART III

          ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    The members of the Board of Directors and executive  officers of the Company
and their ages are as follows:

         NAME           AGE                  POSITION
         ----           ---                  --------
   Robert B. Haas        54  Chairman and Director
   Douglas D. Wheat      51  Director

   Mark W. Oppegard      51  Chief Executive Officer, President and Director
   Barry S. Major        44  Chief Operating Officer
   Alan G. Siemek        40  Chief Financial Officer, Senior Vice President of
                             Finance and Administration, Treasurer, and
                             Assistant Secretary

   William H. Allen      58  Senior Vice President of Wholesale Division

   Thomas A. Hoff        53  Vice President of Retail Development
   Michael J. Kelly      43  Vice President of E-commerce
   Larry R. Rempe        53  Vice President of Information Systems
   Kenneth F. Jirovsky   57  Vice President of Development
   Ardean A. Arndt       59  Vice President of Administration and Secretary



   The business  experience,  principal occupation and employment as well as the
periods  of service  of each of the  directors  and  executive  officers  of the
Company during the last five years are set forth below.

     ROBERT B. HAAS became  Chairman  and a Director of the Company and NBC upon
the consummation of the Recapitalization. Mr. Haas has also served as a Director
of  TheCampusHub.com,  Inc.  since  its  inception  in 2000.  Mr.  Haas has been
actively  involved in private  investments since 1978. He has served as Chairman
of the Board and Chief  Executive  Officer of Haas Wheat since 1995; he has also
been Chairman of the Board and Chief  Executive  Officer of Haas Wheat  Advisory
Partners  Incorporated  since 1992 and  Chairman of the Board of Haas & Partners
Incorporated since 1989 (each of which is a private investment firm specializing
in   leveraged   acquisitions).   Mr.  Haas  serves  as  a  director  of  Sybron
International  Corporation,  AMN  Healthcare  Services,  Inc. and Walls  Holding
Company,  Inc.  and is the  Chairman of the Board of Playtex  Products,  Inc. (a
consumer products company).

     DOUGLAS  D.  WHEAT  became  a  Director  of the  Company  and NBC  upon the
consummation of the Recapitalization. Mr. Wheat has also served as a Director of
TheCampusHub.com, Inc. since its inception in 2000. Mr. Wheat has been President
of Haas  Wheat  since  1995  and  President  of  Haas  Wheat  Advisory  Partners
Incorporated  since 1992; he was Co-Chairman of Grauer & Wheat,  Inc. (a private
investment  firm)  from 1989 to 1992 and Senior  Vice  President  of  Donaldson,
Lufkin & Jenrette Securities  Corporation from 1985 to 1989. Mr. Wheat serves as
a director  of Smarte  Carte  Corporation,  Walls  Holding  Company,  Inc.,  AMN
Healthcare Services, Inc. and Playtex Products, Inc.

    MARK W. OPPEGARD has served in the college  bookstore  industry for 31 years
(all of which have been with the Company) and became Chief Executive  Officer of
the Company and President/Chief  Executive Officer,  Secretary and a Director of
NBC  upon   consummation   of  the   Recapitalization   on  February  13,  1998.
Additionally, Mr. Oppegard has served as President of the Company since 1992 and
as a Director of the  Company  since 1995.  Prior to the  Recapitalization,  Mr.
Oppegard served as Vice President, Secretary, Assistant Treasurer and a Director
of NBC between 1995 and 1998.  Prior to 1992, Mr. Oppegard served in a series of
positions  at the Company,  including  Vice  President of the college  bookstore
operations.  Mr.  Oppegard  has  also  served  as  Chairman  and a  Director  of
TheCampusHub.com,  Inc.  since  its  inception  in  2000.  Additionally,  he  is
currently a director of  NACSCORP,  INC.,  a  distribution  company  serving the
college bookstore industry.

                                       44
<PAGE>

    BARRY S. MAJOR was named Chief Operating  Officer of the Company in January,
1999. Additionally, Mr. Major served as President of TheCampusHub.com, Inc. from
its  inception to  November,  2000,  at which time he was named Chief  Executive
Officer of TheCampusHub.com, Inc. Prior to joining the Company, Mr. Major served
in various  executive  management  positions  at SITEL  Corporation  (SITEL),  a
company listed on the New York Stock Exchange that provides outsourced telephone
and  Internet-based  sales and customer  service.  Joining  SITEL in 1995 as the
Executive Vice President of Finance, Mr. Major was named Chief Financial Officer
in 1996 and assumed the role of President of the North  America  Region in 1997.
Between  1985 and 1995,  Mr. Major  served in a series of  positions,  including
President in 1995,  Executive Vice President,  and Senior Vice  President/Credit
Manager,  with  American  National  Corporation,  a multi-bank  holding  company
operating three banks throughout Omaha and Southeast Nebraska.

    ALAN G. SIEMEK was named Senior Vice President of Finance and Administration
of the Company in April,  2001.  Mr.  Siemek has also served as Chief  Financial
Officer, Treasurer and Assistant Secretary of the Company and Vice President and
Treasurer of NBC since July, 1999. Additionally,  Mr. Siemek has served as Chief
Financial Officer, Treasurer, and Secretary of TheCampusHub.com,  Inc. since its
inception in 2000. Prior to joining the Company,  Mr. Siemek served as Corporate
Controller at SITEL,  starting in 1997. Between 1994 and 1997, Mr. Siemek served
in the positions of Director and Manager of SEC  Reporting  and Risk  Management
for MFS  Communications,  a billion  dollar  telecommunications  firm.  Prior to
joining MFS  Communications,  Mr. Siemek spent eleven years in public accounting
with Coopers & Lybrand LLP in their Omaha and New York offices.

    WILLIAM H. ALLEN has served in the college  bookstore  industry for 36 years
(of which 27 have been with the Company). The Company named Mr. Allen the Senior
Vice President of Wholesale  Division in April, 2001. Between 1994 and 2001, Mr.
Allen served as Vice President of Warehouse Operations for the Company.  Between
1974 and 1994,  Mr. Allen served in a series of positions,  including  assistant
manager of the wholesale  operations.  Prior to joining the Company in 1974, Mr.
Allen was employed by the Missouri Store Company, a predecessor of MBS.

    THOMAS A. HOFF has served in the  college  bookstore  industry  for 14 years
(all of which have been with the Company) and was named Vice President of Retail
Development  for the Company in April,  2001.  Between  1992 and 2001,  Mr. Hoff
served as Vice President of Retail Division for the Company.  Mr. Hoff served as
an assistant to the Vice President of College Bookstore  Operations between 1987
and 1992.

    MICHAEL J. KELLY was named Vice  President of  E-commerce  of the Company in
November,  1999.  Additionally,  Mr. Kelly served as Chief Operating  Officer of
TheCampusHub.com,  Inc. from its  inception to November,  2000, at which time he
was named President and Chief Operating Officer of TheCampusHub.com,  Inc. Prior
to  joining  the  Company,  Mr.  Kelly  served in various  executive  management
positions at SITEL.  Joining SITEL in 1995 as a Business Unit Vice  President of
Administration  and Finance,  Mr. Kelly was named a Business  Unit  President in
1997, assumed the role of Chief Information Officer for the North America Region
in March,  1998, and was named Chief Technology Officer for Global Operations in
August, 1998. Between 1981 and 1995, Mr. Kelly served as Director of Information
Technology for Father Flanagan's Boys Home, a non-profit  organization  offering
services to troubled children.

    LARRY R. REMPE has served in the  college  bookstore  industry  for 15 years
(all of which  have  been  with the  Company)  and has been  Vice  President  of
Information Systems for the Company since 1986. Between 1974 and 1986, Mr. Rempe
served in various positions for Lincoln Industries,  Inc. ("Lincoln"), a holding
company that owned NBC until 1995.

    KENNETH F.  JIROVSKY  has served in the college  bookstore  industry  for 40
years (all of which have been with the Company) and was named Vice  President of
Development for the Company in April,  2001. Between 1986 and 2001, Mr. Jirovsky
served as Vice  President of Sales and Marketing for the Company.  Prior to 1986
Mr. Jirovsky served in a series of positions, including assistant manager of the
wholesale operations.

                                       45
<PAGE>

    ARDEAN A. ARNDT has served in the college  bookstore  industry  for 16 years
(all of which have been with the  Company)  and has served as Vice  President of
Administration  and Secretary for the Company since 1985. Between 1981 and 1985,
Mr. Arndt was Vice  President of  Administration  for Lincoln.  Between 1966 and
1982, Mr. Arndt served in various positions for Lincoln.


                        ITEM 11. EXECUTIVE COMPENSATION.

    The  following  tables  and  paragraphs   provide   information   concerning
compensation  paid by the Company for the last three  fiscal  years to its Chief
Executive  Officer  and to the four  other  most  highly  compensated  executive
officers   earning  in  excess  of  $100,000  in  annual   salary  and  bonuses;
compensation paid to Directors; and employment contracts in place with executive
officers.

    The table  presented  below  summarizes  annual and long-term  compensation,
including stock compensation, to such persons for the last three fiscal years:
<TABLE>
<CAPTION>

                             Summary Compensation Table
                                                              Long-Term
                                                            Compensation
                                      Annual Compensation      Awards
                                     ----------------------  -----------
                                                               Number
                                                            of Securities
                             Fiscal                          Underlying     All Other
Name and Principal Position   Year    Salary       Bonus     Options (1)  Compensation (2)
----------------------------  -----  ----------  ----------  -----------  ---------------
<S>                           <C>     <C>         <C>            <C>            <C>

Mark W. Oppegard - Chief
Executive Officer, President,
and Director                  2001   $ 246,731   $ 138,000        3,050          $ 2,276
                              2000     230,769     152,000            -            2,180
                              1999     197,808           -            -            2,985

Barry S. Major - Chief
Operating Officer             2001     219,231     118,000        2,650            2,120
                              2000     204,615     130,000            -            2,080
                              1999      40,769      60,000        9,530                -

Alan G. Siemek - Chief
Financial Officer, Senior
Vice President of Finance
and Administration,
Treasurer, and Assistant
Secretary                     2001     161,923      97,000        1,875            2,120
                              2000     111,481     133,000        6,353            2,027
                              1999           -           -            -                -

Larry R. Rempe - Vice
President of Information
Systems                       2001     152,769      40,000        1,000            2,276
                              2000     122,385      50,000            -            2,276
                              1999     106,846           -            -            3,092

William H Allen - Senior Vice
President of Wholesale
Division                      2001     106,846      50,000        1,200            2,516
                              2000     103,385      60,000            -            2,516
                              1999     100,923           -            -            3,376

</TABLE>


                                       46
<PAGE>


(1)     The stock  options  were  granted at an exercise  price of  $52.47/share
        ("Founder's  Price").  The estimated  fair market value of NBC's Class A
        Common Stock underlying the stock options, which includes a discount for
        the holder's  minority  interest position and illiquidity of the Class A
        Common Stock, was less than the exercise price on the date of grant.

(2)     Consists of Company  matching  contributions  to the NBC Retirement Plan
        and life  insurance  premiums  paid by the  Company  on the  executive's
        behalf.

    Presented below is information in tabular format regarding individual grants
of stock options to certain executive officers of the Company for the year ended
March 31, 2001:
<TABLE>
<CAPTION>

                  OPTIONS GRANTED DURING THE YEAR ENDED MARCH 31, 2001

                     Individual Grants                            Grant Date Value
--------------------------------------------------------------   -------------------
                                 Number    % of Total
                                   of       Options
                               Securities  Granted to                        Grant
                               Underlying  Employees  Exercise                Date
                                Options    in Fiscal    Price  Expiration   Present
            Name                Granted      2001     Per Share   Date      Value (1)
------------------------------ ---------  ---------   --------  ---------   --------
<S>                              <C>         <C>      <C>        <C>        <C>
Mark W. Oppegard - Chief
Executive Officer, President,
and Director                     3,050       18.6%    $ 52.47    07/31/10   $22,479

Barry S. Major - Chief
Operating Officer                2,650       16.2%      52.47    07/31/10    19,531

Alan G. Siemek - Chief
Financial Officer, Senior
Vice President of Finance
and Administration,
Treasurer, and Assistant
Secretary                        1,875       11.4%      52.47    07/31/10    13,819

Larry R. Rempe - Vice
President of Information
Systems                          1,000        6.1%      52.47    07/31/10     7,370

William H Allen - Senior Vice
President of Wholesale
Division                         1,200        7.3%      52.47    07/31/10     8,844

</TABLE>

(1)     Grant date present value was  determined  using a  Black-Scholes  option
        pricing model,  assuming a 6.24% risk-free  interest rate, 1.0% expected
        volatility, and an expected life of approximately 2.5 years.



                                       47
<PAGE>

    The following table provides  information  concerning each exercise of stock
options by certain executive officers of the Company during the year ended March
31, 2001 as well as the value of unexercised options as of March 31, 2001:

<TABLE>
<CAPTION>

        Aggregated Option Exercises During the Year Ended March 31, 2001
                      and Option Value as of March 31, 2001

                                                            Number
                                                         of Securities      Value of
                                                          Underlying      Unexercised
                                                         Unexercised      in-the-Money
                                                          Options at       Options at
                                                         March 31, 2001 March 31, 2001 (1)
                                                         -------------- -----------------
                                     Shares
                                     Acquired    Value    Exercisable/     Exercisable/
            Name                   on Exercise Realized  Unexercisable    Unexercisable
------------------------------      ---------  --------  -------------- -----------------
<S>                                   <C>         <C>            <C>             <C>
Mark W. Oppegard - Chief Executive
Officer, President, and
Director,                              -         $    -       763/2,287   $10,400/$31,172

Barry S. Major - Chief Operating
Officer,                               -              -     7,811/4,369   106,464/59,549

Alan G. Siemek - Chief Financial
Officer, Senior Vice President of
Finance and Administration,
Treasurer, and Assistant
Secretary,                             -              -     3,646/4,582    49,695/62,453

Larry R. Rempe - Vice President
of Information Systems                 -              -       250/750       3,407/10,222

William H. Allen - Senior Vice
President of Wholesale Division        -              -       300/900       4,089/12,267
</TABLE>


(1)     Represents  the excess of the March 31, 2001 estimated fair market value
        of NBC's  Class A Common  Stock  underlying  the  stock  options,  which
        includes a discount  for the  holder's  minority  interest  position and
        illiquidity  of the Class A Common  Stock,  over the  exercise  price of
        $52.47/share.


COMPENSATION OF DIRECTORS AND ADDITIONAL INFORMATION

   Directors  of the  Company  receive  no  compensation  for  services  but are
reimbursed for  out-of-pocket  expenses.  The Company's  Directors also serve as
Directors of TheCampusHub.com,  Inc., an entity that is partially owned by NBC's
majority owner.

EMPLOYMENT AGREEMENTS

   The Company has  employment  agreements  with Mark W.  Oppegard and the eight
other senior executive officers of the Company. Such agreements (the "Employment
Agreements")  with  the  aforementioned  senior  executive  officers  (each,  an
"Executive")  provide for an annual base  salary as  determined  by the Board of
Directors,  for incentive  compensation  based upon the  attainment of financial
objectives to be established by the Board of Directors (or a committee  thereof)
after  considering the  recommendation of the chief executive  officer,  and for
customary fringe benefits. The amounts of salaries are as follows: Mr. Oppegard,
$257,500 per annum;  Mr. Major,  $230,000 per annum;  Mr.  Siemek,  $170,000 per
annum;  Mr. Rempe,  $156,000 per annum;  and Mr. Allen,  $109,000 per annum. The
Employment  Agreements  provide that their term will be  automatically  extended
from year to year , unless terminated upon specified notice by either party.

                                       48
<PAGE>

   The Employment  Agreements also provide that each Executive will be granted a
number of options  to acquire  shares of NBC  Acquisition  Corp.  Class A Common
Stock  determined  by the Board of  Directors.  Each such option has an exercise
price  not to be less  than the fair  market  value  per share as of the date of
grant and is exercisable as to 25% of the shares covered  thereby on the date of
grant and as to an additional 25% of the shares  covered  thereby on each of the
first  three  anniversaries  of the date of grant,  subject  to the  Executive's
continued employment by the Company on such dates.

   The  Employment  Agreements  also  provide  for  specified  payments  to  the
Executive  in the event of  termination  of  employment  by the Company  without
"cause" (as defined in the respective  agreements)  and in the event of death or
disability of the Executive  during the term.  The  Employment  Agreements  also
contain  customary  confidentiality  obligations and three year  non-competition
agreements for each Executive.

   Finally, the Employment Agreements provide that, prior to the consummation by
NBC of an initial public offering of NBC  Acquisition  Corp.  Common Stock,  the
Executives will not sell, transfer, pledge or otherwise dispose of any shares of
NBC Acquisition  Corp.  Common Stock,  except for certain transfers to immediate
family members, in the event of disability and for estate planning purposes. The
Employment  Agreements also provide that, in the event of the sale of a majority
of the outstanding NBC Acquisition  Corp. Common Stock, the Executives will have
the option,  and (at the option of HWH) will be  required,  to sell their shares
ratably  with,  and on the same  terms and  conditions  as,  the  other  selling
shareholders.


    ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    As a result of the  Recapitalization,  all  shares  of  common  stock of the
Company are owned by NBC. The  information in the following table sets forth NBC
Acquisition  Corp.  Class A Common Stock  beneficially  owned by each person who
owns more than 5.0% of such shares; each director;  each executive officer named
in Item 11; and all directors and executive officers of the Company treated as a
group. The shares listed and percentages  calculated  thereon are based upon NBC
Acquisition  Corp. Class A Common Stock  outstanding as of June 26, 2001 and NBC
Acquisition  Corp.  Class A Common Stock underlying  nonqualified  stock options
that are exercisable within sixty days, pursuant to Rule 13d-3 of the Securities
Exchange Act of 1934.  To the  knowledge of NBC,  each of such holders of shares
has sole voting and  investment  power as to the shares owned  unless  otherwise
noted.  The address for each  executive  officer and director is 4700 South 19th
Street, Lincoln, Nebraska 68501 unless otherwise noted.

                                       49
<PAGE>

<TABLE>
<CAPTION>
                                                              Amount and
                                                              Nature of
                                                             Beneficial    Percent of
         Title of Class/Name of Beneficial Owner             Ownership (1) Class (3)
-----------------------------------------------------------  ------------  ---------
<S>                                                             <C>            <C>
Class A Common Stock:
  Owning Greater Than 5% of Shares:
    HWH (2)                                                    1,136,568      90.0%

  Ownership of Directors:
    Robert B. Haas (2)                                         1,136,568      90.0%
    Douglas D. Wheat (2)                                               -         -

  Ownership of Executive Officers Named in Item 11:
    Mark W. Oppegard                                              25,491       2.0%
    Barry S. Major                                                18,956       1.5%
    Alan G. Siemek                                                10,151       0.8%
    Larry R. Rempe                                                16,748       1.3%
    William H. Allen                                              10,130       0.8%

  Ownership of Directors and All Executive Officers
   as a Group                                                  1,259,431      98.2%

</TABLE>

     (1)  Beneficial ownership is determined in accordance with the rules of the
          SEC and  includes  voting and  investment  power  with  respect to the
          shares of NBC  Acquisition  Corp.  Class A Common  Stock.  Such shares
          include  shares  underlying  nonqualified  stock  options  exercisable
          within sixty days, as follows:  Mr. Oppegard - 1,525 shares; Mr. Major
          - 8,473 shares; Mr. Siemek - 4,115 shares; Mr. Rempe - 500 shares; Mr.
          Allen - 600 shares;  and 19,447 shares for all directors and executive
          officers as a group.

     (2)  The sole general partner of HWH is a limited partnership, and the sole
          general partner of the limited partnership is a corporation controlled
          by Mr. Haas. Mr. Wheat is a  stockholder,  director and officer of the
          corporation.  The address of HWH and of Messrs.  Haas and Wheat is 300
          Crescent Court, Suite 1700, Dallas, Texas 75201.

     (3)  The  percentages  are calculated  based upon  1,263,371  shares of NBC
          Acquisition Corp. Class A Common Stock outstanding as of June 26, 2001
          and shares underlying  nonqualified  stock options  exercisable within
          sixty days as detailed in footnote (1).


            ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    TRANSACTIONS  WITH MANAGEMENT AND OTHERS - Subsequent to year-end,  pursuant
to the terms of an  employment  agreement  dated  April 17,  2001,  the  Company
appointed  Mr.  Rob Rupe to the  position  of Senior  Vice  President  of Retail
Division. Under the terms of the employment agreement, NBC issued Mr. Rupe 2,621
shares of its Class A Common Stock at a price of $52.47 per share. In connection
with this  issuance  of stock,  Mr.  Rupe  delivered  a $123,765  note  maturing
January, 2009 and bearing interest at 5.25% per year and will remit cash payment
on the remainder of $13,752 to NBC.

    CERTAIN  BUSINESS  RELATIONSHIPS  - In fiscal 2001, the Company entered into
several  agreements  related to its WebPRISM and CampusHub  E-commerce  software
capabilities  with a newly  created  entity,  TheCampusHub.com,  Inc.,  which is
partially  owned by NBC's majority  owner.  Such  agreements  included an equity
option agreement,  a management  services  agreement,  and a technology sale and
license  agreement.  The  equity  option  agreement  provides  the  Company  the
opportunity  to  acquire  25%  of  the  initial  common  shares  outstanding  of


                                       50
<PAGE>

TheCampusHub.com, Inc. The management services agreement, which is effective for
a period of three  years,  reimburses  the  Company  for  certain  direct  costs
incurred on behalf of  TheCampusHub.com,  Inc.  and also pays the  Company  $0.5
million per year for certain shared management and administrative  support.  The
technology  sale and license  agreement  provides for the Company to license its
E-commerce software capabilities to TheCampusHub.com,  Inc. for $0.5 million per
year over a period of three years and provides  TheCampusHub.com,  Inc.  with an
option to purchase such software capabilities from the Company during that three
year period.

    For the year ended March 31, 2001,  revenues  attributable to the management
services and technology sale and license  agreements  totaled $0.9 million,  and
reimbursable direct costs incurred on behalf of  TheCampusHub.com,  Inc. totaled
$0.9 million.  Included in the  reimbursable  direct costs incurred on behalf of
TheCampusHub.com,  Inc. are annual and other  compensation  costs  totaling $0.2
million for the Company's Vice President of E-commerce,  who serves as President
and Chief Operating  Officer of  TheCampusHub.com,  Inc.  Additionally,  Messrs.
Haas,  Wheat,  and Oppegard  serve as Directors  of  TheCampusHub.com,  Inc. and
Messrs. Major and Siemek serve as executive officers of TheCampusHub.com, Inc.

    INDEBTEDNESS  OF  MANAGEMENT  - As of March 31,  2001,  NBC  reported  notes
receivable from stockholders and associated interest receivable of approximately
$606,000  and  $91,000,  respectively.  Approximately  $150,000  of  such  notes
originated  during the  leveraged  buyout of the  Company  by  Olympus  Advisory
Partners,  Inc. in 1995. In conjunction with the buyout, the Company's executive
officers were given the  opportunity  to acquire  shares of NBC's Class A Common
Stock with a portion of the purchase  price of such shares being provided to the
officers in the form of interest bearing notes.  Such notes are dated August 31,
1995,  become due August 31, 2002, and bear interest at the  applicable  Federal
rate for mid-term loans.

    The  remaining  balance of such notes  originated  pursuant  to the terms of
employment  agreements  with the Company's  Chief  Operating  Officer,  Barry S.
Major;  Chief  Financial  Officer,   Alan  G.  Siemek;  and  Vice  President  of
E-commerce,  Michael J. Kelly. In January,  1999, NBC issued 4,765 shares of its
Class A Common  Stock to Mr.  Major at a price of $52.47 per share,  in exchange
for $25,000 in cash and a promissory  note in the  principal  amount of $225,000
maturing  January 19, 2009 and bearing  interest at 5.25% per year.  The largest
aggregate amount  outstanding  under this note at any time during the year ended
March 31, 2001 was  approximately  $252,000.  In July,  1999,  NBC issued  3,177
shares of its Class A Common Stock to Mr. Siemek at a price of $52.47 per share,
in exchange for $16,688 in cash and a promissory note in the principal amount of
$150,000  maturing  September,  2009 and bearing interest at 5.25% per year. The
largest aggregate amount outstanding under this note at any time during the year
ended March 31, 2001 was approximately  $162,000.  In January,  2000, NBC issued
2,621  shares of its Class A Common  Stock to Mr. Kelly at a price of $52.47 per
share,  in exchange for $13,752 in cash and a promissory  note in the  principal
amount of $123,765  maturing  January,  2010 and  bearing  interest at 5.25% per
year.  The  largest  aggregate  amount  outstanding  under this note at any time
during the year ended March 31, 2001 was approximately $133,000.



                                       51
<PAGE>

                                     PART IV

  ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, & REPORTS ON FORM 8-K.

    (a) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

        (1)  Financial Statements of Nebraska Book Company, Inc.

             Index to Financial Statements.
             Independent Auditors' Report.
             Balance Sheets as of March 31, 2001 and 2000.
             Statements of Operations for the Years Ended March 31, 2001,  2000,
             and 1999.
             Statements of Stockholder's  Deficit for the Years  Ended March 31,
             2001,  2000,  and 1999.
             Statements of Cash Flows for the Years Ended March 31,  2001, 2000,
             and 1999.
             Notes to  Financial Statements.

        (2)  Financial Statement Schedules.

             Independent Auditors' Report on Schedule.
             Schedule II - Valuation and Qualifying Accounts.

        (3)  Management Contract and Compensatory Plan Arrangement Exhibits.

             Exhibits 10.6 through 10.15 are incorporated herein by reference.

    (b) REPORTS ON FORM 8-K.

              No  reports  on  Form  8-K were filed  during  the  quarter  ended
              March 31, 2001.

    (c) EXHIBITS.

        2.1     Agreement  for Purchase  and Sale of Stock,  dated as of May 26,
                1999  between and among  Nebraska  Book  Company,  Inc.,  Dennis
                Rother, and Larry Rother,  filed as Exhibit 2.1 to Nebraska Book
                Company,  Inc.  Form 8-K,  as  amended,  dated June 4, 1999,  is
                incorporated herein by reference.

        2.2     Agreement of Sale,  dated as of  September  30, 1999 between and
                among  Nebraska  Book  Company,   Inc.,  Michigan  College  Book
                Company,  Inc.,  Ned's  Berkeley Book Company,  Inc., Ned Shure,
                Fred  Shure,  and  Jack  Barenfanger  filed  as  Exhibit  2.1 to
                Nebraska Book Company, Inc. Form 8-K, as amended, dated November
                12, 1999, is incorporated herein by reference.

        3.1     Certificate  of  Incorporation,  as amended,  of  Nebraska  Book
                Company,  Inc.,  filed as Exhibit 3.1 to Nebraska  Book Company,
                Inc.  Registration  Statement on Form S-4, as amended  (File No.
                333-48221), is incorporated herein by reference.

        3.2     By-laws of Nebraska Book Company,  Inc., filed as Exhibit 3.2 to
                Nebraska Book Company, Inc. Registration  Statement on Form S-4,
                as  amended  (File No.  333-48221),  is  incorporated  herein by
                reference.

        4.1     Indenture dated as of February 13, 1998 by and between  Nebraska
                Book Company,  Inc. and United States Trust Company of New York,
                as Trustee,  filed as Exhibit 4.1 to Nebraska Book Company, Inc.
                Registration  Statement  on  Form  S-4,  as  amended  (File  No.
                333-48221), is incorporated herein by reference.

                                       52
<PAGE>

        4.2     Exchange and Registration  Rights Agreement dated as of February
                13, 1998 by and between  Nebraska Book  Company,  Inc. and Chase
                Securities  Inc., filed as Exhibit 4.2 to Nebraska Book Company,
                Inc.  Registration  Statement on Form S-4, as amended  (File No.
                333-48221), is incorporated herein by reference.

        4.3     Form of Initial Note of Nebraska Book Company, Inc. (included in
                Exhibit 4.1 as Exhibit A), filed as Exhibit 4.3 to Nebraska Book
                Company,  Inc.  Registration  Statement  on Form S-4, as amended
                (File No. 333-48221), is incorporated herein by reference.

        4.4     Form of Exchange Note of Nebraska Book Company,  Inc.  (included
                in Exhibit 4.1 as Exhibit  B),  filed as Exhibit 4.4 to Nebraska
                Book  Company,  Inc.  Registration  Statement  on Form  S-4,  as
                amended  (File  No.  333-48221),   is  incorporated   herein  by
                reference.

        10.1    Credit  Agreement dated as of February 13, 1998 by and among NBC
                Acquisition  Corp.,  Nebraska  Book  Company,  Inc.,  the  Chase
                Manhattan Bank and certain other financial  institutions,  filed
                as Exhibit  10.1 to Nebraska  Book  Company,  Inc.  Registration
                Statement  on Form S-4,  as  amended  (File No.  333-48221),  is
                incorporated herein by reference.

        10.2    First  Amendment,  dated  as of May  21,  1999,  to  the  Credit
                Agreement,  dated as of February 13, 1998 among NBC  Acquisition
                Corp.,  Nebraska Book Company,  Inc., the Chase  Manhattan Bank,
                and certain other financial institutions,  filed as Exhibit 10.1
                to Nebraska Book  Company,  Inc. Form 10-Q for the quarter ended
                June 30, 1999, is incorporated herein by reference.

        10.3    Second Amendment and Waiver,  dated as of April 27, 2000, to the
                Credit  Agreement,  dated as of  February  13,  1998,  among NBC
                Acquisition  Corp.,  Nebraska  Book  Company,  Inc.,  the  Chase
                Manhattan Bank, and certain other financial institutions,  filed
                as Exhibit 10.1 to Nebraska Book Company, Inc. Form 10-Q for the
                quarter  ended  June  30,  2000,  is   incorporated   herein  by
                reference.

        10.4    Guarantee  and  Collateral  Agreement,  dated as of February 13,
                1998 made by NBC  Acquisition  Corp.  and Nebraska Book Company,
                Inc. in favor of the Chase  Manhattan  Bank,  as  administrative
                agent,  filed as Exhibit  10.2 to Nebraska  Book  Company,  Inc.
                Registration  Statement  on  Form  S-4,  as  amended  (File  No.
                333-48221), is incorporated herein by reference.

        10.5    Purchase Agreement dated February 10, 1998 between Nebraska Book
                Company,  Inc. and Chase  Securities Inc., filed as Exhibit 10.3
                to Nebraska Book Company,  Inc.  Registration  Statement on Form
                S-4, as amended (File No. 333-48221),  is incorporated herein by
                reference.

        10.6    Form of  Memorandum of  Understanding,  dated as of February 13,
                1998 between NBC Acquisition Corp. and each of Mark W. Oppegard,
                Bruce E. Nevius, Larry R. Rempe, Kenneth F. Jirovsky, William H.
                Allen, Thomas A. Hoff and Ardean A. Arndt, filed as Exhibit 10.4
                to Nebraska Book Company,  Inc.  Registration  Statement on Form
                S-4, as amended (File No. 333-48221),  is incorporated herein by
                reference.

        10.7    Memorandum  of  Understanding,  dated as of  December  22,  1998
                between  Nebraska Book Company,  Inc. and Barry S. Major,  Chief
                Operating  Officer,  filed  as  Exhibit  10.1 to  Nebraska  Book
                Company, Inc. Form 10-Q for the quarter ended December 31, 1998,
                is incorporated herein by reference.

        10.8    Memorandum  of  Understanding,  dated as of July 1, 1999 between
                Nebraska Book  Company,  Inc. and Alan Siemek,  Chief  Financial
                Officer,  filed as Exhibit 10.1 to Nebraska Book  Company,  Inc.
                Form  10-Q  for  the  quarter  ended   September  30,  1999,  is
                incorporated herein by reference.

                                       53
<PAGE>

        10.9    Memorandum  of  Understanding,  dated  as of  November  1,  1999
                between Nebraska Book Company,  Inc. and Michael J. Kelly,  Vice
                President of E-commerce,  filed as Exhibit 10.1 to Nebraska Book
                Company, Inc. Form 10-Q for the quarter ended December 31, 1999,
                is incorporated herein by reference.

        10.10   NBC  Acquisition  Corp. 1995 Stock Incentive Plan adopted August
                31, 1995,  filed as Exhibit 10.5 to Nebraska Book Company,  Inc.
                Registration  Statement  on  Form  S-4,  as  amended  (File  No.
                333-48221), is incorporated herein by reference.

        10.11   NBC Acquisition Corp. 1998 Performance Stock Option Plan adopted
                June 30, 1998,  filed as Exhibit 10.1 to Nebraska  Book Company,
                Inc.  Form  10-Q  for  the  quarter  ended  June  30,  1998,  is
                incorporated herein by reference.

        10.12   NBC  Acquisition  Corp.  1998 Stock Option Plan adopted June 30,
                1998, filed as Exhibit 10.2 to Nebraska Book Company,  Inc. Form
                10-Q for the quarter ended June 30, 1998, is incorporated herein
                by reference.

        10.13   NBC Acquisition  Corp. Senior Management Bonus Plan adopted June
                30, 1998,  filed as Exhibit 10.3 to Nebraska Book Company,  Inc.
                Form 10-Q for the quarter ended June 30, 1998,  is  incorporated
                herein by reference.

        10.14   Form of Deferred Compensation  Agreement by and between Nebraska
                Book  Company,  Inc.  and  each of Mark W.  Oppegard,  Bruce  E.
                Nevius, Larry R. Rempe and Thomas A. Hoff, filed as Exhibit 10.6
                to Nebraska Book Company,  Inc.  Registration  Statement on Form
                S-4, as amended (File No. 333-48221),  is incorporated herein by
                reference.

        10.15   NBC Acquisition Corp. 401(k) Savings Plan, filed as Exhibit 10.7
                to Nebraska Book Company,  Inc.  Registration  Statement on Form
                S-4, as amended (File No. 333-48221),  is incorporated herein by
                reference.

        10.16   Agreement  for  Purchase  and Sale of Stock made January 9, 1998
                between and among  Nebraska  Book  Company,  Inc.  and Martin D.
                Levine,  the Lauren E. Levine  Grantor Trust and the Jonathan L.
                Levine  Grantor  Trust  (the  "Collegiate   Stores   Corporation
                Agreement"),  filed as Exhibit  10.8.1 to Nebraska Book Company,
                Inc.  Registration  Statement on Form S-4, as amended  (File No.
                333-48221), is incorporated herein by reference.

        10.17   First Amendment dated January 23, 1998 to the Collegiate  Stores
                Corporation Agreement,  filed as Exhibit 10.8.2 to Nebraska Book
                Company,  Inc.  Registration  Statement  on Form S-4, as amended
                (File No. 333-48221), is incorporated herein by reference.

        10.18   Commercial  Lease Agreement made and entered into March 8, 1989,
                by and  between  Robert J.  Chaney,  Mary  Charlotte  Chaney and
                Robert J. Chaney,  as Trustee  under the Last Will and Testament
                of James A Chaney,  and Nebraska  Book Company,  Inc.,  filed as
                Exhibit  10.9  to  Nebraska  Book  Company,   Inc.  Registration
                Statement  on Form S-4,  as  amended  (File No.  333-48221),  is
                incorporated herein by reference.

        10.19   Lease  Agreement  entered into as of  September 1, 1986,  by and
                between Odell Associates  Limited  Partnership and Nebraska Book
                Company,  Inc., filed as Exhibit 10.10 to Nebraska Book Company,
                Inc.  Registration  Statement on Form S-4, as amended  (File No.
                333-48221), is incorporated herein by reference.

                                       54
<PAGE>

        10.20   Lease  Agreement  entered into as of  September 1, 1986,  by and
                between John B. DeVine,  successor trustee of the Fred C. Ulrich
                Trust,  as amended,  and Nebraska Book Company,  Inc.,  filed as
                Exhibit  10.11  to  Nebraska  Book  Company,  Inc.  Registration
                Statement  on Form S-4,  as  amended  (File No.  333-48221),  is
                incorporated herein by reference.

        10.21   Lease  Agreement  entered  into as of  September  1, 1986 by and
                between Odell Associates  Limited  Partnership and Nebraska Book
                Company,  Inc., filed as Exhibit 10.12 to Nebraska Book Company,
                Inc.  Registration  Statement on Form S-4, as amended  (File No.
                333-48221), is incorporated herein by reference.

        10.22   Lease  Agreement  made and entered  into October 12, 1988 by and
                between  Hogarth  Management  and Nebraska Book  Company,  Inc.,
                filed  as  Exhibit  10.13  to  Nebraska   Book   Company,   Inc.
                Registration  Statement  on  Form  S-4,  as  amended  (File  No.
                333-48221), is incorporated herein by reference.

        10.23   Industrial  Real Estate Lease dated June 22, 1987 by and between
                Cyprus Land Company and Nebraska  Book Company,  Inc.,  filed as
                Exhibit  10.14  to  Nebraska  Book  Company,  Inc.  Registration
                Statement  on Form S-4,  as  amended  (File No.  333-48221),  is
                incorporated herein by reference.

        12.     Statements regarding  computation of ratios, filed as Exhibit 12
                to Nebraska Book Company,  Inc.  Registration  Statement on Form
                S-4, as amended (File No. 333-48221),  is incorporated herein by
                reference.

        24.     Powers of Attorney (included on signature page).



    All other schedules for which provision is made in the applicable accounting
regulations of the  Securities  and Exchange  Commission are either not required
under the related  instructions,  are not  applicable  (and  therefore have been
omitted),  or the required disclosures are contained in the financial statements
included herein.


                                       55
<PAGE>

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                             NEBRASKA BOOK COMPANY, INC.


                              /s/ Mark W. Oppegard
                             -------------------------------------------
                             Mark W. Oppegard
                             Chief Executive Officer, President, and Director
                             June 26, 2001

    Pursuant to the  requirements  of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.


                              /s/ Mark W. Oppegard
                             -------------------------------------------
                             Mark W. Oppegard
                             Chief Executive Officer, President, and Director
                             June 26, 2001


                                    *
                             -------------------------------------------
                             Alan G. Siemek
                             Chief Financial Officer, Senior Vice President
                             of Finance and  Administration, Treasurer, and
                             Assistant Secretary
                             June 26, 2001


                                    *
                             -------------------------------------------
                             Robert B. Haas
                             Chairman and Director
                             June 26, 2001


                                    *
                             -------------------------------------------
                             Douglas D. Wheat
                             Director
                             June 26, 2001


                        *By: /s/ Mark W. Oppegard
                             -------------------------------------------
                             Mark W. Oppegard
                             Attorney-In-Fact
                             June 26, 2001


    Supplemental  Information  to Be Furnished  With Reports  Filed  Pursuant to
Section 15(d) of the Act by  Registrants  Which Have Not  Registered  Securities
Pursuant to Section 12 of the Act:

    NO ANNUAL REPORT OR PROXY  MATERIAL FOR THE FISCAL YEAR ENDED MARCH 31, 2001
HAS BEEN, NOR WILL BE, SENT TO SECURITY HOLDERS.



                                       56
<PAGE>

                          FINANCIAL STATEMENT SCHEDULES



INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Nebraska Book Company, Inc.
Lincoln, Nebraska

    We have audited the financial  statements of Nebraska Book Company,  Inc. (a
wholly-owned  subsidiary of NBC Acquisition Corp.) as of March 31, 2001 and 2000
and for each of the three  years in the period  ended March 31,  2001,  and have
issued our report thereon dated May 23, 2001; such report is included  elsewhere
in this Form 10-K.  Our audits also  included the financial  statement  schedule
listed in Item 14(a)(2). This financial statement schedule is the responsibility
of the Company's  management.  Our responsibility is to express an opinion based
on  our  audits.  In  our  opinion,  such  financial  statement  schedule,  when
considered  in  relation  to the basic  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth therein.




DELOITTE & TOUCHE LLP

Lincoln, Nebraska
May 23, 2001




                                       57
<PAGE>
<TABLE>
<CAPTION>

NEBRASKA BOOK COMPANY, INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
---------------------------------------------------------------------------------------------

                                              Charged to  Charged to
                                 Beginning of Costs and     Other        Net      End of Year
                                 Year Balance  Expenses    Accounts  Charge-Offs    Balance
                                 ------------ ----------- ---------- ------------ -----------
<S>                                <C>         <C>           <C>      <C>          <C>
YEAR ENDED MARCH 31, 2001
Allowance for doubtful accounts    $ 175,899   $ 434,070   $    -    $ (202,936)   $ 407,033


YEAR ENDED MARCH 31, 2000
Allowance for doubtful accounts      165,899     140,927        -      (130,927)     175,899


YEAR ENDED MARCH 31, 1999
Allowance for doubtful accounts      164,829     134,661        -      (133,591)     165,899


</TABLE>



                                       58
<PAGE>

                                  EXHIBIT INDEX


24.     Powers of Attorney (included on signature page).



                                       59
<PAGE>