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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2010
 OR
 o
    
    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.
  Kansas
    
    47-0549819(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 4700
South
19 th Street
Lincoln, NE 68501-0529
 (402) 421-7300
 None
 None
 Yes o Noþ
 Yesþ No o
 o o
 o
Yes o No
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filerþ
    
    Smaller reporting company o(do not check if a smaller reporting company)
 Yes o Noþ
  Not
applicable as registrants stock is not publicly traded.
 There were 100 shares of common stock outstanding as of June 25, 2010.
 None
  Page 101




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##### 



TABLE OF CONTENTS
 PART I:Item 1 Business
    
    
    3Item 1A Risk Factors
    
    
    13Item 2 Properties
    
    
    18Item 3 Legal Proceedings
    
    
    18Item 4 (Reserved and Removed)
    
    
    18PART II:Item 5 Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    18Item 6 Selected Financial Data
    
    
    19Item 7 Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    22Item 7A Quantitative and Qualitative Disclosures about Market Risk
    
    
    39Item 8 Financial Statements and Supplementary Data
    
    
    41Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    80Item 9A Controls and Procedures
    
    
    80Item 9B Other Information
    
    
    80PART III:Item 10 Directors, Executive Officers and Corporate Governance
    
    
    81Item 11 Executive Compensation
    
    
    83Item 12 Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    92Item 13 Certain Relationships and Related Transactions, and Director Independence
    
    
    93Item 14 Principal Accountant Fees and Services
    
    
    93PART IV:Item 15 Exhibits and Financial Statement Schedule
    
    
    94Signatures
    
    
    99Supplemental Information to be Furnished
    
    
    99Financial Statement Schedule II  Valuation and Qualifying Accounts
    
    
    100Exhibit Index
    
    
    101Exhibit 10.19Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I.
 
 ITEM 1. BUSINESS.
       General
   3




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Bookstore Division.
  Textbook Division. Buyers Guide
 Complementary Services Division.
   4




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Industry Segment Financial Information
 Financial Statements and Supplementary Data www.nebook.com
 Business Strategy
  Capitalize on college bookstore opportunities.
 Re-establish growth in the Textbook Division.
 Increased market penetration through technology solutions
 Expansion of other services programs
  5




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Industry Overview
  College bookstore market.
 (i)
    
    institutional bookstores that are primarily owned and operated by institutions of
higher learning;
 (ii)
    
    contract-managed bookstores owned by institutions of higher learning and managed by
outside, private companies, typically found on-campus; and
 (iii)
    
    independent bookstores privately owned and operated stores, generally located off
campus.
 Wholesale textbook market.
      6




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Products and Services
 Bookstore Division.
 Textbook Division.
 Buyers Guide Buyers Guide Buyers Guide Buyers Guide
 Complementary Services Division.
  7




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Business Description
 Bookstore Division . .
    8




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BookstoresBookstores Open
    
    
    Bookstores
    
    
    Lost/Closed
    
    
    Bookstores atat Beginning of
    
    
    Added During
    
    
    During Fiscal
    
    
    End of FiscalFiscal Year
    
    Fiscal Year
    
    
    Fiscal Year
    
    
    Year
    
    
    Year2006
    
    
    124
    
    
    
    17
    
    
    
    2
    
    
    
    1392007
    
    
    139
    
    
    
    120
    
    
    
    15
    
    
    
    2442008
    
    
    244
    
    
    
    23
    
    
    
    7
    
    
    
    2602009
    
    
    260
    
    
    
    24
    
    
    
    7
    
    
    
    2772010
    
    
    277
    
    
    
    20
    
    
    
    17
    
    
    
    280
  Wholesale Procurement and Distribution
   9




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Information Technology
     Customers
    10




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Competition
   
    
    Follett, MBS and a number of smaller companies for the opportunity to contract-manage
institutional college bookstores (Follett and MBS contract-manage more than 700 and 600
stores, respectively);
 
    
    other college bookstores located at colleges and universities that we serve;
 
    
    a number of entities that rent or sell textbooks, sell e-books, other digital content
and other merchandise directly to students through e-commerce bypassing the traditional
college bookstore;
 
    
    student-to-student transactions that take place on campus and over the internet; and
 
    
    course packs and electronic media as a source of textbook information, such as
on-line resources, e-books, print-on-demand textbooks and CD-ROMs which may replace or
modify the need for students to purchase textbooks through the traditional college
bookstore.
  
    
    college bookstores who normally repurchase textbooks from students to be reused on
that campus the following semester or term;
 
    
    student-to-student transactions that take place on campus and over the internet;
 
    
    other wholesalers who purchase used textbooks from students and then resell them to
other college bookstores; and
 
    
    a number of individuals and companies that buy textbooks directly from students
through e-commerce, or in person, bypassing the traditional college bookstores who are
the Textbook Divisions suppliers and customers.
  11




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
    
    MBS in the sale and installation of college bookstore information technology;
 
    
    MBS in the distance education textbook distribution market;
 
    
    college bookstores that provide their own e-commerce solution in competition with
CampusHub;
 
    
    the Independent College Bookstore Association (ICBA) in the centralized buying
service business (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); and
 
    
    a variety of smaller organizations and individuals involved in these businesses and
others such as marketing services and consulting services.
 Governmental Regulation
  Insurance
  Employees
   Geographic Financial Information
 Financial Statements and Supplementary Data
  12




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ITEM 1A. RISK FACTORS.
  Our highly leveraged capital structure, as well as the conditions of the financial markets,
could affect our ability to extend or refinance debt in advance of its maturity, which would
negatively impact our liquidity and financial condition.
   We face competition in our markets, which could adversely impact our revenue levels, profit
margins and ability to acquire an adequate supply of used textbooks .
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Further deterioration in the economy and credit markets, a decline in consumer spending or
other conditions may adversely affect our future results of operations.
 We are the sole operating subsidiary of our parent company and will need to continue to
distribute funds to our parent to permit satisfaction of its obligations.
 We may be unable to obtain a sufficient supply of used textbooks, which could adversely impact
our revenue levels and profit margins .
 We may not be able to successfully acquire or contract-manage additional bookstores or
integrate those additional stores, which could adversely impact our ability to grow revenues and
profit margins .
  14




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We may not be able to successfully renew our contract-managed bookstores on profitable terms,
which could adversely impact our profit margins.
 Publishers may not continue to increase prices of textbooks annually, which could adversely
impact our revenue levels and profit margins .
 Publisher practices regarding new editions and materials packaged with new textbooks could
change, thereby reducing the supply of used textbooks available to us and adversely impacting our
revenue levels and profit margins.
 The loss or retirement of key members of management may occur, which could negatively affect
our ability to execute our current strategy and/or our ability to effectively react to changing
industry dynamics, thereby adversely impacting our revenue levels and profit margins .
 Our wholesale and bookstore operations are seasonal in nature  a significant reduction in
sales during our peak selling periods could adversely impact our ability to repay the ABL Facility,
thereby increasing interest expense and adversely impacting revenue levels by restricting our
ability to buy an adequate supply of used textbooks .
 We are controlled by one principal equity holder, which has the power to take unilateral
action and could have an interest in pursuing acquisitions, divestitures and other transactions,
even though such transactions might involve risks to other affected parties.
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Our substantial indebtedness could limit cash flow available for our operations and could
adversely affect our ability to service debt or obtain additional financing, if necessary.
 
    
    make it more difficult to pay our debts as they become due, especially during general
negative economic and market industry conditions because if our revenues decrease due to
general economic or industry conditions, we may not have sufficient cash flow from
operations to make our scheduled debt payments;
 
    
    limit our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate and, consequently, places us at a competitive
disadvantage to our competitors with less debt;
 
    
    require us to dedicate a substantial portion of our cash flow from operations to
service our debt, thereby reducing the availability of our cash flow to fund working
capital, capital expenditures, acquisitions and other general corporate purposes;
 
    
    limit our ability to make strategic acquisitions, invest in new products or capital
assets or take advantage of business opportunities;
 
    
    limit our ability to obtain additional financing, particularly in the current
economic environment; and
 
    
    render us more vulnerable to general adverse economic, regulatory and industry
conditions.
 Restrictive covenants may adversely affect our operations.
 
    
    incur or assume additional debt or provide guarantees in respect of obligations of
other persons;
 
    
    issue redeemable stock and preferred stock;
 
    
    pay dividends or distributions or redeem or repurchase capital stock;
 
    
    prepay, redeem or repurchase debt;
 
    
    make loans, investments and capital expenditures;
 
    
    incur liens;
 
    
    engage in sale/leaseback transactions;
 
    
    restrict dividends, loans or asset transfers from our subsidiaries;
 
    
    sell or otherwise dispose of assets, including capital stock of subsidiaries;
 
    
    consolidate or merge with or into, or sell substantially all of our assets to,
another person;
 
    
    enter into transactions with affiliates; and
 
    
    enter into new lines of business.
   16




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The amount of borrowings permitted under the ABL Facility may fluctuate significantly, and the
maturity of the ABL Facility may be accelerated under certain circumstances, which may adversely
affect our liquidity, financial position and results of operations.
 A portion of our goodwill recently became impaired and we may be required to write down
additional amounts of goodwill or identifiable intangibles and record impairment charges if future
circumstances indicate that goodwill or identifiable intangibles are impaired.
 Our operations are subject to various laws, rules and regulations relating to protection of
the environment and of human health and safety.
 Increases in the price of raw materials used by our suppliers or the reduced availability of
raw materials to our suppliers could increase their cost of goods, which could be passed on to us
through higher prices in new textbooks, clothing and general merchandise, which may decrease our
profitability.
  17




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ITEM 2. PROPERTIES.
  
 ITEM 3. LEGAL PROCEEDINGS.
  
 ITEM 4. RESERVED AND REMOVED.
 
 PART II
 
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
 Managements Discussion and Analysis of Financial Condition and Results of
Operations Financial Statements and Supplementary Data
 Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  18




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ITEM 6. SELECTED FINANCIAL DATA.
 Managements Discussion and Analysis of Financial
Condition and Results of Operations Financial Statements and Supplementary Data
 Fiscal Years EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)Statement of Operations Data:Revenues
    
    $
    605,494
    
    
    $
    610,716
    
    
    $
    581,248
    
    
    $
    544,428
    
    
    $
    420,108Costs of sales (exclusive of depreciation shown
below)
    
    
    370,196
    
    
    
    371,369
    
    
    
    354,140
    
    
    
    332,444
    
    
    
    250,914Gross profit
    
    
    235,298
    
    
    
    239,347
    
    
    
    227,108
    
    
    
    211,984
    
    
    
    169,194Operating expenses:Selling, general and administrative (1)
    
    
    161,858
    
    
    
    168,315
    
    
    
    157,193
    
    
    
    143,096
    
    
    
    107,991Closure of California Warehouse
    
    
    
    
    
    
    
    
    
    
    (36
    )
    
    
    774
    
    
    
    Depreciation
    
    
    8,517
    
    
    
    7,603
    
    
    
    7,209
    
    
    
    5,916
    
    
    
    4,913Amortization
    
    
    10,853
    
    
    
    11,384
    
    
    
    10,443
    
    
    
    9,613
    
    
    
    8,762Goodwill impairment (2)
    
    
    
    
    
    
    106,972
    
    
    
    
    
    
    
    
    
    
    
    Income (Loss) from operations
    
    
    54,070
    
    
    
    (54,927
    )
    
    
    52,299
    
    
    
    52,585
    
    
    
    47,528Other expenses (income):Interest expense
    
    
    40,680
    
    
    
    32,878
    
    
    
    33,559
    
    
    
    33,135
    
    
    
    29,395Interest income
    
    
    (180
    )
    
    
    (427
    )
    
    
    (1,332
    )
    
    
    (1,643
    )
    
    
    (1,275
    )Loss on early extinguishment of debt (3)
    
    
    3,066
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Gain) Loss on derivative instrument (4)
    
    
    
    
    
    
    102
    
    
    
    198
    
    
    
    225
    
    
    
    (525
    )Income (Loss) before income taxes
    
    
    10,504
    
    
    
    (87,480
    )
    
    
    19,874
    
    
    
    20,868
    
    
    
    19,933Income tax expense
    
    
    3,142
    
    
    
    7,449
    
    
    
    7,418
    
    
    
    8,256
    
    
    
    7,691Net income (loss)
    
    $
    7,362
    
    
    $
    (94,929
    )
    
    $
    12,456
    
    
    $
    12,612
    
    
    $
    12,242Other Data:Adjusted EBITDA (5)
    
    $
    73,440
    
    
    $
    71,032
    
    
    $
    69,951
    
    
    $
    68,114
    
    
    $
    61,203Net cash flows from operating activities
    
    
    36,237
    
    
    
    31,666
    
    
    
    20,864
    
    
    
    27,432
    
    
    
    22,498Net cash flows from investing activities
    
    
    (8,766
    )
    
    
    (14,898
    )
    
    
    (22,179
    )
    
    
    (32,809
    )
    
    
    (18,122
    )Net cash flows from financing activities
    
    
    (10,537
    )
    
    
    (2,055
    )
    
    
    (2,341
    )
    
    
    4,976
    
    
    
    (2,218
    )Capital expenditures
    
    
    5,411
    
    
    
    7,979
    
    
    
    7,261
    
    
    
    6,543
    
    
    
    7,312Business acquisition expenditures (6)
    
    
    2,848
    
    
    
    6,321
    
    
    
    14,682
    
    
    
    25,874
    
    
    
    10,849Number of bookstores open at end of the period (7)
    
    
    280
    
    
    
    277
    
    
    
    260
    
    
    
    244
    
    
    
    139Balance Sheet Data (At End of Period):Cash and cash equivalents
    
    $
    60,973
    
    
    $
    44,038
    
    
    $
    29,326
    
    
    $
    32,983
    
    
    $
    33,383Working capital (8)
    
    
    168,561
    
    
    
    151,520
    
    
    
    137,100
    
    
    
    130,389
    
    
    
    111,066Total assets
    
    
    615,505
    
    
    
    608,067
    
    
    
    702,087
    
    
    
    695,489
    
    
    
    645,346Total debt, including current maturities
    
    
    377,624
    
    
    
    372,411
    
    
    
    375,204
    
    
    
    375,587
    
    
    
    354,309
 (1)
    
    Includes share-based compensation of $1,107, $1,289, $1,041 and $997 for the fiscal
years ended March 31, 2010, 2009, 2008 and 2007, respectively.(2)
    
    Due to the economic downturn and changes in some variables associated with the
judgments, assumptions and estimates made by us in assessing the appropriate valuation of
our goodwill, including lower market multiples, we determined in the first step of our
goodwill impairment test conducted at March 31, 2009 that the carrying value of certain
reporting units exceeded their fair values, indicating that goodwill may be impaired.
Having determined that goodwill may be impaired, we performed the second step of the
goodwill impairment test. As a result, we recorded an impairment charge of $106,972 in
fiscal year 2009, which reduced our goodwill carrying value to $215,436 as of March 31,
2009. See Note F to our consolidated financial statements in Item 8, Financial Statements
and Supplementary Data.  19




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(3)
    
    The loss on early extinguishment of debt for the fiscal year ended March 31, 2010
relates to the write-off of debt issue costs as a result of the termination of the Term
Loan and Revolving Credit Facility. See Note H to our consolidated financial statements in
Item 8, Financial Statements and Supplementary Data.(4)
    
    Our interest rate swap agreement expired on September 30, 2008.(5)
    
    EBITDA is defined as earnings before interest, taxes, depreciation, and amortization.
Adjusted EBITDA is EBITDA adjusted for goodwill impairment and for loss on early
extinguishment of debt. There was no goodwill impairment or loss on early extinguishment
of debt in fiscal years 2008, 2007 and 2006; therefore, Adjusted EBITDA equals EBITDA for
those years. As we are highly leveraged and as our equity is not publicly-traded,
management believes that the non-GAAP measures, EBITDA and Adjusted EBITDA, are useful in
evaluating our results and provide additional information for determining our ability to
meet debt service requirements. That belief is driven by the consistent use of the
measures in the computations used to establish the value of our equity over the past 15
years and the fact that our debt covenants also use those measures, as further described
below, to measure and monitor our financial results. Due to the importance of EBITDA and
Adjusted EBITDA to our equity and debt holders, our chief operating decision makers and
other members of management use EBITDA and Adjusted EBITDA to measure our overall
performance, to assist in resource allocation decision-making, to develop our budget goals,
to determine incentive compensation goals and payments, and to manage other expenditures
among other uses.Adjusted EBITDA is defined in the ABL Credit Agreement as: (1) consolidated net income, as
defined therein; plus (2) the following items, to the extent deducted from consolidated net
income: (a) income tax expense; (b) interest expense, amortization or write-off of debt
discount and debt issuance costs and commissions, discounts and other fees and charges
associated with indebtedness; (c) depreciation and amortization expense; (d) amortization of
intangibles and organization costs; (e) any non-cash extraordinary, unusual or non-recurring
expenses or losses; (f) any other non-cash charges; and (g) charges incurred on or prior to
September 30, 2010 in connection with the restricted stock plan not to exceed $5.0 million in
the aggregate; minus (3) the following items, to the extent included in the statement of net
income for such period; (i) interest income; (ii) any extraordinary, unusual or non-recurring
income or gains; and (iii) any other non-cash income. Adjusted EBITDA is similarly defined
in the indentures to the Senior Subordinated Notes and the Senior Secured Notes except that
charges incurred in connection with the restricted stock plan are not added back to
consolidated net income. Adjusted EBITDA is utilized when calculating the pro forma fixed
charge coverage ratio under the ABL Credit Agreement and the pro forma consolidated coverage
ratio under the indentures to the Senior Subordinated Notes and the Senior Secured Notes.
See Note H to the consolidated financial statements for disclosure of certain of our
financial covenants.There are material limitations associated with the use of EBITDA and Adjusted EBITDA. EBITDA
and Adjusted EBITDA do not represent and should not be considered as alternatives to net cash
flows from operating activities or net income as determined by accounting principles
generally accepted in the United States of America (GAAP). Furthermore, EBITDA and
Adjusted EBITDA do not necessarily indicate whether cash flows will be sufficient for cash
requirements because the measures do not include reductions for cash payments for our
obligation to service our debt, fund our working capital, make capital expenditures and make
acquisitions or pay our income taxes and dividends; nor are they a measure of our
profitability because they do not include costs and expenses identified below. We believe
EBITDA and Adjusted EBITDA when viewed with both our GAAP results and the reconciliations to
operating cash flows and net income provide a more complete understanding of our business
than otherwise could be obtained absent this disclosure. Items excluded from EBITDA and
Adjusted EBITDA, such as interest, taxes, depreciation, amortization, goodwill impairment,
and loss on early extinguishment of debt, are significant components in understanding and
assessing our financial performance. EBITDA and Adjusted EBITDA measures presented may not
be comparable to similarly titled measures presented by other companies.  20




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Financial Statements and Supplementary Data
 Fiscal Years EndedMarch 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)Net income (loss)
    
    
    7,362
    
    
    
    (94,929
    )
    
    
    12,456
    
    
    
    12,612
    
    
    
    12,242Interest expense, net
    
    
    40,499
    
    
    
    32,553
    
    
    
    32,425
    
    
    
    31,717
    
    
    
    27,595Income tax expense
    
    
    3,142
    
    
    
    7,449
    
    
    
    7,418
    
    
    
    8,256
    
    
    
    7,691Depreciation and amortization
    
    
    19,371
    
    
    
    18,987
    
    
    
    17,652
    
    
    
    15,529
    
    
    
    13,675EBITDA
    
    
    70,374
    
    
    
    (35,940
    )
    
    
    69,951
    
    
    
    68,114
    
    
    
    61,203Goodwill impairment
    
    
    
    
    
    
    106,972
    
    
    
    
    
    
    
    
    
    
    
    Loss on early extinguishment of debt
    
    
    3,066
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted EBITDA (5)
    
    $
    73,440
    
    
    $
    71,032
    
    
    $
    69,951
    
    
    $
    68,114
    
    
    $
    61,203Share-based compensation
    
    
    1,107
    
    
    
    1,288
    
    
    
    1,041
    
    
    
    997
    
    
    
    Interest income
    
    
    180
    
    
    
    427
    
    
    
    1,332
    
    
    
    1,643
    
    
    
    1,275Provision for losses on receivables
    
    
    1,399
    
    
    
    1,367
    
    
    
    468
    
    
    
    834
    
    
    
    231Cash paid for interest
    
    
    (29,102
    )
    
    
    (30,654
    )
    
    
    (31,755
    )
    
    
    (31,388
    )
    
    
    (27,875
    )Cash paid for income taxes
    
    
    (3,155
    )
    
    
    (9,930
    )
    
    
    (13,031
    )
    
    
    (6,551
    )
    
    
    (9,589
    )(Gain) Loss on disposal of assets
    
    
    235
    
    
    
    125
    
    
    
    285
    
    
    
    (1
    )
    
    
    90Due to Parent
    
    
    (3,064
    )
    
    
    (3,160
    )
    
    
    (237
    )
    
    
    (84
    )
    
    
    (75
    )Changes in operating assets and
liabilities, net of effect of
acquisitions (9)
    
    
    (4,803
    )
    
    
    1,171
    
    
    
    (7,190
    )
    
    
    (6,132
    )
    
    
    (2,762
    )Net Cash Flows from Operating Activities
    
    $
    36,237
    
    
    $
    31,666
    
    
    $
    20,864
    
    
    $
    27,432
    
    
    $
    22,498
 (6)
    
    Business acquisition expenditures represent established businesses purchased by us.(7)
    
    On May 1, 2006, we acquired 101 college bookstore locations through the acquisition of
all of the outstanding stock of CBA.(8)
    
    Working capital is defined as current assets minus current liabilities.(9)
    
    Changes in operating assets and liabilities, net of effect of acquisitions includes the
changes in the balances of receivables, inventories, prepaid expenses and other current
assets, other assets, accounts payable, accrued employee compensation and benefits, accrued
incentives, accrued expenses, deferred revenue, and other long-term liabilities.  21




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 Financial Statements and Supplementary
Data
 Executive Summary
 Overview
 Acquisitions.
 Revenue Results.
 Adjusted EBITDA Results.
    22




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Challenges and Expectations
  Fiscal Year Ended March 31, 2010 Compared With Fiscal Year Ended March 31, 2009.
 Revenues .
 Fiscal Years Ended
    
    
    ChangeMarch 31, 2010
    
    
    March 31, 2009
    
    
    Amount
    
    
    PercentageBookstore Division
    
    $
    472,492,275
    
    
    $
    472,038,009
    
    
    $
    454,266
    
    
    
    0.1
    %Textbook Division
    
    
    140,592,220
    
    
    
    147,287,779
    
    
    
    (6,695,559
    )
    
    
    (4.5
    )%Complementary Services
Division
    
    
    35,470,836
    
    
    
    34,233,883
    
    
    
    1,236,953
    
    
    
    3.6
    %Intercompany Eliminations
    
    
    (43,061,718
    )
    
    
    (42,843,490
    )
    
    
    (218,228
    )
    
    
    0.5
    %$
    605,493,613
    
    
    $
    610,716,181
    
    
    $
    (5,222,568
    )
    
    
    (0.9
    )%
   23




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##### Table of Contents



Gross profit .
 Selling, general and administrative expenses .
 Earnings before interest, taxes, depreciation, amortization, goodwill impairment, and loss on
early extinguishment of debt (Adjusted EBITDA).
 Fiscal Years Ended
    
    
    ChangeMarch 31, 2010
    
    
    March 31, 2009
    
    
    Amount
    
    
    PercentageBookstore Division
    
    $
    45,685,171
    
    
    $
    44,029,528
    
    
    $
    1,655,643
    
    
    
    3.8
    %Textbook Division
    
    
    37,050,519
    
    
    
    39,009,073
    
    
    
    (1,958,554
    )
    
    
    (5.0
    )%Complementary Services
Division
    
    
    2,301,001
    
    
    
    1,320,700
    
    
    
    980,301
    
    
    
    74.2
    %Corporate Administration
    
    
    (11,597,268
    )
    
    
    (13,326,971
    )
    
    
    1,729,703
    
    
    
    13.0
    %$
    73,439,423
    
    
    $
    71,032,330
    
    
    $
    2,407,093
    
    
    
    3.4
    %
   24




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Financial Statements and Supplementary Data
 Fiscal Years EndedMarch 31, 2010
    
    
    March 31, 2009Net income (loss)
    
    
    7,362,198
    
    
    
    (94,928,668
    )Interest expense, net
    
    
    40,499,120
    
    
    
    32,553,689Income tax expense
    
    
    3,142,094
    
    
    
    7,448,658Depreciation and amortization
    
    
    19,370,252
    
    
    
    18,986,651EBITDA
    
    
    70,373,664
    
    
    
    (35,939,670
    )Goodwill impairment
    
    
    
    
    
    
    106,972,000Loss on early extinguishment of debt
    
    
    3,065,759
    
    
    
    Adjusted EBITDA (1)
    
    $
    73,439,423
    
    
    $
    71,032,330Share-based compensation
    
    
    1,106,882
    
    
    
    1,288,543Interest income
    
    
    180,709
    
    
    
    426,536Provision for losses on receivables
    
    
    1,399,466
    
    
    
    1,366,979Cash paid for interest
    
    
    (29,102,221
    )
    
    
    (30,653,694
    )Cash paid for income taxes
    
    
    (3,155,473
    )
    
    
    (9,930,165
    )Loss on disposal of assets
    
    
    235,803
    
    
    
    124,871Tax expense due to parent
    
    
    (3,064,522
    )
    
    
    (3,160,038
    )Changes in operating assets and
liabilities, net of effect of
acquisitions (2)
    
    
    (4,803,359
    )
    
    
    1,170,551Net Cash Flows from Operating Activities
    
    $
    36,236,708
    
    
    $
    31,665,913Net Cash Flows from Investing Activities
    
    $
    (8,765,940
    )
    
    $
    (14,898,403
    )Net Cash Flows from Financing Activities
    
    $
    (10,536,611
    )
    
    $
    (2,055,498
    )
 (1)
    
    March 31, 2010 Adjusted EBITDA includes an adjustment for loss on
early extinguishment of debt and March 31, 2009 Adjusted EBITDA
includes an adjustment for goodwill impairment.(2)
    
    Changes in operating assets and liabilities, net of effect of
acquisitions, include the changes in the balances of receivables,
inventories, prepaid expenses and other current assets, other assets,
accounts payable, accrued employee compensation and benefits, accrued
incentives, accrued expenses, deferred revenue, and other long-term
liabilities. Depreciation expense.
 Amortization expense.
 Goodwill impairment.
  25




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Interest expense, net .
 Loss on early extinguishment of debt.
 Income taxes
 Fiscal Year ended March 31, 2009 Compared With Fiscal Year ended March 31, 2008.
 Revenues .
 Fiscal Years Ended
    
    
    ChangeMarch 31, 2009
    
    
    March 31, 2008
    
    
    Amount
    
    
    PercentageBookstore Division
    
    $
    472,038,009
    
    
    $
    454,374,873
    
    
    $
    17,663,136
    
    
    
    3.9
    %Textbook Division
    
    
    147,287,779
    
    
    
    139,685,035
    
    
    
    7,602,744
    
    
    
    5.4
    %Complementary Services Division
    
    
    34,233,883
    
    
    
    34,372,223
    
    
    
    (138,340
    )
    
    
    (0.4
    )%Intercompany Eliminations
    
    
    (42,843,490
    )
    
    
    (47,184,345
    )
    
    
    4,340,855
    
    
    
    (9.2
    )%$
    610,716,181
    
    
    $
    581,247,786
    
    
    $
    29,468,395
    
    
    
    5.1
    %
   Gross profit .
  26




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Selling, general and administrative expenses .
 Earnings before interest, taxes, depreciation, amortization, and goodwill impairment (Adjusted
EBITDA).
 Fiscal Years Ended
    
    
    ChangeMarch 31, 2009
    
    
    March 31, 2008
    
    
    Amount
    
    
    PercentageBookstore Division
    
    $
    44,029,528
    
    
    $
    45,941,624
    
    
    $
    (1,912,096
    )
    
    
    (4.2
    )%Textbook Division
    
    
    39,009,073
    
    
    
    33,731,382
    
    
    
    5,277,691
    
    
    
    15.6
    %Complementary Services
Division
    
    
    1,320,700
    
    
    
    1,558,414
    
    
    
    (237,714
    )
    
    
    (15.3
    )%Corporate Administration
    
    
    (13,326,971
    )
    
    
    (11,280,477
    )
    
    
    (2,046,494
    )
    
    
    (18.1
    )%$
    71,032,330
    
    
    $
    69,950,943
    
    
    $
    1,081,387
    
    
    
    1.5
    %
   27




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Financial Statements and Supplementary Data
 Fiscal Years EndedMarch 31, 2009
    
    
    March 31, 2008Net income (loss)
    
    
    (94,928,668
    )
    
    
    12,456,023Interest expense, net
    
    
    32,553,689
    
    
    
    32,424,742Income tax expense
    
    
    7,448,658
    
    
    
    7,418,339Depreciation and amortization
    
    
    18,986,651
    
    
    
    17,651,839EBITDA
    
    
    (35,939,670
    )
    
    
    69,950,943Goodwill impairment
    
    
    106,972,000
    
    
    
    Adjusted EBITDA
    
    $
    71,032,330
    
    
    $
    69,950,943Share-based compensation
    
    
    1,288,543
    
    
    
    1,040,599Interest income
    
    
    426,536
    
    
    
    1,332,497Provision for losses on receivables
    
    
    1,366,979
    
    
    
    468,007Cash paid for interest
    
    
    (30,653,694
    )
    
    
    (31,755,319
    )Cash paid for income taxes
    
    
    (9,930,165
    )
    
    
    (13,030,853
    )Loss on disposal of assets
    
    
    124,871
    
    
    
    284,891Tax expense due to parent
    
    
    (3,160,038
    )
    
    
    (236,872
    )Changes in operating assets and
liabilities, net of effect of
acquisitions (1)
    
    
    1,170,551
    
    
    
    (7,190,132
    )Net Cash Flows from Operating Activities
    
    $
    31,665,913
    
    
    $
    20,863,761Net Cash Flows from Investing Activities
    
    $
    (14,898,403
    )
    
    $
    (22,179,160
    )Net Cash Flows from Financing Activities
    
    $
    (2,055,498
    )
    
    $
    (2,341,021
    )
 (1)
    
    Changes in operating assets and liabilities, net of effect of acquisitions, includes the
changes in the balances of receivables, inventories, prepaid expenses and other current
assets, other assets, accounts payable, accrued employee compensation and benefits, accrued
incentives, accrued expenses, deferred revenue, and other long-term liabilities. Depreciation expense.
 Amortization expense.
 Goodwill impairment.
  28




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Interest expense, net .
 Income taxes
 CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Revenue Recognition
 Bad Debts
 Inventory Valuation and Obsolescence
  29




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Goodwill and Intangible Assets
     Accrued Incentives.
  30




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Income Taxes
 Changes in Accounting Standards.
 LIQUIDITY AND CAPITAL RESOURCES
 Financing Activities
    31




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Investing Cash Flows
     32




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Operating Cash Flows
    33




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Covenant Restrictions
      34




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Sources of and Needs for Capital
     35




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Off-Balance Sheet Arrangements
   Payments Due by PeriodLess Than
    
    
    2-3
    
    
    4-5
    
    
    After 5Contractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsLong-term debt (1)
    
    $
    375,237,954
    
    
    $
    54,403
    
    
    $
    375,127,935
    
    
    $
    55,616
    
    
    $
    Interest on long-term debt
    
    
    70,239,747
    
    
    
    35,116,701
    
    
    
    35,120,521
    
    
    
    2,525
    
    
    
    Capital lease obligations
    
    
    3,226,790
    
    
    
    846,053
    
    
    
    982,976
    
    
    
    620,311
    
    
    
    777,450Interest on capital lease obligations
    
    
    804,053
    
    
    
    231,847
    
    
    
    311,557
    
    
    
    179,425
    
    
    
    81,224Operating leases
    
    
    80,384,000
    
    
    
    19,630,000
    
    
    
    29,807,000
    
    
    
    15,875,000
    
    
    
    15,072,000Uncertain tax position liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    529,892,544
    
    
    $
    55,879,004
    
    
    $
    441,349,989
    
    
    $
    16,732,877
    
    
    $
    15,930,674
 Total
    
    
    Amount of Commitment Expiration Per PeriodAmounts
    
    
    Less Than
    
    
    2-3
    
    
    4-5
    
    
    Over 5Other Commercial Commitments
    
    Committed
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    YearsUnused line of credit (2)
    
    $
    75,000,000
    
    
    $
    
    
    
    $
    75,000,000
    
    
    $
    
    
    
    $
    
 (1)
    
    Does not include the effect of $0.8 million of unamortized discount for the Senior
Secured Notes.(2)
    
    Interest is not estimated on the line of credit due to uncertainty surrounding the
timing and extent of usage of the line of credit.  Transactions with Related and Certain Other Parties
    36




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Impact of Inflation
  Accounting Standards Not Yet Adopted
     37




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Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
   38




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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
   Fixed Rate DebtWeighted-AveragePrincipal
    
    
    InterestCash Flows (1)
    
    
    RateFiscal Year Ended March 31:2011
    
    $
    900,456
    
    
    
    9.36
    %2012
    
    
    375,649,664
    
    
    
    9.35
    %2013
    
    
    461,247
    
    
    
    8.63
    %2014
    
    
    402,190
    
    
    
    8.46
    %2015
    
    
    273,739
    
    
    
    8.29
    %Thereafter
    
    
    777,450
    
    
    
    8.29
    %Total
    
    $
    378,464,746
    
    
    
    9.35
    %Fair Value
    
    $
    372,317,000
    
    
    
    
 (1)
    
    Principal cash flows represent scheduled principal payments and are adjusted for
certain optional prepayments, if any, to be applied toward principal balances.  39




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March 31,
    
    
    March 31,2010
    
    
    2009Carrying Values:Instruments entered into for purposes other than trading:
    
    $
    
    
    
    $
    4,999,319Cash equivalents (treasury notes)Fixed rate debt
    
    
    377,624,262
    
    
    
    179,334,183Variable rate debt
    
    
    
    
    
    
    193,076,346Fair Values:Instruments entered into for purposes other than trading:Cash equivalents (treasury notes)
    
    $
    
    
    
    $
    4,999,319Fixed rate debt
    
    
    372,317,000
    
    
    
    90,367,000Variable rate debt
    
    
    
    
    
    
    160,253,000Overall Weighted-Average Interest Rates:Cash equivalents (treasury notes)
    
    
    
    
    
    
    0.07
    %Fixed rate debt
    
    
    9.35
    %
    
    
    8.63
    %Variable rate debt
    
    
    
    
    
    
    9.25
    %
  40




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 Index to Consolidated Financial Statements of Nebraska Book Company, Inc.
 Report of Independent Registered Public Accounting Firm
    
    
    42Consolidated Balance Sheets as of March 31, 2010 and March 31, 2009
    
    
    43Consolidated Statements of Operations for the Years Ended March 31, 2010, 2009 and 2008
    
    
    44Consolidated Statements of Stockholders Equity for the Years Ended March 31, 2010, 2009 and 2008
    
    
    45Consolidated Statements of Cash Flows for the Years Ended March 31, 2010, 2009 and 2008
    
    
    46Notes to Consolidated Financial Statements
    
    
    47
  41




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
  42




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NEBRASKA BOOK COMPANY, INC.
 
 CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    March 31,2010
    
    
    2009ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    60,972,625
    
    
    $
    44,038,468Receivables, net
    
    
    57,987,794
    
    
    
    61,301,636Inventories
    
    
    97,497,689
    
    
    
    93,115,663Recoverable income taxes
    
    
    2,435,287
    
    
    
    2,869,583Deferred income taxes
    
    
    6,247,559
    
    
    
    6,581,802Prepaid expenses and other assets
    
    
    4,070,281
    
    
    
    3,950,874Total current assets
    
    
    229,211,235
    
    
    
    211,858,026PROPERTY AND EQUIPMENT, net of depreciation & amortization
    
    
    42,155,424
    
    
    
    45,638,522GOODWILL
    
    
    215,571,126
    
    
    
    215,436,126CUSTOMER RELATIONSHIPS, net of amortization
    
    
    79,902,820
    
    
    
    85,644,340TRADENAME
    
    
    31,320,000
    
    
    
    31,320,000OTHER IDENTIFIABLE INTANGIBLES, net of amortization
    
    
    5,295,324
    
    
    
    9,172,622DEBT ISSUE COSTS, net of amortization
    
    
    9,198,683
    
    
    
    6,875,122OTHER ASSETS
    
    
    2,850,632
    
    
    
    2,121,949$
    615,505,244
    
    
    $
    608,066,707LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    26,387,040
    
    
    $
    26,865,614Accrued employee compensation and benefits
    
    
    9,401,468
    
    
    
    13,780,209Accrued interest
    
    
    7,295,709
    
    
    
    678,516Accrued incentives
    
    
    6,313,933
    
    
    
    6,110,700Accrued expenses
    
    
    9,051,651
    
    
    
    4,277,105Deferred revenue
    
    
    1,299,960
    
    
    
    959,274Current maturities of long-term debt
    
    
    54,403
    
    
    
    6,917,451Current maturities of capital lease obligations
    
    
    846,053
    
    
    
    748,692Total current liabilities
    
    
    60,650,217
    
    
    
    60,337,561LONG-TERM DEBT, net of current maturities
    
    
    374,343,069
    
    
    
    361,445,728CAPITAL LEASE OBLIGATIONS, net of current maturities
    
    
    2,380,737
    
    
    
    3,298,658OTHER LONG-TERM LIABILITIES
    
    
    2,278,963
    
    
    
    5,304,166DEFERRED INCOME TAXES
    
    
    50,467,019
    
    
    
    54,313,459DUE TO PARENT
    
    
    23,194,711
    
    
    
    20,130,189COMMITMENTS (Note I)STOCKHOLDERS EQUITY:Common stock, voting, authorized 50,000 shares
of $1.00 par value; issued and outstanding 100
shares
    
    
    100
    
    
    
    100Additional paid-in capital
    
    
    148,197,307
    
    
    
    148,135,923Accumulated Deficit
    
    
    (46,006,879
    )
    
    
    (44,899,077
    )Total stockholders equity
    
    
    102,190,528
    
    
    
    103,236,946$
    615,505,244
    
    
    $
    608,066,707
   43




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NEBRASKA BOOK COMPANY, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended
    
    
    Year Ended
    
    
    Year EndedMarch 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2008REVENUES, net of returns
    
    $
    605,493,613
    
    
    $
    610,716,181
    
    
    $
    581,247,786COSTS OF SALES (exclusive of depreciation shown below)
    
    
    370,195,916
    
    
    
    371,369,240
    
    
    
    354,139,474Gross profit
    
    
    235,297,697
    
    
    
    239,346,941
    
    
    
    227,108,312OPERATING EXPENSES:Selling, general and administrative
    
    
    161,858,274
    
    
    
    168,314,611
    
    
    
    157,193,426Closure of California Warehouse
    
    
    
    
    
    
    
    
    
    
    (36,057
    )Depreciation
    
    
    8,517,004
    
    
    
    7,602,631
    
    
    
    7,208,504Amortization
    
    
    10,853,248
    
    
    
    11,384,020
    
    
    
    10,443,335Goodwill impairment
    
    
    
    
    
    
    106,972,000
    
    
    
    181,228,526
    
    
    
    294,273,262
    
    
    
    174,809,208INCOME (LOSS) FROM OPERATIONS
    
    
    54,069,171
    
    
    
    (54,926,321
    )
    
    
    52,299,104OTHER EXPENSES (INCOME):Interest expense
    
    
    40,679,829
    
    
    
    32,878,225
    
    
    
    33,559,239Interest income
    
    
    (180,709
    )
    
    
    (426,536
    )
    
    
    (1,332,497
    )Loss on early extinguishment of debt
    
    
    3,065,759
    
    
    
    
    
    
    
    Loss on derivative financial instrument
    
    
    
    
    
    
    102,000
    
    
    
    198,00043,564,879
    
    
    
    32,553,689
    
    
    
    32,424,742INCOME (LOSS) BEFORE INCOME TAXES
    
    
    10,504,292
    
    
    
    (87,480,010
    )
    
    
    19,874,362INCOME TAX EXPENSE
    
    
    3,142,094
    
    
    
    7,448,658
    
    
    
    7,418,339NET INCOME (LOSS)
    
    $
    7,362,198
    
    
    $
    (94,928,668
    )
    
    $
    12,456,023
   44




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC.
 
 CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY
 Retained
    
    
    AccumulatedAdditional
    
    
    Earnings
    
    
    OtherCommon
    
    
    Paid-in
    
    
    (Accumulated
    
    
    Comprehensive
    
    
    
    
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Deficit)
    
    
    Income (Loss)
    
    
    Total
    
    
    Income (Loss)BALANCE, April 1, 2007
    
    $
    100
    
    
    $
    138,017,229
    
    
    $
    46,043,568
    
    
    $
    613,000
    
    
    $
    184,673,897Contributed capital
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    $
    Net income
    
    
    
    
    
    
    
    
    
    
    12,456,023
    
    
    
    
    
    
    
    12,456,023
    
    
    
    12,456,023Share-based compensation attributable to NBC Holdings Corp. stock options
    
    
    
    
    
    
    70,489
    
    
    
    
    
    
    
    
    
    
    
    70,489
    
    
    
    Other comprehensive loss, net of taxes:Unrealized loss on interest rate swap agreement, net of taxes of $861,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,361,000
    )
    
    
    (1,361,000
    )
    
    
    (1,361,000
    )BALANCE, March 31, 2008
    
    
    100
    
    
    
    138,087,705
    
    
    
    58,499,591
    
    
    
    (748,000
    )
    
    
    195,839,396
    
    
    $
    11,095,023Contributed capital
    
    
    
    
    
    
    10,004,802
    
    
    
    
    
    
    
    
    
    
    
    10,004,802
    
    
    $
    Net loss
    
    
    
    
    
    
    
    
    
    
    (94,928,668
    )
    
    
    
    
    
    
    (94,928,668
    )
    
    
    (94,928,668
    )Share-based compensation attributable to NBC Holdings Corp. stock options
    
    
    
    
    
    
    43,416
    
    
    
    
    
    
    
    
    
    
    
    43,416
    
    
    
    Dividends declared
    
    
    
    
    
    
    
    
    
    
    (8,470,000
    )
    
    
    
    
    
    
    (8,470,000
    )
    
    
    Other comprehensive loss, net of taxes:Unrealized gain on interest rate swap agreement, net of taxes of $473,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    748,000
    
    
    
    748,000
    
    
    
    748,000BALANCE, March 31, 2009
    
    
    100
    
    
    
    148,135,923
    
    
    
    (44,899,077
    )
    
    
    
    
    
    
    103,236,946
    
    
    $
    (94,180,668
    )Contributed capital
    
    
    
    
    
    
    (40
    )
    
    
    
    
    
    
    
    
    
    
    (40
    )
    
    $
    Net income
    
    
    
    
    
    
    
    
    
    
    7,362,198
    
    
    
    
    
    
    
    7,362,198
    
    
    
    7,362,198Share-based compensation attributable to NBC Holdings Corp. stock options
    
    
    
    
    
    
    61,424
    
    
    
    
    
    
    
    
    
    
    
    61,424
    
    
    
    Dividends declared
    
    
    
    
    
    
    
    
    
    
    (8,470,000
    )
    
    
    
    
    
    
    (8,470,000
    )
    
    
    BALANCE, March 31, 2010
    
    $
    100
    
    
    $
    148,197,307
    
    
    $
    (46,006,879
    )
    
    $
    
    
    
    $
    102,190,528
    
    
    $
    7,362,198
   45




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended
    
    
    Year Ended
    
    
    Year EndedMarch 31,
    
    
    March 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net income (loss)
    
    $
    7,362,198
    
    
    $
    (94,928,668
    )
    
    $
    12,456,023Adjustments to reconcile net income (loss) to net cash flows from operating activities:Share-based compensation
    
    
    1,106,882
    
    
    
    1,288,543
    
    
    
    1,040,599Provision for losses on receivables
    
    
    1,399,466
    
    
    
    1,366,979
    
    
    
    468,007Depreciation
    
    
    8,517,004
    
    
    
    7,602,631
    
    
    
    7,208,504Amortization
    
    
    15,654,145
    
    
    
    13,589,972
    
    
    
    12,298,118Goodwill impairment
    
    
    
    
    
    
    106,972,000
    
    
    
    Loss on early extinguishment of debt
    
    
    3,065,759
    
    
    
    
    
    
    
    Amortization of bond discount
    
    
    159,518
    
    
    
    
    
    
    
    Loss on derivative financial instrument
    
    
    
    
    
    
    102,000
    
    
    
    198,000Loss on disposal of assets
    
    
    235,803
    
    
    
    124,871
    
    
    
    284,891Deferred income taxes
    
    
    (3,512,197
    )
    
    
    (1,947,665
    )
    
    
    (3,443,682
    )Changes in operating assets and liabilities, net of effect of acquisitions:Receivables
    
    
    1,252,806
    
    
    
    (5,271,324
    )
    
    
    (2,920,327
    )Inventories
    
    
    (2,874,880
    )
    
    
    8,101,584
    
    
    
    (1,425,783
    )Recoverable income taxes
    
    
    434,296
    
    
    
    (2,846,510
    )
    
    
    Prepaid expenses and other assets
    
    
    30,593
    
    
    
    (1,400,805
    )
    
    
    (545,433
    )Other assets
    
    
    462,071
    
    
    
    275,316
    
    
    
    490,219Accounts payable
    
    
    (376,486
    )
    
    
    (2,132,402
    )
    
    
    (1,098,060
    )Accrued employee compensation and benefits
    
    
    (4,378,741
    )
    
    
    1,679,569
    
    
    
    (2,112,361
    )Accrued interest
    
    
    6,617,193
    
    
    
    18,579
    
    
    
    (50,863
    )Accrued incentives
    
    
    203,233
    
    
    
    (998,157
    )
    
    
    125,595Accrued expenses
    
    
    516,894
    
    
    
    1,104,983
    
    
    
    837,883Income taxes payable
    
    
    
    
    
    
    (847,370
    )
    
    
    (2,405,704
    )Deferred revenue
    
    
    340,686
    
    
    
    96,280
    
    
    
    (35,672
    )Other long-term liabilities
    
    
    20,465
    
    
    
    (284,493
    )
    
    
    (506,193
    )Net cash flows from operating activities
    
    
    36,236,708
    
    
    
    31,665,913
    
    
    
    20,863,761CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (5,410,976
    )
    
    
    (7,979,371
    )
    
    
    (7,260,909
    )Acquisitions, net of cash acquired
    
    
    (2,847,608
    )
    
    
    (6,320,772
    )
    
    
    (14,681,655
    )Proceeds from sale of property and equipment
    
    
    141,167
    
    
    
    35,503
    
    
    
    36,385Software development costs
    
    
    (648,523
    )
    
    
    (633,763
    )
    
    
    (272,981
    )Net cash flows from investing activities
    
    
    (8,765,940
    )
    
    
    (14,898,403
    )
    
    
    (22,179,160
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of long-term debt
    
    
    199,000,000
    
    
    
    
    
    
    
    Payment of financing costs
    
    
    (10,190,217
    )
    
    
    (3,961,811
    )
    
    
    Principal payments on long-term debt
    
    
    (193,125,225
    )
    
    
    (2,070,654
    )
    
    
    (1,957,852
    )Principal payments on capital lease obligations
    
    
    (820,560
    )
    
    
    (722,823
    )
    
    
    (624,910
    )Borrowings under revolving credit facility
    
    
    85,000,000
    
    
    
    200,600,000
    
    
    
    148,000,000Payments under revolving credit facility
    
    
    (85,000,000
    )
    
    
    (200,600,000
    )
    
    
    (148,000,000
    )Dividends paid to parent
    
    
    (8,470,000
    )
    
    
    (8,470,000
    )
    
    
    Capital contributions
    
    
    4,869
    
    
    
    10,009,752
    
    
    
    4,869Due to parent
    
    
    3,064,522
    
    
    
    3,160,038
    
    
    
    236,872Net cash flows from financing activities
    
    
    (10,536,611
    )
    
    
    (2,055,498
    )
    
    
    (2,341,021
    )NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    16,934,157
    
    
    
    14,712,012
    
    
    
    (3,656,420
    )CASH AND CASH EQUIVALENTS, Beginning of period
    
    
    44,038,468
    
    
    
    29,326,456
    
    
    
    32,982,876CASH AND CASH EQUIVALENTS, End of period
    
    $
    60,972,625
    
    
    $
    44,038,468
    
    
    $
    29,326,456SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:Cash paid during the period for:Interest
    
    $
    29,102,221
    
    
    $
    30,653,694
    
    
    $
    31,755,319Income taxes
    
    
    3,155,473
    
    
    
    9,930,165
    
    
    
    13,030,853Noncash investing and financing activities:Property acquired through capital leases
    
    $
    
    
    
    $
    
    
    
    $
    2,200,000Accumulated other comprehensive income (loss):Unrealized gain (loss) on interest rate swap agreement, net of income taxes
    
    
    
    
    
    
    748,000
    
    
    
    (1,361,000
    )Deferred taxes resulting from unrealized gain (loss) on interest rate swap
agreement
    
    
    
    
    
    
    473,000
    
    
    
    (861,000
    )Other intangible agreement to be paid over three years
    
    
    
    
    
    
    
    
    
    
    1,585,407Unpaid consideration associated with bookstore acquisitions
    
    
    574,465
    
    
    
    155,000
    
    
    
    700,000
   46




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 A. NATURE OF OPERATIONS
    B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Principles of Consolidation:
 Revenue Recognition:
 Bookstore Division
 Textbook Division
 Complementary Services Division
  47




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##### Table of Contents



Shipping and Handling Fees and Costs:
 Sales Tax Collections:
 Advertising
 Use of Estimates:
 Cash and Cash Equivalents:
 Accounts Receivable and Allowance for Doubtful Accounts:
 Inventories:
 Property and Equipment:
 Goodwill:
  48




---



##### Table of Contents



Identifiable Intangibles  Customer Relationships:
  Identifiable Intangibles  Tradename: ,
 Other Identifiable Intangibles  Developed Technology:
    49




---



##### Table of Contents



Other Identifiable Intangibles  Covenants Not to Compete:
 Other Identifiable Intangibles  Contract-Managed Acquisition Costs:
 Other Identifiable Intangibles  Other:
 Debt Issue Costs:
 Accrued Incentives.
 Derivative Financial Instruments
 Fair Value of Financial Instruments:
  50




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##### Table of Contents



Share-Based Compensation: Share-Based Payment
  Nonvested Stock:
 Income Taxes:
 Accounting for Uncertainty to Income
Taxes
 Comprehensive Income (Loss):
 Presentation:
 Accounting Standards Not Yet Adopted
  51




---



##### Table of Contents



C. RECEIVABLES
  March 31,2010
    
    
    2009Trade receivables, less allowance for
doubtful accounts of $1,283,360 at March
31, 2010 and 2009
    
    $
    30,944,300
    
    
    $
    29,097,291Receivables from book publishers for returns
    
    
    22,148,190
    
    
    
    25,233,975Advances for book buy-backs
    
    
    1,675,625
    
    
    
    2,795,286Other
    
    
    3,219,679
    
    
    
    4,175,084$
    57,987,794
    
    
    $
    61,301,636
  D. INVENTORIES
  March 31,2010
    
    
    2009Bookstore Division
    
    $
    68,765,952
    
    
    $
    59,785,703Textbook Division
    
    
    26,132,007
    
    
    
    30,571,333Complementary Services Division
    
    
    2,599,730
    
    
    
    2,758,627$
    97,497,689
    
    
    $
    93,115,663
    52




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##### Table of Contents



E. PROPERTY AND EQUIPMENT
  March 31,2010
    
    
    2009Land
    
    $
    3,565,382
    
    
    $
    3,565,382Buildings and improvements
    
    
    25,774,209
    
    
    
    25,675,055Leasehold improvements
    
    
    16,207,697
    
    
    
    14,598,193Furniture and fixtures
    
    
    17,153,671
    
    
    
    15,976,841Information systems
    
    
    14,640,695
    
    
    
    14,650,613Automobiles and trucks
    
    
    231,743
    
    
    
    220,008Machinery
    
    
    351,011
    
    
    
    378,966Projects in process
    
    
    83,703
    
    
    
    178,30978,008,111
    
    
    
    75,243,367Less: Accumulated depreciation & amortization
    
    
    (35,852,687
    )
    
    
    (29,604,845
    )$
    42,155,424
    
    
    $
    45,638,522
 F. GOODWILL AND OTHER IDENTIFIABLE INTANGIBLES
       53




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##### Table of Contents



Bookstore
    
    
    CorporateDivision
    
    
    Administration
    
    
    TotalBalance, April 1, 2008
    
    $
    51,305,398
    
    
    $
    269,061,875
    
    
    $
    320,367,273Additions to goodwill:Bookstore acquisitions
    
    
    2,040,853
    
    
    
    
    
    
    
    2,040,853Impairment
    
    
    
    
    
    
    (106,972,000
    )
    
    
    (106,972,000
    )Balance, March 31, 2009
    
    
    53,346,251
    
    
    
    162,089,875
    
    
    
    215,436,126Additions to goodwill:Bookstore acquisitions
    
    
    135,000
    
    
    
    
    
    
    
    135,000Balance, March 31, 2010
    
    $
    53,481,251
    
    
    $
    162,089,875
    
    
    $
    215,571,126
  March 31,2010
    
    
    2009Gross carrying amount
    
    $
    322,543,126
    
    
    $
    322,408,126Accumulated impairment
    
    
    (106,972,000
    )
    
    
    (106,972,000
    )Net carrying amount
    
    $
    215,571,126
    
    
    $
    215,436,126
   54




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##### Table of Contents



March 31, 2010Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    AmountCustomer relationships
    
    $
    114,830,000
    
    
    $
    (34,927,180
    )
    
    $
    79,902,820Developed technology
    
    
    13,709,789
    
    
    
    (12,137,672
    )
    
    
    1,572,117Covenants not to compete
    
    
    3,416,000
    
    
    
    (2,268,172
    )
    
    
    1,147,828Contract-managed acquisition costs
    
    
    4,555,740
    
    
    
    (2,200,557
    )
    
    
    2,355,183Other
    
    
    1,585,407
    
    
    
    (1,365,211
    )
    
    
    220,196$
    138,096,936
    
    
    $
    (52,898,792
    )
    
    $
    85,198,144
 March 31, 2009Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    AmountCustomer relationships
    
    $
    114,830,000
    
    
    $
    (29,185,660
    )
    
    $
    85,644,340Developed technology
    
    
    13,086,017
    
    
    
    (10,069,126
    )
    
    
    3,016,891Covenants not to compete
    
    
    6,614,699
    
    
    
    (4,069,131
    )
    
    
    2,545,568Contract-managed acquisition costs
    
    
    4,816,378
    
    
    
    (1,954,878
    )
    
    
    2,861,500Other
    
    
    1,585,407
    
    
    
    (836,744
    )
    
    
    748,663$
    140,932,501
    
    
    $
    (46,115,539
    )
    
    $
    94,816,962
  55




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##### Table of Contents



AmortizationExpenseFiscal year ended March 31, 2010
    
    $
    10,853,248Fiscal year ended March 31, 2009
    
    
    11,384,020Fiscal year ended March 31, 2008
    
    
    10,443,335Estimated amortization expense for the fiscal years ending March 31:2011
    
    $
    8,104,8522012
    
    
    6,880,5622013
    
    
    6,482,3352014
    
    
    6,119,9182015
    
    
    5,961,196
   G. ACCRUED EXPENSES
  March 31,2010
    
    
    2009Accrued rent
    
    $
    4,285,622
    
    
    $
    3,725,616Accrued share-based compensation
    
    
    4,257,652
    
    
    
    Accrued property taxes
    
    
    508,377
    
    
    
    551,489$
    9,051,651
    
    
    $
    4,277,105
   56




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##### Table of Contents



H. LONG-TERM DEBT
  March 31,2010
    
    
    2009Term Loan paid in full October 2, 2009, principal and interest payments were due quarterly, interest accrued at a floating rate based on Eurodollar rate plus an applicable margin percent (9.25%, as reset on March 31, 2009)
    
    $
    
    
    
    $
    193,076,346Senior Secured Notes, second-priority to ABL Facility, unamortized bond discount $840,482, principal due December 1, 2011, interest payments accrue at fixed rate of 10.0% and are payable semi-annually on December 1 and June 1 beginning December 1, 2009
    
    
    199,159,518
    
    
    
    Senior Subordinated Notes, unsecured, principal due on March 15, 2012, interest payments accrue at a fixed rate of 8.625% and are payable semi-annually on March 15 and September 15 beginning September 15, 2004
    
    
    175,000,000
    
    
    
    175,000,000Mortgage 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%
    
    
    237,954
    
    
    
    286,833374,397,472
    
    
    
    368,363,179Less current maturities of long-term debt
    
    
    (54,403
    )
    
    
    (6,917,451
    )Long-term debt
    
    $
    374,343,069
    
    
    $
    361,445,728
      57




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##### Table of Contents



58




---



##### Table of Contents



Fiscal Year2011
    
    $
    54,4032012
    
    
    375,060,5482013
    
    
    67,3872014
    
    
    55,6162015
    
    
    
 I. LEASES AND OTHER COMMITMENTS
    Capital
    
    
    OperatingFiscal Year
    
    Leases
    
    
    Leases2011
    
    $
    1,077,900
    
    
    $
    19,630,0002012
    
    
    764,606
    
    
    
    16,990,0002013
    
    
    529,925
    
    
    
    12,817,0002014
    
    
    448,973
    
    
    
    9,200,0002015
    
    
    350,765
    
    
    
    6,675,000Thereafter
    
    
    858,674
    
    
    
    15,072,000Total minimum lease payments
    
    
    4,030,843
    
    
    $
    80,384,000Less amount representing interest at 9.0%
    
    
    (804,053
    )Present value of minimum lease payments
    
    
    3,226,790Less obligations due within one year
    
    
    (846,053
    )Long-term obligations
    
    $
    2,380,737
  J. DERIVATIVE FINANCIAL INSTRUMENTS
    59




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##### Table of Contents



(1)
    
    Formal documentation of the hedging relationship and the Companys risk
management objective and strategy for undertaking the hedge were in place.
 (2)
    
    The interest rate swap agreement was expected to be highly effective in
offsetting the change in the value of the hedged portion of the interest payments
attributable to the Term Loan.
      60




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##### Table of Contents



Fiscal Years EndedMarch 31, 2009
    
    
    March 31, 2008Balance Sheet Components:Other assets (Accrued interest)  fair
value of swap agreement
    
    $
    
    
    
    $
    (1,119,000
    )Deferred income taxes
    
    
    
    
    
    
    433,473$
    
    
    
    $
    (685,527
    )Portion of Agreement Subsequent to
September 30, 2005 Hedge Designation:Increase (Decrease) in fair value of
swap agreement
    
    $
    1,221,000
    
    
    $
    (2,222,000
    )Portion of Agreement Prior to September
30, 2005 Hedge Designation:Decrease in fair value of swap agreement
    
    
    (102,000
    )
    
    
    (198,000
    )
 K. FAIR VALUE MEASUREMENTS
       61




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##### Table of Contents



March 31,
    
    
    March 31,2010
    
    
    2009Carrying Values:Fixed rate debt
    
    $
    377,624,262
    
    
    $
    179,334,183Variable rate debt
    
    
    
    
    
    
    193,076,346Fair Values:Fixed rate debt
    
    $
    372,317,000
    
    
    $
    90,367,000Variable rate debt
    
    
    
    
    
    
    160,253,000
 L. INCOME TAXES
  Fiscal Years EndedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Current:Federal
    
    $
    4,542,939
    
    
    $
    8,043,362
    
    
    $
    9,375,591State
    
    
    2,111,352
    
    
    
    1,352,961
    
    
    
    1,486,430Deferred
    
    
    (3,512,197
    )
    
    
    (1,947,665
    )
    
    
    (3,443,682
    )$
    3,142,094
    
    
    $
    7,448,658
    
    
    $
    7,418,339
  Fiscal Years EndedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Statutory rate
    
    
    34.3
    %
    
    
    35.0
    %
    
    
    35.0
    %Goodwill impairment
    
    
    
    
    
    
    (46.7
    )
    
    
    Adjustments to state deferred tax rate
    
    
    (8.0
    )
    
    
    
    
    
    
    NOL carryforward benefit
    
    
    (3.5
    )
    
    
    
    
    
    
    State income tax effect
    
    
    4.9
    
    
    
    4.2
    
    
    
    1.0Meals and entertainment
    
    
    1.1
    
    
    
    0.8
    
    
    
    1.0Other
    
    
    1.1
    
    
    
    (1.8
    )
    
    
    0.329.9
    %
    
    
    (8.5
    %)
    
    
    37.3
    %
   62




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##### Table of Contents



March 31,2010
    
    
    2009Deferred
income tax assets (liabilities), current:Vacation accruals
    
    $
    1,053,004
    
    
    $
    983,822Inventories
    
    
    1,176,603
    
    
    
    802,365NOL carryforward benefit
    
    
    759,526
    
    
    
    Allowance for doubtful accounts
    
    
    488,432
    
    
    
    494,055Product returns
    
    
    1,140,441
    
    
    
    1,142,856Incentive programs
    
    
    2,391,251
    
    
    
    2,336,180Other
    
    
    (761,698
    )
    
    
    822,5246,247,559
    
    
    
    6,581,802Deferred income tax assets
(liabilities), noncurrent:Deferred compensation agreements
    
    
    140,707
    
    
    
    138,953Goodwill amortization
    
    
    (10,270,824
    )
    
    
    (8,612,071
    )Covenants not to compete
    
    
    1,608,593
    
    
    
    1,424,543Identifiable intangibles
    
    
    (42,496,001
    )
    
    
    (46,109,986
    )Property and equipment
    
    
    (492,925
    )
    
    
    (1,233,192
    )Other
    
    
    1,043,431
    
    
    
    78,294(50,467,019
    )
    
    
    (54,313,459
    )$
    (44,219,460
    )
    
    $
    (47,731,657
    )
  M. RETIREMENT PLANS
    63




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##### Table of Contents



N. DEFERRED COMPENSATION
  O. SHARE-BASED COMPENSATION
  2004 Stock Option Plan 
      64




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##### Table of Contents



Stock Options Granted October 12, 2007:General information:Grant date calculated fair value per option
    
    $
    38.23Shares at March 31, 2010:Vested
    
    
    3,538Nonvested
    
    
    1,179Total
    
    
    4,717Unrecognized share-based compensation at March 31, 2010
    
    $
    22,141Period over which unrecognized share-based compensation will be
realized (in years) at March 31, 2010
    
    
    0.5Stock Options Granted February 3, 2010:General information:Grant date calculated fair value per option
    
    $
    13.87Shares at March 31, 2010:Vested
    
    
    1,060Nonvested
    
    
    3,178Total
    
    
    4,238Unrecognized share-based compensation at March 31, 2010
    
    $
    41,630Period over which unrecognized share-based compensation will be
realized (in years) at March 31, 2010
    
    
    2.8
  Fiscal Year EndedMarch 31,2010Consolidated Statement of Operations:Share-based compensation
    
    $
    61,424Deferred tax benefit
    
    
    23,648Other Required Disclosures:Total calculated fair value of shares vested during the period
    
    $
    58,812
  65




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##### Table of Contents



Fiscal Year EndedMarch 31, 2010Weighted-AverageExerciseNumber
    
    
    Price2004 Stock Option Plan:Outstanding  beginning of year
    
    
    80,203
    
    
    $
    117.18Granted
    
    
    4,238
    
    
    
    85.00Exercised or converted
    
    
    
    
    
    
    Forfeited
    
    
    (50
    )
    
    
    205.00Expired
    
    
    
    
    
    
    Outstanding  end of year
    
    
    84,391
    
    
    $
    117.75Exercisable  end of year
    
    
    80,033
    
    
    $
    115.40
 Outstanding
    
    

    ExercisableWeighted-
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    AverageRemaining
    
    
    
    
    
    
    RemainingContractual
    
    
    
    
    
    
    ContractualNumber
    
    
    Term (Yrs)
    
    
    Number
    
    
    Term (Yrs)March 31, 2010:Exercise price of $52.47
    
    
    26,628
    
    
    
    3.9
    
    
    
    26,628
    
    
    
    3.9Exercise price of $106
    
    
    11,760
    
    
    
    3.9
    
    
    
    11,760
    
    
    
    3.9Exercise price of $146
    
    
    10,750
    
    
    
    3.9
    
    
    
    10,750
    
    
    
    3.9Exercise price of $160
    
    
    26,298
    
    
    
    5.1
    
    
    
    26,298
    
    
    
    5.1Exercise price of $205
    
    
    4,717
    
    
    
    7.5
    
    
    
    3,538
    
    
    
    7.5Exercise price of $85
    
    
    4,238
    
    
    
    9.8
    
    
    
    1,059
    
    
    
    9.884,391
    
    
    
    4.8
    
    
    
    80,033
    
    
    
    4.5
 2005 Restricted Stock Plan 
    66




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##### Table of Contents



67




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##### Table of Contents



Valuation of Privately-Held-Company Equity Securities .
 Fiscal Years EndedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Minimum CompensationNonvested Stock:Valuation methodologyShare-based compensation:Recognized:Value of nonvested shares
    
    $
    666,667
    
    
    $
    666,667
    
    
    $
    666,666Reimbursement for taxes
    
    
    378,791
    
    
    
    578,460
    
    
    
    303,444Total
    
    $
    1,045,458
    
    
    $
    1,245,127
    
    
    $
    970,110Unrecognized:Value of nonvested shares
    
    $
    333,333
    
    
    $
    1,000,000
    
    
    $
    1,666,667Reimbursement for taxes
    
    
    198,825
    
    
    
    606,097
    
    
    
    839,618Total
    
    $
    532,158
    
    
    $
    1,606,097
    
    
    $
    2,506,285Deferred tax benefit
    
    $
    375,824
    
    
    $
    476,298
    
    
    $
    375,797Period over which
unrecognized share-based
compensation will be
realized (in years)
    
    
    0.5
    
    
    
    1.5
    
    
    
    2.5
 P. SEGMENT INFORMATION
   68




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##### Table of Contents



ComplementaryBookstore
    
    
    Textbook
    
    
    ServicesDivision
    
    
    Division
    
    
    Division
    
    
    TotalFiscal year ended March 31, 2010:External customer revenues
    
    $
    471,028,406
    
    
    $
    104,918,932
    
    
    $
    29,546,275
    
    
    $
    605,493,613Intersegment revenues
    
    
    1,463,869
    
    
    
    35,673,288
    
    
    
    5,924,561
    
    
    
    43,061,718Depreciation and amortization expense
    
    
    9,285,089
    
    
    
    6,075,652
    
    
    
    2,606,650
    
    
    
    17,967,391Earnings before interest, taxes,
depreciation, amortization, and loss
on early extinguishment of debt
(Adjusted EBITDA)
    
    
    45,685,171
    
    
    
    37,050,519
    
    
    
    2,301,001
    
    
    
    85,036,691Total assets
    
    
    189,058,497
    
    
    
    121,026,790
    
    
    
    15,312,328
    
    
    
    325,397,615Fiscal year ended March 31, 2009:External customer revenues
    
    $
    470,690,964
    
    
    $
    111,715,360
    
    
    $
    28,309,857
    
    
    $
    610,716,181Intersegment revenues
    
    
    1,347,045
    
    
    
    35,572,419
    
    
    
    5,924,026
    
    
    
    42,843,490Depreciation and amortization expense
    
    
    9,009,168
    
    
    
    6,086,334
    
    
    
    2,644,555
    
    
    
    17,740,057Earnings before interest, taxes,
depreciation, amortization and
goodwill impairment (Adjusted
EBITDA)
    
    
    44,029,528
    
    
    
    39,009,073
    
    
    
    1,320,700
    
    
    
    84,359,301Total assets
    
    
    179,192,480
    
    
    
    131,827,129
    
    
    
    17,836,018
    
    
    
    328,855,627Fiscal year ended March 31, 2008:External customer revenues
    
    $
    452,992,078
    
    
    $
    99,584,957
    
    
    $
    28,670,751
    
    
    $
    581,247,786Intersegment revenues
    
    
    1,382,795
    
    
    
    40,100,078
    
    
    
    5,701,472
    
    
    
    47,184,345Depreciation and amortization expense
    
    
    7,908,134
    
    
    
    6,096,196
    
    
    
    2,614,015
    
    
    
    16,618,345Earnings before interest, taxes,
depreciation, and amortization
(EBITDA)
    
    
    45,941,624
    
    
    
    33,731,382
    
    
    
    1,558,414
    
    
    
    81,231,420Total assets
    
    
    186,707,038
    
    
    
    137,629,109
    
    
    
    21,639,502
    
    
    
    345,975,649
  69




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##### Table of Contents



Fiscal Years EndedMarch 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Revenues:Total for reportable segments
    
    $
    648,555,331
    
    
    $
    653,559,671
    
    
    $
    628,432,131Elimination of intersegment revenues
    
    
    (43,061,718
    )
    
    
    (42,843,490
    )
    
    
    (47,184,345
    )Consolidated total
    
    $
    605,493,613
    
    
    $
    610,716,181
    
    
    $
    581,247,786Depreciation and Amortization Expense:Total for reportable segments
    
    $
    17,967,391
    
    
    $
    17,740,057
    
    
    $
    16,618,345Corporate Administration
    
    
    1,402,861
    
    
    
    1,246,594
    
    
    
    1,033,494Consolidated total
    
    $
    19,370,252
    
    
    $
    18,986,651
    
    
    $
    17,651,839Goodwill impairment
    
    $
    
    
    
    $
    106,972,000
    
    
    $
    Income (Loss) Before Income Taxes:Total Adjusted EBITDA for reportable segments (1)
    
    $
    85,036,691
    
    
    $
    84,359,301
    
    
    $
    81,231,420Corporate Administration Adjusted EBITDA loss
(including interdivision profit elimination) (1)
    
    
    (11,597,268
    )
    
    
    (13,326,971
    )
    
    
    (11,280,477
    )73,439,423
    
    
    
    71,032,330
    
    
    
    69,950,943Depreciation and amortization
    
    
    (19,370,252
    )
    
    
    (18,986,651
    )
    
    
    (17,651,839
    )Goodwill impairment
    
    
    
    
    
    
    (106,972,000
    )
    
    
    Consolidated income (loss) from operations
    
    
    54,069,171
    
    
    
    (54,926,321
    )
    
    
    52,299,104Interest and other expenses, net
    
    
    (40,499,120
    )
    
    
    (32,553,689
    )
    
    
    (32,424,742
    )Loss on early extinguishment of debt
    
    
    (3,065,759
    )
    
    
    
    
    
    
    Consolidated income (loss) before income taxes
    
    $
    10,504,292
    
    
    $
    (87,480,010
    )
    
    $
    19,874,362
 March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2008Total Assets:Total for reportable segments
    
    $
    325,397,615
    
    
    $
    328,855,627
    
    
    $
    345,975,649Assets not allocated to segments:Cash and cash equivalents
    
    
    49,933,615
    
    
    
    36,090,627
    
    
    
    12,110,876Receivables, net
    
    
    17,839,544
    
    
    
    19,857,099
    
    
    
    19,490,619Recoverable income taxes
    
    
    2,435,287
    
    
    
    2,869,583
    
    
    
    Deferred income taxes
    
    
    1,690,559
    
    
    
    2,350,802
    
    
    
    1,901,092Prepaid expenses and other assets
    
    
    2,216,334
    
    
    
    3,485,273
    
    
    
    2,259,681Property and equipment, net
    
    
    11,711,425
    
    
    
    12,258,135
    
    
    
    12,017,331Goodwill (2)
    
    
    162,089,875
    
    
    
    162,089,875
    
    
    
    269,061,875Identifiable intangibles, net
    
    
    32,035,514
    
    
    
    32,722,900
    
    
    
    33,347,263Debt issue costs, net
    
    
    9,198,683
    
    
    
    6,875,122
    
    
    
    5,119,263Other assets
    
    
    956,793
    
    
    
    611,664
    
    
    
    803,772Consolidated total
    
    $
    615,505,244
    
    
    $
    608,066,707
    
    
    $
    702,087,421
 (1)
    
    Adjusted EBITDA is defined as earnings before interest, taxes,
depreciation, amortization, goodwill impairment and loss on early extinguishment of
debt. There was no goodwill impairment or loss on early extinguishment of debt in
fiscal year 2008; therefore Adjusted EBITDA equals EBITDA for that year.(2)
    
    Due to the economic downturn and changes in comparable company market multiples,
we determined in the first step of our goodwill impairment test conducted at March 31,
2009 that the carrying value of the Textbook and Bookstore Divisions exceeded their fair
values, indicating that goodwill may be impaired. Having determined that goodwill may
be impaired, we performed the second step of the goodwill impairment test. As a result,
we recorded an impairment charge of $107.0 million in fiscal year 2009, which reduced
our goodwill carrying value to $215.4 million as of March 31, 2009. See Note F to our
consolidated financial statements.   70




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##### Table of Contents



Q. RELATED PARTY TRANSACTIONS
   R. SUBSEQUENT EVENT
  S. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
   71




---



##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2010
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    55,410,821
    
    
    $
    5,561,804
    
    
    $
    
    
    
    $
    60,972,625Intercompany receivables
    
    
    17,716,457
    
    
    
    57,770,424
    
    
    
    (75,486,881
    )
    
    
    Receivables, net
    
    
    32,613,517
    
    
    
    25,374,277
    
    
    
    
    
    
    
    57,987,794Inventories
    
    
    55,017,307
    
    
    
    42,480,382
    
    
    
    
    
    
    
    97,497,689Recoverable income taxes
    
    
    2,435,287
    
    
    
    
    
    
    
    
    
    
    
    2,435,287Deferred income taxes
    
    
    1,690,559
    
    
    
    4,557,000
    
    
    
    
    
    
    
    6,247,559Prepaid expenses and other assets
    
    
    3,494,754
    
    
    
    575,527
    
    
    
    
    
    
    
    4,070,281Total current assets
    
    
    168,378,702
    
    
    
    136,319,414
    
    
    
    (75,486,881
    )
    
    
    229,211,235PROPERTY AND EQUIPMENT, net
    
    
    36,815,903
    
    
    
    5,339,521
    
    
    
    
    
    
    
    42,155,424GOODWILL
    
    
    199,900,018
    
    
    
    15,671,108
    
    
    
    
    
    
    
    215,571,126CUSTOMER RELATIONSHIPS, net
    
    
    4,315,113
    
    
    
    75,587,707
    
    
    
    
    
    
    
    79,902,820TRADENAME
    
    
    31,320,000
    
    
    
    
    
    
    
    
    
    
    
    31,320,000OTHER IDENTIFIABLE INTANGIBLES, net
    
    
    3,455,593
    
    
    
    1,839,731
    
    
    
    
    
    
    
    5,295,324INVESTMENT IN SUBSIDIARIES
    
    
    171,532,241
    
    
    
    
    
    
    
    (171,532,241
    )
    
    
    OTHER ASSETS
    
    
    10,892,382
    
    
    
    1,156,933
    
    
    
    
    
    
    
    12,049,315$
    626,609,952
    
    
    $
    235,914,414
    
    
    $
    (247,019,122
    )
    
    $
    615,505,244LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    22,622,816
    
    
    $
    3,764,224
    
    
    $
    
    
    
    $
    26,387,040Intercompany payables
    
    
    57,770,424
    
    
    
    17,716,457
    
    
    
    (75,486,881
    )
    
    
    Accrued employee compensation and benefits
    
    
    6,921,873
    
    
    
    2,479,595
    
    
    
    
    
    
    
    9,401,468Accrued interest
    
    
    7,295,709
    
    
    
    
    
    
    
    
    
    
    
    7,295,709Accrued incentives
    
    
    31,148
    
    
    
    6,282,785
    
    
    
    
    
    
    
    6,313,933Accrued expenses
    
    
    8,195,313
    
    
    
    856,338
    
    
    
    
    
    
    
    9,051,651Income taxes payable
    
    
    (3,651,775
    )
    
    
    3,651,775
    
    
    
    
    
    
    
    Deferred revenue
    
    
    1,299,960
    
    
    
    
    
    
    
    
    
    
    
    1,299,960Current maturities of long-term debt
    
    
    54,403
    
    
    
    
    
    
    
    
    
    
    
    54,403Current maturities of capital lease obligations
    
    
    846,053
    
    
    
    
    
    
    
    
    
    
    
    846,053Total current liabilities
    
    
    101,385,924
    
    
    
    34,751,174
    
    
    
    (75,486,881
    )
    
    
    60,650,217LONG-TERM DEBT, net of current maturities
    
    
    374,343,069
    
    
    
    
    
    
    
    
    
    
    
    374,343,069CAPITAL LEASE OBLIGATIONS, net of current
maturities
    
    
    2,380,737
    
    
    
    
    
    
    
    
    
    
    
    2,380,737OTHER LONG-TERM LIABILITIES
    
    
    1,918,963
    
    
    
    360,000
    
    
    
    
    
    
    
    2,278,963DEFERRED INCOME TAXES
    
    
    21,196,020
    
    
    
    29,270,999
    
    
    
    
    
    
    
    50,467,019DUE TO PARENT
    
    
    23,194,711
    
    
    
    
    
    
    
    
    
    
    
    23,194,711COMMITMENTSSTOCKHOLDERS EQUITY
    
    
    102,190,528
    
    
    
    171,532,241
    
    
    
    (171,532,241
    )
    
    
    102,190,528$
    626,609,952
    
    
    $
    235,914,414
    
    
    $
    (247,019,122
    )
    
    $
    615,505,244
  72




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING BALANCE SHEET

MARCH 31, 2009
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    40,811,478
    
    
    $
    3,226,990
    
    
    $
    
    
    
    $
    44,038,468Intercompany receivables
    
    
    17,795,278
    
    
    
    31,381,837
    
    
    
    (49,177,115
    )
    
    
    Receivables, net
    
    
    34,406,593
    
    
    
    26,895,043
    
    
    
    
    
    
    
    61,301,636Inventories
    
    
    47,625,966
    
    
    
    45,489,697
    
    
    
    
    
    
    
    93,115,663Recoverable income taxes
    
    
    2,869,583
    
    
    
    
    
    
    
    
    
    
    
    2,869,583Deferred income taxes
    
    
    2,350,802
    
    
    
    4,231,000
    
    
    
    
    
    
    
    6,581,802Prepaid expenses and other assets
    
    
    3,648,635
    
    
    
    302,239
    
    
    
    
    
    
    
    3,950,874Total current assets
    
    
    149,508,335
    
    
    
    111,526,806
    
    
    
    (49,177,115
    )
    
    
    211,858,026PROPERTY AND EQUIPMENT, net
    
    
    40,057,891
    
    
    
    5,580,631
    
    
    
    
    
    
    
    45,638,522GOODWILL
    
    
    199,900,017
    
    
    
    15,536,109
    
    
    
    
    
    
    
    215,436,126CUSTOMER RELATIONSHIPS, net
    
    
    4,625,181
    
    
    
    81,019,159
    
    
    
    
    
    
    
    85,644,340TRADENAME
    
    
    31,320,000
    
    
    
    
    
    
    
    
    
    
    
    31,320,000OTHER IDENTIFIABLE INTANGIBLES, net
    
    
    7,071,442
    
    
    
    2,101,180
    
    
    
    
    
    
    
    9,172,622INVESTMENT IN SUBSIDIARIES
    
    
    151,290,937
    
    
    
    
    
    
    
    (151,290,937
    )
    
    
    OTHER ASSETS
    
    
    8,388,921
    
    
    
    608,150
    
    
    
    
    
    
    
    8,997,071$
    592,162,724
    
    
    $
    216,372,035
    
    
    $
    (200,468,052
    )
    
    $
    608,066,707LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable
    
    $
    22,728,714
    
    
    $
    4,136,900
    
    
    $
    
    
    
    $
    26,865,614Intercompany payables
    
    
    31,381,837
    
    
    
    17,795,278
    
    
    
    (49,177,115
    )
    
    
    Accrued employee compensation and benefits
    
    
    9,705,781
    
    
    
    4,074,428
    
    
    
    
    
    
    
    13,780,209Accrued interest
    
    
    678,516
    
    
    
    
    
    
    
    
    
    
    
    678,516Accrued incentives
    
    
    42,593
    
    
    
    6,068,107
    
    
    
    
    
    
    
    6,110,700Accrued expenses
    
    
    3,804,787
    
    
    
    472,318
    
    
    
    
    
    
    
    4,277,105Income taxes payable
    
    
    (2,187,068
    )
    
    
    2,187,068
    
    
    
    
    
    
    
    Deferred revenue
    
    
    959,274
    
    
    
    
    
    
    
    
    
    
    
    959,274Current maturities of long-term debt
    
    
    6,917,451
    
    
    
    
    
    
    
    
    
    
    
    6,917,451Current maturities of capital lease obligations
    
    
    748,692
    
    
    
    
    
    
    
    
    
    
    
    748,692Total current liabilities
    
    
    74,780,577
    
    
    
    34,734,099
    
    
    
    (49,177,115
    )
    
    
    60,337,561LONG-TERM DEBT, net of current maturities
    
    
    361,445,728
    
    
    
    
    
    
    
    
    
    
    
    361,445,728CAPITAL LEASE OBLIGATIONS, net of current
maturities
    
    
    3,298,658
    
    
    
    
    
    
    
    
    
    
    
    3,298,658OTHER LONG-TERM LIABILITIES
    
    
    5,234,166
    
    
    
    70,000
    
    
    
    
    
    
    
    5,304,166DEFERRED INCOME TAXES
    
    
    24,036,460
    
    
    
    30,276,999
    
    
    
    
    
    
    
    54,313,459DUE TO PARENT
    
    
    20,130,189
    
    
    
    
    
    
    
    
    
    
    
    20,130,189COMMITMENTSSTOCKHOLDERS EQUITY
    
    
    103,236,946
    
    
    
    151,290,937
    
    
    
    (151,290,937
    )
    
    
    103,236,946$
    592,162,724
    
    
    $
    216,372,035
    
    
    $
    (200,468,052
    )
    
    $
    608,066,707
  73




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED MARCH 31, 2010
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsREVENUES, net of returns
    
    
    377,306,980
    
    
    $
    264,870,178
    
    
    $
    (36,683,545
    )
    
    $
    605,493,613COSTS OF SALES (exclusive of depreciation shown below)
    
    
    236,892,355
    
    
    
    171,376,403
    
    
    
    (38,072,842
    )
    
    
    370,195,916Gross profit
    
    
    140,414,625
    
    
    
    93,493,775
    
    
    
    1,389,297
    
    
    
    235,297,697OPERATING EXPENSES (INCOME):Selling, general and administrative
    
    
    113,325,037
    
    
    
    47,143,940
    
    
    
    1,389,297
    
    
    
    161,858,274Depreciation
    
    
    6,751,707
    
    
    
    1,765,297
    
    
    
    
    
    
    
    8,517,004Amortization
    
    
    4,674,439
    
    
    
    6,178,809
    
    
    
    
    
    
    
    10,853,248Intercompany administrative fee
    
    
    (6,732,823
    )
    
    
    6,732,823
    
    
    
    
    
    
    
    Equity in earnings of subsidiaries
    
    
    (20,241,303
    )
    
    
    
    
    
    
    20,241,303
    
    
    
    97,777,057
    
    
    
    61,820,869
    
    
    
    21,630,600
    
    
    
    181,228,526INCOME FROM OPERATIONS
    
    
    42,637,568
    
    
    
    31,672,906
    
    
    
    (20,241,303
    )
    
    
    54,069,171OTHER EXPENSES (INCOME):Interest expense
    
    
    40,678,890
    
    
    
    939
    
    
    
    
    
    
    
    40,679,829Interest income
    
    
    (83,373
    )
    
    
    (97,336
    )
    
    
    
    
    
    
    (180,709
    )Loss on early extinguishment of debt
    
    
    3,065,759
    
    
    
    
    
    
    
    
    
    
    
    3,065,75943,661,276
    
    
    
    (96,397
    )
    
    
    
    
    
    
    43,564,879INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (1,023,708
    )
    
    
    31,769,303
    
    
    
    (20,241,303
    )
    
    
    10,504,292INCOME TAX EXPENSE (BENEFIT)
    
    
    (8,385,906
    )
    
    
    11,528,000
    
    
    
    
    
    
    
    3,142,094NET INCOME
    
    $
    7,362,198
    
    
    $
    20,241,303
    
    
    $
    (20,241,303
    )
    
    $
    7,362,198
  74




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS  FOR THE FISCAL YEAR ENDED MARCH 31, 2009
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsREVENUES, net of returns
    
    $
    386,910,695
    
    
    $
    260,062,026
    
    
    $
    (36,256,540
    )
    
    $
    610,716,181COSTS OF SALES (exclusive of depreciation shown below)
    
    
    244,484,547
    
    
    
    165,056,393
    
    
    
    (38,171,700
    )
    
    
    371,369,240Gross profit
    
    
    142,426,148
    
    
    
    95,005,633
    
    
    
    1,915,160
    
    
    
    239,346,941OPERATING EXPENSES (INCOME):Selling, general and administrative
    
    
    115,276,253
    
    
    
    51,123,198
    
    
    
    1,915,160
    
    
    
    168,314,611Depreciation
    
    
    6,054,313
    
    
    
    1,548,318
    
    
    
    
    
    
    
    7,602,631Amortization
    
    
    5,180,117
    
    
    
    6,203,903
    
    
    
    
    
    
    
    11,384,020Goodwill impairment
    
    
    106,972,000
    
    
    
    
    
    
    
    
    
    
    
    106,972,000Intercompany administrative fee
    
    
    (4,923,600
    )
    
    
    4,923,600
    
    
    
    
    
    
    
    Equity in earnings of subsidiaries
    
    
    (19,707,636
    )
    
    
    
    
    
    
    19,707,636
    
    
    
    208,851,447
    
    
    
    63,799,019
    
    
    
    21,622,796
    
    
    
    294,273,262INCOME (LOSS) FROM OPERATIONS
    
    
    (66,425,299
    )
    
    
    31,206,614
    
    
    
    (19,707,636
    )
    
    
    (54,926,321
    )OTHER EXPENSES (INCOME):Interest expense
    
    
    32,878,225
    
    
    
    
    
    
    
    
    
    
    
    32,878,225Interest income
    
    
    (385,514
    )
    
    
    (41,022
    )
    
    
    
    
    
    
    (426,536
    )Loss on derivative financial instrument
    
    
    102,000
    
    
    
    
    
    
    
    
    
    
    
    102,00032,594,711
    
    
    
    (41,022
    )
    
    
    
    
    
    
    32,553,689INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (99,020,010
    )
    
    
    31,247,636
    
    
    
    (19,707,636
    )
    
    
    (87,480,010
    )INCOME TAX EXPENSE (BENEFIT)
    
    
    (4,091,342
    )
    
    
    11,540,000
    
    
    
    
    
    
    
    7,448,658NET INCOME (LOSS)
    
    $
    (94,928,668
    )
    
    $
    19,707,636
    
    
    $
    (19,707,636
    )
    
    $
    (94,928,668
    )
  75




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS  FOR THE FISCAL YEAR ENDED MARCH 31, 2008
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsREVENUES, net of returns
    
    $
    381,697,820
    
    
    $
    240,155,652
    
    
    $
    (40,605,686
    )
    
    $
    581,247,786COSTS OF SALES (exclusive of depreciation shown below)
    
    
    240,688,980
    
    
    
    156,028,070
    
    
    
    (42,577,576
    )
    
    
    354,139,474Gross profit
    
    
    141,008,840
    
    
    
    84,127,582
    
    
    
    1,971,890
    
    
    
    227,108,312OPERATING EXPENSES (INCOME):Selling, general and administrative
    
    
    108,050,482
    
    
    
    47,171,054
    
    
    
    1,971,890
    
    
    
    157,193,426Closure of California Warehouse
    
    
    
    
    
    
    (36,057
    )
    
    
    
    
    
    
    (36,057
    )Depreciation
    
    
    5,676,303
    
    
    
    1,532,201
    
    
    
    
    
    
    
    7,208,504Amortization
    
    
    4,511,635
    
    
    
    5,931,700
    
    
    
    
    
    
    
    10,443,335Intercompany administrative fee
    
    
    (4,838,800
    )
    
    
    4,838,800
    
    
    
    
    
    
    
    Equity in earnings of subsidiary
    
    
    (15,608,834
    )
    
    
    
    
    
    
    15,608,834
    
    
    
    97,790,786
    
    
    
    59,437,698
    
    
    
    17,580,724
    
    
    
    174,809,208INCOME FROM OPERATIONS
    
    
    43,218,054
    
    
    
    24,689,884
    
    
    
    (15,608,834
    )
    
    
    52,299,104OTHER EXPENSES (INCOME):Interest expense
    
    
    33,559,239
    
    
    
    
    
    
    
    
    
    
    
    33,559,239Interest income
    
    
    (1,287,547
    )
    
    
    (44,950
    )
    
    
    
    
    
    
    (1,332,497
    )Loss on derivative financial instrument
    
    
    198,000
    
    
    
    
    
    
    
    
    
    
    
    198,00032,469,692
    
    
    
    (44,950
    )
    
    
    
    
    
    
    32,424,742INCOME BEFORE INCOME TAXES
    
    
    10,748,362
    
    
    
    24,734,834
    
    
    
    (15,608,834
    )
    
    
    19,874,362INCOME TAX EXPENSE (BENEFIT)
    
    
    (1,707,661
    )
    
    
    9,126,000
    
    
    
    
    
    
    
    7,418,339NET INCOME
    
    $
    12,456,023
    
    
    $
    15,608,834
    
    
    $
    (15,608,834
    )
    
    $
    12,456,023
  76




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS  FOR THE FISCAL YEAR ENDED MARCH 31, 2010
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsCASH FLOWS FROM OPERATING ACTIVITIES
    
    $
    29,900,573
    
    
    $
    6,336,135
    
    
    $
    
    
    
    $
    36,236,708CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (3,737,872
    )
    
    
    (1,730,751
    )
    
    
    57,647
    
    
    
    (5,410,976
    )Acquisitions, net of cash acquired
    
    
    (463,474
    )
    
    
    (2,384,134
    )
    
    
    
    
    
    
    (2,847,608
    )Proceeds from sale of property and equipment
    
    
    85,250
    
    
    
    113,564
    
    
    
    (57,647
    )
    
    
    141,167Software development costs
    
    
    (648,523
    )
    
    
    
    
    
    
    
    
    
    
    (648,523
    )Net cash flows from investing activities
    
    
    (4,764,619
    )
    
    
    (4,001,321
    )
    
    
    
    
    
    
    (8,765,940
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of long-term debt
    
    
    199,000,000
    
    
    
    
    
    
    
    
    
    
    
    199,000,000Payment of financing costs
    
    
    (10,190,217
    )
    
    
    
    
    
    
    
    
    
    
    (10,190,217
    )Principal payments on long-term debt
    
    
    (193,125,225
    )
    
    
    
    
    
    
    
    
    
    
    (193,125,225
    )Principal payments on capital lease obligations
    
    
    (820,560
    )
    
    
    
    
    
    
    
    
    
    
    (820,560
    )Borrowings under revolving credit facility
    
    
    85,000,000
    
    
    
    
    
    
    
    
    
    
    
    85,000,000Payments under revolving credit facility
    
    
    (85,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (85,000,000
    )Dividends paid to parent
    
    
    (8,470,000
    )
    
    
    
    
    
    
    
    
    
    
    (8,470,000
    )Capital contributions
    
    
    4,869
    
    
    
    
    
    
    
    
    
    
    
    4,869Due to parent
    
    
    3,064,522
    
    
    
    
    
    
    
    
    
    
    
    3,064,522Net cash flows from financing activities
    
    
    (10,536,611
    )
    
    
    
    
    
    
    
    
    
    
    (10,536,611
    )NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    14,599,343
    
    
    
    2,334,814
    
    
    
    
    
    
    
    16,934,157CASH AND CASH EQUIVALENTS, Beginning of period
    
    
    40,811,478
    
    
    
    3,226,990
    
    
    
    
    
    
    
    44,038,468CASH AND CASH EQUIVALENTS, End of period
    
    $
    55,410,821
    
    
    $
    5,561,804
    
    
    $
    
    
    
    $
    60,972,625
  77




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS  FOR THE FISCAL YEAR ENDED MARCH 31, 2009
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsCASH FLOWS FROM OPERATING ACTIVITIES
    
    $
    29,207,254
    
    
    $
    2,458,659
    
    
    $
    
    
    
    $
    31,665,913CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (6,096,566
    )
    
    
    (1,989,243
    )
    
    
    106,438
    
    
    
    (7,979,371
    )Acquisitions, net of cash acquired
    
    
    (3,236,139
    )
    
    
    (3,084,633
    )
    
    
    
    
    
    
    (6,320,772
    )Proceeds from sale of property and equipment
    
    
    38,060
    
    
    
    103,881
    
    
    
    (106,438
    )
    
    
    35,503Software development costs
    
    
    (633,763
    )
    
    
    
    
    
    
    
    
    
    
    (633,763
    )Net cash flows from investing activities
    
    
    (9,928,408
    )
    
    
    (4,969,995
    )
    
    
    
    
    
    
    (14,898,403
    )CASH FLOWS FROM FINANCING ACTIVITIES:Payment of financing costs
    
    
    (3,961,811
    )
    
    
    
    
    
    
    
    
    
    
    (3,961,811
    )Principal payments on long-term debt
    
    
    (2,070,654
    )
    
    
    
    
    
    
    
    
    
    
    (2,070,654
    )Principal payments on capital lease obligations
    
    
    (722,823
    )
    
    
    
    
    
    
    
    
    
    
    (722,823
    )Borrowings under revolving credit facility
    
    
    200,600,000
    
    
    
    
    
    
    
    
    
    
    
    200,600,000Payments under revolving credit facility
    
    
    (200,600,000
    )
    
    
    
    
    
    
    
    
    
    
    (200,600,000
    )Dividends paid to parent
    
    
    (8,470,000
    )
    
    
    
    
    
    
    
    
    
    
    (8,470,000
    )Capital contributions
    
    
    10,009,752
    
    
    
    
    
    
    
    
    
    
    
    10,009,752Due to parent
    
    
    3,160,038
    
    
    
    
    
    
    
    
    
    
    
    3,160,038Net cash flows from financing activities
    
    
    (2,055,498
    )
    
    
    
    
    
    
    
    
    
    
    (2,055,498
    )NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
    
    
    17,223,348
    
    
    
    (2,511,336
    )
    
    
    
    
    
    
    14,712,012CASH AND CASH EQUIVALENTS, Beginning of period
    
    
    23,588,130
    
    
    
    5,738,326
    
    
    
    
    
    
    
    29,326,456CASH AND CASH EQUIVALENTS, End of period
    
    $
    40,811,478
    
    
    $
    3,226,990
    
    
    $
    
    
    
    $
    44,038,468
  78




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS  FOR THE FISCAL YEAR ENDED MARCH 31, 2008
 NebraskaBook
    
    
    Subsidiary
    
    
    
    
    
    
    ConsolidatedCompany, Inc.
    
    
    Guarantors
    
    
    Eliminations
    
    
    TotalsCASH FLOWS FROM OPERATING ACTIVITIES
    
    $
    18,407,954
    
    
    $
    2,455,807
    
    
    $
    
    
    
    $
    20,863,761CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment
    
    
    (6,607,380
    )
    
    
    (690,551
    )
    
    
    37,022
    
    
    
    (7,260,909
    )Acquisitions, net of cash acquired
    
    
    (14,246,655
    )
    
    
    (435,000
    )
    
    
    
    
    
    
    (14,681,655
    )Proceeds from sale of property and equipment
    
    
    21,985
    
    
    
    51,422
    
    
    
    (37,022
    )
    
    
    36,385Software development costs
    
    
    (272,981
    )
    
    
    
    
    
    
    
    
    
    
    (272,981
    )Net cash flows from investing activities
    
    
    (21,105,031
    )
    
    
    (1,074,129
    )
    
    
    
    
    
    
    (22,179,160
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on long-term debt
    
    
    (1,957,852
    )
    
    
    
    
    
    
    
    
    
    
    (1,957,852
    )Principal payments on capital lease obligations
    
    
    (624,910
    )
    
    
    
    
    
    
    
    
    
    
    (624,910
    )Borrowings under revolving credit facility
    
    
    148,000,000
    
    
    
    
    
    
    
    
    
    
    
    148,000,000Payments under revolving credit facility
    
    
    (148,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (148,000,000
    )Capital contributions
    
    
    4,869
    
    
    
    
    
    
    
    
    
    
    
    4,869Due to parent
    
    
    236,872
    
    
    
    
    
    
    
    
    
    
    
    236,872Net cash flows from financing activities
    
    
    (2,341,021
    )
    
    
    
    
    
    
    
    
    
    
    (2,341,021
    )NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
    
    
    (5,038,098
    )
    
    
    1,381,678
    
    
    
    
    
    
    
    (3,656,420
    )CASH AND CASH EQUIVALENTS, Beginning of period
    
    
    28,626,228
    
    
    
    4,356,648
    
    
    
    
    
    
    
    32,982,876CASH AND CASH EQUIVALENTS, End of period
    
    $
    23,588,130
    
    
    $
    5,738,326
    
    
    $
    
    
    
    $
    29,326,456
  79




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##### Table of Contents



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A. CONTROLS AND PROCEDURES.
 (a) Evaluation of disclosure controls and procedures.
 (b) Managements annual report on internal control over financial reporting
  Internal
Control  Integrated Framework
 (c) Attestation report of the registered public accounting firm
 (d) Changes in internal control over financial reporting .
 
 ITEM 9B. OTHER INFORMATION.
   80




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
  Name
    
    Age
    
    PositionMark L. Bono
    
    
    50
    
    
    DirectorR. Sean Honey
    
    
    39
    
    
    DirectorMark W. Oppegard
    
    
    60
    
    
    Chief Executive Officer and DirectorBarry S. Major
    
    
    53
    
    
    Chief Operating Officer, President, and DirectorAlan G. Siemek
    
    
    49
    
    
    Chief Financial Officer, Senior Vice President of Finance and Administration, Treasurer, and Assistant SecretaryRobert A. Rupe
    
    
    63
    
    
    Senior Vice President  Bookstore DivisionMichael J. Kelly
    
    
    52
    
    
    Senior Vice President  Textbook DivisionLarry R. Rempe
    
    
    62
    
    
    Senior Vice President  Complementary ServicesNathan D. Rempe
    
    
    32
    
    
    Chief Technology Officer
  Mark L. Bono
 R. Sean Honey
 Mark W. Oppegard
 Barry S. Major
 Alan G. Siemek,
  81




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##### Table of Contents



Robert A. Rupe,
 Michael J. Kelly,
 Larry R. Rempe
 Nathan D. Rempe
 Board of Directors
    Audit Committee
  Code of Ethics
   82




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##### Table of Contents



ITEM 11. EXECUTIVE COMPENSATION.
  Compensation Discussion and Analysis
 Compensation Philosophy
 Compensation Committee and Compensation Process
 Executive Compensation Components
 1)
    
    Base Salary. Base salaries are intended to compensate the Executives and all other
salaried employees for their basic services performed for us on an annual basis. In
setting base salaries, we take into account the Executives experience, the functions and
responsibilities of the job, and any other factors relevant to that particular job. Base
salaries are typically adjusted annually by our chief executive officer and President;
however, we do not limit ourselves to this schedule. The chief executive officers base
salary is approved by Messrs. Bono and Honey of the Board of Directors, the two directors
affiliated with Weston Presidio.2)
    
    Bonus Plan. We use our executive bonus plan to incent each Executive on an annual
basis. Bonuses for each Executive are initially determined by a preset percentage of the
Executives salary based upon attainment of goals related to our consolidated EBITDA and
Adjusted EBITDA compared to budget. Such goals may be revised for material unbudgeted
events. Typically the minimum percentage needed to qualify for a bonus is 93% of budgeted
EBITDA, and the maximum bonus amounts are achieved at 110% of budgeted EBITDA. Such
initial calculated amounts are then adjusted by our chief executive officer and President
based upon non-quantifiable criteria in evaluating job performance.3)
    
    Stock Option and Other Equity Awards. We use nonqualified stock options and other
equity awards to incent our Executives to remain with us and to maximize long-term value
for our shareholders. We have generally awarded stock options on an annual basis to each
Executive based upon informal performance measures. Generally, we must achieve at least
93% of the budgeted EBITDA before options are granted. Messrs. Bono and Honey, the two
directors affiliated with Weston Presidio, receive a recommendation from our chief
executive officer regarding the number of stock options to be granted to each Executive and
then adjust such recommendation as they consider appropriate. In addition, in March 2006,
upon the approval of the entire Board of Directors, our chief executive officer, chief
financial officer, and President were each issued 1,400 shares of nonvested stock for $0.01
per share. This issuance of shares was designed to incent those named Executives to remain
with us until at least September 30, 2010. Since this issuance of nonvested stock, these
named Executives have not received any further grants of stock options.
  83




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##### Table of Contents



4)
    
    Severance Plans. Each Executive has signed a memorandum of understanding under which
they may be paid severance of up to (i) one year of base salary, (ii) pro rata bonuses and
(iii) continuation of health, life and disability benefits for up to 12 months if they are
terminated without cause (as defined in those agreements).5)
    
    Other Benefits. We maintain health, dental and vision insurance plans for the benefit
of eligible employees, including the Executives. The health and dental plans require the
employee to pay a portion of the premium and we pay the remainder. The vision plan premium
is paid in its entirety by the employee. We also maintain a 401(k) retirement plan that is
available to all eligible employees. For fiscal year ended March 31, 2010, we matched
elective employee-participant contributions on the basis of 100% of the employees
contribution up to 1% of their total compensation plus 50% of the employees contribution
on the next 5% of their total compensation. For fiscal years ended March 31, 2008 and
2009, we matched elective employee-participant contributions on the basis of 100% of the
employees contribution up to 5% of their total compensation. Certain amounts of life,
accidental death and dismemberment, and short and long-term disability insurance coverage
is also offered to all eligible employees and premiums or costs are paid in full by us.
Certain other voluntary insurance coverages are available to eligible employees, such as
supplemental life, cancer and personal accident insurance with the entire premium paid by
the employee. The foregoing benefits are available to each Executive on the same basis as
all other eligible employees.
   84




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##### Table of Contents



Summary Compensation Table
  Summary Compensation Table
 Change inNonqualifiedDeferred
    
    
    (3)Fiscal
    
    
    
    
    
    
    
    
    
    
    Stock
    
    
    Option
    
    
    Compensation
    
    
    All OtherName and Principal Position
    
    Year
    
    
    Salary
    
    
    Bonus
    
    
    Awards (1)
    
    
    Awards (1)
    
    
    Earnings (2)
    
    
    Compensation
    
    
    TotalMark W. Oppegard  Chief Executive Officer and Director
    
    
    2010
    
    
    $
    200,426
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8,827
    
    
    $
    209,2532009
    
    
    
    266,500
    
    
    
    100,000
    
    
    
    
    
    
    
    
    
    
    
    206
    
    
    
    11,752
    
    
    
    378,4582008
    
    
    
    295,006
    
    
    
    76,000
    
    
    
    
    
    
    
    
    
    
    
    5,439
    
    
    
    11,502
    
    
    
    387,947Alan G. Siemek  Chief Financial Officer, Senior Vice President
of Finance and Administration, Treasurer, and Assistant
Secretary
    
    
    2010
    
    
    
    214,373
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,827
    
    
    
    223,2002009
    
    
    
    214,857
    
    
    
    80,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,752
    
    
    
    306,6092008
    
    
    
    209,690
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,502
    
    
    
    246,192Barry S. Major  Chief Operating Officer, President, and Director
    
    
    2010
    
    
    
    284,446
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,827
    
    
    
    293,2732009
    
    
    
    287,694
    
    
    
    106,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,752
    
    
    
    405,4462008
    
    
    
    279,691
    
    
    
    73,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,502
    
    
    
    364,193Robert A. Rupe  Senior Vice President  Bookstore Division
    
    
    2010
    
    
    
    230,407
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,827
    
    
    
    239,2342009
    
    
    
    230,928
    
    
    
    50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,752
    
    
    
    292,6802008
    
    
    
    222,926
    
    
    
    40,000
    
    
    
    
    
    
    
    33,145
    
    
    
    
    
    
    
    11,502
    
    
    
    307,573Michael J. Kelly  Senior Vice President  Textbook Division
    
    
    2010
    
    
    
    203,250
    
    
    
    
    
    
    
    
    
    
    
    9,709
    
    
    
    
    
    
    
    8,827
    
    
    
    221,7862009
    
    
    
    204,083
    
    
    
    65,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,752
    
    
    
    280,8352008
    
    
    
    199,771
    
    
    
    50,000
    
    
    
    
    
    
    
    26,760
    
    
    
    
    
    
    
    11,502
    
    
    
    288,033
 (1)
    
    The amounts shown represent the aggregate grant date fair value for awards granted in
fiscal years 2010, 2009 and 2008, computed in accordance with FASB ASC Topic 718. See Note
O of the notes to the consolidated financial statements in Item 8, Financial Statements and
Supplementary Data.(2)
    
    The amounts shown represent above market earnings on non-qualified deferred
compensation.(3)
    
    All other compensation consists of the following components: (a) matching contributions
to the NBC Retirement Plan; and (b) life insurance premiums paid by us on the Executives
behalf. Directors do not receive compensation for their services as a director. See Note
M of the notes to the consolidated financial statements in Item 8, Financial Statements and
Supplementary Data.  85




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##### Table of Contents



Grants of Plan-Based Awards
  All OtherOption Awards:
    
    
    Exercise
    
    
    GrantNumber of
    
    
    or Base
    
    
    Date FairSecurities
    
    
    Price of
    
    
    Value ofGrant
    
    
    Underlying
    
    
    Option
    
    
    OptionName
    
    Date
    
    
    Options
    
    
    Awards
    
    
    AwardsMark W. Oppegard  Chief Executive Officer, President, and Director, NBC
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    Alan G. Siemek  Chief Financial Officer, Senior Vice President of
Finance and Administration, Treasurer, and Assistant Secretary, NBC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Barry S. Major  Chief Operating Officer and Director, NBC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Robert A. Rupe  Senior Vice President  Bookstore Division, NBC
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Michael J. Kelly  Senior Vice President  Textbook Division, NBC
    
    
    2/3/2010
    
    
    
    700
    
    
    
    85
    
    
    
    9,709
 Financial Statements and
Supplementary Data
 Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table -
Employment Agreements
  Financial Statements and Supplementary Data
  86




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##### Table of Contents




    
    Termination of Employment upon Expiration of the Term of the Employment Agreement If we
have given the Executive notice of our intention to terminate employment at the end of the
term of the Employment Agreement, the Executive is entitled to continued payment of base
salary and health, life insurance and disability insurance benefits for a period of one year
following the expiration of the term of the Employment Agreement.
    
    Termination of Employment Without Cause prior to the Expiration of the Term of the
Employment Agreement If we have given the Executive notice of our intention to terminate
employment without cause prior to the end of the term of the Employment Agreement, the
Executive is entitled to continued payment of base salary and health, life insurance and
disability insurance benefits for a period of one year following the date of termination.
Additionally, the Executive is entitled to payment of any incentive bonus when otherwise
due, prorated through the date of termination.
    
    Termination of Employment upon Death or Disability If an Executives employment is
terminated as a result of death or disability, the Executive is entitled to continued
payment of base salary for a period of six months following the date of termination.
Additionally, the Executive is entitled to payment of any incentive bonus when otherwise
due, prorated through the date of termination.
    87




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##### Table of Contents



Outstanding Equity Awards
  Outstanding Equity Awards at March 31, 2010
 Option Awards
    
    
    Stock AwardsEquityEquity
    
    
    IncentiveIncentive
    
    
    Plan Awards:Market
    
    
    Plan Awards:
    
    
    Market or(1)
    
    
    (1)
    
    
    
    
    
    
    
    
    
    
    Number
    
    
    Value of
    
    
    Number of
    
    
    Payout ValueNumber
    
    
    Number
    
    
    
    
    
    
    
    
    
    
    of Shares
    
    
    Shares or
    
    
    Unearned
    
    
    of Unearnedof Securities
    
    
    of Securities
    
    
    
    
    
    
    
    
    
    
    or Units
    
    
    Units of
    
    
    Shares, Units
    
    
    Shares, UnitsUnderlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    of Stock
    
    
    Stock
    
    
    or Other
    
    
    or OtherUnexercised
    
    
    Unexercised
    
    
    Option
    
    
    Option
    
    
    That
    
    
    That
    
    
    Rights That
    
    
    Rights ThatOptions -
    
    
    Options -
    
    
    Exercise
    
    
    Expiration
    
    
    Have Not
    
    
    Have Not
    
    
    Have Not
    
    
    Have NotName
    
    Exercisable
    
    
    Unexercisable
    
    
    Price
    
    
    Date
    
    
    Vested (2)
    
    
    Vested (3)
    
    
    Vested (2)
    
    
    Vested (4)Mark W. Oppegard  Chief Executive Officer, and Director
    
    
    5,950
    
    
    
    
    
    
    $
    52.47
    
    
    
    3/4/20142,675
    
    
    
    
    
    
    
    106.00
    
    
    
    3/4/20142,200
    
    
    
    
    
    
    
    146.00
    
    
    
    3/4/20141,963
    
    
    
    
    
    
    
    160.00
    
    
    
    11/9/20141,244
    
    
    $
    1,419,217
    
    
    
    156
    
    
    $
    177,386Alan G. Siemek  Chief Financial Officer, Senior Vice President
of Finance and Administration, Treasurer, and Assistant
Secretary
    
    
    4,728
    
    
    
    
    
    
    
    52.47
    
    
    
    3/4/20141,375
    
    
    
    
    
    
    
    106.00
    
    
    
    3/4/20141,375
    
    
    
    
    
    
    
    146.00
    
    
    
    3/4/20141,885
    
    
    
    
    
    
    
    160.00
    
    
    
    11/9/20141,244
    
    
    
    1,419,217
    
    
    
    156
    
    
    
    177,386Barry S. Major  Chief Operating Officer, President, and Director
    
    
    4,780
    
    
    
    
    
    
    
    52.47
    
    
    
    3/4/20142,500
    
    
    
    
    
    
    
    106.00
    
    
    
    3/4/20142,050
    
    
    
    
    
    
    
    146.00
    
    
    
    3/4/20141,963
    
    
    
    
    
    
    
    160.00
    
    
    
    11/9/20141,244
    
    
    
    1,419,217
    
    
    
    156
    
    
    
    177,386Robert A. Rupe  Senior Vice President  Bookstore Division
    
    
    1,375
    
    
    
    
    
    
    
    52.47
    
    
    
    3/4/20141,250
    
    
    
    
    
    
    
    106.00
    
    
    
    3/4/20141,175
    
    
    
    
    
    
    
    146.00
    
    
    
    3/4/20141,700
    
    
    
    
    
    
    
    160.00
    
    
    
    11/9/20142,400
    
    
    
    
    
    
    
    160.00
    
    
    
    8/29/20151,180
    
    
    
    
    
    
    
    160.00
    
    
    
    3/30/2016650
    
    
    
    217
    
    
    
    205.00
    
    
    
    10/12/2017Michael J. Kelly  Senior Vice President  Textbook Division
    
    
    2,111
    
    
    
    
    
    
    
    52.47
    
    
    
    3/4/20141,375
    
    
    
    
    
    
    
    106.00
    
    
    
    3/4/20141,175
    
    
    
    
    
    
    
    146.00
    
    
    
    3/4/20141,600
    
    
    
    
    
    
    
    160.00
    
    
    
    11/9/20142,400
    
    
    
    
    
    
    
    160.00
    
    
    
    8/29/20151,180
    
    
    
    
    
    
    
    160.00
    
    
    
    3/30/2016525
    
    
    
    175
    
    
    
    205.00
    
    
    
    10/12/2017175
    
    
    
    525
    
    
    
    85.00
    
    
    
    2/3/2020
 (1)
    
    Separate grants of stock options occurred on February 3, 2010, October 12, 2007, March
30, 2006, August 29, 2005 and November 9, 2004. Twenty-five percent of the options granted
were exercisable immediately upon granting with the remaining options becoming exercisable
in 25% increments over the subsequent three years. In connection with the March 4, 2004
Transaction, all existing options at March 4, 2004 vested, certain of which were cancelled
in exchange for new options granted under the 2004 Stock Option Plan. Options granted in
fiscal year 2004 under the 2004 Stock Option Plan were fully vested and exercisable at
prices consistent with the options which were cancelled.  88




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##### Table of Contents



(2)
    
    Except in certain circumstances, the shares of nonvested stock do not vest until
September 30, 2010.(3)
    
    Represents the recognized portion of share-based compensation associated with the 1,400
shares of nonvested stock issued to each of Messrs. Oppegard, Siemek, and Major on March
31, 2006. Due to the existence of the put rights, share-based compensation is being
remeasured at the end of each reporting period and recognized from the date of issuance of
the nonvested stock through September 30, 2010. See Note O of the notes to the
consolidated financial statements in Item 8, Financial Statements and Supplementary Data.(4)
    
    Represents the unrecognized portion of share-based compensation associated with the
1,400 shares of nonvested stock issued to each of Messrs. Oppegard, Siemek, and Major on
March 31, 2006. Due to the existence of the put rights, share-based compensation is
being remeasured at the end of each reporting period and recognized from the date of
issuance of the nonvested stock through September 30, 2010. See Note O of the notes to the
consolidated financial statements in Item 8, Financial Statements and Supplementary Data. Nonqualified Deferred Compensation
  Nonqualified Deferred Compensation  March 31, 2010 (1)
 (2)
    
    
    Aggregate
    
    
    AggregateExecutive
    
    
    Registrant
    
    
    Aggregate
    
    
    Withdrawals/
    
    
    BalanceContributions
    
    
    Contributions
    
    
    Earnings
    
    
    Distributions
    
    
    as ofin Fiscal
    
    
    in Fiscal
    
    
    in Fiscal
    
    
    in Fiscal
    
    
    March 31,Name
    
    Year 2010
    
    
    Year 2010
    
    
    Year 2010
    
    
    Year 2010
    
    
    2010 (2)Mark W. Oppegard  Chief Executive Officer and Director
    
    $
    
    
    
    $
    
    
    
    $
    9,240
    
    
    $
    
    
    
    $
    293,551Alan G. Siemek  Chief Financial Officer, Senior Vice President
of Finance and Administration, Treasurer, and Assistant
Secretary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Barry S. Major  Chief Operating Officer, President, and Director
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Robert A. Rupe  Senior Vice President  Bookstore Division
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Michael J. Kelly  Senior Vice President  Textbook Division
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 (1)
    
    See Note N of the notes to the consolidated financial statements in Item 8, Financial
Statements and Supplementary Datafor a brief description of the deferred compensation
plan.(2)
    
    There are no above market earnings included herein for fiscal year 2010; above market
earnings in prior years were $206 in fiscal year 2009 and $5,439 in fiscal year 2008 which
are included in the Summary Compensation Table above.  89




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##### Table of Contents



Potential Payments Upon Termination or Change-In-Control
  Potential Payments Upon Termination or Change in Control  March 31, 2010 (1)
 Total(3)
    
    
    
    
    
    
    (5)
    
    
    (5)
    
    
    (5)
    
    
    Potential(2)
    
    
    Prorated
    
    
    (4)
    
    
    Health
    
    
    Life
    
    
    Disability
    
    
    PaymentBase
    
    
    Incentive
    
    
    Restricted
    
    
    Insurance
    
    
    Insurance
    
    
    Insurance
    
    
    UponName
    
    Salary
    
    
    Bonus
    
    
    Stock
    
    
    Benefits
    
    
    Benefits
    
    
    Benefits
    
    
    TerminationMark W. Oppegard  Chief Executive Officer and DirectorTermination of Employment upon Expiration of Term
    
    $
    199,992
    
    
    $
    
    
    
    $
    1,419,217
    
    
    $
    10,098
    
    
    $
    252
    
    
    $
    285
    
    
    $
    1,629,844Termination of Employment Without Cause
    
    
    199,992
    
    
    
    
    
    
    
    1,419,217
    
    
    
    10,098
    
    
    
    252
    
    
    
    285
    
    
    
    1,629,844Termination of Employment upon Death or Disability
    
    
    99,996
    
    
    
    
    
    
    
    1,419,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,519,213Alan G. Siemek  Chief Financial Officer, Senior Vice President
of Finance and Administration, Treasurer, and Assistant
SecretaryTermination of Employment upon Expiration of Term
    
    
    213,990
    
    
    
    
    
    
    
    1,419,217
    
    
    
    10,692
    
    
    
    252
    
    
    
    285
    
    
    
    1,644,436Termination of Employment Without Cause
    
    
    213,990
    
    
    
    
    
    
    
    1,419,217
    
    
    
    10,692
    
    
    
    252
    
    
    
    285
    
    
    
    1,644,436Termination of Employment upon Death or Disability
    
    
    106,995
    
    
    
    
    
    
    
    1,419,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,526,212Barry S. Major  Chief Operating Officer, President, and DirectorTermination of Employment upon Expiration of Term
    
    
    284,003
    
    
    
    
    
    
    
    1,419,217
    
    
    
    12,180
    
    
    
    252
    
    
    
    285
    
    
    
    1,715,937Termination of Employment Without Cause
    
    
    284,003
    
    
    
    
    
    
    
    1,419,217
    
    
    
    12,180
    
    
    
    252
    
    
    
    285
    
    
    
    1,715,937Termination of Employment upon Death or Disability
    
    
    142,002
    
    
    
    
    
    
    
    1,419,217
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,561,219Robert A. Rupe  Senior Vice President  Bookstore DivisionTermination of Employment upon Expiration of Term
    
    
    230,006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    252
    
    
    
    285
    
    
    
    230,543Termination of Employment Without Cause
    
    
    230,006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    252
    
    
    
    285
    
    
    
    230,543Termination of Employment upon Death or Disability
    
    
    115,003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115,003Michael J. Kelly  Senior Vice President  Textbook DivisionTermination of Employment upon Expiration of Term
    
    
    203,008
    
    
    
    
    
    
    
    
    
    
    
    8,679
    
    
    
    252
    
    
    
    285
    
    
    
    212,224Termination of Employment Without Cause
    
    
    203,008
    
    
    
    
    
    
    
    
    
    
    
    8,679
    
    
    
    252
    
    
    
    285
    
    
    
    212,224Termination of Employment upon Death or Disability
    
    
    101,504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,504
 (1)
    
    The Employment Agreements are silent as to how payment amounts are ultimately
determined and how payment is to be made (i.e.  monthly, lump sum, etc.). Our Board of
Directors would ultimately be responsible for approving the terms of such termination
payments.(2)
    
    Base salary in place at time of termination.  90




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##### Table of Contents



(3)
    
    It is assumed that the incentive bonus earned for fiscal year 2010, if any, was paid in
the normal course of business. As the assumed termination does not fall within a fiscal
year, no pro rata allocation is necessary.(4)
    
    In accordance with the Stock Repurchase Agreement, if Messrs. Oppegard, Siemek, or
Major are terminated by us without cause or by reason of their death or disability during
the period from March 31, 2006 to September 30, 2010, a number of the shares of nonvested
stock will become vested on the date of termination equal to the 1,400 shares which were
issued times the number of days from March 31, 2006 to the date of termination divided by
the number of days from March 31, 2006 to September 30, 2010. This value represents the
cumulative balance of share-based compensation recognized at March 31, 2010 in Accrued
Expenses  see Note O of the notes to the consolidated financial statements in Item 8,
Financial Statements and Supplementary Data. For purposes of this table, it is assumed
that Messrs. Oppegard, Siemek, and Major would put the vested shares in accordance with
the Stock Repurchase Agreement upon termination.(5)
    
    Represents premiums paid by us on the Executives behalf. Compensation of Directors
  Compensation Risk Assessment
  Compensation Committee Interlocks and Insider Participation
  Compensation Committee Report
   
   91




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##### Table of Contents



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
 Security Ownership of Certain Beneficial
 Owners and Management Executive Compensation th
 Amount andNature ofBeneficial
    
    
    Percent ofTitle of Class/Name of Beneficial Owner
    
    Ownership (1)
    
    
    Class (3)Common Stock:Owning Greater Than 5% of Shares:Weston Presidio Capital IV, L.P. (2)
    
    
    365,449
    
    
    
    66.0
    %Weston Presidio Capital III, L.P. (2)
    
    
    153,623
    
    
    
    27.7
    %WPC Entrepreneur Fund, L.P. (2)
    
    
    7,579
    
    
    
    1.4
    %WPC Entrepreneur Fund II, L.P. (2)
    
    
    5,785
    
    
    
    1.0
    %Ownership of Directors:Mark L. Bono (2)
    
    
    532,436
    
    
    
    96.1
    %R. Sean Honey (2)
    
    
    
    
    
    
    Ownership of Senior Executive Officers Named in Item 11:Mark W. Oppegard
    
    
    18,188
    
    
    
    3.2
    %Alan G. Siemek
    
    
    10,763
    
    
    
    1.9
    %Barry S. Major (4)
    
    
    14,440
    
    
    
    2.6
    %Robert A. Rupe
    
    
    9,730
    
    
    
    1.7
    %Michael J. Kelly
    
    
    10,541
    
    
    
    1.9
    %Ownership of Directors and All Senior Executive Officers as a Group
    
    
    604,283
    
    
    
    98.4
    %
 (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 common stock. Such shares
include NBC Holdings Corp. shares underlying nonqualified stock options exercisable within
sixty days, as follows: Mr. Oppegard  12,788 shares; Mr. Siemek  9,363 shares; Mr. Major
 11,293 shares; Mr. Rupe  9,730 shares; Mr. Kelly  10,541 shares; and 59,900 shares for
all directors and senior executive officers as a group.(2)
    
    The sole general partner of Weston Presidio Capital IV, L.P., Weston Presidio Capital
III, L.P., WPC Entrepreneur Fund, L.P., and WPC Entrepreneur Fund II, L.P. (the Weston
Presidio Funds) is a limited liability company of which Messrs. Bono and Honey are
members. Messrs. Bono and Honey disclaim beneficial ownership of the shares held by the
Weston Presidio Funds, except to the extent of their respective pecuniary interests
therein. The address of the Weston Presidio Funds, and Messrs. Bono and Honey is 200
Clarendon Street, 50th Floor, Boston, Massachusetts 02116.(3)
    
    The percentages are calculated based upon 554,094 shares of NBC common stock
outstanding as of June 25, 2010 and shares underlying nonqualified stock options
exercisable within sixty days as detailed in footnote (1).(4)
    
    Beneficial ownership includes 1,747 shares of NBC common stock which are pledged as
security for the full and timely payment of remaining amounts due under a promissory note
Mr. Major has with NBC. In January, 1999, NBC issued 4,765 shares of its 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 bearing interest at 5.25% per year. Remaining
amounts due under the promissory note at March 31, 2010 totaled approximately $91,000.  92




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Securities Authorized for
 Issuance under Equity Compensation Plans Financial
Statements and Supplementary Data
 Number of
    
    
    Weighted-
    
    
    Number ofSecurities to
    
    
    Average
    
    
    Securitiesbe Issued Upon
    
    
    Exercise
    
    
    RemainingExercise of
    
    
    Price of
    
    
    Available forOutstanding
    
    
    Outstanding
    
    
    FuturePlan
    
    Options
    
    
    Options
    
    
    Issuance2004 Stock Option Plan
    
    
    84,391
    
    
    $
    117.75
    
    
    
    15,2762005 Restricted Stock Plan
    
    
    
    
    
    
    
    
    
    
    
 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 Director Independence
 
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
  Fiscal Years Ended March 31,2010
    
    
    2009Audit Fees
    
    $
    234,500
    
    
    $
    215,000Audit-Related Fees
    
    
    118,600
    
    
    
    Tax Fees
    
    
    173,162
    
    
    
    187,039Other Fees
    
    
    
    
    
    
    Total
    
    $
    526,262
    
    
    $
    402,039
  93




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##### Table of Contents



Audit Fees
 Audit-Related Fees
 Tax Fees
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 (a)
    
    Financial Statements, Financial Statement Schedules, and Exhibits.
 (1)
    
    Consolidated Financial Statements of Nebraska Book Company, Inc.Index to Consolidated Financial Statements.Report of Independent Registered Public Accounting Firm.Consolidated Balance Sheets as of March 31, 2010 and 2009.Consolidated Statements of Operations for the Years Ended March 31, 2010, 2009 and
2008.Consolidated Statements of Stockholders Equity for the Years Ended March 31, 2010,
2009 and 2008.Consolidated Statements of Cash Flows for the Years Ended March 31, 2010, 2009 and
2008.Notes to Consolidated Financial Statements.
 (2)
    
    Financial Statement Schedules.
  (3)
    
    Exhibits.
 2.1
    
    
    Agreement and Plan of Merger, dated as of July 1, 2003, by and among
TheCampusHub.com, Inc., Nebraska Book Company, Inc., and NBC Acquisition Corp., filed
as Exhibit 2.1 to Nebraska Book Company, Inc. Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.2.2
    
    
    Share Purchase Agreement, dated as of April 2, 2006, by and among Nebraska
Book, CBA and the Sellers referenced therein, filed as Exhibit 2.1 to Nebraska Book
Company, Inc. Current Report on Form 8-K dated April 6, 2006, is incorporated herein by
reference.2.3
    
    
    Second Amendment to Share Purchase Agreement, dated as of April 30, 2006, by
and among Nebraska Book, CBA and the Sellers referenced therein, filed as Exhibit 2.1
to Nebraska Book Company, Inc. Current Report on Form 8-K dated May 4, 2006, 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
    
    
    First Restated By-laws of Nebraska Book Company, Inc., filed as Exhibit 3.2 to
Nebraska Book Company, Inc. Form 10-Q for the quarter ended September 30, 2003, is
incorporated herein by reference.
  94




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4.1
    
    
    Indenture, dated March 4, 2004, by and among Nebraska Book Company, Inc., the
subsidiary guarantors parties thereto and BNY Midwest Trust Company as Trustee, filed
as Exhibit 4.6 to Nebraska Book Company, Inc. Registration Statement on Form S-4 (File
No. 333-114891), is incorporated herein by reference.4.2
    
    
    Form of 8 5/8% Senior Subordinated Note Due 2012 (included in Exhibit 4.6),
filed as Exhibit 4.7 to Nebraska Book Company, Inc. Registration Statement on Form S-4
(File No. 333-114891), is incorporated herein by reference.4.3
    
    
    Form of Exchange Note of Nebraska Book Company, Inc. 8 5/8% Senior Subordinated
Note Due 2012, filed as Exhibit 4.8 to Nebraska Book Company, Inc. Form 10-K for the
fiscal year ended March 31, 2004, is incorporated herein by reference.4.4
    
    
    Supplemental Indenture, dated as of December 31, 2004, by and among NBC
Textbooks LLC, Nebraska Book Company, Inc., each other then existing Subsidiary
Guarantor under the Indenture, and the Trustee, filed as Exhibit 10.1 to Nebraska Book
Company. Inc. Current Report on Form 8-K dated January 6, 2005, is incorporated herein
by reference.4.5
    
    
    Supplemental Indenture, dated as of May 1, 2006, by and among CBA, Nebraska
Book Company, Inc., each other then existing Subsidiary Guarantor under the Indenture,
and the Trustee, filed as Exhibit 10.2 to Nebraska Book Company, Inc. Current Report on
Form 8-K dated May 4, 2006, is incorporated herein by reference.4.6
    
    
    Supplemental Indenture, dated as of May 1, 2007, by and among Net Textstore
LLC, Nebraska Book Company, Inc., each other then existing Subsidiary Guarantor under
the Indenture, and the Trustee, filed as Exhibit 10.1 to Nebraska Book Company, Inc.
Current Report on Form 8-K dated May 7, 2007, is incorporated herein by reference.4.7
    
    
    Supplemental Indenture, dated as of January 26, 2009, by and among Campus
Authentic LLC, Nebraska Book Company, Inc., each other then existing Subsidiary
Guarantor under the Indenture, and the Trustee, filed as Exhibit 4.7 Nebraska Book
Company, Inc. Form 10-K for the fiscal year ended March 31, 2009, is incorporated
herein by reference.4.8
    
    
    Indenture, dated October 2, 2009, by and among Nebraska Book Company, Inc., the
Subsidiary Guarantors and Wilmington Trust FSB, as trustee and noteholder collateral
agent, filed as Exhibit 4.1 to Nebraska Book Company, Inc. Current Report on Form 8-K
filed October 7, 2009, is incorporated herein by reference.4.9
    
    
    Form of 10% Senior Secured Note Due 2011 (included in Exhibit 4.1 as Exhibit A
to Nebraska Book Company, Inc. Current Report on Form 8-K filed October 7, 2009), is
incorporated herein by reference.4.10
    
    
    Pledge and Security Agreement, dated October 2, 2009, among Nebraska Book
Company, Inc., the Subsidiary Guarantors and Wilmington Trust FSB, as Noteholder
Collateral Agent, filed as Exhibit 4.3 to Nebraska Book Company, Inc. Current Report on
Form 8-K filed October 7, 2009, is incorporated herein by reference.10.1
    
    
    Amended and Restated Credit Agreement, dated October 2, 2009, among Nebraska
Book, the Subsidiary Guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A.,
as administrative agent, Wells Fargo Bank, National Association, as syndication agent,
Bank of America, N.A., as documentation agent, filed as Exhibit 10.1 to Nebraska Book
Company, Inc. Form 10-Q for the quarter ended September 30, 2009, is incorporated
herein by reference.10.2
    
    
    First Amendment, dated as of March 22, 2010, to the Amended and Restated Credit
Agreement, dated October 2, 2009, among NBC Holdings Corp., NBC Acquisition Corp.,
Nebraska Book Company Inc., the Subsidiary
Guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative
agent, Wells Fargo Bank, National Association, as syndication agent, and Bank of
America, N.A., as documentation agent filed as Exhibit 10.1 to Nebraska Book Company,
Inc. Current Report on Form 8-K filed March 25, 2010, is incorporated herein by
reference.
  95




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##### Table of Contents



10.3
    
    
    First Lien Amended and Restated Guarantee and Collateral Agreement, dated October 2,
2009, among NBC Holdings Corp., NBC Acquisition Corp., Nebraska Book Company, Inc.,
the Subsidiary Guarantors, and JPMorgan Chase Bank, N.A., as administrative agent,
filed as Exhibit 10.2 to Nebraska Book Company, Inc. Form 10-Q for the quarter ended
September 30, 2009, is incorporated herein by reference.10.4
    
    
    First Amendment dated as of March 22, 2010, to the First Lien Amended and
Restated Guarantee and Collateral Agreement, dated October 2, 2009, among NBC Holdings
Corp., NBC Acquisition Corp., Nebraska Book Company, Inc., the Subsidiary Guarantors,
and JPMorgan Chase Bank, N.A., as administrative agent, filed as Exhibit 10.1 to
Nebraska Book Company, Inc. Current Report on Form 8-K filed March 25, 2010, is
incorporated herein by reference.10.5
    
    
    Intercreditor Agreement, dated October 2, 2009, by and among Nebraska Book
Company, Inc., the Subsidiary Guarantors and Wilmington Trust FSB, as trustee, filed as
Exhibit 10.3 to Nebraska Book Company, Inc. Current Report on Form 8-K filed October 7,
2009, is incorporated herein by reference.10.6
    
    
    Purchase Agreement, dated as of March 4, 2004, by and among Nebraska Book
Company, Inc. and J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Fleet
Securities, Inc., filed as Exhibit 10.13 to Nebraska Book Company, Inc. Registration
Statement on Form S-4 (File No. 333-114891), is incorporated herein by reference.10.7
    
    
    Registration Rights Agreement, dated as of March 4, 2004, by and among Nebraska
Book Company, Inc. and J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and
Fleet Securities, Inc., filed as Exhibit 10.15 to Nebraska Book Company, Inc.
Registration Statement on Form S-4 (File No. 333-114891), is incorporated herein by
reference.10.8
    
    
    Registration Rights Agreement, dated as of October 2, 2009, by and among
Nebraska Book Company, Inc., the guarantors listed in Schedule 1 thereto, J.P. Morgan
Securities Inc., Banc of America Securities LLC, Wells Fargo Securities, LLC and Piper
Jaffray & Co., filed as Exhibit 10.28 to Nebraska Book Company, Inc. Registration
Statement on Form S-4 (File No. 333-164271), is incorporated herein by reference.10.9
    *
    
    Form of Memorandum of Understanding, dated as of February 13, 1998 by and
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.10.10
    *
    
    Memorandum of Understanding, dated as of December 22, 1998 by and 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.10.11
    *
    
    Addendum to the Memorandum of Understanding, dated as of December 22, 1998 by and
between Nebraska Book Company, Inc. and Barry S. Major, dated March 29, 2002, filed as
Exhibit 10.9 to Nebraska Book Company, Inc. Form 10-K for the fiscal year ended March
31, 2002, is incorporated herein by reference.10.12
    *
    
    Amended and Restated Secured Promissory Note dated July 9, 2002 by and between NBC
Acquisition Corp. and Barry S. Major, filed as Exhibit 10.4 to Nebraska Book Company,
Inc. Form 10-Q for the quarter ended June 30, 2002, is incorporated herein by
reference.10.13
    *
    
    First Amendment to the Amended and Restated Secured Promissory Note, dated as of
December 31, 2008, between Barry S. Major and NBC Acquisition Corp., filed as Exhibit
10.1 to NBC Acquisition Corp. Current Report on Form 8-K dated January 7, 2009, is
incorporated herein by reference.10.14
    *
    
    Memorandum of Understanding, dated as of July 1, 1999 by and 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.
  96




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##### Table of Contents



10.15
    *
    
    Addendum to the Memorandum of Understanding, dated as of July 1, 1999 by and between
Nebraska Book Company, Inc. and Alan Siemek, dated March 29, 2002, filed as Exhibit
10.11 to Nebraska Book Company, Inc. Form 10-K for the fiscal year ended March 31,
2002, is incorporated herein by reference.10.16
    *
    
    Memorandum of Understanding, dated as of November 1, 1999 by and 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.10.17
    *
    
    Memorandum of Understanding, dated as of April 17, 2001 by and between Nebraska Book
Company, Inc. and Robert Rupe, Senior Vice President of the Bookstore Division, filed
as Exhibit 10.1 to Nebraska Book Company, Inc. Form 10-Q for the quarter ended June 30,
2001, is incorporated herein by reference.10.18
    *
    
    Amendment to the Memorandums of Understanding by and between Nebraska Book Company,
Inc. and each of Mark W. Oppegard, Larry R. Rempe, Kenneth F. Jirovsky, William H.
Allen, Thomas A. Hoff, Barry S. Major, Alan Siemek, Michael J. Kelly, and Robert Rupe,
dated March 4, 2004, filed as Exhibit 10.27 to Nebraska Book Company, Inc. Form 10-K
for the fiscal year ended March 31, 2004, is incorporated herein by reference.10.19
    *
    
    Executive Employment Agreement dated as of March 27, 2010, by and between Nebraska
Book Company, Inc. and Steven Clemente, Senior Vice President of the Bookstore
Division, filed herewith.10.20
    *
    
    NBC Holdings Corp. 2004 Stock Option Plan adopted March 4, 2004, filed as Exhibit
10.34 to Nebraska Book Company, Inc. Registration Statement on Form S-4 (File No.
333-114891), is incorporated herein by reference.10.21
    *
    
    First Amendment, dated August 18, 2008, to the NBC Holdings Corp. 2004 Stock Option
Plan adopted March 4, 2004, filed as Exhibit 10.1 to Nebraska Book Company, Inc. Form
10-Q for the quarter ended September 30, 2008, is incorporated herein by reference.10.22
    *
    
    Second Amendment, dated January 14, 2010, to the NBC Holdings Corp. 2004 Stock Option
Plan, filed as Exhibit 10.1 to Nebraska Book Company, Inc. Current Report on Form 8-K
filed January 19, 2010, is incorporated herein by reference.10.23
    *
    
    NBC Holdings Corp. 2005 Restricted Stock Plan adopted September 29, 2005, filed as
Exhibit 10.1 to Nebraska Book Company, Inc. Form 10-Q for the quarter ended September
30, 2005, is incorporated herein by reference.10.24
    *
    
    Restricted Stock Purchase Agreement, dated as of March 31, 2006, between Holdings and
Oppegard, filed as Exhibit 10.1 to Nebraska Book Company, Inc. Current Report on Form
8-K dated April 6, 2006, is incorporated herein by reference.10.25
    *
    
    Restricted Stock Purchase Agreement, dated as of March 31, 2006, between Holdings and
Major, filed as Exhibit 10.2 to Nebraska Book Company, Inc. Current Report on Form 8-K
dated April 6, 2006, is incorporated herein by reference.10.26
    *
    
    Restricted Stock Purchase Agreement, dated as of March 31, 2006, between Holdings and
Siemek, filed as Exhibit 10.3 to Nebraska Book Company, Inc. Current Report on Form 8-K
dated April 6, 2006, is incorporated herein by reference.10.27
    *
    
    Stock Repurchase Agreement, dated as of March 31, 2006, between Holdings and
Oppegard, filed as Exhibit 10.4 to Nebraska Book Company, Inc. Current Report on Form
8-K dated April 6, 2006, is incorporated herein by reference.10.28
    *
    
    Stock Repurchase Agreement, dated as of March 31, 2006, between Holdings and Major,
filed as Exhibit 10.5 to Nebraska Book Company, Inc. Current Report on Form 8-K dated
April 6, 2006, is incorporated herein by reference.10.29
    *
    
    Stock Repurchase Agreement, dated as of March 31, 2006, between Holdings and Siemek,
filed as Exhibit 10.6 to Nebraska Book Company, Inc. Current Report on Form 8-K dated
April 6, 2006, is incorporated herein by reference.
  97




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##### Table of Contents



10.30
    *
    
    Restricted Stock Plan Special Bonus Agreement, dated as of March 31, 2006, between
Nebraska Book and Oppegard, filed as Exhibit 10.7 to Nebraska Book Company, Inc.
Current Report on Form 8-K dated April 6, 2006, is incorporated herein by reference.10.31
    *
    
    Restricted Stock Plan Special Bonus Agreement, dated as of March 31, 2006, between
Nebraska Book and Major, filed as Exhibit 10.8 to Nebraska Book Company, Inc. Current
Report on Form 8-K dated April 6, 2006, is incorporated herein by reference.10.32
    *
    
    Restricted Stock Plan Special Bonus Agreement, dated as of March 31, 2006, between
Nebraska Book and Siemek, filed as Exhibit 10.9 to Nebraska Book Company, Inc. Current
Report on Form 8-K dated April 6, 2006, is incorporated herein by reference.10.33
    *
    
    Form of Deferred Compensation Agreement by and among 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.10.34
    *
    
    Amendment of Form of Deferred Compensation Agreement, dated December 30, 2002, by and
among Nebraska Book Company, Inc. and each of Mark W. Oppegard, Larry R. Rempe and
Thomas A. Hoff, filed as Exhibit 10.1 to Nebraska Book Company, Inc. Form 10-Q for the
quarter ended December 31, 2002, is incorporated herein by reference.10.35
    *
    
    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.12.1
    
    
    Statements regarding computation of ratios, filed as Exhibit 12.1 to Nebraska
Book Company, Inc. Registration Statement on Form S-4 (File No. 333-164271), is
incorporated herein by reference.14.1
    
    
    Code of Business Conduct and Ethics and Code of Ethics for Our Principal
Executive Officer and Senior Financial Officers for Nebraska Book Company, Inc., filed
as Exhibit 14.1 to Nebraska Book Company, Inc. Form 10-K for the fiscal year ended
March 31, 2004, is incorporated herein by reference.21.1
    
    
    Subsidiaries of Nebraska Book Company, Inc., filed as Exhibit 21.1 to Nebraska
Book Company, Inc. Registration Statement on Form S-4 (File No. 333-164271), is
incorporated herein by reference.31.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
    
    
    Mirror Option Agreement between NBC Acquisition Corp. and NBC Holdings Corp.,
dated September 30, 2005, filed as Exhibit 99.1 to Nebraska Book Company, Inc. Form
10-Q for the quarter ended September 30, 2005, is incorporated herein by reference.99.2
    
    
    Mirror Restricted Stock Agreement between NBC Acquisition Corp. and NBC
Holdings Corp., dated March 31, 2006, filed as Exhibit 99.2 to Nebraska Book Company,
Inc. Form 10-K for the fiscal year ended March 31, 2006, is incorporated herein by
reference.
 *
    
    - Management contracts or compensatory plans filed herewith or incorporated by reference.  98




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##### Table of Contents



NEBRASKA BOOK COMPANY, INC./s/  Mark W. OppegardMark W. OppegardChief Executive Officer and DirectorJune 25, 2010  /s/ Mark W. Oppegard

Mark W. Oppegard
    
    
    
    /s/ Mark L. Bono

Mark L. BonoChief Executive Officer and Director
    
    
    
    Director(principal executive officer)
    
    
    
    June 25, 2010June 25, 2010/s/ Alan G. Siemek

Alan G. Siemek
    
    
    
    /s/ R. Sean Honey

R. Sean HoneyChief Financial Officer, Senior Vice President of Finance
    
    
    
    Directorand Administration, Treasurer, and Assistant Secretary
    
    
    
    June 25, 2010(principal financial and accounting officer)June 25, 2010/s/ Barry S. Major

Barry S. MajorPresident and DirectorJune 25, 2010
 
 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:
   99




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NEBRASKA BOOK COMPANY, INC.
 
 SCHEDULE II (ITEM 15(a)(2))  VALUATION AND QUALIFYING ACCOUNTS
 Charged to
    
    
    AddedBeginning of
    
    
    Charged to
    
    
    Other
    
    
    through
    
    
    
    
    
    
    End ofFiscal Year
    
    
    Costs and
    
    
    Accounts
    
    
    Stock
    
    
    Net
    
    
    Fiscal YearBalance
    
    
    Expenses
    
    
    (Revenue)
    
    
    Acquisitions
    
    
    Charge-Offs
    
    
    BalanceFISCAL YEAR ENDED MARCH 31, 2010Allowance for doubtful accounts
    
    $
    1,283,360
    
    
    $
    1,399,466
    
    
    $
    
    
    
    $
    
    
    
    $
    (1,399,466
    )
    
    $
    1,283,360Allowance for sales returns
    
    
    5,452,166
    
    
    
    
    
    
    
    31,799,536
    
    
    
    
    
    
    
    (31,978,051
    )
    
    
    5,273,651FISCAL YEAR ENDED MARCH 31, 2009Allowance for doubtful accounts
    
    
    1,033,360
    
    
    
    1,366,979
    
    
    
    
    
    
    
    
    
    
    
    (1,116,979
    )
    
    
    1,283,360Allowance for sales returns
    
    
    5,292,620
    
    
    
    
    
    
    
    32,627,107
    
    
    
    
    
    
    
    (32,467,561
    )
    
    
    5,452,166FISCAL YEAR ENDED MARCH 31, 2008Allowance for doubtful accounts
    
    
    1,100,360
    
    
    
    468,007
    
    
    
    
    
    
    
    
    
    
    
    (535,007
    )
    
    
    1,033,360Allowance for sales returns
    
    
    4,958,090
    
    
    
    
    
    
    
    29,591,517
    
    
    
    
    
    
    
    (29,256,987
    )
    
    
    5,292,620
  100




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##### Table of Contents



EXHIBIT INDEX
 2.1
    
    
    Agreement and Plan of Merger, dated as of July 1, 2003, by and among
TheCampusHub.com, Inc., Nebraska Book Company, Inc. and NBC Acquisition Corp., filed as
Exhibit 2.1 to Nebraska Book Company, Inc. Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.2.2
    
    
    Share Purchase Agreement, dated as of April 2, 2006, by and among Nebraska
Book, CBA and the Sellers referenced therein, filed as Exhibit 2.1 to Nebraska Book
Company, Inc. Current Report on Form 8-K dated April 6, 2006, is incorporated herein by
reference.2.3
    
    
    Second Amendment to Share Purchase Agreement, dated as of April 30, 2006, by
and among Nebraska Book, CBA and the Sellers referenced therein, filed as Exhibit 2.1
to Nebraska Book Company, Inc. Current Report on Form 8-K dated May 4, 2006, 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
    
    
    First Restated By-laws of Nebraska Book Company, Inc., filed as Exhibit 3.2 to
Nebraska Book Company, Inc. Form 10-Q for the quarter ended September 30, 2003, is
incorporated herein by reference.4.1
    
    
    Indenture, dated March 4, 2004, by and among Nebraska Book Company, Inc., the
subsidiary guarantors parties thereto and BNY Midwest Trust Company as Trustee, filed
as Exhibit 4.6 to Nebraska Book Company, Inc. Registration Statement on Form S-4 (File
No. 333-114891), is incorporated herein by reference.4.2
    
    
    Form of 8 5/8% Senior Subordinated Note Due 2012 (included in Exhibit 4.6),
filed as Exhibit 4.7 to Nebraska Book Company, Inc. Registration Statement on Form S-4
(File No. 333-114891), is incorporated herein by reference.4.3
    
    
    Form of Exchange Note of Nebraska Book Company, Inc. 8 5/8% Senior Subordinated
Note Due 2012, filed as Exhibit 4.8 to Nebraska Book Company, Inc. Form 10-K for the
fiscal year ended March 31, 2004, is incorporated herein by reference.4.4
    
    
    Supplemental Indenture, dated as of December 31, 2004, by and among NBC
Textbooks LLC, Nebraska Book Company, Inc., each other then existing Subsidiary
Guarantor under the Indenture, and the Trustee, filed as Exhibit 10.1 to Nebraska Book
Company. Inc. Current Report on Form 8-K dated and filed on January 6, 2005, is
incorporated herein by reference.4.5
    
    
    Supplemental Indenture, dated as of May 1, 2006, by and among CBA, Nebraska
Book Company, Inc., each other then existing Subsidiary Guarantor under the Indenture,
and the Trustee, filed as Exhibit 10.2 to Nebraska Book Company, Inc. Current Report on
Form 8-K dated May 4, 2006, is incorporated herein by reference.4.6
    
    
    Supplemental Indenture, dated as of May 1, 2007, by and among Net Textstore
LLC, Nebraska Book Company, Inc., each other then existing Subsidiary Guarantor under
the Indenture, and the Trustee, filed as Exhibit 10.1 to Nebraska Book Company, Inc.
Current Report on Form 8-K dated May 7, 2007, is incorporated herein by reference.4.7
    
    
    Supplemental Indenture, dated as of January 26, 2009, by and among Campus
Authentic LLC, Nebraska Book Company, Inc., each other then existing Subsidiary
Guarantor under the Indenture, and the Trustee, filed as Exhibit 4.7 to Nebraska Book
Company, Inc. Form 10-K for the fiscal year ended March 31, 2009, is incorporated
herein by reference.4.8
    
    
    Indenture, dated October 2, 2009, by and among Nebraska Book Company, Inc., the
Subsidiary Guarantors and Wilmington Trust FSB, as trustee and noteholder collateral
agent, filed as Exhibit 4.1 to Nebraska Book Company, Inc. Current Report on Form 8-K
filed October 7, 2009, is incorporated herein by reference.
  101




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4.9
    
    
    Form of 10% Senior Secured Note Due 2011 (included in Exhibit 4.1 as Exhibit A
to Nebraska Book Company, Inc. Current Report on Form 8-K filed October 7, 2009), is
incorporated herein by reference.4.10
    
    
    Pledge and Security Agreement, dated October 2, 2009, among Nebraska Book
Company, Inc., the Subsidiary Guarantors and Wilmington Trust FSB, as Noteholder
Collateral Agent, filed as Exhibit 4.3 to Nebraska Book Company, Inc. Current Report on
Form 8-K filed October 7, 2009, is incorporated herein by reference.10.1
    
    
    Amended and Restated Credit Agreement, dated October 2, 2009, among Nebraska
Book, the Subsidiary Guarantors, the lenders party thereto, JPMorgan Chase Bank, N.A.,
as administrative agent, Wells Fargo Bank, National Association, as syndication agent,
Bank of America, N.A., as documentation agent, filed as Exhibit 10.1 to Nebraska Book
Company, Inc. Form 10-Q for the quarter ended September 30, 2009, is incorporated
herein by reference.10.2
    
    
    First Amendment, dated as of March 22, 2010, to the Amended and Restated Credit
Agreement, dated October 2, 2009, among NBC Holdings Corp., NBC Acquisition Corp.,
Nebraska Book Company, Inc., the Subsidiary Guarantors, the lenders party thereto,
JPMorgan Chase Bank, N.A., as administrative agent, Wells Fargo Bank, National
Association, as syndication agent, and Bank of America, N.A., as documentation agent,
filed as Exhibit 10.1 to Nebraska Book Company, Inc. Current Report on Form 8-K filed
March 25, 2010, is incorporated herein by reference.10.3
    
    
    First Lien Amended and Restated Guarantee and Collateral Agreement, dated
October 2, 2009, among NBC Holdings Corp., NBC Acquisition Corp., Nebraska Book
Company, Inc., the Subsidiary Guarantors, and JPMorgan Chase Bank, N.A., as
administrative agent, filed as Exhibit 10.2 to Nebraska Book Company, Inc. Form 10-Q
for the quarter ended September 30, 2009, is incorporated herein by reference.10.4
    
    
    First Amendment, dated as of March 22, 2010, to the First Lien Amended and
Restated Guarantee and Collateral Agreement, dated October 2, 2009, among NBC Holdings
Corp., NBC Acquisition Corp., Nebraska Book Company, Inc., the Subsidiary Guarantors,
and JPMorgan Chase Bank, N.A., as administrative agent, filed as Exhibit 10.1 to
Nebraska Book Company, Inc. Current Report on Form 8-K filed March 25, 2010, is
incorporated herein by reference.10.5
    
    
    Intercreditor Agreement, dated October 2, 2009, by and among Nebraska Book
Company, Inc., the Subsidiary Guarantors and Wilmington Trust FSB, as trustee, filed as
Exhibit 10.3 to Nebraska Book Company, Inc. Current Report on Form 8-K filed October 7,
2009, is incorporated herein by reference.10.6
    
    
    Purchase Agreement, dated as of March 4, 2004, by and among Nebraska Book
Company, Inc. and J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and Fleet
Securities, Inc., filed as Exhibit 10.13 to Nebraska Book Company, Inc. Registration
Statement on Form S-4 (File No. 333-114891), is incorporated herein by reference.10.7
    
    
    Registration Rights Agreement, dated as of March 4, 2004, by and among Nebraska
Book Company, Inc. and J.P. Morgan Securities Inc., Citigroup Global Markets Inc. and
Fleet Securities, Inc., filed as Exhibit 10.15 to Nebraska Book Company, Inc.
Registration Statement on Form S-4 (File No. 333-114891), is incorporated herein by
reference.10.8
    
    
    Registration Rights Agreement, dated as of October 2, 2009, by and among
Nebraska Book Company, Inc., the guarantors listed in Schedule 1 thereto, J.P. Morgan
Securities Inc., Banc of America Securities LLC, Wells Fargo Securities, LLC and Piper
Jaffray & Co., filed as Exhibit 10.28 to Nebraska Book Company, Inc. Registration
Statement on Form S-4 (File No. 333-164271), is incorporated herein by reference.10.9
    *
    
    Form of Memorandum of Understanding, dated as of February 13, 1998 by and
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.
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10.10
    *
    
    Memorandum of Understanding, dated as of December 22, 1998 by and 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.10.11
    *
    
    Addendum to the Memorandum of Understanding, dated as of December 22, 1998 by and
between Nebraska Book Company, Inc. and Barry S. Major, dated March 29, 2002, filed as
Exhibit 10.9 to Nebraska Book Company, Inc. Form 10-K for the fiscal year ended March
31, 2002, is incorporated herein by reference.10.12
    *
    
    Amended and Restated Secured Promissory Note dated July 9, 2002 by and between NBC
Acquisition Corp. and Barry S. Major, filed as Exhibit 10.4 to Nebraska Book Company,
Inc. Form 10-Q for the quarter ended June 30, 2002, is incorporated herein by
reference.10.13
    *
    
    First Amendment to the Amended and Restated Secured Promissory Note, dated as of
December 31, 2008, between Barry S. Major and NBC Acquisition Corp., filed as Exhibit
10.1 to NBC Acquisition Corp. Current Report on Form 8-K dated January 7, 2009, is
incorporated herein by reference.10.14
    *
    
    Memorandum of Understanding, dated as of July 1, 1999 by and 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.10.15
    *
    
    Addendum to the Memorandum of Understanding, dated as of July 1, 1999 by and between
Nebraska Book Company, Inc. and Alan Siemek, dated March 29, 2002, filed as Exhibit
10.11 to Nebraska Book Company, Inc. Form 10-K for the fiscal year ended March 31,
2002, is incorporated herein by reference.10.16
    *
    
    Memorandum of Understanding, dated as of November 1, 1999 by and 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.10.17
    *
    
    Memorandum of Understanding, dated as of April 17, 2001 by and between Nebraska Book
Company, Inc. and Robert Rupe, Senior Vice President of the Bookstore Division, filed
as Exhibit 10.1 to Nebraska Book Company, Inc. Form 10-Q for the quarter ended June 30,
2001, is incorporated herein by reference.10.18
    *
    
    Amendment to the Memorandums of Understanding by and between Nebraska Book Company,
Inc. and each of Mark W. Oppegard, Larry R. Rempe, Kenneth F. Jirovsky, William H.
Allen, Thomas A. Hoff, Barry S. Major, Alan Siemek, Michael J. Kelly, and Robert Rupe,
dated March 4, 2004, filed as Exhibit 10.27 to Nebraska Book Company, Inc. Form 10-K
for the fiscal year ended March 31, 2004, is incorporated herein by reference.10.19
    *
    
    Executive Employment Agreement dated as of March 27, 2010, by and between Nebraska
Book Company, Inc. and Steven Clemente, Senior Vice President of the Bookstore
Division, filed herewith.10.20
    *
    
    NBC Holdings Corp. 2004 Stock Option Plan adopted March 4, 2004, filed as Exhibit
10.34 to Nebraska Book Company, Inc. Registration Statement on Form S-4 (File No.
333-114891), is incorporated herein by reference.10.21
    *
    
    First Amendment, dated August 18, 2008, to the NBC Holdings Corp. 2004 Stock Option
Plan adopted March 4, 2004, filed as Exhibit 10.1 to NBC Acquisition Corp. Form 10-Q
for the quarter ended September 30, 2008, is incorporated herein by reference.10.22
    *
    
    Second Amendment, dated January 14, 2010, to the NBC Holdings Corp. 2004 Stock Option
Plan, filed as Exhibit 10.1 to NBC Acquisition Corp. Current Report on Form 8-K filed
January 19, 2010, is incorporated herein by reference.10.23
    *
    
    NBC Holdings Corp. 2005 Restricted Stock Plan adopted September 29, 2005, filed as
Exhibit 10.1 to Nebraska Book Company, Inc. Form 10-Q for the quarter ended September
30, 2005, is incorporated herein by reference.
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10.24
    *
    
    Restricted Stock Purchase Agreement, dated as of March 31, 2006, between Holdings and
Oppegard, filed as Exhibit 10.1 to Nebraska Book Company, Inc. Current Report on Form
8-K dated April 6, 2006, is incorporated herein by reference.10.25
    *
    
    Restricted Stock Purchase Agreement, dated as of March 31, 2006, between Holdings and
Major, filed as Exhibit 10.2 to Nebraska Book Company, Inc. Current Report on Form 8-K
dated April 6, 2006, is incorporated herein by reference.10.26
    *
    
    Restricted Stock Purchase Agreement, dated as of March 31, 2006, between Holdings and
Siemek, filed as Exhibit 10.3 to Nebraska Book Company, Inc. Current Report on Form 8-K
dated April 6, 2006, is incorporated herein by reference.10.27
    *
    
    Stock Repurchase Agreement, dated as of March 31, 2006, between Holdings and
Oppegard, filed as Exhibit 10.4 to Nebraska Book Company, Inc. Current Report on Form
8-K dated April 6, 2006, is incorporated herein by reference.10.28
    *
    
    Stock Repurchase Agreement, dated as of March 31, 2006, between Holdings and Major,
filed as Exhibit 10.5 to Nebraska Book Company, Inc. Current Report on Form 8-K dated
April 6, 2006, is incorporated herein by reference.10.29
    *
    
    Stock Repurchase Agreement, dated as of March 31, 2006, between Holdings and Siemek,
filed as Exhibit 10.6 to Nebraska Book Company, Inc. Current Report on Form 8-K dated
April 6, 2006, is incorporated herein by reference.10.30
    *
    
    Restricted Stock Plan Special Bonus Agreement, dated as of March 31, 2006, between
Nebraska Book and Oppegard, filed as Exhibit 10.7 to Nebraska Book Company, Inc.
Current Report on Form 8-K dated April 6, 2006, is incorporated herein by reference.10.31
    *
    
    Restricted Stock Plan Special Bonus Agreement, dated as of March 31, 2006, between
Nebraska Book and Major, filed as Exhibit 10.8 to Nebraska Book Company, Inc. Current
Report on Form 8-K dated April 6, 2006, is incorporated herein by reference.10.32
    *
    
    Restricted Stock Plan Special Bonus Agreement, dated as of March 31, 2006, between
Nebraska Book and Siemek, filed as Exhibit 10.9 to Nebraska Book Company, Inc. Current
Report on Form 8-K dated April 6, 2006,
is incorporated herein by reference.10.33
    *
    
    Form of Deferred Compensation Agreement by and among 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.10.34
    *
    
    Amendment of Form of Deferred Compensation Agreement, dated December 30, 2002, by and
among Nebraska Book Company, Inc. and each of Mark W. Oppegard, Larry R. Rempe and
Thomas A. Hoff, filed as Exhibit 10.1 to Nebraska Book Company, Inc. Form 10-Q for the
quarter ended December 31, 2002, is incorporated herein by reference.10.35
    *
    
    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.12.1
    
    
    Statements regarding computation of ratios, filed as Exhibit 12.1 to Nebraska
Book Company, Inc. Registration Statement on Form S-4 (File No. 333-164271), is
incorporated herein by reference.14.1
    
    
    Code of Business Conduct and Ethics and Code of Ethics for Our Principal
Executive Officer and Senior Financial Officers for Nebraska Book Company, Inc., filed
as Exhibit 14.1 to Nebraska Book Company, Inc. Form 10-K for the fiscal year ended
March 31, 2004, is incorporated herein by reference.
  104




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21.1
    
    
    Subsidiaries of Nebraska Book Company, Inc., filed as Exhibit 21.1 to Nebraska
Book Company, Inc. Registration Statement on Form S-4 (File No. 333-164271), is
incorporated herein by reference.31.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.99.1
    
    
    Mirror Option Agreement between NBC Acquisition Corp. and NBC Holdings Corp.,
dated September 30, 2005, filed as Exhibit 99.1 to Nebraska Book Company, Inc. Form
10-Q for the quarter ended September 30, 2005, is incorporated herein by reference.99.2
    
    
    Mirror Restricted Stock Agreement between NBC Acquisition Corp. and NBC
Holdings Corp., dated March 31, 2006, filed as Exhibit 99.2 to Nebraska Book Company,
Inc. Form 10-K for the fiscal year ended March 31, 2006, is incorporated herein by
reference.
 *
    
    - Management contracts or compensatory plans filed herewith or incorporated by reference.   105