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Thomas Nelson Reports Income Drop of 7 Percent

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August 15-31, 2005 Edition

Thomas Nelson

Reports Income

Drop of 7 Percent

NASHVILLE, TN/ 8/9/05—Major Christian publisher Thomas Nelson reported a 7% decline in net revenues to $45.6 million for the first quarter of FY 2006, ended June 30, compared to $49.0 million in the prior year. The company attributed the decline to the absence of major new releases during the period. Nelson also expects the second quarter to be weak, but is looking for an increase in sales with the release of a new Max Lucado title.

Net income was $0.7 million, compared to $1.9 million in the same quarter a year ago. Diluted earnings per share were $0.05 in the recent period, compared to $0.12 last year.

“Our first fiscal quarter is, in most years, our slowest,” noted Sam Moore, Thomas Nelson’s Chairman and Chief Executive Officer, “which tends to magnify the impact of events–either good or bad.”

Mr. Moore continued: “There are three primary factors contributing to the decline in net revenues for this quarter. First, the Company had no major new releases during the first quarter. Most of our major new releases this year are scheduled in the second half of the fiscal year. Secondly, Women of Faith hosted one less event in the first quarter compared to the prior year. Additionally, as trade sources and government statistics indicate, the book retailing market is down overall for the calendar year to date, which causes our direct customers to be slow in re-ordering and quick to return slow-moving merchandise.”

“If there’s good news in the quarter’s poor performance it’s that we are holding or even gaining share of our key markets, plus, the steps we’ve taken in recent years to focus on our core business and improve operating margins have helped cushion the impact of the disappointing sales results on our overall performance,” said Mr. Moore.

Commenting on the outlook for the balance of the year, Mike Hyatt, Thomas Nelson’s President and Chief Operating Officer stated: “Based on our product release schedule, I am cautiously optimistic that our comparisons will improve as the year progresses. Comparisons in the current September-ending quarter will be challenging, as the major trade release from Max Lucado will ship in the third quarter this year versus the second quarter last year. Expected gains in fiscal 2006 will likely come in the second half. We believe that the full year results will exceed last year’s performance.”

Thomas Nelson, Inc. is a leading publisher and distributor of products emphasizing Christian, inspirational and family value themes and believes it is the largest publisher of Bibles and inspirational products. For more information, visit the website www.ThomasNelson.com.