UNITEDTable STATES SECURITIESof AND EXCHANGE COMMISSION Contents

~~Washington,~~UNITED ~~D.C.~~STATES SECURITIES ~~20549~~AND EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-Q~~D.C. 20549

þFORM ~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~10-Q

~~For~~þ ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~December 31,~~SECTION ~~2009~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ORFor the quarterly period ended June 30, 2010

~~o TRANSITION REPORT PURSUANT TO SECTION 13~~ OR ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~o ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from to~~ TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~file~~the ~~number:~~transition ~~333-48221~~period from _______ to ______

~~NEBRASKA~~Commission ~~BOOK~~file ~~COMPANY,~~number: ~~INC.~~333-48221

~~(Exact~~NEBRASKA ~~name~~BOOK ofCOMPANY, ~~registrant as specified in its charter)~~INC.

KANSAS		47-0549819
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4700 South 19th Street
Lincoln, Nebraska (Address of principal executive offices)		68501-0529 (Zip Code)

(Exact name of registrant as specified in its charter)

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


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

4700 South 19^th Street
Lincoln, Nebraska		68501-0529
(Address of principal executive offices)		(Zip Code)

~~Indicate~~Registrant’s bytelephone check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports)number, ~~and~~including ~~(2) has~~area ~~been subject to such filing requirements for the past 90 days. Yes o No o (NOTE~~code: ~~Nebraska Book Company, Inc. is a voluntary filer and is not subject to the filing requirements of Section 13 or 15~~(d402) ~~of the Securities and Exchange Act of 1934. Although not subject to these filing requirements, Nebraska Book Company, Inc. has filed all reports required under Section~~ ~~13 or 15(d)~~421-7300 ~~of the Securities Exchange Act of 1934 during the preceding 12 months.)~~

Indicate by check mark whether the registrant: (1) has ~~submitted~~filed ~~electronically~~all ~~and~~reports ~~posted~~required onto ~~its~~be filed ~~corporate~~by ~~Web~~Section 13 ~~site,~~or if15(d) ~~any,~~of ~~every~~the ~~Interactive~~Securities ~~Data~~Exchange ~~File~~Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to befile ~~submitted~~such reports), and ~~posted~~(2) has been ~~pursuant~~subject to ~~Rule 405~~such offiling ~~Regulation~~requirements for the past 90 ~~S-T~~days. Yes o No o (~~§232~~NOTE: Nebraska Book Company, Inc.~~405~~ ofis ~~this~~a ~~chapter)~~voluntary ~~during~~filer and is not subject to the ~~preceding~~filing 12requirements of Section ~~months~~13 or 15(ord) ~~for~~of ~~such~~the ~~shorter~~Securities ~~period~~and ~~that~~Exchange ~~the~~Act ~~registrant~~of ~~was~~1934. ~~required~~Although not subject to these filing ~~submit~~requirements, ~~and~~Nebraska ~~post~~Book ~~such~~Company, ~~files)~~Inc. ~~Yes~~ has filed all reports required under Section 13 or 15(d) oof ~~No o~~the Securities Exchange Act of 1934 during the preceding 12 months.)

Indicate by check mark whether the registrant ishas asubmitted ~~large~~electronically ~~accelerated~~and ~~filer,~~posted anon ~~accelerated~~its ~~filer,~~corporate aWeb ~~non-accelerated~~site, ~~filer~~if any, orevery aInteractive ~~smaller~~Data ~~reporting~~File ~~company.~~required ~~See~~to ~~the~~be ~~definitions~~submitted ofand ~~“large~~posted ~~accelerated~~pursuant ~~filer,”~~to ~~“accelerated~~Rule 405 ~~filer”~~of ~~and~~Regulation S-T ~~“smaller~~(§232.405 ~~reporting~~of ~~company”~~this inchapter) ~~Rule~~during the preceding 12 ~~12b-2~~months (or offor such shorter period that the ~~Exchange~~ ~~Act~~registrant was required to submit and post such files). Yes o No o

~~Large~~Indicate ~~accelerated~~by ~~filer~~check omark ~~Accelerated~~whether ~~filer~~the oregistrant ~~Non-~~is a large accelerated filer, þan ~~(do~~accelerated filer, ~~not~~a ~~check~~non-accelerated iffiler, or a smaller reporting company). ~~Smaller~~See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” oin Rule 12b-2 of the Exchange Act.

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~o ~~whether~~Accelerated ~~the~~filer ~~registrant~~o isNon-accelerated afiler ~~shell~~þ ~~company~~Smaller ~~(as~~reporting ~~defined~~company ino ~~Rule 12b-2~~(do ~~of the~~not ~~Exchange~~check ~~Act). Yes~~if oa Nosmaller þ reporting company)

~~Total~~Indicate ~~number~~by ofcheck ~~shares~~mark ofwhether ~~common~~the ~~stock~~registrant ~~outstanding~~is a shell company (as ofdefined ~~February~~in Rule ~~12,~~12b-2 ~~2010:~~of the ~~100~~Exchange ~~shares~~Act). Yes o No þ

Total ~~Number~~number of ~~Pages~~shares of common stock outstanding as of August 12, 2010: 47100 shares

~~Exhibit Index:~~Total ~~Page~~Number 47of Pages: 33

~~PART~~Exhibit Index: I.Page ~~FINANCIAL INFORMATION~~33

~~ITEM 1.~~TABLE ~~FINANCIAL~~OF ~~STATEMENTS.~~ CONTENTS

NEBRASKA BOOK COMPANY, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


PART I. FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		CONDENSED CONSOLIDATED BALANCE SHEETS
		CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
		CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
	ITEM 1A. RISK FACTORS
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS
SIGNATURE
EXHIBIT INDEX
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

	December 31,			March 31,			December 31,
	2009			2009			2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	16,815,036		$	44,038,468		$	18,307,027
Receivables, net		75,572,125			61,301,636			74,477,996
Inventories		173,437,403			93,115,663			164,253,279
Recoverable income taxes		6,910,271			2,869,583			5,794,462
Deferred income taxes		7,654,801			6,581,802			7,339,093
Prepaid expenses and other assets		3,461,500			3,950,874			3,208,187
Total current assets		283,851,136			211,858,026			273,380,044
PROPERTY AND EQUIPMENT, net of depreciation & amortization		43,194,981			45,638,522			45,625,017
GOODWILL		215,571,126			215,436,126			322,409,155
CUSTOMER RELATIONSHIPS, net of amortization		81,338,200			85,644,340			87,079,720
TRADENAME		31,320,000			31,320,000			31,320,000
OTHER IDENTIFIABLE INTANGIBLES, net of amortization		5,804,983			9,172,622			9,945,864
DEBT ISSUE COSTS, net of amortization		10,289,115			6,875,122			3,732,897
OTHER ASSETS		3,716,768			2,121,949			2,147,778
	$	675,086,309		$	608,066,707		$	775,640,475
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	69,266,116		$	26,865,614		$	63,017,035
Accrued employee compensation and benefits		9,547,912			13,780,209			10,186,133
Accrued interest		6,175,189			678,516			4,557,106
Accrued incentives		6,231,547			6,110,700			6,518,368
Accrued expenses		7,388,275			4,277,105			3,012,561
Deferred revenue		2,865,460			959,274			2,367,009
Current maturities of long-term debt		52,967			6,917,451			2,581,009
Current maturities of capital lease obligations		813,609			748,692			728,715
Revolving credit facility		23,100,000			—			42,000,000
Total current liabilities		125,441,075			60,337,561			134,967,936
LONG-TERM DEBT, net of current maturities		374,258,315			361,445,728			366,806,962
CAPITAL LEASE OBLIGATIONS, net of current maturities		2,627,370			3,298,658			3,510,759
OTHER LONG-TERM LIABILITIES		2,115,997			5,304,166			4,855,175
DEFERRED INCOME TAXES		51,681,458			54,313,459			53,231,415
DUE TO PARENT		22,998,189			20,130,189			19,758,151
COMMITMENTS (Note 4)
STOCKHOLDER’S EQUITY:
Common stock, voting, authorized 50,000 shares of $1.00 par value; issued and outstanding 100 shares		100			100			100
Additional paid-in capital		148,165,505			148,135,923			138,120,891
Retained earnings (deficit)		(52,201,700	)		(44,899,077	)		54,389,086
Total stockholder’s equity		95,963,905			103,236,946			192,510,077
	$	675,086,309		$	608,066,707		$	775,640,475

~~See~~PART ~~notes~~I. toFINANCIAL ~~condensed consolidated financial statements.~~INFORMATION

2ITEM 1. FINANCIAL STATEMENTS

NEBRASKA BOOK COMPANY, INC. ~~CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)~~

	Quarter Ended December 31,						Nine Months Ended December 31,
	2009			2008			2009			2008
REVENUES, net of returns	$	66,658,584		$	66,658,136		$	412,138,559		$	418,794,376
COSTS OF SALES (exclusive of depreciation shown below)		38,597,654			39,924,915			252,368,739			259,187,334
Gross profit		28,060,930			26,733,221			159,769,820			159,607,042
OPERATING EXPENSES:
Selling, general and administrative		34,078,959			34,581,196			117,281,571			121,838,141
Depreciation		2,124,972			1,777,646			6,218,426			5,467,645
Amortization		2,684,564			2,846,353			8,320,843			8,539,069
		38,888,495			39,205,195			131,820,840			135,844,855
INCOME (LOSS) FROM OPERATIONS		(10,827,565	)		(12,471,974	)		27,948,980			23,762,187
OTHER EXPENSES:
Interest expense		10,650,185			7,820,666			30,032,285			23,795,302
Interest income		(60,744	)		(162,890	)		(104,441	)		(342,610	)
Loss on early extinguishment of debt		3,065,759			—			3,065,759			—
Loss on derivative financial instrument		—			—			—			102,000
		13,655,200			7,657,776			32,993,603			23,554,692
INCOME (LOSS) BEFORE INCOME TAXES		(24,482,765	)		(20,129,750	)		(5,044,623	)		207,495
INCOME TAX EXPENSE (BENEFIT)		(9,597,000	)		(8,052,000	)		(1,977,000	)		83,000
NET INCOME (LOSS)	$	(14,885,765	)	$	(12,077,750	)	$	(3,067,623	)	$	124,495

CONDENSED CONSOLIDATED BALANCE SHEETS

~~See notes to condensed consolidated financial statements.~~ (UNAUDITED)


	June 30,			March 31,			June 30,
	2010			2010			2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	15,223,749		$	60,972,625		$	12,056,577
Receivables, net		42,789,674			57,987,794			38,635,405
Inventories		149,255,999			97,497,689			140,641,391
Recoverable income taxes		10,883,640			2,435,287			11,429,108
Deferred income taxes		6,888,559			6,247,559			6,882,801
Prepaid expenses and other assets		3,265,062			4,070,281			2,879,463

Total current assets		228,306,683			229,211,235			212,524,745
PROPERTY AND EQUIPMENT, net of depreciation & amortization		41,758,207			42,155,424			44,706,430
GOODWILL		217,755,026			215,571,126			215,436,126
CUSTOMER RELATIONSHIPS, net of amortization		78,467,440			79,902,820			84,208,960
TRADENAME		31,320,000			31,320,000			31,320,000
OTHER IDENTIFIABLE INTANGIBLES, net of amortization		5,854,113			5,295,324			7,648,960
DEBT ISSUE COSTS, net of amortization		7,880,810			9,198,683			5,878,827
OTHER ASSETS		3,422,914			2,850,632			2,124,643

	$	614,765,193		$	615,505,244		$	603,848,691


LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	39,695,502		$	26,387,040		$	32,651,569
Accrued employee compensation and benefits		7,716,597			9,401,468			6,418,998
Accrued interest		6,099,525			7,295,709			4,589,423
Accrued incentives		7,817,387			6,313,933			7,650,653
Accrued expenses		9,001,095			9,051,651			3,902,555
Deferred revenue		263,961			1,299,960			325,646
Current maturities of long-term debt		55,878			54,403			52,682,649
Current maturities of capital lease obligations		844,477			846,053			770,201
Revolving credit facility		—			—			5,000,000

Total current liabilities		71,494,422			60,650,217			113,991,694
LONG-TERM DEBT, net of current maturities		374,438,475			374,343,069			315,162,113
CAPITAL LEASE OBLIGATIONS, net of current maturities		2,163,663			2,380,737			3,081,545
OTHER LONG-TERM LIABILITIES		2,081,227			2,278,963			5,416,854
DEFERRED INCOME TAXES		49,665,019			50,467,019			53,470,458
DUE TO PARENT		24,618,711			23,194,711			21,533,189
COMMITMENTS (Note 4)
STOCKHOLDER’S EQUITY:
Common stock, voting, authorized 50,000 shares of $1.00 par value; issued and outstanding 100 shares		100			100			100
Additional paid-in capital		148,235,774			148,197,307			148,145,793
Accumulated deficit		(57,932,198	)		(46,006,879	)		(56,953,055	)

Total stockholder’s equity		90,303,676			102,190,528			91,192,838

	$	614,765,193		$	615,505,244		$	603,848,691

~~NEBRASKA~~See ~~BOOK~~notes ~~COMPANY,~~to ~~INC. CONDENSED~~condensed ~~CONSOLIDATED~~consolidated ~~STATEMENTS~~financial ~~OF STOCKHOLDER’S EQUITY~~statements. ~~(UNAUDITED)~~

									Accumulated
			Additional			Retained			Other
	Common		Paid-in			Earnings			Comprehensive						Comprehensive
	Stock		Capital			(Deficit)			Income (Loss)			Total			Income (Loss)
BALANCE, April 1, 2008	$	100	$	138,087,705		$	58,499,591		$	(748,000	)	$	195,839,396
Contributed capital		—		1,161			—			—			1,161		$	—
Share-based compensation attributable to NBC Holdings Corp. stock options		—		32,025			—			—			32,025			—
Net income		—		—			124,495			—			124,495			124,495
Dividends declared		—					(4,235,000	)		—			(4,235,000	)		—
Other comprehensive income, net of taxes:
Unrealized gain on interest rate swap agreement, net of taxes of $473,000		—		—			—			748,000			748,000			748,000
BALANCE, December 31, 2008	$	100	$	138,120,891		$	54,389,086		$	—		$	192,510,077		$	872,495
BALANCE, April 1, 2009	$	100	$	148,135,923		$	(44,899,077	)	$	—		$	103,236,946
Contributed capital		—		(3,628	)		—			—			(3,628	)	$	—
Share-based compensation attributable to NBC Holdings Corp. stock options		—		33,210			—			—			33,210			—
Net loss		—		—			(3,067,623	)		—			(3,067,623	)		(3,067,623	)
Dividends declared		—		—			(4,235,000	)		—			(4,235,000	)		—
BALANCE, December 31, 2009	$	100	$	148,165,505		$	(52,201,700	)	$	—		$	95,963,905		$	(3,067,623	)

SeeTable notesof to condensed consolidated financial statements. Contents

4NEBRASKA BOOK COMPANY, INC.

~~NEBRASKA BOOK COMPANY, INC.~~ CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~OPERATIONS (UNAUDITED)

	Nine Months Ended December 31,
	Quarter Ended June 30,
	2009			2008
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
REVENUES, net of returns	$	72,421,966		$	68,763,873
Net income (loss)	$	(3,067,623	)	$	124,495
COSTS OF SALES (exclusive of depreciation shown below)		42,199,377			40,343,684
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Gross profit		30,222,589			28,420,189
Share-based compensation		789,162			748,223
OPERATING EXPENSES:
Provision for losses on receivables		414,247			89,592
Selling, general and administrative		35,471,676			33,655,114
Depreciation		62,~~218~~098,~~426~~333			52,~~467~~053,~~645~~644
Amortization		112,~~675~~195,~~812~~955			92,~~925~~837,~~435~~082
Loss on early extinguishment of debt		3,065,759			—
		39,765,964			38,545,840
Amortization of bond discount		60,614			—
LOSS FROM OPERATIONS		(9,543,375	)		(10,125,651	)
Loss on derivative financial instrument		—			102,000
OTHER EXPENSES:
Loss on disposal of assets		140,783			56,752
Interest expense		10,647,029			9,699,327
Deferred income taxes		(3,705,000	)		(3,787,000	)
Interest income		(47,085	)		—
Changes in operating assets and liabilities, net of effect of acquisitions:
		10,599,944			9,699,327
Receivables		(15,429,548	)		(17,169,055	)
LOSS BEFORE INCOME TAXES		(20,143,319	)		(19,824,978	)
Inventories		(79,043,123	)		(63,083,666	)
INCOME TAX BENEFIT		(8,218,000	)		(7,771,000	)
Recoverable income taxes		(4,040,688	)		(5,771,389	)
NET LOSS	$	(11,925,319	)	$	(12,053,978	)
Prepaid expenses and other assets		639,374			(658,118	)
Other assets		(319,543	)		249,489
Accounts payable		42,631,870			33,929,165
Accrued employee compensation and benefits		(4,232,297	)		(1,914,507	)
Accrued interest		5,496,673			3,897,169
Accrued incentives		120,847			(590,489	)
Accrued expenses		(856,976	)		(159,561	)
Income taxes payable		—			(847,370	)
Deferred revenue		1,906,186			1,504,015
Other long-term liabilities		(190,334	)		(254,803	)
Net cash flows from operating activities		(37,725,379	)		(38,141,978	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(4,025,625	)		(5,973,226	)
Acquisitions, net of cash acquired		(2,304,343	)		(5,651,919	)
Proceeds from sale of property and equipment		93,674			30,822
Software development costs		(441,156	)		(264,436	)
Net cash flows from investing activities		(6,677,450	)		(11,858,759	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		199,000,000			—
Payment of financing costs		(9,834,721	)		—
Principal payments on long-term debt		(193,112,511	)		(1,045,862	)
Principal payments on capital lease obligations		(606,371	)		(530,699	)
Net increase in revolving credit facility		23,100,000			42,000,000
Dividends paid to parent		(4,235,000	)		(4,235,000	)
Capital contributions		—			4,869
Change in due to parent		2,868,000			2,788,000
Net cash flows from financing activities		17,179,397			38,981,308
NET DECREASE IN CASH AND CASH EQUIVALENTS		(27,223,432	)		(11,019,429	)
CASH AND CASH EQUIVALENTS, Beginning of period		44,038,468			29,326,456
CASH AND CASH EQUIVALENTS, End of period	$	16,815,036		$	18,307,027
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest	$	21,120,029		$	18,511,767
Income taxes		2,900,688			7,700,759
Noncash investing and financing activities:
Accumulated other comprehensive income:
Unrealized gain on interest rate swap agreement, net of income taxes		—			748,000
Deferred taxes resulting from unrealized gain on interest rate swap agreement		—			473,000
Unpaid consideration associated with bookstore acquisitions		450,000			460,000

See notes to condensed consolidated financial statements.

NEBRASKATable BOOKof COMPANY, INC. Contents

~~NOTES~~NEBRASKA TOBOOK ~~CONDENSED~~COMPANY, ~~CONSOLIDATED FINANCIAL STATEMENTS~~INC. ~~(UNAUDITED)~~

1.CONDENSED ~~Basis~~CONSOLIDATED ofSTATEMENTS ~~Presentation~~OF — The condensed consolidated balance sheet of Nebraska Book Company, Inc. (the “Company”) and its wholly-owned subsidiaries (Specialty Books, Inc., NBC Textbooks LLC, College Book Stores of America, Inc. (“CBA”), Campus Authentic LLC and Net Textstore LLC), at March 31, 2009 was derived from the CompanySTOCKHOLDER’sS ~~audited consolidated balance sheet as of that date. The Company is a wholly-owned subsidiary of NBC Acquisition Corp.~~ EQUITY (~~“NBC”~~UNAUDITED). All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in the opinion of management, necessary to present fairly the financial position of the Company and the results of its operations and cash flows for the periods presented. All of these adjustments are of a normal recurring nature. All intercompany balances and transactions are eliminated in consolidation. Because of the seasonal nature of the Company’s operations, results of operations of any single reporting period should not be considered as indicative of results for a full fiscal year.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2009 included in the Company’s Annual Report on Form 10-K. A description of our significant accounting policies is included in our 2009 Annual Report on Form 10-K. References in this Quarterly Report on Form 10-Q to the terms “we,” “our,” “ours,” and “us” refer collectively to the Company and its subsidiaries, except where otherwise indicated.


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

BALANCE, April 1, 2009	$	100	$	148,135,923		$	(44,899,077	)	$	103,236,946

Contributed capital		—		(1,200	)		—			(1,200	)	$	—

Share-based compensation attributable to NBC Holdings Corp. stock options		—		11,070			—			11,070			—

Net loss		—		—			(12,053,978	)		(12,053,978	)		(12,053,978	)


BALANCE, June 30, 2009	$	100	$	148,145,793		$	(56,953,055	)	$	91,192,838		$	(12,053,978	)


BALANCE, April 1, 2010	$	100	$	148,197,307		$	(46,006,879	)	$	102,190,528

Contributed capital		—		(1,200	)		—			(1,200	)	$	—

Share-based compensation attributable to NBC Holdings Corp. stock options		—		39,667			—			39,667			—

Net loss		—		—			(11,925,319	)		(11,925,319	)		(11,925,319	)



BALANCE, June 30, 2010	$	100	$	148,235,774		$	(57,932,198	)	$	90,303,676		$	(11,925,319	)

InSee ~~June~~notes 2009, the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“Codification”) became the single source of authoritative accounting principles generally accepted in the United States (“GAAP”). The Codification did not create any additional GAAP standards but incorporated existing accounting and reporting standards into a new topical structure with a new referencing system to ~~identify~~condensed ~~authoritative~~consolidated ~~accounting~~financial ~~standards, replacing the prior references to Statement of Financial Accounting Standards (“SFAS”), Emerging Issues Task Force, FASB Staff Position, etc~~statements. Authoritative standards included in the Codification are designated by their Accounting Standards Codification (“ASC”) topical reference, and new standards are designated as Accounting Standards Updates with a year and assigned sequence number. References to prior standards have been updated in this interim report for the third quarter of fiscal year 2010 to reflect the new referencing system.

~~We have evaluated subsequent events through February 12, 2010, the filing date of this Form 10-Q and address such subsequent events in this Form 10-Q where applicable.~~4

2.Table Inventoriesof — Inventories are summarized as follows:Contents

	December 31,		March 31,		December 31,
	2009		2009		2008
Bookstore Division	$	152,507,300	$	59,785,703	$	143,650,769
Textbook Division		17,200,765		30,571,333		17,384,427
Complementary Services Division		3,729,338		2,758,627		3,218,083
	$	173,437,403	$	93,115,663	$	164,253,279

NEBRASKA BOOK COMPANY, INC.

3.CONDENSED ~~Goodwill~~CONSOLIDATED ~~and~~STATEMENTS ~~Other~~OF ~~Identifiable~~CASH Intangibles — During the nine months ended December 31, 2009, ten bookstore locations were acquired in eight separate transactions. The total purchase price, net of cash acquired, of such acquisitions was $2.3 million, of which $0.1 million was assigned to tax deductible goodwill, $0.1 million was assigned to non-tax deductible covenants not to compete with an amortization period of two years, and $0.2 million was assigned to contract-managed acquisition costs with amortization periods of up to nine years. As of December 31, 2009, $0.5 million of the $2.3 million purchase price remained to be paid. During the nine months ended December 31, 2009, we paid $0.1 million of previously accrued consideration for bookstore acquisitions and contract-managed acquisition costs occurring in prior periods. Goodwill assigned to corporate administration represents the goodwill that arose when Weston Presidio gained a controlling interest in NBC on March 4, 2004 FLOWS (~~the “March 4, 2004 Transaction”~~UNAUDITED), as all goodwill was assigned to corporate administration. As is the case with a portion of our assets, such goodwill is not allocated between our reportable segments when management makes operating decisions and assesses performance. We have identified the Textbook Division, Bookstore Division and Complementary Services Division as our reporting units. Such goodwill is allocated to our reporting units for purposes of testing goodwill for impairment and calculating any gain or loss on the disposal of all or, where applicable, a portion of a reporting unit.


	Quarter Ended June 30,
	2010			2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(11,925,319	)	$	(12,053,978	)
Adjustments to reconcile net loss to net cash flows from operating activities:
Share-based compensation		296,976			243,649
Provision for losses on receivables		295,113			77,782
Depreciation		2,098,333			2,053,644
Amortization		3,566,853			3,833,377
Amortization of bond discount		109,941			—
Loss on disposal of assets		25,532			44,390
Deferred income taxes		(1,363,000	)		(1,144,000	)
Changes in operating assets and liabilities, net of effect of acquisitions:
Receivables		14,902,888			22,587,249
Inventories		(49,554,694	)		(47,058,645	)
Recoverable income taxes		(8,448,353	)		(8,559,525	)
Prepaid expenses and other assets		813,635			1,071,411
Other assets		(573,363	)		231,398
Accounts payable		12,401,727			6,167,323
Accrued employee compensation and benefits		(1,684,871	)		(7,361,211	)
Accrued interest		(1,196,184	)		3,910,907
Accrued incentives		1,503,454			1,539,953
Accrued expenses		(307,865	)		(374,550	)
Deferred revenue		(1,035,999	)		(633,628	)
Other long-term liabilities		(181,154	)		(101,768	)

Net cash flows from operating activities		(40,256,350	)		(35,526,222	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(1,566,293	)		(1,385,151	)
Acquisitions, net of cash acquired		(4,717,978	)		(651,428	)
Proceeds from sale of property and equipment		10,844			4,063
Software development costs		(358,364	)		(112,132	)

Net cash flows from investing activities		(6,631,791	)		(2,144,648	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of financing costs		(53,025	)		—
Principal payments on long-term debt		(13,060	)		(518,417	)
Principal payments on capital lease obligations		(218,650	)		(195,604	)
Borrowings under revolving credit facility		12,300,000			41,000,000
Payments under revolving credit facility		(12,300,000	)		(36,000,000	)
Change in due to parent		1,424,000			1,403,000

Net cash flows from financing activities		1,139,265			5,688,979

NET DECREASE IN CASH AND CASH EQUIVALENTS		(45,748,876	)		(31,981,891	)
CASH AND CASH EQUIVALENTS, Beginning of period		60,972,625			44,038,468

CASH AND CASH EQUIVALENTS, End of period	$	15,223,749		$	12,056,577

SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest	$	10,362,374		$	4,792,125
Income taxes		169,353			529,525
Noncash investing and financing activities:
Unpaid consideration associated with bookstore acquisitions		967,354			—

~~The~~See ~~changes~~notes ~~in the carrying amount of goodwill, in total, by reportable segment and assigned~~ to ~~corporate~~condensed ~~administration,~~consolidated ~~are~~financial ~~as follows:~~statements.

	Bookstore		Corporate
	Division		Administration			Total
Balance, April 1, 2008	$	51,305,398	$	269,061,875		$	320,367,273
Additions to goodwill:
Bookstore acquisitions		2,041,882		—			2,041,882
Balance, December 31, 2008	$	53,347,280	$	269,061,875		$	322,409,155
Balance, April 1, 2009	$	53,346,251	$	269,061,875		$	322,408,126
Impairment Loss		—		(106,972,000	)	$	(106,972,000	)
		53,346,251		162,089,875			215,436,126
Additions to goodwill:
Bookstore acquisitions		135,000		—			135,000
Balance, December 31, 2009	$	53,481,251	$	162,089,875		$	215,571,126

DueTable 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 which involves calculating the implied fair value of goodwill by allocating the fair value of the reporting unit to all of its assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing the residual amount to the carrying value of goodwill. As a result, we recorded an impairment charge of $107.0 million in fiscal year 2009. The carrying value of goodwill in excess of the implied fair value was $67.0 million and $40.0 million for the Textbook and Bookstore Divisions at March 31, 2009, respectively. At March 31, 2009, the date of the most recent step one test, after adjusting the carrying values for goodwill impairment, the fair value of the Textbook Division exceeded the carrying value of $213.0 million by 10.5% and the Bookstore Division fair value approximated the carrying value. Remaining goodwill at March 31, 2009 assigned to the Textbook Division was $34.6 million and to the Bookstore Division was $180.8 million. The impairment charge reduced our goodwill carrying value to $215.4 million as of March 31, 2009.Contents

~~Fair~~NEBRASKA ~~value~~BOOK ~~was determined using a market approach based primarily on an EBITDA multiple~~COMPANY, ~~and was deemed to be the most indicative of the Company’s fair value and is consistent in principle with the methodology used for goodwill evaluation in prior years~~INC. The EBITDA multiple approach requires that we estimate a certain valuation multiple of EBITDA derived from comparable companies and apply that multiple to our latest twelve month pro forma EBITDA. We reviewed comparable company information to determine the EBITDA multiple and concluded that 7.0x was an appropriate EBITDA multiple. This total company fair value is allocated to the reporting units based upon their percentage of EBITDA. The fair value was also calculated using the income approach (discounted cash flow approach) and we concluded that it was supportive of the fair value based upon the EBITDA multiple approach. Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions about future economic conditions and comparable company market multiples, among others. In the second step of the goodwill impairment test, we are required to estimate the fair value of reporting unit assets and liabilities, including intangible assets, to derive the fair value of the reporting unit’s goodwill. For purposes of the second step of the goodwill impairment test, we estimated the fair value of our intangible assets tradename, customer relationships and developed technology using the relief-from-royalty market approach, excess earnings method income approach and replacement cost approach, respectively.

7NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. Basis of Presentation — The ~~following~~condensed ~~table~~consolidated ~~presents~~balance sheet of Nebraska Book Company, Inc. (the ~~gross~~“Company”) ~~carrying~~and ~~amount~~its wholly-owned subsidiaries (Specialty Books, Inc., NBC Textbooks LLC, College Book Stores of America, Inc. (“CBA”), Campus Authentic LLC and ~~accumulated~~Net ~~amortization~~Textstore LLC), at March 31, 2010 was derived from the Company’s audited consolidated balance sheet as of ~~identifiable~~that ~~intangibles~~date. ~~subject~~The toCompany ~~amortization~~is a wholly-owned subsidiary of NBC Acquisition Corp. (“NBC”). All other condensed consolidated financial statements contained herein are unaudited and reflect all adjustments which are, in ~~total~~the opinion of management, necessary to present fairly the financial position of the Company and bythe ~~asset~~results ~~class:~~of its operations and cash flows for the periods presented. All of these adjustments are of a normal recurring nature. All intercompany balances and transactions are eliminated in consolidation. Because of the seasonal nature of the Company’s operations, results of operations of any single reporting period should not be considered as indicative of results for a full fiscal year.

	December 31, 2009
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Customer relationships	$	114,830,000	$	(33,491,800	)	$	81,338,200
Developed technology		13,527,173		(11,728,170	)		1,799,003
Covenants not to compete		3,958,699		(2,530,782	)		1,427,917
Contract-managed acquisition costs		4,305,740		(2,079,989	)		2,225,751
Other		1,585,407		(1,233,095	)		352,312
	$	138,207,019	$	(51,063,836	)	$	87,143,183

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2010 included in the Company’s Annual Report on Form 10-K. A description of our significant accounting policies is included in our 2010 Annual Report on Form 10-K. References in this Quarterly Report on Form 10-Q to the terms “we,” “our,” “ours,” and “us” refer collectively to the Company and its subsidiaries, except where otherwise indicated and except where the context requires otherwise.

	March 31, 2009
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Customer relationships	$	114,830,000	$	(29,185,660	)	$	85,644,340
Developed technology		13,086,017		(10,069,126	)		3,016,891
Covenants not to compete		6,614,699		(4,069,131	)		2,545,568
Contract-managed acquisition costs		4,816,378		(1,954,878	)		2,861,500
Other		1,585,407		(836,744	)		748,663
	$	140,932,501	$	(46,115,539	)	$	94,816,962

In our accompanying June 30, 2009 Condensed Consolidated Statement of Cash Flows we have revised our presentation of proceeds from, and principal payments of, our revolving credit facility to reflect the cash flows in connection with the borrowings and repayments under this revolver. Related amounts had previously been presented on a net basis, rather than in accordance with ASC Topic 230, “Statement of Cash Flows”, on a gross basis. This revision had no impact on the net proceeds from, and principal repayments of, this revolver or on our net cash flows from financing activities.

	December 31, 2008
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Customer relationships	$	114,830,000	$	(27,750,280	)	$	87,079,720
Developed technology		12,716,690		(9,524,649	)		3,192,041
Covenants not to compete		6,679,699		(3,675,075	)		3,004,624
Contract-managed acquisition costs		4,549,378		(1,680,959	)		2,868,419
Other		1,585,407		(704,627	)		880,780
	$	140,361,174	$	(43,335,590	)	$	97,025,584

We have evaluated subsequent events through the filing date of this Form 10-Q.

~~Effective September 1, 2007, we entered into an agreement whereby we agreed to pay $1~~2.7 ~~million~~Inventories ~~over~~— aInventories ~~period of thirty-six months to a software company in return for certain rights related to that company’s products that~~ are ~~designed~~summarized to enhance web-based sales. This other identifiable intangible is being amortized on a straight-line basis over the thirty-six month base term of the agreement. The asset and corresponding liability were recorded based upon the present value of the future payments assuming an imputed interest rate of 6.7%, resulting in a discount of $0.1 million which is recorded as ~~interest expense over the base term of the agreement utilizing the effective interest method of accounting.~~follows:


	June 30,		March 31,		June 30,
	2010		2010		2009
Bookstore Division	$	111,047,173	$	68,765,952	$	97,507,297
Textbook Division		34,504,212		26,132,007		40,455,394
Complementary Services Division		3,704,614		2,599,730		2,678,700

	$	149,255,999	$	97,497,689	$	140,641,391

~~Information~~3. ~~regarding~~Goodwill ~~aggregate~~and Other Identifiable Intangibles — During the three months ended June 30, 2010, twelve bookstore locations were acquired in nine separate transactions. The total purchase price, net of cash acquired, of such acquisitions was $5.5 million, of which $2.2 million was assigned to goodwill, $0.3 million was assigned to covenants not to compete with a weighted-average amortization ~~expense~~period ~~for~~of ~~identifiable~~2.5 ~~intangibles~~years, ~~subject~~and $0.6 million was assigned to contract-managed relationships with a weighted-average amortization isperiod ~~presented~~of insix years. The weighted-average amortization period for all covenants not to compete and contract-managed relationships entered into during the ~~following~~quarter ~~table:~~ended June 30, 2010 was five years. As of June 30, 2010, $0.9 million of the $5.5 million purchase price remained to be paid and $0.5 million of prior year acquisition costs remained to be paid. During the three months ended June 30, 2010, we paid $0.1 million of previously accrued consideration for bookstore acquisitions and contract-managed relationships occurring in prior periods.

	Amortization
	Expense
Quarter ended December 31, 2009	$	2,684,564
Quarter ended December 31, 2008		2,846,353
Nine months ended December 31, 2009		8,320,843
Nine months ended December 31, 2008		8,539,069
Estimated amortization expense for the fiscal years ending March 31:
2010	$	10,832,751
2011		7,806,238
2012		6,735,274
2013		6,349,688
2014		6,022,393

Goodwill assigned to corporate administration represents the goodwill that arose when Weston Presidio gained a controlling interest in NBC on March 4, 2004 (the “March 4, 2004 Transaction”), as all goodwill was assigned to corporate administration. As is the case with a portion of our assets, such goodwill is not allocated between our reportable segments when management makes operating decisions and assesses performance. We have identified the Textbook Division, Bookstore Division and Complementary Services Division as our reporting units. Such goodwill is allocated to our reporting units for purposes of testing goodwill for impairment and calculating any gain or loss on the disposal of all or, where applicable, a portion of a reporting unit.

Identifiable intangibles not subject to amortization consist solely of the tradename asset arising out of the March 4, 2004 Transaction and total $31,320,000. The tradename was determined to have an indefinite life based on our current intentions. We periodically review the underlying factors relative to this intangible asset. If factors were to change that would indicate the need to assign a definite life to this asset, we would do so and commence amortization.6

4.Table Long-Term Debt — Indebtedness at December 31, 2009 includes an amended and restated bank-administered credit agreement (the “ABL Credit Agreement”), which provides for a $75.0 million asset-based revolving credit facility (the “ABL Facility”), of which $23.1 was outstanding at December 31, 2009; $200.0 million of 10.0% senior secured notes (the “Senior Secured Notes”) issued at a discount of $1.0 million with unamortized bond discount of $0.9 million at December 31, 2009 (effective rate of 10.14%); $175.0 million of 8.625% senior subordinated notes (the “Senior Subordinated Notes”); $0.3 million of other indebtedness; and $3.4 million of capital leases. The ABL Facility is scheduled to expire on the earlier of October 2, 2012 or the date that is 91 days prior to the earliest maturity of the Senior Secured Notes (due December 1, 2011), the Senior Subordinated Notes (due March 15, 2012), NBC’s $77.0 million of 11% senior discount notes (the “Senior Discount Notes”, due March 15, 2013), or any refinancing thereof.Contents

OnThe ~~October~~changes ~~2, 2009,~~ in ~~conjunction with~~ the ~~completion~~carrying ofamount ~~the offering~~ of ~~the Senior Secured Notes~~goodwill, wein ~~entered into the ABL Credit Agreement~~total, ~~which~~by ~~provides~~reportable ~~for~~segment ~~the~~and ~~ABL~~assigned ~~Facility mentioned previously. Borrowings under the ABL Facility are subject~~ to corporate ~~the Eurodollar interest rate~~administration, ~~not~~are to be less than 1.5%, plus an applicable margin ranging from 4.25% to 4.75% or a base interest rate. The base interest rate is the greater of a) the prime rate, b) the federal funds rate plus 0.5%, or c) the one-month Eurodollar loan rate plus 1.0%, not to be less than 2.5%, plus an applicable margin ranging from 3.25% to 3.75%. In addition, the applicable margin will increase 1.5% during the time periods from April 15 to June 29 and from December 1 to January 29 of each year. The interest rate as ~~of December 31, 2009 was 8.25%. There also is a commitment fee for the average daily unused amount of the ABL Facility ranging from 0.75% to 1.0% of such unused amount.~~follows:

The Senior Secured Notes pay cash interest semi-annually and mature on December 1, 2011. The Senior Subordinated Notes pay cash interest semi-annually and mature on March 15, 2012.


	Bookstore		Corporate
	Division		Administration		Total
Balance, April 1, 2009	$	53,346,251	$	162,089,875	$	215,436,126
Additions to goodwill:
Bookstore acquisitions		—		—		—

Balance, June 30, 2009	$	53,346,251	$	162,089,875	$	215,436,126


Balance, April 1, 2010	$	53,481,251	$	162,089,875	$	215,571,126
Additions to goodwill:
Bookstore acquisitions		2,183,900		—		2,183,900

Balance, June 30, 2010	$	55,665,151	$	162,089,875	$	217,755,026

Prior to entering into the ABL Credit Agreement and issuing the Senior Secured Notes on October 2, 2009, indebtedness included an amended and restated bank-administered senior credit facility (the “Senior Credit Facility”) provided to us through a syndicate of lenders, which consisted of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”). Borrowings on the Term Loan and Revolving Credit Facility were subject to the Eurodollar interest rate or the base interest rate. The ~~Eurodollar~~following ~~interest~~table ~~rate~~presents ~~was not to be less than 3.25% plus~~ the ~~applicable~~gross ~~margin~~carrying ofamount 6.0%. The base interest rate was the greater of a) the prime rate, b) the federal funds rate plus 0.5%, or c) the one-month Eurodollar loan rate plus 1.0%, not to be less than 4.25% plus the applicable margin of 5.0%. Accrued interest on the Term Loan and ~~Revolving~~accumulated ~~Credit~~impairment ~~Facility~~charge ~~was due quarterly. Additionally, there was a 0.75% commitment fee for the average daily unused amount~~ of ~~the Revolving Credit Facility.~~ goodwill:


	Gross carrying		Accumulated			Net carrying
	amount		impairment			amount
Balance, April 1, 2009	$	322,408,126	$	(106,972,000	)	$	215,436,126
Additions		—		—			—

Balance, June 30, 2009	$	322,408,126	$	(106,972,000	)	$	215,436,126


Balance, April 1, 2010	$	322,543,126	$	(106,972,000	)	$	215,571,126
Additions		2,183,900		—			2,183,900

Balance, June 30, 2010	$	324,727,026	$	(106,972,000	)	$	217,755,026

~~The~~We ~~Senior~~test ~~Credit~~for ~~Facility~~impairment ~~also~~annually ~~stipulated~~or ~~that~~more ~~excess~~frequently ~~cash~~if ~~flows,~~impairment asindicators ~~defined~~exist. ~~therein,~~We ~~should~~completed our beannual ~~applied~~test ~~towards~~for ~~prepayment~~impairment ofby reporting unit during the ~~Term~~fourth ~~Loan.~~quarter Anfor ~~excess~~the ~~cash~~year ~~flow~~ended March 31, ~~payment~~2010 ofand ~~$6.0~~no ~~million~~impairment was ~~paid~~indicated. Due to the economic downturn and changes in comparable ~~September~~company market multiples, we determined in the first step of ~~2009~~the ~~for~~goodwill ~~fiscal~~impairment test ~~year~~conducted ~~ended~~at March 31, 2009 that the carrying value of the Textbook and Bookstore Divisions exceeded their fair values, indicating that goodwill may be impaired. ~~There~~Having ~~was~~determined nothat goodwill ~~excess~~may ~~cash~~be ~~flow~~impaired, ~~obligation~~we ~~for~~performed the ~~fiscal~~second step of the goodwill impairment test which involves calculating the implied fair value of goodwill by allocating the fair value of the reporting unit to all of its assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing the residual amount to the carrying value of goodwill. As a result, we recorded an impairment charge of $107.0 million in fiscal year ~~ended~~2009. ~~March~~The impairment charge reduced our goodwill carrying value to $215.4 million as of March 31, ~~2008~~2009.

AFair ~~loss~~value ~~from~~was ~~early~~determined ~~extinguishment~~using a market approach based primarily on a multiple of ~~debt~~earnings before ~~totaling~~interest, ~~$3.1~~taxes, ~~million~~depreciation and amortization (“EBITDA”), and was ~~recorded~~deemed to be the most indicative of the Company’s fair value and is consistent in principle with the ~~third~~methodology ~~quarter~~used for goodwill evaluation in prior years. The EBITDA multiple approach requires that we estimate a certain valuation multiple of ~~fiscal~~EBITDA ~~year~~derived ~~2010~~from ~~related~~comparable companies and apply that multiple to ~~the~~our ~~write~~last twelve-~~off~~month pro forma EBITDA. This total company fair value is allocated to the reporting units based upon their percentage of ~~debt~~EBITDA. ~~issue~~The ~~costs~~fair asvalue was also calculated using the income approach (discounted cash flow approach) and we concluded that it was supportive of the fair value based upon the EBITDA multiple approach. Determining the fair value of a reporting ~~result~~unit is judgmental in nature and requires the use of significant estimates and assumptions about future economic conditions and comparable company market multiples, among others. If we fail the ~~termination~~first step of the ~~Term~~goodwill ~~Loan~~impairment test, we are required, in the second step, to estimate the fair value of reporting unit assets and ~~Revolving~~liabilities, ~~Credit~~including ~~Facility~~intangible ~~under~~assets, to derive the ~~Senior~~fair value ~~Credit~~of ~~Facility~~the reporting unit’s goodwill.

The ABL Credit Agreement requires us to maintain certain financial ratios and contains a number of other covenants that among other things, restricts our ability to incur additional indebtedness, dispose of assets, make capital expenditures, investments, acquisitions, loans or advances and pay dividends, except that, among other things, we may pay dividends to NBC (i) in an amount not to exceed the amount of interest required to be paid on the Senior Discount Notes and (ii) to pay corporate overhead expenses not to exceed $250,000 per fiscal year and any taxes owed by us. In addition, under the ABL Facility, if availability, as defined in the ABL Credit Agreement, is less than the greater of 20% of the total revolving credit commitments and $15.0 million, we will be required to maintain a fixed charge coverage ratio of at least 1.10x measured for the last twelve-month period on a pro forma basis in order to maintain access to the funds under that facility. The calculated borrowing base as of December 31, 2009 was $75.0 million, of which $23.1 million was outstanding under revolving lines of credit, $1.0 million was outstanding under a letter of credit and $50.9 million was unused. At December 31, 2009, our pro forma fixed charge coverage ratio was 1.50x.7

TheTable indenture governing the Senior Secured Notes restricts our ability and the ability of certain of our subsidiaries to pay dividends or make certain other payments, subject to certain exceptions, unless certain conditions are met, including (i) no default under the indenture has occurred, (ii) we and our subsidiaries maintain a consolidated coverage ratio of 2.0 to 1.0 on a pro forma basis and (iii) the amount of the dividend or payment may not exceed 50% of aggregate income from January 1, 2004 to the end of the most recent fiscal quarter plus cash proceeds received from the issuance of stock less the aggregate of payments made under this restriction. The indentures governing the Senior Subordinated Notes and the Senior Discount Notes contain similar restrictions on our ability and the ability of certain of our subsidiaries and the ability of NBC and certain of its subsidiaries to pay dividends or make certain other payments. In addition, if there is no availability under the restricted payment calculation mentioned above, but we maintain the 2.0 to 1.0 consolidated coverage ratio on a pro forma basis, we may make dividends to NBC to meet the interest payments on the Senior Discount Notes. If we do not maintain the 2.0 to 1.0 ratio on a pro forma basis, we may still make payments, including dividends to NBC, up to $15.0 million in the aggregate. At December 31, 2009, our pro forma consolidated coverage ratio calculated under the indenture to the Senior Subordinated Notes was 1.9 to 1.0 and the ratio calculated under the indenture to the Senior Secured Notes was 2.0 to 1.0. The pro forma consolidated coverage ratio calculated under the indenture to the Senior Subordinated Notes differs from the ratio calculated under the indenture to the Senior Secured Notes because the indenture to the Senior Subordinated Notes excludes debt issue cost amortization for all debt instruments outstanding at the March 4, 2004 Transaction date from the calculation and the indenture to the Senior Secured Notes excludes only debt issue cost amortization for the Senior Secured Notes and the ABL Facility from the same calculation. At December 31, 2009, the amount distributable under the most restrictive indenture was $15.0 million. Such restrictions are not expected to affect our ability to meet our cash obligations for the next twelve months.Contents

AtThe ~~December~~following ~~31,~~table ~~2009,~~presents wethe ~~were~~gross incarrying ~~compliance~~amount ~~with~~and ~~all~~accumulated amortization of identifiable ~~our~~intangibles ~~debt~~subject ~~covenants.~~to amortization, in total and by asset class:

5. Derivative Financial Instruments — The Derivatives and Hedging Topic of the FASB ASC requires that all derivative instruments be recorded in the balance sheet at fair value. Changes in the fair value of derivatives are recorded in earnings or other comprehensive income (loss), based on whether the instrument is designated as part of a hedge transaction and, if so, the type of hedge transaction. Until our interest rate swap agreement expired on September 30, 2008, we utilized derivative financial instruments to manage the risk that changes in interest rates would affect the amount of our future interest payments on portions of our variable rate debt.


	June 30, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Customer relationships	$	114,830,000	$	(36,362,560	)	$	78,467,440
Developed technology		14,068,155		(12,245,260	)		1,822,895
Covenants not to compete		3,727,000		(2,528,740	)		1,198,260
Contract-managed relationships		5,205,740		(2,460,860	)		2,744,880
Other		1,585,407		(1,497,329	)		88,078

	$	139,416,302	$	(55,094,749	)	$	84,321,553

Our primary market risk exposure was fluctuation in variable interest rates on the Term Loan. Exposure to interest rate fluctuations was managed by maintaining fixed interest rate debt (primarily the Senior Subordinated Notes); and, historically, by entering into interest rate swap agreements that qualified as cash flow hedging instruments to convert certain variable rate debt into fixed rate debt. We had a three-year amortizing interest rate swap agreement whereby a portion of the variable rate Term Loan was effectively converted into debt with a fixed rate of 6.844% (4.344% plus an applicable margin as defined by the Senior Credit Facility). This agreement expired on September 30, 2008. Notional amounts under the agreement were reduced periodically until reaching $130.0 million.


	March 31, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Customer relationships	$	114,830,000	$	(34,927,180	)	$	79,902,820
Developed technology		13,709,789		(12,137,672	)		1,572,117
Covenants not to compete		3,416,000		(2,268,172	)		1,147,828
Contract-managed relationships		4,555,740		(2,200,557	)		2,355,183
Other		1,585,407		(1,365,211	)		220,196

	$	138,096,936	$	(52,898,792	)	$	85,198,144


	June 30, 2009
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
Customer relationships	$	114,830,000	$	(30,621,040	)	$	84,208,960
Developed technology		13,198,149		(10,618,345	)		2,579,804
Covenants not to compete		6,548,699		(4,428,842	)		2,119,857
Contract-managed relationships		3,930,740		(1,597,987	)		2,332,753
Other		1,585,407		(968,861	)		616,546

	$	140,092,995	$	(48,235,075	)	$	91,857,920

Effective September 30 1, ~~2005~~2007, we entered into an agreement whereby we agreed to pay $1.7 million over a period of thirty-six months to a software company in return for certain rights related to that company’s products that are designed to enhance web-based sales. This other identifiable intangible is being amortized on a straight-line basis over the thirty-six month base term of the agreement. The asset and corresponding liability were recorded based upon the present value of the future payments assuming an imputed interest rate ~~swap~~of ~~agreement~~6.7%, ~~qualified~~resulting asin a ~~cash~~discount ~~flow~~of $0.1 million ~~hedge~~which ~~instrument~~is recorded as interest expense over the ~~following~~base ~~criteria~~term ~~were~~of ~~met:~~the agreement utilizing the effective interest method of accounting.

~~(1) Formal documentation of the hedging relationship and our risk management objective and strategy for undertaking the hedge were in place.~~8

(2)Table 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.Contents

WeInformation ~~estimated~~regarding ~~the~~aggregate ~~effectiveness~~amortization ofexpense ~~the~~for ~~interest~~identifiable ~~rate~~intangibles ~~swap~~subject ~~agreement utilizing the hypothetical derivative method. Under this method, the fair value of the actual interest rate swap agreement is compared~~ to amortization ~~the fair value of a hypothetical swap agreement that has the same critical terms as the portion of the debt instrument being hedged. To the extent that the agreement~~ is ~~not~~presented ~~considered to be highly effective~~ in ~~offsetting~~ the ~~change~~following in the value of the interest payments being hedged, the fair value relating to the ineffective portion of such agreement and any subsequent changes in such fair value are immediately recognized in earnings as “gain or loss on derivative financial instruments”. To the extent that the agreement is considered highly effective but not completely effective in offsetting the change in the value of the interest payments being hedged, any changes in fair value relating to the ineffective portion of such agreement are immediately recognized in earnings as “interest expense”.table:

Under hedge accounting, interest rate swap agreements are reflected at fair value in the balance sheet and the related gains or losses on these agreements are generally recorded in stockholder’s equity, net of applicable income taxes (as “accumulated other comprehensive income (loss)”). Gains or losses recorded in “accumulated other comprehensive income (loss)” are reclassified into earnings as an adjustment to interest expense in the same periods in which the related interest payments being hedged are recognized in earnings. Except as described below, the net effect of this accounting on our condensed consolidated results of operations was that interest expense on a portion of the Term Loan was generally being recorded based on fixed interest rates until the interest rate swap agreement expired on September 30, 2008.


	Amortization
	Expense

Quarter ended June 30, 2010	$	2,195,955
Quarter ended June 30, 2009		2,837,082

Estimated amortization expense for the fiscal years ending March 31:
2011	$	8,363,483
2012		7,202,362
2013		6,727,131
2014		6,280,505
2015		6,099,527

InIdentifiable ~~accordance~~intangibles ~~with~~not ~~our~~subject ~~risk~~to ~~management~~amortization ~~policy,~~consist ~~the~~solely ~~interest~~of ~~rate~~the ~~swap~~tradename ~~agreement~~asset arising ~~was~~out ~~intended~~of ~~as a hedge against certain future interest payments under~~ the ~~Term~~March 4, ~~Loan~~2004 ~~from~~Transaction ~~the~~and ~~agreement’s~~total ~~inception on July 15~~$31, ~~2005~~320,000. ~~However,~~The ~~formal~~tradename ~~documentation designating the interest rate swap agreement as a hedge against certain future interest payments under the Term Loan~~ was determined ~~not~~to ~~put~~have inan ~~place~~indefinite ~~until~~life ~~September~~based ~~30,~~on ~~2005~~our ~~(the~~current ~~effective date of the interest rate swap agreement)~~intentions. AsWe aperiodically ~~result,~~ review the ~~interest~~underlying ~~rate~~factors ~~swap~~relative ~~agreement~~to ~~did~~this ~~not~~intangible ~~qualify as a cash flow hedge until September 30, 2005~~asset. ~~Accordingly,~~If ~~the~~factors ~~$0.7~~were ~~million~~to ~~increase~~change inthat ~~the~~would indicate ~~fair value of~~ the ~~interest~~need ~~rate swap agreement from inception~~ to ~~September~~assign ~~30, 2005 was recognized in earnings as~~ a ~~“gain~~definite onlife ~~derivative~~to ~~financial instruments”. Changes in the fair value of~~ this ~~portion~~asset, ofwe ~~the~~would ~~interest~~do ~~rate~~so ~~swap~~and ~~agreement were also recognized as a “gain (loss) on derivative financial instruments” in the condensed consolidated statements of operations~~commence amortization.

~~Subsequent~~4. toLong-Term ~~September~~Debt — Indebtedness at June 30, ~~2005,~~2010 includes an amended and restated bank-administered credit agreement (the ~~change~~“ABL inCredit ~~fair~~Agreement”), ~~value~~which ofprovides for a ~~September~~$75.0 30million asset-based revolving credit facility (the “ABL Facility”), ~~2005~~of ~~hypothetical~~which ~~swap~~$0.9 million was ~~recorded,~~outstanding ~~net~~under a letter of ~~income~~credit ~~taxes~~at June 30, in2010; $200.0 million of 10.0% senior secured notes (the “~~accumulated~~Senior ~~other~~Secured ~~comprehensive~~Notes”) ~~income~~issued at a discount of $1.0 million with unamortized bond discount of $0.7 million at June 30, 2010 (~~loss~~effective rate of 10.14%)”; in$175.0 million of 8.625% senior subordinated notes (the ~~condensed~~“Senior ~~consolidated~~Subordinated ~~balance~~Notes”); ~~sheets~~$0.2 ~~Changes~~million inof ~~the~~other ~~fair~~indebtedness; ~~value~~and $3.0 million of ~~the~~capital ~~interest~~leases. ~~rate~~The ~~swap~~ABL ~~agreement~~Facility ~~were~~is ~~reflected~~scheduled into expire on the ~~condensed~~earlier ~~consolidated~~of ~~statements~~October 2, 2012 or the date that is 91 days prior to the earliest maturity of ~~cash~~the ~~flows~~Senior asSecured ~~either~~Notes ~~“gain~~(due December 1, 2011), the Senior Subordinated Notes (~~loss~~due March 15, 2012), onNBC’s ~~derivative~~$77.0 ~~financial~~million ~~instruments”~~of or11% assenior ~~“noncash~~discount ~~investing~~notes ~~and~~(the ~~financing~~“Senior ~~activities~~Discount Notes”, due March 15, 2013), or any refinancing thereof.

11Borrowings under the ABL Facility are subject to the Eurodollar interest rate, not to be less than 1.5%, plus an applicable margin ranging from 4.25% to 4.75% or a base interest rate. The base interest rate is the greater of a) the prime rate, b) the federal funds rate plus 0.5%, or c) the one-month Eurodollar loan rate plus 1.0%, not to be less than 2.5%, plus an applicable margin ranging from 3.25% to 3.75%. In addition, the applicable margin will increase 1.5% during the time periods from April 15 to June 29 and from December 1 to January 29 of each year. The interest rate as of June 30, 2010 was 6.75%. There also is a commitment fee for the ABL Facility ranging from 0.75% to 1.0%. The ABL Facility is secured by a first priority interest in substantially all of our and our subsidiaries’ property and assets, which also secure the Senior Secured Notes on a second priority basis.

~~Information~~The ~~regarding~~Senior ~~the~~Secured ~~fair~~Notes ~~value~~pay ofcash ~~the~~ interest ~~rate~~semi-annually ~~swap~~and ~~agreement~~mature ~~designated~~on asDecember 1, a2011. ~~hedging~~The Senior ~~instrument~~Subordinated isNotes ~~presented~~pay incash ~~the~~interest ~~following~~semi-annually ~~table:~~and mature on March 15, 2012.

Portion of Agreement Subsequent to September 30, 2005 Hedge Designation:
Increase in fair value of swap agreement:
Quarter ended December 31, 2008	$	—
Nine months ended December 31, 2008		1,221,000
Year ended March 31, 2009		1,221,000
Portion of Agreement Prior to September 30, 2005 Hedge Designation:
Decrease in fair value of swap agreement:
Quarter ended December 31, 2008	$	—
Nine months ended December 31, 2008		(102,000	)
Year ended March 31, 2009		(102,000	)

The ABL Credit Agreement requires us to maintain certain financial ratios and contains a number of other covenants that among other things, restricts our ability and the ability of certain of our subsidiaries to incur additional indebtedness, dispose of assets, make capital expenditures, investments, acquisitions, loans or advances and pay dividends, except that, among other things, we may pay dividends to NBC (i) in an amount not to exceed the amount of interest required to be paid on the Senior Discount Notes and (ii) to pay corporate overhead expenses not to exceed $250,000 per fiscal year and any taxes we may owe. In addition, under the ABL Facility, if availability, as defined in the ABL Credit Agreement, is less than the greater of 20% of the total revolving credit commitments and $15.0 million, we will be required to maintain a fixed charge coverage ratio of at least 1.10x measured for the last twelve-month period on a pro forma basis in order to maintain access to the funds under that facility. The calculated borrowing base as of June 30, 2010 was $69.4 million, of which $0.9 million was outstanding under a letter of credit and $68.5 million was unused. At June 30, 2010, our pro forma fixed charge coverage ratio was 1.5x.

6. Fair Value Measurements — The Fair Value Measurements and Disclosures Topic of the FASB ASC defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The standard excludes lease classification or measurement (except in certain instances).9

ATable three-level hierarchal disclosure framework that prioritizes and ranks the level of market price observability is used in measuring assets and liabilities at fair value on a recurring basis in the statement of financial position. Market price observability is impacted by a number of factors, including the type of asset or liability and its characteristics. Assets and liabilities with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.Contents

The ~~three~~indenture ~~levels~~governing the Senior Secured Notes restricts our ability and the ability of certain of our subsidiaries to pay dividends or make certain other payments, subject to certain exceptions, unless certain conditions are ~~defined~~met, asincluding ~~follows:~~(i) no default under the indenture has occurred, (1ii) we ~~Level~~and certain of our subsidiaries maintain a consolidated coverage ratio of 2.0 to 1.0 —on ~~inputs~~a pro forma basis and (iii) the amount of the dividend or payment may not exceed 50% of aggregate income from January 1, 2004 to the ~~valuation~~end ~~methodology~~of ~~are~~the ~~unadjusted~~most ~~quoted~~recent ~~prices~~fiscal ~~for~~quarter ~~identical~~plus ~~assets~~cash proceeds received from the issuance of stock less the aggregate of payments made under this restriction. The indentures governing the Senior Subordinated Notes and NBC’s Senior Discount Notes contain similar restrictions on our ability and the ability of certain of our subsidiaries and the ability of NBC and certain of its subsidiaries to pay dividends or ~~liabilities~~make incertain ~~active~~other payments. ~~markets;~~In ~~(2)~~addition, ~~Level~~if there is no availability under the restricted payment calculation mentioned above, but we maintain the 2.0 —to ~~inputs~~1.0 consolidated coverage ratio on a pro forma basis, we may make dividends to NBC to meet the ~~valuation~~interest ~~methodology~~payments ~~include~~on ~~quoted~~the ~~prices~~Senior ~~for~~Discount ~~similar~~Notes. If ~~assets~~we ~~and~~do ~~liabilities~~not maintain the 2.0 to 1.0 ratio on a pro forma basis, we may still make payments, including dividends to NBC, up to $15.0 million in ~~active~~the ~~markets~~aggregate. At June 30, 2010, our pro forma consolidated coverage ratio calculated under the indenture to the Senior Subordinated Notes was 1.9 to 1.0 and ~~inputs~~the ~~that~~ratio ~~are~~calculated ~~observable~~under ~~for~~the indenture to the ~~asset~~Senior orSecured ~~liability,~~Notes was ~~either~~2.1 ~~directly~~to or1.0. ~~indirectly~~The pro forma consolidated coverage ratio calculated under the indenture to the Senior Subordinated Notes differs from the ratio calculated under the indenture to the Senior Secured Notes because the indenture to the Senior Subordinated Notes excludes debt issue cost amortization only for debt instruments outstanding at the March 4, 2004 Transaction date from the calculation whereas the indenture to the Senior Secured Notes excludes the higher debt issue cost amortization for ~~substantially~~the Senior Secured Notes and the ~~full~~ABL ~~term~~Facility, which were issued in October of 2009, from the ~~financial~~same ~~instrument;~~calculation. ~~and~~At ~~(3)~~June 30, ~~Level~~2010, 3the —amount ~~inputs~~distributable under the most restrictive indenture was $10.8 million after applying the $4.2 million dividend paid to NBC for the ~~valuation~~March 15, ~~methodology~~2010 interest on NBC’s Senior Discount Notes. Such restrictions are not ~~unobservable~~expected ~~and~~to ~~significant~~affect our ability to meet our cash obligations for the ~~fair~~next ~~value~~twelve ~~measurement~~months.

~~The~~At ~~Fair~~June 30, Value Measurements and Disclosures Topic of the FASB ASC also applies to disclosures of fair value for all financial instruments disclosed under the Financial Instruments Topic of the FASB ASC. The Financial Instruments Topic requires disclosures about fair value for all financial instruments2010, ~~whether~~we ~~recognized~~were ~~or not recognized~~ in ~~the~~compliance ~~statement~~with ofall ~~financial position. For financial instruments recognized at fair value on a recurring basis in the statement~~ of ~~financial~~our ~~position,~~debt ~~the three-level hierarchal disclosure requirements also apply~~covenants.

~~Cash~~5. ~~equivalents~~Fair ~~are~~Value ~~measured~~Measurements at— ~~estimated~~The ~~fair~~Fair ~~value~~Value onMeasurements aand ~~recurring~~Disclosures ~~basis~~Topic inof the ~~statement~~FASB ofASC ~~financial~~defines ~~position,~~fair ~~therefore~~value, ~~falling~~establishes ~~under~~a ~~the~~framework ~~three-level~~for ~~hierarchal~~measuring ~~disclosure~~fair ~~requirements.~~value, Atand ~~December~~expands ~~31,~~disclosures ~~2009,~~about wefair ~~did~~value ~~not~~measurements. ~~hold~~The ~~any~~standard ~~investments~~excludes lease classification or measurement (except in ~~cash~~certain ~~equivalents~~instances).

12A three-level hierarchal disclosure framework that prioritizes and ranks the level of market price observability is used in measuring assets and liabilities at fair value on a recurring basis in the statement of financial position. Market price observability is impacted by a number of factors, including the type of asset or liability and its characteristics. Assets and liabilities with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

~~Our~~The ~~revolving~~three ~~credit~~levels ~~facility and long-term debt~~ are ~~not~~defined ~~measured~~as atfollows: ~~estimated~~(1) Level ~~fair value on a recurring basis in the statement of financial position so they do not fall under the three~~1-~~level~~ ~~hierarchal~~inputs ~~disclosure requirements. The fair value of our revolving credit facility approximates carrying value due~~ to ~~its short-term nature. At December 31, 2009,~~ the ~~estimated~~valuation ~~fair~~methodology ~~value~~are unadjusted ofquoted ~~the~~prices ~~Senior~~for ~~Subordinated~~identical ~~Notes~~assets ~~(fixed~~or ~~rate)~~liabilities ~~and~~in ~~the~~active ~~Senior~~markets; ~~Secured Notes~~ (~~fixed rate~~2) Level ~~was~~2 ~~determined~~- inputs ~~utilizing~~to the ~~“market~~valuation ~~approach”~~methodology ~~based~~include ~~upon~~ quoted prices for ~~these~~similar ~~instruments~~assets and liabilities in active markets and inputs that are ~~not~~observable ~~active.~~for ~~Other~~the ~~fixed~~asset ~~rate~~or ~~debt~~liability, ~~(including~~either ~~capital~~directly ~~lease~~or indirectly, ~~obligations)~~for ~~estimated~~substantially ~~fair~~the ~~values~~full ~~are~~term ~~determined~~of ~~utilizing~~ the ~~“income~~financial ~~approach”,~~instrument; ~~calculating~~and a(3) Level ~~present~~3 ~~value~~- inputs ofto ~~future~~the ~~payments~~valuation ~~based~~methodology ~~upon~~are ~~prevailing~~unobservable ~~interest~~and ~~rates~~significant ~~for~~to ~~similar~~the ~~obligations~~fair value measurement.

~~Estimated~~The Fair Value Measurements and Disclosures Topic of the FASB ASC also applies to disclosures of fair ~~values~~value for ~~our~~all ~~revolving~~financial ~~credit~~instruments ~~facility~~disclosed ~~and~~under ~~our~~the ~~fixed~~Financial ~~rate~~Instruments ~~and~~Topic ~~variable~~of ~~rate~~the FASB ~~long-term~~ASC. ~~debt~~The atFinancial ~~December~~Instruments ~~31,~~Topic ~~2009~~requires ~~and~~disclosures ~~March~~about 31fair value for all financial instruments, ~~2009~~whether ~~are~~recognized ~~summarized~~or not recognized in the ~~following~~statement ~~table:~~of financial position. For financial instruments recognized at fair value on a recurring basis in the statement of financial position, the three-level hierarchal disclosure requirements also apply.

	December 31,		March 31,
	2009		2009
Carrying Values:
Revolving credit facility	$	23,100,000	$	—
Fixed rate debt		377,752,261		179,334,183
Variable rate debt		—		193,076,346
Fair Values:
Revolving credit facility	$	23,100,000	$	—
Fixed rate debt		357,178,000		90,367,000
Variable rate debt		—		160,253,000

OnTable October 2, 2009, our Term Loan (variable rate) was paid in full upon the issuance of the Senior Secured Notes. At December 31, 2009 we did not have any long-term variable rate debt.Contents

7.Our ~~Segment~~long-term ~~Information~~debt —is ~~Our~~not ~~operating~~measured ~~segments~~at ~~are~~estimated ~~determined~~fair ~~based~~value on ~~the~~a ~~way~~recurring ~~that~~basis ~~management~~in ~~organizes~~ the ~~segments~~statement of ~~for~~financial ~~making~~position ~~operating~~so ~~decisions~~it ~~and~~does ~~assessing~~not ~~performance.~~fall ~~Management~~under ~~has~~the ~~organized our operating segments based upon differences in products and services provided. We have~~ three-level ~~operating~~hierarchal ~~segments: Bookstore Division, Textbook Division, and Complementary Services Division~~disclosure requirements. The ~~Bookstore~~estimated ~~and~~fair ~~Textbook~~value ~~Divisions qualify as reportable operating segments, while separate disclosure~~ of the ~~Complementary~~Senior ~~Services~~Subordinated ~~Division~~Notes is(fixed ~~provided~~rate) asand ~~management~~the Senior ~~believes~~Secured ~~that~~Notes ~~information~~(fixed ~~about~~rate) ~~this operating segment~~ is ~~useful~~determined toutilizing the ~~readers~~“market ofapproach” ~~our~~based ~~condensed~~upon quoted ~~consolidated~~prices ~~financial~~for ~~statements.~~these ~~The~~instruments ~~Bookstore~~in ~~Division~~markets ~~segment~~that ~~encompasses~~are ~~the~~not ~~operating~~active. ~~activities~~Other offixed ~~our~~rate ~~college~~debt (including ~~bookstores~~capital ~~located~~lease onobligations) orestimated ~~adjacent~~fair tovalues ~~college~~are ~~campuses.~~determined ~~The~~utilizing ~~Textbook~~the ~~Division segment consists primarily of selling used textbooks to college bookstores~~“income approach”, ~~buying~~calculating ~~them~~a ~~back~~present ~~from~~value ~~students or college bookstores at the end~~ of ~~each~~future ~~college~~payments ~~semester~~based ~~and~~upon ~~then~~prevailing ~~reselling~~interest ~~them~~rates for tosimilar ~~college bookstores~~obligations. The Complementary Services Division segment includes book-related services such as distance education materials, computer hardware and software, e-commerce technology, and a centralized buying service.

WeEstimated ~~primarily~~fair ~~account~~value for ~~intersegment~~our ~~sales~~fixed asrate iflong-term ~~the~~debt ~~sales were to third parties (~~at ~~current market prices). Certain assets~~June 30, ~~net~~2010 ~~interest expense~~ and ~~taxes (excluding interest and taxes incurred by our wholly-owned subsidiaries~~March 31, ~~NBC~~2010 ~~Textbooks~~is summarized ~~LLC, Net Textstore LLC, CBA, Campus Authentic LLC, and Specialty Books, Inc.) are not allocated between our segments; instead, such balances are accounted for~~ in athe ~~corporate~~following ~~administrative division.~~table:

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) and earnings before interest, taxes, depreciation, amortization and loss on early extinguishment of debt (“Adjusted EBITDA”) are important measures of segment profit or loss utilized by the Chief Executive Officer and President (chief operating decision makers) in making decisions about resources to be allocated to operating segments and assessing operating segment performance.


	June 30,		March 31,
	2010		2010
Carrying Values:
Fixed rate debt	$	377,502,493	$	377,624,262

Fair Values:
Fixed rate debt	$	365,145,000	$	372,317,000

13 6. Segment Information — Our operating segments are determined based on the way that management organizes the segments for making operating decisions and assessing performance. Management has organized our operating segments based upon differences in products and services provided. We have three operating segments: Bookstore Division, Textbook Division, and Complementary Services Division. The Bookstore and Textbook Divisions qualify as reportable operating segments, while separate disclosure of the Complementary Services Division is provided as management believes that information about this operating segment is useful to the readers of our condensed consolidated financial statements. The Bookstore Division segment encompasses the operating activities of our college bookstores located on or adjacent to college campuses. The Textbook Division segment consists primarily of selling used textbooks to college bookstores, buying them back from students or college bookstores at the end of each college semester and then reselling them to college bookstores. The Complementary Services Division segment includes book-related services such as distance education materials, computer hardware and software systems, e-commerce technology, consulting services and a centralized buying service.

~~The~~We ~~following~~primarily ~~table~~account ~~provides~~for ~~selected~~intersegment ~~information~~sales ~~about~~as ~~profit~~if orthe ~~loss~~sales were to third parties (at current market prices). Certain assets, net interest expense and taxes (excluding ~~the~~interest and taxes ~~impact~~incurred ofby our ~~interdivisional~~wholly-owned ~~administrative~~subsidiaries, ~~fee~~NBC —Textbooks ~~see~~LLC, ~~Note~~Net 11Textstore LLC, ~~Condensed~~CBA, ~~Consolidating~~Campus ~~Financial~~Authentic ~~Information~~LLC, toand ~~the~~Specialty ~~condensed~~Books, ~~consolidated~~Inc.) ~~financial~~are ~~statements)~~not onallocated between our segments; instead, such balances are accounted for in a ~~segment~~corporate ~~basis:~~administrative division.

						Complementary
	Bookstore			Textbook		Services
	Division			Division		Division			Total
Quarter ended December 31, 2009:
External customer revenues	$	35,946,154		$	23,643,734	$	7,068,696		$	66,658,584
Intersegment revenues		628,558			8,990,245		1,402,820			11,021,623
Depreciation and amortization expense		2,255,745			1,518,921		682,558			4,457,224
Adjusted earnings (loss) before interest, taxes, depreciation and amortization (Adjusted EBITDA)		(6,432,938	)		5,960,451		556,068			83,581
Quarter ended December 31, 2008:
External customer revenues	$	33,440,314		$	26,658,354	$	6,559,468		$	66,658,136
Intersegment revenues		360,662			9,542,273		1,231,080			11,134,015
Depreciation and amortization expense		2,222,917			1,522,303		661,184			4,406,404
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)		(7,883,504	)		6,291,744		(66,309	)		(1,658,069	)
Nine months ended December 31, 2009:
External customer revenues	$	305,403,467		$	85,424,032	$	21,311,060		$	412,138,559
Intersegment revenues		1,385,982			31,728,270		4,581,679			37,695,931
Depreciation and amortization expense		6,885,874			4,559,710		2,042,835			13,488,419
Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA)		22,175,114			31,831,524		1,669,013			55,675,651
Nine months ended December 31, 2008:
External customer revenues	$	304,630,395		$	93,373,159	$	20,790,822		$	418,794,376
Intersegment revenues		1,160,271			31,910,719		4,751,375			37,822,365
Depreciation and amortization expense		6,550,212			4,563,513		1,972,308			13,086,033
Earnings before interest, taxes, depreciation and amortization (EBITDA)		17,884,424			32,115,491		657,971			50,657,886

EBITDA is an important measure of segment profit or loss utilized by the Chief Executive Officer and President (chief operating decision makers) in making decisions about resources to be allocated to operating segments and assessing operating segment performance.

1411

TheTable followingof table reconciles segment information presented above with consolidated information as presented in our condensed consolidated financial statements:Contents

	Quarter Ended December 31,						Nine Months Ended December 31,
	2009			2008			2009			2008
Revenues:
Total for reportable segments	$	77,680,207		$	77,792,151		$	449,834,490		$	456,616,741
Elimination of intersegment revenues		(11,021,623	)		(11,134,015	)		(37,695,931	)		(37,822,365	)
Consolidated total	$	66,658,584		$	66,658,136		$	412,138,559		$	418,794,376
Depreciation and Amortization Expense:
Total for reportable segments	$	4,457,224		$	4,406,404		$	13,488,419		$	13,086,033
Corporate Administration		352,312			217,595			1,050,850			920,681
Consolidated total	$	4,809,536		$	4,623,999		$	14,539,269		$	14,006,714
Income (Loss) Before Income Taxes:
Total Adjusted EBITDA for reportable segments (1)	$	83,581		$	(1,658,069	)	$	55,675,651		$	50,657,886
Corporate Administration Adjusted EBITDA loss (including interdivision profit elimination) (1)		(6,101,610	)		(6,189,906	)		(13,187,402	)		(12,888,985	)
		(6,018,029	)		(7,847,975	)		42,488,249			37,768,901
Depreciation and amortization		(4,809,536	)		(4,623,999	)		(14,539,269	)		(14,006,714	)
Consolidated income (loss) from operations		(10,827,565	)		(12,471,974	)		27,948,980			23,762,187
Interest and other expenses, net		(13,655,200	)		(7,657,776	)		(32,993,603	)		(23,554,692	)
Consolidated income (loss) before income taxes	$	(24,482,765	)	$	(20,129,750	)	$	(5,044,623	)	$	207,495

The following table provides selected information about profit or loss (excluding the impact of our interdivisional administrative fee — see Note 8, Condensed Consolidating Financial Information, to the condensed consolidated financial statements) on a segment basis:

(1) Adjusted EBITDA is defined as earnings before interest, taxes, depreciation, amortization and loss on early extinguishment of debt. There was no loss on early extinguishment of debt in the quarter and nine months ended December 31, 2008; therefore, Adjusted EBITDA equals EBITDA for those periods.


						Complementary
	Bookstore			Textbook		Services
	Division			Division		Division		Total
Quarter ended June 30, 2010:
External customer revenues	$	47,929,096		$	17,756,174	$	6,736,696	$	72,421,966
Intersegment revenues		35,752			7,686,401		2,123,396		9,845,549
Depreciation and amortization expense		2,180,316			1,520,798		237,182		3,938,296
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)		(5,851,283	)		4,779,670		873,518		(198,095	)

Quarter ended June 30, 2009:
External customer revenues	$	45,111,489		$	17,164,864	$	6,487,520	$	68,763,873
Intersegment revenues		342,512			8,319,126		1,486,019		10,147,657
Depreciation and amortization expense		2,349,038			1,520,583		676,430		4,546,051
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA)		(5,500,144	)		5,159,360		394,725		53,941

~~Our~~The ~~revenues~~following ~~are~~table ~~attributed~~reconciles tosegment ~~countries~~information ~~based~~presented onabove ~~the~~with ~~location~~consolidated ofinformation as ~~the~~presented ~~customer.~~in ~~Substantially~~our ~~all~~condensed ~~revenues~~consolidated ~~generated~~financial ~~are attributable to customers located within the United States.~~statements:

8. Accounting Pronouncements Not Yet Adopted — In January 2010, the FASB issued Accounting Standards Update 2010-06, “Improving Disclosures about Fair Value Measurements” (“Update 2010-06”). Update 2010-06 provides amendments to current standards to require new disclosures for transfers of assets and liabilities between Levels 1 and 2 and for activity in Level 3 fair value measurements. Furthermore, the update provides amendments to clarify that a reporting entity should provide fair value measurement disclosures for each class of assets and liabilities and should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for those measurements that fall in either Level 2 or Level 3. Update 2010-06 becomes effective for us in fiscal year 2011. Management has determined that the update will not have a material impact on the consolidated financial statements.


	Quarter Ended June 30,
	2010			2009
Revenues:
Total for reportable segments	$	82,267,515		$	78,911,530
Elimination of intersegment revenues		(9,845,549	)		(10,147,657	)

Consolidated total	$	72,421,966		$	68,763,873

Depreciation and Amortization Expense:
Total for reportable segments	$	3,938,296		$	4,546,051
Corporate Administration		355,992			344,675

Consolidated total	$	4,294,288		$	4,890,726

Income (Loss) Before Income Taxes:
Total EBITDA for reportable segments	$	(198,095	)	$	53,941
Corporate Administration EBITDA loss (including interdivision profit elimination)		(5,050,992	)		(5,288,866	)

		(5,249,087	)		(5,234,925	)

Depreciation and amortization		(4,294,288	)		(4,890,726	)

Consolidated loss from operations		(9,543,375	)		(10,125,651	)
Interest and other expenses, net		(10,599,944	)		(9,699,327	)


Consolidated loss before income taxes	$	(20,143,319	)	$	(19,824,978	)

InOur ~~October~~revenues ~~2009,~~are ~~the~~attributed ~~FASB~~to ~~issued~~countries ~~Accounting~~based ~~Standards~~on ~~Update 2009-13, “Multiple Deliverable Arrangements” (“Update 2009-13”). Update 2009-13 addresses~~ the ~~accounting~~location for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. The update addresses how to separate deliverables and how to measure and allocate arrangement considerations to one or more units of ~~account.~~the ~~Update 2009-13 becomes effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted~~customer. AnSubstantially all ~~entity~~revenues ~~may~~generated ~~elect~~are toattributable ~~adopt the standard on a retrospective basis. We expect~~ to ~~apply~~customers ~~this~~located ~~standard~~within ~~on a prospective basis beginning April 1, 2011. Management has not yet determined if~~ the ~~update~~United ~~will have a material impact on the consolidated financial statements~~States.

7. Accounting Pronouncements Not Yet Adopted — In October 2009, the FASB issued Accounting Standards Update 2009-1413, “~~Certain~~ Revenue ~~Arrangements~~Recognition ~~That~~(Topic ~~Include~~605) ~~Software~~— ~~Elements~~Multiple Deliverable Arrangements” (“Update 2009-1413”). Update 2009-1413 ~~clarifies~~addresses ~~what~~the ~~guidance~~accounting ~~should~~for bemultiple-deliverable ~~used~~arrangements into ~~allocating~~enable ~~and measuring revenue from~~ vendors ~~that~~to ~~sell~~account orfor ~~lease tangible~~ products inor anservices ~~arrangement~~(deliverables) ~~that~~separately ~~contains~~rather ~~software that is more~~ than ~~incidental to the tangible product~~ as a ~~whole~~combined unit. The ~~amendments in this~~ update doaddresses ~~not~~how ~~affect~~to ~~software~~separate ~~revenue~~deliverables ~~arrangements~~and ~~that~~how doto ~~not~~measure ~~include~~and ~~tangible~~allocate ~~products~~arrangement ~~nor~~considerations doto ~~they~~one ~~affect~~or ~~software~~more ~~revenue~~units ~~arrangements that include services if the software is essential to the functionality~~ of ~~those services~~account. Update 2009-1413 becomes effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. An entity may elect to adopt the standard on a retrospective basis. We expect to apply this standard on a prospective basis beginning April 1, 2011. Management has determined that the update will not have a material impact on the consolidated financial statements.

1512

9.Table Relatedof Party Transactions — In accordance with our debt covenants, we declared and paid $4.2 million in dividends to NBC during the nine months ended December 31, 2009 and 2008 to provide funding for interest due and payable on NBC’s Senior Discount Notes.Contents

~~10.~~In ~~Subsequent~~October 2009, ~~Event~~the —FASB Onissued ~~January~~Accounting Standards Update 2009-14, ~~2010,~~“Software ~~NBC~~(Topic ~~Holding’s~~985) ~~Corp.~~- Certain Revenue Arrangements That Include Software Elements” (~~NBC’s~~“Update ~~parent~~2009-14”). ~~amended~~Update 2009-14 clarifies what guidance should be used in allocating and measuring revenue from vendors that sell or lease tangible products in an arrangement that contains software that is more than incidental to the ~~2004~~tangible ~~Stock~~product ~~Option~~as ~~Plan~~a (whole. The amendments in this update do not affect software revenue arrangements that do not include tangible products nor do they affect software revenue arrangements that include services if the ~~“Plan”),~~software ~~increasing~~is essential to the ~~number~~functionality of those ~~options~~services. ~~available~~Update 2009-14 becomes effective prospectively for ~~issuance~~revenue ~~under~~arrangements ~~the~~entered into ~~Plan~~or tomaterially ~~100,306~~modified ~~options~~in ~~from~~fiscal 85years beginning on or after June 15,~~306~~ ~~options~~2010, with earlier application permitted. ~~NBC’s~~An ~~Board~~entity ofmay ~~Directors~~elect ~~approved~~to adopt the ~~grant~~standard ofon 4a retrospective basis. We expect to apply this standard on a prospective basis beginning April 1,~~238~~ ~~options~~2011. ~~under~~Management has determined that the ~~2004~~update ~~Stock~~will ~~Option~~not ~~Plan~~have a material impact on ~~February~~the 3,consolidated ~~2010~~financial statements.

118. Condensed Consolidating Financial Information — Effective January 26, 2009, we established Campus Authentic LLC, a wholly-owned subsidiary which was separately ~~incorporated~~formed under the laws of the State of Delaware. On April 24, 2007, we established Net Textstore LLC as a wholly-owned subsidiary separately ~~incorporated~~formed under the laws of the State of Delaware. On May 1, 2006, we acquired all of the outstanding stock of CBA, an entity separately incorporated under the laws of the State of Illinois and now accounted for as one of our wholly-owned subsidiaries. Effective January 1, 2005, our textbook division was separately formed under the laws of the State of Delaware as NBC Textbooks LLC, one of our wholly-owned subsidiaries. Effective July 1, 2002, our distance education business was separately incorporated under the laws of the State of Delaware as Specialty Books, Inc., one of our wholly-owned subsidiaries. In connection with their ~~incorporation~~formation, Campus Authentic LLC, Net Textstore LLC, CBA, NBC Textbooks LLC, and Specialty Books, Inc. have unconditionally guaranteed, on a joint and several basis, full and prompt payment and performance of our obligations, liabilities, and indebtedness arising under, out of, or in connection with the Senior Subordinated Notes and the Senior Secured Notes. As of ~~December~~June 3130, ~~2009~~2010, our wholly-owned subsidiaries were also a party to the First Lien Amended and Restated Guarantee and Collateral Agreement related to the ABL Credit Agreement. Condensed consolidating balance sheets, statements of operations, and statements of cash flows are presented on the following pages which reflect financial information for the parent company (Nebraska Book Company, Inc.), subsidiary guarantors (Campus Authentic LLC ~~(from January 26~~, ~~2009),~~ Net Textstore LLC, CBA, NBC Textbooks LLC, and Specialty Books, Inc.), consolidating eliminations, and consolidated totals.

1613

NEBRASKATable BOOKof COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2009 Contents

	Nebraska
	Book			Subsidiary					Consolidated
	Company, Inc.			Guarantors		Eliminations			Totals
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	8,292,431		$	8,522,605	$	—		$	16,815,036
Intercompany receivables		23,513,510			25,009,714		(48,523,224	)		—
Receivables, net		23,399,403			52,172,722		—			75,572,125
Inventories		116,911,937			56,525,466		—			173,437,403
Recoverable income taxes		6,910,271			—		—			6,910,271
Deferred income taxes		2,154,801			5,500,000		—			7,654,801
Prepaid expenses and other assets		2,918,494			543,006		—			3,461,500
Total current assets		184,100,847			148,273,513		(48,523,224	)		283,851,136
PROPERTY AND EQUIPMENT, net		37,798,186			5,396,795		—			43,194,981
GOODWILL		199,900,018			15,671,108		—			215,571,126
CUSTOMER RELATIONSHIPS, net		4,392,630			76,945,570		—			81,338,200
TRADENAME		31,320,000			—		—			31,320,000
OTHER IDENTIFIABLE INTANGIBLES, net		4,111,586			1,693,397		—			5,804,983
INVESTMENT IN SUBSIDIARIES		168,394,390			—		(168,394,390	)		—
OTHER ASSETS		12,521,407			1,484,476		—			14,005,883
	$	642,539,064		$	249,464,859	$	(216,917,614	)	$	675,086,309
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	53,211,464		$	16,054,652	$	—		$	69,266,116
Intercompany payables		25,009,714			23,513,510		(48,523,224	)		—
Accrued employee compensation and benefits		7,349,818			2,198,094		—			9,547,912
Accrued interest		6,175,189			—		—			6,175,189
Accrued incentives		21,347			6,210,200		—			6,231,547
Accrued expenses		6,775,764			612,511		—			7,388,275
Income taxes payable		(3,391,744	)		3,391,744		—			—
Deferred revenue		2,858,701			6,759		—			2,865,460
Current maturities of long-term debt		52,967			—		—			52,967
Current maturities of capital lease obligations		813,609			—		—			813,609
Revolving credit facility		23,100,000			—		—			23,100,000
Total current liabilities		121,976,829			51,987,470		(48,523,224	)		125,441,075
LONG-TERM DEBT, net of current maturities		374,258,315			—		—			374,258,315
CAPITAL LEASE OBLIGATIONS, net of current maturities		2,627,370			—		—			2,627,370
OTHER LONG-TERM LIABILITIES		1,755,997			360,000		—			2,115,997
DEFERRED INCOME TAXES		22,958,459			28,722,999		—			51,681,458
DUE TO PARENT		22,998,189			—		—			22,998,189
COMMITMENTS
STOCKHOLDER’S EQUITY		95,963,905			168,394,390		(168,394,390	)		95,963,905
	$	642,539,064		$	249,464,859	$	(216,917,614	)	$	675,086,309

NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES

17CONDENSED CONSOLIDATING BALANCE SHEET JUNE 30, 2010

NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING BALANCE SHEET MARCH 31, 2009


	Nebraska
	Book			Subsidiary					Consolidated
	Company, Inc.			Guarantors		Eliminations			Totals
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10,841,150		$	4,382,599	$	—		$	15,223,749
Intercompany receivables		18,909,213			44,543,694		(63,452,907	)		—
Receivables, net		17,013,024			25,776,650		—			42,789,674
Inventories		86,703,871			62,552,128		—			149,255,999
Recoverable income taxes		10,883,640			—		—			10,883,640
Deferred income taxes		2,076,559			4,812,000		—			6,888,559
Prepaid expenses and other assets		2,780,777			484,285		—			3,265,062

Total current assets		149,208,234			142,551,356		(63,452,907	)		228,306,683
PROPERTY AND EQUIPMENT, net		36,267,300			5,490,907		—			41,758,207
GOODWILL		202,083,918			15,671,108		—			217,755,026
CUSTOMER RELATIONSHIPS, net		4,237,596			74,229,844		—			78,467,440
TRADENAME		31,320,000			—		—			31,320,000
OTHER IDENTIFIABLE INTANGIBLES, net		3,556,279			2,297,834		—			5,854,113
INVESTMENT IN SUBSIDIARIES		171,414,060			—		(171,414,060	)		—
OTHER ASSETS		10,017,640			1,286,084		—			11,303,724

	$	608,105,027		$	241,527,133	$	(234,866,967	)	$	614,765,193


LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	31,113,419		$	8,582,083	$	—		$	39,695,502
Intercompany payables		44,543,694			18,909,213		(63,452,907	)		—
Accrued employee compensation and benefits		5,329,610			2,386,987		—			7,716,597
Accrued interest		6,099,525			—		—			6,099,525
Accrued incentives		5,578			7,811,809		—			7,817,387
Accrued expenses		8,280,168			720,927		—			9,001,095
Income taxes payable		(2,822,667	)		2,822,667		—			—
Deferred revenue		263,573			388		—			263,961
Current maturities of long-term debt		55,878			—		—			55,878
Current maturities of capital lease obligations		844,477			—		—			844,477

Total current liabilities		93,713,255			41,234,074		(63,452,907	)		71,494,422
LONG-TERM DEBT, net of current maturities		374,438,475			—		—			374,438,475
CAPITAL LEASE OBLIGATIONS, net of current maturities		2,163,663			—		—			2,163,663
OTHER LONG-TERM LIABILITIES		1,871,227			210,000		—			2,081,227
DEFERRED INCOME TAXES		20,996,020			28,668,999		—			49,665,019
DUE TO PARENT		24,618,711			—		—			24,618,711
COMMITMENTS
STOCKHOLDER’S EQUITY		90,303,676			171,414,060		(171,414,060	)		90,303,676


	$	608,105,027		$	241,527,133	$	(234,866,967	)	$	614,765,193

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

18 Table of Contents

NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES ~~CONDENSED CONSOLIDATING BALANCE SHEET DECEMBER 31, 2008~~

	Nebraska
	Book			Subsidiary					Consolidated
	Company, Inc.			Guarantors		Eliminations			Totals
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	11,729,483		$	6,577,544	$	—		$	18,307,027
Intercompany receivables		25,819,943			2,088,177		(27,908,120	)		—
Receivables, net		19,508,405			54,969,591		—			74,477,996
Inventories		111,770,835			52,482,444		—			164,253,279
Recoverable income taxes		5,794,462			—		—			5,794,462
Deferred income taxes		2,282,092			5,057,001		—			7,339,093
Prepaid expenses and other assets		2,849,856			358,331		—			3,208,187
Total current assets		179,755,076			121,533,088		(27,908,120	)		273,380,044
PROPERTY AND EQUIPMENT, net		40,253,860			5,371,157		—			45,625,017
GOODWILL		306,873,046			15,536,109		—			322,409,155
CUSTOMER RELATIONSHIPS, net		4,702,698			82,377,022		—			87,079,720
TRADENAME		31,320,000			—		—			31,320,000
OTHER IDENTIFIABLE INTANGIBLES, net		7,757,819			2,188,045		—			9,945,864
INVESTMENT IN SUBSIDIARIES		146,395,806			—		(146,395,806	)		—
OTHER ASSETS		5,212,773			667,902		—			5,880,675
	$	722,271,078		$	227,673,323	$	(174,303,926	)	$	775,640,475
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	49,210,174		$	13,806,861	$	—		$	63,017,035
Intercompany payables		2,088,177			25,819,943		(27,908,120	)		—
Accrued employee compensation and benefits		7,354,692			2,831,441		—			10,186,133
Accrued interest		4,557,106			—		—			4,557,106
Accrued incentives		27,136			6,491,232		—			6,518,368
Accrued expenses		2,581,521			431,040		—			3,012,561
Income taxes payable		(976,668	)		976,668		—			—
Deferred revenue		2,364,677			2,332		—			2,367,009
Current maturities of long-term debt		2,581,009			—		—			2,581,009
Current maturities of capital lease obligations		728,715			—		—			728,715
Revolving credit facility		42,000,000			—		—			42,000,000
Total current liabilities		112,516,539			50,359,517		(27,908,120	)		134,967,936
LONG-TERM DEBT, net of current maturities		366,806,962			—		—			366,806,962
CAPITAL LEASE OBLIGATIONS, net of current maturities		3,510,759			—		—			3,510,759
OTHER LONG-TERM LIABILITIES		4,785,175			70,000		—			4,855,175
DEFERRED INCOME TAXES		22,383,415			30,848,000		—			53,231,415
DUE TO PARENT		19,758,151			—		—			19,758,151
COMMITMENTS
STOCKHOLDER’S EQUITY		192,510,077			146,395,806		(146,395,806	)		192,510,077
	$	722,271,078		$	227,673,323	$	(174,303,926	)	$	775,640,475

CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2010


	Nebraska
	Book			Subsidiary					Consolidated
	Company, Inc.			Guarantors		Eliminations			Totals
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	55,410,821		$	5,561,804	$	—		$	60,972,625
Intercompany receivables		17,716,457			57,770,424		(75,486,881	)		—
Receivables, net		32,613,517			25,374,277		—			57,987,794
Inventories		55,017,307			42,480,382		—			97,497,689
Recoverable income taxes		2,435,287			—		—			2,435,287
Deferred income taxes		1,690,559			4,557,000		—			6,247,559
Prepaid expenses and other assets		3,494,754			575,527		—			4,070,281

Total current assets		168,378,702			136,319,414		(75,486,881	)		229,211,235
PROPERTY AND EQUIPMENT, net		36,815,903			5,339,521		—			42,155,424
GOODWILL		199,900,018			15,671,108		—			215,571,126
CUSTOMER RELATIONSHIPS, net		4,315,113			75,587,707		—			79,902,820
TRADENAME		31,320,000			—		—			31,320,000
OTHER IDENTIFIABLE INTANGIBLES, net		3,455,593			1,839,731		—			5,295,324
INVESTMENT 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	)	$	615,505,244


LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	22,622,816		$	3,764,224	$	—		$	26,387,040
Intercompany payables		57,770,424			17,716,457		(75,486,881	)		—
Accrued employee compensation and benefits		6,921,873			2,479,595		—			9,401,468
Accrued interest		7,295,709			—		—			7,295,709
Accrued incentives		31,148			6,282,785		—			6,313,933
Accrued expenses		8,195,313			856,338		—			9,051,651
Income taxes payable		(3,651,775	)		3,651,775		—			—
Deferred revenue		1,299,960			—		—			1,299,960
Current maturities of long-term debt		54,403			—		—			54,403
Current maturities of capital lease obligations		846,053			—		—			846,053

Total current liabilities		101,385,924			34,751,174		(75,486,881	)		60,650,217
LONG-TERM DEBT, net of current maturities		374,343,069			—		—			374,343,069
CAPITAL LEASE OBLIGATIONS, net of current maturities		2,380,737			—		—			2,380,737
OTHER LONG-TERM LIABILITIES		1,918,963			360,000		—			2,278,963
DEFERRED INCOME TAXES		21,196,020			29,270,999		—			50,467,019
DUE TO PARENT		23,194,711			—		—			23,194,711
COMMITMENTS
STOCKHOLDER’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

~~NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES~~15 ~~CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE QUARTER ENDED DECEMBER 31, 2009~~

	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals
REVENUES, net of returns	$	31,185,653		$	44,664,776		$	(9,191,845	)	$	66,658,584
COSTS OF SALES (exclusive of depreciation shown below)		17,946,287			30,123,113			(9,471,746	)		38,597,654
Gross profit		13,239,366			14,541,663			279,901			28,060,930
OPERATING EXPENSES (INCOME):
Selling, general and administrative		23,986,143			9,812,915			279,901			34,078,959
Depreciation		1,676,774			448,198			—			2,124,972
Amortization		1,159,526			1,525,038			—			2,684,564
Intercompany administrative fee		(1,353,000	)		1,353,000			—			—
Equity in earnings of subsidiaries		(973,006	)		—			973,006			—
		24,496,437			13,139,151			1,252,907			38,888,495
INCOME FROM OPERATIONS		(11,257,071	)		1,402,512			(973,006	)		(10,827,565	)
OTHER EXPENSES:
Interest expense		10,650,114			71			—			10,650,185
Interest income		(28,179	)		(32,565	)		—			(60,744	)
Loss on early extinguishment of debt		3,065,759			—			—			3,065,759
		13,687,694			(32,494	)		—			13,655,200
INCOME BEFORE INCOME TAXES		(24,944,765	)		1,435,006			(973,006	)		(24,482,765	)
INCOME TAX EXPENSE		(10,059,000	)		462,000			—			(9,597,000	)
NET INCOME	$	(14,885,765	)	$	973,006		$	(973,006	)	$	(14,885,765	)

20NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES

~~NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES~~ CONDENSED CONSOLIDATING ~~STATEMENT~~BALANCE ~~OF OPERATIONS~~SHEET ~~FOR~~JUNE ~~THE QUARTER ENDED DECEMBER 31~~30, ~~2008~~2009

	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals
REVENUES, net of returns	$	29,298,865		$	47,061,351		$	(9,702,080	)	$	66,658,136
ASSETS
COSTS OF SALES (exclusive of depreciation shown below)		18,770,118			31,294,850			(10,140,053	)		39,924,915
CURRENT ASSETS:
Gross profit		10,528,747			15,766,501			437,973			26,733,221
Cash and cash equivalents	$	7,846,251		$	4,210,326		$	—		$	12,056,577
OPERATING EXPENSES (INCOME):
Intercompany receivables		19,542,274			18,851,677			(38,393,951	)		—
Selling, general and administrative		23,291,526			10,851,697			437,973			34,581,196
Receivables, net		13,755,834			24,879,571			—			38,635,405
Depreciation		1,382,712			394,934			—			1,777,646
Inventories		78,575,684			62,065,707			—			140,641,391
Amortization		1,285,738			1,560,615			—			2,846,353
Recoverable income taxes		11,429,108			—			—			11,429,108
Intercompany administrative fee		(1,230,900	)		1,230,900			—			—
Deferred income taxes		2,419,801			4,463,000			—			6,882,801
Equity in earnings of subsidiaries		(1,146,439	)		—			1,146,439			—
Prepaid expenses and other assets		2,578,496			300,967			—			2,879,463
		23,582,637			14,038,146			1,584,412			39,205,195
Total current assets		136,147,448			114,771,248			(38,393,951	)		212,524,745
INCOME (LOSS) FROM OPERATIONS		(13,053,890	)		1,728,355			(1,146,439	)		(12,471,974	)
PROPERTY AND EQUIPMENT, net		39,245,327			5,461,103			—			44,706,430
OTHER EXPENSES:
GOODWILL		199,900,017			15,536,109			—			215,436,126
Interest expense		7,820,666			—			—			7,820,666
CUSTOMER RELATIONSHIPS, net		4,547,664			79,661,296			—			84,208,960
Interest income		(152,806	)		(10,084	)		—			(162,890	)
TRADENAME		31,320,000			—			—			31,320,000
		7,667,860			(10,084	)		—			7,657,776
OTHER IDENTIFIABLE INTANGIBLES, net		5,997,324			1,651,636			—			7,648,960
INCOME (LOSS) BEFORE INCOME TAXES		(20,721,750	)		1,738,439			(1,146,439	)		(20,129,750	)
INVESTMENT IN SUBSIDIARIES		151,843,500			—			(151,843,500	)		—
INCOME TAX EXPENSE (BENEFIT)		(8,644,000	)		592,000			—			(8,052,000	)
OTHER ASSETS		7,393,091			610,379			—			8,003,470
NET INCOME (LOSS)	$	(12,077,750	)	$	1,146,439		$	(1,146,439	)	$	(12,077,750	)
	$	576,394,371		$	217,691,771		$	(190,237,451	)	$	603,848,691
LIABILITIES AND STOCKHOLDER’S EQUITY
CURRENT LIABILITIES:
Accounts payable	$	27,333,662		$	5,317,907		$	—		$	32,651,569
Intercompany payables		18,851,677			19,542,274			(38,393,951	)		—
Accrued employee compensation and benefits		4,934,772			1,484,226						6,418,998
Accrued interest		4,589,423			—			—			4,589,423
Accrued incentives		11,437			7,639,216			—			7,650,653
Accrued expenses		3,412,421			490,134			—			3,902,555
Income taxes payable		(1,520,317	)		1,520,317			—			—
Deferred revenue		325,448			198			—			325,646
Current maturities of long-term debt		52,682,649			—			—			52,682,649
Current maturities of capital lease obligations		770,201			—			—			770,201
Revolving credit facility		5,000,000			—			—			5,000,000
Total current liabilities		116,391,373			35,994,272			(38,393,951	)		113,991,694
LONG-TERM DEBT, net of current maturities		315,162,113			—			—			315,162,113
CAPITAL LEASE OBLIGATIONS, net of current maturities		3,081,545			—			—			3,081,545
OTHER LONG-TERM LIABILITIES		5,346,854			70,000			—			5,416,854
DEFERRED INCOME TAXES		23,686,459			29,783,999			—			53,470,458
DUE TO PARENT		21,533,189			—			—			21,533,189
COMMITMENTS
STOCKHOLDER’S EQUITY		91,192,838			151,843,500			(151,843,500	)		91,192,838
	$	576,394,371		$	217,691,771		$	(190,237,451	)	$	603,848,691

2116

NEBRASKATable BOOKof COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2009 Contents

	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals
REVENUES, net of returns	$	246,489,116		$	198,005,827		$	(32,356,384	)	$	412,138,559
COSTS OF SALES (exclusive of depreciation shown below)		158,084,624			127,440,885			(33,156,770	)		252,368,739
Gross profit		88,404,492			70,564,942			800,386			159,769,820
OPERATING EXPENSES (INCOME):
Selling, general and administrative		82,863,682			33,617,503			800,386			117,281,571
Depreciation		4,900,807			1,317,619			—			6,218,426
Amortization		3,683,562			4,637,281			—			8,320,843
Intercompany administrative fee		(4,059,000	)		4,059,000			—			—
Equity in earnings of subsidiaries		(17,103,452	)		—			17,103,452			—
		70,285,599			43,631,403			17,903,838			131,820,840
INCOME FROM OPERATIONS		18,118,893			26,933,539			(17,103,452	)		27,948,980
OTHER EXPENSES:
Interest expense		30,031,350			935			—			30,032,285
Interest income		(45,593	)		(58,848	)		—			(104,441	)
Loss on early extinguishment of debt		3,065,759			—			—			3,065,759
		33,051,516			(57,913	)		—			32,993,603
INCOME BEFORE INCOME TAXES		(14,932,623	)		26,991,452			(17,103,452	)		(5,044,623	)
INCOME TAX EXPENSE (BENEFIT)		(11,865,000	)		9,888,000			—			(1,977,000	)
NET INCOME	$	(3,067,623	)	$	17,103,452		$	(17,103,452	)	$	(3,067,623	)

NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES

22CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2010

NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2008


	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals

REVENUES, net of returns	$	40,032,804		$	40,343,813		$	(7,954,651	)	$	72,421,966

COSTS OF SALES (exclusive of depreciation shown below)		24,615,002			25,659,389			(8,075,014	)		42,199,377


Gross profit		15,417,802			14,684,424			120,363			30,222,589

OPERATING EXPENSES (INCOME):
Selling, general and administrative		24,719,871			10,631,442			120,363			35,471,676
Depreciation		1,661,438			436,895			—			2,098,333
Amortization		646,194			1,549,761			—			2,195,955
Intercompany administrative fee		(2,171,391	)		2,171,391			—			—
Equity in earnings of subsidiaries		118,179			—			(118,179	)		—


		24,974,291			14,789,489			2,184			39,765,964


LOSS FROM OPERATIONS		(9,556,489	)		(105,065	)		118,179			(9,543,375	)


OTHER EXPENSES:
Interest expense		10,647,023			6			—			10,647,029
Interest income		(17,193	)		(29,892	)		—			(47,085	)


		10,629,830			(29,886	)		—			10,599,944


LOSS BEFORE INCOME TAXES		(20,186,319	)		(75,179	)		118,179			(20,143,319	)

INCOME TAX EXPENSE (BENEFIT)		(8,261,000	)		43,000			—			(8,218,000	)


NET LOSS	$	(11,925,319	)	$	(118,179	)	$	118,179		$	(11,925,319	)

	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals
REVENUES, net of returns	$	252,728,858		$	198,520,746		$	(32,455,228	)	$	418,794,376
COSTS OF SALES (exclusive of depreciation shown below)		164,493,705			128,270,222			(33,576,593	)		259,187,334
Gross profit		88,235,153			70,250,524			1,121,365			159,607,042
OPERATING EXPENSES (INCOME):
Selling, general and administrative		83,158,473			37,558,303			1,121,365			121,838,141
Depreciation		4,327,127			1,140,518			—			5,467,645
Amortization		3,921,895			4,617,174			—			8,539,069
Intercompany administrative fee		(3,692,700	)		3,692,700			—			—
Equity in earnings of subsidiaries		(14,812,505	)		—			14,812,505			—
		72,902,290			47,008,695			15,933,870			135,844,855
INCOME FROM OPERATIONS		15,332,863			23,241,829			(14,812,505	)		23,762,187
OTHER EXPENSES:
Interest expense		23,795,302			—			—			23,795,302
Interest income		(310,934	)		(31,676	)		—			(342,610	)
Loss on derivative financial instrument		102,000			—			—			102,000
		23,586,368			(31,676	)		—			23,554,692
INCOME (LOSS) BEFORE INCOME TAXES		(8,253,505	)		23,273,505			(14,812,505	)		207,495
INCOME TAX EXPENSE (BENEFIT)		(8,378,000	)		8,461,000			—			83,000
NET INCOME	$	124,495		$	14,812,505		$	(14,812,505	)	$	124,495

23 Table of Contents

NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES ~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS~~ ~~FOR THE NINE MONTHS ENDED DECEMBER 31, 2009~~

	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals
CASH FLOWS FROM OPERATING ACTIVITIES	$	(46,006,989	)	$	8,281,610		$	—		$	(37,725,379	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(2,982,415	)		(1,097,913	)		54,703			(4,025,625	)
Acquisitions, net of cash acquired		(305,641	)		(1,998,702	)		—			(2,304,343	)
Proceeds from sale of property and equipment		37,757			110,620			(54,703	)		93,674
Software development costs		(441,156	)		—			—			(441,156	)
Net cash flows from investing activities		(3,691,455	)		(2,985,995	)		—			(6,677,450	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt		199,000,000			—			—			199,000,000
Payment of financing costs		(9,834,721	)		—			—			(9,834,721	)
Principal payments on long-term debt		(193,112,511	)		—			—			(193,112,511	)
Principal payments on capital lease obligations		(606,371	)		—			—			(606,371	)
Net increase in revolving credit facility		23,100,000			—			—			23,100,000
Dividends paid to parent		(4,235,000	)								(4,235,000	)
Change in due to parent		2,868,000			—			—			2,868,000
Net cash flows from financing activities		17,179,397			—			—			17,179,397
NET INCREASE IN CASH AND CASH EQUIVALENTS		(32,519,047	)		5,295,615			—			(27,223,432	)
CASH AND CASH EQUIVALENTS, Beginning of period		40,811,478			3,226,990			—			44,038,468
CASH AND CASH EQUIVALENTS, End of period	$	8,292,431		$	8,522,605		$	—		$	16,815,036

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 2009


	Nebraska
	Book			Subsidiary					Consolidated
	Company, Inc.			Guarantors		Eliminations			Totals

REVENUES, net of returns	$	38,572,150		$	38,706,798	$	(8,515,075	)	$	68,763,873

COSTS OF SALES (exclusive of depreciation shown below)		24,332,877			24,769,519		(8,758,712	)		40,343,684


Gross profit		14,239,273			13,937,279		243,637			28,420,189

OPERATING EXPENSES (INCOME):
Selling, general and administrative		23,616,411			9,795,066		243,637			33,655,114
Depreciation		1,626,308			427,336		—			2,053,644
Amortization		1,263,767			1,573,315		—			2,837,082
Intercompany administrative fee		(1,353,000	)		1,353,000		—			—
Equity in earnings of subsidiaries		(552,562	)		—		552,562			—


		24,600,924			13,148,717		796,199			38,545,840


INCOME (LOSS) FROM OPERATIONS		(10,361,651	)		788,562		(552,562	)		(10,125,651	)


OTHER EXPENSES:
Interest expense		9,699,327			—		—			9,699,327


		9,699,327			—		—			9,699,327


INCOME (LOSS) BEFORE INCOME TAXES		(20,060,978	)		788,562		(552,562	)		(19,824,978	)

INCOME TAX EXPENSE (BENEFIT)		(8,007,000	)		236,000		—			(7,771,000	)


NET INCOME (LOSS)	$	(12,053,978	)	$	552,562	$	(552,562	)	$	(12,053,978	)

~~NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES~~18 ~~CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2008~~

	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals
CASH FLOWS FROM OPERATING ACTIVITIES	$	(43,014,685	)	$	4,872,707		$	—			(38,141,978	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(4,827,556	)		(1,177,190	)		31,520			(5,973,226	)
Acquisitions, net of cash acquired		(2,756,420	)		(2,895,499	)		—			(5,651,919	)
Proceeds from sale of property and equipment		23,142			39,200			(31,520	)		30,822
Software development costs		(264,436	)		—			—			(264,436	)
Net cash flows from investing activities		(7,825,270	)		(4,033,489	)		—			(11,858,759	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt		(1,045,862	)		—			—			(1,045,862	)
Principal payments on capital lease obligations		(530,699	)		—			—			(530,699	)
Net increase in revolving credit facility		42,000,000			—			—			42,000,000
Dividends paid to parent		(4,235,000	)		—			—			(4,235,000	)
Capital contributions		4,869			—			—			4,869
Change in due to parent		2,788,000									2,788,000
Net cash flows from financing activities		38,981,308			—			—			38,981,308
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(11,858,647	)		839,218			—			(11,019,429	)
CASH AND CASH EQUIVALENTS, Beginning of period		23,588,130			5,738,326			—			29,326,456
CASH AND CASH EQUIVALENTS, End of period	$	11,729,483		$	6,577,544		$	—		$	18,307,027

25NEBRASKA BOOK COMPANY, INC. AND SUBSIDIARIES

~~ITEM~~CONDENSED 2.CONSOLIDATING ~~MANAGEMENT’S~~STATEMENT ~~DISCUSSION~~OF ~~AND~~CASH ~~ANALYSIS OF~~FLOWS ~~FINANCIAL~~ FOR ~~CONDITION~~THE ~~AND~~QUARTER ~~RESULTS~~ENDED OFJUNE ~~OPERATIONS.~~30, 2010

Overview


	Nebraska
	Book			Subsidiary					Consolidated
	Company, Inc.			Guarantors			Eliminations		Totals

CASH FLOWS FROM OPERATING ACTIVITIES	$	(40,596,493	)	$	340,143		$	—	$	(40,256,350	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(992,768	)		(573,525	)		—		(1,566,293	)
Acquisitions, net of cash acquired		(3,769,706	)		(948,272	)		—		(4,717,978	)
Proceeds from sale of property and equipment		8,395			2,449			—		10,844
Software development costs		(358,364	)		—			—		(358,364	)

Net cash flows from investing activities		(5,112,443	)		(1,519,348	)		—		(6,631,791	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of financing costs		(53,025	)		—			—		(53,025	)
Principal payments on long-term debt		(13,060	)		—			—		(13,060	)
Principal payments on capital lease obligations		(218,650	)		—			—		(218,650	)
Borrowings under revolving credit facility		12,300,000			—			—		12,300,000
Payments under revolving credit facility		(12,300,000	)		—			—		(12,300,000	)
Change in due to parent		1,424,000			—			—		1,424,000

Net cash flows from financing activities		1,139,265			—			—		1,139,265


NET DECREASE IN CASH AND CASH EQUIVALENTS		(44,569,671	)		(1,179,205	)		—		(45,748,876	)

CASH AND CASH EQUIVALENTS, Beginning of period		55,410,821			5,561,804			—		60,972,625


CASH AND CASH EQUIVALENTS, End of period	$	10,841,150		$	4,382,599		$	—	$	15,223,749

~~Acquisitions. Our Bookstore Division continues to grow its number of bookstores through~~19 acquisitions and start-up locations. We added 1 start-up location and opened an off-campus bookstore to replace an on-campus location in the same market during the quarter ended December 31, 2009. We believe there are attractive opportunities for us to continue to expand our chain of bookstores across the country.

RevenueTable Results.of Consolidated revenues for the quarter ended December 31, 2009 were comparable to the quarter ended December 31, 2008. An increase in revenues in the Bookstore and Complementary Services Divisions was offset by a decrease in revenues in the Textbook Division. The increase in revenues in the Bookstore Division was due to an increase in same-store sales and sales from new stores and the increase in revenues in the Complementary Services Division was due to an increase in our distance education, e-commerce and systems businesses. The decrease in revenues in the Textbook Division was primarily due to a decrease in units sold and, to a lesser extent, a decrease in average price per book sold. Contents

~~Adjusted~~NEBRASKA ~~EBITDA~~BOOK ~~Results. Consolidated Adjusted EBITDA for the quarter ended December 31~~COMPANY, ~~2009 increased $1~~INC.~~8 million,~~ orAND ~~23.3%, from the quarter ended December 31, 2008. The consolidated~~SUBSIDIARIES ~~Adjusted EBITDA increase was primarily attributable to an increase in revenues in the Bookstore and~~ Complementary Services Divisions and lower selling, general and administrative expenses for the Textbook and Complementary Services Divisions. EBITDA and Adjusted EBITDA are considered non-GAAP measures by the SEC, and therefore you should refer to the more detailed explanation of those measures that is provided below.

~~EBITDA~~CONDENSED isCONSOLIDATING ~~defined~~STATEMENT asOF ~~earnings~~CASH ~~before interest, taxes, depreciation, and amortization.~~FLOWS ~~Adjusted~~FOR ~~EBITDA~~THE isQUARTER ~~EBITDA~~ENDED ~~adjusted~~JUNE ~~for loss on early extinguishment of debt. There was no loss on early extinguishment of debt in the quarter and nine months ended December 31~~30, ~~2008; therefore,~~2009 ~~Adjusted EBITDA equals EBITDA for those periods. 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 4, Long-Term Debt, to the condensed consolidated financial statements for disclosure of certain of our financial covenants.


	Nebraska
	Book			Subsidiary						Consolidated
	Company, Inc.			Guarantors			Eliminations			Totals

CASH FLOWS FROM OPERATING ACTIVITIES	$	(37,368,703	)	$	1,842,481		$	—		$	(35,526,222	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(1,034,286	)		(406,462	)		55,597			(1,385,151	)
Acquisitions, net of cash acquired		(143,123	)		(508,305	)		—			(651,428	)
Proceeds from sale of property and equipment		4,038			55,622			(55,597	)		4,063
Software development costs		(112,132	)		—			—			(112,132	)

Net cash flows from investing activities		(1,285,503	)		(859,145	)		—			(2,144,648	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt		(518,417	)		—			—			(518,417	)
Principal payments on capital lease obligations		(195,604	)		—			—			(195,604	)
Borrowings under revolving credit facility		41,000,000			—			—			41,000,000
Payments under revolving credit facility		(36,000,000	)		—			—			(36,000,000	)
Change in due to parent		1,403,000			—			—			1,403,000

Net cash flows from financing activities		5,688,979			—			—			5,688,979

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(32,965,227	)		983,336			—			(31,981,891	)

CASH AND CASH EQUIVALENTS, Beginning of period		40,811,478			3,226,990			—			44,038,468


CASH AND CASH EQUIVALENTS, End of period	$	7,846,251		$	4,210,326		$	—		$	12,056,577

~~There are material limitations associated with the use of EBITDA and Adjusted EBITDA. EBITDA~~20 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 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 is it a measure of our profitability because it does 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 could otherwise be obtained absent this disclosure. Items excluded from EBITDA and Adjusted EBITDA, such as interest, taxes, depreciation, amortization, 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.

26 Table of Contents

~~Subsequent~~ITEM ~~Events~~2. ~~On January 14, 2010, NBC Holding~~MANAGEMENT’sS ~~Corp.~~DISCUSSION ~~(NBC’s~~AND ~~parent)~~ANALYSIS ~~amended the 2004~~OF ~~Stock~~FINANCIAL ~~Option~~CONDITION ~~Plan~~AND ~~(the~~RESULTS ~~“Plan”),~~OF ~~increasing the number of options available for issuance under the~~OPERATIONS ~~Plan to 100,306 options from 85,306 options. NBC’s Board of Directors approved the grant of 4,238 options under the 2004 Stock Option Plan on February 3, 2010.~~

~~Robert A. Rupe, Senior Vice President of the Bookstore Division has elected to retire~~Overview effective upon the hiring of his replacement and transition of responsibilities. Mr. Rupe will continue to serve in his current role until such time as his replacement is found and a transition period has occurred, which is anticipated to occur in the next three to four months.

~~Challenges~~Acquisitions. Our Bookstore Division continues to grow its number of bookstores through acquisitions and ~~Expectations~~start-up locations. We acquired twelve bookstore locations in nine separate transactions during the quarter ended June 30, 2010. We believe there are attractive opportunities for us to continue to expand our chain of bookstores across the country.

WeRevenue ~~expect~~Results. ~~that~~Consolidated werevenues ~~will~~for ~~continue~~the toquarter ~~face~~ended ~~challenges~~June 30, ~~and~~2010 ~~opportunities~~increased ~~similar to those which we~~$3.7 ~~have~~million, ~~faced~~or in5.3%, from the ~~recent~~quarter ~~past~~ended ~~and~~June 30, in2009. ~~addition,~~The ~~new~~increase ~~and~~was ~~different~~primarily ~~challenges~~due ~~and~~to ~~opportunities~~an ~~given~~increase ~~the~~in ~~general~~revenues ~~instability~~ in the ~~credit~~Bookstore ~~markets~~Division and inComplementary ~~the~~Services ~~economy~~Division. ~~We have experienced, and~~Revenues weincreased ~~believe~~in ~~we will continue to experience, increasing competition for~~ the ~~supply~~Bookstore ofDivision ~~used~~primarily ~~textbooks from~~due ~~other~~to ~~companies,~~acquisition ~~including~~activity ~~other textbook wholesalers~~ and ~~from student~~start-~~to-student transactions,~~up ~~increasing~~growth ~~competition from alternative media and alternative sources of textbooks~~since ~~for students~~April 1, ~~competition for contract-management opportunities and other challenges~~2009. WeRevenues ~~also believe~~increased ~~that~~in wethe ~~will~~Complementary ~~continue~~Services toDivision ~~face~~primarily ~~challenges~~as ~~and~~a ~~opportunities~~result ~~related to acquisitions.~~of ~~Finally,~~increased werevenues ~~are uncertain what impact the current economy and the instability~~ in ~~the financial markets might have on~~ our systems business. ~~Despite~~Textbook ~~these~~Division ~~challenges,~~revenues wewere ~~expect~~comparable ~~that we will continue~~ to ~~grow~~ ~~EBITDA on a consolidated basis in fiscal year 2010. We also expect that our capital~~the ~~expenditures~~quarter ~~will~~ended ~~remain~~June 30, ~~modest for a company of our size~~2009.

~~Quarter~~EBITDA ~~Ended~~Results. ~~December~~Consolidated EBITDA loss for the quarter ended June 3130, ~~2009~~2010 ~~Compared~~was ~~With~~comparable to ~~Quarter~~the ~~Ended~~quarter ~~December~~ended June 3130, ~~2008~~2009. An increase in the Complementary Services Division EBITDA due to higher revenues and a decrease in Corporate Administration’s EBITDA loss were mostly offset by an increase in the Bookstore Division EBITDA loss and a decrease in the Textbook Division EBITDA primarily as a result of higher selling, general and administrative expenses. EBITDA is considered a non-GAAP measure by the SEC, and therefore you should refer to the more detailed explanation of this measure that is provided later in this Item.

~~Revenues~~EBITDA is defined as earnings before interest, taxes, depreciation, and amortization. ~~Revenues~~As we are highly-leveraged and as our equity is not publicly-traded, management believes that the non-GAAP measure, EBITDA is useful in evaluating our results and provides additional information for determining our ability to meet debt service requirements. That belief is driven by the consistent ~~quarters~~use ~~ended~~of ~~December~~the measure in the computations used to establish the value of our equity over the past 15 31years and the fact that our debt covenants also use the measure, ~~2009~~as ~~and~~further ~~2008~~described later in this Item, to measure and monitor our financial results. Due to the ~~corresponding~~importance of EBITDA ~~change~~to our equity and debt holders, our chief operating decision makers and other members of management use EBITDA to measure our overall performance, to assist in ~~revenues~~resource ~~were~~allocation asdecision-making, ~~follows:~~to develop our budget goals, to determine incentive compensation goals and payments, and to manage other expenditures among other uses.

							Change
	2009			2008			Amount			Percentage
Bookstore Division	$	36,574,712		$	33,800,976		$	2,773,736			8.2	%
Textbook Division		32,633,979			36,200,627			(3,566,648	)		(9.9	)%
Complementary Services Division		8,471,516			7,790,548			680,968			8.7	%
Intercompany Eliminations		(11,021,623	)		(11,134,015	)		112,392			(1.0	)%
	$	66,658,584		$	66,658,136		$	448			0.0	%

With respect to covenant compliance calculations, EBITDA, as defined in the ABL Credit Agreement (hereinafter, referred to as “Credit Facility EBITDA”), includes additional adjustments to EBITDA. Credit Facility 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. Credit Facility EBITDA is utilized when calculating the pro forma fixed charge coverage ratio under the ABL Credit Agreement. The pro forma consolidated coverage ratio under the indentures to the Senior Subordinated Notes and the Senior Secured Notes uses EBITDA and the indentures define EBITDA similar to Credit Facility EBITDA except that charges incurred in connection with the restricted stock plan are not added back to consolidated net income. See Note 4 to the condensed consolidated financial statements for disclosure of certain of our financial covenants.

~~The~~There ~~increase~~are inmaterial ~~Bookstore~~limitations ~~Division~~associated ~~revenues~~with ~~was~~the ~~attributable~~use toof anEBITDA. ~~increase~~EBITDA indoes ~~same-store sales~~not represent and ~~additional~~should ~~revenues~~not ~~from~~be ~~new~~considered ~~bookstores,~~an ~~which~~alternative ~~was~~to ~~partially~~net ~~offset~~cash byflows afrom ~~decrease~~operating inactivities or net ~~revenues~~income as adetermined ~~result~~by ofGAAP. ~~certain~~Furthermore, ~~store~~EBITDA ~~closings.~~does ~~Same-store~~not ~~sales~~necessarily ~~for~~indicate ~~the~~whether ~~quarter~~cash ~~ended December~~flows ~~31,~~will ~~2009~~be ~~increased~~sufficient ~~$1.9 million,~~for orcash ~~6.0%,~~requirements ~~from~~because the ~~quarter~~measure ~~ended~~does ~~December 31,~~not ~~2008,~~include ~~primarily~~reductions ~~due~~for cash topayments ~~increased~~for ~~textbook~~our ~~revenues,~~obligation ~~which~~to ~~was~~service ~~partially~~our ~~offset~~debt, byfund aour ~~decrease~~working incapital, ~~clothing~~make capital expenditures and ~~insignia wear~~make ~~revenues.~~acquisitions Weor ~~define~~pay ~~same-store~~our ~~sales~~income ~~for~~taxes ~~the~~and ~~quarter~~dividends; ~~ended~~nor ~~December 31,~~is ~~2009~~it asa ~~sales~~measure ~~from~~of ~~any~~our ~~store,~~profitability ~~even~~because ifit ~~expanded~~does ornot ~~relocated~~include costs and expenses such as interest, ~~that~~taxes, depreciation, weand ~~have~~amortization, ~~operated~~which ~~since~~are ~~the~~significant ~~start~~components ofin ~~fiscal~~understanding ~~year~~and assessing our ~~2009~~financial performance. InEven ~~addition~~with these limitations, we ~~have~~believe ~~added~~EBITDA, 37when ~~bookstore~~viewed ~~locations~~with ~~through~~both ~~acquisitions or start-ups since~~our ~~April 1,~~GAAP ~~2008.~~results ~~The~~and ~~new~~the ~~bookstores~~reconciliations ~~provided~~to anoperating ~~additional~~cash ~~$1.5 million~~flows ofand ~~revenue~~net ~~for~~income, ~~the~~provides ~~quarter~~a more ~~ended~~complete ~~December 31,~~understanding ~~2009.~~of ~~Revenues~~our ~~declined~~business ~~$0.6 million~~than ~~for~~otherwise ~~the~~could ~~quarter~~be ~~ended~~obtained ~~December 31,~~absent ~~2009~~this asdisclosure. aEBITDA ~~result~~measures ofpresented ~~certain~~may ~~store~~not ~~closings~~be ~~since~~comparable ~~April 1,~~to ~~2008~~similarly titled measures presented by other companies.

~~For the quarter ended December 31, 2009, Textbook Division revenues decreased $3.6 million, or~~21 9.9%, from the quarter ended December 31, 2008, due primarily to a 5.2% decrease in units sold and a 2.1% decrease in average price per book sold. Complementary Services Division revenues increased $0.7 million, or 8.7%, from the quarter ended December 31, 2008, primarily due to an increase in revenues from our distance education, e-commerce and systems businesses. Intercompany eliminations decreased $0.1 million, or 1.0%.

27 Table of Contents

~~Gross~~Challenges profit. Gross profit for the quarter ended December 31, 2009 increased $1.4 million, or 5.0%, to $28.1 million from $26.7 million for the quarter ended December 31, 2008. The increase in gross profit was primarily attributable to an increase in revenues and ~~gross profit in the~~Expectations Bookstore and Complementary Services Divisions. The consolidated gross margin percentage increased to 42.1% for the quarter ended December 31, 2009 from 40.1% for the quarter ended December 31, 2008. The increase in our consolidated gross margin percentage is attributable to increases in the gross margin percentage for the Bookstore and Textbook Divisions.

~~Selling,~~We ~~general~~expect ~~and~~that ~~administrative~~we ~~expenses.~~will ~~Selling,~~continue ~~general~~to face challenges and ~~administrative~~opportunities ~~expenses~~similar ~~for~~to those which we ~~the~~have ~~quarter~~faced ~~ended~~in ~~December 31,~~the ~~2009~~recent ~~decreased~~past ~~$0.5 million~~and, orin ~~1.5%~~addition, tonew ~~$34.1 million~~and ~~from~~different ~~$34.6~~challenges and opportunities ~~million~~given ~~for~~the general instability in the ~~quarter~~credit ~~ended~~markets ~~December 31,~~and ~~2008~~in the economy. ~~Selling~~Our three tranches of debt (the Senior Secured Notes, ~~general~~the ABL Facility and ~~administrative~~the ~~expenses~~Senior asSubordinated aNotes) each may mature ~~percentage~~within a period of ~~revenues~~six ~~were~~months ~~51.1%~~of ~~and~~each 51other.9% ~~for~~Due ~~the~~to ~~quarters~~our ~~ended~~highly ~~December 31,~~leveraged ~~2009~~capital ~~and 2008~~structure, ~~respectively.~~continued ~~The~~uncertainty ~~decrease~~ in ~~selling,~~the ~~general~~credit markets and ~~administrative~~our ~~expenses~~future ~~was~~results ~~primarily~~of operations may negatively ~~attributable~~impact our ability to aextend ~~$0.6 million~~or ~~decrease~~refinance inour ~~personnel~~existing ~~costs~~debt ~~and~~on areasonable ~~$0.5 million~~terms, ~~decrease~~or inat all. We ~~advertising~~have experienced, and ~~travel~~we ~~expenses~~believe ~~primarily~~we ~~due~~will continue to ~~cost~~experience, ~~cutting~~increasing ~~measures~~competition ~~implemented~~for ~~during~~ the supply ~~last~~of used textbooks from other companies, including other textbook wholesalers and from ~~quarter~~student-to-student transactions, increasing competition from alternative media and alternative sources of ~~fiscal~~textbooks ~~year~~for ~~2009.~~students, ~~These~~including ~~decreases~~renting ~~were~~of ~~partially~~textbooks, ~~offset~~competition byfor contract-management aopportunities $0and other challenges.~~7 million~~ ~~increase~~We inalso believe that we will continue to ~~commission~~face ~~expense~~challenges ~~primarily~~and ~~due~~opportunities related to ~~increased~~acquisitions. ~~sales~~Finally, onwe are uncertain what impact the ~~internet~~current ~~involving~~economy ~~third-party~~might ~~websites and~~have aon $0our business.~~2 million~~ ~~increase~~Despite inthese ~~rent~~challenges, ~~expense~~we ~~primarily~~expect ~~due~~that we will continue to angrow ~~increase~~EBITDA on a consolidated basis in ~~the~~fiscal ~~number~~year 2011. We also expect that our capital expenditures will remain modest for a company of ~~stores~~our size.

~~Earnings~~Quarter ~~(loss) before~~Ended ~~interest~~June 30, ~~taxes,~~2010 ~~depreciation,~~Compared ~~amortization,~~With ~~and~~Quarter ~~loss~~Ended ~~on early extinguishment of debt (Adjusted EBITDA). Adjusted EBITDA for the quarters ended December~~June 3130, 2009. ~~and 2008 and the corresponding change in Adjusted EBITDA were as follows:~~

							Change
	2009			2008			Amount			Percentage
Bookstore Division	$	(6,432,938	)	$	(7,883,504	)	$	1,450,566			18.4	%
Textbook Division		5,960,451			6,291,744			(331,293	)		(5.3	)%
Complementary Services Division		556,068			(66,309	)		622,377			938.6	%
Corporate Administration		(6,101,610	)		(6,189,906	)		88,296			1.4	%
	$	(6,018,029	)	$	(7,847,975	)	$	1,829,946			23.3	%

Revenues. Revenues for the quarters ended June 30, 2010 and 2009 and the corresponding change in revenues were as follows:

Bookstore Division Adjusted EBITDA loss decreased $1.5 million, or 18.4%, from the quarter ended December 31, 2008, primarily due to an increase in revenues and gross profit. The $0.3 million, or 5.3%, decrease in Textbook Division Adjusted EBITDA from the quarter ended December 31, 2008, was primarily due to the previously mentioned decrease in revenues, which was partially offset by a decrease in selling, general and administrative expenses. Complementary Services Division Adjusted EBITDA increased $0.6 million from the quarter ended December 31, 2008, primarily due to improved results in the distance education, e-commerce and systems businesses. Corporate Administration’s Adjusted EBITDA loss decreased $0.1 million from the quarter ended December 31, 2008.


							Change
	2010			2009			Amount			Percentage
Bookstore Division	$	47,964,848		$	45,454,001		$	2,510,847			5.5	%
Textbook Division		25,442,575			25,483,990			(41,415	)		(0.2	)%
Complementary Services Division		8,860,092			7,973,539			886,553			11.1	%
Intercompany Eliminations		(9,845,549	)		(10,147,657	)		302,108			(3.0	)%

	$	72,421,966		$	68,763,873		$	3,658,093			5.3	%

28The increase in Bookstore Division revenues was attributable to additional revenues from new bookstores and an increase in same-store sales, which was partially offset by a decrease in revenues as a result of certain store closings. We have added 30 bookstore locations through acquisitions or start-ups since April 1, 2009. The new bookstores provided an additional $2.6 million of revenue for the quarter ended June 30, 2010. Same-store sales for the quarter ended June 30, 2010 increased $0.9 million, or 1.9%, from the quarter ended June 30, 2009, primarily due to increased new and used textbook revenues. The same-store sales increase in new and used textbooks is partly attributable to the rental program which we began implementing in our bookstores in the fourth quarter of fiscal 2010. If the textbooks rented would have been sold instead, we estimate that same-store sales would have been approximately $0.8 million higher, increasing the same-store sales increase to 3.8% for the quarter ended June 30, 2010. We define same-store sales for the quarter ended June 30, 2010 as sales from any store, even if expanded or relocated, that we have operated since the start of fiscal year 2010. Revenues declined $1.0 million for the quarter ended June 30, 2010 as a result of certain store closings since April 1, 2009.

For anthe ~~explanation~~quarter ofended ~~why~~June 30, ~~EBITDA~~2010, ~~and~~Textbook ~~Adjusted~~Division ~~EBITDA~~revenues ~~are~~were ~~useful~~comparable ~~measures in evaluating our operating results and provide additional information for determining our ability~~ to ~~meet~~the ~~debt~~quarter ~~service~~ended ~~requirements~~June 30, ~~see~~2009 ~~“Adjusted~~as ~~EBITDA~~the ~~Results”~~2.6% ~~elsewhere~~decrease in ~~Management’s~~average ~~Discussion~~price ~~and Analysis~~per ofbook ~~Financial~~sold ~~Condition~~was ~~and~~mostly ~~Results~~offset ofby ~~Operations.~~a ~~The following presentation reconciles~~1.0% ~~Net~~increase ~~Loss,~~in ~~which~~units wesold ~~believe~~and toan beincrease ~~the~~in ~~closest~~revenues ~~GAAP~~from ~~performance~~textbook ~~measure,~~rentals to ~~EBITDA and Adjusted~~third-parties. ~~EBITDA~~Complementary ~~and~~Services ~~reconciles~~Division ~~EBITDA~~revenues ~~and~~increased ~~Adjusted~~$0.9 million, ~~EBITDA~~or to11.1%, ~~net cash flows~~ from ~~operating~~the ~~activities,~~quarter ~~which~~ended weJune 30, ~~believe to be the closest GAAP liquidity measure~~2009, ~~and~~primarily ~~also~~due ~~sets~~to ~~forth~~an ~~net~~increase ~~cash~~in ~~flows~~revenues from ~~investing~~ ~~and~~our ~~financing~~systems ~~activities~~business. asIntercompany eliminations ~~presented~~decreased in$0.3 million, ~~the~~or ~~condensed consolidated statements of cash~~3.0%. ~~flows:~~

	Quarter Ended December 31,
	2009			2008
Net loss	$	(14,885,765	)	$	(12,077,750	)
Interest expense, net		10,589,441			7,657,776
Income tax benefit		(9,597,000	)		(8,052,000	)
Depreciation and amortization		4,809,536			4,623,999
EBITDA	$	(9,083,788	)	$	(7,847,975	)
Loss on early extinguishment of debt		3,065,759			—
Adjusted EBITDA	$	(6,018,029	)	$	(7,847,975	)
Share-based compensation		309,421			262,791
Interest income		60,744			162,890
Provision for losses on receivables		280,618			75,442
Cash paid for interest		(3,760,284	)		(3,545,118	)
Cash paid for income taxes		(4,205,015	)		(5,768,926	)
(Gain) Loss on disposal of assets		22,640			(5,081	)
Change in due to parent		(1,530,000	)		(1,437,000	)
Changes in operating assets and liabilities, net of effect of acquisitions (1)		(100,156,701	)		(96,263,122	)
Net Cash Flows from Operating Activities	$	(114,996,606	)	$	(114,366,099	)
Net Cash Flows from Investing Activities	$	(1,603,108	)	$	(2,070,521	)
Net Cash Flows from Financing Activities	$	27,330,237		$	43,242,807

Gross profit. Gross profit for the quarter ended June 30, 2010 increased $1.8 million, or 6.3%, to $30.2 million from $28.4 million for the quarter ended June 30, 2009. The increase in gross profit was primarily attributable to an increase in revenues in the Bookstore and Complementary Services Divisions. The consolidated gross margin percentage increased to 41.7% for the quarter ended June 30, 2010 from 41.3% for the quarter ended June 30, 2009. The increase in our consolidated gross margin percentage is primarily attributable to the decrease in interdivision profit elimination, which can fluctuate during interim periods but is typically relatively unchanged by fiscal year end.

(1) 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.22

DepreciationTable expense.of Depreciation expense for the quarter ended December 31, 2009 increased $0.3 million to $2.1 million from $1.8 million for the quarter ended December 31, 2008, due primarily to additional bookstores. Contents

~~Amortization~~Selling, ~~expense~~general and administrative expenses. ~~Amortization~~Selling, ~~expense~~general ~~for~~and administrative expenses for the quarter ended ~~December~~June 3130, ~~2009~~2010 ~~decreased~~ increased $0.1.8 million, or 5.4%, to $235.75 million from $233.8 7 million for the quarter ended ~~December~~June 3130, ~~2008~~2009. Selling, general and administrative expenses as a percentage of revenues were 49.0% and 48.9% for the quarters ended June 30, 2010 and 2009, respectively. The increase in selling, general and administrative expenses was primarily attributable to a $0.9 million increase in commission and shipping expense primarily due to increased sales on the internet involving third-party websites, a ~~decrease~~$0.6 million increase in ~~amortization~~rent expense primarily due to an increase in the number of ~~non-compete~~bookstores ~~agreements~~and ~~associated~~a ~~with~~$0.5 million ~~bookstore~~increase ~~acquisitions~~in travel and entertainment expense. These increases were partially offset by a $0.7 million decrease in personnel costs.

~~Interest~~Earnings ~~expense,~~(loss) before ~~net. Interest expense~~interest, ~~net for the quarter ended December 31~~taxes, ~~2009~~depreciation ~~increased $2.9 million~~and toamortization ~~$10~~(EBITDA).~~6 million~~ ~~from~~EBITDA ~~$7.7 million~~ for the ~~quarter~~quarters ended ~~December~~June 3130, ~~2008,~~2010 ~~primarily due~~and to2009 aand ~~$1.9 million increase in interest, which is due to higher interest on~~ the ~~Senior~~corresponding ~~Secured Notes~~change ~~which replaced the Term Loan and a $0.9 million increase~~ in ~~amortization~~EBITDA ofwere ~~additional prepaid~~as ~~loan costs related to the issuance of the Senior Secured Notes and entering into the ABL~~follows: ~~Credit Agreement.~~

Loss on extinguishment of debt. The loss on extinguishment of debt of $3.1 million for the quarter ended December 31, 2009 relates to the write-off of debt issue costs as a result of the termination of the Term Loan and Revolving Credit Facility.


							Change
	2010			2009			Amount			Percentage
Bookstore Division	$	(5,851,283	)	$	(5,500,144	)	$	(351,139	)		(6.4	)%
Textbook Division		4,779,670			5,159,360			(379,690	)		(7.4	)%
Complementary Services Division		873,518			394,725			478,793			121.3	%
Corporate Administration		(5,050,992	)		(5,288,866	)		237,874			4.5	%

	$	(5,249,087	)	$	(5,234,925	)	$	(14,162	)		(0.3	)%

29Bookstore Division EBITDA loss increased $0.4 million, or 6.4%, from the quarter ended June 30, 2009 primarily due to higher selling, general and administrative expenses, which were partially offset by an increase in revenues. The $0.4 million, or 7.4%, decrease in Textbook Division EBITDA from the quarter ended June 30, 2009, was primarily due to an increase in selling, general and administrative expenses. Complementary Services Division EBITDA increased $0.5 million from the quarter ended June 30, 2009, primarily due to improved results in the systems business. Corporate Administration’s EBITDA loss decreased $0.2 million from the quarter ended June 30, 2009, primarily due to a decrease in the interdivision profit elimination, which can fluctuate during interim periods but is typically relatively unchanged by fiscal year end.

~~Income taxes. Income tax benefit for the quarter ended December 31, 2009 increased $1.5~~23 million to $9.6 million from $8.1 million for the quarter ended December 31, 2008. Our effective tax rate for the quarters ended December 31, 2009 and 2008 was 39.2% and 40.0%, respectively. Our effective tax rate differs from the statutory tax rate primarily as a result of state income taxes.

NineTable Monthsof Ended December 31, 2009 Compared With Nine Months Ended December 31, 2008. Contents

~~Revenues.~~For ~~Revenues~~an explanation of why EBITDA is a useful measure in evaluating our operating results and provides additional information for determining our ability to meet debt service requirements, see “EBITDA Results” earlier in this Item. The following presentation reconciles net income (loss), which we believe to be the ~~nine~~closest ~~months~~GAAP ~~ended~~performance ~~December 31~~measure, ~~2009~~to EBITDA and ~~2008~~reconciles ~~and~~EBITDA to net cash flows from operating activities, which we believe to be the ~~corresponding~~closest GAAP liquidity measure, ~~change~~and inalso ~~revenues~~sets ~~were~~forth net cash flows from investing and financing activities as ~~follows~~presented in the Condensed Consolidated Statements of Cash Flows included in Item 1, Financial Statements:

							Change
	Quarter Ended June 30,
	2009			2008			Amount			Percentage
	2010			2009
Bookstore Division	$	306,789,449		$	305,790,666		$	998,783			0.3	%
Net loss	$	(11,925,319	)	$	(12,053,978	)
Textbook Division		117,152,302			125,283,878			(8,131,576	)		(6.5	)%
Interest expense, net		10,599,944			9,699,327
Complementary Services Division		25,892,739			25,542,197			350,542			1.4	%
Income tax benefit		(8,218,000	)		(7,771,000	)
Intercompany Eliminations		(37,695,931	)		(37,822,365	)		126,434			(0.3	)%
Depreciation and amortization		4,294,288			4,890,726
	$	412,138,559		$	418,794,376		$	(6,655,817	)		(1.6	)%
EBITDA	$	(5,249,087	)	$	(5,234,925	)
Share-based compensation		296,976			243,649
Interest income		47,085			—
Provision for losses on receivables		295,113			77,782
Cash paid for interest		(10,362,374	)		(4,792,125	)
Cash paid for income taxes		(169,353	)		(529,525	)
Loss on disposal of assets		25,532			44,390
Change in due to parent		(1,424,000	)		(1,403,000	)
Changes in operating assets and liabilities, net of effect of acquisitions (1)		(23,716,242	)		(23,932,468	)
Net Cash Flows from Operating Activities	$	(40,256,350	)	$	(35,526,222	)
Net Cash Flows from Investing Activities	$	(6,631,791	)	$	(2,144,648	)
Net Cash Flows from Financing Activities	$	1,139,265		$	5,688,979

~~The~~(1) ~~increase~~Changes in ~~Bookstore~~operating ~~Division~~assets ~~revenues was attributable to additional revenues from new bookstores, which was mostly offset by decreases in revenues due to a decrease in same-store sales~~ and ~~certain store closings. We have added 37 bookstore locations through acquisitions or start-ups since April 1~~liabilities, ~~2008.~~net ~~The~~of ~~new~~effect ~~bookstores provided an additional $13.8 million~~ of ~~revenue for the nine months ended December 31~~acquisitions, ~~2009.~~include ~~Same-store sales for~~ the ~~nine~~changes ~~months~~in ~~ended December 31, 2009 decreased $6.5 million, or 2.3%, from~~ the ~~nine~~balances ~~months~~of ~~ended December 31~~receivables, ~~2008~~inventories, ~~primarily~~prepaid ~~due~~expenses ~~to decreased new textbook revenues~~ and toother acurrent ~~smaller~~assets, ~~decrease~~other inassets, ~~clothing~~accounts ~~and insignia wear revenues~~payable, ~~which~~ ~~was~~accrued ~~slightly~~employee ~~offset~~compensation byand ~~an increase in used textbook revenues. We define same-store sales for the nine months ended December 31~~benefits, ~~2009~~accrued ~~as sales from any store~~incentives, ~~even~~accrued ~~if expanded or relocated~~expenses, ~~that~~ wedeferred ~~have operated since the start of fiscal year 2009. In addition~~revenue, ~~revenues~~and ~~declined~~other ~~$6.3 million~~long-term ~~as a result of certain store closings since April 1, 2008~~liabilities.

~~For~~Depreciation ~~the nine months ended December 31, 2009, Textbook Division revenues decreased $8~~expense.~~1 million,~~ orDepreciation ~~6.5%,~~expense ~~from~~for the ~~nine~~quarter ~~months~~ ended ~~December~~June 3130, ~~2008,~~2010 ~~due~~was comparable to ~~a 4.7% decrease in units sold and a 0.2% decrease in average price per book sold. Complementary Services Division revenues increased $0.4 million, or 1.4%, from~~ the ~~nine~~quarter ~~months~~ ended ~~December~~June 3130, ~~2008, as increases in revenues in our distance education and e-commerce businesses were mostly offset by a decrease in revenues from our consulting business~~2009. ~~Intercompany eliminations decreased $0.1 million, or 0.3%.~~

~~Gross profit~~Amortization expense. ~~Gross~~Amortization ~~profit~~expense for the ~~nine~~quarter ~~months~~ ended ~~December~~June 3130, ~~2009~~2010 ~~increased~~decreased $0.26 million, ~~or 0.1%,~~ to $~~159~~2.82 million from $~~159~~2.68 million for the ~~nine~~quarter ~~months~~ ended ~~December~~June 3130, ~~2008.~~ ~~The~~2009, ~~increase in gross profit was~~ primarily ~~attributable~~due to ~~increased revenues and gross~~a ~~profit~~decrease in ~~the~~amortization ~~Bookstore~~of ~~and~~non-compete ~~Complementary~~agreements ~~Services~~associated ~~Divisions.~~with ~~The~~bookstore ~~consolidated~~acquisitions ~~gross margin~~and ~~percentage~~software ~~increased~~development ~~to 38~~costs.~~8% for the nine months ended December 31, 2009 from 38.1% for the nine~~ ~~months ended December 31, 2008. The increase in our consolidated gross margin percentage is primarily attributable to increases in the gross margin percentage for all of our operating divisions.~~

~~Selling~~Interest expense, ~~general~~ ~~and administrative expenses~~net. ~~Selling~~Interest expense, ~~general~~net ~~and administrative expenses~~ for the ~~nine~~quarter ~~months~~ ended ~~December~~June 3130, ~~2009~~2010 ~~decreased~~ increased $40.59 million, ~~or 3.7%,~~ to $~~117~~10.36 million from $~~121~~9.87 million for the ~~nine~~quarter ~~months~~ ended ~~December~~June 3130, ~~2008. Selling, general and administrative expenses as a percentage of revenues were 28.5% and 29.1% for the nine months ended December 31,~~ 2009 ~~and 2008~~, ~~respectively. The decrease in selling, general and administrative expenses is~~ primarily ~~attributable~~ due to a $50.46 million ~~decrease~~increased ininterest ~~personnel~~on ~~costs~~the ~~and~~Senior aSecured ~~$2.5 million~~Notes ~~decrease in advertising and travel expenses,~~ which ~~were~~replaced ~~primarily due to cost cutting measures implemented during~~ the ~~last~~Term ~~quarter~~Loan ofand ~~fiscal year 2009. These decreases were partially offset by~~ a $20.5 4 million increase in ~~commission~~amortization ~~expense,~~of ~~primarily~~additional ~~due~~prepaid toloan ancosts ~~increase~~related into ~~sales~~the onissuance of the ~~internet involving~~Senior ~~third-party~~Secured ~~websites~~Notes and aentering ~~$1.4 million~~into ~~increase in rent expense, primarily due to an increase in~~ the ~~number~~ABL ofCredit ~~stores~~Agreement.

Income taxes. Income tax benefit for the quarter ended June 30, 2010 increased $0.4 million to $8.2 million from $7.8 million for the quarter ended June 30, 2009. Our effective tax rate for the quarters ended June 30, 2010 and 2009 was 40.8% and 39.2%, respectively. Our effective tax rate differs from the statutory tax rate primarily as a result of state income taxes.

~~Earnings (loss) before interest, taxes, depreciation, amortization, and loss on early~~24 ~~extinguishment of debt (Adjusted EBITDA). Adjusted EBITDA for the nine months ended December 31, 2009 and 2008 and the corresponding change in Adjusted EBITDA were as follows:~~

							Change
	2009			2008			Amount			Percentage
Bookstore Division	$	22,175,114		$	17,884,424		$	4,290,690			24.0	%
Textbook Division		31,831,524			32,115,491			(283,967	)		(0.9	)%
Complementary Services Division		1,669,013			657,971			1,011,042			153.7	%
Corporate Administration		(13,187,402	)		(12,888,985	)		(298,417	)		(2.3	)%
	$	42,488,249		$	37,768,901		$	4,719,348			12.5	%

~~Bookstore~~CRITICAL ~~Division~~ACCOUNTING ~~Adjusted~~POLICIES ~~EBITDA~~AND ~~increased $4.3 million, or 24.0%, from the nine months~~ESTIMATES ended December 31, 2008, due to a decrease in selling, general and administrative expenses and an increase in revenues and gross profit. The decrease in Textbook Division Adjusted EBITDA from the nine months ended December 31, 2008 was primarily due to the decrease in revenues which was mostly offset by a decrease in selling, general and administrative expenses. Complementary Services Division Adjusted EBITDA increased $1.0 million from the nine months ended December 31, 2008, primarily due to improved results in our distance education, e-commerce and systems businesses. Corporate Administration’s Adjusted EBITDA loss increased slightly from the nine months ended December 31, 2008, primarily due to an increase in professional services.

~~For~~Management’s anDiscussion ~~explanation~~and Analysis of ~~why~~Financial ~~EBITDA~~Condition and ~~Adjusted~~Results ~~EBITDA~~of ~~are~~Operations discusses ~~useful~~our ~~measures~~condensed inconsolidated ~~evaluating~~financial ~~our~~statements, which have been prepared in accordance ~~operating~~with ~~results~~accounting ~~and~~principles ~~provide~~generally ~~additional~~accepted ~~information~~in ~~for~~the ~~determining~~United ~~our~~States ~~ability~~of toAmerica. ~~meet~~The ~~debt~~preparation of ~~service~~these ~~requirements,~~condensed ~~see~~consolidated ~~“Adjusted~~financial ~~EBITDA~~statements ~~Results”~~requires ~~elsewhere~~us into ~~Management’s~~make ~~Discussion~~estimates and assumptions ~~Analysis~~that affect the reported amounts of ~~Financial~~assets ~~Condition~~and liabilities and ~~Results~~the disclosure of ~~Operations~~contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. ~~The~~On ~~following~~an ~~presentation~~on-going ~~reconciles~~basis, we evaluate ~~Net~~our ~~Income~~estimates ~~(Loss)~~and judgments, ~~which~~including wethose ~~believe~~related to bereturns, ~~the~~bad ~~closest~~debts, ~~GAAP~~inventory ~~performance~~valuation ~~measure~~and obsolescence, togoodwill ~~EBITDA~~and intangible assets, rebate programs, income taxes, and contingencies and ~~Adjusted~~litigation. ~~EBITDA~~We base our estimates and ~~reconciles~~judgments ~~EBITDA~~on historical experience and ~~Adjusted~~on ~~EBITDA~~various other factors that management believes to ~~net~~be ~~cash~~reasonable ~~flows~~under ~~from~~the ~~operating activities~~circumstances, the results of which form wethe ~~believe~~basis tofor bemaking judgments about the ~~closest~~carrying ~~GAAP~~values ~~liquidity~~of ~~measure,~~assets and ~~also~~liabilities ~~sets~~that ~~forth~~are not ~~net~~readily ~~cash flows~~apparent from ~~investing~~other ~~and~~sources. ~~financing~~Actual ~~activities~~results asmay ~~presented~~differ infrom these estimates under different assumptions or conditions. We believe the ~~condensed~~following ~~consolidated~~critical ~~statements~~accounting policies, among others, affect our more significant judgments and estimates used in the preparation of ~~cash~~our condensed ~~flows~~consolidated financial statements:

	Nine Months Ended December 31,
	2009			2008
Net income (loss)	$	(3,067,623	)	$	124,495
Interest expense, net		29,927,844			23,554,692
Income tax expense (benefit)		(1,977,000	)		83,000
Depreciation and amortization		14,539,269			14,006,714
EBITDA	$	39,422,490		$	37,768,901
Loss on early extinguishment of debt		3,065,759			—
Adjusted EBITDA	$	42,488,249		$	37,768,901
Share-based compensation		789,162			748,223
Interest income		104,441			342,610
Provision for losses on receivables		414,247			89,592
Cash paid for interest		(21,120,029	)		(18,511,767	)
Cash paid for income taxes		(2,900,688	)		(7,700,759	)
Loss on disposal of assets		140,783			56,752
Change in due to parent		(2,868,000	)		(2,788,000	)
Changes in operating assets and liabilities, net of effect of acquisitions (1)		(54,773,544	)		(48,147,530	)
Net Cash Flows from Operating Activities	$	(37,725,379	)	$	(38,141,978	)
Net Cash Flows from Investing Activities	$	(6,677,450	)	$	(11,858,759	)
Net Cash Flows from Financing Activities	$	17,179,397		$	38,981,308

Revenue Recognition. We recognize revenue from Textbook Division sales at the time of shipment. We have established a program which, under certain conditions, enables our customers to return textbooks. We record reductions to revenue and costs of sales for the estimated impact of textbooks with return privileges which have yet to be returned to the Textbook Division. External customer returns over the past three fiscal years have ranged from approximately 22.9% to 24.8% of sales. Additional reductions to revenue and costs of sales may be required if the actual rate of returns exceeds the estimated rate of returns. Consistent with prior years, the estimated rate of returns is determined utilizing actual historical return experience. The accrual rate for customer returns at March 31, 2010 and June 30, 2010 was approximately 24.5% of sales.

~~(1)~~Bad ~~Changes~~Debts. inWe ~~operating~~maintain ~~assets~~allowances ~~and~~for ~~liabilities,~~doubtful ~~net~~accounts offor ~~effect~~estimated losses resulting from the inability of ~~acquisitions~~our customers to make required payments. Consistent with prior years, ~~include~~in determining the ~~changes~~adequacy inof the ~~balances~~allowance, we analyze the aging of ~~receivables~~the receivable, ~~inventories~~the customer’s financial position, ~~prepaid~~historical ~~expenses~~collection experience, and other ~~current~~economic ~~assets,~~and ~~other~~industry ~~assets,~~factors. ~~accounts~~Net charge-offs ~~payable~~over the past three fiscal years have been between $0.5 million and $1.4 million, ~~accrued~~or 0.1% ~~employee~~to ~~compensation~~0.3% of revenues. We have maintained an allowance for doubtful accounts between $1.0 million and ~~benefits~~$1.2 million, ~~accrued~~or ~~incentives~~0.2% to 0.3% of revenues, ~~accrued~~over ~~expenses~~the past three fiscal years. If the financial condition of our customers were to deteriorate, ~~deferred~~resulting ~~revenue~~in an impairment of their ability to make payments, ~~and~~additional ~~other~~allowances ~~long-term~~may ~~liabilities~~be required.

Inventory Valuation and Obsolescence. Inventories, including rental inventory, are stated at the lower of cost or market. The cost of used textbook inventories is determined using the weighted-average method. Our Bookstore Division uses the retail inventory method to determine cost for new textbook and non-textbook inventories. The cost of other inventories is determined on a first-in, first-out cost method. Consistent with prior years, we account for inventory obsolescence based upon assumptions about future demand and market conditions. At March 31, 2010 and June 30, 2010, used textbook inventory was subject to an obsolescence reserve of $2.3 million. For the two prior fiscal years, the obsolescence reserve was between $2.3 million and $2.4 million. If actual future demand or market conditions are less favorable than those projected by us, inventory write-downs may be required. In determining inventory adjustments, we consider amounts of inventory on hand, projected demand, new editions, and industry factors.

~~Depreciation~~Goodwill ~~expense~~and Intangible Assets. ~~Depreciation~~Our ~~expense~~acquisitions ~~for~~of college bookstores result in the application ~~nine~~of ~~months~~the ~~ended~~acquisition ~~December 31~~method of accounting as of the acquisition date. In certain circumstances, ~~2009~~our management performs valuations where appropriate to determine the fair value of ~~increased~~assets $0acquired and liabilities assumed.~~7 million~~ toThe $6goodwill in such transactions is determined by calculating the difference between the consideration transferred and the fair value of net assets acquired.~~2 million~~ ~~from~~We $5evaluate the impairment of the carrying value of our goodwill and identifiable intangibles in accordance with applicable accounting standards, including the Intangibles - Goodwill and Other and the Property, Plant and Equipment Topics of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”).5 In accordance with such standards, we evaluate impairment on goodwill and certain identifiable intangibles annually at March ~~million~~31 and evaluate impairment on all intangibles whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. We are required to make certain assumptions and estimates regarding the fair value of intangible assets when assessing such assets for impairment. We evaluate goodwill at the ~~nine~~reporting ~~months~~unit ~~ended~~level ~~December 31,~~and have identified our ~~2008~~reportable segments, ~~due~~the ~~primarily~~Textbook toDivision, ~~additional~~Bookstore ~~bookstores~~Division and Complementary Services Division, as our reporting units. Our reporting units are determined based on the way management organizes the segments for making operating decisions and assessing performance. Management has organized our reporting segments based upon differences in products and services provided.

~~Amortization expense. Amortization expense for the nine months ended December 31, 2009~~25 decreased by $0.2 million to $8.3 million from $8.5 million for the nine months ended December 31, 2008, primarily due to a decrease in amortization of non-compete agreements associated with bookstore acquisitions, which was partially offset by an increase in amortization of contract-managed acquisition costs primarily associated with bookstore acquisitions and contract-management renewals and an increase in amortization of capitalized software development costs.

InterestTable expense, net. Interest expense, net for the nine months ended December 31, 2009 increased $6.3 million to $29.9 million from $23.6 million for the nine months ended December 31, 2008, primarily due to a $4.7 million increase in interest on the Term Loan and Senior Secured Notes mainly due to higher interest rates and a $2.0 million increase in amortization of additional prepaid loan costs related to the issuance of the Senior Secured Notes and entering into the ABL Credit Agreement. These increases were partially offset by a $0.6 million decline in interest on the Revolving Credit Facility due to lower outstanding indebtedness. Contents

~~Loss~~In the first step of our goodwill impairment test, fair value is determined using a market approach based primarily on ~~extinguishment~~an EBITDA multiple, and is deemed to be the most indicative of ~~debt~~the Company’s fair value. The ~~loss~~EBITDA onmultiple ~~extinguishment~~approach ofrequires ~~debt~~that we estimate a certain valuation multiple of $3EBITDA derived from comparable companies and apply that multiple to our last twelve-month pro forma EBITDA.~~1 million~~ ~~for~~We reviewed comparable company information to determine the EBITDA ~~nine~~multiple ~~months~~and ~~ended~~concluded ~~December~~that 6.76x was an appropriate EBITDA multiple at March 31, 2010 and 7.0x was appropriate at March 31, 2009. ~~relates~~This total company fair value is allocated to the ~~write-off~~reporting units based upon their percentage of ~~debt~~EBITDA. ~~issue~~The ~~costs~~fair asvalue awas ~~result~~also calculated using the income approach (discounted cash flow approach) and we concluded that it was supportive of the fair value ~~termination~~based upon the EBITDA multiple approach. If we fail the first step of the ~~Term~~goodwill ~~Loan~~impairment test, we are required, in the second step, to estimate the fair value of reporting unit assets and liabilities, ~~Revolving~~including ~~Credit~~intangible ~~Facility~~assets, to derive the fair value of the reporting unit’s goodwill.

~~Income~~Due ~~taxes.~~to ~~Income~~the ~~tax~~economic ~~benefit~~downturn ~~for~~and changes in comparable company market multiples, we determined in the ~~nine~~first ~~months~~step ~~ended~~of ~~December~~our goodwill impairment test conducted at March 31, 2009, ~~increased~~that $2the carrying values of the Textbook and Bookstore Divisions exceeded their fair values, indicating that goodwill may be impaired.1 Having determined that goodwill may be impaired, we performed the second step of ~~million~~the goodwill impairment test which involves calculating the implied fair value of goodwill by allocating the fair value of the reporting unit to all of its assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing the residual amount to the carrying value of goodwill. As a result, we recorded an impairment charge of $2107.0 million ~~from~~in anfiscal ~~expense~~year 2009. The carrying value of goodwill in excess of the implied fair value at March 31, 2009 was $67.0 million and $40.10 million for the ~~nine~~Textbook ~~months~~and ~~ended~~Bookstore ~~December 31~~Divisions, ~~2008~~respectively. ~~Our~~At ~~effective~~March 31, ~~tax~~2010, ~~rate~~the ~~for~~date of the ~~nine~~most ~~months~~recent ~~ended~~step ~~December 31~~one test, ~~2009~~after ~~and~~adjusting ~~2008~~the carrying ~~was~~values 39for goodwill impairment, the fair value of the Textbook Division exceeded the carrying value of $210.27 million by 4.8% and the Bookstore Division fair value exceeded the 40carrying value of $244.~~0%,~~5 million ~~respectively~~by 4.7%. ~~Our~~We ~~effective~~continue ~~tax~~to ~~rate~~monitor ~~differs~~events ~~from~~and circumstances which may affect the ~~statutory~~fair ~~tax~~values ~~rate~~of ~~primarily~~both asreporting aunits, including current market conditions, and we ~~result~~believe that both reporting units are still at risk of ~~state~~failing ~~income~~step ~~taxes~~one of the impairment test.

~~CRITICAL~~We ~~ACCOUNTING~~are ~~POLICIES~~also ~~AND~~required ~~ESTIMATES~~to make certain assumptions and estimates when assigning an initial value to covenants not to compete arising from bookstore acquisitions. Changes in the fact patterns underlying such assumptions and estimates could ultimately result in the recognition of impairment losses on intangible assets.

~~Management’s~~We ~~Discussion~~monitor ~~and~~relevant ~~Analysis~~circumstances, ofincluding ~~Financial~~industry ~~Condition~~trends, ~~and~~general ~~Results~~economic ofconditions, ~~Operations~~and ~~discusses~~the ~~our~~potential ~~condensed~~impact ~~consolidated~~that ~~financial~~such ~~statements,~~circumstances ~~which~~might have ~~been~~on ~~prepared in accordance with accounting principles generally accepted in~~ the ~~United~~valuation ~~States~~ of ~~America.~~our ~~The~~goodwill ~~preparation of~~and ~~these~~identifiable ~~condensed~~intangibles. ~~consolidated~~It ~~financial~~is ~~statements~~possible ~~requires us to make estimates and assumptions~~ that ~~affect~~changes ~~the~~in ~~reported~~such ~~amounts~~circumstances, ofor ~~assets~~in ~~and liabilities and~~ the ~~disclosure of contingent assets~~numerous ~~and~~variables ~~liabilities~~associated atwith the ~~date~~judgments, ofassumptions ~~the condensed consolidated financial statements~~ and ~~the~~estimates ~~reported amounts~~made ofby ~~revenues~~us ~~and~~in ~~expenses~~assessing ~~during~~ the appropriate ~~reporting~~valuation ~~period.~~of ~~On an on-going basis, we evaluate~~ our ~~estimates~~goodwill and ~~judgments~~identifiable intangibles, including ~~those~~a ~~related~~further deterioration toin ~~returns,~~the ~~bad~~economy ~~debts,~~or ~~inventory~~debt ~~valuation~~markets ~~and obsolescence,~~or ~~goodwill~~a ~~and~~significant ~~intangible~~delay ~~assets,~~in ~~rebate~~the ~~programs,~~expected ~~income taxes~~recovery, ~~and contingencies and~~could ~~litigation.~~in Wethe ~~base~~future ~~our~~require ~~estimates~~us ~~and~~to ~~judgments~~further onwrite ~~historical~~down ~~experience~~a ~~and~~portion onof ~~various~~our ~~other factors~~goodwill ~~that~~or ~~management~~write ~~believes~~down toa beportion ~~reasonable under the circumstances, the results~~ of ~~which~~ ~~form~~our ~~the~~identifiable ~~basis~~intangibles ~~for~~and ~~making~~record ~~judgments~~related ~~about~~non-cash ~~the~~impairment ~~carrying~~charges. ~~values~~If ofwe ~~assets~~were ~~and~~to ~~liabilities that are~~have ~~not~~used ~~readily~~a ~~apparent~~multiple ~~from~~of ~~other sources~~6.44x ~~Actual~~or ~~results~~below ~~may~~at ~~differ~~March 31, ~~from~~2010, ~~these~~we ~~estimates~~would ~~under different~~have ~~assumptions~~performed ~~or conditions. We believe~~ the ~~following~~second ~~critical~~step ~~accounting~~of ~~policies, among~~the ~~others,~~goodwill ~~affect~~impairment ~~our~~test ~~more~~to ~~significant~~determine ~~judgments and estimates used in~~ the ~~preparation~~goodwill ofimpairment, ~~our condensed~~if ~~consolidated financial statements:~~any.

~~Revenue~~Accrued ~~Recognition~~Incentives. WeOur ~~recognize~~Textbook ~~revenue~~Division ~~from~~offers ~~Textbook~~certain ~~Division~~incentive ~~sales~~programs atto its customers that allow the ~~time~~participating ofcustomers the opportunity to earn rebates for used textbooks sold to ~~shipment~~the Textbook Division. WeThe ~~have~~rebates ~~established~~can be redeemed in a ~~program~~number ~~which~~of ways, ~~under~~including to pay for freight charges on textbooks sold to the customer or to pay for certain ~~conditions,~~products ~~enables~~or services we offer through our ~~customers~~Complementary Services Division. The customer can also use the rebates to pay ~~return~~for the cost of textbooks sold by the Textbook Division to the customer; however, a portion of the rebates earned by the customer are forfeited if the customer chooses to use rebates in this manner. If Wethe ~~record~~customer ~~reductions~~fails to ~~revenue~~comply ~~and~~with ~~costs~~the terms of ~~sales~~the ~~for~~program, rebates earned during the ~~estimated~~year ~~impact~~are forfeited. Significant judgment is required in estimating the expected level of forfeitures on ~~textbooks~~rebates ~~with~~earned. ~~return~~Although ~~privileges~~we believe that our estimates of anticipated forfeitures, which have consistently ~~yet~~been tobased beupon ~~returned~~historical toexperience, ~~the~~are ~~Textbook~~reasonable, ~~Division.~~actual results could differ ~~External~~from ~~customer~~these ~~returns~~estimates ~~over~~resulting in an ultimate redemption of rebates which differs from that which is reflected in accrued incentives in the condensed consolidated financial statements. For the past three fiscal years, actual forfeitures have ranged ~~from~~between ~~approximately 23~~9.04% toand 2316.56% of ~~sales.~~rebates ~~Additional~~earned within ~~reductions~~those toyears. ~~revenue~~After ~~and~~adjusting ~~costs~~for ofestimated ~~sales~~forfeitures, ~~may~~rebates beearned ~~required~~are ~~if the~~accrued ~~actual~~at a rate of ~~returns~~approximately ~~exceeds~~13.5% of the ~~estimated~~dollar ~~rate~~value of ~~returns.~~eligible ~~Consistent~~textbooks ~~with~~purchased ~~prior~~by ~~years,~~ the Textbook ~~estimated~~Division. ~~rate~~Accrued ofincentives ~~returns~~at isMarch 31, ~~determined~~2010 ~~utilizing~~and ~~actual~~June 30, ~~historical~~2010 ~~return~~were ~~experience~~$6.3 million ~~The~~and ~~accrual~~$7.8 ~~rate~~million, respectively, including estimated forfeitures, however, if we accrued for ~~customer~~rebates ~~returns~~earned and atunused as of March 31, ~~2009~~2010 ~~was~~and ~~approximately~~June 30, 232010, assuming no forfeitures, our accrued incentives would have been $7.3%0 million ofand ~~sales~~$8.7 million, respectively.

~~Bad Debts. We maintain allowances for doubtful accounts for estimated losses resulting from~~26 the inability of our customers to make required payments. Consistent with prior years, in determining the adequacy of the allowance, we analyze the aging of the receivable, the customer’s financial position, historical collection experience, and other economic and industry factors. Net charge-offs over the past three fiscal years have been between $0.5 million and $1.1 million, or 0.1% to 0.2% of revenues. We have maintained an allowance for doubtful accounts between $1.0 million and $1.3 million, or 0.2% to 0.3% of revenues, over the past three fiscal years. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

32 Table of Contents

~~Inventory Valuation~~Income ~~and Obsolescence~~Taxes. ~~Inventories~~We ~~are~~account ~~stated~~for atincome ~~the~~taxes ~~lower~~by ofrecording ~~cost~~taxes payable or ~~market.~~refundable for the ~~The~~current ~~cost~~fiscal ofyear ~~used~~and ~~textbook~~deferred ~~inventories~~tax isassets ~~determined~~and ~~using~~liabilities ~~the~~for ~~weighted-average~~future ~~method.~~tax ~~Our Bookstore~~consequences ~~Division~~of ~~uses~~events that ~~the~~have ~~retail~~been ~~inventory~~recognized ~~method~~in toour ~~determine~~condensed ~~cost~~consolidated ~~for~~financial ~~new~~statements ~~textbook~~or ~~and~~the consolidated ~~non-textbook~~income ~~inventories~~tax returns. ~~The~~Significant ~~cost~~judgment ofis ~~other~~required ~~inventories~~in isdetermining ~~determined~~the onprovision afor ~~first-in,~~income ~~first-out~~taxes ~~cost~~and ~~method.~~related ~~Consistent~~accruals, ~~with~~deferred ~~prior~~tax ~~years~~assets, weand ~~account~~deferred ~~for~~tax ~~inventory~~liabilities. ~~obsolescence~~In ~~based~~the ~~upon~~ordinary course of ~~assumptions~~business, ~~about~~there ~~future~~are ~~demand~~transactions and ~~market~~calculations ~~conditions.~~where Atthe ~~March 31,~~ultimate ~~2009,~~tax ~~used~~outcome ~~textbook~~is ~~inventory~~uncertain. ~~was~~Additionally, ~~subject~~the toconsolidated anincome ~~obsolescence~~tax ~~reserve~~returns ofare ~~$2.4 million.~~subject ~~For~~to ~~the~~audit ~~past~~by ~~three~~various ~~fiscal~~tax ~~years, the~~authorities. ~~obsolescence~~Although ~~reserve~~we ~~has~~believe ~~been~~that ~~between~~our ~~$2.0 million~~estimates ~~and~~are ~~$2.4 million.~~reasonable, If actual ~~future~~results ~~demand~~could ~~or market~~differ ~~conditions~~from ~~are~~these estimates ~~less~~resulting ~~favorable~~in ~~than~~a ~~those~~final ~~projected~~tax byoutcome ~~us,~~that ~~inventory write-downs~~ may be ~~required.~~ Indifferent ~~determining~~from ~~inventory~~that ~~adjustments,~~which weis ~~consider~~reflected ~~amounts of inventory on hand,~~in ~~projected~~the ~~demand,~~condensed ~~new~~consolidated ~~editions,~~financial ~~and industry factors~~statements.

~~Goodwill and~~LIQUIDITY ~~Intangible~~AND ~~Assets.~~CAPITAL ~~Our acquisitions of college bookstores result in the~~RESOURCES application of the acquisition method of accounting as of the acquisition date. In certain circumstances, our management performs valuations where appropriate to determine the fair value of assets acquired and liabilities assumed. The goodwill in such transactions is determined by calculating the difference between the consideration transferred and the fair value of net assets acquired. We evaluate the impairment of the carrying value of our goodwill and identifiable intangibles in accordance with applicable accounting standards, including the Intangibles — Goodwill and Other Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the Property, Plant and Equipment Topic of the FASB ASC. In accordance with such standards, we evaluate impairment on goodwill and certain identifiable intangibles annually at March 31 and evaluate impairment on all intangibles whenever events or changes in circumstances indicate that the carrying amounts of such assets may not be recoverable. We are required to make certain assumptions and estimates regarding the fair value of intangible assets when assessing such assets for impairment. We evaluate goodwill at the reporting unit level and have identified our reportable segments, the Textbook Division, Bookstore Division and Complementary Services Division, as our reporting units. Our reporting units are determined based on the way management organizes the segments for making operating decisions and assessing performance. Management has organized our reporting segments based upon differences in products and services provided.

~~Due~~Financing ~~to the economic downturn and changes in comparable company market multiples, we determined~~Activities in the first step of our goodwill impairment test conducted at March 31, 2009, that the carrying values 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 which involves calculating the implied fair value of goodwill by allocating the fair value of the reporting unit to all of its assets and liabilities other than goodwill (including both recognized and unrecognized intangible assets) and comparing the residual amount to the carrying value of goodwill. As a result, we recorded an impairment charge of $107.0 million in fiscal year 2009. The carrying value of goodwill in excess of the implied fair value at March 31, 2009 was $67.0 million and $40.0 million for the Textbook and Bookstore Divisions, respectively. At March 31, 2009, the date of the most recent step one test, after adjusting the carrying values for goodwill impairment, the fair value of the Textbook Division exceeded the carrying value of $213.0 million by 10.5% and the Bookstore Division fair value approximated the carrying value. Remaining goodwill, at March 31, 2009, assigned to the Textbook Division was $34.6 million and to the Bookstore Division was $180.8 million. We continue to monitor events and circumstances which may affect the fair values of both reporting units, including current market conditions, and we believe that both reporting units are still at risk of failing step one of the impairment test.

InOur ~~the~~primary ~~first~~liquidity ~~step~~requirements ofare ~~our~~for ~~goodwill~~debt ~~impairment~~service ~~test,~~under ~~fair~~the ~~value~~ABL isCredit ~~determined~~Agreement, ~~using a market~~the ~~approach~~Senior ~~based~~Secured ~~primarily~~Notes, onthe anSenior ~~EBITDA~~Subordinated ~~multiple,~~Notes and isother ~~deemed~~outstanding toindebtedness, befor dividends ~~the~~to ~~most~~fund ~~indicative~~interest ofpayments ~~the Company’s~~due ~~fair~~at ~~value.~~our ~~The~~parent ~~EBITDA~~company, ~~multiple~~NBC ~~approach~~Acquisition ~~requires~~Corp. ~~that~~(“NBC”), wefor working ~~estimate~~capital, afor ~~certain~~income ~~valuation multiple~~tax ofpayments, ~~EBITDA~~for ~~derived~~capital ~~from~~expenditures ~~comparable companies~~ and ~~apply~~for ~~that~~certain ~~multiple to our latest twelve~~acquisitions. ~~month~~We ~~pro~~have ~~forma~~historically ~~EBITDA.~~funded Wethese ~~reviewed~~requirements ~~comparable~~primarily ~~company~~through ~~information~~internally togenerated ~~determine~~cash ~~the EBITDA~~flows ~~multiple~~ and ~~concluded~~funds ~~that~~borrowed ~~7.0x~~under ~~was~~our anrevolving ~~appropriate~~credit ~~EBITDA multiple~~facility. ~~This~~At ~~total~~June 30, ~~company~~2010, ~~fair~~our ~~value~~total indebtedness iswas ~~allocated~~$377.5 million, toconsisting ~~the~~of ~~reporting~~a ~~units~~$75.0 million ~~based~~ABL ~~upon~~Facility, ~~their percentage~~ of ~~EBITDA~~which $0.9 million ~~The fair value~~ was ~~also calculated using the income approach~~ ~~(discounted~~outstanding ~~cash~~under ~~flow~~a ~~approach)~~letter ~~and~~of wecredit ~~concluded~~at ~~that~~June 30, it2010, ~~was~~$200.0 million ~~supportive~~ of ~~the~~Senior ~~fair~~Secured ~~value based~~Notes ~~upon~~issued ~~the~~at ~~EBITDA~~a ~~multiple~~discount ~~approach~~of $1.0 million Inwith ~~the~~unamortized ~~second~~bond ~~step~~discount of ~~the goodwill impairment test~~$0.7 million, ~~we are~~$175.0 million ~~required~~of toSenior ~~estimate~~Subordinated ~~the~~Notes, ~~fair~~and ~~value~~$3.2 million of ~~reporting~~other ~~unit assets and liabilities~~indebtedness, including ~~intangible~~capital lease ~~assets,~~obligations. toTo ~~derive~~provide ~~the~~additional ~~fair~~financing ~~value~~to offund the ~~reporting~~March 4, ~~unit’s~~2004 ~~goodwill.~~Transaction, ~~For~~NBC ~~purposes of the second test~~issued ofsenior ~~the~~discount ~~goodwill impairment test~~notes, ~~we estimated~~ the ~~fair~~balance ~~value~~ of ~~our~~which ~~intangible~~at ~~assets tradename~~June 30, ~~customer~~ ~~relationships~~2010 ~~and~~was ~~developed~~$77.0 million ~~technology~~(face ~~using~~value) (the ~~relief-from-royalty market approach,~~ ~~excess~~“Senior ~~earnings~~Discount ~~method income approach and replacement cost approach, respectively~~Notes”).

33Principal and interest payments under the ABL Facility, the Senior Secured Notes, the Senior Subordinated Notes, and NBC’s Senior Discount Notes represent significant liquidity requirements for us.

WeThe ~~are~~ABL ~~also~~Facility ~~required~~is scheduled to ~~make~~mature ~~certain~~on ~~assumptions~~the ~~and~~earlier ~~estimates~~of ~~when~~October 2, ~~assigning~~2012 anor ~~initial~~the ~~value~~date that is 91 days prior to ~~covenants~~the earliest maturity of the Senior Secured Notes (due December 1, 2011), the Senior Subordinated Notes (due March 15, 2012), NBC’s Senior Discount Notes (due March 15, 2013), or any refinancing thereof. Borrowings under the ABL Facility are subject to the Eurodollar interest rate, not to ~~compete~~be ~~arising~~less than 1.5%, plus an applicable margin ranging from ~~bookstore~~4.25% ~~acquisitions~~to 4.75% ~~Changes~~or ina base interest rate. The base interest rate is the ~~fact~~greater ~~patterns~~of a) the prime rate, b) the federal ~~underlying~~funds ~~such~~rate ~~assumptions~~plus 0.5%, or c) the one-month Eurodollar loan rate plus 1.0%, not to be less than 2.5%, plus an applicable margin ranging from 3.25% to 3.75%. In addition, the applicable margin will increase 1.5% during the time periods from April 15 to June 29 and ~~estimates~~from ~~could~~December ~~ultimately~~1 ~~result~~to January 29 of each year. There also is a commitment fee ranging from 0.75% to 1.0%. The ABL Facility is secured by a first priority interest in ~~the~~substantially ~~recognition~~all of ~~impairment~~our and our subsidiaries’ property and assets, ~~losses~~which also secure the Senior Secured Notes on ~~intangible~~a ~~assets~~second priority basis.

WeThe ~~monitor~~Senior ~~relevant~~Secured ~~circumstances,~~Notes ~~including~~require ~~industry~~semi-annual ~~trends,~~interest ~~general~~payments ~~economic~~at ~~conditions,~~a ~~and the~~fixed ~~potential~~rate ~~impact that such circumstances might have on the valuation~~ of ~~our~~10.0% ~~goodwill~~ and ~~identifiable~~mature ~~intangibles. It is possible that changes in such circumstances~~December 1, or2011. inThe ~~the~~Senior ~~numerous variables~~Subordinated ~~associated~~Notes ~~with~~require ~~the~~semi-annual ~~judgments,~~interest ~~assumptions~~payments ~~and~~at ~~estimates made by us in assessing the~~a ~~appropriate~~fixed ~~valuation~~rate of ~~our~~8.625% ~~goodwill~~ and ~~identifiable~~mature ~~intangibles~~on March 15, ~~including~~2012. aNBC’s ~~further deterioration~~Senior inDiscount ~~the~~Notes ~~economy or debt markets or a significant delay in the expected recovery, could in the future~~ require ~~us to further write down a portion of our goodwill or write down a portion of our identifiable intangibles and record related non~~semi-annual cash ~~impairment~~interest ~~charges.~~payments Ifwhich webegan ~~were~~on ~~to have used a multiple of 6.5x~~September 15, we2008 ~~would~~at ~~have~~a ~~recorded~~fixed anrate ~~impairment charge~~ of ~~approximately $124~~11.0 ~~million~~% inand ~~fiscal~~mature ~~year~~on March 15, ~~2009~~2013.

~~Accrued~~We ~~Incentives.~~file ~~Our~~a ~~Textbook~~consolidated ~~Division~~federal ~~offers~~income ~~certain~~tax ~~incentive~~return ~~programs~~with toour ~~its~~parent ~~customers that~~company, ~~allow~~NBC, ~~the~~and ~~participating~~follow ~~customers the opportunity to earn rebates for used textbooks sold to~~a ~~the~~policy ~~Textbook Division. The rebates can be redeemed in a number~~ of ~~ways,~~recording ~~including~~income totaxes ~~pay~~equal ~~for freight charges on textbooks sold~~ to ~~the~~that ~~customer~~which orwould tohave ~~pay~~been ~~for~~incurred ~~certain~~had ~~products~~we orfiled ~~services we~~a ~~offer~~separate ~~through our Complementary Services Division~~return. ~~The~~We ~~customer~~are ~~can~~responsible ~~also use the rebates to pay~~ for ~~the~~remitting ~~cost~~tax ofpayments ~~textbooks~~and ~~sold~~collecting bytax ~~the~~refunds ~~Textbook~~for ~~Division to~~ the ~~customer; however, a portion of the~~ ~~rebates~~consolidated ~~earned~~group. byThe ~~the~~$1.4 million ~~customer~~increase ~~are forfeited if the customer chooses to use rebates~~ in ~~this manner. If~~ the ~~customer~~due ~~fails~~ to ~~comply~~parent ~~with~~balance ~~the~~for ~~terms of~~ the ~~program,~~three ~~rebates earned during the year are~~months ~~forfeited.~~ended ~~Significant~~June 30, ~~judgment~~2010 isrepresents ~~required in estimating~~ the ~~expected~~current ~~level~~period oftax ~~forfeitures~~savings ~~on rebates~~resulting ~~earned.~~from ~~Although~~operating ~~we believe that our estimates of anticipated forfeitures, which have~~losses ~~consistently~~generated ~~been~~by ~~based~~NBC ~~upon historical experience, are reasonable, actual results could differ~~ from ~~these estimates resulting in an ultimate redemption of rebates~~ which ~~differs~~we ~~from~~derive ~~that~~the ~~which is~~benefit ~~reflected~~through inreduced ~~accrued~~tax ~~incentives~~payments inon the ~~condensed~~ consolidated ~~financial statements. For the~~ ~~past three fiscal years, actual forfeitures have ranged between 13~~return.~~7% and 16.7% of rebates earned~~ within those years. Accrued incentives at March 31, 2009 were $6.1 million, including estimated forfeitures, however, if we accrued for rebates earned and unused as of March 31, 2009, assuming no forfeitures, our accrued incentives would have been $6.7 million.

~~Income Taxes.~~Investing WeCash ~~account for income taxes by recording taxes payable or refundable for the~~Flows current fiscal year and deferred tax assets and liabilities for future tax consequences of events that have been recognized in our condensed consolidated financial statements or the consolidated income tax returns. Significant judgment is required in determining the provision for income taxes and related accruals, deferred tax assets, and deferred tax liabilities. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, the consolidated income tax returns are subject to audit by various tax authorities. Although we believe that our estimates are reasonable, actual results could differ from these estimates resulting in a final tax outcome that may be different from that which is reflected in the condensed consolidated financial statements.

~~Changes~~Our incapital ~~Accounting~~expenditures ~~Standards~~were $1.6 million Inand ~~June~~$1.4 ~~2009,~~million for the ~~FASB~~three ~~Accounting~~months ~~Standards~~ended ~~Codification~~June ~~(“Codification”)~~30, ~~became~~2010 ~~the~~and ~~single~~2009, ~~source of authoritative GAAP~~respectively. ~~The~~Capital ~~Codification~~expenditures ~~did~~consist ~~not~~primarily ~~create any~~of ~~additional~~leasehold ~~GAAP standards but incorporated existing accounting~~ improvements and ~~reporting~~furnishings ~~standards~~for ~~into a~~ new ~~topical structure with a new referencing system to identify authoritative accounting standards~~bookstores, ~~replacing~~ ~~the~~bookstore ~~prior references to Statement of Financial Accounting Standards~~renovations, ~~Emerging~~computer ~~Issues~~upgrades ~~Task Force,~~and ~~FASB Staff Position, etc~~warehouse improvements. ~~Authoritative~~The ~~standards~~ABL ~~included~~Credit inAgreement ~~the~~does ~~Codification~~not ~~are designated~~have bya ~~their~~limitation ~~topical~~on ~~reference,~~capital ~~and~~expenditures ~~new~~other than ~~standards are designated~~ as ~~Accounting~~part ~~Standards Updates~~of ~~with~~the apro ~~year~~forma ~~and~~fixed ~~assigned~~charge ~~sequence~~coverage ~~number~~ratio. ~~References~~We toexpect ~~prior~~capital ~~standards~~expenditures ~~have~~to ~~been updated~~be inbetween ~~this~~$6.0 million ~~interim~~and ~~report~~$7.0 million for ~~the third quarter of~~ fiscal year ~~2010 to reflect the new referencing system~~2011.

~~LIQUIDITY AND CAPITAL RESOURCES~~27

FinancingTable Activities of Contents

~~Our~~Business ~~primary~~acquisition ~~liquidity~~and ~~requirements~~contract-management ~~are~~renewal ~~for~~expenditures ~~debt~~were ~~service~~$4.7 million ~~under~~and ~~the ABL Credit Agreement, the~~$0.7 ~~Senior~~million ~~Secured~~for ~~Notes,~~ the ~~Senior~~three ~~Subordinated~~months ~~Notes~~ended ~~and other outstanding indebtedness~~June 30, ~~for dividends~~2010 toand ~~fund interest payments due at our parent company~~2009, ~~NBC~~respectively. ~~Acquisition~~During ~~Corp.~~the ~~(“NBC”),~~three ~~for~~months ~~working~~ended ~~capital~~June 30, ~~for income tax payments~~2010, ~~for~~twelve ~~capital~~bookstore ~~expenditures~~locations ~~and~~were ~~for~~acquired ~~certain acquisitions.~~in Wenine ~~have~~separate ~~historically~~transactions ~~funded these requirements primarily through internally~~(eight ~~generated~~of ~~cash~~which ~~flows~~were ~~and~~contract-managed ~~funds borrowed under our revolving credit facility~~locations). AtDuring ~~December 31,~~the ~~2009, our~~three ~~total~~months ~~indebtedness~~ended ~~was $400.9~~June ~~million~~30, ~~consisting of a $75.0 million ABL Facility, of which $23.1 million was outstanding at December 31,~~ 2009, ~~$200.0 million of Senior Secured Notes issued~~seven atbookstore alocations ~~discount~~were ofacquired ~~$1.0 million~~in ~~with~~five ~~unamortized~~separate ~~bond~~transactions ~~discount~~(all of ~~$0.9 million,~~which ~~$175.0 million~~were ofcontract-managed ~~Senior Subordinated Notes, and $3~~locations).~~7 million~~ ofOur ~~other~~ability ~~indebtedness,~~to ~~including~~make ~~capital~~acquisition ~~lease obligations.~~expenditures Tois ~~provide~~subject ~~additional financing~~ to ~~fund~~certain ~~the~~restrictions ~~March 4, 2004 Transaction, NBC issued~~under ~~senior discount notes,~~ the ~~balance~~ABL ofCredit ~~which at December 31, 2009 was $77~~Agreement.~~0 million (face value)~~ ~~(the “Senior Discount Notes”).~~

34During the three months ended June 30, 2010 and 2009, we capitalized $0.4 million and $0.1 million, respectively, in software development costs associated with new software products and enhancements to existing software products.

~~Principal~~Operating ~~and~~Cash ~~interest payments under the ABL Facility, the Senior Secured Notes, the Senior~~Flows Subordinated Notes, and NBC’s Senior Discount Notes represent significant liquidity requirements for us. An excess cash flow payment of $6.0 million for fiscal year ended March 31, 2009 under the Senior Credit Facility was paid in September 2009. There was no excess cash flow obligation for the fiscal year ended March 31, 2008.

OnOur ~~October 2,~~principal ~~2009,~~sources ~~in conjunction with the completion~~ of ~~the~~cash ~~offering~~to offund ~~the~~our ~~Senior~~future ~~Secured Notes~~operating ~~and~~liquidity ~~payment~~needs inwill ~~full~~be ofcash ~~the~~from operating ~~Term~~activities ~~Loan,~~and weborrowings ~~entered~~under ~~into~~ the ABL ~~Credit Agreement which provides for the ABL~~ Facility. ~~and~~Usage ~~replaced~~of the ~~Revolving Credit Facility. The~~ ABL Facility isto ~~scheduled~~meet toour ~~mature~~liquidity onneeds ~~the~~will ~~earlier~~fluctuate ofthroughout ~~October 2, 2012 or~~ the ~~date~~fiscal ~~that~~year isdue ~~91 days~~to ~~prior~~our todistinct ~~the~~buying ~~earliest~~and ~~maturity~~selling ofperiods, ~~the~~increasing ~~Senior~~substantially ~~Secured~~at ~~Notes (due December 1, 2011),~~ the ~~Senior~~end ~~Subordinated~~of ~~Notes~~each ~~(due~~college ~~March 15, 2012),~~semester ~~NBC’s Senior Discount Notes~~ (~~due~~May ~~March 15,~~and ~~2013~~December)~~, or any refinancing thereof~~. ~~Borrowings~~Net cash ~~under~~flows ~~the~~used ~~ABL~~by ~~Facility~~operating ~~are~~activities ~~subject~~for to the ~~Eurodollar~~three ~~interest~~months ~~rate~~ended June 30, ~~not~~2010 towere ~~be less than 1~~$40.5%2 million, ~~plus~~up ~~an applicable margin ranging from~~ $4.~~25%~~7 million tofrom 4$35.~~75%~~5 million orfor ~~a base interest rate. The base interest rate is~~ the ~~greater~~three ofmonths a)ended ~~the prime rate~~June 30, ~~b) the federal funds rate plus 0~~2009.~~5%,~~ orThe c)increase ~~the~~in ~~one-month~~cash ~~Eurodollar~~used ~~loan~~by ~~rate~~operating ~~plus~~activities ~~1.0%,~~is ~~not~~primarily due to ~~be less than 2.5%, plus~~ an ~~applicable margin ranging from 3.25% to 3.75%. In addition, the applicable margin will~~ increase ~~1.5%~~in ~~during~~cash ~~the~~paid ~~time~~for ~~periods~~interest ~~from April 15 to June 29~~ and ~~from December 1 to January 29 of each year. There also is a commitment fee~~the ~~for~~timing ~~the average daily unused amount~~ of ~~the~~interest ~~ABL~~payments, ~~Facility~~with ~~ranging~~cash flows from ~~0.75%~~other tooperating ~~1.0%~~activities ~~for~~approximately offsetting ~~such~~each ~~unused amount~~other.

~~The~~As ~~Senior~~of ~~Secured~~June 30, ~~Notes~~2010, ~~require~~we ~~semi-annual~~had ~~interest~~$15.2 million ~~payments~~in atcash aavailable ~~fixed~~to ~~rate~~help fund working capital requirements. At certain times of 10the year, we also invest in cash equivalents.0% ~~and~~Any investments ~~mature~~in ~~December 1,~~cash ~~2011~~equivalents are subject to restrictions under the ABL Credit Agreement. The ~~Senior~~ABL ~~Subordinated~~Credit Agreement ~~Notes~~allows ~~require~~investments ~~semi~~in (1) certain short-~~annual~~term ~~interest~~securities ~~payments~~issued atby, aor unconditionally ~~fixed~~guaranteed ~~rate~~by, ofthe ~~8.625%~~federal government, (2) certain short-term deposits in banks that have combined capital and ~~mature~~surplus onof ~~March~~not less than $500 15million, ~~2012.~~(3) certain ~~The~~short-term ~~Senior~~commercial ~~Discount~~paper ~~Notes~~of issuers ~~require~~rated ~~semi~~at least A-~~annual cash~~1 ~~interest~~by ~~payments~~Standard ~~which~~& ~~began~~Poor’s onor ~~September 15~~P-1 by Moody’s, ~~2008~~(4) certain atmoney amarket ~~fixed~~funds which ~~rate~~invest ofexclusively 11in assets otherwise allowable by the ABL Credit Agreement and (5) certain other similar short-term investments.0% Although we invest in compliance with our credit agreement and ~~mature~~generally onseek to minimize the risk associated with investments by investing in investment ~~March 15~~grade, ~~2013~~highly liquid securities, we cannot give assurances that the cash equivalents that are in or will be selected to be in our investment portfolio will not lose value or become impaired in the future.

WeCovenant ~~file a consolidated federal income tax return with our parent company, NBC, and follow a~~Restrictions policy of recording income taxes equal to that which would have been incurred had we filed a separate return. We are responsible for remitting tax payments and collecting tax refunds for the consolidated group. The $2.9 million increase in the due to parent balance for the nine months ended December 31, 2009 represents the current period tax savings resulting from operating losses generated by NBC from which we derive the benefit through reduced tax payments on the consolidated return.

~~Investing~~We ~~Cash~~have ~~Flows~~a substantial level of indebtedness. Our debt agreements impose significant financial restrictions, which could prevent us from incurring additional indebtedness and taking certain other actions and could result in all amounts outstanding being declared due and payable if we are not in compliance with such restrictions. Access to borrowings under the ABL Facility is subject to the calculation of a borrowing base, which is a function of eligible accounts receivable and inventory, up to the maximum borrowing limit (less outstanding letters of credit). The ABL Credit Agreement restricts our ability and the ability of certain of our subsidiaries to make investments, acquisitions, loans or advances and pay dividends, except that, among other things, we may pay dividends to NBC (i) in an amount not to exceed the amount of interest required to be paid on the Senior Discount Notes and (ii) to pay corporate overhead expenses not to exceed $250,000 per fiscal year and any taxes owed by NBC. In addition, under the ABL Facility, if availability, as defined in the ABL Credit Agreement, is less than the greater of 20% of the total revolving credit commitments and $15.0 million, we will be required to maintain a fixed charge coverage ratio of at least 1.10x measured for the last twelve-month period on a pro forma basis in order to maintain access to the funds under the ABL Facility. At June 30, 2010, we had up to $75.0 million of total revolving credit commitments under the ABL Facility (less outstanding letters of credit and subject to a borrowing base). The calculated borrowing base as of June 30, 2010 was $69.4 million, of which $0.9 million was outstanding under a letter of credit and $68.5 million was unused. At June 30, 2010, our pro forma fixed charge coverage ratio was 1.5x.

~~Our~~The ~~capital~~indenture ~~expenditures~~governing ~~were~~the ~~$4.0 million~~Senior ~~and~~Secured ~~$6.0 million~~Notes ~~for~~restricts our ability and the ~~nine~~ability ~~months~~of certain ~~ended~~of ~~December~~our subsidiaries to pay dividends or make certain other payments, subject to certain 31exceptions, ~~2009~~unless ~~and~~certain ~~2008~~conditions are met, ~~respectively~~including ~~declining~~(i) no ~~largely~~default asunder athe ~~result~~indenture has occurred, (ii) we and certain of ~~decreased~~our ~~acquisition~~subsidiaries ~~activity~~maintain a consolidated coverage ratio of 2.0 to ~~Capital~~1.0 ~~expenditures~~on ~~consist~~a ~~primarily~~pro forma basis and (iii) the amount of ~~leasehold~~the ~~improvements~~dividend ~~and~~or ~~furnishings~~payment ~~for~~may ~~new~~not exceed 50% of ~~bookstores,~~aggregate ~~bookstore~~income ~~renovations~~from January 1, ~~computer~~2004 ~~upgrades~~to ~~and~~the ~~warehouse~~end ~~improvements~~of the most recent fiscal quarter plus cash proceeds received from the issuance of stock less the aggregate of payments made under this restriction. The ~~ABL~~indentures ~~Credit Agreement~~governing ~~does~~the ~~not~~Senior ~~have~~Subordinated aNotes ~~limitation~~and NBC’s Senior Discount Notes contain similar restrictions on ~~capital~~our ~~expenditures~~ability ~~other~~and ~~than~~the asability ~~part~~of certain of ~~the~~our ~~pro~~subsidiaries ~~forma~~and the ~~fixed~~ability ~~charge~~of ~~coverage~~NBC ~~ratio~~to pay dividends or make certain other payments. WeIn ~~expect~~addition, ~~capital~~if ~~expenditures~~there tois beno availability ~~between~~under ~~$5.0 million~~the ~~and~~restricted $7payment calculation mentioned above, but we maintain the 2.0 to ~~million~~1.0 ~~for~~consolidated ~~fiscal~~coverage ~~year~~ratio ~~2010.~~on a pro forma basis, we may make dividends to

~~Business acquisition and contract-management renewal expenditures were $2.3 million and $5.7~~28 million for the nine months ended December 31, 2009 and 2008, respectively. During the nine months ended December 31, 2009, 10 bookstore locations were acquired in 8 separate transactions (all of which were contract-managed locations). During the nine months ended December 31, 2008, 18 bookstore locations were acquired in 15 separate transactions (15 of which were contract-managed locations). Our ability to make acquisition expenditures is subject to certain restrictions under the ABL Credit Agreement.

DuringTable theof nine months ended December 31, 2009 and 2008, we capitalized $0.4 million and $0.3 million, respectively, in software development costs associated with new software products and enhancements to existing software products. Contents

~~Operating~~ ~~Cash~~NBC ~~Flows~~to meet the interest payments on the Senior Discount Notes. If we do not maintain the 2.0 to 1.0 ratio on a pro forma basis, we may still make payments, including dividends to NBC, up to $15.0 million in the aggregate. At June 30, 2010, our pro forma consolidated coverage ratio calculated under the indenture to the Senior Subordinated Notes was 1.9 to 1.0 and the ratio calculated under the indenture to the Senior Secured Notes was 2.1 to 1.0. The pro forma consolidated coverage ratio calculated under the indenture to the Senior Subordinated Notes differs from the ratio calculated under the indenture to the Senior Secured Notes because the indenture to the Senior Subordinated Notes excludes debt issue cost amortization only for debt instruments outstanding at the March 4, 2004 Transaction date from the calculation whereas the indenture to the Senior Secured Notes excludes the higher debt issue cost amortization for the Senior Secured Notes and the ABL Facility, which were issued in October of 2009, from the same calculation. At June 30, 2010, the amount distributable under the most restrictive indenture was $10.8 million after applying the $4.2 million dividend paid to NBC for the March 15, 2010 interest on NBC’s Senior Discount Notes. Such restrictions are not expected to affect our ability to meet our cash obligations for the next twelve months.

~~Our~~As ~~principal sources~~ of ~~cash~~June 30, ~~to fund our future operating liquidity needs will be cash from operating activities and borrowings under the ABL Facility~~2010, ~~which~~we ~~replaced~~were ~~the~~in ~~Revolving~~compliance ~~Credit Facility.~~with ~~Usage~~all of ~~the ABL Facility to meet~~ our ~~liquidity~~debt ~~needs will fluctuate throughout the fiscal year due to our distinct buying and selling periods, increasing substantially at the end of each college semester (May and December)~~covenants. ~~Net cash~~ ~~flows used by operating activities for the nine months ended December 31, 2009 were $37.7 million, down $0.4 million from $38.1 million for the nine months ended December 31, 2008.~~

35Our debt covenants use Credit Facility EBITDA in the ratio calculations mentioned above. For a discussion of EBITDA and Credit Facility EBITDA, see “EBITDA Results” earlier in this Item and for a presentation reconciling EBITDA to net cash flows from operating activities, which we believe to be the closest GAAP liquidity measure, see “Quarter Ended June 30, 2010 Compared With Quarter Ended June 30, 2009” earlier in this Item.

AsSources of December 31, 2009, we had $16.8 million in cash available to help fund working capital requirements. At certain times of the year, we also invest in cash equivalents. The ABL Credit Agreement allows investments in (1) certain short-term securities issued by, or unconditionally guaranteed by, the federal government, (2) certain short-term deposits in banks that have combined capital and ~~surplus~~Needs offor ~~not less than $500 million, (3) certain short-term commercial paper of~~Capital issuers rated at least A-1 by Standard & Poor’s or P-1 by Moody’s, (4) certain money market funds which invest exclusively in assets otherwise allowable by the ABL Credit Agreement and (5) certain other similar short-term investments. Although we invest in compliance with our credit agreement and generally seek to minimize the risk associated with investments by investing in investment grade, highly liquid securities, we cannot give assurances that the cash equivalents in our investment portfolio will not lose value or become impaired in the future.

~~Covenant~~As ~~Restrictions~~of June 30, 2010, we had up to $75.0 million of total revolving credit commitments under the ABL Facility (less outstanding letters of credit and subject to a borrowing base). The calculated borrowing base as of June 30, 2010 was $69.4 million, of which $0.9 million was outstanding under a letter of credit and $68.5 million was unused. Amounts drawn under the ABL Facility may be used for working capital and general corporate purposes (including up to $10.0 million for letters of credit), subject to certain limitations.

WeOur ~~have~~three aprincipal ~~substantial~~tranches ~~level~~ of ~~indebtedness. Our~~ debt ~~agreements~~(the ~~impose~~Senior ~~significant~~Secured ~~financial restrictions~~Notes, which could prevent us from incurring additional indebtedness and taking certain other actions and could result in all amounts outstanding being declared due and payable if we are not in compliance with such restrictions. Access to borrowings under the ABL Facility isand ~~subject~~the toSenior ~~the~~Subordinated ~~calculation~~Notes) ofeach awill ~~borrowing~~mature ~~base,~~within ~~which is~~ a ~~function~~period of ~~eligible~~six ~~accounts~~months ~~receivable and inventory, up to the maximum borrowing limit (less outstanding letters~~ of ~~credit)~~each other. The ABL ~~Credit~~ ~~Agreement~~Facility ~~restricts~~will ~~our~~mature ~~ability~~on ~~and~~ the ~~ability~~earlier of ~~certain of our subsidiaries to make investments~~October 2, ~~acquisitions,~~ ~~loans~~2012 or ~~advances~~the ~~and~~date ~~pay dividends, except~~ that, ~~among~~is ~~other things, we may pay dividends to NBC (i)~~91 indays anprior ~~amount not~~ to ~~exceed~~ the earliest ~~amount~~maturity of ~~interest~~the ~~required~~$200.0 million ~~to be paid on the~~ Senior ~~Discount~~Secured Notes ~~and~~ (~~ii) to~~which ~~pay~~mature ~~corporate~~on ~~overhead expenses not to exceed $250~~December 1,~~000~~ ~~per fiscal~~2011), ~~year~~the ~~and~~$175.0 million ~~any~~Senior ~~taxes~~Subordinated ~~owed~~Notes by(which ~~NBC.~~mature Inon ~~addition~~March 15, ~~under the ABL Facility~~2012), ifNBC’s ~~availability, as defined~~$77.0 million inSenior ~~the~~Discount ~~credit~~Notes ~~agreement,~~(which ismature ~~less~~on ~~than~~March 15, ~~the~~2013), ~~greater~~or ofany ~~20%~~refinancing ofthereof. ~~the~~As ~~total revolving credit commitments~~a ~~and $15.0 million~~consequence, we ~~will~~may be required to ~~maintain~~refinance athe ~~fixed~~other ~~charge~~tranches ~~coverage ratio~~ of atdebt ~~least~~in ~~1.10x measured~~our ~~for~~capital ~~the~~structure ~~last~~as well ~~twelve-month~~as ~~period~~NBC’s onSenior aDiscount ~~pro~~Notes, ~~forma basis~~ in order to ~~maintain~~refinance ~~access to~~ the ~~funds~~ ~~under~~ABL ~~that~~ Facility. AtDue ~~December 31, 2009, we had up~~ to ~~$75.0 million~~our ~~of total revolving~~highly ~~credit~~leveraged ~~commitments~~capital ~~under~~structure, in the ~~ABL~~absence ~~Facility (less outstanding letters~~ of ~~credit and subject to~~ a ~~borrowing~~ ~~base).~~significant ~~The~~improvement ~~calculated~~in ~~borrowing~~our ~~base~~credit asprofile and/or ofthe ~~December 31,~~financial ~~2009 was $75.0 million~~markets, ofwe ~~which $23.1 million~~may ~~was~~not ~~outstanding~~be ~~under~~able ~~revolving~~to ~~lines~~refinance ofour ~~credit~~indebtedness, ~~$1.0 million~~or ~~was~~NBC ~~outstanding~~may ~~under~~not abe ~~letter~~able ofto ~~credit~~refinance ~~and~~its ~~$50.9 million~~indebtedness, ~~was~~on ~~unused.~~terms Atacceptable ~~December 31,~~to ~~2009,~~us ~~and~~or our ~~pro~~parent ~~forma fixed charge coverage ratio was 1~~company.~~50x.~~

~~The~~Our ~~indenture~~ability ~~governing~~to ~~the~~satisfy ~~Senior Secured Notes restricts~~ our ~~ability~~debt obligations and ~~the ability of certain of our subsidiaries~~ to pay ~~dividends~~principal orand ~~make~~interest ~~certain~~on ~~other~~our ~~payments~~debt, ~~subject to certain~~ ~~exceptions,~~fund ~~unless~~working ~~certain~~capital ~~conditions~~and ~~are~~make ~~met,~~anticipated ~~including~~capital ~~(i) no~~expenditures ~~default~~will ~~under~~depend ~~the~~on ~~indenture~~our ~~has~~future ~~occurred~~performance, ~~(ii) we~~which ~~and~~is ~~our~~subject ~~subsidiaries maintain a consolidated coverage ratio of 2.0~~ to ~~1.0~~general oneconomic ~~a pro~~conditions ~~forma basis~~ and ~~(iii) the~~other ~~amount of the dividend or payment may not exceed 50% of aggregate income from January 1~~factors, ~~2004~~some ~~to the end~~ of ~~the~~which ~~most recent fiscal quarter plus cash proceeds~~are ~~received~~beyond ~~from~~our ~~the issuance of stock less the aggregate of payments made under this restriction~~control. ~~The indentures~~We ~~governing~~believe ~~the~~that ~~Senior~~funds ~~Subordinated~~generated ~~Notes~~from ~~and~~operations, ~~the~~existing Senior Discount Notes contain similar restrictions on our ability and the ability of certain of our subsidiaries and the ability of NBC and certain of its subsidiaries to pay dividends or make certain other payments. In additioncash, ~~under~~ ~~the indentures to the Senior Secured Notes~~ and ~~the Senior Subordinated Notes, if there is no~~borrowings ~~availability~~ under the ~~restricted~~ABL ~~payment~~Facility ~~calculation~~will ~~mentioned~~be ~~above,~~sufficient ~~but we maintain the 2.0~~ to ~~1.0~~ ~~consolidated~~finance ~~coverage~~our ~~ratio~~current ~~on a pro forma basis~~operations, wecash ~~may make payments, including dividends to NBC to meet the~~ interest ~~payments on the Senior Discount Notes. If we do not maintain the 2.0 to~~ ~~1.0~~requirements, ~~ratio~~income ontax ~~a pro forma basis~~payments, weplanned ~~may~~capital ~~still make payments~~expenditures, ~~including~~ dividends, up to ~~$15.0 million in the aggregate. At December 31~~NBC, ~~2009, our pro forma consolidated coverage ratio calculated under the indenture to the Senior Subordinated Notes was 1.9 to 1.0~~ and ~~the ratio~~internal ~~calculated~~growth ~~under~~for the ~~indenture~~foreseeable ~~to the Senior Secured Notes was 2~~future.0 toFuture ~~1.0.~~acquisitions, ~~The~~if ~~pro~~any, ~~forma consolidated~~may ~~coverage~~require ~~ratio~~additional ~~calculated~~debt ~~under the indenture to the Senior Subordinated Notes differs~~or ~~from~~equity ~~the~~financing. ~~ratio~~As ~~calculated~~noted ~~under~~previously, ~~the~~we ~~indenture~~also tocannot ~~the~~give ~~Senior~~assurance ~~Secured~~that ~~Notes~~we ~~because~~will ~~the indenture to~~generate ~~the~~sufficient ~~Senior~~cash ~~Subordinated~~flow ~~Notes excludes debt issue cost amortization for all debt instruments outstanding at the March 4, 2004 Transaction date~~ from ~~the~~operations ~~calculation~~or ~~and~~that ~~the~~future ~~indenture~~borrowings towill ~~the Senior~~be ~~Secured~~available ~~Notes~~under ~~excludes only debt issue cost amortization for~~ the ~~Senior Secured Notes and the~~ ABL Facility ~~from~~in ~~the~~an ~~same calculation. At December 31, 2009, the~~ amount ~~distributable~~sufficient ~~under the most restrictive indenture was $15.0 million. Such restrictions are not expected~~ to ~~affect~~enable ~~our ability~~us to ~~meet~~service our ~~cash~~debt ~~obligations~~or ~~for~~to ~~the~~fund ~~next~~our ~~twelve~~liquidity ~~months~~needs.

AsAccounting ofStandards ~~December 31,~~Not ~~2009,~~Yet ~~we were in compliance with all of our debt covenants.~~Adopted

~~Our~~In ~~debt~~October 2009, ~~covenants~~the ~~use~~FASB ~~EBITDA~~issued ~~and~~Accounting ~~Adjusted~~Standards ~~EBITDA~~Update in2009-13, ~~the~~“Revenue ~~ratio~~Recognition (Topic ~~calculations~~605) ~~mentioned~~— ~~above~~Multiple Deliverable Arrangements” (“Update 2009-13”). ~~For~~ aUpdate ~~discussion~~2009-13 ofaddresses ~~EBITDA~~the accounting ~~and~~for ~~Adjusted~~multiple-deliverable ~~EBITDA,~~arrangements ~~see~~to ~~“Adjusted~~enable ~~EBITDA~~vendors ~~Results”~~to ~~elsewhere~~account infor products or ~~Management’s~~services ~~Discussion~~(deliverables) separately ~~and~~rather ~~Analysis~~than ofas ~~Financial~~a ~~Condition~~combined ~~and~~unit. ~~Results~~The ofupdate ~~Operations~~addresses ~~and~~how ~~for~~to separate adeliverables ~~presentation~~and ~~reconciling~~how ~~EBITDA~~to measure and ~~Adjusted~~ ~~EBITDA~~allocate arrangement considerations to ~~net~~one ~~cash~~or ~~flows~~more units ~~from~~of ~~operating~~account. ~~activities,~~Update ~~which~~2009-13 webecomes ~~believe~~effective toprospectively befor ~~the~~revenue ~~closest~~arrangements entered ~~GAAP~~into ~~liquidity~~or ~~measure,~~materially ~~see~~modified ~~“Quarter~~in ~~Ended~~fiscal ~~December~~years beginning on or after June 3115, ~~2009~~2010, ~~Compared~~with ~~With~~earlier application ~~Quarter~~permitted. ~~Ended~~An ~~December 31,~~entity ~~2008”~~may ~~and~~elect ~~“Nine~~to ~~Months~~adopt ~~Ended~~the ~~December 31,~~standard ~~2009~~on ~~Compared~~a ~~With~~retrospective ~~Nine~~basis. ~~Months~~We expect ~~Ended~~to ~~December~~apply this standard on a prospective basis beginning April 311, 2011. Management has ~~2008”~~determined ~~elsewhere~~that inthe ~~Management’s~~update ~~Discussion~~will ~~and~~not ~~Analysis~~have ofa ~~Financial~~material ~~Condition~~impact ~~and~~on ~~Results~~the ofconsolidated financial ~~Operations~~statements.

3629

SourcesTable of and Needs for Capital Contents

AsIn ~~of December~~October 312009, the FASB issued Accounting Standards Update 2009-14, we“Software ~~had~~(Topic up985) Certain toRevenue ~~$75~~Arrangements That Include Software Elements” (“Update 2009-14”).~~0 million~~ ofUpdate ~~total~~2009-14 clarifies ~~revolving~~what ~~credit~~guidance ~~commitments~~should be used in allocating and measuring revenue for vendors that sell or ~~under~~lease ~~the~~tangible ~~ABL~~products ~~Facility~~in ~~(less~~an ~~outstanding~~arrangement ~~letters~~that ofcontains ~~credit~~software ~~and~~that ~~subject~~is more than incidental to the atangible ~~borrowing~~product ~~base)~~as a whole. The amendments in this update do not affect software revenue ~~calculated~~arrangements ~~borrowing~~that ~~base~~do asnot ofinclude ~~December 31,~~tangible ~~2009~~products ~~was~~nor ~~$75.0 million,~~do ofthey ~~which~~affect ~~$23.1 million~~software ~~was~~revenue arrangements ~~outstanding~~that ~~under~~include ~~lines~~services if the software is essential to the functionality of ~~credit,~~those $1services.~~0 million~~ ~~was~~Update 2009-14 ~~outstanding~~becomes ~~under~~effective aprospectively ~~letter~~for ofrevenue ~~credit~~arrangements ~~and~~entered ~~$50.9~~into or materially ~~million~~modified ~~was~~in ~~unused.~~fiscal ~~Amounts~~years ~~drawn~~beginning ~~under~~on ~~the~~or ~~ABL~~after ~~Facility~~June 15, ~~are~~2010, with earlier application permitted. An toentity bemay ~~used~~elect ~~for~~to ~~working capital~~adopt ~~and~~the ~~general~~standard ~~corporate~~on ~~purposes~~a ~~(including~~retrospective upbasis. We expect to ~~$10.0 million~~apply ~~for~~this standard ~~letters~~on ofa ~~credit)~~prospective basis beginning April 1, 2011. Management has determined that the update ~~subject~~will tonot ~~certain~~have ~~limitations~~a material impact on the consolidated financial statements.

OnTransactions ~~October 2, 2009, in conjunction~~ with ~~the~~Related completion of the offering of the Senior Secured Notes, we entered into the ABL Credit Agreement which provides for the ABL Facility (collectively the “Refinancing”). Although our overall indebtedness did not materially increase upon consummation of the Refinancing, our liquidity requirements have increased, primarily due to increased interest payment obligations. After giving effect to the Refinancing, our three principal tranches of debt (the Senior Secured Notes, the ABL Facility and ~~the~~Certain ~~Senior~~Other ~~Subordinated~~Parties Notes) each will mature within a period of six months of each other. The ABL Facility will mature on the earlier of October 2, 2012 or the date that is 91 days prior to the earliest maturity of the $200.0 million Senior Secured Notes (which mature on December 1, 2011), the $175.0 million Senior Subordinated Notes (which mature on March 15, 2012), NBC’s $77.0 million Senior Discount Notes (which mature on March 15, 2013), or any refinancing thereof. As a consequence, we may be required to refinance the other tranches of debt in our capital structure as well as NBC’s Senior Discount Notes, in order to refinance the ABL Facility. Due to our highly leveraged capital structure, in the absence of a significant improvement in our credit profile and/or the financial markets, we may not be able to refinance our indebtedness, or NBC may not be able to refinance its indebtedness, on terms acceptable to us or our parent company.

~~Our~~We ~~ability~~file toa ~~satisfy~~consolidated ~~our~~federal ~~debt~~income ~~obligations~~tax ~~and~~return towith ~~pay~~our ~~principal~~parent ~~and~~company, ~~interest on our debt~~NBC, ~~fund~~ ~~working capital~~ and ~~make~~follow ~~anticipated~~a policy ~~capital~~of ~~expenditures~~recording ~~will~~income ~~depend~~taxes onequal ~~our~~to ~~future performance,~~that which iswould ~~subject~~have tobeen ~~general~~incurred ~~economic~~had ~~conditions~~we ~~and~~filed ~~other factors, some of which are~~a ~~beyond~~separate ~~our control~~return. We ~~believe~~are ~~that~~responsible ~~funds~~for ~~generated~~remitting ~~from~~tax ~~operations,~~payments ~~existing cash,~~ and ~~borrowings under~~collecting ~~the~~tax ~~ABL~~refunds ~~Facility~~for ~~will be sufficient to finance our current operations, cash interest~~the ~~requirements,~~consolidated ~~income~~group. ~~tax~~The ~~payments,~~due ~~planned~~to ~~capital~~parent ~~expenditures~~balance, ~~dividends~~totaling to$24.6 million ~~NBC,~~ and ~~internal growth for the foreseeable future~~$21.5 million ~~Future~~at ~~acquisitions~~June 30, if2010 ~~any~~and 2009, ~~may require additional debt or equity financing. As noted previously~~respectively, werepresents ~~also~~the ~~cannot~~cumulative ~~give~~tax ~~assurance~~savings ~~that~~resulting wefrom ~~will generate~~operating ~~sufficient~~losses ~~cash~~generated ~~flow~~by NBC from ~~operations~~which orwe ~~that~~derive ~~future~~the ~~borrowings~~benefit ~~will~~through bereduced ~~available~~tax ~~under~~payments ~~the~~on ~~ABL~~the ~~Facility~~consolidated ~~in an amount sufficient to enable us to service our debt or to fund our liquidity needs~~return.

~~Off-Balance~~“Safe ~~Sheet~~Harbor” ~~Arrangements~~Statement Under the Private Securities Litigation Reform Act of 1995

AsThis Quarterly Report on Form 10-Q contains or incorporates by reference certain statements that are not historical facts, including, most importantly, information concerning possible or assumed future results of ~~December 31~~our operations, ~~2009~~such as, but not limited to, statements relating to EBITDA growth, the expected revenue of new bookstores we ~~had~~are nooperating, ~~off-balance~~expanding ~~sheet~~sales ~~arrangements~~on the internet, continued growth of the market for new and used textbooks, expected growth or changes in certain segments, volume or revenue growth, our ability to extend, refinance or repay our indebtedness, expressions of general optimism or pessimism about the future, and statements preceded by, followed by or that ~~have~~include the words “may,” “believes,” “expects,” “feels,” “anticipates,” or the negation thereof, or similar expressions, which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These forward-looking statements, for which we claim the protection of the safe harbor contained in the Reform Act, involve risks, uncertainties and other factors which may cause our actual performance or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Several important factors could affect our future results and could cause those results to differ materially from those expressed in the forward-looking statements contained herein. These factors include, but are ~~reasonably~~not ~~likely~~limited to, ~~have~~the following: (1) the risks of operating with a ~~current~~substantial level of indebtedness including possible increases in our costs of borrowing, our inability to pay interest as it comes due, repay debt, extend or ~~future~~refinance ~~effect~~debt onas it matures, and obtain additional financing, and the possibility that the maturity of our ~~financial~~credit ~~condition~~facility may be accelerated and that cash flow will be diverted away from operations; (2) increased competition from other companies that target our markets; (3) increased competition from alternative media and alternative sources of textbooks for students, including digital or other education content sold or rented directly to students and increased competition for the purchase and sale of used textbooks from student-to-student transactions; (4) further deterioration in the economy and credit markets; a decline in consumer spending; and/or changes in ~~financial~~general economic conditions in the markets in which we compete or may ~~condition~~compete; (5) our inability to successfully start-up, ~~revenues~~acquire or ~~expenses,~~contract-manage ~~results~~additional bookstores or to integrate those additional bookstores and/or to cost-effectively maintain our current contract-managed bookstores; (6) our inability to purchase a sufficient supply of used textbooks; (7) changes in pricing of new and/or used textbooks or in publisher practices regarding new editions and materials packaged with new textbooks; (8) the loss or retirement of key members of management; (9) the impact of seasonality of the wholesale and bookstore operations; (10) further goodwill impairment or impairment of identifiable intangibles resulting in a non-cash write down of goodwill or identifiable intangibles; and other risks detailed in our Securities and Exchange Commission filings, ~~liquidity~~in particular in our Annual Report on Form 10-K, ~~capital~~all ~~expenditures~~of which are difficult or ~~capital~~impossible to predict accurately and many of which are beyond our control. We will ~~resources~~not undertake and specifically decline any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

3730

TheTable following tables present aggregated information as of December 31, 2009 regarding our contractual obligations and commercial commitments: Contents

			Payments Due by Period
Contractual			Less Than		2-3		4-5		After 5
Obligations	Total		1 Year		Years		Years		Years
Long-term debt	$	374,311,282	$	52,967	$	374,185,171	$	73,144	$	—
Interest on long-term debt		77,793,245		35,118,137		42,670,774		4,334		—
Capital lease obligations		3,440,979		813,609		1,130,630		647,849		848,891
Interest on capital lease obligations		880,209		252,465		336,421		192,990		98,333
Operating leases		79,333,702		19,291,560		28,480,773		15,547,483		16,013,886
Uncertain tax position liabilities		—		—		—		—		—
Unconditional purchase obligations		—		—		—		—		—
Total	$	535,759,417	$	55,528,738	$	446,803,769	$	16,465,800	$	16,961,110

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

	Total		Amount of Commitment Expiration Per Period
Other Commercial	Amounts		Less Than		2-3		4-5		Over 5
Commitments	Committed		1 Year		Years		Years		Years
Line of credit (1)	$	75,000,000	$	—	$	75,000,000	$	—	$	—

Our primary market risk exposure is, and is expected to continue to be, fluctuation in interest rates. Our exposure to market risk for changes in interest rates relates to our short-term investments and borrowings under the ABL Facility. Exposure to interest rate fluctuations for our long-term debt is managed by maintaining fixed interest rate debt (primarily the Senior Subordinated Notes and the Senior Secured Notes). Because we pay fixed interest on our notes, market fluctuations do not impact our debt interest payments. However, the fair value of our notes fluctuates as a result of changes in market interest rates, changes in our credit worthiness, and changes in the overall credit market.

~~(1)~~We ~~Interest~~may isinvest ~~not~~in ~~estimated~~certain oncash ~~the~~equivalents ~~line~~from oftime ~~credit due~~ to ~~uncertainty~~time ~~surrounding~~allowed by the ~~timing~~ABL ~~and~~Credit Agreement. ~~extent~~At ofJune 30, ~~usage~~2010, ofwe ~~the~~did ~~line~~not ofhold ~~credit~~any investments in cash equivalents.

WeCertain ~~have~~quantitative ~~recorded~~market ~~other~~risk ~~long-term~~disclosures ~~liabilities~~have ofchanged ~~$2.1~~since March ~~million~~31, ~~which~~2010 ~~consist~~as ~~primarily~~a ~~of deferred~~result ~~payments related to acquisitions~~ of ~~$0.9 million; certain lease related liabilities of~~ ~~$0.8 million~~market tofluctuations, ~~appropriately~~movement ~~recognize~~in ~~rent~~interest ~~expense~~rates ~~over the rental term;~~ and ~~deferred compensation~~principal ~~of $0~~payments.~~4 million,~~ ~~which~~The ~~are excluded from the preceding~~ table ~~primarily~~below ~~because we~~presents ~~cannot~~summarized ~~reasonably~~market ~~estimate~~risk ~~the timing of the long-term payments~~information.

Accounting Standards Not Yet Adopted


	June 30,			March 31,
	2010			2010

Carrying Values:
Fixed rate debt	$	377,502,493		$	377,624,262

Fair Values:
Fixed rate debt	$	365,145,000		$	372,317,000

Overall Weighted-Average Interest Rates:
Fixed rate debt		9.35	%		9.35	%

InITEM ~~January 2010, the FASB issued Accounting Standards Update 2010-06, “Improving Disclosures about Fair Value Measurements” (“Update 2010-06”)~~4. ~~Update~~CONTROLS ~~2010-06~~AND ~~provides amendments to current~~PROCEDURES standards to require new disclosures for transfers in and out of Levels 1 and 2 and for activity in Level 3 fair value measurements. Furthermore, the update provides amendments to clarify that a reporting entity should provide fair value measurement disclosures for each class of assets and liabilities and should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements for those measurements that fall in either Level 2 or Level 3. Update 2010-06 becomes effective for us in fiscal year 2011. Management has determined that the update will not have a material impact on the consolidated financial statements.

InEvaluation ~~October 2009~~of disclosure controls and procedures. Our management, with the ~~FASB~~participation ~~issued~~of our ~~Accounting~~chief ~~Standards~~executive ~~Update~~officer ~~2009-13,~~and ~~“Multiple~~chief ~~Deliverable Arrangements”~~financial officer (~~“Update~~our ~~2009-13”).~~principal ~~Update~~executive ~~2009-13~~officer ~~addresses~~and principal ~~the~~financial ~~accounting~~officer), ~~for~~evaluated ~~multiple-deliverable arrangements~~the toeffectiveness ~~enable~~of ~~vendors~~our todisclosure ~~account~~controls ~~for~~and ~~products~~procedures (as ordefined ~~services~~in Rules 13a-15(~~deliverables~~e) ~~separately~~ ~~rather than~~and 15d-15(e) under the Exchange Act) as aof ~~combined~~June 30, ~~unit~~2010. ~~The~~This evaluation ~~update~~was ~~addresses~~performed ~~how~~ to ~~separate~~determine ~~deliverables~~if our disclosure controls and ~~how~~procedures towere ~~measure~~effective, ~~and~~in ~~allocate~~that ~~arrangement~~they ~~considerations~~are designed to ~~one~~ensure orthat ~~more~~information ~~units~~required ofto ~~account.~~be ~~Update~~disclosed ~~2009-13~~by ~~becomes~~us in the reports ~~effective~~that ~~prospectively~~we ~~for~~file ~~revenue~~or ~~arrangements~~submit ~~entered~~under ~~into~~the orExchange ~~materially~~Act ~~modified~~is inrecorded, ~~fiscal~~processed, summarized and reported ~~years~~within ~~beginning~~the ontime orperiods ~~after~~specified ~~June 15,~~in ~~2010~~the Securities and Exchange Commission’s rules and regulations, ~~with~~including ~~earlier~~ensuring ~~application~~that ~~permitted.~~such Aninformation ~~entity~~is ~~may~~accumulated ~~elect~~ and communicated to management, ~~adopt~~including ~~the~~our ~~standard~~chief onexecutive aofficer ~~retrospective~~and ~~basis.~~chief Wefinancial ~~expect~~officer, as appropriate to allow ~~apply~~timely ~~this~~decisions ~~standard~~regarding onrequired adisclosure. ~~prospective basis~~Based ~~beginning~~on ~~April 1~~this evaluation, ~~2011.~~our ~~Management~~chief executive ~~has~~officer ~~not~~and ~~yet~~chief ~~determined~~financial ifofficer ~~the~~concluded ~~update~~that, ~~will~~as ~~have~~of ~~a material~~June 30, ~~impact~~2010, onour ~~the~~disclosure controls ~~consolidated~~and ~~financial~~procedures ~~statements~~were effective.

38Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) which occurred during the quarter ended June 30, 2010 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~In October 2009, the FASB issued Accounting Standards Update 2009-14, “Certain Revenue~~31 Arrangements That Include Software Elements” (“Update 2009-14”). Update 2009-14 clarifies what guidance should be used in allocating and measuring revenue for vendors that sell or lease tangible products in an arrangement that contains software that is more than incidental to the tangible product as a whole. The amendments in this update do not affect software revenue arrangements that do not include tangible products nor do they affect software revenue arrangements that include services if the software is essential to the functionality of those services. Update 2009-14 becomes effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. An entity may elect to adopt the standard on a retrospective basis. We expect to apply this standard on a prospective basis beginning April 1, 2011. Management has determined that the update will not have a material impact on the consolidated financial statements.

TransactionsTable withof Related and Certain Other Parties Contents

~~During~~PART ~~the nine months ended December 31, 2009 and 2008, we declared and paid $4~~II.~~2 million~~ ~~in dividends~~OTHER ~~to NBC to provide funding for interest due and payable on NBC’s Senior Discount Notes.~~INFORMATION

WeITEM ~~file a consolidated federal income tax return with our parent company, NBC, and follow a policy of recording income taxes equal to that which would have been incurred had we filed a separate return~~1A. WeRISK ~~are responsible for remitting tax payments and collecting tax refunds for the~~FACTORS consolidated group. The due to parent balance, totaling $23.0 million and $19.8 million at December 31, 2009 and 2008, respectively, represents the cumulative tax savings resulting from operating losses generated by NBC from which we derive the benefit through reduced tax payments on the consolidated return.

There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A., “~~Safe~~Risk ~~Harbor~~Factors” ~~Statement~~of ~~Under~~our Annual Report on Form 10-K for the ~~Private~~fiscal year ended March 31, 2010, which was filed with the Securities ~~Litigation~~and ~~Reform~~Exchange ~~Act~~Commission ofon ~~1995~~June 25, 2010.

~~This~~ITEM Quarterly Report on Form 10-Q contains or incorporates by reference certain statements that are not historical facts, including, most importantly, information concerning possible or assumed future results of our operations and statements preceded by, followed by or that include the words “may,” “believes,” “expects,” “anticipates,” or the negation thereof, or similar expressions, which constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”)5. ~~All~~OTHER ~~statements which address~~INFORMATION operating performance, events or developments that are expected or anticipated to occur in the future, including statements relating to volume and revenue growth, earnings per share or EBITDA and Adjusted EBITDA growth, our ability to extend, refinance or repay our indebtedness, or statements expressing general optimism or pessimism about future results of operations, are forward-looking statements within the meaning of the Reform Act. Such forward-looking statements involve risks, uncertainties and other factors which may cause our actual performance or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Reform Act. Several important factors could affect our future results and could cause those results to differ materially from those expressed in the forward-looking statements contained herein. Such factors include, but are not limited to, the following: further deterioration in the economy and credit markets; a decline in consumer spending; increased competition from other companies that target our markets; increased competition from alternative media and alternative sources of textbooks for students, including digital or other educational content sold or rented directly to students; increased competition for the purchase and sale of used textbooks from student-to-student transactions; the risks of operating with a substantial level of indebtedness including possible increases in our costs of borrowing and/or our inability to extend or refinance debt as it matures; our inability to successfully start-up, acquire or contract-manage additional bookstores or to integrate those additional stores; our inability to cost-effectively maintain or increase the number of contract-managed stores; our inability to purchase a sufficient supply of used textbooks; changes in pricing of new and/or used textbooks; changes in publisher practices regarding new editions and materials packaged with new textbooks; the loss or retirement of key members of management; the impact of seasonality of the wholesale and bookstore operations; the impact of being controlled by one principal equity holder; further goodwill impairment or impairment of identifiable intangibles resulting in a non-cash write down of goodwill or identifiable intangibles; our inability to successfully execute on our cost savings initiatives; changes in general economic conditions and/or in the markets in which we compete or may, from time to time, compete; and other risks detailed in our Securities and Exchange Commission filings, in particular in our Annual Report on Form 10-K, all of which are difficult or impossible to predict accurately and many of which are beyond our control. We will not undertake and specifically decline any obligation to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

39We are not required to file reports with the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, but are filing this Quarterly Report on Form 10-Q on a voluntary basis.

ITEM 36. ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~EXHIBITS

For the period ended December 31, 2009, our primary market risk exposure was fluctuation in interest rates. Our exposure to market risk for changes in interest rates relates primarily to our short-term investments and our revolving credit facility. All of our long-term debt that would have exposed us to market risk due to fluctuation in variable interest rates has been paid in full. Exposure to interest rate fluctuations for our long-term debt is managed by maintaining fixed interest rate debt (primarily the Senior Subordinated Notes and the Senior Secured Notes). Because we pay fixed interest on our long-term debt, market fluctuations do not impact our debt interest payments. However, the fair value of our long-term debt fluctuates as a result of changes in market interest rates, changes in our credit worthiness, and changes in the overall credit market.


Exhibits

	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.

~~We may invest in certain cash equivalents from time to time allowed by the ABL Credit~~SIGNATURE ~~Agreement. At December 31, 2009, we did not hold any investments in cash equivalents.~~

~~Due~~Pursuant to the ~~short-term~~requirements ~~nature~~ of the ~~revolving~~Securities ~~credit~~Exchange ~~facility~~Act of 1934, the ~~estimated~~registrant ~~fair~~has ~~value was~~duly ~~considered~~caused this report to ~~approximate~~be ~~the~~signed ~~carrying~~on ~~value~~its atbehalf ~~December 31,~~by ~~2009.~~the ~~The~~undersigned ~~interest~~thereunto ~~rate~~duly asauthorized ofon ~~December~~August 3112, ~~2009 was 8~~2010.~~25%.~~

~~Certain~~NEBRASKA ~~quantitative~~BOOK ~~market risk disclosures have changed since March 31~~COMPANY, ~~2009~~INC. as/s/ aMark ~~result~~W. ~~of the~~Oppegard ~~payment~~Mark inW. ~~full~~Oppegard ofChief ~~the~~Executive ~~Term~~Officer ~~Loan~~ and ~~issuance~~Director of(principal ~~the~~executive ~~Senior~~officer) ~~Secured~~/s/ ~~Notes,~~Alan ~~market~~G. ~~fluctuations, movement~~Siemek inAlan ~~interest rates and principal payments~~G. ~~The~~Siemek ~~table~~Chief ~~below~~Financial ~~presents~~Officer, ~~summarized~~Senior ~~market~~Vice ~~risk information.~~President ~~The~~of ~~weighted-average~~Finance ~~variable~~and ~~rates~~Administration, ~~are~~Treasurer ~~based~~and onAssistant ~~implied~~Secretary ~~forward~~(principal ~~rates~~financial inand ~~the~~accounting ~~yield curve as of the date presented.~~ officer)

	December 31,			March 31,
	2009			2009
Carrying Values:
Revolving credit facility	$	23,100,000		$	—
Fixed rate debt		377,752,261			179,334,183
Variable rate debt		—			193,076,346
Fair Values:
Revolving credit facility	$	23,100,000		$	—
Fixed rate debt		357,178,000			90,367,000
Variable rate debt		—			160,253,000
Overall Weighted-Average Interest Rates:
Fixed rate debt		9.35	%		8.63	%
Variable rate debt		—			9.25	%

ITEMTable 4.of CONTROLS AND PROCEDURES. Contents

~~Evaluation~~EXHIBIT ~~of disclosure controls and procedures. Our management, with the participation of~~INDEX our chief executive officer and chief financial officer (our principal executive officer and principal financial officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2009. This evaluation was performed to determine if our disclosure controls and procedures were effective, in that they are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and regulations, including ensuring that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our chief executive officer and chief financial officer concluded that, as of December 31, 2009, our disclosure controls and procedures were effective.

Changes in internal control over financial reporting. During the quarter ended December 31, 2009, we completed a conversion to a general ledger/business planning and consolidation solution from SAP, which is utilized for external financial reporting purposes. Various controls have been modified due to the new solution, and additional controls over financial reporting, including reconciliation and verification reports and tools, have been established to ensure the accuracy and integrity of our financial statements.


	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.

4033

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS.

There have been no material changes in our risk factors from those disclosed in Part 1, Item 1A., “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2009, which was filed with the Securities and Exchange Commission on June 25, 2009, except as set forth below.

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. Our industry is highly competitive. A large number of actual and potential competitors exist, some of which are larger than us and have substantially greater resources than us. Revenue levels and profit margins could be adversely impacted if we experience increased competition in the markets in which we currently operate or in markets in which we will operate in the future.

Over the years, an increasing number of institution-owned college bookstores have decided to outsource or “contract-manage” the operation of their bookstores. The leading managers of these bookstores include two of our principal competitors in the wholesale textbook distribution business. Contract-managed bookstores primarily purchase their used textbook requirements from and sell their available supply of used textbooks to their affiliated operations. A significant increase in the number of contract-managed bookstores operated by our competitors, particularly at large college campuses, could adversely affect our ability to acquire an adequate supply of used textbooks.

We are also experiencing growing competition from alternative media and alternative sources of textbooks for students (such as websites designed to rent or sell textbooks, and sell e-books, other digital content and other merchandise directly to students; online resources; publishers selling or renting directly to students; print-on-demand textbooks; and CD-ROMs) and from the use of course packs (which are collections of copyrighted materials and professors’ original content which are produced by college bookstores and sold to students), all of which have the potential to reduce or replace the need for textbooks sold through college bookstores. A substantial increase in the availability or the acceptance of these alternatives as a source of textbooks and textbook information could significantly reduce college students’ use of college bookstores and/or the use of traditional textbooks and thus adversely impact our revenue levels and profit margins.

We are also experiencing growing competition from technology-enabled student-to-student transactions that take place over the internet. These transactions, whereby a student enters into a transaction directly with another student for the sale and purchase of a textbook, provide competition by reducing the supply of textbooks available to us for purchase and by reducing the sale of textbooks through college bookstores. While these transactions have occurred for many years, prior to the internet these transactions were limited by geography, a lack of information related to pricing and demand, and other factors. A significant increase in the number of these transactions could adversely impact our revenue levels and profit margins.

We believe all of these competitive factors have contributed to a decline in textbooks sold in the Textbook Division.

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. Current global financial conditions have been characterized by increased market volatility. The global credit markets have been experiencing significant price volatility, dislocations and liquidity disruptions that have caused the interest rate cost of debt financings to increase considerably.

These circumstances have materially impacted liquidity in the financial markets, making terms of certain financings less attractive, and in some cases have resulted in the unavailability of financing. Continued uncertainty in the credit markets may negatively impact our ability to extend or refinance our existing debt on reasonable terms or at all, which may negatively affect our business.

Our three tranches of debt (the Senior Secured Notes, the ABL Facility and the Senior Subordinated Notes) each may mature within a period of six months of each other. The ABL Facility may mature on the earlier of October 2, 2012 or the date that is 91 days prior to the earliest maturity of the Senior Secured Notes (which mature on December 1, 2011), the Senior Subordinated Notes (which mature on March 15, 2012), the Senior Discount Notes (which mature on March 15, 2013) or any refinancing thereof. As a consequence, we may be required to refinance the other tranches of debt in our capital structure as well as NBC’s Senior Discount Notes, in order to refinance the ABL Facility. Due to our highly leveraged capital structure, in the absence of a significant improvement in our credit profile and/or the financial markets, we may not be able to refinance our indebtedness, or NBC may not be able to refinance its indebtedness, at all or on terms acceptable to us.

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. Part of our business strategy is to expand sales for our college bookstore operations by either acquiring privately-owned bookstores or being awarded additional contracts to manage institutional bookstores. We may not be able to identify additional private bookstores for acquisition or we may not be successful in competing for contracts to manage additional institutional bookstores. Due to the seasonal nature of business in our bookstores, the operations of the acquired or newly contract-managed bookstores may be affected by the time of the fiscal year when a bookstore is acquired or contract-managed by us. The process may require financial resources that would otherwise be available for our existing operations. Our integration of these future bookstores may not be successful; or, the anticipated strategic benefits of these future bookstores may not be realized or may not be realized within time frames contemplated by our management. Acquisitions and additional contract-managed bookstores may involve a number of special risks, including, but not limited to, adverse short-term effects on our reported results of operations, diversion of management’s attention, standardization of accounting systems, dependence on retaining, hiring and training key personnel, unanticipated problems or legal liabilities, and actions of our competitors and customers. If we are unable to successfully integrate our future bookstores for these or other reasons, anticipated revenues and profit margins from these new bookstores could be adversely impacted.

Our operations are subject to various laws, rules and regulations relating to protection of the environment and of human health and safety. Our operations are subject to federal, state and local laws relating to the protection of the environment and of human health and safety. As an owner and operator of real property, we can be found jointly and severally liable under such laws for costs associated with investigating, removing and remediating any hazardous or toxic substances that may exist on, in or about our real property. This liability can be imposed without regard to whether the owner or operator had knowledge of, or was actually responsible for causing, the conditions being addressed. Some of our properties may have been impacted by the migration of hazardous substances released at neighboring third-party locations. In addition, it is possible that we may face claims alleging harmful exposure to, or property damage resulting from, the release of hazardous or toxic substances at or from our locations or otherwise related to our business. Environmental conditions relating to any former, current or future locations could adversely impact our business and results of operations.

We may be unable to obtain a sufficient supply of used textbooks, which could adversely impact our revenue levels and profit margins. Our ability to purchase a sufficient number of used textbooks largely determines our used textbook sales for future periods. Successfully acquiring books typically requires a visible presence on college campuses at the end of each semester, which requires hiring a significant number of temporary personnel, and having access to sufficient funds under a revolving credit facility or other financing alternatives to purchase the books. Textbook acquisition also depends upon college students’ willingness to sell their used textbooks at the end of each semester. The unavailability of sufficient personnel or credit, or a shift in student preferences, could impair our ability to acquire sufficient used textbooks to meet our sales objectives, 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. Our wholesale and bookstore operations experience two distinct selling periods and our wholesale operations experience two distinct buying periods. The peak selling periods for the wholesale operations occur prior to the beginning of each school semester in July/August and November/December. The buying periods for the wholesale operations occur at the end of each school semester in May and December. The primary selling periods for the bookstore operations are in August/September and January. In fiscal year 2009, 46% of our annual revenues occurred in the second fiscal quarter (July-September), while 31% of our annual revenues occurred in the fourth fiscal quarter (January-March). Accordingly, our working capital requirements fluctuate throughout the fiscal year, increasing substantially in May and December as a result of the buying periods. We fund our working capital requirements primarily through the ABL Facility. We repay our ABL Facility with cash provided from operations. A significant reduction in sales during our peak selling periods could adversely impact our ability to repay the ABL Facility, increase the average balance outstanding under the ABL Facility (thereby resulting in increased interest expense), and restrict our ability to buy an adequate supply of used textbooks (thereby adversely impacting our revenue levels).

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. As of December 31, 2009, we had total outstanding debt of approximately $400.9 million. Our level of indebtedness could have important consequences. For example, it could:

• 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. The ABL Credit Agreement and the indentures governing the Senior Secured Notes, the Senior Subordinated Notes, and the Senior Discount Notes contain various covenants that limit our ability to, among other things:

• 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.

In addition, the restrictive covenants in the ABL Credit Agreement require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet them. A breach of any of these covenants could result in a default under the ABL Facility. Moreover, the occurrence of a default under the ABL Facility could result in an event of default under our other indebtedness including the Senior Subordinated Notes and the Senior Secured Notes and NBC’s Senior Discount Notes. Upon the occurrence of an event of default under the ABL Facility, the lenders could elect to declare all amounts outstanding under the ABL Facility to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the ABL Facility could proceed against the collateral granted to them to secure that indebtedness. We have pledged substantially all of our assets as collateral under the ABL Facility. If the lenders under the ABL Facility accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets to repay the ABL Facility and our other indebtedness or borrow sufficient funds to refinance such indebtedness. Even if we are able to obtain new financing, it may not be on commercially reasonable terms, or terms that are acceptable to us.

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. The amount of borrowings permitted at any time under the ABL Facility is limited to a monthly (or more frequently under certain circumstances) borrowing base valuation of our inventory, accounts receivable and certain cash balances. As a result, access to credit under the ABL Facility is potentially subject to significant fluctuations depending on the value of the eligible assets that comprise the borrowing base as of any measurement date, as well as certain discretionary rights of the agent in respect of the calculation of such borrowing base value. In addition, in the event that we fail to comply with the covenants and restrictions of the ABL Facility, we may be in default, at which time payment of the obligations and unpaid interest may be accelerated and become immediately due and payable under the ABL Facility, which may adversely affect our liquidity, financial position and 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. Our parent company, NBC, is a holding company and as such conducts substantially all of its operations through us and our subsidiaries. Consequently, NBC does not have any income from its own operations and does not expect to generate income from its own operations in the future. As a result, NBC’s ability to meet its debt service obligations, including its obligations under its $77.0 million (face value) 11% Senior Discount Notes, substantially depends upon our and our subsidiaries’ cash flow and distribution of funds by us as dividends, loans, advances or other payments. Our ability to distribute funds to NBC will be limited under certain circumstances under the terms of our indentures and our other indebtedness. If in the future NBC were unable to satisfy its obligations under the Senior Discount Notes, which could result from the application of these restrictions on our ability to distribute funds to NBC, it could result in an event of default under the Senior Discount Notes. An event of default under the Senior Discount Notes could result in cross-defaults under our indebtedness, including the ABL Facility.

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. The principal raw materials used by our suppliers are paper, various fabrics and plastics. The prices we pay our suppliers for new textbooks, clothing and general merchandise are dependent in part on the market price for raw materials used to produce them. The price and availability of such raw materials may fluctuate substantially, depending on a variety of factors, including demand, crop yields, weather, supply conditions, transportation costs, energy prices, work stoppages, government regulation, economic climates and other unpredictable factors. Any and all of these factors may be exacerbated by global climate change. Fluctuations in the price and availability of raw materials to our suppliers have not materially affected our profitability in recent years. However, increases in raw material costs, together with other factors, might cause an increase in the cost of goods for our suppliers which may be passed onto us through higher prices.

ITEM 5. OTHER INFORMATION.

We are not required to file reports with the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, but are filing this Quarterly Report on Form 10-Q on a voluntary basis.

ITEM 6. EXHIBITS.

Exhibits
	4.1		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.
	4.2		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.
	4.3		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 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, 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 Lien Amended and Restated Guarantee and Collateral Agreement, dated October 2, 2009, among Nebraska Book Company, Inc., the Subsidiary Guarantors and Wilmington Trust FSB, as Collateral 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.
	10.3		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.
	10.4		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) filed on January 8, 2010, is incorporated herein by reference.
	10.5	*	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.
	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.

* — Management contract or compensatory plan.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on February 12, 2010.

NEBRASKA BOOK COMPANY, INC. /s/ Mark W. Oppegard Mark W. Oppegard Chief Executive Officer and Director (principal executive officer) /s/ Alan G. Siemek Alan G. Siemek Chief Financial Officer, Senior Vice President of Finance and Administration, Treasurer and Assistant Secretary (principal financial and accounting officer)

EXHIBIT INDEX

4.1		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.
4.2		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.
4.3		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 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, 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 Lien Amended and Restated Guarantee and Collateral Agreement, dated October 2, 2009, among Nebraska Book Company, Inc., the Subsidiary Guarantors and Wilmington Trust FSB, as Collateral 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.
10.3		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.
10.4		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) filed on January 8, 2010, is incorporated herein by reference.
10.5	*	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.
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.

* — Management contract or compensatory plan.

Filing Compare · NEBRASKA BOOK CO