Indigo Crosses Billion Dollar Mark - Grows Revenues By 5%

Digital Business Grows Rapidly

TORONTO, May 31, 2011 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported a 5% increase in revenue for its fiscal year ending April 2, 2011. Revenue for the year was $1.017 billion compared to $969 million last year.  The Company noted that this year had one fewer week than last year.

Commenting on the results, CEO Heather Reisman said, "We are pleased with our revenue growth, particularly given the significant transition going on in our industry.  Consumers have embraced our Kobo eReader and eBook offerings and we are thrilled to be at the forefront of an emerging global industry."

Net earnings for the year were $11.3 million, down $23.6 million from last year "The reduced profit was expected as we continue to invest in the growth of Kobo and the establishment of the Indigo Lifestyle proprietary product design and development capability."

Revenue for the fourth quarter was $211 million, down $17.6 million from last year.  The Company noted that there was one less operating week in the quarter this year compared to last and no hit equal to the runaway success of the Stephenie Meyer Twilight trilogy.    On a normalized 13 week basis, revenue for the quarter was down $2.3 million or 1%.  Net loss for the quarter was $11.7 million compared to a profit of $0.5 million last year.

During the fourth quarter of fiscal 2011 and the first quarter of fiscal 2012, Kobo raised $50 million in additional funding from investors including Indigo which retains its majority ownership of the burgeoning eReading company.   Just after the close of the quarter Kobo also launched its most advanced eReader - the Kobo eReader Touch Edition.

In Q4, Indigo rolled out a new free plum rewards loyalty program which provides points for redemption on almost everything purchased in store as well as preferred pricing at indigo.ca. The program encompasses every business category, rewarding more customers for their patronage along with robust personalized recommendations and relevant offers.

Forward-Looking Statements

Statements contained in this news release that are not historical facts are forward-looking statements which involve risk and uncertainties that could cause results to differ materially from those expressed in the forward-looking statements. Among the key factors that could cause such differences are: general economic, market or business conditions in Canada; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond the control of the Company.

Non-GAAP Financial Measures

The Company prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles. In order to provide additional insight into the business, the Company has also provided non-GAAP data, including comparative store sales growth, in the press release above. This measure does not have a standardized meaning prescribed by GAAP, and is therefore specific to Indigo and may not be comparable to similar measures presented by other companies.  Comparative store sales growth is a key indicator used by the Company to measure performance against internal targets and prior period results. This measure is commonly used by financial analysts and investors to compare Indigo to other retailers. Comparable store sales are defined as sales generated by stores that have been open for more than 12 months on a 52-week basis.

About Indigo Books & Music Inc.

Indigo is a publicly traded Canadian company listed on the Toronto Stock Exchange (IDG) and the majority shareholder of  the global eReading service Kobo, Inc. As the largest book, gift and specialty toy retailer in Canada, Indigo operates in all provinces under different banners including Indigo Books & Music; Indigo Books, Gifts, Kids; IndigoSpirit, Chapters, The World's Biggest Bookstore, and Coles. The online division, http://www.chapters.indigo.ca, features books, eBooks, toys, gifts and, and hosts the award winning Indigo Online Community.  In 2004, Indigo founded the Indigo Love of Reading Foundation, a registered charity that provides new books and education materials to high-needs Canadian elementary schools, to address the literacy crisis in Canada. To date the Foundation has contributed $9 million to schools in need.  Visit www.loveofreading.org for more information.

To learn more about Indigo, please visit the About Our Company section of www.indigo.ca.

Consolidated Balance Sheets
 
    As at As at
 
(thousands of dollars)
 
 
April 2,
2011
April 3,
2010
       
ASSETS      
Current      
Cash and cash equivalents   83,021 103,489
Restricted cash   640 409
Accounts receivable   12,684 8,455
Inventories   232,694 224,406
Income taxes recoverable   - 899
Prepaid expenses   7,941 6,771
Future tax assets   5,393 6,615
Total current assets   342,373 351,044
Property, plant and equipment   85,736 77,478
Intangible assets   30,620 23,794
Future tax assets   30,819 40,894
Goodwill   26,632 26,632
Total assets   516,180 519,842
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current      
Accounts payable and accrued liabilities   224,959 229,920
Deferred revenue   11,528 12,882
Income taxes payable   657 -
Current portion of long-term debt   1,290 1,863
Total current liabilities   238,434 244,665
Long-term accrued liabilities   6,284 8,203
Long-term debt   1,995 1,174
Total liabilities   246,713 254,042
Non-controlling interest   6,347 6,831
Shareholders' equity      
Share capital   202,196 198,635
Contributed surplus   5,039 4,670
Retained earnings   55,885 55,664
Total shareholders' equity   263,120 258,969
Total liabilities and shareholders' equity   516,180 519,842

Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss)
 
  13-week 14-week 52-week 53-week
  period ended period ended period ended period ended
  April 2, April 3, April 2, April 3,
(thousands of dollars, except per share data) 2011 2010 2011 2010
         
Revenues 210,633 228,191 1,017,325 968,927
Cost of sales, operations, selling and administration 224,191 221,546 991,155 895,930
  (13,558) 6,645 26,170 72,997
Depreciation of property, plant and equipment 5,189 4,773 19,311 19,682
Amortization of intangible assets 3,023 2,177 10,679 8,326
Write-off of capital assets - 631 - 1,086
  8,212 7,581 29,990 29,094
Earnings (loss) before the undernoted items (21,770) (936) (3,820) 43,903
Interest on long-term debt and financing charges 97 47 212 214
Interest income on cash and cash equivalents (252) (152) (567) (333)
Dilution gain on reduction of ownership in subsidiary (3,915) - (3,915) (3,019)
Deemed disposition of goodwill - - - 891
Earnings (loss) before income taxes and non-controlling interest (17,700) (831) 450 46,150
Income tax expense (recovery)        
   Current 1,237 (688) 1,237 1,481
   Future (2,299) 594 1,445 11,056
     (1,062) (94) 2,682 12,537
Earnings (loss) before non-controlling interest (16,638) (737) (2,232) 33,613
Non-controlling interest (4,919) (1,234) (13,578) (1,310)
Net earnings (loss) and comprehensive earnings (loss) for the period (11,719) 497 11,346 34,923
         
Net earnings (loss) per common share        
Basic $(0.47) $0.02 $0.46 $1.42
Diluted $(0.47) $0.02 $0.45 $1.39

Consolidated Statements of Cash Flows
  13-week 14-week 52-week 53-week
  period ended period ended period ended period ended
  April 2, April 3, April 2, April 3,
(thousands of dollars) 2011 2010 2011 2010
         
CASH FLOWS FROM OPERATING ACTIVITIES        
Net earnings (11,719) 497 11,346 34,923
Add (deduct) items not affecting cash        
 Depreciation of property, plant and equipment 5,189 4,773 19,311 19,682
 Amortization of intangible assets 3,023 2,177 10,679 8,326
 Stock-based compensation 63 320 583 1,130
 Directors' stock-based compensation 138 89 554 378
 Future tax assets (1,952) (12,008) 11,297 2,842
 Loss on disposal of capital assets 144 34 217 290
 Write-off of capital assets - 631 - 1,086
 Non-controlling interest (4,919) (1,234) (13,578) (1,310)
 Dilution gain on reduction of ownership in subsidiary (3,915) - (3,915) (3,019)
 Deemed disposal of goodwill - - - 891
 Other 1,178 734 2,312 1,387
         
Net change in non-cash working capital balances related to operations        
 Accounts receivable 13,323 7,776 (4,229) 1,435
 Inventories 23,056 21,906 (8,288) (2,639)
 Prepaid expenses 5,788 (1,681) (1,170) (1,653)
 Income taxes payable (recoverable) 1,556 (1,602) 1,556 (1,243)
 Deferred revenue (1,111) 702 (1,354) 1,270
 Accounts payable and accrued liabilities (92,392) (102,292) (6,880) (1,531)
Cash flows from (used in) operating activities (62,550) (79,178) 18,441 62,245
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Change in restricted cash (332) 272 (231) (41)
Purchase of property, plant and equipment (3,127) (4,159) (25,465) (24,927)
Addition of intangible assets (5,283) (5,654) (17,505) (16,231)
Acquistion of non-capital tax losses - (7,748) - (7,748)
Cash flows used in investing activities (8,742) (17,289) (43,201) (48,947)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Repayment of long-term debt (90) (767) (2,073) (3,031)
Proceeds from share issuances 729 1,670 3,003 1,909
Repurchase of common shares - - (387) (446)
Issuance of equity securities by subsidiary to non-controlling interest 12,695 - 15,790 11,000
Dividends paid (2,755) (2,455) (10,948) (9,815)
Cash flows from (used in) financing activities 10,579 (1,552) 5,385 (383)
         
Effect of foreign currency exchange rate changes on cash and cash equivalents (601) (574) (1,093) (1,227)
         
Net increase (decrease) in cash and cash equivalents during the period (61,314) (98,593) (20,468) 11,688
Cash and cash equivalents, beginning of period 144,335 202,082 103,489 91,801
Cash and cash equivalents, end of period 83,021 103,489 83,021 103,489

 

 

SOURCE Indigo Books

For further information:

Janet Eger
Director, Public Relations
416 342 8561
jeger@indigo.ca


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