Indigo Q4 Revenue Up 4.0%



    Company Initiates Quarterly Dividend

    TORONTO, May 22 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's
largest book retailer, reported a 4.0% increase in revenue for its fourth
quarter ending March 28, 2009.
    Revenue for the quarter was $214.5 million, up $8.3 million from the same
quarter last year. On a comparable store basis, Indigo and Chapters
superstores posted 3.8% growth, while Coles and Indigo Spirit small format
stores were up 6.2%. Sales from Indigo's online channel, chapters.indigo.ca,
decreased 6.5% to $23.1 million.
    Pre-tax earnings for the quarter were $2.3 million, up $0.4 million, or
up 21.6% from the same quarter last year. Net income for the quarter was $1.9
million, down $1.2 million from last year. This year's results include tax
expense of $0.4 million while last year's numbers included a $1.2 million tax
recovery, which combined account for a $1.6 million decrease in net income.
    The Company also announced today that its Board of Directors intends to
pay a quarterly cash dividend of $0.10 per share, or $0.40 per share annually,
on its common shares. The Board declared the first cash dividend of $0.10 per
outstanding common share to be paid to shareholders of record as of the close
of business on June 15, 2009, with a payment date of June 30, 2009. Future
declaration of quarterly dividends and the establishment of future record and
payment dates are subject to the final determination of the Company's Board of
Directors.
    Commenting on the quarter's results, CEO Heather Reisman said, "We are
very satisfied with both our top line growth and operating profits, especially
in this challenging economic climate. We are also proud that our strong
balance sheet has allowed us to initiate a quarterly dividend while continuing
to invest in our future growth."
    During the quarter, Indigo launched "Shortcovers", a new digital
initiative that will serve customers who want the convenience of accessing and
reading their selected content, anytime, anywhere, on the mobile devices they
already own (www.shortcovers.com).
    In addition, a new Indigo Books, Gifts, Kids superstore opened just after
the quarter ended. Residents of Surrey, British Columbia now enjoy an award
winning booklover's haven in their market. Milton, Ontario and Edmonton,
Alberta will host the launch of the newest Indigo stores in the summer of
2009.
    Revenue for the full fiscal year was $940.4 million, up $17.5 million or
1.9% from the previous year. Net income for the year was $30.7 million, down
$22.1 million from $52.8 million last year. This year's results include tax
expense of $15.1 million while last year's numbers included a $8.8 million tax
recovery, which combined account for a $23.9 million decrease in net income.

    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.

    About Indigo Books & Music Inc.

    Indigo is a publicly traded Canadian company listed on the Toronto Stock
Exchange (TSX:IDG). As the largest book retailer in the country, 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, www.chapters.indigo.ca, features
books, toys, music and DVDs, and hosts the award winning Indigo Online
Community. In 2008, Indigo launched Pistachio, an eco-aware lifestyle store
featuring stationery, gifts and home décor, and apothecary.
    Chapters and Indigo are rated as the number one and number two retailers
in Canada by the Kubas Major Market Retail Report, and have occupied the list
since 2000.
    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. Visit loveofreading.org for more information.
    To learn more about Indigo, please visit the About Our Company section of
www.chapters.indigo.ca.

    
                         Consolidated Balance Sheets
                                 (Unaudited)
                                                             As at     As at
                                                          March 28, March 29,
                                                              2009      2008
    (thousands of dollars)
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                               92,169    55,933
    Accounts receivable                                      9,890     8,996
    Inventories                                            221,767   206,259
    Income taxes recoverable                                     -        21
    Prepaid expenses                                         5,118     4,929
    Future tax assets                                        6,181     6,745
    -------------------------------------------------------------------------
    Total current assets                                   335,125   282,883
    -------------------------------------------------------------------------
    Property, plant and equipment                           72,137    57,588
    Future tax assets                                       36,422    43,250
    Intangible assets                                       16,299     9,760
    Goodwill                                                27,523    27,523
    -------------------------------------------------------------------------
    Total assets                                           487,506   421,004
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities               233,353   193,323
    Deferred revenue                                        11,612    10,350
    Income taxes payable                                       344         -
    Current portion of long-term debt                        2,734     2,648
    -------------------------------------------------------------------------
    Total current liabilities                              248,043   206,321
    -------------------------------------------------------------------------
    Long-term accrued liabilities                            6,301     7,549
    Long-term debt                                           2,272     3,380
    -------------------------------------------------------------------------
    Total liabilities                                      256,616   217,250
    -------------------------------------------------------------------------

    Shareholders' equity
    Share capital                                          196,471   198,938
    Contributed surplus                                      3,685     2,564
    Retained earnings                                       30,734     2,252
    -------------------------------------------------------------------------
    Total shareholders' equity                             230,890   203,754
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity             487,506   421,004
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                     Consolidated Statements of Earnings
                                 (Unaudited)

                                       13-week   13-week   52-week   52-week
                                        period    period    period    period
                                         ended     ended     ended     ended
    (thousands of dollars,            March 28, March 29, March 28, March 29,
    except per share data)                2009      2008      2009      2008
    -------------------------------------------------------------------------

    Revenues                           214,522   206,236   940,399   922,878
    Cost of sales, operations, selling
     and administration                205,426   197,654   867,945   848,934
    -------------------------------------------------------------------------
                                         9,096     8,582    72,454    73,944
    -------------------------------------------------------------------------
    Amortization of property, plant
     and equipment                       5,323     6,191    22,223    26,322
    Amortization of intangible assets    1,626     1,048     5,638     3,343
    Amortization of pre-opening store
     costs                                   -         -         -       144
    -------------------------------------------------------------------------
                                         6,949     7,239    27,861    29,809
    -------------------------------------------------------------------------
    Earnings before the undernoted items 2,147     1,343    44,593    44,135
    Interest on long-term debt and
     financing charges                      61       203       309       786
    Interest income on cash and cash
     equivalents                          (259)     (789)   (1,443)     (704)
    -------------------------------------------------------------------------
    Earnings before income taxes         2,345     1,929    45,727    44,053
    Income tax expense (recovery)
      Current                           (1,985)        -       344         -
      Future                             2,413    (1,201)   14,733    (8,755)
    -------------------------------------------------------------------------
                                           428    (1,201)   15,077    (8,755)
    -------------------------------------------------------------------------
    Net earnings                         1,917     3,130    30,650    52,808
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per common share
    Basic                                $0.08     $0.13     $1.24     $2.13
    Diluted                              $0.08     $0.12     $1.21     $2.08
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                    Consolidated Statements of Cash Flows
                                 (Unaudited)

                                       13-week   13-week   52-week   52-week
                                        period    period    period    period
                                         ended     ended     ended     ended
                                      March 28, March 29, March 28, March 29,
    (thousands of dollars)                2009      2008      2009      2008
    -------------------------------------------------------------------------

    CASH FLOWS FROM OPERATING ACTIVITIES
    Net earnings                         1,917     3,130    30,650    52,808
    Add (deduct) items not affecting
     cash
      Amortization of property, plant
       and equipment                     5,323     6,191    22,223    26,466
      Stock-based compensation             221       239       862       751
      Directors' compensation               99        84       362       341
      Future tax assets                 (1,996)     (201)   10,324    (8,755)
      Loss on disposal of property,
       plant and equipment                  17         9        30       105
      Amortization of intangible assets  1,626     1,048     5,638     3,343
      Amortization and write-off of
       deferred financing charges            -        44         -       258
      Other                                  -       (25)        -       (19)

    Net change in non-cash working
     capital balances related to
     operations
      Accounts receivable                7,799     7,926      (894)      852
      Inventories                        6,250    22,411   (15,508)   17,800
      Prepaid expenses                    (378)   (1,118)     (189)     (495)
      Income taxes recoverable/payable  (1,964)        -       365       173
      Deferred revenue                     511      (274)    1,262      (271)
      Accounts payable and accrued
       liabilities                     (78,782)  (83,332)   38,782   (16,477)
    -------------------------------------------------------------------------
    Cash flows from operating
     activities                        (59,357)  (43,868)   93,907    76,880
    -------------------------------------------------------------------------

    CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property, plant and
     equipment                          (8,698)   (4,479)  (34,041)  (16,234)
    Addition of intangible assets       (4,151)   (2,325)  (12,176)   (3,298)
    Proceeds from sale of property,
     plant and equipment                     -       691         -       691
    Acquisition of non-capital tax
     losses                             (2,932)        -    (2,932)        -
    -------------------------------------------------------------------------
    Cash flows used in investing
     activities                        (15,781)   (6,113)  (49,149)  (18,841)
    -------------------------------------------------------------------------

    CASH FLOWS FROM FINANCING ACTIVITIES
    Repayment of long-term debt           (785)   (1,389)   (3,784)  (16,811)
    Proceeds from share issuances            -        67       287     1,066
    Repurchase of common shares              -         -    (5,025)        -
    -------------------------------------------------------------------------
    Cash flows used in financing
     activities                           (785)   (1,322)   (8,522)  (15,745)
    -------------------------------------------------------------------------

    Net increase in cash and cash
     equivalents during the period     (75,923)  (51,303)   36,236    42,294
    Cash and cash equivalents,
     beginning of period               168,092   107,236    55,933    13,639
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                      92,169    55,933    92,169    55,933
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Janet Eger, Director, Public Relations, (416)
342-8561, jeger@indigo.ca


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