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Press release from CNW Group

Indigo Crosses Billion Dollar Mark - Grows Revenues By 5%

Tuesday, May 31, 2011

Indigo Crosses Billion Dollar Mark - Grows Revenues By 5%16:07 EDT Tuesday, May 31, 2011Digital Business Grows RapidlyTORONTO, 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 StatementsStatements 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 MeasuresThe 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 83,021103,489Restricted cash 640409Accounts receivable 12,6848,455Inventories 232,694224,406Income taxes recoverable -899Prepaid expenses 7,9416,771Future tax assets 5,3936,615Total current assets 342,373351,044Property, plant and equipment 85,73677,478Intangible assets 30,62023,794Future tax assets 30,81940,894Goodwill 26,63226,632Total assets 516,180519,842    LIABILITIES AND SHAREHOLDERS' EQUITY   Current   Accounts payable and accrued liabilities 224,959229,920Deferred revenue 11,52812,882Income taxes payable 657-Current portion of long-term debt 1,2901,863Total current liabilities 238,434244,665Long-term accrued liabilities 6,2848,203Long-term debt 1,9951,174Total liabilities 246,713254,042Non-controlling interest 6,3476,831Shareholders' equity   Share capital 202,196198,635Contributed surplus 5,0394,670Retained earnings 55,88555,664Total shareholders' equity 263,120258,969Total liabilities and shareholders' equity 516,180519,842Consolidated Statements of Earnings (Loss) and Comprehensive Earnings (Loss)  13-week14-week52-week53-week period endedperiod endedperiod endedperiod ended April 2,April 3,April 2,April 3,(thousands of dollars, except per share data)2011201020112010     Revenues210,633228,1911,017,325968,927Cost of sales, operations, selling and administration224,191221,546991,155895,930 (13,558)6,64526,17072,997Depreciation of property, plant and equipment5,1894,77319,31119,682Amortization of intangible assets3,0232,17710,6798,326Write-off of capital assets-631-1,086 8,2127,58129,99029,094Earnings (loss) before the undernoted items(21,770)(936)(3,820)43,903Interest on long-term debt and financing charges9747212214Interest 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---891Earnings (loss) before income taxes and non-controlling interest(17,700)(831)45046,150Income tax expense (recovery)       Current1,237(688)1,2371,481   Future(2,299)5941,44511,056    (1,062)(94)2,68212,537Earnings (loss) before non-controlling interest(16,638)(737)(2,232)33,613Non-controlling interest(4,919)(1,234)(13,578)(1,310)Net earnings (loss) and comprehensive earnings (loss) for the period(11,719)49711,34634,923     Net earnings (loss) per common share    Basic$(0.47)$0.02$0.46$1.42Diluted$(0.47)$0.02$0.45$1.39Consolidated Statements of Cash Flows 13-week14-week52-week53-week period endedperiod endedperiod endedperiod ended April 2,April 3,April 2,April 3,(thousands of dollars)2011201020112010     CASH FLOWS FROM OPERATING ACTIVITIES    Net earnings(11,719)49711,34634,923Add (deduct) items not affecting cash     Depreciation of property, plant and equipment5,1894,77319,31119,682 Amortization of intangible assets3,0232,17710,6798,326 Stock-based compensation633205831,130 Directors' stock-based compensation13889554378 Future tax assets(1,952)(12,008)11,2972,842 Loss on disposal of capital assets14434217290 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 Other1,1787342,3121,387     Net change in non-cash working capital balances related to operations     Accounts receivable13,3237,776(4,229)1,435 Inventories23,05621,906(8,288)(2,639) Prepaid expenses5,788(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)18,44162,245     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 issuances7291,6703,0031,909Repurchase of common shares--(387)(446)Issuance of equity securities by subsidiary to non-controlling interest12,695-15,79011,000Dividends paid(2,755)(2,455)(10,948)(9,815)Cash flows from (used in) financing activities10,579(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)11,688Cash and cash equivalents, beginning of period144,335202,082103,48991,801Cash and cash equivalents, end of period83,021103,48983,021103,489  For further information: Janet Eger Director, Public Relations 416 342 8561 jeger@indigo.ca