IDG Indigo Books and Music Inc

TORONTO, Feb. 8 /CNW/ -- Digital Business Grows Rapidly TORONTO, Feb. 8 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's largest book, gift and specialty toy retailer reported a 14% growth in revenue for its third quarter ending January 1, 2011. Revenue for the quarter was $387.6 million, up $47.4 million from last year driven by strong growth in the Company's digital business.  On a comparable store basis, Indigo and Chapters superstores posted a 2.6% increase in revenue, while Coles and Indigo Spirit small format stores were down 0.8%.  Sales from Indigo's online channel, chapters.indigo.ca, were up 6.5% compared to last year. Commenting on the results, CEO Heather Reisman said, "We are pleased with our top line revenue growth, particularly in our rapidly growing digital business.  Kobo eReaders were the hottest items in our stores over the holidays.  Consumers have also responded very favourably to our broader gift and toy selection and reinforced our decision to continue expanding these categories." Net profit for the quarter was $30.2 million compared to a net profit of $34.5 million last year.  Ms. Reisman noted, "A reduced profit was expected as we continue to invest in the growth of our digital initiatives and the re-development of our stores and distribution centre to accommodate growth in our gift and toy businesses." During the quarter the Company expanded its IndigoKids departments in seven British Columbia stores further advancing its strategy to make Indigo the ultimate family friendly destination. Indigo launched its IndigoStudio pilot in two GTA stores and launched Photogifts online at chapters.indigo.ca/photogifts. In this quarter, Indigo also revamped its online experience, expanding the online assortment to include gift and lifestyle product and significantly increased the depth and breadth of toys available online. The Board of Directors today also approved a quarterly dividend of 11 cents per common share to be paid on March 14(th), 2011, to all shareholders of record as of February 28, 2011. 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 (TSX:IDG). As the largest book, gift and specialty toy 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, eBooks, toys, music and DVDs, and hosts the award winning Indigo Online Community. In 2008, Indigo launched Pistachio, an eco-aware lifestyle store. In 2009, Indigo spun off their digital eReading division to launch KOBO Inc. - a leading destination for eReading. Chapters and Indigo are rated as the number one and number two most favoured 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. To date the Foundation has contributed $9 mm to schools in need. 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 As at January 1, December 26, April 3, (thousands of dollars) 2011 2009 2010 ASSETS Current Cash and cash equivalents 144,335 202,082 103,489 Restricted cash 308 681 409 Accounts receivable 26,007 16,231 8,455 Inventories 255,750 246,312 224,406 Income taxes recoverable 899 - 899 Prepaid expenses 13,729 5,090 6,771 Future tax assets 5,146 4,589 6,615 Total current assets 446,174 474,985 351,044 Property, plant and equipment 87,950 78,669 77,478 Intangible assets 28,360 20,317 23,794 Future tax assets 29,114 23,164 40,894 Goodwill 26,632 26,632 26,632 Total assets 618,230 623,767 519,842 LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued 316,813 333,319 229,920 liabilities Deferred revenue 12,639 12,180 12,882 Income taxes payable - 703 - Current portion of long-term debt 1,302 2,388 1,863 Total current liabilities 330,754 348,590 244,665 Long-term accrued liabilities 6,822 7,096 8,203 Long-term debt 2,081 1,328 1,174 Total liabilities 339,657 357,014 254,042 Non-controlling interest 1,909 7,905 6,831 Shareholders' equity Share capital 201,280 196,585 198,635 Contributed surplus 5,025 4,641 4,670 Retained earnings 70,359 57,622 55,664 Total shareholders' equity 276,664 258,848 258,969 Total liabilities and shareholders' 618,230 623,767 519,842 equity Consolidated Statements of Earnings and Comprehensive Earnings (Unaudited) 13-week 13-week 39-week 39-week period ended period ended period ended period ended January 1, December 26, January 1, December 26, (thousands of 2011 2009 2011 2009 dollars, except per share data) Revenues 387,642 340,195 806,692 740,736 Cost of sales, 349,910 287,717 766,964 674,384 operations, selling and administration 37,732 52,478 39,728 66,352 Depreciation of 5,152 5,079 14,122 14,909 property, plant and equipment Amortization of 2,726 2,184 7,656 6,149 intangible assets Write-off of - 455 - 455 capital assets 7,878 7,718 21,778 21,513 Earnings before the 29,854 44,760 17,950 44,839 undernoted items Interest on 72 49 115 167 long-term debt and financing charges Interest income on (131) (45) (315) (181) cash and cash equivalents Dilution gain on - (3,019) - (3,019) sale of non-controlling interest in subsidiary Deemed disposition - 891 - 891 of goodwill Earnings before 29,913 46,884 18,150 46,981 income taxes and non-controlling interest Income tax expense Current - 2,169 - 2,169 Future 3,707 10,261 3,744 10,462 3,707 12,430 3,744 12,631 Earnings before 26,206 34,454 14,406 34,350 non-controlling interest Non-controlling (3,976) (76) (8,659) (76) interest Net earnings and 30,182 34,530 23,065 34,426 comprehensive earnings for the period Net earnings per common share Basic $1.21 $1.41 $0.93 $1.40 Diluted $1.19 $1.38 $0.92 $1.37 Consolidated Statements of Cash Flows (Unaudited) 13-week 13-week 39-week 39-week period ended period ended period ended period ended January 1, December 26, January 1, December 26, (thousands of 2011 2009 2011 2009 dollars) CASH FLOWS FROM OPERATING ACTIVITIES Net earnings 30,182 34,530 23,065 34,426 Add (deduct) items not affecting cash Depreciation of 5,152 5,079 14,122 14,909 property, plant and equipment Amortization of 2,726 2,184 7,656 6,149 intangible assets Stock-based 214 299 520 810 compensation Directors' 100 96 416 289 stock-based compensation Future tax assets 13,212 14,554 13,249 14,850 Loss on disposal 4 83 73 256 of capital assets Write-off of - 455 - 455 capital assets Non-controlling (3,976) (76) (8,659) (76) interest Dilution gain on - (3,019) - (3,019) sale of non-controlling interest in subsidiary Deemed disposal of - 891 - 891 goodwill Other 611 618 1,134 653 Net change in non-cash working capital balances related to operations Accounts (15,472) (7,761) (17,552) (6,341) receivable Inventories 11,566 (12,122) (31,344) (24,545) Prepaid expenses 8,423 1,487 (6,958) 28 Income taxes - 1,569 - 359 payable Deferred revenue (10,980) (357) (243) 568 Accounts payable 53,359 86,846 85,512 100,761 and accrued liabilities Cash flows from 95,121 125,356 80,991 141,423 operating activities CASH FLOWS FROM INVESTING ACTIVITIES Change in 2,164 (215) 101 (313) restricted cash Purchase of (7,526) (3,963) (22,338) (20,768) property, plant and equipment Addition of (4,305) (4,518) (12,222) (10,577) intangible assets Cash flows used in (9,667) (8,696) (34,459) (31,658) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Repayment of (356) (760) (1,983) (2,264) long-term debt Proceeds from share 1,093 110 2,274 239 issuances Repurchase of - (446) (387) (446) common shares Issuance of equity 1,905 11,000 3,095 11,000 securities by subsidiary to non-controlling interest Dividends paid (2,742) (2,453) (8,193) (7,360) Cash flows from (100) 7,451 (5,194) 1,169 (used in) financing activities Effect of foreign (369) (618) (492) (653) currency exchange rate changes on cash and cash equivalents Net increase in 84,985 123,493 40,846 110,281 cash and cash equivalents during the period Cash and cash 59,350 78,589 103,489 91,801 equivalents, beginning of period Cash and cash 144,335 202,082 144,335 202,082 equivalents, end of period To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/February2011/08/c8982.html pJanet Egerbr/ Director, Public Relationsbr/ 416 342 8561br/ a href="mailto:jeger@indigo.ca"jeger@indigo.ca/a/p

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