Improved Net Earnings from Continuing
Operations
TORONTO,
May 28, 2013 /CNW/ - Indigo Books & Music Inc. (TSX: IDG),
Canada's largest book, gift and
specialty toy retailer reported full year gross profit $2.7 million higher than last year due to a 2.2%
improvement in margin rate. The improvement in margin rate
was a result of a shift in product mix to higher margin products,
lower sales discounts, fewer markdowns and shipping more product
through the Company's distribution center.
Net earnings from continued operations attributable to
shareholders of the Company for the year were $4.3 million, compared to a net loss of
$27.8 million last year. The
improvement in earnings was primarily due to improved margins and
no goodwill impairment charges being recognized in fiscal 2013.
Revenue for the fiscal year ended March
30, 2013 was $893 million
compared to $934 million last year, a
decline of 4.4%. The decline was primarily due to lower
physical book and eReader sales. Additionally, the Company
operated nine fewer small format stores.
The revenue decline was partially offset by double-digit growth
in lifestyle, paper and toy sales and an increase in revenue from
the Kobo revenue-sharing agreement due to the growth in digital
reading.
On a comparable store basis, Indigo and Chapters superstore
revenue decreased 4.6%, while Coles and IndigoSpirit small format
store revenue decreased 2.4%. Online sales grew 1%.
Revenue for the fourth quarter was $185 million, down $11
million from the previous year against the blockbuster
Hunger Games Trilogy in the fourth quarter last year. Net loss from
continuing operations attributable to shareholders of the Company
for the quarter was $8.2 million
compared to a net loss of $10.7
million last year. The increase in earnings was due to
a 2.4% improvement in margin rate and lower operating and selling
and administrative expenses due to the Company's on-going focus on
its Galileo productivity improvement initiative.
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-IFRS Financial Measures
The Company prepares its unaudited interim condensed consolidated
financial statements in accordance with International Financial
Reporting Standards and International Accounting Standards 34,
"Interim Financial Reporting." In order to provide additional
insight into the business, the Company has also provided non-IFRS
data, including comparative store sales growth, in the press
release above. This measure does not have a standardized meaning
prescribed by IFRS 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). 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 channel, indigo.ca, offers
a one-stop online shop with a robust selection of books, toys, home
décor, stationery and gifts.
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, as well as the
Indigo "Adopt A School" program, have contributed $13.5 million—equating to close to two million
books— to high-needs elementary schools across Canada. Visit loveofreading.org for more
information.
To learn more about Indigo, please visit the Our
Company section at indigo.ca.
Consolidated Balance
Sheets |
|
|
|
|
|
|
|
As at |
|
As at |
|
|
March 30, |
|
March 31, |
(thousands of Canadian dollars) |
|
2013 |
|
2012 |
ASSETS |
|
|
|
|
Current |
|
|
|
|
Cash and cash equivalents |
|
211,701 |
|
207,601 |
Accounts receivable |
|
7,180 |
|
12,627 |
Inventories |
|
216,916 |
|
229,706 |
Prepaid expenses |
|
4,235 |
|
3,695 |
Total current assets |
|
440,032 |
|
453,629 |
|
|
|
|
|
Property, plant and equipment |
|
59,319 |
|
67,464 |
Intangible assets |
|
22,164 |
|
22,810 |
Deferred tax assets |
|
48,731 |
|
48,633 |
Total assets |
|
570,246 |
|
592,536 |
LIABILITIES AND EQUITY |
|
|
|
|
Current |
|
|
|
|
Accounts payable and accrued liabilities |
|
151,283 |
|
174,201 |
Unredeemed gift card liability |
|
47,169 |
|
42,711 |
Provisions |
|
2,168 |
|
232 |
Deferred revenue |
|
13,733 |
|
11,234 |
Income taxes payable |
|
11 |
|
65 |
Current portion of long-term debt |
|
773 |
|
1,060 |
Total current liabilities |
|
215,137 |
|
229,503 |
Long-term accrued liabilities |
|
4,004 |
|
5,800 |
Long-term provisions |
|
78 |
|
460 |
Long-term debt |
|
705 |
|
1,141 |
Total liabilities |
|
219,924 |
|
236,904 |
Equity |
|
|
|
|
Share capital |
|
203,805 |
|
203,373 |
Contributed surplus |
|
8,128 |
|
7,039 |
Retained earnings |
|
138,389 |
|
145,220 |
Total equity |
|
350,322 |
|
355,632 |
Total liabilities and equity |
|
570,246 |
|
592,536 |
Consolidated
Statements of Earnings (Loss) and Comprehensive Earnings
(Loss) |
|
|
|
|
|
|
13-week |
13-week |
52-week |
52-week |
|
period ended |
period ended |
period ended |
period ended |
|
March 30, |
March 31, |
March 30, |
March 31, |
(thousands of Canadian dollars, except
per share data) |
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Revenues |
184,814 |
195,879 |
892,458 |
933,990 |
Cost of sales |
(102,968) |
(113,889) |
(500,681) |
(544,924) |
Gross profit |
81,846 |
81,990 |
391,777 |
389,066 |
Operating, selling and administrative
expenses |
(93,252) |
(97,710) |
(390,080) |
(418,701) |
Operating earnings (loss) |
(11,406) |
(15,720) |
1,697 |
(29,635) |
Interest on long-term debt and
financing charges |
(27) |
(36) |
(116) |
(153) |
Interest income on cash and cash
equivalents |
765 |
420 |
2,609 |
460 |
Earnings (loss) before income
taxes |
(10,668) |
(15,336) |
4,190 |
(29,328) |
Income tax recovery (expense) |
|
|
|
|
|
Current |
- |
(71) |
- |
(71) |
|
Deferred |
2,421 |
4,681 |
98 |
1,572 |
Earnings (loss) and comprehensive
earnings (loss) for
the period from continuing operations |
(8,247) |
(10,726) |
4,288 |
(27,827) |
Earnings and comprehensive earnings
for the period
from discontinued operations (net of tax) |
- |
135,695 |
- |
94,016 |
Net earnings (loss) and
comprehensive earnings (loss)
for the period |
(8,247) |
124,969 |
4,288 |
66,189 |
|
|
|
|
|
Net earnings (loss) and
comprehensive earnings (loss)
attributable to: |
|
|
|
|
Shareholders of Indigo |
(8,247) |
131,527 |
4,288 |
92,664 |
Non-controlling interest |
- |
(6,558) |
- |
(26,475) |
|
|
|
|
|
Net earnings (loss) per common
share from
continuing operations |
|
|
|
|
Basic |
$(0.33) |
$(0.43) |
$0.17 |
$(1.10) |
Diluted |
$(0.33) |
$(0.43) |
$0.17 |
$(1.10) |
|
|
|
|
|
Net earnings per common share from
discontinued operations |
|
|
|
|
Basic |
$ - |
$5.64 |
$ - |
$4.78 |
Diluted |
$ - |
$5.58 |
$ - |
$4.73 |
|
|
|
|
|
Net earnings (loss) per common
share |
|
|
|
|
Basic |
$(0.33) |
$5.21 |
$0.17 |
$3.68 |
Diluted |
$(0.33) |
$5.16 |
$0.17 |
$3.64 |
Consolidated
Statements of Cash Flows |
|
|
13-week |
13-week |
52-week |
52-week |
|
period ended |
period ended |
period ended |
period ended |
|
March 30, |
March 31, |
March 30, |
March 31, |
(thousands of Canadian dollars) |
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
Net earnings (loss) from continuing
operations for the period |
(8,247) |
(10,726) |
4,288 |
(27,827) |
Add (deduct) items not affecting
cash |
|
|
|
|
|
Depreciation of property, plant
and equipment |
4,363 |
4,590 |
17,838 |
18,416 |
|
Amortization of intangible
assets |
2,691 |
1,977 |
10,245 |
8,243 |
|
Net impairment of capital
assets |
- |
- |
250 |
3,956 |
|
Impairment of goodwill |
- |
- |
- |
25,416 |
|
Loss on disposal of capital
assets |
21 |
59 |
65 |
124 |
|
Stock-based compensation |
174 |
175 |
743 |
1,041 |
|
Directors' compensation |
116 |
116 |
446 |
500 |
|
Deferred tax assets |
(2,421) |
(4,681) |
(98) |
(1,572) |
|
Other |
(25) |
(248) |
(443) |
(205) |
Net change in non-cash working capital
balances related
to continuing operations |
(91,394) |
(68,695) |
1,408 |
16,925 |
Interest on long-term debt and
financing charges |
27 |
36 |
116 |
153 |
Interest income on cash and cash
equivalents |
(765) |
(420) |
(2,609) |
(460) |
Income taxes received (paid) |
(13) |
(325) |
32 |
(325) |
Operating cash flows of discontinued
operations |
- |
11,809 |
- |
(56,878) |
Cash flows from (used in) operating
activities |
(95,473) |
(66,333) |
32,281 |
(12,493) |
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
Acquisition of non-capital tax
losses |
- |
- |
- |
(10,559) |
Purchase of property, plant and
equipment |
(2,572) |
(1,611) |
(9,521) |
(12,141) |
Addition of intangible assets |
(2,745) |
(2,513) |
(9,621) |
(8,553) |
Interest received |
796 |
276 |
2,676 |
526 |
Cash disposal resulting from sale of
subsidiary |
- |
(33,033) |
- |
(33,033) |
Proceeds from sale of subsidiary |
- |
148,941 |
- |
148,941 |
Investing cash flows of discontinued
operations |
- |
(948) |
- |
(8,884) |
Cash flows from (used in) investing
activities |
(4,521) |
111,112 |
(16,466) |
76,297 |
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
Notes payable |
- |
(5,280) |
- |
- |
Repayment of long-term debt |
(236) |
(320) |
(1,200) |
(1,367) |
Interest paid |
(33) |
(104) |
(160) |
(245) |
Proceeds from share issuances |
52 |
7 |
332 |
585 |
Dividends paid |
(2,783) |
(2,775) |
(11,119) |
(11,090) |
Purchase of shares in subsidiary |
- |
- |
- |
(3,009) |
Financing cash flows of discontinued
operations |
- |
(263) |
- |
74,819 |
Cash flows from (used in) financing
activities |
(3,000) |
(8,735) |
(12,147) |
59,693 |
|
|
|
|
|
Effect of foreign currency exchange
rate changes on cash
and cash equivalents |
3 |
511 |
432 |
443 |
|
|
|
|
|
Net increase (decrease) in cash and
cash equivalents during the period |
(102,991) |
36,555 |
4,100 |
123,940 |
Cash and cash equivalents, beginning
of period |
314,692 |
171,046 |
207,601 |
83,661 |
Cash and cash equivalents, end of
period |
211,701 |
207,601 |
211,701 |
207,601 |
SOURCE Indigo Books & Music
Inc.