Dividend Declared
Company Continues to Invest in Digital
TORONTO, Oct. 26 /CNW/ - Indigo Books & Music Inc. (TSX: IDG.TO), Canada's largest book retailer, reported a 1% increase in revenue for its second quarter ending September 26, 2009.
Revenue for the quarter was $207 million, up $1.7 million from the same quarter last year. The increase was attributable to the opening of four new superstores in the quarter. On a comparable store basis, Indigo and Chapters superstores were down 0.9%, while Coles and Indigo Spirit small format stores were down 2.1%. Sales from Indigo's online channel, chapters.indigo.ca, decreased 5.2% to $20 million. Last year's results included revenue from the phenomenally successful "Twilight" series by Stephenie Meyer.
Net earnings for the quarter were $2.2 million compared to a $3.2 million net earnings last year.
Commenting on the quarter's results, CEO Heather Reisman said, "We are satisfied with our results through what has proven to be a very turbulent time for most retailers. It is important to note that the drop in bottom line results reflects our increased operating investment in Shortcovers, our digital initiative." Shortcovers launched in late February 2009 and serves customers who want the convenience of accessing and reading their selected content, anytime, anywhere, on the mobile devices they already own (www.shortcovers.com).
The Company also announced today that its Board of Directors has declared a quarterly cash dividend of $0.10 per outstanding common share to be paid to shareholders of record as of the close of business on November 13, 2009, with a payment date of November 30, 2009.
During the quarter the Company opened four new superstores. Residents of Milton, Ontario and Edmonton, Alberta now enjoy an award winning booklover's haven in their market, while residents of Calgary, Alberta have two new stores to experience. The Company also opened a new superstore in Laval, Quebec just after the quarter ended.
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.TO). 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 As at
September 26, September 27, March 28,
(thousands of dollars) 2009 2008 2009
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ASSETS
Current
Cash and cash equivalents 79,055 70,036 92,169
Accounts receivable 8,470 8,234 9,890
Inventories 234,190 215,174 221,767
Income taxes recoverable 866 21 -
Prepaid expenses 6,577 5,138 5,118
Future tax assets 5,885 6,745 6,181
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Total current assets 335,043 305,348 335,125
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Property, plant and equipment 79,672 59,145 72,137
Future tax assets 36,422 41,951 36,422
Intangible assets 18,393 12,069 16,299
Goodwill 27,523 27,523 27,523
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Total assets 497,053 446,036 487,506
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LIABILITIES AND SHAREHOLDERS'
EQUITY
Current
Accounts payable and accrued
liabilities 247,273 218,785 233,353
Deferred revenue 12,537 11,553 11,612
Income taxes payable - - 344
Current portion of long-term debt 2,408 2,589 2,734
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Total current liabilities 262,218 232,927 248,043
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Long-term accrued liabilities 6,296 6,844 6,301
Long-term debt 1,827 2,302 2,272
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Total liabilities 270,341 242,073 256,616
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Shareholders' equity
Share capital 196,638 197,877 196,471
Contributed surplus 4,351 3,062 3,685
Retained earnings 25,723 3,024 30,734
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Total shareholders' equity 226,712 203,963 230,890
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Total liabilities and
shareholders' equity 497,053 446,036 487,506
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Consolidated Statements of Earnings (Loss)
(Unaudited)
13-week 13-week 26-week 26-week
period period period period
ended ended ended ended
(thousands of dollars, September September September September
except per share data) 26, 2009 27, 2008 26, 2009 27, 2008
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Revenues 206,990 205,261 400,541 395,863
Cost of sales, operations,
selling and
administration 197,075 193,659 386,667 379,057
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9,915 11,602 13,874 16,806
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Amortization of property,
plant and equipment 4,918 5,758 9,830 11,558
Amortization of intangible
assets 2,124 1,289 3,965 2,600
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7,042 7,047 13,795 14,158
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Earnings before the
undernoted items 2,873 4,555 79 2,648
Interest on long-term debt
and financing charges 61 71 118 179
Interest income on cash
and cash equivalents (125) (400) (136) (793)
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Earnings before income
taxes 2,937 4,884 97 3,262
Income tax expense 737 1,696 201 1,299
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Net earnings (loss) for
the period 2,200 3,188 (104) 1,963
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Net earnings (loss) per
common share
Basic $0.09 $0.13 $(0.00) $0.08
Diluted $0.09 $0.13 $(0.00) $0.08
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Consolidated Statements of Cash Flows
(Unaudited)
13-week 13-week 26-week 26-week
period period period period
ended ended ended ended
September September September September
(thousands of dollars) 26, 2009 27, 2008 26, 2009 27, 2008
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CASH FLOWS FROM OPERATING
ACTIVITIES
Net earnings (loss) 2,200 3,188 (104) 1,963
Add (deduct) items not
affecting cash
Amortization of property,
plant and equipment 4,918 5,758 9,830 11,558
Stock-based compensation 268 189 511 422
Directors' compensation 68 72 193 177
Future tax assets 832 1,696 296 1,299
Loss on disposal of
property, plant and
equipment 165 - 173 13
Amortization of
intangible assets 2,124 1,289 3,965 2,600
Net change in non-cash
working capital balances
related to operations
Accounts receivable (560) (845) 1,420 762
Inventories (25,982) (17,986) (12,423) (8,915)
Prepaid expenses (946) 112 (1,459) (209)
Income taxes
recoverable/payable (1,210) - (1,210) -
Deferred revenue 103 721 925 1,203
Accounts payable and
accrued liabilities 49,587 31,767 13,915 24,757
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Cash flows from operating
activities 31,567 25,961 16,032 35,630
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CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant
and equipment (13,567) (7,879) (16,805) (11,993)
Addition of intangible
assets (2,905) (3,135) (6,059) (4,909)
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Cash flows used in
investing activities (16,472) (11,014) (22,864) (16,902)
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CASH FLOWS FROM FINANCING
ACTIVITIES
Repayment of long-term debt (762) (675) (1,504) (2,272)
Proceeds from share issuances 101 178 129 277
Dividends paid (4,907) - (4,907) -
Repurchase of common shares - (1,466) - (2,630)
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Cash flows used in financing
activities (5,568) (1,963) (6,282) (4,625)
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Net increase (decrease) in
cash and cash equivalents
during the period 9,527 12,984 (13,114) 14,103
Cash and cash equivalents,
beginning of period 69,528 57,052 92,169 55,933
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Cash and cash equivalents,
end of period 79,055 70,036 79,055 70,036
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ContactsJanet Eger
Director
Public Relations
(416) 342-8561
jeger@indigo.ca
158.94 (1.43%)
