Indigo Q2 Results Reflect Strong Margin and Productivity Improvements

Indigo Q2 Results Reflect Strong Margin and Productivity Improvements 
Plum Rewards Membership Tops 5 Million Customers 
TORONTO, Nov. 6, 2012 /CNW/ - Indigo Books & Music Inc. (TSX: IDG), Canada's 
largest book, gift and specialty toy retailer reported a 5.9% decrease in net 
revenue for its second quarter ending September 29, 2012. Revenue for the 
quarter was $185.6 million, down $11.6 million from last year driven primarily 
by a delay in the planned launch of the new Kobo devices. In addition, the 
Company operated seven fewer Coles stores. Book sales for the quarter were 
down only modestly to last year owing to strong titles as well as effective 
efforts to drive book sales both in store and online. 
On a comparable store basis, Indigo and Chapters superstores posted a 6.5% 
decrease in revenue, while Coles and IndigoSpirit small format stores were 
down 2.2%. 
Commenting on the results, CEO Heather Reisman said, "We are focused on 
driving significant margin and productivity improvements and are pleased that 
our on-going efforts are reflected in our results. We will continue to 
broaden our assortment in our key growth categories to drive higher top line 
sales to offset the decline in physical books. We're also pleased to have the 
newest Kobo eReaders now in store as top gift picks for the upcoming holiday 
season." 
The net loss attributable to shareholders of the Company from continuing 
operations improved $24.8 million from a loss of $28.8 million last year to a 
loss of $4.0 million this year. The significant reduction in net loss was 
due to there being no impairment charges in the current year. In the same 
period last year, the Company recorded a full write down of the $25.4 million 
of goodwill allocated to the Indigo segment. In addition, the Company 
experienced improvements in margin and productivity in the current year. 
The net loss per share from continuing operations improved from a loss of 
$1.14 per share last year to a loss of $0.16 per share due to the above noted 
factors. 
In the quarter, the Company's plum rewards program was recognized for global 
leadership, earning the award for Loyalty Innovation in Retail at the 3(rd) 
Annual COLLOQUY Loyalty Awards. In less than 18 months, five million 
Canadians joined the plum rewards program, collecting over seven billion plum 
points. Designed in response to customer feedback, plum rewards help 
shoppers discover products that match their interests and passions while 
rewarding and recognizing their purchases. Plum rewards members can collect 
points on virtually every in-store purchase, have self-service access to 
personalized recommendations and offers online or at in-store kiosks, and 
enjoy special member pricing on online book purchases. 
Also in the second quarter, Indigo launched its award winning annual 
Adopt-A-School program, a three week national fundraising campaign that raised 
over $580 thousand — the equivalent of over 50 thousand books — to support 
570 participating schools across Canada. Through the program Indigo helps 
augment the $1.5 million in grants made annually by the Indigo Love of Reading 
Foundation to benefit high needs elementary schools. 
The Board of Directors today approved a quarterly dividend of 11 cents per 
common share to be paid on December 5, 2012, to all shareholders of record as 
of November 20, 2012. 
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 million, equating to more than a 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
                                            (Unaudited)
                                                                      
                                            As at      As at     As at
                                    September 29, October 1, March 31,

(thousands of Canadian dollars)              2012       2011      2012

ASSETS                                                                

Current                                                               

Cash and cash equivalents                 192,598     45,491   207,601

Accounts receivable                        14,092     21,831    12,627

Inventories                               247,604    263,918   229,706

Prepaid expenses                            4,835     15,285     3,695

Total current assets                      459,129    346,525   453,629

Property, plant and equipment              62,111     76,031    67,464

Intangible assets                          22,467     31,251    22,810

Goodwill                                        -      1,216         -

Deferred tax assets                        53,986     68,250    48,633

Total assets                              597,693    523,273   592,536

LIABILITIES AND EQUITY                                                

Current                                                               

Accounts payable and accrued              198,435    224,159   174,201
liabilities

Unredeemed gift card liability             37,912     36,292    42,711

Provisions                                    175          -       232

Deferred revenue                           12,882     12,401    11,234

Income taxes payable                          111        650        65

Notes payable                                   -      5,168         -

Current portion of long-term debt             900      1,305     1,060

Total current liabilities                 250,415    279,975   229,503

Long-term accrued liabilities               4,448      5,038     5,800

Long-term provisions                          391          -       460

Long-term debt                              1,045      1,623     1,141

Total liabilities                         256,299    286,636   236,904

Equity                                                                

Share capital                             203,660    202,962   203,373

Contributed surplus                         7,570      6,839     7,039

Retained earnings                         130,164      4,882   145,220

Total equity attributable to              341,394    214,683   355,632
shareholders of Indigo

Non-controlling interest                        -     21,954         -

Total equity                              341,394    236,637   355,632

Total liabilities and equity              597,693    523,273   592,536
            Consolidated Statements of Loss and Comprehensive Loss
                                             (Unaudited)
                                                                       
                        13-week      13-week       26-week      26-week
                   period ended period ended  period ended period ended
                  September 29,   October 1, September 29,   October 1,

(thousands of              2012         2011          2012         2011
Canadian dollars,
except per share
data)
                                                                       

Revenues                185,589      197,248       372,072      385,253

Cost of sales           100,487      111,497       206,875      222,579

Gross profit             85,102       85,751       165,197      162,674

Operating and            90,975      115,579       181,149      208,270
administrative
expenses

Operating loss          (5,873)     (29,828)      (15,952)     (45,596)

Interest on                  29           39            60           83
long-term debt
and financing
charges

Interest expense          (578)           56       (1,159)         (15)
(income) on cash
and cash
equivalents

Loss before             (5,324)     (29,923)      (14,853)     (45,664)
income taxes

Income tax              (1,311)      (1,074)       (5,353)      (4,852)
recovery

Loss and                (4,013)     (28,849)       (9,500)     (40,812)
comprehensive
loss for the
period from
continuing
operations

Loss and                      -     (11,542)             -     (23,773)
comprehensive
loss for the
period from
discontinued
operations (net
of tax)

Net loss and            (4,013)     (40,391)       (9,500)     (64,585)
comprehensive
loss for the
period
                                                                       

Net loss and                                                           
comprehensive
loss attributable
to:

Shareholders of         (4,013)     (35,120)       (9,500)     (53,225)
Indigo

Non-controlling               -      (5,271)             -     (11,360)
interest
                                                                       

Net loss per                                                           
common share from
continuing
operations

Basic                   $(0.16)      $(1.14)       $(0.38)      $(1.62)

Diluted                 $(0.16)      $(1.14)       $(0.38)      $(1.62)
                                                                       
                                                            

Net loss per                                                           
common share from
discontinued
operations

Basic                       $ -      $(0.25)           $ -      $(0.49)

Diluted                     $ -      $(0.25)           $ -      $(0.49)
                                                                       

Net loss per                                                           
common share

Basic                   $(0.16)      $(1.39)       $(0.38)      $(2.11)

Diluted                 $(0.16)      $(1.39)       $(0.38)      $(2.11)
                         Consolidated Statements of Cash Flows
                                             (Unaudited)
                        13-week      13-week       26-week      26-week
                   period ended period ended  period ended period ended
                  September 29,   October 1, September 29,   October 1,

(thousands of              2012         2011          2012         2011
Canadian dollars)
                                                                       

CASH FLOWS FROM                                                        
OPERATING
ACTIVITIES

Net loss from           (4,013)     (28,849)       (9,500)     (40,812)
continuing
operations for
the period

Add (deduct)                                                           
items not
affecting cash

  Depreciation of         4,329        4,557         9,048        9,016
  property, plant
  and equipment

  Amortization of         2,515        2,103         4,937        4,184
  intangible
  assets

  Impairment of               -            -           250            -
  capital assets

  Impairment of               -       25,416             -       25,416
  goodwill

  Loss on                     -           11            44           15
  disposal of
  capital assets

  Stock-based               200           75           359          670
  compensation

  Directors'                 96          118           229          267
  compensation

  Deferred tax          (1,311)      (1,250)       (5,353)      (4,852)
  assets

  Other                     510      (2,125)         (243)      (2,411)

Net change in            10,667     (18,306)         (897)     (11,501)
non-cash working
capital balances
related to
continuing
operations

Interest on                  29           39            60           83
long-term debt
and financing
charges

Interest expense          (578)           56       (1,159)         (15)
(income) on cash
and cash
equivalents

Income taxes                 41            -            45            -
received

Operating cash                -        (282)             -     (16,813)
flows of
discontinued
operations

Cash flows from          12,485     (18,437)       (2,180)     (36,753)
(used in)
operating
activities
                                                                       

CASH FLOWS FROM                                                        
INVESTING
ACTIVITIES

Acquisition of                -        (450)             -     (10,559)
non-capital tax
losses

Purchase of             (2,764)      (3,651)       (3,548)      (5,848)
property, plant
and equipment

Addition of             (2,784)      (2,259)       (4,614)      (3,888)
intangible assets

Investing cash                -      (2,488)             -      (4,646)
flows of
discontinued
operations

Cash flows used         (5,548)      (8,848)       (8,162)     (24,941)
in investing
activities
                                                                       

CASH FLOWS FROM                                                        
FINANCING
ACTIVITIES

Notes payable                 -          225             -        5,280

Repayment of              (338)        (393)         (684)        (712)
long-term debt

Interest received           565           10         1,124           94

Proceeds from               142            -           230          578
share issuances

Purchase of                   -            -             -      (3,009)
shares in
subsidiary

Dividends paid          (2,780)      (2,772)       (5,556)      (5,539)

Financing cash                -           36             -       24,478
flows of
discontinued
operations

Cash flows from         (2,411)      (2,894)       (4,886)       21,170
(used in)
financing
activities
                                                                       

Effect of foreign         (523)        2,285           225        2,354
currency exchange
rate changes on
cash and cash
equivalents
                                                                       

Net increase              4,003     (27,894)      (15,003)     (38,170)
(decrease) in
cash and cash
equivalents
during the period

Cash and cash           188,595       73,385       207,601       83,661
equivalents,
beginning of
period

Cash and cash           192,598       45,491       192,598       45,491
equivalents, end
of period
                                                                       

Cash and cash                                                          
equivalents
attributable to:

Continuing              192,598       18,497       192,598       18,497
operations

Discontinued                  -       26,994             -       26,994
operations
                        192,598       45,491       192,598       45,491





Janet Eger Vice President, Public Relations 416 342 8561 jeger@indigo.ca

SOURCE: Indigo Books & Music Inc.

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CO: Indigo Books & Music Inc.
ST: Ontario
NI: RET ERN DIV 

-0- Nov/06/2012 21:01 GMT