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Great Universal Essentials, UK, Online Sale, Damart Thermal Clothing, Shop Online with WH Smith, Laura Ashley Chapters, Canada . Buy Now Pay Later With Interest Free Credit | Indigo Books & Music Inc. posts improved third quarter results Comp store sales improved 1.9% in the superstores, 3.8% mall stores TORONTO February 19, 2002 - Indigo Books & Music Inc. reported improved third quarter results, with total consolidated revenues rising to $273.9 million, an increase of 10.6% from $247.6 million for the same period last year. In addition to comparable store sales increase in superstores and traditional stores of 1.9% and 3.8% respectively, the increase was attributable to the addition of 15 existing Indigo superstores and 1 new Indigo opened in December. This $29.9 million in sales was offset by sales decreases from closing 27 traditional format stores and lower sales at Chapters Online. On a year to date basis total consolidated revenues were $565.0 million as compared to $538.5 million on a year to date basis last year. Consolidated earnings before amortization, interest, taxes, restructuring charges and non-controlling interest (operating earnings) increased to $34.9 million compared to operating earnings of $27.2 in the third quarter last year. This represents an increase in operating earnings of $7.7 million or 28.3% in the quarter. On a year-to-date basis, operating earnings were $34.2 million as compared to $11.3 million on a year to date basis last year, an increase in operating earnings of $22.9 million or 203%. On a year to date basis, restructuring and other costs of $21.2 million, recorded in the second quarter, relate to store closures and other costs associated with the amalgamation between the Company and Old Indigo. The charges are comprised of $12.3 million in capital asset write downs, $4.5 million relating to store closings, $1.7 million relating to relocation and other costs associated with the acquisition and $2.7 million in finance charges. Of the total restructuring charges, approximately $8.6 million are cash charges of which $3.0 million have been paid. The balance of approximately $12.5 million relates to non-cash transactions. Excluding restructuring charges, the net income on a year to date basis was $1.7 million ($0.13 per share) as compared to a net loss of $11.5 million ($1.01 per share) on a year to date basis last year. This represents an increase of $13.2 million ($1.14 per share). The consolidated net income for the third quarter was $18.8 million ($1.41 per share) as compared to a net income of $9.0 million ($0.79 per share) in the third quarter last year, a $9.8 million or a 109% improvement. The consolidated net loss on a year to date basis, after the one-time restructuring charges described above, was $19.4 million ($1.53 per share) as compared to a net loss of $11.5 million ($1.01 per share) on a year to date basis last year. We are pleased with our improved third quarter performance, said Heather Reisman, Chief Executive Officer of Indigo. We will continue to focus on strengthening all aspects of the retail experience for our customers and on addressing the opportunity to streamline our portfolio of stores in areas where we feel there is over-capacity. I am particularly proud of the employees in this company who have worked and continue to work relentlessly and with spirit to reverse the problems which were negatively affecting performance. Subsequent to the quarter end 13 superstores and 10 traditional stores, previously offered for sale pursuant to a Consent Order issued by the Commissioner of Competition, reverted to Indigo as no divestitures were completed by the trustee appointed to effect the sale. It is anticipated that a few stores in the portfolio will close and that costs related to this process will be incurred. Retail Retail sales in the third quarter were $263.5 million as compared to $232.1 million in the third quarter of last year, an increase of $31.4 million or 13.5%. Operating earnings increased to $35.0 million in the third quarter from $33.3 million in the third quarter last year, an increase of $1.7 million or 5.1%. The increase, as compared to last year, can be attributed to improved gross margin dollars, reduced warehousing and distribution costs offset slightly by higher occupancy and labour costs due to the expansion of the superstore portfolio. Retail sales on a year to date basis were $538.4 million as compared to $497.6 million last year, an increase of $40.8 million or 8.2 %. On a year to date basis, operating earnings were $37.0 million as compared to $35.4 million last year. Superstores In the third quarter, revenues at the Chapters and Indigo superstores, including the World's Biggest Bookstore, grew to $176.1 million, a 26.0% increase compared to revenue of $139.8 million in the third quarter last year. The growth in revenue was generated by the operation of 16 additional superstores as compared to the third quarter last year and positive performance on a comparable store basis. Comparative store sales increased 1.9% during the quarter as compared to 1.3% in the same period last year. Following challenges in the post September 11th environment, comparable store sales in the key month of December increased 5.7%. Year to date revenues increased $51.7 million to $367.8 million as compared to last year. This growth in revenue is attributable to the operation of a larger superstore portfolio and improvement in merchandising. Traditional Stores Total traditional store revenues declined to $72.4 million in the third quarter, a decrease of $5.3 million or 6.8% in comparison to $77.7 million in the third quarter last year. The decline in revenue was the result of operating 27 fewer mall stores, or approximately 12% fewer stores as compared with the third quarter last year. The comparative store sales increase of 3.9% during the quarter was a significant improvement over the 0.4% decline in the third quarter last year. The total number of traditional stores as at the end of the quarter was 190 as compared to 217 stores last year. Comparable store sales in the key month of December increased 4.3%. Year to date revenues decreased $10.8 million to $145.5 million as compared to last year. Comparative store sales increased 2.5% on a year to date basis, a significant improvement over the 3.1% decrease during the same period last year. Online Revenues in the third quarter were $10.4 million as compared to $15.5 million in the third quarter last year, a decrease of $5.1 million or 32.9%. The decline was attributable to less aggressive marketing, discounting and promotional activities during the third quarter of this year as compared to the third quarter last year. Losses before interest, taxes, amortization and restructuring charges (operating losses) were reduced by $5.9 million to $71,000 primarily due to significant reductions in operating costs as a result of restructuring activities undertaken over the previous three quarters. On a year to date basis, revenues were $26.6 million as compared to $40.9 million on a year to date basis last year, a $14.3 million decrease. Operating losses were reduced by $21.2 million on a year to date basis to $2.8 million, a significant improvement over last year's performance. Forward-Looking Statements Statements contained in this press release that are not historical facts are forward-looking statements, which involve risk and uncertainties which 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 and its subsidiaries. About Indigo Books & Music Inc. Indigo is a Canadian company and the largest book retailer in Canada, operating bookstores in all provinces under the names Indigo Books Music & more, Chapters, Coles, SmithBooks, and World's Biggest Bookstore. Indigo operates chapters.indigo.ca, an online retailer of books, videos and DVDs. Indigo is a publicly traded company, listed on the TSE under the stock symbol IDG. To learn more about Indigo, please visit the About Our Company section of chapters.indigo.ca. For further information: Tracy Nesdoly Indigo Books & Music Inc. 416-263-5025 Indigo Books & Music Inc. Consolidated Statements of Financial Position Figures as at December 29, 2001 and December 30, 2000 are unaudited [in thousands of dollars] As at December 29, 2001 As at December 30,2000 As at March 31,2001 Assets Cash $ 25,322 $ 16,474 $ 11,394 Short term investments - - 3,850 Accounts receivable 16,526 19,729 11,547 Inventories 270,255 297,129 193,977 Income taxes receivable 4,695 - 5,353 Prepaid expenses 4,624 4,551 4,863 Future income tax assets 2,921 925 5,281 Total current assets 324,343 338,808 236,265 Capital assets, net 132,249 140,206 138,842 Future income taxes assets 7,762 9,060 5,402 Goodwill, net of accumulated amortization of $5,653 (2001 - $5,137) 59,331 1,292 8,301 Deferred financing charges, net of accumulated amortization of $467 3,383 - - Total assets 527,068 489,366 388,810 Liabilities and shareholders' equity Bank indebtedness - - 52,605 Accounts payable and accrued liabilities 305,530 262,457 182,942 Income taxes payable - 8,170 - Deferred revenue 6,137 5,318 5,272 Current portion long term debt 20,000 - - Total current liabilities 331,667 275,945 240,819 Accrued benefit obligations 1,916 49 1,166 Long-term debt 84,000 54,000 54,000 Convertible debentures 27,133 - - Non-controlling interest - 5,477 1,716 Total liabilities 444,716 335,471 297,701 Shareholders' equity Share capital 153,543 132,262 144,775 Equity portion of convertible debentures 1,903 - - Retained earnings (deficit) (73,094) 21,633 (53,666) Total shareholders' equity 82,352 153,895 91,109 Total liabilities and shareholders' equity $ 527,068 $ 489,366 $ 388,810 Indigo Books & Music Inc. Consolidated Statements of Earnings Unaudited [in thousands of dollars, except per share data] 13 week period ended December 29, 2001 13 week period ended December 30, 2000 39 week period ended December 29, 2001 39 week period ended December 30, 2000 Revenue Superstores $ 176,142 $ 139,838 $ 367,836 $ 316,112 Traditional bookstores 72,394 77,661 145,501 156,344 Internet 10,386 15,481 26,618 40,915 Other 14,969 14,570 25,091 25,114 273,891 247,550 565,046 538,485 Cost of product, purchasing, selling and administration 238,967 220,302 530,797 527,137 34,924 27,248 34,249 11,348 Amortization of capital assets 7,636 6,836 22,738 20,167 Amortization of pre-opening store costs 58 157 443 832 Amortization of goodwill 249 134 749 402 Income (loss) before the undernoted items 26,981 20,121 10,319 (10,053) Restructuring charges - - 21,152 - Interest on long-term debt and financing charges 2,246 978 5,235 2,934 Interest on current debt 1,961 1,370 4,626 3,260 Income (loss) before income tax recovery and non-controlling interest 22,774 17,773 (20,694) (16,247) Income tax expense 4,102 11,052 450 4,773 Income (loss) before non-controlling interest 18,672 6,721 (21,144) (21,020) Non-controlling interest (127) (2,275) (1,716) (9,524) Net income (loss) for the period $ 18,799 $ 8,996 $ (19,428) $ (11,496) Basic net income (loss) per common share $ 1.41 $ 0.79 $ (1.53) $ (1.01) Diluted net income (loss) per common share $ 1.27 $ 0.79 $ (1.53) $ (1.01) Weighted average common shares outstanding Basic 13,341 11,375 12,728 11,369 Diluted 15,090 11,379 12,728 11,369 Retail Corporate Profile Management SEDAR Filings News Releases Online Corporate Profile Management News Releases Info Desk iREWARDS Program About Our Company Affiliate Opportunities Careers Contact Us Corporate Sales Gift Certificates Privacy Policy Shipping Rates Store Locations Wish List chapters.indigo.ca: home Shopping Bag | Account Centre | Wish List | Help iREWARDS Program | Corporate Sales | Store Locations All Products Books DVD Video Gifts Books Advanced Search Search Tips Browse Books Art and Architecture Audiobooks Biography & Memoir Business and Finance Children's Books Computers View all Categories Browse DVD Action & Adventure Comedies Dramas Foreign Films Horror & Suspense Kids & Family View all Categories Browse Video Action & Adventure Comedies Dramas Foreign Films Horror & Suspense Kids & Family View all Categories . 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